PAYMENT OUT OF LOCAL TAXATION ACCOUNT IN RESPECT OF DEFICIENCY ARISING FROM EXEMPTION. (Hansard, 21 May 1896)

§ MR. LLOYD-GEORGE
suggested that the words in the first line of the clause did not carry out the intention of the right hon. Gentleman the President of the Local Government Board. He wished to know what was the meaning of the word "deficiency?"

§ MR. STUART-WORTLEY (Sheffield, Hallam)
On a point of order, 92 I wish to ask you, Sir, what is the question before the House?

*THE CHAIRMAN
There is no question before the House at present, but no doubt the hon. Member will conclude with a Motion.

§ MR. LLOYD-GEORGE
said, that as the right hon. Gentleman had raised the point, he should be compelled to move the Amendment which he had prepared, and he should move it in this form:—To omit the words after "deficiency" down to "define," in order to insert "difference between the amount which the rates to which this Act applies would, but for Section 1 of this Act, produce, and the amount which after the passing of this Act such rate actually produces." He maintained that this was not a question of a deficiency. It was a difference. Supposing under the old law a rate of half-a-crown in a parish produced £1,500. If this Bill passed in its present form it would produce only £1,000; but there was no deficiency. There was simply a difference between what would have been produced but for this Bill and what was actually produced. He therefore moved the Amendment.

§ THE PRESIDENT OF THE LOCAL GOVERNMENT BOARD (Mr. H. CHAPLIN,) Lincolnshire, Sleaford
hoped the hon. Member would not press the Amendment. The clause was perfectly clear as it stood, and there would be no difficulty. It merely stated that, a deficiency having arisen, it was to be made up by a payment out of the local taxation account.

MR. GIBSON BOWLES (Lynn Regis)
said, that the Amendment was no Amendment at all. It was clear that there would be a deficiency in the produce, and it seemed to him that the words proposed only put in a different and rather worse way what the clause meant.

§ MR. REGINALD MCKENNA (Monmouthshire, N.)
pointed out that a rate did not ever produce the actual amount it ought to produce. In a parish assessed at £10,000 the produce of a rate of 2s. in the pound ought to be £1,000. Was it intended that the State should pay £500 or only half of what was actually produced by the rate? As a matter of fact a rate of 2s. in the pound did not produce £1,000, and the 93 occupiers instead of paying £500 only paid say, £450, the produce of the rate. What became of the deficiency in the produce? The clause did not provide for any deficiency in the amount of the rates paid as compared with the rates payable. Under the terms of the clause as it stood, a court of law would hold that the State would only have to pay £450 if the deficiency was £100 on a,£1,000 rate. It must be remembered that there was a deficiency in the amount of the rates paid in every union throughout the country.

§ MR. DILLON
said, that in his opinion the necessity for this Amendment could not be questioned. The clause did not define with clearness what meaning was to be attached to the word deficiency. There might be a difference between the amount of the rate made and the amount paid without there being a deficiency, because the amount paid might be sufficient to cover all the expenditure, and in that case there would be no deficiency. The right hon. Gentleman in charge of the Bill ought certainly to give the Committee some explanation of this point, because the clause was undoubtedly ambiguous with regard to it, before they went any further. By Clause 4 it was proposed that— The Local Government Board shall as soon as may be after the passing of this Act certify the amount (a) of the annual grant to be paid to the Local Taxation Account, and (b) of the share of such grant to be paid annually to each spending authority under this Act, and for that purpose shall determine in the prescribed manner the amount which for the purposes of this Act is to be taken as having been raised during the last year before the passing of this Act by any rate to which this Act applies for the expenditure of each spending authority. There was nothing in the clause that would prevent the local authority from so manipulating the rates as to obtain a larger grant in aid than they ought justly to receive. He should prefer the words of the Amendment of the hon. Member for Carnarvon to those in the clause. At any rate, there ought to be a clear statement made by the right hon. Gentleman with reference to the subject.

§ CAPTAIN PRETYMAN (Suffolk, Woodbridge)
said, that the Bill was retrospective as regarded the amount to be fixed which depended upon the 94 amount which had been raised "during the last year before the passing of this Act."

§ MR. DILLON
asked the hon. Member to take the words of Clause 4.

§ CAPTAIN PRETYMAN
said, that the words of Clause 4 were— The amount which for the purposes of the Act as having been raised during the last year before the passing of this Act by any rate to which this Act applies. By Sub-section (3) it was proposed— That a sum equal to the total amount of the deficiencies thus estimated for all the spending authorities in England shall be the amount of the annual grant, and a sum equal to the deficiency thus estimated in the case of each spending authority shall be the share of the spending authority in the annual grant, and the Local Government Board shall certify the same accordingly.

§ MR. J. H. DALZIEL
said, that the hon. and gallant Gentleman who had just spoken (Captain Pretyman) had undoubtedly thrown some light upon the subject, but he had also opened up other points of great interest. It was evident that the Government intended to fix the sum to be paid in the form of this grant in aid for the next five years.

§ MR. CHAPLIN
said, that was so.

§ MR. DALZIEL
said, in that case, if the amount of the rate received was reduced, who was to make up the difference? Was it to be made up by a fresh rate?

An HON. MEMBER
It would encourage economy.

§ MR. DALZIEL
said, the hon. Member said it would encourage economy, but would it have that effect when three-fourths of the rate was paid by the State? The fact was that the Government had let the cat out of the bag. They were going to pay a given sum year by year for five years, whether the amount of the rates received rose or fell. The local authorities, if they were far-seeing men, would make the rate as high as they could last year and would then reduce it as low as possible for the next five years.

§ SIR WILLIAM HARCOURT (Monmouthshire, W.)
said, that if the rate produced £1,000 one year and fell to £800 the next year there would be a deficiency of £200, and he wanted to 95 know who was to make up that deficiency. In such a case would the State pay £400, the half of the amount received, £500 the half of the £1,000, or £600, so as to make good the deficiency.

§ MR. CHAPLIN
said, he had stated half-a-dozen times already that if there was any decrease in the rates and consequently a surplus in the amount of the fixed grant, that surplus would go in the relief of the rates generally, and to that extent the houses and buildings would benefit in proportion.

§ SIR W. HARCOURT
said, that explanation did not meet his point. The words of the first clause were that the occupier of agricultural land would be liable to pay one-half of the rate payable. But it was the universal fact that the rate payable was not the rate paid. Take the case of a purely agricultural district where there were no residents except farmers. Supposing there was a deficiency in the rate—supposing an occupier did not pay the half of the rate for which he was liable, would the State have to make up the balance?

§ THE SOLICITOR GENERAL (Sir ROBERT FINLAY,) Inverness Burghs
said, the contribution to be made each year by the Exchequer would be a fixed amount. It would be impossible to work a system by which the contribution from the Exchequer would vary year by year according to the rate imposed. Accordingly it was provided that the amount should be based on one-half the rate payable in respect of agricultural land the year before the passing of the Act.

§ MR. JAMES STUART (Shoreditch, Hoxton)
said, the subvention was to be a lump sum which depended upon the rate of last year, and for every future year it was to be the same lump sum. Therefore it did not depend upon the rating of agricultural land in the future. There was to be a fixed sum given to each parish calculated upon a certain basis, namely, the rate of last year, which might have no relation whatever to the rate of future years.

*THE CHAIRMAN
Order, order! The hon. Member is now anticipating a discussion that would more properly arise at a later stage.

§ MR. STUART
said, he would not pursue the point further than to ask 96 where was the adjustment of rating under the Bill, and what was the character of the subvention under the circumstances he had stated?

§ MR. ELLIS GRIFFITH (Anglesey)
asked, what was to happen if the rates went up? The occupier was to be liable for one-half of the rate, and the Government paid a fixed amount. What, then, was to become of the margin between the two?

§ MR. JOSEPH A. PEASE (Northumberland, Tyneside)
said, he would take the case of a colliery district, where £1,000 was required in rates. Say £500 were contributed by the agricultural community, and £500 in respect of colliery property. Owing to the price of coal it might be found necessary to close the colliery. In the course of a year or two years the whole of the industrial population might, in the circumstances, have to leave that district, and instead of £1,000 perhaps only £220 would be required in rates. But that district would still receive £500 of half its original rate from the Government. That showed the ridiculousness of the position taken up by the Government. He had one or two districts in mind which were likely to be in the position he had described within the next few years.

§ MR. MCKENNA
pointed out that under the Bill as it stood the local taxation account would be based on an estimated amount of the rate and not upon the actual amount. That was to say, the State would pay not half the actual rate, but half the estimated amount of the rate. Was the Exchequer, then going to be called upon to pay more than half of what was actually raised in the year before the passing of the Act? That had not been made clear in the explanation of the Solicitor General.

§ SIR W. HARCOURT
said, the point he had raised still remained undecided. The occupier was to pay one-half the rate payable. That was to say, if the rate raised was 3s. in the pound, the occupier paid 1s. 6d. and the State paid 1s. 6d. But if the occupier did not pay his half of the rate, what was to become of the balance?

§ THE SOLICITOR GENERAL
said the contribution which was to be made by the Treasury was defined by the 97 fourth section, and the words of the second section must be read with reference to the fourth section. The second section spoke of the deficiency which would arise, and the fourth section said that a sum equal to the total amount of the estimated deficiencies for all the spending authorities should be the amount of the annual grant. It was a fixed contribution. In a case in which the State contribution was fixed at £500, if £1,500 in all were required, the local authority would have to raise £1,000. The rates were to be levied in the manner prescribed by Section 1, buildings and hereditaments being assessed at twice the amount of agricultural land. It was a fixed contribution which was given in aid of the local authority, irrespective of the actual amount required.

§ MR. T. LOUGH (Islington, W.)
said, the explanation just offered rested upon the supposition that the rates would go down.

§ THE SOLICITOR GENERAL
Whether the rates go down or up, the contribution will be the same; the contribution is fixed.

§ MR. LOUGH
said, the contribution was fixed upon the basis of last year's rates, and the explanation rested upon the assumption that it was perfectly fair to take the rates of last year as the basis. In some instances there was extraordinary expenditure because the District Councils and Parish Councils came into existence, and in some cases the rates were increased in anticipation of an expenditure which had not been incurred, and in these cases there would be a reduction in the rates for next year.

*THE CHAIRMAN
said, the hon. Member was discussing a point which would come up later; this clause dealt only with machinery.

§ SIR W. HARCOURT
said, the question arose whether they were to refer to Clause 4 as explaining Clause 2. They had to make Clause 2 reconcileable with Clause 1.

*THE CHAIRMAN
said, it might be necessary to refer to Clause 4 without discussing the merits of the particular plan provided for arriving at the rate payable.

§ MR. LLOYD-GEORGE
said, the words of the Bill did not carry out the intention of the Government. If there 98 was a case in which £500 was contributed, and the additional amount required rose from £1,500 to£1,800, who would pay the extra £300? ["The ratepayers."] But that was not "the deficiency which will arise from the provisions of this Act." The clause was clearly inconsistent with Clause 1 and Clause 4, because the deficiency to be met was not £500, but £800. What had to be described was the difference between the rates paid and the rates payable; and this was done by his Amendment, which expressed the intention of the Government better than did the words of the Bill. They would not pay a difference "which would arise" but they would pay the difference between the rate of one year and the rate of another year.

MR. JAMES LOWTHER (Kent, Thanet)
said, the discussion showed more and more that there ought to be efficient control over local expenditure in the interests of the taxpayer. If the Treasury made calculations, they ought to be able to satisfy themselves that the money was really required and was fairly spent.

§ MR. DILLON
, said it appeared to him that what the Attorney General had said proved that the Bill was badly drafted, and that Clause 4 should be before Clause 2. The latter could not be discussed without constant reference to Clause 4, for Clauses 1 and 2 had no meaning without reference to Sub-section 2 of Clause 4, where the word "deficiency" was defined. How was provision to be made for an increase of the rates. The Government subvention or "grant in aid" was to be a fixed sum. If it was necessary to increase the rates, how would that be provided for? The result of the Bill would be not only to let off the owner and occupier of agricultural land one-half of the rate he had been paying, but to compel owners of houses to pay rates which they would not be compelled to pay under the present law. In spite of what the Attorney General had said, it had not been made sufficiently clear why the Government stood by their words in Clause 2, and refused to accept the Amendment.

§ MR. H. H. ASQUITH (Fife, E.)
agreed that the sub-section of Clause 4, which provided the machinery for ascertaining any deficiency, should be inserted 99 before Clause 2. It was clear from what the Solicitor General had said that there would be many cases in which the word "deficiency" would be inapplicable. Wherever a smaller rate was necessary, the fixed contribution of the Government would not only cover the deficiency but provide a surplus.

§ MR. LEONARD COURTNEY (Cornwall, Bodmin)
It is a deficiency in the produce of the rate that is referred to in the clause, not a deficiency in the budget of the parish.

§ MR. ASQUITH
said, he was aware of that. He submitted that the word "difference" would be much more appropriate to describe the state of facts that the clause was intended to deal with.

§ THE FIRST LORD OF THE TREASURY
argued that the intentions of the Bill were amply and accurately carried out in the clause, and suggested that the sense of the Committee should now be taken upon it.

§ MR. MCKENNA
asked whether the Solicitor General meant the produce of the rates last year, or the amount which the rates ought to have produced?

§ *SIR ALBERT ROLLIT (Islington, S.),
said he thought there was something more to be said and done than merely to divide, as suggested by the First Lord of the Treasury. He suggested that the matter should be carefully considered between this and the Report stage, and then there need be no division now. There was not only ambiguity, but such expressions in the clause as would leave local authorities in difficulty, and lead them into litigation, which was most undesirable. Even the tenses in the clause were instances of both grammatical and logical confusion of ideas. [Opposition cheers.]

§ THE SOLICITOR GENERAL
said, the Government were satisfied that the meaning of the clause was clear and carried out the purposes of the Act. At the same time, if hon. Members thought the clause deserved consideration, it might receive careful consideration before the Report stage. If agricultural land were taken at its full value, and the rate taken upon it in respect of buildings, of course it would produce more than if agricultural land were taken at only half 100 its value, and the deficiency in the produce of the rates was the deficiency which would arise in that way. The matter would be carefully considered before the Report stage.

§ SIR W. HARCOURT
said, he was glad that the Solicitor General had told them that this matter would be considered, but he would submit that these words which it was proposed to omit were really part of the Preamble, and that the best way of solving the difficulty would be to cut them out and go on to sub-section a. Then the whole ambiguity would disappear. He would ask his hon. Friend to withdraw his Amendment, and then he would propose to leave out the words from the beginning of the clause down to the word "defined." That would really get rid of the whole difficulty, and perhaps the Solicitor General would tell them if there was any objection to that.

§ THE SOLICITOR GENERAL
thought there would be an objection to that.

§ MR. LLOYD-GEORGE
said, this was a drafting question, and he would not press it as the matter was to be considered. He asked leave to withdraw the Amendment.

§ MR. CHAPLIN
moved after ''shall,'' at the end of Sub-section (1) to insert the words ''during the continuance of this Act."

§ MR. LLOYD-GEORGE
said, this raised a rather important question. He had an Amendment to limit the period to three years, and owing to the Amendment of the right hon. Gentleman this question must be discussed now.

*THE CHAIRMAN
said it would not be in order to attempt to reduce that period now, as the Bill had been amended in the first clause so as to fix the period.

§ MR. LLOYD-GEORGE
submitted with deference that the question of the payment to the Local Taxation Account for five years had not been precluded.

*THE CHAIRMAN
said, there would be no object in continuing the Bill for five years if payment was only going to be made for three years.

§ MR. DILLON
said, the effect would be to give the same relief to the occupiers of agricultural land, only the relief would come out of the pockets of the owners.

*THE CHAIRMAN
said, that to discuss that question would be against the general principle which was adopted by the Second Reading of the Bill.

§ MR. DALZIEL
asked what was the necessity of these words if the Bill was limited to five years in Clause 1.

§ MR. CHAPLIN
said that a limit must be provided.

§ MR. DILLON
said, that when the Act ceased to be an Act, the payment would cease.

§ MR. LLOYD-GEORGE
said, that they could not pay money in respect of an Act which had expired. This was an example of bad drafting.

§ MR. LLOYD-GEORGE
moved, after the words ''of such amount,'' in Sub-section (1) to insert the words, "not exceeding £1,300,000." He said, the Government proposed to allocate £1,500,000. That was too much. It could only be expended if there were unfair valuations of land, farm buildings, and farm houses. What might happen unless some Amendment of this kind were accepted? Who would assess the separate value of the farm buildings and farm houses? The farmers themselves, and not independent valuers. The overseers were, as a rule, farmers, and they never employed professional valuers if they could avoid it. Those men could value the buildings at their own price. Whose interest was it to check them? It would not be the interest of the owners of the houses, because they knew whatever the valuation was, the sum would be provided by the Government. There were only two possible checks upon inequitable valuations. The first was the appointment of valuers by the Local Government Board, and that point he would deal with at a later stage; and the second was the fixing of a definite amount in this section. If the sum were fixed at £1,300,000, and there 102 was a deficit in any district, that deficit would have to be made up by the farmers, landowners, cottagers, all of whom would have to pay their proportion. In that way there would be an inducement to see that fair and proper valuations were made.

§ MR. CHAPLIN
said, that during the Debate on the Second Reading, it was stated what sum it was estimated it would be necessary to expend in order to give effect to the Bill. The House accepted that figure by an enormous majority, but now the hon. Member for Carnarvon said he was convinced that £1,300,000, not £1,500,000, would be amply sufficient for the purposes of the Bill. He, on the contrary, thought that £1,500,000 would be required. It had already been agreed that land was only to pay one-half of the rates. A deficiency undoubtedly would arise if they accepted the proposition of the hon. Member and limited the amount to £1,300,000, and the hon. Gentleman happened to be wrong, what was to become of the urban ratepayers, of whom the hon. Member posed as a champion? He could not accept the Amendment, which would upset the whole purpose of the Measure.

§ MR. LOUGH
said, that the hon. Gentleman had asked what was to become of the poor districts. If they did not accept some limit what was to become of Ireland and Scotland? He supported the Amendment in the interest of the towns, and he was surprised the Chancellor of the Exchequer was not anxious to save the £200,000. The adoption of the Amendment would lead to economy, and they ought to cut their coats according to their cloth. They had only £1,950,000; £1,300,000 was quite as much as agricultural land required.

§ MR. DALZIEL
said the Amendment raised a matter of principle rather than one of detail. The question at issue was not so much one of the amount to be actually given, as that the maximum sum to be granted, whatever it might be, should be stated in the Bill. ["Hear, hear,!"] The right hon. Gentleman himself had made an estimate; he had stated it to be £1,500,000; then, what objection could he have to set out that sum as the maximum in the Bill? The effect of not stating the maximum sum to be given would be practically to hand 103 over a power to the Assessment Committees which that House ought to exercise itself. Moreover, by not stating the sum definitely, the amount to be given was left in doubt, the matter would be let to the Assessment Committees, and he questioned whether there was any precedent for leaving such a power in the hands of a local and unknown body. It would be much like giving a blank cheque to the Assessment Committees, and he ventured to say that experience should make the Committee very chary of adopting such a course. He should certainly support the Amendment.

§ MR. MCKENNA
, in supporting the Amendment, said the right hon. Gentleman had allowed the insignificant sum of under £4,000,000 as the proportion of the rateable value of all the farmhouses and buildings throughout the country—that was to say, he had assessed the farmhouses and buildings as only one-eighth of the rateable value of the whole of the land. The figure was much too low—unjustly low, and unless some check was imposed by stating in the Bill the definite and maximum amount to be granted, an inducement would be held out to the Assessment Committees to adopt the same low and unfair figure in making their assessments. [''Hear, hear!"]

§ MR. DILLON
said, he supported the Amendment strongly, if only on the ground that unless the amount to be given was definitely inserted in the Bill, the effect of the omission might be to operate disadvantageously in respect to both Scotland and Ireland when the eases of those countries came to be dealt with. ["Hear, hear!"] On the previous day there was a discussion on the question of paying one-half of the Poor Rate on the rural land in England, and the Committee decided that one half should be paid. How would the House, then, be able to refuse to do the same for Ireland when the question affecting that country came on, and a very large sum would have to be provided for the purpose. For this reason he supported the contention that a definite sum should be mentioned in the Bill, fixing the sum which was to be granted in the case of England. ["Hear, hear!"]

§ MR. ARTHUR JEFFREYS (Hants, Basingstoke)
said, the hon. Member who 104 moved the Amendment was altogether wrong in intimating that farmers were always appointed as overseers in the rural parishes; the inhabitants generally shared in the duty by rotation, and therefore the contention of the hon. Member, on the ground that the assessments made on the farmhouses and buildings under the Bill would be partial and unfair had no foundation. ["Hear, hear!"] The hon. Member had stated that the rateable value of the farmhouses and buildings ought to be fixed at one-third the rateable value of the land, but that was an altogether excessive proportion, and he did not believe any Assessment Committee in the country would approve such a rate. One-eighth would be a far more just calculation. The contention of the hon. Member was to fix and to limit the amount to be given under the Bill at £1,300,000, because the overseers were likely to unfairly put the assessments too low. He denied the inference altogether. ["Hear, hear!"] If £1,300,000 only was given, the inducements to farmers on Assessment Committees to under-estimate the value of buildings would be all the greater. For his part, he believed that the Assessment Committees would be fair in their valuation of buildings.

§ MR. LOGAN
asked the right hon. Gentleman in charge of the Bill to give the figures upon which his estimate for buildings was based. He thought that the calculation must, to a considerable extent, be mere guess-work. In his own constituency unavailing attempts had frequently been made in the revising barrister's court to get at the valuation of farmhouses. Applications were constantly made to put farmers' sons on the register as lodgers, and when the agents making those applications were asked to give the valuation of a farmhouse they were quite unable to do so. They had been told that the total rateable value of agricultural land in England and Wales was about £33,000,000, including tithe, and £30,000,000 without tithe. That estimate included the value of the farm buildings and houses. They knew as a fact that the owners of agricultural land paid Income Tax in 1894 upon no less a sum than £40,000,000 in respect of the land alone. It would appear, therefore, that any figures which the right hon. 105 Gentleman might have been furnished with must be the result of guess-work. As he was one of those who looked forward to a time when the whole taxes of this country would be paid upon land values he approved the proposal to assess land and farm buildings separately, but the value of farm buildings ought to be assessed by some independent body. He supported the Amendment, believing that if a fixed sum were named in the Bill those in charge of local affairs would be more likely to take care that a fair valuation was made of land and farm buildings respectively.

§ MR. CHAPLIN
observed that he had put the houses and buildings at one-eighth of the value of the land.

§ MR. VESEY KNOX (Londonderry)
suggested to his hon. Friend that his position would be stronger if the figures £1,500,000 were substituted for the figures £1,300,000 in his Amendment. He did not think that a large sum ought to be deducted in respect of accommodation land. In fact, he doubted whether anybody really knew what accommodation land was in this country. In the interests of urban taxpayers the Committee ought to know precisely what was the sum that was to be voted. If the sum was not named in the Bill, Scotland and Ireland would never get their allotted share of it. On previous occasions when Ireland had been told that she would receive 9–80ths of a sum, a very unfair proportion, she had not received the whole of the amount when the sum dealt with had been left undefined in the Measure sanctioning the expenditure. That had been so in the case of the Fee Grant and in the case of licence money handed over to local authorities in Ireland. When might they expect to know what would be the amount actually paid to England under this Bill? He feared it would be a long job, and that they could not hope to know what the sum would be until the very end of the financial year. Until then, therefore, they would not know what were to be the amounts to be given to Scotland and Ireland respectively. He held that the information ought to be given now. He had sufficient confidence in the calculations of the Government Department to ask that their estimate should be put in the Bill. He begged to move to amend the 106 Amendment by the substitution of the figures £1,500,000 for the figures £1,300,000.

§ THE FIRST LORD OF THE TREASURY
rose in his place and claimed to move: "That the question be now put.''

§ MR. KNOX
moved, in line 54, after the words "that grant of such amount as is certified," to insert the words "before January 1st, 1897." His object was that he thought it necessary they should keep well within the period of the present financial year in the Irish and Scotch Departments, so that they should know what the sum of money was that England was to get. It was not altogether an imaginary difficulty. The English Departments could in any case have refused information to the Irish or Scotch Departments as to the amount of the English estimate, whether the Scotch or Irish estimate was to be dependent on that amount. The Irish Education Department, for example, had been refused information which was necessary for them in framing their estimate, and probably, by some means or other, similar sums were to go to Scotland and Ireland in connection with this amount. It was essential, therefore, at this tolerably early period, that the Irish and Scotch Departments should know what was the amount England was to get, to be able to frame their Estimates accordingly. Again, he thought that everything ought to be done to have this allocation carried through swiftly, and the English spending authority ought to know at as early a date as possible what they had to spend, because the new rates had to be made for the new year.

§ MR. CHAPLIN
moved the omission of the words" for the five years next 107 after the passing of this Act, and thereafter until Parliament otherwise determine," so as, in conjunction with a preceding verbal Amendment, to make Sub-section 2 read:— (2) The amount so certified as respects each spending authority shall be the share of that authority in the annual grant.

§ *SIR W. HARCOURT
moved an Amendment standing in the name of Sir H. Fowler, to omit Sub-section (3). He said: I asked a question just now why it happens that this provision was not preceded by the ordinary Motion for a Committee on Finance. I have been told that it is in accordance with the evil precedent established for the first time in 1888, when that very ambiguous and doubtful policy was established of what was called "intercepting" Imperial taxation, and not allowing the proceeds of the taxes to come, as they ought to come, into the Consolidated Fund. No one who has ever observed the working of that system fails to come to the conclusion that it is fine of the most pernicious and injurious over introduced in English finance. I believe everyone who has had any cognisance of it at all has seen in it every fault which a system of dealing with taxes can have. First of all, it defeats the authority of Parliament. If this money was to come out of the Consolidated Fund, there is this protection given—there must be a Financial Committee moved; but if you are going to ''intercept'' the taxes, if you are going to stop them on the road, no such protection is given. Whereas, in order to deal with the taxes of the country generally it is necessary that consent of the Crown should be given by a Minister, and that the financial Committee should be moved for, any private Member may move to deal with any tax to any amount and put it into this local taxation fund on the ground, and with the intent, that it shall be ''intercepted'' on its way to the Consolidated Fund. I state that fact to show the mischievous and injurious character of the manner in which you are dealing with public taxation. It is a scandal; it is a danger; it is one of the most mischievous ever introduced into finance. 108 Every protection that is given to the finance of the country is destroyed by the clause. Who are the Commissioners of the Inland Revenue? They are the authorities who are created by Parliament for collecting the revenue of the country to be dealt with by the House of Commons and to be paid into the Consolidated Fund, but here, by this system of what I can only call highway robbery for local taxation purposes—[cheers and laughter]—gentlemen on the highway stop the Queen's taxes and appropriate them to their own purpose. This was invented for the express purpose of subsidies to local taxation—a worse system, carried out in the worst manner, was never invented by unsound financiers. What is the result? It is not merely that the authority of Parliament is defeated in this matter, but it also conceals from the country and from the House what is the real state of the public revenue. [Cheers.] Here, under the authority of Parliament, the Inland Revenue are collecting at this moment £7,000,000 of taxes, and, having collected that sum, they do not account for it as Imperial revenue; they do not pay it into the Consolidated Fund; therefore, you have not the name public protection as you have with the rest of your taxes. All that is stopped on the highway is to be poured into the local taxation fund. Why not let the money go into the Consolidated Fund? That was the course adopted by Sir Robert Peel in 1846, and by Sir Stafford Northcote in 1874–75, and it was not until 1888 that this contemptible dodge was invented for the purpose of deceiving people into the notion that this was not a grant out of the public taxation of the country, but was something other and different. ["Hear, hear!"] I am sorry to learn it has been ruled that in consequence of its being thus intercepted and seized in the hands of the officers of the Inland Revenue and diverted to these purposes that we need not carry a Resolution in Committee, which is the ordinary course by which charges are imposed upon the Consolidated Fund. We have thus not got those precautions which have always been taken when dealing with public money, and we are going to intercept £2,000,000 more under this vicious system. We on this side intend to make a protest against it. 109 ["Hear, hear!"] If this sub-section is struck out, what will be the consequence? The money for this purpose will go, as it ought to do, under the Estate Duty, and what was practically the old Probate Duty, into the Exchequer and into the Consolidated Fund, and will be paid out to the Local Taxation Fund under the authority of Parliament as it used to do before, and then the majority, if they think it right that this sum shall be granted, can grant it out of the Consolidated Fund on the authority of the Minister of the Crown in the proper and regular manner. ["Hear, hear!"] You will then get it in the manner in which, in my opinion, all money ought to be granted, under the regular authority of Parliament. I would call the attention of the Committee to the fact that there is no limit to this system. If you have got this outside fund, the Local Taxation Fund, any chance majority any night—not on the authority of the Government, but on the motion of any private Member—may dispose of unlimited millions of money in this way, breaking down all the protection hitherto given to your public finance. [''Hear, hear!"] These are reasons deserving the attention of the Committee. Whether we succeed upon this particular occasion and upon this particular clause, or whether we do not, I have very great confidence that I shall have the sympathy of the Chancellor of the Exchequer in the general propositions to which I have referred. I am quite certain he must desire there should be given to the public revenue and finance of this country those defences which have been considered essential hitherto. ["Hear, hear!"] It is a most miserable interpretation which is now sought to be placed upon the words "moneys to be provided by Parliament." The dogmatic theology of the middle ages was nothing in its technicalities compared to the doctrines which were applied to this Resolution of the Committee in Supply. I have had experience of it myself whenever I have had to deal with financial questions. But in its wisdom Parliament has decided that ''moneys to be provided by Parliament'' does not mean moneys collected under the authority of Parliament by the Commissioners of Inland 110 Revenue, so long as you succeed in intercepting it on its road. I accept it as I do great dogmas of faith, without attempting to understand it, but anything more Athanasian in character than the principles which are laid down upon this subject I cannot conceive. [Laughter and "Hear, hear!"] What I do understand is the mischievous consequences of such a doctrine as that. What is money provided by Parliament? Taxes which Parliament has authorised. It is money collected by the officers of the revenue, who are the public officers for the Empire. [Hear, hear!"] But it is said that this is not money provided by Parliament, because you have invented a dodge to intercept it on the road. This is a system we ought to put an end to as soon as ever we can, and it certainly is a system which we ought not to extend any further. ["Hear, hear!"] It has not been in existence above eight years, and to extend it as it is proposed to do to-night by this clause, so that £2,000,000 of money shall be dealt with upon this evil system, is a thing against which we ought to enter a strong protest. ["Hear, hear!"] I therefore propose that this sub-section shall be omitted, and that the Government shall make provision in a more regular way. The putting of it in the form proposed by the clause is intended to induce the belief that it is not paid out of the general taxation of the country, and does not, therefore, fall upon the general taxpayer, which, in fact, it does. ["Hear, hear!"] Above all, in our national system, let us be accurate and consistent with the principles upon which our finance is founded, and let us be honest as to what the taxes are, and for what purpose they are applied. For these reasons I propose that Sub-section 3 be omitted. [Cheers.]

§ *THE CHANCELLOR OF THE EXCHEQUER (Sir MICHAEL HICKS BEACH,) Bristol, W.
The right hon. Gentleman has exhausted almost all the vials of vituperation with regard to this sub-section and the general policy of which it is the consequence. I was rather surprised to hear him, of all men, use as his strongest vituperative epithet the word "Athanasian." [Laughter.] I pass by the particular language and I turn to the question he has raised. 111 He is good enough to describe the provisions by which we propose to enact that this money should be paid from the proceeds of the Estate Duty derived in England from personal property as a sham. I do not, of course, argue for a moment that, if this Bill were not to become law, and the money so derived were to be paid into the Exchequer instead of being devoted to the purposes proposed by the Bill, it would not be an addition to revenue which might be used in relief of other burdens borne by the taxpayer. But I wish the Committee to remember that in this Bill we have a Measure for the relief of certain local taxpayers from the Imperial revenue. The precedents in this matter are that when Parliament has desired to give such relief, certain revenues or portions of certain revenues, formerly paid into the Imperial Exchequer have been allocated to that particular purpose. It was so in 1888, when the local taxation licences, and a certain part of the yield of the Probate Duty of the time were allocated to the relief of local taxation precisely as we propose to allocate this portion of the Death Duty from personal property. It was so in 1890, when certain additional taxation on spirits and beer was also allocated to certain purposes connected with local taxation, and the right hon. Gentleman himself continued that policy, whether it be sham or not, in 1894, when, by means of the Finance Act of that year, he continued the allocation of a particular part of the Death Duties, of course under another name, as provided by the Act of that year, to the relief of local taxation. ["Hear, hear!"] These were the precedents I had to deal with, and looking to the fact that the amount of this grant was never proposed to be fixed for more than five years, I think I should have attempted a departure from precedent which was unwarranted if I had attempted to impose it upon the general taxation of the country, and I should at once have been taunted by the right hon. Gentleman himself and by the right hon. Gentleman who sits near him (Sir H. Fowler) with in some way burthening labour and industry rather than personal property, as this Bill proposes, for the relief of realty in the matter of local taxation. ["Hear, hear!"] I am not now concerned to argue whether what has been done in 112 the past was absolutely necessary or not. I have admitted that if this money derived from Death Duty on personal property were not allocated as we propose it would go in aid of the General Revenue, and so far the contention of the right hon. Gentleman is well founded. All I venture to contend is this. I think every one who has admitted—and it has been largely admitted on both sides of the House—that realty is still entitled to relief in the matter of local taxation, has also contended that that relief should in some way or other come from personal wealth, and not from taxes upon industry or anything of that kind. I do not think myself that the method which has been adopted for bringing personal wealth into contribution to local taxes is in any degree perfect, but it is a system which has been carried out, and I for one would be very sorry to see Parliament depart from that principle by inserting in this Bill the words "out of moneys provided by Parliament." I come to the second part of the accusation of the right hon. Gentleman. He objects first to the substance of this sub-section with which I have already attempted to deal, but he also objects to its form, because he says it is not based upon a Resolution in Committee in the ordinary way by which charges are imposed upon the Consolidated Fund.

§ *SIR W. HARCOURT
Or on the Motion of a Minister of the Crown.

§ *THE CHANCELLOR OF THE EXCHEQUER
Well, it is on the Motion of a Minister, because, of course, this Bill has been introduced on behalf of the Government. I very much question if the Standing Order would precisely warrant the inference which the right hon. Gentleman drew, but, at any rate, he objects to the procedure. He said it was invented in 1888; he speaks of it as the worst system that ever was invented by an unsound financier, and calls it a system of highway robbery. It was not only adopted in 1888 and in 1890 in the Acts which I have already referred to, but it was also followed—I want the Committee to mark this—in a Bill for which the right hon. Gentleman himself was personally responsible—namely, the Home Rule Bill for Ireland. [Laughter.] I find that in that Measure, by Sections 11 and 12 of the Bill, 113 as originally introduced in 1893, certain revenue was to be intercepted precisely in the same manner as is now proposed in this Bill, and paid over to the Irish Government without being first paid into the Imperial Exchequer. [Cheers.] I do not think the right hon. Gentleman can fairly blame me for having followed, as I was obliged to follow, the precedents of past legislation in this matter, when he himself adopted it in 1893. But I will say something further. I made careful inquiry into the matter before this Bill was introduced, and I was informed that in no other way could I act in accordance with the precedents, and, therefore, I was obliged to take the course to which the right hon. Gentleman objects. I very much sympathise, I am bound to say, with what fell from him as to the power which, under the Rule, any individual Member may have of practically imposing charges upon the taxation of the country—["Hear, hear!"]—and I will undertake, on behalf of the Government, that that matter shall be very carefully examined, and, if necessary, by some alteration of the Standing Orders of the House, or in some other way, we shall endeavour to prevent what undoubtedly would be a great public evil. ["Hear, hear!"] But I hope I have explained to the Committee, first, the reason for the particular provision in this sub-section, and, secondly, the obligation which compelled me to introduce the sub-section without a previous Resolution in Committee.
After the usual interval, Mr. GRANT LAWSON (York, N.R., Thirsk) took the Chair.

*MR. GIBSON BOWLES
said, the question raised by the Amendment before the Committee was of the utmost importance. It was a matter that concerned the due administration of the affairs of the country, and the guarding of the revenue of the country. The right hon. Gentleman the Member for West Monmouthshire had made a speech with which he (Mr. Bowles) so much agreed that he might have prompted it himself from behind the chair. But the right hon. Gentleman had disclosed the tremendous secret to private Members, that without a recommendation of a Minister of the Crown, without the intervention of a 114 Committee of the House, or the adjournment of the matter to a further day; in short, without any of the safeguards set forth in the Standing Orders in respect to charges being placed on the public revenue, any one of them might move such an interception of the public revenue as was proposed in the third Sub-section of Clause 2. They might, for instance, have an Irish Member proposing that the whole of the Inland Revenue should be allocated to the relief of evicted tenants, or a Welsh Member that it should be devoted to secondary, or even to tertiary education in Wales. If he had been the Leader of the Opposition he would not have disclosed that dangerous secret to private Members. [Laughter.] The right hon. Gentleman had called the proposal of the Government "highway robbery." It was not highway robbery, it was embezzlement. [Laughter.] It waylaid the tax collector on his way to the Exchequer, took some of the taxes from him and diverted them to special uses, instead of allowing them to go into the Exchequer. The manner in which the public revenues should be kept and guarded until they were appropriated by Act of Parliament had been the subject for grave consideration in the House for years. In 1866 a Committee was appointed to inquire into the matter, and the result was the Audit and Exchequer Act. Clause 10 of that Act provided that the Commissioners of Customs, the Commissioners of Inland Revenue, and the Postmaster General, should pay the whole of the gross revenues of their respective Departments into the Exchequer, where they were to remain until Parliament had decided the charges which were to be placed upon them. That was the only proper way in which the State could guard its receipts and render intelligible its accounts. If anything were deducted from those accounts beforehand, the Chancellor of the Exchequer, in his financial statement, must falsify his accounts, must give an account of the public revenue which was not true. In the years 1894 and 1895 he had pointed out the effect of this system of abstraction from the public revenue in entirely falsifying the accounts of the Chancellor of the Exchequer. In 1888 a departure was made from the Exchequer and Audit Act, and the 115 House initiated the system of waylaying the tax collector, taking money out of his pocket, and applying it to certain purposes. The Chancellor of the Exchequer had justified the intercepting, waylaying, embezzling, sub-section of this Bill by reference to the precedent of 1888; but in 1888 the duties to be intercepted were specified, and in this case they were not. In this case the money was to come "out of the proceeds of the Estate Duty derived in England from personal property." The fund was undetermined and indeterminate, and, therefore, the precedent of 1888 in no way applied. The sum to be paid was an arbitrary sum, to be fixed in an arbitrary manner, upon an arbitrary consideration of the rates paid last year. The money was to be levied out of the proceeds of the Estate Duty derived in England from personal property. There was no such fund. [Opposition cheers.] Estate Duty was levied upon an aggregation of property of all sorts, and the rate of duty was determined, not on each separately, but upon the aggregation of the whole. How was part of it to be separated? It was impossible to do it. A man might leave in personalty £10,000, the duty on which would, at 3 per cent., amount to £300. He might also leave £1,000 in realty, £1,000 in settled property, £1,000 in constructional property, and £1,000 in property abroad, making a total of £14,000, on which the duty would be 4 per cent. The additional 1 per cent. would be entirely on account of property which was not personal. There would be an extra £140; from which property would it come? It was solely in consequence of the existence of property not personal that the personalty paid another 1 per cent. It was a hotchpot tax upon a hotch-pot estate. You could not distinguish the proceeds of realty from the proceeds of personalty; he defied an accountant to do it.

THE CHAIRMAN (Mr. GRANT LAWSON)
There is an Amendment later down on the Paper which raises this specific point, and I cannot allow it to be anticipated.

*MR. GIBSON BOWLES
continued, that he was arguing there was no fund; he was not arguing against the inclusion of any particular duty. The other day he asked the Chancellor of the Exchequer what was the amount of the 116 Estate Duty derived from personal property, and the right hon. Gentleman replied that it was about £7,530,000. Why "about"?

§ *THE CHANCELLOR OF THE EXCHEQUER
The hon. Member is grossly unfair in his treatment of my answer. I said it was £7,530,000 as near as I could tell; but I should be able to tell the precise amount in a fortnight or three weeks.

*MR. GIBSON BOWLES
contended that the very fact that the Chancellor of the Exchequer could not give the exact figures from the precise returns that were furnished to the Treasury showed that the Bill sought to put a charge on a fund which could not be distinguished. Whilst it was a fund that could not be distinguished, it was also a fund that might be diminished, for there was already a charge upon it of 2½ millions on Local Taxation account; 2 millions were to be added, and it might be that the proceeds from personal property would diminish until they would not meet the charges laid upon them. But he was mainly concerned with this most dangerous system of waylaying the tax collector and taking taxes he had collected before they were paid into the Treasury; that was the serious point. [Opposition cheers.] The wisdom of this House had surrounded grants of public money with most necessary precautions. A new charge could not be initiated except upon the recommendation of the Crown. What did the right hon. Gentleman mean by an "inferential" recommendation? That was not what was contemplated by Standing Order 57. A recommendation from the Crown was a distinct recommendation from a Minister on behalf of the Crown and not an "inferential" one, and was not to be implied by the introduction of a Bill. The second security was that there must be a Resolution passed in Committee of the whole House; and the third was that when the Resolution was first moved the Debate must be adjourned to a future day. The object of the three securities which had been attached to the charging of money on the subject was to prevent haste and want of consideration, and secure that time and care should be given to so serious a subject. In these days we wanted more of such precautions, 117 not fewer. No one was so ready as a Radical to levy tremendous charges on the people. He pretended to do it for their good, but he knew it was for his own. [Laughter.] If they took away these safeguards there would be tremendous charges on the subject. He was a humble student of the forms of the House, and the more he studied them the more impressed he was with their wisdom, and the wisdom of those who established the various safeguards they embodied. Those safeguards would be evaded by the system of interception embodied in Clause 3. He implored the Government and the Committee to pause before adding another extremely evil example of evading the Standing Orders, settled Procedure, and time-honoured Rules of the House. The whole of the Revenue should be paid without deduction into the public Exchequer. If Clause 3 went the Government would be in an equally good position. Let them propose a charge on the Consolidated Fund and take the money out of the strong box where it ought always to come first of all—out of the Exchequer. The Chancellor of the Exchequer knew perfectly well that the way proposed was not the only way to make this payment, and that if he wished to make this subvention to local taxation there were other ways open to him. He protested against intercepting taxes before they got to the Exchequer, and if this Amendment was carried to a Division he should vote for it.

§ SIR HENRY FOWLER (Wolverhampton, E.)
said, he was glad the Chancellor of the Exchequer recognised the importance of this subject. This was one of the most important clauses in the Bill, and if the House of Commons would look at the matter apart from Party feeling, as a matter affecting the public revenue, the privileges of the House of Commons, proper control of public expenditure, and economy in public money, he did not think there would be, any more than there was the last time the matter was brought up, any difference of opinion between the two sides of the House. The subject was last raised in 1866, when the Standing Order which had been so much referred to was passed on the motion of Mr. Ayrton, then a Member of the Opposition, with the full approval of Mr. Disraeli, who was then 118 Chancellor of the Exchequer. It was singular how the drafting of distinguished Members of Parliament, who looked with something like contempt on the drafting of "mere lawyers," had apparently failed to carry out their intention. There were attempts nowadays to evade the control of the House of Commons over the public expenditure. In 1866 the old Standing Order was repealed and a new one introduced containing these words:— If any Motion be made in the House for any aid, grant, or charge on the public revenue, whether payable out of the Consolidated Fund, or moneys to be provided by Parliament, or for any charge on the people," etc. If hon. Members would read the Debate of 1866 they would find that the avowed object of the Government was to include every possible Motion that could be made affecting public money. The words "whether payable out of the Consolidated Fund or moneys to be provided by Parliament," were inserted to put the matter beyond all doubt. Now there had been discovered in the words a loophole by which the whole Standing Order might practically be evaded. No Speaker or Chairman of Committees had sanctioned the Order being evaded without the knowledge of the House, and when this Bill reached the Report stage, if this section remained, he should publicly ask for the ruling of the Speaker on the clause, that the House might know, for, after all, the final authority was not the Speaker, but the House, and the House had never sanctioned this official and administrative reconstruction of what was one of the most valuable safeguards the House of Commons possessed in respect of its official privileges. He could not raise this question now, and his remarks would be on the general question of omitting the clause which proposed the improper interception of public revenue for purposes over which Parliament had not that annual control it ought to have, and which set an example that any private Member might move the appropriation of public money out of some specific item of revenue, and in that way evade the legitimate control of the House of Commons. The Chancellor of the Exchequer had relied on three precedents. The precedent of 1888 no doubt was the first time since our modern system of 119 audit, taxation, and control of the revenue had been introduced when this was attempted. It was done, too, 100 years ago. In those days they charged pensions and all sorts of jobs on the Irish and British Exchequers.

*MR. GIBSON BOWLES
It was done down to 1866 in some cases.

§ SIR H. FOWLER
To a limited extent. One of the greatest financial reforms Mr. Gladstone introduced (Sir S. Northcote following and supporting it) was that every shilling of the public taxation should be paid without deduction into the Exchequer, and that no money should be paid out of the public Exchequer without the sanction of Parliament. Up to that time the gross receipts of the revenue of Customs and Excise were not paid into the Exchequer, because the cost of collection was deducted. In 1888 the interception of a portion of the revenue was introduced. There were three great items in that scheme, first the transfer to the local authority en bloc of the income from licences—parting with it altogether and not merely intercepting it—by handing it over for local taxation purposes. The Chancellor of the Exchequer at that time also contemplated special taxation, which went by the name of the Wheel and Van Tax and Horse Duty. That was the imposition of a new tax, and he introduced it after a money Resolution had been passed in Committee of the Whole House. His third contribution was the transfer to the local taxation account of one-half of what was then the Probate Duty. There the mistake was made. The House should have voted a subvention and not have transferred bodily one half of the Probate Duty. If a mistake was made in 1888, why should they follow it as a precedent when they saw it was injurious and dangerous? In 1890 the Chancellor of the Exchequer quoted that precedent also.

§ *THE CHANCELLOR OF THE EXCHEQUER
It was the increase of the Beer Duty, not of the Spirit Duty.

§ SIR H. FOWLER
The Chancellor of the Exchequer increased the Spirit Duty by 6d. and the Beer Duty by 3d. The increase had been made the year before, and he retained that and transferred these duties to the local authorities, and out of those duties certain 120 payments were made. The other precedent the right hon. Gentleman twitted my hon. Friend behind me with having forgotten was the Home Rule Bill. That Bill proposed that there should be an Irish Exchequer and an Irish Consolidated Fund, and that into these should be paid a certain proportion of the taxation of Ireland which should be controlled by an Irish Parliament. That could not be held as an analogous case to the case now before the Committee. But the danger of the proposal was this—that by the system of intercepting public revenue before it reached the Exchequer the control of the House of Commons was taken away and the public accounts were mystified. The hon. Member who had just sat down said, "Why not charge this on the Consolidated Fund?" He would as strongly object to that as he objected to this most unsatisfactory arrangement. The principle of the Consolidated Fund was this—that Parliament, for Imperial and public reasons, parted with its annual control over certain payments out of the Exchequer and made them a permanent charge on the revenue—payments which it was admitted ought not to be the subject of annual discussion in the House of Commons, such as the salaries of the Judges. But that principle ought not to be extended. The salaries of the Ministers of the Crown were not put upon the Consolidated Fund; they were annually voted by Parliament. What were the Government going to do in the case of the Education Bill? They were providing that all the increased subventions and payments were to be paid out of moneys to be provided by Parliament. He was sure the Chancellor of the Exchequer never dreamed of putting these payments on the Consolidated Fund. They were to be annual Parliamentary Grants, the principle of which was to be approved by Parliament.

*MR. GIBSON BOWLES
I did not propose to charge these payments on the Consolidated Fund. I should myself prefer an annual vote. All I wanted was to give Ministers more latitude.

§ SIR H. FOWLER
said he did not want to give Ministers any more latitude. He was anxious to maintain the control of the House of Commons over public money. ["Hear, hear!"] Ministers 121 came and Ministers went, and whichever Party was in, one would be just as much tempted as the other to take the most convenient course in order to get the money with the least possible trouble. The duty of the House of Commons was to control the Ministry. But there was another point. The House of Commons came into conflict a few years ago with another House on the question of finance with reference to the Paper Duties, and the House of Commons then, after very careful examination, passed a series of Resolutions, from which they had never departed, to the effect that not only the raising of the revenue but also the appropriation of the revenue was in the sole jurisdiction of the House of Commons. But the Government were making this part of the statute law so that it could never be altered without the consent of the other House of Parliament, and whatever views hon. Members might hold as to a Second Chamber, he conceived that no Englishman would for a moment wish the House of Lords should have any right or power to interfere with the National finance, or that there should be any departure from the constitutional practice that the sole right of raising and spending the taxes rested with the House of Commons alone. ["Hear, hear!"] This was a question outside the question of agricultural rating altogether. It was a question affecting the rights and duties of the House of Commons, and on that ground he would be compelled to press the Amendment standing in his name to a division. [Cheers.]

§ THE FIRST LORD OF THE ADMIRALTY
said the right hon. Gentleman had raised two points. One was the system of ear-marking particular money and intercepting the public money —to use the phrase of the right hon. Gentleman, though he considered it was an improper phrase. The other point was the question of the necessity for a Resolution of the House. With regard to the latter point, if the Speaker should rule that there had been a wrong interpretation of the rules of the House of Commons, the Government, of course, would accept that ruling. He could only say that there had been no desire on the part of the Government to escape from any of the ordinary traditions or rules 122 of the House with regard to the granting of public money. He did not understand whether the right hon. Gentleman was going to appeal to the Speaker. If he were going to appeal from the authorities behind the Chair to the Chair itself, of course the Government would bow to that authority. He could assure the Committee and the right hon. Gentleman that the Government were quite as prepared as the right hon. Gentleman himself to surround the granting of public money with every possible security. In these democratic days it was becoming more and more necessary to maintain the traditions of the House in that respect. On that point there was no difference of interpretation of policy between the two sides of the House. With regard to the question of intercepting public money, he was quite prepared to defend the action of the Government of the day in regard to the Bill of 1888. The great principle which was now asserted by the right hon. Gentleman opposite was not asserted at the time of the passing of that Bill.

§ SIR H. FOWLER
Oh, yes.

§ THE FIRST LORD OF THE ADMIRALTY
No, there was no serious Debate on that point. He remembered that there was a Debate with regard to what was called the confusion of accounts, but the constitutional question, now raised by the right hon. Gentleman was not raised at that time. The Government of that day had to discover sources of local taxation, and the great point in dispute was that personal property did not sufficiently contribute to local taxation, and that special sources of taxation should be assigned to local authorities. Under that system the licence duties were handed over, and the right hon. Gentleman himself admitted that so far as the licence duties were concerned he did not object to interception. He thought the late Chancellor of the Exchequer took a different view, and there was a difference of opinion between the two right hon. Gentlemen; but he had always held the view that the licence duties were practically local taxes. They were raised in the locality, but for reasons on which lie could not now dwell, it was difficult for the locality to collect them. Therefore the localities used the public tax-gatherer to collect them. They did 123 not waylay him and take the money from him, but they used him as their agent, as the most convenient agent for raising the money. It was not Imperial money at all from his point of view.

§ SIR H. FOWLER
The Act contained provisions that at any time by Order in Council, the collection might be done locally.

§ THE FIRST LORD OF THE ADMIRALTY
said, that that showed the spirit in which he acted. He considered it only Imperial taxation for the purposes of collection, and there he differed from the right hon. Gentleman, who said that the right principle was to include everything in the Imperial revenue and expenditure, even though it went to local purposes. Turning to another point, it had been found impossible to collect a local Income-Tax upon personal property for local purposes, and therefore the Death Duties were imposed in order that personal property should be made to contribute to local requirements by means of the Imperial tax-collector. The means adopted for collecting those duties were precisely the same as if 1½ per cent. had been imposed for local purposes and 1½ per cent. for Imperial purposes, only the whole was first paid into the Imperial Exchequer, which paid overfor local purposes one-half of the aggregate sum collected. That was the principle upon which the Government of 1888 acted, and it was perfectly well understood that such was the case, and, indeed, the only person who did not accept that view was the right hon. Gentleman the late Chancellor of the Exchequer. ["Hear, hear!" and Laughter.] The right hon. Gentleman insisted that the duties constituted Imperial taxation, and that a certain sum was given out of the Imperial Exchequer for local purposes. In his opinion, the right hon. Gentleman took an entirely erroneous view of the question, and there was no unconstitutional innovation whatever in the proposal of his right hon. Friend. ["Hear, hear!"]

§ *SIR W. HARCOURT
said that the answer to the speech which the right.hon. Gentleman had delivered was to be found in the very words of the sub-section which it was proposed to omit. ["Hear, hear!"] He and those who thought with him condemned the proposal of the right hon. Gentleman which he made in 124 1888 as being founded upon a fallacy. The tax which the right hon. Gentleman then appropriated for local purposes was not one that had been imposed for local purposes. It was an Imperial tax which was on its way to the Imperial Exchequer and it was intercepted by the right hon. Gentleman on the highway to the Exchequer. The Probate Duty was not a local tax. They did not give to the particular county or parish the particular local proceeds of the duty, as in the case of licenses, but the duty was collected for the Imperial Exchequer, and then one-half of it, or one-third of it, was paid out of the Imperial Exchequer for local purposes. The argument of the right hon. Gentleman, therefore, would nothold water—it was, as the Americans said, a tub with the bottom out. ["Hear, hear!" and Laughter.] The same thing might be said with regard to the extra Spirit and Beer Duties. The fact was that there was not the smallest foundation for the argument which the right hon. Gentleman had addressed to the Committee. The whole object of the right hon. Gentleman was to disguise from the public and the House of Commons the fact that this money was to come out of the Imperial Exchequer. There was only one other thing that had equally confounded the system of finance of this country, and that was the Naval Construction Act, which was also the work of the right hon. Gentleman. ["Hear, hear!"] Whether money was required for the Army, the Navy, or for the purposes of the relief of local taxation, their action should be honest, fair, and above board, without their adopting any subtle contrivances for concealing the real operation of these financial conundrums. In his view it would be more satisfactory if they went back to the intelligible principles which were the safeguards of the finance of this country before 1888. ["Hear, hear!"]

§ MR. JOSEPH A. PEASE
also desired to protest against the system that had been adopted in the finance clauses of this Bill. Since 1888 there had been a great increase in the amount contributed by the Imperial Exchequer in relief of local rates, with the result that there had been an enormous increase of expenditure for local purposes. The bodies who spent the money were not responsible to Parliament, and still 125 less to the taxpayers. He believed it also inflicted an injury on the poorer classes in the community, whilst it was the richer classes who gained the benefit under this Bill. Even if these subventions ought to be made, Parliament should control them. No one had denied, and the Chancellor of the Exchequer himself had stated, that this money was derived from the taxpayer, and it was merely by its interception that he was able to earmark it. He thought that this money should appear in our national balance sheet, and that the taxpayer should recognise what was the correct amount of the taxes which were raised from the taxpaying part of the community. But by the system of handing this money over to the Local Taxation Account, the taxpayer failed to recognise that this money had been contributed through taxation. This was an experimental Bill, and pending an Inquiry which had been promised by the Government on the incidence of taxation, it was imprudent of Parliament to sanction the removal of this matter for five years from its cognisance. It was absurd to ear-mark items of expenditure as the money derived from special tax. Every nation, firm, and individual must look at their financial position as a whole. There was one other point,—during the last 50 years, as the Chancellor of the Exchequer laid down in his admirable Budget speech, the tendency of Parliament had been to divert indirect taxation to direct taxation, and the result had been so to equalise the two that in the present financial year indirect taxation would be 52 and direct 48 per cent. of the total taxes. But the Government, in this Bill, were going against that principle, and would be reducing direct taxation to nearly 46 per cent. The Government proposed to take 2 per cent, of direct taxation from estate, and the tendency of this policy must be to call upon indirect taxation to make up the deficiency in the future. He objected to this financial operation, because it appeared to him to be a partisan character. It would benefit one class at the expense of the general taxpayers, it would create an injustice to householders and urban districts, and was a policy which was opposed to that which Parliament had promoted for half-a-century.

§ MR. R. B. HALDANE (Haddingtonshire)
said, they were face to face with the question whether they should make another precedent for a practice which both sides of the House apparently agreed was a bad one—namely, that of leaving a charge upon the public revenues for the purpose, and by means of the machinery of an ordinary Bill. The First Lord of the Admiralty was brought in for the purpose of blessing the argument of the Chancellor of the Exchequer, which, he was bound to say, was a most temperate one, but instead of approving the instance of 1888, which the Chancellor of the Exchequer had cited, he explained that this instance was by no means so clear a case in favour of the present procedure. So, again, in the case of the Home Rule Bill it was not proposed to impose a new charge on the public revenues, but to take existing charges and distribute the handling of them between two bodies. What they had got to deal with was the charge on the public revenue and he should call the attention of the Committee to the exact point and the Standing Orders about which there was a dispute. There was a controversy raised between the Lords and Commons in the 17th century and a rate was established which had been maintained without alteration to the present time. [The hon. Member then quoted Standing Orders 57 and 62 as given at page 832 and 833 in "May's Parliamentary Practice" 10th Edition, 1893.] What was the object? The object was to prevent Members of Parliament by a scratch majority taking money Voted, say for the Army and devoting it to the Navy. These words were agreed to in order to keep the control of these things under the Committee of that House. The Chancellor of the Exchequer said he followed precedent in this matter but they knew that in 1888 this point was never raised or ruled upon in the Debate. There was therefore no decision of the House, for the point was never raised. In 1894 he was not aware that the right hon. Gentleman raised the point; certainly there was no ruling by the Speaker; and now they, being a Committee of the House, were asked to sanction a course of procedure contrary to the spirit of the Standing Order and its language. This 127 was certainly a charge upon, the public revenue, and why should they pursue this course instead of the constitutional course. There was a great deal of feeling on both sides of the House and he would ask the right hon. Gentleman why he should make a precedent which goes beyond those already quoted?

§ CAPTAIN BETHELL (York, E.R. Holderness)
, said, as they were to have the ruling of the Speaker on the Report they might wait for that. He thought it would be better to have the charge shown in the Imperial accounts. ["Hear, hear!"]

§ *MR. CHARLES HARRISON (Plymouth)
said, it was clear that there was now no Estate Duty derived from personal property. Prior to the Finance Act of 1894 there was an Estate Duty derived from what in law was known as personal property. But the Act which imposed that duty and the Act which dealt with it under that description and language were all prior to the Finance Act of 1894. That Act established a new Estate Duty. The Finance Act of 1894 granted a new duty called Estate Duty to be levied upon the principal value of all property, real or personal, and the Act proceeded to enumerate the property to be subject to duty, and by the Definition Clause expressly declared in England that the term property should include real and personal property. Estate Duty was therefore levied on a mixed and inseparable fund, and there was no means of ascertaining what Estate Duty arose from one class or from the other class of property. The terms employed were legal terms. Personal property did not mean movable property not in England. Appended to the Agricultural Commission was the valuable memorandum of Sir Alfred Milner on the subject. He laid it down that there was no means of ascertaining the amount which realty paid in comparison with personalty, because personalty was used in its legal and not in its economic sense.

THE CHAIRMAN
pointed out that the right hon. Gentleman the Member for West Monmouth had moved the omission of the whole section. There were certain Amendments on the Paper dealing with the specific questions the hon. Member for Plymouth was now discussing. If those questions were 128 discussed at the present moment, they could not, of course, be discussed subsequently.

§ *MR. HARRISON
said, that he used this argument to show that the clause should be omitted, as there was no such fund as that used in the Bill.

§ MR. HERBERT LEWIS
asked whether the Amendments might be discussed separately from the Amendment now before the House.

THE CHAIRMAN
said, it was quite obvious it would not be right to have the same discussion twice over on separate Amendments.

§ *THE CHANCELLOR OF THE EXCHEQUER
appealed to the Committee to come to a decision. The right hon. Gentlemen the Members for West Monmouth and Wolverhampton had stated their views very fully, and he had stated his view—viz., that as to the matter of the sub-section he had acted strictly according to precedent, and in the method of it he had acted according to the only precedent on which he should be allowed to act. He had nothing to add to his argument, and he did not think much, if anything, could be added to the arguments of hon. Members opposite. One statement, however, had been made which was absolutely contrary to the fact. It had been argued by the hon. Member for King's Lynn and by others that it was impossible to do what was proposed in this section—namely, to allocate a certain amount from the Death Duties on personal property. In the Finance Act of 1894 there were the words— that a certain sum shall be paid out of the proceeds of the Estate Duty derived from personal property in substitution of the Grants made by the Act of 1888. That had been done since the passing of the Act, and that would be done in the future. What had been done could certainly be done again, and therefore the argument as to impossibility absolutely fell to the ground.

§ MR. LOUGH
rose, when

§ *THE CHANCELLOR OF THE EXCHEQUER
claimed to move "That the question be now put."

THE CHAIRMAN
I think there is a disposition to come to a decision.

§ MR. LOUGH
said, the right hon. Gentleman had not strengthened his 129 position by the speech he had just made. At any rate lie did not think the Government would suffer any inconvenience by getting rid altogether of the sub-section in dispute. He hardly thought that hon. Members opposite had read the subsection. If they did read it they would find that the first part contained these words: "The Commissioners of Inland Revenue, in such manner, by such payments, and under such regulations as the Treasury direct." [Cries of "Divide!"] Now, it was against the dragging in of the Treasury that he and other hon. Members on that side of the House protested. [Cries of "Divide"!] Why should not the House of Commons exercise this power of direction? The question was one which ought to be settled by the House itself, and he thought the Committee would be wise in taking advantage of the present opportunity of escaping from the difficulties which were caused by the course taken under the Act of 1888.

§ *THE CHANCELLOR OF THE EXCHEQUER
moved that the clause, down to the end of sub-section 3, be now put. [Loud Opposition cries of "Oh," "Gag," and "Cecils."]

THE CHAIRMAN
There is one Amendment to the sub-section which I consider of some substance and which, I think, merits some discussion, although it has been partially discussed upon the Amendment which was last before the House. In my opinion, it should not occupy very long, especially as it has been partially dealt with, and, therefore, for the present I cannot accept the Motion of the right hon. Gentleman.

§ MR. HERBERT LEWIS
moved to leave out the words "out of the proceeds of the Estate Duty derived in England from personal property." He said he wanted to know why all the duties received by the Commissioners of Inland Revenue were not to be equally responsible for the amount that was 130 required under this Bill. Why was a direct attack made under this clause upon the Estate Duty derived from personal property? What was the reason for this attack upon a particular class of personal property? ["Hear, hear!"]

§ *THE CHANCELLOR OF THE EXCHEQUER
said, that he could only repeat that the proposal was in strict accordance with precedent. The reason why relief to real property was proposed to be given in this form was the reason that influenced his right hon. Friend the First Lord of the Admiralty when he proposed in 1888 to make a grant in aid of local taxation out of the Probate Duties levied on personal property. That precedent was confirmed by the action of the late Government in 1894. The Government proposed now that the new grant in aid of local taxation should come from the same source.

§ *SIR W. HARCOURT
held that what the right hon. Gentleman had said was not an accurate representation of what was being done. To represent that this £2,000,000 was taken exclusively out of one class of personal property was to misrepresent the financial operation. The money was being taken out of the general taxation of the country—["Hear, hear!"]—out of the taxation on house property, and out of the Tobacco Duty, the Tea Duty, the Beer and Spirit Duty, &c. [The CHANCELLOR of the EXCHEQUER: "Why did you not make a change in 1894?"]—Because, as it was, he had as much to do in connection with the Budget of 1894 as he could do. ["Hear, hear!"] If he had endeavoured not merely to carry out the reform then effected, but also to undo the abuses of his predecessors—[laughter and cheers]—he thought he should have doubled his task and right hon. Gentlemen opposite would have been unsuccessful in their endeavours to prevent the reform that they introduced in the taxation. [Cheers.] They protested against the pretence of taking this money out of one particular fund, when, in point of fact, it was being taken out of the general fund of the taxation of the country.

§ MR. JOSEPH A. PEASE
said he wished to make this one point. The Government and their supporters seemed to be under the impression that by this 131 proposal they were taking money out of personalty. As a matter of fact personalty, under the proposal of the Chancellor of the Exchequer, was not going to be charged with any more taxation than had been paid during the past year. If that was so, personalty as a whole, whether it was paying to local taxation, or to the Imperial revenue, was not going to pay a penny more during the coming year than it paid during the past year. If instead of devoting it to this purpose, the Chancellor of the Exchequer had devoted the money to the Tea Duty, he would have been able to remove two-thirds of that duty.

§ MR. LOUGH
thought that the words that were now proposed to be struck out were of an entirely unnecessary and meaningless character. It seemed to him there was an attempt in these words to convey a quite wrong notion with regard to the purport of this Bill. A learned Friend of his on the other side, when asked why the Government were persisting so steadily with the Bill, said the Conservative Party had a deep purpose, namely to lay a tax on personal property for the relief of local rates, and it was in these words that a great many hon. Members opposite believed they were doing this. Money was being diverted from the public Exchequer which had gone regularly into it for two years, and it seemed to him that the whole purpose of introducing these words was to deceive the House and the country as to the source from which the money came The Government had got the mandatory part of the sub-section which enabled them to divert the money, and why should they not rest satisfied with that?

§ MR. LLOYD-GEORGE
moved to leave out the words "thirty-first day of March," in order to insert instead thereof the words "thirtieth day of September." The liability for the relief did not arise until after the 31st March. But this Bill proposed to give relief which had actually not come into existence by the very Bill itself. If the relief was to be 132 paid during the six months after that, it could be paid on the 1st of April, and he should say it would be a very appropriate day for payments under this Bill. At any rate, it would be paid immediately after the relief had come into existence. He begged to move the Amendment.

§ MR. CHAPLIN
declined to accept the Amendment on the ground that it would postpone the operation of the Bill for six months. It was quite true that the relief did not arrive until March 31st next, but the Bill became law as soon as it received the Royal assent, and they thought it right to make the first payment on March 31st, in order to meet demands which might be made by local authorities, and to enable them to raise less.

§ MR. DILLON
supported the Amendment, observing that he did not see why this charge should be thrown upon the revenue for the present year. The money ought not to be paid out of the Exchequer until it was required. If the local authorities knew they were to receive a certain sum of money in six months they could strike their rates accordingly.

§ MR. LEWIS
contended that there was no precedent for making payments of this kind in advance. The payments made to County Councils from local taxation were certainly not made in advance, but as the money was received into the Exchequer.

§ MR. MCKENNA
did not think the right hon. Gentleman fully appreciated the point. There would be no deficiency under this Bill until after the 31st March next. The liability to pay did not begin to accrue until after the 31st March, therefore there could be no deficiency in the local taxation account prior to the 31st March next. There could, consequently, be no claim on the Exchequer until after the 31st March, because any deficiency which arose must be subsequent to the date on which the liability for the locality to contribute less began to accrue. The clause said ''the first of these payments shall be made during the six months ending the 31st March next." That was to say, the Exchequer was to make the first payment in respect of a deficiency which, under the Bill, could not accrue until after the 31st March.

§ *SIR W. HARCOURT
thought they must have the support of the First Lord of the Admiralty upon this Amendment. The right hon. Gentleman had explained to them that this was not an Imperial tax at all hut a local tax raised for local purposes. If it was a local tax raised for local purposes it could not be raised until those purposes came into existence. [Cheers.] How did they happen to have this money at all except that it was an Imperial tax? This was an absolute refutation of the whole of the theories that had been expounded to them by the First Lord of the Admiralty and the paulo-ante Chancellor of the Exchequer. [Laughter] Out of mere decency the right hon. Gentleman ought to alter this date in order to give some colour of consistency to the theories that had been expounded from the Treasury Bench. [Cheers.]

§ THE FIRST LORD OF THE ADMIRALTY
remarked that he had stated in the previous day's Debate that the right hon. Gentleman did not know the first principles of rating or local taxation, and he had proved it now. [''Hear, hear!" and laughter.] The right hon. Gentleman thought that no local money was ever to be raised before it was spent. He should like to know how expenditure was to be met except by raising money before the expenditure took place. ["Hear, hear!"] If it was simply what the right hon. Gentleman claimed it to be, then he would be right; but, being what the Government claimed it to be, for local taxation purposes, it must be raised pari passu with the rates.

§ MR. W. ALLEN (Newcastle-under-Lyme)
moved the rejection of the clause. He said the Government had refused to accept any Amendments to it, many of which had been most reasonable. Points had been raised which showed—which clearly showed—the clause to be ridicu- 134 lous, and yet the Government refused to amend it. The clause proposed that a grant should be paid out of the Local Taxation Account on March 31st next, to meet a deficiency which would not then have arisen. Such a contradiction rendered the clause unworkable and ridiculous.