HC Deb 21 April 1856 vol 141 cc1374-80

Order for Second Reading read.


in moving the second reading of this Bill, said, it was intended to supply a defect in the existing law. By the existing law the duty of 3s. per cent per annum on fire insurances was only chargeable where the insurance was effected by a head office established in this country. Now, it was obvious, that companies established in England could not compete with foreign houses having agencies over here, unless both were placed upon the same footing, and made liable to the same duty. The purpose of the Bill, therefore, was to effect that object.

Motion made, and Question proposed, "That the Bill be now read a Second Time."


said, he believed that the Bill would have the effect of driving a very lucrative business from the country, and that it would be impossible to prevent foreign companies having agencies in England; he must therefore oppose the further progress of the measure. The only mode of meeting the difficulty was, for the right hon. Gentleman to reduce the duty upon fire insurances, so as to place all companies, foreign and domestic, upon the same footing. He should move that the Bill be read a second time that day six months.


seconded the Amendment.

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

Question proposed, "That the word 'now' stand part of the Question."


said, he greatly feared that the result of the measure would be that described by the hon. Gentleman who now proposed its rejection. We invited France to freedom of trade and free communication with this country, and yet the moment anything arose that offered an advantage to France the Government interfered with a Bill of this kind. He believed the Bill would be entirely inoperative. They might object to having accredited agents in this country, but they could not prevent communication by letter, and therefore they would only drive away the insurance business from this country. The duty had for a long time been liable to strong objections, and, in his opinion, the Bill would be inoperative.


said, he hoped that the right hon. Gentleman the Chancellor of the Exchequer would not, at that late hour—a quarter past twelve—proceed with a measure which was regarded with very strong feelings of disapproval by hon. Gentlemen on both sides of the House, as being a step in a wrong direction. In his opinion, the question which that House ought to consider was, the propriety of reducing the duty upon all insurances, a step which would, he believed, ultimately tend to increase and not reduce the revenue.


said, he must deny having introduced the Bill without full consideration. Some time ago a deputation of gentlemen connected with insurances offices had waited upon him, and had represented to him that they were exposed to great danger from an agency which had been opened in London for a foreign office, and they begged him to lose no time in bringing in a Bill for their protection. He had upon that occasion stated that he would not introduce a measure until he was satisfied that the danger which they apprehended was real, and not imaginary. The result of his inquiries had been, that the danger apprehended was not an imaginary one, and he had consequently introduced the present Bill, although certainly not without incurring the reproach of supineness for not having brought it in at an earlier period, and he believed that the Bill would have the effect of protecting English companies. There had never been any law against persons insuring in foreign offices, but it had been found, hitherto, that notwithstanding the facility of communication and the ease with which insurances might be effected in Paris, in Amsterdam, or in Hamburgh, from the fear of encountering foreign litigation, and from a dislike to transacting business through foreign agents and foreign lawyers, and in a foreign language, few insurances had been effected in foreign offices, although a higher rate of premium was charged upon insurances in this country. As to reducing the duty, he could only repeat what he had said on a former occasion, that all taxes were liable to objection, and a plausible objection might, with little ingenuity, be raised against every tax. Looking upon the question as a matter of revenue, the tax in the year 1855 had produced in England alone £1,282,000, and at present the country was not in a condition to be able to part with so large a source of revenue. When this duty was first imposed in the year 1782, it was fixed at the rate of 1s. 6d. per cent, and in the year 1792 it produced £138,000. It was then raised to 2s., and the amount of the tax had still gradually increased, and after being raised to 2s. 6d. it was ultimately fixed at 3s. Now, during the whole period the amount of the tax had gone on increasing until, in England alone, in the year 1855, it amounted to £1,282,000. It was now proposed to lower the duty to 1s. per cent. which would be 6d. less than the original duty. Now, in 1833, in consequence of the number of incendiary fires, farming stock was exempted. He would assume that exemption removed, and the utmost revenue that could be reckoned upon would be about one-half, or £600,000. The whole general property now insured was £870,876,000, and farming stock, not paying duty, £64,812,000. The speculation about the increase of insurances was so very uncertain that no cautious person would build upon it at such a time as the present. The arguments which seemed to prevail with the hon. Gentleman who last addressed them might be very sound when they had an opportunity of considering the appropriation of a surplus revenue. He confessed that he had not himself looked at the subject in that point of view. It involved a revenue of nearly £1,300,000, to which, hitherto, no serious objection had been made. Under the circumstances, he therefore hoped the House would consent to let the Bill be read a second time, and the question of a reduction of duty might be deferred to another occasion.


said, no doubt the loss of that amount of revenue was a serious consideration. The right hon. Gentleman would not, he supposed, deal with the agency of any company established in London unless it were doing a good business. The Bill appeared to him to be so much waste paper; he could not conceive anything more inoperative. An agent might be appointed whom the Bill could not touch. They might carry on their business under the provisions of the Bill, and the Bill would only serve to lose to the right hon. Gentleman his revenue, and to give endless worry to the public. The information as to the way in which these insurances were to be done would spread, and the only way to meet the difficulty would be to lower the duty. People were not fond of going abroad, and until they lost a great deal—something like double the amount, which was the case at present—they would rather effect their insurances at home.


said, that the Bill seemed to him calculated to do all that the Legislature could do on the subject. It effectually operated on insurance offices connected with foreign establishments in this country; but as to putting down insurance offices abroad, that was impossible. He had fully considered all the questions connected with the subject, and he still thought that the Bill would effect the object desired.


said, he thought the subject was one which required further consideration. The prudence against which that tax was directed ought to be encouraged rather than discouraged. He was sure that if a great reduction were effected in the duty on insurances the full amount of the tax would be received in the space of not very many years. In conclusion, he should move that the debate be adjourned.


said, he believed that discussion would serve to make known to many people in this country a fact which they did not know before, namely, that they could effect their insurances at a great saving in France. The Bill could not, he believed, settle the question which it involved. He confessed he entertained a strong expectation that, now that peace had returned, the right hon. Gentleman the Chancellor of the Exchequer would imitate the bold policy of his immediate predecessor (Mr. Gladstone) and of the late Sir Robert Peel, and would remit many obnoxious taxes, however difficult it might be for him to find substitutes for them. He (Mr. M. Gibson) considered that it was not the business of independent Members of the House to point out those substitutes to the right hon. Gentleman. He hoped the right hon. Gentleman would agree to the Motion for the adjournment of the debate, as the subject manifestly required more consideration than they could bestow upon it at that moment.


said, he was quite prepared to support the Bill. He had felt much pleasure in hearing the right hon. Gentleman the Chancellor of the Exchequer that evening advocate the principle that it was the duty of the Government of this country to protect British capital against foreign competition. He hoped that the right hon. Gentleman would persevere in the course on which he had entered, and that in his approaching Budget his recantation of his former doctrines would be frankly carried out.


said, he was in possession of a few facts bearing upon the question, which he was anxious to state to the House. He found that the French company lately established in London charged 2s. for insurances in this country, while in France they charged only half a franc, or rather less than 5d., for insurances of the same amount. The diminished charge which they imposed in their own country was owing to the fact that there what was called the "average clause" was universally adopted. Under that clause a person effecting an insurance policy only got, in case of an accident, a sum proportioned to the value which his insurance bore to the whole of the property; so that if a man insured for £3,000 a property worth £9,000, and if that property was damaged to the extent of £1,000, he did not receive the whole of that sum, but merely one-third of the amount. The insurances were thus much more cheaply effected in France than in this country, and the practice of insuring was in consequence much more extensively adopted. The value of the whole of the property insured in England amounted to little more than £900,000,000; the value of the property insured in France, a much less wealthy country, amounted to £1,500,000,000. He should be glad to get rid of the tax altogether; but he doubted whether the money raised under it could, for the present, be spared. He believed that if the "average clause" were introduced into England, and if the duty were reduced to 1s., we should be able to derive as large a revenue from that source as that which we at present received.


said, it was the opinion of the principal insurance offices in this country that this measure would operate both as a protection to the revenue and to the interests of the British companies. The remission of the tax in regard to agricultural produce had led to a very large increase in the amount of property of that description insured; and if the present tax were reduced to 1s. it would require £2,700,000,000 of property, instead of £900,000,000, to be insured to sustain the revenue at its present point.


said, he did not think the question of free trade was in any way involved in the proposed measure. If a malt tax were imposed in this country there would surely be no violation of the principle of free trade or of any principle of common sense in declaring that, although people might obtain malt duty free in France, Frenchmen should not therefore be allowed to sell malt duty free in England. But that was a case precisely analogous to the present. It was true that Englishmen might go abroad for the purpose of effecting insurances, but they rarely availed themselves of that power, because they felt that there were special advantages in their insuring at home. They had here greater facilities for legally recovering claims, and they had a greater certainty that the companies with which they transacted their business were perfectly solvent. But it did not follow that because we could not impose a tax on foreign insurance companies when they remained abroad, we should not, therefore, impose a tax upon them when they came to transact business in this country. If the Bill was thrown out, they would not effect the point in issue. They only permitted a French office to come to this country, and establish an office in Regent Street, in Cornhill, in Manchester, or in Birmingham, to compete unfairly with English offices.


said, the hon. Member (Mr. Wilson) had propounded such a sound doctrine that he should give him his support.


said, he must deny that the case of malt made in France was a parallel case. Insurances could be effected by letter. Sea insurances abroad did not prevail to any great extent, because the English duty had been reduced.


said, he did not approve of the adjournment of the debate. He did not think that the Bill would, as asserted, serve as an advertisement to show the advantages of French insurance over English insurance. But if this were the case, the danger might be obviated by making such a reduction in the property tax with respect to property insured as would meet the exigencies of the case.


said, he would not take the credit or blame, as it might be, of having proposed this Bill in ignorance. The question had been fully considered, and his impression was, that the Bill would be as operative as could be expected. He believed it would be as effective for its purposes as other measures of a similar nature usually were. The object was to remedy a defect in the law, as he had already stated. The question had no reference to the amount of the duty. If the duty were reduced to a shilling, his proposition still would be to pass this Bill. There was at present an unjust differential duty against English insurance companies, and this the proposed Bill sought to remedy. If, however, the House thought they were not in a position to come to a satisfactory decision he had no objection to adjourn the debate; but in so doing he must say he had heard nothing to shake his confidence in the Bill, which he believed to be a proper measure and adequate for its purpose.

Debate adjourned till Friday.

The House adjourned at a quarter before Two o'clock till Thursday.