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Commons Chamber

Volume 290: debated on Tuesday 5 June 1934

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House Of Commons

Tuesday, 5th June, 1934.

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

New Writ

For the County of Somerset (Weston-super-Mare Division), in the room of John Francis Ashley Erskine, esquire (commonly called Lord Erskine) (Chiltern Hundreds).—[ Captain Margesson.]

Private Business

Private Bills Lords

Standing Orders not previously inquired into complied with.

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, originating in the Lords, and referred on the First Reading thereof, the Standing Orders not previously inquired into, which are applicable thereto, have been complied with, namely:

North Lindsey Water Bill [ Lords].

Tynemouth Corporation Bill [ Lords].

Torquay Corporation Bill [ Lords].

Bills to be read a Second time.

Provisional Order Bills

Standing Orders applicable thereto complied with.

Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, referred on the First Reading thereof, the Standing Orders, which are applicable thereto, have been complied with, namely:

Rotherham Corporation (Trolley Vehicles) Provisional Order Bill.

St. Helens Corporation (Trolley Vehicles) Provisional Order Bill.

Mexborough and Swinton Traction (Trolley Vehicles) Provisional Order Bill.

Southend-on-Sea Corporation (Trolley Vehicles) Provisional Order Bill.

Pier and Harbour Provisional Orders (Clacton-on-Sea and Saint Mawes) Bill.

Bills to be read a Second time Tomorrow.

Oral Answers To Questions

Australia (British Settlers, Victoria)

1.

asked the Secretary of State for Dominion Affairs how many of the Victorian settlers have elected to accept the compensation offered by the Victorian Government; how many of the settlers have not yet received the compensation; and whether he will press upon the Victorian Government that the compensation should be paid without delay?

My latest information is that 225 of the Victorian settlers have elected to accept the compensation offered by the Victorian Government, and that 203 of these have been paid in full and nine have received payment on account. I should be glad to inquire into any cases where there is any reason to think that there has been delay.

Can the right hon. Gentleman do anything to dispel the bitter feeling which exists regarding this Victorian scheme either in consultation with the Victorian Government or the Federal Government of Australia?

The constant effort of the British Government made in very exceptional circumstances shows that that is our desire, and my hon. Friend will be glad to know that it is generally recognised that we have done our best.

While admitting that a good deal has been done for a number of the cases, can the right hon. Gentleman say when this matter is going to be cleared up? It has gone on for a long time, and it is time it was cleared up.

Is it not a fact that these few delays have been occasioned by the necessity of making certain adjustments which it has not yet been possible to complete?

That is not only true, but I frankly admit that it has been a deplorable case. I have had each case individually examined, but it is only fair to say that, while there has been great hardship in many cases, certain people have tried to exploit the situation, and I have had to look at that side of it.

2.

asked the Secretary of State for Dominion Affairs whether Mr. Hay, the assessor appointed by the Victorian Government, has yet made any recommendation as to either the allocation of the money provided for the payment of the debts of the Victorian settlers or the land to be allotted to the settlers who have elected to remain on holdings provided by the Victorian Government?

My latest information is that, as regards the debts of the settlers, the assessor is approaching the stage when it will be possible to consider the allocation of the fund, and that as regards those settlers who desire resettlement on the land, he is carrying out the necessary investigations as rapidly as possible.

Is my right hon. Friend aware that until the allocation of debt is made many of these settlers cannot return to the mother country, and will he represent to the Victoria Government that it is an urgent matter of Imperial importance?

Yes, Sir, that I have already done. But there are two questions involved. The first is that there are not only those who desire to return here, but there are those who want to settle out there. Both questions have to be considered on an entirely different basis.

I would like to ask the right hon. Gentleman if he considers that the Victoria Government have played the game with those settlers?

4.

asked the Secretary of State for Dominion Affairs whether he is aware that the combined Empire societies advisory committee in Victoria has been disbanded; and what the present position is of those settlers in Victoria who have not applied for cash compensation but have either applied for re-settlement or have put in no application?

I am informed that the committee referred to has not been dis- banded.I understand that the cases of those settlers who have not exercised the option of accepting cash compensation are being inquired into by the assessor.

Is the right hon. Gentleman obtaining any information as to whether the committee is disbanding although it has not been disbanded?

No, and I understand that on all sides it is recognised that Mr. Hay, the assessor, is not only fair and impartial, but he is doing good work, and I have no reason to believe that the committee is intending to disband.

5.

asked the Secretary of State for Dominion Affairs whether he is aware that the claims of creditors on the compensation money awarded by the Victorian Government to British ex-service settlers in Victoria have resulted in one man being sent to prison and the destitution of another; that others of the settlers have returned to this country without means; and what action he is taking to help these persons to meet their immediate necessities and obtain a fresh start in life?

If the hon. Member will be good enough to give me the names of the settlers referred to in the first part of his question, I will cause inquiry to be made and will communicate with him further. As regards the remainder of the question I would remind the hon. Member that the compensation granted by the Victorian Government was provided with the object of enabling the settlers to obtain a fresh start.

Is the right hon. Gentleman aware that many of these settlers are arriving back to this country in a state of destitution? The object of my question was to ask whether his Office was doing anything to enable those people to get a re-start in life in this country?

I assumed that the question referred to a re-start on the other side, but I will have inquiries made. My hon. Friend knows that I will certainly consider any personal suggestions that can be made on this side.

May I ask if the people who are arriving home in this state may be advised to apply to the Dominions Office for assistance and advice?

Trade And Commerce

Canadian Tariff Board

3.

asked the Secretary of State for Dominion Affairs how many applications from British manufacturers have been made to the Canadian Tariff Board; and how many decisions have been made?

His Majesty's Government in the United Kingdom have requested His Majesty's Government in Canada, in pursuance of Article 13 of the Agreement concluded at Ottawa, to cause a review to be made by the Canadian Tariff Board of 25 tariff items or parts of items. As a result of the reviews made up to the present date, the British preferential duties have been reduced in two cases, and increased in one case.

Can the right hon. Gentleman say whether a decision has yet been reached with regard to the wool textile industry and whether it is correctly reported that the Canadian Government have refused to make any concession to the wool textile industry?

Can the right hon. Gentleman say whether any arrangement has been made by which the decisions of the Canadian Tariff Board may be available to Members of this House?

Certainly, I will consider that matter, because I think that it will be very useful.

Shipping Industry

6.

asked the President of the Board of Trade if he will now state what steps he proposes to take to assist British shipping to meet subsidised foreign competition?

Consultations are continuing actively, but there are many interests to be considered. I hope to be able to make a statement on this subject in the near future.

Will the right hon. Gentleman impress upon the Government and shipowners that while they are coming to a decision in this matter 87 per cent. of the shipbuilders on the Wear are unemployed on account of the shipping depression?

Colonies (Japanese Imports)

9.

asked the President of the Board of Trade whether he is now in a position to make any further statement with regard to the views placed before him by the Japanese Ambassador on 17th May last, as to the measures announced to be taken in the Colonial Empire to deal with Japanese competition?

Can the right hon. Gentleman say whether the Government are proceeding with measures they intend to adopt in the meantime?

Spain

10.

asked the President of the Board of Trade if, in view of the adverse position of our trade with Spain, it is the intention of the Government to open negotiations for a new commercial treaty with that country?

The possibility of initiating commercial negotiations with Spain is being borne in mind, but I cannot at present say at what date it may be possible to reach a decision.

Is the right hon. Gentleman satisfied that the Government of Spain are desirous of opening negotiations with this country with a view to arriving at a new commercial agreement?

8.

asked the President of the Board of Trade whether he has induced the Spanish Government to remedy certain exchange restrictions and to reduce the gold surcharge increases of the duties upon British exports to Spain; is he aware that most-favoured-nation arrangements confer no benefits upon British trade with Spain; and will he take steps to delete most-favoured-nation clauses in Anglo-Spanish trade agreements?

Exchange control in Spain has not in the past led to any serious difficulties. Certain recent changes have, however, been made in procedure which appear to have led to delays in settlement, and the matter is being investigated. The gold surcharge on Spanish duties is applied to imports from all countries, and no request has been made by His Majesty's Government for a reduction. As regards the second and third parts of the question, I am unable to agree with my hon. Friend that the most-favoured-nation clause in our Treaty with Spain secures no benefit for our trade. In fact in many cases the duties levied in Spain on goods from countries not possessing treaty rights are much higher than those we enjoy by virtue of the clause.

Germany (British Herring)

12.

asked the President of the Board of Trade whether, in view of the fact that the German Government has placed severe restrictions upon the import of British herring, he will make representations to the German Government in the matter?

I presume my hon. Friend has in mind the recent general reduction in the amount of foreign exchange permits issued to German importers of many classes of goods, and I would refer him to the reply which I gave on 31st May to a question by the hon. and gallant Member for Banff (Sir M. Wood), to which I am at present unable to add.

In view of the fact that the German Government are simultaneously refusing to pay interest on their private debts and imposing severe restrictions on all imports into their country, does not the right hon. Gentleman think that the time has arrived when he ought to make very forcible representations to the German Government?

I think that the German Government are fully aware of our views on the matter.

May I ask the right hon. Gentleman whether those restrictions apply to the import of aeroplane engines into Germany?

Port Of Liverpool

13.

asked the President of the Board of Trade if he will give the latest information as to the percentage increase or decrease of exports of manufactured goods from the Port of Liverpool?

I would refer my hon. and gallant Friend to the statement furnished in reply to his question of yesterday.

Shipbuilding

14.

asked the President of the Board of Trade how many mercantile ships are building in British shipyards and the aggregate tonnage; what was the number of ships built and the tonnage in 1920 and 1930; and what action he intends to take to bring about a revival in the shipbuilding and allied industries?

On the 31st March, 1934, there were under construction in the United Kingdom 107 vessels of 100 tons gross and upwards, their total tonnage being 481,440 tons gross. The corresponding figures for 31st March, 1920, were 618 vessels of 2,055,624 tons gross, and for 31st March, 1930, 481 vessels of 1,478,563 tons gross. The position in the shipbuilding and allied industries is dependent, of course, on the position in the shipping industry, and on the orders given by shipping firms and companies for new vessels.

The President of the Board of Trade has not replied to the last part of my question:

"What action he intends to take to bring about a revival in the shipbuilding and allied industries."
I want to ask him what reply he has to make to that?

The shortest reply is that we hope to stimulate the placing of orders by shipping firms and companies.

War Material (Export Licences)

15.

asked the President of the Board of Trade whether he will issue a complete list of all arms, ammunition, and implements of war which are subject to an export licence?

The information desired by my hon. Friend was published on pages 526 and 527 of the Board of Trade Journal of the 5th April last, of which I am sending her a copy.

Sweepstakes And Lotteries

16.

asked the President of the Board of Tirade the total value of all contributions from associations operating under the name of art unions, derived from sweepstakes or lotteries authorised under 9 and 10 Victoria, chapter 48, for the five years ended December, 1933?

I regret that the information desired is not available without the expenditure of time and trouble which would not be justified by the results obtained. I would remind my hon. Friend that the prizes in draws of Art Unions sanctioned by the Board of Trade under the Art Union Act, 1846 must consist of paintings, drawings and other works of art.

In view of the fact that this is the only sweepstake or lottery which is authorised, legalised or sanctioned, by the State, is it not incumbent on the President of the Board of Trade to be able to supply the information sought in the question?

Does not the right hon. Gentleman see that this is really only an evasion, because it is perfectly easy to sell the picture, to convert it into cash, and the morality of the matter remains the same?

17.

asked the President of the Board of Trade whether his sanction was sought and given for the promotion of the Caledonian Art Union Legal Derby Sweepstakes (1934) Draw; and whether such sanction, if given, involves the Board of Trade as guarantors of such money inducements which may be offered by the promoters to subscribers?

The answer to the first part of the question is in the negative. The rules of the Caledonian Art Union as sanctioned by the board pursuant to the Art Union Act, 1846, do not authorise a sweepstake for money prizes.

In view of the hon. Gentleman's reply, may I ask whether it is not the responsibility of the Board of Trade to sanction, according to 9 and 10 Victoria, Chapter 48, any draw in any year, and can he place before the House the names of the promoters who sought his sanction in respect of the 1930 Derby draw? In view of the lack of a reply, I beg to give notice that I shall raise this matter on the Adjournment at the earliest opportunity.

British Army

Remounts

19.

asked the Financial Secretary to the War Office whether he has any information as to the number and value of remounts purchased by foreign military authorities in Great Britain and the Irish Free State, respectively, during 1933?

Territorial Army Training Camps

20.

asked the Financial Secretary to the War Office whether he is aware that a number of men in the Territorial Army are penalised by loss of their annual holiday and in some cases by loss of their employment by attending their annual training camps; and whether he will take steps to induce employers to facilitate the attendance of Territorials in their employ?

I am glad to say that in many cases employers facilitate attendance at camp. Territorial Army Associations and Commanding Officers take all possible steps to induce employers to cooperate in this matter.

Water Divining, Salisbury Plain

21.

asked the Financial Secretary to the War Office whether water-diviners are being employed by the Army authorities with a view to discovering additional water-supply sources on Salisbury Plain; and what other steps have been taken to discover water?

Yes Sir. As it is necessary to sink a new bore hole the-opportunity is being used to obtain a. practical test of water divining. The services of civil engineers and geologists in Government employment are also being used.

Military Secretary

22.

asked the Financial Secretary to the War Office whether, in view of paragraph 56 of the report of the board of inquiry into certain statements affecting civil servants (February, 1928), stating that a civil servant may not so order his private affairs as to allow the suspicion to arise that a trust has been abused or a confidence betrayed, he will cause inquiry to be made into the case of the Military Secretary to the Secretary of State for War, who is the largest ordinary shareholder in a private banking company which in 1929 purchased a firm on the lists of the War Office, the Admiralty, and the Air Ministry, and which is closely associated with the manufacture of armaments, and which banking company since that date has subscribed all the new capital for that firm?

No, Sir, I see no reason for causing any such inquiry to be made. The appointment of the distinguished officer to whom the question apparently refers has recently terminated, but I may add for the hon. Member's information that the post of Military Secretary has not the remotest connection with the purchase of armaments.

Is the Financial Secretary aware that the firm referred to in the question, a Sheffield firm, is one which went into liquidation during the period of office of the late Government because of foreign dumping; has now been reorganised and is slowly regaining prosperity under import duties?

May I ask whether the resignation of this gentleman took place since the Financial Secretary knew of this question being on the Order Paper?

No, Sir. He has not resigned; his appointment has terminated, as I have already said.

But terminated since the Financial Secretary knew this question was to be asked?

No, Sir, terminated in the ordinary course of his duties. It was a four years' appointment and was terminated long before.

Why is the Financial Secretary to the War Office so angry in his replies?

Scotland

Bracken

23.

asked the Secretary of State for Scotland if any steps are being taken in the present season to deal with the increasing loss of sheep stock and grazing land brought about by the spread of bracken?

The committee which has been actively investigating the possibility of improving existing methods of eradicating bracken are proceeding with their inquiries, and have arranged for demonstrations of different methods to be given in the course of the present month. I hope to receive a report from them on the result of their investigations as soon as possible thereafter.

Is it intended to publish the report in view of its importance to the sheep-farming industry of Scotland?

It will depend on the character of the report and whether a satisfactory method bas been found.

Have the Government considered offering a reward or devising a scheme for dealing with this matter?

We have chosen a body of scientific and practical men and have asked them to apply their minds to this matter, and I think the report we shall receive will throw further light on a difficult question.

Herring Fishing Industry

24.

asked the Secretary of State for Scotland if he is yet in a position to announce the outcome of the negotiations with the representatives of the herring industry; whether the contemplated agreement is calculated to increase the earnings of fishermen; and whether, failing agreement, the Government propose to take any steps to assist the industry in the present season?

25.

asked the Secretary of State for Scotland what steps the Government proposes to take in order to assist the herring fishing industry?

In reply to these questions I am not yet in a position to make a statement about the proposals which the herring industry have put forward, but I hope to do so in the very near future.

Can the Secretary of State say when he expects the Sea Fish Commission to issue its first report?

26.

asked the Secretary of State for Scotland whether he can obtain the figures from the Scottish and English herring exporters and state the extent to which the Anglo-Russian trade agreement has resulted in increased sales of salt herring to the Soviet Government since 1st January, 1934?

I would refer the hon. Member to the replies given on Thursday last by the Secretary of the Department of Overseas Trade, who stated that the Soviet purchasing authorities have agreed to buy 70,000 barrels of herring. I understand that prior to this no purchases have been made since 1932.

Does this not show that the claims of the Liberal party in regard to the Anglo-Russian Agreement are all falsified?

Sheep Stock Valuations

27.

asked the Secretary of State for Scotland if the committee on sheep stock valuations has yet submitted its report; and, if so, when the report will be made public?

I have not yet received the report of this committee, but I understand that its work is well advanced.

Oats (Imports)

28.

asked the Secretary of State for Scotland if he is now in a position to state the Government's policy with regard to the importation of subsidised foreign oats?

As the hon. Member is aware, the import duty on foreign oats was increased to 3s. per cwt. as from 13th January last. The imports of foreign oats during the three months February to April, 1934, showed a reduction of about 50 per cent. as compared with the corresponding period last years while taking April alone this year's figure was only about a tenth of that for last year, and these imports were entirely from Argentina, where no arrangement is in force for subsidising the exportation of oats.

Is the right hon. Gentleman aware that the price farmers are receiving for oats has not risen in spite of the duty?

I think there has been little alteration in the price of oats, but prices are firmer.

Is it not the fact that the price of oats, although it may be firmer, is quite unremunerative; and does the Secretary of State propose to take any further action in the matter in view of the fact that it is the policy of the Government to put the price for oats and beef on a more remunerative basis?

Is the right hon. Gentleman aware that there is a large quantity of oats still in bond which cannot be disposed of even at the cost of production?

The hon. Member knows that the duty was imposed only a few months ago. The imports have been largely restricted, and I think it would be better to wait until we see the results of the Government's policy before considering any further measures.

Milk Prices

29.

asked the Secretary of State for Scotland if he will inform Parliament if he has considered the report from the committee of investigation regarding the complaints of excessive summer charges by the Scottish Milk Marketing Board; what action he intends to take to reduce prices in accordance with the requests of the co-operative societies, the Scottish Socialist party, and other organisations acting oh behalf of consumers; what action is to be taken regarding the protest from Greenock against the increase in the price of milk during the summer months; and what the effect of this increase will be on local charitable institutions?

The Committee of Investigation for Scotland have not yet reported to me on the subject. With regard to the last part of the question, complaints by charitable institutions are at present under consideration by the Consumers Committee for Scotland in accordance with the provisions of the 1931 Act.

Will the right hon. Gentleman use his influence with the Cabinet, with a view to seeing that the extra supply of milk is given to the schoolchildren free of charge?

Vagrancy (Committee Of Inquiry)

30.

asked the Secretary of State for Scotland whether any action has been taken with regard to the appointment of a Departmental Committee to investigate the subject of vagrancy in Scotland?

My right hon. Friend has appointed a Committee on this subject.

The members of the Committee are as follow:

Sir John Lamb, K.C.B., LL.D. (Chairman), lately Under-Secretary of State for Scotland.

George Cruickshank, Esq., County Clerk of East Lothian.

G. P. Laidlaw, Esq., Chairman of Glasgow Council for Community Service in Unemployment.

Provost William Wells Mabon, Jedburgh.

Miss Dorothea Maitland, Welfare worker among vagrants.

Lieut.-Colonel D. Mathers, D.S.O., O.B.E., Secretary to the British Legion (Scotland).

Adam Smail, Esq., Department of Health for Scotland.

Charley Tinker, Esq., Member of County Council of Inverness.

Joseph Westwood, Esq., lately Parliamentary Under-Secretary of State for Scotland.

Mr. George Marshall, of the Department of Health for Scotland, has been appointed Secretary to the Committee.

With my hon. Friend's permission, I will print the terms of reference in the OFFICIAL REPORT.

Did the hon. Gentleman make any attempt to get any representative of the vagrants on that committee?

How is it that we do not get any answers to these very pertinent questions?

Following are the terms of reference of the Committee:

"To inquire into the conditions under which vagrants and other persons of the wayfaring class are at present living in Scotland and to report as to any steps which might be advisable in order to improve these conditions; also to inquire into the administration of any laws, including by-laws and Regulations, relating to the aforesaid class, including those relating to the relief by Poor Law authorities of wayfaring poor persons, and to suggest any amendments which should be made in such laws, etc., or in their administration."

Agriculture

31.

asked the Secretary of State for Scotland whether the extremely serious position of the farmers in the North-east of Scotland has been brought to the notice of the Government; and if they have considered the advisability of giving some form of temporary assistance to the producers of oats and beef until the price received for these products has reached a remunerative level, in view of the fact that it is the declared policy of the Government that farming must be made to pay?

I am aware of the representations which have been made on this subject. With regard to the marketing of oats I would refer to my reply to-day to my Noble Friend the Member for Perth (Lord Scone). As regards beef, the Government has the meat situation, under active consideration in the light of the recommendations made in the recent reports of the Fat Stock Reorganisation Commissions.

I did not catch the answer to the first part of the question. My question was whether the matter had been brought to the notice of the Government?

In regard to the price of oats, if it be the case that the lowness of that price is due to the stocks that are in the country, why is it that when the duty was first raised by 3s. prices rose as high as 18s. and have now dropped below 14s.?

I think I dealt with that point in detail in reply to a supplementary question put by another hon. Gentleman. I will send a copy of my answer to my hon. Friend.

Able-Bodied Relief

50.

asked the Chancellor of the Exchequer if he is aware of the general demand in Scotland that the Government should take over the financial responsibility for able-bodied relief as from 2nd July; and if he intends to take action in this matter in accordance with the desires of local authorities?

I would refer the hon. Member to the reply given by the Financial Secretary to the Treasury on the 18th May to a question by one of the hon. Members for Dundee (Mr. Dingle Foot).

Haematite Iron Ore (Contract)

33.

asked the Secretary for Mines if he will make a statement as to the result of the negotiations, in which his Department have assisted, for a contract for the delivery of haematite iron ore between the British (Guest, Keen, and Baldwin) Iron and Steel Company, Limited, and the Glamorgan Haematite Iron Ore Company, Limited; and if he can state the quantity to be supplied?

I am informed that a contract has now been signed between the British (Guest, Keen, Baldwins) Iron and Steel Company and the Glamorgan Haematite Iron Ore Company for the supply by the latter company of 230,000 tons of iron ore for delivery over a period of about 18 months. I need hardly say how pleased I am at this development which will result in a considerable increase in the output of the mine with consequent increase in the employment of iron ore miners.

Coal Industry

Collieries (Inspections)

32.

asked the Secretary for Mines the number of examinations made at collieries by workmen's inspectors appointed under Section 16 of the Coal Mines Act, 1911, in each of the inspectorate divisions of England, Scotland and Wales, for the years 1932 and 1933, giving the number of accumulations of firedamp reported during such examination?

As I have a long reply to give, including a tabular statement, with the hon. member's permission, I will circulate it in the OFFICIAL REPORT.

Will the reply contain a statement as to whether or not His Majesty's Inspectors of Mines have an opportunity of verifying the reports of the workmen's inspectors?

My hon. Friend had better await the long statement which I propose to circulate.

Following is the re-ply and tabular statement:

Following the Debate on the Mines Department estimates an analysis on this point had been specially made from the reports of the workmen's inspectors for 1933 and is printed below.

I would point out that any classification of this kind can only be approximate, and that it cannot take any account of the extent and gravity of the defects in ventilation reported to have been found. In many instances where the defect was slight and temporary, it is stated in the report of the workmen's inspectors that the defect was remedied before they had left the spot by attention to the brattice cloths or hurdle sheets. In some of the instances in which places were fenced off, the percentage of firedamp reported by the workmen's inspectors was less than 2½.

In view of the amount of work involved, and as the result is not likely to show much difference, I do not propose to make a similar analysis of the reports for 1932, unless there is a general desire that this should be done.

COAL MINES ACT, 1911.
Inspections on behalf of Workmen during Year, 1933.
Inspection Division.Number of Reports of Inspections.Number of Reports which called attention to any defect in Ventilation.Nature of Report.Number of cases in which places were fenced off because of:—
Firedamp.General, e.g., "Ventilation in need of improvement." "Ventilation only moderate" due to:—
At Faces (including cutting side).In Rippings.In CavitiesIn Roof Breaks.At Faults.In GoafIn Returns.Firedamp.Blackdamp.Fumes of Explosive.Heat.Firedamp.Black-damp.
Scotland5864111
Northern1,6964314711811134
Yorkshire1254919136133312
N. Midland49
N. Western1866
Cardiff and Forest of Dean.80923512123
Swansea101116234
Midland and Southern.24312
TOTAL2,880141442019245314222695

Hydrocarbon Oils (Duty)

34.

asked the Secretary for Mines whether he will give details in regard to the figure of 600,000 tons of coal which have been consumed as a result of the duty on heavy hydrocarbon oils, showing the amounts due to transfers from oil to coal, coke, gas, electricity, and creosote, respectively; and how much he estimates will be similarly transferred in the current year?

The details of the estimated figure of over 600,000 tons per annum given by the Coal Utilisation Council, and quoted in my answer of 17th May, are as follow in tons per annum in terms of coal:

Coal316,000
Coke83,000
Electricity7,000
Gas99,000
Coal oil103,000
Total608,000
As regards the second part of the question, I am not able to supply an estimate of future conversions although, from the information given to me by the Coal Utilisation Council, it appears that they are likely to represent a substantial quantity of coal.

Does not the hon. Gentleman think, in view of the detriment caused to trades which have to use taxed oil, that it is desirable for the information of this House that these statistics should be obtained?

My hon. Friend can use his own judgment in accordance with the usual rules.

Is it not a fact that there is a sharp divergence of opinion between the Coal Utilisation Council on the one hand and the oil users and various other interests on the other; and is it not to the national interest that the Government should have an impartial inquiry to find out the facts?

I cannot debate that question now. I am answering the question which has been put to me.

Traffic Control, Oxford

35.

asked the Minister of Transport whether, in the opinion of his advisers, the automatic traffic-light control system at Car-fax, situated within the 30 miles an hour speed limit in Oxford City, is working satisfactorily?

I am informed that recently there has been some discussion as to whether the present method of working these signals is the best that can be devised and the matter is now being investigated in conjunction with the chief constable and the city engineer. As soon as my hon. Friend has received his representative's report, he will communicate with my hon. and gallant Friend.

Is it not a fact that considerable congestion has arisen as a result of the system at present in operation and that the system manually operated by a policeman has often had to be resorted to at that particular junction?

The facts are all under consideration at the moment. I cannot give any answer until I get the report.

Is the hon. and gallant Gentleman aware that the pedestrians of Oxford think that the system is working rather well?

39.

asked the Secretary of State for the Home Department whether he will inform the House of the total number of fatal and non-fatal road accidents which have occurred on the Oxford to Henley road outside the Oxford speed limit during the time that the speed limit has been in operation; and the total number of accidents in the corresponding period of the previous year?

I am informed by the Chief Constable of Oxfordshire that during the period from the 20th November, 1932, to the 31st May, 1933, there were three fatal and 27 non-fatal accidents on the Oxford-Henley road. The corresponding figures for the same period in 1933–1934 were three fatal accidents and 30 non-fatal accidents.

In view of the increased number of accidents will the right hon. Gentleman communicate with the Minister of Transport, with the object of having the SO miles an hour speed limit at Oxford removed, since it has increased congestion there and made people drive faster outside?

Royal Navy

Foreign Governments (British Advisers)

36.

asked the First Lord of the Admiralty on what dates, for what purpose, for what periods, and in what numbers since the Great War, officers and men of the British Navy have been lent in an advisory capacity to foreign Governments?

Between the years 1926 and 1933 British officers were lent to Chili in an instructional capacity, the numbers employed being originally five, increasing to seven and finally dropping to one. A British naval mission was serving in Greece at the official termination of the War and a fresh mission of 17 officers and seven ratings was sent out shortly afterwards. This mission returned in 1923 and smaller missions have since served from November, 1924, to May, 1926, and from March, 1927, to August, 1932. One officer was lent to the Nanking Government in an advisory capacity from 1931 to 1933; two officers in succession have been employed by the same Government to supervise Chinese cadets undergoing courses of instruction in this country; and two officers are employed at the Naval College at Mamoi, one of them being an officer on the Active List who relieved a retired officer in the same capacity. One officer is at present employed as naval adviser to the Finnish Government, having been appointed in 1929. All the foregoing were appointed for the same purpose, namely, to develop and train the naval service of the country concerned. In addition an officer was lent to Rumania in 1929 to advise on the development of a port.

Ex-Naval Men (Colombian Engagement)

37.

asked the First Lord of the Admiralty, with regard to the recent enlistment of 100 ex-officers and naval ratings in the Colombian navy, how many of these are on the reserve, and how many asked for and obtained the permission of the Admiralty to go?

I assume that the number of 100 mentioned by the hon. Member is that of a party mentioned in the Press on the 14th May as having sailed from this country on the 12th May. The total number of officers and men who are serving in the Colombian navy with the permission of the Admiralty is 130, of whom 13 are officers on the retired list and 117 are naval pensioners. In addition, 55 men now serving in that navy were formerly members of the Royal Fleet Reserve, but were granted their discharge on entering the Colombian service.

42.

asked the Secretary of State for Foreign Affairs whether any communication was received by the Foreign Office from the Government of Colombia with reference to the arrangements recently entered into whereby 100 British ex-officers and naval ratings have joined the Colombian navy for a period of two years?

Yes, Sir. The Colombian Chargé d'Affaires inquired on the 5th February last (1) whether His Majesty's Government would see objection to the engagement of certain British subjects, who had previously served in the Royal Navy, under a direct contract with the Colombian Government, to navigate two destroyers which had recently been acquired by that Government across the Atlantic to Colombia, and (2) under what conditions these ex-officers and men could continue to serve in the Colombian Navy in the event of Colombia becoming involved in war. I replied on the 6th February (1) that there was no legal objection to the Colombian Government entering into a direct contract with British subjects for the purpose of the navigation of the vessels to Colombia and their delivery to the Colombian authorities; but (2) that it would be contrary to the Foreign Enlistment Act of 1870 for any British subject to accept any commission or engagement in the military or naval services of any foreign state at war with any other foreign state which is at peace with this country; and (3) that His Majesty's Government would see serious objection to any contract which the Colombian Government might conclude with any British subject being drawn in such a way as to constitute an agreement by such British subject to remain in the service of the Colombian Government in the event of Colombia becoming involved in war. I subsequently received a communication from the Colombian Government informing me that, under the terms of their contracts with these individuals, the parties concerned could not be called upon to undertake any duties which would be contrary to their obligations as British subjects and, furthermore, that the Government of Colombia would not in fact invite these ex-officers or ratings to perform any service or duty other than those provided for in their contracts.

Does not that really mean that in the event of hostilities breaking out between Colombia and another country, such as Peru, as seems possible, the only competent people on the ships would immediately have to leave?

It means exactly what my answer clearly conveyed to the hon. Gentleman. There is no ground whatever to suggest that the British Government have been party to enlisting any British subjects for the purpose of taking part in any war.

Does it not create an impossible position for British subjects to be serving in a foreign navy seeing that they have to leave it the moment war breaks out?

Aviation

Aeroplanes (Silencers)

38.

asked the Under-Secretary of State for Air whether he will consider the introduction of legislation making the use of silencers obligatory on privately-owned aeroplanes?

No, Sir. My Noble Friend is wholly in sympathy with the object in view, namely, the elimination of all avoidable noise in flying; but it would be altogether premature at present, and indeed useless, to make the fitting of silencers legally obligatory. Silencers would diminish the noise from the engine but would not affect that from the propeller, and they would have the disadvantages at once of impairing the efficiency of the aircraft and of increasing the risk of fire. The whole question is under active consideration and it is hoped that the technical progress which has been and is continuing to be made will have the effect eventually of solving this very difficult problem.

Aie Mail Services (East Africa And Palestine)

58.

asked the Secretary of State for the Colonies whether, in view of the satisfactory operation of the East African and Palestine air-mail service for the past three and five years, respectively, and the rapid development of internal air communications in those territories, he will take steps to urge that the advantage of these air-mail services may be enjoyed by all classes of the community and not confined to that small section which can afford the present high air-mail surcharge rates?

I am afraid that I am not in a position to add anything to the latter part of the reply given yesterday by my right hon. Friend the Postmaster-General to my hon. and gallant Friend the Member for Hertford (Sir M. Sueter), of which I am sending him a copy.

Prison Warders (Pay)

40.

asked the Home Secretary whether the rates of pay of postmen and railway ticket-collectors have been taken as a standard for the rates of pay for the prison subordinate staff in the warder rank?

No, Sir. The rates of pay of these and other occupations were referred to by the Stanhope Committee for purposes of comparison only. They were not taken as a standard for the pay of prison officers.

Fortune Telling (Prosecutions)

41.

asked the Home Secretary whether his attention has been drawn to the case of Nesta Elsie Lewis, who was summoned at Bournemouth, on the 31st May, for professing to tell fortunes, and who was fined £7 and costs; whether he is aware that it was admitted that what she had said was true; and, in view of this and other similar prosecutions, will he take the necessary steps to amend the law, and so prevent many people of high character from being prosecuted for the exercise of powers with which they have been endowed?

I have obtained a report of the circumstances leading to Mrs. Lewis's conviction. It appears that some of the statements made by her were correct, while others were incorrect. I see no occasion for any amendment of the provision under which she was convicted.

Does my right hon. Friend think that an Act of Parliament passed in a more ignorant age should be used 'as the basis of persecution of people of high character, and is he aware that the principal witness for the prosecution was the wife of a police inspector, who admitted that the defendant told her correctly the names of her children and the number of them, and various other details such as that her husband was a man in a uniformed job?

I have gone most carefully into this case. I have no reason to suppose that it was not properly investigated, and I see no reason to take action in the matter.

Would this lady be allowed to use her peculiar powers of vision on a great national occasion such as that which is being Leld to-morrow?

Town Planning (Natural Beauties)

43.

asked the Minister of Health when the report of the public inquiry in regard to the preservation of the beauties of Cannock Chase, arising out of its threatened industrialisation, may be expected?

I presume that my hon. Friend refers to the inquiry held on the 25th April last into the application of the South Staffordshire and North Worcester- shire Joint Town Planning Committee for an Order providing for the representation on that committee of the rural district council of Stafford in which part of Cannock Chase is situated. The report upon the inquiry has been received, and my right hon. Friend has already informed the authorities that he has decided to comply with the application.

44.

asked the Minister of Health if he is satisfied that local authorities are town-planning with sufficient energy to ensure the protection of natural beauties; and if he is convinced that the maximum effort in this direction is being done in Derbyshire?

The specific town planning power to which my hon. Friend refers has been available for just over twelve months. Progress is being made in the use of this power, both generally and in the county to which he particularly refers, and, although it may be hoped that the use made of the powers to protect natural beauties will increase with increasing knowledge and resources, there is no reason to be dissatisfied with the start that has been made.

Is my hon. Friend aware that already most unsuitable buildings have been erected in this area, and, having regard to the great natural beauties of Derbyshire, will he cause further inquiry to be made?

If my hon. Friend will bring any facts to my notice, I will gladly inquire into them.

Is it not a fact that the use of these powers tends to increase rather than to decrease the destruction of natural beauty?

Will the Ministry give every help to the local authorities to preserve these beauty spots?

Certainly, the answer is obvious. The Section was inserted in the Act for that purpose.

Is my hon. Friend content with pious hopes or will he take definite steps to induce local authorities to avail themselves of their powers?

Does not the hon. Gentleman realise that town-planning is about 15 years too late, and that it would have been done but for a reactionary Member of the last Coalition Government, Dr. Addison, who has now joined the Labour party? If we do not look out he will be back again.

United States (British Debt)

Mr Chamberlain's Statement

45.

asked the Chancellor of the Exchequer upon what terms the British Government borrowed £1,000,000,000 in 1917 from the United States?

$2,500 millions, or about £500,000,000, was borrowed during 1917–18 mostly in the form of 6 per cent. demand obligations: this sum formed part of the $4,600 millions funded in 1923: see Command Paper 1912.

Is it a fact that the British Government undertook to pay in gold certain large sums at short-term notice?

asked the Chancellor of the Exchequer whether he can now make a statement on the subject of the American War Debt?

It had of course been my wish that the first announcement on this subject should be made to the House of Commons, and that there should be simultaneous publication of our Note to the United States Government in London and Washington this afternoon. Owing to a misunderstanding, for which the American Government was in no way responsible, the terms of our Note which was delivered at 8 p.m. yesterday by our time were issued in Washington a few hours later in the evening.

The House will recollect that His Majesty's Government in their Note of 1st December, 1932, gave a full statement of the reasons which convinced them that the system of inter-Governmental War Debt obligations as it existed before the Hoover Moratorium could not be revived, and that a radical revision of the existing settlements was essential. The United States Government, in their Note of 7th December, 1932, welcomed the suggestion for a close examination of the whole subject between the two countries. His Majesty's Government paid the instalment due on the 15th December, 1932, in gold, explaining that this payment was not to be regarded as a resumption of the annual payments under the existing agreement, and that it was made because the United States Government had stated that in their opinion such a payment would greatly increase the prospect of a satisfactory approach to the whole problem. Discussions took place both in the spring and in the autumn of last year, but it was not found possible to arrive at a settlement acceptable to the two Governments. On 15th June and 15th December, 1933, His Majesty's Government made token payments in acknowledgment of their debt and on each occasion the President of the United States expressed the personal view that he would not regard His Majesty's Government as in default.

His Majesty's Government would have been prepared to make a further payment on the 15th instant in acknowledgment of' the debt and without prejudice to their right again to present the case for its readjustment, on the assumption that they would again have received the President's declaration that he would not consider His Majesty's Government in default. But they understand that in consequence of recent legislation passed in the United States such a declaration is no longer possible, so that the procedure adopted by common agreement in 1933 cannot be followed on the present occasion. In fact, our Ambassador was informed by the United States Administration on the 11th May that any Government failing to pay in full the instalment due under the existing Agreement on 15th June would have to be regarded as in default; and on 25th May, 1934, the Treasury of the United States addressed a communication to His Majesty's Government setting out the details of various items including arrears of $196 millions due last year and amounting altogether to the sum of $262 millions (or over £50,000,000) due on the 15th instant.

His Majesty's Government were, therefore, in the circumstances which I have described, faced with the alternative either of paying this sum of £50,000,000 in full and of paying a further sum of over £20,000,000 on the 15th December next (that is to say, over £70,000,000 for the current year), or of suspending all interim payments pending the final revision by agreement of the existing War Debt settlement. The first of these alternatives would necessitate a corresponding demand by His Majesty's Government from their own war debtors, for it would not be possible to contemplate a situation in which this country would be called upon to resume payment of their war obligations to others in full while continuing to suspend all demands for the payment of the War obligations due to the United Kingdom. The resumption of full payments to the United States would therefore revive the whole system of inter-governmental war debt payments, and would postpone indefinitely the chances of world recovery. After full deliberation His Majesty's Government came to the conclusion that they could not assume the responsibility of adopting a course attended by such disastrous consequences.

Accordingly, they have addressed to the United States Government a Note of which copies will be available in the Vote Office immediately after Questions. In this Note His Majesty's Government, after briefly restating their views on the whole question of the War Debt, have informed the United States Government that, while deeply regretting the circumstances which have imposed upon them the necessity for such a decision, they have concluded that they must suspend further payments until it becomes possible to discuss the ultimate settlement of inter-governmental war debts with a reasonable prospect of agreement. His Majesty's Government have again made it clear that they have no intention of repudiating their obligations, and will be prepared to enter upon further discussion on the subject at any time when in the opinion of the President of the United States of America such discussion would be likely to produce results of value.

May I ask the Chancellor of the Exchequer if he will give the House an opportunity of discussing the statement?

Perhaps the hon. Gentleman will address the question through the usual channels. I have not considered that.

Can the Chancellor give an assurance that there will not be a repetition of the misunderstanding under which the proposals of His Majesty's Government were given to the Press before they were given to this House?

I cannot possibly give an assurance that there will never again be a misunderstanding.

It arose apparently out of the misunderstanding of a telegram. We cannot prevent misunderstanding arising occasionally in the interchange of messages between one country and another.

Would the Chancellor of the Exchequer be prepared to issue a White Paper showing the total amount of debt owing to America at the first onset, the principal and interest that has to be paid and the debts of other countries owing to this country?

I think if the hon. Member will look at the White Paper he will see some of the information which he requires.

Income Tax

46.

asked the Chancellor of the Exchequer under what statutory authority the Board of Inland Revenue are acting when in the cases of assessment of premises subject to void periods they calculate the gross assessment on the lower rent obtained, and thus reduce the allowance for repairs fixed by quinquennial assessment, although no change has actually taken place in the rental value?

The provision under which relief in respect of unoccupied houses is given is Rule 4 of No. VII of Schedule A of the Income Tax Act, 1918. If, however, my hon. and gallant Friend is referring to the allowance for void periods in the case of houses let in apartments or tenements the statutory authority will be found in Section 21 of the Finance Act, 1930.

Is my right hon. Friend aware that in nearly every case of apartments and tenements no repair allowance is granted for the void periods; that it costs even more to maintain a house that is empty than one that is occupied; and is he satisfied with leaving the discretionary powers under that Section to the Inland Revenue officers?

My hon. and gallant Friend asked what statutory authority there was for the action taken, and I think I have answered that question.

Codex Sinaiticus

49.

asked the Chancellor of the Exchequer if he can make any further statement as to the final amount which it will be necessary to provide from public funds to complete the purchase of the Codex Sinaiticus?

I understand that nearly £50,000 has already been contributed by the public towards the £93,000 which, as was stated in reply to my hon. Friend the Member for South Kensington (Sir W. Davison) on the 8th February, was temporarily advanced by the Treasury for this purpose. It is not yet possible to estimate what will be the ultimate net liability of the Exchequer as contributions are still being received.

Silver Coinage

47 and 48.

asked the Chancellor of the Exchequer (1) whether, when he is recalling silver coins issued before 1920, he will also take measures for the recalling of the discoloured issues of the years during which the first experimental alloys were employed at the Royal Mint;

(2) whether the proposed calling in of the silver coins of the years preceding 1920 will be accompanied by a prohibition of their further circulation, or will only imply the retention and non-reissue of such coins as they come in to the public Exchequer; and, if the former is the case, what period will be allowed to the public for the giving in of such coins before they are demonetised?

There is no present intention of demonetising the silver coinage issued before 1920. If it should eventually be decided to do so, due notice would be given to the public. These old coins, which now form only a very small proportion of the total circulation in the United Kingdom, are being slowly withdrawn with the assistance of the Bank of England and the Post Office, and replaced by coins in the new alloy.

May I ask my right hon. Friend whether he would not find it cheaper to recoin these old silver coins into new money with the present dies rather than sell them as bullion at the ridiculous price of 19 pence per ounce? You would then be getting towards the beginning of a new good coinage.

Revenue (Safeguarding Measures)

51.

asked the Financial Secretary to the Treasury whether any recent cases have been brought to his notice of smuggling in the Solent; and whether he is satisfied that the closing of all coastguard stations on the Solent, leaving only one Customs coast-watcher to patrol a 10-mile stretch of coast with very few houses, has not led to a revival of this practice?

It is contrary to policy to publish information as to cases of attempted smuggling in any particular neighbourhood, but I am advised that the present measures for safeguarding the Revenue in the Solent and elsewhere on the coastline are adequate for the purpose and more efficient than those which previously prevailed.

Rural Water Schemes (Grants)

53.

asked the Minister of Health the names of the 23 parishes whose water schemes have been approved for grant and the individual value of the grants; and also the names of those parishes which have submitted schemes with regard to which no decision as to grant has yet been reached?

As the lists are long, I will, with permission, circulate in the OFFICIAL REPORT the names of the 23 parishes and of a further 15 parishes for which schemes have been approved for grant, and the amounts of grant provisionally allocated to them, and I will send my hon. Friend a list of the 259 parishes for which applications have been made and are being investigated.

Can the hon. Gentleman give us the total amount of the grants made up to the present time?

In round figures, it is about £19,000, and that sum has promoted £168,000 worth of work. Following are the details:

Parishes.Grant provisionally allocated. £
Fyfehead Neville, Hammoon, Hazelbury Bryan, Hinton St. Mary, Manston, Mappowder, Marnhull, Okeford Fitzpaine, Pulham, Sturminster Newton, in the Sturminster Rural District, Dorset4,600
Clenchwarton, Terrington St. Clement, Tilney All Saints, Walpole St. Andrew, Walpole St. Peter, in the Marshland Rural District, Norfolk5,000
Baltonsborough, Butleigh, Chewton Mendip, Cuthbert St. Out, Dinder, Godney, Meare, North Wootton, Priddy, Rodney Stoke, Sharpham, Walton, Westbury, West Pennard, Wookey, in the Wells Rural District, Somerset6,500
Overton in Kingsclere and Whitchurch Rural District, County of Southampton1,500
Letterston and Littlenewcastle in Haverfordwest Rural District, Pembroke860
Liddington in the Highworth Rural District, Wiltshire550
Great Cheverell, Marston, Worten, in the Devizes Rural District, Wiltshire400
Llanishen in the Monmouth Rural District, Monmouthshire280

Infant Mortality, Widnes

54.

asked the Minister of Health the infant mortality for the various wards in the Borough of Widnes; and what action he is taking, in view of the gravity of the figures in some of the wards?

The infant mortality rate for this borough in 1933 was 63 per 1,000 live births, as compared with a rate of 64 for England and Wales as a. whole. My right hon. Friend has not yet received information as to the rates for the various wards of the borough, but he will communicate with the local authority on the subject.

Is it not a fact that in some of the wards in this particular area the infant mortality is as high as 180 per 1,000?

Is it not a fact that the Widnes Town Council have taken advantage of the Government's policy and have inaugurated a big slum clearance scheme in the very ward where infant mortality is highest?

Housing

Slum Clearance, Widnes

55.

asked the Minister of Health if he proposes to circulate the report of an inquiry held by one of his inspectors in connection with the demolition in Waterloo Road East, Widnes, which the medical officer of health for Widnes has condemned as unfit for habitation; and whether the owners of property in this area raised any objection to the demolition of the property?

No, Sir. Reports of this kind are confidential documents. The reply to the second part of the question is in the affirmative.

Is the Minister aware that when this slum clearance scheme for the Waterloo Ward was first suggested it was opposed by the local Socialist Councillors?

May I ask the Parliamentary Secretary whether he does not think that some of these landlords ought to be "pinched" for taking the rent of some of these houses?

Building Materials (Increased Production)

56.

asked the Minister of Health whether, in view of the national house-building policy, he has urged the trades concerned to enlarge their capacity for producing more bricks, more tiles, more builders' glass, and more baths, to replace supplies now imported; and what response has been made by the respective manufacturers?

My right hon. Friend is in constant touch with representatives of manufacturers and suppliers of building materials, and he understands that where necessary they have already taken or are taking steps to increase the productive capacity of their works.

Colonies (Unemployment)

57.

asked the Secretary of State for the Colonies if he has any statistics showing the number of Europeans who are registered as unemployed in our different overseas colonies at the present time?

The only non-self-governing colony in respect of which recent information is available is Kenya, where, in April, the number of registered unemployed Europeans was 104. This figure includes new arrivals, persons unemployable because of age or otherwise, persons whose wives or families are earning not less than 350 shillings a month, and pensioners and others who are in a position to maintain themselves. Excluding these categories the number was 62.

House Of Commons (Ventilation)

59.

asked the First Commissioner of Works whether he is satisfied that every possible effort has been made to improve the ventilation of the House of Commons?

A very comprehensive engineering report on this subject was presented to Parliament in June, 1931, as Command Paper No. 3871 of that year. This report is available in the sale office. I have recently had analyses made of the air in the Chamber and Lobbies at different times of the day, and am sending the hon. Member a copy of the Government chemist's report. I am further carrying out a similar but more complete survey of the ventilation of the whole building, as a result of which I hope it may be possible for more definite conclusions to be reached.

Is my right hon. Friend aware that the atmosphere of this House compares very badly with that of any cinema in the country?

Certainly, that is my own impression; but all the scientific and technical experts who have investigated the subject have found the contrary.

Is my right hon. Friend aware of the practice which obtained some years ago in this House of providing the streptococci in this Chamber with bowls of broth from time to time, in order to test their numbers and strength, and can he tell the House whether recent provision has been made for similar trials of strength?

Will the right hon. Gentleman try the old-fashioned system of opening the windows more frequently?

Is it not true that it is the mentality of this House which is sometimes oppressive, arid not merely the atmosphere?

Selection (Standing Committees)

Standing Committee D

Mr. William Nicholson reported from the Committee of Selection; That they had discharged the following Member from Standing Committee D: Colonel Euggles-Brise; and had appointed in substitution: Mr. Morgan.

Report to lie upon the Table.

Message From The Lords

That they have agreed to—

Clydebank and District Water Order Confirmation Bill, without Amendment.

That they have passed a Bill, intituled, "An Act to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Acts, 1899 and 1933, relating to Irvine and District Water Board." Irvine and District Water Board Order Confirmation Bill [ Lords.]

Irvine And District Water Board Order Confirmation Bill Lords

Read the First time; and ordered (under Section 9 of the Private Legislation Procedure (Scotland) Act, 1899) to be read a Second time To-morrow, and to be printed. [Bill 131.]

Orders Of The Day

Finance Bill

Further considered in Committee. [ Progress, 4th June.]

[Captain BOURNE in the Chair.]

Clause 16—Amendments As To Licences For Mechanically Propelled Vehicles)

3.41 p.m.

I beg to move, in page 11, line 11, at the end, to insert:

"and as if the paragraphs set out in Parts III and IV of the said Third Schedule were respectively substituted for paragraphs 4 (d) of Part II and 5 (a) of Part III of the Seventh Schedule to the Finance Act, 1933."
The purpose of the Amendment, and of the additions to the Schedule which it would involve, is to tax motor vehicles which are used for the carriage of British timber at the same rate as motor vehicles used for the carriage of agricultural produce. A similar Amendment was discussed on the Finance Bill of last year. It is not necessary to enter again into all the arguments used on that occasion, particularly since the Financial Secretary to the Treasury was good enough not long ago to receive a combined deputation representing timber growers and merchants, when this was one of the many requests which were laid before him. The Committee will remember that the Seventh Schedule of the Finance Act, 1933, taxed agricultural vehicles at a lower rate than other vehicles, in order that farmers might not suffer any great increase in transport costs arising from the additional motor taxation which was then imposed. It has always seemed to us something of an anomaly that this preference, which is extended to agriculture, should be withheld from sylviculture; particularly since the problem of transport affects the timber industry perhaps more acutely than any other industry in the country.

It is by no means clear, from the enactments which have been passed within the last 15 years, whether forestry is legally regarded as a branch of agriculture. If there be any justifiable legal distinction, we hope that it will soon be removed by the inclusion of timber within the scope of the Agri- cultural Marketing Act. If it be asserted that a load of timber does a great deal more damage to the road than a load of sugar-beet or a load of turnips, it should be remembered that, while an agricultural crop may be gathered and transported to the market from the same field almost every year, a timber crop from the same piece of ground is felled and transported to the market probably not more than once in a lifetime. The damage done by timber, although it may be more severe, is very much less frequent. Timber is normally felled about once in 80 years. During the whole of the intervening period, the owner of the woods is paying his rates towards the upkeep of the roads, and I would remind the Committee that, although the Exchequer pays a substantial contribution towards the maintenance of first-class roads, the inferior roads, upon which by far the greater part of this damage is inflicted, are maintained by the local authorities.

I shall not delay the Committee by dwelling on the very grave difficulties under which the timber trade is now labouring. No doubt the Committee are already aware that it is impossible at present to obtain an economic price for any sort of timber unless it happens to be in some exceptionally favourable situation, on account of the heavy expense of its carriage; and the Committee must be equally aware of the alarming decline which has taken place within the last three or four years in the numbers of men engaged both in forestry and in all its subsidiary trades. But there is one further consideration which has not, perhaps, always received as much attention as it deserves. The Treasury is itself the ultimate heir to any profits which may be realised from the operations of the Forestry Commission, who already possess some 250,000 acres of woods, and whose woods are increasing ' at the rate of more than 20,000 acres a year. The Treasury pay to the Commission an annual grant of £450,000, which I am sure the Chancellor of the Exchequer would not desire to be fruitless, and I think that any loss of revenue which the Treasury might now suffer by the acceptance of this Amendment, or perhaps of some similar but less unskilfully drafted Amendment, would be very small in comparison with the ultimate loss which might be incurred if the Commission were to be prevented by these heavy transport charges from realising an economic price on their timber sales.

I recognise that there are some difficulties in the way of accepting this particular Amendment. When we submit our proposals to the Treasury, we are generally told that we ought to submit them instead to the Ministry of Transport, and when we go to the Ministry of Transport we are told, very naturally, that that Ministry is not concerned with the difference or similarity between one kind of product and another, but only with the means by which those products are transported. I am sure that the Minister is fully alive both to the peculiar difficulties of the timber trade and to the importance of that trade to the country, and, instead of stressing the grievances of those who are engaged in it, I would prefer to examine whether it might not be possible to arrive at some arrangement acceptable to the Ministry to extend the discrimination in favour of vehicles which are fitted with pneumatic tyres, or more particularly to apply that discrimination to pneumatic-tyred tractors, which do not at present enjoy any preference; or perhaps to make some further differentiation in favour of smaller vehicles, or of whatever kind of vehicles may be likely to inflict the least damage on the roads. We have only put down this one Amendment in order that we might be able to raise the highly important question of transport costs, but I think that, if the Minister should be disposed to be sympathetic towards its case, the industry ought to be more anxious to hear what the Government are able or willing to do than to ventilate its own complaints, and should be ready to co-operate in the working of any concession which might be found practicable.

3.55 p.m.

I should like to join with my hon. Friend who has moved this Amendment in asking the Government to give it more favourable consideration than they gave it last year. As my hon. Friend said in the course of his closing remarks, owners of timber never know where they are in regard to this matter; sometimes they are referred to the Treasury, and sometimes to the Ministry of Transport. I do not wish to blame my hon. Friend the Minister of Transport for taking a one-sided view of this question. I cannot help thinking, on reading the OFFICIAL REPORT of the Debate last year, that he was right from his own point of view when he said that:

"The larger aspects of industrial policy, not only of forestry but of other industries, are beyond my province, and all that I am concerned with is the road user of vehicles which these industries employ."—[OFFICIAL REPORT, 1st June, 1933; col. 2219, Vol. 278.]
I submit that the Chancellor of the Exchequer, when he brings in his Budget, is not concerned with one Department only, but the forestry business point of view gets no chance of being put before him, because he is over-persuaded by one particular Department. If he knew the present amount of employment in forestry, and the development that is now going on in connection with that industry, and if he could realise that the potentialities for employment and development in forestry are greater than in anything else in England at the present time, I think he would put that before the mere use of the roads. After all, even since the Minister spoke last year great improvements have been made in tractors of all sorts. My hon. Friend who moved the Amendment says that he would be quite willing to see regulations introduced whereby all these machines should be rubber-tyred, and I would submit that at the present moment, with the new inventions since last year in connection with rubber tyres, these haulage tractors will not do any more damage than the horses and wagons which are the principal motive power. I am glad that the Minister has consulted with the timber merchants and with the producers of timber, and has gone into that side of the question to which I think more weight ought to be given in the Budget, namely, the business side. If he will refer to the Interim Report of the Inter-Departmental Homegrown Timber Committee, he will see that they say:
"On many estates, particularly those remote from any centre of population, while good quality logs may still be sold, the output of timber is limited by the cost of transport. This is always a governing factor, particularly in the case of thinnings suitable for colliery purposes, which now cannot reach a market and are left to rot in the woods."
Since last year a great advance has been made in the scheme for the organisation of the marketing of timber. Not only producers, but timber merchants and all those interested in forest products are coming together, and they have the good will and the help as far as it can be given of the Forestry Commissioners in getting together, to make a scheme of organised marketing for timber.

We hope that some powers will be taken to keep out foreigners who undersell the market, but both in transport methods and organised marketing our people have to do their best before they are justified in asking for help against foreign competition. The cost of licences to timber merchants has been put up double and treble in some cases for hauling timber out of the woods. The competition is very unfair. You have the foreigner putting his sawn-up timber straight on to the railway, but the home timber merchant has to get great blocks of sawn timber from his local woods to the nearest rail or to his own timber yard. I hope, therefore, that the Government will look into this matter more closely, and give the English timber merchant and producer in the timber industry a fair chance of competing against the foreigner in transport prices.

4.2 p.m.

I would like to say a word to back up the appeal which has been made. The main point is that surely there is no real justification for differentiating between forestry and agriculture. I think that all crops ought to be treated the same. After all, trees are crops. It is a thing about which it is sometimes difficult to convince people when they complain that it is proposed to cut down old trees or to plant new ones. They are regarded as permanent features of the landscape with which it is almost treason to interfere. But whether it is a crop of mustard and cress, which reaches maturity in five or six weeks, or an oak tree, which reaches maturity in 150 years, they are all crops, and the average, taking soft and hard wood together, taking pit wood and sawn wood together, is something like what was stated by my hon. Friend, namely, 70 or 80 years. Although, no doubt, a by-road may be damaged a good deal during the time that that wood is being removed, it happens only at very rare intervals. My point is that if, for good and sufficient reasons, a concession is given to tractors engaged in agriculture, there does not seem to be any sufficient reason why it should not be extended to forestry.

I would like to back up what the hon. and gallant Gentleman opposite has just said, that the English timber trade and forest owners are trying, quite rightly, to put their own house in order, to make better arrangements with the Forestry Commission with their good will, and, I hope, with their help, for the more orderly marketing of their timber, for avoiding competition among one another, and for getting into amicable relations with timber merchants. One constantly finds that these arrangements are made more difficult, and that the whole envisaging of timber as an economic proposition is being made more difficult. Timber growing ought to be an economic proposition, and not a luxury which only rich people can afford for amenity purposes and that sort of thing. We ought to regard it just as much a business-like industry as agriculture, and therefore to extend to it reasonable facilities with regard to its transport. I beg, therefore, to support the Amendment.

4.5 p.m.

I should like to add one word to the appeal which has just been made by my right hon. colleague on the Forestry Commission who has just spoken, that the Minister will give very favourable consideration to this Amendment, or still more to the appeal which lies behind it rather than to the actual Amendment. I think that there is a much better case for a change of this kind to-day even than there was a year ago. I will not repeat the reasons which have been stated, but I will add my assurance that the steps which are being taken among woodland owners and the timber trade to put their house in order are genuine and determined steps.

I want to say a word or two about the importance to the country of making forestry—the growing of trees—a commercially sound proposition. My right hon. Friend who spoke last was the author of a very well-known report which led to the setting up of the Forestry Commission with a very definite task aimed at establishing an insurance fund in timber which would be of the greatest possible value to this country in the event of a great emergency. To achieve that task it is not only essential for the State, acting through the Forestry Commission, to carry out its programme, but that the 3,000,000 acres of woodland which exist in private hands should be put into a proper state of production, which they are not to-day. They cannot be put into a proper state of production to-day because it does not pay to do so, and there is no present prospect of it paying to do so unless there are great market changes or one of the principal difficulties is removed, namely, the cost of transport.

If we are to achieve this great object, I think it is essential that the Government should assist in reducing the cost of transport. I am not proposing that it should be done in such a vague, unconsidered way that all the timber in the country which has to be moved should be moved long distances by road, but I do think that a great deal could be done by a carefully considered and conditioned relief to rubber-tyred tractors hauling timber to encourage the sound commercial production of timber throughout Great Britain. The Forestry Commission itself has now reached a time when it must put on the market year by year a large and increasing volume of thinnings. It is essential to silvi culture that these thinnings should be removed, and it is not necessary for me to prove how essential it is to the Treasury that they should be removed without loss. Transport is the biggest item in the loss, which at present stands in the way of removing and disposing of thinnings. For this and other reasons, I add my appeal to the Minister of Transport to consider this proposition with all the favour he can.

4.9 p.m.

I would like to support the Amendment. I am speaking on behalf of the British timber merchants, but especially on behalf of those who carry on business in the Forest of Dean. One firm when it purchased a tractor had to pay a tax of £25 per annum, and now the tax is £130 per annum, plus special licences, in addition to having had to fix rubber to the wheels. Another firm employs from 60 to 100 persons, and pays £5,000 annually in wages.

This firm has been suffering loss for the past three years, and has gone through very difficult times. The native timber business is faced with keen foreign competition. Surely the preservation of the industry and forestry in our country is a national necessity, and so closely allied with the industry of agriculture tnat it seems impossible to separate them. There is no complaint made to-day with regard to the damage done by tractors which are specially fitted with rubber tyres. I trust, therefore, that the Minister will give this Amendment favourable consideration, and that if it is impossible to give any concession to-day, he will kindly consider it on Report.

4.11 p.m.

While I associate myself entirely with what has been said by all previous speakers, I wish especially to stress the point that the present situation means a great loss of employment. There can be Very few private estates on which at the present day a profit is shown in forestry year in and year out. The result is that woods which ought to be cut and replanted are left standing, because the wood cannot be marketed, and, even if marketed, it means that either no profit is made or such a small profit that it does not justify the landlords in undertaking the considerable expenditure necessary to replant the area which has been cut down. One of the chief causes, undoubtedly, of this loss of profit is the very heavy transport cost. In my own part of Scotland we have the absurd situation of hundreds of acres of good pit wood getting past the useful stage simply because it does not pay to shift it to the Fife mines not 50 miles away, and it is cheaper to bring in pit wood from the North of Europe. It does not matter how well the industry organises itself; unless some concession is given in the cost of transport, we cannot hope to compete successfully with the foreign wood which is coming in so cheaply. The result, as I have said, is that there is a great loss of employment, and, as my hon. Friend the Member for West Renfrew (Mr. Scrymgeour-Wedder-burn) said, the Treasury loses, because there is less Income Tax to be collected 'and more unemployment benefit to be paid out. Therefore, I hope that even if the Government are not prepared to accept this Amendment, or the exact wording of it, this year, they will at least give it very sympathetic consideration, and see if another year they cannot do something to help the timber industry.

4.14 p.m.

I merely want to endorse the appeal to the Minister, and I am doing it on behalf of certain interests in my own constituency who have asked me to represent this particular 'aspect of the matter. There is a close analogy between the agricultural industry and the timber industry as they are both concerned with the land, and it is particularly noticeable in areas where both industries are operating over the same ground. On the edge of Nottingham, actually within the confines of the city, there are important timber interests who are engaged in hauling timber, and they are very concerned about this differentiation between the tax on agricultural vehicles and that on their own vehicles engaged in this trade. They ask me to make an appeal, which I do very warmly, to my hon. Friend that as soon as they can the Government should endeavour to remove this differentiation by putting these vehicles engaged in similar tasks on the same footing.

4.15 p.m.

I should like to say a few words to try to persuade the Minister to do something to help what might be a much bigger industry than' it is. In my lifetime the production of timber has gone through a revolution. Until recent times it was carried on unscientifically and spasmodically and in a way not calculated to produce the best economic returns, but now, under the guidance of the Forestry Commission, a very great advance has been made. After all, our soil is suitable, and we are a small island and our timber ought to be very near the people who want to use it, but the timber trade suffers from a very heavy percentage of cost of haulage. It means that the area of the sale of timber is restricted to a small geographical limit and, the more you reduce the cost of transport and the more you increase that limit, the larger the number of possible consumers of timber you get. I want to see the industry on an economic basis, and, above all, I want to see replanting carried on where necessary. At present it is not being carried on as much as it ought to be, because the timber will not be profitable when it is grown. Surely trees are just as much a crop as corn. They grow out of the land, they are cut down, carried off the land and used in industry. The only distinction that I can see is that they have a longer season, and you have to wait a longer time to reap the crop. I agree that, if the Minister can bold out the hope of a concession, the industry must help him and organise itself. I am told that they are willing to do that, and I hope the Minister will go some way now, if he cannot go the whole way.

4.18 p.m.

I should like to support the very admirable appeal that has been made to the Minister. It has been suggested that, if he cannot accept the Amendment, he might be able to give assistance in another year. I should like to appeal to him to give it at some later stage of this Bill without delaying it for a year. One perhaps rather unusual point of view that I should like to put forward is that of the horse. I very much regret the superseding of the horse by mechanical transport, but this is one of the occasions when it is in the interest of the horse that he should be superseded as far as possible. It is necessarily very heavy work which has in the past been done by horses. Those who have worked them have done it with as little cruelty as possible, but it was heavy and undesirable work for a horse. English timber must go by the roads. Foreign timber largely goes on the railway because it comes in at the ports and is carried to where it is sawn up. English timber cannot do that, but must go on the roads, and it is desirable as far as possible that all encouragement should be given to the use of tractors instead of horses.

4.21 p.m.

I am sure the Committee are grateful to the hon. Member for raising this point and, above all, for the tone in which he moved it; but the Committee will realise that there are other considerations than mere sympathy for the state of an industry which is extremely depressed and the general realisation of the importance of that industry that we have to take into account in dealing with an Amendment which proposes to assist it out of the Road Fund. It would be a widespread extension of the principle that a depressed industry-was entitled to a different rate of licence for the lorries that carry its goods from other industries, and, if it were widely spread, it would break down the licensing system under the Road Fund altogether. Those who stress the resemblance of forestry and agriculture ought to be careful that they carry that resemblance into the Amendments that they move. This Amendment would confer upon forestry a privilege far greater than that enjoyed by agriculture. There seems to be an idea that any vehicle that happens to be carrying agricultural produce pays a special agricultural rate. That, of course, is an entire misapprehension. The special agricultural rate is only enjoyed by a vehicle which is carrying the produce of the owner of the vehicle. Hon. Members would not be content with that privilege. They ask that this should extend to any vehicle that is carrying timber. I am sure those who stress the agricultural argument will realise that they weaken their case that forestry should be put on the same footing as agriculture when in fact they demand that it should be put on a very much better footing.

But it is not only that. It is an entire misunderstanding of the whole principle underlying the system of licensing under the Road Fund to say that a tree is very much like corn and that a vehicle that carries a tree ought to pay the same tax. In determining the tax to be paid by a vehicle, we are not considering what it carries. We are actuated by the knowledge of its user of the road and the damage that it does to the road, and we try to approximate the tax to the damage that the vehicle does to the roads during the year. The concession was not given to agriculture because agricultural vehicles carried wheat or something that grew, but because the vehicles to which the concession applied have a very limited user of the road, and, for that reason, did not do as much damage as the ordinary lorry, and it was felt that, because they did not do as much damage, they should not pay as much tax. The difficulty about the policy that hon. Members urge is that, although it is true that to a certain extent their user of the road is limited, yet it may be generally accepted that during that limited user they do more damage to the roads on which they run than normal vehicles with a much more widely extended user. It is because of the difference in the damage that they do and not because there is any moral, intellectual or legal difference between wood and wheat that we have put forestry into a different position from agriculture.

May I point out what I think is rather a fallacy in the argument of the right hon. Gentleman the Member for North Cornwall (Sir F. Acland), that you only cut a bit of wood once every seventy years and you cut a bit of corn every year. That may be true, but your forestry vehicles may run over the same bit of road year after year and tear it up. The right hon. Gentleman said that unclassified roads are maintained entirely by local rates, but that is not the case. An annual block grant is given to local authorities from the Road Fund for the maintenance of unclassified roads. It is entirely upon the damage that I believe vehicles do that I base my rejection of this claim. It is a question of fact. I am only too willing to listen to any facts which anyone has to bring to my attention, but I think, in striving to maintain the analogy between the two industries and basing the argument entirely on that, a good deal of argument which might have been of much more practical use has been overlooked.

My hon. Friend has thrown out the suggestion that there are certain types of vehicles fitted with pneumatic tyres which do comparatively little damage to the roads. I do not know how far that is correct, nor do I know the extent to which it is possible to use such vehicles. I confess that I have always understood that the possibility of using them was very limited, and I have not pursued that particular line of inquiry because I thought the result could not be of any great assistance to the forestry users, but, if between now and another stage my hon. Friend would like to bring to my notice any facts in that connection which would show either the extent to which it is possible to make use of vehicles fitted with pneumatic tyres or any proof as to the greater convenience of such vehicles upon the road and the lessening of damage to the roads which they would entail, I should be only too glad to take them into consideration. Of course, I make no promise whatsoever in the matter—until I have seen the facts, I certainly should not be able to do so—but I can assure the Committee that I, in company with everyone else here, feel the utmost sympathy for the industry of afforestation. I have the clearest recognition of its utility and the utmost desire to help it in any way which I do not believe to be destructive to the whole principle upon which Road Fund taxation is built. If, therefore, between now and another stage my hon. Friend has anything of that nature which he would like to bring to my notice, I shall be only too glad to have the opportunity of considering it.

4.32 p.m.

I have been very interested, because I had a completely open mind in regard to the merits of this proposition, and I have been trying to gather the pros and cons during the course of the Debate. Naturally, one does not blame anybody who brings forward an Amendment of this sort. All the vested interests are getting their dip into the pot, and there seems no reason particularly why this one should not have a turn. It is a rather fascinating argument: Sylviculture is like agriculture; agriculture has had many concessions; therefore, sylviculture ought to have many concessions. And no doubt someone will say that if sylviculture gets a concession, and wood is used for burning, and coal is used for burning, therefore coal must get the concession that sylviculture gets. It seems to be a generally accepted theory as regards concessions to vested interests. The only trouble of the hon. Gentleman who moved the Amendment seems to be that the Minister of Transport has found a principle, a principle of licensing under the Road Fund, which prevents this particular type of subsidy being a proper and decent thing to be given, and it looks as if his arguments were substantial arguments on that point.

I particularly wanted to intervene, however, in order to comment on a statement which was made by the Noble Lord the Member for Perth (Lord Scone), who said that woods to-day were left standing far beyond their useful period of life, and that indeed some of them were left to stand indefinitely, because they could not be sold at a profit. It was such an extraordinarily interesting example of the fact that timber is only produced as a by-product for profit in this country. Apparently, under our existing system, all this useful timber has to be allowed to rot and not be used for the purposes for which it might be used in the mines and so on because, under our economic methods, unless a profit can be obtained, the timber cannot be produced; and so we find, apparently, a large waste of timber going on in the country, the cutting of which might occupy men most usefully and the carrying of which to the proper places for use would occupy other men most usefully. But we cannot do it. We are prohibited by our system from making use of this material which is standing there waiting to be used, with the men waiting to cut and transport it, and the pits or the other places ready for its reception at the other end. It struck me as so extremely good an example of the futility of the present system, that I took advantage of this opportunity to draw attention to it.

4.35 p.m.

I do not know whether the hon. and learned Member for East Bristol (Sir S. Cripps) has quite understood the position with regard to pitprops. It is not the inability to make a profit which prevents them being cut, but the inability to receive a price which will cover the cost of felling the wood and transporting it to its destination.

It is not at all the same thing. To make a profit, it would be necessary to receive a price which would cover not merely the expense of felling and transport, but the cost of planting and growing the wood, which represents the far greater part of the costs of production. If profits were completely abolished, there would be no more likelihood of it being worth while to employ men, nor would it be any less futile to employ men, to cut down the timber and to take it to the mines if its value to the mines were not even equivalent to the value of that labour.

I am grateful to my hon. Friend the Minister for his reply, and I would also like to thank my hon. and gallant Friend the Member for Rye (Sir G. Courthope), who can speak with so much knowledge and authority on the part of the Forestry Commission, for the observations which he made. I entirely appreciate the reasons which have prevented my hon. Friend from accepting the Amendment, and the last thing I wish to do is to emphasise the difficulties of an industry towards which he is already so entirely sympathetic. I can assure him that we shall be prompt to take advantage of the suggestion which he was kind enough to make, and I hope it may be possible to come to some arrangement which will at least ease the situation. In the meantime, I beg to ask leave to withdraw the Amendment.

If I call the hon. and learned Member, the Amendment cannot be withdrawn.

I just wanted to interject that the reason why timber is grown for profit is the same reason why counsel appear in court for fees.

Amendment negatived.

4.37 p.m.

I beg to move, in page 11, line 11, at the end, to insert:

"and as if there were inserted at the end of paragraph 5 of the said Second Schedule the following provision:—
'For the purposes of this paragraph the expression "trailer" shall not include an appliance not exceeding five hundredweight in weight which is constructed and used solely for the purpose of distributing on the road loose untreated gritting material.' "
Clause 16 proposes to amend Section 13 of the Finance Act, 1920, in which Act licences for mechanically-propelled vehicles were dealt with, and also the question of trailers which were to be drawn by those mechanically-propelled vehicles. I think the House understood that those trailers would be vehicles which were used for the carrying of merchandise and goods, but unfortunately the definition of the word "trailer" has led to misunderstanding and has been found to include other vehicles which I think it was not the intention of the House at the time to include. The present system of the construction and maintenance of roads has necessitated a good deal of distribution on the surface of the roads of sand and grit for the purpose of giving a footing and of taking away the effects of untreated tar. These trailers, which are being used for that purpose, are small vehicles, or rather I would call them small appliances, which are attached to the back of a vehicle simply for the purpose of distributing this gritting material, and I think it was not the intention of the House at that time that they should be considered as trailers for the purpose of taxation.

Up till last year the tax on one of these things was about £6, but last year, unfortunately, it was increased to £10, £15, or £20 in accordance with the weight of the vehicle which was drawing it, and not of the trailer itself. An Amendment was put down last year, but owing to lack of time it was not called and so was not treated on its merits. The fact, therefore, that it was down last year but did not receive a concession should not affect our decision to-day, because it was purely in consequence of the lack of time that it did not receive consideration. I will not labour the point, because I believe the Minister is going to give my Amendment favourable consideration, but I will conclude by saying that these implements are not. used for transport, but simply for distributing sand and grit in the ordinary construction and maintenance of roads.

4.39 p.m.

The sole use of the machines to which this Amendment refers is the treating of roads with a view to the avoidance of skidding and so, of course, the avoidance of accidents. In view of the fact that that is their only purpose, and that the weight of the appliances is in practice small and anyhow limited in this Amendment to five cwt., and in view of the further fact that the machine is not adapted to carrying loads and cannot therefore be used for any other purpose than that of spraying the skiddy roads, I think I can recommend the Committee to accept the Amendment.

Amendment agreed to.

4.40 p.m.

I beg to move, in page 11, line 11, after the words last inserted, to insert:

"and the said section thirteen and section twenty-five of the Finance Act, 1933, shall have effect as if the sub-paragraph contained in Part III of the Third Schedule to this Act were substituted for sub-paragraph (c) (ii) contained in Part III of the Seventh Schedule to the Finance Act, 1933."
Before I discuss this Amendment, may I ask your advice, Captain Bourne, as to whether the Amendment which follows it on the Paper—in line 16, at the end, to insert:
"(3) When determining the weight unladen of vehicles which are constructed or adapted to use coal gas as fuel for the purpose of section thirteen of the Finance Act, 1920, as amended by subsequent Acts including this Act, the weight of the vessels for containing the gas shall be excluded."
is to be taken? I realise that there is a certain similarity between the two Amendments, and a certain overlapping, but I would point out that while both deal with gas-propelled vehicles, this first Amendment deals specifically with the rates of licence duty on steam-propelled and gas-propelled vehicles, and the Amendment which follows deals particularly with the ascertainment of the weight of gas-propelled vehicles only, the unladen weight with the weight of cylinders taken into consideration, and it seems to me, while I hope the Minister will accept both Amendments, that it may be possible that he will accept one and not the other.

Does that mean that I shall be out of order in addressing myself at all to that Amendment, which is considered in some parts of the country to be of considerable importance?

If the hon. Member wishes to make any remarks on it, I think he can do so on the Question, "That the Clause stand part of the Bill"

On a point of Order. Will it be possible to discuss the two Amendments together, as both affect the mining industry?

I do not think we can have a discussion on the two simultaneously.

The Amendment which I am now moving seeks in effect to do away with the rates of licence duty in sub-paragraph (c, ii) of the Seventh Schedule to the Finance Act, 1933, and to substitute in its place another rate of licence duty in Part III to the Third Schedule to this Bill, and those rates of duty are to be found on pages 1258 and 1259 of the Order Paper to-day.

Our objective in moving this Amendment is the desirability of so revising the duties on heavy vehicles as to encourage as far as possible the use of steam-propelled vehicles on the roads. It may be asked why we desire to maintain, if not to encourage, the use of steam-propelled vehicles. Speaking for myself, it is not because I like at all or am very much enamoured of the looks of the steamer, although the modern steamer, which some of us may have an opportunity of seeing in the vicinity of this House in a few days' time is a very much better looking thing than its predecessor. Our reason for desiring to encourage the use of the steamer is that we desire to maintain and to increase if possible the consumption of coal, or derivatives from British coal. It seems to me that that is not only the policy of the National Government but that it is also a national policy. The depressed condition through which the coal industry has passed, the percentage of unemployment in that industry, and the importance of that industry in our national economy, provide ample justification for pursuing that policy.

The question is, to what extent do these steam-propelled vehicles provide a market for British coal. Here, unfortunately, precise information is difficult to obtain, but a census was taken in 1931 and laid before the Conference on Road and Bail Transport, which showed that in that year licences for 8,845 steam vehicles were in force, and that there were also in force licences for 618 traction engines. It was also estimated that these vehicles consume, approximately, 100 tons of coal per annum each. Therefore, approximately, in 1931 the steam-propelled vehicles consumed 950,000 tons of coal. That is approximately our market for coal in Norway, with which country we have concluded a commercial treaty which, I am glad to say, safeguards our exports of coal to Norway.

The next question is this: Is the consumption of coal by steam-propelled vehicles in this country increasing or declining? We find that it is declining. Again, information is not easy to obtain, but from eight suppliers of road coal in South Wales we learn that there has been a steady decline of road coal sold in the years 1930–1933, and in the present year the decline will be found to be more marked and on a greater scale. What is the reason for that decline? I maintain that so far as the recent and anticipated decline is concerned it is very largely due to the legislation of this Government both as regards licence duties and the more severe and stringent application of certain regulations. It may be argued that since the decline has been continued for some years it may have nothing whatever to do with legislation; that, on the other hand, the steam vehicle may be considered an anachronism, that it may be considered inefficient, that it may be uneconomic, but I do not think that those allegations would really bear close examination.

I should like to give some of the known advantages of the steam-propelled vehicle. In the first place, it has the advantage of comparative freedom from temporary mechanical breakdowns and, in the second place, it has the advantage of robustness and durability. It is well recognised that the steam-propelled vehicle when used off the road has a power and elasticity which is denied to the fuel-driven vehicle, when employed in quarries or on sites for building purposes. Here I would mention an important point and one which will appeal to the Minister of Transport, having regard to what he has just said on another Amendment, and that is that the taxation on these vehicles is based on the principle of the damage they do to the roads. If that is the principle upon which the taxation is based, the very fact that a steam vehicle is not driven from a clutch means that such a vehicle has greater flexibility and even more acceleration. It is supplied with steam brakes which, again, give more flexibility in slowing up. Thus, the wear and tear on the road by the steam-propelled vehicle, weight for weight, must be less than that of the vehicle propelled by petrol or heavy fuel oil.

There is one further thing, which also came into the reply which my hon. Friend gave on the previous Amendment, and that is the question of mileage. By the very nature of things the mileage of the steam-propelled vehicle is far less, relatively, per annum than the mileage of a vehicle driven by petrol or fuel oil. My own view is that recent legislation has operated, unwittingly I hope, to the disadvantage of the steam-propelled vehicles in three particular respects. Recent legislation has restricted the speed of the vehicle and the gross weight of the vehicle, and it has also increased the annual licence payable by the owner of such a vehicle. It is no exaggeration to say that to the owner of the older class of steam vehicle recent legislation has been nothing short of disastrous. Perhaps I may be allowed to give an example of what happens to a man who owns a steam wagon, 10 years of age, a four wheeler, solid tyred vehicle, in perfectly good condition and with a long life to go. The weight of such a vehicle will be, say, 7¾ tons. If the owner desires to use the same vehicle again in 1934 this is what will happen to him. The amount of pay load he is allowed to carry will be reduced to 4¾ tons, the speed will be reduced to 12 miles an hour, and the duty he will have to pay will be raised from £60 in 1933 to £160 in 1934.

If he chooses to say: "I will fit pneumatic tyres to my lorry "he will be allowed to go at a speed of 20 miles an hour and that conversion will cost him £200. True, if he does that he can get a reduction of duty from £160 to £120, but he will still be paying double what he was asked to pay in 1933. Furthermore, his maximum pay load will be reduced from 4¾ tons to 3¾ tons. Can anyone be surprised if the owner of such a vehicle decides to take neither of the courses which I have suggested and says: "I am through with steam wagons. I am not to realise the advantage which I had anticipated by buying a robust lorry of durability, and now I shall turn to some petrol-driven vehicle or a vehicle driven by fuel oil." He turns round and he sees employers using lorries of 2½ tons in. weight and hurtling along the roads, swaying from side to side, with a paying load of five tons, completely within the regulations, despite the fact that the manufacturer of that 2½ tons lorry has had placed on the side of the lorry a notice that the maximum safe load for the lorry is 3½ tons.

The owner may say: "I will go out and buy a new light lorry of 2½ tons," but he is deterred because, I am sorry to say, the opinion seems to have grown among the users or the prospective users of steam-propelled vehicles that the Government and the Minister of Transport desire to drive steam lorries off the road. That is a very unfortunate impression, which I hope has no basis in fact. I hope that I have said enough to show that, unwittingly, recent legislation and the greater stringency of the regulations has placed a burden on the owner of the steam-propelled vehicle which is unbearable and unwarranted. I should be doing considerable injustice to the Minister if I suggested that when the regulations were drafted and the rates of taxation were passed that for one moment he thought that they would bear more heavily on this particular kind of vehicle. In practice, however, according to the facts which I have been able to ascertain, that has been the result. If that has been the result and if I have convinced the Minister that that is the result to-day, I hope that he will take the earliest opportunity of amending these penal regulations and penal duties. I should have liked to have urged the Minister to give a special fillip to the use of steam-propelled vehicles, but from what he has said this afternoon on another Amendment I am sure that he will not consider for a moment having favourites. I should like him to relieve the strain to which this particular class of vehicle has been subjected and I do so not in the interests of a particular industry, not in the interests of the users or the manufacturers of a particular vehicle, but in the interests of the coal mining industry and, therefore, in the interests of the country as a whole.

4.49 p.m.

I should like to make a few observations in support of the Amendment in so far as it affects gas-propelled vehicles. The hon. Member has put forward an extraordinarily good case in support of the Amendment so far as it affects vehicles driven by steam. It applies also to those driven by coal gas. It seems to me that once one has established the fact that vehicles driven by coal gas are efficient—and I can assure the Committee that they are; they are made and adapted in my constituency—there is a real case for demanding some assistance from the Government in the competition which they are now facing from imported oil. Coal, one form of gas, has been used for many years and for many purposes, but it has only been in recent times that coal has been used in the form of gas for the purpose of propelling motor vehicles. During the War, hon. Members may remember, motors were converted to use gas when there was a tremendous shortage of petrol. They moved about and carried gas in a balloon attached to the vehicle. It was gas under very low pressure. The real disadvantage of that system and the reason why it made little or no progress, as soon as petrol again became available, was, of course, that the range of these vehicles was very strictly limited. I think the range was about 15 miles.

Interest in the problem of the use of gas for propelling motors was stimulated and a Departmental Committee was set up. It reported in 1919 very strongly in favour of the use of gas for traction. It said that it considered gas as safe as any other system, and considered that the right method of using gas was in high-pressure steel cylinders. Following upon that advice, which came from an authoritative source, many experiments were made. Experiments have particularly been made in my constituency. The Chesterfield Corporation carried out experiments, and by two private firms, one in the construction of steel cylinders and the other in the construction of machinery for compressing gas, and the result is that now steel cylinders are made which can withstand a working pressure of 3,000 lbs., which undergo a test pressure of 4,500 lbs.; and incidentally when a test was made to see at what pressure the cylinders would burst it was found to be 7,000 lbs. So that there is an ample margin of safety. These cylinders are only one-fifth of an inch thick. At the same time they weigh 112 lbs., and it may be asked, why has there not been more progress in the adaptation of motors to running on gas? The reason, of course, is the additional weight of the cylinders.

I think the hon. Member is now trying to anticipate an Amendment which I said I did not select.

I apologise if that appears to be the case. I was endeavouring to show that motor vehicles which convert to the use of gas are actually to be at a disadvantage compared with petrol-driven vehicles. I was attempting to point out that their additional weight and the method of assessing them, taking into account the unladen weight and including the cylinders, places that at a disadvantage compared with petrol-driven vehicles, and that, therefore, there was a real justification for demanding a reduction in the present scale of duties. The Amendment seeks to reduce the rate of duty. Goods vehicles at the present time, as opposed to vehicles carrying passengers, are taxed upon their unladen weight, and if they are using gas the unladen weight includes the weight of the 'steel cylinders. Normally a motor vehicle will carry six of these cylinders, so that it will have an additional weight of 6 cwt. to take into account. There is also the additional weight of the fittings which are necessary to convert to gas. So that in every case the vehicle which converts to gas does pay a very much higher rate of duty than the vehicle which remains running on petrol.

I will give two examples from motors which have been adapted in my constituency. The first is a solid-tyred vehicle belonging to a private company. It weighed 3 tons 18 cwt. and was converted to run on coal gas. The tax on the unconverted vehicle at the present rates would have been £66 13s. 4d. The conversion caused an increase of weight to 9 cwt. and brought it into the 4-5 ton class, and automatically increased the tax to £93 Os. 8d., an increase of £27. The other example is rather remarkable, becaues it shows that, although the weight is increased by a larger amount, yet the rate of tax payable was not increased by so much. The other vehicle was a pneumatic-tyred vehicle belonging to the Chesterfield Corporation Highways Department. It was converted and the weight increased by 12 cwt. The tax was increased to £70 from a previous rate of £50, an increase of £20. So that in the first case the increase in weight of 9 cwt. brought an increase of tax of £27, and in the second case an increase of 12 cwt. in weight brought an increase of £20 in tax. Most of these vehicles which are now running upon coal gas have, of course, been adapted from petrol-driven vehicles. When they were originally made they were usually constructed to reach up to the maximum unladen weight for each range of tax, with the result that any additional weight of the cylinders or other fitments almost always places them in a higher category. The present rates of tax and the method of assessment do act as a direct discouragement of this new industry of changing over from petrol, a foreign fuel, to gas, a home- produced fuel. As far as passenger vehicles are concerned they are assessed, of course, on a different basis, on seating capacity. The weight of a vehicle on four wheels is limited by law to 10 tons, including passengers.

I do not think that even if the Amendment were accepted it could possibly affect passenger vehicles.

I was under the impression that it applied to all vehicles driven by gas, but perhaps I have said enough to persuade the Minister of the justice of the Amendment. Certainly as far as the gas-driven vehicles are concerned the passenger-carrying vehicles are, in the same way as vehicles carrying goods, placed at a disadvantage compared with petrol-driven vehicles. But I am certain it is not the intention of the Government that taxation should be imposed in such a way as to give discouragement to a change-over to home-produced fuel, or definitely to penalise vehicles which are driven by gas. I can say from the experience of those who are engaged in this business in my constituency, that the change-over to gas at the present time has come to a definite standstill and that no progress is being made. I fear that unless the Amendment is accepted or something on these lines is done for this new industry, we cannot hope for any increase in employment in this direction for many months to come.

5.9 p.m.

I should like to support my two hon. Friends who have brought forward this Amendment. It has been estimated that a 5-ton lorry running about 17,000 to 18,000 miles per annum will consume the derivatives, in the form of coal gas, of 50 tons of coal per annum. The question of the licence duty may seem to have a comparatively small bearing on the development of this new industry, but I can assure the Minister that it is quite an important item. If we assess the gallonage of an equivalent of petrol in costs, compared with compressed gas, we find, after the number of fairly limited experiments that have been made, that the actual cost of the gas is less than half of the total cost in running as compared with petrol. The capital cost of the compressing plant and running it and the expense of the cylinders count for the other half of the total cost, and the actual licensing of the vehicle accounts for a substantial part of that. The difference on the gallonage basis of the licence under the existing arrangement and the suggested new schedule is equivalent to one halfpenny per gallon of petrol equivalent, which makes all the difference. I am rather afraid that unless some striking technical improvement takes place or some concession is made we can look forward to very little development in compressed coal gas cylinders on motor vehicles in the future.

On the subject of steam-driven vehicles I support the hon. Baronet the Member for Linlithgow (Sir A. Baillie). Like him I have no love for steam-driven vehicles on the road, particularly when one meets them in a car, hut such developments have taken place in the last few years that they are no more offensive than a large number of petrol-driven lorries. They have this striking advantage: I believe that they have a very much less adverse effect on the roads than a faster and less steady vehicle. It has been found by research that weight for weight the speed of the wheel travel on the road creates a great deal more damage than a slow moving vehicle of equivalent weight. On that basis, quite outside the question of the clutch, I think the steam-driven vehicle, weight for weight, does a great deal less damage to the road than the petrol-driven vehicle; apart from the necessity, which we all admit, of encouraging in every way we can, an increased consumption of coal. Although I am aware that the Minister last year made some concession in the schedule of licence duties for both steam and gas vehicles, I hope he will favourably consider this Amendment, or a combination of the two Amendments, before we leave the Finance Bill to-day.

5.13 p.m.

The general case for the Amendment has been so well put by the hon. Member for Linlithgow (Sir A. Baillie) that I do not propose to take up much time, hut I would like to direct attention to the effect that this change, this reduction in the number of steam-propelled vehicles, has had on the coal industry. The hon. Gentleman who moved the Amendment gave some figures.

I was going to base an argument on them, because they were very striking, but seeing that they have been repudiated by the Minister I shall certainly not use them, except to say that the falling off in the consumption of coal has been something like 750,000 tons. That is making a comparison between the number of steam-driven vehicles in 1931 and the number at the present time.

Those were figures which I obtained, and if they are wrong I shall be interested to hear the Minister's authority for other figures. In 1931 there were roughly 9,000 licences for steam-driven vehicles, in September, 1933, there were 5,100, and in February of this year the number had been reduced to 2,750.

I have not the figures for 1933 but I have the figures for 1931, and for February this year, and, putting the average consumption of coal at 100 tons per annum, I think that the figure arrived at is the one given by the hon. Member for Linlithgow (Sir A. Baillie), namely, that in 1931 the consumption of coal was something like 950,000 tons. If the number of steam vehicles licensed since February this year are down to 2,750, there must be a corresponding reduction in the consumption of coal. It is a very serious matter for the coal industry of this country, and even more serious for the coal industry in South Wales. The depression in the coal industry is much more acute in South Wales than it is in any other coalfield in the country. We have suffered from many causes during the last 10 or 15 years. Oil has made such inroads into the consumption of Welsh coal that the South Wales coalfield has suffered more than any other coalfield as a result of the changes which have taken place from the use of oil fuel.

It can be said—and I am sure the Secretary for Mines will agree—that whatever advantages the Trade Agreements may have brought to the North East Coast, the South Wales coalfield has benefited very little. The fiscal conflict between this country and the Irish Free State has also affected us. The taxation of steam propelled vehicles has seriously affected us. It is estimated that 70 per cent. of the coal used by these vehicles was produced in South Wales, and the Committee will agree that in dealing with that aspect of the question, the matter is very important as far as South Wales is concerned. In my Division, within 200 yards of the house where I live, there is a colliery which had a market for something like 50,000 tons of coal per annum for steam lorries. In another part of my division there is a colliery which, until the middle of last year, scarcely lost a day's work. Sixty per cent. of the coal produced at that colliery was for use in connection with steam propelled vehicles. I am not suggesting, nor would the hon. Baronet who moved the Amendment suggest, that the very great reduction in the number of these vehicles has been caused entirely by taxation which has only recently come into operation. There are other factors to which I trust the Coal Utilisation Council will pay some attention. It must be remembered that since this additional taxation came into operation a number of the users of these vehicles have changed over to other vehicles and that therefore there will be a serious reduction in the course of this year.

The Minister of Transport on a previous Amendment referred to the fact that in dealing with these Amendments he was not so much concerned with the question of the industry, but I would remind him that the taking off the road of three vehicles of this kind means the displacement of one miner. Whatever taxation the hon. Gentleman may get as a result of this imposition, the Treasury or the Government will lose it in other directions from the point of view of the payment of unemployment benefit. The Minister, in dealing with the first Amendment, indicated that if those who were responsible for the Amendment had any information which they could give him as to the damage caused to the roads by the vehicles in question he would be prepared to meet them and consider any representation made to him in the matter. I think that the case mentioned by the hon. Member for Newport (Mr. Clarry) covers a portion of the ground. He referred to the fact that these vehicles do not do as much damage as some of the oil-driven vehicles. If that is the case I would ask the Minister to have an open mind upon the question, and that he should make the same offer to those who are asking that the present Amendment should be accepted as he gave to those who asked that the first Amendment should be accepted. But I am not basing my plea entirely upon that fact, but I am also basing it upon the effect the reduction of heavy steam-propelled vehicles has upon the coal industry of this country. The loss of 750,000 tons of coal, or even 1,000 tons is a very serious matter to us. We consider this matter of such vital importance that unless we can get the Minister—and I am not using this in any way as a threat—to meet the position reasonably, we shall have to press the matter to a Division.

5.23 p.m.

As on the occasion of the last Amendment, everybody sympathises with the depression in the coal industry and is anxious to do anything which can be done to help it. No doubt hon. Members regard the change over from steam lorries to petrol lorries just as they regard the change over from coal-burning to oil-burning in ships, but I would point out to the Committee that it is entirely beside the point to attribute the larger part of this reduction to the action of taxation. The increased taxation of which we are talking this afternoon only came into operation on the 1st January, and no figures are yet in existence from which we can tell its effect. Hon. Members will appreciate that from the year 1926, when there were over 9,100 steam vehicles in licence, to the year 1933, when there were only 5,100 in licence, there had been no increase whatever in the taxation of steam-driven vehicles, but there had been in that period no less than three increases in the Petrol Duty. That means that three times the competitive power of the steam vehicle in comparison with the petrol-driven vehicle had been increased by means of taxation, and yet the fall went on steadily uninterrupted by any advantage which it might be thought the Petrol Duty might give. The figures my hon. Friend gave were not quite correct. He said that in 1931 there were nearly 9,000 vehicles. The correct figure is 6,784.

The figures which I gave were quoted in the Salter Report. The figures I gave were 8,845 ordinary vehicles, plus 618 other vehicles.

The figure of 5,100 for 1933 is correct, but the figures for this year will not be known until the census is taken in September. The Committee will realise that the increase in the taxation of commercial vehicles was based on the Salter Report, which was the result of a conference between representatives of the railways and representatives of road transport. The report was unanimous, and it cannot be said that the people who produced it were, as my hon. Friend says I am, desirous of driving steam lorries off the road. The fact remains that the Salter Report recommended for steam vehicles a very much higher rate of taxation than that which was finally included in the Budget last year. They proceeded on the principle—I think the perfectly correct principle—that when you are allocating between these different classes of vehicles their proportionate share of the taxation to meet the road expenditure, you must take into account the taxation which a particular vehicle pays upon its fuel as well as the taxation which is paid upon the vehicle itself. It is clear that if you are to ignore the taxation upon fuel, you may merely, by taxation, drive people into a form of vehicle which is not in itself more desirable or more economical, but is just attractive at the moment owing to a discrepancy or divergency in the amount of taxation which is paid, with the result that, if the change continues for any great length, sooner or later, in order to protect the revenue, the disparity has to be reduced, and you have only encouraged an industry finally to dissipate its advantages.

The Salter Committee, owing to the fact that the petrol-driven vehicle was paying a heavy tax upon its fuel and the steam vehicle was paying no tax upon its fuel, put forward a scale of duties for the steam-propelled vehicle which was considerably higher than that for the petrol vehicle. It fell to me before the Budget of last year to review the proposals in the Salter Committee's Report before inclusion in the Budget, and I felt that perhaps not sufficient weight had been given by that committee to exactly the same kind of consideration as had been advanced by hon. Members this afternoon. It seemed to me that the shorter radius of action, and therefore the more limited use of the road, was one which we ought to consider. I also felt that the fact that the fuel of one was home-produced while the fuel of the other was imported was something which, to a limited extent, we were entitled to take into consideration in fixing the duties upon these vehicles. It was because of that fact that I very substantially reduced the scale of duties recommended by the Salter Committee, with the result that the actual duties paid by the steam vehicle are now in no case greater, and in some cases actually less, than the duties paid by the petrol-driven vehicles, although, of course, the petrol-driven vehicles pay a heavy tax as well on fuel, while steam-driven vehicles pay nothing. I felt that it was impossible to go beyond the concession I then made without entirely upsetting the principle that in order to get equality of treatment between the various classes of road vehicles you must take into account, when you fix a tax on the vehicles, the taxation which they are called upon to pay on the fuel. I regret that I have seen nothing which has been brought to my attention which in any way upsets the conclusion I arrived at last year.

With regard to coal gas-driven vehicles, similar considerations apply. Actual scales in the case of coal gas vehicles were not considered by the Salter Committee, because it had hardly become a practicable possibility, but, on the principle enunciated by the Salter Report, coal gas vehicles should have been put in the same category as vehicles driven by heavy oil. There was the same consideration, that as the fuel was British produced rather than foreign it entitled me to give them a preference. Steam-driven vehicles and coal gas-driven vehicles have, in fact, been given a preference because the fuel they use is of British origin. There are limits, however, beyond which it is impossible to extend that preference. You must have in consideration the economic and transport merits of transport vehicles. But, having been given this preference it is now up to the manufacturers of these particular vehicles to show that with this assistance they are able to compete with rival forms of transport.

We are told that we shall have an opportunity of seeing new forms of transport, and in my opinion the possibility of some new and improved mechanical form of steam-propelled vehicle is much more likely to restore the competitive position of steam vehicles, increase the use of coal as fuel, and give employment to miners, than any relief which, if given, must be of the small character asked for in the Amendment. I felt entitled, without unfairness to other forms of vehicle, to give this particular class a preference, and I hope that with the assistance of this preference they will now demonstrate, what I am sure the Committee must insist on as the only real criterion for a continued use of these vehicles in this country, that they can be economically and efficiently used in competition with their rivals.

5.33 p.m.

The explanation of the Minister of Transport is not very clear. He has told us that he desires to apply the principle of equality of treatment. That is to say, that he does not regard any particular type of vehicle as more desirable than another, and does not intend, by reason of the incidence of licence duties, to encourage or discourage any type of vehicle. But he also told us that last year he applied the principle of preference to these particular vehicles. Why? He does not desire to encourage or discourage either type of vehicle, but he admitted last year that it was desirable to give a preference.

I told the Committee that although in logic it might be wrong and might be mere sentimentality, still I felt that to a limited extent I was entitled to depart from the strict letter of the principle and give a preference to vehicles which use British coal. The hon. and learned Member for Bristol, East (Sir S. Cripps), who pays more attention to the form than the substance of the principle, disagrees with me, but I think the Committee as a whole will pardon my lapse from strict logic and will welcome the preference given on behalf of British workpeople.

The Minister of Transport will find that it is he who prefers the form to the substance. His main argument was that although he departed from the principle last year it was only a little departure, and that he is sticking to the substance of the principle. Really he is relying on the form of the principle. It is hardly worth while, in view of the action of other Members of His Majesty's Government, to rely on the form of the principle. What is the good of paying a large subsidy for the purpose of manufacturing oil from coal when by a much less subsidy the expensive operation of transforming oil into coal may be avoided and it may be used direct in a steam vehicle? It is hardly logical on the one hand to subsidise the transformation of coal into oil and at the same time to take away another use of coal and make them use a more expensive substitute, oil. That is the objective, to change coal into oil. So long as there are vehicles which in themselves are desirable and which can use coal direct is it not more economical to use coal direct in the vehicle instead of transforming it into oil, or purchasing oil from abroad? The Government have long ago abandoned the principle of equal treatment for industries, because its intention, obviously, in introducing tariffs is not to give equal treatment but to encourage those industries which it thinks ought to be encouraged. That is a principle of capitalist planning. If the Minister of Transport thinks steam vehicles are good and desirable here is an opportunity for him. consciously, to work for their use in this country as against the petrol-driven vehicle.

It is not helpful for him to try and make things so equal between the two that some incidental will determine whether the one or the other is to be used. When the Minister of Transport talks of the economic merits of a vehicle they depend on what it costs to run the vehicle, and that is determined by the licence duty it has to pay, the amount of the tax on its fuel, or the cost of its fuel. All these factors come in; you cannot divorce economic merits from factors of taxation, as the hon. Member is trying to do. He is trying to equalise taxation and then allow the public to choose which vehicle they desire. If it is desirable to burn coal as a matter of national interest, if these vehicles are as good to the roads and as useful to the community as petrol-driven vehicles, this is an opportunity for consciously planning the use of steam vehicles in this-country. There is no excuse for a Government which has always adopted the-attitude of diverting trade into particular channels through taxation and quotas to say that they cannot do it as regards this industry. I should have thought that this was an admirable opportunity to do it, and if the Minister of Transport believes these are good vehicles and that it is desirable they should burn coal as much as possible he is missing an oppor- tunity of doing something really useful. We shall certainly support the Amendment in the Lobby.

5.40 p.m.

I find it hard to resist the logic of the hon. and learned Member for East Bristol (Sir S. Cripps), but I will not pursue the matter. My colleagues and I appreciate the way in which the Minister has dealt with the Amendment and the arguments in support of it. We were encouraged when we heard that he was a little sentimental last year. I wish he had been a little more sentimental. It reminds me of the man who when he was asked if he spoke French said, "Yes, a little." I cannot say that I am entirely satisfied with the reply of the Minister of Transport. There are two specific points upon which we may be able to supply him with fresh data, first, the damage to the roads and secondly the question of the pay load. We recognise the concession which he made last year, but that has been

Division No. 268.]

AYES.

[5.43 p.m.

Adams, D. M. (Poplar, South)Dobble, WilliamLeonard, William
Attlee. Clement RichardEdwards, CharlesLlewellyn-Jones, Frederick
Baillie, Sir Adrian W. M.Gardner, Benjamin WalterLunn, William
Banfield, John WilliamGeorge, Major G. Lloyd (Pembroke)McEntee, Valentine L.
Batey, JosephGillett, Sir George MastermanMaclean, Nell (Glasgow, Govan)
Brown, C. W. E. (Notts., Mansfield)Grentell, David Rees (Glamorgan)Mander, Geoffrey le M.
Cape, ThomasGriffiths, George A. (Yorks, W. Riding)Smith, Tom (Normanton)
Caporn, Arthur CecilGriffiths, T. (Monmouth, Pontypool)Thorne, William James
Clarry, Reginald GeorgeGrundy, Thomas W.Tinker, John Joseph
Cocks, Frederick SeymourHall, George H. (Merthyr Tydvil)West, F. R.
Conant, Ft. J. E.Hicks, Ernest GeorgeWilliams, David (Swansea, East)
Cove, William G.Hills, Major Rt. Hon. John WallerWilliams, Edward John (Ogmore)
Cripps, Sir StaffordJenkins, Sir WilliamWilliams, Dr. John H. (Llanelly)
Daggar, GeorgeJones, J. J. (West Ham, Silvertown)Williams, Thomas (York, Don Valley)
Davies, David L. (Pontypridd)Jones, Morgan (Caerphilly)Wilmot, John
Davies, Rhys John (Westhoughton)Kirkwood, David
Dickie, John P.Lawson, John JamesTELLERS FOR THE AYES—
Mr. John and Mr. G. Macdonald.

NOES.

Acland, Rt. Hon. Sir Francis DykeBorodale, Viscount.Cayzer, Sir Charles (Chester, City)
Agnew, Lieut. Com. P. G.Bossom, A. C.Cazalet, Capt. V. A. (Chippenham)
Albery, Irving JamesBoulton, W. W.Chapman, Sir Samuel (Edinburgh, S.)
Allen, Lt.-col. J. Sandeman (B'k'nh'd.)Bowyer, Capt. Sir George E. W.Chorlton, Alan Ernest Leofric
Allen, William (Stoke-on-Trent)Bracken, BrendanChurchill, Rt. Hon. Winston Spencer
Anstruther-Gray, W. J.Braithwaite, J. G. (Hillsborough)Clayton, Sir Christopher
Applin. Lieut.-Col. Reginald V. K.Brass, Captain Sir WilliamClydesdale, Marquess of
Aske, Sir Robert WilliamBroadbent, Colonel JohnCobb, Sir Cyril
Astbury. Lieut.-Com. Frederick WolfeBrocklebank, C. E. R.Cochrane, Commander Hon. A. D.
Astor, Viscountess (Plymouth, Sutton)Brown, Col. D. C. (N'th'I'd, Hexham)Colfox, Major William Philip
Atholl. Duchess ofBrown, Brig. -Gen. H. C (Berks., Newb'y)Cook, Thomas A.
Bailey, Eric Alfred GeorgeBrowne, Captain A. C.Cooke, Douglas
Baldwin. Rt. Hon. StanleyBuchan, JohnCooper, A. Duff
Baldwin-Webb, Colonel J.Buchan-Hepburn, P. G. T.Courthope, Colonel Sir George L.
Barclay-Harvey, C. M.Burgin, Dr. Edward LeslieCraddock, Sir Reginald Henry
Barrie, Sir Charles CouparBurnett, John GeorgeCranborne, Viscount
Barton, Capt. Basil KelseyBurton, Colonel Henry WalterCraven-Ellis, William
Beaumont, M. W. (Bucks., Aylesbury)Cadogan, Hon. EdwardCroft, Brigadier-General Sir H,
Belt, Sir Alfred L.Campbell, Sir Edward Taswell (Brmly)Crooke, J. Smedley
Bernays, RobertCampbell-Johnston, MalcolmCrookshank, Col. C. de Windt (Bootle)
Blaker, Sir ReginaldCarver, Major William H.Crookshank, Capt. H. C. (Galnsb'ro)
Bilndell. JamesCautley, Sir Henry S.Croom. Johnson, R. P.

entirely over-ridden by the fact that this type of vehicle has to carry coal and water and their pay load. Their profit is somewhat reduced. These two considerations have not been taken into full account, and when they are added to the question of mileage I still feel that our case has not been properly answered. I hope the Minister of Transport will give us the same consideration as he did on a previous Amendment and allow us to put before him any further data which we think might be useful to him.

I am certainly prepared to see my hon. Friends at any time on any subject, and will listen to anything they have to say.

Question put, "That those words be there inserted."

The Committee divided: Ayes, 49; Noes, 294.

Cross, R. H.Jamleson, DouglasRuggles-Brise, Colonel E. A.
Crossley, A. C.Jesson, Major Thomas E.Runciman, Rt. Hon. Walter
Cruddas, Lieut.-Colonel BernardJohnstone, Harcourt (S. Shields)Runge, Norah Cecil
Dalkelth, Earl ofJones, Henry Haydn (Merioneth)Russell, Alexander West (Tynemouth)
Davies, Edward C, (Montgomery)Jones, Lewis (Swansea, West)Russell, Hamer Field (Sheffield, B'tslde)
Davies, Maj. Geo. F. (Somerset, Yeovil)Ker, J CampbellRussell, R. J. (Eddisbury)
Davison, Sir William HenryKerr, Lieut.-Col. Charles (Montrose)Rutherford, John (Edmonton)
Dawson, Sir PhilipKimball, LawrenceRutherford, Sir John Hugo (Liverp'l)
Denville, AlfredKnox, Sir AlfredSalmon, Sir lsidore
Despencer-Robertson, Major J. A. F.Lamb, Sir Joseph QuintonSamuel, Sir Arthur Michael (F'nham)
Donner, P. w.Law, Sir AlfredSandeman, Sir A. N. Stewart
Drewe, CedricLeckle, J. A,Scone, Lord
Duckworth. George A. V.Lees-Jones, JohnSelley, Harry R.
Duggan, Hubert JohnLeighton, Major B. E. P.Shakespeare, Geoffrey H.
Duncan, James A. L. (Kensington, N.)Levy, ThomasShaw, Helen B. (Lanark, Bothwell)
Dunglass, LordLindsay, Noel KerShaw, Captain William T. (Forfar)
Eales, John FrederickLlewellin, Major John J.Shepperson, Sir Ernest W.
Edmondson, Major Sir AlbertLloyd, GeoffreyShute, Colonel J. J.
Ellis, Sir ft. GeoffreyLocker-Lampson, Rt. Hn. G.(Wd. Gr'n)Simmonds, Oliver Edwin
Elmley, ViscountLockwood, John C. (Hackney, C.)Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
Emrys- Evans, P. V.Lockwood, Capt. J. H. (Shipley)Smiles, Lieut.-Col. Sir Walter D.
Entwistle, Cyril FullardLoder, Captain J. de VereSmith, Louis W. (Sheffield, Hallam)
Erskine-Bolst, Capt. C. C. (Blackpool)Loftus, Pierce C.Smith, Sir Robert (Ab'd'n & K'dine, C.)
Evans, Capt. Arthur (Cardiff, S.)Lyons, Abraham MontaguSomervell, Sir Donald
Everard, W. LindsayMabane, WilliamSomerville, Annesley A. (Windsor)
Flint, Abraham JohnMcConnell, Sir JosephSoper, Richard
Foot, Dingle (Dundee)MacDonald, Rt. Hon. J. R. (Seaham)Sotheron-Estcourt, Captain T. E.
Foot, Isaac (Cornwall, Bodmin)McEwen, Captain J. H. F.Southby, Commander Archibald R. J.
Fox, Sir GiffordMcKie, John HamiltonSpencer, Captain Richard A.
Fremantle, Sir FrancisMcLean, Major Sir AlanSpender-Clay, Rt. Hon. Herbert H.
Fuller, Captain A. G.McLean, Dr. W. H. (Tradeston)Spens, William Patrick
Galbraith, James Francis WallaceMacquisten, Frederick AlexanderStanley, Rt. Hon. Lord (Fylde)
Ganzonl Sir JohnMaitland, AdamStanley, Hon. O. F. C. (Westmorland)
Gault, Lieut.-Col. A. HamiltonMakins, Brigadier-General ErnestStevenson, James
Gilmour, Lt.-Col. Rt. Hon. Sir JohnMallalieu, Edward LancelotStewart, J. H. (Fife, E.)
Gledhill, GilbertManningham-Buller, Lt.-Col. Sir M.Stourton, Hon. John J.
Gluckstein, Louts HalleMargesson, Capt. Rt. Hon. H. D. R.Strauss, Edward A.
Glyn, Major Sir Ralph G. C.Marsden, Commander ArthurStuart, Hon. J. (Moray and Nairn)
Goff, Sir ParkMason, David M. (Edinburgh, E.)Stuart, Lord C. Crichton
Goodman, Colonel Albert W.Mason, Col. Glyn K. (Croydon, N.)Sueter, Rear-Admiral Sir Murray F.
Granville, EdgarMayhew, Lieut.-Colonel JohnSugden, Sir Wilfrid Hart
Grattan-Doyle, Sir NicholasMeller, Sir Richard JamesSutcliffe, Harold
Graves, MarjorieMills, Major J. D. (New Forest)Tate, Mavis Constance
Griffith, F. Kingsley (Middlesbro', W.)Milne, CharlesTaylor, Vice-Admiral E. A.(P'dd'gt'n,S.)
Grimston, R. V.Mitchell, Sir W. Lane (Streatham)Thomas, James P. L. (Hereford)
Gritten, W. G. HowardMoore, Lt.-Col. Thomas C. R. (Ayr)Thomson, Sir Frederick Charles
Guinness, Thomas L. E. B.Morgan, Robert H.Thorp, Linton Theodore
Guy, J. C. MorrisonMorris-Jones, Dr. J. H. (Denbigh)Titchfield, Major the Marquess of
Hales, Harold K.Moss, Captain H. J.Touche, Gordon Cosmo
Hamilton, Sir George (llford)Munro, PatrickTrain, John
Hamilton. Sir R. W.(Orkney & Zetl'nd)Nation, Brigadier-General J. J. H.Tree, Ronald
Nicholson, Rt. Hn. W. G. (Petersf'ld)Tryon, Rt. Hon. George Clement
Hammersley, Samuel S.Normand, Rt. Hon. WilfridTurton, Robert Hugh
Hanbury, CecilO'Connor, Terence JamesWallace, Captain D. E. (Hornsey)
Hannon, Patrick Joseph HenryOrmsby-Gore, Rt. Hon. William G. AWallace, John (Dunfermline)
Harbord, ArthurPatrick, Colin M.Ward, Irene Mary Bewick (Wallsend)
Hartington, Marquess ofPercy, Lord EustaceWarrender, Sir Victor A. G.
Harvey, George (Lambeth, Kenningt'n)Petherick, M.Wayland, Sir William A.
Harvey. Major S. E. (Devon, Tots)Peto. Sir Basil E. (Devon, Barnstaple)Wedderburn, Henry James Scrymgeour-
Haslam, Henry (Horncastle)Peto, Geoffrey K. (W'verh'pt'n. Bllst'n)Wells, Sidney Richard
Headlam, Lieut.-Col. Cuthbert M.Pike, Cecil F.White, Henry Graham
Hellgers, Captain F. F. A.Pownall, Sir AsshetonWhiteside, Borras Noel H.
Henderson, Sir Vivian L. (Chelmsford)Pybus, Sir Percy JohnWhyte, Jardine Bell
Heneage, Lieut.-Colonel Arthur P.Radford, E. AWilliams, Charles (Devon, Torquay)
Hepworth, JosephRamsay, Alexander (W. Bromwich)Williams, Herbert G. (Croydon, S.)
Holdsworth, HerbertRamsay, T. B. W. (Western Isles)Willoughby de Eresby, Lord
Hore-Belisha, LeslieRathbone, EleanorWills, Wilfrid D.
Hornby, FrankRawson, Sir CooperWilson, Clyde T. (West Toxteth)
Home, Rt. Hon. Sir Robert S.Rea, Walter RussellWilson, G. H. A. (Cambridge U.)
Horsbrugh, FlorenceReed, Arthur C. (Exeter)Windsor-Clive. Lieut.-Colonel George
Howitt. Dr. Alfred B.Reid, Capt. A. Cunningham-Womersley, Sir Walter
Hudson, Capt. A. U. M.(Hackney, N.)Reid, David D. (County Down)Wood, Sir Murdoch McKenzie (Banff)
Hume, Sir George HopwoodReid. William Allan (Derby)Worthington, Dr. John V.
Hunter, Dr. Joseph (Dumfries)Remer, John R.
Hunter, Capt. M. J. (Brigg)Rhys, Hon. Charles Arthur U.TELLERS FOR THE NOES—
Hurd, Sir PercyRoberts, Sir Samuel (Ecclesall)Sir George Penny and Lieut.-
Jackson, Sir Henry (Wandsworth, C.)Rosbotham, Sir ThomasColonel Sir A. Lambert Ward.
James, Wing.-Com. A. W. H.Ross, Ronald D.

Motion made, and Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

Clause 17—(Income Tax For 1934–35)

Motion made, and Question proposed, ' That the Clause stand part of the Bill."

5.52 p.m.

We on these benches cannot allow this Clause to pass without repeating a protest which has been made on previous occasions in these Debates. We do so for several reasons. Tax relief is always welcomed by any section of the community which benefits from it, and it is welcomed most by those who benefit most, and there is no doubt that a certain number of people in this country will gladly welcome what the Chancellor of the Exchequer proposes to do through the instrumentality of this Clause. We have been informed that the relief to be given under the Clause will amount to about £20,500,000 this year and to £24,000,000 in a full year. It is unfortunate that when the National Government do anything which can be described as a good deed they do it in the wrong way. That is probably due to the unfortunate history of the entire political combination which we know as the National Government. The Chancellor of the Exchequer had benefits to confer as the result of the Budget surplus and undoubtedly he is, through this Clause, conferring some of those benefits upon a section of the community which could well have afforded to bear for much longer period the sacrifice which they were called upon to bear. A lot of other people have had to bear sacrifices and the section of the community who will primarily benefit from this Clause are those who could well have afforded to make some further contribution to the necessities of the State.

It has already been pointed out more than once from these benches that the way in which the Chancellor of the Exchequer is dealing with the Income Tax in this Finance Bill has the result of giving relief to those who need it least and leaving out of account those who need it most. My hon. Friend the Member for East Fulham (Mr. Wilmot). in figures which he has given to the House, has made that point clear, and I do not wish to weary the Committee on this occasion by quoting further figures. I want rather to revert to a statement made on the Second Reading of the Bill by the Financial Secretary to the Treasury. The hon. Gentleman, who always makes interesting speeches, was attempting on that occasion to controvert certain arguments advanced from these benches in regard to the contentions put forward by supporters of the Government in justification of this reduction in the standard rate of Income Tax. The argument of Government supporters has been, in the main. that this reduction in the standard rate of tax will be a stimulus to industry and that the relief given to this section of the community will result in more money being available for industrial development. In reply to that argument we contended that a better stimulus would have been given to trade had the Chancellor of the Exchequer used his surplus to extend consuming power among large numbers of the people in quite other directions from what is here proposed.

The Financial Secretary to the Treasury in reply to our argument gave us a disquisition on the savers and the spenders. He made a very interesting statement in the course of which be asked who were the savers and who were the spenders, and he quoted figures to show that the working classes as he called them had in the last three years saved considerable sums. He argued that there was no force in the contention that if more money went into the pockets of the working classes they would necessarily spend more and in spending more would stimulate production and contribute to some sort of trade revival. He contended that they saved just as much as the other people did and that, consequently, there was little force in our argument. I do not wish to deny the hon. Gentleman's facts, but I ask him why do the working classes save where they are able to do so? The section of the working class to which the hon. Gentleman referred save because of the general insecurity of the economic system in which we are living. They save because the system is so insecure that they want, as far as they can do so, to make provision for the future. What of the other class who are to get the major benefit from this Income Tax relief? Already many of them have far greater incomes than they can possibly spend in any way which will win them pleasure or advantage. They do not save because of the economic insecurity of the system. They save willy nilly. They must do so. They cannot spend all their incomes in ways which will give them satisfaction and pleasure. The motives for the saving in the one case are entirely different from the motives in the other case.

We feel that if the Chancellor of the Exchequer had used his surplus in other ways of giving Income Tax relief for instance—and I would stress that fact—instead of in the way of reducing the standard rate of tax, he would have done something far more calculated to stimulate trade and industry than the method which is being pursued. Many arguments could be brought forward to show how that £20,000,000 could have been used in other ways far more beneficial to the community than in giving it to this particular stratum of Income Tax payers. Consequently, we want again to make our protest against the way in which the Chancellor has given this Income Tax reduction and to reassert our contention, which we have made all along, and which no arguments I have heard from the other side have convinced me is wrong, that had this money been used in other ways, which we have indicated, it would have been an effective stimulus to trade and industry. We shall not go into the Lobby against the Clause, but we do want to make our protest against the method which the Chancellor has employed to deal with this matter.

6.1 p.m.

The merit and equity of having restored the position of the standard rate of Income Tax to the pre-1931 rate and of having used the available surplus for a restoration of the allowances will form the subject of a discussion on a new Clause which appears later on the Paper. It is not necessary, therefore, to weary the Committee with a recital of the case for that obvious piece of justice. In dealing with this Clause which remits the extra contribution called for from Income Tax payers on the standard rate, I feel that the Committee should once again consider the whole justice of the arrangement. Surely it cannot be contended that there is any justice in restoring to what is admittedly the most well-paid section of the community 100 per cent. of the contributions they made in 1931, while not only are allowances not restored, but the sacrifices in reductions of pay of the various classes of Government and other servants are restored only by one half.

It would be reasonable to ask that the first restoration which should come out of the surplus should be the restoration of wages and salaries. If it be argued, as it was by the Financial Secretary, that this is a gesture rather than a payment which is made to create an immense psychological effect and to cause a great revival in trade due to a renewed flowing of confidence, I feel that that revival would be achieved far more swiftly had the Government applied the increased revenues in the restoration and the enlargement of the direct work which is waiting to be done and which would have the immediate effect of taking people who are unemployed off the public charge and putting them on to the pay roll. We are still suffering from the drastic economies which were made in 1931 at the expense of housing, slum clearance and all kinds of public work carried on by grants from the Exchequer through the local authorities. In that direction, I submit that a more direct revival of useful enterprise and a more direct effect upon the unemployment figures would have been secured by an enlargement of the Exchequer contributions in those directions rather than by a reduction in the standard rate of tax.

6.5 p.m.

In spite of what hon. Members opposite say, it is an undoubted fact that those engaged in industry look upon the reduction of the standard rate as the only method of reduction of Income Tax which is of definite benefit to the industry. It is because it is a gesture and also a definite relief from taxation on the money that is put to reserves. That alone is a definite relief to industry. Hon. Members have also forgotten that besides public servants who have had cuts there are large numbers of clerks, foremen and other black-coated workers who are subject to these allowances who had cuts made by their employers. If these businesses prosper again, the cuts are in very many cases put back. I know in my personal experience of many cases where they have been put back to the extent of a half and the whole. In that way the relief of taxation and the encouragement of business is doing more for the black-coated workers than the small relief on the small amount of Income Tax that they pay. It is better for a man to get a substantial return of salary than a substantial relief on his Income Tax allowances. A great many more people will benefit by the present proposal than if the allowances had been dealt with.

6.8 p.m.

I keenly share the anxiety which has been expressed above the Gangway as to the lack of balance which this Clause introduces into the Budget. I am bound to regard a reduction of Income Tax in itself as a good thing, if it is in correct balance with all the rest of the financial provisions that are made. I cannot help remembering the cry of equality of sacrifice which was made at a certain time, which I used myself and genuinely meant, and I think equality of sacrifice definitely carries with it equality of restoration. I do not necessarily mean restoration to each individual in the same proportion in which it was taken from him. We also have to take into account the weight with which the burden fell upon different people in the light of their different economic circumstances. I cannot help feeling that this reduction in the Income Tax coming at this time does not encourage the people as a whole to think that equality of sacrifice is being preserved.

I agree with the hon. Member who spoke last that there may be in some respects an encouragement of industry by a reduction of Income Tax, and I think he put the right point when he called attention to reserves. I think on that point there is something to be said. With regard to the standard rate as a whole, I cannot see that more purchasing power in the hands of Income Tax payers stimulates industry more than purchasing power in the hands of anybody else. The hon. Member could make a reasonable case in regard to reserves, and if some special proposition is put forward in regard to reserves, if that were what we were discussing, it would seriously merit the attention of the Committee. That is not the proposal which is embodied in this Clause, which is a general reduction of the standard rate. I think that on the principle of taking first things first, attention might have been given to a great many other matters which really have a prior claim before this relief, which I admit to be good in itself, was granted to this particular class. If it were to be granted, I agree that it would have been better done if there had been some consideration of the special allowances and exemptions. That would show that the Government in making this restoration, even within the limits of the Income Tax, were considering first those people who had the greatest burden to bear. I cannot help regarding this particular proposal, when taking into account all the other matters which arose out of the financial crisis, and viewing it as a whole, as an instance in which the Budget is unbalanced in the vital sense of not considering first those whose interests are greatest.

6.10 p.m.

I should have been glad if we could have had a word from the Financial Secretary at this point. I hope he does not consider that the last word has been said on this matter. I gather from his features that he is eagerly awaiting an opportunity of enlightening us as to the reasons why this Clause is included in the Bill. Before he does so I might be allowed to say a word or two on behalf of the Opposition. We on this side take exception to what is implied in the Finance Bill. Anybody who in interested in the relation of direct and indirect taxation will know that I am. speaking the bare truth when I say that when Labour Governments have been in office the tendency has been to decrease the proportion of indirect taxation and to increase the proportion of direct taxation. I would further hazard this proposition, and I do not think anyone will controvert it, that the tendency during the lifetime of this Government and of previous Conservative Governments was to decrease the proportion of direct taxation and to increase the proportion of indirect taxation. I have not the figures, but I do not think the Financial Secretary will deny this. He himself in the figures which he gave when he last spoke on this subject admitted that there had been some degree of affecting the balance in the direction I indicated, namely, in favour of the direct taxpayer as against the indirect.

We naturally cannot carry our opposition to this Clause to a Division, because, obviously, the money has to be found. We admit that the King's Government must be maintained, and that can only be done if adequate resources are at our disposal. The point of issue between us is as to how the necessary money is to be found. It was an old principle, certainly among Governments of the Gladstonian days, that the old proportion of fifty-fifty as between direct and indirect taxation was the correct proportion, but I am not sure it is the proportion which is acceptable to the present Government. Judging from their tendency, we shall speedily arrive at a situation where the proportion will be so out of balance that the indirect taxpayer will be very heavily burdened. If we agree with the proposition, as we all must, that the money has to be found, we must fix a principle as to the basis on which taxation is to be levied. We submit with confidence that there is only one principle which can be accepted by anyone in relation to taxation, namely, ability to pay.

We take no special joy in imposing taxation for the purposes of imposing it. That would be stupid. But as long as hundreds of millions of pounds have to be found, we have to determine who is to bear the major proportion of that burden. It is because there is an alleviation of the burden of those who are better able to bear the burden that we object to this Clause. The hon. Member for the Ecclesall Division of Sheffield (Sir S. Roberts) was apparently undecided on which leg to stand, but he must make up his mind as to which is the more desirable method of adding to the purchasing power of the people. I admit that a certain number of black-coated workers will benefit from this proposal, though I think he will agree that the number who will so benefit will not be substantially large, because the effect of the allowances, coupled with the low rate of remuneration of the great mass of the black-coated workers keeps them below the Income Tax limit.

The hon. Member has missed the point I was trying to make, which was that a restoration of prosperity in industry would lead to a removal of the cuts made in the salaries of black-coated workers. With industry more prosperous through the general reduction of taxation, it could afford to remove those cuts, and, therefore, indirectly, the black-coated workers would receive benefits in the way of increased salaries.

I do not at all controvert that general proposition but that is not the fundamental issue between the hon. Member and myself. I am concerning myself simply with the incidence of this particular reduction of Income Tax. Those black-coated workers whose incomes are above the exemption limit will benefit by this reduction of taxation, and that is valuable to them, but it is only valuable to them in so far as it enables them to have increased purchasing power. If that principle is conceded in respect of the limited number who will gain benefit under the Government's proposal, surely it is an excellent principle to apply over a much larger area. The issue between the Chancellor of the Exchequer and ourselvs on this point is as to which is the better way of using the £20,500,000 available for the remission of direct taxation. My hon. Friend the Member for East Fulham, (Mr. Wilmot) developed very fully, and I think very adequately, the proposition that instead of giving a reduction of 6d. in the £ to every direct taxpayer it would be much better, even from the standpoint of creating trade, to restore the allowances, because in that way we should cover a much larger number of individual people. The person who benefits by the Income Tax allowances is the person who has a family depending upon him, and the bigger the number of persons depending upon him the greater the volume of the needs to be supplied. If, therefore, that individual has more money to spend through a restoration of the allowances, he is to that extent in a much better position to help to recreate the demand for goods by satisfying the wants of his own family.

I wish to put forward another proposition on this question of the benefit to trade. I have said earlier in these debates that in returning certain direct taxation to direct taxpayers we must necessarily benefit trade to some degree, but there is no absolute assurance that this £30,000,000 will go into reserves, because certain traders may already be in possession of such an amount of wealth that they may not feel called upon to put the money back into the business, and they will be free to spend it as they will. If I may take an extreme illustration, a person who has £20 or £50 or £100 restored to him under this proposal may spend it at Monte Carlo, or elsewhere, or may spend it on the Derby to-morrow. He may spend it entirely uselessly—that is the point I make; but the person with a limited income, and with a family dependent upon him, cannot afford to indulge in extravagances of that sort, and is bound to have regard first to the calls of his family.

The need of the country at this moment is not so much the opportunity to put more money back into certain types of industry. Suppose that out of this £20,000,000 £2,000,000 went to cotton owners in Lancashire. I very much doubt whether the restoration of that £2,000,000 to the owners of cotton mills in Lancashire would create any more trade or business in Lancashire. Lancashire is suffering not from the lack of money but the lack of orders, and that lack of demand arises because those who would normally be consumers have not the power to purchase. If there were a sudden accession of prosperity to my part of the country, for instance, that would, by consequence, create prosperity in Lancashire; but the restoration of £2,000,000 to certain possessors of income in Lancashire does not of necessity recreate trade in that county. What is wanted is a more widespread measure of purchasing power.

I suggest to the Chancellor, in all seriousness, that a far better way of stimulating trade and, in the long run, of bringing benefit even to the direct taxpayers, would be to use that £20,000,000 in stimulating public developments in various parts of the country. In that way he would give wages to more people and thereby would create a larger number of customers, who, in satisfying their wants, would add to the demands upon the factories of our country. The division between the right hon. Gentleman and ourselves this afternoon is not that we are anxious, out of some sense of bitterness, to keep the Income Tax at a high rate; rather, the difference between us arises over the question of which is the better way of utilising this sum of money, £20,500,000 this year and £24,000,000 next year, in the conditions in which the country finds itself. From the standpoint of the nation as a whole and of the nation's trade, from the more limited standpoint, even, of the well-being of the direct taxpayer himself I submit that in the long run it would be a far better thing to spend the available money upon some form of public works rather than to hazard it upon the hope that individual people will return it to the industries in which they happen to be interested. That is the fundamental difference between us, and we challenge the increasing tendency, for which the Government have been responsible ever since they took office, to add to the burdens of the indirect taxpayers, that is, the poor, and lighten the burdens of those better able to bear the weight of taxation.

6.27 p.m.

The hon. Gentleman rose for the purpose of inviting me to make another speech. I do not know whether that is because he is anxious to hear my voice, or whether he is acting upon the principle that what I say three times is true; but I am only too ready to respond to his invitation. As always, the hon. Gentleman has managed to cover a vast territory of argument within a small space of time. We are, however, not concerned here with any generalities; we are discussing a brief, concise, clear Clause in the Finance Bill reducing the Income Tax by 6d. in the £, and that is the only difference before the Committee. The hon. Gentleman has endeavoured to define the issue between us by saying that we are not distributing our surplus in the best possible way. He might have given us some credit for having a surplus at all. We only have that surplus as the harvest of our prudent finance and of the self-restraint of the British people.

On a point of Order. Is it in order to discuss the Budget surplus on this Clause?

I quite appreciate that the subject is irksome to the hon. and learned Gentleman. Having that surplus, it became necessary for us to determine the principles upon which we should distribute it. The hon. Gentleman, like those who have preceded him on the opposite side of the Committee, has made it clear that the Opposition would have operated upon principles different from our own, and would have used this surplus for redistributing the national income. We, however, conceived ourselves as being bound in honour to distribute the surplus in a certain way. The principles we selected were these: first, that those people had the first claim upon this surplus who had contributed to it by the sacrifices which they made in 1931. The second principle was that the money should be divided in roughly the same proportion as that in which it was given by the various classes who made the sacrifices. Accordingly, as we had a limited sum to dispose of, the direct taxpayers, who contributed nearly £58,000,000, are to have restored to them, in the shape of this reduction in direct taxation, £24,000,000 in the year. Those who suffered cuts in salaries to the extent of £11,000,000, are to receive back £5,500,000. We conceived ourselves hound in honour to make the distribution in that way.

I do not dispute that there is much substance in the argument which the hon. Member for East Fulham (Mr. Wilmot) constantly places before us, namely, that when you make a restoration to direct taxpayers and you have the alternatives of reducing the standard rate of tax and placing back the Income Tax allowances, you might give greater benefit to some people by restoring the allowances. There is room for a legitimate difference of opinion upon that point. Psychologically there can be no question that a reduction in the standard rate of tax has a greater effect. It brings a benefit to every direct taxpayer in the country, and it brings a benefit to every industry puting money to reserve. We made the choice, and we made it upon what we conceived to be a balance of advantage. If those who suffered in respect of allowances in 1931 have to defer their hopes of restoration for another brief space of time—or for a longer space of time—they have the consolation of knowing that even under the allowances as they exist, the smaller incomes escape tax altogether.

I pointed out to the hon. Member for East Fulham that a married man with less than £400 a year and three children pays virtually no tax, so generous is our system of allowances at the present day; when he has £400 a year and those family responsibilities, he does not pay Income Tax at 4s. 6d. or 5s. in the £ upon his income; the effective rate upon his income is 2½d. in the £. Our allowances are upon a most generous scale—£50 for the first child, £40 for each of the other children and allowances in respect of insurance policies, and other allowances. If the hopes of those who have suffered in respect of allowances have to be deferred, they have the conolation of knowing that we have taken a step of general benefit and advantage. I do not know what the hon. Gentleman means when he says that we ought to have used this money in some way which would have restored work to the unemployed. The course which we have pursued has had that result, and had it in the most astonishing manner, and seeing that there are so many more people in work as a result of our policy, we are entitled to expect the praise, however reluctant, of hon. Gentlemen opposite. I realise that the hon. Member for Mansfield (Mr. O. Brown) merely desired, as he said, to make a protest, which he did with remarkable courtesy. If it still be the duty of an Opposition to oppose, I can only congratulate the hon. Gentleman, and those who sit next to him on those benches, on the resourcefulness which they show, which is not in the least to be measured by their exiguous numbers.

6.35 p.m.

The Financial Secretary to the Treasury says that the Government were bound in honour—to everybody except the unemployed—in the distribution of this surplus. The means test was evolved during the crisis of 1931 in order, we were told at that time, to meet the situation which was upon us. The unemployed who have suffered through the means test have suffered more than any other section. There is injustice to the Income Tax payers in this proposal, because, if the principle of equality of restoration were to apply it is obvious, as has been said by the hon. Member for East Fulham (Mr. Wilmot), that the people who were most affected by the abatement of the allowances (had first claim. I recall a figure given in reply to a question in this House—if I do not remember it aright, I am perfectly ready to be corrected—in which it was stated that the unemployed had suffered from the means test to the extent of £21,000,000 per annum. How many of those millions, taken from them by the harsh measures of the means test, are being restored by this Budget? It is estimated that they will receive about £3,500,000 out of the surplus of £29,000,000, while the direct taxpayers are given, in relief of the standard rate of Income Tax, £21,000,000. The relatively small section of Income Tax payers who are to benefit to that extent did not make sacrifices as great as others, because they had more income in their pockets, even after their Income Tax had been increased, than had the other section. The cuts imposed upon the unemployed did not affect luxuries or savings but the very means by which they lived and the very necessaries of life. The first thing that the Government should have done was to meet in full, as a matter of justice and fairness, the claims of those who had suffered worst and to distribute most of the surplus among the unemployed rather than among the direct taxpayers. I protest that this is a most unjust way of distributing the surplus.

I controvert the other thesis put forward by the Financial Secretary. I have said before that he is extremely clever in defending his Government. We are delighted to hear him, and we are extremely interested in what he says, but there is no proof that the relief of the Income Tax payers in this manner has resulted in a revival of trade as the hon. Gentleman seemed to claim this afternoon. I want the Government to consider whether it is not sound policy to say at the moment that, far from helping trade and causing a revival by giving an impetus to trade, the very savings that this is meant to provide will create dangers in the economic situation of the country. I think it can be established that oversaving was one of the causes of the crisis through which we have been passing; money or purchasing power has been heaped up by individuals who, when they get it, cannot spend it. Anyone who has read the classic case put up by Mr. J. M. Keynes in that well-known book "The Economic Consequences of the Peace" will agree that we are not suffering through lack of means for investment. There is not an hon. Member here who will honestly maintain that we are in our present state, and that we have passed through our industrial difficulties, because there were not means for investment. There are ample means, but where are the places in which to invest? You are giving money to people who normally invest, and the Government's plea is that they are giving it in relief of the standard rate rather than in relief of allowances because that will provide money for investments, and will create confidence.

I should have thought that it would be far truer to say that money heaped upon money with no place for investment creates distrust and unsettlement rather than confidence. There is a lack of opportunity to invest, and one of the reasons for that is obviously the lack of purchasing power, which affects the production of goods which modern society has the power to produce. I charge the Government with doing a wasteful and thoroughly uneconomic action. It is waste to pile up money in the banks, and to pile up means of investment without the opportunity to invest. It cannot fructify, and there is no result from it except depression, apathy and distrust. If the Government were to follow a sound economic policy, let alone a fair one, in relation to the sacrifices imposed during the crisis, if, instead of giving money to people who cannot spend it, and who form the section of the community who usually make savings, they were to look at purchasing power, at the spenders—if they looked all round the problem free from bias, free from political pressure, and free from the pressure of those who see profits and profits only—they would have given this money to the unemployed.

I believe that that would have been far better than spending it in public works and making capital aggregations again in that way. The unemployed would then buy the things necessary for them to live. In view of the policy of economic nationalism which is being pursued by the Government, now that they have given up the idea of expanding international trade, and the home market is looming so large, purchasing power is even more important than ever inside this nation. It is of prime importance now that we should see to it that the people in our limited home market have the power to purchase the goods which are produced here. We object to this reduction because, as I have said, it is not just, it has no relation to what happened during the crisis, and it is unsound from an economic point of view.

6.48 p.m.

I expected the Financial Secretary to use some new argument in justification of the reduction of Income Tax, but, instead of that, he contented himself with merely repeating the arguments he used when the Budget was first introduced. The discussion of a Clause like this weeks after the introduction of the Budget has this advantage, that, when the Budget was introduced, this reduction was made because the Press had led the Government to believe that it would be popular to reduce the Income Tax by 6d. The Chancellor of the Exchequer took that advice and did it. The House believed, when the reduction was first made, that it was a popular step on the part of the Government. Now, weeks afterwards, we are able to judge whether it has been popular or not. During the interval we have been able to learn that it has not been a popular step, that the country has not agreed with it, that there has not been a single by-election that has helped the Government because of this reduction of Income Tax. Therefore, I should have liked the Financial Secretary to use some new argument rather than that which he used when the Budget was first introduced. That argument was that this reduction of Income Tax will be a stimulus to trade.

I have been led to believe for a long time that one of the troubles of this country was the huge amount of money that was lying idle in the banks. If there is an abundance of money lying idle in the banks, there can be no justification for reducing the Income Tax in order to stimulate trade. I suggest that this £20,000,000 could have been better used for the purpose of starting new industries in this country. That is the crying need in this country to-day. It is no use depending on private enterprise to start new industries. Those of us who come from distressed areas have lost hope in private enterprise starting new industries.

If there is no prospect of private enterprise starting new industries, it is the duty of the Government, when they have the opportunity, to use whatever money they have in order to start those new industries. Here was a golden opportunity for the Government, with a surplus of £20,000,000 this year, and the expectation of a surplus of £24,000,000 next year, to start new industries in some of the distressed areas. Last year we were told that the Government had a surplus of £30,000,000, and this year there is a surplus of £20,000,000, but that money has not been used to meet the great need of this country to-day. If private enterprise will not start new industries, the House of Commons has to face that fact sooner or later, and it is the duty of the Government, whichever party is in power, to start these new industries. This would have been a splendid opportunity for them to do so, and thereby find employment for men who at present have no prospect of finding employment.

Again, those new Income Tax payers who were called upon in 1931 to pay Income Tax for the first time, had a far greater claim to consideration on this occasion than the standard Income Tax payers had, and the Government should have considered those new Income Ta; payers, who have really been penalised, before they considered reducing the standard rate of Income Tax. Then the Chancellor of the Exchequer should have considered that the Government" owed something to the unemployed who have lost their medical benefit because the Government refused to find £750,000 a year, and who at the end of 1935 will lose their old age pension rights at 65. Another thing that the Chancellor of the Exchequer should have done, if he did not utilise this £20,000,000 for starting new industries, was to abolish the means test. The unemployed who come under the means test had in my opinion a far greater claim on the consideration of the Government and of the Chancellor of the Exchequer than the rich Income Tax payers had. What we complain about is the mistaken way in which this £20,000,000 is being utilised. I consider, first, that the Chancellor of the Exchequer would have been better advised to start new industries, or, failing that—

Surely, the hon. Member is aware that £20,000,000 is exactly the amount that is being and has been spent by private enterprise in the development of new industries in his own constituency?

That is news to me. I confess that up to this moment I was not aware that any money had been spent in my constituency—

Billingham is not in my constituency. Failing the starting of new industries, the Chancellor of the Exchequer should have considered the unemployed who have lost their medical benefit, and then the unemployed who suffer under the means test. In my opinion these courses would have been much better than relieving the rich Income Tax payer.

6.57 p.m.

The Financial Secretary, in his reply, mentioned that it was the duty of the Opposition to oppose, and he excused us on that ground. Surely, we could not oppose on a better thing than this distribution of a surplus of over £20,000,000 to a section of the people whom we regard as being in less immediate need than other people are. Anyone who has followed the broadcasting that takes place weekly, and especially that which took place during the last week-end, will recognise the dire need of many of our people. The position of one woman and her family, which was stated last week, is a crying shame and should not be allowed to continue, and that is typical of thousands of other similar households. To-night, although one knows that it is almost futile to object, we feel that we should not be doing our duty to our people to allow this reduction of Income Tax to a particular section of people, when the relief might be better given in other directions. The hon. Member for Farnham (Sir A. M. Samuel), who on occasions of this character generally has something to say about high finance, has had nothing to say on this matter to-night. I assume that he is quite satisfied to let sleeping dogs lie, but I would have liked him to use some argument that if it did not go into industry then it should be devoted to some better purpose. To my mind, no better use could be made of it than if the people who got it were in need of it: but giving this back will only mean that the banking accounts of the fairly rich people will be increased. We have arrived at a time when we realise that money lying idle is of no use to a community; the real value of money lies in its circulation. Our argument is that this money could be used better if the people who received relief spent it on useful articles, either on food or clothing, for the benefit of the community, instead of giving it to people who will not make good use of it.

To-night I would feel somewhat lacking in my duty if I had allowed this Clause to pass without protest. It is the biggest and most vital Clause in the Finance Bill. I know that later on we shall be dealing with other matters, but they will be academic by comparison. While we have so many people suffering from want, we cannot sit quietly by and allow money to be handed back to people who have no need of it. One argument used in support of this reduction is that some pledge was given that the increase would be redeemed. I am bound to admit that this does hold good to a certain extent, but only if we put back all the cuts. I claim, therefore, that until we fulfil that pledge of restoring all the cuts, we have no need to do what we are doing to-night. I know we cannot fight the Clause and cannot vote against it, but we should be lacking in our duty to our people if we did not protest.

Question, "That the Clause stand part of the Bill," put, and agreed to.

Clause 18—(Higher Rates Of Income Tax For 1933–34)

7.4 p.m.

I beg to move, in page 11, line 39, to leave out "1932–33," and to insert "1928–29."

An hon. Member appealed to the Financial Secretary to the Treasury on the last Amendment to say something. I am going to take the same line. I hope he will offer an apology and express regret when he replies to me and will show sympathy for the Surtax payer. The Amendment I am moving deals with Surtax. I do not expect it will be accepted, there is no money available. Probably Members opposite may deride me for championing the cause of the Surtax payer. Neither in the Budget statement nor during the discussions on this Bill has there been any reference to the Surtax or to the savage rate of taxation now endured by the Surtax payer. This is a matter for regret. We ought not to let the Bill go through without a word, in justice to the Surtax payer. After all, he is very dumb and helpless. There are very few of him among the 30,000,000 electors; only 100,000 are Surtax payers, and of those—I think 90,000 is more correct—70,000 have an income under £5,000 a year, and only 20,000 an annual income of over £5,000. He has very little electoral power. I shall take the over-£5,000 a year man as the text for my remarks. These Surtax payers are not all despised rentiers, living on inherited wealth; for if one looks through the report of the Inland Revenue Commissioners it will be found that £4 out of every £5 assessable for Income Tax and Surtax are derived from Schedule D, profits on trade and professions, and Schedule E, income from salaries, and from wages. Therefore the greater portion of these taxes comes from the personal efforts of persons. The taxation on. the £5,000 a year man is about £1,500; that sum comes back to the revenue and is not available for voyages of economic and industrial discovery. True, a poor man with £4 or £5 a week looks on £4,000 or £5,000 as a lot of money. But, after all, it is from the great incomes, if money can be saved, that adventurous capital is available for new trades and new industries desired by the hon. Member for Spennymoor (Mr. Batey).

I want to find out a little more of what the hon. Member meant by the expression "new industries." It is no use going down to the coalfields to spend more on more collieries. Or into Lancashire to put up more factories for cotton, or to Northampton for boots and shoes: they have already productive power enough to supply the community from existing factories. What is wanted is new kinds of trades and new kinds of industries. In my lifetime what has helped to increase the prosperity of England has been new kinds of trades, such as those created by the introduction of the internal combustion engine, the discovery and uses of coal-tar products, of the soya bean, and oil seeds for food, and rubber, and, quite recently, artificial silk or rayon. These were new kinds of industries, not extensions of old industries. What we are seeking now is not more factories but new industries, fresh in ideas and in newly-invented materials. I look for one, such as an artificial fibre which might take the place of cotton. That is the class of new industry that brought so much new business to this country. Vast sums were lost by those who first speculated in developing these new industries. The men who found the money for inventions and industrial speculations took a sportsman's view and said, "Well, we might lose money, but we might also make large profits to balance."

What happens now with this vindictive taxation running up to 12s. in the £, with Income and Surtax? The game of industrial adventure is not worth the candle. It does not pay to take risks of loss. The £5,000 a year man to-day pays even £1,500; his income was cut by 10 per cent. in 1931 as a result of Mr. Snowden's theories of restricting wealth by the weapon of penal taxation, and the collapse under him of the Socialist principles of national finance. Since then there has been no amelioration of the Surtax payer's position, nothing said about it, nothing done about restoring some of this cut.

The Surtax payer can get nothing tonight: the Exchequer has no money. A £5,000 a year man paying Surtax under the present Clause 18 has had his income injured by tax by a 45 per cent. increase since 1928–29. If there is to be any hope for the rehabilitation of industries, you must allow this Surtax man to have something with which he can speculate in fresh ventures and discoveries, so that later we can have new kinds of industries. Who is going to venture money now, when he has to pay so much of his gains in tax? Suppose a man is asked to venture a large sum on a new industrial discovery such as a new fibre to take the place of cotton and of a more useful nature, he will say: "No, it will need a lot of money to try out the discovery and I may lose it all. If I make money in another venture, the State will come along and penalise me. The State will not help with my earlier losses, but will take away most of what I may make." You will not get men to venture on those lines. Neither will the State be able to take the place of the private venturer.

The hon. Member for North Hammersmith (Mr. West), who was formerly on the Public Accounts Committee with us, will agree with me that, following the views of the hon. and learned Member for Bristol (Sir S. Cripps), if you hand, over the control of industry to the State, you will not create new trades. Do you think that civil servants would venture to take risks of the loss of public money in venturous, untried industry? Those who have sat on the Public Accounts Committee and know what happens if £200 is lost, know that no civil servant would be justified in risking public money in new industrial discoveries and experimental speculations such as always attract the sporting capitalist. The civil servant would rightly say, "If this risk goes wrong I shall be blamed by the Public Accounts Committee for losing public money; but if it comes right it is only part of my duty and I shall hear nothing further of it. I shall get all the blame and little praise for my official courage." You must allow the private man to keep something to recompense him for losses in trade ventures in new industries when he makes a success. He must be tempted by profits to risk his own money. And that is what this vindictive, savage Surtax is not doing. Hon. Members talk of money piled up at banks. That is quite true. Why is money idle there? I submit that a man who succeeds in saving £500 or £1,000 concludes that it is no good venturing it in any fresh industry. He would rather get a gilt-edged 3 per cent. Government stock, or leave it in the bank on deposit because he is not treated fairly. He says, "If I lose by my speculation in developing a new idea or material the Government do nothing for me. If I win by my pluck the Government take everything away from me. It is not good enough, thank you."

In consequence I have put down this Amendment. We are in dire want of men to try new ideas with their own savings. Hon. Members have referred to me as a financier. I am not. I am a retired manufacturer and have never been interested in financial business. I have had nothing to do with finance, my standpoint is always that of productive industry, and I want to see new industries. We shall never get full trade recovery and full employment until we induce men to develop discoveries and set up fresh trades by giving them the rewards of their venturesomeness to invest their skill and money and courage in untried industries. It is folly to discourage them by taxation. I want to hear the representative of the Treasury say that he is very sympathetic, not promising anything, but that when he comes next year with money in hand to the question of taxation he will try to restore some of the cut to those who are liable for Surtax.

7.15 p.m.

I want to come to the help of the Government in this matter. The hon. Baronet says that he knows nothing about finance. I want to be as modest as he is. I know nothing about it either, but I can see one or two things that are happening, and this plea of not knowing anything is all an attempt to better one's position. One would think from the way he spoke that he knows something about the Surtax payers. He seemed to be well primed in regard to their position. He may not be a £5,000 a year man. I would not go so far as to say that about him. I am waiting to see if that is denied. It is evident that, if he does not know much about finance, he is very closely connected with it. I wonder how many of the 100,000 Surtax payers have left the country because of the pressure of taxation. I do not think there are very many who went away in fear and trembling to other places. I do not think there is any better place in the world for the rich man than this country. Four or five years ago, when this taxation was being increased, the hon. Baronet said that, if we went on with this pressure, we should have all the rich men running away and there would be none to tax. Has anyone run away since that time? Have any of them gone to Russia, to Italy or to Germany? I have not heard of them, but I see from the Press that, when there are any loans floated, as in the ease of the Canadian loan the other week, the lists are no sooner opened than they are closed. Where did that money come from? The Surtax payers? I should imagine so. They were quite willing to allow their money to be invested overseas some where.

The hon. Baronet talked about building up new industries. How many of these Surtax payers have invested their money in other parts of the world and then pleaded with the Government to recover some of it for them? That is what they have done in the past, and, if their plea now is for some reduction in the next Budget, I hope the Government will give them no pledge at all. We protest against the reduction of Income Tax, but, if it comes to any question of the Surtax payer having a reduction, there will be a storm on these benches. At a time like this a plea of help for the £5,000 a year man appears ridiculous, and I am surprised that the hon. Baronet should come forward with it. It would be far better for these men to remain quiet for the time being, because when it becomes known that we have so many rich men, I do not think the people will stand for that kind of thing. When there is so much poverty on the one hand and so much wealth on the other, they will demand a levelling down of the wealth. The Government have been asked for an understanding. It would be as well if they did not give it. I do not think there will be any understanding, but I am giving a hint as to what our position will be if there be any attempt in that direction. There must be no attempt at assisting Surtax payers until there is some equalisation in the other direction, that is, helping the very poor. When that has been done, hon. Members can come forward with theif plea for the Surtax payer. I know this is merely an attempt to get something done in the next Budget, but I hope the Government will pay no attention to it.

7.22 p.m.

As one of those who put their names down to a Resolution to restore the cuts to the unemployed, I am sure the hon. Gentleman who has just sat down and other hon. Gentlemen on that side will realise that the last thing I should desire would to be unfair when I say that it is time some one associated himself with the remarks of my hon. Friend the Member for Farnham (Sir A. M. Samuel). Even in these days when taxation and representation seem to be very remotely connected, there should be some poor enough to do ' the Surtax payer reverence. In all fairness it must be borne in mind that one of the cuts at the time of crisis was the 10 per cent. extra on the Surtax; and while being among the foremost of those who advocated that the unemployed should get just consideration, yet I think it is equally just that, when all cuts can be restored, this class—one that performs many valuable functions—should not be neglected, even though they are a small class and have few to speak for them.

Then, again, I think hon. Gentleman opposite seem to forget that these cuts indirectly affect a considerable number of persons normally employed by Surtax payers, who in the event of such a cut are compelled to reduce their establishments in one way or another. And let it be remembered, the persons so affected are not provided for by the Unemployment Insurance Acts. So, for the above reasons, I am happy to associate myself with the Amendment standing in the name of my hon. Friend.

7.24 p.m.

It is quite right, a protest against the reduction of the Income Tax having come from opposite, that a protest should come from this side of the House against the failure to make any restoration to the Surtax payer, for it. is true that, whereas the other sections of the community have received some restoration, the unemployed in whole and Income Tax payers and others in part, the additional burden of 10 per cent. placed upon Surtax payers in the second Budget of 1931 has not up to the present been relieved. In those circumstances, I think no one will complain of my hon. Friend's action in moving this Amendment. He, with his economic knowledge, knows the repercussions of heavy direct taxation upon industry, and therefore upon employment. His Amendment aims at reducing the scale governing the payment of Surtax during the current year to the scale charged for the year 1928–9, which determined the tax payable in 1929–30. There have been since that date two increases in Surtax, and no restitution of course has been made. The cost of meeting this Amendment would be £14,000,000, of which about £4,500,000 represents the removal of the 10 per cent. increase and the balance represents the adoption of the lower scale previously in force. It would clearly be quite out of the question for the Government to concede the Amendment, particularly as it not only proposes the restitution of the 10 per cent. 'additional tax imposed in 1931 but claims a further restitution going back to 1928. But it was not my hon. Friend's object to achieve the insertion of this Amendment in the Bill. It was merely his object to make a protest.

It is interesting to observe that the total income of Surtax payers has fallen by about 30 per cent. since 1929. In that year there were over 100,000 Surtax payers with aggregate incomes of £590,000,000, and the number has now fallen to 85,000 with a total income of £420,000,000. Thus their incomes have fallen by 30 per cent. during the present depression. I appreciate that the jealousy, the envy or the hatred of poorer people may be aroused against the rich, but I would remind the hon. Member for Leigh (Mr. Tinker) that the State depends very largely for its income upon the Surtax payers. I should say they contribute about 40 per cent of the total inland revenue of the State, and the direct taxpayers as a whole, of course, make a contribution without which the social services could not be carried on. Therefore, even if the hon. Member does not like this class of persons, he might at any rate appreciate their utility. He cannot have it both ways. He cannot at the same time rely upon them to provide this contribution and desire to destroy them. He must decide on which side of the fence he is coming down. The present course of taxation shows that they are a diminishing number of persons and, should they diminish still further—happily, as the result of our policy, there is a hope of even further revival—many of the glittering schemes which the hon. Member advocates with such eloquence would have to be abandoned. I do not think I need make any further comment upon the Debate, except to thank my hon. Friend the Member for Farnham for drawing attention to this subject and thus putting into the balance the protest that was made in the opposite direction from the other side of the House.

7.30 p.m.

Before asking leave to withdraw my Amendment, I would like to say something to the hon. Member for Leigh (Mr. Tinker), who is always a fair debater and a student, which I think may perhaps enlighten him. It is no good his girding at the Surtax payer. If you took every farthing of income which is assessed to the Surtax payer away from him, and spread it out evenly among the 45,000,000 people of this country, the amount that you would give to each of them would be something like 7d. a day. But when you had done that you would have lost your £50,000,000 a year of taxation which those Surtax people provide. And would seven-pence a day extra income all round compensate the loss of that tax contribution of £50,000,000 a year? It is easily collected from 90,000 people, and they have no electoral power to speak of. They make honey for others to collect. I would ask the hon. Member for Leigh to read page 83 of Cmd. Paper No. 4456, called the 76th Report of the Commissioners of Inland Revenue, where I am sure he will find figures which will cause him to vary his views about the Surtax payer and be grateful to him. I now beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question, "That the Clause stand part of the Bill," put, and agreed to.

Clauses 19 to 22 ordered to stand part of the Bill.

Clause 23—(Power Of Treasury To Guarantee Loans Issued To Redeem Existing Guaranteed Loans)

7.32 p.m.

I beg to move, in page 14, line 27, after the first "loan," to insert "of the same maturity."

The reason I have put this Amendment down is that it is particularly necessary that this Committee and the House of Commons generally should have special regard to the question of guaranteed loans. I do not believe that the Clause as drafted intends to do anything but make provision for a perfectly reasonable replacement, by conversion, of any loans guaranteed by the British Government which might be suitable for conversion, but as it is drafted it appears to me that it might possibly give a greater degree of latitude to the Treasury than would at first be supposed. If I may give an example, it seems to me that if a loan, possibly guaranteed for a foreign State, were to come to maturity in five years' time, there is nothing in the Clause to prevent the Treasury from replacing it by a so-called conversion loan which might have a maturity of some 20 or 25 years' later date than the maturity which was being replaced. If such a thing as that occurred, the Treasury would be in fact guaranteeing what would amount to an entirely fresh loan, without the prior consent of this House. That, I think, is an entirely undesirable thing to do.

To show how careful we ought to be about these matters, one has merely to look at what has happened already in the case of certain loans that we have guaranteed. There is at the present moment a loan guaranteed to Greece, which is in default. We guaranteed it in gold, and it is costing a great deal to protect our guarantee. We have guaranteed a loan to Austria, and unfortunately there is every reason to believe that that loan would be in default if we had not guaranteed another loan to help them pay the interest. If my hon. Friend the Financial Secretary to the Treasury could assure me that I have misread the Clause, and that the Clause will not permit of a conversion loan being replaced by one of a very much longer maturity, I would save time by withdrawing my Amendment. He will refer me, possibly, to the last part of Sub-section (1) of this Clause:
"Provided that no guarantee shall be given under this section unless the Treasury are satisfied that the substitution of that guarantee for the guarantee of the loan to be redeemed will benefit the Exchequer.
But I must tell him that I should not consider that that was a satisfactory explanation. I take it for granted, of course, that in this matter the Treasury will on all occasions act in a manner which it believes to be to the advantage of this country, but it, like other people, occasionally makes mistakes, and in this matter of giving guarantees past history already shows that it is very dangerous, and I do not think that a responsibility of that kind ought to be parted with by this House of Commons.

7.37 p.m.

The whole Committee recognises in my hon. Friend the Member for Gravesend (Mr. Albery) a vigilant guardian of the financial practices of the nation, and it is right and proper that any powers taken by the Treasury should be closely investigated. I do not know whether I shall succeed in assuaging the anxieties of my hon. Friend, but if it be his desire to elicit a statement of the Government's intentions, I think their intentions are entirely in consonance with his own desires as expressed in his speech. As the Clause is drafted, there is nothing to prevent the Treasury from guaranteeing a conversion loan for a period extending beyond the date of final maturity. There is nothing to prevent it, and we do not think it would be safe to insert a proviso to that end, for if we did so, it might be in conflict, in our judgment, with the actual proviso in the Clause which was read to the Committee by my hon. Friend, and which says that no guarantee shall be given

"unless the Treasury are satisfied that the substitution of that guarantee for the guarantee of the loan to be redeemed will benefit the Exchequer."
We are, therefore, called upon to judge, when there is a question of a conversion, whether or not it will benefit the Exchequer, and we must be satisfied under that head. My hon. Friend, with his great experience in the City of London, will realise that when there is a question of making a conversion loan the Treasury must compare the risk under a scheme of lower annual payments over a longer period with the risk under a scheme of higher payments during a shorter period. The Treasury must, I submit, be trusted to exercise a discretion in the national interest. We have limited our discretion in the most practical way possible by providing that the conversion loan—and this is a part of the Clause that the hon. Member did not read—must be
"solely for the purpose of providing for the redemption of the first-mentioned loan."
It must be solely for that purpose, and it cannot be used, except in defiance of this provision, for making a loan of an extended period which was never originally contemplated. I do not know that I have satisfied my hon. Friend, but I submit to him quite seriously that the acceptance of his Amendment might be in direct conflict with that proviso, which imposes upon the Treasury the duty of assuring itself that the terms of any conversion loan shall be of benefit to the Exchequer.

I endeavoured at the outset of my speech to explain that, and short of repeating myself I cannot explain it any further. I say-that the Treasury must have regard to whether a conversion loan will benefit the Exchequer, and in order to do so it must compare the risk of lower annual payments over a longer period with the risk of higher payments over a shorter period. Anyone making a conversion loan must take those two factors into consideration, and if we have to extend the period in order to save the interest, then we are acting in the interests of the Treasury. My hon. Friend would prevent us from extending the period. Therefore, the Treasury might not be able to secure the very best terms, and that, I say, would be in conflict with the proviso to this Clause.

7.42 p.m.

May I point out to my hon. Friend that, first of all, there is no obligation to make the conversion? We are talking of a loan which is about to become due. Even if the Clause were altered as I suggest, the Treasury would still be able to consider whether it was an advantage to make a conversion or to leave it as it was. Further, I do not think my hon. Friend has taken another point into account. He talked of the interest, which is of importance, but this is only a question of a guarantee, and when it comes to a question of risk, there can be no doubt that a shorter risk at a higher rate of interest, if it is guaranteed, must always be less than a longer risk at a lower rate of interest. I should not see any objection if my hon. Friend varied my Amendment so as to give the Treasury a latitude of five years, but I think it is altogether wrong for this Committee to allow the Treasury to do what in fact is giving this country's guarantee to what is in practice a fresh loan.

7.43 p.m.

My hon. Friend now raises two further points, with which I will try to deal. There is, of course, no compulsion to make a conversion at all. The position is that there are borrowers enjoying a Treasury guarantee who would be desirous of converting on to a lower interest basis if they could retain the guarantee. That is the purpose of this Clause. There is no compulsion—it is a purely voluntary act—and before consenting to continue the guarantee the Treasury has to be satisfied that it is in the national interest that it should be so continued. The lowering of the rate of interest, says my hon. Friend, is of no specific value to the Treasury. Of course, it is not in any direct sense, but if the Treasury has given a guarantee to any company or a borrower, and the borrower can get his money on better terms, then the company is in a sounder position, and there is less chance of the guarantee having to be called upon. That is the answer to the point raised by my hon. Friend.

7.45 p.m.

My hon. Friend has raised a point of substance and importance, and I think the Financial Secretary would be well advised to consider the matter further before the Report stage. If he would do that, it would be very helpful. I cannot see the value of the proviso that the Treasury is to be satisfied that the new guarantee is going to be to the benefit of the Exchequer. That is what the Treasury is there for. Does it mean that when this proviso is not put in the Treasury loses all interest in anything to the Treasury's advantage? The wording does not seem to be adequate, nor does it seem to me that if we pass this Clause Parliament maintains sufficient control over these possible conversion operations. The Financial Secretary did not tell us what series of loans the Treasury have in mind in putting this Clause into the Bill. Is it a very large volume of loans that is likely to some up for possible conversion, or is it one or two specific loans? In which case they are taking far too wide powers. If it be a question of guarantee, then Parliament should retain control in each specific case.

In this Clause we are giving, apparently, to the Treasury, if this form of words be accepted, a complete option, without reference to Parliament. All they have to do under Sub-section (4) is to come to the House with the statement of the guarantee given under the Subsection as soon as may be after it has been given. Therefore, Parliament has no say in the matter. While it is very interesting to get a report after the event, obviously that is no check on the Treasury with regard to the terms of a conversion operation of this kind. I hope the Financial Secretary will look into the matter further. My hon. Friend said that he did not particularly stress the words, "of the same maturity," but that he was willing to give a little time if the Government thought a few years would help them better. I do not think that is right on the information so far vouchsafed to us—there may be more forthcoming because it is our experience in these financial Debates that you start a small point and before you have finished you have discovered a great deal of information, interesting and useful, which otherwise we should not have elicited—to give this unlimited power to the Treasury. The Financial Secretary did not give any indication whether this is a big thing or a small thing; it is just a thing. We want to know which it is. If it is a matter of some real consequence, then we think that a little more thought and a little more explanation would be an advantage. The House should maintain the general principle which all Parliaments have adopted in regard to guaranteeing loans.

The questions that the hon. and gallant Member has asked are hardly covered by the Amendment. They could be better discussed on the Question, "That the Clause stand part."

7.49 p.m.

I should like to say a few words in support of my hon. Friends. Apparently, the object of the Amendment is to get a guarantee that there shall be a time limit to these guaranteed loans. Many of us have been dissatisfied about the guaranteeing of certain loans, and we do not want to see the principle extended too widely. Unless we lay down certain restrictions, as the mover of the Amendment seeks to do, we shall be giving freer power to the Treasury to encourage guaranteed loans. My hon. Friend opposite has done a really valuable piece of work in drawing the attention of the Committee to the position which has arisen under this Clause. We have been extraordinarily unfortunate on one or two occasions in some of the loans guaranteed by the Treasury. I admit that the Treasury now is well looked after by the Financial Secretary and the Chancellor of the Exchequer, both people of great ability, but we are here legislating for a considerable time to come.

The hon. Member is going far beyond the Amendment. If the hon. Member who moved the Amendment would ask leave to withdraw it, the principle of the Clause could be discussed on the Question, "That the Clause stand part."

I was trying to point out that there is one way in which we could limit a course which I thought was unsatisfactory. I listened to the arguments in favour of the Amendment and the arguments of the Financial Secretary, and I am convinced that it is necessary to have words inserted for the purpose of limiting the powers of the Treasury.

7.51 p.m.

This is a very important matter. As the hon. Member for Torquay (Mr. C. Williams) has said, many of us for some time have been dissatisfied with regard to the guaranteeing of foreign loans. I think it is very undesirable to have a hypothetical Clause of this kind.

The hon. Member is now off the Amendment and definitely discussing the Clause. We can have a discussion on the Clause afterwards.

If my hon. Friend can see his way to tell us that he would consider between now and the Report stage whether some safeguard could be put in, I should be pleased to ask leave to withdraw the Amendment.

7.52 p.m.

I never like to mislead the Committee or my hon. Friend, and I must tell him that we have given to this matter the consideration which his Amendments always deserve. He was kind enough to give us notice of the Amendment and we had the matter specially examined. I have explained that this Amendment or any similar Amendment might in our judgment be in conflict with the proviso. Therefore, I could not hold out any hope that it would be accepted, and to say to him that we would consider it between now and the Report stage would imply that it had not received the most careful consideration. I would far sooner be straightforward and tell him that that I cannot do that, than I would mislead him into the belief that something can be done on Report.

The Financial Secretary says that the Amendment would conflict with the proviso. Assuming that the proviso is a self-evident statement of fact, would it not be much better to put in some safeguard, such as my hon. Friend suggests.

I appreciate the point. My hon. and gallant Friend said that a Debate in this House often started with a small point and developed into a magnificent consummation. That applies to his speeches. He began with a small point but he did not succeed in stumbling upon a really major point. There is nothing sinister here. There is no covert Treasury intention of abusing this power in any way. It will be used in regard to guaranteed loans only for the benefit of the Exchequer, and when it is in the national interest that the interest on the loans should be reduced by means of conversion, then we shall have power to authorise the conversion and give our guarantee. We have for a long period been asked by those who are enjoying guarantees under the Trade Facilities Act to look into this matter. We have given it consideration and have made our proposal in this Clause. The Treasury must be trusted to judge the position of the market and the best terms that can be procured. Parliament in every case has been consulted and has authorised the original guarantee, whether it was under the Trade Facilities Act or in regard to a particular loan.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

7.57 p.m.

I am still not at all happy about this Clause. I do not think the Committee has properly appreciated that the Clause applies not only to loans which have already been guaranteed by this Government but to any loans which may hitherto be guaranteed by any Government. I consider that we are giving an absolutely blank cheque for future guarantees by this Government or any other Government in respect of any loan, the terms of which the House has approved. At a subsequent date, before the loan has matured, the Treasury, without reference to this House, will be able to alter the terms on which the loan is to be continued and the rate of interest payable. It will be possible under this Clause for the Treasury to enter into an arrangement by which the capital repayable may be increased. You may have a loan of £100,000 at 5 per cent. and an alteration may be made making it £110,000 at 3½ per cent. by the exchange of securities, as in this Clause. While we on this side accept every word that the Financial Secretary has said about the Treasury as regards existing loans, it is very undesirable that this Clause should be made to apply to future loans hereafter guaranteed by this Government or any other Government. I would ask the Financial Secretary to reconsider the matter once more before the Report stage.

7.59 p.m.

I support what has been said by my hon. and learned Friend. We are giving a blank cheque to the present Government and to future Governments to deal with the conversion of loans which they may make in the future without asking Parliament. If words were put into the Clause to make it clear that it only affects loans which the Government has already guaranteed, it would make a difference in my mind, but I do object to unlimited powers of this kind being given. I think they ought to be clear and definite. We ought not to allow this Clause to pass in its present vague form. At any rate we should be informed by the Financial Secretary what loans it is intended to affect, and whether it is the intention of the Government that this should be a general Clause affecting all future loans, whether the proviso for redemption is included or not.

8.1 p.m.

I do not want to repeat what I have already said, but I must answer the Financial Secretary, who said that I had made a great speech and had brought it to an end without arriving at a major point. He overlooked the fact that the final point in my speech was himself. I cannot imagine any more "major" point than that. This question of loans has brought down Governments before. If I remember aright, in 1924 the curious comings and goings that went on at the time" of the Russian negotiations, which eventually brought about the fall of that Administration, were largely due to questions of loans, and I should be very wary, if I were my hon. Friend, in taking such powers, which take away from the purview of Parliament these lending powers on conversion. My hon. Friend has not convinced me at all. It is all very well to say that the intention of the Government is to benefit the Exchequer in the proviso. Of course it is. But the function of Parliament is to translate the intentions into statutory form and to limit those intentions so that when necessary Parliament may have the opportunity of reviewing the situation.

The Treasury under every Administration is not always right. If the Financial Secretary will look into some of the records of his office he will find that that statement is true. I hope he will ask the Chancellor of the Exchequer to reconsider this matter. It does seem to me to be a rather larger point than we first thought. The Chancellor's view of it might very well be taken between now and Report. Obviously, the Treasury must try to benefit the Exchequer in everything that it does. It remits taxation and it imposes taxation for that purpose, so that on the balance what it does is to the good of the financial situation of the country. Therefore, to say that because these words are put in the proviso the Government have done all that they need do with regard to this House, is really over-stating the case. I hope that the Financial Secretary will exercise his ingenuity and see whether he cannot meet us in a friendly way before the Bill goes on the Statute Book.

8.5 p.m.

This is probably the only opportunity that we shall have of discussing this Clause. If we pass it now it becomes part of the Act. Will it come up again next year for discussion, or will it become permanently part of the machine for dealing with these loans. If it comes up for revision next year I should be happy to let it go through now. It is interesting to note that the only people here who have stood up in this matter of loans, for strict financial administration, have been Conservative Members, and that no Liberal has thought fit to have any dealings in such an important matter.

8.6 p.m.

Does the Financial Secretary feel himself to be in a position to guarantee to this Committee that if this Clause is passed, at no future date will any Government issue under this Clause a conversion loan of such a nature that in effect it becomes an entirely fresh loan and fresh commitment by this country?

8.7 p.m.

I hope that in the few observations which I make I shall not omit to deal with any point of criticism. Mention of the word "point" reminds me that my hon. and gallant Friend the Member for Gainsborough (Captain Crookshank), no doubt for the purpose of denying a charge which I had not in fact made, namely, that he ended his speech without making a point, said that he had ended his speech with a very good point, namely, myself. That is not a flattering observation. For the defini- tion of a point is something which has position but no magnitude.

The hon. and learned Member for Ash-ford (Mr. Spens) is fearful of the future. He says that under this Clause it would be possible to vary the terms of loans which Parliament has authorised. Of course, that is the whole purpose of the Clause, if to vary them means to do something which at once benefits the borrower and benefits the State. The hon. and learned Member is under a misapprehension if he thinks that we are taking power in this Clause to guarantee any future loans. In every case Parliament would have to authorise such a guarantee. All that does happen under the Clause is that we are empowered to continue, as it were, the guarantee already authorised, in respect of a conversion loan, solely for the purpose of providing for the redemption of original loans. The words of the Clause are just as restrictive as the words of the Amendment, except that they do allow latitude for judgment of the circumstances at the particular time.

I think I can assure my hon. Friend the Member for Gravesend (Mr. Albery) that within the terms of this Clause it would not be possible for a Government of the future to do anything which was an abuse of these provisions, namely, to guarantee a conversion loan issued solely for the purpose of redeeming an original loan and that loan being raised in such a manner as would benefit the Exchequer. Any action outside that definition would, of course, be ultra vires any future Government. With regard to the question as to what loans it is intended to affect, which was the question asked by the hon. Member for South Kensington (Sir W-Davison), it is intended to affect all loans which may be redeemed before maturity at the option of the borrower—loans guaranteed by the Treasury.

Future as well as past, but any future loans to be issued would have to be authorised by this House. That would require legislation. Therefore there is no danger as to what may happen in the future. I trust that if that point and the others have been made plain, this Debate has not taken place in vain.

You say it will affect future loans and that the House will have to authorise them, but will it be clear that the proviso will also be read into the new loan?

It must be remembered that sometimes loans become grants, as in the case of the Newfoundland loan, which the Treasury transferred into a grant-in-aid without informing the House.

I will try to remember all that I am enjoined to remember. The actual words of the Clause make the point of the hon. Member for South Kensington perfectly plain. I do not think I need repeat them. I am asked, will this Clause be permanent? Of course the Clause is permanent until it is repealed. It is giving the Treasury this power in the national interest and in the interest of the borrower, until such time as Parliament shall think fit to revoke that power.

Will it come up in the Budget of next year? I understand now that it will not.

A vast number of matters come up every year at the option of hon. Members. If they desire to move a new Clause or an Amendment to any previous Finance Act, provided it is in order they may do so; but it will not come up at the instigation of the Government unless we revise our policy.

Question, "That the Clause stand part of the Bill," put, and agreed to.

Clause 24—(Amendment As To Sum To Be Paid Into Road Fund)

8.13 p.m.

I beg to move, in page 15, line 22, to leave out "and each subsequent financial year."

This Clause deals with a vastly different subject from the last. It deals with a matter brought to the notice of the House by the Chancellor in his Budget statement, and it is necessary largely because of the arrangement which the right hon. Gentleman announced, to reduce the horse-power tax on motor vehicles. I hope that the Amendment will be accepted. It is a modest Amendment and it does not in any sense violate the intentions of the Government with regard to the proposal embodied in the Clause. The object of the Amendment is merely to ensure that next year and in subse- quent years the matter may be the subject of review. I would recall to the Committee that the Road Fund was established in 1920. So fertile a source of revenue has it been that from time to time Chancellors of the Exchequer have appropriated certain funds from it. The disposal of the proceeds of the duty was provided for in the Road Act of 1920. Those provisions were subsequently amended by the Finance Act of 1926. Briefly stated, the position to-day is that out of the total duties collected from the tax on motor vehicles one-third is retained by the Exchequer and two-thirds remains in the Road Fund. When the Chancellor of the Exchequer made his proposals with regard to the reduction of the tax from £ 1 to 15s. per horse-power he made these observations. I would rather call in aid the observations which he made than anything I might venture to express for myself. The Chancellor of the Exchequer said that the cost of the concession was to be £2,200,000 this year and £4,000,000 in a full year. He continued:
"That cost under the existing law would fall to be borne as to two-thirds by the Road Fund and one-third by the Exchequer, but in the present circumstances and with the many claims which are being made upon my surplus, I did not feel that I can undertake this year to provide any considerable sum for this purpose. I. therefore, consulted with my hon. Friend the Minister of Transport, and we have agreed upon the following arrangement: The Exchequer's share of the produce of the Motor Vehicles Duties in present circumstances is to be subject to a minimum of £5,000,000. rather less than the sum that I should expect to get if no alteration had been made at all By that arrangement, therefore, the cost of the concession that I have described will fall mainly upon the Road Fund."—[OFFICIAL REPORT, 17th April, 1934; cols. 918 and 919, Vol. 288.]
I do not suggest any alteration in the arrangement which has been made by the Chancellor of the Exchequer and the Minister of Transport, but I think that it is in the interests of the House, whose function, after all, it is to keep itself informed of these financial arrangements, that there should be an opportunity not only this year, but next year, and in subsequent years, for the House to decide for itself whether or not, on the evidence submitted either by the Chancellor of the Exchequer or the Minister of Transport, whichever Department is affected, the arrangement proposed this year is a right and proper arrangement to become per- manent.I am rather afraid that when words are inserted in Finance Bills they are lost in oblivion, and we do not have an opportunity of reviewing them. in a subsequent year. I understand that the Treasury have the power, and doubtless exercise the power, of revising and reviewing these things, but, unless these words are deleted, the initiative will have to come from some private Member rather than from the Exchequer. Therefore, I propose, for the simple purpose of bringing the matter once more to the notice of the House next year, that the words should be deleted, and hope that my hon. Friend the Financial Secretary to the Treasury may see his way to accept the Amendment.

8.19 p.m.

This is a Clause under which, 'as my hon. Friend has said, the Exchequer's share of the Motor Vehicle Duties is guaranteed at a minimum of £5,000,000, not only in 1934–35 but also in subsequent years. In the Budget speech from which my hon. Friend quoted the Chancellor of the Exchequer "aid that he would not have felt himself able to reduce the taxes as he has done on private vehicles if the reduction had involved any substantial charge on his Budget surplus, for clearly there were others who had prior claims. It may be that the same circumstances which exist this year will exist next year, but it is not the preconceived intention to deprive the Road Fund of the means to carry out its proper duty. Therefore, my right hon. Friend the Chancellor of the Exchequer will keep in close touch with my hon. Friend the Minister of Transport, and should circumstances alter, of course, this arrangement "an be reviewed. It may be that the Clause will become inoperative—and we hope that it will—as a result of expanding revenue. It may be that circumstances will necessitate its withdrawal, but my right hon. Friend has felt that, instead of adding to those provisions which have to be introduced every year, the most effective way would be to put the legislation in this form, leaving it to the future to disclose whether or not it may be necessary to repeal it. I hope that it will not be necessary, because, as I say, we trust that there will be, in the future, an expanding revenue. I trust that my hon. Friend will be satisfied with an assurance that the position will be kept under constant and sympathetic review, and will accept the Clause as it now stands and withdraw the Amendment.

8.21 p.m.

I am obliged to my hon. Friend. I agree that this is the most effective way of dealing with the matter from the Treasury point of view, but I am not so convinced that it is the most effective way of dealing with it from the point of view of the House of Commons. But in view of the statement which he has been good enough to make and his assurance, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question, "That the Clause stand part of the Bill," put, and agreed to.

Clause 25—(Repeal Of Land Value Tax)

The following Amendments stood upon the Order Paper:

In page 15, line 30, to leave out "The provisions of Part III," and to insert "Section ten."

In line 31, to leave out from "shall," to the end of the Clause, and to add:

"have effect as though for the first financial year in which the tax is to be charged there were substituted the financial year ending the thirty-first day of March, nineteen hundred and thirty-six, and the provisions of Part III of the said Act relating to valuation shall have effect as if for the dates respectively mentioned in the definition of ' valuation date ' in section thirty-two of the said Act there were substituted the first day of January, nineteen hundred and thirty-five, and the first day of August, nineteen hundred and thirty-nine."—[Mr. Maclean.]

The first two Amendments in the name of the hon. Member for Govan (Mr. Maclean) are out of order as they require a Financial Resolution.

8.22 p.m.

I beg to move, in page 15, line 32, to leave out from "effect," to the end of the Clause.

Clause 25 is one of the Clauses of the Finance Bill which has given most dissatisfaction to people in the country, and the surprising thing—and it is to this object my Amendment is directed—is that the proposed abolition of Part III of the Finance Act, 1931, which charged Land Value Tax is expressed in such a way that Section 28, which is an integral part of the provisions of Part III, remains unrepealed. It is to effect the repeal of Section 28, as well as the other provisions of Part III, that this Amendment has been brought forward. Part III of the Finance Act, 1931, deals only with Land Value Tax, and among the provisions of Part III which Clause 25 repeals is, first of all, the charge on land values. and then the method of assessing land values and of placing them on record, and the method by which you can object to a land valuation and by which you can bring appeals for further exemption and secure reliefs. Part III is in fact a code. I do not understand why, if the whole code for effecting taxation of land values and stating how land values are to be assessed generally is repealed, one. Section, namely Section 28, is retained. Section 28 provides that:
"On the occasion of—
  • (a) any transfer on sale of the fee simple of land;
  • (b) the grant of any lease of land for a term of seven years or more;
  • (c) any transfer on sale of any such lease;
  • it shall be the duty of the transfer, lessee, or proposed lessee to produce to the commissioners the instrument by means of which the transfer is effected, or the lease granted or agreed to be granted."
    The Second Schedule of the Act contains very elaborate requirements in connection with the production of instruments of transfer. In my submission, it is clear that, in passing the Finance Act of 1931, Section 28 was not inserted as an independent piece of legislation standing on its own. It was simply part and parcel of the code setting up the taxation of land values and the methods for dealing with such taxation. Like other portions of the code it was, and is, onerous to persons taking transfers of land or becoming lessors or transferees of leases. They are under statutory obligation, with a penalty imposed upon them if the obligations are not fulfilled, to supply details as to the situation of the land, the terms of the lease and sales; and so on. My submission is that the mandate which the present Government received to sweep away the proposals of Part III of the Finance Act of 1931—

    At the last General Election. My submission is that the mandate which they received then is not discharged if one essential portion of the code is unrepealed while all the rest is deservedly and rightly swept away. The Amendment is brought forward for the purpose of ascertaining the object of exempting what is clearly a part of the machinery set up by the Act of 1931 for the purpose of the taxation of land values. Every argument which weighs with those who desire the abolition of Part III can be brought forward with regard to Section 28. The Section is no less uneconomical, no less unjust and no less onerous, than other Sections of Part III of the Finance Act, and every argument which can be brought against the provisions of Part III of the Act of 1931, which are now repealed, can be quite, appropriately brought forward against Section 28. It may be said that this is an obsolete piece of machinery and as we are sweeping away all the rest what harm is there in retaining this particular piece of machinery? There may be some positive advantage in it. In my submission it is a source of danger so long as any of this machinery is retained because it makes it easier for a Government which looks on this question from a Socialist point of view, without regard to the well-being and needs of the country, to reintroduce this unjust tax.

    The hon. and learned Member has described this machinery and proposal as Socialistic. Is he not aware that it gives effect to proposals which have been supported by almost every municipal corporation during the last 40 years?

    Some of them may have supported it; if they were ill advised they have supported it. With all due respect to my hon. and learned Friend his intervention is very inapt. The point I am making is that the retention of this one piece of machinery will make it easier for any Government which wishes to re-introduce the taxation of land values. It preserves the one piece of machinery which requires those who deal in land to deliver to the Commissioners a record of their transactions. If the sense of the Committee is in favour of sweeping away the provisions of Part III of the Finance Act, 1931, they will be in favour of the Amendment, because its object is exactly the same, that is, to sweep away lock, stock and barrel, all the provisions of Part III to which the great majority of the supporters of the present Government objected strongly in the Debates of 1931. I am moving the Amendment to ascertain why it is that Section 28 has been retained, because in the absence of any obvious evidence to the contrary it is a bad thing to keep a bad piece of machinery on the Statute Book which makes the re-introduction of mischievous legislation easier.

    8.31 p.m.

    I desire to support the Amendment. There may be some good reasons why the regulations which prescribe the formalities which have to be observed when land is transferred or when a lease is granted should be preserved, but I am unaware of them, and I shall be glad to hear from the Chancellor of the Exchequer what those reasons are. It is obvious that the formalities set out in the Schedule must cause work and, therefore, some expense, and such expenditure is likely to be more onerous on the small man than on the man of substance. For this additional reason, therefore, I shall support the Amendment.

    8.32 p.m.

    It may not be within the knowledge of hon. Members who were not Members of the House in 1909–10 that the subject of Section 28 has been frequently debated in this House and defended by past Conservative Chancellors of the Exchequer on grounds which really have nothing to do with the question of land valuation and land taxation. The reason for the retention of Section 28 is that the information which the Valuation Department is able to obtain is of first importance in saving public money, and when I tell hon. Members that during 1933–4 the Inland Revenue Valuation Department valued property of an aggregate value of £133,000,000 for the purpose of assessing Death Duties and Stamp Duties, and property of an aggregate value of £27,000,000 for the purpose of advising other Government Departments in relation mainly to land requirements, either by the Government or by local authorities, it will be seen that figures of great magnitude are involved. In the process of valuation it is, of course, necessary that the Government valuer or those who represent the Government should be able to produce evidence of the current market value of land in different parts of the country. Unless they have that information at their disposal they must necessarily be placed at a great disadvantage as compared with the representative of the landowner who, of course, has that information at his finger ends. It is for that reason that in 1920 the then Chancellor of the Exchequer, my right hon. Friend the Member for West Birmingham (Sir A. Chamberlain) used these words in defending the retention of this provision:

    "I do not believe there is a man in this House who does not admit that it has been a scandal in the past that a public authority desiring to purchase land for a public purpose has often been notoriously at a disadvantage compared with a private person buying in the same way. I am as anxious as he to see that when a public authority purchases—whether the Government or a local authority—they should pay a fair price and no more. Accordingly, I am anxious that we should have, and the Government desire that we should have, the knowledge that would enable us to check the price asked, to check by reference to the general stream of transactions a particular proposal which may be under our notice at any given moment."—[OFFICIAL REPORT, 14th July, 1920; col. 2434, Vol. 131.]
    This is not really an onerous matter for the landowner. All the landowner need do is to leave his deed at Somerset House for 24 hours or forward it through the local stamp office or post office to Somerset House, in order that the Inland Revenue officials may extract the required information. It cannot be said that that is a very severe burden to place upon the landowner, and, in view of the importance from the point of view of the public purse that this information should be continued, I hope that my hon. and learned Friend will not press this Amendment.

    Amendment negatived.

    Motion made, and Question proposed, "That the Clause stand part of the Bill."

    8.36 p.m.

    The Chancellor of the Exchequer in replying on the last Amendment made a very important statement to the Committee. He justified his refusal to accept the Amendment on grounds of public policy and of safe- guarding the public purse. He read an extract from the OFFICIAL REPORT of 1920 of a speech in which the then Chancellor of the Exchequer, a relative of his own, justified at that time the provision now embodied in Section 28 of the Finance Act, 1931. It is rather a pity that neither the Chancellor of the Exchequer in 1920 nor the right hon. Gentleman himself carried further that regard for the public purse and the public well-being. The Chancellor of the Exchequer in 1920 desired that local authorities should pay-only a fair price and not an extortionate price for land. The present Chancellor of the Exchequer is apparently desirous of accomplishing the same end. He is anxious that local authorities shall not be held up to ransom in connection with the purchase of land. That is evidently his intention and therefore I should have thought that he would have allowed the Land Tax legislation of 1931 to have remained on the Statute Book and would have put it into operation so that it would have been possible for these authorities to obtain land at fair prices and not at the extortionate prices which are presently demanded, when local authorities are anxious to secure land for housing schemes or other schemes of public welfare involving the use of land. I think I hear an hon. Member say that I am wrong, but I shall prove that I am not wrong in saying that extortionate prices are being charged for land and that these extortionate prices would be prevented in the future if the Land Tax were allowed to operate.

    The Land Tax provisions of the Budget passed by the Labour Government have been allowed to fall into disuse. Indeed they have never been put into operation. Last year the valuation provisions passed away and this year the power to tax disappears also. The attention given by the Government to this question seems to have been of a rather cavalier character. The Chancellor of the Exchequer made practically no mention in his Budget speech of the repudiation of the Land Tax. The Prime Minister who in the past has been one of the strongest propagandists of the taxation of land, is not in his place to-night and was not in his place during earlier Budget discussions when this matter was raised by several Members. I understand that the right hon. Gentleman has a reason, justifiable to him, for being absent to-night in that he has a dinner appointment. I should have imagined that having, in his past political life, spent considerable time and energy in advocating this principle of land taxation to the public, and having fought to get it made part of the legislation of Parliament, the right hon. Gentleman would have considered this occasion of sufficient importance to forego even such an appointment and come here and tell us exactly what has happened behind the scenes to justify this transformation. This legislation passed by a previous Government, was not we were told to be touched by a National Government. It is now being scrapped by this Government which has evidently ceased to be national, and has become solely Tory and landlord in its outlook. The Mover of the previous Amendment said that the Government had received a mandate at the last Election for taking this course. I challenge any Tory Member to say that he fought his election in 1931 on a proposal to repudiate and revoke the Land Tax.

    I made it plain in speeches during my election that in no circumstances would I support a Government unless they were likely to repeal these taxes.

    Now it is coming out. I made a challenge in 1931 when the National Government was first formed, after the Election, regarding statements in the election addresses of hon. Members opposite. Now we are hearing something which, evidently, was kept quiet then. I challenged at this Box Members supporting the National Government to state whether they had stood as Tory Members or as supporters of the National Government and they all said they stood as supporters of the National Government. Now they are repudiating that.

    I only intervene again to reply to the hon. Member's challenge. I stood as a supporter of the National Government and I made it plain, not in my address but in speeches, that I demanded the repeal of these taxes.

    I challenged any Tory who had stood at the 1931 Election to state that in his election address he advocated this repeal. The hon. Member for Aylesbury (Mr. Beaumont) admits that he did not put it in his election address but merely made statements in his speeches. A lot of speeches are made which are not recorded. [An HON. MEMBER: "A good job."] It is a good job for some people and since we are talking about speeches which have been delivered on this subject I have some extracts here which I hope to read to the Committee. We shall be able to judge how far these speeches ought to have been recorded or ought to have been left without any record. There are certain Members of the present Cabinet who have spent a fairly long period in political life and have made many speeches, and it is significant that in the records of their speeches we find such passages as those which I am about to quote. The present Secretary of State for Scotland spoke upon this very tax that we are being asked to-night to revoke. He made a statement in the House of Commons on 25th June, 1914. I will come up-to-date as I go along, and the scratch runner, the Prime Minister himself, will have a chance of coming in at the end. That statement was:

    "Every pound spent on education is well-spent public money. Better roads will make for improved transit. Attention to public health will increase the productive power of this country. With these factors at work, however trade may ebb and flow, special and specific advantages accrue to the property owners. The good government of a town and local activity will increase in the future, even more than in the past—the price of land. Why not, therefore, endeavour to tap and intercept these new sources of profit which this new public expenditure will create?"
    The Foreign Secretary, in 1923, at the annual meeting of the Yorkshire Liberal Federation, referred to the taxation of land values and said:
    "Liberals were determined to pursue a crusade, which was the only great crusade that the Liberal party had ever undertaken that it had not carried to a successful issue. In 1920 the last Government not only repealed the tax, but returned to People who had contributed to the public Exchequer the very large sums they had paid under the tax. The Government left the valuation untouched, but on the 19th June a Conservative majority in the House of Commons abolished the valuation and destroyed the last remnant of the effort made to get this information. He did not believe the people of our small island would accept this deliberate denial and obstruction of the right to get a proper contribution from those who received unearned wealth from the increment of the land."
    I should like to know where the Foreign Secretary is now. He made that statement, and he probably will be found in the Lobby voting for the present Budget. Are we to understand that all these statesmen have forgotten the statements that they made, and the principles which they claim they believe, principles their adherence to which they will claim has placed them in the position they now occupy. The President of the Board of Trade on the 28th March, 1925, said at the Reform Club, Manchester:
    "In towns particularly, the whole system of assessment must be put on a new basis. Improvements must be freed from local rates and the burden placed directly on the unimproved site value of the land."
    You will notice I am coming up to date. That was in 1925. In 1927, at Manchester, on the 18th October, the following words were uttered by a present Cabinet Minister:
    "Every one who has been concerned in the administration of a great town knows how when you want to cut a little bit off the side of one of your busiest streets to give a little bit of ease to your congested traffic, you have to pour out money by the thousands of pounds for very yard you snatch for the need of the community."
    You want to know who said that. It was the Chancellor of the Exchequer. That was in 1927. Now he is going to allow these people to snatch thousands of pounds for every yard that a public authority may desire to obtain along the streets of their towns. The Chancellor smiles. I hope he will explain away that statement or will reconcile the statement that I have just read with the action which he is proposing to take. Then we have another statement made at a meeting of the Conservative Parliamentary Agricultural Committee on the 30th May, 1933, to which all supporters of the National Government were invited. It was attended by 250 members According to a report of that meeting:
    "Mr. Baldwin explained, the reason which led the Cabinet to decide unanimously that the Finance Bill now before the House of Commons should not include a clause dealing with these taxes which though in suspense remained on the Statute Book. …He said that be and his Conservative colleagues in the Cabinet had in no way changed their views in opposition to this form of taxation.…This, however, was a National Government, and he and his Conservative colleagues felt that the ungrudging loyalty with which their Labour colleagues had supported other features of the policy of the National Government did call for mutual consideration. He laid stress on the great public advantage of retaining a National Government. Because it was a National Government it had in the 18 months of its existence achieved more than any purely party Government could have hoped to achieve and they still had much useful national work to do."
    This is part of the useful work, evidently—repudiating the promise and the pledge made by the Lord President of the Council to his Labour and Liberal colleagues that they would not do anything to destroy this tax because they were all serving in a National Government. Finally, we have a statement made at the Albert Hall on 27th April, 1928. This was the statement:
    "We suffer from economic parasitism, and a fine type of that is income derived from unearned increment of land values. A Chancellor of the Exchequer who taxes land values will deserve the gratitude of-the country. A Labour Chancellor will do this."
    That was said by the present Prime Minister. He said, in 1931, in a speech at Worksop:
    "The taxation of land values flew in the teeth of every principle in which the Tory party believed. It was a recognition of the fact that what was socially made should be socially owned."
    Then, in an eve-of-the-poll speech in the General Election of 1931, he said:
    "If there is to be any partisan manoeuvring, then I am not their man."
    Has he now become their man? What does the repeal of the land values taxation Clause in the Budget mean but partisan manoeuvring? The hon. and gallant Member opposite said only a minute or two ago that he in his speeches had made a statement that he would not support a Government that did not repeal the Land Tax. We all know, and we respect him for his strong advocacy of his Conservative principles. We prefer to have an opponent who states bluntly what he is and what he stands for. We know then what we have to face, and we hope that we are equally as straight in stating our points, but we and other members of the party to which he belongs are not so straight as he is and not so frank in their advocacy. They are willing to take all that can be given to them under a National Government so long as it serves their purpose to use it as a National Government, but when they feel that the time has come when they have the upper hand in that National Government they drop all pretence of a National Government and become the partisan manoeuvrers of the past. I notice that that provides some humour for some of the Tory Members. Having as a Conservative party got into office by the trick of calling themselves a National Government, they now come out openly as a Conservative Government. They have shred every vestige of pretence of being a National Government and have become a Tory Government. Is it not time they ceased this fraud on the public? Is it not time they told the public that all the things that were said over the wireless in October, 1931, were false? The three years since then had justified us in saying at that time that as soon as they came into office they would abandon all ideas of being a National Government operating purely in the national interest and revert to the policy of the particular party which had the predominant number in the Government. It has turned out as we said.

    There are rather remarkable coincidences attaching to the dropping of this tax. The first Coalition Government scrapped the first land taxation proposals, introduced in the "Lloyd George Budget." This Coalition Government—because it is a Coalition Government—scrap the second attempt to legislate on behalf of imposing taxes on land values. The curious coincidence of it all is that the Chancellors of the Exchequer in those two Coalition Governments are brothers, and it is equally a coincidence, though not perhaps so startling, that both of them are Conservatives who were originally Liberal Unionists. In spite of the large number of Tory Members brought into this House on the wave created by the panic made by broadcasting in the 1931 election campaign I am hoping that, sooner or later, the public will realise and appreciate what this Government really is. When the General Election comes we hope it will sweep this fraudulent National Government out of existence. I am speaking, I hope, for the great majority of our supporters in the country, who still number millions and who are becoming increasingly numerous, in saying that when the next Labour Government comes in, after the defeat of this Government at the next General Election, these things which are being repealed by this Government will be brought forward again; and if I have any influence in that Government I shall see to it that anything that has been lost by the action of this Government is added to the very first instalment called for under the new land taxes in the Labour Budget.

    9.1 p.m.

    I want to speak very briefly on this subject as an owner of land which would have been affected by these taxes if they had been imposed. Some comments have been made already, and more will probably be made, on the subject of political consistency in this matter, which is worth looking into a little more closely. I have been looking up the debates when this taxation was first carried through the House, in the Finance Bill of 1909, and it is interesting to see who, of the Members still remaining Members of the House of Commons, voted for it on the occasion of the Second Reading of the Finance Bill 25 years ago and to estimate what their attitude will probably be to-day. Of the very large majority who then voted for the Second Reading of that Finance Bill only 12 remain and of those 12 I imagine that five, if they are here, will vote against the position which they then took up, namely, the Prime Minister, the Foreign Secretary, the President of the Board of Trade and the right hon. Members for the Epping Division (Mr. Churchill) and the South Molton Division (Mr. Lambert). Against those five there are seven Members—three Labour Members and four Liberals—who, I think, will be of the same opinion still, curious as it may seem, even after 25 years, if they are in the House to record their votes. They are the right hon. Member for Clay Cross (Mr. A. Henderson) who, we know, is occupied elsewhere, but who undoubtedly keeps the same opinion on these matters; the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), who certainly remains of the same opinion; and the hon. Member for Plaistow (Mr. Thorne). Those are the three faithful of the party above the Gangway. The four Liberals are the right hon. Members for Carnarvon Boroughs (Mr. Lloyd George) and for Darwen (Sir H. Samuel) and the hon. Members for Dewsbury (Mr. Russell Rea) and myself.

    As things go nowadays, it is rather a remarkable tribute to political consistency to find that the majority of the twelve—seven out of the twelve—remain of the same opinion as they expressed 25 years ago, and that only five have thought it better to change their opinions, because of changing political fortunes and circumstances which have been, after all, more or less to their political advantage. I think it is worth while quoting a word or two to show how practically each of those five Members who then supported the Second Reading of the Finance Bill of 1909 have dealt with the matter. Many quotations have been made, and no doubt more will be made, from the writings of the Prime Minister, and I want to refer to one. He has been more emphatic about the necessity of this reform than almost anybody. He said:
    "Economic rents must be taken by the State. That is fundamental."
    Then there is this very short sentence from the Foreign Secretary, put so well in his wonderfully lucid style:
    "I do not believe the people of our small island will accept the deliberate denial and obstruction of the right to get a proper contribution from those who receive unearned wealth from the increment of the land."
    He could not have said that without being convinced that it was true. I wish he were here to explain why he has changed his views. The President of the Board of Trade said:
    "The burden must be placed directly on the unimproved site value of the land."
    If that were true then, it is doubly true now. In a very eloquent passage which could only come from one right hon. Gentleman, the Member for Epping said:
    "We see the evil, we see the imposture upon the public and we see the consequences in crowded slums, in hampered commerce, in distorted or restricted development and in congested centres of population, and we say to the land monopolist who is the holder-up of this land, ' If you choose to keep it idle in the expectation of still further unearned increment, then at least you shall be taxed at the true selling value in the meanwhile.' "
    No one could put the principle of land taxation better than that. Those statements remain as true as at the time when they were said. The right hon. Gentleman the Member for South Molton (Mr. Lambert), from whom I learned to be a land taxer as far back as 1903, proposed at the National Liberal Conference at Newcastle a resolution which was seconded by the right hon. Gentleman the Member for Darwen (Sir H. Samuel), with a long string of land proposals, most of which have been carried into legislation since then, and the taxation of land values was first and foremost in that resolution.

    Nobody can go about the country in any capacity without being convinced of the necessity of keeping and using the power of taxation of land values. It is quite extraordinary, as anybody with eyes to see surely must recognise, how quickly developments are happening and how the lack of taxation of this kind is hitting the public interest day after day, and in a very serious way. Is it from that point of view a disaster that legislation constructed with so much trouble and after so much controversy and difficulty should now be swept away. One sees industries moving from the north of England to the south, new coalfields developing in counties like Kent where it was not suspected a few years ago there was coal, and tube railways being pushed out from the big towns in a night almost—they decide where their new stations are to be, and land which is worth £100 an acre one day becomes worth £1,000, £2,000 or perhaps £5,000 an acre next day. One sees new roads and new electric cables adding to the value of land almost daily, according to the very rapid development that we have been making, but the nation does not get back one farthing of the added value, which is all passing almost automatically into the pockets of the private individual who happens, by good fortune, to own the land. That is a scandal which the owners of the land can hardly justify.

    I am bound to say for myself that, in a very small way, I hold a little of this sort of land; I wish I held a lot more. It seems to be altogether wrong, when I pass, as I do about four times a week, through a few fields of mine four or five miles from Exeter—they have an agricultural value because they are used for agricultural purposes—that slowly but surely that land is getting more valuable, not because of anything that I am doing, but because Exeter is going out in the direction of my property. It seems an absolutely fair thing that I should be called upon to pay every year a small amount in taxation, such as was proposed by Lord Snowden, while that land is not developed. It cannot be unfair to have proposals of that kind, because one would feel as a landowner that one was pulling one's weight in the national boat better, and one would he free from the charge ordinarily brought against the landowner.

    It is a most sinister triumph that we have been shown this evening by the action of the Government, of private selfishness over public good. We have done nothing at all, in spite of the efforts that were made in 1909 to bring the principle of the taxation of land values into effect, now that the efforts made under previous Governments are to be finally swept away. As was stated by an hon. and learned Member, practically all our great municipal bodies, who are by no means all of a Labour complexion or anything of that kind, have passed resolutions over and over again on this matter. Wherever the principle has been carried out by foreign countries or by our Dominions it has worked well, and has brought in useful revenue to them. This is simply a ramp on behalf of private land interests against the public interest, and I am ashamed when I feel that all this good work, which seemed to give promise of leading up to a real enactment of a system of land taxation, should be swept away. I said I would like to refer to one sentence recently written by the Prime Minister. I wish he were here.

    I do not like to say anything in his absence because it seems like criticism, but I should equally say it if he were here. This is a concluding sentence in a letter written to the United Committee for the Taxation of Land Values. He says:

    "A Government which was determined to ' take drastic and energetic steps to put into operation the taxation of land values,' would have to proceed to legislation, as the Clauses that have been in suspense for years, largely owing to Amendments which the Chancellor had unwillingly accepted from both Liberals and Conservatives, were not sufficiently full to enable a great deal to be done."
    If that is meant to mean anything, it means that these proposals are being dropped because they do not go far enough. I regard that as a piece of nauseating hypocrisy. Everybody knows that they are not being dropped for that reason, and that if and when you legislate on this matter it will be quite im- possible to please everybody. It will be quite impossible to please the out-and-out land taxers; we who have had negotiations with them know that. It is quite impossible to please landowners who have been affected. As a matter of fact, the proposals as they were put on the Statute Book were a very fair and a very difficult compromise between the interests concerned. They did give those who want exemptions to be made, in the case of land which has been partly developed, a very considerable reduction in the assessment of their land. They would have been Clauses which would have been perfectly reasonable and right to put into operation, not in the final and complete form which the thing might have taken after some years of practice, but very good and sound technically, and reasonably fair to all parties concerned. I feel ashamed, as a Member of the House of Commons, that I should be here to see a thing being swept away which is so wholly and rightly just in the interest of the whole community.

    I have called the Noble Lord the Member for Hastings (Lord E. Percy).

    9.14 p.m.

    The Debate, so far as it has gone to-night, is a most excellent argument for the necessity of having a National Government. We have heard two speeches; I can only congratulate the hon. Members who made them on their command of vituperative language. Although my right hon. Friend the Member for North Cornwall (Sir F. Acland) who spoke last, may be said to have fairly touched the question of land taxation, the hon. Member for Govan (Mr. Maclean) who opened the Debate did not refer to the question at all. We are discussing to-night, and it is very important that we should, the problem of the taxation of land, and there is really no good in the right hon. Member for North Cornwall talking as if that problem was settled 25 years ago. What is the use of discussing this problem, as the hon. Member for Govan has discussed it, with all his quotations about the consistency of various hon. and right hon. Members of the House, as if a state- ment in favour of taxing the unearned increment of land was an argument in favour of the duties which it is proposed to repeal to-night? The two propositions not only have nothing to do with each other, but the proposition of taxing unearned increment was often urged by Conservative Members of Parliament during the passage of Lord Snowden's Budget, and was contemptuously rejected by the apostles of the single-tax theory, then on the Government side of the House. This problem, after all, must be discussed with some reference to the economic facts, with some reference to economic consequences, and with some reference to the whole range of land taxation.

    What are the arguments in favour of any form of taxation of land values? They are, I think, three. One is that land should contribute its full share to the revenues of the State. The second, no doubt closely connected with it, is that increment arising out of public activities, or at any rate out of activities having no connection with the landowner, should, in part anyway, be paid over to the State; and the third is not really a taxation question or a question of social justice at all, but the desirability, as a matter of planning expediency, of forcing land which is ripe for building into the building market.

    These are three perfectly clear considerations. So far as the first two are concerned—I say frankly that I am expressing only my personal view—there is very little difference between my attitude and the attitude of any Member of the other side of the House. I accept the principle that land should pay its full share, which has to be assessed on a number of considerations, to the revenues of the State, and that increment arising out of public improvements, and possibly out of other automatic developments, may properly be specially taxed by the State. In doing so I am voicing principles which I learned in very Tory circles when I was young, and am also voicing principles which have been accepted by the whole Tory party and by the whole of the supporters of the National Government within the lifetime of the present Parliament. Let it be remembered that at the present moment we have not only our system of Death Duties—and that, I suggest to the Liberal party, is perhaps why this is the one crusade of theirs which has not been successfully carried out, because they started off on the red herring of Death Duties under Sir William Harcourt, and never quite succeeded in getting back from that red herring, which has irrevocably fouled the line of a deliberate taxation of laud values—

    I am not at all sure that the right hon. Gentleman is correct, but if, without wearying the Committee, I have time to deal with that question very briefly, I will do so later. We have also had, again within the lifetime of the present Parliament, the Town Planning Act. I was absent when the Bill was going through the House, and I do not necessarily defend the particular expedients adopted in its Clauses; I think they are rather cumbrous; but that Act enshrines the principle of the taxation of unearned increment.

    The third consideration has completely changed in the last 25 years. The old 19th century idea that the one great act of public spirit that any landlord could perform was to offer his land for the building development of the jerry-builder who was building for the industrialist population in the big towns has faded out within the last 25 years, and within the last 10 years we have begun increasingly to realise that my right hon. Friend the Member for North Cornwall may be performing the most essential public duty in preventing those fields of his from ever being developed for building, either now or in the future. Of course, if he intends to develop their building value, I quite understand that he should not object to paying some small taxation, with all the protections devised by Lord Snowden, during the interval. But suppose that he considers it to be rather his duty—and I fancy it is a very arguable question in Exeter, as it certainly is on the outskirts of many towns—that that land should not be developed for building, is it desirable, speaking now from the landlord's point of view, that the fear of taxation should drive that land into the building market when the landlord otherwise would not have put it in?

    My conclusion, of course, is obvious, and it is one with which I think we all agree. It is that we have now entered the region of definite town planning, where a local authority, with, of course, appropriate appeals, ought to be in a position to force the development of land, either by taxation or otherwise; or possibly, as I should prefer, a more appropriate town planning authority than a mere municipal body, which I do not think can prove in the long run to be the best town planning authority. We are in that region of deliberate town planning, and this kind of hit-and-miss land taxation by rule of thumb for the purpose of driving land into building development is as out of date as Noah's Ark. What, therefore, is the good of wasting the time of the House of Commons in reminiscent, vituperation about the records of elder statesmen when the whole character of that section of the problem has changed?

    After all, can there be, to any calm student of economics, a more hopeless confusion than our present system of land taxation? Does anyone suppose that the Conservative party are satisfied with the present land taxation of the country? It is a confusion in which Death Duties and increment duties under the Town Planning Act combine to constitute the most uncertain and capricious form of taxation which has ever been devised for land or any other kind of property. When the right hon. Member for North Cornwall (Sir F. Acland) says that after all Sir William Harcourt's was a very profitable discovery, is he so certain of that? What is happening all over the country at the present moment? You have an estate, which, in the first place, may have to pay Death Duties once in 40 years, or three times in 20 years, according to the accidents of human life.

    You have one estate which, taking it as a whole, it is undoubtedly undesirable, should be developed for building, but which has a high building value. That estate preserves the result of the landowner's policy, which the local authority, not yet having completed its town planning scheme, has taxed, and unfairly taxed in my judgment on its building value, but it is, in view of these factors, taxed rather lightly. On the other hand, an estate which it is desirable should be developed for building, is also valued very modestly and taxed very lightly because of the very uncertainties that I have been suggesting, imposing upon the valuers of the Inland Revenue in valuing for Death Duties, a policy of moderation which must be robbing the Exchequer of hundreds of thousands of pounds every year. That is the result of trying a hit-and-miss policy of land taxation, instead of a deliberate planning policy which enables you to tax heavily the land you ought to tax, and not to tax the land you ought not to tax.

    I apologise for detaining the House like this, but I wish to represent a point of view which may be largely an individual one. The attitude of a National Government faced with this problem ought emphatically to be to repeal those sections of Lord Snowden's Finance Act which we are now proposing to repeal. Those sections are out of date, out of relation to the new problem, and out of relation to already existing forms of taxation of land values. They therefore merely make worse confounded the confusion of our system of land taxation that already exists. Therefore, I shall certainly support this Clause in the Finance Bill.

    On the other hand I think it is peculiarly the duty of a National Government, faced by a situation of such confusion as our land taxation to-day, not to be content with mere repeal of an additional element of confusion, but to tackle the problem constructively. I know it will not be popular. Nothing done on this subject will be used for anything but partisan attacks by the Opposition. That is why it is necessary to have a National Government that there may be some section of persons prepared to consider some subjects on their merits. In spite of this unpopularity it is the business of a National Government I believe to produce a constructive reform of the whole system of land taxation, which shall ensure that land shall pay its fair share, shall ensure especially that (the fortunate landlord who earns—put the emphasis on "earns"; not who is deemed likely to earn by speculation—an increment which does not entirely arise from efforts of his own, shall be heavily taxed on that increment, and which shall ensure that the land the community want for development shall be made available to them, by a deliberately planned system of taxation, while the land they do not want to see developed, such as agricultural land, shall be continued in its present user, and no tax shall be imposed upon it which, by changing the user, might be detrimental to the public interest.

    9.31 p.m.

    I have listened to speeches on the hardship of Super-tax payers and just now on the hardship of landowners and the taxation system. Obviously, they are so miserable and unfortunate that it would be a kindly act for a future Labour Government to take the huge super incomes and land from people so unfortunate. I do not complain of the attitude of the Conservative Members opposite. I think they have been most consistent in their policy on land taxation. It is consistent with the fact that already during the last 12 months they have been most kind to interests that support them, kind to the higher Income Tax payers, generous to the brewers, and now are giving an additional concession to the last of the holy Tory trinity, the landowners. Although I am not surprised at that, I wonder how they are going to square the fact that the Lord President of the Council stated last year that to repeal this Clause would not be playing the game. If it were not playing the game last year, I would like to know how it becomes playing the game this year. I do not think the question of playing the game, however, will trouble the Tory party long. They only understand playing the game when playing the game for vested interests for which they stand in this House as a National Government. I am concerned at the attitude of other Members. I am not surprised at the attitude of the Secretary of State for the Dominions. Long before his act of treachery in 1931 many of us suspected him.

    I am not very much surprised at the attitude of the Prime Minister. The right hon. Member for Epping (Mr. Churchill) described the Prime Minister as a boneless wonder, and indeed he has shown himself extraordinarily flexible, a contortionist so far as past principles and pledges are concerned. I am rather surprised at those hon. Members below the Gangway, former believers and supporters of the last Labour Government. Their attitude does surprise me. I wonder what they are going to do tonight? Three years ago most of them supported this idea in the Lobbies. Tonight apparently they are going to march into the opposite Lobby and support the repeal. I wonder how many pledges they could repeal and not feel miserable. They must know something of the pawnbrokers: they know something about swallowing pledges. Perhaps the most astounding thing is the attitude of the Government towards a person who, I think, still had some elements of manliness about him, even although he went against the Labour Government in 1931. I refer to Lord Snowden. I think he was the principal architect of this scheme of land values. He put most of his life's work into it. I should like to read what he said on the Third Reading of the Finance Bill in 1931:
    "The principle underlying this Bill is to assert the right of the community to the ownership of the land. This is only the first step in the reform of our land system. The effect of that system has been to place a burden on industry of hundreds of millions a year. It has crowded our people into pestilential slums, and it has driven hundreds of thousands of people from the land into the towns to compete with the town workers, with the result that wages have been depressed and unemployment has been increased. I commend the Bill to the House of Commons not only upon its financial proposals but also upon its land proposals. I think that when they come into operation their social and economic effect will be seen, but it is only the first step. The party for whom I speak have always put the question of land reform in the forefront of their programme. Although I may not live to see the step that we have taken this afternoon advance still further, at any rate I submit this Bill to the House of Commons with the satisfaction that I believe we have begun a far-reaching reform which some day will liberate the land for the people and abolish once and for all the tyranny under which the people in this country have suffered."—[OFFICIAL REPORT, 3rd July, 1931; col. 1684, Vol. 254.]
    Those were the views of Lord Snowden three years ago. I believe they are the views of Lord Snowden in 1934. I wonder if hon. Members opposite have forgotten what they owe to Lord Snowden. It is, surely, true to say that, owing to his reputation for integrity, owing perhaps still more to his broadcast before the election, probably millions of votes were gained by the National Government through his influence. Scores of Members opposite owe their seats to his influence even more than to the influence of the Prime Minister. They, perhaps, think they have paid him well. Perhaps they think that in giving him a coronet they have paid him for his services. I do not think so. If I understand Lord Snowden's mind, if he had the choice to-day between keeping his coronet and retaining the principle of the taxation of land values, he would let the coronet go. It shows a low idea of political morality to turn down the measure of this great statesman that they claimed him to be three years ago for the benefit of the vested interests which support their party. That is a low-down game to play with a man who did so much to make the National Government possible. Although the Government may repeal the taxation of land values, they will not be able to Ell the idea behind it. I do not want to prophesy, but I feel certain that after the next election we shall have a Government which will bring in a much more vigorous form of land values taxation and a Measure which will make hon. Members opposite very much regret their action to-night.

    9.40 p.m.

    We have reached a Clause which is bound to excite a good deal of controversy, especially in the minds of those who have been associated with the agitation around it for a good many years, as I have. I want to state the view that I have formed about this proposal—it is a difficult task—in a way which I hope will not unduly excite the criticism of colleagues with whom I am now acting and with whom I desire to act. I am here, as most of us are, on a view taken by the country of the commission which the Government sought at the hands of the electors. It seems to excite merriment on the part of the hon. and learned Gentleman the Member for East Bristol (Sir S. Cripps), but I well remember the fate that he barely escaped in that election. That commission I understood to. be to apply the economic resources of the country in the way thought best by a Government containing elements drawn from all political parties. The practical question is this. From the assessment of the economic resources of the country which, in a state of emergency which still continues, we have to mobolise and apply, can" the value of the land be excluded? In my view it cannot. I regret the course that is embodied in this proposal, because I do not think it gives effect to the commission which the Government received from the country. It will cause widespread dis- appointment among large sections of the electorate, who may withhold their support.

    I think it has certain practical consequences which I want to describe. First, in the necessary acquisition of land required for public purposes, there will not be available a valuation which will prevent taxpayers and ratepayers being called upon to pay extortionate prices. What sort of effect will that have on the general body of taxpayers and ratepayers, out of whose pockets those values are paid? Take any large municipality which has had to acquire land. I do not want to go into cases which are notoriously on record, but the history of the transactions between the Liverpool Corporation and certain landowners in that area are very well known, and that sort of experience will be the experience of (municipalities if, when they have to buy land, there is not available an assessment of the land to regulate the price paid for it. The second result is this: When land has to be acquired, why should not the man who owns the land whose wealth has increased as the result of national or municipal expenditure contribute towards the cost which the public authority has to pay for the land?

    On a point of Order. Is it not a fact that under the town-planning scheme—

    I think I know what my hon. Friend wanted to ask, but I am trying to state the matter as uncontroversially as possible. I say that it is fair that that part of the value of the land which has accrued from public expenditure should be returned in part by the owner when it is sold by him. The third case is that of the occupier of a house, who at present has to pay the full rates and taxes required for the occupation of that house, and the man who owns the site of the house contributes nothing to the municipality whose expenditure largely creates the site value. Those are actual, practical illustrations of what is going to happen in the absence of a valuation. I am bound to say that in my view that is not giving effect to the commission that this Government received, and I am afraid that in the days to come the sup- port which may be received by them will diminish if this sort of policy is persisted in. The right hon. Gentleman the Chancellor of the Exchequer used the exact description which I ask the Government to bear in mind when he justified the valuation which is abolished under this Bill on the ground that it was designed to save public money. All that I am saying is that in all transactions, some of which I have described, where public money can be saved by the existence of a valuation, the Government in their wisdom ought not to take any action which will deprive the nation of that valuation.

    I ventured to interrupt the hon. and learned Member for Moss Side (Sir G. Hurst), who is not here now, in his speech on a preceding Amendment, in which he described this valuation of land as a Socialist proposal. As a matter of fact, I thought his memory was at fault, for as long as I can remember, the great corporations of the country—I remember in particular the Glasgow Corporation, the Edinburgh Corporation and the Birmingham Corporation—year in and year out have registered their view that the land of the country should be valued, so that the nation and individual citizens might profit from the value which was created by public expenditure. I recollect that one of the most notable features of the Career of the late Mr. Joseph Chamberlain who was the father of municipal government in this land as we now understand it, and who applied his great abilities in this House and in Birmingham in an unparalleled way to the extension of local government was that he always pleaded—and I venture to remind his distinguished son of it—that the land had a part to play in providing relief to the State and its citizens by contributing to the wealth which was created by the nation. Frankly, I am sorry that the Government have taken this course. I think it is a course which they will regret. I am very sorry to say this, but I have thought it my duty to express here a view which I have held as long as I have lived, and so long as I think that that view is required in the public interest, as I do at this moment, that is a view which I shall uphold.

    9.50 p.m.

    I beg to move, "That the Chairman do report Progress, and ask leave to sit again."

    After the very painful speech of the hon. and learned Member for South Nottingham (Mr. Knight)—painful, because he was obviously feeling the difficulties of his position—I desire to move to report Progress in order to secure the presence of the Prime Minister. It seems to me, for reasons which I propose to give, that it is impossible to give proper consideration to the Clause which we are now discussing without the presence of the Prime Minister and without the explanation which he alone can give of the present proposal. I am one of those who are privileged to receive, once a fortnight, a very attractive little publication with a somewhat alarming cover, known as the "News Letter," and I am a very careful student of its most excellent, entertaining, and literary pages, but I was very much struck with a certain passage in the political notes. I presume they express, first of all, the views of the noble editor, but I presume also that they are a reflection of the views of the Prime Minister, because it is known that this is his personal organ.

    I ask permission to call attention to certain criticisms. We have had already an expression of them in a mild form from the hon. and learned Member who has just spoken. He had to walk very delicately, because the situation in his constituency requires careful judgment, but, as far as I could gather, he did not threaten definitely to go into opposition. I could not quite understand whether he was going to vote against the Government tonight, but he seemed to hold out some sort of threat that if this kind of thing went on, then I gather the whole forces of the National Labour party would be thrown against the Government, if they continued the reprehensible practice which has been started in this Clause.

    I think this is a mistake, but I should be making a much greater mistake if I should take any course which would dislodge this Government from office.

    I am the first to admit that I was wrong in my impression and to withdraw it, and to offer my congratulations to the Government on the fact that my hon. and learned Friend still intends to continue that support which is so valuable to them. The passages which I say reflect the views of the Prime Minister from the last issue of the "News Letter" are these:

    "The Land Taxes: The Government's first thoughts in the matter of the Snowden Land Tax clauses were so clearly wise that-it seems regrettable they should have been revised this year."
    The article continues:
    "The damage of this year's change of front is not so much practical as political. The original compromise was in accordance with the spirit in which the Government was formed, and in which, on all the major issues of the day, it has carried on its work. Everyone knew that this was a point on which its supporters could not be expected to agree, and on which, therefore, having regard to the much larger issues on which they did agree, they would have to give and take. And it was precisely on those grounds that Mr. Baldwin defended the postponement as distinct from the repeal, of the Clauses in 1932. As things are now, every critic of the Government who wishes to deny the justice of its claims to be national—and the charge that it is merely Tory in disguise, is the common coin of almost every Opposition speech—has been made the needless present of a useful argument."
    That is a very strong criticism of the Government. It is just the criticism that has been made from this side of the House to-night. It may not be of supreme importance if it is only put forward from this side, but when it is expressed, as I submit, by the Prime Minister himself, or as representing his views, it does show the necessity for his presence here, in order that he may make clear where he and the Government stand. I cannot help thinking that this position has some very dangerous possibilities. It may foreshadow the possible break up of the Government. It shows that there is a difference of opinion in the Cabinet on this point.

    It may be that the Prime Minister intends to resign and to go to the country on the programme of the National Labour party, and nothing else, making an appeal to the country, with his hon. Friends, and asking the country to send them back in a majority at the next general election. If he were to do so and he obtained a majority, I do not think he would have much difficulty in forming an Administration. He would not have to look very far to find the Lord Chancellor. I can see sitting opposite, beside the prospective Lord Chancellor, the Chancellor of the Exchequer, and I do not think that the Home Secretary is very far away from the Chancellor of the Ex- chequer.If the Prime Minister is forced, owing to differences in the Cabinet on the Land Taxes, to appeal to the country on his own, and he persuades the country, and the National Labour electors to return him with a majority to this House he will have a very impressive and very capable nucleus of a Cabinet, even if he has to stop there, which is quite possible.

    Is it really fair to other Members of the National Government. There is the Secretary of State for Dominion Affairs. Is it fair to put such a strain on his conscience? He has been a life-long sup-

    Division No. 269.]

    AYES.

    [10.0 p.m.

    Acland, Rt. Hon. Sir Francis DykeGriffith, F. Kingsley (Middlesbro', W.)Mallalieu, Edward Lancelot
    Adams, D. M. (Poplar, South)Griffiths, George A. (Yorks. W. Riding)Mander, Geoffrey le M.
    Banfield. John WilliamGroves, Thomas E.Mason, David M. (Edinburgh, E.)
    Batey, JosephGrundy, Thomas W.Milner, Major James
    Bevan, Aneurin (Ebbw Vale)Hall, George H. (Merthyr Tydvil)Owen, Major Goronwy
    Brown, C. W. E. (Notts., Mansfield)Hamilton, Sir R. W. (Orkney & Zetl'nd)Rathbone, Eleanor
    Cape, ThomasHarris, Sir PercySinclair, Maj. Rt. Hn. Sir A.(C'thness)
    Cocks, Frederick SeymourHoldsworth, HerbertSmith, Tom (Normanton)
    Cove, William G.Jenkins, Sir WilliamThorne, William James
    Cripps, Sir StaffordJohn, WilliamTinker, John Joseph
    Curry, A. C.Jones, Henry Haydn (Merioneth)Wedgwood, Rt. Hon. Josiah
    Daggar, GeorgeJones, Morgan (Caerphilly)West, F. R.
    Davies, David L. (Pontypridd)Kirkwood, DavidWhite, Henry Graham
    Davies, Rhys John (Westhoughton)Lawson, John JamesWilliams, David (Swansea, East)
    Edwards, CharlesLeckle, J. A.Williams, Edward John (Ogmore)
    Foot, Dingle (Dundee)Leonard, WilliamWilliams, Dr. John H. (Llanelly)
    Foot, Isaac (Cornwall, Bodmin)Llewellyn-Jones, FrederickWilliams, Thomas (York, Don Valley)
    Gardner, Benjamin WalterLogan, David GilbertWilmot. John
    George, Major G. Lloyd (Pembroke)Lunn, WilliamWood, SN-Murdoch McKenzie (Banff)
    George, Megan A. Lloyd (Anglesea)Macdonald, Gordon (Ines)
    Graham. D. M. (Lanark, Hamilton)McEntee, Valentine L.TELLERS FOR THE AYES.—
    Greenwood, Rt. Hon. ArthurMaclean, Nell (Glasgow, Govan)Mr. Walter Rea and Mr. Harcourt
    Grenfell, David Rees (Glamorgan)Mainwaring, William HenryJohnstone.

    NOES.

    Adams, Samuel Vyvyan T. (Leeds, W.)Buchan-Hepburn, P. G. T.Dunglass, Lord
    Agnew, Lieut.-Com. P. G.Burghley, LordEdmondson, Major Sir Alber
    Albery, Irving JamesBurnett, John GeorgeElliot, Rt. Hon. Walter
    Allen, Sir J. Sandeman (Liverp'l, W.)Campbell, Sir Edward Taswell (Brmly)Ellis, Sir R. Geoffrey
    Allen, Lt.-Col. J. Sandeman (B'k'nhd.)Campbell-Johnston, MalcolmElmley, Viscount
    Allen, William (Stoke-on-Trent)Caporn, Arthur CecilEntwistle, Cyril Fullard
    Anstruther-Gray, W. J.Chamberlain, Rt. Hon. N. (Edgbaston)Erskine-Bolst, Capt. C. C. (Blackpool)
    Applin, Lieut.-Col. Reginald V. K.Chapman. Col. R.(Houghton-la-Spring)Evans. Capt. Arthur (Cardiff, S.)
    Apsley. LordClarke, FrankEverard, W. Lindsay
    Aske, Sir Robert WilliamColfox, Major William PhilipFleming, Edward Lascelles
    Astor, Viscountess (Plymouth, Sutton)Conant, R. J. E.Fremantle, Sir Francis
    Bailey, Erie Alfred GeorgeCook, Thomas A.Fuller, Captain A. G.
    Baldwin, Rt. Hon. StanleyCooke, DouglasGanzonl, Sir John
    Baldwin-Webb, Colonel J.Courthope, Colonel Sir George L.Gault, Lieut.-Col. A. Hamilton
    Balfour, Capt. Harold (I. of Thanet)Craven-Ellis, WilliamGillett, Sir George Masterman
    Balniel, LordCroft, Brigadier-General Sir H.Gledhill, Gilbert
    Banks, Sir Reginald MitchellCrooke, J. SmedleyGluckstein, Louis Halle
    Barclay-Harvey, C. M.Crookshank, Col. C. de Windt (Bootle)Goff, Sir Park
    Barton, Capt. Basil KelseyCrookshank, Capt. H. C. (Gainsb'ro)Goodman, Colonel Albert W.
    Beaumont, M. W. (Bucks., Aylesbury)Croom-Johnson. R. P.Gower, Sir Robert
    Beaumont, Hon. R. E. B. (Portsm'th, C.)Cross, R. H.Grattan-Doyle, Sir Nicholas
    Bernays, RobertCruddas, Lieut.-Colonel BernardGraves, Marjorle
    Bevan, Stuart James (Holborn)Culverwell, Cyril TomGreene, William P. C.
    Blaker, Sir ReginaldDavidson, Rt. Hon. J. C. C.Grenfell, E. C. (City of London)
    Boulton, W. W.Davies, Edward C. (Montgomery)Grimston, R. V.
    Bowater, Col. Sir T. VansittartDavies, Maj. Geo. F.(Somerset, Yeovil)Gunston, Captain D. W.
    Bower, Lieut.-Com. Robert TattonDavison, Sir William HenryGuy. J. C. Morrison
    Bowyer, Capt. Sir George E. W.Dawson, Sir PhilipHacking, Rt. Hon. Douglas H.
    Braithwaite, J. G. (Hillsborough)Denman, Hon. R. D.Hales, Harold K.
    Broadbent, Colonel JohnDenville, AlfredHamilton, Sir George (llford)
    Brocklebank, C. E. R.Dickie, John P.Hanbury, Cecil
    Brown, Col. D. C. (N'th'l'd., Hexham)Drewe, CedricHarbord, Arthur
    Brown, Ernest (Leith)Duckworth, George A. V.Haslam, Henry (Horncastle)
    Browne, Captain A. C.Duncan, James A. L. (Kensington, N.)Headlam, Lieut.-Col. Cuthbert M.

    porter of the Land Taxes. He has voted for them and he supported them in the Cabinet, and to expect him to surrender on a matter of principle of this magnitude is asking something which I think is going beyond what is reasonable, fair or just. For these reasons, I submit that it would be right at this stage to adjourn the Debate in order that we may secure the presence of the Prime Minister.

    Question put, "That the Chairman do report Progress, and ask leave to sit again."

    The Committee divided: Ayes, 65; Noes, 251.

    Hellgers, Captain F. F. A.Milne, CharlesShaw, Captain William T. (Forfar)
    Henderson, Sir Vivian L. (Chelmsford)Mitchell, Harold P. (Br'tf'd & Chlsw'k)Shepperson, Sir Ernest W.
    Heneage, Lieut.-Colonel Arthur P.Morris, John Patrick (Saltord, N.)Shuts, Colonel J. J.
    Hepworth, JosephMorris-Jones, Dr. J. H. (Denbigh)Simmonds, Oliver Edwin
    Hills, Major Rt. Hon. John WallerMoss, Captain H. J.Skelton, Archibald Noel
    Hope, Capt. Hon. A. O. J. (Aston)Munro. PatrickSmiles, Lieut.-Col. Sir Walter D.
    Hore-Belisha, LeslieNation, Brigadier-General J. J. H.Smith, Sir J. Walker. (Barrow-In-F.)
    Hornby, FrankNicholson, Godfrey (Morpeth)Smith, Louis W. (Sheffield. Hallam)
    Horsbrugh, FlorenceNormand, Rt. Hon. sSmith, Sir Robert (Ab'd'n & K'dine. C.)
    Howard, Tom ForrestO'Donovan, Dr. William JamesSomervell, Sir Donald
    Howitt, Dr. Alfred B.Oman, Sir Charles William C.Somerville, D. G. (Willesden, East)
    Hume, Sir George HopwoodO'Neill, Rt. Hon. Sir HughSoper, Richard
    Hunter, Dr. Joseph (Dumfries)Peake, Captain OsbertSotheron-Estcourt, Captain T. E.
    Hunter, Capt. M. J. (Brigg)Pearson, William G.Southby, Commander Archibald R. J.
    Hurd, Percy A.Peat, Charles U.Spencer, Captain Richard A.
    Hurst, Sir Gerald B.Percy, Lord EustaceSpender-Clay, Rt. Hon. Herbert H.
    James, Wing-Com. A. W. H.Petherick, M.Spans, William Patrick
    Jamieson, DouglasPeto, Sir Basil E. (Devon, Barnstaple)Stanley, Hon. O. F. G. (Westmorland)
    Jennings, RolandPeto, Geoffrey K. (W'verh'pt'n, Bllst'n)Stevenson, James
    Jesson, Major Thomas E.Pike, Cecil F.Stewart, J. H. (Fife, E.)
    Joel, Dudley J. BarnatoPowell, Lieut.-Col. Evelyn S. H.Stuart, Hon. J. (Moray and Nairn)
    Johnston, J. W. (Clackmannan)Pybus, Sir Percy JohnSugden, Sir Wilfrid Hart
    Jones, Sir G. w. H. (Stoke New'gton)Radford, E. A.Tate, Mavis Constance
    Kerr, Hamilton W.Ramsay, Alexander (W. Bromwich)Templeton, William P.
    Keyes, Admiral Sir RogerRamsay, Capt. A. H. M. (Midlothian)Thompson, Sir Luke
    Kimball, LawrenceRamsden, Sir EugeneThorp, Linton Theodore
    Knight, HolfordRankin, RobertTodd, Capt. A. J. K. (B'wick-on-T.)
    Lamb, Sir Joseph QuintonRay, Sir WilliamTodd, A. L. S. (Kingswinford)
    Law, Sir AlfredReed, Arthur C. (Exeter)Tufnell, Lieut.-Commander R. L.
    Law, Richard K. (Hull, S. W.)Reid, David O. (County Down)Turton, Robert Hugh
    Leech, Dr. J. W.Reid, William Allan (Derby)Wallace, Captain O. E. (Hornsey)
    Leighton, Major B. E. P.Remer, John R.Wallace, John (Dunfermline)
    Little, Graham-, Sir ErnestRenwick, Major Gustav A.Ward. Lt.-Col. Sir A. L. (Hull)
    Lloyd, GeoffreyRhys, Hon. Charles Arthur U.Ward, Irene Mary Bewick (Wallsend)
    Lockwood, John C. (Hackney, C.)Roberts, Sir Samuel (Ecclesall)Ward, Sarah Adelaide (Cannock)
    Lockwood, Capt. J. H. (Shipley)Rosbotham, Sir ThomasWedderburn, Henry James Scrymgeour
    Loder, Captain J. de VereRoss, Ronald D.Wells, Sidney Richard
    Loftus, Pierce C.Ross Taylor, Walter (Woodbridge)Whyte, Jardine Bell
    Lumley, Captain Lawrence R.Ruggles-Brise, Colonel E. A.Williams, Charles (Devon, Torquay)
    Lyons, Abraham MontaguRunge, Norah CecilWilliams, Herbert G. (Croydon, S.)
    McConnell, Sir JosephRussell, Hamer Field (Sheffield, B'tslde)Wills, Wilfrid D.
    McCorquodale, M. S.Russell, R. J. (Eddlsbury)Wilson, G. H. A. (Cambridge U.)
    MacDonald, Malcolm (Bassetlaw)Rutherford, Sir John Hugo (Liverp't)Windsor-Cilve, Lieut.-Colonel George
    Macdonald, Sir Murdoch (Inverness)Salmon, Sir IsldoreWinterton, Rt. Hon. Earl
    McLean, Major Sir AlanSalt, Edward W.Womersley, Sir Walter
    McLean, Dr. W. H. (Tradeston)Samuel, Sir Arthur Michael (F'nham)Worthington, Dr. John V.
    Macquisten, Frederick AlexanderSandeman, Sir A. N. StewartYoung, Rt. Hon. Sir Hilton (S'v'oaks)
    Margesson, Capt. Rt. Hon. H. D. R.Savery, Samuel Servington
    Mason, Col. Glyn K. (Croydon, N.)Selley, Harry R.TELLERS FOR THE NOES.—
    Mayhew. Lieut.-Colonel JohnShakespeare, Geoffrey H.Captain Austin Hudson and Mr. Blindell.
    Mills, Major J. D. (New Forest)Shaw, Helen B. (Lanark, Bothwell)

    Original Question again proposed, "That the Clause stand part of the Bill."

    10.9 p.m.

    After that entertaining interlude I would direct the attention of the Committee once more to the merits or demerits of land taxation. I must confess that I share the misgivings of my hon. and learned Friend the Member for South Nottingham (Mr. Knight) at the scrapping of these taxes. Surely, there can be no dispute that a serious problem is involved in land values. They are in many cases rising to staggering heights. I had a vivid picture of that during the last week-end, when I visited Stanmore, which I remembered from my boyhood years and which is now being swallowed up by Greater London. Ten years ago Stanmore, which is only 10 miles from the Marble Arch, was in the depths of the country, and agricultural land was then worth something like £20 an acre. First of all the railway, then the motor omnibus, then the arterial road, and now the Metropolitan, have made these pleasant fields what the building speculators call "ripe for development."

    What has happened? The land, instead of being worth £20 an acre, agricultural value, is fetching anything from £500 to £1,000, up to £1,500 an acre. Owners of derelict and waterlogged land, business men with unimposing country estates, butchers with their few acres of agricultural land, are all in now on the building boom. They are making profits undreamed of. I cannot see that there is anything unfair in making them contribute out of their profits a penny in the pound to the community. Nor can I understand why the Conservative party should be so fierce in their opposition to this proposal. I understand that the argument is that it will increase the woes of the landlords. But there are two classes of landlords; they are not one and indivisible. There are the agricultural landlords, I cannot see how they will be affected by these Land Taxes, because agricultural land is specifically exempted. People who will be affected will be the urban landowners or the semi-urban landowners, and they are well in a position to pay. In the interests of fair taxation why should a professional man have to pay 4s. 6d. in the pound Income Tax, or a rich man as much as half his income in taxation, and these landlords be able to reap their harvest, which in many-cases they have not sown, without any additional impost upon them? It is argued that taxation of land values will never work, that it never has worked. It has worked in the Dominions; it has worked in the United States; it has worked in several European countries. Surely, it is not beyond the capacity of British statesmanship to make it work here.

    The case for some form of increment tax, I suggest, grows with every year. There is the instance of the Becontree housing estate. The London County Council bought 2,000' acres for housing. That land was valued for local rating purposes at £7,000, but when it came to be sold it was sold for £295,000. Why one value for rating and another value for building, for sale, 40 times the rating value? It is a travesty of justice. It is not merely Liberals or Socialists who protest against this land escaping taxation. There was Lord Ashfield who the other day, with regard to the Edgware Tube, said:
    "Land speculation at the Edgware terminus has forced the price to a level which restricted purchases,"
    and he suggested that something should be done to secure the increment value due to the making of the railway. Why is not something done? As long ago as 1885 the taxation of land values was in Mr. Joseph Chamberlain's unauthorised programme. It was in the Newcastle programme of 1891. Time and again the electors have voted for this form of taxation, and time and again they have been thwarted. On no fewer than six occasions the Bill to tax land values passed a Second Reading in this House. Six hundred municipalities have petitioned in favour of it, and I suggest that the Gov- ernment have no right to drop this tax. The policy was not an issue at the last election. If it had been, we might never have had the very powerful support of Lord Snowden. I agree that the value of that support must have been worth something like 100 seats to the National Government. If the Government decide to scrap these land taxes, at least they ought to put something in their place. What I most disliked about the whole business was the air of finality with which my hon. Friend the Financial Secretary to the Treasury buried these land taxes in his Second Reading speech.

    Exactly. That is precisely my point. Here are his words, and I will refresh his mind. He said:

    "The Government having decided, having examined the whole matter, that some future Parliament should not be deprived of its right to examine the whole matter afresh, in the light of the new conditions which will then prevail."—[OFFICIAI, REPORT, 16th May, 1931; col. 1899, Vol. 289.]
    But why some future Parliament? I agree entirely with what my Noble Friend the Member for Hastings (Lord E. Percy) said on the question of land taxation, and I was very glad to hear that the Conservative party were not opposed to the principle of increment value. I hope we shall have some reply to-night from the Financial Secretary to the Treasury that, though this form of land taxation has been scrapped by the Government, they proposed to put something in its place. This question does, after all, raise issues far beyond the actual taxation of land values, issues which concern the whole future of the National Government. I wonder if the Government realise in what position they put non-Conservative supporters by the scrapping of these taxes? Do they realise that on every platform we have to meet the charge that it is not a National Government we support, but a Tory Government? I suggest that it is very difficult, on the scrapping of these land taxes, to refute that charge.

    I believe in National Government. I stood for it at the last election, and, according to my lights I have tried to stand for it in this House. Though I have opposed some of the Measures of this Government, particularly the Protectionist Measures, I did not feel that they justified the extreme step of going into opposition, and with great personal reluctance, because it is a big thing in politics to separate oneself by this floor from one's friends, and after peculiar and powerful temptations to the contrary at the time, I separated myself from my hon. Friends' decision to sit on those benches in opposition. One of the reasons why I did it was because I believed, and still believe, that the right hon. Gentleman the Lord President of the Council, when he spoke at the election about playing the game meant to play it himself, and I believe that he is striving his utmost in very difficult circumstances to keep the Government on an even keel and that the great majority of the supporters of the Government are sincere when they wish to keep alive the national idea. But I ask them this question in all sincerity. Are they prepared to pay the price for national government? Great portions of the Conservative programme have been carried out; is it unreasonable that we should ask that there should be rather more freer borrowings from the Liberal programme?

    The Noble Lord spoke of the need for national government, and with all that he said I am in agreement. National government is not just a question of the arrangement of seats, it is not a question of a Conservative standing down here and a Liberal standing down somewhere else. If that is the only basis of national government then national government is national humbug. National government to be both honest and effective, is surely to be not merely a union of men of opposite parties but a union to some extent of opposite programmes. This is the first time, since I separated from my hon. Friends, that I have ventured to attack the Government, but I felt that I could not sit silent to-night and see land reform, which I regard as urgent and long overdue, recklessly scrapped, without anything being put in its place, merely because the dominant section of the Coalition says it must go.

    10.22 p.m.

    We have listened to a very interesting, very able but very surprising speech. I should be largely in agreement with it if the tax which we are discussing was a tax upon increment values. It is not. It is news to me that the Liberal party are in favour of land value taxation in the form included in Part III of the Act of 1931. The hon. and learned Member for South Nottingham (Mr. Knight) made a fluent speech in favour, among other things, of the valuation of land as a record of its market value. I should largely agree with him, but is this a record of the market value of land? It is a travesty of valuation. Speaking from memory and subject to correction, I believe that in supporting the principle embodied in Part III of the Act of 1931, the hon. and learned Member for East Bristol (Sir S. Cripps) used two examples. He admitted that the proposal was to value every possible site as if it were the only possible site, and when challenged he gave an example and admitted that in the Strand he would value the site of the Savoy Hotel as if that site were clear and every other site in the Strand were in its present state of occupation. That is substantially correct. I say, what a travesty of valuation.

    I want to give a practical reason why in my opinion the Government are to be heartily congratulated upon their courage in repealing this part of the Act of 1931. In my ordinary day-to-day business I have to deal a great deal with the flow of credit on the security of real property, both urban and rural but particularly rural, and I have argued in the House of Commons before, and I do not go back on one word that I have said, that the presence of Part III of the Act of 1931 on the Statute Book was a standing menace to the flow of credit on the security of real property. For that reason it has been a definite handicap to every transaction in land and to operations, particularly agricultural operations, which require a flow of credit into land and on the security of land. It has had the effect of raising the rate of interest at which money could be borrowed for operations in land and to that extent it has definitely hampered the recovery of agriculture and everything else that depends upon the security of the value of land.

    There has been tremendous relief in that respect since the announcement of the Chancellor of the Exchequer in the Budget Speech. The interests concerned with the business and management of real property are profoundly grateful to my right hon. Friend. It will be a relief to agriculture and industries of that kind. Last year I raised this point in Debate and it was said to me, "Why bother? The tax is suspended." It was suspended in precisely the same way as the traditional sword of Damocles was suspended—a perpetual menace to the man who sat and worked under its glittering point. The removal of that suspended sword has removed a state of constant suspense from rural industry, which needs the encouragement of security as much as any other industry.

    10.28 p.m.

    It is so seldom that I intervene in Debate that I almost feel called upon to apologise and to make the usual request for the indulgence of hon. Members on this occasion. But to-night I feel that I ought to trouble the Committee with a few facts which are unknown to many hon. Members present but are very well known to hon. Members sitting opposite. The speech of my hon. Friend the Member for North Bristol (Mr. Bernays) is the speech which I myself delivered against these very taxes in 1931. I then pointed out that the proposals of the Chancellor of the Exchequer of that time did not embody the principles for which we had stood and which had been accepted by the House of Commons on, I think, four occasions when there were Conservative majorities in it. Those were not the principles which were being put forward by Mr. Philip Snowden as he then was. No, his proposals were a partial, a small, a out-down, an almost twopenny-halfpenny embodiment of the principles for which many of us fought in the past. That is why we took exception to them at that time.

    Speaking for myself, I have always believed in the valuation of land so that we might have a true record of the land. That was embodied in the Act of 1909–10 which followed the Budget brought in by the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George). That was an entirely different thing from the Budget proposed by Mr. Philip Snowden. When the Budget was introduced in 1909 it was proposed that there should be a valuation of the land from John o' Groats to Lands End whether it was agricultural land or whether it was land which had become covered with factories or covered with houses or was industrially occupied. It was a valuation of the land throughout the whole of the country. That was not the case in this Bill. Agricultural land was to be kept out. The only land that was to be valued was land which was taxable, and you could only find out what was taxable by finding out the difference between what was agricultural and what was non-agricultural.

    I pointed out from the very seat now occupied by the right hon. Gentleman the Member for Caithness (Sir A. Sinclair) that the thing was unworkable unless you could have a complete valuation. Secondly, in the Act of 1909–10 the taxation was entirely different from the taxation which was proposed in this case. I agree with many of the things said by my hon. Friend on my left and by the right hon. Gentleman on the other side, but I must say that they are both mistaken in their facts. Neither was present in this House, neither knew what was going on and neither knew of the negotiations which took place. In the Act of 1909–10 the very thing that both of them have asked for to-night was included, namely, that there should be a tax upon increment value which had been provided by the public, so that you could divide the value which had been created by the owner of the land himself or his predecessors in title and the value which had been created by the public. The value which had been created by the public, according to certain Members sitting on that side, ought to belong to the public entirely. According to the Liberal party in 1909–10 and the Government of that time it was not right to take the whole, but they took 20 per cent. When they came to this side of the House, and the matter was proposed by their Chancellor of the Exchequer, he did not propose any tax upon the increment value which had been added by the public. What he did propose was a capital duty which was a double tax upon land already paying Schedule A taxation.

    That matter was brought up in the various party meetings which were held elsewhere. I was then under the whip or the lash of the right hon. Gentleman the Member for Caithness who was at the time taking his instructions from the right hon. Gentleman the Member for Carnarvon Boroughs. For the very first time there was a united party determined, to throw out the Labour party who proposed double taxation. We were all united upon that one point. I was then in the position of having the honour of speaking from that side of the House on the Second Reading of the Finance Bill. I gave the Bill the sort of blessing that one expects from a party which is completely in opposition, but which is not quite sure in which Lobby it is going to vote. I said that the Bill was good in parts, that so far as valuation was concerned we welcomed it, as I myself certainly welcomed it but—so far as I remember there were only three sound land taxers in the House at the time: the right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), Mr. Maclaren and myself—I had to point out that at the moment the Bill only went one-tenth of the way we desired it to go. It did not provide for the complete valuation of the land and it did not provide for the proper taxation of income derived from the land, but it put on an extra capital tax over and above the Schedule A taxation already upon it.

    Then what happened? I am sure that certain Members of the Government who were present will forgive me for making a reference to this. I am sorry the right hon. Member for Darwen (Sir H. Samuel) is not here. The first meeting that took place in order to discuss how we could meet this situation—the double taxation to which I took the most strenuous objection—was at the House of the right hon. Member for Darwen, and there were present that night the Prime Minister, the right hon. Member for Carnarvon Boroughs and the then Solicitor-General. We then discussed how best we could meet the situation so as not to turn out the Government, although we were against double taxation. I will not go through all the ramificiations—[HON. MEMBERS: "Go on"]—the meetings which took place in 10, Downing Street or the meetings which took place behind this Chair; but ultimately a formula was devised in order to save the situation. That formula was devised by the then Solicitor-General. We had to accept it, because it was then thought desirable to keep in the Labour Government. We accepted it. It meant in truth and in fact that the taxation was useless which it brought in; but it meant, on the other hand, that the face of the Government had been saved, and I had to give way and pretend that I no longer took any objection to it. I sat here and I heard the then Chancellor of the Exchequer make his Third Reading speech and direct it entirely to me. He had lost his taxation, he had lost his valuation, and his attack was entirely directed towards me. One has only to read his speech on the winding-up of the debate on that occasion. The result is that there is now on the Statute Book an Act which does not provide for full taxation, which is what is always required by the land taxers, and is a nonsensical valuation, because it does not value the whole of the land but values only a portion of it. What is more, the taxation brings in nothing, and the Chancellor of the Exchequer at the time knew that it would bring in nothing. No wonder that he said that I had destroyed his Budget. All I am saying is that if you remove it from the Statute Book you are doing no harm to land taxation, or to the views that we have always held regarding the valuation of the land and the way in which land taxation should be treated; you are removing a thing which is absolutely useless, and was known to be useless at the time that it was introduced.

    10.41 p.m.

    It is a great pity and disadvantage to the Committee that the usual channels did not find it possible to adjourn this Debate until the Committee and the disorganised and confused supporters of the Government had been able to recover. The hon. Member who opened the Debate claimed that a mandate had been given in the first instance for the repeal of this tax, but he has been answered by speeches from his own side of the House. Those speeches, following in rapid sequence, have shown how utterly unfounded is the claim that any mandate was called for or received by the Government for that decision. The Noble Lord the Member for Hastings (Lord E. Percy) said that the Debate showed the greatest justification for the existence of the National Government and, in a speech which I found most difficult to follow, claimed to have been grounded in principles—Tory principles, he claimed them to be—which he had received at the hands of leaders of the Tory party, and which were definite in every way.

    The Noble Lord went on to give a dissertation on the duties of landowners in regard to housing and the development of the land of this country, and spoke of the fear of taxation which was driving land into the market for the purpose of building. The Noble Lord must have lived in a very strange country; he does not know the conditions in the industrial areas and the environs of those areas if he claims that there has been, at any time, an outside or external influence driving unwanted land into the market for building houses. I live in a part of the country where a large number of houses have been built in recent years, and I never knew of any unduly cheap land having made its appearance on the market. My experience, and the experience of housing authorities in all parts of the country, has been that cheap land is difficult to get. Land has always been obtainable, not at a low price but at an extraordinarily high price, whenever it was wanted by the community. Because of the difficulty of obtaining land, the considerably increased prices and the very large increment of value—the Noble Lord laughs. He will laugh at the futility of his own speech when he compares it with the one which I am trying to make at the present moment.

    I cannot help laughing at the hon. Gentleman. Why does he expect that you should get cheap land by taxing land any more than cheap whisky by taxing whisky?

    We are failing to obtain cheap land because of land monopoly and because of interest falling upon the price of land. In consequence of that monopoly, the State and the community are entitled to have the tax. The difference between the Noble Lord and others who spoke after him is very significant. It reveals the wide difference, the utter incompatibility, between the views of Members supporting the Government. One hon. Member complained that the full measure of taxation was not required, that the community's full share was not demanded; he said that the figure was too low. There is no point of agreement between these various hon. Members. I have worked with the hon. and gallant Member for Eye (Sir G. Court-hope) on occasion, and have found him to be a fair and stubborn advocate of the views which he holds. He does not believe in the taxation of land values; he believes that the whole effect of this kind of legislation is to hamper and interfere with the organisation and development of land. We respect that point of view, but is that the view of Members in all parts of the House? Do all those who nominally support the National Government to-night hold that view? If I were to ask hon. Members on the other side of the House to hold up their hands to signify whether they agreed with the hon. and gallant Member, I am sure a considerable number would express their dissent from the view which he puts forward. Really, this question has not been discussed to-night.

    I am very sorry that the Prime Minister's name has been brought in, and that of Lord Snowden, to whom many hon. Members owe their presence here. The Prime Minister is not here to speak for himself. What does the House think, what does the public outside think, of a Prime Minister who is a Member of the House, whose words have been quoted so explicitly on this matter, and who is not here to defend himself against a charge of that kind? If there has been a change of view in regard to the principles of taxation, if there has been a change of view in regard to the merits of the particular provision which is now to be repealed, if there has been a change of view as regards either principle or expediency, those who have experienced that change of view ought to be here in their place to explain to the House the reason for their change of view.

    We complain because the Prime Minister is not present, and we are astonished to hear the views of his henchman. One of the Prime Minister's supporters in the House, who claims to-night to be a sup porter of the National Government, warned the Government, and in doing so pointed an admonishing finger at the Chancellor of the Exchequer, to watch what they are doing, and said that a large number of people in this country who voted for the National Government might not vote for them again—that the Government ran the risk at the next election of losing the votes of a very large number of electors because they had played them false this time. The question that I would put to him, and I extend the invitation to others who sit on this side of the House, is this: If the electorate are entitled to withhold their votes from the Government at the next election in consequence of what is being done to-night, do you expect the electorate to be more loyal to political principles, do you expect them to show their dissent from the sharp practice of the Government, do you expect them to be an example to you, or are you going to be an example to them? I ask hon. Members in all parts of the House who believe that the Government had no mandate—and they certainly had not—I ask those Members who have supported the National Government, are they going to withhold their support from the National Government to-night? I ask the hon. and learned Member for South Nottingham (Mr. Knight) whether he feels justified in warning the Chancellor of the Exchequer that public opinion and the electorate of this country will show their dissent from what has been done?

    If the hon. Member puts that question to me, he must expect some answer. I am going to decide my support of the Government on general lines of policy. I am not going to place this subject above the whole policy.

    Involved in this Debate to-night is a repudiation of pledges, a breach of faith with the electorate and among parties. I do not know whether hon. Members on the Front Bench dissent from me or with each other. They shake their heads, but will they answer the Prime Minister to-night when they come to speak? I can give quotations from the hon. Member who is always honest enough with himself and this House. I believe he is. I have not found him out yet. We on this side of the House watch Members opposite closely, and I have not found him failing to state his position. We shall expect a statement as to why he has joined in this attempt to repeal and repudiate pledges of Members of the Government of which he is one of the leading lights.

    Will the hon. Member tell us what are the pledges to which he refers?

    Pledges not to take party advantage, not to undo the work of other parties, but to work for the economic reconstruction of the country. If part of the economic or national structure is to be pulled down, let us have a reason. I shall expect the Chancellor of the Exchequer to tell us that, instead of meandering philosophies like that of the right hon. Member for Hastings (Lord Percy), who, sitting there in his-high altitude, looking down on the rest of the House with contempt— [Interruption.] The right hon. Member has a superior way of speaking to the House. I would ask the Chancellor of the Exchequer to say what alternative plan he has. In the Schedule to-day it is difficult to give an exact figure for the increment of land values year by year. It is true that under Schedule A an additional £100,000,000 a year in the taxable income has made its appearance in the last 10 years. There is a considerable increase, and I have instances here sent to me in print of that considerable increase, not 10 per cent. annual increment in value, but an annual increment at the rate of hundreds per cent. in certain localities, because of industry and the community, and not because of anything the landowner does.

    Will the right hon. Gentleman, who does not deny the considerable increment in land value, say whether he assumes that the present incidence of Death Duties takes a sufficient hold of this increment in value, or whether he thinks, as the noble Lord the Member for Hastings thinks, that there should be a more scientific way devised for taking off the part of the increase in value that belongs to the community? As the Chancellor of the Exchequer did not take the opportunity on the Second Reading, I should like him to tell the Committee whether he has it in his mind that he will be able in the lifetime of this administration, having achieved his work of destruction in taking this off the Statute book, to devise a plan by which the people of the country can have restored to them that part of the increment of land values that belongs to the community.

    10.56 p.m.

    The hon. and learned Genleman the Member for Montgomery (Mr. C. Davies) startled me by referring to the occasion when the land Clauses of the Finance Bill of 1931 first came under discussion, and he said he attacked these proposals. The hon. and learned Gentleman's attack took the form of saying he could understand that to most Members of the Labour party and hon. Members on the other side the Bill was welcome. He added,

    "I, too, welcome it."
    At the beginning of his speech he said:
    "In the first place, I should like to congratulate the Government upon the opportunity that has been presented to them of once again tackling this question of land values and assessment of site values. I should like to felicitate them upon the will they have shown in taking advantage of the opportunity offered."—[OFFICIAL REPORT, 19th May, 1931; cols. 1815–16, Vol. 252.]
    He went on to make a few criticisms. [Interruption.] Do not supporters of the present Government make criticisms? Have we not listened to some this evening?

    I think I can remember a passage where I said I would give all the pomp and circumstance to the Government of the day so long as they would give me the right of drafting that Bill and making it a very much better one.

    That emphasises my point. The hon. and learned Gentleman mentioned the question of valuation and said:

    "These are matters which will have to be discussed very fully in a later stage. They can only be discussed by the House giving, as I hope it will, a Second Reading to this Bill."
    He said to-night that he had objected to the double tax. In his speech on the Second Beading of the Finance Bill of 1931 he said:
    "Frankly, it is undoubtedly an extra tax and an additional burden upon certain taxpayers which will continue as a burden additional to other burdens until the right hon. Gentleman the Member for Newcastle-under-Lyme and the hon. Member for Burslem form a Government of their own,"—
    Obviously he did not think that was very likely—
    "when all the other burdens will disappear and will be buried in some mysterious way into the land and we shall have only one tax. Until that time comes, this tax will be an additional burden over and upon all the other burdens of taxation that have to be borne."—[OFFICIAL REPORT, 19th May, 193.1; cols. 1824–25, Vol. 252.]
    He further said that Lord Snowden devoted himself to attacking him as the chief architect of the destruction of his land Clauses. I have glanced hurriedly through this Third Beading speech since he spoke, and I see attacks on the Minister of Health, on the Chancellor of the Exchequer, on the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George), and on others, but I cannot find a single attack on the hon. and learned Member for Montgomery. He further said that he attacked these proposals because they did not fulfil the purposes of land taxation, and he hinted that they were a bargain—I do not think I am putting an unfair interpretation upon the hon. and learned Member's speech when I say that he hinted that they were a corrupt bargain— between the right hon. Member for Carnarvon Boroughs and the right hon. Member for Darwen (Sir H. Samuel) on the one hand and the then leaders of the Labour party on the other, a bargain to which he very reluctantly lent himself as a distinguished instrument. I can only quote the hon. and learned Member's own words at the time, when he said, in regard to the formula for land valuation to which he referred in his speech tonight:
    "I do not hide from myself that in that formula, in some instances, there were injustices, but, on the whole, through and through, and throughout the country, it may be taken as a fair compromise. You cannot have a compromise without hurting somebody. During the 20 years' experience that I had at the Bar, I realised it was better to fight for your client than to try to effect a compromise. If you compromised you lost your client, and both sides hated it, but if you fought it out both sides were satisfied. So far as this compromise is concerned, I think it is fair and will satisfy everybody. The only people not satisfied will be the Chancellor of the Exchequer and myself. Neither he nor I have our way completely, but, on the whole, I think justice has been done. I am perfectly willing that he should have as much credit as he likes to take upon himself for having won as much as he did upon that compromise, and I take to myself credit for the fact that for every site value at any rate there will be deducted four times the annual site value for Schedule A purposes, and the tax will not be as heavy as otherwise it would have-been upon fully developed sites."
    But in his peroration he waxed positively lyrical. He said:
    "We on these benches desire to support the right hon. Gentleman in the great step which he is taking in having, once again, the land valued. Hon. and right hon. Gentlemen above the Gangway may laugh"—
    Some, I regret to say, abandoned themselves to irreverent laughter, and I am afraid there will be more laughter at the hon. and learned Gentleman's expense to-night—
    "but this House fought this question for 71 days in Committee, as to whether there should be taxation on site values and whether the land should be valued or not. This House ultimately decided that it should be done, and that decision was carried by a Liberal and Labour majority, as this proposal again will be carried by a Labour and Liberal majority."—[OFFICIAL REPORT, 30th June, 1931; cols. 1200–1, Vol. 254.]
    That was carried with the help of the enthusiastic speech and vote at every stage of the hon. and learned Member. The hon. and learned Member for Montgomery says that it was under the lash of my whip, and that I was under the right hon. Member for Carnarvon Boroughs. When I found it was necessary, on account of a difference of opinion on a great political issue, to part with the right hon. Gentleman I did so, and I regretted it very much. The difference between the hon. and learned Member and myself is that whereas I stand by my responsibility he now seeks to hide behind what he calls the lash, under the flail of which he cowered in the last Parliament. That is not a very proud position for an hon. and learned Member representing such a distinguished constituency.

    On this occasion we have had speeches from various members of the Conservative party demanding. action. We had a most interesting speech from the Noble Lord the Member for Hastings (Lord E. Percy). Even members of the Conservative party are vocal, but the hon. and learned Member who claims to be one of the only two land taxers in this Parliament—there were three in the last—when he finds that the Government are proposing to repeal this tax, makes no suggestion that they should put anything else in its place. I do not think I need waste any more time on the hon. and learned Member.

    Let me say a few words upon the main issue with which the House is confronted. One or two hon. Members on this side have been twitted for not referring to the issue with which we are confronted. I do not want to go deeply into this very great and complicated question at this hour of night, but I would say briefly that I would rest the case for the taxation of land values upon three main propositions, none of which is affected by the changes in the economic situation during the last 30 years, to which the Noble Lord drew the attention of the Committee. The first proposition is that site value is created not by the owner of the fend but, apart from special circumstances as to the nature and situation of the land, by the growth of population, the development of industry, the extension of public works, and so on.

    It is said that a great many public spirited and enterprising individuals by the expenditure of capital have greatly developed the land within their own control and that the development is entirely due to them. That cannot be true in hardly any case. I have in my mind an example of the exact opposite in regard to a certain village in the Island of Harris, where the late Lord Leverhulme spent tens of thousands of pounds upon the development, but nobody followed him. The fishermen did not go. The fishermen did not choose to fish from there. The result is that there has been no increase in the value of that land. Therefore, it is clear that the contribution of the community is an essential one in the improvement of the value of the land. In the second place, the amount of land cannot be increased. That is what differentiates it from other commodities. The critics of land value taxes often say that rubber, cotton, boots and other goods depend for their value upon the action of the community which buys those necessary articles. In those cases, as the population increases the value of those goods does not increase but tends to fall. As the demand increases so the supply increases, but the supply of land cannot be increased, because it is a fixed quantity. The value of the land may fluctuate. In some parts of the country the land values may stand still for a time, and in very remote parts of the country they do not increase, but, taken by and large, with the exception of a very few remote corners of the country, they go on steadily expanding and increasing year after year, without any active steps being taken by a landlord, unless, of course, the individual landlord happens to be enterprising and develops his property. Without the necessity of any action being taken by the landlord these fruits fall into the lap of the landlord.

    My third proposition is this: If site values are taxed and the burden of taxation is removed at the same time from improvements, a double stimulus is given to industry and development of all kinds. On the one hand the penalty for holding up land becomes taxation and the access of the community to the land is rendered easy on fair terms, while on the other hand the reward of development becomes relief from taxes and rates. It is quite true that one of the chief defects which the Liberal party saw in Part III of the Finance Act of 1931, in its original form, was the failure to provide for the untaxing of improvements pari passu with the taxation of site values. That criticism was met by Clause 18, the effect of which is to graduate the tax in accordance with the development of the site, leaving on the fully developed site merely a nominal tax of one-eighth of a penny, for the payment of which industry would be amply compensated by municipal and national development and by the reduction of other forms of taxation.

    I am far from saying that these taxes cannot be improved. The Financial Secretary to the Treasury, who is the only Minister who has opened his mouth on this question since the Budget was first introduced, in reply to some remarks which I made on the Second Reading of the Finance Bill, said that I was careful to say that I did not approve of the tax itself. I never said anything of the kind. I have looked carefully through the OFFICIAL REPORT, and I said nothing of the kind. The nearest approach I made to it was that I was not wedded to the particular form which it takes in the Finance Act of 1931. Certainly I think it is capable of improvement. I do not think there is any one who would quarrel with that statement. I see present the hon. and learned Member for East Bristol (Sir S. Cripps), who did as much as anyone to form that Act. I think he would be the last to say that the tax is incapable of improvement and that it represents a perfect sample of land taxation. We should like to see the total abolition of Schedule A, which of course is not an Income Tax at all. It is paid on property, whether income is drawn from it or not.

    Hon. Members are fond of scoffing at the hypothetical character of land valuation under the 1909 and 1931 proposals, but Schedule A is a tax assessed upon a hypothetical income received by a hypothetical landlord from a hypothetical tenant. So I would welcome the removal of Schedule A, but I am far from saying that it could be done by a stroke of the pen. It could be done by a constructive effort of thought and study such as the Noble Lord the Member for Hastings invited the Government to undertake. It would demand a re-casting of our tax system. I cannot understand why this National Government, especially after the remarkable character of this Debate, should not address itself to that task. But I certainly say that these Clauses are better than none. I certainly say that they are workable, that they provide a valuation which is the indispensable basis for any action in the direction of land taxation at all. Certainly I think that this House should take a firm stand on the question of preserving the land valuation Clauses, which must be the basis of any such constructive action as the Noble Lord the Member for Hastings and other speakers have asked for to-night. Members of the Government must have other ideas for their improvement. In fact, hon. Members on these benches could supply some, but why should they come to us? The Government is full of men, perhaps fuller even than the Labour party, who have devoted no small part of their political influence to the propagation of the principles of land values taxation. Apart from the Prime Minister himself, and the Secretary of State for the Dominions, who has a long record on this matter, there is the Chancellor of the Exchequer, who in public speeches has drawn attention to the part which private interests have played. I think he said on one occasion when Minister of Health, when a little bit of land was wanted for the widening of a street, that private interests would levy extortionate sums of money from the community.

    There is the Secretary of State for Foreign Affairs, who has a very special record on this subject, and who as recently as 1924, only 10 years ago, which is, surely even now quite a short time in a man's political life, introduced into this House a Bill for the valuation of land and the rating of site values. When the Liberal party was preparing its proposals for dealing with urban and rural land, it was the Secretary of State for Foreign Affairs who came down to the conference and drafted a resolution putting land values taxation in the forefront of that Liberal programme. The views of the President of the Board of Trade have already been referred to by my right hon. Friend the Member for North Cornwall (Sir F. Acland), and, not least, there is the Financial Secretary to the Treasury himself who now bears a special responsibility for these financial questions. It is true that he was one of those who criticised the details of Lord Snowden's proposals, but he criticised them on the ground that they did not go far enough. He showed by his speeches that he had made a deep and careful study of this question. He traced the development of the idea from the doctrines of the physiocrats and impôt unique through Henry George and down to the Prime Minister, and Mr. Andrew MacLaren. I would suggest that he is the man who is eminently qualified to assist the Government in dealing with this problem of land taxation in a constructive way. Perhaps it is not quite for me to say, but my view is the same as that of the Noble Lord the Member for Hastings, that this is essentially a task which the National Govern-men should perform. There are Conservatives, Labour men and Liberals all over the country employed in municipal and political work of various kinds who are keenly devoted to this proposal. The hon. Member for one of the divisions of Nottingham referred to Glasgow which passed a resolution in favour of this, although it had an anti-Socialist and moderate majority, and I think it applies to a great many other municipalities. Some hundreds altogether have passed resolutions in favour of this principle. The Government might perform this task of thrashing out a fair and effective scheme for the taxation of land values. The Noble Lord the Member for Hastings said that the policy of the taxation of unearned increment was often urged by Conservative critics during the passage of the 1931 Finance Bill, but that was when they were in Opposition. Why do not they urge it on their party when they are now in power? I see that the Noble Lord has done it here to-night on the occasion when these taxes are to be repealed, but he will be voting for the repeal, and I cannot help thinking that his intervention might have come with even greater force last year or the year before when the question of land taxa- tion was shelved and when the study of it might then have been started.

    It is true that Conservative Members have made proposals for tackling the question of land values when in Opposition, but when they have been in power they say very little about it—and that is the time when they ought to be able to translate their views into action. The Noble Lord said that there was no difference in his attitude on the question of the land making its contribution to the revenue of the State and that of hon. Members on this side of the House. Why then is this action deferred, and why is the, only action taken that of repealing these land taxes? The Noble Lord says that the policy embodied in Part III is as old as Noah's Ark, but surely it is better than the present position which the Noble Lord described as losing hundreds and thousands of pounds in land value to the State through the incomplete and inefficient action of the present scheme of Death Duties. Surely this is a condition of affairs which calls for immediate action, not negative action, but positive and constructive action. The Noble Lord said that it showed the necessity for a National Government. With all respect, it shows nothing of the sort. It shows its futility. When Members in all parts of the House are demanding constructive and positive action, we see that the only action to be taken to-night is a negative action, the repeal of the taxes which now exist. The Financial Secretary in his speech on the Second Reading gave the reasons why the Government were taking this action. He said:
    "Accordingly, the Government have decided, having examined the whole matter, that some future Parliament should not be deprived of its right to examine the whole matter afresh, in the light of the new conditions which will then prevail, and in detail."
    The Financial Secretary knows well that nothing can deprive a future Parliament of any of any of its rights in this matter. He also said:
    "As three years must elapse between the necessary preparation and the exaction of the tax, it becomes plain that the tax could not become operative in the lifetime of the present Parliament."—[OFFICIAI, REPORT, 16th May, 1934; col. 1899, Vol 289.]
    He was slightly mistaken, as only two years must elapse, and that is all the greater reason for getting on with the valuation now, which must form the basis of the constructive action for which hon. Members are clamouring. Delay is wasteful. I have some figures here provided by the London County Council in a book called "London's Statistics," showing the valuation for rating. Let me make it clear that the figures include buildings as well as land, undeveloped land on the basis of agricultural land. The figures show that in the last 25 years land in the County of London has increased in value 37 per cent., in Greater London by 53 per cent., and land in extra London, that is excluding the County of London, fey no less than 100 per cent. That is the source of revenue which is going to waste while the Financial Secretary allows these provisions to be repealed.

    This repeal exhibits the Conservative party in complete control of the National Government. There was the other day a leading article in the "Times" which said that the inclusion of the Clause repealing the scheme in the Finance Bill could only be taken to mean that Ministers who formerly supported it believed that it might as well be formally abandoned. That presumably refers to the Prime Minister and the Secretary of State for the Dominions and it is a pity they are not here to answer for themselves to-night. The efforts of Canute to stop the tide were not more ludicrous than those of the main body of the Conservative party to stop the taxation of land values. The permanent retention of power by the Conservative party is impossible and nothing is more certain than that any progressive majority must reintroduce the taxation of land values. To my mind, the gradual method would have been better. I think this is a controversy which has suffered from its handling by the protagonists on both sides. On the one side, the extremists among the land taxers have made embittered and unfair attacks on property owners and have stirred up great feeling against this just—as I believe it to be—and workable principle. On the other side, the defenders of property have been only too apt to adopt the course for which they were chided 11 years ago by the right hon. Gentleman the Member for West Birmingham (Sir A. Chamberlain) of trying to defend and protect, abuses of the present system. This Clause is not the tomb of the land taxes. The tomb is the tomb of National Government which died long since and this Clause is the stone rolled across its mouth. That it is inconsistent with the idea of a National Government is plainly shown by recent utterances of leaders of the Conservative party.

    Hon. Members have quoted the utterances of the Lord President of the Council and Lord Hailsham, who in another place spoke of the humiliation to which this repeal would subject the Prime Minister. How can the imposition of this humiliation upon the Prime Minister and other supporters of these taxes be justified except upon the assumption that a condition of their retention of power by those Ministers who shrink from calling themselves Conservative, is that they submit themselves to the will of the Conservative party? Why has the Prime Minister submitted? Some Members of other parties at the last Election were prepared to swallow anything. There was a well-known case of a Member whose Conservative constituents were reluctant to accept him as their candidate. They tried to make it as difficult for him as possible. They brought him up to one steep fence after another but the candidate jumped them all and as every question was asked his formula was: "But I go further." The Conservataive Association to its disgust was forced to accept him. The Prime Minister goes slower but he goes just as far. The Prime Minister said at the Albert Hall in 1928:
    "A Chancellor who taxes land values will deserve the gratitude of the country. A Labour Chancellor will do that."
    Now a Labour Prime Minister is repealing it—well, a Prime Minister who holds his position by virtue of the fact that he is taken to represent Labour in this country, rightly or wrongly. We, at any rate, will be no party—

    The right hon. Gentleman was Secretary of State for Scotland in this Government.

    Certainly I was Secretary of State for Scotland as long as I agreed with the Government. I do not know to what the hon. Member refers, but he knows perfectly well that I served as long as I honestly could. When I could no longer serve in the Government to my re- gret—it must be a matter of regret to anyone—I resigned from the Government. If the hon. Member refers to my attitude on the question of land taxation I say it was quite obvious that when a National Government was formed in a great crisis, and when we were faced with this question, which had been a sharp cause of division between the Members of the Government and between their supporters only a very few weeks before, and which left open sores, it was a matter of practical arrangement that it should be shelved in the manner in which it was and left completely open. It was left open for this Government if it liked this year or last year to deal with it. After the wounds had healed they could have taken it up on constructive lines, as was said by the Noble Lord the Member for Hastings. We will be no party to the betrayal of the Prime Minister's policy. Equally we shall oppose at every stage this foolish and reactionary party manoeuvre.

    11.33 p.m.

    The right hon. and gallant Member who has just spoken devoted the first part of his observations to a display of not unnatural arrogance at the revelations of the hon. and learned Member for Montgomery (Mr. C. Davies). To those of us who were in the last Parliament, it seems that the Liberal party found itself in the matter of land taxes and valuation in a very curious position. On the one hand, there was a desire to keep the Labour Government in office. On the other hand, they were opposed, and in some cases bitterly opposed, to the particular form of the land taxes which had been introduced. The final result, as the hon. and learned Member for Montgomery said, was that they saved the face of the Government and preserved it for the time of its existence, but at the cost of the whole value to the then Chancellor's proposals. As my hon. and learned Friend has explained, the Amendment which the Liberal party then forced upon the Government really completely destroyed the value of the tax for revenue purposes and rendered it useless and futile. My Noble Friend the Member for Hastings (Lord E. Percy) did great service in brushing away the cobwebs which in the course of the Debate accumulated round the question. Nothing is more extraordinary to me than the way in which hon. Members like the hon. Member for Govan (Mr. Maclean) who were supporting the Government neither at that time nor to-day have ever learned what the proposals really meant.

    All the arguments which have been adduced to-night in favour of the maintenance of the proposals on the Statute Book are founded on a complete misconception of what those proposals, if they had been carried into operation, would probably have effected. My hon. and learned Friend the Member for South Nottingham (Mr. Knight) has expressed in very moderate and temperate terms his regret at what he deems to be a retrograde step on the part of the Government. He has given three reasons why he thinks it is unfortunate that this Clause should be passed. The first was that it would deprive local authorities of a valuation which had saved them from exploitation. It does not do anything of the kind. The valuation under the proposals of Lord Snowden was what I might call an artificial valuation, a valuation made solely for the purpose of imposing this particular tax, and not a valuation which could have served generally as a basis for the valuation of land to be compulsorily acquired by local authorities. What is needed to save local authorities from exploitation is the sort of information which is obtained under Section 28, which is being retained by the Government. Therefore my hon. and learned Friend is wrong in supposing that anything of that kind is being sacrificed by the repeal of the other Clauses. His second reason was that where the value of land belonging to a private person has been increased, not through anything that he has done, but by the action or the expenditure of the community, it is only fair and just that some part of that increase shall be returned to the community. But does my hon. and learned Friend think that that was the effect of Lord Snowden's proposal? There was no increment tax 'at all. His was a capital duty, not a duty upon the increased value of the land due to the expenditure of the community. In the third place, my hon. and learned Friend said that a man ought to contribute something to the rates of his municipality through his land when the value of the land had been increased by the action of the municipality. Again, this was not an instrument for the relief of rates. This was an instrument of taxation, and not of rating. Therefore, in every one of his arguments my hon. and learned Friend completely misapprehends the effect of these proposals.

    I took those as three instances of the harm which would result from the absence of a system of valuation. I was not describing the particular incidence of Lord Snowden's proposals. I was pleading for the existence of a land valuation.

    My hon. and learned Friend's interruption is very typical of the attitude of a great number of hon. Members opposite. To them a Land Tax is a Land Tax. It does not matter what the nature of the tax is, it is all one system, and all their arguments are devoted sometimes to one form of taxation and sometimes to another, but never with any particular reference to the particular scheme before us. The charges of inconsistency which have been levelled against so many hon. and right hon. Members are irrelevant, because the inconsistency does not exist. The speeches quoted were speeches in support of proposals different from the proposals of Lord Snowden. I am a little astonished that the right hon. Member for North Cornwall (Sir F. Acland) should have been audacious enough to charge the Foreign Secretary with inconsistency in this matter, because he, at any rate, must remember that the Foreign Secretary was one of the most determined and damaging opponents of these proposals.

    The fact is that the arguments in favour of an increment duty asking an owner to make some contribution to the community in respect of an improvement in the value of his property which has been brought about by the community, appeals to a great many hon. Members, to whatever party they belong. I myself cannot see any unfairness in the application of such a principle, so long as it is fairly carried out. I must also add that I have never yet been able to see any practicable way of putting it into operation. In the first place, of course, it ought to carry with it a natural corollary that if the value of the property of an individual has been diminished or decreased by the action of the community, he should be entitled to equivalent compensation. It is extremely difficult—so difficult that I have not seen any way of overcoming the difficulty—to separate out that part of the increased value of property which is due to the community and that part which is due to the action of the owner himself. A right hon. Gentleman spoke of a case where an owner had spent a great deal of money upon development of property which, after all, had not increased in value. That is one case. I know of a case where an owner spent a great deal of money upon developing a property, and it did increase in value, and no doubt that increase in value was partly due to the fact that the land was in the neighbourhood of a large population. As a matter of fact, changes in the habits of the people, after a time, brought about a change in the conditions; the sort of people—at any rate, wealthy people—for whom this property had been developed, and whose occupation had raised its value, ceased to live in that neighbourhood at all, and the value of the property diminished. What is the owner to do then? In this case he spent more money on redeveloping the property on a different plan to suit the changed conditions, and that property is to-day again increasing in value. Is anybody going to say that no part of the increase in value is due to the large capital sums that have been spent upon it by the owner? It would be perfectly absurd to say so. The difficulty is to see how much is due to expenditure by the owner and how much to the fact that it is within the reach of a large population.

    I am here now to speak on behalf of the National Government—and on behalf of all the Members of the National Government—and to explain why we have introduced this Clause into the Finance Bill. Let me, just for a moment, touch upon a trivial point, because more than once it has been suggested that I purposely omitted to say anything about this in my Budget speech. I am not one of those who want to pack out Budget speeches to inordinate length. This proposal did not in any way affect the revenue of the country, nor did it require a Budget Resolution. There was, therefore, to my mind, no reason why I should take up the time of the House in dwelling upon that subject in the Budget speech. Let me explain what is the position of the National Government. Some hon. Members, who take a lofty view of the functions and duty of the National Government, nevertheless fail to appreciate what is really the method in which a national Government must approach national problems. Some suggestions have been made that there was no mandate for the National Government to repeal the proposal. My answer to that is, neither was there a mandate for the National Government to carry out a complete new scheme of land taxation, such as has been suggested by the hon. and gallant Gentleman the right hon. and gallant Member for Caithness and Sutherland (Sir A. Sinclair). The mandate of the Government was what was called at the time a doctor's mandate—to get the country out of the mess in which it had been left and to carry on the administration in the best interests of the general community.

    The hon. Member for North Bristol (Mr. Bernays) said that a National Government should not only constitute a union of parties, but there should be also a union of programmes. His idea was that you should take the whole of the programmes of the Conservative, Liberal and Labour parties, put them in a hat, mix them up, and draw out some of the mixture. That is not my conception of the way in which a National Government should approach its duty to the country. What we have to do is to face up to realities, to try to free ourselves as far as we possibly can from all past prejudices which may exist in our minds, and to judge each problem as it comes before us simply and solely upon its merits. Let us look at the realities in this matter. It is quite irrelevant to dis. cuss the merits of this or that form of land taxation in this connection. The facts are that the proposals of Lord Snowden were suspended in the early part of 1932, and that, instead of the land valuation or the land tax coming into operation on a particular date, in both cases they were suspended until Parliament should fix a date for their coming into operation. What are the realities? Does the hon. Member for Gower (Mr. D. Grenfell) suggest that there was any likelihood that this Parliament would name a date upon which either of those provisions should come into operation? We all know perfectly well that we had no mandate to do it. We know perfectly well that there was not the slightest prospect of this Parliament naming a date; and, even if there had been a prospect of its naming a date, the tax could not have been put into operation during the lifetime of this Parliament. Therefore, it remained upon the Statute Book as a piece of useless lumber. That alone, perhaps, might have been a reason for removing it, but that was not all that we had to consider.

    We had also to consider the facts which were adduced a little while ago by my hon. and gallant Friend the Member for the Rye Division of Sussex (Sir G. Court-hope). Representations were made to us, which we could not neglect, as to the fact that this proposal, still remaining on the Statute Book, was actually interfering with the flow of credit into the land—was actually preventing or hindering the operations of landlords for the improvement of their property which it was in the interests of the country that they should carry out. Whatever may be the views upon these particular proposals—and I doubt if, in their present form, they have really any sincere advocate in the House to-day—whatever may be their merits, I say that it would not be right to leave upon the Statute Book, until the Government are prepared to bring in a scheme of their own, proposals which are interfering with the due development of property to-day, and that it was therefore our duty, as realists, to remove this obstruction and to leave the site clear and unencumbered for the future. We have done no injury to anyone by that. We have not changed the position so far as the practical realities are concerned, except in one respect, to which I have referred; and, if hon. Members opposite are as confident as they profess to be that they are going to succeed this Government, and that they are going to carry out their new programme in the future, they ought to be grateful to us for leaving the ground clear for them in order that they may develop their own ideas unencumbered by Liberal Amendments, and may bring in land taxation in a Measure after their own hearts

    11.50 p.m.

    I propose to make very few remarks at this time in the evening. I want to enter a strong protest against the failure of the Prime Minister to be present during this Debate. We have been told that he had some private engagement early in the evening, but it is now 10 minutes to 12. I should have thought that the Prime Minister, who does not often attend this House, would have taken the trouble to come down when he knew this matter of his behaviour with regard to land taxation would be discussed. We do protest against the casual way in which he is treating the Committee, even if a dinner engagement did keep him, in not attending the rest of this Debate to give the Committee the benefit of his views on this subject. The Chancellor of the Exchequer tells us that the question of inconsistency is irrelevant and that the matters about which the Cabinet were speaking were not of this type of taxation. I am afraid that does not apply to the Prime Minister, because he was one of the protagonists of this Bill and took a great part in the negotiations of which the hon. Member for Montgomery (Mr. C. Davies) gave details, which have passed out of my memory. I do not seem to recollect the hon. Member playing so important a part in the negotiations, and anyway the part he played with regard to the Liberal party has been adequately dealt with by the right hon. and gallant Member for Caithness and Sutherland (Sir A. Sinclair). So far as the question of the precise form of the taxation of land values is concerned, that is a matter almost of academic interest at the present moment.

    This section which is being passed is a token section, showing the behaviour of the National Government rather on the whole approach to the problem of combined action, than the particular problem of land values. It is perfectly true, as the Chancellor of the Exchequer says, this particular method would not, in the first instance, have produced any amount of revenue. But it could have been increased in the next Budget, up to 20s. in the pound. That should have been the course taken. But now, owing to the action taken by the National Government, hon. Members will appreciate any such approach to the land problem has disappeared in this country, either being continued under a Tory Government, with the land untouched and the landowner subsidised whenever he wants it, or increased under a future Labour Government. Straightforward nationalisation of the land is now the only alternative, largely because of the action taken by this Government in doing away with what might have been the first stages of gradual transition to national ownership. That change will now have to be made when it comes much more suddenly, much more thoroughly. It may not come in the next Parliament or the one after but it will come, and hon. Members know it in their bones. When it comes, I hope the hon. Member for Aylesbury (Mr. M. Beaumont) will be here to see it, because I know how much he will enjoy it. I hope hon. Members will remember with great satisfaction that it was due to them very largely that it came in that form. Perhaps therefore, it is academic to discuss now the question of the precise form of the taxation of land values which is never likely to be a practical point in the policy of any Government again in this country.

    But the major question which we have not had elucidated to-night, owing to the absence of the Prime Minister, is to get an explanation from the Government, which the Chancellor of the Exchequer has not given—we could not perhaps expect him to give it because it depends on a statement made by the Lord President of the Council, who also unfortunately is absent. Perhaps he is ' dining with the Prime Minister and discussing the question. The Lord President on a former occasion said the Conservative Members in the Cabinet must play the game. They must not humiliate the Prime Minister. What we want to know is why it is now permissible to humiliate the Prime Minister. Is it the Conservative Members of the Government who now have ceased playing the game or is it that the Prime Minister has become such a nincompoop that he can be humiliated? [HON. MEMBERS: "Withdraw!"] Certainly not. Let the Prime Minister come here and ask me to withdraw. The hon. Member need not worry. I gave the Prime Minister notice, and he has had plenty of time to get here if he wanted to. I should be glad to know why it is that this year they need not play the game. Why this year they can humiliate the Prime Minister, when last year they could not. What are the circumstances inside the National Government which have altered in order to make it decent and proper to do this year that which last year was improper? That question has not been answered. [Interruption.] The hon. Member seems to make a very irrelevant remark. Perhaps he has not been able to follow the argument. If he reads the OFFICIAL REPORT to-morrow he may do better. Perhaps the right hon. Gentleman will ask the Prime Minister, as he cannot be here tonight, whether he will come on the Report stage in order that he may answer

    Division No. 270.]

    AYES.

    [12.0 m.

    Adams, Samuel Vyvyan T. (Leeds, W.)Elliot, Rt. Hon. WalterLloyd, Geoffrey
    Agnew, Lieut.-Com. P. G.Ellis, Sir R. GeoffreyLockwood, John C. (Hackney, C.)
    Albery, Irving JamesElliston, Captain George SampsonLockwood. Capt. J. H. (Shipley)
    Allen, Sir J. Sandeman (Liverp'l, W.)Elmley, ViscountLoder, Captain J. de Vera
    Allen, Lt.-Col. J. Sandeman (B'k'nhd.)Entwistle, Cyril FullardLoftus, Pierce C.
    Anstruther-Gray, W. J.Erskine-Bolst, Capt. C. C. (Blackpool)Lumley, Captain Lawrence R.
    Apsley, LordEvans, Capt. Arthur (Cardiff, S.)Lyons, Abraham Montagu
    Astor. Viscountess (Plymouth, Sutton)Fleming, Edward LascellesMcConnell, Sir Joseph
    Bailey, Eric Alfred GeorgeFraser, Captain Sir IanMcCorquodale, M. s.
    Baldwin. Rt. Hon. StanleyFremantle, Sir FrancisMcKie, John Hamilton
    Baldwin-Webb, Colonel J.Fuller, Captain A. G.McLean, Major Sir Alan
    Balfour, Capt. Harold (I. of Thanet)Ganzonl, Sir JohnMcLean, Dr. W. H. (Tradeston).
    Balniel, LordGault, Lieut.-Col. A. HamiltonMacqulsten, Frederick Alexander
    Banks, Sir Reginald MitchellGledhill, GilbertMargesson, Capt. Rt. Hon. H. D. R.
    Barclay-Harvey, C. M.Gluckstein, Louis HalleMason, Col. Glyn K. (Croydon, N.)
    Barton, Capt. Basil KelsayGlyn, Major Sir Ralph G. C.Mayhew, Lieut.-Colonel John
    Bateman, A. L.Goodman. Colonel Albert W.Mills, Major J. D. (New Forest)
    Beaumont, M. W. (Bucks., Aylesbury)Gower, Sir RobertMilne, Charles
    Beaumont, Hon. R. E. B.(Portsm'th. C.)Graves, MarjorleMitchell. Harold P.(Br'tf'd & Chisw'k)
    Bevan, Stuart James (Holborn)Greene, William P. C.Mitcheson, G. G.
    Blindell, JamesGrenfell, E. C. (City of Londan)Munro, Patrick
    Bossom, A. C.Grimston, R. V.Nation, Brigadier-General J. J. H.
    Boulton, W. W.Gunston, Captain D. W.Nicholson, Godfrey (Morpeth)
    Bowater, Col. Sir T. VanslttartGuy, J. C. MorrisonNicholson, Rt. Hn. W. G. (Petersf'ld)
    Bower, Lieut.-Com. Robert TattonHacking, Rt. Hon. Douglas H.Normand, Rt. Hon. Wilfrid
    Bowyer, Capt. Sir George E. W.Hales, Harold K.O'Donovan, Dr. William James
    Braithwaite, J. G. (Hillsborough)Hanbury, CecilO'Neill, Rt. Hon. Sir Hugh
    Broadbent, Colonel JohnHanley, Dennis A.Peake, Captain Osbert
    Brocklebank. C. E. R.Hannon, Patrick Joseph HenryPearson, William G.
    Brown, Ernest (Leith)Harbord, ArthurPeat, Charles U.
    Brown, Brig. Gen. H. C.(Berks., Newb'y)Hartington, Marquess ofPercy, Lord Eustace
    Browne, Captain A. C.Harvey, George (Lambeth, Kenningt'n)Petherick, M.
    Buchan-Hepburn, P. G. T.Haslam, Henry (Horncastle)Peto, Geoffrey K. (W'verh'pt'n, Bllst'n)
    Burghley, LordHeadlam, Lieut.-Col. Cuthbert M.Pike, Cecil F.
    Burgin, Dr. Edward LeslieHellgers, Captain F. F. A.Pybus, Sir Percy John
    Burnett, John GeorgeHeneage, Lieut.-Colonel Arthur P.Radford, E. A
    Cadogan, Hon. EdwardHepworth, JosephRamsay, Alexander (W. Bromwich)
    Campbell, Sir Edward Taswell (Brmly)Hills, Major Rt. Hon. John WallerRamsay, Capt. A. H. M. (Midlothian)
    Caporn, Arthur CecilHope, Capt. Hon. A. O. J. (Aston)Rankin, Robert
    Carver, Major William H.Hore-Bellsha, LeslieRay, Sir William
    Chamberlain, Rt. Hon. N.(Edgbaston)Hornby, FrankReed, Arthur C. (Exeter)
    Chapman. Col. R, (Houghton-le-Spring)Horsbrugh, FlorenceReid, David D. (County Down)
    Colfox, Major William PhilipHoward, Tom ForrestRaid, William Allan (Derby)
    Colville, Lieut.-Colonel J.Howitt, Dr. Alfred B.Remer, John R.
    Conant, R. J. E.Hudson, Capt. A. U. M.(Hackney, N.)Rhys, Hon. Charles Arthur U.
    Cook, Thomas A.Hunter, Capt. M. J. (Brigg)Roberts, Sir Samuel (Ecclesall)
    Courthope, Colonel Sir George L.Hurd, Sir PercyRosbotham, Sir Thomas
    Cranborne, ViscountHurst, Sir Gerald B.Ross, Ronald D.
    Craven-Ellis, WilliamInskip, Rt. Hon. Sir Thomas W. H.Ross Taylor, Walter (Woodbrige)
    Croft, Brigadier-General Sir H.James, Wing-Corn. A. W. H.Ruggles-Brise, Colonel E. A.
    Crooke, J. SmedleyJamleson, DouglasRunciman, Rt. Hon. Walter
    Croom-Johnson, R. P.Jennings, RolandRunge, Norah Cecil
    Cross, R. H.Jesson, Major Thomas E.Rutherford, Sir John Hugo (Liverp'l)
    Cruddas, Lieut.-Colonel BernardJohnston, J. W. (Clackmannan)Salmon, Sir Isidore
    Culverwell, Cyril TomKeyes, Admiral Sir RogerSalt, Edward W.
    Davidson, Rt. Hon. J. C. C.Kimball, LawrenceSamuel. Sir Arthur Michael (F'nham)
    Davies, Edward C. (Montgomery)Lamb, Sir Joseph QuintonSandeman, Sir A. N. Stewart
    Dawson, Sir PhilipLatham, Sir Herbert PaulSavery, Samuel Servington
    Denman, Hon. R. D.Leech, Dr. J. W.Shakespeare, Geoffrey H.
    Drewe, CedricLeighton. Major B. E. P.Shaw, Helen B. (Lanark, Bothwell)
    Duckworth, George A. V.Lennox-Boyd, A. T.Shaw, Captain William T. (Forfar)
    Duncan, James A. L. (Kensington, N.)Lindsay, Noel KerShepperson, Sir Ernest W.
    Edmondson, Major Sir JamesLister, Rt. Hon. Sir Philip Cunllffe-Shut", Colonel J. J.

    the questions that have been addressed indirectly to him to-night and we will try, through the usual channels, to arrange that this part of the Bill is taken on Report at a time when the Prime Minister notifies us that it will be convenient for him to attend the House of Commons.

    Question put, "That the Clause stand part of the Bill."

    The Committee divided: Ayes, 232; Noes, 56.

    Simmonds, Oliver EdwinStuart, Hon. J. (Moray and Nairn)Whyte, Jardins Bell
    Skelton, Archibald NoelSugden, Sir Wilfrid HartWilliams, Charles (Devon, Torquay)
    Smith, Bracewell (Dulwich)Sutcliffe, HaroldWilliams, Herbert G. (Croydon, S.)
    Smith, Sir J. Walker. (Barrow-In-F.)Tats, Mavis ConstanceWills, Wilfrid D.
    Smith, Louls W. (Sheffield, Hallam)Templeton, William P.Wilson, G. H. A. (Cambridge U.)
    Smith, Sir Robert (Ab'd'n & K'dine. C.)Thomas, James P. L. (Hereford)Windsor-Clive, Lieut.-Colonel George
    Somervell, Sir DonaldThompson, Sir LukeWinterton, Rt. Hon. Earl
    Somerville, O. G. (Willesden, East)Thorp, Linton TheodoreWolmer, Rt. Hon. Viscount
    Sotheron-Estcourt, Captain T. E.Tree, RonaldWomersley, Sir Walter
    Southby, Commander Archibald H. J.Tufnell, Lieut.-Commander R. L.Worthington, Dr. John V.
    Spencer, Captain Richard A.Turton, Robert HughYoung, Rt. Hon. Sir Hilton (S'v'oaks)
    Spens. William PatrickWard, Lt.-Col. Sir A. L. (Hull)
    Stanley, Hon. O. F. G. (Westmorland)Ward, Irene Mary Bewick (Wallsend)TELLERS FOR THE AYES—
    Stevenson, JamesWard, Sarah Adelaide (Cannock)Major George Davies and Dr.
    Storey, SamuelWedderburn, Henry James ScrymgeourMorris-Jones.
    Stourton, Hon. John J.Wells, Sydney Richard

    NOES.

    Acland, Rt. Hon. Sir Francis DykeGriffiths, George A. (Yorks, W. Riding)Mainwaring, William Henry
    Adams, D. M. (Poplar, South)Grundy, Thomas W.Mallalieu, Edward Lancelot
    Banfield, John WilliamHall, George H. (Merthyr Tydvil)Mander, Geoffrey le M.
    Bernays, RobertHamilton, Sir R. W.(Orkney & Zetl'nd)Mason, David M. (Edinburgh, E.)
    Bevan, Aneurin (Ebbw vale)Harris, Sir PercyMilner, Major James
    Brown, C. W. E. (Notts., Mansfield)Holdsworth, HerbertOwen, Major Goronwy
    Cape, ThomasJenkins, Sir WilliamRea, Walter Russell
    Cocks, Frederick SeymourJohnstone, Harcourt (S. Shields)Sinclair, Maj. Rt. Hn. Sir A. (C'thness)
    Cripps, Sir StaffordJones, Morgan (Caerphilly)Smith, Tom (Normanton)
    Curry. A. C.Kirkwood, DavidThorne, William James
    Daggar, GeorgeLockle. J. A.Tinker, John Joseph
    Davies, David L. (Pontypridd)Leonard, WilliamWest, F. R.
    Edwards. CharlesLlewellyn-Jones, FrederickWhite, Henry Graham
    Foot, Dingle (Dundee)Logan, David GilbertWilliams, Edward John (Ogmore)
    Foot, Isaac (Cornwall, Bodmin)Mabane, WilliaWilmot, John
    Gardner, Benjamin WalterMacdonald, Gordon (Ince)Wood, Sir Murdoch McKenzie (Banff)
    George, Major G. Lloyd (Pembroke)McEntee, Valentins L.
    George, Megan A. Lloyd (Anglesea)McKeag, WilliamTELLERS FOR THE NOES—
    Grenfell, David Rees (Glamorgan)Maclay, Hon. Joseph PatonMr. John and Mr. Duncan Graham.
    Griffith, F. Kingsley (Middlesbro', W).Maclean, Nell (Glasgow, Govan)

    Clause 26—(Estate Duty In Respect Of Annuities And Other Interests)

    12.7 a.m.

    I beg to move, in page 16, line 1, to leave out from "ascertainable," to the end of the Clause and to insert:

    "on the footing that a beneficial interest is not to be treated as having accrued or arisen until and except so far as it confers an immediate right to beneficial enjoyment.
    Provided that this section shall not apply to a beneficial interest accruing or arising under a disposition of property made by a person who died before the passing of this Act, if no estate duty was paid in respect of the beneficial interest before the eighth day of December, nineteen hundred and thirty-two."
    This Clause has been inserted to endeavour to rectify the effect of a decision in a recent case. The object of the Clause is to enable the revenue to tax at the ascertained value any beneficial interest which arises or accrues on the death of a person who has made a disposition of property in favour of other persons during his lifetime. No difficulty arises in respect of beneficial interest which arises for the first time on a person's death, for instance, the beneficial interest in policy money which did not exist in the lifetime of the person who takes out the policy, but difficulty has arisen in respect of interest which accrues on something which already exists before the death. In this particular case the effect of the decision of the House of Lords has been that where a beneficial interest accrues on the death, only that portion of the additional interest, that is to say, the difference between the interest which falls into possession on the death and that which the person had in settlement before death, is to be taxable.

    The object of this Clause is to make the total interest in the property which falls into possession on the death, taxable, and it is suggested that it can be done by a Clause stating that the property shall be valued and so always be deemed to have been ascertainable without regard to any expectant interest the beneficiary may have had therein before death. The technical point is that "an expectant interest" is not a phrase which, in the view of myself and many others, is really definite. What the Crown wants to do is to tax the actual beneficial interest to which an immediate right of beneficial enjoyment arises at the death.

    In my submission the words of the Amendment will have the effect of enabling the Crown on each case to tax, to the full value, the beneficial interest to which an immediate right of enjoyment arises on the death, and that is the intention of the Clause, and of the proviso, to carry out the promise given by the learned Attorney-General, that the particular subjects who were successful in the House of Lords case should not suffer as a result of the new Clause. But having regard to the fact that paragraph (a) is put in, and having regard to the actual circumstances of that case, if paragraph (a) remains those particular subjects will not get any benefit whatever out of the proviso, because the facts in that case were these: A father many years ago transferred to trustees for the benefit of three children a fairly substantial sum of property. He denied himself every shape and sort of beneficial interest; but he did reserve during his lifetime the power to direct by writing any part of the income or capital to be paid over to any of these children. But until his death the children took no absolute defined interest either in capital or income. The effect of paragraph (a), if it is left in, will give no benefit at all to those particular children, whose interest the Crown can claim to tax in full on the basis on which the Crown made this claim. In those circumstances I suggest other words, and seek to strike out words to which it is difficult to attach a meaning. If hon. Members will look at the proviso they will see it says:
    "In a case where the deceased died before the passing of this Act, this section shall not apply to a beneficial interest accruing or arising under a disposition of property which was in possession during the lifetme of the deceased."
    The words have no meaning at all, in my submission. It goes on:
    "and produced income falling to be dealt with under the disposition during his lifetime."
    Of course every disposition of property produces some income to be dealt with under the disposition, but in my submission the proviso, as worded, is not easy to understand, and in any event it does not except from the operation of the Clause the particular subjects for whose benefit the proviso was specially intended and inserted.

    12.15 a.m.

    This is a benevolent Amendment in that it is to enable, what I think is common ground between my hon. and learned Friend and myself, a desirable intention to be carried out. My hon. and learned Friend thinks that the words suggested in his Amendment would carry out our common intention better than the words in the Clause. I cannot accede to that view, at any rate, at the moment. I listened attentively to what he said. I think that the words he has used might be construed as merely referring to the time at which the beneficial interest is to be treated as having accrued and might entirely pass by what is the real matter it is desired should be put right, namely, how that beneficial interest shall be valued and whether there shall be any deduction. There is further the question whether these words would apply to a trust in favour of a class where it might be said that there was a beneficial interest. I do not want to go into the matter at too great a length. I assure him that what he has said will carefully be considered, and, if it leads us to think that our words do not carry out the purpose intended, we will certainly reconsider them.

    As far as the second part of the Amendment is concerned, the attitude I have taken up is very similar. I do not accept at the moment at all his argument that paragraph (a), for the reasons which he stated, would cut out the purpose of the Addison case. I do not think that in that case any body was indefeasibly entitled under the disposition. Here, again, I hope that the Committee will not feel that it is in any way disrespectful to them to treat this highly technical matter in this way. We will consider the wording of the Amendment, and if any improvements can be made we will certainly carry them out. I shall be very glad to discuss-the matter with my hon. and learned Friend at any time, and in view of that fact, I hope that he will see his way to-withdraw the Amendment.

    12.17 a.m.

    I confess that I am not particularly interested in the first part of my Amendment, which is to help the-Crown to tax what they hope to tax, but I am very interested in the second. If the learned Solicitor-General will assist me to arrive at a form of words which will make the matter clear, I would beg to ask leave to withdrawn the Amendment.

    Amendment, by leave, withdrawn.

    Motion made, and Question, "That the Clause stand part of the Bill," put, and agreed to.

    Clause 27 ( Short title, construction, extent, and repeals) ordered to stand part of the Bill.

    Motion made, and Question, "That the Chairman do report Progress, and ask leave to sit again," put, and agreed to.—[ Captain Margesson.]

    Committee report Progress; to sit again upon Thursday.

    Chubch Of England Assembly (Powers) Act, 1919

    Resolved,

    "That, in accordance with the Church of England Assembly (Powers) Act, 1919, this House do direct that the Clerical Disabilities Act, 1870 (Amendment) Measure, 1934, be presented to His Majesty for Royal Assent."—[Mr. Denman.]

    The remaining Orders were read, and postponed.

    It being after Half-past Eleven of the Clock upon Tuesday evening, Mr. DEPUTY-SPEAKER adjourned the House, without Question put, pursuant to the Standing Order.

    Adjourned at Twenty - two-Minutes after Twelve o'Clock.