House of Commons
Tuesday, May 11, 1920
Private Business
Private Bills [ Lords ] (Standing Orders not previously inquired into complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, and which are applicable thereto, have been complied with, namely:—
City of London (Various Powers) Bill [ Lords ].
Corporation of London (Rating of Reclaimed Lands) Bill [ Lords ].
St. Annes-on-the-Sea Urban District Council Bill [ Lords ].
Tees Conservancy Bill [ Lords ]
Ordered, That the Bills be read a Second time.
Provisional Order Bills (Standing Orders applicable thereto complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills, referred on the First Reading thereof, the Standing Orders which are applicable thereto have been complied with, namely:—
Ministry of Health Provisional Orders (No. 2) Bill.
Gas Provisional Orders Bill.
Ordered, that the Bills be read a Second time To-morrow.
Lancaster Corporation Water Bill [ Lords ],
Read the Third time, and passed, with Amendments.
London County Council (General Powers) Bill,
Mid-Glamorgan Water Bill,
As amended, considered; to be read the Third time.
London County Council (Money) Bill,
To be read a Second time To-morrow.
Coventry Corporation Bill ( by Order ).
Third Reading deferred till To-morrow, at a Quarter past Eight of the Clock.
Wallasey Corporation Bill ( by Order ),
Consideration, as amended deferred till To-morrow, at a Quarter past Eight. of the Clock.
Redcar Urban District Council Gas Bill ( by Order ),
Consideration, as amended. deferred till Thursday.
Carbery's Divorce Bill [ Lords ] ( by. Order ),
White's Divorce Bill [ Lords ] ( by Order ),
Read a Second time, and committed.
Tramways Provisional Orders Bill,
"to confirm certain Provisional Orders. made by the Minister of Transport under the Tramways Act, 1870, relating to Gravesend, Rosherville, and Northfleet Tramways (Amendment) and Warrington Corporation Tramways (Extension)," presented by Mr. NEAL; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 109.]
MINISTRY OF HEALTH PROVISIONAL ORDERS(No. 5) BILL,
"to confirm certain Provisional Orders. of the Minister of Health relating to Bognor, Bradford, Keighley, Southend-on-Sea, Tynemouth, and the Rochester and Chatham Joint Sewerage District," presented by Dr. ADDISON read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 110.]
Oral Answers to Questions
Poland
Sir S. Samuel's Report
asked the Under-Secretary of State for Foreign Affairs whether Sir Stuart Samuel's Commission of inquiry into the pogroms in Poland was sent to that country to inquire into the alleged atrocities on behalf of Parliament; whether pledges were given to this House on behalf of His Majesty's Government that the Report of the Commission would be laid before Parliament; what has been the approximate cost of the Commission; what country or countries will find this money; whether he is aware that Jews are still being ill-treated in Poland; and why public opinion is not being sought for the aid of the League of Nations by the publication of the Report?
Sir Stuart Samuel's Commission was sent to Poland by His Majesty's Government. As regards the second part of the hon. and gallant Member's question, I have already explained to the House that His Majesty's Government intend to instruct the British representative on the Council of the League of Nations to bring the Report to the notice of the Council, and until this has been done it would be undesirable to lay it on the Table of the House; no pledge was ever given to lay the Report before the House by a given date. The cost of the Commission was approximately £830, which is being borne by His Majesty's Government; the answer to the fifth part of the question is, so far as I am aware, in the negative. As regards the sixth part, I have already stated in my reply to the hon. Member for North Lanark on the 3rd instant that alleged infractions of the Minority Clauses of the Treaty with Poland must be in the first instance brought to the notice of the League of Nations, who are well able to take action without awaiting pressure from public opinion.
Why should this country pay the whole cost of the Commission in view of the fact that Parliament is not going to have the Report until it is dealt with by the League of Nations? Why should not the Signatory Powers and the Council of the League of Nations bear their share of the cost?
Well, the Commission was sent out by His Majesty's Government alone, and not by the Allied and Associated Powers.
In that case why is the report not to be laid on the Table of the House? Why is it undesirable to delay it until months have elapsed?
It is to be laid upon the Table of the House.
Why should it not be laid now?
It is more in conformity with the usual practice to follow the course we are adopting.
Occupation of Vilna
asked the Prime Minister by what authority are Polish forces occupying the Lithuanian city of Vilna; and whether it is proposed to request Poland to cease from the occupation of Lithuanian territory?
By a decision of the Supreme Council of July last, Vilna was provisionally allotted to the Poles without prejudice to the final frontiers of either Poland or Lithuania.
Is it not a fact that the Poles have advanced beyond the line laid down by the Supreme Council, and what steps have been taken to have its decisions respected?
The hon. and gallant Gentleman should give notice.
Egypt
Government Ex-Employes, Pensions
asked the under-Secretary of State for Foreign Affairs whether he is now able to make any statement as to the augmentation of the pensions of ex-employés of the Egyptian and Sudan Government services?
The Egyptian Government has recently granted a temporary increase of those pensions not exceeding £E.300 a year, and state that this is the utmost they are able to afford. The Sudan Government is not yet able to make definite proposals, but the matter is receiving earnest consideration.
Questions
Sir Auckland Geddes
asked the Under-Secretary of State for Foreign Affairs whether Sir Auckland Geddes, the British Ambassador to the United States, has yet been officially received by the President; and, if not, whether he can state the cause of the delay?
Sir Auckland Geddes has not yet had an opportunity of presenting his credentials to the President of the United States, presumably on account of the ill-health of the latter. Pending this formality, it is understood that he has been admitted to the exercised of his Ambassadorial functions, and he will, of course, avail himself of the earliest opportunity to present his credentials to President Wilson.
British Army
Venereal Disease, France and Germany
asked the Secretary of State for War and Air whether he is aware of the continual and alarming rise in the incidence of venereal disease amongst the British troops in France and Germany; whether he will take all possible steps to combat this; and whether in particular the privilege of free leave passes to Great Britain, recently withdrawn from these troops, can now be restored?
I am aware that there has been a rise in the incidence of venereal disease amongst the troops in France and Germany since the Armistice. The subject has received anxious consideration for some months past, and I am satisfied that the authorities on the spot are taking all possible steps to combat it. As regards the last part of the question, I would refer the hon. and gallant Member to my replies on 20th April and 6th May to the hon. Members for Bassetlaw and Lincoln respectively. The decision was only reached after very careful consideration.
Re-Enlistment, General Service
asked the Secretary of State for War and Air whether he is aware that many men who have re-enlisted for general service are also drawing pensions for wounds received in the recent War; whether general experience has shown the folly of taking unfit men into the Army; and whether a man suffering from a physical disability so great that he is in receipt of a State pension on that account ought to be selected to fight for his life?
A few men in receipt of disability pensions for wounds received in the recent War have been re-enlisted in the Army. The majority of these are not serving in combatant units; but in specialist corps, and they have not been found unfit for the duties upon which they are employed. The Regulations provide that, in the case of men discharged on medical grounds applying for re-enlistment, the Medical Officer should consult the former discharge documents showing the cause of discharge before certifying the man fit for re-enlistment. During the rush of recruiting last year a few men were enlisted, and subsequently found to be unfit for further service, but steps have been taken to obviate such mistakes arising in future. In view of the present position of recruiting, orders have been issued that ex-soldiers in receipt of disability pensions are not to be re-enlisted.
If I give my right hon. Friend particulars of men actually in combatant units and cavalry regiments who are in receipt of disability pensions, will he take steps to look into the cases?
Well, Sir, I should like to deal with each case separately. If a man has been wounded, and still wishes to go on in the Service, and his military superiors think he can do useful work, I certainly should not subject him to the same rigid examination from the point of view of health as an absolutely new man.
Is it a question for his military superiors? Is it not rather a question for the medical authorities, who are able to say whether or not a man will ultimately break down from the strain of service, though he may be perfectly fit for peace soldiering? But is it wise to inflate the totals of the Army? Was that not a disastrous policy previously?
I am afraid I do not altogether agree. In regard to recruiting for the Territorial Army, I have given directions that men who have got disability pensions are not for that reason —if there is no other—to be refused. There are many officers in the Army who like the idea of continuing service with their old comrades—men who served in the Boer War and in the Great War.
Is it not the fact that pensions are granted for slight disability that does not interfere with a man's usual work?
In some cases the pension is on account of the amount of disablement; in other cases the amount of suffering and injury that individual has received.
Is my right hon. Friend not aware that new men who are physically unfit are being recruited into the Army at the present time?
I am doing my best to stiffen the standard of recruiting. We have got a certain amount of reserve power in hand that will enable me to stiffen the standard. In the first instance we had to take anybody we could get.
Could not the men physically unfit be discharged from the Army?
It is not intended to stop recruiting, but to stiffen the standards, and by a refining process to get rid of the men who were not physically fit. In regard to wounded soldiers, we should be specially careful to try and study their wishes.
Education Corps
asked the Secretary, off State for War and Air whether, on 10th March last, an official letter was circulated to the effect that a Royal Warrant would shortly be issued for establishing the new Army education corps; what is the reason for the delay in the publication of the Royal Warrant; and whether, in view of the serious dissatisfaction existing in the corps of Army schoolmasters through this delay, he will state when the document will be published?
The general decision was circulated as soon as sanction had been obtained, but the hon. and gallant Member will understand that, since it involves the establishment of a permanent Corps of the Army, there are many matters of detail to be con- sidered before a Royal Warrant can be issued. No avoidable time has been lost, and I hope to be in a position to submit the Warrant to His Majesty for approval in the course of a few days.
I should like to ask the right hon. Gentleman if it is not a fact that the whole of this education work in the Army is in jeopardy owing to the apathy of certain commanding officers; and if that be true will he consider the advisability of taking disciplinary action in the matter?
I do not think it is in jeopardy because the Army Council are resolved that the scheme shall have a thoroughly fair trial. We must not be too ambitious. We must give it a thoroughly fair trial. Naturally the subordinate officers have loyally accepted that decision.
Is this borne on the Army Vote; or is it additional to the expenses of civil education?
Yes, certainly.
Maisons Tolerees
asked the Secretary of State for War and Air whether his attention has been called to statements recently made in the Lower House of Convocation, to the effect that houses of ill-fame are officially recognised by the military authorities in certain military establishments abroad, and that the War Office has information concerning confidential orders or circulars, issued under military authority, permitting and regulating resort by members of His Majesty's forces to such places; and whether he can make any statement on this matter?
No such orders have been issued or authorised by the War Office.
Territorial Army, Recruiting
asked the Secretary of State for War and Air if he has official reports showing that there is a shortage of recruits for the Territorial Army, and that the apparent reluctance to join is due to the fact that it has not yet been decided what units to raise, to the lack of a permanent staff and want of officers, delay on the part of the Army Council in perfecting the necessary machinery, the smallness of the bonus offered, dissatis- faction on the part of suitable men at the treatment meted out to demobilised men in respect to pensions and grants, and lack of enthusiasm and encouragement on the part of headquarters staff; and if he will say what steps he purposes taking to establish permanently a force which rendered great and distinguished service during the War?
I would refer the hon. Member to my statement on Tuesday last. The progress of recruiting is not thought to be definitely unsatisfactory and, generally speaking, the local authorities consider that the numbers required will be obtained in the course of time. With few exceptions the units to be raised have been fixed and allocated to counties, and permanent staff have been appointed. Applications for additional permanent staff for certain units are now being dealt with. The same is true of commanding officers, and as soon as they have made their recommendations the remaining officers can be appointed. Every effort is being made to settle the large number of questions involved in the perfection of the new machinery and substantial progress has been made. I am not aware that there is any general feeling that the amount of the bonuses offered is too small. Certain criticisms have been received regarding the conditions of issue this year and these are being considered. Nor am I aware that men are reluctant to join because they are dissatisfied with their treatment as regards pensions and grants. There is no justification for the statement that there is any lack of enthusiasm on the part of the Government or the military authorities. The exact contrary is the truth.
Is it not a fact that the unusually large number of men who have joined the Regular Army during the last twelve months naturally absorbs part of the supply that might have gone to the Territorial Army; and considering that fact, the present rate of recruiting is not really so bad?
I do not think it is so bad, but I was much impressed by the opinion of the county authorities and the Territorial Forces Associations, and they seem confident that in time, with proper support, they will get their men. They are in touch with large bodies of ex-territorial soldiers, and of course there is coming on the new manhood of the country, which has not had an opportunity of fighting in the War.
Is is not a fact that action in certain quarters is not satisfactory?
We shall have to make a long, persevering, energetic and whole-hearted campaign for the creation of the Territorial Army.
Motor Depot, Kennington
asked for what purpose the motor depôt in Reedworth Street, Kennington, is still kept open; how many motor lorries and cars are garaged there; and what is the total approximate expense per annum of the depôt?
I am informed that this depot is used by the Canadian Army Service Corps for the accommodation of a number of small cars and motor lorries which they have on loan from the War Office. The vehicles are being used for transporting ordnance and aircraft stores to ports for shipment to Canada.
Mechanical Transport, Norwich
asked whether orders were received in August, 1919, for the closing down of No. 977 Company, Mechanical Transport, at Norwich; why is it still in existence; whether he is aware that, on the completion of the disposal of stores, the men could not be discharged without a medical board and that they have waited a month for the board with nothing to do and are getting out of hand; is he aware that the cost of this company has averaged 25s. per ton mile, whereas a civilian firm would have done the transport work for something approaching 4s. per mile; and whether, seeing that it has already taken eight months to carry out the order of last August, he will issue instructions for the immediate closing down of this establishment?
Orders were issued in September last for this company of the Royal Army Service Corps to be closed down. From this date it ceased to be an effective unit, but 14 other ranks still remained at the end of April for the purpose of clearing up the accounts arising from the disposal of the vehicles, stores, etc. The company will be completely closed down by the 17th instant. A medical board was applied for in connection with five other ranks who were claiming disability. There is no reason to believe that there has been any undue delay in carrying out this formality, nor that the men in question are anything but well conducted. The gross cost per ton mile has never exceeded 7s. 5d., and it only reached this figure just prior to the company closing down; this figure was abnormal owing to the unit being in process of being broken up.
Is it not an extraordinary thing that it should take over seven months to close down one company of the Army Service Corps?
Is it not a fact that these men have been waiting over a month for a medical board?
I cannot answer the last point without notice. As to the other question, it always does take time to go through the winding-up process, and there must be some delay.
Is it not a fact that these men who want to get back into civil life have waited a month for a medical board?
I cannot say, but I will inquire into the matter.
asked the Secretary of State for War and Air, whether he is aware that on the 10th April, 1920, an officer was instructed by the senior inspector at the mechanical transport headquarters, Norwich, 977 Company, to proceed in a Vauxhall car to Richborough to collect stores (arriving from France to the order of the senior inspector of mechanical transport) and to have them forwarded on a box-van to his office, hut No. 6, Horse Guards; whether the box-van, a 20 h.p. Crossley, arrived at the senior inspector of mechanical transport's office with a case containing 20 bottles of ink, a set of wooden partitions, 7 ft. by 8 ft., value 30s., and some old drawing boards value 20s.; whether the cost of the journey, including Vauxhall car, Crossley box-van, three men's pay for two days, and one officer's pay, three days at 45s., worked out at £26 15s., and that against this the cost per rail at company's risk would be £2 6s. 8d.; and whether, having regard to the need for economy in every branch of the public service, he will cause an inquiry to be made into the working of the mechanical transport headquarters at Norwich?
There were no mechanical transport vehicles with this company at Norwich on the date mentioned, and no officers were sent to Rich-borough. With a view to hastening the disposal of surplus Government stocks at Chatham, Canterbury and Shorncliffe, a representative from the Senior Inspector of Mechanical Transport's Department was detailed on the 8th of April to visit the units at these stations, and, in the interests of economy, the officer detailed was instructed to proceed by car. In the course of his inspection duty, he ascertained that cases containing valuable records, data and testing instruments had arrived at Richborough. These were urgently required, and as cases of a similar nature had been mislaid or met with considerable delay at the hands of the railway company, the Senior Inspector of Mechanical Transport issued instructions for a box van to be sent from Shorncliffe to Richborough to collect the items in question. The cost of the journey was the cost of running the box van with one driver to convey the goods to their destination.
Does the right hon. Gentleman suggest that my facts are inaccurate?
It would appear so.
I shall ask another question, and give the names of the persons concerned.
National Reservists (Bounty)
asked the Secretary of State for War and Air whether he is aware that National Reservists who re-enlisted for overseas service in 1914 at a Territorial depot received only £5 gratuity, although A.F.B. 218 M. stated that £10 would be paid to men undertaking general service; and whether there was in fact any difference betwen the services rendered by Territorial men undertaking the oversea obligation and other men classified for general service?
The bounty of £10 was issuable only to National Reservists who enlisted in the Regular Army. Territorials, whether they had been National Reservists or not, received no bounty when they volunteered for general service. I am afraid I can hold out no hope that the explicit conditions of this grant can, after this lapse of time, be altered.
Is the right hon. Gentleman aware that this decision inflicts a very real grievance upon certain men who have performed equal service with the others?
I am aware that there has been some disappointment, but it cannot now be altered.
Army Veterinary Corps
asked the Secretary of State for War and Air whether he is aware that ex-warrant officers who undertook service in the Army Veterinary Corps on the outbreak of war have been refused the privilege of re-enlisted soldiers, on the grounds that they were not required to take the oath; on what authority these men were employed on military duty under military discipline; and whether he can adjust the injustice inflicted on these men?
If the hon. and gallant Member will furnish me with particulars of the specific cases he has in mind, I will have inquiry made and inform him of the result.
Territorial Force (Special Medal)
asked the Secretary of State for War and Air if he will reconsider the case of the officers, non-commissioned officers, and men who served in the Territorial Force before the War but who joined the overseas army on the outbreak of war and who have been awarded either the 1914 or 1915 Star but who are debarred from receiving the Territorial War Medal which, if awarded, would show that they were pre-War soldiers who volunteered?
I am afraid I can add nothing to the answers which I gave to questions regarding this medal on the 9th March last.
May I ask the right hon. Gentleman if he will not reconsider this question? Does he not think it a very great hardship that these Territorial officers and men, who were unable to go to the Front, should have no record to show that they served their country before the War?
All these are difficult questions, and a decision was reached on these lines, that those who received the 1914–15 Star and have that decoration should not have the other one—the main principle being that it was thought that three medals were enough for one war. I think it is doubtful whether it is expedient to re-open the subject. After all, the actual grant of the 1914–15 Star is in itself a great privilege, because very hard fighting took place after that which was not specially distinguished by the double medal.
Does not the right hon. Gentleman know that it would be very much appreciated by these officers and men if they could show that they served their country before the War, and gave their time with that object?
Discharge by Purchase
asked the Secretary of State for War and Air what is the purchase price from the Army for men with 12 months' service and for men with over 12 months' service?
The new rates and conditions governing the purchase of discharge are shown in Army Order 180 of 1920, which was issued on the 5th instant. I am sending the hon. Member a copy of the Order.
Can that Army Order be published in the Press, so that anyone desirous of purchasing his son out of the Army can know of it?
I do not know of any rule against it being published in the Press. The Order is available to the public.
Will my hon. Friend see that it is published?
I will inquire into it.
Army Ordnance Depot, Devonport
asked the Secretary of State for War and Air whether he is aware that considerable unrest prevails in connection with men employed at the Army Ordnance depôt at Devonport gunwharf consequent on the rumour that the strength of the depôt is to be considerably decreased and that a number of civilian workmen employed at the gunwharf are to be discharged; and will he say if there is any possibility of the depôt being closed, or if in the event of further discharges what endeavours are being made by the Government to secure employment for the men discharged?
The closing of the Ordnance depôt at Devonport is not in contemplation, nor is there any immediate prospect of the strength of the depot being appreciably reduced below its pre-War establishment.
Royal Air Force
Officers' Titles
asked whether a naval officer who was lent to the Air Service in which he attained the rank of lieutenant-colonel is entitled to retain that rank and to use the designation of lieutenant-colonel after being dismissed His Majesty's service?
A naval officer who has been gazetted as relinquishing his temporary commission as lieutenant-colonel in the Royal Air Force and who has subsequently been dismissed the Naval Service, or whose name has been removed from the Navy List, has no right to use the designation of his former rank in the Royal Air Force without a specific application to the Air Council through the Admiralty. I may add that in such a case it is most improbable that the Air Council would accede to the application.
Will the right hon. Gentleman take immediate steps to see that the military rank shall not be improperly assumed for anti-British purposes?
When these naval officers are transferred to the Air Service, is it for four years and four years in the Reserve?
Does not the fact that a member of His Majesty's service has been dismissed necessarily mean that he reverts to the position of a civilian, and has no right to any military rank whatever?
I have put questions to the authorities on the subject, and I think it must be dealt with on its merits.
Medical Service (Pay)
asked the Secretary of State for War and Air if he is aware that great hardship and much discontent is being caused among members of the medical service of the Royal Air Force by the delay in payment of back pay, now many months over due; and if he will take steps to see that these overdue payments shall be made at once?
The arrangements for remustering Royal Air Force medical personnel to the new rates of pay have been under preparation for some time, and the necessary order was issued last week.
Palestine
Anti-Jewish Riots, Jerusalem
17 and 18.
asked (1) what was the corn-position of the court which sentenced Lieut. Jabotinsky to 15 years' penal servitude; whether this sentence was approved by General Lord Allenby; whether an appeal will be allowed against the revised sentence; whether Mr. Jabotinsky is being treated as a political prisoner or as an ordinary criminal;
(2) whether he can now state whether the British military authorities received any warning of the possibility of anti-Jewish rioting in Jerusalem on the occasion of the Moslem pilgrimage on 4th April last; and, if so, what steps were taken to preserve order?
I would refer the hon. Member to my answers to previous questions on this subject. In continuation of my statement of the 4th May, five Jews have since been acquitted on the charge of being in possession of firearms.
The trial of three Moslems who are charged with helping the escape of absconders has been postponed for the production of further witnesses. The trial of one Jew charged with being in possession of firearms and shooting is now in progress and will be followed by the trial of the three Moslems mentioned above.
The following are now awaiting trial:—
2 Jews for being in possession of firearms;
1 Moslem for wounding.
When will the right hon. Gentleman be in a position to answer my question about Lieut. Jabotinsky?
I consider that question has been dealt with by my answer to a previous question.
Is it not a fact that the previous answer simply was that the right hon. Gentleman was waiting for further information? When will the right hon. Gentleman have -this further information to enable him to reply to my specific question which was on the paper a week ago?
What is the specific question referred to by the hon. and gallant Gentleman?
The specific question was, what was the composition of the court which sentenced Lieut. Jobotinsky to fifteen years' penal servitude?
I gave the full composition of the court, and if the hon. and gallant Gentleman had been in his place he would have heard my answer, or if he had taken the trouble to consult the records he would have been able to read it in the OFFICIAL REPORT.
My second question was whether the sentence was approved by Lord Allenby? Thirdly, whether an appeal will be allowed against the revised sentence; and fourthly, whether Lieut. Jobotinsky is being treated as a political prisoner or as an ordinary criminal?
I replied that the sentence was reduced by Lord Allenby. The ordinary course will be followed in regard to an appeal. I also replied that Lieut. Jobotinsky was being treated in the second division, and with treatment appropriate to that case.
I give notice that I shall repeat this question.
And I give notice that if the hon. and gallant Member does repeat it I shall not allow it to appear on the Paper.
Ex-Service Men
War Office Clerks (Pay)
asked the Secretary of State for War and Air whether he is aware that ex-soldiers under 21 who have fought in the War, and who are now employed as clerks in record offices and other offices under the War Office, receive a considerably lower rate of pay than clerks over 21; and whether he will at once take steps to rectify this state of things?
War Department offices in this matter follow the rule laid down for the public service generally. For clerks there are special rates of pay varying according to age. I regret that I am not in a position to go outside the scale.
Does the right hon. Baronet think it is really decent or right to say that men are old enough to fight, and, when they come back from fighting, are not old enough to be properly paid?
That is a matter for argument.
Land Settlement
asked the Prime Minister what steps are being taken to carry out the undertaking of the Government that land should be provided for ex-service men in Ireland, in view of the fact that the Irish Land Commission inspectors, who were endeavouring to buy land for ex-service men in County Galway, have lately received threatening anonymous letters strongly advising them not to buy any farm in the county for ex-service men, which purchase would cause a lot of bloodshed, as the writers are determined at the cost of their lives to keep out any ex-sailor or ex-soldier; and is he aware that other threatening letters have been received showing five plots of land laid out as graves for ex-soldiers and the remaining plots for the inspectors?
The Estates Commissioners are making inquiries and taking such steps as are practicable with a view to the acquisition of land for the purposes of the Irish Land (Provision for Sailors and Soldiers) Act, 1919. It is a fact that some of the inspectors have received threatening letters with reference to land which the Commissioners propose to acquire in County Galway for the purposes of the Act. The Government is doing everything in its power to deal with the situation.
In view of the unsatisfactory answer I shall raise this question and the question of ex-service men generally on the Adjournment on Thursday week.
Has the right hon. Gentleman's attention been called to the statement by the Lord Chancellor in another place the other day that there was not sufficient land in Ireland to go round?
The hon. and gallant Gentleman should give notice of that question.
Ministry of Pensions (Staff)
asked the Minister of Pensions whether the medical and other officers employed by the Ministry at salaries over £350 a year and who, in addition, are in receipt of income from other public funds are all disabled men; and will he say from which public funds such income is derived and what is the amount in each case apart from disability pension?
With the hon. Member's permission, I am circulating in the OFFICIAL REPORT a statement showing in detail the particulars for which he asks.
The following is the statement referred to:
The numbers, amount, and source of income from other public funds are as follow:—
Number. Amount of Pension, &c. Source. £ 1 120 War Office. 1 150 War Office. 1 164 Admiralty. 1 173 War Office. 1 190 Admiralty. 2 365 War Office and Admiralty. 1 426 * Soudan Government. 1 440 Indian Office. 1 451 War Office. 1 500 War Office. 1 510 Admiralty. 2 600 Admiralty. 1 600 War Office. 1 780 War Office. 2 800 War Office. 1 900 India Office. 2 1,000 War Office. 1 1,010 Admiralty. 1 1,040 War Office. Total 23 * This officer receives, in addition, £120 from the War Office. This officer receives, in addition, £120 from the War Office.
The officers referred to are not all disabled, and the amounts given above do not in any case include disability pension.
asked how many ex-service men are employed at the headquarters of the Ministry of Pensions in London; and how many of these are receiving a salary over £295 per annum?
The number of ex-service men employed at headquarters on the 1st May, 1920, was 2,504, and of these 73 are receiving a salary of over £295 a year. In addition, there are at headquarters 30 medical officers who served in the late War in receipt of a salary of over £295 a year.
War Pensions Committees (Secretaries)
asked how many individuals other than ex-service men have been appointed as secretaries of local war pensions committees or sub-committees during the last. 12 months?
During the period mentioned there have been 37 such appointments out of a total number of 430. In all of those 37 cases, there were considered to be exceptional circumstances justifying a departure from the general rule which requires the appointment of an ex-service man.
asked the Minister of Pensions whether it has been definitely decided that the secretaryship of the Newcastle war pensions committee must be filled by the appointment of an ex-service man; and if he has so informed the local committee?
The answer to both parts of the question is in the affirmative.
Unemployment, Bristol
( by Private Notice ) asked the Minister of Labour whether he is aware that there are more than 5,000 men out of work in Bristol, of whom the great majority are ex-service men; whether assurances were given, with the assent of the Government of the day, that the interests of men returning from military service after the War would be fully protected; and whether steps will be taken at an early date to secure for ex-service men the right to choose and learn a trade and to find employment in that trade.
The number of men registered as unemployed at the Bristol Employment Exchanges is 5,469, of whom 4,358 are ex-service men in receipt of out of-work donation. The answer to the second part of the question is in the affirmative. With regard to the third part of the question, training schemes for disabled ex-service men are in operation, with the assistance of employers and employed in a considerable number of skilled trades, and I shall certainly do all I can to secure their prompt extension. As regards the absorption in civil employment of ex-service men now unemployed, that matter, again, is engaging my closest attention in its several aspects. So far as the Bristol problem is concerned, I saw members of the local employment committee and of the relief committee from Bristol last Monday week, and I have since discussed the matter generally with my hon. colleague the Parliamentary Secretary, who has been so good as to undertake to go to Bristol and discuss personally the situation with the responsible authorities there.
Are the Employment Exchanges really doing any useful work in providing work for these men?
Certainly, they are doing useful work.
Why are they not more successful when there are 5,800 men out of work in Bristol?
Is any of the difficulty of obtaining employment by these men due in any way to the action of any of the trade unions?
Speaking off hand as regards training, I should say that the opportunities of training are being extended rapidly. I think that there have been difficulties in Bristol in that respect, but again I say that, with good will and without recrimination, we shall succeed in removing them.
Have the national roll of employers employed their full percentage of disabled men?
I cannot say. I hope that we may get a large extension of the number of employers who are on that roll, but I have taken every step in that direction.
Russia
Caucasus (British Troops)
asked the Secretary of State for War and Air how many British troops are at present stationed at Batoum and the Caucasus, and whether it is intended to mobilise these troops against the Soviet forces in the Baku area?
It is not in the public interest to give exact figures at the present time. The answer to the second part of the question is in the negative. Baku is some distance from Batoum.
Is it to be part of the pleasurable burden of the British taxpayer to police all the disturbed areas throughout the world?
No, Sir. The War Office for a long time would have been glad, on purely military grounds, to withdraw from Batoum, but, as the hon. Member knows, at the present time it is our only means of keeping in touch with the Armenian Republic. Once Batoum is evacuated, all connection is finally severed.
Is there any truth in the statement that the British Military Mission at Batoum has been captured by the Turkish forces?
I should like to have notice of that question. Some Naval personnel have, I believe, been captured.
asked the Secretary of State for War and Air whether any British force was at Baku at the time of its occupation by Soviet forces; and, if so, what has happened to this force?
I have been asked to reply to this question. There was no British Military force at Baku at the time of its occupation by Soviet forces. A Naval Mission consisting of 5 officers and 30 ratings was, however, en route from Batoum to Enzeli, and was at Baku at the time of change of Government. I am ascertaining the latest news regarding the Mission.
Is there any truth in the statement that these officers and men are being held as hostages?
I prefer not to say until I have ascertained all the latest information, and then I will communicate with my Noble and gallant Friend.
If it is proved that these men are captured, will steps be taken to attempt their exchange?
That is hardly a question for me to answer.
asked the Secretary of State for War and Air whether the British force at Batum has been withdrawn; and, if not, whether it is to be reinforced and used for offensive purposes, or what is the object of its retention there?
The British force is retained at Batoum in pursuance of Allied policy. It is not intended that the force should be used for offensive purposes.
British Intervention (Cost)
asked the Secretary of State for War and Air whether the statement of the cost of intervention in Russia up to 31st March, 1920, will be comprehensive, and will include the cost of secret service and propaganda in Russia and neighbouring states, and any other items of expenditure attributable to the campaign against Soviet Russia?
The statement is being prepared on the same basis as the earlier statement, as to which I would refer the hon. Member to the reply given on the 28th April to the hon. Member for Clitheroe (Mr. Alfred Davies).
Polish Military Operations
asked the Secretary of State for War and Air whether Kiev has been captured by the Polish troops; whether they are advancing beyond that point; and what is the strength of the British Mission with the Polish attacking army?
The answer to the first portion of the question is in the affirmative. A wireless message from Moscow announced the capture of Kiev by the Polish forces on the 6th May. As regards the intentions of the Poles, this is a matter for which the Polish Government alone is responsible. With regard to the last portion of the question, there is a small British Military Intelligence Mission in Warsaw. This Mission is not accompanying the Polish forces engaged in the offensive, although it is quite likely that the Head of the Mission may have detailed an officer to keep in touch with military operations. I do not know whether he has done so, or whether the Polish General Staff have permitted any British officer to accompany their forces.
Can the right hon. Gentleman say what is the actual work of the British Mission? What is it kept there for?
Among other things, to enable me to secure information to answer questions which are put to me here.
Can my right hon. Friend say whether the British War Office is giving any encouragement or military assistance to the Poles in this adventure?
No, Sir. The general question of Poland has been settled, not by the British War Office, but by the Supreme Council of the Allies. Questions with regard to that matter should be addressed, not to the Minister in charge of any particular Department of any particular country, but to the Head of the Government of the country in question.
Has the Supreme Council directed the British War Office to give assistance to the Poles in this enterprise?
The British War Office have given no assistance to the Poles in this enterprise, but both the French and British Governments in former periods—last year and so on—have helped to strengthen and equip the Polish Army, that being an essential part of the policy of the Treaty.
British Military Mission, Crimea
asked the Secretary of State for War and Air whether the volunteer Army in the Crimea is advancing against the Soviet forces, is holding its own, or has decided to surrender; and what instructions have been given to the British military mission with General Wrangel as to the course of action they are to advise?
The volunteer Army in the Crimea is not advancing against the Soviet forces, nor has it decided to surrender, but it is holding its own, in anticipation of the conclusion of a settlement with the Moscow Government. The British military mission gives advice on military questions, and not on policy.
British Control Office, New York
asked the Secretary of State for War and Air whether the office in New York described as British Control, but until the end of last year described as British Military Control, comes under his Department; if so, what is the inclusive cost of this office; and what purpose it serves?
The Military Control Office in New York was abolished in the autumn of last year and a Passport Control Office under the direction of the Foreign Office was established. This office deals with the granting of visas in New York to foreigners desirous of proceeding to British territory. In addition, the Passport Control Officer supervises generally the British passport control system in the United States of America. The office is self-supporting, the cost being defrayed out of the fees received for visas.
Oil, Great Britain
asked the Secretary of State for the Home Department in how many borings in Great Britain oil has been discovered; what amount of oil is being produced in each successful case; whether any decision has been reached as to what is to he done with these wells; what is being done with the oil in the meantime; and in how many cases are boring operations now being continued?
Of the eleven wells which have been drilled, one has been abandoned owing to the difficulty of shutting off large quantities of water which were encountered. Traces of oil have been found in five wells, and one well, at Hardstoft, in Derbyshire, has produced oil in quantity. This well has a natural flow of 50 barrels per week. An experiment in baling showed that it would be possible to increase this quantity to 250 barrels per week. The total amount of oil produced to date is about 2,800 barrels, or 100,000 gallons. The oil is being retained in storage pending a decision on the question of oil rights in this country. Drilling is proceeding in nine other wells, and it is hoped that five will shortly be completed.
Naval and Military Pensions and Grants
Disabled Men (Travelling Facilities)
asked the Minister of Pensions whether a decision has now been arrived at regarding the provision of additional travelling facilities by means of half-fare vouchers to men undergoing treatment away from home; and whether, in view of the fact that it is a hardship to disabled men in such circumstances that they can only visit their homes free of cost at infrequent intervals, he will further consider the issue of a free railway ticket every three months, instead of once in every six months, or some similar concession?
The answer to the first part of the question is in the affirmative. Under the present Regulations of the Ministry, a man under treatment away from home may be provided with a free railway ticket after six months, and a further free ticket for each subsequent six months of treatment. In future, four half-fare vouchers may be substituted for two free tickets, and the man who is under treatment for less than six months will thus be able to visit his home at half-fare after three months. Men under treatment in the convalescent centres of the Ministry are considered to need rather more extended facilities for visiting their homes, seeing that they are away for longer periods, and are at the same time in a better condition of health. These men will accordingly be allowed three free tickets, or six half-fare vouchers, instead of four and two respectively. Instructions will at once be issued to give effect to these decisions.
Scottish Region (Temporary Staff)
asked the Minister of Pensions why the rates of pay agreed to by the Arbitration Board for the temporary staff of the Scottish region are not being paid; and what is the reason for the smaller amounts which are?
The new rates of pay agreed to by the Arbitration Board, which concerned routine and junior clerks and typists, have been in payment in Scotland since Friday, 30th April. Increased rates have now been sanctioned for the higher grades of the provincial temporary staff, and these rates have been in payment in Scotland since Friday the 7th instant.
That is not the question I put. The question I put was why the rates of pay agreed to by the Arbitration Board are not being paid.
I gave the answer. The new rates agreed to by arbitration have been in payment since Friday, 30th April.
Motherless Children (Allowance)
asked the Minister of Pensions whether power can be given to the local war pensions committees for continuing the allowances for motherless children of demobilised or discharged soldiers until such times as the men are in a position to take full charge of the children, rather than such an allowance be limited to one month; and if he will take action in the matter?
My right hon. Friend is not prepared to give local war pensions committees the power of indefinitely extending the period after discharge or demobilisation during which allowances may be continued to the motherless children of an ex-service man. As indicated in the reply which was given to the hon. Member on the 30th March last, exceptional cases of difficulty, where some extension of the period appears to be necessary, may be referred to the Special Grants Committee for decision.
Esthonia, Latvia, and Lithuania
asked the Prime Minister when it is proposed to give by His Majesty's Government de jure recognition to the governments of Esthonia, Latvia, and Lithuania?
I would refer the hon. Member to the answer which I gave on the 22nd of March to a question by my Noble Friend, the Member for Hitchin, which applies to Latvia and Lithuania as well as to Esthonia.
Has progress been made since 22nd March?
On seeing this question I decided to ask the Prime Minister to take it up with the French Prime Minister at their next meeting, which will I think be this week.
Mesopotamia (Garrison)
asked the Prime Minister whether any estimate has been formed by his military advisers of the strength of the British-Indian force which will be required to maintain law and order in Mesopotamia; and what system will be instituted for the relief of these troops?
The whole matter of the future garrison in Mesopotamia is under consideration. It is hoped to make considerable use of the Air Service with a view to economising troops, but no forecast can be given at present. Units stationed in Mesopotamia will be treated for purposes of reliefs in the same way as units on foreign service in any other part of the world.
Ireland
Crime
asked the Prime Minister whether he is aware that the Chief Secretary to the Lord Lieutenant of Ireland has urged on a deputation the importance of giving increased publicity to reports of crimes in Ireland; whether Sir Nevil Macready has taken a similar line in Dublin, and has established a Press Bureau; whether such activities are part of the Government policy; whether the cost of such Departments is to be met from public funds; and whether he can state with what object the movement has been launched?
It is true that the Irish Government has made arrangements for furnishing to the Press statements of outrages as officially reported to the Government. The sole object is to supply accurate accounts of these occurrences, to show the actual condition of the country. No new Department is being formed, and no additional charge on public funds is being incurred.
Can the right hon. Gentleman say whether it is a fact that intimation has been given to Conservative Members of the Coalition, through the usual channels, that they may now ask as many questions as they like about outrages in Ireland? What is the object?
So far as I know, no such intimation has been given, and, from my experience, it is unnecessary.
asked the Prime Minister whether he will call for Reports from the Lord Chief Justice of Ireland and from Mr. Wylie, Crown Counsel it the Lorrha case recently tried in Dublin, with reference to the withholding by Dublin Castle officials of Gilligan's original statement almost until the last moment of the trial; whether he will ascertain the names of the officials who had withheld a document on which the life of the accused depended; whether he will ascertain what officials did in fact interview Gilligan in the interval between his first statement and his sworn evidence; and whether he will cause a searching and independent investigation to be made into the whole incident?
There is no power to call for a Report from the Lord Chief Justice, and the answer to the former question was given after communication with Mr. Wylie. I beg to refer my hon. Friend as regards the last part of his question to my answer of Tuesday last.
What is the objection to letting us have the names of these officials? I should like to ask the Leader of the House whether he seriously proposes to retain in the public service officials who are engaged in suborning evidence against innocent men in a murder trial?
I should need proof of the facts before answering that question.
In the question addressed to the Prime Minister I asked whether an inquiry will be held into this matter. I now ask the Leader of the House whether an inquiry will be held.
We shall judge by the primâ facie evidence whether there is any need for inquiry.
As this is a serious matter may I ask the right hon. Gentleman whether his attention has been called to the comment of the Lord Chief Justice on the verdict of the jury, and whether he is aware that the Crown Counsel in the case stated that the original statement made by Gilligan was only put into his bands at the last moment?
It is quite obvious that I cannot be aware of all these things. The hon. Member must give me notice of such questions.
Is the right hon Gentleman aware that in the question on the Paper addressed to the Prime Minister I gave notice?
The question addressed to the Prime Minister was answered.
No. It was evaded. I will put it down again.
( by Private Notice ) asked the Chief Secretary for Ireland whether it is a fact that four policemen were murdered in Ireland yesterday; and whether the Government are taking any steps to prevent these murders by the distribution of bodies of soldiers to support the police in disturbed areas in that country?
I regret to say that it is a fact that two sergeants and two constables of the Royal Irish Constabulary were murdered yesterday. In one case in County Tipperary, Sergeant McDonnell and Constable Hayes, returning to their huts at Clonaulty from Goolds Cross railway station, were suddenly confronted by four men, who called upon them to hold up their hands. The sergeant and the constable refused, and the sergeant was shot dead. Constable Hayes drew his revolver and succeeded in escaping. The constable has identified two of the men. In the other case, near Timoleague, County Cork, Sergeant Flynn and three constables were attacked by armed men in ambush. The sergeant and two constables were shot dead. The fourth member of the party was wounded while replying to the attack. The police and the military are doing all in their power to prevent such incidents.
Have any arrests been made in connection with these outrages?
Seeing that in the first instance I have been informed that the constable has succeeded in identifying two persons, I am pretty sure that these men have been arrested, if at all possible.
If these men are arrested, will they be released again on hunger strike?
Could the Attorney-General assure the House that ample provision is being made by the Government of Ireland for the widows and children of the murdered men?
Would the right hon. and learned Gentleman say why he thinks that, because these men have been identified, he is pretty sure they have been arrested?
Certainly, I can say that every effort will be made to do it.
May I have an answer to my question?
Yes. In the Constabulary Vote there is provision made for the widows and children, and everything that is allowable under the Statute dealing with the Constabulary will be given in these cases.
Gretna Factory
asked the Secretary of State for War and Air whether it is intended, owing to the size of the Gretna factory, to work different portions of the factory alternately; and, if so, whether this proposal will involve greater cost to the country than would be the case if the Waltham factory were retained?
I would refer the hon. Member to the written reply given on Wednesday last to the hon. and gallant Member for Epping.
Police, Special Service Branch
asked the Home Secretary if he will state the number of persons employed in the special service branch under Sir Basil Thompson at headquarters and elsewhere?
The regular staff of the Special Branch numbers at headquarters and elsewhere is 133.
Does that include the men employed in secret service in industrial districts?
It is the whole of the regular staff.
Aliens (Imprisonment and Deportation)
asked the Home Secretary how many aliens of each nationality are at present imprisoned or detained in His Majesty's prisons under the Aliens Restrictions Act and Defence of the Realm Regulations; and how many aliens of each nationality have been deported under the Aliens Restrictions Act?
The figures of aliens in prison on the 31st December, 1919, the date when the last count was taken, will perhaps serve the hon. Member's purpose; and as regards deportations, the figures I gave last Wednesday. To distinguish nationalities involves a tabular statement, which I will, with the hon. Member's permission, publish in the OFFICIAL REPORT.
The totals are as follow:—There were 265 aliens in prison in the United Kingdom on the 31st December, 1919, of whom 43 had committed offences against the Aliens Restriction Orders, 17 offences against the Defence of the Realm Regulations, and the remaining 205, various criminal offences. Since January, 1920, 22 Deportation Orders have been made.
The following is the statement referred to:
TABLE SHEWING THE NUMBERS, NATIONALITIES, AND OFFENCES OF ALIENS IN PRISON IN THE UNITED KINGDOM ON 31ST DECEMBER, 1919. Nationality. A.R.O. Offences. D.R.R Offences. Other Offences. Total Grand Total. Male. Female. Total. Male. Female. Total. Male. Female. Total. Male. Female. American, U.S.A. … 4 — 4 2 — 2 57 2 59 63 2 65 Austrian … — — — 1 — 1 2 — 2 3 — 3 Belgian … 1 — 1 1 — 1 9 — 9 11 — 11 Chinese … 4 — 4 1 — 1 4 — 4 9 — 9 Danish … — — — — 1 1 3 — 3 3 1 4 Dutch … 1 — 1 1 — 1 3 — 3 5 — 5 French … 1 — 1 — — — 11 2 13 12 2 14 German … 3 — 3 3 1 4 6 1 7 12 2 14 Hungarian … — — — — — — 1 — 1 1 — 1 Italian … 3 — 3 — — — 13 1 14 16 1 17 Norwegians … 1 — 1 — — — 5 — 5 6 — 6 Polish … 3 1 6 — — — 12 — 12 17 1 18 Russian … 8 — 8 — — — 30 1 31 38 1 39 Spanish … 6 — 6 3 — 3 10 — 10 19 — 19 Swedish … 2 — 2 — — — 7 — 7 9 — 9 Swiss … 1 — 1 — — — 2 — 2 3 — 3 Others … 2 — 2 3 — 3 23 — 23 28 — 28 Total … 42 1 43 15 2 17 198 7 205 255 10 265
asked the Home Secretary whether all aliens who enter this country without permission are ordered to be deported; if so, whether they are informed of this rule when they land, or whether they are given identity books and led to believe that they will be allowed to remain in this country; and, if there is no general rule as to the deportation of aliens who enter this country without permission, on what grounds certain aliens in this category are selected for deportation?
Numbers and nationalities of aliens against whom Deportation Orders have been made since 1st January, 1920:—
Americans, United States 11 Austrians 5 Belgians 12 Chinese 10 Dane 1 Dutch 4 Germans 12 Italians 7 Norwegians 10 Poles 62 Russians 39 Spanish 4 Swedes 10 Swiss 3 Others 26 Total 222
The answer to the first and third questions is that every alien who lands without permission is liable to deportation, but that there may be circumstances which justify exceptions to the rule, and every case is therefore fully considered on its merits. As regards the second question, the aliens who land without permission are those who come as stowaways or otherwise evade the examination on landing. There is therefore no opportunity of giving them any warning when they land; and if afterwards they register with the police, and obtain identity books, this in no way condones their offence or secures them any right to remain in this country.
Can the right hon. Gentleman give any figures as to the number of these aliens who arrive without permission?
Not without notice.
Does not the fact that they are able to arrive without permission show the futility of the passport provisions?
It depends on the proportion. It is a very small proportion.
Motor Cars (Speed Limit)
asked the Home Secretary whether the present system of summoning and fining drivers of motor cars for exceeding a speed limit of 20 miles is to obtain revenue for the public or for some other reason?
It is the duty of the police to summon persons who exceed the speed limit fixed by law. The question of obtaining revenue does not enter into the matter in any way.
Do those who obtain convictions get a percentage of the fines?
I do not think so.
asked the Home Secretary whether he has consulted any reliable authority as to the danger to the public in driving a motor-car under proper control along a stretch of open and straight road at a speed of 25 miles an hour; whether accidents occur in the main in negotiating corners or at night in which the question of speed does not enter; and is it his intention to revise the present Regulations as to exceeding a speed limit of 20 miles per hour?
My right hon. Friend the Minister of Transport has asked me to reply to this question on his behalf. The question of speed limits for mechanically propelled road vehicles is to be considered by the Departmental Committee on the Taxation and- Regulation of Road Vehicles. The Minister of Transport will await their Report before proposing any Amendment of the existing law.
Could not the right hon. Gentleman stop the system of fining for speed?
No, Sir.
asked the Home Secretary how many men of the police force were employed in the Metropolitan area on Saturday last endeavouring to time the speed of petrol-driven vehicles; whether, in the majority of cases, the time tests were made on short stretches of road where the regulation limit of speed can bear no relation to possible danger to other users of the road; and whether, in view of the recent alarming increase in cases of burglary, robbery with violence, and kindred crimes, these men could be more usefully employed?
The number of officers so employed was 35. The controls are carefully selected among those places where high speed is particularly dangerous. Owing to winding roads and other natural features, it is not often easy to operate a control much longer than a furlong. So long as drivers indulge in fast driving, a fruitful cause of accident in the Metropolitan Police District, the police must do their best to enforce a reasonable compliance with the law.
In view of the fact that there seem to be so many police who have nothing particular to do in the metropolitan area, could the right hon. Gentleman send some over to maintain law and order in Ireland?
Will the right hon. Gentleman see that those who are frequent offenders are exterminated?
Unemployment Insurance Bill
asked the Prime Minister whether his attention has been called to a resolution of the North Staffordshire Trades and Labour Council protesting against the insertion in the Unemployment Insurance Bill in Committee of the Clause enabling industrial friendly societies and employers' associations to administer unemployment benefits and, unless Clause 17 be restored to the same form as when it left the House of Commons, recommending the whole of the 80,000 members of the trades council to refuse administration of the Act; and whether he can indicate the intentions of the Government respecting the same?
I have been asked to reply to this question. A large number of resolutions in the sense indicated have been received from trade councils and other organisations with regard to the Amendment made in Committee to Clause 17 of the Unemployment Insurance Bill. The action to be taken on Report is receiving very careful consideration.
Western Thrace
asked the Prime Minister whether the Peace Conference received a petition, signed by 84 legal representatives out of 90 communities in Western Thrace, expressing the desire of the whole Turco-Bulgarian population in Western Thrace for a genuine plebiscite and against annexation by Greece; and, if so, whether this petition was received before the Treaty of Peace was approved by the Allied representatives?
Since the beginning of the Peace Conference a large number of petitions and counter-petitions have been received on this, as on other subjects, and all have been carefully considered before decisions were arrived at.
Is it not a fact that they would prefer to be under the League of Nations?
They have not told me.
Government Departments (Women Employes)
asked whether the large number of women at present employed in Government Departments could be considerably reduced, and their places taken by demobilised sailors and soldiers who have been unable to find employment?
I beg to refer to the reply which I gave to the hon. Member for the Wrekin on the 15th April. The percentage of ex-service men employed in Government Departments is considerable and increasing, and I do not think that any special action in the direction suggested is called for.
National Expenditure
asked the Prime Minister whether, in view of the widespread belief that the high rate of public expenditure is due to the action of the Government, he will consider the advisability of issuing periodic statements of reductions and economies effected by Government Departments and of increases in permanently recurring charges due to the pressure of the advocates of advanced social reform and of socialistic and nationalising groups in Parliament?
Particulars are published in White Papers presented monthly to the House of reductions in the staff of Government Departments. The ordinary Estimates and the White Papers presented in connecton with Money Resolutions for Bills already give full information as to increases or decreases in expenditure.
Is the right hon. Gentleman aware that these are the usual conclusions of people who have never given a moment's consideration to any such subjects?
Licensing Bill
asked the Lord Privy Seal when the Licensing Bill will be introduced?
I am not in a position to name a date.
Finance Bill
Table Water Duty
asked the Chancellor of the Exchequer whether, in view of the great burdens imposed upon those who drink wholesome beer and stout, he will consider the advisability of equalising sacrifice by putting a duty on such deleterious beverages as ginger beer and lemonade?
Beverages such as ginger beer and lemonade which are sold or kept for sale are already chargeable with the table-water duty.
Corporation Profits Tax
asked the Chancellor of the Exchequer whether his attention has been drawn to the statement of the educational secretary to the Royal Arsenal Cooperative Society that £130,000 is spent annually by co-operative societies on education, and that this expenditure would come under the Corporation Tax; and, if this is so, will he consider the feasibility of exempting this educational expenditure from taxation where it is proved to have been made without any party bias or political intention?
Corporation Profits Tax is chargeable upon profits prior to distribution, and I cannot undertake to grant specially to co-operative societies any exemption, by reference to the objects to which their expenditure is devoted, which is denied to businesses in general.
asked the Chancellor of the Exchequer whether he can give any estimate for this year and for next year as to the yield of the proposed corporation tax at 7s. 6d. in the £, and to what extent it will affect receipts from Income Tax?
I think my hon. Friend has put this question down under a misapprehension. I am not aware of any proposal to charge a Corporation Profits Tax of 7s. 6d. in the £. The rate specified merely represents a statistical estimate of the figure at which a flat rate tax levied on the profits of all concerns which at the present time pay Excess Profits Duty would have to be fixed to produce in a full year the equivalent of the yield of Excess Profits Duty and Corporation Profits Tax, taken together.
Will the right hon. Gentleman state what effect this 7s. 6d. tax would have on the Income Tax; whether it would not operate in the reduction of the amount that would be received in respect of Income Tax?
Obviously, as both the Excess Profits Duty and the Corporation Profits Tax are allowed as deductions before the assessment of profits to Income Tax, the amount of these taxes does reduce the amount subject to Income Tax.
Will the right hon. Gentleman give the figures or some little statement which will show what the general effect will be on the Budget?
I cannot give an answer to a question of that kind unless it is put on the Paper. My hon. Friend is wasting his time in dwelling on the 7s. 6d. rate. If he wants the figures I will give them if he puts down a question. I think he had better confine himself to the 5s. 6d. rate.
It is on the Paper.
Income Tax (Calculation of Profits)
asked whether if employers grant special facilities to employés for joining the Territorial Army by granting an additional week's holiday on full pay to employés who complete the full period of a fortnight's annual training in camp, the amount of the full pay so allowed will constitute an expense of the business and rank as such in the calculations of profits on which Income Tax or other taxes on profits are levied?
The answer to my hon. Friend's question is in the affirmative.
Excess Profits Duty (Managers' Remuneration)
asked whether any and, if any, what Regulations have been drawn up by the Commissioners of Inland Revenue under Part I., Clause 5, of the Fourth Schedule of The Finance (No. 2) Act, 1915, as to the exercise of the discretion which is vested in them in regard to the remuneration of managers and managing directors dependent for their remuneration on the profits of business liable for Excess Profits Duty?
No Regulations have been made on the subject to which the hon. Member refers. I may, however, take this opportunity of explaining to the hon. Member that in computing the profits of a business for purposes of Excess Profits Duty, it is the practice of the Commissioners of Inland Revenue to allow a deduction in respect of remuneration actually paid to a manager or director, who has not directly or indirectly a substantial proprietary interest in the business, up to an amount not exceeding by more than £2,000 the remuneration paid to him in the last pre-war year. In the case of a manager or director, who holds directly or indirectly a substantial proprietary interest in the business, no deduction is allowed in respect of remuneration paid to him in excess of the amount paid in the last pre-war year.
Can the right hon. Gentleman say whether the fixing of a definite figure is not a very unfair exercise of the wide discretion which is conferred on the Commissioners by the Act of Parliament, and whether it was not clearly the intention of Parliament that in the exercise of this discretion every case should be taken on its merits?
The course taken by the Inland Revenue is on the whole a good one. I was surprised to find the extent to which they had gone.
Secret Service (Expenditure)
asked whether the sum of £57,697 6s. 7d. required to be voted in order to make good an excess on the grant for secret service for the year ended 31st March, 1919, refers to expenditure of secret service work in Great Britain or elsewhere?
The House has always granted Votes for secret service without asking for details of the expenditure, and any other course would be inconsistent with the intention of the Vote. I must, therefore, respectfully decline to give the information which the hon. Member desires.
Is it not a fact that the character of the secret service has altered in recent years from being purely military to being political?
I am not aware off any change in the character of the secret service, and I decline to answer questions on details of the expenditure. If I gave an answer to these questions, even a harmless question, the service ceases to be a secret service. The House must make up its mind that it will either trust the Government of the day with certain money for secret service or that it will not trust it. So long as we are entrusted with it, the expenditure must be secret.
Will the right hon. Gentleman assure the House that no part of this money is spent on political secret service?
I have just said that I will give no particulars of any kind.
Is it not a fact that there are a very large number of traitors in this country and alien enemies who require careful watching?
Shipping
S.S. "Patricia."
asked the Parliamentary Secretary to the Ministry of Shipping whether his attention has been called to statements as to the insanitary condition of the s.s. "Patricia," and the carelessness and inefficiency displayed by the Government in the despatch to India of a ship in such a condition; who is responsible for this; and what steps have been taken in the matter?
I beg to refer my hon. and gallant Friend to the reply given by the Prime Minister on the 11th March to the hon. and gallant Member for Rhondda (East).
India (Homeward Passages)
asked how many passages from India have been arranged for in the extra shipping accommodation already provided, and how many more passages remain still to be provided for; and what steps are being taken in the matter?
Without encroaching on the space in ordinary liners provision has been made in shipping at the disposal of the Government for 2,851 mili- tary passengers entitled to passage at the expense of the Government. In addition, provision has been made in these steamers for 2,900 of the travelling public. These numbers cover 1st class berths, 2nd class berths and 3rd class families. They do not include bodies of troops, for whom separate provision has been made.
Is the right hon. Gentleman aware that on several occasions passenger accommodation has been kept vacant until the last moment, and that the ship has then sailed with empty berths?
We have not encroached on any of the space on ordinary passenger lines.
How many other passengers remain to be provided for?
I have been informed that some 500 applications have been made from India for passages, but the Ministry of Shipping is not in a position to divert any more shipping for India, and they do not see any way of being able to assist further in this.
River Plate Ports (Congestion)
asked the Parliamentary Secretary to the Shipping Controller whether he is aware that the Ministry of Shipping have directed so many steamers to load grain at River Plate ports that there is great congestion, and that many steamers, especially regular liners, are experiencing great delay in obtaining cargoes; that one steamer was kept 13 days waiting after giving notice of readiness to load before any cargo was supplied to her, and that she occupied 24 days in loading same; and that under normal conditions this steamer should have been loaded in about seven days instead of occupying 37 days; whether he is aware that this congestion of tonnage and unreasonable delay, entailing heavy expense, adds to the cost of food in this country; and whether he can give assurance that greater discernment and judgment will be exercised by the Ministry in the direction of steamers?
I am aware that there has been congestion at the River Plate ports, but this has been mainly due to the condition of the railways and to labour difficulties. The volume of the tonnage directed to load grain has been well within the normal capacity of the ports. I have been unable to identify the special case to which my hon. Friend refers, and I will be glad if he will give me full particulars. Any delay to shipping must cause loss and expense, but owing to the terms of the shipping contracts it is not safe to assume that these delays at the Plate ports add directly to the cost of food.
Is the hon. Gentleman not aware that there have been many cases of much greater delay than the one recited in this question, which I shall be glad to give him? And can he state when the Ministry responsible for this mismanagement will be closed down?
I cannot accept the statement that the Ministry has been responsible for any mismanagement. The ships sent were well within the normal capacity of these ports, but we cannot be responsible for these difficulties which occur.
Has not my hon. Friend been aware of the difficulties for some time, and that consequently vessels ought not to have been directed there?
I think I know the case to which my hon. Friend refers, which is one of his own ships.
Is the hon. Gentleman aware that the delays are still going on?
Ex-Enemy Ships
asked the Parliamentary Secretary to the Shipping Controller under what arrangements the 348 ex-enemy merchant ships allocated to Great Britain for temporary management since the Armistice have been run; whether the profit from running these ships comes to the Exchequer; and, if so, what is the amount and under what head of receipts it is included?
The ex-enemy ships allocated to Great Britain for temporary management since the Armistice, 245 in number (not 348, as stated in the question), have been managed on behalf of the Ministry of Shipping by private firms, and employed in carrying Government cargo and in other necessary services. For the time being the running expenses of vessels allocated to Great Britain are being met by the Ministry of Shipping and earnings during the Armistice period will be appro- priated in aid of the Shipping Vote. It will be impossible, however, to strike a final account until the vessels are finally allocated by the Reparation Commission. The hon. Member will appreciate that the tonnage was very largely used for noncommercial services and charged to the Departments concerned on practically a cost basis.
Cannot one of these ships be sent out to India to bring back from there all the sick people who are urgently demanding a passage?
The Ministry of Shipping is not prepared to do that. If that were done during the present season of the year, the ship would have to go there practically empty, and the Government are not prepared to bear the heavy cost which would fall on the taxpayer.
Is it not possible to have credit given for what has been saved the nation by the use under control of these ships?
I hope to be able to give the House something like a profit and loss account, as to the commercial trading of these ships when the Estimates of the Ministry of Shipping come on.
Questions to Ministers
I wish to ask the Leader of the House a question in regard to Scottish questions. There are to-day sixteen starred questions addressed to the Secretary for Scotland, and, as almost invariably happens, these questions have not been reached. I think they are all questions of sufficient importance to have an answer in this House. They give opportunities for raising supplementary questions.
The hon. Member must ask a question. He is not entitled to make a speech.
I will ask the right hon. Gentleman, then, whether he could not give a more satisfactory opportunity for Scottish questions to be asked?
The hon. Member knows that it is not easy to arrange this, because it depends to a large extent on two things—the number of questions put to the Prime Minister and the number of supplementary questions. As a matter of fact, I do not think it is right to say that Scottish questions are invariably left. On the contrary, I am told that they are more frequently answered than not. I will ask my Noble Friend (Lord E. Talbot) to consider whether any other arrangement is possible.
Will the right hon. Gentleman represent to the House the desirability of an extension of Question Time by a quarter of an hour?
May I ask the right hon. Gentleman whether he is aware that it is found possible to allow English Members ample opportunity of asking questions concerning education, health, agriculture, local government administration, and justice, and, seeing that all these matters are represented in Scotland by a single Minister; ought it not to be found possible on at least one day of the week to arrange that there shall be an opportunity of addressing oral questions to the Minister on these matters?
I fully realise the absolute weakness of the position of Scotland in this Government, but my hon Friend is mistaken as regards these other Departments. I think it is reasonable that Scottish questions should be given one day a week, and we shall try to arrange that.
Have a Saturday sitting for Scottish questions only.
Will the right hon. Gentleman consider the question asked by the hon. and gallant Member opposite as to increasing Question Time by a quarter of an hour?
That has often been raised, and I think that in every case the feeling of the House was against it. We should probably simply increase the number of supplementary questions.
Bill Presented
Invergordon Harbour (Transfer) Bill,
"to conform an agreement entered into by the Admiralty for the acquisition of a harbour at Invergordon, and certain properties, rights, and powers in connection therewith," presented by Sir JAMES CRAIG; supported by Mr. Long and Mr. Morison; to be read a Second time upon Monday next, and to be printed. [Bill 111.]
Railway Bills (Group 2)
reported from the Committee on Group 2 of Railways Bills; That, for the convenience of parties, the Committee had adjourned till Tuesday, 1st June, at Half-past Eleven of the Clock.
Report to lie upon the Table.
Private Bills (Group D)
reported from the Committee on Group D of Private Bills; That, for the convenience of parties, the Committee had adjourned till Thursday, at Eleven of the Clock.
Report to lie upon the Table.
Selection (Standing Committees)
Standing Committee B
reported from the Committee of Selection; That they had added the following Members to Standing Committee B (in respect of the War Pensions Bill): Mr. James Bell, Captain Brown, Major Colfox, Captain Coote, Mr. William Graham, Sir Henry Harris, Mr. Hartshorn, Mr. Hogge, Mr. Austin Hopkinson, Captain Loseby, Mr. Macpherson, Mr. Pennefather, Colonel Raw, Captain Tudor-Rees, and Major Tryon.
Standing Committee C
further reported from the Committee; That they had added the following Members to Standing Committee C (in respect of the Health Resorts and Watering Places Bill): Dr. Addison, Mr. Beckett, Sir Thomas Bramsdon, Major Breese, Colonel Burn, Lieutenant-Colonel Croft, Sir David Davies, Captain Foxcroft, Mr. Hinds, Mr. Haydn Jones, Mr. Albert Parkinson, Sir Philip Sassoon, Mr. Thomas-Stanford, Brigadier-General Sir Owen Thomas, and Mr. Edward Wood.
Standing Committee D
further reported from the Committee; That they had added the following Members to Standing Committee D (in respect of the Bastardy Bill): Mr. James Brown, Mr. Neville Chamberlain, Captain Dixon, Mr. Hallas, Sir Douglas Hall, Mr. Lynn, Mr. Maddocks, Mr. M'Guffin, Lieutenant-Colonel Malone, Sir Herbert Nield, Captain Tudor-Rees, Mr. Sidney Robinson, Mr. Alexander Shaw, Mr. Secretary Shortt, and Mr. Wignall.
Reports 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."
I beg to move to leave out the word "now," and, at the end of the Question, to add the words "upon this day six months."
I rise in no capricious spirit to move the rejection of this Bill. It will not surprise me if I do not succeed in carrying more than a handful of Members into the lobby with me. Small lobbies, like small parties, are sometimes the harbingers of big causes. I remember standing up with a mere handful of Members to protest against the evasion by Germany of her financial obligations under the Treaty, and I look back to that event without regret or shame. I move the rejection of this Bill because, quite honestly, I think this is a bad Budget. I think many of the figures on which it is based are absolutely false, that many of the facts on which it proceeds are at least fanciful, and that many of the predictions of the Chancellor of the Exchequer are grotesque. The Budget is inimical to the best interests of British trade; it is inimical to our good relations with France; it is a menace to capital, and in some respects —I am sorry to use the phrase—it involves' a very serious breach of Ministerial good faith. Over and above all these objections, I say that the Budget proceeds fundamentally upon the wrong principle. It assumes that the duty of the Chancellor of the Exchequer consists solely of coming to this House and asking for such money as the spending Departments have told him they require. My view is that the Chancellor of the Exchequer is something more than the Paymaster of the spending Departments, that he is their financial chief, and that he should tell them, not that they should tell him, every year when preparing his Budget the maximum amount which he is prepared to grant 'for their service. I do not hesitate to say that instead of coming to the House and asking for £1,400,000,000 of money, the Chancellor of the Exchequer:should have called together the heads of all the spending Departments and should have said, "I am going to give you £1,000,000,000 amongst you for the current financial year, and you will have to cut your coats according to that cloth." A small business committee going round the Departments could then have suceeded in reducing the amount to that figure.
4.0 P.M.
The Budget proceeds upon another false principle. The Chancellor of the Exchequer is obsessed with the desire to hurry on the repayment of War debt. I need not assure the House that I am no financial purist, whatever that phrase may mean, and, as I said on one occasion, when you come to think of it, the soundest of all finance, if you could do it, would be to let posterity pay. Is it not exceptionally justifiable to apply that principle to this War? It has been a war certainly as much for posterity as for the living generation. I could quote eloquent passage after passage of the Prime Minister and other Ministers telling us that this was a war for humanity, for the liberation of the world, and for future generations. Yet it is this generation practically which is to have the sole honour of paying the bill and handing our children and children's children the receipt. I can imagine the future generations being grateful to us and saying: "We always revere the memories of our fathers and grandfathers, because they paid all the expense of making the world safe for us to live in." Then, finding themselves free of debt, they would begin to look about, and I suppose would soon become involved in another great European war. Those are the general grounds upon which I base my opposition to the Budget as a whole. That being the principle upon which the Budget is based, without any imagination and any really new source of revenue, new in kind, we have trotted out these old stage properties to which Chancellor after Chancellor looks almost exclusively for revenue—Income Tax, drink, and tobacco. I sometimes wonder, when I hear hon. Members inside the House, and out of it, declaiming against the evils of in temperance—they do not often talk about the evils of smoking—what the Chancellor of the Exchequer would do if, by a sudden wave of temperance, these sources of revenue were taken from him. There was one Chancellor of the Exchequer who, speaking, not as a social reformer or as a politician, but purely as Chancellor of the Exchequer, said: suppose hon. Members get plenty of letters such as this which I take at random from at least fifty: Exchequer applies to every one of the spending Departments every year and says: "How much money do you want?" I have in my hand a most interesting memorandum issued a day or two ago by the Chancellor of the Exchequer. I do not think that the House has noticed it. In answer to a question in this House, the Chancellor of the Exchequer said that he would issue a Treasury circular to the various spending Departments. In that circular, dated 28th April, I find these words:
The hon. Member professes to read a circular issued by the Treasury. It is a gross travesty. The whole object of the circular was to prevent Supplementary Estimates, and he knows it.
The right hon. Gentleman—I hope that he has not hurt his fingers striking that Box—is perfectly right when he says that the object of this circular is to prevent Supplementary Estimates.
Then why did the hon. Member say that I was inviting my colleagues to spend more money?
This method of discussion is not always convenient, but as a rule it is not disadvantageous. The object of the circular is to prevent Supplementary Estimates, but the method adopted by the right hon. Gentleman is tantamount to saying to the Departments: "Do not, as you are doing this year, spring new demands on me while the Budget is still before the House." It follows, as a matter of course, and the right hon. Gentleman knows it—I am not near the Box or I would bang it—that this inference is drawn by the spending Departments: "We must be careful not to ask for less than we want." The effect of the circular has been to encourage the spending Departments not to cut down their demands to the lowest possible figure, but to make quite sure that they would not have to be rebuked by the Chancellor of the Exchequer for forcing Supplementary Estimates upon him. The Chancellor of the Exchequer is a Minister for whom no man has a greater respect than I have, and I hope I have not offended him in making my suggestion.
The point has been made that if you take out of the national accounts the figures included as revenue which relate to the sale of War stores, the deficit last year would have been £500,000,000. In just the same way, if you take out of the Estimates for next year's income what it is anticipated will be realised from the sale of War stores—which never ought to be put in the revenue side of the account at all—the deficit will be very much larger. Apropos of the probability of Supplementary Estimates, I want the House to realise the true inwardness of that little Bill which was brought forward and discussed the other day—I mean the Indemnity Bill. I am not concerned with the merits of the measure, but only with the fact that it was intended to relieve the Chancellor of the Exchequer of a possible liability of some hundreds of millions. There was no provision whatever in the Budget for this; it had not been noticed. It was one of the things that crop up, like many other things that crop up, and I do not hesitate to say that before very long the Chancellor of the Exchequer will be compelled to stand up here with Supplementary Estimates and to do as he did last year, to admit that his figures were not so correct as he had hoped to find them. In the way of criticism of the general scope of the Budget, I must admit that there may be some necessity for some new provision, but the effect of one of these new measures, the increase in the Excess Profits Duty, will be that business circles and firms will be enraged. They think, of course, wrongly, that they were misled by the utterance of the Chancellor of the Exchequer last year, and scores have written me saying that as soon as they have got up to their pre-War standard this year they will take things easy. That is what is happening all over the country. There has been a certain breach of general Ministerial good faith over this Budget. I do not want to make any observations that may be calculated to offend the Chancellor of the Exchequer, but I was amazed to find that when the Excess Profits Duty was being dealt with last year the right hon. Gentleman condemned it in effect and in incidence, in stronger language than has been used by any other Member of this House From the OFFICIAL REPORT I venture to take three of his statements. These are the words that the Chancellor of the Exchequer used, and I will give them verbatim: No one has condemned that tax more heartily as that. When an hon. Member moved to omit this tax and quoted those words in substance and effect, the Chancellor of the Exchequer got up in his place and said that he was fully aware of what he had said, and that he adhered to every word of it. May I, with great respect, ask the Chancellor of the Exchequer if he still adheres to that tax which at 80 per cent. acted "as a great deterrent to enterprise and industry"? Does he think that by making it 60 per cent. he will remedy that? I ask the right hon. Gentleman also whether he adheres to a tax which, without any qualification, operates with unfairness and inequality between firms of good pre-War standard and others. I am afraid he must either be a very strong man or else he must be showing great obstinacy of temperament. If I may say it without offence, to my mind no Minister of the Crown was ever placed in circumstances of more personal embarrassment than the Chancellor of the Exchequer finds himself to-day. He has had to increase a tax which I believe he thought last year he would be able to get rid of, and which also I believe the public thought he would be able to get rid of, and which the trade also thought would be taken off. He has not been able to get rid of it—he has had to increase it. What will be the effect of this increase? It will irritate and enrage the great bulk of the commercial community.
The tax on wines is going to be the farce of the Budget. Before it was put on not very much was anticipated from it. I speak from sad experience. The price has been kept down by the exingencies of the trade. Now there will have to be found some substitute for that liquid sunshine, that blood of the vine made for the benefit of mankind. To high wages and high taxation you are going to add this additional tax. I do not know where we stand on this matter from the patriotic point of view. Some time ago—I read it in one of the papers and I also read it in speeches—it was said to be the duty of the public in these days to enforce the most rigid economy in their personal expenditure. The other day when an hon. Member spoke of paying £2 10s. or £3 for champagne the Chancellor of the Exchequer said: I want to ask the Chancellor of the Exchequer what his view really is. Are we to go and flaunt 35s. or £2 or £3 bottles of champagne and 4s. Havana cigars in the face of the public and say: "Look what patriotic people we are!" or are we to drink water and smoke American gaspers? The effect of this tax will be that the consumption of champagne will be enormously decreased. Expensive brands will not be drunk, and the Chancellor of the Exchequer will not get his revenue. France will be irritated. She is now in a desperate plight. I venture to predict that France will take such steps as she will think necessary for her own benefit. We must not be sentimental as to the international view of these things. There is a great feeling in France over this Bill, and that we shall find out.
I do want just to say one word about the extraordinary view of the Chancellor of the Exchequer in the principle he applies to these things. When he gets trade to revive, as it was doing under the statement that the Excess Profits Duty was going to cease, his specific is to tax enterprise. When there is industrial unrest among the working classes, his specific is dear beer and dear beef. I have read of many solutions, but I did not know that dear beer and dear beef was a solution of this problem. I want now to answer an implication which the Chancellor of the Exchequer has thrown out many times in the course of the Debate on the Budget. He admits that the Excess Profits Duty is really bad, but he says, "Cannot you help me? What are you going to give me instead?" I will tell the Chancellor of the Exchequer one or two things which I think will help him. I am against a tax on capital, but if you are going to do it at all, do not talk about a tax on war profits. Have one simple tax, and never have another on the capital of this country. Let every citizen of this Realm make a return on a simple form about the size of a piece of notepaper, of the excess of his assets over his liabilities, and let him be charged 1s. in the pound on that. The Treasury would have the right to check this return. The public wealth of this country has been said to amount to £20,000,000,000. If you had a 5 per cent tax, that would bring in £1,000,000,000. This plan is quite workable, and would hurt no one. I should be prepared to hand over the form to the Chancellor of the Exchequer, and to organise the thing. The whole thing could be done in a month, at a very low cost, if he would like me to do it. The mystery which surrounds Government Departments is amusing to the people who do not sit and worship every Minister as a demigod, before whom we ought to quail.
I am now going to make another suggestion if I can induce the Chancellor of the Exchequer to hear it. I refer to Premium Bonds. Two hundred and eighty-six Members of the House signed a Memorial in favour of Premium Bonds, and in the discussion the whips were taken off, but they put on the masters. I made out the best case I could, and speeches in favour were delivered by others. The Chancellor of the Exchequer got up and told us that the idea was fantastic and undesirable, and that he would not have anything to do with Premium Bonds. Then some of the two hundred and eighty-six Members began to look at each other and to look at me, and some of them met in the lobby. Ultimately, a learned and distinguished Member of this House wound up the Debate in a speech of great ability about great judicial power and great cogency. He sat down at a quarter to eleven in order to allow the Division to be taken, and that time, when the movers and promoters of the measure had closed the Debate, an unheard of thing happened, for the Leader of the House got up and implored hon. Members not to throw over the Chancellor, and the two hundred and eighty-six melted down to about eighty. The next time I am promised the taking off of the Whips I shall say, for heaven's sake keep on the Whips but take off the Ministers and you will get a much freer and much better decision as to the opinion of the House. Premium Bonds are coming. You cannot stop them. Last year France had an issue which we subscribed eighty-two times over. I do urge the Chancellor not to turn a deaf ear on a, scheme which, I think, he rather favoured himself once. Premium Bonds are the solution of the present tightness of money and, to a large extent, of industrial unrest, because let every workman have a pound or two in these bonds and he will not want strikes and revolutions. Another thing is bank balances and unclaimed securities. A Select Committee was appointed on this subject consisting of fifteen members, of whom five formed a quorum, but sometimes we had to wait for an hour and a half to get a quorum. There was a report by some members, three of whom were bankers, that the matter was not worth troubling about.
There are Premium Bonds first, and then bank balances, a subsidiary amount if you will. How much does France get out of its Advertisement Tax? If you put a tax on every private advertisement it would hurt nobody and would produce an enormous revenue as in France. I do not know what the exact revenue is, but I am inquiring and will let the right hon. Gentleman know. If it is only £50,000 one would scarcely insult the House by talking about a sum of that kind in these days. Why not tax racing and betting? Because you tax cards you do not give validity to gambling, and because you tax theatres does not mean that you approve of all the productions, and because you tax drink does not mean that you palliate drunkenness. An old Roman Emperor who was charged with taking some revenue from tainted sources said, non odet, it does not smell. Then you can have a limited tax on capital of the kind I have indicated, and all these will produce, roughly speaking, about £2,000,000,000. I hope I have said nothing which in any way annoyed the Chancellor of the Exchequer because, let me say, that any hypocrisy that the right hon. Gentleman has been most courteous and has set an example to some Chancellors by being with us throughout the whole of the Debate. As my final word I would say, cut down expenditure, allow the departments a certain amount of money and tell them they must do the best they can with it. Do not trouble too much about how you will pay the cost of the War. Wait until Germany sends us something towards it, although there is nothing about that in the Budget. We need not be in too much of a hurry about reducing debt. Our first duty is to get our credit back, and do not leave uncertainty in the air, and let us look to the market prices of Government securities. If we do these things, we shall see that the wealth and recuperative power of this country are absolutely inexhaustible, and if we are only given fair play and are free from harassing legislation and wasteful expenditure and too much Government control, we shall soon be the bright and merry and prosperous England we were in the days gone by.
I beg to second the Amendment.
I desire to confine myself solely to the criticism of the Excess Profits Duty. As to the constructive policy of my hon. Friend I agree with premium bonds and with the percentage tax. I do not second the Amendment in any aggressive spirit, and I feel some solace in the fact that the Chancellor has no more liking for this Excess Profits Duty than I have. The hon. Gentleman who moved read his criticism made a year ago, but has my hon. Friend forgotten what he said this year He told us that this extra twenty per cent. was a dire necessity, and that if there was anybody with creative genius enough to suggest some other alternative he would be the first to give that proposal very sympathetic consideration. It does seem to me quite inconceivable that the Chancellor of the Exchequer, who knows that this Excess Profits Duty, and epecially the 60 per cent., strangles incentive and throttles initiative, should have assented to the tax and to its increase. It is a tax which pleases nobody. The Financial Secretary made a speech the other evening in which he damned it with faint praise. The big stock companies and the great financial concerns are in some instances going to close down, and the Government have been warned about it. I was talking only yesterday to the managing director of one of the greatest financial concerns in this country, which employs over 40,000 men They are going to notify the Government that if the Government stand by this Excess Profits Duty without Amendment they will be forced, much against their will, to close down. What does that mean? Forty thousand men out with their families and unemployed at a moment when hon. Members who represent Labour will tell you of the danger in the near future if this goes on. I would like some explanation from the right hon. Gentleman as to the reason why he has increased this iniquitous tax by 20 per cent. He told us he was forced by dire necessity to do so, and he added: Show me some other tax which will produce the same amount of revenue. Surely it is short-sighted and impolitic simply to judge by the amount of a tax. If the amount which comes into the Exchequer shows the excellence of the tax, then why not charge us all 20s. in the £ at once? It seems to me perfectly inconceivable, after the words which have been read out by my hon. Friend, that the Chancellor should add to his tax, which he himself has described as iniquitous. The fact is that there never was a time when it was more necessary that the Chancellor of the Exchequer and his advisers in this House should be expert financiers. I recognise the great qualities and gifts of my right hon. Friend the Chancellor of the Exchequer, but neither his worst enemy nor his best friend would be annoyed if one said he was not an expert financier, and I say that if the only reason for adding to the tax is that he can find no alternative, then, unless he accepts the alternative of my hon. Friend who moved the Amendment, let him get together a Committee of financial experts, men who have given a lifelong study to finance, and let him see if these men could not put forward some better alternative than this tax, which is detested and hated in this country. I had an Amendment down on the Paper, and since I have put it down I have received scores of letters from people all over the country, from managers and directors of great financial concerns, from big manufacturers and from little traders, and I would like to read just one letter from a small trader, because these men are going to suffer intolerably unless this tax is at any rate amended. I will give the name of the writer, who is not one of my constituents, to any hon. Member who may want it. He writes: cial businesses. One after another they will close down. The right hon. Gentleman said, "Give me an alternative." I agree that after a War which has been greater than anything previous in the history of the world, you can expect nothing but an abnormal expenditure for some years, but between Budgets of £1,400,000,000 and abnormal expenditure, there is a very big margin and a very great discrepancy, and before giving any alternative, one thing is necessary—a rigid, and stern, and strenuous economy. Let us have that first. Then, why does not the policy of the Government tend to de-control? It seems to me that they want to take more control of everything. Yesterday I was given some figures by the Statistical Society; I tried to find out what we would be saving by de-controlling everything that is now controlled, and I was told, "Very little under £400,000,000 a year." That is something to start with. Therefore, let the trend of government be towards de-control, and not towards new control. It seems to me that it is grossly unfair that this generation should bear the whole burden of the War. God knows, we have been bled white, we have given everything, we have given ourselves, we have given our children, we have given our sons, we have given those we love, we have given our liberty, and we would give gladly all over again in order to win the War for the cause of civilisation, but I cannot see why now we should be asked to bear the whole burden of the War, and that is why I welcome very much an alternative which I read in to-day's paper. It was by Sir Edward MacKay Edgar, who, as the House know, although they may not agree with him in everything, has given a lifelong study to finance—and I would add that finance cannot be learned in the House of Commons, or in a day, or in a year, or in a decade.
I will give a short synopsis of the suggestion, which is advanced on the assumption that the Chancellor means to stand or fall by his Excess Profits Duty. He takes the sting out of the Excess Profits Duty by this proposal. He says that if the 60 per cent. is to remain, let the Government give, in return for money raised in this way, a bond carrying no interest for five years, carrying 1 per cent. for the sixth year, 2 per cent. for the seventh year, and so on up to 5 per cent. In 1926 and every following year 5 per cent. of the total amount of outstanding bonds shall be redeemed at par, taking the 1920 series of bonds for redemption first, and only starting on the redemption of the 1921 bonds when all the 1920 Series have been redeemed, and so on. This would have the effect of turning the Excess Profits Duty into a sort of forced loan on industry, and this proposal gives the small trader or big manufacturer something with which they can conduct their industry on the proper lines, and, of course, it also allows the individual to make provision for a rainy day. I urge the Government to give real and earnest consideration to this proposal. I think it is one which is more than worthy of their notice, and it emanates from a man who knows what he is talking about. I see two roads clearly before us. The one will give us back our old traditions in the world and make us again the bankers of the world, the brokers of the world, the carriers of the world, the manufacturers of the world, and the builders of the world. The world seems to be clamouring now for things that we only can supply. There is almost nothing that we cannot supply the world with. All that we want is good government, fair taxation, and credit, on which everything is based. The other road is the road which, if this Excess Profits Duty is not taken off, as surely as I stand here will lead this country to misery, revolution, and in time to red ruin.
The House has heard two long and interesting speeches from the point of view that those who argue that this Budget should be rejected, lock, stock, and barrel. My hon. Friend for South Hackney (Mr. Bottomley), in his opening sentence, said he did not rise in any capricious spirit, but in the next breath he said the Budget was a bad Budget and its figures were false. It seemed to me at the time that those two statements were scarcely reconcilable. However, he went on to criticise the Budget in some of its aspects, and he has been supported by the hon. and gallant Gentleman who has just sat down, and many suggestions of a positive character have been made by one or the other of the hon. Gentlemen. The hon. Member for South Hackney expressed the opinion that the Chancellor was obsessed with the idea of paying off debt, and he was supported by the Seconder of the Amendment, who drew a vivid picture of the sacrifices of life, as well as limb and money, that had been made by the present generation who had won the War for future generations. I think the Chancellor of the Exchequer is justified in seeking to pay off debt, because by that means we shall make our security better in the world, and moreover, when the suggestion is made that we should leave posterity to pay the debt, I should like to ask those who put forward that plea, what about the interest on the debt. Surely, if we can remove this terrible burden from off our shoulders the less interest we shall have to pay in the present generation, and therefore it seems to me that there is not much in that point, with all due respect to the hon. Member. Then he made a suggestion in regard to which I should like to have further information, and that was that the Government securities should be kept at par. I should like to know by whom are they to be kept at par, and does the hon. Gentleman recognise no difference as between rates of interest upon the various securities? He made no distinction himself between 2½ per cent. and 4 per cent., and 5 per cent.—I think the last one was 5½ per cent., but I am not sure—and it seems to me that the rate of interest upon these various securities must necessarily determine to some extent their value in the market.
I said that every one of these securities stands at a big discount, irrespective of rates of interest.
5.0 P.M.
That does not elucidate the point I was going to make. The suggestion to guarantee that every Government security shall always be at par is in its essence a suggestion for more subsidies, and, therefore, it seems to me that it is a wrong principle. We have done a good deal of that already. It was necessary; I am not going back on that. I was a party to it. I believe I was a party to the subsidising of bread before I joined the Government. But I think we have gone a long way in that direction, under the pressure of circumstances, and the sooner we put things upon an economic basis the better. Therefore I cannot see the reason for that particular suggestion. Then the hon. Member of South Hackney had a good deal to say about drink, and, so far as I could gather, he is against excessive taxation on drink. To a large extent I agree with him. I think repression very often leads to deception, and that to repress one particular form of vice often leads to a worse one. I think the remedy for excessive drinking is improved education and a high sense of individual responsibility, and we are making a sensible advance along that direction.
If I might give a personal reminiscence, I remember, when a young fellow, going to my trade union branch meeting, which was of a convivial nature, pots of beer were all over the tables, and men attended very often in the clothes they had worn at the week's work. There is now an immense difference. At a trade union branch meeting now, you find no beer, the men are as well dressed as we are, the meetings are orderly and decorous, and the discussion conducted on as high a level as in this House. That sort of thing is going to continue, and it is the only remedy for excessive drinking. After all, the Chancellor of the Exchequer has to get money, and if we admit the principle that taxes have to be raised on some form of commodity, I know of no commodity on which taxation could be better justified than alcoholic liquor, for it is something a man can do without. As to bank balances, and so on, I have no objection to proposals in that direction. I should think a lot of money could be obtained by taxing advertising. Advertising is a tremendous waste, which might with more advantage and justice be put down than drink. I should certainly have no objection -to taxing the hideous advertisements one sees in going through the country, where the fields are disfigured with these things.
My hon. Friend said a great deal about the Excess Profits Duty. It seems to me to be a necessity, unless some other tax is put in its place. I can well understand that the man who started business before the War, and whose business did not mature to the point of profit before the War, being at a great disadvantage as compared with the man whose profits were high before the War. Moreover, I quite understand that the ex-soldier coming back from the War has been pretty hard hit, and finds it very difficult to set up in business. I have every sympathy with both those cases. I have a perfectly open mind on the matter, and I do not know whether I shall vote for the Excess Profits Duty or not. I would say I should not vote for it if by any means some method could be devised whereby war wealth could be taxed. The hon. Member for South Hackney had a good deal to say about the inadvisability of taxing capital, but, as I said before in this House, if capital generally is not taxed—and I do not want it taxed; I quite understand the position, that in proportion as you make a levy upon ordinary wealth or capital you frighten people—you can tax war wealth, because it has been obtained in quite an exceptional manner as a result of the country's needs. I have no love for the Excess Profits Duty. I can quite see its defects, and I should certainly vote for any well-considered scheme by which its incidence could be removed so far as the ex-soldier and the new business before the War were concerned.
I wish to endorse to the fullest possible extent what has been said as to the need for economy. As I have said, I have seen a little of the waste which goes on, and I have seen it from the inside. I have had tales brought to me from other people who have seen it in the Provinces. For instance, a man came to me the other day and said that in the town in which he lived there were three great Government offices. One was the largest hotel in the town, and everybody who went to that town had to go to a smaller place, and put up with considerable inconvenience. This man told me that not one of the three offices in that town was used more than one-tenth of its capacity. That is the sort of thing that is going on all over the country.
Will my right hon. Friend give me particulars of that?
I will. I am sure the Chancellor of the Exchequer would be supported by everybody if he would have these things looked into. At all events, the House, I am sure, would give him support in anything he might do towards lessening public expenditure. I think, on the whole, the Chancellor of the Exchequer has met a very difficult and abnormal situation with much fairness, and has faced great responsibilities with some courage. In doing that he has relieved from taxation many people who up to now have found it very difficult to make ends meet. Take, for instance, the relief to the people at the lower end of the Income Tax Scale. These people, speaking generally, are the backbone of the country—foremen in the mills or the factories, the engineering workshops, the bank clerk, the parson, and people of that kind generally. The black-coated worker who, by-the-by, has been taken under the sheltering wing of my old colleagues, whom I hope I may still call my friends, the Labour party, is the man who pays Income Tax at the bottom, and I take it that that man has been hit harder than many other man in the whole community, because while workmen's wages have gone up—and I am glad they have—somehow or other it has skipped him. The minister of religion gets about the same as he got before the War. The bank clerk, I believe, has had 30 or 40 per cent. put on his salary, and the foreman and many other people of that kind do not get, I should say, on an average, more than 30 or 40 per cent. more than they did before the War, and many of them not that—I mean the men with incomes of £300 to £400 a year. Take a man with £350 per year. Hitherto that man has had to pay the Chancellor of the Exchequer £10 2s. 6d. He will now pay nothing. That £10 2s. 6d. will be available for boots and shoes, insurance premiums, school fees, and many other things. I suggest his £350 is not a bit too much to cover the ordinary decencies, let alone the comforts, of life.
I want to say a few words about the Corporation Profits Tax. I do not like the tax for many reasons. I believe it is the thin end of the wedge, which, when driven home, will alter the character of our Income Tax altogether. At present the Income Tax is a tax upon the individual. The individual is taxed on the assumption that he has got something over and above his immediate daily requirements. This Corporation Profits Tax is a tax upon corporations, no matter how poor the persons may be who are interested in those corporations. The worst part of it Seems to be the temptation for Chancellors of the Exchequer in the future to increase the 5 per cent. The Chancellor of the Exchequer in the future will say, "Why should I worry about these millions of forms and have numerous officials to examine them, and then possibly have to pay a great deal of the money back when it is found not to be chargeable? Why should I do that, when I can get my money in a lump by simply putting another 5 per cent. on the Corporation Profits Tax? "Therefore, I am against the tax for the reason that it will provide temptation to the Chancellor of the Exchequer in the future to upset the present system of Income Tax. I would not say that, but the Corporation Profits Tax might be all right provided if the same exemptions were given as are given under the Income Tax; but, as I gather, it is an essential feature of the Corporation Profits Tax that no rebates at all are to be given. That is to say, a very poor man may be interested in the corporation which is taxed at the base, and that man's share of what would come to him therefore is lessened, and he has no claim for a rebate.
I want to say something more about the operation of the Corporation Profits Tax upon co-operative societies. Here, judging from many manifestations that I have observed in the House—and I observed one striking manifestation to-day —indeed, I know I shall be going against the stream, but I ask that hon. Members shall at all events listen to me and consider what I have to say, and they may take a different view of the Corporation Profits Tax as applied to co-operative societies. What are co-operative societies? I think there is some misunderstanding about that. Co-operative societies date from 1844, that is upon their present lines. In that year, 1844, a principle was applied which has revolutionised trade and commerce so far as they are reflected by the co-operative movement. That principle was not the carrying on of business for individual profit but for collective good. The result of trading and of manufacture were to go not to the man who put dead capital into the business but to the whole community of customers whose custom was necessary to maintain the business. That is the principle of the co-operative movement, and to my mind it is a very good principle. [HON. MEMBERS: "What is the difference?"] The difference is this: whereas under ordinary capitalism a man puts capital into a business and gets the profits, in this case the co-operators bring in the capital of their own members, and then they pay wages on the standard rates, and capital at the standard rate, and the remainder is distributed, or available for distribution, as a dividend on purchases. That is the rule now. The interest on capital is often four and a sixth. That curious amount came to be fixed by the number of pennies in a pound for calculating purposes. Sometimes the standard rate for capital is counted at five per cent., sometimes four and a sixth. Capital gets nothing else. Whereas capital put into an ordinary business under capitalism gets all that is left after paying wages, the co-operative movement distributes the result of their business, after wages are paid plus four and a sixth or five per cent. for capital, to the community of consumers.
If you do not get the meal you get the malt!
I think that is a very good principle. It brings in the largest possible number of people to benefit by the transactions concerned. How do we stand in regard to taxation now? I believe there is a general impression in the House that whereas the capitalist—against whom I am saying nothing; it is quite a legitimate thing for a man to go into business and get all he can out of it—but I want simply to point out to the House that so far as the impression obtains here that the co-operators have an advantage over the private trader, that from my point of view that impression is not well-founded. What is the present position? Take first of all the question of reserve. Co-operators make some savings by mutual trading which they might pay out to their members, but which they do not so pay out, and why? Because they are filled with the ideal of using these moneys in order to go back to the field of supply and increase their operations. Therefore they deprive themselves of the benefit of the dividend in order that they may increase their business in the way I have mentioned. They acquire a good deal of capital, not always "diva.," to increase that business. In so far as it is not devoted to increasing the business there is not the slightest iota of difference between them and the ordinary private trader or manufacturer. That is to say, the buildings and everything appertaining to a co-operative society have to pay their fair ordinary share of taxation. They are assessed just the same as the manufactory of the ordinary capitalist is assessed. They have to pay rates in the district in which they may be situated. Let us next come to investors. Co-operators do not. always apply all their reserve towards, increasing their business. They invested a good deal of money in Government stock—a patriotic movement. I do not know to what extent this has been done during the last four or five years, but I know it amounts to some millions. That money might have been applied to advancing business. They ought to pay on it exactly the same as anybody else. I always thought they did until I was reading the evidence the other day taken before the Income Tax Commission, and there does seem to me to be some little difference between certain forms of investment in which the co-operators do not pay tax like other people. If this is so, from my point of view, at all events, understanding, as I think, the co-operative position, the members of which have practical exemption from taxation, there ought to be no difference between them and other people so far as the taxes upon investment they may make are concerned. Then there are the dividends going to non-members. The amount does not seem great.
Half per cent.
That does not amount to much, and you need not make any bones about that, inasmuch as the result of trading with non-members is not obtained in the same way as that given exemption, and which has and always been given exemption, that is to say, by mutual trading with their own members. There is no claim to exemption on trade with non-members, and cooperative societies ought to pay. They do not at present pay upon the moneys derived from trading with anybody apart from their own members. What remains? There remains the dividend and the pool from which that dividend comes. I understand the Chancellor of the Exchequer proposes to exempt from taxation all that amount of gain arising from the operations of cooperative societies which is distributed to members of co-operative societies. That is all very well so far as it goes. But might I suggest to the Chancellor of the Exchequer that in taxing the reserves of co-operative societies it will probably be half of the dividends. Co-operators that have in them the pure spirit of sacri- fice and in order to increase their business and the benefits of their movement give up from a half to one-third. They give up a large part of what might be distributed to them in dividends and place it to reserve, and to certain things which are granted out of the reserve. Mention was made to-day of education fostered by the co-operative societies. As a matter of fact, a man can do what he likes with his income. He pays tax on it all the same. I suggest to the Chancellor of the Exchequer that this is an illogical position, trying to exempt a part of the dividend which is redistributed to members, and At the same time taxing the source from which that dividend is derived. There was a letter in the "Times" a week or two ago from Professor Pegou, in which he said:
In conclusion, I should like to point out to the Chancellor of the Exchequer the question of the expediency of applying this tax, for co-operators have ways and means of getting over it. Supposing this proposal stands, and the Bill is carried, and co-operators are taxed upon that part of their dividend which is not distributed? What is to prevent them distributing all of it? What is to prevent them not paying anything to reserve but distributing the lot? Again, if you tax the dividend they may sell at cost price and abolish the dividend. If you exempt dividend that is distributed, then they may, of course, distribute the whole of their results in dividend? Therefore, they will have you either way. I have dropped the question from the point of view of merits, and I am dealing with it purely as a matter of expediency. Is it wise to raise this bone of contention between the Government and a body of about four million people, who form one of the strongest democratic movements in this or any other country? I realise that this was a small matter some thirty or forty years ago. It is true that now co-operators are doing a very large trade, and bringing a very considerable pecuniary advantage to their members. I wish co-operators, consistent with the general idea of exemption of dividend, could be brought in to contribute a larger share to the public Treasury, but how can this be done?
It seems to me that it can be done in two ways. I said that the co-operators paid a standard rate for capital of 4½ or 5 per cent. on the capital invested. That is the only element of the results of cooperative trading which is comparable with the profits of the private trader. If this matter is discussed, I hope those who raised a cheer against co-operators having any exemption will inform the House what other elements in the proceeds of cooperative trading is comparable, except this 4½ or 5 per cent. That return is just the same as profits in an ordinary business. Therefore, if the Chancellor of the Exchequer is going to treat co-operators in the same way as ordinary traders, let him put his tax upon that 5 per cent., or upon anything that the co-operative movement possesses which comes from an investment of capital, and then I shall not have a single word to say against it. Even then co-operators will be more hardly hit than other people, because a much larger number of them come under the taxable limit, and therefore you would hit a larger number by such a tax than would be involved in a similar tax upon the ordinary investors of capital.
There is another way. The right hon. Gentleman might put the tax on trade; that is to say, tax the co-operative societies upon their turnover, like corpora- tions. That might be done, because it would be treating the co-operators the same as other people before the point of profit is reached at all. If you put this charge on trade you will increase the cost of production all round, and then it could be passed on to the consumer, and that does not raise the ugly question of taxing dividends. If that alternative were adopted I should have nothing to say against it. I have mentioned two methods of reaching co-operators one similar terms to other people, that is, tax them on their capital or the turnover of their trade, and those two methods would be free from objection. The way suggested by the Chancellor of the Exchequer is not only unjust, but it will lead to an embittered political controversy, which would be deplorable at this time of day.
I am not in agreement with the remarks of the hon. Member for South Hackney (Mr. Bottomley) upon the Finance Bill, for two reasons. The first is patent to everyone, namely, that we must have the money. The second reason is that I believe and hope that before the Bill is passed it will receive a great many amendments and alterations which, I hope, to a great extent, will modify the Excess Profits Duty. We are told that, having just come through this terrible War, it is necessary, in the interests of the nation; that we should at once set about liquidating our National Debt. I am not at all sure that that is the general public opinion, and I am quite sure it is not my opinion, that this generation, which has been penalised and has suffered so much already, should add to their liabilities by leaving a perfectly clean and unencumbered inheritance to those who follow us.
One is very apt to lose sight of the credit side of this question, and forget the contribution we have all been forced to make by having taken out of the prime of our lives five solid years. That is a very important item to take into consideration. If we are told we must at once start to liquidate the National Debt, then let us look about for a less injurious and a more popular way of doing it. If I may submit a mild criticism after listening to the speech of the Chancellor of the Exchequer, I would say that I appreciate the great difficulties with which the right hon. Gentleman had to deal, and I may also say that the difficulties of bringing forward alternatives are as great to hon. Members, for the simple reason that we have not access to the documents. In response to the Chancellor's invitation we are making suggestions which, I hope, will receive consideration. My criticism in general is that the Chancellor of the Exchequer has attacked and penalised the useful money of the country and neglected to utilise the dormant trust funds of the country. A private Member has no opportunity of ascertaining what the trust funds of this country amount to, but I think the Chancellor of the Exchequer has the material from which to gather that information.
I suggest that there may be some means of utilising these dormant trust funds. If there is a way, possibly it may be found by the Commissioners for the Liquidation of the National Debt. At a moment like this, when the National Debt of this country has reached an amount undreamt of in days gone by, I should have thought we might have heard something of the Commission for the Liquidation of the National Debt. I understand that they occupy offices in the vicinity of the Bank of England, which it takes £20,000 a year to keep up. I believe those Commissioners include the Speaker of the House of Commons, the Chancellor of the Exchequer, the Lord Chief Justice of England, and the Master of the Rolls. Surely some system of State annuities might be compiled by these gentlemen and placed before us for our consideration.
We all know that there are a large number of the lower middle classes who have put by small capital sums which only yield in trustee securities a mere pittance. Then there are other people, like war widows, with a small sum of money which yields them nothing, comparatively speaking, and with that money they could purchase a State annuity free of income tax, and then they would know where they were as regards their income for the future. I do not claim that this is a novel suggestion, but it is one which the right hon. Gentleman might consider. It appeals to a great many people as being a more honest form of raising money, because it amounts to a voluntary surrender of capital in exchange for a sure income. There are many people, particularly those who have passed the prime of life, who would be willing to part with their capital if they were assured of a good income for it.
We have placed before us various other solutions and methods of raising money. One was Premium Bonds, another the hopeless hunt for the war profiteer, and a levy on capital. A suggestion has been made by one of the great magnates in the City that the Excess Profits Duty might be turned into a sort of loan, and extended over a period of years. Personally I do not think that would meet the case. What we require is capital to meet capital, and by attempting to pay off our National Debt out of income, we are only making a piece-meal job of it, and not really remedying the situation. For this reason I suggest that the Amendment ought not to be passed. Before this Finance Bill comes back front the Committee, I venture to hope that the suggestion I have made for the surrender of capital for the purchase of State annuities will be given consideration by the Chancellor of the Exchequer.
If I rightly understand the hon. and gallant Member who has just sat down, he so far agrees with the hon. Member for South Hackney (Mr. Bottomley) that he thinks we are, perhaps, making too great speed in paying off the financial burden thrown upon us by the War. He thinks that this generation, having gone through five terrible years, may well leave to posterity its share of that financial burden. The hon. Member for South Hackney said, on the other hand, that he would not be in too great haste, but would wait and see what Germany would do. In considering everything that arises out of the present Budget, we have two sets of ideas always before us. We have questions of immediate machinery—questions of taxation of co-operators, Super-tax, and so forth; but I think that at the back of the Chancellor's mind all the time are the much larger questions, which go far deeper than matters of machinery and affect the whole financial basis of this country for a generation, aye, for two generations to come. The hon. Member for South Hackney expressed an idea which one hears in many quarters: "We may easily do too much for posterity. Why should we be in such a hurry to pay off this debt?" The answer was given to me not very long ago in Paris by some French friends with whom I was talking in regard to French finances. They said to me, rightly or wrongly, "Remember always that France and your country are very differently situated. In the main, France is an agricultural country; in the main, yours is an industrial country. France has assets which are not wasting, such as the fertility of her soil. A much larger proportion of French territory is fertile, and French territory is much larger." In proportion to her population, she has permanent assets of the agricultural order far greater than we have. Our assets, in the main, are wasting assets. My French friend said to me, "We can afford to wait, provided we pay the interest. You cannot; you are using up your main assets, and you cannot afford to leave a future generation, not far distant, which will have to run your country without cheap coal." I believe that that is a fundamental consideration. I do not say it exhausts the facts, because I believe that one great asset of this country is the human asset which lies in the skill and character of our people and in their habits of government. On the other hand, you have the very slender material basis upon which they will work. If our people are going to hold their own in the world, we must not leave undone the duty of reducing the liabilities which to-day can be reduced, but which will become irreducible under quite imaginable conditions in the not very far distant future. In 1905 the coal resources of this country were investigated by a Royal Commission, and I will quote just one sentence from their Report— which we have had in our coal supplies. It is true that we have fought this War, not for this generation, but also for the future. This little island is but a minute speck among the lands of the world, and, if our race within this island is to play the part bequeathed to it by victory in this great War, we must fight the War out, and fighting the War out includes clearing off a large portion of the liabilities which we cannot leave to the time when we shall have exhausted our already rapidly wasting assets. The Chancellor of the Exchequer seeks, above all things, to reduce the floating debt. The danger of the floating debt is that, if you fail to renew your Treasury Bills, you are bound to resort to the Bank of England with Ways and Means advances. In other words, you are bound at once to use the printing press without withdrawing any assets from the pockets of the citizens of the country. That, with our highly developed banking system, brings about a use of cheques, which, in their total, come to several times the amount of new paper printed and issued as currency, and that, again, results in a further rise of prices. It is essential to clear off, at any rate, a large portion of that floating debt.
When we come to consider the funded debt, we are in a similar position. We have borrowed at a time when the pound would only buy a small portion of the services we render to one another, or of the goods we manufacture for one an-other's consumption. When the time comes when the pound will buy a larger share of the total output of services or goods, we shall have to pay off our debt, which was borrowed when the pound would only buy a small amount, with money which has increased in purchasing value. In other words, the future burden of using dear money, in the sense of money that will buy more, will be far greater than if the debt were paid off at the present time. We borrowed at high prices; let us pay off as much as we can at high prices before they fall. Otherwise, since we shall have to pay in pounds sterling, and not in goods and services, a larger share will have to be paid to those to whom the debt is due. It may be said that this will throw an intolerable burden upon those whose incomes are fixed, and who are already carrying, perhaps, the heaviest burden of anyone. I would point out, however, that the best hope for people with fixed incomes is that prices should go down, so that their fixed incomes may purchase a share of goods and services more nearly approaching that which they used to purchase before the fall in the value of money. Although a portion of the community may not perhaps gain as much as another portion in that matter, yet there is something to be said per contra. I have referred to that point because it seems to me important that such ideas as were expressed by the hon. Member for South Hackney should be met and dealt with as far as possible. We deal here with the mechanism of finance, but the public outside is governed by a few simple ideas, and among those is the idea that we can be paying off too much at the present time, and may safely leave more to be paid off by posterity. The fundamental fact that has to be remembered is that this country differs from almost all other countries, in that, while we are an energetic race, we occupy but a speck of an island, we are exhausting our resources, and we have no right to leave posterity with exhausted resources to face our debt.
6.0 P.M.
With regard to the arguments of my right hon. colleague the Member for Gorbals (Mr. Barnes), I was myself a member of the Income Tax Commission to which he referred, and I heard the evidence on the subject of co-operative societies. I have many co-operators among my constituents and also a large number of individual shopkeepers. I am sure that the co-operators do not wish to be unfair; they are simply asking for what they believe to be their due. Although I know that prejudice will probably make play with some of the things I am going to say, I am going to be bold enough to say something to my co-operating constitutents. As I understood my right hon. Friend, he drew a distinction between investments in an external concern—whether the State or anything else —and the money a man puts into his own business. In ordinary parlance, we speak of the latter as investment in one's own business. Let me put the case to my right hon. Friend, taking the facts that he put. One thing interested me very much in what he said. He said the money which is saved in the process of trading and put to reserve or used in the business of the co-operative society is the source from which dividends are paid. Then he said in the latter part of his speech that the co-operators would have you either way. Either they will pay away all their money in dividends, which would leave no money to go to their reserve and be invested in their business, or they would pay no dividends if the policy of the Chancellor was such as to make that course an obvious one for them. But if the effect of the taxation were to stop them from putting money by, according to the statement in the earlier portion of his speech, that would damp down the dividends, since the dividends are derived from the money put into the business.
I did not say that. I said the money was derived from mutual trading, which was made possible by the members subscribing their capital, that the dividends were the result of that mutual trading, and so far as it was not distributed it was reserved.
My memory of what the right hon. Gentleman said was that, but also that the dividends were obtained from this reserve money which was taken out of the profits and kept in the concern. That is exactly what is called capital in a private shopkeeper's business. Let him consider the case of a shopkeeper who is starting young in a small shop, builds it up until he obtains a great shop and a great business in his native town, and becomes mayor and is knighted. He may have borrowed, but if he were a Scotsman he probably would not borrow. He would have saved. The whole condition of things would be exactly on all-fours with what you have in the case of a co-operative society. Year by year he has put by a portion of the money he has made, and he has put it into his business. He has invested it and has got compound interest for it, because it has yielded him dividends and he has built up a great income. He may have become a philanthropist and given great gifts to his native town. All that may have been done quite conceivably. It has been done many a time by a man who never borrowed, but made the whole of that vast sum by simply refusing to draw his dividends and allowing the money to go to reserve and keeping it in his business. If you go on those lines I can see no distinction to be drawn between the cooperative organisation and the private trader. The right hon. Gentleman speaks of the 4 or 5 per cent. paid on capital. He says that is the only money in a cooperative concern which is analogous to the profit made by the private shopkeeper. The private shopkeeper would certainly not be content with 4 or 5 per cent. He would want 10, 12, or 15 per cent. But the private shopkeeper has put management in addition to capital and in addition to savings, and the profits are not merely a return on his capital, but a return on his brains. Yet he is taxed on those profits. He pays Income Tax, and, if he is liable to it, he pays Excess Profits Duty.
In so far as management and brains are concerned, the co-operators' tax is exactly the same. If the commission earned by the man or woman managing a co-operative concern brings him over the taxable limit to that extent he is taxed.
That is a totally different thing. The directors of an ordinary joint stock company are taxed on their fees, but that is not anything like equivalent to the total Income Tax raised on the profits of the concern, which may put by large amounts of undivided profits and has to pay Income Tax on them. The matter was put quite plainly in the Income Tax Commission. The question was asked, "If the co-operators beat out by their competition private trading the Income Tax of the traders would disappear." The answer was, "Yes, it will, and we believe that is what is going to happen." We then said, "In that case the Chancellor of the Exchequer will have to raise an income from some other source." "Yes," they said, "he will probably have to put on a new tax." Take two shops side by side, the one owned by an individual who has built up his concern by carefully putting by money and not consuming it year by year, and the other a co-operative concern which has not returned dividends to its members, but has put that money by in order to get nearer to the source, to buy mills for grinding corn or factories for making boots, and so forth. In so far as that money has been invested in that way you have something which is absolutely indistinguishable from the capital of the private trader. There is a great political question involved. When we have had a certain practice it is not always easy to overthrow it, and for reasons of general policy not always desirable. The compromise that is proposed by the Income Tax Commission is in itself illogical, but it is illogical against the idea which was put by the right hon. Gentleman. If you had been logical you would have taxed the dividends. In logic you ought to tax both the dividends and the money that is put by. It is illogical in that the Commission says, "We will not tax the dividends, recognising the vast difficulties and recognising the history that is behind us. But we will so far see fair play in this competition that is going on to-day in efficiency between the private trader and the cooperator, that the portion of money which they both put by and invest in their own business for the purpose of developing it shall fiscally be treated equally.' In proposing the compromise that the Income Tax Commission has proposed it has been illogical in favour of the co-operators. It has recognised the political difficulty and, in asking for the tax on the money that is not divided and is put into the business, it is only doing what the State should always do in a Free Trade country, and that is see to it that it does not weight in the competition one side as against the other side.
The right hon. Gentleman finished on a more hopeful note when he suggested a tax on turnover. A tax on turnover has been resorted to in certain cases in lieu of Income Tax where foreigners were concerned trading in this country. It is not always possible to ascertain the profits. We have had great discussions as to the case of a firm mainly situated in a foreign country, but carrying on a portion of its operations in this country. How much of the profit made by that concern is due to selling in this country, and how much is due to the manufacturing in the other country? It passes the wit of man and of the accountant to distinguish between the two, and it has been proposed that in such difficult cases you shall take turnover as a basis, and so do rough justice. The Treasury, of course, is opposed to the taxation of co-operative businesses, because of the practical difficulties and because of the enormous numbers of declamations there will be. The right hon. Gentleman, it seems to me, has very fairly proposed a possible road out of the difficulty. I was very glad to hear him take that line. It is a line which is equitable, which has been pro- posed in certain circumstances, and which has been even followed in certain circumstances, and I think the right hon. Gentleman shows his ordinary fairness of mind when he puts forward that suggestion. I have put forward the facts we had put to us in a non-political atmosphere when we were listening to the citizen—the business man or the employé. In theory and in fact there is no distinction whatever between the dividends of mutual trading and the trading profit of the trader. You have only to imagine cooperation completely successful, you have only to imagine that we were all one vast co-operative concern, you have only to imagine that there is only mutual trading, and you will have driven the nail right home. You would have ended the Income Tax and had to develop some new tax in place of it.
I am afraid it will be necessary for me to sound a discordant note. But I know the House listens attentively and, when an opportunity presents itself, replies to the arguments which have been put forward. I wish to make a few observations on the Corporation Profits Tax. When I listened to the Budget statement, I had a feeling of sympathy towards the Chancellor of the Exchequer. I do not know that there is any Minister of the Crown who has been knocked about from pillar to post more than the right hon. Gentleman has, and it is certainly an extremely difficult position for an individual to occupy. If he endeavours to satisfy every wish and desire of hon. Members, I am afraid he will have to have more faces than one, and will have to possess a coat of many colours. During the Debate on the Budget there were many hon. Members who waxed eloquent in denouncing the Budget in connection with certain items. They denounced the Budget because it was unkind and unjust, and some almost stated that it was extremely cruel. I am afraid that I shall have to mix with a throng of that character. There has been for some considerable time an agitation in this country, and it has even entered into the precincts of this Chamber, in order that the Co-operative movement, and particularly its growth, should be checked. [HON. MEMBERS: "No, no!"] I am prepared by evidence that I have in my possession to prove that. I said at the beginning of my speech that I should have to sound a discordant note, and that I hoped hon. Members would bear with me while I sounded it. Questions relative to the Co-operative movement have been asked in this House, and the subject has been raised in Debate. I remember reading an account of a Budget statement which took place some years ago, when Amendments were moved which affected the Co-operative movement, and it was only on the guarantee of the Chancellor of the Exchequer of that time that at the earliest opportunity a Commission would be appointed to inquire into the question of the whole incidence of Income Tax, and that the terms of reference would bring within the scope of the inquiry the Co-operative movement, that those Amendments were withdrawn. That Commission has reported. We ought to thank the Members of it for their labours for many months for the good of this House and of the country as a whole. This House knows, or, at any rate, it ought to know, the difference between a limited liability company and such organisations as come within the scope of the Industrial and Provident Societies Act, 1893. It is upon that Act that the Co-operative movement founds its charter. Section 24 of the Act says: cannot fully develop on those lines of business in the society to which they have been attached for so many years.
There are many people who run away with the idea, and I have met with it in this House, that local co-operative societies are not assessed. I was glad to hear from my right hon. Friend the Member for the Gorbals Division (Mr. Barnes) that we have to pay our assessment dues just the same as any other private trader in the community. We have our rates and taxes just the same as everybody else. [Hon. MEMBERS: "Not taxes!"] If I make a slip I hope other Members will understand it. I will say "rates" to suit hon. Members. We have to pay our dues and demands exactly the same as private traders. We are simply paying our dues and demands according to the laws under which we are allowed to work, and all we are claiming is that under the law as it stands we shall pay our dues and demands and that no unjust taxation shall be forced upon us when at the present time there is no law justifying it. The limited liability companies to whom the Corporation Profits Tax will apply are totally differently situated. A limited liability company is a concern financed and run in the sole interest of profit for shareholders, whereas an organisation coming within the scope of this Act, is a mutual trading society which is hampered by law, while the people connected with it are limited to £200 in the amount of their shares. It is a system of mutual trading, not for the benefit of a section of the community, but it is in reality mutual trading for the benefit of the whole community who are prepared to be members of it. Any individual in the community can become an ordinary member of a co-operative society, whereas a limited company is limited to a particular circle.
At this stage one does not want to express opinions which may seem harsh or to express words which may sound harsh. The Chancellor of the Exchequer was exceedingly moderate in his Budget statement, and I should like to emulate him in that respect. Nevertheless, we cannot minimise the fact that in this country to-day, particularly in the co-operative movement, which represents roughly 4,000,000 members, there is an exceedingly keen and strong feeling as to the legality of this tax falling on those whom I represent. Who are the people concerned? They are people who otherwise would not be bothered with an Income Tax paper, or with any sort of Income Tax inquisition, for the simple reason that their income is insufficient to bring them within the Income Tax law. The Chancellor of the Exchequer has stated definitely in reply to a question which was put to him by my right hon. Friend the Member for Peebles (Sir D. Maclean) that he is not going to tax dividends. One naturally asked on seeing that in the OFFICIAL REPORT, "What is he going to bring in?' The whole of the profits accruing from mutual trading is not the society's money. The whole of the profits that accrue at the end of the quarter or half-year, or the year, as the case may be, do not belong to the society, but to the members. It is in reality the members' money. The society cannot do what it likes with the money. It has to be decided by a vote of the society, the people who constitute the units of that society. They have by their voice and their vote the privilege of doing with that money exactly what they wish. A question was asked this afternoon as to the £130,000 or £140,000 spent yearly by the co-operative movement of this country upon education. [Hon. MEMBERS: "Propaganda!"] Education in its highest sense. [Hon. MEMBERS: "Political propaganda!"] There are many of our societies who are providing scholarships and giving the daughters and sons of the humblest members of the community some of the grandest opportunities for future development that will make them real citizens in the highest sense. We are spending something like £140,000 on educational work.
How much are you spending on Parliamentary candidates?
A great deal less than the Federation of British Industries. We have not been able to come up to them yet.
The hon. Member says that the Federation of British Industries is providing money for Parliamentary candidates. He is entirely mistaken, and I should like to draw the attention of the House to it.
When the interruption, which apparently has come to nothing, was made, I was saying that we were spending £140,000 upon education. We say that that is the money of the members of the society. They can do exactly as they like with it, and if they desired they could have that £140,000 for themselves. [An HON. MEMBER: "So could a limited company in the same way!"] I did not catch the interruption. Perhaps, "Where ignorance is bliss 'tis folly to be wise." There are other things to which the profits of co-operative societies go, besides education. I am not unmindful of the many hundreds of pounds that are given every year as grants to veterans. Many of them are drawing old-age pensions. Bonuses are given to employés. If the Corporation Profits Tax is to be applied, we say that these things should be released from the application of this tax, because it is the members' money, and not the money of the society. I entered my protest when the Budget was introduced, and I take this opportunity of entering it again. I have a copy of the Clause in the Federal Corporation Tax Law upon which this Corporation Profits Tax has been based. If the Chancellor of the Exchequer is particularly anxious to bring this tax into operation in this country in the way that it is enacted in America, he will find from Section 38 that that Act does not apply in America to co-operative societies. It says:
"That every Corporation, Joint Stock Company or Association organised for profit, and having the capital stock represented by shares and every Insurance Company…shall be subject to pay annually…one per cent. upon the entire net income over and above Five Thousand Dollars, excluding dividends received which have already paid tax…provided, however, that nothing in this Section contained shall apply to labour, agricultural or horticultural organisations or to fraternal beneficiary societies, orders or associations operating under the Lodge system, and providing for the payment of life, sick, accident and other benefits to the members and dependants, nor to domestic building and loan associations organised and operated exclusively for the mutual benefit of their members, nor to any corporation or association organised and operated exclusively for religious, charitable, or educational purposes, no part of the net income of which inures to the benefit of any private stockholder or individual."
I thought that the House would be interested to hear that, because we hear so much about the Corporation Profits Tax, but we hear very little as to how it is being applied in America. You will find from that that it is not applied in America to the co-operative movement. I trust that the Chancellor of the Exchequer will see his way clearly to give us a review of the situation. Pressure is being brought to bear on him from every side, and speaking here on behalf of 4,000,000 consumers of the country, I ask him to review the whole situation with a view to seeing if something else cannot be done, because the whole system of the Corporation Profits Tax is not receiving that consideration that he probably thought it would when it was dealt with on the First Reading.
Any Chancellor of the Exchequer who attempts to deal with such a situation as confronts the country to-day or who presents such a Budget as I have had the honour to submit exposes a very wide front to attack. I am not sure that safety does not lie in that very fact, but in any case I hope that the House will permit me to devote such portion of the time which I shall ask for to-day rather to the widest aspects of the Budget than to the discussion of detailed proposals, such as may be more effectively attempted and more conveniently undertaken in Committee. For instance, my right hon. Friend (Mr. Barnes) the Member for a Division of Glasgow and the hon. Gentleman (Mr. Waterson) have dwelt at some length on a question of great importance, the relationship of the Corporation Tax to the co-operative societies. I hope that both my right hon. Friend and the hon. Gentleman will acquit me in their own minds of any unfriendly feeling towards co-operative societies. If there be any section of the community which is hostile to them or which would desire to hamper or limit their operations, I do not belong to that section, and I have treated the matter purely on fiscal grounds; and as to the proposal which I have made I am quite ready to argue it at greater length in Committee.
For the moment I confine myself to reminding the hon. Member who has just spoken that the proposal which I have submitted to the House is the proposal which found favour with the majority of those who disagreed with the majority of the Royal Commission on Income Tax in their recommendation, that a part of the profits of the co-operative societies should be charged to Income Tax, and who said, not as the hon. Member supposes, that, if they were charged the Corporation Tax in America, then they should be so charged for such a tax here if we had it, but that if there were in the United Kingdom, as there is in the United States, of America, a Corporation Tax levied specially on corporations as such it would. no doubt be proper that a co-operative society as a separate legal entity should be liable for that tax; and that reservation is signed by some gentlemen whose names I do not need to refer to, and by every representative of Labour on that Royal Commission and by the special representative of the co-operative societies themselves. I cannot believe that the co-operative societies who spoke in that document by that gentleman who was specially appointed to represent them mean now to come before this House and the country and say, "We signed that, but at the time we signed it meant nothing, because we thought we would never have a tax of that kind in the country." I will only say at this stage that I have the authority of the representatives of Labour and of the special representative of the co-operative societies upon the Royal Commission on Income Tax for the proposal which I am submitting to the House.
Passing by that, the attack on the Budget, which was opened by the hon. Gentleman (Mr. Bottomley), was of a twofold character. He took broad, sweeping lines of attack. There was nothing meticulous or niggardly about his criticism. In the first place, he attacked the Budget because, in his view, it provided for a swollen and unnecessary expenditure, and, in the second place, he attacked the principle of the Budget, or, at any rate, all the new methods of raising taxation and the continuance of one of the principal old but temporary taxes. I will deal first with the question of expenditure, because I have been criticised greatly for not having dealt with it more fully. It seems to be supposed in some form, if I ever made a speech in which I did not reiterate on the part of the Government our desire for economy, and on my part, as Chancellor of the Exchequer, my determination to do my utmost to secure it, that I have changed my mind, and ceased to care what the expenditure is, and that the special guardian of the public purse is flinging money about broadcast without any regard to the future. This reminds me of a poem which I once read by the Autocrat of the Breakfast Table, in which he described the lamentable results that followed from a joke of which he had been guilty, and concluded with a solemn promise that he would never again be as funny as he could. I am inclined to promise the House that never again will I attempt to be as brief as I can.
I withdraw my objection.
I thought that that threat would tell. One cannot present a picture such as I attempt to do in my Budget statement without a great deal of labour, but I beg the House to believe that no small part of the labour which I undertook was in the effort to spare them unnecessary hours of listening, and therefore I confined myself to what was barely necessary, as I saw it, for the immediate purpose in hand. But it is not because I do not recognise that it is the duty of the Government to secure economy. It is not because I do not recognise that we may be held to blame, and rightly held to blame, for any act of extravagance and of waste, and that it is not only the right of the House of Commons to criticise us if we are guilty by acts of omission or commission, of extravagance and waste, but that it is the duty of the House to searcn out these matters and to impose upon us economy if we ourselves do not faithfully pursue it. In reference to my Budget statement, there has not only been some misconception of the attitude of the attitude of the Government and of myself, but a great failure to comprehend what has been done, and is being done. While expenditure from revenue on the debt has gone up in this year as compared with last year from £332,000,000 to £579,000,000, owing almost entirely to the efforts which we are making this year to reduce debt, the expenditure from revenue on Supply Services has fallen by £488,000,000.
That is not all, and nothing troubles me more frequently than the difficulty of presenting our Budgets to the House or the country in a way which will really convey the truth to those who have not the time or the opportunity to become experts in reading them. It is not all, because a mere contrast between expenditure met from revenue in the two years is a very imperfect measure of the reduction made in the expenditure of this year as compared with last year, and that for the reason that the House knows, that the expenditure last year was not the gross sum voted last year, but the net sum required after the appropriations-in-aid of large receipts which did not come out of taxation. Add these, and you then find that the expenditure on Supply Services is lower not by £488,000,000, but by £822,000,000. I do not think that a single one of those who have criticised us so freely had the least conception of that fact. I do not say that it is conclusive, and that no further reductions could have been made, but I do say at any rate that I have done my share in making the facts known, and that I hope that those who instruct me, whether as Members of Parliament or as writers in the Press, will take notice of what the exact facts are as to what actually has been done.
Taking the gross reduction, I may give a brief outline of how it has taken place. The expenditure on the Army for 1920–21 as compared with 1920 is down by £350,000,000; the Navy is down by £84,000,000; the Air Force by £33,000,000; the Civil Service by £376,000,000. The Revenue Departments are up. They include the Post Office and the great Departments which are responsible for the collection of the huge taxation to-day, and which were necessarily during the War very much under-staffed for the work which they had to do, with the double result that dissatisfaction is caused to the individual taxpayer, and the Exchequer does not receive all the revenue which it ought to receive. I think that those figures are worth giving. As we have said, I do not think that the reduction in expenditure is exhaustive, and I shall be very much disappointed, if on next year's Estimate we have not reduced it by a further sum of from £200,000,000 to £250,000,000.
Take the £550,000,000 at which the Civil Services stand. The first item that will strike you is £120,000,000 for pensions—a wholly new charge arising out of the War. Of that sum of £120,000,000 the cost of administration is only £3,000,000, and that will come down, and I hope come down largely, as soon as the pensions are permanently fixed; but to reduce your staff so that you could not efficiently inquire into the cases before you make a rate which, once struck, is permanent as against the Exchequer and the individual, would result, human nature being what it is, in an immense number of pensions being struck at rates unduly favourable to the individual and unfair to the taxpayer at large. It would not be economy to reduce that administrative staff too quickly. Take that £120,000,000 for pensions from the £550,000,000, and you have a balance of £430,000,000, or about 150 per cent. above the pre-war charges for similar services. Is that increment out of proportion to what is taking place in the country at large according to our common knowledge? If it is out of proportion, all I can say is that every fact as to the conditions and expenses of trade, which are brought to me by the various deputations which wait upon me to protest against this or that tax, is baseless. You cannot expect when costs are rising all round and wages are rising that the Government should still work at the old rate or that Government servants alone of their class shall have no recognition in their salary or wages of the altered conditions of which every private employer is obliged to take note. I am saying these things because I want the House to realise the scope within which economy is possible or reduction of expenditure is possible. Look a little further at some of our expenditure. Take the £550,000,000 of the Civil Service and Revenue Departments.
Some people talk and write as if the whole of this, or a large portion of it, were spent by the Government in keeping a horde of useless, idle and wasteful employés occupying buildings which would be much better handed over to some other purpose. I have served in more than one Department, and I cannot say how strongly I resent and how bitterly I feel these constant attacks upon the Civil Service. A harder working body of men, a more devoted body of men, a more incorruptible or a more faithful public service, you could not find anywhere. I say, not without knowledge, for I have spoken to a great many of them, that one after another of the great business men or men of great business experience, who during the War lent their services to Government Departments, and were closely associated with the Civil Service, who often came in with a good deal of prejudice such as is reflected in the criticisms of which I have spoken, after seeing the civil servants at work and enjoying the advantage of the help which they gave, have gone out prepared to bear testimony to the good fortune of this country in the character and class of civil servants we have. Then do not let us have these general attacks. I say this because I have officially a special responsibility for the Civil Service. I can assure the House that this wholesale criticism, this constant slur cast upon them as a body, is deeply felt by all of them, and most of all by the best of them. I hope there will be some measure for the criticism.
I have already said that war pensions cost £123,000,000. Old age pensions cost £36,000,000; the bread subsidy, £45,000,000; loans to Allies or Dominions, which we are bringing to an end, but which include loans for relief to any part of the world where we find it necessary as a Government to extend relief, £36,000,000; re-settlement of ex-soldiers and out-of-work donations to soldiers, £26,500,000; liquidation of war contracts, £17,000,000; Disposals Board, Ministry of Munitions, £10,000,000; Ministry of Shipping, £16,000,000.
Why is it an increase on last year?
My hon. Friend must have come late into the House and been absent on every other occasion when I have specially explained this, as has my hon. Friend (Mr. Baldwin). In case our explanations would be insufficient we attached a note to the face of the Estimate, which my hon. and gallant Friend has, of course, studied, explaining that last year the Ministries of Munitions and Shipping were both financed out of their appropriations-in-aid, that this year the appropriations-in-aid were taken into the Exchequer and the expenses of the Ministries were asked for in a net Vote from the House. Continuing the figures, £15,000,000 is for coal advances, recoverable from those to whom they are made; £25,500,000 represents payments to the railway companies under the agreements by which we took them over at the opening of the War—not this Government but the Government of that day—and is in payment for wear and tear and so forth during the War; £53,000,000 is for education grants, which I wish were going to stop there, but which will go up to £70,000,000 automatically before very long; and £60,000,000 for the Post Office and Revenue Department, with their great responsibilities. That is a total of £453,000,000. A part of it is disappearing. A part of it may recur in another year, or for a year or two, as, for instance, the charges arising out of the railways. But there is none of it, or no considerable part of it, which can be dispensed with this year unless the House will determine that here and now the bread subsidy is to cease. I can assure hon. Members that the Government have not once only but many times carefully considered the question of how to deal with the bread subsidy. They have not thought it possible to propose it at once to the House, but they are most desirous that it should be brought to an end at the earliest date at which it can be done without evil consequences to the community exceeding the evil consequences inherent in any subsidy of that kind.
7.0 P.M.
The hon. Member (Mr. Bottomley) who opened this discussion propounded for the guidance of the Chancellor of the Exchequer the principle that it was the business of the Chancellor of the Exchequer not to act as a mere paymaster of the spending Departments. I agree. He went on to say that it was the business of the Chancellor of the Exchequer to say to the Departments, "I can find so much money and not a penny more can you have." I do not agree. I can no more dissociate myself from the great acts of policy for which, as a Cabinet, we are responsible, and I can no more ignore as Chancellor of the Exchequer the great national and imperial interests which other Members of the Cabinet have to consider, than can the First Lord of the Admiralty or the Secretary of State for War claim that they have nothing to consider but how to obtain the highest efficiency and the greatest forces for Army and Navy, and that they are not concerned with what is a common and joint responsibility. You cannot draw an arbitrary line like that. What I can do and what I have done I will tell the House in broad outline. I have kept the Cabinet as clearly informed as I could of the financial situation. I have shown them, as I have attempted to show the House, the urgent need there is for wise husbandry of the reserves which we command. We have, through the Finance Committee of the Cabinet, investigated the expenditure of particular Departments. We have given to the Army and the Navy and the Air Force a total figure to which we have invited them to work, and we have examined in common, not merely the Secretary of State and the First Lord or myself but the Cabinet Committee have examined with us, the great items of expenditure which govern the scale of the Army or Navy Vote, and have settled in each case what reductions we took the responsibility of making and what expenditure we could not take the responsibility of refusing. You cannot have the same elaborate investigation into all the details of all the Departments. All my colleagues recognise, and I am grateful to them for it, that it is as much the business of those at the heads of the greatest spending Departments to help the Chancellor of the Exchequer to guard the national finance as it is the business of any Member of the Cabinet to help them to administer to the advantage of the nation the services with which they are specially connected. We are continuing these inquiries, larger or smaller, by ourselves or by our officials, and we will do our best to hunt out whatever remains of waste or extravagance and to put it down. We will do more, we will try and revise the Estimates in the light of the present condition of national finance which imposes upon us a rigorous economy that, but for the sacrifices we have had to make and will have to make in consequence of the War, we need not have followed. I leave that side, begging the House to believe that even now if I do not speak at greater length on expenditure and economy, it is not because I am not interested, and it is not because it does not occupy—I had almost dropped into saying—my waking and my sleeping thoughts. At any rate, it is constantly present to my mind.
The main opposition to the Budget proposals has been to the continuance of the Excess Profits Duty at the enhanced rate of 60 per cent., and it is upon that, and matters which arise out of it, that I would ask leave to say something further to the House. My words have been quoted as to the character of this tax and its disadvantages. I do not wish to qualify any criticism I made of it. It is not a satisfactory tax. Without so wholly altering its nature that it ceases to be the same tax, it cannot be made a satisfactory tax. You may say that no tax is satisfactory I agree. Taxation is a necessary evil, but all of us desire to choose the least of the necessary evils and to avoid the greater. I was very anxious last year to get rid of the Excess Profits Tax, but I found that, at any rate, a large party were anxious to continue it, and for two reasons to which the different repre- sentatives gave different weight. Some urged that a new Excess Profits Tax, a new tax upon trade and industry in substitution for it, was a complicated and difficult task; that it would be a pity to legislate in a hurry; and that they would sooner hear another 12 months of the Excess Profits Duty at some rate less than 80 per cent.—50 per cent., I think, was what was suggested—than have a new tax intended to be of a more permanent character imposed before the commercial interests had had time to consider alternatives themselves and to suggest those alternatives for the consideration of the Government.
Another argument for continuing the tax appeared in the course of the discussion. Those by whom I was interviewed anticipated, as I did at that time, a very considerable fall in prices and profits, and a disturbed and not very prosperous trading year. They attached very considerable importance to the right to reclaim, against tax paid, losses subsequently incurred in consequence of the sale of stocks on a falling market, and they wanted that privilege continued for another year. I gratified them, but not wholly, for the concessions they asked I was unable to give them. I found, when I came to the consideration of the matter this year, that their forecast and mine of the trade year or the financial year that had closed had been mistaken. Trade has been very good; profits had been very high; prices were not falling but were rising, and accordingly you had continually in the country these exceptional profits, due to the disturbances created by the War, which were the original justification for the levying of the tax—abnormal and exceptional profits due to abnormal and exceptional circumstances directly traceable to the War. I found, in addition, that the various alternatives which I had proposed to them met with no favour among a large section of those concerned. I found myself in need of large additional revenue for the redemption of debt and I saw no method which would be open—I will not say to less objection than the Excess Profits Tax, but which would meet with less objection from those who were chiefly concerned because they would chiefly have to pay.
Just consider for a moment the alternatives which have been suggested to-day. The first class of alternative is not an alternative of taxation, it is a method of funding debt. The hon. Member for South Hackney (Mr. Bottomley) returns to his panacea, which is an issue of premium bonds. Premium bonds have their merits, and they have their demerits. The House of Commons has settled the matter, and I think Ministers received a compliment in connection with that matter such as is seldom paid to them in this House or elsewhere, when the hon. Member said that when next the Government professed to leave the matter to the decision of the House, he had no objection to their putting on the Government Whips, but he begged them to take away the Government itself, as their speeches were so persuasive. I am not going to argue the question of premium bonds. I would only point out that it does not reduce debt but merely funds it for a certain period. It is not properly funded, but it puts your debt away for a number of years.
The hon. and gallant Gentleman the Member for the Walton Division of Liverpool (Lieut.-Commander Chilcott) in what was, I think, a maiden speech, and if that is so I may be allowed to congratulate him upon it, suggested an issue of tax free annuities. I have considered the issue of annuities, but of course a long dated annuity at the present time is not a cheap way of funding debt. It really means funding it at the present high price of money, and if my hon and gallant Friend complicates it by saying that the annuities should be tax free, and pleads for that as being especially attractive to the middle class of moderate income, I must remind him that a tax free investment is most advantageous to the biggest taxpayer. It is just in proportion to the wealth of a man and the tax he would otherwise pay that the tax free investment becomes valuable. In other words, by issuing tax free investments you do not issue a security which gives the small man more than the very rich man, but you issue a security out of which, if he chooses to invest in it, the rich man because he is rich reaps a far greater advantage than the poor man because he is poor.
One other alternative which was mentioned to-day—I am not quite certain by which of my hon. Friends, but it has been put to me elsewhere—is the forced loan. I cannot see any advantage that the forced loan has over the simple levy on capital. If the forced loan is universal, it is comparable to the universal levy. If it is restricted to those who have had an accession of wealth during the War, it is comparable to the levy on increased war wealth. But I cannot see, in spite of the pains that some gentlemen, inside and outside of the House, have taken to educate me in the merits of the proposal, that it has any advantage over the levy on capital. You want to free the country of certain charges. You can do that, let us say, by levying £500,000,000, of which a particular person's share is £1,000. You then say "We will give him 2½ per cent. on the £1,000." What is the difference between that and saying "We will take £500 in lieu of the full amount of the levy." If you are to repay the £1,000 at some future time you have not got rid of your debt. It is not therefore a proposal for reducing debt, it is a proposal for funding debt.
These are not alternatives to the Excess Profits Tax, they are really in a different class. What are the taxes which will bring in revenue, and which are suggested as alternatives? There is the turnover tax; a tax on turnover. My right hon. Friend the Member for Gorbals (Mr. Barnes) invited me to propose such a tax, and to extend it to co-operative societies. What is meant by a tax on turnover? Is it on every kind of article that is turned over, from the first stage of production to the last? If so, it is open to exactly the same criticism as has been brought against the Excess Profits Tax; that it falls again and again between the original commencement of production and the time when the goods produced reach the consumer. Every time something is added, not merely the amount of the tax, but something to cover the additional cost. If you consider the number of times that in our complicated processes of production and manufacture and merchanting such a tax would fall upon an article like boots or clothing, do you think that I could carry that tax if I proposed it at the present time? If you do not mean a tax on every formal turnover and every stage, the alternative has been put of a tax on the retail purchase, that is to say, on the goods as they finally reach the consumer. I was very much tempted with that, as I thought, for one thing, there would be a great deal of money in it, and I had it looked into. I found that it had been examined by one of my predecessors and, after considera- tion and some consultation, he had turned it down. I said I was not satisfied and I had it examined again, and my advisers, the officers specially concerned, reported adversely. In the course of last year those particular officers were changed, and I said, "Now is my chance with two new minds which will come fresh to the subject," and I asked them to go thoroughly into the question and produce a Report. After a little time, they said, "Are you prepared to tax food, to put a tax on all sales of food?" and I said, "I am not, at the present moment.' They said, "If you begin to make exceptions, where exactly are you going to stop? If you will not tax food, will you tax the tools of a man's trade?" They proceeded to mention a large number of other conundrums. They invited me, for instance, to consider how I should levy a tax of, say, one per cent., or something like that, and intended to be recovered from the consumer, on newspapers sold at a penny. It is not an easy tax. When it was all done, they estimated that you might get £20,000,000, but that a part of the revenue would escape collection, and that, on the whole, they could not advise that I would get more than £10,000,000.
At one per cent.
Yes, at one per cent. That is my experience with the turnover tax. Then it was suggested very generally, and I was very warmly cheered here the other day when I mentioned the project of a graduated tax on profits. That is a tax I wanted to introduce last year. What is the difficulty? The difficulty is that in order to levy a tax of that kind you must value the capital engaged in every business. As a tax collector I am not fond of that. I frankly admit I do not consider that we could not do it with impartiality and with fairness, but I have not seen the least reason to suppose that those who are now paying the Excess Profits Duty, and who complain of the Excess Profits Duty, would prefer to have a graduated tax on profits. On the contrary, all that they have said to me leads me to think that they would sooner pay the present Excess Profits Duty than submit to the valuation involved in the levy of a graduated tax on profits. I do not say that is conclusive; I am not unmindful of the fact that it is the Government which proposes taxation and that it is the House of Commons which settles it, and that no section of the community can be allowed to override the will of Parliament or to decide in place of Parliament, but I do say that the feelings of the people affected are one of the matters which not only the Government but the House of Commons may take into consideration.
Another alternative is a flat rate tax. I think a flat rate tax of a very moderate amount is possible in respect of companies of limited liability and the Corporation Tax is such a flat rate tax. In order to raise the amount of money from one year's flat rate tax that I raise by one year's Excess Profits Duty at 60 per cent. the flat rate tax must be 5s. 6d. on all businesses within the scope of the present Excess Profits Duty, whether actually being charged with Excess Profits Duty or not at present. I confess I myself should have thought a proposal of a five shillings and sixpenny flat rate tax an impossibility. Though some of those who discussed it with me the other day—and I will have a copy of the shorthand notes of the Deputation placed in the Library, if hon. Members so desire—thought that a flat rate tax, even at that rate, would he preferable to Excess Profits Duty at 60 per cent., not all were prepared to commit themselves to this without a good deal of further consideration.
Including professions?
No, that is not the invitation I have extended to the commercial people. The Government may propose or the House may insist upon further taxation upon professional men or any other class, but to those gentlemen who came to discuss with me a tax on industry my invitation is to find another tax on industry giving me approximately the same money on less disagreeable and less disadvantageous conditions to the trade. I can get any number of suggestions from any number of quarters to tax somebody else, but what I am searching for is the man who says, "Tax me, and this is the way to do it." Let me say that though the deputations which have waited upon me and the important trading bodies which have corresponded with Members, and I daresay have interviewed and pursued Members, do represent a great body of public opinion, they by no means represent the unanimous mind of manufacturers. In fact, many who are hit by this tax, or would be hit by the other tax, have told me I was right, and that I would have their support, and have dissociated themselves in present circumstances from the criticisms that are being made.
There is one other alternative about which I want to talk. I want, if I can, to get those who ought to consider these things really to consider them as a whole, and to consider them with a full knowledge of the alternatives. There is one alternative, and it is a levy on War wealth. May I repeat very shortly what is, in my view, the justification, the twofold justification, for a levy on War wealth? It is that, as a result of the Great War in which we have been engaged, this country as a whole is much poorer than it was. But whilst the country as a whole is poorer, certain people, owing to the reasons that make the country as a whole poorer, are richer, and some of them very much richer. Here I pause to say, and I think it is very important to say, that I am not questioning the honourability of these people or the character of their work. There are black sheep in every community, and I dressy some of us, and I suppose all of us, have heard of some. But the great mass of this wealth was honourably won, and not only so, but the men who got it could not have avoided winning it if they did their utmost to supply the urgent needs of their country at the time. It is, therefore, in no sense as a punishment nor to cast any reflection on this increased wealth that I ask the House and other people to seriously consider the case for a levy of this kind. Whilst the country as a whole is poorer, and whilst great numbers of people suffered largely, and those of us are fortunate who can say that in the end we were as rich as we were in the beginning, a section of the community not confined to any one class or section profited, honourably, but profited on the very circumstances which impoverished so many others. I say there has been great in equality of financial sacrifice. The country has need of further money. Is it not fair, is it not right, is it not expedient, to look to those who have been fortunate where others have suffered for some special contribution in the extraordinary needs of the time?
Let me say something more. A few black sheep, as they always do, bring down upon honest men an amount of odium which they have not earned and do not deserve. But, apart from the cases of wealth not well gotten, the spectacle of the sudden rise of vast fortunes plays straight into the hands of those who are enemies of all capital in any form, and I put it to men of capital who, like myself, in financial matters are of a conservative turn of mind, and think, whatever you may do in other things, in finance conservatism—I do not use the word in the party sense—is wisdom; I put it to them whether there is not something, and a great deal, to be said for a levy on the special increases of War wealth, as an insurance against a tax on capital of all kinds. I believe if we carried out such a levy it would add effectively to the security of capital in general, and disappoint the hopes of those who would be glad to see our present industrial, commercial, and social system break down under the weight which the War has cast upon us. I do not want to anticipate the conclusions of the Committee which is sitting, but, if such a levy could be raised with equity, without insuperable administrative difficulties, and with the large allowances that are necessary to provide for anything in the nature of normal or abnormal savings, then, broadly, if such a levy could be raised, and could produce something in the nature of £500,000,000, that would enable me to revise the Excess Profits Duty programme at once. I should reduce it from the proposed rate of 60 per cent., at which otherwise I shall invite and press the House to keep it for the current year, to 40 per cent. for the current year, and, with £500,000,000 in sight for the reduction of debt, within a year or two, I think, I should see my way to the rapid extinction of the Excess Profits Duty, by a couple of stages, per - haps, leaving us with something in its place in the nature of the Corporation Tax, or of a similar moderate flat rate tax on all concerns coming within the scone of the Excess Profits Duty.
Those are the alternatives. I do not think they have received sufficient attention, nor that all the issues involved have been sufficiently weighed, by those who have spoken so strongly on behalf of trade and commerce and finance. I say quite frankly to the House as a whole, and therefore to the public, what I said privately to a Member of Parliament to whom I was talking on this subject the other day. As the Minister responsible for raising the Tax and administering the taxing machine, I prefer the Excess Profits Duty to any form of levy that involves a valuation of the capital of a great number of individuals. It is much easier for me, but if, instead of being Chancellor of the Exchequer, I were a member of the Institute of Bankers, if I were a member of a Chamber of Commerce, or if I were a member of one of the great federations of industry, I should say in that capacity, "I will take out the insurance that the Chancellor offers me, I will fake cut that insurance for the general security of capital and its defence against predatory attacks, and I will ask the Chancellor and the Government to translate into a definite programme to be laid before Parliament the hope which he has expressed, that with such a tax in prospect he would bring the Excess Profits Duty by rapid stages to an end." If they accept that, or if the House accepts that offer, then it will enormously increase my labours, but that that is the wise thing for those men to do in their own interests I have in my own mind no shadow of doubt.
I listened with mixed feeling to the Budget statement of the Chancellor of the Exchequer. While one felt satisfaction at our being able to face such a huge burden, one felt that there was grave danger that the future progress of the industry of the country would be restricted as the result of all that burden of taxation, and that we must keep in mind that our industrial prosperity has been built up on unspent profits. Business men and companies have not divided up from year to year all the profits they have made, and the amount placed to reserve or carried forward has constituted additional capital for the following year. The Chancellor's demands, therefore, by way of taxation are not so serious from the point of view of reducing the purchasing power of the individual whom he is so heavily taxing, but are dangerous to our industry, because if he were not imposing such heavy taxation more capital would be carried forward this year for future industry in the form of unspent profits. When a nation is heavily taxed in this way it has the right to ask for proof that all the expenditure is justified, and I cannot help feeling that even, though the Chancellor of the Exchequer made out to a certain extent a case on behalf of the Government, the figures he gave did not really bring out some very important points. He told us that the expenditure had decreased as compared with last year by about £480,000,000. Of course the total expenditure has decreased, because the expenses of the Army and Navy are so much less, but the Civil Service Estimates, which I believe the House looks at with very jealous eyes, have increased, particularly if you leave out from the summary of those Estimates the item, "Loans to Dominions and Allies," which obviously are not real expenditure of the nation at all. One finds that, leaving out that item, the Civil Service Estimates have actually increased by £71,000,000 a year. That includes an Estimate for the Ministry of Munitions of £27,000,000, and the House will remember that when that Estimate was brought before the Committee some weeks ago it was almost immediately withdrawn and has to come up again after revision.
Does the hon. Member know how much money we made at the Ministry of Munitions for that expenditure?
I do not think that has anything whatever to do with the point. I do not want to be drawn on to that point, but I could immediately retort to the Government that they are taking to credit the sales of goods to the extent of many millions, which many of us think are not genuine revenue at all. With regard to the Civil Service Estimates, the Chancellor of the Exchequer, very properly and very truly, praised the Civil Servants and said that he resented any accusation against them. I think the whole House agrees with him there, but it is not the action of the Civil Servants, it is the very nature of the Departments, the very method of carrying on, that in the opinion of most people is causing unnecessary expenditure. I want to suggest to the right hon. Gentleman that there are two things for him to do so far as the Government Departments are concerned. The first thing is to find out whether any of the Departments are unnecessary, and, if so, to shut them out, and the second thing is, after he has decided that certain Departments are necessary, to go through those Departments and see that they are not divided up into unnecessary Sub-departments. I want to give an experience which I had in the last three or four months of the War. I was appointed one of the members of the Staff Investigation Committee of the Ministry of Munitions which the Minister set up. That Committee never reported, because its work was not quite concluded when the Armistice arrived, but the experience which I gained on that Committee showed me this.
The Ministry of Munitions was on the whole most excellently run, but it was divided up into too many Departments, and the recommendation that the Investigation Committee would have made would have been that a considerable amount of money could be saved by grouping several of the Departments together. When you came down to those Departments, you found that they, too, were divided up into too many sub-Departments. I was Chairman of a Sub-Committee which investigated the Explosives Department, one of the most important Departments of the Ministry of Munitions. It had a separate building near the Green Park and was presided over by Lord Moulton. No fault could be found with the work that was done by that Department, but it was divided up into far too many sub-Departments, and if several of those sub-Departments had been brought under one head, a considerable number of staff would have been saved. The tendency of every civil or municipal servant or official of any sort, directly they are put into a position of responsibility, is very laudably to make their position as important as possible. They gather round them a staff; the official above them possibly questions the staff they are gathering round them, and they justify it. It is impossible, of course, for the Chancellor or any Member of the Treasury to check every Government Department, but the experience of the Committee at the Ministry of Munitions convinces me that if one could go through every Government Department one would find overlapping here, and unnecessary staff there, which could be reduced if the time and trouble were taken to go through and cause several sub-Departments to group themselves together.
agree with the hon. Member that that may be a future subject of inquiry. It is for the purpose of carrying out that kind of inquiry, among other things, that we have established a new post, a Controller of Establishments, at the Treasury and that a large part of additional Treasury staff has been actively engaged for some time past in carrying out detailed investigations into the staffing arrangements of the various Departments. We quite recognise that that needs doing.
I am very interested to hear that, because the Government's tendency at the present time does not seem to be in that direction. Last week we had the War Pensions Bill, and the first Clauses take away from the Ministry of Pensions and transfer, either to the Army or the Navy, pre-War pensioners and post-War pensioners, so that both the Admiralty and the War Office are now going to set up a Department to deal with pensions with a fresh staff, whereas the Ministry of Pensions could continue to do this work themselves. I was glad to hear what the Chancellor said, but, at any rate, that is the latest case of decentralisation which has been placed before the House.
If I may just refer to the Excess Profits Duty, I would ask the Chancellor whether he would put on the Paper, as soon as he possibly can, the concessions he has promised to make to small businesses. Obviously, he had no time himself before the Bill was drafted, but it would be a great convenience to all who have to consult about these matters that they should be on the Paper some time before the Committee stage is reached. The Chancellor spoke a few minutes ago with regard to a flat rate, and he said that, to replace the Excess Profits Duty at 60 per cents. it would be necessary to put on a flat rate of 5s. 6d. I want to suggest that as large an amount as 5s. 6d. would not be necessary, for this reason. The Excess Profits Duty of 60 per cent. has caused, as he himself has stated, great extravagance in business. People have said, "Well, the Government takes 60 per cent.; what does it matter?" There has been no attempt at economy. There has also been, as the result of a rate of 60 per cent., a certain amount of evasion or subterfuge to prevent profits being shown. If you have a flat rate and a tax which is only 25 per cent., instead of 60 per cent., where the man himself takes 75 per cent. of any saving, and the Government only 25 per cent., you will bring back the spirit of economy into business, and get rid of all these extravagant methods of administration. You will also avoid a considerable amount of evasion and subterfuge with regard to profits, because the less the prize the less the risk a man will run, and, therefore, I venture to suggest to the Chancellor of the Exchequer that for these two reasons—less extravagance and less evasion—a flat rate of 5s. 6d. would yield far more than the Excess Profits Duty of 60 per cent.
I want to ask the right hon. Gentleman what would be the effect on his Budget of the announcement made yesterday with regard to the increased price of coal. This increase will yield in a full year to the coal interests something like £55,000,000 to £60,000,000. The total increase of wages granted to miners has been £30,000,000. So that this increased price of coal is going to bring into the pockets of the coal industry anything between £25,000,000 and £30,000,000 a year. The Coal Mines (Emergency) Act expires on the 31st August, and after that the coal industry is intended to be free from control. They will then come under the Excess Profits Duty and Income Tax. The Chancellor will then have the opportunity of taxing these increased profits which will accrue to the industry as a result of the increased price. He has not got it at the present time, because the profits are now pooled, and the Excess Profits Duty is excluded. But, after 31st August, when de-control comes into force, he will get it, and, I think, as a matter of fact, he will get his proportion of far more than the £25,000,000 of which I have spoken, because you will find in the coal industry that there are a few companies which are making enormous profits as a result of export trade, and there are many who, when the industry is de-controlled, will not come up to their pre-War standard, because they are only supplying household and industrial coal in this country, and they will not be liable to Excess Profits Duty; but the export companies will be, to a very large extent. The right hon. Gentleman will probably get a very large amount of Excess Profits Duty from the coal industry. Possibly he has not taken this into account at all, but I believe the announcement of yesterday will affect his Budget to a certain extent.
Then I want to ask the Chancellor if his attention has been called to a practice which a number of wealthy men have taken up during the last two or three years of, in effect, turning themselves into limited companies, with the object of avoiding the payment of Super-tax at 4s. 6d. in the£.It has been easy in the financial papers, which announce the new companies registered at Somerset House each day, to recognise companies of that sort, and I have no doubt the Companies Department of the Board of Trade could give the right hon. Gentleman particulars. The people who have done this in order to avoid Super-tax are not cheating the Chancellor, but are cheating the other taxpayers in the country, because the Chancellor himself sets out to raise a certain amount of revenue, and if the Super-tax, which is now being avoided in this way, was paid to him, he would be able to reduce some other tax to the rest of the community. As one is anxious that every opportunity of avoiding taxation should be closed up, I hope he will be good enough to inquire into that matter.
I want, lastly, to call the attention of the House, and, if I may, the Chancellor of the Exchequer, to a new aspect of the incidence of indirect taxation. There are some people who say that all taxation should be direct. There are two very good reasons against that. The first is that indirect taxation enables the Chancellor to gather a considerable amount of money without the payers of the tax being really conscious that they are paying it; and, secondly, it is considered that everybody should pay something for the protection they receive from the State, and, as all direct taxes have an exemption limit, indirect taxation is the only way to reach them. But there are certain new circumstances at the present time which make it necessary for us to consider whether certain indirect taxes are worth imposing, and I particularly want to refer to those on sugar, tea and the other commodities which are included in the official calculation of the cost of living. We have to remember that before the War the rate of wages was always fixed according to the law of supply and demand, and an increase of wages could never be obtained, even by trade union action, if the employers were in a position to obtain per- manent substitutes in the event of a strike. To-day that is all changed. The rate of wages is not governed by the supply of and demand for labour. The rate of wages is now governed by the cost of living, and increases of wages are given according as the cost of living rises. An arrangement has been made with the railway men by which 400,000 railway workers receive 2s. per week increase for every increase of ten points in the index number of the Board of Trade prices. There are other groups of workers who are on similar sliding scales, and the effect of these sliding scales is that, immediately a grant is given to these particular sets of workers, the rest of the workers of the country, very justifiably and properly, also receive an increase in their wages. The Food Controller told us last week in the Debate on the Ministry of Food vote, that as a result of these sliding scales a penny a pound on sugar meant an increase of £13,000,000 a year on wages. So we see the way in which wages chase prices, and, as soon as wages catch up, off go the prices again.
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I must call the attention of the House to the fact that the operations of these sliding scales are downwards as well as upwards. If you could reduce the cost of living, you would, on the sliding scale reduce the wages of the worker, but he would be no worse off; in fact, I think I can show he would be better off, even though the wages were reduced, but at the moment I will only say that his wages would only fall by the amount he was going to save in the purchasing of the commodities that had fallen in price. There is nothing in the country that has caused more indignation than the continual rise in prices. There is nothing that causes more dismay to the women of the land than continually finding when they go to buy the necessaries of the household that the price has gone up, and the pound does not go as far as it did before. Nothing, therefore, could do more good from the psychological point of view than a reduction of prices, particularly of the necessaries of life. The Chancellor of the Exchequer will say that he looks at it from the point of view of revenue, and that he cannot afford to lose at the present time the revenue he gets from the indirect taxes on sugar and tea. But I want to remind him that the rise of wages has increased the cost of production of every business in the country, and the rise in the cost of things like sugar has its effect on the cost of production of everything we make in the country. Take railwaymen's wages. When they increase, the rates for fares and for freights have to be increased, too. Directly the rates for carriage on the rail-ways go up, the cost of production of all our goods goes up, too. But if the process were reversed, if we could reduce wages in this country on the sliding scale, then the cost of production of all goods in the country would conversely fall. That would mean—and here I am coming to where the Chancellor comes in—that prices of all goods sold at home would fall to the ordinary ratio of profit which that particular business makes, but we have got to remember that we are an exporting nation, that we sell far more goods abroad than we do at home, that the price we get from abroad is not fixed according to the cost of production, but what we are able to obtain in the foreign markets. If, therefore, we can bring down the cost of production of the manufactures we are making in this country at the present time, we shall still sell them abroad at the same price, and therefore exporting firms, whether manufacturers, or simply agents, will make far greater profits to the extent of the difference, and the Chancellor of the Exchequer will come in for Excess Profits Duty, the 5 per cent. Corporation Profits Tax, Income Tax and Super-tax upon that amount. There is another point; I said that the workers themselves, if you bring wages down in accordance with the sliding scale on the cost of living, will be better off, and in this way: their wages are only going to fall according to the amount which the necessaries of life, as included in the Board of Trade figures, fall, but they are also going to gain, because every-thing else which is not necessary, every-thing manufactured in this country which does not come within the cost of living, will also fall. I want to submit for that the consideration of the Chancellor of the Exchequer that if he would abolish indirect taxation on sugar, tea, and other similar commodities, which come under the official list of the cost of living calculations, there would be increased profits on industry from which he would draw Excess Profits Duty, Income Tax, and Super-tax, which would replace the in-direct taxation. He would bring down the cost of living in every household in the country, not merely in these particular commodities, but in other commodities, because he would generally reduce the cost of production throughout the country. In that way he would secure that revenue he wants for himself; not only that, but his action throughout the whole land in regard to the cost of living would have a psychological effect which it is impossible to over-estimate.
When this Debate opened it centred around two matters, but I presume that the point which was in the minds mostly of the Mover and Seconder was the Excess Profits Duty. The Chancellor of the Exchequer, in the course of a very interesting speech, made use of these words which I took down: "I saw myself in need of large sums for the reduction of debt," and I consequently concluded that the size of the Excess Profits Duty was affected to a large degree by a sub-conscious or conscious motive in the mind of the right hon. Gentleman, namely, the redemption of that debt. I am using that as something upon which to fix my observations, and I note in addition the report of an interview at which I myself was present which appears in the "Times" this morning. It says that the Chancellor of the Exchequer in his reply said: Profits Duty or other taxation to render it unnecessary for him to raise money by ways and means advances. He must raise enough money to have a decent Exchequer balance so that he need not call upon the Bank of England again to find him money, and he must be in a position to take up such Treasury Bills as when the time for renewal comes the market may refuse to take. Beyond that I want to know to what annual amount the reduction of debt can safely go, and whether or not the Treasury and the advisers of the right hon. Gentleman have made up their minds to what extent this country can in future go in the direction of the reduction of the debt.
In his remarks a few moments ago, the Chancellor of Exchequer said, "I wish I could get £500,000,000 towards the extinction of the debt." Where would that lead him? I am perfectly willing that there should be reduction of debt, and I say that because I do not wish a debating argument to be put up against me, but I am not in favour of the over-hasty reduction of the debt. I am in favour of reduction, but I say that that reduction should be imposed at a rate which will not be a danger to the country. The mere bald statement that we wish to reduce our debt is one which I think requires a good deal of qualification. The right hon. Gentleman says that he would like to have £500,000,000 with which to reduce the debt. I wonder what would happen if he had that £500,000,000 in the best method of reducing the debt, that is to say, gold in his hands. Let me see if I can take hon. Members along the sequence of events in this connection.
Suppose I, as a manufacturer and a taxpayer, owed the Treasury £100. Suppose I went to them and said, "I have received enough gold from abroad to enable me to pay what I owe, in gold which I have legitimately obtained." Suppose I said to the Treasury, "Which will you have, that gold or a cheque upon my bankers?" I suppose the Chancellor would say, "Oh, I prefer to have gold, because if I have gold it will help to reduce the currency notes and Treasury bills that are in existence." Suppose then instead of the £100 the Chancellor of Exchequer had the £500,000,000 as he wishes in the finest possible medium, gold. I do not think my right hon. Friend will object to my suggestion that it would be proper to receive payment in gold. Or suppose, to put the matter in another way, he sold one Suez Canal share to the King of the Cannibal Islands who was willing to pay £500,000,000 in gold to possess that one share, and this king took to the Chancellor this £500,000,000 and paid in the gold, and the Chancellor cancelled the equivalent of Treasury bills, what would be the result of paying off that portion of the floating debt? It would at once create an inflation of credit and a rise of prices and wages in this country beyond all conception. Therefore there is something to be said for a limit to be placed on this reduction of debt, or, at any rate, we ought to be clear as to the rate at which we are going to reduce the debt, because I submit that if my right hon. Friend's large reduction of debt takes place, and in that finest medium, gold, you will create the very thing which the Chancellor of the Exchequer says he is trying to remove, namely, a rise in prices and in wages, and a continuance of the vicious circle.
If anyone says that payment in gold for the reduction of debt in an excessive amount will not create an inflation and all its attendant mischief, I would say, look at the United States, where the large influx of gold has undoubtedly forced up prices, or let him look at Sweden, which during the War refused to accept more gold, on account of the inflation which resulted. The Chancellor cannot hope, and does not wish or expects to receive, gold from the Excess Profits Tax about which some of us are complaining. However, that is not my point. I am not dealing for the moment with the excessive amount of the Excess Profits Tax. What I am particularly dealing with is this, what is at the back of the mind of the Treasury and the Government in this large reduction of debt, for which large amounts of money are to be found by taxation. I have shown that if you repay it in gold it will be a very great danger, yet the right hon. Gentleman says, "Repay it by the transfer of credits raised from the taxpayers, merchants, and others, to the Bank of England." Whereupon these credits taken from the taxpayers cease to be any more a liability of their bank, but become an asset in the hands of the Government, on the strength of which they are able to tear up the Government I.O.U.'s and place those credits in the Bank of Eng- land in return for the destroyed Treasury Bills. They become assets of the Bank, and, although they are not so good as gold, still they are assets upon which the Bank can grant credits, which again will cause inflation. The Chancellor of the Exchequer does not seem to have made up his mind as to the amount of damage the reduction of debt will thus cause. I think that even the medium of gold will do a great deal of damage, and so will the medium of reduction in the form of taxpayers' credits transferred to the Government. This will make a more dangerous basis of inflation, and yet the Government bases its taxation on the policy for a great reduction of debt to pull down prices.
What else happens? The right hon. Gentleman has taken the credits from the manufacturers and the taxpayers generally, but the very money which he takes not only creates inflation and high prices, but also withdraws from industry the very thing we want in order to pull down prices, that is capital which is the tools and raw material of industry by which goods may be produced in greater volume. Is there not a curious reductio ad absurdm, in the theory put forward in an excessive reduction of debt? Moreover, this is not a repayment of debt, in fact, it is only a book entry transferring credits from the taxpayer to the Treasury and a cancellation of debt. That is not repayment of debt, and the only way to repay debt is by substituting assets for the debt, or the instruments of debt, which ' exist. The very removal of this capital from industry will deprive the country as a whole of the ability to produce that very wealth which would really repay debt without this juggling of book entries. We have a debt of £8,000,000,000 not covered by assets. By taxation the Chancellor of the Exchequer wishes to twist about the figures in the balance sheet with the idea that, by transferring the ownership of wealth, you may repay part of that £8,000,000,000. But in a commercial balance sheet, if you have a figure not represented by assets, the only way to get that right is by putting into operation a process known as "squeezing out the water," and the only way to do that is by replacing in your balance sheet on the other side assets to represent the figure. Really by this reduction of debt we are not repaying debt, but we are cancelling debt by taking assets from one portion of the community and handing them to the State.
The State and the nation have identical interests, just like a married couple. The man has £1,000 invested in his business, and the wife has saved £200. Suppose their child becomes ill and needs an operation. The man does not take the money to pay for this out of his business, but the wife lends him, say, £100 to pay the doctor, and then they have between them £1,100. The wife may then say, "Give me back my £100 and you pay the debt." Then the husband withdraws £100 from industry, but that will not replace the money they have spent, for they will only have £1,100 between them, whereas they had £1,200 when they started. We are calling on the nation to hand over large amounts of assets to the State, and it is called repayment of debt. It is not, it is only cancellation. In the case I have mentioned, in taking from the husband £100 from his business, you reduce his ability to to earn money, and gradually out of his profits to repay the money parted with for the purpose of the child's operation. That is exactly what excessive reduction of the National Debt will do to us.
There is one method by which we can reduce debt in a proper and legitimate way, and without creating mischief. I realise the Chancellor of the Exchequer has to find money against the securities handed to the Revenue in payment of taxes. I know he cannot pay them by gold, and, if he could, it would put up prices, and if he repays them by the credits of the taxpayer, obtained for debt reduction in what, I think, are improperly large instalments, he will probably create the same inflation by a much more unstable instrument. The way to reduce debt really cannot be reached by short cuts. But we should change as best we can the Treasury bills into long-dated instruments by some sort of conversion. I know that may be difficult to do, but opportunities will occur, and then year by year pay out of revenue as much as can be absorbed without causing inflation or depleting the capital employed in industry. That capital is needed to increase the supply of goods in order to cheapen prices. Meanwhile trade will be making wealth to pay by taxation on its profits enough to take up such Government instruments of debt as then fall due, and keep free the Treasury from the necessity of borrowing through ways and means. That would create an amount of wealth which would adjust the indebtedness of this country, without throwing everything out of gear by this unreasoning speed in the reduction of debt.
There is the moral effect upon the United States created by this method of hasty repayment regardless of the mischief it causes us, but we are paying for that effect very heavily. I am not sure that getting the good opinion of other countries will affect the exchange very much, but by cultivating this desire for foreign applause, we shall have to pay dearly and the game is not worth the candle. Does the Chancellor of the Exchequer yet know the sum that can be handed back in debt reduction annually without creating economic ill-effects? I shall not support this Amendment, but I think it has served a good purpose. It has, at any rate, allowed some of us to pause for a minute and find out why it is that this large amount of money for debt reduction is asked for by the Chancellor of the Exchequer, which compels him in turn to ask for a 60 per cent. Excess Profits Duty. I myself am inclined to think that the Excess Profits Duty affords the best way for industry to make the best of a very bad job. But I want to go back much further behind that tax, and that is why I welcome this discussion. It gives the Chancellor of the Exchequer, the Government and the country, as well as the Treasury officials, an opportunity to make up their minds and tell the country how much money the economic system of the country can safely absorb in debt reduction year by year, without it causing inflation, a rise in prices and wages, and a shortage in the manufacture of goods, and thus accentuating the very mischiefs which the Chancellor of the Exchequer imagines he can remedy, though mistakenly, by excessive debt reduction.
I regret that I shall be unable to respond to the invitation of the Chancellor of the Exchequer that we should deal more fully with some of the general effects of the Finance Bill. That is not because I am unwilling. I set out with the intention of supporting the point of view put forward by the hon. Member for Kettering (Mr. Waterson), but since he sat down two or three aspects of the question have been mentioned, to which I shall take the liberty of making just a passing reference. The hon. Member for North-East Derbyshire (Mr. Holmes) referred to the fact that wages and prices react one upon the other, and to the various laws by which he considered those two factors to be determined. My view is that the cast-iron rules which used to determine these things do not now prevail. We are all more or less familiar with the Ricardian law termed the iron law of wages. Wages were generally determined by the cost of living. Despite the demands that are often made for increases in wages following increased prices, I do not share the view that that law, or anything approaching it, is in operation to-day. Was it not Buckle who stated that the rise and fall of the population followed the rise and fall in the price of wheat? These cast-iron laws have been broken down during the past year or two by agencies with which most of us are familiar.
The hon. Member who has just sat down, the hon. Member who moved the Amendment, and the hon. Member for Camlachie have all referred to the question of the reduction of debt. Those with whom I am associated are wholly in favour of an immediate reduction in debt, and it is well understood what our method of effecting that reduction would be. Even if we cannot get all we desire in regard to it, we shall be ready to support the Chancellor of the Exchequer in any move he may make in this direction. We rejoice in his declaration that his policy is all in the direction of securing a reduction of debt. I do not agree that we should hang the debt up by any method. I am glad to hear that the Chancellor does not approve of the forced loan or of premium bonds, because those are mere expedients for passing the debt on to some future time. I understand that the annual debt charges to-day are at the rate of £360,000,000 a year. It cannot be good for the trade of the country to carry that on indefinitely. I do not think it is economically sound that that line should be pursued. There is also another aspect of the question—namely, that it would not be morally right to do so even if it can be justified in other ways. Our children did not incur this responsibility. The advantages that we are going to hand on to them as a result of the War seem to some of us rather problematical; certainly they are not going to be commensurate with what they will have to meet if they are called upon to take over the responsibilities of the War Debt. The economic tendencies of our time are such that, as has been pointed out, the next generation may find problems quite large enough for them to deal with, without the responsibilities that we should pass on to them in this way. This generation incurred the responsibilities of the War and the expenditure it involved, and they ought to be prepared to discharge the debt so incurred. Our views as to the methods by which the debt should be discharged are well understood in this House. It is encouraging to see that in Italy the capital levy has been instituted, regardless of wartime wealth. Starting at £2,000, which is taxed at the rate of 4½ per cent., they go up to 40 per cent. on £2,000,000.
I have said that I support the hon. Member for Kettering in regard to the imposition upon our co-operative movement. The proposal to tax co-operative societies is the culmination of many years of persistent agitation—not on behalf of Parliament nor on behalf of Chancellors of the Exchequer, but a persistent agitation by the private trading interests of the country. They have passed resolutions by the hundred and written letters by the thousand to all those people who could be influenced to bring this tax on to the shoulders of our co-operative societies. The Chancellor of the Exchequer told us, with some measure of confidence, that this tax had the sanction of responsible heads of the co-operative movement, and that those who were on the Royal Commission on Income Tax gave it their approval. I am prepared to accept his statement, but I do know that the rank and file of the co-operative movement of the country do not agree with that suggestion. Throughout the length and breadth of the country they are up in resentment at the proposals that have been made. I have seen one hon. Member of this House with a parcel under each arm, which he got at the post office in the Lobby, containing communications from co-operative societies protesting against this imposition. Whatever individuals may have stated, or whatever concessions individuals may have made, it is true to say that the co-operative movement of this country are opposed to the proposition of the Chancellor of the Exchequer. Judging from the right hon. Gentleman's observations, he put the co-operative movement on the same platform as the private traders of the country, but I do not think that attitude can be justified. The cooperative movement is something altogether different from a private trading organisation. The mutual interests in the movement must be recognised. The educational work it does, the contributions it makes to institutions outside itself, and the general economic principle which the movement is seeking to interpret are certainly of some value in these days. The hon. Gentleman (Sir H. Mac-kinder) specifically committed himself to the statement that there was no difference between the co-operative movement as a trading organisation and private trading organisations. I have here a copy of the "Economist" for last week, and I find that 15 or 16 of the distributive stores in the London area made a profit in 1914 of £1,200,000. Last year the same concerns made a profit of £3,200,000. I have a list of about 15 wholesale houses in different parts of the country which made £1,000,000 in profits in 1913 and £3,000,000 in 1919, and all of them, except three, had made provision for Excess Profits Duty before the profits were declared. Any principle of taxation which is applied to organisations of that character and is applied to the co-operative movement is not equitable, because every penny of the co-operative profits or surplus goes back to the people who made it. Every penny of profit that is made by the wholesale and retail houses I have mentioned comes from the community and goes into the pockets of a few score shareholders, and so obviously any principle of taxation which is applied to both alike cannot be equitable from the co-operative point of view.
There is another thing which can be said to the credit of our co-operative movement which ought to have some consideration. In a period of rising prices the co-operative movement has been a great steadying influence. The average dividend of co-operative societies before the War was anywhere in the region of 2s. 6d. or 3s. in the £ returned to the members. At present the dividends of co-operative societies range from 6d. to 1s. 6d. in the £. The co-operative move- ment set out to protect its members, and by protecting them it has protected to a very large extent the non-co-operative community by steadying prices all over the country, by manufacturing, producing, and distributing its goods at the lowest possible margin of profit, and in that way they have rendered a great service to the community. It will be exceedingly interesting to analyse what our co-operative societies pay now. The principle of Income Tax in the past has been to impose a tax on individual members of the community according to what they possess in material wealth. Ninety per cent. of the entire co-operative membership of the country consists of non-Income Tax payers, yet all of them pays Income Tax as co-operators. Under Schedule A and B co-operative societies pay upon their buildings, land, houses, and the like nearly £500,000 a year in Income Tax. Every co-operator in the country makes a contribution to that taxation, and the 10 per cent. of co-operators who pay Income Tax as individuals pay again as co-operators; so even now the co-operative movement, not only ought to be defending itself against the further imposition of Income Tax, but ought to be demanding that such Income Tax as they pay at present ought to be removed. The methods of trading in this country are rapidly changing their nature, and the same principle of taxation cannot be applied to the great private trusts and syndicates as to our co-operative movmeent. The trusts and syndicates, which are very largely responsible, in my judgment, for this imposition being made upon the co-operative movement, are changing their tactics. They are conciliating the organised producers of the country and they are turning round upon the unorganised consuming community, and the only bulwark to protect the consuming public is the organised co-operative movement. These huge trusts and syndicates are active, powerful, and articulate. They have a tremendous influence in this House. The unorganised mass of consumers are not articulate. They have no medium of expression, and the organisation of our co-operative movement is the only organisation which can speak for a large number of the consuming public in the community.
Another aspect of this matter is the proposal not to tax the whole of the surplus of the co-operative movement but only a part of it. The surplus of the distributive trade of the co-operative movement is something like £18,000,000 a year, and I say that £16,000,000 of that will go back to the members of societies in dividends and the £2,000,000 that remains goes to reserve, to educational work, charitable institutions and the various avenues which the members determine. It is that £2,000,000 which is going to have tax levied upon it and not the £16,000,000. What method of argument can we apply to a proposal which taxes £2,000,000 out of £18,000,000 and lets the £16,000,000 go free? It seems to me altogether an illogical position, and there is just as much justification to be urged in favour of taxing the whole of the surplus as of taxing part of it. Then, having regard to the fact that only a very small proportion of the co-operative surplus is going to be taxed, the amount of money it is then to yield will be absolutely insignificant and hardly worth the trouble of applying the tax, and co-operators are convinced that if it were revenue that was required the avenues available where larger sums could be secured are so well understood that it is very difficult to understand why the co-operative movement should be pounced upon for such an insignificant contribution. There is a feeling in the country that this taxation is not proposed in order to secure revenue. The Royal Commission on Income Tax lends some weight to that belief. The Report says:
There is another important factor to be considered. What is the greatest menace to this country and to the wealth of the community, and the producer of a great volume of unrest to-day? There are not two opinions upon this matter. It is the operation of the trusts, the rings and the syndicates, the influence they have upon labour, the effect they have upon prices, and the relentless operation they have upon the community. They are conciliating the producers on the one side and turning themselves on to the unorganised community on the other. The unorganised community, with its lack of expression, inarticulate, is murmuring, and it is the murmuring underneath, which cannot come out into open expression, which is the great danger to this country at the present time. What is the next step to the development of the trusts and the syndicates? You cannot carve them up into their old individual organisations. What is the definite economic development which is to be recognised on the other side? It is some form of co-operative effort. The great counter-effect to the trusts and syndicates in this country to-day is our great cooperative movement, and that movement ought to be encouraged, and ought not to be thwarted. If hon. Members will recognise the inevitable economic tendency, they will lend every support possible to our co-operative movement, and not attempt to thwart its activities in the slightest degree. Therefore, we say that our cooperative movement, instead of being throttled, ought to be encouraged, and instead of being penalised it ought to be assisted, so that it can continue to assist that economic development of the country which the co-operative moment stands for.
The co-operative movement is not blind to the fact, having regard to the small amount of revenue that will be derived from this tax, that there are alternatives in other directions where that revenue should be secured. There has not been an expression in this House to-day relating to the proposal which the Chancellor of the Exchequer submitted on the First Reading for the abandonment of the Land Taxes. So far as I understand working-class feeling, there is a resentment against the Land Taxes being thrown over. There is a deep-rooted conviction in the minds of the democracy of this country that the great source of revenue ought to be the land of this country. We had the People's Budget in 1909–10, and the proposals that were put forward for securing contributions from that quarter. Many a time, and often during the last five or six years, I have attended housing conferences, and I have heard it stated at those conferences that one of the reasons why houses were not being erected was the impost of that Budget, through the medium of the land charges. And yet we heard from the Chancellor of the Exchequer, when he announced the throwing over of these taxes, that they never had been paid, and in incidental cases where the taxes have been paid, the amount is so insignificant that those people who ask for their money back can have it granted to them. Working-class sentiment objects to this sort of thing. They say that these taxes ought to have been extended, and not thrown over. Since the 1909 Budget a scheme of land valuation has been going on, and the Chancellor of the Exchequer told us, in answer to a question, that over 7,000,000 separate valuations of land have been made in this country.
We have had a report on this matter, which states that 79 per cent. of the whole of the land of the country has been brought within these 7,000,000 valuations. According to the evidence given to that Committee this 79 per cent. of the land of the country which has been valued has been declared to be worth at its surface value over £5,000,000,000, which ranges from £26 an acre in Scotland, to au average of £94 per acre in the whole of Great Britain, up to over £400 an acre in North Lancashire, and over £5,000 an acre in London. Here is a tremendous reservoir from which revenue can be derived, and it is a retrograde step on the part of this or any other Government to throw over such a reservoir of revenue that the increased land values of this country present. The ascertained surface value of the land, as shown by the Report of the Land Valuation Department, which has been working since 1909, is such that if one penny in the pound was levied on the capital value of the land it would bring more into the Exchequer than the entire surplus of our co-operative movement, not that small fraction of the surplus which the Chancellor of the Exchequer proposes to tax. Therefore, we say that, instead of taxing tea at 1s. per lb. and 10d. per lb., coffee at 6d. a lb., cocoa 4½d.. per lb., and sugar 2¾d. a lb., all of which cooperators pay, if the Chancellor of the Exchequer would remove these indirect taxes, leave our co-operative movement alone and let them carry on their good work and change the economic system of the country, as it is doing gradually, and would turn his attention to avenues of taxation which could reasonably be expected to make definite contributions to the revenue of the country, we believe he would be moving in the proper direction.
I, like many other hon. Members, have had numerous resolutions of protest sent to me against the imposition of Income Tax on co-operative societies. I have replied to these protests that I shall do my best to see that no such impost is put upon them, but when I find, as I did find the other day in the course of Debate, that there is no intention to imposed Income Tax upon the profits of the societies, but there is intention to do exactly what they asked for, then I find it difficult to be in opposition to the proposal of the Chancellor of the Exchequer. I would remind the hon. Member who has just spoken that we have here a Report of the Royal Commission, signed by C. W. Bowerman, William Brace and Henry J. May, who, I believe, is the head of the co-operative movement in this country. This Report says: occasion, but in a matter of this sore, we who are not of the Labour party have the right to say that men must be kept to their word, and that does pledge the cooperative movement of this country to a Corporation Profits Tax. I did not rise to deal with that, but as I represent a constitutency largely concerned with the co-operative movement, which has my strongest sympathy, I know that it is a magnificent movement, though I am sorry to see that lately the rather wild Labour movement in this country is trying to draw the co-operative movement to itself for political purposes. I hope that the co-operative movement will keep free from the wild men of Labour. It is a magnificent society for self-help and mutual assistance in economic matters, and will always receive every justice at the hands of this House.
I came down to-day to curse, and I honestly must say that I remain to praise. I do not think that the House of Commons to-day, if I may say so respectfully, has quite understood the meaning of the announcement which the right hon. Gentleman made to-night. There is more sentiment in this country behind the Budget than many people think,, and the expression of half approval anticipating the Report of the Committee, which is coming, on the Taxation of War Profits, will go right through this country and have a steadying effect on the people. The feeling is that the Budget is heavy, that taxation upon us to-day is heavy. But the people are ready to bear that taxation if they feel that it is equally distributed and if they can be made to believe that the Government are not still committing their extravagances and carrying on their courses of waste. The people of this country are hit very hard, and there is the feeling that the War had this effect too. It took out of the pockets of the many and put into the pockets of the few. As the Chancellor of the Exchequer said, one makes no charge over that. There were monopoly trades during the War in which it was inevitable that men should make huge fortunes, and if by some equitable means the Chancellor of the Exchequer can get from those few, and in a sense put back into the pockets of the many the vast fortunes which were made out of this War, it will have such a steadying effect upon opinion in this country as will be incalculable in its results.
The Press of this country, instead of being somewhat harshly criticised by the Chancellor of the Exchequer and generally sneered at by Ministers in this House, deserves gratitude from the Government for having educated public opinion in this matter of the War Profits Tax, and for having done so much to force the Government to such economies as they have effected. I know that there is one newspaper which has a right to take to itself tremendous credit in the matter of this War Profits Tax, and there is another newspaper, with which I have nothing whatever to do, which has a right to the gratitude of this country for forcing upon the Government such comparatively small economies as it has made in the expenditure of the year. Unless the Government can convince the people that they are doing everything possible to cut down expenditure there will be grumbling and discontent at the heavy imposts. The cost of living to-day is enormous. The War has created a new class. While the working classes as a whole are doing fairly well and their budgets in wages at least are on a pre-War basis in purchasing power, there is a large class, the middle class, who suffer grievously. We put taxes on drink, not because it is an offence to drink, but because we need revenue. The position to-day is that an ordinary bottle of very bad whisky which you could get before the War for 3s. 6d. is to-day compulsorily 12s. 6d., with no guarantee whatever of any quality. In the old days you had particular brands for which you paid a certain sum, while you paid smaller sums for less well-known brands. There are hundreds and thousands of people in this country to-day to whom some stimulant is a great comfort and, if you like, a small luxury, but the cost of whisky to-day makes it impossible in many homes for people to take the little stimulant which they desire.
The Chancellor of the Exchequer has not really convinced me that he is serious in this matter of economy. He did not say a word about economy in his Budget speech, and not a word to-night until it was extracted from him by my hon. Friend the Member for South Hackney (Mr. Bottomley). In the same way, there was no word from the Prime Minister in regard to economy. He did not send out the wonderful circular which had so little result until the Press agitation became so great that he felt that something had to be done. So it is with the last circular which has just been issued, to which my hon. Friend the Member for South Hackney made some reference. That circular is what the hon. Member for South Hackney said it is in effect, an invitation to the spending Departments of the State to overestimate when they go to the Treasury in order to avoid coming to the House for Supplementary Estimates. Unfortunately, although it was published in the OFFICIAL REPORT, it was never read to the House, and many Members escaped knowledge of it. But it says:
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I am pleading on behalf of the middle classes and what I call the new poor, people with fixed incomes, who are so hard hit by all these taxes, because no tax is ever put on that does not increase the cost of living. There are people to speak for the co-operators and for the Excess Profits Duty gentlemen, but I wish to say a word for the small income taxpayer. Here is a return of direct taxes per capita in certain countries: United Kingdom, 1914, £1 11s., 1920, £15 3s.; France, 1913, 13s. 6d., 1919, £2 7s.; Italy, 1914, 12s. 6d., 1919, £2 3s. 3d.; United States, 1914, 3s., 1919, £5 8s. There you see that a tremendous increase has taken place in direct taxation on the British people. Unless the Government do something to cut down expenditure, something more than make speeches in this House, when those speeches are forced from them, you will never have in this country a cheerful tax-paying community. You may have a cheerful taxpaying community if it feels that the money is being properly spent and that waste and stupidity have come to an end. The Chancellor of the Exchequer criticised rather severely the Press for its attitude on matters of expenditure. I have no knowledge, though I read the Press pretty carefully, that there have been any attacks upon the Civil Service. The attacks have been on Ministers. Only the other day there was an attack in regard to the Petrograd Hotel, one of the most infamous pieces of waste even at this late hour. The feeling is that the Government got into a spending mood over the War, and that there is now no stopping them. They seized the great hotels; they had a perfect fever of seizure, and even to-day they are unwilling to give up the hotels. Not only did they seize the hotels, but they prepared to rob the shareholders. Many of the shareholders in the great hotels are very small people and widows, but the Government were prepared to rob them and to spend the taxpayers' money in trying to get the Courts to say that they were justified in the robbing. Now we have had the wonderful result in the House of Lords in the De Keyser's Hotel case, and at last many people who have been waiting for a little return on their investments in hotels will get some reward.
I should not have intervened at all were it not for one important point that has so far been overlooked. In common with many other Members I have listened, I am afraid with languid interest, to the discussion as to whether Excess Profits Duty was an ideal tax or whether its place should be taken by something else, such as a flat tax on profits or some form of levy on capital. To my mind these are details, and on Second Reading we ought to be discussing principle. If it were not for the fact that we are budgeting to pay off our debt in a very short period some of these very heavy taxes would not be necessary at all. If you are proposing to any individual the alternatives of dying by hanging, by poison, or by drowning, the individual would receive the alternative proposition with a certain languid interest, for he has to die in any event. It seems to me that we must go to the root of the matter and ask whether our finance, which throughout the War has been eminently conservative and worthy of the financial reputation of this country, is not now disposed to be too conservative. I have seen successive Chancellors of the Exchequer standing at the box and expounding the same principle, the principle laid down at the beginning of the War, that taxation must be such that if the War came to an end in six or nine months time, it should carry the whole of the interest of the new debt and the whole of the sinking fund charges of the new debt. No other country in the world adopted that principle. We may be proud that the Budgets of successive Chancellors of the Exchequer gave effect to that principle. But are we not now carrying the principle a little too far? I for one listened with the closest attention to the Budget speech of the Chancellor of the Exchequer, but when he came to his peroration there was one sentence that I confess thrilled me with horror. He said:
"We were told on Saturday that two such, Budgets might destroy the Empire. I will not stop to retort that twenty such Budgets would redeem the whole of our debt. I am bound to say that after such a War as that in which we were engaged, and after such gigantic financial sacrifices, that is a position of unexampled and unequalled strength. It is true that to attain it we are obliged to impose fresh taxes and to call for further sacrifices."
The hon. Member for Wrekin (Mr. Palmer) has just reminded us of some figures, which I believe were given in this House last week, of the burden of taxation which has fallen upon the inhabitants of these islands compared with that of the other countries of the world. To me those figures are perfectly appalling. We have a burden of £15 for every man in this country, but the United States have only and France only £2, and the burden is less in other countries. I ask myself, is it necessary to make these gigantic sacrifices? I believe we have only now completed payment of the debt of the Napoleonic Wars. We have taken more than a century to do it. Is it really necessary that we should pay off this colossal debt in 20 years, as is apparently anticipated by the Chancellor of the Exchequer. There is the old tag that posterity has done nothing for us. But we have done a great deal for posterity, and if, after bearing the terrific burden of this great War, we are to burden ourselves with the payment of the debt within 20 years, we shall be doing something perfectly quixotic. I have just returned from France. During the course of the last ten days I have had the privi- lege of speaking to some of the leading financial Ministers of that country. As far as one can summarise private conversation, I can say that their opinion of our finance now one of absolute wonderment. When I told them that we were paying £15 a year per head in taxation, against £2 per head that they were paying, they would not believe me. Surely this is the key to the whole Budget. The whole question of the taxation that is being levied turns upon that. Even at the eleventh hour the Chancellor of the Exchequer, I hope, will reconsider his decision, and will adopt a less heroic, but more sensible, Budget for the payment of the War debt in 50 or 100 years rather than on which it has been suggested that he will pay it off in 20 years. We shall be a long time dead, and do not let us for the few years that are left to us be swamped by the burden of this taxation for the benefit of posterity. I believe there has been in the last 10 days some qualification in this House of the statement I have referred to about the redemption of the debt, but I have not been able to find it in the OFFICIAL REPORT, where I have been trying to check the statement since my return. Perhaps the Financial Secretary to the Treasury (Mr. Baldwin) will refer to it. I hope it will be possible to take a longer period, something like 50 years, and if +hat were done it would render some of this heavy taxation unnecessary.
The hon. and gallant Member who has just spoken seems to think that the gigantic taxation which will be imposed under this Bill will go towards the redemption of the National Debt, to a great extent, at least. I have great doubt about that. I believe that after the Supplementary Estimates have been passed for this year there will not be very much money left for paying off the debt. My excuse for rising is that the Chancellor of the Exchequer has not replied to one or two suggestions which I made in the previous Budget Debate, particularly with regard to the main question of extravagance. I made suggestions that he should cut down certain things, and he has made no attempt to deal with them. I believe that economy is the fundamental factor in our present financial condition, and that unless we get real Government economy there will be greater taxation in the coming years, and the revenue produced by each individual tax will show a decrease. I protest against the heaviness of the taxes levied upon industries. I believe that the effect of these taxes upon industry will be to decrease the revenue. I will not say that the effect will be seen in the present financial year. If that effect is, as I believe it will be, to decrease the revenue, it will be seen in the next financial year. The taxes for this year have reached and over-stepped the limit. This country is overtaxed. Next year, therefore, there must be a decrease of the revenue from the new taxes, and that will be shown at the end of the next financial year. It is a fundamental factor in the situation that we must reduce out taxation. How are we to do that? There is only one way, among the many that have been suggested, and that is by reducing our expenditure. The Chancellor of the Exchequer this afternoon at last, though very late in the day, has made some reference to the question of economy and extravagance. He seemed to be very heated about it. He seemed to be rather angry with individual Members for suggesting that the Government was extravagant and for pointing out that economy showed the way to the reduction of taxation. He also said, although I have never heard in this House that accusations were levied against the Civil Service. The suggestion that I made, and make now, is that there is extravagance because the Government Departments are overstaffed, and to deal with that is one way of bringing about economy.
I do not suggest that the Civil servants are incompetent; I certainly did not, and do not, throw any slur upon them. What I wish to convey is the very opposite—that they are very competent. It is not the fault of the Civil Service that the Government offices are overstaffed. I refer rather to the temporary Civil Service, or whatever they are called, who were taken on during the War in order to deal with the increase of work during the War, and they have not been expelled from those offices now that the War is over. These officials, or bureaucrats as they have been called, are the people I referred to, and not the permanent Civil Servants at all. Many of these temporary Civil Servants are women, and they are doing excellent work. But take the case of the Labour Ministry. It has a staff of over 20,000. Surely that staff of over 20,000, costing what it does, is not showing the results that might be expected. It is impossible, I think, for the head of a Ministry with 20,000 of a staff to keep his hand on all that is going on in the Ministry. The result is that the cost of the staff, to take only one instance, is very heavy and it does not produce results in proportion to the cost. The other suggestions I made were that the Chancellor of the Exchequer should do away with the subsidies and the Labour Exchanges. I do not believe that the Labour Exchanges are giving the results which they should give, taking into consideration the cost of that Department. That cost is extraordinarily high, and we are told that the employment found by them is extraordinarily low. I do not imagine that the abolition of the Labour Exchanges would affect this country in the very slightest degree, and I hope that the hon. Member who represents the Treasury, or the Chancellor of the Exchequer, when they reply will say whether or not they think that these Labour Exchanges are absolutely necessary, and whether they could effect economy in that direction. These are the three things I put forward, the Labour Exchanges, the subsidies, and the staffs of the Goverment Departments, without casting any sort of slur on the Civil Service. Particularly I refer to the staff of the Ministry of Labour. As to the Excess Profits Duty, surely there is some alternative which can be found for that tax. It is the most unjust and unfair tax that ever was levied. The Chancellor of the Exchequer himself and all sections of the House have said repeatedly that it is an entirely wrong tax. Even the Labour section of the House, although they have supported it, have done so from a near-sighted policy, because it will affect the Labour section just as much as the rest of us in the future. If it damages industries there will be a great shortage of work for the labouring classes. It is money that to a great extent makes work, and if firms do not put aside capital for increasing their industries then it must follow that there will be a great shortage of labour.
I suggested that one method of doing away with the extra 20 per cent. on the Excess Profits Duty was an increased Corporation Profits Tax. I still think that an increased Corporation Profits Tax would obviate this extra 20 per cent. Instead, the Chancellor of the Exchequer has suggested that we rely entirely on the hope that there will be a levy on War capital in order to do away with the Excess Profits Duty. Surely suggesting that hope is going to do very little good to the new businesses which have been started. How can that mere hope assist these men? Their plans will have to be made on the supposition that there will be this extra 20 per cent. on the Excess Profits Duty, and the hope that it may be taken off will really have no possible effect on those plans. I firmly believe that the extra duty on excess profits that is being levied this year is only necessary because the Government have been grossly extravagant, and I continue to state that they have been grossly extravagant. Taxes such as the Excess Profits Duty will seriously hurt the business activities of the country. The Chancellor of the Exchequer must surely be able to find some item of taxation that will not be so dangerous to the industries of the country, and I repeat that, the only way to reduce both taxation and the National Debt at once is to cut down expenditure.
Like the other hon. Members, I listened with extreme enjoyment and appreciation to the speech of the Chancellor of the Exchequer this afternoon. It was a courageous and honest speech. It appealed to all of us, for it exhibited a desire to be quite frank and open with regard to the Budget. There is one aspect of the Budget which I have not yet heard dealt with here, but which has often been put to me outside the House. The great objection to the main plank of the Budget is the fact that it is essentially a very bad piece of class legislation. It is class legislation in its very worst form. The possession of pre-War wealth and income under the Budget purchases the right to immunity from post-War taxation. It is the spirit of injustice, which is engendered by the very obvious unfairness of that fact, that is at the root of the complaints we have to-day. There is no question of not wishing to find the money, and of not being willing to find it. The point is, that men who have been in possession for, say ten years, of an income of £100,000 a year, can go on making £100,000 a year without being called upon to contribute one shilling in the shape of the Excess Profits Duty. It has been the custom of Chancellors of the Exchequer in this country to tax according to the ability to pay. I appeal to all fair-minded people as to which person is the best able to pay, the man who has made £100,000 a year for ten years, or the man who has made that sum for one year. Yet the Budget stands for the taxation of the man who has made that amount for one year, and lets the man who has made it for ten years escape the Excess Profits Duty. That is a remarkable fact. Many of us have noticed that there have been huge sales of land in the country of late. Great estates are coming into the market. Lawyers have made immense sums of money out of the conveyancing of this land from the original holders to the various people who have purchased it. None of these people pay one shilling in Excess Profits Duty, but the wretched auctioneer, who puts the property up to auction, has to pay Excess Profits Duty. I fail to see by what logical principle this tax is to be levied; it is taxation by chance, which is a very bad feature indeed.
I noticed that the Chancellor of the Exchequer this afternoon referred to war wealth. So long as you left a reasonable sum—what you might call a living wage—to the smaller manufacturer or the small merchant upon which he can exist, I do not care what amount is taxed after that. It is the small man I am interested in. This is not the first war that we have had, however, and by what logical principle are you going to exclude the war profits that were made out of the South African War, or how you can say, "We are going for the people who made money out of this War, but the people who made it out of the South African War we are going to keep carefully in the background." That is part of the same policy, that those who have shall keep, and that from those who have not shall be taken away even that which they have. I should like to congratulate the hon. Member for Spen Valley (Mr. Myers) upon his admirable speech regarding the co-operative societies' case. I have heard that case argued very many times, but never so completely and forcibly as by the hon. Gentleman. I cannot say that from my point of view he argued it convincingly. I am in a difficulty, because there are certain concrete facts that we cannot evade or avoid. The Wholesale Co-operative Society have purchased recently printing works which belong to the "Manchester Guardian." Last year when this printing business was the property of the "Manchester Guardian" they had to pay 6s. in the £ Income Tax and Excess Profits Tax on any profits they made over and above a given amount. Immediately the Wholesale Cooperative Society buy business and take it over as a running concern, on what grounds do hon. Gentleman contend that the transfer of that business to that society should give immunity of taxation. I may be dense, but I cannot follow it. Will they please remember that we have all had protection in this War, the pre-war plutocrat and a wealthy cooperative society like this with its huge warehouses and its tea plantations in Ceylon and its spreading acres out in Canada. The whole of their property has been defended by the Army and the Navy, and I feel sure they are not paying their fair share of the Income Tax, which is the principal source of revenue of this country. The weak part of the case of hon. Gentlemen is that that business, which was there in 1918, paid all sorts of taxes then, but now does not when it is in the hands of this society. I only wish I could belong to so wealthy a corporation as that of which many hon. Members are shareholders. They are making a custom of buying up businesses up and down the country, and those businesses when in private ownership paid Income Tax and other taxes, but the moment they passed into the possession of this gigantic trust, the Wholesale Co-operative Society, they ceased to be such a fruitful source of revenue to the Chancellor of the Exchequer as they had previously been. I hope that the Chancellor will stick to his guns in this matter and give the cooperative society owners a chance of bearing their fair share of taxation in the country.
I have now heard three speeches from the Chancellor of the Exchequer in which he has dealt with the Excess Profits Duty, and I am still unconvinced of the wisdom of either the increase of this tax or its continuance. There is an Amendment that this Bill shall be read on this day six months. I cannot go into the Lobby in favour of that, and I cannot go into the Lobby to support a Bill which includes the Excess Profits Duty, and therefore it is my intention to abstain in this Division, but to vote continually against the Government in the Committee stage when the question of the Excess Profits Duty comes up for decision. My object in intervening tonight is to discuss the question which arose in the Chancellor's speech when he referred to the five and sixpenny flat rate. I cannot understand his logic as to his intention to include in that flat rate only profits which are made in business, and why it is his intention to exclude the professions. They have made and are making in some directions very extensive profits, and I cannot see why profits made by a lawyer are different to profits made by a manufacturer or trader. I certainly cannot see any difference in one branch of the professions, and I refer particularly to the accountants' branch. Accountants have made very large sums of money out of this very tax itself, and owing to the Excess Profits Duty large profits have gone to the accountancy profession. I think there is a great argument that this flat-rate tax should be levied on industries and manufacturers and professions.
And on landowners?
And on landowners, and by that means the rate could be made lower than 5s. The right hon. Gentleman the Member for the Gorbals Division (Mr. Barnes) referred to the Corporation Tax and made the point that there was no abatement in that tax for the small holder, but neither is there in the Excess Profits Duty. The small holders in the big companies—and there are many in my own company—have to pay the Excess Profits Duty without any abatement, and I think that point cannot be too often driven home. Even the people who are not liable to Income Tax and who are shareholders have to pay the Excess Profits Tax without abatement.
The small holder has the right to demand to be paid back under the Income Tax, but under the Corporation Tax that is not possible.
I quite agree, but equally under the Excess Profits Duty there is no right of abatement and the small shareholder has to pay it. Therefore every argument which the right hon. Gentleman used with regard to the Corporation Profits Tax applies equally to the Excess Profits Duty. My great objection to this tax is that it makes no allowance whatever to the man who is progressive. The man who is enterprising and wants to push forward in business is heavily taxed, while the man who is inefficient and not making any progress and standing still, or, in other words, the parasite of industry is not taxed, because, presumably, he does not earn excess profits and therefore has not to pay. A further reason I would like to press home on the Chancellor is that the Excess Profits Duty falls heavily on those people who have inventive genius and who, by their own inventions, bring new ideas into their factories and works and by that means make extra profits. That is the kind of thing which the Chancellor should encourage. I have one very great grievance. We have not been told, except in very elusive phrases by the Financial Secretary, what concessions we are going to have on the Excess Profits Duty. I fully expected after the hon. Gentleman's speech on the Budget Resolution that these concessions would have been tabulated before we were asked to give the Bill a Second Reading, and I certainly expected when the Chancellor rose this afternoon that he would have given at least a summary of the concessions which he proposed to give. But no, we are asked to come to this House to-morrow and to vote for a blank cheque without the slightest explanation of what it is the Government are proposing or what the Government concessions are. I can assure the House that the business community are seriously concerned in this question. I probably meet business people as often as most Members. In my own constituency, in the City, in various places where business men congregate, the imposition of this tax is condemned, and it is condemned more strongly than by anybody else by the small man, who finds himself in hopeless competition with the large trusts and the large manufacturer.
The Chancellor said a great deal about a graduated profits tax, but I do not think there is the difficulty about this matter that he tried to make out. I do not think that there is any necessity either to value capital or to go to a lot of expensive trouble in the matter. I believe it can be done quite simply with- out any valuation of capital and without any valuation of the assets of any concern. Supposing something like this were done, that a trading company making £20,000 or under was taxed at a flat rate of 3s. in the £, if their profits were under £100,000 at a flat rate of 5s., and over £100,000 at a flat rate of 7s. 6d. It might be said that there is no abatement, but my answer is that there is no abatement of the Excess Profits Duty. I am sure that such a scheme as that, imposed in a fair and equitable way on all traders, making the big concerns pay the highest rate of tax, would meet with the unanimous approval of the business community of the country. There is one other small item of alternative taxation which I wish to bring before the Chancellor's notice. An export bill of lading bears a stamp, but an import bill of lading does not. A bill of lading is a negotiable document which can be placed with a banker and used as a security, and I submit that a stamp on a bill of lading should bring in a very large amount of revenue. I have spoken to one of my business friends on the matter, and it was estimated for me that such a stamp duty would bring in the sum of £10,000,000. I am sure that proposal is quite equitable, because I cannot see why exports should be discouraged and imports encouraged.
I should like to join with those hon. Members who have raised the plea of economy. There is no doubt that what the country is thinking about at the present time, more than any other subject, is the so-called extravagance of Government Departments. I have been to several of the bye-elections which have been fought in this country, in which the people have emphasised in a very striking fashion their support of the Coalition Government, and I am sure that what has carried weight with those people more than anything else has been when on the platforms we said the Government were trying to do everything in their power to cut down extravagance and to prevent waste. I therefore seriously urge on the Government to take strong measures on this question of economy. I would like to direct attention to a question which I put to the Minister of Transport in the past week, in reply to which he stated that there was an administrative staff of 389 persons in his Department, and that those 389 members required 123 typists. I asked my own typist this morning how many letters a day a typist could type, and she told me that she could type between 100 and 150 letters per day. If you add up the numbers of letters that 123 typists in the Ministry of Transport could turn out per day, I am sure it works out at almost as many letters as come from the whole of the Government put together. You may say this is only a small matter and that it is only speaking in pence, but the pence get up into pounds, and the pounds soon get into millions, and I urge the Government to take strong steps to see that the small expenses are cut down and that the small savings are made.
We were told during last autumn that sooner or later we were going to get to a normal year and that that normal year would mean an expenditure of about £850,000,000. I was disappointed to hear the Chancellor in his speech this afternoon state that he hoped by the next financial year he would be able to get his expenditure down to £1,000,000,000. I was hoping that by the next financial year we should get to the normal Budget, but leaving that point aside, the right hon. Gentleman is asking us this year to pay £230,000,000 off our National Debt. If he reduces his expenditure down to £1,000,000,000 next year, we will be paying £430,000,000 off the National Debt, and surely therefore it will not be necessary to place such heavy taxation on the people of this country. I suppose I am correct in assuming that the reason why he is inflicting so heavy a burden of taxation at present is that he has got his eye mainly fixed on the floating debt. To-day in his speech he spoke on the question of a compulsory loan for some time, but I cannot see what the difficulty is about this matter. If he will read the speeches of the Lord Privy Seal when he was Chancellor of the Exchequer, he will see how many times he threatened the country with a compulsory loan. If the right hon. Gentleman would state that, if he does not fund his floating debt by Christmas, the whole of that floating debt will be funded it would be a good thing. If we add it up, what is it? I suppose it is £1,200,000,000 spread over a population of 40,000,000, which comes to a total of £30 a year each, and to say we cannot fund that debt is absolutely ridiculous. The only thing that is wanted is to have security and confidence, and we can only secure that confidence by sound and equitable taxation, we can only put our country's finances on a sound basis by funding the debt, which would have a great result in the future prosperity of the country.
I should like to answer one or two points made by the previous speaker. He drew a picture of the taxing of bills of lading. A bill of lading represents value, and a draft is attached to the bill of lading, and the draft is stamped with the value. The bill of lading is not the document that is taxed, but the draft attached to the bill of lading represents the value drawn upon. The next point is this: He would put a tax upon companies according to their earning capacity. A company of £20,000 is to be taxed 3s. in the £, but when you come to the London and North-Western Railway, which has a multitude of small shareholders, you are going to tax that at 7s. 6d. It cannot be done. If we only realise what is the ultimate result of what we are talking about I think it will save a lot of trouble. I am going now to deal with the other side of the House. When it comes to taxing them they kick. The co-operative societies in the first year of the Excess Profits Duty showed a considerable profit in excess of what they had in previous years. Did the co-operators pay it gladly? Everyone of them kicked. The special provision given to the original co-operative societies was framed to deal with small concerns in small villages. There was a £200 limit. They wanted that £200 limit, but they have now got into quite a different business from the original small village store. The Wholesale Co-operative Society has its buying agents abroad. They buy bacon from Swift and Armour on the other side, and bring it over here, and on any profit that would be made in ordinary trading from one house to the other there is no Income Tax paid at all. It comes to the Wholesale Co-operative Society, and is handed over by them to the different stores, and no Income Tax is paid on it at all.
There is no middleman either.
Go over to Ireland, and you find the co-operative butter factories there. They do not pay any Income Tax upon the profit. I hope the representatives of Labour in this House will be prepared to say that these societies shall bear the same share of tax as others. The members of the co-operative societies meet and vote what is to be done with the profits. So does a limited concern. The profits of the limited concern are voted to the holders of the stock, in exactly the same way as the co-operative societies, and everything that is paid has to bear Income Tax. I hope we are not going to say that labour wants to be an exclusive and privileged class, not prepared to pay its own share. What appears to me to be the weakness on the Labour Benches is that they never argue a question on its merits alone, but simply say what labour opinion is. Nobody wants to know what labour opinion is when you are arguing a point.
I come to the Chancellor of the Exchequer. I want to be perfectly frank—I hope not offensively frank—but I say the Chancellor of the Exchequer has lost the confidence of the business community. Let me tell the House why. When the first loans were floated, there was a half per cent. set aside for the redemption of debt. Last October the Chancellor of the Exchequer made a speech, reviewing the financial situation, and he gloried in the fact that he would have probably 1 per cent. for the redemption of debt. He then comes down now and asks for 3 per cent. for the redemption of debt, and he denounces the Excess Profits Duty in very unmitigated terms, and the business community regarded it as a settled thing that the Excess Profits Duty was to go. The charge that the business community have to make against the Chancellor of the Exchequer is that they put a value upon his words that they do not see now.
My hon. Friend is not fair. I depart from nothing I have said in criticism of the Excess Profits Duty, but I said nothing to anyone which entitles him to think that I gave any sort of pledge or promise as to the future course of the duty by any Government in the exercise of its free discretion in the circumstances of the moment.
10.0 P.M.
I am in the recollection of the House, and I am only speaking of the declaration which the Chancellor made in this House. I am saying now what is the value taken of this declaration by the business community. I am stating exactly what it was, and how we regard it. All during the War we denounced Germany because Germany pleaded that a national extremity drove them to do a thing we regraded as bad. The same argument applies here. The Chancellor of the Exchequer turns round and says that, because of a national extremity, even though a thing is bad, it must continue. I am very sorry to say this, but people do feel it, and those not in business do not realise the extreme difficulty. The large pre-War standard man gets off. The new man coming along does not get off. A small factory started before the War struggled on and made a little profit, and then the Excess Profits Duty came along and took off 80 per cent. They find the value of everything has gone up considerably, and it requires a much greater capital to carry on the same volume of business than before the War. Credit is restricted all round. If you are going to exempt the small business from the Excess Profits Duty, there is not very much to go upon. I feel very sore about this matter. I speak for Mincing Lane. We feel that we have been very badly treated by the Chancellor of the Exchequer and we hope something may be done to mitigate the burden of the Excess Profits Duty.
The Chancellor of the Exchequer has been pressed very much—at any rate, by one speaker this evening—not to be in such a hurry to pay off the debt, but rather to reduce taxation, so that we may not make too great sacrifices for the benefit of posterity. It seems to me that that is a very shortsighted view, and one which I, for my part, hope the Chancellor of the Exchequer will certainly not take. It is not merely a question of the benefit to posterity, but of putting this country into a position in which it could meet any great national emergency which might arise, and require again big borrowing. We cannot shut our eyes to the fact that if a great national emergency were now to arise requiring big borrowings, we should be in a very great difficulty, and would not be able, perhaps, to raise the money that we needed. I hope, therefore, the Chancellor will persist in his intention of keeping on the taxes—much as we dislike them—in order that he may pay off a good deal of the debt fairly rapidly, and so re-establish the credit of this country.
In all probability we have before us a few years of very considerable prosperity. The world needs many of the exports which we can provide. Few, if any, countries are in such a good position to provide those exports as this country, and we shall thereby be able to get, in a perfectly honest way, a very handsome revenue for this country. I sincerely hope the Chancellor will take advantage of these years, when we shall be able to bear a considerable taxation, to strengthen the financial position of the country. There is another reason why I hope the Chancellor of the Exchequer will go on with his project of paying off debt at a very considerable rate, and that is to pave the way for great schemes of social reform which are still needed. There is a vast amount to be done in the improvement of housing and the conditions of life of the masses of the people, in the matter of education, and so forth. If we can by maintaining taxation, which, however dis. agreeable, we can still afford to bear, so reduce our debt, we are in the way of enabling the country to carry out those great schemes of social reform. For my part I should like to touch upon the question of the public ownership of land in this connection. We have had criticism to-night on the abandonment of the Land Taxes. That criticism I very largely share, but at the same time, to my mind, the great source of wealth in any country in the condition of civilisation in which ours is ought to be the public ownership, either wholly or in a great part, of the land. If we can re-establish the national credit, if we can maintain a large revenue, then we shall be in a position to nationalise a large part of our land without doing injustice to existing interests; for, certainly, those of us who have advocated the public ownership of land in this country have always maintained the necessity of doing justice to existing vested interests in the land.
However, I do not intend to go at any length into great questions of that sort. I rather rose to deal with two matters, comparatively small, but yet of considerable importance. The first point has to do with the taxation of mineral waters and temperance beverages, and, generally, with the position of those who do not consume alcoholic liquors. In the Debate on the Budget Resolutions the Leader of the National Democratic party made some severe criticisms upon the Chancellor of the Exchequer in this connection. He said:
Whose speech is the hon. Member quoting?
I am quoting from the speech of the Leader of the National Democratic party, and I will continue the quotation— duty this time will make these essences more costly, and it is estimated that these temperance beverages on the average will contribute very nearly one penny per bottle on the half-pint bottle. That is a very considerable contribution, and is probably as much as the trade can bear. In the case of beer, wines and spirits, the duties are put on, not merely for the purpose of raising revenue, although that is the first consideration, but also because extreme cheapness of intoxicating liquors is not considered to be in the interest of the country. That does not apply, I presume, to soda water and ginger beer, but they should be taxed, at a time like this, to the extent that they can bear, as luxuries which ought to contribute to the revenue of the country. They are now contributing as much as they can reasonably bear, and any attempt to tax them more heavily would probably lead to something like extinction of the trade, or, at any rate, a great diminution in it.
Many people make it evident, in the advocacy of taxation such as this, that their great object is to hit the teetotaler, who, they are convinced, is escaping his fair contribution to the revenue of the country. There is no ground for that, because the teetotaler, if he does not pay the beer duty, pays other taxes which bring in quite as much to the country, or perhaps more. At the time of the great Budget of 1909, when the duties on various articles of alcoholic consumption, tobacco, and so on, were to be increased, an orator was addressing a meeting, and was indignantly trying to prove by statistics that certain branches of the trade were bearing too much. He asked his audience, "If a man consumed a sovereign's worth of beer, a sovereign's worth of wine, a sovereign's worth of spirits, or a sovereign's worth of tobacco, what duties does he pay?"—his object being to prove that the duties were unequally levied; but someone at the back of the audience called out, "Death duties." That is just it; the teetotalers become so rich that they pay death duties. They pay all sorts of Income Tax and luxury taxes, and, seriously, I venture to say that, given two men in an equal station of life, the teetotaler in the course of his life contributes, when Death Duties come to be taken into account, as much towards the expenditure of the country as does the drinker and smoker.
With regard to the Corporation Profits Tax, I am not going to discuss now whether the £500 exemption is a right figure, although I have a strong opinion myself that it is not a wise way of giving exemption to small companies. I can deal with that, however, in the Committee stage. I want now to deal with the big matter of principle, whether this tax is to be levied upon co-operative societies and mutual trading societies at all. The representatives of the co-operative societies on the Income Tax Commission admitted that, if a Corporation Profits Tax was to be levied, co-operative societies would have to pay it in the same way as limited companies. The Chancellor of the Exchequer is going to levy this tax on the profits of the concerns, not on their turnover or on their capital, and therefore the question still remains, even admitting that a co-operative society must pay the tax, what are the profits of the co-operative society, as regulating the amount of tax that will have to be paid? You have to decide what is the profit of a co-operative society. It is very evident, from the arguments which have been used to-night, that many hon. Members have not really grasped the entire difference between the trading of a mutual society and the trading of an ordinary commercial business concern. A mutual society is simply a combination of people to buy wholesale and thereby make an economy that anyone else can make by buying wholesale.
If we in this Chamber agreed to buy a chest of tea among us at the price ruling on the wholesale market, and divide it out amongst ourselves at an arbitrary price, and to deal with the surplus arising in our own way, to return it to ourselves or to use it for laying in a small sum to buy another chest of tea, or to use it in any way of that sort, that surplus so arising would not be a profit, but simply a book-keeping item, a surplus arising from our own money. It is not a profit at all, and therefore it is entirely different from the surplus which arises on the transactions of a limited liability company. A limited liability company does not exist for the convenience of its members. It does not buy and simply distribute among its members. It buys and sells at a higher price to the general public, and its surplus is derived from those sales to the general public, and is therefore a profit. Exactly the same thing occurs in other societies besides co-operative societies. The surplus which arises from mutual insurance, for instance, is not a profit. It is simply a book-keeping surplus arising among the members to be returned to them. I have here the celebrated case of the New York Assurance Company, in which that was decided 30 years ago. Therefore, it is not to be supposed that this principle of mutuality only applies to co-operative societies. It applies to these mutual insurance societies, it applies, therefore, of course, to friendly societies, and it applies to clubs. If in a club we pay certain subscriptions and at the end of the year there is a surplus, that is not a taxable profit on which the Chancellor of the Exchequer can justly levy. It is simply a surplus arising from our own subscriptions. There is, of course, a small profit in the transactions of a co-operative society where they sell to non-members. There is usually a half dividend on their purchases returned to non-members. Undoubtedly the surplus so arising after paying the half dividend is in the nature of profit. In the same way that part of the surplus which is applied to paying interest on shares is undoubtedly in the nature of profit.
I should like to deal with the point which has been made against us with regard to the purchase of a printing works by the Co-operative Wholesale Society. We were told that that printing works was doing a certain volume of business last year, and paid Income Tax upon the profit. This year it has passed into the hands of the Co-operative Wholesale Society. It is doing just as much work, and it is not paying Income Tax. But for whom is it doing the work? When it was a private business it was doing work for the general public, and the surplus arising was real profit and was really taxable. Now, if it is doing work for its own members, it simply means that those members have charged themselves a little more than they need have charged and there is a book-keeping surplus arising. If, on the other hand, it is still doing work for the general public, of course we all admit that the surplus so arising is in the nature of profit. This is a view which the law of this land has always taken, and it is the view which the greatest authorities still take. If you take the Report of the Royal Commission on Income Tax, Reservation 7, and look at the names of those who signed it, you will see that I am justified in saying what I have said. Those who signed it adhere to the old principle that the surplus arising from mutual trading is not profit. That reservation is signed by the late Chairman of the Board of Inland Revenue, by the present Chairman of the Board of Inland Revenue, and by the Professor of Political Economy at Cambridge. Those three men are probably more competent than any in this country to form an opinion on the question whether that surplus is or is not really in the nature of taxable profit. I should not stand here to ask for any privilege for co-operative societies, but I do ask that they should have the benefit of justice and the benefit of those principles which have been the principles of English law for very many years past. I am dealing with the majority report of the Royal Commission on Income Tax, because it is upon that that the Chancellor of the Exchequer is basing what he proposes to do in regard to this tax.
The hon. Member is mistaken. The majority of the Commission propose to bring the profits of co-operative societies into charge for Income Tax. That I am not dealing with in this Budget. The proposal in this Budget is to bring them into charge for Corporation Profits Tax, and that is the proposal, not of the majority, but of that particular reservation which the hon. Member has just cited with such force.
With all respect, I think that the right hon. Gentleman has misunderstood the reservation. The reservation simply says: Bill now before us the definition of what is to be treated as the profit of a co-operative society is based upon the report of the majority of the Commission. The majority said that the real profit of a cooperative society was that particular surplus which remained after the dividends repaid to customers had been deducted. The Clause in the right hon. Gentleman's Finance Bill which deals with this point says that
There remains then that part of the, surplus which the Chancellor proposes to tax with the Corporation Profits Tax. There is the part which is put to the Reserve, and those parts which go to the education fund and used for educational purposes, music and so forth, for the society; also those parts which the society pays out for charitable purposes. All these together are, compared to the whole surplus of the societies, quite a small part. And, moreover, it is to be remembered that there is to be £500 free according to the present drafting of the Clause, so that very small societies will not pay at all. When you add up the interest on their share capital and the sums they put to reserve and for educational and charitable purposes in small societies the total will not amount to more than £500, or very little more, and the amount which the Chancellor of the Exchequer will get will be very small. From the large societies he will get large sums. To my mind, he will get them on an unjust basis by calling profit that which is not profit at all.
The practical test is that if a man is earning a real profit he is enriched by that profit coming into existence, and he will not prevent that profit coming into existence, because that will prevent him being enriched. In the case of members of co-operative societies, if they prevent this surplus coming into existence, they are just as well off as if they allowed it to come into existence. They can prevent this surplus coming into existence by selling to themselves at cost price instead of at a little above cost price, and if they do that they are not one whit impoverished thereby, and that proves that it is not profit, because a man who is in receipt of profit is impoverished if he prevents that profit from coming into existence. Then, again, you say you are not taxing the dividends which go back to customers, but you only tax the reserves which you tax in the case of limited liability companies. I will make a challenge to the limited liability companies. We are perfectly willing to be put on an equal footing with them if they will declare that their reserves are the property of their customers. That is the point. In co-operative societies they are the property of the customer, for they are a purely mutual matter, and for that reason the surplus arising is not profit. Whether it is sent out in dividends or put to reserve, or paid for charitable or educational purposes it is not profit. The only part of it which is really profit is that which is used for capitalistic purposes, to pay the interest on the capital employed.
Is my hon. Friend aware that many of these co-operative societies are registered as limited companies and sell to the public for the purpose of a profit?
No, I think my hon. and learned Friend is mistaken. There are not many of them registered as limited companies. It is a very rare case indeed. There may be half-a-dozen in the country, or something of that sort. When you come to great concerns like the Army and Navy Stores they are not co-operative in the same sense at all, for the very good reason that their share capital is limited, while that of the workmen's societies is not limited. Anyone can join them for 1s. 3d. That is the main differ- ence between them. I believe, also, that those co-operative societies do not give their profits to the customers in proportion to their purchases, but give them to their shareholders. Also the fact of being registered makes no difference. My hon. and learned friend is a lawyer, and I may remind him that in the case of the New York Life Insurance Company versus Styles the learned judges laid down distinctly that the mere fact of a body being registered as a society or company makes no difference in the mutuality of the concern. It is quite admitted that the small surplus arising from dealing with outsiders is in the nature of profit, but the Government officials who gave evidence before the Royal Commission estimated the amount of trade which the co-operative societies did with outsiders as 2 per cent. Is it worth while upsetting the whole of the existing system to deal with a matter of 2 per cent. of the trade of these societies?
It has been said, "Oh, but if the whole business of the country was done cooperatively there would be no Income Tax." That is clearly not so. If the whole of the business of the country was in the hands of co-operative societies there would be an enormous amount of capital in the hands of the co-operative societies, scores and hundreds of times as much as they have now, and the Income Tax paid on the interest alone would be enormous. Moreover, well-being would be widespread, and although there might not be so much coming from Income Tax there would be far more coming from small luxury taxes, Death Duties, and so on; and the whole of the foreign trade of the country would pay heavy Income Tax also, unless you assume that there was co-operation between this country and other countries, and even then there would be no reason why the Chancellor of the Exchequer should not tax the foreign trade of the country which, of course, is on quite a different footing from the mutual trade done by the members amongst themselves. It is quite clear that if you propose such an enormous change the wide spreading of prosperity which would result from it would swell the income from all the other taxes.
There is rather a close connection between these two matters—the taxation upon temperance drinks and teetotalers on the one hand, and the taxation of co-operative societies on the other. I believe we have a wise Chancellor of the Exchequer, though my faith is a little bit shaken by this Corporation Profits Tax. I believe a wise Chancellor of the Exchequer will not try to hit either the mutual societies or temperance drinks or teetotalism. We have heard something to-night about the wild men who are supposed to have got control of the co-operative movement. I have been for 28 years working in the cooperative movement, and I think I may say that, if a Chancellor of the Exchequer wants to play into the hands of the wild men, he is going the right way to do it by putting on these societies a tax which is unjust. They deserve not to be attacked but to receive every consideration at his hands, for they create the well-being and contentment which form the best basis for the work of any Chancellor of the Exchequer; they create the basis of national wealth, of national revenue and national stability.
With all respect I submit that the Chancellor of the Exchequer's proposal with regard to the taxation of co-operative societies is unsound historically, logically, financially and socially. If the Chancellor of the Exchequer refers to the original Industrial and Provident Societies Act, he will find what confusion it is to compare a co-operative society with a company. The Act is dated 1876, and the co-operative society had its origin, not in the Companies Act of 1862, but in the Friendly Societies Act. Under that original Act—repealed in the Act of 1893—the liability of co-operative societies to Income Tax is very clearly defined; indeed, one is impressed with the way in which the Act exhausts the taxable possibilities of those societies as expressed in that Act of Parliament. It is admitted that the transactions of a mutual trading society cannot result in a profit. It indicates the essential difference between a co-operative society and a limited company, viz.: that the one exists for the avoidance of a loss and the other for the creation of a profit. That distinction is quite clearly held in the original Act, and under that Act, not by way of any particular concession to this particular kind of body, but simply as a way of expressing the true legal position, these societies received exemption under Schedules C and D, so far as the results of their trading are concerned. In other words, the framers of the original Act clearly had before them the possibilities of the taxation of these societies and exhausted them to the utmost limit.
As a Conservative I am very pleased to, quote the Act, and the Labour Members will excuse me if I discover in it additional proof of the statesmanship of Mr. Disraeli. He had a faculty for discovering that democratic legislation did not mean, as it often means to Members opposite, sacrificing one section of the community in order to benefit another. He rather discovered that democratic legislation exists in the adjustment of our legislation in such a way as to permit of the advantages of sound finance being, shared by all sections of the community. In his Industrial and Provident Societies Act he simply sought to put a group of poorer people in precisely the same advantageous position as that enjoyed by their wealthy neighbours. An hon. Member has quoted the box of tea. A wealthy man can buy his box of tea under the best conditions and effect a saving. He was not and is not taxed on that saving. Mr. Disraeli sought to give poorer people precisely the same advantage by grouping them under his Industrial and Provident Societies Act. Just as the wealthy man's saving was not taxed, he very properly took precautions that the savings of poorer people also should not be taxed. The mere fact that for the convenience of the individual shareholder in the society the benefit takes the form of maintaining prices, and at, the end of the quarter paying a discount or a bonus, makes no difference whatever, and just as the payment of the cash bonus is a convenience for the individual who is a member of the society, so is the retention of the reserves. Supposing a society paid away all their results, their so-called profits, then there would be no reserves. They could levy; but levying would mean that the individual shareholder would have to pay something out of his pocket. He prefers to have it retained from his bonus rather than be called upon, at some later period, for a levy. The mere fact that the tax could be defeated by a perfectly legal act on the part of the members of the society is the very best proof that what the Chancellor of the Exchequer proposes here is to tax something which legitimately is not taxable. It is an absurdity for any tax to be levied by this Parlia- ment while at the same time the subject is left absolute freedom in order to defeat the tax by the exercise of his legitimate powers.
That argument would destroy a great many other taxes.
I suggest that the right hon. Gentleman is in error. He loses sight again of the difference between a society and a company.
I beg the hon. Member's pardon. I do not think I made myself quite clear. I understand his argument to be that if by a legal act you can defeat a tax, that that in itself condemns a tax. That argument would carry you much further than my hon. Friend would wish to go.
Perhaps I can meet that comment. I cross my "t's" and dot my "i's" over again in illustrating the difference between a company and a co-operative society. A co-operative society will be fulfilling its mission if it pays away no cash bonus, but reduces its prices and avoids the tax. A limited company, existing for the creation of profit, can only escape Income Tax if it entirely defeats its object by ceasing to create that profit. I suggest to the Chancellor of the Exchequer that he may have been unduly influenced by two sets of objectors to co-operative societies; two sets of supporters of this tax. There is one class which represent themselves as the defenders of the small traders, and there is the other class to whom Socialism is always a bogey. With regard to the first class, nothing could be more fatal to the small trader in this country than for the Chancellor of the Exchequer to persist in the imposition of this tax. Were I a co-operator, which I am not, though I have taken a long interest in co-operative societies, professionally and otherwise, and feeling, as I should be bound to feel, a grievance in having this tax imposed on me, I should seek to conduct my trading in such a way as to avoid all surplus. In doing so, with the money at my disposal, and with the ability to purchase in volume, as I could, I should be able so to cut prices as to render life impossible for a great many small traders. Therefore, we are not helping the small traders in supporting this tax. With regard to the argument of the anti-Socialist—and I have no wish to bring myself into conflict with hon. Members opposite, who, whatever differences we have had on other occasions, would be lending me support on this—a co-operative society, so far from being an encouragement to Socialism, directly tends all the other way. After all, what does a man seek to effect a saving for? If I seek to effect a saving in my personal consumption it is in order that I may have a greater margin with which to express my individuality in investment in some form or another. Anyone acquainted with the co-operative movement must know that co-operators, as a class, more so than any other body, are individual proprietors of their own property. They also have investments in savings banks, and they become minor investors in industrial concerns. That is all as a result of the saving effected by means of the organisation of the co-operative society. The debate has shown that there is some confusion still existing as to the position of the co-operative society. We had two most excellent speeches by the right hon. Gentleman the Member for the Gorbals Division (Mr. Barnes) and the hon. Member for the Camlachie Division (Sir H. Mackinder). These two Members quite vindicated the reputation of Glasgow for dialectics. The whole criticism by the hon. Member for Camlachie of the right hon. Gentleman was based on a comparison between the co-operative society and the individual trading for profit or the company trading for profit. Obviously, he was comparing the incomparable, as you cannot compare a co-operative society with either the company or the individual trading for profit. The comparison is between the co-operative society and the individual spending his money. That illustrates my point as to the confusion existing on this aspect.
May I say, with all respect, that the Chancellor is rather taking advantage of the terms of the Minority Report of the Income Tax Commission. I must say that Report is most unhappily worded, and I rather suspect it was written before those concerned had made themselves acquainted with what the American Corporation Tax was, because if you take their reference to the Corporation Tax in conjunction with the latter part of the Report—where they repudiate the idea that a co-operative society can make profit—and if you keep before you the fact that the Corporation Tax in America deals entirely with the com- pany making profit, then obviously they did not have in view in using the term "Corporation Tax" such a tax as that proposed by the Chancellor of the Exchequer. May I submit that it is rather a red herring in this Debate? We are not concerned with what meaning they attributed to the phrase "Corporation Tax," but rather with what meaning is attached to it by the Chancellor of the Exchequer. The test of his tax is profit earning and in his own Budget he admits the proposition that a mutual trading society does not make profits. Those two facts taken together I hope put out of court his proposal to impose this Corporation Tax on co-operative societies. While I make the right hon. Gentleman a present of the dialectical point of the Minority Report, I have much greater faith in the Chancellor than to believe that on a matter of principle of this kind, where the regard or disregard of the principle may have very large results, he will seek to secure his proposal by an interpretation of the Minority Report, which may afford him some semblance of cover in the perpetration of a fallacy and injustice. I think the Chancellor is much too honest an Englishman to seek to inflict injury on cooperative societies, because of what is obviously a weak statement of the ideas and the intentions of the Minority representatives in that Income Tax Report.
It is too late to deal to-night with the last two speeches in detail, but my hon. Friend opposite who was so moved on the subject of teetotal drinks made a careful calculation, by which he showed that the teetotalers paid a matter of some £4,000,000 in direct taxation.
No; I said the manufacturers of temperance drinks paid it.
I think it comes to the same thing. [HON. MEMBERS: "Oh, no!"] However, he was comparing those taxes on table waters apparently to show that they bore the same proper share of taxation as the alcoholic drinks. It was a little unfortunate for him that I should happen to pick up the White Paper just when he was talking about £4,000,000, and by a rough calculation found out that the equivalent taxes on alcoholic liquors are £205,000,000.
Does the hon. Member mean on the same value of alcoholic drinks, or the same measure in quantity?
I suppose that depends a little bit on the size of the throat of the drinker. May I give a small illustration to point out the fallacy which the hon. Member who has just spoken and other hon. Members have apparently overlooked in comparing a co-operative society with a limited company trading for profit. What they have said is perfectly true of the co-operative society as it originally was, and it is perfectly true of a number of men who band together in order to buy a chest of tea. They assume, and they wish the House to understand, that it is precisely the same position now that these co-operative societies have grown to the enormous institutions they are, but if you follow that out to its logical conclusion, that those institutions, large as they are, collecting in some way enormous sums of money which they put back into purchasing other businesses and developing properties, are still to be entirely exempt from taxation, you come to this position. You may get a Garden City, a tract of country somewhere or other with a large band of people in it who will make themselves practically self-supporting by their labours within that ring fence. Are they to be exempted from the taxes of this country? They are rated on the value of their real property, but that does not alter the fact that they do not pay Income Tax on these particular funds. I say that if you carry it to that, you carry it to this, that if only you get a big enough body of men banded together, and they support themselves apart from the rest of the country, then that particular knot of men are not to bear their cost of the upkeep of the services and defences of this country.
There was a speech, to which I listened this afternoon with very great interest, by a Member who specially represents the co-operative societies on the opposite Benches. I recognise this difference between a co-operative society, even big as it is at the present time, and the ordinary limited company trading for profits. The co-operative societies make those profits, collect them, and do not pay them away among the members as dividends, beyond a small amount, as a limited company might do, but they, in effect, force the members to put back those profits into the industry. They put them back into reserve, as I understand.
Only a small part
I agree only a small part is paid in interest—[HON. MEMBERS: "No!"]—but, at any rate, the part that is put back becomes sufficient to buy up the printing press of the "Manchester Guardian" and other big concerns. In such cases it goes to the profit-making of those concerns. My hon. Friend opposite said there was no difference whether this society put back its money into reserve or distributed it among its members. There is all the difference. If it goes to its members it may remain in their pockets and be idle. But if a large sum is put back into the industry which is growing and making money, you come to the position that the co-operative society is trying to put itself in the same position as a knot of men living in a ring-fence, supporting themselves, and because they do so saying they ought to be exempt from the taxation of the country.
11.0 P.M.
As to the question when a profit is not a profit, I do not propose to discuss that; but I do know that innocence is an invariable attribute of the teetotaler, just as guilt attaches to even the most moderate consumer of beer, wine or spirits. Nevertheless, I listened with no little astonishment to the speech of the hon. Member opposite. I cannot believe, in spite of that innocence to which he has every claim, that he can really seriously have laid before the House the argument he did, and which as regards finance has been sufficiently dealt with by my hon. Friend (Mr. D. Herbert). But in his desperate efforts to make a ease for his friends, he suggested that, as they consumed a certain amount of sugar, therefore they were doing all that could be expected of them in regard to contributing to the Revenue. Does my hon. Friend really think that the consumer of beer and wine does not use any sugar, and does not contribute to the revenue from sugar also? His argument really reminds me of what was said by the hon. Gentleman -whoa is put forward as the protaganist of direct taxation the other day. He entirely forgot that the direct taxpayer also pays indirect taxes. He left that out of account—
I was not dealing in the very least with the sugar that teetotalers consume personally; I was dealing with sugar used in the manufacture of the non-alcoholic beverages.
Quite so. But does my hon. Friend really think that sugar is not used in the manufacture of beer and wine? Is he really so innocent? His speech reminds me of the old lady who, when told that her son drank too much overnight, said: "No; it is not true, because she never knew a man so thirsty in the morning." Nor could I follow the arguments of the hon. Gentleman as to the necessity for taxing us all to death to pay off the National Debt. We ought not to be taxed up to the hilt to pay off this debt. I do not think this generation ought to be ground down for the sake of posterity. I would rather see even a more moderate provision made for the payment of the National Debt, although I am quite aware that if you ascend into the higher ethics of this question there is much to be said for this or any other measure subscribed to by my right hon. Friend the Chancellor of the Exchequer.
I asked the right hon. Gentleman today whether the Government would take some pains to point out to the electors to what extent the terrible burdens to which the country is now exposed result from the expenditure of which the Government is in control, and to what extent they result from submission to the demands of advanced Social Reformers, Socialists, Syndicalists, and, I daresay, Bolsheviks will come in for anything that is left, after these various other classes have been satisfied. It is put about all over, in every paper, on every placard, as to the extravagance of the Government! Surely some method could be taken to point out the facts, and to exhibit in their proper light those who, in season and out of season, press upon the Chancellor the acceptance of more and more and greater and greater burdens in the name of social reform, education, and so on. Education again is so sacred that no one need take any account of the cost of anything introduced in its sacred name. In spite of the answer of the right hon. Gentleman that there is sufficient information given as to the savings of the Government in the White Paper, where are we? I know that every Member of Parliament spends not only his working hours, but also his leisure, in studying White Papers, Blue Books, and everything else that shows exactly what everything is about. But I also know that outside this House the electors do not so spend their time, and I am extremely anxious, as one who frequently addresses audiences in the country, that it should be made clear to them how little the Government is responsible for the enormous and perpetually increasing recurrent expenditure, and to what extent it is due to various hon. Members who press for this expenditure!
I want to say a word about the Excess Profits Duty as one connected with business. I was disappointed that this duty was not only not reduced but was increased. I was myself however reduced to silence when I learned that so much money was required that it could only be got by retaining this duty as a Whip or else accepting the scorpion of a capital levy. If the choice is between these two things I confess that I regretfully submit to the Excess Profits Duty, which has less inequalities and injustices than a capital levy. I am aware that anybody who invests in Government or any other stocks must be prepared to face reductions arising from causes outside the control of the Government. Since Victory Bonds are accepted at the value paid for them, for the purpose of meeting the demand of death duties, would it not be possible to make them acceptable at that rate on behalf of that unfortunate person, the payer of Super-tax, who is ground down to an extent which is hardly credible? Is it not possible for the payment of Super-tax to accept these Victory Bonds at 85 instead of at the price to which they have fallen? Is it moreover right and fair that this heavy import should be calculated upon the net and not the gross receipts of the individual? It is neither just nor reasonable that a man should be taxed for Super-tax, not upon that which he has received, but upon that which he has not received, and as the Income Tax is such a very large proportion of a man's income it would only be fair that it should be levied upon the actual receipts of the year before and that these receipts, after payment of Income Tax, should be made the sum on which he should pay Super-tax. That would only be just, and I submit it to the Chancellor of the Exchequer for his favourable. I spoke about economy, and I think the hon. Member for Consett (Mr. A. Williams) mentioned the word more than once. There is no one more insistent than he that the Government should incur perpetual expenditure on behalf of those in whom he is particularly interested, but in whom the taxpayer is not in the least interested. I mean the Armenians.
When did I talk about economy? [HON. MEMBERS: "Never!"]
Now the House understands where the hon. Gentleman is. He does not want economy.
On a point of Order. Is the hon. Gentleman entitled to say that I have been inconsistent in preaching economy when, as a matter of fact, I have not done so? I have never joined in the economy cry, because I have always felt that we must stand to our obligations.
I think the hon. Member might stand a little chaff.
I understand the hon. Member is not interested in economy, and I apologise for that aspersion. Nevertheless I would venture to ask the Government to close the refugee camp for Armenians and to leave the Armenians, Montenegrins, Poles, and so on, alone and consider the case of the heavily burdened British taxpayer. A great deal might be said about that, but I do apologise heartily to the hon. Gentleman opposite. He is the only Member of this House who at any rate does not pretend to be interested in economy. Those who do may very well join in protesting at Question Time, when question after question is put relating to. Parthians, Medes, Elamites, Chaldeans, and dwellers in Mesopotamia. In fact, anyone in the world is good enough to spend the British taxpayers' money upon. Some curb should be put upon this spirit, and the blessed time should be expedited when the British taxpayer will be concerned with the affairs of the British Empire, and will leave the rest of they world to settle its affairs as best it can.
I beg to move, "That the Debate be now adjourned."
I do not propose to offer any objection to the Motion, although it is early to close the Second Reading Debate on the Finance Bill. I hope, how ever, that the Debate will be brought to a close before dinner, so that the House may not be forced to sit late to-morrow night.
On a point of Order. I respectfully suggest, Mr. Deputy-Speaker, that, seeing that it is only a few minutes after eleven, and that other hon. Members wish to address the House, you do not accept the Motion.
Question put, and agreed to.
Debate accordingly adjourned; to be resumed To-morrow.
The remaining Orders were read and postponed.
ADJOURNMENT.—Resolved: "That this House do now adjourn."—[ Lieut.-Colonel Sir R. Sanders. ]
Adjourned accordingly at a quarter after Eleven o'clock.