HC Deb 19 May 1856 vol 142 cc387-99

Order for Committee read.

Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."


said, that his objections to this Bill were increased ten-fold since it had last been under consideration. The object of the Bill was to prevent insurance business from going abroad. Foreigners were not satisfied with inviting British subjects to insure abroad, but they had appointed agents in London; he, therefore, did not blame the Chancellor of the Exchequer for endeavouring to apply a remedy to this evil, but what they had to consider was the sort of remedy he proposed to apply. He thought the right hon. Gentleman had taken a wrong course, and that the Bill would be both impracticable and inoperative for the purpose of suppressing foreign insurances. In his opinion, it would be impossible to prevent people from sending their orders for insurance to France or Germany. His opinion was, that those orders would increase in such a ratio as would compel the Chancellor of the Exchequer to adopt a course more consonant with finance. The question simply was, in what manner could they prevent foreigners running away with a great part of the insurance business of this country? His answer was, that it could only be done in one way, and that was by reducing the duty on British insurances. The tax was wholly indefensible in principle. Mark how it worked. The amount of insurable property in this country was between £5,000,000,000 and £6,000,000,000, and yet not more than £850,000,000 were insured against fire, because of the excessive duty. In France £1,600,000,000 worth of property had been insured within the last thirty-six years. It was perfectly obvious if the duty were reduced a great benefit would be conferred upon the community, and the Chancellor of the Exchequer would in the end, no doubt, receive a large amount of revenue. The marine insurance was a precisely analogous case. The duty in former times was very high; what was the consequence? The owners of vessels and shippers of goods went to Rotterdam and Hamburg to insure. The Government reduced the duty, and the shipowners and merchants immediately resumed insuring in England. The same result would be the case with fire insurances. Clause 8 could only be enforced by opening every letter that passed through the Post Office. That nibbling sort of legislation was trifling with a great question. He hoped the right hon. Gentleman would take these objections into consideration, and provide a remedy more in accordance with sound principles of finance.


said, he fully concurred in the opinion expressed by the hon. Gentleman as to the impracticability of the measure. The object of the Chancellor of the Exchequer was to secure the revenue on fire insurances, but this was not the way to do it. He believed that if the duty were reduced from 3s. to 1s. it would effect all the purposes desired. It was impossible to retain the present amount of duty, besides which he thought the Bill objectionable in principle.


said, he thought that at a moment when free trade was making such rapid advances on the Continent, and when foreign countries were likely to make changes in their policy which would largely benefit us, the Bill before the House was one which would prejudice foreign nations against England. With regard to the duty levied by the Government, the fact was, that the large amount of allowances made to the insurance offices for expenses connected with the collection of the revenue acted as a bribe to those offices to hold their tongues. He cordially reiterated the hope that the Chancellor of the Exchequer would take the subject into his serious consideration.


said, the expenses incurred by the insurance companies in collecting the revenue which was handed over to the Government amounted, he believed, to more than the allowances received by them from the country. Then it must be remembered that in this metropolis the British insurance companies en- tirely maintained the Fire Brigade, the expenses of which during the last year amounted to £21,500, and the country fire brigades cost about the same sum. If, from being subjected to any unfair competition the resources of the companies were impaired, the public—non-insurers as well as the insured—would, of course, be deprived of this protection to property. On the part of the insurance offices, he could say that if the Chancellor of the Exchequer could see his way clear to give up two-thirds of the revenue arising from this source, they would be most happy to receive it as a boon. They did not press this now, but, meanwhile, he thought they had a right to ask for some defensive measure like the present.


said, he should support the Bill on the ground of the unfair competition to which the English offices would otherwise be subjected. With regard to the question of revenue, he thought the House ought not to part lightly with a duty bringing in about £1,300,000 a year—a sum collected probably with less difficulty than any other tax in this country. The proposition of the hon. Member for Sheffield (Mr. Hadfield) would reduce by one-half the revenue derived from fire insurances, and he, for one, was not, in the present position of the national finances, disposed to accept that proposition. When the alteration took place in the duty on agricultural insurance about twenty years ago, the effect of that was not to increase very materially the amount of property insured, although the reduction was very great. The amount of insurances upon agricultural policies between 1841 and 1851 increased only from £51,000,000 to £54,000,000, which did not, in point of fact, represent in any degree the difference in the value of property between those respective periods. Bringing the calculation down to the present day, he found that the amount of agricultural property insured was only about £62,000,000, which, taking into account the increase in the value of property, did not, in 1856, by any means represent the amount of insurance effected in 1841. He assumed, therefore, from these facts that a reduction of duty would not bring about the great increase of insurances which hon. Members seemed to calculate upon. It must be remembered, also, that the system of insurance was entirely different in this country from that which existed in France and Holland, where what was termed the "average clause" was adopted; and he would suggest to the right hon. Gentleman whether he could not leave the duty as it stood upon English policies in their present shape, but make a remission of the duty to 1s. or 1s. 6d. upon policies containing the "average clause." That would be a considerable inducement for persons to adopt the "average clause;" he considered that the competition of the French offices would be best met in that way; and by introducing the French practice into this country the Government would do more to increase insurances than by any other plan which could be devised. The great aggregate of the amount of losses arose from small fires, comparatively few of which were, strictly speaking, accidental; and if they did not occur through wilful design, many were the consequence of culpable negligence. He also thought the introduction of the "average clause" would have the effect of inducing greater care on the part of insurers. He conceived that the Bill was absolutely necessary for the protection of the English offices.


said, he entertained a very strong opinion that of all taxes now existing in the financial system of this country the tax upon insurances was not only the most inexpedient, but, if he might use a stronger word, he would say it was the most immoral, and that it combined every possible bad quality which any tax could have. At that particular moment, however, knowing the pressure there was upon the Government, and quite concurring in the general feeling of the House that this was not a fit time for undertaking a revision of the financial system of the country, he would not upon general grounds have opposed the Bill. But, on looking into the provisions of the measure, he found that it must apparently remain utterly inoperative unless larger powers were given than the Bill conferred, and than he believed Parliament would sanction. By clause 3, every person acting as an agent for any insurance office abroad was required under a penalty to take out a proper licence. The clause did not propose merely to interfere with any person opening an office, or advertising himself as an agent of a foreign insurance office, but with any person who in any single case acted as the agent of a foreign insurance office. Now, by what possible machinery did the Government intend to discover parties who were acting in the capacity of agents? The office was established abroad, and advertised in the English newspapers. Nay, it need not even do that, for it might circulate prospectuses by the post, and the business might be, and probably would be, transacted by correspondence. The agent might receive his powers by a private letter, and, acting upon these powers, he would communicate with his employers by private letters. In all those proceedings there was absolutely nothing that could come before the public, or of which it was in the power of the Government to take cognizance. He did not know what machinery the Government intended to employ, but he thought that in a great majority of cases such a course as he had described would be pursued. He had supposed that some explanation would have been afforded on the part of the Government of the means by which they intended to meet these cases, and, as no such explanation had been given, he felt that he had no alternative but to vote, as he did very reluctantly, against going into Committee on the Bill.


said, that the average clause in foreign policies, to which he referred on a former evening, was in effect this: that in case the property belonging to any person should be of less value than the amount insured, a proportion only of the amount would be paid, and by another clause in the foreign policy, he found that, if the parties would not agree as to the total value, they were remitted to the Courts of France for the matter to be inquired into. It should be well understood, that any person who took out a policy in these foreign offices was liable to be referred to the Courts in France before his claim would be settled. He thought at one time that interference by enactment with these new offices would be unnecessary, but he had since found that a larger amount of insurances was going abroad than he anticipated. The tax was objectionable as it at present stood, but he thought something ought to be done to protect the financies of the country as well as the insurance offices.


said, he thought the course the House seemed disposed to take with regard to this Bill was somewhat unusual. He had stated on a former occasion that the Bill was introduced in order to remedy a defect in the law respecting fire insurances. The present law did not prevent foreign offices from establishing agencies in this country, and dealing in fire insurances without being subject to the duty to which fire insurances effected in English offices were liable. The English insurance offices were thus exposed to unfair competition, inasmuch as the foreign offices were able to effect policies without the payment of the duty which was required from English offices; and the nation also lost the revenue which would have been derived if the insurances effected in foreign offices had been effected in English offices. It, therefore, seemed to him that it was a very obvious course to subject insurances effected by the agents of foreign offices to the same duties which were applicable to insurances in British offices. It had been stated by more than one hon. Member that the Bill would be inoperative and that it would not effect the object for which it was brought forward, but that objection proceeded from gentlemen who, as he understood, did not wish to render the measure more stringent and efficient, but to defeat the Bill altogether. He could only say that the Bill had been carefully drawn by the legal advisers of the department of revenue to which it related; that it had been submitted to the Law Officers of the Crown, and to persons interested in different insurance offices; and that he believed it would fully effect the object for which it was introduced. He was the person responsible for the introduction of the measure, which was to a great extent intended to protect the revenue of the Crown, and he did not wish to make himself responsible for proposing more severe or stringent provisions than the Bill now contained. If the measure should receive the sanction of the Legislature, and its operation should be ineffective, they might then consider whether more stringent provisions ought to be adopted. When, on a former occasion, he had said that the system of foreign insurances was a species of contraband traffic, he had meant that, although it was a practice which had grown up under the shelter of the law, it was an evasion of the purpose and spirit of the law, and, therefore, bore a resemblance to contraband trade. Those hon. Gentlemen who wished to obtain a reduction of the duty on fire insurances seemed disposed to say to the Government, "We have found out a mode by which the duty on fire insurances may be evaded; we will not allow you to amend the law, but we will make a bargain with you, and we will exact from you in return for an extension of your powers a diminution of the duty." That was a course scarcely worthy of that House. If hon. Members objected to the tax, and thought this a proper time for sacrificing so large an amount of taxation, why not bring forward a distinct Motion on the subject, and let the question be fairly debated on its own merits? It was a mistake to suppose that this tax was one of the desperate resources to which Chancellors of the Exchequer were reduced during the war before the last, for the fact was that the duty was raised to three shillings on the 28th of September, 1815, three months after the battle of Waterloo, so that it did not come into operation until after the conclusion of the war. Many duties had been remitted since that time, but it was not until this Session, at the conclusion of a great war, with a deficient revenue and a loan of £5,000,000 just contracted, with the prospect of a further loan in view, that the cry was raised against this tax, and a pressure put upon the Government to consent to its remission. He could not say that he was at all convinced by the arguments which had been advanced for the remission of the tax. He did not mean to say that there was anything in the tax which recommended itself to his eyes beyond the revenue which it produced, and he should have been very glad had it been consistent with his public duty to consent to its remission; but in the present state of the revenue no adviser of the Crown would be justified in proposing a reduction of taxation. All the arguments founded on the presumption that if the duties were lowered the revenue would increase were mere sanguine expectations, which would never be fulfilled. If two-thirds of the duty were remitted two-thirds of the revenue would most assuredly be lost. Such was the opinion expressed to him by some of the most experienced persons connected with insurance offices in the kingdom. The arguments drawn from the state of things in foreign countries were entirely delusive, on account of the prevalence of the system of averages in foreign insurance. Where an "average clause" was inserted in an insurance a person recovered the same proportion of his loss which his insurance bore to the total value of his house. For instance, if he insured one-third of the value of his house, he recovered the third part of his loss. He was afraid, however, that any attempt to force by legislation the universal introduction of the system of averages would be looked upon as an intolerable grievance. The suggestion of the hon. Member for Kendal (Mr. Glyn), to lower the duty on policies containing the "average clause," and to retain it at its present amount on the others, would be found, he was afraid, to produce much confusion. The habits of the country were too deeply rooted in the present system to think of any such change being successful. Under these circumstances he trusted no further objection would be made to the House going into Committee.


said, that for whatever purpose the Bill was brought forward it would, he believed, be totally ineffectual. If it was ever sought to make it in any degree effective, it could only be by means to which the people of this country would never submit for the purpose of putting a stop to foreign insurance. By one clause of the Bill it was enacted that every person who insured with a foreign office should be considered a Crown debtor for the amount of the duty. But how were you to find out who was such a debtor? It was said, that in order to do so, it would be necessary to open all the letters in the Post Office; and so it would be if the foreign offices chose, as they I would, to advertise in this country, and then to communicate by letter with intending insurers in this country. The clause in question was wholly without meaning, and he did not believe it would be possible to enforce it. If there were any means of intercepting the policies as they came to this country, as you did a cask of wine or a bale of goods, then the Bill might have had some chance of being operative, though he should certainly not have expected to see a new tax of this kind introduced by the present Government. Then the Bill went on to impose a penalty on all who acted as agents for a foreign insurance company without taking out a licence. According to that, every person who came over from abroad, and called upon private gentlemen at their own house, as the agents for the wine houses did, would be liable to a penalty if he did not take out a licence. How could such a clause as that be enforced? Then, by another clause, it was provided that all persons who, by any public notice or advertisement, were advertised "as persons from, or to, or by whom proposals shall be effected, shall pay £100 a day;" so that if an insurance agent in Paris advertised that Mr. A or Mr. B would receive policies in England, the person so indicated would be liable to £100 a day, without, perhaps, even knowing that he had been advertised. The present Bill was an attempt, by means of an ingeniously-framed clause, to meet every possible case which could arise—to impose a duty where, from the nature of things, it would be utterly impossible, with effect, to impose or enforce it. He trusted, that if the Government felt it necessary to keep up this duty a little longer, they would let foreigners carry on their business as they had hitherto done, and would leave those who chose to trust them, and would not seek to interfere in the matter, in a way which must be utterly fruitless.


said, that the present was not the occasion on which to discuss the policy of the duty upon fire insurance; but he contended that, while it continued in force, foreign offices ought to be subjected to the same duty of 3s. per cent as the English offices were obliged to pay.


said, he would remind the House that if they voted for this Bill they voted for that which would inevitably foster improvident habits among the people. There was property insured in this country to the value of £900,000,000, but property to the value of £1,800,000,000, still remained uninsured, and it would continue so if the Government were enabled to pass this Bill.


said, that in order to give the House a distinct issue to divide upon, he would move, as an Amendment, that the Bill should go into Committee upon that day six months.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes 172; Noes 31; Majority 141.

Main Question put, and agreed to.

House in Committee; Mr. FITZROY in the Chair.

Clause 1 agreed to.

Clause 2 (Persons insured chargeable with Duties where Insurances made by Unlicensed Foreign Companies).


said, he thought some explanation was due to the Committee, for the Bill aimed at establishing a system of espionage quite foreign to this country.


said, that the object of this 2nd clause was to prevent that advantage which foreign countries would otherwise have over the insurance offices of this country. It was not proposed to make any charge upon the foreign companies which were beyond the jurisdiction of our law, now was it sought to fix agents who might be men of straw, but the persons who effected the insurances should be liable, for he saw no one else whom they could make liable. If this were not so, foreign companies would have the advantage over our own national companies which, of course, it was desirable to prevent.


said, he had great difficulty in seeing how the Government were to devise means of knowing what insurances were effected subject to this measure.


said, he thought the Committee would do well to allow this clause to stand, although he frankly admitted that he did not place any very great hope in its practical result.


said, he thought that the whole Bill was inoperative, but of all its provisions, this particular one was the most useless.


said, he did not attach any particular value to the clause; but, as a declaration of the liability of persons insured, it might not be altogether without use.


said, he thought the clause a most reasonable one, and necessary for the consistency of the Bill. The clause made it obligatory on the insurers, in the case to which it referred, to pay the duties as a debt to the Crown, and there would be no difficulty in compelling a discovery of the insurances effected by them.


said, that during the whole of the discussion, no explanation had been given of the means proposed to be used to ascertain who were the parties liable to the payment of these duties.


said, that if it were proposed to find out the parties by a bill of discovery, that would be a most expensive process, and the discovery of a single insurer for £5, or even 5s., might cost £500. The remedy was most impracticable, and the clause ought to be thrown out.


said, he would take the sense of the Committee on the clause. It could only be enforced by opening letters at the post or by employing spies.


said, he wished to ask, whether, if he went to Paris, and effected there an insurance of his house in this country, he Would be liable to prosecution on bringing back his policy?


said, that if the Bill received the sanction of Parliament, the hon. Gentleman would be, under the circumstances, liable, at the suit of the Crown, to pay the duties on insurance and the costs of the suit. He would not be liable to any penalty. The hon. Member for Montrose (Mr. Baxter) intimated that the clause could only be carried into effect by a system of espionage, but nothing was further from the intention of the Government than to resort to such means; obviously a great variety of modes of effecting the object might be resorted to, quite justifiable and according to ordinary practice. It should be borne in mind, too, that the clause would have a deterring effect, for persons would be extremely cautious how they made themselves parties to any illegal transaction.


said, he would remind the Chancellor of the Exchequer that in his first speech he had said this clause would be inoperative, and that in his second speech he had said he believed it would be of much service in checking foreign insurances. He (Mr. Ewart) objected to a system of legislation which would rest upon the chance of catching particular persons who might have infringed its provisions. He had a great dislike to a system of chance, by which a person would now and then be made a victim.


said, he wished to have this question answered. Supposing a hundred merchants of Liverpool, or any other place, wrote to a well-known insurance-office in Paris, desiring to effect policies of insurance on their properties, received the policies and transmitted the premiums, how was it proposed to obtain the knowledge that they had effected such insurances and become debtors to the Crown for a certain amount of duty? It was no evasion of the law to effect insurance abroad. The Bill did not prohibit it. On the contrary, the Bill legalised such insurances by making them liable to duty.


said, in the first place, he did not believe in the possibility of the fact which the hon. and learned Gentleman assumed. He believed that if by law insurances effected abroad were made liable to duty, no respectable or honest man would effect an insurance abroad, and withhold the duty. He would ask the hon. and learned Gentleman whether he himself would do so? If, as he believed, the hon. and learned Gentleman would not violate the law, it confirmed his opinion that all honourable and honest men were, by this clause, brought within the rule of the law. As to there being no means of ascertaining who were liable to the duty, there were the same means in this as in all other cases, that, when they found an individual evading the law, they came down upon him with the strong arm of the law and made him pay. The English companies would keep a very sharp look out for such offenders, and while honest men would not be guilty of evasion, cautious men would not venture upon infringement, which entailed upon them litigation, and not only the duty but the costs of a suit.


said, that however honest a man might be, the present measure did not show him to whom the duty was to be paid, or how it was to be paid. Assuming that the provisions of the Bill were most just, it was the duty of the Government to devise means by which Returns should be made. There was not a single case in which a duty was imposed by the Legislature in which there was not some provision made by means of which an honest man could easily do his duty, and he called upon the Government to devise some machinery for pointing out how the duty was to be paid.


said, he agreed with the hon. and learned Gentleman in the necessity of introducing a clause to point out the manner in which the duty should be paid.


said, he had understood the right hon. Gentleman the Chancellor of the Exchequer to say that this clause had received the most careful consideration, and had been sanctioned by the Law Officers of the Crown. He thought that the right hon. Gentleman must have been mistaken, because, in the first place, one of the Law Officers of the Crown had stated that he had never seen the clause; and, in the second place, the clause, taken in conjunction with the third clause, would compel persons to pay the duty twice over.


said, he must admit that, as the clauses stood, such would be the case, but care would be taken to make such alterations as would guard against that result.

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

The Committee divided:—Ayes 143; Noes 54: Majority 89.

Clause agreed to.

The remaining clauses of the Bill were also agreed to.

MR. HADFIELD moved the following clause:— That, in place of the duty imposed by the statute of 55 Geo. III., chapter 184, schedule, part one, for or in respect of every insurance from loss or damage by fire only, there shall be paid for or in respect of every insurance from loss or damage by fire only, which shall at any time after the passing of this Act be made or renewed or continued by any public company or other person or persons licensed, or who ought to be licensed, as in the said Act mentioned, or by the Royal Exchange or London Assurance Corporation, a duty at and after the rate of 1s. for every £100 insured for a year, and at and after that rate for any fractional part of a year, as well as for any number of years for which such insurance shall be made or renewed or continued, but no fraction of a penny shall be charged.


said, it was unnecessary to repeat the arguments which had already been used against the proposition of the hon. Gentleman. The present seemed scarcely the time when the reduction of such an amount of taxation could be brought under the consideration of Parliament. Whenever there should be a surplus revenue, an opportunity would be afforded to the House to take the principle of this duty into consideration. But whenever that time arrived there would, no doubt, be other gentlemen who would prefer similar claims and advance strong arguments against other parts of the taxation of the country. It would then be the duty of the House to consider which party had the strongest claim for a reduction, and which tax it would be most convenient to the Government to reduce. He hoped, after the opinions which had been expressed, the hon. Gentleman would not think it necessary to divide the House.

Clause put and negatived.

Bill reported, as amended.

House resumed.