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Commons Chamber

Volume 218: debated on Tuesday 5 June 1928

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House Of Commons

Tuesday, 5th June, 1928.

The House—after Adjournment on 24th May for the Whitsuntide Recess—met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

Private Business

Bermondsey Borough Council (St. Olave's Garden) Bill [ Lords],

Read the Third time, and passed, without Amendment.

London County Council (Money) Bill, To be read the Third time tomorrow.

Mid Kent Water Bill [ Lords],

Read the Third time, and passed, without Amendment.

Regent's Canal and Dock Company (Grand Junction Canal Purchase) Bill (King's Consent signified); an Amendment made,

Bill read the Third time, and passed.

Stoke-on-Trent Corporation Bill (King's Consent signified),

Bill read the Third time, and passed.

Rotherham Corporation Bill,

As amended, considered; to be read the Third time.

Cleethorpes Urban District Council Bill [ Lords],

To be read a Second time To-morrow.

Lewes Water Bill [ Lords],

Poole Corporation Bill [ Lords],

Sandown Urban District Council Bill [ Lords],

Read a, Second time, and committed.

Nottinghamshire and Derbyshire Tramways (Trolley Vehicles, &c.) Bill [ Lords] (by Order),

Second Reading deferred till Friday.

Oral Answers To Questions

Mercantile Marine (Direction-Finding System)

1.

asked the President of the Board of Trade whether any definite decision has now been arrived at with regard to the erection of an experimental station at Orfordness for the rotating loop direction-finding system; and, if so, w hat will be the cost?

It has not yet been possible to reach a definite decision. The estimated cost of the erection of the temporary experimental station at Orfordness is £5,000.

When is it hoped to carry out a decision which was announced some time ago?

Safeguarding Of Industries

Lactic Acid

2.

asked the President of the Board of Trade whether he is aware that the exemption orders applied for during the past two years under Section 10 (5) of the Finance Act, 1926, in respect of lactic acid of a quality known as pale technical, 50 per cent. by weight, and lactic acid, edible quality, being products liable to duty under Part I of the Safeguarding of Industries Act, 1921, have not yet been issued; that the only lactic acid produced in His Majesty's Dominions is a crude dark cloudy quality; that this quality cannot be satisfactorily used in the textiles industry, the artificial silk industry, by manufacturers of light coloured and fancy leathers, and in other important industries; that manufacturers of foodstuffs and soft drinks are bound to use the edible quality; that all these industries have, during the past two years, been compelled to pay more than would otherwise have been the case for these raw materials, which have to be imported; and will he take steps to issue the exemption orders in question forthwith?

Lactic acid which satisfies the requirements of most consumers in this country has been made here for some years past, and I understand that other kinds are now being produced in this country, and will be produced in substantial and increasing quantities. I am, accordingly, not satisfied that the conditions for exemption from duty are fulfilled except in the case of lactic acid complying with the requirements of the British pharmacopoeia, which has already been exempted.

Cocaine And Cocaine Hydrochloride

3.

asked the President of the Board of Trade whether he is aware that the exemption orders applied for in about July, 1926, under Section 10 (5) of the Finance Act, 1926, in respect of cocaine and cocaine hydrochloride, being products liable to duty under Part I of the Safeguarding of Industries Act, 1921, have not yet been issued; that his Department refuse to issue these exemption orders, although the products in question are still not made in His Majesty's Dominions; that, in consequence, hospitals and the general medical services, who are the chief consumers of these materials, which have to be imported, have during the past two years been compelled to pay more than would otherwise have been the case; and will be take steps to issue the exemption orders in question forthwith?

The manufacture of cocaine and cocaine hydrochloride in substantial quantities has been carried on in this country for some time past under the authority of the Home Office. I understand that these materials will shortly be available for disposal, and the conditions for exemption from duty are, therefore, not satisfied.

Press Buttons

5.

asked the President of the Board of Trade whether his attention has been called to the increase in the import of press buttons since the recommendations of the Board of Trade Committee on the safeguarding of buttons, &c., have been published, which increase is reflected in a reduction of 60 per cent. in the weekly orders received by British manufacturers during the past five weeks; and whether he proposes to take any action in the matter?

No, Sir. Figures of imports for the period in question are not yet available.

If there is continued increase of unemployment in this trade, will my right hon. Friend consider a fresh application in relation to this industry?

I do not think that I could be expected to answer a contingent question. My hon. Friend knows that, if the circumstances differ from those which the original application was made, it is always open to a trade to make another application.

Is the right hon. Gentleman compelled to consider every application that is made?

Yes. Every application which is made under the White Paper is considered, in accordance with the terms of the White Paper.

Food Council (Cost)

4.

asked the President of the Board of Trade the total sum of public money expended to date in consequence of the appointment of the Food Commission?

The cost of the Food Council to 31st May, 1928, excluding certain miscellaneous items such as postage, rent, telephones, heating, lighting, which are not readily available, has been £8,443.

Cinematograph Films Act

8.

asked the President of the Board of Trade whether the Advisory Committee appointed under the Cinematograph Films Act, 1927, have reported to him the present position in the cinematograph trade with regard to blind and block booking; and whether his Department has taken any action in the matter?

No formal report has been made by the Committee on the subject, but it is, I understand, well in their mind as in my own. In reply to the second part of the question, I would refer the hon. Member to the answer given to the hon. and gallant Member for Chelmsford (Colonel Howard-Bury) and the hon. and gallant Member for Dulwich (Sir F. Hall) on 9th May.

As this has been running in the right hon. Gentleman's mind, what action is he taking?

I am not taking any action. If there is an infringement of the Act, and satisfactory evidence of it, a prosecution will take place; but I think that satisfactory evidence of the general condition is the great increase in the production of British films and their distribution throughout the world.

British Army

Ordnance Corps Depots

12.

asked the Secretary of State for War the number of men employed in the stores of the Royal Army Ordnance Corps depots in April 1927 and 1928, and the number of group officers engaged in such stores?

As the answer contains a number of figures, I will, with the hon. Member's permission, circulate it in the OFFICIAL REPORT.

Following is the answer:

The numbers employed in the Royal Army Ordance Corps Storehouses are as follow:—

1st April, 1927.1st April, 1928.
Home.
Group Officers126
Civilians3,5233,535
Military748640
Abroad.
Civilians636553
Military178216

Officers (Compulsory Flying)

13.

asked the Secretary of State for War if agreement has now been reached between the War Office and the Air Ministry on the position in. respect of compulsory flying of an officer of the Regular Army attached to the Air Force for study purposes?

I am not aware of any disagreement with my right hon. Friend.

10.

asked the Secretary of State for War for what reason Army Order 304 of 1924 was issued; and what was the date on which it came into force?

Army Order 304 of 1924 was issued because inquiries had been made whether, in view of the formation of the Royal Air Force as a separate Service, Army personnel were still liable to go up in aircraft. The Army Order did not impose any new liability, as Army personnel had always been liable to travel by air on military duties.

11.

asked the Secretary of State for War whether Army Order 304 of 1924 is enforced in the case of officers who joined the Army prior to that date; whether he is aware that Lieutenant D. F. C. Scott, of the Essex Regiment, who joined the Army in 1920, selected that arm of His Majesty's forces because he had an objection to flying; and whether he will in future give those officers who joined the Army prior to the issue of this Order the option of deciding whether they will go up in the air or not, either as a pilot or a passenger?

The answer to the first part of the question is in the affirmative and to the second and third parts in the negative, except that, as explained to the hon. Member on 22nd May by my hon. Friend, the Financial Secretary, officers of the Army are not called upon to fly as pilots unless they volunteer for the duty.

Post Office

Transatlantic Telephone Service

20.

asked the Postmaster-General whether, seeing that the number of outgoing transatlantic telephone calls between Great Britain and Canada for the three months ended to the 19th of April totalled only 68, he can state that the transatlantic telephone service between these two countries is self-supporting?

Yes, Sir; the Canadian and American services are worked over the same radio channel.

Of course, I can answer only for our end; I cannot say what the corresponding rates are at the American end. So far as this end is concerned, the services are self-supporting.

Telegrams, Mumbles

21.

asked the Postmaster-General whether his attention has been called to the delay in delivering telegrams sent through the Mumbles Post Office; whether he is aware that a letter posted in London between 6 and 7 p.m. is delivered sooner than a telegram handed in at the same time; and will he look into the matter?

I have not heard of any general suggestion of delay. The hon. Member may refer to a telegram for Mumbles which was recently handed in at a London office at 6.55 p.m. The Mumbles Sub-Post Office, like other offices of the same kind, closes at 7 p.m., and, accordingly, after that hour there can be no delivery of telegrams except to telephone subscribers.

Can the right hon. Gentleman hold out some prospect of a later closing of Mumbles Post Office; seven o'clock is a very early hour?

Seven o'clock is the normal hour in country offices, and I cannot contemplate any general extension of the hours in every country office. Telegrams can be delivered to telephone subscribers after that hour.

I do not want to say anything disrespectful of Mumbles, but it falls into the class of sub-post offices which are normally closed for telegraph duty at 7 p.m. It is obvious that there must be some genera! hour of closing for the delivery of telegrams, and the quantity of business in offices of that character after seven o'clock does not justify, in the public-interest, their being kept open.

River Pollution

22.

asked the Minister of Agriculture whether he has received a Report from the Trent Fishery Board concerning the pollution of the river Penk and its tributaries; and whether any detrimental effects have resulted in the provision of water for cattle?

The answer to the first part of the question is in the affirmative. As regards the second part, I am not in a position to make a statement as the evidence resulting from the inquiry I have caused to be made is inconclusive.

What action does the right hon. Gentleman propose to take in this matter when he has considered the evidence?

Is the right hon. Gentleman aware that he is causing a great deal of dissatisfaction by his failure to deal with numerous cases of pollution all over the country?

I really cannot deal with cases in face of conflicting evidence Until I get the result of the inquiry.

Does my right hon. Friend not think that these various complaints rather give rise to the view that it is desirable to appoint a new Commission to go into the whole question?

Empire Cotton Growing Association

25.

asked the Secretary of State for Dominion Affairs whether he can state the extent to which public funds have been employed since 1919 in promoting the activities of the Empire Cotton Growing Association; the total amount expended for this purpose from all sources; and the sums provided by private contributions to supplement Parliamentary grants?

I have been asked to reply. A capital grant of £978,715 was made by His Majesty's Government to the Empire Cotton Growing Corporation in November, 1921, and before that date £10,000 had been paid to the Empire Cotton Growing Committee which preceded it. The capital grant has been invested and retained intact. As the result of the levy of 6d. a bale on cotton consumed in the United Kingdom, the corporation has received from the industry between January, 1922, and March last a total sum of £372,547. The total amount of the expenditure during that period, part of which is recoverable, has been £471,215.

Old Age Pensions

29.

asked the Minister of Health how many claims for old age pensions have been rejected because no evidence has been found to establish the age of the applicant; and whether in those cases where no reliable evidence of age exists the applicant is disqualified for all time?

As regards the first part of the question, exact figures are not available, but the number is very small. As regards the second part, the answer is in. the negative. The position can be reviewed, from time to time, on presentation of a fresh claim, and a right of appeal is provided.

There must be cases where no evidence at all is in existence as to the age of an applicant, and where that is the only objection. In such cases, does the Department take steps to fix an age or to make some decision?

No, Sir. I think the claimant is generally invited to supply as many particulars as he can. The hon. Gentleman will realise that it is very difficult for the Department itself to determine a matter of that kind without evidence. We are really anxious to deal with these cases, and, if further evidence is procurable at any time, the applicant can make a fresh application and 'his case is gone into.

Housing (Contract Prices)

33.

asked the Minister of Health if he can give any instances of local authorities which have realised reductions of £50 or more in the price of houses of the same or similar type within the last two-and-a-half years?

Yes, Sir. I quote as examples the following areas:

  • Croydon County Borough Council.
  • Derby County Borough Council.
  • Manchester County Borough Council.
  • Newcastle County Borough Council.
  • Nottingham County Borough Council.
  • Skipton Urban District Council.
  • Chelmsford Rural District Council.
In these cases the prices of houses in contracts let during the spring of this year showed reductions varying from £71 to £134 per house as compared with contracts let by the same authorities for houses of the same size, or approximately the same size, in 1926.

Milk Adulteration

34.

asked the Minister of Health whether there is any increase, according to official statistics, in the adulteration of milk; whether all local authorities are expected annually to carry out any fixed or approximate number of tests; and whether he will take steps to see that such tests are generally carried out?

The official statistics indicate a progressive decrease in the adulteration of milk, the percentage of samples reported by public analysts as adulterated or below the presumptive standards being 6.9 in 1927 as compared with 7.4 in 1926 and 9.3 in 1920. There is no specific requirement as to the number of samples to be taken annually by a local authority, but it is the practice of my Department to communicate from time to time with these authorities which do not seem to be taking a sufficient number to provide a proper check on adulteration.

Rating Relief

35.

asked the Minister of Health whether, under the provisions of the Rating and Valuation (Apportionment) Bill, an industrial establishment which generates and distributes electricity to itself will be entitled to the direct relief in rates under the Budget proposals for the whole of its establishment, including the electricity undertaking; and will the direct relief be given, if in addition to distributing power to its own works, it furnishes power to others outside its own establishment?

My right hon. Friend thinks the question raised by the hon. Member could be most conveniently dealt with in the discussions on the Bill.

As this particular case is of some importance, will the hon. Gentleman represent to his right hon. Friend the desirability of dealing with it in his speech to-morrow?

I am sure some hon. Gentlemen opposite will be able to raise it in the Debate.

Royal Air Force

Garrison, Aden

36.

asked the Secretary of State for Air the present strength of the garrison at Aden; and whether this represents an increase or decrease compared with the position two years ago?

I have been asked to reply. The Aden garrison is composed of one British battalion; two batteries, Royal Artillery; one Fortress Company, Royal Engineers; one squadron, Royal Air Force; one armoured car section, and ancillary services. The present strength represents a decrease in numbers as compared with two years ago, the withdrawal of an Indian infantry battalion and a reduction in ancillary services having more than counterbalanced an increase in the Air Force strength from a flight to a squadron.

Is the cost of this force, which was previously borne by the Indian Government, now all borne by the British taxpayer?

Hydrogen-Kerosene Engine (Purchase)

37.

asked the Secretary of State for Air what was the price paid for the hydrogen-kerosene engine purchased from the Airship Guarantee Company in March, 1926; how much money has been expended on this engine since; and whether he is yet in a position to say whether or not the engine will be of any practical value?

I have been asked to reply. The answer to the first part of the question is 210,500; to the second, that contracts for further work upon the engine have since been placed to the value of £4,274, but payment under these contracts has not yet been made. As regards the last part of the question, my right hon. Friend is not in a position to give a definite answer pending the completion of the work, but it is hoped that valuable results will accrue.

In view of the fact that over two years have elapsed since this engine was purchased, when does the Air Ministry expect to be in a position to say whether any benefit is to be derived from it or not?

The engine will be ready to be tested in July, and we hope then to be able to deal with the matter.

Police Investigations (Inquiry)

38.

asked the Secretary of State for the Home Department whether the proposed inquiry into methods of administration and other matters connected with the police force will apply to the provincial boroughs and counties as well as to the Metropolitan Police?

Without having come to any definite conclusion, I am disposed to think that the object in view will be best secured by an inquiry as to the practice of the Metropolitan Police in conducting interrogations and taking statements in the course of criminal investigations. Such a reference would, of course, cover investigations undertaken by the Metropolitan Police outside their own area, but I have already promised to consult the other parties as to the terms of reference.

Is the right hon. Gentleman aware of the difference between the administration of police by watch committees in boroughs and the administration of police 'by standing joint committees in county areas; and does he not think that he ought to deal with this matter, not in a piecemeal way, but completely, and as affecting the whole country?

I am quite willing, as I say, to consult with the right hon. Gentleman opposite or with the right hon. Gentleman below the Gangway as to the terms of reference. If the hon. Member himself hash Any particular point which he would like to have included, and if he lets me know, I shall be glad to consider it also.

Will the terms of reference allow of inquiry being made into other incidental considerations with regard to police procedure? For instance, there is the case of the Hyde Park double tragedy, where the widow of the man concerned was told by the police that the man was injured and was then, without a word, taken straight to the hospital mortuary where his body was. Will the inquiry include a case of that kind? It is a shameful case.

I have had no details of that case. I suppose the hon. Member refers to a case which has just taken place.

I have no details at all. The hon. Member must not ask me questions of that kind without giving me some notice, but I am always willing to get all the information that I can. If he also would like to suggest terms of reference, I shall consider his suggestion, as well as anybody else's suggestions.

Police Officers (Libel Action)

40.

asked the Home Secretary what steps he is taking with regard to the two police witnesses who gave evidence for the Crown at the Marlborough Street Police Court against two persons charged with an offence against Regulation 24 of the general regulations for Hyde Park, when the case was dismissed with costs against the police; and whether these two police officers are to have an opportunity of clearing themselves or, alternatively, if they are being proceeded against?

I understand that the two officers in question have obtained the issue of writs for libel, and pending the result of any legal proceedings, I can say nothing.

Is the right hon. Gentleman satisfied that the issue of the writs absolves him from his undertaking to see that the cases were fully investigated and that the men were dealt with, one way or the other, before the accusation was allowed to lie over their heads?

No one in the police can issue a writ without the sanction of the Commissioner. The Commissioner has given sanction for the issue of the writs by these men, and their cases will be investigated by a, jury. It would be improper for me to arrive at a decision, one way or the other, which might be contrary to the decision arrived at a month or two later by a jury of 12 of their countrymen. The men are still employed, and I prefer, therefore, to leave the case to go before a jury, assuming always that it is pressed forward with reasonable diligence. If not, I shall have to take steps to see that it is pressed forward properly. I think a jury had better consider it and give their decision first.

Did the right hon. Gentleman give his permission for the issue of the writs or was he consulted?

I was not consulted at all. Writs are always permitted to be issued unless the Commissioner is of opinion that there is anything frivolous or vexatious about the case. In the ordinary case, the policeman is as much entitled to take this course as any Member of this House.

After the termination of this case, will the right hon. Gentleman give the matter further consideration?

If a policeman makes a charge and gives evidence in support of it, and if the charge fails, why should he get into any difficulty about it, as long as he is doing his best in the course of his duty? Does it affect his chances of promotion or his position in the force?

No, Sir. I should like to make it quite clear that, assuming the charge is, in the opinion of his superiors, brought bona fide it makes no difference whatever to the man's position or his chances of promotion, whether it is successful or otherwise.

M Jonescu

41.

asked the Home Secretary whether he has made any inquiry into the activities of M. Jonescu, the host of Prince Carol during his visit to this country; and, if so, the result of his investigation?

I cannot usefully say more than that I did not find it necessary to take any special steps against this alien, who has been resident in the United Kingdom for a number of years.

Has the right hon. Gentleman taken steps to ensure that this particular gentleman does not use his position again in a similar manner?

Industrial Diseases (Sheep-Dipmanufacture)

42.

asked the Home Secretary if he is aware of the dangerous nature of the work of men engaged in the manufacture of sheep-dip in consequence of the amount of arsenic which is used in the process; that after a certain time symptoms of poisoning develop and, owing to the serious illnesses of men engaged on this class of work at Barking Creek factory, inspectors have ordered the management of the firm to supply special washing basins and nail brushes and one pint of milk per day to each employé; and whether he is prepared to issue regulations on these lines to make it obligatory on all firms manufacturing sheep-dip similar to the instructions issued by the Minister of Agriculture in this connection?

I am advised that these processes are liable to give rise to diseases of the skin, but the number of such cases reported in the last few years has been quite small. The Factory Department have not been able to trace any recent cases of a serious character at the Barking factory, and it is presumed that the cases referred to by the hon. Member must have occurred some years ago. The main precautions to be taken are the provision of adequate exhaust ventilation and suitable washing facilities, but these can be already secured in all cases where arsenic is used under the existing provisions of the Factory Act, and I am advised that no additional Regulations are necessary.

China (Situation)

44.

asked the Secretary of State for Foreign Affairs whether he has any further statement to make with regard to the political and military situation in China?

On the 30th of May the Northern forces commenced the evacuation of Paoting, and a military conference held that night decided on a total withdrawal along the whole front. On the 1st of June Chang Tso-lin gave a farewell interview to the Diplomatic Body, and informed them of his intention to leave the capital; he departed on the night of the 2nd of June, accompanied by the whole Cabinet, with the exceptions of the Minister for Foreign Affairs and the Minister of the Interior. A bomb was thrown at Marshal Chang Tso-lin's train just outside Mukden, and he and the Governor of Tsitsihar were both wounded. The Japanese killed two of the assailants, on whom they found bombs of Russian manufacture, with instructions from some South China organisation. A committee of elder statesmen, including two ex-Prime Ministers, has been formed to administer the city during the interregnum, and to maintain law and order. Conditions in Peking remain normal; it is not known which of the Southern leaders will take over the city, nor when this will take place.

May I ask the right hon. Gentleman whether it is proposed to call a conference of the Powers to deal with the new situation, in view of the approaching government of all China by one body?

But surely they are going to take some steps in the matter. Are we prepared to allow the matter to drift with these large garrisons of British troops scattered about China?

Directly we know what kind of Government is going to take over Peking, no doubt steps will be taken.

Great Britain And United States (Treaties)

48.

asked the Secretary of State for Foreign Affairs whether, for the information of Parliament, he is now prepared to elaborate his statement in paragraph 10 of his Note to the United States of America Government of 19th May last, in which he declared that there are certain regions of the world which constitute a special and vital interest for our peace and safety, by stating which areas of the world, outside the British Empire, he had in mind?

I would refer the hon. and gallant Member to the reply returned to the hon. Member for Shoreditch (Mr. Thurtle) on the 23rd of May, when my right hon. Friend stated that it would be undesirable to add to the general statement of the position of His Majesty's Government contained in his Note of the 19th of May. I am not in a position to make any further statement at present.

Is the right hon. Gentleman aware that I asked whether this information could not be given in the interests of the British public and of this House? Is it not undesirable to have these indeterminate areas, of which nobody knows the extent, in a document of this sort?

Unemployment (Juveniles)

49.

asked the Minister of Labour whether any proposals have been received by his Department for the transfer of juveniles from one district to another; and, if so, will he name the districts concerned, with the conditions set down for the welfare of these boys and girls?

I have been asked to reply. There are no such proposals apart from the notification of specific vacancies. These notifications come, in small numbers at a time, from various parts of the country and are dealt with in the ordinary course of Exchange business and with the usual arrangements for supervision by the Juvenile Advisory Committees.

Will the hon. Gentleman ask the Department whether they will name the districts from which these requests have come, in view of the fact that the Department have issued a circular asking for provision for the welfare of these juveniles?

Scotland

Edinburgh Castle

50.

asked the Under-Secretary of State or the Home Department, as representing the First Commissioner of Works, whether he is aware that no sanitary conveniences exist in the upper ward of Edinburgh Castle for the use of visitors to the National Memorial; and, seeing that representations have been made without avail to the Office of Works to have the matter remedied, will he take immediate steps to put this matter right?

The UNDER-SECRETARY of STATE for the HOME DEPARTMENT
(Lieut.-Colonel Sir Vivian Henderson)

Lavatory accommodation for men is already provided in the upper ward of Edinburgh Castle. Provision has been made in the current year's Estimates for the conversion of a disused building in Crown Square into ladies' lavatories, and it is expected that the work will be completed before the end of July.

Local Rates

14.

asked the Secretary of State for Scotland why Members have not yet been furnished with information regarding local rates in Scotland similar to that published for England and Wales?

The information referred to is being compiled from returns that are being supplied by rating authorities. It will, I hope, be published at an early date.

Goal Industry (Silicosis)

15.

asked the Secretary for Mines if he has taken any steps to ascertain what number of mine workers in the South Wales coalfield have been unable to follow their employment due to silicosis; and if any compensation has been paid in respect of any of these eases?

I have been asked to reply. I regret that, for the reasons indicated in my reply to the hon. Member for Gower (Mr. D. Grenfell) on the 3rd of last month, the information asked for in the first part of the question is not available. No compensation is payable at present to workmen who contract this disease in the coal-mining industry, but I have asked the Departmental Committee on Workmen's Compensation for Silicosis to advise on the terms of a scheme under Section 47 of the Workmen's Compensation Act for the industry, and for this purpose I have appointed to the Committee representatives of each side, nominated by the Mining Association and the Miners' Federation, respectively.

Can the right hon. Gentleman tell us when he expects a Report from that Committee?

The hon. Member will remember that it was only on the 3rd of last month that I informed the House that I had not got the names of the representatives from one of the associations. I have now got them, and I have now appointed them; and I believe they are getting to work at once.

Has the right hon. Gentleman power to pay compensation for silicosis cases in the mining industry in the interim pending the Report?

Will the terms of reference to this particular Departmental Committee deal with districts other than South Wales?

16.

asked the Secretary for Mines whether his Department has taken any steps to take tests as to the quantity of silica in the strata of the coal mines of South Wales?

Yes, Sir; the inquiries which have been made as to the occurrence of silicosis among miners working in hard rock in coal mines have included analyses and other tests of the rock dust.

Excess Profits Duty

45.

asked the Chancellor of the Exchequer the loss to the Exchequer due to over repayment of Excess Profits Duty, in the last three financial years?

In the year 1927–28 repayments of Excess Profits Duty exceeded the gross receipts by about £405,000; in the two previous years the receipts were in excess of the repayments. Particulars of the net receipt of the duty and of the amount paid over to the Exchequer in those years will be found on page 100 of the 70th Report of the Commissioners of Inland Revenue (Command Paper 2989).

Is the hon. Gentleman aware that he has not answered my question, which was as to the amount of money which was over repaid, that is to say, improperly repaid in excess of that which was due to be repaid. Can the lion. Gentleman tell me how much that was?

The Exchequer suffered to the extent of £405,000 in 1927–28; in 1926–27 the Exchequer benefited by £4,500,000; and in 1925–26 it benefited by £2,000,000.

Still the hon. Gentleman has failed to reply to my question. My question was as to the amount of money which was improperly repaid by the Treasury?

Is it not to be clearly understood that the answer my hon. Friend has given does not indicate or suggest that there has been any amount improperly paid and that the amounts that he has mentioned are only ordinary amounts either of credit or debit?

Does my hon. Friend not realise that nobody in this House or in the country will believe that the Treasury will ever repay any money improperly?

Is the hon. Gentleman aware that the last Report of the Public Accounts Committee refers specifically to a sum of £8,000 which was improperly repaid by the Treasury? What I wanted to get at was what other sums have been improperly repaid by the Treasury.

If the hon. Member will put down that specific question, I will do my best to answer it.

Civil Service (Ex-Service Men)

46.

asked the Financial Secretary to the Treasury, in view of the pledge given by the late Financial Secretary to the Treasury that the appointment to the Civil Service of the successful candidates in the examination. held in November last will in no way restrict the promotion of permanent non-pensionable men or temporary ex-service men and that no efficient temporary ex-service clerk will be discharged in order to make room for successful candidates from the examination referred to, why 120 men have been discharged on the grounds of decrease of work, while vacancies have been announced by the same Ministry for 550 new appointments; and can he give the House an assurance that these vacancies will be given to temporary ex-service clerks?

I assume that the Ministry of Labour is the Department referred to. I would refer the hon. and gallant Member to the detailed statement made by the Minister of Labour in reply to similar questions on this subject by my hon. Friends the Members for North Kensington (Mr. Gates) and North Croydon (Lieut.-Colonel Mason) on the 17th February last.

British Celanese, Limited (Government Representative)

47.

asked the Financial Secretary to the Treasury whether the late representative of His Majesty's Government on the board of directors of British Celanese, Limited, was a civil servant; whether he received any remuneration for his services on the board; and, if so, how much, and by whom was it paid?

No, Sir. The gentleman in question, Sir Philip Henriques, was not a civil servant. He received a salary of £500 per annum from His Majesty's Government, the director's fees which he drew from the company being handed over by him, by arrangement, to the Exchequer.

Transport (Roundabout System, London)

17.

asked the Minister of Transport whether he will make a general statement on the working of the roundabout system in London; whether he proposes to recommend its extension to other traffic centres; and, if so, to which?

I can only say that in my view, for which I think I can claim general support, the "roundabout" system, where adopted, has greatly relieved traffic congestion. The practicability of the extension to other congested areas is constantly under consideration, and, as the hon. Member is aware, it is introduced from time to time at fresh places where the conditions are considered to be suitable. This policy will be continued, but the hon. Member will realise that the number of places where this system can be introduced is necessarily limited.

Will the local authorities be given an opportunity to express their views before a further extension of this system is made?

I imagine that the hon. Member is referring to the London area. Local authorities are always consulted before anything is done.

Has the right hon. Gentleman's Department considered the introduction of the roundabout system at the Elephant and Castle, and if so, with what result?

We have considered it, but I am not clear with what result; I think it was adverse.

Can the right hon. Gentleman give any information as to whether there has been any diminution in the number of accidents in places where the roundabout system has been introduced?

Is the right hon. Gentleman aware that the Elephant and Castle is one of the most dangerous spots in South London?

Yes, I am aware of that fact, but perhaps the hon. Gentleman will put down a question.

Uganda (Cotton Production)

23.

asked the Secretary of State for the Colonies whether he can submit a statement to the House on the progress of cotton production in Uganda during the past five years; what is the nature of the experimental work now being conducted; and what sums are appropriated for the promotion of increased cotton production?

As the statement is rather long and includes detailed figures, I will, with my hon. Friend's permission, circulate it with the OFFICIAL REPORT.

Following is the statement:

The following table shows respectively the exports of lint cotton from Uganda and the areas planted with cotton in the years 1923 to 1927 inclusive:

1923.1924.1925.1926.1927.
Exports (in centals of 100 lb.)352,184514,418784,152723,438526,912
Area planted (in acres)418,609572,814610,324590,744532,604

It will he seen that steady progress was maintained until 1925. The reduction in the 1926 crop, from the greatest acreage on record, was due to adverse weather conditions, which also seriously affected the later stages of the 1927 crop, While the reduced acreage planted in 1926 and 1927 is accounted for partly by the falling world prices of cotton and partly by the importance attached to the planting of food crops to meet the shortage which was anticipated, and which in some parts of the country has been realised this year. The latest estimate of the probable cotton exports in 1928 is 573,332 centals, which in spite of the lack of rain represents a better yield per acre than in the previous year. The immedate position, therefore, is one of arrested progress, but there is every reason to hope that the setback is only temporary.

As regards experimental work, a Cotton Botanist was appointed in 1924, and has been actively engaged on the work of selecting the best strain of seed with a view to improving the quality and quantity of the cotton produced. In addition, the scientific and administrative staff of the Agricultural Department (including two entomologists, a mycologist, and a chemist) is largely, though not exclusively, concerned with experimental and other work for the benefit of the cotton industry. I may also refer here to the very valuable assistance which has been furnished by the Empire Cotton Growing Corporation, particularly in the matter of supplying staff and in arranging for visits by experts.

The total recurrent expenditure of the Uganda Agricultural Department was estimated at £38,952 in 1927 and £36,897 in 1928, but, as there is no specific division of staff and other charges between cotton and other agricultural work, it is not possible to say more than that cotton, as the staple crop of the country, commands the major share of the activities of the Department. Loan expenditure amounting to £23,226 has been undertaken since 1921 on works, etc., directly concerned with cotton development, and the industry will benefit from the services of the new Agricultural Laboratory which was recently completed at a cost of £20,600.

Kenya (Road Construction)

24.

asked the Secretary of State for the Colonies whether he has now received any information from the Governor of Kenya regarding the allocation of the money provided in the Estimates for 1928 for road making on land alienated to non-natives, roads connecting Government stations in native reserves, and roads in native reserves other than those in the first and second category, respectively?

Yes, Sir; but as the statement which I wish to make on the subject is of considerable length, I will, with the hon. Member's permission, circulate the reply to his question in the OFFICIAL REPORT.

Following is the statement:

It is not possible to give any precise figures for the distribution of the sums provided for extraordinary and recurrent expenditure on the country roads under the desired categories, for the reason that the classification of the road system is not based on racial boundaries, except in respect of some of the minor roads, and then only with regard to some of the expenditure. The main country roads traverse native and non-native areas and areas which have not been established as either, passing from one to another. The main country road system is about 2,578 miles in length. It comprises approximately 746 miles in land alienated to non-natives; about 1,040 miles are in established native reserves, and 792 miles in areas which have not been established either as native or non-native. The minor, branch or district road system leads into these main rods or direct to railway stations or townships. In native reserves the position, character and mileage of most minor roads are uncertain, as they have not been surveyed, except in a few instances. There are roughly 1,633 miles in non-native areas, 2,866 miles in native areas, and 328 miles in areas which have not been established either as native or non-native. The last two figures include only those roads or tracks which have been sufficiently established to justify approximate delineation in respect of general direction on the road map. In addition, there are about 1,420 miles of road connecting Government stations in the northern areas of the Colony whose primary use is for the purpose of administration and defence. It will be seen, therefore, that the mileage of public country roads may be roughly divided in respect of locality as follows:

(1) Within established non-native areas2,379
(2) Within established native areas3,906
(3) In neither1,120
(4) Joining Government stations1,420

The expenditure, both capital and maintenance, on individual roads and parts of them is dependent on the traffic which is carried, not on their situation with respect to racial boundaries. In general, the traffic on roads in non-native areas is much greater than that in native areas, although many individual roads in native areas carry much greater traffic than many individual roads in non-native, areas. The majority, how ever, of the minor roads in native areas carry very little traffic. The public has the right of user, subject to law, of the public roads of the Colony, whether in native or non-native areas, and traffic from roads in native areas traverses roads in non-native areas and vice versa. A statement of the expenditure on roads within native and non-native areas is, therefore, not a true criterion of the benefit which each race derives from such expenditure.

The reference in the lion. Member's question of the 19th December was taken to be to the sum of £100,000 shown in the draft Colonial Estimtes as provided for the maintenance of roads and bridges. The amount eventually voted for this service was £92,664. The proposed expenditure of this amount includes a sum of £11,100 for township streets and a sum of £12,600 for bridge repairs; £1,000 is held in reserve. It cannot be foreseen how occasion will require the employment of the latter two sums. There remains the sum of £67,964, of which £35,500 is on account of main roads. This can only be divided in the manner desired on the assumption that the verage expenditure per mile throughout the country is constant. Assuming this, the proposed distribution in the following categories is arrived at:

£
(1) Within established non-native34.250
(2) Within established native areas19,900
(3) In neither10,900
(4) Joining Government Stations2,914

An additional sum of £49,050 is provided in the Estimates for construction of new roads and bridges and other purposes. This sum is roughly allotted as follows:

£
(1) Within established non-native areas16,600
(2) Within established native areas12,650
(3 In neither15,800
(4) Joining Government Stations4,000

Poor Law

Out-Relief (Able-Bodied Men)

26.

asked the Minister of Health whether he has issued any Order, or caused any instructions to be issued through his Poor Law inspectors, instructing any boards of guardians in London or elsewhere that in future able- bodied single men and able-bodied men with families must not be granted outdoor relief, but must be dealt with by the issue of Orders for institutional relief?

The administration of relief by guardians of the poor, in London and elsewhere, is governed by the Relief Regulation Order, 1911, and my right hon. Friend has not issued any Order amending that Order. As regards the instructions issued to officers of my Department, I would refer the hon. Member to the reply given to a previous question put by the hon. Member for Stourbridge (Mr. Wellock), of which I am sending him a copy.

Stone-Breaking, London

27.

asked the Minister of Health in how many casual wards of London the task of stone-breaking is at present being imposed; how many men were subjected to that task during the four weeks ending 25th May; for what period of time a casual may be detained and set to the daily task of stone-breaking; and what is the method adopted for determining which men shall be subjected to the task?

The reply to the first and second parts of the question is none. As regards the third and fourth parts, I would refer the hon. Member to Articles 9 and 11 and the Fifth Schedule of the Casual Poor (Relief) Order, 1925, of which I am sending him a copy.

If I do the same, is the right hon. Gentleman willing to undergo an experimental test to see what it is like? I will do it with him.

Royal Navy (Soda-Water Fountains)

43.

asked the Parliamentary Secretary to the Admiralty the number and character of ships of the Fleet on which is installed a soda-water fountain; who installed the fountains and what is the price the mineral is retailed at; and whether he will arrange to have such apparatus fitted to all the ships of the Fleet?

Soda fountains are not installed by the Admiralty, but are regarded as part of the Canteen arrangements. The Navy, Army and Air Force Institutes have installed machines in some sixty ships of all classes, and it has been ascertained from that Corporation that the drinks are retailed at an all-round price of 1d. per glass. There are other installations which have not been provided by the Navy, Army and Air Force Institutes, but they are comparatively few in number. It is the practice for the Navy, Army and Air Force Institutes to provide soda fountains when desired by the ship's company and space permits.

Factories, Liverpool (Welfare Order)

(by Private Notice) asked the Home Secretary whether he is aware that the terms of the Sacks (Cleaning and Repairing) Welfare Order, 1927, have not been given effect to in Liverpool, where a large number of women are employed under wretched conditions in old warehouses; that several employers are making no attempt to provide overalls, dining room accommodation, etc., for their work-people and will the Home Secretary take the necessary steps to prevent this Order being completely ignored by a section of the employers who refuse to meet Trade Union representatives to discuss the situation.

I cannot agree that the position is as represented in the question. Reports received from the Factory Inspectors show that the whole of the Liverpool works have been visited since the Order came into force —most of them more than once—and any necessary instructions given, and that, as a result, conditions have been improved and the requirements of the Order are now substantially complied with. If, however, the hon. Member has any special cases in mind and will let me have particulars, I shall be glad to make further inquiry.

Business Of The House

May I ask the Prime Minister whether he can announce the business to be taken on Friday?

I am afraid that I must ask the right hon. Gentleman to put the question to-morrow.

Selection (Standing Committees)

Standing Committee C

Mr. William Nicholson reported from the Committee of Selection; That they had discharged the following Member from Standing Committee C: Mr. Hall Caine; and had appointed in substitution: Brigadier-General Clifton Brown.

Report to lie upon the Table.

Orders Of The Day

Finance Bill

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a Second time."—[ Mr. A. M. Samuel.]

I beg to move, to leave out from the word "That" to the end of the Question, and to add instead thereof the words:

"this House declines to assent to the Second Reading of a Bill which gives no relief in the heavy burden of taxation borne by the wage-earning class, imposes new indirect taxes, and proposes to raise revenue from national taxation for the relief from local rates of a particular class, irrespective of individual need, instead of promoting a fundamental reform of the rating system by levying rates upon site values which are created by the industry and enterprise of the community."
I should like, first of all, to express my pleasure, a pleasure which, I am sure, is shared by every member of the House, at seeing the Chancellor in his place again. We have missed the right hon. Gentleman. The House of Commons is never quite the same when the right hon. Gentleman is not on that Bench. I hope, however, that the result of a recent regrettable experience may be a warning to him in future to avoid proposals which are likely to bring him into difficulties, and to have temporary serious consequences. An Amendment appears on the Paper to which my name is, attached, and I shall devote my observations almost wholly to the latter part of the Amendment, leaving to my hon. Friends behind me the earlier part of the Amendment, which deals with the injustices of the existing system of national taxation. There are many other important matters in this Finance Bill which, perhaps, can be more conveniently dealt with when we come to discuss them on the Committee stage. The outstanding feature of the Budget this year is the rating proposal, which was adumbrated at considerable length in the Budget speech of the Chancellor of the Exchequer; but the Finance Bill is only concerned with providing the revenue under this scheme to compensate the local authorities for the loss of rates by the de-rating of certain properties.

The Chancellor of the Exchequer stated that there were three stages in this scheme. The first stage was the provision of money in the Finance Bill, in anticipation of the later stages of the scheme being carried in the House of Commons. We are, I understand, to discuss to-morrow the second of these stages, that is, a Bill for the reassessment of certain property, and I think it will be more appropriate if we abstain from detailed considerations of that plan until we discuss that Bill to-morrow. Therefore, I propose this afternoon to confine my observations to the principles of local rating. I think there is general agreement, indeed, I think there are no differences of opinion, as to the need for the reform of our chaotic local rating system. It is out of date, and it is altogether inapplicable to modern conditions, especially modern industrial conditions. I also venture to submit the view, which perhaps will not he so generally shared, that it is not the a-mount of the rates which constitutes the burden, but the wrong method of assessment and the unfair incidence of the rates. The rating areas are quite unsuitable for present conditions, and the whole system is wrong in principle, because a very considerable part of the expenditure of local authorities to-day is not for what might be regarded as strictly local purposes and local services, but which are of a national character. We may agree with the Chancellor of the Exchequer as to the need for reform, or, as I believe he put it, we may agree on the diagnosis, but differ as to the remedy to be applied.

My purpose this afternoon, without, I hope, unduly encroaching upon what can be more properly discussed to-morrow, is to show that the revenue to be raised by this Finance Bill and to be handed over to the local authorities is not likely to lessen in the least degree, but is much more likely to aggravate, the existing evils, inequalities and injustices of local finance. This proposal means, simply, taking money out of the pockets of one class of people in order to put it into the hands of others. The proposal of the Finance Bill is to raise this revenue mainly by a Petrol Duty. I thought the Chancellor of the Exchequer, in defending this duty, and especially in defending its application for the purpose to which it is assigned, was singularly un- fortunate and contradictory. He said with very great truth that the industrial greatness of this country was built up on coal, but that oil is now to an increasing extent taking the place of coal. It seems a strange way of helping industry to put a tax upon what is the fuel of industry. It would be just as wise or just as foolish to put a tax upon coal. The only result of that would be, of course, to increase the costs of production, though the point which has been emphasised a hundred times in defence of this rating proposal is that it is introduced as a means of reducing the costs of production.

This relief is to be applied only to what the Chancellor of the Exchequer calls productive industry. That seems to be based upon the idea that you can make a distinction between the costs of production and the costs of distribution. What matters is the cost of the article which comes upon the market. The costs of distribution may be as important as, indeed in a great many cases they are more important than, the actual costs of production. Everyone is familiar with the wide margin between the price of an article when it leaves the place of manufacture and the price the consumer has to pay for it, and there is no doubt that it is the cost of distribution which adds so enormously to the cost to the purchaser. It has just occurred to me that the right hon. Gentleman himself said that the cost of the distribution of petrol is about one-half the price which the consumer has to pay. Anything which increases the cost of distribution increases the price of the article, and to that extent makes the sale of that article more difficult. There is no doubt that this duty upon petrol will increase costs of production.

The Chancellor tried to justify this Petrol Duty by pointing out that the price of petrol to-day is cheaper than it was a year or two years ago. Surely that is no reason why he should put a tax upon it and increase its price. He ought to have welcomed that decrease in the price of petrol as an aid to production and a stimulus to trade; instead, he has made the cost of the article dearer by this imposition. I have no figures as to the percentage of petrol consumed in this country which is used, not for pleasure but for trade, including in the word "trade." our public motor omnibus services. I should be very much surprised if less than one-half of the petrol consumed is not used for what we might call trade or commercial purposes, and therefore this justifies the statement I have made that when this relief is given to specially selected industries you are taxing one class of people for the supposed benefit of another class. The Chancellor of the Exchequer had a very unfortunate experience., and an experience which had temporarily regrettable results, in connection with the kerosene tax, but he ran away from that. tax even before a shot was fired at him in the House of Commons.

I am inclined to think that the petrol tax—or the part of it which has been retained—will be quite as heavy a burden on working people as the Kerosene Duty. I find that in many parts of the country this tax is being passed on to the consumers—I mean those who use public motor omnibuses. I have here a number of tickets issued by omnibus companies to their passengers, and what I am going to point out is happening all over the country. Here is one receipt for a halfpenny in payment of the Petrol Duty. Here is another ticket which is more candid. It says:
"Receipt for extra charge owing to the imposition of the petrol tax."
Here is another ticket for a fivepenny fare upon which 10. is charged for the Petrol Duty. All these facts show that the Petrol Duty is not only being paid by the users of these public vehicles, but they also show that the omnibus companies are taking advantage of the Petrol Duty in order to make an extra profit on their fares, amounting to as much as 200 and 300 per cent. in some cases. It has been stated that the declared purpose of the plan of rate relief suggested by the Chancellor of the Exchequer is to encourage production, but you are only increasing the cost of production by such methods as those which I have described.

There are many other objections to the Petrol Duty which might be urged, but T think I have said sufficient to show that it is an unsound and an unjustifiable tax. It was stated last week at the annual congress of the Co-operative Societies that the Petrol Duty would cost Co- operative Societies £250,000 a year extra for the running of their vehicles.

They will get very little by way of a reduction of their rates; their shops are not getting any relief because they are carrying on a vast distributive trade. Of course, they will have the satisfaction of knowing that they will have to pay £250,000 a year extra for petrol, while, according to a statement made by the right hon. Gentleman the Member for Carmarthen (Sir A. Mond), in the course of the Budget Debate, the Imperial Chemical Industries will gain some £200,000 a year. Therefore, the Co-operative Societies may find a certain amount of satisfaction from the fact that what is being done wilt add to the £4,000,000 profit made by the Imperial Chemical Industries.

The Rating plan proceeds on fundamentally wrong lines, and it does nothing to change the present archaic and unsuitable system of local rating. The changes which this plan will bring about will increase the cost of the production of houses, and surely that is a very important element. The cost of houses will be increased, because anything which causes increased rates is certain to add to the cost of the production of houses. Nobody knows better than the Chancellor of the Exchequer what is going to be the ultimate effect of the change which is proposed by this scheme. It cannot be more than a temporary relief, and this form of relief—it is no use denying it—must sooner or later pass on to the rent, and will therefore become an addition to the income of the ground landlord and those who take rent from property. You can have no relief of the rates so long as you allow land values to be appropriated by private individuals.
"All forms of relief of this kind go back to the landlords in the shape of land values. Every relief of this kind is ultimately passed on to the community and finds its way automatically into the landlords' pockets. If there is a rise in wages we are able to move forward a little because the worker is able to pay a little more for the things he wants. The opening of a new railway or tramway, the establishment of improved services for workmen, the lowering of fares, or a new invention very often confers a benefit on the workers in any district, and it becomes easier for them to live. The ultimate result, however, is that the ground landlord and the landlord, one on top of the other, are able to charge more to the community for the privilege for living there."
I gather from the smile on the face of the Chancellor of the Exchequer that he recognises that quotation, and I can appeal to no greater authority; I certainly could not put my case to the House of Commons in a more eloquent form than the Chancellor of the Exchequer has done. The price that the landlord is able to exact for the use of these privileges is determined by a number of considerations. First of all, the price is determined by the extent of the need of the people, the amount of land they require, and the population. As a matter of fact, every child born adds to the rent of the landlord. The more people you have living on the land, the more the ground landlord is able to take from the community for the privilege of living on the land. Every scientific advance, every machine improvement, everything that adds to productive power, finds ultimately its place in the rent that the landowner is able to take.

It is the same with regard to transport. Every improvement in transport services raises land values. We see it going on everywhere, not only here in London and around London, but, now that motor omnibus services have covered the whole country, you find, alongside the roads on which you travel, on agricultural land which is at present relieved of 75 per cent. of its rates and which next year is to be relieved of the whole of its rates, these notice boards:
"Eligible land for building purposes";
and, if you inquire the price of it, you find that it is not the agricultural value of the land that is asked, but 10, 20, 50, or even 100 times the value that could have been obtained for the land a few years ago. May I appeal again to a high authority:
"It does not matter where you look, or What examples you select, you will see that every form of enterprise, every step in material progress, is only undertaken after the land monopolist has skimmed the cream off for himself. Everywhere to-day the man or the public body who wishes to put land to its highest use is forced to pay a preliminary fine in land values to the man who is putting it, not to an increased use, but, in some cases, to no use at all."
That is the opinion of the Chancellor of the Exchequer.

These instances of land values created by public expenditure for the needs of the community are well known to everyone. Less than two years ago the Corporation of Liverpool, anxious to carry out a street improvement, had to pay at the rate of £1,500,000 an acre for land. Every penny of that value had been created for the population by the industry and enterprise of the City of Liverpool. Again, take Sheffield, a city which is groaning under the burden of excessive local rates to-day. They wanted land for a school, and they had to pay 820 years' purchase on the rateable value of the land. They wanted to widen a street, and they had to pay 846 years' purchase upon the rateable value of the land. With regard to housing, I have here a case from South Shields. There were 9 acres of agricultural land just developed for building purposes. Sixty houses have been put on that site, and they are paying in ground rent £432 a year, yet before that land was needed for housing purposes its annual income was £38.

I dare say Members of the House will recollect a speech made by a former Tory Minister, whom I remember very well. His name used to be Sir Albert Stanley, and he is now Lord Ashfield, the Chairman of the London Underground Railways. They recently made an extension, as hon. Members know, out at Edgware, and he was complaining of the difficulty of getting the population out there, because the landowners there were holding up the land until they could get a higher price for it. Let us have the views of the Chancellor of the Exchequer on that. Taking the case to which I have already referred, he said:
"There is the man who keeps a large plot in or near a growing town idle for years while it is ripening, that is to say, while it is rising in price through the exertions of the surrounding community and the need of the community for more room to live. I dare say you have formed your own opinion upon it. The Conservative party generally think that it is an admirable arrangement. They speak of the profits of land and the land monopolist as if they were the fruits of thrift and industry, and a pleasing example for the poorer classes to imitate. We do not take that view of the question. We think it is a dog-in-the-manger policy. We see the imposture upon the public, and we see the consequences in crowded slums, in hampered commerce, in distorted or restricted development, and congested centres of population, and we say here and now to the land monopolist who is holding up his land—you shall judge for yourselves whether it is a fair offer or not—we say to the land monopolist, This property of yours might be put to immediate use with general advantage. It is at this moment saleable in the market at 10 times the value at which it is rated. If you choose to keep it idle in the expectation of still further unearned increment, then at least you shall ho taxed on the true selling value."
That is the opinion, that is the conviction, of the Chancellor of the Exchequer; and what is he doing? Is he saying that to the land monopolist? No. He is saying to him, "Well done, thou good and faithful servant. You are only paying 25 per cent. of a small rate on a very small assessment now. I will relieve you of rates altogether, and let you go on until this land has received an enormous further advance in value."

4.0.p.m.

By-and-by industry will go out into these areas. The Chancellor of the Exchequer made a statement in his Budget speech with which I do not agree, though I quite realise that there may be two sides to that question, and two quite proper views. He seemed to regret the migration of industries from the highly congested areas into the country. I do not regret it; I think that it is a tendency which should be encouraged, and it is certainly one that cannot be prevented. I believe it will be a very great aid to production. If factories can be removed to places where they can be much more commodious, and where the workers can be better housed, I think that a very considerable improvement in productivity will result. I remember that some years ago a friend of mine, an engineer in Manchester, told me this very interesting fact. They had, he said, removed their factory two years before from the centre of Manchester into the country, and such had been the improvement in the efficiency of the workers that, at the old rate of wages and at the old hours, there had been such an increase of output that the whole costs of removal and of re-equipment had been covered in two years' time. However, that is by the way. When these works have gone out, it means roads, sewers, schools, lighting and the like. The landlord has already, as the Chancellor of the Exchequer put it, 4.0 p.m skimmed off the cream, but, owing to the high price he has got for the land, the rates are higher, because they have to be based upon a higher assessment. These results percolate through the whole of industry, and they are reflected in the increased price of every article we buy. What is the value of the sites of this country? I do not know—no one knows. We have not even an approximate estimate, but, at any rate, we can form some idea from those countries where they have accurate estimates of site values. Take New Zealand. In the last 47 years, the site value in New Zealand has increased from £62,000,000 to £339,000,000; in other words, from £129 per head of the population to £241 per head of the population. I do not think the average in this country would be as high as in New Zealand. If it were, the land values in this country would be worth £10,000,000,000. Even if it were £5,000,000,000, hon. Members can do a little simple sum in arithmetic and estimate what the annual income would be if the site values were rated, say, at 4d. or 5d. in the on the capital value.

The City Corporation of Sydney, New South Wales, a few months ago raised a loan in the London market., and there were some very interesting statements in the prospectus. There the local rates are levied upon the undeveloped capital value of the land. This prospectus stated that the total capital value of the City of Sydney was £61,500,000, and the annual value about 8,000,000. All the local rates raised by the Corporation of Sydney are raised by a tax on site values. There is an addition of a water rate, and, I think, there is a drainage rate. The main services such as police and education are State charges in New South Wales, but a rate of 3½ in the £ raises the whole of the strictly municipal expenditure of the City of Sydney. What has been the effect? During the time that this system has been in operation, that is, during the last 15 years, the population of Sydney has risen from 500,000 to over 1,000,000. This system operates all over our Dominions, and in some Continental countries, particularly and very successfully in Denmark, and, as the right hon. Gentleman says, throughout Europe the systems of land tenure are far superior to our own.

Instead of the scheme for which financial provision has been made in this Bill, I wish that the Chancellor of the. Exchequer had had the courage of his convictions. I know that his views upon this question have not changed—his circumstances have changed. I wish he had, therefore, proposed the transfer of rates to site values, which, as he knows, and everyone knows, are not the product of individual effort but rather a collective product. It may be said that there are difficulties, but they have been successfully overcome in other countries, and, however great the difficulties may be, they are infinitesimal compared with the difficulties that will be experienced in carrying out the Government's scheme. This, as I said just now, is a scheme which is as I know, dear to the heart of the Chancellor of the Exchequer. He thinks about it day and night. He told us so quite recently. He said that it is never out of his mind. Now we submit this as an alternative proposal to the financial proposal which is embodied in this Bill. I have made no attack upon landowners. I do not blame them. They have a perfect right to take advantage of that of which the law permits them to take advantage. It is not they who are blameworthy, it is the State which is blameworthy, as long as it allows such a system to exist. I challenge the Chancellor of the Exchequer, and I challenge any Member on the other side to defend this system. Can anyone say that the fruits of local rates, the fruits of industry should not be retained by industry, but should go into the pockets of certain individuals who have contributed nothing by their labour or industry to the creation of that value? With confident belief in this we submit this Amendment to the House of Commons.

No one could complain of the tone and temper of the speech of the right hon. Gentleman. It was the result of careful reflection; it was expressed in language almost entirely devoid of prejudice, and, for my part, as the result of that speech, I am only for the moment left with' one question to ask—Is that all you have got to say against the scheme of constructive rating reform which we have proposed? After six weeks of careful consideration, during which all the keenest and sharpest brains in the Labour party have been continuously applied to the immense field that we have opened up, with a target covering the whole horizon, this excellent, moderate, suggestive speech—a speech, I must say, largely borrowed—represents all that they have to say at the present time on this subject. I think they have shown a far sounder appreciation of the real importance of this scheme to the country and to its productive industries and its labouring masses, than has been shown by their much more precipitate allies on the Liberal Benches. I ask the House, and I ask the country, to note very carefully the attitude of scrupulous reserve which has been adopted by the Labour party upon these Budget proposals.

What are the two cricitisms which the right hon. Gentleman has been able to select for adumbration this afternoon? He says that the Petrol Duty will be a burden. That is the first criticism. I have never denied that the tax on petrol will be a heavy one. I am very sorry, indeed, that I have had to impose a tax at all, and only a much more grievous need in another direction has led me to make this demand upon the motoring public, in order to find the money necessary to take a forward step. After all, it must be remembered that I am proposing constructive policies on the morrow of the disaster of 1926. More than £80,000,000 has been taken from the revenues of four poor years. But for that, I could have proposed all that we are proposing now and carry it into effect without placing a tax upon petrol. But, in all the circumstances, I submitted to the House, when the Budget was introduced, the broad argument as between the struggling basic industries on the one hand and this buoyant motor traffic on the other., as between our railways with the great interests and labour interests involved in their reasonable treatment and the ever-expanding cost of our road system. There is also the contrast between the position of our coalfields and the ever-growing importation of foreign liquid fuel, and surveying these three groups of alternatives, I submitted to the House and the country the proposition that it was well worth while getting this considerable revenue from a tax upon petrol and petrol-driver, transport, and devoting it to the relief of the basic industries from the extremely onerous and invidious incidence of the rates. But I will never deny that it is an evil, or that I wish the revenues of the country had been such as to enable me to dispense with such a tax.

The right hon. Gentleman's second point, and the alternative which he suggests for the tax on petrol, I gather, is the taxation of land values—[An HON. MEMBER: "The rating of site values!")— the taxation of land values or the rating of land values. The right hon. Gentleman read a speech of mine of some years ago, and one which, I am bound to say, was familiar to me, because I have taken the trouble to re-read some of those statements quite recently, and I am bound to say that, leaving out what you may call the partisan gloss, which, in times of sharp political conflict is prone to be introduced into our deliberations—leaving all that out, I am not at all convinced that, among my arguments in favour of the rating of undeveloped urban land upon its true value, I employed ally which were lacking in lucidity or reason. In the years that have passed a good many things have happened, and we must take notice of these events. In the first place, a whole group of these land taxes were imposed. [An HON. MEMBER: "Never! A whole group of these land taxes were imposed by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) when he was Chancellor of the Exchequer—Increment Value Duty, Reversion Duty and Undeveloped Land Duty.

They were certainly taxes directed to absorbing what is called the unearned increment of the land. They were all imposed, and after 11 years the whole group of these taxes proved a total failure. They yielded in the 11 years only £1,300,000, and so disgusted was the right hon. Gentleman with the result of the taxes that he abandoned the whole policy when he was Prime Minister, in 1920. The right hon. Gentleman suggested that he was out of the country at the time the taxes were dropped, but I can assure him his memory has played him false. I have verified the records. I make not the slightest suggestion of want of candour.

That these taxes were abolished without my know- ledge and consent is not what I meant to suggest. That would have been a very unfair insinuation against the chancellor of the Exchequer. If I conveyed that impression I can only express my regret. It not what I meant. It was in right hon. Gentleman the Member for Carmarthen (Sir A Mond) as to something he had said when the matter was being discussed. I was not there when the discussion took place, but I have not the faintest doubt that I was consulted and assented to it.

I am not making the slightest reflection on the candour or the good faith of the right hon. Gentleman. After all, the torrent of events that swept across us in these tremendous years through which we have passed must necessarily have made it difficult for any Minister who has played the part he has done and been concerned with such a multitude of affairs to remember exactly what the particular course was. The fact is that the right hon. Gentleman presided over both meetings of the Finance Committee of the Cabinet in 1920 which decided on the changes of taxation in the Budget of that year. This was before he went to the San Remo Conference and he presided over both those meetings at the beginning of April, 1920, and agreement was reached on all the changes in taxation.

And when the present Foreign Secretary, then Chancellor of the Exchequer, was challenged in the House of Commons by Members who said, when the repeal of these taxes was announced, that he repealed them while the Prime Minister was away, he said:

"That is a foolish observation. The lion. Member obviously does not understand Cabinet procedure. Does he think that a decision of this kind was taken in the absence of the Prime Minister or without his full concurrence or approval? We have unanimously come to the conclusion that the proper course to pursue is to repeal these duties."
and again, speaking of the right hon. Gentleman:
"He has one great quality not given to every man, and that is that in middle age and after middle age he can still learn. He is no coward who fears to own a change of mind and admit altered conditions. He is no pedant who refuses to alter any views which he first took up when a case was first press sited to him."
Apparently, the right hon. Gentleman is still continuing his course of instruction. I accept his statement that he was an assenting party to the repeal of these taxes. That is a very considerable thing, that the Minister and politician who put the greatest drive into this case that has ever been put into it should, at the summit of his powers, after 11 years of exhaustive experiment, not feel the slightest hesitation in being responsible for the complete repeal of these three taxes.

But about site values and land values—of course there is a lot of politics in them. Further, there are a lot of officials in them. When the valuation process was brought to an end by a later Government it was possible to retrench 4,000 officials, who would have to be replaced before this policy could be taken up again. [An HON. MEMBER: "Not at all!"]That is what I am advised. In addition to that., the right hon. Gentleman took into consideration the great disappointment of the yield. And so, though there may be a great deal of politics and a great many officials, and no doubt a great deal of litigation, as we have proved from what occurred, there is very little money in this policy. The idea that we could use the rating of site values as a substitute for this powerful, fruitful fiscal engine of the petrol tax is one of the great delusions. If we had to enter into a long discussion at present upon site values, that. would be the surest way of obstructing all practical creative reform in the direction of the relief of rates on industry, and the rest of this Parliament would be spent in very exciting but utterly sterile arguments on the subject of land values, and on the principles which you should apply to their rating or taxation, and we should not make the slightest progress towards the very solid, serious task we have set ourselves to accomplish. Therefore I do not intend to make more than one general observation upon the question of site values, except to say that it is the best method of stopping the rating relief of industry. But I will make this one further observation, and I will make it in an interrogative form. Why did Mr. Henry George fail? He was a great advocate of the single tax and he has one disciple, at any rate. Why did he fail, and why is it that his disciples are unable to carry on their political faith in modern times?

The right hon. Gentleman spoke then with less than his usual courtesy and with more than his usual obliviousness of his own record. I well remember the time when no one was more scathing in his denunciation of Socialism than he. Now, by a perfectly natural transition of mind, by a steady process of regeneration, he has reached a certain conclusion. He has reached finality. He has got to the bottom, as it were. I do not in any way belittle the logic or the argument about the rating of land. What I say is that very great experiments in this field have been made and that they were found to have failed to such an extent that they were abandoned by their author.

Let me return to the question why Henry George failed in his single tax proposal. It was because he had been studying the world as it had been for generations and centuries, and arrived at certain conclusions on that basis, and the conclusion he arrived at was that land was practically the sole source of all wealth. But almost before the ink was dry on the book he had written it was apparent that there were hundreds of different ways of creating and possessing and gaining wealth which had either no relation to the ownership of land or an utterly disproportionate or indirect relation. Where there were 100 cases 20 years ago there are 10,000 cases now, and that is why radical democracy, looking at this proposition of the single tax—there are two enthusiastic single taxers left in this House—has turned unhesitatingly towards the graduated taxation of the profits of wealth rather than to this discrimination in the sources from which it is derived, and that is what we have done. Let me point out what has happened in the last 18 years. When this question of site values was being discussed in the Budget of 1909 the Income Tax and Super-tax together stood at the maximum, at 1s. 8d. in the £it is now 10s. Death Duties were 15 per cent. on the highest estates, whereas they now reach 40 per cent. There is not the slightest doubt that very vast changes have taken place in the whole of the methods by which taxation is raised, and those who wish to embark on any controversy upon the taxation of land values in the future must address themselves to the facts as they exist in this completely changed situation.

I leave the only two points the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) on behalf of the Labour Opposition has brought forward in connection with our rating scheme. I am very glad to know that is all they have to say upon the subject. Other criticisms have come from other quarters, and especially from the Liberal party, who have been extremely active in finding fault, arid who have placed an Amendment on the Paper with which I propose to deal, as it touches a very direct issue, and I propose to deal with it in detail. The criticisms which the Liberal Opposition have made in the country are mutually destructive. The first is that it is a very bad scheme and it ought to be brought into operation much earlier. Of course it all turns on money. I should he delighted to bring it into operation earlier, but we have to consider money and the necessary administrative and legislative steps that must be taken. I have not the money to bring this scheme, or any part of it, into operation earlier. I have said that £80,000,000 has been lost by the events of 1926. It is a great effort to do what we are attempting to do at a time so soon after those events. The excision of the Kerosene Duty from our proposals aggravates my difficulties. I do not, however, propose to suggest to the House any alternative taxation to make good the omission of kerosene. I count upon the expanding revenue of the country and upon further economies which must he pursued from year to year to bridge the gap. In any case, the finance is secure for at least three years, but I have nothing more to give in the present year, and the benefits, such as they are, must be awaited with patience. After all, 18 months is not very long to wait, and six weeks of it have gone already.

The second self-destructive criticism has emanated mainly from the right hon. Gentleman the Member for Carnarvon Boroughs. He has pursued a double line of attack. First of all, the relief ought to have been concentrated on the basic and unprosperous industries, much more concentrated than the Government propose. Secondly, and alternatively and simultaneously, he says that the relief ought to have been dissipated and spread over the whole area of the distributing trades and of ordinary residential ratepayers. You have the maximum concentration advocated in one breath and the maximum dissipation in the next. There is a very great deal to be said for concentrating the whole of the relief upon the basic industries, and we have done so in regard to the railway part of our proposals. We have been guided in the main policy by a fundamental principle. It is this, that the instruments of production ought not to be taxed but only the profits resulting from their use. That is our principle. We hold that it is economically unchallengable. Why should we fear to apply it boldly? I expect, if we had concentrated our relief upon the basic industries, the right hon. Gentleman would have been the first to rise in his place and to remark on the favours we were giving to a handful of trades at the expense of all the other producers. Under these circumstances, it is much better and much safer to follow a general principle which has been carefully selected to produce the results at which one is aiming and trust to the workings of that principle irrespective of the hard cases it may produce.

Does the right hon. Gentleman consider that it is practicable to pick and choose between the prosperous and the unprosperous industries? The Liberal Yellow Book suggested no such discrimination, and I am bound to say that it appears utterly impossible to make such a discrimination. The right hon. Gentleman has in many speeches he has been making about the country pointed to this and that hard case, this wealthy company which gets relief, this poor class of residents who do not get relief, this declining industry which ought to have more, and so forth. But I suggest that it is utterly impossible to pick and choose between these different industries. If, on the other hand, we were to extend the scope of the scheme to cover all the householders and all the distributing trades, we should dissipate the whole fruits of our proposals. We should reduce the relief to industry to one-fifth of what we are now giving. And what we are now giving amounts only to 4s a ton on steel on the average. In fact my whole doubt and misgiving has been that the levers at our disposal are not big enough and not strong enough. If they were three or four times as strong, I should be much surer and much more confident. The right hon. Gentleman complains that the distributors do not receive the relief and that the residential ratepayers do not receive it. This would imply a dissipation of the resources at our disposal which would render their employment utterly sterile. We should have spent our £26,000,000, but industry would not be able to appreciate that any change had taken place. We should have lost our money and used up the limited resources of the State and have not altered in any appreciable degree the evils with which we are seeking to grapple. If I had only been considering what I might call benevolent giving, the giving of easements or indulgences, a relief to the general mass of the population, to take one-fifth or one-sixth off the rates would not attract me at all. Long before I did such a thing as that, I would take the tax off tea and sugar which would cost just about the same and which, I have not the slightest doubt, would reach a much wider and lower level of society than the petty general saving over the whole area of the rates. Therefore, I submit to the House that it would have been a great error for us not to concentrate our relief upon the productive industries.

The right hon. Gentleman has gone further and said that we should pick and choose among those industries—Labour Members have confirmed this view—and leave out the prosperous and give all the relief to the unprosperous. It is utterly impossible to do any such thing. No doubt the right hon. Gentleman finds it very convenient to go about the country and hold up the right hon. Gentleman the Member for Carmarthen (Sir A. Mond) and Mr. Courtauld to public prejudice, and, no doubt, get loud cheers from those ignorant of economics and envious of wealth. But you could not pick and choose only between industries. You would have to pick and choose between different concerns in the same industry. The changing fortunes of these businesses from year to year would render it utterly impossible to frame any scheme of reimbursement to the local authorities on this basis.

The right hon. Gentleman not only suggested that you should pick and choose between industries according as they were prosperous or unprosperous, but he suggested other discriminations. Apparently, you are to pick and choose between them accordingly as they are industries the Liberal party like or industries which the Liberal party do not like. Beer, Tory beer, that is to be denied, but cocoa: "Come along my dear ! All is well. "I have been asking myself where the right hon. Gentleman has got this idea of picking and choosing. I think I have it. He got it from the 1918 election. It is the coupon system. It is an attempt to revive it for the benefit of British industries. I should like to ask the right hon. Gentleman this question: He contends that this proposal of the Government will put £400,000 year into the pockets of the brewers, because of the relief in rates. Who does the right hon. Gentleman suppose pays this £400,000 a year in rates on the brewing industry at the present time? Does he really suppose that it is the brewers who all these years have been making this sacrifice out of their own pockets in respect of what is admittedly a legitimate element in the cost of production? No, he is paying, I think, too great a tribute to their hearts and too little to their heads. We have another suggestion as to where the burden of the rates on beer has been thrown hitherto. Our suggestion is that it has been paid by the people who drink the beer, and our further suggestion is that a relief in the cost of production in a prosperous trade like this will infallibly make its way to the consumer by economic laws and the working of open competition.

I am not basing myself on individual promises, but on the work of inexorable laws. Of course, in businesses which are actually paying the rates out of their capital, or in businesses which are paying a portion of the rates out of their capital, or whose rate of profit is below the normal profit of competing firms, in such concerns the first use of the relief will be to stop the denudation of the capital funds and to enable industries to keep their doors open and their people employed. When you come to more prosperous trades which are in contact with competition, external and internal, world-wide and domestic, the only conclusion which any sound economist can draw, and certainly the only conclusion which any Free Trader can draw, is that the diminution in the cost of production will make its way back in quantity, in quality, or in price, through a thousand channels, traceable or untraceable, to the broad mass of the consumers and wage earners throughout the country. If you do not pick and choose, in the distribution of your relief, between one industry and another, then you must face the consequences of applying your general principle. Let us see what are the consequences of applying our general principle. Here we have a direct conflict of opinion. The Liberal party have placed an Amendment upon the Paper, in which an extraordinary statement occurs. It states that the scheme

"will give a greater measure of relief to flourishing industries than to those which are depressed."
Let us examine this statement. Of course, the burden of rates is the result of two factors—assessment and poundage. These are mutually and reciprocally reacting factors but poundage is the dominant factor in the difference of burden between areas. Where the poundage is high you find the industries depressed and where the industries are depressed you find almost invariably that the poundage is high. A general revaluation of rateable property is proceeding at the present time and will be completed next year. This new valuation will, of course, be the basis upon which our plans will proceed. We are not using any earlier year or any incomplete valuation.

Having thus cleared the ground, let me now examine how the distribution will actually take place between the so-called flourishing and the so-called depressed industries. There is no actual definition of a flourishing or of a depressed industry. Any decision on that point must necessarily be arbitrary. Therefore, I select four main tests by which to tell what is a depressed industry or an industry which is not flourishing. Here they are. The first is that unemployment is abnormal; the second, that the ratio of rates to profits is excessive , the third that the profits are subnormal and the fourth that the profits have been decreasing in recent years. These are, I think, four very fair guides of a depressed or a not-flourishing industry, but there are three other factors which ought to be taken into consideration. The first is whether the industry provides wages for very large masses of manual labour, the second, is whether it is unsheltered, and the third is whether it is markedly concerned in the export trade. If all these seven qualifications are present, it will be agreed that the industries helped are the ones which we want to help. Let us see if we can find a group of trades which, broadly speaking, would fulfil all these conditions.

Last Autumn when I was studying this question and when I was anxious to find some criterion, some general principle which would enable me to carry relief to the basic industries, without invidious discrimination, the first set of figures which I examined was a statement of the ratio of rates to profits. Here I was able to rely upon the Inland Revenue. Every year for the purpose of Income Tax assessments a sample is taken by means of confidential returns of the whole trade of the country. Many thousands of concerns are individually examined and the results of this examination enables a forecast of the Income Tax yield to be made with what most people consider to be uncanny precision. For 1923 a specially detailed study was made into the profits, turnover, rates and reserves of industry, and their relationships. It was made by the direction of my right hon. Friend the Member for Colne Valley for the purposes of the Colwyn Committee. Therefore we have two sources of information—first, we have the annual sample of profits, covering the whole range of British industry, on which the Income Tax estimate is based and, secondly, we have the relation of rates to profits which was revealed, by this very detailed and special investigation relating to the year 1923.

The Inland Revenue classified the 30,000 samples of productive industry into 15 main trade groups, which cover the whole of productive industry, except transport, public utilities, and agriculture. These 15 groups comprise nearly 8,000,000 workers, and they account for more than 800,000 of the unemployed. The figures which I studied last autumn were calculated for 1925, which was the last normal year, 1926 having no relation to normal times. I noticed immediately that six of these groups stood out from the other:, in that the ratio of rates to profits was excessive; far beyond what it was in the case of the rest of the groups. I have now, of course, comparable figures for 1927, and the conclusions which I am going to put before the House are based upon the Inland Revenue figures which have been used to forecast the Income Tax revenue for the current year, similar to those which were used last year with an accuracy so great as to he within about 1 per cent. of the actual receipt.

The percentage of rates to profits throughout the whole of the 15 groups is 7.8; but the six trade groups which stand out have an average of 20 per cent, while the other nine trade groups, which we may call the less depressed or the more flourishing, have an average percentage of rates to profits of only 4.6 per cent. Here is a great line of distinction. Let us see which are the trades which fall on the higher side and which on the lower side of the dividing line. Mines; Wool; Cotton; Iron, Steel, Shipbuilding and Engineering: Bleaching and Dyeing; and Metals, excluding Motor Car manufacture, which for the purposes of the Inland Revenue calculations has been included in Metals, but which perhaps it would not be proper to include in the depressed group. In these six trade groups the ratio of rates to profits is four or five times as high as it is in the other nine. In the case of Mines the ratio of rates to profits in 1927 was 27 per cent; in Wool, 15 per cent; in Cotton, 23 per cent; in Iron and Steel, Shipbuilding and Engineering, 20 per cent; in Bleaching and Dyeing, 14 per cent; in Metals, 13 per cent. Look at the other nine groups—Building and Timber, 7 per cent: Leather, 7 per cent. Chemicals, 4 per cent; Food, 6 per cent.; Other textiles, 5 per cent; Paper, 4 per cent; Drink, 2 per cent; Tobacco, 2 per cent; Pottery, 5 per cent.

There is evidently a vast line of cleavage between these different groups of industries which is marked by the burden of rates upon them. Are not the groups which I first mentioned, together with agriculture, those industries which everyone would admit are the depressed industries of the country? I do not say that these are all of the depressed industries, but they are the major depressed industries of the country, and the average rate of unemployment in those industries was, according to the latest figures, 13 per cent., ranging as high as 23 per cent. in shipbuilding. That compares with the average rate of unemployment throughout the whole country of 9.6 per cent., and with the Blanesburgh figure of what might be considered normal unemployment of 6 per cent. These six depressed trade groups are all unsheltered. They all show a lower volume of profit than they had four years ago. They show considerably less profits than they had even so recently as 1925. Lastly, together, these six depressed trade groups constitute the main staple of our export trade, which is the most directly in contact with foreign competition all over the world.

If you look at the other nine groups you see that they include some trades with abnormal unemployment, like the large building trades, and other trades which would repudiate with indignation the suggestion that they were flourishing, like the glass and pottery trades, but, in the main, you may say of these groups as a whole that they are sheltered and holding their own. The ratio of rates to profits in these nine groups is 4.6 per cent. and the unemployment is far below the average of the previous class. Therefore, it seems to me that a perfectly clear line can be drawn between these depressed groups and these not depressed or flourishing groups. The average burden of rates to profits in the first group is 20 per cent. and in the second group 4.6 per cent. That is a terrific difference.

5.0.p.m.

Now let us see how the rating relief is divided between these two classes. Remember, that I am challenging the Liberal suggestion that a greater measure of relief goes to the flourishing industries than to those which are depressed. There are many in the second group which are not flourishing, but in the first group practically you may say that they are all depressed. Let us see how the money is divided between these two classes. The first group of the depressed industries made in 1927 much less than half the profits of the second group. You might almost say that they made little more than one-third of the profits of the second group. They made actually £67,000,000 of profits compared with £162,000,000 of profits made by the second group, although they employed just as many men. Just as many millions of labour employed, and only about one-third of the profits made, and the first group carry on their shoulders double the unemployment of the second group! See how the relief is divided between these two. Including the railway and canal relief, which will be passed on to the basic industries, £14,250,000 of our £26,000,000 goes to these depressed, basic, unsheltered, exporting and large manpower employing group of industries, and £5,500,000 goes to all the others, including the building trade and many industries which may be characterised as depressed. This group of industries which may be classed as depressed gets nearly three times as much as those which are classed as flourishing industries and this does not include the depressed industry of agriculture.

There remains the question as to whether this state of affairs will be sensibly altered by the new valuation which is now proceeding. When firms are doing badly they can claim at any time their rights at law to a reduction; and we have taken into consideration in our estimates the revision downwards which is taking place in the depressed trades. We have reduced our estimate of the cost to the Government of the relief from about £28,000,000 to £26,000,000 as a result of the changes which are taking place in the relative position of the depressed trades.

When you come to the less depressed or more prosperous trades they are waiting for the ordinary process of revaluation, because it is probable that, if they are affected at all, in the main the movement will be upwards and not downwards. I am advised that £1,000,000 would be a generous estimate of the increased net burden which would fall upon the whole of the not-depressed, the flourishing group, as the result of the revaluation, and this assumes that over the whole of this group, including the building trade, prosperous and non-prosperous alike, the increase in assessments will, after any reduction in poundage has been taken into consideration, increase their rate burden by as much as 20 per cent. If that is so, you will have to add £1.000,000 to the £5,500,000 which I mentioned as going to the not depressed group. But what is the effect of such an incident on the figures I have quoted? It does not in the slightest degree affect the validity of the argument I have used, and that argument shows that the Liberal statement that more relief is going to the flourishing than to the depressed industries is not true; that the exact contrary is the truth; and not only the exact contrary, but the exact contrary multiplied four or five times over.

I see the right hon. and learned Member for Spen Valley (Sir J. Simon) in his place, and I believe he is going to follow me or speak in the course of this Debate. I invite him to deal with this matter. He has committed himself to the statement that the bulk of the relief goes to the flourishing trades. In face of the figures I have given, which I am certain cannot be challenged, will he withdraw that statement and expunge from the Order Paper of the House of Commons one of the most grotesque falsehoods which any great party has ever placed upon it? I am astonished that such a statement should have received the responsible approval of the Liberal party. They always tell us that they have the intelligence of both the other parties put together. We know that they have great advantages in examining these matters, great resources with which to embark on research, and they have just. given us the Yellow Book with all their clever thinkers writing and studying these matters. It is most disconcerting to find such a grotesque error, such a, ghastly departure from actual facts, appearing in their responsible official Amendment. I have paid as much attention to the Liberal Yellow Book as anybody else, and, if this is the method by which it has been constructed, if this is the opinion which has animated those who have compiled it, my confidence in its pages is greatly shaken.

I am going to pursue this argument one step further. I have already said that the test by industries as to whether they are depressed or flourishing is not adequate, you must take account of the firms within those industries which may be depressed or flourishing. The resources of the Inland Revenue enable me to carry this probing one stage deeper. I am going to deal with trades in the depressed group. First, Iron, Steel and Engineering. We estimate that one-quarter of our rate relief will go to the firms which are making four-fifths of the profits in that trade and that three-quarters of the rate relief will go to the firms which are only making one-fifth of the profits, or actual losses. In Shipbuilding, 7 per cent. of our rate relief goes to those firms that are making three-quarters of the profits and 93 per cent. of the relief goes to those who are making only one-quarter of the profits, or making actual losses. In Metals, under one-half of the relief goes to those making nine-tenths of the profits and the other half of the relief goes to those who are only making one-tenth of the profits, or actual losses. In Cotton, one-fifth of the rate relief goes to those firms making seven-tenths of the profits, and four-fifths of the relief goes to those firms making three-tenths of the profits. In Wool, one-half of the rate relief goes to those firms making four-fifths of the profits, and the other half to those firms making one-fifth of the profits, or actual losses. In Bleaching and Dyeing, 56 per cent. of the relief goes to those firms making 85 per cent. of the profits, and 44 per cent. of the relief goes to those making 15 per cent.. of the profits, or actual losses.

When you pursue the distribution of this relief below industries and into individual firms, it is certain that the overwhelming mass of the relief is going to those who need it most. Not only are the less flourishing or depressed industries helped four or five times as much as the so-called flourishing trades, but the depressed firms in these industries are also helped in a multiplied degree compared to prosperous firms. Such are the facts deduced from a study of the Inland Revenue figures upon which the almost incredibly accurate forecasts are made from year to year by Chancellors of the Exchequer.

I have only one more observation to make; I leave the facts and come to the theory underlying the Liberal Amendment. Their facts are wrong. They have been completely demolished; not a single vestige or scrap of solid basis is left for them. They are the reverse of the truth. Even if their facts were accurate, it would be impossible in practice to apply them on account of the difficulties of machinery, and, if it were possible to apply them, the theory on which they rest is wholly fallacious. I ask, is it right to try and discriminate between prosperous and non-prosperous industries? It is quite true that we are giving £5,000,000 or £6,000,000 to industries which in the main do not fall in the category of depressed industries. Are we right in doing it? If this country is going to move with the times, if it is going to pay for its imports, provide employment for its people and provide revenue for the Exchequer it is absurd to develop a hostile attitude towards flourishing industries. The character of our industry is constantly changing. It is moving forward into the higher ranges of manufacture, and while we are seeking to relieve the main body which is lagging behind, and, particularly, the rearguard, it would be madness to hinder the advance guard of our in-industries, which is continually gaining valuable positions for the future.

I am sure the position which has been adopted by the Liberal party under the guidance of the right hon. Gentleman the Member for Carnarvon Boroughs is one which is entirely out of harmony with all their main doctrinal principles. The right hon. Gentleman has always been a man of expedients, never a man of theme and system. The great services which he rendered to the country were rendered by instinct and nimbleness in dealing with point after point as they arose, but they did not take the form of laving out a smooth and ordered scheme either in politics or in strategy. In this case, he has induced the Liberal party to take up a position which is absolutely subversive of the main economic creed of orthodox free trade. This attack upon prosperous industries because they are prosperous, this suggestion that they ought to continue to bear this invidious burden because they are doing well, is not merely unorthodox, but squalid in its character. This kind of argument which he uses, the attitude he adopts towards Mr. Courtauld, is exactly the same as that which the present Stalin Government in Russia are adopting towards the Kulaks or industrious peasants. This is their general attitude towards the mass of the peasants, and, incidentally, they have killed the son] of Russia and are now in a position where they can be made the target for political propaganda and abuse. I commend this ghastly error to the attention of Liberal doctrinaires. So far as His Majesty's Government are concerned, we repulse these crude and barbaric ideas. If any country harbours them it will cut itself off from all share in that general expansion of material comfort and enjoyment which scientific capitalistic civilisation, properly corrected by democratic institutions, has now to offer all over the world.

My friends and I feel vastly complimented that the Chancellor of the Exchequer, on the Second Beading of the Finance Bill, should have thought it necessary to depart from the usual custom of hearing what people had to say and then replying, that he should have dismissed the powerful speech of the right hon. Member for Colne Valley (Mr. Snowden) so cursorily, and that he should have devoted the whole of the rest of his time to the "ragged regiment "on these Liberal Benches. The right lion. Gentleman has many most remarkable Parliamentary qualities, and one of them, which those of us who sit opposite to him know very well, is that we understand when he is happy and when he is uncomfortable. In spite of his ingenuous ways, he has displayed to the House that to-day he is thoroughly uncomfortable. That being so, he has found it necessary to adopt what I believe is the quite unprecedented step of intervening before anything had been said in support of an Amendment, first of all to parody what it contained; secondly, to assert some things as in it which are not in it at all; thirdly, to give what he conceived to be an official answer to these criticisms; and, fourthly, to pronounce judgment that ,the whole thing was monstrous, crude, and barbaric.

We take it all in the most complete good temper as an exhibition of the right hon. Gentleman's most fascinating qualities. But at the same time it does not give very much satisfaction to a large number of people outside the House, and perhaps to some people who are entitled to be heard inside the House, who are proposing to respond to the right hon. Gentleman's appeal of six weeks ago, when he said that the one thing for which he was longing was really considerate co-operation and careful criticism. Humbly and briefly, I propose to offer a little now. I do not recognise the validity of verdicts and judgments passed and pronounced before anything has been heard in favour of the convict. In the first place, I put this question to the right hon. Gentleman: Do the Government really think that it is a small matter that their method of relief, whatever its merits may be, is a method which is not going to provide any relief at all for 18 months? I recall the language which the right hon. Gentleman used in his Budget speech. He painted a gloomy picture of collieries shut down, of factories on the verge of closing, of firms working at a loss, of depressed industries holding on by the skin of their teeth; and he has to-day actually had the Parliamentary audacity to say, "After all, 18 months is not very long to wait "That was the actual expression in his speech just now.

It reminds me of a delightful incident in the amusing story written by the late William Mallock, called "The New Paul and Virginia "Someone fell into water, and a philosopher, looking down on the struggling figure, insisted on conducting a long conversation on the nature of the soul and the probability of the individual's future state before he would condescend to offer a helping hand. Before he had finished his discourse the unfortunate victim was drowned. So, here is the right hon. Gentleman. He is perfectly satisfied with his scheme. He says in effect, "Here people are struggling from day to day to keep their heads above water. Their businesses are on the verge of closing down. Collieries have shut down and starvation is stalking through the depressed areas now. You ought to praise the Government because they can do nothing for 18 months."

The Government's system is this: They are taxing petrol to-day and every day at 4d a gallon. By their scheme for tax- ing petrol they estimate to produce in the next 12 months a sum of £14,000,000. There it will be. And then there is to be a General Election. Then, after the General Election, if all goes well with the Conservative party, the £14,000,000 will begin to be distributed. With great respect, I say it is not true, or I will take the right hon. Gentleman's own words and say that it is contrary to the fact for him to assert that in the present year he has no money for this purpose. The right hon. Gentleman imposes his 4d. a gallon on petrol, not in order to meet the burdens of this year, but in order that at the end of the year he may have that £14,000,000 to be carried to a rating relief suspension fund. There is no reason on earth why that £14,000,000, as it is accruing during this year, should not be made available now for the purpose that the right hon. Gentleman has in hand, if it were not that he has committed himself to a machinery and a method which require a great deal of time Co work out.

If hon. Members will look at the Finance Bill, they will find that the Chancellor of the Exchequer has been obliged to have recourse, in this respect, to an amazing, and as far as I know, a unique method. It is, I believe, a fundamental principle of our national finance that, if you have a surplus at the end of the year, that surplus should go towards the discharge of the National Debt. A surplus is a new experience for the Chancellor of the Exchequer. Hitherto, his financial arrangements have produced deficits, and when they have produced deficits, whatever they were they were added to the National Debt, quietly and unostentatiously. But this time the right hon. Gentleman is entitled to be congratulated because he has a surplus of £4,250,000, got by scraping butter out of the dog's mouth, after the Treasury had put it there—a most harrowing operation. Not only is the right hon. Gentleman proposing that that £4,250,000 shall not go to the discharge of debt, but he is, in Clause 19 of the Bill, asking us to enact that the surplus which is to be got out of the Petrol Duty next year shall also be kept in reserve instead of going to repayment of debt.

It means that the right hon. Gentleman is collecting this money now, every day; from the farmer with his Fordson tractor, from the commercial car, from the pleasure car, and from everybody else who uses petrol—he is collecting it all the time and he is resolved not to spend a penny of it until after the next General Election. That is the scheme which the right hon. Gentleman is so anxious to defend, that he will not let anyone get up to criticise it before he has his whack.

I really understood that it would be more convenient if I followed the right hon. Member for Colne Valley (Mr. Snowden), and the right hon. and learned Member who is now speaking then made his rejoinder.

I am not complaining, but I had no idea, when the right hon. Gentleman rose to reply to the right hon. Member for Colne Valley, that he proposed to take three-quarters of the time in making an attack on the Liberal party in regard to things which he had not even heard. That is the surprising thing. Let us see why it is. It is entirely because the Chancellor of the Exchequer has persuaded his colleagues, whether willingly or unwillingly I do not know, to adopt as a method of distribution the method that he is now struggling to defend. That is the sole reason. Let me at least make quite clear the position of myself and of my friends. We are not complaining because the right hon. Gentleman has adopted a principle recommended in the Liberal Yellow Book and in other places—the principle that the resources of the State funds, drawn from the general body of taxpayers, should to some extent be used for the purpose of relieving the heavy burden which is cast on localities. That appears to us to be a just principle, and it might have been applied before. What we do criticise is not the object that the right hon. Gentleman has in view but the method that he has chosen to employ. Let us see what it is.

The Chancellor of the Exchequer has continually spoken during the last half hour as though the criticism from these benches was that he has not been engaged in picking and choosing between individuals and firms and that he has not endeavoured to classify one person as deserving because he is depressed and another person as undeserving because he is prosperous. That is not the critic- ism at all, but I am not in the least surprised that the right lion. Gentleman did not seem to understand. That is not our fault. Our criticism is this: If you adopt a machinery by means of which you ultimately propose to find out how much to give to A, B, C and D, you are delaying the very urgent and necessary relief which ought not to go to individuals as such, but ought to go to specially depressed localities, and ought to assume the form of taking over some portion of the local burden of rates. There is no doubt as to what is proposed by the right hon. Gentleman. There is no use in misrepresenting the proposal which is suggested as an alternative to the proposals of the Chancellor of the Exchequer as one which would use public money in part for taking over as a national charge some portion of local charges and would use it in part for the purpose of giving relief to necessitous areas.

At this point I would put a question to the Chancellor of the Exchequer. I understand a necessitous area to be an area which, owing to special circumstances, such as the small amount produced by a penny rate, or the large number of children in the public elementary schools, or the small rateable value compared with the population, is on these grounds specially heavily hit in the matter of local rates. That is a well-understood conception. It is a conception which has been considered often by Parliament and by the Board of Education in connection with necessitous areas and the Education Grant. My question is this: For the first five years after the Chancellor's scheme comes into operation, is there going to be any more relief given to a necessitous area than the mere repayment of that portion of the rates which is excused to the productive industry within it? I should like to have an answer. I do not believe that the Government's scheme for the next five years is going to give any assistance at all to necessitous areas as such. For the first five years, as far as I can understand the scheme, it is to be confined strictly to doing this—to replacing in the hands of the local authority the sum of money which the local authority does not collect from certain ratepayers because those particular ratepayers are selected by the Government for this relief. It is obvious that if that is so, the necessitous area does not as a matter of fact get any special relief at all from the Government's scheme.

I did not attempt to deal with anything but the first part of the scheme, which is the relief of productive industry. The second part of the scheme is the reimbursement of the local authority. In the process of reimbursement of the local authority, a process of readjustment which will help necessitous areas will come into play. That subject will occupy the Autumn. For the present, we are dealing only with the scheme for relieving productive industry. The only relief, under this part of the scheme, which the local authority will get, is if industry should revive within its area in consequence of the reduction of the rate burden. It is the second part of the scheme which will deal with necessitous areas.

I am not asking the right hon. Gentleman to go further at the moment, but I shall be glad of an answer to my question. Do I understand that under the Government's scheme for the first five years from the beginning of the operation of the scheme, the necessitous area which is feeling this specially heavy burden of the rates is not to get any relief other than the relief which arises in that way, so that there is no special relief for necessitous areas? That view certainly was involved in the speech of the Minister of Health the other day. I come back to the actual point which the right hon. Gentleman was explaining. He has given us figures derived from most responsible sources to show that the relief which he is going to give to productive industry will go in part—and I ought, in candour to say, in the larger part—to the groups described by him as especially depressed, and that the smaller, but still a very substantial part, will go to more prosperous groups of trades. Be it so. It may be that the proportion between the one and the other will depend on where you draw the line, on the accuracy of your calculations, and, still more, I should have thought, on the working-out of the reassessment under the Act of 1925.

I do not know if other Members of the House have been struck by the fact, but it has struck me as most remarkable that neither in the speech of the Chancellor of the Exchequer opening the Budget, nor in the speech of the right hon. Gentleman the President of the Board of Trade who dealt with this point, nor in any other speech commending and explaining the Budget, has there been any reference to the Rating and Valuation Act, 1925. Let me point out what is going on now. Under that Act the whole of the land of this country is being revalued for rating purposes. An enormous sum of money is being spent on the process. In every single rating area experts are at work putting a proper value, under the existing rating law, upon every hereditament, rural and urban, in the whole country. It is a stupendous operation. They are valuing, for example, the whole of the agricultural land of the country, and there cannot be the least doubt that that Act was passed in order that rates might be paid on the values thus ascertained. It seems an extremely odd thing that the Government should come along three years later and say, "Oh, there will not be any rates on agricultural land." What is the purpose for which this enormous sum has been spent in valuing the agricultural land of the country? There is only one possible answer, but it is an answer which shows the absurd elaboration of the scheme which the Government have adopted.

At the time when the Rating and Valuation Act was passed, in 1925, the object was to get a proper valuation of each piece of agricultural land as between the occupier and the rating authority, in order that rates might be fixed. All that has now completely gone. No occupier of agricultural land, we are told, is to pay rates any more, six months after the next General Election—or whatever the period may be. The only purpose, therefore, for which this elaborate valuation is now needed is a purpose which was not the purpose at the time when the Act was passed. It is like burning down the house to roast the pig. It is for the purpose of calculating exactly how much the Treasury ought to pay to the local authorities, because the local authorities do not get agricultural rates. If anybody in 1925 had said that that was the purpose for which we were setting up this enormous machine, that that was the purpose for which every local authority is now paying fees to expert valuers, nobody would have believed it possible that such a scheme would be carried. Much more than that, it is part of the Govern- ment scheme to-day that there is to be a watchdog of the Treasury, who is going to supervise this valuation. But in 1925 a Committee of this House entirely refused to allow the Surveyor of Taxes to have anything to do with it, and the consequence is that these valuations are being made in the absence of the Treasury —though we are told the Government scheme is one which will require Treasury supervision. That is the position as regards agricultural land.

Look at the position as regards urban hereditaments. I do not pretend to speak with great authority on this subject, but I have had something to do with it for a good many years in my professional life. The truth of the matter is that outside London before 1925 there were vast numbers of factories and shops and other premises which stood in the valuation rolls at the old figure. That figure had never been altered, although if proper steps had been taken it might have required substantial alteration. Then the slump came over trade, and the hypothetical tenant—the imaginary tenant who is seeking to become the occupier of these premises—if carrying on a trade which is suffering from prolonged depression would never pay the rent which has been used as the measure of the assessment in the books. The consequence is that all over the country assessments have been standing which call for alteration. I wonder how many of those assessments have been relied on in the figures which the Chancellor of the Exchequer gave us just now, when he endeavoured to show how his relief would be distributed between the depressed and the prosperous trades. He says he made an adjustment. It must be at most only a guess. What is happening now is that this list of valuations is being rapidly revised. In many cases the valuations are rapidly coming down. On the Clyde, in South Wales, in Middlesbrough, there are many large reductions of rateable value. Very often values are reduced down to one-third. It is a perfectly sound point, therefore, to say that if you have two hereditaments, one of which is occupied and is making a large profit, and the other of which is occupied and is making a lass, then the assessment of the one that is making the loss, is or ought to be very greatly reduced as compared with the one which is making the profit.

The right hon. Gentleman says, "If you imagine an area in which the premises are making a loss, though the assessment is low the poundage will be high "But it will not be so in all cases. There are many cases where that is not true, and in every case where that is not true, it is correct to say that you will be giving a much larger measure of relief to the prosperous than to the unprosperous enterprise. The right hon. Gentleman in his concluding passage attempted to defend this—I do not know whether jocularly or seriously—by saying that, after all, people ought not to be attacked because they are prosperous. Of course not, but neither should people because they are prosperous be given a subsidy. This is exactly the same mistake as that which was made with the coal subsidy in 1925. I do not accuse the Government of doing it with malice, but they set to work on a formula which necessarily has the result of giving to the person who is prosperous—1 do not care whether to many or to few—as an individual, a larger measure of relief than you would give to a similar individual if he were suffering. I believe that whole system to be fundamentally vicious and wrong, and I find it difficult to believe that the Chancellor of the Exchequer has had this matter thoroughly "out" with all his colleagues, and has considered the alternatives. If you want to use, as I think you ought to use, public money for the purpose of relieving the burden of local rates, there is no need whatever to use it by the method of conferring favours upon individuals. It can be done perfectly well by selecting such portions of the local rates as are most suitable for the purpose, such portions as you can shoulder, and shouldering them now.

At the end of this year, the right hon. Gentleman will have this £14,000,000. By his Finance Bill he is preventing that sum going to the repayment of debt. He could perfectly well, in this present fiscal year, take over £14,000,000 worth of local burdens and meet it by that £14,000,000 which he has gained from petrol. The reason why he will not do so is than he has got himself enthusiastically in favour of a method, as he thinks, of coming to the relief of what are really selected individuals, under the general head that they belong to depressed industries. Not every member of a depressed industry is depressed, and not every area in which there is a depressed industry is an area with a high rate. The whole idea that this is to be done by selecting individuals for your favour appears to be utterly contrary to sound principles of finance and just principles of government. Therefore, I will trouble the Chancellor of the Exchequer when next he is good enough to speak about the Liberal party's observations on. this subject to take note that the suggestion, which is made not by Liberals alone, is first, that this relief should be given sooner, and that people ought not to have to wait for 18 months; and second, that in order to give the relief sooner, you should scrap this extremely elaborate and quite unnecessary scheme. Instead, you should give relief more promptly, not by giving relief to individuals, but by selecting those local burdens which the State itself can shoulder, by defining necessitous areas and by giving them, as necessitous areas, the relief which every ratepayer in them, whether shopkeeper or co-operative society, or manufacturer, is justly entitled to expect.

I am sure the whole House welcomes the reappearance in his place of the Chancellor of the Exchequer, and I think it is quite evident that, if the Opposition expected to find the right hon. Gentleman showing any signs of weakness, they have been very much disappointed. At the same time I feel it my duty, speaking purely from a financial standpoint, to mention one or two points in which I think the right hon. Gentleman has departed from what I believe to be good economic lines. In not using the old Sinking Fund for the purposes of debt reduction I think he is committing an error of political tactics as well as an error in finance. I was reading the other day a volume by Sir Bernard Mallet, the eminent economist, dealing with the pre-War Budgets, and therein one saw how the estimates of the Treasury worked out very closely year by year in those times. Of course, it was easier in those years to make accurate estimates, because, apart from the Boer War and certain labour troubles, there was nothing so eventful as to disturb the Estimates of the Treasury. No blame attaches to the Treasury or to the Chancellor of to-day if their Estimates are less accurate than the Estimates of pre-War times; but since those Estimates are to form the basis of a new Budget it is surely quite clear that if they work out inaccurately there may be a large balance on the one side or the other, and the Chancellor of the Exchequer ought not to take the balance when he wins, and, when he loses, leave it to be paid by posterity.

In the statement of the Financial Secretary for this year we find the most extraordinary divergencies between the Estimates and the results. It is not a matter of millions but of tens of millions. Receipts are over-estimated by £12,500,000 —£7,000,000 in the case of Customs, and £5,500,000 in the case of Super-tax. On the other side, the receipts are underestimated by £20,500,000, to which Death Duties contribute £10,000,000, and altogether the figures show a total variation of something like £33,000,000, with a balance in favour of the Chancellor of £8,000,000. In addition, on page 2 of the Financial Secretary's statement under expenditure, we find that the interest on debt exceeds the Estimate by £8,000,000, while Civil Votes are down by £8,000,000, a total variation of £16,000,000. It is true that the figures in this case work out level, but that is only due to the fact that the Civil Vote saving has been used to meet the increase of interest on debt. If we add these variations together we find that in the year there has been a total variation of no less than £50,000,000 of results from estimates.

I agree that it is much more difficult to estimate to-day than it was before. We have the difficulties of estimating the Corporation Profits Tax, we have the miscellaneous earnings and payments, of which we cannot judge a year beforehand, and owing to bad times Super-tax is in arrear often by £20,000,000. It makes it impossible to estimate closely, and surely it is all the more necessary that the Sinking Fund should be used for debt when the old Sinking Fund provides a surplus. If the £8,000,000 or 10,000,000 which the Chancellor of the Exchequer was fortunate enough to have this year had been on the other side, our new Sinking Fund of £65,000,000 would not have provided for the Sinking Fund allocated to the different loans plus the Savings Certificates;we, therefore, would have had to provide for both of those, and to make fresh borrowings in order to pay them. I think the Chancellor has committed an error in having used his comparatively small surplus, not for the purpose for which it was intended, but for future purposes.

In drawing your attention to the £10,000,000 by which this year the Death Duties exceeded expectations, we find an argument often used in this House, namely, that Death Duties are capital and should be used as a separate fund to pay off debt. I do not hold with that view, and the Colwyn Report distinctly disagreed with it, but that has been because in the past the Treasury were able to estimate approximately accurately, as they thought, the results of the Death Duties. The moment., however, that the Death Duties exceed expectations by £10,000,000 in one year, it makes us pause, but it does not in the least follow that with the excess of £10,000,000 of Death Duties above the Estimates, the Chancellor should do anything but use his fortuitous surplus for paying off debt.

There is another thing that I would like to ask, and that is, Who are these people whose estates are now providing large sums for Death Duties? Is it not a fact that the millionaires or the rich people who are now passing away are probably the great leaders of industry who in the last 30 years of the last century were making large fortunes and who made them in the great staple, heavy industries of the country? The last century was the time when Great Britain was predominant in the heavy industries of iron, steel, coal, and shipbuilding, and those four industries are exactly the industries which are most depressed to-day. I doubt very much if the Chancellor of the Exchequer is getting any large sum of Income Tax from those particular industries, and I doubt very much if he is getting any, or at any rate more than very little, Super-tax from people in those industries to-day. What he is getting, if he is getting anything from those industries in Super-tax to-day, is from the big men who have retired from those industries and invested their money elsewhere.

One of the cries frequently heard in this House and elsewhere is that the cure for all evils is amalgamation. I quite agree that in certain industries—in the distributive industries, in the co-operative societies, in multiple shops—drapery or grocery—large organisations and amalgamation are highly helpful in reducing expenses and in systematising industry, but in anything so technical as the different branches of the heavy trades there is more danger in amalgamation than there is in their remaining separate institutions. It was during and shortly after the War that the heavy industries began to think it necessary for their salvation to secure for themselves a supply of the raw material of their trade and the iron, coal, and steel industries began to buy up each other, and in the period of inflation perhaps bought unwisely, at large prices, with the results that we see to-day; but what really happens in these large amalgamations is that it almost passes the wit of man to show sufficient power of brain and sufficient hours of the day in which he can attend to the diversified interests. The self-made iron man, the self-made man in the steel trade, knew their job, but the moment they began to amalgamate with other trades, the task was too big for them.

Some 20 years ago an eminent physician made the unfortunate remark of "Too old at 40," indicating that in his profession the man was pretty well done with, or at any rate not at his best, at 40. He admitted that he had made an exaggeration, but it is no exaggeration to-day to say that scarcely anyone, except by some special family influence, ever becomes the head of a great industrial concern at 40 and rarely at 50. The only cure that I can see for the heavy industries is some complete reorganisation from within. It is no good marrying two incompetent concerns or two concerns which have not a competent man to manage them. The one concern may not be too big for a man, but the two jobs may be too big. I was looking at a list of 10 men who controlled 10 of the biggest industrial concerns in the heavy trades. The concerns are a household word in England, and out of those 10 concerns seven are not prosperous, to say the least, providing, I believe, little or no Income Tax for the Chancellor of the Exchequer. When I looked through the names of the distinguished men—and they were distinguished men—who were in control of those concerns, I found that their ages varied downward from 90. In the 10 concerns the united ages of the gentlemen who were conducting them came to 760 years. In every case those men had deserved well of their country, but an average age of 76 for the head of a great concern is, I think we will all agree, a bit on the high side.

Where I think we have failed in this country has been that the great industrialists who have had connection with these concerns and who may have built them up themselves have not realised the merits of leisure, they have not realised the duty of seeking younger colleagues, and if a man has conducted a great concern for 30 or 40 years and is still efficient at 80, then I can assure the House that the efficiency of that concern with a man of 80 really controlling it, still the boss of it, will cease. He will have a very bad effect on the future of that company. It is the man who beyond a certain age seeks leisure, seeks to develop younger men, who is willing to let the younger men make mistakes, who is the really big man, who is watching and looking ahead and making for the prosperity of his concern after he has gone.

I have said that I doubt the general advisability of amalgamation, but in a particular trade, where the problem is a fairly simple one and one with which one man can cope, it has many merits. The heavy trades are suffering largely from high rates and still more largely, in the coal and steel industries, from heavy railway rates. Both of those are harmful to the industry, but decrepitude at the top in the management is more responsible for real harm to the industry than anything else. What has the Chancellor of the Exchequer to do with this matter? What can the Chancellor do to help in this situation? In his Rating Bill, which is going to be explained more fully tomorrow, we shall see a genuine attempt to help the heavy industries, not because he wishes to favour any one industry more than another, but because the old prosperity of England was based on that industry in the last century. The managers of those amalgamated concerns may have been inefficient, but I feel sure that with the assistance of the Rating Bill and a spirit of encouragement on the part of the chief managers towards the younger men, there is still a great future for those heavy industries here.

There is one other way in which the Chancellor of the Exchequer can help these industries. The incidence of the Income Tax when it was 2d., as in Sir Stafford Northcote's time, or even when it was ed., did not much matter to any trading concern, but to-day, with a 4s. Income Tax, it very much matters to a trading concern. You might well say that if a company does not make any profits, it, does not pay any Income Tax. The real point, however, at which the Income Tax hits all trading companies, but especially the heavy companies, is this, that unless sufficient provision can be made each year out of the earnings for depreciation, whether of minerals, of machinery, or of buildings, unless the company is prepared to knock down a building even if it has been up for only a year, and to scrap machinery that is apparently new, but not of the right sort, if there are very strict valuations before it is settled what is taxable in that company, then you are to a certain degree crippling the heavy industry. I would urge that greater latitude should be given to companies in declaring what they should put to reserve before stating what are profits. Thus the younger people may be encouraged, not only to study foreign methods, if they are better, but when they come back to find a large reserve fund which they may use to copy foreign methods, to scrap old machinery which the older people would not dare do, partly because they have an affection for their own plant and machinery and also partly because the Income Tax hits the companies and does not permit sufficient provision to be made.

6.0 p.m.

To turn to the Finance Act, hon. Members will recall Section 31 of the Finance Act of last year, in which it was sought to extend the very proper provision for preventing the evasion of the Super-tax. The Chancellor fully recognised that, there might be hard cases, but he promised, as his predecessor had promised, that no unfair advantage would be taken by this Section of private companies which are honestly doing their best, it is true to accumulate profits, but also to put sums to reserve for fresh developments. Since last year, several committees have endeavoured to find a working arrangement to meet both sides of this case. I understand that the Chancellor has not been able as yet to embody in the Finance Bill any Clause modifying Section 31. I hope that he will be able on the Committee stage to devise some such scheme. It was, in our opinion, not entirely reasonable that the Inland Revenue should declare what profits were reasonable, unless they were prepared to declare what profits were reasonable. There is a desire on the part of small private companies to avoid pains and penalties, which not only would be disagreeable from a money point of view, but might apparently reflect on their honour. It was suggested by one of these Committees last year that it would be better that a company should inform the Inland Revenue what profits they proposed to declare and ask whether the authorities approved of it; if they did, the company should be free from any penalties. I hope the Chancellor will see his way during the Committee stage to advise us that he has been able to meet us on that point.

One or two other points in the Bill require elucidation. The Chancellor promised that the Income Tax should be so simplified as almost to suit a child, and at a later period he told us that it should be so complicated that no one in the House would be able to understand it. I find, in reading the Bill through, that it is a great deal clearer than one had hoped, but there are one or two points which, I hope, the right hon. Gentleman will explain to us. Those who do not understand drafting have interpreted one of the Income Tax Clauses as imposing, not only the standard rate of 4s., but further rates running from 4s. 9d. up to 10s. I know that it is not the intention of the Chancellor to bring Income Tax or Surtax up to that amount, but it has been so read, and I think the substitution of the word "but "for" and" in that Clause would obviate any doubt. Another point on which we should like the Chancellor's view as to the meaning of the Bill, is whether it was his intention that the Super-tax should be, so to speak, superseded by the Surtax; if so, the point arises as to the incidence of the tax in the case of a person dying in, say, April, 1928, who would be free from all Super-tax, whereas if the person were to die in April, 1929, he would be liable for the full Surtax. If the Super-tax and the Surtax were, as is frequently stated, only an extended Income Tax, it seems that both the Super-tax and the Surtax ought to be treated in the same way for persons dying in 1928 or 1929. Previously, in partnerships, the partners were liable for the Income Tax of the partnership, but not for the Super-tax. I should be glad if the Chancellor would state whether for the future that applies to the Surtax as well as the Income Tax, making the partnership liable for both.

I ought to apologise to the Chancellor of the Exchequer. I imagined that he had changed his views with his party, but I can see now that that was quite wrong. I was led away by extracts from his former speeches, on the question of the taxation of land values, to imagine for one fond moment that, when he was in the Liberal Government of 1909 he understood the question, he had grasped the mere elements, and he had arrived at the fact that land values were the creation of the community, and not of the owner of the land. So much we all grasp, but he never saw that the landlord is as big a burden upon industry, and that he can be as ruinous to depressed industries, as the rates which the Chancellor is now talking of removing. If he had arrived at the fact that land values are the creation of the community, he has now gone further, and observed, with the rest of the Conservative party, that rates are a burden upon industry, and acid to the cost of production, reduce output and increase unemployment. He accepts all that, but he cannot see the further stage, that the less the demands of the landlord, the greater the benefits to the producing industries. What we are suggesting in this Amendment is that the right hon. Gentleman should see a little clearer, and understand finance a little bit better. We realise that in the past he has slipped lip on occasions. The premature restoration of the gold standard, and the infliction upon the heavy industries of this country of a tax, which is not called a tax, namely, the contributions to the widows' and the orphans' pensions, are little mistakes which he has made in the past. He now sees that he was wrong.

I ask him to observe this. If he is going to relieve industry of rates, and pay for that relief by burdening industry with a tax on petrol of an equivalent amount, the products of industry will not be any cheaper as a result of that change. If he puts on a tax equal in amount to the amount of rates of which he relieves industry, and if that tax is levied upon industry, the ultimate results to industry will be to leave the product of industry exactly where it was before. He says, however, "I am discriminating between industries; it is true that the consumer will pay the same, but it will be the distributing industries which will pay the additional tax, and the productive industries which will get the benefit of the reduction in rates." It makes no difference to the consumer, I think he will admit, but, in the long run, does that make very much difference to the producing industries either? He told us that it was an irrefutable law that, in the long run, the reduction of rates would result in cheaper prices to the consumer, and that the consumer would get the benefit of any reduction in rates. He appealed to our deep-seated preference—prejudice, if you like—in favour of Free Trade. We know that where there is free competition, and only where there is free competition, if you reduce the burden of the rates, the consumer will get the benefit. In that case, the reduction of the rates to the depressed industries would only benefit those industries if the product of their industry were cheaper, and more people would be able to buy their goods, but if the ultimate product were not cheaper, there would be no benefit to those industries at all.

We ask the right hon. Gentleman in this Amendment to grasp in its entirety the Free Trade position that any cheapening of production means a benefit to the consumer, and not to meet the cost of the reduction of the rates by a tax on other industries in the shape of the petrol which they use, but to meet it by a tax upon land values, which he admits, not only from his speeches of old days, but from his silence to-day, to be the creation, not of the individual landowner, but of the community as a whole. We ask him to meet this reduction of rates, which we all want to see, by putting a tax upon land values, which shall be a just tax. Further, by putting a tax upon land values, it will not merely benefit industry by relieving them of the burden of rates upon improvements, but will actually make all land cheaper, and put the landlord in a worse position for demanding excessive rents. We want to get the double event—not merely the reduction of the burden of the rates upon improvements, but also a tax upon land values, and do it in such a way that the land will fall in value, and that the tax levied by landlords upon industry will be reduced, just as the rates are reduced by this scheme. The House always takes everything that we on the Labour side say as being mere party prejudice, and not based upon economic authority. Let me give the decision of the Committee on the Scottish Land Values Bill, It is a long time ago, but economic principles remain the same, however much people may change. The Committee said:
"It is well to select a standard of rating which will not have the effect of placing the burden upon industry."
That was said 20 years ago, and the Government are accepting it now.
"Hence the proposal to exclude from the standard the value of buildings, of erections of all kinds, and fixed machinery."
This is a recommendation of a Committee of this House 20 years ago, and it has now been adopted.
"To include these in the rating tends to discourage industry and enterprise; to exclude them has the opposite effect."
So far the Conservative Government of to-day are with the Liberal Parliament of 1906. Cannot they go further, and cannot the right hon. Gentleman recover this other small element of his old Liberalism? The Committee went on to say:
"The justification for the adoption of the new standard of rating is that the land owes the creation and the maintenance of its value to the presence, enterprise and expenditure of the surrounding community."
Finally, may I quote the authority of Sir Laurence Gomme, formerly Clerk to the London County Council? He said:
"Local taxation is a legitimate burden upon site values imposed in return for benefits received."
What we ask is that the Government, in making this change, should not adopt this miserable, halting, half-way house which the Chancellor of the Exchequer dignifies by the name of a great constructive scheme—a great constructive scheme which anyone who has studied the question knows can never be put into operation—this scheme of helping some industries when the percentage of unemployment in their trades is greater than in other trades, or when the ratio of local rates to profits falls below or above a certain percentage—an utterly impracticable scheme which—

—a scheme drawn up in the privacy of the study, wholly unrelated to practical methods and of the practical facts of our present rating system, based upon a half-baked idea that you can benefit industry by relieving one class of production from rates in order to impose an exactly equivalent burden upon other branches of production. The Chancellor of the Exchequer ought to scrap this idea, which gives no satisfaction to those trades where there is keen competition, because there the benefits must pass on to the consumer, but which does give considerable satisfaction to monopolies, which will profit by the reduction in their rates and not pass the benefit on to the consumer. The scheme holds out no prospects of additional employment or of reduction in the costs of production, and ultimately it will inevitably be scrapped, in order that this country may adopt those principles of local taxation which have been adopted in every one of our self-governing Dominions.

Here we are, going on century after century, following a system of local taxation which was invented in the days of Queen Elizabeth. No one has ridiculed it more than the Chancellor of the Exchequer. Now he has got from the time of Queen Elizabeth down to the time of Charles II. Let him come and join us, in the 20th century, and see what they are doing in the rest of the Empire towards getting a system of local taxation which will not throw a burden upon industry. [Interruption.] In Charles II's time, hon. Members may recollect, the feudal landlords of this country managed to pass on to the other taxpayers all the remaining burdens upon their feudal lands. In this Budget, at the same moment that he is making such an admirable shop-window effort to advertise the advantages of relieving the rates upon industry, the Chancellor is actually removing £4,500,000 of rates levied upon agricultural land. He knows quite well that that relief will not be passed on to the consumer and cannot be passed on to the consumer, but that it goes straight into the pockets of the landlord. He knows also that it is not a sum of £4,500,000 only, but that the mere passing of this great Finance Bill, this wonderful constructive Measure of which we hear so much, will give the landlords, in the increased value of their land, £90,000,000 cash down. [Laughter.] Hon. Members laugh. I have the advantage of being a landowner, as I dare say a great many other Members have. You know what rates you pay on your agricultural land now—I do—and I know that in future when I come to sell my land I shall sell it free from agricultural rates, and I shall expect, and get, from the purchaser the capitalised value of the rate which is removed.

May I ask the right hon. and gallant Gentleman when he is going to sell it?

As soon as you will buy it. I am looking for a purchaser, and if the hon. and learned Member for Argyllshire (Mr. Macquisten) wants to put an honest penny into British agriculture, now is his chance.

I want more from the hon. and learned Member now than I should have wanted two months ago. I am going to get my "snap" out of this Budget. [HON. MEMBERS: "Then vote for it."] Oh, that is not the principle on which we on these benches vote. On these benches we are trying to look after the interests of the community, against our own personal interests. The right hon. Gentleman, animated by those magnificent principles which were imported into the 1909 Budget, which he did not understand then, because the taxes were not taxes upon land values, and which he does not understand now, because he could not reply to the speech of the ex-Chancellor of the Exchequer, and turned upon the unfortunate Liberals, but which he may come to understand in the dim future—[Interruption.] After the speech of the right hon. Member for Spen Valley (Sir J. Simon) I have not much hope for the Liberal party. But the right hon. Gentleman has introduced into this Budget the thin end of the wedge. He has by this Budget removed the burden of rates upon productive industries, or at least three-quarters of the rates. Last year, or the year before, his tutor the Minister of Health removed the burden of the rates from machinery. He goes one better. He removes the burden from the factory as well, and from the mine as well, though he does this a little too late for some of our industries, because in the 18 months they have to wait they will go under.

When is he going to carry this system further and remove rates also from the distributing industries and from the houses of the people, as well as from the factories in which they work? How much longer are we to wait before he carries to a logical conclusion the principles which the Conservative party are driven to accept, and removes the rates from a man's work and levies them instead upon that land value which is the creation of the community and which is the just basis of taxation? That system will not merely be just, but it will send down the value of land and enable people to get land to use on cheaper terms than at the present time. Let him carry out that principle. Let him examine what they have done in the Dominions. Let him read, mark and learn what has led to the prosperity of Sydney. In Canada, in Vancouver and elsewhere you find, perhaps not an extreme single tax position, but that they are going steadily on with this definite process of relieving industries and houses and the other results of the labour of man from taxation, in order to impose it upon those values which are the creation of the community. Although by this Budget the right hon. Gentleman cannot carry these principles through, because at the moment he is tied by the party behind him, yet he has opened the floodgates, he has allowed this subject to be discussed, and we can be very certain that before these Debates are over this House will have realised that there is an alternative method to this burdening of industry in this country, whether by rates or by a tax upon petrol.

I have listened to this Debate with a great deal of interest. In common, I think, with every other speaker who has addressed the House, the impression that is most vivid upon my mind is that nobody except myself understands economics. Certainly I do not think the right hon. Member for Colne Valley (Mr. Snowden) or the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) has any grasp of the principles that underlie value. I do not think they know what value is, or what causes it; at any rate, if they do, it is strange that they should arrive at the conclusions at which they seem to come. All the speakers who have attacked the Budget have confused or mixed up a somewhat indefinite charge of injustice, which has not been fully worked out, with a much more relevant charge of inexpediency. If we are to deal with the matter at all, clearly it is necessary to separate those two things. It is necessary to recognise that what the Chancellor of the Exchequer is proposing to do is to help industry as a matter of public expediency. I do not mean to say that he is indifferent to considerations of justice, or would not be prepared to give due weight to any considerations relative to justice, but what he has in view is to aid industry by an adjustment of taxation. Prima facie, at any rate, the scheme ought to be judged by investigating how far it will, in fact, aid industry. To that discussion the right hon. Member for Spen Valley (Sir J. Simon) contributed by putting forward an alternative scheme. He complained with great acerbity of the speech of the Chancellor of the Exchequer, alleging that the Chancellor of the Exchequer had not recognised that what the Liberal party proposed to do by their Amendment was to relieve areas instead of relieving industries, but he omitted to show that by contributing to the relief of local rates in a particular area he would necessarily help the distressed industries within that area. It might quite well happen that it would not do so. For instance, a local authority might take the opportunity of carrying out improvements which they had long desired to make and which could be made only at the expense of the rates, and so raise the rates in proportion to the assistance given from the central fund. The only remedy for that would be to introduce some method of control over rating areas, and that involves very difficult questions, and a great deal of odium and a great deal of friction. I do not say that such a scheme might not be worked out, but it is quite clear that you do not necessarily relieve industry by relieving distressed areas.

The right hon. Member for Colne Valley and the right hon. and gallant Member for Newcastle-under-Lyme both dwelt mainly on this strange theory that the site value of land is the creation of the community in a sense different from anything else. That is sheer economic nonsense, and there is no truth in it whatever. It is a mere confusion of thought, because all values are created in the same way. They are all created by the demand operating on supply. I know the Chancellor of the Exchequer does not realise that, but it is so. The only articles which have no value are those articles which nobody wants and of which there is an indefinite, inexhaustible, and abundant supply. Those articles have no value. The air we breathe, necessary as it is, has no value because there is an inexhaustible amount of it.

Yes, there is a limited supply of land, and everything of which there is a limited supply has value. It does not matter what article it is. The fact remains that if you can increase the supply of that article to an inexhaustible extent, then it has no value. In the case of site values, the value does not refer to anything else. It is something which is limited in amount, and, therefore, it has a value clue to the pressure of demand. All restrictions of output, for example, increase the value of the article produced in the same way as site values. If there is less supply, then the demand presses on the output and on the market, and up goes the price.

If the argument of the Noble Lord is right, will he tell me what causes an increase in value when supply and demand are equal?

Equality is achieved at a certain figure. The greater the demand, the higher is the figure, and the greater the supply the lower is the figure. They always come to an equilibrium, and that depends upon the pressure of demand and supply. It does not matter how many cases you take, because they are all the same. Take the variations in the value of coal. Those variations are governed by the law of supply and demand. The value of coal went up enormously during the War, and in many cases we were able to make a large profit on our export trade. There was a heavy demand for coal abroad; this pressed upon us, we were able to charge higher prices, and the value of our coal rose very much in consequence. It is just the same in regard to eminent lawyers. If all barristers possessed the same persuasive powers of reasoning as the right hon. Gentleman the Member for Spen Valley there would be no demand for them. That is the case with every other form of exertion, and, unless there is a demand for that exertion, it has no value. Really, value does not inhere in an article or in a person but in the human mind. Once you demand something, you get it at the figure fixed by the supply. It is the demand for an article which has a limited supply that makes its value. Therefore, the whole theory on which the right hon. Gentleman the Member for Colne Valley and the right hon. and gallant Gentleman the Member for Newcastle-under-Lyme have proceeded is nonsense, and there is no distinction between the site value of land and the value of any other article whatever.

You cannot do without anything if you decide to satisfy your demand. You can always do without a thing by giving up your demand for it. You can even, live on land that has no value, and you need not buy land which has risen greatly in value. You may be obliged to do so in the modified sense that you want to live there, and that is the source of the demand. I may desire to have a bottle of champagne, and the demand for champagne may increase its value, but really it is the limited supply of champagne in a given year that produces its value. Of course, if people give up the drinking of champagne, that would reduce the demand for it, and the same principle applies to the value of land. The right hon. Gentleman the Member for Colne Valley said a very surprising thing when he stated that every increase of population and every increase in transport facilities caused the value of land to go up. What happened to agricultural land 50 years ago as the result of greatly improved transport was to bring cheaper corn to this country from the ends of the earth which competed with our home produce, and enormously reduced its value. As a matter of fact, the owners of agricultural land are very much poorer to-day than their ancestors were 50 years ago.

My impression of the Debate is that the efforts of the Chancellor of the Exchequer have been reasonably directed to relieving industry, although I think he was hazardous in saying that the relief of rates always goes to the consumer. I believe Lord Goschen once said that it was quite impossible to say where the relief of rates ultimately went, because the effect was so indirect. I think the Chancellor of the Exchequer is justified in saying that, when you are dealing with industry threatened with great depression by giving them assistance, you do help to restore those industries in a quicker way, and you strengthen the prosperity of the whole country. Whether you benefit the consumer by that process depends on the demand of the community for that particular article, and, if any distinction is to be drawn in these matters, then I am opposed to that method. I think you should try and favour those who aid industry by increasing the abundance or the cheapness of supply rather than those people who try to enrich themselves by enhancing the demand, and become richer without any addition to the total wealth of the community. Anybody who becomes rapidly rich does so either by taking advantage of the urgent demand for a certain article, which causes a rapid rise in price, or by means of some invention which increases and cheapens supply, and so creates a greater quantity of cheap goods which benefit the community. If you make yourself rich by restricting output or increasing the demand, you are doing the community no good at all. On the other hand, if you make yourself rich by cheapening and making a more abundant supply, you are benefiting the community. If any way can be devised of distinguishing between those two things there would be something to be said for it.

Take literature as an example. The Sunday newspapers are often criticised, and some of them stimulate a demand of a very unhealthy character for all sorts of criminal stories about crime, vice, and the like. According to the theory of hon. Members who have spoken from the Opposition side, they would make no distinction between those who have made exertions of the kind I have just alluded to, and the landlord who sells his land at a higher price which he has done nothing to enhance. You must consider whether the exertions of a person have been ethically estimable, and the Sunday newspaper proprietor who has pandered to the vices and the morbid inclinations of the public does not deserve anything, however hardly he has worked. Those who are connected with greyhound racing and bookmakers are undeserving people according to a certain moral standard. Therefore, you must distinguish between the people who deserve to be assisted, and those who do not deserve assistance. It has been said that the community help to increase the value of land and property by their town improvements, by lighting, by providing a water supply and streets. It is also claimed that the community help in the administration of justice and the maintenance of contracts. Obviously all that the community does in this respect operates on value by making the demand effective and making the relations of supply and demand profitable. Great exertions were required during the War, and there was a great demand for labour from which labour benefited. It is quite true in a sense that all those engaged in the City depend to a certain extent upon the community because communications have to be maintained and you have to ensure the necessities of life.

However the matter is viewed therefore, the attempt to distinguish one sort of wealth for taxation is unsound. It rests on a confusion of thought which is, I am afraid, rendered acceptable to many Liberal and Labour minds by a sort of traditional spite against landowners. I am against founding our fiscal system on stupidity stimulated by spite. My hon. Friend the Member for the City of London (Mr. E. C. Grenfell) spoke of the advantages of amalgamation, and it occurred to me, while he was speaking, that amalgamation could be made to relate to these principles of demand and supply which we have been considering. An amalgamation which has the effect of cheapening supplies, an amalgamation which, by economy in means of production, enables supplies to be more cheaply furnished, and which, therefore, aids industry, is a good thing; but an amalgamation which tends to what is called control of the market, that is to say, which holds up the output in order to allow the demand to drive up the price, is a bad thing.

A good many of the amalgamations that have taken place since the War certainly seem to me, as a member of the public, to have been rather for the purpose of aiding industry merely by raising the prices, and not by giving the same stimulating exertion which existed in former times to make the industry efficient; and, therefore, they seem to have done a harm to industry rather than good. They have not really operated by cheapening supplies so much as by raising prices whenever it has been possible to control the market. There are many who suggest that something of the same kind should be done in respect of coal, but let us be under no misapprehension in that regard. Amalgamation in respect of coal tending to secure economy of output would be a good thing, but, if it is going to work by raising the price of coal, by restricting the supply of coal in face of the demand and so driving up the price, it will be a mischievous thing.

I can propound a better principle than that of taxing site values, namely, to tax always in proportion to wealth. It is quite proper that the wealthy owner of site values should pay taxes, not because they are site values, but because he is rich and able to pay; and the thing to seek with respect to local taxation is some method of making the whole wealth of the particular area available for taxation, and not merely the real property which is now taxed. I know that it is a difficult thing to do, but it is the real solution, because, really, the only thing that is expedient or equitable is to tax wealth, and especially that wealth which is readily available without being withdrawn from any industrial employment or from any useful employment such as the education of children and the like.

The true principle is that we should always aim at abundance of wealth, that we should encourage by all possible means the increase of supplies. And let it be remembered—and this, perhaps, is a concession to hon. Members on the Labour benches—that it is one of the qualities, and, perhaps, one of the defects, of the capitalist system, that, if you are going to do good to industry under a capitalist system, you must begin with the capitalist. The capitalist is the heart, as it were, through which the circulation of wealth operates; it comes in to him and goes out from him, and, if you are going to help industry, that is the point to which you must address yourself. Anything more foolish than the modified Socialism with which the Labour party is now more and more associated I cannot understand. I understand, though I do not in the least agree with, those who say, "Let us have a complete change; let us have collective ownership in some form or other of all means of production." I do not believe that that would work, but I understand the attractiveness of the proposition. To go on, however, with private ownership and the capitalist system and yet always be jealous of the capitalist, so that you will never allow him to launch out and become rich, is merely to have a system of restricted and inefficient production, and, therefore, no wealth for anyone.

The way to make the capitalist system work well is the American way, under which they cherish their millionaires and get out of them as much productive capacity as possible. One often hears foolish people—the clergy are dreadfully bad in that way—talking about slums and millionaires, as though a slum naturally went with a millionaire. Of course, the contrary is true; where you have many millionaires you have few slums. The more wealth there is, the better off every one is: the whole community goes up in wealth. The revenue ought not to go up, because there ought to be economy which would render expansion of the revenue unnecessary. If the right hon. and learned Gentleman the Member for Spen Valley, instead of talking about his own scheme of areas, and saying—which was quite a misapprehension—that the Amendment did not say that the Government plan was to relieve flourishing industries—if, instead of saying that, he had dwelt on the necessity of economy of armaments, I think he would have spoken with a great deal more force, because the Chancellor of the Exchequer has a rather sad side to his character in regard to armaments. He feels for war and armaments something of the enthusiasm that a blue-bottle feels for filth. It satisfies some appetite within him, and makes him buzz about with self-importance.

Let us make it our fiscal principle that we want to produce wealth as abundantly as possible, but that we do not want to carry the sword of justice, saying that one person is deserving and another person is undeserving—partly because it is no business of the Chancellor of the Exchequer to do that, and partly because it is quite impossible to carry it out fairly or reasonably. We want our taxation to be levied, as far as it can be levied, where the wealth is that can pay. That does not mean, of course, that those who are comparatively poor should pay nothing, but that they should pay in proportion to their means—that everyone should pay in proportion. I believe that industry can be made to flourish if, with this principle, you work economically and spend as little money as possible in the hands of the public, leaving as much as possible, according to the old phrase, to fructify in the pockets of the capitalist. Do not let us listen to the foolish nonsense that would turn the Budget into a crusade against landowners, and would persuade this House and the country that there is something peculiar about the value of sites of land, because all such ways of thinking are a delusion and a snare, only originating in confusion of thought and only satisfactory to factious malice.

I think that those who have listened to this Debate to-day, and who had the opportunity of listening to the Debate on the Resolutions, must have been struck by the considerable difference between the speeches which have been delivered by Members of the two Opposition parties. To-day we have had from the right hon. Gentleman the Member for Colue Valley (Mr. Snowden) a speech which had little to do with the scheme which we have mainly to consider. It was a courteous and, no doubt, lucid explanation of a particular form of taxation, but it seemed to have little bearing on the relief which we are considering to-day. It certainly was in marked contrast to the speech which he made on the Resolutions, which, if I may say so, was one of the speeches which we expect from him, that is to say, compounded in part of that venom which he seems to be able to draw from some in- exhaustible source of supply, and in part of a kind of irritated surprise that a misguided electorate should voluntarily have deprived itself of the services of a perfect Chancellor of the Exchequer. I feel considerable sympathy with the ancient Romans and what they must have suffered from the oft-told tale of the glories of Plancus; but even they, as far as I know, did not have to bear the additional burden of hearing what fresh glories there would have been if Plancus had been elected for a second term.

There was an equal difference between the speeches of the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), when he spoke immediately after the introduction of the Resolutions, and of the right hon. Gentleman the member for Spen Valley (Sir J. Simon) to-day. The right hon. Gentleman the Member for Spen Valley twitted the Chancellor of the Exchequer with his obstinacy in sticking to his own proposals—with his lack of fluidity and elasticity. That is rather striking in view of what occurred when the Resolutions were introduced. We had every reason to expect from the right hon. Gentleman the Member for Carnarvon Boroughs that at least he would give some time to the consideration of these proposals. He went so far, when first it became apparent in the Press that the question of rating reform would be introduced in the Budget, as to appoint a Committee of members of his party—a Committee of such quality and such quantity in proportion to the usual attendance on the Liberal Benches that he might almost have been said to have gone into Committee of the whole of his House. There was every promise of an interesting experiment in Soviet Government in one of the older of the parties, but, alas, the experiment never was made, because, within 15 minutes of the Chancellor of the Exchequer sitting down after introducing these proposals, and certainly before any Committee could have been consulted, the chief Commissar, in a short but decided speech, expressed his determined hostility to the scheme which the Chancellor of the Exchequer had introduced, and, if and when that unfortunate Committee had met, there would appear to have been nothing left for it to do except to report progress and ask leave not to sit again.

7.0 p.m.

If the Chancellor of the Exchequer should feel just a little disappointed at the reception of his scheme by the two Opposition parties, I am sure he can feel thoroughly gratified at its reception by his own supporters in the House, and also by the Press in the country and by the electorate of the country; and may I take this opportunity of expressing my own humble gratitude to the Chancellor of the Exchequer for the courageous effort which he has made. A few months ago, some hon. Friends and myself committed a literary indiscretion—one of those books which the many criticise but only the few pay for. In it we ventured to devote some space to the consideration of the question of rating reform, and, as a consequence, it was alleged against us in the "Daily Mail" that we bore, if not the mark of the Socialist beast, at least the brand of the red triangle. I think, however, that, now that that great organ of respectable opinion, in the interval, apparently, of establishing a new dynasty in Central Europe, gives unqualified approval to the principle of rating reform, we are entitled to say that we are not as pink as we were painted. There is no objection in any quarter of the House to the principle of rating reform or to the necessity of some change in the system of rating. Certainly, if there is that objection, it is not raised by the Socialist Amendment and certainly it is not to be found in that Yellow Book from which the hon. Members below the Gangway draw their inspiration. I think when you are discussing the various methods that can be adopted it is as well to bear in mind that if you are going to seek out anomalies, look for cases where one individual appears to be getting less relief than another, you will find them in this method, as well as in any other method you may adopt. What you have to do is not to indulge in tactics that may be very well for electioneering purposes, but not for statesmanship. We have to take the broad view, and see whether this or any other scheme is going to benefit production and is for the benefit of the country. The first alternative is a general relief of the ratepayer either pro rata or with special help to the occupier of the lower rate-able hereditament. That seems to me to depend on the fundamental question whether the evil of the rating system is that it is a method of taxation which bears particularly hardly on the poorer classes, or whether you consider the real evil of our present rating system is that it is a direct handicap on productive industry.

If you believe in the first case, then rating is only on a par with a tax on tea and sugar, and the relief can be given more easily by reducing your indirect taxation. If you believe in the second case, there is the objection that £20,000,000 spread over the rates in this country may go to the dwellers in Grosvenor Square and the owners of big houses in the country, or those carrying on businesses in the City of London. It does not, in fact, touch this problem at all. The second alternative is the transference of certain services from the local authorities to the State. If you take the ordinary service which can be transferred, say the main roads, the relief you can give them is equally spread over the private individuals and the productive industries, but it would by that diffusion lose much if its benefit. The only possible service which can really be of use is the maintenance of the able-bodied unemployed. But the transference of that service appears to have some considerable objection. For one thing it is expensive. It would require £80,000,000 more than we are now providing. The second is administrative. It is obvious that if you are going to take over the whole expense of the service, you must assume the whole control of the matter, and I wonder how hon. Members opposite, who received with no appreciation the passing of the Boards of Guardians (Default) Act, would welcome the taking over of the functions of boards of guardians repeated on a wholesale scale. The third objection is that you would leave untouched a great part of what is admittedly a distressed industry. The transference of the able-bodied employed to the State would give no assistance whatever to agricultural areas, and it would give no assistance to the industries that are situated in the agricultural areas.

Then there is a proposal to give some kind of relief either to distressed areas or to distressed industries, but the objection to that is that you cannot say that because you pick out the most distressed area or distressed industry that they are always going to remain the same. An invention which will provide oil from coal at a slightly cheaper rate than can be done at present might transform Durham and South Wales into prosperous areas, while peace in China might restore the cotton trade. I do think that if you are going to embark on a scheme of this kind it must be a scheme based on a permanent principle, and not some artificial condition which is liable to change at any moment because of circumstances over which we have no control. The second objection is that you discriminate against prosperous industries, and for this I can see no reason. The industry which is prosperous to-day is the industry capable of expansion} in the future, and that is exactly the kind of industry to which we want to give a stimulus. The right hon. Member for Carnarvon Boroughs sneers in public at the relief which Mr. Courtauld is getting. Surely he realises that any stimulus given to Mr. Courtauld, any assistance to sell more of ,his artificial silk, will probably do more for the coal miners in this country than any direct help you can give to the coal industry. It is the old fault of stereotyping industry, of looking, say, on a coal industry employing 1,100,000 men as a permanently depressed industry and trying to bolster is up, instead of stimulating more prosperous industries and enabling them to absorb the miner until the coal industry is reduced to an economic level. Thirdly, a scheme concentrating on depressed areas will create just as many anomalies as the Government scheme of which the Opposition complains. For instance, if you were selecting a depressed area, you could not omit Durham. Now the right hon. Member for Carnarvan Boroughs the other day on the public platform expressed great indignation that the right hon. Member for Carmarthen (Sir A. Mond), who has lately suffered a sea change, should have any benefit from the scheme. Yet, in Durham he will find the right hon. Gentleman is running one industry and running it at a profit.

I believe that the method which the Government have instituted is the best method for raising relief. It is financially practicable, because it can be put into operation in the fairly near future without imposing a new burden on the taxpayers; it is not going to be altered by extraneous circumstances, and, finally, it is a watertight compartment in itself. It touches one side of the problem and deals with that completely, but leaves the ground entirely free for anyone else who should wish to attempt a general scheme for the ratepayers as a whole. I have, however, one criticism to make. The Prime Minister in the Debate on the Gracious Speech made an extremely interesting speech on the position of industry in this country to-day, and he contrasted the depressed areas with the prosperous, and stressed the fact that all new industries and growing industries were being established in the prosperous areas owing to the burden of rates, with a resultant waste of the public services already existing in industrial areas. This Government scheme does assist to remove that difficulty, but I must confess that I should like to see it carried to its logical conclusion either by taking productive industries out of the category of rates altogether, or by fixing a flat rate for industry all over the country, so that you can put down your factory either in Durham or Cornwall knowing what rate you are going to pay according to the size of your property. We are told that this scheme is not popular. I do not believe it, and if I did believe it I should not admit it, because to admit it would be to say that the electors are incapable of taking a long view, and that it is impossible to get them to understand the connection between this burden of production and their own employment; in fact, that it is impossible to get them to understand or appreciate any scheme which does not hold out a promise of direct and immediate profit to themselves. That is an admission I am not prepared to make.

The Chancellor of the Exchequer undoubtedly paid us a compliment in devoting the greater portion of his address to criticising what he said were our proposals. As a matter of fact, I do not think he had correctly grasped the alternative put forward. He told us that he had very carefully looked through the Yellow Book. For that reason, he ought to guard himself against seeing things with a jaundiced eye. It seems to me that, the Government having recognised the mischiefs of the present rating system, a recognition that they refused to give to it, notwithstanding several speeches made from this side of the House, up to very recently, the question they had to put to themselves was "How are we to remedy them?" The real evil of the present system of rates is what is manifested in the necessitous areas. If we had not necessitous areas, the incidence of the rates would go unheeded to-day, as they have gone unheeded for 300 years. What do I mean by necessitous areas, because if we are to apply a remedy it is necessary to try to understand that. I should say necessitous areas are those industrial centres that are engaged in the heavy export trades, which are made up of massed heaps of houses, run up hurriedly, where there are slums and where there is a disproportionate number of children, and for those reasons these areas, quite apart from unemployment, make greater demands upon the rates than others. Then unemployment comes along. It is in these areas that the falling off of our export trade has been most heavily felt. The result is that you have immense unemployment. In South Shields I suppose 40 per cent. of the rates go in dealing with unemployment. That is the problem we are facing, the problem that put it into the Government's mind to deal with this question at all.

Is it quite sound to place the root of the evil where the right hon. Gentleman has placed it? He says there is something wrong in principle in taxing the tools of productive industry. Is there any difference between the tools of productive industry and the tools of distributive industry? I fail to see the distinction. If it is right that the instruments that produce a thing should be free, it is equally right that the instruments by which the thing is carried to our door should be free. There is no distinction in principle between the two at all. Nor is there any distinction in principle between the industrial centres that cater for a foreign market and the industrial centres that cater for the Home market. In the Midlands and the South you have industrial centres catering for the foreign markets which are quite prosperous. In the North you have industries catering for the Home markets which are not prosperous. That is not the true distinction. I have been wholly unable to see during the whole of the Debate why a man who is occupied in vending goods has any less obligation to fulfil the requirements of his neighbourhood than the man who is occupied in making the goods. Both of them share its benefits. Both have their sanitation, their sewage and their health and educational facilities. Why should one be treated on a different footing from the other? You get no real distinction on that footing at all. The true question is this. There are parts of England whose whole crime is simply their geographical position, near ports, near mines, near rivers. Towns have sprung up and factories abound. The population is densely crowded together. The need for social services is immense. When bad times come unemployment is disproportionately great. What you have to do is to say, "We will relieve these areas."

The Liberal method of relieving them is the simple and natural one. We say no more than this. You have now thrown upon the rates a large amount of what are truly national services. When we place a military army on Salisbury Plain, we do not ask the people of Salisbury to attend to their educational and medical wants. We say they happen to be there, they are doing the nation's work and the nation will pay for them. If you lift such portion of the rating burden off the industrial areas as is properly appropriate to the taxation purse, automatically you bring about the very thing that is desired. An area that suffers because foreign trade has fallen will get great relief when its burdens are shifted, because the pressure upon it is great. Take another area—Bournemouth. There are manufacturers there. They make motors and gramophones. Apply the same principle and remove the burden. But the burden is very small. The health services are low because there are no slums and no crowded conditions. The education service is low because the people who live there can afford to send their children to private schools. Unemployment is nil because the people are prosperous. In South Shields the children are so poor that they have to be taken on the rates. They are in such a state of impecuniosity that they can only get the medical attendance that is now provided by the medical services. The bulk of them are unemployed because their industries are hit by the loss of foreign markets. So the system proposed by the Liberal party would automatically effect the result we are all striving for. It is moonshine to say anyone would have thought of tackling this question at all if it was not for the evils that have been manifested in these areas.

The Liberal method is to relieve those areas, and it would draw no distinction between one part of the country and another. It would be simple. It would not call upon the taxpayer to bear any portion of the burden now that lies upon the rates except in so far as it is absolutely necessary. I am not now going to argue the stale question of the single tax. These things are too impracticable at this moment. You ought to have those in the neighbourhood contributing to its requirements according to the benefit they receive and to their ability. It is on that basis that the principles of rating that exist to-day were laid down 300 years ago. Everyone in the parish made his contribution to the various requirements of the parish. The test of ability was not your land but your house, and it was a fair test. To-day the result has come about that the owner of the site is paying rates on the agricultural value, which is practrcally nothing, and the owner of the building is paying rates upon the gradually growing value of the building. Site value was worth little a few hundred years ago. It is worth a great deal to-day. The Noble Lord indulged for a long time in arguments accompanied by epithets of stupidity and foolishness and nonsense addressed to those who thought otherwise. What he wanted to say was that there is no difference between the increased value that is given to land by the accumulation of people and the increased value that is given to personal service. But in the case of personal service, or ordinary movable goods, as the demand gradually grows the supply can come in to meet it. There is an increasing demand for land in the centre of a town, but there is no more land to be got, and, of course, it must go up in price.

I am not blaming the owner of the land. He has a right to get as much as he can. But the system is wrong. It only rates him for the value the land had originally, instead of the value it has to-day, a value which has been given to it by the combined influence of an increasing demand and a fixed supply. It is not that I quarrel with the Noble Lord's doctrines. I quite agree with him, but the owner of the land has an interest that is to-day worth a thousand times mere than it was originally and why should he not pay on what it is worth to-day, the same as everyone else? The Noble Lord will agree with me that the professional man ought to pay according to his income. He ought to have a house in proportion to his income and pay for it. Why should not the owner of the soil be put in exactly the same position, and as the value of his site rises he also be called upon to pay in accordance with the value of the same.

I would like, before sitting down, as I come from an industrial area, to make my position quite clear. The criticisms I want to pass upon the Government scheme are these. No. 1: It will not come into operation at best before 18 months have elapsed. There is no need whatever for that. The 18 months' delay is brought about, not by a shortage of money, but by the nece