HC Deb 28 November 1867 vol 190 cc339-59

WAYS AND MEANS considered in Committee.


Sir, in the unavoidable absence of my right hon. Friend the Chancellor of the Exchequer, it devolves upon me to lay before the Committee the materials which are necessary for their consideration before they decide as to the sources whence the expenses of the Abyssinian expedition are to be provided. I cannot but regret on two grounds that upon me rests the performance of this duty—first, on account of the indisposition of my right hon. Friend—a regret which I am sure the Committee will share; and secondly, on account of the disadvantage at which the Committee will be placed through having this Financial Statement from me instead of from my right hon. Friend. The Committee, I am confident, will well understand, after witnessing the great sacrifices made by my right hon. Friend in attending here last week under the most trying circumstances, that it is only the physical impossibility of attending that causes his absence this evening. Under these circumstances, I think that I may reckon upon the kind indulgence of the Committee, and that, undertaking this task as I do at very short notice, they will pardon any shortcomings. The House having determined yesterday to agree with the Committee of Supply that £2,000,000 should be voted towards defraying the expenses of the Abyssinian expedition, the Committee are of course prepared for a proposition to provide for that expenditure. I believe, that occupying the position I do on the present occasion, the Committee will not expect me to go into general principles as to how military expenditure ought to be provided for. It would be easy to lay down general principles; but the application of those principles must vary according to the circumstances of the moment. Abandoning, however, the treatment of the question upon abstract considerations, and confining myself merely to the present emergency, I will state that the Government have no hesitation in saying that they do not pro- pose to look beyond the resources of the year for meeting these £2,000,000. It was, of course, open to the Government to propose a loan—either for a long period or a short period—leaving it to be decided by the Committee of Ways and Means next year how the burden should be borne. The Government, however, think it is a more manly course to face our difficulties, and provide this year for the extra expenditure which the expedition will entail upon us during the year. That being the case, we have to consider how we can provide in 1867–8 for this sum of £2,000,000, which was of course not contemplated when the Chancellor of the Exchequer made his Financial Statement on the 4th of April. But before proceeding to inquire whether any additional source of income is required, it is desirable to check the Estimate laid before the Committee of last Session by my right hon. Friend. Unfortunately, I cannot lay before the House on this occasion so glowing a statement as it has been the happy lot of the right hon. Gentleman opposite (Mr. Gladstone) to make so frequently in reviewing the fiscal history of previous years. The Committee has been accustomed for many years past to hear, and to hear with great satisfaction, that the surplus estimated by the Chancellor of the Exchequer at the commencement of the financial year has been largely exceeded, and that the revenue has flowed into the Exchequer in a manner which has more than fulfilled his most sanguine expectations. That is not the case this year so far as present experience extends; nor has the Government reason to suppose that it will be the case at the end of the financial year. The causes are not far to seek. The monetary crisis of 1866 has certainly been felt in the Exchequer during the present year; and it will be evident that this is so when I say that the branch of revenue which is less favourable than in previous years is the Excise. The want of confidence in new enterprizes and the great financial depression have exercised an influence over the employment of labour in public works, and it is those who live by daily labour who chiefly contribute to this source of revenue by their consumption of malt liquor and ardent spirits. However, in spite of this, the Committee will learn with satisfaction that the surplus estimated by my right hon. Friend on the 4th of April is likely to be realized, or very nearly so. But, in stating this, I should add that the actual revenue received during the eight months does not lead us to suppose that the revenue will flow into the Exchequer exactly in the manner and from the sources that were anticipated. The Government expect there will be a falling-off in the Excise, in Income Tax, and in Miscellaneous Revenue; and, on the other hand, a gain upon Customs, Stamps, and the Post Office. Taking one head of revenue with another we anticipate, without additional taxation, very nearly the same amount of income as was estimated when the Financial Statement was made in April. On the other hand—of course, putting out of consideration for the present the Abyssinian expedition—we have been able to check the expenditure, which will be rather below the estimate. In round numbers we anticipate about £100,000 less of income and about the same saving of expenditure. The Committee may recollect that the surplus estimated on the 4th of July was £246,000; but in the course of the Session there were certain alterations in the Estimates, and the result at the end of the Session was that, making allowance for all the variations which took place—a diminution in some items and an increase in others—the estimated surplus was reduced to £205,000. Under these circumstances, I think that even my hon. and learned Friend the Member for Tiverton (Mr. Denman) will recognise the wisdom of continuing the attorney's certificate duty, and the House will feel a satisfaction in having followed the advice of those who, being responsible for the finances of the country, resisted the repeal of that tax. That being the case, I think, putting Abyssinia out of the question, we have some reason at this moment, as I have said, to expect a surplus—speaking in round numbers, for I do not pretend to go into particulars—of about £200,000 at the end of the year. Of course, that surplus will be available as far as it goes for the expenditure of £2,000,000, which has been voted for the Abyssinian expedition, leaving a sum of £1,800,000 to be provided in other ways. The Committee will, no doubt, be anxious to know in what way the Government propose to provide for that expenditure. Not to keep the Committee long in suspense, I will say that they propose to lay on an additional 1d. of income tax during this financial year. The Committee is, no doubt, aware that an additional 1d. on the year's assessment will bring in something under £1,500,000—or, to take a prudent estimate, about £1,450,000. But the Committee should bear in mind that, although an additional tax to that amount is put on, the whole sum of £1,450,000 will not come into the Exchequer within the present financial year. The sum which it is reckoned can be collected and paid in within this period is £840,000, leaving the balance to be brought to account after the close of this year. Therefore, all the Government has to depend upon this year towards the expenses of the war is the £200,000 surplus which I have named, and the £840,000 to be raised by means of the addition to the income tax—if the Committee assent to the proposal—which will leave £960,000 to be provided for in other ways. Well, the Chancellor of the Exchequer has, of course, given great consideration to the probable state of the balances at the close of the year. And here I may, perhaps, be permitted to refer to what the balances amounted to at the beginning of the year, and then to show how, if we take from them this sum of £960,000, our balances would stand at the close of the financial year. On the 1st of April, 1867, the balances were £7,294,000. Supposing the proposition which I now make on behalf of the Government to be assented to, the excess of expenditure over revenue—taking into account the cost of the Abyssinian expedition on the one side and the £840,000 of additional income tax on the other—will be £960,000. Then there is also an estimated excess of payments over receipts, other than revenue expenditure and receipts, of £684,000, making a total to be deducted from the balances of £1,640,000. Deducting this sum of £1,640,000 from £7,294,000, which we estimate we shall have as the amount of our balances on the 31st of March, 1868, there remains a sum of £5,654,000. This is, indeed, not a very strong balance. I will, however, call to the recollection of the Committee the state of the balances in some previous years. In 1862 the balance on the 31st of March was £5,289,000, and on the 31st of March, 1866, it was £5,851,000, which is within very little of the sum now proposed to be left as a balance. But then it should also be remembered that, though we shall leave the balance upon this estimate at £5,654,000, we shall have coming into the Exchequer after the close of this financial year on account of income tax levied in respect of the current year £610,000, and therefore the balance will be recouped to that extent out of the Ways and Means provided for this year. In referring to the state of the balances, I should have remarked that the Government are assuming that we shall renew the £1,700,000 Exchequer Bonds, which they took power to renew in the Budget of April. At present we have paid off £700,000 of these bonds, but we have made arrangements for the renewal of these bonds next month, and we contemplate the renewal of the remaining £1,000,000, which are payable next March. There is a sum of £672,000, which is available during the quarter, on account of Sinking Fund, and we have made use of that in repayment of temporary advances from the Bank. We intend to avail ourselves of similar resources next quarter, which will give a sum of £228,000. That sum is taken into account in estimating the balances which we anticipate. In considering whether we might safely leave that sum of £960,000, which I have before mentioned to be provided for out of the balances, we have taken the opinion of those most competent to advise us, and the Government have come to the conclusion that it will be perfectly safe to leave the balances in that state. It has been objected by some persons that the expenditure for this war ought not to be wholly provided for out of income tax, but that those who contributed to the public taxation otherwise ought to be made to bear their share. Supposing that objection to be made, I will reply that the balances in the Exchequer are made up of the general revenue of the country; and therefore in that sense it may be said that the Government are providing for the war in a way which will throw the burden not only on the income taxpayer, but also on those who contribute to the other taxes of the State. I have endeavoured to be as concise as possible in my statement, and I now propose to put into the hands of the Chairman the Resolution which will lay an additional 1d. of income tax on the year 1867–8.

Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, in addition to the Rates and Duties granted by the Act passed in the 30th year of Her Majesty's reign, chapter 23, for one year, commencing on the 6th day of April, one thousand eight-hundred and sixty-seven, for and in respect of all property, profits, and gains mentioned and described as chargeable in the Act passed in the 16th and 17th years of Her Majesty's reign, chapter 34, for granting to Her Majesty Duties on profits arising from property, professions, trades, and offices, there shall be charged, col- lected, and paid for and in respect of such property, profits, or gains, either by assessment or otherwise, the following additional Rates and Duties (that is to say): Upon any assessment made on the annual value or amount of any property, profits, or gains (except property, profits, and gains chargeable under Schedule (B),) the additional Rate or Duty of one penny for every twenty shillings of the annual value or amount of all such property, profits, and gains respectively; and for and in respect of the occupation of lands, tenements, hereditaments, and heritages chargeable under Schedule (B), the additional Rate or Duty of one halfpenny in England, and of three-eighths of a penny in Scotland and Ireland respectively, for every twenty shillings of the annual value thereof; and such additional Rates and Duties respectively shall be collected and paid with, and over and above, the second moiety of the Duties assessed or charged for the said year: Provided always, That, where any dividends, interest, or other profits or gains becoming due or payable half-yearly are assessed or charged half-yearly with the Rate or Duty under the said Act of the thirtieth year of Her Majesty's reign, chapter 23, there shall be charged upon the first assessment or charge which shall be hereafter made on such dividends, interest, profits, and gains, the additional Rate or Duty of two pence for every twenty shillings of the half yearly amount thereof; and where any profits or gains becoming due or payable quarterly are assessed or charged quarterly with the Rate or Duty under the said Act, there shall be charged upon the first two quarterly assessments or charges respectively which shall be hereafter made on such last-mentioned profits and gains, the additional Rate or Duty of two pence for every twenty shillings of the quarterly amount of such last-mentioned profits and gains; and the said additional Rates and Duties charged in such half-yearly and quarterly assessments respectively shall be collected and paid with and over and above the Rates and Duties assessed or charged therein respectively under the said Act.


I think, Sir, we all concur with the hon. Gentleman who has just sat down in lamenting the absence of the Chancellor of the Exchequer, on account of the annoyance it must cause him to be absolutely disqualified from performing one of his most appropriate and important duties; but in every other respect I am sure we have no reason to complain of the manner in which the place of the right hon. Gentleman has been supplied. The hon. Gentleman opposite has given us a perfectly clear statement of the condition of things on which we are called upon to act. He has placed the House in a position to pass judgment upon it, and I must at once say that, as far as I am concerned, I propose to deviate from the ordinary rule observed on such occasions, because at this period of the year there would, I think, be a practical difficulty in inducing us to postpone our opinions. It is better, therefore, to say at once what we think on the subject. The usual rule in Committee of Ways and Means is that the House should adjourn its judgment, and not only does it do so, but it is the practice of hon. Members generally to refrain from delivering positive opinions. I have no doubt that it is the intention of the hon. Gentleman to allow the Resolution to stand over for a while before taking an absolute Vote upon it; but, inasmuch as, so far as I am concerned, I see no difficulty about the matter, I proceed to deliver an opinion. One word only about what the hon. Gentleman has said with respect to the state of the revenue and expenditure of the country. I do not now mean the amount which the expenditure has reached, or the addition made to it in the course of the year, because I do not think this a proper and convenient time for entering upon that matter. But, as respects the condition of the revenue itself, I am bound to say that though absolutely it is not a satisfactory condition, yet relatively to the circumstances we have been passing through it is better than we could at any former period have expected. I do not quite agree with the hon. Gentleman as to the cause of the present decline in the most important branches of the revenue. He attributes that decline to the financial crisis of last year; but obviously the effects of that crisis were most intense in the period which immediately followed it, and in that period we had not a bad, but on the whole a good revenue. I have no doubt that the circumstances, perfectly unavoidable, under which people have had to pay such very high prices for provisions, and especially the exceedingly elevated rates they have now to pay for bread, constitute the main cause why they are unable to expend the usual amount upon exciseable commodities. The contraction of employment which has taken place, as far as I have any means of estimating it, is a much smaller contraction than that which we had to encounter during what was called the cotton famine in Lancashire; yet, we being then happily favoured with moderate prices of provisions, especially of bread, the revenue continued to prosper. Looking, however, at facts as they are, my surprise, I confess, has only been that the decline in the revenue has not appeared sooner. It was quite evident on the 1st of October, when the quarter's revenue was announced, that a too sanguine view was taken of it by the public journals. It plainly marked a beginning of decline, and as such must be expected to be followed by other quarters exhibiting a decline more pronounced—because people naturally, before actually restricting their mode of subsistence, exhaust not only their actual means, but their credit likewise. The process is therefore a rather slow one, and the decline only makes its appearance some little time after the pressure which produces it. The principle adopted by the Government, as stated by the hon. Gentleman, involves, I think, more than is completely satisfied by the proposition he makes. I do not wish to hold him to the literal terms of his statement; but he said the Government had come to the conclusion that the burden which is to come upon the year should be met from the resources of the year exclusively. Now, that is a very good principle, and had we been at the commencement of the financial year, it would have been desirable to apply it without any mitigation or qualification. At a period, however, so late as this, when we are about to enter on the ninth month of the financial year, there is undoubtedly much difficulty in bringing the principle into application. Without looking, therefore, too rigidly at the terms of that statement, the question we have to consider is whether, upon the whole, the proposal of the Government is a judicious one. Now, I quite agree with the hon. Gentleman that it would have been most objectionable to provide for the expenditure now contemplated by a loan; but differing, perhaps, from some of my hon. Friends, I am of opinion that it would have been still more objectionable to postpone the provision to the Budget of next year. Of all financial errors there is none so seductive, none so plausible, and therefore none so dangerous, as making a short postponement of the provision for your expenditure. That course was adopted by the House in 1839. In that year, with a falling revenue, a large amount of a considerable branch of the revenue was more than hazarded—it was almost entirely surrendered—for a purpose perhaps the most beneficial ever contemplated in any of our administrative reforms, but under circumstances deplorably ill-adapted for a trial of the experiment.—I mean the Post Office revenue. The course taken was this—The House brought the penny postage into immediate operation, and it resolved that if a loss of revenue should accrue, which was certain to be the case, provision should be made for it the next year. I certainly feel greatly indebted to the Government for not having been induced to follow that most dangerous course. The consequence in that very case was that when the next year came the House found itself in still greater embarrassment, and it went stumbling on from 1839 to 1840, and from 1840 to 1841; the result being that in 1842 an income tax was imposed to remedy the mischief. Taking into account a surplus of unfortunately no more than £200,000, according to the estimate formed from the Appropriation Act of last Session, and the probable revenue for the year, the Government have now to provide for a deficiency of £1,800,000. To provide for that deficiency the hon. Gentleman proposes a measure which would furnish £1,450,000; but of that sum he can only get in hand £840,000 during the year, and he therefore proposes to go upon the balances for £960,000. In round numbers that is to say, one-half is to be provided for during the year by an additional tax, and one-half is to be provided by drawing upon the balances; the first half being followed, however, by a further grant of £610,000, which will only be receivable in the course of the next year. It is obviously an inconvenience, though an unavoidable one, that the income tax, effective as it is in every other respect, cannot be made to operate in the same manner as the Customs and Excise—namely, from the very day the House chooses to give them its authority. The inconvenience is considerably less now than it was formerly, in consequence of the changes made in the mode of collection and in the form of the law, but it remains, and must remain, inherent in the very nature of the tax. The Resolution proposed by the Secretary of the Treasury of a tax of an additional 1d. in the income tax for the year might, perhaps, for practical purposes be more simply described as an additional tax of 2d. for the last six months of the year. This proceeding is much analogous to that adopted in 1859. The Budget was then only submitted in July, when a large increase of expenditure had to be provided for, and when an addition of 2d. was made to the income tax for the year, or, in point of fact, an addition of 4d. for the half year. Considering the late period of the year we cannot expect a rigid application of the rule laid down by the hon. Gentleman, and I think the important thing is the immediate imposition of some tax, choosing, of course, the best for the purpose, and bringing it into operation as soon as our legislative machinery will allow. This has been done by the Government, and therefore I am not disposed to be over-critical upon any other point. I am bound also to say, without laying down any general rule, or dogmatizing upon the subject, that the Government in resorting to the income tax have made a judicious choice. With regard to the sum to be taken from the balances, I do not doubt that the estimated sum at which the balances will stand on the 1st of April will be quite sufficient to sustain the credit of the country. One disadvantage there undoubtedly is in reducing the balances at this period—namely, that we have a falling revenue, and I will not say we must expect, but depend upon it we must not be surprised, if the rate of decline in the revenue should undergo some aggravation. A reason, however, which has not been mentioned by the hon. Gentleman induces me to be better satisfied with that reduction than I should otherwise be. It is this—the balances have already been drawn upon during the year for the reduction of the Debt. I do not represent that as a reason why the balances should be further drawn upon; but the fact that in the operations of the year you have applied a considerable sum of money under the provisions of Acts of Parliament to the reduction of debt is a reason why, without committing any fault, you may make a call upon your resources, other than those of taxation, for a portion of this expenditure, keeping as you will within the amount actually expended in the reduction of Debt. I am not quite sure what that amount is, but I suppose somewhere about £1,000,000. [Mr. HUNT: £889,000.] £889,000; well, the sum you propose to take from the balances is £960,000, and that is so near that I think the proceeding is perfectly unobjectionable. The state of the case will therefore be this—undoubtedly, in principle, drafts from the balances ought to be regarded as equivalent in the main to the creation of debt, and therefore, putting the case at the worst, you are going to create a debt to the extent of £960,000; but you have reduced the Debt in the operations of this same year to nearly an equivalent amount. Setting one transaction against the other, you will not by the operations of the year, taken as a whole, make an addition to your Debt. If that be a correct statement of the case, I must own that it gives no just ground for complaint, and I do not know that the Government under the circumstances could have acted better or more prudently. No sound principle is violated, no practical risk is incurred, and I believe the good sense of the public will be infinitely better satisfied by meeting a manly demand for some immediate extension of taxation towards the expenses of this war than it would have been if the Government had unfortunately been induced to resort to any expedient less direct and less calculated in the end to maintain the strength of the credit and resources of the country.


said, he had to remind the Committee that last year there was a surplus of £800,000, and the Government might have reduced taxation to that amount, or kept that surplus for any contingency that might arise, and which had actually occurred. But the Government took a third course. The Chancellor of the Exchequer, taking a leaf out of his predecessor's book, threw away that surplus for the sake of effecting a trifling and prospective reduction of the National Debt. Several hon. Members, and himself among the number, urged that this was, in effect, a proposal to revive that objectionable scheme, a sinking fund. They contended that when the right hon. Gentleman had money in hand for which he had no other use, it might properly be applied to the reduction of the Debt. He argued that the plan of the Government was worse than the old sinking fund, because that might have been given up at any moment, whereas their present plan could lead to nothing. He warned the House that perhaps next year we might have a war, and he asked why the balance should not be allowed to remain for future years in case the Government wanted the money. The Chancellor of the Exchequer could not be brought to agree to this view; but what had occurred showed that he and others were not far wrong. The Government irretrievably gave away that surplus, and now proposed to raise between £800,000 and £900,000 by an addition to the Income Tax of the present year. He maintained that this was a very objectionable thing, and more so now than it would have been some years ago, because the country had gone through a period of financial distress which was not yet over. The falling off of the Excise and Income Tax showed the distress that now weighed upon large classes of the community, and it was infinitely to be lamented that the Government should think it necessary at such a moment to increase the Income Tax. The falling off of that tax showed that it was already higher than the present condition of the country justified. He did not know whether there was any remedy for the mistake that had been made, and whether there was any possibility of making use of that surplus revenue of £800,000 appropriated by Act of Parliament for the reduction of the National Debt. Whether that Act could now be conveniently repealed he would not undertake to say; but he must express his deep regret that the Chancellor of the Exchequer had upon this subject adopted the policy of his predecessor, and that he had disposed, perhaps irretrievably, of a surplus which he now required for the service of the country, and for want of which he was compelled to add to a tax already sufficiently vexatious and burdensome to large classes in this country.


said, that the question before the Committee was very simple, and there was no reason why hon. Members should not at once express an opinion and decide upon it. The practical question at the present moment was whether there was to be an addition to the Income Tax of 1d. or 2d. in the pound in the present year. There was a deficiency of £1,800,000, and the alternative lay between throwing over the provision for this amount until next year's Budget, or meeting half the amount by an increase of 1d. in the Income Tax on the present year as proposed by the Government, or meeting the whole by an addition of 2d. to the Income Tax. He agreed in the general principle that it was desirable in a matter of this kind to meet the expenditure of the year by the revenue of the year; but upon the whole, and under the circumstances, he was satisfied to accept the proposal of the Government. It was evident that if the war were to continue, the Chancellor of the Exchequer might be driven to the necessity of increasing the Income Tax by 2d. in the pound, if not more. In that case there would be a strong demand that the whole burden of the war should not fall upon the upper and middle classes, but that the rest of the community should contribute towards it by increased indirect taxation. It was desirable to postpone this alternative as long as possible, because it was highly inexpedient to make slight and temporary additions to the indirect taxation of the country. In dealing with articles like tea and sugar it was very undesirable that they should not be affected by frequent and slight alterations. That question of an increase of indirect taxation was not yet ripe for discussion, and the point to be decided was whether the deficiency should be raised by an additional 1d. or 2d. of Income Tax. If the Government had decided to raise the Income Tax by 2d. in the pound, he, for one, would not have objected; but he could appreciate the reasons why, in the present state of the money-market, the Government had decided to draw for half the deficiency upon the balances of the year. Still the practice of drawing in such cases upon the balances ought not to pass as a matter of course, or to be resorted to on all occasions. As a general rule, it was not well to draw these balances too fine. When the amount in the Bank of England was at all limited, if the Government ran their balances too low they deprived the Bank of England of the power of meeting the legitimate demands of the commerce of the country. There was danger in so doing of bringing on a financial crisis, which could not fail to affect the revenue, and make the Exchequer lose ten times more than the amount saved. Each case must, however, be judged on its own merits, and looking to the present state of the money-market and the Bank of England returns, he did not think there would be any chance of inconvenience in allowing the balances to go below what would be a desirable point in ordinary times until April next. There was, he thought, great force in the objection of the hon. Baronet (Sir George Bowyer) as to the application of these balances to the reduction of the National Debt. He had strenuously opposed the measure of last Session on this subject; but at the time he was far from contemplating such an illustration of the disadvantages arising from the adoption of that course. Taking things as he found them, however, he was satisfied with the proposal of the Government. It was a temporary measure which would stop the gap to a reasonable extent. He feared, however, that the House would be called upon to apply itself to the consideration of a much larger financial question on the introduction of the next Budget next April.


was sorry to disturb the unanimity which appeared to prevail on both sides of the table, but he felt bound to enter his protest against any augmentation of taxation. The country was not prepared for more taxation, but expected more economy. Hon. Members seemed wholly to have forgotten the magnitude of our present expenditure. We were now defraying a war expenditure in time of peace. Were hon. Members aware that the Government were now expending £18,000,000 more than in 1850? and that the sum of £2,000,000 now asked for was not quite 5 per cent on the amount of this year's Estimates? After the enormous Votes in Supply last Session, it struck him as positively humiliating that on an emergency like this the Chancellor of the Exchequer should have to cast about for "ways and means," and be, at last, driven to appeal to Parliament, at this unusual season, to enact increased taxation to carry him on to the close of the financial year. The normal Exchequer balances with the Bank of England and the Bank of Ireland ought to be kept up to such a figure as should amply suffice, till the ordinary time for the meeting of Parliament, for any unexpected demand like this for the Abyssinian expedition. For, as a witty French politician recently remarked, nothing now-a-days was so certain to be expected as the unexpected—l'imprévu. The Votes in Supply were now £18,000,000 more than they were in 1850. Last year the Votes in Supply amounted to £42,874,887, or £2,000,000 more than they were in the year preceding. In 1850 the actual amount of the Estimates was £20,081,609, but if to the latter amount he added the cost of revenue collection, which in 1850 was not included in the Estimates, they would have a sum of £24,000,000 to compare with the £42,874,887 voted last Session. This amount was wholly made up of the Optional expenditure, or expenses under the control of the House, as distinguished from the charges for the National Debt and the charges on the Consolidated Fund. He ventured to think that if the right hon. Gentleman the Member for South Lancashire (Mr. Gladstone) looked into the matter, he would find that the national expenditure had increased in a much greater ratio than the national wealth. How much of this frightful prodigality was due to the House he would leave it to the country to decide. In 1850 the Votes for the army and navy were £15,700,000, in the present year they amounted to £26,200,000. If from the latter he deducted £1,000,000 for the re-payments made by the Indian Government, the account would show a payment of £9,500,000 more for military and naval purposes in 1867 than was made in 1850, and the time and labour of 170,000 Volunteers to-boot. In 1850 the total expenditure was £49,882,322, or, including the collection of the revenue, the actual amount was £54,000,000. The Estimate of the total expenditure for 1867–8, irrespective of the Votes which the House were going to make for Abyssinia, was £68,134,000. But in 1850 the charges for the public Debt and on the Consolidated Fund were £30,600,000, while in 1867 they were only £27,900,000, or £2,700,000 less than in 1850. Indeed, but for the compulsory operation for the extinction of the Debt adopted last Session, and which was a sort of surreptitious sinking fund, the charge for the public Debt and the charges on the Consolidated Fund would in 1867 have been £3,500,000 less than they were in 1850; and therefore the latter amount is to be added to the extra expenditure which we are now incurring. He must be a bold man who would dare deny that the public expenditure of some years past had not been too rapid in its growth, and had not now become excessive. Can any reasonable person doubt that important reductions might be made in the national disbursements, without in the slightest degree impairing the efficiency of the public service? Alike consistent with our honour and our safety, it is incontestable that large retrenchments might yet be made. Allowing for the extra cost of re-constructing the fleet—for gunnery experiments and for gunnery failures—for the conversion of our small arms into breech-loaders—allowing liberally for improved arms and armaments, and also for the increased pay and augmented comforts of our soldiers and sailors, which no one begrudges: still, he ventured to think that a prudent and frugal administration could and should effect a saving of £2,000,000—the sum now required—not 5 per cent on the vast total voted for the Estimates of last Session—namely, £42,874,887. Excepting, perhaps, the Post Office, there was not one of the public Departments in which considerable reductions might not with advantage be made; but he regretted to think that neither the present Government nor the preceding one had adopted any general practical measure of public economy. In one of those admirable political resumés with which the Foreign Secretary occasionally favoured his constituents the noble Lord made some very excellent remarks on this subject. He would make a quo- tation from that speech, because it was one of the best ever delivered by the noble Lord, and had elicited a strong encomium from Mr. Cobden. It was spoken at King's Lynn on the 19th of October, 1864. Among other observations made by the noble Lord were these— You will never again, I think, see the national accounts showing a figure on either side of less than £60,000,000; but there are certain items in which I believe reductions, and not inconsiderable reductions, can be made. I do not pretend to minute acquaintance with the working of the dockyards; but there is an extraordinary concurrence of testimony on the part of every person to whom I have spoken—and I have discussed the matter with engineers and sailors, and with others who ought to be acquainted with the subject again and again—there is, I say, an almost unanimity of testimony that the work there done, though it is good work when it is done, is costly in a very extraordinary degree. And that, I think, is only what might be expected in establishments of such vast magnitude. You cannot have the master's eye everywhere; you have nobody personally interested in enforcing a strict and minute economy; dockyard men have votes, and I am afraid there is a good deal of political jobbery remaining; and, apart from that, nothing leads to waste, even among perfectly honest men, more than the knowledge than your employer's purse is one that you cannot exhaust. Now, I fear our enormous wealth is making us rather too careless in these matters. I think also it is a question whether, in the utter uncertainty which at present exists as to the best ship and the best gun, we ought to go on building iron-clads at the present rate. On the whole, though I speak with diffidence, yet I believe that in a year or two we ought to be able to knock off from the Navy Estimates from £1,000,000 to £1,500,000, and that without doing any injury to the service. The noble Lord said also that he held it as "certain that any economical reform of importance must take place in the naval and military departments;" yet the Estimates for those departments were now as they had been when that speech was made, £26,000,000. He quite concurred in the remarks made by the noble Lord opposite on the occasion to which he had referred, and hoped that the Government would maturely weigh and be guided by them now. We ought not, for instance, to have wars provoked and carried on at the Cape or in New Zealand for the benefit of the colonists, but paid for by England. No less a sum than £3,500,000 was annually paid out of the Imperial Treasury for purely colonial objects, and our relations with the West African Coast involved an expenditure of £1,000,000 per annum. The country earnestly desired the national expenditure to be diminished, and after the Recess he should certainly take the sense of the House as to the magnitude of our ex- penditure and its proper distribution. The Chancellor of the Exchequer had many times told the House that our national expenditure was contingent upon our foreign policy, and that if we had a meddling, muddling, and aggressive foreign policy we should be compelled to keep up what the right hon. Gentleman termed our "swollen and bloated armaments." Now it must be confessed that the noble Lord the Secretary for Foreign Affairs had consistently abjured any obtrusive policy, and he trusted, therefore, that we should now have its benefits in the shape of diminished expenditure. In the Speech from the Throne at the beginning of every Session, we had the stereotyped phrase declaring that the Estimates would be prepared with a due regard to economy, and he hoped the Government would, for the future, allow that phrase to become a truth. The right hon. Gentleman the Chancellor of the Exchequer, addressing the House on the 1st of August, 1862, had asserted that, "to hold aloof from a turbulent diplomacy, to lighten taxation, and frugally and wisely to administer the public treasury" was the duty of a Conservative Minister. Accepting that declaration, he now called upon a Conservative Ministry to act in accordance with it. The hon. Gentleman concluded by stating that he should not divide the Committee on the present occasion, though after the Recess he should take an early opportunity of bringing forward a Resolution condemnatory of the magnitude of our national expenditure, and expressing the urgent necessity which existed for its thorough revision and reduction.


said, he hardly expected that on such an occasion as this any hon. Member would have drawn a comparison between our present expenditure and that of previous years, because all the Committee had to decide was as to the best means of raising £2,000,000 which the House had already voted. He must say he dissented entirely from the opinion expressed by the hon. Member for Wick (Mr. Laing), that it was to be regretted that the Government had applied the usual sum during the past year towards the reduction of the National Debt. That application had been made in accordance with previous Acts of Parliament, over which the Government had no control. He (Mr. Hankey), on the contrary, rejoiced that it had been done, and he hoped that the House would never sanction a departure from the principle that the surplus of the income of the year should be applied to that purpose. He hardly understood one point in the statement which had been made by the Secretary to the Treasury. The Government now asked for a sum of £2,000,000 to be provided as far as possible out of the revenue previous to the 30th April; but the Chancellor of the Exchequer had stated that he anticipated an expenditure of £4,000,000 would be required, and another £2,000,000 would therefore have to be provided out of the accruing revenue of the year—a sum for which no provision was made. Under any circumstances a much larger amount than £2,000,000—the sum now asked for—would have to be paid, and the surplus over that sum would have to form an additional charge in the Estimates for next year. There was no provision, however, for that; and, as he understood it, there would be a large and serious deficiency in April next.


I wish to say a few words in reply to the criticism of the hon. Gentleman who has just sat down. He tells us that we have expended, or are calculating upon expending, £4,000,000, while we are making provision for only £2,000,000. Well, my answer to that is, that so far as I understand the matter, we have not spent more than the £2,000,000 for which the provision is now proposed to be made; and with regard to the rest of the £4,000,000, it is totally uncertain whether we shall require it or not. My right hon. Friend the Chancellor of the Exchequer mentioned that as the sum which probably might be required if the expedition went on until a certain time. But we have nothing to assure us that the expedition will have to be continued until that period. It is quite possible that by the liberation of the captives the necessity for continuing the expedition may cease; and in that case the present provision may be sufficient, or very nearly sufficient, to meet the whole charge. I do not say that is a thing which you can at all calculate upon; but I do not think we ought to be called upon to make provision for an expenditure which may never be incurred. If the Abyssinian expedition becomes an Abyssinian war, further provision will have to be made for it at the future time when the regular Financial Statement for the year is usually brought forward. I entirely agree with what the hon. Member said as to the inexpediency of touching in any manner the provision, small as it is, for the diminution of the National Debt. I sincerely hope that, unless an exigency arises much graver than any which exists at the present time, we shall always look upon that fund as sacred. Nothing could justify interference with it except the most serious national emergency. I have listened attentively to the speech of the right hon. Member for South Lancashire, and no one could have listened to it without feeling that the right hon. Gentleman was actuated by an earnest desire, as far as his sense of public duty would allow him, to assist those who are charged with the executive functions of the State in performing the unpleasant duty of meeting a necessarily augmented expenditure by a temporary addition to the taxation of the country. And if I may judge not only by his speech but by the not less significant silence of others, by the general absence of criticism and of opposition in this Committee, I think we may assume that there is—I do not venture to say entire unanimity, but a practical agreement to accept the financial scheme which has been proposed by my right hon. Friend for the purpose of meeting this temporary difficulty. That being so, and circumstances rendering a long sitting at this time of the year inconvenient, I would venture to suggest for the consideration of the Committee whether it might not be the most convenient course to allow this Vote to be taken to-night. I am quite aware that this is a departure from the ordinary course of proceeding; but then the present financial arrangement is entirely temporary in its character; it is brought forward at an unusual time of the year, and, if it is unusual, as undoubtedly it is, to take a Vote of this kind on the night when it is proposed, it is not less unusual to see such a concurrence of opinion on the part of the Committee, and especially on the part of those Members who speak on the highest authority on financial matters, as has been shown this evening; and that circumstance may sanction—I do not say that it involves—the slight departure which I have taken the liberty of suggesting from the customary practice. I would again remind the Committee that the whole question of our financial arrangements must be reviewed in March or April next, probably not more than four months from this date; and I would also ask them to remember that even if this Vote should be taken to-night, there will be another opportunity of considering the subject on the Report.


was of opinion that the speech just delivered by the noble Lord the Foreign Secretary was not marked by the same degree of sound sense and logic which usually characterized his remarks in that House. The noble Lord had given no satisfactory answer to the very just criticism of the hon. Member for Peterborough (Mr. Hankey), that though the Government contemplated an expenditure of £4,000,000 for the expedition, they were now providing for only half that outlay. The noble Lord must know that there was no solid ground for expecting King Theodore to surrender the captives without the use of actual force; and therefore it behoved the Government and the Committee, as reasonable and practical men, now to take into view the whole estimated cost of the enterprise in which they were embarking, and not merely a part of it. But there was another point to which he was particularly anxious to advert. He hoped the Government would, in imposing the increased Income Tax, take into their consideration the expediency of relieving as far as possible from its operation small annuitants and those whose incomes ranged between £100 and £150 a year, because on persons of that class the charge bore very heavily.


I wish to say one word in answer to the appeal of the noble Lord. As far as I am concerned, I am prepared at once to agree to the proposal he has made. I think it very desirable that the understanding should be distinct, and I believe it is distinct; but I will repeat it from this side of the House in order to obviate the possibility of any mistake. I understood the noble Lord to say that the passing of this Resolution would not be attempted if it were objected to from any part of the House. I also understand that this is a proposal which is not to be made a precedent for the transaction of the ordinary financial business of the year, and that it is merely adopted for the convenience of all the Members of the House. Under these circumstances, I have no opposition to offer to its adoption.

Question put, and agreed to; Resolution to be reported To-morrow.

Resolved, That this House will immediately again resolve itself into the Committee of Ways and Means.

WAYS AND MEANS—considered in Committee.

(In the Committee.)

Resolved, That, towards making good the Supply granted to Her Majesty, the sum of Two Millions be granted out of the Consolidated Fund of the United Kingdom of Great Britain and Ireland.

Resolution to be reported To-morrow;

Committee to sit again To-morrow.