" That, towards raising the Supply granted to Her Majesty, the Duties of Customs now chargeable on Tea shall continue to he levied and charged on and after the first day of August, one thousand eight hundred and ninety-one, until the first day of August, one thousand eight hundred and ninety-two, on the importation thereof into Great Britain or Ireland (that is to say) on—
Tea . . . . the pound . Four Pence." —(Mr. Goschen.)
§ (4.15.) SIR W. HARCOURT (Derby)
In the long and very interesting speech which the Chancellor of the Exchequer addressed to us on Thursday night in introducing his financial proposals for the year, the right hon. Gentleman touched upon a large number of subjects which, no doubt, were fully deserving of the attention and inquiry of the House, and upon one or two of those subjects, as well as upon the general scope of the right hon. Gentleman's financial system, I would ask leave now to make a few observations. Before I go into any general matters I wish to draw the attention of the Committee and of the right hon. Gentleman to one statement that he made, which is so surprising that it appears to be impossible to reconcile it with the figures contained in the official Returns relating to the subject—I mean the statement with reference to what has been done in the way of the reduction and extinction of Debt. The right hon. Gentleman said that he had made large reductions in the Debt during his administration—much larger reductions, he proceeded to prove, than had been effected by his predecessors in office. Well, of course, the right lion. Gentleman ought to have made large, and even very much larger, reductions than his predecessors, for this reason—that, by the operation of the Sinking Fund, the sum payable for interest becomes less year by 1492 year, while the margin of Revenue applicable for the redemption of the Debt becomes larger. It must also be remembered that, in consequence of the right hon. Gentleman's successful operations in connection with the conversion of the Debt, the annual interest on the Debt has been reduced by £1,500,000. And that is not all. In addition to that, the right hon. Gentleman has had enormous sums, amounting in the whole to something like £8,000,000, due to the old Sinking Fund, which arose from the realised surpluses of his estimates. The sums derived from these various sources which were applicable to the reduction of the Debt have, therefore, enabled him to make a very considerable reduction in the amount of the Debt.
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN, St. George's, Hanover Square)
There has been an increase of balances.
§ SIR W. HARCOURT
I am not going into the question of balances; but in olden times the balances were entered as an asset to be taken against the Debt. 1 always thought that that was an unsound principle of calculation, and I was fortunate enough to convince the Chancellor of the Exchequer, who decided that they were no longer to be taken as a balance of Debt, but were to be put in a separate column by themselves. The balances may come into the reduction of Debt next year by anticipation; but I only mention the matter by the way. The Chancellor of the Exchequer has stated that during the last five years, quite apart from the operation of the Terminable Annuities, he has effected a reduction in the Debt of £37,000,000. Upon that point I must ask the right hon. Gentleman to give the Committee some explanation of the figures upon which lie bases that statement, because it is certainly not supported by any figures contained in the official Returns, and it would be a serious matter to have a conflict as to the National Debt in the Budget and the Debt shown in the Returns. In making his calculations the right hon. Gentleman quite fairly omitted the years 1885–86 and 1886–87, seeing that there was exceptional military expenditure in those years, and that he himself was responsible for the Estimates in the latter year. The right hon. 1493 Gentleman took the four years before and the four years after the exceptional period; but he ought not to have taken the year 1880–81 for the reason already stated, that the arrangements of 1881 were those made by Sir Stafford North-cote before the Dissolution. The Chancellor of the Exchequer ought to have begun with the year 1882, and have taken the four years up to and including 1885. In the earlier four years the right hon. Gentleman says the total was £27,200,000; and the difference was £3,600,000 in favour of the present year. There is in existence a means of testing these statements. Two or three years ago I was anxious to have fuller Returns respecting the National Debt than any the House then possessed, so that it might be seen exactly what has been done from year to year, and particularly how much Debt has been wiped off, and how much created. The Return was prepared in the most careful way by Mr. Edward Hamilton and Sir C. Rivers Wilson; and I will take from it the figures for the two sets of years, and see how they tally with those of the right hon. Gentleman. The figures show that the net reduction of Debt was—for 1888, £5,225,000; for 1889, £6,428,000; and for 1890, £8,200,000. For 1891 the amount does not appear upon the Return, but it can be ascertained from the figures the Chancellor of the Exchequer has just given, and the amount is £6,100,000. The total for the last four years was £25,953,000, or, in round numbers, £26,000,000. This is the amount which the Chancellor of the Exchequer puts at £30,800,000. For the earlier four years the figures of the Return are as follows: — 1882, £6,940,000; 1883, £6,776,000; 1884, £8,900,000; 1885, £7,273,000; total, £29,889,000, or, in round numbers, £30,000,000, as against £26,000,000. The comparative result is exactly the reverse of that stated by the right hon. Gentleman, and so far from showing £3,600,000 in his favour it shows £3,600,000 in favour of the former Government. Unless these figures are erroneous, so far from the right hon. Gentleman having, with enormously greater resources and with a diminished interest to pay, done more for the reduction of the Debt than any one else 1494 under the system established by Sir Stafford Northcote, he has done less by the amount of £3,600,000. The resources referred to are the under-estimates of Revenue through which the old Sinking Fund in these four years have amounted to £8,000,000, which means that he has raised £8,000,000 more than was wanted. In the former four years the excess was £1,500,000 as compared now with £8,000,000, or a difference of £6,500,000; and if this has been raised it ought to be shown in the Debt operations; but it has disappeared. May I ask how and where it has disappeared? The Budget speech was a long speech—I do not say that it was too long—but it was necessarily long under the new patent system of finance which has overthrown all the old English traditions. It is not one Budget giving an account of Imperial finance for the year, which raised the money for the year and closed the account at the end of the year; but the right hon. Gentleman had to deal with three Budgets—first, what may be called the old English Budget; next, the new-fangled Continental " Extraordinary " Budget; and lastly, the Local Subsidy Budget. These are new things, and even those most familiar with the subject find it impossible to understand the Public Accounts and Public Finance at the present time. The great security for economy and sound financial administration has always in this country been that you provide the money you think you would want for the Services of the year; at the end of the year you closed the account, and if there had been more money raised than was required, you returned it to the Exchequer. In short, you closed the account, and began a fresh account the next year. That was the great security of English finance, and it was one which had been carefully built up by great masters of finance. It has been jealously guarded by the appointment of the Auditor General and other officers, who see that the principle is observed; whenever that principle has been departed from the departure has been severely attacked, and the departure has been condemned in past days by none more severely than by the present Chancellor of the Exchequer. The first effect of the present multifarious system of accounts is confusion, and, if the Chancellor of the Exchequer will excuse me 1495 for saying so, considerable difficulty in explaining the accounts. I have endeavoured to follow the right hon. Gentleman's figures in the House and in print, but I confess that the difficulty of understanding them becomes greater the more they are explained. The right lion. Gentleman has delivered paper after paper, not one of which it is possible to reconcile with the other. I have endeavoured with my friends, the right hon. Members for Wolverhampton (Mr. H. H. Fowler) and Bradford (Mr. Shaw Lefevre), who are very familiar with these subjects, but we cannot make any one of these accounts square with the other, and it is necessarily so. The Chancellor of the Exchequer has created four accounts—the Australian Establishment Account, the Imperial Defence Account, the Naval Defence Fund, and the Barrack Fund. Every one of these Funds has been raised out of different sources, to be paid at different times on money borrowed on different conditions. The extraordinary part is that the expenditure was to take place at certain times, and has not so taken place; the money has not been provided in the manner intended; if anybody endeavours to make head or tail of the Expenditure he will fail, and I doubt whether even the Chancellor of the Exchequer understands it. Some of the right hon. Gentleman's statements certainly cannot be made to correspond with the Papers he has delivered. J do not say that the right hon. Gentleman has endeavoured to hold anything back, still less that he has endeavoured to misrepresent anything. With the greatest courtesy the right hon. Gentleman has endeavoured to give all the information in his power. It is the system he has introduced which has created such confusion that he himself is not able to clear it up. I am extremely sorry to have seen this departure from all the principles on which English finance has hitherto been governed—principles of action and of account which were established by Sir Robert Peel, Sir George Lewis, and by my right hen. Friend the Member for Mid Lothian. [Mr. W. E. GLADSTONE: We have now changed all that.] It is an extremely dangerous thing in an old-established firm to alter its system of book-keeping, and to begin to proceed upon new-fangled 1496 principles altogether. We have seen some consequences of that sort of thing lately in the City, and I would be sorry to see the same principles tried upon the old firm of the English Treasury. All these things are very ingenious, but ingenuity is not what is most wanted in dealing with finance. You do not want a number of small devices for escaping the fact that you are' spending more money than you have got; and, instead of wrapping up the fact that you require to spend more than you have, you should come forward and say so, borrowing the money upon the ordinary credit of the English nation. That is the process which has before been followed, and it ought to be adhered to, instead of saying when £2,500,000 is wanted, " We are not borrowing it; nobody will have to pay for it; nobody will feel it we will put it some years hence upon the proceeds of the Suez Canal." This is a process which has hitherto been unknown to English finance, and the Economist, a paper not unfriendly to the right hon. Gentleman, says that he hasDescended to arts which are humiliating to English finance, and which belong rather to the finance of bankrupt South American Republics.The right hon. Gentleman says that £2,500,000 will not come out of the taxes. I should not have thought that a man with the logical capacity of the right hon. Gentleman would have descended to so transparent a fallacy as that. If, instead of putting it upon the Suez Canal, he had put it upon the increased value of the leases upon the Crown estates when they fall in, can it be said that nobody would have felt the burden? Does not everybody see that five years hence, when £500,000 a year comes in from the Suez Canal, the people of that time will have to pay £500,000 more in taxes than they would had this mortgage not been made upon them? Having added this extraordinary Budget to the old English Budget, the right hon. Gentleman has added a new head of "local subsidies." The first observation I would make upon those subsidies is that they add immensely to the confusion of the public accounts. The right hon. Gentleman has removed the confusion in one respect, but it is impossible to make out what is the real produce of the taxes. But there is a much more serious 1497 consequence than that. The right hon. Gentleman has diverted from the Exchequer a stream which would have filled his reservoirs with £4.000,000, which he has given away. I said, he had given it in relief of rates. We have it on the authority of the Minister of Agriculture that the relief of rates in the rural districts all went to the landlords. J admit that the Chancellor of the Exchequer told us that he had not settled quite in his own mind how much of the relief in urban districts went to the occupier and how much to t he owner, and I do not pretend to settle that point. But what might the Chancellor of the Exchequer have done with this £4,000,000 if he had kept it? He might have taken 1d. off the Income Tax; have removed all, or nearly that remains of the Tea Duty; and he might have taken off what remains of the Inhabited House Duty. All this would have been a relief to the landowner, who would have been more benefited by d. reduction in the Income Tax than by all he gets from the rates. Towards the end of his speech the other night the Chancellor of the Exchequer asked, " Am I to have a surplus? " From the many principles known to English finance, the answer ought to have been in the negative. A surplus in any given year is an excess of receipts over payments, of Revenue over Expenditure. If your Revenue exceeds your Expenditure you have a surplus, but if your Expenditure exceeds your Revenue you have a deficit. Now, what was the situation of the right hon. Gentleman this year, and what was it last year? Did his Revenue exceed his Expenditure? No; his Expenditure exceeded his Revenue, and he bad had a deficit last year, and the right hon. Gentleman's Expenditure this year is to be, as I will show, in excess of the Revenue he has got, and neither last year nor this year has he, or will he have, a surplus. How did the right hon. Gentleman get this surplus last year? By the figures the right hon. Gentleman has given it is easily made out; he borrowed between £3,000,000 and £4,000,000 of money last year. The Unfunded Debt is increased by £4,000,000. The right hon. Gentleman borrowed £3,500,000 last year in order to obtain a surplus of £1,750,000; if lie had not borrowed he 1498 would have had a defict of £1,500,000. The old Sinking Fund is operated upon in a way which I will call the Chancellor of the Exchequer's " new way of paying old debts." What is the right hon. Gentleman going to do this year? He is going to borrow something like £3,000,000; he has got an Expenditure beyond what he provided for in the Revenue of the year. The right hon. Gentleman has said that £2,140,000 would be spent on naval defence. I think that the First Lord of the Admiralty would be very much surprised if that is all he is to get to spend on naval defence.
§ MR. GOSCHEN
I thought I had stated with absolute clearness that I was speaking of money which was borrowed.
§ SIR W. HARCOURT
Nothing could be further from my desire than to misrepresent the right hon. Gentleman; but I think that if we substituted the word " borrowed " for the word " spent " in the Chancellor of the Exchequer's. speech we might make something of it. Having borrowed £2,000,000 the right hon. Gentleman will have a surplus of £3,000,000; if he had not borrowed it lie would have a deficit of £1,000,000. That is the way of getting a surplus in in this new-fangled mode of English finance. It is like getting a banker to put £1,000 to one's account in order to pay Christmas bills, and then treating that £1,000 as a surplus, whereas the money has been borrowed, because without it the account would have been overdrawn. That is what I would call not salvation finance, but the milder term of post obit finance. All these systems are ingenious shifts to make-. people believe that the finances are in a. very flourishing state. In order to pay our way we are obliged to borrow £3,500,000 at a time when the Revenue is in a condition of prosperity such as has not been enjoyed for a long time. I maintain that this system of finance is extremely mischievous, and tends to hide from the people what is the real condition of things. It is mischievous in its present effects, and in my opinion it is much more mischievous in its future consequences; because we may depend upon it that this easy going system of finance, which, in the time of Mr. Hudson, was known 1499 as "making things pleasant," is an encouragement to every species of extravagance; it teaches people that they may spend what they like, as tradesmen tell young gentlemen they need not pay now, they can pay at some future time. How has the right hon. Gentleman obtained 'the surpluses of which he is so proud? Of course, he has been greatly aided by the prosperity of the time, and he has been largely aided in concurrence with that prosperity by the magnificent opportunity of which he has taken so able and skilful advantage, in the Conversion of the Debt. But with all this assistance, out of what have the surpluses been made? The first has been made by cutting down the fund for the reduction of the Debt; the second by borrowing £3,500,000; and the third is made by borrowing £3,500,000 again. At this time of piping prosperity that is the way in which the right hon. Gentleman makes his surplus. How is it, with all these advantages of good trade and reduced interest on the Debt, that the right hon. Gentleman has no money to give away in reduction of taxation? Well, the right hon. Gentleman has impeached his colleagues who sat beside him as the robbers of the Queen's Exchequer. But the right hon. Gentleman himself is one of that long firm; he is the colleague who carries the bag, and without his consent and participation this burglary could not be effected. It often happens that it is the domestic servant who opens the door for the:plunder of the house; and that is the situation which the Chancellor of the Exchequer must have been content to fill in this matter. Of course, the first cause why the right hon. Gentleman has nothing to give away is the enormous increase in the Naval and Military expenditure of this country. The right hon. Gentleman has increased this expenditure not upon the Estimates of the Liberal Government, but upon his own, by £3,000,000 a year since 1889; that is the ordinary increase under the Naval and Military Estimates, besides £17,000,000 extraordinary. That is the real ground and foundation of the financial situation; it is all nonsense talking about a Sinking Fund and paying off debt when we are borrowing. Lord Beaconsfield talked of " bloated armaments." I wish we could get back to 1500 the bloated armaments which Lord Beaconsfield used to denounce. Are these swollen Estimates the result of the experience and judgment of the Government itself? I know that hon. Members opposite go up and down the country saying that if there is an increase it is due to those miserable Liberals who have run down those establishments. How has the money been spent? When the Chancellor of the Exchequer came into office in 1887 he had full knowledge of how things stood. In 1887, in his Budget speech, the right hon. Gentleman said that the extra charge was due to that which is commonly known as the naval scare. The right hon. Gentleman did not expect at that time that lie was going to have a naval scare by which £17,000,000 would be added to the ordinary expenditure. The right hon. Gentleman said in his speech in 1887 that the House had agreed to an extra expenditure of £3,000,000 on ships, and £1,600,000 on the Army. The right hon. Gentleman went on to say that the Estimates had been increased temporarily, and that he hoped that at the end of the financial year they would have effected a large diminution in the heavy charges which had been made on the taxpayers owing to exceptional circumstances. Only three years ago he said—There is good reason to hope and believe that the time is not far distant when the Navy Estimates will not require to be swollen by exceptional items, such as these, which have fallen as heavily on the taxpayer of the last few years.Our expenditure then was, in fact, exceptionally heavy, and the Chancellor of the Exchequer expressed confidence that in the future it would be lighter. That was only three years ago. Let the right hon. Gentleman now go to the country and say that the present increased expenditure is due to the running down of the establishments by the Liberal Government, and see what answer he will get. He said three years ago that the expenditure of the Governments which preceded him had been exceptionally large, owing to the naval scare, but lie pledged his opinion that the Navy Estimates would in the future be much lower. For a time he reduced the Estimates to the extent of nearly £1,000,000. Yet it is said. that this 1501 present great increase is due to the fact that we ran down the establisments, which he himself subsequently depleted to the extent I have mentioned. The statement is absolutely untrue, and I hope it will not be repeated. The Government may think that the extraordinary expenditure they have demanded is necessary, and they may think that the country supports them in it. Then, if so, why do they not prove it by asking the country to pay for it, instead of doing, as Sir Stafford Northcote did—namely, " spreading " it, for which he was denounced by the present Chancellor of the Exchequer as a cowardly financier. By the system under which the Chancellor of the Exchequer is now dealing with these matters, it is quite impossible to check the accounts year by year—to ascertain accurately what is received and spent in any one year. For the first time we have unexpended balances carried over from one year to another, a practice which our whole system of finance was intended to prevent. The result is that various matters are mixed up which ought to be kept separate, and it is impossible to trace the accounts satisfactorily—to tell how much has been paid, or for what, or how much has been borrowed. As to the statement that you are borrowing for permanent works, I deny it, for, in fact, you are borrowing for things of comparatively brief duration. The cost of sites for post offices you have the courage to liquidate every year. You do not borrow for them. The right hon. Gentleman was determined to have a surplus, whether he had the money or not, and it is for this reason that he has introduced the novelty of unexpended balances into English finance. But if these things are done in the piping times of prosperity, what is going to be done in hard times? If such things are to be done in the fat years which the Chancellor of the Exchequer has had, what will be done in the lean years? That is a consideration which I think the Committee ought to bear in mind. How has most of this money been obtained? By borrowing, and the Unfunded Debt has been increased by £4,000,000. I do not leave out of consideration the reduction in the Funded Debt. I fully recognise that; but the right lion. Gentleman, I believe, shares 1502 the objections I feel to a great increase of the Unfunded Debt of the country. It has always been the resort of lax finance, the Unfunded Debt has always been a resource to weak financiers. Now, in the Budget of 1887, the right hon. Gentleman said the Treasury bills which already existed were, to his mind, on too large a scale, the Floating Debt then being £15,000,000; yet in the past four years the debt has been increased by £20,000,000, and now stands at £36,000,000, according to a Return which I received this morning from the right hon. Gentleman. I am aware that a considerable portion of the sum is in the hands of the Public Departments or the National Debt Commissioners; but with the £3,500,000 which the Chancellor of the Exchequer will borrow the Unfunded Debt will be no less than £40,000,000 at the end of the present year, a sum which it has never reached during the past half century. What was the position of the Unfunded Debt in 1874? When the Government of Lord Beaconsfield came into office in 1874 the Unfunded Debt stood at £4,000,000; when they left office it was £27,000,000. Sir Stafford North-cote at that time thought the sum inconveniently large, though it was £10,000,000 lets than at present. He therefore began to reduce it by means of terminable annuities, and the right hon. Gentleman the Member for Mid Lothian afterwards funded a portion of it. It was thus reduced to £14,000,000 or £15,000,000, but has now been increased, as I have said, to £36,000,000. I know that in relation to the conversion operations a considerable portion of the money has been raised, but that does not do away with the objection of this great weight of Unfunded Debt. I think the right hon. Gentleman will admit that this is not a desirable state of things. It is not because you have to pay more interest; very often you have to pay less, but I think the right hon. Gentleman has had a somewhat different experience during the last 12 months. In my time I have got money for 1½; per cent. I doubt very much if he has been able to get it at less than 2¾. I object, however, that a large Floating Debt of this kind, especially upon short terms like the Treasury bills, makes the Chancellor of the Exchequer a money dealer in the 1503 Money Market, thus placing him in a position which he never ought to occupy. The right hon. Gentleman has let the cat out of the bag on one point. Why, instead of using the money of the Sinking Fund to pay off the Floating Debt, did he use it by preference to pay the Consols? Because Consols are so low, he says. He is evidently a little tender on that subject, and I assure him I will consult his feelings. He is the godfather of the new Consols, they go by his name, but, like many other infants, they have not fulfilled all that was promised and vowed in their name. The right hon. Gentleman told the people who took the Consols that they would be worth par, and by a certain amount of adroit manipulation they were kept at par for a time during the period of conversion, but they very soon fell below, and for the simple reason that nothing can for any length of time be kept up above its real market value. That is briefly the reason of the present price of Consols. The right hon. Gentleman may say that they have fallen in the commercial distress, or because there has been such a number of sales of Consols. He has said, moreover, that Trustees will not invest in Consols, and he addressed to them a touching appeal. He talked of those patriotic Consols which their forefathers desired to be a provision for their daughters. But these patriotic Consols are the old Three per cents. Our forefathers never considered the condition of Consols reduced, if I may so describe it, to a vulgar fraction. Sydney Smith talked of the " sweet simplicity of the Three per Cents.," but now that they are reduced to 2¾, ultimately to sink to 2½, it is difficult to calculate what their value may be here or hereafter. All the sacredness and simplicity has departed from Consols, and the unfortunate daughters, who one day will become old maids, will look rather to a solid debenture which will give them a permanent 3 per cent. than cling to Consols reduced to a vulgar fraction. That is really the reason why the right hon. Gentleman is so afraid of being obliged to put Consols on the market which he thinks the market is not likely to absorb. I was very glad to hear the right hon. Gentleman say he is going to undertake the restoration of light coin. But the Chancellor of the Exchequer told us last 1504 year that he had impounded the profit which he got on the silver, and that he had made a permanent fund for that purpose. He got £600,000 for it last year, and he has got £400,000 this year; and I should be glad if the right hon. Gentleman will tell the Committee that he means to appropriate both those sums for the purpose. I think it will cost nearly £1,000,000 to accomplish the task. There is one subject I feel more delicacy in addressing the Chancellor of the Exchequer upon than even Consols, and that is the brewers. With regard to the right hon. Gentleman's argument against taking the tax off the brewers, I can assure him that the argument addressed to the Opposition side of the House was not necessary; as far as I can see, to the brewers it was not satisfactory. The brewers are disappointed, and no wonder. Why, what was his argument when the Opposition fought him on the compensation proposals? It was said he was going to compensate out of the taxation of the people. He replied, "No such thing; we are going to compensate out of the money of the brewers;" and he used that argument in his Budget speech. We on the Opposition side thought at the time that that was a perfectly unsound financial argument. We said that money paid by the brewers or anybody else was money that belonged to the Exchequer, and that it could not be ear-marked as belonging to a particular class. Therefore, to talk of the money being paid out of the fund of the brewers was entirely a financial error. I am very glad that we have converted the Chancellor of the Exchequer, because he has adopted our argument in contradiction of his own. He says—It is argued that this additional tax falls not on the consumer but on a particular and limited trade; but I am unable to admit that plea, because if that were so I think we should never be able either to reduce or increase the tax.That is a complete contradiction of his argument when we were battling with him on the compensation clauses. The right hon. Gentleman, in calculating the future progress of the Revenue, used a rather singular phrase, to which I must demur. He said that last year the House entered into a partnership with him as to the taking of low Estimates. 1505 The House enters into no partnership with the Chancellor of the Exchequer upon Estimates of Revenue. The House has no means of forming an opinion upon the subject at all. I will go even further, and say that the Chancellor of the Exchequer can not himself form an Estimate of the Revenue. Those Estimates are formed by the experienced officers of the Department, who form them just as a surveyor forms an estimate of the value of land, and that is the only foundation of the Estimates of Revenue. But the right hon. Gentleman, who is not content unless he is innovating in everything, has produced a new system for estimating Revenue. He lays down a certain percentage for increase of population, which is to form a sort of rule of thumb standard, applicable to each article of Revenue—a thing unheard of before. Now, it is a remarkable fact that in his Budget of 1887 the right hon. Gentleman founded his claim to cut down the Sinking Fund applicable to the reduction of the Debt on the experience of the last 10 years, which showed that there was no elasticity in the Revenue. He drew a dismal picture of what had been, and what was likely to be, and his special ground was that the growth of Revenue anticipated by Sir Stafford Northcote was absent, and that it did not now rise in proportion to the increase of population. The Estimate of the Revenue ought to be founded upon the expectations of the particular year and nothing else, and to lay down a rule that we are to give any percentage to increase of population is in my opinion, thoroughly unsound. I protested at the time against the right hon. Gentleman's dismal prognostications and against his reduction of the Fund. From the moment he began reducing the Sinking Fund the Revenue rose, and the right hon. Gentleman still keeps on reducing the Fund although the Revenue has risen. The Estimates must be taken on the responsibility of the Chancellor of the Exchequer alone. We cannot enter into a partnership with him, as we have no means of forming a judgment on the matter. As to the destination of the surplus, all I can say is I am extremely pleased, from whatever source it comes, that it should be bestowed on free education. I am one of those who stood 1506 by my right hon. Friend the Member for West Birmingham in the election of 1885. I stood by the programme of free education. I can say no more upon that subject until I see the Bill, and until I know what is to be done, and how it is to be done. What I desire, apart from the correction of erroneous statements, is to call attention to the extraordinary innovation which the right hon. Gentleman has made in the financial business of this country, to the extreme revolution he has made in all those safeguards which have been considered most essential to secure the solidity of the finance of the country. I desire most earnestly to protest against the financial policy of shifts and devices of the character which the right hon. Gentleman has adopted. Will the right hon. Gentleman forgive me if I allude to one other criticism made by the Economist newspaper? They say, and they say truly, that the pretext upon which this extraordinary Budget has been founded has broken down; and so it has. The pretext was that a great expenditure was suddenly required, and the money must be instantly found, and that therefore the payment must be spread over a long period. What is the fact? In June last my right hon. Friend the Member for Bradford asked how much money the Navy were going to spend upon contract ships. A Parliamentary Paper was delivered, stating that they were going to spend £5,500,000, whereas as a fact they spent little more than £3,000,000. They could not spend the £5,000,000 that they pretended and doubtless intended to spend. The right hon. Gentleman said that we had misrepresented the transaction. How could we when we had the official document stating that £3,000,000 out of the £5,500,000 had been spent? What does this show? It shows that the pretext of the necessity for suddenly raising money was utterly unfounded. I consequently entirely concur in the criticism that the pretext on which this extraordinary Budget was founded has entirely broken down. This system of finance is unfortunate, and we ought to protest against it in order, if we can, to prevent it in the future. The right hon. Gentleman protested against something of the sort 12 years ago, and I protested with 1507 very great force, and, I hope, with some effect. At that time there was far more excuse for what was done than that which the right hon. Gentleman now possesses. The foreign policy had involved the Government of Lord Beaconsfield in great difficulties, and Sir Stafford Northcote proposed to spread a very small sum of money, as the right hon. Gentleman is now proposing to spread a very large sum of money. And what did the right hon. Gentleman say as to the action of Sir Stafford North-cote? The right hon. Gentleman said then, what I say now. He said—The fact is that the House has lost power as to the expenditure of the country through the introduction of this distinction between ordinary and extraordinary expenditure. While they hunted with the hounds they ran with the hare; and after singing ' Rule Britannia' at Conservative dinners all over the country, they came down and talked of public economy. He would turn from the Budget of the right hon. Gentleman to his financial policy. Fortunately it would be described in a very few words. It simply postponed the excess of expenditure liability over income to a future date; it renewed bills, it prolonged liabilities. The right hon. Gentleman told the House that he had put these liabilities not entirely out of sight because it would be unheroic and mischievous, but so far out of eight that they need not look at them unless they liked. It might be an unpopular thing to say, but it was better for the cause of economy and for the good of the country that we should pay off our burdens by taxation and not stave off payment to a future day. Cheerfulness on the part of the country to make the necessary sacrifice would prove patriotism most valuable to Her Majesty's Government, while to impose taxation would have shown what confidence they had in the resources of the country. But the Government had shrunk from that test., There was an exhibition of an apparently strong policy carried out by a weak man; he did not mean a man intellectually weak, but wanting in the nerve and courage to face unpopularity. They had shown want of confidence in the willingness of the country to hear the burdens which were the result of the policy of the Government.Later on the right hon. Gentleman said—I know the state of commercial gloom. I know what pinching there is in many households. but I hope, and still believe, y m are willing to bear your share of the burden, to uphold old English principles, and to say—' Do not let us be financial cowards, but let us pay our way like men.''The right hon. Gentleman said that the country was willing to boar its burdens, and he declared against financial cowardice, and in fact the right hon. Gentle- 1508 man protested, as I protest, against this . shabby, flabby policy. Ought I to, read the last extract from the speech? It shows, at all events, that we were at the time entirely in accord. The last.; words were—" To use the witty expression of my hon. and learned Friend the Member for Oxford, peace with honour on tick is not a policy for an English statesman to adopt.These were the financial proposals and policy against which the right hon. Gentleman protested in 1879, and it is against the same policy that I protest in. 1891.
§ (5.36.) MR. GOSCHEN
I rise with a chastened spirit, having listened to the speech of the right hon. Gentleman. I appreciate the right hon. Gentleman's authority in these matters. He has been Chancellor of the Exchequer, though not for very many months, and he distinguished himself by proposing to suspend two little Sinking Funds to meet a deficit of £500,000. That is the unique performance of the right hon. Gentleman. I shall be prepared to meet the speech of the right hon. Gentleman; but, having occupied the time of the House at great length on Thursday, I do not wish to inflict myself again at too great length, or too often, on the attention of the Committee. But I had notice some time ago that a far superior authority than the right hon. Member for Derby intended to arraign my finance. In the celebrated speech of the right hon. Member for Mid Lothian (Mr. W. E. Gladstone), at Hastings, he said—" There is much more to be said with regard to finance than I intend to say on this occasion.I hope that if the challenge is to be fought out at all, it will be fought out now, and, as I am the person challenged, I should prefer to follow the right hon. Gentleman rather than to be followed by him.
§ MR. W. E. GLADSTONE (Edinburgh, Mid Lothian)
I do not know to what words of mine reference is made by the right hon. Gentleman. In my speech at Hastings 1 made certain references to finance, and I said, also, that there was much more that might be said on the finance of the right hon. Gentleman. If the allegations I made , at Hastings are contested I shall defend 1509 them. I never gave any indication at Hastings as to any course I intended to pursue on the present occasion. I have listened to the speech of my right hon. Friend, and my impression is that the Chancellor of the Exchequer need not go far afield, for there is a pretty tough business before him in meeting the statements of my right hon. Friend.
§ MR. GOSCHEN
I hope, then, that I may understand that, as I was the attacked party in the speech of the right hon. Gentleman, which has been repeated, travestied, land burlesqued on many platforms, I now know the worst from the right hon. Gentleman. If, then, the right hon. Gentleman considers that all has been said that is necessary, I will proceed to the speech of the right hon. Gentleman the Member for Derby (Sir W. Harcourt). The attacks which he has made are on small points, on details, and on principles. The right hon. Gentleman appears to gloat over the reduced price of Consols, and he has never ceased to harp upon that. The Member for Mid Lothian has with greater magnanimity never tried to diminish the value of the conversion to the country, or to affect its credit by holding up to Consol-holders that their prices have fallen, but the right hon. Member for Derby has five or six times tried to irritate them, pointing to the Chancellor of the Exchequer, as if to say, " It is he that is your enemy and has done you this bad turn." I do not consider that to be a device of one really interested in the finance of the country. The right hon. Gentleman must know, as every man of business knew, that the fall was to a great extent temporary. Does he not know that all securities had fallen? The right hon. Gentleman referred to the price as 96, but they stood at 98 for a very long time after the conversion. Is not all this done to weaken the effect of that great operation for which the right lion. Member for Mid Lothian had always been willing to give the fullest credit to Her Majesty's Government? This is a kindred point to another which was made by the right hon. Member for Derby, namely, the question of the Funded and Unfunded Debt. The right hon. Gentleman talked about the " gross extent " to which the Unfunded Debt had been increased; but no embarrassment 1510 can be caused to a Government when a very large portion of the Unfunded Debt is held by the National Debt Commissioners. To say that the Unfunded Debt has been increased from £15,000,000 to £36,000,000 is to create a false impression; because from £7,000,000 to £8,000,000 is the whole increase of the Floating Debt held by the public; and, on the other hand, we have paid off £24,000,000 of Consols in cash. Was it not worth while to incur this slight increase in the Floating Debt as a means of paying off £24,000,000 of Consols in cash? The right hon. Gentleman has ' remarked that the circumstance of the increase in the Unfunded Debt is a proof of weak finance.
§ SIR W. HARCOURT
My objection to the increase in the Unfunded Debt is to that portion of the increase that has been incurred this year.
§ MR. GOSCHEN
The right hon. Gentleman has attacked me, in the first place, for borrowing the money, and, secondly, for the method in which the money has been borrowed. The right hen. Gentleman, in dealing with the second point, has asked why the money has been borrowed on Treasury bills instead of in the ordinary way. I have borrowed the money in the way I have done because I am anxious to repay it as soon as possible. If I had borrowed the money for a temporary purpose by means of Stock I should have been open to the very opposite charge, namely, that I had increased the Debt without making any provision whatever for paying off the increase. Certainly it is one of the first duties of a Chancellor of the Exchequer to make provision for paying off any increased Debt. The right hon. Member for Derby spoke throughout, and, in his eloquent peroration—borrowed from myself—to which, however, the right hon. Gentleman lent an additional charm, as if everything had been raised by loans and no efforts put forth or appeal made to the patriotism of the people of this country to meet the increased expenditure upon the Army and Navy out of the taxation of the year. The right lion. Gentleman, however, appears to take no notice of the very strong point that the ordinary Estimates have been largely increased, and that Her Majesty's Government up to the end of 1511 the year 1889 asked the taxpayers to pay more in each year than was actually spent. The right hon. Gentleman the Member for Mid Lothian has characterised the surpluses of 1888, 1889, and 1890 in the first place as fraudulent, and subsequently as fictitious; but year after year there have been satisfactory and perfectly genuine surpluses—a fact, perhaps, which was not very agreeable to the right hon. Gentlemen opposite.
§ MR. GOSCHEN
But it has been stated all over the country that the right hon. Gentleman charged the Government with having fictitious surpluses in the plural, and I can assure him that I greatly prefer that attacks should be made upon my financial policy in this House, where I can answer them, than elsewhere, where misapprehensions cannot be so readily corrected. I now am to understand, therefore, that the epithet " fictitious " was applied not to the surplus as of 1888,1889, and 1890, but merely to that of 1891. In listening to some of the speeches that have been delivered by right hon. Gentlemen opposite people might suppose that the system of extending the re-payment of money borrowed over a lengthened period had never been countenanced or adopted until the unfortunate individual who now fills the office became Chancellor of the Exchequer; but I may say the Barracks Bill is an exact copy of the Localisation of the Forces Act, which was passed when the right lion. Gentleman the Member for Mid Lothian was Prime Minister. The principle of not paying off the whole of the expenditure incurred within the year is the same in both cases, and if the surplus of 1890–1 is fictitious because I have adopted that principle, the surpluses which the right hon. Gentleman the Member for Mid Lothian dealt with in former years were equally fictitious. Would anyone who heard the speech of the Member for Derby believe that the taxpayers of the present year are actually paying for an amount of money borrowed in former times by a Government of which the right hon. Gentleman the Member for Mid Lothian was a member? If J had created " converted annuities," what would have been said of the phrase? 1512 and yet there are some £600,000 of these converted annuities chargeable to the taxpayers for expenditure incurred for the fortification loans of many years ago. It has been established by precedent that it is lawful, Constitutional, and not unusual that expenditure on certain works of a permanent character should be postponed over a certain number of years; and though I bow humbly to the strictures of the right hon. Gentleman, I think if he had appealed to precedent J should have been relieved from the charge of having introduced a fresh system in this matter. I come now to the question of the Imperial Defence Loan, where the Suez Canal Shares are expected to find money three or four years hence. When I read the Economist of Saturday, I said to myself "I know now the exact speech which will be made by the right hon. Gentleman." I have not been disappointed. The speech was an expanded and eloquent version of the article, but still it is that article. Although I often agree with the Economist, I must say that the language it has used on this subject is absurd, because it speaks as if the Suez Canal Shares interest were hypothecated in the sense of being offered to the holders of the bills separately as a pledge, as if it were necessary for the security of the transaction. If the editor had referred to the Act he would have seen that that is not the case: and, indeed, it is almost absurd to suggest such a thing as probable. It appears to me to be perfectly legitimate to deal with the future interest of this windfall, for it is a windfall, and it has been an extremely valuable one.
§ MR. GOSCHEN
The buying of the shares was an act of policy, and the windfall is that they have become so much more valuable than was anticipated. It was not believed at the time that the shares would be so valuable, and I say it is no more contrary to good policy to say that the interest upon them should be devoted to extinguishing Debt so many years hence, than it is to say the same with regard to the annuities that have been created by the right hon. Gentleman the Member for Mid Lothian in accordance with the 1513 constant method of Imperial finance. If I had personally introduced some of this complicated system of annuities — deferred, postponed, and rolling —I wonder what the right hon. Gentleman would have said? What we have done in the case of the Suez Canal shares is a simple operation, and it is perfectly defensible. All that has been done is that an Act has been passed providing that the future interest to be received shall be devoted to the extinction of this Debt. There is very little room for difference of opinion on the matter, and certainly no cause for censure. Coming to the Naval Defence Act, the right hon. Gentleman seemed to be perfectly incapable of understanding what we mean by the policy we have adopted. I conceive that the right hon. Gentleman is not a good accountant. He has many excellent qualities, but he gets hopelessly befogged occasionally when be gets amongst figures. What has been the origin of the fog into which some right hon. Gentlemen have got with regard to these Naval Defences? The origin of the difficulty was a Return moved for by the right hon. Member for Bradford (Mr. Shaw Lefevre) in as confused a form as could possibly be conceived. There was some difficulty in agreeing to the form in which the right hon. Member desired to have it, because it was one that was certain to lead to every kind of confusion. The right hon. Member for Derby has just said that very frequently Returns do not agree with each other; and the reason is that Members who move for them have got, I will not say fads, but views to which they desire to give effect. They accordingly move for Returns in conflicting forms. The Government weakly gives way rather than be charged with desiring to conceal something; and then it is said that the Returns do not agree with each other. What was this famous Return of the right hon. Member for Bradford? It was a Return of Expenditure divided into various items so as to show the Expenditure out of Revenue and the Expenditure out of borrowed money. In quoting some of the items the other evening, I did not always use the phrase " out of borrowed money," as I ought to have done in order to avoid misapprehension. I thought I had been clear enough; and I hope that if I did mislead the right 1514 hon. Gentleman the Member for Derby, it was only for a moment.
§ SIR W. HARCOURT
The Expenditure given in the Returns of my right hon. Friend the Member for Bradford is the actual estimated Expenditure. It cannot be meant to be the estimated Expenditure from borrowed money. It is £2,000,000 in excess of the Estimates altogether.
§ MR. GOSCHEN
I see that the right hon. Gentleman does not yet understand the Return. On the first page you have the whole Expenditure both from borrowed money and from income. The right hon. Gentleman does not understand the form of the Return, because he read an amount of estimated expenditure without observing whether it was to be out of borrowed money or out of other money. And now as to the substance—this is a point upon which I ask careful attention —a point of substance. Here we estimated that a large amount would have to be paid for contract ships. But, says the right hon. Gentleman, "You ought to have spent the whole of that out of revenue." That is the gravamen of his charge—
§ MR. GOSCHEN
Paid out of revenue. The gravamen of the charge is, we ought to have paid the whole of that Estimate out of Revenue. Well, if that had been proposed what would have happened? The right hon. Gentleman must know that a Chancellor of the Exchequer cannot always estimate this expenditure with accuracy. The Admiralty makes the best Estimate they can. They had 70 contracts out and they estimated as well as they could what they would have to pay on them in the year. I believe in all these cases delivery will have to be made by a certain date; therefore, although they have paid less in the course of the last financial year, that does not prove that the ships will not be delivered at the date they have been contracted for. This is an important point. What would have happened if we had not taken the power of spreading the expenditure over a certain number of years? According to the right hon. Gentleman we ought to have pro- 1515 vided out of taxation the whole of the expenditure set out in this Return.
§ MR. GOSCHEN
But you want to know what you are going to spend within the year. Let us clear up this point. The Return was made in June, my Budget is brought in in April. I had notice from the Admiralty that a certain amount would probably be spent on contract ships during the course of the year, and according to the view of the right hon. Gentleman it was unheroic for us not to ask the people to pay for this from taxation. Whether he says " Yes " or " No," that is the charge made —we ought to pay the expenditure of the year out of the taxes.
§ MR. GOSCHEN
The right hon. Gentleman has been a short time at the Exchequer, but he has not been at the Admiralty, and he does not know the difficulty of making Estimates as to work put out to contract. The Estimate is made before the beginning of the year, and in the case of the Admiralty there must be a very large margin for the uncertainty connected with contracts. The case of work in the dockyards is not in point. Ought we to have asked the House of Commons to pay over the total amount which, according to the best view the Admiralty could take at the time, would be required for contract work during the year? If we had done so we should have had to ask the people for £2,500,000 which would not have been required, and which would have gone into the Sinking Fund at the end of the year. Does that commend itself to the view of the right hon. Gentleman? At all events we know where we are. Is the charge against us that we have been remiss in not asking for money because we did not take from the pockets of the people £2,500,000 more than would have been required? We did not ask for money which it turns out was not wanted and could not be spent in the year. The right hon. Gentleman says, "You must not carry over," and that is another of the grave charges he has preferred. It is quite true that the Government have carried over a balance on the dockyards. If we 1516 had not carried over that balance, what would have been the result? In the past, when a certain amount of money has been voted to the Admiralty, an attempt has been made to spend it in the year, and the great difficulty has been to keep the Department to spending as much money upon fresh construction as the House intended to devote to it. According to the old system, if the money voted was not spent on fresh construction, the Admiralty said, " We had better spend it on repairs — the ships are sure to be wanted." This has been the experience of all Boards of Admiralty in the past. But now the Admiralty are so tightly held that if they do not spend the money upon construction they have to pay it over, so that it may go to reduce the cost of construction in the following year. That appears to me to be a very businesslike mode of proceeding, and one which, although it is new, has tended to economy in the work of the dockyards. The right hon. Gentleman shakes his head, but I say it is unwise to give a certain amount of money for the use of a Department with such elastic duties as the Admiralty, putting them under the temptation, I may say, of spending within the year money which they do not require, and a large amount of which we should have to provide out of taxes. Now I turn to another point. The right hon. Gentleman and others seem to ignore the fact that we did impose additional taxation under very trying circumstances to meet increased demands for the carrying out of our naval programme, and when the right hon. Gentleman says we have been "flabby and shabby," one would think we had not done anything in the way of imposing taxation. When we established our naval programme we imposed taxes by spreading annuities over seven years, and no person will have to pay more taxes in respect of those annuities except those upon whom this new taxation has already been placed. We have practically raised by taxes the whole amount required for our ship building programme. Where, then, is the charge of the right hon. Gentleman that we have done nothing but borrow? We have raised from the people as much as we thought necessary for the purpose, throwing the expenditure over a limited number of years, 1517 and arranging that the balance shall be so carried forward that there shall be a certainty of the wishes of Parliament being carried out. The result has justified our expectations. The dockyards have built what was intended to be built, and the money has not been uselessly raised to pay to contractors instalments which have not become due. With regard to the general increase in the Army and Navy Estimates—and that is a battle which we have fought before —I hold that the necessities for the defence of the country and the cost of the Services cannot simply be argued by a given standard, but must depend upon the political situation, and a vast number of other considerations. In 1888 we submitted a programme to the House: it was generally approved by Members, including a. good many Members on the other side; and of all the charges levelled against the Government, the one to which in fairness they are least exposed is the charge of attempting to hide their expenditure. The right hon. Gentleman has acquitted me and my colleagues of any intentional design of the kind; but it has been said by another right hon. Gentleman opposite that it is better to spend £5,000,000 than to hide the expenditure of £1,000,000.
§ MR. W. E. GLADSTONE
I never spoke of the intention of the right hon. Gentleman and of the Government. I spoke of the fact. My opinion is that in the mode of proceeding there was a multiplication of the accounts and a complication of the arrangements which had the effect of withdrawing the fact from the cognizance of the House and of the public.
§ MR. GOSCHEN
We now know precisely what is to be understood, but if the right hon. Gentleman will do what I know is very disagreeable, if he will read his own speech over again, he will see that the whole passage in question conveyed to his hearers, though against his intention, that the Government were deliberately attempting to hide away a portion of their expenditure. Such words as " fraudulent " lend themselves to such a suggestion. The right hon. Gentleman did not say that? " No," he said, " I would say fraudulently obtained, but that I do not want to be personal."
§ MR. GOSCHEN
Now I understand the view of the right hon. Gentleman that we are entirely acquitted of a desire to hide the expenditure. We never had any motive for hiding it. Last year I defended the expenditure of the Government, and it is the last thing we should wish to withdraw from the cognizance of the Committee. If the accounts are too complicated, then I am willing to devote every possible attention to the simplification of the accounts. I agree with the right hon. Gentleman the member for Derby that there is nothing more to be desired than the simplification of the accounts, and if there is anything further to be done in that direction, I will undertake it. The right hon. Gentleman said the pretext of the Budget has broken down.
§ MR. GOSCHEN
The Budget instead of breaking down has been abundantly justified, because when so large a sum has to be spent among so many contractors it is impossible to say how much will be spent each year, and it is equalised over a certain number of years. The right hon. Gentleman has again twitted the Government with regard to their local subsidies in relief of local taxation. I suggest to the right hon. Gentleman that it is right that the public should know how much money is given to the Local Authorities. Under the old system it was not known at all. The money was given away in the Estimates and was never discussed. We ran up million after million in these local subsidies, but they were never brought before the eye of the House; and far from having complicated the situation, I have simplified it by introducing a system which makes it necessary that it should be stated how much has been given to, and is received from, Local Authorities. We have given £3,000,000 or £4,000,000, not only to the ratepayers, because there are a certain number of other objects — Technical Education, Free Education in Scotland, Police Superannuation, and a number of other matters, which have been accomplished within those £4,000,000. That the right hon. Gentleman omitted to state, although he must know that the 1519 House has over and over again pledged itself —I admit, against the views of the right hon. Gentleman and others—that the ratepayers should be assisted. It was a legacy we inherited, and I am perfectly certain that the great bulk of hon. Gentleman opposite would have joined in any Vote that would have emphasised the neglect of the poorer ratepayers in towns if we had not proceeded in the direction we did. But I think that on the whole it is too late in the day to discuss that question. Now, having disposed of the more formidable charges, I come to what the right hon. Gentleman has said about the framing of Estimates. The right hon. Gentleman has strongly protested against the House being supposed to associate itself with the Chancellor of the Exchequer in his estimate of future Revenue. Now, I think the right hon. Gentleman might have remembered that it was more in a humorous than a serious vein that I spoke of the House having associated itself with me by a responsive cheer, and I think the House understood the attitude I took. Of course, I was not pressing home the partnership to the extent the right hon. Gentleman has suggested. When I spoke of partnership, I did not speak of partnership in a particular Estimate, but of association in the view that Estimates should be framed with caution. We frame our Estimates upon the view that the situation shows a tendency to be stationary, or that the Revenue will advance or will recede, and upon this view of the situation, the House of Commons is capable of forming a judgment. The right hon. Gentleman has never ceased to attack me for putting my Estimates too low in order to get an artificial surplus, although at the same time he knows that the Chancellor of the Exchequer is guided, to a very great extent, in framing the Estimates by his responsible permanent colleagues and advisers. Nevertheless, there is, I presume, always a certain amount of cross-examination of the data upon which they proceed, and that comes within the duty of the Chancellor of the Exchequer, and upon his view of the prospects of the country, the increase or the decline in its prosperity, are the Estimates considered and revised in one direction or 1520 the other. Every man in the position of Chancellor of the Exchequer gets a large amount of information from various quarters, of which he would be foolish if he did not avail himself in submitting his Estimates. The right hon. Gentleman said that it was a newfangled procedure to take 2 per cent. all round as a standard of increase. I have pointed out that, as a whole, it will come up to 2 per cent., but if the right hon. Gentleman will look at the details he will see that it does not always come out at 2 per cent. in the separate items. What I wanted the House to understand was that 2 per cent. increase really meant stationariness with regard to expansion. There is 1 per cent. for population and 1 per cent. for the three days. I, therefore, made use of 2 per cent., which represents the normal increase on the year generally, but, speaking generally, I have allowed for little increase on the year calculated apart from that normal increase. I maintain that I have proceeded on the lines upon which we have always gone, and it was the fault of my explanation if I conveyed an opposite impression. Then I come to the point the right hon. Gentleman touched upon at the commencement of his speech when he spoke of the figures I gave the other night. Now, as regards the £37,000,000, the right hon. Gentleman said I spoke of this sum apart from terminable annuities. That is not how I find it in my notes.
§ MR. GOSCHEN
I am aware that it is so reported in the Times. The reporters are extremely accurate, and I cannot be certain whether I used the words or not; but, looking at my notes from which I was reading at the time, I can say that I could not have suggested that amount as having been paid off without the assistance of annuities; it would have been absurd, and the right hon. Gentleman himself has recognised that it would have been absurd. The right hon. Gentleman has here failed to do me justice, failing to understand the force of my argument the other night. I had been speaking at one time of the total reduction of speaking but at another time I had been dealing with the amount paid out of taxes. What is the charge 1521 to which I have, practically, been replying? That I have not paid the money out of taxes, but have got a fictitious surplus by other means. But I want to show, and I did show, that, notwithstanding the withdrawal of a certain amount from the permanent charge devoted to the extinction of Debt, we were, nevertheless, applying as much out of the taxes as had been applied by the previous Governments. I had not been saying that we were doing so much better than our predecessors, but was replying to the charge that we were doing nothing; I said that we had paid £12,600,000 more in our five years out of taxes than had been paid in the previous five years; more by £3,600,000 in four years than in the previous four years. These are actual figures; and if they are doubted, I can lay Papers before Parliament to show this is so.
§ SIR W. HARCOURT
What I want the right hon. Gentleman to show me is an authoritative statement that within latter years—that is, within the last four years — there was paid off £30,200,000; for that was his statement.
§ MR. GOSCHEN
I had been speaking of the total reduction of Debt and then of the amount paid off by taxation. When I spoke of the reduction of Debt in the last year I mentioned about £6,000,000, and when I spoke of the amount voted out of taxes for reduction of Debt I spoke of £7,500,000. The right hon. Gentleman wishes to fasten on me a statement that is not justified by the language used, and which I did not intend to convey. I am charged with not paying off Debt, but with having filched money which belonged to the payment of Debt, and I said that, notwithstanding all that has been done during the four years which I took of the present Administration, as much money has been devoted out of the taxes to the payment as in the four years of the former Administration.
§ SIR W. HARCOURT
What we understood the right hon. Gentleman to say was that in the last four years the present Government had been paying off £3,000,000 more of Debt than had been done by the last Government. That is what the right hon. Gentleman has been understood in the country to say, and that has been commented upon in every newspaper as a satisfactory demonstration of the right hon. Gentleman's finance. If the right hon. Gentleman says that is not so, that it is an exaggerated statement, I am quite satisfied.
§ MR. GOSCHEN
It is the exact opposite. The right hon. Gentleman is trying to evade the most substantial;point by putting the controversy on another footing. The amount of Debt the Government have paid off is immense, but this particular point with which I had been dealing was the amount paid out of taxes at one period as compared with the other, and I expressed myself plainly on that point.
§ MR. W. E. GLADSTONE
The right hon. Gentleman has dealt not with the simple question of how much the Debt has been reduced, but has dealt at one moment with how much it has been reduced, and at another moment with the totally different question as to the amount devoted to the reduction of the Debt out of taxes, which has involved the whole subject in inextricable confusion.
§ MR. GOSCHEN
But the right hon. Gentleman should not begin by charging me with not having paid sufficient out of taxation for the reduction of Debt, for that was the charge, not that we had not reduced Debt sufficiently. But even without reference to the conversion, where money has been paid out of taxation for the reduction of Debt, though it does not reduce the amount of Debt on paper—even on the figures of the right hon. Gentleman himself this is established, that after all the charges which have been made against us, we have reduced the liabilities by a net reduction of £26,000,000. I have excluded a year for which right hon. Gentlemen opposite were responsible; if I had taken that year into calculation the comparison would have been much better for the Government. I do not know, however, whether it is profit- 1523 able to pursue this matter any further. The argument which I hope I have established is that we have paid off more than the Administration—if it is to be a question of Administrations—of the right hon. Gentleman opposite. I think I have now dealt with all the main points which have been raised, and if I have omitted any I think it probable that I shall be reminded of them. At all events, if right hon. Gentlemen do not agree with much of my reply, I trust they will admit that I have endeavoured to meet the points they have raised.
§ (6.46.) MR. H. H. FOWLER (Wolverhampton, E.)
Although I am sure the right hon. Gentleman has endeavoured to explain this matter as fully as he thinks necessary, he must not be surprised to hear that Members on this side of the House have utterly failed to understand him. It may be our fault, but I venture to say that the confusion in regard to the Budget is now worse confounded than when the right hon. Gentleman sat down on Thursday night. The right hon. Gentleman now draws a distinction between what he calls net reduction of the Public Debt and sums appropriated out of taxation to that purpose; but the inference drawn from his speech the other night is that the reduction is wholly effected out of taxation; and although he said he did not intend to give the matter a political character, it has already assumed that character in every election now going on in the country. The statement is being made that while the Government of 1880 to 1885 reduced the Debt out of the taxes by only such an amount, the present Government has done so by a very much larger amount. Now, the true test of sound finance in regard to the reduction of Debt is how much is applied year by year out of the Income of the year to the purpose. There are, as we know, large sums which come automatically and go to the reduction of the Debt—sums which do not depend on either the wisdom or folly of the Chancellor of the Exchequer, but I repeat that the true test is the amount applied to the purpose out of the Income of the year. There are two ways of reducing the Debt—by means of Terminable Annuities, under the operation of the new Sinking Fund, or by means of the old ,Sinking Fund, which is the 1524 surplus of the income of the year over the Expenditure of the year. Taking the Chancellor of the Exchequer on both those grounds, I will draw his attention to a Return which has been laid before Parliament, and which was carefully prepared under my direction when I was at the Treasury. I will not in the comparison reject the year 1881, but will take the four years which the right hon. Gentleman gave in his Budget Speech-1881, 1882, 1883, and 1884—as representing this side of the House, and 1887, 1888, 1889, and 1890 as representing' the Government side. Now, in the former four years the Chancellor of the Exchequer of that day out of the taxes appropriated to the payment of Debt the sum of £27,128,000, of which only £1,586,000 was surplus. In the four years under the Administration of the right hon. Gentleman the amount so appropriated out of taxes was £27,600,000, of which a little over £7,000,000 was surplus. In presence of these figures, then, what ground is there for the right hon. Gentleman to contrast his own Government in such glowing terms with the preceding Government? The truth really is, with reference to the payment of the National Debt, that the credit is not due to this or to that Chancellor of the Exchequer. The credit was due originally to the principle of the Terminable Annuities established, I believe, to a great extent by my right hon. Friend the Member for Mid Lothian (Mr. Gladstone) and Lord Sherbrooke, and largely developed in 1885 by my right hon. Friend the Member for South Edinburgh (Mr. Childers). For the Chancellor of the Exchequer to take credit to himself for paying off Debt with those millions was as if an engine-driver driving a passenger train across the Forth Bridge took credit for building the bridge. The means were already at his hand, and he could do no other than reduce the Debt with them. I think the figures remain precisely where my right hon. Friend the Member for Derby (Sir W. Harcourt) left them. With reference to other points on which the Chancellor of the Exchequer had spoken, I am bound to confess that I cannot understand his defence of the accounts relating to the Army and Navy. I was much surprised to hear the right hon. Gentleman state that it was impossible at the 1525 commencement of the year for the Government to estimate what the expenditure for the year on public works or contracts would be, for such a statement strikes at the very roots of our finance. The one great point which has long distinguished English from foreign finance—and especially French and German finance—is that in England the year's Expenditure is met by the year's Income, and that the accounts are kept strictly within the year. But the present Chancellor of the Exchequer has introduced quite another system. He told the Committee the other night, for instance, that his Estimate for the Navy and Army for this year was £31,750,000. Now, an ordinary every-day man of business would certainly understand that that amount was to be the expenditure this year on the Army and Navy together. Not at all. The Chancellor of the Exchequer has himself said that he is about to put another Return on the Table, in which he states that he estimates the Army and Navy Expenditure for this year, not at £31,750,000, as announced in his Budget Speech, but at £36,907,000.
§ MR. H. H. FOWLER
Well, Sir, we did not understand that. I am not charging the right hon. Gentleman with keeping back in that sense of the word, but I say he is introducing a new system of finance altogether. He does not put before the country the Expenditure of the year in the shape the country understands it. He does not go to the country and ask that the sums he needs should be raised by taxation, but he proposes to borrow money to meet them. If I wanted to answer the Chancellor of the Exchequer on this very point, I should go to the speech, with which I have no doubt he is now very familiar, which my right hon. Friend has already quoted. The First Lord of the Treasury of these days was the First Lord of the Admiralty of that day, and the First Lord of the Admiralty of that day had very much the same views as to Navy Expenditure that the Chancellor of the Exchequer has now. The Chancellor of the Exchequer would not accept the statement of his right hon. Colleague, and let me read 1526 what he said in reply to him. He said—The First Lord of the Admiralty had presented a comparison based on ordinary and extraordinary expenditure. Let him ask the House to understand how this matter really stood. There were two kinds of extraordinary expenditure—that was using the language of the Government and not that of our old finance, namely, that which was used for a distinct purpose, and that extra expenditure, which was merely spent in our own dockyards, increasing our ordinary quantities of supply stores and ships. So much of the extra expenditure as was expended at home on dockyards in increasing the number of ships remained, and the House would see that it ought to fall, and it must fall, on the ordinary Estimates of the year.There is one other point the Chancellor of the Exchequer raised on which he seems to think no one impugns his action. I would do so, and I would say that all the financial sins with which the Chancellor of the Exchequer may be charged in future the greatest, I think, will be his anticipation of a possible contingent profit on the Suez Canal shares six years hence. That is a profit which does not exist, and which is a matter for the discretion of a future Parliament. It will be for the taxpayers and the Parliament of 1894 to say how they will appropriate that money. And I think the sum has been considerably exaggerated. If I understand the thing aright, there will only be a profit of £370,000 on the shares. We are now receiving £200,000, and the Chancellor of the Exchequer estimates that in 1894 he will receive £570,000, and he is now mortgaging the contingent profit between the £200,000 and £570,000.
§ MR. GOSCHEN
I would point out that that £200,000 profit now received is applied to the diminution of Debt.
§ MR. H. H. FOWLER
Yes; to the payment of the Terminable Annuities created for the purchase of the shares. Passing to the general finance of the Budget, the Chancellor of the Exchequer seems to think himself justified in his Expenditure. Whether he justifies it or not the House of Commons ought not to pass the enormous increase in our Expenditure which the Budget proposes without some criticism. The right hon. Gentleman in the course of his speech said he had beaten the record with regard to the payment of Debt. That, I think, we have disputed and disproved, but 1527 nobody, I think, can dispute or disprove that the right hon. Gentleman has beaten the record so far as Expenditure is concerned. The Budget of last Thursday night was the highest Budget ever submitted to the House of Commons in time of peace. We have reached a £100,000,000 Budget. I admit that a considerable proportion of that is to be appropriated in the shape of local subventions—for that is the real character of the local taxation, not grants in aid—with all the vices of the old system, with no advantage in the shape of control or economy; but practically we have to raise a Revenue next year of something like £100,000,000. The Chancellor of the Exchequer has anticipated where he will be exposed to criticism, and he has made reference to his Military and Naval Expenditure. I should like to quote one or two figures to show how this expenditure is increasing, and increasing in time of peace, and for reasons which the right hon. Gentleman said were of a political nature, of which we have no cognisance. The year 1879-80 was not a particularly peaceful year. The ordinary Expenditure of that year, which was the last year of the Beaconsfield Government, was £25,250,000; it is now estimated at £32,750,000. For this side of the House I can repudiate all partnership with the Chancellor of the Exchequer in that Expenditure.
§ MR. H. H. FOWLER
We have voted against it until we have become tired of voting against it. We have no wish to impede Public Business; but if the Chancellor of the Exchequer desires us to have protracted disputes in Committee of Supply, we may, perhaps, be inclined to gratify him. The gross figures as to the Army and Navy and Civil Service Expenditure are misleading, because they include gross amounts from which there are considerable receipts. In the Return I have referred to, we have the net Expenditure, which shows that it is not £100,000,000 or £90,000,00, but some £77,000,000, and of this Expenditure I want the House to contrast three or four items and see where the difference is, both as to where we are spending less and where we are spending more. Ten years ago we appropriated for Debt and 1528 interest £28,000,000. The House will remember the glowing picture the Chancellor of the Exchequer drew of the enormous increase in our national wealth and prosperity and prospects; but in spite of that increase, last year we only spent £21,750,000 on the Debt. Ten years ago we spent on our Army and Navy £25,750,000; last year we spent £32,750,000. Ten years ago the Civil Service cost £15,000,000; last year, including the discontinued grants, it is only £17,000,000; and on the collection of Revenue there is a reduction of from £2,750,000 to £2,500,000. Therefore, you see where the shoe pinches. You are increasing steadily and enormously the Military and Naval Expenditure, and you are decreasing the provision for the payment of Debt. If the House of Commons with its eyes open allows that to be done no one has a right to complain; but I entered my protest against the system as unsound and objectionable. The Chancellor of the Exchequer says he has levied a tax in order to provide for the extra expenditure on the Navy—the Estate Duty. The right hon. Gentleman did not tell us what were the receipts of that tax and the sources from which the money would be derived. I assume that if taxation is to be put on the country for military or naval purposes, all classes should share in it and be equally benefited. When lie put on the Estate Duty, we told him on this side of the House that the duty was being unfairly assessed. I do not know—the Chancellor of the Exchequer knows—what was the result last year. But I do know from the Report of the Commissioners of Inland Revenue what was the result of the first year of the Estate Duty, and I think the House of Commons will be interested to know what are the proportions in which the duty is paid by real and personal property. In the first three quarters of that year the total produced from personal property was £780,000, and the total produced from real estate was £9,776.
§ MR. GOSCHEN
The right hon. Gentleman should remember that one is paid in cash down, and the other only in instalments.
§ MR. H. H. FOWLER
Even so, and taking it at £72,000, I say that is an unfair proportion of a tax that is producing £800,000 from personalty. The right hon. Gentleman appropriates £7,000,000 to local taxation; but when he introduced the scheme only three years ago, it was not a scheme of £7,000,000, but of £5,500,000. He is now going to give Local Authorities £1,500,000 more than he proposed to give them (including the Horse and Wheel and Van Tax).
§ MR. H. H. FOWLER
I have gone through these matters very carefully, and am satisfied that what I have stated is correct. The right hon. Gentleman said—We consider that these proposals meet, and adequately meet, the demands of those who have been called the reformers of local taxation. We have got no further plan behind us. We have shown you our hand.But he now goes further, and puts on an additional £1,500,000.
§ MR. GOSCHEN
That is not so. Will the right hon. Gentleman show me how he arrives at his figures? I imposed the Beer and Spirit Tax, which takes the place of the Wheel and Van and Horse Tax. That would have amounted to £700,000. If there is anything more, it is the £700,000 that represents the Police Superannuation and the grant for technical education.
§ MR. H. H. FOWLER
The right hon. Gentleman may sub-divide it as he likes. I say that last year he gave for local taxation over £7,000,000. The abolished grants were £2,600,000, or £2,900,000 if you like. That leaves upwards of £4,000,000, and I say the original scheme did not come to within £1,500,000 of that amount.
§ MR. H. H. FOWLER
Well, what I want to do is to protest not only against the principle of the subventions with regard to local taxation, but against the unfair manner in which they are divided, which is becoming worse and worse every year. The figures with regard to the grants to London, to county boroughs, and counties show how unfairly the money is divided. The rateable value of the Metropolis is £31,500,000, that of the county 1530 boroughs £30,000,000, and that of the administrative counties £90,000,000. The local taxation of the country in round figures is, deducting the poor rate proper, £19,000,000, or £5,000,000 in London, £4,500,000 in the county boroughs, and £9,500,000 in the counties. Now, if the Committee will bear these figures in mind, they will see what is the injustice of the plan of the Government. London last year received from the local taxation account £815,000, the county boroughs £1,056,000, and the counties £2,933,000. That shows how unfairly the money is divided, and the relief should be given in proportion to the amount raised. That is an appropriation of public money which ought not to pass without some serious discussion. The appropriation of the surplus meets with my entire approval. But the true hero of the Budget is the right hon. Gentleman the Member for West Birmingham. When we remember what occurred in 1885 as to free education, and when we see that the Member for West Birmingham is able to compel a Tory Government, through the mouth of the present Chancellor of the Exchequer, to announce the adoption of free education, I think it will be admitted to be one of the most marvellous political triumphs of the time.
§ (7.5.) THE FIRST LORD OF THE TREASURY (Mr. W. H. SMITH, Strand, Westminster)
Sir, I congratulate the right hon. Gentleman that he has given us the assurance that the appropriation of the surplus meets with his entire approval. It is gratifying that there is one topic on which he is in absolute agreement with the Government. I shall give the right hon. Gentleman the earliest opportunity of showing how cordially he will support the Government. The right hon. Gentleman has spoken of sound principles in English finance. I agree with him that the Expenditure of the year should be met by the taxation of the year. But there is one other principle which has been lost sight of in the past—and that is, when an Expenditure is deliberately recognised as necessary, provision should be made for it in the future as well as at the moment it is passed by the House. What is the objection that is made? It is that the Government, recognising the defenceless condition of !the country, so far as the 1531 Army and Navy were concerned—armaments, coaling stations, and ships—felt themselves bound to make arrangements for the completion of the work they undertook, so that the Expenditure of one year should not be wasted through the omission to vote the money in the year after. There has been a singular deficiency of soundness in years gone by in that respect. Ships have been kept on the stocks for five or six years without being completed. There was a waste there, and waste of interest on the money already expended. If a man enters into a contract for the building of a house he generally sees his way to the completion of the contract into which he enters; he makes financial arrangements so that the work shall be carried through to a successful issue. The whole objection to the policy of the Government is that we recognise this responsibility to the country; we have made financial arrangements for the completion of the work we have undertaken, and have not left it to the uncertainty of the future. Objection is taken that the total of £6,800,000 for what is called extraordinary expenditure is put down and only £4,708,000 actually expended. I think we ought to take credit for that. Is it not, however, too late to object to those proposals two or three years after they have been sanctioned by Parliament? The right hon. Gentleman, however, has been discussing them as if the Bills embodying them were now before the House. The right hon. Gentleman has objected to the appropriation of the income derived from the Suez Canal shares held by this country to meet any particular branch of expenditure on the ground that that income forms part of the general Revenue of the country. On this point I have to say that when Her Majesty's Government came into Office they found that there was a great cumulative deficiency of provision for the safety and the protection of the country, and we thought that it would be hard upon the taxpayers of the day to ask them to pay off in four, five, or six years the whole charge which has to be incurred in consequence of those accumulations of deficiencies which are the result of many years' failure to provide for the safety of the country. It is to meet this Debt, which is due to the action of past Chancellors of the Exchequer, past Houses 1532 of Commons, and past taxpayers, that the income derived from the Suez Canal shares has been appropriated for a limited number of years. No one could have anticipated, when Lord Beaconsfield purchased the shares in 1875, that the investment would realise so large a profit for the country, and it is only right that the proceeds of this successful investment of the national funds should be. appropriated for a term to providing for the safety and the security of the country. The right hon. Gentleman has objected that the contributions from the Imperial Exchequer in aid of local expenditure are not under Imperial control, and suggests that in such circumstances there is no security that the contributions will be expended in an economical manner. But if the Local Authorities, who are the representatives of and are responsible to the ratepayers, are to be trusted to expend the local rates economically, why should they not be equally trusted to spend the Imperial contributions economically when it is clear that those contributions merely represented an equivalent amount of rates? It cannot be contested that the economical expenditure of these contributions must result in a diminution of the rates. I do not suppose for a moment that the right hon. Gentleman would seriously propose that the Imperial contributions in aid of local burdens should be put an end to, with the result that the rates would have to be raised to a corresponding extent. Then with regard to the rate of the repayment of the Debt. I should like the right hon. Gentleman to go to the country on the question whether the Debt should be repaid at the rate of £9,000,000 or £10,000,000 a year, instead of at the rate of £6,000,000 a year, with the result in the former case that the taxation would have to be increased by £3,000,000 or £4,000,000 a year. I should not like to go to the country with a proposal of that kind, and to ask it to pay taxes to the amount of £9,000,000 or £10,000,000 a year instead of the £5,000,000 or £6,000,000 for which provision is now made. I believe the present system is one by which the Debt is paid off with sufficient rapidity to give security and stability to the finances of this country; and to call upon the taxpayers to find so large a sum as £9,000,000 or £10,000,000 yearly by 1533 organised taxation, apart from occasional services, would be a monstrous demand, and one largely in excess of what any Government ought to propose.
§ (7.41.) MR. SYDNEY BUXTON (Tower Hamlets, Poplar)
I think the right hon. Gentleman entirely misapprehended what fell from the right hon. Gentleman the Member for Wolverhampton, who objected that under the system introduced by the Chancellor of the Exchequer Imperial and local finances were now so mixed up that it was very difficult to distinguish one from the other, and that too large an amount was now given to local finance in view of what the Chancellor of the Exchequer originally said would be a fair sum. In regard to the last point raised by the right hon. Gentleman the First Lord of the Treasury as to whether the country would desire to vote an additional £3,000,000 a year towards the reduction of the Debt, that is a question which cannot possibly arise, thanks to the action of the Chancellor of the Exchequer himself. The real point is not whether we are prepared to vote this additional £3,000,000, but whether the right hon. Gentleman was justified three or four years ago in reducing the Sinking Fund by £2,000,000, and invading its principle by taking out a further £1,000,000. It so happens that the Revenue has increased since then. We are very glad of it, for the right hon. Gentleman has been able to reduce a larger amount of Debt in consequence of the unexpected surpluses he has received; but our complaint is that still more would have been paid off if he had not invaded the Sinking Fund. In regard to the question of spreading the Expenditure, the First Lord seems to think- our chief complaint is of the large outlay which is unfortunately being made on the Army and Navy. I agree with the right hon. Gentleman the Member for Wolverhampton in his remarks on that, but the point we are discussing is not the actual amount of annual Expenditure under the Act, but the mode in which it is carried out. The Government proposed to spread the Expenditure over seven years, and our complaint, which has since been proved to be well founded, was that it was not possible so long ahead to frame accurate estimates of such Expenditure. The First 1534 Lord seemed to think it to be to the credit of the Government that they had spent a much less sum than was originally estimated for, but it appears to me that this miscalculation is the best possible condemnation of the policy they pursued. Another of our complaints was not that they had borrowed a certain amount of money, but that they made no effort to meet the outlay out of current income. The right hon. Gentleman the Member for Derby made some trenchant remarks on the action of the Chancellor of the Exchequer in "spreading " the Expenditure, and pointed out how the right hon. Gentleman strongly condemned the practice when adopted by one of his predecessors. The Chancellor of the Exchequer, in his reply, while he defended his policy, might have pointed out that in the previous years of his Chancellorship he had given £4,000,000 of annual Revenue to the Income Tax payers, that he had reduced the Debt by £2,000,000, and that in the same year he increased the Estate duty and practically reduced the Sinking Fund by £1,000,000. In the last year, too, he was able to reduce the taxation by another £3,000,000. I cannot consider it heroic finance while reducing the taxation £7,000,000 to add £1,000,000 a year to cover expenditure which ought to have been met in the year in which it was incurred. The right hon. Gentleman said we on this side of the House do not understand the matter, and that the Return he has given to the right hon. Gentleman the Member for Bradford is totally mislead. ing. Now, no one in this House was able to trace in any published account how the money was being expended and how it was being provided, and hence the Return was asked for. It was only obtained under great, pressure from the Front Opposition Bench, and it does seem strange that the Chancellor of the Exchequer should now say it is misleading, and that we do not understand it. But I need not enter on that point further. In conclusion, I should like to say that many of us on this side of the House hail with satisfaction the proposals contained in this Budget, because we desire to support the application of the surplus to the abolition of school fees. When the Bill is introduced, if it is not in a satisfactory shape, we shall 1535 endeavour to improve it; but I hope we shall not fall into the course evidently desired by the Government—to judge from the utterances of their supporters —and so oppose the Bill as to induce them to withdraw it. I hope we shall accept it, whether satisfactory or not, keeping ourselves free at some future time to deal with the whole educational question in a more satisfactory way. It seems very likely that we shall have to support the Government rather than oppose it, to judge from the way in which the proposal was received the other night by hon. Gentlemen opposite. Their reception of it was certainly ominous of trouble and of the fate of the Bill. It seemed as if]ion. Gentlemen were not quite so ready to throw over all their past professions and past pledges in regard to the question of free schools as the right hon. Gentlemen on the Front Bench; that they are not quite willing even just before a General Election to offer free education as a sort of bribe, seeing that they have opposed it in the past. Hence they are not quite prepared to follow the Government in this matter. But we believe in the principle of free schools, we believe in the abolition of fees, and therefore we shall do our best to save the Government from their own friends.
§ (7.51.) MR. ROWNTREE (Scarborough)
I hope the statement of the right hon. Gentleman the Member for Wolverhampton as to the inequitable distribution of the grants in aid will receive more attention from the Government, for it is exciting a good deal of notice in the country, and marked dissatisfaction is becoming apparent. The right hon. Gentleman spoke of the large amount which county areas were receiving from the grants in aid as compared with the county boroughs, and the Metropolis. I think the matter ought to be pressed further, for the argument might be extended with great force, because the smaller Corporations in the county area are receiving very much less than they ought to in proportion to their area, population, and rateable value. May I give one illustration? The Chancellor of the Exchequer in his Budget speech stated that £3,100,000 had been appropriated to grants in aid of local taxation in England alone. If so, surely every Corporation in the country 1536 and every area of population should have received some decided and considerable benefit from this large sum; but, as a in matter of fact, there are unfortunately some Corporations which have practically received no benefit at all. The borough I represent has received only £47 in addition to the grants it received previously. No doubt it will be urged that negotiations are pending with regard to the main roads, and that when completed further sums will come to the boroughs; but admitting that, I doubt if we shall get anything in the way of arrears, or if we shall even get a fair share in the future. To show how important this is, I will illustrate the case of Scarborough. If I take the basis of population, they are entitled to £3,600 out of the £3,100,000 of the grant in aid; but if I take their rateable basis, they will be entitled to £4,400 annually. If I take a third alternative—the basis of the previous payment or amount raised within the town as far as we can estimate towards that taxation—our share would be £4,130. Yet we have only received £47 in addition, and assuming we do receive that which apparently we are entitled to receive in the future from the County Councils, we shall only have £1,250, or about one-third of the proportion due to us. I believe this case can be paralleled by the cases of other towns; and I respectfully submit that the smaller boroughs—giving, as many do, much attention to the sanitary requirements of the town, and anxious in every way to promote the well-being of their people—are as much entitled to their proportion from these grants in aid as larger boroughs within county areas. I ask the Government to give some attention to this matter, and enable these boroughs if they are in error to see exactly where that error is, because it appears that they are under considerable difficulty in bringing forward figures so fully as they would wish to do. I particularly appeal to the Chancellor of the Exchequer to allow Returns to be prepared giving by way of illustration a certain number of towns showing the effect of the new system on smaller Corporations, on the non-county boroughs, as well as on larger ones. In December last the Chancellor of the Exchequer's Secretary wrote showing exactly the position of 1537 the county borough of Halifax under the new system; and I should be glad if the Government would prepare a Return showing what they claim to be the beneficial effect of the system on some of the smaller towns. We may be mistaken; but at present we believe we are being unfairly dealt with and prejudiced by the new system. At present, the figures show that taxation is being raised from the small boroughs to be expended in the adjoining counties, and we are not receiving any relative advantage from it. We feel this to be a great grievance. I wish to say, in conclusion, that as far as possible moneys granted in aid of local rates in the future should not be ticketed and allocated to some particular fund, and that the Local Authorities should be trusted more in the actual distribution of these funds. The right hon. Gentleman the Leader of the House has spoken of trusting the representatives of the Local Bodies. We ask that they should be trusted in the actual distribution of these sums. The finance of towns is being made much more intricate and difficult to understand; because different sums come into the financial accounts which are earmarked for certain purposes, and which therefore do not go through the balance-sheet as a whole, but form a variety of separate accounts. Such a state of things lessens the responsibility of the representatives of the different Local Bodies, and makes the local balance sheet much more intricate and difficult to understand. I trust that, in view of the great interest which is felt in the application of the grants, we shall have some assurance that the money will be granted equitably and justly to all the different Corporations and all the Local Bodies concerned.
§ (8.2.) THE PRESIDENT OF THE LOCAL GOVERNMENT BOARD (Mr. RITCHIE, Tower Hamlets, St. George's)
The hon. Member has more than once urged upon me that Scarborough, the borough he represents, does not get that share of relief which he considers it ought to get, either in proportion to its rateable value or population. The hon. Gentleman has told us to-night that the whole sum which has been received by Scarborough up to the present was something like £47—
§ MR. RITCHIE
In addition to the discontinued grants. I presume the hon. Gentleman has not included the amount which has been paid to the Union in which Scarborough is, in aid of the poor rate.
§ MR. ROWNTREE
That comes to about £700; hut, on the other hand, we have had to pay to the county rate a like amount. I balanced the one against the other.
§ MR. RITCHIE
Then, of course, Scarborough has something to receive in respect of main roads. I am quite prepared to admit that Quarter Sessions boroughs, which previously made no contribution to the county at all, are in a somewhat different position to ordinary non-county boroughs. Parliament decided that it was necessary that Quarter Sessions boroughs--all boroughs below a certain population—should, in future, become part of the county; and in order to meet what was considered a just demand on the part of the Quarter Sessions boroughs, which had no main roads, but which contribute to the county main roads, it was determined that there should be a re-consideration of the streets of the boroughs, and that such of them as were main roads should be declared main roads, and be repairable by the county. I do not dispute that there may be cases in which, perhaps, the adjustment may not be so satisfactory to the borough as all desire. In connection with the declaration of main roads in Scarborough, I have considerably extended what was considered necessary and recommended by the Local Government Inspector who went down, but I have not been able to meet the wishes of the lion. Gentleman or of the borough of Scarborough. I feel there is some ground for the complaint on the part of Scarborough that it has not benefited so much by the relief under the Local Taxation Account as some other' boroughs, which do not possess the exceptional position that Scarborough has, and if I can give a Return such as the hon. Gentleman desires I shall be glad to do so. I am sorry the right hon. Gentleman the Member for Wolverhampton has left the House, because I desire to take advantage of this opportunity to make some remarks with regard to the figures he quoted in comparing the position of the counties, the 1539 county boroughs, and the Metropolis, so far as the relief of local taxation is concerned. The right hon. Gentleman said that under the complete scheme London would receive £280,000, the county boroughs £700,000, and the counties about £2,000,000. Those figures are not, however, accurate. My own calculation at the moment is that London will receive something approaching £500,000, the county boroughs £600,000, and the administrative counties £2,000,000. The right hon. Gentleman stated the figures in order to draw a comparison unfavourable to the towns. He said the benefit derived by the counties was very much larger than that conferred on the Metropolis or the county boroughs. Now, my point is that the relief to the Metropolis is 3.5d., as against 4.9d. for the counties and 5.4d. for the county boroughs. Thus, though the Metropolis gets a very large sum, the actual amount of relief is not so great as in the cases of the counties and county boroughs. This is explained by the fact that the amount collected for licences in London is considerably less than in other parts of the Kingdom, and consequently London does not receive so much in relief. I do not think that the inhabitants of London have any very strong ground of complaint. The right hon. Gentleman the Member for Wolverhampton drew a comparison between the relief to the country and that to the towns, and contended that the relief in the latter case was less than it ought to be. But what are the facts? While the relief -given in the county boroughs in England and Wales is 5.4d., the counties have only benefited to the extent of 4.9d.
§ MR. STOREY (Sunderland)
Will the right hon. Gentleman give us the comparison of the existing rates in boroughs and in counties? A reduction of 5d. in a 4s. rate would be very different to a reduction of 4d. in a 6d. rate.
§ MR. RITCHIE
I maintain that that would not be a fair basis of comparison. If it be true that the towns have heavier rates, they have got value for their money. There can be no question about that. They have spent large sums on water supply and drainage, and other matters, which contribute greatly to the comfort of the inhabitants, and it would be an entirely erroneous method of calculation if this money were to be distributed and relief 1540 given on the basis of money spent. If the rates in towns are high the inhabitants reap the benefit in the shape of the increased value of their property. I contend that, on the basis of rateable value, the towns have not fared so much less well than the country, for, from a statement before me, I find that whilst the county boroughs will be relieved by 5.4d. in the £1, subject to the equitable adjustment, the complete effect of which we do not yet know, the administrative counties have received relief by about 4-9d. The amount of difference is not great, but whatever it is I say that it is in favour of the towns. The right hon. Gentleman complained that Wolverhampton had not fared well in the distribution. I think it has benefited considerably above the average of county boroughs throughout the United Kingdom, for it has received the equivalent of 6d. in the £1, whereas the average of county boroughs is 5d. I, therefore, do not think it has any reason to complain on that score.
§ (8.15.) MR. STOREY
I accept the right hon. Gentleman's figures for the present, although Parliament has not been furnished with the means of testing them. I understand him to say that London has received, through the operation of these subventions in aid, a reduction of 3d. and a fraction in its rates—[Mr. RITCHIE: Nearly 4d.]—3.7d. He tells us that county boroughs have received a reduction of 5d. and that counties received practically about 5d. We understood that this was to be a relief of those who needed relief most, but the basis upon which the right hon. Gentleman and the Government have gone has been such that those have got most relief who were least heavily burdened, and who therefore needed least. I Take the case of a county where the rate is 1s. in the £1. If the county had got a saving of more than 4d.—nearly 5d.—in the s., it is very evident that the reduction in the rates would amount to 33 per cent. Take the case of a borough which may happen to be within the county though not of it. That borough has secured a reduction of rates of 5d. The fates are probably 4s. in the £1, and in some cases more. It is evident that a reduction of 5d. upon a 4s. rate is a very different thing to a reduction of 4d. 1541 upon a 1s. rate. We, in Sunderland, have secured such an amount of money through these subventions as has enabled our Poor Law Guardians to levy a lower rate this year than we have had for several years past. But whilst we are large enough to secure a reduction of our rates by something like 2d. in the £1, which is about one twenty-fifth of our total rate, in the county immediately adjoining they have been able to secure a larger reduction—indeed the reduction has been of such an amount that practically their rates have been reduced to next door to nothing at all. When the Local Government Act was passing through the House the contention was that there were certain areas and certain descriptions of property that were so heavily rated that it would be convenient and advantageous to apply general taxes to alleviate the burdens upon those properties, and we allege that the operation of the right hon. Gentleman's method has been that the relief has mainly gone to the owners of land who least needed it. The relief which we in boroughs were led to expect would be very important and very considerable, has been, as a matter of practice, found worth very little at all. I have no disposition to pursue the other points raised to-night, because I do not think it is really worth while debating them at all. But this particular point the right hon. Gentleman well knows has not come up now for the last time. It will come up, I hope, again and again, until we are able to secure some much more equitable division of the relief as between boroughs and counties.
§ (8.24.) MR. ROWNTREE
I have Papers here referring to many other towns where the grievance to which I have called attention is as strongly felt as in Scarborough. I am sure there would be a feeling of great satisfaction if the right hon. Gentleman could see his way to present a Return which would enable the towns to judge of the actual result of the new system.
§ (8.30.) MR. STOREY
I desire to ask a question with respect to the House Duty. Last year a reduction was made in the Inhabited House Duty, and we contended it should apply to tenement 1542 houses. We understood that that condition had been acceded to, and that tenement houses which were occupied by two or more tenants, though there was a common door, would be exempt. A case occurred in Sunderland, in which a woman applied to the Inland Revenue authorities to be relieved from the Inhabited House Duty on the ground that the house was a tenement house, occupied by two tenants, neither of whom paid £20 a year. The Local Commissioners took a common-sense view, and exempted the woman from the duty; but the authorities in London have appealed against the act of the Local Commissioners, and are putting the poor woman to considerable expense in legal proceedings. Perhaps the right hon. Gentleman will explain to us how the matter stands. (8.33.)
§ (9.5.) MR. MORTON (Peterborough)
I do not wish to detain the Committee beyond a very few minutes, and have merely risen to call the attention of the Chancellor of the Exchequer to a matter upon which I spoke last year. But I may say, on the general question, that I am very glad to think that the Government propose to redeem their promise and give the people free education. So far as I am concerned, I am glad to acccept as much free education as they will give us, not troubling whether denominational schools benefit by it or not. I know there are some persons, both inside and outside the House, who believe that the Whisky and Beer Duty should be reduced; but I am bound to say that, having the choice, I should have no hesitation in preferring free education to free whisky. I hear something said about free education being accompanied by popular control of denominational schools, and that may be necessary by-and-bye., Meantime I, for one, do not care to destroy the denominational schools at once, and am satisfied that it would be no benefit to the ratepayers; but if it is found by-and-bye that it is impossible to work a system of free education with denominational schools, then an element of popular control may be provided in the management—
§ MR. MORTON
I do not wish to go beyond what you, Sir, consider the limits of the present discussion, and will say no more on this matter. But I do trust 1543 that we shall have free education introduced as soon as possible, and I am sure it will be a benefit to the people of this country. The particular matter upon which I rose to say a word or two has relation to the assessment of House Duty and Income Tax. Last year I called attention to the matter, and I am aware that it has often been referred to in previous Sessions of this and other Parliaments. But we shall not be satisfied with simply calling attention to it; the system should be altered to a uniform system of assessment for rates and taxes. At the present moment the rates are collected on what is called the rateable value. This is in accordance with the Act of Parliament, which says that the rateable value shall be the value, after deductions from the gross rent, of certain charges. Income Tax and House Duty, however, are collected on the gross value. Now, what is wanted is that both should be collected on the same basis. They cannot both be right, and one or the other should be adopted. I do not, of course, mean that it is legally wrong, but it is morally wrong, to collect the Income Tax and the House Duty upon the gross value. Of course, the matter has occupied the attention of successive Chancellors of the Exchequer, and has been considered by Parliament, and Parliament has said that local rating shall be on the net value. The question of fair value has also been before the Law Lords of the other House, and in 1883 they decided' that the gross value was not the fair value, but unfortunately they did not decide what was the fair value. In the case of assessment for the water rate they declared that the gross value was not the fair value. In 1885 Parliament decided on the same question by passing an Act, declaring, in regard to these Water Companies, that the fair value was the rateable value, so I think we have good authority for saying, in regard to this matter, that whether it be legally right or not, so far as we can get any declaration, it is that the true value is the rateable value. Of course, I am perfectly aware I can hardly expect the Chancellor of the Exchequer to do anything during the present year, for the alteration means a reduction in the Revenue, and we can only expect this when a Chancellor of the Exchequer has 1544 surplus to dispose of. On ways of dealing with the subject I will not now dwell; all I want to know is, whether the Chancellor of the Exchequer is considering the matter, and if he proposes to do anything in regard to it? In the course of a short discussion I initiated last Session, the right hon. Gentleman said " It was a matter of great importance, and it would ,continue to occupy his attention, not without some hope that it would be possible to deal with the matter some day." Now, " some day " is a vague expression, and I bad hoped it might have come this Session, and, at any rate, I should like to know if the right hon. Gentleman yet sees his way to do anything in the matter, which will not be settled until a uniform system of assessment is adopted for rates and taxes. There is another matter, to which I called the right hon. Gentleman's attention earlier in the year, and that is this. In the collection of local rates a deduction is allowed to landlords on property of a certain rateable value if they pay on their houses whether empty or let and during the whole of the year. I am told that the overseers find that it saves them a good deal of trouble, and that they do not find there is any loss by making these allowances, it being convenient to both landlord and tenant. I should like to know whether the right hon. Gentleman could not do the same thing as regards House Duty and Property Tax, allowing a certain discount on property up to a certain rateable value where the landlord and not the tenant pays the taxes? I am sure if that could be arranged it would save a great deal of trouble to collectors, tenants, and landlords, and I do not think there would be any loss to the Revenue. I will not detain the Committee longer, but I trust the Chancellor of the Exchequer will be able to give me an answer a little more favourable than that he gave me last year in regard to the assessments; and I trust the time is not far distant when we shall have the alteration made, because it must be wrong to collect the taxes upon what the House of Commons has declared an unfair value. You might as well collect the Income Tax on a man's income, deducting nothing for expenses, as to collect the tax on house property, allowing nothing for outgoings.
§ (9.16.) MR. CHANNING (Northampton, E.)
The present Budget proposals are the most remarkable we have had for many years, and remarkable in two ways: in the first place, in offering to the people of this country, perhaps the greatest, the most important, and most urgently desired remission of taxation for I consider free education to be a remission of taxation that has been offered for many years past. But I think the Budget is equally remarkable in that it has given rise to a discussion which has been an explosion and an exposure of the Chancellor of the Exchequer's method of finance. The whole of the right hon. Gentleman's long speech he gave us the other day might be summed up in one sentence that he felt very severely the strictures passed upon his financial methods by one of the most eminent authorities on finance (Sir Thomas Farrar), and the whole of his speech was an elaborate apology for his financial administration, based on the charges made against that administration by Sir Thomas Farrar. Now, I do not propose to deal with the question which has been so thoroughly threshed out to-day; but, at least, this may be said: that the support which the Chancellor of the Exchequer gets to his proposals by saying that the burden will not come upon the taxpayers because of the Suez Canal shares, is founded on a fallacy absolutely transparent. With regard to the Naval Defence Act, he has bound the hands of Parliament and future Chancellors of the Exchequer so that they cannot interfere with Expenditure without the consent of the House of Lords, which we know will not be given. But with regard to the Suez Canal shares, while there is no consent of the House of Lords necessary, then there would be no difficulty, supposing a Radical Parliament elected at the next General Election, and a Radical Chancellor of the Exchequer proposed it, in appropriating the whole of that windfall to some other purpose for the public advantage, instead of that for which the Chancellor of the Exchequer destines it, still, in that case, too, there is practically an anticipation of income, depriving the taxpayers of a fund which they might apply to other uses. But 1546 the whole financial administration of the right hon. Gentleman has been tumbled down like a house of cards by the criticisms of my two right hon. Friends, and I will not therefore occupy the time of the Committee in dealing with the subject, but I have something to say (as to what may be called the Local Budget of the Chancellor of the Exchequer. The £4,000,000 of money issued from the Consolidated Fund as grants in aid to County Councils are not only a violation of those principles of finance laid down by Chancellors of the Exchequer and all who have thought out local finance administration, but contrary to his own contention which, with all eminent authorities, has been that you should give aid to local finance in the form of taxes, which can be raised by these Local Authorities, and for which Local Authorities should be primarily and directly responsible, and in the economical raising and spending of which Local Authorities have a peculiar and direct interest. In issuing these subsidies from the Con solidated Fund, the violation of principle involved is made all the worse by what has been admitted by the Minister of Agriculture with regard to agricultural districts, that reduction of rates is ultimately for the benefit of landlords, so that, practically, the whole of these £4,000,000 do not go to relieve industry, but will fall into the lap of the landed interest. I refer to this because I wish to say a word upon the financial side of free education. £1,000,000 is to be devoted to that purpose this year, and £2,000,000 in future years, and all who are interested in education and in the welfare of the poorer working classes who send their children to elementary schools must be perfectly satisfied with this appropriation of national funds. But what I wish to point out is this: in the first place, that we are pledging the resources of the future; of that I do not so much complain; but then these £2,000,000 annually will be granted out of the Consolidated Fund, while there is no attempt made to revise the incidence of Imperial taxation on land and realised capital. You are adding £2,000,000 a year to the outgoings, while 1547 you have not introduced a graduated Income Tax, or revised the Death Duties, or placed direct taxation upon ground rents and ground values. These matters are left to the remote future, and the Government are giving this grant out of the pockets of commerce and enterprise and industry and labour, and out of the pockets of those men and women whose precarious incomes depend on their own faculties, and for whom the Chancellor of the Exchequer has no remedy or relief in the immediate future. I wish to emphasise the point that we are having a great gift made to the people of the country without placing a fair share of the burden upon realised property. I know it would be out of order to enter into the details of the proposal of free education. J would only say with regard to this that every Liberal and Radical on this side of the House, and every Liberal and Radical in the country, will in one sense thank Her Majesty's Government from their hearts for having made this great concession to the people of the country. But we consider it a victory of Radicalism and Liberalism over Tory prejudice and Tory protest. At the beginning of this Session, when this question was mentioned, the only Conservative Members who spoke on it condemned the whole proposal. How has it come about? We Radicals gave the franchise to the county electors, and nobody opposed its extension to them more persistently than the Chancellor of the Exchequer, but it is the fact that the county electors have a vote and will shortly be able to exercise it, and not sympathy with the principle of free education that has induced the Chancellor of the Exchequer to make this boon to the people of the country. I hope the measure will be promptly brought by Her Majesty's Government before the House. As far as those who have sometimes worked with me on educational questions in the House are concerned, I am sure we shall give the warmest and heartiest support to this proposal, while we shall not shrink from asserting in some practical form those conditions which we consider to be essential to the true and genuine carrying out of the measure of free education. But, subject to that, we shall give the right hon. Gentleman's proposal our 1548 hearty support. If there is a section of the followers of the Chancellor of the Exchequer who are anxious to avail themselves of the exigencies of Parliamentary time to enable the Government to escape from the carrying out of their pledge, we Radicals shall not let them off, but shall insist on the prolonging of the Session sufficiently to carry this proposal into effect, and shall not leave the poor men we represent in the counties subject to this tax one instant longer than we can. We shall insist upon the carrying out of the pledge which makes the Budget of this year so memorable.
§ (9.29.) SIR R. FOWLER (London)
The hon. Member has made a great attack on the landed interest. I do not happen to be largely connected with that interest, but I sit and live amongst those who are, and I know they are taxed to an extreme point, and that an increase of the taxation upon them would be equivalent to the imposition of the last straw that breaks the camel's back. I have already expressed my great satisfaction with the general principles of my right hon. Friend's proposals. I think he is entitled to the gratitude of the country for them. There is one particular point, however, to which I desire to draw attention. My right hon. Friend has proposed, and I think unjustly proposed, to throw a very heavy burden indeed on the Straits Settlements, namely, no less an amount in future than £100,000. per annum. Now, the Crown Colonies are not in the position of self-governing colonies like Australia and Canada; they have no Representative Institutions, and therefore depend for their ruling and for justice, to a large extent, on legislators appointed by the Home Government. I think they have a right to look to this House in a sense in which the self-governing colonies do not look to it. As regards the Crown Colonies, the effort which has been made to put increased taxation on them is very hard upon them. The reason for what has been done, particularly in Singapore, is that it is a most important naval station—a coaling station. It has been thought advisable by the Government to expend a large sum in fortifying the position; and I contend that, as the work is for Imperial purposes, the cost should 1549 be borne by Imperial, and not by local, finance. In Hong Kong the expenditure of the Government is £200,000 a year; at present the colony provides £20,000 a year, but in future it is to be called upon to contribute £40,000. In the Straits Settlements the expenditure of the Government is only £136,000 annually, and yet this colony is asked to vote upwards of £100,000 of that amount. The burdens are not only all unfair in themselves; but in the case of the Straits Settlements, the proportion demanded is particularly unjust, and it is a burden forced upon it in violation of the votes of the Local Council entirely, because the Crown nominees are in a majority. I maintain that this is a great grievance, and I appeal to the Chancellor of the Exchequer to carefully re-consider the matter on grounds both of justice and of policy. I appeal to him to do this as a statesman who has sat in a good many Cabinets. He is not only acquainted with the Exchequer, but he has been First Lord of the Admiralty, and has filled other positions in Governments. He ,can, therefore, take an all-round view of the question. I believe that this has been suggested to the Treasury.
§ SIR R. FOWLER
Well, I believe they have looked into it. No doubt the duty of the Treasury is to raise money by all the means in their power; but I would appeal to the Chancellor of the Exchequer to regard the matter from the point of view of statesmanship, and not from the narrow point of view of the Treasury.
§ (9.38.) SIR T. SUTHERLAND (Greenock)
This is an important question to the Crown Colonies concerned, and I can speak with some authority on it, because I happened to be a member of the Legislative Council of Hong Kong at the time the first Imperial contribution was imposed on that colony. I listened with some surprise at the manner in which the Chancellor of the Exchequer appealed to the patriotism of the Crown Colonies with respect to the new and much larger impositions in the future. To my mind, his attitude was something like that of an amiable fishmonger, who, having skinned an eel, suggests that it should be as 1550 obliging and patriotic as possible. The course of procedure in such cases is that a Minister, or an official representing the Government of the day, having discovered that a Crown Colony has a Revenue and no representative Institution, decides to appropriate a portion of that Revenue for Imperial purposes. In the case I am familiar with, a message was sent out to the Governor to bring in a Bill, and the official members of the Council were required to vote for it, and in all cases the official Members are in a majority in Crown Colonies. In the particular instance to which I refer I had the audacity to oppose the contribution on what I believed to be just and equitable grounds, and one or two of the official members ventured to take a similar view; but, subsequently, a Despatch was received from the Secretary of State, in which it was practically stated to the official members of the Council that it would be as much as their places were worth if they voted against a measure advised by the Home Government, and brought forward by the Governor for the purpose of filling the Exchequer of the Home Government. That is not at all an exaggerated statement of the facts as they occurred a few years ago, and I venture to say that it will be found, on investigation, that a similar course has been pursued in regard to the recent enormous levies on the Straits Settlements, Hong Kong, and Ceylon. I need scarcely say that if these colonies possessed representative Institutions, the Government would never have tampered with their independence in the way they have done; for, as has been stated, the great bulk of the expenditure referred to is for Imperial, and not for local, purposes, and ought to be borne by the Home Government. I do not know how the Crown Colonies intend to deal with this question, but I trust they will not allow it to remain in its present unsatisfactory position. I am not, perhaps, sufficiently experienced in matters of this kind to advise them as to what would be the proper course to pursue. Whether they should follow the example of Newfoundland and ask to be heard at the Bar of the House may, perhaps, be an open question. I would, however, venture to suggest to the Chancellor of 1551 the Exchequer an intermediate course —one which he might judiciously adopt in the interests of the Home Government and in the interests of a good understanding with the colonies—and it is that he should allow a grave matter of this kind to be submitted to a Committee of the House, before whom representatives of the colonies might be allowed to attend and show cause against the course pursued by the Government. I have no doubt the Chancellor of the Exchequer will be able to give an elaborate, add even a plausible, answer to the observations of my hon. Friend and myself on this question, but I venture to say that the matter will not rest on the present Budget discussion. Passing by the question with which I have been dealing, I cannot but congratulate my right hon. Friend on being one of the most cautious and fortunate Chancellors of the Exchequer who has handled the finance of this country for a very long time. J uphold entirely the financial method which the right hon. Gentleman has adopted on the important questions with which he has had to deal. No wiser or more sensible thing was ever done by a Government than, having entered on a most important and necessary programme in connection with the naval and military defences of the country, that they should have determined to allow the Departments concerned more or less a free hand in carrying out the great work, instead of confining them to the narrow limits of the Estimates of each succeeding year. It is utterly impossible for any Admiralty or any Naval Department to devise a scheme by which they can lay down exactly how much of the £21,000,000 which the House sanctions for naval construction can be expended in one particular year. At the same time, I think the accounts which the Chancellor of the Exchequer placed before the House at the time he introduced the Budget might be of a clearer and more comprehensive character. There is a great deal of mystery, especially with regard to these outside running accounts, which might be cleared away if a different system were adopted. I would suggest that the Chancellor of the Exchequer should have a printed Financial Statement issued from the 1552 Treasury in the same way as is done by the Admiralty and the War Department. Such a statement would greatly facilitate Members in addressing themselves to the question of the national defences, and also lessen the labours of the Chancellor of the Exchequer in his Budget Speech. I should like to allude to the amount of the Floating Debt vis-à-vis to the amount of our Consolidated Fund; and, so far as I am concerned, I entirely approve of the idea of the Chancellor of the Exchequer in desiring to maintain Consols at the lowest possible amount, even at the cost of speculating somewhat in regard to the Floating Debt. I do not know whether in the voluminous Returns given to the House from time to time the information is afforded as to the cost to the Treasury of financing the Floating Debt; but I should be extremely surprised to hear that the cost of that financing during the last 12 months has been equal to the rate of the limited interest paid on the Consolidated Fund. Even if the expense were greater, I should still be an advocate for, as far as possible, avoiding the necessity of increasing the actual amount of our Consols. As to the price of that Stock, all the Members of the House are responsible. When the reduction in the interest was effected, investors rushed out of Consols into Railway Preference and Debenture Stock, and the consequence was that the latter have advanced something like 20 per cent., while Consols fell into a state of suspended animation to some extent. The re can be no hostile criticism of the Chancellor of the Exchequer with reference to their existing value, for no one voted against the reduction of the interest. I must bear my testimony as a shipowner to the advantage the country has derived from the possession of its interest in the Suez Canal. The shipping interest of this country is under a deep debt of gratitude to those who had the happy inspiration of obtaining for this country a voice, and an important voice, in that control of that great undertaking which is so vital to our interests and welfare, and the interest on the shares could not be easily devoted to a better purpose than that to which it is applied by the Chancellor of the Exchequer.
§ (10.5.) MR. SHAW LEFEVRE (Bradford, Central)
Sir, the lion. Member behind me has complimented the Chancellor of the Exchequer for giving way to the great military Departments, but for my part I must protest against such doctrines, and if they were carried out to the full extent they would open floodgates of Expenditure in all directions. I protest against the doctrine that there is any financial pedantry in criticising the plans by which the Chancellor of the Exchequer meets the demands of the Naval and Military Departments. The Chancellor of the Exchequer ought to act as a check on any imprudent Expenditure by those Departments, and if the Chancellor of the Exchequer finds himself able to reduce taxation by postponing payments for ships and works or by borrowing money for the purpose, practically all check upon Military and Naval Expenditure will be removed. It is no answer to say that precedents can be found—one in the fortification scheme of Lord Palmerston and the other in the scheme for the localisation of the forces. We all know that a great amount of money was wasted upon the fortifications, and the localisation of the forces was not a wise precedent. The Chancellor of the Exchequer and the present Government have not contented themselves with a single case or two, but they have adopted the principle of borrowing in five distinct operations—for the fortification of our home ports, for the fortification of the coaling stations, for the Australian ships, for ships built under the Naval Defence Act, and for barracks. One of the chief evils of this system of finance is the concealment it enables of the Military Expenditure of the country. [The CHANCELLOR of the EXCHEQUER: Enables.] It has the effect of concealing the Expenditure of the country. Last year the Budget had to be discussed without any information whatever about the extraordinary Expenditure then incurred on behalf of the Army and Navy; the only information then given was that contained in the ordinary Army and Navy Estimates, and there was no other source from which information could be gathered as to what the real Expenditure was. I ventured to call attention to the fact and to hazard a guess as to what 1554 the real Expenditure was, but my figures were disputed by the Heads of Departments. Some weeks afterwards I obtained the Return to which allusion has been made. If it be of a confusing character, that is not my fault, because I was ready to adopt any form which would give the figures in a reasonably clear way. The form was approved of by the Treasury, and therefore it is not for the Chancellor of the Exchequer to complain. The Return showed that over and above the Army and Navy Estimates for the year there was a contemplated expenditure at that time of something like £7,000,000. It now turns out that that Estimate was excessive by £2,000,000. It is not the intention of the Opposition to find fault with the spending of the money, but if it had been necessary to take a Vote for the extraordinary Expenditure within the year a much more careful Estimate would have been submitted. Omitting these £2,000,000, the actual Expenditure last year over and above that voted in the Estimates was £5,058,000. Of this, £1,428,000 was charged on the Consolidated Fund; £1,155,000 was the unexpended balance of the previous year, which otherwise would have gone in reduction of debt; £405,000 was supplied by the Budget surplus; £350,000 was provided by Supplementary Estimates this year; and £1,719,000 was borrowed under various Acts of Parliament, by which the repayment is spread over different periods, namely, £696,000 was borrowed under the Naval Defence Act, £780,000 under the Imperial Defence Act, and £243,000 was borrowed under the Imperial Defence Act for expenditure on Australian ships. These were the statistics for last year, and I now come to the current year, for which the Treasury has produced a Return which is not yet in the hands of Members. In the course of his speech the Chancellor of the Exchequer told the Committee what would be borrowed; he used the terms " spent " and "borrowed," sometimes one and sometimes the other: but lie did not tell the Committee what was the actual sum to be expended on the Army and the Navy within the current year. The Return now on the Table will point this out, but it is even more confused than that of last year. 1555 It shows that beyond the ordinary Estimates of £31,750,000, £5,227,000 will be expended within the current year. That amount the right hon. Gentleman provides for in this way—charged on Consolidated Fund, £1,428,000; Budget surplus, £500,000; unexpended balances on previous years, £447,000; to be voted in next year's Estimates, £181,000; to be borrowed under Naval Defence Act, to be repaid by 1896, £2,119,000; to be borrowed under Imperial Defence Act and repaid out of surplus, £550,000; making a total of £5,225,000. Of this sum £1,928,000 is provided for in the year, £3,116,000 borrowed as money which will go in reduction of Debt, and £181,000 out of next year's Votes. My objection to these schemes of the Chancellor of the Exchequer is that they entirely destroy the effective control of the House of Commons over the Expenditure of the Army and Navy, and that they conceal the real amount of that Expenditure from the country. They also enable the Chancellor of the Exchequer to claim a surplus when in reality there is a considerable deficit, while they throw the Estimates for the Army and Navy into complete confusion, and render them useless for comparison. The statement of the First Lord of the Treasury as to the extent and the effect of the delay in the building of ships was greatly exaggerated, and in my opinion such delay as has occurred in the past has frequently resulted in our obtaining ships of a better type. The action of the Government in increasing the normal Expenditure upon the Army and Navy by £3,000,000 a year, in addition to the extraordinary Expenditure of £17,500,000, has resulted in the whole saving effected by the Chancellor of the Exchequer's conversion scheme being swallowed up.
§ MR. SHAW LEFEVRE
I understand the saving effected by the right hon. Gentleman's conversion scheme amounts from £1,500,000 to £2,000,000 per annum, whilst the increase in the normal Expenditure upon the Army and Navy amounts to £3,000,000 per annum. It is a very doubtful question whether that increase will ever be reduced; it is not easy to reduce Estimates again when once they have been increased, so I do 1556 not think I exaggerate when I say the normal increase of the Estimates for the two great Services swallows up the saving on the conversion of Consols. In addition, there is the authorised extraordinary Expenditure under loan to the extent of £17,500,000.
§ MR. SHAW LEFEVRE
That is, undoubtedly, the case; but, nevertheless, it was extraordinary Expenditure, and did not come under the £3,000,000 to which I have alluded. Such is not, I think, an untrue statement of the result as regards the Army and Navy. Then I have to allude to the expenditure in another Department, where the complaint is not that too much, but too little is spent, I mean the Post Office. The Chancellor of the Exchequer alluded to the Post Office in the course of his Budget speech, and appeared to take credit to himself during the last year for having spent some increased amount upon it. Now, last year I called the attention of the House to the expenditure upon the Post Office, and I complained that diving the four years the Government have been in office they had starved and stinted the Post Office, and had discouraged improvements in that Department. My figures were on that 'occasion denied; they were stated to be unreliable. But during the interval between last Session and:the present time, a Return of the Expenditure and Receipts of the Post Office has been laid upon the Table, showing the net surplus of revenue each year during 20 years. That Return fully bears out the statement I made last year. It shows that during the five years that the late Mr. Fawcett presided over the Post Office, there was a net surplus revenue derived from the Post Office and received by the Treasury, of about £2,800,000 annually. The amount remained about the same each year during the five years Mr. Fawcett presided over the Department. My hon. Friend the Member for Cardiff stated the other night, what I believe is perfectly correct, that Mr. Fawcett on taking office under my right hon. Friend the Member for Mid Lothian in 1881 came to an understanding with my right hon. Friend that he should be allowed a free hand in 1557 respect to Expenditure at the Post Office, or, at all events, that any sums beyond the normal amount paid into the Treasury as net revenue for the Post Office, should be under his control. And what I would call attention to is that the five years during which Mr. Fawcett held the position of Postmaster General was the period during which the greatest improvements were effected in the Post Office, and when the demands of the public were satisfied to a remarkable degree. In spite of this, during that period the net revenue for the Post Office remained stationary, amounting year by year to £2,800,000. I speak of the Post Office, and ,do not include the Telegraphs. As the result of this policy when Mr. Fawcett left the Department it was one of the most popular of the Services under Government, and there was general contentment among the employés. I think I am fully justified in saying that no Department of the State gave greater satisfaction to the public. What is the state of things since that time? I pass over the two or three years when the office of Postmaster General was held by myself and two or three others for short periods, during which there was practically no change; but I take the four or five years during which the present Government has been in Office. During this period the net revenue from the Post Office has risen from £2,800,000 to £3,450,000 in the year 1888–89, au increase of revenue of £650,000.
§ MR. SHAW LEFEVRE
I include the Packet Service. And during these five years of increasing revenue from the Post Office there have been increasing complaints on the part of the public. I know the net revenue has been somewhat reduced last year, 1890-91, by a sum of £130,000, owing to the increases in salaries; but in the Estimate of the coming year I find in the Budget speech that the net revenue is expected to be the same as in the present year. As the revenues of the Post Office have been habitually underestimated, I think we may assume that it would be at least £3,400,000.
§ MR. GOSCHEN
I can reassure the right hon. Gentleman upon that point. The possible increase in the revenue will certainly be largely diminished by the possible increase of Expenditure. One site for instance for a new Post Office is likely to cost £125,000.
§ MR. SHAW LEFEVRE
That is not included in the Estimate for the year, and of course I cannot speak of things which are in the mind of the Chancellor of the Exchequer, but which have not reached the stage when they can be mentioned in Estimate or in Budget speech.
§ MR. GOSCHEN
The right hon. Gentleman was speaking of a possible increase upon the Estimates, and I only wished to point out to him that unforseen Expenditure is likely to be as large or larger than unforeseen increase of revenue. I do not mention this by way of controversy, but for the satisfaction of the right hon. Gentleman.
§ MR. SHAW LEFEVRE
Naturally I only dealt with the figures as I find them, and it is not fair to have this new figure started when it has not been mentioned in the Estimate or in the Budget speech. But even if we make allowance for that, I am perfectly certain that the net revenue in the coming year will at least be equal to the past year, and I shall be surprised if it is not £100,000 in excess. Taking the net average revenue of the Post Office during the five, years when Mr. Fawcett presided there, I think I am justified in my contention that the Government have raised a constantly increasing net revenue from the Post Office, and that during the whole of the time improvements have been discouraged or refused on the part of the Treasury for the sake of getting this increased revenue for the Department. I do not say that the Postmaster General is to blame. The fact is, as everybody knows, the Postmaster General is the humble servant of the Treasury. If the Treasury desires to increase its revenue, the Postmaster General must give way, for the Treasury is master of the position—that is to say: the Chancellor of the Exchequer. The increase of revenue can only be effected at the expense of the Postal Service. And now we find that what six years ago was one of the most popular Services under 1559 Government, has become one of the most unpopular Services. I might go further and make reference to pay, but inasmuch as improvement has been effected in the present year I will not dilate on this matter. My own belief is, that if the Postmaster General were allowed a free hand to deal with questions as they arise—if he had not to consult the Treasury upon every possible occasion—then many of the complaints might have been dealt with at a much earlier period and probably the ultimate charge upon the Government would not have been so great as now it proves to be. I will undertake to say that the result of drawing this increasing revenue from the Post Office has caused the Department to be unpopular in the sense that people have felt that improvements were neglected and discouraged by the Government while the Government has continued to derive increasing revenue from the Post Office. The Chancellor of the Exchequer will not, I think, deny the relations he has described between himself and the Postmaster General. Speaking to the London Chamber of Commerce last year the right hon. Gentleman said—I can assure you that when the Post Office falls short of its duty it is on the Treasury that the responsibility should be laid rather than on the Postmaster General. The Post Office is an ambitious and a capable Department; its ,capacity is equal to its ambition, and its ambition is, I am bound to say, equal to its capacity. Let it never be thought that the Post Office is content to remain behind the measures or the systems of any Foreign or Colonial Governments.The conclusion I have arrived at is that, while the Chancellor of the Exchequer has listened to the demands of the great Military Departments and given them what they wanted, he has starved and stinted the Post Office with the view of deriving from it a gradually growing income. I look upon any policy of starving that Department as unwise. My belief is that it would be a wise policy to give the Postmaster General a free hand in regard to the Service, though I would not carry that beyond the point of securing to the Government a considerable revenue, which I would put at £3,000,000, any excess beyond which should be devoted to the im- 1560 provement of the Service. In conclusion, I again protest against the continual increase on the one hand of the Army and Navy Estimates, while a Department like the Post Office is being starved for the purpose of giving the Government an increased net revenue.
§ (10.38.) MR. JACKSON
I have listened to the speech of the right hon. Gentleman with amazement and very great pain. The right hon. Gentleman has charged the Treasury with having starved and stinted the Post Office, and with having prevented from time to time great improvements in that Department. He has charged the Treasury with paying no heed to the public interest, but only desiring to extract as much out of the Department as they possibly could. I venture to tell the right hon. Gentleman that there is not the smallest foundation for that charge. Nor has the right hon. Gentleman brought forward a single instance in support of that most monstrous charge. I should have thought that if my right hon. Friend the Postmaster General, by good administration, shows an unexpected balance, that is rather matter for congratulation than condemnation. The right hon. Gentleman had spoken about starving and stinting the Post Office. If he were cognizant of the facts ho would know that within the last 12 months the Treasury has sanctioned an increase of staff and an increase of pay to the staff which will not amount to less than £400,000 a year. I know what the amount is, the right hon. Gentleman does not—
§ MR. SHAW LEFEVRE
I alluded to increase of salaries in the past year, and the Postmaster General a few nights ago, I think, put the figure at £220,000.
§ MR. JACKSON
I have listened to the right hon. Gentleman with extreme disappointment. The right hon. Gentleman has filled the position of Postmaster General himself, and no one therefore can be in a better position to know what mischief exaggerated statements made in this House by men in his position are calculated to effect in the Service. I am sorry to have spoken with some warmth, but I know that these charges levelled against the Treasury are entirely without foundation, and I must say when 1561 they are made they ought to be supported by some evidence. It has ever been the duty of the Treasury since I have been there, and I think I may say the same of my predecessors, to sanction every improvement which was calculated to add to the public convenience proposed from time to time by the Postmaster General. I am quite sure if my right hon. Friend the Postmaster General were here he would repudiate the statement the right hon. Gentleman opposite has made.
§ MR. SHAW LEFEVRE
I spoke mainly of improvements in the Service in the public interest. I did not speak of salaries.
§ MR. SHAW LEFEVRE
This is not the first time I have dealt with the subject. I dealt with it last year. I never alluded in any way to the question of the staff. In alluding to the starving and stinting of the Service I meant solely to refer to improvement in the public interest.
§ (10.43.) MR. STOREY
I do not wish to enter into this dispute. I wish to recall the attention of the Chancellor of the Exchequer to a matter of infinitely more importance to the taxpayers. I spoke early in the evening, when the House was empty, and I wish to convince the Chancellor of the Exchequer that the remedy he proposed last year with regard to Inhabited House Duty has been futile in the extreme. Last year he admitted the grievance, and when I tell the House that that grievance involves the interests of many scores of thousands of citizens—
§ MR. JOHNSTON (Belfast, S.)
Js it in order, Mr. Courtney, for an hon. Member to make the same speech over again?
§ MR. STOREY
And as he has not heard the present speech, I think his attempt to convince the House that it will be the same speech is, at any rate, premature. I am not going to make the same speech, but I will make a better 1562 one. The subject is of importance to my constituents, and, I think, to many Members of this House. What the right hon. Gentleman did last year was to admit the grievance as to the levying of House Duty on tenement houses which were never intended to be included within the scope of the impost. After defeating the remedy we proposed from this side of the House, the right hon. Gentleman proposed a remedy himself, and it is contained in the 26th clause of the Customs and Inland Revenue Act of last year. I wish to assure him, on behalf of the householders throughout the country, that his proposed relief of the grievance has turned out to be futile in the extreme. He proposed to relieve these tenement houses and, as a matter of fact, he has not done so. The right hon. Gentleman has himself stated that, whilst he expected his modified Inhabited House Duty to yield £1,460,000, it has, as a matter of fact, during the past year yielded £1,570,000, and I want to state that in my judgment the excess of £110,000 is altogether or mainly due to the fact that the poor owners of tenement houses have, owing to the peculiar drafting of the measure and to the difficulties thrown in their way by the public officials, failed to secure the relief we anticipated they would secure. I will give the Chancellor of the Exchequer the concrete instance on which I found this allegation. In Sunderland applications were made on behalf of the tenants and householders for relief from House Duty, and a test case was presented to the local Commissioners. That case related to a house of two storeys, with one front door, but with two tenants, one on the lower and the other on the upper floor. It was admitted before the local Commissioners that the house had been originally built many years previously for the purpose of accommodating two tenants, and that it had continued to be used as the habitation of two tenants up to the date of the application. The owner produced the certificate of the Medical Officer of Health that the House was in a proper sanitary condition. The local Income Tax Commissioners agreed that the house came within the Statute, and that the owner should not be liable to Inhabited House Duty. There we hoped 1563 the matter would have ended, and that the local Officers would have given effect to the decision in the test case and relieved all the different applicants in the town. The local Officer, however, wrote up to London and, under guidance of the Somerset House authorities, appealed to a Court of Law against the decision of their own Commissioners.
§ MR. STOREY
I know they are not their own in the sense of being paid Commissioners, but I know also that they are local persons who are appointed to deal with these matters because they are independent and reasonable persons. I want to know on what grounds the authorities in London put this poor owner to the cost of going to law on a matter of this kind I have been looking at the Act, and I cannot conceive on what ground the Chancellor of the Exchequer will defend the action of the Board of Inland Revenue. This House is in precisely the same position as two cottages, except that, instead of the two tenements being side by side, they are one above the other. The only answer the Chancellor of the Exchequer can give is that there is one front door. This very question of a separate entrance was raised last year. An hon. Member asked whether it was to be understood that there was to be a separate entrance, and the Chancellor of the Exchequer said—The hon. Gentleman will see that there are no such words in the clause.The hon. Member then asked—Win there have to be a separate entrance?And the Chancellor of the Exchequer said—Why should the hon. Member wish to have the words? I believe, as I propose to amend it, the clause will meet the views of the Committee. It will be for the Sanitary Officers to decide whether the houses are properly adapted.Therefore, I say that if the Sanitary Officer has decided that this was a sanitary dwelling, the mere fact that it has a common stair is not sufficient to exempt it from the operation of the Act. This, as a single instance, may seem extremely trivial, as it only involves a question of a few shillings, a year. But these few 1564 shillings are to be multiplied by hundreds of similar sums in my own town, by thousands in the North of England, and by hundreds of thousands throughout the country. There are scores of thousands of instances in the large towns of tenements perfectly sanitary, inhabited by the working classes, and possessing a common door. There may be three or four instead of two tenants, but each set of rooms is to all intents and purposes a separate tenement. The purpose aimed at by the Committee last year, and conceded by the Chancellor of the Exchequer was that all these people should be relieved from Inhabited House Duty. An examination of the Debates that took place when that duty was first established shows that it was never intended that tenement houses, where the tenements were let for less than £20 a year, should come under the operation of the law at all. The object of the duty was to obtain an additional tax from people who were rich enough to own and to occupy a house with a value of more than £20 a year. It was never intended that the Inhabited House Duty should be exacted in the case of a house that was inhabited not by a single well - to - do family, but by several small families. I hope the Chancellor of the Exchequer will give us some assurance that he and his associates in London will not press the law in opposition to the Statute, as I think they are doing now, for the purpose of trying to justify an unjust impost. By frankly giving way in this matter and accepting the view the Government agreed to last year, he will give sensible relief to many thousands of persons throughout the country, and carry into effect that which was the intention of Parliament last year.
§ (11.0.) MR. J. M. MACLEAN (Oldham)
Hon. Gentlemen opposite have not had the courage to make any direct attack on the Budget. Very few of them have attempted to criticise it in any of its details, but most of them have made haste to express their agreement with the manner in which the Chancellor of the Exchequer proposes to dispose of his surplus. But through all the speeches of hon. Members there ran a tone of general disparagement of the great and splendid financial reforms 1565 which the Chancellor of the Exchequer has achieved during the four years in which he has been in office. The right hon. Gentleman has accomplished three great reforms. The first is the great conversion of the National Debt, by which he has relieved the taxpayers of the country from the payment of £2,000,000 a year. Hon. Gentlemen opposite do not dare to say that that is not a great and successful work, but they have done their utmost to minimise its value by referring to the present prices of Consols, and trying to make out that the Chancellor of the Exchequer has not devoted so much money as their Ministry did to reducing the corpus of the debt. I was struck by one remark of the right hon. Gentleman the Member for Wolverhampton. The right hon. Gentleman said that no Chancellor of the Exchequer can take any particular credit for the reduction of the debt, as the matter is, for the most part, automatic. If that is so, what becomes of the elaborate attack made by the right hon. Gentleman the Member for Derby, who challenged the figures of the Chancellor of the Exchequer and tried to make out that the reduction of debt has not been so great as that made by the Liberal Administration? Another reform achieved by the Chancellor of the Exchequer is the putting upon a permanent footing the relations between Imperial and local taxation, an object long desired by Members on both sides, but which no one hitherto have had the courage or skill to accomplish. I gather from the speech of the Member for Derby that he complains that the Chancellor of the Exchequer has given £4,000,000 or £5,000,000 a year out of Imperial taxation for the relief of local taxation, and I drew the inference from the right hon. Gentleman's speech that when he came into power—may the day be long distant—he would make it his first duty to take away the grants from the local bodies and apply them to the reduction of the Income Tax and the abolition of the duty on tea. I commend that programme of the Front Opposition Bench to the attention of the County Councils and other Local Bodies who now enjoy such great aid from the Imperial Exchequer. The third great work accomplished by the Chancellor of the 1566 Exchequer is the provision for the nava defence of the country. There have been many dissertations on the offence the right hon. Gentleman is supposed to have committed in hypothecating some of the resources of future years in order to provide for a loan by which to raise the necessary money to place the Navy of the country in a state of efficiency. If we accept the doctrine that it is necessary to raise the Navy of the country to a certain standard, I cannot conceive any object for which it is more fitting for the Ministry of the day to draw largely on the future resources of the country. Are not our own resources mortgaged to an enormous extent by the National Debt? What was the object of that drawing upon the resources of posterity? It was to secure the independence of this country and the liberty of Europe, and the money was well invested, for the expenditure has given us 80 years' peace and commercial supremacy. When the Navy has once been raised to a proper standard it is easy to maintain it at a moderate expense from year to year. desire to say a few words about the finance of the present year. When I listened to the Chancellor of the Exchequer the other night I was struck with one thing, which has not been much noticed in the present Debate, and it is that the expenditure of the country is increasing at an alarming rate. I cannot sufficiently express the admiration I feel for the Chancellor of the Exchequer when he denounced with noble wrath the policy of buying in the cheapest market, and said the Government would purchase both their material and labour at a fair price. That is a great change to undertake in the policy of the country. I admit that the Chancellor of the Exchequer is yielding to a very strong and irresistible feeling on the part of the people that the Government ought to be a model employer, and ought not to buy its material and labour as cheaply as possible, but should take care to get the best article and pay labour. at a fair price. The people are the masters; they pay the taxation, and they have a right to say how their money shall be employed; but the new policy has led to a considerable increase in the Estimate of the year. Increase in wages is being demanded in every branch of the Civil 1567 Service, and if the demand is granted there must be a very considerable increase of expenditure. If that is the case, I have some misgiving as to whether the splendid surpluses of the last few years will be continued in years to come. The revenue is not likely to increase in anything like the same proportion—in fact, the Chancellor of the Exchequer admitted the other night that we are now probably at the top of our prosperity. The surplus this year is very largely accidental, and I do not think it should be allowed to go forth to the country that the surpluses of the future will be sufficient to provide for the very excellent purposes which all have in view. If we are to carry out our policy it will be necessary for the country to prepare itself for some very great act of self-sacrifice in regard to the payment of fresh taxation in future years.
§ (11.10.) MR. GOSCHEN
I am obliged to my hon. Friend who has just sat down for the manner in which he has spoken of my general finance. I am not sorry that the hon. Member has laid some stress on the tendency to increase expenditure; but I think he somewhat exaggerated that portion of my speech which dealt with the fact that the country had given us the cue not to buy in the cheapest market but the best. I trust that my hon. Friend will continue to pay some attention to the increase of expenses in all Departments of the State. The right hon. Member for Bradford (Mr. Shaw Lefevre) censured the Government for meeting the wants of the Military and Naval Departments while they are so economical with regard to the Treasury. The right hon. Gentleman would prefer that we should starve the army and Navy in order to be extremely generous to the Post Office. He appears to attach more importance to a parcel being sent cheaply than to a war ship being built to defend our coasts. But, if the accounts are not so simple as before, a great and successful effort has been made to strengthen the Navy. I will not, however, say anything with regard to what the right hon. Gentleman calls complicated shifts and devices for meeting the Naval Expenditure. Before we lay down the seals of office we shall have paid off a considerable portion of the loans, and if we have produced some 1568 complexity in the accounts, which are certainly not so simple as formerly, our successors, whoever they may be, and whenever they may come into office, will find a stronger and a better Fleet than this country ever possessed before. I turn now to answer one or two of the minor points raised. I am glad to see that the hon. Member for Sunderland has returned to his place, and I must say I think it is a compliment to the Budget that amongst the many topics which might have been opened by the hon. Gentleman one of his chief attacks has been upon the decision of some of the local officials of the Inland Revenue Office at Sunderland. Still, I think the hon. Gentleman would have done better if he had not introduced such a very local topic into a discussion on the Budget.
§ MR. STOREY
The right hon. Gentleman forgets that I spoke to him on the point some weeks ago, and he failed to give me a satisfactory assurance.
§ MR. GOSCHEN
I can only now say that further investigation will be made into this matter, and if there are any cases of hardship I shall be glad to look into them, as the Government desire to do justice in this matter. We have proved our desire to do that by sending down an Inspector. The hon. Member for the City of London has spoken of the colonial contributions. Now, I put it to the Committee that if our colonies are progressing in wealth, population, and every other attribute of prosperity, it is but fair that they should in some fixed proportion bear the increased cost of defence. I believe that that is a self-evident proposition. Fortunes are made in our colonies by firms which pay no Income Tax upon their profits, and seeing the advantages they derive from the protection of this country, it is only fair to the British taxpayer that the colonists should bear their fair share of the increased and increasing costs of defence. I do not wish to say one word which would bear hardly upon the colonies, but I think I have made out my case on that point. Jt has been suggested that a Statement of Accounts should be prepared and printed with the Budget, just as the Statements of the Army and Navy are printed. That is a matter worthy of 1569 consideration, but I may point out that all these Parliamentary Papers and Returns are not always read by the great public at large, and therefore it is the duty of the Chancellor of the Exchequer, in his annual statement, to introduce a very full explanation irrespective of the Returns, so that the public, which has not the same facilities of access to the printed Returns, may understand the position of affairs. Since I addressed the House last I have had an opportunity of looking into the figures suggested by the right hon. Gentlemen the Members for Derby and Wolverhampton. There is not a single figure in the Budget Statement by which J am not prepared to stand. I have refreshed my memory as to the exact method by which the £37,000,000 I have given with respect to the payment of Debt is made up. It is constituted of the amount paid inside of the permanent charge during five years, with the addition of the surpluses secured during that period. There is no doubt whatever on the subject. The amount within the permanent charge is £26,600,000 and the amount of the surpluses £10,900,000. These together make the £37,000,000. The right hon. Gentleman the Member for Derby has not broken down a single figure given in the Budget statement. The figure with which the £37,000,000 was contrasted by me—the £24,000,000 —was constituted of £27,550,000 paid off within the permanent charge by the Governments of the period, less a deficit of £3,000,000. These figures are absolutely correct, but it is true that if one very unfortunate year, in which large expenditure was incurred, had been left out, the contrast would not have been so great. Then with regard to the other point raised by the right hon. Gentleman the Member for Derby, namely, that the present Government have only paid off £27,000,000 while I have claimed £30,000,000 —I have claimed the larger sum as having been devoted from the taxes to the payment of Debt, because I added to the £26,800,000 actually paid an item of £2,000,000 paid in connection with the conversion expenses. This was money spent in the reduction of Debt as much as the rest of the £30,000,000. It is clear that the right hon. Gentleman 1570 the Member for Derby has not had sufficient time to study the figures, but he ought not to have rejected so readily the figures given in the Budget statement.
§ (11.27.) MR. H. H. FOWLER
I do not propose to resume the controversy at this.- moment, but I will ask for a continuation of the Return asked for by my right hon. Friend as soon as possible. I may at once admit, as far as my own figures are concerned, that the Chancellor of the Exchequer was not credited in the amount paid for the reduction of Debt with the £2,000,000 spent on the expenses of Conversion. But I still adhere to my statement that in the years 1881–85 the amount paid out of the taxes in the reduction of Debt was £34,000,000. If the right hon. Gentleman will give us the Return asked for, the House will be able to judge for itself.
§ (11.29.) MR. MORTON
The right hon. Gentleman has not replied to my question as to the Income Tax Assessment.
§ MR. GOSCHEN
I beg the hon. Member's pardon. I admit there is considerable force in the argument that the Income Tax should be paid on the net instead of the gross value. But this reform must be taken in hand with many other changes in the Income Tax, and though I am not so pessimistic as the right hon. Member for Mid Lothian, who thinks the re-construction of the Income Tax would take a century, still I agree that the reform would take a considerable time, and more time than the First Lord of the Treasury be disposed to allow me this year.
§ (11.30.) Sin E. J. REED (Cardiff)
J must say J am unable fully to sympathise with the remarks made by my right hon. Friend near me with regard to the naval policy of the Government, for I believe that every day we derive great benefit in our relations with other States from the fact that we are a strong Naval Power. If I thought that the Naval Expenditure made no return to the country I should be one of the first to' offer opposition to it. But believing, as I' do, that there is no portion of our expense from which the country derives' anything like so great a national benefit, I think it is a pity that this Expenditure, on our naval power should be depreciated on so many occasions. I have thought 1571 it right to say that, although in saying it it must not be taken that I assent to the particular methods adopted by the Government to meet the Expenditure. I was rather surprised on this point at the speech of the hon. Member for Oldham. That hon. Member made a powerful speech on the Naval Defence Act when it was before the House.
§ MR. J. M. MACLEAN
It is quite true I did express some doubt as to the absolute necessity of the proposed addition, but the policy having once been accepted by the House, it resolved itself into a financial operation. The raising of the money by loan was perfectly legitimate. That constitutes quite another question.
§ SIR E. J. REED
I noticed with some apprehension the ambitious criticism on the finances of the State from this side of the House to-night, but I do not think I need follow them up. I am sorry the Secretary to the Treasury is not in his place. I heard with surprise the attack of the Secretary to the Treasury on my right hon. Friend the Member for Central Bradford, who stated that the Postmaster General was unable, as a rule, to carry out improvements in the Postal Service because of the interference of the Treasury with the proposals. I listened with astonishment because I have always believed that if there is anything connected with public finance which is not only admitted but proclaimed, it is the doctrine that the Postmaster General is practically a subordinate of the Treasury and is controlled by that Department He quoted words of the Postmaster General himself to the effect that the Post Office was never in a position to give effect to its promises without consulting the Treasury.
§ MR. JACKSON
My objection was that the charge was made without the smallest evidence in support of it.
§ SIR E. J. REED
My right hon. Friend quoted from a Parliamentary Return the details on which he rested his case. I think the Secretary to the Treasury mistook altogether the meaning of my right hon. Friend. On a recent occasion, when a Motion with reference to the Post Office was under discussion in this House, my right hon. Friend was good enough to tell me he could take no part in the Debate if it took the form, as it seemed likely to do, of instigating a 1572 claim for an increase of salary on the part of officers of the Department. Therefore, I do not think the Secretary to the Treasury was justified in the attitude he adopted towards my right hon. Friend. As to, the general subject of discussion to-night, I do not think that the Chancellor of the Exchequer has a right to complain of any undue anxiety on this side of the House to have the national finance closely watched and carefully criticised. It seems to me of the utmost importance that the House should carefully watch such questions as contributions from Imperial Funds to local purposes in dealing with which endless confusion might arise, and especially the question of providing for the Public Service by means of loans falling on the future. It has been said that the extraordinary Naval Expenditure need not entail increased Naval Expenditure in the future. I am afraid, however, that the increased Naval Expenditure is being applied to purposes (I do not complain of them) which will necessarily entail increased Naval Expenditure in the future. In the first place, it is being applied to the production of ships of enormous size, and, judging from the experience of the past, those ships will entail the maintenance of an enormous crew and staff of officers. The increase of expenditure is being applied also to small vessels, which require separate officers and crews, and I believe it will be found that we must have a considerable increase in the number of officers with a view to the future constitution of the Fleet. The First Lord of the Treasury and the Chancellor of the Exchequer, who have both presided over the Admiralty, are aware how important it is to keep down the Naval Lieutenant's List, which otherwise will go to swell very much the cost of pensions. I can only say, in conclusion, that I sincerely hope in the interest of national finance and the well being of the country—that the Government, while indulging in this large increase of Expenditure, will do everything it possibly can to secure a concurrent reduction of cost in the less important branches.
§ (11.42.) MR. W. H. SMITH
I venture now to appeal to the Committee to give the Government the Resolutions. If further opportunity is required for 1573 discussing the finance of the year and the interesting topics raised by hon. Members opposite, it will be afforded on the Second Reading of the Bill. It is obvious that the taxes imposed by the Resolution ought not to be held in suspense.
§ (11.43.) MR. ILLINGWORTH (Bradford, W.)
The hon. Member for Cardiff has very properly warned the Committee and the country that these spasmodic efforts to increase the strength of the Navy will involve an increased annual charge for its maintenance. I do not wish to condemn the proposals of the Government all round. The Chancellor of the Exchequer has turned round on himself, and acceded to the universal feeling on this side of the House in favour of free education, and I wish to discriminate, therefore, between the proposals of the Government. I confess that I have no confidence whatever in the idea that increased security has been given to this country by the increase of the Navy. What has been the result of this increase of our Navy? The result has been that every country in Europe is hurrying to follow in our track.
§ MR. ILLINGWORTH
If they are not developing to the extent that our spasmodic increase would require, it is only because they have not the finances. But the disposition is there; and there is not a Minister of Marine in any Cabinet in Europe who does not urge the necessity of further development on his Parliament because of what has been done in this country. I protest against its being supposed that we are doing anything for the increased safety of the country by this increased Expenditure. Are we sure that the increase of the Navy is not coupled with an engagement on the part of the Government to defend Italy in certain contingencies? I think Her Majesty's Government would have been more usefully employed in setting on foot some system of arbitration; and I hope on another occasion to join with others in pressing on the Government to give ear to the appeals which come to us from America in this direction.
§ (11.50.) MR. SEXTON (Belfast, W.)
I think it would be convenient that the Irish Members, before they agree to the 1574 proposal to hypothecate Irish resources, should know what proportion of the sum to be given to free education is to be applicable to Ireland, and also whether the Chancellor of the Exchequer will consider the suggestion to improve the salaries of the Irish National School teachers out of the sum so allocated. It would be convenient to the Irish Members to have some intimation of the intention of the right hon. Gentleman before we part with the clauses of the Land Purchase Bill, as the final form those clauses may take may to some extent depend on the Budget proposals. I would also ask the right hon. Gentle. man that before he finally makes up his mind on these matters he should take care to inform himself as to the views of the Irish Members.
§ (11.52.) MR. GOSCHEN
The hon. Member should remember that while it is my duty to find the money, it is not for me to consider its precise application. The question of the hon. Member should be addressed to the Chief Secretary for Ireland. On a former occasion I assured the hon. Member that considerable weight would be attached to his suggestion, and further than that assurance I could not go.
§ MR. GOSCHEN
If £1,000,000 is in question, probably £100,000 will be the amount; if £2,000,000, the probable amount will be £200,000. I cannot speak positively to a few thousands more or less. I think the figures would not be quite so large as I have stated.
§ (11.54.) COLONEL NOLAN (Galway, N.)
I trust the right hon. Gentleman is not going to withdraw from the intimation he gave on the Budget night to the effect that a portion of the money will be disposed of in Ireland, in a similar way to that in England—that is to say, in relief of school fees. That would have a beneficial effect on the salaries of the teachers, though not so much in regard to class salaries.
§ Question put, and agreed to.