HC Deb 10 April 1905 vol 144 cc1107-48

Motion made, and Question proposed, "That for the purpose of paying off any Exchequer Bonds issued under the Supplemental War Loan Acts of 1900, any sums not exceeding £10,000,000 be raised by the issue of Exchequer Bonds to be current, subject to the provisions for the redemption of the total issue, for a period of ten years, and that in each year of that period one-tenth part of the total issue of the new Bonds be drawn for repayment and redeemed by the application for the purpose of the requisite part of the new sinking fund, and that the permanent annual charge for the National Debt be increased so as to be £28,000,000. That any expenses incurred in connection with raising or paying off any such sums, and the principal of and interest on any such sums, be charged on the Consolidated Fund, and, as to the interest, be paid as part of the permanent annual charge for the National Debt."—(Mr. Austen Chamberlain.)

MR. WHITLEY (Halifax)

said he could not help thinking that the satisfaction which had been expressed at the Budget of the right hon. Gentleman was a sign of how little the House and country expected from the present occupants of the Treasury Bench. The miserable reduction of £1,500,000 on the present scale of taxation three years after the war in South Africa had ceased was the strongest possible condemnation of the capabilities of the present Government. No one would have believed that three years after the close of the war this country would have found itself still at the height of war taxation, because the 2d. which had been taken off tea was not put on for the purposes of the war, but to meet the deficit of £5,500,000 twelve months ago. Three years after the close of the war the sugar tax, a tax which bore most hardly on the poor, and most hardly upon one of the most promising trades of the country, was still in operation. The tea tax was still 50 per cent. more than it was before the war broke out. We still had the income-tax at 1s. instead of 8d., another 50 per cent. addition. The war tax on beer and spirits was still in existence, and our military and naval expenditure was £34,000,000 above the peace level. Those who were thankful for such a Budget under these circumstances must be thankful for very small mercies indeed.

Perhaps the most interesting portion of the statement of the right hon. Gentleman was that in which he dealt with the decline of receipts from Customs and Excise. He told the Committee that from the year 1900 there had been a steady diminution from those sources. What were the facts? Everyone knew perfectly well that as soon as the froth of Jingoism disappeared the sobriety of the people increased, that as the practice of drinking went down so Liberalism went up, and it was doubly satisfactory to find that since the war fever had died down there had been considerable sobriety in drink, as in other ways. The right hon. Gentleman had attributed the decrease in the revenue from the consumption of liquor to the fact that the people took their pleasures in a more rational way. He should be glad to think that the right hon. Gentleman was right in attributing it to that cause. He himself had had some little experience which bore out the suggestion of the right hon. Gentleman, and one of the elements which tended to the decrease of the liquor traffic was no doubt the increased facilities, such as electric tramways, which carried people quickly out and away from the great centre of industry in which they earned their living. He agreed with the hon. Member for the Spen Valley that the Chancellor need have no fear of the revenue decreasing in consequence of the increase of the sobriety of the people. The revenue which that would produce in other ways would more than compensate for the present wasteful expenditure in drink.

The Chancellor of the Exchequer had said that what some of them might venture to call "the hustling" of the income-tax payers had resulted in £800,000 being collected in excess of what was collected last year in the same time. In his opinion the right hon. Gentleman had under-estimated the amount he had got in that manner, and he would like to know upon what the right hon. Gentleman had based that estimate. He had promised a Return to the hon. Member for Edinburgh showing what amount of income-tax had been paid up to the 1st of March last year as compared with previous years. Unfortunately that statement was not to hand, otherwise they might have compared it. He would like to know when that Return would be ready.


said he hoped it would be in the hands of Members in a very short time from now.


said he hoped it would be in the hands of the Committee before the Income-tax Resolution was discussed. That was the point on which the discussion as to the soundness of that estimate depended. The present Budget was the most hum-drum Budget it was possible to conceive, the one special point about it was that the Chancellor of the Exchequer had not had the courage to remit any of the burdens which pressed most heavily on trade. The tax on tea would indirectly help in that direction, but there were two great taxes which were as great a tax upon trade as they were upon the consumer; he referred to the sugar tax and the coal tax. The great inspiring feature of Budgets of bygone years had been that Chancellors of those periods had had the courage to remit taxes which affected trade so that the removals in that direction would tend to increase trade and bring in further revenue. The present Chancellor of the Exchequer did not believe in free-trade, and, therefore, it was, perhaps, too much to expect that he would remove restrictions upon trade; although, had he had the courage to do so he would have found that the increased freedom of trade would have resulted in the future in a far greater revenue.

The point in the Budget to which most attention would probably be given was the Resolution with regard to the floating debt. The Resolution read from the Chair ought, in his opinion, to have, been placed on the Paper of the House in order that Members might have had an opportunity of considering it before being called upon to discuss and decide it. He did not mean that it should have been placed upon the Paper before the Chancellor of the Exchequer made his statement. But inasmuch as there was no particular urgency and no sufficient demand made for its being discussed in a hurry, after twelve o'clock at night he thought the Government might see their way to allow the discussion on this Resolution to stand over until to-morrow when the Committee would see the Resolution upon the Paper. Next December £14,000,000 fell due for payment which the Chancellor of the Exchequer could not meet; therefore he had come forward with a proposal to spread the repayment over a further term of ten years. That was the very thing that the right hon. Gentleman the Member for West Bristol tried to guard against when he introduced that proposal to this House. He made those short terms for the express purpose of compelling the House, in so far as he could compel it at all, to meet its obligations. In 1900 the Member for West Bristol said— I do not propose to ask for any permanent borrowing power; I desire to adhere to the principle that we should as far as possible earmark our borrowing for the purposes of this war as temporary borrowing, and that it should be automatically pointed out to the Chancellor of the Exchequer of the day, whether I occupy the position, or it is occupied by anybody else, that it is his duty at the earliest possible time to make provision for the reduction of the loan. And then, when the matter came up on the further stage, he was challenged by the right hon. Gentleman the Member for West Monmouth, the late Sir William Harcourt, who and said— Assuming the borrowing, I approve his declaration that he will not make it a permanent borrowing, but will ear-mark it as temporary borrowing. That shows, as far as the circumstances admit, that the Chancellor of the Exchequer has a sound financial conscience. Where had the sound financial conscience gone at the end of five years? Sir William Harcourt went on to say this was an excellent principle and he only hoped the Member for West Bristol might be the Chancellor of the Exchequer of the day to act upon it. This, he (Mr. Whitley) thought, showed as clearly as possible that this borrowing was for the term of five years for the express purpose of making the House and the country set its house in order after the war was over, and he never imagined that they would be actually unable to meet their liabilities until December of the present year, their taxation at the full height of the war level, and be compelled to ask their creditors to be good enough to take payment for ten years at the rate of £1,000,000 per year, instead of being able to pay off that small portion of the floating debt. Let them observe what happened. By extending this first portion of the war loan over ten years they made it overlap a number of other items which would fall due within that period, and so they would be obliged to go on with one after another of those debts falling in, never able to meet them when due. This, in his opinion, was far from being courageous finance; it was pushing their liabilities on to the future, on to other shoulders; and it was, above all, shirking the position to which the Member for West Bristol wished to bring the House.

He had often protested against the continuation of war expenditure. He pointed out four years ago that unless a very strong hand was kept over all the Departments, expenditure which crept in under the excuse of the war would remain as permanent expenditure and would never disappear; and he asked the Chancellor of the Exchequer if he could put in a separate column expenditure which had arisen out of the war, so that they should have it clearly in front of them and that their financial conscience should never be satisfied till it was cleared away. But nothing of the sort was done, and the Departments, all of them, had allowed the war standard to become a minimum standard for the future. It would require a man of a great deal more courage than the present Chancellor of the Exchequer to compel the Departments to reduce their claims on the public to a proper standard. This, he thought, was a correct description of the financial operation which was proposed in the Resolution before the House. The Chancellor of the Exchequer had said that he was going to raise this money at once, although it was not wanted for the particular purpose it was to be raised for till next December. In the meantime, he was going to apply it to the ordinary purposes of the revenue. No doubt he would make some saving in the amount of interest he would otherwise have to pay on borrowings on ways and means, but for the space of nine months, till next Christmas, he was actually adding £10,000,000 to the liability of the country. If we were only going to pay off our floating debt of £77,000,000 at the rate of £1,000,000 a year, where were we? Surely the amount of our floating debt ought to be got back to something like £20,000,000 or £25,000,000, which was considered to be the outside amount a few years ago. If, taking £50,000,000 as the surplus above the normal amount, we were only going to pay it off at the rate of £1,000,000 a year, he thought it was a very unsatisfactory state of things, and they could not look forward with satisfaction to the money market being left with this amount of national bonds or bills floating about for all that length of time.

He would like to point out that it had a very serious effect in many ways. It raised the rate of interest for all short loans all over the country. He knew a town whose rates were actually increased 8d. or 10d. in the pound simply by the extravagance of the present Government having forced up the rate of interest in the money market to such an extent that they had to pay extravagant prices for short term loans. It also had the additional effect that contracts were deferred, works were restricted; and it had a great deal to do with the congestion of the labour market and the lack of employment. Municipal loans in nearly all cases were productive expenditure, they had assets at the back of them; and with such things as electric tramways they increased the happiness and health of the people and had the additional benefit of reducing the drinking at the same time. It was expected, when this floating debt was created, now nearly five years ago, that it would have been paid off, a large part, before now. One great resort was the £30,000,000 from the Transvaal in the form of a war contribution. He took this deferred payment to mean that the Chancellor of the Exchequer really did not hope to get this war contribution at all. If there were any reasonable prospect of it coming, and it could be devoted, as it ought to be, towards the reduction of this floating debt, there would be no need for these expediencies; and he feared it was because the Chancellor of the Exchequer had already given up hope of any receipts from that source that he had been obliged to confess that he could not meet his obligations and ask that payment should be spread over the ensuing ten years. For this reason he (Mr. Whitley) was for one rather suspicious of this so-called courageous dealing with the floating debt. It meant to his mind a much slower dealing with the floating debt than they were entitled to expect. It meant a confession that we were not going to get the war contribution from the Trans- vaal, it meant that the Government had no hope of getting Estimates down to a reasonable figure. Their windfalls ought to have been applied to the more steady reduction of the National Debt, but they had the Chancellor of the Exchequer first of all reducing the amount applied to the Sinking Fund, then suspending the Sinking Fund altogether, and now coming and claiming credit for the restoration of the small sum of £1,000,000, which was very much less than was anticipated by his predecessor at the time the Debt was created. He was glad the Budget was not worse than it was. It might easily have been so, but he could not help voicing his protest that, three years after the conclusion of the war, we should be in a position neither to see nor anticipate from those in power any substantial reduction of our national expenditure, and that we should be obliged, to come to such small shifts even for dealing with the floating debt which had been hampering us so long.

MR. COGHILL (Stoke-upon-Trent)

said he rejoiced that the Chancellor of the Exchequer had seen his way to take off the 2d. per pound extra on tea, because he was sure it was felt in almost every poor household throughout the length and breadth of the land. He protested against it last year, and he was very glad the Chancellor of the Exchequer had seen his way to take it off. He regretted deeply that the additional Id. on the income-tax still remained. He was sure everybody felt that the time had come for the relief of the income-tax payer, and that no relief was to be given would be resented. An income-tax of Is. in the pound in times of peace was a very disturbing matter indeed, and he was afraid, if people got it into their heads that 1s. was to be a permanent tax, time would be considerable dissatisfaction with the Government in power. The Chancellor of the Exchequer said he had no money to give relief, but ho might very well, out of a huge expenditure of £142,000,000, have found some direction in which he could have effected economies and found the necessary money to give relief to the income-tax payer to the extent of, at all events, 1d. in the £. When he first entered Parliament the expenditure was about £90,000,000, and it had gone on increasing ever since. First by moderate steps, but since the adoption of the Firs Lord's scheme for dealing with Supply, by leaps and bounds. Until the House of Commons resumed its proper control over Supply and examined every Vote expenditure would not only keep up but increase. The guillotining of Supply must be stopped, and the closure resorted to much less frequently.

He regretted the Transvaal Government had not yet made any contribution towards the cost of the war. The "quasi legal obligation,'' as described by the Colonial Secretary, might have been turned into a proper legal obligation by a payment on account, and the payment of, say, £1,000,000, which he thought the Transvaal could very well afford, would have enabled the Chancellor of the Exchequer to make a reduction in the income-tax. He could not associate himself with the views of the hon. Member for Halifax with regard to the Debt. He agreed that we ought to pay off as much debt as we incurred, but why we should be saddled with the debt of generations before he could not understand. As to posterity, it should be remembered that they would derive far more benefit from our extended colonial possessions than we should.

He regretted the Chancellor of the Exchequer had not looked around for some new source of revenue. Personally he was in favour of the taxation of imported goods, but until the time came when that could be done it was necessary to look elsewhere. One possible source of revenue was a tax on aliens; that would probably put a stop to alien immigration. Another was the taxation of land rallies, from which he believed considerable revenue might be derived without pressing unjustly upon any class of he community. Further money could be found by retrenchment in the Civil service. He was not in favour of reduction in the Army and Navy, but in he Civil Service he believed there was a most lamentable waste of money. He wished to call attention to another great waste of public money. When he Land Bill was before the House he expressed his disapproval of certain financial proposals contained in it, and a great many other hon. Members shared his views upon that point. Last year the Government issued £5,000,000 of land stock at £87 per £100, and the price of the stock afterwards went up to £92, causing a loss to the Treasury upon every £100 issued of £5. That loss altogether came to about £300,000. Was that a business-like way of going about a transaction of that kind? This year another £6,000,000 of land stock was issued at £89, and the present price was £95, a difference of £6 on every hundred. Altogether there had been a loss of £900,000 on these two issues. What other Exchequer in the world could be conducted upon those lines? If they were to continue to have such a great waste of public money how could they stop their expenditure increasing? He hoped the Chancellor of the Exchequer would say something on this point in his reply. He could not see why the right hon. Gentleman could not have waited until the money market had improved and then the Irish land stock might have been issued at a price nearer its proper value. He did not know who had got the benefit of that transaction. If any hon. Member would go through the Estimates, he would see on every page opportunities for effecting large reductions in the expenditure. He felt confident that great disappointment would be experienced amongst manufacturers when they realised that the Government had taxed the people so much that they had reached the limit of their paying capacity, and that feeling would not be removed when they read that in this Budget the Government had turned a deaf ear to the demand of the commercial classes who, notwithstanding their devotion during the war, were still called upon to pay an income-tax of 1s. in the pound.

*MR. HERBERT SAMUEL (Yorkshire, Cleveland)

said that so far as the surplus was concerned this was a sound Budget. The hon. Member for West Islington said that, in disposing of this surplus, the Chancellor of the Exchequer had adopted methods of sound conservative finance, but he might have said this was a sound Liberal Budget. The Chancellor of the Exchequer, in choosing tea as the article to be relieved of taxation was, he imagined, only doing so because he had been convinced of the justice of this course by the arguments addressed to him last year from the Opposition side of the House, in which they pointed out the unfairness of the incidence of taxation, and he was glad that the right hon. Gentleman had taken so early an opportunity of redressing to some extent this injustice. The Chancellor of the Exchequer said that he had not enough funds to reduce the income-tax, and at the same time to provide a sinking fund for the new bonds of £10,000,000. If he had taken £500,000 instead of £1,000,000 and spread the repayment of the bonds over twenty years, he would then have had £2,000,000 with which to reduce the income-tax.

The Opposition were unanimously pleased that the indirect taxpayer had been the recipient of the right hon. Gentleman's bounty this year. The working classes were by far the heaviest taxed of all classes in the community. Last year he presented the Committee with a calculation upon the relative incidence of taxation upon various classes of the community, and he showed that the average working-class family, receiving an average wage and Consuming the average amount of taxed articles, was taxed to the extent of 1s. 7d. in the £ of their income. The hon. Member for South Islington said the lower ranks of the black-coated classes, such as the clerks, bore the heaviest burden, and these included the class who were earning between £200 and £500 a year. Although that was commonly supposed to be so, it was not the case, because they received large abatements. A man with £200 a year paid 1s. in the £, and a man with £500 paid the same amount in direct and indirect taxation together, whilst a man with £1,000 a year paid 1s. 2d., and with £5,000 1s. 0½d. On the other hand, a working-man's family with an income of £90 a year paid 1s. 7d. in the £. Therefore, the indirect taxpayer had an overwhelming claim to relief in preference to any other class, and he had still a claim to relief in the future. The Chancellor of the Exchequer must not think that those in the House who expressed the demands of the working classes would be silenced by the present relief, or that they would not continue to press the claims of those classes. The income-tax now was the same as it was in the year 1900, but the indirect taxpayer not only paid the taxes he paid then, but in addition £6,000,000 a year in taxation on sugar, £500,000 a year on tobacco, while the tea tax, after the present reduction, was still 50 per cent. more than it was before the war.

Owing to the borrowing of £9,000,000 next year under the Military and Naval Works and other Acts, in spite of the increase in the Sinking Fund the country would be still adding fresh debts faster than it would be paying off old debts. The right hon. Gentleman said not a word about extravagance. Previous Chancellors of the Exchequer had said much as to economy, but did nothing. Perhaps the present Chancellor, although he said nothing, might prove that ho was able to do much. He hoped this might be the case. The hon. Member for Stoke-upon-Trent said the fault lay with the House of Commons in not exercising sufficient control over expenditure, and that this increased expenditure dated from the time when the closure was strictly enforced in Supply. He had no doubt this had much to do with it, but if there were a spirit of real independence among Members opposite, the time at the disposal of the House would be ample to enforce economy on the Government. He wondered how often the hon. Member for Stoke upon-Trent had voted against the Government in regard to the Estimates of the various Departments. A wave of sobriety seemed now to be spreading over the Government, and perhaps there might now be a tendency towards a death-bed repentance, although, if the present Government were returned again to power with a considerable majority, he was afraid their reckless career would recommence. If the illustration was not thought disrespectful— When the devil was ill, the devil a saint would be, When the devil grew well, the devil a saint was he. One of the reasons for the reduction in the tea duty, he suspected, was the imminence of dissolution. On that side, of the House they welcomed in the main the way in which the surplus was disposed of, but if it heralded a dissolution they would welcome it still more.

*MR. SCOTT-MONTAGU (Hampshire, New Forest)

congratulated the Chancellor of the Exchequer upon his Budget generally and, more especially upon the fact that he had seen his way to adopt the recommendations made by the Alcohol Committee. He thought the right hon. Gentleman would recognise that the Committee had taken great care to consider the different aspects of a very difficult question. At the present time alcohol was freely used in various industries, and he believed that it would be used much more in the future. They had only to look at the enormous progress made in the use of it by Germany, France, and Switzerland in various trades in order to realise that the more extended use of alcohol in the manufactures of this country was bound to come if our manufacturers were to hold their own. It was largely used in Germany at the present moment to produce power, and heat, and light, and it was being also used for internal combustion engines. He was confident that before long the use of alcohol would supplement the use of petrol, and it would form an indigenous supply of fuel. He agreed that the Chancellor of the Exchequer would be well advised not to extend the use of alcohol too quickly or two widely, because it was a large source of revenue, and any tampering with it should be carefully watched. At the same time he thought that when the Report of the Committee came into the hands of Members they would see that efforts had been made to safeguard the revenue whilst affording at the same time manufacturers greater facilities in regard to it's use.

There was another point in regard to alcohol which should not be overlooked. In time of war the use of alcohol might be invaluable as an auxiliary motive force when their supply of petrol might be curtailed. At the present time petrol was largely used in submarines for naval work and motor-cars for military purposes, and it was of the greatest importance that they should have an independent source of supply. The agri- cultural aspect of the question should also not be overlooked. In Germany a very large number of acres were devoted to the cultivation of the potato for the production of alcohol, and this aspect of the question ought to interest hon. Members from Ireland, because there were a great many places in Ireland which could produce potatoes for this purpose which would make very good alcohol. It was also used in the manufacture of artificial silk, in the dye trade, and for varnishes, fine chemicals, and in the manufacture of smokeless powder. He was glad that the Report of the Alcohol Committee had been accepted by the Chancellor of the Exchequer, because it would do a great deal to enable the manufacturers of this country to compete more successfully with foreigners. He desired to thank the right hon. Gentleman for the sympathetic way in which he had received this Report, and he hoped the result would be beneficial to those manufacturers who had suffered severely from the restrictions upon the use of alcohol in the past.

*MR. ARTHUR HENDERSON (Durham, Barnard Castle)

said he could not join in the praises sounded from almost every part of the House in regard to the Budget statement. It was always right for nations, just as it was for individuals, to show signs of repentance for their wrong doing, but he believed there were two kinds of repentance, one genuine, and the other spurious—one that was begotten of deep conviction, and the other that was the outcome of fear. He was rather inclined to think that the statement they had heard to-day was a sort of death-bed repentance. He took the statement as the precursor of an immediate dissolution of the present Parliament. [Cries of "No!"] Some hon. Members opposite said "No," but in their case the wish was father to the thought. He desired to speak from the point of view of the indirect taxpayer. A good deal had been said by previous speakers in regard to the action of the Chancellor of the Exchequer in using part of the balance for the reduction of indirect taxation. That was all very well so far as it went, but when they took into consideration the amount of indebtedness of the State to the indirect taxpayer, surely, what they were to receive was only a very small return for that which had been taken from them. He would state the taxes that had been imposed on the indirect taxpayer for war purposes alone. Tea was increased by 4d. in the pound, tobacco 4d. in the pound, spirits 6d. per gallon, beer 1s. per barrel, sugar 4s. 2d. per hundredweight, export coal 1s. per ton, corn 1s. per quarter, producing a grand total of £18,123,000. That was £500,000 more than the direct taxpayer had been called upon to pay for war purposes. What were the changes that had since been made? Two years ago 4d. was taken off the income-tax, and it was very suggestive to him that the Chancellor of the Exchequer then forgot all about the individual who paid such a large amount in the shape of indirect taxation. He admitted that last year the income-tax was increased 1d., but the net result was that the income-tax had been reduced 3d., giving relief to diret taxpayers amounting to £7,500,000 off the taxes imposed for the war. As to the indirect taxpayer the only thing up till to-day attempted to be taken off was the corn duty, giving relief to the indirect taxpayer amounting to £2,500,000. He thought he was right in saying that the indirect taxpayers of this country, notwithstanding the action of the. Chancellor of the Exchequer, were still £14,000,000 per annum worse off than they were before the South African War.

He was one of those who considered the Chancellor of the Exchequer had that lost a magnificent opportunity. That opportunity was presented in two forms. In the first place he ought to have endeavoured to persuade the Government to do something to reduce the military expenditure of the country. In view of the tremendous growth of military expenditure during the past ten years, surely the time had come when an effort should be made to reduce the cost in that Department. Ten years ago the Army Estimates stood at £18,000,000, and to-day they were £29,000,000; ten years ago the expenditure on the Navy was £20,000,000, and to-day it was £41,000,000. Surely reductions ought to have been secured on these amounts, and especially in the Army Estimates. He did not think that any hon. Member would assert that we were getting value for the money we were spending on the Army to-day. The Secretary of State for War, speaking at Chelmsford recently, admitted that, notwithstanding the fact that we had doubled our Army expenditure, the Army did stand in need of mending. The hon. Member agreed with those who said that a great Army expenditure was not necessary in a country like ours. We ought to maintain an efficient Navy, but when we remembered that ten years ago our Navy expenditure was £20,000,000, and last year it was less than £41,000,000, this was an expenditure which no Government could justify. Then he found that for navy purposes France was spending £12,500,000; Russia £12,000,000; and Germany £14,000,000. These three Powers were spending £35,500,000 per annum on their navies, and surely there was a magnificent opportunity for the Chancellor of the Exchequer to reduce our great military expenditure. Further he thought that the Government might have sought for some new sources of revenue. Last year a Bill passed its Second Reading, supported by all sections of the House, in favour of the principle of taxation of land values. That was a source of revenue which could have been taken hold of. Then there was the important question of royalties, representing large revenues, which went into private pockets. When the people realised what was proposed by the Budget he did not think the indirect taxpayers would consider that they had anything to thank the Government for. This House ought to remember there was no form of taxation that pressed so heavily upon the workers as indirect taxation. The smaller the resources of a working-class family the greater was the burden which was imposed by the taxes on such articles of daily consumption as tea sugar, and other articles of universal use in the homes of the poor, to which he had referred. In conclusion, he regretted he could not congratulate the Chancellor of the Exchequer on his second Budget Statement, for again he would say when the whole position was examined there was little the indirect taxpayer had to thank him for.

*MR. CHARLES McARTHUR (Liverpool, Exchange)

said it appeared to him that the Budget statement partook of Liberal lines, rather than lines which commended themselves to hon. Members on his side of the House. The hon. Member for the Barnard Castle Division had shown very little appreciation of this attempt to follow Liberal policy. He had termed the course which the Government were taking in this matter "a death-bed repentance" but if the life of the Government was going to be so short as the hon. Member seemed to suppose he might have rewarded their efforts by giving them absolution instead of reminding them of having done those things they ought not to have done and left undone those things they ought to have done. It was rather from the Government side of the House that a discordant note ought to have come. He could not help feeling that the fact that no relief had been given to the income-tax payer would cause great disappointment in the country. The income-tax payer, had borne the burden and heat of the day, who had some right to complain that no relief was to be afforded to him, rather than the payer of indirect taxes. The income-tax payers were not generally wealthy people, but people of comparatively small incomes —professional men, clerks, and shopkeepers—and on them the tax pressed very heavily. Although he admired the Chancellor of the Exchequer's courage and independence in passing over the income-tax payer in order to reduce debt, and had no objection in itself to the reduction of the tea duty, he hoped the income-tax payer would be next on the list.

There was great disappointment in the tobacco trade that the Chancellor of the Exchequer had not announced his intention of removing altogether the differential tax on tobacco imposed last year. As a revenue tax the duty on strips was a complete failure. It had brought in the estimated revenue this year because, there were large stocks in bond, which could not be released until the duty was paid. But the import of strips had almost entirely ceased, only that which had already been contracted for, or that required for use in bond, having come in. The trade in stripped tobacco was killed, and, therefore, no revenue would accrue from the tax in future. The tax, it was true, had introduced a certain amount of employment in this country in stripping tobacco, but that employment was of a spurious character. It was not really required, for the tobacco could be much better dealt with on the other side of the Atlantic. Referring to the stamp duties, he wished once more to voice the opinion of the marine insurance community that the time had come when something should be done to reduce the stamp duties on marine insurance. The stamp duty on fire insurance was 1d. for any amount, whereas for marine insurance it was 3d. or 6d. per cent. That was felt to be a heavy burden by underwriters, and they hoped that something would be done before long to reduce it.

MR. JOSEPH WALTON (Yorkshire, W.R., Barnsley)

said that the Chancellor of the Exchequer in his fair-minded statement dwelt to a considerable extent on various items of income which he expected to come into the Exchequer during the year 1905–6; but hon. Members could not but have noticed the lamentable absence on the right hon. Gentleman's part of any serious attention to the alarming growth of national expenditure, or of one single word of protest against the enormous growth in the expenditure for the naval and military services. Now, the right hon. Gentleman's predecessor the right hon. Member for West Bristol had told the Committee in one of his speeches that no one outside the War Office believed that the country got value for its money in Army expenditure, and he thought it was possible to have a reduction in that expenditure with increased efficiency. What was the position they were face to face with? Not much more than a quarter of a century ago, when the finances of the country were in the hands of a financial expert, the expenditure, all told, was £71,500,000, and to-day, in a time of peace, it was twice that amount, or £142,000,000. In addition to that, however, there were the expenditure upon naval and military works, the amounts given to Ireland, and the contributions to local taxation; and national expenditure now reached £160,000,000. Last year there was an increase of £10,500,000 which was reduced this year by £1,500,000, and the reduction for the coming year was something under a £1,000,000. Therefore the expenditure for the year 1905–6 was nearly £10,000,000 greater than that in 1902–3. He meant normal expenditure. The burden of this upon a country was almost incalculable, so far as its commercial prosperity was concerned. A large proportion of it was unproductive and restricted the buying power of the people who had, compared with the last ten years, £50,000,000 less wherewith to buy everything they needed—food, clothes, and the furnishing of their homes. That meant that fewer orders were given to manufacturers producing for the home market, and a large increase in the number of the unemployed.

This alarming increase in the national expenditure required a much more serious consideration from the Committee than it had yet received. For two years past economists on both sides of the House had declared that a day ought to be given to the House to consider the Report of the Public Accounts Committee, but that day had not been allocated. That Committee had recommended that, as the national expenditure was divided into four classes, one class should be taken each year and independently examined with the view of securing a possibly considerable curtailment of expenditure in each particular class; but that recommendation had been entirely disregarded by the Government. They had been told the other day that it was too late to discuss properly national expenditure with the view of securing a reduction of it on the Budget, and that these discussions ought to take place or the Estimates. Further, they had been told that it was the neglect of the House to criticise the Estimates which caused the expenditure of the country to be greater than it otherwise might have been. But how could they discuss the Estimates when these were closured night after night, and millions were votes away without many of the Votes having been considered in the slightest degree by the House of Commons? They must conclude, therefore, that the Government were not serious, and that they did not realise the unbearable burden which this huge and inflated nations expenditure laid upon the country.

Reference had been made to the comparison between direct and indirect taxation. When the South African War was proceeding taxation was imposed in equal amount on the direct and indirect taxpayers; but when, in 1903–4, the Chancellor of the Exchequer had ten and a half millions of a surplus, instead of remitting with it half the burden on direct and half on indirect taxpayers, he remitted four-fifths in relief of the direct taxpayers, and only one-fifth in relief of the indirect taxpayers. He congratulated the Chancellor of the Exchequer on having in his remission of taxation this year dealt much more equitably with the general body of taxpayers in the country, though there was still due to the indirect taxpayers the disproportion in the relief given in 1903–4. In 1903–4 the direct taxpayers were relieved of 4d. in the £ in income-tax, while the indirect taxpayers were only relieved to the extent of 1d. in the shape of the removal of the corn duty. As regarded the income-tax further opportunity would occur of discussing that important question—whether there ought not to be a graduated income-tax, and a differential income-tax charged on these who earned their income by their own exertions, and those who were in the enjoyment of incomes from investments, especially if they had inherited them.

What was the position in regard to the war taxes? They had still the war tax of 2d. per 1b. on tea, still the sugar tax, and the coal tax. In regard to the coal tax, the Chancellor of the Exchequer told the Committee that the exports of coal were greater this year, so far as they had gone, than they had ever been before; and that therefore the coal tax could not be having an injurious effect on the coal trade. But what were the actual facts? Those engaged in the coal trade—coalowners, coal miners, and coal shippers—not only had to pay the other taxes levied on the community, but £2,000,000 a year in addition. No corresponding tax was imposed on any other great industry in the country; and he maintained that that was a flagrant injustice which ought to be remedied, and that there ought to be equality in the incidence of taxation. The Chancellor of the Exchequer, he believed, thought that the coal trade was not injured by this tax; but, nevertheless, it was a tax which specially affected all coal exported from Scotland, Northumberland, Durham, and Yorkshire. They received in consequence of the coal duty on export coal 1s. per ton less at the pit's mouth. That had naturally decreased the wages of the miners, and the continuance of this serious burden might result in the shutting down of many collieries and injury to the coal trade of this country from which not less than 4,000,000 of people derived their livelihood. He considered that the Chancellor of the Exchequer should give, even in connection with this Budget, his serious consideration as to whether, by some means or other, provision could not be made for the abolition of this most unjust coal tax. There was a general view that if the Government reduced the number of the Regular Army, and the enormous expenditure on the Navy, and doubled the amount hitherto devoted to securing the efficiency of the Volunteers and Auxiliary Forces, the defensive power of the country would be greater, and the direct burden on the taxpayers would be substantially less.

He would, like the Chancellor of the Exchequer to give him his attention for one moment. He had been pointing out that they had had no word of protest from the right hon. Gentleman, in the course of his speech, against the enormous increase in the expenditure on the Army and Navy.


I said what I had to say on that subject on another occasion. I think it is futile and idle to talk of reducing expenditure which I believe to be necessary for the security of the country.


said he was glad to have drawn that statement from the right hon. Gentleman; but they had been promised last year by the Secretary for War that there would be large reductions in the Army expenditure.


Not for this year.


said he was not aware that the Secretary for War had excluded this year.


Yes, he did. Perhaps the hon. Member will take it from me that he did.


said he certainly accepted the right hon. Gentleman's statement that he understood the Secretary for War to exclude this year; but they were face to face with the fact that ten years ago the expenditure on the Army and Navy was only £35,000,000, whereas this year the expenditure on these services was £63,000,000, and in addition to that, there was an expenditure of £9,000,000 on naval and military works, or a total of £72,000,000. And what had they got in return for this enormously increased expenditure? An Army practically without efficient artillery, and with a rifle the merits of which were still under discussion. The fact was, we were in a state of chaos in regard to our Army; and he did think that the guardian of the public purse, even if he thought it would be futile, should have seriously protested against this enormous growth of expenditure on the Army and Navy. The right hon. Gentleman the Member for West Bristol had, when that right hon. Gentleman was Chancellor of the Exchequer, uttered a warning as to the necessity for substantially reducing the expenditure on those services.

The National Debt was in a most unsatisfactory position. On the one hand, the right hon. Gentleman had taken a step in the right direction by increasing the amount allocated to the reduction of the National Debt from £27,000,000 to £28,000,000; but he was going to borrow £9,000,000 for naval and military works, and therefore there was no reduction in the national expenditure. The fact was there was urgent need to criticise the whole financial situation of the country, not only in regard to Imperial, but also in regard to local expenditure. What was required was a national balance-sheet which would show where we stood. The national aggregate indebtedness amounted to £1,500,000,000, including local debts and debt for South Africa, and that in connection with the Land Act in Ireland. It was perfectly true that, as regarded local indebtedness, a great deal of it had been expended on tramways, electric lighting, waterworks, etc., which were revenue-producing undertakings; but still the fact ought not to be overlooked that the people had to pay very heavy local rates. Take the case of London. A working man had to pay for a very indifferent home a rent of 7s. 6d. per week, and that, with rates, was equal to 10 per cent, of his earnings, putting these at 25s. per week. In additional to that he had to pay another 10 per cent, of his earnings in Imperial taxation. When the question of taxation was considered from that standpoint it became a matter of life and death; so far as the working classes were concerned it meant the difference between being hard driven to secure necessary food and clothing, and living in comparative comfort. Hon. Members professed a desire to raise the standard of living among the people; they ought to begin in a practical way by grappling with this inflated national expenditure in a manner not yet attempted. It was only by facing the whole facts of the situation and realising how seriously the prosperity of the country was being crippled and hindered that they would ever get this expenditure brought within reasonable limits.

MR. KEARLEY (Devonport)

said the Chancellor of the Exchequer had attributed the falling off in Customs largely to a change in the habits of the people. He knew of no more certain barometer as to the condition of trade than the yield of Customs and Excise. Last year the Chancellor of the Exchequer took a low estimate for the yield in view of the fact that both he and his predecessors had been disappointed in previous years, but in spite of that low estimate the yield was £1,250,000 less than he budgeted for. That pointed unmistakably to the fact that taxation was unduly heavy and was more than the people could bear, and that they were not able to consume the amount of commodities they would have consumed if taxation had been lower. That was a serious aspect of the taxation necessitated by the enormous increase in our expenditure, and the ex- planation that it was to be accounted for by a change in the habits of the people would not bear a minute's investigation. The right hon. Gentleman forgot that the people who contributed the largest proportion of the revenue were those who were in receipt of weekly wages, who had just so much to spend and no more, and if by taxation or any other cause the price of the commodity was advanced they had to satisfy themselves with less or with an article of inferior quality. He hoped nobody supposed that the Budget indicated that trade was reviving. There would be no real revival in trade until there was diminished national expenditure followed as a consequence by diminished taxation.

With regard to the tea duty he would he glad to see it restored to the figure at which it stood last year, and nobody would be more pleased than those who were engaged in planting in Ceylon and India. He was rather inclined to think that the right hon. Gentleman had made his concession not so much in the interests of the English consumer as in consequence of the strongest possible representations having been made to him by the Governments of India and Ceylon as to the detrimental effect which the unduly high taxation had had upon the industry. He knew of no trade that would stand this perpetual interference, that had become almost chronic in respect to the tea trade. Successive Chancellors of the Exchequer in the last five years had made this trade a sort of happy hunting ground when in search of revenue. There had been no I less than three alterations in five years, and these constant changes involved an enormous loss to the trade. He hoped the right hon. Gentleman or his successors would bear in mind that this interference was most detrimental to trade. The right hon. Gentleman had arranged that the remission of duty should not take place until the 1st July. Had the right hon. Gentleman considered the effect of that upon the Exchequer? He warned the right hon. Gentleman that the receipts would be very small from now to July, and at the same time it would paralyse the wholesale trade, which would practically come to a standstill, as all orders would be given for delivery on July 1st. It would have been far better to have adopted the old plan of making the remission come into force the very next day after the announcement of the Chancellor of the Exchequer. It would be well if the right hon. Gentleman would endeavour to collect the opinion of the trade as to whether it would not be more beneficial—it would certainly be more beneficial to the right hon. Gentleman to allow the remission to become operative before July 1st. He would also suggest that the right hon. Gentleman should allow the preparation of tea for the wholesale trade to go on under bond in the bonded warehouses, otherwise, when July 1st came, there would be such a rush to pay duty that trade would be entirely dislocated.


I have to express my thanks to the Committee for the way in which they have received the Budget statement and the proposals I have made. The right hon. Gentleman the Leader of the Opposition was good enough to felicitate, me for the brevity of that statement, which I believe makes "a record" even over my own performance of last year. I will endeavour not to spoil that by speaking at too great length in reply to the observations which have been made, but I owe the Committee some explanations in regard to various points which have been raised. I am glad to recognise that on all sides of the House there has been a recognition of the fact that it is our duty to take early measures to reduce the burden of the Debt, and upon the present occasion ourselves to make the necessary sacrifices for that purpose, and not leave them wholly to be borne by those who come after us. Indeed, the only criticism that has been offered is that I have not gone far enough. I rather suspect that if I had devoted more money to the same purpose—if, for instance, I had declined to propose any reduction of taxation at all, and used the whole of the surplus for the reduction of the Debt—I should only have been placing in the way of my successor a temptation which, human nature and, above all, politicians' human nature, being what it is, he would have been unable to resist. I think that my proposal, sufficiently large in itself, is yet of such a character that it may withstand temptations of that kind, and will not easily be open to attack by others who may feel less deeply than I do the necessity for a reduction in our outstanding liabilities. To those who think that the provision I have made is insufficient, I would venture to say one word. After all, the Sinking Fund should be judged not merely by its actual amount, though that is larger under my proposal than ever before, but by what proportion it bears to the Debt existing at the time. Judged by that standard how does my proposal appear? If hon. Members will look back over a course of years they will see that the Sinking Fund reached its heyday in 1898–99, and with the addition which I now propose it will again stand at almost as high a point. This is not a bad account to give of ourselves; and I trust that others outside will feel the same satisfaction which has been expressed in the Committee at seeing the Government take this early opportunity of increasing the provision which we are making for the repayment of the Debt.

The Member for East Edinburgh has suggested that it was my duty to take advantage of the falling in of certain terminable annuities next year, and to apply them in the way in which other terminable annuities were applied in earlier years, in anticipation of their expiration. I am not certain that the hon. Member appreciates what would be the result of that operation. It is, of course, perfectly open to me or to my successor next year to deal with the annuities which fall in as may seem best to him at the time; and if an operation of that kind was the one which most approved itself to the Committee next year, there is no obstacle whatever raised in his path by what I have now done. The Chancellor of the Exchequer would next year be free to carry out such an operation, and why should I anticipate his decision at that time? I think there is every reason to wait for a little further experience before we decide exactly how we shall apply the money which thus becomes available. The only thing I will say for myself, and for anyone who holds my position, is that the money, however it might be applied, must be applied to one object, and one object only—namely, the reduction of the Debt. The mere creation of new terminable annuities will not apply a penny more to the reduction of the Debt than the application of the same money in other ways, if other ways prove desirable. It is not a question, therefore, as might have been assumed by anyone listening to the hon. Gentleman, between applying more money or less money to the reduction of debt. It is merely a question of how we apply the money which is available; and, unlike the hon. Gentleman, I prefer not to anticipate the discretion of the Chancellor of the Exchequer next year, but to leave it to him to decide in the light of the information then available to him whether he will apply it in the way which at present seems to me most useful for the purpose, or whether he will set up fresh terminable annuities such as the hon. Gentleman suggests.

The hon. Member for East Perthshire has asked me one or two Questions, some of which I replied to in the course of my speech, and I think he will find the answer if he will be good enough to look at the report of what I said this afternoon. He asked me, as I had stated that I hoped not to be obliged to have recourse to the market for fresh borrowings on account of expenditure charged to capital account in the course of the present calendar year, how I proposed to provide for the expenditure which I myself had admitted must be met on that account. I hope that within the present calendar year the resources at the disposal of the National Debt Commissioners will be sufficient for all our purposes without any recourse to borrowings on the open market. The hon. Member further asked me why I propose to issue the new bonds at once. The question of the date of issue of any new security is a matter which must always exercise the careful consideration of the Chancellor of the Exchequer, and in choosing the time for the issue he must be guided by the conditions of the market and by the prospects of better results or less good results by delaying his appeal, in the present case I think an earlier appeal to the market will be most likely to secure the most favourable terms for the nation. But there is another reason, as I have explained, why I desire to raise the money at an early date. Under ordinary circumstances we have to borrow largely upon Treasury Bills in the early months of the year, these Treasury Bills being repaid in the last quarter of the year. If the House approves, as I doubt not, after the debate of to-day, it will approve, of the early issue of these bonds then I shall be able to restrict these early borrowings on Treasury Bills, and shall have the use of the money arising from the now bonds until the time comes when, in the month of December, I have to pay off the now outstanding Exchequer bonds. I think those are the principal questions put to me in the course of this discussion.

There were some points touched upon by hon. Gentlemen on the other side, who, I think expressed their intention of taking a later opportunity of developing them more fully, an opportunity such as would be afforded on the other Resolutions or upon the Budget itself. I hope they will excuse me from replying to them in detail on the present occasion. I will reserve what I have to say until we can discuss the matter more fully. But I will make a few observations on the remarks which have fallen from the hon. Member for Islington and the Member for Devonport. The hon. Member for Islington has recognised very kindly an effort I have made to meet a case put to me by a deputation which he introduced and which seemed to me on its merits a good case, which had only escaped attention hitherto because it was a small matter and those affected were few in number. I think a case of that kind deserved consideration when I had the opportunity to give relief by waiving charges of little advantage to the Exchequer and of great annoyance to trade; but on other matters I am afraid he and I are less in sympathy. He alluded to the wine duties, and, as I understood him, attributed the falling revenue wholly to the lack of a lower duty upon the wines of lesser alcoholic strength.


The increase of duty about four years ago.


Well, I differ from the hon. Member. I see the fall in revenue derived from this source with great regret. With double regret I observe that the decline in the importation of wine has affected in equal measure the imports from our own British possessions. There may come, there will come, a time when we shall be enabled to deal with this matter in other ways, and when I hope we may cultivate this trade with our Colonies more than we have hitherto done. The present decline, affecting, as it does, all classes of wine, is not due to the rate of the tax, but to the lessened purchasing power of those who consume it.


What is that due to?


It is due to bad trade in the last few years. The hon. Gentleman went on to allude to certain proceedings in connection with the income-tax of this year, and, if I am correctly informed, to a particular case where he suggested an unfortunate man had been driven to suicide by the pressure brought to bear upon him by the authorities.


The coroner's jury reported. I have a cutting from a newspaper and was asked to put a Question upon it; but I hesitated to do so, preferring rather to leave the Chancellor of the Exchequer to deal with it.


The hon. Member must not always trust to cuttings from newspapers. If he had come to me for information on the subject, I think I should have been able to convince him that there was no truth whatever in this story. The final notice had not been served on the man, and the newspaper cutting on which the hon. Member relied led to an angry visit to the collector from a neighbour, who said that to her knowledge the man had not been served with his final notice, as she had been, and who founded on this a complaint that taxpayers were unequally treated, and that he had been let off more easily than others.

I pause, now to answer the hon. Member for Devonport, who also dealt with the tea duty. I listened with interest to his remarks. I gather that the hon. Member would have preferred that I should have left the tea tax at the present rate. Instead of expressing satisfaction at the relief which it is in our power to give to the consumer of tea, he had no sympathy for the tea consumer or tea producer, but only had a lamentable tale of woe on behalf of the tea dealer, who would have to make out new price lists and issue new circulars to his customers.


said that was a gross exaggeration of what he had said. He had asked the right hon. Gentleman whether he realised what would be the effect of delaying this concession of duty until July 1st. He pointed out that it would have a very demoralising effect on the trade, and that all orders would be held up for delivery until after that date.


The hon. Member is now referring to another portion of his speech on which I have not yet commented; but he also complained that the tea duties have received too much attention from Chancellors of the Exchequer, and he asks me if I realise the trouble and inconvenience to the trade.


Three times in five years.


Yes, the duty has been altered three times in five years, and the third time is the reduction which I have proposed to-day. I think the hon. Gentleman should think a little about the producer and the consumer and should not be wholly occupied with the interests of the dealer.


said that was a very unfair observation. He pointed out for the information of the right hon. Gentleman, should he be Chancellor of the Exchequer next year, that it would be well to bear in mind that these frequent alterations in the duty affecting one particular trade were very onerous, costly, and burdensome. He contended that was a most fair observation and ought not to subject him to the kind of hostile criticism he had received from the right hon. Gentleman.


I do not differ from that statement of the hon. Gentleman. Any change of duty is an inconvenience to the trade concerned. What I venture to suggest is that there are other considerations which must also be taken into account besides the interests of those who dealt in the dutiable article. Certainly I, and no doubt any other Chancellor of the Exchequer who succeeds me, will bear in mind the reluctance of the hon. Gentleman to receive any further alteration in the tea duty. The hon. Gentleman also calls my attention to the particular conditions surrounding the repeal of the extra twopence of duty which I have proposed in the present year. I have very carefully considered this matter, and, if he will pardon my saying so—my practical experience of the trade being much less than his—I Gentleman somewhat overrates the difficulty in which the trade may be put. I am certain that if I had proposed to repeal the duty from to-morrow there would have been an outcry from every man who held duty-paid stock at the present time. I must, in common fairness, give to traders with duty-paid stocks a reasonable time for clearing those stocks; and, whatever time be fixed, it is clear that during the last few weeks the higher duty is in force duty-paid stocks will in every case be reduced to a minimum. I do not, I confess, understand why it should cause more inconvenience, provided traders know the date on which the duty will be reduced, than it would if it took effect a month or six weeks earlier.

There is another side of this matter to which I must beg the attention of the Committee, and which is of real importance. In recent years every trade in a dutiable article has become extraordinarily sensitive about Budget time. Whenever there is an expectation of an increase in the duty there is great forestalment of clearings. This is a thing we cannot provide against, but it has a disturbing influence on the proportion of the revenue between the two years. And, equally, if any reduction of duty is anticipated, there is apt to be a similar disturbance, since dutiable goods are held back in an abnormal way; and if the trades affected get to understand that a remission of duty will take place immediately after the Budget, which is brought in as near as possible to the beginning of the financial year, the result may be that the revenue of the preceding year would be very seriously upset, and actually it may amount to this, that remissions which under the normal payment of duty would be possible may be rendered impossible. If hon. Gentlemen will consider these matters, they will see that, apart from questions affecting the trade, there is a very serious question affecting the revenue to which for the time being, as guardian of our national finances, I feel I must attach great weight. I believe that if I had not published a letter in answer to a correspondent, in which I pointed out that the tea duty was enacted by Parliament until July 1st, and if I had not expressed my own intention—and my belief that any who followed me would pursue the same course—not to remit such a duty before that date under any circumstances, I do not know whether the surplus of last year would have been turned into a deficit; but I am quite certain that the anticipations of my last year's Budget would have been still further disturbed, and we should not have had the balance at the end of the year on which we are able to congratulate ourselves on this occasion. I admit that there would have been in past times much greater inconvenience in my proposal in the special circumstances of the tea trade than exist to-day.

I do not think the hon. Member for Devonport quite understood the scope of the concession which I made last year in regard to blending in bonded warehouses. Owing to changes in the tea trade which I need not describe, it has become necessary for traders to have a larger stock available for handling than was formerly the case; but I believe I have fairly met all reasonable claims that could be made in that respect by the concession I made last year, and that wholesale dealers will find no difficulty in preparing for the great demand, which will undoubtedly arise immediately the lower duty comes into force, under the new conditions which I extended to their trade last year. The hon. Member for Devonport said that in proposing this reduction on tea the Government were more influenced by representations from the Indian and Ceylon Governments than by regard for the consumer. I am not ashamed to say that I attached great weight to the representations of the Indian and Ceylon Governments on this subject. As I said earlier in the day, I chose tea last year as an article of increased taxation with avowed reluctance. Again and again I admitted that I had merely chosen it as the lesser evil. In the discussion it was stated that it was improbable that any portion of the duty would be paid by the foreigner. I do not think it has been paid by the foreigner; but some portion of it has fallen on our fellow-subjects in India and Ceylon; and if they, too, with the consumer receive relief under the proposal I am making, this is not to my mind a subject for regret, but an additional reason for making that proposal.

I have attempted in the discussion today to avoid anything of a controversial character. I suppose we may, perhaps, come to that later, though I am hopeful that, having regard to the general approval which has been expressed of the Budget proposals, there will not be so much of it as there has been in some previous years.


asked when the small changes with regard to the reduction of the ⅛per cent, would come into operation.


These changes cannot come into operation until the Finance Act passes. I appeal to the Committee, as they have treated the Budget statement on the whole in a non-controversial spirit, to allow a decision to be now taken on the first Resolution. I understand that by agreement between the two sides of the House, following a discussion between the Leader of the Opposition and the Prime Minister, the other annual Resolutions—the merely repeating Resolutions—are to be taken to-night, and the serious Resolutions taken later—the tea duty on Tuesday and the income-tax on Wednesday, and that on the tea duty Resolution to-morrow, with your permission, Sir, a general discussion will be again allowed if hon. Gentlemen desire. In the circumstances I think I should only be wasting the time of the Committee if at this period I attempted to take up the time of the Committee further by entering into more detail with regard to these proposals. I thank them for the kindness they have shown to me, and I make this appeal for a still further exercise of their indulgence.

*MR. FIELD (Dublin, St. Patrick)

said he took it this probably was the most important Resolution they could pass. The Chancellor of the Exchequer had not given the House any idea as to what would take place with regard to the expenditure of the, future. He did not give any hope of reducing expenses or of enlarging the area of taxation. As an Irish Member he thought they were entitled to some expression from the right hon. Gentleman with respect to the over-taxation of Ireland, which had been steadily increased since the verdict of the Financial Relations Committee declared they were over-taxed by £2,750,000 sterling per annum—this increase to almost £4,000,000 sterling was mainly the result of the Boer War. They were all aware that the Transvaal War was practically a Stock Exchange War. It was manipulated by financiers and gamblers, in options, shares, and warrants. To protect the public, in his opinion, all such gambling, especially in respect to metals, commodities and food stuffs, should be prohibited, or at least controlled, as they were in other more sensibly governed countries, where financiers had not such influence in operating the Government. The House understood that these mineowners were to provide £30,000,000, and, as none of this had been paid, and as no definite promise had been made, before the Budget was introduced he asked whether a reasonable import duty would be imposed on diamonds. The right hon. Gentleman said the secrets of the Budget were regarded as sacred, and he could not give him any information. He wanted the information now. He thought it was reasonable that such a duty should be put on diamonds imported into the three kingdoms by those who engineered the country into an expensive war.

Another subject the right hon. Gentleman had passed over which, demanded attention was that of land values. Parliament had expressed its opinion very clearly on this question, and the Chancellor of the Exchequer ought to have carried out its behest. This was not a good but a very commonplace Budget. There was nothing original about it. The right hon. Gentleman was afraid to venture into new regions. There ought to be a tax on motor-cars, which wore undoubtedly, like diamonds, a luxury, and were owned by people who could afford to pay. The House had lost nearly all control over the taxes; the power over the public purse had to a large extent passed from private Members. When passing Supply the closure was applied, and the result was that democratic Members had limited opportunity of criticising the Estimates. This country was not paying its way. Their expenditure had swelled to an enormous degree, over-taxation was undoubtedly lessening the power of purchase on the part of the workers; and, the present system should be superseded by one of greater economy and more efficiency. These great questions of National Taxation were practically managed by the permanent officials. They had the same indigested kind of finance annually put forward as the bill of fare for the House to swallow whether they had an appetite for it or not. He was glad the tax on tea had been reduced, but an effort ought to be made to endeavour to further reduce the indirect taxation, and obtain more taxes from those better able to pay it than the working classes. They who represented a democratic community were entitled to be heard in this matter, because Ireland was over-taxed against the expressed terms of the Unions and above her taxable capacity; now they had to pay expenses of a war of which they disapproved, and from which they received no benefit. He hoped the right hon. Gentleman would consider the points he had raised. He reminded him that in olden times all the taxation of the country came from the land. Then it was shifted to the consumer, and now they had got into a more complex system, they ought to have half of the taxation direct and half indirect, the tremendous revenues derivable from royalties should be taxed. He trusted that the House would, in future, take more interest in these Budgets, because the finances of the country was one of the principal things they had to consider; but, unfortunately, the House had almost lost the power of criticism regarding fiscal arrangements upon which the prosperity and progress of the community so largely depended.

MR. SYDNEY BUXTON (Tower Hamlets, Poplar)

said he wanted to be clear about their position with regard to the Resolutions of to-morrow and Wednesday. He understood that the arrangement was that they should be allowed to discuss the Budget as a whole with the Resolution of to-morrow, which would be tea, and that on Wednesday the income-tax Resolution would be discussed. The Member for East Edinburgh some time ago asked the right hon. Gentleman to lay on the table a Return showing for various years the collection of the income-tax in various parts of the Kingdom. This had connection with a point the right hon. Gentleman raised in his Budget speech as to the extra collection which had taken place this year. He believed this Return had been laid, and perhaps the right hon. Gentleman could say whether it would be in the hands of hon. Members by Wednesday.


said he understood that the arrangements made were that they should have the tea duty first to-morrow, and that on the tea duty, with the Chairman's permission, they should continue the general discussion if hon. Gentlemen so desired; that on Wednesday they should take the Income-tax Resolution, and that to-night they should take the other annual Resolutions unchallenged.


Will the right hon. Gentleman consider the suggestions that I have made to him?


Perhaps the hon. Gentleman will excuse ma from saying more at the present moment than that I think there is not one of the suggestions he has made to which I have not given careful consideration.

MR. McKENNA (Monmouthshire, N.)

Is there any reason why the right hon. Gentleman should take the other Resolutions to-night?


Yes, if we are to finish the Resolutions in Committee stage by Wednesday. It is an arrangement made between the two sides. I am sure the hon. Gentleman does not intend to question any arrangement of that kind. The arrangement was that we should finish this stage of the Budget Resolutions by Wednesday, and that for the convenience of the House the tea duty should be the first for discussion to-morrow, that the Income-tax Resolution should be the first on Wednesday, and that we should take the other Resolutions, which are the annual Resolutions, unchallenged. As regards the particular Return, I cannot say definitely that it will be in the hands of hon. Members on Wednesday, but I will get the figures by that time. I am not quite certain whether the figures are actually ascertained yet; I rather think the Return is in the hands of the printer.


The Return was laid bout ten days ago, and I think it is important for Wednesday's debate that we should have the figures.


I will give them to the Committee if I can Of course, the Return being laid does not mean the Return is prepared.


Can the right hon. Gentleman say whether the arrangement goes beyond having all the Resolutions completed in Committee by Wednesday next.


I am informed by my right hon. friend that the agreement was that all Resolutions in Committee stage should be finished by Wednesday and that the Resolutions, with the exception of those of the tea duty and the income-tax, should be concluded to-night.

*MR. SHACKLETON (Lancashire Clitheroe)

said he wanted to say a word or two before they passed the Resolution before them. First of all, he would like to refer to the Chancellor of the Exchequer's statement respecting the reduction of receipts for intoxicants consumed in this country. As a representative of workmen he could assure him that no one was better pleased than they were, and they hoped and believed that the reasons he had given for this reduction were genuine, that it was due to a change in the habits of the people. Some of them could remember the time when holidays were spent among roundabouts and that sort of thing, and they were pleased to know people could now get away to the seaside, taking advantage of the excursions; and he believed that it was in this direction, as mentioned by the right hon. Gentleman, that they were now spending more money. He would like to suggest to him that the Government might do something to assist this, if it read and digested some of the recommendations of the Committee on Physical Deterioration. One or two of these recommendations were of particular interest; and, if the Government could adopt them, he was sure they would help further in the decrease in the consumption of intoxicants in the country. They had nothing but praise for the reduction of the duty on tea, but it should not be understood that the Budget was a satisfactory one to the labouring classes. It was nothing of the kind. They quite admitted that the Chancellor of the Exchequer was carrying out the financial arrangements of all previous Chancellor, of the Exchequer and had done the best he could, but there was no reason why he should not have instituted some new mode of raising money. There were such things as copying graduation, as they had it in the death duties. Why should not the same principle be adopted with regard to the income-tax? He was quite amused to notice how careful and considerate hon. Members were about the commercial classes and their income-tax. Surely, they realised that there was a net income of £160, and that taxation in those cases left 19s. in the £. But when they came to the working man earning 18s., £1, and 22s. a week, there was no £160, and the tax came clean out of the income. It was a very heavy tax. What they wanted to see was that those who could pay, those who had £160 and more, should be taxed to the relief of the indirect taxpayer.

Then he held that there was absolutely no need for the present great expenditure. They must prove first of all that their expenditure was justifiable before they could say the people were not entitled to some reduction. Surely discussions in the House during the past three or four weeks on Army questions revealed to the whole nation that we were not getting value for our money, and that, if we were, there would be considerably less expenditure for the same troops and for the armament of them. He knew it was very unpopular to say a word against expenditure on the Navy, but they had such men as the Member for Exeter saying, as he said last year, that the two-Power standard could be maintained with £9,000,000 less expenditure, and this had never been replied to, and they were entitled to have some consideration given to statements of this kind and to have something shown for the additional £9,000,000 which he said were unnecessary to maintain that standard. He wished the Chancellor of the Exchequer to reply to the statement as to the proportionment of taxation paid by the various classes in the country. It was a subject that wanted going into. If it were true that a working man with an average wage of 33s. per week was paying 1s. 7d. in the £, it was considerably more when they came to the labourer with 18s, £1, and 25s. per week. When it was said that the commercial classes were paying 1s. in the £, it should not be understood that they were paying more than their share; in his opinion they were paying less in proportion to their ability to pay.

1. Resolved, "That for the purpose of paying off any Exchequer Bonds issued under the Supplemental War Loan Acts of 1900, any sums not exceeding £10,000,000 be raised by the issue of Exchequer Bonds to be current, subject to the provisions for the redemption of the total issue, for a period of ten years, and that in each year of that period one-tenth part of the total issue of the new Bonds be drawn for repayment and redeemed by the application for the purpose of the requisite part of the new Sinking Fund, and that the permanent annual charge for the National Debt be increased so as to be £28,000,000. That any expenses incurred in connection with raising or paying off any such sums, and the principal of and interest on any such sums, be charged on the Consolidated Fund, and, as to the interest, be paid as part of the permanent annual charge for the National Debt.— (Mr. Chancellor of the Exchequer.)