I desire to present a petition on behalf of the Pathhead United Free Church, Kirkcaldy, which shows:

"That your petitioners view with alarm the proposal to raise Imperial revenue by the imposition of a tax on betting transactions; because the habit of betting and gambling is already very widespread and is doing serious harm to the well-being of the nation; and because your petitioners believe that to raise revenue by such a tax would tend to root the hurtful practice more deeply in the nation's life. Your petitioners, therefore, humbly pray your honourable House to reject the aforesaid proposal.

And your petitioners will ever pray.

(Signed) DONALD GRAY

(Moderator).

JAMES BRODIE

(Session Clerk)."

I desire also to present similar petitions on behalf of the following:

James Gillespie, Moderator, Normand Road United Free Church, Dysart.

William Muir, Session Clerk.

John McCracken, Moderator, Erskine United Free Church, Burntisland.

David Thomson, Session Clerk,

Stewart D. Gray, Moderator, Victoria Road United Free Church, Kirkcaldy.

John Barnes, Session Clerk.

James G. Calderwood, Moderator, Loughborough Road United Free Church, Kirkcaldy.

Robert Taylor, Session Clerk.

John McLennan, Moderator, Methil United Free Church, Methil.

James D. Allan, Session Clerk.

I beg to move, to leave out the word "now," and, at the end of the Question, to add the words "upon this day six months."

The Motion for the Second Reading of this Bill affords an opportunity to review some of the larger financial problems which confront the country. It is the practice in connection with our financial discussion to reserve a great deal of the details for the Debate on the Evolutions voted immediately after the Budget speech and for the Committee stage of the Bill itself. Accordingly this afternoon I propose to follow the usual practice on these occasions of selecting only one or two of the larger subjects and inviting the consideration of hon. Members to those particular questions. The great difficulty we have in discussing the Finance Bill this year is that it is increasingly hard to ascertain the kind of financial principles which this Government is pursuing.

Throughout the whole range of their financial operations the principles upon which they have proceeded are such as no ordinary man can unravel. During the discussion of the Committee stage of this Measure I think we shall be able- to show great inconsistency and contradiction, more particularly in the dangerous policy of raiding one fund after another in order to balance the Budget, extending tariffism, and embarking on a Betting Duty which many of us believe to be financially and industrially disastrous. Leaving aside all considerations of that kind I propose to deal with two or three of the larger problems. The first of these problems is that dealing with the structure of the Income Tax in Great Britain. The House will observe that in this Bill there is a proposal to depart from the three years' average which has been in operation for a considerable time under Schedule D, and to substitute for a great field of taxable material the basis of the preceding year The Royal Commission on the Income Tax in 1919 reviewed this question at great length; and, therefore, it is unnecessary to urge that this matter is one of vital importance at a time when our Income Tax and Super-tax together are producing £350,000,000 per annum.

All hon. Members, whatever their view in fiscal matters may be, should be satisfied that the administration of the Income Tax is on a sound basis. We want to be quite sure that we are collecting from all the people who are legally liable all that they ought to pay. The Royal Commission, in its analysis of the recommendations, agreed that the best proposal was the year of assessment itself. There is not the least doubt that that is the ideal basis for any Income Tax. It is the basis which is nearest to the time in which the profits are being made. From many points of view that is a system which secures that payment will be made with ease and convenience by the taxpayers of the time. The Royal Commission, however, as a body of tolerably practical people, were driven to the conclusion that the sacrifice which would be involved in the year of transition, at a time when the yield of Income Tax in this country was from £300,000,000 to £400,000,000, would be too great, and accordingly they fell back upon the recommendation—unanimously, if I remember aright—that the figures for the preceding year should be adopted, and that recommendation has been embodied by the present Government in the Finance Bill of this year.

Let me make it perfectly plain at this stage that we on this side of the House will offer no objection to that part of the scheme, subject to certain detailed explanations which I think the whole House will undeniably require; but we are entitled this afternoon very strongly to attack what the Government are failing to do or refraining from doing in other important Departments of the Income Tax structure. I shall have very little difficulty in showing that, up to a point, their failure to adopt other recommendations, which were unanimous, of the Royal Commission in 1919, is leading to a somewhat lopsided position in regard to Income Tax in Great Britain. Shortly, the position is that, since the Royal Commission reported, this House has given effect to practically every recommendation of that Commission which involved a sacrifice of revenue, and, to be perfectly frank on the point, the adoption of those recommendations led to certain concessions to people of minor income in the community which certainly were urgently required; but the House up to the present time has practically failed, save in one or two minor points, to give effect to other recommendations of the Royal Commission which are of vital importance to the taxpayers and to the Government of the day.

Let us single out two of the recommendations. What the Royal Commission submitted to this country was not a series of incidental propositions. It offered to the Government of the day and to succeeding Governments a scheme for Income Tax administration, and included in that scheme there were two recommendations, one of which dealt with the evasion of Income Tax, and the other with the placing of the agricultural community on a basis of assessment in line with that of other taxpayers, for all practical purposes, in the State. It is increasingly important to try to direct the attention of Parliament to the situation which has arisen. Many of us never subscribed to the extravagant statements as to tax evasion which were made, even to the Royal Commission itself; but I am bound to remind the House, and certainly the Chancellor of the Exchequer and the Financial Secretary to the Treasury, that there were reliable witnesses who said that round about that time, including the Excess Profits Duty, as much as £100,000,000 had been lost to the Exchequer by evasion over a short term of years; and they went on to say that in their view the annual amount lost by evasion was not less than something between £5,000,000 and £10,000,000. Many of my hon. Friends on this side of the House who are familiar with these matters think it is a great deal more, but even if it is only £5,000,000 to £10,000,000 at the present time, that is an amount which should be collected by the Exchequer, and the evasion of which is a manifest injustice to other taxpayers who are dong their duty under the law as it stands.

The Royal Commission recommended, I agree, certain tolerably drastic proposals, including the calling for certain information which is vitally necessary if this tax is to be properly administered, and some additional powers for the Treasury and the Income Tax authorities. It has always been our regret, on this side of the House, that, in the conflict which was provoked by the Revenue Bill of the Coalition Government, many of these valuable proposals of the Royal Commission totally disappeared. Now we have a Chancellor of the Exchequer who is raiding, as I have already said, every fund in creation for the purpose of balancing his Budget, driven to propose in this House a duty on betting, but neglecting year by year to gather up anything between £5,000,000 and £10,000,000 of revenue which competent authorities say is lying to his hand if these recommendations are enforced. During the Committee stage of this Bill we shall again press these proposals of the Royal Commission.

The other point in Income Tax administration to which we have regularly directed attention on this side of the House has been the system of assessing the agricultural community. As hon. Members know, the farmer to-day has an option of being assessed for Income Tax purposes on the basis of one time the annual valuation or his annual rent, or of making his return in the ordinary way showing his profit under Schedule D, and I am advised that, notwithstanding the agricultural depression of recent times, a comparatively small number of farmers have exercised the option of being assessed on the basis of actual profits. Here, again, the Royal Commission in 1919 made a unanimous recommendation. They said that no longer could the community tolerate the excuse, or the suggestion, that farmers did not keep books, and therefore could not make proper returns. I invite any hon. Member in this House who has ever owed anything to a farmer to tell me that farmers do not keep books. That argument has now disappeared. The unanimous recommendation of the Royal Commission has, however, not been followed, and the consequence is that we go on taxing the agricultural community in this country on a quite exceptional and quite indefensible basis.

Hon. Members will agree with me that, while there has been agricultural depres- sion during recent years, there could be no hardship to any man who is assessed on the basis of what he is actually earning as income year by year, and, moreover, this has become increasingly important for a series of other reasons. This Government, anxious to help the agricultural community directly and indirectly, has embarked upon one form of subsidy after another. The subsidy to beet sugar was defended, very largely, on the ground that it was going to be a benefit to agriculture, and there are many concealed subsidies in connection with local rating which affect the agricultural community. All these things have been conferred at a time and in circumstances when we cannot say with accuracy what fanners are earning, because we do not get returns to that effect. I suggest to the Chancellor of the Exchequer that not only is it necessary that his information in this respect should be complete, but that it is a matter of elementary justice to the taxpayers as a whole that he should have that information without delay, and that he should adopt that part of the recommendations of the Royal Commission and make his scheme one complete whole, assessing all classes engaged in trade on the basis of the profits which they actually earn.

That is all that I propose to say at this stage upon the large general issue which is raised by the proposals of the Bill in regard to taking the figures for the previous year as the basis of assessment for Income Tax purposes. I now turn to what has been the subject of considerable debate in this House, namely, the great expenditure during the War and the apparent stabilisation of expenditure at about £800,000,000 during the past two or three years. There has settled down on some classes interested in financial problems a kind of fatalism. They say that, with prices at their present level, with the fixed burden, as they regard it, of the National Debt, and with other obligations, there is practically no possibility of reducing our Budgets very much below £800,000,000 in the near future. This afternoon, mainly because we shall be discussing this subject during the Committee stage, I will not enlarge upon what hon. and right hon. Friends of mine on this side of the House have said already regard- ing the Debt, but there are two other great blocks of expenditure which I believe members both of the Public Accounts Committee and of the Estimates Committee, and others, will agree call for very special investigation. There is, first of all, £116,000,000 which we are finding this year for armaments, and, secondly, approximately £240,000,000 which is expended on what are now described as the social services. We desire to see that expenditure on armaments drastically cut down. We recognise that we must rely on international agreement leading to a better state of affairs, but I am going to suggest that there are immediate steps which the Chancellor can take for a fair reduction of expenditure without any injustice to the interests that are primarily involved.

What has been the experience of practically every Committee that has investigated this expenditure in recent times? I cannot speak of the results of the latest Committee that has been engaged on the subject, but the great difficulty of representative Committees in this House is that of getting near to the actual facts of the situation. You may examine witnesses from the Departments at very great length, but you can only deal with the problem in bulk. You can only ascertain large scale figures. Moreover, to every proposa1 for reduction which is put up there are reams of argument and every kind of case for the maintenance of the conditions as you find them. Unless this House is prepared to put two or three people inside these Departments, more or less permanently to sit down with the officials and find out exactly what is going on, I am afraid there is very little hope unless we adopt another proposal. If we cannot get at it by means of investigation through all these Committees, we can with safety impose the duty upon the Departments themselves. Let us assume, for a moment, that there will be some coordination of these services in the near future. I would say, in the light of our experience in representative Committees in recent times, that you could to-day impose an overhead cut of £5,000,000 each year for three years on the Departments.

On each?

On all—I am making a very moderate proposal—of £5,000,000, and throw on them the duty of effecting economies within that limit, and in three years, at least, if that programme were adopted, you would have wiped off about £15,000,000 of this expenditure. In my view it is not merely enough, but I believe that in the process you would find out what could be done. It is only by a device of this kind that you are going to force upon the Departments engaged in this class of expenditure the task of achieving economy. That is one definite suggestion that I make in a Debate of this kind. Much as we deplore the financial methods of the Chancellor of the Exchequer, I have always said that none of us to-day are relieved of the duty of throwing into the common pool every concrete suggestion we can offer, and I think there are many Members of the House who will agree that that is a suggestion which should be considered.

I turn to another sphere which has become highly controversial within recent times. We are spending about £240,000,000 per annum on the social services, and the policy the Government have so far adopted appears to be one calculated, unless the services are to be restricted, to throw increasing obligations upon the local authorities, with the idea that we are going by that route to reduce the burden on the State. Accordingly, what has been proposed is, during the present year, stabilisation of the percentage grant system or its continuance in terms of the method that is already in force, but during that time anxious inquiry as to an alteration of the basis and, unless we are wrong in all our forecasts, the fixing of some form of block grant by the State, probably for a period of three years, and then request the local authorities to do all they can within the limited sum placed at their disposal, with no doubt a certain greater measure of freedom from centralised control. Hon. Members might say at once: "If you object to a block grant or an overhead cut in the social services, why do you recommend it in the case of armaments?" I recommend it because the two circumstances are entirely different. Except to a very limited extent, the vast expenditure on armaments is not productive in the true sense, and all experience has shown that it does not even bring us security. It is altogether different in the sphere of the social services. Many of these social services are, for all practical purposes, new. They are only beginning to find out the task with which they are confronted, especially in the crowded centres of population, but they are beginning to minister effectively to the health and strength of our industrial population, without which there can be no true economic recovery in this land or in any other, and it is just at this time that this, as we regard it, mischievous policy of the Government is introduced and when it is proposed by a kind of block grant to replace the percentage system.

But there is another charge. In 1922, following a recommendation by the Geddes Committee, which in my judgment was very imperfectly considered, the Coalition Government appointed a Committee to consider the percentage grant system. That Committee, of which some of us were members, took a great mass of evidence. It is common knowledge that 85 per cent. of that evidence was against any serious modification of the percentage grant system. But to this day that Committee has never reported, and yet the Chancellor of the Exchequer has announced this policy, at all events through the President of the Board of Education and other Departments, before the Report has been produced. Even if he decides to run counter to what undeniably would be the recommendation of the Report if it were in line with the evidence, it is surely the plain duty of the right hon. Gentleman to obtain that information for us before the proposals of next year are introduced. To the best of my knowledge there is no likelihood of the Report being forthcoming, yet we are apparently to be committed to a scheme of this kind.

There are one or two drastic and final objections to the proposal. It violates an economic argument which has been put forward, not by men on our side of the House at all, but of a very representative character in problems of taxation. The great tendency in the State has been towards personal taxes rather than taxation of buildings, plant or fixed machinery. It is otherwise, of course, in the case of the local authorities, and to a very large extent they rely to-day on taxation imposed upon the annual valuation of property. Everyone recognises that that is not nearly so true to the principle of ability to pay, yet unless those services are restricted, it means that there will be a greater burden on the local authorities, and more particularly a greater burden in the distressed areas which have suffered most from industrial depression and are therefore least able, in the process of industrial recovery, to bear this form of overhead or fixed charge. That is one objection to the proposal the Government have made. There are many other objections. But we do not leave this problem in a purely negative position. Over and over again we have made proposals to the Chancellor of the Exchequer which we believe would safeguard the percentage system, improve it very largely, protect the position of the local authorities, give a very much better return for the money and avoid the controversy, or a large part of it, which will be involved in the right hon. Gentleman's scheme.

What is our proposal? We have drawn attention to the very great variation in the price which is paid for services in different localities. Undeniably, there is certain inefficiency in the percentage system as it now operates, and we have argued that if we could adopt a different method, by arriving at a unit of cost, which would give us an effective comparison area by area, we should then find out not only how we could get a far better return for the money, but how we could make the service much more efficient than in many cases it now is. That proposal was put very clearly before the Meston Committee by competent witnesses, and I suggest that that is the true method of dealing with the difficulty in this connection. One point which we have constantly to bear in mind is that by transferring any particular burden to the local authority, we do not improve the general taxation one iota from the standpoint of business and commerce or industry generally. The real issue for all industry in this country is the aggregate amount of Imperial and local taxation, and not these items considered separately. We are entitled to hear from the right hon. Gentleman what he proposes to do in that sphere which underlies many of his financial proposals.

There is only one further subject to which I would draw the attention of the House. Most of us are more than ever convinced that, try as it will, this House can hardly get near to the realities of the financial situation. When Budget Debates take place they run over a large number of specific issues. A great block of our expenditure year after year is never discussed at all by the House, owing to the pressure of Parliamentary time. Another great block of expenditure on the Supply Services is, by common consent, very insufficiently discussed, because the opportunity, quite rightly, is, taken for debating grievances, local conditions and a variety of problems of, that kind. The Public Accounts Committee and the Estimates Committee may work as energetically as they like on the actual figures of the year in one case and on post-mortem examination in the other, but with the best will in the world they cover only a limited part of the field. Is there no method by which we can, delegate responsibility to some competent section of the House. By delegation of responsibility I do not mean entrusting power in finance, but to delegate the responsibility of real investigation to a section of this House, making it the primary duty of that section to relate' our finance year by year to general industrial conditions.

Let me illustrate my point. The Board of Trade at the present time is engaged in the production of certain reports. They have issued a very valuable document dealing with overseas markets. They have issued another report which is a survey of industrial relations within this country. Taken together, whatever view we may have of public ownership or of the Socialist solution of the industrial problem, or anything of that kind, the fact remains that there is a great mass of material in both these reports of vital importance to industry now, and with a profound bearing upon our system of national finance. But these reports are never considered in detail in this House. They are never related here to our financial system. They remain buried, or they are in danger of being buried, in Government Departments, or in the minds of people wrongly called experts, whose views are not considered suitable for public debate. These reports are of importance at a, time like this, when our burden is £800,000,000 per annum, when we have still more than 1,000,000 people out of work, and when, by common consent, we are in danger of losing per- manently certain of our overseas markets with their reaction upon the standard of living at home.

I have suggested recently for the consideration of Members that a Commission of this House, not anything on the lines of the French model, but some kind of body representative of the House should be appointed whose business it would be systematically to study these documents dealing with industry and national finance and place the results of its deliberations, with some kind of technical assistance thrown in, at the disposal of the House, and even of the Government of the day. We on this side, while we believe that there can be no true solution of the industrial problem outside the principles we hold, still recognise that there is a vast mass of immediate material which is going to waste, which in our judgment would be a very valuable instrument if we made use of it. These are my observations in moving the rejection of the Bill, and I offer them in the hope that hon. Members will feel that there is on this side of the House just as definite and vital an interest in fundamental things as there is elsewhere, and that dark as the situation may be for industry and commerce to-day, the use of this mass of reliable technical information would contribute materially to human recovery and public good.

The Finance Bill of this year contains a number of new proposals, and it is evident from the course of the Debate on the Budget Resolutions that those proposals do not command the universal assent of the House. I welcome and support them all. I do not intend to refer in detail to the novel financial devices proposed by the Chancellor of the Exchequer, but I wish to support the proposals contained in Clause 7 of the Bill, and briefly to advert to the attitude of hon. and right hon. Members below the Gangway opposite towards that part of the Bill.

For many years past we have enjoyed a Preference in our Dominion markets. No one doubts that that Preference has been a valuable one. I do not wish to trouble the House with figures, but one readily realises that, whenever and wherever that Preference was granted, there has immediately followed a great and rapid expansion of trade between this country and the Dominion which had accorded the Preference. We have also to remember that our exports in manufactured goods to our Dominion markets mean for us something between £250,000,000 and £300,000,000 a year, representing in wages something like £220,000,000. One has only to realise these facts to see that it is clear that without these Dominion markets, and without the Preference that we have enjoyed so long, it would be impossible for us to maintain our great industrial population. Clause 7 of the Bill stabilises the Preference which this country has granted to our Colonies and the Dominions. The Preference which we have enjoyed in the Dominion markets has been very valuable to us, and the Preference we wish to accord to our Dominions in the home market will be undoubtedly equally valuable to the Dominions.

But it is necessary to remember that the Dominions at the moment are only in their infancy. They have not developed their full productive capacity. The result is that they are not able to take advantage of the possibilities of the increased trade which this Preference holds out unless they embark upon far-reaching ventures for the further development of their resources and upon costly enterprises and schemes for the settlement of emigrants in their territories. These enterprises will not be undertaken and prosecuted with that vigour, courage and vision which are necessary to make them successful, unless there is some element of permanence in the trade advantages which inspire them. Therefore I welcome Clause 7 of the Bill, because I am certain that, as a result of the permanent advantages which that Clause confers on our Dominions, there will be a quicker development of our Imperial resources and a great expansion of Imperial trade.

May I remind the House that our Imperial trade is the most valuable part of our trade? Surely it is plain that it is to our advantage to buy our foodstuffs and the basic raw materials for our industries from those countries which, in return, buy the manufactured products of our industries. In the past our Colonies have bought millions and millions of pounds worth of manufactured goods from this country, repre- senting millions and millions of pounds in wages to the working men of this country. Our Imperial markets have been valuable in the past, and they will be more valuable in the future, because more and more our Dominions will buy our manufactured goods. Foreign countries are not anxious to buy our manufactured goods, because they desire to stimulate their own manufacturers. If anyone examines our trade figures, he will find that the policy of these great industrial nations, with whom we have to compete in the markets of the world, is rather to sell to us their highly manufactured products and to establish credits in this country with which they will be able to compete with us in the purchase of raw materials in the markets of the world. When we realise this, we see that our Imperial trade is by far the most valuable part of our trade, and I welcome Clause 7 because it will result in an increase of that trade, and will be a stimulus generally to Imperial development.

May I offer one other observation in support of the proposal? With the rapid advance of science in recent years, and with the more intelligent and effective application of science to industry, the products of industry tend more and more to become perfect and more and more suitable for the purposes for which those manufactures are designed. But if the advance of science has been rapid, if the application of science to industry has been more effective, these are features which are universal; they are not confined to this country, or to any particular country. The result is that you find the manufactured products of the great industrial countries of the world approximate more and more to perfection and become more and more suitable for the purposes for which they are designed. Therefore, so far as these purposes are concerned, there is not much to choose between the products of this country and those of any other country. What does that mean? It means that advertising becomes more and more important. That is a fact which is realised by every commercial body throughout the Empire. Our Imperial markets have been, as I have said, valuable to us in the past. They will be more valuable in the days to come as they grow. The great industrial nations of the world also realise the value of these markets, and they are competing with us for the capture of these markets, and much will depend, so far as the future of trade and industry of this country is concerned, upon the efficacy of the advertising policy which is adopted.

I know of no more compelling and effective advertisement than the advertisement which the British trader can make when he announces in the Colonial markets that our wares are just as good as the wares which come from Germany or America, that they are the products of the homeland where we have decided to give the Dominions an advantage and a preference over the products of foreign countries. For that reason I welcome these proposals. I think they will tend to increase the advantages we enjoy in the Imperial markets, will result in a great expansion of the trade with our Dominions, and accelerate the development of the British Empire which must redound to the advantage of the trade and industries of this country.

4.0 P.M.

Having said so much in support of these proposals, may I quite shortly refer to the attitude taken by hon. and right hon. Members on the other side of the House? From the Debates on the Budget Resolutions I came to the conclusion that hon. and right hon. Gentlemen opposite opposed Clause 7 of the Bill and the stabilisation of this Imperial Preference because it interferes with the free and unimpeded flow of the current of trade. It is a Clause which is repugnant to their traditional faith of Free Trade; therefore, it is to be condemned, and condemned without trial. That is a narrow view. This narrow view was a characteristic of the policy of hon. and right hon. Gentlemen opposite before the War, and it is a characteristic of their policy now. But it was not a characteristic of their attitude during the War and immediately after the War? But I refer to a few utterances which came from hon. and right hon. Gentlemen opposite during the War and just after the termination of the War, when its lessons were fresh in the memory of us all. Dealing with the fiscal question and analogous questions in 1918, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George) said: they say they are going to repeal these preferences which we have given to our Dominions. They may get into power by the will of the people on those confused issues, but, if they repeal the provisions of this Clause, they will do so in direct defiance of the wishes of the majority of the people of the United Kingdom. I am confident of one thing. If this issue were put singly to the nation, unconfused by any other issue, and if the nation were asked to express its opinion upon it, there would be an overwhelming majority in favour of granting to the Dominions a Preference similar to the Preference which they have granted to us, because there is a recognition that that would be to the advantage both of us and of the Dominions, and there is also a recognition that the Dominions during the War made sacrifices which constitute a debt which can never be repaid.

From another point of view, the attitude of hon. and right hon. Members opposite is unfortunate in that it tends to associate the policy of the development of the Empire with one party in the State. I think that is bad. It is true that the development and the consolidation of the Empire is and always has been the main and dominant aim of the Unionist party, but it is a matter of national importance. One has only to look at the history of the matter to see that the future of this country depends upon Imperial development. If we are to progress, and prosper, to maintain our position among the great industrial countries of the world, it is absolutely essential that vigorously, courageously and immediately we should undertake a policy of Imperial development. Therefore, I suggest, the importance of the subject is such that it should be kept outside the sphere of party politics. In taking up this attitude, hon. and right hon. Gentlemen opposite have done a disservice, because they have tended to associate in the mind of the country this great policy with only one party in the State.

I am quite sure, whatever may be the opinion in various quarters of the House on fiscal questions, we can all join in congratulating the hon. and gallant Gentleman the Member for Dumbarton (Lieut.-Colonel Thom) on the vigour and warmth with which he has enunciated his views. I will make only one single comment on his speech. I hope, in course of time, he will cease to confuse the advocacy of what he called Imperial or Colonial Preference with the advocacy of the development of the British Empire. The things are not the same. The development of the British Empire is just as dear to the hearts of many of us who are strong Free Traders as it is to those who call themselves Protectionists. But I can quite understand the warmth with which he has expressed his views this afternoon, and I am sure that the House will be glad to hear him on other subjects.

I turn, however, away from the immediate controversy on which he has spoken with so much ability to deal with more recent events. I do so largely because of a certain degree of surprise with which the country, and I must say I myself, heard the Chancellor of the Exchequer say that the stoppage of work during the last fortnight or three weeks was going to cost the Exchequer this year only the comparatively small sum of £750,000. The smallness of that sum is out of all proportion to the injury which has been inflicted upon British industry and commerce during that stoppage. Naturally I, as I presume many observers, have been trying to make some estimate of what the country has lost in its failure to solve its industrial differences without resort to force. The stoppage of the last three weeks covered not only the railways and the coal mines, each of them responsible for the maintenance of very large numbers of our population, but the trams, omnibuses and other forms of transport on the roads; the iron and steel industries, which are directly dependent upon the coal trade, and the other metal trades, all of which have been affected directly or indirectly; the heavy chemical trade, and in a remoter degree the textile industries. All of these have undoubtedly suffered from the stoppage of work. What has been lost in the great power industry it is impossible to estimate. It will be impossible for a long time to arrive at anything like precise figures, but I think I am expressing the views of a good many people when I say that I fear the Chancellor of the Exchequer will find that the £750,000 which he thinks will be lost to the revenue this year because of the stop-page—

My right hon. Friend has quite misunderstood the answer which I gave. I said that the direct extra charge to the State would not be more than £750,000; that is, the disbursements we have to make for extra police, the civil constabulary, and the various expenses—will not be more than £750,000. I also said that I do not at the present time see any reason which makes it necessary for me to propose fresh taxation. I am not attempting in any way to estimate the enormous loss which the strike has cost, and is still costing, the trade and industry of the country.

I presume, therefore, from what the Chancellor of the Exchequer has just now said, that the loss to the Revenue on one side or the other of the balance sheet may be estimated at the present time at about £750,000?

No, it is not a question of loss to the Revenue. It is a question of additional expenditure for which I may have to propose a Supplementary Estimate to the House. That will be under £750,000.

No. The extra expenditure on one side of the balance sheet is surely the same as if there were a similar diminution on the other side. I do not wish to misstate the case or to enter into controversy with the right hon. Gentleman.

No.

What I am hoping to do is to arrive at some sort of estimate, if one can, of the loss which the country as a whole has incurred, and which must be directly reflected upon the revenue of the country. That is a matter of very prime concern to us, and it seems to me a matter of even greater importance than the temporary question of the revenue of this immediate year.

Hear, hear!

Let me try to arrive at some sort of estimate of what we have lost in our principal industries. We start with the coal trade, which has a normal output of £14,000,000 sterling a month. Taking the pit-head prices, it is clear that we have lost at least £7,000,000 there, and that £7,000,000 will not be made up by greater activity on the return of the mines to their full working capacity. The time has been lost, and it has been lost for ever. The railways, in the course of the fortnight or three weeks, have certainly lost something in the region of £8,000,000. The total monthly income from passengers and the carriage of goods works out at about £16,000,000 sterling, and they have probably lost half of that at least, and it may be a good deal more. In the pig-iron trade, which produces normally about 500,000 tons a month, of the value of £2,500,000, we may take it that at least half, and probably a good deal more, has been lost, for I fear that a good many of the blast furnaces which were damped down may not be lighted up again, and certainly those who have a direct or indirect connection with the industry know that at least eight or nine have been blown out for good, so that the injury there may be of a more permanent character. In the steel trade, the normal output of which is 600,000 tons a month, or of the value of something like £5,000,000, or probably a little more, the loss again will be in the region of £2,500,000.

For the fortnight?

I am taking the rough fortnight, because the few days afterwards cannot be cut off quite precisely. In the textile industry exports have undoubtedly been curtailed. The normal amount exported per month is about £22,000,000 sterling, and I think it is a fair estimate to say that a quarter of that, or about £5,000,000, was lost owing to the stoppage. In heavy chemicals and fine chemicals, taking the export figures alone, and remembering that each month we export about £2,000,000 worth, there has been a loss of at least £500,000. In the engineering and metal goods trade, I find it much more difficult to make anything in the nature of a rough estimate. But I think it is safe to say that about £2,500,000 has been lost in that industry alone. That makes, even with those items, and I have not added a very large number more, which were indirectly affected, a total loss of about £26,750,000. I do not suppose it is an exaggeration to say that the stoppage of the fortnight, more or less, has probably lost this country somewhere in the region of £30,000,000 worth of trade. That cannot be the whole of the tale. The docks have been stopped; shipping of every class has been held up, from necessity through lack of labour; cargoes have been delayed, held on the docks, in the warehouses or in the ships themselves; and the indirect losses have found practically no offset. Even the loss on the road services has not altogether been made up by the amazing activities of the motors on which we were dependent for a fortnight for the carriage of the essential goods and the foodstuffs on which we live.

If one takes the whole of these losses, direct and indirect, it is quite apparent that the taxable body on which the right hon. Gentleman can draw his revenue will have shrunk. It is unfortunate that there are also other effects on our foreign markets which are, after all, in some parts of the country just as important as the Imperial markets to which the hon. and gallant Member was referring. The loss there in the placing of contracts is a matter of very grave concern, and I am afraid has already gone some way. I take one example. The Finnish State Railways have for years been good customers of our's in the North of England for the coal which they use in their engines. The whole of their orders for the coal supplies for the year, which usually are placed in England, have gone to Germany. We have lost that; whether we shall regain it or not only prices and quality will decide in the future. Contracts for future deliveries all over the Baltic have passed away from this country and have been placed mainly in Germany, though some have been placed elsewhere, and, oddly enough, a few have been placed in France. Besides that, there has been an immense shipment of coal by Rhine barges down the river to Continental countries which used to be fed from our coal mines, especially in the East of England. Those are losses to British industry which we may find it difficult to regain, for once great foreign suppliers have got into these markets and buyers and engineers have got into the habit of using foreign coal, it is not so easy to regain their custom.

The building up of these connections is one of the things which has been of inestimable value to every one of our great industries. This stoppage, therefore, whatever may be our views as to the cause of it or of anything that pertains to it, has done a very grave injury to British industry and commerce, from which we, cannot expect to recover very rapidly. How soon can we hope to recover? I ask that question for one very good reason. There is a tendency, both in this country and abroad, to look on the whole of our prospects as dark, our future uncertain, the chance which we have of regaining our predominant trading position in the world possibly gone for ever. In so far as that impression is conveyed from this country to other countries abroad, it is just as well that we in this House should remember that there is another side to the picture, and that things are not altogether bad with us. They are certainly not as bad as with any one of the Continental countries. We shall undoubtedly take some time to recover from losses of trade, grave interruptions in traffic, the holding up of our commerce, and the dislocation by which the regular flow of trade will be badly injured. But we have the foundations of prosperity on which we can build.

Let us go back to the year 1921 for an example of what can be done in the way of rapid recovery. In 1921 the stoppage in the coal mines lasted for something like 13 weeks. During those weeks there was very little coal mined; the iron and steel trade came almost to a standstill; furnaces were damped down all over the country. British shipping, which normally would carry coal away from this country to the foreign markets of the world and thereby reduce the rate of freight for return cargoes, was for the time being paralysed. Throughout the whole of that summer there was a dislocation far longer than, and week by week just as serious, as anything which happened in the last three weeks here, for the coal trade actually was the key to the situation. Two remarkable things happened. The first was the very rapid recovery of coal mining itself. Before the strike broke out or the lock-out was declared in 1921, we were mining at the rate of about 4,000,000 tons a week. In July, just after the strike was over, we came up at once to 3,860,000 tons a week. Actually in the month of August, eight weeks after the strike, we had exceeded the March figures, and had regained a good deal that we had lost. In the meantime the activity of our merchants and the industry of our miners were so great that in the course of something like eight weeks we did recover a good deal of the custom which we had lost during the prolonged stoppage.

Great as has been the injury done during the last few weeks, if we have anything like the same enterprise among our merchants abroad and the same industry in the mines, there is very little doubt that we can recover from these grave injuries in the course of a very few weeks. That I take to be not a sombre prophecy, but one which is based on actual experience, and as cheering to those of us who have been reading in far too many journals of the dark side of British industry and commerce. In the pig-iron industry there was nothing like the same rapid recovery. Here, again, we shall probably find an exact picture of what will take place in the next few months Oddly enough, the pig-iron industry took about six months to recover from the serious interruption of its work. That was only natural from the nature of the trade. But whereas pig-iron recovered slowly, the production of crude steel went up by leaps and bounds. We can only hope that we shall have exactly the same experience in this country in the immediate future. Within something like four months of the conclusion of the stoppage in 1921 the output of crude steel had actually doubled in this country. If anything like that were to be the experience of the great black regions of England and Scotland now, we shall have a very rapid diminution of the numbers of unemployed.

These matters can be gauged in another way. There was, during the six months after the 1921 stoppage, a most amazing recovery of British finance. It was a time of falling prices, and yet during that period the deposits in the bank went up by very nearly £100,000,000—a most remarkable fact. That £100,000,000 may be interpreted in various ways by theoretical economists, but it did not mean that in the months after the stoppage there had been anything like a shrinkage of trade. It showed the remarkable powers of recovery of this country and the resilience with which it rebounds from every blow. There is, however, one element now which undoubtedly gives us ground for increased satisfaction, and I hope assurance, as to the rapidity of our recovery, and that is that we are on the gold standard. It really is amazing that even at this time of day, after 12 months' experience, there should still be some people who say that the return to the gold standard has been an injury. The return to the gold standard has been a benefit to commerce and everybody in it.

There is no doubt that too rapid deflation may bring a good many injuries in its train, and it was, of course, quite possible that too rapid deflation had a direct effect upon wages and upon employment. But, on the other hand, the return to the gold standard has so increased the value of nominal wages that the cost of living figures have tended favourably during the last few months. The value of the pound sterling is higher now than at any time during the last 12 years. The purchasing power of the people has increased. Of the gold standard we may say that getting on a sound financial basis is of as great benefit to the people as a whole as to those who handle high finance. [ Interruption. ] I am going on the assumption that there has been no increase in wages. If wages remained exactly the same during the last 12 months, my argument is that our having gone on to the gold standard during that period has indeed been a benefit to the wage-earner and to those who are engaged in high finance.

But wages have been reduced.

The reduction of wages does not come in this financial problem. I am only pointing out that a return to the gold standard, so far from being an injury to the wage-earning class, has indeed been of benefit to them. Whether there has been in some industries a reduction of wages is quite another question, which I am not discussing at the moment. It may or may not be justifiable, but it does not affect the point which I am making now. There is another thing which has had a great deal to do with the maintenance of the high value of the sovereign. The arrangements which were made last year for stabilising sterling exchange in New York have proved to be sound. The best proof of that is that the 300,000,000 dollars credit lies in New York entirely untapped. It has had its good effect, undoubtedly. I said at the time that I thought it was worth paying for, and I think so now. Then there is the £150,000,000 of gold in the Bank of England.

These facts have undoubtedly had a great deal to do with keeping up the reputation of the pound sterling in New York. But there is another thing which has undoubtedly tended to keep the pound sterling up to its high level, and that is that there has been so much confidence in America during the last three weeks in the temper with which all classes of the community in the United Kingdom would pass through their trials, that there has been no disturbance of the American deposits in London—a most remarkable fact. If there had been anything like a rapid withdrawal of deposits from London its effect on the money market might have been disastrous at a very critical moment, and the full effect of that would have been seen, not only in the withdrawal of American credits, but probably the withdrawal of other foreign credits as well.

The last element which has undoubtedly tended to preserve the stabilisation of our exchange has been the amazing capacity of our invisible exports We draw, year by year, perhaps something in the region of £240,000,000 as interest on foreign investments. That, of course, has remained uninterrupted. It has gone on with a regular £20,000,000 a month, or £10,000,000 during the last fortnight, and that has all been to the good. There has been, of course, the volume of invisible exports in the way of shipping freights, insurance charges, banking commissions, and so on, which go to make up a sum total of a very large figure. I presume it is not an exaggeration to say that they represent at least £10,000,000 during the last fortnight. These two enormous items of invisible exports have undoubtedly tended to stabilise our reputation in the world, for it is on reputation that exchange very largely depends. It is not purely a matter of mathematics, summing up what our exports are in one table and what our imports are in another, not merely a matter of our commitments with regard to foreign war debts or the payments made by our debtors or to our creditors abroad.

There is a great deal in the reputation which the financial world has gained of what the British temper is in money matters, even in times of great industrial storm. It is a remarkable fact, as we look back over the last three weeks, to find that throughout the whole of this terrific strain upon the temper of all classes there has been, comparatively, extraordinarily little damage done. The rioting was very largely in a restricted area and was confined mainly to classes of the population who were not themselves directly involved in the great dispute. The amount of loss of life has been almost negligible, if one may say that of any loss of life. Extraordinarily small has been the injury to human life during the past few weeks. Whatever may have been the determination with which men entered into the struggle and with which they may continue to struggle in all industrial disputes, the fact is that there remains predominant in the British mind a sense of lair play as well as of determination. There has been a growing sense throughout the country and the world that, whatever may be thought of the objects of those who were striving on the one side or the other, good temper and good feeling would predominate in the end. It was that reputation as much as anything which has tended to increase the status of Great Britain in the financial world, and it is the true basis upon which the Chancellor of the Exchequer can build his finance, and without which his contrivances, however good they may be, would, in the long run, prove to be unreliable.

I offer no opinion to-day on the details by which the right hon. Gentleman seeks to increase his revenue. I have already said that I think his Betting Duty is bad and may do real harm. I do not believe in making permanent his Preferences. I dislike a 10 years' limit to any financial proposals in this House. They ought to be dealt with year by year. But I think it is necessary that, at all events, outside observers, who have no official responsibility, who are capable of taking a large view of British finance, should declare that all this talk about the paralysis of the United Kingdom, the shakiness of its finance, and the blackness of its future, is rubbish. We have as great powers of returning to prosperity in this country as ever we have had in the past. There is the power of co-operation, which has not yet been fully exhausted and which may even now be applied to the mining industry. There is the power of enterprise by which men will take risks tempered by knowledge. There is the desire on all hands to extend the commerce of this country, not only within the Imperial boundaries, but throughout the whole world. There is the great ambition of all those engaged in industry and commerce to make their contribution towards the return of prosperity.

I am sure we must all feel reassured by what the right hon. Gentleman the Member for West Swansea (Mr. Runciman), speaking with his great knowledge of trade and commerce, has just said, and, though unable to speak with his authority, I should like to say that it seems to me also that recent happenings have cleared away from the horizon a cloud of which everyone has been in fear for months and years past. The fact that this cloud has been cleared away may likely lead to considerably better times in the future than we have had for some years past. The Finance Bill which we are now considering has this peculiarity that it covers an enormous field, and I feel bound almost to apologise to the House for confining myself to one or two actual proposals in the Bill. I wish first to deal with the proposals relating to motor taxation and the Road Fund. A great many of us have received telegrams asking us to take a certain course with regard to the proposals concerning the customs duties on imported motor cars. That is merely a Committee point which can be dealt with by an Amendment in Committee, and I do not propose to say anything further about it to-day.

Concerning the proposals as to the Road Fund, my right hon. Friend the Chancellor of the Exchequer knows—I have taken means to let him know—that I am sorry that he has touched the Road Fund at all. It has been said that it is a breach of faith to do so. It is true, however, that what one Parliament has done another Parliament can reverse. Anyone acquainted with Parliamentary procedure knows that perfectly well, but the trouble is that a great many people have said already that this is a breach of faith and they will continue to say so and we shall have to argue that question all over the country. The reason why I object to any tampering with the Road Fund is that the roads- want all the money they can get, and a great deal more, and as has already been said in this Debate, it is not an economy to take money off the taxes in order to put it on the rates. It is a fact that the cost of both classified and unclassified roads has gone up enormously and the extra cost is caused not by local use but by the wear and tear of roads due to vehicles coming from a distance. For these reasons I am sorry that the right hon. Gentleman touched the Road Fund at all, but, having said so much, I admit that his attack upon it is not nearly so bad as I expected it was going to be. With regard to the taking of the capital sum it can be said that that sum of money and more had been advanced by the Exchequer to the roads in previous years and the Exchequer, being hard up, it is perhaps easy for the right hon. Gentleman to defend his action in taking that money back again. What I do not like is the taking of one-third of the taxes on light cars. That hardly amounts to a raid on a large scale—I suppose one could only call it petty larceny—and a great deal of the money will come back from the extra duty which has been put on the heavy motor cars.

I am very glad to know that all the money taken out of the Road Fund comes off the cost of new construction and that the grants to local authorities will not be less but will actually be more than they have been previously. I would impress upon my right hon. Friend that it would be a good thing to make that fact more generally known. The figures of the Ministry of Transport are rather difficult to obtain. They are not easy to understand and they are very seldom up-to-date. I do not know why it is that, whereas one can obtain the figures concerning other Departments up to the find of last year, one cannot get the figures connected with the Ministry of Transport up to the same period and that Department always seemed to be several months behind other Departments in this matter. It is true that by the courtesy of the Minister I and a great many of my hon. Friends have been able to see these figures and to learn a great deal about them, but the outsider is without that knowledge, and the Chancellor of the Exchequer would save himself and his followers a great deal of trouble by publishing the fact that this cost falls wholly on new construction and that both classified and unclassified roads will be getting more in the future than they have got in the past. I know it is contrary to my right hon. Friend's nature to do anything in the matter of advertisement, but I would urge upon him that this is a time when it would be wise to let these facts be known as widely as possible.

Another subject on which I desire to make some remarks is that of the Betting Duty. We have heard a great deal already in the House on this subject and our letter-boxes overwhelm us with literature dealing with the matter. I am quite ready to agree that on an issue of that sort we should all pay attention to the opinions of our pastors and masters. As it happens both the Chancellor of the Exchequer and myself had as our pastor and master, Dr. Welldon, the present Dean of Durham, and I understand he is a wholehearted supporter of the duty, so that we can both support it without any want of respect for the opinions of those who taught us in our youth. The effects of this duty are not very clearly stated in the letters that one gets on the subject from various bodies, and I think there is a certain amount of prejudice in regard to the matter. When we come down to the concrete reasons for voting against the proposal, one of the chief arguments seems to be that the imposition of the duty will increase the amount of street betting. I do not believe that is so. The street bookmaker does not cater for the same class of customer as those affected, and in addition, I think the result of the duty will probably be that the police and magistrates will be stricter in dealing with those who engage in any form of illegal betting. The next argument used against it is that it would lead to future legislation which would legalise betting at present illegal. That is the old system which one has found over and over again with regard to proposals in this House, of what I may call funking the next fence but one. It is not that the present proposal is likely to lead to any harm, but that some time in the future some other proposals may possibly be made and it is the other possible proposal that the objectors dislike.

I support this proposal, in the first place, because I think it will bring in money, and it will raise that money on a luxury which anyone can forego, and which a great many people would be better to forego. I am strongly of opinion that it will lessen, instead of increasing, the amount of betting. I do not suppose the Chancellor of the Exchequer disguises from himself that it is going to be a rather difficult duty to work. There is the matter of the certificate, to which objection has been taken on both sides. Some of the people who send us letters on this matter say that by issuing these certificates the Government will give its sanction to betting and bookmaking. On the other hand, I believe the bookmakers also object to this system, and on something like the same grounds, saying that by it Government sanction may possibly be given to the "welsher." Personally I do not think there is much in either of these objections. As I understand it, the certificate gives no sort of guarantee. It will be like a motor certificate or a dog licence. If you get a motor certificate it is no guarantee that you can drive a car, and a dog licence is no guarantee that the dog does not bite, and I see that power is to be taken to refuse to renew a certificate on the conviction of the man who holds it. I presume that if a man who gets a certificate is brought before the Courts he will not get a certificate in future. There is also the question of tickets and stamps, and this, I believe, is likely to give the Chancellor of the Exchequer a good deal of trouble. I am told that this will occasion great trouble in the moment just before a race when people are rushing to make their bets in a great hurry. In such circumstances, to sort out the stamps and tickets necessary for the different bets will be a cause of considerable difficulty. I hope before the Act comes into force the Chancellor of the Exchequer will devise some more workable system than the stamp system promises to be.

The reason why I think that the duty will have the effect of diminishing the amount of betting is that it will diminish the odds, which are short enough already. I see that Lord Astor, who speaks with some authority on the subject, in a letter the other day, said that it did not make any difference to a man who was inclined to bet whether the odds against him were 20 to 1 or 100 to 6. I dare say that is quite true, but it is likely to make a great deal of difference when it is a question between "even money" and "five to four on," and when the favourite comes to a very short price indeed. Those are the cases in which people lose money. It is not so much on the 100 to 6 chances that people lose a lot of money, but they generally lose more than they can afford on what they regard as really good things Hence, I believe this tax is likely to do a good deal to counteract betting in that way. I believe that the bookmaking fraternity concur in their idea that the tax will have a tendency, not to increase, but to reduce betting. For those reasons, I heartily support the Chancellor of the Exchequer in bringing this tax forward, and I only hope he will get as much out of it as he expects to do.

Like the right hon. Member for Wells (Sir R. Sanders), I propose to commence what I have to say by dealing with the Road Fund. When discussing the Economy Bill, a number of epithets were hurled at the Chancellor of the Exchequer, which he retailed to us with a good deal of gusto later on in his reply speech. The right hon. Member for Wells has, I think, added another one to-day when he spoke of petty larceny.

Hear, hear!

As far as I am concerned, I wish to eschew the epithets that have been already used, and to suggest that in proceeding as he proposes the Chancellor of the Exchequer will be guilty of conversion. The right hon. Gentleman is no novice in conversion in the political field, and, like the Vicar of Bray, some of his conversions have coincided, in his case, with preferment, but this is the first time that conversion in the legal sense has been charged to the Chancellor of the Exchequer, and I think it adequately describes his action. There can be no doubt that the moneys provided under the Road Fund for motor taxation were provided on the basis that they would be used for the roads; there is no doubt that they are still required for that purpose, and there is no doubt that the Chancellor of the Exchequer is converting that money to his own use, not, of course, his personal use, but his use as Chancellor of the Exchequer. I said just now that the money is required for the purpose for which it was under- stood it was raised. No one can doubt that not only classified but unclassified roads need all the money they can get at the present time. In my own constituency and neighbourhood, in the surrounding districts of Leicestershire, I am told there are large numbers of unclassified roads on which money has to be spent from the rates, which are, as a matter of fact, used by a very great deal of through heavy traffic, and for which money from the Exchequer ought reasonably to be paid. In the adjoining district to that in which I live in Surrey, there is an unclassified road on which a very large amount of money will shortly have to be expended. I am referring to the rural district of Dorking, where, I am informed, a thousand tons of material and a cost of £l,500 will have shortly to be spent in consequence of the fact that this road has been destroyed by heavy omnibus traffic, and it seems to me very hard that a rate should be put on that district which, I am informed, may amount to over 6d. in the £, on a road destroyed by through traffic, and that the Chancellor of the Exchequer should not be prepared to contribute out of the Exchequer any money. That is on account of the fact that that road belongs to the unclassified series.

We are giving more money to them.

But the right hon. Gentleman is not giving as much as he could do if he were not converting the money from this Fund to other uses, as he is doing at the present time.

I had not intended to say anything today with regard to the gold standard, because I dealt with that very fully in Committee on the Budget, but, as the right hon. Member for West Swansea (Mr. Runciman) threw out a challenge on this matter, I cannot pass that challenge by without just one word. The right hon. Member for West Swansea said what a splendid thing it is for everybody concerned, because the pound now buys more than it did before. That will only be true provided in other respects people are equally situated to-day as they would have been but for that change. As a matter of fact, what has happened is that the general level of wholesale prices has fallen 13 per cent., and that fall of 13 per cent, has undoubtedly had a most damaging effect upon the industry of this country, and particularly upon the export trade. There is no doubt in my mind—and I think there is no doubt in the minds of a number of economists, including Sir Josiah Stamp—that that has had a very large part to play in the situation in which the coal industry finds itself to-day. I have spoken about this before, and I do not want to weary the House on this point, but I do contend that injury to industry, unemployment, and the threatened reduction in the wages of the coalminers are largely due to this resumption of the gold standard.

I want now to pass from those individual questions to a larger aspect of the finance disclosed in this Bill. My principal objection to this Finance Bill and to the whole policy, not only of the Chancellor of the Exchequer, but of the party opposite which it represents, is that it is all part of a system of broadening the basis of taxation. This is a process that has been going on for some time. and it is consolidated in this Bill, as I think, with disastrous consequences. Certainly, "broadening the basis of taxation" is a very pleasant expression. It suggests an edifice which at one time rested only upon a small point, and has now been spread out so that the foundations of our financial system are more stable and lasting, but when we come from that pleasant ideal down to the actual facts, we find that what it really means is transferring the burden from the shoulders most able to bear it to the shoulders of those less able to bear it, whether it takes the form of industry or of individuals. Let me illustrate that from two angles.

First, let me take the whole question of direct taxation. Those whose principal contribution to the State revenues takes the form of direct taxation are wont to point with a good deal of annoyance to the very large sums that they are called upon to pay. The Chancellor of the Exchequer has endeavoured to show that, in spite of his reductions in taxation, those who pay the direct taxes contribute as large a proportion as they ever did before. But suppose, instead of looking at it from that angle, we consider the amount contributed by direct taxes, as compared with the amount paid out in interest and charges on the National Debt. It is quite true that the whole of that which is paid out under the changes on the National Debt does not go back into the pockets of the wealthier classes of the community. Some of it goes abroad, and some of it goes to the poorer people, but in the main that does go back into the pockets of those who may be termed wealthy. It is also true that the whole of the direct taxes are not paid by persons of considerable wealth, but, broadly speaking, we may take those two receipts and payments as covering the same class of society. Let us consider the margin between the direct taxes and the Debt charges in the Estimates of the Chancellor of the Exchequer for the present year.

Death Duties for this present year are estimated to bring in £66,000,000, Income Tax £255,000,000, and Super-tax £65,000,000, or a total of £386,000,000. The Debt charges in this year are £364,000,000. The margin of the direct taxes over Debt charges is, therefore, only £22,000,000, and even if you add the proceeds of the Excess Profits Duty and the Corporation Profits Tax, you only get a margin of £30,000,000 available for the general expenditure of the State. As you go back, you find that that margin was very much greater. Last year the margin was £30,000,000, if you take the direct taxes only, and £46,000,000 if you include the Excess Profits Duty and the Corporation Profits Tax. In the previous year the figures were £40,000,000 and £50,000,000 respectively, and if you go back to 1920–21, you find that the figures were £100,000,000 and £313,000,000 respectively. In other words, the proceeds of these forms of taxation, instead of being, as they were before, largely available for the general communal purposes of the State, are now almost wholly used up in providing the Debt charges, which return into the pockets of the people who have to pay them.

Again, I said just now that the Chancellor of the Exchequer urges in defence of his policy that nearly as large a percentage of taxation takes the form of direct taxation as it did in days gone by. Bearing in mind the fact that taxes are at a very much lower rate, it shows that those in possession of great incomes have a very much larger residue after paying taxes than they had a little while back. Therefore, those members of the popula- tion are very much better off than they were before.

Now let me take another aspect. The interest on the Debt is a very great burden on the State. From another angle, it represents a very great tribute that is paid by the community to the holders of war debt. In the years that I have been quoting, it stood roughly, in pounds, at the same figure as it stands to-day. The interest on the Debt has not varied very much from something a little over £300,000,000 during the last five or six years. But while the figure in pounds has remained the same, its purchasing power has enormously increased. In 1920–21 the index figure of wholesale commodities reached as high as 380, taking the year 1901 as 100. Last year it had fallen to 185, and, largely owing to the gold policy, it has fallen to-day below 160. That is to say, it has fallen below half the figure at which it stood in 1920–21. The fall of the index figure means that the purchasing power of the interest on the Debt has more than doubled in that course of time, and, therefore, in terms of commodities, which is the only thing that really matters, the burden of the Debt has more than doubled during the last five or six years. We have made a great effort at reducing the Debt by means of a Sinking Fund, and to-day we are knocking £50,000,000 a year off the Debt, but what a very small thing that is, if at the same time the whole basis of our calculations has been changing, so that the effective burden of the interest on the Debt is more than double to-day what it was five or six years ago.

5.0 P.M.

Let us turn to the other side of the picture. I have said that the whole policy of the Chancellor of the Exchequer and of the party opposite, as re presented by finance, for the past five or six years, has been to improve the position of the holders of wealth and to throw the burden upon industry and upon labour. Let me first take the case of industry. I find, looking back over the Budgets of many years past, that it was the general practice that the Post Office should just, about pay for itself. But when we come to last year and this year, we find that that principle is now being departed from. The Post Office at the present time is making a profit of £5,000,000 a year. Hon. Members may say, "Surely you will not complain of a Department making a profit?" What I do complain is that that profit is not being used in the way it ought to be used, that is, for the relief of industry.

The cost of a reduction from l½d. to 1d. in the postage would be about £5,000,000, as I am informed, and, therefore, it would be a perfectly legitimate action to use the profit at present produced to effect that great financial reform, to the immense relief of industry all over the country. It is not being done at the present time, because it is contrary to the policy of broadening the basis of taxation. Again, there is incorporated in this Bill the fruits of the Economy Bill, which deprived employers of the penny per man in the case of unemployment insurance to which they were entitled. I have already dealt with the Road Fund, and with the effect of the 13 per cent, fall in prices—again, a very big blow struck at industry and manufacture in this country. So much for the effect on industry.

Now for the effect upon labour and the people concerned. When we come to miners, again you see the effects of the whole policy which has increased the benefits falling to wealth, and reduced the benefits falling to industry in the present difficulties of the mining trade and the result which is being demanded, of a fall in miners' wages. You have the policy, again, in the Economy Bill of reducing the amount spent upon insurance and upon education. All these things are working out in increasing poverty, or, at any rate, in preventing the people from rising above poverty. I am not one of those who pour out in this House a large number of sentimental facts which are sometimes called sob-stuff, but I do think this little extract which has been sent me by a doctor is worth reading to the House. In 1924, the school medical officer in Reading weighed all the boys of 12–71 in number—in three elementary schools in the centre of the town. He also weighed all the boys of 12–34 in number—in Reading School, a secondary school, containing some scholarship but mostly fee-paying pupils. The average height of the boys of 12 in the secondary school was 4½ inches higher, and the average weight 12½ lbs. greater than in the other schools. The point of those figures is this: In so far as you have broadened the basis of taxation, as I have been describing, you are transferring money from the poorer people to the wealthy. The effect upon the lives of the poorer people is displayed by those statistics regarding the growth of boys to which I have just referred, so that you can come down from theoretical to practical and human considerations in the matter.

Let me illustrate it by two more things. Last year we had the taxes upon silk and artificial silk. It was erroneously said, I think, by some people in opposing those taxes that they would very much raise the price of those articles to the public. What has actually happened, as the Chancellor of the Exchequer himself has admitted, has been that the fall in prices, which would otherwise have taken place, was not allowed to come into operation. But the point I want to make is that the tax presses most heavily upon the poorer people who buy the cheaper articles, because the tax is greater in proportion on the poorer articles than on the better articles.

We have in the present Finance Bill a further illustration of the same kind of proposed duty. If you take the tax upon optical glass, which is to be put up to 50 per cent., most people, I think, are under the impression that that only applies to telescopes and scientific glass, but one of the principal objects covered by this tax is the lens in a camera. If you take an expensive camera, say one of fifteen guineas, the lens in that camera is half the value of the camera. If, on the other band, you take a cheap camera, say 10s., the lens will only be 5 per cent, of the value of the camera. Therefore, when you put a, 50 per cent. tax on the camera as a whole, as is done in this Bill, you are putting a much heavier burden on the cheaper lens in proportion than on the dearer one.

What is the remedy for all this? First of all, dealing with the War Debt, proposals have been made to repudiate the Debt. Personally, I have never hesitated to condemn such a policy as not only immoral, but absolutely impossible to carry out. Another proposal has been made to reduce the rate of interest on the Debt—again a proposal which, personally, I could not countenance, because not only again would it be, I think, a breach of faith, but I think it would be quite unworkable. The proposal I put forward was the levy on capital. That, I think, was perfectly workable, and has been worked in many countries, and if it had been adopted when the War came to an end, it would have produced a most valuable result in preventing the state of things which we have at the present time. All those proposals were rejected for reasons which seemed good to Members on the opposite side of the House, but what I want to know is, what proposal have they got to prevent the state of things which I have envisaged?

May I ask which of those proposals the hon. Gentleman recommends now?

I made it quite clear that I do not support repudiation of the Debt, or a reduction of the rate of interest, but I still think a capital levy is a practical proposal. I am not, however, wedded to the particular policy of a capital levy, if other proposals can be found which produce the same effective result, namely, the placing of a special burden on those already in possession of great wealth, with a view to the relief of industry and labour. There are many proposals which, when the proper time comes, I am quite prepared to put forward either in addition to, or in substitution of, the capital levy. The point I am making now is that not only does the Chancellor of the Exchequer and the party opposite put forward no proposals in that direction, but that they are taking steps in exactly the opposite direction. The broadening of the basis of taxation is having the effect of tilting the balance against industry and against labour in favour of the possessors of what I may call static wealth. That seems to me to be injuring the prosperity of the country, injuring the promotion of industry, injuring our export trade, injuring employment, and is, I think, largely responsible for the position in which our coal trade is at the present time. Further, and above all those physical effects, it is having a very serious psychological effect upon the people of this country. I do not think Members opposite realise the extent to which the continued throwing of burdens on to industry and labour is making a psychological opposition to the carrying on of industry at the present time. The workers of this country feel that they are not having a square deal. They feel that with the progress of knowledge they ought to be improving, and improving rapidly, their economic status in the country. They are perfectly right in thinking this would be possible. One of the things which stands in the way is this idea of broadening the basis of taxation. It is this which goes in the opposite direction, and is producing in their minds the kind of feeling which we all, on whatever side of the House we sit, deplore, but which cannot be cured until the whole policy is reversed.

I propose to deal only with that aspect of the Budget which relates to the proposal to put a tax on betting, and I think I may claim that I can approach this question with a perfectly unprejudiced mind, because I am not ashamed of saying I am very fond of seeing a good day's racing; at the same time, I never have a bet, and so I have no prejudice against racing as a sport, and I have no particular financial interest in the question of betting. But, after a most careful consideration of the pros and cons, I have certainly come to the conclusion that I feel justified in adding my appeal to that of others to the Chancellor of the Exchequer to withdraw this proposal in this Budget.

I am not going to deal with the moral side of the question, because my experience is that when people commence to talk about morality, they very often descend into cant, and, to be quite candid, when I hear people and see people holding up their hands in holy horror at the idea of anybody making money as a bookmaker, and at the same time see those people quite prepared to make large fortunes by exploiting native and other labour, then I think we have descended to mere hypocrisy. I am going to approach the question from quite a different aspect. In the first place, I think that when the Government are going to establish a new principle, the taxation of betting, it ought to be introduced in a separate Bill, and not sandwiched in a Budget.

I want to point out to the right hon. Gentleman that in the Southern Irish Parliament they are also, I believe, going to propose a tax on betting; it is not going to be introduced in the Budget, but in a separate Measure. I think that ought to be done so far as the present proposal is concerned. It would be quite feasible to postpone the proposed tax on betting and to bring in a separate Measure in the Autumn Session. It would be quite feasible for the Chancellor of the Exchequer, in his speech in introducing the Budget, seemed to me to make a statement which showed that he really did not quite know the subject with which he was dealing. It struck me as very remarkable, for he said—if my memory serves me aright, and, anyhow, it was to this effect—that the tax would not affect the present racing season, and, therefore, he proposed to bring it in on 1st November. That would seem to show that the Chancellor of the Exchequer really knew nothing whatever about it, because the racing season does not end in October at all. There are three or four weeks in December during which racing goes on. There is the Liverpool Cup, the Derby Cup and the Manchester Handicaps, amongst others. Therefore, I cannot help thinking, whoever advised the Chancellor to bring in the tax at present, there must have been some misunderstanding.

Therefore, I venture to suggest that as betting during the winter months is comparatively speaking small, the tax might easily be introduced in a separate Bill, and then Parliament would have an opportunity of considering the question from A to Z, and on its merits, without being confused with other factors, import duties, and the like. I make an appeal to the Chancellor of the Exchequer for these reasons, to withdraw this proposal. If the right hon. Gentleman will not accept that proposal, at any rate I suggest that the question should be decided by the free vote of the House. I know it would probably be said that this is not the usual custom for the Chancellor of the Exchequer to follow. There I quite agree, but this is rather a remarkable suggestion. There was a Commission appointed only quite recently to consider this question of the taxation of betting. That Commission reported against it. [An HON. MEMBER: "The majority did."] My hon. Friend to my right says that a majority did; taken as a whole, the result of the Commission was that a majority was against the proposed tax on betting. It seems to be rather remarkable, the Commission having been appointed, and the Commission, including Members of this House, having heard evidence and spent a good deal of time in the matter, that in less than two years the bulk of their recommendations should be put on one side, perhaps against their wish, and we should be putting a betting duty into the Finance Bill.

That is not all. A little earlier in this Session an hon. Member who sits opposite asked leave to introduce a Bill to legalise betting. The House actually refused to allow that Bill to be introduced. It would not so much as allow a First Reading to take place in the present Session. I know, of course, it will be said by many hon. Members that this is not legalising betting. [HON. MEMBEES: "Hear, hear!"] There I rather join issue with hon. Members. It may not legalise betting to-day, but it must inevitably lead to the legalisation of betting, and I will tell hon. Members the reason. The present proposal is most unfair. It is most unjust. It cannot work. I want justice done to the bookmakers as well as to anybody else. What does this proposal suggest? The bookmaker has got to pay a duty for his certificate. He has got to put on—I am not sure about the technical description—but some kind of stamp on every betting transaction. If he does not do it, he renders himself liable to certain pains and penalties, including arrest without warrant. I may say, by the way, that I very much object to these increasing arrests without warrant. He is subject to these penalties, and yet under the law he has no right actually to recover the money. I am just wishing to show the House how impossible it will be to continue this system very long without making it somehow legal.

In addition to this, there is a very strong opinion against this Bill on the part of those who are known as the sporting fraternity, that is to say, men who take an interest in racing from its best standpoint. They look upon this proposed tax as one which will have a very detrimental effect upon the sport. I am not putting it forward as my opinion one way or the other, but, when we consider that objection as well as the objection of a large number of people, who on religious and other grounds are opposed to it, I do say that this is not a duty to be brought in and thrust through the House as a Budget proposal with the Whips on.

There is another point. I do not believe that 10 per cent, of the electors at the last election had any idea whatever that such a proposal as this would be brought forward. That is why I feel that it should be withdrawn from the present financial proposals. It could be, if the Government wish, dealt with by a separate measure without being confused with other proposals. If the Chancellor of the Exchequer cannot see his way to listen to this appeal, I think the matter should be decided by the free vote of the House. It is a new principle. It is not a question of finance in the Budget. I do say that to ask Members here to give a vote upon a question which is a vital principle to a great many and to ask-them either to do that or to vote against the Government is placing them in a most unfair position. I only speak for myself. I shall not vote for the proposal. I imagine there are other hon. Members in the same position. I do not object to the tax on moral grounds, but I do object to passing a Bill of this sort with a new principle which ought to be dealt with separately and not confused with the other Budget proposals.

I should like to say a word or two purely in regard to this duty on betting, but from an opposite point of view. There has always been in this country a moral feeling, to my mind quite unjustified, in regard to proper betting. I do not hold the view at all that bets properly made and in accordance with the limits of a person's income are bad either for the moral health of the country or for the State. We have Known of efforts that have bean made to stifle proper recreation for the community, and these efforts always recoil very seriously upon the heads of the very people who are supposed to want to improve the lives and morals of the community. Because I think like that, I welcome very strongly indeed the provision which the Chancellor of the Ex- chequer has made in the Finance Bill. In saying that, however, I do feel with the hon. Member for Exeter (Sir R. Newman) that the only logical conclusion of a tax of this sort would be to give proper and full recognition of legal betting. It seems to me that it is a totally impossible position for the State to take up, to say that they are going to license bookmakers, to make them pay £10 a year for their licence, £10 a year for their premises—if they are fortunate enough to have premises—and to put ail sorts of onerous conditions upon the bookmakers, and at the same time say to them: "We are licensing you, and putting on all sorts of conditions; nevertheless, we are not going to give you any benefit of the law of the land in respect to your calling."

It seems to me that if a bookmaker is recognised by the State to such an extent that it says, "We are going to provide a a revenue out of you," at all events that man is rightly entitled to say that the contract he makes in respect to which he is going to be taxed ought to be fully recognised by the State, and he ought to have equally the right of enforcing his contracts as well as any other man who carries on any other sort of business in the country. I should like to ask the Chancellor of the Exchequer: Does he think it possible to reconsider the whole position in regard to the Budget? Does he not think it would be fair to consider establishing the gambling laws and the lottery laws of this country on a proper and firm basis? I speak with great humility on the matter, but, as a lawyer, I am perhaps entitled to say this: that everyone of us knows that the present state of the gambling laws of this country are very bad indeed; even in regard to lotteries, people do not know quite what is and what is not a lottery. If you ask any of the most eminent counsel for their advice upon any particular lottery, what they reply is: "To the best of my opinion, I can only tell you that I think it is all right, but I take no responsibility." Surely that is a state of affairs that in a great country like this, and, if I may say so, a sporting country, is very lamentable. My first point is that I should like, from the point of view of equity and justice to this class of the community, who live on racing and betting, to say: Would it not be advisable to reconsider the whole position?

There is a further point. This Bill proposes to legalise certain bookmakers. There is no doubt about it that a large amount of money which is at present placed with recognised bookmakers is liable to go outside to street bookmakers. Naturally the people do not like this, particularly working men and working women who do not necessarily think that it is bad to bet. I know in my own part of the country—Cumberland—that men have their recreation, and they like to follow the form of the horses, and put a bob on. I do not see any particular harm in that, if they are getting some real pleasure out of it, as it may be others get out of their amusement. Does not the Chancellor of the Exchequer think this is playing into the hands of the street bookmaker? A large number of people who think they can get better odds, who are betting small amounts of money, are quite ready to say, "I am not going to pay this tax; I am going to one of the street bookies to place my money with him." I do feel that this differentiation between the licensed bookie and the other at the present time shows that you know little about the street bookie. You are likely to drive quite an amount of money from the legitimate bookmaker to the street bookie, whom you do not touch. Finally, I do feel that the time has come when we should rise above the position of looking at betting as a tremendous vice. If it is going to be allowed by the State at all, the best thing to do is to put it on a clean and proper basis. The police, who have the unpleasant job of looking round barbers' shops to see whether they can find people consorting there for the purposes of betting, could be materially relieved and given the opportunity of doing far more valuable work. By putting the whole of our betting system on a proper footing, we could relieve a large portion of what I would call petty strife in the country, and relieve the Police Courts in the North of England of a large amount of work.

In conclusion, I ask the Chancellor of the Exchequer whether between now and the tax coming into operation he will set up a Committee to go into the whole question of gambling, and to suggest amendments in the whole of the gambling law. It is most urgent, and is only fair to the bookmakers, who, after all, have to make their living out of these trans- actions. Let us remember that horse-racing in this country, which is a great national sport, could not be kept going for any length of time without betting. We all bet. A lot of hon. Members opposite, and Members in all parts of the House—I will not include my right hon. Friend the Member for South-East Leeds (Sir H. Slesser), who is sitting on the Opposition Front Bench, for I have no doubt he looks strictly upon betting—even Members on the Labour Benches like to "have a little bit on" occasionally. I have no doubt the hon. Member for Silvertown (Mr. J. Jones) has had a bet once or twice.

And will have again.

I hope it will be again and again. I know it is very difficult to get the Chancellor of the Exchequer to change his mind, but I do hope he will realise that there is a tremendous feeling in the country that we ought to rid ourselves of this hypocrisy of betting, and try to get the law of the country put straight.

When I began to go into this question of the Betting Duty and the position I ought to take up, I came to the conclusion that, most likely, I should be entirely alone amongst the Conservatives in being opposed to the tax. [HON. MEMBERS: "No!"] I was glad to find, in the course of this Debate, that I was not the solitary person that I expected I should be. I have read a good deal of the tendencious literature with which we have all been inundated, and I have read some books on the subject, and I have come to the conclusion that as soon as we—that is, those of us who are giving expression to our objections to this tax—take up a logical position, the situation goes, because all the logic, in my opinion, and all the common sense, are behind the provisions of the Bill. It is all very well for my hon. Friend the Member for Exeter (Sir E. Newman) to say he is not raising the moral issue. It is the moral issue that is raised; there is no question about it. As far as logic is concerned, people who say that it is an un-Christian and an unsocial thing to bet, because covetousness is at the bottom of betting, do not seem to have the first idea of what are the motives of the person who lays a bet; and those who say, as I have been informed in some of this literature, that if we wish to gain some advantage without giving corresponding service to somebody or to the State we are guilty of an un-Christian or an unsocial action, seem to have lost all sense of proportion.

Looking at it from the other side, those who say that if you tax betting as you tax liquor you will reduce and control it, are indulging in a false argument, because the question of taxing betting cannot be dealt with in the same way as taxing a commodity. If a man is accustomed to pay 10s. for a bottle of champagne, and finds that as a result of taxation he has got to pay 20s., he drinks less champagne —there is no question of it; but if he is accustomed to bet in terms of 10s. and he find that for every "Bradbury" he pulls out of his pocket he is only going to get odds of four to one instead of five to one, that is not going to affect the amount of betting he does as a direct tax on the commodities he consumes affects his expenditure in that direction.

I cannot help feeling that a great many of the efforts to use logical arguments against this tax on betting fall to the ground. On the one side we have the bookmaking fraternity saying that it is going to put them out of business, and on the other side representatives of the churches are saying it is going to encourage betting. Those views can be set off one against the other. In giving this matter the consideration which it deserves from one who is responsible for even a small share of the legislation of the country, I do feel that we have to take into account this very large question—which is the moral question, whether you can argue it logically or cannot—that there are a very large ram ber of people in this country who would be very deeply wounded in their most vital conscientious feelings by a Betting Duty. It is not like a political issue, such as Free Trade versus Protection, or whether there should be Home Rule for Ireland or should not; those great issues which cleave people and parties asunder are purely political questions; but this is a question upon which very strong views are held by some of the most desirable and responsible citizens of the country. Even if they are in a minority, even if their position logically is assailable, nevertheless I feel that we have a responsibility towards their attitude of mind, and that if, for the sake of a comparatively small amount of revenue, we take action which will outrage that feeling, we shall be taking, tactically and politically, an unwise course. Therefore, I join in urging upon the Chancellor of the Exchequer to withdraw this provision from his Finance Bill, and either, as my hon. Friend the Member for Exeter suggested, deal with it in a separate measure, or else take the wider point of view, which I think would be the wiser, and say that this matter shall be left alone and the necessary revenue raised from some other source.

As one of those who is not very much addicted to gambling—although I sometimes have tried my luck, and generally failed—I am not going to set up any high moral standard, for the very simple reason that I do not see much difference between those who get their income on the Stock Exchange and those who earn their living on the racecourse. All this high-falutin' nonsense about morality in connection with putting a shilling on a horse does not appeal to me with any great force. I am opposed to the Betting Duty for totally different reasons, because, under the provisions of the Budget, it is the old tale over again of there being one law for the rich and another for the poor. If you can afford to be on the telephone, if you can afford to send a telegram, if you can afford to visit private offices kept by a bookmaker, then everything in the garden is lovely from the moral point of view; and if you can afford to take a day off, losing a day's wages, and go and gamble on the racecourse, then you are a perfectly respectable citizen. But if I walk outside my house and meet a bookmaker friend and say to him, "Bill, put half-a-dollar for me on a horse "—not the horse I own, but the one I would like to—I am a criminal in the eyes of some of those who talk high morality in these matters. I reckon I am not a criminal because I have a spare shilling in my pocket and "chance my arm." I have sometimes backed myself at billiards, because I fancied myself—though after the game was over I did not. I am going to vote against the betting tax because I do not believe in differentiating between sections of the community in regard to so-called offences. Gambling is either right or wrong. If we think it is wrong, we ought to use all our power against it—[ Interruption ]—and, if we could, stop it; but I would like to see the Government that would try! They would have to begin at the top before they could deal with those at the bottom! I want to see the time come when people will be in a position to enjoy themselves without the necessity for gambling.

I wish to speak about another matter more directly interesting the people I represent, and that is the Road Fund. The right hon. Gentleman the Chancellor is probably aware that in the last 15 years enormous improvements have taken place in the docks and river of London. Over the area from Tilbury to London Bridge £15,000,000 has been spent by the Port of London Authority and those responsible for the river in order to bring London up to its present position as the greatest port in the world. The docks have been made capable of accommodating the biggest ships that sail the ocean, and the river has been improved, but the road approaches to the docks remain very much as they were 15 or 16 years ago. I am pleased to say that as soon as the Ministry of Transport came into being it proposed to improve the road transit to the docks. A great plan of it was exhibited in this House, and those hon. Members who represented London constituencies admired the proposal, and said that it was just what was needed. What is the use of improving the docks and the river while leaving the road approaches to the docks and the river practically as they were 20 years ago? The Chancellor of the Exchequer has said he does not intend to touch the money for roads already in existence, but that it was the fund for new roads that he was going to raid. We have been turned down in West Ham because, so we have been told, the roads to the docks are not arterial roads in the ordinary sense of the term. The road to the Albert and Victoria Dock and King George's Dock is not a road to Brentwood Market or to Romford Market, or even to Southend; it is the road to the Empire, because ships from every part of the civilised, and some parts of the uncivilised, world visit those great docks. This road is an absolute necessity in view of modern developments, and yet we are told that the Road Fund is to be raided, and the money allotted to us—a sum of £3,000,000 was allotted to us under the road scheme—is to be taken from us.

Any hon. Member who knows anything about the East End of London and its dockside population knows what absolute congestion exists there through the roads being too narrow to carry the enormous traffic to and from the docks. Any hon. Member who visited the scene would be compelled to admit the absolute necessity of doing something on a very large scale. The locality is unable to bear the cost. The cost of maintaining the roads is almost too much for local authorities to bear. Owing to the heavy motor traffic it is now costing about four times as much to repair the roads to and from the docks as it used to cost 15 or 16 years ago. The right hon. Gentleman ought to consider cases like ours.

We do not put ourselves forward as the only people to be considered, but here is a case where a scheme was prepared by the Ministry of Transport, where everybody accepted it, and where the local authorities concerned were prepared to pay a reasonable sum towards the cost. It is not merely the cost as far as we are concerned, but it means the development of the trade of London. Practically one-fourth of the population live in and around London, and surely we have a right to expect in regard to a great scheme like this that the Government should reconsider the taking away of this money. This has already been described as a raid on the Road Fund, but in our case it is highway robbery. Of course I do not mean that in an individual sense, and I should not like to say that the Chancellor of the Exchequer is a highway robber, but it is at any rate taking away money that is very badly needed in our own district. I hope what I have suggested will receive favourable consideration, and that we shall be allowed to go on with the scheme which has already been adopted.

There is only one point I wish to bring forward, and it is to ask the Chancellor of the Exchequer to make one small concession in connection with the new duty proposed to be placed on wrapping paper. What I wish particularly to refer to is straw-board on reels, which is commonly known as strawpaper. As its name implies, strawboard is made practically entirely of straw, and very nearly the whole of our supply of strawboard is manufactured in Holland. The thicker strawboard comes over in flat sheets, the thinner kind in reels, and is used by the importer for the manufacture of the corrugated paper very largely in the manufacture of fibre board boxes and kindred boxes of that kind, as also in the wrapping up of certain food products put up in bottles or other breakable materials of that kind.

My reasons for objecting to this duty are four in number. The first is that the. Board of Trade instituted a committee last September which finished its sittings by the end of November. They inquired into the question of duties of various types on wrapping paper, and, although I have studied the report of that committee, I cannot throughout its pages find any mention whatever of strawpaper. This is also verified by the import and export list of 1925, and obviously straw-board is not included. I know the Board of Trade have a right to insert another material or product after the Advisory Committee has finished its labours, but, in view of what the Prime Minister states namely, that only after the most stringent inquiry would any product be taxed under the safeguarding proposals, it does not seem to me that a product which has obviously not been reported upon by a committee should be put into the list subsequently. I know there is a very strong feeling amongst the importers of this product that they have not been dealt with fairly.

My second reason is that these duties are Safeguarding Duties. I have tried to discover what British material is to be safeguarded in this case, because straw-paper is not made in Great Britain. That is economically impossible because it is not a paying concern to make it from straw in this country. Some foreign countries have cheap straw, but Great Britain has a shortage of straw. In Holland the straw is close to the factories, and it is brought there by cheap water transport as against rail transport in this country. Another point is that the farmers in Holland are interested in the factories which produce this raw material, and it does seem to me that we are draw- ing rather close to Protection and away from safeguarding if there is no specific industry of this kind in this country or a similar article which is going to be taxed. I do not call that safeguarding at all. I know strawpaper was made in this country some time ago, and it was better than that which was made anywhere else, but that does not alter the fact that at the present time it cannot be made for the economic reason I have stated.

Now let me turn to the practical side—if this duty be put on, is it going to assist British industry? I do not think so. At the present time, there is a very close competition between boxes made from corrugated paper and fibre board on the one hand, and the Scandinavian wooden shook, which is also imported, on the other. The prices at present are very level. Once the duty has been imposed are British manufacturers going to take the Dutch or British article, or are they going to revert to the Scandinavian wood boxes, which will be from 10–15 per cent. cheaper?

My third reason is really a corollary of the second. A certain amount of unemployment will be produced in this country if strawpaper has this duty placed upon it. In my own constituency there is a manufacturer of corrugated paper made from imported Dutch strawpaper, and the firm very much fear, if this duty be imposed, that they will have to turn off between 50 and 60 per cent, of their employés. They employ only about 100 men, but we do not want to impose any duty which is going to turn out of employment 30, or even one or two men without the most searching inquiry, such was promised by the Prime Minsiter.

I have only one other small point to add, and that is the cost to the Exchequer. As this article was not reported upon in the original Committee's Report, it seems to me that when drawing up the estimate it cannot have been included. There are some 15,000 tons of strawpaper imported into this country per annum, and the price is about £10 per ton. This would produce £23,000 per annum had it been included in the estimate. But I do not think it can have been included. It will, therefore, be easier for the Chancellor of the Exchequer to grant this small request, because he will not be losing any of his revenue. I hope the right hon. Gentleman will be able to see his way to grant this request, or at any rate give an opportunity for the whole of the question with regard to the strawpaper to be re-examined.

6.0 P.M.

I should like to say a word or two about the Clause which seeks to levy a duty on wrapping paper. It cannot be made too clear that this proposal is not the result of an application of the British paper industry for the protection of that industry, but the application of one section only of that industry. I am speaking as one who has no connection of any kind with overseas paper makers. All my dealings in the overseas market are on the selling side. Therefore I have no interest in this matter except that of the British paper industry. That industry may be divided roughly into five main sections: the rag-paper industry, the esparto paper industry, the wood-free paper industry, the newsprint industry, and, lastly, the wrapping-paper industry. The rag-paper mills obtain rags from every quarter of the world and convert them by the skill of British paper makers into the finest writing papers. The esparto paper mills use as their raw material esparto, commonly known as Spanish grass. This particular grass is imported from Tripoli Tunis, Algeria and Spain, and it is converted into a paper which cannot be equalled by any other paper-making country in Europe or in America. Indeed in this particular article we have no competition at all. The third section is the wood-free section. This is made from a chemical pulp, that is, wood reduced to pulp by chemical means, and again in this case we make a paper which fears no competition from any paper-making countries in the world. The white page on which the OFFICIAL REPORT is printed is a good example of a wood-free paper. Next comes the newsprint section. In that section we import wood pulp, but unlike the wood-free section we use a mechanical pulp produced by mechanical means only and not chemically. We produce in that section good newsprint and book papers and we can hold our own with any paper-making country in the world in regard to this particular article. Those four important sections of the paper industry, therefore, neither require nor request protection. We can compete, and do compete successfully, in every oversea market; we can sell those papers in any market in the world, regardless of any competition. Then we come to the wrapping and packing paper section, which has applied to the Board of Trade, and, with the assistance of the Board of Trade, this Clause has been put into the Finance Bill this year. I want to be quite fair; many of my friends are engaged in that section of the industry, but, speaking generally, it is the least efficient, the least progressive, and the least enterprising section of the whole British paper industry. [An HON. MEMBER: "Why"?] Because in many cases they make paper which no self-respecting paper maker desires to make; because they often make paper which no foreigner will trouble to make; because they make paper which the enlightened consumer does not want. Paragraph 26 of the Committee's Report illustrates this point quite clearly. It says:

"As the papers made from home-produced materials are not generally imported, no direct comparison between home and importers' prices was offered in respect of them, nor did the parties go closely into the question of the terms on which the alternative wrappings like Kraft or sulphites can compete with the brown wrappings which they are tending to displace. One or two typical illustrations, however, were sufficient to show that, sheet for sheet, and on the basis of equal strength, Kraft has a decided price advantage, though its price per ton is much higher."

That is why the wrapping and packing paper section of the British industry is bringing this blemish on the whole British paper industry, and the Board of Trade and the Government are advertising to every foreign paper buyer the fact that the British paper industry is no longer able to compete with other paper-producing countries in the world. That will not do us any good with our foreign buyers. Let me now give the opinion of one of the greatest experts in this country on wrapping paper, the hon. Member for East Dorset (Mr. Hall Caine). I am glad to see him in his place; I told him I hoped to have the pleasure of reading this in his presence. He was the chief technical adviser on paper to the Ministry of Munitions during the War. He said:

"The wrapping and packing paper trade has also suffered severely during the last two years, partly because of its antiquated machinery—a paper machine never seems to be used for the manufacture of wrapping paper until it has exhausted its use for the manufacture of other classes—and partly because of the change in the class of wrapping paper demanded. Before the introduction of Kraft paper, the British paper manufacturer could hold his own, but, in recent years the importation of Kraft and other wrapping papers manufactured from wood pulp has dealt a severe blow to the old-fashioned type of wrapping paper hitherto made in England. Kraft paper can, of course, and will, be made in this country, but to be competitive it must be manufactured on modern fast-running and up-to-date machines. There are few of this class of machine in British wrapping paper mills."

With every word there expressed I heartily agree.

Will the hon. Member say on what date that was written, and where?

It was written, I think, two or three years ago. It was not any ill-considered after-dinner speech of my hon. Friend; it was a signed article by him in the "Manchester Guardian Commercial" about two years ago. What was true then is even more true to-day. I have just this moment heard from the London Chamber of Commerce that a consignment of vulcanised fibre has been held up at the London docks. Vulcanised fibre is made from pure cotton cellulose, that is to say, from paper made from cotton rags. By no stretch of the imagination can it be described as packing or wrapping paper. But that vulcanised fibre, made from paper, has been held up in the London docks because it is made from paper. It cannot be described by any Customs officer. as in any way resembling wrapping paper. To begin with, it is much too expensive to use for wrapping paper, and, secondly, it is entirely different in character. When is all this tomfoolery on the part of the Board of Trade going to end? Consignments of other kinds are being held up all this week. I have been told of various cases in which paper that is not wrapping paper, and could not be used as wrapping paper, is being held up because of this impending duty on imported packing and wrapping paper.

For a very short time this evening I wish to trouble the House to consider the question of the evasion of Super-tax and Death Duties. Had I been called immediately following one of the speeches on the Betting Duty, I should have apologised to the House for taking them on to a rather dull and uninteresting subject, but I think that anything will compare favourably with the discussion on Kraft and wrapping papers to which we have just listened, with all due respect to the ability with which the last two speakers expressed their views. About a year ago I put a question to the Chancellor of the Exchequer as to whether his attention had been drawn to the numerous cases of the formation of limited companies to take over the private estates of various persons, and whether he had taken into account the loss of revenue which was being thereby incurred. I am very disappointed not to see in the Finance Bill which is now before us any further strengthening of the law, with a view to closing the meshes of the net through which these large fish are escaping.

I would like at the outset to make it clear that I do not consider that the formation of a company, or the acquisition of a derelict company, to take over the private estate of a person, of necessity implies any evasion of tax. As the law stands now, it is undoubtedly very inequitable that a rich man with a big estate is not allowed, if the estate be owned by him personally and not by a limited company, any expenses of management—secretaries, clerks, agents, and so on—in arriving at his Super-tax liability. In the case of a very rich man, it is an absolute impossibility for him to manage all his affairs himself, and it is inequitable that all the expenses of managing them should be disregarded in arriving at his Super-tax liability. That, no doubt, may have given rise to the original idea of forming companies to take over these estates. But what was originally legitimate has now gradually extended into what, in my opinion, is illegitimate.

The Legislature has recognised this, and has made, if I may say so without disrespect, a very feeble effort, in Section 21 of the Finance Act, 1922, to cope with some of the evils which have crept in in regard to this tax evasion. I want to make it clear that I am not referring only to landed property, but to the whole of the investments and assets of the persons concerned. Individuals who had a legitimate motive for forming companies to take over their estates, in order to ensure that they should only pay Super-tax on their real income—that is to say, on the dividends that the company was able to pay to them out of the income from what had previously been their property—found that, by the company abstaining from the payment of dividends, they could avoid Super-tax altogether, except as regards such money as they absolutely needed to live upon. In other words, they could arrange that the company which they owned should only pay such dividends as were absolutely necessary to provide them with the minimum of cash that they required. It was to deal with such cases as this that Section 21 of the Finance Act, 1922, was passed. It provided that

Worse than all these cases I have drawn attention to is one I saw recently, which I can put in these terms. The whole of the investments and property of a certain individual were sold to a company for a large purchase price which was to be paid by the company to this indi- vidual in 40 or 50 half-yearly instalments of a certain amount in cash without interest. The effect of that transaction when it came to be worked out was clear. The details of the investments were not published, but imagine that it was £2,000,000 of 5 per cent. War Loan—nothing more and nothing less. The £100,000 income from this £2,000,000 of War Loan was liable first of all to 4s. in £ Income Tax—that is £20,000—and Super-tax on the balance of £80,000, to the extent of something in the neighbourhood of £30,000, making the total taxation nearly £50,000 out of the £100,000, He then sold the War Loan, the purchase price to be paid in instalments spread over 25 years. The company was liable for Income Tax at 4s., but it had no Super-tax to pay as a company. It was able then to enter into a contract with him, carefully worked out in advance, that it would pay the purchase price of £2,000,000 by half-yearly instalments at the rate of £80,000 a year. That was not income. It was the payment to him by instalments of a capital sum, on which he was not liable for a penny piece of Super-tax. We must always be prepared for a certain amount of tax evasion on the part of all classes of the community, but I contend that whereas we are accustomed to knowing that possibly some of the smaller fishes, who ought to be caught, may slip through the meshes of the net, it is entirely the wrong way round when we have the net and it is some of the big fish who can slip through, because the expense and trouble of taking such steps as those I have outlined make it not worth while, to anyone but a person with a very big income.

It is not much use criticising if you have no constructive suggestion to make, and I suggest that without waiting another year, when the thing will have gone further and further, a Clause should be inserted in this Finance Bill altering and strengthening Section 21 of the Finance Act, 1922, or alteratively replacing it entirely by a fresh Clause. I felt impelled to raise this matter in the House, and I hope it will reach the ears of the Chancellor in due course. Where I have addressed working-class meetings up and down the country combating the views of our Socialist friends opposite, I have always pointed out that we not only have 4s. Income Tax, but a Super-tax rising to 6s. in the £, and that the very richest people in the country are paying approximately 10s. in the £ on their income. That is true of the bulk of the rich people of the country, and I think it is the duty of the Government to put a provision in this Bill now to ensure that it shall be compulsorily applicable to the small minority of the rich people of the country who are seeking to evade it.

I should like entirely to support the hon. Member, but I am afraid the result of his speech may not be quite what he intended, because, as he informed us, he used the argument as to the weight of taxation borne by the wealthy classes when he was trying to oppose Socialist policy. While he was speaking, I could only think the cases he was giving would probably be exceedingly good to use on the Socialist platform.

I trust that if the hon. Member makes what I consider to be not a particularly sporting use of my remarks, he will do me the justice of adding that the Conservative speaker in question was urging the Government to tighten the law to prevent such abuses.

If the hon. Member had allowed me to finish he would have seen that it was very much on those lines that I was anxious to support him, because I think the illustration he has given is exceedingly useful as showing what is taking place in regard to evasion of taxation. I entirely agree with him that there are wealthy people who are paying their taxation in a perfectly straight way, and it is people like those the hon. Member complained of who are really little short of a curse to the country. In the business world you come across men of the kind he has referred to, who are always trying to see how near they can get to the law so as to avoid certain payments, and you always discover that people who are perfectly innocent are bound to suffer from the Regulations which have to be brought into effect in order to counteract the sharp practices of people similar to those the hon. Member referred to. I very much hope the Treasury will consider how far this practice is being carried out, and if they are convinced that it is really going on to any great extent—and I am inclined very much to agree with the hon. Member, though my experience is nothing like his, not being in the same class of business—they will tackle the thing at once and not allow it to drift on for another 12 months, because it does no good to anyone and it would be invaluable if the law could be tightened up and people who were bound to pay should be made to pay, in justice to others who are honourably playing the game.

I entirely agree with the right hon. Gentleman the Member for Swansea (Mr. Runciman) that it is well to have put before the House a fairly hopeful view of the trade position at present. At the same time he did not mention certain special circumstances which give rather a different complexion, and at any rate have to be borne in mind when we look at the picture he has painted. One of those circumstances, of course, is that we have still untouched the vast mass of unemployment. The other, and a new one is this. Many of us had begun to hope that the position on the Continent was getting rather better from a financial standpoint, and speaking personally—it may be that other hon. Members who are better acquainted with the subject were expecting it—it has been a great disappointment to me in the last two or three months to find that in certain countries whose exchanges one had hoped had become fairly stabilised for the time being—there has been not alone the serious slump that has taken place in France but Belgium, Poland and Italy, whose exchanges have been fairly stable for a number of months, have had breaks in them which we know will only add to the difficulty of those who are doing trade with those countries. There are certainly factors, looking at the whole position, which must compel the House to view the situation very gravely.

The right hon. Gentleman also referred to the way in which the money market had faced the difficulties of the last fortnight. I think possibly there is one explanation in which hon. Members opposite will not agree with me, that the suggestions made in certain quarters that the strike was of a revolutionary character were not taken seriously by those interested in the financial world, and that if they had been really believed in, as certain papers desired they should be believed in, seemingly, the financial position would not have remained as it is. But the wonderful calmness of the country and the way the strike was taken convinced the large mass of the owners of stocks that the disturbance was not revolutionary, but was an industrial strike such as was planned by the leaders.

The Budget seems to me to be a selection of items rather like a Tit-Bits newspaper. You have a Betting Duty and safeguarding, and you jump from one subject to another in a way that is rather different from the Budget of last year. I am rather impressed with the futility of the two suggestions attempting to stabilise taxation. I cannot think how the Chancellor imagines he is going to bind the nation definitely for 10 years by inserting a Clause to say that Imperial Preference and the Safeguarding of Industries are to go on for 10 years. What is to prevent any Government, in another Budget, before the 10 years are out, if they so desire, anulling and cancelling these Clauses? However, I suppose the Chancellor thinks in some way he is securing a certain policy. If that is what he wants, he may possibly secure that end, but a succeeding Government can alter the policy if they so desire. I agree that at the end of 10 years probably the policy of the Conservative party will be to support the Safeguarding of Industries, but I should not be at all certain that that would be the policy of the Chancellor of the Exchequer. I cannot imagine that anyone would be prepared to say what his policy might be in 10 years on any of these questions.

One of the main items in the Budget proposals is a hindrance to trade. During last week, we heard of the hold-up of the docks. I was rather amused when an hon. Member was speaking from those benches to hear that we were having another hold-up. This time I concluded it was the Chancellor of the Exchequer who had taken the place of the dockers in regard to the hold-up he is complaining of to-day. The mass of regulations on the safeguarding of industries and the preference and protective measures the party opposite are introducing, seem to be only a perpetual hindrance to the development of our trade. We see small matters mentioned in the Budget—small technical questions. A Clause ought to be put into the Bill authorising the Treasury to exempt certain articles if they are so small that it is not worth while troubling about them. One proposal that is being dealt with under the safeguarding legislation is the very important question of glass. If I remember rightly, before the War the London County Council had been asked to develop the study of glass in one of their large polytechnics. At that time, the County Council said that the study of this question was a national matter and they asked the Government if they would make a considerable grant of money in order that this study of the manufacture of glass might be developed at the polytechnic. The Government refused to do that, and while the London County Council and the Government were deciding who should pay for the enlargement of the institute, the War came on and the problem of lenses became very acute.

It seems to me that in these industries—I have been reading the Report of the Safeguarding dealing with glass—it is much more satisfactory if we want to help an industry, to help it by a method which I admit is not to be defended on financial grounds. If we want to have an industry in this country like the glass industry, which was so needed during the war, it is infinitely sounder to give a subsidy than to have a protective tariff. In the Report dealing with the safeguarding of glass, over and over again it is stated that glass of the highest quality is manufactured in this country, but nobody seems to want to buy it. It is also stated that in Germany there is a demand for this glass. Before the war in Germany it was specially required for military purposes, but that demand has gone, because the German Army is now smaller than the English Army. If we want to get these industries going, and if they cannot be made to pay on an ordinary economic basis, it is far better that they should be treated in the way that we are tackling the sugar beet question than in having duties imposed which only add to the block on the Customs frontiers of this country, by adding further items to the very many small items, affecting a very limited number of people, which block the Customs frontiers.

When the Chancellor of the Exchequer deals with the question of the licensing of motor vehicles, I hope he will give thought before he imposes a heavy duty upon a vehicle which I know many hon. Members, especially those who drive motor cars, regard as a perfect abomination. I refer to the char-a-banc. Although it may be a very great nuisance on a country road when one is driving a motor, to discover that a char-a-banc party is ahead, when we look at the matter from the standpoint of the crowded districts of a great city like London, we have to bear in mind that there are crowds of men and women who had not seen the countryside of England until the char-a-banc came along. They are now seeing the country in a way that only those who have private motor cars have been able to see it. The char-a-banc provides a cheap form of travel for these masses of men and women, who find great enjoyment from it. I hope the Chancellor of the Exchequer when he is imposing extra taxes will bear in mind that it is not merely a question of enjoyment to these people, but a very important matter of health to them, and that taxation which is going to put any hindrance in the way of this healthful form of recreation and enjoyment is prejudicial to the well-being of the country.

In regard to the Betting Duty, I would like to endorse what was said by one of the hon. Members on the benches below the Gangway on this side. When we look at the proposals of the Betting Duty, we must ask ourselves whether they correspond with what the Chancellor of the Exchequer said when he informed us that this duty did not legalise betting. I entirely agree with what my hon. Friend said, that if we look at the Regulations that have to be entered into and the restrictions imposed upon those who wish to take part in betting as a bookmaker, the effect is very clear. The strangest thing of all is the Clause dealing with police entry into buildings where betting is being carried on. I suppose that at the present time the only power the police have to enter any place is when they go into some club where betting is being carried on in an illegal manner. Now, strange to say, the police are to be empowered to go into any of these buildings where betting is being carried on, and they are to go there, not for the purpose of stopping it or arresting those taking part in it, but to see that the law is being carried out in regard to the betting that is going on.

If we are going to split hairs on legal points, it may be proved that this duty does not legalise betting, but to the ordinary man in the street it does legalise betting, with the result that the people will look upon betting as a part of our legal system, quite as much as the drink trade or any other trade which is carried on and is taxed. For these reasons I think that what was said by the hon. Member for Silvertown (Mr. J. Jones) is of very great importance, because once the idea is held generally that betting is legalised, then we at once come to the question of street betting. If we are going to have legalised betting, we must tackle the whole problem and deal equally with every section connected with it. What we are doing at the present time, however much the Chancellor of the Exchequer may try to argue that he is not altering the law, is that a vast mass of men and women will say that he is legalising betting, and will look upon it as having been legalised.

What will inevitably follow will be that the Government will not be content to let the law remain in the condition in which it will be when we have passed this Finance Bill, and in two or three years' time they will propose that the whole system should be legalised. I am not going into the question of whether it is or is not well to legalise betting. I am opposed to it, but there is a great deal to be said for legalising betting. I put it to hon. Members opposite who favour the legalising of betting that it would be better to realise that the whole principle of this Bill really legalises betting, and the people who wish to make a protest against it ought to make their protest now, because it will be futile a year or two hence when perhaps the small man in the street is going to be dealt with by the Government for people to object, because the whole principle of the thing will have been given away in this Bill.

The Chancellor of the Exchequer referred to the fact that the Trade Facilities Act is not to be renewed. That statement met with a good deal of approval in the House. I hope the right hon. Gentleman has made a mistake. I recognise the force of the criticisms that have been made against this Act, but the way in which it has been worked is only a secondary point. The hon. Member for Ilford (Sir F. Wise) has stated that the creation of stock of this kind, with the Government guarantee behind it, to a certain extent must influence the standing of Government stocks. I think that side of the question has been over accentuated, because with the enormous sums of money which the Government have in stocks, it seems to me to be making too much of it to say that the stock created by the Trade Facilities Act will outweigh the essential thing, and that is the providing of anything that will help to keep trade going and to find work for the unemployed. On these grounds, I regret that the Chancellor of the Exchequer has told us that that Act is to come to an end in a year or two's time when it is due to expire.

The fundamental question in regard to this Budget, as of all Budgets, was raised by the hon. Member for Leicester, West (Mr. Pethick-Lawrence) when he dealt with the whole question of how taxation is distributed among those who have the money and those who have not. Hon. Members opposite would do well to consider the very interesting figures given by the hon. Member, because possibly they do not fully realise how these facts in regard to taxation and the distribution of wealth are being talked about in quarters which 20 or 30 years ago never troubled their heads or thought it was of any importance to know anything about taxation, or what was being done with the wealth of the country. Behind the great movement of the last fortnight and the response to the strike called by the trade union leaders, there was great dissatisfaction as to the distribution of wealth and the fact that so many men and women in this country were feeling that they were being asked to accept reductions in wages, whilst they knew perfectly well that the policy of the Chancellor of the Exchequer year after year had been to give relief in taxation to classes of men and women who were best qualified from the amount of their wealth to have borne that taxation. We have had a warning in the last fortnight, and I suggest that it is a matter that hon. Members opposite might carefully consider.

I confess that the Debate this afternoon as far as it has gone has come upon me as a very pleasant surprise. This is one of the chief Government Measures of the year, if not the chief Government Measure of the year, and when I saw the Order Paper I fancied that we must be in for a rather formidable task, for I saw that the Opposition had put down an Amendment for the rejection of the Bill. I thought when I heard that the right hon. Member for Central Edinburgh (Mr. W. Graham) was going to open the Debate that we should have had a very thoroughgoing criticism of the proposals in the Bill. I found also that four or five leaders of the Liberal party had also put an Amendment on the Paper, which presumably they would have moved if they had had the opportunity. That Amendment traverses every salient part of the Budget and criticises all its proposals. The list of those associated with that Amendment is headed by the name of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). I hope the right hon. Member for West Swansea (Mr. Runciman) will not be offended if I speak of him as his leader. The Leader of the Liberal party has not honoured us with his presence to-day, and consequently, I suppose, took no interest in this particular Amendment. But the right hon. Member for West Swansea made a most interesting speech which had no relation whatever to the Amendment which stands in his name on the Paper. In fact, I do not think throughout his speech, with perhaps one single exception, that there was a word to which I, or the Chancellor of the Exchequer, could take any exception.

On the contrary, in the present circumstances it was a most helpful and useful speech. He showed very conclusively the tremendous damage likely to be inflicted on the trade of this country by the recent industrial crisis through which we have passed, and he went on to give good reasons for saying that we were not to take too pessimistic a view of the situation and that in spite of the crisis through which we had just passed he thought the country might rapidly recover. That was certainly not an attack upon the Bill, the Second Reading of which is before the House to-day, and, therefore, I find so far as the attack of these two right hon. Gentlemen is concerned that my task is a comparatively easy one. The right hon. Gentleman the Member for Central Edinburgh also made, as he always does, a very thoughtful and careful speech, but he made no great attack, so far as I could follow him, on the actual proposals of the Bill. It is true he gave reasons for objecting to the provisions which have been made in the Economy Bill, and which no doubt underlie the finance of the year, and to that extent it is relevant to the proposals we are now making. Otherwise, the only two real criticisms which the right hon. Gentleman made were, first, that we have not inserted in this Bill drastic proposals for dealing with tax evasion— a subject also dealt with by the hon. Member for South Salford (Mr. Radford)— and, in the second place, that we have not made provisions which will impose heavier taxation on the agricultural industry. He complained that we have not made arrangements for the assessment of those engaged in agriculture which would impose a heavier burden of Income Tax upon them. Unless that was the meaning of his objection to the option now given, then the only alternative in his mind is that the farmers when they do exercise the option should exercise it in a way which will impose upon themselves the higher taxation which is necessary.

The Second Reading of the Finance Bill is, of course, one stage only in the very long and elaborate process by which the finance of the year is supervised and controlled by the House of Commons. But the Second Reading of the Finance Bill, like all other Second Readings, is not really concerned with minute details, but with the general principles contained in the Bill. Acceptance of the Second Reading does not involve the acceptance of every detail proposed in the Measure. On the other hand, the rejection of the Second Reading would involve the disapproval by Parliament of the whole scheme of finance for the year proposed by the Government, and, consequently, disapproval of the Government which brings it forward, and, therefore, if the House—I do not think it is very likely to do it—were to reject the present Bill it would mean that they wished the finances of the country to be placed under the control and management of one or other of the two parties opposite, or of the two parties in combination. Has the House any very clear idea what that result would be? Has it any clear idea of the financial proposals of the parties opposite? Is it even sure that the two parties above and below the Gangway respectively have any financial policy in common? I do not think there is any indication from the speeches we have heard to-day that there is any more agreement between them than there is between either of them and ourselves.

We have heard from the hon. Member for Leicester, West (Mr. Pethick-Lawrence), who no doubt is a person of influence in the party opposite on questions of finance, that he still regards the Capital Levy as the means, or the chief means, of dealing with our financial difficulties. I heard a speech not long ago from an hon. Member opposite who went a good deal further, and evidently regarded a repudiation of the National Debt, in some form or other, as the chief way out of our difficulties. But of this we may be quite certain, that, although our financial burdens at the present time are heavy enough—we all know that the taxpayer is groaning under the weight of taxation—if hon. Members opposite were to be made responsible for the finances of the year it would be a case of the taxpayer exchanging chastisement with whips for chastisement with scorpions. Hon. Members opposite have certain economies which they occasionally tell us they would make, but they never leave us in any doubt that the expenditure which we should be called upon to bear would be infinitely heavier than anything contained in the present Bill or likely to be ever proposed by the present Government.

The right hon. Gentleman opposite, in his opening speech, told us, and we have often heard it from the benches opposite, that he looks upon a drastic cutting down of armaments, which means national defence, as the chief means of escaping from the heavy expenditure of to-day. It is quite true that the right hon. Gentleman went on to give us what I thought was a very reasonable and moderate view as to the particular economies that might be made. He spoke of a sum of £5,000,000 a year for three years as being a possible economy on the fighting Services. Well, I do not think that is a very extravagant hope, and I am quite sure that my right hon. Friend hopes to effect economies—I do not know whether they will reach that figure or not. I am sure of this, however, that any economies that can be made either in the fighting Services or elsewhere will be made so far as it is possible from year to year. We on this side of the House cannot, and will never, agree with hon. Members opposite that economy in the fighting Services, that is in national defence, can or ought to be carried out recklessly and merely for the sake of reducing expenditure, altogether apart from the requirements of those Services. The other economies of the right hon. Gentleman opposite would be the result of an increase of revenue and would come from the increased taxation which he wishes to place upon the agricultural interest. That is not an expedient to which we on this side of the House can accede. We regard the agricultural interest as fully taxed at present, if not overtaxed, and we cannot accept the idea that any change of the sort proposed by the right hon. Member opposite is a possible expedient for increasing revenue at the present time.

I am sorry to interrupt the right hon. Gentleman, but that is not the real point. The whole point was the unanimous recommendation of the Royal Commissions to put the taxation of agricultural land on exactly the same basis as all other industries in this country.

Does the right hon. Gentleman not think that the carrying out of that recommendation would have the effect of placing heavier taxation on the agricultural industry? That is the point.

But surely the right hon. Gentleman will not dispute this proposition; that there can be nothing unfair in putting taxes on profit actually earned. That is the whole basis, and nothing else is before us in debate.

I am not speaking as to whether it is fair or not. I am asking the right hon. Gentleman whether that is his intention. Our intention is not to do anything which would at the present time increase the taxation, which we think is already ample, upon the agricultural interest. The real principle which we are called upon to assert in the Second Reading of this Bill is not so much any changes in taxation as changes in financial administration. The Bill we are asking the House to accept to-day makes no change in the great staples of taxation in this country. The great pillars upon which rests the structure of the financial edifice are not to be touched. There is the Income Tax, the Super-tax and the Death Duties, the great trio of direct taxation; and there are the Duties on tea, sugar, tobacco, spirits and beer. All those great staples of taxation are not touched at all in the present Finance Bill, and, therefore, I may say that so far as changes in taxation are concerned they are, comparatively speaking, unimportant. It is true that we also continue the Key Industries Duties, and we continue the McKenna Duties, with very slight alterations, and, therefore, the main scheme of taxation remains, and will remain after the Bill is passed, exactly as it is at present.

7.0 P.M.

As regards the payment of Debt, my right hon. Friend has vindicated his extreme orthodoxy by the proposal which excited the criticism of the right hon. Member for Colne Valley (Mr. Snowden), but which, at all events, has made good the inroad that the coal subsidy made upon the provision for the redemption of Debt, in the way the Chancellor of the Exchequer described in opening his Budget, and a Clause of this Bill gives effect to that proposal. There are only three changes in taxation which, to judge from the Debate this afternoon, are likely to excite very much debate. There is, first of all, the duty to be placed on wrapping paper. Two hon. Members have criticised that proposal, and one of them suggested, if I recollect rightly, that this proposal ought to have been placed in the Safeguarding Bill. As a matter of fact, the wrapping paper duty has passed through exactly the same ordeal as the other safeguarding duties imposed last autumn, and it was only because of the exigencies of Parliamentary time that it was not then included in that Bill. It has run the gauntlet of the Committee which examines these articles and trades suggested for safeguarding; it has passed through that ordeal and is now included in this Bill instead of in the Safeguarding Bill, and the whole procedure and machinery for bringing it before Parliament is exactly the same as in the case of the other duties passed last year. When the Bills come into Committee, no doubt those considerations which hon. Members have brought forward this afternoon will be very carefully considered, but those criticisms certainly do not go to the principle of this Measure, and are essentially Committee points.

Then there will no doubt also be, when we get into Committee, a good deal to be said about bringing commercial motor cars within the McKenna Duties and the increased schedule of duties on the heavy motor vehicles. These again are essentially committee points and I will only now say, in order to forestall any misunderstanding on the point, that the bringing of commercial vehicles within the scope of the duty is not for safeguarding purposes but is entirely in order to escape the administrative difficulties, in fact the impossible difficulties, created in the case of motor cars when this particular species of car, with the parts, were excluded from the duties. It is interesting to remember that it was the original intention of Mr. McKenna to have included these cars and they were only subsequently dropped out because it was felt that it was better to give an exemption to those who were engaged in commerce. Therefore, so far as the principle of safeguarding is concerned, no question arises with regard to that.

There will also no doubt be a good deal of discussion when the time comes over Clauses 40 and 41, which deal with the Road Fund. We have had some criticism of that this afternoon, and one from my right hon. Friend the Member for the Wells Division (Sir R. Sanders). I am glad to see that the idea that in this matter there has been anything in the nature of a breach of pledge appears now to be dropped. [An HON. MEMBER: "No!"] I do not know whether anybody takes that view, but certainly no one who has addressed the House this afternoon has ventured to bring up that idea. I notice that there are a good many Members who, in quite a different connection, have emphasised the perfect freedom of one Parliament to reverse the proceedings of a preceding Parliament. The right hon. Gentleman the Member for West Swansea has insisted on that in reference to Imperial Preference. What applies to one applies to the other. If Parliament is free to reverse the Imperial Preferences of a former Parliament, it is equally free to reverse the arrangements that may have been made in former years in quite different circumstances for dealing with the upkeep and maintenance of the roads. The Bill carries out the decision of my right hon. Friend the Chancellor of the Exchequer to transfer from the Road Fund "surplus" to the Exchequer the sum of £7,000,000. Let me mention, in case it should have escaped notice—though it was mentioned by my right hon. Friend in opening the Budget—that on no showing whatever can that be regarded as a breach of pledge, as hon. Members opposite call it.

"Larceny" was the word used.

I notice nobody else did, and I think it was the right hon. Gentleman opposite who used the word "steal" in former Debate. Considering that shortly after the Armistice a sum of £8,000,000, in regard to which there was no sort of contractual obligation, was granted from the Exchequer to the Road Fund for the upkeep of roads, the most and the very worst that can be said about this £7,000,000 is that the Exchequer now, owing to altered circumstances, has taken back, not the whole, but seven-eighths of the gift which was then given. In this Bill and the proposals made for dealing with the roads, there is no departure whatever from the principle, to which we still adhere, that the users of the roads ought to pay for their upkeep, but what we are saying now is that, in addition to mere use and wear of the roads, there is a pleasure and luxury element in the use of motor cars, and it is perfectly reasonable that we should make a division—I do not say a division that can be scientifically accurate, but at all events a division—between that element which is the element of pleasure and luxury, and the element which is mere wear and tear of the roads. Therefore, we say that the element which is attributable to pleasure and luxury should go into the Exchequer. But the Road Fund really does not suffer, as compared with what anybody expected it to enjoy at the time it was formed. Its income will be infinitely larger, even after this terrible raid that is to be made on it, than anybody ever anticipated in 1920 and even in the present year its income is seventeen and a half million pounds and there is a larger sum for the maintenance and upkeep of the roads than was estimated last year and a larger sum than was expended last year.

In addition to that, there is another point—and I do not know whether my right hon. Friend the Member for Wells, who is so interested in this matter, has borne it in mind. A sum of, I think, £1,250,000 has been set aside by the Chancellor of the Exchequer in this year for the use of unclassified roads, especially in rural districts. Those are provisions which are, I think—I was going to say generous, but at all events very fair, provisions under the existing financial circumstances of the country, and I do not think anybody can say that, having regard to the necessities of the country, and the demands on the Exchequer for administration in all its branches, that that represents by any means a mean sum to be appropriated solely to the upkeep and improvement of the roads.

I said just now that it seemed to me that the main principles of this Bill, with which we are concerned on Second Reading, do not mainly consist of any changes of this sort in taxation, and that they really depended a great deal more on the alteration of the permanent law with regard to taxation, especially as seen in two principles. I refer especially—and now I come to what was said by the right hon. Member for West Swansea—to one principle embodied in this Bill which is one which I am quite certain will be warmly welcomed by Members on this side of the House, and that is the seventh Clause which for 10 years stabilises, so far as we can do anything to stabilise it, the system of Imperial Preferences, and in this connection I would like to say with how much pleasure I listened to the very able maiden speech of the hon. and gallant Member for Dumbartonshire (Lieut.-Colonel Thom). I think it was a speech which shows that when the House at all events is discussing these matters of Imperial concern, he will be able very materially to add to the information of the House.

The right hon. Gentleman the Member for West Swansea, in referring to this principle of stabilising—and it was referred to by some other Members, including the hon. Member who spoke immediately before me—emphasised the freedom which Parliament must have to deal with these matters in the future, whether we stabilise or not. That is perfectly true. No one suggests that any thing we can do will tie the hands of any future Parliament but if I may, with out offence, refer to the Leader of the party of the right hon. Gentleman the Member for West Swansea, I would ask him how he reconciles his view with the action of his leader. I am very sorry that the right hon. Gentleman the Member for Carnarvon Boroughs is not here, but his consistency in all political principles is known to everybody in the House. It was only four years ago that the Leader of the Opposition—

What about the Chancellor of the Exchequer? That was only two years ago.

It was only four years ago that the Leader of the Liberal party did exactly what we are doing now and which offends the right hon. Gentleman the Member for West Swansea so grievously, because in 1921 the present Viceroy of India, who at that time was Under-Secretary for the Colonies, paid a visit to the West Indies. While he was out there he was authorised by the Government, of which the right hon. Gentleman the Member for Carnarvon Boroughs was Prime Minister at that time, to make an announcement in the West Indies that the measure of preference which was given at that time to the Dominions and Colonies should be stabilised for 10 years at the existing rates. When he came home in 1922 the following year, in this House, actually speaking on behalf of the Prime Minister, Mr. Wood repeated that this system of preference was to be continued for 10 years.

Now the right hon. Gentleman the Member for West Swansea, notwithstanding that clear action of his leader, tells us that this is a principle which ought to be resisted and then he goes on to give us this warning that not merely what the right hon. Gentleman thinks—though that is very important, too—but more important to know what his Leader thinks, and, therefore, what he would be likely to do if the time came when he again was at the head of a Government with different political and fiscal opinions. I think we are entitled to know what the Liberal party stands for on this issue.

You had better ask the Chancellor of the Exchequer. He is most likely to know.

Right hon. Gentlemen of the Labour party have given us fair warning that when the time comes, and they have an opportunity, they will scrap what we are doing now. I see that the right hon. Member for Come Valley nods his head. Even Jupiter nods sometimes. We are warned that this proposal will be scrapped. The hon. Member for Hills-borough (Mr. A. V. Alexander) gave us formal warning of that only the other day. All I can say is that we are very glad to know so clearly what are the intentions of right hon. and hon. Gentlemen opposite. I have no doubt that they will take every opportunity of proclaiming their views upon this point to the country. Obviously they will not make that declaration here and try to keep it back in the country. But should they fail to make it known in the country we shall not fail; we shall let the country know what will be one of the first results of displacing the present Government and putting in power a combination of either of the parties opposite. I feel certain that the majority of instructed opinion in this country is so increasingly in favour of the great system of Imperial Preference, with its infinite value to the future of this country, commercially as well as in other ways, that nothing which we could proclaim would be more likely to retain us on this side of the House than the announcement of the intentions of which right hon. Gentlemen opposite have warned us.

The second great principle embodied in this Bill is the change in the system or the method of assessing Income Tax. The right hon. Member for Central Edinburgh told us that he did not object to the proposal to put the assessment on the previous year's income instead of on the three years' average. As the right hon. Gentle- man truly said, the proposal is carrying out the very strong recommendation of the Royal Commission. The Royal Commission called attention to the fact that in the evidence given before them there was an immense amount of support for the idea of the change, which they endorsed and emphatically recommended. The right hon. Gentleman complained that we have not done anything to give effect to some other recommendations of the Royal Commission in the direction of preventing evasion. My hon. Friend the Member for South Salford spoke very strongly on the same point. May I say to my hon. Friend that there is no difference of opinion in any part of the House that every possible step should be taken to prevent the evasion of tax. But the right hon. Member for Central Edinburgh has overlooked a certain amount that has been done already in that direction. He said that something like £5-£ 10,000,000 a, year was probably lost through evasion of the tax. The right hon. Gentleman ignores what has been done in recent years to meet this very point.

I do not think that the Royal Commission, if sitting to-day, could speak in quite the same terms with regard to the evasion. "We have had legislation to deal with the evasion of Super-tax by one-man companies. We have been given examples to-day of the way in which evasion still goes on. Of course the House realise that a great deal of ingenuity is constantly being expended in devising ways in—I will not say evading, for that is hardly fair—but in finding out exactly how far the law prevents certain things being done. There is nothing wrong in carrying out any transaction which is strictly within the law. There is an equal amount of ingenuity being extended by the Inland Revenue authorities for stopping the holes, so to speak, and trying to make the thing watertight. There is always that contest going on. I am certain that the speech which my hon. Friend made this evening will be very carefully considered by the Inland Revenue authorities, and it is quite possible that he may assist them in following out the sort of cases he had in mind and in devising machinery for dealing with them.

My hon. Friend asked my right hon. Friend the Chancellor of the Exchequer to deal with the matter in this Bill. He must remember that it is one thing to be able to come to the House and give an example of a rather scandalous case, and it is quite a different thing to be able to draft a Clause in an Act of Parliament which will hit that particular case and not hit a great many other cases which are not intended to be hit. I cannot say at this moment whether it would be possible to frame a Clause which would have the effect that my hon. Friend desires, without having other effects which he would not desire, but the matter will certainly be considered, and my hon. Friend will no doubt bring forward any proposals he may have to make when the Bill goes into Committee, and then will be the time to consider whether his proposal meets the case.

With regard to this change over from the three years' average to the previous year's income, the House will find a number of Clauses grouped in Part 4, along with this change. I admit that the wording of these Clauses is in some cases extremely intricate, and hon. Members will no doubt be anxious in Committee to know exactly what is the meaning of them. What is being done is this: There are categories of income which are first of all transferred from Schedule A to Schedule D. The most important of them are profits derived from mines, railways, gas works, docks and similar undertakings. This transfer from one schedule to another is not only a formal change of classification. It is more than that. There are many varieties of method in assessing Income Tax under these schedules. Some are already based upon the profits of the previous year; some are based on an average of the years; some are based on an average of seven years; and in one case, if not more, they are based on an average over an unfixed period, which is left to the discretion of the Commissioners of Income Tax. Therefore, in order to carry out a great scheme of simplification, these various categories are first of all to be transferred to Schedule D, in order that all that confused medley may be swept away, and when they are grouped together under Schedule D they may then all be based on the profits of the previous year.

Accompanying this change, other Clauses, which may at first puzzle some hon. Members, are necessary, because the transition from one system to the other may involve in certain cases exceptional hardship, which will have to be dealt with for that transition period, and there are certain contingencies which may arise in the course of business, when the change takes place, for which provision has to be made. All the Clauses which are grouped in Part 4 of the Bill are for that purpose. Passing from Income Tax, there is one other provision of the Bill which lays down a certain landmark in the road which we are slowly travelling since the War. Five years ago the Excess Profits Duty was repealed. Although the tax was no longer in existence, old assessments have been kept open up to the present time, and large sums of money have been brought in through assessments which were standing over. But in the Finance Act of 1921, which left the door open for these assessments to be revised, the door was left open quite indefinitely, the words being that they were to continue open "until Parliament otherwise determines." As my right hon. Friend said in opening the Budget, it has now been decided that sufficient time has passed and sufficient opportunities have been given on the one side and on the other, for dealing with these assessments which were overdue, and we have decided that that door is now to be closed and no further investigation on one side or the other will be allowed— with one exception only. If a case should come to light in which there was either positive fraud or wilful default on the part of a taxpayer, it is obviously right that this Bill should not operate as an act of oblivion and that the right of the Crown in such cases should be kept open.

These appear to me to be, in the broadest possible outline, the main characteristics of the Bill which the Government now ask the House to read a second time. Like all modern Finance Bills, it contains, of course, a very great mass of intricate detail which will have to be considered, debated and examined when the Bill goes into Committee. That mass of detail reflects the great and growing complexity of the business life of a great industrial community like ours. Hon. Members will no doubt scrutinise the whole of the Bill at the proper time, and, I dare say, many valuable suggestions may be made with a view to improving the Bill as it stands. So far as concerns the general scheme of taxation as laid down in this Bill for raising the revenue necessary For the year, I do not think, speaking of it as a whole, that the House of Commons is likely to refuse to give the Bill a Second Reading and thus take upon itself the responsibility of rejecting the whole of the proposals of the Government for dealing with the national finances in the present year.

It would seem that Government after Government come along with new ideas on the subject of taxation and in the present Finance Bill we have got down to what is called the gambling tax. How much better it would have been had the Chancellor of the Exchequer, who knows the subject well, brought in proposals dealing with the taxation of land values. The city of Glasgow suffers severely to-day because in every improvement which it desires to make, values created by the presence and increase of population find their way through extortionate prices into the hands of a few unscrupulous landlords. This means that the city of Glasgow is held up in every improvement it seeks to make by a handful of men. When the Chancellor of the Exchequer held other views, he made a powerful speech which is known as the Manchester speech, in relation to land values, in which he described in detail what was meant by the taxation of land values. He did not leave anything out of consideration; he dealt with the subject thoroughly and he showed not only the justice, but the great national need of getting back some of the income stolen from the industry of this country. Instead of a piffling duty on betting it would have been better had the right hon. Gentleman considered a tax of this kind. But a Tory Government will tax anything except what they regard as their own sacred holding, the land. They say, "You can tax anything else but do not touch the land" and yet the land is the basis upon which every generation depends for the things on which it lives.

I wish to draw attention to what may seem a small thing, but the Budget is made up of small things. If we could stop all the small thefts that are going on we could build up our national finances on a sounder basis. I refer to the present which is made every year to the distillers of this country, in the rebate on industrial spirit of 5d. per gallon. That is part of the swindle which was done under the 1880 Spirit Act, because when that Act said "per gallon," it did not specify per gallon of "pure spirit' or "industrial spirit" and when we come down to the facts, we find that it is not 5d. on each gallon of spirits, because almost 50 per cent. of the liquid on which the 5d. rebate is allowed consists of water, and it works out actually at something like 9¼d. per gallon of spirit. At present because of the Cabinet system of government, it is impossible in this House to get down to working details of this kind in regard to any industry. Since 1880 there has been going on a system which prevents the continuous working of the plant engaged in producing this spirit. This system not only prevents greater production but prevents the employment of more men. Yet all the time we continue the stupid practice of paying a rebate on this article.

Why the great Tory minds on the Front Bench, those who are always talking about reconstruction and about getting more work out of the working people, should go on blindly with a system which prevents machinery working to its proper capacity passes my comprehension. I think it must be because the average politician who sits on the Front Bench does not get down to the details of industry. They always talk about industry in the clouds. Their artistic instinct is at its best in outlining the clouds and not in giving the details. Under the system to which I refer, we are making a yearly present to the distillers of this country of hundreds of thousands of pounds, while, at the same time, we are preventing the increased production of the article in question. I could understand putting a tax on the importation of the same article from other countries if it was to increase production in this country, but we do not do anything of the kind. We put l0d. on what is brought in and we give 9¼d. to the distiller. That is not even good finance and it is simply due to the ignorance of the people who are dealing with the subject that the system continues.

At the present time plant of this kind has to be stopped periodically in order to get what are called the measurements for taxation purposes. Our taxation laws take it for granted that there is no honest person in the British Isles. They treat everybody as being dishonest and therefore, we cannot trust any manufacturer to give a true account of what he is doing. Accordingly we shut down plant of this kind for four days out of the seven when we could go on keeping it at work and keeping men employed and producing something. I know the indifference of Chancellers of the Exchequer and other Front Benchers to these basic details, but they are the things which really matter. These are the holes in the dam through which the wealth of the country is running out. I brought this matter up before in the House and I tried to get previous Governments to deal with the question but I found that details did not appear to matter. The possibilities of accomplishing something are trampled under foot simply because the subject does not come within the purview of those who talk in flowery language about industrial reconstruction.

This nation will never do anything else but make huge mistakes unless we get down to the things which are at the basis of industry, unless we have the knowledge of how things are done and until we learn how to stop the damage which is being done. The continuous working of this plant in distilleries would mean more work and more wages. Two years ago, when the Government refused to recognise this industry, an American plant was brought into this country and put up at Hull. The only function of that plant was to generate power alcohol. The usual thing has happened. Here in Parliament this matter had been explained time after time by myself, and others who understand it, and what has been the result? Instead of the subject being taken up, instead of this being made a basic industry, this American plant is brought into the country. They immediately come into competition with the distillers, and the D.C.L. of Edinburgh step in and buy out at a ransom price to get the full monopoly and control of this industrial alcohol plant. Now they have the monopoly rights for Australia.

I do not want the Chancellor of the Exchequer himself to go into the distilleries and breweries, but I want him to send someone there who understands the subject. He has the men in his Depart- ment who could be sent out in order to get something done. The question of the production of this power has been thrashed out here in a House just as crowded as the present one, but there was always someone in the Gallery who was interested in the matter. Here is an opportunity to have a real industry not based on the expenditure of money. All that is asked is that you shall in your Regulations give power to allow of the continuous working of this plant instead of the present intermittent working which is rendered necessary by the taking of measurements for taxation. I know that we cannot trust many people. We must have an army of chemists going about to see that our food is not poisoned because someone or other wants a halfpenny extra profit. That is the result of the commercial system. It breeds dishonesty so that even in the case of infants' food we have to employ specialists to see that the children are not poisoned. But surely we can trust the manufacturers to some extent, and even if it was necessary to put on more men to watch the manufacturers, it would be worth while in the interests of the industry of the British nation to begin to sit up and take notice of these things. This is only one little thing that I am dealing with, and we have done nothing with it since 1880.

Here we are, a nation using millions and millions of gallons of petrol, and it is only now that we are getting a Petroleum Bill. It came in last Session, when I objected to it, and it is now in the other House. I objected to it because it was only an owners' Bill, and did nothing but provide good things for those who own and sell petrol. When it comes back to this House, I shall want to have it further amended. As I was saying, 1880 is our last attempt to deal with this spirit industry, and what is the use of men claiming to be great politicians, or great nationalists, or great patriots, if they only smile and push us off when we want them to get down to details 1 I do not expect a man on the Front Bench—that is where I quarrel with the Cabinet system—to know every detail, but the system prevents each of those who know the conditions from getting right down to the matter. In the three years during which I have been here, I have brought this question up every year, and I have always been fobbed off with some kind of statement to the effect that it would be looked into, and then nothing else has happened. I want this suggestion of mine to be looked into thoroughly, because you would do far more with this than you can with a gambling tax, and you would do more than you would with either if you had a Land Values Tax. Take the basis of the rum-running trade in America. If you tightened up now even those places that are making only the quantity that is necessary for the rum-running people, you would not only employ more men, obtain greater revenue, and make it impossible for anybody else to compete with this country in industrial alcohol, but you would have a full control nationally, if you took your courage in both hands now and took the advice of one who knows.

Notice taken, that 40 Members were not present; House counted; and, 40 Members being present —

It is not my intention to take up more than a very few minutes of the time of the House, but I feel that, as a country Member, I should like to add my congratulations to the many which the Chancellor of the Exchequer has already received, not only upon so successfully balancing his Budget but more especially upon the Clauses of the Finance Bill dealing with Imperial Preference, which, I feel, will be a very real legislative contribution to the strengthening of Empire ties and to the consolidation of Imperial commerce. As we all know, it is only under conditions of peace and stability that trade can flourish and expand, and I feel that, as a result of the 10 years of guaranteed Imperial Preference, those who are responsible for our business activities and enterprises will be given that necessary assurance upon which they can carry on business negotiations, which can only accrue to the advantage of our trade and industry, whether it be in the factory or on the land, throughout the component parts of the British Commonwealth.

I must frankly admit that it is, however, with some misgiving that I observe, under Clause 41, that the Chancellor has appropriated some £7,000,000 from the Road Fund. This, in the present critical condition of national finance, may be a not unwise decision, but I sincerely hope that, if that condition improves, the right hon. Gentleman may see his way clear to allow the Road Fund to be utilised for the purpose for which it was originally intended, and so relieve the ratepayer from the very heavy burden which he has now got to carry in connection with the maintenance and upkeep of our roads. There are to-day some £46,000,000 a year required for the maintenance of our principal roads, and another £6,000,000 for our secondary roads, and I think last year the Road Fund amounted to a little less than a third of that amount. On the assumption that "wheels should maintain the roads which are built to support them,' it would seem fair to argue that the Road Fund should be kept and maintained for the purpose of the building f our roads until such time as it fully meets our financial requirements in this respect. This, I think, is more fully reasonable when one takes into consideration that some 96 per cent, of the traffic to-day is of the petrol-driven vehicle type. I believe I am expressing the opinion of a very large number of my constituents, many of whom are farmers owning their own land, and smallholders—and they do not all own motor cars—when I express the hope that the Chancellor of the Exchequer, in his wisdom, when times improve may be able to allow the Road Fund to be used in the future for the purpose for which it was originally intended.

I intervene in this Debate to express my pleasure that the Chancellor of the Exchequer has thought fit to retain substantially unaltered those taxes on silk and artificial silk which he introduced last year, and which we know particularly as the Silk Duties. In the Bill now before the House, in Clause 5, it is proposed to make various minor emendations of the Silk Duties, but there is no proposal to make any vital alteration. Probably the most contentious part of last year's Budget was that part which dealt with the imposition of taxes on silk and artificial silk. There was a great storm of protest throughout many parts of the country, and in this House amongst the Opposition parties, who were divided in so many things, there was unanimity in forecasting failure for the working of these duties. It was said that these taxes would be a threat to the new and growing trade in artificial silk, that they would be an unnecessary burden on the finery of poor working-class girls, that they would be a blow to the great textile trades of Lancashire and Yorkshire, and that they would be an imposition which would cost more to collect than the revenue which it was hoped to obtain from them. In a sentence, they were described by the Opposition as taxes which were bad in principle and which would prove even worse in practice.

It is, perhaps, only fair to say that a great deal of this opposition was aggravated by the necessity which arose of having, together with the tax on natural silk, a tax on artificial silk. In many parts of the House there were people who thought that natural silk, as a luxury material, was a proper vehicle whereby we could introduce taxation, but those people who confined their criticism to an endeavour to separate artificial silk from real silk could have had very little know-ledge of the real properties of the fibre. It is, practically speaking, impossible for anybody other than an expert to discriminate in the made-up material between artificial silk and real silk, and to attempt to tax real silk without taxing artificial silk would have been to cause a, blow unfairly and unjustly, which might have meant almost a death-blow, to the real manufacturing silk industry. Since that time, we have had the opportunity of observing the working of these taxes, and the period we have had in which to observe is sufficiently long for us to notice definite indications, though it is not quite long enough for us to draw absolutely final and definite conclusions. I would like to state that no reliable conclusion can be obtained by comparing the figures for last year with the figures for the previous year, because in the first quarter of last year the taxes were not imposed, and in the second quarter of that year there was a distinct hiatus between the proposal to introduce the taxes and the taxes themselves being definitely imposed as a matter of law, and during that hiatus there was a very large amount of dumping of artificial silk into this country from the Continent.

Probably the most noticeable effect of the working of these taxes has been the diminution of the importation of artificial silk into this country, particularly from Italy. In the first half of 1925 we imported from Italy into this country approximately 4,500,000 lbs. weight of artificial silk, and in the second half of 1925 we imported less than 500,000 lbs. weight of artificial silk. Side by side with this decrease in imports, we have an increase in exports. Prior to the imposition of these duties, it was a fact that the imports of artificial silk into this country—and by that I refer not only to artificial silk yarn but to artificial silk thread and to manufactured goods therefrom—showed an excess over exports, but now we observe precisely the opposite effect. Now we have got an increase of exports over imports, and I would particularly draw the attention of the House to this fact, that during the whole of this period the natural increase in the consumption of British natural and artificial silk has been maintained, and to-day the consumption per head in this country of artificial silk is approximately twice as much as that of any other country in the world, the United States of America not excepted.

8.0 P.M.

So we can observe an increase in production which has grown from 24,000,000 lbs. in 1924 to 30,000,000 lbs. in 1925—an alteration from an unfavourable balance of trade in this commodity to a favourable balance of trade, and, side by side with that, we have the setting-up of new mills for the making of artificial silk. Therefore, when we come to consider this threatened new trade of the manufacture of artificial silk in this country, we find precisely the opposite has taken place. Twelve new companies have been started in which artificial silk is to be made. It is quite true that thus far their production has not materially added to the amount made in this country, but in course of time they will no doubt materially affect the quantity this country makes. In connection with this matter, I would particularly draw attention to the fact that one should not forget that with the tariff walls which are raised against the exportation of this country's products, it has become the policy of some of the largest firms making artificial silk to put up factories in other countries, so that to-day in the United States of America, and in Germany and France, we have concerns which are more or less British-controlled, and which are, in fact, though not in name, making what is British artificial silk.

A second objection was that the taxation of these materials would impose an unnecessary and unjustifiable increase in price on the decorative material which is used by the poorer classes of the population. That prophecy has been falsified by the event. There has been no increase in the price of artificial silk. The excise tax has been paid by the British manufacturer from the commencement, and the Customs Duties have been paid by the foreigner. To-day the cheap artificial silk stockings, about which we heard so much during the last Budget Debate, can be bought at as low a price as they could then, and in respect of many of the mixed materials containing artificial silk, you can buy them even more cheaply to-day than you could 12 months ago. But perhaps the mast weighty objection which was brought to bear against the imposition of these silk duties was the protest which came from the great textile trades of Lancashire and Yorkshire. They have been, and continue to be, in a state of great depression, and it is only natural that in respect of artificial silk they should look with the keenest suspicion on any steps which might prevent the exportation of their products, but here, again, we find that the taxes have had precisely the opposite effect. It was stated in this House that the major consumption of artificial silk in this country was not by the textile trades, but by the silk trade of Leek and Macclesfield, and it was estimated that less than 33⅓ per cent, of the total consumption of artificial silk in this country was by the textile trades of Lancashire and Yorkshire. Now we find that over 50 per cent. of the total consumption of artificial silk is in Lancashire and Yorkshire, and this increased proportion should be recognised as taking place side by side with an increased total consumption.

It is true that the textile trades have been depressed, but of the many sections of these trades—and particularly I speak in reference to the cotton trade—that section which has been the most prosperous, or, shall I say, the least depressed, has been that section which has had to deal with artificial silk. It is only during the last three months that figures have been available to show the amount of cotton cloth containing artificial silk which has been exported, but assuming there is no increase throughout the remaining three-quarters of the year, if we take it the figures will be maintained at the figures of the first quarter of the year, we shall have exported about 55,000,000 yards of cloth containing artificial silk. I notice that during the recent application of the hosiery trade for protection, Mr. Hartshorn, the vice-chairman of the National Joint Industrial Council of the Hosiery Trade, and general secretary of the Nottingham and District Hosiery Workers' Society stated, in reply to the question as to how he accounted for the increased numbers employed, that this was due to the development of the artificial silk trade, and agreed that the Silk Duties had benefited this side of their business. So that, if we consider those trades using artificial silk as a mixture, we find the tendency has been definitely to benefit those trades and not to depress them.

Then we have to consider the objection that this would be a costly method of raising revenue—that the cost of collecting the money would exceed almost the amount which was to be received. With the exception of, perhaps, £200,000, the receipts from the Silk Duty have approximated to the estimated revenue, and I personally feel quite convinced that next year the receipts from this duty will exceed the amount estimated in the Financial Statement. Then it was suggested that scores of officials would have to be employed and new places built in which to house them. None of those forecasts has proved true. My information from the Manchester Chamber of Commerce is that, with the assistance of the Advisory Committee, everything is working to the greatest satisfaction. It is true that at first there were difficulties. Those difficulties have been got over, and I think one might say, without fear of contradiction, that, on the whole, the collection of the Silk Duties has proceeded with less difficulty than was anticipated by even the moat optimistic partisan.

It would be foolish to suggest that by merely putting a tax on silk and artificial silk one was able to stimulate the silk trade and revive the textile trades. That is not the contention, but the contention was, that by this particular legislation which was introduced last year, with its system of drawbacks, and its safeguarding of the export trade, you could use the luxury material of silk and the quasi-luxury material of artificial silk as an appropriate medium for the collection of revenue, and, side by side with that action, you have the effect, through the protective tariff of that duty, of an increase of employment, and an alteration from an unfavourable balance of trade in respect of that commodity to a favourable balance of trade. I think there should be no section of this House who would propose to make any substantial alteration in the duty. I should be sorry if anything I have said should be assumed to suggest that I was desirous of these duties being increased. I neither want to see them increased nor substantially altered. They have played their part. They have provided an increase of employment. They have obtained for us an increase of revenue, and they have secured valuable assistance to the textile trades. I trust there will be no effort made by any party in this House to do anything to end or to render ineffective this valuable new weapon in our fiscal machinery.

There was one point which the Chancellor of the Exchequer made in his Financial Statement which I do not think has received any great attention in the House, but which has caused me, at any rate, as a back bencher, some gratification, and that was his reference to the position of the great railways of this country. One of the reasons for his proposal for dealing with the Road Fund was his recognition of the gross unfairness from which the railways have suffered for years past. I only mention that in passing, as it is right that someone should offer some appreciation of that point. I think the right hon. Gentleman the Financial Secretary was rather pleased with the fact that they have given towards the rural roads a sum of £1,250,000, and I should be churlish if I did not express the appreciation we all feel that we have some more money in the country districts. But I should be betraying my trust as a rural Member if I did not point out, that even if we get the full £1,250,000, that only means about £9 per mile for unclassified roads, and I am assured by the local road surveyor in my own district that at least £80 a mile is necessary if the roads are to be kept in proper condition.

Therefore, while we are very grateful for what we have got, we must at least hope that in the future, when the country is in a more prosperous condition, we shall get some more help. But my general point is, that now that the Chancellor of the Exchequer has taken up this question of the Road Fund, I hope he will not stop there, but will pursue it, and take a lively interest in the distribution of the money which is left. I can assure him that one of the things which caused the greatest interest throughout the country during the whole of last autumn and winter was his proposed raid on the Road Fund. Nothing excited a country audience more, or gave greater gratification, than the assurance that the Chancellor of the Exchequer did not really intend to raid them to any serious extent, and I think we can congratulate ourselves we have got off so lightly. But I do hope when he comes to hand over the amount of money he intends to hand over to the Ministry of Transport, that he will keep a close eye on what they do. We had a good example this afternoon of the attitude of the Ministry, in the reply which the Minister himself gave to a question, when he said that of course the large towns contribute very largely, or most largely, to the Road Fund, and therefore they must receive some consideration.

Of course the large towns contribute largely to the Road Fund because there are a larger number of motor cars registered there. If they were all taxicabs they would largely confine their activities to the cities and towns, but we find that motor vehicles of every description come out in their multitudes to destroy the roads which people in the country have to keep going, very largely for their benefit. That is just the whole strong position of the rural people: it is because we have to keep up these roads for the benefit of the people living in the towns and cities that we contend that we ought to have more money devoted to the rural roads. I myself think that we might very well ask for a revision of the present system of granting money. The percentage system seems to me to have been immediately designed to give money to those who have it. The rich counties, which can afford to spend large sums themselves, are thereby enabled to get large sums from the Central Road Fund. The result is that less money is left for the poorer districts who cannot put forward these claims.

There is another point. Large sums of money are still being spent upon what I claim are mere luxury features in our roads. I have not the slightest objection to seeing corners straightened and roads widened. These, in themselves, are most estimable things to do. The better and the straighter roads we can get the better for all. At the same time all these things we have to pay for, and perhaps the most benefit is reaped by those whom I call speed merchants. I am most heartily in favour of the speed merchant in normal times, for no one enjoys a run along a good straight road more than I do myself; still, I look on this as a luxury at the present time, and one which we cannot afford. By doing this perhaps we leave the poorer districts and the rural roads to get into a lamentable condition, which may, indeed, become little short of disastrous.

In many parts of the country, too, the road rates are far too high. They cannot be made any higher, and the present system of giving grants really encourages extravagance. I believe that in an extra grant of 75 per cent, for first-class roads and 50 per cent, for second-class roads, to be given only when the road rate exceeds a certain amount, or a system whereby grants shall be given, not on account of a high road rate, but by reason of the productivity of a penny rate in the pound coupled with the mileage of the districts, you would get some justice for the poorer districts such as the one I have the honour to represent. I do hope that the Chancellor will keep a close eye on the Minister of Transport and all his doings. I do hope he will attempt to curb unnecessary expenditure on roads, and see if he cannot within the limits he has set himself in relation to the Road Fund, give a larger contribution to the poorer districts.

Having said that I should like to congratulate the right hon. Gentleman on the way in which he has at least given us a hope, in spite of the fact that he has had to raid our fund, that we shall have an increasing amount of deduction in respect of motor cars. To the extent I have indicated I welcome it, while I am sorry that he should have had to make any raid upon the fund at all. Still we realise in these days of financial stringency, as everyone must do, that we are spending as much money as we possibly can on our roads in view of the condition of our finances as a whole. In conclusion, I would say again that I only hope that the large percentage that has already been given may even yet be given to those very seriously hit and necessitous country districts.

There are one or two points to which I should like to direct the attention of the House. The Budget proposals as a whole, I think, commend themselves to the great majority of Members of this House. There are, however, when we are criticising the Bill, certain Clauses which I should wish were not there, and certain other Clauses omitted that I should like to see embodied in the Bill. I should not, however, like it to be thought that I do not very heartily approve of the Budget. I am sorry that the Chancellor has not inserted a Clause in the Bill enabling a deduction to be made for Income Tax purposes in respect of wasting assets. In these days of high taxation it is very necessary to see that Income Tax payers are not asked to pay Income Tax except in respect of profits actually earned. The fact that no allowance is made at the present time for certain classes of wasting assets creates, in my opinion, a sense of unfairness which it is very desirable to remove. The hon. Member for Barnstaple (Mr. B. Peto) moved a Clause last year dealing with this matter. In speaking upon it he mentioned that the same point had been brought up year after year when the Finance Bill was introduced. The Chancellor of the Exchequer replied to my hon. Friend. I should like to read to the House one or two extracts from the right hon. Gentleman's speech. The Chancellor of the Exchequer said:

I am sorry to see that the Chancellor, in his search for new revenue, has not taken the opportunity of putting cooperative trading on a more equitable basis. I am not in the least degree opposed to co-operative trading and would like to see it go ahead, provided it is not being carried on unfairly in competition with the general trade of the country. I do not know whether hon. Members realise that there are 5,000,000 members of co-operative societies, roughly 11 per cent. of our population. In 1911 the membership numbered 2,500,000, which was, roughly, 5 per cent, of the population at that tune; so that the co- operative movement is growing very rapidly indeed. In 1924 their retail sales amounted to no less than £175,000,000. The Chancellor of the Exchequer, in his Budget statement a few weeks ago, referred to the Royal Commission on Income Tax in 1920, and is adopting certain of their recommendations. That Commission dealt with the question of co-operative societies, and made three recommendations which I would like to read to the House. The first was:

I would like to say one or two words about the Road Fund. I am very glad this Fund will continue to grow as motorists increase in number. On the whole I do not think motorists will unduly quarrel with the decision of the Chancellor to appropriate out of this year's receipts from motor vehicle taxation the sum of £3,500,000 for general purposes, and I do not think they will quarrel with the proportion it is proposed to divert to general revenue purposes in future years. But this depends, I think, upon motorists having confidence that the proportion is not likely to be increased in the future. I am afraid, after what has happened, that no pledge given by the Government on this particular matter—if they were willing to give a pledge, which I take it they are not—would give motorists that feeling of confidence respecting the future of the Fund which they would like to possess. The transfer of the £7,000,000 from the so-called "surplus Road Fund" is, in my opinion, a "very different matter indeed. Specific promises were made that the whole of the money raised from motor vehicle taxation in the past should be used for road purposes, and unless there are extenuating circumstances, I feel it is somewhat difficult to justify the action of the Chancellor on moral grounds. The Financial Secretary to the Treasury, who spoke a few moments ago, said that a special grant of more than £8,000,000 was made direct to the Road Fund in the year 1920, and he emphasised the point that that was a larger sum than it was now proposed to divert from the Fund, evidently feeling that here was a complete justification for the Chancellor's proposals. A few days ago, I put a question to the Minister of Transport on this particular matter, and was informed that the grant of £8,250,000 was given with the dual object of reconditioning the roads of the country after the War and of finding employment for ex-service men on demobilisation.

In the same reply I was informed that revenue was diverted from the Road Fund to the Exchequer during the War to the amount of, approximately, £7,233,000, so that this special grant of £8,250,000 was really made for the purpose of adjusting the previous raids upon the Road Fund, and it is quite obvious, therefore, that one cannot quote that same sum of £8,250,000 in justification of the present transfer of money from the Road Fund. If it is possible to justify this transfer on moral grounds—and I hope it is, because I am very anxious that I should never have any reason to doubt the rectitude of the Chancellor of the Exchequer in these matters—I still feel that it is very difficult to justify this transfer on grounds of equity. In the past it has been the practice when any highway authority applied for a grant towards the construction of a new road that the Minister has declined to sanction the grant unless the amount were available out of the current year's revenue. As, in many cases, it takes three or four years to carry out a piece of new road work after the grant has been made, the money has necessarily to be put on one side ready for the time when payment is required. That is the real origin of the so-called "Surplus Fund," and I am informed that every penny of that Fund has been earmarked already for grants which have been sanctioned.

This view is confirmed, to some extent, by the fact that in recent years the Minister of Transport has refused grants for necessary road improvements on the ground of lack of funds, and when the Chancellor of the Exchequer was speaking on the Economy Bill I thought it was a little inconsistent for him to point out that the Road Fund was growing so rapidly that the Minister of Transport found it impossible to spend the money as quickly as it was being collected, while at the same time the Minister of Transport was refusing grants for necessary road construction because of lack of funds. I hope the Chancellor of the Exchequer will explain this little inconsistency during the course of this Debate. There are one or two other points in connection with road finance to which I would like to direct attention, but I think, possibly, it would be more suitable to deal with them on the Committee stage.

I want to say a word or two about the proposed abolition of the three years' average for Income Tax. I happen to be chairman of the Finance and Taxation Committee of the Association of British Chambers of Commerce, and I am speaking on behalf of that body. At the annual meeting in April last a proposal was made by the London Chamber of Commerce that the association as an association should advocate the abolition of the three years' average. The question was debated at some length and the proposal was defeated, so that it can be taken that it is the considered view of the commercial community that they prefer the retention of the three years' average. I am bound, however, to state that the official spokesman who represented the association, and who placed the views of the association before the Income Tax Commission, spoke in favour of the substitution of one year for three years.

It is quite clear that we live in far too complicated an age and the step which is now contemplated will make for simplicity. The danger of the proposed alteration is, as the right hon. Gentleman pointed out, that the averaging of profits for Income Tax purposes makes for stabilisation in Income Tax receipts and that will not be the case when the averaging is done away with. It is however clear that the expenditure of the country is more or less stable while the revenue varies considerably with good and bad trade. The effect of this proposed change would be that in times of depression the Chancellor of the day may find it necessary to increase the rate of the Income Tax at a time when such an increase will add to the prevailing depression, and he will be able to reduce the tax in times when trade is good and when a reduction is not so imperative. If, however, the Government itself could form a sort of Income Tax pool and only take for the purposes of current year's revenue the average amount produced in Income Tax and Super-tax during the three preceding years then, we should have all the advantages which are derived from the one year's system and we should suffer few of the corresponding disadvantages. There are certain further disadvantages which at the proper time we as an association shall take an opportunity of asking the Chancellor of the Exchequer to consider. I think those are the main points to which I would like to ask the attention of the Chancellor of the Exchequer.

The speech to which we have just listened as well as the speech which preceded it, if they cannot be described as pæons of praise they have at least expressed a general approval of the Budget. I think it is now time that a note of criticism should be sounded. I want to criticise the Budget from two points of view and I express my regret that the Chancellor of the Exchequer has not taken the advantage, particularly in view of the present financial situation, of tapping new and additional sources of revenue. I regret that he has not taken advantage of the present situation to announce that long deferred reform in regard to the taxation of land values. I think we were entitled to expect from the present Chancellor of the Exchequer, in view of his past record, that he would at least have risen to the occasion, and being bold and courageous, and in the light of his speeches in the past on this subject, I should have thought that he would have tried to carry out his often expressed desire with regard to utilising the enormous values of land for national purposes.

That course was all the more desirable because he has been reduced to such great straits that he has had to scrape together one of two millions here and there by putting his hands into funds belonging to the great mass of working people. By such a policy he has alienated millions of electors at a time when he was in a position to tax some 3,000 landowners without any great danger to his political fortunes. By neglecting some measure dealing with the taxation of land values he has fallen into the error that one would not have expected the present Chancellor of the Exchequer to have fallen into, that is of maintaining the historic reputation of the stupidity of the Conservative party. He has allowed himself to carry on that historic role of being so perfectly stupid, and he is now dealing only with small things. All the time the land of the landlords is rising in value in our towns as a direct result of public expenditure, and from this source the right hon. Gentleman might have got large amounts of revenue without any danger to the electoral situation. It is all the more desirable that he should have included in this Budget a provision for taxation of land values, in view of the enormous expenditure which is being incurred in connection with the Road Fund. Here there is a sum of anything up to £20,000,000, which is being taken away from the users of motors, and the great bulk of it is being spent upon the roads of the country, every penny of which adds value to the landlords' land. In every road upon which this money is being spent, the land on either side rises in value and becomes more eligible.

It is not only in the matter of the expenditure out of the Road Fund that this is the case, but there is the same justification in regard to the expenditure of public money in many other ways which has the effect of increasing land value. Some of our recent legislation has relieved the occupiers of land of the rates to a large extent, and this amounted in 1923 to £3,000,000 or £4,000,000, and since 1896 quite £100,000,000 must have been spent in this way. To that extent there has been an equivalent rise of land values owing to that policy. Even within the present Session there was foreshadowed in the King's Speech, as hon. Members will recollect, a new agricultural development, in connection with which we are being asked to commit ourselves to another £1,000,000, to assist the drainage of agricultural land. Every penny of that amount will add to the value of the land- lords' land, while they are making no contribution at all. I think it is very regrettable, both from the point of view of policy and from the point of view of equity, that the Chancellor should not have taken the opportunity to do something in the way of taxing land values.

There is another criticism that I want to make with regard to the Budget, and that is that the Chancellor of the Exchequer, in view of his great financial closeness and of the needs of the revenue and of the Government, should not have taken this opportunity of re-imposing upon the people who are in a position to pay Super-tax at least the £10,000,000 of which he relieved them last year. I suggest that it would have been far more equitable to do that than to dip his hand into the Health Insurance Fund and take £2,800,000 from that, or to deplete the Unemployment Fund, in which thousands of unemployed men and women are concerned. I submit that it would have been far more equitable to look for increased revenue by re-imposing an amount equal to the relief that was given last year to those who are fortunate enough to be in the position of paying Super-tax.

I want to call the attention of the House to some rather significant figures which were given to me by the Financial Secretary to the Treasury, in reply to a question which I put to him only a few days ago. On the 6th May I asked the Financial Secretary to the Treasury the following question: am correct in saying that this last figure is to be taken in conjunction with the fact that that is the year in which there was a relief of £10,000,000, or some part of that amount, given to the Super-tax payers. The striking feature of these figures lies in the comparison with the fact that 1,100,000 miners were working before the stoppage for 12 months, and the total of their wages for 12 months was only £142,000,000, whereas here we have 91,000 persons whose incomes bring them in £522,000,000. Surely, it would have been more equitable if the Chancellor of the Exchequer had said, "There is the source from which additional revenue should come." That would have been far more equitable than an Economy Measure which attacks insurance funds and the sick, the helpless, and the unemployed, and I venture to express the hope that, when this Bill is being considered in Committee, the equity of this claim will be seen and some concession made.

We have had comments and suggestions from all parts of the House as regards the various proposals in this Bill, but I think the main feature of the discussion this afternoon and evening has been the almost complete absence of any criticism of the main structure of the Bill. On previous occasions the Finance Bill has been criticised, and attempts have, perhaps, been made to tear it to bits, but this afternoon we have had a very different experience. We have had various suggestions, but nevertheless there has been an entire absence of any sustained criticism of the main principles of the Bill and the Budget. I think that what most arrests public opinion in the country is not so much the various proposals contained in this Bill, as the enormous sum for which we have to budget, and I think that there is very serious concern throughout the country that at the present time we have still to budget for over £800,000,000. It cannot be said that the Chancellor of the Exchequer is answerable for that. I know that he has made gallant attempts to keep down expenditure, and, if he had only had the whole-hearted support of this House when he brought forward proposals for reducing expenditure, we might have had a smaller sum to budget for than we have in the present Bill.

I would like to say a few words upon two of the proposals. The first is as regards the Road Fund. In the country districts which I have the honour to represent, the Road Fund is considered to be of vital importance. We see in those country districts the road assessments increasing by leaps and bounds every year, and we know what a serious effect that has upon country life generally, and upon all rural industries. I am thankful to hear the Financial Secretary to the Treasury say that in this year, 1926–27, we shall get as much, and, in fact, more for the roads than we got in the past year. Therefore, I think that a good deal of the misapprehension and anxiety which was felt in our country districts will be relieved when they know that as much and, in fact, more will be received in the current financial year than was received during the previous year. Of course, however, we always have to bear in mind that motor traffic is increasing every year to a very large extent. Therefore the damage done to the roads and the money required for their maintenance must always be going up every year. What I think would give a good deal of satisfaction to the country districts would be for the Chancellor of the Exchequer to say that this money which he is earmarking for the roads is going to be spent upon the country roads. In recent times we have seen a large sum diverted in other directions. We have, of course, had large sums spent on the Mersey Tunnel. I think the Chancellor and the Financial Secretary to the Treasury would do a great deal to satisfy the feeling of apprehension that exists in the country districts if they let it be known that their influence would be used whole-heartedly in the direction of keeping this money which we are to get from motor taxation for the country roads.

I am sure the stabilisation of Imperial Preference will give an enormous amount of satisfaction throughout the country generally, and not only to our people at home, but I think it will give so much confidence amongst our overseas Dominions that we may see a forward step in our trade to those Dominions which will do an enormous amount to give help to our people at home and will do something to remove some of the unemployment under which we are suffering. I congratulate my right hon. Friend on the way in which he is framing his Finance Bill this year and I only hope, with the support of the House of Commons, he will be able to pave the way for a smaller sum toeing budgeted in future years.

9.0 P.M.

I rise to offer a few observations upon the proposals dealing with the Betting Duty. It has been said on high authority that no man can serve God and Mammon, but the Chancellor of the Exchequer has proved conclusively that it is possible to make enemies of the representatives of both at one step, because we find here mobilised against these proposals both bishops and bookmakers, both ministers of religion and those who habitually back horses, and in fact the most extraordinary opposition, I should think, that has ever been found against one proposal. My own opposition to these taxes is based upon grounds which I believe to be logical. There is used in this Bill the expression "legal or lawful betting." It it only within very restricted limits that betting is lawful. What one ordinarily understands by a lawful transaction is a transaction which can be enforced in a Court of Law, and betting under our present law cannot be enforced in a Court of Law. It seems to me worse than illogical, highly unreasonable, to say you will tax a transaction to which you will not allow the full force of law. To put it in something like concrete form, suppose my hon. Friend on the other side—I am selecting him merely as an instance—were to write or telephone to a bookmaker, and say: "Put me £100 on Sarsaparilla for the Derby." As I understand it, the bookmaker would be compelled to pay a duty of £5 upon that debt. But if my hon. Friend said: "No, I will not pay my £100," the bookmaker, having paid his £5 tax, would not be able to recover the £100 upon which he has paid the tax, because, as these proposals are framed, a bookmaker has to pay upon the bet and not upon the amount he receives. It is a tax upon credit betting, and he has to pay on the amount which his client—I believe they call them clients in imitation of a different profession—says he is willing to bet. It seems to me to be perfectly absurd.

Is the House really to legalise betting to the full extent? Let it not be forgotten for a moment that betting on horse races is not the only form of gambling transactions. There are gambling transactions carried on by people called bucket-shop keepers. Is anyone in the House prepared to say that that sort of gambling which foolish people carry on with bucket-shop keepers shall be enforced by Court of law? I do not think so. A great many years ago when the original statutes against the recovery of gaming debts were passed, they were passed upon the representation of the Judges of the country, who up to that time had been compelled to enforce gaming contracts, just as they enforce other contracts, because they were made for valuable consideration. The Judges found themselves in the position of being compelled to enforce gaming contracts, sums of money lost at cards, bets of the most ridiculous description, very often made by people who though they were not so inebriated as not quite to know what they were doing, were at any rate so much overcome by liquor that they did things they would not have done in their sober moments, and the Judges at the last made representations, and those responsible for the conduct of the country's legislation at that time, upon those representations, brought in certain Acts which are known as the Gaming Acts so as to deprive gaming of its legal sanction and to make gaming debts irrecoverable at law.

I cannot understand how it is possible to suggest that upon a transaction which the Courts cannot enforce under the law a tax shall be levied, and it shall be levied neither less nor more whether the man who owes the debt of honour pays it, or whether he does not. I submit that we shall, if we pass this Betting Duty, be driven irresistibly to make gaming debts recoverable in the Courts. Unless we are prepared to do that, this Clause of the Finance Bill ought to be withdrawn. I do not wish to join the forces of the two Oppositions, but I thought it advisable that I should put forward what I consider to be logical and reasonable grounds, and I suggest that when the Chancellor of the Exchequer has been told that certain forms of betting are legal he has been entirely misinformed. All that they can have meant by that was that a person cannot be punished in a Criminal Court for having betted under these circumstances. I thank the House for having given me this opportunity of putting my point of view. I thought it was right that someone should make this point of view absolutely clear.

I should like, as far as I understand the point, to agree with and confirm what my hon. and learned Friend the Member for the Park Division of Sheffield (Mr. Storry Deans) has said in regard to the legal position under the proposed Betting Duty. Clause 15 (2) provides that: does not wish to encourage. Reference has been made to the opinion of the bishops and other spiritual authorities on this matter. Their views are entitled to consideration as much as those who are interested in the turf. The view which the bishops have expressed is the correct view. The party to which I belong is opposed, for one reason or another, to this duty, and because I think this duty will inevitably involve the legalising of all betting, I am very glad to oppose it.

May I say a few words on a subject where I am very happy to be able to congratulate the Government. I refer to Clause 8 of the Bill which recognises, I think for the first time in fiscal legislation, the inestimable value of works of art and antiquity imported into this country. This Clause testifies to the æsthetic character of the Government and shows a very great advance in the appreciation of the value of these ancient things. It is provided by this Clause that we shall be in this happy position that people will be able to import into this country works of art and antiquities generally without any danger of Customs being imposed upon them. I think I shall not be straying out of the rules of order and I shall not be advocating any fiscal heresy when I say that I hope this will be accompanied later by an export duty on works of art which are taken out of this country to America. Apart from the more sordid question of finance, I think a tariff might be used to protect works of art from exportation and to encourage their importation. As the Financial Secretary to the Treasury seems to indicate assent, I hope that next year fiscal means will be devised to prevent priceless works of art from being destroyed and taken out of this country. Clause 8 marks a great cultural advance on the part of the State, the Government and the Treasury which shows that they recognise the value of getting as many beautiful and ancient objects into this realm as we can, and keeping as many as we can. I hope that this Clause is the beginning of further legislation for the protection of works of beauty and that next year the Government will sympathetically entertain proposals for a still greater advance in this direction.

I should like to make a few criticisms of the Bill. I join in the congratulations to the Chan- cellor of the Exchequer, with the reservation that I regret to note that he has not been able to redeem a promise frequently made from the Government Bench to abolish the Entertainment Duty. That duty was a War measure, adopted in a time of emergency, and over and over again we have been told that it would be withdrawn. I realize and the entertainment industry realizes that money is necessary, and that we must live another year in hope, even though we may die in despair.

With regard to the proposal for a 5 per cent, duty on betting, I do not approach the subject from the moral or the legal point of view, which have been well ventilated. I approach it from the point of view of the practicability of the suggestions made by the Chancellor of the Exchequer. I agree that the legal position is not changed; that the legal position of betting remains exactly where it did, but if the Chancellor of the Exchequer and the Government have really intended to eradicate betting altogether they could not have done much better than by the system which the Chancellor proposes. The number of people who bet in this country is legion, and it is as difficult to eradicate betting as it would be to introduce prohibition. It is in human nature, and especially, I think, in British human nature, to gamble and bet, and if any Measure is to be brought in at all, I think one should thoroughly explore the field before deciding what form the duty should take.

I see no difference between publicans and bookmakers in respect of the trade or profession they carry on, and if one is licensed there is no reason why the other should not be licensed. I speak as a layman, but as a layman with an extensive and, may I say also, with an expensive experience. Let me give some instances as to how this Betting Duty will work. Hon. Members who race at all will know that occasionally a horse starts at 20 to 1 on. That is to say, that a backer has to lay £20 in order to win £1, and if he has luck enough to find a winner then he owes himself 5s. He loses 5s. although he has backed a winner. Let me give a case which is taken from the account of a firm of bookmakers by a firm of chartered accountants. A man lost £l,310, but invested £8,530 over 226 days, an average of £38 per day. The 5 per cent, duty on the turnover, not on his winnings, would be £426 10s. or £l 15s. per day. This client never exceeded £1,350 in his outlay, so the Duty would take 33 per cent, of his capital. It is like this. If a man plays long enough at chemin-de-fer it 13 well known that what is called "the kitty" will take the whole of his capital. The same thing will apply here. Here is another case. A man wins £186 11s. He invests £2,792 over 247 days, an average of about £11 5s. per day. A duty of 5 per cent, is £139 12s., or lls. 3d. per day. In this case the client might be said not to have circulated any new money as he showed a profit from the start (actually he was out of pocket only during the first few days £32), it will be seen that the Duty would absorb 7–10ths of the backer's profit.

There are innumerable instances in which the proposal of the Chancellor of the Exchequer cannot, to my mind, be carried out with any chance of success. Let me repeat what has already been said by nother hon. Member as to the time this duty is to operate. Hon. Members know that hurdle racing starts in November. Bookmakers as a rule do not want to bet at all on what is called "over the sticks." It is not a profitable game, and they would rather not bet at all. I am afraid the Chancellor of the Exchequer will not get his £1,500,000 from November to the end of March. At any rate it will not be exceeded in any case. I do not think he will get anything like that sum, for as a matter of fact it will pay bookmakers to close their business during those months. I do not doubt for a moment that the Chancellor of the Exchequer will get his estimate of £6,000,000; but in getting that he will be taking away the capital of the man who backs horses, and eventually betting will stop to a certain extent.

Take my own experience as a small owner of racehorses. In this connection the House must not forget that there is the horse breeding industry in this country, about which little has been said up to the present, but which is really a very big and important industry. Sales are held annually at Doncaster, Newmarket and elsewhere, and very high prices are paid for what are called yearlings. As much as £20,000 has been paid for a yearling. But smaller men like myself go there and buy a yearling for £500. He takes the risk of having the horse trained in order to race, and one cannot get his money back unless he is allowed to bet. It is impossible to do it. Keeping horses is a very expensive business. There are training expenses and jockey expenses, which mean a lot of money, and unless you are able to bet you cannot afford to run horses. If this imposition, as I call it. is levied upon me. I shall have to consider retiring from the game. Possibly I shall be better off if I do so, and may be most owners will be better off if they retire, but if that should happen the State will lose money.

I rather gather that the hon. Member does not agree with the contention that the Duty will encourage betting?

No, I do not agree with that at all. I think its effect will be to discourage betting. Backers will lose most of their capital in the course of a few years through the operation of this duty. As the Regulations are framed at present they are absolutely unworkable. Anyone who has been to a big race meeting and watched the operations of the bookmakers will know that the largest bulk of betting takes place two or three minutes before the flag falls, and if a bookmaker has to search through, the bureau, which he will have to carry if he is to have all the tickets that will be necessary, it will be impossible for him to deal with his many customers. The bets may be, first, a shilling each way; the next man may put on £5 each way, and the next man £20 to win. The next man may put on a bet for first, second and third; and how is the bookmaker going to sort out the various tickets? I think the amount of betting will be exceedingly limited. I have heard it said that the bookmaker makes the odds. He does not. It is the weight of public money which makes the odds. The suggestion I have to make is one which I hope the Chancellor of the Exchequer will consider. This proposal does not come into operation until November, and there is, therefore, time to thoroughly discuss all sides of the question in this House, and time enough also to bring in a separate Bill in connection with the taxation of betting. My suggestion is that you should institue a register of bookmakers; license them. I should propose that a licence duty of £250 be imposed on every bookmaker. It is estimated that there are from 10,000 to 50,000 bookmakers in this country, but I think there are at least 30,000 bookmakers, including street bookmakers, who would be p repared and willing to pay £250.

You do not mean those who are starting a business as bookmaker. You mean the established bookmaker.

No, I do not mean that. The suggestion which is implied is that a new man who is just starting would not pay the £250; that he could not afford to pay it. I can give you a case, which is one of many, where a street bookmaker pays, not £250 a year, but £500 a year, £10 per week, to runners and other people in connection with his business. That occurs in many of our manufacturing districts, and if this licence duty of £250 was imposed it could be easily collected by the Post Office. A man could walk in and ask for a licence, pay his £250, and whether he makes a success of his business or not does not matter to the Government. In this way the Government would get their £6,000,000 easily, and it would at the same time do away with the reflection, which I believe is quite right, about class distinction. The street bookmaker would have the same opportunity to buy his licence as the man who has palatial offices. I venture to suggest to the Chancellor that he might take that into consideration. Racing is a Valuable asset to the country at the present time. I have already remarked on the value of the horse-breeding industry in this country. It would be a thousand pities if that business were interfered with. If there is to be taxation of any kind, let us at least tax betting in the best possible way so as to obtain the revenue the Chancellor expects at present without the difficulties which will arise under the present proposals, so that betting will prosper and not, as I am afraid, decrease under the present proposals.

I feel very tempted to follow the hon. Member for Blackpool (Sir W. de Frece) into the stable and discuss in detail the questions which he has raised. Any tears I might shed because a man who lays a bet at 20 to one on has to pay "five bob" would be crocodile tears. The argument against the Betting Duty which seems to me most futile is that by putting a tax on betting you are going to drive the betting from the credit bookmakers on to the streets to the street bookmakers. As far as I can see that would be quite pointless. It could not possibly happen. The odds laid in races, as the hon. Member has just pointed out, are made by the weight of the money and therefore, the odds offered by the street bookmaker will presumably be the same as those offered by all other bookmakers.

The street bookmaker does not pay the 5 per cent.

I know he does not. That would only be to the advantage of the street bookmaker and would not interfere with the odds. I do not see why it should drive anybody to bet on the streets. I should like, however, to get back to the general discussion on the Finance Bill. The Financial Secretary pointed out that the great pillars of taxation remain in this Bill as they were, and that there was no change in the Income Tax, the Death Duties, and so on. As one reads the Bill, there seems to me to be four new principles which have emerged. I would like to touch on them very briefly, especially the first which has not been mentioned at all. That is a very new principle, and it is contained in Clause 6, by which powers are taken so that when a duty is about to be imposed it is possible to collect that duty from the date on which the Resolution was passed. That will meet with the general approval of the House as being a very satisfactory Clause. Last year we were all struck by the tremendous importation of motor cars which were brought in in front of the Terrace, and I am sure it is due to the representations of many hon. Members that the Government have seen fit to introduce this Clause. It is a small Clause, but one which is going to be of Very great value and one which will certainly save us a great deal when such duties have to be imposed whether for safeguarding purposes or for any other reason.

The second new principle has already been touched upon and that is contained in Clause 7, the stabilization of the Imperial Preference duties. After the very admirable maiden speech of the hon.

and gallant Member for Dumbarton (Lieut.-Colonel Thom), it is not necessary for me to say anything further about that. I did take a note of the observation of the right hon. Member for West Swansea (Mr. Runciman) who rather scoffed at the proposal that we should attempt to bind our successors. I am sure the House is not attempting to do anything of the sort. We entirely agree with his remarks that we must "look on every financial proposal is it comes year by year." He ought to take up the same attitude in discussing the Road Fund. He should look at it as it comes up in all the circumstances of the case this year and these Imperial Preference Resolutions will similarly be considered by fresh Parliaments as the opportunity arises. By putting a Clause of this kind into the Finance Bill, we hope to make an obstacle to future Parliaments in order that when and if they wish to reverse that decision, they will definitely have to do something and the Government will not be able to let it drop by administrative action. To that extent at any rate, it is a certain safeguard and a certain guarantee to the Colonies and Dominions who have for so long pressed upon us their need for both men and markets.

The third new principle is, of course, the principle of the Betting Tax. The legal point has been laid down in Clause 15, Sub-section (2), where it definitely states that nothing arising out of this Bill makes anything lawful which was not lawful before. That seems to me to clear up the legal aspect of the case, as far as one possibly can. The Chancellor dealt with the moral aspect in his Budget speech in a manner which commended itself to the majority of the House. As one gets the complaints from numerous bodies about the imposition of the Betting Duty, one cannot help thinking how strange it is that it is practically always those who oppose the duty who are the same people, or, rather, the same bodies, who advocate an increased duty on beer and spirits in order to diminish their consumption. Where can be the logic of that position? If you grant that a doubled or trebled tax on beer and spirits is going to stop their consumption, it seems to me that the same sort of thing must happen if you pile a tax on betting, and that you will very soon abolish it. That is, presume- ably, what these bodies who take a high moral line would like to see come about. I do not dispute that if you had a perfect world it would be better to abolish betting altogether. Unfortunately, one has got to face facts as they are, and one of the instincts of human nature is to "play," as the American expression for betting goes, but if you play, you should at any rate play within your means When you put a duty on it, it is like putting a duty on any other entertainment, except that sometimes you do not get so much amusement. After all, however, the Betting Tax is much more suitable for discussion in the Committee stage.

The fourth new principle is perhaps the most important of all, and that is the definite adoption of the system of assessing Income Tax on one year instead of three years. That is a thing which is going to make a difference to our industry, our commerce and our financial interests. A tax on betting is not going to affect them or to affect our position in the world, but any relief given to industry, and I think that that will be a relief, is going to affect our position very much. I would like to ask the Chancellor if he will not consider this particular point. During the next year there is going to be a considerable investigation and discussion on the whole question of the manner of raising the Income Tax. I would like to extend their inquiries a little into the incidence of it. In December I had the temerity to ask the Chancellor of the Exchequer what would be the loss to the revenue if Income Tax was remitted on all incomes under £300 a year. The reply was that, as far as could be judged, the loss would be something like £3,000,000, but that the saving to the Inland Revenue administratively would not be very great.

With that reply I would like to link up an observation made by the right hon. Member for Central Edinburgh (Mr. W. Graham). He stated—although the Financial Secretary whittled the statement down, it did not disappear—that the loss in collection was somewhere between £5,000,000 and £10,000,000 a year. Those are the two facts which I put before the House. I would like the Chancellor of the Exchequer to consider very seriously the question of raising the limit for Income Tax, partly because the tax does weigh very hardly upon people, more especially working people, whose incomes come under the £250, or £300 a year, but also from the point of view of industry to this extent—that any firm which employs a great number of hands is by the Finance Act of last year—an enactment which this year is to be made permanent—twice in every year to render a return of the names and places of residence, and the wages for each half year of every weekly wage-earner employed by way of manual labour, whose wages, including overtime, bonuses, and other extra earnings, amount to £80 or upwards. Anyone concerned with any big firm knows that the mere fact of keeping the cards and the information in that detail week by week for every person employed, represents a very considerable clerical cost which is quite unnecessary, because in these days the number of workpeople, with wives and children, who have to pay Income Tax, is extraordinarily small compared with the bother of collecting the information on the part of a firm and compared with the bother for the Inland Revenue.

If you take a medium-sized town, like that I have the honour to represent, you find a very large tax office which has to deal with all these cases, and in thousands of them they never begin to see any sign of getting anything from it. Every Income Tax office is graded according to its size. Therefore there is always an inducement to keep tip the size of any office. I suggest to the Chancellor of the Exchequer that in his investigations he should see whether he could not raise the minimum to £250 for unmarried people. In the case of the unmarried one might assume that they are putting by money in order to be able to afford matrimony at a later stage, and, therefore, they are really saving for that perhaps rather rainy day. If the right hon. Gentleman would investigate that matter, and see whether he can balance it against what he can get by more accurate collection, the possibility of which has been indicated, then there would be no net loss to the revenue and a very great help would be given to vast masses of the wage-earners, and a very considerable relief in the way of clerical expenses to every large employer of labour.

Those are the only points which I wish to mention. We must congratulate the Chancellor of the Exchequer on the success of his Budget of last year. When all is said and done the extraordinary buoyancy of the Income Tax proves up to the hilt the Chancellor's wisdom in having reduced the rate of collection last year. That was what happened in the United States. The United States found that the rate of Income Tax was too high. They reduced the rate, and got in an. enormous revenue. To people like myself, who do not understand finance at all, it is certainly very mysterious. But it is on the same lines as what happens in agriculture, under the "law of diminishing returns." There does come a particular moment when it is no good putting more into the land, for it will not yield beyond a certain given point, and what you put in after that is so much waste. The same thing occurs rather mysteriously in connection with the Income Tax. The fact that there was such an enormous receipt under that heading this year proves, so far as anything can be proved, the wisdom of that point of view.

We hope that before the year is over the Treasury will take into very careful consideration another question which arises on every Finance Bill. That is the question of local and national expenditure and their relation the one to the other. A very lucid exposition of this subject was given yesterday in a speech by the hon. and gallant Member for Stockton-on-Tees (Captain MacMillan), a speech which I hope the Chancellor of the Exchequer will read, because the hon. and gallant Member raised a point which must be in the minds of very many people—the illogical nature of the incidence of the two kinds of taxation, rates and taxes. Many of the differences are due, no doubt, to historical reasons, but on the face of it, as the hon. and gallant Member explained, there seem to be no particular reason why some part of education should be paid for in one way and some part in another. Still less does there seem to be, on the face of it or on logical grounds, any reason why one part of the expenditure on police should be paid out of one pocket, and another part out of the other pocket. Any changes in the method of collecting revenue would tend probably to swell the actual Budget and Exchequer figures, yet they might at the same time be of very considerable assistance to industry as a whole, because rates are the particularly heavy burden with which any industrial organisation is now faced.

One hopes, therefore, that the Treasury will set up a Committee during the ensuing year to review the whole of the question. Anyhow, I for one feel confident that in a year's time we shall look back upon this Finance Bill with as much satisfaction as we look back on that of 1925. The wisdom of the financial policy then, the wisdom of getting back to the gold standard, has been completely justified by the fact that at the end of the general strike the pound sterling was not only able to look the dollar in the face, but could stand on tiptoe and look over its head. We feel sure that next year the Chancellor of the Exchequer will in the same way be able to look all his critics in the face and lay before them plans for 1927 which will be as satisfactory as those of 1925 and 1926.

I want to revert to the argument of two legal Members of the House, the hon. and learned Member for South-East Leeds (Sir H. Slesser) and an hon. and learned Member opposite. I would not contend with them in legal lore, but I would enter the contest in order to combat their forecasts as to the Betting Duty. It has been stated that, as a result of this duty, it will inevitably, follow that debts incurred on betting will be legally recoverable. I am neither a prophet nor the son of a prophet, but I would not mind undertaking to prophesy that that result will not follow, at all events, in this generation. I cannot see the logic of the argument used. There are some other transactions in connection with which debts are not legally recoverable in this country. I believe it is not possible to sue in a Law Court to recover the amount of a beer score in a public house, but we have a duty on beer and we license the premises in which beer is sold. I think our friends will find that their prophecies will not be fulfilled. An hon. Member, who spoke of the effect which this duty would have on betting, suggested that it would soon absorb all the money of the people who took part in betting and that by this means the evil would be abolished. I think the hon. Member carried that argument a little too far. I am not a betting man, but having listened to or read the arguments of the bishops and the bookies on the subject I find them mutually destructive, and I feel inclined, for once, to toss up a penny to see on which side I shall come down. I think the bookmakers are even more astute than the Chancellor of the Exchequer, and that they will come out all right in the end, as they always do.

I am not going into the high moral issue. After all, life itself is a gamble, and there are many other forms of gambling besides betting on horses. For instance, the profession to which some of my hon. Friends belong provides most unprofitable gambles in the form of lawsuits. To gamble discreetly, I would rather put my shilling on a horse than my pound on the result of a law case. However, I think that the recognition of betting will make our younger people take betting as the normal thing to do, and that is where I see the harm in it. There is quite enough betting already. I have been in the workshops, and I know the great harm it does. It is not alone the moral question of taking somebody's money without giving anything for it. It is the manner in which it absorbs the whole thought and interest of people who take any part in it that does the harm. Some such people take no sensible interest in anything else except spotting winners and backing losers. The next process will be to enact that bets must not be accepted from persons below a certain age. We tried that in regard to tobacco, and now a boy, even if he has not the inclination to smoke, feels impelled when he reaches the age of 15 to buy cigarettes in order that he may blow a whiff of smoke in the face of the policeman. That restriction has done more to encourage than to discourage smoking, and I fear it will be the same with betting.

I wish the Chancellor of the Exchequer had left the subject alone and had found some better way of raising money that that of recognising vice in order to bring in revenue. I do not drink alcohol but I recognise that in a moderate degree alcohol is allowable and that only when taken to excess does it become a vice. From a utilitarian point of view, however, betting as I have said is extremely harmful, not only because those who indulge in it generally lose their sub- stance, but because it diverts their minds and gives them an outlook on life and a philosophy which is harmful. I had an early lesson in the evils of gambling. I was in the cashier's desk in a tailor's shop in a busy part of London when I was a lad, and from my cash desk I saw, every day, in the street outside, prosperous-looking gentlemen wearing large watch-chains and smoking big cigars, who seemed to have nothing to do. They had many friends and all the friends seemed poor. Presently I began to inquire as to who were these mysterious people. They were bookmakers. I then made up my mind that if ever I had anything to do with betting it would be as a bookmaker and not as a backer.

The Chancellor of the Exchequer in his time has played many parts. One might call him the Harlequin of politics. We never know at what particular spot on the stage we may find him or what face he will turn towards us. In this Finance Bill there is a trace of the Chancellor of the Exchequer in his old guise, as he was when he was allied to the Liberal party which was pledged to a free breakfast table. His one relief to the mass of the people, his one contribution to a free breakfast table, is the abolition of the tax on chicory. I do not know if this will mean one farthing per inhabitant per year. For the rest, this Finance Bill means that this is a rich man's Government. There is no consideration in it for the poorer people, whose incomes have gone down and who have been in such a precarious position for the last few years. Last year the Chancellor of the Exchequer, when he was asked where the working classes came in, said they had had their turn in the previous year in the Budget of the right hon. Gentleman the Member for Colne Valley (Mr. Snowden). We thought we should have something to get this year, especially as in the Economy Bill and other Measures the Government have been cutting down everything which means anything to the poor people, but the Budget has not given them a fraction of relief. Then hon. Members wonder that feeling should be growing in the country. One hears talk about the distressing state of the country and how we must all suffer together, but when I take the Report of the Commissioners for Inland Revenue, I find that the actual total income of the Income Tax payers, after deductions, in the year ending March, 1914, was £951,000,000; in the year 1919 it was £2,071,000,000; and in the year 1924 it was £2,300,000,000; so that the income of those who pay Income Tax has increased to about two and a-half times what it was in 1914.

During all this time of depression, when the workers' wages have been cut down and we are told that all the workers must expect a reduction in their wages, we find the income of the wealthy Income Tax payers and Super-tax payers has been increasing enormously [An HON. MEMBEE: "And the wage earners!"] The income of the weekly wage earners who made returns for Income Tax was, in 1920, £825,000,000, but in 1924 it had gone down to £300,000,000. They had lost £500,000,000 in that time, and more than that sum had gone to the people who are above the weekly wage and salary scale. That shows that all the time the poor have been getting poorer and poorer, and the rich have been getting richer and richer, and the present Chancellor of the Exchequer has all the time been relieving the rich of taxation and cutting down everything that meant anything to the poor at all. This is class legislation right the way through, and I hope that, if the present Chancellor of the Exchequer should retain his position till next year, which Heaven forbid, hon. Members behind him will see the injustice of this financial policy and insist that the workers shall at last be given a chance in the finances of the country.

10.0 P.M.

The hon. Member who preceded me boasted about the return to the gold standard. In 1919 we were told that £2,000,000,000 returned for Income Tax was only worth 13s. of gold value, but now by the manipulations of high finance, in conjunction with the Chancellor of the Exchequer, they have raised those pounds which were worth 13s. to 20s. gold value, and by that very process they have increased their total wealth, measured in gold terms, by 50 per cent., apart from any increase in figures. It has also had its effect on the trade and industry of this country. We were during 1924 slowly, but surely, recovering our position, and in the normal course of events, without any picturesque showing before the world, we should have normally returned to the gold standard without the disastrous effect that that sudden return had on the export trade of this country, which meant a handicap immediately of 10 per cent, on the coal trade of this country in its export, and largely brought about the final blow to the coal trade, which brought in its train the necessity for the subsidy and the sequence of events which we have had during the last few weeks. That has been the result of the Government's financial policy. They may boast of the wealth coming in from abroad, and of how their pounds are coming in—those who have overseas investments—worth 20s. gold value, and about invisible exports, and so on; they may draw tribute from all the world and boast of their high financial position, but more secure existence, because of the policy of our business people of economising always in wages instead of giving encouragement for their workpeople to equip themselves and become efficient, and to feel that they have some career as workmen rather than as manipulators of other people's work

All those who really are concerned and who wish to see this country regain its position as a free country, with craftsmen and industrial workers who can compare with those of any other country in the world and hold their own, have got to see that the greatest enemies of industry in this country have been those people of high finance who have manipulated the Front Benches of this House so much in the past, and who, if they are not restrained, will bring us to disaster. I hope hon. Members opposite, who may be in power next year, and very probably will, will learn the lessons of these last few years, and will learn that the present Chancellor of the Exchequer, in the policy that he is putting forward, is demonstrating to the workers of this country that he is greatest enemy that they have, and he is the greatest asset to our party. But if success for our party is to be won by the crimes of the others, I would sooner have no success for this party. Let the party opposite put an end to their crimes, and put forward a sound policy of finance which will help to restore our industry and to give a decent life to the workers, who form the basis of the nation.

I do not propose to follow the hon. Member for Edmonton (Mr. Broad) in defending the wages paid to the workers of this country or in answering his explanation as to why it culminated in the recent catastrophe. I think we are likely to find out later on that the action of the Government will be fully justified. I am certain that no one who realises that the Chancellor of the Exchequer has had to budget for an expenditure of £826,000,000, which is about four times in excess of our pre-War expenditure, can fail to appreciate the magnitude of the task which he has accomplished, and I should like to add my humble appreciation of his efforts, which have not only maintained but enhanced our credit. They have had the effect, quite contrary to what the hon. Member above the Gangway has sug- gested, of raising in reality the purchasing power of the wages of the workers of this country. The Chancellor of the Exchequer said he proposed, during the current year, to do everything he could to economise the national expenditure. I do not think it can be too often or too frequently reiterated that reduction in our national expenditure is absolutely vital if we are ever to return to permanent prosperity in this country. I hope that the head of every spending Department of the Government, that every Member of this House, and, particularly, hon. Members above the Gangway, will endeavour to practise what is so often preached in this House, and see that our national expenditure is reduced. There are two ways of balancing a Budget. One is by increased sources of revenue, and the other is by reducing expenditure. I am sure that in the interests of the country reduced expenditure is preferable.

I only want to refer, quite briefly, to two matters in the Finance Bill. The first is in respect of payment to this country from France. I was extremely disappointed to learn from the Chancellor of the Exchequer that he had only been able to persuade the French Finance Minister to make a payment this year of £4,000,000 on account of the indebtedness of France to this country. The French Government have laid it down in official pronouncemnts that they will not pay away to their creditors more than they receive from Germany. But, under the Dawes Reparation scheme, Germany will pay France, it is estimated, from September, 1925, to 31st August, 1926, a sum approaching £29,000,000, and, after making allowances for the charges and expenses of occupation, there remains a sum of something like £22,000,000 for France. Under the scheme of settlement that M. Peret, according to an official announcement, proposed, America, and England would receive some £5,000,000 this year, leaving a profit to France of no less than £17,000,000 out of the payment she receives from Germany.

We all admire France as a great friendly neighbour, but it is no use disguising the fact that she is spending unprecedented amounts on armaments. She has less unemployment than we have in this country. She has a much lower scale of taxation, and it is intolerable that in effect we should be taking money to subsidise her industries to compete with our own manufactures. We have to pay annually to America some £35,000,000, largely on account of debt contracted on behalf of France, and if we had received the amount that was provisionally promised by M. Caillaux of £12,500,000 a year, we should only be getting practically one-third of what we are paying away on her behalf. I do not think this country can afford to continue to subsidise France, and I do hope the Chancellor of the Exchequer will do everything in his power to insist upon France, at least, handing over any proceeds she gets from Germany under the Dawes Reparation scheme.

There is one other matter to which I wish to refer, if the House will allow me, and that is the betting tax. A great deal has been said about it, but I hope the House will bear with me for a few minutes, because I happened to be on the Committee which dealt with that subject. We have already seen a very large number of communications in regard to the matter, which shows the wide and deep interest which all members of the community are taking in this proposed tax. A large number of protests have been made from members of the Church and other Christian bodies. I do not think it is right to say that the moral objections should be entirely ignored. I think moral considerations sometimes outweigh financial considerations, but I do not propose at this stage to deal with those in detail, except to emphasise the seriousness and the reality of some of the protests which have been made. We are also receiving a large number of protests from those interested in the industry. Admittedly, they speak with prejudice, but if we are to believe what racing people say, it means that if this proposed taxation takes place, racing will entirely be stopped. Personally, I do not share that view at all, but I am quite satisfied that if you stop racing, you will certainly not stop betting, because betting is inherent in the Anglo-Saxon race.

There are, perhaps, some Members of this House, and certainly a large number of people outside, who would say that if betting were stopped, it might not be an evil; on the contrary, it might do a great deal of good. I do not propose to venture an opinion on that point. I am quite satisfied to rely on what Dr. Lyttelton and Bishop Welldon have both said, and that is, that betting, like everything else, is a question of degree. Betting, if done to excess, betting, if it takes up a man's time and makes him neglectful of his work or other social functions, undoubtedly becomes a very real and grave evil, but betting in moderation can be compared to taking one glass of wine instead of drinking a while bottle. It may very well be that the Chancellor of the Exchequer, in his very natural desire to find some other source of revenue which would foe least harmful to the community as a whole, thought it desirable to tax betting. While I do not happen personally to agree with the proposed tax on betting, for reasons which I will give shortly, I am quite prepared to admit that it may be a desirable experiment; but if betting is to be taxed, then it must be on a basis of fairness and equity to all concerned. I cannot help feeling that the Chancellor of the Exchequer has ignored, or, perhaps, not even considered very carefully the conclusions which were arrived at by the Select Committee on Betting. After they had examined important and material witnesses during innumerable sittings lasting over several months they came to the unanimous conclusion that the greatest evil in regard to betting is what is known as the street bookmaker

Millions of people are constantly conniving with each other, and frequently with the police, to avoid the law. That must inevitably have a demoralising effect upon character, must make the people have a contempt for the law, and hold it up to ridicule. The Chancellor of the Exchequer said he is not looking for trouble; that he is only looking for revenue, but what he is now proposing is entirely to ignore the findings of the Select Committee, to leave this great social evil of street bookmaking untouched and perfectly unaffected by this Bill, and to tax the people who are at the present moment carrying on their business within the law. The Chancellor has said that he does not believe there is any harm in taking revenue from those who at the present moment obey the law and pay super-tax, Income Tax and Entertainments Duty, but he is perfectly prepared to leave alone what we were told by the Select Committee was a great social evil, to leave those concerned untouched, and allow them to continue to break the law without having to pay any of the taxes inflicted upon those who are law-abiding.

On the introduction of the Finance Bill the Chancellor of the Exchequer pointed out that he did not think that the mere fact of introducing a tax would in any way stimulate street bookmaking. If to-day there are, as the evidence before the Select Committee showed, 6,000 people practising street bookmaking in this country who are not now paying Income Tax, is it not quite obvious that when there is a further penalty upon, licensed bookmakers in having to pay a duty, the number of 6,000 is likely to increase, and the number of the others to decrease? The Chancellor of the Exchequer takes the view that the people who now bet within the law are not likely to be driven to the street bookmaker. That is obviously true of people who bet in a big way, and who are law-abiding citizens. But there is a middle class who will appreciate very much the opportunity of being able to bet on more advantageous terms with the street bookmaker. He will have a further incentive to offer. The hon. Baronet who presided so ably over the Select Committee said it was absurd to suggest that the street bookmaker would be able to offer any better terms than the bookmaker betting within the law, as they were all guided by starting-price returns. I venture to suggest the street bookmaker can offer a very great inducement, that is, that he will not ask the backer to pay him the tax, or, alternatively, he will be able to offer a certain proportion of odds half a point over and above what the bookmaker betting within the law offers.

I do not want to follow the hon. and learned Gentleman who pointed out certain inconsistencies in the regulations, for those can be dealt with in the Committee stage, and I am sure the Chancellor of the Exchequer will be only too willing to grant any concessions in order to make the machinery work more smoothly. What I want the Chancellor of the Exchequer to consider is this: It may be a good thing to tax betting, but if it is to be taxed, I appeal to him to take his courage in both hands and deal with the subject thoroughly. I cannot imagine that he has studied seriously the very weighty Report of Sir Horace Hamilton, the Chairman of the Board of Customs and Excise. I know that on the last occasion the Chancellor of the Exchequer said the Board of Customs and Excise had considered the matter from another point of view, but I cannot imagine there was any other point of view from which to consider it, and I would like to read to the House the considered conclusion of Sir Horace Hamilton:

I do not propose following the hon. Member who has just spoken in regard to what he has said about the Betting Duty, but perhaps I might deal with his reference to France. I do not know whether he fully realises the enormous number of francs that it would take to pay to this country more than £4,000,000 a year at the present rate of exchange.

I suggested that we should receive some of the gold marks which France is getting from Germany

I am sure that we do not want gold marks in this country. We want sterling, France has to pay in sterling, and if she had to pay us £4,000,000 sterling a year at the present rate of exchange, it would mean a payment of 680,000,000 francs, which would be a great drain on any country. As far as the rate of exchange is concerned, and taking into account the balance of trade with a country like France with an inflated currency, it is very difficult for France even to pay us anything large in repayment of the debt she owes us.

I agree with the hon. Member for Balham (Sir A. Butt) in what he said about expenditure, because expenditure is undoubtedly the blot on the Budget. The growth of national expenditure has gone up, and is still going up, and I do feel that something should be done similar to what was suggested by the right hon. Gentleman the Member for Central Edinburgh (Mr. W. Graham) earlier this afternoon. I remember a speech made by the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) last August in which he hinted at some idea that there should be set up some sort of committee to check the Estimates before they came before this House, and I agree with the right hon. Gentleman the Member for Central Edinburgh that something should be done, and can be done in this direction if only the Chancellor of the Exchequer or the Financial Secretary will take the matter in hand. It is no good throwing up your hands and saying "Expenditure cannot be reduced." The right hon. Gentleman the Member for Central Edinburgh, who is Chairman of the Public Accounts Committee, knows as well as I do that expenditure can be reduced. If some sort of scheme could be drawn up by which the Public Accounts Committee and the Estimates Committee could somehow work together, I feel confident that the Chancellor of the Exchequer would be handed proposals which could be put before the country for the reduction of our national expenditure.

The most important part in the speech which the Chancellor of the Exchequer made when he introduced the Budget is that in which he said, "It is expenditure that governs the position." That is very true, and it is expenditure that governs the position to-day. I feel that certain Members on the Government Bench seem to think that a rise in revenue is the same as a reduction in expenditure, but really there is nothing more farcical than to think that a rise in revenue is equal to a reduction in expenditure. I cannot help thinking that many people in the country are looking with some nervousness as to the future financial prospects. We have had great difficulties, and there are great difficulties ahead of this country as far as finance is concerned. Since the Armistice we have reduced our debt by £736,000,000, we have reduced our interest by about £80,000,000 per annum, and we have reduced taxation by about £200,000,000, while our currency, which was about 30 per cent, below par, is now at par, and, in fact, as was mentioned by an hon. Member on these benches, it rose above par two days ago. In spite of this, we have the Consolidated Fund interest running up to £304,000,000 in 1926–27. The Chancellor of the Exchequer is suggesting increasing the Sinking Fund by £10,000,000 this year, making the total amount £60,000,000. That is a gigantic amount, and I would ask him if the country can afford such a large amount at the present time. A Sinking Fund is valuable to credit as long as you do not increase expenditure, but, if you increase expenditure, the Sinking Fund loses its value and its weight.

European countries are in a different position from ourselves as far as the payment of interest on debt is concerned Countries like Germany had inflation, and have really destroyed their National Debt by repudiation. We have no desire to do that, but there are still countries in Europe, such as the one mentioned by my hon. Friend the Member for Balham and Tooting, which have Fiat notes and yawning Budgets, and cannot possibly get back to normal conditions until their Budgets meet in a proper and right way, by expenditure being less than revenue. The right hon. Gentleman the Member for Colne Valley, in the Budget Debate, said:

I appreciate that.

I wish the right hon. Gentleman would take it more to heart. I have been in finance for many years. I think I appreciate what credit is, and I stand here and say on behalf of the nation and the taxpayer that it is necessary to protect our credit, especially as I am con- vinced that if these credits go on our credit will be in greater danger than it has ever been before. I sincerely hope the burden of taxation will be reduced in the near future. It can only be reduced by a reduction of expenditure. If it can be reduced by a reduction of expenditure, our industries will start going again and will go more rapidly than ever they have in the past. Another important point I should like to mention is the ability of the country to lend money. You may say roughly that the lending of capital is the raw material of industry, and in the past we have been a great lending country.

In pre-War days there were practically only four nations that lent money—Britain, Germany, France and Holland. The United States in pre-War days did not know how to lend money—did not understand international finance. It may sound laughable to-day, but it is a fact that the United States practically lent no money overseas in those days. To-day you have only two countries that can lend money—the United States of America and ourselves. It is a great asset still to be able to lend overseas. It helps the workers in this country by being able to export goods, and I sincerely hope we shall be able to continue lending money overseas and in that way help the nation in the export of goods. I wish again to impress on the Chancellor of the Exchequer the necessity for really having some sort of organisation to go into Government expenditure. It would help our trade, and if he will put his foot down and stop these pyramids of guarantees and subsidies, I feel confident that that will help to reduce our expenditure and will help him to guide the nation into a sounder and firmer financial position.

There are one or two points in this very important document we have here that I should like to touch upon. If we glance over the index at the beginning I think it is clear that this Finance Bill falls into two distinct parts. Part 1, in my opinion, is the most important part of the Bill, the part that deals with Customs and Excise, with its counterpart, the Imperial Preference question, and duties on imports. Speaking from this side of the House I need hardly say how I welcome what provisions have been made. I am not exactly a whole-hog Protectionist at the moment, though that is what I am hoping for as time and the situation develops. The Safeguarding of Industries Act was one of the soundest Measures that was ever put upon the Statute Book. Our experience of the Safeguarding of Industries Act has shown that nothing but good has accrued from it. We have only gone a little further in the direction of wrapping paper in this Finance Bill, but I look forward in the Finance Bill of next year to see something more put on, and perhaps something more between now and then. I want to see the Safeguarding of Industries continued. It is important for our own welfare that this Act should be developed more than at the present time. If safeguarding is to be developed successfully for the benefit of the country and the Empire, it must always be coupled with Imperial Preference. The provisions in this Finance Bill for Imperial Preference are sound. The stabilising of the rates of Imperial Preference for 10 years is a very wise provision, and one which our Colonial kin will regard with the greatest of favour, because it lets them know where they are. They know the rates they will have to pay, and they can act accordingly. It will stimulate the question of Empire development. I want to see the question of Imperial Preference go forward always coupled with safeguarding.

What we should aim at is that as through Imperial Preference we are able to stimulate our Empire production of the necessities of life we should through Safeguarding begin to erect a tariff against all foreign imports, no matter what they are. Many people, particularly hon. Members opposite, are leaning down, kissing the foot and licking the boots of the fetish of Free Trade, and they object to taxes on food. I frankly confess that I strongly object to such taxes, but if we, through Imperial Preference, can stimulate the supply of the foods we need from our Empire to come into this country, I want to see a tariff against foreign goods, and to carry it on from there. I want eventually to develop Imperial Preference on the one hand and Safeguarding on the other, coupling them always together, and so to arrange matters that we shall eventually have a high tariff against all foreign products, and Free Trade within the Empire. There is one blot on the Finance Bill in Clause 41, which I do not like. It provides:

My point is this. If these roads are allowed to deteriorate through lack of expenditure upon them we shall be faced in a short time with a much greater cost, and one which is absolutely out of all proportion. Most hon. Members are aware that the amount of rates spent on roads is very much in the ascendency. That extra £3,500,000 which we are getting for the roads this year may possibly prevent a rise in that portion of the rates devoted to road maintenance, and if that is the case I shall be glad. But that is not the point. It is no use being satisfied with leaving the rates where they are. We want to get them down, and it is just as much important to reduce rates as it is to reduce taxes. If we are not going to spend a proper sum of money on the roads I can see those rates going up. There is another aspect of this question, and that is the rural aspect. In his Budget speech the Chancellor of the Exchequer said it would be very disastrous if through the development of road and road transport railways should be threatened, that they should be cut out by the competition.

I should be very sorry indeed to see that, but I draw the attention of the Chancellor of the Exchequer to the fact that there are a great many districts, particularly in Scotland, where railways do not exist. The constituency which I have the honour to represent, and which is to a large extent like many other constituences in Scotland, is 1,400 square miles long and it has about 70,000 people scattered over that area. There are very few railway facilities there, and there are several villages, 20 and 25 miles from a railway station. We have a very big mileage to maintain and the rates are very heavy for road maintenance and repairs. In that constituency we do not expect to have wonderful roads fit for joy riding. All we ask is that we should have roads that are suitable for the transport of our bare necessities.

When there are villages so far from the station it is the roads, and the roads alone, that can keep them going. We, therefore, submit that the roads in rural districts must receive a great deal of attention. We have also got to think of the farmer's requirements. He needs transport for such things as artificial manures, seeds, threshing machinery and other farm implements, and also for removal of his farm produce. I have known occasions when farmers have had to go to the expense and annoyance of transferring loads out of lorries into their own farm carts because, owing to the state of the roads, the lorries got stuck. That does a great deal of harm to the farming industry. The proportion of rates devoted to roads has been stretched to the utmost, and in some districts reaches 5s. in the £. We cannot bear that much longer, and the transfer of the Road Fund will not make things easier for us at all. I have cited that constituency as an example, but the same thing applies to many others.

The finance of road upkeep is entirely wrong from top to bottom. We have motors now that go along at anything up to 70 or 80 miles an hour. They can cover an enormous distance in a given time. Yet it is safe to say that the greatest part of the mileage that any motor does, whether it is a private car or a commercial vehicle, is done in roads in districts where the owner pays no rates of any description. His only contribution to the rates in that particular district would probably be through his licence tax via the Road Fund. A great deal of that is now to be taken away from us, and therefore he is contributing very much less than he did before. Again, we have the fact that a great number of car owners live in urban districts, where the mileage of roads is smaller, and the cost per head is less. Yet they go about on roads where they pay no rates whatever. From those points of view alone I think that roads are no longer a local question. They have got to be a national question administered nationally through a Government Department. It would be fairer to tax cars and lorries more highly than they are at present, tax them to increase a Road Fund administered by the Ministry of Transport and reduce road rates in proportion. That would be a great stimulus to industry, and it would do the motor owners no harm whatever.

I should like to touch shortly upon what the Chancellor of the Exchequer calls "optional taxation." I put a question to him some time before Easter, as to whether he was considering the taxation of certain hotels and restaurants as a means of raising revenue on the lines of Entertainment Tax. I got a reply that the question of luxury taxation was being considered. The Betting Duty is the only result. I hope we will get more in the way of luxury taxation next year. We need not be a bit frightened about; luxury taxation. If you tax people through luxuries, the mere fact that they indulge in those luxuries is a clear proof of the basis of all sound taxation, namely, the ability to pay. People who spend a lot of money in amusements are clearly able to pay. There is a type of person who in spite of the tax will have these luxuries. You have at present car licences, game licences, taxes on certain drinks, and so forth, and they all work perfectly smoothly. There is no reason why luxury taxation should not be carried a little further, even if only temporarily. I am speaking from the common-sense point of view; I am trying to get the people who can afford to pay to help to stimulate our revenue, so that those who can least afford to pay, namely, those in industry, will have to shoulder a litle less of the burden.

I think the Finance Bill perhaps caters for too great an expenditure. It is an expenditure very largely made up of social services, and very rightly so in some cases. But in these hard times we cannot expect everything. We have 1o keep in the forefront of our minds the need for economy. It is the duty of every hon. Member to see that economy is effected. We may not be popular in putting economy through, but I think that the results, even though they may lead to unpopularity at the time, will be very well worth it. Economy is not palatable medicine, but it has to be taken. I sincerely trust that hon. Members on this side of the House will back up the Chancellor of the Exchequer as much as possible. We have to take the road to economy because it leads to what we all desire, namely, peace, prosperity and progress, and however narrow that road may be, I trust that all Members of the House will take the road with absolutely unflinching courage and determination.

Ordered, "That the Debate be now adjourned."—[ Mr. Sexton .]

Debate to be resumed To-morrow.