I understand that we have your permission to make use of this Resolution to continue the general discussion of the Budget Statement of the Chancellor of the Exchequer which was made a couple of days ago. That statement occupied a great deal of time and covered an immense area of ground, yet it left gaps in our information which are only partially filled by the White Paper which the right hon. Gentleman has circulated, and, indeed, it opened up vistas which it will take this House a long time to travel down. I shall not attempt to follow the Chancellor in detail in all the many subjects which he raised. If I was to do anything of the kind my speech would be as long as his, and I am not sure that in the present stage of the information I should leave the country much wiser than I found it. But there are some observations which even at this early stage, and with the imperfect information which we at present have, that I would like to make. The Chancellor dealt very briefly with the results of last year. He congratulated himself, as he was entitled to do, on the realisation of Estimates the accuracy of which had been disputed by his critics a year ago. I was one of those who thought that the basis on which he told us he had framed his Budget was over-sanguine. I picked out one particular item last year as being an underestimate—that was Stamps—and apparently in that regard I was more fortunate in my guess than the Chancellor of the Exchequer. But the Chancellor of the Exchequer has had his Estimates justified, and more than justified, by a year of quite extraordinary prosperity from the Treasury point of view. He has now to budget for another year, which he tells us he cannot expect to be as prosperous as last year, but which he regards as likely to be a good normal year. Upon that assumption, and, indeed, upon any assumption, I cannot help thinking that the right hon. Gentleman has underestimated his income, and I would add that I am really at a loss to comprehend the Estimates which he has submitted to the House, cither for the current year or future years, as being the result to be expected from the alteration in Income Tax which he makes in reference to income invested abroad. These art minor matters, on which I do not wish to say more now. I rather want to clear away one or two subjects of this kind before entering on a general examination.

One other minor matter of the kind relates to the finance of the year. Towards the very close of last year we had submitted to us very large Naval Supplementary Estimates of, I think, £3,000,000; yet, if I understand what occurred rightly, the Admiralty underspent £1,500,000. If I am wrong I should like to be corrected. If I am right I should like some explanation of how it comes that so late in the year the Admiralty was so far out in its calculation. There is only one other point I propose to mention in regard to the finances of last year. The Chancellor once again reported with pride to the House the total yield of the new taxes which he imposed by the Budget of 1909–10. They have yielded in the year which has closed a sum of rather over £27,000,000. But, looking back on all that has happened, is the Chancellor wholly satisfied with his financial experiments of that date, and does he think that they have borne out his calculations? I am not now referring to the error which he himself admitted when he said that, owing to the failure of his expectation that the Navy Estimates would be reduced, and owing to growing demands, the taxes, as a whole, were not sufficient to finance the country without resort to new taxation. I am speaking rather of particular taxes. A very large part, the greater part, of the battle of these years was waged around the Land Taxes. They had, as I ventured to say before, other than fiscal purposes, and perhaps their other purposes were more important in the eyes of the Chancellor of the Exchequer than their fiscal purposes. I think I said on a previous occasion that in that great Budget the Chancellor of the Exchequer proposed certain taxes to get revenue and certain taxes to get votes; and that the taxes which got votes did not get revenue, and the taxes which got revenue did not get votes.

Let us look at the vote-catching taxes, and see how much they contributed to the £27,000,000 produced last year by the total changes made by the Budget of 1909–10. The total sum as we know from the Chancellor of the Exchequer's statement was £715,000, but included in that total sum is the amount yielded by the Mineral Rights Duty. That is not a Land Duty, nor is it comparable in any way with the other Land Duties. Indeed, it is based upon opposite principles; and the Committee will remember that the original Mineral Eights Duty was based upon the same principle as the Land Duty, as for instance the Undeveloped Land Duty in particular. It was proposed to tax minerals which were not got in order to induce people to get them. That we were never allowed to discuss, because before we came to the proposal the Chancellor of the Exchequer strangled his own bantling and substituted the new Mineral Tax for it. The new Mineral Tax is nothing more or less than a new imposition of Income Tax upon mineral rents. Therefore I put that on one side. That is really a development of Income Tax which is not a new Land Duty. The total yield of the other Land Duties is £386,000. By the courtesy of the Chancellor I have the figures. The Increment Value Duty brought in £31,000. It has not helped the Chancellor of the Exchequer to pay for many things. Undeveloped Land Duty brought in £275,000. That is a tax which, from the first, as soon as it was got into operation, the Chancellor expected to produce its full yield. I do not know whether he has seen any reason to change his mind on that subject. I see none. As soon as it was brought into effective operation it was to produce its full yield. I presume that it is in active operation now, and therefore that it is not likely to produce more than the amount gathered last year; but it is likely to produce less, because in the amount collected last year there is a great part of the arrears of the previous years. Lastly, there is the Reversion Duty, which, again, is not to be expected to develop to any great extent, for there the basis of the tax was dated back, and not, as in the case of the Increment Duty, dated from the time of the Budget, and that precious tax produced £80,000. I am sorry the Prime Minister is not here, but I should like the Chancellor of the Exchequer to draw the Prime Minister's attention to a speech he delivered in answer to my right hon. Friend the Member for the City of London on the 16th August, 1909, and reported in the OFFICIAL DEBATES. Volume IX., column 318. The Prime Minister was discussing the value of the Undeveloped Land Duty—the site value of undeveloped land. He said:— I now come to the final charge against this tax. The right hon. Gentleman, having made it before, repeated it this evening. He said that this was not a fiscal proposal in any real sense at all on the ground that the yield of the tax would be less, or certainly would not exceed, probably, this year, the actual cost of valuation. I do not assent to the right hon. Gentleman's proposition. I defend this tax and all the the taxes contained in this Finance Bill as fiscal instruments, and if anyone can demonstrate to me that they are not, I shall agree they ought to he excised from the Bill. I shall agree that they should be excised if anyone can show that they will not be useful, profitable, and fruit-bearing for fiscal purposes. I would like the Chancellor of the Exchequer to remind the Prime Minister of that speech, and ask him to compare the results with his anticipations. We shall have spent about £3,000,000 on this valuation. We have not begun to cover the cost of the valuation itself, let alone to pay for the "Dreadnoughts" which the right hon. Gentleman announced he was going to finance out of these taxes. But —and this is an important point—the charge on the revenues of the country for this valuation is but a small portion of the charge to the country itself. The amount of expenditure in which individual taxpayers, whether liable to the taxation or not, have been involved under the intricacies and complications of the Budget, the amount of litigation to which it has given rise, and which is still pending, the uncertainty which still prevails as to the whole basis of their assessment and collection, do, I think, mark those taxes out as something wholly unlike any tax we have ever placed on the Statute Book; and if the Chancellor of the Exchequer thinks they mark them out to his greater credit as Minister of Finance, I can only say that the standards of what are successful taxes are very different from those which I should apply. I turn for a moment only to the consideration of the Budget as a whole. It marks a stage—as when you turn a century you mark a stage—in our financial procedure. Within a very brief space of time we have created, and are continuing to create, standards of national expenditure which would not merely have filled with horror Gentlemen who were in the House when many of us entered it, and continued with us for years afterwards, but would have been treated by them as absolutely inconceivable.

I confess that this Budget, with its yield on present taxes of £200,000,000, with a deficit on present taxation of £10,000,000 this year, £16,000,000 next year, and perhaps more in the years to come—this Budget, which is to raise £210,000,000, fills me with serious misgiving, not so much as to the course we are travelling, but as to the rate at which we are travelling. I cannot see that anyone now asks the House of Commons or the country whether they can afford anything that they want. In private life we have to do it, whatever our incomes, unless they be beyond the dreams of avarice. There are things which we should like, and for which we think we should be better, but which we have to admit to ourselves that we cannot afford; and amongst the things, I do not say to most of us of prime necessity, but things in the rank of desirable, we have to choose those which we can afford and forego those which are in excess of our means. It used to be the business of the Treasury to watch over the national expenditure in the same sense, and, without necessarily disputing the desirability, on general or on particular grounds, of the expenditure asked for by different Departments, to put together the totals of all those fresh demands, and then, as representing the taxpayers, to say, "We cannot afford to carry out the whole of this expenditure; we must choose amongst it according to our means, and part of what otherwise would be desirable must be postponed until those means have increased."

Hear, hear.

4.0 P.M.

The Chancellor cheers. He knows that is very necessary. But, alas, under his dispensation, the Treasury appears wholly to have abandoned that view. It is no longer a Department of check and control; it is the greatest, the most extravagant of all the spending Departments. In the old days, under greater men than any of us now living, the Treasury left to other Departments the initiation, definition, and conduct of legislation involving great expenditure. The Chancellor of the Exchequer used to confine himself to a statement that for this or that purpose, for education, for health, or whatever it might be, he found it necessary to lay aside a certain sum, but the policy would be the policy of the Department immediately concerned. That Department would be left to justify it, and the Chancellor of the Exchequer only made himself responsible for granting to that Department, after it had presented its ease to him, such sum as he thought the country could afford. I do not see that that procedure is followed now. Nowadays the Chancellor of the Exchequer teaches us to look to him, and all his Friends in the House and outside of it encourage us to look to him, as the initiator of all social reform, and the result is that the financial check which ought to be brought to bear on those reforms is not brought to bear on them, and the Treasury becomes insistent on expenditure instead of exercising any control over expenditure. We are accordingly moving at a rate which, quite apart from one of the objects on which the money is spent are good or are bad, certainly means trouble whenever we come upon less prosperous years, and may, if those loss prosperous years be years of any serious difficulty or complication, mean something more than trouble, grave serious injury to the State, and loss of credit and loss of elasticity in its financial concerns, which may cause us deeply to regret that we can no longer echo the boast of our predecessors, that one of our greatest resources for any international struggle that we should be involved upon is the reserve of credit which our financial system gives us. Under those circumstances, and because I see already I shall exceed the time I allotted myself, I do no more than repeat in a sentence my regret that the Chancellor should have meddled with the Sinking Fund. Far better, in my opinion, to have taken a million off the new Grants somewhere, or to have raised a million more by taxation, than at such a time, and under such circumstances, to tamper again with the Sinking Fund. We have had within the last day or two the usual Return about the National Debt which gives a statement of the dead-weight debt, and of the amount of debt provision made each year for its repayment. In the last year for which we were responsible, 1905–6, the debt provision was eight and three-quarter million. In the next three years, and I am giving very round figures, it was nine and a half millions, eleven millions, and ten millions, respectively.

Since that time it has never been as high as the figure at which we left it when we were still suffering the after effect of a great war, and when we had no such prosperity to assist us as that of which the Chancellor of the Exchequer has year after year been able to boast. It is quite true, and the Chancellor of the Exchequer is always taking credit for it, that the actual reduction of debt has been higher than those figures, but that is due to the accident of the years through which we have passed being more prosperous than he has dared to hope, and that is due to the working of the Old Sinking Fund, and not to the working of the New Sinking Fund, which is the specific provision which the Government makes. This New Sinking Fund, the sum they deliberately set apart in their Estimates for reduction of deadweight debt—that is the measure of the importance they attach to the reduction of debt, and the measure of the sacrifice which they willingly incur for the purpose. And in all these prosperous years, except the first three, and for two of which the present Chancellor was not responsible, they have never made a similar effort to that which we made in the last year for which we were responsible under circumstances of great difficulty, when, without launching out on any new projects of expenditure, we were obliged to raise taxation to meet the ordinary liabilities of the country. The Chancellor of the Exchequer, even after raiding the Sinking Fund, has to largely increase taxation. What he has done is, I think, very much what everyone expected him to do. I never supposed that under present circumstances, both in legislation and in finance, that the Chancellor of the Exchequer would think of removing one of the food duties at the present time.

But if he had ever thought about it, I think it was made impossible by the speech which the Prime Minister delivered on either the Tea or the Sugar Duty last year, when he pointed out how much and how large a proportion of our new expenditure was incurred for the benefit of the poorest classes, and how the rest of our expenditure was for the benefit equally of all classes, and how large was the proportion of that national expenditure which now fell on the shoulders of the more well-to-do, and, he stated a principle with which I, for one, heartily concur, that under those circumstances and under the conditions of the distribution of voting power which we now have and must always have, it would not be merely unsound, but reckless—and I am using my own words and do not profess to quote his—and immoral to absolve those from whom so large a part of the expenditure is specifically undertaken, and who are interested in the whole, from the duty of contributing any part whatever to that expenditure. The Chancellor of the Exchequer raises the Income Tax. He raises the Super-tax, which is but another form of Income Tax, and he raises the Death Duties generally. I think I speak the mind of all my Friends when I say that towards meeting this huge new expenditure the rich must contribute a much larger share than the poor. I think I speak the mind of all my Friends when I say that it is our desire that the contribution which a man makes to the State should be in the main proportioned to his means and to his abilities to meet the burden cast upon him. But you must take into account also the distribution of that part of the expenditure which goes to benefit portions of the community. I admit that it is not possible for anyone to lay down an exact principle by which you shall decide accurately when the burdens on a particular class of income become intolerable and oppressive, and to say that people falling within certain Income Tax limits are taxed beyond their means and out of proportion to others. But I do think that we are travelling perilously near that point when in a Budget of this kind, and with demands for such an enormous increase of revenue so largely for social purposes, we take our contributions wholly from the direct taxes which exact no contribution from the less well-to-do amongst us.

It is not easy and I think it is not possible to lay down general principles of this sort, but we are accustomed to hear in this House doctrines of taxation from the hon. Member for Blackburn (Mr. Snowden) and others which are no more shared on the benches opposite than they are on the benches behind me; and I think Members on the benches opposite may usefully ask themselves what it is in principle which distinguishes the course we are treading under the present Government from the course which the hon. Member for Blackburn advocates, and may try to decide at what point they will draw the line in this special taxation of classes and separate themselves from the Socialistic view of the hon. Member for Blackburn, that what you have to look at is not what you take from a man, but what he has over when you have taken from him all that you want. The result of using the particular taxes chosen by the Chancellor of the Exchequer, and them only, is that they are now fixed at very high levels. That is a great disadvantage, not as regards specially all these taxes, but the new taxes, because when a tax is low the anomalies and imperfections are little felt, but when you raise it to a higher figure every injustice is enormously magnified. It is not a question of arithemetical proportion; it is an increase in geometrical proportion, if I may say so, of all the anomalies and imperfections of Income Tax, which were perhaps tolerable though not answerable in logic, and perhaps defensible in practice, when you had an Income Tax of 6d. or 8d., but really become a very serious burden when you come to 1s. 4d. They are not met by the subtle distinction between earned and unearned income. That is a distinction which I presume, and I do not doubt, has come to stay—once made it is not likely to be altered—but do not lot it be thought that as between individual taxpayers of the same wealth it is always a fair discrimination, and if you are to consider because you have discriminated between the two you may tax unearned income to any extent you please, I think you will be making worse hardships than any you may have remedied by the attempt to distinguish between the two.

Take the income unearned, and let it be remembered unearned income does not necessarily mean income which a man has not won by his own exertions. Every penny of it may have been earned, saved at the cost of some privation, and invested to provide for the old age of the man and his wife or to make provision for his family afterwards. Take the case of a man like that, or take the case of the widow of a man left with an income, it may be partly inherited, and it may be partly or wholly earned. Assume that they are just above the limit of abatement—that is to say, that they have £701 income amongst the man and his family or the widow and her family. Is not a tax of 1s. 4d. in the £ on a family income of anything from £700 to £1,000 a tremendous tax for times of peace, especially if you consider the cost of education in these days to people of that class of life? The State does not present them with free education for their children of the kind which they desire to have for them, and which we think that they ought to provide for them. I think that the Chancellor of the Exchequer, when he carries his tax so high, is inflicting great hardship on classes of that kind. In the same way I unfeignedly regret that he has altered again, and so quickly, the Death Duties, and I particularly regret that he has done so at the lower scale. I am inclined to think that, for the general welfare of the country and to preserve the best parts of its social system, it is a great misfortune that the Death Duties on moderate estates should be so large. What the effect over a period of years is going to be on the life of our country districts I will not undertake to forecast; but I am sure that, by the changes which the Government have made since they have been in power, they have done much to overthrow the old social system which, whatever its defects, has yet preserved relationships of kindliness, good feeling, friendship and helpfulness amongst different classes of the community in the rural districts, and that no social legislation that we have passed now or are likely to pass, whatever its merits, can replace, by its hard and fast systematic charity, the kindly help, the friendly good feeling, and the daily knowledge and assistance which the old system gave.

Let me make one other observation about frequent alterations in the Death Duties. When Sir William Harcourt made his great change he treated the Death Duties, and properly so, as a graduated Income Tax, to be provided for by insurance, which the owner of an estate would take up paying premiums year by year, so that at his death he might leave the estate as he found it. That becomes impossible, in the first place, if you make the charges too heavy, because the current revenue of the estate cannot afford the premium. It also becomes impossible if you frequently vary the basis of the charge. It is a very great hardship to a man who has made provision on a certain basis to find the Prime Minister, when Chancellor of the Exchequer, altering the basis; he covers himself again, and, as he is older, on more expensive terms. He then finds the present Chancellor of the Exchequer again disturbing the basis, and he makes further provision when he is older still. He now finds the Chancellor of the Exchequer once more upsetting the basis, forcing him to have recourse to fresh insurance if he is not to leave a decreased estate, and to insure against the new taxes at a yet higher rate, because he is older than when he insured before. I do not think then, although the Chancellor of the Exchequer's methods are simple, even brutally simple, that they are without great hardship. They are more dangerous to the morals of the House of Commons and the country, because, owing to the taxes which he has chosen, and the points in the scale at which they are affected, those who suffer hardship are only a small proportion of the population, and therefore exercise but a small influence on our legislation. That is so, and it must be so in these days. I venture to say that that imposes a solemn duty upon us to weigh well the effects of our actions, and to see that, in the effort to make things smooth for ourselves with our electors, we do not pile an unjust burden upon a few, because they are a few—upon those who have not great electoral influence, not because they have the means to bear the new burden with indifference, but just because they have not the votes to make themselves a commanding force when we go back to our constituencies.

One word about the new taxes. The Chancellor of the Exchequer proposes to abolish the Settlement Estate Duty. I think that that raises an ethical question of some difficulty which the Committee ought seriously to consider. Let me say at once that I, for one, should take no exception to this change, if the Chancellor of the Exchequer proposed to apply it to all future settlements. I think his case is a very strong one for saying—I will not say there is no reason, but that there is not sufficient reason given for the present law. I do not challenge the proposal, therefore, as regards future settlements; but what about past settlements? Many years ago perhaps you took money front the taxpayer as part of a contract with him. For years, having paid that money, he has assumed that, when the time came for the fulfilment of the contract, he would have the benefit of it. Now you say, "On the contrary, we are going to break the contract which we made. We deprive you of the benefit for which you have paid." And you think you can justify that to yourselves by simply refunding to him the money you have received. No man as between man and man would make a claim of that kind. No Court would substantiate such a claim. Are we to be less scrupulous in keeping our bargains as between the Stats and the individual? On so great a question of principle, I hardly like to recur to a minor matter in connection with the proposal, although I have it on my notes, and which I heard suggested by an hon. Friend behind me. I understand that the Chancellor of the Exchequer not only proposes to break the contract and to return the money that was paid, but that he proposes simply to return that money however long he has kept it, and had the enjoyment of it. The least you can do if you break a contract of this kind—which I hope you will not do without a great deal of further consideration—is to allow the taxpayer interest on the money he has paid, just as you charge him interest when you allow him time for payment.

These are all general questions from which one could not well escape. But the real interest of the Budget is not what is in it, but what is to come out of it. We shall not know what the Budget really is or what is the meaning of it, I presume, until we have had four or five other Bills submitted to us. But the main purpose of the Budget, after filling the deficit in the existing national balance-sheet, is to deal with the question of local taxation. We are all of us agreed, and have been for a long time, that that is a question urgently needing to be dealt with. We are agreed that it is not merely a debt, but a debt long overdue, to the local authorities and the ratepayers. We are agreed also that it is a debt from personalty to reality.

No.

The hon. Member will forgive me if I do not verbally except him from every general statement that I make.

made an observation which was inaudible in the Reporters' Gallery.

As between the Government and ourselves we are agreed that there was a debt from personalty to realty. In so far as his proposal conforms to these general admissions, the Chancellor of the Exchequer has our hearty concurrence and approval. But he used very ominous language about the payment of this long overdue debt. He said that any subsidy to the local authorities was to be dependent upon the passage during the present Session of the various other legislative projects which the Government had in contemplation—a Rating Bill, a Valuation Bill, an Education Bill, an Insurance Bill, a Housing Bill—I do not know whether the number is more or less than half a dozen. If you get the money as the Chancellor of the Exchequer proposes to get it, and if you admit as he admits that this is a debt long overdue, the money ought to go to the local authorities at once, and the House of Commons ought not to be put under duress to pass within the very limited time available half a dozen highly-complicated, very technical, and, if we may judge from the Chancellor of the Exchequer's previous performances, I venture to say very undigested measures. We know something of the perils of hasty legislation, and I submit that it is in the interests neither of the Treasury nor of this House nor of the country that we should be told that our constituents will be deprived of the money we are voting for them, unless we consent to swallow, regardless of time and of our power to examine them, all the legislative projects which the Chancellor of the Exchequer or his colleagues will produce to give effect to his proposals.

I have spoken of the amount of agreement which we have enjoyed for a long time on the subject of rating. I am glad to think after the Chancellor of the Exchequer's speech that that agreement is now much larger than it has often appeared. The Chancellor of the Exchequer was anxious to explain that, although he had sometimes dissembled his love, he had really always been very fond of the Agricultural Rates Act; it was only the particular method that he opposed. I thought that he opposed the principle on the ground that it was a dole to the landlord. I thought that the view of himself and of his party when in opposition had been that agricultural land was not entitled to the relief which it obtained. We now have it admitted, not merely that it has been entitled to that relief, but that it would not be fair to rate it on the same basis as other property, and that that kind of relief must be continued to it under any changes in the future. But the right hon. Gentleman proposes that as part of his new scheme there should be a new valuation for rating purposes. I do not think that he explained to the House why. At any rate, I am unable to find in his speech any sufficient reason for that proposal. The new valuation is not required for any of the Grants which the right hon. Gentleman adumbrated, except the Education Grant, and by a very slight modification of our present system and the Education Grants you could fairly distribute the new Education Grant without any such new valuation as proposed. In spite of that he requires a new valuation. He tells us that for a large part of it the work has already been done, and the results in the offices of the Land Valuation Department, that he has got for it already gathered together an admirable staff; and that his new need will be easily adjusted to the valuation already made by that staff. I venture, profoundly, to differ in regard to those statements. He proposes to supersede all present Local Assessment Committees. In a sentence he said that though they were superseded local influence would not necessarily be eliminated. We shall be interested to see what amount of local influence is left. The Assessment Committees are superseded ! They have done their work very well. [HON. MEMBERS: "No!"] As a whole they have done their work very well. If a taxpayer is aggrieved as against ether taxpayers he has his right of appeal and can exercise it. I say that whether you think of the local authorities or of the individual taxpayer, all of them would sooner trust the judgment and knowledge of the Local Assessment Committees than be placed under the thumb of a centralised Government Department which will not have the local knowledge, which will not be accessible as the Local Assessment Committees are, and which will be costly out of all proportion to the Local Assessment Committee as at present constituted.

I have had a calculation supplied to me to which I invite the attention of the Committee. The Valuation Department, I am told, at the present time costs six shillings per cent. per annum on the rateable value of the country. A London borough, which was selected by my informant for comparison, manages its valuation at the rate of two shillings per cent. once in five years, with practically no charges in the interval. That is to say, your centralised scheme costs six shillings per cent. per annum against, say, sixpence per cent. per annum for the decentralised scheme of the London borough. But what about the valuation which the Chancellor of the Exchequer proposes to have, and what about the staff? I do not want to speak harshly of the staff of any Government Department, but I do not think that in any competent quarter it will be held that the staff which the Chancellor of the Exchequer has gathered together is competent for the valuation of agricultural land for annual rating purposes. I am quite sure that the valuation which they have made is of no use for their new purpose. The Chancellor of the Exchequer appears to think that by some simple arithmetical rule of thumb calculation carried out by the Department in their offices, they can convert the capital values they have got into an annual value for rating purposes—the capital value of 30th April, 1009. What rule of thumb is there between that and the annual value in 1915? Then take all special properties, mines, quarries, and properties of that kind. What relation has the capital value to the annual rateable value? They are wholly distinct, and have got to be discovered by examination of each case on the spot. They cannot be decided by any general rules laid down in central offices. To discover the annual rateable value of agricultural land you must have a field-to-field valuation. No such valuation has been undertaken or attempted by the valuers who have been at work. Those same valuers have never had to make a valuation of any of the statutory companies, and all those statutory companies must be valued for the purposes of rating.

In the first place, any attempt to centralise your valuation will be infinitely more costly than your existing system, and in the second place, that it will cause, and rightly cause, great dissatisfaction and mistrust in the localities, and will be resented alike by your municipal, county, and other authorities and by the individual taxpayers concerned. I add that it is wholly unnecessary for the purpose of the distribution of the taxation which you propose to make amongst these local authorities, and it is only required, if I may for once guess at motives in order to find a justification for taxes which have brought in no revenue and a Valuation Department which has spent a good deal of money without being hitherto of any use. I must omit some of the points on which I proposed to speak, but I must, in passing, say that I think the Chancellor of the Exchequer owes the Committee a sentence, at least, of explanation, if not more, of his reasons for flinging on one side the Report of the Majority of the Committee on Local Taxation—and the side which he himself adopted! The Committee reported not merely against taking land values as the sole basis of rating, but against any scheme of which the rating of site values should be any part. Their reasons are set forth with great power and ability in the Report which they have published, and not only their reasons, but some of the difficult problems to which the rating of site values in that connection gives rise. The Chancellor of the Exchequer gives us no reason for disregarding their recommendations. He did not dispute a single one of their conclusions. He gave us no information as to how their difficulties are to be got over. I am not going to read to the House—if I had not taken so long over other parts of my speech I had intended to do so—their general objections to this proposal. But I want to read to the Committee a paragraph or the part of a paragraph of the Report—paragraph 262. Having come to the conclusion that on general grounds they are unable to recommend the substitution of a system of site value rating for the present rating system, the Committee go on:— It is unnecessary for us to refer at length to more detailed questions connected with the proposal. The witnesses who gave evidence before us had not in any degree elaborated their scheme. For example, we were unable to ascertain exactly how the land value was to be calculated, not from whom the rates were in fact to be collected, not what was to be done with existing contracts. Nor was there any indication given of the way in which the ownership of the site value was to be divided between the different interests, which in many cases must be deemed to have a share in it. Those are all very important matters, but no word have we had from the Chancellor in regard to any one of them. The right hon. Gentleman cheers me. I gather he appreciates the fact that, whilst professing to give the House an indication of what he is going to do, he realises perfectly well that the House must be and cannot help feeling completely in the dark as to the nature, the equity, and machinery of those proposals—after the only statement which he has so far vouchsafed. I do say that we ought to have all this information before us before we are called upon to vote money as part of a scheme which, when it is disclosed to the Committee, the Committee may be unwilling to accept, and which may be as unpopular on the other side of the House as on this side of the House—for what I know it may be more unpopular in some quarters of the House. That information we ought to have before we are asked to vote the money. We ought immediately to have information on such subjects, for instance, as the treatment of existing contracts, and on questions which can be described as questions not of machinery, but of principle. On these there is no excuse for any delay, and I ask the Government to give us that information at the earliest possible moment.

We want also—and this is very important—much more information than we have already got, either in the Chancellor's speech or in the White Paper which he has laid, as to the effect of his schemes upon the local rates. I spent, as I have no doubt many other hon. Members did, many laborious hours yesterday trying to find out where the local authorities would be if the Chancellor's proposals were carried out exactly as he has made them. I have come to the conclusion that there is no Member of the House of Commons, and no local authority, that can by any possible calculation within their power say how they will stand if the proposals adumbrated by the Chancellor of the Exchequer are carried out without alteration. It is quite evident that the Chancellor of the Exchequer has a great number of calculations before him. It is quite evident the Committee had other calculations than those which they have published in the table, on page 30, I think, of their Report. But that table—and the Chancellor's speech—is enough to show that some authorities are going to lose. I think there is reason to suppose that a good many authorities may lose, and very grave reasons to doubt whether any purely rural areas are really going to get relief at all. Take the Chancellor's proposals in regard to roads alone. I am not at all certain, if you consider the purely rural areas—by which I mean those which are agricultural—excluding from the districts known technically as rural district council areas the urban communities within them—there is good reason to doubt whether these purely agricultural parts will not be worse off under the proposals of the right hon. Gentleman than they are now. But we ought to have, as far as the Chancellor of the Exchequer can give it, for the whole of his Grants, a statement as to how they will affect all the types of authorities within the country. He takes out one here and there, and I have no doubt he takes care it will show up pretty well. If I may judge from what I am able to see of local opinion down in Birmingham, we are not quite as sanguine as to the relief to that city as the Chancellor of the Exchequer himself appears to have been, nor am I myself quite certain—I am now talking of urban areas—as to what relief the Chancellor of the Exchequer professes to give. He spoke of his Grant being equal to a relief of 9d. in the £. Ninepence is a rather ominous figure. The last time it was 9d. for 4d.—this time it is 9d. for nothing. If any ratepayer, rural or urban, thinks his rates are going to came down by 9d. in the £ of which the Chancellor of the Exchequer speaks, I think he is an extremely sanguine individual.

The Chancellor of the Exchequer divides his Grants into Grants for new services, and Grants in relief of existing expenditure, but I think his division is very imperfect, for anyone who studies his speech will see that the authorities which count upon getting large relief for what they are now doing are counting without their host. The Chancellor of the Exchequer is putting new burdens on all round. I saw the Budget described in a paper which supports the right hon. Gentleman as "a speeding-up Budget," but you do not speed up for nothing. No doubt local authorities will get larger sums, but they will only get them on condition of spending more, and it will be observed that at every stage in these new relations between the central and the local authorities, the local authorities are to count for less, and the central Government Department is to count for more. A central Government Department never works for economy. Take the Education Department. Do you think if we had less centralisation we might not have had, for instance, in our rural district, a system of education long before this, much better suited to the rural districts and much more economical. We hear a great deal about necessitous school areas. I remember having had to consider the case of West Ham when I was in office as Chancellor of the Exchequer, and I found the Education Department refusing to sanction a proposal by the West Ham education authorities as being incompatible with their rules or standard of accommodation for children, which prevailed in every great public school in the country, and which prevails in some of them now, and which, I should think, prevailed in all the old public schools of the country when I was at school. A central authority drives to expenditure, and this Budget is intended to lessen the discretion of the local authorities, and to put more power into the hands of the Government Inspectors and Presidents of Boards.

The Budget marks in this respect, as in other respects, an absolute abandonment of the old Liberal tradition. I have not been in this House nearly as long as many Members, but when I came into the House, the extension of local authorities and local responsibility was the great panacea of all Liberals. I remember the hon. Member for Salford (Sir W. Byles) and my right hon. Friend the Member for West Birmingham (Mr. J. Chamberlain), already divided on the Irish question, co-operating in view of their common Radical instincts on the Parish Councils Bill on these lines. All the trend of modern Radical legislation is in the direction of taking away power from the municipalities and local bodies, and concentrating it in the hands of central bodies, and this Budget will be an enormous and most powerful instrument for taking local government out of the hands of local authorities and concentrating it in Government inspectors and presidents of boards. I think that is so. Well, Sir, this Budget—and I am coming to the end of my observations—is also an abandonment of the old Liberal policy in matters of finance. No Liberal candidate can in future go upon a platform and talk of retrenchment. I recall a speech of the Prime Minister and speeches of many of his colleagues made in the General Election of 1906, denouncing not the particular objects to which the Unionist party had devoted money, but their general extravagance. I remember the Prime Minister announcing seriatim that every tax he mentioned was too high. All pretence of retrenchment, all careful economy has been abandoned by the Liberal party. They, like most of us, enjoy spending. I remember a witty lady who observed she was never so happy as when she was saving a penny, except when she was spending £5. The House does not care much about saving a penny, but it loves to expend millions, and the Chancellor of the Exchequer encourages it to do so. He has been fortunate.

Sir, I concluded my speech upon the introduction of his Budget last year with a prophecy which has been fulfilled. He then had spoken of the yield of his new taxes and the power they had given him of financing the growing expenditure of the country. I told him that that would be the last year of which that would be true. I was right. He has admitted that even the new taxation he is raising now will not enable him to finance next year's expenditure. We cannot look forward to a continuation of the unexampled prosperity which we have had. What are we going to do when the bad years come? What provision have we made to meet that? We have spent every penny as it came in. We have raised nearly all our taxes to a high figure. The Prime Minister indicated that it might soon be necessary to graduate the Income Tax downward, I suppose to a class which do not now pay, while his only reserve for war was to raise the food taxes—I think not a very happy reserve for a great war. Opinions differ amongst us as to the part which food taxes should or might play in our system of taxation, but is there anyone who thinks that a great war, which was a naval war as well as a land war, would be the happy moment to choose for an increase of the food taxes—just that moment when our food supplies would be threatened, and the quantity of them might be reduced, and the cost of them would certainly be raised?

We are raising all our taxes to what would have been thought a war figure in times of peace. We raise them to this figure in times of great prosperity. We spend every penny year by year which these taxes bring in. We have mortgaged the whole future increases that we could reasonably calculate to come from these taxes. We know that the social reforms that we have passed will grow in their cost without any legislative interference, if no amendments or changes were made, and we know that as they work and their imperfections become visible, their anomalies become more painful, and we know that other Chancellors of the Exchequer might have to patch his handiwork and find fresh money to make these schemes work. I beg the House to think of these things. We are living too fast, we are moving too rapidly, and unless Members of the House in all parts will make some serious effort to check the weigh upon the ship, we shall run upon the rocks before we know where we are.

I think it may be for the convenience of hon. Members if I say at this stage that I foresee a possible danger in the discussion in our Committee of Ways and Means. It arises no doubt largely from the speech of the right hon. Gentleman the Chancellor of the Exchequer on Monday last, and that danger is, that we should introduce into the Committee of Ways and Means matters which more pertain either to Committee of Supply or to stages on Bills which have been hinted at. I do not propose to take exception to anything the right hon. Gentleman has said, but only to remind the Committee that in Ways and Means we are considering the ways of raising money, and not how that money will be dealt with after it is raised; but of course, to the extent to which the Chancellor of the Exchequer opened these matters in his speech, I cannot prevent hon. Members following him, but they must not attempt to go further into details.

5.0 P.M.

The right hon. Gentleman who has just spoken will not misunderstand the position if the right hon. Gentleman the Chancellor of the Exchequer does not rise to reply to him at once. He asked me to intervene in order that he may answer further questions that may be raised in the course of the Debate when he replies later on. The right hon. Gentleman began with a dismal description of the Treasury and the condition in which he finds it now as compared with older times. I have very little experience of that office, but I can assure the right hon. Gentleman that we are endeavouring to administer that office on the same lines, more or less, as he administered it himself, and the reason why this new expenditure is recommended is because we believe that the country can fully afford it, and it is in response to demands comparable to those which he referred to from the Board of Education and from the Local Government Board. I do not think the right hon. Gentleman paid in his speech sufficient attention to the fundamental fact of this Budget, that the majority of the new taxes are not intended to increase the burden of the community as a whole, but go to reduce existing burdens, and ought not, therefore, to be compared with the whole for new expenditure. The right hon. Gentleman developed yesterday, and proceeded to develop to-day, an argument against the conduct of the Government in determining to reduce the charge for the repayment of debt and announcing that as part of their financial policy. He first said that we ought not to include in the reduction of debt achieved in the last eight years those amounts which had been paid on the Votes for Army and Navy works respectively. The right hon. Gentleman reminded us that that had been achieved by setting up Sinking Funds when the expenses were incurred by the right hon. Gentleman opposite and his Friends. I think we are entitled to include those amounts if we remind the Committee of the fact that whereas they provided the Sinking Fund and incurred new debts, we have put an end to that kind of expenditure since this Government assumed office. There is one other remarkable argument which is as great an achievement as anything I have heard in this House in the difficult task of comparing two things which were wholly and irremediably unlike.

The right hon. Gentleman said that by reducing the debt by £100,000,000 you have saved the taxpayer, roughly, something like £3,000,000 in interest on that debt, but you have to set against that the £21,000,000 you have incurred in respect of old age pensions and insurance. As I understand it, the dead-weight debt derives its name from the fact that the taxpayer, who is called upon to pay the interest, derives no present measurable benefit from the debt at all, and yet he cannot honourably escape, and his successors cannot escape, from the task of providing that interest as long as the debt remains unpaid, and as long as it remains a debt of this country; whereas, on the other hand, the expenditure incurred under the Insurance Act and for old age pensions is money which the taxpayer is asked to pay in order to foot the Bill for services rendered from day to day and from year to year. It is, in fact. a method of repayment of future debt, for whereas we inherited a deadweight debt from which we had no advantage, others who come after us by this Budget, on account of the great social reforms initiated by it, will have the advantage of greater prosperity in the nation through being relieved of many of the charges which now fall upon the taxpayer and the ratepayer. To suggest that you should compare the burden of the taxpayer, in respect of something which can only continue as long as it is useful, with something which burdens him for ever is, I venture to say, with all respect to the right hon. Gentleman, merely grotesque.

If the Committee will forgive me for dealing in more detail in this question with the reduction of debt, I should like to point out that there are three main heads under which we ought to consider the adequacy of the provision we have made. (1) How does the burden of debt remaining for future generations compare with the burden shouldered by the taxpayers of to-day or yesterday? (2) How do the sacrifices made by the present generation for the purpose of reducing debt compare with those made by earlier generations? (3) How far, having regard to expediency and equity, does the provision for debt reduction satisfy the creditors of the State, that is, the holders of Consols? The debt to-day is lighter per head of the population than it has ever been since the Napoleonic wars. In 1887, the total burden per head was £20.11, in 1899, before the Boer war, it was £15.52, and to-day it is £15.37. So far, therefore, as this comparison goes, the taxpayers since the Boer war have succeeded, despite the new debt added by that war of £160,000,000, in bringing the debt per head down to a lower figure than that which faced the taxpayer before the Boer war broke out. Further, not only has the population increased, but the wealth of the country has increased as well, and whereas the dead-weight debt on the 31st of March. 1906, was 5.8 per cent. of the estimated capital wealth of the country, on the 31st March, this year, the dead-weight debt was 4.3 per cent. of the estimated capital wealth of the country. Despite the fact that a large proportion of the money spent was derived from the Old Sinking Fund, I do think we are entitled to take credit for the fact that within the last eight years the present generation has made unprecedented sacrifices for the reduction of the debt. If you take into account the amount left over from last year of something like £5,000,000 for the reduction of debt, we have reduced it by £104,000,000 sterling. If you reduce the charge which comes in course of payment for the interest on debt by something like £3,000,000 sterling, then it clearly follows that with a debt charge of £3,000,000 less you can go on devoting the same amount of money as you did before to the reduction of debt. I ask the Committee to consider seriously, having regard to the sacrifices that we have made recently, and to the growth of the wealth of the country, whether it is right, when you are taking great sums of money from the taxpayers to improve the well-being of the community, to ask them to tax themselves with the unprecedented amount for the continued reduction of debt which has been going on for the last seven or eight years. I think it would have been right to-reduce the Sinking Fund, as is proposed to-day, even if there had been no suggestion of an increase of taxation. I would remind the right hon. Gentleman opposite of a Paper laid before this House on the 11th April, 1899, by Mr. Hanbury, in which he presents this view:— The maximum amount of stock of which alone account can be taken in connection with the Striking Fund cannot exceed the amount in the hands of the public. The amount to be taken into account is the amount in the hands of the public. Out of the total dead-weight debt the Government held on the 31st March, 1913, £233,000,000 sterling, or 35 per cent., the corresponding percentages for 1899 and 1906 being 34 per cent. and 28 per cent., respectively.

What is the amount in the Post Office Savings Bank?

I have no figures on that point.

The more there is in the Post Office Savings Bank account, the more serious is the situation, as by taking it for the Post Office you transform the obligation from a liability for an annuity into a liability to pay the capital sum.

I am only showing that if you take the test which was laid down by Mr. Hanbury, even in regard to that there has been an improvement in the position in respect of the amount of stock held by the public. I should like to commend to the right hon. Gentleman a report which I have noticed in one of the morning papers, which is not usually particularly favourable to the Government, with regard to the effect on Consol holders of the announcement which the Chancellor of the Exchequer made the day before yesterday as to the reduction of £1,000,000 in the Sinking Fund. Here is the quotation: Consols were depressed at first by the reduction of £1,000,000 of the New Sinking Fund. They fell to 74¾ for cash. Afterwards the market thought, after all, that £1,000,000 either way makes no great difference to the Consol market and Consols rose again to 7415/16 The fact of the matter is that when this money has been withdrawn from the Sinking Fund there still remains something like £6,500,000 for the reduction of debt, and having regard to the considerations that I have mentioned this is ample for that service. The next argument which the right hon. Gentleman addressed to the House was one concerning the new rates of Income Tax and the dangers which we were under of taking an undue proportion of taxation from those who were wealthy but who were few, because they did not loom largely in the constituencies. I do not think it is right to say that wealth is not adequately represented in this House. I wholly and entirely demur to the view that you can measure the influence of wealth upon politics by the actual number of votes recorded at the poll. Wealth has many other methods and weapons of political activity, and I do not think the wealthy are ever likely to suffer, because, politically, they are not adequately protected. I believe that the unequal distribution of wealth can only be defended if it can be proved that an adequate subscription is taken from those who have wealth—for the necessary requirements of the country. If one looks at the statistics of the growth of wealth and capital in this country on the one hand, and the growth of the size and amount of incomes that come under review for Income Tax purposes, there is not the slightest doubt, if this burden is spread properly and fairly over the community, that the community can easily afford to pay it. But this money is not taken from the wealthy alone, for it begins with the very lowest Income Tax payer. Roughly, on the basis of the rates in force last year, out of 1,250,000 Income Tax payers, 251,400 paid less than 1d. in the £; and on the proposed rates 214,000 will pay less than 1d. Going a little higher up the scale, 725,000, three-quarters of a million of taxpayers out of one and a quarter million, will pay less than 6d., as opposed to 747,000 if the old rate had continued.

I do not think that enough attention, in considering Income Tax questions, is paid to the actual rate of Income Tax that is paid. People talk of a 1s. 2d. Income Tax and a 1s. 4d. Income Tax, when the actual rate is something far less, when the majority of people are paying less than half, and when therefore there is sufficient room for a further drain upon Income Tax resources in times of national emergency. The House ought also to remember that the general run of Income Tax payer is just the very man who benefits mostly by a reduction in the rates, and therefore, when we are setting out to relieve a burden which a Royal Commission and a Departmental Committee together have agreed falls unjustly upon local taxes and ought to fall more substantially upon Imperial Taxes, the Income Tax payer is one of the first people to whom this House ought to apply. After all, there are many people in this country, and I believe in this House who would admit the rating of personalty—a local Income Tax. These new Income Taxes are local Income Taxes in that they are collected imperially and distributed locally for the relief of local burdens. I do think, and here I am expressing a personal opinion with all humility, that the idea that the Income-Tax should be kept low in order that in times of crises it should be the first place to which to resort for extra funds, is really not so axiomatic a proposition as people suggest. It is at the very moment of a national calamity and national emergency that you can go with the greatest certainty to the whole body of taxpayers, from the poorest to the richest, and call upon them to make a special contribution in aid of the necessities of their country.

The right hon. Gentleman opposite said something about the taxes on capital, and the harm that had been done by the increases in the Death Duties for which this Government have been responsible. There is no evidence of the destruction of capital in the statistics which are available. The total Death Duties paid in the seven years 1906–7 to 1912–13 have amounted to £154,400,000. The capital value of this country in 1913, if we take Sir Robert Giffen's principles of calculation, is £15,000,000,000, and other recent writers have put it at £15,869,000,000. Therefore this sum of £154,000,000 is under 1 per cent. for the whole period, or about. 15 per cent. per annum, and when you consider the rate of interest that this money probably obtains it is absolutely certain that the capital of this country is growing far faster than the amount taken from it for taxation.

May I ask the hon. Gentleman from where he got that figure of Sir Robert Giffen's?