House of Commons
Tuesday, May 2, 1922
The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.
PRIVATE BUSINESS.
London County Council (Money) Bill (Standing Orders applicable thereto complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, referred on the First Reading thereof, the Standing Orders which are applicable thereto have been complied with, namely:
London County Council (Money) Bill.
Bill to be read a Second time.
Private Bills [ Lords ] (Standing Orders not previously inquired into complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the following Bill, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:
Bradford Canal (Abandonment) Bill [Lords].
Bill to be read a Second time.
Provisional Order Bills (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, referred on the First Reading thereof, no Standing Orders are applicable, namely:
Land Drainage Provisional Order (No. 2) Bill.
Bill to be read a Second time To-morrow.
Birmingham Corporation Bill,
Read the Third time, and passed.
Trafford Park Bill [Lords],
Read a Second time and committed.
KILMARNOCK WATER PROVISIONAL ORDER BILL,
"to confirm a Provisional Order under the Burgh Police (Scotland) Act, 1892, relating to Kilmarnock Water," presented by Mr. MUNRO; read the First time; and referred to the Examiners of Petitions for Private Bills, and to be printed. [Bill 103.]
ORAL ANSWERS TO QUESTIONS.
INDIA.
NORTH-WEST FRONTIER PROVINCE.
asked the Under-Secretary of State for India whether a Committee has been appointed by the Government of India to report upon the position of the frontier province and its relation, present and future, with the Punjab; and, if so, what are the terms of the reference?
I have seen reports of debates in the Legislative Assembly which indicate an intention to appoint a Committee to inquire into various matters connected with the administration of the North-West Frontier Province, including its relations with the Punjab, but, so far as I am aware, the Committee has not yet been appointed, nor have the terms of reference to it been settled.
Is the Noble Lord aware that at the present time the North-West Frontier Province is the only province where there is no sort of constitution and no self-government? Will he take steps to see that an end is put to that anomaly?
I have said that a Committee has been appointed to inquire into that matter.
Will the Noble Lord impress on his advisers the necessity for insisting that there shall be no interference with the settlement of frontier disputes by Jirga and also the inadvisa- bility of inflicting a Legislative Council on the Province, for which it is at present unsuited.
My hon. and gallant Friend had better wait until the Committee dealing with the matter has reported.
RETRENCHMENT COMMITTEE.
asked the Under-Secretary of State for India if a Retrenchment Committee, as agreed to between the Government of India and the Legislative Assembly, has been constituted; if not, will he state the reason for delay; and whether the terms of the reference have been drawn up?
Steps are being-taken to establish the Committee as rapidly as possible, but neither its constitution nor its terms of reference have yet been finally settled. My hon. Friend will appreciate the importance of securing the services of the best available personnel, and the fact that this may necessitate a little delay in completing the formation of the Committee.
Will the Noble Lord take steps to see that the superfluous officers brought in on account of the Reform scheme are now retrenched?
The matter will be considered by the Committee which, I have stated, is being set up.
ASSEMBLY AND PROVINCIAL COUNCILS (HINDUS AND BRAHMINS).
asked the Under-Secretary of State for India if he will submit a statement showing the number of Hindus elected to the Legislative Assembly and the respective provincial legislative councils and the number of Brahmins elected to each?
I have not the material for such a statement, but will ask the Government of India to supply me with it.
WIRELESS SERVICE (GREAT BRITAIN).
asked the Under-Secretary of State for India if two offers, one by a British and the other by an Indian firm, have been received to construct and work a direct wireless service between India and Great Britain under licence and in accordance with Government requirements as outlined by the British Post Office authorities; and whether a decision on these offers will be arrived at without undue delay?
The answer to the first part of my hon. Friend's question is in the affirmative. The precise form in which wireless communication between India and this country is to be established is still under consideration by the Government, and until that has been settled no decision in regard to the offers referred to by my hon. Friend can be arrived at.
IMPERIAL SERVICE LANCERS.
asked the Under-Secretary of State for India whether he can state the circumstances which led to the mutiny of Indian troops and the dismissal of 350 men of the 1st Imperial Service Lancers?
The troops in question did not belong to the Indian Army, but to the forces of His Exalted Highness the Nizam of Hyderabad. The Hyderabad Government have assured the Government of India there is no likelihood of violence or cause for anxiety. The accounts of the incident that have appeared in the Press are understood to be substantially correct.
Are they Mussulmans or Hindus?
I must have notice of that question. It is a matter which concerns His Highness's Government.
CALCUTTA GAOL (OUTBREAK).
asked the Under-Secretary of State for India to what the outbreak in the Calcutta gaol was due; did the trouble begin among the politicals; were they being treated as politicals; and how many politicals were killed and wounded?
I have not received any message ascribing any definite cause to the outbreak. But there are no political prisoners in the gaol.
asked the Under-Secretary of State for India whether he can give any details as to the reported rising in an Indian prison near Calcutta; and whether he can state how the prisoners in the prison secured arms and ammunition?
As the answer is rather lengthy, I propose, should the Noble Lord see no objection, to circulate it in the OFFICIAL REPORT.
Does the answer cover the last point raised in the question?
Yes, the telegraphed reports do not seem to suggest that the prisoners were in possession of arms and ammunition. We expect fuller details by the next mail.
Following is the answer:
The reports received are to the effect that a serious mutiny broke out in the Presidency Jail, Calcutta, at 11 a.m. on the morning of Wednesday the 26th. Prisoners attempted to break through the gate of the jail and this necessitated the use of firearms by warders under the orders of the superintendent of the jail. Armed police and troops were sent, but the civil authorities resumed charge of the jail at 2 o'clock on the same day and all troops were withdrawn. Five prisoners are reported to have been killed and 35 wounded; these casualties apparently occurred before the additional police and troops arrived which were sent to render assistance. A few warders and jailers were slightly injured. Three large sheds were set on fire by the prisoners and destroyed and damage estimated at about £20,000 was caused. The telegraphic reports do not suggest that the prisoners in the prison secured arms and ammunition, but fuller details are expected by mail. I would mention that no political prisoners were confined in this jail.
LOCOMOTIVES (CONTRACTS).
asked the Under-Secretary of State for India whether the Government of India has recently arranged contracts for locomotives for the Indian railways; what is the number of engines required by the terms of these contracts; how they have been allocated in this country; and whether any have been placed with firms abroad?
The reply to the first part of the question is in the negative. The other parts do not therefore arise.
KENYA AND FIJI (INDIAN SUBJECTS).
asked the Under-Secretary for India whether any, and, if so, what, progress has been made in respect of the equal status question in Kenya and Fiji?
The position of Indians in Kenya is under active consideration between the India Office and the Colonial Office. I am not able to make any statement at present. As regards Fiji, I do not anticipate that any further action will be taken until a report by the deputation from India to Fiji has been received and considered.
Has that report not been received?
It has not reached my hands.
BURMA (CONSTITUTION).
asked the Under-Secretary of State for India whether he can yet give a date for the initiation of the Burma Constitution; and, if not, whether the delay arises from a change of attitude towards the constitutional reform?
The new Constitution will be initiated as soon as possible after the rules required for the purpose are approved. The Secretary of State hopes to bring the draft rules, with his proposals, before the Standing Joint Committee at a very early date, and is anxious that they should be settled without delay.
Do I understand that the fixing of these rules by the Standing Joint Committee will be the last stage before the enactment of this Constitution, and that the Constitution is at present awaiting the decision of the Joint Committee?
No, Sir. The procedure, as my hon. and gallant Friend will recollect, is that they will have to be approved by this House. That will be the next step after the Standing Joint Committee has reported. These rules, it is hoped, will be put in operation this year.
The Noble Lord does not intend to introduce a Bill to establish this Constitution, but merely by an executive Act to include Burma in the original Bill?
It is not necessary to introduce a Bill, but there will have to be a Resolution by both Houses, either affirmative or otherwise.
BRITISH ARMY.
ROYAL AEMY SERVICE COEPS (COEPS PAY).
asked the Secretary of State for War if he is aware that the technical qualification upon which depends the issue of corps pay to officers of the Royal Army Service Corps, under Army Order 324, of 1919, has not yet been completely defined by the Army Council in accordance with the promise contained in the Order, and that in consequence many officers in the Royal Army Service Corps are unable to draw corps pay for which they may hold sufficient qualifications; and whether the necessary instructions will be issued at an early date?
The Army Council have not decided upon any extension of the qualification for corps pay provided in Army Order 324 of 1919, namely, qualification in the examination for Associate Member of the Institution of Mechanical Engineers. The question is under their consideration and further instructions in the matter will be issued as early as practicable.
Will there be very much delay?
I hope not.
WAR MEDALS.
asked the Secretary of State for War what would be the approximate cost of issuing War medals to those members of the Territorial forces who volunteered for overseas service but who were kept at Home by the orders of the War Office; whether the expense of issuing these medals is the only reason for their not being issued; and, if not, will he say what are the other reasons?
I regret that I am not in a position to answer the first part of this question, as the number of those concerned is not available. The answer to the second part is in the negative. With regard to the third part, I have nothing to add to previous answers given to numerous similar questions asked by the hon. Member.
Can the hon. Gentleman say how it is that the Government can find money to provide medals for Home Service Special Constables but not for Home Service Territorials?
It is a very painful subject. If the hon. Gentleman wants to discuss it, his best way will be to raise it on the Estimates.
PEACE TREATIES.
SILESIA (BRITISH TROOPS).
asked the Secretary of State for War what is the number of British troops still stationed in Silesia; what is the expenditure involved; and if he will state the purpose for which this force is retained there?
The number is 4,500 all ranks. In regard to the remainder of the question, I would refer my hon. and gallant Friend to the replies respectively given yesterday by myself to the hon. and gallant Member for Central Hull and on 15th March last, on behalf of the Prime Minister, to my hon. and gallant Friend the Member for East Fife.
Do the replies to which the hon. Gentleman refer cover the last part of my question—for what purpose these forces are still being retained there?
If my hon. and gallant Friend will read the answer I think he will see.
But does the answer contain that information?
I think it does.
Who pays for these troops? Are we paying for them up till now?
If the hon. Gentleman will read the answer given yesterday I think he will see that.
Is the hon. Gentleman aware that, without making any charge against the British troops, it is the case so long as they are in Upper Silesia there will be trouble; will the War Office use its best endeavours to bring these troops back?
My information is exactly the opposite. Their presence there makes for peace.
Are there not other parts of the world in which these men could be much more usefully employed?
ARMIES OF OCCUPATION.
asked the Chancellor of the Exchequer whether any action has been decided upon with regard to the claim of the Government of the United States of America for the payment of the costs of the American Army of Occupation; what has been done with the payments received to date from Germany for the Armies of Occupation; whether any sums on this account have been received by His Majesty's Government; and whether any payments have been made to the United States Government out of the sums received to date from Germany for reparations or for the costs of the Armies of Occupation?
No payment has been made to the United States Government for the cost of Armies of Occupation out of the sums collected by the Reparation Commission, and their claim in this respect is now being considered by the Allied Governments. The amounts received by His Majesty's Government have been paid into the Exchequer except in so far as they have been appropriated by Parliament in aid of advances to Germany for coal.
As to the first part of the question, would the hon. Gentleman state whether any action has been decided on with reference to the Allies at all?
The hon. and gallant Gentleman will observe in my reply that it is now being considered by the Allied Governments.
GRETNA FACTORY (PAINTERS' WAGES).
asked the Financial Secretary to the War Office whether he is aware that up till September last the painters employed in the Gretna factory were classed as skilled workmen and received the Carlisle painters' rate of wages; that now the painters are the only class of skilled workmen in Gretna factory who are not receiving the skilled rate for the district; and whether he will take steps to rectify this matter?
I have been asked to answer this question. The wages of painters and Various other employés at Gretna were altered in September last to bring them into accord with the rates understood to obtain for the nearest comparable employé in private engineering establishments in the Carlisle district, and the change in the case of painters was approximately the same as in the case of other employés at the factory. I am not aware that the men in question have ever been treated as fully skilled workmen entitled to the rates of wages obtaining for skilled workmen employed under building trade conditions. If the hon. Member has any reason for thinking that the rates of any of the men concerned are less than "fair" within the meaning of the "Fair Wages Resolution," I should be glad to make further enquiries if he will acquaint me with the details of any case that he may have in mind.
IRAQ.
CABINET PORTFOLIOS.
asked the Secretary of State for the Colonies whether the vacant portfolios in the Government of Iraq have yet been filled?
The post of Minister of Public Works has been filled. Whether the other vacant offices have been filled or not has not been reported by the High Commissioner.
Are these Ministers nominated by the British representative, and have they to contest a bye-election as in this country?
I cannot answer as to bye-elections. With regard to the first part of the question, Ministers are selected by His Majesty King Feisal.
RAID.
asked the Secretary of State for the Colonies whether he has any further information with regard to the recent raids into the territories of the King of Iraq by adherents of Ibn Saud; whether His Majesty's Government or the Government of King Feisal is represented at the Court of Ibn Saud; whether satisfactory explanations of the recent raids have been forthcoming; and whether the payment of the monthly subsidy to Ibn Saud has been suspended or retarded?
As to the first part of the question, there has been no further trouble, and recent information tends to show that the attack was perhaps mainly due to a sheikh belonging to one of the border tribes of Iraq, and that in any case the raid was carried out without the approval or even cognisance of Ibn Saud. As to the second part, a representative of the High Commissioner for Iraq has been with Ibn Saud recently, and a representative of Ibn Saud has been in Iraq on two or three occasions to discuss pending questions with the High Commissioner; but neither His Majesty's Government or Ibn Saud has at present a regular arrangement for the appointment of diplomatic representatives, nor is either King Feisal or Ibn Saud represented at the Court of the other. The reply to the fourth part of the question is in the negative.
Is not this money paid in arrear, subject to good order being kept amongst these very outlying sheikhs, who seem to be making trouble, and ought not we to stop some of the money as a lesson for the future?
The hon. and gallant Member is quite correct in stating that the subsidy is paid in arrear. There would have been, however, no justification for withholding payment to Ibn Saud unless my right hon. Friend had cause to believe that he was responsible for these disturbances. As a matter of fact, the full information, when he received it, and the extremely frank ex- planation afforded by Ibn Saud, were sufficiently strong to convince him that there was no justification for withholding it.
If Ibn Saud cannot control the tribes within his nominal territory, what is the use of paying him a subsidy?
IRELAND.
BRITISH OFFICIALS, DUBLIN.
asked the Secretary of State for the Colonies if Mr. Cope is still in Dublin; if so, what position he holds, whether under the Provisional or British Government; and by which Government is he paid?
Mr. Cope is still in Dublin. He holds the position of Assistant Under-Secretary to the Lord Lieutenant, and is in the service of and is paid by the Imperial Government.
Will the right hon. Gentleman say what duties Mr. Cope is performing, seeing that the administration of Southern Ireland has been handed over to the Provisional Government?
Mr. Cope and other Imperial servants are engaged in winding-up various Imperial services. They are all doing their duties under great difficulties. They are all amenable to this House, and their conduct can be raised on the Irish Estimates. I do not think it helpful to these gentlemen in their difficult situation that the policy adopted by the House should be criticised from day to day.
Can these gentlemen do something to save the lives of the Protestants in Cork?
What about the Catholics in the North of Ireland?
Can the right hon. Gentleman tell us will they go when they are wound-up?
LORD LIEUTENANT.
asked the Secretary of State for the Colonies what is the position which Lord FitzAlan now holds in Ireland; is he still acting as Lord Lieutenant; and, if so, what are his duties and his powers?
Yes, Sir, Lord FitzAIan is still Lord Lieutenant of Ireland. His duties and powers are as stated in the reply which my right hon. Friend gave to the Noble Lord the Member for South Battersea (Viscount Curzon) on the 13th February last.
Are the Lord Lieutenant and his staff making any efforts to protect these loyalists who are being murdered every day?
Surely the hon. Member knows that the position of the Lord Lieutenant in Ireland is very similar to that of a Governor-General in Australia or in Canada. He acts under the advice of his constitutional advisers, and he cannot act in any other way.
Cannot something be done to get back the Lord Lieutenant's motor car, which has been stolen by the Provisional Government?
As the right hon. Gentleman mentioned the Dominions, may I ask whether Ireland is not in the United Kingdom, and, as such, in a different position from the Dominions?
Who are the constitutional advisers of the Lord Lieutenant?
The Governments of Ireland.
Which part?
The two Irish Governments.
Is not Dail Eireann the Government of Ireland?
That is an argument, and not a question.
CIVIL SERVANTS (SUPERANNUATION).
asked the Secretary of State for the Colonies if he will state definitely what are the exact terms to which Irish civil servants are entitled who may voluntarily retire in consequence of the change of Government; whether, in addition to the transitional period, they are entitled to have abolition years added in accordance with the Superannuation Act, 1859; and, if so, what are the exact number of years which should be so added?
Irish civil servants who may voluntarily retire in consequence of the change of Government are entitled to terms not less favourable than those accorded by the Act of 1920. That Act provides that the years of service of such a civil servant shall be reckoned as if he had served up to the end of the transitional period or to the time when he would have reached the age of 65, whichever may be the earlier, and that there shall be added any additional years which he may be entitled to reckon under Section 4 of the Superannuation Act, 1859.
If a man decides to continue under the Provisional Government of Southern Ireland, will the years that he has served under the British Government be counted in his time?
I must ask the hon. Member to put down that question.
Is the right hon. Gentleman aware that there are many civil servants in Ireland who will have-to retire, and for whose case there is no provision under the Government of Ireland Act, 1920; and can he state the conditions under which those men will be entitled to retire?
I must ask hon. Members to put questions of that kind down. I cannot answer a technical question like that without notice.
Is not the question perfectly general as to civil servants in Ireland who have to retire, whether under the Act of 1920 or not?
PRISON OFFICERS (SUPERANNUATION).
asked the Secretary of State for the Colonies if he will state definitely whether Irish prison officers who may voluntarily retire in consequence of the change of Government, and who have served, say, 23 years, would, on having the transitional years added to their service, be entitled to receive their full pension as though they had actually served 30 years in accordance with Section 1, Sub-section (1, b ), of the Superannuation (Prison Officers) Act, 1919?
Yes, Sir. A prison officer of 23 years' service to whom the Superannuation (Prison Officers) Act, 1919, applies, who may voluntarily retire in consequence of the change of Government, will be entitled to compensation not less favourable than that accorded by the Act of 1920, namely, an annual allowance calculated in accordance with the Act of 1919 as though he had actually served to the end of the transitional period or to the time when he would have reached the age of 65, whichever may be the earlier.
ELECTIONS, SOUTHERN IRELAND.
asked the Secretary of State for the Colonies when the elections in Southern Ireland will take place; and what measures have been taken to ensure that those with a right to vote will be allowed to do so without coercion of any kind?
I understand that the Provisional Government hope to be in a position to arrange for the holding of an election next month. It is for that Government to take such steps as may seem to them most efficacious to prevent intimidation or coercion, and I cannot make any statement on the subject.
Will the right hon. Gentleman communicate with the Southern Government and ask them to take necessary steps in order that those people who are desirous of showing what their will is may be protected?
In view of the disturbance that took place last night in St. George's, Hanover Square, at a meeting in support of one of the Government's candidates, will due and adequate steps be taken to protect the electors of Westminster?
FOUR COURTS, DUBLIN (SEIZURE).
asked the Secretary of State for the Colonies whether any steps have been taken to recover possession of the Four Courts, in Dublin, which have been recently seized by armed rebels; whether he can state in whose custody are the books and papers relating to the £5,000,000 trust funds, or there-abouts, now being administered by the Irish Courts; whether these books and papers are the property of the British Government, or of some Department of that Government; and whether it is possible, failing access to these books and papers, to make the usual payments to the numerous persons interested, many of whom are poor, and are solely or mainly dependent on these payments for their maintenance?
The question of the steps to be taken for the recovery of possession of the Four Courts is one for the Provisional Government, and I cannot make any pronouncement on the subject. The documents referred to are the property of the Supreme Court of Judicature of Southern Ireland, for which the British Government's responsibility ceased on the 1st ultimo. I understand that duplicates of some of these documents exist outside the Four Courts, and that, while hardship will undoubtedly be inflicted upon a large number of innocent beneficiaries of the trust funds, it will probably be possible to proceed with many of the payments.
Will the right hon. Gentleman take steps, by representation to the Provisional Government or otherwise, to prevent the infliction, to which he refers, of gross hardships upon these, innocent persons, who, after all, are British subjects?
Does the right hon. Gentleman think that the Provisional Government, which cannot retain possession of its own principal law courts, will be in a position to offer protection to voters at an election?
With reference to the question of the right hon. Gentleman the Member for the Scottish Universities (Sir H. Craik), each Member of the House must draw his own conclusions. With reference to the question put by the hon. and learned Member for York (Sir J. Butcher), the Provisional Government is responsible for the administration of law and order in Dublin and Southern Ireland, and it is not possible for His Majesty's Government to intervene otherwise than by way of suggestion in a case like this.
Can the right hon. Baronet give any information as to the seizure of money from the banks?
That does not arise here.
Is the Government quite satisfied with the result of its policy?
That is a matter for debate.
ROYAL IRISH CONSTABULARY.
asked the Secretary of State for the Colonies whether he can now give particulars to the House as to the kidnapping and removal of two ex-Royal Irish Constabulary men on their way to England from the Holyhead boat, a British vessel, just before she sailed from Kingstown during the Easter recess; what has happened to these men; what action is being taken by the British Government for the protection of demobilised men of the Royal Irish Constabulary; and what, if any, arrangements have been made with the Provisional Government to secure the protection of demobilised soldiers and other persons who have been in the employ of the British Government from the serious danger to their lives and property with which they are daily threatened?
In reply to the first part of the question, as soon as the report of this alleged outrage was brought to my notice I made inquiry from the officers of the ship, from the Dublin Metropolitan Police on duty at the quay, and from the Royal Irish Constabulary authorities in Dublin, but could obtain no confirmation of the report. I was further informed that a certain sergeant whose name was given to me was a member of the party upon whom this outrage was committed, and this sergeant has been interviewed, but states that no molestation or interference of any kind between Gormanstown and Kingstown or elsewhere was experienced by the party of which he was a member. I have therefore at present no information leading me to suppose that any such outrage has in fact occurred, but I should welcome and would immediately investigate any further information which may be in the possession of the hon. Member. The second part of the question does not arise. In reply to the remainder of the question, the public discussion of such arrangements as are possible for the protection of persons and property would clearly serve no useful purpose.
I did not ask what arrangements have been made, but if any arrangements have been made which the British Government consider adequate for the protection of the life and property of ex-service men and others in Southern Ireland.
Have any of those who have committed murders in the North of Ireland on Roman Catholic subjects of His Majesty yet been discovered and tried?
That does not arise upon this question. In reply to my hon. Friend (Sir W. Davison) every step that can be taken has been and is being taken to protect the lives and property of people in Ireland as well as people who leave Ireland and come to this country. It is a most distressing and difficult position, I agree, and I regret that more effective steps, both financially and legally, cannot be taken.
Is the right hon. Baronet aware that last week the Ross-lare boat was crowded with refugees flying for their lives from Southern Ireland?
No, I am not aware of that fact, and I do not believe it.
On a point of Order. Are Members of this House entitled, in asking questions about a country which you have ruled they cannot ask questions about, to make charges of this character?
Has not the right hon. Baronet already admitted the responsibility of His Majesty's Government, when their old servants come home after their disbandment, to protect their families from being murdered?
This is a point on which I have allowed questions.
CATTLE (EXPORT TO GREAT BRITAIN).
asked the Minister of Agriculture whether he has taken the opinion of the Law Officers of the Crown as to the effect of the passing of the Irish Free State Act on the question of the importation into Great Britain of store cattle; if so, what is their opinion; and whether he proposes taking any further action in the matter?
I am advised that the expression "United Kingdom" in the definition of the word "foreign" in the Diseases of Animals Act, 1894, means the territory comprised in what was the United Kingdom at the time of the passing of the Act and that consequently animals from the Irish Free State are not foreign animals for the purposes of the Act. It will probably be desirable, however, to remove any possible doubt by including a provision on the subject in a Bill dealing with the Irish question
TANGANYIKA TERRITORY.
asked the Secretary of State for the Colonies whether his attention has been drawn to the proposed issue of a public loan for the development of Tanganyika Territory; and whether our mandate in respect of that country contains any provision for the raising of such loan on the credit of the district?
It is not proposed to issue a public loan for the development of Tanganyika Territory. The second portion of the question, consequently, does not arise.
Are we not charging against Tanganyika Territory, which is a mandated territory, the Grant-in-Aid that we were forced to make to that territory, either last year or this year, in order to make both ends meet?
If my hon. and gallant Friend means by that the Treasury Grant-in-Aid, the interest upon which is chargeable against Tanganyika Territory, that is so.
Is it within the scope of our Mandate to make this mandated territory accept a loan from the British Government?
I think it is evidently within the scope of the Mandate to invite the mandated territory to charge its revenue with something which is obviously in the interest of the mandated territory.
PENITENTIARY STAFF, KINGSTON, JAMAICA.
asked the Secretary of State for the Colonies whether he received several months ago a petition from the Kingston penitentiary staff, Jamaica, relating to their conditions of service; and, if so, what action does he propose taking in the matter?
I have to refer the hon. Member to the reply which my right hon. Friend gave on the 17th March on this subject to the hon. and gallant Member for Westminster (Brigadier-General Nicholson).
CRUELTY TO CHILDREN, TOTTENHAM.
asked the Secretary of State for the Home Department if he is aware that at Tottenham Police Court on Thursday, 20th April, a man named Charles Whybrow and his wife were sentenced to a month's imprisonment on a charge of cruelty to children; and that the police-inspector in the case gave evidence that the children were well fed and clothed and that the best that could have been done for the children under the circumstances had been done; and, in view of the great difficulty people have in obtaining suitable house accommodation at the present time, will he take this case into his sympathetic consideration with a view to the remission of the rest of the sentence?
I have made inquiries. The case was adjourned from time to time to enable Mr. Whybrow to obtain other accommodation, which he said he could do, and he was told that if he failed he must apply to the guardians. The court came to the conclusion that Mr. and Mrs. Whybrow were wilfully defying the law. I regret I cannot therefore interfere.
Is it advisable for men who do not want to go on the Poor Law relief to be forced to accept it?
That may not be so, but you will have to consider the interest of the small children.
Is it not true that that is the evidence given by the police inspector, yet we are told the only remedy is that they must go into the workhouse to be kept by the ratepayers?
No. According to my information that was not the evidence.
Will the right hon. Gentleman take further steps, by investigation, to see whether the statements in the question are true?
I have made the fullest inquiries and had a full account from the Clerk of the Court of all the evidence.
LIQUOR TRAFFIC (STATE MANAGEMENT).
asked the Home Secretary if he will state, in connection with the State management districts, the total amount actually paid into the Exchequer up to the 31st of March, 1922, in replacement of capital cost; the total amount of interest actually paid into the Exchequer in respect of Exchequer advances up to the 31st March, 1922; and the amount still outstanding in respect of compensation on account of licensed properties acquired by the Central Control Board (Liquor Traffic)?
The total amount paid into the Exchequer up to the 31st March, 1922, in connection with the State management districts, was £477,102 6s. 7d., but none of the actual payments which together made up this total were earmarked as being so much for replacement of capital cost or initial advances, and so much for interest. In reply to the last part of the question, the capital liability in respect of properties which have been acquired, but for which the compensation has not yet been paid, is approximately £18,000.
asked the Home Secretary whether the Government have under consideration the question of extending the liquor control experiment which is in force at Carlisle; and whether, in view of the strong condemnation by the Geddes Committee of the Carlisle arrangements on financial and other grounds, he will appoint a Committee to conduct an impartial inquiry into the matter?
The question of extending the Carlisle system to other districts is not at the present moment under the consideration of the Government, and I do not find in the Report of the Geddes Committee any condemnation, strong or otherwise, of the Carlisle arrangements, or any ground for the appointment of a Committee to inquire into them.
Has the result of these operations been a financial success?
Yes, I think it has been. That we shall be able to deal with in debate.
Before arriving at that surplus, has interest been charged on capital and Income Tax and Corporation Profits Tax been paid, the same as in a private concern?
I have explained over and over again that the surplus money is paid into the Treasury and we do not go into the question.
Then it is impossible to find out whether it is a success or not.
That does not arise.
PUBLIC MOTOR VEHICLES.
asked the Home Secretary whether his attention has been drawn to a very serious accident to a public service motor vehicle in Knightsbridge recently, apparently due to the failure of the steering gear, which resulted in several casualties; whether he can state what steps, if any, are taken to ensure that public service vehicles in the Metropolitan Police area are kept in an efficient condition; whether the police have any power to compel the withdrawal of any vehicle which is observed to be plying for hire in an unsafe condition; and whether any penalty can be inflicted upon those responsible?
As far as information goes at present there is no evidence to show that the collision was due to the failure of the steering gear. The inspecting staff are engaged daily in inspecting public carriages at garages and in the streets with a view to their being kept in an efficient condition. During the year ended 31st December last 18,489 reports of unfitness (some of which were of minor importance) were dealt with. When a vehicle, upon inspection, is found to be in a condition unsafe for public use, steps are taken for its immediate withdrawal from the streets. Under the London Hackney Carriage Act, 1853, Section 17 (3), the driver of a public carriage who plies for hire with any carriage which is at the time unfit for public use is liable to a penalty of 40s.
Are we to understand from that answer that if the inspectors observe an unsafe vehicle in the street they can withdraw it?
Yes, that is so.
INDUSTRIAL AND REFORMATORY SCHOOLS.
asked the Home Secretary how many industrial and reformatory schools have been closed during the past two years; and what reduction of staff, if any, has accrued in his Department as a consequence?
Thirty-two schools have been closed. The Chief Inspector's clerical staff has been reduced by two clerks and a vacancy for an inspector has not been filled.
Have the children been removed from these schools to other schools?
Yes, when a school is closed the children are transferred to vacant places in equally good schools.
Why has not the number of inspectors been reduced?
Owing to the very largely increased amount of work in the schools, an increase of staff would have been necessary but for the closing of some schools.
METROPOLITAN POLICE.
asked the Home Secretary whether any reductions have recently been made in the annual clothing and boot allowances made to the members of the Metropolitan Police force; if so, can he state approximately what the annual value of the reduction will be to an officer and constable of this force; and will he state what is the total estimated annual saving to be made in these reductions on the whole force?
The boot allowance has been reduced by £2 12s. per annum (from 2s. to 1s. weekly) for all ranks. The anticipated saving amounts to £50,000 for the year. The reductions in the plain clothes allowances amount to £6 per annum (£16 as against £22) in the case of inspectors and £5 4s. per annum (5s. weekly as against 7s. weekly) in the ease of sergeants and constables. Only a small proportion of the force is affected by these reductions. The anticipated saving amounts to £6,000 for the year.
asked the Home Secretary what are the regulations with regard to Metropolitan Police on point duty wearing white gloves; whether he is aware of the experiments being carried out in provincial towns with white overalls and of the difficulty of distinguishing the signals of the officers in blue at badly-lighted points in the Metropolis; and whether he will consider experimenting with light-coloured overalls in the interests of the safety of the police and the public generally?
White gloves are supplied for each permanent traffic point. The question of supplying white overalls has been considered, but the Commissioner is of opinion that they would not be suitable for point duty under the conditions of London traffic.
Will the right hon. Gentleman consider the advisability of providing white sheets for people who continuously furiously drive?
Can the right hon. Gentleman say whether these gloves are supplied free?
I expect so; but I can ascertain.
Is there not the danger of people mistaking these men for ghosts at night?
That depends upon the condition of the person.
SCOTLAND.
ADVOCATE'S LIBRARY, EDINBURGH.
asked the Secretary for Scotland whether the sum of £2,000 included in the Estimates for 1922–23, in aid of the upkeep of the Advocate's Library, Edinburgh, represents the final decision of the Government at the present time; whether his attention has been called to the fact that this allowance is inadequate in present conditions, and is very much less than the sums which have been voted for some time to similar institutions in Wales and Ireland; and whether, in these circumstances, he is prepared to press for reconsideration of this matter with a view to a more substantial grant being given?
The answer to the first part of the question is in the affirmative. I am aware that larger sums have been voted to the National Libraries of Wales and Ireland, but, under existing financial conditions, I am not prepared to take action on the lines suggested by my hon. Friend. The grant of £2,000 is intended to enable the Faculty of Advocates to tide over the financial difficulties in connection with their library, and I have received no representation to the effect that it is inadequate for this limited purpose.
Having regard to the circumstances of this library in Edinburgh, may we hope for a readjustment of the grant, having regard to the fact that, other countries have had grants a long time, and nothing whatever has so far been allowed to what is becoming a Scottish national institution?
The question of its being a Scottish national institution will arise at a later date. I would ask my hon. Friend to recognise the generosity rather than the frugality of the Chancellor of the Exchequer.
LION FLAG.
asked the Secretary for Scotland whether his attention has been drawn to a communication received by the court of the Lord Lyon in Edinburgh from the Lord Chamberlain's office in London intimating that the Scottish Lion flag is to be hoisted on Holyrood Palace on certain days, but that this does not give any official sanction to the flying of this flag by private persons; whether the flag referred to in the communication is the flag with the device Or, a lion rampant within a double tressure flory counterflory, gules; and, if so, having regard to the fact that this flag has ceased since the union to be used as the personal flag of the Sovereign, will he make it clear that, in the terms of the Scottish Office circular of 18th June, 1907, there is no necessity to discourage its display?
I am informed that the communication issued from the Office of the Lord Chamberlain on the subject of the flying of the Scottish Lion flag over Holyrood Palace did not contain any reference to the flying of this flag by private persons. The flag referred to in the communication is that described by my hon. and gallant Friend. The Scottish Office circular of 18th June, 1907, is still in force, and, in point of fact, it is desired to encourage the display of this flag by private individuals.
HOUSING, THURSO.
asked the Secretary for Scotland whether he is aware that a large number of houses in Thurso have been reported by the local sanitary inspector as unfit for occupation; that 52 tenants have appealed to the local council to put in operation their powers to compel the property owners to put the houses in a reasonable condition for occupancy; that the council has declined to interfere; and whether, in view of the dissatisfaction that prevails among a large number of tenants, he will call for the reports of the sanitary inspector to be submitted to the Scottish Office for investigation?
I think that the hon. Member is under a misapprehension. The report in question was not a report that the houses were unfit for occupation, but a report for the purposes of the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, to the effect that the houses were not in such a state of repair as to entitle the owners to the increase in rent permitted by the Act. The Town Council took the action appropriate upon such a report, and issued the necessary certificates. I see no reason to take any further steps in the matter.
Is it not a fact that some of these houses, particularly the ones referred to in the question, were included in the report, and that increases of rent are being taken from those occupying the houses, and the Town Council of Thurso are not taking any action in the matter?
I have covered that question in my answer.
POST OFFICE.
POSTAL AND TELEGRAPHIC EATES.
asked the Postmaster-General whether the estimated Post Office surplus will be devoted to the reduction of postal and telegraphic rates?
I would refer the hon. and gallant Member to the statement made by my right hon. Friend the Chancellor of the Exchequer in introducing the Budget yesterday. I propose to deal fully with the question of Post Office finance when I introduce the Post Office Estimates on Thursday next.
DEVONSHIRE CREAM (PARCEL EATES).
asked the Post master-General whether he is aware that the charge for sending half-a-pound of Devonshire clotted cream by parcels post now amounts to 9d., or three times as much as was charged prior to the War, the consequence being that the charge has become practically prohibitive and seriously handicaps an important branch of the agricultural industry in Devonshire, which, in view of the plentiful supply of milk, is of increasing importance to the farmers and dairymen of that county; and can steps be taken to reduce these charges?
The parcel post rates are not remunerative and I regret I cannot at present reduce them. The initial charge of 9d. covers a parcel weighing up to 2 lbs., and for parcels of light weight, such as those to which my hon. Friend refers, the letter post is available at a lower cost.
TELEPHONES (LISTENING-IN).
asked the Postmaster-General whether listening-in in respect to telephone conversations is still continued in any official Department or in the office of any Minister of the Crown; and whether the record of any such conversations is kept?
I would refer the hon. and gallant Member to my answers to the hon. Member for Stratford on the 4th of this month, and the Noble Lord the Member for Battersea on the 21st March, which both relate to this subject.
Can the right hon. Gentleman say whether there is any machine or instrument for recording such conversations?
Is the right hon. Gentleman aware that I have never asked any question relating to Ministers of the Crown?
I do not quite understand what my hon. and gallant Friend means by instruments for recording conversations.
Are there any automatic instruments for recording these conversations, or have they to be listened in by the persons?
I have never in any answer said that the system of listening-in has been adopted in Government Departments. There is no recording instrument, 60 far as I am aware, which will record this or any other conversation.
IS the practice of listening-in adopted or not?
I have said repeatedly that, except where we are asked to do so by the police, there is no listening-in. Even then it would not be done except by my personal sanction.
There is no such instrument installed in Downing Street, that is certain?
NIGHT TELEGRAMS, LONDON.
asked the Postmaster-General in how many post offices in London it is possible to send telegrams during all hours of the night; whether any night offices have recently been closed in London; what is the latest hour one can send telegrams from the head and sub-district post offices in the London district; whether these hours have recently been curtailed; and, if so, for what reason?
The number of telegraph offices in London (including railway stations) open throughout the night is seven. The latest hour at which telegrams can be handed in at head offices and the principal branch offices in London is normally 8 p.m. There has been no recent curtailment of these hours. Telephone subscribers in London can dictate telegrams at any time to the Central Telegraph Office for onward transmission, and non-subscribers can also do so from call offices at telephone exchanges which are open always ( i.e., the majority of telephone exchanges in London) upon payment of the usual call office fee in addition to the charge for the telegram.
DISTRICT POSTAL NUMBERS.
asked the Postmaster-General if the adding of district postal numbers on London letters has been of great assistance in the sorting and delivery of London letters; whether, if letters are posted without the district number, it means any delay in the delivery of such letters; and, if this be the case, will Re have public notices to this affect displayed in all post offices and outside all London letter boxes which exist in London or at other chief post offices?
The addition to the London postal district initials of the number of the office of delivery in the address of a letter is, as the hon. Member suggests, of great assistance to the Post Office. I am glad to say that the practice is now generally adopted. According to returns recently taken, 85 per cent, of the letters delivered in the south-western district bore the number of the office of delivery. In these circumstances I do not think it necessary to incur at present the cost of further special advertisement. Letters not bearing the number of the office are delivery are sorted with other letters, but the presence of the number in the address simplifies the procedure and thus lessens any risk of delay.
Will the right hon. Gentleman consider conceding to Members of Parliament the great facility in their work of allowing them to know how soon or how late they can post to various constituencies in and around London?
That is a question which can be raised in the Debate on Thursday.
NAVAL AND MILITARY PENSIONS AND GRANTS.
ROYAL ARMY SERVICE CORPS (EX-PRIVATE T. D. MASON).
asked the Minister of Pensions whether he is aware that ex-Private T. D. Mason. 80, George Street, Heywood, late of the Royal Army Service Corps, who is suffering from permanent injuries received in the War, a pension of 9s. 6d. per week for 156 weeks has been awarded, with a terminal gratuity of £40, without the man being consulted as to taking a terminal gratuity; and, in view of the fact that the man's trouble is likely to grow worse with age, will he set aside the decision of the regional director and allow the man to be awarded from time to time what is his due, according to reports from medical boards who dealt with him?
The award is the appropriate compensation for disabilities assessed, as in this case, by a medical board at less than 20 per cent., and was made subject to the usual rights of appeal by the man through his local committee.
KING'S OWN ROYAL LANCASTER REGIMENT (J. ELMER).
asked the Minister of Pensions whether he is aware that Joseph Elmer, 36, Wingates Little Square, Westhoughton, late No. 17023, King's Own Royal Lancaster Regiment, joined His Majesty's forces in August, 1914, was taken prisoner in May, 1915, was in the hands of the Germans for three and a half years, suffered from head trouble and deafness from early in 1915, had been in hospital for treatment most of the time since his demobilisation, and that death took place from encephalitis lethargica on 18th March, 1922; that, in the opinion of the local war pensions committee, death took place owing to War service; that he left a widow and four children without any allowance whatever in respect of his War service; that there was no money available to bury him; and that he was buried at the cost of the Poor Law; and, whether, in view of the indignation caused thereby, he will inquire into the case with a view of paying the cost of the burial, and grant some allowance to the widow and children, and prevent similar occurrences in future?
Compensation was granted to this man for deafness, but the encephalitis lethargica from which he died could not be accepted by the Ministry as either due to or aggravated by his service, and, accordingly, the cost of his funeral could not be defrayed from Ministry funds. The widow was married to the late soldier some time after his discharge, and, therefore, neither she nor her children are eligible for pension. A claim for pension may, however, be made through the local committee in respect of the children of a former marriage, and if that claim is rejected by the Ministry on grounds of entitlement there would be a right of appeal to the Pensions Appeal Tribunal.
Will the hon. Gentleman take steps so that we can avoid such cases as this in future, where a discharged soldier is buried by the Poor Law authorities?
If he had been in our care in one of our hospitals he would have been buried at the cost of the Ministry of Pensions.
Then because a man has been fortunate enough to get well when he dies he must be buried by the Poor Law authorities?
The hon. Member may-take it that the Ministry cannot, under its Constitution, pay for the funeral of a man whose death was not attributable to the War.
ELECTORAL REFORM.
asked the Prime Minister whether, having regard to the fact that in three-cornered electoral contests persons who represent only a minority of the electors are not infrequently returned to this House, he will consider the advisability, with a view to removing this anomaly, of introducing legislation for the institution of proportional representation or the alternative vote at Parliamentary elections?
The Government have been fully occupied with other and more urgent questions and have not discussed further reforms in our electoral system. Personally, I am not clear that the assumption underlying this question is correct, namely, that in' the case of a three-cornered contest the two minorities are necessarily in greater agreement with each other than one or both of them may be with the majority. Several other matters of importance are raised by the question, but it would be improper for me to stretch a Parliamentary answer to the length necessary for their adequate statement and consideration.
Has any report been made to the Cabinet on this subject by the Minister of Health, and, if so, has such report been considered by the Government?
I have said, using the formula current in my younger days, that the Cabinet have been engaged considering more urgent questions, and have not considered the further reform of our electoral system. As regards any memoranda submitted to the Cabinet, I must entirely demur on this or any other occasion to stating what papers are submitted to the Cabinet.
In view of the fact that the Government imposed a system of proportional representation on Ireland as one of the highest forms of governmental wisdom, why has similar provision not been made for this country?
So far as the hon. Gentleman asks my opinion, that is a matter of debate rather than of question and answer. So far as he is professing to give a statement of facts, I concurred in the establishment of this system in Ireland rather reluctantly, but preferred to see it established in Ireland rather than in this country. The results accruing so far in Ireland have not shattered my conviction.
Did the right hon. Gentleman concur in the adoption of this system in Ireland as the result of his convictions or as a political expedient caused by his position as a Member of the Coalition Government?
TURKEY.
ANGORA GOVERNMENT.
asked the Prime Minister whether he will issue as a Government Paper the reply of the Angora Government to the collective Note of the Allies of 15th April?
His Majesty's Government consider that no useful purpose would be served by the premature and partial publication of the correspondence between the Allies and the Greek and Turkish Governments, which is still proceeding.
Would the word "Allies" cover Italy in view of the announcement in to-day's papers?
Certainly.
Is the right hon. Gentleman aware that the newspapers to-day state specifically that Italy has concluded a separate treaty with Turkey?
CONSTANTINOPLE QUAYS.
asked the Prime Minister whether certain quays at Constantinople have been purchased by the Foreign Office or any other Government Department; if so, will he indicate the time and terms of Parliamentary sanction to the purchase and the price paid; whether any profits have accrued from the transaction; and to what purpose such profits have been devoted?
The Constantinople quays, which are managed by a company, have not at any time been purchased, either by the Foreign Office or any other Government Department.
Is the right hon. Gentleman aware that the terms of the alleged transaction, as set forth in this question, showing the price paid, the amount of the profits, and the purpose to which the profits have been devoted, associated with the names of Lord Grey and Lord Hardinge, are given in Colonel Repington's book?
No. I am not aware of what is contained in the book, but my information is what I have just given to the House.
If the information is to be found in that book, then, having regard to the seriousness of the situation, what action will be taken?
VEHICLES (LIGHTS).
asked the Prime Minister whether the Government propose to introduce this Session any Measure amending the laws relating to the lights to be carried at night by bicycles and other road traffic and, if so, when?
I have been asked to answer this question. I hope it will be possible to introduce a Lights on Vehicles Bill before the end of the present Session.
Will the hon. Gentleman take steps to make more complete inquiry among the users of the humble bicycle before he introduces this Bill?
My hon. Friend never lets me forget them.
GENOA CONFERENCE.
asked the Prime Minister what general instructions were given to the financial experts and economists representing His Majesty's Government at the Genoa Conference on the subject of the removal of barriers and impediments to the free exchange of goods and the free movements of individuals across the various frontiers of Europe?
His Majesty's Government were represented by Ministers on the Economic and Transport Commissions set up by the Genoa Conference to study the subjects referred to in the question. The general lines laid down for these discussions are indicated in the report of the experts who met in London during March. This report was issued in full to the Press on 13th April and was published in most of the important newspapers.
In view of the findings of the experts, do the Government propose to repeal the Safeguarding of Industries Act for the improvement of commerce?
asked the Lord Privy Seal whether the Currency Commission of the Finance Commission at the Genoa Conference arrived at the conclusion that inter-Governmental liabilities can only be paid in so far as an export surplus is available for the purpose and that the country which has excessive liabilities or external debts cannot be expected to balance its Budget; and whether these results have been communicated to the Reparation Commission for consideration in connection with the determination of the German indemnity?
The Report of the Commission which contains some such passages, but couched in less positive language, has been published, but has yet to be confirmed by the Conference.
Are we to take it that the recommendations of the Reparation Commission will not be in harmony with the recommendations of this Committee?
DYESTUFFS (IMPORTATION).
asked the Lord Privy Seal whether, seeing that the London memorandum of the experts states that the limitation of import should be effected by the medium of Customs duties rather than by a system of prohibition modified by licences, an Amendment to the Dyestuffs Act is to be introduced by the Government?
I have been asked to reply. The answer is in the negative. Dyestuffs constitute one of those special cases which the memorandum expressly contemplates.
LEAGUE OF NATIONS (GERMANY).
asked the Lord Privy Seal whether, in view of the statement by the Prime Minister at Genoa, that until all countries were members of the League of Nations peace in Europe was hardly possible, he can say what action was taken by the British delegates at the last assembly of the League of Nations in relation to the admission of Germany?
The admission of Germany to membership of the League of Nations did not come up for consideration at the last assembly, no application for admission having been made by, or on behalf of, that State.
Was it likely that application would be made if it was known that it would not receive the support of this country?
That is an entirely different question.
Were any instructions given to delegates to support such an application if it was made?
No.
RUMANIAN GOVERNMENT (LOAN).
asked the Chancellor of the Exchequer whether the Rumanian Government has recently raised or is at present negotiating the raising of a loan in London on the security of the unexploited petrol lands owned by that nation; whether His Majesty's Government have given any facilities for the raising of this loan; what is the amount of the loan; and whether he will give the names of the group who are providing the loan?
I am not aware of what negotiations the Rumanian Government may be conducting, but no such loan has in fact been raised. As my right hon. Friend the Chancellor of the Exchequer has frequently explained, the London market is open to borrowers and the consent of His Majesty's Government is neither asked by borrowers nor required.
INCOME TAX.
asked the Chancellor of the Exchequer how many persons actually pay 6s. Income Tax on every pound of their income; how many pay more than 5s.; and what is the average tax per pound of income returned for assessment?
I am sending my hon. Friend a table showing the effective rates of tax ( i.e., Income Tax, including in the higher ranges of income, Super-tax) payable in the circumstances there stated upon each pound of the taxpayer's actual income. For statistics of the estimated numbers of taxpayers, classified according to the amount of total income, I beg to refer my hon. Friend to Table 64 for the year 1918–19, on page 70 of the 63rd Report of the Commissioners of Inland Revenue (Command Paper 1083). No later figures are yet available. The average effective rate of Income Tax (excluding Super-tax) levied on each pound of actual income was 2s. 11d. in the year 1918–19, 2s. 8d. in the year 1919–20, and is estimated at 2s. 10d. in the year 1920–21.
Will the tables sent to the hon. Member be published in the OFFICIAL REPORT?
The tables to which I referred will be published.
BRITISH CELLULOSE COMPANY.
asked the Chancellor of the Exchequer the position of the British Cellulose Company; what is the total British Government loss; whether the Government has given away the 750,000 preference shares they held; who holds the present first and second debentures; and what is the amount, in sterling, of goodwill, patents, and patent rights in the new organization?
I would refer my hon. Friend to the exhaustive Report of the board of directors and to the chairman's speech delivered at the annual general meeting of the company held yesterday.
Were the Government consulted on this reorganisation?
Undoubtedly.
In view of what has happened, will the Government now consider the selling of all other speculative investments which they now hold while they still retain some value in the market?
Without accepting the hon. and gallant Gentleman's description "speculative," the question of the policy of realising Government investments is always under review.
Does the hon. Gentleman remember my advice only a short time ago with regard to the Anglo-Persian Oil shares?
Would it not have been better to have sold these 750,000 shares for what they would fetch, even if for only 6d. a share, than to give them away?
The preference shares in question were of no realisable value when they were surrendered.
Is it not true that two or three months ago the shares now given over to this company were valued at over £200,000 and that by selling them the Government would have made £200,000 on the 750,000 preference shares they have now handed over? Why is it that the Government are handing over properties that are supposed to belong to the Government without taking into consultation the Members of this House, as is done when they come to the House and ask Members to pay the calls for Anglo-Persian Oil Company shares?
With regard to the first part of the question, if the hon. Member has ever seen any such optimistic valuation as that mentioned for the securities I should be interested, but surprised, if he would call it to my attention.
I will.
As to the second part of the question, it is far from being what is rather suggested in the question, the waste of a valuable asset. On the contrary, it was a necessary step in order to appreciate the remaining part of the Government's holding in this company.
Is it not the case that the Government actually had mortgages and debentures on the stocks and assets of this company?
Will the House have an opportunity of discussing the matter, and were the Government advised that they have power to give away these shares without any Parliamentary sanction?
There is no specific occasion on which such a matter as this—to the best of my knowledge at the moment—can come before the House for an ad hoc Vote. On the other hand, of course, it can be discussed on such general opportunities as arise on the salaries of those concerned.
—
We cannot now debate the matter.
CZECHO-SLOVAKIA.
asked the Chancellor of the Exchequer if the Czecho-Slovakia Government owes Great Britain any War debts?
Czecho-Slovakia received no War advances, but she owes this country £479,000 in respect of relief loans and £1,500,000 in respect of wheat supplies. Arrangements have been made for the repayment of this latter loan.
PULHAM AERODROME.
asked the Secretary of State for Air if he has received any complaints from the Pulham Parish Council, Norfolk, in reference to letting the land at the air station at Pulham, amounting to nearly 1,000 acres; and, if so, seeing that there are so many people living in the district, many of them ex-service men, wanting land and who would put it under much better cultivation, if he will consult with the parish council with a view of these ex-service men and others acquiring some of this land?
Representations were received from the local parish council in regard to the letting of the Pulham Aerodrome to smallholders, but it is most undesirable to split up land in small lots for cultivation before the future of the station has been settled. It is, at pre sent, impossible to forecast how long this land may be in the hands of the Government, and it may be necessary, at any moment, to dispose of it at very short notice. It would clearly be against the interest of smallholders that they should take up land of such very uncertain tenure. Should it be decided to retain the land permanently, the ground would be required for use as an aerodrome and it would not then be possible to let it to smallholders.
Is it not a fact that the man to whom this land was let is allowing it to lie almost derelict? Would it not be far better to let the land to the ex-service men in the district, many of whom are unemployed, to enable them to get an honest living?
I think my hon. Friend will appreciate the difficulty in connection with aerodromes and airship stations. There has been a doubt whether the Government would retain them, or whether a private company would take them over. That doubt will be settled soon, one way or the other.
Would it not be more advisable to colonise England than to send these people out to Australia?
CHESHAM HOUSE.
asked the hon. Member for the Pollok Division of Glasgow, as representing the First Commissioner of Works, how much money His Majesty's Government have spent in connection with Chesham House since 11th November, 1918; how much of this sum was spent in rent and how much on other purposes, and what purposes; what was the date of the last payment; what are the outstanding liabilities; who is the present tenant of Chesham House and why; and whether it is the intention of His Majesty's Government to return this building to the Russian Government?
His Majesty's Government have spent in connection with Chesham House, from the 11th November, 1918, to the 31st March, 1919, when all payments ceased, approximately £15,111. Of this, £557 11s. 5d. was for rent, £2,725 6s. 8d. for the upkeep of the embassy and church, £2,884 for the maintenance of the military agency, £1,837 2s. 3d. for the upkeep of Russian trustees and staff, £4,666 1s. 4d. for the upkeep of Russian Consulates, about £440 on account of the naval attaché, and £2,000 on account of Russian relief. His Majesty's Government have no outstanding liabilities in this connection. The present tenant of Chesham House is Countess Benckendorff, who has leased the house from its owner. In these circumstances His Majesty's Government have no ground for intervening in its occupancy.
Would the Noble Lord find out who is the owner of this house?
That does not concern the Government in the least.
JURIES BILL [Lords].
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.
Bill, as amended ( in the Standing Committee ), to be taken into consideration To-morrow, and to be printed. [Bill 104.]
BRISTOL TRAMWAYS BILL.
Reported, with Amendments; Report to lie upon the Table, and to be printed.
STANDING COMMITTEE A.
Sir SAMUEL ROBERTS reported from the Committee of Selection; That they had discharged the following Member from Standing Committee A: Mr. Alfred Davies; and had appointed in substitution: Mr. Myers.
Sir SAMUEL ROBERTS further reported from the Committee; That they had added the following Fourteen Members to Standing Committee A (in respect of the Rating of Machinery Bill): Sir John Harmood-Banner, Mr. Banton, Sir Joseph Davies, Lieut.-Colonel Hurst, Mr. Haydn Jones, Sir Ashton Lister, Major Molson, Sir Alfred Mond, Sir James Remnant, Sir Alexander Richardson, Mr. Robert Richardson, Mr. George Roberts, Colonel Penry Williams, and Sir Kingsley Wood.
STANDING COMMITTEE B.
Sir SAMUEL ROBERTS further reported from the Committee; That they had discharged the following Member from Standing Committee B: Mr. Jellett; and had appointed in substitution: Mr. Hannon.
Sir SAMUEL ROBERTS further reported from the Committee; That they had added the following Fifteen Members to Standing Committee B (in respect of the Empire Settlement Bill): Mr. Amery, Mr. Bigland, Mr. James Brown, Sir Henry Cowan, Captain Gee, Sir Clement Kinloch-Cooke, Mr. Marriott, Mr. Gideon Murray, Sir Henry Norman, Mr. Alexander Shaw, Sir Robert Thomas, Colonel Wedgwood, Mr. Wignall, Mrs. Wintringham, and Sir Frederick Young.
Reports to lie upon the Table.
GAMING BILL [Lords].
Bead the First time; to be read a Second time upon Tuesday next, and to be printed. [Bill 105.]
WAYS AND MEANS.
Considered in Committee.—[ Progress, 1st May. ]
[Mr. JAMES HOPE in the Chair.]
AMENDMENT OF LAW.
Motion made, and Question proposed, That it is expedient to amend the law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance.
There was a very striking testimony yesterday to the remarkable interest which the Budget statement of the Chancellor of the Exchequer evoked in the House, since, contrary to the usual custom, the debate was carried on until nearly 11 o'clock, and large numbers of Members indicated their desire, even at that late hour, to take part in it. I hope that the Leader of the House will take the eagerness displayed by Members into favourable consideration and not close his mind to-night to what may be the desire of the Committee to continue the discussion until 8.15 to-morrow. The interest in the Budget statement is not by any means confined to this House. It has often been said that Budgets are by no means matters merely of figures, but very human documents. There is not a working man's home in the land which is not as deeply interested in the Budget and its action and reaction as are financial houses in the City. Therefore I approach consideration of the statement made yesterday with the exceptional national interest in the Budget fully in my mind. Of one thing, at any rate, there can be no doubt. One of the most urgent and vital needs of the nation to-day, in its financial position, at any rate, is the reduction of taxation. I would single out especially the reduction of the Income Tax. No one who knows anything about business and its difficulties to-day can be otherwise than of opinion that a reduction of the imposts of taxation of trade and commerce is of first, indeed of vital, importance.
I would say, at the outset, that we all feel a very considerable amount not only of personal, but of a much wider interest, in the statement which the Chancellor made yesterday, when, being possessed of a surplus—at any rate, what he calls a surplus—he made a choice between the redemption of debt and the reduction of taxation, and elected to reduce taxation. That is a matter for which he takes responsibility and which, as a taxpayer, and also perhaps in the wider aspect, I am not disposed to criticise over-severely subject to qualification which I shall lay before the Committee in the course of what I have to say at a later stage. It is perfectly true that, so parlous is the condition of commerce to-day, it is possible that the authorities may collect just the same amount from a 5s. Income Tax as they got by a 6s. tax. That is a very remarkable reflex of the serious position in which the country is placed financially to-day. There are one or two other exemptions from taxation which the Chancellor has made. Since he has had to do something as well as reduce the Income Tax, he has selected tea as the favoured item among other articles of the breakfast table. It is, of course, a welcome reduction, but I am quite certain that in the choice he has made he has not selected the article which is really of the greatest importance to the country. Take, for instance, sugar. Had he taken 1d. off sugar, I believe it would have resulted in a loss, which he would have had to make up somehow or another, of about £11,000,000 to the Exchequer.
Yes, £11,000,000.
I would urge the consideration that sugar is a raw material of great importance to the country. The confectionary trade, the jam trade and ancillary industries depend on reasonably cheap sugar as the mainstay of their continued progress, and those are also most important exports of this country. Further, it is a food of the people, and I am certain the reflex of the lessening of taxation on sugar, in the homes of the working people of this country, would be more beneficial than the reflex of the relief in taxation on tea—important and welcome as that is. The right hon. Gentleman has hit upon the farmer for some additional relief, and I do not object to that. The farmer did well in the War; so did other trades do well in the War. He is doing very badly now; so are other trades doing very badly now. I admit, however, there are some special circumstances in connection with agriculture, and I, for one, do not quarrel with the fact, that in making his selection among the many applicants for his favour the right hon. Gentleman's choice has fallen upon mitigation of taxation for the farmer and some mitigation of the returns which the farmer had to make under the conditions which previously obtained.
4.0 P.M.
I would now direct the attention of the Committee to the Financial Statement itself. On page 3 is set out the result of the various taxes during the past year. As my right hon. Friend and leader (Mr. Asquith) said yesterday, the Estimates for Customs and Excise were remarkably accurate, but the Estimates under the head of Inland Revenue from Estate Duties, etc., down to Corporation Profits Tax, were unusually bad. What the reason for that is, I do not fully appreciate. Some margin of error is quite natural, but I would call attention to the very great amount of error which we find here. Stamps do not show so very much, but under this heading there is £1,362,000 on the wrong side. Income Tax is more than £11,500,000 short; Excess Profits Duty, £89,500,000 short, and the Corporation Profits Tax, in round figures, £12,500,000 short. That is very bad estimating. Rarely indeed, in the history of Budgets presented to Committees of this House has there been so large a margin of error as is disclosed here. That leads me to comment on the similarity between the legislative efforts of the Government and their imposts of taxation, and on the empirical methods which they have adopted. Statutes have been placed on the Statute Book; Statutes have been taken off the Statute Book. Look at the Government's taxes and we find the same fault lies there. The Excess Profits Duty was purely a War measure and it was placed on business by Mr. McKenna, on the distinct understanding that at the very earliest opportunity after the close of the War it should be abolished. We remember the discussion in this House on that subject. What was the action of the Government in regard to it? They extended it, they raised it, and finally they had to abolish it. As a peace tax it was a thoroughly bad tax, and had they possessed prescience they should have carried out the obligations imposed upon the Government of the day by the then Chancellor of the Exchequer and they should have done two years ago what they had to do finally last year. Then see what has happened with another tax, the wines and cigar tax. The operation of that tax disclosed the fact that it had been put on at such a high rate as to kill the trade, and the only remedy was to get rid of it. The new postal taxes—for after all that is what they amount to—imposed last year handicapped business. I may say there was increased revenue in this case but the results to business were so obvious that after somewhat less than a year's experience the Chancellor of the Exchequer had to say that this again was a miscalculation. At any rate, that is what I submit. Then take the Corporation Profits Tax. That has yielded £12,500,000 less than was anticipated. It is the kind of tax which is bound to create injustices and irritation, it has proved by no moans so fruitful as was anticipated, and the way in which it has operated brings at once before the Committee and the Chancellor of the Exchequer the need, as the hon. Gentleman the Financial Secretary to the Treasury said last night, for very careful revision at the hands of the Committee. That being the ease in regard to these taxes to which I have referred, what substance of real strength is there for the anticipation of the Chancellor of the Exchequer that his estimates will work out more favourably for him in the future? I remember yesterday that the right hon. Gentleman administered some measure of castigation to me because I had in July last year said that his Budget lay in ruins at his feet. The suggestion was then made that he would not realise any surplus. I am not going to discuss with my right hon. Friend whether the anticipated surplus was £177,000,000 or £80,000,000. I will accept the £80,000,000. That surplus came down to £45,500,000, and the right hon. Gentleman holds that that is a complete refutation of the prophecy in which my Noble Friend the Member for Hitchin (Lord R. Cecil) and myself indulged in July of last year. Where does he get his surplus? I will tell him. The rare and refreshing fruit fell from Germany. That is where he got it. There was no expectation in the state- ment of the Leader of the House, who made the Budget statement last year, of a single penny from German sources. I take the word "reparation" to include any payment from Germany, which, I think, is quite fair. He said: The Committee will observe that, as I have done in past years, the Chancellor of the Exchequer has taken no credit in the present Budget for any sums which we may receive on Reparations account."—[OFFICIAL REPORT, 25th April; col. 75, Vol. 141.] Forty-four and a half millions came in and has supplied him almost exactly with the surplus of which he was so sadly in need. See what other gifts have fallen to him. The Leader of the House last year stated that he had to provide £32,000,000 for the Depreciation Fund on the four and five per cent. War loans and in addition there was about £80,000,000 for statutory and contractual obligations with regard to our internal finance. The operations of the financial market, I calculate, have relieved him of no less a sum than between £50,000,000 and £60,000,000. What brought that about? It was not good trade. One of the most important factors making for the remarkable rise in what we call gilt-edged securities was bad trade. There we have disclosed to us, as I suggest, the much-belauded surplus of the right hon. Gentleman. If it had not been for this gift of £44,500,000 his Budget would have been in ruins. I am very glad that it is not, because I need not say that I hail the 1s. in the £ off my Income Tax with a great deal of satisfaction. That, I think, is an answer, which at any rate satisfies me, to the charge of my right hon. Friend that in July I was hopelessly out in the calculations which I then laid before the House on the Third Reading of the Finance Bill.
Take another point. The Chancellor of the Exchequer provides only £25,000,000 for Supplementary Estimates. If that is going to be anywhere near the reality, there must be a sweeping and a radical change throughout the whole of the Government Departments, backed by a measure of Treasury control and a zeal for economy in all the Members of the Government, which have hitherto been strikingly absent. What has been our experience in the past? In 1920–21 the Supplementary Estimates were no less than £168,000,000. Last year they were about £90,000,000. The figure which my right hon. Friend (Mr. Asquith) gave yesterday of about £300,000,000 in Supplementary Estimates during the past three years is not the real total. It is round about £400,000,000. We have therefore got to face the position that the Government for their surplus rely mainly on the Supplementary Estimates being no more than £25,000,000. That is not going to help them at all. What is going to determine the policy of the Government? We do not know what further charges may fall upon the Exchequer owing to the developments which may accrue from Genoa. They may be very considerable. Has the Chancellor of the Exchequer made any provision for them? Every department of our social life and foreign policy, I regret to say, is full of threats and warnings to us, and there is the unpleasant prospect of the expenditure of more money. That in itself is sufficient warning to us to attach very little importance indeed to the Estimate of £25,000,000 for Supplementary Estimates upon which my right hon. Friend bases his surplus which he is distributing for the relief of the taxation of the day.
The main point of criticism is the fact that he has suspended the redemption of debt. That is not a party point at all. I am quite certain that everybody in all parts of the House, no matter what their feelings for or against this Budget may be, deeply deplore that decision. My right hon. Friend the Member for Central Glasgow (Mr. Bonar Law), whom we are delighted to see in his place, took a prominent and leading part, with other Chancellors of the Exchequer, in insisting on the great importance of the redemption of debt. It was dealt with in an eloquent and somewhat lurid passage by the Prime Minister in the Debate which took place on 30th October, 1919, on the Vote of Confidence, and of which I have some rather painful recollections myself. After the disclosure by the Leader of the House, who was then Chancellor of the Exchequer, of a wonderful scheme for the paying off of the whole £8,000,000,000, this is what the Prime Minister said: What about my right hon. Friend's provision for the liquidation of this great debt of £8,000,000,000? The provisions are fixed up for liquidating this debt in fifty years. Is not that one of the most magnificent proposals for liquidating national liabilities that has ever been put forward? It is one of those things that will resound throughout the world as a testimony to British courage and British foresight—that you should make provision for wiping out a gigantic debt of that kind in fifty years."—[OFFICIAL REPORT, 30th October, 1919; col. 976, Vol. 120.] Where is it? Two-and-a-half years afterwards, and the Chancellor of the Exchequer has to face the Committee and say: "I cannot find a single penny for the redemption of debt." It is a very serious position for us to face. It is admitted that one of the most useful factors in the re-establishment of the credit of this country has been that from time to time, notwithstanding our heavy burdens, we have been making attempts to pay off the debt. Let me say a word or two about what the right hon. Gentleman claimed as the reduction of debt. He claimed that the debt had been reduced by £300,000,000.
£322,000,000.
I am rather in favour of comparing like with like and year with year. What period did he take? He selected for the purpose of his comparison the 31st December, 1919, the highest point.
I said that we had paid £322,000,000 in cash during the last two financial years.
Where has that cash gone?
It has actually re deemed that debt.
Has it reduced the total?
It has reduced the debt by £322,000,000 in these two years.
Then there is something wrong with the Command Papers as submitted to this House. I will give the figures from the Command Papers. It is very important. Command Paper 1438 gives these figures: On 31st March, 1919, the total debt was £7,481,000,000. In 1920 it was £7,875,000 000. In 1921 it was £7,574,000,000. The right hon. Gentleman yesterday said that there was an increase of the debt—I will use his own figures—to £7,654,500,000. That increase was caused by the issue of the 3½ per cent. Conversion Loan. That was responsible for a total of £80,142,000. Take that increase from that figure of £7,654,500,000, and you get a figure of £7,574,358,000. Where is the reduction of debt? I have given the right hon. Gentleman's own figures, and what I say is this, that from 31st March, 1919, to 31st March, 1922, there has not been a reduction of the debt. That is how the figures stand. That is the solid fact from the Government's own Return, and I say it is a serious matter, which we all join in regarding as serious, no matter to what party we belong. We have the Chancellor of the Exchequer feeling compelled to come down here yesterday and lay before the country the disastrous state of affairs that not a single penny of national revenue is to go to the reduction of debt this year. That is the natural method of getting the relations between our exchange and other countries on a sound and proper basis, and I shall be glad to hear whether there is any correction to be given by the Government of what I have stated, so that we shall know exactly what the facts are.
When the Leader of the House submitted his Estimates last year, he devoted at least a page and a-half of the OFFICIAL REPORT to the year beyond. There was a judicious, but not a satisfactory silence on the part of the Chancellor of the Exchequer yesterday in regard to the year 1923–24, and why? For this reason, that the Chancellor of the Exchequer and the Government to-day have taken the short view and not the long view. Turn where you like among these figures, there is a black shadow east by them on the year 1923–24. Income Tax must be down, clearly, for there are two bad years and a fair year to go on. There will be some revival of trade, let us hope, but Customs and Excise show no signs of revival. What was the remedy for all this? There was a remedy, and it was a remedy which ought to have been applied at least two-and-a-half years ago. Every man who has attended these Debates knows this, that criticism inside and outside the House was addressed to the Government in regard to its wasteful expenditure in 1919 and in 1920. An insistent cry for reduction of unnecessary expenditure went up both inside and outside the House, but obtained no response from the Government until quite recently.
We spent on our fighting services in the years 1919, 1920, and 1921 no less than £1,345,000,000. To-day we are faced with much less Estimates. Why was not that done before1? The reason, of course, was because of the wild oat schemes in Russia, the futile expeditions in Mesopotamia and the world over, and that we were being driven into policies of which, at last, we are feeling the real impact. Those were the opportunities for reduction of expenditure. One of the finest sources of revenue is reduction of unnecessary expenditure, and I do not hesitate to say this, that even if the mitigated efforts at economy which are now apparent on the Government Benches as a result of the Geddes Committee Reports and other efforts had been applied earlier, we should have had to-day Estimates which would be less by about £100,000,000 to £125,000,000. You are taking 1s. off the Income Tax, but you could have taken 2s. off at the very least, and you could have reduced your Sugar Duties and your Tea Duties long ago. In short, you could have brought the position of this country into one of which we might be much more proud than we are to-day. That is the charge we make against the Government, that in the days of prosperity they neglected to utilise the opportunities at their hands, but in the days of darkness and at last, but too late, too late, too late—that is the truth, and everybody knows it outside this House, if they do not know it here—they have reduced the national expenditure and applied a measure of economy.
I have listened, as I am sure the House has, with great interest to the speech of my right Son. Friend the Member for Peebles (Sir D. Maclean), and I do not think the Chancellor of the Exchequer will feel that there is much danger of the rejection of his Budget as the result of it. As I listened to my right hon. Friend, I was reminded of lines with which, himself being a Scotsman, he is as familiar as I am— Gathering her brows like gathering storm, Nursing her wrath to keep it warm. It was quite evident that my right hon. Friend was doing his utmost to attack the Government, but with an inside feeling that perhaps he was overdoing it. I shall not occupy much time, but there are one or two considerations suggested by the Budget speech and by some criticisms of it which I should like to put before the Committee. In the first place, however, I should like to say—and in this, as it happens, I am repeating the words of my right hon. Friend the Member for the City of London (Sir F. Banbury), who takes even a more detached view of the Government than I do—that on the whole in the present circumstances the Budget is just about as good as we could have expected. That is my view, and I am inclined to think that if my right hon. Friend the Member for Paisley (Mr. Asquith) had himself been responsible for it—I am sure he will not agree with me, but he will allow me to have my opinion— he would have presented a Budget very much the same as that which was presented by my right hon. Friend. I listened with great interest to his speech yesterday. His speeches are always interesting, and never more so than when he deals with the subject of finance. He laid down two canons of finance, which he said, or implied, had been broken by this Budget. I shall say something about those canons, but before doing so I should like to make a principle of my own, a principle which, in my opinion, ought to apply to our methods of finance in dealing with the burden left by the War. That burden is one which is altogether unknown in this country or in any other country in the world, and I venture to say that if we are to face it, we must not think too much of precedents but must look at the facts as they are and deal with them in the best way that circumstances allow.
The principle, therefore, which I lay down is this, that it would be quite wrong to fix, as the quotation of my right hon. Friend suggested, a certain time, say, 50 years or anything else, and say that the debt must be paid off in that time, and that each year we must pay the same amount to the Sinking Fund to meet it. That, in my opinion, would be folly, and it would be quite impossible to carry it out. The only real principle, the only principle on which it is possible to meet this burden, is that when trade is good, when the revenue is expanding, we should not think of the contribution of any particular year, but we should give every penny that can be given without destroying trade in order to meet the burden, and that carries with it the corollary that when trade is bad we are not only justified in taking, but it is our duty to take, into account what we have done, and therefore to slacken in our efforts to meet the burden. That is my view of the obligation, and as regards this year, when we were all beginning to think about the financial position, I expressed the view in a speech in the country so long ago as February—and I think I said the same thing in a Debate in this House three or four weeks ago—that the right course to take, with trade as it is, is for the Government to meet the expenditure without either adding to or deducting from the debt, in the hope that by so doing we shall improve the trading condition of the country and get more value than by paying off more debt. That is my view. Now consider what we have done. What has been done in the way of reducing the debt is something which I do not think even yet the Committee thoroughly realises. It was a prodigious effort. Nothing like it has ever been done in any country, and if we compare what we have done with what has been done by other countries who were our Allies in the War, it simply admits of no comparison. I do not know the exact figures, but I know them approximately, of what has been done in America and in France. I will not give them, because to do so would show a state of things which it might be unfriendly to our Allies to state, but what have we done?
My right hon. Friend seems to have some doubt as to the actual paying off of debt. I am sure he is quite wrong. I listened to the speech of my right hon. Friend the Chancellor of the Exchequer yesterday, and I studied it again this morning. What we have done is this. In the two-and-a-half years from December, 1919, till the end of the last financial year we have paid off the prodigious sum of £500,000,000 of debt. Let the Committee realise what that means. The figures are a little confused, but the explanation is pretty obvious. The nominal debt was increased last year by the conversion loan, but unless we assume that by converting a debt which was at par to a debt at 3½ per cent, much above par we have actually lost by the transaction, unless we assume that, the position is this. The high water mark of our debt, was £7,988,000,000—I remember that figure very well. Last year, at the end of March, 1921, it was reduced to £7,574,000,000, but the Chancellor of the Exchequer told us that between March of last year and 31st March of this year we had paid off £88,000,000 of debt. Deduct that from £7,574,000,000, and you get a reduction of rather more than £500,000,000. That is prodigious, and I want the Committee to realise this, that that was not done without great sacrifice and doing great harm to the trade of this country. Nobody pretends that it was, and we are suffering from it at this moment. My right hon. Friend spoke of a concession he was giving of allowing Excess Profits Duty to stand over at 5 per cent. It is certainly right that he should do that, but the Committee would make a great mistake if they were to suppose that our trading community is not suffering intensely from the arrears of Excess Profits Duty. It is affecting business all over the country, for, obviously, if a man goes to a bank, and wants to borrow for new enterprises, and it is known that there is this obligation to the Government, he will have much more difficulty in getting his money. It is a tremendous obligation. It might well be that we went too far, but I doubt it, and I would ask those who feel certain that we have gone too far, to remember that the crash in trade did not come first from this country, but it came first from America, and it is my belief that whatever we had done about taxation, it would inevitably have come.
My right hon. Friend the Chancellor of the Exchequer said something in connection with that yesterday with which I do not quite agree. He said people were surprised at the rapidity with which the slump came. I do not think that is so. On the contrary, so far as I was concerned, I was greatly surprised that the boom lasted so long, because it seemed to me inevitable, and, indeed, I said many times when dealing with financial statements at the time I was Chancellor of the Exchequer, that our real bad time in finance would not come when we were continuing to borrow money, but it would come when the borrowing had ceased, and that is exactly what has happened. What have we done? We have made this tremendous reduction in the load of Debt. We have made it to a certain extent at the expense of our trade. Does it not follow that if now, by any legitimate method we can do anything to help trade when it is in the state in which it is to-day, it is our duty to give that filip to trade? I remember speaking here about a month ago, when I ventured to say, in my opinion, there were signs of a recovery of trade. I think, on the whole, that view is more generally held now than it was then. If, by any chance, this reduction in the Income Tax does give an impulse, however slight, to that recovery, is it not obvious that it will do far more to help the financial position of this country than you can possibly do by spying in a pedantic way that we must make some reduction of Debt even in this year? I do not think hon. Members on the Labour Benches opposite will disagree with me when I say the position in which we find ourselves to-day is really very much the same as it was after the Napoleonic Wars for many years. There was then, as there is to-day, a tremendous outcry about extravagance. There was a feeling that the load of taxation was absolutely clogging the wheels of our trade. It is the same to-day, and I do not believe my hon. Friends opposite will disagree when I say that the question of a reduction of Income Tax is not a benefit alone to the man who pays the Income Tax, but its effects go far deeper than that. I say that if we pay our way without either adding to or diminishing our Debt, then that is the Budget which in this year we ought to have.
I would like to deal with the criticisms of my right hon. Friend the Member for Paisley. He said, as I have mentioned, that two canons of finance have been broken. Both have been referred to by my right hon. Friend who has just sat down. I shall take the second first. His criticism is that the Chancellor of the Exchequer is not looking far enough ahead, that he is Budgeting for this year only, without regard for the future. There is only a limited amount of truth in that criticism. I admit at once that if with the best advice the Chancellor of the Exchequer can get forming the best judgment that is in his power, he came to the conclusion that in the next financial year we should be unable, not only to pay our way, but to make some reduction of Debt on the basis of existing taxes, then he had no right whatever to reduce taxation. But beyond that, I do not think we have a right to go. No one will remember better than the right hon. Member for Paisley that Mr. Gladstone, in the most famous of his Budget speeches, in 1853, attempted to do what my right hon. Friend has suggested now. He made a Budget outline for seven years. What happened? In a very short time it was all on the scrap-heap, and he had to begin all over again. That must always be so, as human foresight does not enable us to look so far ahead, and we have to deal with difficulties as we find them.
The other criticism, or canon of finance, of my right hon. Friend was one with which I entirely agree. He said that no Government has a right to remit taxation unless there be a balance of revenue over expenditure to enable it to go on, and he said that you are not entitled under any circumstances to borrow money to reduce taxation. I agree with him. Surely my right hon. Friend did not carefully listen to the statement made with regard to the Budget. There is no borrowing if the Estimates are carried out. You cannot say that it is borrowing if you pay off a certain amount of debt, and borrow in another way precisely the same amount as that which you have paid off. That is not borrowing. Does my right hon. Friend opposite really question that? Let me point out something that will convince him that he is wrong. I think I shall succeed—I am very optimistic, I am told. I am not sure. Last year, and every year since the War, a certain amount of short-term borrowing became due. When that became due, we paid it off—but how? Not out of taxation, but by borrowing again. Does the right hon. Gentleman call that borrowing? It is simply a continuation of the same state of things. It is neither borrowing nor the reverse of borrowing, but leaving things exactly as they were. I think that is obvious. I doubt whether I shall convince my right hon. Friend, but, at all events, it is a fact. If that be so, the charge that you are borrowing to remit taxation falls absolutely to the ground.
I want to make it quite plain to the Committee that I do not take an extremely optimistic view of our finance, but I want to look at the facts as they are. In my judgment, if the Budget Estimates are realised, we shall pay off some substantial amount of Debt. I will tell the Committee why. They have noticed, no doubt, as I did, that there was some discussion in the newspapers as to whether you should fund the, pensions. I am very glad my right hon. Friend has not found it necessary, but that ought not to blind our eyes to what the actual facts are. The burden of pensions is as much a War Debt as any part of the £8,000,000,000. It does not arise in any way out of present finance, and there would have been nothing contrary to sound finance in saying we shall treat that as part of War Debt, and pay it off as we pay the rest; and I venture to say that, if the alternative had been between adopting that course and putting on new taxation, with trade as it is to-day, everyone in the House would have recommended its adoption. If you consider what the facts are, I think they are very important. The amount which is estimated for War pensions in this financial year is, I think, something like £90,000,000. If that were treated, not as a debt to be paid in 50 years, but as something to be paid in proportion each year as long as it lasts, for, say, 40 years, it would mean that we were paying between £40,000,000 and £50,000,000 more this year than would be necessary to be paid off had it been treated in that way. In my opinion, that is to be regarded as a real meeting of our Debt obligation. It is all very well to criticise any Budget, but neither my right hon. Friend nor anyone else can control the circumstances in which we find ourselves, and I venture to say to the Committee, that if you have to choose between the chance of a certain stimulus to trade by this slight reduction, and the certainty that there will be no stimulus with the present state of unemployment, the wise course for the country to adopt is, so long as we pay our way, to meet the situation by making some reduction in taxation.
There are only one or two other points to which I should like to refer. My right hon. Friend spoke about the indirect taxation to which relief had been given. I am sure we would all like to see a larger remission of that kind of taxation; but when you see, as I saw in a paper to-day, that this is a rich man's Budget—[HON. MEMBERS: "Hear, hear!"]—it is even more hopeless to convince hon. Members opposite they are wrong than it was to convince my right hon. Friend opposite. When I first came into this House the proportion of direct and indirect taxation was the same. At that time the then Chancellor of the Exchequer, Sir Michael Hicks-Beach, as he was, always tried to keep it the same. That, of course, has gone, and gone completely, and I think I can say this without disagreement from any quarter of the House. I think the way in which during the War what are called the better-classes paid the terrific taxation imposed upon them without a grumble, is a fact of which as a nation we have some reason to be proud. [An HON. MEMBER: "They had all the profits."] I do not think that affects it, for I have not noticed that people who are the richest are, as a rule, the readiest to give. What is the position to-day? After the change made by my right hon. Friend, the proportion of indirect taxation is only 36 per cent., so that I do not believe anyone can honestly say that an effort has not been made to meet the financial obligations, not in favour of one class or another, but in the way that is best for the interests of the country as a whole. That, at all events, is my view.
Then my right hon. Friend was not pleased quite about tea. I would remind him that in the old days we were constantly told that tea was really the food of the lowest paid portion of our population, and that there was nothing more important than a reduction in the price of tea. I admit it would be a great thing to reduce the sugar duty, but, in addition to the fact that the amount involved is so large, I think there is this further consideration. The price is fluctuating so much, that if you were to take 1d. off it, it is very doubtful if the consumer would get the benefit, and when my right hon. Friend went on to say we are interfering with our export trade in sugar manufacture, he, of course, forgot the very important fact that a rebate of the full amount of the tax is given on all sugar that is exported, in any form in which it goes out of the country. But I quite admit I would like to see more indirect taxation taken off.
I do not know whether other Members of the House were favoured as I was, but I have received hundreds and hundreds of post cards urging me to do what I could to get something taken off the price of beer. Perhaps, as an hon. Member says, more came from Scotland. I did not read them all, but I read one, which was a very human document, and made a strong appeal to me. It was to this effect: "I am an individual who likes a drink, but, owing to low wages and high costs, I cannot get it." Although I am as favourable to temperance as anyone else, if I thought it possible to make a reduction in the beer duty, which would have a corresponding increase in the revenue, I would think it the right thing to do. I do not believe it is possible, but I hope that is one of the things which will be possible in the near future. I have only this to say further: I do not in the least wish the Committee to have the idea that I think the financial position a satisfactory one. It is impossible that it can be so. We have got a burden which for two generations at least we must bear. It will be a tremendous clog on the industry of the country, and no financial genius will enable us to cope with it. I agree with my right hon. Friend the Member for Paisley (Mr. Asquith) that the future is likely to make difficulties even greater than they have been up to now. The reason is obvious. Though it has not been mentioned in this Debate, it has been mentioned very frequently in other financial Debates.
The value of money as a token is falling. We had £8,000,000,000 of debts. If that is paid off only 20 or 30 years hence it will probably take something like £16,000,000,000 to pay it off. That is really a rather alarming state of things to look forward to. It is something also which, I think, justified the Government of the day—and I shared the responsibility—in making that tremendous onslaught on the commercial classes in the Excess Profits Duty. Because the £500,000,000 which were paid off at the high price of money, when money was coming in, was much more easily paid off than it will be when we come back to normal ground. That is the great difficulty. It will be met to some extent by a lower rate of interest. My right hon. Friend the Member for Paisley said yesterday that the improvement in the financial position was due to some extent to the lowering of interest. It is due to a large extent to bad trade, but not only to that; in my opinion it is due to the fact that we are definitely getting away from the high token values of money in the War and we are coming to a lower level. In looking back perhaps the House will permit me this amount of egotism. I am glad to remem- ber that in the Loan issued in 1917 I put in a provision that we should have the right to pay it off in 12 years—it is possible to pay it off in 1929. This did not in the least interfere with the issue of the loan.
Amongst the defects or peculiarities of humanity is the feeling of the majority that the condition of things that exist to-day is going to exist for ever. That may turn out to foe of very great value for this purpose. If it is possible to re-borrow money at even 1 per cent, less than 5 per cent., it will mean a saving of £1,000,000 a year to the Treasury. For that reason we shall get some relief. But there is only one way in which this position can really be met, that is, by cutting down expenditure. Both my right hon. Friend the Member for Paisley, and my right hon. Friend the Member for Peebles seem to think that the Estimates that have been put forward were likely to be wrong. I do not think they have any right to assume that. It is quite true that the Estimates have been far more difficult to forecast than used to be the case before the War. Everyone knows the reason. No one ought to know it better than my right hon. Friend the Member for Paisley. Throughout the War all our finance was carried on, not by Estimates, but by Votes of Credit. Nobody should know that better than my right hon. Friend, for perhaps he will permit me to say that amongst the best of the speeches I ever heard in this House were some of those made by him at the time to which I refer, when he moved these Votes of Credit. It is obvious that with such an upset of everything you cannot expect the Estimates to be anything like as accurate as they ought to be.
But we are getting further removed from War conditions, and I think there is reasonable hope that this year the Estimates will prove more accurate. I will give the reason why I think so. My right hon. Friend dwelt very much upon the Supplementary Estimates of last year. I do not like them. I am sure the Chancellor of the Exchequer does not like them. But, to a certain extent, they were inevitable. Yet, in spite of excessive Supplementary Estimates, far greater than anything which we had any right to expect, the total expenditure was £57,000,000 less than was estimated in the Budget. If therefore we find there are Supplementary Estimates greater than this £25,000,000, it does not follow, and I think it would be very wrong if it is proved to 'be true, that there will not be, as there was last year, a reduction of general expenditure which will keep it well within the Budget estimate.
I have said that there is possibly a bad time in front of us. Not now, for I hope things are going to improve, but this can only be met by cutting down expenditure. I am not going to say that I was not as responsible as anybody else. I am not going to deal with the matter in general terms, beyond saying there are things which the nation cannot reduce. Look at the immense sums expended to-day on the Navy, for instance. I have not had the opportunity of judging as to whether the Geddes Committee was right or wrong, but I am quite sure that when the Cabinet began to examine it, it was in the same frame of mind as I would, and it was this, that, so far as human foresight can tell, there would be no world war for a very long time to come. In my belief—take this as a general proposition—the real strength of this country to meet the difficulty when it comes will be found far more in a strong financial position than anything else. When I say this, do not think I am saying anything that every Member of the Cabinet does not realise as much as I do. One of the mistakes which hon. Members who have not had the privilege of being in the Government forget is that Cabinet Ministers are human, and that whenever a subject of this kind comes before them you may be certain that the same arguments for and against which are used in this House will be used there. All I wish to say in conclusion is this: It is the plain duty of the Government, not that of the Chancellor of the Exchequer alone—he cannot do it by himself—and the view I always took was that the mere fact that I was Chancellor of the Exchequer should not make me take a different view from what I would have taken if I had been a Minister of any other Department. One ought to look at this from what is the plain duty of the Government. That is to realise that the revenue will fall, and that everything which human foresight and energy can do should be done to keep our expenditure at the lowest level.
I never listen to a speech of the right hon. Gentleman who has just sat down without feeling absolutely and entirely convinced by it. I am only astonished at one thing. I have listened to the characteristically able address he has given to the Committee, and I am only astonished at one thing, that my right hon. Friend should have been so characteristically modest as to have listened to the Budget speech yesterday in a comparatively quiet corner of the Gallery instead of his usual seat. I feel that in presenting this Budget the Chancellor of the Exchequer has been able to show the extraordinary stability of the financial position of this country. The right hon. Gentleman yesterday criticised the action of the Government in regard to the non-redemption of debt this year, and likened it to the action of some Continental nations. We have heard, both in the Press and in this House, the word "bankruptcy" as regards the financial position of Great Britain. There never was a more ridiculous and absurd notion put before the country than that this country is anything near bankruptcy. The right hon. Gentleman has mentioned the definite operation that has been carried out during the course of the last two or three years. It is remarkable if not amazing. I think that in regard to that some tribute is due—I do not think it has yet been paid in this Debate—to the action of those who, in the City of London, have advised the Government. I have been informed in the City—and I am sure that it is a matter of common knowledge—that the manner in which the Government at present conduct their financial affairs there is little short of remarkable. Every advantage is being taken of the decreasing rates of interest, maturing loans have been extended on more favourable terms, and these complicated operations have been carried out with the utmost efficiency and promptitude.
5.0 P.M.
When my right hon. Friend referred to the payment of debt it seemed to me—I could not help feeling it—there was one qualification which ought to be placed upon what he said. It is true, no doubt, that we have repaid £500,000,000 of debt in the last three years. At the same time one must remember that on the revenue side we have received, I should think, very nearly that sum in special receipts by the sale, of war stocks and also—I consider this a capital liability—in the collection of death duties. Death duties have produced something like £500,000,000, and one cannot help being reminded in this of the announcement of the panacea for the evils put forward by the Labour party, i.e., a capital levy. Death duties of £50,000,000 per year constitute in themselves a colossal capital levy upon the capital of this country. In the course of several generations death duties will amount to £1,500,000,000, as much as the Labour party would ever be likely to obtain by one capital levy put upon industry at one moment, with the dislocation consequent upon it, upsetting everything which I am perfectly certain would result. Just one other general observation with regard to the repayment of the American debt. I hold the view, and I am sure the majority of Members of this House hold the same view, that the cancellation of inter-Allied War debts is inevitable before long. In time, I think our friends in the United States of America will come to see this, but meanwhile our payments of interest to them must and will go on, not without some inconvenience to America. It is quite obvious that as we pay interest on our debt to the United States it must mean either that we should import that amount of goods less from them, or else that we should export that amount of goods more to them. That, of course, would seriously interfere with trade and employment in America.
I now wish to refer to a point that has not been alluded to in the Debate so far, and I desire to ask the Chancellor of the Exchequer if he would very kindly give me his attention with regard to this matter, because I hope he may be able to say something about it when he comes to reply to this Debate. I refer to the new element in this Budget, and that is the financial state of affairs with regard to Ireland, and particularly Northern Ireland. Under the Irish Free State Act the Irish Free State was to assume a certain liability for the service of debt and payment of war pensions. I would like to know, in regard to the figure of £335,000,000 for the service of war debt, whether anything has been allowed to the Free State of Ireland. As regards the £89,000,000 pensions on the Civil Service Estimates, are those merely pensions in respect of Great Britain and Northern Ireland, or are they for the whole of the United Kingdom? Those are two preliminary questions.
I want to deal in more detail with the figures contained in the White Paper issued yesterday as to the charge upon the Consolidated Fund for payments for the Northern Ireland Residuary Share of taxation. That is quite a new figure in the Consolidated Fund charge, and it appears as £2,500,000. I should like an explanation of that figure. Under the Government of Ireland Act, 1920, all the main sources of revenue and taxation—Customs, Excise, and Income Tax—are collected and imposed by the Imperial Parliament, and two things are deducted. First of all, the cost of administering the Reserved Services, and, secondly, what is called the Imperial contribution of Ireland or Northern Ireland. Those are deducted from the taxes collected in this country, and the balance is what we see here as the residuary share of reserved taxes. If the Financial Secretary to the Treasury will look at page 11 of the White Paper he will see that it is quite clear that this figure of £2,500,000 is based upon the new rate of Income Tax, namely, 5s. in the pound, instead of 6s., and it appears as that sum in the table on that page after the alteration proposed by the Chancellor of the Exchequer. I do not know what the words "et cetera" mean with regard to that item. It says, "Payments for Northern Ireland Residuary Share, etc." I do not know whether there is anything more, but it is a matter of importance to the Government of Northern Ireland as to whether there is anything of consequence meant in the words "et cetera," and perhaps the right hon. Gentleman will be able to tell me later.
What I want to know is how much do the Government of Northern Ireland lose by reason of the reduction of the Income Tax from 6s. to 5s. in the £. I believe it is about £700,000 a year. Consequently the revenue of Northern Ireland must be much less this year through the reduction of the Income Tax, quite apart from the fact that it is bound to be less from other general causes which affect the revenue throughout the whole of the United Kingdom, such as trade depression, the three years averaging of the Income Tax, and so on, and particularly as trade depression is operating in that part of the country by reason of the fact that shipbuilding is one of our largest trades, and one of the most oppressed trades in the country at the present time. Therefore, you have got a smaller revenue in this financial year from Northern Ireland than there was in the last financial year.
Against this, on the other side, so far as I understand it, there is no diminution in the amount of the Imperial contribution. If my hon. Friend will follow the figures I think I can make it clear what I mean. Under the Act of 1920 the Imperial contribution from Northern Ireland is fixed at £7,920,000. At that time the total Imperial obligations of the United Kingdom were something like £900,000,000, the principal items being for the Army, the Navy, the Air Force, and the service of debt. On page 6 of this White Paper, it shows what the position is to-day as regards the Imperial expenditure. In the first column there is the Estimate for 1921–22, and you have there the National Debt Services put down as £345,000,000, the Army £106,665,000, the Navy £82,479,000, and the Air Force £18,411,000, and one might take perhaps one-third of the Supplementary Estimates and call it £33,000,000, which added up make a total of Imperial payments by this country, that is by the United Kingdom as opposed to the purely English or Scottish or Irish affairs, of £585,000,000.
For next year that sum is going to be reduced as shown in column 3. The Debt Services are to be £10,000,000 less, the Army Estimates are £44,365,000 less than last year, and the Navy Estimates £17,595,000 less. The Air Force Estimates are £7,516,000 less, and the provision for Supplementary Estimates is £72,000,000 less than last year. Taking one-third of the provision of Supplementary Estimates for Imperial Services, it leaves a total reduction this year on the Imperial Services of £103,476,000, and makes, instead of £585,500,000, a total of £483,000,000. The point of my argument is that the actual Imperial payments which have to be made by the United Kingdom have largely decreased in the last two or three years. We are spending less on all these services, and yet the contribution towards those Imperial matters which is to be made by the Government of Northern Ireland remains as it was under the Act of 1920 passed two years ago. There is no diminution, and the result is that the £2,500,000 as payments to Northern Ireland as the Irish residuary share of taxes is much less than in equity and fairness it should be. I have worked the figures out, and the diminution to which I have referred in the general Imperial services amounts to one-sixth, that is to say that the amount we are spending this year is less by about one-sixth than it was last year. The contribution from Northern Ireland was fixed at £7,920,000, and that should be on the same basis as the general reduction of Imperial services reduced by about one-sixth, which is £1,320,000, which would reduce the Imperial contribution to something like £6,600,000 instead of £7,920,000. If this amount were added to the payment of the residuary share of taxes, it would bring this item, chargeable upon the Consolidated Fund of the United Kingdom payable this year, from £2,500,000 to £3,820,000.
I have gone into these matters rather in detail because the finance of the Government of Ireland Act of 1920 has broken down and is proving unjust and inequitable to the newly functioning Government in Ulster. The Financial Secretary to the Treasury and the Treasury officials are, of course, fully alive to this anomaly, and it arises because under the Act of 1920 it was provided that the Imperial contribution from Northern Ireland could not be reduced, and could not be adjusted at any earlier time than two years from the appointed day. For these reasons I ask the Government to do their best to bring about an alteration with regard to this adamantine provision. I presume it would require legislation. I most strongly urge upon my hon. Friend and the officials of the Treasury to do all they can to alleviate this position. Obviously it has to be done. It must be put right in the end, and it would be a comparatively simple matter either to add a Clause to the Bill or in some other legislative way to bring about the possibility of the Joint Exchequer Board, whose duty it is to look into this matter, adjusting the figures at an earlier date than they are now permitted to do under the Act of 1920.
Are you taking into account the amount which the Treasury are paying for special constables?
That is a question which has arisen since the passing of the 1920 Act. It is a matter for which the Northern Government are in no sense and in no degree responsible—that is to say, they are not responsible for the causes which gave rise to the necessity for that force. My hon. Friend who interrupted me is surely the last person who would wish to affect the financial position of any part of Ireland, and particularly of that part from which he comes. I hope that the Financial Secretary, or the Chancellor of the Exchequer, when a reply is given will be able to offer some explanation of this item in this year's Budget, which I say has appeared for the first time owing to recent legislation in Ireland. It is only right and just that the matter should be put right. It is a point which, if rectified, will make a substantial addition to the revenue of that part of the country, and will conduce to the smoother working of the institutions set up two years ago.
I am quite sure that the hon. Gentleman who has just spoken will not think me discourteous if I am unable to follow him in his special plea for Northern Ireland. I am quite content to say that almost any sacrifice would not be too much if it would bring peace and contentment to that unhappy country. I wish to make a few general observations on the Budget we are now considering, and I am almost tempted not to follow the precedent which apparently every speaker has adopted, of congratulating the Chancellor of the Exchequer. The right hon. Gentleman must be getting somewhat tired of the congratulations of hon. Members who promptly after they are uttered, proceed to criticise this proposal. But I do associate myself with the general appreciation of the Committee of the lucidity of the Budget statement which we heard yesterday. It is very significant to observe the difference of policy three years after an election as compared with the policy of the Government prior to that election. Yesterday afternoon, in a very flippant and almost indifferent manner, the Chancellor of the Exchequer said that so far as German reparations were concerned, he never treated them seriously and, as a matter of fact, had always looked upon them as somewhat in the nature of a windfall. That was the statement of the Chancellor of the Exchequer yesterday. I wonder, if it were possible to look at the leaflets of 1918—if it were possible this evening to reproduce some of the speeches of the Prime Minister and other occupants of the benches opposite—how many Members in this House got returned on the cry that we must reap these reparations, not as windfalls, but rather that Germany must pay to the last penny, and that we were going to search her pockets until she had done so. That was the kind of statement we heard in 1918. Those were the statements responsible for securing the return of many Members to this House of Commons, yet those who made those statements then knew they were untrue, they knew perfectly well they could not be realised, they knew all the time that it was a mere election dodge, and now, three years after, in a Budget speech, the question is being treated as something that does not matter and as something to which the great mass of the public are indifferent. My one regret is that the electors of this country could not have been present here yesterday to have heard that statement. I am quite sure they would have given, not only an answer, but the answer that I give now, that no Government and no statesman can hope to gain respect for the British House of Commons unless he is content to treat seriously an election pledge, and not to treat it as something never intended to be fulfilled, but merely used for election purposes.
I frankly admit that at no period in recent years was more interest taken in a Budget statement than in that which we are now considering. There are good and sufficient reasons for that, because all sections of the people are recognised in it. One might judge from the postbag voluntarily sent to Members of the House, and from petitions sent without pressure of any sort or kind, that the great mass of the electorate were merely considering at this moment a reduction of the Income Tax by 2s. I want to submit that this House of Commons will make a great mistake if it assumes that the mass of the people of this country are concerned alone with a reduction of Income Tax and are not concerned with the question of indirect taxation as well as direct taxation. Personally, I have no hesitation in saying that I prefer direct taxation to indirect taxation. I should like to see all taxation direct. I should like to see every householder paying his own rates, and not paying through the landlord. I believe by that means we would do more to kill the war spirit fever than anything else, for we would bring home to the people exactly what war means; in other words, they would be brought to realise what the actual bill is. I may be forgiven if I just remind the Committee what the indirect taxation is at the present moment. One would assume, listening to speeches and reading the Press, that it is only Income Tax payers who are contributing to the National Exchequer. In fact, the suggestion has been repeatedly made that, so far as commerce and trade are concerned, it is only the Income Tax people who make any contribution whatever. Let us see what the exact situation is at the moment. Every consumer of one pound of tea is paying at the present time 1s. tax, and 10d. on Empire-grown tea. On coffee he is paying 6d., on cocoa 4½d., on sugar a minimum of 1¾d. per lb., on condensed milk 1½d. per tin, on fruit 2d., on beer 4d. a pint, on tobacco 7½d. per ounce, and a proportionate amount on cigarettes.
I would ask any Member of this Committee to visualise a working man's home, to take the case of an ordinary working man with a wage of anything up to £3 10s. per week, and then to take these items I have read out—items which we call the ordinary breakfast fare—for a man, his wife, and three children—five in all. I venture to submit it is placing it at a minimum to say that his contribution in indirect taxation weekly for the family of five is anything up to 8s. or 10s. I am putting it at a minimum. Curiously enough, it has been urged that it is only a remission of direct taxation that will give a stimulus to trade. Are we to assume that if the poorer people were relieved from some of these indirect taxes and given an opportunity of spending more on essential things, that would not in itself be a stimulus to trade? Would not that in itself find more employment? Being spread over a much larger body of people, it would, in my judgment, be a greater stimulus to trade even than the 1s. off the Income Tax. I do not, however, want it to be assumed that we on these benches think for a moment that you can merely go on piling up Income Tax. We do not want it to be assumed that we are opposed to a reduction of Income Tax, or that we think for a moment that a, high Income Tax is a good thing for the country. We know perfectly well that you can put on a tax which will not only cease to be a revenue-bearing tax, but which may and will in the end cripple industry. Our complaint and our criticism against this Budget is that, while giving a bonus to the farmer, and a bonus to the landlord, which in itself will have the effect of stopping land from being cultivated—and that, after all, is of vital importance to the working classes of this country—the contribution it gives to the overwhelming mass of the people is a miserable 4d. from tea.
Yesterday afternoon the Chancellor of the Exchequer did not really attempt to justify the 1s. reduction on the ground of the nation's finance. As a matter of fact, anyone who has been privileged to hear Budget statements in the past, and who compares them with the Budget statement of yesterday, could only draw one conclusion, namely, that we are going to reduce taxation, we are going to take 1s. off the Income Tax, not because the finances of the country justify it—on the contrary, they do not justify it—but as a gamble in the hope, as it is said, that it will stimulate a revival in trade. Boiled down, that is the essence of the Chancellor's statement. Before replying to it, I want to make an observation upon one point that he made. As a further justification of not paying off further capital this year, he reminded the Committee of the great amount that this Government has paid off during the past three years. This afternoon, in reply to a speech from the right hon. Gentleman the Member for Peebles (Sir D. Maclean), the right hon. Gentleman the Member for Central Glasgow (Mr. Bonar Law) urged the same point. I do not pretend to be a financier, but is there anyone claiming to be a financier, or to be a business man, who, in presenting a balance sheet, would say on the one hand, "I have redeemed a debt of £500,000,000," when on the other side of the balance sheet he had sold, not £500,000,000, but £1,000,000,000, of surplus war stock which was in itself capital, and would claim credit for that being a reduction of debt? It is absurd and ridiculous, and it will in itself aggravate our difficulties in after years. That is going to be the real difficulty for a future Chancellor of the Exchequer 12 months or two years ahead. He will have no surplus war stocks to dispose of, and he will not then be able to come along and say he has reduced the debt by £500,000,000, because his method of reducing debt must of necessity be by an increase in taxation.
I come back to the underlying assumption that this 1s. off the Income Tax is going to revive trade to-morrow morning. In the interest of those 2,000,000 men and women who are walking the streets, I wish it were true. Every hon. Member on these benches would walk into the Lobby to-morrow night, anxious to help and to support the Government, if it were true that this 1s. off the Income Tax were going to cause a revival in trade. The statement made to this effect yesterday was, however, contradicted by the Prime Minister in the last speech that he made in this Chamber before he went to Genoa. What was his defence of Genoa? What is the justification for Genoa? It is that there can be no revival of trade, no hope as regards unemployment, no revival of British industry, until our impoverished customers are in a position to pay. Incidentally, we on these benches, at least on this matter, are prepared rather to trust the original judgment of the Prime Minister in regard to Genoa than the statement of the Chancellor of the Exchequer with regard to the 1s. reduction of Income Tax. Yesterday afternoon, in an indirect way, the right hon. Gentleman the Member for Gorbals (Mr. G. Barnes) misinterpreted the action of the Labour party. I am sure that that has not been deliberately done in the House of Commons, but it certainly has been done outside. The action of the Labour party has been deliberately misinterpreted with regard to our national obligations in connection with war debt. It is frequently asserted that we are in favour of repudiation. My right hon. Friend the Member for Platting (Mr. Clynes) was asked yesterday whether he intended, on behalf of the Labour party, to deny the right and moral claim that the Government should meet the obligations of interest on our war debt. I want to say quite frankly that I have never yet heard it from members of our party, and it certainly never has been the policy of the party, to repudiate in any way our obligations; but what we do put seriously to the Committee is whether it would not be better, in the national interest, to reconsider the whole situation in the light of existing circumstances. I will go into details and explain what that means.
In the first place, with regard to the external debt, speaking for myself, I am as satisfied as that I am now standing at this Box that the time must come when there will be a cancellation of all external debt. I agree entirely with the Chancellor of the Exchequer in regard to meeting obligations to America at this moment, but I am equally certain that the time is not far distant when America and other countries, as well as ourselves, will realise that it is in the interests of all that this debt should be cancelled. As regards our internal obligations, when we have made statements on this matter we have been repeatedly challenged as to what we meant. Let me first take money that was invested in War Loan at any period from January, 1917, down to 1919. Between those dates the sovereign at one stage was worth less than 8s., and we may assume, without committing ourselves to any definite figure, that hundreds of millions of pounds were invested in War Loan at the then purchasing value of 8s. for £1. If the redemption were to take place to-day, in addition to all interest paid, there would be a capital appreciation of at least 100 per cent. Is it wrong, is it confiscation, is it falsifying the canons of sound finance, to suggest that, just as during the past three months we have had a conversion loan which has been successful, which has been accept able to numbers of people, so you would be able to give a long-dated loan which could be obtained at the rate, not of 5 per cent., but, I believe, at this moment, even at 3½ per cent., and certainly at not more than 4 per cent.? My first point, there fore, is that we do not speak of repudiation. We believe in meeting our obligations. But we believe that circumstances have arisen which would enable us to meet our obligations with a tremendous relief to the taxpayer. That is with regard to interest; but there is the second alternative, the one that was advocated when it would have been far more effective than it is at this moment. It was advocated at the time——
Before the right hon. Gentleman proceeds to the next part, might I ask him, for my information, a question with regard to what he has just proposed? Is he proposing a voluntary option of transfer into this conversion loan, or a compulsory transfer?
Obviously voluntary, and my justification for saying it would be a success is the appreciation in War Loan and in Government stocks of all kinds, and the rush, on the 1st April for the 15s. 6d. War Certificates. It is generally argued that those were individual certificates, but I venture to assert that there were more applications for the £387 10s. than is generally imagined. It shows that the maximum amount was being subscribed. If I advocated compulsion, that would be falsifying the very statement that I made earlier, that we have no desire to repudiate our liabilities; but the hon. Gentleman would be the first to admit that the financial situation at this moment would be a favourable opportunity for the Government to reconsider their position under this head, and I say that many millions could be saved thereby. In the same way, not within the last few months, but at the time when enormous war fortunes were being made and when hugh profits were heaped up day after day and week after week, we suggested to the Government that the real way to relieve the Income Tax and to reduce the burden was a capital levy at that time and not at the present time. I am sorry the Chancellor of the Exchequer has not seen his way to deal with the Entertainments Duty. I was sorry to hear my right hon. Friend the Member for Gorbals (Mr. G. Barnes) sneeringly suggest that this was a luxury. It would be a pretty serious state of affairs if we were to deny all form of entertainment to the people. But the unfairness of this tax is the way it is levied. The tax on the 5d. cinema seat is 40 per cent., and on the £2 theatre seat it is 11s. 4d. I should prefer to sec the tax entirely abolished, but if that is impossible the right hon. Gentleman ought at least to consider that his first duty is to make the tax an equitable one. I do not believe the great mass of the people will accept this Budget in the popular sense that it has assumed in the House of Commons. They will not look upon it as an equitable Budget which relieves the fathers and the Income Tax people in the same way that rich people are relieved, and for that reason on the Committee stage we will give expression to our views by moving Amendments.
I have listened with much interest and some astonishment to the speech of the right hon. Gentleman who has just sat down, especially in his opening criticisms of the admirable Budget which has been introduced with care and foresight and with an acumen which is equal to any of the distinguished predecessors who have introduced Budgets in this House. I was astonished at the right hon. Gentleman's criticisms of the pronouncement of the Prime Minister in respect to the fashion and method in which the German Reparation and Debts should be dealt with. I throw out this challenge to the right hon. Gentleman, and through him to those who shall speak later on behalf of the party. Neither during, before or since the War, has any pronouncement been made by any Member of the Socialistic or Labour party correctly diagnosing or dealing with the finance of this country or our obligations to the Allies or to our sister nations that go to make up the British Empire.
May I remind the hon. Member that both during and since the War we have repeatedly pointed out that the Versailles policy of reparations was disastrous, and Genoa is now confirming what we have said.
That does not meet my point. My point is that there is not now, nor was there during the time the question of German reparations was being discussed or since, any policy from the Labour benches which has proved correct in respect of the events which we have had to face. They have two very distinguished economists in their ranks, the hon. Member for Central Edinburgh (Mr. W. Graham) and the hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), and I shall wait with much interest to hear what one or the other says in respect of this question of finance. I was the more astonished when I heard that, although the right hon. Gentleman condemned the Prime Ministers policy, he stated afterwards that the time has now come to reconsider the whole position in the light of altered circumstances—exactly what the Government has done. Then why does he complain? The fashion and method in which the Allies dealt with the British proposals in respect to reparations compelled the same position to be taken up by the Chancellor of this country. What is sauce for the goose is equally sauce for the gander. I judge the right hon. Gentleman on his own words in respect to his opening criticism on finance and reparations, neither from any Labour nor Free Liberal benches nor from the bankers nor any Chancellor in Europe has there been a correct diagnosis of the financial position. Again I say I shall be interested to hear what will be said from these Labour benches to prove that their prophecies during and since the War had any correct bearing on the necessities of the nation and the Empire. I admit that the problems of finance are extensive and are international, but we have been handicapped by the needs of the sister nations that go to make up the British Empire, as well as by the viewpoints which have been put before us by our Allies and also by the position which the United States have taken up. I look forward to the time when the United States will consent to a real, practical financial scheme which will carry forward some part of the debt, and the interest on the debt which we owe them to the generations to come for whom we have carried the responsibility of these anxious times, as well as for some real, definite, practical and useful financial contributions from our Allies, for, although I listened with very great care to my right hon. Friend's statement, and to the Financial Secretary, I have not heard such exact details as proves that the interest we are paying on the money we borrowed from the United States, not for ourselves but on behalf of our Allies, is equal to that which we are receiving from our Allies. I believe the British taxpayer is carrying most of the burden of this interest.
There is another factor which, to my mind, should be very carefully considered in respect to the Budget. Among the returns relating to the financial statement I find an amount of £19,000,000 dealing with the Road Fund and payments to Local Authorities' Account, and I am exceedingly interested to know in what fashion the Treasury are compelling careful administration in respect to it. I have in my mind that some constituencies in the South of England, which sometimes are governed by Members of the type of political faith that is held by you on the Labour Benches, are paying more for the money they have borrowed than some of the more, shall I say, carefully financially floated loans as we have them in Lancashire. [An HON. MEMBER: "Give an example!"] My own constituency, where you have working men trained in respect of local administration. I would ask the Financial Secretary to tell us how he is safeguarding the obtaining of local loans at a suitable and economic price, for when one looks up the payments which are made to local taxation accounts, there seems to me to be very strange loopholes which require some further consideration. I also want to speak in respect to a suggestion for the Ministry of Labour. I have had two communications from working men in my constituency bearing upon the Budget. They say: Instead of receiving the unemployment grant, as we are shareholders and therefore co-partners in the firms in which we work (cotton and woollen mills), we would rather have the capitalised amount of our unemployment pay loaned to us as employers (because we are not only employés but employers), at a low rate or free of interest so that we might be able to successfully compete in the world's market in such a wax-as to obtain orders and thereby the necessities of work and industry. I have wondered whether those huge manufacturing establishments which were used in the War days and are now lying idle, complete with plant—which the Disposal Board of the Government are endeavouring to dispose of—could not be utilised by employers of labour for the benefit of their workpeople. I want also to ask for the serious consideration of the Financial Secretary when he represents what is said here to the Chancellor to the incidence of the Entertainments Duty. I want to deal with the Entertainments Duty, not from the viewpoint purely of those who attend places of entertainment, but from the viewpoint of churches, chapels and religious establishments. The way in which churches, chapels, Sunday schools and certain athletic establishments attached to them are supported is often by sales of work, bazaars, and other kinds of entertainment. You cannot find any denomination which to-day is not handicapped in respect of the upkeep of its churches and schools, and these methods are now adopted to assist in such upkeep. It may be that in some cases lack of proper local administration is the cause, but in most cases the Entertainment Tax is being imposed upon them in an inequitable manner. It was intended by the Act that charitable and religious organisations should be free, but that does not obtain to-day. Nine out of 10 of these religious establishments which obtain support for their work through bazaars and sales of work are penalised by entertainment taxation. This should have the very serious and careful consideration of my right hon. Friend.
6.0 P.M.
I should like to say one word in respect to the taxation of liquor and beer. I took part in certain conferences which resulted in the enactment of a Measure which, to my mind, is a great forward step in respect to temperance legislation. The Licensing Bill of 1921 is a greater and more forward step than has been taken for 50 years in this country. I well remember at those round table conferences that certain definite assurances were given and accepted in regard to what should obtain in right and equity for those who participate in this trade, as well also to those who use liquors and beers. We carry a moral obligation, as a House of Commons, to see that the agreements entered into round that table, although it was not a statutory enactment, in respect of its findings, should be properly honoured. When one considers that on a 7d. pint of beer (not 4d. per pint, as was stated by the right hon. Member for Derby (Mr. Thomas), but 3⅓d. is indirect taxation, I suggest that it is not a wise, fair, or equitable amount to impose. We want to go on a higher ground. Recently there has been held in the City of Glasgow the Church of Scotland Presbytery, and it is a remarkable fact that at that meeting there was a discussion upon the question of the taxation on spirituous liquors and on beer. It was stated that, resultant of the cost of spirits and beer, methylated spirit drinking was increasing in Glasgow. It was stated at this Presbytery meeting that in 1920 in Glasgow there, were 474 convictions for methylated spirit drinking, and that number had risen in 1921 to 647. I could give figures, if necessary, to show that there is a type of doping, due to the high cost of beer and spirits, which is increasing in the country.
I am not speaking as a man who holds a brief for either one side or the other, but in fairness to the Council and the conferences that were held before the enactment of the Licensing Bill of 1921, and also, with the information that we have as to the doping that is taking place to-day in different parts of the country, I maintain that it would have been a wise policy if the Chancellor of the Exchequer could have considered some small diminution in regard to the taxation of beer, and see that such diminution was carried to the consumer. I congratulate him upon his Budget, and I hope that he may be successful in getting that which he requires and which is essential, but I do suggest that, in regard to finances, both national, local and county loans should be carefully considered, that we should see how and in what fashion the application of the Entertainments Duty has a bearing on the religious denominations of this country, and that we should consider the habits and customs of the people and give to them that consideration and that equity that they have the right to demand.
The hon. Member for Royton (Mr. Sugden) has at last come to these benches and asked us for some suggestions for dealing with the financial problem. Had he come to these benches two or more years ago, he would not have found himself in the difficulties in which he finds himself to-day. What is the matter? We are supposed to be governed by a Cabinet of statesmen. Actually we are governed by Press headlines. The Chancellor of the Exchequer, in framing his Budget, has been governed and guided by what he has been told in the Press, because ever since the Prime Minister bowed his head to the "Daily Mail" at the 1918 election we have been governed in this country, in our policy both at home and abroad, by what is known as the Harmsworth Press.
In regard to the Budget, the general effect is to place or rather to retain the burden of the finances of this country upon the poor and the workers, black-coated or manual, on the middle classes, on the wounded ex-soldiers, on the diseased and disabled war heroes, and on the dependants of dead warriors. This is a landlord's Budget. This is a rich man's Budget. What a Budget to be produced by a Government whose Prime Minister is famed throughout the four corners of the land for his oratory at Limehouse in years gone by! What a Budget to be produced by a Government with a Prime Minister who has the past record of the present Prime Minister. It is supposed to be a Budget to revive trade. The newspapers which have been counselling the Chancellor of the Exchequer as to what he should do have been demanding the reduction of the Income Tax in order to revive trade. How on earth do they suppose that trade is going to be revived by reducing the Income Tax. The Chancellor of the Exchequer in his opening statement yesterday said that the arrangements with regard to the debt to America had resulted in an increase in the value of the pound sterling. So much the better, but I would remind the Committee that only 8 per cent, of our present export trade goes to America. Even before the War, our export trade to America was only about 9 per cent. How is a reduction in the Income Tax going to affect trade with other countries? Our export trade with Europe is roughly 40 per cent.
The Chancellor of the Exchequer has proposed a reduction in the duty on tea, cocoa and other comestibles, but even if 4d. per lb. is taken off the duty on tea, how much of that 4d. is going to be given to the consumer? I doubt very much if it will result in a reduction of more than 1d. or 2d. to the people who have to buy the tea. Supposing that it does result in a small reduction in the cost of tea. What is going to happen then? When the cost of living falls, are wages going to be further reduced? Obviously, that is what is intended by the reduction of the duty on tea. The reduction in the duty on tea will not in the long run prove of any benefit to the working classes in this country, because as soon as the cost of living falls the rate of wages is bound to be reduced as it has been in the past. It may be said that when the wages have been reduced the cost of the production of our export articles will also fall and that that will really improve trade. I do not believe it can improve trade, because even if our cost of production to-day was so much reduced that the workers worked without any wages at all, it is impossible, with the exchanges as they are, to sell goods in such European markets as the Austrian, the German and the Hungarian markets. The fact is that the Chancellor of the Exchequer cannot improve our trade by tampering with Income Tax. His best method is to use his influence at the Foreign Office to revise our foreign policy with Europe. I would remind the Committee that our home markets consume approximately 60 per cent, of our production. Only 30 per cent, of our normal production went abroad in our export trade. The better way of improving our trade is to stop some of the wage cuts that have been going on in all the industries during the last 12 months, because if wages were not reduced there would be more money to circulate and to spend on production of goods in this country.
I now come to the question of Income Tax. I find from the last form of the Commissioners of Inland Revenue that 3,547,000 persons are chargeable for Income Tax. Of the 5,500,000 who are assessable for Income Tax, nearly 2,200,000 persons are exempt on account of private allowances or other abatements. Of the 3,500,000 persons who pay Income Tax, 3,055,000 will receive an abatement of only 6d. in the £. The benefit of the reduction of 1s. in the Income Tax will only go to 500,000 rich people. All this clamour about the reduction of Income Tax is extremely misleading. The applause from the Press which supports the Government is misguided; it is rather premature, because the reduction of 1s. only affects 500,000 persons, whereas the remaining 3,000,000 who have to pay Income Tax will only benefit to the extent of 6d. in the £. The unfortunate thing is that this may produce a very unfortunate result at an early election. The people of this country have great difficulty in understanding how to fill up their Income Tax forms, and it may not be borne home to the mass of people in this country before an early election takes place that they are getting a reduction not of 1s. in the Income Tax but of only 6d. in the £.
The real sources of wealth in this country are still practically untouched. I have only to turn to Government publications, quite recently produced, to see that 15,799 persons have incomes between £5,000 and £10,000 a year; some 6,389 persons have incomes between £10,000 and £20,000 a year; 3,167 persons have incomes between £20,000 and £50,000; while 600 persons have incomes exceeding £50,000 a year, and can be termed millionaires. In this poverty-stricken country, therefore, we are not so very badly off for millionaires. A levy on accumulated wealth would very soon find the money required, without bleeding those who can very ill afford to pay. I have heard a good deal in the last few weeks about an organisation known as the Income Tax Payers' Society. They have been clamouring for a reduction in the Income Tax. That society is presided over by a very wealthy gentleman, and I suggest to the Chancellor of the Exchequer that he should direct the energies of this well-meaning society in the direction, not of getting a reduction of Income Tax, but to get for the benefit of the Exchequer and the country some of the Income Tax which has not been paid, and is now very much in arrear. That now amounts to Income Tax £110,000,000, Super-tax £24,000,000. This huge sum is now in arrear.
There could not be a more iniquitous policy than the policy of the Chancellor of the Exchequer in suspending the Sinking Fund. It would have been far better, if it is not possible to cancel or to reduce the rate of interest on our internal debt, to have offered to convert the whole of our internal debt by a conversion loan at, say, 3¼ per cent, at par. At the present time we are not presenting a clean slate in regard to our national finances. We are borrowing again with all the evils of inflation. The Chancellor of the Exchequer will not face the facts of the situation. He will not face the fact that the burden of our expenditure to-day is not on social services, as the Geddes Committee of shipowners and coalowners would have us believe, but is the burden of our War debt. I know that the payment for pensions covers approximately £67,000,000 of our War debt. That I admit is justifiable. Of that amount the Government have no qualms in reducing the pensions paid to the War heroes who were told that they were fighting to make this a land fit for heroes to dwell in, because, under the Royal Warrant, in April, 1923, pensions allowed to War heroes are going to be reduced in proportion to the fall in the cost of living between 1918 and the present. You never hear of any suggestion of reducing interest on War debt.
We are paying for our misguided policy during the War. If the Government early in the War had conscripted all the factors of production necessary for the prosecution of hostilities and made all existing owners of industry captains, colonels and generals of industry, paying a salary in proportion to their responsibility, paying reasonable wages and curtailing profits, I believe that the expenses of the War could have been reduced probably by more than 50 per cent. If it was the duty of men of military age to have their lives conscripted it was the duty of the Government to conscript the wealth of the men who stayed behind and simply because of their position made money out of their country s need in her hour of peril. Future historians will ask, where was Great Britain's sense of equity, justice and proportion? Profits made during the War were drawn out of the people. The Government pledged the future prosperity and the future productive power of the country to a few of their friends who now support them. The Government policy, in suspending the Sinking Fund, is merely postponing the evil day. I suppose they will put it off until there is a Labour or other advanced Government in this country, which will have an opportunity of taking some of the accumulated wealth of this country. The Chancellor of the Exchequer yesterday referred to the fact that we were transferring our external debt to an internal debt. He said: As my right hon. Friend the Leader of the House said, in making his Budget Speech last year, the transformation of external debt into internal debt is a definite gain to the national wealth. He then went on to say: We then pay our interest not to people outside the country but to ourselves."— [OFFICIAL REPORT, 1st May, 1922; col. 1025, Vol. 153.] We are transferring the money from the pockets of one section of the community into the pockets of another. We are shifting money from the pockets of the middle classes and poor people into the pockets of the rich and the profiteer, because, as the cost of living falls, the value of the money paid to the bondholders increases, but the wages of the working classes are inevitably reduced. The people who hold the money will become gradually richer and richer. This Budget shows only too clearly the psychology of the present Government. There is no hope of increasing the scanty pro- vision for education, housing, or other social purposes. A few rich men who support this Government may well be pleased with this Budget, but just think of what we have outside. We have 2,000,000 men with their dependents suffering all the evils of unemployment. Three hundred and forty-nine thousand War heroes have had their meagre pensions reduced during the last 12 months The proposals which the Chancellor of the Exchequer puts forward will be read with widespread dismay by the millions of workers throughout this land, and by the thousands of men locked out during the last few days, whose scanty savings are being used up by one of the most cruel and unjust lock-outs which we have ever known in the industrial history of this country, and as to which this Govern-has been in the most complete collusion with the employers the whole time.
I have listened with a great deal of Interest to the somewhat melancholy speech of the hon. Member. There is no use, when considering questions of political economy, in getting into the frame of mind that produces denunciation of accumulations of capital, because these accumulations are the means from which industry springs. If a man has a large income and does not spend it, but re-invests it, he is doing the utmost benefit to his fellow-countrymen. There is no getting away from that fact. A man only has the income which he spends. The rest of it goes in benefit to his fellow-countrymen. I have often thought that the whole system of taxation is unsatisfactory, because I believe that a man should be taxed only on the income which he spends, and that a company should pay Income Tax only on the dividends which it distributes. Then it would be possible to build up cheap capital easily borrowable, so that many persons who cannot pay the high rates demanded by banks and others, owing to the scarcity of capital, should be able at a moderate rate of interest to get a start in life, and thus increase his own and the general prosperity. There is a complete misunderstanding of economics in the speeches of hon. Members on the other side. We often hear from them that capital takes an undue share of industry.
Not capital, but capitalists.
There is no difference, for as long as they reinvest it they are doing good. If they waste it they are not doing their duty. The attitude that labour should get all the products of industry and that capital should have no reward—that is the Marxian doctrine, I believe—shows that these gentlemen have not got further in their economic education than the dairymaid who maintained that all the milk which she drew from the cow belonged to her because she milked it. I congratulate the Chancellor of the Exchequer, not only on his Budget but also on his statement of it. The highest compliment I can pay him is to say that it is the most business-like address which I have known in my recollection of Budget speeches. It was more like the speech of the Chairman of some great beneficial industry which was carried on in this country. There was no egotism, and it was a most business-like statement, but it was only the statement which those of us who have known him expected, and I am proud to say that he comes from North of the Border and from the same city which I have the honour to represent.
The great importance of the Budget in the remission of taxation is not so much the amount of taxation that is remitted, but that it is a great Budget psychologically, because it is the beginning of an intimation to all classes that there is to be an attempt to decrease taxation. You cannot continue to overburden the taxpayer to the extent to which he has been overburdened. If you do the back of the taxpayer will ultimately get broken, and it was getting very near the breaking strain. An Income Tax of 6s. in the £ is an impossible tax. Five shillings is a little better. The beginning of the downfall, and of the terrific crash that came upon industry—it may have been only contemporaneous, but I think that it has a lot to do with it in spite of what the Member for Central Glasgow (Mr. Bonar Law) says—was when the heart was taken out of the commercial and industrial community by the raising of that extraordinary tax, the Excess Profits Duty, which had been 80 per cent., and then reduced at one fell swoop to 40 per cent. It would have been wiser to reduce it to 60 per cent, instead of lowering and then raising it. Having been reduced to 40 per cent., as trade was booming, it then occurred to certain officials in the Trea- sury to inspire the present Leader of the House to get a bigger share of the boom that was going on. Unfortunately in so doing, in my humble opinion, it did a great deal to kill the trade of the country that time.
All those who were engaged in industry felt that something like a breach of faith had been committed, or they felt that they had been deceived, perhaps self-deceived, and they knew that there was no good starting to engage in any form of industry in which they stood to lose 20s. in the £, perhaps more, when the Chancellor of the Exchequer was going to step in and take far more than the lion's share, practically the whole profit. The fact is that industry simply sat down and refused to go ahead, and the slump dates from that. It was not so much the actual effect of the tax. It was the psychological effect. No man is going to start and work in a time when peace is supposed to be declared when 33⅓ of his time is for the benefit of the State. That is more than flesh and blood will stand. There is bound to be a reaction. If the State shared all the loss he might do so, but when the State takes nothing but the profit, and he is left with a chance of the total destruction of his business, he cannot be expected to engage in it. The Chancellor is completely justified by what he has done by the psychological effect which the reduction in the Income Tax will have. People will set to work. They will feel that there is a shilling off this year and that there is chance of a shilling off next year. I believe that with this reduction there will not be as much loss as there would have been if the former tax had been maintained, because I believe that there will be a bigger Income Tax than otherwise there would have been, and that the beginning of our industrial resurrection will date from the attempt made to reduce taxation.
The Member for the City of London (Sir F. Banbury) took exception to what he called borrowing. I know that the Member for the City of London has always been engaged more or less in what one might call gilt-edged finance. He does not know about the struggles of the average industrial man, of those who carry on commercial business on an overdraft and finance their businesses by bills of exchange. From their speeches one would think that the right hon. Member for the City of London and the last speaker did not know what a bill of exchange was, and had never heard of one being renewed. All that the Chancellor of the Exchequer has done in this so-called non-paying-off of contractual debts is simply to renew the bill, with the chance of renewing it at a lower rate of interest, which would be a distinct gain. In last year's Budget and the Budget of the year before, there was too big an attempt made to pay off debt. Too big a strain was put upon industry and upon the income makers of this country. It is time that we gave a chance to those who are capable of organising industry and of making incomes that are fit to be taxed. The power of organising industry is not a common power. When you get an average Government official endeavouring to engage in any industry, you always see the unholy mess he makes of it. It is very difficult to conduct commercial businesses with prosperity, and it does not do to pole-axe the right type of man, who is not too numerous in the community, or to say to him, "Whatever you make, we are going to take the lion's share of it."
An hon. Member opposite spoke of very-large incomes as if they were net incomes. They are not net incomes. When all taxation is deducted there is only 1s. or 2s. in the pound left. A Scottish Member of the House of Lords the other day gave particulars of the income of one of his estates. In 1912 the net income was £14,000 a year and last year it was only £400. That was the small sum left out of a very large revenue; and nothing remained to keep up productive enterprises on the estate. On the big estates of this country the Government of the day have mad* about as complete a sweep as the most ardent disciple of Marx or of Lenin and Trotsky could hope for, and there is practically nothing left. That is a very great calamity to industry and to the financing of industry. There was much talk about making a capital levy. I took the trouble during many weeks to investigate the problem, and I found that the only result of such a levy would be to make those who have plenty of money richer, and those who have very little poorer.
There are one or two items in the Budget, with which I am not so well satisfied. The right hon. Member for Peebles (Sir D. Maclean) spoke about taking off the duty on sugar. I wish it had been possible to do so. He described sugar as one of the necessaries of life. It has become so, but if he looks at Adam Smith—there are many doctrines quoted from him, without his qualifications, by Free Traders—he will find that the great economist lays it down that sugar is a very fit subject for taxation, as it is a pure luxury. It was so in Adam Smith's time. It has changed and has now become something of a necessity. If the Chancellor of the Exchequer cannot do what was suggested, I hope he will take one urgently necessary step. Before 1903 our great sugar industry had been almost completely destroyed and all the vast colonial estates had gone out of cultivation through the pernicious system of sugar bounties instituted by Napoleon for the purpose of building up the industries of France and of injuring the industries of Britain. That policy had been seized on by Germany and between her and Austria there was produced almost three-quarters of the sugar consumed here. So desperate was the situation of our dependencies that Mr. Joseph Chamberlain secured the abolition of the bounties. He had actually to give a dole to some of our West Indian Colonies of a large sum of money.
One of the results of the late War was that these Colonies were very largely cut off from us. We could not get to them owing to the submarine campaign and the shortage of shipping. America proceeded to develop the sugar industry of Cuba, the products of which rose from a few hundred thousand tons at the beginning of this century to many millions of tons throughout the War. American capitalistic combines also put enormous quantities of sugar machinery, made in America, into Cuba and the Philippines. These places and our West Indian Colonies used to buy almost all their sugar machinery from Glasgow. Glasgow made sugar machinery for the rest of the world long before France or any other country. The industry employed thousands of men. These avenues of employment have now been closed and Americans have stated their intention of getting complete possession of the sugar markets not only of their own country, which is legitimate, but of countries elsewhere. Now that prohibition is introduced, the United States use enormous quantities of sugar, which is one of the raw materials for home dis- tillation. America has a surplus of sugar and it is being sold in all our markets and in the British market at very much below cost. The result is that our sugar producing colonies and dependencies, the natural suppliers to us of the major portion of our sugar, are being reduced practically to the same position as that to which they were reduced by the sugar bounties. They have been granted a small preference of about £3 15s. per ton, but that has been already met by the American producers.
It is not only the Colonies for which I am speaking, but for my own city of Glasgow. In that city enormous additions to the number of unemployed have been made by the destruction of the sugar machinery industry. I, therefore, make an appeal to the Chancellor of the, Exchequer. He has made a large concession to home-grown sugar. It is a very proper concession, for if we can establish a new agricultural and manufacturing industry in this country and help it over the early years of struggle, it may be a perfectly sound thing to do. The Chancellor of the Exchequer, however, has not given anything like the same concession to the sugar producers of our Colonies. I think they should get a stabilised figure of one-third instead of one-sixth abatement on the Sugar Duty. That is necessary to secure that they will not be extinguished by American competition. Once they are extinguished by America or Germany, we may expect very dear sugar. Such an abatement would have been a more popular abatement than the abatement on tea. The duty on tea doss not amount to very much in the case of a single cup, for from one pound of tea it is possible to make from 80 to 100 breakfast cups of tea. Tea is a very poisonous drug. There is nothing more accountable for chronic dyspepsia, heart disease, and many of the ills that beset the constitution of our people, than the habit of keeping tea constantly on the hob and drinking it at all times and periods. There is a still more noxious compound, cocoa. It is simply like chocolate and is a sweet. Is the cocoa Press so very powerful? A little while ago the Prime Minister was protesting against being deluged by cocoa slops. I do not know whether to call it a beverage or a porridge. The duty is so slight as to be an infinitesimal fraction of a penny on each cup. I do not see why it should have been considered. Sugar would have been a much more fit subject for abatement.
In the present state of our finances it is impossible to ask for the relief that one would desire, but I would ask the Chancellor of the Exchequer to consider the danger that our Colonies are facing if the combination of capitalists across the water is to be put in the position of bringing ruin to the sugar-producing Colonies. I will read a very interesting note I found in a German history. The German historian, writing in 1916 while the War was in progress, and speaking of our sugar industry and the effect it had on Germany, said: By her Free Trade policy England has done us more good than any harm she has done us by her political opposition. Where would our sugar industry be, the great pioneer of our industrial progress; where our iron and textile trades; where the whole body of the new German finance, without the rich, all-absorbing English market? Carried on her back by Free Trade England, we have ventured to reach out for English world power. That resulted from our giving her uncontrolled right of access to our markets. The same result and the same danger will follow if we do not take some step to give protection to these industries which are so vitally necessary, and which, mark you, take our products, not only sugar machinery, but all sorts of other things, and thus help towards the solution of our employment problem. There is no reason why this little further preference should not be given. It is quite small, and will not involve the taxpayer in any big liability, but will protect these industries from being reduced to the position in which they were in 1903. I may refer also to a speech made by the late Prime Minister the right hon. Member for Paisley (Mr. Asquith) on the 2nd August, 1916, at the very same time as this German writer dealt with the matter. He said: The War has opened our eyes to the full meaning and the manifold implications of the German system of economic penetration and commercial and financial control of vitally important industries and to the use to which vantage ground gained by this system can be put in war. It is difficult, indeed, I think it is impossible, to believe that Germany would not continue to be animated by the same spirit and policy when the War is over…. They are already organising their industries—and do not let us be blind to this—for an attack on our Allied markets and for a vigorous and, if possible, a victorious competition in neutral markets."—[OFFICIAL REPORT, 2nd August, 1916; col. 333, Vol. 85.] Therefore I submit I have established a case for a reconsideration of the sugar duties, and now I come to another point. Having quoted the remarks made on a previous occasion by the right hon. Gentleman the Member for Paisley, I wish to refer to what he said yesterday in regard to War stores. He says they should not be included as part of the Revenue but dealt with in the Capital account. That comes badly from the right hon. Gentleman, whose party created the Death Duties as revenue. The fact is that the State has got no Capital and Revenue account. It is impossible in the book-keeping of a great country to have a Capital and Revenue account. There is one other item to which I wish to call the attention of the Chancellor. The claim has been made by other speakers that there should be a reduction of the beer duty. There is no doubt the present beer duty is quite excessive. I should like to see a vote upon the beer duty in order that those Gentlemen who hold the view that taxation should be used as a foundation for their own peculiar ideas, should give their constituents an opportunity of seeing whether or not they agree to a reduction. The return from the beer duty is practically the same, although the taxation has been raised, but the proportion consumed is very much smaller.
What is still more shocking to me is to see that the return from the Spirit Duty has fallen off by 7½ million pounds. That is a colossal figure, and means that a great many people have been diverted from what as Scotsmen we are entitled to believe is the more suitable medicine— at least it is one of our native products. I do not pretend to have made an exact calculation, but if you take the amount of 7½ million pounds, and take the present duty per bottle, allowing for the present somewhat diluted strength, it means there has been a falling off in the consumption in this country of nearly 20,000,000 bottles. [HON. MEMBERS: "Shame!"] I quite agree. Think of how much human happiness is involved in these simple figures. Think of all the old people resident in Scotland—and a good many in England—to whom a glass of toddy at bedtime was one of the principal events of the day. Now this consolation is being taken not only from elderly people but also from sick people, because for those suffering from diseases like influenza there is no better medicine. Indeed, one of the guardians of this House, who comes from the remote North of Scotland, speaking to me when the campaign for Local Veto was going on, asked me "What is going to happen when it is impossible to get any of the wine of the country?" He told me that in his part of the country, in Ross-shire, they never had a doctor; they kept a bottle of whiskey in the house and if anyone became sick, the patient got some of it and became better.
It is perfectly shocking that these taxes should be maintained at the present excessive rate. I, like the hon. Member for the Central Division of Glasgow (Mr. Bonar Law), have received something like 1,000 post cards on this matter. I did not read them all, but there was one which touched me profoundly in which the writer said he hoped, seeing that his wages had so fallen, and his work was as hard as ever, that I would be able to do something. He concluded by saying, "You are our only hope." I would also point out to the Chancellor that taxation in this respect has reached such a grotesque figure that something like the American system is beginning to creep into this country. It is only within the last few days that in the City of Glasgow there have been discovered two very well equipped distilleries on- a small scale. I may tell the Chancellor that the process of distillation of some form of alcoholic liquor is not so very difficult, and if these grotesque figures are maintained there is grave danger that as in the days of former generations in the Highlands of Scotland, means of this kind, will be resorted to. These duties will be so high that people in a state of indignation will follow the courses which we have found in other days followed in the North, though I do not know about the practice in the South. There may be a recrudescence. I am told that it has been practically universal in Ireland for many years, but we do not want to see the Scottish people taking up lawless methods. As I say, however, already two cases have been discovered in Glasgow, and how many are still going on and have not yet been discovered it is impossible to say, but it should not be forgotten, as I say, that it is not a very difficult operation, and sugar is about all one needs to do it. I do say it is very unfair that on a vast mass of our fellow countrymen prohibition should be enforced in this particular way by taxation, especially when there has been such a very heavy fall in wages, and I urge that, at the earliest possible moment, some attempt should be made to meet the reasonable desires of the working man to get reasonable refreshments without trenching so heavily on his wages.
A little consideration might also be shown on the question of the Entertainments Duty. I was interviewed by some very decent men who run what they call "twopenny shows," and they told me it was a fatal thing to have to pay a halfpenny of Entertainments Duty out of their 2d. charge. There are also the lower priced seats in the cinemas, a matter which affects our big industrial districts. We have to thank our industrial system, and still more our railway system, for having urbanised our population, and congested vast masses of people together, and it is very sad that some of them should have nowhere but the streets to go to to amuse themselves, and still sadder that most of them have to go so often to get a little light and amusement to the cinema. I think in regard to the low priced seats the duty works very invidiously, and I wish the Chancellor of the Exchequer would find time to examine the matter and see whether some concession could not be made without a very great loss to the revenue, in regard to this particular form of popular amusement.
As has been said by so many speakers, we do wish to see a great reduction in expenditure. We will never get assistance that end from the benches opposite. As long as public money is concerned they will cheerfully spend it. I remember hearing a Labour Member in a great Corporation saying to another member who objected to certain expenditure, "You are awfully mean; you would almost think it was your own money." That clearly expresses to my mind the Labour point of view. If it is not your own money "blue it" with an easy conscience, but if it is your own you have to be very careful. What I resent is that the Government have taken a good deal of its policy in this respect from the Labour Benches, and, of course, the result has been an expenditure of public money, and there is consequently less money for industry and employment for those who are capable of making money—a com- paratively small section of the community. Those who are capable of keeping it when they have made it represent a still smaller section of the community. They are having all their money annexed to pursue the views of idle theorists who are never capable of making any money for themselves, but think they are the right people for spending other people's money. If they are to get their way the result will be that those who have the capacity to keep the wheels of industry going will find some other sphere, or will not engage in industry to the same extent.
As regards the cutting down of our expenditure, we might have taken a great deal more out of the Geddes Report than we did. We might have enormously diminished our services in military and naval matters, and developed our air service. If another war comes, there will be no time to improvise an air service. It will be over in a few hours, and we could have saved immensely by dealing more drastically with the fighting forces in the two old arms and enormously increasing the efficiency of our air service. If you have a competent air service, you will get time to improvise in a sense as regards both Army and Navy, but if your air service is comparatively weak as ours is in comparison with Continental Powers, there will never be time to improvise. That was one chance of saving, and I shall take an opportunity, when the Education Debate is resumed, of giving my views on the saving which might be effected in that respect.
On the whole, I congratulate the Chancellor. Next year he will have a harder time. Had it not been for previous good years there would be great difficulties ROW. Many people paid taxation out of capital this year and made no income. One concern with which I am connected had to pay 10s. in the £ because it had had two good years previously, but this year was not so good. The coming year is going to be a pretty black one, and I hope the Chancellor of the Exchequer will establish, not only Treasury control, but personal control of the expenditure which is going on. I think he has got the Glasgow mind, inasmuch as he is not likely to be hidebound by officials. He will go his own way and exercise a firm hand over the expendi- ture of the nation of which at present he is our greatest trustee.
7.0 P.M.
I will not trouble the Committee long in dealing with the general situation. What we are learning now is that we have been living for the past 12 months, as some of us are living now, on capital, and, if the conditions are not rapidly changed, our industries started, and our exports resumed on something approaching the pre-War standard, we are rapidly approaching bankruptcy. I heartily agree with the hon. Member who spoke last when he said that to a great extent in this country we are living on capital. Many of us are paying away capital in order to meet the present burdens of taxation. The complaint has been made that the Income Tax reduction is only going to affect certain individuals in this country. Hon. Members who make that complaint are apparently entirely ignorant of the fact that every business undertaking in this country, whether commercial or productive, has to pay Income Tax not only on the dividends paid to the shareholders-but also on a very great deal of the money which it earns and has to retain in the business in order to keep the business alive. The methods of assessment to Income Tax are very onerous. The reduction of 1s. will be a sensible relief, if only a small one, to all the industries of this country. I do not want to take up time on that now, an opportunity will come a little later, when the figures and the statements will be carefully analysed and the whole question of national finance gone into. I will only say this now on the broad issue, that it is profoundly disappointing, after so much pressure and so much clamour has been engaged to effect economies, that we are still faced with a Budget which contemplates a national expenditure of over £900,000,000 in the coming year, and that the reductions of expenditure, many of them automatic, only total some £64,000,000 as a result of the inquiries and investigations which have been made.
My hon. and gallant Friend must not say that. What I referred to were the reductions which took place last year upon the final Estimates in the actual working of the year, and which amounted to £69,000,000. The reductions as shown by the Estimates of the present year, however, amount to something like £240,000,000 compared with the expenditure of last year.
That is so, but I am talking of the ordinary expenditure of the year and the reduction that has been brought about as a result of the Geddes Inquiry.
The hon. and gallant Member is really labouring under a complete misapprehension about this. The Report of the Geddes Committee was directed towards the Estimates of the year in which we now are and not towards the situation of 1921–22. In 1921–22 we succeeded in bringing down the actual expenditure by £69,000,000, compared with the estimated expenditure for that year. But the suggestions of the Geddes Committee who took the Estimates for next year—that is the year in which we are now—have been fulfilled to a very large degree, and have resulted in the bringing down of our Estimates for the present year, as compared with the final Estimates for last year, by £240,000,000.
My right hon. Friend is no doubt correct in what he says, but he misunderstood what I wanted to convey, namely, that the result of the Geddes Report was to bring about a further reduction in the Estimates——
It has done so.
And that that amount, I understand, was £64,000,000, or thereabouts. I think I am correct in that?
Yes, but that was on the particular things to which they directed their attention. We have directed our attention to a good many more things.
Then I am right in being disappointed that a larger reduction has not been brought about in that matter. Of course, there are very large reductions in expenditure. The service of the Debt is very largely reduced automatically by the Government being able to borrow at a lower sum, and by bonds and securities which have fallen due for payment being renewed at a very much lower rate of interest. Those are all brought into the savings on the Estimates, but they have happened automatically, and there is no credit to the Government on that ground. It is a windfall, owing to improved conditions for which they are not responsible. It is lamentable that the Government contemplate an expenditure for the coming year of over £910,000,000, and the country cannot afford that expenditure. There are only two ways in which this House can act in bringing about economy. We have tried, over and over again, by cutting down the Estimates. As the Committee is very well aware, only 20 days are allotted to the Estimates, with such days as may be allotted to Supplementary Estimates. We cannot possibly deal with all the Estimates of the year in that time, and there are as many matters of policy discussed on those days as actual items of money to be appropriated. The process of cutting down Estimates in detail has proved to be impossible. We can only make certain changes in certain cases. If we really want definite economy and a further reduction of expenditure, we should refuse to vote the money in excess of what the nation can afford, and reduce by a considerable sum the money already asked for. Some policy of that kind ought to be brought before the House, and there should be a further reduction in taxation.
One tax which most certainly ought to be lowered, and which is doing great injury to the industries of this country, is the Corporation Profits Tax, and no people complain of that more than the co-operative societies who have been brought within its ambit. They are fully aware of the way in which it is pressing upon industry and they complain, as does every other industry affected by this particular method. Very great relief would be brought to industry if this tax were lowered and it would not cost a very great sum. I would allude in passing to the relief which has been given to agriculture by the reversion to a lower rate of assessment to Income Tax. That will be a great relief, but the condition of agriculture now is so critical and difficult that something further is required, and measures will certainly have to be taken to give additional relief in the payment of local rates in order to give agriculturists a reasonable chance of tiding over the present great financial difficulties with which they are faced.
I am sure hon. Members will expect me to say something on the question of the Beer Duty. I should not be doing my duty to a trade with which I am connected, and to the vast amount of correspondence I have had from people not connected in any way with the trade, if I did not mention this matter. I do not know whether the Committee realises that the Beer Duty, before the War, was 7s. 9d. on the standard barrel, and that it now is £5 on the same quantity. There is no other article which has been taxed to the same extent, not even spirits. Tea, cocoa and coffee, which have just had some relief of duty, only had the duty doubled in consequence of the War. The Beer Duty has been increased 13 times, and it is quite impossible under present conditions that the price of beer can be reduced in any way to reach the consumer unless there is a reduction in taxation. The calculation is a perfectly simple one; hon. Members can find it out for themselves. Practically it has been enshrined in an Act of Parliament, because the last time the price of beer was increased by 1d. the increase of duty was 30s., and a reduction of 30s. on a barrel would enable the brewer and the retailer to charge 1d. less per pint on the article sold to the public. The Government apparently do not intend to give any relief. They stated, in answer to a question in this House, that it would cost £26,000,000. I do not believe it would cost any sum so great to give relief. As a matter of fact, the consumption of beer during the last quarter has fallen off very considerably. I do not know whether the attention of the Chancellor of the Exchequer has been called to the very heavy fall in the consumption of beer since the beginning of this year?
Oh, yes, I have examined it.
The fall has been very remarkable. I am sure the Estimate that the right hon. Gentleman has made, that the tax is going to yield not very much less than last year on the basis of the present consumption, is far too sanguine a one. So far as I can calculate, the utmost amount that you would risk losing by reducing the price of a pint of beer by 1d. through a reduction of the tax would be £20,000,000, and the right hon. Gentleman might, by increased consumption, reduce that amount very considerably. The right hon. Gentleman has produced a teetotal Budget, as the relief to tea and coffee gives nothing to the drinker of beer. I can assure him, if the statements made to me by people who have nothing whatever to do with the licensing trade are by any means correct, that there will be a vast amount of disappointment in many parts of the country that the Chancellor, when reducing taxation, should still leave a glass of beer, costing 7d. on the average, with a tax of over 3d. It is not reasonable, and no doubt it will have to be reduced. I hope the opinion of the Committee will be taken on this question. It is a grievance.
Looking at the general situation, expenditure is much too high. That means that the Government are asking for more money for expenditure this year than they ought. There might very well be some further reduction in taxation, and I think the Government will have to reduce their Estimates and cut down their expenditure in order to carry on with the amount which this House may be willing to vote. In a somewhat rapid and casual Debate such as this, and without full time to examine and analyse carefully the figures only presented to us yesterday, I will not venture to make any detailed suggestions. I will only conclude by saying that not nearly enough has yet been done in the reduction of expenditure and taxation. It is satisfactory, at any rate, that a beginning has been made, but the process will have to be Continued if this country is to recover its financial soundness and if trade, industry and employment are fully to be revived as they were before the War.
I agree with much of what the hon. and gallant Gentleman who has just sat down has said, but my complaint is that except in regard to beer, on which he speaks naturally with great authority, his speech was of a general character. He did not tell us in which way we were to cut down expenditure. The only definite suggestions we have had have been from two hon. Members both of whom sit for divisions of Glasgow. The hon. Member for Springburn (Mr. Macquisten) wants to cut down education and, most extraordinary wonder of all, the right hon. Member for Central Glasgow (Mr. Bonar Law) wants to cut down the Navy. I do not know why the Navy should be pitched upon by the right hon. Member for Central Glasgow. Whatever our foreign policy is—and I think that is where you will find the key to much of our unnecessary expenditure at the present time—while a condition of the world exists in which a number of States may at any time be at enmity one with another, and with our position of dependence on overseas supplies, we must have an adequate Navy. Where I believe the expenditure is excessive is in military expenditure, and especially with regard to the armies that we maintain on soil which is not British, but outside the British Empire. In regard to what the hon. and gallant Member for Burton (Colonel Gretton) said about beer, I hope a division will be taken specifically on the Beer Duty and that we shall have a test, and I hope that some of the Conservative Members voting for the Government on that occasion will have their reasons ready to explain to their constituents. I believe this is the most burning question with that strange bird known as the Conservative working man. I have a great many of that type of person in my constituency, but I am glad to say that he supports me.
That makes him all the stranger!
He knows me better perhaps than the right hon. Gentleman is known by his constituents in Glasgow. The dockers of Hull feel very keenly on this question of the price of beer, but they do not altogether blame the Government. They look at the very high profits made by the brewers, especially during the years of the War, and they have a sort of suspicion that the brewers are largely responsible for the high price. I and others have pressed the President of the Board of Trade to institute an inquiry into the prices charged for beer to the public of this country, and an inquiry has been held, about which we have been told practically nothing at all. It has been held behind closed doors, the evidence has been taken in secret, and we have put question after question to the President of the Board of Trade, but we have been unable to extract any information from him as to the progress of that inquiry, and finally we were told that he found there was no evidence of profiteering. That is not good enough. We know that the Beer Duty puts 3d. a pint on beer, which goes to the Exchequer, but an hon. Friend behind me reminds me that beer is weaker now, the wages in the brewing trade are down, and we want a great deal more evidence than we have been given so far to remove the suspicion that there is still gross profiteering on the part of the brewers. I yield to none in this House in my enthusiasm for temperance. I am all for temperance. I would like an absolutely sober nation that did not spend anything at all on intoxicants, but I want it to come about by the free will of the people, and not by compulsion, and the present method of the Government is by a back door to introduce compulsory teetotalism amongst the labouring classes of this country. The men doing the hard manual labour today are not drinking beer, not because they believe that water or cocoa or other such drinks are better for them, but because they cannot afford beer, and there is also the fact that men are being driven from beer to spirit drinking, which I do not believe is a good thing for them. I hope we have this matter of the Beer Duty put clearly to the House, and a vote taken, but I must protest against the Government's laxity in not looking more closely into the question of profiteering and the artificial keeping up of the price of beer.
Does the hon. and gallant Member suggest that the brewers are putting the 30s. into their pockets?
I do not want to do any injustice to the brewers. I believe the honest brewers resent the charge of profiteering and would like to have the matter properly cleared up, and I admit that 3d. in the pint is due to taxation, but I am not altogether convinced in view of the great profits made in the past by brewers. Many brewers were on the verge of bankruptcy at one time. I am not referring to the firm presided over so ably by the hon. and gallant Member for Burton, but without more, evidence I cannot accept the plea of the Government that there is no undue profiteering.
With the expenditure that the Chancellor of the Exchequer had to meet, and with the revenue that he could legitimately count on, I must say that I do not see that he could have done very much better than he has done. A shilling off the Income Tax is, of course, not enough. We are over-taxed. I quite agree that over-taxation does make unemployment.
There is something in the charge that this is a rich man's Budget, but at the same it is not a middle-class Budget.
It is a muddle-class Budget!
The Budget is not so muddled as the policy which has led to the enormous expenditure which the right hon. Gentleman has to meet. Until we can get less expenditure of public money in one form or another, we are going to have injurious taxation. Taxation is injurious; it is hampering industry and hampering the, revival of trade. Where can we look for savings? I can tell the right hon. Gentleman almost at once where he could get the wherewithal to reduce the Income Tax by another shilling or, on the other hand, take something off sugar. Last year, and until the end of March this year, the Germans paid to us £44,000,000 in reparations, but that was not sufficient to pay for the Army of Occupation on the Rhine. If we had not got that Army of Occupation on the Rhine, that £44,000,000 would be available for the Exchequer, and at once you would have the means for reducing the Income Tax by another shilling, and I intend to rub that in in the country whenever I have the opportunity. If you had not got your Army of Occupation on the Rhine, that £44,000,000 would be clear gain to the Exchequer, but as it is, it does not even pay the cost of those troops.
Is the hon. and gallant Member aware that there are only 4,500 troops in Silesia? How does he arrive at £44,000,000?
I have not mentioned Silesia at all. I was talking about the Army of Occupation on the Rhine.
He does not know where the Rhine is.
£44,000,000 was paid last year towards its upkeep, and we have been told in answer to questions that that does not cover the cost. If you could withdraw that army, you would have £44,000,000 clear, at any rate. With regard to Silesia, you have got the best fighting troops in Upper Silesia. The other armies in Upper Silesia are continually causing trouble, and——
The hon. and gallant Member must not go into details. It would be out of order in discussing ways and means.
I am sorry I was led away by the interruption of my hon. and gallant Friend. While you have got these armies outside British territory altogether, costing the enormous sums they do, it is impossible to make the reductions in taxation which the country must have. What has been said about the wage-earning classes living on their savings during unemployment is also true about the middle classes. Just as the wage-earning classes are coming to the end of their resources, so the Income Tax payers and the middle classes are gradually coming to the end of their resources, and the breaking point is being reached, and reached quickly. While you have these armies in Constantinople, on the Rhine, in Iraq, in Upper Silesia, and anywhere outside British territory, you cannot look for a reduction of taxation. That is one sink down which the taxpayers' money goes. With regard to the general expenditure on armaments, I agree with the right hon. Member for Central Glasgow up to a certain point, namely, that further economies are possible in the Navy, but for heaven's sake do not pick out the Navy alone to be cut and scraped, and overlook the enormous expenditure on other Services, the Army and the Civil Service in particular. The argument that this 1s. in the pound reduction of Income Tax is going to lead to a revival of trade is, I submit, wrong. We are not going to get a revival of trade until there is a revival of confidence, and that you will not get till you get a real peace, which we have never yet had, and I am sorry to say we do not look like getting it, even as a result of the Genoa Conference. You will not get a revival of trade until you restore the markets that took our goods in the past. Even a reduction of 2s. 6d. in the Income Tax which was spoken about, without the restoration of our markets and the restoration of the confidence which only peace would give, would not bring about a revival of employment in the country, and it is, I think, criminal to mislead people to believe that it will. In these Debates the question of governing policy has not been touched upon. In the famous Report of the Geddes Committee policy was hardly mentioned, because it was outside their terms of reference, but it is not outside the terms of reference of this Committee, and until we realise the real causes of the excessive expenditure which leads to such Budgets as we are discussing to-day, and until we put our foot down and insist on a change of policy, there is no real hope for the taxpayers of this country.
The Committee will probably agree that to every Budget we have to apply one or two very plain and simple tests. First of all, we want to be absolutely sure that the Budget, as far as we can humanly make it sure, is going to produce the revenue which the country requires, and, in the second place, that the taxation imposed is to be judged from the point of view of the industry on which the country depends and from the point of view at the same time of the social conditions with which the country may be confronted. It is in that spirit that I should like very briefly indeed to approach the consideration of the Budget which the Chancellor of the Exchequer has introduced. A very great deal of argument has been led from this side of the House to the effect that this Budget is generous to the wealthy classes of this country and is ungenerous to the poor, and I think that the criticism lying behind that argument is that too large concessions have been made in the realm of direct taxation and too little have been given in indirect taxation. Let as take in broad summary on these two points actually what the Budget proposals amount to. The Chancellor of the Exchequer proposes to give, in the sphere of direct taxation, relief to the extent of 1s. in the £ on Income Tax, the relief in the aggregate amounting to anything between £35,000,000 and £50,000,000 in a full year. Then there are certain concessions in the extra length of time which is granted for the payment of Excess Profits Duty, and there are certain concessions to the farmers and to the agricultural classes in the basis of assessment; and, fourthly, the Chancellor has promised to meet the difficulties raised by certain legal decisions, notably the Gittus case, and others, which turn again on direct taxation, and which, if remedied, will presumably bring some relief to individual firms and undertakings in the State.
All that in the aggregate means a very considerable measure of relief in the sphere of direct taxation, and against that, on the other side, we are only able to place this concession of 4d. on tea, which will amount to a relief of £2,000,000 or £3,000,000. So that, quite obviously, it is easy for any hon. Member, with every desire to be perfectly fair and just, to come to the conclusion that very large concessions have been made in the relief of direct taxation and comparatively little has been done from the point of view of indirect taxation. In reply to that, probably, some hon. Members will argue that a very great change has come over the situation in this country within recent years, so far as the relationship of direct and indirect taxation is concerned. In the introductory speech, if I remember rightly, of the Chancellor of the Exchequer we were reminded that not so very long ago the contribution from direct and indirect taxation was equal, but that now the proportions were about 64 from direct taxation and about 36 from indirect taxation, so that, apparently, in the changing practice of the years, certain concessions have been made in the interests of large numbers of people, all of whom pay indirect taxation, from year to year. But there appears to me to be one very plain, and, I think, strong reply to that argument, that, after all, at bedrock in this problem of taxation, we are considering two very different things. In the sphere of direct taxation, and notably Income Tax, we are considering something which is roughly, and, I think, on the whole, accurately based on ability to pay, whereas, in the case of indirect taxation, there may be very little reference at all to ability to pay, and I am going to show in a few minutes that not only has that operated in the years that led up to the War, but it is very strongly in evidence at the present day, in view of the tremendous industrial depression and the very large reduction in salaries, and particularly in wages, that has come about.
Is it, therefore, wrong to suggest, or is it making any unfair plea at the present day, to press the Chancellor of the Exchequer to try to do in this Budget a little more in the relief of indirect taxa- tion, even if he maintains what he already proposes to do in direct taxation, and is there any means by which he can find some additional millions without in any way increasing the taxes as such? Is there any way in which he can find some extra millions for the purpose of giving some additional relief in indirect taxation? Before I come to that, I want to remind the Committee that the change which has come over the situation is this. Since the present industrial depression began, up to the end of March of the present year, in round figures about £500,000,000, measured as a kind of annual sum, has been deducted from the wages of certainly 10,000,000 workpeople in this country. That in itself means a very great change in distribution of income, and certainly it means a very great change in purchasing power. But, in addition to that, we have very nearly 2,000,000 unemployed, and there is the precarious position of their dependents, so that there has been a serious restriction of what we should call average income in the masses, and it becomes our duty, in view of that great reduction, to consider whether this change that has come about in indirect taxation altogether meets the new and greater difficulties to which these people have been exposed. I do not think for a moment any hon. Member could contend that, while there has been a change from a rough equality of 50 per cent, on each side to 64 on one and 34 on the other, in the light of social conditions to-day that change in taxation can be regarded as going the whole way, or anything like the whole way, that the people really require. Surely it is fair to suggest that our taxation must be of an elastic character, that is, it must be capable of change and alteration in the light of the change or alteration in social conditions, and I think, on the whole, it would be a good investment for the State to ask to-night in this Budget whether it could not do a little more for the relief of these people.
I welcome the reduction which the Chancellor of the Exchequer has given on tea, but I am profoundly disappointed that he has not been able to suggest any reduction at all so far as sugar is concerned. The right hon. Member for the Central Division of Glasgow (Mr. Bonar Law) suggested that if any reduction in sugar were to be effected, it would be necessary to give some larger sum than had been referred to in the Press, otherwise there was no certainty that the consumer would gain at all. I have no doubt there is something to recommend that argument, but surely the Chancellor of the Exchequer, and probably many hon. Members who have taken part in the Debate so far, have overlooked this point in the suggested reduction in the sugar tax, that it is not merely a concession from the point of view of the cost of living, or in one of the urgent necessaries on which the people depend, but it is also a concession of very great value from the trade point of view, because of the remarkable extent to which sugar is used in many industries in this country at the present day. I do not want at this stage to pick out any individual industry, and to plead specially for that industry, because we shall have an opportunity when the Finance Bill is in Committee of promoting what Amendments we have in mind: but I can give one convenient illustration in the mineral trade which, whatever view people take of the industry, shows the manner in which a trade can be penalised by high taxation. There is not the slightest doubt that that industry has suffered terribly in this country by reason of the high taxation of the War period, and the very high taxation to which it is at the moment exposed, and both employers and workers in that industry agree that if any relief could be afforded, either in the tax on the commodity itself or the sugar which is used in its production, there would be almost immediately a very considerable increase in the consumption of the commodity, an improvement in the numbers employed in the industry, and probably a gain to the Exchequer at no distant date. I agree entirely that the aggregate amount represented by individual industries like that is in each case comparatively small, but the cumulative effect, both from the point of view of taxation and from the point of view of employment, is very great. Therefore, I suggest it is worth our while to consider whether we could not do something for sugar in this Budget, and if that were done, I should be prepared to say we had made a Budget which was broadly and roughly just as regards direct and indirect taxation, and I think I should proceed to say also that, having regard to the circumstances of the time, it was a very remarkable Budget for any British Chancellor of the Exchequer to be able to introduce.
That is all I propose to say on the side of indirect taxation, but I desire now to refer to some of the proposals so far as direct taxation is concerned. My hon. and learned Friend the Member for the Springburn Division of Glasgow (Mr. Macquisten) spoke, of course, with his characteristic breadth and lack of consideration for elementary accuracy in the endeavour to leave that impression on the Committee which he usually strives to create. He said that nobody on this side of the Committee—and he was referring, of course, as usual, to the hopeless ignorance of Labour Members where financial matters are concerned—had ever raised his voice in defence or in support of the reduction of expenditure. A statement of that kind is absolutely untrue. Over and over again from these benches we have pleaded for drastic reduction of expenditure in certain spheres, but on no single occasion have we enjoyed the support in the Lobby or even in Debate of my hon. and learned Friend. I think that kind of criticism does not help us very much at the present day. We feel very strongly indeed that this country must do everything in its power to reduce expenditure, and to reduce taxation, and I think I may be forgiven if I say we make that plea mainly because of the effect we believe it would have in restoring employment to very large numbers of people who are now out of work. But let us be perfectly candid in our examination of this reduction of the Income Tax. After all, taking the present Budget, which provides for anything between £900,000,000 and £1,000,000,000, and taking it to yield Income Tax and Super-tax at anything from £300,000,000 upwards, the first point that confronts us is that this device in the national scheme of taxation accounts for practically one-third of the revenue this country desires to raise. Quite clearly, if there be a reduction to the extent of £35,000,000 to £50,000,000 in a full year, that is a very important contribution indeed towards the improvement of the conditions of taxation, and has a bearing on the conditions of industry and employment. I do not minimise that for a single moment, but let us keep clearly in mind that the £35,000,000 to £50,000,000 reduction is, after all, a comparatively small proportion of a £1,000,000,000 Budget, and we must not exaggerate the effect in actual practice—I mean, by the actual reduction, of taxes that this £35,000,000 to £50,000,000 is going to bring about.
That is not really the advantage which we are going to gain from thin reduction. I venture to suggest that the real gain which is going to accrue to this country from this tax reduction at the present time is really a gain in what, I suppose, my hon. and learned Friend the Member for the Springburn Division would call the psychology of the situation. It is the very fact that we have been able somewhat to reduce taxation, the very impression that is spread throughout industry and commerce that some concession, however trifling, has been given —it is that influence which will be of real value to this country, and strengthen our position abroad in the year which we have just entered, so far as British finance is concerned. But I should here express the hope that we are going to get right down through all stages of society the benefit of the reduction which has been introduced. The right hon. Member for the Central Division of Glasgow, if I may say so with respect, quite rightly said that this was a reduction which should enure to the benefit of all sections of the community. Of course, broadly and generally, that would be, in our common examination of the situation, the effect of the reduction of taxation on these lines, but we have to keep in mind that a very great change has come over British industry and commerce, that we have to-day large trusts and combines, and that in point of fact the small man, the individual producer and competitor has very largely disappeared. I do not suppose that any hon. Member disputes that over a fair part of British industry and commerce, monopoly to a considerable amount exists. I fear very much that it is just the existence of that sort of monopoly in the State, which I think is undesirable, that is going to make it doubtful whether this reduction in Income Tax will get down to all sections of the people in their capacity as consumers of the commodities which these firms produce, and which, presumably, in their prices would be affected by taxation as a whole. That to our minds is a very important consideration. I hope that we are going to keep it clearly in mind, and not exaggerate the practical effect of the reduction in taxation which the Chancellor of the Exchequer has been able to concede.
While I am on the question of the Income Tax, I want to revert here to a suggestion I made a few minutes ago. The Chancellor of the Exchequer will say, as he invariably does say when we promote any scheme from this side of the House: "Well, tell me where I can find the money for this proposal." Over and over again from these Benches I have referred to the recommendations of the Royal Commission on Income Tax. I want to remind the House to-night of one very important consideration so far as British Income Tax is concerned. Two years ago we spent a full year on that important Commission interviewing all kinds of witnesses, getting a great mass of expert evidence and producing a Report which I think, in all modesty, will deserve to rank as one of the important financial documents of our time. The predecessor in office of my right hon. Friend opposite pressed the Royal Commission to conclude its labours and to produce its Report in order that he might give effect to its recommendations in family and other allowances in the Income Tax Estimates in the Budget and the Finance Bill of that year. It is only due to say that very large and important concessions were made in the Income Tax structure of this country which undoubtedly has eased the situation for, perhaps, very large numbers of the British people at the present day. May I give the House this convenient illustration.
If you take ordinary working-class people, or small professional people in Great Britain, it is true to say that there may be, say, a husband, wife, and three children under the ages at which the abatements stop, and if they have one or two small insurances they may have anything between £350 and £400 per annum income before they are liable for a copper of Income Tax at all. I welcomed that concession at the time, and I keep it clearly in view in this Debate to-night. But surely the Chancellor of the Exchequer is bound to remember that having made these concessions in the realm of direct taxation, and in a time when he is looking about for any source of revenue to which he is entitled—and which, in fact, he does not get—it is his duty at the earliest possible moment to bring into force those other recommendations of the Royal Commission relating to the evasion of Income Tax and Super-tax in Great Britain. Hon. Members, I believe, sometimes consider that we on this side of the House are prone to exaggeration, but I have never exaggerated the amount of evasion, or net evasion, as I shall call it, that actually takes place. It is undeniable that a considerable number of people pay more than they should, because they do not take the trouble to find out what is due. They say they do not understand the thing, and they do not take expert advice on the matter. Suppose we set the amount overpaid against what is evaded, and we get down to what I may call the net evasion. I am not going to press the distinction. I am taking the amount that the Royal Commission stated, and that was that the evasion was perhaps from £5,000,000 to £10,000,000, and perhaps it went as high as £12,000,000 to £15,000,000 per annum.
Very distinguished authorities—I am excluding people who have any connection with party politics—put the figure as high as from £17,000,000 to £20,000,000 per annum. The representatives of the Inland Revenue who gave evidence before the Royal Commission said that with certain additional machinery and power placed at their disposal they could meet this evasion and get a considerable amount of it for the Exchequer, and do justice—and surely this is an important point—to the taxpayers of this country who were making bonâ fide returns and honestly paying the tax. I should like, therefore, to press the Chancellor of the Exchequer, when he comes to reply in this Debate, for a specific assurance on this point, because, after all, we are only asking him to see that these people make the contribution which they ought to make under the law of the land. I have no hesitation in saying that this will yield from £10,000,000 to £15,000,000 per annum. I allow, of course, that this will take a little time, and the results might not be available for the purpose of being put immediately against any concession which the Chancellor might make, but I suggest as a thing which admits of no doubt at all that on expert advice, in this way, the Chancellor could get that substantial sum which he urgently requires, and at the same time enable us to do that justice in the realm of income tax to which I have referred.
There is only one other point to which I shall refer briefly. Personally I am not a pessimist in these matters of British finance. If, however, in 1914, or before, any writer of romance, or any theorist or visionary had told the British people that in a few years from then their National Debt would have mounted to the high point of £7,998,000,000, that they would have raised taxation enormously, that they would have carried on industry and commerce as they have been carried on, and that at the end of it all they would find their financial structure better than the financial structure of any other country that might be named, such a man would have been described as a fool or a false prophet, and as saying something that would never in human experience be realised. But what I have said is actually what this country has accomplished in seven years of British finance between August, 1914, and the present day. It is a very remarkable achievement from many points of view, and I find in that achievement that note of encouragement which I am now going to strike, and which, I think, it important for this country to strike, in view of the messages of despair which are spread by some sections of the Press and by other people, and who, in my judgment, render this country no service by engaging in a task of that kind.
What is the situation? There are not many countries who find it easy to balance their Budgets. There are comparatively few countries who have not resorted to exceptional devices in finance. There are very few countries in which we do not find the finances in an unhealthy and diseased condition. These things are true of Continental countries but they are true of certain other countries as well. After all, in Great Britain, despite our errors of finance—and we have been guilty of errors—we are in a stronger position than most of these other countries. We therefore have a better foundation on which to build our industrial structure and at the same time we have, generally speaking, a much sounder and safer financial machine. I think that without undue optimism it is that note which Great Britain should keep in mind to-day. It is that thing which we ought to emphasize here and elsewhere in relation to the industrial recovery of which we find signs at the present time. I am perfectly sure that if that is our financial policy we shall be able to take our place again effectively in the markets of the world, and we shall be able to provide remunerative and healthy employment for those two millions of people and their dependants whose future at the present time is clouded by anxiety and care.
I have listened with very great pleasure to the speech just delivered. I wish—and I am sure hon. Members will re-echo my wish—that we had more such temperate speeches from the other side of the Committee. In the first place, before I enter upon the few remarks I desire to make in regard to the Budget, I desire to compliment the Chancellor of the Exchequer upon at last showing us some methods by which we may look forward to a further reduction in taxation. I am a manufacturer, and a trader, and I know that since the War we have been borne down by the weight of taxation. We were told that the cost of the War since 4th August, 1914, until 31st March, 1921, was no less than £12,000,000,000 to this country. We were told that, but we found out to our cost that no less than £5,000,000,000 of that had been taken out of revenue. When we remember so colossal a figure as this being taken out by taxation from the meagre profits of some recent years since the War, we no longer need to wonder why our trade, our commerce, and our manufactures are depressed! Therefore, I welcome the concessions we have got from the Chancellor of the Exchequer. I sincerely hope that he will be in office next year, and that he will be able to continue his good work. He is a business man, and has given us a business speech. I am sure of this, that the business community throughout the country are grateful to him for the concessions of which we have already heard.
We were reminded by the hon. Member for Central Edinburgh (Mr. Graham) of the fact that we have not got more relief to the indirect taxpayer, for instance, in the reduction of the duty upon sugar. I do not know whether the hon. Gentleman mentioned beer or not, but I mention it. I would have liked to see some reduction in the price of beer. Coming up to town in the train from the North yesterday I had two glasses of beer. They charged me 1s. 6d. for it. That is serious. Very few working men could afford to have two glasses of beer per day at that price. I have beer every day of my life, and I am proud that I am able to have it, and I would like to see a reduction in the price of beer. One reason why there is not a greater reduction in indirect taxation is this; It is proved up to the hilt that direct taxation has crippled our industries, has caused, and is causing, unemployment. There is no proof that indirect taxation has caused unemployment. What it has done is this: it has crippled and reduced the purchasing power of the worker so that he is not able to get as much for his wages as he would like to do; but there is no proof that unemployment is caused by indirect taxation.
8.0 P.M.
We are told by some authorities that the suspension of the Sinking Fund is unsound finance. If that be so, then we have had a good deal of unsound finance since the War. I consider it unsound finance that we are now paying so much away in doles and unemployment pay. It is unsound, but I agree that it is expedient, and I consider that on the whole we were wise in doing it. We have tided over a very difficult period, and the suspension of the Sinking Fund will enable us to tide over the very difficult position in which we are placed at the present time. We are told that London is the money market of the world, and that by this unsound finance we shall interfere with its position. I would rather see this state of things than I would see it full of moneylenders. I hope the Chancellor of the Exchequer will find as a result of his courageous policy that trade will improve and that he will have a greater revenue from profits on trade.
This Budget will be a relief to traders and manufacturers. We have had such a load on our shoulders since the War that many of us have almost lost heart, and some of us have thought it hardly worth while to carry on our industries. In this Budget there is a ray of sunshine for us, and I believe the result will justify the courageous policy the Chancellor of the Exchequer has adopted. I will not attempt to follow the arguments put forward by the hon. Member for Central Edinburgh (Mr. W. Graham) except to say that I join with him in the hope that the next Budget will not only give us a further reduction of the Income Tax, but that the right hon. Gentleman will be able to reduce indirect taxation. I am almost afraid to go to my constituency and tell them that while we have had a reduction of the Income Tax and a reduction in tea, yet there is nothing to come off beer. I have many letters pointing out that one of the causes of industrial unrest at the present time is die high price of beer. I would rather have been in the position to have told my constituents that there was going to be a reduction in the price of beer rather than a reduction of 4d. per pound on tea. However, I shall have to make the best of it, and I hope, in the near future that I shall be able not only to tell the trading classes that the Income Tax has been further reduced, but that we have been able to get a reduction in the price of beer and the other taxes which are pressing so heavily upon the people at the present time.
I wish to congratulate the Chancellor of the Exchequer upon his Budget statement, although I would have liked to have seen more relief given to indirect taxation. I think a bolder policy would have increased consumption, and the revenue would not have suffered materially if we had taken something off sugar, beer, and tobacco. There is one part of the Budget statement with which I am in cordial agreement, and that is where the right hon. Gentleman indicates quite clearly that he realises the necessity of relieving industry, and using his surplus to that end in order to give industry a stimulus. He has done something for agriculture, and by deducting 1s. off the Income Tax, if it only gives confidence of more to come, it will have a good effect upon industry.
It is because the right hon. Gentleman has realised the necessity of relieving industry from the great burden of taxation that I am surprised at one very significant omission, and that is in regard to the Entertainments Duty. I know of no industry, and particularly the cinema branch of industry, that will respond more readily to a reduction by assisting many other forms of industry than would the Entertainments Duty. It is well known that, during the War, in this country this young industry was unable to develop rapidly as in the United States where, during the War, a very great and rapid development took place not only in the production of cinema films, but in the erection of buildings in which those films were shown. The advancement of public taste greatly added to the production of those films, and necessitated more comfortable and costly theatres in which to show them. That development took place in the United States during the War when, in this country, it was not possible to develop the industry owing to the War. Now that the War is over, we find ourselves with these films very much advanced in price, very much improved in quality, and higher in standard as regards taste and in every other way.
We have some 3,500 cinema theatres, a very large number of which are not fit and proper places in which to show these films. Therefore we require development in that direction and larger theatres must be built, existing theatres must be enlarged, and the seating arrangement improved. Besides this, the ventilation of some of these theatres must be vastly improved if we are to ask the public the price for admission which is now necessary in order to make a profit on showing these particular films at the standard at which they have now reached. Mainly owing to the expense of this tax, the industry is retarded and it is unable to make that development which is necessary. A reasonable readjustment of this tax would give confidence to the industry and enable those engaged in it to go forward.
This would permit every branch of the building trade to find increased employment beyond those branches of the building trade which are not used mainly in the building of factories, cottages and houses. Those engaged in fibrous plastering and all forms of decorative art would find an enormous increase of employment in the cinema industry, bringing it into conformity with the newer and better conditions. A good deal of work would be provided by the equipment of these theatres in the way of furnishing and carpeting, and it would give an enormous amount of additional employment to the makers of electrical appliances and electrical equipment, and all these trades would instantly benefit by this policy. Another result would be that unemploy- ment would be decreased and additional people would be employed in these new and large buildings as they were erected if only the industry had the encouragement of a readjustment of the scale of tax.
We have got 1s. off the Income Tax and a promise of something more to come next year. If we could get a reduction of the Entertainments Duty on the lower scale we could go ahead with some confidence. We cannot get the money for all these purposes unless the industry is prosperous. The burden of this duty is more than the industry can bear to-day. The industry pays Income Tax, Corporation Profits Tax, and a duty on films. There is an import duty on films and carbons, but the Entertainments Duty is a tax on the box office receipts which has no regard or relation whatever to our profit, or our ability to pay, with the result that there are hundreds of cinema theatres in the country to-day making a profit at the box office, but when the Entertainments Duty is deducted they are incurring a serious loss.
The right hon. Gentleman the Member for Gorbals (Mr. G. Barnes) says the industry does not pay the Entertainment Duty, because he says the public pay it. I do not know what he means by that. If I have a theatre holding 1,000 people, and I can fill it 14 times a week at 6d. per head, and make a reasonable profit, what I have to do to-day is to charge the public 6d., out of which I get 4½d., and the Exchequer gets the 1½d., but if I wish to make it pay I must put another 2d. on the duty and charge 8d., which the public will not pay. The right hon. Member for Gorbals says that the public pay the duty, but long ago the public, owing to industrial depression, lower wages, and unemployment, have passed this duty on to us by transferring themselves from the 1s. seats to the 6d. seats, and to the lower-priced seats, and the duty is now more than the industry can possibly pay.
What is a man to do who owns a cinema making £2,000 a year after the present tax is deducted. He has to deduct £4,000 for the rent, making a loss of £2,000. Naturally, he says: "I cannot go on. I can run it at a profit if I am allowed to. I am willing to pay the taxes which other people pay, but I cannot charge higher prices because the public cannot pay them, although I can make a reasonable profit. But the deduction of the Entertainments Duty produces a serious loss, and I must shut up. I have to pay under a 50 years' lease £4,000 a year, and therefore if I shut up my cinema my loss will be £4,000. Therefore, I am between the devil and the deep sea, whichever way I go. I want to make a smaller and a reasonable profit, but I cannot do it." That is the effect of the tax, not on one, but on hundreds of cinema theatres in this country, and at the right time I shall provide the Committee with ample and indisputable evidence on this point, as I have already provided the Chancellor of the Exchequer with such evidence.
In the Committee stage I shall put down Amendments which will remedy this, and which I am convinced will cost the Chancellor of the Exchequer nothing if he takes a long enough view. The increased prosperity of the industry and the increased number of those places paying the duty, perhaps not this year, but next year and the following years, will considerably increase, rather than decrease, the revenue which the right hon. Gentleman is deriving from this source. I pointed out last year that the revenue from this source would decrease. As a, matter of fact, it has fallen £1,500,000 during the year. It is falling at a more rapid rate to-day, but the fall is no real criterion of the effect of the duty on this industry.
I can tell the Committee why this is so in a very few words. The proprietor of a cinema, built before the War and probably costing about £60,000, finds he is running it at a substantial loss owing to the duty. He carries on for a time, but the moment arrives when he cannot go on with it any longer. All this time the Chancellor of Exchequer by this duty is taking from him hundreds of pounds per week, and eventually this drives the man into bankruptcy. Finally, the man goes into liquidation, and the cinema changes hands, say, at £20,000. Another man buys that cinema, and carries on at the lower capitalisation. He carries on. He continues to pay the Chancellor of the Exchequer his revenue. But the time comes when he can no longer carry on. He cannot make a profit even on the lower capital, and he goes into liquidation. Then someone else comes along, and buys the place for £10,000. Instead of getting £200 the Chancellor of the Exchequer gets perhaps only £190, but he does not really feel the result of his tax on the industry as long as the place keeps open. So long as it does that he continues to draw revenue, but he has behind him a long tale of bankruptcy and disaster. It is quite time he gave attention to these facts, and examined the figures of the situation, and gave relief by a readjustment of the scales on the lower-priced seats, to make them conform with the scales on the higher-priced seats, thus giving confidence to the industry, and enabling it to develop.
Before I conclude, I should like to point out to the right hon. Gentleman that the duty on the lower priced seats ranges from 25 per cent, to 33⅓ per cent., and 40 per cent. These are seats occupied by the working classes. The tax on the scats occupied by people who go to West End theatres in London and in the great provincial cities, varies from 11½ to 16 per cent. Thus, here again the working classes are taxed on their amusements to an extent more than double the charge on the wealthy classes. I am asking the Chancellor of the Exchequer to-day either to readjust the scale of taxation and to bring the lower-priced seats on the same percentage of taxation as the higher-priced ones, or, what would be fair and just, and would be welcomed by proprietors, to adjust the prices to meet the altered circumstances and to impose a flat rate for all seats. If the right hon. Gentleman had a flat rate of 15 per cent. on the box office receipts he would be slightly increasing the charges on the expensive seats and decreasing those on the cheaper seats. The tax falls directly on the proprietor of the entertainment. It has done so for two years or more now. The great majority of proprietors would welcome a flat rate of 15 per cent. rather than this impossible charge on scheduled prices, which does not enable them to charge the prices they desire. If a proprietor raises the price of a seat by 1d. he also raises the price of the tax. If he lowers the price of a seat by a 1d. he lowers the price of the tax by only half the amount by which he lowers the price of the seat, and every time, whether he be raising or lowering prices, the proprietor suffers twice as much as the Exchequer. I therefore propose a flat rate tax which would give absolute freedom in adjusting prices, and would also give confidence for the development of the industry, while, ultimately, it would increase the revenue which the right hon. Gentleman is now raising from this source.
I have listened to practically every speech in this Debate, and I think I am right in saying that the Budget of the Chancellor of the Exchequer has received, I will not say enthusiastic approval from all quarters, but at any rate a modicum of approval from practically all sides of the Committee, with certain few exceptions. I would like to deal for a moment or two with the question of Income Tax. I quite agree it is enormously important to reduce indirect taxation as much as possible, and I would like to show very shortly how I believe, with a little more foresight perhaps, the Chancellor of the Exchequer could have reduced indirect taxation as well as direct taxation more than he proposes to do in this Budget. Up to the very last moment when my right hon. Friend was speaking, I hoped he would find it possible to reduce the Income Tax, if not by 2s. at least by 1s. 6d. in the £. After all, it is a truism to say that industry now is bearing a burden almost more than it can bear, and I think my hon. Friends who belong to the Labour party are gradually becoming convinced that the Income Tax constitutes a very heavy burden of taxation and is responsible for much unemployment at the present moment, because every single pound taken out of the taxpayer's pocket means that a very large proportion of that pound comes from a fund through which employment is given to the working classes.
There is one other reason why I should very much like to see taxation reduced. It is that the lower the amount of supplies you give to the administration of the day the more likely they are to economise. The more you cut down supplies of revenue flowing into the Exchequer the less likely are we to have Supplementary Estimates presented to this House week after week and month after month. If there is no additional revenue available, we are much more likely to be able to keep expenditure down than if there is an overplus of funds in the Exchequer. During the last three years many of us have felt that the thing to do is to cut down expenditure in order to reduce the burden of taxation. I am not at all sure that the converse is not equally true, that if you can only cut down taxation we shall insure very much less spending by the Departments at large. I do not think that to ask for the taking off of another 6d. in the pound would be making an extravagant demand on the Chancellor of the Exchequer. He told us yesterday that the shilling reduction was going to cost him £35,000,000. The extra 6d., therefore, would only cost him another £17,000,000 Does anyone seriously imagine that the Government, during the next 12 months, could not cut its expenditure down by at least £17,000,000? I believe personally, if he could only bring sufficient pressure to bear on the Departments, the Chancellor of the Exchequer would quite easily get that extra £17,000,000, and that would enable him to reduce Income Tax by a further 6d. in the pound. At the same time, it would give him an added revenue from Customs and Excise, because the extra 6d. would be put into industry, trade and commerce, and that would be followed by greater returns from Excise.
There was another possible source of revenue referred to by my hon. Friend the Member for Central Edinburgh (Mr. W. Graham), and I should like to emphasise what my hon. Friend said about it. My hon. Friend was a very distinguished member of the Royal Commission on Income Tax. I read every single word of that Commission's report, and I entirely agree that the Chancellor of the Exchequer has only to carry out one recommendation—to prevent the evasion of Income Tax—to enable him to make, at the most moderate estimate, an extra £10,000,000 a year. The chief Treasury witness before that Commission reported, as my lion. Friend has said, that at the very least between £5,000,000 and £10,000,000 sterling was lost through people evading their duties in regard to Income Tax. Another witness made it a much higher figure. The Association of Tax Surveying Officers, who gave evidence before that Commission—it was not mentioned by my hon. Friend—stated that in their opinion £100,000,000 sterling during a period of four or five years can be lost to the Exchequer through evasion of Income Tax. Putting it at £10,000,000, that would pay for more than half the cost of reducing the Income Tax by another 6d., and I believe it would pay for practically the whole of the extra reduction of 6d. I do not know why this has not already been taken in hand, because it is in the interest of the Exchequer and of the people who pay their taxes on the spot that this recommendation should be carried out. Then the cost of living is going down rapidly——
No!
Well, not, perhaps, rapidly, but at any rate it is going down. In the Civil Service Estimates, however, there is a footnote in almost every case stating that they are based on the computation of a cost of living of 100 over pre-War, and the whole of the expenditure is based on that supposition. At the present moment it is not 100, but 82, that is to say, it is 18 below the basis stated in the Civil Service Estimates. Why have not the Government taken account of that? If it goes on as it is now going, it surely would make a considerable difference in the expenditure of the Government during this coming year. I do not know why it has not been taken into account, or what it amounts to. It may amount to £1,000,000, it may be hundreds of thousands, or it may be several millions, but anyhow it is quite possible that, if it continues to go down, the very fact of that lessened expenditure might be used in order to take, say, another 1d. off the Tea Duty.
I believe that the economies and savings which I have already mentioned would be quite sufficient to cover an extra reduction of 6d. in the £ in the Income Tax, but, after all, there are far more important savings which are possible. The Geddes Committee are quite clear on one important point, which I think ought to be emphasised as much as possible. They are absolutely clear that Government Departments ought to be rationed down to a definite figure, and I have no hesitation in saying that, if the Exchequer rationed the Departments down to a definite figure, we should save millions sterling every year. The Geddes Committee stated over and over again in their Report that they could not possibly go into all the details of every Department, and I am certain that even the Chancellor of the Exchequer cannot possibly do so. The only person who can do so is the permanent head of each Department. Therefore, it seems to me that rationing is the only possible system, and certainly, to my mind, it is the most vital recommendation in the whole of the Geddes Committee's Report. There are other huge fields for economy to which I will just refer. One is a change in the present system of percentage grants to local authorities. I believe that if something could be done in that way millions a year would be saved. The present system is no encouragement to economy, but invites the most extravagant expenditure. Then there is the question of the co-ordination of the whole of the defence of the Empire. If we could set up a Ministry of Defence, and do away with the separate Departments of the War Office, the Admiralty, and the Air Force, I believe that again millions sterling would be saved every year. I have only mentioned these very large matters in passing, but, besides all that, the Geddes Committee over and over again point out that, while they have dealt specifically only with certain items, there is a vast field throughout the whole of the Departments of State where in their opinion economies can be obtained. After all expenditure is what we have to fight. I think that sometimes the Government forget that we are a far poorer country than we were before the War. We ought to make it our object, not to get a little less distant from our pre-War expenditure, but really, considering that we are a far poorer nation than we were before the War, our efforts ought to be directed to trying to get below our pre-War expenditure. Nevertheless, we are to-day employing very nearly 70,000 more Government officials than we were before the War, and we cannot afford them.
I believe that the present rate of Income Tax is detrimental to the whole interests of the people of this country. It leads to high prices, because the manufacturer and trader, in fixing their prices, have to take into account the fact that they have to bear this very high tax. This leads to other countries being often able to undercut us in the markets of the world, and that, again, leads to unemployment. Unemployment leads to doles, and these lead to further expenditure. A very good test is to look at the bankruptcies and failures which have taken place during the last few years. The latest returns show that no less than 5,548 failures have taken place. If one compares the figures with pre-War figures, taking only the wholesale trade, one finds that just before the War there were 609 failures in the wholesale trade in the United Kingdom, while the latest return for one year shows a figure of 1,028. That necessarily again spells unemployment very largely, owing to the heavy burden of taxation which is placed upon these people. To my mind this high rate of Income Tax operates very unfairly as between women and men—as between husband and wife. If the husband is earning his income, and his wife has an income of her own, he practically always gets off paying a large part of the tax, whereas the wife has to pay practically the whole of the normal rate of Income Tax on her own income. In the case of a husband with an earned income of £500 a year, living with his wife, who has an income of £500 from securities— that is to say, £1,000 between them—the husband first of all gets off 10 per cent. of his £500 because it is earned, and he then gets off £225 because he is married. He therefore only has to pay on £225 at the new rate now of 2s. 6d., that is say, half the normal rate. In fact, he will only have to pay a tax of £28. His wife, however, on the whole of the remainder, pays at the now rate, of 5s., and, therefore, has to pay £125 in tax. That will always be so while you do not go on the far more just basis of separately assessing husband and wife. It practically always happens in such eases, and, of course, it operates very harshly, indeed, where the husband and wife do not happen to get on. It operates against the wife in favour of the husband. It is in the interest of the Exchequer to reduce taxation for this reason, that under our present law you are directly encouraging people to evade the tax by living abroad for more than six months in the year. I was talking the other day to a member of a large firm which obtains repayment of Income Tax from the Government. He told me that no fewer than 150 of their clients live abroad for just over six months in the year. They are British subjects. They come back to this country and live over five months here and they get the whole of the privilege of British citizenship. Not only that, they can have the whole of their money invested in British funds, and if they go on that principle they do not pay a single farthing of British Income Tax, either here or abroad. The higher the tax the greater the number of these people, and there is no doubt that, owing to the height of the tax, by these methods the Government is losing a great deal of money every year. Therefore I hope hon. Members will most relentlessly do what they can to get expenditure reduced. Shilling by shilling we must get taxation down. If we do not, T do not believe trade or employment will revive, and if employment does not revive a very large proportion of our working classes will gradually degenerate into a despairing crowd, with nothing to look forward to but penniless old age.
This House is always pleased to hear again the refrain of waste, and it always comes better from the hon. Member who has just sat down than from anyone else, because he is one of the very few anti-wasters who ever condescend to concrete proposals of economy, and he does not only speak against waste, but he votes against it as well. In the matter of economising and in the case of the Government we may say the devil does not entirely get his due. The Government has been very courageous in cutting things down in the last two years. We all know the main source of waste, and that was the Socialistic schemes that the Government launched out into during and after the War. It retraced its steps in the matter of agricultural doles and various other ambitious schemes that it tackled; and it retraced them amid the jeers and the mockery, not only of the Opposition, but of many on their own side. They got precious little thanks for the economies that they did introduce, while they got the very maximum of blame for the economies which it was said they did not practise. They began a very bold and drastic course of economy. There is plenty of room for a continuation, and everyone hopes that, however unpopular it is with the country and the House— and it will be extremely unpopular and there will be great outcries—the Government will go on with its stern duty of economy, which is forced upon us in some ways against our will, but by the iron necessity of the times and which really is an act of mercy to our population. It has been proved beyond the shadow of doubt that any sort of scheme of scattering plenty over a smiling land, when you take that plenty out of the pockets of the inhabitants, which you are bound to do, does not lead to the enrichment of the land, but to the impoverishment of the whole population.
I am not going into a general review of the Budget. It is too late in the day to say anything on the general question. Everything has been said not only once, but very many times, about its general position. I rise really to pursue the point which was raised first in the speech of my hon. Friend and colleague the Member for Central Edinburgh (Mr. W. Graham). That was a speech about which I have only one regret; that, as it was delivered at a somewhat unfortunate hour, when the cravings of the inner man are apt to supersede the craving for light and leading, he had not a larger House to listen to him. In his absence I can praise him, which I would not do to his face. The speech was typical of the speeches which this House expects from him. It had an absolute absence of claptrap and electioneering and partizan feeling, and I am proud to be reminded that he is a Scotsman and an Edinburgh man. It had that illuminating, suggestive, thoughtful quality which the House expects from the hon. Member. He deplored to some extent, in a very moderate and reasonable way, that the balance had not been kept quite evenly between the reduction of the direct and indirect taxation. In that matter I sympathise with his point of view and not quite with that of the hon. Member for Wood Green (Mr. G. Locker-Lampson). The Income Tax payer has had terrible burdens. The great excuse for diminishing the burdens of the Income Tax payer is the uncomplaining efforts he has made—far greater than those made in any other country by any class of direct taxpayers, greater than those which could have been demanded from any Continental or American country. The back of that long-suffering camel has been very nearly broken by this time, and it is an act almost of necessity, as well of mercy, to lighten that load at least a little. But I do not think the general body of Income Tax payers have displayed that impatience of the load which they have been so patriotically bearing quite so much as it is made out that they complain by certain sections of the Press. There is a certain amount of artificiality in the tremendous clamour and outcry that has been raised in the Press. We must remember that the burden of these bitter times falls upon every class of the community, not only on the Income Tax paying class, but on the poor people and the wage-earners. I have always maintained in this House that there should be an absence of any class feeling and class bitterness, and that the person who preaches class war and class bitterness is the worst enemy of this country at the present time. While I feel personally the great burden of the Income Tax, and I have general sympathy with the Income Tax payer and the direct taxpayer, I also realise the terrible burden which the reduction in wages and the general hard times and unemployment imposes upon the poor. I should like, therefore, to see a greater lightening of indirect taxation. A reduction in the taxation on sugar would be a very good method. [An HON. MEMBER: "What about beer?"] No Scotsman could be deaf to such an appeal as that made by the hon. Member for Springburn (Mr. Macquisten). His speech must have wrung the hearts of Scotsmen, if they were not sufficiently wrung before by the letters they have received from their constituents. I received a letter yesterday in much the same terms as the letter which the hon. Member for Springburn read to the Committee. It appealed to me to see that the taxes on spirits and beer were reduced, and there was a heart-rending postscript: Tell Sir Robert Home that the taxes upon the necessaries of life are crushing the heart out of the people of Scotland.
Does the hon. Member suggest that whiskey and spirits are the only necessaries of the people, of Scotland?
I was quoting my correspondent. I am not taking any responsibility for what he said. He, evidently, was of that opinion. It is the duty of any hon. Member to suggest other methods of raising revenue if the Chancellor of the Exchequer makes up his mind to further diminish indirect taxation. I have pleaded before, and I renew my suggestion now, that a great deal of money might be brought in by a steeper gradua- tion of taxation in regard to very large incomes. At the present time the Income Tax and Super-tax is graduated up to £10,000 a year. It is almost beyond the dreams of people, for the most part, to contemplate incomes above that figure, but a very large number of very big incomes in this country are not taxed upon a graduated scale beyond that figure. The principle of graduation is a very good principle. It carries out the principle of direct taxation, which is that the big burden should be placed upon the broad back, and that the broader the back and the stronger it is, the bigger burden it should carry. Although we have adopted the principle of steep graduation of taxation we have only carried it up to incomes of £10,000 a year.
The graduation of Income Tax and Super-tax continues to increase in steepness up to a very much higher income than that mentioned by the hon. Member. It increases up to £100,000 a year.
I beg pardon. That is the figure. I misread it. In the year 1909–10 the number of incomes above £100,000 a year was 65, and the figures for 1919–20 show that the number of incomes above £100,000 a year had increased to 148. The number has gone down since then, but it is still very large, and much in excess of what it was in 1914. The reason for that is that vast fortunes were made during the War. I am not one of those people who take a very high moral attitude towards profiteers. Everybody tried to be a profiteer if they could during that time. It is unfortunate that these big fortunes were made. Inflation was largely responsible for that. Now, by a steep graduation right up, the Chancellor of the Exchequer could certainly get something like £8,000,000 or £10,000,000 more. He could get a good deal more in millions than is represented in this Budget in the reduction of the duty on tea. The argument against it very often is that, if you tax the big millionaire, the man with an income of over £100,000 a year, he will stop saving money altogether, and the tax will become unproductive. I do not think that that is the case. I am encouraged in my belief when I look at the example set us by the United States and by Canada. The United States is a sort of native home of the millionaire. The animal and his habits are better known there, probably, than in any other country in the world. Cynics have said that it is a country run by millionaires and for millionaires. But in that country the graduation does not go up to something like 12s. in the pound, as it did here, but it goes right up, I understand, to 15s. and 15s. 6d. Accordingly, I think that a great deal could be done by a steeper graduation of the Income Tax. It was laid before the Income Tax Commission that a great deal more could be done in raising money by this means.
With that suggestion I congratulate the Chancellor of the Exchequer, not only on his Budget and on his speech, but on the way in which his Budget has been generally received. He had a situation of almost unequalled difficulty to contend with, and it is a marvel that he has come out of his ordeal with so much applause and triumph. He has escaped all damaging criticism of his Budget, and he has received applause from quarters from which it was to be least expected. The fierce light that always beats on the Chancellor of the Exchequer has, this year, been even fiercer than ever. All the flashlights of the Press Have been playing on him, and he has been the subject of a general record of his temperature in the Press almost every day for the last fortnight, as to whether he was wavering or not. Finally, he has produced a Budget which has given satisfaction in a way which nobody could have expected. It has been called a "Budget of hope." We need a great lot of hope at this time of day. I trust that his hopes will be realised, for we need a great deal of that quality, and also a great deal of faith and not a little of charity to get through these dreadful times. This Budget will hold out a ray of hope to the overburdened industries and taxpayers of this country, but if the right hon. Gentleman can see his way, even at the cost of putting a little bigger burden upon the broad back, to lighten a little more the burden of indirect taxation, it would be very welcome to the House and to the country.
9.0 P.M.
Every Member of the Committee who listened to the Debate must have appreciated certain things which have been said, particularly the statements made affecting certain persons in this country who are liable to pay Income Tax. According to the state- ment made by the hon. Member for Wood Green (Mr. G. Locker-Lampson) there are certain individuals who, although British born and having all their investments in this country, escape paying Income Tax by living more than six months abroad. On the other side of the Committee the hon. Member for the Springburn Division of Glasgow (Mr. Macquisten) stated that men who were only receiving one-third of the income for which they worked, and who are being deprived of two-thirds of that income in taxation by the State, were completely broken down. It was, in his own words, more than flesh and blood could bear, and he said that they were, refusing to carry on the industries which they controlled because of the heavy load of this taxation. May I point out without any bias that statements such as those, if the circumstances warrant them, say very little for the so-called captains of industry who, because of the cost of a War which they, among others, helped to carry on, influencing men to go into the Army and fight in the War, now decline to pay for the War to the extent that they refuse to carry on trade. If that is the attitude which they take up——
No.
That is the attitude which we are told they take up, simply because taxation is injurious to them, and if it is correct it says very little for their patriotism and very little for the patriotism of those other gentlemen who are drawing their income from investments in this country and who live abroad for more than six months of the year to escape paying their share of the taxation of the country, and bearing the heavy burdens of the War. But that is not what I rose to speak about. Certain criticisms have been directed against the Chancellor of the Exchequer in connection with this Budget. One of the things alleged is that the cause of trade depression in this country has been the severity of the Income Tax. That has been alleged by several Members, who say that that is the cause of the trade depression which at present reflects itself in the fact that close upon 2,000,000 people are unemployed. That is not the view taken by the Prime Minister of this country, the Leader of the party to which most of those critics who have made that statement belong. More than that, on previous occasions in this House, when Members of the Labour party have challenged the decisions and desires and motives of the Government of this country, those very same Members who to-day are declaring that the severity of the Income Tax is the cause of trade depression walked into the Lobby and voted against us in favour of the Prime Minister's statement.
Close upon three years ago the Prime Minister came back here and was hailed with applause because he brought the peace of Europe which had been newly signed. He spoke from the Treasury Box, and declared that we had arrived at an era of peace, and we would expect to see Europe raised from the chaos in which it had been left through four years of war. Three weeks ago he stood at that box again and told us that the peace of Versailles which he brought back had caused Europe to go into greater chaos, and in the tones which have thrilled multitudes in this country and moved crowds on many occasions, he told you that Europe lay bruised, battered, and broken, not because of the severity of the Income Tax in this country, but because of the peace which he helped to sign at Versailles; and he appealed to Members of the House to support him in the Lobby so that he might go to Genoa in order to reconstruct Europe and bring it back to better conditions, under which trade might flow from country to country. If the severity of the Income Tax is the cause of the depression of trade in this country, does any hon. Member declare that the severity of the Income Tax is the cause of trade depression in Belgium or Italy, or in any of the other countries of Europe?
The hon. Member is getting rather wide of the financial problem of the current year.
I was bringing my remarks back to the point when you called me to order. I was using the illustration of other countries which are as much affected by unemployment as ourselves. Those other countries are not affected by a severe Income Tax on the wealthy sections of their population. What is the cause of trade depression in this country ought to be the cause of trade depression in those countries also, and as that does not happen to be the case in those countries, it cannot be the cause in this country. The Chancellor of the Exchequer has brought in his Budget. I shall not criticise it in the tone that the last speaker welcomed from a colleague who sits in front of me. It may be that our temperaments are different. I cannot see how a Budget of this kind can be spoken of with any degree of temperate language, when we find that the wealthy classes are receiving in the main the greatest amount of the relief granted. A shilling off the Income Tax gives them £32,000,000 this year and £52,000,000 in a normal year. The offset necessary to produce anything like an equality of treatment of all classes would be to reduce certain indirect taxes on tea and coffee and cocoa.
The saving that will be effected by indirect taxation will be shared by the wealthy classes. On an analysis of the figures one would find that of the total amount of £5,000,000 or £6,000,000 which will be saved by the reduction of the duty on tea, about £2,000,000 will be saved by the Income Tax paying section of the community, and only two-thirds of the saving, or £4,000,000, will represent the remission of taxation on tea to the working classes. Questions have been raised affecting land. Certain remissions have been given with regard to farms. This has been described by a colleague as a rich man's Budget. It is a rich man's Budget. I am putting forward here a claim that I have put forward on several occasions. You cannot get this country back to prosperity until you cut down its expenditure, and one of the very few ways in which that can be done in a drastic manner is by reducing the interest upon the War Loan. I have been accused before by the Chancellor of the Exchequer and by the Financial Secretary to the Treasury of advocating repudiation.
Hear, hear!
I note that the vicar of Bray agrees. Repudiation is not in my mind at all. The Financial Secretary to the Treasury put a question to the right hon. Member for Derby (Mr. J. H. Thomas), "Would he enforce reduction or would he leave it voluntary?" The right hon. Member for Derby was not to be trapped. He said he would leave the matter voluntary. I am now speaking for myself, and I am not committing the party to which I belong. This country is in a bad condition financially. We must reserve our economic and financial resources. Commercially, we are in a condition similar to that in which we-were when the War was raging. You appealed then for men to volunteer. You found you had to conscribe them. Let the Chancellor of the Exchequer appeal to the holders of War Loan voluntarily to accept a lower rate of interest. Put upon these people, who are now drawing interest upon War Loan, the obligation that you put upon the manhood of the nation during the War, and if you find that you cannot effect a sufficient saving by voluntary methods, do as you did during the War—apply conscription. The wealth of the nation could be restored and renewed by labour. But you cannot restore life. I am reminded that in such an event we would have a lot of conscientious objectors. What is the attitude of the country towards this question? Throughout the country working men are being invited to accept reductions in wages because the cost of living has come down. They are told that the purchasing power of £1 has risen and that the working man can buy more for a sovereign than he could buy a year ago. Consequently it is said his wages must be reduced.
If that holds good in the case of the man earning wages—if his £1 to-day can purchase more than it could purchase a year ago—it is equally true of the man who draws £5 from his investment of £100 in War Loan. His £5 can also buy more to-day, and if the Government contracted during the War to pay him £5 which enabled him to purchase, say, one ton of coal, to-day they are giving him in the £5 sufficient money to purchase, say, one and a half tons of coal. The consequence is that the miners have to work half as hard again to provide with coal a man who is receiving War Loan interest at the same rate to-day as a twelvemonth ago. The workers generally in the country have to work half as hard again, and the result is that individuals who are drawing War Loan interest are in an infinitely better position to-day than they wore one year ago. The argument may be put forward that we contracted to do this: that the country through the Government pledged itself to pay the people that rate of interest. Yes, but during the War you pledged yourself to pay 3½ per cent. interest on certain stocks. When you found that money had become scarcer you increased the interest, you did not abide by your contract to pay 3½ per cent, to these people, but raised the interest to correspond with the new rates of interest on new loans. You can get money to-day cheaper than you are paying for it at your 5 per cent, on War Loan. Why not apply here the same principle which you applied during the War when you raised the rate of interest? You then passed an Act of Parliament which enabled people to have their mortgage interest increased. Why can you not take steps to reduce interest when the conditions in the country have changed in an opposite direction?
With regard to the usual tall talk that these are contracts entered into and pledges made, I ask are these the only pledges that have been made and the only contracts entered into by the Government? What about the contracts entered into with the men who went out and fought and who came home broken? What about the pledges to practically all sections of the community which have been broken—the pledges with regard to housing, with regard to pensions, with regard to training and finding situations for men who served in the War and came back bruised and maimed? The whole history of this Government for the past three years is strewn with broken pledges made to the people of this country who endured during the War, to the men who suffered during the War, and to the relatives who were in agony and are still in poverty because of the War. All these have been broken without scruple, and this Government is not a Government that should stand forward and say they are going to observe the sacredness of the contracts they have entered into. It is only when it is a question of money, of capital, of wealth, that this Government recognises the sacredness of contracts. Hon. Members have suggested various methods for finding money. I have Stated already in this House, and have given figures in the form of questions, showing the savings which can be effected if the Government care to take courage and proceed along these lines. These savings would amount to from £75,000,000 to £150,000,000, according to the amount by which the Government is prepared to reduce the rate of interest. That would be hailed by the "Daily Mail." You would be able to reduce the Income Tax by 3s. in the £, and the "Daily Mail" would then buy up advertising space on the screens of the music halls to advertise the wonders of its glorious Government, in the same way as they are doing to-day to denounce it.
Will the hon. Member excuse me if I ask him one question? When reducing the rate of interest on these securities, would he also reduce the rate of discount on War Savings Certificates?
You have already done so by inviting them to subscribe at 16s. now and closing up the list at 15s. 6d. The hon. Member has already put out a new loan. It is 16s. now and there are no more at 15s. 6d. Why does he not do the same with War Loan? I have told him already that Pelham did this and Goschen did it. Pelham did it by passing two Acts in this House compelling those who had loaned money to the Government, with the exception of a sum of about £3,000,000 that had to be repaid, to accept this course. Surely if it were good enough for Pelham after a great war, a war that was as costly to this nation at that time, as the recent War was to us, it is good enough for the Government to-day. Pelham, as the then Chancellor of the Exchequer, was capable of doing that and it is surely not beyond the wit of the Chancellor of the Exchequer of to-day to carry out a similar scheme. I suggest that while this proposal may be unpopular in the House, it is not unpopular in the country. I have invited hon. and right hon. Members who support the Government to put the question before working-class audiences, in this country, and if they do so they will find that those audiences will tell them at once that it is a sound proposal. The people are being told to suffer and they have accepted suffering. There are men to-day who are willing to accept a reduction in wages of 16s. 6d. and on whom it is being sought to enforce a reduction of 26s. 6d. per week.
Some of them 11s. a day.
Are these the only men who are to make sacrifices? I hope when this Budget comes before the House I shall have an opportunity of putting down an Amendment on the lines I have suggested. This proposal is gaining support in the country, and has already gained support in this House. I was formerly the only Member to put forward this view, but you have had to-day three Members advocating the same idea, and you have had a tentative suggestion from the late Leader of the House (Mr. Bonar Law) in the same direction.
Mr. YOUNG dissent.
Did not the right hon. Member for the Central Division of Glasgow suggest a reduction of interest? Did he not point out that the heavy rate of interest we are paying just now was a burden on the community? Whether the right hon. Gentleman agrees with my motive or not, the fact that he believes a reduction of interest to be necessary, even if it be by the method of conversion, shows that he recognises—if those responsible for the budget do not recognise—the burden of debt upon this country. I hope when the Budget comes before the House mine will not be the only name appended to an Amendment putting that forward as a definite fiscal proposal for the Government of this country to put into operation. The hon. Member for West Leyton (Mr. Newbould) and several other hon. Members referred to the tax on the cinema. I also want to appeal to the right hon. Gentleman, not upon the ground of non-paying cinemas or threatres, and not because of any interest I have in theatres, for I have none. I am speaking from a purely unbiased point of view and as one who finds that this particular line of amusement has had to bear more than its share. The people who are paying and bearing most in this particular line upon which taxation is levied are again the workers of this country, where you always place the burden. The hon. Member for Wood Green (Mr. G. Locker-Lampson) gave the show away when he said that certain men, when the Income Tax was put upon them, passed the tax on to the goods which they sold. They always pass it on to the consumer, but they do not take it off when the tax is reduced; they wait awhile until they get the benefit of the remission, and it is only when there is public clamour with respect to an article that the consumer gets any benefit from the concession. I want to appeal because of the amusement, and because the cinema is something which does not lend itself to the application of this tax. It is something very much like the luxury tax, which was proposed a few years ago. The Government, after examination, found it to be impracticable in its application, and consequently it was cast on one side. It is the same with the tax on the cinema. It also puts the managers and those who are in the box offices in the position practically of becoming tax collectors for the Government. I suggest that this is a time when, if it is not advisable to remit the whole of the duty and to wipe it off the Statute Book entirely, at least some chance might be given to scale the rates in such a way that all sections of the community should pay an equitable share. The burden should not be placed on the workers, who have to bear the greater share of the duty, as is the case with most of the other taxes in this country.
I do not propose following the last speaker in his rather unique ideas in regard to taxation and confiscation. Confiscation, so far, has been reserved for countries whose finances are bankrupt. Thank goodness, we are not bankrupt in this country. I can, however, throw to the hon. Member a crumb of comfort. He has spoken of the State taking an extra portion of interest on War Loan. I will present him with the idea that the War Loan was issued in 1917, when the Income Tax was 5s. in the pound. Since that date the Income Tax has been increased, and a decrease was only announced yesterday. The Super-tax has also been very considerably increased during the last five years. Therefore he has the satisfaction of feeling that both in Income Tax and on Super-tax the country is now taking a larger proportion than was expected by investors who took up War Loan in 1917.
With regard to the point made by the Financial Secretary to the Treasury, obviously it is only fair, if you are going to scale down the interest on War Loan and other War debts, that War Savings Certificates, which cost 15s. 6d., and which were due for repayment at 20s., should only be repaid at 19s. or 18s. 6d. I would ask the hon. Gentleman whether he is prepared to go before a working-class audience and tell them that? It is, I am glad to say, one of the great features of our War finance that now, instead of our national securities being held by a relatively very small number of people, these War Saving Certificates and other War investments are held by many millions of investors up and down the country. What will be their feelings, when for the first time they are holding Government stock, as War Saving Certificates are, and they find, if the suggestion of my hon. Friend is carried out, that instead of getting 20s. at the end of five years, they get 18s. 6d. or 19s.; or if they have been so ill-advised as to lend the money for a further five years, they find at the end of that period that they get, not 26s., but 24s. or even 23s. 6d.? I can imagine nothing more conducive towards stopping habits of thrift. In that case it will be a national misfortune if those views are ever carried into practice, but I do not think there is any very serious danger of that at the moment.
My right hon. Friend the Member for Derby (Mr. J. H. Thomas) revived an illusion which, as one of the Members of the Increase of War Wealth Select Committee two years ago, I rather hoped we had helped to kill. He began by saying that immense sums of money which had been made during the War had not been taxed. He apparently forgot the fact that during the last two years of the War, when the greater part of these big sums were being earned, Excess Profits Duty was being paid at the rate of 80 per cent. and that the remaining 20 per cent, was made subject to increased Income Tax and Super-tax, which worked out at 80 or 90 per cent. I remember seeing in the Press in 1918, the last year of the War, that a man would have to have an income of £30,000 a year to be in the same relative position, after he had paid his taxes and taking into account the reduced spending value of money, as he had been before the War with an income of £5,000. I quite agree that sums were made even in excess of the sixfold increase necessary in the case I have mentioned, but almost all that money was on paper and in stocks. There has been a tremendous commercial depression during the last eighteen months or two years, and if the Inland Revenue had been given a scheme by that Committee under which they had to try and get hold of this money which existed on paper to a certain extent, they would now find that the majority of those persons who had had it were not able to pay Income Tax or the balance of the Excess Profits Duty, let alone 15, 20, or 25 per cent, of the increase on so-called War wealth which might possibly have accrued to them on the 1st July, 1919, but which has since vanished owing to the fall in stocks and all commodities. I went on to that Committee, as did most of my friends, with quite an open mind; but with two dissentients the Committee came to the unanimous conclusion that it was quite impossible to put any tax on these so-called War profits.
With regard to the Chancellor's Budget speech, I like optimism, but I think he is taking rather an optimistic view. In these difficult days it is much wiser to be optimistic, as he was, than to be pessimistic, as were speakers on the Front Opposition Bench. I would very much rather have a healthy tinge of optimism. Listening to the Chancellor of the Exchequer I was reminded of one of the 400 or 500 of my constituents who filled in forms from the daily Press and sent them to me during the last few days. Under the heading "occupation" on that form this man wrote the words "trying to make both ends meet." I am glad to think, in view of the optimism of the Chancellor of the Exchequer, that my friend will have more chance to make both ends meet in the future. The raiding of the Sinking Fund can only be justified by very exceptional circumstances and times. I say that we are in very exceptional times, and also that we have done a very extraordinary thing, which has been done by no other belligerent Power. We have paid off, in the three and a quarter years since November, 1918, a sum running into some £300,000,000 of our War debt. I thought a year or two ago —and I said so to the House—that if anything we were doing too much as regards paying off debt. Anyhow, our efforts in the last three years have been rewarded, and we are now in a very strong position, and I think that justifies the action taken by the Chancellor of the Exchequer in putting no sum at all this year into the Sinking Fund.
Another point I want to make in regard to it, which I do not think has been made before, and that is that I am rather more hopeful than he is with regard to the future yield of the Income Tax. There is a sum of £120,000,000 or £130,000,000 which should have been paid by the 1st April this year which was not collected. One gets a little bit anxious with regard to these big sums, whether they will eventually accrue to the Inland Revenue or not, but in answer to a recent question my right hon. Friend said that of over £100,000,000 outstanding a year ago, all except approximately £5,000,000 has now been collected. That is to say, that over 95 per cent, of the arrears has been collected in the financial year following that in which they ought to have been collected. I hope he will take the same line with regard to the £120,000,000 or so of Income Tax and Super-tax which did not come in in the year ended 31st March last, and if he can, inasmuch as that will be Income Tax at the higher rate of 6s., I think it will be a very great help to him in his Income Tax yield for the present financial year. A further point with regard to arrears of taxation is this, that the right hon. Member for Peebles. (Sir D. Maclean), I think, could not understand why the Excess Profits Duty yield had fallen off so much. I could throw out one reason for it. The unfortunate people who still have that duty to pay have not got the money, and those who have arrears to claim sent in their claims very quickly indeed. We therefore have, in large measure, the claims arising out of bad trade for the last 15 months, and the people who have the money to pay find that it has been sunk in stocks or has been required for Income Tax purposes. I am therefore rather more optimistic in regard to the future yield of Excess Profits Duty. I remember one Manchester firm which had a claim for loss of over £1,000,000. That meant a refund on Excess Profits Duty of £500,000, presumably. I imagine these have been paid, and we start this financial year in a much stronger position from that point of view.
A further reason why I welcome the Budget is that the indirect taxpayer has really been benefiting unduly at the expense of the direct taxpayer, and, as regards this year's financial statement, some three-quarters of the remission of taxation is being given to the direct taxpayer. He will still bear almost two-thirds, instead of approximately half, but, even then, that is a step towards keeping that balance even which was kept even by the great Chancellors of the Exchequer of the '80's and '90's. The hon. Member for the City of Oxford (Mr. Marriott) gave us yesterday some very interesting figures in regard to taxable capacity. He was quoting Dr. Crammond, but a book has come out recently, by Sir Josiah Stamp, entitled "Wealth and Taxable Capacity," to which I would refer all those who take a deep interest in these matters, and especially my hon. Friends on the Labour Benches, who possibly have not had the same opportunities as some of us who have been engaged in business of going into these economic questions.
Thank you very much! We do not want to!
I read this book with the greatest possible interest, and I think hon. Members might try to read it. The author gives some very interesting figures in regard to our taxable capacity during the last Budget. I have been at pains this afternoon to work out these figures as regards last year and how they apply to this year's Budget, and I make out that he would have considered with this Budget that the greatest taxable sum that we could take from the country, and still allow a small margin of reserve for contingencies, was £910,000,000. I then looked to see the figure which the Chancellor of the Exchequer proposed to extract from us, and by a rather curious coincidence it is also £910,000,000. Sir Josiah Stamp's figure therefore exactly coincides—I think it is a happy coincidence—with the figure given by the right hon. Gentleman for this year's revenue, but Sir Josiah Stamp presupposes that our productive power is 85 per cent, of what it was before the War. In the speech by the hon. Member for Oxford yesterday, it was stated that Dr. Crammond worked out, as regards our foreign trade, that we were only doing 63 per cent, of what we were doing before the War. As regards our home trade, I have great difficulty in getting hold of reliable figures, but I have got figures of the rail-borne traffic during last year, as compared with what they were before the War. We all know there has been a considerable increase in motor traction, and that you cannot take rail-borne figures as being an absolutely true index, but taking the rail-borne figures for last year, the amount of tonnage was in the neighbourhood of 60 per cent. If you add the goods taken by motor haulage, you get about two-thirds as being the pro- ductive power of this country compared with what it was before the War. Sir Josiah Stamp's figures pre-suppose 85 per cent, of our trade as able to pay £910,000,000. On our last year's figures we were doing nearer 65 per cent., and therefore I suggest to the Treasury that it is really urgently necessary that even further economies should be effected than have been effected up to the present. I think there must be still scope for economies, and in conclusion I would suggest that we know how very short the public mind is in these matters. An hon. Member on the Labour Benches did not seem to have a very high opinion of Sir Josiah Stamp. I hope he has read, as I have, every one of the three volumes of the "five men of good will" in the Geddes Committee Report.
I did not object to Sir Josiah Stamp, but to the somewhat snobbish attitude assumed by the hon. and gallant Member.
I have no wish to be snobbish, but I suggest it as a useful book to read. If there is any suggestion of snobbishness, I hope the hon. Member will accept my withdrawal. There are two aphorisms which he will find if he has read those three books by the "Five men of good will." One is, "To create employment on an uneconomic basis cannot be justified." That is a good thing always for a Government to remember, and a further one, which might almost be worth while framing and putting into Government offices—the cost would be relatively small, and I believe it would pay in the long run—is, "The way to stop correspondence is to reduce the staff which creates it."
I want to call the attention of the Chancellor of the Exchequer very briefly to one of the Resolutions which were provisionally approved by the Committee last night, which refers to the proposals embodied in the Budget, and I do so in the hope that before those proposals are embodied in the Finance Bill they will have a little further consideration. I refer to Resolution 11, which provides, and I think rightly, for the levying of Super-tax upon private companies. In the past, as the Chancellor of the Exchequer has explained, the private companies have, so far as regards undivided profits, been exempt from Super-tax, and the Chancellor of the Exchequer very wisely proposes to rope in these particular profits, and by that means increase his Super-tax returns. The point I wish to raise is this. Two years ago the then Chancellor of the Exchequer introduced in his Budget a Corporation Profits Tax, and the argument that was used at the time to justify that tax was that because these companies were escaping the Super-tax in respect of their undivided profits, he introduced the Corporation Profits Tax with the object of equalising in some degree the advantages which they enjoyed.
I desire to submit to the Chancellor of the Exchequer that now that he proposes—and rightly proposes—to levy Super-tax upon private companies in respect of undivided profits, there is no justification any longer to continue the Corporation Profits Tax. If that tax be continued, it will mean that the Chancellor of the Exchequer will not fulfil in this Budget the views which he expressed very strongly yesterday. He said it was desirable to relieve the commercial undertakings of this country from some portion of the burden of taxation, in the hope that they would be better able to compete in the world's markets and provide employment. He has proposed to reduce the Income Tax by 1s. in the £, but with the other hand he proposes to get back from this particular class of trader in Super-tax most of, or it may be more than, the relief he has granted them. The Corporation Profits Tax, from the very day it was introduced, has always been a source of grievance, not because of the tax in itself, but because of the inequality in its incidence. The Corporation Profits Tax, as the Chancellor of the Exchequer is well aware, levies 5 per cent, on the profits of the company, but it has in the past given a sort of preferential treatment to those companies that have either debenture or preference shares, or loans at a fixed rate of interest, and the effect of that has been that the company with a large proportion of its share capital in debentures, preference shares, or loan capital, has received an advantage as against the company whose share capital is all in ordinary shares. That has been a grievance, but I do submit that that grievance is accentuated now by reason of the fact that the companies which have hitherto suffered disadvantage in the respect to which I have referred, are now going to be called upon to pay Super-tax, if I understand it rightly.
I think my hon. Friend is labouring under a slight misapprehension. The consequent action in the Resolution will only apply, in the first words of the Resolution, "where a reasonable proportion of the actual income from all sources is not distributed." It is not, therefore, the result of this Resolution that all companies of a private character shall be liable to Super-tax under these circumstances, but only broadly and in effect those the obvious purpose of which is to make an, at present, legal evasion of the structure of the Super-tax laws.
Who is to interpret what is reasonable or unreasonable? Private companies vary very much in size. One private company may have a £2,000 or £4,000 capital. Another may have even £1,000,000, and in the case of a large company with £1,000,000 capital and half a million debentures, it will enjoy a great advantage over smaller companies.
The hon. Gentleman asks me an interesting question which ought to be answered, and that is, what authority is to say what proportion is reasonable? I may say that in the legislation which will be introduced in the Finance Bill to fulfil this Resolution, the decision will be, in the first place, with the Special Commissioners of Income Tax, and there will be an appeal to another and independent body.
I am quite sure that the Chancellor of the Exchequer has no desire to inflict a further injustice on small private companies in order to rope in some people who evade the tax. In the endeavour to remedy one abuse of the Income Tax law, it would be inadvisable and unjustifiable to inflict another injustice, and I call attention to it for the purpose of asking the Chancellor of the Exchequer to exercise his mind upon the point, if the point I make is of any substance, and endeavour to introduce into the Bill some provision to protect the small company which will be affected in the way I have suggested, and I (submit a small private company, sometimes called a one-man company. But the Resolution as proposed deals with companies other than one-man companies. It may be a company with half a dozen people, one partner being very rich and the others being merely working partners, and the tax will be levied according to their respective interests. But, in the case of a one-man private company, if the proprietor draws in the form of a salary or dividend one-half of the total earnings, the other half being put to reserve for the purpose of increasing his working capital, he will be charged in his Income Tax payment on Super-tax in respect of the amount. I am not complaining of that, but what I do complain of is that the small private company will also have to pay Corporation Profits Tax as it pays it to-day, and whatever grievance the trader might have had in the past in respect of the Corporation Profits Tax, that grievance was accentuated last year by reason of the vote taken in this House, when co-operative societies secured exemption in a very large degree, but not wholly, from that tax.
The Chancellor of the Exchequer has received deputation after deputation on this point. He is well aware of the alleged grievance, and I think it is a real grievance in respect of that tax. I do submit that if it is desired to make the private company share equally and relatively with the private individual, that object will be secured by levying the Super-tax as suggested in the Resolution, and abandoning the Corporation Profits Tax. Then equity and fairness will be secured, and I ask the Chancellor of the Exchequer, in the consideration of this question, before it is embodied in the Act, carefully to consider what the effect will be, because I can quite conceive that he has not heard the last word about this from the trading classes of this country if it be persisted in that they shall pay the Corporation Profits Tax, the Super-tax, and the Income Tax. I hope, therefore, the Chancellor will give this matter a little more consideration.
The Committee, in the course of the Debate, has had most differing figures given to it as to the amount of reduction in the National Debt that has taken place, and I hope the Financial Secretary can give us authoritatively what are the actual figures on this particular point. We heard from the Chancellor of the Ex- chequer yesterday that there has been a reduction of £322,000,000. We heard today from the right hon. Member for Central Glasgow (Mr. Bonar Law) that that had increased to £500,000,000. We have the right hon. Gentleman the Member for Peebles (Sir D. Maclean) quoting from White Papers issued by the Government that, comparing March, 1919, with March of this year, there is practically no reduction whatsoever. There does seem to be a most extraordinary conflict of evidence, and the figures are given apparently with authority. The Committee will notice that the Chancellor of the Exchequer in giving his figures chose the somewhat peculiar date of December, 1919. Is it possible that between March and December, 1919, there was a considerable growth in the amount of the National Debt. I do ask the Financial Secretary to the Treasury, when he comes to deal with this question, to tell us what is the actual amount of National Debt standing against this country in December, 1918. Then I think we can get at the actual facts of the case. The hon. Gentleman shakes his head. Surely he can give us the amount of the debt in December, 1918?
Mr. YOUNG indicated assent.
Hon. Members may object to the conclusions which we draw from those figures, but if we are given the facts it is open for the Committee and the country to draw their own conclusions. I do not understand that yet we have had it contradicted that, whereas between March, 1919, and March, 1922, there is practically no reduction, that a reduction has taken place between December, 1919, and to-day's date. What we want to know really is the actual state of the National Debt to-day as compared with the condition at the time of the Armistice. Whether that is a fair comparison to draw is a matter on which we shall each form our own opinion, but I submit we are entitled to the facts as to whether there has been any substantial reduction in the amount of the National Debt as between December, 1918, and March, 1922.
10.0 P.M.
We have reason to complain that the Sinking Fund is this next year going to be raided and that there is to be no reduction in the National Debt. We have prided ourselves that during these strenuous years we alone of the nations of the world have made strenuous efforts to reduce our National Debt. Surely it is because of this that our rate of exchange has improved, and that our general position has been strengthened thereby. It would be particularly unfortunate if this year we refuse to continue that most excellent policy. Reference has been made to the two Sinking Funds. Surely if we do not continue to provide funds for the New Sinking Fund we might, at any rate, provide for that contractual Sinking Fund that is so essential to maintain our credit with the rest of the world! I am quite aware that the contractual Sinking Fund is to be provided out of borrowings, whereas it ought to be provided out of revenue. Even admitting that there has been a certain amount of reduction in the National Debt since December, 1919, has it not been at the expense of using for revenue purposes war stores which are in fact capital value, money which was borrowed during the War and which increased the National Debt? The realisation of these stocks has been used in the Revenue Account, which is, surely, hardly sound finance? Certain observations made in various quarters have given approval to the Chancellor in his readjustment of the assessment in regard to certain taxable income. We are told that so far as land is concerned, and particularly agricultural land, that there is to be a readjustment of the assessment on the taxes levied, and considerable concessions are made to the agricultural and land interests. They have pleaded that their rates are a heavier burden than they can bear. But I submit that there are other districts and other interests in the country which are groaning under duties and under rates which they can hardly bear, and I submit that if you are going to revise and readjust any assessments on which the taxes are to be levied, it ought not to be done in a piecemeal fashion, but on broad general lines. We have been waiting for some years for the redemption of the promise of the readjustment of the burden of local and national taxation. It is most unfortunate that we are again to be disappointed, that again this question is postponed, and the evil which has grown tremendously in recent years is to be left without redress. I submit that there are many national services which are borne most unequally by various local authorities. You have in the large industrial areas certain services which are undoubtedly national services and which bear exceedingly heavily on the local rates.
There is the question of national education. Part of that charge, it is true, is borne by the national Exchequer, but it is borne in such a way that the burden falls heaviest on those districts which are least able to bear it. Industrial areas with a large child population and a low rateable area have the burden heavier for what is undoubtedly a national service, and they are least able to bear the strain. You have a similar state of things with regard to Poor Law administration and the burden of poor relief. You have large industrial areas suffering under excessive taxation because industrial works are at a standstill owing to this burden of local and national taxation. You are doing nothing to relieve or to assist these areas where industry is being strangled. They have to bear the burden of their own unemployed to an extent which is getting beyond the possibility of coping with. I Submit to the Chancellor that he has lost a great opportunity of revising and readjusting the burdens which fall upon the rates and those which fall upon the taxes.
My point is that in this attempt to readjust the burden in one particular area and the burdens of one particular interest, as he is doing in the question of agricultural land, it is a pity that he is not dealing with the question on a wider plane, and taking into consideration the various claims, not merely dealing with one. Years ago a Committee of this House reported that there were certain services which should be dealt with as a national charge. We have waited for the recommendations of that Committee to be put into force. I have referred to education and the Poor Law. You also have the police services, and those connected with the upkeep of the main roads. These are charges which bear most unequally and most heavily on certain industrial areas, and I deplore the fact that the Government have again postponed dealing with this question. I hope that before another Budget comes round they may have had the opportunity of going into the matter—undoubtedly one of great difficulty—but because of its difficulty the more compelling that attention should be given to it. Reference has been made to the burden of direct and indirect taxation. I do not know whether we all quite realise what is the burden of indirect taxation. Even to-day with the readjustment that the Chancellor of the Exchequer has foreshadowed, I think I am right in suggesting that the amount of indirect taxation borne in the coming year will amount to something between 10s. 6d. and 11s. per family per week throughout the country——
Customs and Excise?
Yes, I am glad that the hon. Member for Mossley and myself and the Committee for once are in agreement.
Not necessarily.
Well, on the facts, though the conclusions we may draw from the facts may possibly be different. I submit, however, that a burden of 10s. 6d. per week per family is no light burden to bear at a time when wages are falling and it is difficult to get the necessities of life. Therefore I had hoped the Chancellor of the Exchequer might, on the question of Income Tax, have readjusted the burden. We understand that he has something like £30,000,000 to dispose of in relief to the Income Tax payers. I ask the right hon. Gentleman, is he making the best use and giving the greatest relief by devoting £30,000,000 of his surplus to a flat rate reduction of the Income Tax by 1/6th. One shilling is taken off those who pay 6s. and 6d. off those who pay 3s. I think we ought to go back to the days of the graduated Income Tax. We are told that we must relieve industry, but are you doing that when you place a tax equally on incomes from industry and investments which the man is not earning and not working for at the time?
There are many ways in which this relief might have been given in a form which would have brought more real assistance to those who are most deserving. There is the case of the man and his dependents. I submit there would have been a great opportunity in these days when the middle classes, as well as the working classes find a difficulty in making both ends meet, to have given relief to those with large families and those with dependents. Instead of that, we are leaving the scale of taxation untouched with regard to incomes, and we are not making the best use of the relief which has been given. I suggest that during the stages of the Finance Bill it may be possible to make a much better use of this surplus, and relieve those who need it most. There are cases of hardship which the Chancellor of the Exchequer has admitted that he is unable to meet an account of the many claims upon him, but I hope that next year they will receive more consideration than they have done in the past.
I should like to point out to the hon. Member who has just spoken that the Chancellor of the Exchequer did not go out of his way to take any particular industry in relieving agriculture, and he only gave them back something that had been put upon them during the last year or two. I am with the hon. Member in saying that we ought to have a thorough re-arrangement of rates and taxes, but I do not see how that can be done in one year without a considerable surplus. It will be a very difficult process when the right hon. Gentleman does do it, because he will not know how to arrange it, or how much loss of profit there will be by exchanges of taxation.
We have had a very interesting Debate from many points of view, but one thing has been very clearly demonstrated, and it is, that we cannot go on at our present rate of expenditure. Nobody has been able to controvert that argument in any way, and none of the suggestions for reducing this or that form of expenditure will be sufficient to meet the difficulty. It is quite clear that the Government will have to reduce expenditure in the coming year, and it has got to be done this year. I would suggest to the Chancellor of the Exchequer that he should undertake to ration the Departments. I know this means that something which is considered necessary now will have to be done with out, but we shall have to do that or face bankruptcy.
It is absolutely necessary that drastic reductions should be made. We do not want an axe to cut away two or three heads of the hydra, but we want the whole thing gone into systematically, and we have to reduce our expenditure by a fixed amount in every Department. It is the duty of the Treasury to ration the Departments all round, and say that each must make a certain reduction, and let them find out the things to reduce, and then they will reduce those things which the country will suffer least by. That is the only way. No Members of Parliament, however anxious for economy, can suggest how any particular economy can be made. Each Department knows perfectly well how it is worked. The heads of Departments can tell you perfectly well where they can make reductions, and if they are compelled, we shall get great reductions without any great loss of efficiency. I hope the Chancellor of the Exchequer will ration every Department and every Ministry all through.
I hesitate to intervene in a very important Debate like this, but I wish to make a few observations, particularly on some of the comments which have been made in the House this evening. Before I deal with those points I would like to say that I cannot understand hon. Members opposite being so satisfied with the Budget as introduced by the Chancellor of the Exchequer. I cannot see where they get their satisfaction from, because to me, as a citizen, I cannot be satisfied to see a burden on the country of £7,000,000,000 without any attempt, so far as I can read the figures, to reduce that colossal sum. The mere fact that the individual citizen is able to secure a shilling off the Income Tax does not appeal to me, and does not warrant the satisfaction which has been expressed. I know full well that Members of this House and some people outside take this huge debt as a mere excuse to prevent social reforms being carried out. I feel sure that until this debt is reduced, we shall not be able to proceed with some of the very essential social work that is required to be done in the country at the present moment.
Someone has said in this Debate that this was a rich man's Budget. If hon. Members will turn to page 6 of the financial statement, they will see there an indication of the mind of the Government in regard to the expenses on the services of the country. I notice under "Civil Services" that there are only two counts in which there is shown an increase, and they are in regard to railway agreements, transport and coal mines. I would like the right hon. Gentleman to indicate the destination of the increase in those amounts. I think we will find out later that this money is being paid in some way to help capitalist interests in this country. I would like to ask the Chancellor of the Exchequer also to explain what is meant by "ordinary" and "special rates" on page 7 of the financial statement, amounting, all told, to about £112,000,000. The average individual, who need not be an expert in finance, can very well understand the basis of these estimates in regard to all the columns except those two. I shall be very glad indeed to hear whether these sums are brought in on account of workshops, mills and factories owned by the Government which have to be sold during the next financial year.
I wish also to put in a plea for relief on behalf of parents who are prepared to make the necessary sacrifice in order to educate their children beyond the elementary school. I do not know whether such an appeal has already been made to the Chancellor, but I want to make this point in regard to it—because of the cry for economy in the country it is getting more difficult every day for parents to keep their children in secondary schools and to give them that education they desire. I shall be glad if the Chancellor can see his way to do something in that connection.
I want to add my quota to what has been said by the hon. Member for Govan (Mr. N. Maclean) in relation to the huge fortunes made during the period of the War. The Government of the day missed a great opportunity at the conclusion of the War when they failed to appreciate what some people—a small section it is true—did during the War. What happened was this: a small section of the community during the short period of three or four years, to my own knowledge, made sufficient money out of the necessities of the nation, and did it without any regard to patriotism at all, to enable them to retire in comfort. They invested their gains in War Bonds, and they and their families can live in comfort for the rest of their lives. The, opportunity for dealing with these fortunes has gone once and for all. We on these benches maintain that there is no chance for the recovery of industry, trade, and commerce until we make a grand attack on the colossal debt under which the country is suffering at the moment. The only possible way, so far as I can see, is to call upon all persons to contribute to a common pool by way of a levy of some kind, in order that we may clear away at any rate one-half of the huge debt under which we are groaning, and thereby leave industry and commerce free to do the work they are intended to perform. If we can get rid of the huge interest on the National Debt the country will go along much better than it is now doing.
I desire to support the policy of the Chancellor of the Exchequer in reducing the Income Tax, and also in not bothering too much during this financial year in paying off debt. Of course, if it could be achieved by means of economy one would be in favour of it, but whatever economies are achieved at the present moment I think it far better that the amount of those economies should go in relief of taxation rather than to pay off debt. I want to put before the Committee one consideration which I think is an obvious one, but in regard to which we have not really had an adequate reply from financial authorities. The policy of the predecessor of the Chancellor of the Exchequer—the present Leader of the House—was undoubtedly in the direction of rather violent deflation. He allowed the boom at the end of the War to go on for a considerable period without check, until we got largely inflated and artificial prices. Then he suddenly seemed to become afraid, and put a sudden brake on. He did it in several ways. I remember that when he instructed the banks to close in, and to grant no further facilities for overdrafts, it came very suddenly. It interfered with a great many projects which were then being embarked upon, and resulted in heavy losses.
As I think everyone will admit, one of the causes of the bad trade through which we have been passing, is that people had become accustomed, during the few months of the boom, to this stimulation of trade, and had laid in stocks on the faith that the boom would last for a certain period. The measures of the Chancellor of the Exchequer artificially brought the boom to a sudden termination. There was no doubt that the end would come in time, but one of the evils was that it came so suddenly. The result was that every merchant and every industry was landed with high-priced stocks, and these stocks, which could not be moved without the most calamitous results to individuals, have been one of the reasons which have caused the depression in trade. I will only mention one familiar instance, in regard to which the hon. Member for Stockport (Mr. Greenwood) will, I think, bear me out, namely, the trade with India. The trouble there is a different trouble, but the Indian merchants have had stocks of high-priced cotton goods which, owing to the fall in silver, and to other causes, they have not been able to liquidate successfully without becoming individually bankrupt, and that has held up trade. The same thing has applied in this country, and, therefore, I think that this sudden deflation, through the artificial action of the Chancellor of the Exchequer, was a very evil thing.
If that policy was justified at the time when it was adopted, it must be taken to its logical conclusion, namely, that, if this policy of deflation were carried out, it must be only for the purpose of getting back as early as possible to pre-War prices in this country. I would ask any hon. Member who is in favour of this policy of violent deflation whether, if we get back to pre-War prices, we shall not also get back to pre-War margins of profit and pre-War income? Let us face that position. Before the War, on the income which this country then enjoyed, we had a revenue and an expenditure of approximately £200,000,000 each, and we were told on the best authority that the surplus savings from the income of the country, which went back into industry in the form of capital to replenish industry with the necessary sinews of war, amounted, at the outside, to the sum of £400,000,000. The sum of these two amounts, viz., £600,000,000, at pre-War prices and pre-War margins of profit, is the ultimate amount available for taxation and for the savings required to provide the new capital which is always necessary to carry on industry. I ask how this sum would be sufficient with the permanent burdens and charges on the national exchequer which we have to bear to-day? Take the question of interest on the National Debt. We borrowed the National Debt in a highly depreciated currency, when the sovereign was only worth about 8s. How is it possible to pay off that debt if we go on paying back, in real value, a sovereign for every 8s. that we received? The thing is obviously impossible. If you just take the present expenditure, the interest on the National Debt is £350,000,000, and we have a pensions liability of £100,000,000. That makes £450,000,000, without taking into consideration the Army and Navy and all the vast expenditure that we have to incur for education, health, and other social services, and the various Civil Service charges. I do not see how it is conceivably possible to balance our Budget if we adopt a policy of rapid deflation and get back to pre-War margins of profit and pre-War income. As a necessary preliminary, before we get to that stage, we have got to get some means of reducing the interest charges on our national indebtedness, either by means of re-borrowing at a lower rate of interest or by some other method. Of course in the early days a great many people were in favour of a capital levy. The only argument that at all appealed to me in favour of a capital levy was that it had the advantage of paying back debts in the same currency in which you had borrowed it, whereas leaving your debt where it is and deflating is trying to pay it back in a different currency altogether, which is an impossibility. If that policy is impossible and totally impracticable, as I beileve it is, you must have some alternative policy. To re-borrow the debt at a lower rate of interest can only be done very gradually. I understand in 1927 some £2,500,000,000 will be reaching maturity. No doubt in 1927 you will be able to re-borrow a lot of money at a lower rate of interest, but that is a good way off, and we have to budget for the next year and the year after, and the only way the Budget will ever balance is by not adopting this policy of deflation. The policy of the country should be, first and foremost, to stimulate trade, and if you stimulate trade and by that stimulation keep up the margin of profit and the income of the country, you benefit everyone.
It is well established that if the cost of living falls, wages have to fall on a sliding scale. They are doing so, whether you agree with it or not. So that if the cost of living does not fall, wages do not fall. [HON. MEMBERS: "Yes, they do!"] Well, they ought not to. That is the theory I am advancing. The working man will benefit just like every other class with the stimulation of trade. It is all very well to say we want purist finance and to pay off the largest amount you can of your National Debt, but you will not be able to do it. With your 6s. in the £ to-day you have barely balanced your Budget. There was the £38,000,000 which the Chancellor of the Exchequer had for his Sinking Fund, and to meet certain obligations which were accruing, but it was a very near thing, and can anyone believe that next year, and particularly the year after, when you feel the full brunt of the bad time through which we are going now reflecting itself in the Income Tax returns, you will be able to balance your Budget on the present basis of taxation? If the policy of deflation goes on, as it is doing, it is certain that you will not be able to balance it, and then where will come in your purist finance? Your first step, if you are going to carry out your strict canons of finance, would then be no raise your taxes. It is well known that we have got to the ultimate limit of profitable return on our taxation, and that from now, if it has not already been reached, we are getting a diminishing return. Therefore, the policy of having your eye, first and foremost, on helping trade, and if necessary giving it an artificial stimulus, is one which should be supported by every independent-minded and far-seeing man to-day. The argument of the impossibility of repaying a debt which has been incurred by borrowing at a certain value with money which has largely appreciated, is one that is quite obvious.
The Chancellor of the Exchequer has adopted the right policy, though I think that further economies ought to have been made and that the benefit of these economies ought to have gone in the direction of further reduction of taxation. The reduction of the Income Tax by 1s. in the pound has not been sufficient. I should have welcomed the Chancellor of the Exchequer making a much more drastic cut. I should have welcomed a reduction of 2s. in the pound. My income is of such a negligible quantity that the rate of tax is not one of supreme importance, but it is of great importance to the trade of this country. The burdensome nature of the taxation has been restricting and clogging enterprise and the development of industry. It is not only the Income Tax that has to be considered, but all the other burdens, Estate Duties, Entertainments Tax, and many other taxes. [HON. MEMBERS: "Beer!"] Yes, beer. I am in favour of the reduction of all taxation, and am quite prepared to face the logical result of that. The logical result, in so far as it will cheek the present violent deflation, is not only to the good, but absolutely necessary if we are ever going to balance the Budget. No doubt my opinions must sound somewhat heterodox to those hon. Members with whom I am accustomed to associate, but that does not trouble me. One of the principles of the party to which I belong is that we have the freest individual liberty of opinion.
You do as you like!
In these days, when we have had the huge cataclysm of the War, and all sorts of financial experts and prophets, and none of them seem to agree in any of their theories, there is ample room for divergence of opinion on these matters. The solid argument which requires a reply from the financial purists is how they are going to balance the Budget when they have to meet interest on debt which itself is nearly double the pre-War expenditure of the country. If you get back to pre-War rates and prices, you will not have the income that you had pre-War, because you have a lower turnover and a lower output. It is obvious that with certain countries in Europe in their present condition there is smaller demand for our goods. We are not getting as much production per man as we did pre-War, and your margin of profit has to be made on a lower output and a lower turnover. It is impossible, unless we adopt the policy of giving trade every encouragement by means of the reduction of taxation, and aim at getting trade prosperous, at stabilising currency at its present value, and not deflating it more rapidly, to see any possible chance of balancing the Budget. For these reasons I welcome the reduction in taxation and wish it had been of a larger amount.
There is only one criticism that I wish to bring against this Budget. That is that it is a com- plete piece of humbug. The Chancellor of the Exchequer says, "In order to relieve the burden on trade, commerce, and industry in this country I am going to reduce the Income Tax to the extent of 1s. in the £. But in order to make up for the deficiency that is thus produced I am going to raid all sinking funds right and left to the exact extent of the yield of 1s. in the £ on Income Tax." If there is one thing more certain than another it is that what constitutes a burden on industry is simply the amount of the expenditure of the Government on non-productive services, and it does not matter two-pence whether that expenditure comes from robbing sinking funds, raising fresh loans, or from taxation so far as industry and commerce are concerned, and therefore by relieving industry as he says, by reducing Income Tax by a shilling and by robbing the Sinking Fund of a proportionate amount, he leaves industry in this country exactly as he found it before his Budget. There is no escape from that fact. The only way of reducing the burden on industry is by reducing the non-productive expenditure of the Government.
What he has done, and I congratulate him on having done it, is to relieve a number of people who more than any other class in this country, far more than the wage-earning manual workers of the country, have suffered from the effects of the War. He has relieved to a large extent, in fact to the full extent of a shilling reduction in the Income Tax, those unfortunate people who are living on small fixed incomes which they accumulated for their old age or which were accumulated for them by relations. To that extent he has relieved a most deserving public-spirited class. But to say that he has relieved industry and commerce is entirely untrue. I do not accuse the right hon. Gentleman of deliberately deceiving us, but what he has done is to deceive us in actual fact. Now as to the criticisms which I heard from the other side. We heard certain Gentlemen suggest that the way to get the country upon its financial legs and reintroduce prosperity for the industries and the workers of this country is the process known as inflation. Inflation in the case of the individual is the process by which, if one finds one's income insufficient for one's expenditure, one issues a number of those interesting documents known as I.O.U.s. The process in the case of a nation is exactly similar in every respect. Inflation simply consists in having issued a large number of I.O.U.s and then issuing a further large number. In other words it is the most dishonest and disgraceful action which a Chancellor of the Exchequer can do. It is deliberately robbing the holders of his currency.
Quite apart from its dishonesty, it is a very bad policy. So far as my experience and observation have gone, honesty, generally speaking, is not the best policy, but in all matters of national finance, especially matters of currency issue, honesty is the only policy which does not mean complete national disaster. Therefore, I do hope that the Chancellor—indeed, I have no reason to doubt it— will pay no attention to these wild ideas which, it is claimed, will make a nation prosperous by setting the printing press to work, and printing currency and causing inflation. After all, the hon. Member for Stockport (Mr. W. Green wood), who, I understand, is a financial genius and the protagonist of this method of making the people prosperous, might, at any rate, study the process of inflation as it has been carried out in Russia by M. Lenin. M. Lenin came to the conclusion that it would be highly desirable that every unskilled worker should have £500 a year as income and that every skilled worker should have £1,000 a year. So he decided that the skilled worker should have 10,000 roubles a year, and the unskilled worker 5,000 roubles. Having done so, he proceeded on the lines of the hon. Member for Stockport. He collected all the printing-presses on which he could lay his hands and started the printing of notes to pay these wages. But, I understand, from more recent accounts of Russia, and particularly of the economic state of the workers of Russia, that that policy of inflation, so far from having created a reign of prosperity and peace and plenty in Russia, has had exactly the opposite effect. I will not bore the House by attempting to explain why that is so. The policy of inflation, however, has resulted in the starvation of a very large number of innocent men, women and children in Russia.
Instance Germany instead of Russia.
Hon. Members of the Labour party have not been very positive about their love for a capital levy. The right hon. Member for Platting (Mr. Clynes) gently hinted that he would like to have a levy. Other hon. Members, particularly those who are more or less official members of the Labour party and not free-lances, have glanced at the capital levy with a certain amount of love, but not with that positive affection which we used to have among members of the Labour party, official and otherwise. Indeed, there is almost hope—in spite of the fact that they treat references to Sir Josiah Stamp and other gentlemen of his standing in the economic world with derision, being so vastly superior in every respect in economic knowledge to these gentlemen—that they are beginning to realise that of all policies a capital levy, which is simply another name for inflation, is one of the most dangerous policies that any Chancellor of the Exchequer could adopt. There are many of us, and I believe wiser men than myself— [HON. MEMBERS: "Impossible!" and "Names!"]. Hon. Members may think it impossible, but I thought it was possible. I suggest that people, who know a lot more about economics than I do, at one period thought that a capital levy might, at any rate, be examined carefully to see if it had any merits. Examination at once showed the utter and fatal folly of such a policy. Apart from that, it is impossible to put such a policy into practice. Take the ordinary manufacturer in my own position. Suppose that the Labour party came into power and decided upon a capital levy of 25 or 50 per cent. If the tax gatherer came to me and said, "We want a levy of 25 per cent, on your capital," I would say, "Very well; take it." That would not help him in the very least. What is the use to him of buildings, machine tools, stock-in-trade and things of that sort which constitute something like nine-tenths of the capital of nearly every manufacturer in the country? What again, is the use of attempting a capital levy on the landowner and house-property owner? You come to him and he endeavours to pay the capital levy and you say, "We will not take it in houses or land; we must have it in cash." He then goes to the auctioneer and puts his property up for sale; but remember, simultaneously every other land and property owner in the kingdom is also putting up his property for sale, and how are they going to raise any cash whatever?
It is as clear as mud.
What about stocks and shares?
Of course, as an hon. Member opposite says, in the ease of those whose capital is mostly in commercial shares or in Government stocks, the same difficulty arises. In the case of Government stocks the holders might be put at a most unfair disadvantage as compared with the holders of every other stock and property. So that, in spite of the plausible nature of the idea of a capital levy for reducing the burden of the nation, the thing is utterly and preposterously impossible. It is impossible to do it, in the first place, and in the second place it would be utterly fatal to any country which attempted it. After all, on what does the prosperity of any community depend in the long run? It depends on two factors, the productive power of the individual people and the accumulation of capital that they have set aside to make that productive power operative. Those are the two sources of wealth and prosperity in every country. If one regards the position of a primitive community living entirely by agricultural pursuits, one sees at once the absurdity of these ideas, both of inflation and a capital levy.
A country living by agricultural pursuits becomes prosperous when out of each harvest a very considerable percentage is saved to form the foundation of a bigger harvest if possible from the next sowing, and any means by which people are enabled to consume the whole of that harvest instead of saving part of it for sowing next spring inevitably leads to reduced prosperity. There is no dodging it. The position of capital in modern industry is exactly analogous to the position of seed corn in an agricultural community. The mere fact that capital is largely in improved land, in buildings, in machinery, tools, aye, and even in trained minds—that mere fact does not make the analogy false. It is utterly impossible to go on consuming the whole-of one's production year after year and to stave off starvation from the people in the future. I hope hon. Members will excuse me, but it is very necessary that someone should make an attempt to get at the real fundamental facts in this matter. The official policy of hon. Members opposite consists of four points, which can be laid down by them and printed and circulated throughout the country. The first point is a minimum standard of living for all, in good times and bad times alike—I am quoting their own phrase. What does that mean? That simply means that, when the harvest is bad, you are still to consume just as much corn as when the harvest is good. That is to say, if you have a short harvest, you go on keeping up your standard of living, and eat up the seed corn that you should keep until next year.
Your second point is this: that the surplus should be for the common good. That simply means that the result of each surplus, beyond the necessities of the actual consumption for the moment should also be distributed around. That is simply the first point all over again in other words. The third point is a revolution in national finance. When one comes to examine the printed word, one finds it is simply another word for a capital levy, which, as I have already explained, is simply another device for living on capital, for consuming the seed corn long before it is time to plant it for the next harvest. Every single piece of the Labour party's economic policy, whether in their printed statements issued from Eccleston Square or in the speeches of right hon. and hon. Members opposite are all based on that wonderful principle that when you reap the harvest you must not save one single grain of corn for the next harvest in the form of capital, but you must consume every single bit of it during the winter, whether it is much or whether it is little. [HON. MEMBERS: "When are you going to finish?"] This Debate is going on until 11 o'clock, and I may as well make an attempt to put something before you. Hon. Members will not listen and read what Sir Josiah Stamp says. Therefore, having got the opportunity, I am going to make the most of it.
The points we have gone over to-night have really been very important ones for any Budget Debate, because there have been signs from time to time, undoubtedly, that the Govern- ment and even the Chancellor of the Exchequer himself, have felt very tempted indeed to let the morrow take care of itself and to live from day to day. The raiding of the Sinking Fund really proves that I am not doing the right hon. Gentleman an injustice when I suggest that the après moï le déluge policy, which the Prime Minister has brought to the highest state of perfection, is not altogether repudiated by the Chancellor of the Exchequer. I pointed out that, so far as we who are engaged in the industries of the country are concerned, we thank him for his good intentions, but we inform him that he is not doing us the least good in the world, and that every relief we get in the form of reduced Income Tax is being taken away from us on the other hand by the robbing of the Sinking Fund.
It is financially and economically the same thing as the accumulation of more debt. If this Sinking Fund had not been raided, the value of our currency would have mounted more quickly than it will now, and the funding of our debt would have been possible, it might have been within a few days or hours, earlier than now that the Sinking Fund is robbed. It is quite absurd to say that because the money market to-day does not show a definite fall in the amount of the pound sterling, compared with the dollar, and that possibly the next tender of Treasury Bills might be exactly the same amount as had been anticipated, supposing the Sinking Fund had not been robbed, yet, at the same time, the difference may be very small considering the vast sums involved to-day. Yet though you do not see it to-day on the Stock Exchange or the money market, be assured of this, that your sin will find you out. No one knows the longing that comes over the Chancellor of the Exchequer at such times as this to be able to make funding loans and to reduce the average rate of interest on the National Debt, but hope will have to be deferred just a little longer, because you have robbed the Sinking Fund. Any reduction of the National Debt will have to be deferred a few days or weeks, but, notwithstanding, for every other step upon the path of destruction which the Chancellor has taken by robbing the Sinking Funds a bitter and inevitable penalty will be paid. This period of hope deferred, this period of longing to see these Funding Loans on the market, all these ambitions, these longings, these pitiful longings of his, will be prolonged just by the amount that he has strayed from the path of economic rectitude in robbing the Sinking Fund.
We always listen to the hon. Member for Mossley (Mr. Hopkinson) with the greatest interest, and I should have been considerably impressed by his arguments if he had not said that he has never found honesty to be the best policy. That is a sufficient reply to the sobs to which our hon. Friend has treated the Committee. There is time in the three minutes which remain to us to say one or two things that ought to be said about the proposals of the Chancellor of the Exchequer. The reductions he has made in expenditure are by no means sufficient. If he could exercise the influence he ought to exercise, which everyone who knows his ability thinks he possesses, he could have controlled the Departments in such a way that the expenditure would have been so much less during the forthcoming year that he could have made much greater economies. In the second place, the Chancellor's concessions are very much overdue, and that could be emphasised if I had time by reminding the Committee that the Geddes Committee suggested cuts long after the Government might have made the same cuts themselves. The third point which I have time to make is that, obviously, the Chancellor's concessions are altogether made on an unsound basis, and if you take these three arguments together, first, that the concessions are not enough to stimulate the revival of industry which the country needs; second, that they are very long overdue, the proof of which is the Report of the Government's own Committee; and, third, that the suggestions are founded on an unsound basis—those three arguments alone, had I time——
It being Eleven of the Clock, the Chairman left the Chair to make his Report to the House.
Committee report Progress; to sit again To-morrow.
SUPPLY.
[11TH APRIL.]
Resolutions reported;
CLASS I.
1. "That a sum, not exceeding £75,250, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1923, for Expenditure in respect of Houses of Parliament Buildings."
2. "That a sum, not exceeding £1,013,480, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1923, for Expenditure in respect of Customs and Excise, Inland Revenue, Post Office and Telegraph Buildings in Great Britain, and certain Post Offices Abroad."
3. "That a sum, not exceeding £1,474,950, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1923, for Expenditure in respect of sundry Public Buildings in Great Britain, not provided for on other Votes."
4. "That a sum, not exceeding £473,350, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1923, for Expenditure in respect of Employment Exchange and Insurance Buildings, Great Britain (including Ministries of Labour and Health)."
5. "That a sum, not exceeding £144,800, be granted to His Majesty, to complete the sum necessary to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1923, for Expenditure in respect of the Royal Parks and Pleasure Gardens."
Resolutions agreed to.
WORKMEN'S COMPENSATION BILL.
Order for Second Reading read, and discharged; Bill withdrawn.
The remaining Orders were read, and postponed.
ADJOURNMENT.
Resolved, "That this House do now adjourn."—[ Colonel Leslie Wilson. ]
Adjourned accordingly at Five Minutes after Eleven o'Clock.