I beg to move, "That the Bill be now read the Third time."

In what may be a brief, but I hope not irrelevant, compass, I rise to move the Third Heading of the Finance Bill. This is the first Measure of its kind for many years past to bring general and widespread relief. Its purpose is, of course, to raise the revenue necessary for carrying out the scheme outlined in the Budget statement. It is part of that scheme that a body of over 2,000,000 unemployed persons should have at their disposal, from 1st July next, well nigh £200,000 a week more to spend in the shops, to create a demand for goods and to help to stimulate still more that industrial activity which, it is emphasised from the benches opposite, must proceed from an enhanced purchasing power. Also, from 1st July next and thenceforward there will be given to a million of those who draw emoluments from the State another £100,000 a week, additional to what they at present receive. The outlay of this money will doubtless have a similar effect. Those who gain this advantage will not fail to realise that they owe it to a restoration of the public credit, just as the contributions which they were called upon to bear in 1931 were the inevitable outcome of an unbalanced Budget. Approximately, 3,500,000 Income Tax payers will retain in the course of twelve months £24,000,000 which they previously gave to the tax gatherer, and each one of them will save 2s. in every pound on the bill which otherwise he would have had to pay.

Such then, in broad outline, is the scheme. Alternative suggestions have been made for the distribution of the surplus, but the Government has felt compelled to resist them. It was not out of any disregard for their merits, but because they did not comply with the principle which my right hon. Friend the Chancellor of the Exchequer, laid down, namely, that those people had the first claim upon any available assets who had come to the aid of the country in 1931. In the course of these discussions hon. Members opposite have sought to lead us away from realities into those broad fields of generalisation in which they love to roam. Should more money be spent upon public works? What are the respective merits of direct and indirect taxation? Who are the spenders and who are the savers in the community? Such speculations are always interesting; but to-day we have to take a decision upon the simple issue of this Bill, and I do not hesitate to commend it to the House as a justification of those sacrifices which were made in 1931 and as a vindication of the financial policy which has made possible a partial restitution.

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

I am sure all Members of the House will be in entire accord to-day when I offer to the Chancellor of the Exchequer, and especially to the Financial Secretary, thanks for the way in which they have helped us in our discussions of this Bill. I would add a further observation to the Financial Secretary. He has undertaken an unusual share of the Budget discussions this year, and he has always done it with considerable advantage to the whole House. I gathered from his speech that he knows the weakness of the Budget, for he tried to anticipate what he thought would be the legitimate line of criticism which we may offer to the Bill, and I am very much obliged to him for having pointed officially, on behalf of the Government, to the demerit of the Bill. The consideration of the financial proposals for the year have occupied our attention intermittently for something like two months and, of course, everyone will agree that every detail of the Finance Bill has by now been closely examined, has emerged from our discussions entirely unchanged as far as the main proposals are concerned, and consequently it is not necessary for me to add that our criticism of it in its final shape remains unabated and our attitude towards it unchanged.

When the Chancellor of the Exchequer made his Budget statement on 17th April he was received with resounding cheers by his supporters. Indeed, for a time he seemed to wear a halo, but by now the halo has tended to disappear somewhat, and, judging from the state of the Government benches and, indeed, the state of the benches in all parts of the House this morning, the enthusiasm for the Budget seems to have evaporated. The right hon. Gentleman told us that he was able to rejoice in a surplus on last year's operations, I need not remind him, as other people across the Atlantic have reminded him by now, that a considerable portion of that surplus, indeed all of it, would have disappeared had our debts been paid.

That is assuming that no debts to us had been paid.

No. I am speaking now of the American Note. I do not intend in any way to embarrass the right hon. Gentleman by discussing the American Note. That Note has brought us up against certain realities in relation to the burden of our debts, and I repeat what I have said on previous occasions, that both our external and internal debt, in relation to this Bill, is such that we cannot possibly allow it to remain without making some definite and formidable attack upon it in the immediate future. Hon. Members will forgive me if I quote one passage which not only sets out the position in relation to external debt but can equally be applied to internal debt. I quote from page 4 of Command Paper 4609, an address to the American Government on behalf of our Government in which they state:

"In respect of war advances totalling 4,277 million dollars, payments totalling 2,025 million dollars have been made up to date by His Majesty's Government to the United States Government. Yet despite these payments the nominal amount of the debt still outstanding as at 15th June, 1934, amounts to 4,713,785,000 dollars."

That is up against the 4,277 million dollars, the figure which I previously cited. The same condition of affairs attaches to our total dead weight debt. The Financial Secretary corrected me during the discussion on the Budget Resolutions when I ventured the opinion that our dead-weight debt was £150,000,000 more this year than last year. He told me that it was not £150,000,000, but £175,000,000 more. That only shows how formidable is the prob- lem with which we are confronted. Beyond saying that, I do not wish to speak upon that matter, but we are involved in this discussion by reason of the fact that we are spending a substantial amount, I think about 6s. 8d. out of every pound of taxation that is gathered in this country, in respect of the interest and management of the National Debt. If in addition to that expenditure we estimate another 3s. 4d. in the pound spent upon armaments and preparing for possible future wars, we see that if additional heavy commitments are undertaken in respect of further armament expenditure, they will produce an outlook which is dark indeed, not only for ourselves but for our children.

I wish to say a few words in regard to two aspects of the Finance Bill: first, as regards the burdens which it imposes, and, secondly, as regards the reliefs which it grants. Perhaps I may be allowed before I pass to the discussion of those matters to say that we on this side of the House, while we make no complaint about it, wish to point out that we were unfortunately unable to raise a matter which we wanted very much to raise. That is the question of the effect of the co-operative tax imposed last year. Unfortunately, we have not been able to discover what the effect of the legislation of last year in that respect has been in the course of the subsequent 12 months. I had hoped that we should have been able to learn what the effect had been, but we have been deprived of the opportunity and I can only express my regret at the fact.

What is the meaning which the hon. Gentleman attaches to the word "effect" in this connection? Does he desire to know whether the tax produced the amount which was anticipated? If so, may I tell him at once that it produced a little more.

I made the simple statement of fact that we should like an opportunity of discussing it. That is all that I implied by my observations. The Financial Secretary rightly anticipated that we should once again enter our emphatic protest against the increasing change in the relationship between direct and indirect taxation which is indicated in this year's Finance Bill. Indeed, it is characteristic of the Government's financial legislation that the burden of taxation has been steadily shifting on to the shoulders of those who are least able to bear it. We must emphasise this point. It is not an accidental result. It is the result of deliberate, cool calculation on the part of the Government. The Prime Minister, speaking at Kilmarnock, made it abundantly clear what was at the back of the Government's mind. He said:

"In the national interest and in the interest of every consumer it is wise to release economic forces"—

What the right hon. Gentleman meant by that I do not know—

"that will scientifically and gently"—

especially, gently—

"push up the level of prices."

Since then, we have had a plethora of boards of various sorts springing up as plentifully as asparagus in May. The producers have been studied, but the consumers have been very largely ignored. Since the consumers in the main constitute the poor classes of the country they have had to pay the price for that gentle scientific push referred to by the Prime Minister. I do not stop to discuss that matter further. I wish to be as brief as possible on this occasion but I beg of the Chancellor of the Exchequer to understand that the brevity of our comments on the Finance Bill on this occasion is no indication of the strength of our resentment against it. I turn to the discussion of the reliefs which are granted by this Bill. The Financial Secretary I think in pleasant anticipation of resounding cheers which did not come—made the claim that the financial abatements allowed this year were based upon the principle that just as there was equality of sacrifice in 1931 so there was equality of restoration in this Bill. I do not accept the ground of that argument. I do not agree that there was equality of sacrifice in 1931, and I certainly deny that this Bill indicates equality in restoration.

Let me take first the restoration of the salary cuts. Half the cuts are to be restored as from 1st July this year. That is to say, those who will benefit from that restoration will already have lost by the end of this month when the restoration begins, one quarter of the year. In other words they will have made an extra three months' contribution in respect of the cuts which were imposed 2½ years ago. I suggest that that is inequitable, and I would beg of the Chancellor of the Exchequer to keep this in mind. These people, it is true, as from July will get one half of the cut in their salaries restored but they were equally involved in whatever burden was imposed through the added Income Tax of 1931. Therefore, to be fair to all, they should have been dealt with as Income Tax payers like everybody else, and their salary cuts should have been restored, because that is their own private remuneration, and was in addition to what was commonly imposed upon all other subjects. The right hon. Gentleman said the other day that the direct taxpayers began their contributions earlier in 1931 than some of these other people. I do not deny that. It is equally true that, just as the direct taxpayers made their contribution earlier in 1931, those civil servants to whom I am now referring, who came within the ambit of Income Tax impositions, also made their contributions as early as that in 1931. Therefore, they are exactly in the same boat, so to speak, as the rest of the taxpayers in that respect.

If I might speak of one particular section of these people only—not because their case is worse or more meritorious than that of anybody else, but because I happen to know it better—in the case of the teachers, they actually made a voluntary contribution in 1923 of 5 per cent. in respect of the then national crisis, a contribution which has never been restored to them. Therefore, I suggest that the claim of the Financial Secretary that there has been equality of restoration is not, so far as those people are concerned, justified by the facts. In respect of direct taxation, we adhere to every argument we have advanced from the beginning of these discussions this year. We take the view that if the Chancellor of the Exchequer decided that he could afford to give £20,250,000 in restoration of taxation to direct taxpayers, it would have been more equitable if that restoration had gone, first of all, through the medium of restored allowances, rather than by a grant to the direct taxpayers as a whole.

I can see the difference between us. The Chancellor of the Exchequer had to decide which was the best, from the public point of view, and is a difference of principle that we regard as rather important. As I understand it, the Government's case was that in acting as they have done they would thereby be enabling a larger number of people to put back into the reserves of industry the amount of money which they were saved by the restoration of taxation. I quite see that argument, though I cannot concede that it is as meritorious as the supporters of the Government seem to think. May I, in support of my contention, quote a passage or two from this month's "Lloyds Bank Monthly Review?" It is an unsigned article, on page 259, and, therefore, I cannot tell who the author is. But it is apposite to my argument. In the first passage he gives the two grounds that justify, as he thinks, the move which the Government have made in respect of direct taxation, and then he puts the other side, and I will take that second part of the argument for the sake of brevity. He says:

"Without being dogmatic, all available evidence suggests that there exists now an ample accumulation of savings for which the owners would only be too glad to find secure and profitable employment. There is also evidence that, so far from there being a need for additional machinery, there is much serviceable machinery standing idle. That is why the first factor, namely, the demand for the products of industry, predominates in importance."

Then he proceeds, after a sentence or two, as follows:

"Now the demand for consumers' goods ultimately depends upon the volume of general purchasing power, that is, on the size of real incomes measured in commodities and not in money. Here, too, unlike the position that arose concerning the supply of capital, it is the smaller incomes and not the larger incomes which are most important, for the recipients of the smaller incomes are in the vast majority. Any action which adds to the more numerous small incomes is the action best calculated to increase the demand for consumers' goods and, as we have already seen, for capital goods as well."

There, put very succinctly, in words I could not possibly manage myself, is the argument, as we see it, in favour of the method of restoring allowances as distinct from a general restoration for all taxpayers. The Financial Secretary to the Treasury used some time ago in this House a very remarkable argument in support of the Government's position. He was replying, if I remember rightly, to my hon. Friend the Member for East Fulham (Mr. Wilmot) and he made this statement:

"The standard rate of Income Tax is 4s. 6d. in the £, but a married man with three children enjoying an income of less than £400 a year, is exempt from taxation, or virtually exempt. He pays nothing either before this Bill or after this Bill, and if he has an income of £400 he pays an effective rate of tax not of 4s. 6d. in the £, but of 2½d. in the £."—[OFFICIAL REPORT, 16th May, 1934; col. 1903, Vol. 289.]

I do not question the truth of that statement, but if the hon. Gentleman is going to base himself on what is the effective rate of tax in this country, may I remind him that if he will look at the last issue of the Statistical Abstract, table 123, page 175, he will find the following fact, that when the nominal rate of Income Tax in the £ was 5s., the effective rate was not 5s., but 24·19d., so that if we are to have the effective rate applied to those whom my hon. Friend cites, we must apply it all round, and it is as fair for me to cite as it was for the hon. Gentleman.

I turn from that to the last of the reliefs of which the hon. Gentleman spoke so enthusiastically this morning. The right hon. Gentleman the Chancellor of the Exchequer was rather severe with us some time ago because, apparently, we had not expressed our adulation of the effort he had made in respect of the unemployed cuts. We were chided in this House, and we were even chided over the wireless by the right hon. Gentleman the Secretary of State for the Dominions, for not having cheered the right hon. Gentleman's announcement. We have been told that we use this unemployment question for party purposes. Why was this talk on the wireless couched in such terms? Not for party purposes at all, of course. The right hon. Gentleman had no intention of making out that the Labour party were unwilling to have a restoration of unemployment cuts—far from it—but merely to tell the country something by way of a pleasant gossip, no doubt. What, in point of fact, has happened in this matter? I invite the Chancellor of the Exchequer to deny the truth of my argument. There are, of course, the people to whom we restored something like £4,000,000, the unemployed people on statutory benefit. Not one extra penny of that money comes from the right hon. Gentleman's own funds; not one penny falls upon his Budget this year.

There is a body of people, namely, the other body of unemployed, in receipt of transitional payments, and in respect of them the Chancellor of the Exchequer does find £3,600,000, but, after all, he can afford to be generous to that degree, for, if the answer given by the Minister of Labour still applies and the Government are still paying, shall we say, £21,000,000 less through the means test to the unemployed than they would be called upon to pay if the basis were the same as that prevailing when the Labour Government were in office, if they did, therefore, deprive the unemployed of £21,000,000 in that way, they can easily afford to be generous by giving back £3,600,000. If the hon. Gentleman wants to test it, I will make him an offer to give him £3 12s. any time he likes and as often as he likes to give me £21 in return.

That is exactly what the Chancellor of the Exchequer has done. When this announcement was made we were given to understand—and this is why the right hon. Gentleman's friend cheered—that all the unemployed were to have their cuts restored, but within two days we got the truth. As a matter of fact, not one unemployed man is bound automatically to get it. It all depends on the initiative and sympathy of the public assistance committees. If they determine, in applying the means test, that they are not warranted in giving a man anything extra, he will not get it. There is no guarantee that this money will go to the unemployed. I hope that the followers of the Government will cheer that fact as well. There is another fact which we must note. The unemployed have been called upon to make a further contribution in respect of the restoration; they have been called upon to make another three months' extra contribution as compared with the direct taxpayer. The taxpayer gets his cut restored from the 1st April, but the unemployed man is to go on contributing for another three months. How does the Government square that fact with the sentiment expressed in the White Paper from which I have already quoted, addressed to the United States Government, when they speak of the continuance of the unemployment benefit cuts as "imposing a severe strain on the national conscience." It did not strain the Chancellor of the Exchequer's conscience; he did not hesitate at all in making the unemployed give another three months' contribution beyond the time when the direct taxpayer gets his cut restored.

Finally, we take strong exception to the new feature which has appeared in this finance Bill after the Chancellor had delivered his Budget statement in April. I refer to the Clause dealing with land valuation. I know that the Chancellor has argued that these Clauses are largely useless and that nobody could make very much use of them. The Financial Secretary has said they would not be effective in this Parliament because we could get nothing out of them for another two or three years, and so on. What has justified this change? For, after all, we have had pledges of a rather striking kind from leaders of the Government. The Lord President of the Council repelled an attempt during the War to repeal the land valuation taxation of the right hon. Member for Carnarvon Boroughs (Mr. Lloyd George). He spoke in these terms when the then Sir Frederick Banbury moved his amendment to abolish them:

"If we began to discuss a matter of this kind during the War everything which was not only moribund but dormant in our party spirit would spring once more into life and take possession of us like seven devils."—[OFFICIAL REPORT, 5th July, 1917; col. 1384, Vol. 95.]

I have not reckoned the number of Conservative Cabinet Ministers in the Government, but I imagine there must be round about seven. If it were devilry to act in that way during the War, what is it now when we have a Government which has undertaken to forget all party allegiances and to act strictly in terms of the good of the nation. May I add another quotation from the Lord President of the Council during the lifetime of this Government in relation to this tax:

"Had this been a Tory Government"—

which, of course, it is not—

"we should have repealed the Statute. …In the National Government there are five members who were members of the Labour Cabinet when this Act became law. …Would any one of you who had been a member of a National Government, who had gone through the fight we went through last autumn, who had taken part in the discussions on finance on the first construction of the National Government with men who fought during that Election like Lord Snow-den, when you had been met, by those who had been opposed to you, by their consenting to eviscerate this Act, and when they expressed to you their reluctance to see the Act finally taken off the Statute Book, do you think that I, going about the country as I did and knowing the force of Lord Snowden's speeches and broadcasts in helping to win seats which we should never have won, was going to say to them, 'Oh, no, now we have got a big Tory majority, much bigger than I expected, out you go.' Not much. That is why we stand for the Clause as it is in the Bill. We can accept neither a repeal of the Act nor the insertion of the Amendments."—[OFFICIAL REPORT, 26th May, 1923; col. 583, Vol. 266.]

How does a thing that seemed impossible and disgraceful in 1932 become possible in April, May or June, 1934? The Financial Secretary told us the reason. He told us that in the generosity of his heart he wants the next Labour Government to have a clean slate; he did not wish to embarrass the next Government. Really the hon. Gentleman must not expect me to be grateful for nothing, for neither he nor any member of the Government can commit any succeeding Government. When, therefore, he and the Chancellor of the Exchequer said they were thinking of the freedom of the next Parliament, I can assure him that the next Parliament, if we have something to do with its control, will act without any kindness of this sort, from them. As to the real reason, it is easily found. The Lord President of the Council made it quite clear in June at the time when, we suppose, the Government were coming to a great financial crisis, when he said:

"I may say one thing about it that, if we get back to power, that tax will never see daylight."

To-day we are taking leave of these Clauses which enable us to take a valuation of land. As to the Prime Minister and his share in this matter, we must speak quite frankly. I regret his absence, and if it be due to ill-health, I, like every one else, readily express regret and sympathy, but we have striven to secure the attendance of the Prime Minister on previous occasions because he has a personal share in this matter, and a personal responsibility. This is what he said:

"If there is to be partisan manoeuvring, I am not their man."

The right hon. Gentleman was right. He is not their man. He is their slave. He is no longer master of his fate, or captain of his soul. He is just harnessed to the victorious chariot of the Tory party. We are entitled to say that this seems to be the last act of penance which the Prime Minister has been called upon to make in the last 2½ years to the Tory party for having had the audacity to help with others to build up a Labour movement in this country. Let us be perfectly clear about this matter. After these Clauses are passed the valuation of land may no longer be possible, but as sure as night follows morning the time will come when the landlords of this country will be called upon to bear their proper share of taxation as landlords. I have ventured to advance a few arguments, not, I admit, very new ones, because there is very little that is fresh to be said in regard to this Bill, but I have ventured to advance what I conceive to be the implication of the charge we make against this Bill. If I may summarise it in familiar words I would say "The right hon. Gentleman has left undone things which he ought to have done, and he has done things which he ought not to have done, and there is clearly no health in him."

My hon. Friend, in the opening sentences of his speech, described to the House the attitude of himself and his friends towards this Finance Bill, and said that he was proposing to deliver a formidable attack on the Budget. I am afraid that my attack will not be so formidable, because I am conscious that I am not the formidable person that my hon. Friend is. This Bill, like any Finance Bill, gives us some indication, at any rate, of the general financial and industrial policy of the Government. In the past Governments have been charged from time to time with making their financial proposals the instruments of a particular policy, and even within my recollection, although I was not then a Member of this House, the particular sin which was alleged against a Liberal Government before the War was that they put through proposals, cloaked as financial proposals, which were really intended to be the instrument of the particular policy in which they believed. The House will recollect the great controversy which arose over the land taxes in those days. As a consequence of that this House has laid upon you, Mr. Speaker, the duty of defining what is and what is not a Money Bill.

I submit to the House that during the progress of this Bill, and especially during this last stage, we cannot omit from our discussions the implications and consequences involved in these proposals. It is our duty to try to judge whether the methods which have been adopted by the Government for raising the money to carry on the business of government accord with what we regard as the correct canons of taxation, and whether it is distributed justly and equitably as between various classes of the community. We know that the money is needed, but we must also judge not only how the money is raised but how it is being spent. Even though the taxation may be levied in an equitable and a just way, there is still the question of whether the money is being spent needlessly, recklessly and without regard to the claims of the various national services. Further, I submit that it is incumbent upon us in this Debate to consider the proposals not only in the light of what they contain but what they omit. I want particularly to consider how the proposals of the Government affect the fortunes of industry and of trade. I do not hesitate to say that they are not very striking proposals, they can even be said to be humdrum, and possibly, according to the critics of the Government, they are unimaginative and lacking in enterprise. In some respects they are, indeed, harmful to trade and industry.

The land taxes have been referred to and we have heard distant echoes of past controversies. While I am as strong a supporter of land taxation in some form as is my hon. Friend the Member for Caerphilly (Mr. M. Jones) I confess that I am not going to lose tears over the dropping of this particular Section. That is not because I have ceased to believe that land, and particularly its increased site value, which is solely attributable to communal activities, is a proper subject for taxation; indeed, in my judgment, and in the judgment of a great many people of this country, it should be one of the first to be picked out. Anyone who goes along one of our main arterial roads must be struck by the immense aggregation of wealth to individuals who have done nothing to create it in most cases, and one is surprised that that sight has not before now caught the glad eye of the Chancellor of the Exchequer. I should think that the fact that this obvious source of taxation has escaped notice shows the strength of the vested interests in this particular form of property. But, on the whole, I do not moan or mourn for the disappearance of this particular skeleton, because, as my hon. Friend has reminded us, the Chancellor of the Exchequer's remarks give one hope for a glorious resurrection some day. He said, if I may quote his words:

"It leaves the situation open to any future Government to bring in any form of land taxation that they may think proper together with an appropriate system of land valuation."—[OFFICIAL REPORT, 18th June, 1934; col. 160, Vol. 291.]

Although my hon. Friend does not thank the Chancellor for that, the House should be glad that the present Chancellor of the Exchequer has now virtually admitted that the question of land taxation is not dead. After the patchwork which was produced by the late Government another Government had better start afresh on the question of land taxes. In the Book of Books it is said that no man seweth a piece of new cloth on to an old garment lest the new show up the old. I confess that in this matter of land taxes I would, on the whole, prefer a Government which was starting afresh. I want, not a coat of many colours, but a coat of one colour, and that a new coat.

In regard to industry, it is well known that the Government claim that their protective policy has stimulated home industry to produce for the home market. Whatever opinons may be held about that, the House is aware of one great danger of any protective policy, which is that it may be an artificial stimulus to an inefficient industry behind a high tariff wall. I ask myself whether the Government's policy as disclosed in this Budget is an encouragement to reorganisation, and whether it tends to improve industry and make it more efficient. I hope the House will permit me to select one illustration. I refer to a claim which has been made year by year. Industry has been knocking at the door of the Treasury for years for better treatment in regard to allowances for depreciation and obsolescence. Last year, the Chancellor resolutely refused to give effective consideration to, or to grant, an appeal which has been made to him from time to time from all quarters, in respect of the claim for depreciation. Surely the Chancellor of the Exchequer realises the disadvantages under which industry labours. If he has studied the allowances for depreciation and obsolescence in other countries, he must know that it is very difficult for industry to compete in foreign markets.

Reference has been made to Income Tax abatements and allowances. I am inclined to agree that those allowances should be restored first to the smaller Income Tax payers. On the other hand, I approve of the reduction in the standard rate, for the reason that those who are in control of the smaller industries have suffered most by the high rate of taxation. Small though those industries may be, most of their proprietors have not gone into big groups or been rationalised; they are still trying to keep on a successful business. They have been used to a certain standard of living for many years, but they have now come up against great difficulties because of the Income Tax. The difficulty of finding new capital is a serious deterrent to them in the improvement of their machinery and the expansion of their industry. One result of high taxation has been that some of those people have unwillingly gone into those huge accretions of industry which have taken place in the last few years and which, in many instances, are highly undesirable. The Government's policy in that respect, in so far as it has gone, has the approval of those who know the circumstances, but the Government have done nothing to facilitate the free flow of available capital into those smaller industries.

I did not take any part in the discussion when the fuel oil duty was debated this year. Last year I spoke once or twice, but, as the Chancellor was adamant, and as I found him unresponsive to invitations given again this year, I came to the conclusion that he was as stubborn as ever. This is a new form of taxation, and it singles out one form of fuel. It is useless for the Chancellor of the Exchequer to deny that this is a real tax upon productive industry. I am not going into any details about it now, but I can tell the Chancellor that the metallurgical industry in his own city is suffering because of this tax. The only alternative fuel to take the place of oil is electricity, or, it may be, some form of gas, but we know that electricity, compared with oil, costs about three times as much. We are told that we shall get oil from coal. The technique which is learned in the operation of oil-fuel furnaces will be valuable when that time comes, as we hope it will.

The proposals of the Government are bound up with such agreements as the Ottawa Agreements. Even in the Bill there are provisions which are related to the agreements which were made at Ottawa. I invite the Government to pay attention to the criticisms that have begun, on those Agreements and their result upon British industry. Let the Government take notice, for example, of the memorandum recently issued by the Federation of British Industries, who have studied the results of the Agreements. In the memorandum, they say that the Ottawa Agreements have proved more beneficial to the Dominions overseas than to Great Britain. I am afraid that when those Agreements come up for review the Government must keep their eye upon the necessity of reviewing them, not particularly in the interests of the Empire as a whole, but in the interest of this country. The doubt expressed by the Federation of British Industries as to how far the improvement in British exports may be attributed to the Agreements and how much to other factors such as currency and the linking of Dominions currency with sterling, is of great interest. I have expressed my views on this Bill, and I not only invite the Government, now that they have successfully established in this country a protective duty, to reconsider the cruder forms of their financial policy, and to turn their attention from now onwards to a wider conception of monetary policy, which is all important.

Despite the adverse observations of the hon. Member for Caerphilly (Mr. Morgan Jones), I think that the House as a whole is prepared to admit that the Budget itself is a remarkable achievement, and still more that it represents a remarkable achievement, which I venture to say is the admiration of every other country in the world to-day, and for which the Chancellor of the Exchequer himself is entitled to a great deal of credit which he has not always been very anxious to claim. There are, I think, one or two blemishes in the Finance Bill; I have never known a Finance Bill that was entirely free from blemishes. The only serious one, to my mind—I have never been able to change my view as to this, and I am rather surprised that the hon. Gentleman who led for the Opposition did not mention it—is the treatment of the debt on the Unemployment Insurance Fund.

Many of us have felt all through, and I still feel very strongly, that the least my right hon. Friend could have done would have been to apply the surplus to repayment of the debt which is imposed by this Bill on the new Unemployment Insurance Fund. For my part, I still think that he ought to have taken over the debt altogether, because I do not feel that it is fair to impose upon industry, and upon the workers of industry, the burden of paying for the mistakes of successive Governments in the past in handling this unemployment problem. It is not the fault of industry, and is still less the fault of the unemployed, that this enormous debt was incurred; it is the fault of all the Governments in this country since 1922, each one of which made a frightful mess of the problem, and allowed this debt steadily to accumulate. It seems to me that the taxpayers as a whole ought to take responsibility for the debt, and that it should not now be imposed upon industry—for it is a charge on industry. Supposing that my right hon. Friend had found himself able to take over that debt, or even a portion of it, the contributions of both employers and employed could have been reduced far sooner than they now will be, and I can imagine no more direct stimulus to industry in this country than that would afford. I would beg my right hon. Friend most sincerely to reconsider this question with a view to dealing with it in next year's Budget; I recognise that he cannot deal with it now.

The minor blemishes which I see in the Bill concern whisky and oil. My right hon. Friend was obviously sympathetic when some of my friends raised in Committee the question of the tax on whisky. I think it can be safely said that it is the only really savage tax on the Statute Book at the present moment. It is a penal tax, out of all proportion and out of all relation to any other tax; and, if a tax is obviously unfair, as some of us feel that the tax on whisky is, it ought to be removed as soon as possible. I wish my right hon. Friend had been able to see his way to increase the tax on wines coming from abroad, and to make a proportionate reduction in the duty on whisky, so that he should not lose any revenue.

With regard to the question of heavy hydrocarbon oils, which ha" been raised by the hon. Member for Cardigan (Mr. D. Evans), the Chancellor of the Exchequer gave during the Committee stage some figures which greatly puzzled me. He claimed that, under the tax on these oils, 378,000 tons of coal had been regained from oil; that another 95,000 tons had been saved which would have been lost had not the tax been imposed; and that in addition about 100,000 tons of coal had been sold in the place of oil. If this be so, it is obvious that oil must have lost about 350,000 tons of trade during the past year, or about a third of the total inland trade in oil. But this is not the Case. And I cannot help feeling that these figures, supplied by the Coal Utilisation Council, are not in every respect accurate. The consumption of fuel oil in this country was higher in 1933 than in 1932, and, according to my information, it is likely to be still higher in 1934. I do not think the Chancellor can have it both ways; he cannot say that he is getting a great deal of revenue and at the same time say that he is saving the coal trade from the incursions of the oil trade by reducing the amount of oil consumed in this country by this very large amount, when the facts appear to show the contrary. Certainly a great deal of revenue has been received from oil, but where is the Chancellor getting his revenue from? We have to import 450,000 tons of oil purely for lubricating purposes—oil which nothing can replace; and another 240,000 tons of gas oil for use by gas companies, which the coal industry could not supply. The remaining 1,000,000 tons imported is used by industries which admittedly might use coal or coal products, but which, as has been said by the hon. Member for Cardigan, find it more economical and efficient not to do so; they use oil because it is more economical and efficient.

I rather share the hon. Member's apprehensions about the duty. I do not think it is a good thing at any time, if it can be avoided, to tax efficiency and economy. There are many industries in this country which must use heavy hydrocarbon oil. I am informed by people who know a good deal about the industry that, if the tax were removed altogether, the maximum number of miners that would be affected would be 2,000 at the outside. There is, as my right hon. Friend will admit, a sharp discrepancy—perhaps it is inevitable—between the figures supplied by people interested in coal and the figures supplied by people interested in oil. There is too wide a discrepancy, and I am inclined to think that my right hon. Friend has been a little disposed to accept the figures supplied by the coal people as against those supplied by the oil people. At any rate, I hope that between now and next year he will endeavour to give the House some accurate figures compiled by one of his own Departments, and not leave us to rely purely upon figures supplied by the Coal Utilisation Council, which are open, on the face of it, to considerable suspicion.

Apart from these criticisms, the Budget and the underlying economic position in this country which it reveals is, as I have said, rightly an object of admiration in this country and throughout the world. That is due, I think, largely to the confidence and stability which have undoubtedly and unquestionably been introduced as a result of the very existence of the present Government; and, secondly, it is due to the policy of Protection which has been put into operation, and which, whatever any hon. Members opposite may say, has fully justified everything that those of us who have been fighting for it for years past have ever said of it.

How does it affect herrings?

Unfortunately, it would be out of Order now to discuss the subject of herring; otherwise, I can assure my hon. Friend that I would have introduced the topic. The good result has been due also to the brilliantly successful conversion operation which my right hon. Friend carried through, and for which I think he has never either claimed or received sufficient credit. Our monetary policy since that time has been carried out with extraordinary skill. Some of us have been a little apprehensive lately about the fall in the deposits of the joint stock banks. They have gone down by about £120,000,000 since 1933, and this must have, and I think has had, a slightly deflationary effect. I believe it is due to the recent policy of the Treasury in reducing the Floating Debt to too great an extent. Anyway, I would ask my right hon. Friend, if he cannot make a statement on the subject now, to look into this policy from that point of view, and see whether in fact it has not been carried a little too far, whether the effect has not been on the whole deflationary, and whether it would not be advisable to have a somewhat larger amount of Treasury bills in circulation than there has been of late.

The reduction in the standard rate of Income Tax and the protective duties imposed by this Bill have certainly stimulated industrial activity; and I would say to hon. Members of the Liberal party that, if you have £20,000,000 or so to dispose of, there is no way in which you can dispose of it with a better psychological effect than by making a reduction in the standard rate of Income Tax. In my opinion, alterations in the allowances would not have had anything like the same stimulating psychological effect on industry generally throughout the country as the reduction in the standard rate, although I quite agree that, on purely social grounds, there is perhaps a stronger case to be made out for an alteration in the allowances. This, however, is one of those cases where you have to strike a balance between conflicting interests, and I think my right hon. Friend was quite right in making a reduction in the standard rate this year, and deferring any alteration in allowances to a later stage; for it is obvious that the Chancellor is anticipating a continuance of industrial revival in this country. Is he justified? Well, I think he is justified within limits, but not necessarily for an indefinite period.

As this Finance Bill is based very largely upon a continuance of the industrial revival, I would like briefly to examine the economic position at the moment in this country, because I have recently had an opportunity of going through a number of vital facts and figures compiled by one or two statisticians without any political bias. They reveal a very interesting underlying economic situation. The index of ordinary shares—a good rough test in this country—rose from a low point of 51·3 in May 1932 to 90·2 in May this year—a rise of about 76 per cent. That shows what can happen between a Labour Government and a National Government being in office. The quantity of industrial production all over this country is now up to the average of the three pre-slump years. That is a claim which can be made by no other country in the world except Japan and Sweden. There is no doubt that this industrial revival has been founded, first of all, upon a revival of home trade as against foreign trade; and, secondly, upon the increased activity in the "capital" or "investment" industries, as against an increase in the sale of consumption goods.

This brings me to the point raised by the hon. Member for East Fulham (Mr. Wilmot), and the whole question of direct or indirect taxation. Is your industrial revival going to be based on an increase in consumption goods, or upon an increase in capital or investment industries? The whole movement in America has been based upon consumption and, I think, that is one of the reasons why it is breaking down, because I do not think that an industrial revival based purely upon consumption is sound. Every test goes to prove that solid recovery has been based hitherto upon an increase in capital or investment industries, and that is why we have more reason to be satisfied at the present time than any other country, because it has also been proved that the expansion of activity in capital-producing industries creates at the same time a net increase in the puchasing power for all other goods. In 1931 a statistician, a friend of mine, made a very elaborate calculation. Roughly, it was that an increase of £ X in the aggregate output of investment trades should lead to an increase of £2.5 X in the value of general output all over the country, which would take place almost simultaneously. This calculation has been fulfilled in the case of our industrial revival in a very remarkable manner. The figures for the first quarter of 1934 show that the whole value of home-produced output has risen from the low point of 1932 by £75,000,000 a quarter, or £300,000,000 a year, as compared with a rise of £125,000,000 in the investment trades. That works out almost exactly in the proportions the statistician made in his calculation for 1931.

Will the hon. Gentleman give briefly the figure in volume of goods, independent of money terms?

I have not got it worked out here.

It is an easy proposition.

As a matter of fact, it is worked out in volume as well, because the values have been worked out in corresponding figures, so that it is easy to work it out in amount.

This is a very important point. There is a change of prices in the classes of goods.

I would dissent from that opinion; but, of course, it is a technical argument, and the hon. Member cannot expect me to argue these technical matters across the Floor of the House. Broadly speaking, I believe that my statements are true, and that the prices I have given correspond. Of this increase of £125,000,000, which is not in dispute, about 50 per cent. is accounted for by increased demand for fixed capital goods, particularly building. About 33⅓ per cent. represents re-stocking, and 16·2/3rds per cent. improvement in the balance of trade, due, obviously, to the protective measures which we are taking in this Finance Bill. Of the 50 per cent., building is the backbone; and it becomes clearer and clearer, the more you investigate the causes of this industrial revival, that it has been building activity which has been at the bottom of it, just as it was at the bottom of our recovery from the depression of the 'nineties and has been the basis of practically every sharp industrial revival. Our present industrial recovery is founded on building activity based on low interest rates. Of course, the Chancellor can claim a direct share in that, because no man has done more to reduce interest rates than he.

The building and contracting industry in this country is the largest. The annual output is £300,000,000, and we are now erecting dwelling houses at the rate of £100,000,000 per annum. It is enormous, but it cannot be expected to go on, and my right hon. Friend ought to give the closest consideration to the whole question of building activity, because while I admit that these figures are satisfactory and even spectacular, I do not think that the housing proposition is fundamentally sound, and I am sure it is in many respects unsatisfactory. I have never thought that speculative builders should be allowed a free hand to erect these monstrously ugly little houses which today disfigure the whole countryside. For the most part, the houses being built at the present moment are being built for a limited class, the lower and middle class, and saturation point is bound to be reached before long. Fortunately, from an aesthetic point of view a large number of these houses will fall down, and no one will regret that except the unfortunate people who have to go on paying instalments on them.

Potentially the situation is alarming, because if we are to continue this industrial revival, the present housing activity will have to be supplemented by some other kind of constructive activity, and I hope that my right hon. Friend will see to it that the next housing phrase—and no one knows more about the problem than he does—will be properly faced, and that better houses will be built for people who need them more. When it comes to restocking, there are indications at the moment that this is already on the wane. As for the balance of trade, the economic war all over the world is being intensified at the present time, and we cannot possibly look for any substantial revival in our export trade over the next few years; at least we should be very ill-advised to base any great hopes upon it. Therefore, when this immediate housing demand has been satisfied, our position may not be so good, unless the right hon. Gentleman takes definite and immediate steps to deal with it.

I would beg my right hon. Friend to consider whether it would not be possible between now and the next Budget, in order to ensure the continuance of industrial activity, to bring forward a really comprehensive scheme of slum clearance and the erection of workers' flats all over the country. I do not believe it can be done piece-meal. I do not believe it can be done by local authorities alone. I believe the Government must themselves take a hand, and that involves the establishment of a national housing corporation. Something has to be done to take the place of the present rather unhealthy, sporadic housing development. It is one of the most vital problems that confront the Government.

There is also the general question of national development. No one wants to see public works entered into recklessly, but I think we are still very behindhand in national development, and it is exasperating, when you think of the amount of British money that has gone into European countries in the last ten years, to rehouse them, re-road them, and develop them in every way, to have the sort of thing we had the other day when the Under-Secretary of State for Scotland refused even to consider financial assistance for putting up a road bridge across one of our main routes of communication. The London and North Eastern Railway has made the passage over the Forth in anything but a railway train impracticable. They cannot be blamed for it. They naturally want to get people into trains as much as possible. But the public are entitled to be considered, and for 20 years this question of a road bridge across the main East coast route between the North and the South of Scotland has been talked about and nothing has been done. I merely put this forward as an example in a plea for a more expansive policy as far as national development is concerned.

Similarly, there are no proposals in this Bill for giving any stimulus of a practical character to two industries at any rate, which are vitally affected by the present slump. The right hon. Gentleman has not taken any steps, and there is no indication that he is going to do anything, to stimulate shipping and agriculture, which would do a lot to continue and develop industrial activity, upon which the whole Budget and this Finance Bill must ultimately depend. I would ask him seriously to consider whether he would not be well advised to use some of the surplus revenue which he will probably get, and which he can take out of industries and individuals that are going to prosper more and more, and apply it to give a direct stimulus to one or two special industries which are suffering terribly, through no fault of their own.

I have never advocated the comprehensive Government planning of industry, I do not think it can be done except under a Communist régime with any chance of success. But during a world economic crisis it is necessary for the Government, and especially for the Chancellor of the Exchequer, occasionally to strike a better balance between industries which are prosperous and others which are in the doldrums. If the present Government have a fault at all, it is perhaps a slight lack of imagination. The Chancellor well knows how easily bored people become these days. The one thing that we want to avoid at all costs is a repetition of the incompetence and muddle which we must always associate with the advent to power of the Labour party. It ought to be avoided if we can possibly manage it in the course of the next two years. I think we can manage it, but only if we produce a constructive policy which will catch the imagination of the people.

I congratulate the Government. I do not remember, I do not think anyone remembers, any Finance Bill introduced by the National Government which has had the support of the hon. Member. This is indeed an occasion which should be celebrated. I am not quite so certain that the hon. Member is to be congratulated. I have always looked forward to the time when he would take his proper place, possibly in the Labour party, realising that his best chance was on this side, as he must indeed have realised himself. Now I see that his best chance is the re-shuffle next September. His speech really has shattered some of my fondest illusions. I have regarded him as one who really understood this question of the balance of trade and the advantages of inflation. Now the most deflationary Budget that has ever been introduced has received his blessing. I understand the reason. He attacked the Liberal party on the ground that they were still Free Traders and that, if it had not been for Tariff Reform, we should not have seen any recovery of trade, and the Chancellor of the Exchequer would not have been able to introduce this heaven sent beneficently inspired Budget. He knows as well as I do that, if there had not been any Tariff Reform, trade must still have balanced and goods would have been kept from coming into the country, not by tariffs but by the fall in the purchasing value of the £ sterling, that exactly the same results as far as our import trade is concerned would have been caused by the fall in the value of the £ as have been caused by the protective tariff which has been put on, with this profound difference, that whereas the tariff, by obstructing imports into the country, confers no benefit whatever on the export trade, increases indeed the cost of production of goods to some extent to the exporter, yet if trade had been balanced by the fall in the value of the £ then the export trade would have got the benefit of that fall in the value of the £. So that even now, when every one is so satisfied with the Government, when we see that all that we required was the right hon. Gentleman as Chancellor of the Exchequer instead of these reprobates on the Labour benches, when you take credit for all the prosperity which is being sung of so much today, and of which I see so little in my constituency, remember that coming of gold had a good deal more to do with it than Tariff Reform a la Birmingham.

But I really did not get up in order to raise this fundamental question of deflation versus inflation, nor to add to the chorus of post mortem requests to the Chancellor. We know that we cannot get anything out of him this year. Everyone has had his say in Committee and on Report. We have been prostrating ourselves all along the Appian Way before the right hon. Gentleman for the last three weeks. Now I suggest that we come off it. It is no good talking about oil. You cannot get that idea into his head. I do not propose to say anything more about penal taxation in the cinema trade. Let it have peace for a year. First in the queue. I wonder how many people will be first in the queue for next year. I am not certain there are going to be any doors open at all next year for the queue to enter.

I really want to speak on the Third Reading because I believe that I am not merely the last representative of the Manchester school but the last advocate of the taxation of land values remaining in this House. We have heard many speeches on the taxation of land values during these Debates, much wailing, but I did not hear one single speech understanding the issue or making promise for the future. Speaking straight from the horse's mouth, I may tell the House that the taxation of land values and the valuation we had on the Statute Book was of no earthly use. It was the production, first of all, of Mr. Philip Snowden, who did not understand it, secondly of the Treasury officials, who did understand it, and thirdly of the Opposition from that side of the House, from over there and from this side to the whole principle of cheapening land by the taxation of land values; the resulting Measure was one which I could inter without a sigh. I cannot also inter without a sigh the attitude of the Labour party towards the question. We know the Government view, and as far as I can make out the Liberal view has something to do with unearned increment.

What is the Labour party view? [An HON. MEMBER: "Nationalisation."] Now I have got it. It no longer appears on the Labour party programme. There is no longer the question of taxation of land values or the rating of land values appearing in any of the eloquent speeches at Labour meetings. I shall not be asked any longer to go to Labour meetings. I should like to know whether the prospective revival to which the right hon. Gentleman the Chancellor of the Exchequer referred not I think with hope, but with derision, is ever likely to come from the progressive benches or from the progressive party in this House. The real difficulty is that the vested interest in the land is pretty strong on the Labour benches. The second objection is that most Labour people have got nationalisation on the brain. At the last meeting which I attended I said, "Are you going to do it or not?" And they said, "We are really going to do the thing in style; we are going to nationalise the land."

I have heard land nationalisers talk for 30 years The only thing I know about them is that they are not stickers. Never a Bill. The real difficulty about nationalisation is, what are you going to nationalise? What is meant by the nationalisation of the land? As long as you talk in vague terms about the nationalisation of land, it is evident that you do not intend to get anywhere at all. Do you intend to buy the improvements on the land? If you intend to buy the improvements on the land, what do you intend to do with them? You cannot let them to anybody except the person who is using them at the present time. You cannot nationalise any land in this country unless you have at the same time the power of saying how that land is to be used. You buy up, say, a factory. To whom can you let the land? What is the State to do? It must either conduct the factory, or it must lease the factory. There is no one to whom to lease the factory except the man who has it at the present time. Therefore, the whole idea falls to the ground, because if there be only one person able to lease that hit of land he can pay as little for it as he likes.

On a point of Order. It is very interesting and illuminating to hear the right hon. and gallant Gentleman from the front Labour bench breaking the Labour party to pieces like potter's clay, but I suggest that it is not in Order in a speech during the discussion of the Finance Bill.

May I make an appeal on behalf of the right hon. and gallant Gentleman the Member for Newcastle- under-Lyme (Colonel Wedgwood). He has suggested that he has at better way of raising revenue than that put into the Budget. Let us hear what he has to say. Let him destroy the old nationalisation plan and the Socialisation of industry as put forward by the official Opposition.

May we also discuss the pros and cons of land nationalisation versus the taxation of land values?

The hon. Member has put me in a considerable dilemma. The right hon. and gallant Gentleman was stressing the question of the repeal of the Land Value Duties, but I cannot say whether nationalisation has anything to do with it.

I thought that it was a God-given opportunity of saying what I feel about land nationalisation.

I think that the right hon. and gallant Gentleman had perhaps better leave the nationalisation of land and come back to land values.

I will leave that sad subject, returning to it later on, of course. There is one other point in the Budget besides the tragedy of the Land Value Tax upon which I would like to say a few words. It is a point with which it is rather more difficult to deal. I do not think that anybody in this House likes our situation vis-à-vis America at the present time. That situation is far more dangerous now than it was three weeks ago in view of the Bill which the Chancellor of the Exchequer or somebody else is to introduce next Monday. We are up against a really dangerous situation. It was not until this Budget was introduced that anybody, either here or in America, imagined that there would be anything in the nature of a repudiation of our debt to America. It was only when the unfortunate thing happened that what we owe America was just about the same amount as our stir-plus here, that the question really came home to the American mind. On Monday we are to put forward a scheme for securing for ourselves the payment of what Germany owes to us and refuses to pay; if I may say so, an admirable scheme. But I do not want to see that scheme or anything of its nature applied to Great Britain. Therefore, it is vitally urgent that in connection with this Finance Bill, with its surplus, the Chancellor of the Exchequer should take an opportunity of stating our case vis-à-vis America. I am certain that that case is perfectly straightforward. It is that we shall honour our obligations whatever the attitude of other countries towards us may be. We stand by the letter of the bond. The real difficulty is not that France is not paying us, but that there is difficulty in getting our payments into America. The difficulty with which we are faced is not that we have not the money, not that we do not intend to pay, but that America cannot take the things that we can send her. That has been met since the Budget came in, to a certain extent, by the American offer to take goods instead of cash. I do not know how far that offer goes.

It is an inquiry, not an offer.

I would draw attention to a rather important letter from Mr. Richard Holt, once an honoured Member of this House, which appeared in "The Times" the other day, suggesting that we should meet the debt by placing a credit in sterling in the hands of the banks here, upon which credit Americans would be entitled to draw when they were buying things from this country that would ensure that the whole £30,000,000 a year which we owe to America would be sold to America every year and, pro tanto, the debt would be met by the imports of British goods into America. That idea neglects the fact that we have at the same time to buy from America. We cannot be content to export and get nothing back. While that scheme does to a certain extent meet the views of America, and there is no doubt that the whole of that credit would be taken in imports, while we are about it we might arrange that the credits should be, shall I say, doubled so that we could pay America £60,000,000 a year in goods and they would pay us £30,000,000, the difference between the two being the debt payment. At the same time our payments would meet our necessary imports from America.

Strictly speaking, there is nothing about the American debt in this Finance Bill.

It ought to be in the Bill.

I am not concerned with what ought to be in the Bill but with what is in the Bill.

I am sorry that I have been transgressing the Rules of Order so frequently, but I have said all that I want to say. I should, however, like from the Chancellor of the Exchequer a definite assurance that, be the difficulties what they may, England is going to meet her bond in the long run and pay her debt of honour to America.

I, like every other hon. Member, listened with great delight to the speech of the right hon. and gallant Member. I think he is about the only remaining individualist in this House, and he has relegated the taxation of land values to the category of the Schleswig Holstein question, about which it was said by a certain individual that only three people ever understood it, two of whom were dead and he himself had forgotten it. The right hon. and gallant Member appears to be the only person who can understand the taxation of land values. I suppose he will not come to speak at any Conservative meetings. As he has said, he is not likely to be asked to any Labour meetings in the future, and as you, Mr. Speaker, have ruled him out of Order to-day, it is doubtful whether we shall ever hear the pure milk of the gospel of these taxes. It must, however, be some satisfaction to the Chancellor of the Exchequer that the right hon. and gallant Members approves the action that he has taken in repealing the particular Clauses dealing with the taxation of land values.

I listened with great delight, as I always do, to the speech of my hon. Friend the Member for East Aberdeen (Mr. Boothby). Although he did not refer particularly to the industry of his own constituency he always tries to put in a word for his own country, whether it be the national beverage or an endeavour to get a greater grant out of the taxpayers of England for the benefit of Scotland.

Hear, hear.

In view of the enormous revenue to the National Exchequer from the Scottish national beverage, is not Scotland entitled to more consideration?

Whatever Scotland may be entitled to the hon. Members who represent Scotland in this House try to ensure that Scotland gets it. In spite of the many other attractions to draw Members away from the House to-day, any supporter of the National Government who is fortunate enough to catch your eye, Mr. Speaker, must feel it a privilege to congratulate the Government on the Finance Bill, the Third Reading of which we are now discussing. I do not know whether to admire or congratulate the Chancellor of the Exchequer most on the present financial position of the country or on the manner in which for the past two or three years he has successfully resisted what may be called the specious expedients which have been put up to him by which it was suggested that he could bring about financial soundness and turn a deficit into a surplus. As the right hon. and gallant Gentleman has said, one of the most fortunate incidents that has taken place, and to which in a very large measure such prosperity as exists to-day is due, was the fact that we went off gold 2½ years ago. That was not due to the integrity of any one man but rather, one might say, to the fortuitous intervention of Providence. In spite of that, sound orthodox finance has been pursued and has won the day.

One cannot help comparing the situation in this country to-day with the situation prevailing in the United States of America. Never a day or a week goes by in America without some new experiment being suggested. I do not think that we could have a better instance of what happens when a Government starts to interfere with business than in what is happening in America. Once it has started to interfere it has to continue to interfere. One cry raised from all sections of the community in America to-day is that the Government should cease to interfere. It always seems to me that the duty of a Government is not to interfere any more than necessary in the conduct of industry but rather to create that atmosphere and those conditions in which efficient industries can run their own show and prosper. Conditions have improved in this country because of the policy pursued by the Government, because of the tariffs that have been imposed and the Agreements that have been made, and I believe that the improvements will continue. It is almost impossible to gauge the change that has taken place in regard to the financial situation of this country, unless one has been abroad and heard the testimonies which have been paid to this country by foreigners. What has happened? London has once again become the financial centre of the world, England is the chief exporting country of the world, Empire trade, in spite of world conditions, is increasing year by year, and I believe that the foundations of that trade, through the Ottawa Agreements, have been well and truly laid. But without a sound currency and a balanced Budget none of these benefits would have been achieved.

No Budget has had less criticism than this, but I suppose that every hon. Member has some particular fancy of his own. We may feel a little disappointed that the Chancellor of the Exchequer has not turned a sympathetic ear to our own particular subject, whether it is oil or cinemas, and hope and trust that he will look with favour on it next year. My own particular fancy is Death Duties. In years gone by the Chancellor of the Exchequer has spoken with considerable sympathy on this question. I think he has under-estimated the revenue he is going to receive in the coming year. I would ask him to turn his attention to the effect of Death Duties on agricultural estates—

I do not think there is anything about Death Duties in the Finance Bill.

Various forms of taxation are included in the Bill, and Income Tax has been discussed at some length.

There is a special Clause dealing with Income Tax but not with Death Duties.

I regret that I should have traversed the rules of debate and I will merely say this, that, if the right hon. Gentleman will examine with sympathy the force and manner in which Death Duties are applied to-day, I am certain that next year, if he has a surplus to distribute, he will consider sympathetically this particular form of taxation, which I hope to be able to deal with on some other occasion.

There is one other matter which I hope I shall be in order in dealing with, our debt to the United States. I only mention this because we may at any moment be in the position of having to make a settlement, and it is, therefore, an integral part of the finance of this country. Twice a year now a crisis arises. Surely it behoves us from the point of view of finance and Anglo-American relations to get the matter settled. This is a debt which is different in its character from almost any other debt. No one wishes to be a defaulter, and the only thing I regret in connection with the original settlement is that it did not contain a most-favoured-nation clause. The settlement was just and fair, and the best that could be obtained under the conditions prevailing, but since then other countries have made debt agreements far more favourable, and all I ask is that our debt should be settled on the same favourable terms, as for instance the debt of the Italian Government.

Before the proceedings were interrupted I was making some observations regarding the settlement of our debt to the United States. I will conclude by making a suggestion to the Government. In answer to a question which I put to the Treasury a few days ago, as to what would be the amount which this country would pay America if our debt from the onset had been settled on the same basis as the Italian debt settlement, the answer was that we would have to make no further payment until the year 1955. I suggest that we should say to America, "We are prepared to accept a settlement on the same basis as that which you made with the Italian nation, or if you cannot accept that we are prepared to offer you a definite sum in full settlement of our obligations." The figure which has been suggested is in the neighbourhood of a billion dollars, which would work out in amount almost the same as the settlement on the Italian basis, and we should pay £5,000,000 to £7,000,000 a year for 30 years. We should offer that on our own responsibility and endeavour to get some portion of it back from our European debtors.

I should like the Government to make that definite offer to the United States, and allow them to find the best means of "putting it over" in Congress, which is certainly something that we could not do from this side of the Atlantic. I should like to know, but I presume we shall not be told, the figure which the Government's advisers suggested to the United States Treasury when they went there a few months ago, and the figure which the United States Government suggested to us. Of course, if the United States refuse to accept either of these offers, there is nothing further to be done in the matter. We must allow time, that great solvent of all problems, which has so successfully solved the problem of the debts of the individual states in America to this country, to solve also the problem of our debt to the United States.

It was said by one hon. Member that the recovery in the trade of this country, has been due largely to "taking in our own washing," that it has been internal improvement rather than improvement in export trade. That is obviously true. How long that improvement can continue without a general improvement in world conditions, is a matter for argument and perhaps for calculation. On the other hand, I would say there is still room for a further increase of trade within our own shores. The 2,000,000 unemployed constitute the greatest market for the consumption of goods that we could find anywhere in the world. To get them back into industry, would be to find a market such as we could discover nowhere else in the world. We have also in the Empire a market which could well continue to increase, and increase rapidly, in the next few years. Moreover, in spite of world conditions, the trade agreements which this country has made with foreign nations—

I do not see anything in the Bill which deals with that subject.

There were several speeches by hon. Members dealing with matters far less cognate with the financial situation of the country, than the subject of the few remarks which I am making. Naturally, I bow to your ruling, Mr. Deputy-Speaker, but perhaps you will allow me to say that there is still a prospect of increased export trade by this country, as a result of the trade agreements which the Government have been able to make and that those agreements would never have been effected had it not been for our tariff policy. That is the point which I wished to make. Therefore I look with considerable hope to the continuation of that measure of prosperity which has come about in this country during the last couple of years.

If I had any doubts or misgivings one thing which would dispel them, and encourage me to hope, is the speech with which the Chancellor of the Exchequer introduced the Budget. No one would call the right hon. Gentleman an incorrigible optimist, but in introducing the Budget he sang—or perhaps that is a un-Parliamentary word and I ought to say he spoke in almost lyrical terms—of the good things that we are to receive in the near future. I cannot believe that such words would come from him unless he had sure and certain knowledge of what was in store. One thing, at any rate, is certain if this country were to go bankrupt if our Budget were unbalanced, then indeed, there would be no hope for world recovery. I maintain that the prosperity of this country and the Empire, represents the corner-stone upon which world recovery must be built. I believe that in the last few years the National Government have laid that corner-stone well and truly, and that they deserve well of the country for having done so.

The hon. and gallant Member for Chippenham (Captain Cazalet) started his speech by telling us what I believe to be perfectly true, namely that we have to go abroad to hear the praises of this present Government. At the same time, we have not had to go abroad to-day to hear those praises, because the hon. and gallant Member for Chippenham has sung them. He has praised the Government in some respects but in other respects he has not been so laudatory. He mentioned the part they had played in reference to our debt to America. I do not wish to dwell upon that subject but it has been raised in this House time and again, and the proposal that we should meet that debt by paying it in goods has been received with favour in high quarters. I do not object to that proposal at all, but if it is good enough for America that we should pay their debt in goods, then it ought to be equally fair to ask our own fellow-countrymen and women to take payment in goods instead of cash for the debt which is owing to them, incurred for the purpose of carrying on the War. If it is good for America, it is good for our own fellow citizens.

We ought to drop all this hypocrisy. We have no right to ask America to accept payment in goods if we are not prepared, at the same time, to ask our own folk to accept payment in goods. So that hon. Members will see that they are on delicate ground in making that proposal. They are coming very near to my idea of the repudiation of the National Debt. I am not saying that on behalf of the Labour party. They may not support me in that idea, but I have always, as a Socialist, stood for that idea and I still stand for it. Another supporter of the Government, the hon. Member for Aberdeen and Kincardine (Mr. Boothby) began his speech by saying that this Budget was the admiration of the world. I was astonished to find him such a great admirer of the Government, because I have heard him give the Government some dull thuds on various occasions. In saying that this Budget was the admiration of the world, I suppose he meant the part of the world outside our own country, and he went on from that to say that all Governments since 1922 were responsible for the mess which this country had got into as regards unemployment. I agree with him about that.

He also said that the Protectionist policy of the Government has brought industry to this country, that through pro- tecting certain industries individuals have come from foreign countries and established their works here. I happen to have a letter here from my union, the Amalgamated Society of Engineers. It is from Manchester, and it refers to a highly skilled engineer, who goes to one of these new firms that the Financial Secretary to the Treasury has made great play with across the Floor of the House when he has talked about the wonderful industries that the Government have been able to bring to this country from abroad. They formerly manufactured goods in their own country and exported them here, but the Government have put a stop to all that nonsense, and now we have the works here where our own people are being employed. Well, here is the employment. This is the letter, from a German firm, to a highly skilled engineer, the very highest type of engineer, a tool maker, who goes to a labour exchange in Manchester and is handed this letter:

"What we want is a man who is an experienced master in his line, in tool and die-making for pressings, stampings and drawings of every kind."

He has to be able to draw, to be a designer—

"To such a man we could offer a lasting position, providing he gives a proof of his capabilities. The man we want must push himself. He is to create himself the position of master of our tool and die-making department. We would suggest, first, three months with a weekly salary of £2 10s. a week, to be increased as soon as we see that you are the right man for us. You will realise that we cannot appoint you only on your written application. We first must have an occasion to see you and talk matters over with you. We must have three months' trial."

This is the kind of employment that is going to be handed out to us by these firms that the Financial Secretary to the Treasury told us this Government have been responsible for introducing into this country. This is what they are introducing. This is to lower the standard of the workers of this country in a manner never before approached. This letter has just come from our society, this morning, and I have raised the matter with the Minister of Labour.

The hon. Member for East Aberdeen said that we on these benches make the great mistake of always demanding, first and foremost, increased consumption, an increase in the purchasing power of the people. The hon. Member disagreed with all that and said that we ought to go in for increasing investment capital. That was the way out. That is his point of view, the capitalist point of view, and that is where there are two phases of thought that conflict in this House, consciously or unconsciously. There is the Socialist point of view, which I stand for, and there is the capitalist point of view, which supports the present Government. We believe that the way out is by increasing the purchasing power of the people in the mass, but that would mean taking it from those who have it. The right hon. and gallant Member for New-castle-under-Lyme (Colonel Wedgewood) said this morning that the reason why the Labour party did not support him was that in the Labour party there was a great number of landowners. I do not think there are very many. I wish the right hon. and gallant Gentleman had been in his place now, as I would like to have said something to him, but I will not, seeing that he is not here.

The fact of the matter is that it is in budgeting that the power lies, and that is the power that the Chancellor of the Exchequer has. He has the power in this Bill if he would exercise it. From a Socialist point of view, we have never yet produced a Chancellor other than a Conservative Chancellor, and we shall have to do the best we can until he arrives on the scene. I never heard anyone in this House make a speech so confident as that of the Financial Secretary to the Treasury in moving the Third Reading of this Bill this morning. I have never seen anyone so satisfied with him-self. He seems to forget that there are great parts of our native land to-day that are right up against it, so much so that even his own Government have appointed four responsible men to go into those different areas, to see what can be done and to find out the truth. We on these benches have been telling this House and telling every Government that has been in control since 1922 about the hellish conditions that prevail in those parts of the country, in the most valuable parts of the country, parts that have always rendered to our country the most human service. There are whole tracts of Britain which are recognised as derelict. There is South Wales. Think of the contribution of that part of Britain to make the British Empire possible. I ask any hon. Member to go down to South Wales, even in good weather such as we are having now, not

"When chill November's surly blast

Made fields and forests bare."

Let them go now, and see the valleys that at one time teemed with people who were happy and contented and, comparatively speaking, comfortable. Today you would think a blight was abroad in the land. Starvation is rampant, thousands of the finest youths that the country has ever seen are roaming the streets with no aim in life and nothing to do. There is no room in the inn for them. If it were only South Wales it would not be so bad, but the same is true all over our great industrial areas. Go to any of our big industrial centres, go to the city from which the letter came which I have just quoted, Manchester. What will you see? The youth of Manchester standing at the street corners. Go to Newcastle, to Liverpool, to Glasgow. And yet responsible men and women, representatives of these people, come to this House and talk about the glorious and wonderful achievements of the Government. There is not a Member in the House but knows what I am speaking is God's truth and irrefutable.

The Government had such an opportunity to do something. I have never questioned their ability or the ability of any Government since I came into the House twelve years ago, but I have always challenged their courage to face up to the situation and to do what they said they would do when they were asking the people to entrust them with the government of the country. If ever there were a Government which was trusted by the country and given a blank cheque, it is the present Government. A combination of the outstanding personalities of Britain arrived on the scene and the people gave them implicit trust and the most powerful majority that any Government ever had.

Perhaps the hon. Member will connect his argument with the Bill now before the House.

I think, with all due respect, that this has everything to do with the Finance Bill. I am stating the actual conditions of our country, and there is no way of changing those conditions except through finance, and the only Minister who has control of finance is the Chancellor of the Exchequer. When I appeal to the Minister of Labour he tells me that his position in the Government is simply to administrate and that he has no power to create work. I have pressed Ministers for years, and as a result of putting questions by the hundred I at last arrived at the conclusion that the individual who can supply work so far as the Government is concerned is the President of the Board of Trade. I have applied myself to him, but he replies that he cannot do anything without the assistance of the Chancellor of the Exchequer. Therefore, I am driven to attack the Chancellor, and, to use my own phraseology, to harass him. I am going to do it as far as lies within my power and as far as I am allowed by the Chair.

Go on, David.

I will. The laughter of the hon. and gallant Member for Bournemouth (Sir H. Croft) will not affect me in the least. I know where his interest lies. My interest lies in my native land, not across the sea in Palestine or anywhere else. I will fight for my native land. I am sent here to do it. I am not sent here to make friends with the Government and dine and wine with the rich of this House, but to stand up for the rights of my class, and I will do it. There is far too much pandering to the Government. There will be no pandering from me. While the finance of the country has been under review, I have systematically sat here, taking very little part in the debates, but weighing up to the best of my ability everything that has passed. The one thing that has struck me forcibly is that the Chancellor had a great opportunity in the Budget to fulfil pledges—not simply the pledges of an individual. It is difficult for us to tie down an individual. Several of my colleagues have challenged Members on the Front Bench about not keeping their pledges. The Government ask "Who made the pledges?" and "What was the pledge?" It is difficult to tie them down to an individual pledge, but the fact remains that, undeniably, they created in the land the spirit which I have described, although I was told then from the Chair that I was going outside the scope of the Bill. I have always stood for—I put it in my election address—5s. a week for each child of an unemployed man.

The hon. Member cannot review that subject on the Third Reading of the Finance Bill.

It is in the Bill here. Thirty Tory Members went into the Lobby in support of 3s. a week, but the Chancellor resisted that Amendment, and the allowance is 2s. a week. My point is this, that here is this nice, great, wonderful Government, which all the world admires, taking the view that 2s. a week is enough for an unemployed man's child.

The hon. Member will not find that in this Bill. That is in the Unemployment Bill, and not this one.

I must be guided by you—but it is all in the Finance Bill. This Bill empowers the Chancellor to disburse a certain amount of money. My contention is that he has not provided enough. He has only assessed here for 2s. a week for an unemployed man's child, although 30 Members of his own Party supported 3s. a week. I saw the Whips running after them and giving them a "telling off" for daring to vote against the Government. That is what happens in such cases. I contend that the Chancellor has neglected his duty. He has let down his colleagues. I am asked to be practical and not to be theoretical, to keep my head out of the clouds, and to keep my feet on the earth. My feet are always on the earth, and the trembling earth resounds the tread. My contention is that he has failed to keep faith even with his own colleagues, by not assessing high enough those who are able to pay. I told Philip Snowden, when he was Chancellor of the Exchequer in the Labour Government, that there was only one place where he could get the "bawbees" with which to do the job, and that he should take the money from those who have it. This Finance Bill is the legal way of doing it. You can call it by all the fancy names you like, but taxation is just a form of confiscation. People do not like that word, but taxation is just a form of confiscation. My only complaint is that they do not confiscate enough. I do not object to the confiscation.

We shall never get round our troubles as long as we allow individuals to have incomes of £10,000 or £5,000 a year. To me it is all hypocrisy when I hear individuals talking about raising the status of the working-class, and giving every one in this country a comfortable life, and at the same time supporting a system that gives individuals an income of £5,000, £6,000, £10,000 and even £100,000 a year. It cannot be done, and it is all wrong, because there is nobody in this House or elsewhere whose value is £10,000 a year. And they have no use for it. Why should the Chancellor of the Exchequer be afraid? The hon. Member for Farnham (Sir A. M. Samuel), in his last speech, put up la plea—just fancy; and in my hearing in this House—for the Super-Tax payer. I was staggered to find that there are still men in this country—and well-meaning men—

Thank you.

and goodly to look upon, who can stand up here quite calmly and put up a plea for individuals who are paying Super-tax, declaring that it is a sin against the Almighty, so to speak, to tax those men so heavily. The majority of my colleagues, and the majority of my supporters in the country, thought that his appeal would fall on deaf ears, but I want to take this opportunity, because the House of Commons is the best sounding board in the world, to say that it did not fall on deaf ears, because the Chancellor resisted all our appeals, except the one which I myself took the opportunity to pay tribute to, and that was regarding the unemployed. What we Socialists have stood for is £l a week for the unemployed—again I put that in my election address—and 10s. a week for the unemployed man's wife and 5s. a week for each child.

I must remind the hon. Member that this is the Third Reading of the Bill, and we cannot go into a full discussion of it, as we could on the Second Reading.

Thank you for your advice, Sir. I am trying to draw the attention of the House to the fact that even though pressure was brought to bear upon the Chancellor of the Exchequer by the united front of the whole working class of this country, irrespective of political or religious opinion, in defence of the unemployed, all that the Chancellor conceded was 1s. 3d. per week, to those who are right up against it. That sum brought their handsome salary—I must use the phraseology; I got it from that letter—to 17s. per week. Active men, with all their faculties, have to maintain themselves on 17s. a week. The hon. Member for Farnham and his class, the £10,000 a year men—what did the Chancellor give them? He gave them £4 8s. 0d. a week. That was not a bad increase for those who pay Super-tax.

That illustrates the methods of this Government in attempting to solve the problems with which they were faced when they took over the reins of government. They have given practically nothing to the working-class, although all the wealth of the country is produced by the working-class and by nobody else. When I speak about the working-class, I mean every one who renders useful service to society and not the usual phrase that is used, "whether by hand or brain"; I think that is the greatest lot of nonsense that I ever heard uttered, because it gives the idea that the ordinary workman does not use his brain. Nobody works without having to work by both hand and brain. The working-class produce all the wealth of the country, defend the country against all comers whether by foreign invasion or in industrial and economic war, and bear the brunt, and it is in defence of that section that the Chancellor ought to legislate; but he has done nothing of the kind.

Ranging, as I do, from one end of the country to the other, I say that the country is a standing disgrace to our day and generation. The unemployed, who are, to use the capitalist phrase "unexploited," are the finest raw material in the world, but they are roaming the streets with nothing to do and with no aim in life. A concession was givenby the Chancellor of the Exchequer to the Minister of Labour and to the Secretary of State for Scotland. It is, by the way, a standing disgrace to Scotland that while a Bill of such importance as this is being discussed, no representative of the Scottish Office has been on the Government Front Bench during the whole day. The hon. Member for East Aberdeen complains that nothing is being done for Scotland, not even the completing of the Forth road Bridge. Is it any wonder that there is a move on for Home Rule for Scotland? If this is not giving that movement a peg to hang their coat on, I do not know what is. There is no representative of the Scottish Office here to hear what is going on.

The Chancellor of the Exchequer is empowering the Minister of Labour and also the Secretary of State for Scotland to do something with the problem of our youth, who are the most valuable asset to the country. They are a valiant youth. The Chancellor of the Exchequer is giving a contribution for the setting up of training centres through the Ministry of Labour in England, Wales and Northern Ireland, and to set up similar training centres in Scotland under the Poor Law Bill, which we are now considering before the Scottish Grand Committee. The Government are being forced to realise that for tens of thousands of the youth of Britain there is no place in industry, and everyone is appealing to the Chancellor of the Exchequer to find the means of providing them with work. The Prime Minister set up what he called an economic committee to try and change the situation, as far as unemployment was concerned. Last week we elicited from the Lord President of the Council the fact that the Chancellor of the Exchequer had spent, up to date, £5,000 on that economic committee. I asked the Lord President of the Council what work had emanated from that committee.

I cannot really see that this is relevant to the Third Reading of the Finance Bill.

I have no desire to prolong my speech, because I know that there are a number of others on all sides of the House who wish to speak, but the House ought to be made aware of the terrible plight, not of tens of thousands, but of hundreds of thousands, of men, women and children, who are as good as we are and as good as ours are in every way, mentally physcally and morally. They are our kith and kin. On the other hand we spend money in Palestine and on China.

Last year, the Arabs in Palestine got from the Chancellor of the Exchequer a grant of a couple of millions, but when we make an appeal for the working class, not away abroad across the sea, but in our native land, we are told that it cannot be done. Until the Government face the situation along those lines, it is no use their going into the country and tell- ing their supporters that they are the most wonderful Government that ever held sway in the annals of British history, when those very supporters know perfectly well that, at every by-election which is being fought at the moment, the supporters of the Government have been, metaphorically speaking, chased for their lives.

I do not care what Government comes in; they can call themselves by any name they like; but, unless they face this unemployment problem definitely along Socialist lines, the unemployment problem will tumble that Government. The Chancellor of the Exchequer has the power; he has control of the money-bags of this country; he can ease the situation, not by sending these young men away to work centres to teach them to be handymen, but by creating a system of education, because education to-day, in my opinion, is the birthright of the entire working class. For the first time in the history of our country, it is possible for that to be achieved, and it can only be achieved by this Bill—by the Chancellor of the Exchequer allocating enough money. Up to the present time, the higher forms of education in this country have been the preserve of the rich; but now, owing to economic development, owing to man's ingenuity in tapping the resources of Nature and making Nature do man's work, we are all the heirs of this glorious inheritance, which if properly handled, would enable us to give to all our young men and young women who are capable and willing a higher standard of education than has been given to the common people, either in this or any other country, in the history of the world.

I am sure the House has been much interested by the remarkable speech of the hon. Member for Dumbarton Burghs (Mr. Kirkwood), and I think that the Chancellor of the Exchequer, had he been present, would have been glad to find that the hon. Gentleman, with all his eloquence and all his penetrating power of examination, was yet unable to find one single point in the Finance Bill on its Third Reading which he could seriously attack, and, therefore, was constrained to bring in his allies, that is to say, his references to other matters which I know are very near to his heart. The earlier speeches in the Debate must have been very satisfactory to my right hon. Friend. The hon. Member for Cardigan (Mr. D. Evans), speaking for the Liberal party, pointed out that even in regard to the Land Value Tax he did not want that skeleton once more unburied, and I think his only criticism was in regard to the question of obsolescence of machinery, a subject which I think the Liberal party ought thoroughly to understand. The right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood), generally speaking, had nothing to say against the Finance Bill; all that he had to say was what a pity it was that his favourite theories were not included therein.

Had the Chancellor been here, I should have liked to add my small testimony to the great work which he has done in restoring the financial and economic position of this country. I think he can take it as a fact, that he has the confidence, not only of the City of London—although on one or two occasions he has had to stand up against them with considerable firmness—but also of all the industrial productive elements in this country; and no one, I think, will deny that he can claim that, since ho has been in charge of the finances of this country, there has been a most wonderful change from dis-pondency and gloom to hope in most directions. Even after the moving description of the depressed areas given by the hon. Member for Dumbarton Burghs, whose sincerity everyone recognises, I think we must all rejoice that, even in those depressed areas, we have seen an improvement in the position during the last two years.

There is one thing that I should like to urge upon the Government, and that is that they would do well, in spite of the fact that they are going through strenuous times and have many problems to consider, to look ahead for six months, or a year, or even two years, with regard to the drift of our trade and our trade balance. I make no apology for raising this question. I believe I am right in saying that I was the only Member of the House who referred to the probable coming adverse balance of trade during the two years prior to 1931. Before the Socialist Government took office, there were grave indications that the balance of trade was going to swing seriously against us. Up to that time very few of us had taken much trouble about the matter, because we always used to say that imports were paid for by exports. We remember the gramophonic observations of the hon. Member for East Edinburgh (Mr. D. Mason) to that effect. Nobody worried very much until we found that the trade balance had gone very seriously against us.

Last year, the adverse balance of trade reached a much more satisfactory position, thanks to the efforts of His Majesty's Government. I think that last year it was only something like £4,000,000. For the first five months of this year, however, the adverse balance of trade is something over £18,000,000—that figure was agreed to by the Prime Minister yesterday—and there is every indication that it may go considerably further against us, and may be somewhere near £50,000,000 before the end of the year. We cannot ignore the danger of that situation, and I hope the Chancellor will realise that, in raising this point, I do so in no unfriendly way. After all, I think he will agree that, on the occasions when his many friends in the Empire Industries Association in this House have met together, which has been very rarely, in order to call attention to dangers, they have been proved to be right, and the Government, perhaps after a month, or two months, or even a year or a little longer, have shown by their actual policy that the indications we endeavoured to put before them on those occasions were correct.

It is a fact that we are importing at this moment something like £150,000,000 worth of manufactured goods per annum. Is it not that a realm in which the Chancellor of the Exchequer may be able to find a solution of this increasing tendency towards an adverse trade balance? Are we not a little too much inclined to consider the revenue which we are getting from our Customs tariff, instead of making the question of the employment of our people our first concern? I differ from the hon. Gentleman who interrupting an earlier speech, said that the tariff had not given the Chancellor his Budget balance. I do not suppose you could say that this or that revenue has accounted for the balanced Budget, but under the Customs duties we have raised something like £34,000,000, and by the increased employment of people we have saved to the Exchequer in one way and another up to £40,000,000 or £50,000,000. The fact remains, however, that there is a danger in encouraging ourselves too much by the increased Customs revenue, because that very likely means, and, in fact, does mean, that in certain commodities foreign countries are getting over tariff barriers.

I do not want to detain the House by giving a list of the industries which have shown an alarming increase. Figures were given not long ago showing the increased imports of manufactures for the first three months of this year, and I think that last month, in some of the industries, the figures went to a considerably higher level, although one has only been able to get out an analysis in the last few days. There is still £150,000,000 worth of manufactured goods coming into this country, and, even on a very conservative estimate, I submit that, without doing any harm to any industry which is dependent on other industries, at least £80,000,000 worth of those manufactures could be manufactured in this country to-day. If the employment absorption is going to cease, or even go back a little, there is nothing so bad for the confidence of the people of this country. On the other hand, the manufactures which are now coming in and might be produced at home, in my honest belief could provide employment for another 300,000 people.

If that be true, may we not urge the Government really to make this their chief concern in the coming months? After all, their policy has been surprisingly vindicated. Even those who, like the hon. Member, do not agree about fiscal measures, have admitted that the policy has been successfully introduced. If that be true, why are the Government afraid of their own shadows? They have done wonderful work, and why should they not have the courage to go forward, even although it may require drastic and speedy action in order to see that this country is not endangered by a further increase of the adverse balance of trade which has been displayed so alarmingly in the last four or five months? The hon. Member for East Aberdeen (Mr. Boothby) referred to national planning. May I ask the Government to consider, along with that question, the whole question of Empire planning? Reference has been made to our loans to Germany and other countries since the War amounting to some £200,000,000. If half that sum had been invested in great development schemes overseas, there would have been no default; ample security would have been found, and a great thing would have been done for our own people in the development of our Empire overseas.

I do beg the Government to realise this. They have done a great work in achieving the two great objects for which they were returned by the people of this country to carry out. They have balanced the Budget, and they have balanced our trade, although it still wants very careful watching. I think that the country will now look for a long-distance policy, because I do not believe that any Member in any part of the House now believes that you are ever going to solve this unemployment question on our own resources. Even with the most successful policy which His Majesty's Government could possibly adopt under what is known as the capitalist system or under a Socialist system, I doubt if you are going to get unemployment down below 1,000,000 or 1,250,000. I do not think anyone will deny that we are overcrowded in this country, and therefore in order to relieve the congested areas of this country, we have to look to the vacant spaces of the Empire overseas; and I believe that with good will, courage and vision it is possible for an extra 500,000 people to find employment in the Dominions overseas.

I think that the outstanding feature of the Debates on the Budget—I have been present through all its stages—has been the truth of the doctrine of economic determinism. The lyrical phrases, as an hon. Member described them, applied to the Chancellor from all those people who have benefited by the Budget have been very remarkable. The Budget, like all other Conservative Budgets of which I have had any experience, has kept pretty vividly in my mind a statement that I once read, which, I think, was made by the late Lord Salisbury, that it is the duty of a Conservative Government to look after its friends. This Conservative Government like all others I have known, has definitely looked after its friends, and, personally, I am not blaming it for that, because I should hope that when the opportunity comes to a Socialist Government in this country, it, too, will look after its friends. The difference that I see is that the friends of the Conservative Government are those people who are doing extremely well in life, who are benefiting by the system which bas been built up by a succession of Conservative Governments, and who look to every succeeding Conservative Budget to give them fresh privileges.

If I am going to vote against any Bill I like, at any rate, to be able to give some reasons why I am voting against it, and I am voting against this Bill to-day because of my belief in my friends, and because I believe that this Budget has been definitely framed with the object of taking more from my friends and giving more to the Chancellor's friends. In other words, it is a rich man's Budget. I have nothing against the Income Taxpayer. I am one myself in a small way, and I certainly have no objection to any reasonable reduction in Income Tax; but while large sums are being used out of the surplus to reduce the Income Tax, I cannot help have the feeling that, after all, I, and other payers of Income Tax, are not really so hard hit that we could not have survived on a decent standard of life if that reduction had not been made. We would not have suffered, for instance, the loss of a meal, or any serious loss in the number of amenities of life that we are able to enjoy.

On the other side, a much smaller sum—it has been estimated at from £3,500,000 to £4,000,000—is to be given to a comparatively large number of people who are drawing relief from the State. They do not like the word benefit now. It has been called transitional benefit, but in future it is not even to be called benefit. They have no right to benefit from the State, but they have a right to relief from the State. That is the new word that the Government has coined. How are these men who are to be relieved by the State in future to be treated? I received a letter last week from a constituent who has a wife and five children and pays 25s. for his house. He is on transitional payment. He served right through the War and draws no pension. I am now dealing with that part of the Budget which refers to the payment that will be made to people on transitional relief.

That does not arise on the Third Reading of the Finance Bill.

It has been discussed by several Members, and is rather late in the day to keep one so closely to the Third Reading of the Bill. On the general question of transitional payment, it is true that it may amount to having half the cut restored. The Chancellor of the Exchequer, in his Budget statement, showed great self-satisfaction when he said that he proposed to restore to the unemployed the whole of the cuts, but he proposed to do no such thing. He proposed to restore to that section of the unemployed who were within the Fund the 10 per cent. but he is well aware that, in the great majority of cases in receipt of transitional payment, that 10 per cent. will not be restored. I was merely giving the experience of a man who has a wife and five children and pays 25s. a week rent out of £1 9s. 3d. I was going to ask the Chancellor whether he would, as a consequence of the implications of his Budget statement, issue an instruction to those responsible for making these transitional payments that that 10 per cent. shall be restored. We are entitled to ask that those in receipt of transitional payment shall receive in full the restoration that he said that he proposed to give them.

That is my principal objection to the Budget. My next is the proposal with regard to the debt. That is the meanest side of a mean Budget, that the debt, as it is called, which has been created, on the authority not only of the hon. Member for East Aberdeen (Mr. Boothby) but of many other Conservatives as well as Members on these benches, by the successive blundering of successive Governments since 1922, is now to be saddled on those who are to-day within unemployment insurance. They are to be saddled with the payment of £105,000,000 plus interest, approximately £200,000,000 in all, over a period of years. That is entirely wrong in principle, and one of the meanest things that has even been done by a Chancellor of the Exchequer. The benefit that those in insurance will receive in the future will be governed by the amount in the Fund, and the amount in the Fund will be governed to some extent by the payment of this debt from year to year, consequently, it cannot be guaranteed to them that the cut will be restored if the amount in the Fund does not permit of it being done. If, as a consequence of this annual payment in respect of debt, the Fund is reduced to such a point that it will not permit of the payment of the ordinary unemployment benefit plus the 10 per cent. that is supposed to be restored, that 10 per cent. will not, and cannot, be restored.

I think the whole tendency of the Budget, as of previous Budgets, is to give more to those who have and to take more from those already living in a state of hardship. Those sufficiently well off to own motor cars are to have a reduction. Those who go to the 4d. cinema get no relief. Those who are paying large sums of Income Tax are to have a reduction. Those who are paying small sums annually are to have practically no reduction at all. The higher the amount of Income Tax that is paid, in other words the richer the person, the greater the percentage of reduction he gets and, the lower the amount he is called upon to pay, the less percentage of reduction does he get. The whole Budget is framed with the object of preserving the rich in their riches and impoverishing the poor to a greater extent than they are impoverished now.

A great deal of the discussion to-day has circled round the question whether the purpose which the Chancellor of the Exchequer has achieved has been due to industrial revival, that is to improvement in trade, or to other causes. The hon. Member for East Aberdeen (Mr. Boothby) and the hon. Gentleman the Member for Bournemouth (Sir H. Croft) attributed this surplus to the industrial revival, but I think that the Chancellor of the Exchequer would admit, as I am sure would any impartial critic, that the major part of this surplus has been derived from the enormous savings through the conversion of the National Debt. I believe that I am right in stating that the gross saving has been something like £97,500,000. Anyone desirous of being impartial would say that that was the same source of the strong financial position we are in to-day, and it is absurd entirely to attribute the surplus, and the budgeting for a further surplus, to an industrial revival. We do not deny that Protection has unquestionably benefited certain in- dustries, but we have to have regard to the fact that we still have some 2,000,000 unemployed, and that our shipping and industrial position with reference to foreign trade is in a most parlous condition. No impartial person will say that our strong financial position in due to a revival of trade and commerce; it is due in the main to the large saving secured by the conversion of the National Debt, which has been made possible through the cheapness of money, which, I think, one hon. Member stated was entirely attributed to the Chancellor of the Exchequer—a most amazing statement. Neither the Chancellor of the Exchequer nor any Government can bring about such changes. They may retard circulation, but when there is a contraction of trade all over the world, the depression, in the main, is the cause of the cheapness of money, which in turn enables a Government to take advantage of the position and convert national debt at a lower interest.

There is an enormous contraction in trade. In 1932 there was a contraction in the aggregate trade of this country, compared with 1931, of no less than £195,500,000. The improvement upon which the Chancellor of the Exchequer prides himself in respect of certain industries is trifling when it is considered that the colossal decline in our aggregate trade still exists. The Chancellor of the Exchequer in the Second Reading debate spoke complacently about recouping ourselves by trade with the Dominions. Does the right hon. Gentleman suggest to this responsible House, and to men engaged in banking and finance, and in trade and industry who are capable of taking a calm and cool view of the situation, that we can recoup ourselves in that way. It is a physical impossibility to recoup ourselves from the sparsely populated Dominions. In Canada, Australia and other great Dominions and even in India, there is no great demand for the products of manufacture. Does the right hon. Gentleman suggest that we can recoup ourselves for the loss of foreign trade?

I never said so.

The right hon. Gentleman will pardon me. I am sorry that I have not the OFFICIAL REPORT here. It will be within the recollection of the House, and I will try to remember precisely what he did say. I ask him to contradict me if I misrepresent him, which is' the last thing that I would wish to do. Unquestionably he said on the Second Reading that he thought or seemed to come to the conclusion that we had reached the peak in our foreign trade. Is that not so? He does not deny that fact. He pointed to the possible development of either our local trade or trade with our Dominions to recompence or to recoup us for the loss. Does he quarrel about the word "recoup"? I cannot remember the exact words. I thought that the right hon. Gentleman was denying not only the actual words of the statement which I have made, but inferring that I was misrepresenting him.

I am denying, and I am saying that the hon. Member has misrepresented me. I never stated or suggested that we could expect in the course of the next few years to find in any development of our home trade or in the development of Empire trade sufficient to recoup us for what we had lost in international trade.

That is what the hon. Gentleman said.

My hon. Friend says that that is exactly what I stated. It will serve no useful purpose to continue bandying words with the right hon. Gentleman, but I would ask hon. Members in all fairness to look up the OFFICIAL REPORT to see whether the statement which I have made is not in accordance with the facts of the case, and that the impression which the right hon. Gentleman wished to convey to the House was that we had to look to our local trade and to our Dominions to recompense us for the loss of foreign trade. We could not look to a recovery of that great section of our trade. I should be very sorry ineed to misrepresent the right hon. Gentleman, but if the House will do me the honour of reading the statement in the speech of the right hon. Gentleman, they will find that what I have stated is in accordance with the truth. This Bill which has to provide for the finance of the year still carries on the unsound finance which, we are enjoying, if I might use the term, with regard to the depreciated state of currency and of our exchanges. I do not propose to develop that argnment, but merely wish to draw attention to the matter.

A number of speakers have referred to the great advantage that we enjoyed as a result of going off gold. What does that mean? If it be a supreme advantage to have a Finance Bill based on a continuance of such a state, if it be a good thing, why not make it continue for ever. Why trouble to restore the sound state of finance, to restore the Exchange, and secure the standardisation of currency? If hon. Members will study the problem they will admit that when we in 1931 departed from gold and went off the gold standard and we had goods on our shelves and in our warehouses, that gave a temporary advantage to the exporters. But we are importers as well as exporters, and the result has been that we penalise ourselves when we come to import. That is why we do not have a permanent paper currency and why we do not advocate it as a policy for any country. If we desire to restore our foreign trade we must face the problem of monetary reform. We must get a common denominator with other nations to settle the question of German transfer and the American debt. That is of supreme importance if we wish to restore the foreign trade by which we live.

I always hesitate to address the House on any question connected with finance because it is the one subject on which I feel that I am not as competent to speak as many other hon. Members. But the more I listen to speeches on finance in this House the more I feel that I do know a little about it. I envy the hon. Member for East Edinburgh (Mr. D. Mason) his knowledge of the monetary policy of the country. I wish I knew as much about it as he does. I am not sure, however, that I should be more capable of explaining it if I knew as much about the subject as he does. I have listened to most of to-day's Debate, and I have been astonished at the observations of some hon. Members. I wish the hon. Member for East Aberdeenshire (Mr. Boothby) were in his place. He told us that he had come across some figures which had been produced by statisticians who had no political bias. I have been searching for those gentlemen for some years. Every statistician I have come across is either a Tory or a Socialist. There is, of course, an occasional Liberal statistician. All statisticians, so far as I am concerned, are just as reliable as each other.

The right hon. and gallant Member for Newcastle-under-Lyme (Colonel Wedgwood) made an interesting speech. I do not think that there is any hon. Member more popular or better informed than my right hon. and gallant Friend, but I rather disliked the castigation he gave to the Labour party on the question of the taxation of land values. He wanted to know where we stand. I have wondered at times where he stands on most subjects. It always appears to mo that those gentlemen who follow Henry George very closely and intimately are always very sensible and intelligent on every other conceivable subject on earth, but as soon as they touch the problem of the taxation of land values it upsets their mental apple cart at once. That is the strange thing about the taxation of land values. It always makes the people who believe in it feel that they cannot suffer the opinions of anybody else unless they happen to believe in the taxation of land values. My reply to the right hon. and gallant Member is that, although I agree with him and would go the whole way with him in regard to the taxation of land, the fact still remains that when you have taxed the value of land the land is still left in the hands of persons who can use it for any purpose, and make profit out of it. That is only tinkering with the problem of the land.

On the Third Reading of the Finance Bill we are considerably restricted in what we can say. We cannot argue as to what should be in the Bill. All that we can do is to criticise and deal with those provisions that are in the Bill. I propose to deal with two or three practical points which have not yet been mentioned. I should be glad if the right hon. Gentleman would tell us exactly the meaning of Clause 11, which gives power to the Import Duties Advisory Committee, which apparently, they had not had before. The Import Duties Advisory Committee is a very handy instrument in the hands of this Government. It is their guide, philosopher and friend. I wonder sometimes whether the Government are satisfied that those gentlemen have not too much power over the destinies of this country, especially in relation to our trading with foreign countries. The Import Duties Advisory Committee can demand certain information from any quarter, including Government Departments. I should like hon. Members to notice the change which is now taking place, and it is a very important change in the powers of the Committee under the terms of Clause 11. In future the Committee will be able

"to disclose to any Government department or to any person authorised by a Government department any information obtained by the Committee if and in so far as it appears to the Committee to be necessary for the purpose of obtaining further information from that department on a matter which the Committee are required or authorised to consider by any enactment for the time being in force."

I am not a lawyer and I do not understand the law, but I do understand that the Import Duties Advisory Committee in future, having asked for information for the purpose of recommending the Government to impose new duties, will have secured that information from traders and manufacturers in the most confidential way. I do not think that the Committee could have secured all the confidential information that they have obtained up to now if it had been thought that the information was going to be used for any other purpose. I should like to know what is the reason for the change in regard to the securing of information by the Import Duties Advisory Committee and the transferring of it to a Government Department, and that Department being able apparently to use it for any purpose that it may think fit.

There is another provision to which I should like to draw attention There are new regulations to be made in relation to smuggling between the Free State and Northern Ireland.

When any one succeeds in smuggling any goods into this country it is the duty of the Customs officials to prove that he is a wrong-doer. That is the present law. But here, if goods are smuggled from the Irish Free State into Northern Ireland, not only are they to be confiscated, but the owner has to prove to the Crown that he is innocent. In our relations with the Irish Free State, so far as smuggling is concerned, we are going back to the French system of saying that the offender himself must prove that he is an innocent person. That is a radical change, and in my opinion it is not a good change. There is one other question that I must put to the Govt. Are we to assume that there are people in Northern Ireland who are not playing the game towards this country? Are the people in Northern Ireland in collusion with people in the Irish Free State smuggling on a colossal scale? In view of the fact that there are Irishmen north and south of the frontier, can any measures which we may set up prevent smuggling?

No doubt hon. Members have noticed that the Ottawa Agreement is mentioned more than once in the Bill. I have received, I do not know why, several letters recently from working men in Canada; the last letter I received I sent to the right hon. Gentleman in order that he may know what is happening there. The Ottawa Agreement provides that motor cars, typewriters, or patent leather, can come into this country free under Imperial Preference provided that the article has 50 per cent. content of Canadian manufacture. The complaint which working people in Canada make is that motor cars manufactured in the United States are sent into Canada and that all they do in Canada is to assemble them. In order to get the 50 per cent. content of Canadian manufacture and thus get the motor car into this country free of duty, they add, if you please, the cost of advertising the motor cars in Canada, the cost of printing information about them, and the freight for conveying them into Canada as well. Therefore, they consider they are well within the provisions of the Ottawa Agreement.

I have always had my doubts about this Agreement. I cannot conceive how the Canadian Government can possibly control this problem of the 50 per cent. content. In order to control it properly we should require to have our own Customs officers in Canada on the frontier; and there are 3,000 miles of frontier between Canada and the United States. Therefore, I think we are entitled to ask the right hon. Gentleman how far the Canadian Government comes up to standard of efficiency in enforcing the condition's under which they are supposed to be dealing with these articles. I am just as much afraid of the tricks which the United States people are playing on the frontier in relation to patent leather as I am in regard to motor cars and typewriters. The great slaughterhouses of Chicago produce the largest amount of raw material for the manufacture of leather, and it is more than likely that a great deal comes from Chicago into Canada where it is transformed into patent leather and imported ultimately into this country.

I was interested too in the speech of the hon. and gallant Member for Bournemouth (Sir H. Croft). He rather surprised me by an admission which he made. He said that he wanted employment and not customs revenue to be the primary consideration of the Government. That seems to me to be an indication, it may be slight, that the hon. and gallant Member is not quite satisfied with his own policy; that Protection in his view has not delivered all the goods which he prophesied it would. The hon. Member for East Aberdeen (Mr. Boothby) actually said that we are now witnessing an industrial revival. If hon. Members came to Lancashire they would not be able to talk like that. Lancashire, which is the greatest industrial county in the land, sends to this House about one-tenth of its representatives, and there is not a single member out of the 60 representing Lancashire who can say a single word in favour of the proposition that a great industrial revival is taking place in this country. It might be a good thing, when Governments are formed in the future, that places in the Cabinet should not turn so much on talent as on the territory they represent. If there had been two or three representatives of Lancashire in the present Cabinet I am sure that the Government would have taken more heed of the conditions which prevail in that great county. A protectionist policy may be all right for the tinsel goods of Birmingham but it is of no avail for the coal and cotton industries of Lancashire. Hon. Members must really take account not only of what is happening on the fringe of London, or in Luton and Birmingham, but the fact that within 80 miles of the City of Manchester, there are 10,000,000 people, and that there is hardly a town or village in the whole of that vast area of which it can be said that they are experiencing a great industrial revival under the present Government.

The situation is, indeed, becoming very sad in some parts of the country. I have given this illustration before, but I will give it again. In the division which I have the honour to represent, when I became a member 13 years ago there were 10,000 miners employed. To-day that total is reduced to 1,700, and the numbers are declining every year. Consequently we cannot congratulate the Government on having done anything whatever as far as Lancashire is concerned. Lancashire is the greatest exporting county in the whole Kingdom. Unless I am mistaken the greatest single item of export by this country consisted of Lancashire textile manufactured goods—greater than coal, greater than shipbuilding, greater than shipping. I am not going to say that it is because of this Government; I am not foolish enough to say that; but in any case it can be said that the claims of this Government at the beginning of its reign over this country were such that the Lancashire people had great hopes that the county would be saved by the Government; but if any person cares to study the condition of the 5,000,000 to 6,000,000 people living in Lancashire today, and the history of Governments since the last War, I am certain that the facts will prove that the conditions in Lancashire, whether because of this Government or not, have become worse since this Government came into power than they have been in the period of any previous Administration since the War. The facts would prove that. Shipping in Liverpool has gone down, the textile industry is going, the coal industry in the county is going, and as far as we in that county are concerned we are not at all satisfied with the performances of the Government.

This is the second or third Budget of the present Chancellor. Those who believe in Protection and those who argue for Free Trade will argue something like this: The Protectionist will say: "The condition of the country is better to-day than it was, and if Free Trade had been allowed to prevail the conditions would have been worse." We heard the argument of the hon. and gallant Member for Chippenham (Capt. Cazalet) on that point. We all leave out of account the climatic conditions that affect production all over the world. The hon. and gallant Member rather implied in his speech that this Government had been blessed by Providence, that the conditions in this country are not what they are because of the intelligence of the Government front bench but because of divine Providence. I am not so sure that the argument is a good one in that connection. Were it not for the restrictions that have been imposed by governments in Europe, were it not for the new frontiers created by them, and the economic nationalism which has emerged, there might still have been a slight improvement in trade. I maintain that the improvement might be very much better were those restrictions wiped away altogether. I am hoping to see the day come when the Governments of Europe will get together to co-operate and our own Government, whatever its political colour, will take the lead. We have tried these restrictions, quotas and subsidies and we should now say that we will try to find a better way of living and trading together. I am sure that that is the proper method for handling these problems—that the people of the world should trade openly and help each other by co-operative action to improve the conditions of employment in their separate countries.

I would like to begin the few observations which I desire to address to the House by acknowledging the very kindly and generous sentiments with which the hon. Member for Caerphilly (Mr. Morgan Jones) opened his speech this afternoon. I appreciated the compliments which he paid to my hon. Friend the Financial Secretary, because, although he certainly has well earned them, yet we do not always get credit given to us for our performances, even by our friends and much less by our opponents, and when we do it is only right that we should make full acknowledgment of it.

The discussion which has taken place upon the Bill has been of an unusually moderate character. A good many hon. Members tried, not with complete success, to air their views not so much upon what is in the Finance Bill as upon what they thought ought to have been in the Finance Bill. In deference to your Ruling, Mr. Speaker, I must deny myself the pleasure of entering upon a disquisition this afternoon upon subjects such as the American debt or the proper policy to be pursued in respect of housing or shipping, or whether or not I should have been justified in radically altering the Death Duties, since the Death Duties and these other matters do not figure in the Finance Bill at all. I must, therefore, confine myself to those parts of the criticisms to which I have listened which actually refer to the Clauses of the Bill.

I begin with a question which has been addressed to me by the hon. Member for Westhoughton (Mr. Rhys Davies) as to the purpose of Clause 11. I may point out to him that it is a little late in the day, on the Third Reading of the Bill, to begin to ask what is the meaning of a Clause which has been subject to discussion both in Committee and on Report and which has been—presumably in the absence of the hon. Member—the subject of Amendments by Members of his own party. It is somewhat amusing that the hon. Member should have based his criticism of Clause 11 on the ground that it gave the Import Duties Advisory Committee too much power of imparting information to various Departments of the Government. Had he been here during the earlier discussions on the Bill he would recollect that his own party found fault with this Clause, not on that ground at all but on the ground that it did not give sufficient powers of imparting information to the Departments. I think this is the second instance we have had this afternoon of profound and radical divisions of opinions in the Labour party, and I would therefore recommend them to spend the week-end in trying to compose their difficulties before they again take part in criticism of Government Measures.

I was not surprised to hear the hon. Member for Caerphilly once again express his strong objection to Clause 27 which deals with the land tax and land valuation provisions of the Finance Act of 1931. I regret very much that the hon. Member had to be absent from his place at the time when we had that extremely interesting and entertaining disquisition from the right hon. and gallant Gentleman the Member for New-castle-under-Lyme (Colonel Wedgwood). The right hon. and gallant Gentleman is, of course, a great authority upon the subject. We know that, because he has told us so. He is the only person in this House who understands the subject, and he informed us that the provisions which we are now repealing were utterly useless and meaningless and that they would be interred without a sigh. That, of course, was very much in accordance with what we ourselves have ventured, though with somewhat different ideas in our minds, to put forward on several-occasions. But once having paid my tribute to the hon. Member for Caerphilly, not only for his compliments, but for the very fair and moderate speech which he made this afternoon, I must express my strongest reprobation of his conduct about the Land Value Tax. We have done the Labour party a great service in this matter. We have removed from their way a mass of useless, meaningless, cumbrous legislation which would have been a very serious interference with any ideas that they might choose in the future to try to translate into legislation on the subject of land taxes and land valuation. Instead of expressing his gratitude for our having cleared the site of what, after what the right hon. and gallant Member for Newcastle-under-Lyme said, I must describe as insanitary buildings, he actually comes down to this House and says that he strongly resents our attitude. There is no gratitude in the hon. Member at all, and for my part I hereby renounce, once and for all, any future effort to try to make things easy for him.

The hon. Member made some complaint about the reliefs which have been afforded by the Bill, but on the whole I rather gathered, from the tone and the expressions which he used, that he was not disposed seriously to quarrel with the two principles which I laid down as governing me in the distribution of my surplus this year. He said he did not consider that the principles had been carried out, but in principle I think he agreed with them, and that is only in accordance with an observation to which I listened, I think it was on the Report stage of the Bill, from the hon. Member for Leith (Mr. Tinker), when he said that they are principles that have been accepted in every quarter of the House. I recall that on the Second Reading of the Bill there had been no such acceptance, and it is always pleasing to find that the sheer weight of the reasonableness of the efforts one has put forward has overcome the reluctance of the Opposition to accept them.

But having got the general acceptance of hon. and right hon. Gentlemen opposite for these principles, I come to the question as to whether they have been fairly carried out. There is always, I notice, a certain shyness and delicacy which come over hon. Members opposite when they get anywhere near the restoration of the cuts in unemployment benefit and transitional payment. On this occasion the hon. Member criticised the restoration of the cut in unemployment benefit on the ground that it had not cost the Exchequer anything.

The statutory benefit.

Yes, but I do not think the working man who is going to get 17s. instead of 15s. 3d. and 9s. instead of 8s. will very much mind where it comes from. What he is concerned with is how much is going to come to him, and I imagine that when the hon. Member for Caerphilly goes down and stands on the platform and calls down thunder and lightning on the head of the Government because the Exchequer has contributed nothing to the restoration of unemployment benefit, he will find that his audience will be left rather cold.

I have not found it so.

Perhaps the hon. Member does not tell them, what is nevertheless the fact, that it is the policy of the Government which has made it possible for the Unemployment Insurance Fund to find the extra money required for the restoration of the full amount of unemployment benefit. In the position in which we found the Fund, it was bankrupt and borrowing every week large sums from the Exchequer, and there was certainly no prospect of any restoration of benefit, but there was a prospect of increased contributions and lessened benefits in the future. It is the policy of the Government in that alone which has restored the balance and which has once more made the Fund not only solvent but able to have a very substantial surplus to its credit, and to put it in the happy position not only of being able to restore these benefits and to bear the cost of interest and sinking fund on the debt, but able also to contemplate that the Statutory Committee which is shortly to be set up will have in front of it a surplus which it will be able at an early date to take into consideration.

The hon. Member dealt at some length with the question of Income Tax allowances. I have always felt and I have always said that in the choice which I had to make as to the form in which I should give back that partial remission of taxation, which was all I could afford to do, there was room for a reasonable difference of opinion as to which was the wisest course to take. That difference of opinion has shown itself in the House, because Members even of the same party do not take the same view as to which was the best course. In quoting from the article from Lloyds Bank Monthly Review, the hon. Member did not quite appreciate what was the argument of the article. Incidentally, it is always satisfactory to see how much weight and influence hon. Members opposite attach to any pronouncement that comes from a bank, so long as it is conducted by private enterprise, as a source of the profoundest understanding of our problems. In quoting the particular article to which the hon. Member referred, he suggested that the writer had advocated the restoration of the Income Tax allowances rather than the reduction in the standard rate of Income Tax.

If I gave that impression, I was wrong. My sole intention was to take that quotation as indicating that a restoration of the allowances would increase the amount of purchasing power. I used the quotation as showing the value of increasing purchasing power in that sense.

I do not wish to misrepresent the hon. Gentleman and therefore, in what I am going to say, I do not want to suggest that I am criticising him. I will merely give the sense of the article, because it is of some interest as bearing on some of the observations he made. We had from my hon. Friend the Member for East Aberdeen (Mr. Boothby) an interesting disquisition on capital and consumption goods, and that was a topic touched on by the writer of this article. My hon. Friend pointed out that the American policy had been founded upon encouraging the increase in the production of consumption goods, and he expressed the view that that was a wrong policy and that we should en courage the production of capital goods. The article said that, as far as capital goods were concerned, a reduction in the standard rate was much better than an increase in Income Tax allowances. Therefore, the action I have taken is, in the opinion of this writer, calculated to further the policy which my hon. Friend the Member for Aberdeen East desires this country should follow. On the other hand, the article says:

"As far as consumers' goods are concerned, it is the smaller incomes which are most important."

It points out that in restoring the "cuts" the Chancellor has taken a step well calculated to increase the demand for consumers' goods. Therefore, so far as I can see and judging by what is written in this article, the Chancellor has done what both the hon. Gentlemen opposite and hon. Gentlemen behind me desire, both helping to increase the consumption of consumers' goods and the production of capital goods.

The hon. Member for Cardiganshire (Mr. D. Evans) who spoke earlier in the afternoon, voiced a complaint which I have heard a good many times now, that the Budget showed a certain want of imagination. It is all very well for dashing young sprigs to criticise those who, they think, may show extra prudence. There are many ways of conducting the finances of the country, and it is quite possible that other ways would be followed by other men if they were in my place, but one may perhaps point to the fact, to which witness has been generously borne by several of my hon. Friends, that this country is not so badly off compared with other countries, and that this is some justification for the humdrum and unimaginative policy in finance which I have hitherto pursued.

What I have endeavoured to do has been to follow the general policy of the Government, the guiding motive of the Government, which was to bring back prosperity to the country. I am not one of those who believe that everything can be done by a Government to achieve that end, nor am I one of those who believe that nothing should be done by a Government to help industry to help itself. I believe the Government should all the time be keeping its eye open for ways in which it can create conditions in which individuals and companies and concerns of one kind or another can help to make themselves, and incidentally the country, more prosperous. One of those conditions, perhaps one of the most important of all, is the creation of confidence, and the creation and maintenance of confidence is inconsistent with a policy of wild dashings in various directions without thorough consideration beforehand; and whatever may be lost by an indisposition to make experiments may well be gained, and more than gained, by a firm foundation of that confidence which really must lie at the bottom of all genuine improvement in industry and the prosperity of the country. We have had a very large number of difficult problems to tackle arising out of the crisis and we have already dealt with some, and, on the whole, I think we may say that we have dealt with them not unsuccessfully. Others are more powerful or more local in their application. The hon. Member for Westhoughton will not claim that industrial revival has occurred with equal effect in ever part of the country. We have our weak spots in employment in industry, land everybody knows that those weak spots are due to special causes which cannot be tackled in a moment of time.

In the case of Lancashire, the loss of trade did not begin only in the last two or three years; it has been going on longer than the existence of the present Government. Everybody, I think, knows what the main causes of the loss of trade by Lancashire have been, and that there is no prospect of that trade ever getting back to the position which it enjoyed at one time. The Government have not sat idly by. The events of the last few weeks have shown in regard to one of the major causes, that the Government are taking active steps to remove that cause. With regard to other industries, shipping, for example, the position cannot be put down to the action of the present Government. The position of shipping is chiefly due to the shrinkage in international trade, which is a world phenomenon, and which arises, fundamentally, from want of confidence. These are matters which we have to take one by one, each in its turn, and we have to think out and to apply the appropriate remedy in each case.

I said on a previous occasion that in my view it was not likely and not reasonable to expect, that we should again, at any rate in our time, see international trade approach its former proportions. That was in a passage which was alluded to by the hon. Member for East Edinburgh (Mr. D. Mason). He and I had a little passage just now as to the meaning of what I said. I think that the difference between us is a matter of time. The hon. Member represented me as saying that we should replace international trade by a fresh expansion of home trade and of trade with the Dominions. I never said that we could do that now. What I said was that you must look to a development in those two directions to compensate us for what we have lost in foreign trade. It is perfectly obvious that when the hon. Gentleman speaks of "the sparsely peopled lands of the Dominions" he is putting his finger upon the very point that I had in my mind when speaking of the future and not of the present. Of course, you cannot, with a population of 10,000,000, expect a market to replace that which you have lost with a population five, six, or 10 times that amount. The hon. Member surely does not anticipate that the population of the Dominions will remain at its present figure for all time.

I would just like to read very shortly—[HON. MEMBERS: "Divide!"] The right hon. Gentleman has very courteously given way, and what I want to read is only a matter of about six lines; I hope hon. Members will do me the honour of listening. The passage to which the right hon. Gentleman referred was in the Second Heading Debate, and was as follows:

"In the maintenance and expansion of the home market and in the further development of those inter-Imperial agreements which were begun, and only begun, at Ottawa—I believe that this country will have to find its compensation for the loss of so much of its foreign trade, which we probably shall not be able to recover in the lifetime of many of those present.—[OFFICIAL REPORT, 16th May, 1934; col. 1837, Vol. 289.]

That is exactly what I have said. I repeat that the hon. Member does not appear to appreciate the point—

What is the point?

The point is that it is not to the existence of present trade with the Dominions, but to the development of that trade in the future, that we have to look for compensation for the loss of international trade. The hon. Member does not seem to appreciate that this is a long-term policy; but, on what we do now with respect to the Dominions may very well depend the development of trade relations betwen the different parts of the Empire 50 years hence. What I am anxious to see is that we should so set the trend of trade to-day that, as the population of the Dominions increases, we shall get preferential treatment in those countries. There alone, so far as I can see, is there any prospect of filling up those gaps which have been made by the shrinkage of international trade.

I do not think I have anything further to say. When we have been suffering from a very long drought, and begin to see a few drops of rain fall, everyone is interested to wonder whether it means only a brief and temporary check in the conditions, or whether it is really a turn of the barometer and means that we are going to have the refreshing moisture of which we have been in need. Similar reflections might apply to this Budget, which, for the first time since the depression, has shown a lightening of our burdens. It is very rash to prophesy, and I am not going to do so now. All that I say is this. As in the past I have felt that I could not safely, and with due regard to my responsibilities, so far anticipate events as to give relief which I did not feel certain I could implement in the future, so to-day, in giving the relief which has been afforded by this Budget, I have done so in the full confidence that the relief will not have to be withdrawn in the future; and I hope it may turn out, whether I have over-estimated or under-estimated the revenue or expenditure of this country, that this will be but the beginning of the rare and refreshing showers which everybody desires to see descend upon the country.