FINANCIAL RELATIONS. (Hansard, 1 March 1898)

§ SIR ROBERT REID (Dumfriesshire)

Mr. Speaker, I rise to call attention to the financial relations of Scotland with other parts of the United Kingdom, and to move— That a Select Committee be appointed to inquire and report whether the interests of the inhabitants of Scotland are inequitably affected under the present arrangement of Imperial taxation and expenditure; and, if so, to report what remedies are practicable. I am extremely sorry that a question of such importance as this should be brought forward in so thin a House, and at this time of the evening. The situation affords another illustration of the manner in which Scotch business is neglected by this House. I would postpone the question to a more auspicious occasion—an occasion more convenient to Members—most willingly if it were not absolutely impossible for us to obtain any other day this year, such is the plethora of business which this House has to discharge. I have no desire to unduly dwell on that aspect of the subject, and I will now try and place the grounds of my Motion as shortly as possible before the House. In the first place, I want to say that the proposal I am making is in substance a proposal that has been made twice by a Conservative Government within the last seven or eight years. In 1890 a Select Committee was appointed to consider, among other things, putting it shortly, (1) the contribution to revenue by England, Scotland, and Ireland respectively; (2) the amount paid under recent legislation 345 to local authorities in England, Scotland, and Ireland respectively; and (3) how far the financial relations of those different parts of the United Kingdom are equitable, having regard to the resources and population of the three countries. I want to observe that I have not given the exact words, but I have given most accurately the substance of the proposals of the Government in 1890. The Select Committee only held one meeting, and no work was done. But it is important to remember that this Committee was appointed by a Conservative Government, and its appointment proves that in 1890 the Government of the day thought an inquiry necessary. At that time a great deal of money was being distributed to local authorities in different parts of the United Kingdom out of Imperial funds, and it was considered—and, I think, rightly considered—by the Chancellor of the Exchequer of that day that that distribution required investigation as to the relative claims of different parts of the United Kingdom. The reappointment of that Committee was in vain sought both from Irish quarters and Scotch quarters—it should have been sought also from English quarters. Lord Salisbury's Government and Mr. Gladstone's Government refused to reappoint the Committee. In 1894 a Royal Commission was appointed instead, in connection with the Home Rule Bill. It was not appointed to consider the whole subject, but only to investigate the financial relations between Great Britain and Ireland. They were not to inquire into the financial relations between England, Scotland and Ireland, as had been the case when the Select Committee was appointed in 1890. That happened in 1890. In that way Scotland was taken out of any consideration in the appointment of a Royal Commission which followed the appointment in 1894. The result of that is a very valuable Report by the Royal Commissioners with regard to the financial relations 346 of Ireland. Sir, I have nothing whatever to do with that I do not intend to enter upon elaborate figures and, indeed, the reasonings and figures contained in the various Reports is extremely elaborate, but in 1897 upon being pressed as the Government were with the consequences of the Reports made by that Royal Commission, upon being urged by the Irish Members to do justice in financial matters of Ireland, the Government declined to accept as conclusive the Reports of the Lords Commissioners; and last year a promise was given that a Royal Commission should again be appointed, and the Chancellor of the Exchequer in one of his speeches said that the case of Scotland would come before that Royal Commission separately, as well as the case of Ireland and the case of England, and that if it appeared that any injustice was being done that that injustice would be rectified. That is all one can ask; and I say myself, without any hesitation, that we Scotchmen, as far as I know, have no desire to anticipate, no desire to dogmatise on figures. All we want is to have fair inquiries made. If you will appoint honourable men to make those inquiries, we shall be perfectly satisfied at the fair results at which they arrive. I do not believe there is the smallest desire to pay one farthing less than our proper contribution towards the British Exchequer in support of the Imperial outlay, of which we have our share. We do not for one moment wish to escape any legitimate claim. There was a promise given in 1897 that that Royal Commission should be appointed, but it has not yet been appointed. The other day, when a question was asked upon it, the First Lord of the Treasury explained that difficulties had arisen partly from the Irish Benches. It is quite natural, but I understand the hon. Gentlemen from Ireland do not wish to have re-opened the question which they think has been settled in their favour by the Report of the Commission of 1894, but also the right hon. Gentleman 347 said that the blame attached to the right hon. Gentlemen sitting on those Front Benches.

§ SIR ROBERT REID

Sir, they applied to serve on the new Royal Commission. I understand that the right hon. Gentleman said that the view taken was that the Irish side of the question should not be opened again. I did not understand, and I think it would be a very great injustice to my right hon. Friends to say that they wish to keep back anything derogatory to the case of Scotland. I believe that would be a great injustice to my right hon. Friends, and, as they are not all of them here, I think it my duty to make that protest. I sympathise most heartily with the Irish, because I think they are overtaxed; that is a matter of omission, but I protest against the Scotch case being sacrificed. I think I am entitled to say that this matter ought to be brought forward on its merits. Having stated so much, I think I have made good this ground—that the present Government were of opinion in 1890, and again in 1897, that the case of Scotland was one that demanded inquiry. That is all I, on this Motion, affirm. I only wish now to give a few figures which, by the necessity of the case, must be tentative. I will not trouble you with any great number of figures; I only wish to indicate the figures which, I think, incontestably show that there is a financial grievance on the part of Scotland. I do not wish, as I have said, to dogmatise, because I know how intricate the subject is, and because I have read the Reports, and, to my sorrow, the evidence that was given before the Irish Commission, and it is very difficult to be absolutely accurate with regard to almost any figure within a small margin; but 348 one can be substantially accurate, and you can obtain substantial results I have no doubt whatever. I believe substantial results will show that a real injustice is being done to the inhabitants of Scotland. Without assuming that these matters are to be commented upon the principle of recognising a separate entity, in the first place I wish to ascertain what is the relative taxable amount of Scotland in comparison with England. I leave Ireland out of the case, because it would only complicate matters. I think the right hon. Gentleman will not dispute, when he hears a few figures of my case, that Ireland is not left out of my calculation for the purpose of "cooking" figures. What is the result, as regards Scotland, roughly made in figures? Roundly speaking, I believe it can be shown that Scotland bears the relation to England that 1 does to 9¼. The population, at the time I am taking my figures, 1893 and 1894—the figures in the report of the Royal Commission—was, roughly, 1 in Scotland and 9¼ in England. I could show that there is unfairness in this taxation. I will not adopt the temporary method which has been used by my right hon. Friend the Member for Blackfriars—namely, omit the non-taxed revenue, which, of course, obviously is not taxation at all. It might be done otherwise, but it seems to me that the following is the simplest way if you omit the direct taxation; also, because they fall upon persons according to their means. They fall upon a man in Scotland in the same way as upon a man in England, whether it be death duty or an infant tax, and I look really at the substance of the thing—namely, taxation of commodities. With regard to this the round figures are, Scotland 5½ millions, while England pays 34 millions—that is to say Scotland pays far in excess of her share. If you adopt the basis of taxable capacity, her proper share should be about 3¾ millions. If you compare her share with that of England—England pays 34 millions—Scotland ought to pay 3¾ 349 millions; so upon this solid basis we pay 1¾ millions beyond what we ought to do in the way of revenue. Let me apply another method, so as to apply per head of population. If one looks at the taxation by commodities, one finds that England pays per head gross 22s. and.48—roughly speaking, 23s.—and Scotland pays, in round figures, 27s.—that is to say, Scotland pays 4s. more per head than England; and then, whatever view you take of taxable capacity, unless you suppose what is absurd, that Scotland is richer than England, you overtax Scotland, per head of taxation, upon this article of "commodity." Take another example, one which includes local expenditure; but before going into that, may I say one word about the last figures I have quoted? I am quite aware that there must be some adjustment in these figures, because all the spirits which pay in Scotland are not necessarily, I trust, consumed in Scotland, and I am quite aware that some adjustment has to be made in respect of matters of that kind; but I say, if you make any allowance which is fair upon that it will still leave upon subsequent commodities a much greater amount in Scotland that it does in England. Now, I come to the last figures which I will inflict upon the House. As I said before, my desire is not to labour these figures. If I did, I might occupy an indefinite space of time and lead to confused ideas upon the subject. I take another test, from the Parliamentary Reports of 1894, which shows the total revenue as contributed by the different parts of the United Kingdom. It shows a local expenditure, as paid by the Government, in the three parts of the kingdom, and then the balance gives how much each country contributes as net contribution to the Imperial expenditure. Now, Sir, passing the unhappy case of Ireland, which does not contribute so much as in England by something less than 2,000,000 sterling, England contributes, net, about 52,014,000 and Scotland contributes about 6,650,000. I am taking round figures. Now, if this were in the proportion of the taxable capacity of 1 to 9.2, or 9¼, Scotland would pay something like 1,000,000 less. The 350 fact is, upon this test also Scotland is found to pay 1,000,000 more than she ought to pay in the nature of contribution to the Imperial expenditure. Now, Sir, I have endeavoured to show—and I pause there—I have endeavoured to show that not only by applying the principle of entity, but also by dealing with the contribution per head of population, and in regard to commodities, I have endeavoured to show, and I think I have done so, that there is too much contributed by Scotland; and I must add that the balance, when it comes into the Exchequer, and is used for Imperial purposes, is so spent as to leave Scotland paying a very large sum of money for which she gets no return. To a certain extent that must be so, because the capital of the United Kingdom will, of course, always remain in England, but at the same time there is thrown upon the resources of Scotland (large as I am glad to think those resources have been) about a million pounds on the Army Reserve forces in Scotland, and about a million on the Navy, and that leaves a balance of which much must have been spent in England. Now, Mr. Speaker, I have dealt shortly with this Measure, and I want to say expressly why I have dealt shortly with it. It will be possible, as I have said, to enormously increase the number of figures and calculations that I have endeavoured to place before the House, but my object is to get a Committee, and it would be a waste of the time of the House to labour this matter unduly. My object is to get a Committee for the purpose of inquiring into these matters. I ask no more than that, but I desire to point out, if you are doing as you are doing, giving £770,000 this year to Ireland (I am not making any complaint of that at this moment at all, if you are doing that, the case of Scotland is infinitely stronger than the case of Ireland. The Irish receive a very large sum in excess of their £4,000,000 of expenditure in that country, whereas we in Scotland not only pay a larger sum than we think we ought to do, but we receive less than what we think is our legitimate share in return. Now, I will only 351 say one word in regard to the nature of the remedies, because I think that is a matter which ought to be inquired into by the Commission. I believe myself that the case of England, Scotland, and Ireland is practically identical. I believe myself that no such remedy is to be found by treating this inequality on the basis of entities at all. I believe it is equally true, and if I was the Member for Wiltshire or some other part of England, I could get up a case for that part if I were able to obtain a separate return for those counties as in Scotland. I believe I could then get up and make just as good a case in regard to Wiltshire or Dorsetshire, and I say I have no more desire that the Exchequer should be burdened to relieve Scotland than I have that the Exchequer should be burdened to relieve any inequalities there are in Wiltshire or Dorsetshire. I believe that is not a proper position to take up, but I believe the cause of all the inequality lies in this—that the incidence of taxation in this country is such that it falls with greater severity upon poor people than upon rich; and if you once take that as the ground of your remedy, if you inquire into the evil and its consequences and its remedies in that spirit, it may be, I think it will be, possible, at all events it will do a great deal more than is done at present for the purpose of remedying that which is a common injustice to all parts of the United Kingdom. Sir, the reason why Scotland contributes more in proportion to her taxable capacity than England is because (although I am glad to say the difference is diminishing year by year, and I hope will soon be abolished, possibly it may be said that Scotland is not so rich as England) England, on the whole, is richer. There are more poor people in Scotland, although I do not think very much poorer, and the consequence is that the burden of taxation upon the system which is at present applied, comes more severely upon Scotland than it does upon England. That is one thing of which we complain, but I believe the complaint is common to all the poorer districts in England as well as Scotland. Another complaint which I think is separate to Scotland is the outlay, the expenditure, 352 is less in Scotland than in England. Upon this I think the Chancellor of the Exchequer will admit that the Scotch Members are not unreasonable in what they ask. I think it has been pointed out, with justice and fairness, that there are a considerable number of cases in which the salaries paid and the wages paid in Scotland, and so forth, are improper in comparison with similar salaries and the same payments that are made in England. That is only a small part, I agree. The great part is that you do not give us any return, as much as you ought to do. It comes to this, that when taxation is paid by individuals the remedy must be applied to individuals in the same way as taxation applies. That, I think, can be established; I do not think there is any real doubt about it. At all events, I ask the House and the Chancellor of the Exchequer to be kind enough, if it is proper, to make some criticism upon what I have said; and to bear it in mind I have not endeavoured to put before the House an exhaustive case, because I do not think the patience of the House would endure it. It is an enormously long subject, though I do not think it is in its main outlines a difficult subject. I have endeavoured to put forward two or three salient principles showing the inequality which Scotland suffers under. Both in 1890 and 1897 there have been promises given by the Government that this matter should be inquired into. I do think we are entitled to have this question fairly considered and inquired into by a Select Committee. It would be a very gratifying conclusion if the Government assent to the appointment of such a Select Committee which would investigate the matter and do justice to the case.