HC Deb 04 April 1878 vol 239 cc536-608

WAYS AND MEANS—considered in Committee.

(In the Committee.)


Sir, although I hope to be able to render the Statement which I have to make to the Committee as concise as possible, and not to trespass for any inordinate length of time upon their attention, yet as that Statement must necessarily be somewhat complicated, I must request the kind indulgence and forbearance of the Committee while I discharge the duty that has devolved upon me. What renders the Statement I have to make upon the present occasion complicated is, what hon. Members will at once observe for themselves—that is to say, that we have to deal, not only with the ordinary Revenue and Expenditure of the year just closed, and with the Estimates of the Revenue and Expenditure for the year we have just entered, but we also have to consider an extraordinary Expenditure arising out of the extraordinary Supplies which were voted last year in the form of a Vote of Credit for £6,000,000, which Vote will affect both the Statement with regard to the finances of last year, and, of course, also the Estimates for the year upon which we are now entering.

I will, in the first instance, review the finances of the last year, and also give an estimate of the finances of the year we have entered, without reference to this extraordinary Expenditure; and, therefore, I will begin in the ordinary way to which the House is accustomed by stating the Revenue and Expenditure of the year 1877–8. I promised last year, when I made my Financial Statement, that I would supply a printed statement of the items of the Budget. I find that there would be an inconvenience of a serious character if such a statement were printed and prepared for distribution before the Chancellor of the Exchequer made his Statement in the House. But what I have done is to have prepared an account which, I think, will be found full enough, and in which the figures that I may have to propose will also be included, which will be moved for to-night, and will be in the hands of hon. Members I hope to-morrow morning, or, at all events, in the course of to-morrow. Of course, it is not to be of use for discussion tonight; but it will be of use in a future discussion.

Well, now with regard to the Revenue of 1877–8. I am happy to be able to tell the Committee that which I have no doubt they have already gathered from the sources of public information, that the Revenue has turned out very satisfactorily, and that it has fully answered the expectations which I ventured to form of it at the beginning of the year. I was told at the time —though my Estimates appeared to myself and to my advisers to be of a very moderate and prudent character— that they were over sanguine; that we had probably a bad year before us; and that I should be disappointed in the Estimates that I had formed. Well, I certainly was told that with so much authority that I should have been alarmed, if it had not occurred to me that upon every occasion on which I have as yet had the honour of bringing forward a Financial Statement in this House similar prophecies had been heard, and had been falsified by events. However, I find that the Customs, which I had estimated would produce £19,850,000, produced the actual sum of £19,969,000—an increase of more than £100,000. The Excise, which is the only item on which I have been disappointed, I estimated at £27,500,000; it has produced £27,464,000. Stamps, which had been estimated at £10,920,000, produced £10,956,000. The Land Tax and House Duty, which had been estimated at £2,560,000, produced £2,670,000. The Income Tax, which was estimated at £5,540,000, produced £5,820,000. The Post Office, which was estimated at £6,100,000, produced £6,150,000. The Telegraph Service, which was estimated at £1,300,000, produced £1,310,000. The Crown Lands, which were estimated at £410,000, produced exactly that amount. The Interest on Advances for Local Works, and on Purchase Money of Suez Canal Shares, which had been estimated at £949,000, produced £949,883. And the Miscellaneous, which had been estimated at £4,017,000, produced £4,064,415. Thus the total Revenue, which was estimated at £79,146,000, produced £79,763,298, being an excess of Revenue over the Estimates of £617,298.

I should be uncandid if I did not admit that there are circumstances which, to some extent, explain that excess. Within the last week or 10 days an apprehension has prevailed among some classes that there might be an increase of taxation, and persons who were interested in articles upon which they conceived it was possible or probable that any increase of taxation might be made, entered those articles for consumption more largely than would otherwise have been the case. There has thus been a larger quantity than usual of certain commodities—such as tea and spirits—brought into the country within the last two or three weeks. I believe I am not far wrong in conjecturing that about £100,000 increase in the Customs, and that £200,000, or more than that, in the Excise, is due to this fact. It is rather difficult to be certain; but comparing particular weeks of one year with the other, it seems probable that something like £350,000 of increase may be due to that cause. However, it is evident from the statement which I have made, that although we have certainly had a very bad year—although I regret to say there has been no rebound from the commercial depression and general uneasiness which prevailed at the beginning of the year—the Revenue has kept itself up in a remarkable manner.

I will turn from that to the Expenditure. And with regard to the Expenditure, I may state, first of all, that the permanent charge of the Debt was £28,000,000. The Interest on the Temporary Loans for Local purposes was £212, 827; the Interest on some Exchequer Bonds that were raised in order to pay for the Suez Canal Shares was £199, 923, and the other Consolidated Fund Charges were —1,641,585. These items connected with the Debt and the Consolidated Fund Charges amounted to £30,054,335. The Army Charge was £14,607,445; the Home Charges of Forces in India, £1,000,000; Army Purchase Commission, £504,720; the Navy, £10,978,592—making a total of Military Charges of £27,090,757. The Miscellaneous Expenditure was £13,982,553; the Expenditure in the Customs and Inland Revenue Department, £2,688,267; in the Post Office, £3,185,346; for the Telegraph Service, £1,139,237; for the Packet Service, £763,000—making a total charge for the Revenue Department of £7,775,850. Therefore, there was a total Expenditure of £78,903,495, showing a surplus of income over ordinary expenditure of £859,803. The total Expenditure of the year was, as I stated, £78,903,495; the Expenditure of the year before was £78,125,227, and the increase upon the Expenditure of the year before was £778,268. The increase is chiefly due to this cause—the permanent charge of the Debt was £300,000 more than in the preceding year; it has now reached the normal amount of £28,000,000. The Army Charge was £186,000 more; and the Miscellaneous Civil Services were £648,000 more. On the other hand, there was a decrease of £385,000 in the Navy, and of £170,000 in the Revenue Departments. I may say that in comparing the Expenditure last year with the Estimate, it is necessary to decide what Estimates you should compare it with. There are three different periods at which the Estimates are made—the time that the Budget is brought in; the close of the Session, when the Appropriation Act is passed; and the time when the last Supplementary Estimates are brought forward at the close of the financial year. When you take into account the total Expenditure as compared with the Budget Estimate, the excess of actual Expenditure over the Estimate is £109,000. But considerable Votes were passed last Session before the Appropriation Act, and the Estimate was £241,000 more than the Expenditure turned out to be. As compared with the total appropriation of the year, the Expenditure was below those total grants to the amount of £765,479. It is always desirable to remind the Committee and the public of that, which, though frequently reminded, they always seem to forget—that there are every year considerable savings upon the Vote of Parliament under the different Heads of Expenditure. It is not, therefore, always wise to take, as some do, the Estimate of Expenditure at the time of the Budget, and then, by adding the Supplementary Votes taken in the course of a year, and deducting the Estimate of Revenue at the beginning of the year, to thus show that there must be a deficit. You must always take into account that which cannot be ascertained until the close of a year—namely, the savings of the year. So much, then, as regards the ordinary Income and the ordinary Expenditure of the past year. But in order to make the Statement complete, it is necessary that I should now mention what is the sum that has been expended out of the Vote of Credit.

The Vote of Credit, as the Committee will remember, was for £6,000,000. Of that £6,000,000, £3,500,000 has been actually expended. Some further amount has been incurred which I will mention by-and-by; but the total amount actually expended is £3,500,000. The total Expenditure, exclusive of the Vote of Credit, would have left a surplus roundly of £860,000; the Expenditure, inclusive of the Vote of Credit, leaves a deficit of £2,640,000. To meet that Expenditure, the Government have issued Exchequer Bonds, under the authority of the Act recently passed, for £2,750,000, and they have applied out of the surplus Revenue £750,000; so that the £3,500,000 which has been expended on account of the Services for which the Vote of Credit was given has been defrayed, partly by the application of £750,000 out of Revenue, and partly by the issue of Exchequer Bonds to the amount of £2,750,000. The Exchequer Bonds have been issued for one year only, so that they will fall due at the end of this financial year in the month of March; and, therefore, it will be entirely with the House to decide in what way these Bonds shall be hereafter dealt with. We thus commence the year 1878–9 with a debt of a temporary character of the amount of £2,750,000. There will be some other expenditure which will be required for the Services for which the Vote of Credit was given. The circumstances which led to our asking for the Vote of Credit at the time were circumstances of urgency, and it would have been inconvenient, for various reasons, to have taken in detail the Votes for the application of the money to the different Services for which the Vote was required; but with regard to the completion of the Services which have already been entered upon, there will be no such reason, and it will be decidedly more proper and convenient that whatever is to be provided in that way should be provided by Supplementary Estimates, which, therefore, will be presented.

I will now state the Estimates of Expenditure for the year which we are now entering upon. The charge for the permanent Debt will be the fixed one of £28,000,000; the charge for Interest on Local Loans, £425,000; the charge for the Suez Canal Annuity will be £200,000. There will be a sum of £94,000 for the interest on the Bonds for £2,750,000 which have been issued, and a sum of £1,760,000 for the other Consolidated Fund Charges. This will bring these Heads of Expenditure for the Debt and Consolidated Fund Charges to £30,479,000; the issues of last year for that class amounted to £30,054,335. It is more convenient to make these comparisons by classes, instead of by individual items, with which we can deal afterwards. The estimated Expenditure this year is:—For the Army, £15,595,800; for the Home Charges of the Forces in India, £1,080,000; and for the Navy, £11,054,000; making the total of Military and Naval Expenditure, £27,729,800, as against £27,090,757 last year. The Estimate for the Civil Services is £14,816,475, as against £13,982,553 last year; for the Customs and Inland Revenue, £2,793,068; for the Post Office, £3,313,215; for the Telegraph Service, £1,114,972; for the Packet Service, £773,245; making the total for these Services £7,994,500, against £7,775,850 last year. That makes the total Expenditure £81,019,775, or £81,020,000, against £78,903,495 last year. The Expenditure is £81,020,000, without making any provision for the redemption of the Bonds that have been issued for the Vote of Credit, or for the Supplementary Services to which I have referred.

I will proceed now to state the Estimate of the Revenue. Customs last year produced £19,969,000. I estimate that this year they will produce £19,750,000; this is making allowance, of course, for the circumstance to which I adverted last year, when a considerable sum was brought in at the close of the year unnaturally, and of course we lose that sum, which disturbs the comparison of the two years. The Excise, which produced last year £27,464,000, we take at £27,500,000—that is, the full amount it produced last year, with some allowance for increase. Stamps produced last year £10,956,000, and I take them at £10,930,000. Land Tax and House Duty produced £2,670,000, and I take them at £2,660,000. Income Tax produced £5,820,000, and I take it at £5,620,000; the reason for taking it a little lower is, that there was a late collection in the year before last, and it was a comparatively early one last year, so that a larger amount came in within the year than would have been due upon an average of years. The Post Office we take at £6,200,000; the Telegraph Service at £1,315,000; the interest on Advances for Local Works, and on Purchase Money of Suez Canal Shares, which was £949,884, I take at £1,075,000; and Miscellaneous sources at £4,000,000. The whole Revenue, which last year was £79,763,299, we estimate at £79,460,000. Therefore, I am sorry to say I have brought out an anticipated deficiency of £1,560,000, without having made any provision for the extraordinary Expenditure.

I will not detain the Committee at present by going at great length into the question of the increase of Expenditure. There is no doubt that the increases are considerable; but the Committee must bear in mind that, to some extent, these increases are not so serious in reality as they appear to be. In some cases there is an increase on both sides of the account—as, for instance, is especially the case with the charge on Debt—where we borrow money with one hand in order to lend it with the other. Again, it must be borne in mind that some of the increases are increases in charges which have been taken upon the country by the legislation of recent years, and which are in the nature of relief to ratepayers, while involving some addition to the burdens of the taxpayers. Speaking generally, the increase of Expenditure this year upon last year is about £2,100,000; and it is made up in this way—The increase upon the charge for the Debt is about £425,000; the increase upon the Military and Naval Services is £639,000; the increase upon the Civil Expenditure is £834,000; and the increase upon the Revenue Department, £220,000. With regard to the Debt, there is one thing I may point out. The amount to be applied to the charge of the Debt is £28,000,000 every year, and that is provided on this principle—In the first place, all the charges for the interest and management of the Debt shall be defrayed and the balance shall be applied to the reduction of the Debt, and as the Debt is gradually redeemed by the application of these surpluses, of course, the charge for interest becomes less, and, all other things remaining equal, there ought to be a greater amount from year to year applied for the extinction of the Debt. It is, of course, subject to this possibility—that there may be certain increases within the class of Debt which is charged upon the £28,000,000, and any increase of that kind will diminish the portion of the £28,000,000, which will be applicable to the new Sinking Fund. It is always a matter of interest to look to the amount that is paid to the new Sinking Fund; last year it was £764,825; and in the year to come the amount so applicable will be only £684,747. The original Estimate I made was, that this year there would be applicable an amount sufficient to redeem £603,000 of Stock; instead of that we find we shall have £684,000 of cash with which to purchase Stock; that, of course, produces a larger quantity; therefore, so far as the operation of the new Sinking Fund is concerned, comparing it with the original Estimate, it is distinctly satisfactory, and has produced a greater effect than was anticipated. But when we come to inquire why there is less applicable this year than last year, we find that it arises in this way—that a larger amount has had to be borrowed in Terminable Annuities. Of course, a larger amount being borrowed in Terminable Annuities reduces the proportion of the £28,000,000 that can be applied under the new Sinking Fund. The new Annuities which have thus been created are as follows:—It has been necessary to provide, first of all, for a half-year's payment on a new Annuity to repay the £l00,000 advanced for fortifications last July; and a small sum has also to be provided for a further Annuity of £35,000, which will probably be required in the coming year. I am happy to say that this balance will complete the amount of the Fortification Grant. But then there is another charge that we have taken on ourselves, and which we also have to meet by Terminable Annuities, and that is for the payment of local barracks. That is a charge which we found existing when we came into Office, and it is one for which provision has to be made. Therefore, that amount of fresh Terminable Annuities has been created. £300,000 was advanced on the 1st of March, 1878, and it is estimated that about £700,000 more will be required in the year 1878–9. Taking these two sums, which involve a charge of £100,000 between them, and adding that which is required for Fortifications and for the Annuities I have referred to, we find that £118,000 will this year be applied to Terminable Annuities more than last year; and that accounts for the diminution of the proportion of the £28,000,000 which can be applied to the new Sinking Fund. I think it is well that we should bear this in mind; because there is sometimes a disposition in some quarters to doubt the operation of the new Sinking Fund. The new Sinking Fund is itself operating perfectly, and with a greater amount of effect than we might have ventured to anticipate. The new charges which are created, and for which we are not responsible, affect the amount so applicable; but they will not disturb the amount of £28,000,000 for the public Debt.

But, passing from that—which does not really affect the finance of the year, but which is yet interesting as showing the progress of our Debt—I must call attention to a very serious increase which has arisen in the interest on money borrowed for Local Loans. Last year, for monies to be borrowed to meet the loans of local authorities, we issued £212,000, or nearly £213,000. This year we estimate these issues at probably £425,000, showing an increase of £213,000. No doubt, there will be a corresponding increase in the Estimates from the interest of the money that we lend to the various bodies which are entitled to borrow these sums. But the increase is now so rapid, and the amount of the Debt which is coming into existence for this purpose is so very considerable, that I think I ought now, before it is too late, to call the serious attention of the Committee to what is going on. The Committee will, of course, bear in mind that this question of advances to local authorities has nothing to do with the policy that we adopted two or three years ago and that we have carried on since, of placing certain charges which were formerly thrown on the rates upon the Consolidated Fund. That is quite a separate matter, and it has nothing to do with the present question. The subject of Local Loans is one which has been growing in importance for a considerable time; but it has been growing very rapidly, indeed, within the last two or three years. I need not go back to any great antiquity with respect to the Exchequer Loan Fund and so forth; but what I may almost call the origin of the present system of lending was when, some years ago, the Government of the day—I think it was the Government of Lord Palmerston—finding that a considerable pressure was put upon them to expend money in forming harbours of refuge, thought it was the wiser plan to meet the claim that was made by proposing to authorize the Public Works Loan Commissioners to lend money to harbour authorities for the purpose of improving their own harbours, and to lend it at a very low rate of interest. I think 3¼ per cent was stated to be the rate of interest at which these loans should be made. That policy was adopted, and it has led, I think, to an advance of something like £900,000 to local authorities for harbours. That is a small matter in itself; but the precedent which was then set has been followed in other cases. It was followed in the case of the Education Act of 1870. At that time, in order to facilitate the introduction of the new and very costly system of education which was to be established under that Act, power was given, to school boards to borrow at a comparatively low rate of interest—3½ per cent—from the Public Works Loan Commissioners; and at that time an estimate was formed of the amount which would probably be required. It was, of course, difficult for the Education Department of that day to make any correct estimate of what the total amount might be; but I believe that the sum which the Education Department spoke of, and which the Treasury conceived to be the probable sum, was something like £4,000,000 for England, and another £1,000,000 for Scotland. Well, at the present moment the sum which has been spent by the Education Department amounts, on the whole, to no less than £9,348,000 for England, and £2,221,000 for Scotland, and we are far yet from having an assurance that we have arrived at the end of it. Well, the same principle was carried into effect in the case of the new sanitary legislation. There was a very natural and very proper desire that the sanitary arrangements of the country should be improved, and that costly works should be undertaken for that purpose. But how was the money to be provided? The suggestion was made—and it was embodied in an Act of Parliament—that there, too, the Public Works Loan Commissioners should be called upon to advance money at a moderate rate of interest for the execution of works which had to be undertaken. In that case I think a saving clause was inserted in the Act, and although 3½ per cent was named as the rate of interest, yet words were introduced at the suggestion of the Treasury—who were now beginning to get a little uneasy—to the effect that 3½ per cent interest should be charged, or such other rate as would secure the Treasury from the risk of loss. But in that case, also, there has been a very spirited advance on the part of the local authorities in making demands for sanitary loans. And, again, my right hon. Friend the Secretary of State for the Home Department, when he introduced his Artizans Dwellings Act, followed suit. The Treasury became more and more paralyzed in this matter, was unable to resist the precedents which had been set, and here, again, we have a large door open for these borrowing powers. To give one instance of the great demands which are made under these Acts, I may observe that last year one town alone— namely, Birmingham, one of whose Members I see opposite, and who, I hope, enforces the necessary economy on his fellow-townsmen—Birmingham, I say, borrowed the best part of £1,000,000 in 1877, and it is asking for something like another £1,000,000 in 1878. I do not for a moment blame Birmingham. I have no doubt that an excellent use will be made of these monies. I have no doubt whatever that the security which is offered is a good security; and I have no doubt that it will be very much for the advantage of Birmingham that that expenditure should be incurred. But, of course, such examples are catching, and we shall very soon find that these demands will go on increasing and increasing with fresh rapidity. And several curious effects will be produced by this. In the first place, the facility of borrowing at so moderate a rate of interest has naturally a tendency to render municipalities more free to borrow and increase their indebtedness. But what is more to be remarked is this—that by encouraging them thus to borrow from the State we are substituting the State as the creditor in the place of the private creditor. Now, of course, there can be no question that these loans are contracted with the most thorough bona fides, and there is no doubt whatever that the State, in advancing them, has a very good security. But if these advances are made for 30, 40, and 50 years, and if they are made—as, possibly, they may be made in some cases—for purposes which should prove to be unremunerative, and should entail a heavy burden on the localities for which the loans are contracted, it is quite conceivable that a time of difficulty may arise, and that pressure may be put on the Imperial Exchequer to consider the position of some of these debts. It will, of course, be understood that I am not for a moment suggesting that anything of that sort is now even dreamt of. I am only looking forward to a danger that may possibly arise.

But then I may be told that, after all, this business on which the Treasury has entered is a very fair and remunerative one; for although they are bound to lend at 3½ per cent, yet the credit of the country is so good that we are able to borrow at a somewhat lower rate, and we can put the difference into our own pockets; and I think sometimes those who come to us for loans suppose not only that they are borrowing at a low rate of interest, but that they are helping the Chancellor of the Exchequer to a handsome profit over and above; but I am afraid that will not stand the test of experience. There are some remarks which I may venture to quote to the Committee from a paper that has been drawn up on the subject. It answers the suggestion that the interest paid on loans would be covered by the interest received. The Public Works Loan Commissioners only charge interest yearly. They therefore receive no interest within the financial year on the advances they make after the 1st April. But the State has to pay interest half-yearly or quarterly, and in the case of Treasury Bills the interest is paid in advance. Thus the charge on the State has a tendency to increase faster than the interest it actually receives. In 1876–7 the Public Works Loan Commissioners earned by way of interest £542,000, and in 1877–8 £612,000, being an increase of £70,000. The interest paid by the State increased by about the same amount. In 1878–9 the Public Works Loans Commissioners estimate that they will receive £725,000 to £730,000, an increase of about £118,000. I have shown that our Estimate on this point is for a possible increase of as much as £200,000, certainly not much less than £150,000. That is an illustration of the difficulties which may stand in our way with regard to these loans for local purposes. Of course, in regard to the interest standing over for a whole year, we propose to get rid of that; but that is only one of those points which will require attention. I wish to point out to the Committee that although our present system is all very well when the rate of money is low, it would not be equally so when the rate of money is high. I have found it desirable to raise a good deal by short loans or Exchequer Bills and Treasury Bills for short periods. But then these loans are made for long periods—40 or 50 years—and, although they may be profitable at first, when the rate of money is low, they may be very much the reverse if we have to renew our short bills when money is at a higher rate. There is one remedy—to borrow not by the issue of Treasury Bills, but on Consols at 3 per cent. That is a step to which I see some objection, and I should be sorry to be obliged to take it. I mention these things to the Committee, not because I have any proposal to make at the present moment, but because I wish to draw attention to the subject as one which forces itself seriously on our attention, and from which, if we do not make some provision to secure the public, serious mischief may arise. I should be most unwilling to charge a higher rate than could be avoided for loans to make sanitary improvements, loans connected with education, improved labourers' dwellings, the creation of harbours, and other purposes of that kind; but a hard-hearted Chancellor of the Exchequer may find it his duty to take steps to secure that the Exchequer, at all events, shall not suffer. Though I have thus made a little digression on this subject, I do not think the time has been altogether thrown away.

I will not now go at any great length into the various increases that have taken place in the other Heads of Expenditure. The Military and Naval increases have been explained and voted by the House when the Army and Navy Estimates were before them. With regard to the Civil Expenditure, the increase amounts to £834,000. That increase is due to two causes. It is accounted for partly by the transfer of prisons, and partly by the growth of grants for Public Education. The addition for prisons comes to nearly £600,000. The grants for Public Education are £250,000 more than last year. These are the two great increases. I am not going to discuss their propriety. I have only to tender my account and to meet the charges on me as well as I can. I believe the policy adopted in taking these charges on the State is a sound and correct policy. If they entail an additional burden on the taxpayer, they, on the other hand, contain a relief to the ratepayer of charges which ought not to fall exclusively on him. And it must be borne in mind that, coincidently with relief given to the ratepayers, we are laying new and heavy burdens by legislation upon the taxpayers in respect of sanitary and other matters.

Now, I go back to what I had almost forgotten for the moment, but which must be my leading feature to-night—I go back to the expenditure of the Vote of Credit. What has actually been spent is £3,500,000, and it has been spent in this way—The Army has spent £1,543,000. Out of that about £240,000 has been spent on horses; £1,100,000 on various stores, mining, laboratory, clothing, &c.; £76,000on guns; £48,000 on ammunition; £38,000 on iron shields, &c. The Navy Service has actually spent £1,916,000. Of that, by much the largest part—£1,445,000— has been spent in purchasing ships of war, sometimes with the armament and stores; £144,000 upon means of transport, and £249,000 upon provisions, leaving £40,000 for torpedoes. £38,000 has also been expended in laying down special telegraph cables to keep up our communication with the Fleet. No doubt, hon. Gentlemen will remember that at the time the Vote of Credit was taken considerable uneasiness was felt owing to the interruption of telegraphic communication; and therefore we thought it desirable that steps should be taken to improve and make independent the telegraphic communication between this country and the East, utilizing for this purpose the lines of the Eastern Telegraph Company. Besides these sums the Army has, I understand, committed itself to a further expenditure of something like £500,000, and the Navy to a further expenditure of £200,000. These sums are for services analogous to those which would have been defrayed out of the Vote of Credit if they could have been completed and paid for during the year. They will be made the subject of Supplementary Estimates, and be laid before the Committee.

Then we have a further question, which is one of greater uncertainty, and that is as to what the expense may be of the step which has just been taken of calling out the Reserves. It is very difficult for me to form any real estimate on this matter at the present moment; because everything depends on the number of the men that may come up, and the length of time they may be kept under arms. But supposing they are kept under arms for three months, I take the expense at the approximate sum of £400,000. I also take the extra labour required in the Dockyards during the first part of the year at the sum of £400,000. I have put these sums down rather in order to make a round balance than to give any very correct information. In the present state of affairs, it is impossible to get accurate information. Of this amount £3,500,000 has been already paid, leaving certainly £700,000, and, it may be, some further sum which may, perhaps, bring the total to £1,500,000, to be paid. But of the amount paid £2,750,000 has been borrowed, and must be taken into account in the coming year.

Well, then, these are the figures which I stand face to face with. There is an estimated deficiency of Revenue to meet the ordinary Expenditure of the year of £1,560,000. There are the Exchequer Bonds which are outstanding, and which amount to £2,750,000, and the Supplementary Estimates, which may be £1,000,000 or £1,500,000. That leaves me to meet a sum of £5,300,000, or of £5,800,000; and now we are to consider how we are to meet it. It was quite understood when the Vote of Credit was proposed and Exchequer Bonds issued for the purpose of the Vote that they should not be raised by one loan. At the same time, we have done all that we could to pay out of the surplus of last year a not inconsiderable portion of what has been spent, and I think we ought to make an effort to cancel that debt, not in the present year, but in the year after—that is, in 1879–80. I think we ought this year to meet the regular deficiency of £1,560,000; we ought, also, to meet the Supplementary Estimate of £1,000,000 or £1,500,000; and we ought, also, to meet some portion of the outstanding debt. I am uncertain what the Supplementary Estimates may be; but I hope, if the Committee will give me the Ways and Means I am about to ask for, I shall be able to extinguish the regular deficit, and to pay whatever the Supplementary Estimates may amount to, leaving a reasonable portion over to be applied towards the reduction of the £2,750,000.

With regard to the Ways and Means, I will not keep the Committee long in suspense. But there are one or two minor matters which I must first mention. One of them relates to the mode of dealing with the House Tax. The question as to the mode in which professional offices are charged to the House Tax is one which my right hon. Friend the Member for the City of London (Mr. Hubbard), my hon. Friend the Member for Peterborough (Mr. Hankey), and others are well acquainted with. In certain cases persons who are using their houses for the purpose of carrying on a trade and not as dwelling-houses are allowed to leave caretakers in them without bringing them within the higher rate of inhabited house duty, 9d. That indulgence is not extended to professional offices, and therefore very curious discussions are sometimes raised as to those who may be entitled to caretakers and those who may not, and the difficulty is increased by the circumstance that a house is treated as a whole. Supposing that a house is divided into chambers in which 20 persons may live, it may happen that 19 of those persons are carrying on trades, while one may be a professional person; but the professional person vitiates the whole house, and it has all to be subjected to the higher rate. I hope to be able to meet these two serious inconveniences. I hope I shall be able to introduce into the Bill which is to give effect to the Budget provisions for the purpose of placing professional offices on the same footing with regard to caretakers as trade offices, and thereby to relieve the hon. Member for Peterborough of a difficulty which he feels and passes on to me—namely, to know what is a trader and what a professional person, and also provisions by which separate tenements will be charged as separate houses. With regard to the Income Tax, my hon. Friend the Member for Oldham (Mr. Hibbert) and others have pressed on me to make allowance for the wear-and-tear of machinery. That is a very difficult question, and I will not now enter into it; but it is one which will have to be considered when we have the Bill before us. Considering the way in which ships and railways are treated, and the various matters which are more or less distinctly recognized as subject to depreciation, I think it is fairer and better, and will be more satisfactory, that proper provision should be made for recognizing depreciation in the case of machinery. These two changes will, of course, to some extent, though not to a very large extent, affect the proceeds of the House Tax and the Income Tax; but, on the other hand, I have a small addition to propose to another tax, which I think will about balance the remissions on those two taxes—I allude to the tax upon dogs. I will not attempt to go into this very interesting subject; certainly I will not weary the Committee with any great number of the letters I have received on the matter. One writer suggests that a special tax should be laid upon pugs because they are ugly. I beg to say that I do not share that opinion. But what I propose to do is this—in the first place, with regard to the duty, I think it may be fairly raised from 5s. to 7s. 6d. Then there are some other changes which might be made. It has been impressed upon me that the exemption of dogs under six months leads to a great deal of evasion. I am told of persons who keep dogs, and when someone says to them—"That is the same dog I have seen last year," the answer is—"Oh no, my dogs are never more than six months old." I propose, therefore, that the limit of exemption should be reduced from six months to two months. [Laughter.] Hon. Gentlemen may laugh; but it is much easier to know a puppy under two months than under six. It is also proposed to introduce the principle that, in the event of any doubt arising, the burden of proof will lie upon the owner of the dog. I have been in communication with my right hon. Friend the Secretary of State for the Home Department and the Commissioners of Inland Revenue as to the mode in which the tax is to be levied, and I hope that we may be able to make some further use of the police, and also to take precautions which the Inland Revenue thinks ought to be taken to bring a larger number of dogs under the tax. I have not the slightest doubt that the step I am taking would meet with a great deal of remonstrance from the people of Scotland, if I were not able to add that I propose to take the opportunity of dealing with the case of the shepherds' dogs. No doubt there are certain cases in which shepherds' dogs ought not to be taxed. The way in which I propose to deal with shepherds' dogs is that there shall be a certain form of declaration provided upon making which a shepherd or the owner of sheep shall have the right to a licence for one dog, and in some cases for two dogs, free of charge. I think the increase of Revenue from the Dog Tax will rather more than compensate for the loss I shall have sustained from the remissions in the case of the House Tax and Income Tax which I have mentioned. The one I put down at £100,000, the other at £80,000.

And now I must call the attention of the Committee to the position in which we stand, and to the provision which we are to make for the large deficit which I have brought under its notice. I put aside at once—and I think the Committee will agree with me in putting aside—all idea of meeting that charge in any other way than by fair taxation. It would be quite out of the question to attempt to tamper with the arrangement for the reduction of the National Debt. Then, if we are to meet it by taxation, by what kinds? Everyone, I am sure, will naturally think of the Income Tax; and, at the same time, there will be, I believe, a general agreement that we ought not to throw ourselves upon the Income Tax alone. In any circumstances, I think that would be so. But, certainly, the changes we have made within the last year or two in the incidence of the Income Tax with a view to giving relief to a considerable number of persons in the case of that burden must render it more and more objectionable to rely upon the Income Tax as our sole resource. It is, however, one of such immense value that we cannot help taking it into our consideration, and making what I am afraid will be regarded as a very important addition to it. The Income Tax is now estimated to produce for each penny the sum of about £1,800,000, of which about £1,500,000 would come into the year in which it was imposed. Therefore, if we raise the Income Tax by 2d., we shall get from that source an addition of £3,000,000 in the present year; and to this we propose to add an additional duty of 4d. per 1b. on tobacco. I am afraid that it is impossible to select any taxes that shall be altogether unexceptionable; but I think it is better that we should endeavour to meet such a call as is now made upon us by broad and simple proposals which will be efficacious for that purpose, and which, I hope, will not involve any lengthened strain upon the country. At all events, that is the proposal of Her Majesty's Government, and they have selected the article of tobacco for the subject of additional taxation; because it is one the produce of which has been steadily rising year by year, and which, in the present year, has produced a very considerable amount more than was anticipated. The present duty on the great bulk of tobacco, unmanufactured and containing 10 per cent of moisture, is as nearly as possible 3s. 2d. per 1b.—3s.d. I think. It is estimated that the duty on tobacco, raised to the extent I propose, will produce £8,723,000. The gross Revenue from this source in 1876–7 was £7,864,000, and probably the gross increase will be £859,000; but after deducting an estimated drawback, it will be brought down to £759,000. There are various rates, which were settled with considerable care in order to make a just proportion between manufactured and unmanufactured tobacco. We get rid of the fraction. [Mr. GLADSTONE: So that the increase is more than 4d.] It is 4d. and a trifle. That will give £750,000, and in that way we propose to increase the Ways and Means of the year to £3,750,000. I had estimated—and I think probably it was as safe an estimate as I could make—the sum we had to meet at £5,300,000. It might be £5,800,000; but I will take it at the lower sum. Taking £3,750,000 from the sum of £5,300,000, it leaves a remanet of £1,550,000 to be met next year. It may be more. If the expenditure on the Supplementary Estimates should be £500,000 more, it will be £2,000,000 next year, but then we shall have next year a remanet on the additional Income Tax of £600,000; and I think we shall find ourselves in a position which will enable us with very great ease either to meet any debt which might be incurred or to meet any call which might possibly be made upon the Exchequer. I venture to hope that no such call will be necessary. I venture to hope that the country has been wise in time; and that, although the Budget which I have now had the honour to submit to the Committee has been by no means a pleasant one either to frame or to expound, yet it will be received by this House and by the country in the same spirit of patriotism in which they have already voted Supplies, and in which we have endeavoured to make our financial proposals.

I will now state over again, as is usually done, the balance-sheet of the year—

Permanent Charge of Debt £28,000,000
Interest on Local Loans 425,000
Interest on Supply Exchequer Bonds 94,000
Charge of Suez Loan 200,000
Other Consolidated Fund Charges 1,760,000
Army £15,595,800
Home Charges of Forces in India 1,080,000
Navy 11,053,901
Civil Services 14,816,475
Customs and Inland Revenue 2,793,068
Post Office 3,313,215
Telegraph Service 1,114,972
Packet Service 773,245
Customs £20,500,000
Excise 27,600,000
Stamps 10,930,000
Land Tax and House Duty 2,630,000
Property and Income Tax 8,570,000
Post Office 6,200,000
Telegraph Service 1,315,000
Crown Lands 410,000
Interest on Advances for Local Works, and on Purchase Money of Suez Canal Shares 1,075,000
Miscellaneous 4,000,000
TOTAL REVENUE £83,230,000
— leaving a surplus available for meeting deficiency caused by Vote of Credit and Supplementary Expenditure, £2,210,324. The first Resolution which I shall submit to the Committee will be the usual formal Resolution for renewing the tea duty, and then I propose to submit the Resolution for the addition to the tobacco duty. I hope the Committee will be willing to pass the latter Resolution to-night; because if the announcement of that addition were made to the country without steps being taken which will enable the officers of the Customs to charge the increased duty, great loss to the Revenue would ensue.

(1.) Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, the Duties of Customs now charged on Tea shall continue to be levied and charged on and after the first day of August, one thousand eight hundred and seventy-eight, until the first day of August, one thousand eight hundred and seventy-nine, on importation into Great Britain or Ireland (that is to say): on

s. d.
Tea the lb. 0 6."


Of course, I do not rise to make any remarks upon the more substantial and essential parts of the painful Budget which it has been the duty of the Chancellor of the Exchequer to bring before us, and I am extremely sorry he has been obliged to make his very clear statement under circumstances of great inconvenience, I am afraid, to himself. My right hon. Friend did not mention to us the day upon which he proposes to take the substantial discussion on his plan, but that omission, I have no doubt, he will take care to supply before the House breaks up; and, in the meantime, nothing can be more proper than his demand that we should pass the Resolution to-night about the tobacco duty. There are many Members of this House, who are less accustomed to these matters than myself, who may not be aware that they are not understood to commit themselves upon the merits of the plan by assenting to the Resolution. It is purely a fiscal necessity to prevent loss to the Revenue without any corresponding gain. I rise for the purpose only of making one or two incidental remarks, and some remarks having special reference to that important part of his speech which related to the matter of local loans. But, first, there have been two deviations in the speech from the usual practice which, though they are not of very great importance, I wish to notice. The right hon. Gentleman set out by drawing distinctions in presenting the public account between the ordinary and the extraordinary Expenditure; and from that measure he derives the momentary convenience of being able to speak to us in language always agreeable to hear in this House, that he had a surplus of £600,000 or £700,000. But, immediately afterwards, he was obliged to show us the real state of the accounts for the year, where there is a deficiency, in round numbers, of £2,500,000. I never knew that distinction of ordinary and extraordinary Expenditure introduced before in a statement of public account in reference to charges which are charges of the year; and I doubt very much whether it is altogether convenient. There may be cases in which Expenditure is extraordinary; but I do not think that ought to be allowed to come into a statement of public accounts when what is most desirable is to impress upon the minds of the House a leading fact, and that leading fact is that we have a deficiency, in round numbers, of £2,500,000. It is perfectly fair, in comparing Expenditure, that his own expenditure should be carefully separated from the original Estimate; and my objection applies to the introduction of this distinction in the original statement. In speaking of the comparative Expenditure with Estimate, this is a point which I always laid stress upon—the Chancellor of the Exchequer said that the Expenditure had fallen within the Estimate of account, or gone beyond it, according to the Estimate with which you compare it. I lay great stress on this—that we can only make a comparison with the original Estimate presented, and it is utterly idle for a Finance Minister to tell the House of Commons—"I presented to you certain Estimates in April; but these Estimates were increased in May, June, or July, and it all depends upon which of these standards you take to determine the manner in which the matter should be estimated." Now, the House of Commons, considered as the stewards of the public purse, must reckon with the Finance Minister once a year; and it is totally impossible for this House to exercise any effective control upon any other basis or principle whatever. It is for the Chancellor of the Exchequer to explain all details he thinks fit; but if Finance Ministers are not to compare their Expenditure with the original Estimate, you lose every check over the formation of that original Estimate. He must make the original Estimate, which is to cover every probable expense, the security the House has for making it on a sound and large principle, and that the basis shall be sufficiently broad that he shall present it once, and that one Estimate shall be the standard by which shall be ultimately tried the relation between Estimate and Expenditure. I will now pass from these merely critical remarks to a question which was dealt with in some detail by my right hon. Friend the Chancellor of the Exchequer—I allude to the question of local loans. I was very glad, indeed, to hear what was said by him upon this subject; but I am bound to express my hope that in order that we may gain some proof of that portion of his speech, some measure will be introduced by the Government to meet this growing danger. It is, of course, a great benefit to have our attention drawn to a question of this kind at any time; but we can only hope to secure benefit from having our attention so called by my right hon. Friend making some proposal on the subject, based on the responsibility of the Government, and intended as a safeguard against the danger which the Chancellor of the Exchequer has pointed out. I can say for myself—and if I know anything of the financial mind of those who sit on this side of the House, I would almost venture to say for them—that any precautionary measures which the Chancellor of the Exchequer may submit in the way of some augmentation of the rate of interest on prospective loans, or in whatever way he may deem it best to deal with the question, will meet with a fair and favourable consideration on this side of the House. The Chancellor of the Exchequer gave an account, however, of the way in which this danger, first of all, crept in, and it is to that account I wish to address myself. He says it was under the Government of Lord Palmerston that this practice was commenced. That I admit—as I am bound to do— was the first example of a practice which has since become dangerous, and the introducer of such a practice is naturally held responsible for it. I was Chancellor of the Exchequer when the Harbours Act was passed, and when, as the Chancellor of the Exchequer has said, it was permitted to local bodies to make applications for loans of public money at the extremely low rate of interest of £3 5s. per cent. I am fully responsible for that Act, and never was I concerned in an Act of Parliament by which was effected so great a public economy. Now, I will show the difference which has come into play. We have learned in these later years to use this business of local loans as a mode of gratifying local communities, of oiling the wheels of the State, and facilitating the passing of measures through Parliament by making further additions to the boons which, at the expense of the taxes, are given to the ratepayers. But that was not the view with which this step was first taken. What were the circumstances? A movement was got up chiefly in the Eastern, but also in other, parts of an extremely popular character for laying out very large sums of money in what were called Harbours of Refuge. I do not hesitate to say that if that plan had been carried into effect it would have cost the Exchequer not less than £12,000,000, and more probably, £20,000,000. Lord Palmerston's Government set themselves against the adoption of that plan. It was suggested by the bulk of the Conservative Opposition, and, I must honestly confess, by a fraction of the Liberal Party, which converted that Conservative Opposition into a majority. An Address to the Crown was moved, which, if it had been acted upon, would—as I am firmly of opinion—have involved an expenditure to the amount I have mentioned. The Government of Lord Palmerston resisted that Address. We were beaten on a division, and I rather think by a somewhat considerable, at any rate not by a very small, majority. We refused to act on the Address of the House of Commons, and I think we were perfectly right in so doing; because, in my opinion, the House of Commons was going beyond, and, in point of fact, abusing, its powers in endeavouring to compel the Government to make that expenditure of money. Since then we have had attempts to revive that plan when Liberal Governments were in power—of course, when Conservative Governments are in power there can be no need for Harbours of Refuge. [Murmurs.] Well, at any rate, let me say that for four years a Conservative Government has seen no such necessity; and in referring to the matter I shall proceed upon the principle on which we acted in the Government of Lord Palmerston. My right hon. Friend will see that by resisting the voice of a considerable majority in the House of Commons who supported a proposal which, undoubtedly, had many plausible arguments to recommend it, we placed ourselves in a very peculiar position. We were compelled, in the stead of an enormous expenditure—and which, in fact, it would have been very difficult to place any limit at all—propose a very moderate expenditure, and on terms which, I admit, were better than would have been justified on any ordinary principles. Those, then, were the circumstances under which this plan of borrowing was introduced under the Government of Lord Palmerston; and I wish to observe that I do not recollect that my right hon. Friend, when on former occasions he has introduced this plan of lending money to local bodies as a matter of great convenience and advantage to those bodies, was at all careful to father the device upon the Government of Lord Palmerston. But now he points out his danger.


I had no intention to throw any blame whatever upon the Government of Lord Palmerston.


I did not think my right hon. Friend had any such intention, nor have I any intention to cast any blame on him; but what has been done is this—the Government of Lord Palmerston have been set up as the authors of a practice which has become dangerous, and my object is not merely to make a polemical reply to my right hon. Friend, but to point out the principle upon which it was then done, not as a financial measure, good in itself, but taking its terms and conditions into view, as a means of avoiding an infinitely greater evil which it was necessary to avoid. Therefore, the moral of my remarks is that this is the proper basis for a system of local loans which ought not to be made upon light or secondary considerations of policy, but only for great objects and purposes which cannot otherwise be attained. I do not want to dwell further upon the critical part of what I have said; but I am glad the question has been raised, because it has given me the opportunity to point out the principle of action on which we went. I think that principle was sound, and I wish we could bring back the system as nearly as may be to that principle. My right hon. Friend has pointed out that it is said by some people that they confer a sort of favour on the public by taking these loans, because the public nominally receives a higher rate of interest than it pays for the money that it borrows. If it were so it is not the business of the public to become—unless it happens accidentally in a particular case—a trader in money or to enter into jobbing transactions of that kind. The Government ought to charge a rate of interest on these loan which not only has reference to the actual state of the money market, but which, viewing the rate at which the public can borrow over a long series of years, affords a sufficient margin to cover all danger. I hope this important question may be submitted to us in a practical form; and I would again remind my right hon. Friend of the question I put to him as to the day on which the matter will be brought before the House.


said, he wished to thank the Chancellor of the Exchequer for having at length yielded to the strong representations that had been made to turn from year to year on the subject of remitting the tax on shepherds' dogs. With regard to the tax on dogs generally, he should not have objected to the tax being raised to 10s. per dog. He could not agree with the proposal as to the age at which dogs should be liable to taxation. Two months was, he thought, too young an age at which to charge the impost, for it happened, as a rule, that it was not until dogs were over that age that their owner could tell which to keep of a litter of puppies and which to destroy. With regard to the harbour loans, he thought some alteration was necessary. Many of the harbours, which had become national rather than local institutions, had their debt divided under two heads—one comprising the money borrowed before the passing of the Act, which enabled them to borrow from the Public Works Loan Commissioners, and the other the money so borrowed. He saw no reason why the debts of harbours, which had become national harbours and were, in every sense of the word, harbours of refuge, should be so divided; and if the Chancellor of the Exchequer could devise a means of altering the present state of things, he would give great satisfaction to the persons interested in harbours—particularly those on the North and North-East coast. There were, he thought, ways in which, in view of the fluctuating value of property on which public money was lent, the present modes of granting loans could be made more secure for the Government and more satisfactory, on the whole, to everyone concerned.


expressed his thanks to the Chancellor of the Exchequer for having conferred a great boon upon the shepherds by removing the tax upon their dogs. If dogs generally had a 10s. tax imposed upon them, he hoped there would be no limitation of any kind with regard to shepherds' dogs. With regard to local loans, the Chancellor of the Exchequer might remember that on one occasion a loan was granted to the local government of Ceylon; but the granting of the loan was made contingent upon the local authorities making a proportionate advance. He thought this principle might with advantage be applied to all loans of the kind; and as the Exchequer made these advances at a low rate, the Government ought to have priority of repayment over other creditors.


congratulated the Chancellor of the Exchequer on the way in which his Estimates for the last year had come out. With regard to the Income Tax, the figures could not fail to be satisfactory, in that they showed a great advance in the wealth of the country, notwithstanding the fact that the receipts from earnings in trade had not been above the average. Indeed, it was to be feared that there would be some diminution in this respect. With regard to the in habited house duty, he was much pleased by the course that had been taken by the Chancellor of the Exchequer, because it would remove a real grievance, which was now felt by professional men and traders, many of whom had to pay a whole year's duty, though their inhabitation might not be worth more than £5 or £6. He should have been better pleased if, in making provision for next year, the Chancellor of the Exchequer had, instead of laying a great additional weight upon the payers of Income Tax, put an additional 1s. per gallon on spirits, which had not, up to the present time, borne a fair share of the taxation of the country. He did not mean to say that he should have opposed any addition to the Income Tax; but he certainly thought that tax was called upon to bear an unfair share of the burden. Further, he thought that an increase in the spirit duty would, while increasing the Revenue, have proved serviceable to public morality. He felt sure that if hon. Members turned to the pages of Hansard, they would find an abundant armoury of arguments against increasing the Income Tax in the speeches of the right hon. Gentleman the present First Lord of the Admiralty.


wished to know whether, under the heading of dog tax, the Chancellor of the Exchequer intended to make any allowance in the case of packs of hounds which were kept for the purpose of affording healthy exercise and amusement for the people, and were therefore, in his view, entitled to some consideration? The tax upon Marine Insurance, too, was one which ought to be considered, because, by the inequality of its incidence, it was an impost which caused considerable inconvenience, and was calculated to drive trade from this country. The amount was not large, but it was charged in the same ratio upon large and small insurances—a policy involving a premium of £5,000 had to pay no more than an insurance upon a small coasting trader. It was with satisfaction that he had heard the Chancellor of the Exchequer announce his intention to keep the account of interest paid upon Exchequer Bonds and the floating debt generally separate from that of the funded debt. He hoped the Chancellor of the Exchequer would speedily put before the House in a practical form his proposals in regard to local loans. The great cities of the country could borrow money from other sources for the making of public works at an interest of a trifle over 4 per cent; and he therefore agreed with his right hon. Friend the Member for Greenwich (Mr. Gladstone) as to the undesirability of a Government becoming a dealer in money. There were some localities which could not give so good a security as was possible in the case of great cities and the large towns; and it was surely not unreasonable that they should pay interest at the rate of something more than 3½ per cent. On the whole, however, the Department had been very well managed, although, mainly on public and national considerations, which could not well be resisted, loans had occasionally been granted which had resulted in the loss not only of the principal, but of the interest. As much of the money borrowed had been spent on purposes connected with education, he did not think anybody would grudge the small amount added to the national expenditure. In making up the deficiency for the year, the Chancellor of the Exchequer had, in his opinion, added too much to the direct taxation of the country, and would have acted wisely if, instead of doing that, he had placed an additional sum upon the spirit duties. Not with standing the additions that had been made, the Chancellor of the Exchequer would still have to face the year with a deficiency of about £2,000,000, and, considering the existing state of affairs, he did not think that a wise course to take. They knew that Her Majesty's Government, when they came down and asked that House to vote £6,000,000 the other day, said that they did so in order that they might assume a bold front and show very considerable strength. If they had come that day and proposed that the whole of that amount should be included in this year, they would have taken a wise and prudent course. The right hon. Gentleman told them it was desirable that the Sinking Fund should be kept up, and that no inroad should be made on the £28,000,000 which, by the National Debt Bill, he set aside for the service of the year. The cheers with which that was received showed that the House sympathized with his opinion. Were they really carrying out that policy? It seemed to him that by this proposal, while, on the one hand, they would be paying off £3,000,000 or £4,000,000 of debt by Terminable Annuities, on the other hand they would be adding another £1,000,000 to the National Debt. Therefore, the Chancellor of the Exchequer could hardly take credit to himself for carrying out his own policy; for while he was borrowing money with one hand, he was paying it away with the other. He thought, therefore, the right hon. Gentleman would have acted wisely if he had put a duty on spirits, or in some other way had tried to raise the whole £5,500,000.


said, there was one point to which he trusted the Government would give attention, and that was the question of how to construct harbours. The late Government proposed to lay out a large sum on Dover on the plea that it was one of the military or refuge harbours which the country required. The Conservative Government had the good sense to submit the project to an examination by a Select Committee. On their Report, which practically condemned the plans proposed, the present Government abandoned the defective project; and for this, it seemed to him, the Conservative Government was en- titled to credit. But the rejection of a defective project was no sufficient reason for abstaining altogether from trying to provide harbours so much needed for our trade and fisheries. At the same time, he thought that great caution was needed in investing money in further attempts to provide harbours which proved failures. He agreed with the right hon. Member for Greenwich (Mr. Gladstone), that in 1861 there was a proposal to spend £12,000,000 on harbours of refuge, and that it was wise, on the part of the Government, to avoid all that expenditure until such time as the Government knew how to invest money with far better chances of success than hitherto. Since that time, millions had been laid out on harbours, some of which had been entire failures. A Return which he had obtained showed that since the beginning of this century, nearly £10,000,000 had been spent on harbours, nearly the whole of which had proved worthless. These £10,000,000 were taken from the Exchequer. It was a knowledge of these remarkable failures which led to the Government of Lord Palmerston passing the Act known as the Passing Tolls Act, to which the right hon. Gentleman the Member for Greenwich referred. No doubt, this Harbour Act of 1861 did substitute for Government money the payment by localities, conditional, however, on loans being made in aid of local funds for the construction of these harbours. These loans were to be made by the Public Works Loan Commissioners out of funds provided by Parliament, and at low rates of interest; but he submitted that the Chancellor of the Exchequer was perfectly well aware that these advances had not been made with judgment, and that from a number of these harbours not one penny of the money advanced by the Public Works Loan Commissioners could possibly be recovered. This was entirely traceable to the defect in the plans, and to other avoidable blunders. That was no reason why money should not be advanced on account of harbours; but it was a reason why the Government should see that the transactions were done in a proper manner, and that competent engineers should plan the works. Local authorities should not be allowed to borrow money to spend in any manner a local engineer might advise; and, in permitting that, he must say the several Governments in power since the Act was passed in 1861 had not acted with caution. Therefore, before they granted any more money, they should see that it would be expended in a proper manner. But here, again, there was a defective exercise of judgment on the part of the Loan Commissioners in not aiding those projects which proved a success. In the Tyne, where nearly £3,000,000 had been spent, additional expenditure was required to complete the work there, and they had found great difficulty in getting the money. This was a work of great national importance. It had already provided a refuge for vessels of the largest size; it had greatly extended the trade and benefited the people. In spite of all these results, the work was not aided as it deserved. One of the greatest safeguards against the improper expenditure of money was publicity. Encouragement ought to be given, in every way, to the proper publication of loans by the Public Works Loan Commissioners, and for what purposes the money so lent had been applied, and with what result. He had been told that that would involve expense; but it seemed to him that very little money would be required to show what loans were made and what interest was paid, and for what purposes expended. In that way, thousands and thousands of pounds might be saved—because, with the natural habit of our people, the defects and shortcomings in respect to the employment of the funds, would inevitably be exposed by the many public-spirited people who are, happily, to be found in all parts of the Kingdom. He was persuaded that if this information were given, and people of different localities could see what loans were advanced for different purposes, simply at a cost of £200 or £300, much waste would be prevented. Would the Wigan church rate case, have taken place if proper publication had been given to the loan? That loss alone would pay for 30 or 40 years for the whole of the publication of accounts.


agreed with the hon. Members for Maidstone (Sir John Lubbock) and Sheffield (Mr. Mundella) that intoxicating liquors were a fit subject for taxation, and that it might be desirable on occasion to increase the duties on them, but not in the manner that had been recommended. He observed, from a Return recently laid on the Table, that duty to the amount of £7,939,099 had been paid on 58,543,252 bushels of malt during the year 1877. Now, assuming that the whole of that quantity had been converted into beer, and that it yielded in that form at least one and a-half proof gallons of proof spirit per bushel—a very moderate calculation—it followed that 87,814,878 gallons of spirit had paid duty at the rate of little more than 1s.d. per gallon, whilst other spirit paid more than five times as much—British spirit being charged at 10s., foreign at 10s. 5d., and that from British Colonies at 10s. 2d. If, therefore, the spirit duties were equalized, by raising the amount charged on that contained in beer, there would be a gain to the Revenue amounting to more than £36,000,000 per annum. He was aware the Government might say that if they interfered with the poor man's beer they would never hear the last of it; but the same argument applied, certainly in a less degree, to the rich man's wine. Wine paying the 1s. duty contained, on an average, 18 per cent of proof spirit, so that 100 gallons, at the rate for other spirits, should pay at least £9, whereas it only paid £5; similarly, wine at the 2s. 6d. duty, which contained about 35 per cent of proof spirit, should pay £17 10s. per 100 gallons, whereas it only paid £12 10s., showing a total loss on the quantity cleared of about £1,000,000 per annum. He did not wish to urge that the duties on either wine or beer should be raised to the full extent at once, but merely to point out the existence of a vast source of Revenue that his right hon. Friend might well deal with in the event of need arising for increased taxation in future.


merely wished to call attention to the proposal to put 4d. per lb on manufactured tobacco, and 4d. per lb on un manufactured tobacco. If the Government found it necessary to increase the duty on tobacco for the purposes of Revenue, it should have been 8d. per lb on the manufactured article; because he could understand that in that way the Revenue would derive the benefit. But, as it stood, the increase of 4d. per lb on manufactured tobacco would have this effect—the poor man would pay 4d. an ounce. The tobacconist would put on halfpenny an ounce, and in that way he would derive a farthing advantage from the poor consumer. On consideration, he trusted the Chancellor of the Exchequer would see whether he could not derive a larger sum for the Revenue by putting 8d. per lb on manufactured tobacco.


said, there was no occasion to go into a discussion that night on the Budget. The right hon. Gentleman the Chancellor of the Exchequer had not been able to produce this year such a prodigy as was produced last year—namely, a Budget of equilibrium, where there was no excess either the one way or the other. That occurred only once in a generation. The last time was more than 30 years ago. He could congratulate the right hon. Gentleman on the actual Revenue of 1877–8 having exceeded the estimated Revenue by £617,000. He could also congratulate him on the Revenue of 1877–8 having exceeded that of 1876–7 by a considerable amount. The growth of the Revenue in the year was £1,198,000, instead of £455,000, as the right hon. Gentleman estimated. But if he looked to the cause of the growth, it was not altogether so satisfactory. The Excise loss was greater than was estimated, notwithstanding that a general apprehension of increased taxation had drawn into the year just closed much Excise and Custom Revenue that properly would have stood over to next year. It would be well if the right hon. Gentleman would tell them on what class of Stamps the increase had taken place. The right hon. Gentleman knew very well that Stamps embraced a very miscellaneous amount of receipts, and it would be interesting to know to which of them the unexpected growth of Revenue was due. A good deal of the increase, he found, was due to Miscellaneous Receipts, and included £126,000 profits of the Post Office Savings Banks, which were added to Revenue account at the close of last Session; but against that, a corresponding amount of deficiency arising from the old Savings Banks and the Friendly Societies should be set. The most satisfactory amount of growth was in the Income Tax—and it was to that the Chancellor of the Exchequer had addressed himself, in the main, to provide for increase of taxation in the coming year. There was one matter on which he could not congratulate the Chancellor of the Exchequer. He had not been able to keep the Expenditure within the Budget Estimates. The excess of actual Expenditure over the Estimate in the Budget—setting apart the Vote of Credit—was £109,000. Well, the fact remained that here was one more Budget which showed that the Chancellor of the Exchequer was not able to control the expenditure of the Departments so as to bring the actual expenditure within the Budget Estimate. The right hon. Gentleman had again had his usual misfortune—he had been overwhelmed by the large amount of Supplementary Estimates. That was a matter to which he called attention last year, and to which he must call attention again this year. A large amount of Supplementary Estimates was a defect in finance. It was an indication of want of care and accuracy in framing the original Estimates for the year, and it was also an indication of want of firmness on the part of the Treasury. The Supplementary Estimates of this year amounted in all to £913,000. Deducting the Savings Banks and Friendly Societies deficit charges, the Supplementary Estimates for the year had considerably exceeded £700,000; and, in connection with this, he should like to ask the attention of the Committee to a Return in regard to Supplementary Estimates which the Chancellor of the Exchequer, on his Motion, placed on the Table of the House last year; because it showed how the Supplementary Estimates had grown under the right hon. Gentleman the Chancellor of the Exchequer. He would exclude from consideration the year 1873–4, because that was the year in which the Government was changed, and the Liberal Government were responsible for the Estimates in the greater part of the year. The present Government came into Office at the close of the year, and had only the last two months—two important months—in which the finances of the year were wound up. Therefore, he excluded that year, and would only take the last four years during which a Liberal Government was in Office, and exclusively responsible for the finances. In those four years, the Supplementary Estimates amounted, on an average, to something over £500,000; and in the four years for which the Conservatives were exclusively responsible to over £1,000,000. In the year 1874–5, the Supplementary Estimates of the Conservative Government had been £1,528,000; in 1875–6, £1,144,000; in 1876–7, £1,127,000, and in 1877–8, £913,000. The right hon. Gentleman proposed to meet the deficit chiefly by an increase of the Income Tax. He could not refrain from again expressing his regret at the step which the right hon. Gentleman had taken in 1876 in making such very large exemptions and abatements in the payment of that tax. It was not consistent with sound finance to undermine so much a tax which, in the main, must be the tax to be relied on in an emergency. He was afraid it was in vain to ask what number of persons had been exempted under Schedules A, B, and C. But, from a Report of the Inland Revenue, it appeared that under D and E the number who paid the tax in the year 1876–7 had been only 585,000—whereas it had in 1875–6 been 789,000—and that there would have been 40,000 more chargeable under those Schedules last year; so that 244,000 persons, or 30 per cent, who would have been liable, had gone scot-free. He did not know the loss caused to the Revenue by the abatement of £120 on all incomes under £400. But there was also the greater political objection of making Income Tax, as it were, a charge on a comparatively limited number of persons. If it was to be a tax voted by the many, and paid by comparatively few, they lost a great and valuable check on an unnecessary increase of taxation. As to the tobacco duty, he would only presume that the right hon. Gentleman had consulted with the best authorities as to the possibility of an increase of smuggling. The duty on a pound of common tobacco, worth 8d., was now 3s. 2d., or about 500 per cent, and tobacco in general was not only a very highly-taxed, but an easily smuggled commodity.


could not join in the criticism on the right hon. Gentleman the Chancellor of the Exchequer, because, at the end of a twelvemonth, the Revenue and Expenditure did not precisely agree with his Estimate. All that he professed to do was to make the best Estimate he could, and the result of that operation he thought satisfactory. He thanked the right hon. Gentleman for the concession as to the Inhabited House Duty, a matter he (Mr. Hubbard) had long been interested in on behalf of his constituents in the City of London. He regretted the increase in the Income Tax, because it threw an undue proportion of taxation on particular classes, and because the right hon. Gentleman had not indicated the result of an inquiry he had undertaken whether any mitigation could be introduced of the inequalities of the Tax. The right hon. Gentleman had said, in introducing his Sinking Fund arrangement, that it would be in the power of the House at any time to suspend or qualify that arrangement. Here, then, was an occasion for doing so. He could not reconcile to himself the amount of taxation raised to pay off the National Debt at the rate of more than £5,000,000 a-year, by a process of taxation, which was driving honesty and truth out of the country. Nothing could justify a Minister in imposing year after year a system of taxation so demoralizing and oppressive.


explained that the average of the Supplementary Estimates during the four last years for which the Liberal Party were responsible had been £527,000, and of the Conservative four years, £1,253,000.


said, he would only trouble them for a few moments on two points. The first had reference to the very important subject to which his hon. Friend the senior Member for South Durham (Mr. Pease) had alluded—namely, that of loans to harbour authorities under the provisions of the Harbours and Passing Tolls Acts. He earnestly hoped that the right hon. Gentleman the Chancellor of the Exchequer would, when he gave the subject the further consideration he had promised, in connection with the larger question of loans to local authorities, find himself able to adopt the suggestion that had been made to him by his hon. Friend, and extend the provisions of the Harbours and Passing Tolls Acts to existing loans of public harbour authorities, instead of confining advances, as at present, to loans for new works to be hereafter executed. He gathered that the loans already made to harbour authorities, for harbour purposes only amounted to about £900,000; whilst the loans to other local authorities under an extension of the system of granting loans by Public Works Loan Commissioners, inaugurated under the Harbours and Passing Tolls Acts, amounted, he gathered, to almost £20,000,000. A very few additional millions advanced to public harbour authorities would enable them to discharge all their loans at high rates of interest, and to devote their funds more extensively to harbour improvements. His hon. and gallant Friend the Member for Kincardineshire had referred to losses incurred through loans to harbour authorities; but these loans must have been made before the passing of the recent Act, as, under its provisions, loans could only be made to existing public harbours after a full and searching inquiry by a competent engineer, nominated by the Board, as to the utility of the works, the sufficiency of the estimates, and other matters of that kind; whilst, as regarded financial considerations, the most careful investigation was made by the Public Works Loan Commissioners into the financial position of the borrowers, and no loan whatever was granted until the Commissioners were thoroughly satisfied that the revenue was amply sufficient to protect the public from loss. In short, the loans were confined to public harbours, the solvency of which was proved to the entire satisfaction of the Public Works Loan Commissioners. The other point to which the hon. Member wished to refer was one that the right hon. Gentleman the Chancellor of the Exchequer had not referred to in his luminous exposition of the financial affairs of the country, nor had it been touched upon during the debate. The right hon. Gentleman the Member for Greenwich (Mr. Gladstone) had, during the period when he controlled the National Finance, swept away an immense number of anomalous taxes and charges, and very materially simplified their fiscal system; but the duties, to which he was about to call attention, had been left untouched and their anomalies continued, and were, in his opinion, indefensible. He referred to the duties on probates and administrations, and to the legacy duties. In the first place, the probate and administrative duties were dissimilar, the duty upon administrations being 50 per cent more than that upon probates. For this anomaly no good reason that he was aware of could be assigned. Then, following upon these duties, came the legacy duties, assessed at various rates, varying from 1 to 10 per cent—another anomaly which, in his opinion, ought to be removed. These duplicate charges—for such they were upon what might be termed the succession to personal, as distinguished from real, property—were a most prolific source of vexation, annoyance, and expense, as every hon. Member must, from his personal experience, well know; and this wholly irrespective of the amount of the duties themselves. All this ought, in his (Mr. Dodds') opinion, to be swept away, and a combined and uniform rate of duty substituted. He hoped to have an early opportunity of calling the attention of Parliament more fully to this very important subject, and he should not now trouble the Committee with any lengthy details. He would simply mention what his suggestions were, in the hope that the right hon. Gentleman would take them into his consideration, and make them available on some future occasion. He proposed, in the first place, to abolish the distinction between the stamp duty on probates of wills and letters of administration, and to do away with the anomaly of imposing an additional tax upon a man who left the law to distribute his property instead of distributing it himself by his will. The anomaly ought, he thought, to be put an end to, and the same stamp duty charged upon both documents. Then, he would abolish the various differential rates of legacy duty; and, finally, he would combine the two duties, and levy one uniform advalorem rate upon all successions to personal property. He found that in 1877 legacy duty was paid upon property amounting to £115,000,000, and the sum realized was over £2,846,000, whilst during the same period probate duty was paid upon about £125,000,000 sterling, and yielded about £2,200,000. The aggregate amount of duty derived from these two sources—namely, stamps upon probates, letters of administration, and testamentary inventories and legacy duty was, therefore, about £5,000,000. A uniform charge of 4 per cent would yield somewhat more than this sum, and its uniformity and certainty would increase this amount considerably, and thus greatly benefit the Public Exchequer, whilst it would remove anomalies which were productive of the greatest possible vexation and expense to all who were liable to account for these duties. He would not detain the Committee further, but would earnestly commend these two important matters to the favourable consideration of the right hon. Gentleman and of the Committee.


remarked that if the operations of the scheme for the payment of the National Debt were to be suspended for a year, there would be no necessity for imposing increased taxation upon the country. Under the name of asking for a war tax, the Chancellor of the Exchequer was in reality asking the people to pay an additional tax for the purpose of paying off the National Debt. He thought that the proposal of the Chancellor of the Exchequer to throw five-sixths of the additional burden of taxation upon the payers of the Income Tax, leaving only one-sixth of it to be borne by the country generally, was an unfair one, and one which was not desired by the masses, who would not object to bear their fair share of taxation.


said, that the whole nation would hear with joy the strong and vigorous language in which the right hon. Gentleman the Member for the City of London (Mr. Hubbard) had denounced what he had truly designated "the iniquitous Income Tax." The right hon. Gentleman was a high authority—higher could not be—on finance, and he had profoundly studied the subject. He had felt it his duty to declare openly in that House that the Income Tax Act was "eating away the honesty of the country." This was a terrible statement, and the worst of it was that it was true; for the right hon. Gentleman had spoken of it as a fact within his own knowledge and experience. That being so, how much was it to be lamented that the Chancellor of the Exchequer not only retained, but even increased this odious impost! He might have avoided doing so by reducing the public expenditure, which was in many things extravagant, and in nothing more so than in maintaining Royal Palaces and Parks for those who were well able to maintain them themselves. The right hon. Gentleman was also expending £5,000,000 a-year in paying off the National Debt. This was hardly wise; for if we could reduce the National Debt to £20,000,000 or £30,000,000 only, instead of the £750,000,000 which it was, we should be simply enabling those who came after us to plunge into the same extravagant and costly wars as those had done who came before us, and for whose folly we were now paying. To apply this £5,000,000 a-year to the public service would be, he thought, wiser than to squander it in this apparent reduction of our burdens; and it would be more appreciated by those who groaned under the Income Tax. He was grieved to hear the right hon. Member for Chester (Mr. Dodson) express his sorrow that the Income Tax did not embrace a larger area of victims to it; and he wondered what the "Liberals" throughout the nation would think of this doctrine, coming from the front Opposition bench by one of the Liberal champions, who felt so much, as they always proclaimed, for the poverty and suffering of the middle and humbler classes. Many of these would be inclined to think that the Budget was framed in the interests of the rich rather than with consideration for the poor. More especially would they do so if the right hon. Gentleman the Chancellor of the Exchequer were to listen to the appeal of the hon. Baronet (Sir John Lubbock), who had adjured him to impose no taxes whatever on those who kept packs of hounds. He, on the contrary, instead of sharing in that sentiment, would be glad if the present tax on hounds were doubled; those who enjoyed such costly luxuries ought to pay for that enjoyment, as they could well afford to do. He joined the hon. Member for Sheffield (Mr. Mundella), and those other hon. Members who followed him, in lamenting that the Chancellor of the Exchequer had not increased the duty on spirits. He might do so without the least fear of that smuggling which seemed to be before the eyes, and in some sort to disturb the rest, of the hon. Member for Greenwich (Mr. Boord). The progress of temperance was on the increase and advance among the best elements in this country; and the right hon. Gentleman the Chancellor of the Exchequer would have had an increase of popularity among the most valuable members of the community if he had discouraged the consumption of spirits by an augmented duty. He thought also that the Chancellor of the Exchequer would have done well if he had reduced the cost of telegrams from ls. to 6d. Many persons were now deterred by the higher price from using the Telegraphic Department who would not scruple to do so if the tariff were lower. He fancied that, as in the penny postage scheme, so far from the revenue in telegrams suffering by this reduction, it would be in a short time doubled. As to tobacco, he did not much approve of an increased duty. Many persons thought that tobacco was used by the poorer classes as a luxury. He believed rather that it was used in numerous instances as a stay of the pangs of hunger by those who could not afford to buy sufficient food. Upon such, therefore—the very poor—this additional duty would be severely felt. But while taxing this poor man's solace, the Chancellor of the Exchequer had not in the least burdened the rich man's pleasure. Why did he not put a 1s. stamp upon every bottle of champagne drunk? He calculated that there were at least 100,000,000 bottles of what was called and sold as champagne consumed every year in the United Kingdom. This, if taxed with a Government 1s. stamp, would produce a large revenue, and it would fall on those who were well able to pay. Champagne was a wine mostly consumed by very foolish, or very wealthy persons; and he owned he had no such sympathy with either as to relieve them from taxation for their enjoyment while the poor man's pipe was saddled with a new impost.


said, he had very great pleasure in rising upon that occasion to express thanks, on behalf of the community he represented, to the Chancellor of the Exchequer for conceding the principle that in the assessment of Income Tax there should be a recognition of the depreciation of machinery. It was a matter which he had always taken great interest in, and only that morning he had received from a large body of his constituents a strong representation upon the subject, and urging him to bring the matter upon this occasion before the notice of the right hon. Gentleman the Chancellor of the Exchequer. While touching upon this subject, he ought also to say that this concession would be a matter of great satisfaction to his hon. Friend and Colleague the junior Member for Old- ham (Mr. Hibbert), who last year brought this question under the notice of the House. He should like to put one question with regard to the Railway Passenger Duty. He was not sanguine enough to expect the slightest assistance with regard to the remission of that duty; but the question he was going to ask was, What was the amount which had been derived from that impost during the course of the year which had just ended? And, while upon that subject, he might venture to say that he had been, in common, he believed, with many Members of the Committee which sat upon that subject, very much disappointed that no action had been taken with regard to that which was so strongly proved before the Committee and reported upon—namely, the illegal manner in which the Railway Passenger Duty was levied. That did not simply rest upon the assertion of Railway Companies or of Members who took an interest in the matter, for it might be remembered that several officials belonging to the Government were called before that Committee and gave the strongest testimony as to the illegality of the course now being pursued. He hoped, if that matter could not be dealt with during the present Session, that it would be considered in the next. As regarded the extra duty proposed to be put on dogs, that was a matter on which he looked with a great deal of satisfaction. He had, as Chairman of the Petty Sessions in the neighbourhood in which he resided, had the matter under his consideration, and he was sure that everything which diminished the number of stray dogs was really an additional comfort to the people. As to the increase in the Income Tax, he could not but think that the Chancellor of the Exchequer had taken the right course in obtaining the greater part of the Revenue he required from that tax, especially under the circumstances which now existed, when that tax did not press so heavily as it once did upon the more humble and poorer classes of the community. He hoped that, considering the great amount of additional security which had been provided for the country by the judicious expenditure—for he believed it had been judicious—of money raised by the Vote of Credit, the extra taxes would be cheerfully and readily paid by all classes. As to the tobacco duty, he owned that he did not feel himself competent to speak very much on the question as to whether the charge should be made on tobacco or spirits, for he indulged in neither. Therefore, he was very impartial; but he was afraid that in some cases the tax would fall a little heavy on certain poor people, especially among the agricultural labourers, who, eschewing both spirits and beer, indulged in a pipe after working hours. However, he supposed they must bear their share of taxation with the rest of the community; and he could not help thinking, on the whole, that this Budget, considering the extraordinary circumstances under which it was made, would give satisfaction to the whole Kingdom.


said, he sympathized with the hon. Member for Maidstone (Sir John Lubbock) when he said he should like the whole deficit to be paid by taxation in the present year; but Chancellors of the Exchequer were but human, and they could hardly expect any Chancellor of the Exchequer to bring the virtue of self-denial to the point that the hon. Member for Maid-stone desired. He (Sir George Campbell) was content to say, looking at the various circumstances of the case, that the Budget was a just, equitable, and fair mode of meeting the difficulty. In his opinion, the Chancellor of the Exchequer had exercised a wise discretion in the mode in which he had apportioned the taxation. He thought the Income Tax was a fair tax on which to make an increase; and he considered that the Chancellor of the Exchequer had rightly made that increase. It was right, also, to put increase of taxation on those influential classes by whom the warlike feeling was chiefly promoted in the country. The readers of The Pall Mall Gazette and The Daily Telegraph were, no doubt, payers of Income Tax; and he was glad, by this addition to it, they would be reminded as to the results of the policy which they had adopted. But they knew that the desire for a spirited foreign policy was not wholly confined to the payers of Income Tax; and he thought it right that other classes should have a gentle reminder of the fact that to carry out such a policy meant that they must pay for it, and that by an increased duty on tobacco. He earnestly asked the Chancellor of the Exchequer not to yield to the suggestions of hon. Members to further tax spirits, seeing the difference already existing between the dues paid on spirits, such as Scotch whiskey and English beer. The tax on whiskey, in proportion to the amount of alcohol which it contained, was actually six times as heavy as the tax on beer, or was, at all events, enormously heavier. He was inclined to believe, with the great majority of medical men, that when alcohol was consumed it was better to take it in the shape of a little whiskey and water than of the beer which was so largely drunk in England, though he agreed with his hon. Friend the Member for Carlisle (Sir Wilfrid Lawson), that it would be still better not to take it at all. It appeared to him, that the state of beeriness in which both both men and some women so habitually lived in England was a great deal worse than any occasional excess which occurred in the drinking of whiskey in Scotland. In Scotland, a considerable portion of the population lived from month to month the life of Arcadians, drinking nothing but water; and, if once or twice a-year they did get drunk on the occasion of some hiring market, that, he thought, was not half so great an evil as the constant "boosiness" in which Englishmen indulged in consequence of the facilities which were open to them for drinking beer. He wished, in the next place, to say a few words on another subject, in respect to which he was happy to say the Chancellor of the Exchequer had done an act of long-deferred justice to Scotland—he referred to the proposed remission of the tax on collie dogs. ["No!"] Yes; the right hon. Gentleman had stated that the shepherd's collie dog—that was to say, the poor man's dog—was to be exempted from taxation; and although some hon. Members seemed to think that proposal was wrong, he, personally,, had taken a very different view of the subject since the occasion on which he had canvassed the electors of a Scotch county in the Highlands some 10 years ago. He then happened to attend a meeting, at which he made a speech touching on foreign affairs and a great variety of other questions, without having been able to move, in the slightest degree, the feelings of his audience. Before he concluded, however, somebody having mentioned the point to him, he told the meeting he had something to say with regard to collie dogs. The announcement was greeted with a roar of applause, and he at last found out what was the particular subject in which the meeting seemed to take the greatest interest. The proposal of the Chancellor of the Exchequer with respect to it was, in his opinion, a great act of justice, and would be fully appreciated by the people of Scotland; but how far it was right to make the exemption by means of placing additional taxation on other descriptions of dogs he was not prepared to say. It was, no doubt, wise to have some sort of tax upon dogs for the purpose of registration; but whether it was well to levy a tax on the poor man's pet he was not sure. But he was happy to be able to bear testimony to the equity, prudence, and boldness of the Budget, and he would not at this moment cavil with the Chancellor of the Exchequer about so small a matter as the increase of the taxation on dogs. Before he resumed his seat, he desired to make a few remarks on the subject of local taxation. That was a subject on which he had constantly had occasion to exercise his mind in another country, and since he returned to England he had sat on Committees of that House, and was now a Member of one whose investigations bore on the question. It had also come under his notice last year that, especially from Scotland, a number of measures for the purpose of effecting local improvements were brought before the House, there being no less than three borough Water Bills from his constituency. Now, he was very much opposed to the increases of debt, and to the throwing on posterity additional burdens; but he knew, from experience of the case of the borough of Kirkcaldy—that the raising of local loans, such as those to which he was referring, was a great advantage when the funds were prudently administered, as he believed they were in Scotland. Though, therefore, he wished to resist any extravagance with respect to the granting of local loans, he did not think it would be wise to check their prudent application. He was of opinion that the interest charged on those loans should be such as not only to recoup the Exchequer, but also to cover any possible losses in regard to their repayment. There was, however, a great deal of trouble and expense attending the promotion of Private Bills for the purposes of improvement loans, and much was left to chance, and to the views which might be taken by a particular Committee, as to whether those Bills were successful or not. Although there were some objections to the State becoming a public money-lender, yet those who came to the State for loans were subjected to a scrutiny from the Local Government Board, which checked extravagance, and, in some degree, enforced economical and prudent expenditure. While, therefore, he recognized the justice of the remarks which had been made by the Chancellor of the Exchequer on the subject, he would venture to express a hope that he would not be too hard on small bodies who made application for local loans, so as to prevent small boroughs, such as that which he had the honour to represent, from obtaining the money which they wanted to carry out really useful works, without the expense and labour which attended the promotion of Private Bills.


I wish to make one or two remarks on the proposals of the Chancellor of the Exchequer; but, of course, not with the view of debating the main propositions which he has laid before us, the discussion of which may very well be deferred to another day. I would, in the first place, say a few words on a subject which has been adverted to by the hon. Gentleman who has just sat down, and the hon. Member for Greenwich (Mr. Boord). I mean the disproportion between the duty levied on spirits and that which is levied on beer. No doubt, if you take the quantity of alcohol in spirits, you will find that it is taxed much more heavily than the alcohol in beer; but what, I would ask, do those hon. Members who complain of that disproportion, propose to do to remedy it? Is any one of them prepared to say that the duty on beer should be doubled, or that the duty on spirits should be diminished by one-half? I think the hon. Member for Greenwich would soon discover, if he were to propose an increase in the Malt Tax, that his proposal would be almost overwhelmed by the opposition which it would create; while the whole House, with very few exceptions, would resist any Motion which might be made for a large reduction of the duty on spirits. If you diminish the tax on spirits by one-half, you will cause an immediate loss to the Revenue of £10,000,000 or £12,000,000 a-year. [Mr. BOORD said, he did not propose the reduction of the spirit duties.] I was asking, not the hon. Gentleman only, but all who complain of this disproportion, whether they proposed to reduce the duty on spirits?—and I would remind them that if £10,000,000 or £12,000,000 of Revenue are sacrificed, the ingenuity of the Chancellor of the Exchequer would, I am afraid, be very severely taxed in trying to find a substitute for so large an amount. Fivepence in the pound in the shape of Income Tax is hard enough; but to have to impose an 11d. Income Tax, in order to adjust the duties on alcohol, would frighten the most courageous Chancellor of the Exchequer. But, be that as it may, my chief object in rising was to ask one or two Questions of the right hon. Gentleman, premising that under the special circumstances of the case the Committee will, I am sure, agree with me that nothing could be clearer than the statement which he made this evening, and that no one could have placed his proposals before us in a more satisfactory way. The first remark I would make has reference to what fell from my right hon. Friend the Member for Chester (Mr. Dodson), who said that we have now another instance of the Expenditure of the year exceeding the Budget Estimate. That may be regarded as a small matter; but it has been for many years a rule of finance that the Expenditure ought to be kept within the Budget Estimate. Now, it so happens that, only once during the time of the late Government, was the Estimate exceeded by the actual Expenditure; but I am afraid there is not a single year in which the Expenditure has not exceeded the Budget Estimate since my right hon. Friend the Chancellor of the Exchequer has occupied his present position as Finance Minister. My right hon. Friend, I have no doubt, regrets as much as any Member of the House, that that should be so, and I think the House ought to support him in insisting that the various public Departments should so regulate their expenditure that the Estimate should not be exceeded. I would, in the next place, like to say a word as to the outcome of the Revenue during the last year. My right hon. Friend says it is quite true that, in the case of each of the last three Budgets, we on this side of the House have questioned the soundness of his Estimate, and that this year, as in former years, the total Revenue has exceeded that which the Government anticipated. Well, those two statements are perfectly correct; but it must be borne in mind that the only two items of Revenue which independent Members who are not behind the scenes can really question are the Customs and Excise; and last year several hon. Members, as well as myself, did question, so far as the information at our disposal enabled us, whether the Chancellor of the Exchequer was not too sanguine as to those items. He will recollect that on two previous occasions we were right in the view which we took, and this is now the third time in which the Customs and Excise Revenue have fallen below my right hon. Friend's. Estimate. It is very true that the items were better than those shown in the original Budget; but, candidly enough, the Chancellor of the Exchequer informed the Committee that he received from the Customs and Excise, within the last few days, a considerable amount of Revenue which, properly speaking, belongs to the year 1878–9. He mentioned the sum of £350,000 as the amount which has been thus anticipated and brought into the Revenue of 1877–8. Now, the Customs and Excise duties have exceeded the Estimate of the Chancellor of the Exchequer by some £83,000— the Customs Revenue being £119,000 more than the Chancellor of the Exchequer expected to receive, and the Excise £36,000 less; and if the right hon. Gentleman received £350,000 which really belonged to the present year, the result was that the Revenue from Customs and Excise had fallen short of the Estimate by £266,000 or £267,000—a considerable amount, and justifying, in my opinion, the caution with which we recommended him to proceed in estimating those two sources of Revenue. The next point to which I wish to call the attention of the Committee is that it has been the invariable custom, on all these occasions, so long as I can remember—and certainly it has been the Chancellor of the Exchequer's own practice— to state the amount of the Debt and the public balances at the end of the financial year, showing to what extent the National Debt was being paid off. This statement has, owing, no doubt, to some accident, been omitted on the present occasion. I do not blame the Chancellor of the Exchequer for the omission, considering the amount of details which he has felt constrained to give us on other points. This, however, is a year in which it is very desirable we should know what has been done towards the reduction of the Debt; for I observe that, during the last quarter, the amount of Debt raised in excess of the amount paid off was no less than £5,500,000— the exact figures given in the Gazette Return being £8,799,000 of Debt raised, and £3,472,000 of Debt paid off, showing a net increase of Debt for the quarter of £5,547,000. What I should like to know is, how the Debt stood on the 1st of April? I rather suspect that the Funded and Unfunded Debt and the Terminable Annuities stood very much at the same figure as on the 1st of April, 1874. The Chancellor of the Exchequer also referred to the local loans, and to the extent to which the necessity for providing for them had pressed on the financial arrangements of the Treasury. Now, all that he said on that subject may be very true; but, remembering, as I do, the debates which took place in 1874, 1875, and 1876, I am bound to remind my right hon. Friend that great credit was taken by the Government for the advantages which they proposed to confer on local institutions by enabling them to borrow money on easier terms. If it has turned out that the amount of those loans has been too great, then they had better reduce it, for the total annual amount is settled by Government and need not be exceeded. At a time when the Metropolitan Board of Works can borrow in the open market at the rate of 3½ per cent, I cannot see the necessity of looking so much to the Exchequer as the great lending institution. I should wish, also, to make a remark about the Expenditure charged on the Vote of Credit. Only the other day, some of us ventured to say that it was impossible to spend the £6,000,000 for which we were asked during the remainder of the financial year. For making that statement we were rebuked. We were told that £6,000,000 was the sum expected to be spent, and that any portion of it which was not spent would be repaid into the Exchequer. Well, no one can deny that the Government have shown the greatest possible activity in the matter of this Expenditure. The whole energy of the spending Departments has, during the last two months, been devoted to getting rid of the £6,000,000 as quickly as possible up to the very last hour; but, after all, only a little more than one-half has been expended, although enormous sums have been given for the purchase of iron-clad ships. There is another point which I want the Chancellor of the Exchequer to make quite clear—that is to say, whether, quite irrespective of any special Expenditure, the ordinary Revenue is not short of the ordinary Expenditure by £1,560,000? So that, if there had been no extraordinary Expenditure whatever, we should still have had another 1d. added to the Income Tax; so that the policy of the last four years has resulted in this—that after two years 1d. has been added to the Income Tax, that in other two years another 1d. has been added; in other words, that, leaving wars and rumours of wars out of the question, for the ordinary purposes of Government, 2d. has been added to meet increased Expenditure. Upon the proposed increase of taxation, I do not at present wish to make any remark. At another time the proposal to add 2d. to the Income Tax and 4d. per 1b. on ordinary tobacco will come before us, and be discussed at length; but there is one Question to which I should be glad to have an answer. Is it proposed to add only 4d. to the cigar duty? If so, I question whether justice will be done to the home manufacturer of cigars, as against the importer—a pound and a-half of tobacco being required for a pound of cigars. I will conclude by asking the Chancellor of the Exchequer when he proposes to take further debate on the subject? I would suggest that, after the necessary formal Resolutions, he report Progress to-day, take the Committee pro formâ to-morrow, and settle then when the proposals shall be discussed. I know it is important that certain Resolutions should be taken to-night for the protection of the Revenue; but I hope the House will then have a reasonable time to consider the statement generally.


did not rise for the purpose of adding anything to the able criticisms of the right hon. Member for Pontefract (Mr. Childers). Were he inclined to say anything in regard to the Budget, he would, perhaps, express his regret that the Chancellor of the Exchequer proposed an addition of 2d. to the Income Tax, instead of endeavouring to equalize direct and indirect taxation by adding to the duty on spirits. His purpose in rising now was to make a very modest request to his right hon. Friend the Chancellor of the Exchequer. He was good enough to listen to a request made by him (Mr. Monk) last year as to taking off a duty levied on institutions to benefices. There was still a duty imposed upon licences granted by Ecclesiastical Courts for improvements or additions made in churches or churchyards. The amount of duty was, probably, under £500;but, while it was so small, it was considered a great grievance by those who were called upon to pay it. Whenever any alteration was made in a church or churchyard it was necessary, according to the law confirmed by the Public Worship Regulation Act, that a faculty should be obtained from the Bishop of the diocese. These alterations were paid for by subscriptions raised among the congregations themselves, there being no fund out of which their cost could be defrayed. It was thought to be a grievance to have to pay even the small tax of 10s. on a faculty to obtain which additional fees and other payments were necessary. The abolition of this tax would be very pleasing to those connected with the Establishment.


joined in the congratulations offered to the Chancellor of the Exchequer by the hon. Member for. Kirkcaldy (Sir George Campbell) upon the Budget that had been laid before the Committee. In putting a Question that evening with regard to the Passenger Duty, he (Mr. M'Lagan) did not expect to get any different answer than that given to him. He was glad, however, to find that the question of repealing the Passenger Duty was still open, and that when times were better a diminution might be expected. Now that all other taxes on locomotion were abolished, it was a simple injustice that this tax should be continued. With regard to the Estimates, he, unlike some hon. Members, thought it better that Estimates should not be full than that they should. If they had full Esti- mates, the Expenditure was likely to come up to them; but when there was a short Estimate, there must be Supplementary Estimates, and the criticism to which such Supplementary Estimates were subjected constituted a sufficient check on Expenditure. He thanked the right hon. Baronet the Chancellor of the Exchequer for the exemption from the dog tax of shepherds' dogs; but he wished the dog tax had been increased to 10s. instead of to 7s. 6d. That, he believed, would have been more satisfactory to the country. He would like to know whether the exemption would extend to dogs employed by those in charge of cattle as well as by those in charge of sheep? If so, there would be a possibility of evasions of the law. He was sorry that still more duty had not been imposed on tobacco. The consumer would have to pay the whole of the tax put on; whereas, if it had been raised by 6d. or 8d., the dealers would not have had the same advantage over the consumers which they would have when a sum not so easy to divide was added to the duty. He was glad no additional duty had been laid on spirits, which were taxed sufficiently. He would not wish to see the tax reduced; but if a tax was to be laid on alcoholic liquors, it should be accompanied with more taxation on beer and wine, so as to put England, Scotland, and Ireland more upon a level with regard to their payments. The tax on wines from France, in particular, should be increased; because the French had shown that they did not appreciate the boon we had given them in admitting their produce to this country at a low rate.


thanked the Chancellor of the Exchequer for his Budget. He thought it excellent, and had no Amendment to suggest; but he wished to remark upon some suggestions made by some hon. Members on the Ministerial side of the House. The hon. and learned Member for Chatham (Mr. Gorst) maintained that it would have been better if the new taxation had been so proportioned that a larger part of it would have fallen on the working classes. Now, he (Mr. M'Laren) approved the Budget, because there was no special taxation of working men, who would have to pay only their share of the increased tobacco duty. The work- ing classes already paid far more than a fair share in proportion to their income of the taxation of the country. From a Parliamentary Paper issued that morning, it would be seen that the National Revenue from actual taxation last year was about £65,500,000. Another Return, issued recently, showed that the duties on spirits, malt, and tobacco, and the licences for selling these articles, came to £39,000,000. This sum did not include wine. This £39,000,000 was mainly paid by the working classes, as being by far the most numerous, and it was 60 per cent of the whole taxation of the country. He held, therefore, that the working classes paid a great deal more than their just proportion according to their income. Other hon. Members had said that additional duty might have been put upon spirits. That could not have been done without injustice, unless the whole question of the relative duty charged on spirits and beer had been taken into consideration, and the duties revised together. In all matters of taxation, a Chancellor of the Exchequer must naturally desire to treat equally every part of the United Kingdom. But the Chancellor of the Exchequer could not carry out this wish by adding to the spirit duty. Taking the quantity shown by the Inland Revenue Report to have been consumed last year, and assuming that 1s. would have been the amount of additional duty imposed, the effect would have been that Scotland would have had to pay £410,000. Under any equable adjustment, England being seven times as populous, and far more than seven times as wealthy, ought then to have paid seven times £410,000, or £2,870,000; but, under the present mode of adjustment, England would only have paid, upon a 1s. being added to the spirit duties, £1,334,000, because of the comparatively small quantity of alcohol consumed in the shape of whiskey in England, and of the large quantity consumed in the shape of beer, which was taxed to an infinitesimal extent as compared with whiskey. The man who took his ounce of alcohol with water paid six times as much taxation for it as the man who consumed a quantity of beer containing the same quantity of alcohol. No one who had studied the facts and figures of this subject could suggest an increase of taxation so unjust to Scotland. Since 1863 the duty on spirits had been raised six times; but, whatever the duty was, the consumption had continued to increase. It was useless, therefore, to attempt to check consumption, as had been suggested, by an increase of these duties. He was thoroughly statisfied that the Budget was a good one.


thanked the Chancellor of the Exchequer, on behalf of the shepherds and sheep-farmers of Perthshire, for the proposed exemption of their dogs from taxation, and hoped that the practical instructions issued would not unduly limit the expected boon, but would exempt as many dogs as were actually employed by them in tending sheep. He hoped that the right hon. Gentleman would not listen to the suggestion of the hon. Baronet the Member for Maidstone (Sir John Lubbock), that hounds should be exempted from the tax. They were kept not for business, but for pleasure, and there was no good reason why they should be exempted.


could not approve of the proposed increase in the tobacco duty, which would be seriously felt in Ireland. Besides, the working classes already paid more than their proportion of taxation. The reason that the tobacco tax would fall more heavily on Ireland than on England was that Ireland was not so wealthy, while smokers naturally consumed about the same amount of tobacco. He thought it fortunate that the spirit duty had not been raised, or the question adverted to, when some Irish Members were present; because many were prepared with good speeches and long ones, having plenty of statistics in them, to fire off at the Chancellor of the Exchequer. One hon. Gentleman told him he was prepared to speak for two hours; and, as he had recently spoken on a kindred subject for two hours and 50 minutes, he (Major Nolan) rather thought the hon. Gentleman would have kept his word. The whole argument against the imposition of an extra spirit duty was summed up in the conclusion arrived at from statistics by the hon. Member for Edinburgh (Mr. M'Laren), that anyone drinking spirits paid six times as much on alcohol as anyone paid who drank beer. It would be wrong to raise the tax on spirits without raising the tax on beer. The Chancellor of the Exchequer would see that the heavier the tax on incomes the greater became the importance of a question which he (Major Nolan) wished to bring forward when he had another opportunity—namely, the question of the abatement from that tax. He saw no reason why the abatement should cease to be allowed when incomes reached £400. The fair and mathematical proceeding would be to deduct the same sum from everybody's income before levying the tax, and at a future stage he thought he would divide the Committee upon this question. He was also in favour of an extension in the amount of the abatement, the result of which would be that the Exchequer would lose a large sum on very small incomes; but as small incomes paid proportionately more indirect taxation than large ones, the extension would be just. A man of large income could only consume about the same amount of Exciseable and Customs' commodities as the man of small income, so that the former did not suffer so much from indirect taxation, and ought to pay more direct taxation. This question would become very important if there should be a large War Income Tax. The men of small incomes would not care to pay an Income Tax of 1s. or 1s. 2d. He hoped the Chancellor of the Exchequer would not listen to suggestions to increase the spirit duties at any future time, and that he would not be so unjust as to put a heavy amount of taxation upon Scotland and Ireland in order to relieve the responsibility of England.


Before replying to the observations and criticisms that have been made upon my necessarily unpleasant Statement, I would thank the Committee for the attention with which that Statement was listened to. I can only say that I congratulate myself and the Committee also on the spirit in which the proposals have been received. Of course, I quite understand that in allowing the discussion to close this evening, those who have taken part in it in no way commit themselves to approval of the whole, or, indeed, of any part, of my Statement. They have only assented to the passing of the fiscal Resolutions, which could not be delayed without very great inconvenience; but which, of course, will be subject to be reversed if the House so thinks fit. What I propose is, that we should take to-night the Votes for the tea and tobacco duties, and then report Progress on the other Resolutions, for the discussion of which we can hereafter fix a day. There is some inconvenience, of course, in not passing the Income Tax Resolution at once; but we have faced that inconvenience before, and we must face it again for a few days. A good deal of discussion has gone on to-night upon proposals which have not been made. I will not enter into the merits of those proposals, except to say that I doubt whether an addition to the spirit duties would, as a financial operation, be successful, for there has been a continuous falling off in that source of Revenue, and it seems to me that the experience derived from various attempts at increasing the duty does not speak very much in its favour as a fiscal measure. As regards some of the arguments that have been brought forward, I would say of them that I do not think we ought to attempt to adjust our taxation upon theoretical or mathematical bases. It is perfectly impossible to make the taxation of this country so accurately and mathematically equal as some hon. Gentlemen seem to think. You could not take different kinds of strong drink—such as spirits, wines, and beer—and adjust your taxation in accordance with the precise quantity of alcohol in each. Neither do I think you could take the Income Tax and so adjust it as that it would bear with the same amount of pressure upon everybody. My right hon. Friend the Member for Pontefract (Mr. Childers) seems to think that as regards the duties on tobacco it would be unfair, while raising the duty on unmanufactured tobacco, not to raise it on cigars to a somewhat greater extent, so as to equalize the price of the article. That is not the principle upon which we proceed. If he looks into the matter, he will see that the tax is levied on the leaf as it comes into this country, and when it so comes it is either used in the form of leaf tobacco, is cut up into smoking tobacco, or is made into cigars. Some of the tobacco brought into this country is not brought in in the form of leaf at all, but in the form of ready made cigars. The object, then, is so to tax the foreign cigar as fairly to represent the cost of manufacture in this country. The scale of such taxation is that which was settled in 1863, after very careful consideration and long debates in this House, under the scheme of my right hon. Friend the Member for Greenwich (Mr. Gladstone), and which established a difference amounting, I think, to 1s. l0d. between the manufactured cigar and the unmanufactured leaf. If, therefore, you were to raise the duty on cigars to more than that amount above the duty on the unmanufactured article, you would do one of two things—you would either give protection to the British manufacturer against the foreign importer, or you must find some means of taxing him on the manufacture of his cigar after he has got the leaf. That would involve an inconvenient process; and, therefore, we propose, in order to avoid the inconvenience, to raise the tax by 4d. all round. An hon. Member has recommended us to raise it by 6d., because that would be a sum more easy of calculation; but 4d. per lb. represents ¼d. per ounce, and that, perhaps, is just as easily divisible as 6d. The right hon. Gentleman the Member for Chester (Mr. Dodson) has asked me what particular class of Stamps shows the largest amount of increase this year? The fact is, that there are very slight differences under all the different heads of Stamps. There are small improvements under the heads of Stamps for Legacy and Succession Duties, Labels, Bills of Exchange, and Bankers' Notes; and there is somewhat of a falling-off under the heads of Probate, Deeds, Receipts, Drafts, and other Instruments. But the changes are so slight, that I do not think there is any other inference to be drawn from them, than that the Revenue from Stamps has, on the whole, fairly kept up. My hon. and learned Friend the Member for Oldham (Mr. Serjeant Spinks) has asked me the amount received from Railway Passenger Duty this year; and my answer is that it was £750,000. Then my right hon. Friend the Member for Pontefract (Mr. Childers) wishes me to state to the Committee that which, in point of fact, I frankly stated before—namely, that, irrespective altogether of the extraordinary Expenditure caused by recent events, the Expenditure for the coming year will exceed the Estimated Income by a sum which would be covered by an addition of about 1d. in the pound to the Income Tax. I am sorry that this is so, and that I should have been brought under the lash of my right hon. Friends the Members for Greenwich and Pontefract. I have made my Statement in the way which I thought would be most clear to the Committee, and without wishing to conceal the fact that there was a deficit in the past year, and that there is a likelihood of a deficit in the coming year. I will not go into either excuse or justification—whichever you like to call it—of this increase in the Expenditure. To a very great extent, however, I may say that the increase has been, and is, due to legacies that have been left to us by our Predecessors—not legacies of which I wish to complain, but still legacies. The Education Act, for which they claim—and very justly claim—a great deal of credit, has been a very expensive measure to the country, and it is an expense which must, in the nature of things, go on increasing. I do not complain of this, because I think the Act is a very proper one to have passed. The Party opposite passed the Act and right hon. and hon. Gentlemen are never tired of claiming credit for it; but they must not blame us for carrying it out—when they have ordered the dinner, they ought not to complain of us who have to pay the bill. I might say the same of certain portions of our military expenditure. Many of the improvements which were made by the last Government have been heartily accepted by my right hon. Friend (Mr. Hardy); but, though excellent, they have been found to be of a very costly character. So it has been with other matters; and these remarks connect themselves with a subject on which some remarks were made by my right hon. Friend the Member for Greenwich at an earlier period of the evening. My right hon. Friend seemed to be rather hurt at my having mentioned the Harbour and Passing Tolls Acts as the commencement of the loan system for public works; but where, I would ask, is the further development of the system thus established to be found? Not in any measures of ours, but in measures passed by a Government of which my right hon. Friend was the head—I allude particularly to the Education Act, under which a system of local loans to school boards was set on foot. The greater part of the expense so created has been cast upon us. Then there are the Sanitary Acts, which established the same principle, and put upon us a large amount of expense. Then my right hon. Friend says—"You have done good service in calling attention to this matter, but why do you not do something more; why do you not attempt to check it?" The right hon. Gentleman the Member for Pontefract (Mr. Childers) again, says—"This is a matter on which we have been in the habit of taking a great deal of credit to ourselves." This may be so; but I venture to say that we are doing—and have been doing—all that we can in order to prevent the evils arising from that system. We have done more than one thing in this direction since we came into Office. We have, in the first place, instituted the principle of bringing in a local Budget, by means of a Bill, which gives an annual opportunity of discussing the system of local loans, instead of leaving the Treasury to lend money at discretion. Let me also remind the Committee—and through them the public—that we have passed an Act for the purpose of rendering it more easy for local authorities to borrow money independently of the Public Works Loan Commissioners. With regard to the question of the tax on dogs, I would request hon. Members to wait until they see the clauses of the Bill. I doubt whether we can profitably discuss it at present. Then there remains the Question of my right hon. Friend the Member for Pontefract, and his reminder that I have not stated the condition of the Debt. I believe the result of the year to be that the permanent Funded Debt on March 31, 1877, was £712,621,000, and in the past year there has been created for Telegraph Service an additional £314,000, making in all £712,935,000. In the course of the year, £1,166,000 have been cancelled by the new Sinking Fund; the old Sinking Fund was used to pay off advances of £48,000; Life Annuities, £723,000; Land Tax, £92,000; and the Judicature Act, £31,000, making a total of £2,068,000; so that the permanent Funded Debt on the 31st of March stood at £710,867,000, being an estimated decrease on the year of £1,753,000. Then with regard to Terminable Annuities, the estimated value on the 31st of March, 1877, in 3 per cent Stock was £49,308,000; and on the 31st of March, 1878, it was £46,328,000, or a decrease of £2,979,000. But when we come to the Unfunded Debt the case is different. The Exchequer Bills outstanding at the beginning of the year were £4,193,000, and new Bills were issued in the year for local works to the amount of £400,000, making a total of £4,593,000. Then there were Exchequer Bonds outstanding at the beginning of the year amounting to £7,550,000, less a portion of the Suez Canal Bonds paid off, £60,000, and new Bonds issued on account of the Vote of Credit £2,750,000, making up the amount of the Bonds outstanding on the 31st of March to £10,239,000. There were also Treasury Bills outstanding at the beginning of the year to the amount of £2,200,000, and new Bills amounting to £3,570,000; in all, £5,770,000. Therefore, the total amount of the Unfunded Debt at the end of the year was £20,603,000, against £13,943,800 at the beginning of the year, or an increase of £6,659,000; which is due, of course, mainly to the money borrowed on account of the Vote of Credit and for local loans. I may, making a comparison of the whole period during which the present Government has been in Office, state the Debt as follows:—In round figures, the Debt, when the Government came into Office, was £779,300,000, and the amount due from persons and public bodies to whom the Government had lent money was £15,300,000. This last amount may be described as assets; and, deducting them from the gross amount it leaves a net Debt of £764,000,000. On the 31st of March last the Debt was £777,800,000; but the amount due to the Government on the Suez Canal Shares, and from persons and bodies to whom money had been lent, was at the same date £30,800,000; so that the assets, so to speak, have doubled since the accession of the Government to Office. The net Debt, therefore, on the date I have mentioned was £747,000,000, as against £764,000,000 at the former date, making a diminution in the net amount of £17,000,000.


asked the Chancellor of the Exchequer whether the addition of 4d. per lb. to the duty on tobacco was on both manufactured and unmanufactured tobacco? [The CHANCELLOR of the EXCHEQUER: Yes.] It was rather an awkward thing to make the duty 5s. 7d. per lb., and he thought the retail dealer would take advantage of the odd figure and charge an even shilling. He also thought the rapid increase in the Income Tax, weighing heavily as it would upon persons with small fixed incomes, was a most dangerous experiment. He could see no valid reason why some addition might not have been made to the spirit duties; and he hoped the matter would be reconsidered before the taxation for the year was finally fixed.


regretted that successive Chancellors of the Exchequer had so framed their Budgets as that the largest part of the money taken from Ireland and Scotland for Imperial purposes was drawn from the very poorest of the people, instead of from the middle and upper classes, as was the case in England. Ireland contributed in taxes on articles of consumption and use a sum of £5,360,112, of which amount more than £4,500,000 was derived from the duties on spirits and tobacco, which were chiefly consumed by the very poorest of the people. It was said that whiskey was not more heavily taxed in Ireland and Scotland than in England; but it was forgotten that in those countries whiskey was the common beverage of the poor people, which was not the case in England. Everyone who had lived for a number of years in Ireland must have observed that whiskey as a beverage was natural to the climate, just as beer as a beverage was natural to the climate of England. Various circumstances attendant upon the poverty of the people in Ireland made them more prone to have recourse to the use of stimulants than if they were well-off and well-fed. Many a man suffering from the pangs of hunger, and having only a few pence in his pocket, thought he would acquire more temporary strength for the work he had to perform by purchasing a glass of whiskey than if he spent the same amount on bread. Undoubtedly, people who were miserable and badly-off would always seek consolation in the use of ardent spirits. Of course, he would be told that it was perfectly fair to levy such a tax on whiskey, as its incidence was the same in Scotland and England. The present Chancellor of the Exchequer was certainly not responsible for the original rise in the spirit duties. A former Chancellor of the Exchequer, seeing that he had a poor country to deal with in Ireland, and conscious that he could not hope to raise any Revenue worth speaking of, if contributed by the classes who furnished the principal portion of the Revenue in England, deliberately selected an article upon which he should be able to get a large increase of Revenue from the poorest classes. The taxation of spirits and tobacco was a monstrous imposition as regarded Ireland. The Revenue from all sources in that country amounted to about £7,500,000, and in England it reached £67,000,000. But in Ireland the Revenue contributed by the very poorest people was relatively very much greater than was contributed by the same class in England. It was only by taking advantage of the taste of the people of Ireland for stimulants and tobacco that they had been able to raise any Revenue in that country worth speaking of. He knew how Ireland could get out of English rule to a large extent. If Irishmen would only give up drinking whiskey, and so deprive the English Government of £5,500,000, the Government would conclude that it was not worth while retaining that country, and would let it try to govern itself. He did not, however, see any probability of a great diminution in the amount of spirits drunk in Ireland, although the Sale of Intoxicating Liquors on Sunday (Ireland) Bill might effect something in that direction. The broad fact still remained—that of the Revenue of £7,500,000 derived from Ireland, £4,500,000 was derived from the duties on spirits and tobacco—£3,500,000 being realized from spirits, and £1,000,000 from tobacco. The increase in the duty on tobacco was a matter which deserved the serious consideration of Irish Members. In the case of Ireland that tax would come out of the pockets of the very poorest people. A dozen other methods of taxation might have been devised by which the poorest classes in Ireland would not have been called upon for that undue amount of contribution. It was true they smoked a cheap kind of tobacco; but the incidence of this tax would fall equally upon all kinds of tobacco—cheap and dear. Thus the tax of 4d. per lb. would affect the poor man who smoked bad tobacco quite as much as the rich man who smoked Havannah cigars.


said, that if the Chancellor of the Exchequer, as was generally expected, had imposed an addition to the spirit duties, the probability was that with the rising sense in Scotland of the injustice of the alcoholic duties, and the long-continued sense of injustice in Ireland on the same subject, it would have been impossible to have got the Budget through before the Holidays. The subject of the alcoholic duties was too important to be dealt with in a desultory manner, for he believed it would become a great question that would divide the three countries. There could be no doubt, whatever, that the duties upon spirits affected the Scotch and Irish peoples in a manner that was absolutely and abominably unjust. In Ireland, during the last 25 years, they had raised the duty on spirits 400 per cent; and that had been done, as the hon. Member for Meath (Mr. Parnell) had pointed out, in order to get a Revenue from the country. Now, that Revenue was contributed by the poorest, the most ill-fed, and the worst-clothed population in the whole of Europe. Assuming that a labouring man spent 2s. a-week in alcoholic drinks, the labourer in England bought beer with it, while the labourer in Scotland and Ireland bought whiskey. Each of the three men would consume very nearly the same amount of alcohol; but the spirit drinker contributed 1s. 6d. to the Chancellor of the Exchequer, whilst the man who drank beer only contributed 3d. From the remarks of his hon. Friend one would suppose that whiskey grew indigenously in Ireland. The reason why spirits were so largely consumed in Ireland was that beer was the product of a high state of civilization. Its manufacture required great capital, besides great care and experience. Breweries were very numerous in England all over the country, and the trade was a very lucrative one. In Ireland breweries were very few in number; and, although very good beer was brewed in Dublin, there was but a very small consumption of it in the provincial districts in Ireland—spirits being almost exclusively drunk. That was the reason why the duties had been raised; and he trusted that the time was coming when a stand would be made upon that subject, and when Scotchmen and Irishmen would insist that something like equality should be intro- duced in the taxation of alcoholic beverages. He was not in favour of levelling the spirit duties down—he did not want to make spirits particularly cheap; but he wished to put them on the same level as beer, and therefore he would level up the duties on beer. If the Government taxed beer on its alcoholic strength in the same way as they taxed spirits, they would raise upwards of £90,000,000 a-year. It was also proposed to increase the duty on tobacco. That plant had been cultivated with great success in Ireland, where excellent tobacco was grown and could be grown again, the climate being exceedingly well suited to it. But the English Government had entirely prohibited the cultivation of that plant, which had formerly been prosecuted with great success. The Government were going to realize £700,000 by a tax of ¼d. per ounce on the ordinary tobacco which the people smoked. But did any Member of the House suppose that the consumer would get it for ¼d.? Tobacco would be raised at least ½d. per ounce, and the farthing would go into the pockets of the retailer. It appeared to him that that was an exceedingly cruel proposition. Tobacco was valued by the poorer classes when they were old, worn-out, and ill-fed, even more than the food they consumed. If the Chancellor of the Exchequer had really desired to act justly, he would have imposed an additional 1s. on the wine duty. Wine was consumed almost solely by the upper classes; the lower classes did not drink it, and they would not appreciate it if they did. The public paid now 6d. a-glass for the commonest claret across the counter, and if the duty was raised 1s., making it 2s., it would not in the slightest degree interfere with the retail price of wine. In that way, a portion of the burden would have been placed on the upper classes, and not merely on the lowest and most miserable portion of the population. The question was too large to go into then; but he hoped this Session would not close before a combined effort was made by the Scotch and Irish Members, aided by some English Members who seemed to understand the subject, to obtain a full inquiry into the question of alcoholic taxation. Since 1853 the duties on spirits had been gradually raised, as it was found the people would drink stimulants although they sold their clothes to procure the means. These duties had been successively 2s. 3d., 3s. 4d., 4s. 6d., 8s., and now they had reached 10s. The result was that they had wrung out of the pockets of the Irish people £4,000,000 per annum of extra taxation of various kinds during the last 25 years, while they refused to lay any additional tax on the beverage of the Englishman. The only remedy was to tax alcohol wherever it was found, in wine according to its strength, in spirits according to the amount of proof spirit, and beer should be treated in the same manner, so that no one should be placed in a worse position because he happened to live in a part of the country where he could not get beer.


said, he could not share the objections which had been taken by the two hon. Members who had preceded him as to the propositions of the Chancellor of the Exchequer. As the right hon. Gentleman had imposed four-fifths of the additional taxation upon the richer classes by means of the Income Tax, it was not unfair that a portion of the remaining fifth should fall upon the poorer classes; and, moreover, it was desirable that all classes of the community should be made to feel a lively interest in the Expenditure of the country. He rose for the purpose of making a practical suggestion. The Chancellor of the Exchequer appeared to be very much alarmed at the local indebtedness of this country, and he objected very much to the claims which the local authorities were making upon the Exchequer to receive money at low rates for public purposes. The objection of the right hon. Gentleman appeared to be based on two grounds—first, that the total local indebtedness was rapidly becoming excessive in the country, and should, if possible, be kept within more moderate dimensions; and, secondly, that there was some fear lest the Public Exchequer should ultimately suffer loss in consequence of the loans granted from it. He (Mr. Chamberlain) would say with respect to the latter of these two objections, that at present, at all events, there could be no possible reason for even a fear; because he believed it was the fact that no local body was at present indebted to more than twice the amount of its actual rates, or, in other words, to more than one-tenth of the total value of the property which remained as security for the money so lent. As long as they had a security which was worth 10 times the amount lent, there really need not be the slightest fear that the Public Exchequer would suffer. As to the rapidly-increasing total amount of local indebtedness, he did not think that was so alarming as the figures at first sight would lead one to suppose. It must be borne in mind that recently very great progress had been made by local authorities in obtaining possession of various public works—such as gas works and water works—which must be treated as investments, and not as loans for ordinary expenditure. With regard to the remainder, the Chancellor of the Exchequer would see that a great part of that expenditure was absolutely necessary, and was imposed upon local authorities by Act of Parliament. The right hon. Gentleman had referred to the expenditure for providing schools and for many sanitary undertakings. Nothing that the House could do would enable local authorities to dispense with such responsibilities, and the only result of making it more difficult to obtain money from the Public Exchequer would be that the local ratepayers would have to pay a larger interest, and it was impossible to see that anybody would be benefited thereby. So far as the security was absolute, it was clear that no loss could be incurred by affording the accommodation sought by local authorities. There was, however, a certain portion of that expenditure which might be said to be permissive, such as that to which the right hon. Gentleman had referred, and which was very large in the town he represented—the expenditure under the Astizans' Dwellings Act. At present, the municipality was a debtor to the extent of £1,000,000 to the Public Works Loan Commissioners, and this debt would be further increased by £500,000 before their contemplated improvements were completed. The Public Works Loan Commissioners possessed not merely the security of the Birmingham rates, but the security of the freehold property the local authority had purchased, which was now worth the sum paid for it, and in 20 years hence would be worth twice as much; although, in the course of that period, a large portion of the loan would have been repaid. Unless the Birmingham municipality had had the advantage of the credit of the Public Exchequer, that scheme could never have been carried out. The difference between the rate at which they borrowed the money lent by the Public Works Loan Commissioners and the rate at which it could have been obtained through other channels, amounted to an annual charge of something like £5,000 per annum. The people of Birmingham had voluntarily taxed themselves to the extent of £15,000 per annum to defray the cost of improvements under the Artizans Dwellings Act; but they could not have afforded to have incurred an extra charge of £5,000 per annum. Therefore, if the Birmingham municipality could not have borrowed from the Public Exchequer, the only result would have been that the work would not have been done. The House must bear in mind that it had, by an almost unanimous Vote, approved of that legislation, and had afforded by its discussions, and by the determination to which it had arrived, a stimulus to local authorities to engage in such work and to carry it out with energy and success. Now, he came to the practical suggestion. It was, of course, desirable that local authorities should apply to the Exchequer as seldom as possible. Small local authorities must constantly come to the Public Exchequer; but in the case of such towns as Birmingham, Manchester, and Liverpool, their credit was so good that, if the Government gave them a little assistance, they could go into the markets themselves for loans, and not be beholden to the Government. If the local authorities consolidated all their loans into one loan, that in itself would be a great step in advance. Take, for example, the case of Birmingham. They had loans raised upon separate rates—upon the improvement rate, upon the borough rate, and upon other rates, each of them being really based upon the same security at the bottom, although the incidence of the taxation was in some cases slightly various. There would, in his opinion, be no practical difficulty in bringing in a general Act to place these loans upon the general security of the property of the town, and so enable the local authorities to consolidate them into one another. If the Government would bring in a Bill to enable trustees to invest in municipal loans, then towns such as Birmingham would at once bring out a loan on the London market, and would never again trouble the Chancellor of the Exchequer for financial aid.


said, if he voted against the increase of the tobacco duty, he should not do so because he regarded it in the light of an Irish national grievance, but simply on popular grounds, believing, as he did, that it would be most oppressive on the poorest class of the population. The objections they were entitled to raise to the spirit duties were of a different character, inasmuch as the incidence of that tax fell with disproportionate weight upon Scotland and Ireland—for in these countries whiskey was the national beverage. The increased tobacco duty would press more heavily upon the people of Ireland than upon the people of the sister countries, from the circumstance that the poorest class in Ireland was poorer than the poorest class in England and Scotland. He did not approve of the suggestion that the spirit duties should be increased. It was all very well for those who took the other side of the question to say that the Englishman paid as much upon his whiskey as the Scotchman or Irishman. It must be recollected that there might be a national injustice where there was no individual injustice. That tax was deliberately imposed with the full knowledge of how it would bear on Scotland and Ireland, and it was on that ground that the justice of the objection made by hon. Members from Ireland rested, However, the case as regarded the tax on tobacco was entirely different, all three Kingdoms being equally affected.


said, he was one of those who, some years ago, urged upon the Treasury the expediency of granting loans to localities on easy terms. On the whole, he believed, much good had been done in this way. The danger alluded to by the Chancellor of the Exchequer was not a consequence of the system itself, but arose from loans having been granted too lavishly by this and former Governments. Now, the tendency of the right hon. Gentleman's Statement, he believed, would be that the Treasury would think it proper and patriotic to suspend or limit all loans, however beneficial they might be, and they would act unfairly. Places like Bir- mingham, which had had the advantage of Government money, would be at their ease; while struggling localities, to which it was manifestly the duty of the Treasury to lend a willing ear, would be left in the lurch. The true remedy for the undue pressure on the Treasury, arising from too lavish and lenient an expenditure, was not suddenly to deny the needy places the advances they required, but to put a fair price upon the Government money, and give it wherever it was wanted—on proper security, of course. What Mr. Carlyle called—"Strength to the strong, and devil take the hindmost," was not, in his opinion, the best policy for the Government to pursue. The obviously juster and wider course would be to put such a minimum price on Government Loans as would yield, in every case, a moderate profit, and tend to make the Imperial Treasury, acting on known and recognized rules, a bank for local improvements throughout all parts of the country.


thought the tobacco duty would operate unfairly as between vendor and consumer. In Ireland, the tobacco consumed by the poorer classes was sold at 3d. an ounce, and the proposal of the Chancellor of the Exchequer was to put ¼d. per ounce on the price of it. Now, the farthing was not a coin that was in general circulation, and the result of the right hon. Gentleman's proposal would practically be that an additional ½d., instead of ¼d., would be charged to the consumer.

Resolution agreed to.

(2.) Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, the following Duties of Customs shall be charged on and after the 5th day of April 1878, on Tobacco imported into the United Kingdom, in lieu of the Duties now payable thereon (that is to say):—

Tobacco Manufactured, viz.:—

£ s. d.
Segars. the lb. 0 5 4
Cavendish or Negrohead the lb. 0 4 10
Snuff containing more than 13lbs. of moisture in every 100lbs. weight thereof the lb. 0 4 1
Snuff not containing more than 13lbs. of moisture in every l00lbs. weight thereof the lb. 0 4 10
Being Cavendish or Negrohead Manufactured in Bond the lb. 0 4 4
Other Manufactured Tobacco the lb. 0 4 4

Tobacco Unmanufactured, viz.:—
Containing 10lbs. or more of moisture in every 100lbs. weight thereof the lb. 0 3 6
Containing less than 10lbs. of moisture in every 100lbs. weight thereof the lb. 0 3 10."

—(Mr. Chancellor of the Exchequer.)


inquired in what form he could put the Question that the tobacco duties remain unaltered?


said, the second and third of the Resolutions that had been put into his hands related to the tobacco duties, and that the hon. and gallant Member might effect his object either by saying "No" to the second Resolution, or by moving to amend the clause or Schedule of the Bill to be founded upon it subsequently.


thought it would be simpler to move a Resolution in terms similar to those of the Resolution relating to tea.


suggested to the hon. and gallant Member that he should divide against the second Resolution as it stood.


pointed out that the duty on tobacco was not an annual duty, and that the effect of the Resolution being lost would simply be to leave the duty as it was. The hon. and gallant Member, therefore, would effect his object by saying "No" to the Resolution when it was put from the Chair.


said, his reason for making the inquiry was that he did not wish to place himself in the absurd position of appearing to object to all duty on tobacco. He only objected to the increase.


asked whether the increase on all classes of manufactured or unmanufactured tobacco was the same —namely, 4d. per lb?


replied, that the increase in the duty was the same on every description of tobacco.

Question put.

The Committee divided:—Ayes 204; Noes 24: Majority 180.—(Div. List, No. 96.) (3.) Resolved, That, in lieu of the Drawback now payable on Tobacco, there shall be allowed on and after the 5th day of June 1878, a Drawback on the exportation, or deposit in a bonded warehouse to be used as ship's stores, of Tobacco, of Three Shillings and Seven Pence per pound, subject to the provisions of "The Manufactured Tobacco Act, 1863," (26 Vic. c. 7) for ascertaining the amount of Drawback payable, and under such regulations as the Commissioners of Customs may see fit to adopt.

(4.) Motion made, and Question proposed, That, towards raising the Supply granted to Her Majesty, there shall be charged, collected, and paid for one year, commencing on the 6th day of April, one thousand eight hundred and seventy-eight, in respect of all Property, Profits, and Gains mentioned or described as chargeable in the Act of the sixteenth and seventeenth years of Her Majesty's reign, chapter thirty-four, the following Duties of Income Tax (that is to say): For every Twenty Shillings of the annual value or amount of Property, Profits, and Gains chargeable under Schedules (A) (C) (D) or (E) of the said Act, the Duty of Five Pence; And For every Twenty Shillings of the annual value of the occupation of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) of the said Act,— In England, the Duty of Two Pence Halfpenny; In Scotland and Ireland respectively, the Duty of One Penny Three Farthings; Subject to the provisions contained in section one hundred and sixty-three of the Act of the fifth and sixth years of Her Majesty's reign, chapter thirty-five, for the exemption of persons whose income is less than One Hundred and Fifty Pounds, and in section eight of 'The Customs and Inland Revenue Act, 1876,' for the relief of persons whose income is less than Four Hundred Pounds.


wished to ask the Chancellor of the Exchequer to state to the Committee, whether this was purely a formal Vote, leaving the Question entirely open to discussion afterwards?


said, it certainly would not preclude future discussion. The reason for adopting the Motion at that time was purely one of convenience, with regard to the payment of dividends.


asked, whether the dividends payable to-morrow would be subject to the increased rate of the Income Tax?


answered in the negative.


inquired, whether the effect of the Committee now agreeing to the Motion would be, in any degree, to preclude the making of a proposal that the Income Tax Act should contain some provision for continuing the tax, subject to any future alteration which might be determined by Parliament for a certain number of days beyond a twelvemonth? The question had Frequently been raised by the hon. Member for Maidstone (Sir John Lubbock) and discussed in the House. For his own part, he did not wish to enter into a discussion at present; but desired only to know whether it would be competent to raise the question when the proposal for containing the Income Tax Act came under the notice of the House?


said, the Resolution would not, in any way, compromise the action of the House in the matter.

Resolution agreed to.

Motion made, and Question proposed, That, on and after the first day of June, one thousand eight hundred and seventy-eight, in lieu of the Annual Duty of Five Shillings imposed by the Act of the thirtieth and thirty-first years of Her Majesty's reign, chapter five, there shall be granted and charged the Annual Duty of Seven Shillings and Sixpence for and in respect of every Dog of the age of Two Months or upwards, for which a Licence to keep the same shall be taken out under the said Act, such Licence terminating on the thirty-first day of December following the day on which it is granted.


, without wishing to express any opinion as to whether the change proposed was a bad or a good one, asked the Chancellor of the Exchequer, whether such a Motion ought to pass on the night of the Budget being proposed, seeing that the increase of the tax was not to take effect until the 1st of June?


at once consented to the withdrawal of the Motion.

Motion, by leave, withdrawn. (5.) Resolved, That it is expedient to amend the Laws relating to the Customs and the Inland Revenue.

Resolutions to be reported To-morrow;

Committee to sit again To-morrow.