House of Commons
Tuesday, July 27, 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 Bill, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:—
Workington Harbour and Dock Bill [ Lords ].
Ordered, That the Bill be read a Second time.
Pontypridd Stipendiary Magistrates Bill [ Lords ],
Read the Third time, and passed, without Amendment.
MANCHESTER SHIP CANAL BILL [Lords]— (by Order)
Order for Second Reading read.
Motion made, and Question proposed, "That the Bill be now read a Second time."
May I be permitted to inquire whether the Chairman of Ways and Means has any communication to make to the House regarding this Bill?
Yes. I have intimation from the promoters of this Bill that they are willing to take out the Clause to which the hon. Gentleman has raised objection, if the Bill be allowed to proceed without further opposition.
Then the objection is withdrawn.
Question put, and agreed to.
Bill read a Second time, and committed.
Port of London Authority (Consolidation) Bill [ Lords ] (by Order) Second Reading deferred till Thursday.
Uxbridge and Wycombe District Gas Bill [ Lords ]. Ordered, that Standing Order 211 be suspended, and that the Committee on Unopposed Bills have leave to consider the Bill on Thursday.— ( The Chairman of Ways and Means. )
Oral Answers to Questions
Questions
Hungary
asked the Under-Secretary of State for Foreign Affairs whether his attention has been called to the publication of what purports to be a strictly confidential Order signed on 11th June last by General Dani, the Military Commander of Budapest, and issued to the subordinate commands; whether he is aware that this Order states that although on the whole it is desirable that military authorities should treat prisoners humanely, yet in some cases it is desirable that stronger measures should be used; that therefore persons who are undergoing, or have undergone, these strongest measures should be kept in the strictest isolation and be prevented from receiving any visits, even from their counsel, so long as they bear external marks of their treatment, in order that news about the bad treatment of prisoners may not leak out to Entente missions and foreign countries; that such cases are not to be handed over to the civil authorities until the above conditions have been complied with; and whether he will instruct the British representative in Hungary to make the fullest inquiries into the issue of this alleged circular?
I have no information regarding the circumstances mentioned by my hon. and gallant Friend, and I would ask him to remember that there is a limit to our power or right of intervention in the affairs of other states.
Would the hon. Gentleman answer the last part of my question as to whether he would instruct the British representative in Hungary to make inquiries.
It is to the last part of the question of the hon. and gallant Gentleman to which the latter part of my answer refers.
Is it not possible to ask our representative in Budapest to make inquiries, without interfering with the internal affairs of Hungary, merely in order to keep us informed?
I observe that this is described as a strictly confidential document. I cannot see how our representative could intervene without appearing to interfere.
I do not want to interfere.
asked the Prime Minister whether Hungary has offered to send troops against the Russians; and, if so, whether any conditions have been made as to compensation for Hungary or as to protection in case of defeat?
I must refer the hon. and gallant Member to the reply given yesterday to a similar question put by the hon. and gallant Member for Finchley.
Passport Office
asked the Undersecretary of State for Foreign Affairs if he will grant a Return showing the number of persons employed in the Passport Office; the cost of upkeep for a year; the number of passports issued during the last 12 months; and the total receipts from their issue during that period?
I assume that the hon. Member's question refers only to the establishment of the Passport Office in London. The authorised establishment of the Passport Office is 257. For the year ended 30th June, 1920, the average number of persons employed was 241; the cost of salaries was £37,473; number of passports issued (including endorsements, visas and renewals), 407,874; total receipts from fees, £91,504.
Syria
Treaty of Peace
asked the Under-Secretary of State for Foreign Affairs what is considered to be the present frontier between the kingdom of the Hedjaz and Syria?
The frontiers of Syria are at present under discussion by the principal Allied Powers, in favour of whom Turkey is to renounce all claims to Syria by the Treaty of Peace.
Tyre (Customs)
asked the Under-secretary of State for Foreign Affairs whether Customs dues are being collected at the ports of Tyre or Sur by the French Government or by the Government of Damascus?
Tyre, or Sur, is in French occupation, and Customs dues at that port are presumably being collected by the French authorities.
Emir Feisal
asked the Under-Secretary of State for Foreign Affairs whether the international status of the Emir Feisal is that of a sovereign prince as King of Syria, or of a French protected ruler, or of a subject of the King of the Hedjaz?
The Emir Feisal originally attended the Peace Conference at Paris as representative of the King of the Hedjaz. The latter, however, has not since deputed him in a similar capacity. The claim of the Emir to be regarded as King of Syria has not received international sanction. Syria has been placed under the French Mandate. But this does not, of course, constitute a Protectorate.
May I ask whether, if it does not constitute a Protectorate, the Mandate gives a right to military occupation?
I must have notice of that.
When was the Mandate granted, and when may we be told the terms?
It was granted at one of the Peace Conferences. I am not sure which.
May we have the terms?
Are we to understand that France has been granted the Mandate for the whole of Syria, including that portion which lies immediately east of Palestine, or only for that part north of the Sykes-Picot line?
That is under discussion by the Ambassadors' Conference.
League of Nations
Armenia
asked the Under-Secretary of State for Foreign Affairs whether the League of Nations, when offered the mandate for Armenia, replied that they would endeavour to find a Power willing to accept the mandate provided that the Supreme Council first gave information to the League as to the financial guarantee, the military guarantee, and the question of Armenia's access to the sea; and why no communication has been made to the League on the first two points?
I would refer the hon. Member to the reply returned by the Prime Minister to the hon. Member for Leigh on 24th June.
Nauru Island Agreement
asked the Lord Privy Seal whether he still maintains that the League of Nations will have a right to refuse to confirm the Nauru agreement if it chooses, and how it is to exercises this right if the agreement is not submitted to the League?
This subject has been fully discussed in Debate, and I have nothing to add to what was then said. In the Debate I made it quite plain that in my view, though the mandate ought to be submitted to the League of Nations, that did not apply to the commercial agreement.
Roumanian Oil Fields Agreement
asked the Lord Privy Seal when the Anglo-French agreement, relating to the Roumanian oil fields, will be published; and when it will be registered with the Secretariat of the League of Nations in accordance with Article 18 of the Covenant?
The agreement was laid on the Table of the House on Friday, and steps are being taken to have it registered with the Secretariat of the League of Nations in accordance with Article 18 of the Covenant.
British Army
Connaught Rangers (India)
asked the Secretary of State for War the number of casualties which occurred in the recent alleged mutiny by sections of the Connaught Rangers in India; and what pensions their dependants will be entitled to receive?
I am informed that the number of casualties which occurred were two killed and one wounded. The latter part of the question should be addressed to my right hon. Friend the Minister of Pensions.
Strength
asked the Secretary of State for War if there is any increase in the number of soldiers with the colours in England now as compared with the number in England in the period before the War?
There are approximately 5,000 more soldiers serving with the colours in Great Britain than in 1914. On the other hand, the Reserve is less than half as large, and the Territorial Force has only reached one-fifth of its previous strength. In addition to the 5,000 extra soldiers, many of whom are young recruits in depots, there are 2,000 regular soldiers who are War-invalids requiring further care before discharge, and about 5,000 demobilisable non-regulars who are still in hospital recovering from wounds and sickness.
Arising out of those interesting figures, may I ask why, as they are very nearly the same as before the War, it is necessary that the War Office should occupy a large portion of Wimbledon Common?
I should like to go into that specific instance with regard to a question directed entirely to it.
Wimbledon Common Camp
asked the Secretary of State for War what arrangements he is making to restore the surface of Wimbledon Common to its former-state when the camp is closed; if the portion not now used by the military can be begun to be put into order; if the pits and foundations and roads can be removed; and if it will take at least two years to get it into anything like order and 20 years to make it as beautiful as it was before?
The arrangements ments for the reinstatement of the Common are under consideration, but it is hoped that a decision will be reached shortly, and the necessary instructions will then be issued.
Scots Guards (Edinburgh)
asked the Secretary of State for War why the Scots Guards were sent from Windsor to Edinburgh to act as a guard of honour on the occasion of the royal visit; whether it is usual to requisition the household troops for duties so distant from London; were there no troops in Scotland who could have been requisitioned for the honourable duty; and what was the cost to the British taxpayer of sending the Scots Guards to Scotland?
A guard of honour and band of the Scots Guards were sent to Edinburgh on the occasion of the royal visit, partly in order to stimulate recruiting for the Scots Guards. Other units stationed within convenient reach of Edinburgh have also furnished guards of honour. The cost of sending the Scots Guards to Edinburgh is approximately £760.
Is it, then, the idea of the War Office deliberately to seek to popularise scarlet at the expense of khaki?
That is nothing to do with it. But it is necessary to have recruits for the Scots Guards.
In view of the figures just given, showing that there are 5,000 more soldiers now than in 1914, is it necessary now to stimulate recruiting?
Yes, in connection with the Scots Guards and also the Welsh Guards, it is necessary to keep up recruiting, and to do everything to maintain it.
Is the right hon. Gentleman aware that there are 200,000 fewer Territorials than before the War?
Does the right hon. Gentleman regard this large sum of money well spent?
Yes, Sir; as a Scotsman, I think it is.
Guards' Regiments (Recruiting)
asked the Secretary of State for War what steps are being taken to obtain recruits in Ireland for the Irish Guards, in Wales for the Welsh Guards, and in Scotland for the Scots Guards?
Special recruiters from these Guards' Regiments are employed in certain recruiting areas selected by the commanding officer of the regiment concerned. Recruiting is open for the Irish Guards in Ireland and all other areas in Great Britain for bonâ fide Irishmen; for the Scots Guards in Scotland, parts of the Northern and Western Commands, Channel Islands and the London recruiting area; for the Welsh Guards, in Wales, Liverpool, Bristol City, and the London recruiting area.
Troops, Eastern Europe
asked the Secretary of State for War whether there are any British troops in Danzig, Memel, or in the plebiscitary areas in Eastern Europe; and, if so, whether they will be withdrawn before they become involved in distubances or fighting arising out of the Russo-Polish war?
There are British troops in Danzig and Allenstein. It is intended that these troops shall be withdrawn as soon as their duties in connection with the plebiscite have been completed. Meanwhile, the necessary measures for dealing with the situation which may arise there as a result of the fighting in Poland are being considered.
May we take it there is no intention of these troops being used to back up the Poles without coming to this House and stating the policy first?
I think it very unlikely, but, at the same time, if there is any question of policy, it should be addressed to the Foreign Office or the Prime Minister. The business of the War Office is to hold troops in readiness at various points and employ those troops in the interests of the State.
When did the right hon. Gentleman cease to interest himself in policy in Central Europe?
China Garrison
asked the Secretary of State for War the number of British troops stationed in North China and at Hong Kong, respectively?
The number of British troops are as follow:—
Does that include Indian native troops?
No, Sir; British troops are mentioned in the question, and I think it refers only to white soldiers.
Does this mean that the garrison at present in Hong Kong numbers, approximately, what it did before the War, and, in view of the possible breaking of the Agreement between Great Britain and Japan, does he not think that 900 British troops for the protection of the whole of our interests in those dominions is a very small number?
It is a very small number indeed, but the disposition of our troops must be considered in relation to the general arrangements of naval defence and the general strategic position of the world. The duties which they are discharging are the same as they discharged before the War. The garrison at Bong Kong has to be maintained.
India and Egypt (Garrisons)
asked the Secretary of State for War whether, having regard to his recent statement that reinforcements for the Middle East would not involve the sending of troops from this country, the necessary forces being drawn from India and Egypt, and to his more recent announcement that large reinforcements were being sent from India, he can say whether it has now been decided to send troops from England to fill the gaps in India and Egypt?
No, Sir.
Aldershot Command (Employment of Women)
asked the Financial Secretary to the War Office whether his attention has been called to the fact that in the Aldershot Command, Eastern Command, and Souhern Command the number of females employed by the Navy and Army Canteen Board is 1304, as against 1264 males; whether, according to the War Office Regulations in existence prior to the formation of the Navy and Army Canteen Board, it is a fact that no females were allowed to be employed in regimental institutes, in barracks, or in camps, and Commanding Officers were especially instructed in War Office Rules for Management of Regimental Institutes, dated 1st July, 1916, to ensure the employment of pensioners or reservists in the positions as managers or attendants and whether, under these circumstances, he will consider the advisability of restoring the pre-War regulations so that the positions mentioned should now be filled by men, especially considering the number of ex-service men who are capable of filling these positions, and who are at the present moment out of work, costing the country from £200,000 to £300,000 per week for out-of-work pay, and also because the money allowed as unemployment pay is insufficient to keep a man and his wife and several children, with the result that appeals are being made daily to all kinds of charitable funds by the wives and families of these men?
The figures contained in the first part of the question were furnished in my reply to the hon. Member on 24th June. I understand that no Regulations existed prior to the formation of the Navy and Army Canteen Board, which precluded the employment of women in regimental institutes, barracks, or camps, but it was not customary so to employ them. Paragraph 51 (which deals with the employment of ex-service men) of the Rules of Management of Garrison and Regimental Institutes, issued in July, 1916, is similar to that contained in previous editions, and I have no reason to suppose that the Regulation is not being observed. As regards the policy of the Board in regard to the employment of women, the work done in canteens by the women referred to is mainly of a domestic nature, for which they are more suited than men, and it has, therefore, been decided to retain women in employment of this nature. The claims of ex-service men for employment always receive prior consideration, and such men are given employment as suitable vacancies occur. I have, however, specially asked the Navy and Army Canteen Board to try to employ ex-soldiers wherever the work is not unsuitable.
Is it not a fact that a large number of the offices filled by these 1,304 women could not be perfectly well filled by ex-service men; and is there any necessity to have more women employed by the Navy and Army Canteen Board than ex-service men?
I think I have just answered that. I am told they are employed where they are most suitable. I have asked the Board to employ as many ex-service men as possible where the work is suitable for them.
Ireland
Disturbances, Fermoy and Lismore
asked the Secretary of State for War whether he has yet read the reports of the committees of inquiry into the recent disturbances at Fermoy and Lismore, when soldiers are stated to have damaged houses and shops; whether civilian witnesses were invited to give evidence before the committees; what are the findings; and when he will be in a position to make a statement?
The investigations into the outbreak of troops at Fermoy have been completed, and the General Commanding-in-Chief informs me that he has taken suitable disciplinary action. Certain officers have been censured and a number of soldiers have had their leave stopped.
As regards Lismore, I am informed that during the search of certain houses on the night of 27th-28th June the troops came into collision with certain civilians, and a bomb accidentally dropped by the military exploded in the road, slightly wounding an officer. There were no other casualties.
Will the right hon. Gentleman answer the second part of my question as to whether civilian witnesses were invited to give evidence before these committees?
I did not say committees were set up to investigate the matter. The general took the necessary steps to investigate the occurrences under his responsibility, and he informs me of the disciplinary measures he has adopted.
Will the Report be circulated to Members of this House?
No, not in the ordinary course; and I should ask that the House would require very definite reasons for departing from the ordinary course.
Will the right hon. Gentleman see that British soldiers do nothing to disturb the peace and quiet of Ireland at present, and will he give strict orders that British soldiers confine themselves to their proper function in Ireland of acting as targets for Sinn Fein bullets?
Is the right hon. Gentleman satisfied that these disturbances will not recur in the future, and is he taking steps to see that there is no recurrence of these regrettable incidents?
I do not know at all whether they can be prevented in future. I hope they will be prevented, but the surest method of securing their non-recurrence is a cessation on the part of the revolutionary and rebel elements of their campaign of murder and outrage.
May I ask —( Interruption )—if we are to understand that the right hon. Gentleman considers—( Interruption )—that reprisals by the troops are justified by the admittedly regrettable murders that have taken place in Ireland, and is he aware— ( Interruption )—that we all regret murders. ( Interruption )—Disgraceful!— ( Interruption )—It is not Belgium?
Questions
Illegal Courts
asked the Prime Minister whether the courts set up by the Sinn Fein organisation in Ireland have been able to administer a form of law which protects life and property in districts where the ordinary courts have been unable to administer the law; whether it is the intention of the Government to protect life and property rather than to enforce law and order where that procedure is interpreted by many in Ireland as being repugnant to their idea of Government, whether, under these circumstances, it is the intention of the Government to prosecute those taking any part in the proceedings of Sinn Fein courts as being participants in proclaimed meetings; and, if so, what alternative courts is it proposed to establish to protect life and property?
I have been asked to answer this question. I can add nothing to what I said in my statement to the House on Thursday last.
Russia
Munitions
asked the Secretary of State for War what was the cost to the British Government of the munitions supplied to the anti-revolutionary forces in Russia from the date of the Armistice up to the latest available date; and what proportion of the total was supplied after his interview with General Golovin in May, 1919?
The Parliamentary Paper (Cmd. 772), which was published last week, contains complete information, and I cannot undertake to have any further Returns prepared on the subject. With regard to the latter part of the question, I would draw the hon. Member's attention to my answer on 15th July to the hon. Members for Workington (Mr. Cape) and Wigan (Mr. A. Parkinson), which was as follows:
"Mr. CAPE asked the First Lord of the Admiralty what was the number of casualties among the British naval forces operating against Soviet Russia from the date of General Golovin's interview with the Secretary of State for War and Air in May, 1919, up to the latest available date.
Mr. ALLEN PARKINSON asked the Secretary of State for War what was the number of casualties among the British forces in Russia from the date of his interview with General Golovin in May, 1919, up to the latest available date.
Mr. CHURCHILL: I gave on Tuesday last the number of British casualties incurred since the date of the Armistice by British operations in the withdrawal from Russia. The hon. Member now asks for a return showing what proportion of these casualties were incurred after a conversation, of which a very inaccurate account has appeared, which I had at an early date in May with a Russian general. As this conversation constituted no departure in policy and involved no action of any kind which affected the situation, there would be no sense in giving such a return. Its only purpose would be to provide material of a petty and misleading kind for pro-Bolshevik propaganda in this country. I shall therefore ask the House to support me in declining to waste the time of the War Office staff on such a matter.
On the other hand, I am willing to have a calculation made of the looses incurred after the date when some definite decision of policy was taken, for instance, the telegram of the five great Powers (Great Britain France, the United States, Italy, and Japan) sent to Admiral Koltchak on the 3rd July last year promising him a continuance of Allied support; or the decision of the War Cabinet of the 27th June, 1919, authorising an advance to be made on Kotlas for the purpose of disengaging the British forces in North Russia and enabling the evacuation to be completed without interference from the enemy; or the decision of the House of Commons on the 5th November, 1919, approving a further and final contribution in arms and money to General Denikin"— [Official REPORT, 15th July, 1920; cols. 2621-2, Vol. 131.]
General Wrangel's Government
asked the Primer Minister whether the French Premier announced in the Chamber of Deputies on 20th July that General Wrangel's Government would be recognised on condition that it assumed all the former engagements of Russia with foreign Governments; and whether the British Government agrees to recognise General Wrangel on this condition or dissociates itself from the French Government's policy on this matter?
A statement to the effect of that contained in the first part of the question appeared in the French Press, but I do not know whether or not it was accurate. The question of recognising General Wrangel's Government has never been presented to His Majesty's Government.
Will this be one of the subjects to be discussed at the conference with the Soviet Government?
I am not a prophet.
Can the right hon. Gentleman ascertain whether M. Millerand did make the statement which was fully reported in the French papers?
I really do not think that is our business, and we ought not to go out of our way to find out the truth of what is said in these matters in the papers unless it directly affects ourselves.
Have His Majesty's Government had anything to do with General Wrangel since he broke his word and attacked after we had got an armistice?
We have said over and over again that we have no responsibility of any kind in this matter and we are having no communications with him. Perhaps it is hardly right to say that, because we communicated the Soviet proposal to them. Otherwise we are having no communications with General Wrangel at all.
Is the right hon. Gentleman aware that the statement referred to was made by M. Millerand arising out of the Spa Conference?
I still adhere to the answer I have given.
British Prisoners (Baku)
( by Private Notice ) asked the Prime Minister whether information has reached the Government from the Commander-in-Chief in the Mediterranean that the Bolshevists at Baku, in violation of their promise to transfer the British prisoners to a villa outside the town, are keeping fifty British prisoners confined in one small room in the central prison, where they are suffering from heat and vermin, while all but two of the French prisoners have been released; if he will say by what steps on the part of the French Government the release of French prisoners has been procured; and whether the Government are taking any urgent measures to save the lives of such of the British naval and military prisoners as may have survived, so far, the torture of the Black Hole of Baku?
The Commander-in-Chief in the Mediterranean telegraphs that Commander Luke, who has just arrived at Constantinople from Tiflis, which, however, is at a great distance from Baku, has given the report contained in the first part of the question. We have been putting the strongest possible pressure on the Soviet Government in regard to this matter. That Government has disclaimed responsibility for the Azerbaijan Republic, and has told us that the reports of ill-treatment were unfounded. We have, however, received this morning a telegram from the Soviet Government, and, as this subject is, in my opinion, so important, I shall, with the leave of the House, read that message and the reply which we have sent to it:
M. Litvinoff states he is informed by Azerbaijan Government that members of British Mission in Baku are treated most humanely. Previous reports received by His Majesty's Government about ill-treatment of British in Russia have proved to be inaccurate which now, he continues, seems the case concerning prisoners in Baku.
Equally inaccurate is information in possession of His Majesty's Government about the mutual (? relations) between Government of Azerbaijan Independent Republic and Commander of Russian troops.
M. Litvinoff protests in his Government's name against decision to suspend repatriation of Russian prisoners. Russian Government have practically carried out agreement except for few men left in Siberia, whilst His Majesty's Government have failed to take any steps for repatriation of many hundreds of Russians in their hands. Russian Government are most anxious, he states, that agreement should be fulfilled in its entirety as soon as possible without any misunderstandings, and with this object in view he suggests that His Majesty's Government should appoint day on which complete exchange could take place, on Finnish or Esthonian frontier, of all Russians in British Empire, against British subjects left in Russia.
Russian Government would be prepared to use their influence to induce Azerbaijan Government to bring to frontier, on appointed day, all British subjects detained in Baku.
The following is the reply:
Please inform M. Litvinoff that our latest information is that British prisoners at Baku are receiving most inhumane treatment.
We are, however, prepared, as indeed we always have been, to repatriate all Russian citizens in the British Empire as soon as the Soviet Government repatriates all British subjects in Russia and at Baku. We therefore accept M. Litvinoff's proposal for complete exchange of British and Russians at date and place to be fixed later, and will make arrangements to this effect as soon as we learn that the Soviet Government will secure repatriation to this country of all British subjects whatsoever, without any exceptions, who wish to return, including those detained at Baku.
Until the belief, which is widely held and is greatly exciting British public opinion, that these prisoners are being inhumanely treated has been dissipated, it must be obvious to the Soviet Government that the pending negotiations must be futile.
May I add, though I cannot give details beyond what is referred to in my answer, that in my opinion we have done everything we can to secure the release of these prisoners?
Do I understand that the statement derived from the British Commander-in-Chief in the Mediterranean is only contradicted on the reliability of the word of M. Litvinoff from the Baltic, and have the Government taken any steps to verify the report of the Commander-in-Chief of the Mediterranean, and are they aware that the Italian Government have a diplomatic representative at Baku, and have they inquired or tried to use the good offices of the Italian Government in order to find out definitely whether these men are being tortured to death or are not?
Is the right hon. Gentleman aware that the late Dutch Consul left Baku on 9th June and gave reliable information which is the exact contrary of that given by M. Litvinoff? He says these prisoners are not well treated.
We had, while the Dutch representative was at Baku, asked him to look after the prisoners. His information was that they were not satisfactorily treated, but I think we cannot accept as absolutely accurate statements which came through our representative at Tiflis, which I think is some 300 miles away, and which can only be obtained by refugees of one kind or another. I will make inquiry as to there being a regular Italian representative, but I rather think that is not the case.
Does the right hon. Gentleman recollect that yesterday the Prime Minister said he could not hold the Soviet Government responsible for the condition of affairs in Baku, and unless he has distinct evidence that the Soviet Government is in a position to exercise effective control over the Government of Azerbaijan, is it not a mistake to make an exchange of prisoners in Russia depend on what happens in another place over which the Soviet Government may not be exercising control?
I do not think the Prime Minister put it quite as the hon. Member says. I think he said one of the difficulties was that Azerbaijan was an independent Republic and the Soviet Government disclaimed responsibility. That, of course, is true, but there is no doubt that they have great influence over it and the last past of the message I read showed that they recognise that and are prepared to exercise it.
Arising out of my right hon. Friend's statement that he did not know that the Italian Government was there represented, or doubted whether that was the case, is he aware that relatives of some of the imprisoned officers have actually been sent to the Italian Embassy by our own Foreign Office with notes of recommendation asking them to use their good offices. Can he explain how under these circumstances, and in view of the great gravity of the case he, representing the head of the Government here, is not aware of that fact?
The hon. Member ought to give notice of these details. The explanation seems to be quite simple. He cannot expect the Leader of the House to be acquainted with the details of every one of the offices.
In that case I ask your leave to move the Adjournment of the House in order to call attention to a definite matter of urgent public importance, namely, "the failure of the Government to take adequate measures to save the lives of British prisoners undergoing close confinement and torture at Baku."
I do not understand what the hon. Member suggests the British Government should have done. The thing is too indefinite. I do not understand what measures he suggests the British Government should have taken to rescue these unfortunate men.
That is why I have asked leave to move the Adjournment of the House. I cannot suggest what measures should be taken in a question, "but I am perfectly prepared to suggest cogent measures if I have an opportunity of addressing the House. I therefore ask leave to move the Adjournment.
Will my right hon. Friend answer the last part of my hon. Friend's question, how the French got their prisoners repatriated?
No, I cannot, but I do not think it was the result of any diplomatic action. I do not know why we are less favourably treated, but it is the case.
May I ask leave on the ground I have stated to move the Adjournment of the House?
The pleasure of the House not having been signified, Mr. SPEAKER called on those Members who supported the Motion to rise in their places; and fewer than 40 Members having accordingly risen, the House proceeded to the Business of the Day.
Mesopotamia
British Troops (Health)
asked the Secretary of State for War if the health of the British troops in Mesopotamia is satisfactory; and if he can state the ratio of sickness among the forces in Mesopotamia as compared with those in the United Kingdom?
For the first three months of this year the health of the British troops in Mesopotamia was very satisfactory, the sick rate being less than that in the United Kingdom. In April, the last month for which complete figures are available, the admission rate per l,000 of strength rose owing to the seasonal incidence of sandfly fever, giving an annual ratio of 890·4 per 1,000, compared with 644·6 per 1,000 in the United Kingdom. The incidence of sandfly fever increased during May and June, but is now declining rapidly.
Is the right hon. Gentleman quite satisfied that British troops are not suffering severely from the climate of Mesopotamia at the present moment?
I think it is a very trying climate in Mesopotamia, owing to the fact that the troops, who are nominally discharging peace-time garrison duty, have not the permanent accommodation which, in other parts of the British Empire, they receive, and expect to receive, in time of peace.
Military Operations
asked the Secretary of State for War whether he has any fresh information to give to the House regarding the recent fighting in Mesopotamia?
The garrison at Rumaitha was relieved on the 21st July, and has retired northwards to 4 miles south-west of Imam Hamaza. The Arabs are still carrying on their sporadic attacks on the railway and our posts. A column, composed of all arms, is shortly to proceed to the Kufa area to clear up the situation.
Is the right hon. Gentleman in a position to give any information about the casualties to the British force?
I was under the impression that had been given.
No.
Between 200 and 300 casualities were incurred, but chiefly among the Indian native units. I think five or six British officers were killed and wounded.
Has the right hon. Gentleman any information that the Turks are co-operating with the Arabs?
No, they are a long way off, and separated from the Turkish Dominions by enormous stretches of intervening hill-traversed country. It may be that detached members of the Turkish forces, which used to exist in Mesopotamia, are assisting the Arabs and directing them, and we have had some evidence to that effect. There may be some non-commissioned officers or officers with them, but only a few.
Are there Syrian Arabs with them in Mesopotamia?
I should be rather shy of giving an answer to that without having an opportunity of verifying the facts.
Civil and Military Expenditure
asked the Chancellor of the Exchequer what is the total estimated expenditure for the military and civil occupation of Mesopotamia in 1920–21; and whether he has information that that estimate will be exceeded, and by what amount?
I understand that the provisional estimate of expenditure on the civil administration of Mesopotamia for 1920–21 is about £7,000,000, exclusive of port and railway expenditure, which would be self-supporting. Final estimates cannot be put forward until a more stable condition is reached. It is not anticipated that any charge will fall on the British Exchequer in connection with civil administration. The provision in Army Estimates is shown on pages 16 and 17 of those Estimates, to which I would refer the right hon. Gentleman. The Air Force expenditure is estimated at £482,000. It is not possible to give a revised estimate of military expenditure at present, but I fear that an additional sum will be needed.
Can the right hon. Gentleman give me the total military and Air Force expenditure estimated for the year 1920–21?
I have given the Air Force Expenditure, and I have referred the right hon. Gentleman to the Vote in which the military expenditure is given. I have not the figures before me.
Persia (British Force)
asked the Secretary of State for War what is the approximate annual cost of maintaining the present military forces in Persia?
The annual cost of the force in North-West Persia, calculated at the existing rate of the rupee, is approximately £5,000,000. This figure excludes the troops now in course of withdrawal from East Persia, referred to in my reply to Question No. 16.
Scotland
Prison Service
asked the Secretary for Scotland if he will expedite matters with reference to all the points raised in the petition of 11th March last from the store warders of the Scottish prison service, with a view of assimilating their pay and conditions of service with the clerks and schoolmasters, a similar rank, in the prison service of England and Wales?
The petition to which my hon. Friend refers was carefully considered and a reply was sent last month. On one point further communication with the Treasury was necessary. I have now received the Treasury decision, which will be communicated to the store warders, and which will, I think, be satisfactory to them. I may add that suggested new scales of pay and war bonus have recently been submitted for all ranks of the subordinate prison staff, including store warders. These, I understand, will place the store warders in the same position as the clerk-schoolmaster class in England.
Could the right hon. Gentleman say what is going to be communicated to these people?
I shall be glad to give my hon. Friend the information if he will see me privately later.
Benbecula Island
asked the Secretary for Scotland what steps are being taken to carry out that part of the Report of the Rural Transport Committee which would make the derelict pier at Petersport, in Benbecula, available as a landing place for the island?
The needs of this district as regards communications are at present receiving my consideration in connection with the Report of the Rural Transport Committee, and a proposal for the construction of a pier at Lochcarnan.
asked whether the Board of Health have received any applications for a local resident doctor for the island of Benbecula; and, if so, whether the Board propose to take steps to satisfy this need?
Representations as to the need for a resident doctor in Ben- becula have been received by the Scottish Board of Health, and the matter is now being investigated by them.
asked whether the Board of Agriculture have received applications for small holdings from ex-service men and others in the island of Benbecula; and, if so, when the Board propose to have these claims met?
The Board have received 33 applications for new holdings and 24 applications for enlargements from the island of Benbecula. Fifteen of the applicants are, I understand, ex-service men. The Board are keeping in view the needs of the island in connection with the development of land settlement in the outer isles.
Education Grants
asked the Secretary for Scotland whether he is aware that, by minutes of the Scottish Education Department of the 11th April and 9th December, 1919, both of which were laid before Parliament, it is provided that in respect of the year ending 15th May, 1920, there shall be paid to each education authority grants equal to a certain proportion of that authority's approved expenditure; that, in answer to an inquiry of the 7th June, 1919, from the education authority of Glasgow, the Department replied that the term approved expenditure means all such expenditure as is shown by the authority's account to have been properly and competently incurred and made and which is so certified by the Department's accountant in Edinburgh after the account has been duly audited; that notwithstanding the said minutes and and the Department's interpretation thereof and the Glasgow authority's procedure in accordance therewith and on such understanding the Department are proposing to disapprove, for the purpose of a grant, of a part of the Glasgow authority's expenditure, though such part is not disapproved of as improperly or in competently incurred; that an action in the Court of Session has been raised by the Glasgow authority against the Department to have it found that the Department's attitude is unsound; and that by the minutes of the Department, dated 30th June and 9th July, 1920, which are at present before Parliament, the Department are endeavouring to place a different construction on these earlier minutes and to amend them retrospectively; and whether, under such circumstances, he will give instructions for the withdrawal of the said minutes of 30th June and 9th July, 1920, till the said action in the Court of Session be determined?
The answer to the first two parts of the question and also to the fourth part is in the affirmative. The third and the fifth parts relate to matters which can more conveniently and properly be dealt with in Debate upon the policy underlying the minutes of 30th June and 9th July now lying upon the Table of the House. An opportunity can, if it is desired, be found for this purpose when the Scottish Estimates are under discussion. I am willing to extend the time during which the minutes must lie upon the Table until after the date in question. To the last part of the question the answer is in the negative.
Post Office
Government Telegrams (India)
asked the Postmaster-General what proportion of the total number of telegraphic messages between this country and India during the last 12 months were of a commercial or civil character and what proportion were for Government Departments?
The Eastern Telegraph Company inform me that the figures for the last 12 months are not available. It is stated, however, that during the year 1919 the number of telegrams exchanged between the United Kingdom and India was 629,571, of which 71,142, or 11·30 per cent., were Government messages.
Could the right hon. Gentleman say whether any of these 71,000 telegrams from the Government Departments have priority over private telegrams?
I should like notice of that: these figures refer to over a year ago—1919.
But in the ordinary way, do all Government telegrams get precedence over ordinary telegrams?
Not necessarily; in some urgent cases they do.
Are all these Government telegrams paid for at the ordinary rate?
If they are sent by a private company, I should imagine they are.
Would the right hon. Gentleman draw the attention of the Government Departments concerned to the grave inconvenience to the commercial interests caused by congestion on the lines by sending 200 Government telegrams a day?
Telephone Charges
asked the Postmaster-General what notice he proposes to give the public of any changes in the charges for the use of telephones?
Before the new rates are applied, the existing agreement with each subscriber will be terminated by the period of notice prescribed therein, which is usually three months.
Telegraph Service (Carnarvonshire)
asked the Postmaster-General whether he is aware that the inhabitants of the village of Bettws Garmon, in Carnarvonshire, are being asked, with his sanction and authority, to guarantee the sum of £27 per annum to cover an alleged deficit on the telegraph service; whether he is aware that the closing of this office would cause inconvenience to the district; and whether it is the policy of his Department to close every office in rural districts which shows a working loss?
At Bettws Garmon the number of telegrams handed in during the past year has not averaged two a week; and as there is another telegraph office within about 2 miles, I do not feel justified in continuing without a guarantee facilities of which so limited a use is made. The policy generally is to keep open telegraph offices in rural districts even if they show a working loss, provided reasonable use is made of the facilities. In the present exceptional case, it is only with much reluctance that I have decided to close the office.
Naval and Military Pensions and Grants
Pensions Committee, Ealing
The following question stood on the Order Paper in the name of : 41. To ask the Minister of Pensions whether he is aware that the estimates of the Ealing local pensions committee were sent to the Ministry on the 18th June, and the subject was again pressed upon the attention of the Ministry on 10th July without result, no reply whatever having been received, and that in consequence the work is being carried on without direct authority; and whether he will personally inquire into this attitude towards the local committee whereby its efforts to administer the work is being deliberately frustrated?
When answering this question, will the hon. and gallant Gentleman say why it was not answered as a written question on Thursday last?
I will answer the question which the hon. and learned Gentleman has put down for to-day. The annual estimate of expenditure submitted by the committee contained items of proposed expenditure which were considered inadmissible and considerable investigation and correspondence has been necessary in order to rectify them. Pending settlement of the matters at issue, funds have been advanced on requisition by the local committee to enable them to carry on their work and approval has now been given to such items in the estimates as are not questioned. In the latest communication from the local committee, that of the 10th July, it is stated that the matters at issue will be further considered by the committee at their next meeting, but no subsequent reply has been received. I am satisfied that no delay has occurred in dealing with this matter other than was necessary to secure the proper administration of public funds.
asked the Minister of Pensions whether he is aware that the Ealing Local Pensions Committee is being studiously neglected by the officials of the Ministry with the evident object of rendering their work impossible; whether he is aware that repeated applications for a supply of official books and stationery has produced no response and that the local administration of pensions is being seriously hampered by this policy of neglect; whether he has received a resolution unanimously passed by the Committee on the 13th instant asking him to receive a deputation for the purpose of drawing his attention to the grievances of the Committee and the serious difficulties under which they have been working for some time past by reason of the action of the officials of the Ministry; and whether he will afford the Committee the interview sought?
In connection with the first part of my hon. Friend's question I would remind him of his question of the 8th instant, in which he drew attention to the number of visits paid to the offices of this Committee by inspectors and auditors of the Ministry. Inspection of the Ealing Local Committee is proceeding in the normal manner. All applications for stationery have been met without avoidable delay, and the last demand from the Committee was, I am informed, complied with within ten days of its receipt. I am unable to trace the receipt of the resolution referred to, and until my right hon. Friend is in a position to know the grounds on which an interview is desired he is unable in advance to accede to the suggestion contained in the last part of the question.
Does the hon. and gallant Gentleman know that the Committee have threatened to resign because their work has been wholly frustrated by the Ministry for months past?
I am aware that my hon. Friend has put down a statement in his question that the Ministry are deliberately frustrating the administration of this Committee. I am also aware that he has been informed by the Minister that there was a serious failure to keep adequate accounts of the cash transactions of that Local Committee.
I beg to give notice that, when the House adjourns for the Summer Vacation, I shall call attention to the way this Committee has been treated by the Ministry.
Food Supplies
Winter Supplies
asked the Minister of Food whether he anticipates that there will be a shortage of food before the end of the coming winter; and, if so, what commodities will be especially short and rationed?
Apart from sugar and butter, of which there is a world shortage, I do not, on present prospects of supplies, anticipate such a shortage of any other foodstuff before the end of the coming winter as would be likely to necessitate rationing.
Beehive Mill, Bollington
asked the Minister of Food whether his attention has been called to a statement by Councillor Webster, of Macclesfield, that a quantity of flour has been stored at the Beehive Mill, Bollington, since the early part of the War; that this flour is maggoty and unfit for human food; that the Ministry of Food has issued instructions that this flour shall be sold locally owing to the cost of transport; and that a large quantity is at the present moment being sold to bakers in the borough of Macclesfield; whether these facts are correct; if so, whether he will take steps to prevent the distribution of food unfit for human food; and, if the statement is incorrect, whether he will cause the statement to be denied?
My attention has been called to the statement in question, which is untrue in every particular. There is no ground whatever for this aspersion upon the conduct of the efficient officers whose duty it is to inspect at regular monthly intervals the stocks of flour belonging to the Royal Commission on Wheat Supplies lying at warehouses and mills.
Then will the hon. Gentleman take steps to prosecute Councillor Webster for making an untrue statement?
Divisional Food Commissioners (Staff)
asked the Minister of Food if he will state what are the different Departments now in existence in the office of the Divisional Food Com missioner, the duties attached to each, and the number of staff in each; what are the functions of the district food offices; how many are there in the area of each Divisional Food Commissioner; and what population is attached to each food office?
With regard to the first part of the question, I would refer the hon. Member to the answer given him on the 29th June last. The organisation of the individual offices naturally varies to some extent, and it is not possible within the limits of a Parliamentary reply to give a detailed account of the distribution of the work in each office and the number of staff employed in each section. As regards the second part of the question, I would refer the hon. Member to the answer given to the hon. Member for Bradford, Central, on the 9th June last. As regards the last two parts of the question, a printed list of district food offices, snowing the division in which each office is situated and its population, will shortly be available. I shall be pleased to send a copy to the hon. Member if he desires.
Will the hon. Gentleman make inquiry to ascertain whether there is any overlapping or duplication of work between the office of the District Commissioner and the staffs at the local offices?
The regional organisation of the Ministry of Food has quite recently been subjected to the most careful overhauling. I have no reason to suppose that such overlapping exists, but if any further information can be given, of course, I will make inquiry.
Jam
asked the Minister of Food whether his Department has any knowledge that jam combines are operating in this country; and whether he will invite the Australian Government to ship larger supplies of jam to this country?
This subject is at present being investigated by a Sub-Committee of the Central Committee on Trusts, whose Report, it is understood, will be issued shortly, and any questions on this subject should therefore be addressed to my right hon. Friend the President of the Board of Trade. With regard to the second part of the question, I am glad to be able to say that there are now substantial quantities of Colonial jams in this country, and the market possibilities are thoroughly well known to importers of these jams.
Questions
Motor Car Act (Police Controls)
asked the Secretary of State for the Home Department if he will state how many police controls were in operation in the metropolitan police area for detecting infringements of the Motor Car Act between a.m. 24th July and p.m. 26th July; how many police officers were employed, and with what success; and were any cases of dangerous driving reported?
There were 107 controls during the three days. Eighty officers were employed. One hundred and sixty-one cases were reported by the officers on control duty for prosecution, of which none related to dangerous driving. Five cases of dangerous driving were detected by police on ordinary duty during the period.
Would not all this expense be saved if habitual offenders were sent to goal without the option of a fine?
Public Service Vehicles
asked the Home Secretary whether drivers of public service vehicles desiring a licence to ply for hire in the metropolitan police area are required to pass any test in the rules of the road and traffic signalling; whether any such test has to be passed by vehicles for private hire in the same area; and whether any tests of a similar nature are required of similar classes of vehicles outside the Metropolitan area?
The examination for the drivers of public vehicles includes a practical test in observance of the rules of the road and the giving of signals to following vehicles. There is no power to impose any similar test in the case of vehicles for private hire. I believe that driving tests are imposed by some of the large provincial licensing authorities for drivers of public vehicles, but I have no jurisdiction in the matter.
Lord Balfour of Burleigh
asked the Prime Minister whether he is aware that Lord Balfour of Burleigh, who is drawing an ex-Cabinet Minister's pension of £1,200 per annum is chairman of seven companies and a director of four other companies; that he is about to receive a large sum as compensation for loss of his fees as chairman of the Pacific Phosphate Company; and whether, to meet such a case, he will take steps to revise the existing regulations governing ex-Cabinet Ministers' pensions, having regard to the principle laid down by Section 6 of 4 and 5 William IV., c. 24, i.e., that a pension is to be granted on a consideration not only of services performed by the individual for the State, but also of the inadequacy of his private fortune to maintain his station in life?
asked the Prime Minister whether he is aware that Lord Balfour of Burleigh, who is drawing a pension of £1,200 per annum as an ex-Cabinet Minister, is a chairman of seven different companies and a director of four other companies; that he is about to receive a large sum as compensation for loss of fees as chairman of the Pacific Phosphate Company; whether it is laid down by Section 6 of 4 and 5 William IV. that a pension is to be granted on a consideration not only of services rendered by the individual to the State but also of the inadequacy of his private fortune to maintain his station in life; and whether, as the latter point cannot apply, he will take steps to have such pension revised.
The statements made in the questions do not, I am informed, accurately represent the facts. The number of companies with which Lord Balfour of Burleigh is connected is overstated and, in the case of some of them, the work is done without fee. At the time his pension was granted he satisfied the Treasury authorities that the conditions laid down in the Act were fulfilled in spirit and in letter. As a matter of fact, Lord Balfour's estate in Scotland—owing to its heavy burdens—yielded little revenue and is now yielding none. The compensation payment referred to has not been made, but Lord Balfour is well aware of the purpose with which such pensions are granted and has fully realised his duty to give it up if his private circumstances should so improve as to put him in a position that the object with which the pension is granted should not apply to him.
Let me add that few men, if any, not only during the War, but at all times, have done greater or more useful unpaid public work that Lord Balfour—indeed, since 1875 there has not been a single year in which he has not rendered valuable unpaid public service.
Peace Treaties
Plébiscites
asked the Prime Minister how many of the plebiscites provided for in the peace treaties have been completed; and whether he can state their results?
The plébiscites at present completed are those in Schleswig and in the Allenstein and Marienwerder districts of East Prussia. The Schleswig voting took place separately in two zones divided by a line fixed by the treaty. The northern zone having, by a large majority, voted for Denmark, has been incorporated in that country. The southern zone voted for, and remains included in, Germany. The plebiscites in the Allenstein and Marienwerder districts have resulted in large German majorities except in a few small communes. The determination of the exact frontier lines in accordance with these results is a matter engaging the attention of the Ambassadors' Conference at this moment.
Have any of the troops been withdrawn from areas where the plebiscites have been completed?
That is a question of which notice should be given.
Is the hon. Gentleman aware that the Minister for War refers us to the Foreign Office?
No. I answer all the questions with reference to plébiscites.
Can we be assured that the results of the plebiscites will be followed by the Supreme Council?
I am afraid I do not gather what the hon. and gallant Member means.
These plébiscites having been largely in favour of Germany, can we be assured that the Supreme Council will agree to them, and decide the boundaries accordingly, and not override those decisions?
The Supreme Council will carry out the Peace Treaty.
Benzol
asked the Lord Privy Seal whether Germany is under contract for three years to deliver to the Allies 35,000 tons of benzol per annum; and, if so, will he state how much of this benzol is being delivered for British consumption, the purposes for which it is used, and, if it is being used for public use, the name of the buyer and the price at which it is sold?
I have been asked to answer this question. The terms of the Peace Treaty provide for the delivery to France only of 35,000 tons of benzol a year for three years. The second part of the question does not, therefore, arise.
Poland
German Neutrality
asked the Prime Minister whether Germany has declared its neutrality in the war between Russia and Poland; and, if so, whether this neutrality will be respected by the Allied Powers?
I have nothing to add to the reply which was given yesterday to the hon. Member for Rothwell.
Is it a fact that there is no truth in the story from Germany that three trainloads of troops have gone through Germany in British uniforms and have been sent to Czecho-Slavakia?
The hon. and gallant Member must know that that report is ridiculous.
Armistice Proposals
asked the Prime Minister if he can give any information as to the result of the advice tendered to the Polish Government to approach the Soviet Government directly on the question of an armistice?
The Polish Government have received (in reply to their application to the Soviet Government) a wireless message from the Soviet Government stating that the Soviet High Command has been instructed to enter into immediate negotiations with the Polish High Command with regard to the time and place of meeting for armistice negotiations.
Can the right hon. Gentleman say whether in the meantime hostilities are proceeding?
I am afraid they are.
Questions
Industrial Undertakings (Government Capital)
asked the Chancellor of the Exchequer when he will publish the return showing the amount of capital invested by the Government in industrial undertakings?
The return is in the hands of the printers and will be issued as soon as possible.
Allies and Dominions Obligations
asked the Chancellor of the Exchequer whether any interest is to be paid this year on any of the obligations of the Allies and Doninions as enumerated, in Command Paper No. 780?
Interest is being paid by the Dominions, but not at present by the Allies.
Transport
Sir Hardman Lever
asked the Chancellor of the Exchequer what are the duties of Sir Hardman Lever at the Ministry of Transport; is he responsible only to the Treasury or is he in any way under the orders of the Minister of Transport; has he power not only to veto claims upon the State by the railway companies but to turn down expenditure demands of the Ministry; and is the salary of Sir Hardman Lever borne on the Estimates of the Treasury or on those of the Ministry of Transport?
Sir Hardman Lever's duties were described in the reply which I gave to a question put by the hon. and gallant Member for Anglesey on 7th July. I will send the hon. Member a copy. Sir Hardman is responsible only to the Treasury and his salary is borne on the Treasury Vote.
London Traffic Board
asked the Minister of Transport whether his attention has been called to the likelihood of still greater congestion in the streets due to omnibus competition; and whether he can give an assurance that the Bill creating the London Traffic Board will be introduced at the earliest possible date to deal with the situation which may thereby arise?
I would refer the hon. Member to the replies which were given to the hon. Member for Hornsey on the 24th June, and to the Noble and gallant Member for Battersea on the 12th instant.
Wagons
asked the Minister of Transport whether railway wagons and trucks belonging to the various railway companies are now pooled; and whether, in view of the present state of the railways, financial and otherwise, he can explain the reason for returning to a system which involves much unnecessary and useless mileage?
All railway wagons and trucks belonging to the various railway companies are pooled, provided they are suitable for general common use. This system is economical, and has reduced unnecessary mileage to a minimum. I am not aware of any proposal to alter it.
Excursion Trains
asked the Minister of Transport if he is taking any steps to induce the railway companies to grant facilities for excursion trains during the. ensuing month; and, if so, if he will say what they are?
My right hon. Friend is in favour of a resumption of excursion trains as soon as the companies are able to run them. The Rates Advisory Committee investigated the question, but could not recommend excursion fares, because the witnesses for the companies, generally, said they were unable to run the trains. I am pressing the companies as far as they possibly can to arrange such trains individually, even if some companies are unable to do so.
Can the hon. Gentleman say whether it is expected that any excursion trains will be run during this summer or autumn?
I do not think I can add anything to what is said in the answer. The Minister is asking the individual companies to do all that they can in that direction.
Questions
Royal Dockyards (Industrial Employees)
asked the Chancellor of the Exchequer what were the numbers of industrial employés, male and female, in the dockyards and similar establishments on 1st June last paid out of moneys voted by Parliament; and what were the corresponding figures for the 1st August, 1914?
The numbers of industrial employés in dockyards and similar establishments on 1st August, 1914, and 1st June, 1920, were approximately 84,500 and 137,500 respectively. Figures showing the numbers of men and women separately are not available.
Income Tax (Forms)
asked the Chancellor of the Exchequer if there is any necessity for the number of income tax forms now being sent out, and if many persons have received four or more forms from different quarters and do not know what to do with them; and if the system of the sending out of the forms could be greatly curtailed and simplified and a large sum of money saved in printing and paper?
I assume that the class of case which my hon. Friend has in mind is that in which a taxpayer has several sources of income, for example, a number of directorships, and therefore receives a number of Income Tax forms. The issue of more than one form in such circumstances is a necessary corollary to the system of taxation at the source, which, as my hon. Friend is doubtless aware, is the vital factor in maintaining the yield of the Income Tax; but certain recommendations of the Royal Commission, if ultimately adopted by Parliament, will restrict the necessity for issuing forms in many cases.
Is it not a fact that although the position is indentical many more forms have been sent out this year than last year and the year before?
I am not aware of it.
asked the Chancellor of the Exchequer if any ordinary individual can understand the forms now sent out by the Income Tax Department; and if it is possible to fill them up without professional assistance and most accurate book-keeping, and watching of the cases which appear from time to time in the Law Reports?
I would invite my hon. Friend to read paragraphs 415–419 of the Report of the Income Tax Commission which deal with this matter. My hon. Friend will then understand that the complication of the forms is the necessary corollary of the complication of the tax and particularly of the multiplicity of reliefs accorded to different classes of taxpayers. My hon. Friend will appreciate the profound truth of the observation made by the Commissioners, that "if particulars of any of these reliefs were to be omitted from the forms, the critics who now lament their complexity would be the first to complain."
Houses of Parliament (Precautions Against Fire)
asked the First Commissioner of Works if, in view of the value of the Houses of Parliament and the importance of saving time in the case of fire, he will consider the advisability of fixing automatic instead of screw couplings to the fire hose?
The couplings at present used in the Houses of Parliament are exactly similar to and interchangeable with those used by the London Fire Brigade, and I do not consider that any change is desirable.
Borough Boundaries
asked the Minister of Health whether his attention has been called to the expressed opinion of the Joint Committee which had before them the Ministry of Health Provisional Order (Birkenhead Extension) Bill that, subject to special conditions of public advantage, no Provisional Order for other extensions should be brought before Parliament for confirmation which had not previously received the substantial support of the ratepayers in the areas proposed to be incorporated; and will he say what steps the Ministry propose to take to prevent the waste of time and money that is being incurred by the many local authorities who, against the wishes of their inhabitants, are to-day threatened with applications to the Ministry for Provisional Orders to incorporate them in other administrative areas.
The answer to the first part of the question is in the affirmative, but I may state that it is the invariable practice of the Department to pay due regard to the views of the local authorities and the inhabitants generally in regard to proposals for the extension of boroughs, and that no provisional order is made unless the Ministry are satisfied that the extension would be likely to lead to greater efficiency and economy. At the same time it is essential that considerations of a purely local character should, where necessary, be subordinated to the interest of good Government. As I have already stated, I am endeavouring to simplify and cheapen the procedure at these inquiries, but I should like again to point out that a large amount of unnecessary expenditure is incurred by local authorities in the employment of counsel and expert witnesses.
May I ask if the right hon. Gentleman will speed up that information for the local authorities, as at present scores of thousands of pounds are being wasted by local authorities in employing counsel, engineers, and staffs in preparing for extensions.
It is not the duty of my Department to speed up information. All I can do is to collect that. I do everything I can to give advice. I agree with my hon. Friend that this is unnecessarily expensive.
Will the right hon. Gentleman put a stop to it. In these days when we are hearing so much about economy from that Bench why not practice it?
I have to administer the law which prescribes that certain things shall be done, and I have to see that they are done.
Will the right hon. Gentleman see that these people, who do not wish to be incorporated in boroughs which are greedy for extension, shall not be deprived of their rights of protection against such absorption?
They are given abundant opportunities of stating their case both locally and in this House.
Cannot the right hon. Gentleman give some guidance to Select Committees so as to have unified procedure in these matters.
I cannot give any such guidance except in regard to making Provisional Orders, which is done after official inquiry has been made. The only form of guidance I can give is by doing my duty.
Would it not be better, seeing we now hear so much of self-determination in other parts of the world, if we granted self-determination to the local authorities?
No, I am afraid that would lead to frightful confusion.
Not in these matters.
Ex-Service Men
Temporary Clerkships (Army Departments)
asked the Secretary to the Treasury whether he is aware that the War Office recently contemplated, and in some instances actually issued, instructions that ex-service men holding temporary clerkships in Army Pay, Army Records, and other War Department offices, should be discharged from their employment, and replaced by young serving soldiers, and especially enlisted men; and whether the* Treasury have agreed to this policy?
I have been asked to reply. No such instructions have been issued by the War Office in the case of Army Records and other War Department offices. In the case of Army Pay offices, I would refer my hon. Friend to the reply given to the hon. Member for Morpeth (Mr. Cairns) on 22nd instant.
Questions
Civil Service Record Keepers
asked the Secretary to the Treasury whether the application for increased salary submitted on 7th November, 1919, to the Treasury by the Association of Civil Service Record Keepers on behalf of their members, has been considered; and, if so, with what result?
Careful consideration has been given to the application in question, and while certain cases of urgency have already been dealt with on their merits, a general revision of the rates of pay and conditions of service of Civil Service record keepers has been deferred, pending a settlement of the grading and remuneration of the messenger staff, to which the record keepers are closely related. A settlement of the whole question may be expected shortly.
India
Central Labour Board, Madras
asked the Secretary of State for India whether he has received any communication from a meeting held under the auspices of the Central Labour Board, Madras, protesting against the use of private companies and the military police for the purpose of breaking the strike, whilst at the same time employers have refused to agree to arbitration, and also protesting against village officials using their official influence to recruit labour to take the place of the strikers; and whether he proposes to make any inquiries into this matter?
My right hon. Friend has received a communication purporting to come from the Madras Central Labour Board which protested against the use of military strike breakers, but did not refer to the other points mentioned by the hon. Member. He asked for a report from the Government of Madras, who have informed him that fifty members of the Labour Corps were lent to the Madras Electric Supply Corporation to carry on work in order to prevent hospitals and other public buildings being left without lights or electric fans. An award had previously been given by a Court of Enquiry and accepted by employers and workmen, but the latter had failed to return to work.
Questions
Eastern Persia (British Forces)
asked the Secretary of State for War, whether any British or Indian troops, whose cost falls upon the British taxpayer remain at Meshed or along the East Persian cordon; if so, what is the present object of maintaining this force in Eastern Persia and what is its present monthly cost; whether work is still continuing on the extension of the Mirjawa strategic railway; and whether the cost of the extension of this railway into Persian territory falls upon the British or the Indian taxpayer?
As regards the first part of the question, I am afraid that I cannot add anything to what I said on the 23rd June, in speaking on the Vote on Account. The monthly expenditure on the troops in East Persia is roughly estimated at £400,000. The extension of the railway from Mirjawa to Duzdap was completed about a year ago at the cost of Imperial funds, and no work on this railway is now proceeding.
Excess Profits Duty (Repayment)
asked the Chancellor of the Exchequer whether he has received any claims for the repayment of Excess Profits Duty under Sub-section (3) of Section 38 of the Finance (No. 2) Act, 1915?
The scheme of the Excess Profits Duty is such that claims for repayment of duty under the Sub-section referred to have constantly arisen in the past, and will continue to arise so long as the duty is in existence. On this subject I would refer the hon. Member to the reply given by my right hon. Friend the Financial Secretary to the Treasury to the hon. Member, for Cardiff Central (Mr. Gould) on the 29th June. I will send him a copy of that reply.
Australian Commonwealth Line
asked the Parliamentary Secretary to the Ministry of Shipping whether shipping companies in the Australian trade are refusing to take freight from any shipper who also sends goods by the Australian Commonwealth Line?
No complaint or report as to the discrimination referred to in the question has been received at the Ministry of Shipping.
Adana, Cilicia (Siege)
( by Private Notice ) asked the Prime Minister whether the town of Adana, in Cilicia, is entirely cut off by the Turkish Nationalist forces from communication with the outside world, except by aeroplane, and has food supplies for a very few days only; whether the population includes 70,000 native Christians, 10,000 Moslems and some British subjects; whether some of those who are besieged there were sent to Cilicia from places of safety by British authorities, in some cases against their will; and whether His Majesty's Government, in concert with the French authorities, are arranging to take steps for the relief of the town?
The most recent information in the possession of His Majesty's Government is to the effect that the town of Adana is very hard pressed by the Turkish Nationalists. As my hon. Friend is aware, Adana is in the French zone, and the French authorities are, I am sure, fully alive to the situation.
Does the right hon. Gentleman decline all responsibility, seeing that we sent these people back to Cilicia, that we were in possession there and handed them over to the French?
Does not this show how undesirable it is to give rise to claims like this by intervening on behalf of the Armenians?
I am sure that the Government, as well as the House, have every sympathy with the Armenians, but there is a limit to the possibility of interference by the British Government, and, since Cilicia was definitely taken over by the French, with the responsibilities involved, we cannot feel that we are responsible.
Cannot the right hon. Gentleman give the House some assurance with regard to the British subjects?
At all events, we cannot do what my hon. Friend suggests, namely, send an army to release them.
May I ask whether, in view of the anxiety on this subject which exists, and which, I am sure, the right hon. Gentleman recognises, in many quarters of this House and in the country, he can hold out any hope at all that we shall be able to fulfil the repeated pledges we have given to the Armenians?
I do not think we have given any more pledges than other countries—for instance, America. We cannot go beyond our responsibilities.
Greek Army (Cypriote Volunteers)
( by Private, Notice ) asked the Under-Secretary of State for the Colonies whether eight thousand Cypriotes recently volunteered o take service with the Greek Army fighting for the maintenance of the Treaty with Turkey at the desire of the Allies; and whether the British authorities in Cypus forbade the Cypriote volunteers the right to join the Greek Army; and what were the reasons?
Information was recently received that the representative of the Greek Government in Cyprus had informed the Local Government that he had been asked to enrol volunteers in Cyprus for service in the Greek Army. As it would be contrary to well-established usage to allow British subjects to be recruited in British territory for service in the army of a foreign Power, the proposal of the High Commissioner to withhold his consent to any such recruitment in the case of British subjects was agreed to. No objection was made to the recruitment of Greek subjects.
Business of the House
May I ask the Leader of the House a question on the Motion which stands in his name relating to the taking of the proceedings in Committee of the Ministry of Food and other Bills to-night? The question relates particularly to that of the Committee on the Ministry of Food [Salaries and Expenses]. Does not the right hon. Gentleman agree that there is no urgency about that Bill, in view of the fact that in his own White Paper it is stated that they have power to continue for a year after the termination of the War? Would he not also agree with me that it is of very great importance that, in an examination of the finance of this measure we should not be called upon to take it at one o'clock to-morrow morning if the proceedings on Report of the Finance Bill should not be concluded before then?
The facts are not quite as my right hon. Friend has put them. It is true the Ministry of Food will continue, but the powers on which it acts are largely based on Defence of the Realm Regulations, and therefore we must have it before the House adjourns, or it will cease to be able to exercise some of its functions. As regards the time, I am more hopeful about the length of time the Finance Bill will take, and I think it is possible that we may be able to discuss this before eleven; but in any case at this stage of the Session we must make use of the time after eleven, for I, at least, and I think the rest of the House, hope that, by one method or another, we will get an Autumn Recess.
Is it proposed to take the Telegraph (Money) Bill to-night? It is very desirable that it should be discussed.
We propose to take the Second Reading. There will be other opportunities to discuss it.
Motion made, and Question put,
"That the Proceedings in Committee on Ministry of Food (Continuance) [Salaries and Expenses], on the Telegraph (Money) Bill, and on the Representation of the People (No. 3) Bill be exempted at this day's Sitting from the provisions of the Standing Order (Sittings of the House)."—[ Mr. Bonar Law. ]
The House divided: Ayes, 239; Noes, 69.
Division No. 251.] AYES. [4.0 p.m. Addison, Rt. Hon. Dr. C. Dewhurst, Lieut.-Commander Harry Law, Rt. Hon. A. B. (Glasgow, C.) Agg-Gardner, Sir James Tynte Doyle, N. Grattan Lewis, T. A. (Glam., Pontypridd) Ainsworth, Captain Charles Duncannon, Viscount Lister, Sir R. Ashton Amery, Lieut.-Col. Leopold C. M. S. Du Pre, Colonel William Baring Lloyd, George Butler Archer-Shee, Lieut.-Colonel Martin Edge, Captain William Locker-Lampson, Com. O. (H'tingd'n) Ashley, Colonel Wilfrid W. Edwards, John H. (Glam., Neath) Lorden, John William Astor, Viscountess Eyres-Monsell, Commander B. M. Loseby, Captain C. E. Atkey, A. R. Falcon, Captain Michael M'Curdy, Rt. Hon. C. A. Bagley, Captain E. Ashton Falle, Major Sir Bertram G. M'Donald, Dr. Bouverie F. p. Baird, Sir John Lawrence Farquharson, Major A. C. Macdonald, Rt. Hon. John Murray Baldwin, Rt. Hon. Stanley Fell, Sir Arthur Mackinder, Sir H. J. (Camlachie) Balfour, George (Hampstead) Fildes, Henry Macmaster, Donald Barlow, Sir Montague Fisher, Rt. Hon. Herbert A. L. Macnamara, Rt. Hon. Dr. T. J. Barnett, Major R. W. FitzRoy, Captain Hon. E. A. McNeill, Ronald (Kent, Canterbury) Barnston, Major Harry Flannery, Sir James Fortescue Macpherson, Rt. Hon. James I. Barrand, A. R. Foreman, Henry Macquisten, F. A. Barton, Sir William (Oldham) Foxcroft, Captain Charles Talbot Magnus, Sir Philip Beckett, Hon. Gervase Fraser, Major Sir Keith Mallalieu, F. W. Bellairs, Commander Carlyon W. Gange, E. Stanley Malone, Major P. B. (Tottenham, S.) Benn, Sir A. S. (Plymouth, Drake) Gardner, Ernest Marks, Sir George Croydon Bennett, Thomas Jewell Gibbs, Colonel George Abraham Marriott, John Arthur Ransome Betterton, Henry B. Glyn, Major Ralph Middlebrook, Sir William Bigland, Alfred Gould, James C. Mond, Rt. Hon. Sir Alfred M. Birchall, Major J. Dearman Grant, James A. Morris, Richard Bird, Sir A. (Wolverhampton, West) Green, Albert (Derby) Morrison, Hugh Blades, Capt. Sir George Rowland Green, Joseph F. (Leicester, W.) Morrison-Bell, Major A. C. Blair, Reginald Greenwood, William (Stockport) Mosley, Oswald Blake, Sir Francis Douglas Greig, Colonel James William Mount, William Arthur Berwick, Major G. O. Guinness, Lieut.-Col. Hon. W. E. Munro, Rt. Hon. Robert Boscawen, Rt. Hon. Sir A. Griffith- Hambro, Captain Angus Valdemar Murchison, C. K. Bowyer, Captain G. E. W. Hanna, George Boyle Murray, Lieut.-Colonel A. (Aberdeen) Breese, Major Charles E. Harmsworth, C. B. (Bedford, Luton) Neal, Arthur Bridgeman, William Clive Harris, Sir Henry Percy Newman, Sir R. H. S. D. L. (Exeter) Briggs, Harold Haslam, Lewis Nicholl, Commander Sir Edward Buchanan, Lieut.-Colonel A. L. H. Henderson, Major V. L. (Tradeston) Nicholson, William G. (Petersfield) Bull, Rt. Hon. Sir William James Henry, Denis S. (Londonderry, S.) Norris, Colonel Sir Henry G. Burn, Col. C. R. (Devon, Torquay) Herbert, Hon. A. (Somerset, Yeovil) O'Neill, Major Hon. Robert W. H. Burn, T. H. (Belfast, St. Anne's) Herbert, Dennis (Hertford, Watford) Ormsby-Gore, Captain Hon. W. Campbell, J. D. G. Hills, Major John Waller Palmer, Brigadier-General G. L. Carew, Charles Robert S. Hoare, Lieut.-Colonel Sir S. J. G. Parker, James Carr, W. Theodore Hood, Joseph Parkinson, Albert L. (Blackpool) Casey, T. W. Hope, James F. (Sheffield, Central) Parry, Lieut.-Colonel Thomas Henry Chamberlain, Rt. Hn. J. A. (Birm., W.) Hope, J. D. (Berwick & Haddington) Pearce, Sir William Chamberlain, N. (Birm., Ladywood) Hopkins, John W. W. Peel, Col. Hn. S. (Uxbridge, Mddx.) Clough, Robert Hopkinson, A. (Lancaster, Mossley) Pennefather, De Fonblanque Coats, Sir Stuart Hunter, General Sir A. (Lancaster) Percy, Charles Cockerill, Brigadier-General G. K. Hurst, Lieut.-Colonel Gerald B. Perkins, Walter Frank Cohen, Major J. Brunei Illingworth, Rt. Hon. A. H. Pownall, Lieut.-Colonel Assheton Collins, Sir G. P. (Greenock) Jackson, Lieut.-Colonel Hon. F. S. Pratt, John William Colvin, Brig.-General Richard Beale James, Lieut.-Colonel Hon. Cuthbert Preston, W. R. Conway, Sir W. Martin Jameson, J. Gordon Pulley, Charles Thornton Coote, Colin Reith (Isle of Ely) Jephcott, A. R. Purchase, H. G. Cope, Major Wm. Jellett, William Morgan Rae, H. Norman Courthope, Major George L. Jesson, C. Raeburn, Sir William H. Cowan, D. M. (Scottish Universities) Jodrell, Neville Paul Ratcliffe, Henry Butler Craig, Colonel Sir J. (Down, Mid) Johnstone, Joseph Raw, Lieutenant-Colonel N. Craik, Rt. Hon. Sir Henry Croft, Brigadier-General Henry Page Jones, Sir Evan (Pembroke) Jones, J. T. (Carmarthen, Llanelly) Rees, Sir J. D. (Nottingham, East) Remer, J. R. Curzon, Commander Viscount Kellaway, Rt. Hon. Fredk. George Rendall, Athelstan Dalziel, Sir D. (Lambeth, Brixton) Davies, Thomas (Cirencester) Kelly, Major Fred (Rotherham) Kidd, James Richardson, Alexander (Gravesend) Davies, Thomas (Cirencester) Kidd, James Roberts, Sir S. (Sheffield, Ecclesall) Dawes, James Arthur King, Commander Henry Douglas Robinson, S. (Brecon and Radnor) Denniss, Edmund R. B. (Oldham) Kinloch-Cooke, Sir Clement Rodger, A. K. Rogers, Sir Hallewell Sutherland, Sir William Williams, Lt.-Col. Sir R. (Banbury) Roundell, Colonel R. F. Sykes, Colonel Sir A. J. (Knutsford) Williamson, Rt. Hon. Sir Archibald Samuel, A. M. (Surrey, Farnham) Talbot, G. A. (Hemel Hempstead) Willoughby, Lieut.-Col. Hon. Claud Samuel, Rt. Hon. Sir H. (Norwood) Taylor, J. Wills, Lieut.-Colonel Sir Gilbert Sanders, Colonel Sir Robert A. Thomas-Stanford, Charles Wilson, Capt. A. S. (Holderness) Scott, A. M. (Glasgow, Bridgeton) Thomson, F. C. (Aberdeen, South) Wilson, Daniel M. (Down, West) Seager, Sir William Thomson, Sir W. Mitchell- (Maryhill) Wilson, Colonel Leslie O. (Reading) Seddon, J. A. Tickler, Thomas George Wood, Hon. Edward F. L. (Ripon) Seely, Major-General Rt. Hon. John Tryon, Major George Clement Wood, Sir J. (Stalybridge & Hyde) Shaw, William T. (Forfar) Waddington, R. Woolcock, William James U. Shortt, Rt. Hon. E. (N'castle-on-T.) Ward-Jackson, Major C. L. Yate, Colonel Charles Edward Smithers, Sir Alfred W. Ward, Col. J. (Stoke-upon-Trent) Yeo, Sir Alfred William Sprot, Colonel Sir Alexander Ward, Col. L. (Kingston-upon-Hull) Young, Lieut.-Com. E. H. (Norwich) Stanley, Major Hon. G. (Preston) Waring, Major Walter Young, W. (Perth & Kinross, Perth) Stephenson, Colonel H. K. Wason, John Cathcart Stewart, Gershom Watson, Captain John Bertrand TELLERS FOR THE AYES .—.— Strauss, Edward Anthony White, Lieut.-Col. G. D. (Southport) Lord E. Talbot and Mr. Dudley Sturrock, J. Leng Williams, Lieut.-Com. C. (Tavistockl Ward.
NOES. Asquith, Rt. Hon. Herbert Henry Hallas, Eldred Sexton, James Banbury, Rt. Hon. Sir Frederick G. Hirst, G. H. Short, Alfred (Wednesbury) Bowles, Colonel H. F. Hodge, Rt. Hon. John Sitch, Charles H. Brace, Rt. Hon. William Holmes, J. Stanley Smith, W. R. (Wellingborough) Bramsdon, Sir Thomas Irving, Dan Spencer, George A. Briant, Frank Jones, Henry Haydn (Merioneth) Swan, J. E. Brown, James (Ayr and Bute) Kenworthy, Lieut.-Commander J. M. Thomas, Rt. Hon. James H. (Derby) Cairns, John Kenyon, Barnet Thomas, Brig.-Gen. Sir O. (Anglesey) Cape, Thomas Kiley, James D. Thome, G. R. (Wolverhampton, E.) Carter, W. (Nottingham, Mansfield) Lawson, John J. Tootill, Robert Cecil, Rt. Hon. Lord R. (Hitchin) Lunn, William Walsh, Stephen (Lancaster, Ince) Crooks, Rt. Hon. William Maclean, Rt. Hn. Sir D. (Midlothian) Waterson, A. E. Davies, A. (Lancaster, Clitheroe) Malone, C. L. (Leyton, E.) Wedgwood, Colonel J. C. Davison, Sir W. H. (Kensington, S.) Mills, John Edmund White, Charles F. (Derby, Western) Edwards, C. (Monmouth, Bedwellty) Murray, Dr. D. (Inverness & Ross) Wignall, James Galbraith, Samuel Myers, Thomas Wilkie, Alexander Graham, D. M. (Lanark, Hamilton) Newbould, Alfred Ernest Williams, Aneurin (Durham, Consett) Graham, W. (Edinburgh, Central) O'Connor, Thomas P. Wilson, Rt. Hon. J. W. (Stourbridge) Gretton, Colonel John Palmer, Charles Frederick (Wrekin) Wilson, W. Tyson (Westhoughton) Griffiths, T. (Monmouth, Pontypool) Parkinson, John Allen (Wigan) Wintringham, T. Grundy, T. W. Raffan, Peter Wilson Wolmer, Viscount Guest, J. (York, W. R., Hemsworth) Richardson, R. (Houghton-le-Spring) Wood, Major M. M. (Aberdeen, C.) Gwynne, Rupert S. Rose, Frank H. Hall, F. (York, W. R., Normanton) Royce, William Stapleton TELLERS FOR THE NOES .—.— Mr. Hogge and Mr. Neil Maclean.
Shekleton's Divorce Bill [Lords],
Ordered, That a Message be sent to the Lords to request that their Lordships will be pleased to communicate to this House Copies of the Minutes of Evidence and Proceedings, together with the Documents deposited, in the case of Shekleton's Divorce Bill [ Lords ],—[ Mr. Morison. ]
Overseas Trade (Credits and Insurance) Bill,
Reported, with Amendments, from Standing Committee A.
Report to lie upon the Table, and to be printed, [No. 163.]
Minutes of the Proceedings of the Standing Committee to be printed. [No. 163.]
Bill, as amended (in the Standing Committee), to be taken into consideration upon Thursday, and to be printed. [Bill 187.]
Merthyr Tydfil Corporation Bill,
Reported, with Amendments; Report to lie upon the Table, and to be printed.
Dangerous Drugs Bill
Reported, with Amendments, from Standing Committee C.
Report to lie upon the Table, and to be printed. [No. 164.]
Minutes of the Proceedings of the Standing Committee to be printed. [No. 164.]
Bill, as amended (in the Standing Committee), to be taken into consideration To-morrow, and to be printed. [Bill 188.]
Publications and Debates' Reports
Report from the Select Committee brought up, and read.
Report to lie upon the Table, and to be printed: [No. 165.]
Standing Committees (Chairmen's Panel)
Mr. JOHN WILLIAM WILSON reported from the Chairmen's Panel: That they had appointed Mr. Mount to act as Chairman of Standing Committee B (in respect of the Resident Magistrates (Ireland) Bill; Mr. Hodge to act as Chairman of Standing Committee B (in respect of the Pensions (Increase) Bill); Mr. Macmaster to act as Chairman of Standing Committee D (in respect of the Guardianship of Infants Bill); Sir Samuel Roberts to act as Chairman of Standing Committee E (in respect of the Ministry of Food (Continuance) Bill); and Sir William Pearce to act as Chairman of the Standing Committee on Scottish Bills (in respect of the Public Libraries (Scotland) Bill and the Merchant Shipping (Scottish Fishing Boats) Bill).
Report to lie upon the Table.
Selection (Standing Committees)
Standing Committee E
Sir SAMUEL ROBERTS reported from the Committee of Selection; That they had discharged the following Member from Standing Committee E: Major O'Neill; and had appointed in substitution: Brigadier-General Wigan.
Report to lie upon the Table.
Message from the Lords
That they have agreed to:
Gas and Water Provisional Orders Bill,
Ministry of Health Provisional Orders (No. 6) Bill,
Newcastle-upon-Tyne Corporation Bill,
London County Council (General Powers) Bill,
Sheffield Corporation Bill,
Coventry Corporation Bill,
Lowestoft Corporation Bill,
Southampton Corporation Bill, with Amendments.
Amendments to:
Weardale and Consett Water Bill [ Lords ], without Amendment.
Gas and Water Provisional Orders Bill, Ministry of Health Provisional Oders (No. 6) Bill,
Lords Amendments to be considered to-morrow.
Orders of the Day
Finance Bill
As amended, further considered.
CLAUSE 49.—(Charge of corporation profits tax.)
(1) Subject as provided in this Act there shall be charged, levied, and paid on all profits being profits to which this Part of this Act applies and which arise in an accounting period ending after the thirty-first day of December, nineteen hundred and nineteen, a duty (in this Act referred to as "Corporation Profits Tax ") of an amount equal to five per cent. of those profits:
Provided that—
( a ) where the profits are profits arising in an accounting period of twelve months, no tax shall be charged on the first five hundred pounds thereof, and where the profits are profits arising in some shorter accounting period, no tax shall be charged on such amount of the profits as bears to five hundred pounds the same proportion as the shorter accounting period bears to twelve months; and
( b ) the amount of tax payable in respect of the profits of a British company for any accounting period shall in no case exceed the amount represented by ten per cent. of the balance of the profits of that period estimated in accordance with the provisions of this Part of this Act, after deducting from the amount of those profits any interest or dividends actually paid out of those profits at a fixed rate on any debentures, debenture stock, preference shares (so far as the dividend paid thereon is at a fixed rate), or permanent loan issued before the twentieth day of April, nineteen hundred and twenty.
(2) The profits to which this Part of this Act applies are, subject as hereinafter provided, the following, that is to say:—
( a ) the profits of a British company carrying on any trade or business, or any undertaking of a similar character, including the holding of investments:
( b ) the profits of a foreign company carrying on in the United Kingdom any trade or business, or any under taking of a similar character, so far as those profits arise in the United Kingdom.
(3) In this Part of this Act—
The expression "company" means any body corporate so constituted that the liability of its members is limited:
The expression "British company" means any company incorporated by or under the laws of the United; Kingdom:
The expression "foreign company" means any company which is not a British company:
The expression "permanent loan" means a loan of a permanent character which is secured by mortgage or debentures or otherwise on the assets or income of a company and which, if subject to repayment, is subject to repayment at not less than three months' notice
I beg to move, to leave out the Clause.
I wish to move the rejection of the Corporation Profits Tax, and I do so on these grounds. In the first place, I think all Members of the House know very well that what the country objects to most of all is new taxes. Old taxes you may raise and people will stand it with very little trouble, but when an entirely new tax is invented and imposed it hits people in ways that cannot be calculated beforehand, and it causes the maximum amount of general unrest. This Corporation Tax is, to my mind, not only bad, because it is new and therefore has an unexpected effect upon business everywhere, but also because it is in effect a new form of Income Tax. The Income Tax is 6s. in the pound. The Chancellor of the Exchequer seems to have said to himself, "Well, we really cannot raise the Income Tax any further," and therefore he invented to take its place the Corporation Tax. The special viciousness about this tax, to my mind, is that it is an Income Tax which can be more easily shifted than the present Income Tax. The present Income Tax in so far as it falls on preference shares and debentures, on farmers or landlords, upon any form of fixed income or monopoly, cannot be transferred from the person upon whom it is imposed on to the general community, but the Corporation Tax is very different Indeed, the Corporation Tax seems to have been selected so that it might be most easily transferred from the people upon whom it is imposed, from the companies who pay the tax in the first place, on to the backs of the rest of the community. Obviously, this tax, like the Excess Profits Duty is a charge which has to be taken into account in the cost account of any business. It becomes one of the overhead charges. Because of the Corporation Tax, every pair of boots made in this country is going to cost more. It is simply adding to the overhead charges just as advertisements might be, and the consumer in the long run pays the tax.
It is particularly vicious that you should have taxes paid by people who do not know they are paying the taxes. It has been our objection on these Benches to the whole of the indirect taxation of the country that people pay it without knowing they pay it. For instance, we found far more opposition among the workers to paying Income Tax than to the increase in the indirect taxation of the country on sugar and tea, etc., although the sugar and tea taxes take far more out of their pockets, yet the very fact that they had actually to pay the Income Tax themselves made them object to that tax more than to the indirect taxation, which they ought to have resented far more fiercely. This Corporation Tax is exactly similar. Instead of being a tax which is paid by the person who puts his hand in his pocket, it is paid by the consumer, who finds the cost of everything he buys increased. Not only is the tax bad, but it is peculiarly unjust, in that it exempts some of the people who have made most money out of the War. Take the tenant farmers of this country. Nobody can deny that they have done handsomely. They have become, owing to legislation, part landlords of their farms, and they have been making handsome profits throughout the War. These people pay Income Tax, it is true, but they pay Income Tax only on the rental value of their land, on a figure, indeed, which is far less than the real income they are making. We find now this real increase in the Income Tax, this Corporation Profits Tax, invented, and added to the burdens of a large body of Income Tax payers in the country, but specially devised so that farmers shall escape the tax. That, I think, is the negation of justice. Those are the people who have made money out of the War, and they escape. The people, on the other hand, who find their Income Tax increased, as it will be under this, from 6s. in the £ to 7s. in the £ will pay more, although the burden upon the middle classes is already as much as can possibly be borne. It is worse than that. It is not only that certain people benefit by being exempted from this tax, but it is the casual nature of the tax. Take the case of a man who saves £1,000. He may have invested that £1,000 in preference shares at 8 per cent. He has made the money during the War, and he invests it in preference shares at 8 per cent. in Lever Bros., or in any of these vast companies which have been making issues recently. If he does so, he escapes the Corporation Tax altogether, but if he was unfortunate enough to have invested that money in ordinary stock, or, worse still, if he was man enough to put it into deferred shares, then he finds that the whole weight of this tax falls upon him.
Take the case of the man who puts his money into deferred shares. The Corporation Profits Tax is based upon the whole profits of that company. The deferred shares get sometimes no dividend. Sometimes they get 10 per cent., 15 per cent., or 20 per cent.; but the whole of that tax is paid by the deferred shareholder, and even the ordinary shareholder in that case escapes scot free. Of course, if the ordinary shares are participating, or if the preference shares are participating, they may pay a small amount of income tax; but in so far as the deferred shares at present are taking the surplus profits of those companies, the deferred shareholder will bear the whole weight and burden of the tax. In the case of founders' shares, it is even worse. The deferred shareholder, like everybody else, paid what was the market value of his shares when he bought his property. Is the Chancellor of the Exchequer right in picking out the deferred shareholder and making him pay the whole burden of the tax—not 1s. in the £, but often 5s. in the £ in their case, while the rest of the shareholders in the company go scot free? The tax is so casual, again, in that companies differ. Some companies will have a large amount of ordinary shares and a small amount of preference shares. In that case the ordinary shareholder will not pay so much of the burden as he would in a company where there is a small amount of ordinary shares and a large amount of preference shares or debentures. These people are all hit irregularly, and, above all, the deferred shareholder bears the brunt of the tax.
When this Clause was going through the Committee stage, the case of the railway companies was brought up, and there again, by a curious freak of fortune, we found the true genesis of this tax borne out. Of course, a tax levied upon the shareholders in railway companies cannot be transferred on to the consumer. They are a monopoly. Therefore in their case this tax is not transferable; so the Chancellor of the Exchequer was easily persuaded to drop it for three years in the case of railway companies because there, after all, it was going to be the actual profits of the company which would be taxed, and they could not be got back by increasing the charges to the consumer. It is an example of what we may always expect. Henceforth, as long as we have these new irregular taxes, the Chancellor of the Exchequer will always be looking for taxes which can be shifted on to the consumer and which look as though they were direct taxes. In every statement of our taxation, we shall be told in future, "Oh, the Government are raising far more in direct taxes than any other country in the world, and our proportion of direct taxes in England to indirect is greater than it is anywhere else." Yes, let us understand that these things which are called "direct taxes" can, under certain circumstances, be made indirect taxes, and in so far as they are taxes of that nature, they are certainly bad. I have pointed out in the first instance that this tax is unfair because it hits one man and not another when there is no difference between them except that one happens to invest in one sort of property and the other in another sort of property. But far worse than that is the ultimate result. It may not be immediate, but it must be that, in two or three years time, the vast bulk of this tax will be shifted from the people who originally paid it on to the shoulders of the general community. It will increase the cost of living. It will make it still harder for the middle classes to make both ends meet, and it will make it still more necessary that the working classes should continually strike for higher wages. That is not what we want on this side of the House. We want to have a settled state of affairs, so that the cost of living, even if it does not go down, shall certainly not go up. On those grounds we on these Benches shall unhesitatingly vote against the Corporation Profits Duty.
I beg to second the Amendment.
I do so on grounds slightly different from those which have been urged by my hon. and gallant Friend opposite (Colonel Wedgwood). In the first place, I suggest, whether this tax be in itself sound or unsound, good or bad, it is at any rate premature to impose it, for this reason. As I understood the statement of the Chancellor of the Exchequer when he was introducing the Budget, it was—I may have misunderstood it—that he was looking round for some alternative to the Excess Profits Duty. He said: as the hon. Member opposite indeed pointed out, it will be bound to prove extraordinarily unequal and unfair in its incidence as between one taxpayer and another. I have always supposed that it was one of the most elementary canons of taxation that when you were looking about to discover a new form of taxation you should try to get one which would be reasonably fair in its incidence as between one taxpayer and another. Whatever else may be said in favour of this tax, it cannot be said that it would be fair in its incidence. As the hon. and gallant Member opposite has already pointed out, it will be very unfair as between an ordinary trading or industrial company and what one may call for brevity's sake a statutory company. It will be very unfair as between those two classes of undertakings—so unfair that when I first listened to the Debate I had not the ghost of a notion that it could, by any stretch of imagination, be applied to a statutory company. We subsequently learned that it would be.
Allow me to point out to the House the way in which it will operate as between one statutory company and another. The hon. Member opposite was perfectly right, if I may be respectfully allowed to say so, in showing that the incidence of the tax will depend very largely upon the ratio between different classes of capital. Take the railway companies. There are some railway companies which have got a very large ratio of debentures or of preference capital in relation to their ordinary capital. There are others where the proportion is the other way. I have had the incidence of this tax taken out in the case of three different railway companies. On paper it looks as though it were a tax of Is. in the £, and, as a tax of Is. in the £, it does not terrify as many people as it ought to do. When you work it out, the incidence is in this wise. In the case of one railway company which has split its ordinary shares into preferred and deferred, it will work out not as Is. in the £, not at 2s. in the £1, but, for reasons which have already been most lucidly explained by my hon. and gallant Friend opposite, it will work out in this case as an additional tax of 6s. 3d. in the £. In the case of a second railway company which I have taken out it will work out at the rate of 8s in the £. In the case of a third railway company it will work out at very nearly 10s. in the £. I venture to put it respectfully to the Chancellor of the Exchequer whether he really suggests to impose on the miserable holders of these deferred shares an additional Income Tax of 10s. in the £. Take the case of the very rich man who never excites any emotion or pity in this House. He is already paying. 12s. in the £1 Income Tax, and if he happens to be the holder of deferred shares in the company to which I have alluded his total Income Tax will amount to 22s in the £1.
indicated dissent.
:I gratefully accept the hon. Member's correction. Of course, I mean in relation to his shares in that particular company. He may have a very large fortune invested in the deferred shares of that company. He pays 6s. in the £1 Income Tax, 6s. in the £1 Supertax, and 10s. in the £l Corporation Tax, or for his share of the Corporation Tax on the deferred shares in that company. I may be accused of looking a gift horse in the mouth in supporting my hon. and gallant Friend in his Motion for the rejection of this Clause, because the House will be aware that the Chancellor of the Exchequer has been good enough to put down an Amendment which will have the effect for a period of three years of exempting what I will call for brevity's sake statutory companies from the operation of this tax. I should have been very much more grateful to my right hon. Friend if he had been willing to accept an Amendment deleting these companies from the tax. All that he has done is to defer the operation of the tax for three years. I want business men in this House to apply their minds to this problem: How are the companies over which the threat of this tax at the end of three years is held—indeed, it is more than a threat, because the tax will become operative until it is repealed by legislation, so I understand—going to raise fresh capital during the next three years? How will railway companies, electric light companies, water companies, any companies whose tolls, charges, and rates are fixed by Act of Parliament, or by Order having the force of an Act of Parliament, to go into the market and raise capital during the next three years, with this terrible threat hanging over their heads? It is not a business proposition. I have more particularly emphasised the case of these statutory companies because they as business undertakings will be particularly hard hit by this tax; but I am not the less concerned for the general consumers on whose behalf my hon. and gallant Friend more particularly spoke. On these grounds I cordially support the Amendment to omit this Clause.
The path of a Chancellor of the Exchequer is very difficult. The hon. and gallant Member who moved this Amendment, and my hon. Friend who has just spoken, share not one single political principle in common. Their ideals of Government and of taxation are as far apart as the poles [HON. MEMBERS: "No, no!"] Yes; they would not agree upon any substitute for this or any other tax, but they are united in opposing this tax.
It shows how bad the tax is!
I do not agree with my hon. Friend. It shows how easy it is to let your critical faculties run riot without supplying any constructive thought on a difficult financial problem.
That is not our business.
That is the old retort. The independent Member has nothing to do but to put conundrums which he cannot answer.
I thought a private Member was not allowed to move anything to impose a charge.
My hon. Friend cannot ride off on that argument.
We have made suggestions for cutting down expenditure.
I was not alluding to my right hon. Friend (Sir F. Ban bury). He is, I think, prepared to oppose almost any new expenditure.
Hear, hear. So am I.
I think I had better not pursue these asides any further.
Any unnecessary expenditure.
My hon. Friend now qualifies it by an adjective. Let me come to the speech of my hon. and gal- lant Friend (Colonel Wedgwood), and since he is no longer in his place perhaps that will enable me to proceed with my argument.
My hon. and gallant Friend has been called out of the House.
I was not making any reflection upon him in the discharge of his duty. The hon. and gallant Member gave expression to some curious doctrines of taxation, and they were peculiarly curious in the month of a gentleman who has just associated himself with the Labour party because he could not find any other sufficiently in sympathy with the aspirations of the great masses of our countrymen. At least, I understand that was his reason. The first principle which he laid down was that all new taxes were bad. Land taxes, for instance, were new taxes, and the existing land taxes, he admits, are unworkable. Does that prevent him from suggesting other land taxes? Certainly not. He went on to say that taxation as it falls on certain things, and amongst others on a monopoly, cannot be transferred. I should have thought that if there was any case where a person upon whom you impose taxation could transfer it on to other people more readily than in another case, it would be where the person immediately taxed was the possessor of a monopoly which other people used. Finally, he objected to all taxes which, like this one, are paid indirectly by people without their knowing it. In the same breath he went on to explain that the masses of our people did object to Income Tax when they ought to have objected to the Sugar Tax. I do not remember that he advocated or supported any resistance to any demand for Income Tax relief from these people. What a curious doctrine it is for so extreme a democrat that what the people want they are not to have, because the hon. Member, who is wiser, knows that it is not good for them. These are the general principles of taxation with which the hon. and gallant Member opened his attack. He said that this tax will be an expense on business. So it will. It will be an expense on a certain kind of business, carried on under special conditions by favour of the legislation of the State. It seems to me that business as so carried on may be rightly called upon for a special contribution in recognition of the privileges which they enjoy, and provided that the recognition is as moderate as that which I propose I do not think the various suggestions that I have made will mean any hardship.
My hon. Friend (Mr. Marriott) made a speech which I cannot help thinking he had prepared before, in the Committee stage; I undertook to go a long way to meet it. It was not relevant, or at any rate nine-tenths of it was not relevant to what we are doing to-day, because the concerns of which he was speaking, such as the railway companies, are to be excluded from the operations of the tax for a period of three years. Why is that? Because they are limited by statutory conditions. These statutory conditions are under review at the present time, and must come under review by the House of Commons, and for these public utility companies, speaking broadly, arrangements must be made in order that they may adjust themselves to the altered situation. It would be premature now to decide the applications of the tax to them, and I therefore propose to suspend its operation for three years in order that in their case Parliament may have an opportunity of reviewing the position when the situation has been cleared up, when the new conditions are laid down, and when Parliament can say exactly what is the position of these companies. I confess that when one has made what one thought was a great concession, after listening to what was a reasonable plea, it is very discouraging to find a mere perfunctory expression of gratitude as the peroration of a long attack which could not have been more vigorous if one had not made any concession at all. My hon. Friend asks the House to consider the position of these companies for the next three years, not knowing what their position thereafter is going to be. The sword of Damocles is suspended about their heads. Perhaps I had better not have made a concession if I have created a grievance by leaving their position open, unprejudiced.
Not unprejudiced.
I will say, leaving their position open, I will not quarrel about the use of a word. If I have prejudiced their position by leaving that question as regards them open for three years, the moral is that I was wrong to make the concession, and that I had better not move the Amendment which I have put down on the Paper. If that is my hon. Friend's desire I will not move it. Whichever I do he has his grievance, and he will have it. It is not the way to secure concessions. I have tried to be conciliatory. I have tried in carrying through this Budget to meet reasonable objections, and I do think that the action of the Government in that respect is entitled to a little more consideration from hon. Members, who say that because we have gone a long way we ought to have gone further. In the long days and weeks of the Budget discussions we have listened to attacks upon the Excess Profits Duty from all the interests subject to the Corporation Profits Tax. They have denounced it as the worst of taxes, and they desire that it should be abolished. From organised industry I have had one suggestion and one suggestion only for an alternative.
Tax capital values.
From organised industry I have one suggestion only as an alternative. It was made by the Associated Chambers of Commerce and by the Federation of British Industry. It was for a flat rate tax, not on corporations of limited liabilities alone, but on all business profits. It was suggested, not at the rate of Is., but at the rate of 2s. 6d., and some of them were ready to have it enforced at 5s. 6d. That is the one proposal which representative business organisations have made to me as an alternative. When I, in the Corporation Profits Tax, apply the same proposition at the rate of 1s. instead of 2s. 6d. or 5s. 6d., to a limited field, I am told I am grossly unfair, that I am ruining industry, destroying enterprise and preparing disaster.
So you are.
My hon. Friend had better talk to the big business men who advised me to put this tax on industry at 2s. 6d. in the £. Hon. gentlemen come here and presume to talk for all the industry and commerce of the country. They do not represent it, and they have no right to speak in its name. They may speak for themselves or for a section, but they have no more right than I have to speak for all the industry and commerce of the country. It is not an easy task to find a new tax. It is not possible to find any tax to which objections cannot be raised and which does not involve great difficulties, but I do not believe you can find a fairer one, or one which will be met with less hardship, than that which is now challenged.
I wish to support the Amendment. We must try to hark back to the genesis of this tax. As I understand the position, the idea at the inception of this tax was that the feeling of the country was so strong against the Excess Profits Duty that the Chancellor of the Exchequer felt compelled to consider some other means of raising revenue when the Excess Profits Duty came to be wiped off the Budget. I understand from him now that his conception of this Corporation Profits Tax is that it shall be a permanent tax and that the Excess Profits Duty shall gradually disappear. If that is so, I must make my own position clear. I have never spoken in this House or amongst my friends, or in my constituency, against a moderate Excess Profits Duty. I consider that under the exceptional circumstances in which the country finds itself an Excess Profits Duty to a reasonable extent is right. We have no competition, as an exporting country, with Germany to-day, as we had it for many years before the War. Therefore the possibility of our manufacturers, our merchants, our bankers and our insurance companies being able to raise their charges, not only to the people in this country, but to the people overseas, makes the Excess Profits Duty a very easy thing for them to pay. As a payer of that tax, I say distinctly that I would much rather have a 40 per tent. Excess Profits Duty than a 10 per cent. or 20 per cent. Corporation Profits Tax. I realise that so long as I am paying Excess Profits Duty I have in my hand the pre-war standard, plus a share of that previous money, and if I am called upon to pay the Corporation Profits Tax, which the Chancellor of the Exchequer tells us will be augmented as the Excess Profits Duty decreases—he does not look forward to a permanent reduction of revenue requirements—then I say that when we vote upon this Amendment we have to remember that the Corporation Profits Tax is not a temporary tax, or one for this year only, but is one which, beginning at 1s. in the £, is certain to increase as the years go by.
Many of us feel that as representatives of the British taxpayers we have a right in this House to express our views as to why we consider certain taxes preferable to others, and to say that the total amount of taxation should not exceed a certain sum. This tax will retard the free purchase and sale of industrial shares. It will depreciate the capital value of all industrial, commercial, shipping, and mining shares to a far greater extent than the amount secured by the Treasury. Let us take case of a director of a company which has been in the habit of paying 7½ per cent. dividend, and that the shares are £100 shares. He will find that the 7½ per cent. keeps his shares at par. Even with a 5 per cent. Corporation Profits Tax he will not be able to pay 7½ per cent dividend, and the dividend will drop to 7 per cent. How will the Stock Exchange look upon that? The ordinary man in the street may say, "Well, ½ per cent. dividend less on £100 is only 10s." but if it comes to a question of capital, of a man selling his shares of which he may have several thousands in his cash box, the buyer will say, when purchasing at 7 per cent., "I will give you £90 for your £100 share, instead of the £100 which I would have given you if the interest had continued at 7½ per cent." If that happens with a 5 per cent. Corporation Profits Tax, what will happen when the Chancellor of the Exchequer, having reduced his Excess Profits Duty, raises this Corporation Profits Tax to a much higher level? The right hon. Gentleman suggested that the hon. Member for Oxford City (Mr. Marriott) was not quite fair in bringing in again the question of the railways. I suggest that if this Bill becomes law the Corporation Profits Tax is almost certain to come on these railway shares within a few years.
What I object to in this tax and what I hope the Chancellor of the, Exchequer will consider, is that it is depreciating capital value. It must depreciate the capital value of every limited company in the land. I earnestly call upon my right hon. Friend to reconsider the matter. The fact that the Government have not considered it very carefully was proved by the Chancellor's readiness to exclude all statutory companies. They represent a very large percentage of the estimate which he put before the House as to what the tax would produce in a full year. If the millions and millions which are to be excluded in gas companies, railway companies, general utility companies, electrical supply companies, and so forth, are to be left off the list, the tax will fall all the heavier on the limited liability companies, which still have to pay the toll. For these reasons I consider that the matter is not one which should be pressed at the moment. The tax should be more fully considered than it has been. We all know that very little was known of this Corporation Profits Tax until the Committee Stage of the Bill, and that then many phases of it were brought out which had not been visualised by the Government or by the House before. The Chancellor of the Exchequer has said that we Back Benchers and private Members should suggest to him some outline of taxation, even if we are not at liberty to make a proposal for a definite tax. In my judgment, he is right. My desire to see this tax dropped is due to the fact that as a business man of 40 years' experience I realise that the accumulated taxes of to-day are bearing so heavily on the industrial life of the country that the pressure is more than the Chancellor has a right to impose unless the necessity is absolute. The necessity is absolute to meet the interest of our debt, but the necessity is not absolute to meet £245,000,000 of capital charge against the War debt and the reduction of the floating liabilities of the Government. That floating liability should be kept floating or founded in some form, and we of the present generation, at least for the next five years, should find the interest on our indebtedness, but should not be called upon to bear heavy taxation against capital.
5.0 P.M.
This year the Chancellor of the Exchequer is going to take out of industry at least £200,000,000 more than he is called upon to take. It is that £200,000,000 which is one of the principal causes of the great depression which has come on the country during the last five months. I admit that the Chancellor of the Exchequer had every reason last February to think that we were in the midst of a time of most extraordinary business prosperity. The change came apparently from nowhere. It seemed to begin in the East, with the financial troubles of Japan. It spread and led to financial trouble in the United States. It was accentuated by the action of the Chancellor of the Exchequer himself, when he admitted that he had had a meeting with the bankers and felt that some strong curb must be put upon the evident desire of all traders to extend their business. I do not blame him for that. If in February last I had been in his position I should have taken very much the same view that the country could meet this extra 200 millions. But here in July the Chancellor knows, and no one knows it better, that there has been an extraordinary depression for the last five months. As he does not really need the money from this tax for his immediate liabilities then I do ask that he will in the interest of the business community of this country drop this tax for the present. In that way he would give a fillip to industry, and to, shall I say, that enterprise and impetus which has been taken from commerce and industry during the last four or five months. I have moved all my life amongst manufacturers, merchants, shipowners, brokers and business people and I am really able to catch the tone and feeling that is prevalent. I say to the Chancellor, with all solemnity, that if he will do something of the nature we ask in this Amendment, he will give a turn round again to the manufacturer, the producer, the shipowner and the different merchants and trading concerns of this country. This is the last straw, for it is really a straw, which bears more heavily than he thinks on the actual divisible profits of a company. I had prepared some figures, but I do not think I will read them, with reference to a company of £70,000 capital with 12,000 pre-War basis. That company is making now £20,000 instead of £12,000 and the strange thing is, although the company is making that extra money, the directors and partners in that limited company are only to-day making about three-fifths of the money they made in pre-War days owing to the enormous taxation that is put upon them.
Every director of a limited company, when he comes to consider the division of his ordinary share profits, finds that by Act of Parliament the Chancellor of the Exchequer says "You shall only write off so much against depreciation." Every director knows that he must write off a much larger sum against depreciation than the amount which is allowed. That is really a safeguard for the debenture holders and the preference shares, which are immune from this tax. Thus the ordinary shareholder has practically to safeguard every debenture bondholder and every holder of preference stock. Although you only charge by this tax one shilling in the pound on the profits earned by the ordinary stock in the dividend warrant, there is a very much greater reduction than that shilling from the fact that the depreciation and development all comes out of the profits of the ordinary shares. The result is that the capital value of the ordinary share goes down. A tax which deliberately reduces the capital value of every limited liability company in this land is a tax which should be very carefully scrutinised. New inventions and new developments, and everything which has any great risk in it, are always started by limited liability companies, because no one will take the risk of running a great venture and having his capital liable to the full amount he possesses. So that we are really taxing enterprise when we put a Corporation Tax on ordinary shares. When you ask a manufacturer to take on a new invention, and to introduce new machinery instead of that which he has been using for the last 20 years, his continual answer is that his ordinary share capital is not sufficient and that he is afraid to do this work. This Corporation Tax will be another direct reason why directors will refuse to take risks, and refuse to throw out th3ir old machinery, and introduce new plant necessary to bring up production against competition with all the other countries of the world.
I said I would make a suggestion. I say that during the next five years it is not good policy to budget for more money than is actually needed for the Services and the interest on our debts. Many of us have been considering for the last three years how it would be possible to raise revenue without taxation. That is a problem which some people think is visionary, but I do not. I believe, out of the large assets of this great Empire which we hold to-day, it will be possible with Government guarantees and Government participations to have great developments in the success of which the Government would participate. That success would go largely to pay not only the interest, but the principal of our great war debt. This is hardly the time to go into details of how this great change could be made. In this Budget we wipe out the Land Values Taxes because they brought in no revenue. There are within our Empire millions of acres of fertile, rich land. Could we not begin a Land Value Tax from the prairie value, uninhabited and uncultivated as many of those lands are to-day, and by a system of development of those properties with railways, transport and irrigation, bring about a reasonable participation by the State in a share of the increment value of those great lands. Looking forward a few years from now on such a policy as that, I suggest we could hope, and reasonably expect, revenue without taxation. We must be prepared to pledge some of our credit in order to develop this vast Empire which has come into our hands. Some of us have the vision to believe that such a thing could and should be done. Looking back 300 years, when we defeated the Spanish Armada, the British Empire began its development. Now that we have defeated the great German Power from being the controller of the commerce of the earth, this is the time when the development of the British Empire should go forward at a rate and pace which has never been thought of or considered. We, the guardians of the taxpayer, must be prepared to ask our Chancellor of the Exchequer to help in this great development work. On this line I do suggest that it is not incumbent on the Chancellor to push this Corporation Tax in the present Budget, and that he ought to suspend it for another year until the country has had time to consider all the issues involved, and till the country has had time to consider the effect on all the railway companies. It will be much better, in my opinion, to let the tax be brought in after a decision with regard to the railway companies has been come to. That could be done in another Bill. Let us put the Corporation Tax aside for this year, and consider it again when the railway issue and other matters are more fully understood.
In the Committee stage of the Finance Bill, I voted against the Corporation Tax, and I am going to vote against it now again. My reasons for doing so differ from those of some hon. Members who have spoken I agree with them that the tax has not been fully considered, and that is one reason why it should be postponed for further consideration. I do not think the Government have kept good faith with the commerce and industry of this country in piling on the additional taxation contained in this Bill. The Excess Profits Duty has been raised from 40 to 60 per cent. I have no objection to that on big business, because they can stand it. I know that, because I am associated with perhaps one of the biggest in the country; but the small people were in trouble over it. Certain concessions have been given to them, and I have no more to say in consequence of that. But to pile on a new tax like this on top of an increase in the Excess Profits Duty is a mistake, and a discouragement to the commerce of the country. I strongly urge on the Chancellor to postpone the tax until the Excess Profits Duty is reduced or abolished. There is another reason. I think we are overdoing things in the way of paying off our debt. We fought the War, not for ourselves, but for the future of the whole world, and especially the future of our own people. Why should not future generations bear this for a longer period than that suggested by the Chancellor? I believe his proposition is that the debt should be paid off in a hundred years I see no reason for that, and I think it need not be paid off for a hundred years. I think it is only right that future generations should bear their share of the great cost of this War, which will have led to their freedom, and the freedom of the world. I hope the Chancellor will postpone this tax this year, and reconsider it, and perhaps bring it in when he reduces the Excess Profits Duty next year.
I am sorry that at at the moment the Chancellor is not in the House. I should like to point out that I have no desire whatever to depart from the agreement we came to with the Chancellor of the Exchequer as to the railway companies. I objected to this tax as a whole, with regard to its incidence on other companies in the United Kingdom. After all, the railway companies, although they form a large pro- portion of the companies in the United Kingdom, are not the only companies. We are here to express our opinions upon what we think to be right or wrong and prejudicial to the country as a whole and not to one Department. First of all, let me emphasise the fact that this tax is going to fall in a very unequal way upon the individuals to whom it applies. Take the case of a company with a large amount of debenture stock, and a more or less small amount of ordinary stock. The result will be that on that company the tax will be very much heavier than on another company doing similar business, which happens to have a small amount of debenture stock and a large amount of ordinary stock No one can say that that is not true. It is a very unfair state of things. Take the case of a man who could have had no possible knowledge of any tax of this sort, who invested money in a company with a large amount of debenture stock, and another man who invests his money in a company doing similar business with a small amount of debenture stock. Why should the first man have to pay an additional income tax of anything up to 6s. or 7s. in the £ and the other only pay 2s. or 3s. in the £. The whole thing is absurd if one comes to look into it.
The Chancellor of the Exchequer said that those of us who are opposing this tax could not speak for organised industry, and that he had only received from organised industry one or two suggestions. I have never attempted to say, and my hon. Friend the Member for Oxford (Mr. Marriott) did not say, that we were speaking for organised industry. I had no intention of speaking for them, but I should like to point out to the Chancellor of the Exchequer that there are many other people who will be affected by this tax, besides organised industry, and that those people have not made excess profits, whereas in the great majority of cases organised industry has made excess profits, and, therefore, their position is different. Let me take the case of foreign railways. There are a large number of foreign railways—in the Argentine Republic, in Brazil, and in other countries—which have been made out of English capital, which are owned by English companies, and which are operated by English companies. I have not had time actually to check the figures, but I think I am right in saying that in most cages those companies are paying, not a larger dividend, but in most cases a smaller dividend, than they were before the War. Those companies are going to be affected by this tax, and what is going to happen? Is it not likely that, in those cases, a certain number of them will transfer their headquarters from London to the country in which their property is? It is perfectly simple to do so, and if they do that, is not that going to hurt industry in this country? Take the case of the Argentine railways. Will not their orders for steel, instead of coming to England, go to America? The directors of these railway companies are Englishmen, and, being more or less patriotic people, have, so far as possible, and so far as is consistent with the interests of their shareholders, placed their orders in England, but if their head offices are removed this will disappear, and consequently a double blow will be struck at industry.
There are other companies; there are genuine investment companies which were formed about the year 1888. These companies received large sums of money, which they invested for their shareholders in taxed securities. Every one of them since the War has found their properties have deteriorated, and their dividends decreased and not increased. They will be taxed under this proposal, and they will be hit very hardly by it. Is that fair, or just, or likely to encourage people to invest their money in English companies, or, indeed, to put their money into anything English? It is my belief that all these things have not been considered by the Chancellor of the Exchequer. Many of them are matters which require some little time to consider when you are dealing with a new tax of this sort. I do not want to say anything against the Treasury officials; I think they are by far the best of the Government officials, and they are well acquainted with their work, and do as a rule make wonderful estimates of what a tax is going to bring in, but they are not super-men. I do not think there are any super-men.
Only one!
Only one? These officials cannot know everything, and I believe that, although they have put this tax in the Bill quite innocently, they do not thoroughly recognise what the effect of it will be. There are plenty of other companies which have not made money during the War and which will be seriously affected by this tax. I think that the remark of the Chancellor of the Exchequer about organised industry has very little to do with the question before the House.
The Chancellor of the Exchequer went on to say that it was very ungrateful of people who had enjoyed special privileges to object to this tax. I want to know who it is who has enjoyed special privileges? I know of very few such people. I do not quite know what he means by that. I can hardly recall anyone who has enjoyed special privileges unless he means the people to whom the Government have given orders. They are a very limited number of people, and they are not included in the many companies to which I have alluded. I do not want to take up the time of the House, and I will only say this one word in answer to the suggestion of the Chancellor of the Exchequer, that if an hon. Member criticises a tax, he should be prepared to put another one in its place. I am not sure that I agree with him. If I were Chancellor of the Exchequer in another Government, I should be perfectly prepared and perfectly willing to lay my own Budget before the House, but I am not, and therefore I do not see why I should be called upon to make suggestions in that direction. But I have always made one suggestion, and I propose to make it again, and that suggestion is economy. There are plenty of opportunities for saving and they should be utilised. What is this tax going to bring in? That fact has not been alluded to in this Debate. I do not agree with the hon. Member who said that we ought not to reduce our debt, but if the Chancellor of the Exchequer had used his great influence to prevent all these Supplementary Estimates coming in instead of putting on this annoying little tax, he would have rendered great service to the country, but, in any case, there is a large field for economy, and that is the only field in which we ought to look for a reduction of the expenditure, and for a saving to the Exchequer. As far as I am concerned, I do earnestly hope that the Government will not enter into a great speculation such as has been outlined by my hon. Friend above the Gangway (Mr. Bigland). It may come out all right, but the very last thing an English Government ought to do is to enter into any speculation of any sort or kind. They are here to govern a country, and not to enter into speculations.
I do not think this tax has a single friend in the House. It is really an increased Income Tax. It is unjust and arbitrary; no reason has been given, and no reason has been attempted to be given why the miserable ordinary shareholder should be taxed and why certain companies only should pay this tax and others should not pay. There are many objections to this tax, but I only want to raise two. The first is that, under this Corporation Tax, many workmen who are not liable to pay Income Tax will be called upon to pay what is really Income Tax, although it is called Corporation Tax. Some of us in industry have been trying to improve the conditions between Capital and Labour and master and man. We have persuaded the workers in some cases to take up shares—some of them deferred shares—in the companies in which they work. It has been a difficult job. The men have been suspicious, but in many cases we have been successful, and in many cases men are now shareholders in the companies in which they are working. We shall have a poor chance of persuading any further men to become investors in these companies if these men who have taken up shares are to be liable to pay this extra Income Tax which they should not be liable to pay, and when they find themselves having to pay a tax of 6s., 7s., or 8s. in the £.
Another point that is more important from the country's point of view is that under this tax the Chancellor of the Exchequer is going to lose more than he hopes to gain. The right hon. Baronet who has just spoken referred to companies whose registered offices are in London, but who are trading abroad. There are hundreds and hundreds of companies, copper-mine, tin-mine, and railway companies, which operate in a foreign country, but have their offices in the City of London. They have to pay Excess Profits Duty and Income Tax on all their profits, whether the shares are owned by a foreigner or by a Britisher, and I understand the revenue so produced is something in the neighbourhood of £33,000,000. Now these companies have stood the Income Tax and they have stood the Excess Profits Duty, because it has been regarded as a temporary tax, but they will not stand the Corporation Profits Tax. They will clear out of the country altogether. An hon. Gentleman said, "Do not let them go," but you cannot stop them. In many cases their only assets consist of the furniture in their offices, which could be distrained upon, but the value of it is infinitely less than they pay in taxation for a year.
The Chancellor of the Exchequer may be interested to hear that, early in 1914, I was present at a conference, held by a group of companies, at which it was freely discussed whether those companies, which operate abroad, and whose capital is something in the nature of £50,000,000, should not move their registered offices from London to a foreign capital in order to avoid the Income Tax, which their foreign shareholders have to pay. The matter was seriously discussed, and the majority were in favour of it. But the question was shelved for the moment, and then the War broke out and the whole matter went to the wall. This Corporation Profits Tax will reopen the whole matter. One company has already gone. I read in "The Times" the other day the case of a Chilian railway company the chairman of which stated that the Corporation Profits Tax was the last straw. The English shareholders had sold their holding to a foreign corporation. The shares, which were quoted on the Stock Exchange at £11 odd, were bought by this foreign corporation at £20 apiece. So that the British shareholders, who have sold their shares, are, I suppose, pleased, because they have got a very good profit on their bargain. The foreign shareholders are pleased, because they have no longer to pay the Excess Profits Duty or Income Tax, and I suppose the Inland Revenue authorities are pleased, because they have lost a very fat sum. Once foreign shareholders realise that in moving their registered offices from London they can double the value of their shares, the trickle will become a raging torrent, and the Inland Revenue will lose a very large portion of the £33,000,000 they now derive from such companies. Before the Chancellor of the Exchequer asks us to pass this tax, will he tell us how he proposes to deal with this very difficult question? The difficulty has got to be faced. Let us face it now, and do not let us pass this Clause until we have been shown a way out of the difficulty.
I opposed this tax in Committee, and I hope to oppose it again, because it is an unequal tax, and has not been justified upon any principle. Of course, it is a fascinating tax to the Chancellor of the Exchequer, because it is so easy and cheap to collect. For that very reason it is bound to be permanent once it is passed by this House, and it will be increased from five per cent. probably to a very much larger amount as years go on. It is, therefore, worthy of grave consideration as to whether it ought to be imposed or not. I listened with very great interest to the speech of the Chancellor of the Exchequer to see if he could say upon what principle the tax is founded. It is founded on none. No principle was stated. He said he brought it in because limited liability companies had special privileges. The right hon. Baronet the Member for the City of London (Sir F. Banbury) has said that he knows of no privileges. The object of the Limited Liability Companies Act was to enable people, especially small people, to invest small sums they saved in industry with safety. If the right hon. Gentleman calls that a privilege, then limited liability companies have privileges; otherwise they have none. His principle, as he calls it, is merely an excuse, and not a principle at all. That was the only attempt he made to justify this tax. He then went on to say that it was the duty of Members of this House, if they would not agree to the tax, to suggest a substitute, and that he had appealed to business men in this country in vain. The Associated Chambers of Commerce and the Federation of British Industries proposed a flat rate of tax on the profits, but that was not on the profits of limited liability companies only, but a flat rate tax on all people who make profits, and not on a limited class, as this is. The principle upon which I object to this new tax is that it is not equal, because it is placed upon a limited class of people who have invested their money in limited liability companies, and who are people of varying degrees of wealth; and it is not merely upon those who have invested their money in limited liability companies, but only the ordinary shareholders, the debenture and preference shareholders escaping.
The right hon. Gentleman's argument that nobody has suggested an alternative tax to this falls to the ground, because that suggestion was made as an alternative tax to the Excess Profits Duty, which is now to be enforced to the full 60 per cent. I am one of those who believe that the Excess Profits Duty, under the circumstances, is a perfectly fair and proper tax. I have supported it, and shall support it again next year if it comes up, and if the circumstances are the same as now, namely, that commerce is still being carried on under war conditions. But the great objection which is felt to this tax in my constituency, and in Lancashire generally, is that it is a tax which disregards altogether the principle of ability to pay, which is the second great principle, next to equality, which should guide us in putting on a new tax. Take the case of the cotton trade, in which the operatives have invested their money, not merely in loans to the companies, which would not be taxable, but in the shares of the cotton companies. That is the rule in Lancashire, and there are many mills in which the number of shareholders is very considerable indeed. Especially now that we have had the cotton boom, Lancashire operatives have been led to invest their money very largely. Now, under ordinary cricumstances, the Lancashire operative does not pay Income Tax. His income is not sufficient to warrant it. This Corporations Profits Tax is an income tax, and he will have to pay Income Tax, though he is not liable, because the amount of his income is not sufficient to justify the ordinary Income Tax. Moreover, he is put in this awkward position, that he is not allowed any of the ordinary deductions before he becomes liable to Income Tax.
These limited liability cotton companies have a very small capital. Nearly all the money is borrowed money. They carry on their mills and buy machinery almost entirely with borrowed money. Their working capital is almost entirely borrowed money, of course, at small percentages—it used to be 4, 5, or 6 per cent. The operatives themselves lend large sums of money to the cotton mills for the purpose of working capital at weekly call, getting 4½ or 5 per cent., according to the stability of the mill. The share capital being so small relatively to the total amount of capital in these businesses, the tax on the profits will be enormous by reason of this 5 per cent. tax on the ordinary shareholders, and the operatives may find themselves in the awkward position of having to pay as much as 10s. in the £ out of their dividends from the cotton companies. I do not know whether my right hon. Friend has considered the position of the cotton companies in Lancashire and the composition of the shareholders, and how in cases like that great hardship will be done. I know what the feeling in Lancashire will be, and I hope he will take that into consideration.
The tax is levied at 5 per cent. on the profits, with a limit of 10 per cent., or, in other words, 2s. in the £ on the amount available, whether paid in dividends or placed to reserve for the benefit of the ordinary shareholders.
I understood it was on all the profits of the company, and not merely on the amount distributed to the ordinary shareholders.
My hon. Friend, then, has not understood the limitation. That is what I thought when he spoke of 10s. in the £ to ordinary shareholders. It cannot be more than 2s.
I understood it was on the whole profits, and not on the amount distributed to the ordinary shareholders.
I am sorry, but my hon. Friend still misunderstands me. I beg him to read the Bill when he has finished his speech.
That may be considered a very smart retort, but the right hon. Gentleman has sat here during the whole of the Debate, and he has heard it said that the 5 per cent. is levied upon the whole of the profits.
No.
He has also heard it said that it may amount to as much as 8s. in the £, according to calculations. At all events, whether it is 5 per cent. of the profits or 10 per cent. of the profits, it must, of course, be very much more upon the ordinary shareholder if the proportion between the ordinary shares, the debenture shares, the preference shares, and the loan capital is Very large indeed. These are the reasons for which I object to this tax. The hon. and gallant Gentleman opposite (Colonel Wedgwood) told us the result in the end was that it would be paid by the consumer. If so, that would be an argument, not against the tax, but in favour of it from that point of view. From the point of view of the Labour party it would be an objection.
The right hon. Gentleman the Chancellor of the Exchequer in answer to the hon. Member for Mile End (Mr. Preston) and Newcastle-under-Lyme (Colonel Wedgwood) stated that the peculiarity of part of the discussion was that we were so very widely apart upon all political questions and all questions affecting taxation except this one. He could not understand why the two extremes in this House seemed to be supporting this Amendment. There is not so much difference between the position which has been laid down by this side of the House and many of the arguments adduced by the other side of the House which go a very large way in support of the arguments used by my hon. and gallant Friend when he stated that one of the primary reasons in opposing this tax was that it was so easy to transfer it to the shoulders of someone else. A very great deal of the speeches of the hon. Member for Mile End and the right hon. Baronet the Member for the City of London have been devoted to opposition to this particular tax because it is going to affect railway companies. The right hon. Baronet stated that, so far as the railway companies were concerned, it was very difficult indeed to transfer the burden from the shoulders of the shareholders to those who were using the services. When the Chancellor of the Exchequer replied he said that the argument which had been used was a very bad argument. He said that so far as the railway companies were concerned they were a monopoly and therefore it would be far easier to transfer these burdens than in any other case. In this particular instance the Chancellor was less clear in answer to the hon. and gallant Gentleman (Colonel Wedgwood) when he stated that the railways being monopolies it would be easier to transfer the burden from the shoulders of the shareholders to that of the general public. But the Chancellor knows that the railway companies are statutory companies, and cannot transfer their burdens to the shoulders of those using their services. If a railway company was a monopoly like the trade of the licensed victualler the directors might very easily transfer the burden. Being a statutory company the burden cannot be transferred. Therefore that part of the argument of the Chancellor absolutely fails. It was unconvincing generally, and did not in any degree answer the arguments put forward by the hon. Member for Newcastle-under-Lyme.
I do not want to interrupt, but I would just say that the hon. Member has entirely misunderstood my argument. I will not repeat it, but if he will be good enough to look to-morrow at the OFFICIAL REPORT he will see that he is incorrect.
I will do so, and if the Chancellor will also look at the OFFICIAL REPORT, and read it, he will see that I am correct. One of the primary reasons we are supporting this Amendment is that it is so very easy to transfer this burden to the shoulders of someone else. May I respectfully, and in parenthesis, say that I believe the fiscal policy of the illustrious father of the Chancellor of the Exchequer, in its first object, was to cement more closely the colonies and the Mother Country. The second consideration was the raising of revenue. The illustrious father of the right hon. Gentleman never lived to see the realisation of his ambition and of his dream. I only wish to say in passing that the right hon. Gentleman has surpassed his father in raising taxation by the most specious method that has ever been known in this country. This particular tax, along with other taxes, and particularly the Excess Profits Duty, are standing in the way, as has already been stated by the right hon. Gentleman himself in this House, of the acceptance of the principle of the levy upon capital or a levy upon war wealth——
The remarks which the hon. Gentleman wishes to make in parenthesis must not be too lengthy.
I quite agree. I will endeavour to give the second reason, which is this: So far as the party to which I belong is concerned, we believe that this form of taxation, the Excess Profits Duty and the Corporation Profits Duty, are standing in the way of the adoption of a levy upon capital or War wealth, and in this I am only saying what the Chancellor himself stated here in asking support for the Government for the Excess Profits Duty.
Perhaps the hon. Gentleman will direct his remarks to the question before the House. He has not been doing so for some time.
May I say most respectfully that the Chancellor of the Exchequer has asked Members to give him some alternative to this tax?
It does not follow that an hon. Member responding to an invitation of the Chancellor of the Exchequer would be in order.
Then all I can say is that that is a very, very peculiar reason. An Amendment is moved. A Member who wishes to remove a certain form of taxation is not permitted by the Rules of the House to suggest some other method.
The hon. Member is entitled to suggest another method, but this is not the time for it. There is a definite Amendment before the House.
Several hon. Members this afternoon have pointed out that this tax will be passed on to the consumer for years to come. That is doubtful at present. Whether it will in future be passed on or not will be determined by competition amongst the traders. This is the third new tax which has been introduced into the House of Commons during the War. The Excess Profits Duty is to be discarded in the future. The Amusements Tax will undoubtedly play an important factor in the future. This tax which the Chancellor of the Exchequer this afternoon is asking the House to pass, in my judgment violates the fundamental principle which underlies the taxation passed by this House for many years; that is the principle of ability to pay. In the earlier part of our Debate the Income Tax laws were re-arranged so as to give relief to the small income taxpayer. In this proposal the Corporation Profits Duty will fall equally upon all whether rich or poor. In view of the Chancellor of the Exchequer's difficulties and the needs of the situation to-day I shall not oppose him, but I am convinced that public opinion in this country is in favour of the broad principle of placing the burden on the broad shoulders; of adjusting our fiscal methods to that policy. This tax will not stand the test of time. I quite well believe that in the office of every Chancellor of the Exchequer in every country in the world the tax collectors are seeking out new ways of raising revenue. Revenue itself can only be raised in two ways. First, by direct taxation, and secondly, by indirect taxation of articles of luxury. Speaking for myself I should have preferred the Chancellor to have increased the Income Tax rather than instituted this new tax which we are asked to pass this afternoon.
The Chancellor of the Exchequer should, I think, be very well satisfied with the result of this Debate. The hon. Gentleman who has just sat down has said that this tax will not stand the test of time. That may or may not be; but it is not the Excess Profits Duty exactly people object to, or the Corporation Profits Duty. What they want is certainty of taxation: that they may know what the future is likely to bring forth. Postpone this tax for a year and you will have uncertainty. The best way is at once to swallow the pill of this tax, and make preparation for getting rid of the Excess Profits Duty when we have tested during one year at least this new Corporation Profits Duty. I quite well understand hon. Members opposite objecting for reasons which will appear shortly. They object on account of the co-operative societies. [HON. MEMBERS: "No, no!"] But this is a fair tax on every trading community which has limited liability. It is founded upon a fair principle, and I hope the Chancellor will stick to it.
Question put, "That the words proposed to be left out to the word 'that' [Sub-section (1) "Provided that—"], stand part of the Bill."
The House divided: Ayes, 177; Noes, 122.
Division No. 252.] AYES. [6.0 p.m. Agg-Gardner, Sir James Tynte Davison, Sir W. H. (Kensington, S.) Horne, Sir R. S. (Glasgow, Hillhead) Ainsworth, Captain Charles Dawes, James Arthur Hume-Williams, Sir W. Ellis Baird, Sir John Lawrence Dean, Lieut.-Commander P. T. Hunter, General Sir A (Lancaster) Baldwin, Rt. Hon. Stanley Dewhurst, Lieut.-Commander Harry Hunter-Weston, Lieut.-Gen. Sir A. G. Barnett, Major R. W. Doyle, N. Grattan Hurst, Lieut.-Colonel Gerald B. Barnston, Major Harry Duncannon, Viscount Illingworth, Rt. Hon. A. H. Barrand, A. R. Du Pre, Colonel William Baring Jameson, J. Gordon Barton, Sir William (Oldham) Edwards, Major J. (Aberavon) Jodrell, Neville Paul Beauchamp, Sir Edward Entwistle, Major C. F. Jones, Sir Edgar R. (Merthyr Tydvil) Beckett, Hon. Gervase Eyres-Monsell, Commander B. M. Jones, Henry Haydn (Merioneth) Bellairs, Commander Carlyon W. Falcon, Captain Michael Jones, J. T. (Carmarthen, Llanelly) Benn, Capt. Sir I. H., Bart. (Gr'nw'h) Falle, Major Sir Bertram G. Kellaway, Rt. Hon. Fredk. George Betterton, Henry B. Farquharson, Major A. C. King, Commander Henry Douglas Blades, Capt. Sir George Rowland Fisher, Rt. Hon. Herbert A. L. Kinloch-Cooke, Sir Clement Blair, Reginald Flannery, Sir James Fortescue Knight, Major E. A. (Kidderminster) Blake, Sir Francis Douglas Foreman, Henry Law, Rt. Hon. A. B. (Glasgow, C.) Borwick, Major G. O. Forestier-Walker, L. Lewis, Rt. Hon. J. H. (Univ., Wales) Bowyer, Captain G. E. W. Forrest, Walter Lewis, T. A. (Glam., Pontypridd) Breese, Major Charles E. Fraser, Major Sir Keith Lloyd-Greame, Major Sir P. Briggs, Harold Gardiner, James Lonsdale, James Rolston Brown, Captain D. C. Gardner, Ernest Lorden, John William Buchanan, Lieut.-Colonel A. L. H. Gibbs, Colonel George Abraham M'Donald, Dr. Bouverie F. P. Burn, Col. C. R. (Devon, Torquay) Gilbert, James Daniel Macdonald, Rt. Hon. John Murray Carew, Charles Robert S. Glyn, Major Ralph Mackinder, Sir H. J. (Camlachie) Cautley, Henry S. Goulding, Rt. Hon. Sir Edward A. Macmaster, Donald Cecil, Rt. Hon. Lord H. (Ox. Univ.) Grant, James A. Macnamara, Rt. Hon. Dr. T. J. Cecil, Rt. Hon. Lord R. (Hitchin) Green, Joseph F. (Leicester, W.) McNeill, Ronald (Kent, Canterbury) Chamberlain, Rt. Hn. J. A. (Birm., W.) Greene, Lt.-Col. Sir W. (Hack'y, N.) Macpherson, Rt. Hon. James I. Chamberlain, N. (Birm., Ladywood) Greig, Colonel James William Maddocks, Henry Coates, Major Sir Edward F. Hanna, George Boyle Magnus, Sir Philip Cohen, Major J. Brunei Harris, Sir Henry Percy Malone, Major P. B. (Tottenham, S.J Coote, Colin Reith (Isle of Ely) Haslam, Lewis Marks, Sir George Croydon Courthope, Major George L. Henry, Denis S. (Londonderry, S.) Meysey-Thompson, Lieut.-Col. E. C. Craig, Captain C. C. (Antrim, South) Hewart, Rt. Hon. Sir Gordon Middlebrook, Sir William Craik, Rt. Hon. Sir Henry Hills, Major John Waller Mildmay, Colonel Rt. Hon. F. B. Curzon, Commander Viscount Hoare, Lieut-Colonel Sir S. J. G. Mond, Rt. Hon. Sir Alfred M. Dalziel, Sir D. (Lambeth, Brixton) Holmes, J. Stanley Moreing, Captain Algernon H. Dalziel, Rt. Hon. Sir J. H. (Kirk'dy) Hope, James F. (Sheffield, Central) Morrison, Hugh Davidson, Major-General Sir J. H. Hope, J. D. (Berwick & Haddington) Murray, Dr. D. (Inverness & Ross) Davies, Major D. (Montgomery) Hopkinson, A. (Lancaster, Mossley) Newman, Colonel J. R. P. (Finchley) Davies, Thomas (Cirencester) Home, Edgar (Surrey, Guildford) Nicholl, Commander Sir Edward Norton-Griffiths, Lieut.-Col. Sir John Samuel, A. M. (Surrey, Farnham) Tryon, Major George Clement O'Neill, Major Hon. Robert W. H. Sanders, Colonel Sir Robert A. Ward-Jackson, Major C. L. Palmer, Brigadier-General G. L. Scott, Leslie (Liverpool Exchange) Ward, Col. L. (Kingston-upon-Hull) Parkinson, Albert L. (Blackpool) Seager, Sir William Watson, Captain John Bertrand Perkins, Walter Frank Seddon, J. A. Wheler, Lieut.-Colonel C. H. Pollock, Sir Ernest M. Seely, Major-General Rt. Hon. John White, Lieut.-Col. G. D. (Southport) Pownall, Lieut.-Colonel Assheton Shortt, Rt. Hon. E. (N'castle-on-T.) Wild, Sir Ernest Edward Prescott, Major W. H. Smith, Harold (Warrington) Williams, Lieut.-Com. C. (Tavistock) Pulley, Charles Thornton Stanley, Major Hon. G. (Preston) Wills, Lieut.-Colonel Sir Gilbert Purchase, H. G. Starkey, Captain John R. Wilson, Daniel M. (Down, West) Raeburn, Sir William H. Stephenson, Colonel H. K. Wilson, Colonel Leslie O. (Reading) Ratcliffe, Henry Butler Stewart, Gershom Wood, Sir J. (Stalybridge & Hyde) Raw, Lieutenant-Colonel N. Strauss, Edward Anthony Woolcock, William James U. Rees, Sir J. D. (Nottingham, East) Sturrock, J. Leng Yate, Colonel Charles Edward Richardson, sir Albion (Camberwell) Sykes, Colonel Sir A. J. (Knutsford) Yeo, Sir Alfred William Roberts, Sir S. (Sheffield, Ecclesall) Talbot, G. A. (Hemel Hempstead) Young, Lieut.-Com. E. H. (Norwich) Robinson, S. (Brecon and Radnor) Thomson, E. C. (Aberdeen, South) Rodger, A. K. Thomson, Sir W. Mitchell- (Maryhill) TELLERS FOR THE AYES .—.— Roundell, Colonel R. F. Tickler, Thomas George Lord E. Talbot and Mr. Dudley Ward.
NOES. Adair, Rear-Admiral Thomas B. S. Grundy, T. W. Remnant, Sir James Atkey, A. R. Guest, J. (York, W. R., Hemsworth) Rendall, Athelstan Bagley, Captain E. Ashton Hall, F. (York, W.R., Normanton) Richardson, Alexander (Gravesend) Balfour, George (Hampstead) Hallas, Eldred Richardson, R. (Houghton-le-Spring) Barnes, Major H. (Newcastle, E.) Hambro, Captain Angus Valdemar Rose, Frank H. Benn, Captain Wedgwood (Leith) Henderson, Major V. L. (Tradeston) Royce, William Stapleton Bennett, Thomas Jewell Hirst, G. H. Rutherford, Sir W. W. (Edge Hill) Bigland, Alfred Hodge, Rt. Hon. John Scott, A. M. (Glasgow, Bridgeton) Bird, Sir A. (Wolverhampton, West) Hogge, James Myles Sexton, James Bowerman, Rt. Hon. Charles W. Hood, Joseph Shaw, William T. (Forfar) Brace, Rt. Hon. William Hopkins, John W. W. Short, Alfred (Wednesbury) Bramsdon, Sir Thomas Irving, Dan Sitch, Charles H. Briant, Frank James, Lieut.-Colonel Hon. Cuthbert Smith, W. R. (Wellingborough) Bromfield, William Johnstone, Joseph Smithers, Sir Alfred W. Brown, James (Ayr and Bute) Kelley, Major Fred (Rotherham) Spencer, George A. Cairns, John Kenworthy, Lieut.-Commander J. M. Spoor, B. G. Campbell, J. D. G. Kenyon, Barnet Sprot, Colonel Sir Alexander Cape, Thomas Lane-Fox, G. R. Swan, J. E. Carter, W. (Nottingham, Mansfield) Lawson, John J. Thomas, Rt. Hon. James H. (Derby) Casey, T. w. Lister, Sir R. Ashton Thomson, T. (Middlesbrough, West) Cecil, Rt. Hon. Evelyn (Birm., Aston) Lloyd, George Butler Thorne, G. R. (Wolverhampton, E.) Child, Brigadier-General Sir Hill Lunn, William Tillett, Benjamin Clough, Robert Lyle-Samuel, Alexander Tootill, Robert Clynes, Rt. Hon. J. R. Maclean, Neil (Glasgow, Govan) Waddington, R. Coats, Sir Stuart Mallalieu, F. w. Walsh, Stephen (Lancaster, Ince) Colvin, Brig.-General Richard Beale Marriott, John Arthur Ransome Walton, J. (York, W. R., Don Valley) Davies, A. (Lancaster, Clitheroe) Morgan, Major D. Watts Ward, Col. J. (Stoke-upon-Trent) Denniss, Edmund R. B. (Oldham) Mount, William Arthur Waterson, A. E. Edwards, C. (Monmouth, Bedwellty) Myers, Thomas White, Charles F. (Derby, Western) Edwards, John H. (Glam., Neath) Nail, Major Joseph Wignall, James Fell, Sir Arthur Newbould, Alfred Ernest Wilkie, Alexander FitzRoy, Captain Hon. E. A. Newman, Sir R. H. S. D. L. (Exeter) Wilson, Capt. A. S. (Holderness) Foxcroft, Captain Charles Talbot Norris, Colonel Sir Henry G. Wilson, W. Tyson (Westhoughton) Galbraith, Samuel Palmer, Charles Frederick (Wrekin) Wintringham, T. Gould, James C. Parkinson, John Allen (Wigan) Wood, Hon. Edward F. L. (Ripon) Graham, D. M. (Lanark, Hamilton) Pearce, Sir William Wood, Major M. M. (Aberdeen, C.) Graham, R. (Nelson and Colne) Pennefather, De Fonblanque Young, Robert (Lancaster, Newton) Graham, W. (Edinburgh, Central) Perring, William George Young, W. (Perth & Kinross, Perth) Greer, Harry Preston, W. R. Gretton, Colonel John Rae, H. Norman TELLERS FOR THE NOES .—.— Griffiths, T. (Monmouth, Pontypool) Raffan, Peter Wilson Sir F. Banbury and Colonel Wedgwood. Gritten, W. G. Howard Remer, J. R.
6.0 P.M.
I beg to move, in Sub…section (1), after the word "that" ["Provided that—"], to insert to the discussion, I think there is ample justification for introducing this proposal. It will be observed that the Amendment strictly confines the exemption to the mutual trading of the members, of a society registered under the Industrial and Provident Societies Acts. I do not wish to hark back to the illustrations which I gave during the Committee stage in order to convince the House, not of the difference in degree, but in kind, that must exist between a co-operative society on the one hand, and a company on the other. I am going to assume that it was conclusively established that the one was the contrary of the other, and that a co-operative society was a spending organisation, while a company was an earning organisation. I am encouraged to take that view by the fact that the Chancellor himself seems to have endorsed it.
The right hon. Gentleman is in agreement with me to this extent, that in so far as the trading of a co-operative society is confined to its own members, it cannot be characterised as a profit-making society, and the result represents the economy effected in expenditure. I agree that the Chancellor of the Exchequer would be warranted in imposing a Corporation Tax on any profits derived by a co-operative society upon outside trading. If a co-operative society, under the shelter of the Industrial and Provident Societies Acts, goes into the outside trading world and competes with the ordinary trader for the custom of the public, it is obvious that that society is not a mere spending organisation, but takes upon itself the character of an earning organisation, and in so far as it is an earning organisation, it must bear precisely the same taxation as the private trader. I think all who are in company with me at this time will agree that so far as outside trading is concerned, the co-operative society ought to pay not only the Corporation Tax, but every other kind of Income Tax. My Amendment is entirely confined to the internal trading of co-operative societies. It is confined to the trading which a co-operative society at its origin was intended to have, and that trading represents simply the effort, and often a very successful effort, on the part of the members to achieve economy in expenditure, just as their wealthier neighbours may achieve this. They employ a group to do the purchase and distribution, and in this way they are able to secure the economies which a wealthy man may obtain for himself.
I want to distinguish between a society carrying on that work consisting of the wealthier members of the community. You may have such a society. You can have a trading society with a wealthy clientèle. So far as the co-operative society is concerned, it has not a wealthy clientèle, and it consists of the poorer members of the community. If these poorer members agree to impose upon themselves the methods they do and, instead of buying goods at the cheaper rate at which they might buy them, seeing that they are purchased through the group, are willing to pay fuller prices, and take back the surplus in the shape of a so-called dividend at the end of the quarter, that is a matter with which the Treasury has no concern. The Army and Navy Stores would do the same thing as the co-operative society, but inasmuch as they have a wealthier membership who do not seek a return in the shape of a cash dividend they fix prices at rock-bottom and thereby obtain just the same advantage as the poorer members of the co-operative societies, with this difference, that the more wealthy society can operate its functions in such a way that it will never have a surplus to which the Corporation Tax will apply, while, on the other hand, the co-operative society, having resorted to the device I have mentioned and obtained a small surplus for the convenience of its own members, finds that surplus taxed, although to all intents and purposes, and from a fiscal point of view, it must be regarded as identical with what might have been the surplus of the wealthier organisation. That being so, the Treasury has no right to treat that surplus as a profit and to seek to impose a tax upon it.
In some mysterious way—perhaps the right hon. Gentleman will pardon what may be my density—he has, discovered a difference in the character of the tail end of the surplus, inasmuch as he exempts from the tax the principal part which is paid away as dividend. While I entirely sympathise with his difficulties in these days, and would be the last to ask exemption for any particular individual or any particular body of individuals, still I am entitled to ask the Chancellor of the Exchequer to explain to the House why he seeks to differentiate in this way. I know he argued in the Committee stage that this Corporation Tax was occasioned by the fact that certain corporations had limited liability, and the nature of the tax with regard to earning companies was on a profit basis. It has seemed to mo throughout this controversy that the Chancellor of the Exchequer, with rare dialectical skill, has steadily confused the occasion for the Corporation Tax with the basis of it. I am not complain- ing about the occasion for it, but I object to what the right hon. Gentleman wants to do in regard to the basis of it. He takes one basis for a company earning profit and another and entirely alien basis for the co-operative society.
An hon. and gallant Member who spoke from the Benches opposite on the previous Resolution very properly pointed out that one obvious defect in the Corporation Tax, as a tax, was that it could be operated as a kind of indirect taxation on the consumer. I entirely agree. A company which is earning profit and which knows it has this tax to provide for out of profit will try every device, as it is entitled to do, to pass the tax on to the consumer. Observe how this operates against the co-operative society which confines its operations to inter se trade. That society, as a purchasing group, takes over its goods from some profit-earning organisation, and as a result will bear the tax passed on. Its members have to earn their money and on those earnings they have paid Income Tax. Now that the Chancellor of the Exchequer, forgetting for the moment all that is good in the old-time sense of equity, proposes to put a third tax upon these people, what he is doing is to put a triple Income Tax on workers who are members of cooperative societies. I think the House is entitled to press him for his reasons for so doing. The right hon. Gentleman used this other argument, that this surplus is not profit of the co-operative society, but that the balance of the surplus is the nearest analogy he can get to the profit earned by a trading company. As I understand the Chancellor of the Exchequer when he first introduced this Corporation Tax, he sought to justify it before this House on the ground that the Corporation was equivalent to the Super tax on the individual. There is no doubt a great deal to be said for that standpoint. There is an analogy between the Super-tax and the Corporation Tax imposed on a company earning profit, but there can be no analogy between contraries such as a spending society and an earning company are. On the contrary, the mere fact that these two classes of society are the exact opposite one to the other postulates this, that to seek to impose on the one the tax which is borne by the other is a most obvious injustice. If profit-earning is the basis in the one case, surely economy effected by spending can never be the basis in the other.
I only want to add this, that it is a great mistake for Members of the House who have not followed the co-operative movement closely to believe either that the co-operative society has any special privileges or exemptions in the way of taxation, or that they have not discovered a great source of revenue for the State. These are both misapprehensions very common in the public mind. I am sure no Member has any desire to do otherwise than to give absolute justice to the co-operative societies, and this misapprehension arises entirely from lack of information as to the co-operative movement on the part of many hon. Members. Why do I say that the co-operative society enjoys no exemption in regard to taxation? I have sought to the best of my ability to establish this: that it is an utter abuse of the English language to talk about the surplus of a purely cooperative society as a profit, and, that being so, it having no profit, it is not liable to Income Tax. The original Industrial and Provident Societies Act exhausted the possibilities of the taxation of such societies. Mr. Disraeli took the land which was the property of the society as representing the platform upon which the society conducted its operations. The platform itself was subject to-taxation, but the operations on the platform, inasmuch as they never gave a result in profit, but simply in an artificially devised surplus, could never be taxed. The same explanation holds good here now with regard to the Corporation Tax.
I submit, with a confidence which I am sure will be shared by every man in this House who has any acquaintance with the co-operative movement, that economies effected through the devices of spending through co-operative societies have resulted in a very large revenue for the State. Look at the national balance sheet as a whole. One should not for this purpose make a sort of squint-eyed observation, but should remember there are two sides to the balance sheet, and then it will be found that throughout the country you have a wealth of private ownership which you would never have had, had it not been for the economies of the co-operative societies, and from all this taxation is received. Again, you have a wealth of investments, also taxed, which would never have existed but for the economies effected by the co-operative plan. Therefore I ask the House to agree with me that these societies receive no special exemption, while they do produce much new revenue. I also assert there never was a time when it was more necessary to encourage such thrifty organisations. It is nonsense for hon. Members to be sent out into the country by the Whips to talk economy on public platforms, and then when it comes to actual business here to show no sense of economy. Yet that is what we shall be doing if we put a premium on extravagance and a penalty on thrift. That is what the Chancellor of the Exchequer proposes by this tax. In the last Debate I referred to the fact that the right hon. Gentleman had very properly abandoned the idea of imposing a levy on capital. Inasmuch as this surplus is not a profit, by proposing to impose the Corporation Tax upon it the Chancellor of the Exchequer is making a levy on capital in its most odious form. It is not a levy on capital in the true sense; it is a levy on the capital represented by economy of people who must practise economy. Under those circumstances, I cannot understand any hon. Member who is opposed to a levy on capital supporting the Chancellor of the Exchequer in this particular instance.
I desire to support the Amendment, and I do so with the utmost confidence, for I feel sure that on reflection the Chancellor of the Exchequer will realise, as people who have studied this question already realise, the great importance of encouraging thrift at the present time. Possibly in Scotland co-operative societies are running on lines which are more easily understood than in other parts of the country, and certain it is that in Scotland there is a distinct feeling that if a penalty is going to be imposed on the legitimate trading of cooperative societies—trading with their own members—it is not only most unfair but rather hypocritical. Those who are acquainted with the large industrial districts of Scotland realise that the Scotsman has an instinct to save money and spend it wisely. In these times of increased leisure for the workers and in- creased expenditure on education and everything else, anything that can be done to encourage thrift, surely, ought to be done. Furtherfore, the very idea of a co-operative society seems to be but little understood. It seems to be forgotten that the word "society" means a band of people who join or club together for the mutual benefit of each other, while the word "company" means a band of other people who deliberately set out to get whatever profits they can by squeezing the outside community. If we are sincere in our desire to reduce the cost of living—and, after all, that is, perhaps, the most important thing we can aim at—surely it is important to encourage purchasing on such terms that people will have the necessaries of life without having to pay unnecessary money for them. Hon. Members from Glasgow will correct me if I am wrong in what I am about to say, but, when I heard first about the matter, I made inquiries, and I believe what I say to be the fact. There was a proposal by the master bakers of Glasgow to raise the price of the quartern loaf. They felt that they were entitled to a higher price. The cooperative baking society in Glasgow said that they would have nothing to do with such a proposal, and that it was quite possible to make a working profit without increasing the price of the loaf. The result was that the master bakers of Glasgow were unable to carry their scheme through, and bread continued to be sold to the people at a lower price than would otherwise have been charged had the co-operative society not stood in the way of the proposed victimisation.
A great deal has been said in this House about the private trader, and I am sure that none of us who support this Amendment have any wish to run counter to his legitimate gains. At the same time, the private trader now is to a very large extent merely an agent of a large trust or combination or trade. I wish there were more private traders exercising their own initiative and ability in assisting producers of food in the areas in which they reside. It is of the utmost importance to remember that, if there is going to be a rate-cutting war between the large cooperative societies and private traders, there is little doubt that the economies that can be effected by the larger organisations will drive the private trader out of business. That would be most unfortu- nate, because the great advantage of private trading is that the individuals who run the business are actually acquainted with the persons with whom they trade. They can obtain for those persons what they require, they understand the local conditions, and, if they are wide awake people, they look ahead and prepare in time to meet the demand when it occurs. Co-operative societies have two great dangers to face. One is that they may, by purchasing in large bulk, purchase goods that are not of the first grade, although it is their endeavour always to do so. Secondly, they are rather in the hands of their local managers, who may or may not be able to judge what are the requirements of the locality. It is certain that, if you put an increased burden on the working of co-operative societies, not only will you restrict them in assisting their members towards thrift by paying out, half-yearly or quarterly, a large sum which is used to pay the rent, but you will encourage them to cut down the price at which articles are sold, in order that they may not carry the large reserves, or so-called profits, on which this tax is to be imposed. If they adopt that system it will result in great damage to private traders throughout the country. I would, therefore, implore the Chancellor of the Exchequer, if he will not relent on this occasion, at any rate to give a pledge on behalf of the Government that, if cooperative societies will trade legitimately and properly, and at no time step outside the bounds of the law which governs them, he will consent to have the whole matter looked into and readjusted. It is obviously ridiculous to suppose that the Royal Commission on Income Tax had any real knowledge of, or, indeed, any opportunity of studying, the co-operative movement from its inception. On these grounds I would ask the right hon. Gentleman if he would consider the advisability of postponing the imposition of this tax on co-operative societies pending a thorough investigation of the whole cooperative movement.
The House has again listened to a very lucid explanation by my hon. Friend the Member for Linlithgow (Mr. Kidd), and again I would state, on behalf of the co-operative movement, that we express to him our sincere thanks for the manner in which he has introduced this subject by his Amendment. Many observations have been made in the course of the discussion upon the Corporation Profits Tax. Hon Members have termed it an unjust Income Tax; many have said that it was unequal and unfair in its incidence; and one hon. Member said that it causes unrest. I venture to predict that this Corporation Profits Tax, as it is proposed to apply it to the co-operative movement, is causing, at any rate, a large amount of concern in the country, and people are anxiously wondering what the final issue of this Budget will be. I venture to state that an honest attempt has been made by the co-operative movement to keep down the prices of foodstuffs in the country, and to give, at any rate, a fair return for expenditure. When a section of the community has made such an attempt, and when an attempt is made to impose unjust taxation by various methods, and then, again, to penalise them by a tax of this description, I venture to suggest that it is causing a righteous concern in the minds of practically 4,250,000 of consumers in this country. I believe that this is the fourth, if not the fifth, time we have discussed this subject, and it is difficult for hon. Members to find any new arguments upon it. I hope, however, not to reiterate many of the arguments that one had to express in previous speeches. I do state definitely and clearly that we, as co-operators, believe that this is striking a blow against the very principle of mutuality on which our movement is based and for which it stands to-day, and I feel that it would be unwise for me to let this opportunity pass without reiterating that statement The hon. Member for Linlithgow said he was afraid that, while many hon. Members were not altogether opposed to the co-operative movement, there seemed to be a lack of understanding of it. This question of internal trading is, I admit, to those who do not understand it, rather difficult at first sight. A batch of consumers get together, and set up a small establishment, where they can get two or three commodities. They enlarge, and then they set up a manufactory and pro duce their own goods. Many societies, again, join together and set up wholesale establishments. It was suggested, in the Debate on the last occasion, that wholesale societies should be liable to this tax. I will take the words of the Chancellor of the Exchequer. In the course of his statement he said that the societies are liable to Income Tax in various forms, and then he went on to say: is that this tax will be applied to the vast amount of money which is given by members to various charitable organisations. In the case of a society in which I am particularly interested, the members met together during this last week, and, out of the surplus provided, they, by a unanimous decision, gladly gave £250 to a local hospital which was in extreme need, and which had been making many applications and advertising in order to get the necessary assistance. co-operators are charitable individuals, and, when they get a surplus from their mutual trading, they are prepared to give a proportion of that amount to the charitable institutions in their locality. In this particular place £250 was given only last week. It would be unfair to tax an amount of that character. I am given to understand that gifts to charitable institutions do not come within the scope of the American Corporation Tax.
I have another case before my mind, which is a case of co-partnership firms which are in close working arrangement with the co-operative movement. Here is a society which employs 1,000 men and women. They are paid quarterly a bonus on wages recognised as the participation of labour in a share of the profits, the bonus being calculated at an equivalent sum per £ to the dividend paid to members from the surplus of the society. The recommendation of the Commission proposed to tax all surplus not paid as dividend to the members; hence the employés' bonus, which is just their due, will be liable to be taxed. As there are many productive societies in this country they naturally feel grave concern with reference to their business. To me at any rate nothing can be more unfair. The right hon. Gentleman will admit that during the War there was no more loyal section of British citizens than those who compose the co-operative community. Instances could be mentioned whereby the co-operative movement was called on, and they gladly gave all they had at their disposal. They were able to give the Government their only reliable costing basis in any line the Government handled. No one can say how many millions were saved to the consumers of the country by the practical experience of the men in the co-operative movement. In fact, one Government Report, dealing with the question of profiteering, said the very fact that the co-operative movement was so well established in the industry which the Committee was investigating was sufficient proof that the consumers were well protected. Again, the basis of British Income Tax is taxation of the individual, and to treat a co-operative society as a legal entity is a departure that is unjust and foreign to British methods. In limited liability and many other companies you frequently find that the £ shares are worth a great deal more, but in co-operative societies they never run more than 20s. a £, and bonus shares are never issued, and on all members there is a legal responsibility to pay Income Tax on their investments, which many hon. Members seem to think they do not pay.
I hope the right hon. Gentleman will make some concession. Let us make no mistake about it. If this tax is applied it will mean that these people will pay thrice. They will pay as owners, they will pay through their retail society, they will then pay through their wholesale society, and through the productive societies, and there is no section in the community which would take sitting down a tax of that character. It is a remarkable thing that you are going to penalise the poorer section of the community, of which the cooperative section is composed, because of their thrift, by a system of double taxation. We view the position with grave concern, and it seems to me, as to many of my fellow men, that as far as the co-operative movement is concerned nothing is safe if this tax is brought into operation. The principle of mutuality is to go for ever. Our organisation will be unsafe. Far be it from me to make any personal allegation against the right hon. Gentleman that he wishes the downfall of the co-operative movement, but as sure as the night follows the day you are opening up an avenue in the application of this tax that all Chancellors of the Exchequer will follow. We shall never know where it will end. They will tread along that avenue, and it will make effective progress into the principle of the great co-operative movement. Rumours are very current. We frequently hear what is going to be done in the House before we get here. It is a remarkable thing how we get to know this information. I am told, though I cannot vouch for it, that a suggestion is going to be put forward on the basis of a registration fee. I have not the least authority to accept such a principle, neither do I say the cooperative movement will accept it. This is a matter of grave concern to us, and we require constant and immediate consideration before any commitment can be made; but I am convinced in my own mind that it would not be accepted. We are only the mouthpieces of a great movement, and before we could commit the movement, it would have to go before the rank and file for final consideration. I appeal to the right hon. Gentleman not to depart from the line of procedure which all previous Chancellors have followed, but still to give the right to the co-operative movement to have that basis upon the principle of mutuality which has been hitherto our enjoyed privilege.
I have listened with great interest to the speeches which have been made. The method of presenting their case and the brevity with which it was presented were models of their kind. I have only one criticism to make of the speech of the Mover. He observed that I had not answered his argument. I observe that when an hon. Member gets an answer which he does not accept his common form of retort is that he has not been answered. I will try again to meet my hon. Friend, but I can assure him if my answer does not seem to him to reply justly to the case which has been made for the Amendment it is not because I wish to shirk that case. On the contrary I want to meet it and get the issue fairly before the House. Anyone listening to the speech of the hon. Member (Mr. Waterson) will see that in the opposition to the particular proposal which is before the House there is a great deal which has nothing to do with the proposal. The hon. Member is obviously afraid of the admission which he thinks would be made by the adoption of the present proposal upon the position of co-operative societies in regard to Income Tax, and I think my hon. Friend showed something of the same apprehension. At any rate, he challenges me to draw a distinction between the different parts of the surplus-which will justify the taxation of one and would not equally justify the taxation of the rest. I tried the other day to remove that apprehension. I went out of my way, indeed, probably rashly, to express at this stage, when we are not dealing with Income Tax, my general view as regards the applicability of Income Tax to the so-called profits of co-operative societies. I stated that on that matter I found myself differing from the majority of the Royal Commission, who recommended the inclusion of a part of the profit, and agreeing with the minority, who were unable to accept that recommendation. It is not therefore because I think on the analogy of the Income Tax these are profits chargeable to taxation that I suggest the proposal that is made to-day.
Let us remember what the Corporation Profits Tax is. The hon. Member (Mr. Waterson) said in this country we tax individuals, and that a tax on any corporate body as an entity was a thing unknown to the law. He is, of course, quite mistaken. You sometimes tax an individual and you sometimes tax a corporate body as such, and indeed the reason why this is called a Corporation Profits Tax and not a Corporation Tax is because there is already a Corporation tax in existence. What are we taxing? We are taxing certain corporate bodies. There are various reasons for taxing them which may combine to justify the tax, but the one which is pertinent to this Amendment is that we tax them in respect of their enjoyment of the privilege of limited liability in trading. That is a privilege shared by the cooperative society. When you have a tax you must assess it on something. You must find a basis by which you measure the liability. In the ordinary trading corporation with a limited liability, the profits are a measure by which you may adjust the burden as between one and another. In the case of the cooperative society there are, in my opinion, within the terms of the Income Tax Acts, no profits. At least the profits are very narrow. I should not be right in saying there are none, because it is admitted that there are some, but they are very narrow and would not form a basis for assessment. I choose the method taken in the Bill, because it seems to me on the whole the fairest measure by which you can assess the liability of a co-operative society, not the same measure as that applied to an ordinary trading corporation, but the one which is most analogous to it. The hon. Member says, "Why do you distinguish between that portion of the so-called profit which is returned to a member in the shape of a discount, and that part which is put to reserve or applied to the general purposes of the society?" I do not want to press the distinction too far, but surely that part of the surplus which is reurned to the individual as a discount on his purchase, which might be returned to him at the moment, but which is in fact returned to him at the end of the quarterly or half-yearly period, is distinguishable from that part of the surplus which it not allocated to the individual shareholder, but is made the corporate property of the whole body? If my hon. Friend cannot see that distinction, or thinks it imaginary, I cannot help it.
7.0 P.M.
I have put concisely, and I hope clearly, my general reasons for the particular course which I have chosen. Now I want to ask those who take a different view what is exactly their ground? Is it their ground that the operations of co-operative societies should be free from all tax, or is it only to the form of this particular tax that they take exception? I do not think the co-operative movement contends that they ought to be exempted from all taxes. I do not think they would be wise to make that claim in their own interests. They are, of necessity, in keen competition with a great number of small traders scattered up and down the country who feel heavily the burden of the taxation which they are called upon to bear in the present national necessity, and the co-operative movement will really accumulate against itself a mass of indignation if it says to the country that it is not willing to take its fair share of whatever burdens other people have to bear. I say that is not the view taken, as far as I can gather, by co-operators themselves. I think I am justified in saying that.
I must quote once again a well-known paragraph in the reservation—the paragraph that was signed by Mr. Bowerman, Mr. Brace, Sir Edward Nott-Bower, Mr. Warren Fisher, Mr. Henry May, Sir William Graham and Professor Pigon. I do not fix upon any of the signatories approval of the proposal I am now making. Mr. May said he did not mean it. I said I accepted his word. I quote it only to show that they are not enemies against every taxation and all taxation of co-operative societies. They say:
I am actuated by no hostility to the movement. I grant every one of the advantages claimed, and rightly claimed, for the individuals who take part in the movement, and for the country in consequence. But the effect of the movement is to withdraw from taxation a great field of revenue which formerly contributed a large share. It withdraws from the field of taxation — perfectly legitimately, because Parliament does not tax business transacted in that form—a great deal of business which formerly contributed a share to the Revenue. It thereby casts a heavier burden on those who do have to contribute. The greater the success of the movement the more intolerable that position becomes for everybody else, the more impossible it becomes for the Revenue authorities, and the more certain it becomes that in some form or another the co-operative societies must contribute their share to the common necessities of the State. I am asking for very little. It may be said that it is not worth while trying to collect so small a sum. Nor would it by by itself. It is worth while collecting in connection with the larger collection which is made elsewhere. I am asking for a sum which is estimated to produce about £180,000.
My hon. and gallant Friend (Major Glyn) spoke of this as if I was dealing a serious blow to the movement. I think my hon. Friend the Mover spoke in the same sense. He talked about discouraging economy—about discouraging the co-operative societies. Is the language proportionate to the crime? I have got no exact figures, but I think the turnover of the co-operative societies must exceed £100,000,000. [An HON. MEMBER: "£240,000,000!"] See how I state the case against myself at every point. I was taking it at something in excess of £100,000,000. The tax on that would amount to something less than 2 per cent.—to something less than one-fifth of one per cent. If it is £200,000,000, then it is something less than one-tenth of one per cent. Is that a discouragement of economy? Is that a fatal blow to the co-operative movement? Surely that proves what I said at the opening, that there is no injustice done to co-operative societies. It is not the burden of this tax upon these great and powerful associations which is the trouble. It is the fear of some ulterior movement, the fear of action by other Chancellors of the Exchequer, which is really at the heart of the agitation.
I have only one other observation to make. The hon. Gentleman (Mr. Waterson), who spoke with some authority, as I understood, for the co-operative societies, said that in this Debate alternative suggestions might be made that he must remind me that nobody had authority to make them. An alternative suggestion has been made to me from more than one source by gentlemen who do not profess to have authority to speak on behalf of the movement, but who I am sure the hon. Gentleman would recognise as unquestioned friends of the movement, if I were free to give their names. I do not feel myself free to give them. I have not asked their permission, and I am not going to mention them. The proposal made was that in place of this tax, the reactions of which are so much dreaded in their effect on future discussions on income or on some other proposals which are not before us, we should levy a small percentage tax on the share capital of the co-operative society. It is quite obvious that I could not put down an entirely novel proposal of that kind at this stage of our proceedings. I should require a new resolution, and it would mean a delay which I cannot contemplate. All I want to say is that, so far, the co-operative societies have not been willing officially to make any suggestion to me. If they will be good enough to consider what I have said, and if they then feel that whilst this particular tax in itself is obnoxious, but that they are willing to suggest a reasonable contribution—I do not say necessarily precisely in this form, but in another form—I would certainly give any such suggestion which comes to me with their authority my most friendly consideration, and I believe the whole House of Commons would be glad to do the same. But for the moment I put it to the House that to exempt the cooperative societies from this tax, and to put nothing in its place would be to put these societies in a privileged and therefore in an invidious position. Their very success and growth, by withdrawing so much business from the field covered by our existing taxes, makes it unavoidable that by this tax, if not by some other, they should give some financial assistance to the needs of the country. I hope that after the explanation I have given and the offer I have made to consider in a friendly spirit any suggestions which they may be pleased to bring before me, it will at least be recognised that I am trying to deal fairly with the matter, and that those who may support me in the Lobby are not to be branded up and down the country as enemies of the co-operative movement, nor is it to be pretended that this light burden, whether they like this particular form or not, can have the slightest adverse effect upon their great and beneficent activities.
I thank my right hon. friend for the tone and attitude he has adopted in his ingenious and powerful speech with regard to a really difficult problem connected with the business of taxing co-operative societies. I hope that the hint which he threw out at the end of his speech may lead to a closer rapprochement than is now the case between the Exchequer and the representatives of those societies; but I am sure the House will not be surprised if a hint like that, which may be of very great importance in the future, can scarcely be taken by many of us as an adequate reason for desisting from our opposition; to this specific tax at this particular moment. The very fact that the reactions of this tax are recognised as being so grave, and that the Chancellor of the Exchequer has been compelled to defend it in one particular as being of such minute proportions—everyone knows that things which begin very little have a habit of growth, and that when evinced in taxation they have a very serious aspect —may well understand that the objections felt to this tax on the ground that it is really Income Tax in another form have not and cannot be removed even by my light hon. Friend's powerful dialectics. It would ill become me, who is neither a Minister nor a Scotsman, to intervene in the dispute as to what is the exact difference between the kind of money not distributed at once but which may be distributed some other time and that which the shareholder gets back rapidly; but as I listened to the reply of the Chancellor of the Exchequer I was reminded of the well-known warning where persons in a very different place from this
"found no end, in wand'ring mazes lost."
All the arguments for and against this differentiation are so subtle and are so easily contested that it is a very unsafe basis on which to rest this special enactment which is now sought to be placed on the Statute Book. If those who follow my right hon. Friend into the Lobby may claim, as no doubt they can, that they are not concerned with harassing the co-operative societies, so those of us who are unable to support this enactment must not be taken as thereby wishing to put co-operative societies in any position of special benefit. [HON. MEMBERS: "Oh!"] I hope, at any rate, that I shall be entitled to the benefit of the doubt if there is any doubt in the minds of hon. Members. Those of us who take that view are entitled to say that what we are concerned with is not that co-operative societies may have special privileges, but that they may not be specially singled out for specialised taxation because of their prosperity or because they take so large a part in in- dustrial activity. It has been said over and over again that if a tax can be devised which falls upon co-operative societies not specially because they are co-operative societies, but in the ordinary uniform incidence of a tax falling upon all kinds of enterprises which are analogous, that would be another matter. My right hon. Friend has suggested a kind of tax which if it fell not only on these societies but on limited liability companies generally, would be a kind of taxation which would be more reasonable and it would be much better and stronger than this particular proposal which is indistinguishable in the minds of many of us from Income Tax. We do not think that the amount to be gained by the tax and the moment selected for levying it are adequate to put against the grave disadvantages and the appearance which this tax gives of singling out a particular kind of enterprise for taxation.
I wish to point out that the Chancellor of the Exchequer's method of taxing undivided surplus is to tax something which is identical with, and has been taken from the identical source of that particular part of the surplus which he has allowed to go free on being divided as dividend among the shareholders. The whole of the profits or so-called profits of a cooperative society do not come within any category that is known as profit similar to that in any limited liability company in the country. This profit represents the savings effected by careful management and by mutual organisation for purchasing and distribution. It is the same form of organisation, carried on to a wider and on a more lavish scale, as that which might be carried on by a few individuals in this House clubbing together to purchase a chest of tea, getting it at wholesale rates, charging each other the retail rate, and then using the difference between the wholesale rates and the retail rates either to divide among themselves or to divide a portion of it, and use the other portion to carry on the purchase of other articles. What the Chancellor of the Exchequer is going to tax is that portion that would be retained by them to purchase additional articles and to extend their business. How can he justify taxing that part and letting the other part go free. In the co-operative movement there is a Co- operative Insurance Society which carries on its business in a very economical manner. Its expenses only amount to 3 per cent. The system of insurance is that every society which joins it pays to the insurance company 1d. per £ on the purchases of each individual member. That insurance society has at present 855 co-operative societies as members, representing 2,600,000 individual co-operators. The undivided surplus which the Chancellor of the Exchequer proposes to tax is as to part of it the premiums which will be paid by those individual societies into that insurance society. That has as much right to be handed back free of tax as the dividend which is paid over every quarter or every half year, amounting as it does to 1d. per £ on their purchases. That ought to be left free.
The Chancellor of the Exchequer has stated that the objection of the co-operative societies is not to the size of the tax, but to the principle of the tax. If the principle is bad, then the co-operative movement has a right to oppose it. If they are being taxed in a different manner from any other section of the community, they have a right to protest, and they are exercising that right, not only on the Floor of the House, but in the country. They are protesting against being singled out for a tax which is to be made apply to them, although they do not conform to the particular principles of other businesses which have to be taxed. The Chancellor of the Exchequer has quoted the reservation in the Minority Report, which deals with the Corporation Tax as being an equitable tax applied to co-operative societies. Is he aware that the whole of the co-operative movement represented in the Co-operative Congress held at Bristol in May of this year repudiated the whole terms of that particular section of the Minority Report. It was repudiated unanimously by the delegates, who represented 4,000,000 members. They repudiated the suggestion that the Corporation Tax would be welcomed by them as necessary taxation which they believed themselves entitled to pay. The co-operative movement does not stand in the same category as other movements. They pay taxation upon those things upon which they are entitled to be taxed. Much of the taxation which is levied upon their property is taxation for which they could obtain repayment if they got their members to sign abatement forms and send them to the officials. If this tax is likely to be imposed upon them, there is every possibility of the co-operative movement opening a Claims Department, whereby the various members of the society who are eligible to have the money which is paid in Property Tax refunded to them will be able to make claims for that purpose.
Owing to the small amount which the Chancellor of the Exchequer is likely to get from this tax, which he estimates at £180,000, and in view of the great discontent which is being caused among large sections of the population who are members of co-operative societies, I suggest that he should withdraw the co-operative societies from this tax for at least a year, in order that he can go into the matter more fully and decide for himself as to the particular basis upon which he will levy his taxation. [HON. MEMBERS: "Divide!"] If hon. Members are tired of sitting in the House, there are comfortable Smoke Rooms outside. I hope that during the next year the right hon. Gentleman, in consultation with the co-operative societies, will consider how best he can arrive at some satisfactory solution. Otherwise, I am afraid that this tax will mean, not £180,000 going into the Chancellor's pocket, but that large claims for abatement will be made upon other items of taxation, which are paid without any objection by the co-operative movement and its members.
The Chancellor of the Exchequer laid great stress upon one point. He represented that this tax was a tax on corporations and not on individuals, that it was a tax upon corporations in respect of the privilege or the protection that they secure in trading as limited liability companies. When he made that statement I ventured to interject, "No, no!" When the right hon. Gentleman turned round I think his attitude was rather one of pity for my innocence. If I venture to demonstrate to him that he is wrong upon this matter, I expect he will have recourse to the very simple method by which he disposed of another hon. Member, by accusing him of metaphysics. I repeat that this is not a corporation tax. A corporation tax is a tax imposed on all corporations. This is not a tax imposed on all corporations and all limited liability companies. It s imposed only upon some—upon those which are making a profit. It is not imposed in respect of the protection which corporations secure in trading as limited liability companies. Which are the companies that secure the most protection, and to which companies is the protection most valuable? Those which are making a loss. If this were a corporation tax it would be a tax on all corporations in respect of the privilege of trading as limited liability companies. It is a tax not upon the corporation but upon the-individuals who are concerned in the corporation. It is a tax on the incomes of individuals derived from these corporations. The tax may be denned as an Income Tax, subject to three variations from the existing Income Tax. In the first place, it is an Income Tax which is not imposed on all incomes. In the second place it is an Income Tax which is not subject to the usual abatements and exemptions. It is imposed equally upon the person who has an income of only £100 and the person who has an income of £10,000. In the third place it is a tax which takes no account whatever of ability to pay. This Debate has proceeded upon the assumption, stated clearly by my right hon. Friend, that Income Tax should not apply to co-operative societies. It is no use arguing in detail whether co-operative societies ought to be assessed for Income Tax. If, as I contend, this is an Income Tax, it follows naturally from that presumption that co-operative societies ought to be exempted from this tax. There is a double dilemma in the matter. If my right hon. Friend exempts co-operative societies from Income Tax, he cannot logically avoid exempting them from this tax. The other dilemma is upon the co-operative societies. If they accept this tax they cannot avoid accepting Income Tax. This tax is subject to special resentment from them. They feel that they are being got at by a subterfuge, and are being taken in a trap.
Question put, "That the words,
'( a ) Where the profits are profits or surplus arising from the trading with its own members of a society registered under the Industrial and Provident Societies Acts no tax shall be charged,'—
be there inserted in the Bill."
The House divided: Ayes, 121; Noes 182.
Division No. 253.] AYES. [7.40 p.m. Adair, Rear-Admiral Thomas B. S. Hall, F. (York, W.R., Normanton) Raffan, Peter Wilson Adkins, Sir W. Ryland D. Hallas, Eldred Remer, J. R. Asquith, Rt. Hon. Herbert Henry Hambro, Captain Angus Valdemar Richardson, R. (Houghton-le-Spring) Bagley, Captain E. Ashton Hayward, Major Evan Roberts, Rt. Hon. G. H. (Norwich) Barker, Major Robert H. Henderson, Major V. L. (Tradeston) Rodger, A. K. Barnes, Rt. Hon. G. (Glas., Gorbals) Hills, Major John Waller Royce, William Stapleton Barnes, Major H. (Newcastle, E.) Hirst, G. H. Scott, A. M. (Glasgow, Bridgeton) Barrand, A. R. Hodge, Rt. Hon. John Seely, Major-General Rt. Hon. John Barton, Sir William (Oldham) Hogge, James Myles Sexton, James Beckett, Hon. Gervase Holmes, J. Stanley Shaw, William T. (Forfar) Benn, Captain Wedgwood (Leith) Hope, J. D. (Berwick & Haddington) Short, Alfred (Wednesbury) Blake, Sir Francis Douglas Hopkinson, A. (Lancaster, Mossley) Sitch, Charles H. Bowerman, Rt. Hon. Charles W. Hunter, General Sir A. (Lancaster) Smith, W. R. (Wellingborough) Bowyer, Captain G. E. W. Irving, Dan Spencer, George A. Brace, Rt. Hon. William Jameson, J. Gordon Sprot, Colonel Sir Alexander Bramsdon, Sir Thomas Johnstone, Joseph Swan, J. E. Briant, Frank Jones, Sir Edgar R. (Merthyr Tydvil) Taylor, J. Bromfield, William Jones, Sir Evan (Pembroke) Thomas, Rt. Hon. James H. (Derby) Brown, James (Ayr and Bute) Kelley, Major Fred (Rotherham) Thomas, Brig.-Gen. Sir O. (Anglesey) Cairns, John Kenworthy, Lieut.-Commander J. M. Thomson, F. C. (Aberdeen, South) Cape, Thomas Kenyon, Barnet Thomson, T. (Middlesbrough, West) Carter, W. (Nottingham, Mansfield) Kinloch-Cooke, Sir Clement Thorne, G. R. (Wolverhamptnn, E.) Casey, T. W. Lambert, Rt. Hon. George Tillett, Benjamin Clough, Robert Law, Alfred J. (Rochdale) Tootill, Robert Clynes, Rt. Hon. J. R. Lawson, John J. Waddington, R. Coote, Colin Reith (Isle of Ely) Lewis, T. A. (Glam., Pontypridd) Wallace, J. Cowan, Sir H. (Aberdeen and Kinc.) Loseby, Captain C. E. Walton, J. (York, W. R., Don Valley) Davies, A. (Lancaster, Clitheroe) Lunn, William Ward, Col. J. (Stoke-upon-Trent) Denniss, Edmund R. B. (Oldham) Macdonald, Rt. Hon. John Murray Waterson, A. E. Edwards, C. (Monmouth, Bedwellty) Maclean, Nell (Glasgow, Govan) Wedgwood, Colonel J. C. Edwards, Major J. (Aberavon) Maclean, Rt. Hn. Sir D. (Midlothian) Wheler, Lieut.-Colonel C. H. Edwards, John H. (Glam., Neath) Mallalieu, F. W. Wignall, James FitzRoy, Captain Hon. E. A. Martin, Captain A. E. Wilkie, Alexander Galbraith, Samuel Morgan, Major D. Watts Wilson, Rt. Hon. J. W. (Stourbrdge) Gardiner, James Myers, Thomas Wilson, W. Tyson (Westhoughton) Graham, D. M. (Lanark, Hamilton) Newbould, Alfred Ernest Wood, Major M. M. (Aberdeen, C.) Graham, R. (Nelson and Colne) Newman, Sir R. H. S. D. L. (Exeter) Young, Robert (Lancaster, Newton) Graham, W. (Edinburgh, Central) O'Grady, Captain James Young, w. (Perth & Kinross, Perth) Griffiths, T. (Monmouth, Pontypool) Parkinson, John Allen (Wigan) Younger, Sir George Grundy, T. W. Parry, Lieut.-Colonel Thomas Henry Guest, J. (York, W. R., Hemsworth) Rae, H. Norman TELLERS FOR THE AYES .—.— Mr. Kidd and Major Glyn.
NOES. Agg-Gardner, Sir James Tynte Dalziel, Sir D. (Lambeth, Brixton) Hope, James F. (Sheffield, Central) Ainsworth, Captain Charles Davidson, Major-General Sir J. H. Hopkins, John W. W. Atkey, A. R. Davies, Thomas (Cirencester) Home, Edgar (Surrey, Guildford) Baird, Sir John Lawrence Davison, Sir W. H. (Kensington, S.) Hume-Williams, Sir W. Ellis Baldwin, Rt. Hon. Stanley Dawes, James Arthur Hurst, Lieut.-Colonel Gerald B. Balfour, George (Hampstead) Dean, Lieut.-Commander P. T. Illingworth, Rt. Hon. A. H. Banbury, Rt. Hon. sir Frederick G. Dewhurst, Lieut.-Commander Harry Jackson, Lieut.-Colonel Hon. F. S. Barnett, Major R. W. Duncannon, Viscount James, Lieut.-Colonel Hon. Cuthbert Barnston, Major Harry Du Pre, Colonel William Baring Jesson, C. Beauchamp, Sir Edward Eyres-Monsell, Commander B. M. Jodrell, Neville Paul Bell, Lieut.-Col. W. C. H. (Devizes) Falcon, Captain Michael Johnson, Sir Stanley Bellairs, Commander Carlyon W. Fade, Major Sir Bertram G. Jones, Henry Haydn (Merioneth) Benn, Cant. Sir I. H., Bart.(Gr'nw'h) Fell, Sir Arthur Joynson-Hicks, Sir William Birchall, Major J. Dearman Fisher, Rt. Hon. Herbert A. L. Kellaway, Rt. Hon. Fredk. George Blades, Capt. Sir George Rowland Flannery, Sir James Fortescue King, Commander Henry Douglas Blair, Reginald Foreman, Henry Knight, Major E. A. (Kidderminster) Borwick, Major G. O. Forestier-Walker, L. Lane-Fox, G. R. Boscawen, Rt. Hon. Sir A. Griffith- Forrest, Walter Law, Rt. Hon. A. B. (Glasgow, C.) Breese, Major Charles E. Foxcroft, Captain Charles Talbot Lewis, Rt. Hon. J. H. (Univ., Wales) Bridgeman, William Clive Fraser, Major Sir Keith Lister, Sir R. Ashton Briggs, Harold Gibbs, Colonel George Abraham Locker-Lampson, Com. O. (H'tingd'n) Buchanan, Lieut.-Colonel A. L. H. Gould, James C. Lorden, John William Bull, Rt. Hon. Sir William James Goulding, Rt. Hon. Sir Edward A. Lort-Williams, J. Burn, Col. C. R. (Devon, Torquay) Grant, James A. M'Curdy, Rt. Hon. C. A. Campbell, J. D. G. Green, Joseph F. (Leicester, W.) Mackinder, Sir H. J. (Camlachie) Carew, Charles Robert S. Greene, Lt.-Col. Sir W. (Hack'y, N.) Macmaster, Donald Cautley, Henry S. Greenwood, William (Stockport) McNeill, Ronald (Kent, Canterbury) Cecil, Rt. Hon. Evelyn (Birm., Aston) Greer, Harry Macpherson, Rt. Hon. James I. Cecil, Rt. Hon. Lord H. (Ox. Univ.) Greig, Colonel James William Maddocks, Henry Chadwick, Sir Robert Gretton, Colonel John Malone, Major P. B. (Tottenham, S.) Chamberlain, Rt. Hn. J. A. (Birm., W.) Gritten, W. G. Howard Manville, Edward Chamberlain, N. (Birm., Ladywood) Harmsworth, C. B. (Bedford, Luton) Marks, Sir George Croydon Child, Brigadier-General Sir Hill Harris, Sir Henry Percy Marriott, John Arthur Ransome Coates, Major Sir Edward F. Haslam, Lewis Middlebrook, Sir William Coats, Sir Stuart Henry, Denis S. (Londonderry, S.) Mond, Rt. Hon. Sir Alfred M. Colvin, Brig.-General Richard Beale Herbert, Dennis (Hertford, Watford) Montagu, Rt. Hon. E. S. Courthope, Major George L. Hewart, Rt. Hon. Sir Gordon Moreing, Captain Algernon H. Craig, Colonel Sir J. (Down, Mid.) Hoare, Lieut.-Colonel Sir S. J. G. Morrison, Hugh Craik, Rt. Hon. Sir Henry Hood, Joseph Mount, William Arthur Munro, Rt. Hon. Robert Richardson, Alexander (Gravesend) Terrell, Captain R. (Oxford, Henley) Nail, Major Joseph Roberts, Sir S. (Sheffield, Ecclesall) Thomson, Sir W. Mitchell- (Maryhill) Neal, Arthur Robinson, S. (Brecon and Radnor) Tickler, Thomas George Newman, Colonel J. R. P. (Finchley) Roundell, Colonel R. F. Tryon, Major George Clement Nield, Sir Herbert Royds, Lieut.-Colonel Edmund Ward-Jackson, Major C. L. Norris, Colonel Sir Henry G. Rutherford, Sir W. W. (Edge Hill) Watson, Captain John Bertrand O'Neill, Major Hon. Robert W. H. Samuel, A. M. (Surrey, Farnham) White, Lieut.-Col. G. D. (Southport) Palmer, Brigadier-General G. L. Samuel, Rt. Hon. Sir H. (Norwood) Wild, Sir Ernest Edward Parkinson, Albert L. (Blackpool) Sanders, Colonel Sir Robert A. Williams, Lieut.-Com. C. (Tavistock) Pearce, Sir William Scott, Leslie (Liverpool, Exchange) Willoughby, Lieut.-Col. Hon. Claud Pease, Rt. Hon. Herbert Pike Seager, Sir William Wills, Lieut.-Colonel Sir Gilbert Peel, Col. Hn. S. (Oxbridge, Mddx.) Shortt, Rt. Hon. E. (N'castle-on-T.) Wilson, Capt. A. S. (Holderness) Perkins, Walter Frank Smith, Harold (Warrington) Wilson, Daniel M. (Down, West) Perring, William George Smithers, Sir Alfred W. Winterton, Major Earl Pinkham, Lieut.-Colonel Charles Stanley, Major Hon. G. (Preston) Wood, Sir J. (Stalybridge & Hyde) Pollock, Sir Ernest M. Starkey, Captain John R. Worsfold, Dr. T. Cato Pownall, Lieut.-Colonel Assheton Stewart, Gershom Yeo, Sir Alfred William Prescott, Major W. H. Strauss, Edward Anthony Young, Lieut.-Com. E. H. (Norwich) Pulley, Charles Thornton Sturrock, J. Leng Purchase, H. G. Sutherland, Sir William TELLERS FOR THE NOES .—.— Raeburn, Sir William H. Sykes, Colonel Sir A. J. (Knutsford) Lord E. Talbot and Mr. Dudley Ward. Ratcliffe, Henry Butler Sykes, Sir Charles (Huddersfield) Remnant, Sir James Talbot, G. A. (Hemel Hempstead)
The next Amendment, in the name of the hon. Member for Derbyshire (Mr. Holmes)—[In Sub-section (1, b ) leave out the words "actually paid out of those profits" and insert instead thereof the words "payable in respect of that accounting period"]—imposes a charge and is out of order.
I beg to move, in Sub-section (1, b ), to leave out the words "actually paid out of those profits," and to insert instead thereof the words "payable in respect of arrears due and of that accounting period."
I confess I cherish some small hope that the Chancellor will see fit to do something to meet this case. That expectation is due to the fact that the Parliamentary Secretary on several occasions indicated that the matter would be considered before Report. Speaking on one occasion he said: b ) of Sub-section (1) is to confer a certain measure of relief in certain circumstances so that the Corporation Tax may in those circumstances be less than 5 per cent. It is provided that the tax shall not exceed the amount represented by 10 per cent. of the profits after deducting interest or dividends paid on any debenture stock or any fixed preference dividend. In that event a lesser sum, if any, shall be the amount of the Corporation Tax. Let me give a typical example of what I regard as the clear injustice of the words "actually paid out of those profits," and of the necessity for substituting the words which I propose. Take two companies, each with a share capital of £600,000 and each divided into 200,000 5 per cent. debenture stock and 200,000 A. fixed preference shares, and 200,000 ordinary shares. They trade in the same business, and assume that they earn exactly the same profit of £30,000. In one case the company happens to be very hard pressed for cash, though its trading position is good. In the other case the company is in a satisfactory cash position and pays its 5 per cent. debenture interest, amounting to £10,000, and its 8 per cent. preference dividend, amounting to £16,000. It is entitled to deduct the £26,000 from the £30,000, and the Corporation Tax on the balance is £400. In the case of the company with an unsatisfactory cash position, it pays debenture interest of £10,000, but because of its cash position does not pay its preference dividend. It is therefore only entitled to deduct £10,000 from the £30,000 of profit in its calculation for Corporation Tax, and 10 per cent. of £20,000 being in excess of the full 5 per cent. Corporation Tax, it gets no relief. Thus the one company pays £400 Corporation Tax, and the other pays £1,500, although the two companies are identical. I suggest that this case has not been fully considered. I am not asking for any abatement of the tax, but that the time for allowance should be when the charge falls on the company for any fixed dividend or any debenture interest. The year that the company is hard up you compel them to pay £1,500, while the other, the more prosperous company, gets off with £400. I could give many illustrations of companies having to defer the actual payment of preference dividend. It is ultimately paid, and no doubt they would be allowed to deduct in the year they paid, and that is a time when they would be in an easy cash position.
I beg to second the Amendment.
The hon. Gentleman claims that I have not given sufficient attention to the Amendment, but he has not given me very long to consider it. I have given careful attention to this matter, not merely in relation to the Amendment now moved, but also on the Amendment of the hon. Member for Derbyshire (Mr. Holmes), which has been ruled out of Order because it would impose a charge. The hon. Member for Hampstead (Mr. G. Balfour) explained that his intention is the same as that contained in the Amendment to which I have just referred
With the exception of arrears.
8.0 P.M.
The Amendment of the hon. Member, whilst it would give relief in some cases, would take away relief which is given by the Bill in other cases. That was the reason why the previous Amendment would impose a charge, and was ruled out of Order. The hon. Member for Hampstead has avoided that difficulty by producing a form of words by which the allowance would be made twice over. I am sure that is not what he intended, and I believe when he understands the effect of his own Amendment he will not desire to press it. We thought the time to measure the amount was the actual accounting period in which you made over the payment. There is nothing in it in the long run from the revenue point of view, but I still think that our scheme is the best one in the general interest, and that whenever they are paid there shall be another allowance. That is my hon. Friend's Amendment. I know that he would disclaim any such intention. If he disclaims that intention, and if he says that that is not what he wants, then his Amendment will not do, and the other Amendment on the Paper is out of Order, for reasons which I have explained.
If you were to insert in the Amendment words to make it read "arrears due at the passing of the Act," that would cover arrears at the date of the passing of the Act, and then you are only entitled to admit amounts which become payable each year, and there cannot possibly be any question of the amount being charged twice. If you insert those words, "at the date of the passing of this Act," thereafter no arrears arise; but as the amount becomes payable each year it is allowed for the purpose of deduction, and the word "paid" not being in the Amendment, it cannot possibly be charged twice over.
I cannot accept those words at this stage when I have no possibility of revising or correcting them. The hon. Member has put down words at the very last moment.
I hoped to see words put down by you in accordance with the Financial Secretary's statement.
I really could not see my way to meet the point. I do not think my hon. Friend is entitled to say that I have not given consideration to the suggestions received from him. I have met him in various cases, and I have come now to the residuum of the cases, and he must not complain if I cannot see eye to eye with him always.
The only point I wanted to make clear was that where the preference share dividend is not paid on the last date of the accounting period, say the 31st December in any year, but is paid on the 1st or 2nd January, or perhaps after the annual meeting has been held, payment not being made till then, that that should be allowed as a fair deduction.
Oh, yes!
The Financial Secretary said that was so, and that that would be considered as having been actually paid out of the profits for the year, and it will now be registered in the Official Report that that is so.
Oh, yes; I can give the hon. Gentleman the assurance that that is so.
Amendment negatived.
I beg to move, in Sub-section (1, b), to leave out the words "issued before the twentieth day of April nineteen hundred and twenty" and to insert instead thereof the words
"but if any debentures, debenture stock, preference shares, or permanent loan were issued alter the date of the passing of this Act, the deduction of interest or dividends thereon shall not be allowed unless the company proves to the satisfaction of the Commissioners of Inland Revenue that the issue represents new money paid into the company for the purpose of its trade or business."
This Amendment deals with any debenture, debenture stock, preference shares, or permanent loan issued after the date of the passing of this Act. The Financial Secretary intimated previously that the Government would accept the date on which this Bill was passed in place of the date of the Financial Resolution. The point I made previously was that where a company had obtained fresh capital for the purpose of earning profit, and those profits were going to be taxed through the Corporation Tax, it was only fair that the interest on that new money used for trade purposes should be allowed as a deduction under this Clause. The right hon. Baronet the Member for the City of London referred to certain cases of individuals turning themselves into a limited liability company, and said that the omission of the words "before the 20th April, 1920" would enable those people who had so far escaped the payment of Super-tax to be able to escape also, to a certain extent, the payment of Corporation Profits Tax. To endeavour to meet that case and provide that people who really do try to do some financial "rigging" in order to escape the tax, shall not be able to effect their object. I have suggested the words on the Paper. It compels a company before they can have a deduction of interest on any new money, to prove to the satisfaction of the Commissioners of Inland Revenue that the issue represents new money paid into the company for the purpose of its trade or business. I think it was the, Financial Secretary who suggested to us on the Committee stage that if anyone could find satisfactory words, the Chancellor of the Exchequer would consider them. I hope that I have met this point in putting down the words on the Paper.
I beg to second the Amendment.
I hope the Chancellor of the Exchequer will be able to do something to meet the cases mentioned by the hon. Member for North-East Derbyshire (Mr. Holmes). The next Amendment on the Paper is in the name of the Chancellor, and it touches upon the same point, but does not deal with it, and following that there is an Amendment in my own name dealing with the same matter, and I think it might be convenient if the Chancellor could say a word or two at this stage as to whether he is able to do anything more than is contained in his own Amendment and along the lines of the Amendment proposed by the hon. Member for North-East Derbyshire or the Amendment which I have on the Paper.
I am afraid I cannot accept the hon. Member's Amendment. I think he acknowledges—though I must admit that I was not giving much attention to what he said, I was discussing something else—that I have gone some way towards meeting him by the two Amendments that I have made, one to substitute the date of the passing of the Act for the date on which the Resolution was passed, and the other to extend the concession to loans issued subsequently which were in substitution for issues which had matured.
I do not think that meets it.
I do not think it does meet the particular point. I frankly admit that. Still, it meets some of the points which I think the two hon. Members have made. I am afraid of going further in the matter lest we should encourage the issue of capital in a particular form for the purpose of avoiding this tax. My hon. Friend shakes his head. He sees no danger; but it is not his business to guard the public purse. He is thinking of the difficulties of the company or of their promoters. There was a case to be made out, however, in respect of the issues already made, because they were made with no foreknowledge of the tax, and with no power therefore of considering in the light of the tax whether it was desirable or not to make that issue. That does not apply, however, to new issues which will be made with full knowledge of the situation at the time of liability to this tax, and which would be decided in the light of all the circumstances at the time including this tax.
Amendment negatived.
I beg to move, in Sub-section (1, 6), to leave out the words "twentieth day of April, nineteen hundred and twenty" and to insert instead thereof the words
"commencement of this Act, or on any debentures, debenture stock, or permanent loan issued after that date for the purpose of replacing an equal amount of any debentures, debenture stock, or permanent loan issued before that date."
Question, "That the words proposed to be left out stand part of the Bill," put, and negatived.
Question proposed, "That the words 'commencement of this Act, or on any debentures, debenture stock, or permanent loan issued after that date for the purpose of replacing an equal amount of any debentures, debenture stock, or permanent loan issued before that date,' be there inserted in the Bill."
I beg to move, as an Amendment to the proposed Amendment, to leave out the words
"for the purpose of replacing an equal amount of any debentures, debenture stock or permanent loan issued before that date,"
and to insert instead thereof the words,
"provided that the total interest and dividend allowed for the purpose of the deduction on any debentures, debenture stock, shares, or permanent loan issued after the passing of this Act shall not exceed a sum calculated at the rate of six and a-half per cent. per annum on the total amount of such debentures, debenture stock, shares, or permanent loan."
I would refer hon. Members to the statement made by the Chancellor of the Exchequer in Committee:
"I will take time to consider what has been said in my absence more fully than I have been able to do up to this moment. I shall also be glad if they will give me any suggestions which they may think will satistfy our two objects, the first of which is to see that the tax is not evaded, and the other, that as far as possible it shall be equitable. I will consider the matter with an open mind and see if I can do anything before the Report stage to meet the points which were raised."
The right hon. Gentleman also said on the same occasion:
"There has been some criticism with regard to inequalities, but my object is certainly not to put old businesses in a preferential position over new ones."—[OFFICIAL REPORT, 13th July, 1920; col. 2277, Vol. 131.]
That I take as a distinct declaration that there is no intention of putting an old business in a preferential position over a new business. Let me briefly refer to a recent prospectus issued by an old business, and put before the House how a new business would be situated, and how it would be injured if it got no relief at all. This is the prospectus of a company with a total of £3,335,000 of debenture and fixed dividend preference shares. The total amount of interest and dividend payable on that £3,335,000 is over £307,000. It is a soft goods business. Supposing the profits of the company, say, next year, fall to exactly the sum of £307,100, it is entitled to deduct from that amount £307,100 of debenture interest charges and dividends on preference shares, and it has then to pay Corporation Profits Tax on 10 per cent. of the difference, which is nil. That company will pay no Corporation Profits Tax. Now take the case of a company which started, perhaps, across the street with £100 share capital. A few people get together "and put up £100,000 of ordinary shares, £100,000 preference shares, and £100,000 debenture stock. That company is not allowed to deduct a penny of its debentures or preference shares, and if it made £30,000 trading profit, it would have to pay Corporation Tax for that amount, namely, £1,500, and there is this company across the road with £307,100 of trading profits for the year which has not to pay one penny of Corporation Tax. The old business strongly established with over £300,000,000 capital is free of Corporation Profits Tax, and the young company has to pay £1,500 on the profits it makes in that year. I do not know under what scheme this has been devised, but if it has been devised to kill new businesses, and to give a premium to old-established businesses, it is certainly going to put a millstone round the necks of new businesses. While I have not the slightest interest that I know in any company interested in the arguments, I am putting before the House, I do think, from the public point of view, this is a wrong thing, and that an Amendment on the lines I have put before the House should be accepted.
I beg to second the Amendment to the proposed Amendment.
I regret I am unable to accept this Amendment. The Chancellor of the Exchequer gave very careful consideration to the whole matter between the Committee stage, and the Report stage, and in his opinion, he fulfilled the undertaking that he gave by extending the time from the date in April which was originally mentioned until such time as this Act passed into law. What, after all, has been the position? I do not think there could be any doubt but that it is only fair not to penalise old companies which, after all, were conconstructed without any knowledge of this tax, and which had organised themselves and framed their allocation of capital in a different set of circumstances from those which exist to-day. Taking the concession which the Chancellor of the Exchequer has made, if such a concession were granted as the hon. Member desires to make, we should then be making a considerable hole in the return of this tax in the future, and our contention is that, with the extended time which we have given, it will rest with those who organise the capital allocation of new businesses so to allocate their capital as will best suit them, in consideration of the terms of this tax with which they will then be familiar. We see no reason at all to continue the allowances, which have been extended, as I have said, by the Chancellor's Amendment.
How can there be a hole in the amount of this tax when this only refers to new businesses of the future?
Because it means that less money will be got from these new businesses. I do not agree with that at all. I think the hon. Member is unduly alarmist. I think one's natural feeling is that any new tax—I sympathise with my hon. Friend here—is going to be a great penalisation on industry. This is a new tax on a new basis, and in a very short time I believe—I do not expect my hon. Friend will agree with me—the industry of the country will accommodate itself to it, and, in my view, and I hope in the view of the House, the Amendment which the Chancellor of the Exchequer has made, meets a very real point, and goes so far as he is justified in going in meeting the point he was asked to consider on the Committee stage.
The Government, we are told, wants money, and that, therefore, is the apology for the proposals put forward, but that is not the view that hon. Members here take as against what they deem to be the justice of the case. The prior charge at a fixed rate of interest very greatly assisted the development of businesses in this country. What my right hon. Friend now proposes, and what the Chancellor of the Exchequer is insisting upon, is that there shall be penalisation to the extent of 5 per cent. Has any calculation been made as to the effect on the issue of preference debentures and permanent preference stock charged with this extra 5 per cent. in addition to the interest—because that is what it amounts to? That method can no longer be adopted. The old process will be stopped, and companies, when capitalising themselves on the altered lines, will have to consider whether they can do it best by registering themselves in the Colonies or some country abroad. Would it not be wise to wait and see if the proverbial coach-and-four cannot be driven through the Government proposals by, at any rate, allowing what has gone "on for so many years—deductions, and so on—to be made in what is a perfectly legitimate and proper process of business in the future as in the past? I cannot understand the attitude of my hon. Friend opposite, but I record the strong protest which is being made against these proposals. Whether my hon. Friend divides or not to-night this matter will be raised again in the strongest form next year. Meanwhile you are going to suspend for twelve months from the passing of this Act to the next Budget the formation of limited liability companies on the old lines so far as the 5 per cent. imposed upon the earnings is concerned by the Corporation Profits Duty.
Amendment to proposed Amendment negatived.
Proposed words there inserted in the Bill.
I beg to move, in Subsection (2, a ), after the word "company" ["profits of a British company"], to insert the words "(except a company whose business is wholly carried on and directed abroad.)"
I would not have troubled the House with this Amendment had it not been that I moved a similar Amendment in Committee, and the Chancellor said there was some confusion in his mind, after what had transpired, as to the real scope and object of that Amendment. Therefore I ventured to put it down again. The object of it is to excuse from liability to this tax companies incorporated in the United Kingdom but wholly carrying on business and directed abroad. There are quite a considerable number of companies which have been incorporated for many years past that come within that category. They are not liable to Income Tax or Excess Profits Duty in this country because they do not trade here and they have no direction here. I suggest to the Parliamentary Secretary that if this tax is imposed upon that class of company which neither trades here nor makes a penny of profit here, the obvious effect will be to drive those companies out of the country. I should imagine the obvious effect, too, will be to prevent any similar companies being incorporated here in the future.
We have been told of the many advantages that accrue to this country from companies of this character having been incorporated here in the past because of the identity of this country with these incorporations. Let me illustrate my argument by applying this to, say, a business incorporated here and carrying on business in one of the Dominions. If the company which is incorporated here desires to change, and believes that by so doing it is advantaging itself, it can incorporate itself in one of the Dominions, and will get exactly the same protection there as it would if incorporated here. It would have practically the advantage of identical incorporation laws as if it remained hers. Therefore, it seems to me there is no object in endeavouring to impose this tax on companies of this character, as the only result would be what has been said by my hon. Friend. Let me ask the Parliamentary Secretary one question How does he intend to collect this tax? To me it seems almost impossible. There are no directors here, no assets, no income.
I beg to second' the Amendment.
My hon. Friend who-has just spoken and who put his case so clearly, does not, I think, really expect this Amendment to be accepted. I understand that he has had some communication from the Chancellor of the Exchequer in which my right hon. Friend expressed his regret that he was unable to meet him. The matter was discussed, if I remember aright, on the Committee stage. The Chancellor of the Exchequer mentioned that he was fortified in his decision on this particular Amendment by the view of; the Royal Commission on Income Tax which had considered the position of such companies in relation to the Income Tax and actually recommended the extension' of the law in the case of British registered' companies trading abroad and directed abroad so as to secure that their profits should be chargeable to British Income Tax. I fully realise the fears that have been expressed by hon. Members as to the possible driving away of such companies from London, which is their headquarters. This is a fear which has been expressed many times in this House when various proposals for taxation have been made. I agree if such a result did occur it might be possible that the whole question would have to be reconsidered. After all we have to bear in mind that there are very substantial companies having head offices in a city like London, and that is a privilege for which most companies would be quite willing to pay something. We have also to bear in mind that to make such a change is a serious matter for the company. You have no certainty in the present state of the finances of the world that whatever may be the city to which you transfer your registration, you may find ultimately that you will be better off as far as taxation goes. At this moment we are grappling with the financial situation that lies before us. The fact that we are successfully grappling with that situation is a guarantee that we shall be able to benefit by the exertions and sacrifices we have made, and for a long shot, I myself would rather remain in this country and take my chance of the taxation in the generation which is now beginning than 1 would transfer my allegiance to any other country in the world. For these reasons I regret that I am unable to accept this Amendment.
Surely something more is required in reply to this Amendment. The right hon. Gentleman says that these companies might be taxed in the country to which they go, but they are bearing taxation there now. They are bearing taxation in the country where they have been operating and where they are being directed. It is clear that the only thing that can happen is that you will shut the door, and these companies will not think it is worth while registering in London, and employing men and women in the offices in London, who will no longer be required. In this way they will sever connections which have been a very great advantage in many ways, and orders of all kinds which come here may in future go to other countries. I think the right hon. Gentleman should answer the question as to how he proposes to collect this money. The right hon. Gentleman talks as though these companies are taxed, but they are not. You do not collect money from them, and you are taxing them for the first time. I want to know how this tax is going to be collected, from what funds, and upon what assets? There is nothing here but the office furniture in most cases, and the share register. I hope the Financial Secretary will explain this point. It is a matter of great importance. I wish to know how the Inland Revenue intend to collect this money if the charge is persisted in. If the right hon. Gentleman can answer that question I will not press him further, but I think we are entitled to an answer, because this point goes to the root of the whole matter.
Amendment negatived.
Amendment proposed: At the end of Sub-section (2,
"Provided that this Part of this Act shall not, during the period between the first day of January, nineteen hundred and twenty, and the thirty-first day of December, nineteen hundred and twenty-two, apply to the profits of—?
I desire to express my thanks to the Chancellor of the Exchequer for having exempted these undertakings for the period stated. I regret he could not accept our other Amendment, and I hope this concession will not cause much loss to the revenue. I am sure that it will be of great benefit, and I desire to thank the right hon. Gentleman for the concession he has made
I desire to point out that some of these gas companies work on a maximum dividend, and obviously they are covered by these words. I wish to direct the attention of the Financial Secretary to the companies that work on a sliding scale. I want him to tell me whether they are covered by this proposal, because their dividend is dependent upon the price of gas charged for the last year or six months. Will he tell me distinctly whether companies working on a sliding scale are covered in the same way as the other companies?
Yes, they are.
I beg to move as an Amendment to the proposed Amendment to leave out paragraph (i).
This is the last of a very considerable series of concessions which have been made by the Chancellor of the Exchequer in the course of the passing of this Bill through its various stages. I wish to draw attention to the fact that all those concessions have been given on one side of the Finance Bill. Under this measure money is being raised by various methods. It is being raised by Excess Profits Duty, the Corporation Profits Tax and by indirect taxation. A large portion is raised by taxes on foodstuffs and other commodities consumed by the great mass of the people. I think I am correct in saying that the sum to be raised under this measure is something like five times as much as was raised before the War. The point I want to make is that the Chancellor of the Exchequer has consistently resisted throughout the whole passage of this measure any concession we asked him to make with respect to indirect taxation.
That would be an appropriate subject for discussion on the Third Reading, but the hon. Member should now keep to the merits or demerits of the proposed concession.
I will not pursue that point any further beyond saying that the fact of all these concessions being made on one side of the Measure makes it more difficult now or at any future time to get concessions on the other side. Those of us who desire to see some reduction in indirect taxation believe that by this particular concession our efforts will be very much prejudiced, because the effect of this proviso will be to exempt these particular companies for a period of three years from the operation of the Corporation Profits Tax. We have heard something about metaphysics in the course of these Debates. I think there could be no better training in that science than for a man to be Chancellor of the Exchequer and to have to differentiate between one tax and another, and to give reasons for imposing taxes in one direction and giving relief from the burden in another. We ought to have had some explanation why these particular companies are being exempted, yet not a word was said by the Parliamentary Secretary in moving this proviso. Obviously, it must be an extremely costly exemption which is being made, and one which will have a considerable effect on the Revenue, an effect extending not over one year only, but lasting for three years. I turn to the best source of information I can find in order to ascertain what are the profits of these various undertakings, and I gather that in recent years they approached something like from £60,000,000 to £70,000,000, and undoubtedly in the next three years the amount will be largely increased. Therefore this concession must make a considerable hole in the proceeds of the tax. The Financial Secretary shakes his head. Perhaps he will correct me when he gets up to reply.
Has the hon. Member deducted from the £60,000,000 or £70,000,000 profits the interest on the total Debentures and Preference shares as they would only pay 10 per cent.? On the balance, that is what counts.
I do not know whether the point of that interruption is that the concession is a small one. I do not accept it. We are dealing with some of the largest undertakings in the country which supply important public services, and it is a matter of common knowledge that the capital invested in those undertakings is very considerable. The returns from it must be considerable also. The Parliamentary Secretary might explain to us why, after having strained the whole meaning of the term "profit" in order to include co-operative societies, and to produce thereby a revenue which, we are informed, will not exceed £180,000, the Chancellor of the Exchequer is now letting out the large class of undertakings covered by this proviso. It appears to me that, whilst straining the meaning of the word in order to get in £180,000, the right hon. Gentleman is now cutting out words that will reduce the produce in the next three years by from £5,000,000 to £6,000,000. That is a point that will impress itself upon a very large section of the community. In the face of very strenuous opposition, which had the effect of reducing the majority of the Government to, I believe, the lowest figure, at which it has stood during this Session, the right hon. Gentleman has persisted in imposing a tax which can only bring him in £180,000, and yet he is now exempting a large number of very powerful and wealthy corporations from the tax, and thereby reducing the revenue from it by a very much larger sum. That requires some explanation.
Perhaps we may be told why this particular class of companies should be singled out, and why a differentiation should be made between them and other companies to which this tax applies. As far as I understand the principle of the Corporation Profits Tax, it is not to be levied on debenture interest or on the interest on preference shares, or where the interest is a fixed amount. It cannot be on that principle that those companies are exempted from its operations. It cannot be on the principle either that the Corporation Profits Tax should not be levied on companies that are only paying a moderate rate of dividend. It might have been that in these particular cases, where the undertakings are only paying a dividend of 5 or 6 per cent., they ought not to be brought within the operation of the tax. If it had been the principle that the tax was not to be applied until the profit had gone beyond a certain level, that would, no doubt, have ruled out a certain number of these companies. But that principle does not apply under this proviso. A great many of the undertakings to be exempted pay a very much larger dividend than companies to be taxed, and it seems to me a very invidious distinction to have introduced in this tax. While it may be true that in some of these undertakings there is a fixed dividend, it is not true in the case of a great many of them, because if they make savings and economies they may increase their dividend. I would like to draw the attention of the Parliamentary Secretary to this fact, that at the present moment we are passing through this House Bills that have for their object increasing the charge made by these undertakings by reason of their high present costs, and any reduction which may take place in the next three years in those costs will have the effect of increasing the profits of the undertakings, and during the whole of that period they are to be exempt from this tax. If it is suggested, as a reason for exempting them, that they have maximum charges which cannot be raised, it seems to me that the answer is that, while it is true that their charges cannot be raised, they are protected against those charges being lowered. A company operating in the open market might take advantage of the conditions of the market in a way in which these undertakings cannot without special sanction, and it might be able to increase its charges and make a large profit. As against that, however, a free company in a free market may at any time find the prices of its services or its commodities so reduced as to cause a loss. I do not know whether it is suggested that these undertakings should be exempted from the operation of this tax because, for the moment, they are caught in this period of changing values at a time before their charges can be increased, and that they are, therefore, placed at some disadvantage. If that is so, I should like to say, in reply, that those companies which form the larger proportion of these undertakings, namely, the railway companies, have been guaranteed, and have been receiving, their pre-war dividends throughout the whole of this period, so that they are not subject in any way to the disadvantages which fall upon some of the other undertakings. As far as my information goes, I think that the relief of this class which will be given to the railway companies will account for, perhaps, 60 per cent. or 70 per cent. of the relief afforded under this exemption. In view of the relationship in which the Government stand to the railway companies, and of the fact that, under their agreements, they occupy a peculiarly advantageous position—getting all their repairs, renewals and maintenance carried out at the public expense, and getting a replacement of their stores at the prices at present ruling—this is not the time at which to single out those companies for specially favourable treatment. We on this side of the House, who have received so little—in fact, absolutely nothing—from the Government by way of concessions, and who find all our hopes for the reduction of indirect taxation seriously prejudiced by a concession made, not only for this year, but for three years, are, I think, entitled to a specific explanation from the Government as to why this concession is being made. I am sure that the Parliamentary Secretary, with the candour which always marks him, will tell us why this proviso has been inserted.
Although the hon. and gallant Member may not be aware of it, he has said the same thing five or six times over, and is seriously encroaching upon the rule against repetition.
I will only add that, unless we have an explanation which will satisfy us fully, we on this side of the House will be prepared to carry this to a Division.
I beg to second the Amendment.
I should like to say how much we appreciate the concessions made in paragraph (ii) of the right hon. Gentleman's Amendment, with regard to building societies. We believe that he is doing something in the right direction. After this afternoon's Debate on the iniquitous imposition on co-operative societies, however, we have the Chancellor of the Exchequer, who wanted this money so badly, and wanted the community to share the burden equally, proposing to relieve the private interests that are included in this paragraph. If they had not been protected I would not say so much, but, only a few weeks ago, a Bill was introduced—and it was opposed from this side of the House—giving to tramway and other undertakings the power to increase their charges in order to meet the increased cost of labour. Although they have been protected, the Chancellor of the Exchequer, while he is imposing a tax on co-operators and increasing the tax on beer and various other taxes, is going to relieve these vested interests by giving them concessions of every kind—the concessions in regard to champagne and cigars, the concessions in regard to the land taxes. All these concessions have been given——
These re marks of the hon. Member would be in order on the Third Reading, but not on this Amendment. We must keep to the particular Amendment which is before the House.
The only way in which we can drive our point home is by making these comparisons. Like my hon. and gallant Friend who moved this Amendment, I should be satisfied if the Parliamentary Secretary would explain to us why he is going to give this enormous present to the vested interests in this House. If he cannot give us a satisfactory answer, I hope my hon. and gallant Friend will divide upon it.
I feel that I cannot allow this occasion to go by without entering my emphatic protest against an Amendment of the character of that moved by the Chancellor of the Exchequer. The right hon. Gentleman will remember that we have taken a very important decision with reference to the attitude of the Government towards a particular working-class section of the community. In this Amendment the Chancellor of the Exchequer gives away a concession to those who are already well placed or who find, at any rate, that they are in comfortable circumstances—to tramway companies, hydraulic power companies, and so on—who do not in reality need anything of this character. As far as the others are concerned, it seems as though the Chancellor of the Exchequer and his friends have made a determined attempt to do all that lies in their power to see that they are crippled at the first opportunity. Feeling as I do upon the other matter, I consider that I ought to take this opporunity of entering my protest against the action of the Chancellor of the Exchequer, so that it may be placed on record that we have not allowed the opportunity to go by without letting him know our views on the subject.
9.0 P.M.
The Financial Secretary to the Treasury is so popular on both sides of the House that I feel that on this point I ought to make his speech for him, because I know that he will find it extremely unpleasant to have to reply to this Amendment. Therefore I think it is well that the statement he was going to make should be made from this side. Obviously the whole object of the Amendment of the Chancellor of the Exchequer is perfectly simple. When the Corporation Profits Tax was introduced, it was intended to be a tax which, while nominally falling upon corporations, could be transferred from the corporations to the community as a whole. Then it was discovered, after the Corporation Profits Tax had been introduced, that there was a certain class, of companies which were unable to transfer the tax to the consumer, namely, these unfortunate statutory companies. They were unable to increase their charges, and were, therefore, unable to do what the other companies could do, that is to say, to pass the charge on to the consumer. Immediately, therefore, it was decided that an exemption must be made in their favour, and that they, the only people who could not transfer the tax, must be exempted from it. It is perfectly simple. The only difficulty is that the Chancellor of the Exchequer, when introducing the Corporation Profits Tax, did not make it quite clear to the House that it was only nominally intended to fall upon the corporations, and was really intended to fail upon the consumers, and so to increase the cost of living. This Amendment makes it perfectly clear—much clearer than it was before. These unfortunate statutory companies were going to be taxed—a most monstrous idea in the present state of affairs. Taxes should only be introduced when it is possible to make someone pay them other than the people upon whom they were charged. These statutory companies cannot do that, and, therefore, they are going to be exempted. It is true that we on these Benches will oppose that, because we prefer the shareholders in the statutory companies to pay the tax rather than that it should be transferred to the consumer and increase the cost of living. That is purely our old-fashioned idea, that we want to make the cost of living cheaper, and we realise that it is old-fashioned. But being old-fashioned Tories we shall persist in voting for keeping the tax off the consumer and letting the shareholders in the statutory companies carry the baby.
I should like to ask the Parliamentary Secretary what we are likely to lose by giving this concession to these companies. During this period of exemption, how much will the Treasury lose by this concession, and what do they expect to gain by the tax on co-operative societies?
I am very grateful to the hon. and gallant Gentleman (Colonel Wedgwood), one of the kindest-hearted Members of the House, who has been at pains to deliver my speech for me. I need hardly say the arguments he has used are far more ingenious than any which would have occurred to me, but I am afraid I must go on on lower and, perhaps, more prosaic ground. The hon. Member who moved the Amendment spoke as though he really believed nothing had been said on this subject at any earlier stage of our proceedings. The sole reason why I did not rise to make any observations on moving this Amendment was that the Chancellor had covered the ground on the Committee stage, not at great length, but I think sufficiently, and I am not one of those who eagerly embrace every opportunity that presents itself for addressing this House. Perhaps I rather go to the other extreme, and my chief anxiety generally is to get business through and say nothing more than is absolutely necessary. Also there are limits to the patience of the House, and I should be very sorry to impose myself on it longer than they cared for. I will read two or three pertinent sentences which were employed by the Chancellor on the Committee stage advising the Committee at that time that he was going to introduce an Amendment on the Report stage. Speaking on statutory companies as a whole, he said:
"They cannot adjust themselves to a new business expense thrown upon them, and that is what this tax is. It is not a deduction from the dividends of the individual shareholder, but an additional business expense put upon the business. They cannot adjust themselves to it in the same way that a business can which is not subject to the conditions under which they are working. These companies are nearly all of them at the present time either the subject of legislation now before the House or of proposed legislation which is to be brought before the House as soon as possible, intending to enable them to adjust their circumstances to the new conditions which the War has produced, or, in other words, to adjust their charges to the increased cost which has come about in consequence of the War. In these circumstances I have come to the conclusion, after the best consideration I could give to the matter, that it would not be fair or right—I could not justify it in Debate—to bring the Act into immediate operation as regards these companies."
Those are the reasons the Chancellor gave and those are the reasons for which this Amendment was introduced. Hon. Members speak as if it was a very great concession, but this Corporation Profits Tax is intended to last a considerable number of years, and in these special circumstances in which the statutory companies find themselves to-day a period of about 2½ years, during which their conditions will be adapted to the circumstances they have to meet, will not be looked on, I am sure, in the future as an unreasonable thing for this House to have done. The Corporation Profits Tax itself, if my memory serves me, is calculated to bring in, on the expiration of the Excess Profits Duty, about £50,000,000 a year on its present basis, and the amount of the Corporation Profits Tax which will be paid for all the companies included in the Chancellor's Amendment would amount to something like £2,750,000 in a year.
Seven millions.
It might be something like that before the three years have expired, but there is no intention that these statutory companies should escape for any longer than this probationary period.
You mean that during that probationary period they will be able to screw their charges up?
The hon. and gallant Gentleman knows as well as I do what the difficulties of these companies are. He knows that in certain circumstances additional fares will be sanctioned by legislation to meet the enormously increased expenses they have to meet, and just as additional fares are sanctioned for this purpose, so indisputably when we get what we all hope to see, a fall in prices, the corollary holds good that the fares charged will have to have a corresponding relation to the reduced expenses. I perfectly understand, and as one who has been for many years, in fact for the greater part of my time in this House, a Member of a very small but active Opposition, I can understand hon. Members moving, with some vigour, their Amendments to the Chancellor's Amendment. I quite understand the position they take up, but I think the House as a whole will feel that the Chancellor has met a really difficult case in a not unreasonable manner, and if this Amendment is pressed to a Division, I feel confident that he will receive the support of a considerable majority of the House.
I must enter some protest, as far as the railways are concerned, against some of the observations which have been made. I know the misery and terrible distress which have been caused among shareholders both in Canada and in this country. When you consider that in 1913 the railway interest in this country realised 4 per cent. on the investment, and since then, owing to the enormous increase in expenses, principally wages, the railways are at present living on the charity of the Government, and when you consider that you could not have carried on the War for a single day unless the railways had been there—[ Interruption ]—Quite right, but the great bulk of the railway securities are trustee securities, in which poor people have invested their money. I think there are at least 300,000 people who hold amounts of £500 and under. I could not, without rising in my place, listen to the attacks which have been made on the railways after the splendid service they and their men have done, and I think the idea which goes abroad, that the railways are owned by a lot of selfish capitalists who do nothing, ought to be protested against.
Question put,
"That the words 'provided that this Part of this Act shall not, during the period between the first day of January, nineteen hundred and twenty, and the thirty-first day of December, nineteen hundred and twenty-two, apply to the profits of—
(i) a company which carries on' stand part of the proposed Amendment."
The House divided: Ayes, 197; Noes, 54.
Division No. 254.] AYES. [9.11 p.m. Addison, Rt. Hon. Dr. C. Chamberlain, Rt. Hn. J. A.(Birm., W.) Greene, Lt.-Col. Sir W. (Hack'y, N.) Adkins, Sir W. Ryland D. Chamberlain, N. (Birm., Ladywood) Greenwood, William (Stockport) Agg-Gardner, Sir James Tynte Clough, Robert Greer, Harry Ainsworth, Captain Charles Coates, Major Sir Edward F. Gregory, Holman Atkey, A. R. Coote, Colin Reith (Isle of Ely) Greig, Colonel James William Baldwin, Rt. Hon. Stanley Courthope, Major George L. Gretton, Colonel John Balfour, George (Hampstead) Cowan, D. M. (Scottish Universities) Gritten, W. G. Howard Barker, Major Robert H. Craig, Colonel Sir J. (Down, Mid) Guest, Capt. Rt. Hon. Frederick E. Barnett, Major R. W. Craik, Rt. Hon. Sir Henry Harmsworth, C. B. (Bedford, Luton) Barrand, A. R. Davidson, Major-General Sir J. H. Harris, Sir Henry Percy Barrie, Charles Coupar Davies, Alfred Thomas (Lincoln) Haslam, Lewis Barton, Sir William (Oldham) Davies, Thomas (Cirencester) Henderson, Major V. L. (Tradeston) Bell, Lieut.-Col. W. C. H. (Devizes) Dawes, James Arthur Henry, Denis S. (Londonderry, S.) Bellairs, Commander Carlyon W. Dean, Lieut.-Commander P. T. Herbert, Dennis (Hertford, Watford) Benn, Capt. Sir I. H., Bart. (Gr'nw'h) Denniss, Edmund R. B. (Oldham) Hewart, Rt. Hon. Sir Gordon Betterton, Henry B. Dewhurst, Lieut.-Commander Harry Hood, Joseph Birchall, Major J. Dearman Edge, Captain William Hope, James F. (Sheffield, Central) Bird, Sir A. (Wolverhampton, West) Edwards, Major J. (Aberavon) Hope, J. D. (Berwick & Haddington) Blades, Capt. Sir George Rowland Elveden, Viscount Hopkins, John W. W. Blake, Sir Francis Douglas Eyres-Monsell, Commander B. M. Hopkinson, A. (Lancaster, Mossley) Borwick, Major G. O. Falcon, Captain Michael Home, Edgar (Surrey, Guildford) Boscawen, Rt. Hon. Sir A. Griffith- Farquharson, Major A. C. Hume-Williams, Sir W. Ellis Bowyer, Captain G. E. W. Fell, Sir Arthur Hunter, General Sir A. (Lancaster) Bramsdon, Sir Thomas Fildes, Henry Hunter-Weston, Lieut.-Gen. Sir A. G. Breese, Major Charles E. Foreman, Henry Hurst, Lieut.-Colonel Gerald B. Briggs, Harold Forestier-Walker, L. Illingworth, Rt. Hon. A. H. Brown, Captain D. C. Fraser, Major Sir Keith Inskip, Thomas Walker H. Bull, Rt. Hon. Sir William James Gardiner, James James, Lieut.-Colonel Hon. Cuthbert Burn, Col. C. R. (Devon, Torquay) Gibbs, Colonel George Abraham Jameson, J. Gordon Campbell, J. D. G. Goff, Sir R. Park Jesson, C. Carew, Charles Robert S. Gould, James C. Jodrell, Neville Paul Carr, W. Theodore Goulding, Rt. Hon. Sir Edward A. Johnson, Sir Stanley Casey, T. W. Gray, Major Ernest (Accrington) Johnstone, Joseph Cecil, Rt. Hon. Evelyn (Birm., Aston) Grayson, Lieut.-Colonel Sir Henry Jones, Sir Edgar R. (Merthyr Tydvil) Chadwick, Sir Robert Green, Joseph F. (Leicester, W.) Jones, Henry Haydn (Merioneth) Jones, J. T. (Carmarthen, Llanelly) Newman, Sir R. H. S. D. L. (Exeter) Shaw, William T. (Forfar) Kellaway, Rt. Hon. Fredk. George Nield, Sir Herbert Shortt, Rt. Hon. E. (N'castle-on-T.) Kidd, James Norris, Colonel Sir Henry G. Smithers, Sir Alfred W. King, Commander Henry Douglas Ormsby-Gore, Captain Hon. W. Sprot, Colonel Sir Alexander Law, Alfred J. (Rochdale) Parkinson, Albert L. (Blackpool) Stanley, Major Hon. G. (Preston) Lewis, Rt. Hon. J. H. (Univ., Wales) Parry, Lieut.-Colonel Thomas Henry Stephenson, Colonel H. K. Lewis, T. A. (Glam., Pontypridd) Pearce, Sir William Strauss, Edward Anthony Lister, Sir R. Ashton Pease, Rt. Hon. Herbert Pike Sutherland, Sir William Lloyd, George Butler Perkins, Walter Frank Sykes, Colonel Sir A. J. (Knutsford) Locker-Lampson, Com. O. (H'tingd'n) Perring, William George Sykes, Sir Charles (Huddersfield) Lorden, John William Pinkham, Lieut.-Colonel Charles Taylor, J. Lort-Williams, J. Pollock, Sir Ernest M. Terrell, Captain R. (Oxford, Henley) Loseby, Captain C. E. Pratt, John William Thomson, Sir W. Mitchell-(Maryhill) Lowe, Sir Francis William Prescott, Major W. H. Thorpe, Captain John Henry Lyle-Samuel, Alexander Pulley, Charles Thornton Waddington, R. M'Curdy, Rt. Hon. C. A. Purchase, H. G. Wallace, J. Macdonald, Rt. Hon. John Murray Rae, H. Norman Walton, J. (York, W. R., Don Valley) Mackinder, Sir H. J. (Camlachie) Ratcliffe, Henry Butler Ward, Col. L. (Kingston-upon-Hull) Macpherson, Rt. Hon. James I. Rees, Sir J. D. (Nottingham, East) Warren, Lieut.-Col. Sir Alfred H. MacVeagh, Jeremiah Remer, J. R. Watson, Captain John Bertrand Mallalieu, F. W. Richardson, Sir Albion (Camberwell) White, Lieut.-Col. G. D. (Southport) Manville, Edward Richardson, Alexander (Gravesend) Williams, Lieut.-Com. C. (Tavistock) Marks, Sir George Croydon Roberts, Sir S. (Sheffield, Ecclesall) Wilson, Daniel M. (Down, West) Martin, Captain A. E. Robinson, S. (Brecon and Radnor) Wilson, Rt. Hon. J. W. (Stourbrdge) Middlebrook, Sir William Rodger, A. K. Winterton, Major Earl Montagu, Rt. Hon. E. S. Roundell, Colonel R. F. Worsfold, Dr. T. Cato Morden, Colonel H. Grant Rutherford, Sir W. W. (Edge Hill) Yeo, Sir Alfred William Moreing, Captain Algernon H. Samuel, A. M. (Surrey, Farnham) Younger, Sir George Mount, William Arthur Sanders, Colonel Sir Robert A. Munro, Rt. Hon. Robert Scott, A. M. (Glasgow, Bridgeton) TELLERS FOR THE AYES .—.— Nail, Major Joseph Seager, Sir William Lord E. Talbot and Mr. Dudley Ward. Neal, Arthur Seely, Major-General Rt. Hon. John
NOES. Bell, James (Lancaster, Ormskirk) Hogge, James Myles Sitch, Charles H. Benn, Captain Wedgwood (Leith) Holmes, J. Stanley Smith, W. R. (Wellingborough) Bowerman, Rt. Hon. Charles W. Kenworthy, Lieut.-Commander J. M. Spencer, George A. Brace, Rt. Hon. William Kenyon, Barnet Swan, J. E. Bromfield, William Lawson, John J. Thomas, Brig.-Gen. Sir O. (Anglesey) Brown, James (Ayr and Bute) Lunn, William Thomson, T. (Middlesbrough, West) Cairns, John Maclean, Nell (Glasgow, Govan) Thorne, G. R. (Wolverhampton, E.) Cape, Thomas Maclean, Rt. Hn. Sir D. (Midlothian) Tillett, Benjamin Carter, W. (Nottingham, Mansfield) Morgan, Major D. Watts Tootill, Robert Clynes, Rt. Hon. J. R. Newbould, Alfred Ernest Ward, Col. J. (Stoke-upon-Trent) Davies, A. (Lancaster, Clitheroe) Parkinson, John Allen (Wigan) Waterson, A. E. Edwards, C. (Monmouth, Bedwellty) Raffan, Peter Wilson Wedgwood, Colonel J. C. Galbraith, Samuel Richardson, R. (Houghton-le-Spring) Wilson, W. Tyson (Westhoughton) Graham, D. M. (Lanark, Hamilton) Roberts, Frederick 0. (W. Bromwich) Wintringham, T. Graham, R. (Nelson and Colne) Roberts, Rt. Hon. G. H. (Norwich) Wood, Major M. M. (Aberdeen, C.) Grundy, T. W. Rose, Frank H. Young, Robert (Lancaster, Newton) Guest, J. (York, W. R., Hemsworth) Royce, William Stapleton Hall, F. (York, W.R., Normanton) Sexton, James TELLERS FOR THE NOES .—.— Hirst, G. H. Short, Alfred (Wednesbury) Major Barnes and Mr. T. Griffiths.
I beg to move as an Amendment to the proposed Amendment, in paragraph (i) to leave out the word "wholly."
There are three following Amendments in my name, and the object of them is to give to English companies operating public utility properties abroad, where they are limited under the terms of their charter or concession in precisely the same way as an English company operating in Great Britain is limited under an Act of Parliament, exactly the same protection as is given to an English company operating public utility property in this country. During the Committee stage and again to-day reference has been made to the effect of driving English capital abroad, and the Financial Secretary to the Treasury, speaking to a recent Amendment, suggested that there was absolutely nothing in that statement. During the Committee stage I gave certain illustrations, and in order that the Financial Secretary might have more clearly before him the exact facts, I will mention a number of public utility properties which have removed during the last few years from London and made their chief seat of operations in the country in which the public utility property is situated. The Burmah Electric Tramways and Lighting Company, with a capital of £200,000 has removed from London. The Bombay Electric Supply and Tramways Company, Ltd., with a capital of £2,149,499 has removed from London and is now paying no taxes in this country. The Rangoon Electric Tramway and Supply Company, Ltd., with £685,063 capital, has removed, and the Hong Kong Tramways Company, Ltd., with £251,875, has removed.
During the Committee stage I ventured to draw the attention of the Chancellor of the Exchequer to the fact that the loss of total taxation to this country on the companies which I personally know have removed abroad, is far more already than will be collected from the whole of the public utility properites operating abroad and owned in England. If they go abroad the loss in taxation, that is, Income Tax, Super-tax and Corporation Tax added together, will be vastly out of proportion to any question of the relief given under the proposal contained in my Amendment. I do urge upon the attention of the Chancellor of the Exchequer this Amendment. I am quite satisfied, and I think he will be quite satisfied when he has had more time to give to the consideration of such a small Amendment as this, that there will be no loss to the Exchequer, but a gain to the Exchequer if he will exempt these companies from the Corporation Tax. The small amount which will be given away will be made up many times over by the number of companies who will retain their offices in London instead of moving their offices abroad. I beg to move the Amendment.
I beg to second the Amendment.
My hon. Friend has given a list of companies which have removed their head offices from this country. They did not do that because the Corporation Tax was proposed. They did it because other taxes were already operating. The 1s. Corporation Tax from that point of view is infinitely less important than the Excess Profits Duty. It is not the Corporation Tax as a supplemental tax which is really going to affect this movement of companies abroad. It is the high rate of general taxation which is inevitable for the present as a consequence of the War.
Income Tax does not affect them.
It clearly affects these companies.
Not shareholders in this country. If they get their dividends in this country they have to pay Income Tax whether the company is registered in Bengal or elsewhere.
I hope my hon. Friend will forgive me for saying that I do not think he has got his mind on the particular point we are discussing at this moment. His observation may be germane to another point, which he has in his mind, but I cannot connect it with the Amendment moved by my hon. Friend or with the case put up, of the inducement, especially to companies in which there is a large body of foreign shareholders, to remove the administration from this country. I cannot except a company which operates abroad, because it operates abroad, from a charge which is imposed upon a company operating at home. Nor do I think that the claim for temporary exemption in the case of a foreign company can be sustained. They are not in the same position as British companies. British companies have been thrown out of gear. Their ordinary arrangements have been upset owing to special circumstances arising from the fact that we were belligerents. Just as we impose this tax upon them so we control their activities. The legislature which controls these companies is the same as the legislature imposing the tax. Neither of these conditions are fulfilled by companies operating abroad.
It seems to me that this Amendment is one which certainly ought to be pressed to a Division in order to show up the ridiculous nature of the Corporation Tax. We have exempted British railway companies, but we have not exempted railway companies who operate abroad. Railway companies operating in the Argentine are no better able to raise their freight rates and passenger rates than railways operating in this country. The Calcutta Electric Supply Corporation cannot raise its rates any more than the Charing Cross Electric Company can raise its rates. You differentiate between them, and you differentiate between them in favour of the British companies that operate in this country because you think there are more shareholders in the companies that operate in this country than in those which operate abroad. The real difficulties of this game is that it does drive companies abroad. Take the case of the Calcutta Electric Supply Corporation, a very big company. There is also the Bombay Electric Supply Corporation. The Calcutta company is registered in London. The Bombay company has shifted to Bombay. The Calcutta company has not yet shifted to Calcutta, but what is to stop it shifting? The right hon. Gentleman says that these companies that are registered abroad have foreign shareholders. They have a certain number of foreign shareholders, but the majority of their shareholders are English. Take the Calcutta company. Nearly all the shareholders are British. If it transfers its domicile to Calcutta in order to avoid the Corporation Profits Tax, the Chancellor of the Exchequer will lose his Corporation Profits Duty. He will lose a great deal more than that. He will lose his Excess Profits Duty, and all the shareholders who happen to live in India will get rid of their Income Tax at the same time. True, the shareholders who live in this country will still have to pay their Income Tax, but the people who live in India will escape. Is it the object of the Government to drive these companies to register abroad? They are only too ready to-day to do so. In India at the present time there are many companies who have shifted their domicile there, partly in order to avoid this tax, and partly for political reasons. They also want to get Indian shareholders into their companies now that India is getting self-government. That is a thing we have to expect; but why the Chancellor of the Exchequer should go out of his way to hasten the transfer of domicile from this country to India I cannot understand. The fact of the matter is that this Corporation Profits Tax is fundamentally unjust. You are simply hitting a few people instead of raising the money as you might do by Income Tax, or as you ought to do by a levy on all capital. The tax has already been whittled away. As the Government have made a concession to statutory companies in this country simply because they were unable to shift the burden on to the consumer, I do not see why they should not make a concession to other companies who are in the unfortunate position of not being able to shift the tax on to somebody else. It seems to me that this Corporation Profits Tax, which we are really beginning to understand at last, is a most iniquitous, unfair tax, and a tax most contrary to the canons of taxation that have ever been laid down by any authority that we have ever had before us in this House. The Chancellor of the Exchequer shelters himself behind the mass of business opinion in this country. He ought to have his own view about the taxation that ought to be levied and not leave it to the big businesses in this country. The big businesses hit upon this Corporation Profits Tax under the impression that it was a tax that could be uniformly shifted on to somebody else, and that it would look as if they paid it when they did not really pay it. That is not a firm ground for basing taxation in this country. I think the Chancellor of the Exchequer next year had better remove this Corporation Profits Tax altogether and get back to increased Income Tax, which would hit everybody, including landlords and tenant farmers, instead of merely selecting a certain number of people in this country and imposing this taxation upon them.
Amendment to proposed Amendment negatived.
I beg to move, as an Amendment to the proposed Amendment, in paragraph (i), after the word "power" ["hydraulic power"], to insert the word "dock".
I will accept that Amendment.
Question put, "That the word 'dock' be there inserted in the proposed Amendment."
The House divided: Ayes, 194; Noes, 44.
Division No. 255.] AYES. [9.35 p.m. Addison, Rt. Hon. Dr. C. Barton, Sir William (Oldham) Bowerman, Rt. Hon. Charles W. Agg-Gardner, Sir James Tynte Bell, Lieut.-Col. W. C. H. (Devizes) Bowyer, Captain G. E. W. Atkey, A. R. Bellairs, Commander Carlyon W. Breese, Major Charles E. Baldwin, Rt. Hon. Stanley Benn, Capt. Sir I. H., Bart. (Gr'nw'h) Brown, Captain D. C. Balfour, George (Hampstead) Betterton, Henry B. Bull, Rt. Hon. Sir William James Banbury, Rt. Hon. Sir Frederick G. Birchall, Major J. Dearman Burn, Col. C. R. (Devon, Torquay) Barnett, Major R. W. Bird, Sir A. (Wolverhampton, West) Campbell, J. D. G. Barnston, Major Harry Blades, Capt. Sir George Rowland Carew, Charles Robert S. Barrand, A. R. Borwick, Major G. 0. Carr, W. Theodore Barrie, Rt. Hon. H. T, (Lon'derry, N.) Boscawen, Rt. Hon. Sir A. Griffith- Casey, T. W. Cecil, Rt. Hon. Evelyn (Birm., Aston) Hope, James F. (Sheffield, Central) Perring, William George Chadwick, Sir Robert Hope, J. D. (Berwick & Haddington) Pickering, Lieut.-Colonel Emil W. Chamberlain, Rt. Hn. J. A. (Birm., W.) Hopkins, John W. W. Pinkham, Lieut.-Colonel Charles Chamberlain, N. (Birm., Ladywood) Horne, Edgar (Surrey, Guildford) Pollock, Sir Ernest M. Clough, Robert Hunter, General Sir A. (Lancaster) Preston, W. R. Coates, Major Sir Edward F. Hunter-Weston, Lieut.-Gen. Sir A. G. Prescott, Major W. H. Coote, Colin Reith (Isle of Ely) Hurst, Lieut.-Colonel Gerald B. Pulley, Charles Thornton Courthope, Major George L. Illingworth, Rt. Hon. A. H. Purchase, H. G. Cowan, D. M. (Scottish Universities) Inskip, Thomas Walker H. Rae, H. Norman Craig, Colonel Sir J. (Down, Mid) James, Lieut.-Colonel Hon. Cuthbert Ratcliffe, Henry Butler Craik, Rt. Hon. Sir Henry Jameson, J. Gordon Raw, Lieutenant-Colonel N. Davidson, Major-General Sir J. H. Jesson, C. Rees, Sir J. D. (Nottingham, East) Davies, Thomas (Cirencester) Jodrell, Neville Paul Remer, J. R. Dawes, James Arthur Johnson, Sir Stanley Richardson, Sir Albion (Camberwell) Dean, Lieut.-Commander P. T. Johnstone, Joseph Richardson, Alexander (Gravesend) Denniss, Edmund R. B. (Oldham) Jones, Henry Haydn (Merioneth) Roberts, Rt. Hon. G. H. (Norwich) Dewhurst, Lieut.-Commander Harry Jones, J. T. (Carmarthen, Llanelly) Roberts, Sir S. (Sheffield, Ecclesall) Edge, Captain William Kellaway, Rt. Hon. Fredk. George Robinson, S. (Brecon and Radnor) Edwards, Major J. (Aberavon) Kelley, Major Fred (Rotherham) Rodger, A. K. Elveden, Viscount Kenworthy, Lieut.-Commander J. M. Roundell, Colonel R. F. Eyres-Monsell, Commander B. M. King, Commander Henry Douglas Rutherford, Sir W. W. (Edge Hill) Falcon, Captain Michael Law, Rt. Hon. A. B. (Glasgow, C.) Samuel, A. M. (Surrey, Farnham) Farquharson, Major A. C. Lewis, Rt. Hon. J. H. (Univ., Wales) Sanders, Colonel Sir Robert A. Fell, Sir Arthur Lewis, T. A. (Glam., Pontypridd) Seager, Sir William Fildes, Henry Lister, Sir R. Ashton Seely, Major-General Rt. Hon. John Foreman, Henry Lloyd, George Butler Sexton, James Forestier-Walker, L. Locker-Lampson, Com. O. (H'tingd'n) Shaw, William T. (Forfar) Fraser, Major Sir Keith Lorden, John William Shortt, Rt. Hon. E. (N'castle-on-T.) Galbraith, Samuel Lort-Willlams, J. Smithers, Sir Alfred W. Gibbs, Colonel George Abraham Loseby, Captain C. E. Sprot, Colonel Sir Alexander Gilbert, James Daniel Lowe, Sir Francis William Stanley, Major Hon. G. (Preston) Goff, Sir R. Park M'Curdy, Rt. Hon. C. A. Stephenson, Colonel H. K. Gould, James C. Mackinder, Sir H. J. (Camlachie) Strauss, Edward Anthony Goulding, Rt. Hon. Sir Edward A. Macpherson, Rt. Hon. James I. Sutherland, Sir William Gray, Major Ernest (Accrington) Mallalieu, F. W. Sykes, Sir Charles (Huddersfield) Grayson, Lieut.-Colonel Sir Henry Manville, Edward Talbot, G. A. (Hemel Hempstead) Green, Joseph F. (Leicester, W.) Marks, Sir George Croydon Taylor, J. Greene, Lt.-Col. Sir W. (Hack'y, N.) Marriott, John Arthur Ransome Terrell, Captain R. (Oxford, Henley) Greenwood, William (Stockport) Middlebrook, Sir William Thomson, Sir W. Mitchell-(Maryhill) Greer, Harry Montagu, Rt. Hon. E. S. Thorpe, Captain John Henry Gregory, Holman Morden, Colonel H. Grant Tillett, Benjamin Greig, Colonel James William Moreing, Captain Algernon H. Waddington, R. Gretton, Colonel John Mount, William Arthur Ward, Col. J. (Stoke-upon-Trent) Gritten, W. G. Howard Munro, Rt. Hon. Robert Ward, Col. L. (Kingston-upon-Hull) Guest, Capt. Rt. Hon. Frederick E. Nail, Major Joseph Warren, Lieut.-Col. Sir Alfred H. Guinness, Lieut.-Col. Hon. W. E. Neal, Arthur Watson, Captain John Bertrand Gwynne, Rupert S. Newman, Sir R. H. S. D. L. (Exeter) White, Lieut.-Col. G. D. (Southport) Hanna, George Boyle Nield, Sir Herbert Williams, Lieut.-Com. C. (Tavistock) Harris, Sir Henry Percy Morris, Colonel Sir Henry G. Wilson, Daniel M. (Down, West) Haslam, Lewis Ormsby-Gore, Captain Hon. W. Wilson, Rt. Hon. J. W. (Stourbrdge) Henderson, Major V. L. (Tradeston) Palmer, Charles Frederick (Wrekin) Wilson, Colonel Leslie O. (Reading) Henry, Denis S. (Londonderry, S.) Parkinson, Albert L. (Blackpool) Worsfold, Dr. T. Cato Herbert, Dennis (Hertford, Watford) Parry, Lieut.-Colonel Thomas Henry Younger, Sir George Hewart, Rt. Hon. Sir Gordon Pearce, Sir William Holmes, J. Stanley Pease, Rt. Hon. Herbert Pike TELLERS FOR THE AYES .—.— Hood, Joseph Perkins, Walter Frank Lord E. Talbot and Mr. Dudley Ward.
NOES. Bell, James (Lancaster, Ormskirk) Guest, J. (York, W. R., Hemsworth) Smith, W. R. (Wellingborough) Benn, Captain Wedgwood (Leith) Hall, F. (York, W.R., Normanton) Spencer, George A. Brace, Rt. Hon. William Hirst, G. H. Swan, J. E. Bramsdon, Sir Thomas Kenyon, Barnet Thomas, Brig.-Gen. Sir O. (Anglesey) Bromfield, William Lawson, John J. Thomson, T. (Middlesbrough, West) Brown, James (Ayr and Bute) Lunn, William Thorne, G. R. (Wolverhampton, E.) Cairns, John Maclean, Nell (Glasgow, Govan) Tootill, Robert Cape, Thomas Morgan, Major D. Watts Waterson, A. E. Carter, W. (Nottingham, Mansfield) O'Grady, Captain James Wilson, W. Tyson (Westhoughton) Clynes, Rt. Hon. J. R. Parkinson, John Allen (Wigan) Wintringham, T. Davies, A. (Lancaster, Clitheroe) Raffan, Peter Wilson Wood, Major M. M. (Aberdeen, C.) Edwards, C. (Monmouth, Bedwellty) Richardson, R. (Houghton-le-Spring) Young, Robert (Lancaster, Newton) Graham, D. M. (Lanark, Hamilton) Roberts, Frederick O. (W. Bromwich) Graham, R. (Nelson and Colne) Rose, Frank H. TELLERS FOR THE NOES. —— Griffiths, T. (Monmouth, Pontypool) Royce, William Stapleton. Colonel Wedgwood and Mr. A. Short. Grundy, T. W. Sitch, Charles H.
Proposed words, as amended, there inserted in the Bill.
Amendment proposed: In Sub-section (3), after the word "limited" insert the words
"but does not include a company whose assets consist wholly of stock or other securi- ties issued by any public authority and formerly held by the persons by whom the company was formed."—[ Mr. Chamberlain. ]
I beg to move, as an Amendment to the proposed Amendment, at the end to add the words "nor a company incorporated before the year nineteen hundred and ten whose assets consist wholly of stock or other securities."
I have been asked to call the attention of the Chancellor of the Exchequer to the case of investment trust companies, and the object of my Amendment is to endeavour to induce him to do something by way of their relief. I have taken the year 1910, because in that year there existed no private companies of the kind against which the Chancellor is believed largely to have directed this legislation. The position of investment trust companies is really very different from that of most other companies which this tax will concern. They are not trading companies in the ordinary sense of the word; they are really associations of investors. They have no turnover like factories, or banks, or shipping businesses. They are simply companies formed practically of associations of investors who can invest in them more wisely than directly with ordinary brokers. From the public point of view, their advantage is special, because, as has been instances during the late War, at periods of emergency they have come forward and not only subscribed largely to Government issues to carry on the War, but have been the direct means of placing very large blocks of securities at the disposal of the Government, and have thus facilitated the Government borrowing abroad. They have, therefore, a special kind of public utility. The ordinary investor may invest with an ordinary broker in the ordinary way, but the advantage to him of investing in investment trust companies is that they are a means of investing his money soundly at a slightly higher rate of dividend than that which is obtained from the normal gilt-edged security. My right hon. Friend now proposes to subject these special companies to a Corporation Profits Tax, to which the direct investor is not liable. The whole tendency of the tax is to dissuade the investor from using these companies. That clearly must tend to put these companies out of business altogether. I do not say that the amount of tax proposed will do so, for I do not think it will, but one must always look forward, and what the companies say is, that if this tax is largely increased there could be very little doubt that people would not come to them, and there would be an end of all their operations. If they are in the nature, as they contend they are, of an emergency national reserve fund, which can be applied to when emergencies, such as the War, occur, for assisting the Government with large blocks of securities, it is obviously in the public interest to retain these companies in existence. What I want to urge upon my right hon. Friend is, that if this tax is to be imposed upon them as well as upon other companies, their special position should be considered favourably, and, if he cannot this year exempt them altogether, that in a future year—assuming, as I trust will not take place, this tax is seriously increased —he would favourably consider their exemption.
My right hon. Friend's Amendment is not out of order, since he has been allowed to move it, but it has no more relation to the Amendment that I have moved than chalk has to cheese. If reasons are wanted for that statement I am prepared to give them. My right hon. Friend asks me now to give an undertaking as to what I or the Government or Parliament would do if at some future time this tax of one shilling became a heavier tax. I really cannot give any such undertaking. I do not contemplate an unlimited extension of the tax, and, on the contrary, in answer to business men who pressed for a high flat rate tax, I said that a flat rate tax could only be levied at a moderate rate. I clearly cannot bind anyone but myself, and I do not think I ought to be bound as to future contingencies. The other argument which he used was that these companies had special qualities which single them out from any of the other undertakings subject to the tax. In the Bill we have provided that the same money shall not be twice chargeable with the same tax because it passes through two hands. If an investment trust derives its revenue from a source on which Corporation Tax has already been levied, then it will not be called on to pay Corporation Tax in respect of the same sum again. Therefore, what is at stake is the income they derive from investments which have not already paid the tax. If I am to give exemption to one of these companies I must exempt all. I cannot make an exception of this kind in respect of this particular class of com- pany. I suggest that equity is secured by the provision that the tax shall not be levied on the revenue which has already paid it. As to the future it is not reasonable to ask me to answer hypothetical questions about conditions which I do not foresee, and if I did answer, the answer I gave could not be of the slightest value to the interests for which the right hon. Gentleman pleads.
May I say, with all due humility, that the right hon. Gentleman does not understand the effect of his tax. I happen to be chairman of an investment trust company since 1892. The right hon. Gentleman says that the tax will not have to be paid twice over. The company which I have mentioned holds practically none at all, or a very small amount, of stock upon which the tax will be levied. Our investments consist of Government securities, corporation securities, debentures, preference shares in a variety of companies, and a certain amount of foreign stocks. We may possibly hold a certain amount of ordinary stock, but it is very, very small, and therefore the argument of the right hon. Gentleman falls to the ground as far as that is concerned. The right hon. Gentleman says that business men preferred a flat tax. We have nothing to do with business men. The business men to whom he refers are manufacturers who have made large excess profits during the War. They have nothing whatever to do with this kind of company, and they know nothing whatever about it any more than the Chancellor.
The right hon. Baronet said I did not understand the effect of the tax, and proceeded to explain it, if not in my words, in the exact way I explained it. What I said was that I had stated in reply to business men that in my opinion a flat tax could only be levied at a moderate rate.
10.0 P.M.
I understood the right hon. Gentleman to say that the tax would not press hardly, because where it had been already levied it would not be levied twice over. I understood him to say that business men preferred a flat tax. I pointed out that those business men were manufacturers who had made excess profits. The particular companies to which I refer, so far from having made excess profits, have lost money during the War, and there is no earthly reason why they should be singled out to have additional Income Tax cast upon him, especially when they are paying less dividends than before the War. The investment trust company, which I mentioned, was in the habit of paying five per cent., and immediately after the War started paid four or four and a quarter per cent., and it is now paying four and a half per cent. On that, because they have some preferred stock, another two shillings is to be placed in addition to the six shillings income tax. I say that is grossly unfair. Why should you single out people who have invested their money in this way? They got a return of 5 per cent. before the War, and now 4½ per cent., and you put upon them an additional tax of 2s. I cannot see the reason for it. The Amendment of my right hon. Friend—no doubt it is my fault—passes my comprehension. I do not make this protest in any spirit of hostility to the Government or to my right hon. Friend. I say this with all submission. I do not want to say anything which is in any way offensive, or anything which casts any doubt upon the ability of my right hon. Friend. He knows perfectly well that, of all the Members of the Government, I think he is the best, but I do not call him a superman, and good men sometimes make mistakes. Now this particular question is one that has come under my direct notice. I have been a director of this company since 1890, and Chairman, I think, since 3892, and I really do know on this particular occasion—perhaps it is the only one —what I am talking about, and I can assure my right hon. Friend that he has made a mistake, that he has not recognised what the position of these companies is, and that what he is doing will injure them. I do not go into the arguments of my hon. Friend. I think he said these companies were there to benefit human nature. I do not say that at all. I think they have made a good many mistakes, but they are more or less honestly conducted, and they are there, not to make great profits, but for a small return, the original idea being that the ordinary investor did not know how to invest his money, and that if he put his money into a company of this sort, the directors of which did know something about investments, he would lose less than if he exercised his own judgment and invested the money in the ordinary way. Now my right hon. Friend comes along and says, "Because you have done that, you will have to pay the additional 2s." I do not think I need say any more.
Amendment to proposed Amendment negatived.
I beg to move, as an Amendment to the proposed Amendment, at the end to add the words
"but shall not be deemed to include any company incorporated and conducted for the purpose of encouraging, promoting, and protecting the interests of agriculture, housing, or transport, or any general industry in the United Kingdom, and not having a capital divided into shares."
There are certain companies which do not divide their capital into shares. They exist for the purpose of furthering the interests of industry. The right hon. Gentleman, when this Amendment was moved in Committee, said:
"Having made that concession with regard to public utility companies, I should like to consider how far there is an analogy between them and such associations as my hon. and gallant Friend has in mind.—[OFFICIAL REPORT, 13th July, 1920, col. 2293, Vol. 131.]
I should like to ask the right hon. Gentleman whether he has come to any definite decision as regards these companies, and whether he proposes to bring such companies within the scope of the Bill? Secondly, would he explain whether companies limited by guarantee would be required to pay the Corporation Profits Tax, and, if so, whether exemption would be given in cases where the income of such companies is devoted to general utility purposes, or where no provision is made for any surplus amongst the guarantors in the event of the win ding-up of the company? I hope, in any event, he will be able to accept my Amendment.
I beg to second the Amendment to the proposed Amendment.
I think it is a question of where the dividing-line is drawn between companies which are trading concerns and those which are not.
I have considered this matter again. It is not altogether free from difficulty, but I think, not by reason of a specific exemption, but by reason of the nature of their operations, most of the associations or companies of the character which my hon. and gallant Friend has in mind, would be exempt; but, if they were carrying on trading operations, they would not be exempt by reason of the fact that the liability was limited by guarantee, or by reason of the purposes to which they devoted any profits that they made. I think I should involve myself and the House in very considerable difficulties if I tried to make an exemption in those cases. I should be reproached with not having made other exemptions which have been discussed to-day, and a good many exemptions might be suggested to me; but I believe in the main, by reason of the character of the operations, nearly all associations of the kind which my hon. and gallant Friend has in mind, and which the hon. and gallant Member (Captain Ganzoni), who moved a similar Amendment in Committee, would be exempt.
Amendment to proposed Amendment negatived.
Question proposed, "That the words
'but does not include a company whose assets consist wholly of stock or other securities issued by any public authority and formerly held by the persons By whom the company was formed,'
be there inserted in the Bill."
Might we have an explanation?
The Amendment is designed to meet a case which has been brought to our notice. We are only aware of a single instance it covers, and we do not think there are more than one or two, if that, in the country. But the case is very peculiar, and one in which it would be very inequitable if the tax should be charged. There is a harbour which is controlled by trustees. The debenture interest—the whole of the capital having been provided by debenture holders—was in default, and a reconstruction of the capital was necessary. When the capital was reconstructed two classes of debenture holders were formed. It was found that in the one class there were some 1,200 or 1,300 small holders scattered throughout the country. It was difficult for them to communicate amongst themselves, and keep in touch with what was being done at this harbour. They therefore decided to form themselves into a company. The sole duty of the secretary of that company was to collect such interest as was paid, if and when paid, and remit their proportions to this large number of debenture holders, and at the same time to advise them of any circum- stances in which their interests might require that they should be brought together for the purpose of the consideration of the affairs of the harbour. Under the Bill as it stands the interest paid by the harbour trustees would not be liable in any circumstances to the Corporation Profits Tax. But under the Bill as it stands the mere fact of these debenture holders having united for the purpose which I have endeavoured to describe would render them liable to pay Corporation Profits Duty on the interest they received from the harbour trustees. Clearly, that would be a most inequitable thing, and we think we have covered this very curious case by this Amendment.
If the sole object of the Amendment were to meet the case which my right hon. Friend has outlined I would have nothing to say against it. But here again, with great humility and much trepidation, I express the opinion that the Amendment goes far beyond that case. I shall be only too glad to be shown that I am wrong. Let me read the Amendment. It says
In 1915, I think it was, I was asked by the present Prime Minister to become a member of a committee of five called the Treasury Issues Committee. I remained on that committee almost until the end of the War when there was a difference between the late Sir Thomas Whittaker and myself and the Government and we retired from that committee. I sat on that committee for at least four years. During that time we had an enormous number of cases come before us. The other members of the committee were Lord Cunliffe, the late Governor of the Bank of England, the late Lord St. Albans, Sir Thomas Whittaker, myself and the representative of the Board of Trade. Leaving out myself, that was a committee of some experience. There came before us on several, occasions applications from solicitors for permission to form a private company. We were told that "Mr. Jones was most anxious to make provision for his children; that he was approaching the period of life"—I noticed that the particular period was never mentioned—"when the necessity of making provision for his children arose." Therefore, he wished to make a private company and transfer his property to that company. Not one of us—and the other four were certainly able men—knew what on earth these people were driving at, and we always refused permission. It was always impressed upon us by the various solicitors and occasionally by Members of this House that we were acting in an arbitrary manner; that what was asked was a simple thing. Here was a poor man who wanted to make provision for his children, and we should allow him to do so. However, we held out. I did not find out what underlay this until one day in the old days when I sat on the front Opposition Bench—I happened to sit next to Mr. McKenna. I mentioned this thing to him. He said: "Do you not understand that this is to avoid Super-tax?" Then, of course, the whole thing dawned upon us. For the sake of argument assume that I have £30,000 a year. I put it all into a company and I make myself and my wife or brother directors. My income, say, is £30,000 a year, and it is in the form of a company of the sort mentioned here. It is a company holding securities" formerly held by the persons by whom the company was formed." I only spend £4,000 a year, and I declare a dividend of £4,000 a year and put £26,000 to reserve. When the Gentleman under the Gallery request me to return the total amount of my income I return it as £4,000. It crossed my mind that I might do this, but I did not do it. I know the Supertax is fairly heavy. I informed the other Members of the Committee which I have mentioned what had taken place, and then we were absolutely certain that we would not grant permission to these people who desired to form private companies. I ask hon. Members to carefully read this Amendment. As I read it these words will let everybody do the thing which I have just outlined. The words are What is a public authority? I want to know where we are. The House of Commons ought to know what it is doing. As I read this Amendment the effect is what I have stated. What is to prevent these people putting all their money into corporation stock and forming a company under this Amendment, and then they will escape the Super-tax. I should like the Chancellor of the Exchequer to tell me where I am wrong. I believe that is the effect of this Amendment, and under these circumstances I cannot understand what on earth this Amendment is for. Hard cases, I know, make bad law, and this is an Amendment introduced to meet an isolated case. I hope my right hon. Friend will not think that I wish to be offensive, but to propose an Amendment which I say is extremely badly drawn, which is indefinite, and which goes far beyond what I believe was the purpose intended, is a great mistake. I suggest that the best thing to do is to withdraw this Amendment, and when we come to the Third Reading to-morrow move to recommit the Bill in order to introduce an Amendment which carries out what the Chancellor of the Exchequer wishes to carry out.
My right hon. Friend is a layman like myself. I have had the advantage of skilled advice in the drafting of this Amendment. He has not. I have not asked one of the Law Officers of the Crown to be in attendance through all these Debates to give assistance if points of law were raised. My right hon. Friend is at one with me, because he admits that the case described by the Financial Secretary is one which ought to be met, and that it would be an injustice if it were not met. That case was brought to us. There are hon. Members of the House present who know what it is. We thought it should be dealt with; we consulted our experts, and they drafted a form of words which they said would meet the case and let in nothing else. I really think my right hon. Friend on reflection will be content with the assurance that the experts have drafted this Amendment to meet this particular case, which we believe to be unique, although I admit if there were any cases like it they would have to be included. The experts drafted the Amendment so as to cover that case and any other case that was on all fours with it, and I therefore hope my right hon. Friend will not press his objection. I cannot recommit the Bill after Report.
May I point out to my right hon. Friend he really has not answered my point. He said that the experts had decided that a certain thing ought to be done, but he has not shown that I am wrong in the opinion I have expressed.
When I gave my right hon. Friend the assurance that the experts had drawn this Amendment to prevent the inclusion of such cases as he has suggested, or other cases much less open to reprehension than this, I thought he would have been satisfied.
I am very sorry, but I cannot see that the experts have done what they intended to do. Experts very often make mistakes. This is really a very serious matter, and to avoid an error surely it would not be unwise to lose even a few hours in order to put it right. We have refused to another place the right to make a correction, and therefore I earnestly hope my right hon. Friend will consult the Law Officers tomorrow morning. I may observe that, in the old days, the Law Officers of the Crown always sat on that Bench during the discussion of the Finance Bill.
Never!
Always!
I have heard the Chancellor of the Exchequer give very good answers several times to difficult questions in the course of this Debate, but I never saw him wholly fail, as he has on this occasion, to meet a practical proposition which was put before him. The House has listened to what my right hon. Friend the Member for the City of London has said, and he put what, to my mind, as one having some acquaintance with the law and also with business, was a thoroughly practical, reasonable likelihood. When these proposals get upon the Statute Book, as my right hon. Friend knows, some of the best brains of the country are put to work to see how they can be evaded, and it is well known that the Courts always construe the Statutes as against the Crown and in favour of the subject. It is a really practical likelihood that a man possessing, say, £100,000 or £150,000, can sell out and invest in securities issued by public authorities, paying fully 6 per cent., and then, three or four months afterwards, turn himself into a limited company and become exempt from the provisions of this Statute. What is the answer of the Chancellor of the Exchequer? He says, "I have consulted the experts, and the experts have covered the case which 1 put to them." Very likely they have; I should think it is extremely likely. But, while experts are all right, as all business men know, for a specific question put to them, they are extremely bad masters on questions of general policy, and it is a question of general policy which my right hon. Friend has put to the Chancellor of the Exchequer. I say again that he has wholly failed to meet that practical point. If ever there-was a loophole left in a Section of what is shortly to become an Act of Parliament, this is one of the greatest I have seen for a long time.
I am a very humble member of the lower branch of the legal profession, but it has been even my fortune to find the law officers of the Crown mistaken before now, and, in spite of what the Chancellor of the Exchequer has said, I should be prepared, if I were a betting man, to bet all Lombard Street to a china orange that his experts are wrong on this occasion, and that the right hon. Baronet is right. On the other hand, I cannot understand the right hon. Baronet's opposition to this Amendment, because it seems to me that, if his interpretation is right, the result is going to be something which is perfectly just and perfectly satisfactory, and, moreover, the very thing in favour of which the right hon. Baronet was arguing.
No.
I think I see where the difference is. I think my right hon. Friend made one slip when he was referring to this question of evading Super-tax. He could only prevent people from resorting to this method while there was a restriction on new issues; but Super-tax was evaded in that way years before the War, and it is being done every day now. A private individual, for the purpose of providing for his children, or of splitting up his property in some way, might choose to hand it over into the names of two nominees as trustees. Let us suppose that all his investments thus handed over are in corporation stocks, and that, instead of appointing two nominees as trustees, he appoints a limited company as trustee. That company does nothing but receive precisely the same dividends as an individual or two nominees as trustees would receive. Therefore it seems to me only just that that company should be free from paying the Corporation Profits Tax a second time over on this particular investment, which would not pay the tax if it were standing in his own name instead of in the name of the company. I was anxious to support the previous Amendment of my right hon. Friend (Sir F. Banbury) because, if certain dividends are not to pay Corporation Profits Tax twice over, or if they are not to pay it at all, why should they pay it because they happen to stand in the name of a company instead of in the name of a private individual? I disagree absolutely from the Chancellor's experts, but I would support the Amendment as giving, not an undesirable loophole, but a measure of justice to private individuals.
Does not the Amendment exempt this particular company from paying Corporation Profits Tax, whereas, the companies which I want exempted, which were innocent companies carrying on legitimate business with very small profit, are not exempted, but this company which is formed for another purpose is exempted from the tax by the Amendment.
My right hon. Friend is perfectly right and I should like to have supported his Amendment as well, but if you cannot get good treatment for the horse at least get it for the donkey.
I, like others, have been trying to understand what the object of the Amendment is and I feel too that it is liable to be a very decided loophole which can be used in certain directions, but the irony of it seems to be that the particular case which was stated by the Financial Secretary, where the Corporation Profits Tax would be paid twice, is a dock or harbour company, which is not going to pay the tax in the first instance, so I do not see where the hardship is, if the company is formed for other purposes and becomes a limited company, why it should not pay the tax in the same way the others did. At any rate, I submit that to make a very wide Clause like this for the purpose of exempting the shareholders of some particular harbour trust is a great pity. I would sooner put a Schedule to the Bill and exempt this particular company and give no particular reason.
I beg to move, as an Amendment to the proposed Amendment, after the word "company" ["but does not include a company"], to insert the words "formed before the commencement of this Act."
May I try to meet the apprehensions which have been expressed I There are cases which neither I nor my predecessors have found an effective way of dealing with, but I think this Amendment will meet the apprehensions which have been expressed. It obviously prevents the formation of the company for the purpose of this evasion.
Amendment to the proposed Amendment agreed to.
Proposed words, as amended, there inserted in the Bill.
CLAUSE 50.—(Determination of profits.)
(1) For the purpose of this Part of this Act profits shall be taken to be the actual profits arising in the accounting period, and shall not be computed by reference to the Income Tax year or on the average of any years.
(2) Subject to the provisions of this Act profits shall be the profits and gains determined on the same principles as those on which the profits and gains of a trade would be determined for the purposes of Schedule D set out in the First Schedule to the Income Tax Act, 1918, as amended by any subsequent enactment, whether the profits are assessable to Income Tax under that Schedule or not:
Provided that, for the purpose of this Part of this Act,—
( a ) profits shall include all profits and gains arising from any lands, tenements, or hereditaments forming part of the assets of a company, and all interest, dividends, and other income arising from investments or any other source and received in the accounting period, not being interest, dividends, or income received directly or in directly from a company liable to be assessed to Corporation Profits Tax in respect thereof, and no deduction shall be allowed on account of the annual value of any premises used for the purposes of the company:
( b ) deductions shall be allowed in respect of interest on money borrowed for the purposes of the company, and for rent or royalties or share of profits distributed to employés under a profit-sharing scheme, and for any other payment Income Tax on which is collected
( c ) any deduction allowed in respect of the remuneration of any director, manager, or other person concerned in the management of a company, who has a controlling interest in the company, whether directly or indirectly, and whether solely or jointly with any other persons, shall not exceed an amount calculated at the rate of one thousand pounds per annum:
( d ) no deduction shall be allowed in respect of any transaction or operation of any nature which has artificially reduced the amount to be taken as the amount of the profits of the company for the purposes of this Part of this Act:
( e ) no deduction on account of wear and tear or renewals or obsolescence or any expenditure of a capital nature for the development of the company or otherwise in respect thereof shall be allowed other than such as may be allowed under the enactments relating to Income Tax or Excess Profits Duty, whichever be the greater:
( f ) no deduction shall be allowed on account of the liability to pay, or the payment of, Income Tax or Corporation Profits Tax:
( g ) a deduction shall be allowed on account of any Excess Profits Duty, any Mineral Rights Duty and Excess Mineral Rights Duty payable or paid in the United Kingdom and for any sum payable or paid on account of Excess Profits Duty or similar duty imposed in any country outside the United Kingdom for the same accounting period, but in computing profits for the purposes of that duty no deduction shall be allowed on account of the liability to pay or the payment of tax under this Part of this Act:
( h ) profits shall include in the case of mutual trading concerns the surplus arising from transactions with members, and in the case of a society registered under the Industrial and Provident Societies Act, 1893, any sums paid by way of bonus, discount, or dividend on purchases, shall be treated as trade expenses and a deduction shall accordingly be allowed in respect thereof:
( i ) in the case of a company carrying on the business of life assurance the part of the profits belonging or allocated to, reserved for, or expended on behalf of policy holders or annuitants shall be apportioned between the profits of
( j ) any sum received by way of repayment of Excess Profits Duty in respect of a previous accounting period under Subsection (3) of Section thirty-eight of the Finance (No. 2) Act, 1915, and subsequent Amendments thereof shall be excluded from the profits taxable:
( k ) In the case of any contract extending beyond one accounting period from the date of its commencement to the completion thereof, and only partially performed in any accounting period, there shall (unless the Commissioners of Inland Revenue owing to any special circumstances otherwise direct) be attributed to each of the accounting periods in which such contract was partially performed such proportion of the entire profits or loss, or estimated profits or loss, in respect of the complete performance of the contract as shall be properly attributable to such accounting periods respectively, having regard to the extent to which the contract was performed in such periods.
Where a company carries on life assurance business in conjunction with assurance business of any other class, the life assurance business of the company shall for the purposes of apportionment under this paragraph, and for no other purpose, be treated as if it were a separate business carried on by a separate company.
Amendment made: In Sub-section (2, b ) leave out the word "for" ["and for rent or royalties"], and insert instead thereof the word "of."—[ Mr. Marriott. ]
I beg to move, in Sub-section (2, b ), to leave out the word "for" ["and for any other payment"], and to insert instead thereof the word "of."
The same Amendment as we have just agreed to is necessary here to make it read right.
Amendment agreed to.
I beg to move, in Sub-section (2, g ), to leave out the words "that duty" ["for the purposes of that duty"] and to insert instead thereof the words "excess profits duty in the United Kingdom."
This is necessitated by words inserted in Committee, and is merely a drafting Amendment, as the words "that duty" no longer clearly express the meaning.
Amendment agreed to.
I beg to move at the end of Hub-section (2, i ), to insert the words
"Where a company carries on life assurance business in conjunction with assurance business of any other class the life assurance business of the company shall, for the purposes of apportionment under this paragraph but for no other purpose, be treated as if it were a separate business carried on by a separate company."
In printing the Bill, as amended in Committee, the second part of paragraph ( i ) was misplaced by a printer's error and appears at the end of the Clause. This Amendment and the consequential omission later of the lines in question correct that error.
Amendment agreed to.
Further Amendment made: In Subsection (2,
"Where a company carries on life assurance business in conjunction with assurance business of any other class, the life assurance business of the company shall for the purposes of apportionment under this paragraph and for no other purpose be treated as if it were a separate business carried on by a separate company."—[ Mr. Chamberlain. ]
I beg to move, at the end of the Clause, to insert
"(3) Where a company (hereinafter referred to as 'the principal company') holds, either in its own name or in that of a nominee, the whole of the ordinary capital of any other company (hereinafter referred to as 'the subsidiary company'), or so much of that capital as under the general law can lawfully be held by a single shareholder, the profits of the subsidiary company shall, if an application in that behalf is made by the principal company, be treated for the purposes of this Part of this Act as being the profits of the principal company as if the subsidiary company were a branch of the principal company, and the subsidiary company shall not be separately assessed to tax under this Part of this Act:
Provided that in ascertaining, under paragraph ( b ) of Sub-section (1) of the last preceding Section, the maximum amount of tax payable by the principal company, no deduction shall be allowed in respect of any payments made by the subsidiary company to the principal company, or any other company, which in relation to the principal company is a subsidiary company within the meaning of this Sub-section."
I undertook to find a form of words for this purpose during the Committee stage.
Amendment agreed to.
CLAUSE 54.—(Repeal of land values duties.)
(1) As from the commencement of this Act the Land Values Duties shall cease to be chargeable, and the obligation of the Commissioners of Inland Revenue under Section twenty-six of the Finance (1909–10) Act, 1910, to cause a valuation to be made of all land in the United Kingdom shall cease.
(2) Any Land Value Duty which has been assessed at the date of the commencement of this Act but which is unpaid at that date shall not be collected, and no assessment shall be made in respect of any Land Value Duty which became chargeable before that date.
(3) Where any person shows to the satisfaction of the Commissioners of Inland Revenue that he or any person of whom he is, in the opinion of the Commissioners, the legal representative has at any time paid any sum on account of any Land Value Duty he shall, on making an application in that behalf to the Commissioners at any time within six months after the date of the commencement of this Act and in such form as may be prescribed by the Commissioners, be entitled to repayment of the sum so paid.
(4) Where an immediate lessor has paid or borne any Annual Increment Value Duty
and has made a deduction in respect of that duty from the rent payable by him to his lessor, he shall on obtaining a repayment under this Section of that duty refund to the lessor or the representative of the lessor a sum equal to the amount so deducted.
(5) In this Section the expression "Land Values Duties" means the Increment Value Duty (including Annual Increment Value Duty), Reversion Duty, and Undeveloped Land Duty imposed by Part I. of the Finance (1909–10) Act, 1910, but does not include Mineral Rights Duty.
I beg to move, to leave out the Clause.
The question was fully discussed in Committee, so I will not go into it now, but I should like to take the opportunity of testing the feeling of the House in regard to this Clause.
Question put. "That the Clause stand part of the Bill."
The House divided: Ayes, 179; Noes, 67.
Division No. 256.] AYES. [10.40 p.m. Addison, Rt. Hon. Dr. C. Falcon, Captain Michael Law, Alfred J. (Rochdale) Agg-Gardner, Sir James Tynte Farquharson, Major A. C. Law, Rt. Hon. A. B. (Glasgow, C.) Ainsworth, Captain Charles Fell, Sir Arthur Lewis, Rt. Hon. J. H. (Univ., Wales)' Atkey, A. R. Fildes, Henry Lister, Sir R. Ashton Baird, Sir John Lawrence Fisher, Rt. Hon. Herbert A. L. Locker-Lampson, Com. O. (H'tingd'n) Baldwin, Bt. Hon. Stanley Forestier-Walker, L. Lorden, John William Balfour, George (Hampstead) Forrest, Walter Lori-Williams, J. Banbury, Rt. Hon. Sir Frederick G. Foxcroft, Captain Charles Talbot Loseby, Captain C. E. Barker, Major Robert H. Fraser, Major Sir Keith Lowe, Sir Francis William Barnett, Major R. W. Gibbs, Colonel George Abraham M'Curdy, Rt. Hon. C. A. Barnston, Major Harry Goff, Sir R. Park Mackinder, Sir H. J. (Camlachie) Barrand, A. R. Gould, James C. Macpherson, Rt. Hon. James I. Barrie, Charles Coupar Goulding, Rt. Hon. Sir Edward A. Manville, Edward Bell, Lieut.-Col. W. C. H. (Devizes) Grant, James A. Marriott, John Arthur Ransome Bennett, Thomas Jewell Gray, Major Ernest (Accrington) Montagu, Rt. Hon. E. S. Betterton, Henry B. Grayson, Lieut.-Colonel Sir Henry Moreing, Captain Algernon H. Blades, Capt. Sir George Rowland Green, Joseph F. (Leicester, W.) Morrison-Bell, Major A. C. Blake, Sir Francis Douglas Greene, Lieut.-Col. W. (Hackney, N.) Mount, William Arthur Borwick, Major G. O. Greenwood, William (Stockport) Munro, Rt. Hon. Robert Boscawen, Rt. Hon. Sir A. Griffith- Gregory, Holman Murchison, C. K. Bowyer, Captain G. E. W. Greig, Colonel James William Nail, Major Joseph Breese, Major Charles E. Gretton, Colonel John Neal, Arthur Bridgeman, William Clive Gritten, W. G. Howard Newman, Colonel J. R. P. (Finchley) Brown, Captain D. C. Gwynne, Rupert S. Newman, Sir R. H. S. D. L. (Exeter) Bull, Rt. Hon. Sir William James Hanna, George Boyle Nield, Sir Herbert Burn, Col. C. R. (Devon, Torquay) Henderson, Major V. L. (Tradeston) Norris, Colonel Sir Henry G. Butcher, Sir John George Henry, Denis S. (Londonderry, S.) Ormsby-Gore, Captain Hon. W. Campbell, J. D. G. Herbert, Dennis (Hertford, Watford) Palmer, Charles Frederick (Wrekin) Carr, W. Theodore Hewart, Rt. Hon. Sir Gordon Parkinson, Albert L. (Blackpool) Casey, T. W. Hood, Joseph Pease, Rt. Hon. Herbert Pike Cecil, Rt. Hon. Evelyn (Birm., Aston) Hope, James F. (Sheffield, Central) Perkins, Walter Frank Chadwick, Sir Robert Hope, J. D. (Berwick & Haddington) Perring, William George Chamberlain, Rt. Hn. J. A.(Birm., W.) Hopkins, John W. W. Pickering, Lieut.-Colonel Emil W. Chamberlain, N. (Birm., Ladywood) Hopkinson, A. (Lancaster, Mossley) Pollock, Sir Ernest M. Clough, Robert Horne, Edgar (Surrey, Guildford) Pownall, Lieut.-Colonel Assheton Coates, Major Sir Edward F. Hunter, General Sir A. (Lancaster) Pulley, Charles Thornton Coats, Sir Stuart Hunter-Weston, Lieut.-Gen. Sir A. G. Purchase, H. G. Coote, Colin Reith (Isle of Ely) Illingworth, Rt. Hon. A. H. Raeburn, Sir William H. Courthope, Major George L. Inskip, Thomas Walker H. Ratcliffe, Henry Butler Craig, Colonel Sir J. (Down, Mid) James, Lieut.-Colonel Hon. Cuthbert Raw, Lieutenant-Colonel N. Craik, Rt. Hon. Sir Henry Jameson, J. Gordon Rees, Sir J. D. (Nottingham, East) Davidson, Major General Sir J. H. Jodrell, Neville Paul Remer, J. R. Davies, Alfred Thomas (Lincoln) Johnson, Sir Stanley Richardson, Sir Albion (Camberwell) Davies, Thomas (Cirencester) Kellaway, Rt. Hon. Fredk. George Richardson, Alexander (Gravesend) Davison, Sir W. H. (Kensington, S.) Kelley, Major Fred (Rotherham) Roberts, Sir S. (Sheffield, Ecclesall) Dean, Lieut.-Commander P. T. Kidd, James Roundell, Colonel R. F. Dewhurst, Lieut.-Commander Harry King, Commander Henry Douglas Rutherford, Sir W. W. (Edge Hill) Elveden, Viscount Knight, Major E. A. (Kidderminster) Samuel, A. M. (Surrey, Farnham) Eyres-Monsell, Commander B. M. Lane-Fox, G. R. Sanders, Colonel Sir Robert A. Scott, A. M. (Glasgow, Bridgeton) Thomson, Sir W. Mitchell- (Maryhill) Williams, Lieut.-Com. C. (Tavistock) Seager, Sir William Thorpe, Captain John Henry Wills, Lieut.-Colonel Sir Gilbert Seely, Major-General Rt. Hon. John Townley, Maximilian G. Wilson, Daniel M. (Down, West) Shaw, William T. (Forfar) Tryon, Major George Clement Wilson, Colonel Leslie O. (Reading) Shortt, Rt. Hon. E. (N'castle-on-T.) Waddington, R. Wood, Hon. Edward F. L. (Ripon) Smithers, Sir Alfred W. Walton, J. (York, W. R., Don Valley) Worsfold, Dr. T. Cato Sprot, Colonel Sir Alexander Ward-Jackson, Major C. L. Young, Sir Frederick W. (Swindon) Stanley, Major Hon. G. (Preston) Ward, Col. L. (Kingston-upon-Hull) Younger, Sir George Sykes, Sir Charles (Huddersfield) Warren, Lieut.-Col. Sir Alfred H. Talbot, G. A. (Hemel Hempstead) Weston, Colonel John W. TELLERS FOR THE AYES .—.— Terrell, Captain R. (Oxford, Henley) White, Lieut.-Col. G. D. (Southport) Mr. Dudley Ward and Lord E. Talbot. Thomson, F. C. (Aberdeen, South) Wigan, Brig.-General John Tyson
NOES. Adkins, Sir W. Ryland D. Guest, J. (York, W. R., Hemsworth) Rodger, A. K. Barnes, Major H. (Newcastle, E.) Hall, F. (York, W.R., Normanton) Rose, Frank H. Barton, Sir William (Oldham) Hirst, G. H. Royce, William Stapleton. Bell, James (Lancaster, Ormskirk) Johnstone, Joseph Sexton, James Benn, Captain Wedgwood (Leith) Jones, Sir Edgar R. (Merthyr Tydvil) Short, Alfred (Wednesbury) Bowerman, Rt. Hon. Charles W. Jones, Henry Haydn (Merioneth) Sitch, Charles H. Brace, Rt. Hon. William Kenworthy, Lieut.-Commander J. M. Smith, W. R. (Wellingborough) Bramsdon, Sir Thomas Kenyon, Barnet Spencer, George A. Bromfield, William Lawson, John J. Swan, J. E. Brown, James (Ayr and Bute) Lunn, William Thomas, Brig.-Gen. Sir O. (Anglesey) Cairns, John Maclean, Neil (Glasgow, Govan) Thomson, T. (Middlesbrough, West) Cape, Thomas Maclean, Rt. Hn. Sir D. (Midlothian) Tillett, Benjamin Carter, W. (Nottingham, Mansfield) Mallalieu, F. W. Wallace, J. Clynes Rt. Hon. J. R. Morgan, Major D. Watts Waterson, A. E. Cowan, D. M. (Scottish Universities) Newbould, Alfred Ernest Watson, Captain John Bertrand Davies, A. (Lancaster, Clitheroe) O'Grady, Captain James Williams, Aneurin (Durham, Consett) Edwards, C. (Monmouth, Bedwellty) Parkinson, John Allen (Wigan) Wilson, Rt. Hon. J. W. (Stourbridge) Galbraith, Samuel Preston, W. R. Wilson, W. Tyson (Westhoughton). Gilbert, James Daniel Rattan, Peter Wilson Wintringham, T. Graham, D. M. (Lanark, Hamilton) Richardson, R. (Houghton-le-Spring) Wood, Major M. M. (Aberdeen, C.) Graham, R. (Nelson and Colne) Roberts, Frederick O. (W. Bromwich) Young, Robert (Lancaster, Newton) Graham, W. (Edinburgh, Central) Roberts, Rt. Hon. G. H. (Norwich) Grundy, T. W. Robinson, S. (Brecon and Radnor) TELLERS FOR THE NOES .—.— Mr. G. Thorne and Mr. T. Griffiths.
SECOND SCHEDULE. DUTIES ON MECHANICALLY- PROPELLED VEHICLES. Description of Vehicle. Rate of Duty. 1. Cycles (including motor scooters and cycles with an attachment for propelling the same by mechanical power) not exceeding 8 cwt. in weight unladen:— Bicycles— Not exceeding 200 lbs. in weight unladen £1 10s.
FOURTH SCHEDULE. ENACTMENTS REPEALED. Session and Chapter. Short Title. Extent of Repeal. 10 Edw. 7. c. 8. The Finance (1909–10) Act, 1910. Sections one to three; subsection (1) of section four; in subsection (2) of section four the words "for the purpose "of the assessment of duty thereon," and the words "and" to pay interest at the rate of five per cant. per annum "on any duty ultimately payable by him as from the date "on which the instrument has been executed"; in subsection (3) of section four the words from "( a ) either" to "assessment or," and the words from "which in their opinion" to the end of the subsection; subsection (4) of section four; in subsection (5) of section four the) either" to "assessment or," and the words from "which in their opinion" to the end of the subsection; subsection (4) of section four; in subsection (5) of section four the
Exceeding 200 lbs. in weight unladen £3 Bicycles if used for drawing a trailer or side-car, and tricycles £4
Amendment made: Leave out the words "Bicycles, if used for drawing a trailer or side-car, and tricycles…. £4," and insert instead thereof the words "Bicycles if used for drawing a trailer or side-car, an additional sum of £1. Tricycles…. £4."—[ Sir A. Fell. ]
Session and Chapter. Short Title. Extent of Repeal. 10 Bdw. 7. c. 8. The Finance (1909-10) Act,1910- cont .. words from "and with respect" to the end of the subsection; subsection (6) of section four and in subsection (7) of section four the words from "but the Commissioners" to the end of the subsection; sections five to nineteen; in subsection (4) of section twenty-one the words from "or where" to "that duty," the words "or increment value duty as the case may be," the words "or redaction as the case may be"; sections twenty-two, twenty-three, twenty-five to twenty-nine; subsection (4) of section thirty-one; section thirty-two; in subsection (1) of section thirty-five the words from "and any increment" to the end of the subsection; sections thirty-six to forty; in section forty-one the definitions of "rent-charge," "rent," "incumbrance," "fixed charge," "owner," and "agriculture"; in paragraph (1) of section forty-two the definition of "rent," "rent-charge," "owner," "feeholder," and "incumbrance"; paragraph (3) of section forty-two to "accordingly"; section sixty-two; in section seventy-three the words "the conveyance or transfer of any stock or marketable security as "defined by section one hundred and twenty-two of "that Act or to"; and as from the 1st day of January," 1921, section eighty four; as from the 1st day of July, "1921, section eighty-five; as from the 1st day of January, "1921, section eighty-six; and as from the 1st day of July, "1921, the Fifth Schedule. 1 & 2 Geo. 5. c. 2. The Revenue Act, 1911. Sections one to six. 1 & 2 Geo. 5.c.48. The Finance Act, 1911. As from the 1st day of January, 1921, section eleven; and as from the 1st day of July, 1921, section twelve. 2 & 3 Geo. 5. c.8. The Finance Act, 1912 Section ten. 5 & 6 Geo. 5. c. 89. The Finance (No. 2) Act, 1915. Subsection (5) of section twenty-one; section forty-nine; as from the 1st day of January, 1921, subsections (1) and (2) of section 10; and as from the first day of July, 1921, subsection (3) of section ten and section fourteen. 6 & 7 Geo. 5. c. 24. The Finance Act, 1916 Sections thirteen and fourteen as from 1st day of January, 1921. 7 & 8 Geo. 5. c. 31. The Finance Act, 1917 Section nine is from the 1st day of January, 1921. 8 & 9 Geo. 5. c. 15. The Finance Act, 1918 Sections eighteen to twenty. 8 & 9 Geo. 5. c. 40. The Income Tax Act, 1918. Sections nine to thirteen; subsections (1) and (2) of section fourteen; sections fifteen; twenty-one, twenty-four, twenty-six, thirty-one, forty-two, fifty, fifty-two, and fifty-five. 9 & 10 Geo. 5. c. 32. The Finance Act, 1919 Sections three, twenty, twenty-one, twenty-three, twenty-seven: and the First Schedule. Sir W. BULL: I beg to move, in the paragraph beginning "10 Edw. 7, c. 8," col. 3, to leave out the words three; subsection (1) of section four; in subsection (2) of section four the words "for the purpose of the assessment of duty thereon," and the words "and to pay "interest at the rate of five per cent. per annum on any "duty ultimately payable by him as from the date on "which the instrument has been executed"; in sub-section (3) of section four the words from "( a ) either" to "assessment or," and the words from "which in "their opinion" to the end of the subsection; subsection (4) of section four; in subsection (5) of section four the words from "and with respect" to the end of the subsection; subsection (6) of section four and in subsection (7) of section four the words from "but the "Commissioners" to the end of the subsection; sections five to) either" to "assessment or," and the words from "which in "their opinion" to the end of the subsection; subsection (4) of section four; in subsection (5) of section four the words from "and with respect" to the end of the subsection; subsection (6) of section four and in subsection (7) of section four the words from "but the "Commissioners" to the end of the subsection; sections five to
I want to save half a million of money or more to the British public which does not come out of the pockets of the Exchequer. By a question which I put on the 25th June last I ascertained that there were over 500,000 documents stamped and particulars delivered during the year ending 31st March. Now that the Land Values duties have gone this expenditure is entirely unnecessary. The public are generally charged by their solicitors £1 1s. for services rendered in this connection, but I do not see what use is made of the particulars. All this trouble had to be taken by every man who sells or deals with his land. Therefore I earnestly urge the Chancellor of the Exchequer to sweep away all this costly nonsense. Although solicitors usually charge a guinea for doing this work, in some cases as much as 25 and even 30 guineas have been charged for something for which there is no use whatever. As far as I can understand, no use has been made of all the mass of information which has been gathered in the Government offices. A large staff of clerks could be discharged and clients would not be charged this sum. I admit that I am speaking against the interests of my own profession, but I have been asked by the Law Society and by many of the provincial law societies to seek to get the provision abrogated. The request comes from practically all the solicitors in England.
I beg to second the Amendment.
In addition to the expense to which the Mover has referred, I think it will be realised that the provision also has the effect of imposing considerable delay on transactions. There was some excuse as long as the land values duties were on the Statute Book, but now that they are removed I fail to see the reason for retaining this vexatious machinery. It is not as if it was possible to get any results out of it by way of valuation. It is well known by experience that within five years whatever particulars are delivered are to all intents and purposes out of date.
I beg to support the Amendment.
I gladly admit that the hon. Member who moved the Amendment and the hon. Member who supported it are speaking against the immediate interests of the profession to which they belong, but when I have explained why I ask that these documents should still be presented to the Inland Revenue and stamped, I hope I shall have convinced them that they do serve a real and effective purpose, and that, although they may impose some charge on those who are dealing with property, yet that charge is not imposed recklessly or idly or without due advantage to the State. The House knows that I have proposed to bring to an end the collection of all the fancy values which were created for the purpose of the taxes. Those values go with the taxes. They have no relation to any transaction that ever took place between man and man. But the Government, while thinking that valuation useless, attach the greatest importance to having as accurate information as possible as to the value of land and hereditaments in England. We need that information for the purpose of taxation and for the purpose of advising public departments and authorities when they are purchasing land. The information we collect under the provisions it is sought to abrogate is most valuable for that purpose. It has proved to be of the greatest assistance to the Valuation Department for all valuation purposes, providing as it does an exhaustive and progressive indication of the movements of values in the property market. It is really essential, if the Valuation Department is to give that assistance which it ought to be able to give to public authorities, and especially to the State, when purchasing, and if it is to exercise that intelligent supervision and check which ought to be exercised over the valuations tendered to it in Death Duties, and all questions of valuation that come before us. It may be that at a later time this particular provision may be altered or added to, but in the meantime it serves a practical purpose, and the Government attach the greatest importance to it. I really could not consent to abandon it without any substitute being put in its place.
I am sure many of us have been rather puzzled by the speech of the right hon. Gentleman. He spoke of fancy values and said that since the House had decided to abandon the land values Clauses all the rest fell, or, at least, the fancy values fell. I very regretfully supported him in abandoning a plan which brought in nothing to the Exchequer, but I am surprised to hear that he proposes to retain the staff to continue the land valuation for the purpose of leading with Death Duties and for other purposes. What is the difference between a fancy value and the new values on which the staff are going to advise him?
What I referred to as fancy values was what has been described as metaphysical abstractions, the valuation of something which never passed in any transaction. You imagined a site divested of buildings and quite, different from what it was, and found out your value for the purpose of Land Values Duties. That does not represent the value in the market of any property. It is the value in the market which gives us information as to the value of the land or buildings.
At that time.
Yes, at the particular time. Undoubtedly our capacity for judging of any particular transaction or of any particular property when it passes at death, or when it is required for the purposes of a public authority, is much better when we have a record of the sales which have taken place in the open market between a willing seller and a willing purchaser, where there is no question of the payment of taxation or of a public authority purchasing by compulsion. We get a record of the actual transaction and of the actual value as between a willing purchaser and a willing seller. You have, of course, to allow for any change which may have taken place in the interval on the property since it passed in those circumstances, or any differences which may exist between it and neighbouring property. It affords great assistance in arriving at a value for the purposes I have named.
May I ask my hon. Friend this question: Why cannot he get this information to which he attaches such great value from the ordinary records of estates and property which is sold?
11.0 P.M.
I do not think anyone in this House could have opposed the land values scheme more heartily than I did, but I sympathise with the action that the Government have taken in keeping a record of all transactions that take place. At the present time, if this record is not kept, all they can do is to have a record of all sales which take place by auction. This arrangement by which everyone has to record every transaction that has taken place privately enables them to keep accurate information of the sale of all land. By far the larger number of transactions take place privately. We spent a large sum on a more or less unnecessary valuation, but if any advantage was obtained from that valuation I wish it to be retained and not to be lost. I do not think it is necessary to retain anything like the staff which is retained at the present time. I think it can be largely reduced and the expenditure brought down to a small sum.
It has been.
I am glad to hear the Chancellor say it has been reduced, but it could be reduced to a greater extent than it has been up to the present time.
My hon. Friend is not aware that I myself invited the National Expenditure Committee to look into this staff and see if they thought it exceeded what was required for the duties it now discharges and to advise upon it.
So I understand, and I understand that the evidence before the Committee was that there was an unnecessary amount of expenditure, but the Report has not yet been published. I want to support the Chancellor of the Exchequer as far as I can, because I think the advantages, so far as any are obtained by this valuation, should not be lost, and I do think it necessary that the record of all transactions and sales which take place by private contract should be recorded, and not only those that take place by public sale.
This question of keeping a record of land value should be a totally different question to that which we are now discussing. This return was rquired in connection with the imposition of these duties which are gone and are no longer to be imposed, and therefore the return to be made in order to assess these duties seems to be no longer necessary. I think the duties having gone it is wrong to impose on the people who deal in land the expense of sending in these expensive returns. It may appeal to the Chancellor of the Exchequer if I tell him that the Birmingham Law Society have unanimously passed a resolution against the continuance of this obligation. I have had a copy of that resolution sent to me, and I do think my right hon. Friend should pay attention to the opinions of the legal profession in Birmingham. It is quite true what my hon. Friend who moved this Amendment said. Not only have the Law Society passed a resolution, but the provincial Law Societies throughout the country have done the same. I do hope my right hon. Friend will reconsider the matter.
I am in somewhat a difficult position, because I am a member of the Council of the Law Society, of which the hon. Member who moved this Amendment is also a member, and I had considerable difficulty myself in making up my mind as to what view I should take on this Amendment. I must say that what the Chancellor of the Exchequer has said, combined with what my hon. and gallant Friend added, has helped me to come to a decision, and the decision I come to is that I think the Chancellor of the Exchequer is right, subject to this. The valuation of the land was almost completed. It was expensive, but no one can doubt that that valuation is of the greatest service to the purchases of land which are going on at present under various Government Departments. It is necessary, therefore, in order that that valuation is kept up to date, that it should be kept up to date by reliable people who know what the transaction is and who are responsible, as officers of the Court—because that is what solicitors are—for the accuracy of the information which they give. What really worries solicitors in this matter is the unnecessary amount of detail. They get a long form—almost as long as my arm—requiring information which, for the special purposes the Chancellor of the Exchequer now says it is only required, is really unnecessary; and if a short form was devised, giving only the necessary information, and the fee was halved to the Crown, and it certainly would be halved to the solicitors, the form being so much less, I think the whole case would be met. I feel very strongly that what the Chancellor of the Exchequer has said carries a great amount of weight. We ought not to allow this information to get out of date, but it can be kept up to date in a much simpler and less expensive form.
I shall be very glad to have the form looked into, and try to simplify it. I cannot pretend to knowledge of details of that kind, but if examination shows that my right hon. Friend is right, and there is unnecessary detail, it certainly shall be altered.
Might I suggest to my right hon. Friend that he had better get into touch with the Law Society, who really understand this?
I will.
Really, the difference between a Registry and a Valuation Department is this. It cannot be necessary to preserve a single valuer such as existed under the Finance Act of 1909–10. All we want is a direction that the deed of conveyance shall be lodged with the simplest particulars, in order that the consideration money and the conditions of the deed shall be duly noted, and that can be done by a Registrar with his assistant clerk, and I should think the cost of the Valuation Department could be diminished almost to vanishing point.
May I say, as Chairman of the Committee on National Expenditure, to whom my right hon. Friend has referred this question, that the Sub-Committee which has considered it passed their Report this afternoon. The whole Committee will consider their Report on Thursday, and will then present it to the House. All this has been thoroughly gone into. It would be out of order to refer to evidence we have taken, or to say whether or not it conflicts with the views hon. Members have expressed; but as the Committee has taken considerable trouble, and examined a number of witnesses, it is only courteous to say that before the right hon. Gentleman takes any steps he should at any rate consider our Report.
Did I say one word to suggest that I was going to do otherwise? On the contrary——
Well, I have tried to get up and explain.
I had no knowledge of the evidence. What I said was that your Sub-Committee was examining into the matter. I expressed no opinion until I saw the Report.
Surely it is inequitable that one section of the country already overburdened should have a tax which we are informed costs £500,000 a year? And with no advantage whatever to the revenue. We had a long discussion on the burden on the co-operative societies—the wealthy bodies. This will only cost £120,000. Yet here we have a section of the community indirectly taxed, which involves an expenditure by them of some half-a-million a year. It is very doubtful at the best as to whether it will be of much use to the Government. These isolated registrations and transactions are valueless.
I am delighted at the Chancellor holding on to this thing. We need this information. We, in a case in Durham, were charged for a parcel of land £1,230 per acre. Since we were able to get at the valuation of the land by the people themselves we have been able to buy the adjoining site—probably a better one—for a school for something like £300. The information on the register will save many costly arbitration cases, and so save and help local authorities.
What has been said about the half million ought to impress the House with the wisdom of voting against a continuance of this system. The defence of the Chancellor is a technical official defence, and that of a bureaucratic Department desirous of maintaining its own establishment. The fact is that this is not the judgment of those who know the situation; and we have the extraordinary circumstance of a system universally condemned by the very profession which has everything to gain by its maintenance. It is generally admitted that all the recommendations will be valueless in four or five years. It is suggested that in the meantime a Government official acting purely as a recorder of certain transactions, can be the means of supplying special valuable information in regard to land values. I suggest that that opinion is an entirely erroneous one. In any particular city if a Government official is to be taken as a criterion of land values he will not have the information to guide him which would enable him or any other person to form a sound judgment in regard to those values. He is merely an official recorder, and he has no personal knowledge of the transactions. Transactions in land vary entirely before the special circumstances connected with their sale, and they are only known to the people whose business is to deal in land, and cannot be known by a purely recording official of the Government type If the professions of the Government and the Chancellor of the Exchequer that they really desire to effect every possible economy are sincere, the very first thing they will do is to abandon any expense in connection with the mere recording of transactions which will be utterly valueless after a few years' time. I hope the right hon. Gentleman will take this step in a much needed direction of cutting down public expenditure, because the information that the Revenue Department or any other Department desires, can be obtained from people with more technical knowledge and better able to give an opinion upon the subject.
Question put, "That the words proposed to be left out stand part of the Bill."
The House divided: Ayes, 180; Noes, 26.
Division No. 257.] AYES. [11.16 p.m. Addison, Rt. Hon. Dr. C. Bell, James (Lancaster, Ormskirk) Bridgeman, William Clive Agg-Gardner, Sir James Tynte Bonn, Captain Wedgwood (Leith) Bromfield, William Ainsworth, Captain Charles Bennett, Thomas Jewell Brown, James (Ayr and Bute) Baird, Sir John Lawrence Bird, Sir A. (Wolverhampton, West) Butcher, Sir John George Baldwin, Rt. Hon. Stanley Blades, Capt. Sir George Rowland Cape, Thomas Barker, Major Robert H. Blake, Sir Francis Douglas Carter, W. (Nottingham, Mansfield) Barnes, Major H. (Newcastle, E.) Boscawen, Rt. Hon. Sir A. Griffith- Casey, T. W. Barnett, Major R. W. Bowerman, Rt. Hon. Charles W. Chadwick, Sir Robert Barnston, Major Harry Bowyer, Captain G. E. W. Chamberlain, Rt. Hn. J. A. (Birm.,W.) Barrie, Charles Coupar Brace, Rt. Hon. William Chamberlain, N. (Blrm., Ladywood) Barton, Sir William (Oldham) Breese, Major Charles E. Coates, Major Sir Edward F. Courthope, Major George L. Kelley, Major Fred (Rotherham) Roundell, Colonel R. F. Cowan, D. M. (Scottish Universities) Kenworthy, Lieut.-Commander J. M. Royce, William Stapleton. Craig, Colonel Sir J. (Down, Mid) Kenyon, Barnet Royds, Lieut.-Colonel Edmund Davies, A. (Lancaster, Clitheroe) Kidd, James Rutherford, Sir W. W. (Edge Hill) Davies, Thomas (Cirencester) King, Commander Henry Douglas Samuel, A. M. (Surrey, Farnham) Dawes, James Arthur Knight, Major E. A. (Kidderminster) Sanders, Colonel Sir Robert A. Dean, Lieut.-Commander P. T. Law, Alfred J. (Rochdale) Scott, A. M. (Glasgow, Bridgeton) Edwards, Major J. (Aberavon) Law, Rt. Hon. A. B. (Glasgow, C.) Seager, Sir William Eyres-Monsell, Commander B. M. Lawson, John J. Seddon, J. A. Falcon, Captain Michael Lewis, Rt. Hon. J. H. (Univ., Wales) Seely, Major-General Rt. Hon. John Farquharson, Major A. C. Locker-Lampson, Com. O. (H'tingd'n) Sexton, James Fildes, Henry Lort-Williams, J. Short, Alfred (Wednesbury) Fisher, Rt. Hon. Herbert A. L. Lunn, William Shortt, Rt. Hon. E. (N'castle-on-T.) Forrest, Walter Lyle-Samuel, Alexander Sitch, Charles H. Fraser, Major Sir Keith M'Curdy, Rt. Hon. C. A. Smith, W. R. (Wellingborough) Gibbs, Colonel George Abraham Maclean, Neil (Glasgow, Govan) Spencer, George A. Gilbert, James Daniel Maclean, Rt. Hn. Sir D. (Midlothian) Stanley, Major Hon. G. (Preston) Gould, James C. Mallalieu, F. W. Stephenson, Colonel H. K. Graham, D. M. (Lanark, Hamilton) Manville, Edward Swan, J. E. Graham, R. (Nelson and Colne) Marriott, John Arthur Ransome Talbot, G. A. (Hemel Hempstead) Grant, James A. Montagu, Rt. Hon. E. S. Terrell, Captain R. (Oxford, Henley) Grayson, Lieut.-Colonel Sir Henry Moore-Brabazon, Lieut.-Col. J. T. C. Thomas, Brig.-Gen. Sir O. (Anglesey) Green, Joseph F. (Leicester, W.) Moreing, Captain Algernon H. Thomson, F. C. (Aberdeen, South) Greene, Lt.-Col. Sir W. (Hack'y, N.) Morgan, Major D. Watts Thomson, T. (Middlesbrough, West) Greenwood, William (Stockport) Morrison-Bell, Major A. C. Thomson, Sir W. Mitchell- (Maryhill) Griffiths, T. (Monmouth, Pontypool) Mount, William Arthur Thorne, G. R. (Wolverhampton, E.) Grundy, T. W. Munro, Rt. Hon. Robert Thorpe, Captain John Henry Guest, J. (York, W. R., Hemsworth) Murchison, C. K. Tootill, Robert Hall, F. (York, W.R., Normanton) Neal, Arthur Townley, Maximilian G. Henderson, Major V. L. (Tradeston) Newbould, Alfred Ernest Tryon, Major George Clement Henry, Denis S. (Londonderry, S.) Newman, Colonel J. R. P. (Finchley) Waddington, R. Herbert Dennis (Hertford, Watford) Newman, Sir R. H. S. D. L. (Exeter) Ward-Jackson, Major C. L. Hewart, Rt. Hon. Sir Gordon Norris, Colonel Sir Henry G. Ward, Col. L. (Kingston-upon-Hull) Hirst, G. H. Parkinson, John Allen (Wigan) Waterson, A. E. Hood, Joseph Pease, Rt. Hon. Herbert Pike Weston, Colonel John W. Hope, James F. (Sheffield, Central) Perkins, Walter Frank White, Lieut.-Col. G. D. (Southport) Hopkins, John W. W. Perring, William George Wigan, Brig.-Gen. John Tyson Hopkinson, A. (Lancaster, Mossley) Pollock, Sir Ernest M. Williams, Lt.-Com. C. (Tavistock) Hunter, General Sir A. (Lancaster) Pownall, Lieut.-Colonel Assheton Williamson, Rt. Hon. Sir Archibald Hunter-Weston, Lieut.-Gen. Sir A. G. Pulley, Charles Thornton Wills, Lieut.-Colonel Sir Gilbert Illingworth, Rt. Hon. A. H. Purchase, H. G. Wilson, Daniel M. (Down, West) Inskip, Thomas Walker H. Raeburn, Sir William H. Wilson, Rt. Hon. J. W. (Stourbridge) James, Lieut.-Colonel Hon. Cuthbert Rankin, Captain James S. Wilson, Colonel Leslie O. (Reading) Jameson, J. Gordon Raw, Lieutenant-Colonel N. Wilson, W. Tyson (Westhoughton) Jodrell, Neville Paul Rees, Sir J. D. (Nottingham, East) Worsfold, Dr. T. Cato Johnstone, Joseph Richardson, R. (Houghton-le-Spring) Young, Sir Frederick W. (Swindon) Jones, Sir Edgar R. (Merthyr Tydvil) Roberts, Frederick O. (W. Bromwich) Young, Robert (Lancaster, Newton) Jones, Henry Haydn (Merioneth) Roberts, Rt. Hon. G. H. (Norwich) Jones, J. J. (West Ham, Silvertown) Robinson, S. (Brecon and Radnor) TELLERS FOR THE AYES .—.— Kellaway, Rt. Hon. Fredk. George Rodger, A. K. Lord E. Talbot and Mr. Dudley Ward.
NOES. Atkey, A. R. Davison, Sir W. H. (Kensington, S.) Ormsby-Gore, Captain Hon. W. Balfour, George (Hampstead) Dewhurst, Lieut.-Commander Harry Palmer, Charles Frederick (Wrekin) Banbury, Rt. Hon. Sir Frederick G. Foxcroft, Captain Charles Talbot Pickering, Lieut.-Colonel Emil W. Bell, Lieut.-Col. W. C. H. (Devizes) Gretton, Colonel John Remer, J. R. Borwick, Major G. O. Gritten, W. G. Howard Richardson, Alexander (Gravesend) Bramsdon, Sir Thomas Gwynne, Rupert S. Rose, Frank H. Cecil, Rt. Hon. Evelyn (Birm., Aston) Horne, Edgar (Surrey, Guildford) Coats, Sir Stuart Lorden, John William TELLERS FOR THE NOES .—.— Davidson, Major-General Sir J. H. Lowe, Sir Francis William Sir William Bull and Mr. E. Wood. Davies, Alfred Thomas (Lincoln) Nall, Major Joseph
FOURTH SCHEDULE. ENACTMENTS REPEALED. Session and Chapter. Short Title. Extent of Repeal. 2 & 3 Geo. 5. c. 8 The Finance Act, 1912 Section ten.
Amendment made: At end of paragraph beginning "2 & 3 Geo. 5. c. 8," insert "5 and 6 Geo 5, c. 62, the Finance Act, 1915, Section five."— [ Mr. Chamberlain. ]
The Motion to recommit the Bill, standing in the name of the hon. Member for Portsmouth (Sir T. Bramsdon), cannot be taken at this stage. It can be taken as an Amendment to the Third Reading.
Bill to be read the Third time Tomorrow, and to be printed. [Bill 189.]
Ministry of Food (Continuance) [Salaries and Expenses]
Considered in Committee.
[Sir E. CORNWALL in the Chair.]
Motion made, and Question proposed,
"That it is expedient to authorise the payment, out of moneys provided by Parliament, of any salaries or expenses which may be payable or incurred under or by virtue of any Act of the present Session to continue temporarily the office of Food Controller, and to make further provision with respect to his powers and for purposes in connection therewith."—[ Mr. McCurdy. ]:
I beg to move, at the end of the Question, to add the words
"Provided that the total sum to be expended under any such Act shall not exceed £150,000."
The House having decided, by its Resolution earlier in the day, to take this Resolution after Eleven o'clock, no comment from me on that point would be in order, but I think I am entitled to say that it is a great strain on the patience and endurance of hon. Members that a very important matter such as this should be taken now. I pass from that to the Memorandum on the Financial Resolution, which hon. Members who have not already obtained it may find in the Vote Office. I advise them to look at it, and I would invite the attention of the Committee to what it says. It reads:
"Assuming the official date of the termination of the War to be the 1st November, 1920"
That is a very optimistic view. No one in his senses really thinks that the War is going to end on the 1st November next. It will not; and the Ministry is em- powered to go on for a period of 12 months after the termination of the War, without any further powers from this House at all. That is the position, as stated by the Government themselves, under the Ministers and Secretaries Act. They are asking, under this Resolution, for further financial powers beyond those which they have already in the Estimates —which have not yet been passed, but which will very speedily come under the operation of the guillotine, and this Department can have all the money for which it asks. Let me direct the attention of the Committee to the completion of the sentence in the Memorandum:
"The period of the extension of the Ministry of Food shall be ten months, and the estimated monthly expenditure of the Ministry during this period, over and above the cost of liquidation, is not to exceed the following amounts: The Sugar Rationing Staff, £20,000 a month."
Not a year, but a month!
"The Regional Enforcement and Emergency Staff, £10,000 a month, and the Headquarters' Administrative Staff, £10,000 a month."
Assuming the ten months develop themselves into twelve, that is £480,000. Is the Committee prepared to give this Ministry, which they themselves state to be in liquidation, or very nearly so, that which they ask under this Resolution? I have read the Memorandum, but the Resolution itself is on the usual extended. and unbounded terms. It simply asks that Parliament should authorise any salaries or expenses which may be payable or incurred under or by virtue of any Act of the present Session to continue temporarily the office of Food Controller, and to make further provision with respect to his powers and for purposes in connection therewith. If the Committee is going to grant this Ministry this sum they are giving up any claim at all to be a controlling or economical influence upon the Treasury or upon this Ministry. The sugar ration! What justification can they show us tonight—and it is the only chance we have got of getting a grip of this question to-night at half-past eleven. It is a most important point. I ask the Minister to justify to us £20,000 a month on the sugar rations. I ask the hon. Gentleman to justify to us on the facts, £10,000 a month for the regional enforcement and emergency staff, and £10,000 a month on headquarters— £120,000 a year for running this business of headquarters! It is a monstrosity born of the War and carried on with peace. Of course the hon. Gentleman laughs. He has nothing to do with economy on that Bench. What do they care? They have not got to find the money. The Chancellor of the Exchequer brings the tax, and they manipulate the food stocks at what prices they like, and take it out of the public that way. Why should they bother about expenditure? Of course, the hon. Gentleman laughs. It does not bother him, but it bothers us very much when we are responsible to our constituents. I wonder what the Committee will do. I suppose the hon. Gentleman thinks it is platform stuff. It is not. It is honest ordinary business. We shall hear him say, I daresay, "You need not bother." He said the other day, "You need not trouble. I am a credit Department. I make my money out of the public, and I make so much out of the public that I do not cost the public anything." What finance! It is reduced to futility and puerility. It is not straight. Food cost was a charge on the public, and they say, "At the end we will return such a balance that we will repay all the Treasury spend on us." The public have got to pay just the same. I strongly urge the Committee to-night, few as they are, to take this matter into their hands and ration this Ministry and its headquarters' staff, ration it and its sugar rationing staff, ration it and its regional emergency staff. We can do, it. Ration them to-night. I think £150,000 is quite sufficient for them to carry on with, and when they have spent it they can come back to us again, and we will grant then the necessary money with which to carry on their liquidation and the reasonable ending of their Ministry.
I beg to second the Amendment.
I am not often in agreement with the right hon. Gentleman opposite, but on this subject I find myself in agreement with every word he has spoken. It is high time hon. Members struck out a real strong note of economy, and tried to fight out the position of these Government Departments, whose only consideration is not how much they can save but how much they can spend. I think the position is even more serious than has been stated by my right hon. Friend. We have just added a Clause to the Finance Bill, Clause 57, which gives the Ministry of Food power to spend money up to £120,000,000, or something of that kind, under the Civil Contingencies Fund Act, and it is quite within the possibilities that the purchases which are made under that heading will result in a very substantial loss. In the memorandum which the Minister has issued it says:
I will go with both feet into the Lobby with my right hon. Friend (Sir D. Maclean). This is one of the opportunities we have of putting those two feet down, and showing that we will not have the gross and wasteful expenditure that is going on to-day. I imagine that the right hon. Gentleman who brought forward this Financial Resolution put it in this specious way in the endeavour to cover up the real amount. I suppose his excuse is that as the Ministry is only in existence for 10 months he is living from hand to mouth, and he comes down to the House of Commons and asks for £40,000 a month until we are pleased to extinguish him. So long as we pay out money to these limpet Departments, so long will they hang together. It is only by all hon. Members in this House at last making a definite stand against the extravangance and the bureaucracy which is bearing so heavily upon us all that we shall get anything done. The right hon. Gentleman seemed to be amused at the somewhat heated and virile remarks of the hon. Gentleman who, I believe, for the moment leads the Opposition. I was pleased to see he was amused, because as a rule he is regarded as a lugubrious Minister when he goes about the country trying to frighten it into continuing this costly Department by threatening the country with the horrible evils that will befall it unless it keeps him in office and supports his extravagant Department. But to-night he is pleased to laugh. To me the irony of it is that we have been spending the whole afternoon oppressing the taxpayer with new demands. If the Government had any sense of decency or imagination they would see that this is not the hour or the day at which to bring forward these new and extravagant proposals to impose still more expenditure on the pockets of the oppressed taxpayer.
I am rather anxious to hear how the right hon. Gentleman will translate his smiles into words. I am pleased to see him for once amused. It is a new spirit for him. Let us take it as a spirit of hopefulness that he at last is beginning to see the irony of this business and that he cannot conceal his mirth at it. I hope hon. Gentlemen in the House to-night—some of whom have been loyal to the Government past belief—when they have regarded this new demand will go with us into the Lobby to register an effective and, I hope, final protest; because if we do deny this money tonight it will make His Majesty's Government sit up. It will make the Government see for the first time that this House means business. Unfortunately the Leader of the House is not present to-night. If he had been present he would no doubt have told us that he was going to stand or fall by this Vote and that unless we voted for it we would have to look out for another Government. We do not want to look out for another Government, and it is because we do not want another Government, that we ask the present Government, in Heaven's name and for economy's sake, to put their house in order, to come to us with sensible proposals, and, when we stand up indignantly denouncing what they are doing, not to laugh at us. I see the right hon. Gentleman is impatient to translate his smiles into words; but whatever he says he will not content me. Let him be prepared to accept the Amendment, and be the first Minister to give some earnest of a desire for economy. Let him show his courage by accepting this Amendment.
He could have more money, if necessary, but we want now to restrict him; we want him to live from hand to mouth, as some of us have to live to-day owing to the demands of the Government. Let him get up and say that this is a reasonable Amendment, and that if he wants any more money he will come and ask for it.
I am very much obliged to the right hon. Gentleman opposite (Sir D. Maclean) and to the two hon. Members who have spoken for giving me an opportunity to explain exactly the grounds upon which I ask for this Financial Resolution. Let me make plain a point upon which there seems to be some confusion of thought in the mind of my right hon. Friend, and that is as to the real purpose of the Ministry of Food (Continuance) Bill. My right hon Friend has pointed out with perfect accuracy that we have, for the purpose of this Financial Resolution, assumed that the official date for the termination of the War will be 1st November, 1920. The right hon. Gentleman has pointed out, and it is possible, that the official termination of the War may be at a. later date. If it is at a later date, then the continuance of the Ministry of Food, which is the result of this proposed legislation, will be less than ten months. It may be for only a very short period of it. In fact, this is a Bill for delimiting the period of the Ministry. It adds to a period already fixed by law, a period which the right hon. Gentleman agrees will not be another ten months, and may be a substantially shorter period than that.
Do we understand from that that if there is some miraculous speeding up of the signing of peace and the ratification, and so on, it will shorten the duration of the Ministry?
I am afraid the hon. and gallant Member has not quite understood what is the position.
That is why I asked the question.
The point is that, so far as the Ministry of Food is concerned, it continues in existence, under the New Ministries and Secretaries Act, for a period of twelve months after the termination of the present War. It does not continue to have effective powers to do the work which it is now doing after the termination of the War. That is an anomaly which made it necessary to introduce this Bill. Incidentally, what the Bill does is to fix for termination a date which is certainly not ten months after the existing life-time of the Ministry, and it will enable us, as a business concern, at any rate to make our arrangements so that at that date at the latest we shall cease to exist.
You ask for powers to 1922.
We are speaking of the same date.
You do not want the Bill at all.
I do not want to repeat myself, but the right hon. Gentleman has repeated himself in this matter twice to-day and once upon the Second Reading Debate. May I, therefore, attempt finally to make plain to him the fact that while our existence continues for twelve months after the duration of the War, the powers which enable us to render that existence, as we hope, of some service to the community generally, cease as soon as the War terminates. Therefore, it is necessary that the powers which would come to an end must be replaced by some other powers if we are to be in a position to liquidate the property of the taxpayer to advantage and to continue the other services which we are at present rendering. As to what those services are, I will speak in one moment. First of all, let me say that no one is more in sympathy with economy than I am, but what I do beg this Committee for once to do is not to bother about the pence, but to think of the pounds. Do not bother about the wages of charwomen, of which we near so much, or about the salaries of officials, but think in millions. In the first place we have £132,000,000 worth of the taxpayers' property to liquidate.
Too much.
I daresay, but it is not our fault.
You are going on buying.
In regard to wheat, I suppose people must have bread.
You are buying bacon. HON. MEMBERS: Sugar!
Why do you not start buying timber?
I do not know the relevance of that observation. Let us deal with one matter at a time. People talk about economy, but as soon as you come up against a proposition in which there are millions to be lost or saved they immediately want to turn off and talk about something else. I am talking about £132,000,000 worth of the property of the British taxpayer which has to be liquidated. Acting throughout in the closest consultation with the best financial advice that we can obtain, we are conducting our transactions with the intention and with the contemplation that we shall be able to liquidate the whole of these stocks without any loss to the British taxpayer. We are not asking for one halfpenny for that in this financial Resolution. Nobody can say at the present time whether the actual period at which the Ministry of Food will come to an end will be two months, three months or the maximum of ten months suggested in the memorandum.
My right hon. Friend (Sir D. Maclean) talks airily about the figure of £20,000 a month for the sugar rationing staff. The sugar ration enables us to economise the sugar consumption in the country in a manner which must be obvious to the Committee. When there is a shortage of sugar you must either provide enough for the rich to buy as much as they please, and for there still to be a surplus for the needs of the working-class population, or you must ration rich and poor alike and by that equitable distribution economise the sugar supplies. The actual economy we are making in the national food bill by the rationing system is £90,000,000 a year at the present time. It is suggested that we are starving the children. If that be so we can increase the ration, but the saving will remain substantially the same. The sum of £20,000 referred to, which merely represents a charge of 2d. a year for each rationed person, is a very cheap price to pay for the absence of the sugar queues, on the one hand, or for the saving of £90,000,000 a year effected in our sugar consumption at the present time. Now I come to the £10,000 for regional enforcement and emergency staff. This is a large sum, which amounts to £120,000 a year. We collected in fines last year £68,000 to set against that. I can assure the Committee that an organisation which has collected that amount of fines, most of which were inflicted by magistrates for the protection of the consumer against excessive prices, means a saving to the consumers of a sum very far in excess of either £68,000 or £120,000.
By the local authorities.
12 M.
I do not know whether that observation is serious or not. I may say that in the period of grave emergency last year the milk supply of the Metropolis was entirely dependent on the transport service of the Ministry of Food, which acted without any regard to any interest other than that of the consumer. That service was rendered by the organisation for which the sum in question is being asked. I pass to the item of head quarters and administrative staff. Reference has been made as to speeches about economy. I suggest, if you want to see a practical illustration of how public economy may be effected, month after month, you have only to look at the record of the headquarters and administrative staff of the Ministry of Food since the date of the Armistice. On the 30th June, 1918, the total of this staff was 7,635, and I do not think any one will doubt the services the Ministry was then rendering. In twelve months that figure of 7,635 had shrunk to 4,400, and on the 30th June of this year it had shrunk to 2,500. I anticipate that by the 1st July next our headquarters' staff is likely to be reduced to 500 persons. I can assure the Committee that, not only is the question of saving of expense and the cutting down of the staff of the Ministry occupying the constant thoughts both of myself and of the Parliamentary Secretary, but our efforts, and those of my predecessor, make it abundantly clear by the most cursory glance that the record of the demobilisation of the staff has been a continuous one since the date of the Armistice. If any Members of this Committee are sincerely desirous of economy I venture to suggest to them that the worst possible economy would be to refuse the very modest and conservative estimate for the continuation of the Ministry, which during the years of war saved the consumers of the country some hundreds of millions and which is still actually affecting economies for the consumer of this country amounting to many millions a year and which does that work without costing the taxpayer of this country one penny piece because, as I stated the other day and repeat to-day, the expenses which we ask for we do not ask for on the footing of a spending Department as moneys to be spent and accounted for on paper, but on the footing of a Department which has always treated the moneys received from the taxpayer in the nature of loans to be utilised for the benefit of the consumer, who receives a benefit many times greater than the expenditure of the taxpayer, loans which must ultimately, when the accounts of the Ministry are closed, be returned to the country with interest in hard cash. I hope I have answered all the points that have been raised. I assure the Committee that I do not want to treat this matter in any controversial spirit. My sole desire, and the sole desire of all my colleagues at the Ministry of Food, is to deal with all the problems before us on a business basis, and it is on a business basis and with every confidence that it represents a transaction highly profitable alike to the consumers and taxpayers of this country that I ask the Committee to give us the Resolution to-night.
The right hon. Gentleman has made out an excellent case, as he always does, and no one in the Committee doubts that he is doing his best. The business of the Sugar Commission is conducted by a very small number of persons, and we are informed that they managed to make a very big mistake and involved us in a very heavy expenditure for sugar which might have been avoided. We are informed that the Sugar Commission at a critical period in the sugar market ran what is called a bear. It was a great failure, and the result was that they spent a great deal more than if they bought at the market price. I notice that in this Memo- randum the Ministry of Food calmly assures us that the liquidation of their purchases and commitments will not be complete till the 31st August, 1922. That is the basis of the whole of their Memorandum. They say they would like to carry on their powers also until their liquidation is complete. There is nothing, I understand, in the Act which says that the Ministry should continue until the very last day on which their existence is authorised. There is nothing to prevent them winding it up before of the last tick of the clock on the last day of their existence. The Council have it in their power to curtail this large expenditure, and it is certainly news to learn there are still 2,500 persons on the staff of the Ministry when the War terminated two years ago. We know how difficult it is to discharge persons who have done good service, but they have unfortunately to be discharged in the national interest. As long as you have these large staffs they will have something to do, if it is only sending a piece of paper from one room to the other. They will find something to do if only to show they have dispatched a certain number of documents and drawn up a number of memorandums The only way is to wind up all Departments that are absolutely useless and hand them over to the Finance Department to wind up as quick as possible. I desire to support the limitation of the expenditure of this Ministry to a fixed sum which has been proposed by my right hon. Friend who moved the Amendment. If the Ministry wants any more it should come to Parliament and show cause for the increased expenditure. I ask the Council to support this limitation if on no other reason than that Parliament should be thoroughly informed of what is going on.
I would like to ask the Minister one question. I take it that the expenses of the Royal Commission on Sugar Supply are not included in this £20,000 a month, that it is only one end of the sugar business, and that the whole of this sugar business is not represented in the Vote. The Commission for Sugar Supply is a most anomalous concern which has been running in association with the Treasury, and which we have never been able to call into account. This £20,000 a month is for the distribution and rationing of sugar. The other expenses are down somewhere else. What they are we do not know. The last speaker told us what that particular end of the sugar business has done, namely, to lose the people of this country a very large sum of money last year. They made a very serious blunder. That accounts for the present price of sugar imposed upon us and for the necessity of the right hon. Gentleman having to define his end of the business. As regards his end, I can assure Labour Members opposite that they are making a great mistake in their support of this particular Department. If it was not so late, I could probably give them some information which would change their minds very considerably on that particular item. Let us make one thing quite clear to the right hon. Gentleman. We all admit that this Ministry did very essential and excellent work and that a skeleton organisation might be useful to do similar work again. We admit that it was necessary and well done. But what we now say is that the time for it has gone.
The right hon. Gentleman beside me (Mr. G. Roberts) was definitely sent by the Cabinet to the Ministry of Food to wind it up. The hon. Gentleman on the Front Bench (Mr. McCurdy), so far as I can make out, has been sent by the Cabinet to continue it for another two years. That was a great astonishment and a great disappointment to me. In regard to sugar, the language of the hon. Gentleman really fills me with despair. The reason he gives for continuing this extensive system of rationing is that it is a useful way of enforcing economy on the population. But this country now has no fear of being short of sugar; no reasonable fear for this year. The attention of the hon. Gentleman has been called to definite examples of the Sugar Commission refusing sugar. They refused two shiploads which I brought to their notice. If the hon. Gentleman challenges that statement, I can prove it. We had sugar offered, and at a reasonable price. One reason—a peculiar one—given for refusal to purchase was that the Ministry had made up their minds that the people must be forced not to buy too much sugar —that the Ministry was going to enforce economy. If the Government want to enforce economy, then for goodness sake do not do it at the expense of the starving children of this country who are not getting as much sugar as they ought to be having. Sugar can be got; it is available. I do not suggest that the Minister should at once get rid of this power of control to look after sugar. But the time for this elaborately detailed rationing has gone—months ago! If you do as I suggest you would have more sugar for the poor people. But what I do object to is that the hon. Gentleman comes here to-night and makes no promise to wind up the Ministry. He holds out no such hope. He is going to stick to his full detailed rationing long after it is necessary. Therefore, I hope the definite limit suggested will be supported so as really to emphasise, not so much on the hon. Gentleman himself as on the Government, the need to wind up this business as soon as possible.
The hon. Gentleman makes out that we on this side of the House objected to voting supplies for his Ministry at all. That is not so: what we propose to do is to grant money for four months, and then for the Ministry to come and ask for more. That is a very reasonable proposition. The Minister might be well-advised to accept it and not risk a defeat which, if he does not accept, he richly deserves. I am in favour of the Ministry of Food being continued, as the hon. Gentleman knows perfectly well. I have supported him on several occasions. When last spring he or his predecessor said they would try and wind up the Ministry in six months or so, I predicted that he would not be able to do anything of the sort; and I have been right. There is a food crisis in the world, and though we may be all right here, we have to watch the situation, and there will be need for a headquarter's organisation for some years. But that is no reason why we should not watch very carefully the expenditure.
A point to which I want to draw attention is the appointment of regional food controllers. You are appointing up and down the country these men, and in one or two cases—I think not many—you have given the posts to men quite unfit; busy people who are doing other work, and who are getting £1,000 a year for a part-time job. This sort of thing ought to be checked. The most flagrant case I know of was an obviously political appoint- ment made in a northern city in Scotland. I do not want to give the name, but, if challenged, I will do so. An obvious political appointment was made of a business solicitor, a gentleman who, in addition to having a large practice as a solicitor in Scotland, is a director of a number of commercial companies, but he has had nothing whatever to do with food. He is appointed at £1,000 a year, and is carrying on his other activities and an extensive practice as a solicitor. I contend that that is a waste of public money. If a man is doing a part-time job of that sort, he ought to be public-spirited enough to accept a lower wage than £1,000 a year. On the other hand, there are plenty of admirable gentlemen, ex-officers of the Army, with administrative experience, who could give their whole time, and would be glad of the job at £500 or even £400 a year. I think this matter of these appointments of the regional food controllers in different parts of the country for political reasons or whatever reasons are of an extremely questionable nature. I hope we shall have some assurance that the utmost economy is going to be exercised in that direction. I do not criticise the skeleton staff at the headquarters. I go further that many hon. Members, and I think that food control will have to be tackled by the Supreme Economic Council. I do not question the staff at headquarters as long as it is kept as low as possible and not overcrowded. It is the provincial staffs that I think are open to grave criticisms, and I would like to ask that economy should be exercised in this direction.
Many of us who, from time to time, find that we are absolutely compelled to oppose the Government on these questions of expenditure, have, I think, the fullest possible justification for taking that step in the speech which the right hon. Gentleman made just now. In a time when we are faced, as we are now, with the necessity of imposing alarming burdens on the people of the country, burdens which are inflicted on every class and section of the community, the Food Controller comes down to the House and begs us to "think in millions"! There is an old saying that, if you look after the pence, the pounds will look after themselves. That, I think, is true, but I have often noticed in the course of listening to the Debates in this House that the people who come and tell you to think in millions are the people who are principally responsible for the expenditure of these millions, and that those who have that responsibility of extracting the money, and of explaining to their constituents why that money has to be extracted from them, find that, if only we can keep our eye closely on the expenditure of the Government in every detail, there is some possibility of reducing these millions to a more rational sum. But, having informed us to think in millions on the subject of liquidation, he then tells us that the liquidation of these vast sums which had to be spent during the War would not really cost us a halfpenny, so that these millions he referred to have comparatively little to do with what we are dealing with to-night, and that is this particular Memorandum which has been issued for our guidance. There is one statement which has been referred to before which I think everyone can bet on as being certain, that this liquidation of the Ministry of Food will not be complete before August, 1922. When an official lays it down that he is not going to shut up until a certain date, we may be perfectly certain he is not going to close down before that time. I would like to draw the attention of those few Members of the House who are here to-night to this clear statement and declaration of the Ministry, that they have not the smallest intention of closing down until they are absolutely compelled to by the House. As they have made this declaration quite clearly, and as they come here to-night and ask us to grant them a further considerable sum to expend, I shall certainly go into the Lobby in opposition to the Government, and shall support the resolution to reduce the sum, because I am quite convinced that it is no good Members of this House coining here and complaining of taxation unless they show very clearly that they are going to see that taxation is expended in a rational way. The Food Controller seemed to think that some of us were grumbling at rations. We are not grumbling at rations being fixed; it was right and fair and just; but what we do grumble at is the slow reduction of the staff, and what we ask for is that the staff shall be reduced very much more quickly than it is being done to-day. For that reason I urge those Members of the House who find a difficulty in explaining this enormous expenditure to make up their minds quite clearly to endeavour, whenever the opportunity arises, to press the Government. If they wish for a large sum later in the year to go on with, let them come here again. Let us give them the smallest sum possible now. They can come back in the Autumn Session and ask for more. Let us lay it down that we are not going to continue giving the Government a free hand to draw from the national purse whenever they come here and say, "We want a little more."
I was much impressed with the speech by the right hon. Member for Peebles (Sir D. Maclean), and I was very unfavourably impressed when I saw this Memorandum. After having heard the Minister of Food I have modified my views. I am not satisfied that a continuance of the rationing of sugar is unnecessary. I have doubts about these cargoes of sugar that have been refused, and as to the great quantities of sugar that we might have had if we had only exercised common sense. I believe that the shortage still continues, and that it is the duty of the Government to continue the rationing of sugar. I am alive to the fact that the Ministry have made mistakes, and may have made bad purchases, but they have £132,000,000 worth of stocks to liquidate; and therefore the Ministry cannot be brought to an end at a day's or a month's notice. It will have to be continued, at any rate for the sake of realising those large stocks. It is entirely in the interests of the country that those accumulated stocks should be realised to the best advantage, and I do not think it would be wise or judicious to hand over that realisation to some other party. With all my desire to associate myself with those who demand economy, who are aghast at the continued large expenditure on the part of the Government, and who protest from time to time at the continuance of bureaucratic methods in so many of our Departments. I think we should view this matter with a due sense of proportion. I am convinced that the right hon. Gentleman has made out quite a good case for the continuance of his Department. I should have felt better pleased if he could have made some statement as to whether he could accept the suggestion of the right hon. Gentleman the Member for Peebles, that he should be satisfied with £150,000 to carry on with for the next four months. If, at the end of four months, he came back and made out his case, I do not think the Committee would refuse him, and I hope that before this discussion ends he will be able to give us an assurance to that effect. If, however, he says that that is not possible, and that he must have the money in accordance with this Resolution, I shall not withhold from him my support, because what impresses me more than anything else is that we should not, from a natural feeling of resentment against the spending of many Government Departments, embark on a false line of economy altogether. In so doing, while seeking to save the pounds, we may lose the millions. I am sure the right hon. Gentleman is seeking to present his case as impartially as he can, but I should, as I have said, welcome a statement from him that he would accept the modification suggested by the right hon. Gentleman the Member for Peebles, and be content with £150,000 to carry him on for the next four months.
I do hope that the Food Controller will reconsider the attitude that he has adopted, because many of us who are in the habit of supporting the Government certainly cannot vote for the continuance of this Ministry for another twelve months with the large figures submitted in this Paper. I cannot vote £240,000 for rationing sugar. Every information at my disposal shows that there is a large quantity of sugar in the country at the present time, and there is no likelihood of any scarcity, and I gather the only object of this rationing is to enforce economy in sugar; that is to say, to prevent people spending money on sugar, and I do not think we ought to vote to-night £240,000 for the rationing of sugar when there is no suggestion it is in order to secure an adequate amount of sugar for the people. In fact, it is suggested that many children under the rationing are not receiving sufficient sugar. No case has been made out for an expenditure of £240,000 in this connection, and I shall certainly not vote for it.
I ask the Minister of Food to clear up a misapprehension in the mind of the Member for Glasgow. This money is not for the next four months. You have got your money for the next sixteen months, until the end of 1921. What we are asked to vote to-night is money that will not be wanted until after November, 1921. That seems a very sound reason for modifying the demand that is before us to-night. I would put it to the Minister of Food that no criticism has been directed against his administration. We are as satisfied with him as with any Minister of Food that there has been. We are not seeking to-night to apply any new precedent to the Ministry of Food. We are asking him to accept the precedent accepted by the President of the Board of Trade on the Ministry of Mines Bill. The House then asked the President of the Board of Trade to limit the expenditure under that Act just as we are asking the Minister to limit his expenditure under this Act to-night. I put it to him, seeing he does not want his money until 1921 and that he is budgeting now for a period of ten months, although the period may be less than ten months, that that seems a good reason for reducing the sum to £150,000. His final point was that the Minister of Food was making a considerable diminution in his staff. That will mean a diminution in the expense. By November, 1921, he may have got his staff considerably cut down. Taking all those points into account, that you do not want the money until November, 1921, and that you may want it for less than ten months and that you are going on diminishing your staff, I think it is reasonable for the Ministry of Food to act as the President of the Board of Trade did in his case and to accept the limit provision.
I am much obliged to the hon. Members who have given me an opportunity of clearing away what I see is a misconception in the minds of some hon. Members. The question to-night is not whether the Ministry of Food is to be granted money for four months, or eight months, or twelve months. It is not a question of that kind at all. This is a Resolution necessary in accordance with the procedure of this House to put the Bill in order. If the War goes on long enough, all amounts that are required already can be properly voted under the New Ministries and Secretaries Act. We are merely here passing a Resolution making it a contingency of the Ministry being in operation some months after the New Ministries and Secretaries Act has come to an end. Really the question is not of the next four months or eight months, but of the hypothetical last few months and long before the time when one farthing of the money which this financial Resolution refers to, and the Resolution must necessarily be in general terms because it deals with a hypothetical period, can be spent, this House will have a full and proper opportunity of considering estimates presented by myself, if I still occupy the office of Food Controller, or by my successor, and it will be explained for what the money is required and that will be the time for the House to refuse to grant it. I am not asking for the sums mentioned in the White Paper at all. This is merely a general Resolution, which is to put in order a Bill, which is a money Bill, and for that purpose there has to be a Financial Resolution. Before I can spend a farthing of money I have to come to this Committee and I have to present Estimates which show on what I propose to spend the money. Then is the proper time for the Committee, in accordance with the procedure of this House, to put what further limit they like on the further expenditure of the Ministry of Food. This is not the time or the occasion and I am afraid that the White Paper is responsible for some of the misconceptions which have arisen and I apologise to the Committee for the Ministry unintentionally misleading them in giving information that they thought might interest the House.
I thought perhaps there was a desire to play a practical joke on my right hon. Friend because although I am not expert in studying documents drawn up in legal form, I certainly did not understand the document to mean additional expenditure by the Ministry of Food. I understand it to mean it is necessary to introduce the Bill, because while the Ministry will continue for 12 months after the termination of the War, the powers under its old Act will cease. Therefore it has become necessary to introduce a Bill in order to endow the Ministry, if continued, with powers to carry out its work and that involves the necessity of a Financial Resolution because a mere skeleton Ministry in existence without powers to operate is useless. The House has already had the Estimates under its consideration. Of course, it is quite true the House has not decided by vote on the Estimates of the Ministry of Food, but that will be decided in due course. This is rather Estimates of the expen- diture which will be involved in the continuation of the Ministry. The discussion here to-night has challenged the continuance of the Ministry. [HON. MEMBERS: "No, no!"] Well, a great part of the discussion has challenged entirely the continuance of the Ministry, a matter which was decided on Second Reading on Friday last.
In my opinion the hon. Member ought not to have made that remark. The main discussion has not been a challenge to the continuance of the Ministry. The main discussion—I have listened to it very carefully—has been on the Financial Resolution. Had it been on the continuance of the Ministry I would not have allowed it.
I am sorry, Sir Edwin, if any observation of mine could be construed as an observation on the Chair. In my opinion sugar rationing will have to be continued for some time, despite the statement made here to-night as to plentiful supplies of sugar being available. All the time I was at the Ministry of Food I heard those stories, but the sugar was not forthcoming. If you gave entirely free sugar you would so stimulate the demand of those who had money to spend as to increase the prices for the poorer classes and increase the world stringency accordingly. With respect to the headquarters, I only wish to give an impression of my own experience. It is not a question of keeping a staff in existence, but it is a matter of persuading business men to remain in your service. Certainly the business with which the Ministry of Food has to deal requires expert persons to handle it. They are mainly business men brought in from outside. One of my great difficulties was in retaining the services of these business men, men in whom this House ought to have general confidence. Also, we ought to bear in mind that it is not merely a question of State economy. It is a matter of protecting the consuming public against undue exploitation, and I am afraid there is a great desire in the country to get decontrol in order that business interests may be able to take advantage of the world scarcity. At any rate, that is the cause for the continued existence of the Ministry of Food. The mere fact that the Ministry is in possession will allow them to contemplate de-control with, greater satisfaction because, so long as they retain stocks, they will be able to retain some control by releasing or withholding them as the state of the market requires. I have no particular interest in the matter, and am as keen as anybody else in the matter of economy, but, viewing the matter impartially, I think that the case for the continuance of the Ministry is overwhelming. I think we must accept the advice of the experts as to the services they require and the money that is requisite.
Question put, "That the words 'provided that the total sum to be expended under any such Act shall not exceed £150,000,' be there added."
The Committee divided: Ayes, 33; Noes, 91.
Division No. 258.] AYES. [12.44 a.m. Ainsworth, Captain Charles Holmes, J. Stanley Robinson, S. (Brecon and Radnor) Barker, Major Robert H. Jones, Sir Edgar R. (Merthyr Tydvil) Rose, Frank H. Barton, Sir William (Oldham) Jones, Henry Haydn (Merioneth) Royce, William Stapleton Bowerman, Rt. Hon. Charles W. Kelley, Major Fred (Rotherham) Sexton, James Cowan, D. M. (Scottish Universities) Maclean, Rt. Hn. Sir D. (Midlothian) Smith, W. R. (Wellingborough) Davies, Thomas (Cirencester) Mallalieu, F. W. Thomson, T. (Middlesbrough, West) Davison, Sir W. H. (Kensington, S.) Morgan, Major D. Watts Williams, Lieut.-Com. C. (Tavistock) Entwistle, Major C. F. Norris, Colonel Sir Henry G. Wilson, Rt. Hon. J. W. (Stourbrdge) Gould, James C. Ormsby-Gore, Captain Hon. W. Wilson, W. Tyson (Westhoughton) Gretton, Colonel John Palmer, Charles Frederick (Wrekin) Hall, F. (York, W. R., Normanton) Remer, J. R. TELLERS FOR THE AYES .—.— Hirst, G. H. Roberts, Frederick O. (W. Bromwich) Mr. George Thorne and Major Barnes.
NOES.> Addison, Rt. Hon. Dr. C. Greene, Lt.-Col. Sir W. (Hack'y, N.) Pulley, Charles Thornton Age-Gardner, Sir James Tynte Greenwood, William (Stockport) Purchase, H. G. Atkey, A. R. Herbert, Dennis (Hertford, Watford) Raeburn, Sir William H. Baird, Sir John Lawrence Hood, Joseph Rankin, Captain James S. Barnett, Major R. W. Hope, James F. (Sheffield, Central) Raw, Lieutenant-Colonel N. Barnston, Major Harry Horne, Edgar (Surrey, Guildford) Roberts, Rt. Hon. G. H. (Norwich) Bird, Sir A. (Wolverhampton, West) Hunter, General Sir A. (Lancaster) Rodger, A. K. Borwick, Major G. 0. Illingworth, Rt. Hon. A. H. Roundell, Colonel R.F. Boscawen, Rt. Hon. Sir A. Griffith- Inskip, Thomas Walker H. Rutherford, Sir W. W. (Edge Hill) Bowyer, Captain G. E. W. Jodrell, Neville Paul Sanders, Colonel Sir Robert A. Bridgeman, William Clive Johnstone, Joseph Scott, A. M. (Glasgow, Bridgeton) Brown, James (Ayr and Bute) Jones, J. T. (Carmarthen, Llanelly) Seddon, J. A. Cape, Thomas Kellaway, Rt. Hon. Fredk. George Stanley, Major Hon. G. (Preston) Carr, W. Theodore Law, Rt. Hon. A. B. (Glasgow, C.) Steel, Major S. Strang Casey, T. W. Lawson, John J. Stephenson, Colone H.K. Coates, Major Sir Edward F. Lewis, Rt. Hon. J. H. (Univ., Wales) Sturrock, J. Leng Coats, Sir Stuart Lort-Williams, J. Sutherland, Sir William Coote, Colin Reith (Isle of Ely) M'Curdy, Rt. Hon. C. A. Talbot, G. A. (Hemel Hempstead) Courthope, Major George L. Maclean, Nell (Glasgow, Govan) Thomson, Sir W. Mitchell- (Maryhill) Craig, Colonel Sir J. (Down, Mid) Manville, Edward Tryon, Major George Clement Dean, Lieut.-Commander P.T. Montagu, Rt. Hon. E. S. Ward-Jackson, Major C. L. Dewhurst, Lieut.-Commander Harry Moore-Brabazon, Lieut.-Col. J. T. C. Waterson, A.E. Edge, Captain William Morrison-Bell, Major A. C. Weston, Colonel John W. Edwards, Major J. (Aberavon) Neal, Arthur Wilson, Daniel M.(Down, West) Elliot, Capt. Walter E. (Lanark) Newman, Sir R. H. S. D. L. (Exeter) Wilson, Colonel Leslie 0. (Reading) Eyres-Monsell, Commander B. M. Parkinson, Albert L. (Blackpool) Young, Sir Frederick W. (Swindon) Falcon, Captain Michael Pease, Rt. Hon. Herbert Pike Young, Robert (Lancaster, Newton) Forrest, Walter Perkins, Walter Frank Foxcroft, Captain Charles Talbot Pickering, Lieut.-Colonel Emit W. TELLERS FOR THE NOES .—.— Fraser, Major Sir Keith Pollock, Sir Ernest M. Lord E. Talbot and Mr. Dudley Ward. Gibbs, Colonel George Abraham Pownall, Lieut.-Colonel Assheton Green, Joseph F. (Leicester, W) Pratt, John William
Main Question put, and agreed to.
Resolved,
"That it is expedient to authorise the payment, out of moneys provided by Parliament, of any salaries or expenses which may be payable or incurred under or by virtue of any Act of the present Session to continue temporarily the office of Food Controller, and to make further provision with respect to his powers and for purposes in connection therewith."
Resolution to be reported to-morrow (Wednesday).
Telegraph (Money) Bill
Order for Second Reading read.
I beg to move, "That the Bill be now read a Second time."
This is quite a simple Bill and is the natural sequence to the Financial Resolution passed last week. It is to raise £10,000,000 for the development of the telephone service. This can be raised in three different ways, whichever is most convenient financially to the Treasury. The money will be raised either on the Consolidated Fund, or borrowed by means of terminable annuities not exceeding 20 years—as a rule they will be 15 years— or by Exchequer Bonds These will be repaid by a sinking fund from the proceeds of the telephone service. As regards the second Clause, when telephones were first invented, the Courts decided that a telephone was a telegraph, and consequently the accounts for the telegraphs and telephones were put into one for commercial purposes. For their own information the Post Office has kept separate accounts of the telephones, but it is a waste of time to mix them and then separate them again. The second Clause does away with that, and the telephones, if the House passes the Bill, will be kept entirely separate from the telegraph accounts which will simplify affairs very much. Although the purpose of the Bill was fairly fully explained when the Financial Resolution was before the House last week I will repeat some of the reasons for it. As everyone knows, the system was left in a rather bad state by the National Telephone Company. This, however, was not to be wondered at as they were working on a terminable licence and they were not spending unnecessary money in order to hand it over at a price which they did not know to the Government. Accordingly, the system was very much run down when it came to the Post Office. It is quite simple to know how to remedy that state of affairs which we have not been able to do since the War began. There is a shortage of plant of all descriptions, there is a shortage of exchanges, there is a shortage of wires and cables, and there has been a shortage of everything that was wanted. In order to remedy this we have to lay out a large sum of money. There is a large trunk programme which we have in hand to replace aerial wires. Ever since the telephone system has been in existence in this country, as sure as spring has succeeded winter and winter succeeded summer, every winter a mass of lines has been blown down and every spring they have been put up again. I do not propose to go on doing that sort of wasteful thing in future. We have begun now laying some very large trunk systems all over the country. The main underground programme consists of some 38 large trunk systems all over the country and many smaller ones. These, when finished, will give much better communication. There will be more wires available, there will be a certain number of wires disengaged, and people will get communication much quicker over longer distances. It is also proposed to develop a large number of exchanges, and a large number of relief exchanges, and also to add to the exchange boards, which are very much overloaded.
1.0 A.M.
At present the orders received are very large, and we are not quite able to cope with them. At the time of the Armistice over 200,000 wished to be put on the telephone. That number to-day has been reduced to 50,000, but at least 25 per cent. of the provincial exchanges are unable to accommodate any more subscribers, and about 30 per cent. of the London exchanges. We are also getting a more efficient staff. The staff has not been as efficient as one would like, but we have now got a better staff and pay them very much better wages. I will give examples of some of the wages. In 1913–14 we were paying employés 18 years of age 19s. a week. Now they are getting 46s. 5d. At 21 years of age we were paying 24s., now they are getting 50s. 2d., and the maximum of 28s. is now 83s. 11d. By doing that I think it will induce the employés to stay on longer at the Post Office, so that we shall not have continually to take on staff to supply the places of those who have left. The development of telephones in this country, I think everyone will agree, has not been in proportion to the importance of Great Britain as an industrial and commercial country—the most important industrial country in the world. There are in the United States 9·7 telephones per 100 of the population, in Denmark 45, in Sweden 4·1, Norway 3·4, Switzerland 2·5, and Great Britain 1·7. Unless we can get a considerable amount of capital, it is impossible to increase the number of telephones, which are so very necessary for carrying on the business of the country. If the House grants the money I believe the organisation of the Post Office, which is, I think, on the whole very good, will be able to give the country the very finest system of telephones in the whole world. I ask the House to give the Bill a Second Reading.
The House has every reason to protest against a Bill of this importance being introduced at one o'clock in the morning. The Money Resolution for the Bill was first brought before the House between 11.30 and 12 o'clock one night, and I then protested against such a matter being brought before a jaded House of a few Members, and here again to-night, at one o'clock in the morning—a "bull" will probably quicken our jaded senses—we are asked to discuss a matter which is vital to the reconstruction of the business enterprise of the country. It is admitted by the Postmaster-General himself that the telephones of this country are in a bad and neglected state. I do not intend to discuss the matter at this time in the morning, but the very title of this Bill shows the position of the telephone in this country—that it has been a plaything among the electrical means of communication. The Bill we are discussing to-night, though it is all about telephones, is called the Telegraph (Money) Bill. There is really a great deal in that title, because since 1869 the Post Office, having the monopoly of the telegraphs, has opposed anything which would compete with the telegraphs. Consequently, when the telephone was first invented, it was looked upon by the Post Office as an interloper, as a luxury for idle people or for rich people, and not as a practical matter, and everything was done to impede the development of the telephone. In spite of that, however, the telephone was developed in private hands. The National Telephone Company combined a number of private enterprises and did wonders under great difficulties. It was given a licence expiring in 1911, and in spite of all its difficulties it struggled on, giving a service which in many ways was very much better than the service which we have to-day.
In addition to hampering it with a licence, the Post Office also opposed it by preventing it from undertaking the trunk telephone service. The Post Office came down on the National Telephone Company and said they would undertake the trunk service, and prevented the company from developing that service as they had intended to do. I would have liked to hear from the Postmaster-General some comparison of the very efficient services of the United States, of Sweden, Denmark, and other places which he has only briefly alluded to by saying that in the United States there are 9·7 telephones to every 100 of the population, 4·7 in other countries, and coming down at last to the miserable figure of 1·7 for this country. I understand that in America the telephone service develops in the course of only one year to the extent of the whole of our service. [An HON. MEMBER: "That is why more money is wanted!"] Exactly. But I say that £10,000,000 is either too much or too little. We ought to have a committee of business men who are familiar with the telephone services of the world to go thoroughly into this question and report to the House before we go tinkering any further with this business. We want this telephone service, which is vital to the country, thoroughly inquired into.
Will the hon. Gentleman allow me to interrupt him? We are asking for 10 millions only because the contractors are so short of material and have so much difficulty in carrying out the orders that this will last for a considerable time, probably for about 16 months. I wish I had been able to come before the House to ask for 20 millions and say that that would be expended in the same time, which would develop the system very much quicker. But it is through the private contractors, by no fault of their own, being unable to get the material as quickly as I should like.
That may be so. It just shows that the whole question wants to be thoroughly gone into. The dead hand of the Government Department has been over this from the beginning, and many of us wonder whether it would not be better, in the interests of the country, of economy, and of the improvement of the service, for some telephone authority under business management to be constituted even at this late hour. Again and again lack of business aptitude has been shown. Six months ago, after several questions and answers here, I informed the Postmaster-General of a grievance on the part of subscribers. They were constantly having announcements that their deposits were at an end, though no particulars were rendered as to the state of their accounts, whether they had 10s. or £1 to spare. After several questions he admitted that they had all the information at the Post Office and that it was only a question of informing the people. That is six months ago and nothing had been done. He has told us to-night that he cannot serve a tithe of the people who want telephones. He has to some extent recovered the arrears of 200,000 telephones which he had a year ago, but there are still thousands of people who cannot get telephones. There is one thing he might have done, and that is to have reconstituted the system of telephone letters that we had before the War, when, if a person had not a telephone, one could at any rate telephone to the nearest Post Office the message and have the message conveyed to that person. That would have modified the inconvenience. I only give those two examples as showing how you are up against the dead weight of a Government Department. If it had been a business firm those suggestions would have been taken hold of and carried into effect long ago, to some extent ameliorating the situation which has arisen.
Then there is the question of secrecy which has been sprung upon us by a recent case in the Courts. Most of us thought that we had our wires wired to secrecy. I had one wire in my house wired to secrecy, and I paid something extra for that being done, and I was told that I would have a completely secret service. We have been told that anybody at the telephone exchange, by simply switching a lever, can hear anything that is said. That is another matter on which we would like some information. At this time of the night, it is impossible to go into all these things, and I think the House has every ground for complaint that a thing of vital importance of this kind, involving £10,000,000, should be asked for us at this time of the morning, with only a handful of people to discuss it.
It is the fault of the Government that this important question is brought on at this hour. If we had time, and did not feel we were talking under the pressure of the clock, there are many points on this telephone system, which some of us regard as the worst in the world, which we would like to raise, and I would suggest that rather than extend the system we should prefer the existing system to be improved. Is anything being done in the matter of automatic telephones? I have operated it in certain towns in this country and it works with tremendous success. It would save a great deal of work at the exchanges. I have worked it in a house at Epsom and I am surprised at its success. The right hon. Gentleman, in introducing the question of underground lines, said every winter the overhead lines came down, and that they had the expense of putting them up. That is one expense, the expense to the State; but the expense to the business community of this interruption is very great indeed, and I congratulate the right hon. Gentleman on the work he is going to do on these underground lines. I am all in favour of spending this money and all the money necessary to perfect the telephones. The percentage of money expended in this country and in countries abroad makes us feel somewhat ashamed of ourselves that we are the lowest on the list and the biggest commercial country in the world. I enter my protest against bringing on this subject at this hour. It is worthy of five or six hours: of discussion, and there are many points we would like to put to the House, but at this time we are forced to make these perfunctory remarks.
With reference to the question just asked about automatic telephones, I would say it is the intention of the Department to extend automatic telephones. I have had considerable experience of it myself. It has been in vogue, in my constituency for a number of years. The chief reason against it is, of course, the enormous capital expenditure in regard to it, but it is going to be developed, and there will shortly be a considerable increase in regard to it. I would just like to make one other reply, and that is in regard to the statement which has been made in reference to America. It was perfectly true that there was some time ago a very great difference between the telephones of America and this country. The experience was that the American telephone was much more efficient. At the present time it is not so. The hon. Member for Acton, who came back the other day, complained to me that it was acknowledged that since the War the telephone service in this country was superior to that in America. I would like to say, in regard to my hon. Friend's statement about the question being dealt with late in the evening, that when the Resolution was first brought before the House I spoke on it early in the evening, and gave a full statement on many details not before the House to-night. I hope the House will see its way to pass the Bill.
Question, "That the Bill be now read a Second time," put, and agreed to.
Bill read a Second time, and committed to a Standing Committee.
Representation of the People (No 3) Bill
As amended ( in the Standing Committee ), considered.
Motion made, and Question proposed, "That the Bill be now read the Third time."
I am glad that this tiresome delay between the voting and counting is now at an end, and I have personally no objection to raise to the Bill.
Question put, and agreed to.
Bill read the Third time, and passed.
The remaining Orders were read, and postponed.
It being after Half-past Eleven of the Clock upon Tuesday evening , Mr. SPEAKER Adjourned the House, without Question put, pursuant to the Standing Order.
Adjourned at Twenty minutes after One o'Clock.