TEA.

HC Deb 07 May 1908 vol 188 cc480-549

1. Motion made, and Question proposed, "That the Customs duty now charged on tea shall continue to be charged until the first day of July, nineteen hundred and nine, that is to say—Tea, the pound, fivepence.—(Mr. Asquith.)

MR. AUSTEN CHAMBERLAIN (Worcestershire, E.)

If the Prime Minister does not think it impertinence on my part I would congratulate him on the method and manner of his statement. I hope he will permit me to do so on behalf of myself and my hon. friends. He is a master of lucid statement, and he makes his way clear as he proceeds, never wasting time by unnecessary words, and I must say, without any disrespect to his successor, that to listen to such a statement as we have heard to-day must make us regret that we are not to have any more Budget statements from the Prime Minister himself. The statement made by the Prime Minister to-day is, without the possibility of contradiction, one of the most important Budget statements made for many years in this House. It has been the subject, as the Prime Minister has said, of many months' consideration on his own part and on the part of his colleagues, and he may be quite certain that I am not going to be so rash in following him to go, without even a moment for consideration, into any detailed criticism of the great schemes which he has outlined, or the great reforms which he has proposed. I venture however to make one or two observations, I think I can the assure right hon. Gentleman for all who sit on these benches, whatever we may have to say as these debates proceed in the way of criticism of his proposals for old-age pensions, our criticisms, as he himself anticipated, will not be conceived in any hostile or unfriendly spirit. There are distinguished gentlemen outside this House who are opposed to any State-aided system of old-age pensions except such as we have been long accustomed to through the Poor Law. I doubt whether there are half a dozen in this House who take the same view. We have, without distinction of party, watched the growth of this movement. Many Members on both sides of the House have contributed to the formation of public opinion on the subject, and I think the state of public opinion has reached a point where this question had to be dealt with in some form or another by any Government on the first occasion on which they could see their way not merely to make some provision in the current year, but, to use the right hon. Gentleman's words, on the first occasion on which they could lay the foundation of a future scheme on a solid basis. I am not likely to under-rate the difficulties which surround any attempt to deal with this question. I have been very conscious of them, as I have shown by such references as I have made to the subject in public or in this House, and no doubt, whatever solution the Government had arrived at, they would have been open to much criticism, as I have said, not of an unfriendly character, but of a reasonable and friendly kind. There is much to be said against any particular settlement at which you arrive. For my part I have favoured the idea of a contributory scheme. I am well aware of all the difficulties that can be urged against such a proposal, but I believe that the growth of public opinion was such that many of those difficulties were lessened by criticism, and it had become possible to frame, or it might have been possible to frame, a contributory scheme, which would also have been a compulsory scheme, with the prospect at any rate of sufficient acceptance. That is my own view, and had the Government decided to follow that course, of course there would have been certain obvious advantages. If you frame a contributory scheme you at once lessen the burden on the Exchequer, or, to put the matter in another way, which, I think is clearly a practical way to state it, any given amount of money you have at your disposal will go much further than it will with a non-contributing scheme. It will contribute to make provision for a much larger number of people when those people make a personal contribution of their own during their young years, and if you associate with those personal contributions of their own what I should have liked to see, compulsory contributions from those who employ them—if the Chancellor of the Exchequer will allow me again to quote Germany—on the German model, with a given sum of money you could reach three times the number of people you can reach with a non-contributory scheme. But I am bound to recognise from the moment a responsible Minister propounds a noncontributory scheme, and as long as that non-contributory scheme is not rejected by the House, which I do not anticipate it will be, the non-contributory scheme holds the field and a contributory scheme becomes, in my opinion, impossible, not merely in the present but in the future. No one supposes that the right hon. Gentleman himself desires, and no one desires, that, assuming his scheme to go through this year as he has described it, it should be the last word said about pensions or pension schemes in this House or the country. He has cut his coat according to his cloth, more or less, and he has fixed the amount of the pension to a certain extent on the conditions of the income of the pensionable people, and in regard to the amount of money he has available. But I imagine that he and all of us would like the pension to begin at a lower age, and would like some other changes in the direction of making them more beneficial at least to the deserving poor—I do not use that word in too narrow a sense—than he has been able to do. I think the tabling of a non-contributory scheme of this kind makes it impossible in any development we may make in future to go back to any contributory form, and more difficult than it otherwise would have been to go the length which all of us would desire to go. I will make one more observation on that part of the right hon. Gentleman's statement. He sketched to us some of the conditions which were to debar people who had arrived at the pensionable age from receiving pensions. He sketched them very vaguely, and I make no complaint whatever about that, but naturally all the conditions about the granting of pensions will need careful examination as we proceed with the discussion of the measure. I confess that, as I listened to the right hon. Gentleman, I felt that unless the scheme when it is developed is better safeguarded than would at present appear, I should fear that there might be a good deal of abuse and that the pensions might reach a good number of people who were very little deserving of such special aid from the State. After all, what you give to those who do not deserve it, you withdraw from those who do deserve it. And with any given sum of money I would much sooner that it was spent on the more deserving than wasted on those which have no claim on our sympathy and who in their earlier years have not behaved as the average decent citizen should. I guard myself by again saying that I do not want anything in the nature of an inquisitorial investigation into character. I do not believe that to be for one moment possible, and I do not mean to suggest that every man should be excluded who has not for all the years of his life a stainless record. But I do say that those who have been ne'er-do-wells, those who have been thriftless, those who have been of no use to themselves and very likely a burden to their relations and to the State during a long period of their lives, have not a claim to the benevolence of the State, such as the great mass of the more deserving poor have. I will not press that part of the subject at the present time. I think it would be unfair to myself to do so, and after the speech of the right hon. Gentleman, it would be unfair to his statement and to all the work that that statement indicates to attempt to criticise his plan in more detail.

I turn from that to his general Budget statement. There are one or two observations which I would like to make. He opened it with a cheerful account of the state of trade during last year. No doubt the figures of exports and imports were all that the late President of the Board of Trade could have desired, if he had had the liberty of framing them for himself. But I do not think that they indicate an equal degree of increase of prosperity throughout the nation; and I think that a more careful inquiry would show that except in one or two very large and very important trades no doubt, but still except in these one or two trades, last year was not a particularly good year either for the manufacturers or the people they employ. If you look at the Board of Trade returns as to the increase of wages, you will find that increase on which the Prime Minister commented; but if you analyse them a little further you find that it is almost wholly accounted for by the increase in the amount of wages paid to miners and to operatives in the textile trades. If you take out the miners and the operatives engaged in the textile trades you have practically taken out the whole additional boon which this prosperity has brought to the working classes of the country. Well, that is not a very satisfactory feature. But incidentally, with regard to an observation which the Prime Minister threw out, I mean his reference to coal—I suppose he wanted me to tread on the tail of his coat—I do not quite know on what authority he said that we, on this side of the House, were pledged to the abolition of the coal tax.

MR. ASQUITH

The right hon. Gentleman knows what I was referring to.

MR. AUSTEN CHAMBERLAIN

What I said to many of my friends was that this tax, of course, stood in a peculiar position. It was unlike any other tax in our fiscal system, and I expressed to them, partly on that ground, partly by reason of the nature of the trade, and partly by reason of the political influence which the trade had in this House, my belief that the tax could not be permanently maintained. But as far as public utterances are concerned I have gone no further than that. I do not believe that the tax had up to this time last year done any injury to the coal trade of the country. I made no other promise to the deputations which waited upon me than that it might be repealed. But that is very different from saying that it was right and proper to take off the coal tax when the right hon. Gentleman did take it off, viz., at a time when the export coal trade was booming and when the demand was growing. It has been growing ever since, and had the tax been continued in force, the result would, in my opinion, without the shadow of a doubt, have been that the foreign purchaser would have paid the tax. I do not believe that the coal trade of this country has benefited in the least since the abolition of the tax. It might be benefited when the export trade became slack, but when the tax was taken off it was no benefit to the trade here but a gift to the foreign purchaser of the money he would have had to contribute to our Exchequer. Of the other taxes, the most noticeable feature in the results of last year is, I think, the repetition in the failure of the Excise to show any elasticity. When outside Committee of Ways and Means, we congratulate ourselves on this fact, because it means lessened drinking habits on the part of the people; but when inside Committee of Ways and Means, it gives some of us a little anxiety, because the drinking habits of the people are themselves the cause of so large a proportion of the revenue we collect. Indeed, I think the right hon. Gentlemen—the Prime Minister and the Chancellor of the Exchequer—when they are in the course of other debates denouncing the liquor trade at large, should remember that, so long as they hold office, they are partners in that trade, and partners who go off with a very large portion of the "boodle." Now, it is not excessive drinking which profits the revenue; neither is it excessive drinking which profits the brewers and the publicans. It is the moderate, steady drinker who brings in the steady revenue. I commented three or four years ago when I was Chancellor of the Exchequer upon the continued fall in the revenue from Excise. Now it has not fallen so much, but it remains stationary. I believe that no doubt in good times there is always a tendency for the people to spend more freely on luxuries of this kind, but does that indicate a permanent change in the habits of the people? There is a permanent change which I do not believe any return of prosperity, however large it may be, will undo. It means that they are increasingly spending their spare money in other ways; that all the additional attractions which games and the opportunity of travel offer, are now being more fully taken advantage of by them, and that if more be spent in this particular way they want to spend less on exciseable liquors. Now, as to our Income Tax Returns. In this connection, as an old Chancellor of the Exchequer, I would like to express my congratulations to the late Chancellor of the Exchequer and his authorities upon the extraordinary accuracy of the forecasts on which they based the returns of income. That must be indeed a source of satisfaction to the right hon. Gentleman. The Prime Minister, however, made one observation in treating of the income-tax which, I think, perhaps, had some bearing on our general fiscal system, and upon the future changes which he foreshadowed in the concluding observations which he made. He said that the reduction in the amount of the tax charged on earned incomes had actually resulted in more income being presented for taxation.

MR. ASQUITH

Had been followed by.

MR. AUSTEN CHAMBERLAIN

Had been followed by more income being presented for taxation; and therefore the right hon. Gentleman thought that probably the removal of a sense of injustice, the idea that there was something to get—even if they were to give something—that there were various motives induced by this change which themselves called forth more income subject to the tax and had brought that income within the purview of the tax-collector. That may very well be true, but if true the reverse action would bring about a reverse tendency. And when you talk with a light heart of a further increase of the death duties and a graduation on a higher scale of the income-tax, you will find that, just as when you offer a boon more income comes forth to the tax, so when you inflict punishment more income is withheld from you. I think that the remarkable fact to which the right hon. Gentleman referred has a direct bearing on the expediency of enlarging the income-tax and death duties on big estates. I congratulate the right hon. Gentleman, without any arrière pensie, or any reservation, on what he has been able to accomplish in the way of reduction of the National Debt. It was an urgent need. I think I am entitled to say that, acting as Chancellor of the Exchequer in circumstances of very considerable difficulty, I added £1,000,000 to the Fixed Debt Charge in order that we might make faster progress with that reduction. I venture to make two criticisms on what the right hon. Gentleman has accomplished, not in an unfriendly spirit but by way of painting in details, which, in the large picture with which the right hon. Gentleman was concerned, may have escaped his notice and might escape the notice of the Committee. The first observation I have to make is that the right hon. Gentleman has, of course, added nothing to the Fixed Debt Charge in the course of the years for which he is responsible. He added £500,000 in one year and some £1,500,000 in another year. But in each case he withdrew these sums by extraordinary Supplementary Estimates. He took for the Volunteers the £500,000 allocated for the Fixed Debt Charge in the first year; and in the second year £1,500,000 for the same purpose. And I have to observe that in the reduction of £47,000,000 in the Debt for which the right hon. Gentleman—not unfairly—claimed credit in the years for which he was responsible, no less than £13,000,000 accrued from the realised surpluses, that is to say from the old Sinking Fund. They are not voluntary contributions which the right hon. Gentleman has made; it was not his intention to make them, but they arise through having under - estimated his revenue, and £3,500,000 of what he claims was really my contribution.

MR. ASQUITH

I quite agree, but I am not claiming that.

MR. AUSTEN CHAMBERLAIN

I thought the right hon. Gentleman included that.

MR. ASQUITH

I quite agree that the right hon. Gentleman left me £3,500,000, for which I was very grateful to him, but it is not included.

MR. AUSTEN CHAMBERLAIN

The sum, being the realised surplus of 1905–6, therefore would be included in the Year 1906–7. There remains about £10,000,000 in all of his own realised surpluses, which are sums which have gone, according to old-established principle and statute, to the reduction of Debt, but which it was not the intention of the right hon. Gentleman to devote to that purpose. He has been enabled to devote them to the reduction of Debt by the fact that he under-estimated his revenue and over-estimated his expenditure, and that he had these balances over at the end of the year. Of the use which the right hon. Gentleman proposes to make of the surplus of this year I have no criticism to make, as far as concerns the small change which he announced in regard to marine policies of insurance. Indeed, I welcome that change greatly. I believe it will be a great boon to those concerned, and will relieve them of some injustice and unfairness which the tax has hitherto imposed upon them. I confess that I am more doubtful about the wisdom of the right hon. Gentleman, who last year most prudently and most skilfully began to collect a nest-egg for his own old-age pension scheme, in this year spending all his available money up to the hilt. It is not as if the old-age pension scheme were the only new expenditure which we can contemplate in the near future. It is perfectly clear that we must have largely-increased expenditure on the Navy. I do not believe that anybody competent to speak on the matter believes that we could compensate it by reductions on the Army. We must have large expenditure on these matters. We have growing expenditure in all other directions—throughout the Civil Service Estimates. All these matters tend to come upon us with increasing force and with added growth year by year. In these circumstances, when the Chancellor of the Exchequer is starting a pension scheme admittedly incomplete and experimental, it is unwise for him to spend his surplus up to the hilt in the present year and to leave nothing as a nest-egg for next year.

Let me say a word upon what has happened in this respect since the present Government came into office. Upon no subject, I should think, were the right hon. Gentlemen opposite, and the Prime Minister in particular, more accustomed to enlarge in the country than on the extravagant expenditure of the Unionist Government. One expectation that they held out to the country was that they would reduce expenditure. Well, have they done it? [A MINISTERIAL MEMBER: They have reduced the Debt.] I said, have they reduced expenditure? It really is not an answer to tell me that they have reduced Debt. The issues for the Supply services in 1905–6 were £109,700,000 odd; the issues for last year are given as £109,185,000; but the Estimates for the current year are £111,934,000. That shows—what we have all along contended—that to a certain extent, according to your opinion of what is important and what is not, you may cut something off here or something there in the Estimates, but you cannot make a material reduction on the whole, because of the new claims which are constantly pressing upon you. And, although there may be some difference as to what may be chosen, in the main there is very little difference between the two sides of the House on that point, because those new claims absorb, and more than absorb, any reductions that you can make. I confess that in those circumstances I am not altogether happy at the resolution which the right hon. Gentleman has come to to balance his Budget with only a surplus of £250,000, and to leave liabilities of several millions unprovided for for next year, except by additional taxation which may then be imposed, or by a reduction in the provision which is at present made for reducing the National Debt. No doubt that figure is fixed at a very high sum at the present time—a very much higher sum than was thought necessary by Mr. Goschen at the time that the dead-weight Debt stood at practically the same figure as at present. But I think the experience of the years which intervened—the experience of the South African War and all that has followed upon it—should lead us to be very slow to come back to such a provision as was made and thought sufficient by Mr. Goschen and other authorities at that time. I myself feel that until we have carried the Debt to a considerably lower figure we ought not to make any material reduction, at any rate in the Fixed Debt Charge. The right hon. Gentleman announced that instead of borrowing for the completion of the public buildings he was going to raid the old Sinking Fund to the extent of £500,000 or £600,000 for their completion. I heartily approve of the action which he has taken. I think it is sensible, reasonable, and wise finance. I make no criticism of it, but I beg him to read the speeches in which a Liberal predecessor, Sir William Harcourt, denounced similar action when taken by us.

MR. ASQUITH

was understood to say that he had read those speeches.

MR. AUSTEN CHAMBERLAIN

Of course, I have had no opportunity of refreshing my memory. I can only say that I have vivid recollections of fierce denunciations in connection with exactly similar proceedings when the surplus which Sir M. Hicks Beach did not wish to devote to the reduction of Debt was applied to the creation of new obligations on account of capital works for the Army and Navy, which is a similar matter. I assume that the right hon. Gentleman will not attempt to proceed far with his Resolutions to-night, but, as usual, will reserve the income-tax or some big Resolution of that kind, on which we shall be allowed to discuss, not merely the subjects immediately raised by the Resolution, but the whole scope of the Budget and of the fiscal system of the country. With that understanding I shall postpone any further observations.

MR. ASQUITH

What we propose to do is to reserve the income-tax and have a general discussion upon that on some future day. But we must have the other Resolutions to-night. There are very few of them.

MR. AUSTEN CHAMBERLAIN

Is it necessary to take the sugar duties?

MR. ASQUITH

Yes, it is necessary to take the sugar duties, but the income-tax raises everything.

MR. RICHARDSON (Nottingham, S.)

expressed his gratitude to the Prime Minister for the message of hope which his Budget would be to those who had been looking forward to old-age pensions. They would realise that this Budget brought within their grasp some of the elements that would help to make for them a little heaven on earth. He was delighted to hear from the Prime Minister that the people were indulging less in strong drink, and that the right hon. Gentleman was able to wipe off a big slice of the National Debt. The present Government would be known in the future as a Business Government. The peaceful settlement of a great industrial war by the late President of the Board of Trade, and the introduction by the right hon. Gentleman of the Patents Bill, added to the present Budget, proved that the Government understood that this nation was not merely a fighting nation, but was also a commercial nation. When last year's Budget was introduced, he voted against the reduction of the sugar tax, believing the working classes would prefer to keep the tax at the rate at which it then stood, because it would then be possible to start old-age pensions. His conduct had been largely criticised in his constituency. He had explained his views to the Trades Council, and they had passed a resolution exonerating him from any blame. He had recently had another interview with them, and without a single dissentient they came to the conclusion that he should vote for old-age pensions, even with the retention of the sugar tax. It therefore gave him intense satisfaction to find from the present Budget that not only were they to have old-age pensions, but half the sugar tax taken off. In the name of 40,000 trade unionists he thanked the Government for their proposal.

* SIR F. CHANNING (Northamptonshire, E.)

said that as one who had identified himself with the repeal of the sugar tax for many years, and had made many appeals to previous Chancellors of the Exchequer on this subject he warmly thanked his right hon. friend for the concession he had made in the remission of half the duty. He had also identified himself with old-age pensions for many years past, and he wished to congratulate his right hon. friend for not having parted with his control over the Exchequer before he had carried out the pledge of last year by launching this important reform, and associating it for ever with his name. The right hon. Gentleman the Member for East Worcestershire had argued that the Liberal Government had not sufficiently reduced the expenditure of the country to meet the expectation of their followers or to redeem their own pledges before the election. That was not a matter on which he should attempt to enter. He had a strong feeling that the expenditure of this country might be and ought to be still further reduced, but he thought that the very fact that they had the late Chancellor of the Exchequer there to-day insisting as he had insisted that the Government had not half fulfilled their pledges to reduce expenditure, and that this grand Budget could accomplish so many things without any such sweeping reduction of expenditure, was the most vivid demonstration of the limitless resources of this country. These mighty social reforms would be accomplished in the near future without, as the right hon. Gentleman had said, cutting down the expenditure of this country to anything like the level his own supporters had expected. The Budget statement was a magnificent demonstration of the triumph of free trade, and a grand record of the purity and soundness of the principles upon which the commerce of this country was based. What was the record of the Government? In three years they had struck off one-twelfth of the total deadweight Debt of the country, and they had reduced the annual charge for the payment of interest upon the Debt by one-nineteenth. This magnificent achievement had been effected by a great Free Trade Government. Last year his right hon. friend had been able to accomplish a reform with which he (Sir Francis Channing) identified himself twenty years previously, when he first became a candidate for this House, namely, the relief of precarious earned incomes. That great and solid reform achieved and carried out by his right hon. friend was shown by the statement to which the Committee had just listened to have been a splendid reform in more ways than one. This year half of the sugar duty had been repealed, greatly to the benefit of the great sugar-using industries of the country, and repealed in exactly the way and at the time that would best meet the interests of those great industries, and while carefully securing to the consumer the whole benefit of the remission it had enabled those engaged in the manufacture of sugar products to get rid of their present stocks at current rates and without loss. He wished to point out the benefit to the consumer from the remission of the sugar duty. It was a matter which really required a good deal of close consideration. He had examined very carefully the incidence of this duty upon various incomes for many years past, and he was in a position to tell his right hon. friend what was the precise measure of the benefit which he had given. Taking the figures as given by the Board of Trade, the agricultural labourer with an income of 18s. 6d. a week on the average, by this remission would receive, reckoning it as income tax, what was equivalent to a reduction of l½d. in the £., while the artisan with 30s. a week, according to his calculations, would receive very nearly five farthings in the £. All this was due to the skilful manipulation of the right hon. Gentleman in dealing with the matter. These were very great and solid benefits, and he congratulated his right hon. friend on the consummate skill, boldness and wisdom which marked their embodiment in the Budget. The other subject with which he had been identified in that House for many years was the question of old-age pensions. The Prime Minister almost complained of the over-zeal of the collectors of Inland Revenue, who had so swept up the arrears of income tax that £750,000 had been passed into the old Sinking Fund and was lost in the magnificent series of achievements which led to the reduction of the Debt, and was, therefore, not available for the old age pensions scheme at the present time. There they had another proof of the splendid triumph of Free Trade principles. [An ironical cheer from Sir F. BANBURY.] Yes; the Member for the City mocked at that, but he should wish to know how the hon. Gentleman regarded the enormous deficits in Germany and the United States as compared with the magnificent record of this Budget, the commencement which was being made by his right hon. friend with old-age pensions, and at the same time this grand reform of the sugar tax—a good pair of horses—which his hon. friend opposite knew so much about—which were being driven at fullspeed through the financial gates of that prosperity which was consequent upon Free Trade. They had £1,200,000 set aside, to begin with, for old-age pensions for half a million of people. He must say at once that he thought the Prime Minister was extremely wise in setting his old-age pension scheme free from many restrictions and limitations and getting rid of the Poor Law tests, the difficulties of which had been pointed out and debated for years past, and which were unworkable and impossible of application. His right hon. friend was right in saying that people who were not actually in prison at the present time should have every chance of enjoying this great boon, but he deeply regretted that he had not assented to the benefit being given to those who were 65 years of age. During the subsequent course of the Budget he should contend very strongly in favour of that age, and he thought very good reasons might be adduced showing the financial possibility and practicability of such a proposal in connection with the Budget scheme laid before the House by the right hon. Gentleman. He believed they could combine a pension scheme for aged persons of from 65 years with the relief from the sugar duty, which was such a magnificent contribution in the present Budget. He was quite sure that hon. Members on both sides of the House were aware that rumours had been current that the proposals for old-age pensions could not be carried out without a considerable addition to and a graduation of the income-tax, additional death duties, or things of that kind, yet here they had the income-tax payers let off with generosity. [OPPOSITION cries of "Oh."] Yes; that was the great feature of this Budget, that they had no graduation, and that they had not increased the death duties. Having listened to many Budgets, he thought the present Budget was one of the most merciful and generous Budgets to the wealthier classes that had been advanced for a long time. There were plenty of resources which might have been very easily tapped in order to secure the enormous benefit to the poorer classes of filling up the gap between 65 and 70 years of age. He knew numbers of poor old people of the most deserving kind in the community; he had sat with them in their cottages, and he knew how great a disappointment it would be that the age had not been reduced to 65 in the present Budget. He contended that the country had vast accumulations of wealth which, in his opinion, might be subjected to a further extension of the death duties, and they would find also in the subjects which they had been discussing during the past week an ample range of financial resources which were within the reach of the Chancellor of the Exchequer, and which might have been used to fill up the gap between 70 and 65 years of age. He would just allude to the question which had been before the House for some days by one illustration. It seemed to him that it would be perfectly open to the right hon. Gentleman, it would be logical, moral, and honest, to impose higher licence duties. The whole of the licensed houses of London and the great towns and urban districts were now paying less than £1,300,000 a year, but if they were taxed on the scale which obtained in New York, they would be paying 15½ millions in the year to the Exchequer. That would mean an addition to the revenue at the disposal of the Exchequer of no less than 14½ millions sterling, which would be more than ample to cover the margin between the ages of sixty-five and seventy. That was a point which they would have to argue later. This Budget was opening the door to the mitigation of the sufferings of old age. Further, the remission of half the sugar duty enormously benefited the community and a great group of industries and would greatly increase employment, while at the same time the wealthier classes were being generously left exempt from additional taxation, which he believed many of them had expected.

* MR. CHAPLIN (Surrey, Wimbledon)

I can assure the hon. Gentleman who has just sat down that I will not attempt to accept the challenge which has been offered more than once from that side of the House on a question which he and right hon. Gentlemen opposite will insist upon calling free trade in this country. But I do desire to associate myself heartily and entirely with my right hon. friend who spoke before me in all that he said, not only with regard to this scheme and the spirit in which it will be met by Gentlemen on this side of the House, but even more, perhaps, in what he said of the character and ability of the statement in which the right hon. Gentleman explained his scheme to the House. If I may be permitted to say so, the thought occurred to my mind often while he unfolded his scheme, that I had heard no explanation of a large measure like this to the House equal to his since the days of Mr. Gladstone, of whose marvellous lucidity of exposition it greatly reminded me, and I do not think I can pay the right hon. Gentleman a greater compliment than that in regard to his two speeches on the Licensing Bill and the scheme he unfolded to-night for old-age pensions. It is to that I intend entirely to confine my own observations. The right hon. Gentleman's scheme differs very materially from the scheme of 1899, for which I have been reminded by him that I was to some extent responsible myself, although I am glad to remember my association with the right hon. Gentleman opposite who served upon the Committee with me, and I for one would have every satisfaction if we were to agree as often in the case of debates in this House as I think we did upon that occasion. I do not criticise the scheme to-night. There will be ample opportunities in future, and there will be many different points on which I and others on this side of the House will all think it our duty to offer opinions. I rise merely for the purpose of asking for some further information on two or three points. I understood the right hon. Gentleman to say he had some reason to believe that with regard to the Royal Commission which is sitting on the Poor Law it was probable that they would recommend that the care of the aged should be taken out of the Poor Law.

MR. ASQUITH

It is not the fact that I have any knowledge whatever whether the Commission is going to do that or not. What I said was that I thought they would in some shape or other give *** effect to the re-classification in different categories of the different classes of persons.

* MR. CHAPLIN

I followed the right hon. Gentleman very carefully with regard to what he said on reclassification, in which I entirely agree with him, but I thought he went further and said he thought it was not unlikely that the aged would be taken almost entirely out of the Poor Law. The next point on which I wanted to ask information is this: I understood the right hon. Gentleman to say that as between the State and the pensioners the obligation to provide the pensions must rest on the Treasury and not on the local authority. Then there was a sentence which followed immediately after that, which I did not catch quite distinctly, and which led me to feel some apprehension that possibly there was an intention on the part of the Government in the time to come to withhold subventions, if they thought desirable, from the local authorities. I do not quite know what the meaning of that sentence was.

MR. ASQUITH

I said it was to be entirely without prejudice to the question what the relations in future were to be between the State and the local authorities in regard to Poor Law expenditure and everything connected with it.

* MR. CHAPLIN

Then there is only one other point—where the right hon. Gentleman came to the question of discrimination. I entirely agree that there must be discrimination. There were four different points, and one was the question of character. The right hon. Gentleman said that the less inquiry made on that point the better. But what is it he proposes? Is there to be no inquiry into character? For instance, I put a question that occurs to me now. Would it be intended that a confirmed, habitual drunkard should have a pension? Is there any provision in the Bill against that; is it intended or not? That is one of the points I should rather like to have cleared up, because it seems to be a very extraordinary thing, with a Licensing Bill to bring about a great diminution of drunkenness, to have habitual drunkards treated as pensioners under the new Bill. As regards old-age pensions, I am aware on this side of the House of no hostility to the proposal in principle, and the scheme submitted to us, when we come to examine it will be fairly considered.

* MR. MCCRAE (Edinburgh, E.)

thanked the right hon. Gentleman for the sympathetic view he had taken on the question of old-age pensions. They all knew the greatwork done by the Chaplin Committee, and one of the interesting features was that although they resolved that their scheme should be confined to the deserving poor, in their estimate of the number of poor of seventy years of age of pensionable character they put the number at 387,000, and the cost at £5,800,000, against the Prime Minister's estimate of 500,000 in number at a cost of £6,000,000. These two sets of figures came very near each other, and he thought it rather a remarkable illustration of how thoroughly the Committee over which the right hon. Gentleman presided had gone into the question. The late Chancellor of the Exchequer had made two observations which he would like to emphasise. When speaking about the coal-tax he added that the political influence which the trade exercised in the House was a very serious element in considering whether that tax ought to be abolished. Might he ask the right hon. Gentleman to cast his mind a little forward, and imagine what would happen if, instead of an export duty on coal, we had a large number of import duties on a large number of articles, and each trade interested in maintaining or increasing those duties? He thought it would be found that the political pressure in the House would be rather alarming. With regard to his observation about pledges that had been made by the Government and by Members on that side of the House with regard to reduction of expenditure, he thought the right hon. Gentleman took rather too superficial a view for an ex-Chancellor of the Exchequer. He said: "What have you done with regard to expenditure?" and he compared the expenditure under the Supply services with what had taken place in a previous year. Might he give him one figure which had perhaps escaped his observation? In the last year for which she right hon. Gentleman as Chancellor of Exchequer was responsible there was, in addition to the ordinary revenue expenditure, a charge of £6,400,000 for loan expenditure as naval and military works, while in the current year the charge for loan expenditure on that head was only £1,100,000. He agreed with the criticism of the right hon. Gentleman, so far as the surpluses were concerned, that though they had gone for a very good object, namely, the reduction of Debt, it meant that they were really taking more out of the pockets of the people than was justified by the national expenditure. It was generally agreed that, although deficits were to be avoided, from the financial point of view surpluses were almost equally detrimental. The accuracy of the forecasts had in past years been remarkable, and perhaps never more so than in the past year, with one exception. They had erred last year with regard to the forecast of income-tax, and it was pointed out in the debates on the Budget of last year that the Chancellor of the Exchequer was rather underestimating his revenue. They found that the remission of 3d. in the £ on earned incomes and the new regulations with regard to income-tax, instead of providing, as the Chancellor of the Exchequer anticipated, a deficit of £750,000, yielded an actual surplus of £1,800,000. He thought, as he said at the time, that the Chancellor of the Exchequer took far too conservative an estimate of the revenue, and that it was their duty to try and make the revenue and expenditure balance as near as possible. In the last two years they had taken £5,000,000 a year out of the pocket of the taxpayer in addition to what was necessary for the ordinary expenditure of the country. Though the surplus went to a very good object; the provision for the Debt ought to be deliberate and not accidental. With regard to the increased produce of the income-tax, the Chancellor of the Exchequer had pointed out that the income coming under the review of the Inland Revenue authorities had increased during the year by £37,000,000, and he attributed that in a large degree to the reduction of 3d. on earned incomes. He humbly begged to disagree with that. If a larger view were taken of that part of the national income, they would find that this £37,000,000 was really no more than the average increase in that income previous to the war in South Africa. He had occasion the other day to go into the figures, and the amazing result was that eleven years ago the income coming under the review of the Inland Revenue authorities amounted to £705,000,000. According to the Prime Minister it was £943,000,000 last year, and this year it amounted to £980,000,000. If they compared those figures they would find that in those eleven years that part of the national income had increased by £275,000,000. It was a most remarkable result. He merely pointed it out to emphasise the fact that though during the years of the war the increase in this part of the national income was very small, and as the Prime Minister pointed out last year only amounted to £14,000,000, this year it had come back to more like its normal figure. He would like to put in a caveat, which he had always done, with regard to the expedition of collection of income-tax in England. According to a Return presented to Parliament the other day, at the end of February of this year, in Scotland they had collected 94 per cent. of the whole income-tax. In England they had only collected 63 per cent. That meant that England had only collected two thirds as against what Scotland had done in the same period. On the other hand, he must admit that the Inland Revenue authorities had made considerable progress in the matter, because in 1901, when he raised the question first of all, the collection in England at the end of February was only 53 per cent., so that they had really made an advance of 10 per cent. Still, he thought the progress was rather slow. One very gratifying feature of the Budget statement was that it showed the great elasticity of the revenue. In 1906 the revenue, including the local taxation charges, amounted to £153,800,000, and the estimate for the present year was £157,700,000. The net remission of taxation already made amounted to £3,500,000. Thus they had practically a revenue of £160,000,000 raised on the same basis as three years ago as compared with £153,800,000 in 1906. He was sure the House was very much indebted to the Prime Minister for his statement with regard to the remission of the sugar duty. It had often been said that that was a war tax, but Sir Michael Hicks Beach said he meant it not as a war tax but as a permanent addition to the National Revenue. The very year in which the sugar tax was imposed the increase in the ordinary expenditure swallowed up all the new taxes, so that the sugar-duty was not really a war tax but was put on in order to provide for peace expenditure. They were all grateful that the Prime Minister had seen his way to make this change and no doubt he had left it to his successor to take off the other half of the duty next year and had thus left something for him to do. The Prime Minister had not dealt with new taxation or with new sources of revenue, and apparently he had left that also for his successor to deal with. The Chancellor of the Exchequer would next year, he hoped, not only take off the balance of the sugar-duty but make the pensionable age sixty-five instead of seventy. They were much struck with the simplicity of the scheme submitted by the Prime Minister for old-age pensions. Hitherto the schemes of foreign countries and those formulated by Royal Commissions and committees had been rather intricate in their machinery, but the scheme formulated by the Prime Minister was very simple in that respect. He wished to point out that those who represented labour in the House, and others representing labour constituencies, who had taken an interest, in the question, desired a scheme of old-age pensions which would insure that the pension should not be given as a charity but as a right. There was nothing finer in any Act of Parliament than the preamble of the New Zealand Act which laid down that it was equitable that deserving Colonials, who during the term of their lives had helped to bear the burdens of the Colony by paying taxes and developing its resources by their labour and skill, should look to a pension in their old age. He did not think anyone expected that a complete or comprehensive scheme could or would be submitted at the present time. He was very much struck with the able speech of the hon. Member for Blackburn upon the Licensing Bill. When discussing local veto the hon. Member said that although it was limited it was better that a new thing should begin in a small way rather than in a more extended form. After that declaration he thought they would have the support of the Labour Party in the proposals which had been submitted for starting an old-age pension scheme at the age of seventy. The present was perhaps an occasion when a bolder and more comprehensive view might have been taken of the question of taxation and something done to get additional revenue in order to provide that an old-age pension scheme should start at the age of sixty-five, but the Prime Minister had refrained from doing anything in regard to increasing taxation or looking out for new sources of revenue. He thought the old-age pension scheme was being started on the right lines and it was capable of expansion. The late Chancellor of the Exchequer said there had been a great increase in ordinary expenditure under various heads and of what he should call beneficial expenditure such as that of education. He thought the spirit of the time was in favour of spending rather more than less money upon education. He thought the present Government had reduced their expenditure in the right quarters. They had charged to revenue what formerly had been charged to loan, and that had tended to increase ordinary expenditure. If they took the year 1905–6, the last year for which the right hon. Gentleman opposite was responsible, they found in comparing the Estimates of the current year that there had been a reduction on Army expenditure of £3,500,000, and on Navy expenditure of £5,200,000, or in all a reduction on those two services alone of £8,700,000. Right hon. Gentlemen opposite would find that at least on armaments a considerable reduction had been made. Not only had they elasticity of revenue, but the total revenue raised compared very favourably with Continental countries. Only last Thursday the German Budget Committee were discussing how to meet the financial crisis in which that country was at present placed with regard to its expenditure. The Imperial Secretary to the Treasury made a statement, and he should have thought that in Germany he would have had a simple remedy. If it were true that tariffs were paid by the foreigner, all the German Secretary to the Treasury had to do was to increase their tariff or else add new tariffs. But he was not surprised to find that the Imperial Secretary to the Treasury in Germany said that there was only one way of meeting the difficulty, and that was by a reduction of expenditure. That was what in this country they had attempted to do, and while in England they were reducing their Debt in the proportions indicated by the Prime Minister, Germany had increased her National Debt by £200,000,000 upon ordinary expenditure, and during the next five years she would have to borrow £10,000,000 a year to meet ordinary expenditure. So that five years hence Germany would have added £250,000,000 to her National Debt in a period during which this country was providing from £13,000,000 to £15,000,000 a year to the reduction of Debt. There was only one way for them to economise, and that was on the Army and Navy. He was aware they must keep up the Navy to a proper standard of superiority, but that ought not to prevent its economy. He had endeavoured to point out that extravagance begot inefficiency, and that economy produced efficiency, but whilst they looked upon the expenditure upon the Army and Navy as a national insurance he wished to ask who ought to pay for it. If the commercial classes were to be protected against the financial disasters of war, then it was only right that property as well as incomes should bear its proper share of the burden. He thought a very considerable part of that insurance ought to be derived from an increase on the income-tax on higher incomes. That would be proposing what was quite legitimate, and what was fully justified by the needs of the nation. He congratulated the Prime Minister on the excellent statement which he had laid before the House, but regretted that with regard to old-age pensions the age limit was not fixed at sixty-five.

* MR. LAURENCE HARDY (Kent, Ashford)

said they would all agree with the last speaker in his statement that the Prime Minister had left the Chancellor of the Exchequer something to do next year. He did not think any Budget possessed more remarkable features than the one just introduced. In the first place, it gave the lines of the new Budget next year which were generally kept secret, and it also left unlimited liabilities to be fulfilled without any income to meet them. They had heard from the right hon. Gentleman the Member for Worcestershire something as to what the needs of next year were likely to be. With regard to old-age pensions a balance of nearly £5,000,000 was to be found this year, but no nest egg was left on this occasion. They knew that the system of loans had been given up, and that involved larger expenditure. Next year in regard to Rosyth they would certainly have to anticipate a Considerable sum of money being required to carry forward that improvement. Every item of expenditure showed an increase, and there was no provision made for that. They had heard that the cost of the advantages given to Post Office servants would come on future years. Incidentally it was most interesting to discover things in regard to which it was not always easy to get information by the process of Question and Answer. They now knew that for some considerable time the House was not going to be asked for large additional expenditure in connection with the Education Bill of this Year. If that Bill were to be pursued, there would be an expenditure of £1,400,000 under it, and provision would have to be made for the money as some portion of the expenditure would fall at the end, if not at the beginning, of the present financial year. He presumed, therefore, that the Education Bill was not to be proceeded with. The hon. Baronet the Member for East Northamptonshire had referred to the effect which the reduction of the sugar tax would have on the domestic budgets of artisans and agricultural labourers, but if he went to his constituents and pointed out what they were receiving in that direction, he should ask them how much they got in connection with the abolition of the coal-tax. He did not think that the remission of the coal-tax resulted in any reduction of the budgets of artisans and agricultural labourers. He himself opposed the reduction of the corn tax and the remission of the coal tax. He did not think experience would show that the reduction of the coal tax would justify the Chancellor of the Exchequer in bringing it up as a precedent when dealing with the remaining taxes. With regard to old-age pensions he was Chairman some years ago of one of the strongest Committees he could remember which inquired into this question. The Unionist Members took a great deal of interest in the question. There was no object which he more desired to see carried out than a just and fair scheme of old-age pensions for the deserving poor of the country. He agreed with the preamble of the New Zealand scheme which had just been read. It decisively provided for a discriminatory scheme; it distinctly said that they desired to give the pension for services well rendered to the State. That was the particular line which he and his friends desired to see followed in reference to any scheme of old-age pensions. They wanted in any such scheme to ensure that the pension should be a kind of reward for services well rendered. In that case it must be discriminatory to a considerable degree. He was glad that the Prime Minister had made the scheme so far discriminatory. He wished to know whether the scheme was to be dealt with in the clauses of the Finance Bill, or embodied in a separate Bill. It was surely a question which should be dealt with by a separate Bill, even if the funds were to be found in connection with the Finance Bill. In regard to the status of foreigners, he wished to know what was the decision of the Government as to the length of residence that would be required before they would be able to participate in the scheme. The Prime Minister said it might be ten or twenty years, but did not tell the House what was the actual number of years decided upon. He thought the limit of 5s. was one which, on the whole, met the case in the rural districts, but the fact that the scheme had been framed in a manner which made it very difficult to enlarge it raised in his mind a question as to how far it really would be suitable for London and the other large towns of the country. These were matters which could not be entered into until they saw the scheme itself. He hoped they would be able to pass some scheme on substantial lines which would not lend itself to desires on the part of others to go one better. When they had dealt with it they ought to consider the question finally settled. Although this must to some extent be tentative, it ought to be the duty of the House to see that it was laid on lines which did not admit of constant bargaining. With reference to the Budget as a whole, he regretted that the Government had not made that due provision for the future which they ought to have done in bringing forward such a large scheme. It might have been better if the Government had waited for the Report of the Poor Law Commission before committing themselves to such a scheme. If they had done so, it might have been possible to start on better and firmer lines. He congratulated the Prime Minister on making such a large remission of taxation. The right hon. Gentleman had in that way put it out of the power of hon. Members below the gangway or elsewhere to make demands for the enlargement of the scheme during its passage through theCommittee Stage.

* SIR WILLIAM HOLLAND (Yorkshire, W.R., Rotherham)

congratulated the Prime Minister, the Government, and the country on the very favourable circumstances under which the Budget had been introduced. They had been enjoying for several years past an exceptional degree of prosperity and the Prime Minister was in clover, but it was by no means certain that the Chancellor of the Exchequer would twelve months hence find himself in such favourable circumstances as they were in that day. He agreed that, while they had been enjoying an exceptional degree of prosperity, it had been a wise course for the Chancellor of the Exchequer to do his utmost to make liberal reductions in the indebtedness of the country. He congratulated him on the reduction he had announced in the stamp duty on voyage policies. That charge had been grossly unfair and utterly indefensible, and he only wondered that so great an injustice had been tolerated so long. The Prime Minister had made interesting revelations in regard to the income-tax, and last year's experience had proved that the lower the tax the higher the proportionate yield. It was a very important discovery to have made, and he thought the explanation given was very intelligible. The success which had been achieved by the policy of differentiation must be very gratifying to those members of the Income-Tax Committee who made themselves responsible for that recommendation. He was glad the Prime Minister had been able to announce a reduction in the sugar tax. If nothing had been done in that direction a great many people would have been smarting under a sense of injustice. He imagined that the right hon. Gentleman would have been very glad if he could have entirely removed the tax. Amongst all the claims made for remission of taxation he thought the right hon. Gentleman had made a very wise choice. The right hon. Member for East Worcestershire thought the removal of the coal tax had been a mistake and that its removal had not brought any advantages. He was sure that Members connected with the coal trade could point to foreign contracts for coal for large amounts which could never had been accepted but for the removal of the tax, and the securing of the contracts must have been a benefit to those engaged in the trade in this country. That day would be historic and memorable as marking the beginning of a system of old-age pensions. That was a subject which many people had been talking about for a great many years, but now the House of Commons had happily begun to take practical steps towards its realisation. It must have been very gratifying to the House to hear that one of the conditions under which provision was to be made for old-age pensions was that it should be entirely outside the Poor Law. It was also gratifying to hear that the experiments tried and the experience gained in other countries had proved to be very valuable to the Prime Minister, and that they were able to learn something from their young and vigorous Colonies. It was clear, from the speech of the Prime Minister, that the Cabinet had given the most thorough and careful investigation to all the schemes and suggestions and difficulties that had been put forward in regard to old-age pensions. Of course it would have been easy for the Prime Minister to have won greater applause and roused greater enthusiasm if he had produced a very much larger scheme, lowering the age and increasing the provision. But they must all, or nearly all, be agreed that it was very much wiser to proceed in the first instance comparatively slowly on this subject until they could learn in the school of experience and then future steps might be taken with much greater confidence.

SIR EDWARD SASSOON (Hythe)

said that he was glad that his hon. friend took a more sober and chastened view of the possibility of British finance than the hon. Member for East Edinburgh, who seemed to exalt in what he considered the great elasticity of our revenue, while omitting from the purview of his reflections the fact that most of our present taxation still stood upon the old level while large reductions had been made on the Army, and they knew that considerable appropriations would have to be taken in regard to the Navy but had been postponed to a future period. The Prime Minister had expounded his Budget with that distinction and power which he had accustomed the House to associate with all his efforts. He would, as a humble Member of the Unionist Party, offer his congratulations to the right hon. Gentleman on having imperishably attached his name to an urgently needed social reform, but, at the same time, one which would place an eventual obligation on the State of certainly not less than £12,000,000 a year. It was perfectly evident that the age-limit proposed would have to be reduced. The question they had to ask themselves was whether the commerce and enterprise of this country, great as was their power of endurance, would bear the weight and strain of this future tremendous pressure. He had no doubt the Prime Minister was right in discarding the contributory basis for his pension scheme. He had very properly pointed out that it would involve the postponement of the concession of pensions to a great many people who had already arrived at the age of sixty-five or seventy. At the same time it was matter of common knowledge that most of the friendly societies in the country were opposed to any scheme of pensions from which a contributory basis was absent; they considered that such a scheme would act in the direction of weakening the sense of thrift, which was, he feared, not very strongly implanted in the British breast, and that it would offer a certain premium to the spendthrift and others. He was sorry that the Prime Minister had not taken the opportunity of making some sort of provision for the increased strain that would be placed on the finances of the country. Again, though the Chancellor of the Exchequer had had three years of abounding surpluses, what was the amount of reduction of Debt that he had brought about? He believed that no more than £2,000,000 had been redeemed from the Debt of the country, for the Committee should remember that the other reductions and redemptions had taken place under the normal operation of the Sinking Fund, and further by the automatic and compulsory application of the realised surpluses each year. He did not know whether his right hon. friend agreed with that view, but so far as he had been able to examine the accounts the real reduction brought about by the Government did not amount to more than £2,000,000. The Prime Minister, he was glad to say, had been able to make a substantial reduction in the tax upon sugar, but he had done nothing for tea. There was no tax of a more cruel nature than that on tea or which showed itself more hideously and repulsively. A tax of 93 per cent. of its value was placed on an article produced by our fellow subjects in India and Ceylon. To keep that tax on tea went to undoing the enterprise of people who were ekeing out a precarious existence, while our own people had to be sweated to enable their small incomes to go as far as possible. Although the Prime Minister had made a most reasonable alleviation in regard to the burden of the indirect taxpayer, he had done nothing for the payer of direct taxation; and it would be found that there would be a sensible departure from the proportion between direct and indirect taxation which every eminent and sagacious financier, from Sir George Cornewall Lewis down to Mr. Gladstone and Sir William Harcourt, considered should be maintained if the equilibrium and stability of our finances were to be preserved. He thought the Committee ought to be thankful that the present First Lord of the Admiralty was not the Chancellor of the Exchequer now, for he distinctly remembered a speech by that right hon. Gentleman last year in which he boldly preached the doctrine that every single penny necessary for the expenditure of the country should be borne by direct taxation. Was it possible for any financial authority to say that the whole or most of the expenditure of the country should be paid by one category of His Majesty's subjects, while the other category—numbering seven-eights of the population of England—went scot free? He would like to call attention to one phenomenon which had been going on and which, according to a Return given to him by the Chancellor of the Exchequer, continued in unabated strength. That was the rate and volume at which British capital was being driven abroad. Even allowing for the theories of the Chancellor of the Exchequer on the point, they were, in the view of disinterested and impartial people who scrutinised these accounts, face to face with a substantial margin of capital which owing to its non-employment here was being driven out of this country by the centrifugal tendencies of our commercial system. Explain the matter as they might, they had to recognise the hard, gaunt fact that there was not remunerative employment for capital in this country, and that, to use the expressive phrase of the President of the Local Government Board, they were unable to "decasualise" labour on that account. In the two years to which he referred,1905–6 and 1906–7, the amount received from profits earned abroad amounted to no less than £15,000,000, over and above the amount normally shown in the accounts of previous years. If they took only half of that sum they had left £7,500,000, which, capitalised at twenty-five years purchase, gave a total of £180,000,000, which must in some form or another have left this, country in order to irrigate and fertilise the centres and sources of foreign enterprises to the disadvantage of our own workmen and the reduction of employment at home. But a Daniel had recently come to judgment in the person of a venerable sage, not in point of age, but in the point of commercial experience. The right hon. Baronet the Member for Northwich had recently besought his Party to bestir themselves and do something for trade, and he used the colloquial term something that would "dish" their political opponents. But the Prime Minister was far too great a stalwart to pay any attention to such an invitation. He said that he remained the guardian of the citadel of free trade, and adhered to the time-worn and strenuously rejected doctrines of that fiscal system. North-west Manchester was the cradle and the nursery of Cobdenism. It was true that the shrine was still there, but the fire was dead. That constituency had spoken in no uncertain tones, and they had had electoral manifestations in several other typical constituencies in the country. He happened to be the candid friend of the Party opposite, and he would tell them that if they wished to place the finances of the country in a proper and sound financial position, if they desired to obtain better and more stable conditions of employment for our workmen at home, they would do better to take the advice of the right hon. Baronet the Member for Northwich, to heart. That was the only way in which right hon. and hon. Gentlemen opposite could prevent their depleted resources in the bank of public opinion being exhausted and themselves landed in political and financial ruin.

* MR. STUART (Sunderland)

said he would not be led away from the few remarks he desired to make on the Budget itself by what had fallen from the hon. Gentleman who had just spoken, except to say that the fear of foreign investments on the part of tariff reformers seemed to arise from the fact that they thought that the success of other countries was inimical to our success, whereas there was nothing we should more hope for than the welfare of those with whom we were dealing. There had been a tendency for tariff reform to push its head out of the water at every turn like the head of King Charles the First in Mr. Dick's experiences in Dicken's book. It had to do double duty. Frequently it was in the form of a duty to keep out foreign goods, and that night it was put forward as a means of securing income. First, they had the one leg stood upon by tariff reformers, and then the other, but it did not seem to him that it was possible for them to use both arguments at one time. They were used alternatively; however, and did duty one at one time and one at another. But he did not desire to be led aside from the Budget by tariff reform intrusion. One of the things he was glad to see was the reduction of the tax upon sugar, and he wanted particularly to emphasise his satisfaction that that reduction had taken place concomitantly with old-age pensions, because otherwise there would have been many persons who would have felt that the sugar tax was being kept on to provide those pensions, an arrangement for providing them from which he would absolutely dissent. But he would like in passing to say one word of commendation on the businesslike way in which the Prime Minister had dealt with the sugar tax by taking off the farthing in such a way that the whole remission would reach the consumer. It was a very wise and sensible position to have taken up, and showed the care with which this very important matter had been dealt with. But the main point of the Budget, of course, was the provision or the first time in this country for old-age pensions. It had been pointed out that we could learn from foreign countries, and we could learn a little but not very much; we could learn something from our Colonies, perhaps more, and there had been at least in one of the speeches an indication that our Colonies had done very much better than we had in this matter. But there were not very many thanks due to them. They were relieved absolutely and entirely from the great pressure of taxation which was cast upon this country; that was to say, we had not only to defend ourselves but to pay for their defence, and that was a very important contribution from which they were free. Not only that, but we were burdened by the cost of the defence of the Empire in the past and they were not so burdened, and as to the collection of money they showed not the slightest hesitation in putting on any amount of taxes on our goods. He did not say that they made us pay those taxes, but they had ruthlessly taxed our goods while we were paying for their defence. He did not think, therefore, that they were deserving of any very great credit, but he felt that this country and those who were taking up the burden of providing old-age pensions did deserve a very considerable amount of credit for the step, because it was a large sum of money and would be a very much larger sum. It was his lot at the conclusion of last session to make a complaint of the action of the Chancellor of the Exchequer as he then was and of the Government with respect to their financial action. He complained that they had relieved the rich rather than the poor, and that they had not done anything for old-age pensions; he said that it was hard upon people like himself who were very much interested in an old-age pension scheme, and upon social reformers; that they could only wait, and that he would not take any action to censure the Government until the present session had passed. But now he thought the Prime Minister had responded very reasonably indeed to the requirements of old-age pensions and had started them upon a fairly reasonable basis. He would really challenge anyone in the House to say how he could start old-age pensions partially, and start them differently from the way in which the Prime Minister had done it. It was absolutely essential, in his opinion, and he spoke with considerable knowledge on the subject—it was absolutely essential in connection with a satisfactory system of old-age pensions in this country that they should have a non-contributory system. Had the Prime Minister endeavoured to extend the operation of his scheme by introducing a contributory system he would have done evil and not good. He would rather see the right hon. Gentleman restrict his operation without a contributory system than widen it with a contributory system. He was also of opinion that the question of character should not come into the question of old-age pensions more than in extreme cases, and he was glad to see that the Chancellor of the Exchequer had adopted a reasonable line in connection with that. There were other parts of the scheme upon which the House was so largely agreed that he need not enter upon them, but absolute separation from the Poor Law was one of the essentials of a system of old-age pensions and the Prime Minister had secured that. Surely there were no other points left to work upon except the exclusion of people whose income was sufficient, the limitation of the amount of pension, and the age at which the pensions were to be taken. As to all these limitations he regretted them. He knew from experience that the age must be made sixty-five. They might begin at seventy, but in the end it must be sixty-five, and they might go lower down than that in some cases. Sixty-five was the age at which the workman began to fail, and they did not want to wait until he was completely done but to give him a little bit of the autumn of life to enjoy. He regretted the limitation of age to seventy, and he particularly regretted the limitation of 5s. a week, as his experience was that that was not sufficient. But having begun at 5s. a week, they might go further. He thought, however, the right hon. Gentleman had begun upon the right lines, but the most objectionable feature was that in the case of certain persons it was to be held that they had saved enough. He thought the pension ought to be universal whatever the savings of a person might be. He did not believe that old-age pensions would do any injury to thrift. He had watched many cases, and so far from pensions having any influence in the way of hindering thrift, they had rather the contrary effect and induced people to make a provision for their old age. What did the richer classes do? They all attempted to provide for themselves and their families in their old age, but that did not prevent them from practising thrift. One of the greatest stimuluses to thrift was the desire to add something to that which had been already put by. While he regretted the limitations in the scheme and believed that they would and must give place to a better and more reasonable state of things, he did not find fault with his right hon. friend. On the contrary, he thought the Prime Minister had gone as far as wisdom and prudence would allow him to go in initiating the system. More particularly did he say that, because he thought his right hon. friend had initiated it on the right lines. Under these circumstances he would be glad to withdraw the censure, if such a word could be applied to the words in which he characterised the action of the Government last session. He did not regard the present proposals as anything but an instalment, as a first step in the right direction, a momentous and brilliant step. Hon. Gentlemen opposite said that the right hon. Gentleman did not provide any funds for future development. That might be so, but he indicated the sources from which they might come. The three years during which the right hon. Gentleman had been responsible for the Exchequer would be always brilliant and memorable because of the reduction of the Debt by which the poor as well as the rich benefited. It was an immense advantage to borrow money cheaply. Some years ago £100 was obtained instead of £80, and housing schemes were able to be proceeded with far more cheaply than at present. His right hon. friend had reduced the Debt to the amount at which it stood twenty years ago by far larger instalments than were considered necessary by such great financiers as Mr. Gladstone and Mr. Goschen, and out of the sum allocated for the reduction of Debt might come a portion of money sufficient to deal with this great system. There were other sources also: for instance, higher taxation of the larger incomes. Hon. Members opposite said it was hard to place on the manufacturers and commercial people of the country such a burden as the provision of old-age pensions, but he submitted that it was the duty of the manufacturers, tradesmen, and commercial classes to provide for the comfort in their age of those who had served them all their working life, and if it had to be done through the State instead of through personal action, a large amount must be provided by those classes. Many could be provided for, no doubt, by personal action, but there were large numbers of people, not casual labourers, but people who passed from one employer to another, who could not be provided for adequately by private action—independently of which, in the private action of an employer there was always a certain danger of his appearing to hold an unfair advantage over the workman. That could be avoided absolutely by care as to the system employed, but he was desirous of seeing old - age pensions on a broad basis, and of removing the working classes from the shadow of the workhouse that now hung over them; and, while this scheme was not complete and was only a beginning, he thanked the Prime Minister for having introduced it and congratulated him upon its introduction contemporaneously with the reduction of the tax upon sugar.

* MR. TIMOTHY DAVIES (Fulham)

congratulated the Prime Minister on the Budget he had introduced, although from the observations of the hon. Member for Hythe one would have imagined that no provision had been made during the last three years for the reduction of debt or the limitation of taxation. The hon. Member had attempted to prove that the reduction of debt to the extent of £2,000,000 only was due to the right hon. Gentleman's action. He could only say that during the time the Prime Minister had been in office a good many taxes had been limited which right hon. Gentlemen opposite might have limited before they went out of office. The House were told that the sugar-tax was a war tax, but the war was over four years before the late Government left office, and the tax remained. During the last three years the tea and coal taxes had been repealed, and the income-tax reduced from 1s. to 9d., on earned incomes under £2,000, and in the same period the debt of the country had been reduced by nearly £50,000,000, Whilst during the three years from 1903 to 1906, the last years of the late Government, the reduction was less than £27,000,000. The Prime Minister therefore had done far better than his predecessor. The right hon. Gentleman deserved and would receive the thanks of all who represented great industrial constituencies. The reduction of the sugar-tax was most important. Sugar was not only a food but also a raw material of many industries, and the class of people employed in the sugar-consuming industries were not at the best of times people who could afford to give anything away. In his constituency there were many employed in those industries, and when sugar was cheap it was possible for the employers to keep them on both winter and summer, but when sugar was at a high price many hundreds of them were thrown out of work, the employers finding it impossible to employ them even at halftime. The reduction of 2s. 4d. per cwt. would help those industries greatly, and a large benefit would accrue to the people employed in them and to the poor generally. The establishment of old-age pensions would also greatly benefit those whom he represented, and the same, no doubt, might be said of all large industrial constituencies. He was glad, therefore, that the Prime Minister had laid the foundation. They knew perfectly well that the present proposal was not a finality, but a commencement, and that year by year the age would be reduced and possibly the amount per week increased, as was suggested by the hon. Member who had just sat down, as the money was found for the purpose. By laying the foundation to-day for old-age pensions the right hon. Gentleman had provided for the happiness of 500,000 people next year, people who had done their duty in the past, and into whose lives a little sunshine would now be brought. He would have liked to have seen the pension for old married people living together increased. It ought to be more than 3s. 9d. each; if 5s. was given to a single person, 10s. should be given to an old couple living together, but if 10s. could not be given they should at least have 8s. or 9s., which would enable them to live happily for the few years that remained to them. The right hon. Gentleman had indicated the sources from which some of the money would come next year, but he himself thought a further reduction might be made in the cost of the army, that £1,000,000 or £2,000,000 might be obtained from that source, and so enable the qualifying age to be reduced to sixty-five. He looked forward to the time when the Chancellor of the Exchequer, whose duty it would be to introduce the Budget next year, would be able at any rate to find some means—he had up to the present time been successful in finding his way out of difficulties fairly well—of placing the aged poor in a better position than that in which they were put even by the present Budget.

* MR. NICHOLLS (Northamptonshire, N.)

said that on behalf of a large number of agricultural labourers in the country he would like to congratulate the Prime Minister on the step he had taken, a step not as long as some of them could have wished, but still a step in the right direction. The question of old-age pensions had now got off the platform and out of the papers, where it had remained for years, and where it had been so long that many poor labourers felt that it would never be anywhere else. It had been almost impossible to convince the labourers in the rural districts that a pension scheme of any kind would ever come. He was sure that the speech of the Prime Minister would produce a note of hope in many homes of the poor and in many of our rural villages. They had heard a good deal from hon. Members who were not favourable to old-age pensions, about thrift, and they seemed inclined to think that this scheme would not help thrift. They would never be able to make some of the agricultural labourers more thrifty than they were. It was impossible to do it. He was down in Norfolk last week, where the farmers, without fiscal reform; had experienced a better year than they had had for eight years, both as to crops and prices; yet he found in some quarters of Norfolk that it was impossible to get the wages of labourers raised above 12s. a week. He visited last Friday three large farmers who were holding out, saying that they would not give more than 12s. They pleaded poverty, and said they could not do any more, and when the case was put so clearly to them that they could not stand against the force of facts, their last resource was to say: "Well, if we are forced to give them 13s., then we shall discharge three men to make it up"; and the notices were given last Friday night and the men who had received notices expected to finish on Saturday of this week. How were they going to make men thrifty who had to pay rent, and feed and clothe their children, on 12s. a week, except for the few weeks in hay time and harvest time when they got a little extra? When they became older they had nothing, because when there was an abundance of labour and it was felt that the old men could be done without, then they had to go. The people who lived in these rural villages dreaded the workhouse; they hated the very name of it; they would almost starve before they would even move to let anyone know the state they were in. It was to these thrifty, hard-working, careful people, who knew that if they went to the relieving officer they would be forced into the workhouse, that the 7s. 6d. or the 5s. would be a great benefit, and though everybody knew that was not enough, yet it was as much as could possibly be done in this Budget. That was pretty well clear to some of them. He was anxious to go the whole distance, but he could not himself see how they were going to get any further at present, but he hoped with others to get further before very long. But one question had been puzzling him since the Prime Minister's speech. What was the position of the person who, unable to work any longer, was receiving half-a-crown a week from the parish? In several instances the relief was extended to 3s. a week, but the guardians in some cases found out that the recipient had perhaps two sons who were labourers. Their sons had also families to keep on 12s., yet the guardians called upon each to pay 1s. out of the 12s. towards the 3s. allowed the old parent. He was not quite clear whether such persons who had been helped by the guardians were to be con- sidered paupers. Were these persons to be debarred from receiving the pension because they received 3s. a week from the guardians, 2s. of which was contributed by members of the family? It must be remembered that 3s. did not keep a cottage going, and often a married daughter had to squeeze a sixpence out of her small resources in order to help her aged parents who had helped her in her early days. Was the receipt of half-a-crown or 3s. a week to be a bar to the pension? He would like to get some answer to that. He wished to say a word about the reduction of the sugar duty. That also would be of great benefit in the poorer villages. Not only would the aged poor be helped, but the cottage home would be relieved in regard to one of the prime necessities. Sugar formed some part of almost everything consumed in a cottage home; it was one of the real necessities, especially where there was a large family. He knew what it meant often to have bread and sugar instead of bread and meat. He believed a good many children in the villages knew more about sugar than about meat. They had looked after the aged poor and helped to keep them from the relieving officer and the workhouse, and now the Government had also reduced the burden on this necessity—sugar. Although he would have liked to have gone further, he was bound to say that he congratulated the Prime Minister. He was delighted to be in a Parliament that had been able to remove this pension ideal from book, platform, and paper, to the region of practicability, where it took the form of a scheme to be set working. Some complaint had been made that there were liabilities for the future, and that no provision had been made against them, but there were a great many sources of taxation already to hand and which might be tapped as soon as needed. He wanted to say a word or two with reference to the comment on the speech of the right hon. Member for Northwich. An hon. Member on the other side of the House seemed to think that the hint about the Government helping trade was helping them forward with their fiscal idea. He wondered whether they noticed that the explanation given two days afterwards by the same hon. Member showed quite clearly that what was in his mind was that the one and real way of helping the trade of this country was to nationalise the railways. He wanted to know if they advocated the same principle. He also wanted to say a word or two with reference to continental countries. Reference had been made to the fact that continental countries in granting pensions considered services well rendered to the State. He thought the Government also were considering them. People who had stuck to the villages and had brought up their children, sending in to the towns the best servants, had, he considered, well rendered service to the State and were a class of people whom they ought to consider and to be ready to help. He was delighted that this step had been taken. He had hoped it would have been a longer step, but he was proud to know that this year they had made this step.

* MR. MCARTHUR (Liverpool, Kirkdale)

said his object in rising was to say a word of thanks to the Government for their announcement that the marine insurance duty was to be reduced. He was not an underwriter, so he had no direct interest in the matter, but he had been associated with marine insurance business all his life, and therefore he knew, from practical experience, how very badly this tax had pressed upon underwriters. It had tended to drive business abroad where there was either no duty or a duty much lower than in this country. They were thankful for the reduction, though the Government were not giving them what they asked for or what they had hoped for. In every case of insurance except marine insurance any amount might be insured and the duty was only 1d. They might insure £1,000,000 on a fire policy and 1d. covered it. In the case of marine insurance the duty had been 3d. per cent. on voyage policies and 3d. per cent, on time policies under six months, and 6d. per cent. over six months. It had been urged that the duty on fire and marine insurances should be made uniform, but instead of that the Prime Minister had announced that the 3d. per cent. duty on voyage policies would be reduced to 1d. per cent. There was a great deal of difference between 1d. per cent. and 1d. Nevertheless, they must be thankful for this partial reduction. He wished to ask whether any reduction was to be made in the duty on time policies. He suggested that it should be made uniform with voyage policies or, if not, instead of having 3d. for under six months and 6d. over six months it should be made uniform at 3d. He could not forbear to say one word on the great boon of old-age pensions. He was heartily glad the Government had been able to take this step. He did not think it was a party matter. The reception which had been given to the Government proposal on, both sides of the House showed that they were equally glad with hon. Gentlemen opposite that this great question had been removed from the area of theory into the area of practice. He represented a great industrial constituency, composed almost entirely of working men, and he was convinced that the Budget would bring a gleam of hope to many a dull home and would irradiate many a cheerless heart with a prospect of better times to come. He had come from a contested election not many months ago, and his principal opponent was not Liberalism but Socialism, and hon. Members below the gangway who expressed themselves so moderately in that House and so often led them almost, if not quite, to adopt their opinion, went down to that constituency not singly but in battalions and preached undiluted Socialism. He felt that if they were to fight Socialism, which was undoubtedly making considerable advance among the working population, they must fight it with social reform, and one of the great weapons of social reform was the introduction of a scheme of old-age pensions. He was glad the proposal had been made, in his judgment. on sound lines, and that they had a small beginning, because they could never take a step back, and he believed they would go on. The proposal had been framed on such sound lines that as the competency of the country increased to deal with the matter, so they would be able to make the provision more complete and more generous He was also very glad indeed that the sugar-duty had been reduced. That should be a great, benefit to consumers and manufacturers. Many people would regret that there was no reduction in the income-tax which, except as regarded the favoured class, was still to be on a war footing. But he hoped direct taxation would be relieved next year.

SIR F. CAWLEY (Lancashire, Prestwich)

thought attention ought to be paid to the Prime Minister's observation that income-tax was talked of as if it were 1s., whereas it was nothing of the sort. The great majority of people paid only 9½d. He joined in the great joy with which the old-age pension scheme would be welcomed in the agricultural districts. As regarded those who had Poor Law relief he would be glad to know for a certainty whether they were going to receive the pension instead. He did not feel any apprehension in the matter, because he thought that everybody who now received 2s. 6d. in poor relief would be allowed to come within the scheme. Any other conclusion would be absurd. The only criticism he had to make on the Budget was that he would like to see the whole of the sugar duty taken off, not only because it was a necessary of life, but because it was the raw material of a very large trade. The confectionery trade had suffered enormously ever since the Sugar Convention and since the duty was put on. In the last two or three years there had been more people thrown out of employment and more failures in the confectionery trade than perhaps in any other trade in England, and, sugar being a raw material of that trade, the duty interfered very much in our competition with foreign countries. Even at the expense of not reducing the Debt of the country so rapidly, although he was very much in favour of reducing Debt, looking at it as a business proposition he would prefer to have had the remaining duty taken off sugar. It would be not only a right down good business transaction, but the means of finding employment for a great many people, which was one of the things they most wished for. He would be very pleased indeed if they could get the Chancellor of the Exchequer to consider the question at a later stage. The hon. Baronet had made a good deal of play in regard to the recent speech of his right hon. friend the Member for Northwich. Hon. Members opposite and the Press seemed to think that because his right hon. friend said something about doing more for trade that he was going in for protection. Anyone who knew him knew that it was nothing of the sort. What he really meant was that the trade of the country could be really looked after more by those in charge, and when they considered that the Chancellor of the Exchequer had passed the Patents Act and was responsible for the London Docks Bill they would see that the matter was left in very safe hands. He thought his right hon. friend had the matter of railways and canals in his mind. Any idea of tariff reform was absolutely absent from it. It showed a great dearth of any kind of imagination for hon. Members immediately to jump at the conclusion that because he said something about increasing trade he meant tariff reform. The hon. Member for Hythe seemed also to deplore the fact that money was going out to foreign countries. The reason was the great extension of railway enterprise in new countries, and better interest could be got on capital. What was the real criterion of the prosperity of a country or a firm? It was its credit. The Prime Minister had shown that our credit was infinitely higher than that of any other country in the world, and that was instanced some little while ago when the London County Council offered a loan at 3½ per cent., and it was subscribed some hundreds of times over; while Germany offered a national loan for 4 per cent. at a discount, and it was only half applied for. When he heard Members opposite trying to make capital out of the Government's not introducing tariff reform he thought the fact that our credit was in a superior condition to that of any other country in the world was an absolute answer.

* MR. EVERETT (Suffolk, Woodbridge)

heartily congratulated the Prime Minister on being in a position to have the handling of a very considerable surplus. It was pleasant to think that during the past three years each year had shown a substantial surplus, and the general condition of the industries and the agriculture of the country had been more prosperous than for a long time past. He fully hoped and believed that as long as this Government continued in power so long would surpluses continue to roll into the national exchequer. He congratulated the Prime Minister almost more for the use which he had made of the considerable surplus of which he had had the disposal. This was a people's Budget. It was the most popular Budget that had been introduced in his life time. It would gladden the hearts of the people in every street of every town and in every lane of every village. To hear that the long talked-of old-age pensions were in the position of being realised would rejoice their hearts. He was also glad to hear that they were to have half of the sugar duty taken off, because that was one of the most iniquitous taxes ever imposed on the country. He might say that the Liberal Party Meant to have the whole of that tax off if this Parliament went on to its full period. At any rats, they were thankful to have half of it swept off during the present year. Every time the poor man or woman looked at the sugar basin they would think with gratitude of what the Government had done to undo some of the evil which the late Government did to them. To make a real beginning with old-age pensions was a thing he had longed to see, and he thanked God that he had been spared to see an actual financial proposal made by a responsible Government. He was glad that the pensions were to be upon a noncontributory basis, and on such lines that they could be easily extended to a universal old-age pension scheme. The Government had made a beginning, but it was only a beginning, and they were so grateful that a definite beginning had been made and on sound lines that they were not at all disposed to quarrel with minor details. It was a bold thing to bring forward such a proposal, and they would now be able to go to their constituents and meet them with the greatest delight to inform them that this comfort for their declining days was promised and would be a reality if they were spared until next Year. He hoped they would be able to do away with the provision which stated that when the husband and wife were both spared to the age of seventy, the pension would be a smaller one. The proposal now made to give pension to the aged poor was the greatest boon that any Government had ever bestowed upon the people of this country since the repeal of the Corn Laws, and its benefits would be felt throughout every village and town in the country. Not only would the recipients be pleased, but all their relatives and friends would rejoice with them. With all his heart he thanked the Government for bringing, forward these proposals. He was thankful that he had lived to see that day, and to see a Liberal Government bestowing on the people of the United Kingdom such blessings as were undoubtedly contained in the present Budget.

MR. ARTHUR HENDERSON (Durham, Barnard Castle)

said that, as one who had listened attentively to the Prime Minister unfolding his financial, plans for another year, he almost felt-sorry that the right hon. Gentleman was putting forth his last Budget statement. During the three years he had occupied the position of Chancellor of the Exchequer he had managed to demonstrate to the country something of the financial possibilities which they possessed as a people. Having regard to, the many great schemes of social reform which the right hon. Gentleman and his colleagues had laid before the country at one time and another, it was well that they should begin to see that the country had those financial resources which it was possible to tap for the purposes of advancing the schemes to which the Government were pledged. It must be to all sections of the House a matter of great congratulation that the Government had succeeded in the past three, years in making such a substantial inroad into the National Debt. They all realised that until that bad been done, it constituted a powerful argument against either the present or any other Government launching into schemes of social reform involving great financial cost. He congratulated the Government upon the use to which they had put the major portion of this year's surplus—he referred to the £3,000,000 they had devoted to the remission of the sugar tax and the amount to be utilised for old-age pensions. He had voted for an Amendment condemining the sugar tax each year since it was imposed, and he felt very strongly on the point. Those who took a deep interest in the life of the working classes knew that there was no taxable article which entered more into the life of the poorest of the people than this commodity which the Prime Minister had seen fit to relieve of taxation. He assured the Committee that he would have rejoiced greatly if the Prime Minister had seen his way clear not only to take off part of the sugar tax, but to abolish it entirely. The Prime Minister had very properly reminded them that not only was it a tax on the food of the people, but a tax on raw material used in many industries, which had been seriously affected since the tax was imposed for war purposes. He was afraid that the remainder of his remarks would not be of quite so harmonious a character. He was delighted that at last the Government had seen its way clear to make a beginning with regard to the great and important social problem of making some provision for the aged poor. There were one or two features in connection with the scheme unfolded by the Prime Minister with which he was in the most cordial agreement. He was delighted that the Government had been sufficiently bold to initiate the scheme on a non-contributory basis. It would have been one of the most offensive suggestions that could be made in regard to any scheme of old-age pensions that they should put a tax upon the economic necessities of the great mass of the people who were to be the recipients of such pensions. He was delighted to think that the Government had kept the scheme entirely free from that most objectionable proposal. He was also glad that the Government had determined that whatever scheme was ultimately put into operation it should have no connection whatever with the Poor Law. He was sure that such a proposal would have been very objectionable to the great mass of the people. He was also pleased that the charge for old-age pensions was to be national rather than local, for that was making a beginning in the right direction. Having said that, he would now proceed to make one or two criticisms in connection with other parts of the scheme. His first criticism was that the scheme was not quite what they had been led to expect. The question of old-age pensions had been before the country for something like thirty years, and most of the leaders of the Liberal Party at one time or another in the country and in the House had made speeches which justified him in saying that the scheme now proposed was not what they had been led to expect. He would make one quotation to show that he was justified in expressing the disappointment of his colleagues and himself that the scheme did not go further. He had before him a quotation from a speech delivered to a deputation which waited upon the late Prime Minister and his colleague the then Chancellor of the Exchequer, who was now Prime Minister, on 20th November, 1906. He remembered that it was a very large deputation, the majority of whom were supporters of the present Government. The deputation also included a number of Labour Members and trade unionist representatives. What was the reply of the Prime Minister, after the case had been fully stated by the Member for Morpeth and the Member for the Blackfriars Division of Glasgow? The late Prime Minister replied that— He agreed that the only satisfactory method of dealing with the question was by a universal plan by which a pension should be paid to everyone who applied for it, with, of course, certain well understood exceptions. Those exceptions were criminals and lunatics. In the same speech the Prime Minister also said that he was against contributory schemes because they involved inquisitorial machinery, and he further stated that far from a pension sapping independence or undermining thrift, it would have the opposite effect, and he again asserted that any scheme must be universal in its application. The Committee would notice that in the short extract he had read it was definitely laid down, both at the beginning and at the end of the extract, that the scheme of old-age pensions whenever it was adopted must be universal in its application. Having regard to that declaration, he was justified in saying that the scheme did not come up to that standard, and therefore it was not what they had been led to expect. There were two serious objections to the scheme. In the first place, the qualifying age was too high. Those who had studied friendly society and trade union statistics knew that few men who had been engaged in hard toil throughout the whole of their lives would be any better off for a scheme of old-age pensions at the age of seventy. It seemed to him a great pity that such a high limit had been fixed, for this reason. He thought that most of the representatives of the working classes in the House would admit that it had been clearly demonstrated during the last few years that working men were being discarded at an earlier age than ever before. They did not talk about a man being too old now at sixty-five to seventy. Hundreds and even thousands of men who had reached the age of fifty or fifty-five were, as they knew too well, being refused employment if they showed any tendency to stoop or had grey hairs. Therefore, it must be seen that there was very little chance of a man who was thrown out of work at the age of fifty-five, or even sixty, getting a pension, because he would have nothing with which to keep body and soul together for another ten years; and therefore he would get no benefit at all. It seemed to him that there was little justification for placing the age limit at seventy. It was true that the age was placed at sixty-five when the agitation began thirty years ago, but industrial life was then entirely different from what it was to-day. He believed that if the agitation had been but beginning, having regard to the changed circumstances in industrial life, no such high limit as sixty-five would have been suggested, but probably the age limit would have been five or ten years earlier. Moreover, it seemed to him that the whole argument of the Prime Minister went to show that this country possessed magnificent financial resources to which future Chancellors of the Exchequer might resort. Statistics went to prove that during the last thirty or forty years the finances of the country had been growing by leaps and bounds. In the great agitation in connection with free trade, in which the Labour Party had joined with the Liberal Party, one great argument used in defence of free trade was that we were getting on exceedingly well, that exports and imports and national income went to show what magnificent resources this country had. If that was so, could there be any reason why sixty-five years should not have been substituted for seventy years? Reference was frequently made by the Prime Minister to what was being done in other countries. He himself might be wrong, but, having looked fully into the question, he did not find a single scheme either in Belgium or in any part of the Colonies where the age-limit was fixed so high as in the scheme unfolded to the Committee that afternoon. [An HON. MEMBER: What about Germany?] He was not going to refer to the German scheme at all; it went on entirely different lines from the schemes in operation in Belgium and in the Colonies, and he did not think anyone would dare to get up in the House—at any rate he would not be able to hope for a great deal of success in the country—and propose the German scheme for the wage earners here. He wanted to offer a second criticism in regard to the income-limit which was to prove a disqualification for the pension. That was to his mind—and he thought he had every Member of the Labour Party with him—the greatest defect in the whole scheme. What was going to be the effect of this income limit on the very best of the working classes? They were, it would be admitted, to be found among those who had been best disciplined in connection with the trade unions and friendly societies. He would give one or two illustrations. First of all, there was the magnificent organisation which his hon. friend the Member for the Black-friars Division of Glasgow so ably represented. The Amalgamated Engineers, whose organisation embraced 110,000 members, entitled members paying subscriptions for forty years to a pension of 10s. a week. The printers' organisation, with 32,000 members, paid 10s. a week after forty years. The boiler-makers and the steam-engine makers had similar rules. These were only a few cases, and others could be named. [An HON. MEMBER: The boiler-makers get 11s.] That was so. What was going to be the result of the proposal made in connection with the scheme unfolded by the Prime Minister? The members of those organisations during a long course of years paid subscriptions up to the point of sacrifice. The President of the Local Government Board would agree with him on this point. The workers, even in the trades to which he had been referring, earned 34s., and in some cases 32s., a week, and they paid probably into both their trade union and a friendly society, they endeavoured to live respectable lives, and in the circumstances, the elimination from their wages week by week of their contributions to these organisations involved a sacrifice. Yet under this plan, notwithstanding their willingness to make some preparation for the day of feebleness and old age, they would receive no old-age pension, because they had, as the reward of their own sacrifice for forty years, got 10s. a week from their trade union. He asked his right hon. friend the President of the Local Government Board whether he thought it desirable that such a premium should be placed on thriftlessness, for that was what it meant. The thriftless, who had never joined a friendly society or trade union, could at the end of seventy years, if they had then any life left, come upon the pension fund of the State, and the other men would be denied that privilege.

THE PRESIDENT OF THE LOCAL GOVERNMENT BOARD (Mr. JOHN BURNS, Battersea)

No, no. I am sorry to interrupt the hon. Member, but he has assumed that 6,000 members of the Amalgamated Society of Engineers, whose superannuation ranges from 7s. to 10s. per week, would be disentitled to a 5s. pension under this scheme. He is entirely mistaken. The whole of the 6,000 men will be entitled to what this pension scheme confers. It is over 10s. and not up to 10s. that is the mark.

MR. ARTHUR HENDERSON

thanked his right hon. friend for that interruption; but was he not aware that there were in the rules of the engineers arrangements whereby the men could rise to a maximum superannuation allowance of 10s. a week.

MR. JOHN BURNS

Under this scheme every man entitled to that maximum of 10s. superannuation would be able to receive the 5s.

MR. ARTHUR HENDERSON

was delighted to hear that. It seemed to him to be going further than what he gathered from the speech of the Prime Minister. His remarks had been made on the speech of the Prime Minister, from rough notes taken while the-right hon. Gentleman was speaking. Taking for granted that the fact was as his right hon. friend said, what about the boiler-makers with their maximum superannuation of 11s.? Merely because they paid for a shilling more they would be disqualified. He thought he was right in that case. Supposing that a man took 10s. a week from the Engineers' Society; he ventured to say that that man might have made such arrangements as put him in the position of getting 2s. or 3s. per week from some other source—say from his friendly society. In that case he would get nothing from the State. He wanted to show that the more disciplined and the more thrifty a man had been the worse he would come off, because he got nothing in the shape of 5s. a week from the State. That seemed to him to be putting a premium on thriftlessness, and refusing to recognise the sacrifices made by the great majority of the organised workers of the country. He hoped the Government were not wedded to these two points, especially the latter. He was bold enough to say that if he had to choose between a concession on this point, and the reduction of the age-limit to sixty-five, he would perfer the former, which would secure some alteration being made in the income rate. He hoped that between now and the introduction of the actual Bill providing for old-age pensions, the Government would look into these aspects of the case and bring them into harmony with Colonial practice.

MR. FELL (Great Yarmouth)

said that this might be called a fair weather Budget, presented in a year of most unexampled prosperity—a year, as the Prime Minister had said, when the imports and exports were the largest ever enjoyed by this or any other country. But, as the Prime Minister himself had pointed out, there were signs that those years of abounding prosperity were coming to an end; that the returns for the first three months of this year had convinced him of that April showed a very heavy drop indeed—£9,000,000 in imports and £4,000,000 in exports. He knew that Easter had intervened, but, notwithstanding that, the drop was so great that they should speak cautiously in regard to next year and the years to come. So that in congratulating the Prime Minister on the Budget he had brought in, they could not congratulate the Chancellor of the Exchequer on the prospect of an equally abounding Budget next year, because next year they would have to face the great expenditure on the Navy which had been foreshadowed, and which must cause much anxiety if combined with a considerable drop in the exports and imports. In referring to the income-tax, the Prime Minister had made one slight omission. He described how he had reduced the tax on earned incomes under £2,000 to 9d. in the £, but the right hon. Gentleman did not refer to the fact that he had gained £750,000 by no longer allowing the return of tax on falling businesses. That was a very substantial quid pro quo. In regard to the pension scheme, in which most of them heartily concurred—[OPPOSITION cries of "No."] Well, the majority; he knew that on all accounts it might not conduce to the prosperity of the country. He did not think that any allowance had been made in this year's accounts for the expense which would be entailed by the preparations necessary to be made for the payment of the pensions at the beginning of next year. He admitted that in New Zealand, as the Prime Minister had said, the pensions were administered very cheaply. He granted that nearly all the work connected with the pensions was done voluntarily, but he did not believe that it would be done voluntarily here. In New Zealand the magistrates made all the inquiries—and he had some knowledge of the scheme in that Colony—into the payment of the pension and he could assure the Chancellor of the Exchequer that there would be many great difficulties in regard to the proof of claims. It was a fact that many people in England went by two names; they saw that by the police reports. Very frequently a man was known in one part of the country by one name, and by a different name in another part of the country. It was easy for him to get neighbours to testify that he was So-and-so here, and So-and-so there. In fact in each district they might find neighbours to swear affidavits as to their bona fides. There would be, therefore, great difficulty and expense in proving their claims on the part of many poor people who would not be able to bear the expense themselves. The claims would have to be prepared by lawyers, who would have to obtain evidence of identity and proof of age by the production of birth certificates. All that would have to be done by the State, and would entail very considerable expense on the country. Not a day, therefore, should be lost in commencing preparations. He also pointed out that it would be very hard that, while two sisters living together would each receive the full pension or 10s., a husband and wife in the next cottage would have their pension cut down to 7s. 6d.

* MR. CHIOZZA-MONEY (Paddington, N.)

said that a friendly critic of the Prime Minister's proposals felt himself under a very considerable difficulty because the Budget before them was not complete. The chief point in the Budget, and that on which the attention of the country would be rivetted, was the scheme of old-age pensions; but it was a remarkable thing that while they had such a scheme set forth they had not likewise set forth the means of paying for it. It was said that the scheme would cost £6,000,000 a year, but they were only providing in this Budget a sum of £1,200,000. That was to say, there was a sum of nearly £5,000,000 which was not budgetted for, but provision for which would have to be made by the Chancellor of the Exchequer in the succeeding Budget. Therefore, they had not a complete Budget before them. That consideration should have more weight when it was remembered that the Estimates of revenue for the current year on which this proposal was based, seemed to be higher than the circumstances warranted. He did not know whether his right hon. friend had seen that day's trade returns. In the first three months of this year, the imports of the raw materials of industry had decreased by £20,000,000. That meant a falling off at the rate of £60,000,000 per annum, compared with last year. This diminution, again, meant a loss in wages to the workmen of this country of fully £100,000,000. Therefore, he feared that the estimated revenue from Customs of £32,600,000, and from Excise of £35,500,000 had been exaggerated. He passed to this further consideration, and put it to the Committee, who it was, on the approach of bad times, chiefly suffered? They knew who it was chiefly. It was not the drawer of dividends or of rent. The man who chiefly suffered was the man who earned weekly wages, and they knew at the present time that in this, or in succeeding weeks, batches of men would be dismissed from their employment, and that a number of men would suffer shortly by being asked to work short time, as for example, in the Lancashire cotton industry. Therefore they had the more reason to direct their attention to the distribution of the wealth of the country, as an outcome of its trade, and the more reason to adjust their taxation so that it fell upon the right shoulders. He had listened with interest to the Prime Minister's lengthy exordium, in which he put before them the financial strength of the country, after it had been tried very sorely indeed. The right hon. Gentleman told them that in twenty years they had done this remarkable thing. They had almost cleared off the payments for a war which cost fully £225,000,000 of money. The right hon. Gentleman had demonstrated conclusively that the financial strength of this country was very extraordinary. But what followed? It seemed to him that while the exordium demonstrated the wealth of the country, the proposals which followed it had little regard to that wealth and prosperity. The sugar-tax had been referred to, but after the Prime Minister had been reminding them of the millions in which the wealth of the country was expressed, they found him discussing whether it was wise to take a farthing or a part of a farthing off the sugar-tax; That seemed to him to be in singular contrast with the exordium which had relation to the extreme wealth of the people of the United Kingdom. He would like to call attention to the increase of the income-tax in the last ten years. In 1897 the aggregate income of the income-taxpayer was £705,000,000, and in 1907 it had increased to £935,000,000 or by 33⅓ per cent., as nearly as possible. That was an increase of £230,000,000 of money on the incomes of the payers of the tax, or £23,000,000 a year; so that one year's increase would more than suffice to give old-age pensions of 5s. per week to every old man and woman in the country. Those were the facts to which they must have regard in reference to these proposals, and although the Prime Minister demonstrated the national wealth he thought his proposals did not. He was inclined to agree with the Labour Party as to the limitations which had been attached to the pension scheme. If those limitations were imposed they deliberately shut out many men for whom they ought to have as much regard as for those who were included. It was perfectly true that many thousands of men who drew trade union pensions were also men who obtained money in other directions. These were superannuated members who ran a little shop, and had a small income of over 10s. say running up to 11s., 13s., or 15s. a week. He did not think these forms of thrift should be discouraged by the payment of a pension only to such men as had not been thrifty. He did not believe in a system of penalising thrift, and he hoped the Government would reconsider that particular point, as well as the fixing of the age at seventy, which, after all, was a very advanced age indeed, the number of people who lived to it in this country being exceedingly small. The hope which the scheme held out to the working classes was really a very small hope, and the Government certainly had the means at their disposal to be more generous. Referring to the means of raising the money to carry out the social reforms to which the Government were pledged, the hon. Member went on to deal with the assessment for the income-tax, and said that the Government had, in view of the number of incomes of £5,000 and upwards, the means to their hand if they cared to apply them of being more just and generous in this particular matter. There was no doubt whatever in his mind that those whose incomes exceeded £5,000 a year had an aggregate taxable income of over £200,000,000 a year. There was also this consideration, that whether we were spending much money or little, whether our national expenditure was £50,000,000 or £200,000,000, it still ought to be raised equitably with due regard to the people who paid the money, and he thought there was cause for regret that the Government in the Budget had still left alone the question of graduation of the income-tax. It was true that they had the rough graduated steps formed by the abatement system upon which had been grafted differentiation up to £2,000 a year between earned and unearned incomes. In what position did that leave the income-tax? It left it in so complicated a position that it was necessary for the Prime Minister to remind the Committee that the great majority of the people of this country did not pay a "shilling" or even a "ninepenny" income-tax. A very grave injustice was done under this system. A man with £2,000 a year paid £75 tax on earned income, whereas a man with £2,200 paid £110, or £35 more, although his income was only £200 more, through the drastic methods of the present system. He appealed to the Chancellor of the Exchequer to sweep away the present system of abatement and differentiation and to substitute a graduated scale which would do justice to the middle classes, and at the same time yield a larger sum, if necessary, to the Exchequer. The Liberal Party had a great responsibility. If they did not democratise the finances of the country and show that under a free trade system they could finance social reform—and he did not think anyone on either side could say that he was satisfied with such a system of old-age pensions as was set forth in the Budget—they would open the door to those who represented that another fiscal system was necessary in order to raise the necessary funds. The hon. Member for Northwich had pleaded with the Government to adopt a liberal trade policy, if it wished to retain the confidence of the trading classes. He desired to add the plea, that if they wished to retain the confidence of the working classes, they should throw off the policy of laissez faire, create a positive policy, and take measures to democratise our finance and place the financial burdens of the country on the right shoulders. Let the Chancellor of the Exchequer do for the income-tax what the late Sir William Harcourt did for the death duties in the celebrated Budget of 1894.

SIR F. BANBURY (City of London)

thought he could not do better than take up the challenge of the Prime Minister, who said in the course of his speech that if he were criticising his own speech from the Opposition side he would say that he made little provision for the present, it was all for the future. His sympathy was with the Chancellor of the Exchequer, who next year, if he still occupied the same position, would have a very difficult task to perform. The Prime Minister had confessed that he could not tell what this old-age pensions scheme would cost, but he thought £6,000,000; that there was no foundation upon which an accurate estimate of the cost could be based. If that was so, the Committee was taking a leap in the dark. As he could not say what it would cost, the only provision the right hon. Gentleman took in this Budget was £1,250,000. It would be admitted by everybody, including the right hon. Gentleman, that next year there would have to be a large increase provided for the Navy, in addition to which the Chancellor of the Exchequer would have to provide a further £5,000,000 for old-age pensions. No indication had been given by the Prime Minister of how that was to be provided, except that there was the new Sinking Fund which might possibly be reduced. When the late Government was in power, and the question of reducing the new Sinking Fund was broached hon. and right hon. Gentlemen opposite assailed that proposition with criticisms. But when that reduction was made it was made for two very important reasons: the first being to increase the Navy which was not sufficiently strong, and the second the South African War. Those were two extremely important reasons for which it was necessary that a certain sacrifice should be made. He did not think the instance given by the right hon. Gentleman could be taken as a parallel. What was that instance? The Prime Minister took 1889, twenty years ago, and said the dead weight of the National Debt then was £960,000,000. At the present moment it was also £960,000,000, and because the debt now was reduced to what it was then it was legitimate to reduce the new Sinking Fund in a year's time. If the right hon. Gentleman had taken 1899, ten years ago, he would have found the dead weight of the debt was £620,000,000 and not £690,000,000. The right hon. Gentleman told the country at the time of the elections that the first thing they had to do was to place the finance of the country in the position it was before the war. Therefore, if the right hon. Gentleman wished to be consistent, he should have taken 1899, and not 1889, in which case the Chancellor of the Exchequer could not afford to reduce the fixed charge on the debt until the debt was reduced to £620,000,000, and not £690,000,000, as it would be in a year's time. The right hon. Gentleman had also left out a very important factor. They had no Irish Loan at that time. The Irish Loan was eventually to be £120,000,000; it was now £30,000,000, and the right hon. Gentleman had left out of consideration both the £30,000,000 and the £120,000,000.

MR. ASQUITH

That is not part of the National Debt.

SIR F. BANBURY

said they were liable for both principle and interest, and it was charged on the Consolidated Fund, and there was no difference between the two things. Therefore, the Chancellor of the Exchequer must not regard the dead-weight debt as £690,000,000, but must add to it the amount of the Irish Loan. In that case the argument of the Prime Minister fell to the ground as to the reduction of the fixed charge for the reduction of debt, in order to provide funds for old-age pensions. A great deal had been said about the abounding prosperity and great wealth of the country. Was it not a fact that Consols could be bought to pay £2 l0s., the highest rate of interest they had yielded for many years? In 1896 the return they gave was £2 6s. Was this the time to talk of abounding prosperity? Consols were lower now than they had been for twenty years. All the gilt-edged securities were in such a state that it was almost impossible to realise money upon them. Only that day he had received a letter from a well-known stockbroker saying that the giltedge security market was in a parlous condition. The finances of the country were in a by no means satisfactory condition, and they would be in a no more satisfactory condition if the Government added to the burden of the nation without giving compensating advantages to the ratepayers. The old-age pension scheme had been received by those in favour of it with the proviso that it was very good as far as it went, but it did not go far enough. It had not been placed before the country half- an-hour before hon. Members lose from all sides of the House, and said seventy was too old, 5s. not enough; that the 10s. must be abolished and restrictions must be removed—that was the way in which the scheme had been received. The right hon. Gentleman had said it was possible that somebody might say that the days of ancient Rome had come back; that the daily dole had come. The amusements had not yet come. In Rome they came together, we had not got them but they would come. The right hon. Gentleman had also said that no doubt some old-fashioned people would say that in this reform we were travelling down an inclined plane, but, said the right hon. Gentleman, no reform was ever carried without such prognostications being made. He read the other day a statement rather apposite, he thought, to this matter—a statement made by a very high legal light, Lord Halsbury, the late Lord Chancellor, who said— For instance they might say, and the sentiment was more than 2,000 years old, that democracy sometimes led to a position of things in which public men both spoke and acted as if they were acting not for the good of the State but to please the popular mind at the moment. He had no wish to emphasise that, but to the old-fashioned mind, which according to some hon. Gentlemen ought now to be in a museum, it appeared that that criticism might be applied to all the Members of the House who advocated an old-age pension scheme at the present moment. Was it correct that a person earning 10s. a week was to be included in this scheme, or was he to be disqualified by reason of his earnings?

MR. ASQUITH

The income must not be over 10s. a week.

SIR F. BANBURY

said he understood, therefore, that an income of 10s. a week would be included and the person with an income of 10s. 6d. a week would be excluded. But how about the paupers? How was that going to work? Would a man whose friends took him out of the workhouse to-day be qualified for a pension in a month's time? He understood that criminals were not to have pensions when they were sentenced, but were they to have them when their sentence had expired and they came out of prison? These were important points, and the people who would have to pay wanted to know something about them. Perhaps the Prime Minister or the Chancellor of the Exchequer would answer these questions when he came to reply. The right hon. Gentleman had said that the cost of the Post Office was going to be £450,000 a year more, and that that would result in a settlement of the Post Office grievances. He did not know where the right hon. Gentleman got that impression, because he received letters every day from postmen saying they were not only dissatisfied but that they were going to raise the question of further increases and had memorialised the London Members to receive a deputation. He hoped the right hon. Gentleman would reply to the various points he had raised.

* MR. THEODORE TAYLOR (Lancashire, Radcliffe)

said there was surely no more profitable form of national expenditure than giving a little money to some old people. The hon. Baronet had said that the country would not prosper so long as they spent money and the ratepayers got no benefit from it. He did not know any better kind of benefit that the ratepayers ever could get than to provide pensions for the poor old people. When the hon. Baronet was speaking, he could not help contrasting this expenditure with the wasteful expenditure on war contracts in South Africa when money went in millions like water. He thought that was a bad form of expenditure, and he could not find a better form of expenditure than on old-age pensions. He gave Members who voted for the proposal every credit for voting for it not to curry favour with the electors, but because they believed it was a sound principle to give old-age pensions. The hon. Member for North Paddington had uttered that evening one of the most astounding fallacies that he had heard in his life. He was a plain business man, and in his own industry of woollen cloth manufacture they had been suffering from the high price of raw material, and he knew the cotton trade was the same. The hon. Member for North Paddington, in warning the Prime Minister, asked if he had noticed that in the first four months of the year the importation of raw material had fallen by £20,000,000. He multiplied that by three and assumed that the importation of raw material would go down by £60,000,000 this year, and he said from that that they would have a less expenditure in labour of £100,000,000. As if a reduction in the money value of raw materials imported necessarily meant less volume and therefore less employment! He had never heard such an impractical view put forward in his life. He ventured to say that the reduction in the price of cotton and wool which had taken place would tend to increase the amount of labour employed. He was delighted with the Budget though it did not do all—not half—of what he would like to see. He would like to see old-age pensions for everybody at sixty and the sugar tax swept away all at once; but they were not children and could not expect impossibilities. He believed the Labour Party knew very well—as they all knew—that in this Budget two very important things were established. Just by cutting off a farthing of the sugar tax that tax was doomed. The Prime Minister had indicated plainly that the remainder of the tax must go before long. And in the next place they had got the thin end of the wedge of old-age pensions. He was glad that the Government was committed and the country was committed. He was certain the country was committed because he was perfectly sure that the party which had been inspired by the right hon. Gentleman the Member for West Birmingham to take up the cry of old-age pensions that were now being begun by his side would never go back upon it. The country as a whole was pledged to it, and it was a happy day for him that he was a Member of the House when this idea was first made a practical question. No doubt the lessening of the sugar tax and its ultimate abolition would be somewhat inconvenient to those who had it in their heart to exchange it for corn and meat taxes later on. The sugar tax was as hateful to him as old-age pensions were desirable, because it was in effect a poll tax. He believed the consumption of sugar would be increased by the reduction of the tax by over one-half. He was sure its increased consumption would be still greater when the tax was entirely swept away. By the tax they did not merely take money out of people's pockets as in the ease of a tax on luxuries, such as motorcars, where the people could afford to pay, but they compelled the people to consume less of useful commodities. This kind of expenditure promoted the people's well-being. Sugar was a raw material, and as the representative of a constituency which had several industries in which sugar was a raw material, he begged most heartily to thank the Government for reducing the tax. It would promote the trade of the country and the welfare of the poor. He had studied the question as an employer with the practical purpose of trying to give to working people old-age pensions, and had reluctantly had to come to the conclusion that it was practically impossible for employers in most industries to do it. He was glad, therefore, the Government had taken it up. It was possible for railway companies, banks, and permanent institutions to give pensions, but the average employer of labour in manufacturing and mercantile industries had no permanence and in many cases could not afford to do so. He thanked the Government on every ground. He wished once more to commend to the Chancellor of the Exchequer an expedient for bringing before the people of the country the nature of our national income and expenditure. If they printed a summary of the Budget for the current year upon the income-tax demand papers, the payers of the income-tax who were not an uninfluential section of the community, would be likely to take more interest in future in the expenditure of the country. When they grumbled they would be able to see what they were paying for; and, if they were such patriots that they wanted a large Army and Navy, perhaps their spirits would be quieted. If they were economists, it would stimulate their interest in public expenditure, and, he thought, promote economy in the rightful direction.

* MR. HELME (Lancashire, Lancaster)

said the Budget would be received by the country with feelings of deep and genuine satisfaction, because in it they had further evidence of the great skill and courage with which the right hon. Gentleman the Prime Minister, was prepared to develop the policy of the party which he led, upon sound finance. If there was one thing above another that would assist the commercial development of the country, it was the reduction of Debt and the wise application of the money raised in taxes and so it was that they, the Members of the Liberal Party, hailed with satisfaction a Budget in which two features were the establishment of a system of old-age pensions and the reduction of taxation upon the food of the people. With regard to the spirit in which the establishment of old-age pensions would be received they had the satisfaction of feeling that there was a general acknowledgment that it was but the beginning of a system, and he thought the fears and criticisms of the hon. Member for Barnard Castle might be considerably discounted, because of the fact that, although 10s. was the limit of to-day, it was possible and intended to arrange that in future, when they knew the cost and they had an increased income they should be able to proceed in directions which would put a premium upon thrift, and the regulations under which this system would be administered would not in any degree put a premium on thriftlessness. He thought the workers throughout the country who supported the Liberal Party at the general election would feel that they had now good evidence that in the responsibility of office the Government had given effect to the principles they then professed, and that in continuing their confidence in the Liberal Party they had the best guarantee that their desires would be fully carried out. So it was that he begged, as one of the rank and file of the Party, to express the satisfaction which he believed his constituents would feel in the two principles that had been established on a free trade basis, and in looking forward to the development of the industries connected with the sugar trade, he was sure they would have an opportunity for increased employment, and at the same time the weekly house bill of the cottager would be relieved in a way that would bring contentment and satisfaction to the people.

MR. COURTHOPE (Sussex, Rye)

expressed satisfaction that the right hon. Gentleman had seen his way to make a start with old-age pensions. He, for one, had always wanted them, and was glad that a start had been made. He would not go into the details of the pension scheme, but he wanted earnestly to call the right hon. Gentleman's attention to one point which he had omitted in his Budget, and which was admitted on all sides to call for redress. He thought some relief should have been given to local taxation in respect of national services. The burden of national services on local taxation had become heavier and heavier each year, and was now almost intolerable, and great injustices and many anomalies arose from the fact that the bases of local taxation and Imperial taxation were so extremely different. The Prime Minister, replying to a deputation a few weeks ago, said he thought the people who raised the question of local taxation, and tried to get something done for the ratepayer, lost sight of the fact that the ratepayer and the taxpayer were very often the same person. He had not lost sight of that fact. He was well aware that in relieving the local rates, to some extent, of the burden which they now bore for national services the whole relief would not be felt by them, but injustice would be removed, and the burden of national services would be spread over a much wider area than at present. The Royal Commission which considered the whole question of local taxation had reported that the following five services were of a national character—police, lunatics and asylums, education, roads and bridges and poor relief, but that 82 per cent. of the cost of those services was borne by the rates. It would be possible to go into elaborate detail, showing the injustice of the system even in urban areas, but for the moment he was only concerned with rural areas. It was the tenant farmer who suffered most severely under the present system, in spite of the fact that under the Agricultural Rates Act he was only assessed at half the rateable value. The relief given by that Act was quite insufficient. To begin with, the agricultural rates grant no longer filled the gap it was intended to fill when the Act was passed. It was less than half what it should be if it carried out the original intention of that Act. But that was not all. In spite of the relief of the Agricultural Rates Act it would be found that the rates which the farmer had to pay, regarded in relation to the profits which he derived from his business, were enormously in excess of the rates paid by the owner or occupier of any other form of property. He was rated not only on property but on the raw material of his business, his stock in trade, and these remarks did not apply to any other class at all, though, of course, to a minor degree comparisons of a similar kind might be made between the shopkeeper and the banker and other classes of that kind. But it was the farmer who suffered most, and he still hoped the right hon. Gentleman would see his way to carry out to some extent the recommendation of the Royal Commission, and give some relief to local taxation. If one looked for a moment at these services one realised how extremely unjust the burden was. Eighty-six per cent. of the cost of the main roads and bridges fell on the local rates, although the greater part of the wear and tear of the roads did not arise at all from the locality. In these days of rapid locomotion, motor cars, and so on, the wear of the road in a particular spot had very little bearing upon the use by the people living in the neighbourhood. It had often been said that all these matters must await a Valuation Bill. But a Valuation Bill was not in the least necessary. An allowance could be made on the surface area of the road to be maintained and in respect of the police and lunatics per head. In the case of education there could be an increased grant per head, and the same with poor relief, and he could not really see how any one of these matters was dependent at all on valuation. The Royal Commission found that £40,000,000 out of the total of £56,000,000 which these services cost fell upon the rates. In the state of prosperity which the right hon. Gentleman was able to show he thought some means might be found of changing that proportion. If the right hon. Gentleman could do anything of that kind it would give great satisfaction to a far larger number of people than perhaps he realised. Possibly he was not aware what a strong feeling there was in all the rural districts of the country on the matter. He urged him to give it his kindly consideration and to do something if he could.

MR. AUSTEN CHAMBERLAIN

There are two questions I should like to put to the right hon. Gentleman which I ought to have put when I spoke earlier in the evening, but they escaped my memory. The first is as to legislative procedure in regard to old-age pensions. I rather assume that there will have to be a separate measure for the administrative provisions and that they will not be included in the Finance Bill. Perhaps the right hon. Gentleman will tell us whether that is so. The other is a question I should have liked to put to the Prime Minister when he was speaking but for the inconvenience of any interruption. He drew our attention to the fact that the issues last year from the Exchequer were £2,000,000 less than the Estimates and Supplementary Estimates combined, and in passing, he spoke of that money having been saved. What I wanted to know was what proportion of it was due to the expenditure having actually been less than was required, and what proportion was due, if I may use a technical expression which the right hon. Gentleman will understand, to over issues over previous years?

MR. ASQUITH

I cannot tell at the moment. If the right hon. Gentleman will put it in the form of a Question, or, still better, reserve it, I will look into it.

THE CHANCELLOR OF THE EXCHEQUER (Mr. LLOYD- CEORGE,) Carnarvon Burghs

I rise to ask the House if they can see their way now to give us the Resolution. There are five or six, and we are now taking the first, on tea. When it is realised that, after all, full discussion will be possible on the Income-tax Resolution, I think the House might see their way to accede to the request. With regard to the first question of the right hon. Gentleman, old-age pensions will not be dealt with in the Budget but in a separate Bill, and there will be opportunities for discussing all the points of detail which have been raised. On the whole, it is perfectly obvious that this is not an opportunity for entering into all those details. The Bill will be introduced and tabled in course of time. No doubt there are a great many details which we ourselves will have to consider. My right hon. friend just outlined the scheme, but the Bill will be introduced at an early opportunity, and the House will have a full chance of discussing all the details, especially the important points put by the hon. Baronet. We fully realise how important they are. The questions which have been raised have been very suggestive and will be useful to the Government when they come to draft the Bill. I trust the House will now see its way to allow us to get the Resolutions. There will be a full opportunity of discussing them when the Finance Bill is introduced.

MR. MORTON (Sutherland)

did not want to stop the Government getting their Resolutions at once, but he wanted a distinct understanding that he should have the same opportunity that he would have if he choose to go on. He had been waiting to bring forward matters in which his constituents were concerned, and in which he had a right to be heard as much as anyone else. As he understood that he would have a full opportunity he would give way to the Government.

Question put, and agreed to