INCOME TAX.

HC Deb 23 April 1896 vol 39 cc1543-603

THE CHANCELLOR OF THE EXCHEQUER

proposed: — 2. "That there shall be charged, collected, and paid for the twelve months which began on the sixth day of April, one thousand eight hundred and ninety-six, in respect of all property, Profits, and Gains respectively described or comprised in Schedules (A), (B), (C), (D), and (E), in The Income Tax Act, 1853, the Duties of Income Tax at the rate of eight pence— For every twenty shillings of the annual value or amount of Property, Profits, and Gains chargeable under Schedules (A), (C), (D), or (E) in the said Act; and For every twenty shillings of one-third of the annual value of Lands, Tenements, Hereditaments, and Heritages chargeable under Schedule (B) in the said Act in respect of the occupation thereof, and no deduction of one-eighth out of the Duties chargeable under Schedule (B) shall be made."

*SIR HENRY FOWLER (Wolverhampton)

said: I want to interpose one or two remarks partly on the Resolution which has just been put from the Chair and also upon the general questions raised by the Budget. I am glad to-night to be able to approach the subject without being influenced by the glamour of the Chancellor of the Exchequer's eloquence. The right hon. Gentleman's statement, I am bound to repeat, was one of the clearest and most lucid, interesting and eloquent, I have heard since I have been a Member of this House from a Chancellor of the Exchequer— [cheers] —and, seeing that the Chancellor took a very optimistic view of the situation, it was natural that that view should colour the whole Debate last Thursday evening. When next morning comes, however, in this as in so many other transactions, one looks at the thing in rather a cooler light, and I am bound to say that I cannot take an optimistic view of our present financial position. There is no doubt perfect accuracy in what the Chancellor said with reference to the condition of the trade of the country. The signs of improvement which he pointed out are general, and I think are extending. Nevertheless, in Committee of Ways and Means we have to deal with the finance of the country for the year, and we have to deal with an expenditure which, as he himself says, is unprecedented and one which is next year to be further increased. The Chancellor of the Exchequer showed that, so far as the year that is closed, 1895–96, is concerned, there was an excess of income over expenditure, including in that expenditure very heavy supplementary estimates, of 4¼ millions, which no doubt is a very gratifying figure to the House and the country, and he based his scheme for next year upon the assumption that there would be an excess of income over expenditure of 1¾ million. That, at first sight, is a very satisfactory state of things, but when we come to look at the thing a little closer our satisfaction must be qualified. Three years ago, when my right hon. Friend behind me (Sir W. Harcourt) assumed the control of the Exchequer, he called attention to the fact that he was proposing to raise during that year and to expend the enormous sum of 91½ millions; and the House was startled. Yet in three years that 91½ millions has gone up to 100 millions. To meet this expenditure the Chancellor expects a revenue, assuming the basis of existing taxation to continue, of lOl¾ millions. Now, the first question I should like to ask the Committee is this, seeing that the estimate of revenue based upon the taxation of last year will not only meet the expenditure but will produce 1¾ million more, whether the first claim upon the Government and the House is not the claim of the taxpayer for relief from some of his burdens. [Cheers.] At the present moment there is no Income Tax. The Income Tax has come to an end, and the Committee is now about to settle at what rate it is going to impose the Income Tax for next year. The proposition of the Government is that the Income Tax should be imposed at the rate of 8d. in the pound. Now, is 8d. to be taken as the normal rate of Income Tax in this country in time of peace, and is the Income Tax payer to have no relief? I would recall to the mind of the Committee what has been the rate of Income Tax ever since it was imposed. Prom the imposition of the tax in 1841 to the time of the Crimean War the rate was 7d.; during the war it was raised to a very high figure, but immediately the war was over it was reduced to various figures. There was an increase in 1859, if my recollection is right, owing to a naval scare of that year, over which four or five millions were expended, and the Income Tax was raised to 9d. or l0d.; but, at all events, in 1864 it came back to its original level of 7d. In 1865 it was 6d.; 1866, 4d.; 1867, 4d.; 1868, 5d.; and in 1869, 6d. In 1879 and 1880 it was 5d.; 1881, 6d.; 1882, 5d.; 1883, 6½d.; 1884, 5d.; and in 1885, 6d. From 1888 to 1893 it stood at 6d. My right hon. Friend behind me in 1894 raised it to 7d., and in 1895, which is the year we are now dealing with, in order to give relief to small payers of Income Tax and also some relief to owners and occupiers of land, which he assumed at 1½ million, he put the tax at 8d. The House will see that 8d. has never been the normal place rate of the Income Tax. It was estimated to produce £15,500,000; it has produced considerably more this year, notwithstanding the losses by recent allowances. In these circumstances, when taxation allows of an increase of £2,250,000 in expenditure—that is the increase of expenditure in this year which the Chancellor of the Exchequer provides for—I think that the Income Tax payer has a claim for some relief. ["Hear, hear!"] I put it on this ground. The Income Tax is a reserve in time of war and difficulty; it is a power of reserve for special expenditure. I appreciate what the Chancellor of the Exchequer said as to the great reserve of the Sinking Fund, and I think that he did not speak at all too strongly with reference to that. My right hon. Friend behind me (Sir W. Harcourt) pointed out that two years ago in his Budget statement. But we want a tax on which the Chancellor of the Exchequer can immediately put his hand and which will at once respond to pressure, which requires no fresh machinery; and the Income Tax in a country like ours must be regarded as the great reserve fund for special emergencies. Sixpence in the pound is a very fair peace rate for the Income Tax, and if it is fixed at that amount then you are in a position in time of special difficulty to make a rapid increase of our revenue. But this year the Chancellor of the Exchequer proposes to leave it at 8d. It may be asked if this so, "Why do you not move its reduction in order to test the opinion of the House on the question? I am aware that the Chancellor of the Exchequer could not take off a penny in the pound, but it is clear that he could take off a half-penny; and there have been precedents for an Income Tax being fixed at the odd figure. My reason for not making this proposal is because I do not see that there is the available margin of £1,750,000 for us to deal with even if we wished to apply it to the purposes of the Income Tax. I may say in passing that I do not like the mode in which the Budget statement is presented to the Committee by the Treasury as the final Budget sheet. If it is to be introduced in our permanent returns or statistical abstract, we shall be deceived and the basis of our calculations will be disturbed as to what our financial Estimate is. In his final Estimate the Chancellor of the Exchequer put the income next year, based on the taxation of this, at £101,750,000, but in what is called the final balance-sheet the revenue next year is £100,500,000. How is that done? It is done in this way. When the Chancellor of the Exchequer comes to deal with the Death Duties this balance-sheet deducts £200,000 in respect of proposed alterations in the law; therefore he will have so much less income. But the next item of deduction is this:— Amount required for the Agricultural Rates Bill in England, and for proportionate grants to Scotland and Ireland £1,175,000. You might as well deduct from that side of the account the item for the Army, the Navy, or the Civil Service. It is a transfer no doubt, but the revenue is raised out of the taxes of the people. It would be a very great dislocation of the mode of keeping accounts if, when there is raised from taxation £101,750,000, it is put down as £100,480,000. But that is a small criticism which I make in passing, because I shall proceed to argue, not on the revenue being £100,500,000, but £101,750,000. The first question I put to the Chancellor of the Exchequer is, ''Is there a surplus?'' First, take the Navy. The Chancellor of the Exchequer puts the Navy amount required at £21,823,000, and the Estimate for last year was £18,701,000, which would show an increase of £3,122,000. Now, the payment for the Navy last year was £19,724,000, but £1,000,000 of that sum was charged in the shape of a Supplementary Estimate. That £1,000,000 really formed part of the naval expenditure for this year; so far as shipbuilding, armour plates, and stores were concerned it really was a sum in aid of the expenditure of the present year. This year the expenditure is put down at £21,000,000, but if there had not been the Supplementary Estimate of £1,000,000 it would have been £22,000,000, and that sum is provided for out of last year's surplus and taxation. Therefore if the right hon. Gentleman had had to provide the whole Naval expenditure out of this year's revenue he would not have had this surplus of £1,750,000, for £1,000,000 of it would be gone. I put the same question to the right hon. Gentleman with reference to the Army. The Army Vote this year shows a saving of a small amount, but a Supplementary Estimate was presented for the Army in respect of the Volunteer capitalisation grant. It states in a footnote, I think, that £496,300 was voted last year, half of this is in respect of this year's expenditure; and therefore this year's expenditure will be £250,000 less, because that £250,000 less has been anticipated and paid for in the preceding year. I want to put to the right hon. Gentleman this—that the Navy is apparently £1,000,000 less than it really is, and the Army £250,000 less than it really is. [The CHANCELLOR of the EXCHEQUER: "No."] The right hon. Gentleman has had the advantage of last year's surplus; he has £1,250,000 provided for out of last year's income. I do not find fault with anything that has been done, but I say, looking at the financial position of the country as a whole, we really have not this year, however much we may be disposed to think we have, defrayed our expenditure; if we defrayed the whole year's expenditure out of the year's income we should be £1,250,000 worse off than we are. Therefore, when we are talking about the surplus, I say that it ought to be reduced by that sum. I think that the expenditure was wise, just, and prudent, and it was quite right for the Chancellor of the Exchequer and the First Lord of the Admiralty to do what they did. I am not criticising their action in any way, but I am looking at our position as a whole. No doubt the Chancellor of the Exchequer may say with truth, ''I have got enough of money to meet the demands made on me this year, and at the end of this year, if I have no other demands made, I should have that surplus." But we have to deal with the finances of the country as a whole, and I say that our expenditure is not as put in this balance-sheet as a smaller sum, but the larger sum to which I have called attention. Next year we have to deal with a considerable increase in our expenditure. I will tell the Chancellor of the Exchequer where I expect his increase will be. I have been led to believe that the second year of a Naval programme is much more expensive than the first, and the third year more expensive than the second. Assuming that the Chancellor of the Exchequer carries out his programme without diminution, there must be an increase of several hundreds of thousands of pounds next year in order to carry out the programme of Naval expenditure to which the Committee is already committed. I am also told that there will be an increase in wages next year. Some 5,000 men are to be added to the Navy, and a great part of their wages will come upon next year's Votes. Then, with respect to the Army, the Chancellor of the Exchequer will not deny that £250,000 will have to be provided next year when there will be the full capitation grant. There is also the necessary automatic increase of the Army and Navy. These facts ought to make the Committee pause before they sanction an extra expenditure next year of something like £2,000,000 under the Agricultural Land Rating Bill. The new Education Vote must be increased by several hundred thousand pounds next year; and the existing Education Vote involves annually an increase of several hundred thousand pounds. Therefore, whether I am right or wrong with reference to last year, I say that the right hon. Gentleman can barely provide for half the additional expenditure to which he asks the Committee to assent, and he has made no provision for the automatic increase of the expenditure of the Army, Navy, and Civil Service. The Income Tax will have to be increased in order to meet this expenditure. But this is not the whole story. There is to be expenditure in yet another direction this year. The Chancellor of the Exchequer has assumed that we are to be in a state of perfect peace, that there is no trouble in any part of the world, and nothing likely to cause us trouble in Egypt or the Soudan, for example. ["Hear, hear!"] The Chancellor of the Exchequer must have a lively recollection of what took place 12 years ago. In 1884 Mr. Childers brought in his Budget in April, and put the Income Tax at 5d. In August we had a Vote of Credit for the Soudan of £300,000 and in November another for the Army of £1,000,000 and a third for the Navy of £324,000. What was then the state of things? Parliament had to be called together in November, and the then Chancellor of the Exchequer had to propose that the Income Tax should be increased to 6½d. in order to meet these exceptional charges. That was what occurred when we last took part in operations in the Soudan. The Committee must not forget the history of the past. If history repeats itself in regard to policy it will repeat itself in regard to cost. But that was not the end of the business. Early in 1885 Mr. Gladstone came to the House and asked for the celebrated Vote of Credit of 11 millions. Six millions and a half out of that sum were wanted for special military preparations in connection with the Russian advance towards Afghanistan, and four millions and a half were wanted for the Soudan. Although I believe that sum was not ultimately spent, and that the amount was brought down to a fraction over 10 millions, yet Mr. Childers in his Budget had to deal with a deficit of 14 millions, with the result that the Sinking Fund had to be suspended and other expedients adopted in order to provide the money. The country ought to be told now what the Government are going to do. In a time of peace enormous military preparations are going on, and if the Committee think that Egypt is going to pay for all that is done they will be very greatly disappointed. Sooner or later England will have to pay, for the policy that has been adopted is hers, and the initiative has been hers. Then what is the position in South Africa? Is no money going to be spent there? Some hon. Members seem to think that the Chartered Company will defray everything, and I hope they may, but my belief is that there will be some considerable addition to our expenditure in that part of the world. The figures I have given show that at the end of the year you will have to meet an expenditure of at least £104,000,000 when your income is only £101,750,000, which is to be reduced by £300,000 under the arrangements respecting the Land Tax and the Estate Duty. The Government are proposing by Act of Parliament to make permanent additions to the expenditure of the country, and if their proposals are carried the Chancellor of the Exchequer, independently of any sum which may have to be found for unexpected contingencies, will have to face this time next year an expenditure of something near £104,000,000. That is why I do not ask the right hon. Gentleman to make any reduction of the Income Tax. In the present position of affairs we cannot afford to reduce taxation, nor can we afford to increase our expenditure. ["Hear, hear!"] There is one other matter to which I desire to refer— namely, the financial gravity of the situation if the Chancellor of the Exchequer is paying off debt at 12, 13, or 14 per cent. premium. The fact that Consols have risen to 114 is a very serious matter as far as the position of the National Debt is concerned. My opinion, which is shared by more competent authorities, is that there has been an artificial rise in Consols as against Chancellor of the Exchequer. No Chancellor of the Exchequer has a right without the consent of Parliament and without its full knowledge to be redeeming the National Debt at such a premium as 12, 13, or 14 per cent. The national creditor is entitled to 2¾ per cent. until 1903, when he becomes entitled to an annuity of £2 10s. which the Government will subsequently have a right to redeem with a hundred sovereigns. It would be an act of extravagance and folly for us to assist in any way in keeping up fictitious prices as against ourselves. I do not suggest any suspension of the National Debt, for I think that the resources of finance are not exhausted and that we can keep the sinking fund in a state of efficiency without continuing operations which encourage those who are, I believe, making clever speculations upon the financial position of the Government and selling us these stocks at high prices.

*THE CHANCELLOR OF THE EXCHEQUER (Sir MICHAEL HICKS BEACH,) Bristol, W.

I am very much indebted to the right hon. Gentleman for the observations with which he commenced his speech and for the remarks he made with regard to the question he last alluded to. I can assure him that that question is receiving my anxious consideration. I am no more fond than is the right hon. Gentleman of purchasing Consols at 113 or 114 by way of redemption of debt, and I have given instructions which, I think, certainly have not placed the Government lately as a competitor in the market for Consols. [Cheers.] What else I may be able to do is a matter on which I hope the right hon. Gentleman will allow me to reserve my opinion. I feel the difficulty of the situation, and I wish to be allowed not to say anything further on the subject. [Hear, hear! "] The right hon. Gentleman has made a very interesting speech, mainly upon the subject of the Income Tax. I think I can remember the day when my right hon. Friend the present First Lord of the Admiralty was able to reduce the Income Tax to 6d., and was criticised by the right hon. Gentleman on that account for having produced a rich man's Budget. [Laughter.] I think I remember only the other night, when I ventured to call the attention of the Committee to the great advance that had been made in the amount the Income Tax payers have to bear of the burdens of the country since the year 1875, as compared with the payers of indirect taxation, that the right hon. Gentleman the Member for Monmouthshire ejaculated, "Yes, that is equalisation of taxation." I am very glad to hear from the Front Bench opposite a plea for the Income Tax payers. ["Hear, hear!"] I do not at all agree with the opinion which the right hon. Gentleman rather suggested to me as my own opinion that 8d. should be the normal figure for the Income Tax. ["Hear, hear!"] I agree rather with what has been said— that when we are able to reduce it in time of peace we should do so in order to secure a more powerful engine in the time of war. ["Hear, hear!"] But the right hon. Gentleman himself admitted that, looking to the position of our Revenue and expenditure as disclosed in the present Budget, no reduction of the Income Tax was possible; indeed, he went on to argue that the figures which I gave the other night to the Committee did not really represent accurately the financial situation of the year, and that I was too optimistic in the view I took of the expenditure as compared with the Revenue. I do not at all admit the justice of the first part of the criticism of the right hon. Gentleman. He seemed to think that for some reason which he did not give, the supplementary Estimates, of last year were normal supplementary Estimates, and that, although our Naval Vote, for example, had increased to an amount of more than £21,000,000, we should have a supplementary Estimate of £1,100,000 again next February, as we had this year. I can assure the right hon. Gentleman that there is no reason to anticipate this. He went on to say that the Navy Estimates of this year of more than £21,000,000 would lead to higher Navy Estimates next year. I believe that to be contrary to the fact. I believe that, to the advantage of the country, my right hon. friend the First Lord of the Admiralty has so arranged his programme of shipbuilding, which, as the right hon. Gentleman very well knows, forms a very important part of the Navy Estimates, that the sum borne on the Estimates on that account for the current year will be very considerably larger than that required for next year. ["Hear, hear!"] That is, I think, an answer to what the right hon. Gentleman said with regard to the Navy Estimates. I admit that on one point, with regard to the Army Estimates, the right hon. Gentleman was right. Last year we took a supplementary Estimate of nearly half-a-million for paying the Volunteer capitation grant up to date, and that relieved the present year of £250,000—a sum which next year will have to bear. But we expect to make a far larger saving than that amount on the Navy Estimates. ["Hear, hear!"] But the right hon. Gentleman went on from these minor criticisms to accuse me of not having provided in my estimate of expenditure for the year for similar expenditure to that which was incurred between the year 1884 and the year 1885 by the Government of Mr. Gladstone in the Soudan. The right hon. Gentleman was perfectly justified in saying that I have a very lively recollection of that time, as I have no doubt he has also. [Cheers.] But I can assure him that we do not intend to imitate a policy which led to an expenditure of £7,000,000 in the Soudan and, I think, £11,000,000 subsequently under a Vote of Credit, which, if reasonable skill had been exercised in our diplomacy, never ought to have been wanted at all, for matters connected with the dispute with Russia with regard to the Afghan frontier. [Cheers.] I have not calculated upon the expenditure of any great amount in the current year in military operations, as I believe they used to be called— [cheers]—either in the Soudan or in South Africa. The right hon. Gentleman himself dismissed the question of South Africa, for he felt that he could not make any reasonable charge against me on that ground. ["Hear, hear!"] It is not at all probable that any charge beyond a charge for the movement of some additional force from England to the Cape can come upon this country in respect of South Africa, for the cost of the troops sent to the territories of the Chartered Company is to be borne by the Chartered Company. ["Hear, hear!"] But with regard to Egypt the right hon. Gentleman spoke of enormous military preparations. I do not know of any enormous military preparations in this country. [Cheers.] Where does the right hon. Gentleman get his information from? He said there were enormous military preparations going on. There is no such thing. The Egyptian Government have undertaken this expedition with their own forces and at their own cost, and there is no necessity for military preparations here and no obligation upon mo to provide for any large expenditure on that account. ["Hear, hear! "] It is probable that some charge may be imposed on us in connection with the dispatch of special service officers or the movement of the British troops now in Egypt, but I, at any rate, have no reason to anticipate that any of the terrible prognostications of the right hon. Gentleman will be fulfilled, and I can assure him I have gone into this question with a full and lively recollection of the follies perpetrated in 1884 and 1885. [Cheers.] I think I have now dealt with the arguments that have been put before the Committee by the right hon. Gentleman, and I do not wish to detain the Committee; any further, but of course I should be prepared to answer any matter he may think I have omitted. ["Hear, hear!"]

*SIR WILLIAM HARCOURT (Monmouthshire, W.)

With regard to the question which my right hon. Friend behind me has raised on the payment of the National debt, I should have been more satisfied if he had told us what his own plan was for paying off the National Debt if not by the purchase of Consols. [Laughter.] No doubt it is a disadvantage to buy Consols at a high price, but with the large stock of Consols which the Government already hold for Savings Bank and other purposes, which were purchased at a low price, they of course had the benefit of the enhanced value. I know some people who desire that other things should be bought besides Consols, but, first of all that does not diminish the National Debt, and as regards the Savings Bank, I should always oppose any security except Consols being held, because sometimes people raise an alarm as to what would happen if there was a large run on the Savings Bank and a desire on the part of the investors to take out their investments. Everybody knows that in a time of panic the only really saleable security is Consols— ["Hear, hear!"]—and therefore, if you invest in any other security, you place yourselves in a position of peril with reference to a very large sum of money at call, amounting to nearly £150,000,000. Bankers are always casting it in the teeth of the Government that they hold no reserve against their deposits, and the least the Government can do is to hold their deposits in the highest class of security. ["Hear, hear!"] That ought to be the rule in reference to this department. ["Hear, hear!"] I believe with my right hon. Friend that the price of Consols is not normal. It arises from exceptional circumstances, and I am perfectly satisfied with the statement of the Chancellor of the Exchequer that he will consider what should be done during such an exceptional period. I hope that nothing that has been said or done will deter the present Chancellor of the Exchequer or any other Chancellor of the Exchequer from devoting a moderate sum of money annually to the discharge of the National Debt, whatever may be the price of Consols. ["Hear, hear!"] The right hon. Gentleman spoke of the First Lord of the Admiralty in the last Administration but one having reduced the Income Tax to 6d. Well, Sir, there are two ways of reducing the tax. You may reduce the tax when you have got a surplus; but if you make a surplus by cutting off £2,000,000 from the permanent fund for the reduction of the National Debt, that, in my judgment, is not the proper method of reducing the Income Tax. I now come to the objections of my right hon. Friend the Member for Wolverhampton, who said that the apparent expenditure of this year is not the true expenditure. That is to say, that the Government have supplemented and anticipated what was to be their real and natural expenditure this year by borrowing from the surplus of last year. In the previous Budget, when I was Chancellor of the Exchequer, I knew that there would be some difficulty in meeting expenditure, and, having got a reasonable surplus, we spent upon stores and materials £200,000 out of it. But, of course, that was anticipating the expenditure of the next year, because we were spending more in the expiring year that we might expend less in the coming year. That my right hon. Friend says is done to a considerable extent in the present Budget, and the right hon. Gentleman the Chancellor of the Exchequer admits that it has been done to the amount of £250,000 in the Volunteer Votes. The right hon. Gentleman the First Lord of the Admiralty has started a number of new ships, and I was extremely astonished when I was told that they were to cost less in the second and in the third years than in the first. [Cries of "No."] Then we ought to have the matter explained. ["Hear, hear!"] I remember that in 1894, when we began upon the building programme, I was told that I had only provided for the first year, but that in the second and third years the expenditure upon the ships would be much larger. I met that point by the answer that in the Death Duties I had introduced a new tax which in the next and third years would yield more money to meet any increased expenditure on the Navy in those years. But where are the present provisions to meet the increased expenditure in future years? The right hon. Gentleman the Chancellor of the Exchequer has made none. ["Hear, hear!"] He has given the whole of his money away to the hon. Gentlemen who sit behind him. [Cheers and laughter.] The point is this. The expenditure of this year is really more than it appears to be, so far as the right hon. Gentleman has borrowed out of the surplus of last year—admittedly to the amount of a quarter of a million. We shall hear from the right hon. Gentleman the Chancellor of the Exchequer why his shipbuilding programme is to cost less in each succeeding year. It is an extraordinary proposition to me and very much in contradiction to all that we have been told before. However, at present I am assured that, notwithstanding the immense addition to the shipbuilding programme the expenditure will be less in the year 1897–98 than it will be in the year 1896–7. There is no denying the truth of the old Scotch saying that "bachelors' bairns are all good children because they are not born." ["Hear, hear!" and laughter.] I am afraid that the Budget of 1897–98 will not show so large a surplus as that of 1896–97 upon which we can draw for our naval expenditure. The first point is that the expenditure of 1896–97 is less than it appears to be by the amount which has been borrowed from the surplus of 1895–96. The second point is that in the provisions made this year the expenditure of 1897–98 must be very much larger than that of 1896–97. That cannot be denied. ["Hear, hear!"] We have been told that as regards the agricultural rates the expenditure next year will be a million more than in this year. Where is the money for that additional expenditure to come from? We have been told that with reference to education the expenditure will be very little more this year, but that next year it will be some £500,000 or £600,000 more. Thus we have a million and a half additional expenditure in 1897–98 for which no provision has been made. The right hon. Gentleman the Chancellor of the Exchequer is giving away his money, and yet by the legislation of this year the Government are to incur an additional expenditure in the year 1897–98, for which no provision whatever has been made. ["Hear, hear!"] But besides that we have the automatic growth of expenditure, which I know to my cost amounts to some £300,000 or£400,000 a year on education alone. Unless the Government succeed in lowering the standard, and so effect a decrease of expenditure, there is certain to be an automatic growth of expenditure under that head which will bring the increased expenditure of 1897–98 to at least two millions. The right hon. Gentleman the Chancellor of the Exchequer tells us that we are to expect that no Imperial money is to be spent in South Africa. ["Hear, hear!"] He assures us that we shall have no Imperial expenditure in South Africa because the Chartered Company are to pay the whole of the costs. For my part I confess I do not like the security. ["Hear, hear!"] I have very grave doubts about the financial position of the Chartered Company in regard to the matter. After what has happened in Matabeleland and Mashonaland, where is the Chartered Company to get its income from? All the capital of those persons who are shut up in Buluwayo which has been invested in the land will have gone. [Cries of "No."] How much do you suppose of that capital will remain after the land has been harried by the Matabele? Why, nothing at all. ["Hear, hear," and cries of "Oh!"] Therefore, the assurance the right hon. Gentleman gives us that the Chartered Company will be able to pay the costs of what has happened in their territory does not appear to me to amount to a satisfactory security. ["Hear, hear!"] However, I do take a considerable comfort from the assurance of the right hon. Gentleman the Chancellor of the Exchequer that, as far as he is concerned, there is to be no Imperial expenditure in South Africa. That is a declaration which I hope will be adhered to. ["Hear, hear!"] The right hon. Gentleman the Chancellor of the Exchequer is a man who does not say things without the determination to adhere to them, and we may therefore take his statement as a declaration on the part of the Government through the mouth of the right hon. Gentleman that no Imperial money is to be spent upon the present state of things in South Africa. I am not speaking of Metabeleland only, but of the Transvaal also. ["Hear, hear!"] Beyond the small expenditure to which the right hon. Gentleman has alluded, we hear with satisfaction the assurance that there is to be no Imperial expenditure in South Africa arising out of the present condition of things in that part of the world. ["Hear, hear!"] I accept, also, with satisfaction the right hon. Gentleman's announcement that there is to be nothing but a trifling expenditure of Imperial money in Egypt or on the Nile. ["Hear, hear!"] That, again, is a declaration which we may note with satisfaction. ["Hear, hear!"] I hope that it will go forth to what I may call the Jingo Press of this country that at last we have got a declaration of policy on the part of the Government which is a tangible one, and which we can lay hold of. ["Hear, hear!"] All that we have heard before in relation, to this question has been slippery enough. [Cheers and cries of "Oh!"] If the word "slippery" is considered offensive, I will withdraw it, and will substitute the word "vague" for it. ["Hear, hear!" and laughter.] Up to this time we have heard nothing that we could lay hold of as to what are the intentions of the Government, but now at all events we have it that the conquest of the Soudan is to be done for half a million of Egyptian money.

THE CHANCELLOR OF THE EXCHEQUER

I did not say anything about the conquest of the Soudan. [Cheers.]

*SIR W. HARCOURT

Well, then, that is still more satisfactory. ["Hear, hear!" and laughter.] At all events, what I will call the "advance limited by resistance" will cost not more than £500,000, and that is to be Egyptian money alone. [Cheers.] That is a satisfactory declaration. I hope that the delusion of those who talk of the reconquest of the Soudan and of our having fleets and battalions on the Nile will be dispelled by the satisfactory statement of the right hon. Gentleman the Chancellor of the Exchequer. ["Hear, hear!"] At all events, I am very happy to hear from the right hon. Gentleman a disclaimer of any notion that the Government intend to carry out the rash and foolish, and, I will add, wicked policy with which people had credited—or rather discredited — the Government. ["Hear, hear!"] I do think, from that point of view, that we have obtained a declaration from Her Majesty's Government which will give great satisfaction throughout the country. [Cheers.]

THE FIRST LORD OF THE ADMIRALTY (Mr. G. J. GOSCHEN,) St. George's, Hanover Square

said, that he thought he might at once clear up the point with regard to the Navy, as some confusion had arisen with regard to it. There were two reasons why the result foreshadowed by his right hon. Friend the Chancellor of the Exchequer would happen with regard to future years. The right hon. Gentleman opposite had spoken as if the Government had suddenly started a new shipbuilding programme without having an earlier programme to complete. If in this year they had started to build new vessels they at the same time relieved 1896–97 and still more 1897–98 from the shipbuilding programme of Lord Spencer— from the expense of the construction of seven battleships that he laid down, including the ships now in hand. This year the expenditure for naval construction was heavy, but next year it would be considerably reduced. The programme of construction which the Government had initiated contained not only battleships, but a large number of torpedo-boats and third-class cruisers. The torpedo-boats were almost entirely paid for in the present year, leaving only a small margin for the years to follow, and the Government also hoped to pay a large portion of the cost of the third-class cruisers—which were not expensive ships—in the present year. The matter had been carefully considered by the Government. They had put together Lord Spencer's programme and their own programme to see how the expenditure would be spread over future years, and they had come to the conclusion that this year would be the heaviest year of the two united programmes.

SIR CHARLES DILKE (Gloucester, Forest of Dean)

said, the Debate was one of the most important of the Session, because it had brought out clear and emphatic declarations of policy by the Government in regard to three questions of the highest moment. The Leader of the Opposition had expressed the satisfaction they all felt on that side of the House in regard to the declarations of the Government with respect to South Africa and the Soudan. But there was a third question in regard to which he could not join in the satisfaction that had been expressed. The Chancellor of the Exchequer, speaking the other night, mentioned the strong hope he entertained that the demands of the Navy next year might be less than they had been in the present year, and, in view of the statement the Committee had just heard, it was clear that the Chancellor of the Exchequer had spoken after consultation with the First Lord of the Admiralty. He therefore desired to utter a word of protest against it being supposed that the present year's programme of shipbuilding, men, and wages could be regarded as sufficient for next year, or that by merely going on completing the work of naval construction begun in previous years we should be able to keep our place in the world. We could not now, as in the old days, make up for deficiencies in time of peace by lavish expenditure in time of war. With the Navy with which we began the next war we would have to fight that war, for we should not be able to make up afterwards any deficiencies which then existed. He thought the country was not in a position to look forward to a diminution in naval expenditure, and he was therefore sorry that at a time when the country was prosperous as was shown by the Budget statement—the Government should contemplate a decrease instead of an increase of expenditure for the defence of the Empire.

MR. JAMES LOWTHER (Kent, Thanet)

said, he did not dispute the necessity for preparing for war in time of peace, but nevertheless he thought the Committee should thank the right hon. Gentleman the Member for Wolver-hampton for the declaration that while an increase in the Income Tax in time of war was justifiable, it should be severely criticised in time of peace. The Chancellor of the Exchequer, in his Budget speech, uttered some, words of warning which well deserved consideration. The right hon. Gentleman said that if our expenditure went on increasing at the rate it had increased during the last 20 years, and if the revenue showed no greater elasticity, the great danger would arise that a future Chancellor of the Exchequer would find a difficulty in meeting the requirements of the Empire. The right hon. Gentleman hinted that some other impost, to which the element of elasticity would be more applicable, should be introduced into our financial system; but he concluded his very able speech without enlightening the country as to the source from which relief would come. The right hon. Gentleman went on to say that under the present system the indirect taxpayer was very moderately burdened if he neither drank or smoked. He shared in that benefit in regard to the latter practice. [Laughter.] He presumed that the Chancellor of the Exchequer meant, in regard to the former practice, those who did not drink anything but water, because tea, cocoa, and such drinks, were still largely taxed. The right hon. Gentleman then asked a question which deserved the most careful attention of Parliament and of the country —whether, if the demands on the Chancellor of the Exchequer went on increasing, our present financial policy could be maintained? They were told that the Income Tax could be indefinitely raised in time of war, but he doubted that an indefinite addition to the Income Tax was a thing to be contemplated without grave alarm. Each penny of the Income Tax produced about £2,000,000, and he thought he was justified in asking the Committee whether it was fair to rely solely upon this plan of raising revenue under all conditions and in all circumstances. The Chancellor of the Exchequer referred to the distinction between the consuming classes and the propertied classes in regard to their contribution to the revenue of the State. His right hon. Friend had made use of the expressions the propertied classes and the consuming classes. He should like to know what was meant by those terms, and whether the consuming classes meant the non payers of Income Tax.

THE CHANCELLOR OF THE EXCHEQUER

I suppose we all belong to the consuming classes. ["Hear, hear!"] Some are foolish enough to consume tobacco, and others are wiser. [Laughter.]

MR. JAMES LOWTHER

said, that when the right hon. Gentleman told them that 48 per cent. of the revenues of the State was contributed by the propertied classes, and 52 per cent. by what he called the consuming classes, he was making the former do duty as a stage army, for the propertied classes in their capacity as consumers contributed a very large proportion of the 52 per cent. which was allocated to the non-Income Tax paying class. The non-Income Tax paying class did not contribute anything like half the revenue. Most of the critics of the Budget were crying for more money, but he, on the contrary, would make an offer to the Chancellor of the Exchequer of millions if he was only willing to accept them. The House of Commons was distinctly invited by the right hon. Gentleman to reconsider our entire financial system, and he must obviously have had it in his mind that at some future time they must have recourse to some other source of revenue. That source, he unhesitatingly maintained, must be indirect taxation. ["Hear, hear!"] The sum of two million pounds, which a penny in the pound on the Income Tax produced, might be obtained by the restoration of the small 1s. registration fee upon corn of all kinds, which had been most foolishly abandoned by a previous Chancellor of the Exchequer. He was aware that in times past any suggestion that a recourse should be had to indirect taxation had always been scouted as a reactionary and impossible proposal. But at a time in the future when more money might be wanted, did they intend to draw on the Income Tax, or to have recourse to the wise principle of indirect taxation which had been so wantonly abandoned? He had not hesitated to suggest corn, because when the suggestion of indirect taxation was made it was said by some that if this was adopted it might lead to an imposition of a tax on corn. He therefore put corn first, corn of all kinds—barley, wheat, oats, etc. That was a source to which they ought to look for an augmentation of the revenue. In taxing barley they would not be taxing what they were told in clap-trap phraseology was the food of the people. Ground flour ought in the interests of the community to be subjected to an impost duty on entering this country, for the importation of ground flour had added considerably to the want of employment in the country. [Cries of "No, no!"] He ventured to say that the introduction into this country of millions of hundredweights of ground flour had obviously displaced a vast amount of labour which had been engaged in the milling industry. It might be a matter of opinion whether there had been compensating advantages, but the diminution of employment could not be gainsaid. There was another source ready for the Chancellor of the Exchequer any time he wanted eight or nine millions. He would point out that 87 millions' worth of foreign manufactured goods was brought into this country, which, if subjected to the moderate average impost of only 10 per cent. would produce eight or nine millions sterling per annum. The proposals of his right hon. Friend the President of the Local Government Board for the relief of the agricultural interest to the extent of 1½ million were proposals to ask the non-agricultural taxpayer to contribute something towards an industry in the prosperity of which he had so great an interest. He would point out that by the imposition of a reasonable duty upon food stuffs the relief of agriculture would be immediate, and the whole community would share in the advantages which would thereby be secured. If they were told that the people of this country would never stand a tax on the articles necessary for their daily consumption, he would reply that at the present moment in this Budget it was proposed to levy between four and five millions of taxation in the shape of Tea Duty, and duties on coffee, chicory, preserved fruits, and so forth. He cordially agreed with what was said as to the necessity of obtaining from all classes of the community a fair proportion of the taxes required. The Chancellor of the Exchequer had pointed out that it was a dangerous policy to rely upon taxation to which the majority of the people did not contribute. It was for that reason he had not associated with the demand for the abolition of the tea duties. The bulk of our revenue ought to be derived from all classes of the community, so that all might be equally interested in sound Government. As matters now stood, we derived too much of our indirect revenue in a manner which too little affected the daily consumption of the people. He would transfer some duties to imported articles such as were produced in this country. He would not take any more money out of the pockets of consumers, but he would seek to benefit producers. The idea that the taxation of corn involved pressure upon the people would not bear argument. When cross-road orators spoke of starvation prices in the earlier years of the century, they forgot to say that those high prices were due to the difficulty of obtaining supplies in war time. That state of things might exist again, if we became dependent upon contraband cargoes for our main food supplies. If the Chancellor of the Exchequer wished to devise a fresh financial policy, let him consult the Secretary of State for the Colonies rather than any other colleague, for he had just delivered an admirable speech indicating the direction of a new policy in preferential arrangements with our colonies. The idea of Free Trade within the Empire was impracticable, seeing that so many colonial governments depended upon indirect taxes, and we must contemplate their difficulties as well as our own. On that account he looked forward to a natural revision of our one-sided and untenable fiscal system.

SIR JOHN BRUNTNTER (Cheshire, Northwich)

said, the Chancellor of the Exchequer had warned us that our expenditure was in many particulars automatic in its growth. There were two fields in which this automatic growth could be stopped if the policy of Her Majesty's Government were to be adopted. There had been a continually growing loss on the Post Office Savings Banks. The interest we were able to obtain for money was continually diminishing, while the deposits were increasing. If we determined that this loss should be reduced by diminishing the interest allowed, we might have the satisfaction of knowing that we had a little more money to give to other classes of the community than the depositors. The Chancellor of the Exchequer doubted whether they belonged to the working-classes, because he found deposits of £50 and £100 a year; but the experience offered by a savings bank for the men employed by his own firm showed that such deposits were not uncommon with the best of working-men in the North of England, It might be right to reduce the interest allowed to Post Office Savings Bank depositors, but to do so would run the risk of discouraging thrift just where the encouragement was valuable. Then it was said we might limit the amount to be spent on education out of Imperial funds as well as out of local funds; but this was certainly not one of the ways in which this country ought to secure money. A Report from our Consul at Wurtemburg stated that one per cent. of the population passed through a course of agricultural instruction. If that proportion obtained in Cheshire, the number of pupils receiving such instruction would be 7,500, whereas the actual number was 230. They were giving over two millions, but he was convinced that if they persevered in their efforts to educate their people until they came up to the level of the German people they would be doing more for true economy.

*MR. DISRAELI (Cheshire, Altrincham)

said, he happened to represent a part of one county and to live in another county, and he could inform the hon. Member that the giving of the two millions had been hailed with the greatest delight. They had, perhaps, an exaggerated idea of what the Chancellor of the Exchequer did for them—["hear, hear!"]—but they had that feeling of encouragement which, he thought, would do more for them than anything that the Chancellor of the Exchequer could give them. They had had a very interesting speech from the Member for Thanet, with the old-fashioned ring, and which appealed to his own heart. [Laughter.] it was curious that after exactly 50 years after the repeal of the Corn Duties they should be considering the fiscal policy of the country, whether it had been a failure or a success. They found the Chancellor of the Exchequer, after his most eloquent speech, confronted by his right hon. Friend asking whether our present system of financial policy could be maintained. The Chancellor of the Exchequer had had a fat year. He wondered whether the Chancellor of the Exchequer had ever considered where he would have been if he had not had a fat year. If, in the next two or three years—and he hoped his right hon. Friend would continue to be Chancellor of the Exchequer—he found the expenditure increased and the income not so, where was he to go to for increased taxation, and how was he to get it? He had given them an interesting summary showing that the increase in the population in 10 years was 20 per cent., and the increase in the expenditure 80 per cent. That had been entirely borne by the Income Tax and the Stamp Duties. Those were facts plain to all, and he thought it would be an advantage to broaden the basis of taxation. That, in his opinion, was one of the questions which the Chancellor of the Exchequer would have to meet, and which he hoped he would consider in the next Budget. He thought in a time like this, when they had not been for many years so near war, and certainly when there were rumours of war, it was a wonderful spectacle, showing the soundness of the national character and trade that the millions had come rolling into the pockets of the Chancellor of the Exchequer without any diminution. He thought that must be very satisfactory. He wished next to refer to the food supply in connection with the national defence. He did not agree with Lord Wolseley on this point. If other countries were not willing to send their corn, it did not matter how large their Army or Navy might be. They could not compel them to send it.

THE CHAIRMAN

ruled that the hon. Member could only refer to the food supply from a financial point.

*MR. DISRAELI

said, the Chancellor of the Exchequer referred to the increase in the volume of trade, but what they should like to know was whether their trade was increasing in proportion to that of other foreign European countries. The increase there was much larger than here, and this he attributed to the system of bounties, which were undermining some of the flourishing industries here. As to the relief given to the agricultural population, he believed the benefit would be felt throughout the country and filter through the small villages. Other trades might have them but the land never would, and it was the duty of the Government to tend and foster it as much as possible. ["Hear, hear!"]

*MR. JOSEPH A. PEASE (Northumberland, Tyneside)

said, the right hon. Gentleman (Mr. J. Lowther) always had a panacea for every evil, namely, protective duty upon the food supply to the people; but for himself he did not believe in raising the price of the necessaries of life. He held that part of the surplus ought to be devoted to removing the duties from articles such as tea. He should like, in his humble way, to congratulate the Government on having produced, at all events, a simple Budget which they could understand. When the last Tory Government was in power they had Budgets introduced which were complicated by Barrack and Naval Defence Acts, mortgaging Suez Canal shares, by charging annuities on the Consolidated Fund, and by Imperial subventions—all making it difficult to comprehend what was proposed. Even expert financiers were unable to explain to a popular audience what was the actual expenditure and revenue of the Government of the day. It seemed to him that the present Chancellor of the Exchequer was not justified in handing over a surplus of nearly six millions-supplementary estimates of nearly £2,000,000 and the surplus £4,210,000-in the way he had done. It appeared to him that the money had been stolen from the liquidation of the National Debt. It was an old constitutional tradition that the money should be devoted to the liquidation of the Debt, and nothing could justify, in his view, the departure from that rule. This was a dangerous precedent to set. Instead of devoting it to the liquidation of the National Debt in times of peace, any Chancellor of the Exchequer who might subsequently possess a surplus would be tempted to hand it over for the relief of taxation, or any other purpose he might think fit. The appropriation of the money had been justified on the ground that the necessities of the Navy required it. He believed that the policy produced a constantly increasing Army and Navy expenditure, and would not be necessary if they took proper steps to promote an international arrangement for the gradual reduction of expenditure of this character. He should like to criticise the Budget from another point of view. A large proportion of the Probate Duty, a few years ago, was devoted to the relief of local taxation Since then a large portion of the Estate Duty was devoted to that same object. He held that both these ways of raising money were matters connected with Imperial Revenue, and, though paid to local taxation accounts, they were nothing less than Imperial expenditure. For the year ending 1895–6, the expenditure, as communicated by a Parliamentary Paper recently presented to the House showed an expenditure of something like £97,764,000. To that ought to have been added £6,634,000, making the expenditure for the past year £105,000,000. For the coming year, 1896–7, the estimated expenditure was £100,480,000, and the amount to be handed over to local taxation was £7,310,000. Therefore, the expenditure of the country was going to be £108,000,000 during the current year, and the people of the country ought not to be blinded by a figure of £100,000,000 on the Balance Sheet presented to the House of Commons. The anticipated balance was, he understood, to he devoted partly to education purposes. The Chancellor of the Exchequer said that £433,000 would be devoted to educational purposes and other contingencies. He himself approved of a certain amount of that expenditure going towards the purposes of education. For instance, he thoroughly agreed in the necessity for abolishing the 17s. 6d. limit, especially in the poorer schools of the country, such as the Roman Catholic Schools, where grievous hardship had been felt, and the people connected with the schools were poor. He believed that ignorance was more expensive than knowledge, and he did not take any exception to the expenditure of money for education, provided it went to promote progress, and not retard it. But it seemed to him that the greater portion of the £433,000 proposed to be spent by the Bill was for the preferential treatment of a certain class, and would not promote education, but rather retard it. With regard to the Land Tax, he admitted that real property seemed, under our present system to pay rather more than personal property. If the revision of the Land Tax would redress that small grievance he would accept it. With regard to the relief of local rates, he took the greatest exception to the method adopted by the Government. It seemed to him to be nothing else than a barefaced contribution to a class. The principle of Imperial subventions was bad. The ratepayers gained at the expense of the taxpayer. Imperial revenue was derived from commodities consumed by us all; therefore, we all contributed to what would be handed over to the ratepayers for the benefit of that class. The taxes, on the whole, were paid by the poorer portion of the community, the rates by the richer. Dr. Hunter, the cause of whose absence now from the House must be a matter of regret, proved in an article in the Contemporary Review a few months ago, that Imperial subventions meant that every occupier below an average rental of £48 was a loser, and above that sum a gainer, and the poorer a man was, so much the more did he lose by these contributions from Imperial funds, and out of the then £6,000,000 paid to local authorities by the Treasury, the poorer classes lost £5,000,000, the lower middle £1,000,000, by these contributions to the richer portions of the community. It was nothing but robbery for the Chancellor of the Exchequer to hand over money collected for Imperial purposes to the relief of merely one class. He objected to the system of constantly increased Imperial subventions. They promoted extravagance. In his own county he had seen the greatest difficulty in the expenditure of the money. They had, for instance, upwards of £16,000 to spend in the county on technical education, and it was very difficult for the Technical Education Committee to see that they got a proper return for that money when they spent it. In every parish were people who thought they ought to have a share of the money, whether they were going to take advantage of the educational advantages put before them or not. The bestowal of money of the kind tended to increase the demands made on the Chancellor of the Exchequer by different sections of the community year by year, and it was most difficult for the Government to resist the appeals made. But the Government were asked at the last General Election to relieve the depression of agriculture. The price of wheat to-day was about 25s. a quarter; whereas a year ago it was about 20s. In his own district agriculture was more prosperous than almost any other industry. No farms were left uncultivated. If anything rents had been increasing, and he did not think that, on the whole, the farmer had much to complain of. Certainly, rents were well paid. But in the iron trade and in the colliery districts wages had gone down, there had been no profits for two or three years, and if any industries should receive relief, it was these rather than the farmers, who followed a profitable in dustry. Farmers would get the benefit temporarily, but they could not permanently if they held their farms on a yearly lease, for the landlord, either by increasing his rents or refusing abatements or improvements in times of depression, would take advantage of this Imperial contribution. The President of the Board of Agriculture had expressed sympathy with the agricultural labourer who was the worst paid individual in this country. But he himself did not see how this Imperial subvention of £975,000 would help the labourer. But who contributed that? It was, to a large extent, contributed by the labouring classes of this country. There were 7,000,000 wage-earners, and these men who drank the beer and smoked the tobacco were largely those who contributed to the revenue of the State. He did not think the Chancellor of the Exchequer would deny that.

THE CHANCELLOR OF THE EXCHEQUER

I do. This grant will come out of the Death Duty on personal property.

*MR. PEASE

submitted that it came out of the surplus the Chancellor of the Exchequer would have in anticipation of the revenue of the coming year. He said there was a balance of £1,710,000 to deal with. Out of that £443,000 would go towards education; £200,000 was to go to the relief of the Land Tax; £100,000 for another purpose connected with the Estate Duty, and there would be £975,000 left. That sum was simply the balance out of the total revenue of the country, a large proportion of which came from the working classes of the country, who contributed directly or indirectly to the revenue. Assuming, however, the agricultural labourer would derive benefit from the proposal, it appeared to him that it was proposed to tax 7,000,000 of labourers for the benefit of 1,000,000. He did not believe the agricultural labourer would get a penny of this money. The greater part of it would go into the pockets of the farmers temporarily, but permanently into the pockets of the landlords. For these reasons he objected to the proposals of the Government. ["Hear, hear!"]

*MR. GIBSON BOWLES (Lynn Regis)

said, he was alarmed to hear the Chancellor of the Exchequer threaten to increase the Navy Estimates next year, and he was further concerned when the First Lord of the Admiralty made himself an accessory after the fact to the declaration. He thought this would have to be reconsidered. His belief was that, although the expenditure next year on the Navy might not be required in the same direction, there would be little if any possibility of diminution. His only consolation with regard to the matter was that it would have to be reconsidered next year, and he strongly suspected that the right hon. Gentleman himself would find that he could not alter the Naval Estimates. He was pleased to hear the declaration of the Chancellor of the Exchequer with regard to Akasoheh, Dongola, and Khartoum. He said the Egyptian Government was making the expedition with their own troops and at their own cost. He, who looked with distrust on the expedition, who believed that it would lead us further than anybody had any idea of at present, was delighted to hear that declaration. They were told originally by the Under Secretary for Foreign Affairs that this was not an Egyptian, but a British expedition, which would go to Akasheh, then if the heat was too great, would stay there, but if not, would go on to Dongola, and he said, in reply to some queries addressed to him by the right hon. Member for the Forest of Dean that he did not wish to publish the plan of campaign beforehand. The right hon. Gentleman, therefore, prepared them for a large expedition to Akasheh, probably to Dongola, and possibly to Khartoum. Again the Colonial Secretary said, "We are doing this in order to show our sympathy with the Italians——"

THE CHAIRMAN

The hon. Gentleman is now discussing the whole question of the expedition up the Nile. So far as it has any financial bearing upon the Budget, it would be in order, but the general policy clearly would not be in order.

*MR. BOWLES

bowed to the Chairman's ruling, and observed that he had made the contrast he wished to make with regard to the financial aspect. Since the final and improved policy now announced by the Chancellor of the Exchequer was to be adopted, of course they might make themselves easy with regard to the financial results of the expedition. Had the old policy, as announced by the Under Secretary for Foreign Affairs and the Secretary for the Colonies, been persisted in of making it a British expedition, then he thought the effects would have been most serious on the finances of this year, and the Chancellor of the Exchequer would undoubtedly have had to reconsider his Budget. He was glad to know there was no possibility of that, and consequently that they should not be called together in November for a Vote on Account for a further advance in the direction of Khartoum. There was only one other subject to which he wished to allude. He thought the Chancellor of the Exchequer had been a little unfair with regard to the Death Duties — in fact, he did not truly appreciate all he got. The right hon. Gentleman said the increase was £1,460,000, but he left out of his calculation the increase that had arisen in that part of these duties which was to be devoted to local taxation. There had been an increase there of £50,000, so that instead of the increase being £1,460,000, it was really £1,510,000. He must say he considered it was unfair that this part of the Death Duties due to local taxation should be left out as if it did not exist. It did exist, it had to be levied, and it was an important part of the tax. Inasmuch as the Death Duties had produced £1,500,000 more than was expected, the Death Duties had really the first claim for consideration in the Budget. The right hon. Gentleman, however, only allocated the small sum of £200,000 to redress the injustices with which the Act bristled, and he hoped when the Bill was laid before the House some consideration would be given to some extremely modest suggestions he should be prepared to make in favour of alterations which would improve the working of the Act. He only desired to add that he had listened with the greatest satisfaction and relief to the declaration of policy with regard to the Soudan which the Chancellor of the Exchequer had made that evening.

On the return of the CHAIRMAN after the usual interval.

*MR. FREDERICK CAWLEY (Lancashire, Prestwich)

said he rose to protest against any portion of the present surplus going to one particular industry. He absolutely denied there was that amount of depression of the agricultural interest that some hon. Gentlemen opposite endeavoured to make out. He could name many industries in which no profit had been derived for years past, and, therefore, he contended that if the Chancellor of the Exchequer had money at his disposal he ought not to hand it over to one industry only. It had been said that all this money would go into the pockets of the tenants. That he thought would not be the case. At the present time many landlords were negotiating with tenants in respect to reductions of rent. Would they not when negotiating take the proposed subvention or allowance in the rates into consideration; landlords were not different to other men, but they would be more than human if in making fresh agreements they did not tell their tenants that they would now have some relief from local rating. It was alleged, too, that the labourer would be benefited under the Rating Bill. The agricultural labourer was distinctly better off than he had ever been. The fall in prices both of food and clothing had been of the greatest advantage to the agricultural labourer, as well as to every other labourer in the country. Some hon. Members opposite spoke as though there was a deficiency instead of a surplus. They spoke in doleful terms of all other interests as well as agricultural. As a matter of fact, the Budget clearly proved that the working classes of the country were never so well off. He would like the Chancellor of the Exchequer to tell them where this subvention policy was to stop. Was the right hon. Gentleman going to give relief to every industry affected by foreign competition, because, if so, one industry after another would come to him and claim relief. He had some connection with works in Lancashire employing 2,000 hands. Those works had to be stopped owing entirely to foreign competition, the Belgian people were able to produce the article cheaper than the Lancashire people could. Was the Chancellor of the Exchequer prepared to see 2,000 people thrown out of work on account of foreign competition and not give them relief, while he gave relief to the agricultural labourer, tenant, and landlord? If the policy of protection advocated by the right hon. Member for Thanet and by other hon. Members opposite were to extend, he could foresee the time when there would be a very large socialistic element in the House, and the Chancellor of the Exchequer would say to the landlord class— When you had the predominating influence in the House, you gave relief to landlords, you gave funds belonging to the country, to the landed interest, now we, in other interests, are willing to abide by your precedent.

MR. A. GRIFFITH-BOSCAWEN (Kent, Tunbridge)

said, that before he came to the special point which he wished to bring before the Committee he desired to associate himself entirely with the hon. Gentlemen who had thanked the Government for the substantial relief they proposed to give to agriculture. So far from regarding the relief proposed as a gift to one class, he held it to be a matter of national importance that something should be done for agriculture at the present time, because he could conceive nothing more calculated to injure the country than that that great interest should be destroyed, as it was being rapidly destroyed, and that the agricultural population should be massed in the towns and urban districts. He, however, rose specially to ask that something should be done for another class who had expected to receive some crumb of comfort from the present Budget—he meant the clergy. He and other hon. Members had received letters from the clergy, and especially from those who held small benefices, complaining of the extremely heavy incidence of rates and taxes. The clergyman paid rates not on his net annual value but his gross annual value, and therefore he thought a strong case could be made out for asking that some relief should be given in the Rating Bill to the clergy. However, he recognised to the full that that was not possible at the present time, and he did not want to press the point, but he did ask the Government whether they could not give some relief to the clergy in a different direction. He admitted that the clergy would benefit by the reduction of the Land Tax, but he wished to see something more done, particularly for those clergy who were possessors of very small benefices. By a series of Acts of Parliament passed between 1807 and 1816 those who held benefices of less than £150 a year were exempted from Land Tax. That was done by a Commission appointed under several Acts of Parliament. In consequence of the decline of value since that period, a large number of livings had dropped below the £150 a year limit; but, owing to the fact that the operations of the Commission came to an end in 1820, the exemption, which was clearly intended to apply not only to livings which at that time were under that value, but to those which should subsequently fall below £150 a year, did not apply to the latter class of livings, and they still paid Land Tax. He was at present not in possession of any exact statistics, though he was trying to obtain them. But he thought that the principle which had been observed in the early part of the century might be extended to the present time, and those benefices totally exempted from the Land Tax where the annual value would be exempt from Income Tax if the holders had no other incomes. He should put down a new clause dealing with this point, and he hoped it would receive the favourable consideration of the Government.

MR. W. ALLAN (Gateshead)

said he was surprised to hear the First Lord say that the Naval Vote would be less next year than this.

THE CHANCELLOR OF THE EXCHEQUER

The Shipbuilding Vote.

MR. W. ALLAN

said that that was practically the Naval Vote, because the Navy was not a Navy without ships. The right hon. Gentleman had forgotten that nations were very jealous of each other's success. The commercial success of Great Britain had undoubtedly created a feeling of jealousy among other nations, and the key of all commercial greatness was the command of the sea. He wished to look at this from a practical rather than a cheese-paring point of view, and he failed to see how any reduction in the Shipbuilding Vote could be looked for. Our increasing commerce demanded an increasing Navy; and scientific progress was continually productive of new designs and new requirements. Men-of-war and merchant ships were virtually old-fashioned in less than 10 years. For example, some 10 years ago, the French built some torpedo-boats to make 15 and 20 knots; and we followed by building other torpedo - boats, some of which could make 24 knots. Where were those boats now? They were lying in the basins at Sheerness, Chatham, and Portsmouth, and would never go to sea; because they had been supplanted by the torpedo-boat destroyer, which had come to the front within the last six years. In the last Navy Estimates there was provision for building boats which would make 32 knots, and the inference was that in a short time the torpedo boat destroyers would be things of the past. It was contrary to the nature and spirit of the Empire that the Naval Vote should be reduced. A reduction could follow only from one cause—loss of commerce, command of the sea, and the colonies. He, did not like to hear such words from right hon. Gentlemen opposite; for he looked to them as the great upholders of the strength and dignity of this Empire, and he was thoroughly with them when they asked for a big Navy. As for the Army, he could dispense with that to-morrow. He would go further and show that his proposition was correct. The expenditure under the Naval Works Bill would increase the total amount of the Naval Vote. He did not see how the Chancellor of the Exchequer was going to reduce that next year. A further item which must be taken into account was the necessity of having another fleet altogether; and by that he meant a coaling fleet. We had no means of coaling our fleet whatever——

THE CHANCELLOR OF THE EXCHEQUER

That is clearly a question of naval policy and not of finance.

MR. ALLAN

It seems to me I am to-night on the wrong tack as Jack says. In conclusion, he should only say that he demurred entirely from the statement that the Navy Vote could be reduced. It could only be reduced on one ground, and that was the weakening of the right arm of Great Britain. Personally, he was convinced that the future would be marked by still greater expenditure for the Navy.

*MR. W. F. LAWRENCE (Liverpool, Abercromby)

as representing a commercial port, thanked the hon. Member who had just spoken for the manner in which he wanted to protect the commerce of the country. He desired, on the present occasion to recall to the House what he had once before stated with regard to the question of the Stamp Duty on marine insurance policies. While fire insurance was exempted from that duty, marine assurance was placed under the disadvantage of being subject to a three-penny ad valorem duty on every premium above 2s. 6d. per cent. There was the further disadvantage to English companies that neither American nor German companies had to pay such a duty. Every large risk taken by a company was spread over other insuring companies, and every separate transaction was liable to that threepenny ad valorem duty. The Committee would, therefore, see that a very appreciable tax was put on this particular line of business. The grievance was not of such magnitude that the Chancellor of the Exchequer could not deal with it. It had reference to only £140,000 a year, and it was a great disappointment to those whom he represented to find that on the occasion of this year's Budget, their legitimate grievance had been overlooked. Another point in connection with this matter was that as an insurance company did not always know the actual amount of the insurance, they could not at once arrive at the amount of the duty to be assessed. The consequence was that they were obliged to have recourse to a covering note, which was not a legal document, and could not be produced in court, hut simply rested upon the honour of the parties. If the Chancellor of the Exchequer could not remove the duty altogether, it would be desirable that there should be one fixed stamp which might be attached to the document he had referred to and make it produceable in a court of law. ["Hear, hear!"]

*MR. T. LOUGH, (Islington, W.)

stated that he had had the honour to introduce to the Chancellor of the Exchequer, a deputation representing the coffee trade, who preferred a request that he would take off the duty on coffee. He believed consumers generally would welcome that concession, it would cost only about £160,000 or £170,000, and it would be a step towards the consummation of the free breakfast table. He suggested, too, that something ought to be done about the Hackney Carriage Tax. In the report of the Departmental Committee on cabs, it was unanimously agreed that this tax of 15s. a year, which was a heavy tax on a poor industry now suffering from the competition of bicycles and omnibuses and trams, should be abolished so far as the Metropolis was concerned. He believed that it would cost the right hon. Gentleman very little to do it. He next drew attention to one or two very interesting remarks which the Chancellor of the Exchequer made on the course that our finances were taking. No statement made by him interested the House more than that dealing with the progress of indirect taxation. The right hon. Gentleman said that indirect taxation was only 52 per cent. of the taxes levied in this country, and that it might be needful for him to reconsider the change in this respect which had come over the financial circumstances of the country. He hoped that the right hon. Gentleman would pause before he took any such step. He was in favour of direct taxation. He believed that it pressed much less hardly on the poor than indirect taxation, and he believed that direct taxation was also more capable of adjustment than indirect taxation. Once they had fixed an indirect tax on a commodity everyone, however poor, had to pay the tax, and this was a strong argument against it. He congratulated the country on the progress made towards equalising direct and indirect taxation. There was a question, however, which ought to interest the Committee in connection with this matter, and it was this: "Is this progress equal?" He did not mean equal as between individuals, but as between the two parts of the United Kingdom—Great Britain and Ireland. The pressure of indirect taxation on Ireland was inquired into by the Financial Relations Commission which had presented two volumes of evidence. From it they saw that indirect taxation in Ireland this year had not been 52 but 76 per cent. of the whole burden. Therefore they had this extraordinary fact that, while in one country the indirect taxation was only 50 per cent., in the other country it was 76 per cent. The right hon. Gentleman, however, went back to 50 years ago, and showed that in Great Britain in 1841 the indirect taxation was £1 7s. 3d. per head, while to-day it had fallen to £1 4s. The corresponding figures with regard to Ireland were that in 1841 indirect taxation was 11s. 1d. per head; in 1895 it was £1 2s. 2d. per head. While, therefore, in one part of the United Kingdom a healthy progress was going on, in the other portion the burden of indirect taxation had been doubled in amount per head of the population during the last 50 years. In 184 the population in this country was 18,500,000; to-day it was 35,000,000; so that as the indirect taxation decreased the population increased. In Ireland, in 1841, the population was 8,250,000; to-day it was 4,500,000, so that while indirect taxation had been doubled the numbers of the people had been cut down by a half. In Great Britain 1841 was the highest year which indirect taxation ever reached since the Battle of Waterloo. It amounted in that year to 73 per cent., but to-day in Ireland it amounted to 76 per cent.; so that the circumstances with regard to indirect taxation in Ireland were worse than they ever were in Great Britain. The Chancellor of the Exchequer discussed the question whether in this country we were not reaching the limit of expenditure which the nation was able to bear. He said that during the last 20 years the population had increased 1 per cent., the taxes by 17 per cent., and expenditure by 68 per cent., and argued generally that our expenditure was increasing more rapidly than our capacity to bear it. He suggested to the right hon. Gentleman that some of those arguments were a little antiquated. If those taxes which the right hon. Gentleman summarised pressed equally on all the sources of wealth in the country the calculation would be sound. But they had not pressed equally, and there were sources of wealth in this country not yet tapped. The Budget contained hints that there was at present in our system of taxation some points which showed that the wealth of this country was not really taxed in proportion to what it could bear. In the first place there were the Death Duties. The Chancellor of the Exchequer had not altered them materially, and found no injustice in them. The suggestion, therefore, was that a great vein of wealth had been tapped here, and that the nation could bear all the burdens placed upon it. The Chancellor of the Exchequer mentioned the case of stamps in connection with Stock Exchange transactions, and the amount of champagne drunk over the bargains. But a nation that was poor would not consume champagne and spend so much on stamps. The tremendous productivity of those taxes showed that there was a quantity of wealth in Great Britain not yet tapped by the Chancellor of the Exchequer; and he suggested, before the right hon. Gentleman came to the conclusion that we had reached the limit of taxation, that he must take into account the whole question of national income. The question of National income had been considered lately. In the first place there was the Income Tax, and it was found that other sections of the community, taking them in the gross, had about the same amount of income as the Income Tax payers. The total annual income of Great Britain was at least between £1,500,000,000 and £1,600,000,000 a year. An allowance of £12 per head for living being made, there remained a taxable income of £1,100,000,000, and the whole of the taxes, local and Imperial, amounted only to £130,000,000. We were, therefore, in Great Britain only using one-ninth of our taxable income. In Ireland the gross income of the country was £70,000,000. Deducting £12 per head of the population for living purposes, there remained a taxable income of £15,000,000, and the total amount of taxes, local and Imperial, was; £12,000,000. So in Ireland there was only a margin of £3,000,000 after the payment of the taxes, while in England there was a margin of nearly £1,000,000,000. In Ireland we were using five-sixths of our available taxable income. We were, in. fact, using up nearly every available £1. The Chancellor of the Exchequer had told them that he had a surplus of £6,000,000, and that the past year had been a wonderful year, and hon. Members fingered the gold in their pockets and thought how prosperous we were. He held that they ought to think of Ireland where there was no surplus, and precious little balance in anybody's banking account. The increased expenditure which had been provided for this country was not required in Ireland. The Naval Works Bill afforded a good illustration of the difference in necessary expenditure between the two islands. £14,000,000 had been provided for the purpose of protecting this island, but not a penny was to go to Ireland for that purpose. He did not blame the Chancellor of the Exchequer for that, because Ireland did not want protection. The sure defence of the Irish people was their poverty. What he did blame the Government for was for spreading the burden of this expenditure between the two islands. He had asked the Chancellor of the Exchequer whether he would try to find out how much was exacted from Ireland each year, and the right hon. Gentleman replied that as he had not heard from the Royal Commission on the Financial Relations between the two countries, he could not supply the necessary information. That he considered an unsatisfactory answer. Since 1818 no account had been kept of how much money had been exacted from the unfortunate sister isle. The. Treasury had made a calculation upon the subject, but upon what was it based? It was based upon figures relating to the last four months of a recent financial year, and upon information of the flimsiest character. It was a disgraceful state of things that full authentic information could not be obtained on the subject. He regretted that the Royal Commission had not yet been able to issue a Report. Thirty or forty thousand people were done to death, or exiled from Ireland every year as a consequence of the continuance of the present most infamous system. Why should they wait for the Report of the Commission before they did something to remedy the evil? This had been described as a Landlords' Budget. He would consider for a moment the question of the financial relations of the two countries from the landlords' point of view. He suggested that the landlords would do well if they united with the representatives of the people of Ireland in asking that this question of Ireland's taxation should be favourably considered by that House. Governments were constantly appealing to the landlords to reduce their rents, and during the last 40 years £2,000,000 had been taken off the rent-roll of Ireland through the action of Parliament. But what had Governments done? For every £1 taken off rent, they had imposed £2 in taxes. Thus £2,000,000 had come off the rents and £4,000,000 had gone on to the taxes. The Land Bill of the Government would have no meaning if it did not reduce further the landlords' receipts, but ought they not to ask the Government to reduce taxation at the same time? Old taxes which were too high were being continued and four new taxes had been laid on Ireland in the last four years—the tax on beer and the tax on whisky as indirect taxation, and the Death Duties and increased Income Tax as direct taxation. The taxes were constantly increasing, and the population was constantly diminishing. From the English taxpayer's point of view, it was also desirable that the taxation of Ireland should be reduced. He did not suggest that Ireland should pay less and that England should pay more. As the representative of an English contituency, he should think it monstrous that his constituents should have to pay anything to relieve Ireland from payment. Ireland ought to pay her own way in the world, and she would be willing and able to do so if a proper system of Government, suitable to the needs of the country, were established. England reaped no profit out of her financial oppression of Ireland. Long ago she did reap a profit, but circumstances had changed, and to-day the balance was on the wrong side. £200,000 a year was probably lost by England in her transactions with Ireland, regard being paid to the cost of maintaining the Army in Ireland. In 1860 there was a balance of £5,500,000 which Great Britain got out of Ireland, but since that time the Irish civil expenditure had gone up, and now the balance was only £1,750,000, as against which a payment of £2,000,000 was made for the Army. The fact was that the Irish people paid large taxes, and that the money was all fuddled away. Therefore, from the English taxpayer's point of view there was good reason why this question should be considered. In future years, unless a change was made, the English taxpayer would probably have to contribute £1,000,000 or £2,000,000 a year towards Irish taxation. It was all very well to tax a country as long as one got something out of it, but it was no use to go on doing so when the goose was dead that laid the golden egg. Why not discontinue these burdens, which were the curse of the people of Ireland, and which did no good to this country? It would probably be said that good was done in Ireland by the expenditure there of part of the money raised in taxes. Well, while 4s. 3d. were spent on education per head in Ireland, 15s. 4d. per head were spent on the armed forces. That, surely, was too little on education and too much on the military. As for levying a tax of 15s. 4d. on the unfortunate people for the maintenance of soldiers and police in their country, he did not think anything more tyrannous or corrupt was ever done in a civilised country. He had not mentioned these figures without giving them the closest study. They were not calculations of his own, but they were given in evidence before the Royal Commission. He would close by asking whether it was not fair to ask the right hon. Gentleman to take into consideration the situation of the unfortunate country. The contrast would grow greater every year, and he appealed to the Government—and he recognised that the present Government were no worse than previous Governments of either Party—to consider this matter in accordance with the nobler and broader traditions of English finance, and to do justice to the people of Ireland.

*MR. A. K. LOYD (Berks, Abingdon)

said he wished to call attention to two points in connection with the incidence of the Death Duties. The first case was that of an estate being left to a widow absolutely. The present state of the law was that she paid Estate Duty as any other person. To his mind that was a great injustice, because, in the normal condition of things, an estate would probably pay duty only once in a generation. The average disparity of age between husband and wife he took at five or six years, and, that being so, the estate had to pay a severe duty at an interval only about one-sixth or one-fifth of the normal interval. Might not she therefore be excused from paying more than, say, one-sixth or one-fifth of the normal Estate Duty? He was sure the right hon. Gentleman would be consulting the interest of every household in the country if he could make some alteration in this direction. The other case was that of an estate left by will or settlement to the widow for life, and remainder to the children. In this case the widow paid Estate Duty, but no further duty was payable on her death. He suggested that it might be possible to postpone the payment of the duty during the life of the widow. The result would be that the estate would be left intact during the period when the children were being brought up and educated. He begged to submit these two points to the consideration of the right hon. Gentleman. ["Hear, hear!"]

MR. F. S. STEVENSON (Suffolk, Eye)

contended that the provision with regard to the Land Tax would certainly operate beneficially for the poorer clergy. While, of course, he sympathised with their position owing to the fall in tithes, it was impossible to deny that the loss the tithe-payers had incurred, owing to the fall in the price of agricultural produce, had been greater in proportion. His hon. Friend the Member for Islington had suggested new sources of revenue which were still untouched, and he agreed with him that, if the necessity for further expenditure increased, it would be necessary to tap new sources of revenue. The right hon. Gentleman the Member for Thanet had trotted out his familiar hobby-horse of Protection, but he would not follow him in that. His object in rising was to call attention to a particular point in connection with the Land Tax. He was very glad the Chancellor of the Exchequer had escaped the toils of two distinct classes of tempters on this question. Some were in favour of abolishing the tax altogether, and others were in favour of handing it over to the County Councils. He was glad the right hon. Gentleman had not given in to either. If the right hon. Gentleman had abolished the tax it would have involved a grave injustice to those who had redeemed the tax. If, on the other hand, he had handed the tax over to the County Councils he would not have met the grievance of the small payers of the tax. The special grievance of the small payer of Land Tax was that, owing to the fall in prices of agricultural produce which affected large estates, the fixed quota which the district had to pay fell more heavily upon them. In his opinion, the landlords would obtain the greater benefit of the reduction of the Land Tax from 4s. to 1s. He should like to know from the right hon. Gentleman the Chancellor of the Exchequer whether the reduction of the Land Tax from 4s. to 1s. would be automatic.

THE CHANCELLOR OF THE EXCHEQUER

said, that the reduction would be automatic in the quota payable by the parish.

MR. STEVENSON

said, that that would facilitate matters greatly. He had always taken a keen interest in this subject, which he had shown by asking in 1893 that there should be a revision of the Land Tax all over the country. He was very glad that the right hon. Gentleman the Chancellor of the Exchequer had made this concession. With regard to the other subject which affected the agricultural interest, namely, the payment by the State of half the rates on agricultural land, he was entirely in favour of the scheme, because it was the only way—though, perhaps, a roundabout and cumbrous way—by which personal property could be made to pay its share of the rates. It must not be forgotten that the small tradesmen in small country towns had suffered greatly from agricultural depression owing to an increase in the burden of local rates, and he was sorry that they were not to have a share in the relief afforded by the grants in aid. He should have thought that it was possible to have extended the benefits of these grants in aid not only to the large landowners and farmers, but to the smaller classes who had suffered during the late and present depression of agriculture.

MR. C. T. MURDOCH (Reading)

said, that he rose for the purpose of making a few observations on the peculiarly interesting speech of the right hon. Gentleman the Member for Wolverhampton. The right hon. Gentleman had addressed himself largely to the subject of the Income Tax, and he rather made an attack on the right hon. Gentleman the Chancellor of the Exchequer because, having a surplus of one million and three-quarters at his disposal, he had not taken off a portion of the Income Tax. The right hon. Gentleman the Member for Wolverhampton, however, had been obliged to confess that even with a surplus of a million and three-quarters the right hon. Gentleman the Chancellor of the Exchequer would not be able to take off 1d. in the pound of the tax. The right hon. Gentleman, therefore, suggested that the Chancellor of the Exchequer should have taken off a halfpenny, but at the same time admitted that the question was not a very urgent one. He, however, could not help thinking that to take off merely a halfpenny of the Income Tax would not be a very satisfactory course of proceeding, because it would be extremely difficult as a matter of calculation, and would not afford any really substantial relief to those who paid the tax. Although he was not a landowner to any great extent, was not the possessor of any valuable heirlooms, and had no life interest to come back to him, he might be allowed to say that in taking off the taxes in the way the Chancellor of the Exchequer had done, he had exercised a very wise discretion, and had disposed of his surplus in the best possible manner. The right hon. Gentleman the Member for Wolverhampton had made a very strong point with regard to the fact that the Supplementary Estimates of last year had not been included in the Budget or in the Estimates for the present year. When the Chancellor of the Exchequer framed his Financial Statement for the year, he depended to a great extent on the Estimates submitted to him by the heads of the Spending Departments, who in their turn based their Estimates, not only on what was required by the Departments for the year to come, but also on what had been spent in the previous year, including the Supplementary Estimates. He therefore held that in the Budget these Supplementary Estimates were themselves considered. The right hon. Gentleman expressed the hope that the Chancellor of the Exchequer had not been purchasing Consols in the market at their present high price. If he remembered rightly, the Chancellor of the Exchequer had made a great point in his Budget Statement of having paid off a considerable amount of the Floating Debt. That in itself was a considerable reduction in the indebtedness of the nation. In reality, that Floating Debt represented to a great extent what was formerly the old Three per Cents. At the time when the present First Lord of the Admiralty, as Chancellor of the Exchequer, converted the Three per Cents., there were a certain number of holders who would not come into the scheme; and the right hon. Gentleman, instead of issuing new stock in substitution of the amount which those holders would not receive, allowed the Floating Debt to be represented by that amount, something like £35,000,000, which had gradually been paid off, and which, in his opinion, had during the past year been laid considerable hold of. That was really the very best way of paying off the National Debt. The right hon. Gentleman did not go into the market and buy Consols at their exorbitant prices, but he continued to buy off the indebtedness of the nation in the very best way that could possibly be adopted. In his humble opinion, the high price to which Consols had been run up was due, not only to the purchases on account of the amount in the Post Office Savings Banks, but also because Consols had become a luxury, and because most banks thought it necessary to hold a large amount in Consols which they did not part with, which did not come into the market, but which appeared as ornamental items in the balance sheets, and which consequently added to the scarcity of Consols. In regard to the question of deposits in the Post Office Savings Banks, he desired to call attention to a practice which was now being pursued, and which, in his opinion, amounted to fraud. There were several instances of well-to-do persons who held large amounts in those Savings Banks by depositing in several places under different names, and who thereby obtained that comparatively high rate of interest which was intended by the Government as an encouragement to thrift amongst the poorer classes. That was a matter which, he thought, should have the attention of the Government. ["Hear, hear!"] As a banker himself, he objected to the Government competing with the bankers of the, country, especially as the Government did so upon bad financial terms. If any banking institution took money on deposit upon a higher rate of interest than it could obtain itself, it would soon find that that was not only a risky but a fatal class of business. The depositors whom the Government encouraged to come in received such a rate of interest as the Government in its banking capacity could not afford to give its depositors, and it was a monstrous injustice that the bankers of this country should be competed with by the Government, who were trusting to the taxpayer to make up the deficit in the interest which they could not pay on their deposits. He did not believe that the sources of taxation were by any means exhausted, and he could not believe that men of the consummate ability of the First Lord of the Admiralty, the present Chancellor of the Exchequer, or the right hon. Gentleman the Member for Monmouthshire, would not have many means at their disposal for increasing the revenue if it were necessary. In financial circles in the country there was a growing feeling that direct taxation had gone almost as far as it should go at the present time, and that the attention of Chancellors of the Exchequer should be now turned to indirect taxation. He would remind the hon. Member for Islington that the principal source of taxation in Ireland was from the duty upon whisky made in Ireland, but drunk in Great Britain— [Nationalist cries of "No!"]—and that therefore the taxes which had been complained of as unjust were borne by Englishmen, and others abroad, as well as by those living in Ireland. He believed that the agricultural classes in Ireland were in many respects much better off than the similar classes in Great Britain.

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

said, the most striking and, he thought, the most saddening part of the whole discussion on the Budget was in reference to the enormous increase of annual expenditure. He thought the Committee was hardly aware that the round figures given them in the Budget Speech did not, as compared with previous years, really represent the national expenditure of this country. No less than five or six millions of our annual expenditure had been transferred from our national to our local accounts, and the 100 millions of the Budget meant something like 107 millions. He trusted that the right hon. Gentleman would see fit to alter his account and bring it more in accordance with previous accounts. An item was put down on the revenue side which was really a new source of expenditure. One of the great defects in arriving at any conclusion on the expenditure of revenue was the extraordinary discrepancy between the public accounts of the Treasury and the other Departments.

*THE CHANCELLOR OF THE EXCHEQUER

said, what the hon. Member alluded to was no doubt that in all previous accounts that part of the Death Duties and of the revenue from beer and spirits which went to the local taxation account had not been included in the Budget Estimate for the year. He followed that precedent precisely in making up the official figures of his Budget Estimate this year by deducting the sum which was to go towards the local taxation account in future years from the Budget Estimate of Revenue.

MR. BUXTON

said they had no desire to question any expenditure or revenue, it was only a question of the confusion of accounts, and he thought that what the right hon. Gentleman had said confirmed his view that here was a distinct item of expenditure which was put down on the revenue side in our national account. That certainly was not the way in which any business man would keep his ordinary accounts. Questions of such great importance as education of course required attention, and, looking to the state of Europe at the present moment, he supposed they could not, unfortunately, regret our expenditure on the Navy; but the worst of it was that successive Chancellors of the Exchequer had all expressed their great regret at this expenditure, but always produced increased Estimates. Satisfaction had been expressed with the statement of the Chancellor of the Exchequer that his Estimates of expenditure did cover all the proposals of the Government with regard to the Army and Navy; and he trusted the right hon. Gentleman would be justified in what he had said with regard to both North Africa and South Africa, and that there would be no demand for panic stricken expenditure in either. The First Lord of the Admiralty had given a clear exposition as to the position of the Navy; but unfortunately it had been found by experience that as soon as the expenditure on one programme began to diminish, a new programme involved an increase of expenditure. The Estimates of the revenue seemed to be taken in a most cautious spirit, and he believed that the revenue would be larger than the Estimate. The advantage of the Income Tax was that it could be raised and lowered as required, and it was well that it remained an integral portion of our National finance. But, as the yield of a. penny in the pound was now two millions, it was possible to contemplate making changes either way by a halfpenny in the pound, and he did not see that any difficulties of calculation need stand in the way. No one had objected to the course that had been pursued in gradually diminishing indirect and increasing direct taxation until they were brought to almost equal proportions, and looking round our whole financial position he did not see where it would be possible to impose any additional indirect taxation on any articles of consumption. There was no article of common consumption that would stand a great amount of taxation without diminishing the consumption of it so as to affect our whole home and international trade. Although it might be regarded as rather heterodox on himself, he must say he concurred in one remark made by the right hon. Member for Thanet; he thought the abolition of the registration duty on corn was in some sense a misfortune, but it was abolished because Mr. Lowe had more money than he knew what to do with; and, although it brought in a little more than a million, it in no sense raised the price of corn to the consumer. If Mr. Lowe could have foreseen the stupendous expenditure of the present time— almost double what he had to deal with—he would have left the registration duty as a basis of taxation. The hon. Gentleman referred to the subject of direct taxation. He did not want to weary the Committee by going into the question of the way in which direct or indirect taxation fell on different classes in the community. It was a subject on which a good deal could be said on both sides. He did not think that they could lay down a general proposition that direct taxation fell on the rich and indirect entirely on the poor. That was, perhaps, not the way in which, in the ultimate result, taxation fell. They had to remember the great matters of the consumption of such articles as tea, tobacco, spirits, wine, etc., and it was an absolutely unquestionable fact that in consequence of their fiscal system, the burden fell infinitely heavier on the poorer than on the richer classes. ["Hear, hear!"] It was found that it was absolutely impossible to levy the taxes as the law intended. He should not pursue that point, but he thought it was a good thing, for their system of taxation enabled them to reduce a vast number of taxes, and that it was based on a broad principle. He wanted to say a few words as to the Death Duties, in which he took an interest some few years ago. He thought it was remarkable that the increase in the Death Duties fully justified all the assurances and expectations of his right hon. Friend. It was a fact that realty had been able to pay the Death Duties without any great burden or inconvenience. The right hon. Gentleman did not propose to interfere with the settlement. As he understood the Chancellor of the Exchequer was going to make some slight altera- tions in matters with regard to which grievances had arisen, but he trusted he would not give way to the arguments used by the hon. Member just now. He wanted to ask the Chancellor of the Exchequer one question in regard to one of his proposals, because he understood him to say that his proposals were made in no way with a view to the derogation of the principle of the Death Duties. The only point that struck him somewhat was that dealing with the question of life interest. He understood that he proposed, where the owner had parted with his property, but retained a life interest until the property came back to him again, he would only pay one Death Duty.

*THE CHANCELLOR OF THE EXCHEQUER

He will not pay on what is called the enlargement of his interest.

MR. BUXTON

said, then, in conclusion, he would only say that he entirely agreed in the hope that, even though the National Debt might have risen to a high figure, they should not relax their efforts in reducing that Debt. The Chancellor of the Exchequer prided himself, or rather the nation, on the fact that in the last 15 years they had reduced the Debt by £100,000,000. He thought that the right hon. Gentleman ought to recollect that the National Debt still amounted to the tremendous figure of £660,000,000. While they had decreased the National Debt, they had increased their local indebtedness by over £100,000,000. He was glad that the right hon. Gentleman would continue the excellent system under which they were gradually reducing the Debt.

SIR A. B. FORWOOD (Lancashire, Ormskirk)

said it was difficult to prophecy in regard to naval expenditure, which must be regulated by the shipbuilding programme of other nations. He thought the First Lord of the Admiralty would be able next year to reduce the naval expenditure if the expenditure of Foreign Powers remained what it was at present. Certainly, the amount which was being spent this year was much in excess of what would be found necessary to maintain on a liberal scale the Navy of this country. With respect to the Registration Duty on foreign corn, he shared the regret of the last speaker that it had been removed, and would have preferred to see a small nominal duty of that kind placed on imported corn, as an equivalent to the local rates which home-grown corn had to pay. He was glad that a grant from the Exchequer was to be made to local rating authorities, because it appeared to be the only means of bringing that charge of personalty on to the local rates. It was obviously unfair occupiers should have the burden of the local rates and personalty escape. He was also very glad that this grant was not to be given in lump sums to districts, but in proportion to the rates that districts raised. There was nothing so wasteful as granting public money to district councils. ["Hear, hear!"] He had himself had considerable personal experience of a very large council, which had received in the last few years considerable grants of public money for technical instruction, and he was bound to say that, after careful and close watching, there had not been exercised over the expenditure the same vigilance and care that was exercised over expenditure which was levied by rates by that local authority. He was therefore glad that the Chancellor of the Exchequer had made it a condition of the grant that it was to equal the amount raised locally. He hoped the grant would be only temporary, and that the whole question of local rates would be considered. He hoped and believed there would be ample means in the possession of the Chancellor of the Exchequer in the coming year, out of a reasonable and proper saving on the Navy expenditure, without in any way diminishing the power or efficiency of the country. ["Hear, hear!"]

DR. CLARK (Caithness)

regretted very much that the Chancellor of the Exchequer had not followed the example of his predecessors in reference to carrying out the principle of graduation in the Income Tax. He had, on various occasions in the last Government, pressed this point, and when the First Lord of the Admiralty was Chancellor of the Exchequer, he took Divisions and moved Amendments to his Income Tax in order to carry out two very important changes he considered they ought to have. He also moved an Amendment to the first Budget of the late Chancellor of the Exchequer, the right hon. Member for West Monmouthshire, who, to a certain extent conceded the point raised. This was not a matter of Party, for he remembered the hon. Member for North Islington acting as his co-teller in an Amendment he had moved to the Budget of the late Government. They had got graduation to a certain extent. It was introduced by Sir Stafford Northcote, and now the late Government had still further modified it by increasing the sum from £150 to £160, so that a person in the receipt of £3 per week escaped the Income Tax altogether. The graduation limit had also been raised from £400 to £500. The principle of graduation was thus carried out to a certain extent. It was carried out fully in the matter of the Death Duties, and the right hon. Gentleman had got this splendid surplus. If it was carried out in interest like it was in capital in the Death Duties, the Chancellor of the Exchequer would find a large field in which to operate. There were something like 500,000 payers of Income Tax. Three-fourths were under £500, one-fourth were not heavily taxed, but the other three-fourths were, and he did not think there was any class in any country so heavily taxed as the lower middle classes in this country. He pressed upon the right hon. Gentleman in future Budgets to consider the desirability of making this burden fairer on all classes. It was too heavy now on the smaller middle class, and not heavy enough on the richer classes. He felt still more strongly on the question of differentiation. They taxed a man whose income was derived from unearned increment at the same rate as the man whose income depended upon his industry. But the two classes of income were entirely different. A professional man or trader who was making £300 a year was altogether different from a man who had £300 a year from investments. The £300 came to the one whether he was well or not; he did not require to save for any contingencies. But the man whose £300 a year was derived from his own industry had to put by a certain amount for provision against sickness and old age. On the same basis by which there was an allowance for insurance, there should be a certain sum taken off the tax on industrial incomes, because of the conditions under which they were earned, and the necessity for providing for contingencies. There should be a differentiation between in comes derived from investments and those derived from labour.

*THE CHANCELLOR OF THE EXCHEQUER

The discussion we have had to-night has been very general, but there are some points upon which, before the Resolution is taken, I should like to make a few observations. The hon. Gentleman who has just sat down is very anxious that there should be graduation and differentiation of the Income Tax. With regard to graduation I have only to say that, so long as it is impossible to find out how many different sources of income a man has, and what his total income is, it is not possible to attempt graduation. With regard to differentiation, that is a principle with which many of us will be disposed to sympathise; but, in spite of the authority of the hon. Member, I would observe that every Chancellor of the Exchequer, from the time of Mr. Pitt down to that of Mr. Gladstone and my predecessor, having examined this ques- tion, have found it a practical impossibility. Two very important Committees of this House, sitting in 1851 and 1862, having thoroughly examined it, reported strongly and, I think, conclusively against it on the grounds of impracticability. I would now wish to say a few words upon the remarks made by other hon. Members in the course of the Debate. An hon. Friend behind me put two cases of hardship with reference to the Death Duties, and suggested some alleviation in the manner in which the duty was levied on widows. I cannot absolutely say whether one of the cases would not be to some extent met by one of the Amendments which I named to the Committee the other day, but, if he will be good enough to place the facts of the cases before me, I will look into them and see if anything can be done. The hon. Member for Liverpool spoke of the grievance of his constituents in the matter of the tax upon marine insurance. I know that is an important question, and that the duty on marine insurance does stand on a different footing and is of very different amount to that upon either fire insurance or life insurance. I am afraid I cannot hold out any very definite hopes of being able to deal with it, and certainly I could not do so this year; but it may be my duty, for other reasons, to look into the whole question of stamps, and, if I do so, of course this will be one of the subjects which will occupy my attention. The hon. Member for West Islington spoke first of all on the subject of coffee, and rattier suggested that he was disappointed that I had not been able to abolish the duty on that article. I thought I had given a very conclusive reply, though he may not have thought it a very satisfactory reply, on that subject when he waited upon me with a deputation of those who were interested the trade. I can only repeat what I said then, that I see no ground, so far as the consumer is concerned, for the abolition of that duty. He then spoke on the subject of hackney carriage licences. That is a tax which, I think, goes entirely to local taxation, and I am not much inclined to deal with local taxation licences now. He also dwelt at considerable length on the difference between the position of Ireland and Great Britain with regard to taxation, and I think that, with the zeal of a gentleman who has written a book on the subject, he rather exaggerated the case which he put before the Committee. He went so far as to say, if I heard him rightly, that there were no balances to the credit of anybody in the Banks in Ireland.

*MR. LOUGH

I did not mean to say that. [Laughter.] I meant to say the balances were not very large.

*THE CHANCELLOR OF THE EXCHEQUER

I think the balances are pretty considerable, and I hope and believe they will be considerably increased. Of course, anybody who looks at the statistics, which are annually published, of the relative personal wealth of Ireland and of Great Britain that is subject to Income Tax or to Death Duties, will at once see, as we all know, that Ireland is a poorer county than England ["Hear, hear!"] Whether Ireland is unfairly taxed as compared with England is another, and a very difficult question. As the Committee are well aware, that is now occupying the attention of the Royal Commission on the financial relations between the two countries, and I can only promise that, when that Commission reports, my best attention will be given to the Report and to the evidence laid before the Commission. Until then I should respectfully decline, with all deference to the Committee, to enter into the subject at all. I do not think that any discussion of it would be fruitful of any result. The hon. Member went on to make some suggestion as to the kind of taxation I might propose if, another year, I find myself in the need of revenue. He pointed to the possibility of additional duties upon general stamps. That is a matter which, no doubt, deserves investigation, and possibly something may be found to arise from that investigation. He estimated that the total income of the class who are now below the Income Tax level was as large as that of the class who are above it, and he said that, calculating that everybody wanted £12 to live upon, you should take the whole income of all the people in the country, including those below as well as those above the Income Tax level, except £12 a year, as the taxable income of the country. I should very much like to see what would happen to a Chancellor of the Exchequer who proposed an Income Tax on the income of that part of the population who do not pay Income Tax on the basis that you may tax everybody's income except £12. ["Hear, hear."]

*MR. LOUGH

You can do it apart from Income Tax, and you do it in Ireland.

*THE CHANCELLOR OF THE EXCHEQUER

I think I have now dealt with the main points raised by hon. Members, and I would now venture to ask the Committee to come to a conclusion of this Debate. We have debated these Budget Resolutions now for two nights, and it is very desirable that this Resolution, and the final and general Resolution, on which, I think, there is never any Debate, should be passed this evening in order that we may take the Report to-morrow, and that I may able to introduce the Budget Bill. ["Hear, hear!"] The Committee are aware that my right hon. Friend the Leader of the House hopes to be able to take the Second Reading of the Bill on Thursday next, when, of course, full opportunity for discussion will arise. ["Hear, hear!"]

MR. R.G.WEBSTER (St. Pancras, E.)

said, that before they came to a decision, he desired, as a London Member, to say one or two words on this question which materially affected the metropolis. Hon. Gentlemen on the Opposition Benches had said that the Income Tax hit particularly the lower middle class. The London constituencies were mainly composed of the lower middle class, and in the Budget that class had been absolutely ignored. Very wisely, as he thought, relief was to be given to the agricultural class, but he regretted that no thought had been given to the lower middle class in London. To a great extent, he agreed with the observations made by the right hon. Gentleman the Member for Thanet (Mr. James Lowther), who addressed the Committee early in the evening. The right hon. Gentleman said that we rather failed in our modes of indirect taxation. At present indirect taxation was mainly assessed on articles that could not be produced in the United Kingdom or in any of the British possessions—viz., wine, spirits, tea, and tobacco. ["Oh!"] No doubt tea was produced in India and Ceylon, but the larger proportion of tea which was sold in the United Kingdom was brought from China and places other than our dependencies. The fact he wished to lay stress upon was that it was essential in considering the fiscal system of the United Kingdom that they should consider it as a whole. The Budget simply continued an 8d. in the pound Income Tax on the middle class in London and elsewhere, and gave, to some extent, an advantage to the landlords. [Opposition cheers.] He failed to see what else the Budget did.

MR. J. W. LOGAN (Leicestershire. Harborough)

said, he had no intention to trespass at any length upon the attention of the Committee, but he felt very deeply that this Budget was a most unjust Budget, and he would, in the House and in the country, take every opportunity he could to protest against it. No case had been made out for giving the whole of the surplus to one class, and that one of the richest classes in the country. It was said that during the last 20 years the farmers had lost a large amount of capital. If it was the fact that the farmers had lost a large amount of capital during the last 20 years, it was also the fact that during that period the landowners had received in rent no less than £100,000,000, There was no justification for taxing the working classes to subsidise the landlords. Further, he objected to this Measure because the result would be, if this 1½ million a year were made a permanent charge for the benefit of the landlords, to increase the selling value of the property by no less than 30 millions sterling. As to the argument of the right hon. Member for the Isle of Thanet, the labourer clearly understood his position. He knew that under Free Trade he was better off with a wage of 14s. a week, and with wheat at an average price of 28s. a quarter, than under Protection with a wage of 8s. a week and wheat at 72s. a quarter. The Budget this year was a sufficient assurance of the wisdom of a Free-Trade policy for this country. In 1842, just before the Corn Laws were repealed, the London Common Council passed the following Resolution:— The continuous and increasing depression of the manufacturing, commercial and industrial interests of this country, and the wide-spread distress of the working classes, are most alarming. Manufacturers without a market, shipping without freight, capital without investment, trade without profits, and farmers struggling under a system of high rents, with prices falling as the means of consumption by the people fail, a working population rapidly increasing, and a daily decreasing demand for its labour, union houses overflowing as workshops are deserted; Corn Laws to restrain importation, and induce the starving people to regard the laws of the country with a deep sense of in justice. If a duty were put on corn and manufactured articles, where would the right hon. Member for the Isle of Thanet wish to stop? For every pound worth of corn and meal imported, there were two pounds' worth of other agricultural produce imported, all of which could be grown in this country. The right hon. Gentleman argued, if you tax tea, why not corn? The answer was obvious. The tax on tea fell upon all classes alike; but a tax on foreign corn would increase the value of the corn grown at home. He should have liked to have seen this money used for the benefit of the indirect taxpayer. He considered this system of State Aid for the relief of rates as pernicious, and as calculated to lead to extravagance. The indirect taxation fell more heavily on the poorer than on the richer classes—that was to say, the poor man pays a much greater portion of the indirect taxation, and in support of his statement he quoted from an article written by the hon. Member for Aberdeen (Dr. Hunter), whose state of health did not admit of his being here to protest, as he was sure he would have done, against this iniquitous Budget. In conclusion, he gave the Government credit for honestly believing that the Measure they had brought in was a just Measure, but at the same time, in the interests of the poor men whom he represented, he was compelled to protest against it. He said this Budget was not conceived with a notion of filling the hungry with good things and sending the rich empty away—["Oh!"]—it was conceived rather with a desire to give to those who have, so that they may have more abundantly, and taking away from him who hath not even that which he hath. [Laughter and cheers.]

*THE CHANCELLOR OF THE EXCHEQUER

appealed to the Committee to allow the Resolutions to be taken now, so that he might bring in the Bill. No Amendment had been moved on the Resolution, nor could an Amendment be moved on the two Resolutions now remaining. The time for expressing opinions like those of the last speaker would be on the Second Reading of the Bill.

MR. COURTENAY WARNER

said it had been stated, with reference to the increase in the Navy, that the Estimates would not be so large next year. Did this mean that in the dockyards and Government factories a large number of hands would be discharged?

THE CHANCELLOR OF THE EXCHEQUER

No, it does not. [Cheers.]

Resolution agreed to.