§ WAYS AND MEANS considered in Committee.
§ (In the Committee.)
§ 1. Brewers Licences.
Motion made, and Question proposed,
That in lieu of the Duties payable on Licences to Brewers of Beer for Sale (other than Brewers of Spruce or Black Beer) there shall be charged, collected, and paid on such Licences to be taken out on and after the first day of October, one thousand eight hundred and seventy-five, the following Duties (that is to say):
|For and upon every Licence to be taken out yearly by any Brewer of Beer for Sale,—|
|If the quantity of Beer brewed within the year ending the thirtieth day of September next preceding shall not exceed fifty barrels, the Duty of||0||12||6|
|If the same shall exceed fifty barrels, then for every fifty barrels and for any fractional part or number of an entire quantity of fifty barrels, the Duty of||0||12||6|
|And for and upon every Licence to be taken out by any person who shall first become a Brewer of Beer for Sale, the Duty of||0||12||6|
|And there shall also be charged upon and paid by the last mentioned person in respect of his Licence, such further sum as with the said Duty of Twelve Shillings and Sixpence shall amount to the Duty which would be chargeable on a Licence for a quantity of Beer equal to the quantity brewed by him during the existence of his Licence, and such further sum shall be paid within ten days next after the expiration of the Licence."—(Mr. Chancellor of the Exchequer.)|
Sir, I believe that I am correct in supposing that I shall be perfectly in Order in offering, on the present occasion, such general observations 291 upon the Financial Statement of the Chancellor of the Exchequer for the year as may appear to me to he required, although the immediate question before the Committee only refers to the proposal with regard to Brewers' Licences, and I shall accordingly proceed to make these observations. Sir, I was very glad last year, when my right hon. Friend the Chancellor of the Exchequer approached the consideration of his annual arrangements under circumstances of great disadvantage, to allow that, from his point of view, there was very little to complain of in his Budget. The plan of finance which we had meditated and proposed to the country had been rejected by a majority of the constituencies, and a different plan of finance with a different scale of expenditure were adopted by the incoming Government. It has been frequently stated—and it was even supposed by some—that the Estimates of the present Government last year were the Estimates that had received the sanction of the preceding Government, but that is an entire mistake. They were Estimates, no doubt, which were in preparation in the Departments for the judgment of the preceding Government, but they were not Estimates which had received the sanction of that Government, for no decision had been taken upon their proposed amount when Parliament was dissolved. However, I very much wish that I could have repeated or that I could have indulged in the use of similar language on the present occasion, or, better still, have refrained from troubling the House with any observations of mine as to the finances of the year. I must own I was under the expectation when my right hon. Friend was about to make his Statement, that he must necessarily present a Budget of extremely small dimensions and of exceedingly small interest, because when it was found that his expenditure was large and that his means were narrow, there was very little that could possibly be expected from him, and under those circumstances the House could hardly claim credit for over-indulgence in submitting to the necessity of the case, and allowing the Chancellor of the Exchequer to travel quietly forward without attempting plans which would afford relief or challenge criticism. But I am bound to say that there are a number of points in the Budget, small as is its scale, which call for remark—in 292 some cases, for approval; in some, for inquiry; and in others for criticism or disapproval. I wish, in the first place, to say a word on the subject of the income tax. It is one of such great importance that it is exceedingly desirable the House of Commons and the country should understand with precision the ground taken by the Executive Government in regard to this most important impost. Now the impression has gone abroad that my right hon. Friend intended to convey in his speech that the Government had considered the matter, and did not now propose a merely annual renewal of the tax at 2d. in the pound, but that it was a matter which ought to culminate in that form, not necessarily permanently, but only as an impost of which that ought to be considered the normal condition in time of peace. Well, it is desirable that that should be understood, because that was certainly not the impression that would have been formed by any Gentleman who conceived that the present Government drew its inspiration in this matter from the right hon. Gentleman the Member for Buckinghamshire, because at the time when he issued his address to the electors of Buckinghamshire, and when the then responsible Advisers of the Crown had pledged their responsibility for the removal of the income tax, the right hon. Gentleman gave it to be understood that not less was to be expected from him in that respect than from the then Government, for, says he—The principal measures of relief will be the diminution of local taxation and the abolition of the income tax, measures which the Conservatives have always favoured and which the Prime Minister has always opposed.I must admit that was a piece of history, like many pieces of history which have proceeded from the same quarter, which was entirely new to me and had not been embraced in my narrow studies. But apart from history I look to opinion, and I should like to know whether it is the opinion of the Government—for which my right hon. Friend on that assumption has already received great credit from the one really great financial authority—The Economist—and there is nothing invidious towards other journals in speaking of that as the leading organ in financial matters—he has, I say, received great credit for having thrown over the false and erroneous doctrine held by former 293 Administrations, and laid down the doc-trine that the income tax is now to be regarded as a permanent part of the finances of the country. Well, if so, I wish to know what was the meaning of the words of the right hon. Gentleman the Member for Buckinghamshire, and whether we may now dispense with further consideration of them, they having served the purpose they were intended to promote? I have no fault to find with the Government if that be their decision. My own opinion of the income tax is, that it ought to be abolished when by economy, and without economy it never can be done—by a policy of economy, instead of a policy of very free and large expenditure, and by the vigorous vitality of the resources of the country, its abolition can be effected. There never were but two occasions when that step could be taken. One was in 1845; but at that time Parliament determined, and I think wisely, to retain the income tax, and made it the instrument of most important and vital reforms in our finance: the other was last year, when it was offered to the country, and when either the country—or, what is called the country, the majority of the constituencies—advisedly rejected the offer, or else were charmed by the incantations of the right hon. Gentleman the Member for Buckinghamshire into the belief that the same result would occur, but that other hands would bring it about. And I must say I cannot help looking with a degree of compassionate interest on a great variety of communications which now reach me from what are called Income Tax Repeal Associations. Those associations are under the chairmanship of Conservative Members of Parliament, and were so at the time of the General Election last year. I am sorry that these communications—some of which reached me so lately as yesterday—are about 15 months' too late; for, unfortunately, it is not in my power, whatever my disposition may be, to give effect to the views they express—not that I blame any man for that, or that his opinions differ from mine. Well, Sir, with respect to the Brewers' Licences, which is the immediate subject of the Resolution, I think the proposal of my right hon. Friend the Chancellor of the Exchequer is a decided improvement on the existing law. Whether it is a greater improve- 294 ment than that proposed by my hon. Friend the Member for Hackney (Mr. J. Holms) is another matter, and one to which the House will give its very serious consideration before deciding between them. There is another proposal, however, which will not affect the balance of income and expenditure, as to which I hope the Government will give full consideration—namely, the proposal to abolish the present charge on the undergraduate scale upon salaries, or to reduce it very largely and make it uniform by the extension to it of all appointments in the Civil Service. We are told that there is to be neither gain nor loss by this proceeding. To some persons, no doubt, there will be very great gain; and I having cast over the matter in my mind, and having paid £1,200 or £1,400 in my time for stamp duties on appointments, find that, as I understand the proposal of my right hon. Friend, I would have only had under it to contribute to the necessities of the country 1,200 or 1,400 shillings. [The CHANCELLOR of the EXCHEQUER dissented.] Yes; 5s. instead of £5. And, whatever may be the patriotism that warms my breast, I would not have viewed with dissatisfaction that state of things. But it would be interesting to know who is to pay the other 19s.; because when 19s. disappear some one must pay them. I hope some information will be given upon that subject before the Committee comes to a final decision with respect to it. Sir, the Chancellor of the Exchequer has made two proposals in his Bill—one relating to the Post Office Savings Bank, including what are called the old Savings Banks, the other to the Friendly Societies accounts. There is one proceeding connected with these proposals which I own appears exceedingly objectionable. I will not now discuss it, but it is the throwing of the Savings Banks account into hotch-pot with the Friendly Societies account. The Post Office Savings Bank account, besides being a benefit to the country, is, I am glad to say, a solvent and paying concern, and to take the profits we make from the deposits of those savings and throw them into the account with the old Savings Banks with an immense deficiency, and to continue to pay the old Savings Banks depositors a higher interest than the country can afford, and higher than the Post Office Savings Bank depositors ever received, 295 is a proposal in which I hope the Government will not persevere. Having watched the Post Office Savings Bank with considerable interest from its infancy, I shall be bound to oppose the proposition if it is submitted to the Committee. But there is another proposal contained in the Bill which, I think, is an excellent one, and it is that instead of going on with this real charge upon the country—a liability of the country concealed from our eyes which is kept in a separate account of which Parliament hears nothing, except when special occasions arise—the deficiency—for deficiency it must be for some time—shall be made a regular charge, and shall be made a regular charge to be disclosed to the House of Commons each year, and to be provided for as part of the financial measure of that year. I also understand that it is the intention of the Government that in future years there shall be submitted to the House of Commons what is called in the Financial Statement "Local Budgets," and that likewise appears to me to be in itself a very wise and useful proceeding. I have no objection to make to such an arrangement, and I know of but one difficulty in the way of carrying it out—namely, that it will entail a very serious addition to the labours of an already overburdened Parliament. I confess, however, that, although I think that Parliament is over-burdened, such is not the general opinion, because we see deputation after deputation, headed by Members of Parliament, waiting upon various Departments of the Government, imploring the latter to assume functions other than they now exercise, and we see that those deputations meet with the most courteous and flattering receptions, and with such replies as encourage them to repeat their visits and multiply their proposals. But be that as it may, I think that in view of the enormous extension of the system of local loans, the proposal of the Government on this point may be a sound one in principle and one to which I do not object. That is all that I need say at present upon the financial and administrative propositions contained in the Financial Statement of the year; but I come now to consider that which I regard as a more important matter—namely, the mode of stating the accounts of the country, and of presenting to the House of Commons the balance 296 of the income and the charges of the country. This is a subject that appears to have attracted no attention at all from critics out-of-doors; for, as far as I am able to judge, there has scarcely been a word of discussion on this point during the present year, and I should say, speaking impartially, that the reception of the Budget by the Press is uniformly favourable, and it is therefore possible that I may be in a very small minority in my old-fashioned views and notions with regard to the form in which the accounts of the nation should be stated. Such as my views on the question are, however, I hope that the House of Commons will permit me to state them, because it rests with this House to determine what those forms shall be, and upon it rests the responsibility of resisting dangerous innovations which to my mind do not deserve its sanction. There can be no doubt as to the elementary rules that ought to govern the conduct of the Financial Minister with regard to this subject. They are three in number. Let it be remembered at starting that lam not condemning the action of the Treasury as being wanting in judicious economy, because I frankly admit that such economy prevails there, and that to those who control the Treasury every credit should be given. The first duty of the Chancellor of the Exchequer is to reduce the expenditure of the country; the second is to keep the income of the country above the charges; and the third is to present nothing to the country and to the House of Commons, except figures that will bear careful and searching examination; for we must not forget that the House of Commons deals with the Government in matters of finance upon terms of great disadvantage. On most questions that are discussed in this House numbers of hon. Members are able to follow the subject and to give opinions of weight with regard to it, but on questions of finance that is not the case. Our system of finance is often complained of as being so complicated, and people ask why we do not have a more simple system of finance; but I believe that the primary condition of our financial system should be not so much to secure simplicity in our accounts, as a system that is certain, safe, and well calculated to maintain the control of Parliament. And I venture to say, after a long experience, that, however desirable simplicity may be, I 297 doubt the possibility of combining the attainment of the greater ends to which I have referred with the simplicity in our accounts which some persons desire. It is, therefore, of the utmost consequence that every figure given by the Government should be such as to bear a searching examination, and that the course hitherto adopted for giving solidity to our finances is rigorously and strictly maintained. But the necessary result of this complication in our present financial system is, that there only exists a small number of persons in this House who can follow the financial accounts of the country. I do not mean as to the expediency of laying on or of taking off particular taxes, but as to the mode of bringing to a proper account those enormous sums which pass through the hands of the Chancellor of the Exchequer, who is possibly the greatest banker in the world, and has, in that character, to deal with affairs which are scattered all over the face of the earth. Under these circumstances, I think that the rules of finance that are the result of the experience of former times should be rigorously and strictly maintained, and the question is, have those rules been followed by the Government in the present instance? I will state in terms, I hope, not of exaggeration, what appears to me to be the state of the case, and I shall be all the better pleased if the Government are able to answer my objections to their accounts satisfactorily. I am not about to hold my right hon. Friend responsible for the recent growth of the national expenditure; I am sorry to say that the growth of the expenditure seems to be one of the normal incidents of the accession to power of the Party to which he belongs. ["No, no!"] I should like to see some proof to the contrary. What I have always required and desired—what was once the established rule of the country, but which has been entirely forgotten for the last 20 years of my Parliamentary life—was a generous rivalry between the two great political Parties of the State on matters of economy; but that is no longer so, and the figures and accounts of the last 20 years will determine the question more satisfactorily than any arguments or ingenuity of mine can do. I wish, however, to keep to facts, and not to enter on arguments, having no desire to give a political character to 298 what ought to be strictly a matter of business. On looking at the Supply Services for 1874–5 and comparing them with those of 1873–4, after deducting the two great items of the Alabama accounts and the Ashantee War charges, there appears to be, according to my calculation, an increase under the head of public expenditure of £1,360,000, which appears to be a pretty good sample for a first year's performance. But I am bound to say, at the same time, that the Government by increasing the expenditure of the country are acting in a manner not generally disapproved, although I disapprove their action in the matter. My ideas on the subject, as I said before, may be antiquated and belong to a period of some 20, 30, or 40 years ago; but the Government may some day awaken to the fact which they do not seem to understand now—that these continual additions in detail to the expenditure of the country do act upon the totals. Many people think that a gross paradox; but it is, on the contrary, one of the most common-place matters of fact that these totals do determine the sound state of our finances, and put it out of the power of the British Parliament to diminish the burdens of the people by reducing the taxation. I am right in saying that the Estimates of the present year show a considerable increase over those of the previous year, notwithstanding the strenuous efforts of the Treasury to keep down the total of the expenditure. That, however, is not the fault of the right hon. Gentleman the Chancellor of the Exchequer, and in common Christian charity I ought to say that the responsibility for that increase rests upon the Government, and that responsibility is shared by Parliament, which must be prepared to let the country understand that it requires and sanctions a constantly growing national expenditure. But although it may not be the fault of my right hon. Friend that the expenditure of the country is growing, if the Chancellor of the Exchequer makes proposals to the country which do not present a clear surplus of income over expenditure in estimating the circumstances of the country for the coming year, he is guilty of a default of duty which, besides affecting the Government generally, affects himself specially. The Chancellor of the Exchequer is also specially responsible for all that relates 299 to the accounts of the country. These are the points upon which I wish now to make some reference—that is, to the figures in the Financial Statement. Firstly, with regard to the manner in which the account of Revenue and charge was made out. The House will have observed that last year there was a surplus on the Revenue, as compared with the Expenditure, of £594,000; but they will also have observed that the account which has been presented to Parliament this year since the Financial Statement, shows not a surplus of £594,000, but a deficiency of £6,000. This is a matter I think it right to touch upon, without at the same time, dwelling upon it as one of capital importance. I do not think that there has been any uniformity of practice with regard to the mode of stating the accounts. Sometimes the whole of the Expenditure, including loans—and it is the question of loans which makes the difference—has been given in the Financial Statement of the year; and I think it is better that it should be so. For the most part, when there is a large surplus, it is almost immaterial whether it is stated or not, and fortunately, on many occasions of late years, there have been large surpluses to announce to the House. When, however, it so happens that that loan expenditure makes the difference between a respectable surplus and a small deficiency, I think it is most desirable that it should be distinctly stated, and it seems to me it would have been better to have included it in the Financial Statement of the present year. Whether we are wise in including the known loan expenditure in that expenditure which is ascertained before the balance is struck to determine the surplus applicable for the reduction of debt is another matter upon which I might have something to say, and upon which I can easily conceive that argument might be made. My object in referring to this subject is not to cast blame, for I think it is a small matter whether the thing was stated or not. My wish is to point out the usefulness of the rule which has on this occasion been neglected. It is useful and important to bring before Parliament on the only regular occasion when the attention of Parliament is effectually given to the finance of the country, the whole expenditure of the country. It does not sig- 300 nify whether it is from Revenue or from loan, the House of Commons ought at one conspicuous period of the year to understand fully what is the entire expenditure which has been made under its sanction, or under the sanction of the Executive Government. It is an old and valuable practice of finance, and if the thing be not done at the period of the Financial Statement, it may as well not be done at all. No notice is taken of these things if they are severed from that one great central occasion, and I should be very glad if, without censuring anyone, my drawing attention to the matter should have the effect of causing this useful practice to be observed in future years. But, Sir, there is another operation connected with the Revenue of last year which I confess appears to me to be much more difficult to defend. The Chancellor of the Exchequer said to us, in the fairest and most ingenuous manner, in the course of his Financial Statement, that the apparent deficiency in the Miscellaneous Revenue of the country was owing to a special cause. The words ascribed to him in the report are these—It was owing to my having given instructions that there should he no haste in calling in certain receipts which might have been paid in before the 31st of March, but which it did not appear necessary to call in, and which it would he better to leave for this year."—[3 Hansard, ccxxiii. 1026.]Here, Sir, I must frankly state that I think my right hon. Friend, in assuming to himself the liberty of checking the inflow of any portion of the Revenue in order to enlarge the resources of the coming year, committed a serious error—an error so serious that, though all I desire on the present occasion is to make it understood, I should, in default of anyone else, feel it my duty, if it were defended, to challenge the judgment of the House in regard to it in ease it should become a practice. I am not aware of such a thing having been done before. This, however, I do remember, that during the existence of the late Government, a very vigilant Member of Parliament who did us some good service in matters of finance—namely, Mr. White, then Member for Brighton—inquired of my right hon. Friend the Member for the University of London (Mr. Lowe) then Chancellor of the Exchequer, what was the cause of the 301 great and evidently exceptional augmentation of receipts in the first week of the financial year, and whether it was owing to the keeping back of the Indian receipts at the suggestion of the Treasury, and my right hon. Friend is reported to have replied as follows:—There was no doubt that the excess for that week was due to the causes assigned in the Question; but it was equally certain that that result had not been obtained in consequence of any suggestion from the Treasury."—[3 Hansard, ccx. 1263.]Now, if I understand the Chancellor of the Exchequer rightly on the present occasion it was by a suggestion from the Treasury that a sum of £300,000—which I may observe would have been a real and legal surplus, though a small one, in last year's transactions—was kept back and taken out of the account of last year, and brought into the account of this year, because "it would be better to leave it for this year." This, I believe, is not acting in accordance with the spirit of those regulations which govern the collection of our Revenue and the methods of bringing out the accounts. Under the Orders of the Treasury, the receivers general of Revenue are bound to pay it in daily to the Exchequer. No delay whatever is permitted in respect to any branch of the Revenue. It is perfectly true that, in a certain sense, there is no receiver general of Miscellaneous Revenue, but at the same time it is quite evident that the regulation of the Treasury requires daily payment from every Revenue Department: this rule merely expressing the principle that what becomes due to the public should at once be placed to the credit of the public and not be delayed in its passage to suit the convenience of any Government, be that Government what it may. Obviously this principle is one of the greatest consequence, for there are no bounds to the extent to which a contrary practice might be carried. It is a Treasury Order, and a Treasury Order alone, and not the law of the land, that secures the proper payment of the Revenue. These delay payments are made by the Revenue Departments under the Order of the Treasury. Were the Treasury to send Orders to the Revenue Departments to suspend them for the week, any Chancellor of the Exchequer, who had to meet a large expenditure, and did not like the responsibility of imposing new taxes, might, 302 by stopping the inflow of Revenue of the last week of the year, throw into the coming year such a surplus as entirely to dispense with the necessity of increased taxation. That will show the House that the question here at issue is really one of principle and a measure of the deepest possible importance. No doubt the designs of the Chancellor of the Exchequer were most innocent, as we may clearly see from the ingenuousness with which he stated them to the House. He gave us an opportunity, manfully and honourably, of raising the question. For my part I must say that I believe the practice to be unprecedented and decidedly dangerous, and I earnestly hope that it will not be repeated. So much, Sir, for the account of the last year and the mode of handling the Revenue for that year. I now come to the Estimate for the present year, and to a rather minute examination of what is supposed to be the surplus upon the figures of the Financial Statement. That surplus is stated at £417,000. My doctrine is, that there is no surplus at all, and not only so, but that there is a considerable amount of probable charge quite unprovided for, independently of any scheme for the reduction of the Debt. Let us see how it stands. We start with £417,000 the reality of which I do not dispute; but I find the Chancellor of the Exchequer is reported to have said in reply to my right hon. Friend near me (Mr. Childers), who found fault with the surplus as being overcharged with weight of expenditure, that his Estimates were taken at a very reasonable and moderate figure. Now I must make a comment on the practice of taking Estimates at a very reasonable and moderate figure, and I affirm with the utmost confidence that no Chancellor of the Exchequer has the smallest right at the commencement of the financial year to take credit for the probable incoming of any Revenue beyond that which he has anticipated in his Estimates. It is his duty to include in his Estimates whatever Revenue seems to him probable—neither more nor less—and that is a duty to the performance of which the House of Commons ought tightly and stringently to bind him. In that way they would maintain what their Predecessors valued so much—namely, the financial control of Parliament over the expenditure of the country. I must take the Estimates as they are presented. If 303 we show that the figures will not bear the expenditure of which we already know, and that the Chancellor of the Exchequer and the Government are disposing of money they do not possess, it is not a sufficient answer to say that the Estimates are taken moderately. There is one course open, and it is this—the Chancellor of the Exchequer should reconsider the Estimates and make such additions to them as, in his judgment, may be necessary and justifiable. But you cannot have it both ways, and say, in presenting Estimates at a given figure—"I have other sums in reserve which you know nothing about, but on which I can rely, and as to which I ask you to charge some portion of the expenditure." I shall, therefore, take the Estimates as real Estimates, and assume that they show a surplus of £417,000. The reduction of £60,000 in respect of Brewers' Licences brings that sum down to £357,000. We have lately adopted a principle which it is necessary to explain for a moment to the House with regard to the large business which we transact in loans and advances for public works and otherwise which enters into the statement of the Revenue and charge of the country. We have begun to take credit for the interest which we receive on those loans and advances; and if we take credit for the interest we receive on them, it is quite plain that when we borrow money in order to make them, we must charge ourselves with the interest which we have to pay on that money. I am not certain whether I am quite correct in what I am going to say; but as I understand that the Chancellor of the Exchequer—if I am wrong he will correct me—has this year borrowed money for the purpose of making these loans, and that he expects to have to pay £70,000 as interest on it. That is part of the actual charge for the year, and it must be taken as against the surplus of £417,000, because when the interest on the loans so made comes in, it goes to the credit of Revenue, in which case it must go to the debit of Revenue when the loans are contracted. Therefore, we must reduce £357,000 to £297,000. But then, Sir, it is part of the plans of the Government, and I own a most excellent part, that they should charge upon the finance of the country from year to year the deficiency into which we have allowed the Friendly Societies and Savings Banks 304 Funds to fall. If you like to take credit in the surplus for the Post Office funds you may do so; but I find that the aggregate deficiency, as shown by the Bill submitted to the House by the Government, is at present £3,700,000 in round numbers, and the interest on that deficiency is £120,000 a-year, which has not been mentioned in the Financial Statement, but which must evidently be part of the charge of the year. That £120,000, taken from £297,000 brings it down to £177,000. Then there is a charge for which, as a public charge, I am sorry my right hon. Friend made no provision in the Estimate of Income and Expenditure which he presented to the House, and that is a charge on account of Irish Education. The amount of the charge last year was £118,000. It has not yet been stated to Parliament in an Estimate. Why? Was it withheld in order to be reduced? No, Sir, it is withheld in order to be augmented. Therefore, using the best information at my command, the £177,000 to which I have already referred has to be still further reduced by £118,000, which leaves you £59,000 as all that remains of your surplus of £417,000, and that surplus of £59,000, must be charged with the augmentation, whatever it may be, in the Irish Education Vote, which has been actually announced. I do not know what it will be; it may be £30,000, or it may be £40,000, or more. There was also mentioned in the discussion that it was the intention of the Government to make a proposal for paying a portion of the expenses of the Registration Act. Has that been provided for in the Estimates? [The CHANCELLOR of the EXCHEQUER: Yes, it has.] Then nothing need be said further respecting that. Well, we have got the surplus reduced to £59,000, against which, as I have said, there is the increase on the Irish Education Vote, and the result, I say, is that there is no surplus at all; for in a question of this kind, you cannot dispute about a mere £10,000 or £20,000. Now, Sir, I submit that the charges which I have stated to the House are positive charges, every one of which ought to be provided for in the plans of the Government; and the effect of them is that they eat the whole of the surplus—substantially, the whole of the surplus which has been announced to us by the Chancellor of the Exchequer; 305 and yet that surplus had a great deal else to do, for, first of all, is there to be a surplus of Revenue or not? Now, it is the established principle of finance that the whole of the charge for the year, so far as it can be foreseen, is to be submitted to the country, as a charge, when the Financial Statement is made; and if any of the elements of that charge are uncertain, they are not to be kept out of view. The established rule is that the Chancellor of the Exchequer has to state them as well as he can, and take a sum which he thinks ample to cover them, charging himself with the whole of the sum before he presents anything that he is justified, in the face of Parliament, in calling a surplus. Of course, I do not speak of a time when a great war is impending, when £5,000,000 or £10,000,000 might have to be added to the expenditure of the year: it is impossible to say what the charges may be then; but I speak of the regular state of things in time of peace, which may be roughly called the normal state of things; and I say it is the duty of the Chancellor of the Exchequer in such cases to present to Parliament, before taking credit for any surplus at all, what he thinks will be the probable amount of those charges. I wish very much to know whether that principle is challenged, because I hold it to be essential to sound finance, and even, in the long run, to what would be called by Parliament, honest finance. My right hon. Friend has said there will be Supplementary Estimates, but that he does not know what they will be; and because he does not know what they will be, he does not provide a farthing to meet them. I say it is his absolute duty to make the best computation he can of those Supplementary Estimates, and to charge himself with the whole of them before he so much as pronounces the word "surplus" to the House. And so, Sir, the £417,000 presented to us as a surplus has vanished from our view; it is nowhere; it has gone to supply purposes valuable and important, no doubt, but still it is gone; and what remains? It has three or four duties which it ought to do. It ought to perform the function of meeting Supplementary Estimates, as well as the right hon. Gentleman can calculate them. After that it ought still to leave Parliament in a position to say—"We have provided for unseen 306 contingencies a surplus of income over charge for the coming year; "instead of that, however, it has to bear all the charges I have stated, and besides it has to supply the sum of £185,000 which is to be voted for the reduction of the National Debt, and of which the Government does not possess a single shilling. I do not refer to the details of the Supplementary Estimates. An hon. Friend of mine put a Question the other day as to the charge for the proposed Royal Progress through India, and the Question was answered by the right hon. Gentleman opposite with much tact and skill. I say nothing of that charge, because I know nothing; but I hold that it is in the power of the Treasury, by communication with the Departments, to know what the Supplementary Estimates are likely to be, and that their probable amount is part of the information that ought to be submitted to us before we proceed to strike a balance between the Revenue and Expenditure of the year. I now propose to make some remarks on the plans of my right hon. Friend in respect to the National Debt, in the light of the observations I have already offered in regard to the condition of his most shadowy and ghostly surplus, which it appears is fully and more than fully charged—nay, charged three or four times over—for different public purposes, a course of proceeding which I contend it is impossible for him or any other person to carry out in practice. My right hon. Friend has proposed a scheme with regard to the National Debt which has received the marked approbation of what are believed to be the most sagacious of all things inanimate—namely, the Three per Cents. He is very much pleased—and I do not wonder at it—because half a per cent, forsooth, has been added to that part of the National Debt in consequence of the promulgation of the scheme of the Government for its reduction; but there are sceptical persons who may say this fact proves that the Three per Cents are not of that high order of intellect which they have been considered to be. Let us look at this matter a little. There are three modes by which the National Debt may be reduced—one is by a surplus of Revenue over Expenditure; one is by Terminable Annuities; and the third is by fixed appropriations beforehand. I tell the Government fairly that, 307 so far as I am concerned, my own deep conviction is that, although we have done a good deal, we have never done as much as we ought to have done in the reduction of the Debt. That has always been my opinion, and I am thankful to say my right hon. Friend near me (Mr. Lowe) was enabled during five years of his administration to surpass every proceeding Chancellor of the Exchequer in this matter; but even the standard of reduction established by him did not, I think, at all answer the powers and capacities of a country so great as this, if they were accompanied by an equal forethought and a desire to guard against the probable contingencies of the future. Having those views, it may be said, and truly so, that I ought not to be fastidious as to my preference as between one mode and another of reducing the Debt. Well, I ought not, and I will take any mode that you show to be real; but my objection to this proposal is that it is totally unreal, totally opposed to authority and to the test of experience. You will see if I make good this objection. First, we may reduce the Debt by Terminable Annuities; and here the Chancellor of the Exchequer gave the House the figures, which I have no doubt are perfectly correct; and they are of the most instructive character. Down to a certain date, he showed us what had been done by two modes that have been adopted for the reduction of the Debt, and he likewise showed us what had been done by the contraction of new loans. [The CHANCELLOR of the EXCHEQUER: They were up to the present time.] At any rate, however far they may extend, as far as the principle is concerned, the effect will be the same. The figures, which are extremely simple, are these. The surpluses of Revenue over Expenditure amounted, when put together, to £40,000,000. But these surpluses of Revenue over Expenditure are, unfortunately, outweighed by the surpluses of Expenditure over Revenue, because, although we may divide these surpluses of Expenditure into two classes, according as they are unforeseen deficiencies, or according as they are loans, yet a loan means nothing in the world but the expression of a deficiency in the year's income over the Expenditure. And while the whole of those surpluses amounted to £40,000,000, the deficiencies, together with the loans that it was found 308 necessary to raise to meet the Expenditure were £73,000,000. Therefore, so far as the surpluses of Revenue are concerned, although there has been a great effort made by Parliament and the Governments for the reduction of the Debt—great efforts made by prudent and vigilant men—yet, so far as the annual balance of Revenue and Expenditure are concerned, taking loans into view, as you must do, there is an actual deficiency of £33,000,000, so that you have £33,000,000 added to the Debt. The whole of the reduction has been effected by means of Terminable Annuities. They have, according to the figures of the Chancellor of the Exchequer, effected a reduction of £120,000,000, which balances that deficiency of £33,000,000, and leaves an entire reduction of £87,000,000. I am not going to enter into a discussion of what, in my view, is the real argument in favour of Terminable Annuities as compared with visionary schemes. The fact is that the visionary schemes did not reduce the Debt; that Terminable Annuities did reduce it; and the merits of any scheme for the reduction of the Debt are that the Debt shall be reduced. My right hon. Friend the Chancellor of the Exchequer, in face of the figures which show that there has been on the whole no surplus of Revenue over Expenditure, and that we have required £33,000,000 to meet deficiencies, has printed a Re-turn, in which his imagination flies into the empyrean, and ranges over a period of 30 years down to 1905, in which he takes credit for a surplus of £500,000 every year. I ask, is that a practical proceeding? Why, the history of the last 30 or 40 years proves that what we have borrowed has, upon the whole, done more to increase the Debt than our surpluses have done to reduce it; and is it not a most extraordinary thing to submit to Parliament as a calculation and assumption that, upon the whole, in the 30 years to come, there will be a surplus of £15,000,000 over all deficiencies; that is to say, that a state of things which experience has shown us to exist heretofore will be entirely reversed? Under what circumstances is this done? If my right hon. Friend had a surplus of £500,000 to begin with, there would have been some little element or spark of encouragement to believe his calculation; but here is a Chancellor of the 309 Exchequer, who has not one farthing of surplus, who presents to you an imaginary surplus of £500,000 for 30 years to come, for every one of which years the surplus is founded upon the assumption that every future Chancellor of the Exchequer will do the exact opposite of what the present one is doing. This is a somewhat extraordinary result, and it is necessary that the House of Commons, in the first instance, the intelligent editors of critical periodicals in the second, and the Three per Cents in the third instance, should take some cognizance of these facts. A word or two now with regard to the third method of reducing the Debt, respecting which I will not enter into any comparison between Dr. Price, Mr. Pitt, Lord Grenville, and Lord Bexley. They had different methods of proceeding; but it is a waste of time to enter into a distinction between one of these plans and another. The essential point of these plans is this—that whereas a surplus of Revenue proceeds upon firm conviction that there shall be a surplus, the whole value of that plan depends upon exacting rigidly from the Chancellor of the Exchequer, that from year to year he shall present to you not a nominal, but a real surplus. While that the Terminable Annuities have proved what they have actually done, that plan has for its essential feature this system of making a fixed appropriation of money by prior Act of Parliament. Of money did I say? No, Sir, not of money. If it were a fixed appropriation of money, there would be a great deal to say for it, and I would be slow to quarrel with it. But it is a fixed appropriation of figures and ciphers written down on a sheet of paper—of figures written down too on such a scale that they have revealed that glorious sum of £230,000,000 which has astounded the Three per Cents and bewildered their imagination. Why, it is not clear from the Estimates of the Chancellor of the Exchequer that this year there will be even a surplus of the most slender description. What I submit to the Committee is this—that these methods of providing for the reduction of the Debt by annual appropriations, arbitrarily fixed by those who do not intend to find the money for them, but who think it laudable and creditable to lay it down that future Parliaments shall find that money, have been tried and tested 310 by experience and have failed again and again. If they have been so tried and tested, and if they have so failed, I ask is it wise—and I give my right hon. Friend credit for the best motives, for he has, no doubt, had the idea that a plan of this kind would be an efficient check upon expenditure—again to resort to them? I know my right hon. Friend is the last man who would deliberately produce an exploded fiction; but I ask him to consider in the light of experience, and not in the bewildering light of hazy speculation, whether this plan of proceeding is not a fiction detected by experience? After the Great War, the statesmen of that day were profoundly impressed with the necessity of reducing the National Debt. They began by paying off a large sum which had been borrowed, and which constituted the large balances in the Treasury at the close of the War. They began with the very best intentions. Popular feelings with regard to the oppressive operation of existing taxes were not then so accurately represented in this House as they now are, so that the circumstances of Parliament were in many respects favourable to paying off the Debt. The plan adopted was this: In the year 1819 it was determined that £5,000,000 should be provided every year for paying off the Debt. No doubt, the Chancellor of the Exchequer has studied all these details, and yet, if he has, I think they ought to have impressed his mind more than the mind of other people. £5,000,000 were to be appropriated for paying off the Debt. Were they so appropriated? Not even in that Parliament, the majority of which held seats hardly accessible to the faintest breath of popular opinion—not even in that Parliament was that sum applied for the reduction of the Debt. The whole sum that was applied to the reduction of the Debt between the years 1816 and 1828 was considerably less under the operation of this £5,000,000 system, with certain modifications which I shall mention by-and-by, than the annual amount which was applied to it by my right hon. Friend near me when he was Chancellor of Exchequer. This law, with regard to the appropriation of £5,000,000 remained an absolutely dead letter. You may pass a law that you will pay off the whole National Debt this year, but it will remain an absolutely dead letter. 311 It will do nobody any good, and it will do nobody any harm, except those who are weak enough to believe it. So it was in this case, the law with regard to the £5,000,000 remained, but the money was not provided, and at last they began to think that this state of matters was unsatisfactory, and that a demand of £5,000,000 every year was too heavy. So they said—"Let us make it more moderate, and the amount of money will be provided." They reduced the demand to £3,000,000; but it was exactly the same thing over again. They passed a law that £3,000,000 should be provided, and the £3,000,000 were not provided. Then there sat a Committee of great weight on Finance in the year 1828. That Committee was, I may say, then accepted as almost conclusive authority on the subject and has been so from that day to this. That Committee distinctly reported against the whole system of fixed appropriations. They said—The Committee are of opinion that, instead of a fixed sinking fund, the surplus of Revenue only should be appropriated annually in the mode hereafter stated to the reduction of the Debt.That is the principle upon which now for 47 years the successive Governments of this country have acted, and from which we are now requested to depart. So broke down the plan of fixed appropriations; but in the course of time there arose another Chancellor of the Exchequer, a man of great ability—a man immensely respected and, I may say, beloved in this House; a man whose character was eminently that of a circumspect and practical statesman—I mean the late Sir George Cornewall Lewis. That eminent man, when it became his duty to borrow for the purposes of the Crimean War, satisfied himself that it would be worthwhile to try this scheme. In 1855, he made a loan of £15,000,000 or £16,000,000; and he invited the House to insert in the Bill then before it, a clause to the effect that in every financial year—beginning with the first year after the signature of a definitive treaty of peace, £1,000,000 should be applied to the reduction of this Debt. That was the clause which he recommended to the House, and I am sorry to say it was one which he prevailed upon the House to accept. It was no wonder that it should have done so, for 312 there was no one whose advice it was more disposed to follow, and no one who more deserved that that should be the case. But the clause excited sharp resistance. I, myself, was one of those who stoutly protested against it; and amongst those who made excellent speeches against it was the right hon. Gentleman now at the head of the Government. This, the House must bear in mind, was one of those measures for the reduction of Debt by means of fixed appropriations; and the right hon. Gentleman said—I trust the House will hesitate before it assents to this 22nd clause. What is it? It is neither more nor less than a recurrence to the system of creating an artificial sinking fund; and, to my mind, no principle can be more pernicious."—[3 Hansard, cxxxvii, 1967–8.]The right hon. Gentleman, with the present Chancellor of the Exchequer, and several other right hon. Gentlemen, Members of the present Government, very loyally and properly went into the same Lobby, all harmoniously uniting on that occasion. I said I objected to the clause exceedingly. I said—"If my right hon. Friend is Chancellor of the Exchequer when the war is over, and if he endeavours to induce the House to provide a millon of money and give a vote for it, I shall be found voting with him." I was in that patriotic state of mind that I would assist him to provide the million. Well, the war did come to an end, and the Chancellor of the Exchequer did come forward to make provision for the year. It was the right hon. Gentleman the Member for Buckinghamshire; but I had no opportunity of assisting the right hon. Gentleman in persuading Parliament to provide this money. The right hon. Gentleman said it was not to be expected that the money was to be provided. He had always been against the clause. A former Chancellor of the Exchequer had carried a majority of the House in voting the clause into the law, and the right hon. Gentleman carried the whole House with him in voting it out of the law, with only a a faint and feeble protest from a single ghost of the old Liberal Treasury Bench that then sat on this side of the House. It appears to me that these are historical matters which really amount to a sufficient teaching of experience upon the whole subject that is before us. My right hon. Friend said 313 he thinks if we adopt his plan and pass it into law, a future Chancellor of the Exchequer will not like to come down and repeal the law, unless he had good reasons against imposing a new tax. He thinks a Chancellor of the Exchequer will have difficulty in finding good reasons against a new tax. There, again, I must say I am astonished at his sanguine expectations. Is there ever wanting a good reason against a new tax? Are new taxes ever adopted, except under pressure of necessity? Will any man under a paper necessity impose a new tax? Will any man do so under such a necessity as is now proposed to be constituted?—that is to say, referring to a past Chancellor of the Exchequer, who travelled out of his province and chose to lay an injunction upon the future which he had no right to lay, and which he did not supply his successors with the means of meeting? We live in an age of wonders; we have seen many, and shall see many more; but there is one wonder we have never seen, and that is a Chancellor of the Exchequer, who in his place here will propose a new tax in order to maintain a sinking fund. History certainly has not producd any such creation; no such lusus naturœ has as yet appeared; and I do not think that the Government of a Party which justly prides itself on adherence to the traditions of the past, on learning lessons from antiquity, on avoiding vain theories, and keeping to the lessons of experience, ought not to be the people to delude us by projects such as this into the marshes in which we shall be plunged, instead of remaining upon the safe high road by which we have hitherto travelled. I must say, I think that there is no answer to these objections. There is another ground on which I object to the proposal of the Chancellor of the Exchequer. I must say that attempting to provide what shall be done in the year 1885 with a sum of £5,000,000, which will then become disposable, is invading the province of future Finance Ministers, and of future Parliaments, to a degree entirely unexampled. Is it reasonable to suppose that in 1885, the Chancellor of the Exchequer will be governed in the slightest degree, in his view of the policy which he thinks the time and interests of the country may then require, by a reference to the circumstance that the Chancellor of the Exchequer wished this year to do 314 something, and provided no money to do it? He would say—"It is enough for us to manage our own affairs, and to leave them to manage theirs." Apply this to my right hon. Friend himself. I was Chancellor of the Exchequer in 1865, and if, in 1875, there had been £5,000,000 coming in, what sort of respect would my right hon. Friend have had for the Chancellor of the Exchequer in 1865, who had been so good as to do his work for him, in total ignorance of what would be the state of the country, and what its interests would require? These form strong practical considerations against the proposal. It is an attempt to revert to a scheme of proceeding which, however well intended, has been exploded under the combined action of authority and experience. With respect to the criticisms which I have ventured to offer, I have done so on information not so perfect as that possessed by the right hon. Gentleman; and if the explanations which he may hereafter give should be found sufficiently satisfactory, I shall accept them, not only with resignation, but with lively gratitude.
§ THE CHANCELLOR OF THE EXCHEQUER
Sir, my right hon. Friend has travelled, as he was entitled to do, over a very large field, and if I were to follow him over the whole of his observations I fear I should weary the Committee, for in doing so I must enter upon subjects the discussion of which had better be deferred to more convenient opportunities. I will, therefore, with the permission of the Committee, reserve for the present the discussion of one or two of those subjects. The policy of the Government with regard to the income tax it will perhaps be more opportune to discuss upon the Motion of the right hon. Member for the City of London (Mr. Hubbard); the question of Stamp Duties on Salaries again will be the subject of a special Resolution, and I would rather reserve the discussion respecting the Savings Banks until the House comes to the discussion of the Savings Banks Bill. I understand that my right hon. Friend approves of the principle upon which that Bill is founded, although he objects for special reasons to putting the three funds into one; but I think I shall be able to show him, when the proper time arrives, that it is not open to the objection which he takes 315 to it. I pass from these matters in order to reply to that part of the speech of my right hon. Friend which is in the nature of a direct personal attack on myself—I mean officially personal, because no one can be more sensible than I am of the extreme kindness and courtesy with which the right hon. Gentleman treats me individually in discussing these matters, and I shall not be misunderstood when I say he has made severe comments upon the framework and principle of the Budget, which I had the honour to submit a week or two ago. It is really essential I should deal frankly and freely with those criticisms, and satisfy the House that there is no foundation whatever for any imputation cast upon me or the present Government of departing from the old frank, honest, and straightforward system of finance. On the contrary, we are prepared to challenge comparison with any of our Predecessors in this respect on any point of practice. I come then to the three points which my right hon. Friend says the Chancellor of the Exchequer ought to bear in mind in dealing with the finances of the year—namely, to keep down, or, as he said, to reduce the expenditure; to maintain the income above the charge; and to present figures to Parliament which will bear thorough examination. With regard to the question of keeping down the expenditure, I can only say that I thank him most sincerely for supporting me in my position as Chancellor of the Exchequer by keeping a vigilant eye, and making severe comments upon the natural tendencies not of the Government, but of Parliament and the country, continually to raise the expenditure. I am no advocate of unthinking and indiscriminate economy; I am not prepared to say the public service ought to be stinted or impaired, or that the natural desires of the country ought to be thwarted when the expenditure called for is reasonably within the country's means and likely to be beneficial and useful. At the same time I am painfully conscious, from daily experience in my position as Chancellor of the Exchequer, that the demands made upon me from all quarters induce me to welcome support, from whatever quarter it may come, to my anxious desire to check and resist any undue increase of expenditure. But in speaking of the increase this year and last my right hon. Friend must have 316 included the sums which have been paid in subvention of local finance. Now I am not sure that a subvention to local finance can be regarded simply in the light of increased expenditure. What you give in subvention of local expenditure is a relief to rates. It is a reduction of one form of taxation at the expense of the Exchequer, but it is still a relief to the nation. Although I am not one of those who think that the Exchequer should give with both hands in subvention of local government, still money given in aid of the rates cannot be regarded as money thrown away in the same way as if it had been expended on the ordinary Supply Services of the year. Passing over that matter, I must next notice the remark of my right hon. Friend—that it is the duty of the Chancellor of the Exchequer to keep the income of the year above the charges, and here my right hon. Friend began by saying he was going to call our attention to those old-fashioned principles which he admires, and he challenged me for not having taken into account—when I presented my balance of Revenue and Expenditure the other day—the item for fortifications and local defences. He says that I presented a Budget putting the surplus of income over expenditure at £417,000; but that if I had deducted the sum expended on account of fortifications and barracks, I should have found myself with a deficiency of £6,000. I quite admit that if you state the account in that way there is a deficiency. But is that the old-fashioned way of stating it? Of all Members in the House I am perhaps as clear on this matter as anybody can be, because it was my lot to be one of a small minority who protested against a system introduced by a Government of which my right hon. Friend was Chancellor of the Exchequer, of raising money for fortifications by the creation of Terminable Annuities, and I argued, as well as I could, that that expenditure ought properly to have been met by the ordinary Supply Vote for the Services. But I was overruled by an enormous majority. The system was introduced against my wishes and counsels. And how has that system been put into operation? Why, in every year but one since its commencement, the practice which I have now adopted has been uniformly followed. It is true that, in the first year for borrowing on 317 account of the fortifications, 1860–61, my right hon. Friend, who was then Chancellor of the Exchequer, stated his Income and Expenditure, with an allowance of £50,000 for fortifications, but in no subsequent year did he adopt that plan. [Mr. GLADSTONE: "Oh, oh!"] Well, will my right hon. Friend state any other year in which that plan was adopted? I have here a statement of the surpluses as stated by the Chancellor of the Exchequer, and as returned to the Commissioners for the Reduction of the National Debt. In these Returns on every occasion the sums spent on fortifications form part of the expenditure, and in no one year, except 1860–61, do the figures correspond with the figures stated by the Chancellor of the Exchequer. In 1863–4 the surplus returned to the National Debt Commissioners was £2,352,000, but the sum stated by the Chancellor of the Exchequer was £3,152,000. It is much the same in the subsequent years. If I were to go through every one of these Returns I will venture to say that in no year, except the year I have mentioned, 1860–61, do the figures correspond. Now, has the practice which my right hon. Friend has urged upon us been adopted? I am not saying my right hon. Friend is not right in his criticism, and that we ought not to adopt this plan. But when he asks us not to depart from old-fashioned principles, I have a right to complain that the discovery of novelty in a practice which has been followed by himself and others these 15 years has suddenly flashed upon him when our proposals are laid before the House. I wish he had told us of his views a little sooner. If, last year, when I stated the surplus of the year 1873–4 at £869,000, for which we were not claiming credit ourselves, but were ascribing it to our predecessors, he had said—"Oh, no; you are giving us credit for too much, you ought to have reduced it by the amount borrowed for fortifications," then I might have taken the hint, and would have framed my Estimates this year accordingly. But that did not occur then to my right hon. Friend, and I do not blame him for it: I only wish to point out that when he blames me in this matter he is blaming himself. Then, in bringing the tremendous charge against us of not having called up a certain proportion of Miscellaneous Revenue 318 last year, I think he is hardly measuring out to me quite the same measure which has been measured out to himself and to other persons who have been placed in similar circumstances. I have no doubt the answer which we have heard was given by the Member for the University of London (Mr. Lowe) to Mr. White was strictly and literally correct. I am not sure that I might not this year have given a similar answer, and been equally correct, because there were certainly no instructions from the Treasury that the India Office payments should not this year have been called in by the 31st of March. In 1872, when the India Office payments to the Treasury were kept back, the amount was more than £800,000. On the present occasion, all I did was on a very much smaller scale. There were two sums which I certainly did not call up as Miscellaneous Revenue, although I might have brought them in before the close of last year. One of them was the remains of the Credit Vote on account of the Abyssinian Expedition. The payment had not been accurately adjusted—had not then been ascertained; and, although I knew that there was a certain sum which might have been called in, I thought it reasonable that it should stand over to the beginning of the year, by which time the actual amount could be fully ascertained. There was also a small sum of £160,000 due by the Indian Government, which, if we had taken steps to call it in, we could have got before the 31st of March; but I frankly told the Committee I did not call it in because I did not very much desire it. At all events, if I did anything wrong, I frankly stated it to the Committee, and I do think that under the circumstances of the case I was justified in what I did. Now, what were the circumstances of the case? Last year I brought forward a Budget in which along with a large remission of taxation I proposed a subvention to local expenditure. At the moment I made my Statement I was not perfectly aware how much of the local subvention would fall to be paid within the financial year. I did not know at what periods the payments to Scotch and Irish police, &c, would fall due, and, as a matter of precaution, I took a round sum, as being the amount which would have to be provided during the year. As the year drew on and we came 319 to ascertain the dates of the various payments, I found there was less to be made last year and more to be thrown on this year than I had calculated. I, therefore, assumed I should have a larger surplus in the Exchequer than was necessary, and that the calls upon me this year would be proportionately larger. Under these circumstances, I did what was nothing very extraordinary or unprecedented, or of which I am in the least degree ashamed—I allowed £300,000 to stand over from one year to the other and to go towards defraying the expense of the metropolitan police and other objects. I think I was perfectly justified in doing it equally with the other case I mentioned. And if I had not mentioned the fact I do not think anybody would have found it out. In these matters I wish to be perfectly frank, and therefore I let the House and the country know exactly what I was doing. My right hon. Friend, of course, has the right to comment upon this, and to say we ought to be more regular in future. We will endeavour to be so. But now I am coming to an important point. My right hon. Friend challenges my Estimate for the present year, and he says—"In the first place you claim to have a surplus of £417,000. But there is £60,000 on account of Brewers' Licences, then there is the interest of £70,000 upon loans, next a large deficit on the Savings Banks, and finally the Vote for Irish education." Well, with regard to some of these items, I do not admit the correctness of my right hon. Friend's observations. The interest on loans had been considered in the calculation which was originally made, and will cover the amount we are likely to require. If a larger amount should be raised we must remember that the interest will be balanced by the interest we shall derive from the advances we shall make, and that this will be carried to the other side of the account as Miscellaneous Revenue. The Savings Bank deficiency, again, will not arise till next year. But taking the Irish Education Vote and any other Supplementary Estimates, no doubt there will be some of the latter which may even absorb the surplus, or even more than absorb it. There is the deduction on the Brewers' Licences of £60,000, and allowing a further deduction for the increase in the charge or Debt of £255,000, which in- 320 cludes £185,000 of the fixed sum, and £70,000 for the local expenditure, the result is a total deduction of £315,000 taken from the surplus of £417,000, which leaves me £102,000 with which to begin the year, with a prospect, undoubtedly, of some further Supplementary Estimates. Well, I have said that my surplus was entirely exhausted, but I did also state that my Estimates were moderate; and although in the Statement I have laid before the House I have only made provision for the Estimates which have been actually laid upon the Table, and not for the sums we shall have to propose in addition, I do anticipate that there will be a further amount of Revenue which will come into the Exchequer in some shape or other, and which will fairly balance any Supplementary Estimates that we may have to propose. Is not that, after all, a common sense view of the case? I was twitted last year with the kind of Budget I then laid before the House. Last year I presented a Budget which was fortunate enough to receive the approval of the right hon. Gentleman himself, in which I set forth in detail the amount I expected to receive from Customs, Excise, and so forth. The result was that, on the whole, the Estimate I then presented was exceeded in the actual returns by something like £500,000. I was justified in the result, and yet I did not satisfy my critics. I was told I was wrong here and wrong there, and that, although I might be right in the totals, I was wrong in the details. Now, I am a student of the newspapers, and I am not above taking advice from any quarter whence it may come, and I am not ashamed to say that I received a valuable hint from the correspondent of one of the leading newspapers, The Times, who writes under the well-known name of "Surplus." In a letter which that gentleman wrote, and which entirely fell in with my views on this subject, he said—It is impossible for a Chancellor of the Exchequer, although he may calculate the general outcome, to say what might be advances on particular articles, such as tea, malt, stamps; but let him take courage and make his Estimates as carefully as he can, and then make some allowance for the general spring of the Revenue.Well, unless circumstances should arise altogether unexpected, I think I am 321 taking a safe estimate when I say that I may put the supplementary receipts and savings on expenditure—for these must be taken into account—against any Supplementary Estimates that may be required. I may be wrong, and I may be open to criticism next year; but at the present moment I will ask the House to give me credit for having acted, at least, as one who, above all others, will be the sufferer if he makes any mistake. If there should happen to be a deficiency of £100,000 or 200,000, the country will not be a great loser—["Hear, hear!"]—but it will be a very great loss indeed to the Chancellor of the Exchequer and his credit; and, in spite of the ironical cheer from the right hon. Gentleman opposite, I am staking my own reputation more than any interest of the country upon the sufficiency of the Estimates I have presented. We have heard a great deal about old-fashioned notions, but is it such a very unheard-of thing that a Chancellor of the Exchequer should present a Budget with an anticipation of a very narrow surplus or, possibly, of a deficiency? Why, some 10 or 12 years ago we had cool Estimates presented to us of deficiencies of upwards of £1,000,000, which were to be taken out of the Balances. Is there anything very extraordinary in estimating rather closely on the present occasion, when in former times a Chancellor of the Exchequer got up and said—"I foresee such an amount of expenditure and income, and I leave you with the prospect of a deficiency of £1,200,000," which ultimately turned out to be something like £2,500,000. [Mr. LOWE: There was £6,000,000 for the China War.] I suspect that if we went into the details of those Estimates there would be a good many things to speak of besides the China War. We were at that time giving away right and left in reduction of taxation; we were reducing duties in this quarter and that quarter. ["Hear, hear!" from the Opposition.] You cheer that. Am I to understand that the argument that we have come to is that it is legitimate to speculate for a deficiency, if you are going to give away taxes; but that it is not right to speculate upon a close fit, if you are going to do something towards paying off Debt? The last, and what may be called the most interesting, part of my right hon. Friend's re- 322 marks filled me with a most profound astonishment. I did not expect that my proposals would, in all particulars, meet the approbation of my right hon. Friend; but I own I did think that the kind of criticism that we have heard on the propositions for the reduction of the Debt would have proceeded from any other Member of this House rather than from my right hon. Friend. His arguments were perfectly new and surprising. He told us that there were three ways of reducing the Debt. The first was to maintain a surplus of Revenue over Expenditure, the second was by a system of Terminable Annuities, and the third was by fixed appropriations. Three ways! I must say I only know of one. Does my right hon. Friend mean to put the maintenance of the surplus of Revenue over Expenditure in contradistinction to any other plan, as if there could be any plan not founded on this principle? Why, that is the old fallacy brought up again, and stamped with the authority of my right hon. Friend. For my own part, I take my stand, and the Government take their stand, on the principle that was embodied in the Report of the Finance Committee of 1828—upon the principle which has been repeatedly impressed upon this House ever since the fallacy of the old Sinking Fund was discovered; and that is, that the only legitimate way of reducing Debt is by maintaining a surplus of Revenue over Expenditure. And if my right hon. Friend means to tell us that he has found any machinery in the form of a juggle or puzzle, in connection with Terminable Annuities or anything else, which does not involve the maintenance of a surplus of income over expenditure, and if he thinks that he is thereby going to reduce Debt, he is only seducing the House into a false track, which ought to be repudiated at the first possible moment. I will do my right hon. Friend the justice to say that I do not believe he meant what he said. What I suppose he meant was, that we might trust to casual surpluses from year to year of Revenue over Expenditure, as contrasted with any fixed principle or system for the reduction of Debt. That must have been the meaning of my right hon. Friend, because it justified what I said—that casual surpluses from 1829 to the present time had only produced a 323 reduction of £40,000,000, against which was to be set an increase of £70,000,000 in loans. On the other hand, I pointed out that the system of the reduction of the Debt by the fixed process of Terminable Annuities had produced the more satisfactory results to which I adverted; and I used the argument to support my proposition that it was not safe, if you wished to do something substantial for the reduction of the Debt, to trust to these casual surpluses from year to year, but that you ought to try some settled plan. That, however, was spoken of my right hon. Friend as unreal and against all experience, and that was a principle to be condemned! But where is the experience that my right hon. Friend spoke of? He gave us the experience of Lord Bexley, and of the period when, at first £5,000,000, and afterwards £2,000,000 or £3,000,000 a-year, was to be set aside for the Debt. That plan was given up in 1828. My right hon. Friend gave us also the experience of Sir George Cornewall Lewis, which likewise ended in failure. But he did not give us one experience which is more recent and more to the point—he did not give us his own experience. He has been proving that, under the circumstances of the years after the Great European War, the system on which Lord Bexley and other Chancellors of the Exchequer had endeavoured to maintain a fixed appropriation of £5,000,000 was impossible to be carried out. He has reminded us that when the country was burdened with taxation, the primary object was to reduce taxation and relieve the industry of the country; but although the pecuniary arrangements of a Sinking Fund were objected to and were given up by my right hon. Friend, yet he forgot to tell us that we have been living for 10 years under the system of what he now calls a fictitious payment of the National Debt. We have been left by him to provide for the Terminable Annuities which, at his suggestion, we have been paying for the express purpose of extinguishing Debt, and it is just as fictitious and as unreal as any other system. Well, my right hon. Friend may prefer his system to mine; I do not care for that, and I do not quarrel with him for doing so. The system I proposed was an exceedingly simple one, and occupied some 10 minutes to explain, while that of my 324 right hon. Friend was an extremely complicated one, and took up at least a good half-hour. I daresay many hon. Members here will remember the celebrated speech which gave everyone a headache in 1865, when my right hon. Friend brought forward his elaborate plan of Operation A and Operation B, and distinguished the position of the Chancellor of the Exchequer as Finance Minister from the position of the Chancellor of the Exchequer as banker, and showed how in the one case he might be in a surplus and in the other in a deficiency—that there were cases in which he might be in a special condition to make arrangements which would reduce the Debt. I do not know that he named such very large sums as he did just now, but he named very considerable sums, and the right hon. Gentleman the Member for Pontefract (Mr. Childers) was so enthusiastic on that occasion that he got a Return printed and laid upon the Table, which carried you on to 1888, with a vista of annuities which would be terminable in 1905. I have never been visionary enough myself to go beyond that date; and then my right hon. Friend says with an air, as if he was going to put us all down—"Did you ever hear of a Chancellor of the Exchequer who came forward and proposed taxes in this House for the purpose of keeping up a sinking fund?" Yes, I did. I remember a Chancellor of the Exchequer coming forward and proposing a match tax. I am proposing taxes at this moment to carry out arrangements into which my right hon. Friend himself originally induced us to enter. [Mr. GLADSTONE dissented.] My right hon. Friend shakes his head; but does he mean to tell me that if it were not for these Terminable Annuities which he has set on foot, and which you might be pleased by a very simple operation to put an end to at once—we would be obliged to bear the burden of taxation we are doing? Nothing of the sort. My right hon. Friend and those who sit near him are ready enough to come forward on proper, or, what they think proper, occasions, and say—"See, we have extinguished £3,000,000 or £4,000,000 of Debt every year." Why, Sir, these Terminable Annuities will this year pay £3,700,000 of Debt, and we are proposing taxation to cover that. And, therefore, I say that this system of fixed 325 provision is not new, and is not absurd. It is one which my right hon. Friend has himself proved the efficacy of, and one which experience shows that Parliament will maintain and carry out. [Mr. GLADSTONE again dissented.] Well, my right hon. Friend is the most incredulous man I ever met—he keeps on shaking his head whenever I refer to him; but if the House will not think it too familiar a parallel, I will mention one which suggests itself to me. There is one of Walter Scott's novels in which he introduces a Scotch boy, who informs a gentleman that the Nabob of the story had given him half-a-crown, charging him not to play it away at pitch and toss. "And of course you disobeyed him? "he was asked. "No," he said, "I didna disobeyed him, I played it away at neevie-neevie nick-nack." Why, Sir, the difference between the two systems is just about the same as losing the half-crown at neevie-neevie nick-nack instead of at pitch and toss. My right hon. Friend seems to think that my plan is necessarily antagonistic to Terminable Annuities, and that I have a feeling against their operation and principle. I say, not at all, because it is perfectly possible within fixed limits—and I think on certain occasions it will be the right thing to do—to create Terminable Annuities as much as you please, and I believe within those limits it will be a good arrangement to do so. My right hon. Friend has, I think, said—other people certainly have—that I am proposing to reduce Debt with one hand and to contract it with the other. Well, in a very limited sense, that is true; but if you look at the whole of the operations proposed by the Government, in the Bills which we have laid on the Table, you will see that we are putting an end to the various systems which really allow the contracting of Debt. If it is open to assert that we are reducing Debt on the one hand by raising it on the other, I would say that my right hon. Friend and hon. Gentlemen opposite have been for some years going upon the principle of reducing Debt with one hand and raising it on the other with four hands. Now, first, they have been in the habit of borrowing for fortifications, just as we propose within the limits they prescribe to do. They have been paying off Debt by Terminable Annuities on the one hand, and 326 have been raising money for fortifications and adding to the Debt with the other. But not only that—when they have raised £1,000,000, they have not only added £1,000,000 to the Debt, but substantially £2,000,000—£1,000,000 they raised, and they stopped another from going into the Exchequer in the form of a sinking fund to reduce Debt. I will not weary the Committee with the figures, but they show that the amounts expended on fortifications have added to the Debt much more than the amounts raised, because taking the sum raised and the amount deducted out of Revenue, and arriving at the amount you are to hand over to the National Debt Commissioners, you have been robbing the National Debt, and of course strengthening your balances in a way which enabled you to fall back upon those balances to make up a deficiency when occasion required. Then the third hand you have used is this Savings Bank deficiency, which you have allowed to go on increasing, and which we propose to extinguish. I apprehend that there is no more sound or simple principle of finance than this—that, instead of allowing those sums to accumulate as Debt against the nation from year to year, we should come to Parliament and say—"Here are these Savings Banks deficiencies; you choose to allow the depositors in them this amount of interest, being more than your funds will bear; they must, however, be provided for, and we must ask you to vote sums for the purpose." But now what is the fourth hand by which you have been contracting Debt? What is this system of Terminable Annuities? When you turn a Perpetual Annuity into a Terminable Annuity, what do you do? You extinguish a Perpetual Annuity of smaller amount, and you substitute for it a Terminable Annuity for a certain number of years of larger amount, and the difference ought to be such that by investing the amount by which the Terminable Annuity exceeds the Perpetual Annuity, you will at the expiration of the term of years have replaced, and exactly replaced, the money which you had to begin with. Well, but what have you done? If you had gone into the market, and had offered to issue Terminable Annuities and extinguish Perpetual Annuities in their place, no doubt the higgling of the market would have 327 established fair terms. But, for reasons which I need not go into, you did not do that. The Chancellor of the Exchequer, in his capacity of National Debt Commissioner, or banker, as my right hon. Friend calls it, has made terms with the Chancellor of the Exchequer as Finance Minister, and he has been both buyer and seller of these Annuities, and has fixed the price as he thought fit. But suppose you attempt to operate upon a large scale in that way, what would happen? You extinguish your Perpetual Annuity. You create a Terminable Annuity, and you repay every year a certain amount of capital, which has to be re-invested; but the effect would be to raise the price of the funds, as my unhappy proposal, which has created so much wrath and contempt, has done; so that the money, when it comes back to be re-invested, will not produce the same amount of stock, and consequently there is a loss, and that loss is another way in which I say a false operation has been going on. If you attempt to rest any scheme for the reduction of the National Debt on Terminable Annuities, you will to a certainty produce that effect. You will either make a bargain too favourable and add to the Debt, or you will, on the other hand, make a bargain too unfavourable, and so rob those for whom you are trustees—the Savings Banks depositors; and, therefore, the system is not one on which you ought to rely. I do not, however, say we are not to have Terminable Annuities at all. I am for retaining them to a certain extent, and there are provisions in this Bill to enable you to do so; but to say that that is the only really sound and sensible principle to act upon, and that the other which I propose is unsound and visionary, seems to me to be nothing but gross and sheer prejudice. I am not able to use any other term. Of course, my right hon. Friend regards his own child with different feelings from those with which he regards the child of another; but I must say I was amazed when I heard the propositions laid down by my right hon. Friend. If he has passed over his own peculiarities he has looked into my faults with the sharpness of an Epidaurian serpent. He has done me the honour of looking into the Division List of 1858, and reminding me that I went into the Lobby on the occasion to which he referred with him- 328 self and my right hon. Friend at the head of the Government against Sir George Cornewall Lewis. I was then a young Member of the House, and I voted pretty much according to the authority of my two right hon. Friends. But, as the right hon. Gentleman has thought fit to refer to the manner in which I gave my vote on that particular occasion, I should wish to remind him that in a book which I have since written upon the subject I have very freely given my views with regard to that sinking fund of Sir George Cornewall Lewis, and I beg to refer the right hon. Gentleman to my opinions therein expressed. Sir George Cornewall Lewis originated his proposal in a year when a war was raging, and when he was borrowing large sums, and his intention was that his sinking fund should come into operation at the close of that war. The year, however, which he had selected for the sinking fund to come into operation was of a peculiar and very unfortunate character for such an operation. It was not a year of peace, because we were at war in China; the commercial condition of the country was such as to threaten us with a deficiency, and it was also a year when we were bound by an agreement entered into long before to reduce the income tax from 9d. to 7d. in the pound. There were circumstances, therefore, which rendered that year very different from the present, and I refer to it mainly to show that in adopting my proposal we by no means bind future Ministers of Finance. If within two years after Sir George Cornewall Lewis made his proposal for a sinking fund, Parliament was ready to set his scheme aside, is it not perfectly manifest that if times should ever arise when Parliament should think that it is not expedient that my plan should remain in force, the Finance Minister of the day will be bound to come forward and to ask Parliament to set it aside? If you adopt my proposal you will have none of the complications incident to the system of Terminable Annuities—you will have a system of finance which I venture to say will be of a most sound and stable character, because while it establishes a consistent policy of the repayment of Debt, it can be set aside whenever the circumstances of the country require that it should be put an end to. If the country were really in want of money, 329 and taxation could not be increased without injury, the first thing that the Minister of Finance would do would be to put a stop to the system of the repayment of Debt in place of borrowing money. I must apologize to the Committee for having devoted so much of their time and attention to the discussion of this point; but I did so because it was the one which was most pressed upon their attention by the right hon. Gentleman in the last part of his speech. The right hon. Gentleman referred to other matters, which I shall be ready upon the proper occasions to discuss, and I hope that the right hon. Gentleman will not think that I am passing them over because I have thought it right to confine my observations on the present occasion to that part of his speech which refers to my proposal for the reduction of the National Debt.
§ MR. LOWE
I wish, Sir, in the first place to correct a statement of the Chancellor of the Exchequer with reference to what occurred in 1864. I find on referring to the speech of my right hon. Friend (Mr. Gladstone) in 1864 that he said they must bear in mind that they had incurred certain charges for fortifications, and that both Expenditure and Revenue had included a considerable amount which did not appear in the accounts of previous years. With regard to the charge made by the Chancellor of the Exchequer against the conduct of my right hon. Friend in taking off taxes and yet having a deficit in the same year, I must observe that the right hon. Gentleman (Mr. Gladstone) took off the taxes in question in April, and the China War, necessitating the re-imposition of those taxes, broke out in the following July, and was one of those unforeseen contingencies which no Minister could guard against. It was, therefore, owing to no fault of my right hon. Friend that the deficiency was incurred. I think that that is a complete answer to the charges which the Chancellor of the Exchequer has brought against my right hon. Friend. But we are not here to answer charges. We are here to arraign the policy of the Chancellor of the Exchequer, and to show the House why the financial proposals of the Government do not merit the confidence of the House. The right hon. Gentleman opposite has argued the matter as though he had not a deficit. 330 When he made his Financial Statement, he gave the country to understand that he had a surplus of some £417,000; but, in giving us those figures, he entirely left out of sight the large expenditure that will be required for the purposes of Irish Education and other matters of account. But on the faith of those Estimates, he asked the House to sanction the remission of the charge for the Brewers' Licences amounting to £60,000, the payment of £70,000 on account of interest for money borrowed on loan, and his proposal for the repayment of the National Debt, incurring a further expenditure of £185,000. The right hon. Gentleman never ventured to say in so many words that he had not a deficit, and, indeed, I do not know why he should have done so, because he seems to regard a deficit as being just as good as a surplus. The right hon. Gentleman having no money in his pocket, draws upon the negative quantity, and enters upon a far-reaching speculation for the purpose of paying off the National Debt, commencing his operations by borrowing the money to enable him to make a start. Under these circumstances, I really wonder that the right hon. Gentleman took the trouble to deny that he is in debt. Therefore, while the right hon. Gentleman does not venture to say that he has a surplus, I think that we are justified in saying that he has a very serious and considerable deficit, and that it has arisen from the want of serious consideration being given to accounts of income and expenditure. Well, this is after all but a poor affair. But although it is but a poor affair it might have been relieved if he had treated it in a more magnificent manner. We have shown that in a time of profound peace, when no emergency is expected to arise, when we only last year gave the right hon. Gentleman £6,000,000 to play with, and when we are enjoying the result of a splendid harvest, he has been unable to keep us out of a deficit. I really was somewhat ashamed when I saw the manner in which the right hon. Gentleman dealt with and palliated the circumstances of the case. He told us, in the first place, that he had retarded the progress of £300,000 of Indian money which was finding its way into the Exchequer, and he seemed to consider it a matter of no consequence. But surely it is the duty of the Chancel- 331 lor of the Exchequer to lay before the House the finances of the country as they actually stand, and not as he has manipulated them. Any Finance Minister who adopts the latter course enters upon what was termed some years ago in relation to railway speculations, "a culinary operation" of the most difficult and dangerous nature. Nothing can be more alarming than for it to be publicly avowed that it is the duty of the Chancellor of the Exchequer to manipulate the public accounts so as to show the revenue to be larger than it really is, and our fears would be greatly increased were we to be told that the object of such manipulation was to prevent the necessity of its being shown that there was a large deficit. It may be said that this is a small matter, and that it does nobody any harm; but the first step in such a direction is everything, however little, and if the House consents that the Minister of Finance shall cook and manage the accounts and present that as a fact which is not a fact, we are entering on a course the end of which no man can foresee. The right hon. Gentleman has not only disposed of the £6,000,000 given him last year, but he has also reduced the balances by £1,000,000, and worse than that, what kind of excuses does the right hon. Gentleman set up to cover his proceedings? Why, he says that the Government remitted a great quantity of taxes last year, and that part only of such remission came into operation during the present year, and therefore that he was entitled to consider that a portion of the deficit was a remission of this year. He also said that the coming year is Leap Year, that it contains an extra day, that there is no Easter in it, and several things of that kind, and hopes that things may be better than his own calculations have led him to believe. The right hon. Gentleman in making his Financial Statement appears to have made all kinds of mental reservations instead of telling us exactly what the state of the Revenue was. That is a matter for serious complaint, for if there is anything in the hopes that the right hon. Gentleman now entertains on the subject of the Revenue, he ought to have taken that into consideration before he presented his Estimates to the House. There is nothing more difficult than to fix upon the 332 right hon. Gentleman any specific statement at all. We have had of late years a pretty good time in the way of finance, even without the assistance of the Match Tax. But it seems that whenever the Conservative Party are in power there must be a deficit. After the right hon. Gentleman the First Lord of the Treasury came into office in 1852 he had to deal with a deficit, and, wanting to take off a great portion of the Malt Tax, he laid hold of a Public Works Fund and appropriated it for the purpose. That was his first experiment in finance. Then in 1858 he laid his hand upon the sinking fund, which had been provided by Sir George Cornewall Lewis, and appropriated it as part of the Revenue of the year. Now, the right hon. Gentleman has come in with every conceivable advantage, after a remission of £12,000,000 of taxes and with power to remit £5,000,000 more. We had taken off something like £26,000,000 of Debt; we had paid off £5,000,000 of the Abyssinian legacy that was left us by our Predecessors; we had expended £2,000,000 in the preparations rendered necessary by the War in 1870, and in addition we had paid £3,200,000 of the Alabama Indemnity, all payments of the nature of Debt. In five years, therefore, we had paid off no less than £36,000,000 Debt. If ever a Chancellor of the Exchequer came into office with a good chance of having a surplus and of cutting a respectable figure—if only for the sake of variety—surely it was the right hon. Gentleman. But what has been the result? In the first year the right hon. Gentleman squandered away the whole of the surplus which he found available when he came into office, and the next year he comes before us with a deficit. I think, under those circumstances then, that the right hon. Gentleman would do better if he directed attention to his own defence, instead of endeavouring to carry war into the enemy's country. In a most admirable manner the right hon. Gentleman sought to show that he was still remitting taxes. First, he told us that part of the remissions of last year took effect this year; and, in the second place, he pointed out that relief was given in some respects to local taxation. With regard to the latter circumstance, it is obvious that the money spent in relief of local taxation must be charged upon the Revenue of the 333 country; but according to the logic of the right hon. Gentleman this is remission of taxation—and therefore the more you tax a people the more you relieve them. But what I object to most of all in the right hon. Gentleman is the levity with which he speaks of a deficit. I do not know that this is a place for logical definitions; but if I were asked to define a Chancellor of the Exchequer, I would say he is "an animal who ought to have a surplus." If—except under extraordinary conditions—he has not a surplus, he fails to fulfil the very end and object of his being. I hold that the want of a surplus in a time of peace—when there is no pressure, no panic, no great distress anywhere—is nothing less than a national calamity. Our position as Englishmen—and I feel it—is lowered by it in the eyes of the world. The right hon. Gentleman has given us a great many reasons why he has not taken off fresh taxes this year. I think he might have spared himself the trouble. It is like the person who could not fire a salute, for 13 reasons—the first being that he had no gunpowder! The Chancellor of the Exchequer having spent every shilling he had, had a good excuse for not taking off taxes. The right hon. Gentleman attached importance to the fact that next year—Leap Year—there would be an extra day, and that, moreover, the Easter festival would not fall within the financial year. Surely these are little calculations, which are more worthy of a retail trader than of a Chancellor of the Exchequer? People sometimes say that we are descending in the scale of nations—that we are not the country we are, and so on. We can still, however, point to many circumstances which prove the contrary, and notably to the rate at which we can borrow money. But if we hold ourselves out to the world, under the auspices of the right hon. Gentleman and his supporters, as caring so little for the credit of the country and for its antecedents that we do not scruple, without any occasion, to present the miserable spectacle of a Financial Statement which does not balance, how can we expect to retain our high position in the eyes of other nations? And if this is what you do when there is nothing threatening, how will it be when there is real danger and pressure? I hold that we are bound, not only as a matter of pride, but as a 334 matter of duty, to give an example to the rest of the world by regularity and propriety in our financial arrangements. With regard to the scheme for the reduction of the National Debt, I maintain that the right hon. Gentleman is introducing into this country a system which, from its own nature, is certain to fail, and which experience has shown to have always failed. Suppose a Chancellor of the Exchequer is asked to take off a tax—the Malt Tax, for instance. He says—"Very well, I will do it; but I must increase another tax." But then the repealers of the other tax—say the income tax—come forward and make a similar demand, and the Chancellor of the Exchequer may stand by until the two parties fight it out. But suppose, instead of being obliged, if you yield to either of the demands, to increase the taxation in some other direction, there is a fund already provided for the purpose of paying off Debt, how long do you think the Chancellor of the Exchequer will be able to resist the pressure for an appropriation of that fund to the remission of taxation? He will say—"I want to pay off Debt." But on all sides there will be a cry—"We do not care at all about that." I should like to read a few lines from Ricardo's Essay on the Funding System in regard to a sinking fund established in 1716—This fund was for some time regularly applied to the discharge of Debt. … Soon after, the principle of preserving the sinking fund inviolable was abandoned. In 1733, £500,000 was taken from that fund and applied to the Services of the year. In 1734, £1,200,000 was taken from the sinking fund for current services, and in 1735 it was anticipated and mortgaged. The produce of the sinking fund at its commencement in 1717 was £323,437. In 1776 it was at its highest amount, being then £3,166,517, and in 1780 it had sunk to £2,403,017. … On the whole, this fund did little in time of peace, and nothing in time of war, to the discharge of the National Debt. The purpose of its inviolable application was abandoned, and the hopes entertained of its powerful efficacy entirely disappointed.That was the experience of the first sinking fund in this country, and it is exactly what would happen now. As long as it is small—and the right hon. Gentleman has not yet contributed anything to it—it will be safe. But let it reach a larger sum, and there are numerous claimants who will try to get hold of it; and the only question will be to whom will the Go- 335 vernment of the day make this present that is being provided for them? It is impossible to suppose that it will last. Let us take an instance. The right hon. Gentleman at the head of the Government is now lending his countenance to the project of a sinking fund. Well, in 1855, when Sir George Lewis was Chancellor of the Exchequer, £16,000,000 were lent to the Turks, and £1,000,000 was to be used every year as a sinking fund. Soon after peace was restored, a Conservative Government came into power, and as usual there was a deficit. Then the present Prime Minister was Chancellor of the Exchequer, and the right hon. Baronet was Secretary to the Treasury. [The CHANCELLOR of the EXCHEQUER: I was not then in Parliament.] The result was, that an Act was passed under the auspices of the right hon. Gentleman opposite (Mr. Disraeli) to which I would ask particular attention. By that Act the right hon. Gentleman repealed the sinking fund scheme, and did the very thing which he is now condemning. He resisted in the most solemn manner the bad system of a sinking fund, and yet now he came down to the House to rate those who sat opposite to him because they, in Opposition, ventured to doubt the policy which he had himself so emphatically denounced. The real objection to a sinking fund is that it is a thing made to be robbed. It always has been robbed and always will be robbed, to the end of the chapter, because it is of no interest to the general public to defend it, and in a fight about taxation, with an interested party on the one side and the general public on the other, the general public will always go to the wall. The right hon. Gentleman the Chancellor of the Exchequer said, and with truth, that Terminable Annuities have in them something of the nature of a sinking fund. But, as a matter of practice, there is this difference between them—that the nature of a sinking fund, such as the right hon. Gentleman contemplates, is that it should be plundered, while the nature of Terminable Annuities is that they have not been able to be plundered. They have been efficient; they have never been interfered with by Parliament, and although I may be told that it is not logical to object to one and not to the other, I do not care whether it is logical or not; one thing is certain, that is that the country 336 will allow us to do one thing and not the other. By this proceeding the Committee are asked by the right hon. Gentleman to do away with the system, and to destroy the only efficient means that have yet been devised for paying off the Debt. I will not dwell upon the ridiculous position in which the Chancellor of the Exchequer places the House by landing us in a deficit, and then, without a farthing to dispose of, proposing to borrow money in order to initiate a system by which he hopes to pay off £200,000,000 of Debt. The right hon. Gentleman might at least have waited until he had a shilling of his own to commence his operations with. It was urged upon Burke, when arguing the case of America, that we ought to take off the monopoly of trade and the taxation, or neither, because it was not logical to continue to monopolize their trade and not to pay taxes. He said—"I do not care whether it is logical or not. They will submit to the monopoly, and they will not submit to the tax." That is exactly the case in this instance. I do not care for the logical objections which may be urged against Terminable Annuities; the fact is as I have said, the people of England will inevitably apply the money laid up by the right hon. Gentleman for the purpose of taking off taxes while they will not disturb the Terminable Annuities. Further, the right hon. Gentleman might have been content with landing the House in the discredit of a deficit, without striking a fatal blow which, upon the authority of his own Leader, must inevitably lead to the appropriation of the sinking fund to the necessities of the Government. One small matter I may refer to before resuming my seat—namely, the stoppage of £300,000 in its course into the Exchequer, with regard to which the right hon. Gentleman says he has let matters take their course. It is owing to the right hon. Gentleman's instructions and under his own direction that this most irregular and improper step has been taken. In conclusion, this is the outcome of the whole business—that we have got our finances into a state in which we have not seen them for five or six years, and that the only consolation the Chancellor of the Exchequer has to offer is a number of refined definitions as to the incidence of taxation, the effects of moveable feasts, and other matters of 337 the same nature, and then, having given us this immense boon, he takes measures, so far as human foresight can ascertain, for destroying the only means we possess for paying off the Debt of the country.
§ MR. HUNT
felt when the right hon. Gentleman who had just spoken (Mr. Lowe) rose, that he had a very difficult task before him, because the right hon. Gentleman the Member for Greenwich had dealt with every conceivable point of attack in the proposals of the Chancellor of the Exchequer, and his criticism had been so completely answered by his right hon. Friend's speech, that he was sure the right hon. Gentleman had nothing to do but toGlean the blunted shafts that had recoiled, And aim themagain at his right hon. Friend. They were charged with having no surplus, and it was quite possible that the Supplementary Vote for Irish Education might almost absorb the surplus after the sinking fund had been provided for; but when it was objected that a Chancellor of the Exchequer ought not to start without a surplus, he would remind the House that in 1871–2 the Chancellor of the Exchequer of that day was content to start with an estimated surplus of only £7,000, from which it appeared that what was then entirely proper was now entirely vicious. True, the actual surplus realized in 1871–2 was £3,218,000, so that, notwithstanding the dismal prospect with which that year began, it closed with a very prosperous state of the Exchequer. Therefore, before right hon. Gentlemen opposite came to the conclusion that the present year would land them in a deficit they should wait until they saw its actual result. With reference to the sums receivable from India, to which allusion had been made, he understood that both in the case of the last as well as the present Government, the receivable Order was sent to the Bank of England one day later than it might have been. Whether the right hon. Gentleman opposite had given directions to that effect he did not know; but the Order was at the Treasury, and he might have made himself acquainted with the fact if he had made inquiry into the matter. In the one instance, then, according to the right hon. Gentleman, the transaction was a most legitimate one; while in the 338 other there was a most flagrant dereliction of duty. The right hon. Gentleman went on to say that the late Government had left their Successors a very considerable surplus and that they had squandered it. Now, the surplus of last year had been dealt with entirely in the way of the remission of taxation; but while right hon. Gentlemen opposite were apt to boast of all that they had done in that way, they characterized the same operation on the part of their political opponents as squandering a surplus. A great deal of criticism, he might add, had been expended on the subject of the relief which was given to the ratepayers, and no doubt that which had ostensibly increased the expenditure of the country was the subvention in aid of local taxation by which very considerable relief had been afforded. In connection with the subject complaints, which had been admitted on all hands, had been made for years past that certain Imperial charges were placed solely upon a certain class of taxpayers—namely, the local ratepayers; but while the late Government found it necessary to pay attention to that grievance, it was left to the present one to deal practically with it, and he believed the relief felt by the remissions of his right hon. Friend the Chancellor of the Exchequer had been gratefully acknowledged by those who had participated in them. But the main question raised that evening was, whether the proposals of his right hon. Friend with respect to the reduction of Debt were such that they ought to receive the sanction of the Committee. The right hon. Gentleman opposite (Mr. Gladstone) contended that the plan was one which must fail, inasmuch as sinking funds had always failed with the exception of Terminable Annuities. Well, circumstances altered cases, and the failure of sinking funds, in his opinion, involved the question whether it was necessary in order to support them to impose heavy burdens on the people in the shape of taxation. It was not surprising that when war taxes were pressing on the community a Chancellor of the Exchequer should rather seek to relieve the taxpayer than to provide for the reduction of Debt. That might be his duty, while at another time when the burden of taxation was light the reduction of Debt ought to occupy more seriously his attention. And when the 339 right hon. Gentleman opposite contended that the only form of sinking fund which was of any value was that of Terminable Annuities, he (Mr. Hunt) would ask whether he thought those Annuities would be safe in the event of the pressure of taxation being very great? Nothing could be gathered in answer to that from what had occurred, for it appeared to him that the pressure of taxation had been very much less during the continuance of these Annuities than on former occasions when other forms of sinking fund had been abandoned. He recollected that when he himself was Chancellor of the Exchequer, and had to make provision for the expenses of the Abyssinian War, there were not wanting hon. Members in that House to urge the desirability of breaking in on the system of Terminable Annuities for the purpose of raising the necessary funds. He was, however, enabled, with the support of the House successfully to resist the proposal; but in the event of the breaking out of a war, which should necessitate the imposition of taxes of anything like a grievous nature, he had no doubt that under any system of sinking fund we should be compelled to cease paying off Debt for the period those taxes were required. But, then, the right hon. Gentleman argued that the present was not the time to enter on such a system as that proposed by the Government, because the contribution which it would be possible to make this year in furtherance of it was so exceedingly small—only £185,000. The time was, however, he maintained, an opportune one to make a beginning in the proposed direction, because there was so much less temptation to decide on any other mode of spending the money. The pressure of taxation being by no means grievous, and taxation having of late years been remitted to such an extent in the case of those classes on whom it bore most heavily, it was easier under the circumstances to make a virtuous resolve than it would be in 1885, when the Terminable Annuities would fall in, and when there would probably be a general scramble for the remission of taxes. But the right hon. Gentleman went on to say that the Chancellor of the Exchequer sneered at the system of Terminable Annuities. That, however, was not the impression which he (Mr. Hunt) gathered from the speech of his 340 right hon. Friend. Indeed, he rather thought his right hon. Friend had pointed out that there was a scheme of Terminable Annuities which it might be advisable, under certain circumstances, to adopt; and in his Savings Banks Bill he had taken power to cancel Stock, and to substitute for it something similar to Terminable Annuities. Terminable Annuities had, no doubt, been successful as far as they had gone, but it would, in his opinion, be unwise to tie ourselves merely to that mode of operation. He thought that the matters complained of had been so entirely answered that it was really unnecessary for him to trouble the Committee further, and he hoped that the Committee would assent to the proposals of the Chancellor of the Exchequer.
§ MR. LAING
thought the speeches to which the Committee had listened that evening, able and eloquent as they were, partook rather of the tu quoque line of argument, while he was desirous of addressing himself to the question as it bore on sound principles of finance. Considering himself as a financier first, and a politician next, he proposed to enter upon what appeared to him to be a legitimate criticism of the Budget in three aspects, the first of which would be the Budget of the year. That Budget was divided into two parts; one the Financial Statement, the other the scheme for the reduction of the National Debt. His only weighty objection to the first part of the Budget was summed up in the admission of the Chancellor of the Exchequer, that there was substantially no surplus, and probably none whatever. The circumstances must be exceptional in which it was not the first duty of the Chancellor of the Exchequer to provide against possible contingencies. It was a question, not of money, but of credit and security. The commercial classes felt uneasiness at the prospect of a deficit, and a substantial surplus ought to be regarded as a point of honour. The only argument against it was that it encouraged pressure from the Departments, but Government ought to be strong enough to consider demands on their merits. The reason why we found ourselves in our present position, after two years of peace and prosperity, was that remissions were carried so far last year, although he would, in passing, admit that the large reductions previously 341 made by the former Government in the amount of the Sugar Duties had made their total abolition a case of inevitable necessity; yet the reduction of the income tax, notwithstanding the difficulty created for the present Government by the late Prime Minister's promised abolition of it, was much less justifiable; and had it been maintained at 3d. instead of 2d., we might now have looked forward to a surplus without reckoning upon the odd day in Leap Tear. But for these large reductions of taxation the country would be in a safer position with regard to meeting any emergencies which might arise, and, at the same time, in a position to do more towards reducing the National Debt. The facts showed how injurious it was to import political considerations into our finance. The objections to the proposals for dealing with the Debt were the time and mode of doing it. The difference between a sinking fund and Terminable Annuities was this—a sinking fund was entirely optional, and there was no third party to the contract; but in the case of Terminable Annuities, there was a third party, whose claims could not be got rid of by a stroke of the pen. The old orthodox system of making an impression on the National Debt was to estimate the expenditure well on the safe side, and to apply the surplus to reducing the Debt. If we had resolution to levy £5,000,000 a-year, for that purpose that would be the most straightforward and economical course. Terminable Annuities were only a device for catching the surplus Revenue. The only objection to the sinking fund was we were under no obligation to maintain it. The great danger was, that it looked seductive on paper, and when the amount became large, it was idle to think of pledging any successor as to what he could do with such prodigious sums as would have to be levied by taxation beyond what was actually required for the services of the year. Was it not more desirable that the Chancellor of the Exchequer, 10 years hence, should be as free as the right hon. Gentleman who now held the office to deal with the circumstances that might arise according to what was best for the time? Many of the small assessed taxes were troublesome in comparison with the revenue they produced; and he would not assert that the whole of our system of taxation was so perfect that no question could arise 342 hereafter as to whether it would not be better to reduce taxation rather than pay off Debt. He would say nothing about the Railway Passenger duty; but why should a tradesman's cart be liable to taxation, and did not some of the licence duties require revision? As regarded tea, he supposed that all the arguments which were brought forward for getting rid of or greatly reducing the Sugar Duties would tell equally for the reduction of the duty on tea. Indeed, he thought that no greater boon could be given to one-half of the population—the female half—than the reduction, or, if it could be afforded, the total repeal of the tea duties. There were many causes of increased expenditure looming in the distance, and that was an element in the question. The debates on Army Recruiting showed that the labour market had risen against the Government, and if the security of the country required that the raw material of the Army should be improved, it might be necessary to increase the pay of the soldiers. The debate on horses, too, proved that the cost of mounting our Cavalry and Artillery was increasing. Then, again, it might be possible that in four or five years our military authorities would follow the example of Germany, and substitute breech-loaders for muzzle-loaders, at a cost of, say, £4,000,000. The charge for Education was constantly growing. The Votes for National buildings had been properly postponed for the present year; but if we were to have new Law Courts, a new National Gallery, and a Musuem of Natural History, it might, he thought, be true national economy to get them finished without too much delay, so that we might enter upon the use and enjoyment of them at once. All these questions should be left to be considered unfettered by what had been determined upon five or six years before in regard to a sinking fund, and it would be neither wise nor prudent to commit a future Parliament upon the question whether the surplus revenue should go in one direction rather than another. He trusted the House would stand upon the old paths of Conservative finance which had been acted upon for so many years by politicians on both sides—namely, to maintain the old sources of Revenue, to go on with the plan of Terminable Annuities, and if we should chance to have a large surplus 343 two, three, or four years hence to defer the consideration of what should be done with it until that time arrived.
§ MR. J. G. HUBBARD
said, he merely rose to call the attention of the right hon. Gentleman opposite (Mr. Lowe) to the fallacy underlying his argument as to the relative importance of a deficit and a surplus. It was obvious that a Chancellor of the Exchequer would take a sanguine view of the advantages to be derived from a considerable surplus, and he was certain, under ordinary circumstances, to keep his Estimates of Revenue at a moderate amount. The modern position of a Chancellor of the Exchequer under the system of Terminable Annuities was one in which the reduction of Debt ceased to be a source of solicitude to him, as he would only have to provide for the payment of these Annuities, and upon their expiration there would be wiped off the Debt an amount equal to the capital sum they represented. Consequently, he would have no other duty than to give the House a fair view of his revenue and expenditure. The latter was the view taken by his right hon. Friend, and he thought he had shown that it had been not only with perfect frankness, but with thorough honesty of purpose, he had made his Estimates as closely as he possibly could. On the other hand, he entirely understood the view which attached extreme importance to a considerable surplus. The right hon. Gentleman the Member for the University of London seemed to consider a large surplus a special evidence of a Chancellor of the Exchequer's fitness for his position. But if that were so, nothing in the world would be easier than to become a most accomplished Chancellor of the Exchequer. The holder of the office would only have to take counsel with those excellent gentlemen the heads of the Revenue Departments, and say to one—What may be your estimate? and if the answer was £21,000,000, he need only say, Write down £20,000,000; to another, write down £5,000,000 instead of £5,500,000, and so on. No Chancellor of the Exchequer could have it absolutely in his power to foresee the prospective Revenue; everything must depend upon the circumstances under which the Budget was made, and the objects which were aimed at. A Chancellor of the Exchequer might go a little 344 above or a little below the mark, and he ventured to think that his right hon. Friend had made an exceedingly good shot. He ventured, therefore, to think that there was no room for the severe censures which had been indulged in on the apparent discrepancies in the financial arrangements of the Government. When those financial arrangements had been made, and the reduction of Debt provided for to such an extent as the House might determine, it was the duty of the Chancellor of the Exchequer to lay before the House as close and accurate Estimates of income and expenditure, and in that respect he was confident the House had now no cause to be dissatisfied.
§ SIR JOHN LUBBOCK
said, that his right hon. Friend who had just spoken (Mr. J. G. Hubbard) seemed to overlook the fact that it would not be sufficient on the part of the Chancellor of the Exchequer to under-estimate his revenue in order to ensure a surplus. He would also have to keep down his expenditure; and, therefore, the matter would not be so easy as his right hon. Friend supposed. He thought the House, in conjunction with himself, had listened with great interest to the very able statement of the Chancellor of the Exchequer, but he feared they came back to this fact—that they had only a nominal surplus at a period of great prosperity—namely, about £102,000—which would be all swept away by the Supplementary Estimates. While he heartily congratulated the Chancellor of the Exchequer on the results of last year, which were owing to an excellent harvest, he was glad that the Estimates of this year were founded on a different basis. The right hon. Gentleman said he was glad the money was in the pockets of the people and not in his cash-boxes. He had listened to that part of his speech with some regret, and it was quite inconsistent with the latter part of his speech, in which he forcibly pointed out the importance of reducing our Debt. The right hon. Gentleman thought that £28,000,000 should be devoted to the principal and interest of the Debt; but he was obliged to carry out this policy by three yearly increments. Why could he not at once carry out his policy? He was prevented from doing so by his Budget of last year. It seemed, therefore, inconsistent that the right hon. 345 Gentleman should congratulate himself on that Budget. The right hon. Gentleman the Member for Greenwich and the right hon. Gentleman the Member for the University of London had referred to past precedents which appeared to satisfy them that the Debt was not likely to be reduced by a fixed annual sum. But the circumstances of the present period were different from those of the previous periods, and he was, therefore, on this point, more disposed to take the view of the Chancellor of the Exchequer. The pressure of taxation was now much less than formerly, and the public opinion of the country had been educated on the subject. There was, however, this objection to both plans—that they did not bring prominently before the minds of the public the great advantage of reducing Debt. He believed that if not only the interest of the Debt was paid, but also an appreciable portion of the principal each year, the public would see by the annual burdens becoming less and less each year, the real advantage and importance of extinguishing the Debt.
§ SIR JOHN KENNAWAY
said, the Chancellor of the Exchequer had deliberately come forward and proposed a definite plan by which they might make some practical inroad upon the National Debt, and he thought the right hon. Gentleman must have been greatly encouraged by the support he had received from all parts of the House. During the last 47 years, notwithstanding the public income had increased 65 per cent, at the same time that the amount of taxation had been diminished, we had only paid off £ 160,000,000 of our Debt, while we had added to it £73,000,000. The plan brought forward by the Chancellor of the Exchequer would avoid an annual Vote and annual discussion of the sum to be set aside; it was a most practical one, and one which the country always received favourably in times of peace. The right hon. Gentleman the Member for Greenwich found fault with it; but why had he not proposed a better plan when he controlled the finances of the country at periods of unexampled prosperity? When the right hon. Gentleman the Member for Greenwich promised the nation the magnificent surplus of £6,000,000 on the eve of the last General Election, he made no allusion to the repayment of any portion of the National Debt. Parliament had been 346 legislating with the view of educating the people and of teaching them to be provident and self-denying; but if they wished their recommendations to have any effect, they must begin by setting the people a good example by providing for the repayment of the National Debt while the country was prosperous and we had the power of doing so. He was not sorry the income tax had been retained, as it was a most reliable source of Revenue, and it did not press hardly on any one at the present time. The country saw that there must be a certain amount of direct taxation, and they preferred the income tax to an enormous increase in the legacy and succession duties, which it was generally understood was the way in which the right hon. Gentleman the Member for Greenwich intended to recoup the Exchequer for the loss of the income tax. He entirely approved the proposals of the Government with reference to the relief of local taxation; while by their scheme in connection with the local loans, much benefit would be conferred upon the country. The financial measures of the Government would be of great practical benefit, and he trusted that the House would confirm the favourable verdict given by the country on the Budget.
§ GENERAL SIR GEORGE BALFOUR
said, he felt bound to protest against the unjust and unfair attack which had been made upon the Chancellor of the Exchequer in reference to the Exchequer balances left out of income after meeting all charges. It was in every way advantageous to the country to have a Chancellor of the Exchequer working on close estimates, whether of income or expenditure. There was no measure more conducive to exactness and regularity than that of enforcing accurate Estimates. The mere fact of showing that there was no surplus income available for the wants of Departments, effectually prevented the sending in of Supplementary Estimates for additional expenditure. No doubt this bad practice was not only stated by the Chancellor of the Exchequer of the late Liberal Government to be unavoidable; but no one acquainted with departmental arrangements could have heard this avowal with any other feeling than that of regret, and might well lead to the report that, on hearing it, the late Prime Minister left the House. No doubt, the present Chancellor of the 347 Exchequer had appropriated the income derived from the whole nation in aid of local taxes for local purposes, and in a way which he could not approve of; but he must admit that, in affording some relief to local taxation, the right hon. Gentleman had only acted in conformity with the desire of the Conservative Party. Had the right hon. Gentleman, however, instead of affording that direct relief out of the Consolidated Fund, merely handed over to the local authorities certain taxes, such as the tax on male servants, on carriages, on armorial bearings, also the gun and dog tax and even the publicans' and other local licences, he would not have laid himself open to the reproach of having increased the expenditure of the country, and would have been spared the reproach of adding to the dangerous practice, previously in force, of powerful parties putting their hands into the Treasury chest of the nation to use public funds for local purposes. The principle which the right hon. Gentleman had adopted of only retaining a small surplus was a very wise and prudent measure, because it would prevent premature attacks being made on the Revenue of the future, and would make all the Departments of Government very cautious in their expenditure. He saw no great objection to the plan of the right hon. Gentleman for the reduction of the National Debt, and he thought that the right hon. Gentleman was not open to the censure and blame which had been cast upon him by right hon. Gentlemen who had attacked his proposals. No doubt the old practice of 150 years of meeting debts by Terminable Annuities was a wise mode of concealing payments for debt; but if the nation would bear a direct charge, as proposed, then it might be tried until the people called for a return to the annuity system.
§ MR. W. S. STANHOPE
said, he also wished to express his warm approval of the financial scheme of the right hon. Gentleman, which would preclude any scramble for the large sum that would fall in during 1885. In 1853 the right hon. Gentleman the Member for Greenwich had commenced to speculate upon the falling in of the Long Annuities in 1860; but when the latter year arrived, instead of the income tax being repealed, it had reached the high figure of 10d. in the pound. He took credit to the Conservative Party for hav- 348 ing originated the system which for a considerable time had been gradually reducing the Debt; but, at the same time, he acknowledged that that system had been supplemented and honestly carried out by the late Government. It seemed to him, however, that a yearly appropriation of a fixed sum of money out of which to reduce the Debt was the simplest and most straightforward way of proceeding. This policy might be of vital importance in future generations. We owed much of our commercial superiority among nations to the abundance of our coal supplies, and when coal became scarce—as there was reason to fear it some day might—it would be well if the country had not to bear the burden of a heavy National Debt. With regard to taxation, he would suggest to his right hon. Friend the Chancellor of the Exchequer whether the dog tax might not, with great advantage to the public safety, be increased, so that by limiting the number of those animals, it might have its due effect in repressing the fearful malady of hydrophobia.
§ SIR JOSEPH M'KENNA
said, it was his intention, in the few remarks he had to offer to the Committee, to address himself to the scheme contained in the Resolutions of the Chancellor of the Exchequer. As regarded the general character of that scheme, he thought the Committee had little else to do than to accept or to reject it in toto. There were in it, no doubt, things to affirm or applaud, and others that might not be so satisfactory to some hon. Members; but, as he had said, the scheme was one which should be accepted or rejected in toto. What he wished mostly to urge, however, was this—That if this scheme of the Chancellor of the Exchequer was intended to bind future Parliaments and future Chancellors of the Exchequer to the allocation of any particular surplus for future years, it was amenable to many objections, some of which had been very ably stated by the right hon. Member for Greenwich; but if it went no further than to propose a plan which might be acceptable to the present views of Parliament, and which might be approximated to or departed from, as they thought fit, hereafter, it appeared to him to be about as good as any scheme which had been launched in previous years. With regard to the efforts made for the reduction of the National Debt, he would 349 only observe that if the whole of the reductions by Terminable Annuities were to be capitalized that they would not amount to more than the additional taxation raised in Ireland since 1841. He said that as an Irish Member, and he would strongly object to having any stereotyped scheme recognized by Parliament, that should bind them in their future contributions to the Imperial Exchequer. On the other hand, he admitted it was desirable that Parliament should place the country on short allowance with respect to the use of its surplus revenue in prosperous years. To that extent, perhaps, Terminable Annuities were preferable to other modes of reducing the Debt. He did not know that there was so much difference between the two schemes, the more so as, in principle, they were what every prudent householder practised—namely, the laying by of a small sum periodically that a larger one might return afterwards. With regard to the amalgamation of the old Savings Banks with the Post Office Savings Banks, he looked on that as a highly critical and dangerous operation. Some of the old Savings Banks were among the best managed institutions in this country or in Ireland. It had been a principle with Conservative Governments to treat existing institutions as tenderly as possible; and he believed that a great feeling of insecurity would arise in many places where the old Savings Banks had a great hold, if the proposal of the Chancellor of the Exchequer were adopted with any view to merge them in the Post Office system, but he did not understand the right hon. Baronet to propose taking that step.
§ MR. BIRLEY
said, he approved of the scheme of the Chancellor of the Exchequer, because it appeared to him to be plain and simple in its character, moderate in its compass, and that it would come into operation at an early period. The right hon. Gentleman, he thought, had satisfactorily disposed of the question of Terminable Annuities in one of the best financial expositions which he had ever heard. That able speech by which, as he might say, the right hon. Gentleman had enraptured the House, had to his mind completely disposed of the charges which had been brought against his financial administration by the right hon. Gentleman opposite. The charge, especially that ex- 350 travagance was the normal fault of Conservative Ministers, came with a very bad grace from the right hon. Gentleman the Member for Greenwich, seeing that he had in his hand a paper while he was making that charge which showed that the last year of his own administration of the finances of the country was one in which the expenditure had been the largest known for several years. It was possible, of course, as had been contended, that the scheme of the Government for the reduction of Debt might before the lapse of 30 years have to undergo considerable modifications; but even were it to continue in operation for only nine or ten years, it would do much good by enabling us to borrow money on much more favourable terms than would otherwise be the case, besides committing us to a course of continued economy. Among many topics which had been adverted to in the debate was the probable duration of our coal fields There had been several estimates of that duration, none of which had been very satisfactory; but he wished to observe that he had once read in an old book that England was doomed to commercial extinction with the extinction of her forests, when she would no longer be able to build ships to compete with foreign countries on the ocean. That apprehension had been so completely falsified, that it might very well be that the apprehension founded on the limited duration of the coal supply might be just as ill-founded. As to the amalgamation of the Savings and Post Office banks, he understood it was the intention of the Chancellor of the Exchequer not to take entire possession of the money in those banks, but simply to consolidate the accounts, and the security would remain as good as ever.
§ MR. PEASE
admitted that the Estimates of the Chancellor of the Exchequer for the last year were practically correct; but when he now, without any surplus, talked of Supplemental Estimates, and looked to something to "turn up" in order to meet them, he was reminded of the language of Mr. Micawber, a policy which he thought was one that would not be highly approved by the country. If, too, the right hon. Gentleman wished to reduce the National Debt, he ought, he contended, instead of tying the hands of future Chancellors of the Exchequer by the 351 scheme which he proposed, to have set down the amount required in his Estimates. That was the proper way to deal with the matter, for then the House would have the real state of the case from time to time before it, and would be in a position to decide whether, under the circumstances, it would back up the Finance Minister in his proposals or not. That, in his opinion, would be a more business-like mode of dealing with the question than the plan suggested by the Government.
said, however desirable it might be to reduce the Debt, the backbone of the whole business would be the imposition of new taxes to meet the exigency. He quoted a letter he had received deprecating the annual scramble of interests for any surplus, and advocating the bold appropriation of surplus to reduction of Debt as a policy which would be approved by all intelligent classes. At present our danger lay in giving up taxes and in deceiving ourselves by fine words. The right hon. Gentleman the Member for Greenwich would not deceive others, nor be deceived by them; but did he not sometimes impose upon himself? We were led away by metaphors. Under the cry of "The last rag of Protection" we gave up a registration duty on corn, which was not felt, and the duty on timber; other taxes were yielded up as being "taxes on knowledge," or to meet demands for a "free breakfast table," and the income tax had been very nearly shipwrecked by talk about "lightening the springs of industry." He would suggest a new tax to be imposed on phrases and metaphors; it would produce a considerable income, and a large part of it would be paid by Members of the House. The proposal of the Government as to the Debt was objected to as binding future Parliaments. There was no danger of doing that; we could not do it. The duty of all who desired the welfare of the country was not to lose sight of the importance of reducing the Debt; and, although each reduction might be small, the effect on the credit of the country would be great, particularly at a time of emergency. So long as the credit of the country was good there would be no difficulty in raising money at a low rate of interest.
§ MR. W. SHAW
said, he had heard nothing to change his first impression 352 that the Budget was a business-like Financial Statement, and, although exception might be taken to the scheme for reducing the Debt, he defied any Chancellor of the Exchequer to produce a scheme that would not be open to objection. He would suggest for consideration an income tax on a graduated scale, believing that persons with £1,000 a-year or more would not object to an extra penny in the pound if the proceeds were to be applied to the reduction of that Debt, in the creation of which the working classes had no voice. He would further suggest that the local loan system should be expanded and also extended to Ireland. An Imperial guarantee assisted a metropolitan loan materially. Why Should not local loans be partially guaranteed by the Government?—say, to the extent of £60,000,000 of the total of £80,000,000. Then, instead of local authorities borrowing at 5 per cent, the Government would be able to borrow the money at 3¼ per cent and to lend at 4 or 5 per cent for local improvements offering a substantial security, and thus, while promoting the reclamation of waste lands and sanitary reforms, secure at the same time a profit to the Exchequer. In that way alone very considerable local relief would be afforded; and if the loan system, so improved, were extended to Ireland, that country might obtain some of the spoil, of which at present its share would be very small indeed. The cost of the Army might be materially reduced, with benefit to the soldiers, by finding them useful employment. He had observed the temptations to which the men were exposed by idleness, when within a short distance of the barracks there was reclaimable land which would have paid for any labour they might have bestowed upon it.
§ MR. BUTLER-JOHNSTONE
wished the Chancellor of the Exchequer had operated on the National Debt last year when he had a substantial surplus in hand. He begged to thank the right hon. Gentleman for his statesmanlike speech on the National Debt, and he also congratulated him upon having no surplus. He could not help thinking that there was some danger in the modern plan, not simply of reducing taxes, but year after year of abolishing them altogether. It seemed to him therefore that a check upon prosperity 353 such as we had had in the last few years would be most salutary. Chancellors of the Exchequer, drunk with success, had year by year remitted taxation until we had almost come to this—that all taxes would be abolished owing to the coffers of the Chancellor of the Exchequer being so full. There was, however, this remarkable feature in the finances of late years—that not only had taxes been lessened, but entirely remitted, the effect being to make the sources of our supplies become annually smaller and smaller. Not a single new tax had been imposed of late years, and nothing less than the unbounded prosperity we had recently enjoyed would suffice to maintain our present expenditure. A large proportion of our Revenue was raised from beer and spirits, and it was taken for granted that the people's taste for those liquors would continue. But revolutions in taste were not very rare, and it was possible that while the taste for beer might remain, the consumption of ardent spirits might undergo a great change and diminution. At all events, there was some danger in allowing so large a portion of our Revenue to rest upon a basis of national vice—upon what might be called a tax upon vice and drunkenness. Under these circumstances, it would be prudent to lessen the national liabilities as much as possible. No parallel could be found either in ancient or modern times to the prosperity which this country had enjoyed during the last few years; but what ground was there for supposing that it would always last? Our prosperity and wealth depended, for example, in the first degree upon our getting a cheaper supply of coal than other nations, and without this the whole fabric of our prosperity might crumble away. The relations between masters and workmen in this country were in anything but a satisfactory position, yet the whole of our material prosperity depended upon the continued exercise of temper and tact between two great rival organizations. He rejoiced that the National Debt was to be systematically reduced, as he believed that its reduction would promote the prosperity of the people, and he thanked the Chancellor of the Exchequer for the resolution he had arrived at in reference to the income tax, one of the least injurious and unjust of our imposts, and which had done 354 such great things for the country in the past, and would materially assist in lightening our load of debt in the future.
§ MR. DODSON
said, that reference had been made by the hon. Member for Bandon (Mr. W. Shaw) to the subject of local loans for the accommodation and benefit of Ireland. He (Mr. Dodson) had no objection to the granting of such loans with proper security, but would remind the House that anyone who had looked into the Report of the Committee on Public Accounts would see that the country had many bad debts arising from local loans. He, however, would not say in what part of the United Kingdom the greater part of these bad debts were to be found. The hon. Gentleman who had just spoken (Mr. Butler-Johnstone) was happy that there was no surplus. He ought to be extremely happy, because, according to the figures of the Chancellor of the Exchequer, it was likely that, instead of a surplus, there would be a deficit. The hon. Gentleman had spoken of revenue derived from vice and drunkenness, and he (Mr. Dodson) himself hoped to see the day when the revenue from spirits would be diminished by increased habits of sobriety on the part of the people; but when the hon. Gentleman spoke of a tax upon vice, he feared he was about to bring the House back to the days of Dean Swift, when it was suggested that there should be a tax upon people's vices and virtues, and that people were to estimate their own virtues and their neighbour's vices. With reference to the past Budget of the Chancellor of the Exchequer, there was one part of the criticism to which it had been subjected in which he never had joined—namely, that his estimate of Revenue would not be realized. Nor did he now join in the cry of those who found fault with the right hon. Gentleman because his estimate of the different branches of the Revenue did not come out in the manner he anticipated. The right hon. Gentleman, or any other person filling the same position, had to estimate as well as he could the amount to be obtained from the different sources of Revenue; but it was an absolute certainty that when he had made the best Estimates he could, some of those sources would produce less, and others more than the expected amount. If the results in the main came out right, there was no use in complain- 355 ing. More especially was that the case with regard to the Customs and Excise. The Excise had disappointed the right hon. Gentleman's anticipations, but the Customs had exceeded them; and he could not be found great fault with for that, because, after all, the Excise and Customs were cognate branches of the Revenue. But there was another branch which stood separately and on a different basis—namely, the Stamp Duties, which depended upon the prosperity of the country, and not upon the consuming power of the masses. It was in this branch that the greatest failure had arisen. The right hon. Gentleman reckoned upon an income from Stamps of £330,000 above that of the preceding year, and actually realized £10,000 less; and he (Mr. Dodson) should be glad to know to what cause that unexpected shortcoming was attributed? The right hon. Gentleman anticipated that the coming year would be a good financial year because it would have fewer holidays than the past year; but were fewer holidays favourable to the consumption of articles from which a large revenue was derived? The right hon. Gentleman seeemed to look forward with a light heart to the Supplementary Estimates to be presented; but he (Mr. Dodson) thought their effect would be to sweep away the surplus of £102,000 to which the Chancellor of the Exchequer had reduced himself. Last year, the Supplementary Estimates amounted to £1,654,000, and the excess of expenditure over the normal estimate of the Budget was £1,426,000. Out of that amount £512,000 was given in aid of local rates, instead of £1,010,000 as promised, and yet on the year there proved to be an expenditure of £914,000 in excess of the Estimate. If the right hon. Gentleman had only the ordinary Supplementary Estimates of £300,000 or £400,000 to provide for this year, the balance would be on the wrong side. To what was he trusting to meet the Votes for Irish Education and the Supplementary Estimates? Was he trusting to the increment of Re-venue above that of last year? He had discounted that in the total Estimates of Revenue he had given, for he had taken increments amounting in the aggregate to £986,000. No doubt this was much less than the increment of Revenue he reckoned upon last year which, after 356 deducting the Sugar Duties and taking 1d. off the income tax, amounted to £1,533,000. The right hon. Gentleman had, however, deliberately stated his estimated increments from the different branches of his Revenue for the coming year; could it be that to meet the Supplementary Estimates and other expenses he was secretly trusting to increment upon increment? If he was doing that, he (Mr. Dodson) did not think it was a prudent or a fair course to pursue towards Parliament. The Chancellor of the Exchequer being, however, according to the figures he had laid before the House, in an impecunious state, in the face of his difficulties, proposed a gigantic scheme for the reduction of the National Debt. This, if carried out, might produce the greatest amount of reduction of Debt ever yet attempted; but before he did that, he ought to be in a position to give the House some earnest of his sincerity by flinging into the gulf some surplus of his own, and not merely cut off the prospective surpluses of his successors. He (Mr. Dodson) did not, however, think the right hon. Gentleman would be successful in inducing future Chancellors of the Exchequer, and especially the Chancellor of the Exchequer of 1885, to follow his lead, any more than the fox who lost his brush in the trap induced his comrades to part with theirs. The right hon. Gentleman sneered at the system of Terminable Annuities, but he had last year created a batch of them, and now proposed a scheme which was equally expensive and far less permanent. Terminable Annuities, like a fixed apportionment of capital for payment of debt, involved a present burden for the value of future relief. Terminable Annuities were looked upon, however, as a contract with someone or other, and experience showed that they were respected. A fixed apportionment never had long proved tenable, and in this case the result would be that some future Chancellor of the Exchequer, if not the right hon. Gentleman himself, would ask the House to set his plans aside. The Government, in fact, was only adding one more good intention to those with which the floor of this House and of another place was popularly said to be paved. Last year, the right hon. Gentleman had a magnificent surplus; but instead of throwing that into the gulf for the pur- 357 pose of reducing the National Debt, he applied it to making things pleasant all round. Now he proposed to be virtuous at the expense of his successors. "The system of paying off Debt by fixed appropriations was false in principle, injurious in practice, and one to which the wisest men were adverse." Those, however, were not his (Mr. Dodson's) words but the words of the right hon. Gentleman the Member for Buckinghamshire in 1858.
§ MR. SAMUDA
said, he approached the subject as an ordinary man of business, and as such thought that, notwithstanding the intricate and elaborate web which had been woven round it by his right hon. Friend the Member for Greenwich, the subject of the reduction of the Debt was really a very simple one. To set aside a fixed sum to discharge Debt which had been incurred was the course which naturally commended itself to any prudent man who had the misfortune to get into debt or difficulty. This was what the Chancellor of the Exchequer now recommended, and he could not see that there was any substantial difference between that plan and the system which had been adopted by the late Government. He (Mr. Samuda) had turned the matter over in his own mind no end of ways, and had even brought a proposal on the subject before the House, in which he had suggested that the Debt should be cleared off by means of annuities for 99 or 100 years. Such a scheme had some recommendations, and for an immediate expenditure of £500,000, in 100 years the country would be able to extinguish £100,000,000 of debt. But all these proposals came to the same thing in the end—and he was disposed to be contented with the scheme of the Chancellor of the Exchequer, which was to his mind a very proper and wise one. In regard to the Income Tax, he suggested that, on account of the difficulties connected with it, and the evil effect it had in inducing deceit, it might be well to rely upon a Property Tax in its stead. He believed the fear that this would give an undue advantage to persons engaged in trade was quite unfounded.
§ MR. CHILDERS
said, the debate had ranged over three principal subjects—namely, the state of the account for last year, the Budget Estimates of Income and Expenditure for the present year, and the scheme proposed by the Chan- 358 cellor of the Exchequer for permanently reducing the Debt. As to the first, it was a point of importance to notice, that whereas for many years past there had been a surplus of Revenue over Expenditure applied to the reduction of the National Debt, during the last year there had been no such surplus whatever so applied. A Return for which he had moved showed that although during the last five years no less than £3,200,000 a-year had been applied to the reduction of the Debt, or nearly £16,000,000 altogether, irrespective of the reduction through Terminable Annuities, during 1874–5 the sum applicable to the reduction of the Debt was nothing whatever. It was said that something would have been so applied, but that the Chancellor of the Exchequer at the end of the year had authorized a certain sum that would naturally have come into last year's account to come into the account for the present year; and thus nothing was left available for the reduction of the Debt last year. But the explanation given that night by the right hon. Gentleman as to the grounds on which he authorized that transfer to be made was inconsistent with his statements to the House last year. In his Budget Speech last year, the right hon. Gentleman said he anticipated a very large payment on account of the reduction of local taxation; before the end of the Session he discovered that a considerable part of that sum would not come in course of payment during the financial year; and in connection with that discovery he placed an amended Budget before the House, including considerable Supplementary Estimates for ordinary services, and less aid to local taxation. But on that occasion he gave no hint that he proposed, in consequence of this diminished aid to local taxation, to hold back any part of the Miscellaneous Revenue. Anyhow, not one farthing last year went directly to the reduction of Debt—a striking satire on the Chancellor of the Exchequer's profession. With regard to the payments in respect of fortifications, he had referred to the debates of 1864, 1865, and 1866, and he found that in the Financial Statements of each of those years, his right hon. Friend the Member for Greenwich expressly named the amounts, and stated the surplus both ways, both including and excluding these payments. 359 The non-statement of those sums last year concealed—he did not use the word offensively—from the House the fact that, so far as the surplus applicable to the reduction of Debt was concerned, instead of a surplus there was a deficit, and that the first deficit for six years. The consideration of that fact afforded the strongest reason why the estimated surplus for this year should be carefully scrutinized. Now, the nominal surplus was £417,000. Against that there came the following charges:—There was £60,000 on the Brewers' Licences; then £70,000 on account of the interest on the Debt contracted for local purposes; then £120,000 on account of the deficient interest in regard to the old Savings Banks; and £118,000 on account of the Irish Education Vote, which was not a Supplementary Estimate but an omitted Estimate, and a further sum would have to be added to that £118,000. Those items swallowed up the whole of the surplus before they came at all to the sum which the Chancellor of the Exchequer proposed to apply to the reduction of the Debt. It had been suggested that the deficient interest on the Savings Bank account might fall on 1876–7, but he maintained that it could not, under the Bill brought in by the Chancellor of the Exchequer, be fairly excluded from the account for the present year, 1875–6. If that were so, it was perfectly plain that the balance, according to the estimate of his right hon. Friend, at the end of the financial year would not amount to more than £50,000. Was it possible, he would ask, that in a year of profound peace the House could accept, as satisfactory, Estimates which started with either a deficit or a surplus of £50,000? But the Chancellor of the Exchequer suggested that there might be some further increase of the Revenue to the extent of £500,000, out of which he would be enabled to meet the Supplementary Estimates for which he would have to make provision. Now, he for one, protested against the doctrine, which had been this Session, he believed, broached in the House for the first time, that a Chancellor of the Exchequer might, after the lapse of a few weeks from the day when he had stated what the Estimates of Revenue and Expenditure were, come down and say that he expected to get £500,000 360 more money. It was perfectly impossible to have a true system of finance if a Chancellor of the Exchequer might in the course of a few days vary his Estimates in that way. But, in a Return for which he (Mr. Childers) had moved as to the probable amount of the reduction in the amount of the National Debt for the next few years, he found that the right hon. Gentleman had taken credit for the very £500,000 which he was now proposing to appropriate as an unappropriated surplus. In the account which had been laid on the Table on the 20th of April were two columns—the one showing the amount of stock which it was proposed to purchase out of the fixed charge of £28,000,000, while in the other the surplus of Revenue over Expenditure, including this charge, was given at £500,000. If such loose Estimates were accepted by the House, he could only say that it would be doing that which it had never done in past times. Having made those remarks with reference to the accounts for the present year, he wished to say a few words with respect to the main proposal of the Government for the reduction of the National Debt. The right hon. Gentleman proposed to reduce within a period of 30 years the Public Debt by over £200,000,000. Well, that was the statement which had so impressed the public mind, who believed that a third of the Debt would be redeemed in the course of a short time, that in a few days after the announcement was made there was an extraordinary rise in the Funds. Now, he had moved for a Return which contained the figures showing how the scheme was to be carried into effect. The proposal of the Chancellor of the Exchequer was that, by the process practically of compound interest there would be applied stated sums rising from £275,000 to £960,000 during the next 10 years annually to the reduction of the National Debt—sums amounting altogether to £6,795,000, or something over £600,000 a-year. The right hon. Gentleman at the same time anticipated that the normal surplus of income over expenditure would yield £500,000 a-year, or £5,000,000 for the 10 years. Putting those two sums together, he expected to reduce the Debt during the next 10 years by the sum of £11,000,000, or rather more than £1,000,000 a-year. That was the first 361 part of the right hon. Gentleman's scheme. Let the Committee bear in mind, then, that all that was proposed was, that by the ordinary operation of the sinking fund of 1829 and the new sinking fund, there should be applied about £1,100,000 a-year during the next 10 years with the same object; the fact being that the sum which had actually been thus applied to the reduction of Debt during the five preceding years was no less than nearly £16,000,000, or more than £3,000,000 a-year, so that the grand scheme of the right hon. Gentleman, even upon his own showing, was to apply £1,100,000 to the reduction of the Debt by two methods, through the employment of one of which only by the late Government, no less than £3,000,000 a-year had been so applied during the previous five years. In 1885 and 1886 Terminable Annuities would fall in to the amount of between £5,000,000 and £6,000,000 and the Chancellor of the Exchequer proposed that the whole sum should be applied to the reduction of the Debt, and that we should this year pass an Act under which, in about 20 years afterwards, or in 1904, there should be appropriated to the reduction of Debt, from the ordinary excess of income over expenditure, a sum of £14,300,000. Therefore, the scheme came to this—that for 10 years the appropriation towards the Debt was to be one-third of what it had been in the past, and then it was suddenly to be enormously increased. Was it possible the Legislature would venture to lay down that in 1904, £14,000,000 of the National Debt should be paid off by taxes? No Parliament was ever asked before to bind itself and its successors to take £14,000,000 out of the taxes to reduce the Debt. This part of the scheme was impossible. The Chancellor of the Exchequer seemed to think that, in comparing the reduction in the next 10 years with that of the past five, he had included in the latter the operation of the Terminable Annuities. Not at all. During the last five years the Debt had been reduced by Terminable Annuities to the amount of £16,000,000; and, by the two processes together, by the sum of £6,420,000 a-year—a very respectable amount indeed, and as much as the country could be fairly expected to contribute. Therefore, he repeated, what the Government 362 were proposing to do, under cover of a magnificent scheme, was to apply at first a much smaller sum than had been applied during the last five years, and to apply enormously increased sums afterwards. Was it reasonable to start such a scheme, at a time when we had no surplus? Why should this plan be preferred, when it was known to be vicious in itself, to have broken down in the past, and to be more likely to promote extravagance than economy? The demerit of the scheme was, that it purported to apply sums of money to the reduction of the Debt before it could be known whether they were applicable; it involved operations in the dark. The only way in which we could satisfactorily attack the Debt was by keeping expenditure well within income, and applying the difference, when it was ascertained, to either temporary or permanent reduction. There were two plans of operating upon the National Debt—one by the Sinking Fund under the Act of 1829, and the other by the process of Terminable Annuities. It appeared, from a Return for which he had moved, that the amount of permanent stock in the hands of the Government was £98,000,000, and that sum might be operated upon so as to produce Terminable Annuities to almost any extent required. Depend upon it, the only way of permanently maintaining fixed charges for the reduction of the Debt was by means of Terminable Annuities; and when the Chancellor of the Exchequer had a reasonable, well-ascertained, actual, and available balance, he should use it for such conversions. What he complained of at present was, that the Chancellor of the Exchequer was building up another Sinking Fund on a surplus which he had not got; while the real way to reduce the Debt was, when there was a real surplus, to use it to connect the funds in the hands of the public Departments. He regretted that the plan of Terminable Annuities should have been prejudiced by the speech and plan of the right hon. Gentleman; and he still hoped that the Chancellor of the Exchequer would lay before the House some proposal for dealing effectively with the Debt by Terminable Annuities, and not ineffectively by this shadowy return to an exploded system.
§ MR. W. H. SMITH
said, he thought he might congratulate his right hon. Friend the Chancellor of the Exchequer upon the fact that although there had been no lack of effort to place his financial proposals in no very favourable light before the Committee, they had as a whole met with very general acceptance. The objections raised by the right hon. Gentleman the Member for Ponte-fract (Mr. Childers) divided themselves into two heads; first, that his right hon. Friend had attempted to deal with the Debt by means of a sinking fund when there was no balance available for that purpose, and further, that he was dealing with the Debt by a method which was foreign to the experience of late years. He (Mr. W. H. Smith) could not but be surprised at objections being made to proposals now, when no new taxes were being imposed, which were made practically to establish an equilibrium in the finances of the country, when only three years ago proposals were made to, and sanctioned by, the House, which left the Chancellor of the Exchequer with a surplus of £7,000 only. Great stress had been laid upon the fact that the Chancellor of the Exchequer estimated only for a surplus of £500,000, but did the Chancellor of the Exchequer five years ago estimate for a surplus to be applied in the reduction of Debt? For his own part, he thought his right hon. Friend had taken a moderate estimate, and one that was correct, in assuming that the taxation of the country would bear the charges upon it, and leave that amount of surplus. Was there any probability, so far as the statements made in that House were concerned, that in one year there would be a surplus of £6,000,000, in another of £2,000,000, in another of £5,500,000. If there had been, he believed those sums would have been, not applied towards the reduction of Debt, but in the reduction of taxation. His right hon. Friend opposite had spoken in strong terms about the contracts made as to Terminable Annuities. But what did those so-called contracts consist in? In this, that the Chancellor of the Exchequer in Downing Street wrote to the Chancellor of the Exchequer in the Old Jewry representing the National Debt Commissioners requesting that a certain sum of money should be converted into Terminable Annuities. The result was, 364 that at the present time a sum amounting to £3,707,000 had been paid off the National Debt; but objection had been taken that that arrangement was a very good one as far as it was a contract between the Chancellor of the Exchequer in Downing Street and the Chancellor of the Exchequer in the Old Jewry; but that if an Act were passed it would be a much more easy process to get rid of the Act, than when pressure arose to get rid of a charge which by a similar Act of Parliament, might be re-converted into Perpetual Annuities again. For his part, he had no doubt that if a time of pressure came, the one Act would be quite as secure as the other. But there was this vice with respect to Terminable Annuities, that it was impossible to tell at what price they could buy back the Stock, or whether the funds of the Savings Banks would, at the end of the operation, result in a sum of money which would fairly represent the sum at which they were converted in the first instance. It had been said, as an objection to the policy of Her Majesty's Government, that there had been no reduction of Debt last year. But one of the provisions of the Budget was, that £500,000 should be applied to raise £7,000,000 of Terminable Annuities, and that amount of Debt would be extinguished in 1885. [Mr. DODSON: That was derived from interest on local loans, which was not Revenue.] It was the first time he had ever heard that interest did not become Revenue. The interest in question was appropriated in former years to the Balances; but from this time forward it would go in reduction of the National Debt, and he claimed that it was a distinct advance in the principle of sound finance, that income should be applied to definite purposes previously assigned by the Chancellor of the Exchequer in the House of Commons. What his right hon. Friend proposed was, that a fixed sum of £28,000,000 a-year should be applied to pay the interest and a portion of the principal of the Debt. The balance applicable towards the extinction of the National Debt under the scheme of the Chancellor of the Exchequer would increase from £200,000 per annum next year to £960,000 in 1884–5, and that would be supplemented by such surpluses as might remain in the hands of the Chancellor of the Exchequer from 365 time to time. That the present taxation was borne without effort and without difficulty by the country was evidenced by the continued prosperity of the Revenue, which almost every year exceeded the calculations of the different Chancellors of the Exchequer, and therefore he trusted that the country would continue to bear without murmur the small charge which it was proposed to appropriate to the sinking fund for the extinction of the National Debt. He was not quite sure that the Committee thoroughly understood the propositions of his right hon. Friend with regard to any future loans for fortifications or local barracks. It was proposed that for the future, if it were necessary to borrow money for such purposes, no sums which remained in the hands of the Chancellor of the Exchequer should be taken, but that they should go in reduction of the National Debt, while a fresh loan should be opened for the fortification and barrack account. The accounts for the Savings Banks were to be made up to the 31st of December, instead of the 20th of November, the date at which the old Savings Banks accounts were made up; but such accounts were to be laid before Parliament within four months. Under these circumstances, the deficiency of the year would be included in the Estimate of the following year; and he did not think that was an unsatisfactory or an improper arrangement under all the circumstances of the case. Objection had been taken to the Government proposal with regard to the old Savings Banks; but it must be recollected that the acceptance of that proposal would not involve any change whatever in the liabilities of the country towards the trustees of such Savings Banks. On the whole, he would claim for the Bill the virtues of simplicity and security, and for the statement of the Chancellor of the Exchequer the advantages of simplicity and clearness; and he believed that those virtues and advantages would recommend both the Bill and the statement to the good sense of the House and of the country.
§ MR. WHALLEY
thanked the right hon. Gentleman the Chancellor of the Exchequer for his Budget, and for the declaration that the National Debt was to be reduced, although they might differ as to the mode in which that object was to be accomplished. He agreed 366 with the hon. Member for Wick (Mr. Laing) that it would have been good policy to have retained the income tax at 3d. in the pound; but he would entirely do away with Schedule D, and compensate the Revenue for the loss by an addition to the property tax. There was a special grievance under the operation of the income tax in the case of hardworking men whose income was brought, by dint of extra earnings and over work, just a little over £100, and who thereby came outside the line of exemption. He entirely objected against any portion of the Imperial Revenue being applied in aid of local taxation.
said, he was sorry to find there had been a petty and a Party attempt made to trip up the Chancellor of the Exchequer in many of the subjects he had brought before the attention of the House. He could not help feeling amused when he heard the right hon. Gentleman opposite (Mr. Lowe), the concoctor of the Bryant and May Budget say that now there was a deficit because they had got a Conservative Chancellor of the Exchequer; but he would remind the right hon. Gentleman that the Whigs never had a surplus from 1832 until they succeeded in stealing from the Conservatives the services of the right hon. Gentleman the Member for Greenwich.
reminded the Chancellor of the Exchequer that he had not stated what amount he was likely to require for the purpose of loans, and how much was represented for that purpose by the £70,000? He would also ask his hon. Friend the Member for Hackney (Mr. Holms) to state what course he proposed to take with his Resolution with regard to Brewers' Licences?
§ MR. J. HOLMS
said, it would be impossible at that late hour—past 12 o'clock—to go on with his Motion, and therefore he would propose that the Chairman now report Progress.
§ Motion made, and Question proposed, "That the Chairman do report Progress, and ask leave to sit again."—(Mr. Holms.)
§ THE CHANCELLOR OF THE EXCHEQUER
said, he could not expect the hon. Gentleman to proceed with his Resolution at that hour if he did not desire to do so. He would therefore suggest that 367 the hon. Gentleman should bring forward his Motion, either on the Report of that Resolution or in Committee on the Bill. It was undesirable that the Government should lose a stage in their proceedings, as their measures had already been somewhat kept back, and they were now approaching the Whitsuntide holidays. Some time had elapsed since the close of the financial year and the legal expiration of the income tax. The income tax Resolution had, indeed, been reported to the House, and the Board of Inland Revenue collected the tax under it; but it was not convenient that it should continue to be collected for an indefinite time without the sanction of an Act of Parliament. As to the Question put by the right hon. Gentleman opposite, he was not at present in a position to say how much they were likely to raise this year for local loans, because it depended on the amount of the demands made by the Bodies which had the right to borrow, and especially on the amount that might be required under the Education Act for school-houses. But he expected it would not be more than £2,000,000, and therefore he took about £70,000, the sum which would probably cover the interest on that amount.
suggested to the hon. Member for Hackney that his Resolution should be postponed until after the Whitsuntide holidays, in order that the preliminary stages of the financial measure might be advanced.
THE MARQUESS OF HARTINGTON
said, that the distinct understanding was, that his hon. Friend the Member for Hackney should not be prejudiced by the passing of the Resolution that evening.
§ THE CHANCELLOR OF THE EXCHEQUER
said, that was the distinct understanding, and in order to comply with it he would suggest that the best time to bring forward the Motion would be on the Motion to go into Committee on the Customs and Inland Revenue Bill.
§ Motion, by leave, withdrawn.
§ Original Question put, and agreed to.
2. Stamp Duty on Appointments.
Resolved, That in lieu of the Stamp Duty now payable on any admission, and on any appointment or grant by any writing, to or of any office or employment, and on any Commission or Deputation granted by the Commissioners of
Inland Revenue or the Commissioners of Customs, there shall be charged and paid Stamp Duty as follows (that is to say):
|Where the annual salary, fees, or emoluments appertaining to the office or employment, or payable by virtue of the Commission or Deputation do not exceed one hundred pounds, the Duty of||0||5||0|
|And where such annual salary, fees, or emoluments exceed one hundred pounds—|
|For every one hundred pounds, and also for any fractional part of one hundred pounds of such an nual salary, fees, or emoluments, the Duty of||0||5||0|
§ Medicine Vendors Licence Duty.
§ Motion made, and Question proposed,
|"That, in lieu of the Duties of Excise now payable by Law upon or in respect of the Licences to be taken out yearly in any part of Great Britain by the Owners, Pro prietors, Makers, and Com pounders of, and Persons uttering, vending, or exposing to sale, or keeping ready for sale any Medicine liable to Stamp Duty, there shall be paid for each such Licence, the Duty of||0||5||0"|
§ Motion, by leave, withdrawn.
§ 3. Inland Revenue.,
§ Resolved That it is expedient to amend the Laws relating to the Inland Revenue.
§ MR. J. W. BARCLAY
, in rising to move a Resolution on the subject of Gun Licences, said, that, when last Session he submitted a Motion for the total abolition of the Gun Tax, the Chancellor of the Exchequer said that he was not aware there was any feeling in the country in favour of its abolition. He had had many deputations craving abolition of various taxes, but none on the Gun Tax. This Session, however, a deputation of Scotch Members, sufficient to show a strong feeling in Scotland on the subject—and he believed the feeling was as strong in England—waited on the Chancellor of the Exchequer, and explained their views regarding the taxes on guns and dogs. It was accordingly expected that the just interests of the farmers would be considered in the right hon. Gentleman's Budget, both as regarded dogs and guns. As, however, the 369 right hon. Gentleman had failed to make any concession, he (Mr. Barclay) felt it his duty to take the sense of the House on the exemption from duty of guns exclusively used for protecting crops by farmers, market-gardeners, or nurserymen. No one would deny the justice of the Motion he had to submit—namely—That it is expedient that guns used by farmers or persons employed by them exclusively for the protection of their crops, he exempted from Licence Duty.But it was contended that exemptions were inconvenient and very detrimental to the productiveness of a tax. Had the tax been imposed for fiscal purposes, he would admit the force of the objection; but the right hon. Gentleman the Member for the University of London (Mr. Lowe)—at whose instance the tax was imposed, at a time when there was a large surplus Budget—described it as a tax to restrain lawless habits. The right hon. Gentleman expatiated on the enormity of boys shooting birds, because that led up to poaching, and poaching to crime and Botany Bay; but, whatever might be thought of that kind of argument, the protection of crops by farmers or farmers' servants, could not be described as lawless habits, and was no argument in favour of charging them for gun licences. It would be quite competent, after the proposed exemption was made, for the Excise to prosecute persons of lawless habits using guns without a licence. If they took a licence, the object of the Bill would be defeated which exposed its absurdity. At present, the tax was chiefly paid by farmers for their servants. If the House refused the exemption, it showed that landlords had no confidence in farmers or their servants, and that the Gun Tax was, as it had often been alleged to be, a game law. The hon. Member concluded by moving the Resolution.
§ Gun Licences.
Motion made, and Question proposed,
That it is expedient that guns used by farmers or persons employed by them exclusively for the protection of crops be exempted from Licence Duty."—(Mr. James Barclay.)
§ THE CHANCELLOR OF THE EXCHEQUER
said, this was a matter on which there was no substantial grievance. It was scarcely to be supposed that any farmer did not take out a gun licence; and the regulations of the Board of 370 Inland Revenue were such as to permit the gun which belonged to the master to be used by any person in his employ on his land for the purpose of scaring birds.
§ Question put.
§ The Committee divided:—Ayes 44; Noes 173: Majority 129.
§ Resolutions to be reported upon Monday next;
§ Committee to sit again upon Monday next.