House of Commons
Tuesday, July 19, 1921
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.
Private Business
Private Bills [Lords] (Standing Orders not previously inquired into complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into which are applicable thereto, have been complied with, namely:
London and North Western Railway (Holyhead Harbour Leasing) Bill [ Lords ],
Slough Trading Company, Limited (Canal) Bill [ Lords ].
Bills to be read a Second time.
Private Bills [ Lords ] (No Standing Orders applicable),—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, no Standing Orders are applicable, namely:
Wolverton Estate Bill [ Lords ].
Bill to be read a Second time.
Rhymney Valley Water Board Bill [ Lords ],
Read a Second time.
Ordered, That the Standing Orders relative to the Committal stage of . Private Bills be suspended.
Ordered, That the Bill do lie upon the Table.—[ The Chairman of Ways and Means. ]
Paisley Gas Provisional Order Bill,
Read the Third time, and passed.
Speech of Lord President of the Council
Copy ordered "of speech to the Imperial Conference of the Lord President of the Council on the League of Nations."—[ Lord Robert Cecil. ]
Oral Answers to Questions
India
Aligarh Disturbances
asked the Secretary of State for India whether he can make any statement regarding disturbances reported to have occurred at Aligarh?
I will circulate in the OFFICIAL REPORT the information I have received about these disturbances.
The following is the information:
I communicated to the Press on 6th July the first details of these occurrences which I received that day. I received on the 14th a further report, which, though issued to the Press that evening, came too late to secure general publication. It appears that the main facts are as follow: On the 5th July a political agitator named Malkhan Singh was on trial at the Magistrate's Court, Aligarh. A crowd, composed of townspeople and villagers, had collected outside the Court, probably originally intending to make a demonstration. But, excited by agitators and by the rumour that another individual who was seen to enter the Court had been arrested, the crowd endeavoured to rush the Court. This was prevented by the police, who, after two warnings, used their batons. The crowd then moved off, intending to attack the bungalow of the reserve police inspector, which is some distance away. This was frustrated, and meanwhile judgment appears to have been pronounced convicting Malkhan Singh.
Later on a mob attacked and burned certain buildings in the City, including police quarters. One of the buildings attacked was the Treasury, the armed guard on which was compelled to fire. The magistrate visited the Non-Co-operators' headquarters in the evening, and warned them that any further dis- turbance would be severely repressed—a warning which had the desired effect. Disturbances had entirely ceased before reinforcements of British and Indian troops arrived from Agra.
It seems quite clear that the attacks in the city were directed mainly against the police. No attacks were made on the houses of Europeans. Thirty arrests were made—chiefly rioters caught red handed in the police headquarters and persons with gunshot wounds. One constable was unfortunately killed and three dangerously wounded. It is not clear from my information whether any rioters were killed, but a number were wounded. The Mohammedan University was not affected, and, so far as is known, no students took part in the disturbances.
Madras Labour Disturbances
asked the Secretary of State for India whether he will make any statement regarding labour disturbances in Madras?
I would refer my hon. Friend to the reply given yesterday to the hon. and gallant Member for New-castle-under-Lyme, of which I will send him a copy.
Will the right hon. Gentleman consider favourably the summoning together of the Legislative Council of Madras, in order to deal with this question so that it may not rest entirely with Lord Willingdon?
I do not think the hon. and gallant Gentleman would regard it as proper for me to consider this subject, because it is one which is entirely in the discretion of the Governor of the Province. I am quite convinced that if any useful purpose would be served by summoning that Council, Lord Willingdon would consider it himself.
Am I to understand that these outcasts have been used as strike breakers to break up the men's: unions in Madras?
That question does not arise.
National Defence (Cost)
asked the Secretary of State for India what is the present approximate total annual cost of national defence in India, including naval, military, and air forces; what is the approximate annual cost per head of the population of the Indian Empire on this account; and how these amounts compare with the present approximate cost of national defence in Japan, amounting to £108,280,000, which works out, roughly, at £1 8s. per head of the population for the total Japanese Empire?
The total cost of national defence in India for the year 1921-22 is estimated at 62 one-fifth crores of rupees. This gives a rate of expenditure of 243 rupees per head of the population of British India. A just comparison with the cost of national defence in Japan would involve other highly important factors, as, for instance, the ratio of defence expenditure to total expenditure, and the ratio of expenditure per head to average income per head of the population.
Staff Lines Bungalow, Allahabad
asked the Secretary of State for India whether he will cause inquiry to be made into the case of the acquisition in the autumn of 1920 by the military authorities of a bungalow, No. 33a, in the staff lines, New Cantonment, Allahabad, and as to why the appeal to him sent on 8th November, 1920, has not been dealt with?
The acquisition of the bungalow in question took place in 1913, not 1920. The memorial to me of 1920 was withheld by the Government of India because over five years had elapsed since the passing of their final orders in 1915 against which appeal was made.
Army (Reductions)
asked the Secretary of State for India whether, in view of his statement that reductions in military expenditure in India could only be achieved if compatible with the internal and external security of India, and his assurance that no further reductions would be made pending the inquiry by the Committee of Imperial Defence, and considering that in addition to the reduction of 18 cavalry regiments the 44th Infantry has now been disbanded, another, the 80th Infantry, is under orders for disbandment in September, and it is believed others are to follow suit, that in conse quence the whole Indian Army is gravely perturbed, and having regard also to the fact that both internal riots and external frontier attacks are of increasing occurrence, he will now give orders for the strict observance of the undertaking which he has given, and put a stop at once to the disbandment of pre-War units of the Indian Army till the Report of the Committee has been considered?
I would refer my hon. and gallant Friend to the answers I gave to the hon. Baronet the Member for Twickenham on the 23rd February and the 23rd March, and to my hon. and gallant Friend on the 6th, 19th and 26th April and the 7th June. As regards the units to be disbanded, I would refer to my replies to my hon. and gallant Friend on the 3rd, 10th and 31st May and the 12th July, and to the hon. Member for the Cromac Division of Belfast on the 5th July.
Is the right hon. Gentleman aware that every one of these replies was entirely unsatisfactory and can he give me a more satisfactory reply?
I do not share my hon. and gallant Friend's view as to the unsatisfactory nature of the replies. My difficulty is to find a formula in which to answer the same question so often.
Will the right hon. Gentleman consider the question of putting a stop to these disbandments which are so suicidal at the present time?
That is the same question.
British Army
War Decorations
asked the Secretary of State for War whether he is aware that there is considerable dissatisfaction amongst the members of the defence forces of those Crown Colonies and Protectorates which are not defined as a theatre of war in Army Order XX of 1913 and Army Order 301 of 1919 at the non-award of a war medal; whether it is a question of expense which is delaying a decision in the matter and, if so. whether he is aware that the Governments of the Crown Colonies and Protectorates concerned would be unlikely to raise any opposition to defraying the cost of these medals; whether the defence forces in India during the War have already received War medals; and, in any case, whether he can now state whether a decision has been reached in the matter, and what it is?
asked the Secretary of State for War if he can now announce the decision of the Army Council regarding the claim of the Wessex Territorials to the 1914–15 Star, based upon the explicit promise of the late Lord; Kitchener?
asked the Secretary of State for War if he is now able to make his promised statement with regard to the decision of the Army Council on the claim of the Devon Territorials to the 1914–15 star?
Perhaps my hon. Friends will kindly repeat their questions on Tuesday next, when I hope to be in a position to make a definite statement on the subject.
Mess Dress
asked the Secretary of State for War whether, with the view of saving expenses, permission will be given to officers to continue to wear the blue serge frock with trousers as mess dress after the 31st December next?
No representations have been received as to financial hardship caused by the Army Order of December, 1920, which laid down that all regular officers must provide themselves with mess dress by 1st January, 1922, this period being allowed with the special intention that officers should be able to spread the expenditure over 12 months. The Army Council are, however, anxious to regard sympathetically any representations on this score which may be made, but at the same time wish to lay stress on the desirability of uniformity of dress in mess. It is, therefore, now proposed that officers should, at the discretion of the commanding officer of their unit, be granted an extension of the time within which they must provide themselves with mess dress up to a limit of 12 months, making two years in all from the date of the Army Order. It is hoped that this will meet the views of my hon. and gallant Friend.
I am much obliged to the right hon. Gentleman, but will he take into consideration at the end of the two years whether it would not be desirable to abolish the present mess dress?
Of course, that is quite another question.
Inns of Court Officers' Training Corps
asked the Secretary of State for War whether he will consider the recent proposal to disband the Inns of Court Officers' Training Corps or to amalgamate it with a territorial battalion, in view of the facts that it furnished over 10,000 officers to the British Army during the years 1914-18 and that if it should be disbanded there will be no institution left in existence capable of giving such a supply in any future crisis?
I would refer my hon. and learned Friend to the reply on 5th July to my hon. and learned Friend the Member for Nuneaton.
Pay Department and Record Office (Committee)
asked the Secretary of State for War if he is able to inform the House of the composition of the Committee set up to inquire into the advisability of combining the duties of the Pay Department and the Record Office; and if he will state the terms of reference?
As the reply to this question is somewhat lengthy, I will, with my hon. and gallant Friend's permission, circulate it in the OFFICIAL REPORT.
Following is the reply:
The following is the composition of the Departmental Committee which has been set up to consider the question of the amalgamation of the Record Offices and Regimental Pay Offices in Commands:—
Major C. G. C. Hamilton, M.P. ( Chairman ).
Lieut.-Colonel J. H. T. Cornish-Bowden, C.M.G., D.S.O. (Adjutant General's Department, War Office).
Colonel D. J. M. Fasson, C.B., C.M.G. (Officer in Charge of Records, Royal Field Artillery).
Mr. H. H. Fawcett, C.B. (Director of Finance, War Office).
Mr. J. T. Hewetson (Treasury).
Colonel W. B. Lauder, C.M.G. (Chief Paymaster, War Office).
Mr. A. C. Pedley, C.B., I.S.O.
Mr. M. H. FitzGerald (War Office) ( Secretary ).
The following are the terms of reference of the Committee: —
To make recommendations
(1) For the amalgamation of Pay and Record Offices with a view to securing greater efficiency and economy in financial and record duties.
(2) For the transfer of any military duties which it may be impossible to entrust to the amalgamated organisation.
(3) To make estimates of the savings to be effected by the scheme recommended.
Chaplains (Woolwich and Sandhurst)
asked the Secretary of State for War if the salary to the chaplain to the Royal Military Academy, Woolwich, has been increased from £445 annually, with quarters, to £730 annually, with quarters, and the two chaplains at Sandhurst from a joint payment of £775 to a joint payment of £1,380; whether, all told, there were only 118 chaplains before the War, and now there are 251; and if he will state, in view of these facts, what has been done by his Department to comply with the letter of the Prime Minister in the summer of 1919, indicating that everything in excess must be ruthlessly cut down?
As the hon. and gallant Member is aware, the rates of pay of army officers generally were revised and increased in 1919, and commissioned chaplains share in these advances. As I explained in answer to a question on 21st June last, the pre-War establishment of army chaplains did not include a varying number (between 40 and 50) of acting chaplains paid the minimum rate of a commissioned chaplain. These are now included in the establishment shown in the Army Estimates, 1921–22, which represented the maximum number which might be employed. On 1st June the number had fallen to 260, and by 1st April next it is hoped that it will be still further reduced to 200. The scattered distribution of garrisons at home and abroad has necessitated the employment of a larger proportion of chaplains than before the War. When more normal conditions are restored, further progressive reductions will be possible.
Military Intelligence Service
asked the Secretary of State for War whether officers and other persons connected with the branch of the Military Intelligence Service known as M.I.5 were employed in censoring, or otherwise supervising, the correspondence between trade unions and their branches during the recent dispute in the coal trade; and will he state the object of interference with such correspondence?
The answer to the first part of the question is in the negative and the other part does not therefore arise.
Were the young officers stationed at the Post Office in London there only to reassure the ladies' staff in case of danger?
I must have notice of so intricate and delicate a question.
What were they doing there?
Service Age Limit
asked the Secretary of State for War what was the maximum age at which men were called upon to serve in the late War; and whether, in certain cases, the age limit was 56?
The Military Service (No. 2) Act, 1918, extended the liability for military service to men who had not attained the age of 51 years and to qualified medical practitioners who had not attained the age of 56 years. The Act also provided that the age limit could be extended, by Order in Council, to 56 years for all classes of men, but this extension was not carried out.
Is the right hon. Gentleman aware, that the other day he stated that the Publicity Officer was too old to go to the War, and is it a fact that his age is now 63?
I think that would be a rash assumption on the part of my hon. and gallant Friend. Personally I forget his age.
Welch Regiment (6th Battalion)
ask the Secretary of State for War whether it is proposed to disband the 6th Battalion of the Welch Regiment, and include in the Welsh Territorial Division a battalion from outside Wales; and whether, in view of the Prime Minister's declaration that Wales should have a division of her own, he will use his influence to maintain Wales as a separate entity?
It is not proposed to disband the 6th Battalion but to amalgamate it with another battalion of the Welch Regiment. Two battalions outside geographical Wales, but inside the Welsh Territorial area are to be absorbed into the Welch Division. I am not aware of any pledge given by my right hon. Friend the Prime Minister that Wales should have a Territorial Army Division of her own.
7th Royal Scots
20 and 22.
asked the Secretary of State for War (1) whether the ground on which the amalgamation or disbandment of the 7th Royal Scots was decided was that it was not up to strength and did not seem likely to come up to strength; whether, in view of the fact that the battalion is now approximately 600 strong, he will reconsider his decision;
(2) how many battalions of the Territorial Army which are to be preserved are below the strength of 600; and why he proposes to disband or amalgamate a battalion which reaches that strength, whilst preserving others which have fewer numbers?
asked the Secretary of State for War whether, in view of the extraordinary response to the appeal for recruits to the 7th Battalion Royal Scots, and the fact that this now brings the battalion nearly up to strength, he will allow this battalion to continue its independent existence?
As regards the amalgamation of the 7th Battalion Royal Scots, I have nothing to add to the general statement made on 11th July and to the answers to questions on 14th July. As regards the first part of Question No. 22, 144 battalions, which are unaffected by the proposed scheme of amalgamation, were below the strength of 600 on the 25th March last (the date of the last complete returns).
Why does the right hon. Gentleman disband a battalion which is over strength, and retain battalions which are under strength?
I have already said I am not disbanding them.
Well, amalgamating them.
There is a difference between disbanding and amalgamating. The rest of the question the hon. and gallant Member asked at some length on the 11th July, and it was then answered.
Is it not the fact that of the four battalions that are losing their identity in the Lothians, two are in the Royal Scots Regiment?
In view of the distinguished services of this battalion during the War, its career all through since volunteering was instituted in 1859, and the great sacrifices it made during the War, will the right hon. Gentleman guarantee to continue it?
My hon. Friend appeals to me in a way I should like to be able to answer. These battalions did magnificent services during the War, and their reputation and continued existence for a long time prior to the War does entitle them to every consideration. On the other hand, I am advised, both on military and financial grounds, that it is not justifiable to continue them unless they are amalgamated. I believe they will amalgamate, and lose none of their usefulness in the amalgamation.
Was that advice not given before it was known that a very large number of recruits had joined up?
Will the right hon. Gentleman kindly reply to my question whether it is not the fact that of the four battalions that are losing their identity, no less than two come from the Royal Scots Regiment?
Officers' Promotion
asked the Secretary of State for War whether in the period November, 1918, to April, 1921, only 10 promotions to substantive major were made in 142 battalions of infantry, whilst in the same period there were 25 promotions in 10 battalions of the guards and 78 in 31 regiments of cavalry; and, if so, whether he can explain this disproportion?
During the period from the Armistice to 31st March last, the number of promotions to substantive major in the permanent Regular Army was: infantry, 13; Foot Guards, 29; and cavalry, 111. The reason for this apparent disproportion in the number of promotions is that, during the War, it was found necessary in the infantry to promote officers to the rank of major after 15 years' service, in order to provide a sufficient number of officers of this rank for the New Armies. In consequence, at the time of the Armistice there was a very large surplus of majors to be absorbed. This temporary War expedient was not required to be adopted in the cavalry, and did not affect the Foot Guards to the same degree as the infantry. In the Foot Guards only a few senior captains had 15 years' service, and promotion was therefore mainly by establishment. Promotion to major in the cavalry, both during the War and since, has been solely by establishment.
Is it not a fact that in the infantry there are still large numbers of majors who were either sent home or were physically unfit for the greater part of the War, and how much longer are these officers to be retained in the service to the prejudice of more efficient juniors?
I do not think my hon. Friend has the facts correctly. If he will give me particulars of any cases, I will look into them.
Malta (Franchise)
asked the Secretary of State for the Colonies whether under the new Constitution of Malta the list of voters for the Lower House will be raised approximately from 5,000 to 20,000; and whether regard will be had to the advisability of a dissolution within 12 months to allow the new franchise to operate?
I am advised that the first election under the new Constitution will be under the new franchise. So that the question of a dissolution does not arise.
Shuttle Kissing
asked the Secretary of State for the Home Department, seeing that a committee consisting of employers', workers', and Home Office representatives, after months of investigation, reported that efficient substitutes for mouth-suction shuttles in the cotton-weaving trade were in existence, and that they ought to be introduced in a certain definite time after which mouth-suction shuttles should be prohibited, if he, in view of this Report, proposes to take such steps as will lead to the abolition of the practice known as shuttle kissing?
The representatives of the employers' association intimated at a conference last autumn that their association would be prepared to recommend its members to provide hand-threaded shuttles for use wherever practicable, on condition that the operatives on their side gave an assurance that shuttles so provided would be used by the workers. Subsequently, the employers' association represented to the factory department that, in view of the abnormal conditions prevailing in the industry, it would be useless to press the question on its members, and that it was sure that the operative would acquiesce in this view. This was communicated to the Weavers' Association, and no objection having been received from that association, it has been assumed that they did acquiesce. The matter is one which should be settled by agreement between the employers' and workers' representa- tives, and the Home Office will be glad at any time, at the instance of either side, to take steps to reopen the negotiations.
Is the right hon. Gentleman aware that the operatives have come to a definite agreement with employers and with representatives of the Home Office that this system is disgustingly dirty and unhealthy; and will he not consider the feasibility of making the practice illegal, seeing that now it is properly acknowledged by all three parties that an efficient substitute exists"
I am not aware that that is so.
Egyptian Students' Meeting (Police Action)
asked the Home Secretary whether Scotland Yard officers entered on Saturday a meeting of 70 representatives of the Egyptian students from seven British universities; whether the police discovered that this meeting was assembled to register their protest against the official delegation from Egypt now in this country and to record their support of Zaghloul Pasha as the national leader: whether the police took the names and addresses of those present; whether a protest against this violation of the right to hold a peaceful meeting was signed by all present and handed to the police; and why this raid was ordered and at whose request?
It is the case that the police attended the meeting referred to, that they were supplied by those present with their names and addresses, and that a signed protest was handed to them. The action of the police was based on the information received, showing that the objects of the meeting were not confined to a peaceful protest.
Motor Accident, Bond Street
asked the Home Secretary whether he is aware that a lady was knocked down by a motor car in Bond Street about 8 o'clock on the evening of Tuesday, 24th May; that her medical attendant, seeing she was seriously injured, went to Vine Street Police Station the following morning, and found that the accident had not been reported, although there was a police officer present; whether, in view of the fact that the injured lady was taken home in the car, which was then driven by the chauffeur, and the owner, who had been driving at the time of the accident, remained behind with the police officer, he will make inquiries why the accident was not reported; and whether, as injured people in such circumstances may be unable to take the number of a car, he will take precautions to ensure that motor cars and drivers cannot quietly disappear without trace after such an occurrence; and will he do all he can to help the injured lady to identify the car, so that she may be able to proceed against the owner of the car for compensation should she desire to do so?
The Commissioner of Police informs me that he is investigating this occurrence, but has not so far succeeded in ascertaining all the facts. The police will give the lady any assist once they can to identify the car, and if a police officer be found to have neglected his duties, appropriate action will be taken,
Is there any record kept of each squad of policemen acting in a particular area?
Yes, but the difficulty in this particular case is that there are in the area a number of men very close together, almost overlapping. The Commissioner, however, has the matter under his personal investigation.
Stipendiary Magistrates
asked the Home Secretary whether any representations have been made to him to the effect that the next appointed stipendiary magistrate in London should be a woman; and what, in that case, has been his answer or will be his policy?
The reply to the first part of the question is in the negative. With regard to the second part, the claims of any properly qualified applicant for a police magistracy will be considered.
Fatal Accident, Harrow-On-The-Hill
asked the Home Secretary whether his attention has been called to a fatal accident which took place on 14th July last at the crossing of Peterborough Road and Tyburn Lane, in Harrow-on-the-Hill; and whether, in view of the fresh evidence of the necessity, he will reconsider his former refusal to place a policeman on permanent duty at this crossing?
The Commissioner of Police has considered a report on this accident which took place at 7 o'clock in the morning, but he is not able to modify his conclusion that the continuous employment of police officers on traffic duty at this point would not be justified. He thinks the case would be met by adequate measures of the kind referred to in the reply which I gave to the hon. Member on the 28th February last.
Is the right hon. Gentleman aware that such measures have been taken? Will he state how many more serious accidents are to take place here before he takes action?
My information is that the measures have not been taken.
Motor Cyclist Police
asked the Home Sceretary whether he can yet make any statement upon the work carried out in the control of traffic by the motor cyclist branch of the metropolitan constabulary?
The Commissioner of Police has called for reports by the end of August, and hopes by that time there will have been sufficient experience to enable the arrangements referred to to be properly reviewed.
Post Office
Picture Postcards
asked the Postmaster-General whether, seeing that picture postcards bearing not more than five words of simple greeting are allowed to pass at the old 1d. rate, he will explain why picture postcards bearing not more than five written words of simple greeting are now being surcharged 1d. when posted at certain offices, while at others postcards stamped with 1d. and containing five words of commercial information pass without any surcharge?
I am not able to answer the hon. Member, in the absence of the documents upon which his question is apparently based.
Would the right hon. Gentleman be surprised to know that in one case the words of greeting on the card were "Love to Moyna," and in the second the words were "Danish butter, 23s."; and that in the one case the receiver of the card was fined 1d., while the other card got through free?
The hon. Member had better transfer to the Treasury Bench.
Colonial Parcel Rates
asked the Postmaster-General whether he is aware that the Colonial parcel post rates have been raised twice in the past year; that these rates are hindering the mail order trade with our overseas possessions; and whether he will keep in close touch with this situation with a view to reducing the charges as soon as possible?
I regret that it should have been necessary to raise the parcel post rates to the Dominions; the increases have been due in part to the increased costs incurred by the British Post Office, in part to the higher cost of sea transport, and in part to claims for increased payment made by the Dominions concerned. I can assure the hon. Member that the situation is kept under review in order that the public may be given the benefit of any reduction in costs which may be practicable.
Is it not the fact that the rates, instead of being increased, have been very considerably reduced? How does that square with the answer he has just given?
I have given a statement based on facts. The various steamship companies have not reduced their rates in the direction I have indicated.
They have reduced them considerably. How does that account for the increase in prices?
I do not think a general question will get over particular instances.
Will the right hon. Gentleman look after the case of the Crown Colonies and Protectorates as well as the Dominions?
Certainly.
Wireless Telegraphy
asked the Postmaster-General whether he will order a Report by an independent accountant, to be made to him for the information of the Treasury, of all Post Office operations in wireless telegraphy now and for the past two years?
I see no necessity for employing an independent accountant for this purpose. The facts are in the possession of the Comptroller and Accountant-General of the Post Office, and Reports to the Treasury, which were only suspended during the War, are on the point of being resumed.
When will the Report be published? There is no information now as to the actual cost to the Post Office.
I will consider that.
Circulars Posted Abroad
asked the Postmaster-General whether he is aware that the French Post Office accept circulars to England in open envelopes for a postage of 10 centimes, or slightly over a halfpenny at current rates of exchange, as compared with the inland rate of 1d. for printed circulars charged in this country; and whether, seeing the loss to the revenue which is now resulting from sending circulars addressed to destinations in this country to France and Germany in bulk for postage there, he will now amend the postal regulations to enable printed circulars to be accepted and posted at the old rate of a halfpenny?
asked the Postmaster-General to what extent English firms are making a practice of circularising English customers through French agents in order to avoid the increased English postal rates; whether he is aware that, in this way, one English firm with 8,000 direct customers saves £16 in postage on each batch of circulars; and will he take steps, in the interests of the postal revenue and of English trade, to reduce English postal rates?
The minimum international printed paper rate in France is 10 centimes. I am aware that in a few cases British firms have thought it proper to evade the Inland British rate by posting abroad, but so far as I can ascertain such postings at present are, in the aggregate, inconsiderable. In any case, it is impossible to fix the British Inland rates of postage by reference to the depreciated currencies of foreign countries.
Can the right hon. Gentleman explain why, quite apart from the depreciated currency. Belgium can handle this class of postage up to 2 ozs. for five centimes, which is one quarter of the depreciated exchange and one-half of the normal exchange? Does this mean that our Post Office is four times as extravagant or one-quarter as efficient as the Belgian Post Office?
No, Sir, I do not see how that conclusion can be arrived at. It is the depreciated currency. It would be impossible to fix our rates quite with regard to the depreciated currency in Europe.
Does the right hon. Gentleman suggest it is depreciated four times?
Will the right hon. Gentleman fix it at the normal exchange which is one-half in Belgium what it is here? May I therefore assume that the Belgian Post Office is doubly as efficient, or am I to take it it is four times as extravagant?
I do not think the hon. and gallant Member may assume that ten centimes is the rate in Belgium and our rate is 1d.
It is 5 centimes in Belgium up to 2 ozs.
Does this case not come under Clause 2 ( b ) of the Safeguarding of Industries Bill?
Telephone Seevice
asked the Post master-General if applicants for telephones are now being asked to pay a deposit, although there is no immediate prospect of the installation being carried out; and can he state what sum of money the Post Office Department holds as covering these unfulfilled obligations?
The answer to the first part of the question is in the negative.' Where an applicant paid the surcharge under the regulations in force up to the end of last year and has not yet been provided with telephone service, the surcharge would be refunded on his signing an agreement for the service at the new rates.
asked the Postmaster-General what economies he has made, or contemplates making, to meet the serious diminution in the revenue of the telephone department?
The revenue of the telephone service does not show a decrease, as suggested by the hon. Member, though the recent industrial unrest and prevailing trade conditions have caused a reduction in the number of calls made by existing subscribers and a falling off in the rate of new orders. To meet these temporary conditions the recruitment of telephonists has been suspended.
asked the Postmaster-General whether he is aware that Mr. Frank Lang, 33, Virginia Street, Glasgow, had his telephone disconnected at the beginning of June by the Post Office telephone department owing to his refusal to sign the tariff agreement; that this Mr. Lang paid the annual rent of his telephone yearly in advance and that his year does not expire until the 3rd December, 1921; whether he can explain why the officials of his Department have disconnected the telephone, which has been paid for and the hire of which does not expire until the 3rd December; whether the original agreement under which this telephone was installed was under the 1906 terms, which made it necessary for four months' notice from either side; and whether he will give instructions that this telephone be reconnected?
Under the provisions of the relative agreement, executed in 1916, the rental was payable annually in advance, but the agreement could be determined by either party giving to the other three calendar months' notice in writing, to expire at the end of the first year or of any successive periods of three calendar months, any prepaid unexpired rental to be refunded by the Post Office. The necessary three months' notice was given, in connection with the general revision of rates, to terminate the agreement on the 3rd June, and the service was withdrawn on the 4th June, after the subscriber had been warned that this action would be taken if he did not sign the new agreement. I am not prepared to issue instructions for the service to be restored until the new agreement is signed.
Will the telephone facilities, for which this man is paying, be restored until this question is finally settled?
In regard to any facilities that are paid for, the Post Office will carry out the agreement. There was power given in the agreement in this case to terminate the agreement by three months' notice on either side.
Government Staffs and Offices
Annual Leave
asked the Prime Minister whether he is aware that no less than 13,958 members of the staffs of nine Government Departments are entitled to an annual holiday of four weeks' duration, exclusive of Bank holidays and other public holidays, and that no less than 8,140 members of the staffs of the same nine Government Departments are entitled to an annual holiday of from five to six weeks' duration, exclusive of Bank holidays and other public holidays; if 22,000 of the. staffs of nine Government Departments are entitled to four weeks' or more annual holiday, will he say what is the total number of all Government staffs entitled to four weeks' or more annual holiday; will he state what are the present scales of holidays applicable to the various Government Departments; and, in view of the fact that in ordinary business and commercial circles much shorter holidays are customary, will he consider what public economies might be effected by a revision of the present scales of holidays in all Government Departments?
The figures given include a number of naval and military officers, and show, as entitled to five to six weeks' holiday, a number of civilian officials who are, in fact, limited to 28 days a year. They, however, appear to be substantially accurate otherwise. In answer to the last part of the question, the total number of Government employés entitled, subject to the exigencies of the Service, to four weeks or more annual leave, is, approximately, 30,000 out of a total of 370,896. The scales of leave allowed vary with the very numerous classes of employés, and I arm sending my hon. Friend a copy of a statement on the subject, which was circulated in reply to a question on the 22nd June by my hon. Friend the Member for West Fulham (Sir C. Cobb). I am not satisfied that a reduction of the privileges, which are always subject to the exigencies of the public business, would be productive of economy.
Will the right hon. Gentleman consider whether holidays running up to eight weeks might not be reviewed, in view of the present need for national economy, and considering that in commercial and business circles very much less holidays are given?
I am not aware that the holidays, which are given to similar servants in other employments, are in any way less than those in the Civil Service. I am as eager for economy as any hon. Member, and if I can achieve it by any method whatever that is fair to the employés concerned, I will do so.
If the right hon. Gentleman is not aware of it, will he kindly make inquiries in the City of London, and ascertain what holidays are granted to high officials in important mercantile firms?
I am already well aware of them in many cases, and I find that the holidays granted to many of them are just as great as, and in many cases much greater than, those granted to Civil servants of the same class.
Ministry of Transport (Treasury Representative)
asked the Chancellor of the Exchequer why the Treasury representative in the Ministry of Transport is paid £5,000 per annum, a salary largely in excess of that paid to the highest officers in the Civil Service?
The salary of this officer was fixed by the Board of Treasury after full consideration of all the relevant facts, including the limitation of the appointment to a period of three years, and was not assessed with reference to, or on the basis of, the rates of remuneration prevailing in the permanent Civil Service.
Can the right hon. Gentleman say why it costs so much more to look after the Ministry of Transport than after any other Government Department?
I think that if my hon. Friend had taken an intelligent interest in what has been produced—[HON. MEMBERS: "Oh, oh!" and "Withdraw!"]— in what has been produced to the House of Commons in connection with the accounts and all that has been investigated in connection with the British railways, he would have seen that it requires a very special type of officer in order to investigate these accounts, and that this investigation has saved the country very many millions. The kind of question which my hon. Friend puts to me really puts me in a difficult position. I have the greatest possible desire to save the money of this country, but if every occasion is taken when any special officer gets a special salary for a duty which has to be performed, with special abilities which command far higher rates outside, it makes it impossible for me to effect any economies at all.
May I very respectfully ask the right hon. Gentleman why it is necessary to pay a bigger salary to that official than to the permanent heads of the Department in the Civil Service?
Because, as I have said, he has very special qualifications for this particular task—[HON. MEMBERS: "So has Geddes!"]—qualifications which command far higher rates outside than they do in the Government service.
Will there be a saving of £5,000 a year after August, owing to the disappearance of the present Minister of Transport?
I cannot say that, but this particular officer has sent in his resignation to the Government, and therefore the salary paid to him will not be required. Whether we shall require another officer of a similar character I have not yet determined, but I do beg the House not to look at these matters in the wrong perspective. If they were aware of the salaries paid outside to this class of people, they would realise the impossibility of getting such services unless you pay an adequate remuneration.
We must not now have a Debate.
Civil Service Bonus
asked the Chancellor of the Exchequer whether he is aware of the heavy cuts in wages which are being assented to by the skilled workers in the cotton, woollen, engineering, and other trades; and whether, quite apart from the bonus, he will consider the desirability of making reductions in the salaries of all public servants so as to ensure some equality of sacrifice aid place them somewhat on the same footing as all other branches of workers in the country?
I am aware that wage reductions have been accepted in a number of outside industries. With regard to the second part of the question, I should be obliged if my hon. Friend would await the statement that I propose to make on the subject of the Civil Service bonus when the Treasury Vote is taken.
Supervising Clerks
asked the Financial Secretary to the Treasury whether the men doing supervisory work, who have been assimilated to the lower clerical class, were only acting supervising assistant clerks, who reverted in the ordinary course to their substantive rank of assistant clerk for purposes of assimilation, and were thus never actually supervising the work of their own grade; and whether, on the other hand, first-class women clerks, now required to supervise the work of second class women clerks, both having been assimilated into the lower clerical class, are being called upon to perform a duty which is not one of those laid down in the reorganisation report as proper to the lower clerical class?
It is the case that the substantive rank of the men referred to in the first part of the question was, prior to assimilation, that of assistant clerk, and that their assimilation was determined with reference to their substantive rank. It is not the case that they reverted to their substantive rank of assistant clerk, or that they never actually supervised the work of their own grade. On the contrary, they continue where required to perform such supervision. As regards the second part of the question, the grade of first class woman clerk was a substantive grade superior to that of second class clerk, but it was agreed on the Reorganisation Committee that women clerks (first and second class) should be treated as one class for purposes of assimilation. The scale of the class to which they have at present been assimilated is considerably better than the scale of either of the old classes of woman clerk. The position of individual officers who are temporarily, and pending reorganisation, performing higher duties than those of the grade to which their class has been assimilated is not affected by sex, and is uniformly postponed for consideration on reorganisation.
Pensions Administration (Report)
asked the Lord Privy Seal whether he is aware that the Report of the Departmental Committee on Pensions Administration has been issued as a Stationery Office publication, and that no copies are available in the Vote Office; and whether, in view of the great interest taken by ex-service men and their organisations in this report, and the fact that Stationery Office publications are issued: at a higher price than Command Papers, he will arrange for any new issue or reprint of this report to be treated as a Command Paper?
The answer to the first and second parts of the question is in the affirmative. In view of the general inter- est taken in the report referred to in the hon. and gallant Member's question, directions were given for a free circulation to all Members of the House. I will give careful consideration to the suggestion in the last part of the question.
Will the right hon. Gentleman explain why Members of this House were asked to discuss the Second Reading of the War Pensions Bill without this Report, although they made repeated applications for it and the Report was essential to a proper discussion of that Bill?
This was discussed on Friday week.
Will reasonable time be given before the Committee stage of the Bill, in order that we may read the Report?
That also was discussed on Friday week.
Anglo-Japanese Alliance
asked the Prime Minister whether, in view of the Anglo-Japanese alliance which still exists, he can state the obligations of Great Britain should China become an ally of the United States and make common cause with her in any conflict with Japan, more especially in view of the accepted interpretation of Article IV of the said Treaty?
I do not think it would be desirable to make any statement, particularly at the present time, in reply to this hypothetical question.
Secretary of State for India (Vote)
asked the Lord Privy Seal when the salary of the Secretary of State for India will be taken?
I am not in a position to name a date.
Peace Treaties
German War Criminals (Trial)
asked the Prime Minister whether, considering the inade- quacy of the sentences passed on war criminals, the Government intends to continue its representation at the trials at Leipzig; and what steps it intends to take to redeem the pledges given at the last election?
HALL asked the Lord Privy Seal whether the French Government have withdrawn their representatives from Leipzig as a protest against the prejudiced attitude of the Supreme Court in connection with the trials of German War criminals now proceeding there; and if he will state whether, as the German Government are using these trials to create an atmosphere favourable to Germany as regards the barbarous methods of waging war employed by her, the British Government propose to take any further part in these unreal proceedings?
I have been asked to answer these questions. I have no information other than that which has appeared in the public Press as to the course taken by the French Government. The series of trials arising out of the preliminary list submitted by the British Government to the Supreme Court at Leipzig has been concluded. The question of the course to be taken in the future will be carefully considered by the Allies.
When will a decision be arrived at?
I could not say. At the earliest possible moment.
While thanking the right hon. Gentleman, may I ask if he will not give a date?
I cannot if I would.
Will these trials be taken as specimen trials, and will the Allies determine what is going to be done in regard to action?
That is one of the questions which we shall have to consider.
In view of the fact that last Wednesday the French Prime Minister stated in the French Senate that a communication had been sent to the British Government, and gave the Senate its terms, will the right hon.. Gentleman inquire whether the letter has miscarried?
The hon. Member, if I may say so, disappoints me. He said yesterday that he was going to send me that communication. I want to see it.
Is the right hon. Gentleman aware that I did this morning send him a copy of the French Prime Minister's speech?
I have not received the document.
Have any steps been taken yet to arrest Commander Patzig at Danzig?
That does not arise out of the question.
asked the Prime Minister whether, in view of the results of the War criminal prosecutions at Leipzig, the Allies propose to proceed with them; and what is the cost of such prosecutions to date so far as this country is concerned?
I have been asked to reply. As to the first part of the question, I must refer the hon. Member to the answer already given to the hon. and gallant Member for Dulwich (Sir F. Hall). The cost of the prosecutions, including travelling expenses, has, I understand, been borne by Germany. I should like to add that the Solicitor-General, following the practice of the Law Officers of the Crown at the Paris Conference for the purpose of settling the terms of the Peace Treaty, declined to accept any fees for his attendance at the sittings of the Court at Leipzig.
German Reparation (Recovery) Act
asked the President of the Board of Trade, in the case of goods bought in Germany and coming under the new Reparations Act being delivered free on board at Hamburg, whether, in such case, the British consignee has to pay the 26 per cent. on the freight and insurance; and, if so, whether the funds so derived are treated as reparations and go into the Allied pool?
Under Section 3 (1) of the German Reparation (Recovery) Act, 1921, freight and insurance are excluded from the value on which the Reparation levy of 26 per cent. is calculated.
Imperial Airship Service
asked the Secretary of State for Air if he can give an estimate of the capital outlay and annual cost of upkeep required to establish an all-British rigid airship service between England and Southern Australia, with airships leaving England and Australia once a week each, and including the cost of the airships required and their necessary sheds, mooring masts, repair outfits, gas-making plants, etc., to be established on. the route; how many airships in commission would be required to run such a weekly service; and how many of these are now available?
No trustworthy figures are available. A paper has, however, been circulated to members of the Parliamentary Air Committee, giving very broadly the assumed cost of such a service. This paper can be made available if desired. I have sent the hon. Member a copy of the Paper.
Do I understand that the right hon. Gentleman has no statistics as to the cost of such a service?
They are stated in the Paper to which I have referred.
Why cannot I have an answer now?
Because it is too long.
asked the Secretary of State for Air whether he is aware that it takes one-fourth of a year for the Prime Minister of Australia to travel to and from an Imperial Cabinet in England; and whether he can frame any estimate as to the saving in time that would be effected by an Imperial airship service of rigid airships?
I believe the fact is as stated in the first part of the question. As regards the second part, it is estimated that, when once a regular airship service has been established, an airship should be able to complete the journey from Melbourne to London and back in about three weeks.
Aeroplanes (Parachutes)
asked the Secretary of State for Air whether the aeroplane flown by Mr. Hawker on the occasion of his fatal accident was fitted with a parachute; and what regulations exist as to the supply of parachutes to aeroplanes?
The answer to the first part of the question is in the negative. There are no regulations as to the supply of parachutes to civil aircraft.
Is the right hon. Gentleman aware that in many cases during the War pilots, when their machines took fire, saved themselves by means of parachutes?
If the hon. and gallant Gentleman will study the evidence given at the inquest he will remain in doubt whether the assertion that the machine caught fire in the air is accurate or not.
Victoria Embankment Gardens
asked the hon. Member for the Pollok Division of Glasgow, as representing the First Commissioner of Works, how much longer the huts in the Victoria Embankment Gardens between Westminster Bridge and Northumberland Avenue will be required; and why furniture is from time to time taken to these huts and also removed?
I would refer the hon. Member to the reply which I gave to a similar question by the hon. Member for Harrow on the 15th ultimo. The removal of furniture is necessary in connection with the rearrangement of staffs.
Housing (Roofing Materials)
asked the Minister of Health (1) in what districts the difficulty of obtaining roofing materials has been experienced; whether the stock of slate purchased by the Ministry has been disposed of; if so, to whom and on what date; what inquiries, if any, were made of the Welsh slate quarries as to stocks available before purchasing tiles of foreign manufacture at prices in excess of those for which Welsh slate could be obtained;
(2) whether tiles of foreign manufacture are being used on the following housing schemes, namely: Bellingham, Dagenham, Ilford, Tottenham, Hertford, Hammersmith, King's Lynn, Ipswich, Norwich, Chelmsford, Brighton, Watford, Wembley, Dover, Hastings, Haslemere, Bexley, Beckenham, Buxted, Epsom, Fleet, Burgess Hill, Portsmouth, Abercarn, East Grinstead, Purley, Sutton, East Croydon, Swindon, Winchester, Roehampton, Maidenhead, East Cowes, Emsworth, Walker-on-Tyne, Macclesfield, Blackburn, Liverpool, Southend-on-Sea, Kingsclere, Betchworth, Hampton Court, Manchester, Otley, Goudhurst, Newcastle-on-Tyne, Southport, Blackpool, Atherton, Salford, Stockport, Swinton, Altrincham, Prestwich, and Chester-le-Street; whether the plans and specifications were submitted to and approved by the Housing Department of the Ministry of Health; and whether the tiles are in many instances purchased by the Building Material Department of the Ministry'.
My Department has not purchased any tiles of foreign manufacture. A certain quantity of Welsh slates was purchased, and the bulk of these slates has been sold at various dates to local authorities in different parts of the country. The comparatively small stocks still held by my Department are being disposed of in the same way. Many housing schemes in different parts of the country have been delayed by shortage of roofing materials. In some cases (I have not verified all the cases quoted by my hon. Friend, but I have no reason to doubt that he has been correctly informed) contractors to local authorities, with a view to obviating delay in completing houses, have proposed to use foreign tiles. Approval has only been given after consideration of the possibility of obtaining, in reasonable time, materials of British manufacture at an acceptable price. My hon. Friend will realise that slates cannot always be used in districts where tiles are the normal roofing material.
Naval Officers (Pay and Allowances)
asked the Parliamentary Secretary to the Admiralty whether married naval officers are receiving less in pay and allowances than officers of their approximate age and standing in the Army; and, if this is the case, what steps it is proposed to take to remove this discrepancy?
The answer to the first part of my hon. and gallant Friend's question is in the affirmative as regards officers of certain equivalent ranks, though I ought to add, in qualification of this, that Army officers are, generally speaking, somewhat older than naval officers of the same relative rank. As regards the second part of the question, I can only repeat the assurance which I gave in this House on the 11th instant, that I hope to make a statement upon the subject before the end of the Session.
China
asked the Under-secretary of State for Foreign Affairs whether he has received a memorandum from the China Association setting forth the danger of allowing our policy in China, and especially in Shantung, to be identified with that of Japan; and whether the boycott of Japanese trade in China is practically complete?
The hon. Member no doubt refers to the letter from the China Association which was published in the Press on 8th July. I have received no other. No recent reports on the boycott of Japanese trade in China have been received, but according to such information as I have the boycott has varied considerably in different localities and seems, generally speaking, to be diminishing in importance.
Is not the hon. Gentleman of the opinion that some recommendation should be made to the Cabinet to recognise the sovereignty of China?
I do not see that that question arises.
Ancient and Historical Monuments (Royal Commissions)
asked the Chancellor of the Exchequer whether the activities of the Commissions on Ancient and Historical Monuments can be reduced in view of the urgent need for departmental economy whenever it can be effected?
I have been asked to answer this question. I would refer my hon. Friend to the answer which I gave him on the 14th instant in which I stated that the Treasury are at present in communication with these Commissions with a view to reduction of their expenditure.
Mexico
asked the Chancellor of the Exchequer if he has any information of the Mexican Government resuming the payment of interest on Mexico's external public debt?
I have no official information on this subject.
Dollar Securities Scheme
asked the Chancellor of the Exchequer what is the approximate amount of the American dollar securities returned to the Treasury; and what is the approximate amount the Treasury is still holding?
The total nominal amount of securities lent to the Treasury was £438,311,000, of which securities to the nominal amount of £320,454,955 have been returned to the holders, leaving £117,856,045 still on deposit. Of the latter amount £25,588,887 is under notice for return in August, September and October. The greater part of the balance is pledged as security for outstanding loans in America.
Agricultural Organisation Society
asked the Chancellor of the Exchequer whether, seeing that the Government will pay to the farmers about £20,000,000 under the Agriculture Act, Part I, it is still intended to pay to the Agricultural Organisation Society public subsidies for organisation of farmers; whether the Government is assured that the farmers are unable to pay for their own organisation, and that these subsidies to the above-mentioned society are necessary; and whether, in view of the demand for economy and the expressed view of the Government that subsidies must go, he will immediately stop all further grants to the Agricultural Organisation Society?
The arrangements proposed under the Corn Production Acts (Repeal) Bill are not considered to afford any sufficient reason for terminating the grants made from the Development Fund to the Agricultural Organisation Society. I am satisfied that the grants are required in order to enable the society to establish itself on a self-supporting basis. As previously stated, they are on a diminishing scale, and will terminate in 1923.
What educational research has been attempted by the Agricultural Organisation Society?
The hon. Member should put down a separate question for that.
Merchant Service (Pension Fund)
asked the President of the Board of Trade whether his attention has been called to the fact that out of the net profits made by the Mutual Norwegian War Risks Insurance Association, carried on during the War under the auspices of the Norwegian Government, the Norwegian Shipowners' Association have, in recognition of the bravery of the men of the Norwegian mercantile marine during the War, inaugurated a seamen's fund for the benefit of Norwegian seafarers, the capital of it amounting to between 16,000,000 and 20,000,000 kronen, out of which two-thirds will be used as a pension fund, four-thirtieths will be spent on homes for old sailors, three-thirtieths for education purposes, and three-thirtieths for seamen's homes and missions and life-saving institutions; and whether, having regard to the large profits made by Government war risks associations in this country, the Government will consider the propriety of allotting out of these profits an amount which would create an adequate nucleus for a national pension fund for the masters, officers, and men of the merchant service of this country?
My attention has not been called to the question. It is rather a matter for the Chancellor of the Exchequer.
Will the hon. Gentleman consider this question of the profits made by the Norwegian Association, and make a recommendation to the Treasury?
The hon. Baronet had better address that question to the Chancellor of the Exchequer.
Bosphoeus, Dardanelles and Sea of Marmora
asked the Under-Secretary of State for Foreign Affairs whether the Bosphorus, the Dardanelles, or the Sea of Marmora are neutral waters?
I would refer the hon. Member to the replies returned to the hon. Member for Yeovil on the 18th April and the 21st June, which show the present position. To those replies I am unable to add anything.
Can the hon. Gentleman say whether or not Greek warships are operating in these neutral waters?
That point does not arise out of the question, but if the hon. Member will look at the answer to which I have referred he will find a complete reply.
Is the hon. Gentleman aware that I have often looked at previous answers and found that there was no answer at all?
Can the hon. Gentleman say whether there are any Greek warships in these waters?
I cannot answer that question offhand.
British Embassy, Washington (Servant's Decoration)
asked the Undersecretary of State for Foreign Affairs if our Ambassador at Washington has decorated one of the negro servants of the Embassy with the Order of the British Empire; and if an ambassador has the right to confer an Imperial Order without reference home?
The bestowal of the medal of the Order of the British Empire upon Charles Browne, Chancery Servant at His Majesty's Embassy at Washington, in recognition of his long and faithful services during the past 33 years, was approved by the King on the advice of the Secretary of State for Foreign Affairs.
Is this servant a British subject?
I do not know, but I will inquire if my hon. desires to know.
In view of the fact that His Majesty has as many black subjects as white, is there any reason why this servant should not have a decoration?
Jute Cloth Purchase, Uruguay (Refund)
asked the Under Secretary of State for Foreign Affairs whether he has yet obtained Treasury sanction for the refund of £14,349 to certain purchasers of jute cloth in Uruguay, which was made on the sole responsibility of the British Minister at Monte Video; whether in any case the refunds were made after the contracts for sale had been completed; and whether his Department has made any similar concessions at the expense of the taxpayer without the sanction of the Treasury?
The matter is now under consideration by the Treasury. The refunds, which were not made in cash, but in the form of allowances on further amounts purchased, were made after the contracts of sale to which they referred had been completed. With regard to the last part of the question, I would point out that the transaction referred to was carried out in connection with business undertaken by His Majesty's Minister at Monte Video on behalf of the Wheat Commission.
Why were not the transactions submitted to the Treasury before these large refunds were made on the sole responsibility of the Foreign Office?
I should like notice of any technical question of that kind.
Chatham Dockyard (Dismissal)
The following question stood on the Paper in the name of Mr. J. JONES:
18. To ask the Secretary of State for War if he is aware that a labourer named McCully employed at the Gun Wharf, Chatham Dockyard, was discharged from his employment on Friday, 10th June, 1921; that this man was informed that he was discharged on account of an adverse report by his foreman, but when the foreman was brought face to face with the man he stated he had no fault to find with McCully's work, and that the ordnance officer promised to issue a good character to the man if he would ask for his discharge voluntarily; and, in view of the contradictory nature of the statements made in the case, if he will reconsider the whole matter with a view to the man's reinstatement?
I beg to ask the Secretary of State for War Question Number 18.
Has the hon. and gallant Member the express authority of the hon. Member for Silvertown?
No; but we ought to have an answer.
The hon. and gallant Member is not entitled to ask the question without authority, as I have already stated in another case.
Palestine
Bethlehem, Population
asked the Secretary of State for the Colonies what is the population of Bethlehem; how many of the inhabitants have emigrated during the past 10 years and, in particular, in the years 1919 and 1920; and whether any who have emigrated during the past 10 years have returned?
The population of Bethlehem is believed to be about 14,000 to 15,000. During the 10 years ending 1920-21 4,500 persons emigrated from that place and 393 returned to it. For the year 1919-20 the figures are: 245 emigrated, 35 returned; for 1920–21, 185 emigrated, 65 returned.
Official Languages
asked the Secretary of State for the Colonies what are the official languages in use in Palestine; whether Hebrew, if one of these languages, is placed first amongst them; if so, for what reason; whether only those who can read and speak Hebrew are employed in Government service in Palestine; and what are the total numbers of Christians, Moslems, and Jews in Government service, including railways and post office?
There are three official languages in Palestine—English, Arabic, and Hebrew. Hebrew is not placed before the others. A knowledge of Hebrew is not a necessary qualification for employment in the Government service. The total number of Government officers and servants, including the personnel of the railways and Post Office, is 2,571, of whom 1,338 are Christians, 719 Moslems, and 514 Jews.
Why is such an enormous preference given . to Christians?
Scotland
National Factory, Cardonald (Explosions)
asked the Secretary for Scotland whether he is aware that several explosions took place on 28th June on the site of the national filling factory, Meiklewood Road, Cardonald; whether five people were seriously injured; whether this ground is open to anyone to walk over and the first explosion took place when a 14-year-old girl passed over the ground and trod on a substance which immediately exploded; whether a number of small bags containing a cream-coloured powder were found where the first explosion occurred; whether subsequent investigation by Inspector Ewing and Sergeant John Seton, of the Govan police, showed a number of bags and also quantities of the powder scattered over the ground; whether, on gathering these bags together, a further explosion took place by which Sergeant Seton had the thumb and forefinger of his right hand blown off and a civilian who was assisting had his sight permanently injured; whether the Government intend holding an inquiry into the matter and whether they will clear this ground of all explosive material and close the ground against the public during the period of clearance; and whether he can state if compensation will be paid to the people who were injured owing to Government negligence?
I have been asked to answer this question. I would inform the hon. Member that this matter is now under close investigation, and I shall be pleased to communicate the results of the inquiry to him.
In the meantime, while the inquiry is going on, can the hon. Gentleman tell me if this ground is being closed to the public, and if this material is being cleared from the ground, otherwise it will be a source of danger in the middle of a largely populated district?
There is an answer, but I should have to get the information. I will draw attention to what the hon. Member says.
It was one of the points in my question.
Govan Town Hall (Naval Sentries)
asked the Secretary for Scotland whether he is aware that the town hall, Govan, is still guarded by Naval sentries with fixed bayonets; whether he can state why they were placed there and if their services were ever required; and when they are likely to be withdrawn?
I have been asked to reply. The town hall at Govan was used to accommodate a Naval battalion whilst it was stationed in Scotland during the dispute in the coalmining industry. Sentries were posted outside the building in accordance with the normal naval and military procedure, just as they are posted outside a barracks or camp occupied by any unit. The sentries were withdrawn on the final departure of the battalion on 11th July.
Can the right hon. Gentleman say how far it is from Govan Town Hall to the nearest colliery; whether it is not 20 or 30 miles, and why Govan should be selected as the place in which to station that naval battalion?
It was a convenient headquarters, and a very nice building, and so it was selected for that purpose.
Bacon, Ham, and Lard (Prices)
asked the President of the Board of Trade if he will state generally what are the issues in dispute between the importers of bacon, hams, and lard and the Food Department respecting the requisition of these goods at the date of recontrol on 9th August, 1919; whether, in order to recover the heavy losses stated by the Comptroller and Auditor-General in his Report to have been incurred in this transaction, the price of bacon to the public was kept at figures above the market price as from 9th August, 1919, to 31st March, 1921; what was the Ministry's price for American sides of bacon, cut in Wiltshire fashion, on 1st December and 31st March last; and what is the market quotation at the present time?
Where claims by importers whose bacon, hams, and lard were requisitioned in 1919 remain unsettled, it is because agreement has not been reached as to the balance, if any, still due to the claimant. The statutory powers under which the requisition was effected provide for arbitration if agreement is not reached. The answer, to, the second part of the question is in the negative. The average controlled price of American Wiltshire sides was on December 1st, 1920, 183s. per cwt.; on March 31st, 1921, 115s. per cwt. At the present time the average market price is approximately 132s. per cwt.
Sandown Fort, Isle of Wight
asked the Financial Secretary to the Treasury if Sandown Fort, Isle of Wight, was vacated by the Government on 4th October, 1920, and the Treasury valuer and inspector of rates has notified the overseer of Yaverland, Isle of Wight, that in consequence a reduction of £21 will be made from the payment of the next contribution in lieu of rates in respect of the amount overpaid for the half-year ending March, 1921, and how it was possible for the overseer to know for certain, without any notice from the Army authorities or the Treasury, that this fort was unoccupied, as they had no right to enter the fort to ascertain; if the Union Jack was still flying last week from the fort, signifying some sort of occupation; if a service telephone exchange exists at the fort with two or more Royal Engineers constantly in attendance; if. some 200 or more Gordon boys are quartered temporarily at this fort; and if the Government will reconsider their decision not to pay rates?
The action by the Treasury valuer was taken on a report by the military authority that occupation of Sandown Fort ceased on 4th October, 1920, the furniture and stores having been removed and a caretaker installed. The question as to the present position at the fort should be addressed to the Secretary of State for War. The Treasury have received no information to justify a reconsideration of the decision.
How was the overseer to know that this building was not occupied as he had no right to enter the fort to ascertain.
I have imparted to my hon. Friend all the information in the possession of the Treasury. If he desires further details I must refer him to the Secretary of State for War.
Railway Tourist Tickets
asked the Minister of Transport whether he will approach the railway companies in reference to the advisability of reviving the old custom of issuing tourist tickets for a longer period than 15 days; and whether he is aware that a large number of people are desirous of seeing this old custom re-established?
My right hon. Friend is in favour of the restoration of such facilities as soon as they can be justified commercially. The railway companies were given liberty to grant cheap facilities wherever, in the opinion of their responsible managers, such a course would result in additional net revenue.
Are these facilities likely to be granted before the summer holidays are over?
Each railway company has to decide for itself. I am not in a position to state what is their experience in the matter.
Roadside Fires
( by Private Notice )asked the Minister of Agriculture if he is aware that the emission of sparks and the throwing out of hot cinders or clinkers from coal-using motor vehicles, by setting fire to the exceptionally dry roadside grass, is in many places causing standing crops, haystacks and homesteads to be in great danger of being burnt, and will he confer with the other Government Departments concerned as to promptly issuing warnings and taking such other steps as may be possible in order to reduce this danger to a minimum?
I have no information as to such occurrences as are referred to, nor do I see any practical means which I could adopt to prevent such occurrences. The serious liability that attaches to negligence in this respect should suffice to make owners of steam-engines used on roads careful to prevent fires being thereby caused.
Is the right hon. Gentleman not aware that a word from him on the subject would be reported in the Press all through England, and would constitute a warning to those who did not realise the danger?
Do not the owners of these lorries who burn the roadside grass thereby render themselves liable for the damage done to property?
Would it not be better to confer with the Ministry of Transport?
As I have stated, a very serious liability does attach for any damage that is done. I do not know what word I could say except to make it plain that serious liability does attach.
Business of the House
May I ask the Leader of the House what business he proposes to take an Friday?
As I have said in reply to an earlier question by the hon. Member for Leigh (Mr. Raffan), we hope to proceed with the Licensing Bill on Friday.
If the Licensing Bill is disposed of, what else will the Government take on Friday?
The other small Orders on the Paper.
New Member Sworn
Thomas Brown Wallace, Esquire, for the County of Down (West Down Division).
Bills Presented
Licensing (No. 2) Bill,
"to amend the Law relating to the sale and supply of intoxicating liquor, and for purposes in connection therewith," presented by Sir Gordon Hewart; supported by Mr. Shortt, Mr. Munro, Sir John Baird, and Mr. Hilton Young; to be read a Second time To-morrow, and to be printed. [Bill 177.]
Salmon and Freshwater Fisheries (No. 2) Bill,
"to consolidate and amend the enactments relating to salmon and freshwater fisheries in England and Wales," presented by Sir Arthur Boscawen; to be read a Second time To-morrow, and to be printed. [Bill 178.]
Railways Bill (Reserved Portion)
Reported, with Amendments, from Standing Committee B.
Report to lie upon the Table, and to be printed.
Minutes of the Proceedings of the Standing Committee to be printed.
Health Resorts and Watering Places Bill
Lords Amendments to be considered upon Friday, and to be printed. [Bill 176.]
Corn Production Acts (Repeal) Bill
Reported, with Amendments, from Standing Committee C.
Report to lie upon the Table, and to be printed.
Minutes of the Proceedings of the Standing Committee to be printed.
Bill, as amended (in the Standing Committee), to be taken into consideration upon Thursday, and to be printed. [Bill 175.]
Private Bills (Group H)
reported from the Committee on Group H of Private Bills; That the parties opposing the Pilotage Provisional Orders (No. 5) Bill [Bristol Order] had stated that the evidence of Captain Edward William Castle and Captain William Roberts was essential to their case; and, it having been proved that their attendance could not be procured without the intervention of the House, he had been instructed to move that the said Captain Edward William Castle and Captain William Roberts do attend the said Committee To-morrow, at half-past Eleven of the clock.
Ordered, That Captain Edward William Castle and Captain William Roberts do attend the Committee on Group H of Private Bills To-morrow, at half-past Eleven of the Clock.
Bills Reported
Southend Water Bill [ Lords ],
Reported, with Amendments; Report to lie upon the Table, and to be printed.
Pier and Harbour Provisional Orders (No. 1) Bill,
Reported, with Amendments [Provisional Orders confirmed]; Report to lie upon the Table.
Bill, as amended, to be considered Tomorrow.
Pilotage Provisional Orders (No. 6) Bill,
Reported, without Amendment [Provisional Orders confirmed]; Report to lie upon the Table.
Bill to be read the Third time Tomorrow.
Pilotage Provisional Orders (No. 7) Bill,
Reported, with Amendments [Provisional Orders confirmed]; Report to lie upon the Table.
Bill, as amended, to be considered Tomorrow.
Manchester (Police, &c.) Provisional Order Bill,
Reported, without Amendment [Provisional Order confirmed]; Report to lie Upon the Table.
Bill to be read the Third time Tomorrow.
Hastings Tramways (Extension) Bill [ Lords ],
South Shields Corporation Bill [ Lords' ],
Reported, with Amendments; Reports to lie upon the Table, and to be printed.
Conyngham's Divorce Bill [ Lords ],
Reported, without Amendment, from the Select Committee on Divorce Bills; Report to lie upon the Table.
Bill to be read the Third time.
Message from the Lords
That they have agreed to,
Colne Corporation Bill.
Swansea Gas Bill, with Amendments.
Amendments to—
Waltham and Cheshunt Gas Bill [ Lords ], without Amendment.
Selection (Standing Committees)
Standing Committee C
Sir SAMUEL ROBERTS reported from the Committee of Selection; That they had discharged the following Members from Standing Committee C: Mr. Forestier-Walker, Captain Foxcroft, Mr. Hinds, Mr. Jodrell, Mr. Lunn, Mr. Raffan, Colonel Sir Alexander Sprot, Captain Reginald Terrell, and Lieut.-Colonel Willoughby.
Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee C (added in respect of the Water Undertakings (Modification of Charges) Bill): Mr. Godfrey Locker Lampson.
Reports to lie upon the Table.
Orders of the Day
Finance Bill
Order read for resuming Adjourned Debate on new Clause proposed [18th July] on Consideration of Bill, as amended (in Committee and on Re-Committal).
NEW CLAUSE.—(Reduced Customs duties on Sugar.)
In lieu of the present Customs duties, drawbacks, and allowance in respect of sugar, molasses, glucose, and saccharine there shall, as from the first day of September, nineteen hundred and twenty-one, be charged, levied, and paid the duties specified in the first column of Part II of the First Schedule of this Act, and there shall be paid and allowed the drawbacks and allowance set out in Part II of that Schedule.—[ Sir William Barton. ]
Question again proposed, "That the Clause be read a Second time."
In the early hours of this morning a new Clause was moved by the hon. Member for Oldham (Sir W. Barton) and seconded by the hon. Member for Central Hull (Lieut.-Commander Kenworthy) to reduce the sugar duty to three half-pence. There are two questions that arise, Why is the duty at its present figure and what would be the result if this Amendment were carried? This Amendment raises in an acute form the very wide question whether War taxation should be continued in time of peace. During the War all classes of the nation readily accepted the heavy financial burden placed on them by the various Governments. To-day Britain is the most heavily taxed country in the world. During the War the House of Commons pressed on the Government of the day that increase of taxation. I remember in 1915 several hon. Members in a democratic House of Commons, more especially Members from Lancashire, asking the Government to increase taxation. It is due to the patriotic instinct of the British public that our taxation is as high to-day as it is, and I think that the House of Commons and Britain look back with pride to the financial sacrifices which one and all made during that period which enabled this country to Dear the very heavy financial burdens that we're imposed on it. Not only that, but it enabled Britain to finance her allies, especially France. France was able to borrow on the security of this country because the taxpayers of Great Britain readily accepted the high taxation which was imposed.
During that period I was a strong supporter of high taxation. During the period when large profits were being made, when wages were higher than in pre-War days, due very largely to the vast outpouring of borrowed money, these conditions resulted. But today a different situation has arisen. There is to-day a fall in prices, a drop in profits and a big capital waste, and I think that the time has arrived when the Government of the day should face the question whether war taxation should be continued in time of peace. I ask the House to consider, if the level of taxation had not been raised so high during the War, would we be asked to-day to consider this increase in the sugar duty? The present high level of taxation is due to the patriotic instincts of the British people, who accepted readily the high taxation imposed on them during the War. This particular tax is a bad tax. It is a tax on food. In pre-War days there were many discussions in this House, as to whether or not the sugar duty should be removed altogether. In those pleasant days the level of taxation in this respect was ¼d. in the £. To-day it has increased to 2¾d. in the £, and the Amendment which I am supporting aims at reducing the 2¾d. to l½d. I can well understand during the last two or three years, while the heavy wheat subsidy was in force, that the Government of the day, had a very strong argument to advance against those who advocated the repeal or reduction of the sugar duty. They could then point out with truth, that large sums of public money were being spent to lower the price of bread, and therefore the burden on the indirect taxpayer, was not so heavy as it might appear to be. With the removal of the wheat subsidy—on which the Government are to be congratulated —that argument falls to the ground.
If we consider the position to-day, there are three million men out of work —a vast army of pensioners. Every hon. Member will agree that this particular duty falls with extraordinary severity on a very large number of people. When trade is bad, and profits are small, and there is considerable unemployment, taxation falls more heavily on the indirect taxpayer than in more prosperous times. There is a very general opinion throughout the country that the indirect taxpayer is paying more than his fair share. It is undoubtedly true that the direct taxpayer is paying heavily. In a Debate which took place in the House earlier in the Session, the Financial Secretary to the Treasury reminded the House that of the total revenue raised by taxation 61 per cent. was paid by the direct taxpayer and 39 per cent. by the indirect taxpayer. That percentage conforms very nearly to the pre-War percentage, and it is, therefore, true that to-day the indirect taxpayer is paying the same percentage towards the total cost of government as he paid in pre-War days. This is not only a tax on food, but on raw material. We on this side of the House believe that employment can be created by cheapness. Any step which the Government take, by increasing taxation or any other fiscal expedients, to raise prices will check employment and will create bad trade. The converse holds good, that any steps which the Government take to lower prices will increase employment, and so help the indirect taxpayers throughout the country. This is a thoroughly bad and vicious tax, excessive in amount, and raised to its present high level through war pressure. For 'these reasons the House would be well advised not to repeal the tax altogether, but to reduce it to the midway figure of l½d. in the £. If this Amendment were accepted there would be a decrease in the revenue for the services of the Government this year and the coming year. Government expenditure in these days is determined by the national revenue. I can give instances to show that Government expenditure today is being reduced, not through the desire to curtail policy, but merely through lack of revenue. If this House is anxious to stop the large Government expenditure which is going on to-day in every Department, the most effective method is to reduce national revenue, and so place at the disposal of the Government of the day smaller sums of money for their various schemes. From the three points of view, first, that the duty was raised to a high level during the War; secondly, that it is a bad tax, imposed on food and raw material; and, thirdly, that reduced revenue would be the most effective method of curtailing Government expenditure, I have pleasure in supporting the new Clause.
I do not think I need say very much in reply to the speeches made from the opposite side upon this very important Clause. The considerations upon the one side and the other are clear to all hon. Members, and do not require any elaboration. No one wishes to tax sugar at a higher rate than one is bound to. Everyone would wish to relieve all articles of food from taxation to the utmost possible limit, but as my hon. Friend who has just sat down explained to the House, the limit of direct taxation has been reached. He cannot suggest any other form of taxation to take the place of the particular tax which he wishes to reduce.
Reduce expenditure.
All he says is that by curtailing the money supplied to the Government you curtail the amount which the Government may spend. That is perfectly true. If you give a man nothing to spend he cannot spend, and there is, accordingly, a great power in the hands of this House to stop the whole machinery of the country if the House so desires. After all, if the country is to be run at all, the Government must be supplied with sufficient funds for the purpose, and it is in the power of the House upon each occasion, when revenue is sought, to decide how much will be granted. Upon this particular tax, I should like to point out that the effect of accepting the proposed Clause would be to reduce revenue in the present year by £9,500,000 and in a full year by £15,000,000. In point of fact I cannot afford to lose that revenue, and for that very cogent reason I cannot accept the Clause.
4.0 P.M.
It is quite impossible to leave this matter where the speech of the right hon. Gentleman leaves it. He and his predecessors have wilfully thrown away revenue in many directions, and I suggest that when reductions are being made, it is desirable that the poorer sections of the community should enjoy their share of these remissions. I do not propose to enter into a prolonged discussion of the Excess Profits Duty, but as a matter of fact, when after the War, taxation was balanced amongst the various sections of the community, that was a tax which was found to be borne by the wealthier classes of the community. It has been found an unsuitable tax and it may be that that is quite right and that it is unsuitable in the interest of trade. The wealthier portion of the community have to that extent been relieved of the burdens which lie on them. The landowners of this country have been entirely relieved of taxation imposed on them, and when the Government refuse this small concession in the interests of the very poorest of the community it does not lie in their mouths to say that they cannot afford it because otherwise they could not get the revenue, when, in the case of the landowners they have not only exempted them from taxation but have paid back to the taxpayer the taxes already paid by them. Even this year the Government has remitted taxation on cigars and champagne.
Why?
Because this is a Government which obeys the behests of the rich and powerful and is entirely deaf to any appeal from the poorer part of the community. Certainly the right hon. Gentleman cannot be allowed to shield himself as he has done behind the argument that there is no other method by which he can obtain the revenue. If there are to be remissions the remissions should go first to the very poorest part of the community.
There is absolutely no tax which weighs more heavily on the poor than this. The old age pensioner is endeavouring to keep body and soul together on 10s. a week, and that small pension is rendered less productive in purchasing power because of this tax. The right hon. Gentleman has made out no case whatever for resisting this Amendment. This is a bad tax in every way. It has been increased to a much greater extent than any other It is a tax on industry, as was shown last right. Our export trade suffers, because in many respects we are unable to produce for export as we did before the War because of the increased price of sugar. It is a tax on industry and on food. The jam-making industry, every household, and every mother is affected by it. I welcome the right hon. Gentleman's attitude for one reason, and one reason only, that is, that I am quite sure that when a General Election takes place it will be very difficult for the wives and mothers of this country to support a Government which acts as this Government has done.
The Chancellor of the Exchequer admits that, as far as this particular tax is concerned, he is strongly in favour, if possible, of its being reduced. He admits that it is too high.
All our taxes are too high.
Yes, but the only reason why he cannot accede to the urgent requests made is that he wants the money. He must have the money, and he says that he cannot obtain this money by any method of direct taxation. If he takes the advice of the principal officers of the Inland Revenue they will be able to indicate to him that there are people who are escaping more Super-Tax than would cover this £15,000,000 or this £9,500,000, which he has stated he would lose if he acceded to our demand. It has been said during the Debate that there is not a single tax in the whole gamut of taxation which has been increased to anything like the extent that this one has. I understand it has been increased to no less than 14 times its value in 1914, and if the Chancellor of the Exchequer were to accede to this request it would still show an increase of six times. Surely this article, which is one of the essential ingredients of the food of the people, should not bear this enormous taxation. No home can do without it, and it falls most heavily where there are large families of little children. How can we expect the working classes of this country to take kindly to the idea of wage cuts when it is an impossibility, owing to Government taxation, to bring down the cost of living? It is impossible to bring down that cost while you have taxation of this character. The arguments which have been put forward for the reduction of this particular tax cannot be effectively answered by those on the Government Bench. The indirect taxation on food in 1914 was over £10,000,000. It has gone up on food alone to £53,000,000. That is out of all proportion to the ability of a good many people of this country to bear this indirect taxation. For this weighs most heavily on those people whose incomes are the most slender, and who ought to be relieved of a burden of this character when life would not be worth living if they could not procure this sugar. Though we know that the Treasury Bench is adamantine in regard to appeals of this character, if there is any source of irritation among the working classes it is the fact that the cost of living cannot be brought down owing to the extraordinary methods of taxation employed by the Government.
I think this particular tax is a radically bad one. It violates a cardinal principle of taxation that taxation should be imposed according to ability to pay. That is what makes this particular tax a bad one, and I shall look forward to its total abolition. I am sorry we are unable now, in view of the financial situation of the country, to propose its abolition entirely. We must remember that in spite of what was said last night that sugar is practically a necessity for everyone. Sugar is not consumed according to the banking account or income of any particular person. The poor man with a family of a certain size consumes the same amount of sugar that a rich man consumes who has a similar family. The result is that the tax on sugar is a very much heavier burden on the poor man than on the rich man. Therefore no one would for a moment attempt to defend the tax on that account. So long as sugar enters so largely into the domestic budget of the poor class family so long will it be a burden and will hit them harder than it hits anyone else. You cannot bring up children at the present time with the same comfort and on the same diet as was the case before the War, and I do hope the right hon. Gentleman and the Government will do what they can to remove part of this tax at the earliest possible moment. I shall vote for the Amendment.
Everyone in the House deprecates the enormous taxation on sugar, and we all recognise the fact that it presses hardly on those with large families and small incomes. But we have got to find the money that is necessary to carry out the obligations of the country. I have not heard any alternative proposals which have been put forward by which this £15,000,000 could be obtained. References were made which were quite correct as to the effect of this tax on poor people, but nothing was said about the taxation placed on the people supposed to be rich people. They have got their quota to bear, and while it is true that the rich man does not pay any more for his sugar, you must not overlook the heavy taxation borne by those who have got the money—Income Tax which is based on a sliding scale according to ability to pay, and added to that the Super-tax. My hon. Friend the Member for Leigh (Mr. Raffan) referred to the abolition of the Wine Tax and the reduction in two other taxes. He referred to the abolition of the Excess Profits Duty, but he did not draw attention to the fact that many business houses have had to make an application to the Chancellor of Exchequer for the return of large amounts which they have had to pay in consequence of the depression in trade. If that was to continue, the country would be faced with an enormous increase of unemployment on the very large figures that are operating at the present time. With regard to the reduction in the cigar duties and the champagne duties, I should have thought that my hon. Friend would have thought a little more carefully on these subjects. What did the Government do? Speaking last year on the cigar duties, I said that you could tax an article up to a point and get revenue, and that you could tax it still further and get a reduced revenue. That is exactly what is taking place. My right hon. Friend recognises that this is not given as a subsidy to those who are able to buy cigars and champagne, but as a business expedient. Noting that there has been this reduction in the amount of revenue, he desires to put the thing right; for we know that in these days the Chancellor does not like to reduce any taxation.
Does not the hon. and gallant Gentleman realise that that is part of our argument? If you reduce these taxes it will bring about increased consumption and there will be a larger revenue?
We have got to look at the facts as they are. We cannot throw away the substance for the shadow. I quite agree that in ordinary or normal times it would be well to look for a reduction in the taxation of sugar: that would increase its consumption. But we are living in abnormal times, and you cannot, on chance, throw away £15,000,000 in the hope that you may get back £4,000,000 or £5,000,000. The Government are quite correct in regard to this taxation. I repeat it was not a subsidy to those able to buy. It was a case where the Chancellor said, "I cannot get my revenue with these large prices because the thing is over-taxed; therefore, I shall have to reduce that taxation." Although desirous of seeing a reduction in taxation as much as are my Labour friends, I am going to assist the Government in obtaining the money necessary to carry on the Government of the country.
This is a very old subject, and has nothing to do with the amount of taxation of any particular article. In 1906, when the taxation of sugar was very much lower, at my election I was asked whether I would vote for a reduction of it, and I said, "No." My Radical opponent said he would. Radical candidates in 1906 said they would, if returned to power, reduce the taxation on sugar, and they did not do so.
Oh, yes!
A certain number of my hon. Friends said, "Let us see what reliance we can place upon the pledges given by Radical Members at the last General Election Therefore, they moved a reduction of the duty on sugar. I am always consistent. I disliked the Radical Government of that day. I dislike Socialists and Radicals of the present time. I voted with a Radical Government in power for the maintenance of the tax on sugar. Not a single Member who had pledged himself at that late election to reduce the taxation on sugar voted in favour of it. On the contrary, they all voted with the Government in support of it- This question has nothing whatever to do with the question of general taxation. It is a vote-catching manœuvre which has been going on for a number of years, and will go on whatever happens.
The hon. Member for Dulwich (Sir F. Hall) in his customary manner has endeavoured to give us an analogy of the situation as it was following the General Election of 1906. I am not here this afternoon to speak against this tax simply for election purposes. I hope the House in relation to this tax is going to rise above that consideration. So far as we on this side are concerned our opposition is aroused because of the injustice that is being perpetrated upon the greatest class in the country. There is such a thing as going too far even with indirect taxation. When you look at the figures you see that sugar in 1914 was taxed at 1s. l0d. per cwt. I ask the right hon. Gentleman, the Chancellor of the Exchequer, if he can find anything to compare with the increase on sugar from that day to this? In 1914 the tax on sugar was 1s. l0d. per cwt; in 1917 it was 14s., and to-day it is 25s. 8d. My right hon. Friend opposite (Sir F. Banbury) who addresses the House upon these things generally provides us with some very good information, sometimes helpful, but I noticed yesterday in the Debate, when he was speaking upon the club tax, he rather made us infer from his speech that the only taxes that affected the working classes were tobacco and beer.
And tea.
I submit the question of sugar affects every individual irrespective of class.
I had forgotten that.
Never a table is prepared but what it is affected by this particular tax!
I quite admit that,. I had forgotten the sugar.
I have had sent to-me certain figures that were given in connection with a particular organisation in this country. They paid this tax in 1914 to the extent of just over £4,000.. To-day they are paying nearly £27,000. This organisation is composed chiefly of those who are engaged in the factories and mills and who live under what is known as the wage-system. They are not able to pay this expensive tax and regard it as a great injustice. My hon. and gallant Friend, who, I notice, has left the House, said he was in favour of a reduction of this tax. I am one of those who endeavour to carry out so far as lies in me the policy which I endeavour to preach. It is impossible for Members of this House when they are out for a reduction of this tax at the same time to go into the Lobby to keep the tax where it is. People are proved by their deeds and not so much by their words. I want to appeal to the right hon. Gentleman whether he cannot give some reduction of this sugar tax. Questions which are many and varied affect the ordinary life of the toilers of this country. In a great percentage of these things the people pay the taxes indirectly, and included in these taxes is the tax upon sugar.
I learn that so far as the sugar pays heavily which is put into ordinary canned fruit is concerned, and this is a common thing to be found upon the table of working people. The organisation to which I have referred has paid £15,978 for this year. Wherever we turn our attention, in the making of fancy bread or confectionery, anything which will give a little more comfort or luxury— and sometimes, indeed, necessaries—to the ordinary people of the country, we find this question of sugar taxation affects them in a wholesale fashion. I suggest to the right hon. Gentleman that he cannot much longer perpetuate a tax of this kind. There has got to be a strong effort made in this direction. One has often been asked about this matter in the various constituencies where one is honoured to speak. Occasionally the rank and file want to know when these indirect taxes are going. Out of every 1s. of taxation 2½d. is indirect taxation. If the workers of the country knew more as to the amount of indirect taxation that they were paying, they would rise up in revolt against any Government anxious to keep on a tax of this character. I ask my right hon. Friend, will he not consider the matter? Will he promise, if he cannot do anything this year, to do something next year? Or will he, at all events, give us a little ray of light or a gleam of hope that, if he has the honour to introduce next year's Budget, he will endeavour, as he has given promises to certain vested interests to give them back certain things, to turn his attention to this case, which affects the great majority of the poorest people.
Change the Government!
My hon. and gallant Friend says "Change the Government." That is not within my power. I am one of those who believe that the House of Commons is a reflex of public intelligence. [HON. MEMBERS: "No, no.!"] If the public had had a little more intelligence then to-day probably this House would have been differently constituted. I want to ask the right hon. Gentleman if he cannot see his way clear to give us a definite assurance that something will be done this year to give us an assurance that on the introduction of the next Budget that this indirect taxation shall be considered.
If the Amendment before the House goes to a Division every hon. Member of this House who in 191S expressed his belief in the abolition of taxes upon food should go into the Lobby with us; if so there will be no difficulty about this Amendment receiving a substantial majority. I hope it will go to a Division, from the point of view of giving those hon. Members an opportunity to act up to their profession upon this particular matter. In some of our earlier experiences of political agitation we frequently came up against the cry for a free breakfast table. Our fathers in their day tumbled over each other to rench the ballot box to record their votes in favour of removing taxes from food and in favour of a free breakfast table. I am bound to confess, quite apart from all political considerations, that they instinctively were on sound lines, in endeavouring to remove any weight from the food of the people, a policy to be pursued quite irrespective of the political party that advocated it.
Some reference has been made in this Debate to the many comparisons between the taxes upon sugar, the taxes upon champagne, and the rest of it. I do not think they are on all fours at all, because if any tax is imposed upon beer or sparkling wines we individually can get out of the way. We can leave the cigars alone. We can leave intoxicating liquor alone. We can cease consuming the sparkling wines. Everybody will be the better for it, and the thing will be on the right lines. When, however, there comes a question of sugar on the breakfast table of the ordinary working class population, to apply the same policy of direct action or passive resistance and cease to consume the sugar that they had before would be a disadvantage, and would be going upon the wrong lines. So I suggest that the arguments applying to the one do not apply to the other. I understand that for the current year the tax is anticipated to yield in round figures somewhere about £33,000,000. If we balance that up and strike an average, we find that that runs out at about 1s. 6d. to 1s. 9d. per week for every family in the country. There are a large number of families to whom 1s. 6d. per week is a very minor consideration. The only consideration with them is the matter of supply. But there are a large number of working-class families in this country to whom the tax of 1s. 9d. per week upon one of the essentials of life is an exceedingly serious matter. The Amendment which has been proposed, which in a normal year would reduce that by one-half, is, I submit, not at all unreasonable.
To those hon. Members who ask us to submit an alternative as to where this £15,000,000 can be raised, I would reply that it is not for us to find an alternative under the existing circumstances. If we had the opportunity it would easily be done, and the Chancellor of the Exchequer knows where it can be done and where the money can be raised without injuring a single human being in this country. There are sources of taxation left untapped that ought to be attended to, where large sums could be secured which would not injure in the slightest degree any individual who was called upon to make that contribution, but this is a matter for the Government and not for us. Our case is that this tax on the poor people, on one of the essentials of life, is one that ought not to be imposed, and its continuation cannot be sustained.
Some months back I put a question to the Treasury, asking if it was correct that increased duties to the extent of over 1,000 per cent. had been placed on sugar during the period of the War, and the reply was in the affirmative. It will interest the House to know that the tax to-day on sugar is far in excess of the original cost of sugar in pre-War days. Parliament has decided quite recently that the unemployment dole of 20s. shall be reduced to 15s., and one can realise what an effect it has upon the food that is obtainable by those who are in receipt of this small dole when their essential commodities are taxed to such an extent. The only satisfaction that is forthcoming from the Chancellor of the Exchequer on this very important matter is that he brushes all these arguments aside by saying, "I want the money." After all, it is the duty of the Chancellor of the Exchequer to get his money in the fairest way he can, and not by the easiest method, such as by taking any commodity that is most convenient to himself, and putting on a duty of 1,000 per cent., while upon other commodities he is willing to take taxation off, as in the case of champagne and cigars, for the only reason that the excess duty has had an effect upon the sales of those commodities. I wonder if he has taken any trouble to investigate what has been the result of this colossal taxation upon sugar.
At the present moment the bonded stores of London are carrying double the quantity of sugar compared with the pre-War period, and the reason is that there is far less sugar being consumed, not alone as sugar, but every industry which uses sugar is affected. We all know from practical experience that large quantities of sugar are used in jam making, and very much less jam is now being made on account of the present cost of sugar. The biscuit factories are working very much less time because the cost of their biscuits has been increased, and it is the same in the confectionery trade and with golden syrup, which has gone up greatly in price, with the result that there is ever so much less being consumed. It is no wonder that the Sugar Commission has had to go out of business, leaving a deficiency of an enormous sum for the Chancellor to face on account of the high prices they had to charge. Would it not be better for the right hon. Gentleman to have reduced his duty? If he had done that, he might have saved a good deal of the loss which the Sugar Commission had to face, and the people would have gained a great deal, while the industries concerned would be in a more flourishing condition. I suggest to the Chancellor of the Exchequer that this is a commodity affecting, not a limited number of trades or people, but practically every individual throughout the land, and I think it is worthy of a little more consideration from him.
The hon. Member for Whitechapel (Mr. Kiley) has rather badly estimated the situation in regard to the consumption of sugar. The bonded warehouses are carrying large stocks, it is true, but that is largely owing to a falling off in the demand recently, due to the coal stoppage and widespread unemployment, but at the present moment the feature of the market is a considerable rise in the price of sugar. The duty is not, as a matter of fact, choking off the demand, and the tendency of the market is to rise still further, showing that there is still, if anything, a growing demand. That brings me to the one point which I wish to make on this question. If for no other reason, I should vote against the Amendment on the authority of Mr. Gladstone, who pointed out that if you make a very drastic reduction in a revenue import duty, it is very unlikely that the whole or even a considerable part of that reduction will be passed on to the consumer, but if you want it to be passed on to the consumer you must make it gradual. That statement was made by Mr. Gladstone in his Budget speech of 1854, I think, on the question of the price of tea, and I am quite certain, judging from the present state of the market, that if this Amendment were passed, not more than 10 to 20 per cent. of the reduction would ever be passed on to the consumer.
I am opposed to all forms of indirect taxation. In the first place, the people who are penalised most by it are the poorest of the people, the old age pensioners and the children in particular. Children, we are told, need sugar, although I believe there is some dispute about that amongst doctors, and to-day there is a largely reduced consumption of sugar because of the price of sugar. I remember the time—and it does not seem so very long since—when we could get 6 lbs. of sugar for l0½d. I do not know what the position was with regard to the tax then, but there could not have been a very high tax on it at that time. I think it was about 1s. l0d.per cwt. I do not believe that any words that fall from any hon. Member's lips here will alter the attitude of the Chancellor of the Exchequer. He intends still to impose the tax.
You woke him up, at any rate.
The reason is that Governments in modern times have seemed to be determined to raise an increasing quantity of revenue by indirect methods, and, with all due respect to my hon. Friends on this side, I have yet to learn that when they were in office they were very anxious to reduce these forms of taxation. For years, I remember, the doctrine of a free breakfast table was talked of, but when they had the opportunity they tinkered with it a little but did not effectively take any steps to remove all these forms of indirect taxation. They have had their opportunity, and they have failed to deal with it on the drastic lines on which we would deal with it. The Chancellor of the Exchequer is in the position to-day of having to raise huge sums of money, and it is because during the War we borrowed very extensively, and to-day we are having to find nearly twice the amount of money, to pay the interest on that huge debt, that used to be raised in a pre-War Budget. I remember when a pre-War Budget of £200,000,000 was talked about as being the limit of national finance, but we are raising nearly double that to-day to pay the interest on the huge debt we have incurred, an interest, I believe, of over £340,000,000, without anything for sinking fund at all, and the tendency seems to be for the Governments of the day to put an increasing burden on to the people who are least able to bear it. I am afraid we shall have to put up with that until the people outside alter their methods and send men here who are determined to put the burdens on the backs of the people who are most able to bear it. Our hon. Friends opposite have Seen complaining about the increase in Income Tax, but I submit that they are paying it, in the main, to themselves. I sent my lads to the War; they lent their money, and were well paid for doing it. I submit that if they had been requested to lend their money free of interest they would not have been making any greater sacrifice than the people who sent their lads.
That is not relevant to this particular Amendment.
I will get back to the issue, but I thought it was largely relevant, because it is due to that huge burden that the Chancellor of the Exchequer is at his wits' end to find revenue, and he dare not increase the Income Tax because of the agitation from those sources that are bearing a very big burden. Therefore, a stealthy way is found to get money from the common people, on sugar, tea, coffee, cocoa, dried
fruits, mineral water, entertainments, and so on. These taxes were put on for War purposes because we needed the revenue, but the tendency is for the Chancellor to continue them, despite the protests from this side of the House, and I shall go into the Lobby in favour of this Amendment.
Question put, "That the Clause be read a Second time."
The House divided: Ayes, 65; Noes, 135.
Division No. 265.] AYES. [4.45 p.m. Acland, Rt. Hon. Francis D. Grundy, T. W. Rattan, Peter Wilson Barker, G. (Monmouth, Abertillery) Guest, J. (York, W.R., Hemsworth) Rendall, Athelstan Barnes, Rt. Hon. G. (Glas., Gorbals) Hall, F. (York, W.R., Normanton) Richardson, R. (Houghton-le-Spring) Barnes, Major H. (Newcastle, E.) Hallas, Eldred Roberts, Frederick O. (W. Bromwich) Bell, James (Lancaster, Ormskirk) Halls, Walter Robertson, John Benn, Captain Wedgwood (Leith) Hancock, John George Royce, William Stapleton Bottomley, Horatio W. Hayday, Arthur Sexton, James Bramsdon, Sir Thomas Hayward, Evan Shaw, Thomas (Preston) Bromfield, William Henderson, Rt. Hon. A. (Widnes) Smith, W. R. (Wellingborough) Brown, James (Ayr and Bute) Hirst, G. H. Swan, J. E. Cape, Thomas Holmes, J. Stanley Thomas, Rt. Hon. James H. (Derby) Carter, W. (Nottingham, Mansfield) Irving, Dan Thorne, G. R. (Wolverhampton, E.) Clynes, Rt. Hon. John R. Kennedy, Thomas Waterson, A. E. Collins, Sir Godfrey (Greenock) Kenworthy, Lieut.-Commander J. M. White, Charles F. (Derby, Western) Davies, A. (Lancaster, Clitheroe) Kenyon, Barnet Williams, Aneurin (Durham, Consett) Edwards, C. (Monmouth, Bedwellty) Kiley, James Daniel Wilson, Rt. Hon. J. W. (Stourbridge) Edwards, G. (Norfolk, South) Lunn, William Wilson, W. Tyson (Westhoughton) Entwistle, Major C. F. Maclean, Nell (Glasgow, Govan) Wintringham, Thomas Gillis, William MacVeagh, Jeremiah Wood, Major M. M. (Aberdeen, C.) Glanville, Harold James Mills, John Edmund Graham, D. M. (Lanark, Hamilton) Myers, Thomas TELLERS FOR THE AYES.— Graham, W. (Edinburgh, Central) Newbould, Alfred Ernest Sir W. Barton and Mr. Spencer. Griffiths, T. (Monmouth, Pontypool) O'Grady, James
NOES. Agg-Gardner, Sir James Tynte FitzRoy, Captain Hon. Edward A. Lloyd-Greame, Sir P. Ainsworth, Captain Charles Foxcroft, Captain Charles Talbot Lowther, Maj.-Gen. Sir C. (Penrith) Amery, Leopold C. M. S. Fraser, Major Sir Keith Lyle, C. E. Leonard Ashley, Colonel Wilfrid W. Ganzoni, Sir John M'Donald, Dr. Bouverie F. P. Astor, Viscountess Gardiner, James Macdonald, Rt. Hon. John Murray Bagley, Captain E. Ashton Geddes, Rt. Hon. Sir E. (Camb'dge) McMicking, Major Gilbert Baird, Sir John Lawrence Gibbs, Colonel George Abraham McNeill Ronald (Kent, Canterbury) Banbury, Rt. Hon. Sir Frederick G. Gilmour, Lieut.-Colonel Sir John Macpherson, Rt. Hon. James I. Barnston, Major Harry Glyn, Major Ralph Mond, Rt. Hon. Sir Alfred Moritz Beckett, Hon. Gervase Goff, sir R. Park Moore-Brabazon, Lieut.-Col. J. T. C. Benn, Sir A. S. (Plymouth, Drake) Goulding, Rt. Hon. Sir Edward A. Moreing, Captain Algernon H. Bennett, Sir Thomas Jewell Grant, James Augustus Morrison, Hugh Bethell, Sir John Henry Green, Joseph F. (Leicester, W.) Murray, C. D. (Edinburgh) Bigland, Alfred Hailwood, Augustine Neal, Arthur Bird, Sir William B. M. (Chichester) Hall, Rr-Adml Sir W. (Liv'p'I, W. D'by) Newman, Sir R. H. S. D. L. (Exeter) Blair, Sir Reginald Hambro, Angus Valdemar Nicholl, Commander Sir Edward Breese, Major Charles E. Hannon, Patrick Joseph Henry Nicholson, William G. (Petersfield) Briggs, Harold Harmsworth, C. B. (Bedford, Luton) Ormsby-Gore, Hon. William Brown, T. W. (Down, North) Harris, Sir Henry Percy Palmer, Major Godfrey Mark Bruton, Sir James Hennessy, Major J. R. G. Palmer, Brigadier-General G. L. Casey, T. W. Henry, Denis S. (Londonderry, S.) Parker, James Cecil, Rt. Hon. Evelyn (Birm., Aston) Hills, Major John Waller Peel, Col. Hon. S. (Uxbridge, Mddx.) Chamberlain, Rt. Hn. J. A. (Birm. W.) Holbrook, Sir Arthur Richard Percy, Lord Eustace (Hastings) Chamberlain, N. (Birm., Ladywood) Hope, Sir H.(Stirling & Cl'ckm'nn'n, W.) Philipps, Gen. Sir I. (Southampton) Clay, Lieut.-Colonel H. H. Spender Hope, Lt.-Col. Sir J. A. (Midlothian) Pollock, Sir Ernest Murray Clough, Sir Robert Hopkins, John W. W. Pownall, Lieut.-Colonel Assheton Coats, Sir Stuart Hopkinson, A. (Lancaster, Mossley) Raper, A. Baldwin Croft, Lieut.-Colonel Henry Page Horne, Edgar (Surrey, Guildford) Rees, Capt. J. Tudor- (Barnstaple) Curzon, Captain Viscount Horne, Sir R. S. (Glasgow, Hillhead) Remnant, Sir James Davies, Thomas (Cirencester) Hunter, General Sir A. (Lancaster) Roundell, Colonel R. F. Dawes, James Arthur Hurd, Percy A. Samuel, A. M. (Surrey, Farnham) Edwards, Major J. (Aberavon) Jackson, Lieut.-Colonel Hon. F. S. Sanders, Colonel Sir Robert Arthur Elliot, Capt. Walter E. (Lanark) James, Lieut.-Colonel Hon. Cuthbert Seely, Major-General Rt. Hon. John Elveden, Viscount Jones, Henry Haydn (Merioneth) Shaw, Hon. Alex. (Kilmarnock) Eyres-Monsell, Com. Bolton M. Kidd, James Shortt, Rt. Hon. E. (N'castle-on-T.) Falle, Major Sir Bertram Godfray King, Captain Henry Douglas Simm, M. T. Fisher, Rt. Hon. Herbert A. L. Lindsay, William Arthur Sprot, Colonel Sir Alexander Stanier, Captain Sir Beville Tryon, Major George Clement Williams, C. (Tavistock) Stanley, Major Hon. G. (Preston) Waddington, R. Williams, Lt.-Col. Sir R. (Banbury) Steel, Major S. Strang Wallace, T. B. Wise, Frederick Stevens, Marshall Ward, Col. J. (Stoke upon Trent) Wolmer, Viscount Sugden, W. H. Waring, Major Walter Wood, Hon. Edward F. L. (Ripon) Surtees, Brigadier-General H. C. Warner, Sir T. Courtenay T. Young, E. H. (Norwich) Thomas, Sir Robert J. (Wrexham) Weston, Colonel John Wakefield Thomson, Sir W. Mitchell-(Maryhill) White, Col. G. D. (Southport) TELLERS FOR THE NOES.— Townshend, Sir Charles Vere Ferrers Whitla, Sir William Colonel Leslie Wilson and Mr. Dudley Ward.
NEW CLAUSE.—(Repeal of Duties on Mechanical Lighters.)
Section ten of the Finance Act, 1916, is hereby repealed.—[ Mr. Kiley. ]
Brought up, and read the First time.
I beg to move, "That the Clause be read the Second time."
This new Clause is moved with the object of reviving an industry killed by this tax. The Government, a most extraordinary Government, have taken up the time of the House for weeks past with a Bill known as the Safeguarding of Industries Bill, whilst at the same time they have actually, by this Bill, wiped out of existence an industry that was prosperous, even if small. I propose to quote an extract from a statement made by the proprietor of one of these factories, which I am sure will not be without interest to the House: our soldiers, who on account of the difficulty of obtaining matches were compelled to use these lighters in the trenches. The Government put a tax of 1s. on these articles, and the price of the article itself is 1s. or thereabouts. At the expense of our men out in the front line the Government certainly got some revenue.
I have been endeavouring to ascertain why the Government pounced upon this small industry to raise revenue, and I am told that the one and only reason was that the match industry was afraid that the manufacture of these instruments would lead to the closing down of some of their factories, that people would buy these machines instead of buying matches. This is a case which may well be followed up, and, with the permission of the House, I will follow it up in some future Debate, and show when you interfere with one industry how far-reaching are the effects on others. I have said sufficient, however, to show that this tax has actually killed an industry. It has put out of work a number of people, who are now drawing unemployment doles, and at the same time it is bringing no revenue into the Exchequer; in fact, after the Government have paid the expenses of these inspectors who travel round to the different factories there must be a severe loss. At the same time the fears of the match makers, however definite they may have been, have been proved to be without justification.
I beg to second the Motion. I wonder if the House is aware that the mechanical lighter that uses a little drop of petrol pays a tax of 1s. As one always loses one or two of them a year, that means that the user is mulcted in several shillings a year. The type that does not use petrol pays a tax of 6d. These are the words of the Clause:
"There shall be charged, levied and paid on any tinder box, tinder lighter, or other mechanical and portable contrivance for producing a spark or flame imported into Great Britain or Ireland a duty of 1s. where spirit is used and 6d. in any other case."
A tinder box is taxed 6d. I wonder if hon. Members recollect the stories in the old-world tales of the soldier and his magic tinder-box. The flint and steel that were so popular a few years ago are much the same; they have to pay this tax of 6d. As my hon. Friend the Member for Whitechapel (Mr. Kiley) has shown, all that has happened is that you have killed a small but valuable industry. The same skilled persons who assembled these mechanical lighters might be useful to you in all sorts of ways. It is fine engineering work. Those hon. Members who are only concerned with thoughts of the next war might consider that these people might be valuable for munition making, if for no other reason. The reason for this tax, of course, was to protect match manufacturers and to remove a formidable competitor from them; in fact, those were the arguments put forward in 1916 against those who objected to the original tax. It is a case of over taxation of a young industry. The introduction of the mechanical lighter is quite a recent thing in this country, and it has been killed by this shortsighted and ridiculously high taxation.
5.0P.M.
I had intended to suggest to the House that this new Clause should be accepted at the outset; and I would not have delayed the announcement had it not been that the House ought not to take away the impression, founded upon a misapprehension, which will undoubtedly be left by the eloquent speeches which we have heard. The origin of the tax upon the tinder-box trade was not to protect the trade in tinder boxes nor the trade in matches; it had the very humble purpose of protecting the match duty. The fact was that the Government, in the time of War, was anxious, in the first place, to prevent the importation of matches, and, in the second place, to raise money by the duty on matches. But there was no point in raising a tax on matches if people deserted them for the use of the tinder-box. Accordingly, a duty was put on the tinder-box as well as upon the supply of matches. That had the desired effect. In the course of the War a very large number of tinder-boxes were sold. I do not think I should be exaggerating if I said that people at home who thought of the comforts of men who were fighting in the trenches, lavished these tinder-boxes upon them as gifts, at once helping the revenue and their own desire to be generous to the men in the trenches. It is perfectly plain, as the hon. and gallant Member has said, that this tax has now ceased to have any efficacy, and for that reason I am delighted to accept this Clause. I would, however, venture to, call attention to the possibility of a situation arising in which the match manufacturers might have something to say if their trade were very seriously curtailed, although I do not think it would arise, and I am very glad to accept the Clause.
In thanking the right hon. Gentleman for the manner in which he has intervened, may I point out that he will have the satisfaction of knowing that he has achieved a definite move in the direction of economy—
The hon. Member may not speak again.
Question put, and agreed to.
Clause read a Second time, and added to the Bill.
With regard to the next Clause ( Allowance for spirits used for the manufacture of perfumery ), I propose to take that subject on the last of the new Clauses, as it is in a better form.
NEW CLAUSE.—(Amendment of 10 and 11 Geo. V. c. 18, Sch. 2, par. (1).)
The following paragraph shall be substituted for paragraph (i) of the Second Schedule to the Finance Act, 1920:—
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 eight hundredweight in weight, unladen:— £ s. d. Bicycles— Not exceeding two hundred pounds in weight unladen 15 0 Exceeding two hundred pounds in weight unladen 1 10 0 Bicycles, if used for drawing a trailer or cycle-car, an additional sum of 10s. Tricycles 2 0 0 —[ Lieut.-Commander Kenworthy. ]]
Brought up, and read the First time.
I beg to move, " That the Clause be read a Second time." This Clause, which has been placed on the Paper by my hon. and gallant Friend (Major Barnes) and myself, proposes to reduce the duties on motor cycles and the like by 50 per cent We consider that the present duty of 30s. on motor scooters and cycles with an attachment is too high. The industry has not made much headway, though it gave great promise, and a reduction of the tax, while meaning very little loss of revenue, would foster a struggling new industry, which is making all these pleasant means of locomotion. With regard to motor bicycles, the duty of £3, where the bicycle exceeds 200 lbs. in weight, we consider much too high. It has, of course, an effect on the sale of motor bicycles, as a duty of this sort is bound to have, and, furthermore, the men who ride motor bicycles, as a rule, are young men whose pockets are not too well lined. Very many of them use their motor bicycles in business, and the duty of £3 is really an imposition. It is a very heavy burden. I do not believe it will be seriously contended that motor bicycles cut up the roads to any extent— at least, not to any extent comparable with heavy motor lorries, and so on. The contribution, therefore, to the roads by the motor cycle is unduly heavy. There was a boom in the motor cycle industry in 1919 and 1920, due to the number of officers and men demobilised from the Army and the Navy investing part of their gratuity in motor bicycles. I am sorry to say there has since been a slump.
I am glad to hear it.
At any rate, the right hon. Baronet the Member for the City of London (Sir F. Banbury), who is pleased to hear of this slump in British trade, will agree that the class of young man who use the motor bicycles, very largely the ex-soldier and the ex-officer—a class for whom the right hon. Baronet has usually a good word, so long as they behave themselves, which means that they support the views of the right hon. Baronet—is deserving of some regard by this House. I come next to the duty on the trailer or cycle-car, on which, at present, in addition to the £3 for the motor bicycle, there is an additional charge of £l. The young man, who takes his sweetheart behind him on his motor bicycle, pays no additional tax. No charge is made in addition to the ordinary duty, when you see these young ladies riding on a pillion, and embracing the motor cyclist; but if the man invests in a trailer or cycle-car, then an additional duty has to be paid. Personally, I do not like to see a girl in the hazardous, and, I must say, rather invidious position of riding on a pillion. I would much rather see her in a side-car. The young man who uses a side-car has to pay an extra £l, whereas his friend, who carries his sweetheart on a pillion, gets off that duty. That is ridiculous, and we propose to reduce the amount of duty on the trailer by a half.
Notice taken that 40 Members were not present; House counted; and 40 Members being present
There is another aspect of this case. The selfish man who goes off on his motor bicycle by himself, pays the £3 duty, but if a man invests in a sidecar, and takes his young wife, with, perhaps, the new arrival, as the result of their union, in the country, he is taxed an extra £l. I do ask the Parliamentary Secretary to the Ministry of Transport, why he taxes in this way the sociable young man who takes out his friends, or his wife, or the children, while his beer-drinking friend, who goes out by himself in the country on his selfish rides, is let off this duty? The thing is not reasonable at all. Then, with regard to motor tricycles, which are mostly used by elderly people, a duty is put on of £4. Why should you make this very steep ascent between the bicycle and the tricycle? The tricycle does not go so far as the bicycle, and does not, therefore, wear the roads to the extent that a motor bicycle does. Yet the hon. Gentleman puts an extra £1 duty on the motor tricycle, and, if there be a trailer as well, there is an extra £1, making the duty £5. It is too much, and we propose to cut down the duty by 50 per cent. The justice of the case is that, generally speaking, the users of these tricycles and bicycles are men or moderate or narrow means, and they are paying a duty, in comparison with other motorists, out of all proportion. We raised this question last year, but it was late at night, and the House was impatient, and I do not think it got the consideration from the Ministry of Trans- port that it should have got. I hope it will have a better fate this year. There is this added reason, that the motor bicycle-making trade in this country is suffering very severely indeed. It would help employment, to a slight degree, I admit, if the. duty were reduced. I, therefore, hope that we may receive equal sympathy from the hon. Gentleman as we received in the case of the mechanical lighters. I do not like to play the part of the horse-leach's daughters, but we are given hope by the valuable concession made by the Chancellor of the Exchequer on the last Clause.
I beg to second the Motion.
May I remind the House that these duties have not yet been in operation for a full year, and it is much too soon, we think, to commence revising them. The whole of the motor taxation, including these duties upon motor cycles, was the result of most careful examination by a Committee representative of all classes of motorists, including motor cyclists, who investigated the problem in every aspect, and who made recommendations, I think unanimously, as to the duties which might properly be attached to the various licensed vehicles, having regard to the cardinal principle that it was the use of the roads that was to be taken into account. We have already, on this Finance Bill, consented to an Amendment in favour of motorists. That Amendment was the result of representations made to the Minister as to the granting of licences for periods less than one year. Before that change was made motor cycles were not entitled to quarterly licences. They might, under certain circumstances, get a half-yearly licence, but we have now included them in that class of vehicle, and from the commencement of next year, they may get a licence for a shorter period than a quarter. It has been represented that in the case of bicycles which have to get
quarterly licences on a certain day, that that interfered with the trade, because persons would not buy their bicycles except when the day was approaching on which a quarterly licence might be obtained. A very serious question arose as to whether we should include motor cycles amongst those which should receive that benefit, and the Minister of Transport, after consideration, came to the conclusion that, because they are used very largely by a class of the community who are not wealthy, they serve a very useful purpose and tend to take men accompanied by congenial companions into congenial surroundings, and therefore he thought it right to recommend to the House that we should accept the Amendment which the Financial Secretary to the Treasury put down, and further than that it is impossible to go.
There was no concession on this subject.
Yes, there was, because the motor cyclist who does not wish to take out a licence during the winter months would prefer it when the weather was better, and he would come within the operation of this concession.
I do not wish to appear ungrateful, but the man who uses his bicycle for business purposes will have to take out a licence for a whole year, and therefore this concession does not help him.
That is the case, but it helps those who wish to take out a licence for a less period than a year. We respectfully submit that it is altogether too soon to begin revising these duties, and, if revised at all, it should only be done after a complete survey of the whole of the duties. For these reasons I ask my hon. and gallant Friend not to persist in this Amendment.
Question put, "That the Clause be read a Second time."
The House divided: Ayes, 58; Noes, 177.
Division No. 266.] AYES. [5.20 p.m. Acland, Rt. Hon. Francis D. Cape, Thomas Gillis, William Barker, G. (Monmouth, Abertillery) Carter, W. (Nottingham, Mansfield) Glanville, Harold James Barnes, Major H. (Newcastle, E.) Clynes, Rt. Hon. John R. Graham, D. M. (Lanark, Hamilton) Benn, Captain Wedgwood (Leith) Collins, Sir Godfrey (Greenock) Graham, W. (Edinburgh, Central) Bramsdon, Sir Thomas Davies, A. (Lancaster, Clitheroe) Griffiths, T. (Monmouth, Pontypool) Bromfield, William Edwards, C. (Monmouth, Bedwellty) Grundy, T. W. Brown, James (Ayr and Bute) Edwards, G. (Norfolk, South) Guest, J. (York, W. R., Hemsworth) Cairns, John Galbraith, Samuel Hall, F. (York, W. R., Normanton) Hallas, Eldred Mills, John Edmund Swan, J. E. Halls, Walter Myers, Thomas Thomas, Rt. Hon. James H. (Derby) Hancock, John George Newbould, Alfred Ernest Thomson, T. (Middlesbrough, West) Hayday, Arthur O'Grady, James Thorne, G. R. (Wolverhampton, E.) Hayward, Evan Rattan, Peter Wilson Waterson, A. E, Henderson, Rt. Hon. A. (Widnes) Rendall, Athelstan Williams, Aneurin (Durham, Consett) Hirst, G. H. Richardson, R. (Houghton-le-Spring) Wilson, W. Tyson (Westhoughton) Irving, Dan Roberts, Frederick O. (W. Bromwich) Wintringham, Thomas Kennedy, Thomas Robertson, John Kenyon, Barnet Royce, William Stapleton TELLERS FOR THE AYES.— Kiley, James Daniel Sexton, James Lieut.-Commander Kenworthy and Lunn, William Shaw. Thomas (Preston) Mr. Spencer. Maclean, Neil (Glasgow, Govan) Smith, W. R. (Wellingborough)
NOES. Adair, Rear-Admiral Thomas B. S. Goulding, Rt. Hon. Sir Edward A. Parry, Lieut.-Colonel Thomas Henry Agg-Gardner, Sir James Tynte Grant, James Augustus Pearce, Sir William Ainsworth, Captain Charles Green, Joseph F. (Leicester, W.) Peel, Col. Hon. S. (Uxbridge, Mddx.) Armitage, Robert Greene, Lt.-Col. Sir W. (Hackn'y, N.) Perkins, Walter Frank Ashley, Colonel Wilfrid W. Hallwood, Augustine Philipps, Gen. Sir I. (Southampton) Astor, Viscountess Hall, Rr-Adml Sir W. (Liv'p'I. W. D'by) Philipps, Sir Owen C. (Chester, City) Bagley, Captain E. Ashton Hamilton, Major C. G. C. Pinkham, Lieut.-Colonel Charles Baird, Sir John Lawrence Hannon, Patrick Joseph Henry Pollock, Sir Ernest Murray Balfour, Sir R. (Glasgow, Partick) Harmsworth, Hon. E. C (Kent) Pownall, Lieut.-Colonel Assheton Banbury, Rt. Hon. Sir Frederick G. Hennessy, Major J. R. G. Rae, H. Norman Banner, Sir John S. Harmood- Henry, Denis S. (Londonderry, S.) Rankin, Captain James Stuart Barnes, Rt. Hon. G. (Glas., Gorbals) Holbrook, Sir Arthur Richard Raper, A. Baldwin Barnston, Major Harry Holmes, J. Stanley Rees, Capt. J. Tudor- (Barnstaple) Barrie, Charles Coupar (Banff) Hood, Joseph Remnant, Sir James Beckett, Hon. Gervase Hope, Sir H.(Stirling & Cl'ckm'nn, W.) Roberts, Rt. Hon. G. H. (Norwich) Benn, Sir A. S. (Plymouth, Drake) Hope, Lt.-Col. Sir J. A. (Midlothian) Robinson, S. (Brecon and Radnor) Bennett, Sir Thomas Jewell Hopkins, John W. W. Samuel, A. M. (Surrey, Farnham) Bentinck, Lord Henry Cavendish- Horne, Edgar (Surrey, Guildford) Samuel, Rt. Hon. Sir H. (Norwood) Bigland, Alfred Horne, Sir R. S. (Glasgow, Hillhead) Sanders, Colonel Sir Robert Arthur Bird, Sir William B. M. (Chichester) Hunter, General Sir A. (Lancaster) Scott, A. M. (Glasgow, Bridgeton) Borwick, Major G. O. Hurd, Percy A. Shaw, Capt. William T. (Forfar) Bowyer, Captain G. W. E. Hurst, Lieut.-Colonel Gerald B. Shortt, Rt. Hon. E. (N'castle-on-T.) Boyd-Carpenter, Major A. Jackson, Lieut.-Colonel Hon. F. S. Simm. M. T. Brassey, H. L. C. Jellett, William Morgan Smith, Sir Malcolm (Orkney) Breese, Major Charles E. Johnstone, Joseph Sprot, Colonel Sir Alexander Briggs, Harold Jones, Sir Evan (Pembroke) Stanley, Major Hon. G. (Preston) Brown, Major D. C. Jones, Henry Haydn (Merioneth) Steel, Major S. Strang Brown, T. W. (Down, North) Jones, J. T. (Carmarthen, Llanelly) Stewart, Gershom Buckley, Lieut.-Colonel A. Kellaway, Rt. Hon. Fredk. George Sturrock, J. Leng Butcher, Sir John George Kidd, James Sugden, W. H. Carter, R. A. D. (Man., Withington) King, Captain Henry Douglas Surtees, Brigadier-General H. C. Casey, T. W. Law, Alfred J. (Rochdale) Sutherland, Sir William Cecil, Rt. Hon. Evelyn (Birm., Aston) Lewis, T. A. (Glam., Pontypridd) Thomas, Sir Robert J. (Wrexham) Chamberlain, Rt. Hn. J. A. (Birm. W.) Lyle, C. E. Leonard Thomson, F. C. (Aberdeen, South) Chamberlain, N. (Birm., Ladywood) M'Curdy, Rt. Hon. Charles A. Thomson, Sir W. Mitchell- (Maryhill) Clay, Lieut.-Colonel H. H. Spender M'Donald, Dr. Bouverie F. P. Townley, Maximilian G. Clough, Sir Robert M'Lean, Lieut.-Col. Charles W. W. Waddington, R. Coats, Sir Stuart McMicking, Major Gilbert Wallace, T. B. Curzon, Captain Viscount McNeill, Ronald (Kent, Canterbury) Ward, Col. L. (Kingston-upon-Hull) Davies, Thomas (Cirencester) Macpherson, Rt. Hon. James I. Waring, Major Walter Dawes, James Arthur Manville, Edward Warner, Sir T. Courtenay T. Dean, Commander P. T. Marriott. John Arthur Ransome Warren, Sir Alfred H. Edwards, Major J. (Aberavon) Mason, Robert Watson, Captain John Bertrand Edwards, Hugh (Glam., Neath) Mitchell, Sir William Lane Weston, Colonel John Wakefield Elliot, Capt. Walter E. (Lanark) Molson, Major John Elsdale Wheler, Col. Granville C. H. Elveden, Viscount Mond, Rt. Hon. Sir Alfred Moritz White, Col. G. D. (Southport) Erskine, James Malcolm Monteith Moore-Brabazon, Lieut.-Col. J. T. C. Whitla, Sir William Evans, Ernest Moreing, Captain Algernon H. Williams, C. (Tavistock) Eyres-Monsell, Com. Bolton M. Morrison, Hugh Williams, Lt.-Col. Sir R. (Banbury) Falcon, Captain Michael Murray, C. D. (Edinburgh) Williams, Col. Sir R. (Dorset, W.) Fisher, Rt. Hon. Herbert A. L. Murray, William (Dumfries) Williamson, Rt. Hon. Sir Archibald FitzRoy. Captain Hon. Edward A. Neal, Arthur Willoughby, Lieut.-Col. Hon. Claud Foxcroft, Captain Charles Talbot Newman, Colonel J. R. P. (Finchley) Wilson, Lt-Col. Sir M. (Bethnal Gn.) Fraser, Major Sir Keith Newman, Sir R. H. S. D. L. (Exeter) Wilson, Lieut.-Col. M. J. (Richmond) Gardiner, James Nicholson, Reginald (Doncaster) Wise, Frederick Gee, Captain Robert Nicholson, William G. (Petersfield) Wood, Major Sir S. Hill- (High Peak) Gibbs, Colonel George Abraham Ormsby-Gore, Hon. William Young, E. H. (Norwich) Gilbert, James Daniel Palmer, Major Godfrey Mark Gilmour, Lieut.-Colonel Sir John Palmer, Brigadier-General G. L. TELLERS FOR THE NOES.— Glyn, Major Ralph Parker, James Colonel Leslie Wilson and Mr. Dudley Wars.
NEW CLAUSE.—(Exemption of exhibitions of art societies from entertainments duty.)
(1) Notwithstanding anything contained in the Finance (New Duties) Act, 1916, and
(2) The Commissioners may make regulations for carrying the provisions of this Section into effect.—[ Mr. Ormsby-Gore. ]
Brought up and read the First time.
I beg to move, "That the Clause be read a Second time."
The object of this Clause is to endeavour to get the Government to adopt rather more in its entirety the Clause that was originally moved on the Committee stage by my hon. Friend the Member for Twickenham (Sir W. Joynson-Hicks). Yesterday the Government accepted in their own form part of this Clause, but, significantly enough, they omitted all exhibitions connected with art from the class they accepted. The position is that a craftsman who exhibits his craft at a trade show organised by an association of manufacturers gets off the Entertainments Duty, but the leading artists' societies of this country are still charged the Entertainments Duty, which seems to me to be proclaiming ourselves a Philistine country with a vengeance, putting the premium on the lower crafts rather than the higher crafts.
The hon. Member for Twickenham proposed a Clause in regard to which the Government said they were afraid that the words "art exhibition" were much too wide and applied to all kinds of entertainments which were not of the bond fide artists' societies class, which hold exhibitions for the encouragement of an art or craft. I have framed a Clause limiting the exceptions virtually to the well-known Royal Societies such as the Royal Society of British Artists, the Royal Institute of Painters in Water Colours, and the Painters and Etchers' Society. I leave out altogether art exhibitions got up for private profit, or where the society distributes dividends to its members, or where there is anything to be made out of a charge for admission to the exhibition. As everyone knows, these first-class societies, if I may so call them, have to face great difficulties. Few classes are harder hit at the present time than artists. The one society which escapes the Entertainments Duty is the Royal Academy. That is exempted by a Regulation which provides that any profits made should go to the support of education in the country. As a matter of fact, other societies, such for instance as the New English Arts Club, do equally good work with the Royal Academy in that direction, but they are not recognized in the same way, and they have to rely upon the receipts from the admissions to their exhibitions in order to pay the rent of their galleries, and other expenses. In that regard the Royal Academy is in a somewhat different position. Nevertheless the fact remains that these half dozen societies or more that exist in the country for the promotion of the arts, painting and sculpture, have to pay this Entertainments Duty at a time when they are suffering under very severe burdens, and I would earnestly urge my hon. Friend the Financial Secretary to accept this Clause. I want to deal with the thin end of the wedge argument which is sure to be advanced in opposition to the Clause, namely, that if you let in arts, paintings and sculptures you will have to exempt concerts and similar gatherings. I say that is not so, and I am quite willing to accept any Amendment to this new Clause which I have tried to make as watertight as possible in order to rigidly restrict its operation to the societies I have named. I am willing to accept any Amendment which will strictly confine it to these bond fide organisations if it is thought that the words I have used are not sufficiently watertight.
I beg to second the Motion. If it is necessary in the national interest to educate people in particular branches of agriculture and industry, it is even more important to arouse in the public mind a conception of what beauty is.
The arguments advanced by my hon. and gallant Friend (Mr. Ormsby-Gore) in favour of this New Clause have been put forward in a most attractive form, but I must say at once it is impossible for my right hon. Friend to accept the Clause, because, although the intention may be as the hon. Gentleman has explained, it would be impossible to prevent its extension to exhibitions other than those we have described. Further, the Clause embodies what I regard—and I do not wish to use too hard a phrase—the vicious principle of profit. The essence of the Clause is to extend the concession already-made to business exhibitions to exhibitions in the nature of art exhibitions. My hon. and gallant Friend anticipated quite correctly the argument likely to be put forward against this Clause, that it would allow exemptions on the far side of the very hard and fast line which is drawn between industry, business, and commerce on the one hand, and those exhibitions which move almost imperceptibly in the direction of entertainments for profit. If you allow this exemption, you will be unable to resist the gradual extension of this particular exemption to the whole region of exhibitions. No words inserted in the Clause would serve any useful purpose to prevent that. The Clause may be strongly enough worded, but the pressure would be too great to prevent the extension of the exemption.
Let me clear away a misconception which evidently exists with regard to the exemption of exhibitions, the profits of which go to education. I understand the hon. Member not so much to complain but rather to express his wonder that the exemption should be allowed to the Royal Academy alone, and not to other and similar institutions. But there is no special exemption for the Royal Academy. That institution earns exemption by coming under the general rule which is somewhat different from that stated by the hon. and gallant Member. The exemption is not based upon the use made of the profits or surplus earned by the exhibition, but because the exhibition is part of an organised systematic course of instruction. Any exhibition could bring itself under that rule, and obtain the same exemption as is granted to the Royal Academy. I have to submit that the exemption given under the Regulations to educational exhibitions, shows, etc., covers the whole ground which is properly covered in the region of arts, painting, and sculptures. Further, it is essential in the interests of the revenue to maintain the distinction between exhibitions held in connection with business and commerce, which, after all, provide a hard and fast line, and the extremely vague description covered by the words "arts and music."
The very unsympathetic speech of the hon. Gentleman the Financial Secretary to the Treasury is very unfortunate; and it is equally unfortunate it should have been delivered in a Parliament which has been described as less soulless and materialistic than any of its predecessors. We have already exempted from this duty exhibitions promoted by great limited liability companies who are, after all, only anxious to sell their goods, and if these wealthy corporations are to be allowed to escape the Entertainments Duty, why should we not at the same time assist the poor artists who are doing much more than the limited liability companies have done in the interests of education. True, they get up their exhibitions in order to sell their pictures and they are told that if, at such exhibitions, they charge entrance fees, they must pay this duty. The comparison between the two classes seems to indicate a very unhappy state of the law, and I hope the hon. Member will reconsider the matter and agree that those who promote arts and painting should be treated on at least the same lines as the manufacturer whose object it is to sell his manufactures. If one is to come under the duty, the other ought to do so also. It is most regrettable that those who are trying to show how life can be made a little more beautiful should be handicapped in this way, especially in these days of reconstruction when the Government are running away from all their material efforts to promote reconstruction. I very much regret the decision which has been arrived at by the Government.
I associate myself entirely with what has been said by the last speaker. I listened to the speech of the Financial Secretary with very great regret. It was one of the strangest combinations of pedantry and vandalism I have heard in this House, even from that Treasury Bench. The Government have already granted exemption from the Entertainments Duty to industrial and commercial exhibitions, and it is obvious that that exemption ought to be extended under, it may be, very severe limitations, to exhibitions held entirely for the en-couragemnt of the arts. What are the conditions which are laid down? The exhibitions must be held by a society or institution incorporated for the purpose under charter, and whose sole object is the promotion of the arts of painting, etching, and sculpture. Further, the Amendment proposes that any profit from the exhibition shall be devoted to the promotion of the general objects of the society; and, thirdly, that they shall not be distributed by way of dividend to any members of the society or institution. Surely that seems to provide a natural and sufficient safeguard against any possible abuse in what I may call a commercial direction. The Financial Secretary explained the conditions of the exemption granted to the Royal Academy, but I cannot see why the exemption should not be extended to other exhibitions of a like nature,
and I do not see why those other societies should be subject to a form a taxation which seriously interferes with the public objects for the promotion of which they have been formed. These restrictions simply limit the number of persons who take advantage of exhibitions of this kind, while I am certain that the amount of profit derived by the Exchequer from this source must be absolutely infinitesimal. Under the circumstances I hope that the Government will reconsider their decision.
Question put, "That the Clause be read a Second time."
The House divided: Ayes, 81; Noes, 188.
Division No. 267.] AYES. [5.45 p.m. Acland, Rt. Hon. Francis D. Grundy, T. W. Parry, Lieut.-Colonel Thomas Henry Agg-Gardner, Sip James Tynto Guest, J. (York, W. R., Hemsworth) Peel, Col. Hon. S. (Uxbridge, Mddx.) Asquith, Rt. Hon. Herbert Henry Hall, F. (York, W. R., Normanton) Raffan, Peter Wilson Barker, Major Robert H. Hallas, Eldred Rees, Capt. J. Tudor- (Barnstaple) Barker, G. (Monmouth, Abertillery) Halls, Walter Rendall, Athelstan Barnes, Rt. Hon. G. (Glas., Gorbals) Hancock, John George Richardson, R. (Houghton-le-Spring) Barnes, Major H. (Newcastle, E.) Hayday, Arthur Roberts, Frederick O. (W. Bromwich) Bell, James (Lancaster, Ormskirk) Henderson, Rt. Hon. A. (Widnes) Roberts, Rt. Hon. G. H. (Norwich) Bramsdon. Sir Thomas Hirst, G. H. Robertson, John Breese, Major Charles E. Hoare, Lieut.-Colonel Sir S. J. G. Royce, William Stapleton Briant, Frank Hopkinson, A. (Lancaster, Mossley) Sexton, James Bromfield, William Horne, Edgar (Surrey, Guildford) Shaw, Thomas (Preston) Brown, James (Ayr and Bute) Irving, Dan Smith, W. R. (Wellingborough) Burn, Col. C. R. (Devon, Torquay) Kennedy, Thomas Spencer, George A. Cairns, John Kenyon, Barnet Swan, J. E. Cape, Thomas Kidd, James Thomas, Rt. Hon. James H. (Derby) Carter, W. (Nottingham, Mansfield) Kiley, James Daniel Thomson, T. (Middlesbrough, West) Clynes, Rt. Hon. John R. Lambert, Rt. Hon. George Thorne, G. R. (Wolverhampton, E.) Davies, A. (Lancaster, Ciltheroe) Lowther, Major C. (Cumberland, N.) Tootill, Robert Du Pre. Colonel William Baring Lunn, William Waterson, A. E. Edwards, C. (Monmouth, Bedwellty) Maclean, Neil (Glasgow, Govan) Wedgwood, Colonel Josiah C. Edwards, G. (Norfolk, South) Maclean, Rt. Hon. Sir D. (Midlothian) Williams, Aneurin (Durham, Consett) Entwistle, Major C. F. Mills, John Edmund Wintringham, Thomas Galbraith, Samuel Murray, Dr. D. (Inverness & Ross) Wood, Major M. M. (Aberdeen, C.) Gillis, William Myers, Thomas Young, Robert (Lancaster, Newton) Glanville, Harold James Newbould, Alfred Ernest Graham, D. M. (Lanark, Hamilton) O'Grady, James TELLERS FOR THE AYES.— Griffiths, T. (Monmouth, Pontypool) Parkinson, John Allen (Wigan) Mr. Ormsby-Gore and Lord H. Cavendish-Bentinck.
NOES. Ainsworth, Captain Charles Carter, R. A. D. (Man., Withington) Fildes, Henry Armitage, Robert Casey, T. W. FitzRoy, Captain Hon. Edward A. Armstrong, Henry Bruce Chamberlain, Rt. Hn. J. A. (Birm. W.) Flannery, Sir James Fortescue Bagley, Captain E. Ashton Chamberlain, N. (Birm., Ladywood) Fraser, Major Sir Keith Balfour, George (Hampstead) Child, Brigadier-General Sir Hill Frece, Sir Walter de Balfour, Sir R. (Glasgow, Partick) Clay, Lieut.-Colonel H. H. Spender Gee, Captain Robert Banner, Sir John S. Harmood- Clough, Sir Robert Gibbs, Colonel George Abraham Barnston, Major Harry Coats, Sir Stuart Gilbert, James Daniel Barrand, A. R. Craig, Capt. C. C. (Antrim, South) Gilmour, Lieut.-Colonel Sir John Beckett, Hon. Gervase Craik, Rt. Hon. Sir Henry Glyn, Major Ralph Bellairs, Commander Carlyon W. Croft, Lieut.-Colonel Henry Page Goff, Sir R. Park Bennett, Sir Thomas Jewell Curzon, Captain Viscount Goulding, Rt. Hon. Sir Edward A. Bigland, Alfred Davidson, J. C. C. (Hemel Hempstead) Grant, James Augustus Bird, Sir William B. M. (Chichester) Davidson, Major-General Sir J. H. Green, Joseph F. (Leicester, W.) Blair, Sir Reginald Davies, Thomas (Cirencester) Greene, Lt.-Col. Sir W. (Hackn'y, N.) Borwick, Major G. O. Dawes, James Arthur Hailwood, Augustine Bowyer, Captain G. W. E. Dean, Commander P. T. Hamilton, Major C. G. C. Boyd-Carpenter, Major A. Edwards, Major J. (Aberavon) Hannon, Patrick Joseph Henry Brassey, H. L. C. Edwards, Hugh (Glam., Neath) Harmsworth, Hon. E. C. (Kent) Briggs, Harold Elveden, Viscount Henderson, Major V. L. (Tradeston) Broad, Thomas Tucker Erskine, James Malcolm Monteith Hennessy, Major J. R. G. Brown, Major D. C. Evans, Ernest Henry, Denis S. (Londonderry, S.) Brown, T. W. (Down, North) Eyres-Monsell, Com. Bolton M. Hewart. Rt. Hon. Sir Gordon. Buckley, Lieut.-Colonel A. Falcon, Captain Michael Hohler, Gerald Fitzroy Campbell, J. D. G. Falle, Major Sir Bertram Godfray Holbrook, Sir Arthur Richard Holmes, J. Stanley Newman, Colonel J. R. P. (Finchley) Stanley, Major Hon. G. (Preston) Hood, Joseph Newman, Sir R. H. S. D. L. (Exeter) Steel, Major S. Strang Hope, Sir H.(Stirling & Cl'ckm'nn, W.) Nicholson, Reginald (Doncaster) Sturrock, J. Leng Hope, Lt.-Col. Sir J. A. (Midlothian) Nicholson, William G. (Petersfield) Sugden, W. H. Hopkins, John W. W. Norris, Colonel Sir Henry G. Surtees, Brigadier-General H. C. Horne, Sir R. S. (Glasgow, Hillhead) Oman, Sir Charles William C. Sutherland, Sir William Hunter, General Sir A. (Lancaster) O'Neill, Major Hon. Robert W. H. Thomas, Sir Robert J. (Wrexham) Hurd, Percy A. Palmer, Major Godfrey Mark Thomson, F. C. (Aberdeen, South) Hurst, Lieut.-Colonel Gerald B. Palmer, Lieut.-Colonel G. L. Thomson, Sir W. Mitchell- (Maryhill) Jackson, Lieut.-Colonel Hon. F. S. Parker, James Thorpe, Captain John Henry Johnstone, Joseph Pearce, Sir William Townley, Maximilian G. Jones, Henry Haydn (Merioneth) Pease, Rt. Hon. Herbert Pike Waddington, R. Jones, J. T. (Carmarthen, Llanelly) Perkins, Walter Frank Wallace, J. Kellaway, Rt. Hon. Fredk. George Phillips, Gen. Sir I. (Southampton) Wallace, T. B. King, Captain Henry Douglas Philipps, Sir Owen C. (Chester, City) Ward, Col. J. (Stoke upon Trent) Law, Alfred J. (Rochdale) Pinkham, Lieut.-Colonel Charles Ward, Col. L. (Kingston-upon-Hull) Lewis, T. A. (Glam., Pontypridd) Pollock, Sir Ernest Murray Ward, William Dudley (Southampton) Locker-Lampson, Com. O. (H'tingd'n) Pownall, Lieut.-Colonel Assheton Waring, Major Walter Lyle, C. E. Leonard Pratt, John William Warren, Sir Alfred H. M'Donald, Dr. Bouverie F. P. Prescott, Major W. H. Watson, Captain John Bertrand Mackinder, Sir H. J. (Camlachie) Purchase, H. G. Weston, Colonel John Wakefield M'Lean, Lieut.-Col. Charles W. W. Rae, H. Norman Wheler, Col. Granville C. H. McMicking, Major Gilbert Raeburn, Sir William H. White, Col. G. D. (Southport) McNeill, Ronald (Kent, Canterbury) Raper, A. Baldwin Whitla, Sir William Macpherson, Rt. Hon. James I. Remnant, Sir James Williams, Lt.-Col. Sir R. (Banbury) Maitland, Sir Arthur D. Steel- Roberts, Sir S. (Sheffield, Ecclesall) Williams, Col. Sir R. (Dorset, W.) Manville, Edward Robinson, S. (Brecon and Radnor) Willoughby, Lieut.-Col. Hon. Claud Mason, Robert Robinson, Sir T. (Lanes., Stretford) Wilson, Lt.-Col. Sir M. (Bethnal Gn.) Matthews, David Rodger, A. K. Wilson, Col. M. J. (Richmond) Mitchell, Sir William Lane Roundell, Colonel R. F. Wilson, W. Tyson (Westhoughton) Molson, Major John Elsdale Samuel, A. M. (Surrey, Farnham) Wilson-Fox, Henry Moore-Brabazon, Lieut.-Col. J. T. C. Samuel, Rt. Hon. Sir H. (Norwood) Wise, Frederick Moreing, Captain Algernon H. Sanders, Colonel Sir Robert Arthur Wood, Sir H. K. (Woolwich, West) Morison, Rt. Hon. Thomas Brash Scott, A. M. (Glasgow, Bridgeton) Wood, Major Sir S. Hill (High Peak) Morrison, Hugh Seager, Sir William Young, E. H. (Norwich) Murray, C. D. (Edinburgh) Shaw, Capt. William T. (Forfar) Murray, William (Dumfries) Shortt, Rt. Hon. E. (N'castle-on-T.) TELLERS FOR THE NOES.— Nall, Major Joseph Simm, M. T. Colonel Leslie Wilson and Mr. Neal, Arthur Smith, Sir Malcolm (Orkney) McCurdy.
On a point of Order. I should like to ask your assistance, Mr. Deputy-Speaker, on a difficult matter which has arisen in connection with the new Clause standing in the name of the hon. Member for Yarmouth (Sir A. Fell). A similar proposal stood in my name earlier on the Paper, and Mr. Speaker decided that it would be best to take the discussion on the proposal of the hon. Member for Yarmouth. He is not in his place, and I understand that it would not be in order for me to move the Clause. Would it be in order for me to move that the Bill be recommitted, as far as this Clause is concerned, in order to enable the matter to be discussed?
That might be a question for the Third Reading, bill not for the Report stage.
Should I not be in order in moving my previous proposal?
I fear not, because the hon. Member has not given notice of his intention to move that particular proposal.
Is the ruling this, that the proposal which my hon. Friend makes would have been in order on the Committee stage, but is not in order on the Report stage? During the Committee stage, after the new Clauses have been gone through, it is open, as I understand, for any hon. Member to move a Clause which has not been moved, and which stands in the name of the hon. Member responsible for it. Is it the case that on the Report stage that practice does not apply, or is it—and this is the point that I want more particularly, with your assistance, to clear up—that, the selection of Amendments having been exercised as against the Clause standing in the name of my hon. Friend, he is, therefore, excluded from any privilege which might be his as regards the Amendment standing in the name of the hon. Member for Yarmouth?
I do not rule that the hon. Member is out of order, or rather, I do not refrain from calling him on account of selection of Amendments, but, as the right hon. Gentleman has indicated, because this is the Report stage. The right hon. Gentleman is perfectly correct in what he says as to the general practice which prevails in Committee. Were we in Committee it would be possible, on reaching the end of the new Clauses, to move the hon. Member's proposal, but on Report notice has to be given of the particular proposal which it is desired to move.
Does not the fact that the earlier Clause was passed over, on the understanding that the later one would be taken, amount to notice that the hon. Member intended to raise the question?
That is not so. I was not present when Mr. Speaker passed over the earlier Clause, but I understand that he intimated that it would be better to take the discussion on the later one.
I do not know whether hon. Members understood that the Standing Order with regard to new Clauses on Report is different from the Standing Order with regard to Amendments. While a new Clause cannot be moved unless notice has been given, Amendments can be moved whether notice has been given or not.
Mr. Young.
On a point of Order. I have an Amendment on the Paper preceding the one in the name of the Financial Secretary to the Treasury. Is it not your intention to call that Amendment?
No. Mr. Speaker decided that the next Amendment to be called should be the first Government Amendment.
CLAUSE 5.—( Amendment with respect to exemption from railway passenger duty. )
(3) Nothing in this Section shall operate to charge with railway passenger duty any fares which were not at the commencement of this Act chargeable with such duty.
I beg to move, at the end of Sub-section (3), to add the words
"and where, before the first day of January, nineteen hundred and seventeen, a fare for any journey was exempt from railway passenger duty, notwithstanding that it entitled a person to be conveyed in a class of carriage superior to that in which a person paying the lowest ordinary fare then chargeable for that journey was entitled to be conveyed, a fare entitling a person to be conveyed for the same journey and in the same class of carriage shall be exempt from duty if the proportion which that fare bears to the minimum fare does not exceed the proportion which the first mentioned fare bore to the lowest ordinary fare chargeable before the said first day of January.
For the purpose of the foregoing provision the expression ' lowest ordinary fare' means the lowest fare chargeable otherwise than to a special class of passengers or on a special occasion."
I do not think I need detain the House for more than a very few minutes in explaining this Amendment. Clause 5 is designed to amend the Cheap Trains Act, 1883, to bring it into line with present money values. The Cheap Trains Act provides for the remission of the passenger duty in the case of fares up to 1d. a mile, on condition that the railway company gives a satisfactory number of cheap trains and workmen's trains. The alteration in the value of money has rendered 1d. a mile a thing of the past, and the object of this Amendment to Clause 5 is to adjust the law to the present conditions. During the Committee stage my hon. and learned Friend the Member for Cambridge University (Mr. Rawlinson) suggested that the words we had included in the Bill were not sufficiently wide to cover every possible case. On consideration, our advisers have come to the conclusion that there are cases which might be outside the ambit of the Bill as drafted, and it is to meet such cases that we move this Amendment.
Amendment agreed to.
CLAUSE 18.—( Declaration as to ss. 43 and 44 of 8 & 9 Geo. 5, c. 40.)
(1) For the purpose of removing doubts it is hereby declared that Sections forty-three and forty-four of the Income Tax Act, 1918 (which grant certain reliefs for any year of assessment as respects which they are respectively continued in force by any Act), were not continued in force for the year 1920-21, and the said Sections are hereby repealed.
(2) If, in any case, any person has been assessed or charged to tax (including Super-tax) or has been allowed relief from tax on the basis that the said Sections were continued in force for the year 1920-21, all such adjustments, amendments of assessments, and payments of tax shall be made as are necessary for securing that that person shall be charged to and pay tax (including Super-tax) on the basis that the said Sections were not continued in force for the said year.
I beg to move to leave out the Clause.
6.0.P.M.
We had a discussion in Committee, not upon the actual proposal which I am making now, but on a somewhat different proposal, and several hon. Members informed me that, if the proposal had been in the form in which it is now they would have supported me in the Division Lobby. The Government thought last year that they were repealing Sections 43 and 44 of the Income Tax Act, 1918. Those Sections permitted a man who was assessed on the three years' average, and found that his income was below the figure at which it was assessed, to claim the difference between the amount at which it was assessed and the actual amount that he received; while where a man was assessed upon his yearly income and could show that his income turned out to be less by more than 10 per cent. than the amount at which it was assessed, he could claim an allowance. Those were very good provisions and they ought not to have been repealed. The Government thought they were repealing them, but a case arose and was taken before the General Commissioners, who held that the Act of 1920 was not repealed and that consequently certain people were entitled to the allowance under this Clause. If the General Commissioners are wrong the Government have an appeal to the High Court, and eventually to the House of Lords, and I suggest that the proper course is not for the Government to endeavour to make a law for themselves but to allow the law to run its course, that is to say, to appeal from the decision of the General Commissioners to the High Court, and if the High Court gives it against them, if they like to go to the House of Lords they can. But I deprecate very much this habit, which is growing, of the Government if they are beaten on a point in a Court of Law, immediately bringing in a Bill to arrange that the Court is wrong and that they are right. That is a very bad principle. If the subject is victorious in a Court of Law against the Government it must be remembered that he has against him the whole force of the taxpayer's money. It does not matter to the Government. They employ the most learned counsel and pay them the highest fees possible. They have the taxpayer's purse to fall back upon and the private subject has only got his own purse. When he has had the courage to stand up against the Government and beat them it is utterly wrong for the Government to take advantage of a majority in the House of Commons to say " notwithstanding that the Court has held that you are right we are going to pass an Act, and a retrospective Act," because the second Sub-section of Clause 18 says:
I have listened with the greatest possible disappointment to the right hon. Baronet's speech. He has contrived to give an account of the previous proceedings with regard to Clause 18 of this Bill which must have left every hon. Member who listened to him in a state of complete misapprehension. I thought that in Committee, when I made an elaborate speech in reply, I had exposed the fallacy of the right hon. Baronet's argument, and that I had sufficiently succeeded in correcting him upon the facts. But it is easier to make a short statement with regard to a matter and create misapprehension than it is to make a reply, and accordingly I am afraid I shall have to take up some time, because the right hon. Baronet, in spite of the previous discussion, which lasted for a very long time, has thought fit to leave out all the salient facts of the position and has attempted to make the House believe that a great attack is being made upon a principle which we should all accept. This is not a case of attempting by retrospective legislation to alter the law. If that were involved I should be the first person to condemn it. The right hon. Baronet knows as well as I do that what happened last year was that the Clauses upon which he relies for bringing about this alleviating position with regard to the Income Tax payer were put down as to be repealed. In order that a discussion might take place at a particular stage in Committee the then Chancellor of the Exchequer withdrew' that part of the Bill which dealt with the repeal of these Clauses and pointed out—which was accepted by everyone—that you did not require to repeal these Sections, that they required each year to be re-enacted, and therefore it was sufficient for his purpose to oppose their re-enactment. The discussion took place upon that footing, and the right hon. Baronet was defeated. At a later stage a definite proposal was made by the hon. Member (Mr.-Holmes), supported by the right hon. Baronet, to insert a statement to the effect that these Clauses were to continue in force for 1920-21, and the House by a very large majority rejected it. If ever there was a clear indication given of the view of the House of Commons of what was intended to be enacted it was given in that Division. The only difficulty there is to meet on this has been on the part of certain sections of Commissioners. The right hon. Baronet talks as if there had been cases in which certain people had won their cases in the courts. Nothing of the kind.
I said the General Commissioners.
There have been in all six cases, of which three have been decided in favour of the Inland Revenue and three in favour of the taxpayer, upon the mistaken ground, no doubt, put before the Commissioners that the part of the Bill which would have repealed these Sections had been taken out by the Chancellor of the Exchequer, it having entirely failed to be noticed that those Sections required re-enactment and were not re-enacted. The right hon. Baronet says this is retrospective legislation. He is saying, as is apparent from the history of these proceedings, what cannot be described as the facts. He has given a completely inaccurate statement of the facts of the situation.
I must object to that I made a very short speech, because I did not wish to take up time. The statement of the right hon. Gentleman is quite correct. I do not deny it in the least. It was all given a few weeks ago, and I thought the House was thoroughly conversant with the whole matter, or I would have gone at greater length into it. The real fact is that the Government made a mistake, and they want to introduce an Act of Parliament to put it right.
I entirely dissent from what the right hon. Baronet says. The Government made no mistake, and anyone who reads the account of the Debate will find that no mistake was made at any time. If any mistake was made, it was on the part of the Chancellor of the Exchequer in allowing the discussion to proceed by withdrawing the part which dealt with repeals. But that was a mistake in courtesy. He, no doubt, relied upon people like the right hon. Baronet adhering to the view that the House had taken. But because of that, and although it is perfectly plain in the Statute itself that these Clauses required to be re-enacted, we have this kind of backwash to-day, all because the Lord Privy Seal on that occasion, in order to let the right hon. Baronet have his say, took a course which was well understood by him and other Members of the House. What the Section does is nothing more than this. It seeks to avoid the trouble which will be created by a long series of litigations. There is no doubt at all that in the present state of most taxpayers that they would take advantage of every possible suggestion made by the right hon. Baronet to defeat the Revenue. I am not at all afraid of what would happen in the end, but it would be a great misfortune if we were to allow taxpayers to go forward, spending their money in abortive legislation, when, in point of fact, what is really intended by the Statute is as clear as noonday to any person who studies the history of the affair. Accordingly, I would very strongly press upon the House that the Amendment should not be accepted.
I think the account the right hon. Gentleman has given of what took place in the House last year is quite accurate. There is no doubt whatever that the House by their votes and the Division that took place decided that these two Sections, 43 and 44, should not be re-enacted in the year 1920. One thing the right hon. Gentleman has said which is not quite accurate is that certain Commissioners have given decisions upon this matter because these Sections were not specifically repealed in the Schedule, and apparently because of speeches which have been made by the right hon. Baronet. The decision of the Commissioners does not rest on anything that took place in this House. It rests upon the actual Finance Act, 1920. These Sections 43 and 44 only applied in any year in which they were specifically re-enacted. Eminent counsel have given the opinion that although the Government did not intend these Sections to be re-enacted they were actually re-enacted by the Finance Act, 1920, Section 14, Sub-section (2), which reads:
"All such enactments relating to Income Tax as were in force with respect to duties of Income Tax granted for the year 1919-20 shall have full force and effect with respect to any duties of Income Tax granted by this Act."
Eminent counsel are of opinion that under that Section, Sections 43 and 44 of the Income Tax Act were re-enacted for 1919–20, and they were also re-enacted for 1920–21, and the Commissioners, who gave the decision in favour of the taxpayer and against the Inland Revenue, have done so on those grounds. The Commissioners and the Courts, if it goes to the Courts, will pay no attention to the speech of the right hon. Baronet or the Chancellor of the Exchequer or any of us in this House. They go by the actual words in the Act and place their construction upon them. The Chancellor of the Exchequer is compelled to include this Clause in his Bill this year in order to prevent this matter going to the Courts and possibly the Courts going against him. If there had been time to put it to the Courts and the High Courts had given a decision against him, and if it had gone higher and the House of Lords had given a decision against him, then the right hon. Baronet (Sir F. Banbury) would be perfectly right in saying that this is retrospective legislation. It is for these reasons that those of us who opposed this Clause last year are fully entitled to oppose it this year.
From what we have heard from the Chancellor of the Exchequer one would assume that there were only three cases involved. There are thousands of cases, and he must know that there are thousands of cases.
The hon. and gallant Member must have misapprehended me. I was replying to what the right hon. Baronet said about cases which had gone to the Courts. I said that no cases had gone to the Court, but that six cases had come before the Commissioners. I was not talking about the number of claims.
The number of claims is enormous.
I gave the number on the Committee stage.
The Chancellor of the Exchequer in putting forward this proposal seems to be taking up the side not of the Exchequer but of the public. I do not think that the public want him to take up their side. They are quite prepared to take the law as it stands If the right hon. Gentleman claims that this is not retrospective legislation, and if he says that he is sticking up for the public and not going in for retrospective legislation, let him leave it alone and not put in this Clause. We do not believe all that the right hon. Gentleman says about this. He is trying to make out a very strong case when he has no case at all. What I object to in this retrospective legislation is that it encourages sloppiness in the Government offices. The officials sitting under the gallery do not mind if they leave out something from a Bill. They say, "We will put it right next year." That sort of thing encourages these highly-paid Government officials to be casual and not to look after their duties properly. This Clause ought to have been put in the Bill last year, and it ought to be made retrospective this year.
Question put, "That the words proposed to be left out stand part of the Bill."
The House divided: Ayes, 244; Noes, 76.
Division No. 268.] AYES. [6.19 p.m. Adkins, Sir W. Ryland D. FitzRoy, Captain Hon. Edward A. Neal, Arthur Agg-Gardner, Sir James Tynts Flannery, Sir James Fortescue Newman, Colonel J. R. P. (Finchley) Ainsworth, Captain Charles Foreman, Sir Henry Newman, Sir R. H. S. D. L. (Exeter) Armstrong, Henry Bruce Forestier-Walker, L. Nicholson, Reginald (Doncaster) Bagley, Captain E. Ashton Fraser, Major Sir Keith Norman, Major Rt. Hon. Sir Henry Baird, Sir John Lawrence Frece, Sir Walter de Norris, Colonel Sir Henry G. Baldwin, Rt. Hon. Stanley Ganzoni, Sir John Norton-Griffiths, Lieut.-Col. Sir John Baltour, Sir R. (Glasgow, Partick) Gee, Captain Robert Oman, Sir Charles William C. Barker, G. (Monmouth, Abertillery) Gibbs, Colonel George Abraham O'Neill, Major Hon. Robert W. H. Barnes, Rt. Hon. G. (Glas., Gorbals) Gilbert, James Daniel Palmer, Major Godfrey Mark Barnston, Major Harry Gilmour, Lieut.-Colonel Sir John Palmer, Brigadier-General G. L. Barrand, A. R. Glanville, Harold James Parker, James Barrie, Charles Coupar (Banff) Glyn, Major Ralph Parry, Lieut.-Colonel Thomas Henry Beckett, Hon. Gervase Goff, Sir R. Park Pearce, Sir William Bellairs, Commander Carlyon W. Goulding, Rt. Hon. Sir Edward A. Pease, Rt. Hon. Herbert Pike Bentinck, Lord Henry Cavendish Graham, D. M. (Lanark, Hamilton) Peel. Col. Hon. S. (Uxbridge, Mddx.) Bird, Sir A. (Wolverhampton, West) Green, Joseph F. (Leicester, W.) Perkins, Walter Frank Bird, Sir William B. M. (Chichester) Greene, Lt.-Col. Sir W. (Hackn'y, N.) Perring, William George Blair, Sir Reginald Gregory, Holman Philipps. Sir Owen C. (Chester, City) Borwick, Major G. O. Greig, Colonel Sir James William Pinkham, Lieut.-Colonel Charles Bowyer, Captain G. W. E. Gritten, W. G. Howard Pollock, Sir Ernest Murray Boyd-Carpenter, Major A. Hacking, Captain Douglas H. Pownall, Lieut.-Colonel Assheton Bramsdon, Sir Thomas Hallwood, Augustine Pratt, John William Brassey, H. L. C. Hannon, Patrick Joseph Henry Prescott, Major W. H. Breese, Major Charles E. Henderson, Major V. L. (Tradeston) Purchase, H. G. Briggs, Harold Henry, Denis S. (Londonderry, S.) Rae, H. Norman Broad, Thomas Tucker Hewart, Rt. Hon. Sir Gordon Raeburn, Sir William H. Brown, Major D. C. Hinds, John Ramsden, G. T. Brown, James (Ayr and Bute) Hoare, Lieut.-Colonel Sir S. J. G. Rankin, Captain James Stuart Brown, T. W. (Down, North) Hohler, Gerald Fitzroy Raper, A. Baldwin Buchanan, Lieut.-Colonel A. L. H. Holbrook, Sir Arthur Richard Rees, Sir J. D. (Nottingham, East) Buckley, Lieut.-Colonel A. Hood, Joseph Rees, Capt. J. Tudor- (Barnstaple) Burn, Col. C. R. (Devon, Torquay) Hope, Sir H.(Stirling & Cl'ckm'nn, W.) Renwick, Sir George Campbell, J. D. G. Hope, Lt.-Col. Sir J. A. (Midlothian) Richardson, R. (Houghton-le-Spring) Cape, Thomas Hopkins, John W. W. Roberts, Rt. Hon. G. H. (Norwich) Carew, Charles Robert S. Hopkinson, A. (Lancaster, Mossley) Roberts, Sir S. (Sheffield, Ecclesall) Carr, W. Theodore Horne, Sir R. S. (Glasgow, Hillhead) Robertson, John Carter, R. A. D. (Man., Withington) Hunter, General Sir A. (Lancaster) Rodger, A. K. Casey, T. W. Hunter-Weston, Lieut.-Gen. Sir A. G. Roundell, Colonel R. F. Chadwick, Sir Robert Burton Hurd, Percy A. Royce, William Stapleton Chamberlain, Rt. Hn. J. A. (Birm. W). Hurst, Lieut.-Colonel Gerald B. Samuel, A. M. (Surrey, Farnham) Child, Brigadier-General Sir Hill James, Lieut.-Colonel Hon. Cuthbert Sanders, Colonel Sir Robert Arthur Clay, Lieut.-Colonel H. H. Spender Jesson, C. Sassoon, Sir Philip Albert Gustave D. Clough, Sir Robert Jodrell, Neville Paul Scott, A. M. (Glasgow, Bridgeton) Clynes, Rt. Hon. John R. Johnson. Sir Stanley Seager, Sir William Coats, Sir Stuart Jones, Henry Haydn (Merioneth) Seddon J. A. Colvin, Brig.-General Richard Beale Kellaway, Rt. Hon. Fredk. George Shaw, Thomas (Preston) Coote, Colin Reith (Isle of Ely) Kenworthy, Lieut.-Commander J. M. Shortt, Rt. Hon. E. (N'castle-on- T.) Cowan, D. M. (Scottish Universities) Kidd. James Simm, M. T. Cowan, Sir H. (Aberdeen and Kinc.) King, Captain Henry Douglas Smith, Sir Malcolm (Orkney) Craig, Captain C. C. (Antrim, South) Law, Alfred J. (Rochdale) Smith, W. R. (Wellingborough) Davidson, J. C. C. (Hemel Hempstead) Lewis, T. A. (Glam., Pontypridd) Spencer, George A. Davidson, Major-General Sir J. H. Lloyd, George Butler Sprot, Colonel Sir Alexander Davies, A. (Lancaster, Clitheroe) Lloyd-Greame, Sir P. Stanley, Major Hon G. (Preston) Davies, Alfred Thomas (Lincoln) Locker-Lampson, Com. O. (H'tingd'n) Stanton, Charles Butt Davies, Thomas (Cirencester) Lyle, C. E. Leonard Starkey, Captain John Ralph Dawes, James Arthur M'Connell, Thomas Edward Stewart, Gershom Dean, Lieut.-Commander P. T. M'Donald, Dr. Bouverie F. P. Sturrock, J. Leng Doyle, N. Grattan Macdonald, Rt. Hon. John Murray Sugden, W. H. Du Pre Colonel William Baring McLaren, Robert (Lanark, Northern) Surtees, Brigadier-General H. C. Edward's, C. (Monmouth, Bedwellty) Lean, Lieut.-Col. Charles W. W. Sutherland Sir William Edwards, G. (Norfolk, South) McMicking, Major Gilbert Swan, J E. Edwards, Major J. (Aberavon) McNeill, Ronald (Kent, Canterbury) Taylor, J. Edwards, Hugh (Glam., Neath) Macpherson, Rt. Hon. James I. Thomson, F. C. (Aberdeen, South) Elliot Capt Walter E. (Lanark) Mallalieu, Frederick William Thomson, Sir W. Mitchell- (Maryhill) Elveden Viscount Martin, A. E. Thorne, G. R. (Wolverhampton, E.) Entwistle Major C. F. Mason, Robert Townley, Maximilian G. Evans, Ernest Matthews. David Townshend, Sir Charles Vere Ferrers Eyres-Monsell, Com. Bolton M. Molson, Major John Elsdale Tryon, Major George Clement Falcon, Captain Michael Moreing, Captain Algernon H. Turton, Edmund Russborough Falle, Major Sir Bertram Godfray Murchison, C. K. Waddington, R. Fell, Sir Arthur Murray, C. D. (Edinburgh) Wallace, R. Fildes Henry Murray, Dr. D. (Inverness & Ross) Wallace, T. B. Finney, Samuel Murray, William (Dumfries) Ward-Jackson, Major C. L. Ward, Col. J. (Stoke-upon-Trent) Whitla, Sir William Woolcock, William James U. Ward, Col. L. (Kingston-upon-Hull) Wilson, Rt. Hon. J. W. (Stourbrdge) Worsfold, T. Cato Ward, William Dudley (Southampton) Wilson, Lt.-Col. Sir M. (Bethnal Gn.) Yeo, Sir Alfred William Waring, Major Walter Wilson, W. Tyson (Westhoughton) Young, E. H. (Norwich) Warren, Sir Alfred H. Wilson-Fox, Henry Younger, Sir George Waterson, A. E. Wintringham, Thomas Watson, Captain John Bertrand Wise, Frederick TELLERS FOR THE AYES.— Wedgwood, Colonel Josiah C. Wood, Sir H. K. (Woolwich, West) Colonel Leslie Wilson and Mr. Weston, Colonel John Wakefield Wood, Major Sir S. Hill- (High Peak) McCurdy.
NOES. Acland, Rt. Hon. Francis D. Hallas, Eldred Parkinson, John Allen (Wigan) Armitage, Robert Halls, Walter Rae, H. Norman Balfour, George (Hampstead) Hamilton, Major C. G. C. Rattan, Peter Wilson Banner, Sir John S. Harmood- Hancock, John George Rawlinson, John Frederick Peel Barnes, Major H. (Newcastle, E.) Harmsworth, Hon. E. C. (Kent) Remnant, Sir James Bell, James (Lancaster, Ormskirk) Hayday, Arthur Rendall, Atheistan Bennett, Sir Thomas Jewell Henderson, Rt. Hon. A. (Widnes) Roberts, Frederick O. (W. Bromwich) Bigland, Alfred Herbert, Dennis (Hertford, Watford) Robinson, S. (Brecon and Radnor) Briant, Frank Hirst, G. H. Shaw, Capt. William T. (Forfar) Bromfield, William Hogge, James Myles Smith, W. R. (Wellingborough) Cairns, John Irving, Dan Steel, Major S. Strang Carter, W. (Nottingham, Mansfield) Kennedy, Thomas Terrell, George (Wilts, Chippenham) Chamberlain, N. (Birm., Ladywood) Kenyon, Barnet Terrell, Captain R. (Oxford, Henley) Conway, Sir W. Martin Kiley, James Daniel Thomas, Rt. Hon. James H. (Derby) Craik, Rt. Hon. Sir Henry Lawson, John James Thomas, Sir Robert J. (Wrexham) Curzon, Captain Viscount Lowther, Major C. (Cumberland, N.) Thomson, T. (Middlesbrough, West) Davies, A. (Lancaster, Clitheroe) Lunn, William Thorne, W. (West Ham, Plaistow) Galbraith, Samuel Maclean, Neil (Glasgow, Govan) Tootill, Robert Gillis, William Manville, Edward Wheler, Col. Granville C. H. Graham, R. (Nelson and Colne) Mills, John Edmund White, Col. G. D. (Southport) Gretton, Colonel John Moore, Major-General Sir Newton J. Wignall, James Griffiths, T. (Monmouth, Pontypool) Morrison, Hugh Willoughby, Lieut.-Col. Hon. Claud Grundy, T. W. Myers, Thomas Wood, Major M. M. (Aberdeen, C.) Guest, J. (York, W.R., Hemsworth) Nall, Major Joseph Young, Robert (Lancaster, Newton) Guinness, Lieut.-Col. Hon. W. E. O'Grady, James Hall, F. (York, W. R., Normanton) Ormsby-Gore, Hon. William TELLERS FOR THE NOES.— Sir F. Banbury and Mr. Holmes
The next Amendment, standing in the name of the hon. and gallant Member for Burton (Colonel Gretton), to leave out Clause 19, can be raised more conveniently when we come to the Schedules. Perhaps the hon. Member will move his Amendment on Clause 27.
I am not ready to move it at the moment.
33.—( Extension of Section 14 of 63 & 64 Vivt. c. 7 to persons killed during disorders in Ireland. )
(1) The provisions of Section fourteen of the Finance Act, 1900, under which, as amended by subsequent enactments, relief is given in respect of the death duties payable on property passing on the death of certain persons killed in the present War, shall, subject to the provisions of this Section, have effect in the case of persons, being persons to whom this Section applies, who die from causes arising directly out of the present state of disorder in Ireland as they have effect in the case of the persons killed as aforesaid.
(2) The persons to whom this Section applies are the members of any of His Majesty's Forces, members of the Royal Irish Constabulary (including any auxiliary branch thereof) and members of His Majesty's Civil Service serving in Ireland.
(3) The Treasury shall for the purposes of this Section act in the case of members of
(4) This Section shall apply in the case of any persons dying from any such causes as aforesaid arising at any time after the thirty-first day of December, nineteen hundred and eighteen, and before such date as His Majesty may by Order in Council fix.
I beg to move, in Subsection (2), to leave out the words
Will the right hon. Gentleman say what is the meaning of this Amendment?
The object is to increase the area of relief given in respect of death duties in connection with those who have been killed while members of His Majesty's forces. The people now brought in may be subject to the same fatalities as those who are actively engaged in His Majesty's forces and the same relief should be given.
Amendment agreed to.
Further Amendment made: In Subsection (3) leave out the words
"members of the Royal Irish Constabulary on the recommendation of the Inspector-General of the Constabulary, and in the case of civil servants"
and insert instead thereof, the words
"persons who are not members of His Majesty's forces."—[ Sir B. Home. ]
34.—( Objects of national scientific, historic, and artistic interest to be exempt from death duties if sold to national or public institutions. )
Notwithstanding anything in Section twenty, of the Finance Act, 1896 (which, as amended by Section sixty-three of the Finance (1909–10) Act; 1910, gives exemption from Estate Duty, Legacy Duty, and Succession Duty to objects of national, scientific, historic, and artistic interest so long as they remain unsold), or in the said Section sixty-three, duty shall not become chargeable on the sale, after the passing of this Act, of any property in respect of which exemption has been allowed under those sections if the sale is to the National Gallery, British Museum, or other similar national institution, any university, any county council, or any municipal corporation in the United Kingdom.
I beg to move, to leave out the word "or" [" or any municipal "].
This is the first of two Amendments which, I understand, the Government are prepared to accept. The effect of both will be to include in this Clause the National Art Collections Fund, which is now the principal means of collecting these works of Art, as well as the individual institutions which the society feeds. Practically all these museums and galleries depend on the National Art Collections Fund.
I beg to second the Amendment.
Amendment agreed to.
Further Amendment made: At the end of the Clause, add the words "or the National Art Collections Fund."—[ Mr. Ormsby-Gore. ]
43.—( Interest on certain loans not to be treated as profits for purposes of Corporation Profits Tax. )
The interest receivable by any company in respect of any securities forming part of the three and one-half per cent. Conversion Loan redeemable in nineteen hundred and sixty-one, or in respect of any securities forming part of any loan which may be issued at any time after the passing of this Act as respects which the Treasury on the issue thereof direct that this Section shall apply, shall not be included in the profits of the company for the purpose of Corporation Profits Tax under Part V of the Finance Act, 1920.
I beg to move, after the word "sixty-one," to insert the words
"or in respect of the five and one-half per cent. Treasury Bonds repayable on the first day of April, nineteen hundred and twenty-nine."
The object of this Amendment is to extend to the 5½ per cent. Treasury Bonds the same privilege, by way of relief from Corporation Profits Tax, as is given in respect of the other securities referred to in the Clause.
Amendment agreed to.
I beg to move, at the end of the Clause, to add the words
The Chancellor of the Exchequer admits that the tax, when imposed on a company trading for profit, is a tax based on the profits and in that case the tax is in no way related to the legal fact of incorporation. In previous discussions when the Chancellor of the Exchequer has been beaten on the point, that the balance resulting from mutual trading is not profit, he has sought to explain his taxation of the co-operative movement on the ground that "It is assessed because of the legal fact of incorporation. So far as the co-operative society is concerned, and so far as mutual trading is concerned, there is no profit and the tax is not on the profits, but in respect of the legal fact of incorporation, and inasmuch as they have no profit to be taxed as a company has, I must secure something, and I secure it in the way I set forth." My first reply is, that it is not a matter of speculation at all. The Act of last year makes it clear that the tax has no relation to the fact of incorporation.
I need not explain the essential difference between a mutual society trading among its own members and a company existing for the discovery of profit. In one case you have a spending organisation: in the other case you have a profit-earning organisation. But there are two kinds of these mutual societies: There is the kind represented by the better-class members of the community, and the kind represented by poorer members. In the first case members take their economy in the shape of reduced prices for the goods which they purchase. In the case of the society whose clientele is the poorer class, the economy is taken by way of a cash discount commonly known as a bonus. In the case of the first class of mutual societies, whose members take their economy by getting goods at the lowest possible price, there is no balance remaining to be divided, and it is not suggested by the Chancellor of the Exchequer that in that case he could tax in respect of incorporation. That proves conclusively that here again the tax is based on profit. Where there is no profit there is no tax, and this argument as to taxing in respect of incorporation is a mere device to avoid the irresistible logic of the case for the co-operative society.
In the case of the society representing poorer members of the community, who accumulate their economies by taking goods at a higher price and who thus compel themselves to economy which they can receive in the way of a cash bonus or balance which is given to the members, the Chancellor of the Exchequer says, "I will not exact tax on that particular part of the balance which goes out in the shape of dividend, but I will not exact a tax on that part which is retained in stock." The balance is either paid away in cash dividend to the individual members, or retained in the shape of stock in the way of goods, or it is paid away on behalf of individual members as contributions for educational purposes. A simple analogy with the case now put forward is the case of a mutual insurance company. Under last year's Act a mutual insurance company is exempt from taxation (1) with regard to the proportion of the balance which goes as dividend to the members, (2) the proportion of the balance retained in the society for the members, and (3) the portion of the balance which has been paid away on behalf of members. There you have a precise counterpart of the three parts of the balance which we wish to exempt from tax so far as co-operative societies are concerned.
We want to exempt from taxation that part of the balance which goes to members, that part which is retained in the way of stock, and that part which is paid away in contributions for educational purposes. We only ask for the cooperative movement the same measure of exemption as has already been given to mutual insurance companies. We are not asking any favour for co-operative societies. We simply ask that the law shall be interpreted to them as it has been interpreted to mutual insurance companies. The Chancellor of the Exchequer may say, "In that case, what taxes do I get from co-operative societies?" As one who has taken some interest in the co-operative movement, as a social movement of infinite value to the country, as pre-eminently the social movement which has led to enormous economies, and has enabled tens of thousands of people to own property which they never would have owned, as one who has taken some interest in these organisations, I am more than surprised to find that somehow or other some Members entertain the view the Exchequer does not get its proper quantum of taxation from the movement. I challenge that, and I venture to submit that there is no organisation in the country which has assisted the Treasury more.
Let us keep before us that the money which trickles through co-operative societies has already been earned, and as earned, has already been taxed, and its peregrinations through the co-operative movement occur in the course of the spending. As a result of the economies effected by the poor in that way, there arises much investment by the workers in property, national loans, bonds, and so forth from which the Exchequer derives advantage. [An HON. MEMBER: "The same with everybody."] I really expected to find more financial acumen displayed by the hon. Member. I am trying to point out to the House that the direct result to the Exchequer, of the existence of the co-operative movement is a huge revenue which otherwise the Exchequer would not have. Wealthy men may laugh at the device if they like, but the fact remains that these poor people compel themselves to these economies in this particular way, and, as a result of the economies, find themselves in the possession of property both in land and moveables and from that property revenue is obtained. Disraeli's wise legislation fostered the co-operative movement. That was legislation in marked contrast to the taxation which I am opposing now —taxation which is an insult to the memory of a great statesman. He kept before him that land and property, the platform upon which mutual operations were conducted, should be taxed, while the mutual operations on the platform could not result in a profit open to taxation.
As a result co-operative societies multiplied throughout the land, and they now hold property on a very large scale, from which revenue is obtained and upon that revenue taxes are imposed to a colossal amount. I offer the Chancellor of the Exchequer this: I do not claim exemption from taxes so far as outside trading is concerned. Therefore he is entitled to get this Corporation Tax on the amount of that outside trading. Further, on the revenue which is accruing from investments outside the mutual movement I say to him, he is entitled to this Corporation Profits Tax. I can give him nothing more. To give him more means putting a levy upon capital, and while hon. Members opposite take up a strong attitude on that, they do not hesitate about a proposal to put a levy on capital when the capital belongs to the poorer members of the co-operative movement. Here is a challenge. The Chancellor of the Exchequer can analyse it and examine it from A to Z. When he seeks to tax something which is not a profit, but is the result of economy in spending, he is levying a tax on capital. As one who opposes a levy on capital, I say that did I favour such a proceeding, I should never begin at that end.
I have no wish to put the case too strongly for the co-operative movement. It is a very simple case. I venture to say this, in fairness to the Chancellor, that had this question been discussed before the imposition of the tax as it has been since, I do not believe any Chancellor would have ever ventured such a contradiction of logic, and such a violation of the elementary canons of taxation. But the tax was imposed, and displaying a quality of stubbornness not unattractive to a. Scot, the then Chancellor stuck to his guns. So far as the present Chancellor is concerned, I in my heart believe that he looks upon this tax as a kind of damnosa haereditas to which he has succeeded. I honestly believe if the position were clear, if he had a free hand, and if he were unhampered by the fact that this taxation was imposed by his predecessor, he would never dream of imposing a tax on such a balance as that which arises in the mutual trading of the co-operative movement.
The Chancellor in his heart knows he has given no answer to the case of the cooperative movement. I do not doubt his vision, and I do not doubt his courage, and I want to make an appeal to his sense of fairness. In making that plea, I entertain the hope that even at long last he will accept this Amendment. On previous occasions he has contented himself with a merry jest, and, I think, a somewhat ancient joke. The Chancellor knows we admire his gifts in that respect, but we do not want to dispose of those gifts to such a purpose as that of playing havoc with the co-operative movement. He may say to me, "Sell your goods at rock-bottom prices." If it be any comfort to him to know it by doing so I should dissipate the economies which have been effected, and do very great injury to the Exchequer. I can see no reason why the Chancellor of the Exchequer should ask the co-operative movement, merely as a refuge from an unjust tax, to abandon the method which suits their people. That being so, while hopeful we may get an indication yet that it is unnecessary to press the co-operative case further, I express this desire, that the Chancellor will to-day do one of two things—either give a reply to-day distinguishable from previous replies, which will satisfy the mass of the Members of this House, that the tax has some justification, or else, failing that, that even at the eleventh hour he will abandon the proposition, which originally was not his own, a proposition with which, I am justified in believing, he has very little sympathy, and accept the Amendment which I now move.
I beg to second the Amendment. I hope the Chancellor will accept it, although he refused to do so in the Committee stage. He has had a change of reflecting since, and, after all, he belongs to the Government in which there are men of very mobile mind, who are not afraid to reverse to-day what they did yesterday. I do not agree with some of their recent actions in that respect, but I think on this occasion they might do well to reconsider their decision. The Mover has shown that no special facilities are being asked for by the co-operative societies, because the concession demanded only applies to profits from mutual trading. In his speech on this question in Committee the Chancellor seemed to claim that these surpluses arising from mutual trading were profits open to taxation, but I think the Mover of the Amendment has shown quite clearly what the position is. It will only be doing the barest justice to co-operators if the Government accept this Amendment.
7.0 P.M.
I am in agreement with the Mover of the Amendment. I am afraid the Chancellor has been left with a child that he does not like very much, and I want to assure him that I sympathise with him in the difficulty in which he finds himself. The arguments put forward by my hon. Friends should have convinced many Members of this House— even those who have not been convinced before—as to the justice of the case made. The Mover put his case in a very fair, reasonable and equitable way and in a way appreciated by the House, judging from the manner in which it was received. May I say at this juncture, that the movement, in which I have been particularly interested, appreciates the services the Mover of this Amendment has rendered to it in this House? I feel justified once more in stating very clearly that the Corporation Profits Tax as applied to the co-operative movement is striking definitely at the principle on which that movement is based. I have to repeat that statement in every speech I make on the subject in this House, because many Members have the impression that we are asking for some preferential treatment. I dseire to follow on the lines taken by the Mover of the Amendment in endeavouring to prove that is not so. Every Chancellor prior to my right hon. Friend's predecessor, has acknowledged the position in which the Co-operative movement is placed. There have been attempts in days gone by to see if the movement itself could not come under some form of taxation. I believe, if I may say so very respectfully, that there was a certain amount of ignorance of the workings of the movement. We submit that the imposition of this tax is a burden upon a portion of the community that is already overtaxed as is proved by the amount of money which the revenue derives under Schedules A and B. To enforce this tax upon the movement is to create an injustice in regard to that portion of the community. I want to give one or two quotations from a well-known document, the evidence of the Royal Commission on Income Tax. I find within its pages that question 19,529, page 960, of the Minutes of Evidence of the Royal Commission, clearly demonstrates what I am stating. Mr. E. Stanford London, C.B.E., Deputy-Chief Inspector of Taxes, was asked by Mr. Armitage Smith: that is. I think it is a statement which the House will be prepared to accept as evidence, and to attach to it even more importance than if it came from one of those interested in the co-operative movement. I would ask the House to remember this in addition, that the In-Come Tax is a tax on income and that it is not a corporate but an individual one. If the members of the co-operative movement are individually exempt they cannot, logically, be collectively chargeable.
During the Second Heading the Chancellor of the Exchequer said: was followed up, and the same hon. Member put a further question to the Chancellor of the Exchequer, who replied:
I do not think that anybody who reads the whole of my speech will find there is any real discrepancy at all. The only Income Tax paid is upon trade with non-members, which is an infinitesimal part of their business. They pay also so far as they hold land and heritable premises upon that annual income. If the hon. Member reads my speech again he will find I make no further suggestion.
It is not my desire to do the Chancellor of the Exchequer an injustice, but I have read the speech very carefully, and I can assure him I am only giving the effect of it upon my own mind and upon the minds of many Members. I notice so far as many societies are concerned that under Schedules A and B they are paying 8s. in the £ Income Tax, and owing to an arrangement which is not merely for the convenience of the cooperative movement, but for the convenience of the Treasury, no attempt is made to get the rebates they are entitled to. In order to prove my contention I will read one or two figures, which affect a very important society in this country. This society will pay something like £30,000, but if they had desired, under Schedules C and D, they would be easily able to get the necessary rebate which would leave them a very substantial return. But they have no desire because there is a complete arrangement with the Treasury, and on two specific occasions the Treasury has even issued an official circular in which it requests the societies that things should be allowed to remain as they are. Taking a rough estimate of the co-operative movement, I venture to say that we are to-day contributing some- thing like £600,000 or £650,000 to the revenue of the State. It is a question of an arrangement and we honour the obligation, though it has been for the purpose and convenience of the Treasury that this arrangement has been established. If it is necessary to proceed upon the lines which my right hon. Friend has proceeded upon, then it will be quite within the statutory rights of these societies to see what can be meted out to them in the way of rebate. I remember well that upon the Second Reading one or two Members spoke of the question of non-members' trade. I am one of those who has stated that trade outside mutuality is liable to taxation. No member of the movement could logically stand upon a platform and justify anything else. That is quite within the terms of the Amendment moved. I have noticed that several Members, in speaking upon this question of non-members' trade, speak of it in such terms that one would imagine we were doing immense things. They speak of the huge ships we have upon the sea. I have been offered the opportunity of a voyage upon one of these vessels, but I did not accept it, because the vessels are only two little ships travelling between France and England. These are the only ships we have, and they are utilised to get the necessary produce from French soil. To prevent the ships going out in ballast we may take a consignment of goods, and we believe that the profit accruing from that is liable to tax. I noticed also in the speech of the hon. Member for Mossley (Mr. Hopkinson) that he definitely stated he had been one of the traders with this particular society. What were the real facts of the case? I am not going to say that the hon. Gentleman desired to misinform the House, but I have gone carefully into this matter, and I find that the society in which the hon. Member did his trade practically broke the rule on patriotic grounds. As to the goods served to the hon. Gentleman for the replenishment of the hospital, they were sold at cost price, and the working expenses given freely for the good object, and every penny-piece that was handed over the counter for the goods was the lowest possible price. The society themselves were losers on the deal. It is only fair to submit what I have to the House when an hon. Member makes a statement of this description in a matter which in itself only amounted to £232 10s. I only gave the illustration because the case seemed to make a very deep impression upon the minds of hon. Members.
Under the terms of the Amendment one is led to understand that the principle of mutual trading will be safeguarded, and that trading done outside the movement and outside the scope of its members is liable to tax. I think I can very safely say that an Amendment of that description would be quite acceptable. As the Mover of the Amendment said, the co-operative movement seeks for no preference. It asks for no privileges. If the tax itself were reduced to 2½ per cent. instead of five, the same objection would be raised, and no greater objection would be raised to the tax if it was raised to 10 per cent. We feel that a principle that has obviously been so well established by law in this country, and has been recognised by every Chancellor of the Exchequer, should, at any rate, stand us in good stead through the days we are passing. It has been argued, very ably, doubtless, that the Government have dealt with the matter adequately by allowing the deduction as trading expenses, with bonuses, discounts, or dividends on purchases returned to members of the society. I want hon. Members to recognise this point, that in dealing with a tax of this description, before any dividend can be declared or any surplus estimated, the tax has got to be allowed for just the same as any other business concern in this country. We feel that a tax which is of so compulsory a nature breaks rather across the principle of mutuality, and cannot, as long as it remains upon the Statute Book, be anything else but obnoxious in the extreme. Until it is removed, and until at least justice and equity is established, it will be necessary for the movement to endeavour to bring to bear upon this House, or upon the subsequent House, such pressure as can ensure that justice and equity will be applied all round.
There can be no doubt that this matter has now received a very full and adequate discussion in the course of the Debates upon this Finance Bill. If I may, I would congratulate hon. Members who have offered criticism that they have succeeded in introducing new considerations of some interest into the discussion, and it is with these one or two matters that I desire to deal briefly. I am inclined to hope that we have, at any rate, arrived at a larger measure of agreement than appeared in the discussions on a previous occasion; but it is not, I fear, an agreement between that point of view which I have to represent, and the point of view of my critics. I have, however, observed a greater measure of agreement between the different bodies who constitute the critics of the Government. I believe, for the first time, the hon. Member for Kettering (Mr. Water-son) has come to some substantial measure of agreement with the hon. Member for Linlithgow (Mr. Kidd), and it encourages the hope that were we to proceed to greater duration of discussion we might eventually obtain even an agreement between those two exponents of critical schemes and the hon. Member for Central Edinburgh (Mr. Graham). It is, perhaps, too much to hope that one should have the advantage of this unified body of criticism with which to deal. If, however, I understand the present state of affairs, it is that the two hon. Members who have spoken agree—I am not seeking to make any implications out of what was said—agree in some measure, carefully defined, of how the co-operative societies may be called upon to pay the Corporation Profits Tax. I rather imagine the intention of the Amendment, as moved by the hon. Member below the Gangway, includes the co-operative investments outside.
That is so.
It is open to some doubt upon the wording of the Clause, but I think that is the intention. The hon. Member for Central Edinburgh (Mr. Graham) rather inclined to take a larger view of what the co-operative societies should be taxed upon. It is of very great and vital importance in this connection to obtain some close measure of unified opinion upon this matter. I observe, as one may have observed throughout these discussions, and if I may say so without presumption—a predisposition on the part of co-operative societies to meet whatever burden of taxation they were called upon by the Government to bear, while at the same time desirous that in relation to the co-operative movement the proposed taxation was fair and equitable. I believe there has been a free recognition of the obligations of the co-operative societies on the part of those who speak for them, and I hope and believe there has been a free recognition on the part of those representing the Government that it was their duty and obligation to convince the prospective taxpayer that the tax is fair. In order that I may seek to fulfil that duty I desire to address myself to the question referred to by the hon. Member for Linlithgow. It is essential, if this tax is to be commended to the co-operative movement, that we should succeed in convincing those who speak for the movement that there has been no unfair differentiation against the co-operative societies as distinguished from the mutual and life assurance society.
The matter is one more of technical objection. Nevertheless I will seek in the few words I desire to say to set out what does appear to me to be a necessary correction of the argument of the hon. Member for Linlithgow. The contention I have to make is this: that there is no distinction at all between the treatment meted out by the present taxation law to co-operative societies on the one hand and life assurance societies and mutual life societies on the other. Let me ask the House to consider for one moment the ordinary life assurance society; what is its position under the present taxation law? On the profits which it makes and which are allocated to policy holders in one form or another—I use the wide words on purpose—there is freedom from taxation, from the Corporation Profits Tax. The profits allocated in one form or another to shareholders—I am dealing with the ordinary life assurance company—are not exempt from taxation, but subject to the Corporation Profits Tax. I say the true analogy between the co-operative societies is not with the mutual office but with the ordinary life assurance society. I hope I shall succeed in making that clear. In the ordinary insurance society there are two classes, the shareholder and the policy holder. In the ordinary co-operative society there are two exactly analogous classes, the shareholder in one form or another and the purchaser.
They are the same individual!
Their personality is totally irrelevant.
In what capacity does he pay the tax?
My contention is, and perhaps the House will allow me to make it whether they agree with me or not, that in regard to the co-operative society part of its profits which are distributed to members or purchasers are free from taxation, that part of the profits which are allocated in the form of reserve or in the form of interest on share capital to shareholders are subject to taxation. Between the co-operative society and the mutual life assurance society there is no analogy at all. In the Mutual Life Assurance Society the onlly class is the policy holder. If you apply the same taxation rule to the co-operative societies and to the mutual life societies you produce the present result. There is total exemption from taxation for profits because, there being no shareholders in the mutual societies, they are all allocated to policy holders. It appears to me that there is a strong argument at least that exactly the same treatment in taxation that is now given to the co-operative society should be given on the other hand to the life assurance societies.
Let me conclude by saying that the case in favour of some measure and some degree of taxation by the Corporation Profits Tax upon co-operative societies has occasionally not been understood because a certain circumstance has been lost sight of, and that is the difference between the condition of taxation and the measure of taxation in this respect. The basis of the Corporation Profits Tax is this, that first of all you have a condition of taxation, and that is that the subject of the tax, the company or whatever it may be, is carrying on business. Nobody will deny that the co-operative societies fulfil that condition—they carry on business. The second condition is this, that they shall carry on business with some form of limited liability, and that again is a condition fulfilled by the co-operative societies. In regard to the measure of the tax, in the ordinary case the measure of the tax is found in the profits of the company, but supposing you have a company which is liable to the tax, but which has got no profits, you cannot impose the tax upon it according to the ordinary measure. What must you do? You must do what I think has rightly been done in this scheme of tax— you must find the thing most closely resembling profits and take that as the measure of the tax. I am quite prepared to argue that what we tax in this particular case is not only in the nature of a profit, but that it is a profit in the true sense of the profit of a limited liability company, but I make the hon. Members opposite a present of that, and I assume that it is not a profit. I say it is consistent with the scheme of the tax that, once you ascertain conditions of liability you then find, in the case in which the ordinary measure of liability is not present, that which most resembles profits. In the case of the co-operative societies, those are these things which have been selected in the scheme of the tax we levy, that which most closely resembles profits, namely, the undivided surpluses which accrue in law and in fact out of the benefits, not to the members of the societies, but to the shareholders in the societies.
The Members of the present Government seem to me—and I see upon that Bench several of them, but particularly my right hon. Friend the President of the Board of Trade— to have a passion for the doctrine of analogy. We have seen it in the case of the anti-dumping proposals of the Government, in regard to goods which are something like, or reasonably near, or within measurable distance in point of identity. Now we have the Secretary of the Treasury developing the argument of analogy in another sphere. I am not going to pursue the argument, because it seems to me to be irrelevant to the real point, except to say that, having listened carefully to the hon. Gentleman's statement, he appeared to me after all to state that the real analogy, if there be one at all—and I do not care whether there is any or not—is between the co-operative societies and the mutual insurance companies. To my mind, the points of difference are far less than they are between the co-operative society and the insurance company which carries on its business between policy holders and shareholders. That, however, is not the point. Let me just in two or three sentences state what I conceive to be the real issue raised by this Amendment, of which I am in hearty support.
What has been the financial policy of this country in regard to co-operative societies in the past? They are liable, like other persons who own or occupy land, under Schedules A and B, and they do not disclaim that liability. They are satisfied with it, but they might claim abatements which they are willing to forego. Then again, as regards profits which are made by a co-operative society from trading outside its own membership, no one disputes, and certainly the supporters of this Amendment do not dispute, and do not ask the House to dispute, the liability of the co-operative funds to that extent. But it has always, upon grounds of public policy which have been recognised by successive Chancellors of the Exchequer now for the best part of two generations, and certainly so far back as my financial memory goes, been maintained that the so-called profits arising from their mutual trading should not be regarded as subject to Schedule D. That is common ground. That has been hitherto, on grounds of policy which I believe to be thoroughly well justified— at any rate, which have never been successfully challenged in this House and which have been followed by successive Administrations of almost every complexion of political thought and party— regarded as almost a fundamental canon of our Income Tax law.
Now come the Government and levy a new tax, which they call the Corporation Profits Tax—in my opinion, a thoroughly bad tax, as I think experience has shown. We discussed it yesterday, and the Chancellor of the Exchequer showed hardly more parental or stepfatherly affection for it than his colleague at the Board of Trade has shown for the Safeguarding of Industries Bill. The real parents of these Measures do not seem to be able to bequeath the sentiment of fatherhood to those who succeed them as adoptive fathers in the nourishing and bringing up of their offspring. I listened to the arguments of the Chancellor of the Exchequer yesterday in the hope that I should be able to vote in favour of the retention of the Corporation Profits Tax. I was not able to do so, but I yielded to the argument that he gets from it £30,000,000 of money. There are very few of us who are at this moment prepared to suggest a substitute or alternative which will bring in as much cash to the Exchequer. That was the whole argument which the right hon. Gentleman used. To come back, however, to the co-operative societies, this Corporation Profits Tax is a special Income Tax of a peculiar kind, and every argument of policy which justifies, as the Chancellor of the Exchequer, himself admits, the exemption from Schedule D of the old Income Tax of these so-called profits of the co-operative societies appears to me to apply with exactly the same force to the Corporation Profits Tax. The Government are really, under the guise of a new tax, taking away—and that, I believe, is the real grievance which is felt by the co-operative societies—they are taking away, or they are driving in, to use an old and familiar rhetorical instrument, the thin end of the wedge, or, to use another term, they are paving the way upon which more audacious Chancellors of the Exchequer than those who now sit on the Front Bench opposite will be able to invade the time-honoured and thoroughly well-justified exemption of the so-called profits of co-operative societies from Schedule D of the Income Tax. I should like to make this appeal to the Chancellor of the Exchequer: Is it worth while? As I understand, the total yield of the tax, so far as these co-operative societies are concerned, does not exceed something like £600,000.
What my right hon. Friend is thinking of is the amount of yield of the taxation under Schedules A and B. So far as the Corporation Profits Tax is concerned, the anticipated yield this year is £150,000.
I put it too high, and I am obliged to my right hon. Friend for supplying me with an additional dialectical weapon. I am the last person to discourage any legitimate addition to the revenue in the present condition of our finances, but is it worth while getting £150,000 out of these co-operative societies? Is it worth while to arouse this feeling, very widespread indeed, among a very large class of our population, who, in their character as co-operators, everyone admits set an example which might well be followed in other connections?
The last two speakers seem to me, the one to be groping timidly for an analogue by which the Government can tax co-operative societies as under Corporation or Income Tax Schedules, and the right hon. Gentleman the Member for Paisley (Mr. Asquith) and those who preceded him on this side are searching for methods or, to use the right hon. Gentleman's own phrase, for juridical niceties by which the co-operative movement can escape paying its fair scot and lot for the upkeep of the country. I shall oppose this Amendment on grounds which I should like for a few moments to explain. I think in some measure, with the right hon. Member for Paisley, that it is foolish on the part of the Government, although I shall support them in imposing the tax, for them to dither with this matter. Here you have £350,000,000 worth of trade turned over every year by these admittedly admirable societies. The co-operative movement was started, I take it, as a quasi-charitable undertaking, and it was never thought that they would invade the general total of trade to the extent of £350,000,000 per annum. The consequence is that these gentlemen who are carrying on this co-operative trade, and who are now endeavouring by these juridical niceties to avoid paying what may be imposed upon them by this proposal, are narrowing the area of national taxation which provides them and us with the Army and the Navy and every other national service, which allows them and us to trade, and without which they could not exist, or trade, and flourish—they are endeavouring, as I say, by some petty juridical nicety to shirk that burden and to throw it on to the rest of the community. I take the broad view in opposing this Amendment. Suppose, instead of a turnover of £350,000,000, the societies had a turnover of £750,000,000. They would filch away from the shopkeepers and big firms the additional business on which these latter are paying Income Tax and perhaps Corporation Profits Tax. Suppose, instead of the co-operative movement doing a trade of £350,000,000 per annum, John Smith & Co. did a trade of £350,000,000, the firm would certainly pay the Corporation Profits Tax, yet cooperative societies escape. As I was listening to the admirable speech of the hon. Member for Linlithgow (Mr. Kidd), on which I wish to compliment him sincerely, my mind went back to my old history books. At the present time we have reproduced the condition of affairs of 650 years ago, when an institution set up for the benefit of the people, called the Church, obtained and held an increasing amount of lands. In those days, instead of protecting the realm by paying taxes according to yellow forms presented to the subject, the way in which then to support the King to defend the realm was to give military service. As land fell into the hands of the Church in increasing volume, so the area from which military service could be drawn for the defence of the country was reduced because, generally speaking, the Church did not itself render military service. The King, representing the general body of the people, got tired of that privilege or exemption, and in 1272, I think it was, an Act called the Statute of Mortmain was passed. The King saw the same thing was happening then that we see happening now in the case of tax-exempted co-operative societies. The area which could be brought under contribution for military service was being greatly reduced, and it was not possible to obtain sufficient soldiers from the reduced area, after allowance had been made for exemptions and privileges claimed by the Church. Here, 650 years later, you have the co-operative societies as the exempted and privileged class. They are continually in this House making use of the expression "the immunity of the co-operative societies from Income Tax." They ask for privilege. [HON. MEMBERS: "NO."] Whether they ask for privilege or not, they have got it. They cannot deny that by any amount of chop logic. They say: " We are not going to pay under Schedule a, b, c, d, or x, y, z, because of some juridical nicety which regards us as some quasi-charitable or mutual trading body, and we will not pay." I think it is mean-spirited on the part of co-operators and those who support this Resolution to squeal, if I may say so, to claim privilege and immunity when called upon to pay their fair share towards the upkeep of the country. Indeed, it is mean-spirited to shirk paying like the rest of us. I go further. I think this or any future Government is quite wrong to dither with the problem. They should take this difficult matter boldly by the throat. Government should say: "We are not going to have this privilege continued and a discussion year after year as to whether co-operative societies come in on the ground of mutual trading or non-mutual trading or under Schedule a, b, c, or d." They should find out what the capital and reserves invested in cooperative trade are, then find out what the turnover on that total is, and then find out what similar companies would make from that same capital and turnover if they were limited liability companies or private firms. Then, when the Government has found out what advantage these great co-operative societies obtain from their trade, tax that trade as other folks would be taxed. Do not call it necessarily Income Tax, call it whatever you like, but say they, as trading co-operative societies, must pay their fair contribution towards the upkeep of the State under which they exist and flourish. Charge them, if you like, a much smaller tax than the ordinary trader, because it is true that the main body of the co-operators are quite poor people, though very few of them now get under £2 10s. a week. When you have done that, it should save the self-respect of those who, identified with the co-operative movement, come down to this House year after year with special pleas for exemption when the societies are called upon to pay their just scot and lot. I shall oppose this Amendment and support the Chancellor, and I hope that on the next occasion when co-operative trade is mentioned for taxation the Government will not again cause us to have to split arguments for or against. Let them and the co-operators deal with proposals to tax co-operative societies on the ground of equal justice, equal liability to national burdens, and no privileges.
The inexorable logic of my hon. Friend the Member for Linlithgow (Mr. Kidd) is, perhaps, not so very easy to controvert, but I always distrust these logical arguments, for if you only look a little way round them, I think you will probably see something on one side which rather upsets them. Hon. Gentlemen opposite are never tired of saying that it is the consumer who pays the tax. If some of these people of the same class as the co-operators, but who are not co-operators, purchase their necessities of life from an ordinary trading store, they make a contribution towards Income Tax in the price they pay. The trader has to pay tax, and the tax is placed on the price of the goods. If the co-operator, in his institution, pays no taxation at all, he is getting out of a certain amount of Income Tax which is paid by the man who bears the tax as one of the consumers. I think the Corporation Profits Tax is a bad tax, but this Debate has shown that something of that kind is the exact thing that is wanted in order to make the co-operative institutions pay what they should do towards the upkeep of the country, while saving them from having to pay full Income Tax as paid by trading societies that are not mutual trading societies. If hon. Members who support this Amendment would content themselves with asking only for immunity from taxation for that surplus which is restored to the members of the mutual trading society at the end of the year, there would be something in it. But the mutuality, and the argument that this surplus is not profit, comes to an end when the individual who has paid something more than the cost price is unable to get back his share of the surplus. That is where, I think, the Corporation Profits Tax is justified. He is contributing to a common fund which is not managed by him and his fellow members, but is managed by the equivalent of a board of directors, who by that means control very large amounts. While not admitting that advocating the Corporation Profits Tax being levied on co-operative societies in any way commits us to making them liable to Income Tax on that surplus, there is good ground on which those societies should pay something, if a less tax than the Income Tax paid by the ordinary trading society, and I welcome the Corporation Profits Tax in so far as it applies to these particular institutions.
It has been emphasised again and again that there is no desire on the part of co-operative societies to escape any taxation which they should properly pay, and I think the relevant reply to a great deal of the argument which goes to suggest that co-operators are now enjoying a privilege, is really found in the defence of the principle of mutuality, which has been examined and debated by various Committees from time to time. A great injustice would be done to the co-operative movement if we did not clearly bring out what is suggested, and I am going to try to do that as briefly as I can. In the course of the Debate yesterday, hon. Members on this side of the House expressed their opposition to the Corporation Profits Tax. We opposed it as a bad fiscal Measure, but we were defeated in the Division. It would, therefore, be irrelevant on my part to continue to argue the particular incidence of the Corporation Profits Tax as applied to the co-operative movement, but I am going to make this suggestion with a fair measure of confidence to hon. Members in all parts of the House—that in financial and economic circles there is a very strong feeling that Corporation Profits Tax is simply a refinement of Income Tax, that you. are applying that Income Tax at a stage in the profits of an undertaking before they are distributed—when they are in what I may call their aggregate form—and that you are by the present arrangement extending this to the cooperative movement.
8.0 P.M.
If there is anything in the suggestion that this is a variation of Income Tax, as I believe it to be, it is fair and right to point out that the overwhelming majority of members of the co-operative movement are outside the ordinary limits of Income Tax, and you are therefore doing an injustice to them in applying this tax to the undistributed portion of their surplus arising from mutual trading. Thanks to the abatements and exemptions introduced under the last Re-port of the Royal Commission on Income Tax, it is possible for a husband, wife, and three children to have very nearly £400 per annum before they are liable for a copper of Income Tax. There can be no doubt that that figure covers a tremendous proportion of the members of the co-operative movement, and to that extent you have done them an injustice in this matter. I am going to appeal, because I am afraid that is the only thing we can do, to the Chancellor of the Exchequer as a fellow-Scotsman, and as one whose experience lies very largely in my own city of Edinburgh, where, I think he will agree, we have a passion for logic and the exact. I am going to ask him on the Floor of this House whether the device he has adopted is a logical and defensible device. The House will readily visualise a large fund flowing admittedly from the mutual trading of the members of these societies. For the purpose of this tax, that fund is divided into two portions. By far the greater portion is distributed as dividends on purchases, and, by common consent of all the Committees and bodies which have investigated this matter, that part of the surplus goes free. There is no doubt or hesitation that it is a result of mutual trading, to which nobody suggests the tax should be applied, but the Chancellor of the Exchequer, on what I regard as a misreading of the recommendation of the Royal Commission's Report of 1919, selects that very small portion of the fund which is not distributed to members by way of dividends on purchases, and applies the Corporation Profits Tax to that undistributed portion, for the reason which was advanced by his predecessor in office a year ago when the tax was introduced, that it is that undistributed portion which is most closely analogous to a profit in the ordinary company sense of the term. That was the phrase that was used. I respectfully suggest that that is not a sound principle in taxation at all. We have got to ascertain whether this is genuinely a profit, not something which is merely like a profit, or analogous to a profit; and, above all, we have got to be strictly sure that we are not exempting from taxation the whole or a great portion of a fund, and applying the tax to a small surviving portion of the very same fund arising from the very same course of trade, and mutually earned beyond the shadow of a doubt by the trading of those members, on a mutual basis, of course, one with another.
I have never heard the Chancellor of the Exchequer, either last year or this, reply to that part of the argument which we, perhaps, with our Scottish love of logic, love to put from this side of the House. If that were the only argument, for many of us north of the Tweed it would be a final argument against the taxation of this undistributed portion of the surplus. But there is another practical and social argument of the very highest importance. After all, what is done with this undistributed portion of the fund arising from mutual trading? It is perfectly obvious, in a movement of 4,000,000 people, with a great deal of difference in local, industrial, and commercial conditions, you must have variety of practice, but, broadly and generally, that portion of the fund is used for education, for philanthropic work, for contingencies, and for charitable and other purposes, much of which would have to be overtaken either by the local authorities in these districts or by the State, if it were not discharged by this free, voluntary effort on the part of the co-operative cause. I do wish to press most strongly indeed upon the Chancellor of the Exchequer, is it worth while for £150,000, in a Budget of £1,216,000,000, to apply a tax to that small portion of a fund largely used for public purposes, and to incur the opposition and the ill-will of a considerable percentage of 4,000,000 of the thrifty classes of the electorate of Great Britain? I do not sit, fortunately, on the Coalition side of the House, but if I were a Coalition representative, I should question whether this was sound business—to put it no higher—from the point of view of keeping the good-will of the electorate of this country. It is not just; it is not even respectable practice. It is thoroughly unsound, in the light of whatever Commissions and Committees have reported.
I do not want to sit down without referring to the constructive proposals which we have made from time to time. The Parliamentary Secretary, in replying a few minutes ago, adopted the familiar device of analogy on the one side, and an attempt on the other to divide Members in this part of the House. I recognise that, on the last occasion in debate, I made proposals under four heads which were supported by the Board of one of the most representative, and certainly one of the largest, co-operative societies in this country. I also recognise, as I pointed out quite clearly then, that these proposals were not supported by official and representative co-operators in this country, and I am only going to say now that, in the main, the proposals which are now put forward by the official co-operative movement are a variation of what I then proposed—no doubt a slight contraction, but something which I can, nevertheless, very cordially support under the Amendment which my hon. Friend has proposed. The Co-operative movement offers to the Chancellor of the Exchequer, in the first place, the application of this tax to the annual value of property. We put forward that as the first of our proposals to-night, on grounds which, I think, call for some little explanation in this Debate. The Chancellor of the Excheqer knows perfectly well that, by the very nature of this movement, a very large part of its money is sunk in house and cottage property of all kinds, and I am informed that, under that head, the taxation recently has largely increased, and with that the return to the Exchequer, so that there you have something which, by the nature of this movement, gives you what I would regard as a somewhat greater hold upon cooperative societies so far as revenue is concerned.
In the second place, we are offering the application of the Corporation Profits Tax, so long as it is continued, on the results of trading with non-members. Hon. Members in different parts of the House have very curious ideas on that point. In the last Debate one hon. Member seemed to suggest that the co-operative movement did a vast trade on non-mutual lines. If that hon. Member were correct, if there be any truth in the suggestion—of course, I will prove in a minute there is next to none—he cannot possibly oppose us, because we offer it freely and gladly, under existing conditions, for the application of the Corporation Profits Tax. But the actual position, of course, is that non-mutual trading is very small indeed. Of about 40 societies—large retail societies— whose conditions were recently reviewed, I think it was shown, after investigation, that non-mutual trading amounted to about one-half per cent. of the whole turnover. That is a very small amount indeed. It probably ranges over the whole movement, at anything from one to one and a half per cent. I may, perhaps, have exaggerated the position in that very general statement, but we offer that, in the second place, for the purposes of this Corporation Profits Tax.
In the third place, we offer the return from investments held outside the cooperative movement, if they have not been already taxed. The Chancellor of the Exchequer will probably reply tonight, if he gives a reply to our arguments on this side of the House, that these things are, in effect, a comparatively poor and humble offer on our part, and that they do not in toto amount to what I myself suggested in a previous discussion. Since that time, I have had an opportunity of more closely examining the position, and I find that at least two of the proposals which I made in the last Debate are of the nature of duplication. There were elements in them which were frankly redundant, I think the right hon. Gentleman himself will agree, and I have come to the conclusion that the three heads which we now unitedly put forward are a far better basis for the application of this tax than the illogical scheme which the Chancellor of the Exchequer has so far pursued.
Did the hon. Member say the return from investments?
The return from investments held outside the co-operative movement, if not already taxed. The only other argument I am going to use is that, in existing conditions in this country, it is not worth while, for the sake of £150,000, to lose the goodwill of a great thrift organisation. I think I correctly represent the attitude of the co-operators when I say that they do not seriously worry over the amount of money involved. Obviously, it is a mere bagatelle in the great structure of co-operative finance, but they do attach great importance to the principle, and they see in this tax an undoubted invasion of that which is mutually earned, even if it be applied to only a small portion of the surplus arising from mutual trading. The movement did very well during the crisis of the War. My right hon. Friend knows it has done a great deal to stabilise economic and social conditions in this country. All that activity rests largely upon the goodwill of its members. Do not, for the sake of a beggarly sum like this, in a Budget, I repeat, of £1,216,000,000, sacrifice that goodwill when you need it so much.
I am sure the House will agree with me that we have listened to a very able speech from the hon. Member for Central Edinburgh (Mr. W. Graham). His speeches always have the character of lucidity, which reminds one of a clear spring on a Highland hillside. I heard a great man say, only the other day, that he had a great contempt for logic, but it was very useful in argument, and I am perfectly certain that anyone who has listened to the hon. Gentleman will agree that logic is one of the most powerful weapons in the great armory at his disposal. I should like to endorse, from my own point of view, what he said as to the value of co-operative societies, as to their steadying and stabilising effect in this country. They are one of the greatest engines for thrift, I think, this country has ever known, and none of us, I am sure, want to do anything which would in the slightest way impede the great-advances which they have steadily made in this country. But there is one reflection which crosses one's mind, and that is, where would the revenue of the country be, supposing there were no other traders but co-operators? It would be perfectly obvious that we should require some other way of raising revenue; and I gather from the hon. Gentleman that he is prepared to assert, on behalf of the co-operative movement, that they have no desire to evade carrying their proper burden of responsibility in maintaining the services of the country, and that all that they desire is that we should find the proper method by which they should be assessed, and the amount of their contribution to the service of the country collected.
In those circumstances, may I turn to the justification of the Corporation Profits Tax? I shall say something as to whether it is necessary that we should always follow this method of arriving at the obligations of the co-operative movement towards the taxation of the country. I cannot agree with what the right hon. Gentleman the Member for Paisley (Mr. Asquith) said, that in the history of our taxation the co-operative movement has always been recognised as being outside taxation under Schedule D. It is already taxed upon the annual value of the property which it either holds or occupies, but it has never been recognised as liable to taxation under Schedules C and D. I put it forward that the explanation is to be found in the fact that Income Tax is not properly leviable upon any but individual incomes. If you were to levy Income Tax upon the profits of the cooperative societies as such, you would really be taking an Income Tax from an aggregation of individuals. It would be a false use of your Income Tax Acts to apply the Income Tax in that sense to a co-operative society.
What is this particular tax with which we are now concerned? It is a tax upon corporations. I do not suggest that it is the best form of taxation that we could devise. It is a very inferior taxation to our Income Tax, but sometimes you have to take second best things if the best have been exhausted, and in ordinary times, unless we had been severely pressed in matters of finance, the Corporation Profits Tax would never have been applied. But it has been applied to corporations upon the main ground that they enjoy privileges and immunities which are not given to private firms. Under the Limited Liability Act they are in a position which is specially acknowledged by the Legislature, and under these circumstances it was thought justifiable that they should be asked to pay something. Whatever you can say about the co-operative movement it certainly is a corporation, and it has the benefits and immunities which the limited liability law of this country gives to all corporations.
Looked at from that point of view, let me put a broad issue to the House. Here is a great corporation which has over £80,000,000 worth of capital in its trading and commercial organisation. We have been told that it has a general trading account of £350,000,000 a year. I scarcely dare use the word profit, but I will say that it has got a surplus which, for the moment, I will call profit, of something like £18,000,000 or £20,000,000 a year. Now if the co-operative movement is going to bear its fair burden of taxation, is it really too much to ask it to pay £150,000 a year for the privilege of having the liberties and immunities which it derives from the Limited Liability Act, when they have £80,000,000 worth of capital invested in a commercial organisation. I do not think anybody can say that the amount is too much.
What is the real objection? I gather that it is really a sentimental one which arises out of an apprehension that if the theory of mutuality of trading is attacked taxation may extend to the whole of the revenues derived by this great organisation from trading amongst its own members. Let me address myself for a moment to that aspect of the situation. It is provided that whatever is paid in dividends shall not be counted in the sum upon which the tax is to be assessed. That, I think, is a definite recognition of the principle of mutuality. It is said that you are going to tax something which is not different to the fund actually distributed in the way of dividend. But it is different in this way. The dividend is really a discount to the purchaser upon the goods which he has bought which is paid at the end of six months or at the end of a year. That divi- dend is obviously in a different category so far as the co-operative movement is concerned from the surplus which remains after the dividends are paid.
It is said that these are distinct funds. So far as these other surpluses are concerned, it may be that in origin the theory of co-operation was that you bought an article at a certain price, and sold it among a number of people at a price which brought back simply the cost of the article, but you cannot maintain that that is still the way in which the co-operative movement works.
It would be impossible in the complicated state of modern society to do that. It cannot be said about any single commodity that it is sold to their members at just what it costs to buy plus the cost of distribution or selling. The way in which it works now is just the way in which it works among ordinary individuals; what they lose on butter they may make up on cheese. It is really done upon a conglomerate principle with a division of profits, not on the results of transactions in any particular article, but a division of the surplus of profits realised on the whole. Whether you call this profit or not, you are not invading any theory of mutuality, and with regard to that particular sum, you are entitled to treat it differently, and if it enables you to arrive at a particular figure which the cooperative movement do not regard as too burdensome, then we have achieved a result that we may accept until we find something better.
It is perfectly obvious that in the cooperative movement itself different views have been taken on this question, and I say that as an excuse for not having myself found a way which would better suit the theories, predilections and prejudices of members of the co-operative societies. If I take the Amendment moved by the hon. Member for Linlithgowshire (Mr. Kidd), it only goes a very small part of the way in giving us any revenue in respect of this tax on the co-operative movement. On the basis of that Amendment, £10,000 is all that we would get, and it is not worth while dealing with the question on those lines. The hon. Member for Central Edinburgh goes further, undoubtedly. What he proposes would yield a larger sum. He also goes further than the hon. Member whom I have always regarded as the prime representative of the co-operative movement in this House. My lion. Friend the Member for Central Edinburgh differed from his previous opinion. On a former occasion he put forward a scheme in the House which, if I had accepted it, would have been in the way, probably, of becoming part of this Measure at this moment. He proposed not merely to include as a subject of taxation all property held and the returns from trading with non-members, but also the incomes from investments outside the co-operative movement. He proposed further to include the return upon the members' share capital and the returns from the reserve. These were two items in my hon. Friend's original suggestion which he does not now include, and I quite understand why he does not include them. In the first place, it is obvious that the return of the members' share capital was something which the co-operative society was paying out instead of getting in, and it would be totally illogical to tax them upon it. There may still, however, be something in the theory that I should get a certain amount from the money which comes from investments of the reserve. I think that is a point for discussion.
I have given this résumé of these various proposals for the purpose of saying this. It is quite clear that we have not exhausted the discussion of this matter. I for one am perfectly willing to find a way of enabling the co-operative movement to make its proper contribution to the country's services in the way in which they would most desire to do it. It is clear that we have not arrived at any consistent or agreed scheme up till now. I would, accordingly, venture to ask the House not to pass this Amendment tonight, and I can give the assurance that I shall keep in touch with those who represent the co-operative movement in the House with the object and desire of finding out some other method by which we can arrive at a conclusion on this matter satisfactory to all parties.
I imagined we were going to continue Scottish logic with no result until I heard the last few sentences of my right hon. Friend. I want to submit to him this proposition, that he will make a great mistake in this matter if he merely attempts to take advantage of any apparent differences of opinion in the co-operative movement. Let me clearly state to him that whether it be the mover of the Amendment, or any speaker on these Benches, there is no difference whatever on this point, namely, that we will never agree to any proposal that places the benefits of mutuality in the same category as the profits to individuals. That is a clear line of demarcation which we claim, and any attempt to include mutual trading in the same category as private profits strikes clearly at the foundation of the co-operative movement. I would ask my right hon. Friend to examine carefully the logic of his own speech to-night. Just imagine what he said to the House. He said, "Here is a concern with £80,000,000 of profit, and all I ask of them is a miserable pittance of £150,000," and he turns to the House and says, " Who can grumble at that? It shows how reasonable we are. As a matter of fact it shows that we want to help the co-operative movement." If that were the fact, I would) say to hon. Members to-night, "Vote against the Amendment," and I would say to the Chancellor of the Exchequer, "£150,000 is not enough." If there is any logic in the right hon. Gentleman's case, it means instead of it being £150,000, it ought to be considerably more, for the very reason that we do not base our case upon a privilege. If I were asking the House of Commons to give a privilege to the co-operative movement, the right hon. Gentleman would be entitled to ask, "Why should we differentiate?" Therefore, I say that it is not a question of £150,000 that is involved. The question involved is whether this Government is going to reverse under the guise of the Corporation Tax the accepted policy of every Government for the past 50 years. That is what is before the House, and no difference in the speeches on this or that side of the House can alter that fact.
Let me show how the House has been deceived. An hon. Member opposite got up and said, "I believe that this is a rotten tax. I voted against it. I believe it is bad in every detail. It raises £30,000,000 to which I am opposed, but bad as it is, because it gives an opportunity to get at the co-operative movement I am going to vote for this miserable £150.000, although I believe that the £30,000,000 is a bad tax." That is the logic of his case. I would ask the House to remember when, talking of this £80,000,000, what the co-operative movement does. Take the Co-operative Building Society, of which I happen to be the chairman. Last year we had a turnover of about £500,000. Income Tax was paid upon that and no question was raised about paying it because our object is to encourage people to build houses. We believe that the best service that can be rendered to the people of this country, and that the best citizens can be created by allowing them to be the owners of their own little homes. Who will challenge that? Who will challenge the object of it? We made no profit ourselves, but notwithstanding that fact we paid Income Tax to the revenue the same as every other individual. Take again the trading concern in the co-operative movement. They all pay Income Tax. The individual Members of the co-operative movement all pay Income Tax the same as hon. Members do. There is no difference. Do let the House keep it clearly in mind that 4,000,000 individual co-operators make out their Income Tax Schedules in precisely the same way as every Member of this House, and if they are subject to Income Tax they pay it. All that we ask them not to do, and where we join issue tonight, is this: Let us suppose my right hon. Friend to be the owner of a large estate, and to have a large staff of servants. He says that, instead of all those servants buying their separate hundredweights of coal, a truckload shall be bought between them. They happen to get the truck of coal 10s. cheaper, because they are buying a truck-load, than if they were buying their separate hundredweights. Who is there who would come to this House and say, "You save 10s. by buying that truck of coal; that is profit, and we must tax it"? There is no one who would say that, and yet that is exactly the case that is now put.
No!
The hon. Member will be able to state his reasons. What I am putting is the accepted view, and anyone who has studied the co-operative movement will be bound to agree that it is an accurate statement of fact. I rather gather that the Chancellor of the Exchequer has said in substance: "I admit the logic of your case; I admit that you have beaten me, and I have not a leg to stand on. This is a Bill which was handed over to me, and which I only intend to nurse for twelve months. Do not dry up the source of nourishment for twelve months, and I will promise you that I will have nothing to do with the baby after that period." I can appreciate the logic, but I do not want this Government, or any Government, to do anything that interferes with thrift, that strikes at these movements which are the foundation of everything that is best in our country. Never mind what our politics may be; never mind on what side of the House we sit; there is no one who would not admire, respect, and encourage the man who says: "I will go on with my work, I will do my best, I will endeavour to buy a house, I will be thrifty and endeavour to educate my family." That is the type of citizen that we all want to encourage, that has made our country great, and that we all want to help. How can it be said that we are doing the right thing when we say to-night for the first time: "Never mind all your efforts in the past, never mind how thrifty you have been; we think that now is the time to take £150,000 from you"?
It will not pay the Government. It will start every secretary and every committee thinking out ways and means to defeat you. Every one of them can do it. I say quite frankly, as chairman of a society, that if I set myself to stop you from having a copper from that society I could do it, and you know it. But that is not the way to establish confidence in a Government; that is not the way to run a country. We may differ politically, but do not let any section of the people feel that they are not having a fair crack of the whip from the Government of the day. Are you doing the right thing in creating that impression? I believe that not only is it a mistake, but financially it is not worth arguing about. You have admitted that you are all in the wrong, and that you have no case. You have frankly said from that box, "Do give me 12 months' grace." I say to you, " No, we will save you from your own trials for the 12 months." We are now helping you because we believe that, whilst you will get over your own difficulties in 12 months' time, if you accept this Amendment you will save yourselves difficulties, because I know that in the next 12 months you will be worried to death with all your financial embarrassments. I ask the House to vote for this Amendment, not only in the interests of the co-operative movement and of 4,000,000 of our best citizens, but in order to give the Chancellor of the Exchequer a fair opportunity to face his difficult task, and not add to his burden by the difficulties that this miserable £150,000 will create for him.
I think it is fair that I should make some explanation about my interruption during the speech of the right hon. Gentleman the Member for Derby (Mr. Thomas). He seems to think that I have not studied this cooperative question, but I may tell him that I have studied it for many years. What was not fair in his speech was the argument of the man having a large estate and a number of servants, who co-operated in buying their truck of coal. The better feeling that is expressed to me, as a Member of this House, by many small traders, is this: During the last 20 years, sums have been put aside that were never paid in dividends, and, with those large accumulations, the surpluses of profits which were not distributed, co-operators have built up for themselves a magnificent business corporation. The bitterness in the mind of the small shopkeeper is that Chancellors of the Exchequer have never claimed Income Tax, not on the amount that was divided as dividend—it is agreed that it should not be done in that case—but on the amount that was not divided. Where did this capital of £80,000,000 come from? It came from the profits, over and above dividends, made during the last 20 years, and the bitterness and the feeling of injustice in the mind of every small shopkeeper is that Income Tax ought to have been paid on that enormous sum.
I wish to dissipate somewhat the opinions that may be formed from the statement of the hon. Member for Birkenhead (Mr. Bigland) as to the fear and resentment among small traders over the large amounts of capital that have grown up in the co-operative movement because previous Chancellors of the Exchequer have not, in their wisdom or lack of wisdom, taxed co-operators on the profits that they thought they were making. As the Chancellor of the Exchequer has said, we do not admit making profits. I should like to ask who is it that is causing the greatest inroads in the trade of the small trader, who is bringing the small traders in larger numbers into the Bankruptcy Court, or driving them out of existence altogether? Is it not the multiple trader who is driving out these small traders in greater numbers perhaps even than does the competition of the co-operative society? I would suggest to the hon. Member, on the question of resentment, that he will find that in many towns up and down the country large numbers of the small traders are members of co-operative societies. They get goods from the co-operative society, and in some instances get them so cheaply—more cheaply than from wholesale firms—that they retail them over again at their own shops, make their profit there, and get their dividend at the store as well. That is how the small trader looks after himself; he does not require a Member of Parliament to do it. After all, the co-operators are not the great enemies of the small traders. They have built up their business by skill and enterprise—by that skill and enterprise which working people are sometimes accused of lacking. I hope that a handicap is not going to be placed upon it, and therefore I join with others who have spoken in supporting this Amendment. I trust that the Chancellor of the Exchequer is not going to put it off for another year. We may then have another Chancellor of the Exchequer, and he may want to put it off for a still further year. I trust that, with the love of Scots' logic which he admitted, and with the knowledge that he possesses of the cooperative movement, which had its origin in Scotland, the right hon. Gentleman is going to back up this Scottish movement and withdraw this tax as it affects the co-operator.
Question put, That the words
"and 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 such Corporation Profits Tax shall be charged,"
be there inserted in the Bill.
The House divided: Ayes, 137; Noes, 135.
Division No. 269.] AYES. [8.47 p.m. Adkins, Sir W. Ryland D. Hall, F. (York, W. R., Normanton) Rae, H. Norman Armitage, Robert Halls, Walter Raffan, Peter Wilson Asquith, Rt. Hon. Herbert Henry Hancock, John George Ramsden, G. T. Bagley, Captain E. Ashton Hayday, Arthur Rees, Capt. J. Tudor- (Barnstaple) Barker, Major Robert H. Hayward, Evan Rendall, Athelstan Barker, G. (Monmouth, Abertillery) Henderson, Rt. Hon. A. (Widnes) Richardson, R. (Houghton-le-Spring) Barnes, Rt. Hon. G. (Glas., Gorbals) Henderson, Major V. L. (Tradeston) Roberts, Frederick O. (W. Bromwich) Barnes, Major H. (Newcastle, E.) Hirst, G. H. Roberts, Rt. Hon. G. H. (Norwich) Barrand, A. R. Hodge, Rt. Hon. John Robertson, John Benn, Captain Wedgwood (Leith) Hogge, James Myles Rodger, A. K. Bentinck, Lord Henry Cavendish- Hope, Sir H.(Stirling & Cl'ckm'nn, W.) Royce, William Stapleton Bowerman, Rt. Hon. Charles W. Hopkinson, A. (Lancaster, Mossley) Scott, A. M. (Glasgow, Bridgeton) Bowyer, Captain G. W. E. Horne, Edgar (Surrey, Guildford) Shaw, Hon. Alex. (Kilmarnock) Bramsdon, Sir Thomas Hurd, Percy A. Shaw, William T. (Forfar) Breese, Major Charles E. Irving, Dan Smith, W. R. (Wellingborough) Briant, Frank Johnstone, Joseph Spencer, George A. Bromfield, William Jones, Sir Edgar R. (Merthyr Tydvil) Stanton, Charles Butt Brown, Major D. C. Jones, J. J. (West Ham, Silvertown) Sueter, Rear-Admiral Murray Fraser Brown, James (Ayr and Bute) Kennedy, Thomas Sugden, W. H. Cairns, John Kenworthy, Lieut.-Commander J. M. Swan, J. E. Cape, Thomas Kenyon, Barnet Taylor, J. Carter, W. (Nottingham, Mansfield) Law, Alfred J. (Rochdale) Thomas, Rt. Hon. James H. (Derby) Casey, T. W. Lawson, John James Thomson, T. (Middlesbrough, West) Clough, Sir Robert Lewis, T. A. (Glam., Pontypridd) Thorne, G. R. (Wolverhampton, E.) Collins, Sir Godfrey (Greenock) Lunn, William Thorne, W. (West Ham, Plaistow) Coote, Colin Reith (Isle of Ely) Macdonald, Rt. Hon. John Murray Tootill, Robert Cowan, D. M. (Scottish Universities) McLaren. Robert (Lanark, Northern) Waddington, R. Davies, A. (Lancaster, Clitheroe) Maclean, Neil (Glasgow, Govan) Wallace, J. Dawes, James Arthur Maclean, Rt. Hn. Sir D. (Midlothian) Walsh, Stephen (Lancaster, Ince) Edwards, C. (Monmouth, Bedwellty) McMicking, Major Gilbert Ward, Col. J. (Stoke upon Trent) Edwards, G. (Norfolk, South) MacVeagh, Jeremiah Waring, Major Walter Edwards, Major J. (Aberavon) Mallalieu, Frederick William Waterson, A. E. Edwards, Hugh (Glam., Neath) Martin, A. E. Wedgwood, Colonel Josiah C. Elliot, Capt. Walter E. (Lanark) Mason, Robert White, Charles F. (Derby, Western) Entwistle, Major C. F. Morgan, Major D. Watts Wignall, James Finney, Samuel Murray, Hon. A. C. (Aberdeen) Williams, Aneurin (Durham, Consett) Galbraith, Samuel Murray, Dr. D. (Inverness & Ross) Williams, Col. P. (Middlesbrough, E.) Gee, Captain Robert Murray, William (Dumfries) Wilson, Rt. Hon. J. W. (Stourbridge) Gillis, William Myers, Thomas Wilson, W. Tyson (Westhoughton) Glanville, Harold James Newbould, Alfred Ernest Wintringham, Thomas Glyn, Major Ralph Newman, Sir R. H. S. D. L. (Exeter) Wood, Sir H. K. (Woolwich, West) Graham, D. M. (Lanark, Hamilton) Nicholson, Reginald (Doncaster) Wood, Major M. M. (Aberdeen, C.) Graham, R. (Nelson and Colne) O'Connor, Thomas P. Young, Robert (Lancaster, Newton) Graham, W. (Edinburgh, Central) O'Grady, James Griffiths, T. (Monmouth, Pontypool) Ormsby-Gore, Hon. William TELLERS FOR THE AYES.— Grundy, T. W. Parkinson, John Allen (Wigan) Mr. Kidd and Lieut.-Colonel Sir J. Guest, J. (York, W.R., Hemsworth) Parry, Lieut.-Colonel Thomas Henry Hope.
NOES. Agg-Gardner, Sir James Tynte Davies, Thomas (Cirencester) Johnson, Sir Stanley Ainsworth, Captain Charles Dean, Lieut.-Commander P. T. Jones, G. W. H. (Stoke Newington) Amery, Leopold C. M. S. Doyle, N. Grattan Jones, Henry Haydn (Merioneth) Armstrong, Henry Bruce Evans, Ernest Kellaway, Rt. Hon. Fredk. George Ashley, Colonel Wilfrid W. Eyres-Monsell, Com. Bolton M. King, Captain Henry Douglas Atkey, A. R. Falcon, Captain Michael Lloyd, George Butler Baldwin, Rt. Hon. Stanley Fell, Sir Arthur Lloyd-Greame, Sir P. Balfour, George (Hampstead) Foreman, Sir Henry Lyle, C. E. Leonard Balfour, Sir R. (Glasgow, Partick) Forestier-Walker, L. M'Connell, Thomas Edward Barlow, Sir Montague Fraser, Major Sir Keith M'Curdy, Rt. Hon. Charles A. Barnston, Major Harry Gilmour, Lieut.-Colonel Sir John Mackinder, Sir H. J. (Camlachie) Bell, Lieut.-Col. W. C. H. (Devizes) Goulding, Rt. Hon. Sir Edward A. M'Lean, Lieut.-Col. Charles W. W. Betterton, Henry B. Green, Joseph F. (Leicester, W.) McNeill, Ronald (Kent, Canterbury) Bigland, Alfred Gritten, W. G. Howard Marriott, John Arthur Ransome Blair, Sir Reginald Hacking, Captain Douglas H. Mitchell, Sir William Lane Borwick, Major G. O. Hallwood, Augustine Molson, Major John Elsdale Brown, T. W. (Down, North) Hall, Captain Sir Douglas Bernard Mond, Rt. Hon. Sir Alfred Moritz Buckley, Lieut.-Colonel A. Hall, Lieut.-Col. Sir F. (Dulwich) Moore, Major-General Sir Newton J. Bull, Rt. Hon. Sir William James Hamilton, Major C. G. C. Moore-Brabazon, Lieut.-Col. J. T. C. Burn, Col. C. R. (Devon, Torquay) Harmsworth, C. B. (Bedford, Luton) Moreing, Captain Algernon H. Butcher, Sir John George Hennessy, Major J. R. G. Morison, Rt. Hon. Thomas Brash Campbell, J. D. G. Henry, Denis S. (Londonderry, S.) Morris, Richard Carew, Charles Robert S. Herbert, Dennis (Hertford, Watford) Morrison-Bell, Major A. C. Carr, W. Theodore Hewart, Rt. Hon. Sir Gordon Nall, Major Joseph Carter, R. A. O. (Man., Withington) Hinds, John Neal, Arthur Chamberlain, Rt. Hn. J. A.(Birm., W.) Hohler, Gerald Fitzroy Norris, Colonel Sir Henry G. Coats, Sir Stuart Holbrook, Sir Arthur Richard Parker, James Colvin, Brig.-General Richard Beale Hood, Joseph Pearce, Sir William Conway, Sir W. Martin Hopkins, John W. W. Perkins, Walter Frank Cory, Sir J. H. (Cardiff, South) Horne, Sir R. S. (Glasgow, Hillhead) Perring, William George Craik, Rt. Hon. Sir Henry Hotchkin, Captain Stafford Vere Pollock, Sir Ernest Murrey Croft, Lieut.-Colonel Henry Page Hume-Williams, Sir W. Ellis Pownall, Lieut.-Colonel Assheton Davidson, Major-General Sir J. H. Jesson, C. Prescott, Major W H. Purchase, H. G. Stanier, Captain Sir Seville Warren, Sir Alfred H. Raeburn, Sir William H. Stanley, Major Hon. G. (Preston) Watson, Captain John Bertrand Randles, Sir John Scurrah Steel, Major S. Strang Whitla, Sir William Ratcliffe, Henry Butler Stewart, Gershom Williams, C. (Tavistock) Rawlinson, John Frederick Peel Sturrock, J. Leng Williams. Col. Sir R. (Dorset, W.) Reid, D. D. Surtees, Brigadier-General H. C. Wise, Frederick Renwick, Sir George Sutherland, Sir William Woolcock, William James U. Robinson, S. (Brecon and Radnor) Terrell, Captain R. (Oxford, Henley) Worsfold, T. Cato Samuel, A. M. (Surrey, Farnham) Thomas. Sir Robert J. (Wrexham) Yeo, Sir Alfred William Sanders, Colonel Sir Robert Arthur Thomson, Sir W. Mitchell- (Maryhill) Young, E. H. (Norwich) Seager, Sir William Turton, Edmund Russborough Shortt, Rt. Hon. E. (N'castle-on-T.) Wallace, T. B. TELLERS FOR THE NOES.— Simm, M. T. Ward, Col. L. (Kingston-upon-Hull) Colonel Leslie Wilson and Colonel Gibbs.
Sir .Ryland Adkins—
May I ask the Leader of the House whether, in view—
I called on Sir Ryland Adkins.
On a point of Order. Is it not customary to allow a question to be put to the Leader of the House after a Government defeat, as to whether they intend to proceed with the rest of the business of the day?
Yes, we propose to proceed with the business.
On a point of Order. [ Interruption. ]
The hon. and gallant Gentleman wishes to raise a point of Order. I am bound to hear him.
On an occasion when, with the Government Whips on, the Government has sustained a defeat, is it not usual to adjourn?
Sir Ryland Adkins—
44.—( Rate of stamp duty under 42 & 43 Vict. c. 6.)
(1) The Stamp Duty charged on local authorities by the District Auditors Act, 1879, as amended by any other Act, in respect of the audit of their accounts by district auditors, shall, instead of being calculated according to the scale contained in the First Schedule to that Act, be calculated according to a scale to be fixed from time to time by the Treasury after consultation with the Minister of Health, and the scale so fixed shall be such as to secure that the duties levied under the said Act shall be sufficient to meet the costs incurred in respect of the remuneration, including superannuation allowances, and the expenses, of distributions.
(1) The Treasury may, after consultation with the Minister of Health, direct that the
I beg to move, in Sub-section (1), after the word "Health" ["Minister of Health"], to insert the words "with such associations of local authorities as appear to the Minister to be concerned."
This Clause deals with the imposition of Stamp Duty charged to local authorities in respect of the audit of their accounts by persons appointed by the Government, and it provides that instead of the Stamp Duty being calculated according to the fixed scale in the first Schedule of the Act of 1879, it shall be calculated according to the scale fixed from time to time by the Treasury in consultation with the Minister of Health. The object of the Amendment is to secure that where any scale is fixed by the Treasury in consultation with the Minister of Health, which in these days is the Local Government Board, there shall be consultation also with the local authorities.
It may save time if I announce at once that the Government will accept this Amendment.
The object of the Amendment is to secure that the local authorities will be consulted in a matter which affects them. I am grateful to my hon. Friend for intimating that the Government are prepared to accept the Amendment.
I beg to second the Amendment.
Amendment agreed to.
I beg to move, in Subsection (2), after the word "may" ["Treasury may"], to insert the words "on the application of any local authority."
The object of this Amendment is to enable the Treasury to make such allowances where the operation of the ordinary scale would not be fair, and we want the local authority to be put in the right status for seeing that that is done.
I beg to second the Amendment.
I will accept the Amendment.
Amendment agreed to.
I beg to move, in Sub-section (2), to leave out the words "any particular," and to insert instead thereof the word "that."
This Amendment is consequential, and makes the Sub-section refer to the local authority that made the application.
I beg to second the Amendment.
Amendment agreed to.
The Schedule which follows in the name of the hon. Member for Oldham (Sir W. Barton) and other hon. Members dealing with sugar, etc., lapses, owing to the failure of the former Amendment on the subject.
Second Schedule
Relief from Excess Profits Duty in Respect of Trading Stocks
Part I
4. The amount to be allowed as a deduction or addition under this Part of this Schedule shall not in any case exceed the amount by which the profits of the trade or business for the period from the end of the final accounting period to the thirty-first day of August, nineteen hundred and twenty-one, fall short of the percentage standard of that trade or business, or if there has not been one pre-War trade year, fall short of the pre-War standard of profits based on the statutory percentage on the average amount of capital employed in the trade or business during the first accounting period, and if the profits aforesaid are not less than such standard, the provisions of this Part of this Schedule shall not apply.
5 No claim under this Part of this Schedule shall be allowed unless the accounts of the trade or business are made up to the thirty-first day of August, nineteen hundred and twenty-one.
9.0 P.M.
6. Where a trade or business has after the end of the final accounting period and before the thirty-first day of August, nineteen hundred and twenty-one, ceased or changed ownership, this Part of this Schedule shall apply as if the date of the cessation or change of ownership were substituted for the thirty-first day of August, nineteen hundred and twenty-one.
I beg to move, in paragraph (4), after the word "under," to insert the words "the foregoing provisions of."
This Amendment leads up to the long Schedule which follows relating to the winding up of Excess Profits Duty.
Amendment agreed to.
I beg to move, after paragraph (4), to insert
It has been urged upon the Chancellor of the Exchequer that the allowance so made did not take account of certain circumstances, which were these: that in certain businesses the stock in hand does not tell the whole story, and that besides the stock in hand you must take into consideration stock on forward contracts, that besides stock in esse you must, if I may put it so, take into account stock in posse. In other words, there are some businesses which are, as regards stock on the basis of big seasonal fluctuations, sometimes with Very little stock in hand and sometimes a great deal. If one of these seasonal businesses happens to have its period at the end of the final accounting period coincide with a period during which its stock in hand was low, and the amount of stock on forward contracts was large, then it would derive no benefit from the levelling process. It was also urged upon the Chancellor of the Exchequer that this was a very serious matter in the case of many businesses, and that the omission of this provision would, not to put too fine a point on it, confront many businesses with bankruptcy. In order to cover these cases, this Schedule is being put into the Bill.
The Schedule follows the scheme of the Bill. The general design is to put forward contracts, as regards the period of the levelling process, on the same basis as the stock in hand, subject to certain limitations. There is undoubtedly a very large amount of money involved in this concession. Further, it is a concession which is foreign to the general scheme of Excess Profits Duty. It is made simply to meet the hard necessities of the time. That being so, it has been found necessary, and considered just, to confine this allowance to the most narrow bedrock limits in order to deal with the cases in which an allowance is essentially necessary. I do not put it forward as anything else but an allowance to deal with cases of sheer necessity where, if no allowance were made it would really be a case of not knowing whether the business was going to carry on.
In order to confine it to those cases there are various limitations imposed. The first principal limitation is that the allowance is confined to those cases in which there is actual loss during the levelling process. It is rigidly confined to those cases. The second principal limitation is that it has not been thought just or necessary to extend this allowance to businesses which have large excess profits still on their hands, accrued to them during the War, and to the extent of one third of the excess profits still in hand this allowance is diminished accordingly, so that account is taken, and I think quite fairly, of the amount of the excess profits still outstanding in reduction of this allowance. The whole substance of this matter is that this Schedule has been put forward to deal with cases of the forward con- tracts in the levelling process, but it is rigidly confined to those cases in which it is considered essential in order to deal with real hardship. The mechanism of the Schedule is for the purpose of confining the allowance to those cases in which it is necessary.
This Amendment is an attempt to remedy an injustice which my hon. Friend admits is well-founded. The sole question is whether the proposals of the Government meet fully the justifiable claims of those who are being damnified at present by circumstances over which they have no control. I do not know whether my hon. Friend mentioned a seasonal trade which is particularly hit by the fall in prices—the woollen trade. He has, I think, received deputations, and certainly he has received many written representations, on this matter. The essence of the whole business is that woollen goods are bought forward for six, nine, or twelve months before they actually appear on the market. Therefore owing to what, from the merchant's point of view, is an appalling drop in prices, it has a mitigating effect in benefiting the public, though at the same time such a fall in prices indicates not only a cheapening of goods, but unfortunately also a great loss of purchasing power; these merchants have been very badly hit.
I cannot say if the proposals of this very lengthy and highly technical Amendment meet fully the justice of the claim. I have endeavoured to study it as well as I can in the limited time at my disposal, but I find that Amendments have been set down by two of my hon. Friends who have special knowledge of the issue which is now being debated, and my hon. Friend the Member for North-East Derbyshire (Mr. Holmes) has an Amendment to leave out paragraph ( b ) in Subsection (1). Speaking generally on this matter, I fear that the Government Amendment is so hedged round by precautions and limitations and restrictions that the benefits which my hon. and gallant Friend and the Chancellor seek to give to these seasonal trades will be so much minimised as in a very large number of extremely hard cases to be of no benefit at all. I hope in the discussion which will follow full and adequate consideration will be given to the arguments adduced on that point. We are grateful to the extent to which the Chancellor has met us, but there is no reason why the Treasury should not accept a further Amendment, which, while not making too large a hole in the amount going to the Exchequer, will tend to give to these hard cases to which sympathetic reference has been made the full benefit of the remedial proposals to which the Government is committed, at any rate, in spirit, by the Amendment now before the House.
The Amendment which has been moved by the Financial Secretary to the Treasury is probably one of the most extraordinary Amendments ever proposed to a Bill in Parliament. I wish the positions were reversed. I should have enjoyed hearing the Financial Secretary replying to this Amendment, if it had been put down by a private Member. I can imagine what he would have said concerning it, if it were not a Government Amendment. He would have pointed out the extraordinary results which the Amendment would have if applied to particular cases. He would have told us that in certain circumstances there would be a result, which he would venture to describe as ludicrous. He would have pointed out that, as is well known in trying to frame legislation on these lines, and in trying to cover a certain number of hard cases, wherever you fix your line, you leave a certain number of hard cases outside. He would also have told us that you act with more general equity by leaving matters to administrative action than by having such an unsatisfactory Clause as the one on the Paper. He would probably have finished up—speaking with the greatest respect and using language of such delicacy that no one could be offended—by suggesting that the person who had drawn up the particular Amendment should be shot at dawn. Perhaps I am wrong in saying the "person" who drew up the Amendment. I am quite sure no one person would ever have drawn up this Amendment. It was probably drawn up by a number of people seated round a table, something like a family party doing a jig-saw puzzle. I shall try to paraphrase this Amendment as it now stands, in order to show the House what a business firm has, to do, and the conditions on which they have to comply, before they can take advantage of it. The first question that is put to a business firm is, "Did you between the end of the final accounting period and the 31st August, 1921, have delivered to you, for the purpose of your trade or business, trading stock which you had contracted for in writing before the end of the final accounting period at a specified price?" If you can answer that in the affirmative the next question is, "Is the value of your forward contracts equal to, or more than, one-third of the value of your total trading stock at the end of the final accounting period?" If you can also answer that in the affirmative you are then asked, " Have you made a loss on your forward contract?" If you can answer that also in the affirmative the Inland Revenue say to you, " If so, we will allow you that loss as a deduction in computing the Excess Profits Duty you must pay or the deficiency of duty you will receive in respect of the final accounting period—but subject to certain provisions."
The first provision is, you will be limited to a quantity of forward stock not exceeding the yearly average quantity of similar stock delivered under forward contracts either, at your option, in the last three pre-War years or the last three accounting periods. If your business was not in existence for three accounting periods, you will be limited to a reasonable quantity. I should like to ask the Chancellor of the Exchequer, not as Chancellor, but as a lawyer, who is going to interpret what the word " reasonable " means. In the next place, if you have " sold forward " in the same way— that is, under written contracts—as you have " brought forward," you must give credit for your sales and ascertain the value thereof. If the quantity of forward purchases exceeds the quantity of forward sales, you must ascertain the value of the excess at the 31st of August, 1921. You will then compute whether the cost of your forward purchases exceeds the receipts of your forward sales plus the value of the excess on the 31st August, 1921. If you have complied with all these provisions up to date, you then do the following arithmetical computation. You divide the amount by two and you take away one-third of your retainable excess profits, and the result is the allowance which you are to receive, but once again subject to certain provisions. We have almost got here to the stage of the old problem we have all heard of in our young days, in which you think of a number, double it, add six to it, take away the number you first thought of, and the answer is a lemon, or something like that. If you go through all these calculations and at last get down to the amount of allowance which you ought to receive, you are faced with two more conditions. First, you must have made a trading loss in the period from the end of the final accounting period to the 31st of August, 1921, and then, even if you have made a trading loss and can show a deficit on forward contracts, you will only benefit under these provisions so far as any allowance under Part I of the stock provisions of the Bill and the deficit on forward contracts equal the trading loss. I am bound to say, in my opinion, the Chancellor has fitted this Amendment to meet certain cases, those of a few people whose losses have been represented to him, and who can comply with the conditions laid down in the Amendment. I submit to him that in this Bill we have given a very large concession to all businesses and trades of the country with regard to stock. Those provisions have been universal. They apply to everybody, large and small, throughout the length and breadth of the land. Forward contracts are of the same nature, but he has not given the concessions on forward contracts to everyone. He has practically, in the first place limited them to big men.
indicated dissent.
The right hon. Gentleman shakes his head, but surely the limitation by which the value of the forward contracts must be equal to or more than one-third of the value of the total trading stock at the end of the final accounting period must confine this concession to people who are in a big way. I do not think there is any possibility of the man who has just one or two forward contracts coming into this at all. There is no likelihood of his forward contracts being the necessary one-third. The point I want to make is this, that if you are going to make a concession on forward contracts it should be one that should apply universally to everybody who has made forward contracts, and, as a result thereof, has made a loan. If the Chancellor of the Exchequer says he must con- fine the amount of the loss regarding which allowances can be made to £15,000,000 or £20,000,000, then he should cut down the allowance to one-sixth or one-eighth, and make it so that everybody who has had losses of money on forward contracts should have something. The arrangement should not be one whereby a certain number of privileged people may alone be permitted to get redress. The Chancellor of the Exchequer and the Financial Secretary, especially the Financial Secretary, in the speeches they made in the Committee stage, argued against concessions in particular cases. I think the Financial Secretary said two or three times that it is not good to try to meet hard cases, as you will only find more cases beyond, and that what we want to do is to have general principles. There is no general principle in this Amendment. It is simply to meet some hard cases of which the Chancellor knows. On these grounds, I hope the House will not give a Second reading to the Amendment.
Does the hon. Gentleman move his Amendment to leave out paragraph ( b )?
I do not move it.
I do not know whether it is worth while spending much time discussing this complicated Amendment after what happened a little earlier in the evening. We may hear more about that to-morrow. But it may be well to give this matter some attention, because the examination of it may be of value to the next Government. This Amendment is very complicated and very lengthy, but I think its meaning is not altogether difficult to see. The Chancellor of the Exchequer, in his sympathy for the great wholesale trading firms of this country, has endeavoured to guard them from losses, or rather part of their losses, due to the general falling of prices, all the world over. We already allow them the depreciation of their stocks, in relation to Excess Profits Duty and other taxes. Now we are enlarging this to include stocks they do not hold, but which are on contracts they have not been able to break. I am putting the matter in the ordinary layman's English. This is a matter which ought to be looked at twice. It is enlarging an easement tremendously, and I think that before we pass it, we ought to be informed if the Government officials have made any calculation as to the amount of money which will be here involved. The hon. and gallant Gentleman who introduced this Amendment did not mention the sums of money involved, and it may be that it is impossible to get any calculation, but there ought to be some idea of the amount of revenue which will be lost. When we want any concession, we are told that the Government are extremely hard up, and that they are unable to accede to our request. How much are they going to give away here? Is it a small sum, or does it run into hundreds of thousands, or a million or more? In view of the great need of money which is urged when we try to get concessions for the widow, the orphan or the widower, we ought to be told what is the computation of the amount of money involved. The Government are making a rather belated attempt, an attempt which is no less mischievous, to keep up prices in this country by legislation. The Bill we were discussing last week is deliberately designed to keep prices up, and I think we ought to have a. word from the Government as to whether, if there are further rises of prices, owing to inflation or otherwise, or owing to legislation, the Treasury is safeguarded. The inflation in Germany has caused a boom and my friends in the City tell me a boom is possible in this country, a temporary boom which will result in serious reaction. But if prices go up again people with contracts will find themselves not so badly off as they fear. Has that been allowed for? Generally speaking, in view of the fact that the people engaged in these large operations have on the whole done well in the last seven or eight years, I really think this concession is gratuitous and should be looked at with grave suspicion by the House. They may find themselves losing a little of the money they made during the last seven or eight years, and they are trying to avoid paying their share of taxation. They made great sums in the past, and they have not been taxed to the extent they might have been. Anything which eases their burden of taxation now, because they have been unlucky in buying, should foe resisted by the House, unless more serious reasons for this Amendment are given by the Chancellor of the Exchequer than those given already by the Financial Secretary. I admit that I am a layman in these matters, and I have only looked at this from the point of view of the man in the street. I have no great knowledge of accounting or of transactions in the trading world. However, I endeavour to use my common sense, and it seems to me that this is a considerable concession to wealthy corporations and I am very much inclined to resist it.
I beg to move, as an Amendment to the proposed Amendment in paragraph (2, d ), to leave out the words "the amount by which."
I must confess I take quite a different view to this Clause to the hon. and gallant Gentleman who has just spoken. To the financial interests of the country this is a very disappointing Clause which does not ensure that equality of treatment which must arise in the very wide difference in the final accounting period. There has been an unexampled fall in values in the ordinary course of trade, and about this time last year most businesses had to make forward contracts either for raw material or for seasonal goods. As the Clause stands losses on these forward contracts almost altogether depend upon the mere accident of what is the date of the final accounting period. For instance, large purchases were made this time last year, and if the accounting period ends in September the trader has to bear the whole brunt of the loss which these falling contracts bring him. If it ends in December he escapes one-third. If his accounting period ends in June then he will bear the whole of the loss of the forward contracts which were made in the ordinary course of business. This time last year, not only for seasonal goods but for the raw materials of the manufacturing industry.
During the War it was found necessary to keep factories and manufacturing businesses going with a supply of raw material, and in view of the difficulties of transport everybody got into the habit of making large forward purchases. If you left the thing too late it was difficult to obtain freights, and the probability was you would not get your goods required for the fundamental purposes of manufacture. Therefore it is evident that very large purchases were made this time last year, extending over a long forward period, and whether the man has got to bear the whole brunt of this loss absolutely depends upon the date of your final accounting period. These unexampled losses may involve bankruptcy. It is quite true that this Clause as now drafted, if the right hon. Gentleman does not accept any alteration, will bring him in more revenue than he would otherwise get, but look at the limitations! I do not think the House understands what really are the extent of the limitations. It is a long, involved Clause, and it took me some time to appreciate the limitations in it. There are two very large limitations which enormously affect the rights of alleviation given in the Clause. As the Government Clause stands, first of all the deficit allowed off the amount of the loss is a half, but that half is not allowed pure and simple. There is a second limitation. It is not allowed, if the share of excess profits received during the five years are of a certain amount, and this amount must not be in excess of one-third of the five years' total excess profits received by the claimant. For instance, if a business has lost £1,000, the half of that is £500. The Government allows the limitation, but if the same business made five years' excess profits receipts of £2,000, the Government would limit it to one-third, or £666, and so the individual or company who made the loss are prevented from making any claim against the Government.
Again, there is another limitation which seems to me to be of more consequence still. No profit is allowed during a period if the pre-War standard is in any way not wiped out. For instance, if a firm had a pre-War standard of £10,000, and they are now making a loss of £8,000, and the whole business finally had a loss of £7,000 on pre-War contracts, the aggregate profit or the period is reduced to £1,000. Because they are making this £1,000, which is a very small profit, although they have had a loss of £7,000 from forward contracts, the Government deny them any relief. These are the limitations, and I suggest to the House that instead of the Government having made an unwise concession to trade and industry, they have not really met us in respect to hard cases. They have simply guarded themselves against a number of large firms going into bankruptcy. It is only these very-heavy losses that are met by the Clause as it now stands. They have been wise in their day and generation.
I do not know whether it would be in order for me, on this Amendment, to make a few general remarks on the Government Amendment. I moved some new Clauses on the Committee stage under the belief that in them was to be found mere justice and that it was merely following out the ordinary—
Do I understand the hon. Member to ask me whether he can discuss now the Government Amendment as a whole?
Yes, Sir.
No; I think he must wait until we have disposed of the Amendments to the Amendment, and then he will have an opportunity.
The effect of the Amendment moved by the hon. Baronet (Sir W. Pearce) would be to allow a, claim for a deduction from the amount upon which Excess Profits Duty is required to be paid, or for the purpose of claiming back from the amount previously paid in Excess Profits Duty, the full half of the loss suffered under a forward contract, without regard to what the retainable profits in the hands of the taxpayer may happen to be. No doubt it would be much simpler to take that course, but, in point of fact, it is not possible without involving a very large sum of money. There is a very justifiable ground for limiting the amount which is to form the subject of deduction. If you happen to have a trader who is in the position of having earned large excess profits in the course of the five years of the War, obviously, there is not the same hardship in his case which would induce you to make a special allowance in his behalf. After all, the intention of this Clause is to meet the hardship of which traders have complained, and all the cases which have been put up to me by the deputations which I have received from various trading bodies have been founded upon the argument that trade and industry have been so severely hampered by the Excess Profits Duty that something had to be done to give them relief, and it is upon that ground that the relief was granted by the levelling process in connection with stocks already in hand. It is on the same ground, although the case of forward contracts is in a different category, that relief is being given in that connection. Accordingly, it is only fair, if you do find traders with large sums of retainable profits in their hands, that they should not be getting relief to an extent which, from the point of view of their position in the trade, is not justified. Accordingly, what we have attempted to do is to meet harshness where that exists and to provide that the trader shall be allowed half of the loss which he has suffered, but only to the extent by which that loss exceeds a third of his retainable profits. In effect, as the House will see, this means: As to half of the loss which he suffers, he has two-thirds of his retainable profits to finance it; as to the other half, he will get as a deduction the amount by which that exceeds the remaining third of the profits which he has retained. I think that, however complicated it is, this will commend itself to the House as a method by which we can at least alleviate the position of many people who are very hardly hit by the conditions of the Excess Profits Duty at this time. Therefore, I regret that I cannot accept the Amendment which has been proposed to my Amendment.
Whilst I am glad the Chancellor of the Exchequer has given some alleviation, I feel sorry that he has not been able to do more. Paragraph (2, d ) lays down that only half of the amount of the deficit may be retained, and that only by so much as this amount exceeds an amount equal to one-third of the retainable excess profits, and, as far as I understand it, the one-third of the retainable excess profits is an arbitrary deduction from one-half of the deficit, which can be no fair test of the need for relief. The proviso which comes after paragraph ( d ) is even worse, for it lays down that the proportion of the deficit so arrived at, when added to any amount that may be obtained from a fall in the value of stocks, shall not exceed the trading loss between the final accounting period and the 31st August, and the trading loss means the actual loss below zero, without taking any regard whatever to any profits standard. I submit that the matter might have been dealt with with more equity if the Chancellor of the Exchequer had seen his way to grant half the amount of the deficit, added to the amount that may be obtained from a fall in the value of stocks that did not exceed the amount by which the profits fell short of the percentage" standard during that period, which would have been the result if my hon. Friend's Amendment had been accepted. Whilst regretting that he has not seen his way to accept this Amendment, I should like to thank him for having done at least something to save the firm who were in danger of facing bankruptcy or very severe loss—a loss below zero.
I am afraid I cannot join with the hon. Member who has just spoken in thanking the Chancellor of the Exchequer. I think the whole thing is gross inequity, and I hope my hon. Friend will press this Amendment as far as he possibly can. The Chancellor of the Exchequer met the industries of the country very fairly with regard to the central provisions of this Bill. A very elaborate scheme was drawn up by which everybody who lost on their stock at the end of the final accounting period could recover something. Everybody was put on the same level. For business reasons business men have to buy forward, and there was a good case for treating these exactly in the same way as they had been treated in regard to stocks. But the Chancellor has done nothing of the sort; he has not carried out anything of the kind in the scheme he has put before us. He is treating those cases where there is unexampled loss on forward contracts. It is people who speculated wildly he is bolstering up for their unwise speculations. A man who has bought forward in the ordinary way and who has exercised his business prudence, but has lost money upon it, he is to get nothing at all. I can quite understand the Chancellor of the Exchequer saying that he cannot afford to give too much, that he must limit the amount that he gives. Let the Chancellor's advisers work out the total amount that is estimated that the firms of this country have lost on forward contracts at the end of their final accounting period. If they cannot do that, this amount must be wrong. Will the Chancellor give us approximately what this is likely to cost?
I cannot give any figures at all as to what it is likely to cost. I cannot imagine under any cir- cumstances it costing more than £15,000,000. Whether it will cost anything like that I cannot tell. However, I am not now in order in explaining the matter. I will come to it in due course.
If he is prepared to go to £15,000,000 with regard to forward contacts he ought to spread that £15,000,000 in relief over the whole of the firms in this country who have lost on forward contracts, and if it could be estimated as probably it could, that the loss on forward contracts was £90,000,000 in all, he could have said, we will allow you one-sixth of that loss. Instead of that he takes unexampled cases of loss, gives them a subsidy to keep them going when possibly their losses may be the result of rash speculation and give no relief to other people.
I protest against any suggestion of the sort. I should like the hon. Gentleman throughly to understand that I have absolutely no individual case of any sort or kind in view. The suggestion which he has made is one which I cannot bear in silence.
I hope I did not in the slightest way suggest that the Chancellor of the Exchequer had in mind individual cases.
My hon. Friend stated that individual cases had come to me, and the difficulties had been made known to the Chancellor. I have not had any individual instance or case presented to me, and the Amendment was drawn without reference to any such cases.
I am sorry to have any difference with the Chancellor. I understood the Chancellor to say that he had received deputations.
10.0 P.M.
My hon. Friend knows perfectly well that the deputations I referred to was from the Federation of British Industries and Chambers of Commerce on the whole matter of Excess Profits Duty. I did not suggest for a moment that I had received any deputation with reference to this Amendment.
I am sorry if I have misrepresented the Chancellor of the Exchequer. I do not want to do it in the slightest. I explained just now that I do not think he has any particular firm in his mind. I do not suppose he has studied the position of any firm in the country, but I do want to submit to the House that this Amendment in the way it is framed is only going to assist people who have made unexampled losses as the result of forward contracts, and it is not going to assist people who in the ordinary course of business have lost-money on forward contracts as a result of circumstances beyond their own control. I hope the Chancellor of the Exchequer will accept the assurance, which it is not necessary for me to give, that I do not think he has in the slightest degree made any attempt to favour any particular person, firm or company. But I do feel, as I said before, that if he is going to give £15,000,000 for losses on forward contracts they should be spread over the industries of the country to the people who have lost money on forward contracts, and not in particular cases where the losses have been unexampled.
My suggestion was that as the Amendment stands in no case will the deficit be recognised of more than one-half, and the second point is that this half is subject to further limitations with regard to any amount that may be received in regard to Excess Profits Duty over the five years.
I really think that this matter ought to be cleared up. This further sum of £15,000,000 is a very serious thing. Fortunately, there is plenty of time to-night, and I am glad the Chancellor of the Ex-chequer did not attempt to take the Amendment in the small hours of this morning, but I think we ought to know exactly the position when he replies to the hon. Member for Limehouse (Sir W. Pearce). He ought to inform us exactly why this Amendment has been put on the Paper. I do not suggest there is any particular big firm or corporation, but what class of trader is this Amendment supposed to benefit? The money is being disbursed by the Exchequer, and the whole this is, to use a certain historic phrase, "wropt in mystery."
Amendment to the proposed Amendment negatived.
The other two Amendments of the hon. Member for Limehouse (Sir W. Pearce) are consequential. I will put the question on the main Amendment.
Question proposed, "That the proposed words be there inserted in the Bill."
I moved a new Clause during the Committee stage of the Bill, and I also put down a new Clause for this stage, and you, Sir, ruled that it could be taken on the general discussion of the Chancellor of the Exchequer's Amendment. I feel very strongly that this Amendment of the Chancellor of the Exchequer has not met the case at all. I do not think the case which has been put before him on many occasions has been met by his Amendment. I have held all along that this was a question, not so much of argument but of justice, and that it was also a case of ordinary business principle. I said on the Committee stage of the Bill, in moving my new Clause, that it was the regular practice of a great many firms always to take into account their forward contracts in making up their accounts. That statement was challenged by the Chancellor of the Exchequer, who practically told me I was entirely wrong, and that I did not know quite what I was talking about on such matters. I have taken the opportunity since then of consulting two of the biggest firms of chartered accountants in the United Kingdom, firms whose names would be accepted as household words, and they both tell me it is quite a usual practice; in fact, a very general practice, for firms to take into account their forward contracts. Therefore I consider the justice of the case has been met in the new Clause which I put down, which gives effect, roughly, to the proposition that where firms, in the ordinary course of their business, have been in the habit of taking into account forward contracts they should be allowed to take into account forward contracts now. I think that is eminently reasonable and just, because if firms have been in the habit of taking into account their forward contracts, it follows that when the basic period was taken, in many cases these firms had lost on their forward contracts and, by so doing, made their basic period lower. Therefore, in the whole period of Excess Profits Duty, they have been paying excess profits on too low a basic year. I say that if not allowed at the end of the final accounting period of the Excess Profits Duty, it ought not to have been allowed on the accounting period which took the basic year into account.
I am not very hopeful of anything the Chancellor of the Exchequer may do for us. When in Committee I moved my new Clause, and pressed it to a Division— it is quite true it was about half-past four in the morning—the result of the Division was not very helpful. We had 13 on our side, and there were about 100 in favour of the Government. Far be it from me to say that the 13 Members who voted for my new Clause were the Members in the House who were listening to the argument, and that the other 100 were outside eating bacon and eggs. However that may be, the 13 Members were present to hear the Debate, and voted in favour of the new Clause. The Chancellor of the Exchequer since that time has received many deputations, and discussed the thing with various representative bodies. I must say that, from our interviews, we did expect that the right hon. Gentleman was going to give some relief, but I think the net result is that we have got nothing. We certainly see the advantages of having a Chancellor of the Exchequer with a trained legal mind, because on this question, although he may not be so well versed in the business affairs of the matter, he has been able to prepare a Clause, which I do not think anybody can thoroughly understand, or, at least, no ordinary mortal, with ordinary training, can understand, and perhaps, with the exception of the right hon. Gentleman, even no lawyer can understand. The Amendment is hemmed round with restrictions of all sorts, so that it is not possible for any business firm to expect to get any relief under it at all. It is perfectly fair to make a limit of date, but the 31st August is a very low date. A firm can get nothing on forward contracts if their forward contracts are not at least one-third of their stock. There will be nothing given unless a firm can show a complete loss on the trading period concerned. The only omission, I think, the Chancellor of the Exchequer has made is that he has not put in that they must show there are at least three wet days in the week before they can allow an appeal.
I do think, on my original plea of justice and business usage, the Chancellor of the Exchequer ought to be a little more careful before he gives a complete challenge to an hon. Member of this House as to ordinary business principle. I think he will find it is a very usual business principle, and that it is a very fair and reasonable course which we who have taken this attitude have suggested he should follow. Everybody knows quite well that the Government is getting exceedingly unpopular in the country. One sees the result of this every day, and, if I may say so as a supporter of the Government, I think the Government is rapidly losing the support of its own best friends. [HON. MEMBERS: "No."] That is my opinion, and I think this is due to the fact that there is great uneasiness growing up in sections of the community because they feel they cannot get justice. You will not find anything which so readily makes for a bitter resentment amongst people than a feeling that they cannot get justice. I feel that in this case the Government have simply looked at the matter from the point of view of expediency and the Exchequer funds. I do not think bringing something to the Exchequer funds is a real reason for doing an injustice. Commercial interests should be fostered and encouraged to-day. They do not expect to be fostered and encouraged by Socialist Governments with narrow-minded views as to the necessity of looking after trade and commerce, and we do not expect tenderness and sympathy from people who do not understand what business means. I ask the Government to consider this matter from the point of view of justice, and to remember that their own best friends and supporters do feel that it does pay better and you get more as an enemy than you do as a friend of the Government.
I remember that the hon. Gentleman and I had some controversy about this subject and we came to a clash. I have no doubt that from the information each of us received each of us in some measure thought we were right. The. hon. Gentleman holds to his views, and I have no doubt that there are many firms who practise the methods he has described whilst others have practised what I believed to be the almost universal method. That, however, is not a question upon which we need take up any time. I should like to explain to the House the position out of which this Amendment arose. The hon. Gentleman who spoke last said with perfect correctness that you cannot gain very much in the world if you create a sense of injustice and that Governments cannot very long survive if there is a widespread feeling that injustice is being caused. I agree with that point of view.
Let us see whether there is any room for the application of that suggestion in connection with this particular Amendment. What, was the situation with which we were confronted. The Excess Profits Duty was coming to an end with, I believe, the concurrence and acquiescence and goodwill of practically everybody, and we have to devise methods by which that duty in passing away should create as little difficulty as was possible. Various people have come in under the Excess Profits Duty at various periods, and accordingly their last accounting period ended at dates extending over a period of months. The suggestion made to me on the part of the business community, particularly on behalf of the two deputations to which I have already referred connected with the Federation of British Industries and the Chambers of Commerce, who were good enough to come and see me upon this matter, was that a considerable amount of difficulty would be caused unless some arrangement could be made which would bring the parties more or less into the same position. It was not a question of judgment at all. It was a question of administration—of providing a method which would avoid a hardship for which nobody in particular was responsible, and which could not be said to be founded on any particular view, but which was simply the outcome of administration. I endeavoured to meet the point of view thus put, and, as the hon. Member for North-East Derbyshire (Mr. Holmes) has said, we discovered a method by which, in connection with stocks held by firms, we could bring them more or less into the same position. Everybody, no matter when the accounting period came, would be entitled to have the stocks valued at the 31st August—which meant, in most cases, a considerable period after the accounting period—and to have an allowance made for any depreciation that had taken place in the interval. It was not a question of justice in the ordinary sense of the term. It was a question of finding some mechanism by which we could meet the hardship which people might suffer through the ordinary administrative closing of the Excess Profits. Duty.
In point of fact, most people were at that stage, through the depreciation of stocks, anxious that the Excess Profits Duty should not come to an end so soon, but that there should be a longer period left in which they could hope to get back Excess Profits Duty paid in previous years. After we had come to that conclusion, the Bill was taken in Committee in this House, and thereupon various Members came forward with suggestions that all traders in the country should be treated alike, and that firms with forward contracts should be treated on the same lines as those who had stocks in hand. It was represented to us that it was difficult for those who had contracted to buy stocks which depreciated at a subsequent period to meet the case as if the stocks had already been in hand. I want to ask the House to believe that I have gone in this matter as far in the way of concession as I felt justified, looking at the finances of the country. I am afraid what I have done may attract the attention of hon. Members on the benches opposite, who are already prepared, as I can see from my hon. and gallant Friend's demeanour to-night and on previous occasions, to go to the country and say, "This extravagant Government has been giving away these millions of money to whom—to the great manufacturers of the country! " That, I conceive, is the plan which they are preparing.
Unless we get a better explanation.
I do not include the hon. Member for North-East Derbyshire in that. I regard him as being rather in in semi-detached position with respect to others on those benches.
What about Churchill?
I do not understand the appositeness of that remark. I cannot see any resemblance between the. hon. Member for North-East Derbyshire and the Colonial Secretary, but probably the hon. and gallant Member will find some recondite similarity between them. As I have said, I have gone as far as I think it was possible to go, but the question of forward contracts undoubtedly deserves the most serious consideration, and I was very anxious to meet the position, because in the course of that Debate there were many complaints from Members of this House to the effect that great hardship was being suffered, and that greater hardship still would be suffered in the future. It was that case which I set out to meet, and I considered what were the limits of possibility. I say quite frankly that it was quite impossible to go so far as I was urged to go. The revenue of the country would not allow of anything like the wider deviation which has been asked for by my hon. Friend who has just spoken, and in which he was supported by the hon. Member for Limehouse (Sir W. Pearce). I have endeavoured, however, within the limits of my capacity, to design an Amendment which will meet the worst hardships to which reference has been made.
I wish to assure the House, if it be necessary for me to give that assurance, that there is no idea in this Amendment of particular cases, or even of particular classes of cases. What I was dealing with was the statement as to the widespread hardship that was going to be suffered, and, starting with a desire to meet the case to the greatest possible extent, this Amendment was devised. Broadly it amounts to this: You start with the analogy of the forward contract to the case of stocks already in hand. I could not go so far as I had gone in the levelling process with regard to stocks. What modifications had I to make? I said that in the first place a greater reduction must not be asked for than would be represented by the ordinary amount of forward contracts at that period of the year, over a period of three years. I next said that it could not be for merely sporadic contracts, but must be something approximating to the regular business habit of the firm making the claim, and that, therefore, the amount must be something like one-third of the full stock that was being carried. The hon. Member for North-East Derbyshire said that that only helped the big trader, but, when you are dealing with proportions, the proportion in the case of the small trader is the same as in the case of the larger trader, and therefore, so far as I can understand the matter, the small trader will gain as much benefit, or suffer as little loss, from that modification as will the large trader.
I came to the conclusion, looking to the limits of our financial possibilities at the present time, that you could not give more than half the loss. My hon. Friend (Mr. Lyle) would, I think, have accepted that, but objects to its being still further modified. If I had given the concession, as my hon. Friend asked, it might possibly have amounted to a concession of £75,000,000, and I could not face that. I had to make some modification, and the modification that I made was this. I said that if the trader is in the happy position that he is retaining in excess profits large sums of money, then he will only get the extent of half his loss, because it is one-third of the amount which he still holds as profits gained during the period when the Excess Profits Duty was in force. That is the simple explanation of the whole matter. It is a thing of general application so far as it goes. There are some cases which will not get much, but there are others which will be perhaps saved from bankruptcy, but the principle I went on was one of uniform application wherever it applied. It had nothing to do with individual cases or with classes of cases, and I hope what I have said will be sufficient assurance to my hon. Friend upon that score.
There is one limitation. As I read the Clause, if the claimant has made any profits at all during the period in question, that is from the last accounting period to 31st August, even if they are only one-tenth of his usual profits he is outside the scope of the Clause. It is only in case of a total loss that he is able to come under the purview of the Clause at all.
That is perfectly true. It is the case that in order to be able to make a claim you must have failed to make any profits at all, but only in that limited period. Being anxious to meet in some way the hardship to which expression was given, but being limited by the capacity of the Exchequer in the matter one had to devise something which would meet the case at least to some extent. I am not proud of this Clause. I apologise for its complicated character, but I am sure the House realises what a difficult matter this Excess Profits Duty is and that you cannot express it in terms which are very easy of comprehension, not always even to lawyers. I was at fault even myself with the phraseology. It is wrong and a completely inaccurate way of stating the matter to suggest that this is a case of surrendering £15,000,000 to these traders. The question with which the trader is confronted is as to how much of the Excess Profits Duty we should be able to collect. You have to take facts as you find them. You must realise that businesses to-day are no longer in the position in which they were, not only during the War, but a year ago. Immense losses have been suffered in business and the Exchequer is not going to gain by the attempt to exact from the trade of the country money which it cannot afford. It is from the point of view of doing the best both for the Exchequer and for the trade of the country that I have put forward the Amendment.
Question put, " That the proposed words be there inserted in the Bill."
The House divided: Ayes, 239; Noes, 64.
Division No. 270.] AYES. [10 34 p.m. Adkins, Sir W. Ryland D. Bigland, Alfred Chamberlain, N. (Birm., Ladywood) Agg-Gardner, Sir James Tynte Bird, Sir A. (Wolverhampton, West) Chilcot, Lieut.-Com. Harry W. Ainsworth, Captain Charles Bird, Sir William B. M. (Chichester) Churchman, Sir Arthur Amery, Leopold C. M. S. Borwick, Major G. O. Clay, Lieut.-Colonel H. H. Spender Armitage, Robert Bowyer, Captain G. W. E. Clough, Sir Robert Armstrong, Henry Bruce Boyd-Carpenter, Major A. Coats, Sir Stuart Ashley, Colonel Wilfrid W. Brassey, H. L. C. Colvin, Brig.-General Richard Beale Astbury, Lieut.-Com. Frederick W. Breese, Major Charles E. Cory, Sir J. H. (Cardiff, South) Atkey, A. R. Briggs, Harold Craik, Rt. Hon. Sir Henry Bagley, Captain E. Ashton Brittain, Sir Harry Davidson, J. C. C. (Hemel Hempstead) Baird, Sir John Lawrence Brown, Major D. C. Davidson, Major-General Sir J. H. Baldwin, Rt. Hon. Stanley Brown, T. W. (Down, North) Davies, Alfred Thomas (Lincoln) Balfour, George (Hampstead) Buckley, Lieut.-Colonel A. Davies, Thomas (Cirencester) Banbury, Rt. Hon. Sir Frederick G. Bull, Rt. Hon. Sir William James Dawes, James Arthur Barker, Major Robert H. Burn, Col. C. R. (Devon, Torquay) Dean, Commander P. T. Barlow, Sir Montague Butcher, Sir John George Doyle, N. Grattan Barnston, Major Harry Carew, Charles Robert S. Edwards, Major J. (Aberavon) Barrie, Charles Coupar (Banff) Carr, W. Theodore Erskine, James Malcolm Monteith Beckett, Hon. Gervase Carter, R. A. D. (Man., Withington) Eyres-Monsell, Com. Bolton M. Bell, Lieut.-Col. W. C. H. (Devizes) Casey, T. W. Evans, Ernest Bellairs, Commander Carlyon W. Chadwick, Sir Robert Burton Falcon, Captain Michael Betterton, Henry B. Chamberlain, Rt. Hn. J. A. (Birm., W.) Falle, Major Sir Bertram Godfray. Fell, Sir Arthur Lowther, Col. Claude (Lancaster) Seager, Sir William Fildes, Henry M'Connell, Thomas Edward Shaw, Hon. Alex. (Kilmarnock) Fisher, Rt. Hon. Herbert A. L. Mackinder, Sir H. J. (Camlachie) Shaw, William T. (Forfar) Forestier-Walker, L. McLaren, Robert (Lanark, Northern) Shortt, Rt. Hon. E. (N'castle-on-T.) Foxcroft, Captain Charles Talbot M'Lean, Lieut.-Col. Charles W. W. Simm, M. T. Fraser, Major Sir Keith McMicking, Major Gilbert Smith, Sir Harold (Warrington) Fremantle, Lieut.-Colonel Francis E. McNeill, Ronald (Kent, Canterbury) Sprot, Colonel Sir Alexander Gibbs, Colonel George Abraham Mallalieu, Frederick William Stanier, Captain Sir Beville Gilmour, Lieut.-Colonel Sir John Marriott, John Arthur Ransome Stanley, Major Hon. G. (Preston) Glyn, Major Ralph Martin, A. E. Stanton, Charles Butt Goff, Sir R. Park Mason, Robert Starkey, Captain John Ralph Goulding, Rt. Hon. Sir Edward A. Matthews, David Steel, Major S. Strang Green, Joseph F. (Leicester, W.) Meysey-Thompson, Lieut.-Col. E. C. Stewart, Gershom Gregory, Holman Mitchell, Sir William Lane Sturrock, J. Leng Greig, Colonel Sir James William Molson, Major John Elsdale Sueter, Rear-Admiral Murray Fraser Gritten, W. G. Howard Mond, Rt. Hon. Sir Alfred Moritz Sugden, W. H. Gwynne, Rupert S. Moreing, Captain Algernon H. Sutherland, Sir William Hallwood, Augustine Morison, Rt. Hon. Thomas Brash Taylor, J. Hall, Captain Sir Douglas Bernard Morris, Richard Terrell, George (Wilts, Chippenham) Hall, Lieut.-Col. Sir F. (Dulwich) Morrison-Bell, Major A. C. Terrell, Captain R. (Oxford, Henley) Hamilton, Major C. G. C. Murchison, C. K. Thomas, Sir Robert J. (Wrexham) Harmsworth, C. B. (Bedford, Luton) Murray, C. D. (Edinburgh) Thomson, F. C. (Aberdeen, South) Harmsworth, Hon. E. C. (Kent) Murray, William (Dumfries) Thomson, Sir W. Mitchell- (Maryhill) Henderson, Major V. L. (Tradeston) Nail, Major Joseph Thorpe, Captain John Henry Hennessy, Major J. R. G. Neal, Arthur Townley, Maximilian G. Henry, Denis S. (Londonderry, S.) Newman, Sir R. H. S. D. L. (Exeter) Tryon, Major George Clement Herbert Dennis (Hertford, Watford) Nicholson, Reginald (Doncaster) Turton, Edmund Russborough Hewart, Rt. Hon. Sir Gordon Norris, Colonel Sir Henry G. Wallace, J. Hilder, Lieut.-Colonel Frank Palmer, Brigadier-General G. L. Ward-Jackson, Major C. L. Hinds, John Parker, James Ward, Col. J. (Stoke upon Trent) Hohler, Gerald Fitzroy Pearce, Sir William Ward, Col. L. (Kingston-upon-Hull) Holbrook, Sir Arthur Richard Peel, Col. Hon. S. (Uxbridge, Mddx.) Ward, William Dudley (Southampton) Hood, Joseph Perkins, Walter Frank Waring, Major Walter Hope, Sir H. (Stirling & Cl'ckm'nn, W.) Perring, William George Warner, Sir T. Courtenay T. Hope, Lt.-Col. Sir J. A. (Midlothian) Philipps, Gen. Sir I. (Southampton) Warren, Sir Alfred H. Hopkins, John W. W. Pollock, Sir Ernest Murray Watson, Captain John Bertrand Horne, Edgar (Surrey, Guildford) Pownall, Lieut.-Colonel Assheton Weston, Colonel John Wakefield Horne, Sir R. S. (Glasgow, Hillhead) Purchase, H. G. Wheler, Col. Granville C. H. Hotchkin, Captain Stafford Vere Rae, H. Norman White, Col. G. D. (Southport) Hume-Williams, Sir W. Ellis Ramsden, G. T. Whitla, Sir William Hurd, Percy A. Randies, Sir John Scurrah Willey, Lieut.-Colonel F. V. Jodrell, Neville Paul Rankin, Captain James Stuart Williams, C. (Tavistock) Johnson, Sir Stanley Ratcliffe, Henry Butler Williams, Lt.-Col. Sir R. (Banbury) Johnstone, Joseph Rawlinson, John Frederick Peel Williams, Col. Sir R. (Dorset, W.) Jones, G. W. H. (Stoke Newington) Rees, Sir J. D. (Nottingham, East) Williamson, Rt. Hon. Sir Archibald Jones, Henry Haydn (Merioneth) Rees, Capt. J. Tudor- (Barnstaple) Wills, Lt.-Col. Sir Gilbert Alan H. Jones, J. T. (Carmarthen, Llanelly) Reid, D. D. Wise, Frederick Joynson-Hicks, Sir William Remnant, Sir James Wood, Hon. Edward F. L. (Ripon) Kellaway, Rt. Hon. Fredk. George Renwick, Sir George Wood, Sir H. K. (Woolwich, West) Kidd, James Roberts, Samuel (Hereford, Hereford) Worsfold, T. Cato King, Captain Henry Douglas Robinson, S. (Brecon and Radnor) Worthington-Evans, Rt. Hon. Sir L. Kinloch-Cooke, Sir Clement Robinson, Sir T. (Lancs., Stretford) Yeo, Sir Alfred William Law, Alfred J. (Rochdale) Rodger, A. K. Young, E. H. (Norwich) Lewis, T. A. (Glam., Pontypridd) Roundell, Colonel R. F. Younger, Sir George Lindsay, William Arthur Royds, Lieut.-Colonel Edmund Lloyd, George Butler Samuel, A. M. (Surrey, Farnham) TELLERS FOR THE AYES.— Lloyd-Greame, Sir P. Sanders, Colonel Sir Robert Arthur Colonel Leslie Wilson and Mr. Locker-Lampson, Com. O. (H'tingd'n) Sassoon, Sir Philip Albert Gustave D. McCurdy. Loseby, Captain C. E. Scott, A. M. (Glasgow, Bridgeton)
NOES. Barker, G. (Monmouth, Abertillery) Hall, F. (York, W. R., Normanton) Raffan, Peter Wilson Bowerman, Rt. Hon. Charles W. Hancock, John George Rendall, Athelstan Briant, Frank Hayday, Arthur Richardson, R. (Houghton-le-Spring) Bromfield, William Hayward, Evan Roberts, Frederick O. (W. Bromwich) Brown, James (Ayr and Bute) Henderson, Rt. Hon. A. (Widnes) Robertson, John Cairns, John Hirst, G. H. Royce, William Stapleton Cape, Thomas Hogge, James Myles Sexton, James Carter, W. (Nottingham, Mansfield) John, William (Rhondda, West) Smith, W. R. (Welling borough) Cecil, Rt. Hon. Lord R. (Hitchin) Jones, J. J. (West Ham, Silver town) Spencer, George A. Collins, Sir Godfrey (Greenock) Kennedy, Thomas Swan, J. E. Davies, A. (Lancaster, Clitheroe) Kenworthy, Lieut.-Commander J. M. Thorne, G. R. (Wolverhampton, E.) Edwards, C. (Monmouth, Bedwellty) Kenyon, Barnet Tootill, Robert Edwards, G. (Norfolk, South) Lawson, John James Walsh, Stephen (Lancaster, Ince) Entwistle, Major C. F. Lunn, William Waterson, A. E. Galbraith, Samuel Maclean, Nell (Glasgow, Govan) White, Charles F. (Derby, Western) Ganzoni, Sir John Maclean, Rt. Hon. Sir D. (Midlothian) Williams, Aneurin (Durham, Consett) Gillis, William MacVeagh, Jeremiah Williams, Col. P. (Middlesbrough, E.) Glanville, Harold James Morgan, Major D. Watts Wilson, W. Tyson (Westhoughton) Graham, D. M. (Lanark, Hamilton) Murray, Dr. D. (Inverness & Ross) Wood, Major M. M. (Aberdeen, C.) Gretton, Colonel John Newbould, Alfred Ernest Young, Robert (Lancaster, Newton) Grundy, T. W. O'Grady, James Guest, J. (York, W.R., Hemsworth) Parkinson, John Allen (Wigan) TELLERS FOR THE NOES.— Mr. Holmes and Mr. Leonard Lyle.
Bill to be read the Third time to-morrow, and to be printed. [Bill 179.]
Admiralty Pensions [Commutation, Etc.]
Considered in Committee.
[Sir E. CORNWALL in the Chair.]
Motion made, and Question proposed:
"That it is expedient to make further provision out of moneys provided by Parliament with respect to Admiralty Pensions, and with respect to Pensions, Grants, or Allowances payable under the Injuries in War (Compensation) Acts, and the Government War Obligations Acts."—[ Mr. Amery. ]
The Resolution before the Committee is one which, in accordance with the procedure of Parliament, is a necessary preliminary to the introduction of a Bill dealing with the commutation of Admiralty pensions— a small and, I trust, entirely non-contentious Measure which is, however, technically a Money Bill. The first object of that Bill is to give the Admiralty the power, which unlike the War Office, the Air Ministry, and the Ministry of Pensions, it does not possess, of commuting pensions. The Jerram Committee, which dealt with this question, strongly recommended that this power should be given to the Admiralty, under proper safeguards both as to the amount and as to the conditions, under which commutation is to be allowed. The second object of the Measure is to redress a certain small number of hard cases, with which the Admiralty recently had to deal, where the Forfeiture Act of 1870 prevents the Admiralty from restoring pensions, either in whole or in part, or from granting out of a pension an allowance to dependants, in cases in which the actual pension has been forfeited owing to misconduct. This applies to a small number of pensions or grants made under the Injury in War (Compensation) Acts and the Government War Obligations Acts. The Act of 1870 ruled that wherever a pensioner committed an offence for which he was punished by imprisonment for more than 12 months, or imprisonment of any duration with hard labour, that pension is automatically forfeited. Subsequent Acts and Orders in Council modified the rigidity of that Act and made it possible for the Admiralty in certain cases to pay a portion of the pension, or to restore the pension, or to make some allowance out of the pension to a woman and her children in cases where the husband, a pensioner, was in prison.
In respect of certain workers, however, who were receiving Admiralty grants or pensions under the Injuries in War (Compensation) Acts, it was found recently that this power to modify the forfeiture of a pension or to revoke the forfeiture of a pension, did not exist and that the Act of 1870 applied in full force. The second object of this Measure then is to enable the Admiralty, in such cases, to restore a pension or to make an allowance to the wife in the case of a man who has been in receipt of a pension and who has been punished for an offence to an extent which involves forfeiture. The same applies to certain pensions administered under the same Acts, and under the Government War Obligations Act, by the War Office, the Board of Trade, and the General Post Office. These powers are conferred by the War Pensions Act on the Ministry of Pensions, but they do not cover the particular Admiralty cases, and possibly one or two cases in the other Departments I have mentioned.
It is clear that parts of this Measure involve, technically at least, the spending of money. Commutation, of course, involves no added permanent burden on the taxpayer. After all, the pensioner only gets in a lump sum the actuarial value of such part of the pension as is commuted. But when the particular pension is commuted there is an increased charge in that year and to that extent there is a demand for fresh money and, therefore, it is necessary to come to the House of Commons with this Resolution. In the present case there are a good many men waiting to be allowed to commute their pensions. Some of them have been waiting for eighteen months, and it is possible that there will be an additional charge in the next year, amounting to a few thousand pounds—certainly not more than £10,000. Regarding the second part, this will also involve a fresh charge on the taxpayer, but the cost is very small, and the amount will not be more than a few hundred pounds in the year. It is simply a case of remedying a few cases of hardship, and I trust the Committee will find no difficulty in dealing with this Resolution.
With regard to the commutation of pen- sions, the Admiralty have enticed the younger men to leave the Navy, and I wish to know whether the same encouragement cannot be given to the senior officers by commuting their pensions. It will be obvious that senior men often need small capital sums to start themselves in business. If it is right to give these sums to the junior officers, then it is right that a similar privilege should be given to the senior officers. Will the right hon. Gentleman consider this point, which I have raised before? It is also proposed to make some allowance to the wives of seamen who, after retirement, have committed offences and have gone to prison; but where a man has committed no offence, but has the misfortune to die, his widow gets nothing. That is an anomaly.
The difficulty of agreeing to these Financial Resolutions, on which Bills are founded, is that we do not get a sufficiently adequate explanation of the policy involved on the part of the Admiralty. This presumably only deals with service pensions.
It also deals with pensions under the Injuries in War (Compensation) Acts and pensions to civilians who may have been serving under the Admiralty.
This question of commutation is a large matter of policy and principle which cannot be settled in this piecemeal way. So far as I know, it has never been the practice to do more than commute a certain proportion of a pension. I do not know what the proportion is. That proportion, and the amount of commutation, is an important point. I want to be clear as to who of these men come under the Injuries of War (Compensation) Act, 1914, and who come under the Board of Trade and who under the Admiralty?
Certain men under the War Office, Post Office, and Board of Trade may possibly come under this scheme. I do not think it will cover the large number of persons referred to.
Those answers are quite satisfactory to me. There has been so much in connection with the War which wanted clearing up that I am anxious, before we pass this Financial Resolution, to know whether these men are exclusively under the province of the Admiralty, and are not included in the wider scheme.
Question put, and agreed to.
Resolution to be reported To-morrow.
Guardianship, Etc., of Infants Bill
As amended ( in the Standing Committee ), further considered.
NEW CLAUSE.—( Provisions as to adoption. )
Where any person adopts a child of another person any agreement entered into to effect this purpose shall be submitted for approval to the justices of the peace in petty sessions assembled for the district in which the parent or guardian of such child resides, and any agreement approved by such justices of the peace shall be binding; on the parties thereto and upon such child until he or she attains the age of eighteen years.
Provided that subject to such agreement nothing in this Section shall relieve the parent of his responsibilities in respect of such child.—[ Sir F. Banbury. ]
Brought up, and read the First time.
I beg to move, "That the Clause be read a Second time."
In moving this Clause, I desire to say—
It being Eleven of the Clock, further Consideration of the Bill, as amended, stood adjourned.
Bill, as amended, to be further considered To-morrow.
The remaining Orders were read, and postponed.
Finance Bill (Government Defeat)
Motion made, and Question proposed, "That this House do now adjourn.— [ Colonel Leslie Wilson. ]
My right hon. Friend the Leader of the House will perhaps recollect that at 9 o'clock to-night the Government were defeated in the Division which took place at that time, and that I then asked whether the Government intended to proceed further with the Business of the Day. The reply which my right hon. Friend gave me was that certainly they intended so to proceed. What I want to point out to him, with much respect, because I believe he has respect for the traditions of the House, although occasionally he has lapses from it, is that that Division was at the end of a long Debate, lasting, I think, a couple of hours. There was no element of what one calls a "snap" in it, and it was quite obvious that the proceedings on that particular question were likely to come to an end at almost any time after a quarter to Eight, that the Government Whips were put on, that the Government had full notice of the drift of opinion in the House, and that after the decision of the House was given, my right hon. Friend, instead of acting, as I suggest to him, in accord with the practice and traditions of the House— there have been some exceptions, I agree— elected, after so serious a defeat as that, to proceed with the Business of the Day. I suggest that that was not a proceeding in consonance with the dignity of the Government or the practice of the House, and I want to know now whether he is able to inform the House what steps the Government propose to take in the matter.
I regret very much that I was not present in the Division. I understood it would come on a little after nine, but when I came back a little after nine with the intention of voting with the Government, and found that the Division had taken place, I regret very much that after a defeat of that sort, in the Budget, the Government went on with the Business of the House, as much as to say, "We treat the House of Commons and its opinions with contempt. If they happen to vote with us, well and good; if they happen to vote against us, we do not care; we are going on with our business." I have been 29 years in the House of Commons, and in the short time at my disposal since this Division I have looked into the various defeats of Governments which I remember. I re member a defeat of Sir William Harcourt on the Address in the 1892 Parliament. My recollection is that the Debate was adjourned, and the Orders of the Day were gone through, and the next day Sir William Harcourt announced his intention to bring in a new Address, a very unconstitutional practice.
In 1895, on the Cordite Vote in Supply, at half-past seven in the evening, the Government were defeated. They adjourned the Debate, the Orders of the Day were gone through, and when we met next day the Government resigned. The next question that I remember was in 1905, when my colleague the right hon. Member for the City of London (Mr. Balfour) was Prime Minister. A reduction of £100 was moved in Committee of Supply, and that was a snap Division. We met at 12 o'clock, the Government were defeated, and the Division did not end until after 12 o'clock. It being after 12 o'clock, no further proceedings could take place. The further Orders of the Day were gone through, and we adjourned at 20 minutes to one. The next occasion was in 1902, when I had the honour of defeating the Government. That was on the Report of a Resolution on the Irish Bill. I have looked up what we did. The Debate was adjourned at once and the Orders of the Day were gone through and postponed until the next day. We adjourned at 28 minutes past four. That was a snap Division, but this was not a snap Division. It was in the ordinary course of events, and I am sorry it occurred. I hope that the Government will to-morrow announce their determination to recommit the Bill and re-introduce the Clause. I shall have much pleasure in supporting them. What I do want to point out to the Government and to a Conservative Leader is that we must keep up the old traditions of the House. We cannot afford to go on sitting in the House to 3 o'clock in the morning and meeting in Committee Rooms at 11, spending hours here, and then when the Government is defeated having no notice taken and business going on just as usual. I do not even know whether we are going to be told what is going to happen. This is treating us with contempt and ruining Parliamentary government. It means that right hon. Gentlemen who sit on the Government Bench do whatever they please. They bring in a Bill and you have just got to pass it. I am very sorry that they should have taken this course, and I am still more sorry that my old friend, who is, at any rate, a Liberal Unionist, which is the next good thing to a Conservative, should have taken the lead in doing something which, I venture to say, is unconstitutional and subversive of the principle of government by Parliament and contemptuous of the House of Commons.
I am not surprised that my right hon. Friend opposite (Sir Donald Maclean) should have wished to raise again the question which he put to me a moment after the Government were defeated. I am surprised, however, at the particular motive of the complaint that my right hon. Friend the Member for the City of London (Sir F. Banbury) makes as to the procedure on behalf of the Government. On this occasion my right hon. Friend opposite would, I believe with truth, though I am trusting to memory and I have not verified my recollection, that it has not been the universal practice to adjourn the discussion and then the House whenever there has been a defeat of the Government. The occasion, the character of the subject under discussion, the importance of the defeat, the question whether it was the intention of the House to inflict a defeat upon the Government, and whether the course of Government business has shown that the Government has lost the confidence of the House, all these questions have to be considered by the Government of the day in deciding what action they will take when an unfortunate accident of this kind happens.
I have had to consider what course we should pursue on this occasion. I decided, though I regret the decision of the House, that, having regard to the public circumstances of to-day, and the many very grave issues which are under the discussion of this House, and having regard to the small financial importance of the alteration made, that the Government will accept the decision of the House. I may be right, or I may be wrong, but I am not, as my right hon. Friend makes out, treating the House with contempt. I have sat on the opposite side of the House, and on this side, and I have repeatedly heard Governments urged to give greater latitude and not to insist that every Government defeat should be treated as a want of confidence, but to allow them a little more liberty of expression. That has been repeatedly urged upon the Government. But the limits within which the Government can expect to have its policy reversed by the House and accept the reversal, must be, in my mind, very narrow.
On this occasion, after consultation with my right hon. Friend the Chancellor of the Exchequer, I have come to the conclusion that, as the money involved is insignificant compared with the Budget, as the House has chosen to decide, or those Members of the House who have been both in the House and voted, have chosen to decide, against the Government, we will accept their decision. We will not at this stage of the Session, with all the other business that has to be done, ask the House to reverse the decision to which they came to-night. I do not see that there is anything in that which is undignified on the part of the Government. My hon. Friends will not suppose that it is a process to be repeated very often by any Government; but I am quite certain that there is nothing which is contemptuous to the House in the course we are taking.
May I be allowed, as one of the youngest Members of this House, to express my view of the matter? Those of us who are trade unionists have lately been lectured at very great length about constitutionalism. We have been told that the leaders do not lead, and that the people generally want leadership. I have been led to believe that the House of Commons was the last word in constitutionalism, and that when this House decided by a free vote that a certain policy should be adopted, that that policy would be adopted. [HON. MEMBERS: "It has been."] No. When the Government Whips are put on, it becomes a question of a vote of confidence in the Government. The Government Whips have been on to-night, and the House has decided, against the Government, that a certain policy should be pursued in the matter of the co-operators' tax. It was not a tax upon corporations, but a tax upon co-operation. The last speaker gave the whole show away; in fact, he " let the cat out of the bag." He said it was not so much a tax upon co-operation as a desire to prevent the growth of co-operation, and he said it was intended to prevent them from developing their strength. We were always led to understand—I, as a workman, representing a working-class constituency, was led to understand—that the House of Commons ordained its business on constitutional lines, and that, when the Government Whips are placed on upon a matter of financial importance, we are the money Chamber. This is the place where finance is decided, and no other Chamber is superior to us.
We are the last word in finance. This is financial business, and I want to know why, after the Division had been taken, with the Government Whips on, the Government did not adopt the usual constitutional procedure, and retire from business? We are "not fit to govern." Hon. Gentlemen opposite are, but they were not born like that.
I suggest, if you want us to be Constitutionalists, you will have to be Constitutionalists yourselves. If you want us to obey the law laid down by the right hon. Gentleman the Member for the City of London, you will have to accept the same law yourselves. How can the Leader of the House justify this situation when he has been defeated by a vote of the House? I suggest that, if the Government Whips had not been put on, the Government would have been defeated by an overwhelming majority. Even with the Whips on, the Government have been defeated, and the right hon. Gentleman's excuse is: "Please, Sir, it is not me." In our trade unions the issues are far too great. If you want us to ask the working men to be Constitutionalists, you will have to be Constitutionalists yourselves. You are not adopting that principle. You are hanging together to-night because you are afraid that if you do not, you will hang separately. I am not so great a Constitutionalist as the right hon. Member for the City of London (Sir F. Banbury). He knows more about Constitutionalism than I ever hope to know, and I suggest that the historical reminiscences he has given demonstrate that you are nearly coming to the end of your tether, that now you ought to resign, if you are honest men, and give decent men a chance.
Question put, "That this House do now adjourn."
HON. MEMBERS: "Divide!"
This Motion being opposed and it being after Eleven o'clock we cannot proceed to a Division.
Question put, and agreed to.
Adjourned accordingly at Twenty Minutes after Eleven o'clock.