HC Deb 13 May 1907 vol 174 cc717-32

Postponed Proceeding on Amendment to Question, "That the Bill be now read a second time ":—

Which Amendment was— To leave out from the word 'That,' to the end of the Question, and add the words 'in the opinion of this House, the financial needs of the country, as disclosed in the Budget statement of Mr. Chancellor of the Exchequer, require that the basis of taxation should be broadened in order that the anomalies and hardships inseparable from the present high rate of particular taxes may be diminished, the revenue necessary for the public service and for social reform raised with fairness to all classes of the community, and our fiscal system adapted to the present condition of national and Imperial trade.' "—(Mr. Austen Chamberlain)—instead thereof, resumed.

Question again proposed.


continuing his speech, said he had alluded to a dissimilarity between capital and labour. He would now indicate a point at which they converged and assimilated. Capital like labour was one of the raw materials without which industries decayed and manufacturers ceased to flourish. Furthermore capital represented the very life-blood of a normal and progressive expansion of all forms of industrial and commercial activity. When the attack made on capital reached the straining point he submitted that that policy became industrially inexpedient and wasteful and economically incapable of being defended. His hon. friend the Member for Durham had asked why we should make any alteration in our fiscal system. Might he venture to submit one or two reasons? After two years of unexampled prosperity at home, with abounding wealth, with an overflowing Treasury, with millionaires shuffling off this mortal coil in order to replenish the Treasury, with magnificent trade returns, with abnormal receipts from the coinage of silver—with all these phenomenal aids to our financial resources, what had the Chancellor of the Exchequer done? He was going in for abnormally high taxes on articles of food and non-alcoholic, beverages. In the case of tea 97½ per cent, of the commodity came to us from India and Ceylon, where the cultivation of the plant gave employment to upwards of 2,000,000 natives. That article was taxed to the extent of between 75 and 100 per cent. Sugar, coffee and tobacco were taxed up to the hilt without mercy or remorse. Not a single penny had been devoted to the relief of the consumers of these articles. The income tax was maintained at the level of a war tax; and this, notwithstanding that there had been consi derable reductions in expenditure which might lead—he hoped they would not—to the weakening of our military and naval defences. If these were the straits to which the public purse was reduced now, it might not be unreasonable to ask what would be the case when a cycle of lean and unprofitable years came round, as it inevitably must. The coal tax, which was abolished light heartedly, was bringing in millions of money and he thought it was capable of mathematical proof that the bulk of it was paid by the foreign consumer. The supply of the particular class of coal exported was absolutely limited, and if the tax operated in restraint of trade, would the Chancellor of the Exchequer have been in a position to say that during the last eight months of the currency of the tax, when it was altogether to the advantage of the foreign purchaser to postpone his orders, no loss than £800,000 was received over and above the amount budgeted for? That almost conclusively proved that a considerable portion of the tax was paid by the consumer. As to the registration duty on corn, nobody had ever attempted to show that it had the slightest effect on the price of bread. Did hon. Members opposite believe that a small tax of that description, allowing Colonial corn to come in free, would not have the effect of enabling the Colonies to send in larger and larger proportion most of the food-stuffs the country needed? Surely this was not a Party question? [Cries of ''Hear, hear."] Hon. Gentlemen said "hear, hear," but the tariff reform party had done all they possibly could to keep this question out of the turmoil of Party politics. Hon. Gentlemen opposite had rather stood in the way of that being done. The Colonial Premiers had said in words that left no room for ambiguity that the one thing which they desired above all was to trade with the Mother Country, and to have preferences with the Mother country, rather than to seek advantageous commercial alliances with the foreigner. The President of the Board of Trade had, in the legislative measures for which he was responsible, shown great perception in safeguarding the interests of British industry. He hoped the right hon. Gentleman would continue on that wholesome path, but if the Party opposite refused to redress the inequalities in our financial system, and to bring it into line with the requirements of modern industry, the burden of that task would be cheerfully undertaken by the Unionist Party. [MINISTERIAL cries of "When?"] As soon as they had the opportunity, and that might not be so long as hon. Members thought. They would endeavour to pave the way for industrial freedom throughout the length and breadth of the dominions of the Crown.


I will endeavour to meet some of the points adumbrated by the two right hon. Gentlemen opposite. I listened with great interest to their speeches, and I confess that I was more interested in what they did not say than in the policy which either of them proposed. Of course, the Amendment intends, as far as possible, to bring together hon. Members who hold the various opinions which are known to exist on the other side of the House in regard to the fiscal question. We did, however, expect, and I think we were entitled to expect when a solemn Amendment of this sort is brought forward, some light and leading on the question; but, as far as I am concerned, I must say that I have derived no light and no leading from the speeches of the right hon. Gentlemen. The right hon. Gentleman the Member for St. George's, Hanover Square, dealt almost entirely with the question of preference, and not really with the question before the House. I heartily endorse all that was said by my right hon. friend the President of the Board of Education on this matter. We desire to be friendly towards the Colonies, and, indeed, both sides of the House, and all parties in the country, have the same object in view, though they do not see eye to eye in regard to the mode in which it is to be carried out. I think the right hon. Gentleman has conceded the whole position of the Government. He admitted that after the last election it would be practically impossible for the Government to grant the full preference for which some of the Colonies are asking. He suggested that we might have met the Colonies in regard to the existing sources of taxation; but though that might in substance have been a minor matter, in principle it would have been exactly the same, and the demand for further preference would have been practically overwhelming. It has been represented that it is inconsistent to reject preference between the Mother Country and the Colonies and to assist it between the Colonies themselves. But the two cases are very different. The Colonies are protectionist countries, and it is, therefore, natural that the Government should encourage them to make preferential arrangements between themselves, because any such arrangement is a mitigation of the protectionist system to which they are subject, and tends towards free trade within the Empire. There is nothing inconsistent in encouraging inter-colonial preference, while at the same time we are not able to accept it for ourselves. If the House will allow me, I want to deal with what, after all, is the basis of this Amendment, and with what was the whole gist and substance of the argument of the right hon. Gentleman the Member for East Worcestershire, namely, the question ought we, or ought we not, to enlarge and broaden the basis of our taxation? I thought the right hon. Gentleman would tell us exactly how he proposed to broaden the basis of taxation, especially as he spoke with the authority of an Ex-Chancellor of the Exchequer who has studied these things very carefully. I think we were entitled to hear from him a clear and concrete alternative to the present Budget. The right hon. Gentleman the Member for St. George's Division said it was not necessary to go into details; but in this matter details are everything. It is no use suggesting that we should broaden the basis of taxation unless you are going to show in detail, in pounds, shillings, and pence, whore you are going to get the revenue from, and how you are going to relieve the present taxpayers from some of the burdens which they have to suffer. It is a very old method of argument to say that the doctor should not prescribe until he is called in; but when right hon. Gentlemen are proposing to alter the whole fiscal system of the country, I think we are entitled to ask on this occasion what it is they actually propose. What we have suffered from so much in the fiscal controversy is, in the first place, that right hon. and hon. Gentlemen on the other side cannot be got to agree among themselves; and, in the second place, that they cannot be induced to sot clown in black and white exactly white they propose for the improvement of the trade and commerce in the country. I am entitled to ask the right hon. Gentleman what are his definite proposals for the improvement of the trade and commerce of the country, and for obtaining an increased revenue The right hon. Gentleman says that he and his friends are going to produce them, but they have not done so yet. So far as I am concerned I deny altogether the premisses on which the right hon. Gentleman's argument is founded—that our present system of taxation has broken down. I do not think we want to broaden the basis of taxation; we may be quite content with the existing fiscal system. The right hon. Gentleman drew a very gloomy picture of the finances of the country and said that they were in a parlous way. But if we take the last two years it will be found that there have been remissions of taxation to the extent of some millions, and, the National Debt has been reduced by no less than £25,000,000. We are told by the right hon. Gentleman the Member for West Birmingham that our export trade is going. It has not gone; it is increasing; and remembering what the Chancellor of the Exchequer did last year and this, I doubt whether our finances have been for many years in a sounder condition than at present. The right hon. Gentleman the Member for St. George's, Hanover Square, quoted Sir George Lewis that there ought to be a large number of taxes on a large number of articles, each producing a comparatively small sum; but my recollection is that Mr. Gladstone made short work of that argument, and that the whole House was on the side of Mr. Gladstone, and not on that of Sir George Lewis. The right hon. Gentleman the Member for East Worcestershire seemed, in a half-hearted way, to suggest a tax on the import of foreign manufactured articles; but the Leader of the Opposition, while in favour of preference, has hitherto said that he was opposed to any tax which would be at all in the nature of a protective duty, Well, a ten per cent, duty on manufactured goods may be a very low duty, but clearly it must be more or less of a protective duty. If a duty of that kind were imposed, I find that the total number of articles which would be taxed would amount to between 200 and 300. In time of war taxes were imposed upon coal, corn and sugar. Two of these duties have been taken off, and probably the third will disappear as soon as it is not desirable for the purpose of our present finances. I think our present fiscal system, which has grown up gradually, is the right basis on which we ought to levy our taxes. It has been growing up since 1843, and came to fruition in 1860, and under it, by confining the taxes to a few articles of general consumption, no impediment is imposed on trade, while the cost of collection is reduced to a minimum. While many duties have gone, while others have been greatly reduced, and none has been added, the Customs and Excise, which in 1860 produced forty-two millions, now produces sixty-two millions. This is a sufficient testimony to the advantage of the present system of taxation. In the late war, moreover, the present system provided the means by which taxation was easily raised. I do not know how far the night hon. Gentleman the Member for St. George's agrees with his right hon. friend about the ton per cent, on manufactured goods; but they both advocated preference, and we all know that preference can only be given by imposing a tax on corn, wheat, bread, butter, and other articles of daily consumption, and it is proposed with that money to reduce the taxation on tobacco, tea and sugar. I will ask the right hon. Gentleman whether it is better to have a tax on six articles instead of on three. We hear a good deal about a free breakfast table; but the right hon. Gentleman proposes to attack the dinner table of the working man.


the promise of a free breakfast table has been unfulfilled up to the present moment.


That is due to the £240,000,000 which the late Government put upon the expenditure for war purposes. The only point of the right hon. Gentleman out of which I can make an exact and concrete proposition is that he is very anxious, as his leader was the other day, that the shilling income-tax should be reduced. I do not deny for one moment that a shilling income-tax is a very high figure, but I do not think it should be forgotten that that shilling income-tax will be borne by only a few persons, and by no one with an income under £2,000. If the present Budget goes through those below £2,000, to the number of half a million or so, will be relieved. Although I do not deny that a shilling income-tax is a heavy duty, still I do not agree with the right hon. Gentleman that it is a tax which weighs very heavily upon the trade and industry of this country, whereas all the proposals of the right lion. Gentleman opposite for broadening the basis of taxation will fall in some way on the consumer. And while I should be prepared to say that it would be desirable that the income tax should be reduced, I say it should not be reduced in such a manner as to alter the relation between direct and indirect taxation. In other words, it ought not to be reduced unless the indirect taxation is also proportionately reduced. I do not think it is a right thing that the income-tax payer should be relieved at the expense of the consumer of articles of general consumption. The right hon. Gentleman makes three proposals for the broadening of the basis of taxation; first, retaliation, secondly, preference, and, thirdly, the taxation of foreign manufactured goods. Retaliation will give us no relief; but it is said by the Leader of the Opposition that he only asks for retaliation in case it is necessary to use it, and he merely wants it because the threat of retaliation will make other countries give way in regard to their tariffs. Obviously there is no revenue to be derived from retaliation, and therefore we are left with the question of preference. What amount of revenue does the right hon. Gentleman expect to get from preferences which are going to do the evils to which I have referred? He says they will not touch raw materials. I am surprised at that, because the right hon. Gentleman says that an additional preference tax on corn, meal, and butter will not really add to the price to the consumer; and what is true of wheat, meal, and butter, must be equally true with regard to raw materials. But it is not the fact that hon. Gentlemen opposite are willing to withdraw raw materials from taxation. I do not believe you can carry on a legitimate and systematic system of preference unless you tax the raw material of industries. The right hon. Member for St. George's said you cannot expect in these matters mathematical precision; but what we say is that if it is true, as we are told it is, that the only way to keep the Empire together is by these commercial bonds in addition to others, they will not help us very much in keeping the Empire together. Some parts of the Empire cannot benefit if we do not tax raw materials, and if we are going to lose our other Colonies because we will not give them preference, I am afraid it is a very bad look-out for the Cape. The proposal is to put a duty on articles of large consumption, such as corn, meat and butter. The right hon. Member for West Birmingham estimated that that would produce about £4,400,000 a year. That does not seem very much among all these claimants to whom the right hon. Gentleman has referred. But oven so, what is he going to do with his £1,400,000? It is true the liquor duties would not be touched, and tobacco is a luxury and therefore the duty is not to be touched. [An HON. MEMBER: Yes.] Then that would take off a considerable slice of the £4,400,000. Then the duty on sugar has boon dwelt upon. That tax was after all put on to broaden the basis of taxation. My right hon. friend, in his Budget speech, enunciated the irresistible argument that though it would be a good thing if we could get rid of it altogether, to reduce the sugar duty by one-half would be uneconomical and wasteful. You would retain all the vexations and all the cost of collecting the tax, and the farthing would not go to the consumer, but to the middleman. So much was that thought to be the fact at the time when the sugar tax was repealed in 1874 by Sir Stafford Northcote that he repealed it largely on the ground that the factor was uneconomic. I suppose, therefore, the right hon. Gentleman does not propose to deal with that. That leaves the tea duty, and I do not believe it would be to the advantage of the working man in this country to have his tea duty reduced at the expense of a duty on meat, corn, and butter. The only tax still remaining, therefore, at a high figure is the income-tax. That I have dealt with, and I should steadily resist the reduction of the income-tax and the expansion of those taxes to which I have referred. I have said that the estimated revenue was £4,400,000. We have to recollect this in regard to preferential duties; the object of this proposal for preference is that Colonial corn and meat shall supersede that of foreign countries. What does that mean? It means that by so much as these Colonial products take the place of foreign produce the revenue disappears; that the more successful this system of preference is the less revenue will there be year by year; that if it is carried out with the success that is anticipated there can be no reduction in the taxes from which we suffer so much. That is what retaliation and preference come to. With regard to the taxation of manufactured articles, to which the right hon. Gentleman says his whole Party is committed, I do not know what his Chief Whip thinks of that; we have always up to now looked upon him as a free trader.

SIR A. ACLAND HOOD (Somerset, Wellington)

We are all free traders.


What is really proposed in regard to this duty on manufactured articles? I am prepared to admit that the right hon. Gentleman and those who support him do not desire to go back to the bad old days when these duties were very high, but, as I have pointed out, they will have to go back to an extent, and to have duties on an enormous number of articles in place of the simplicity we have in our present system. Therefore, we are entitled to ask how they are going to define manufactured articles. I should like to ask the Loader of the Opposition, now that we understand that these proposals for preference are adopted by the right hon. Gentleman, whether he agrees with the view put forward by his right hon. colleague—whether he is in favour of an export tax on foreign manufactures, because that must be in the nature of a protective duty, its whole object being to protect our industries. I should like to know whether he is in favour of a protective duty ask the right hon. Member for East Worcestershire how he is going to define foreign manufactures. He is against the taxation of raw material, and I believe that it is beyond the wit of man to disentangle wholly and partly-manufactured articles from one another. In the second fiscal Blue-book these articles are defined as far as they can be, and they amount to about £180,000,000 and produce about £10,000,000 a year. Is the right hon. Gentleman really going to tax these partly-manufactured articles to which I have referred? I remember that when the right hon. Gentleman went to Warrington he, in a celebrated speech, proposed to tax foreign wire. Norwich manufacturers who use foreign wire in the production of a more complete manufacture said that the proposal was all very well for Warrington, but it would not suit Norwich. I remember Mr. Gladstone illustrating the difficulty of these definitions by mentioning a curious dispute as to whether a mummy which had been imported was to be taxed as raw-material, a partly-manufactured, or a wholly manufactured article. I believe it was finally declared to be a completely manufactured article. We are in a very great difficulty with regard to this matter, and we are entitled to some answer from the right hon. Gentleman as to how far and to what extent he proposes to tax these partly-manufactured articles. I do not think the right hon. Gentleman will be able to carry out the proposals which he has made across the floor of the House. He has suggested the reduction of the income-tax, but no such reduction ought to take place at the expense of indirect taxation and at the expense of the consumer. Whatever way we look at it, whether from the point of broadening taxation, of preference, of retaliation or of protection, I believe it will be shown that our present system of taxation for revenue purposes on a few articles of consumption is in its simplicity by far the best for the finances of this country. The right hon. Gentleman is not likely to get for his proposals a sufficient amount to attain his ends, and any departure from our present system is likely to load us into hopeless financial confusion.

*MR. JESSE COLLINGS (Birmingham, Bordesley)

said that the right hon. Gentle-man in his speech had used only the stock arguments which were in use fifty or sixty years ago, and he had added nothing to the knowledge which had been obtained since that time. He had said that if retaliation were successful and other countries were induced to lower their duties, then no revenue would be obtained. Quite true; but had the right hon. Gentleman reflected on the enormous increase of employment it would give to this country? Unless they argued this question from the point of view of good, constant, well-paid employment, which was the solution of all our social difficulties, they missed the main point. Some years ago we imported 600,000 gallons of wine per annum from South Africa. An understanding made with France put an end to that; but if we were to give preference to South Africa in wines and tobacco, the purchasing power of South Africa would be increased and we should get the benefit of it. The right hon. Gentleman had asked how the difference between wholly and partially- manufactured goods was to be defined, and said it was beyond the wit of man to define it. It did not defy the wit of man, but it defied the wit of the present Government to do it. It did not defy the wit of other Governments like those of Germany and France. What was the test which they adopted? They took a certain article and judged how much labour was in it, and to the extent of the labour in it they required that import duty to be paid upon it. That was an effective way of doing it. The Chancellor of the Exchequer had not only slammed the door in the face of our Colonial brethren, but he had had the hardihood to assure them that the last general election had finally settled the question of free trade. If the Government really believed that, then let them appeal to the country on that one particular point, and they would get quite a different answer. Everything had changed since the year 1860. The carriage and other expenses connected with the importation of corn, which was once equal to about 10s. or 12s. per quarter, had disappeared, although the Cobden school at that time thought they were going to remain. Everything was different now. It was said that under free trade no more land would go out of cultivation, and in less than five years every nation would follow our example Food was to be abundant and cheap, pauperism was to disappear from England, workhouse were to be abolished; it was said that workhouse would be seen standing ruined and empty as monuments of the success of a free trade policy. But all that had not come about. The workhouses of to-day were bigger and more numerous. Pauperism had increased considerably, and its cost was now more than four or five times as much as it used to be. Everything which had been foretold in regard to free trade had not come to pass. If that was the case where was the success of this one-sided free trade which was no more like real free trade than chalk was like choose? Foreign countries always kept the producer to the front. In America the producer was always considered first because the greater the production the greater the employment. The greater the employment the more money there was to buy with, and when there was plenty of money to buy foreign countries rightly put price in the second place. In this country they placed the consumer first and the producer second, with the result that they had no employment and no money to buy with, and under those circumstances what did it matter about the price? At present they put an import duty upon what they did not produce. If, instead, they put a duty on what they did produce, the weekly budget of the housekeeper-would not be a farthing more, but the employment would be greater, because there would be a greater production of those things in this country, and there would be more regular employment. He had listened with interest to the admirable speech of the hon. Member for the Black-friars Division of Glasgow, and he agreed with him as to the inequality in the distribution of the wealth of the country. In what the hon. Member said about poverty and misery and destitution, his description was very touching. He followed up his argument by saying that things were getting worse, but this was under so-called free trade. His remedy, however, seemed to resolve itself into one of charity and State aid for the sufferers. He had stated that they wanted several great social reforms based on free trade, and that they would cost millions of money. He did not tell them where the money was to come from, but simply said that be would place that task upon the shoulders of the Chancellor of the Exchequer. In his opinion nothing had helped forward the question of fiscal reform so effectually as the Budget which had been introduced by the Chancellor of the Exchequer. It was a Budget of despair. It stated in so many words that the Government had got to the end of their tether as far as other sources of revenue were concerned. It was practically admitted that under the present system it was impossible to get any more money to carry out those great social reforms which they were all anxious to see brought about. In this country the import duty upon food and drink was higher than in any other country. An import duty on silks, satins, motor cars, and a thousand and one other things would increase employment in this country. They very properly objected to the importation of sweated labour, but why did they favour the importation of the productions of sweated labour? There was an enormous trade in hats in the Midland counties. The bulk of the hat trade abroad was done in Italy by people who worked for 8s. to 10s. a week, their hours of labour being from twelve to fourteen per day. He wanted an answer to this question. Supposing 100 of these Italians were imported into Nuneaton and employed by hat makers, and supposing they agreed to work twelve or fourteen hours a day for 10s. a week, would not the English hatmakers very properly say "You are sweaters and blacklegs and we will not have it?" But these 100 Italians could go back to Italy and produce hats under precisely the same conditions, and the hats could be imported into this country free to compete with the hats produced under other conditions at Nuneaton. It would be bettor for the community that the Italians should be in Nuneaton, because they would be paying rates and taxes, spending money with the shopkeepers, and in a variety of other ways. He asked the hon. Member who represented the district if he could tell him the difference.

*MR. W. JOHNSON (Warwickshire, Nuneaton)

I can only say that the hat manufacturers of Nuneaton and district have made large fortunes the last ten years.


said he was not speaking of the master hat manufacturers who received 50 per cent, on their imported stuff and in some cases more. They were making money, but how about the working men? He wanted an answer to the question. What was the difference between preventing sweated labour at home and welcoming the importation, without any import duty, of articles produced by sweated labour abroad? He had never been able to see the difference at all. While the free importation of foreign-made goods was going on, something far worse was happening in the removal of factories from this country to places abroad. That statement was challenged the other day. He did not know whether hon. Members had read the evidence given by gentlemen of the first standing in several trades before the Tariff Commission. From that evidence it appeared that the lace manufacturers of Nottingham, the manufacturers of Bradford and other parts of Yorkshire and Lancashire, were removing their factories to other countries. There was thus an exportation of capital, but the men were left behind. The labour of this country was destroyed by so-called free trade, and the working people of England were finding it out. In the not distant future the Labour leaders would have a very rude awakening. He could give many other instances showing how unfair foreign competition was injuring our trade, but he would only mention one. The making of packing cases was an important industry in this country. It employed thousands of men. The United States said to our manufacturers that if they sent their goods packed in cases made in America they would not charge duty on them. The consequence was that the packing case workmen, as in many other trades, were being done away with by this unfair competition.

Debate to be resumed To-morrow.

Adjourned sit seven minutes after Eleven o'clock.