HC Deb 03 May 1909 vol 4 cc749-854

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 ten, that is to say:—

Tea, the pound fivepence."

—[The Chancellor of the Exchequer.]


This is the beginning of what everybody the least acquainted with the signs of Parliamentary times will know must be a very long and arduous and complex discussion. How long that discussion will go on I know not; but the Chancellor of the Exchequer has decided to make proposals, many of them so novel, all of them so complicated, covering so great a field of finance, and, let me add, so large a field of politics, that it is quite impossible for this House readily or quickly to deal with the questions that are put before it. Certainly it would be perfect folly on my part to attempt this afternoon any minute survey of the Budget proposals. The Chancellor of the Exchequer himself occupied nearly five hours, four of which were devoted to these proposals, the preliminary hour being consumed in a general electioneering manifesto. But in the four hours which he devoted to the strict business of finance he was compelled by the magnitude of his subject, through no fault of his own, to deal with the matters with such brevity, and the matters themselves were so difficult, that even now neither the Committee nor the country are really fully in possession of the effect of his proposals. He has told us in the course of answers to questions this afternoon that he thinks we had better reserve questions of detail until we come to the Budget Bill, in which the details will be set forth, and that the discussion on the Budget Resolutions is inappropriate for clearing up all the doubts and misunderstandings to which his statement, almost inevitably, has given birth. I for my part quite agree with him so far. I agree that there is a large number of questions which can only be properly dealt with by this House when we have before us the concrete, specific, and detailed proposals of the Government, combined with the method in which they propose to carry them out. I shall not attempt either to forecast precisely what those details are nor to criticise what I imagine is the machinery which the Government mean to bring into existence in order to give effect to them. For my own part, in the remarks I am going to address to the House, I shall not only absolutely avoid saying a single word about the very large number of points raised by the right hon. Gentleman, but I shall in regard to no head or topic on which he engaged our attention last Thursday, attempt to go into detail. I shall merely deal with the broad general principles which he has adopted in laying his proposals before us. I have said that the first part of his speech was much more like an electioneering manifesto than I have ever yet heard from a Chancellor of the Exchequer in making his annual statement. I do not think it would be either convenient to the Committee or in any sense appropriate that I should traverse I will not say all the statements of policy, but suggestions of policy which he made with regard to "Dreadnoughts," with regard to contributory schemes of old age pensions, and with regard to all the other topics on which he engaged our rather surprised attention a few days ago. There was, however, one part of the earlier segment of his speech which did touch on finance and on which I must say a word, and that was the Development Grant which he is going to set up in this country.

I have no objection whatever to a Development Grant being set up. The Government of which I was a Member on more than one occasion dealt with certain aspects of the agricultural problem of Ireland. As I understand it, the right hon. Gentleman the Chancellor of the Exchequer proposes to deal with the less acute problem in Scotland and England. I must observe, in the first place, that I think the right hon. Gentleman did very scant justice to what has been done for English agriculture, and to what the condition of English agriculture is. I am quite sure strangers in the Gallery, if strangers had been admitted to the Gallery during the course of the right hon. Gentleman's speech, would have taken away the idea from the Debate that in the opinion of the Government English agriculture has in the last hundred years lagged behind the agriculture of other countries, and that our record in that matter was one of which we have little reason to be proud. That is not my view, and I do not believe that it is the view of any Gentleman really acquainted with the progress of agriculture in this country. It is quite true that agriculture in this country owes very little or nothing to organised efforts, or to patronage by Government. It is quite true that has not been a British tradition. We have so far, in this matter, I take it, been individualists to excess. Nobody now supposes that our individualism has been unfruitful. On the contrary, the progress, and all that has been done for British agriculture without the aid of the Government, is in the highest degree creditable to every class connected with agriculture, occupiers, owners and everybody else connected with that great industry. In many respects we still retain the lead, but we have obtained it, in so far as we have it, entirely by the individual spirit, ability, and efforts of the landlords and tenants of this country. But let me say, further, that we have gone through almost the gravest crisis that ever attacked an industry. The crisis of the last 20 years, without any assistance from the general body of the public tax-payer or Government, not, indeed, without great suffering and loss to all concerned, but, on the whole, as I think, with credit to all those who have sustained the struggle and, in some respects, a very unfortunate industry.

But I quite agree that the time has tome when something more must be done, and must be done in the way of organised effort with Government assistance. My complaint is not about the policy, but it is about the methods which the right hon. Gentleman is adopting of carrying that policy into effect. He proposes that the resources of this new department are to be obtained by abolishing the old Sinking Fund. I am amazed that that suggestion should come from him, and I am doubly amazed at a suggestion of the kind coming from a Member of that Front Bench. They deafened us during the first year or two of office by explaining the wonderful things they had done for the reduction of debt. When we examined what they had done for the reduction of debt, we found they had continued the Sinking Fund at the level established by their predecessors, and in addition, through the old automatic Sinking Fund, they paid off £13,000,000 or £14,000,000. That method of diminishing debt the right hon. Gentleman desires by his proposal permanently and wholly to abolish. I do not believe there is a single one of his predecessors, whatever party he belonged to, going back through 80 or 90 years during which the old Sinking Fund has been in existence, who would not regard with dismay the suggestion which he has now made. What does it amount to? What is the Old Sinking Fund? The Sinking Fund is the money unexpended at the end of the year through one or two causes. Either the Chancellor of the Exchequer has made a miscalculation, or because the Department economises in the money that Parliament has voted. Surely an extraordinary method of endowing agriculture is that we are asked to give money to this purpose, not fixed in amount by the needs of agriculture, not fixed in amount by the ability of the Chancellor of the Exchequer of the day, to find money deliberately and consciously out of the resources of taxation to give to the new Department, but to find it by the accidental miscalculation of one public officer or by the economy of another. That is a very amazing method by which to support a tottering industry. I would suggest that both the control of this House over its finances, and I had almost said, the decencies of administration would require the Chancellor of the Exchequer, and those who frame estimates, to come down in the ordinary way at the beginning of the financial year, and say, "We estimate that the needs of this Department require so much. We are prepared to give that sum, we put it in the estimate, and we are going to spend it in such a way."

Observe what a stimulus to extravagance and to over estimates. The Chancellor of the Exchequer says he is very anxious to improve the prospects of the Department, but not very anxious to talk too much about the methods by which the department is to be affected. He has only under those circumstances to miscalculate and by the mere silent operation of the tax collector he finds himself endowed with the money which he wanted, and which he did not tell the House of Commons that he wanted, and what are the great spending Departments going to do? The criticism, and the only valid criticism which was passed on the system of the old Sinking Fund, was that it was always alleged that great Departments of State, or one of the spending Departments, knowing that its unexpended balances will not go to carry out its own purposes and to pay off its own debt, are not too anxious to save here and pay there, because they know that the result of their saving and paying will simply be that the General Fund will be augmented. It seems to me that that tendency, if it exists, and in so far as it exists, can be largely augmented by the present proposals. Is the Admiralty going to endow agriculture? What interest has the Army Department in afforestation? All the Departments of State, especially the great spending Departments, will henceforth, if the proposal of the Chancellor of the Exchequer is en- dorsed by Parliament, which I can hardly believe, feel that every economy they make on the Estimates adopted by Parliament is an economy done not on behalf of their own Department, but on behalf of a Department in which they have no concern and no interest.

That is the only comment I have got to make upon what I call the first portion of the right hon. Gentleman's speech, in which he dealt not merely with the means of raising the money, but with a miscellaneous catalogue of the objects on which he proposed that that money should be expended. I wish to speak henceforth upon strictly finance proper: upon certain portions, but only portions, of the financial proposals which he has made in his Budget. I shall begin by discussing the manner in which he has treated taxes on property, a subject which, whatever our opinions may be, everybody will admit is of vital importance to a sound system of finance. You may think there ought to be no property; you may think property ought to be taxed slowly and surely out of existence. You may think it ought to be taxed fairly and equitably, according to the general principles which have hitherto dominated civilised society, or the best thought of civilised society—I do not say always their practice. Whatever your view may be, the way you deal with property is one of the most important things which either the Chancellor of the Exchequer, the Government, or this House could possibly have under consideration. This critical and difficult question as to the treatment of property arises when you treat equal blocks of property in different ways. I should like the House to distinguish between quite two different forms of differential treatment which have been or may be meted out to property—a differential treatment simply depending upon the quantity the individual has, or a differential treatment depending not on the amounts the individual has, but on the kind of property which he possesses. They are quite different questions, and they must be looked at and treated, I think, quite separately. I take the differential treatment as regards the amount of property possessed by the individual first. That, everybody sees, is the question of graduation. Is it wise or unwise to have a system of graduation, and what are to be its limits? It is perfectly well known to anyone who takes an interest in this subject that John Mill held the view that above a very small minimum all property, whatever its amount, whether it amounted to hundreds, or thousands, or millions, ought to be taxed in exact arithmetical proportion to its quantity. In other words, he thought, and attempted very elaborately to prove, that differential graduation as against owners of large blocks of property was inherently unjust. I confess I have never been able to take that clear abstract view of John Mill. I do not believe myself that could be shown to be necessarily and obviously and on the face of it the proper and the just way of dealing with property. It is not from that point of view of the property owner that I want the Government very seriously to consider whether they are not carrying to a very rash extent the kind of differential treatment embodied in this Budget. I have not worked it out; it has been worked out by others; but I have forgotten the figures. You can work out two methods of differentiating in the succession or death duties and the super-tax which the Chancellor of the Exchequer proposes. I think he will find there is a very stiff graduation by increased taxation as upon the higher forms of income. I do not think it can be demonstrably proved that beyond any particular point graduation is just or unjust if you once grant—and I am not prepared to deny—that some graduation is fair, convenient, and expedient. You cannot point to this graduation or that graduation and say, "Here you have obviously and demonstrably gone beyond the limits of fairness, equity, and expediency." But I do think you have got to remember—and statesmen must remember—that the danger of democracy has been always supposed by its enemies to be that the great body of the community will throw an undue financial burden upon a fraction of the community—that the great body of the people, who necessarily do not belong to the richest class, having the whole power of taxation in their hands, may abuse it. That is the rock on which all the old democracies split. I am not a pessimist about this; I do not believe the people of this country are the least animated by the spirit which did induce old time democracies simply to use their political power to destroy those who happened to be better off than themselves; but undoubtedly it is very easy for a Chancellor of the Exchequer in a democratic Constitution to throw a very great burden on a very small number of people, who themselves, from the very fact that they are a small number of people, have very little practical power of making their voices heard. The Chancellor of the Exchequer rather naively, I think, observed that there was a very strong reason for not beginning graduation at £3,000 a year, because if you began at £3,000 you would have to deal with 20,000 people, whereas if you began at £5,000 you would have to deal with only 10,000 people. That may be very convenient for the Treasury, but when you get up to the higher figure, above £10,000, and when you take the whole question of the death duties and the super-tax you will find that you do extract a very large extra burden—I mean by "extra" more than the exact arithmetical proportion—from an extraordinarily small handful of the community, and that inevitably carries with it, I think, public danger. In the first place, directly you persuade people or make them think, rightly or wrongly, that they are bearing this kind of burden unduly you will make persons who would regard themselves as fairly conscientious in public matters look round for some way of evading what they look upon as an unfair burden. That would matter very little if you were sure that they would look round in vain. Are you sure? Is there the smallest probability that they will look round in vain? The bulk of the great fortunes now are in a highly liquid state—I think that is the proper term. They are not in that form in which they present themselves to the imagination of some rash and ignorant speculators. They do not consist of huge landed estates, vast parks and castles, and all the rest of it. They consist of funds which can be transferred, by telegram almost, from one country to another, and from one occupation to another. Are you sure that a certain proportion of those who are subjected to this very high differential taxation will not only try to evade, but will succeed in evading your duty? And if they do, observe that the evil to the Exchequer, to the country, and to public morality does not stop with the loss to the Exchequer which the evasion occasions. It throws the burden upon others, who are either more honest or possess property of a less mobile character. The idea that you would give anything like an excuse to any class of the community to evade its proper share of obligation to the State is one which, I think, must be repulsive to all of us, and make us cautious. I am convinced that everybody I am addressing quite recog- nises that we ought to be very cautious not to give them any sound or just excuse to do so. I dare say the Chancellor of the Exchequer will tell us before the Debate has gone much further what are the estimates of differential taxation on different incomes under the system which he proposes. He must include not only the super-tax, but the effect of the death duties on various classes of property. I think he will find that the rise is almost dangerously steep.

There is another point in this connection, and it is the only further one I shall make upon this branch of the Chancellor of the Exchequer's treatment of property. He is, as I think, by increasing the death duties and by this new taxation damaging the accumulation of capital in this country, and, by doing so, he is inflicting an injury not merely upon the people whom he is taxing, of which if the taxation were just nobody could complain, but he is inflicting collateral and consequential injuries upon many other classes of the community who benefit at present by this accumulation of capital, and who will benefit no longer if you sweep it out of existence in great blocks as you propose to do, as was done to a considerable extent under the old death duties, and as is done to an additional extent under the new death duties, a process which will be assisted, as I think, and materially assisted, by the new super-tax. These observations, which are all I mean to make at this stage upon the differential treatment of property considered merely by its amount, are observations in the nature of a warning to the Government, and especially to hon. Gentlemen on the other side of the House, who, while I am sure they do not desire to inflict injustice, are, I think, rather reckless in their treatment of this question, and they are in the nature of a warning to hon. Gentlemen below the Gangway who may have wholly different social ideas as to the rôle which what is now property is to take in the regenerated State of the future—but which, in my opinion, can only lead to making the existing system of things worse than it otherwise would be. You must, of course, remember that what we are suffering from now is not having too many rich men, but having too many poor men. I, at all events, quite clearly take the opinion, and am prepared to defend it before any audience that will consent to listen to me, that the community does not lose by having men of great wealth among it. On the contrary, I think it gains. Of course, if you make poor men less poor by having fewer great fortunes, that is another matter; but I do not think you do. If you do not, nothing whatever is gained by frightening capital, by inducing rich men to accumulate their fortunes and to spend them elsewhere than in this country by any of the processes which have commended themselves in past times to speculators of various schools of thought, which I hope and believe have somewhat lost their popularity in the light of modern criticism.

I now leave this differential treatment of property according to its amount, and come to the differential treatment of property according to its character and quality. Here I must frankly say that, in my opinion, the Budget of the Government does very little credit either to their powers of construction or to any perception of the principles which ought to underlie the treatment of property in accordance with its character. The Chancellor of the Exchequer has been very angry when accused, as the authority levying taxes in this country, of having in that capacity used his powers against certain classes of property chosen in no small degree because they differ from him in politics. He is very angry when that charge is made [MINISTERIAL cheers.] I see that hon. Gentlemen opposite think the charge a very unreasonable one. I will defer saying anything further on that point until I come to his treatment of the liquor trade, which I think shows it conclusively. I propose to deal first with his treatment of certain classes of land, and what is called real property. I do not in the least understand on what principle he proposes this differential treatment of one kind of property. He has never explained it. I do not think he can explain it. But I will take his three taxes in turn.

Let us begin with the tax upon vacant land near towns. Why is the Chancellor of the Exchequer going for that particular kind of land? I do not believe it is to get money. I believe it is because he is bitten with certain theories of social and municipal reform, which he will not swallow in their entirety, which he will not take as a coherent whole to be driven to their logical conclusion, but which he nibbles at, and of which he takes a fragment here and a fragment there, hoping that those who do accept the theories in their entirety will haply be content with the morsel which he is pleased to toss to them. If it is not merely a source of income, what is it he hopes to get by his tax on unoccupied land? Is it a just tax? If it is a just tax, ought it to go to the Government and not to the municipality? These are questions which I seriously commend to the attention of the Committee. One reason why I understand the Chancellor of the Exchequer desires it is because he thinks that land near great cities is being artificially held up, that there is a "corner" in land, to use the modern expression, and that those who have what he inaccurately calls monopoly in land round the towns are squeezing up prices with a view to filling their own pockets at the cost of the community, at the cost of, the towns, and especially at the cost of the poorer classes in the towns. I do not believe there is the slightest proof that anything like that is taking place. There may be here and there cases of it. It is very difficult to prove a universal negative, and I am not going to try to prove it. Where it can be proved it seems to me to be a case absolutely and overwhelmingly conclusive in favour of the compulsory purchase of the land by the public in some form which this landowner or these landowners are supposed to be holding up in this iniquitous manner. Buy it, and buy it compulsorily. But it is not a common case, and it cannot be a common case. Take Glasgow, a city which was the subject of a great deal of discussion in connection with all these subjects of land values. I believe it has been calculated that the whole increase of Glasgow can be accommodated by the occupation of new buildings on 40 acres of land per year. Let anybody think how insignificant is the fraction of land belonging to the many different owners forming the present periphery of Glasgow to be extracted from those different owners per year! It is quite a new doctrine—at any rate, for those who conceive themselves to be economists of the modern type—to suppose that you get worse results by leaving people in these cases to pursue their own ordinary interest than by driving them artificially to sell where they do not want to sell, and driving them to build where they do not want to build. I do not believe it has been calculated that the people seem to think you help the poor of the town. If you produce any result at all, I venture to ask the Committee whether you do not artificially encourage further migration from the country. Evidence of the growth of Glasgow under existing circumstances shows it to be 40 acres annually; but if you compel the owners of the land around Glasgow against what would be under existing circumstances their interest to hurry into the market to sell or to put up buildings, no matter what their character, provided they do build, you will not accommodate in Glasgow more than the same number of people than are accommodated now each year. What you will do, or what you may do, is to attract more people to Glasgow who would otherwise be living in the country. You are giving artificial stimulus to that very exodus from the country which you say you deplore.

But consider some other classes. How about the market gardeners? Whenever we are talking about the land everybody says, "We want more small holders." The most profitable occupation for small holders is market gardening. We all expend our energies in expressing pious wishes that there were more market gardeners, and say that if we did not import so many vegetables from France small holders of that class would be encouraged, and that intensive cultivation would greatly increase. Directly you come to the Chancellor of the Exchequer—not in his capacity of a gentleman who is going to apply this Development Grant out of his own estates—but in his capacity as a gentleman who is dealing with land which has a value which he thinks he can tap, what becomes of the market gardener? He is going to be turned out. Every fiscal machinery is going to be used to make it impossible for his landlord to retain him as a tenant. Who is to benefit? Is it this class, which on every occasion we all admit to be peculiarly deserving of our sympathy and encouragement, and who, in this case, you are going to do your very best to destroy?

I go from the market gardener, on whose behalf I may, perhaps, claim some slight scintillations of sympathy, to the case of the owners of land, on whose behalf, I gather, I must not expect any sympathy at all. Well, do not let us give him sympathy. Let us give him a little justice. What the Government are doing is, in taxing this man—he may be very small or very big, he may be poor or he may be wealthy—you are taxing him not on what he has, not on his income on which he lives, you are taxing him upon his hopes, upon his expectations—expectations which may be realised, but also expectations which may not be realised. What is more, you are, by doing that, hitting him in two ways. First, by a special tax upon one kind of property, which, of course, depreciates the value of that kind of property. You are, in other words, appropriating a portion of the property which he has hitherto believed he held on the same tenure as every one else who holds their property. You are taking a fraction of it, by direct and obvious means, out of his possession. You are doing more, because you are compelling either him or his neighbours, perhaps both, to go into the market and sell, weighed down as they are by a tax which they cannot pay. In the next place, you tax him not upon what the land is bringing, but upon which he, or somebody else, hopes the land is going to bring at some future period. That is the first way in which you mulct him. In the second way you mulct him by compelling, not naturally, and I believe quite unnecessarily, more land at this particular time to come into the market, so that you lower the value of the whole body of property with which you are dealing over and above the diminution of the value which follows from the tax. I should really like to ask the Chancellor of the Exchequer on what principles his valuation is to take place? Is it of the land as it would have been if the present Government had not come into political existence; or is it to be the land that will be after the Chancellor of the Exchequer brought in his Budget? The Chancellor of the Exchequer, even before he has passed his Budget—as it seems to me—diminished, and diminished by no small amount the actual capital market value of land which would pay death duties on a much higher rate if he had not come in with his Budget, injured everybody who possesses that sort of land, and frightened everybody who would have perhaps purchased land.

Where is going to be henceforth your market for land? The Chancellor of the Exchequer told us that these valuations are to be valuations as between the willing seller and the willing buyer. How many willing buyers are you going to get? This is a Budget for producing willing sellers. How many willing buyers are there going to be to redress the balance? It seems to me the whole idea of taxing these expectations—mere expectations, which may not be fulfilled—is in itself extremely rash and extremely doubtful. If you are going to do it at all, how can you stop at expectations about land? There are heaps of other expectations in the world which have a market value, the possessors of which sometimes are disappointed, and sometimes are pleased, with the result of what is necessarily a speculative holding. I presume the right hon. Gentleman will regard it—undoubtedly it is—a perfectly legitimate transaction for a man to buy on the Stock Exchange to-morrow a great block of stock which does not pay a penny interest, and which has a value entirely based upon the income somebody thinks it is going to pay. May I ask why that species of expectation is not to be taxed as well as the others? In the case of land there is an income, a small one, compared with the expectation in case of the stock which I have mentioned. I cannot conceive on what principle the Chancellor of the Exchequer thinks that one expectation ought to be taxed and not the other, unless it be that he holds the view that the man who possesses property in land is a fair mark for every species of exceptional and unjust treatment, and that the man who deals in stocks belongs to a wholly different and more angelic category. But turn from the Chancellor of the Exchequer dealing exceptionally with property to his way of dealing with the reversion of leases. I am utterly unable to understand his reasoning in that matter. What did he tell us? He told us that the owner of the land made an agreement with the builder for a house to be built on a 99 years' lease, after which it would revert to the owner. The value of that reversion, he said, at the time the agreement was entered into is so small that practically at the end of the 99 years the house is a windfall. I thought a windfall was some fortunate thing which you got when you did not expect it. It was anything in the world unexpected until this Government came into office. If anything in the world is expected by a man who lets land on a 99 years' lease for builders' additions it is at the end of the time that he will get the house. Why is that a windfall? Is everything a windfall because the Chancellor of the Exchequer says the man does not deserve it? I think that was one of the observations he made. I do not know, but it seems to me that he deserves it as much as anybody who enters into a commercial transaction deserves the result of that transaction. Is everything, each fortunate thing which a man gets and which he does not wholly deserve, is that a proper subject for taxation? The Chancellor of the Exchequer on this branch of his subject was even more inconsistent, and made proposals more inconsistent to what I conceive to be his principles, than upon the other branches of his Budget, He is going to make what he calls exceptional treatment to people who have bought reversions.

Why is he going to give exceptional treatment to people who bought reversions? Is that a windfall? Is that less deserving? Of course we all know why it is that he has done it. When he talks of a man who may be bargaining with the builder for 99 years' lease of course he has in his mind very rich land-owners like some of those in London. They are not at all specimens, I may say, of the urban landowners throughout the country. Very far from it. Those are what he had in his mind when he talked of making exceptional provision for those who bought reversions. He was thinking of the Building Societies and the enormous number of small investors who invest their money in reversions, and very naturally he forgot his principles, and thought only of his votes, when he announced his intention of giving them exceptional treatment. A majority can do anything, but I defy any man to show why the original bargainer, the creator of the arrangement by which the house is to be built to the advantage of the builder who built it, and who sells that arrangement when halfway through, I defy any man to show any reason why one should be treated one way and the other in another. The very fact that the Chancellor finds himself able to announce that he was going to give exceptional treatment to those who bought reversions shows that in his heart of hearts he knows the whole scheme of mulcting this kind of property is morally and fundamentally unjust. Of course the two proposals I have just discussed are absurd and unjust, whatever your view be of what is called unearned increment. You may think there ought not to be unearned increment, but even when I consider this particular way of dealing with the capital of land outside the towns, and with the bargains that are made with regard to building on land, I think the proposal is grossly and absurdly unjust. But what does lie at the basis of this view of unearned increment, which I suppose the Chancellor of the Exchequer thinks is a justification for the first two of his land taxes, and which is avowedly and on the face of it the whole justification of his third land tax, by which 20 per cent. is to be abstracted from all increase nett value of land whenever they pass from owner by death or by purchase or sale? What I never was able exactly to understand is on what ground the Chancellor makes the distinction he does.

Mr. Henry George held that the possession of all land was intrinsically robbery, and that it ought to be taken away without compensation from the existing owner. I do not think that that theory will bear examination. If I had to characterise it in terms of the ordinary morality I should characterise it in very violent terms, but at all events it is perfectly clear and original from Henry George's point of view. If you start from the point of view, and if a man has any moral right to own land of any kind or description then unfortunate individuals who are in the possession of those stolen goods must give up possession of such stolen goods. That, at all events, be it right or wrong, just or unjust, is fairly coherent. What on earth lies at the bottom of the proposals of Mr. Henry George's great namesake. Why, of course, I grant that if by unearned increment you mean the growth in the value of property to which the general community and the world at large is partly responsible for, of course I agree that the amount of unearned increment in the world is growing, and I hope it will continue to become greater. It is the result of society, it is the inter-play of the various social forces. Supposing you have a railway which goes through a country which is very ill-served by means of communication, at once the farmers and the owners—probably the owners and certainly the farmers—of the immediate neighbourhood get unearned increment. The owner may be the occupier or the owner may have let his land on lease. At all events the occupier for certain, and the owner possibly, gets a large increase on the value of their property, and you say that is unearned increment. Agriculture is greatly developed, intense cultivation takes the place of pasture lands, there is enormous growth of traffic, and that is unearned increment of the railway. The two things play into one another. They mutually act and re-act upon one another. I do not know that the railway deserves the great increase of the local wealth any more than those who made the local wealth deserve the advent of the railway. No human being thinks of taxing the railway because of the unearned increment of the farmer, or taxing the farmer because of the unearned increment of the railway.

Take the case which must have been present to the mind of the Chancellor of the Exchequer when he explained his Budget. He is going to take a fine from the owner of land when the house falls in, and he is going to take a fine whenever the land increases in valuation and passes either by death or sale. Supposing a house is built on a perpetual lease, which is very common, both in the North of England and Scotland, and which I as an individual wish was more common in the South of England; supposing the land was let upon a perpetual lease, you have a house and land precisely the same kind of house and the same kind of land which you have on a 99 years' lease. You are going to tax the owner of the land on which the 99 years' house is built at intervals and in two separate ways. As I understand, you are going to tax him on the value of the site increasing, and you are going to tax him when the house falls in. What about the man who holds the land on a perpetual lease? There is precisely the same unearned increment. It does not go to the landlord. He has got a fixed land for all time. It may be 10 or 20 acres, therefore in that case there is unearned increment which you do not propose to tax. There is precisely and exactly the same amount of unearned increment from precisely and exactly the same social and local causes in the case of the landowner whose land is let on perpetual and unaugmentable lease for a time, as in the case of the landowner who lets his land upon a 99 years' or short lease. Why are you going to tax the unearned increment in one case, and not tax it in a precisely similar case? Again, I think it is conclusively shown that the differential treatment of different kinds of property by the Government is not based upon any real distinction, any fundamental principle of equity or justice, but that it is a mere matter of expediency. Of course, the man who gets unearned increment in the case of perpetual lease is the man who owns the house, or feus, in the case of Scotland, but you do not propose to tax him.

Then I say it is absurd to describe your differential treatment of property as a basis of anything even in the nature of elementary justice. I do not believe this doctrine of unearned increment really will hold water. I regret to say that such real property as I possess has shown an unfortunate tendency not to unearned increment, but to unearned decrease, and I think I have before remonstrated with the Chancellor of the Exchequer for not finding out from gentlemen who get unearned increment something which would console me for the unearned decrease from which I suffer. In course of truth you cannot argue the thing out on any original basis. You cannot show any justification for taxing the unearned increment. But if you think I am wrong—and I am sure there are some who think I am wrong—at all events deal equitably with all forms of property, with all that get unearned increment, whatever the form of property may be, and I would add, whatever be the form of their professional services and goodwill, which are as much unearned increment as that from land. Deal with goodwill and those emoluments on the same principle as you deal with the man who gets unearned increment in another way, and until you do that you cannot escape the charge I make, with all seriousness, against the Government: chat they are treating deliberately one class of property grossly unfairly as compared with their treatment of another class of property. And may I say—and this will conclude this branch of my criticism—that I do not think you ought rashly to mix up two systems of taxation and capital value and tax upon increments. You tax on capital value when you think it suits you, and you tax on income when it suits you; but the two systems do not work very well together. I am told—and I believe that I am told accurately—that the Inland Revenue insist on taxing a man on his income, although that income is derived from a property the very life of which is terminable within a very short period. If a man makes a very large income in a coal mine that has only one year to run he has to pay on the full income. If a man owns a patent immediately running out, he has to pay on the full income of the patent. I think that may be carrying your system of taxation on incomes too far. To mix up the two plans and whenever you think the property is valuable and the income small say, "I shall tax that upon its capital value," and when the income is large and the property is small say, "I will tax that property upon its income," is grossly unjust in the extent to which the right hon. Gentleman is now carrying it. I suggest that he should consider which of the two plans he means to stand on.

I now leave the treatment of special kinds of real property by the Chancellor of the Exchequer and I turn to what I may roughly call his treatment of the liquor trade. I think he is grossly unfair to certain kinds of real property. I think everyone will admit, whether I have argued soundly or unsoundly, I have argued the proposition, and I have not indulged in empty rhetoric. Now I come to the treatment of the liquor trade. Some hon. Gentleman at an earlier period of my speech interrupted me—not at all offensively—because they thought I was very unfair and unduly severe upon the Chancellor of the Exchequer when I said that less worthy motives than purely fiscal considerations had entered into the motives on which he framed his Budget. I think that with regard to real property, and also in regard to a matter which I forgot to refer to—namely, the property of unused minerals—the Chancellor of the Exchequer's proposals are not only grossly unjust, but quite unworkable. If I say unjust to the Chancellor of the Exchequer in attributing these motives to him in dealing with real property, I do not think that anybody can deny that in the face of Ministerial statements themselves, other than fiscal motives have come in when they have been dealing with the brewer and the publican.

I think it was the Lord Advocate who pursues his own eccentric and independent orbit on matters of taxation, who, in more than one speech, has gloated over the prospect of what he calls the Chancellor of the Exchequer imposing swingeing duties upon the trade. You can almost hear the swish of the scorpions being applied to the backs of these unfortunate victims of Governmental indignation. Just consider what the Government are doing in respect to liquor. They are substituting an enormous licence duty for the present licence duty, and on a wholly new scale, and they are providing that that licence duty shall be paid in the case of tied houses by the brewer, and in the case of free houses by the owner of the premises. In the first place, that is the death knell of every house that is not a tied house. I always thought the party opposite had a great affection for the free house as against the tied house, and although they think that the proper method of selling beer and spirits on the premises to the consumer is through the medium of a man not tied to any particular manufacturer, yet they come forward with a proposal for taxation which, on the face of it, and obviously is not only an attack on the brewer, but the destruction of the free house. [MINISTERIAL cries of "Why?"] Because the brewer, at all events, may or may not be able to carry the load of the new licence duty, but the owner of the licence can go to him, and, as I understand from the speech of the Chancellor of the Exchequer, is empowered to go to him, and say, "Here is this heavy new duty put on, and you must see me through.' He cannot go to anybody but the owner of the free house, and he is left unprotected to the tender mercies of the Chancellor of the Exchequer. That may be right, or it may be wrong, but it is an amazing proposal to come from right hon. Gentlemen and hon. Gentlemen opposite.

So far as the tied houses are concerned the tax is a tax on the brewer. It is one of two taxes on the brewer. First of all you tax the man who owns the tied house through the tied house, and then you tax the brewer by a large additional duty, although it is not called a duty, but it is a manufacturer's tax on every barrel of beer he produces. Let me say before I consider the consequences of that proposal it is preposterous to call it a licence duty. The Chancellor of the Exchequer—as is well known by the short extract from his speech which has appeared in the daily papers—declared that the duty to be put upon brewers was not an appropriate duty to turn into a sliding scale upon the amount of production or be anything else but a registration duty. That is what he said in answer to an hon. Gentleman opposite. But the present Chancellor of the Exchequer has thrown over the last Chancellor of the Exchequer in that respect, and they must settle their differences between them. I am not concerned, thank goodness, with the internal consistency of the Government. I am only concerned with what I may call the external effects of the policy which they more or less agree together to pursue. I say that that external policy as regards the so-called licence duty on the brewers is nothing more nor less than a tax on beer. It is a tax on the product of this particular manufacture, and it is in proportion to the amount turned out by each concern. It is absurd to call it a licence. You may call it a licence if you like, but it is much more, it is a tax.

Let us consider what is the main effect of this double taxation of the brewer. You first of all tax him through any tied houses he happens to possess, and then you tax him on the amount of his manufactured article. I was given just before I came to the House, with authority to use it, the exact numerical effect which this will produce on one well-known brewery, Messrs. Whitbread's. I imagine that the character and management of no other firm stand higher than this brewery, and the House will recognise that in this particular example I am not making use of any exceptional case. Let me just tell the House how this particular firm stands now, and how it will stand after the new system has come in. I understand that on the existing full licences owned by this firm £16,000 a year are now paid; for beerhouses they pay £680 in the form of licences, and, of course, as brewers they pay the £l licence—the registration licence so much admired by the late Chancellor of the Exchequer which the present Chancellor of the Exchequer has so fundamentally altered. These figures added together give, to be strictly accurate, £16,801. Under the head of full licences, after the Bill passes, instead of paying in round numbers £16,000 a year they will pay £37,000 a year; and on beerhouses, instead of £680, they will pay £5,000 a year; and as brewers, instead of paying £l a year, they will pay £9,500. In other words they pay now, roughly speaking, £16,800 a year, and they will pay under these proposals £51,700, the difference between those two sums being £35,000 a year. Perhaps the significance of those figures will become apparent when I say that the amount divided amongst the ordinary shareholders amounts to £28,500, so that the new taxation will swallow up, roughly speaking, £7,000 a year more than is now paid to the ordinary shareholders of the company.


May I ask the right hon. Gentleman whether those figures are on the assumption that Messrs. Whitbread have not got a single house in respect of which they can claim abatement under the restaurant or hotel clauses?


I am afraid I cannot say. I have told the House that I had this information put into my hands on good authority just before I came to the House, and I have mentioned the name of the firm. I am sure this firm will be ready to supply any further information which the Chancellor of the Exchequer may require.


Will Messrs. Whitbread keep their retail prices at the same level?


I am obliged to the hon. Member for his interruption, which is extremely pertinent, and it reminds me that I ought, of course, to have made two qualifications which I think everybody has made. The first is that beer sells at its present price, and the other is that the number of licences remains the same. I think it is obvious that it is on that basis.


And provided they get no abatement under the clause I have mentioned.


Yes. One of the things that amazes me most in respect to this licence duty on brewers is that while a tax it is not a tax, but it is an excise tax on which there is no corresponding customs duty. Your proposals throw a new light on what is said to be a Free Trade Budget. You are going to put these crushing burdens on the brewer, but I suppose you are not going to put a corresponding tax on foreign hops? Truly that is a very astonishing arrangement. They choose to call a tax a licence, and they think they need not have any corresponding arrangement to prevent the foreign producer who is not blessed with a licence from bringing in his article at his own pleasure, and at a much lower scale of duty. I suppose, from something that fell from him, the Chancellor of the Exchequer is under the impression that the British producers, as well as the sellers, of beer will be partly consoled for the treatment that he is meting out to them by the fact that they are trying by force majeure to make all Scotchmen and Irishmen drink bad beer or beer of some kind. This is absolutely the first time in our history when a duty—not a trifling duty, but an enormous duty—has been put on spirits, with corresponding addition, except the accidental one, which the Government had not discovered, on beer, and with no corresponding duty on any foreign beer.


"Or foreign whiskey."


Now, is it not a most amazing proposal? There are two different and inconsistent theories with which this House is faced as alternatives as regards the taxation of liquor. Sometimes it is regarded as a great engine of temperance, and sometimes as a great source of revenue, and the two ways of looking at it are obviously always clashing. When you carry your proposals to the extravagant excess of the present Government this contradiction, which may be tolerated in easier times, becomes flagrant even to absurdity. On which two theories has the Chancellor of the Exchequer proceeded when he puts on all consumers of spirits an additional duty of 3s. 9d.—a duty that is out of all proportion in the cases of Scotchmen and Irishmen? Is he doing it because he wants to get more revenue out of those two parts of the country, or is he doing it because he wishes to make Scotchmen and Irishmen more sober than they are?

Is this philanthropy or is it finance? It is really very important to know if we are really putting on this tax for the moral benefit of Scotchmen and Irishmen. In that case it ought not to be regarded as a tax at all, but as a fragment of social reform. "We are making their homes happier and brighter"—I quote from the peroration of the Chancellor of the Exchequer—"with the incidental advantage of a lot of money for the Exchequer."

The PRIME MINISTER made a remark which could not be heard in the Gallery.


Then does the right hon. Gentleman anticipate that the consumption of whiskey in Scotland and Ireland is going to be greatly diminished by them? I gather from the half-heard interruption of the Prime Minister that he happily combines the philanthropic and fiscal view. But when you come to figures you must settle which you mean. Lord St. Aldwyn, when he was Chancellor of the Exchequer, put as a war tax on spirits not 3s. 9d., but 6d., and from that 6d. he got on an average £1,000,000 a year.




I think that I am not wrong in saying that. Last year it was something over £900,000. The Chancellor of the Exchequer is going to put on more than seven times Lord St. Aldwyn's war tax on spirits in the present year, and he expects to get only £1,600,000. I suppose he imagines he is justified in that estimate by the amount of spirits which have been taken out of bond; but it cannot possibly amount to anything like the difference between the estimated amount of money from 6d. obtained last year and the amount he budgets for this year; and, therefore, I suppose, when he comes to figures, the right hon. Gentleman takes the philanthropic view that he is going to stop, and to stop largely, whiskey-drinking in Scotland and Ireland. But from other parts of his speech I gathered this was his method of making all the community bear their fair proportion of taxation. That means that they do consume whiskey, and that they do contribute. If they refuse to drink beer—the German beer which the Chancellor of the Exchequer is holding up in this tempting manner to their lips—it seems to me that the differential tax you are putting on the whiskey-drinking parts of the country is absolutely without justification or palliation. How can it be justified? How can it be palliated? If you are going to make them moral, if they are not going to drink it, pro tanto your philanthrophy is successful. But if it is on the financial leg that the Chancellor of the Exchequer is standing, then I say that your treatment of the whiskey parts of the country is totally and absolutely without any sort or kind of justification. What the Government are doing is this: They are putting in the name of a licence on the brewer a tax of which they have no corresponding excise. They are putting on the brewer a burden which is absolutely grotesque unless their object is political revenge or the financial ruin of that one particular class of the community. Of course it will end—it must end—in the destruction without compensation of a large number of the tied houses at the two ends of the scale—of all licensed premises at the two ends of the scale. That is an arbitrary, and unjust, and a grossly oppressive use of the powers of taxation which this House possesses. It cannot be, and it is not in the interests of temperance. It cannot be, and it is not in the interests of finance. Your whole proposals are not merely grossly unjust, but they only become barely intelligible as the work of reasonable men if the object they have in view is not money, not temperance, not social reform, but the destruction of their own political foes. This is Free Trade finance. These are the resources to which the Prime Minister referred when he told the country in so many sanguine speeches that the resources of this particular mode of finance were by no means exhausted. How different is this finance from that which was proposed to the House of Commons and accepted by the country at the hands of those whom hon. Gentlemen opposite as, I think, most absurdly claim as their fiscal ancestors. How widely does it differ from the principle which underlay the Budgets of Sir Robert Peel and Mr. Gladstone. They would not know them. I am convinced those men would have repudiated with disgust and with indignation the kind of proposals which have emanated from the Government. They indeed, desired to see the revenue of the country raised from a few duties, but these duties were to be elastic. You are attempting to raise money from sources which you know are not elastic. In dealing with the income tax they desired that it should be, in earlier periods, temporary, and that it was essential that it should be modest. In these days I admit that it cannot be; but you have forgotten the other more important maxim that it should be moderate. You have introduced principles into it which will make the actual machinery extremely difficult to carry out—principles which would have been utterly revolting to those who were the original framers of it. They desired that it should be easily levied, cheaply levied, and levied without inquisition. Yours will not be easily levied. It will be evaded, and the inquisition is of the very essence of it. They were anxious that in all they proposed that no burden should be thrown on the capital of the country, not so much from regard for the capitalists, but because they regarded the security of capital as the very foundation of every other kind of security and prosperity for every class of the community. You have apparently made it your principle to distinguish arbitrarily between one kind of property and another. So blind and ignorant are you of the fact that it is impossible to attack one kind of property, arbitrarily selected, without throwing a shade of fear on security and suspicion over every other class of property. Much of the evil you have done has been done even by the fact of your proposals. Whatever the House may do with them, even the fact that you have proposed them, I am quite sure has disturbed the mind of everybody who reflects on the many conditions on which an individualistic society, so long as it lasts, can alone flourish. Your scheme is arbitrary and unjust; your scheme, I am convinced, will be costly in its incidence, although until we see the machinery of your Valuation Bill a final judgment on that point cannot be passed. What undoubtedly is certain is that by the very proposals you have made you have given a shock to confidence and credit which will take a long time to recover.


I have been endeavouring to follow the right hon. Gentleman in the speech he has just delivered. From what I have heard outside I understood that red ruin was likely to follow this Budget. The hon. Gentlemen opposite cheered that part of the right hon. Gentleman's speech in which he said there would be a shock to confidence and credit, and signs of disturbance everywhere. Well, I do not notice even from his own speech and his own criticism that that is the case. I have no complaint to find with the arguments he has used in reference to the various taxes, but if he is as alarmed as he led us to suppose I would refer him to what I believe is really the best test in regard to these matters—I would refer him to the City. Anyone on hearing his speech would have thought that everyone who held Government securities and brewery shares would have immediately rushed on Friday to sell them out. [Cries of "Why?"] Because the right hon. Gentleman says we have given such a shock to public confidence, and that signs of disturbance are evident everywhere. Well, I saw that Consols had gone up, and the brewery shares have not gone down, and I noticed in one of the evening papers to-day that it is noticed especially that a brisk investment demand has sprung up for gilt-edged securities. The right hon. Gentleman told us that the Budget of my right hon. Friend would drive, and was driving, capital out of the country, and that there would be evasion and that there would be transfer. It is a curious thing that most of the intelligent people of the City do not yet seem to have taken the right hon. Gentleman's view. I will say this in agreement with the right hon. Gentleman, that there is no desire on the part of my right hon. Friend and the Government so to place taxation as a burden on the country as to lead to either evasion or to undue burden being placed upon them; and certainly this I repudiate to the full, that neither in regard to land or to liquor is the taxation imposed for a vindictive purpose. The right hon. Gentleman, if he will allow me to say so, was given a comparatively easy task for this reason, that nothing is easier than to denounce a particular tax and to show that that tax ought not to have been imposed or ought not to have been increased. It is a much more difficult thing to defend either the imposition or the increase of taxation. Every tax is a burden, every tax is a hardship, and the right hon. Gentleman, in picking out the land tax and the increase of the liquor duties, had a comparatively easy task in showing the harm they might do. I am not going to deny that either of these taxes are liable to interfere, to a certain extent, with the trade of the country or with the comfort of individuals. But what I hoped was coming from the right hon. Gentleman was this, that while he was denouncing special taxes he was going to propose some alternative for them. [Cries of "Oh, oh."] I think that is a very fair proposition. Does the right hon. Gentleman deny that at the present moment it is necessary for this country to raise between thirteen and fourteen millions? The party opposite seemed to think we are not raising enough, and that we ought to raise three millions and not raid the Sinking Fund. Well, I am not going to ask the right hon. Gentleman to discuss in detail what he proposes as an alternative. We have to look round us and see what alternatives there are. No doubt, before these Debates are over, we shall have a fiscal Debate, and no doubt the right hon. Gentleman will be provided an opportunity to tell us clearly what his proposals are in regard to fiscal matters. That, no doubt, will be an alternative policy. Let me just say in regard to that that there is little money in it, and if the proposals of the right hon. Gentleman were carried out they would not help us very much further in meeting the present deficiency. If we had not the land and liquor taxes it really means that we should have to have as an alternative an increase of tea or sugar duty. I would ask the right hon. Gentleman, assuming that he thinks a certain number of millions should be raised in the course of the year, does he object to the land tax and liquor tax, or would he propose to put an increased tax on tea or an increased tax on sugar? I desire to say a word or two in reply to the observations the right hon. Gentleman has made in reference to some of the taxation proposed by the Chancellor of the Exchequer. He denounced the taxes first in bulk and then in detail. I do not object to that, if he makes suggestions by way of alternative. But let me say this in regard to the present position. There are thirteen millions of taxation which the Chancellor of the Exchequer finds he must impose. Mr. Lowe once said that a Chancellor of the Exchequer, in imposing taxation, had to distribute a certain amount of misery, and it ought to be his endeavour to distribute that misery so that it would rouse the least possible discomfort. That, I think, my hon. Friend has done in this Budget. He has had, unfortunately, to distribute misery to the liquor traffic and the land and to other interests, but he has endeavoured to distribute very fairly partly on direct taxation and partly on indirect taxation. Take the income tax—the super-tax to which the right hon. Gentleman objected as spoliation.




Then the right hon. Gentleman does not object. He does not call it spoliation. I am glad the right hon. Gentleman takes that view. It appears to me that, as the right hon. Gentleman himself admitted, there is no real objection to the principle of differentiation in our taxes so long, as he rightly said, it is not carried too far to the destruction of certain property. As regards the income tax, we now have practically graduation by means of abatements up to £3,000. We are proposing to extend that graduation to incomes up to £5,000. Lord St. Aldwyn, when he was Chancellor of the Exchequer, discussed this matter. He said he had no objection to it in principle, but he found some difficulty in carrying it out in practice because he was afraid it would interfere with the collection at the source. Well, the Government have found a way of getting over that difficulty. This super-tax will in no sense interfere with the collection at the source, and therefore will not interfere with the smooth working of this great instrument of taxation. Therefore I think, as far as supertax is concerned, there does not seem to be any great objection either to the way in which it is carried out or to the way it is proposed to impose it. But the right hon. Gentleman's chief objection was, in the first place, to the proposals for the taxation of land and the taxation of liquor. As regards the taxation of land, he misapprehended my right hon. Friend's position as regards that and the method he proposes to employ. As I understand the proposals in reference to land, they are these: That a man shall not be taxed or rated on any investment of his own for any energy or enterprise of his own that he has put into the land. All that will fall upon him will be additional taxation in one, two or three ways on that part of his property which, as far as the increased value of it is concerned, he has had nothing to do, but the whole of which is due to the energy and enterprise of the community at large. Is there any unfairness in that matter? The right hon. Gentleman made a great point, as I understood him—I do not understand the Scotch system of land tenure as he does—he said as regards the feu system and the system in England, in the English system the unearned increment would be taxed, and as regards the Scottish system it would not. That is certainly not the proposal of my right hon. Friend. In Scotland under the feu system the landowner gets a perpetual rent, while in England the landowner gets the ground rent for a certain number of years, and then comes in for the reversion. It is perfectly true that the feu rent charge—that is, the same rent from the day of birth for ever—never does have any part in the unearned increment. That should be taxed on the other income. It is going to be obtained on some of the other interests of this property when this property either comes into the market or in case of death. In the case of England no doubt the rent charger will have to pay a considerable proportion of the tax, because he is the person who obtained the increment income; but in the case of Scotland it will be the person who obtains the unearned income which actually takes place.


I do not quarrel with the right hon. Gentleman's version of my argument, but take the case of these perpetual leases of 999 years, the unearned increment certainly does not go to the lessor, and who is going to pay for that unearned increment?


The unearned increment is discovered on the sale of a particular property. May I give the right hon. Gentleman a case? Supposing a property is worth £1,000, one day after the passing of this Bill, because, of course, the value would be taken after the passing of this Bill. Retrospective unearned increment is not going to be touched. The property is worth £1,000 capital value on the day after the passing of this Bill, but a few years after the Bill has passed it is sold for £1,500, but the owner has not put capital or energy into it of any kind. I do not blame him, but it is the fact, that he has not put it in. He sells for £1,500, and that £500 extra is due, not to his exertions, but to the exertions of the community, and it will be upon that £500 that he will be taxed.


Supposing that the owner has not spent any money or industry, perhaps, on that particular property, but he has on the adjacent property—which affects the whole—such as a road which runs close by and will affect his property which is sold?


That just shows the difficulty of dealing with Committee points before you get into Committee, or before the Bill is printed. That point, I can assure the hon. Gentleman, is met, because I wish to say, as broadly and strongly as I can, that there is no desire on the part of the Government in regard to this portion of the Bill, or any other portion of it, to treat with injustice or hardship any particular individual.


May I ask the right hon. Gentleman to elucidate the Scotch case? The right hon. Gentleman in talking of a 999 years' lease said that if a property was now worth £1,000, and ultimately was sold for £1,500, a proportion of the £500 would, of course, be taken by the Government under these proposals, because, I think the right hon. Gentleman said, nothing has been done by the owner. In Scotland the feuar does everything in the way of improvement himself. He is the man who would improve the property; would he be the man who would be taxed?


I have endeavoured to say, two or three times, that the sole object of these proposals is, that the taxation should fall on the owner of the property, where the increased value is in no sense due to the capital or enterprise of the owner. Then the right hon. Gentleman said it was not the fact that the owners of vacant land held up their land in order to get an enhanced price. I am afraid that is not quite in accordance with the evidence before the Royal Commission, and, I think, unfortunately, it is largely the case; but I am not going to blame the man for holding up his property, but if he is going to be a dog in the manger he will have to pay for his manger, and if he is going to hold the land only for future purposes and for a higher price, then I think it is only fair that he should contribute a larger share of the Local and Imperial taxation than he does at present. At the present moment he only contributes on a nominal rent, and not the value of the land, and the whole of this proposal is really founded on the value of the land at the particular moment, and all the improvements which the owner has made himself will be deducted from the price. The hon. Member for the City mentioned the other day the case of Woolwich, in which he said there had been a large fall in the price of land. That means, as far as that goes, between sale and sale and the question of market value, there has been a fall, and there will be less taxation placed upon it. One of the advantages of this tax is that the tax will be more in proportion to the value; if the value is low then the tax will be small; if the value is high, the tax will be high; and if there is no value at all, there will be no tax. That is the advantage of the tax. Let me make this as clear as possible. If there is no value, there will be no tax. If there is a large value, there will be a considerable tax. Now let me come to the second point which the right hon. Gentleman made and dealt with at great length. I mean the proposal to increase the liquor licences, etc. He quoted certain figures, and I am not going to dispute those figures in themselves. We heard a good deal of them last year when we were discussing the Licensing Bill, and we got rather hardened to the figures which showed the absolute ruination of these companies, etc. But I do not think that the right hon. Gentleman denies that it has been admitted for some years past that the licence duties are undoubtedly low. The trade have been given in the case of licences a large and valuable property, and in the case of every licence the licence duty has been altogether out of proportion to the value. I know it is difficult to say at what annual value the licences should be put at. It has been put at something between £12,000,000 and £15,000,000. At the present moment all that the State gets from this valuable property is something like £2,000,000 a year. That state of things, I think it is admitted by everybody, ought not to exist, and the taxation ought to be increased. The right hon. Gentleman quoted certain figures with regard to one firm, and no doubt if those figures were multiplied with regard to all the firms they would come to very large sums. But what I would point out to him is that the proposal of my right hon. Friend suggests the imposition of not a vindictive tax, not a heavy tax, but a tax upon a large trade which admittedly has these licences of enormous value and is a trade with a turnover of many millions a year. Can it be said that my right hon. Friend is proposing to destroy this trade, to ruin every brewery, to ruin every brewery shareholder, by putting on a tax of two and three-quarter millions?


It is more than that. We say that the figure is wrong—that it is entirely wrong.


I daresay you do, but I shall be delighted myself if the Estimates of my right hon. Friend are below the mark, not because I have any vindictive feeling, but if this is an under estimate on his part, why is it an under estimate? Because the output of the brewers is larger than he believes or expects. It will be a larger sum in proportion to the output, and I really cannot think that a trade of this description, having from the State these licences of great value, can really complain, or ought to complain, when, remember, in his efforts to get this £13,000,000 everyone has to contribute. I do not think it an unfair thing, therefore, to ask this trade to contribute 2¾ millions towards the objects which we have in view. I admit that we attempted to deal with this matter last year in a somewhat different way, and I believe on the whole it was a better way. That better way was this. That admitting, as it was admittted by us, that the State is entitled to a considerable share of the monopoly value of the licences, we proposed that the trade should be given a certain number of years in which to turn round, and so on, but at the end of that time, 21 years, the State would have taken the whole of this monopoly value. That happier way was unfortunately thrown out in the House of Lords, or, rather, it never got as far as the House of Lords. It never got any further than Lansdowne House, where it disappeared.




I beg your pardon, if the right hon. Gentleman objects to that.


No, I do not object.


We are proposing now to deal with it in a way in which the State should immediately and in future obtain a share, and I think not an undue share, of the profits of these licences granted by the State. The right hon. Gentleman dwelt upon one point of which he made a great deal. He said my right hon. Friend was introducing an Excise duty and not at the same time a Customs duty, which was totally contrary to the principles of Free Trade. I have very little doubt if the right hon. Gentleman presses my right hon. Friend, he will have no particular objection to remedy that evil; but it is a very small matter, and will produce very little. But our principle is as far as possible to put the taxation on large consumption, and not try and put on a large number of small duties. I have no doubt my right hon. friend would be perfectly willing to impose the Customs duty if it gives great gratification to the right hon. Gentleman the Member for East Worcestershire, and he thinks it will be an advantage to do so, but I am afraid the satisfaction of the right hon. Gentleman will be a little mitigated when he knows that the whole of the produce of this enormous innovation of Free Trade proposed, and this great preference given to foreign commodities in consequence of which everybody will drink German beer, and one thing and another, perhaps he will be surprised to know that the total amount of the tax if it is introduced at the present moment would be £500.


As the right hon. Gentleman referred to me, may I say that the question is what will be the effect on trade, if you put a burden on the home producer and not on the foreign exporter? Then it might make a great difference in trade, and it will be a satisfaction to me to know that we may keep our brewing trade.


I am very glad to assure the right hon. Gentleman, and I think my right hon. Friend will give me authority to do so, that he will endeavour to protect the home trade from this terrible German importation of lager beer, which produces at the present moment the enormous revenue of £500 a year, therefore the right hon. Gentleman may at all events, I hope, sleep comfortably in his bed to-night. Then the right hon. Gentlemen mentioned the question of the spirit duty, and, as I understand, his chief objection was that while the spirit duty was being increased an equivalent duty was not put on beer as well. I do not know whether the hon. Gentleman sitting behind him would have liked that in addition to the licence duty, because as a matter of fact they go together, and must be taken together—the licence duty on the brewer, which to a large extent will fall on the consumer, and the spirit duty now proposed. The right hon. Gentleman said it ought to produce a great deal more. It is not anticipated by the Inland Revenue at the present moment that it is likely this year to produce more than £1,800,000. But he said it was not fair to tax the liquor of the Scotch and Irish and not to tax the beer of the British and the Welsh. As a matter of fact I believe a great deal more spirits are drunk in England than in Ireland and Scotland put together, and the burden of taxation will be very heavy in England as well as in other parts. I think the real answer is the one I gave just now, that while we are putting this duty on spirits, at the same time we are practically putting a duty on the beer, and to a larger extent, by the licences.

With regard to death duties, all that the right hon. Gentleman said, as I understand, was that the imposition of this large amount of taxes was liable, if carried to an extreme, to create evasion With that I have already dealt by saying that as far as we are concerned we do not think it will be the fact. In regard to additional income tax, which he also included in his denunciation, there was a deficiency of 3½ millions to make up after all the other taxation was imposed, and the natural source of that was the income tax, and for a very good reason, I think, while other branches of revenue, especially indirect revenue, showed some signs of flagging, the income tax has shown two remarkable features during this year. In the first place, the amount of income brought under assessment is over £1,000,000,000, and the yield of a 1d. per pound, in spite of the abatements of last year, was larger than it has ever been before. That shows at all events that the burden of the income tax payer, while I admit a heavy one, is not an unduly heavy one, and has not had any effect in practically injuring their position or in leading to evasion. [An HON. MEMBER: "There has been more inquisition."] I do not think there has been any more inquisition. At all events, if there has, no inquisition will account for the very much larger increase which has been brought under assessment, though it might lead to a larger production of a penny. I was assured by those responsible for the control of these matters that this inquisition has not been greater this year than at any other time, and by inquisition I take it the hon. Member means pressure. There is always inquisition in regard to income tax at certain times of the year, and the income tax payers, especially in Scotland, complain of it as a very severe thing. At all events, if there has been, it really does not account for the increased assessment of £1,000,000, and the produce per penny, and it is clear that we are not living on our capital and that the income tax is not an undue burden on those who have to pay it. There has been a great change in the last two years in regard to the income tax, because the burden of it was in many cases excessive, especially at the lower scale of earned income. I believe there has been an enormous relief to a large proportion of the taxpayers by the reform which my right hon. Friend carried out in regard to differentiating between earned and unearned income. He is raising this year the unearned income by £500, and is providing also for those below £500 a little additional assistance and in these ways the income tax as a whole has been placed on a firmer basis, it has been made less oppressive. The right hon. Gentleman said: "Put it up to 1s. 2d. and you will have evasion." We have, I am glad to say, practical experience in regard to that matter, because, at the time of the War, when the tax was put up to 1s. 3d., there was as little evasion under the high tax as there had been before, and the actual proceed per penny was higher with the income tax at 1s. 3d. than before the addition was put on.

I have endeavoured to deal with the various criticisms of the right hon. Gentleman. We have to raise a large amount of taxation and we have to raise it, therefore, from a very large number of assessments. We agree to this extent with the right hon. Gentleman: that when you have a large amount of taxation, you have to broaden your basis, but we desire to broaden our basis by taxes such as the super-tax, such as the land duty, such as the additions to stamps, and to leave untaxed as far as we can articles of consumption, certainly not to place a tax on bread or on meat, and as far as possible to keep our duty as low as we can on tea and sugar. I think my right hon. Friend, having had a very difficult task before him, has carried it out with great impartiality as between the direct and the indirect taxpayer, and has endeavoured so to distribute his favours as, so far as possible, to keep a fair equality between the various classes of taxpayers and to meet in a courageous way the enormous deficits with which he was faced at the beginning of the year.


I am extremely anxious that the attitude of Ireland towards this Budget should not be open to the smallest misapprehension or misconception. Any criticisms which I offer to these Budget proposals are made entirely and solely from the Irish point of view. My colleagues and I come here to represent the Irish point of view solely. That is our only object in coming here, and we feel that it is our duty in the consideration of every measure which comes before the House to place the interests of Ireland first. One of the worst evils which, in my opinion, flows from the present relations between England and Ireland is that measures which are good for this country, and which are demanded and desired by the people of this country, may be and very often are of little value to Ireland. When the Chancellor of the Exchequer for the time being sits down to consider his Budget proposals I think he concentrates his mind upon Great Britain. He has in his mind some great object of policy for which money is to be spent, well suited, in his opinion, for Great Britain; but you tax Ireland without, as I claim, any serious, consideration at all as to the specific object for which she herself may really need expenditure. Ireland's presence, in fact, in most of these British Budgets may be taken to be almost accidental, and thus it happens that a large proportion of the money which is spent in Ireland, in my judgment, at any rate, is uselessly, wastefully, and extravagantly spent. The Irish people are not consulted, their representatives are not consulted, neither they nor their representatives have any responsibility, and, in fact, it would not be an exaggeration if I said that the system of finance which is carried out in Ireland under the existing relations between the two countries is really a system, so far as Ireland is concerned, of taxation without representation. Hence it is that we are led in Ireland constantly into wasteful and extravagant expenditure. The great schemes which the Chancellor of the Exchequer has before him when he is preparing the subject may be good and necessary so far as Great Britain is concerned, but the very same schemes may be for us utter extravagance and folly. They may be even calculated to do actual harm to us, they may be planned on lines which are suitable to Great Britain but absolutely unsuitable to Ireland. All this is never taken into account. The Chancellor of the Exchequer and the Cabinet for the time being feel that a certain policy needing great expenditure is desirable for Great Britain and that as Ireland, most unfortunately for herself, cannot well be left out, she is simply lumped in and told she must look pleasant. So it happens that, according to the varying needs, or I might even say the varying fancies, of our opulent partner, Great Britain, Ireland, is constantly forced into various enterprises, some of them ruinously extravagant to Ireland and often quite unsuited to her condition and in the working and control of which she is allowed the privilege of having no share.

The Act of Union seems to me to be absolutely forgotten by every Chancellor of the Exchequer when he sits down to prepare his Budget. That Act, which was, according to English opinion and English declaration, not merely an Act of Parliament, but was in the nature of a treaty between two sovereign Parliaments, and between two nations, provided that Ireland was to be taxed only in accordance with her taxable capacity as compared with Great Britain, and it was specially provided that if the Exchequers became amalgamated, as they did in 1817, and if taxation became indiscriminate for the two countries, there should be exemptions and abatement for Ireland, so as to make sure that she would never be called upon to pay more than her fair share, so as to make sure that the specific pledge given by Lord Castlereagh in the Debates on the Union should be carried out when he declared that the ratio of Ireland's contribution must ever correspond with her relative wealth and prosperity. That treaty, as England has always called it, has been persistently neglected and disregarded and shamefully violated by successive Chancellors of the Exchequer. The Financial Relations Commission which sat in 1894–5 reported that, according to the spirit and the letter of the Act of Union Ireland had been systematically overtaxed and on the figures of 1894–5 that she was being overtaxed to the extent of between two and three millions a year. When a discussion took place on the Report of that Commission in this House the entire Liberal party voted with us in accepting the Report and demanding that redress should be given. In a memorable speech, which I will never forget so long as I live, the present Prime Minister, in 1897, made a remarkable declaration, in the course of which he said he found no man to really dispute the findings of the Commission that the real facts were that Ireland was overtaxed to the extent of £2,500,000 a year. Not only has the Report of that Commission been disregarded, but the taxation of Ireland has been increased by millions since that day, and, therefore, we on these benches feel bound to look at this Budget as we have looked at every other Budget, solely from the point of view of Ireland, and from the point of view of a poverty-shricken and admittedly overtaxed Ireland.

Let me say a word with reference to these proposals as a British Budget. If I were a British Member, holding the views I do on these great social questions that are touched, I should regard this as a great and courageous Budget. It is a Budget advancing into the reforms for which I have contended and laboured all the time I have been in this House. It aims at redressing burdens which to-day are borne on the shoulders of the least able and the least bound in justice to bear them. It aims at ameliorating the lot of the masses of the working classes of this country. There is not one of the reforms touched upon in this Budget which has not the complete sympathy, and which has not always had the support, of my colleagues in this House. The right hon. Gentleman's land tax on the unearned increment, his increased death duties, his super-tax on large incomes—all these have our complete sympathy, and those who specially represent the working class electorate in this country may rest quite sure that Irish Nationalist representatives in this matter will not be false to their record in the past. We have an honourable record in this matter, which members of this. House do not always, I think, recognise or admit. Since the day of the Reform Bill in 1832 I do not believe there has been a single measure of reform carried in the interests of democratic progress and for the benefit of the working men of this country that has not been, not only supported, but actually carried into law by the votes of the Irish Nationalist representatives. That may seem a strong thing to say, but I believe it is absolutely true. I was going to quote a passage which is probably familiar to all Members of the House, but I cannot lay my hand upon it—a remarkable statement made by Mr. Lecky in his history of the eighteenth century in England, in which he declares that from the days of Daniel O'Connell down to the present moment every single democratic reform in this country was carried by the action of Nationalist representatives, and in which he went on to say that the presence of the Irish Nationalist party in this House and the influence it had upon the tone and character of the House constituted probably the most powerful of all agencies in advancing what he called the democratic transformation of English politics.

That being our record, hon. Members of this House who are specially interested in these great democratic reforms promoted by this Budget need be under no apprehension whatever that we will act the part of wreckers with reference to measures of reform to which we have devoted our best energies all our lives. But we must look at this Budget from the point of view of the interests, first of all of our own country, and from that point of view there are some proposals in this Budget which we regard as oppressive and unjust. What is the history of the whisky tax in Ireland as it affects the international financial arrangements of the two countries? The first great blow which was struck at Ireland after the amalgamation of the two Exchequers was struck in 1853, when Mr. Gladstone imposed an enormous whisky duty on the country. The result of that was that the taxation of Ireland was actually increased at one blow £2,500,000. At what time was that blow struck? In the year 1853, when Ireland was endeavouring to struggle to her feet after the awful experiences of the great famine. That whisky duty at once created a burden of taxation which we regard, and which your Commission declared, to be unjust, and it has gone on increasing. In 1890 Sir William Harcourt increased this tax, although the object for which he did so was never carried out. The tax has remained, and in 1900 Sir Michael Hicks-Beach again put on a small additional tax—small compared with what is now proposed on whisky. When he put it on he absolutely promised that it was to be taken off next year. He said:—

I think, having regard to these facts, we may very properly impose another 6d. per gallon on spirits. I wish to say, however, with regard to this, as well as with regard to the rest of the indirect taxation I am about to propose, I look upon it as a temporary addition to existing taxation, and I hope merely for the coming year. That tax has never been removed, and now the right hon. Gentleman comes down and proposes to add not 6d. per gallon but 3s. 9d. Why this discrimination against Ireland? Why tax the commodity which is used by Irishmen and manufactured by Irishmen, while at the same time you do not put a farthing of additional taxation on the article manufactured in England and consumed by Englishmen? It is all very well to say that you are putting on an additional licence tax, but that will hit the consumers of whisky as well as the consumers of beer. We say that you are discriminating unfairly against us when you leave untouched the English product and put this enormous tax of 3s. 9d. on the commodity which is one of the few remaining Irish industries, and which is an article consumed by the Irish people. I might dwell at considerable length on the ways in which this tax will affect Ireland. There are hundreds of ways in which this additional taxation will injure Ireland.

Has the right hon. Gentleman thought that the imposition of this tax will undoubtedly mean injury to pot-still distilling—that is, the distilling of what people are accustomed to regard as pure whisky from grain—and will throw the whisky trade more in the direction of the patent still production of whisky from all sorts of foreign and very often deleterious materials? The result will be to discourage barley growing in Ireland, to diminish still further the area of tillage, and to do untold harm to some of the most industrious people in the country.

Another consideration about this tax is this. If it is left in the way proposed as regards Ireland, it will largely deprive us of every advantage we have gained in our international financial relations with this country in respect of old age pensions. It is said that we got more than our fair share of old age pensions. There is a great deal of ignorant and pestilent nonsense talked about this matter, which I will explain in one moment. We got more than our share of old age pensions as compared with England on the basis of population. That is the statement which has been made. Why is that? I say that a lot of pestilent nonsense is talked about this matter. We were told that there were 50,000 fraudulent cases in Ireland. We were told that the Committee which the right hon. Gentleman had sent over from Somerset House discovered that fraud had been committed, and that the Committee had actually withdrawn 50,000 pensions granted in Ireland. There is not one word of truth in that; it is an absolute absurdity. It is pestilent nonsense talked from the benches at the back of the right hon. Gentleman. An hon. Gentleman has been asking a series of questions based on the supposition that there have been 30,000, 40,000, or 50,000 cases of fraud in the dispensing of old age pensions. The right hon. Gentleman gave the figures the other day, and the number of cases in which pensions had been withdrawn, instead of 50,000, was 2,000 only, and as far as I know there has been no fraud proved in Ireland any more than in England, Scotland, or Wales. Why is the proportion of people in Ireland who get pensions larger on the basis of population than in England? It is in a sense a retribution on this country. The condition to which English government has reduced Ireland is such that there is deeper and more widespread poverty to be found in Ireland than in any other portion of the Empire. What did the Chancellor of the Exchequer say the other day? That he and his friends and advisers were astonished and horrified when they found how widespread poverty was in Ireland. There are whole districts of the country where it may be said that if you had the age qualification reduced every man would be entitled to a pension. All these wretched people are living on uneconomic holdings, on patches of bog land, and in congested districts, not over small areas, but over counties. Everyone would qualify, so far as income is concerned, for an old age pension. You have nothing like it in Scotland even among the crofters, and you have nothing like it in England or Wales. That is why the proportion of pensions is larger in Ireland than in this country.

There is another aspect of the age question which is easily explained. One of the most horrible things in connection with Ireland has been the steady emigration from the country. Year by year young men and young women leave the country. I am happy to say that this year and last year there was less emigration from Ireland than any year since the great famine. That is satisfactory, but still they are going, and for many decades they have gone by the thousand and by hundreds of thousands. Remember it is only the young people who go, and to-day you have the extraordinary fact that there are undoubtedly more old people arid young children to be found in Ireland than in any other country in Europe. These are the explanations of the large proportion of old age pensions in Ireland. But the fact that we have a larger proportion as judged by population receiving old age pensions than in Great Britain may foe said to have gone to some extent to diminish the unjust burden of taxation which, according to the Financial Relations Report, we are suffering from, and I admit that, so far as it goes, it does tend in that direction, but now, by this proposal, you are going to put on again and to raise our unjust burden of taxation practically to the limit at which it stood before. Therefore, I believe that increased tax on whisky is unjust and oppressive, that it takes from Ireland that small advantage she gained under the Old Age Pensions Act, that it makes an unjust discrimination against our country and in favour of this country, and, of course, it is manifestly the imperative duty of the representatives of Ireland to oppose it with every vigour at their command.

Let me deal for a moment with the tobacco. I said the other night, speaking without any time for consideration and on the spur of the moment, that that was a cruel tax, and I honestly believe that it is. I regard, in certain districts in Ireland, tobacco as almost a necessary of life and in no sense a luxury. The idea of using the word luxury with reference to the lot of the people I speak of is ridiculous. I regard it as a necessary of life. The indirect taxation of Ireland is 73 per cent. of the whole. In this country the indirect taxation is only 50 per cent. of the whole. Why is the indirect taxation of Ireland 73 per cent. of the whole? It is because the country is so poor that the only way you can raise taxation at all in the country is by taxing the food of the people. The income tax yield per penny in this country has been steadily going up; in Ireland it has been steadily going down, and the right hon. Gentleman knows perfectly well that the proposals in this Budget to raise money by income tax, or, for the matter of that, by death duties or motor-cars, or by a super-tax on high incomes or anything of that kind—he knows perfectly well that these taxes would not raise money in Ireland, and the only thing he is going to raise money from in Ireland to help him will be by these indirect taxations. That is to say, you are going to raise all the money you need from, practically speaking, the necessities of the poor, and from the poorest of the poor. I say that tobacco is a necessity of life to these people.

I was reading the other day one of those delightful essays written by Miss Jane Barrow, which were published under the title of "Irish Idylls." I daresay a great many Members of this House are familiar with these sketches, which are very beautiful and very true to life. One of them gives a picture of one of these wretched little villages on the Western seaboard, where the people have not enough to eat, where they never have enough clothing or enough fuel, and where they live with a sort of perpetual cold grey mist from the Atlantic clinging like a shroud around them. She tells a story of an old woman to whom a legacy suddenly comes from America. The legacy amounts to 15s., and she regards it as untold wealth, and she struggles oft next day to the nearest country town to spend her money. The poor old creature spends the whole of the 15s.—every penny of it—in buying presents for the neighbours, and she goes round dispensing her little presents to the few little cottages in the neighbourhood. Finally she comes to the last. She goes in, and there she sees, sitting on some sort of a rude stool over two or three half cold sods of turf, an old man with famine in his cheeks and wretchedness and misery all around him, watching over the almost burned-out fire with his empty pipe between his teeth. She goes to him, and gives him a couple of ounces of tobacco as a present, and I wish I had the words here to quote to the House the description Miss Barlow gives. The greedy famished look comes into the man's eyes when he sees the tobacco. He had been smoking his empty pipe for some weeks, because he could not buy tobacco, and a heaven of delight came to him from the giving of this little bit of tobacco. The right hon. Gentleman for his "Dreadnoughts" is going to tax the tobacco of men like that. I will not quote Miss Barlow; I will quote the Chief Secretary for Ireland. What did he say only the other day on this very subject? The poor in Ireland drink large quantities of tea and smoke many ounces of tobacco. That, in my opinion, is proof of the inadequacy of their sustenance and not of the extravagance of their taste. We have in Ireland a country where revenue is derived from indirect taxation upon articles which must be described as articles not of luxury but of prime necessity. Is the House familiar with the Budget of some of these poor families? I have more than once quoted these budgets in the House. They were published in the Report of the Congested Districts Board, so that they are official documents. I will not take the budget of the poor. In the case of the poorest the income goes down as low as £8 for the whole family. But let me take the budget of a well-to-do family, or one so described in the Report of the Congested Districts Board. The total income of that family from all sources for the year is £23 8s. 7d. How is it spent? Meal, £7 4s; tea, £5 17s.; sugar, £l 19s.; and tobacco, £3 9s. 4d. The right hon. Gentleman is adding to the cost of that necessity of life, as I believe in a family like that a new additional taxation, for the purpose of building "Dreadnoughts," of 8d. per pound additional. Last year he took about £300,000 off the sugar duty, a most admirable piece of finance and one that we welcomed heartily, because we knew what a tax it was on the poor in Ireland; but now he is putting it on again in tobacco. What he relieved these poor families of in respect of sugar he is putting on again now in tobacco. I really ask the House of Commons to view these facts. Do not they feel somewhat ashamed when they have to spend these extra millions on "Dreadnoughts" that they have to go to such sources to get taxation to pay for them?

What does Ireland want with "Dreadnoughts?" "Dreadnoughts" are to protect the worldwide commerce of England. You take very good care by your rule in cur country for the last hundreds of years, to destroy our commerce and our industries. We have no commerce to be protected by your "Dreadnoughts." The case of the Colonies is entirely different. You were delighted when the Colonies offered to pay for some "Dreadnoughts" for you. Why should not they? The Colonies have got absolute self-government. They manage their own affairs. Their very existence depends upon a strong Navy and upon the defence given to them by this Empire. They do not pay a single penny towards the expense of this Empire, but here is Ireland not permitted to manage her own affairs in the smallest degree. She has no need for your "Dreadnoughts." They are no use to her; yet Ireland has to pay through the nose towards every extravagance which you resort to in connection with the Government and the defence of your Empire. I really ask whether hon. Members are not somewhat ashamed when they think if they need "Dreadnoughts" to protect the Empire that they have to go into the cabins of these poor people and tax, as you did in the time of the Boer War, the meal, tax the tea, tax the sugar and tax the tobacco of the poor people in these districts? And these war taxes are still on, and now you are going to add to one of them in the shape of this new tax on tobacco.

There are a great many other matters that I would like to refer to, but I must not detain the House at this stage. We will have to speak on many other occasions before the Budget is over. I would like to have spoken on how the licensing proposals will affect Ireland. I would like to have spoken especially about the Development Grant and about forestry. I do not understand yet exactly how the right hon. Gentleman intends his Development Fund to be worked, or how he intends this improvement in forestry to be carried out, and until he has an opportunity of dealing in detail with these portions of the Development Fund and forestry, until he has an opportunity of dealing more in detail than he could on the first night, I really think it would be a waste of time for me to speak of it now. All I can say is, we are deeply interested in questions like forestry and we are deeply interested in his proposal about the Development Fund, but we do not understand what his proposals are with reference to the extent and distribution of that fund. There are a lot of matters of that kind that I would like to have more information about. There is just one matter about which I have received a number of letters from solicitors in various parts of Ireland within the last couple of days that I would like to mention to the right hon. Gentleman. They are in reference to the proposed increase of stamp duties on transfers of land. I will read one as a sample. One solicitor writes me pointing out that, of course, transfers of land are going on wholesale all over Ireland at the present moment owing to land purchase, and what seems a very small thing here may become an extremely serious thing in Ireland. At present I understand the tax is 10s. per cent., and the right hon. Gentleman proposes to raise that to £l per cent., a proposal that may seem to hon. Members here a very small thing, but, owing to the multiplicity of transfers all over the country, with the multitudes of rolls of land, it becomes a very serious thing in Ireland. One solicitor writes:— Last week I paid £3 stamp duty on a transfer of a small holding sold for £300, as the Land Commission valued the outstanding annuities at £300, but when the new Act comes into operation, if ever it does, we must pay £6 on a sale of £300 instead of £3. That is an extremely serious thing. I do not know whether when this was put into the Budget the right hon. Gentleman really had his attention called to the matter in the way I am doing it now at all. It is quite possible that the fact of these multitudes of transfers of land may have escaped his attention and that of his advisers, but unless there is some remedy in this matter another very serious grievance will be thrown on Ireland, which will have to be borne in the shape of this tax, infinitely more in proportion than in the case of England, Scotland, or Wales.

I would like to say just one thing which I omitted with reference to the spirit duty. The Chancellor of the Exchequer estimates that it will only produce in Ireland £160,000. How in the world does he arrive at that figure? The duty paid last year in Ireland on spirits was £2,000,000. He is going to put on an addition of about one-third of the existing tax, and, therefore, the amount produced ought to be about £700,000. I believe something like £685,000. He says it will only be £160,000. He may be making an allowance for diminution in consumption. There has been no diminution of consumption of whisky for the last three years in Ireland; but even if there is a diminution and he makes allowance for that, I cannot conceive how he can bring down his figures from about £700,000 to £160,000, and I fear that it will be found that his figures in this respect are not much more accurate than his figures were with reference to Irish old age pensions. I repeat to-day, with reference to the general purport of this Budget, that so far as it is a British Budget, so far as it deals with these great matters of social reform, we are in complete agreement, and I think the right hon. Gentleman has shown boldness, if he will allow me respectfully to say so, boldness and statesmanship in grappling with these problems in the way that he has done. I was challenged the other night when I said that I did not know whether this Budget would lead to a dissolution or not, but I expressed the hope that it would. I was misunderstood by some hon. Gentlemen above the Gangway. Nothing would delight me more than to see the issue taken to the House of Lords on these great social questions. That is what I meant when I said that I would be glad. I am in complete and absolute accord with the right hon. Gentleman on this point; but, so far as Ireland is concerned, so far as these provisions and others which I have not touched upon are concerned, we regard those proposals as oppressive and unjust, and the right hon. Gentleman must not misunderstand us when we offer to them that vigorous objection which we believe is a manifest and imperative duty to the country we represent.


In the absence of my hon. Friend the Member for Barnard Castle it falls to my lot to offer a few observations on the Budget for myself and for those with whom I am associated on these benches. Last Thursday we voted unanimously in favour of the first Resolution submitted, and we voted also by a large majority in favour of the latter proposals—that is to say, those in regard to indirect taxation. Moreover, those of us who thus cast our votes on the spur of the moment did so without any consultation between us, and, therefore, every Member of the Labour party acted as he thought best, and those votes, in consequence, may be taken as fairly and accurately indicating the mind of the Labour party in regard to this Budget. We rejoice to find that principles which have been fought for, and for which many have suffered, have at last found expression from a Government which, we believe, is strong enough to carry them into effect, and which we hope will carry them into effect. For many years the schoolmaster has been abroad; for many years we of the Labour party and others have taken part in agitation for those principles We and many others have pointed out that wealth did not contribute its fair share to the burdens of the nation. In season and out of season we have pointed out that landlordism appropriated to itself social values for which it gave no return. We have, further, pleaded that there were great social questions waiting and ripe for solution, and a solution of which in large part depended upon diverting those social values from private to public uses. While expressing satisfaction that this Budget has been introduced embodying principles that, as we think, will be beneficial not only to Labour, but to the whole community, I think I may fairly and without egotism take some sort of credit to those with whom I am associated, and to myself. [An HON. MEMBER: "Not you alone."] And many others also, who, if they are not in favour of many of the projects we have in our minds, at any rate see together with us in regard to landlordism. Having said so much, I need scarcely say that we of the Labour party will give a steady and consistent support to the Government in all the steps necessary to carry this Budget into effect. I want to make an observation upon two points which are scarcely so satisfactory as might have been in the preliminary observations of the Chancellor of the Exchequer on Thursday last. The first point is in regard to the pauper disqualifications from participation under the Old Age Pension Act of last year. I think the decision of the Government, or the intention indicated by the Chancellor of the Exchequer last Thursday, will cause intense disappointment to many thousands of poor old veterans of industry who have been looking forward to this Budget with great hope. It will probably cause as much disappointment among others who are sympathisers in all sections of society, and who have always hoped that on the occasion of the Budget they would see the removal of this pauper disqualification. I may remind the right hon. Gentleman that at all events hopes had been raised—I will not say that promises have been given—that this disqualification would be re- moved this year. On behalf of my colleagues and myself I can only express our sincere disappointment that it has not been found possible to remove that disqualification, though I may be permitted to express the hope that it may be removed speedily and on an early opportunity.

The next point to which I wish to refer has reference to a far-reaching matter—one, I venture to say, of more ominous import, that is in regard to what he said about national defence. For my part, I was sorry to note the tone of what might be called fatalism and materialism running through all those observations. We, on these benches, are not cranks or faddists in regard to national defence. We well know that under present conditions the needs of defence must be adequate to the purposes of any particular time. While we know that, however, we know at the same time that increased expenditure simply in response to the cries of professional scaremongers does not lead to anything in the nature of peace. On the contrary, increased expenditure, by setting up increased vested interests, rather tends to risk of war and greater pressure being brought to bear on the Government to incur further increased expenditure. I was sorry to note that the Chancellor of the Exchequer last Thursday did not use, as I think he might have used, the opportunity to at all events say something about the promotion of moral forces behind the material forces, and for my part I think I can say this on behalf of my colleagues, that we should welcome a Budget and we should be glad of the appearance of a Chancellor of the Exchequer who would be willing to spend a little more money in preparing for peace as well as in preparing for war. I should be glad to see some arrangement made whereby more money could be spent in order to effect an interchange of international courtesies, of holding international conferences with a view to the perfection of international law and in setting up that sense of self interest in national defence on the part of the great mass of the people of this country which, after all, would be the best guarantee of peace and the best guarantee against invasion. With these reservations, I quite admit the obligation imposed upon the Chancellor of the Exchequer to make provision for "Dreadnoughts" as well as for social reforms, and I can only re-echo his expression of the hope that the money necessary to be provided by the Chan- cellor of the Exchequer will be less for the first and a good deal more for the second. Anything we can do in that direction the Government may be assured will be done by us. I also appreciate the fact that the new taxes which it is proposed to levy are, many of them at all events, of such a character as to constitute the thin end of the wedge being inserted this year. (Hear, hear.) Hon. Members above the Gangway cheer, but the best point about these proposals is the impost on land. We are to have the thin end of the wedge put in this year, and so that we can go on afterwards, as the Chancellor of the Exchequer pointed out the other day, that is to be done without raising any further disturbing element, and especially without disturbing trade. We shall be able to drive the wedge home in the future so as to gain a great deal more revenue from these sources of taxation. The results will be small so far as the land and super-taxes are concerned during the first year, but in the future it will be found that they will yield more revenue, and, for my part, I believe that the result of this tax upon land is indirectly of greater importance than it is from the revenue point of view. We welcome it because of that fact.

We accept the deficit as a fact, and we must make the best of it. It is proposed to give £350,000 for labour exchanges and national development. I have been against labour exchanges, and I have said so in this House and elsewhere when they were simply brought forward as something in themselves, and while the Government did not deal with the problem of unemployment. But when labour exchanges are coupled up, as they are in this Budget, with schemes of afforestation, with provision for the reclamation of bog lands and with many other things that are mentioned, all of a character such as will develop the national resources, then it follows that these things give opportunities for labour and create that demand for labour under which, of course, labour exchanges will assume quite another aspect altogether. I am glad, therefore, that labour exchanges along with other things are provided for by the Budget. We are also cordially in favour of the provision which is to be made for insurance against unemployment. We are in favour of that because we believe that it recognises that to provide for the unemployed is a national and social obligation, and because it relieves the trade unions of the country from a burden of which they have borne the brunt up to now. May I just say here that this House, and I think the country, scarcely realise the immense burden which the trade unions of this country have borne in regard to the matter of unemployment. I myself belong to an organisation of a voluntary character, and which has 100,000 men as members. During the first eight years of this century that organisation has spent no less than £1,000,000 of money in providing for the unemployed, and in keeping want from their door and from their families. That expenditure was not only of a character to carry comfort into the homes of the men and benefit their families directly concerned, but it was of benefit to the country as a whole, and we are, therefore, glad that provision is to be made for insuring against unemployment for the reason I have stated, and for the further reason that it may do something to solve the unemployed problem, or at all events to relieve it by increasing the spending power of the people just at the time when it is most needed. I heard something said the other day of such a nature as to lead me to believe that part and parcel of this scheme of insurance is to be the exaction of contributions from unemployed workmen or from workmen who are becoming unemployed. For my part, if it is proposed, it will have to be looked at fairly and squarely at its practical side. I do not believe it could be defended theoretically. It may be that there will be contributions exacted from the employers as well as the workmen, and therefore from practical considerations it may be necessary to endorse that particular part of the scheme. It may be that the fact that employers may be compelled to contribute as well as the workmen may induce them to keep their workmen on and shorten the hours of labour. There may be a good deal to be said from a practical point of view in favour of such contributions, both for the employer and the workmen. But it seems to me that unemployment and the existence of an unemployed army is a matter of social national obligation, and for my part I am not going to be pledged here and now to any contributions from the workmen at all. With that I leave that part of the question in the meantime.

We are entirely in favour of the scheme for national development which was outlined the other day, and with the proposal for the £200,000 which is to be set apart for this fund this year, and also for the dropping into that fund of balances in future years. I noticed an objection was urged to that to-day by the right hon. Gentleman the Leader of the Opposition. As far as I could understand he objects to this dropping in of this surplus to the fund because it is done without the authority year by year of Parliament, and may lead on to undue expenditure on the part of the Department. I think that objection may be largely, if not entirely, removed by having the purposes for which the fund is to be devoted strictly denned. As far as I could hear from the Chancellor of the Exchequer the purposes for which this fund is to be applied, so far as the Government has made up its mind, are entirely of a beneficial character. Those purposes include afforestation, experimental farms, agricultural education and agricultural colleges, reclamation of land, and small holdings. If I make any suggestion as to an addition to the list I think we should have something in the nature of scientific research so far as manufactures are concerned and some help given to poor inventors, the ideas of whom are, I believe, often lost to the nation because of the pressure of poverty. So far as I can see from the list as already drawn up, and it may be added to, those purposes are all purposes which would increase the national productivity, will increase national efficiency, and, therefore, are such purposes as we can have no misgivings in regard to. For my part, I am altogether in favour of them.

Coming to the next item on the list, that of reduction of the deficit, I get this matter of three millions which has been taken from the Sinking Fund. We again are entirely in favour of that item. A great deal of the National Debt has been paid off in the last few years, and, as a consequence, of course a good deal of interest has been saved for the nation. I have nothing to say against that, it is a good thing, so far as it goes, but, while I am in favour of it, I will say that social reform is a good deal more important than the paying off of the National Debt, and I believe a good deal more urgently needed. Therefore, we are in favour of that social reform. Moreover, may I remind the House that letting things alone in regard to social reform may, after all, be a good deal more costly than the saving of interest charges of the burden of the National Debt. As a matter of fact, the consequences of letting slums alone are such as we cannot congratulate ourselves upon. The evils arising from over- crowding do not stop in the overcrowded areas, and in many ways the evils, physical, mental, and moral, incidental to the poverty and overcrowding spread themselves through all sections and classes in the community. Therefore, we are in favour of this particular item, and, for my part, I should not have been at all sorry if the raid on the Sinking Fund had been a great deal more vigorous and the grants to the National Development Fund a good deal more generous.

I come to a little item and I take it next, as it is next on the list as put forward by the Chancellor last Thursday. That is this tax upon motors. I have no love for such taxes. I do not say that from a mere academic point of view, but because, as a practical man, I am always inclined to look at things from a practical point of view. I have no love for the tax, because I believe it will tend to lessen that particular industry which, to my mind, is a good one. Incidentally, I may say that it is an engineer's industry. I may be unconsciously influenced thereby. I hope not. I think I should say the same whatever the industry if it was one for the good of the people. I believe that taxes of this character tend to defeat the purposes for which they are put forward. How do we know that the rich may not cease to spend money on motors and go in for yachting. I think if I were a rich man I should be partly influenced by the burdens I would have to bear. My Friend below me reminds me that we cannot yacht in Piccadilly. That is so, but you cannot reach yachts on the high seas, and you cannot exact taxes on them. It may be by taxing the motors you will divert money into other channels. In regard to petrol, I understand that there is some distinction to be drawn between petrols used by motors of rich people as a luxury and petrol used in trade. I believe it will be exceedingly difficult to distinguish between one and the other, and will, no doubt, require an army of collectors. We shall vote for it, being largely influenced by the support given on this side, because, so far as I have been able to gather, opinion above the Gangway has all been in favour of this particular tax, and my vote will be largely determined by that. So far as I am concerned, I would not be at all sorry if that particular tax were dropped altogether. I pass by the income tax with the statement that I am entirely in favour of it, and quite agree with the observations of the Chancellor last week when he said that even now, when it will be by the Budget 1s. 2d. on unearned incomes over £2,000 and earned incomes of £3,000, that there is still ample margin for national emergencies. It seems to me absurd to call this tax a war tax—it is a tax—and a right tax I believe—exacted upon the wealthy.

I should like to say, further, I welcome the provision in regard to the exemption of £10 in respect of each child under 16. I speak feelingly in regard to this matter. It so happens that when my children were young, and when I was struggling to give them as good an education as I could to put them in a better position than I had given me to face life's difficulties, I had to pay the Chancellor taxes upon £40, being the difference between the exemption of £160 and my income of £200. I can quite appreciate there are many now in the same position as I was then. In fact, I may say I know a man who has ten children, all under 16, giving him the benefit of this particular exemption. I can appreciate that there are plenty in this position in the country, and, therefore, for their sake, I welcome the proposal. In regard to the super-tax, we all welcome it as being a step in the direction of that equality of financial burden so long overdue. I will just say for a moment that, the other day, while on a journey, I constructed a scale of what those people would have to pay who were subject to the super-tax. I rather think there is a flaw in it; it does not concern us of course, but I think it is rather unfair at one point. Take a man, for instance, with £4,000 per year, and a man with £5,001. The man with £4,000 pays £233, and the man with £5,001, £342. That is to say, a little over £100 in respect of the additional £l,000. If you compare the man with £5,000 with the man anywhere between £4,000 and £5,001, you will find the discrepancy is greater still. Take a man with £4,500, he pays £260, and the man just rover £5,000, say £5,001, he has to pay £342, that is £82 additional in respect of that £500 additional income. It seems to me that those who are struck hardest by the super-tax are those at the bottom of the scale. If I were one of them I think I would have a claim to suggest to the Chancellor of the Exchequer that the tax might be readjusted in such a way as to charge a little less than 6d. at the bottom, and a little more than 6d. at the top. I pass over the stamp duty alteration, because, to be candid, I do not know much about it.

There is one point I wish to make, and of which I was reminded by the speech of the hon. Member for Waterford, that is as to the transfer of property. I wish to speak of a good many cases in this country which I think are similarly placed to those in Ireland, and in the case of people to whom a few pounds is a very great consideration. I was secretary of the Amalgamated Society of Engineers for about 12 years. I passed through my hands, very nearly if not quite, a thousand cases of members of the society who borrowed sums of money, I suppose, ranging from £300 to £400 for the purchase of household property. As far as I understand it, this new adjustment of the duty will double what they have to pay in respect of such transactions. Those men of whom I speak do not own £300 or £400, many of them do not own £30. We used to lend them up to 95 per cent., and many of those men struggled to get £15 or £20. The additional law cost, and even the small charge from 10s. to 20s. per £100 will make a great difference to many of these men; in fact, it will make all the difference as between escaping the exactions of the landlord and getting houses of their own. I may express the hope that something may be done to readjust this matter so far as the transfer of such property is concerned, and by that means a great deal will be done to satisfy many workmen who have a very laudable ambition to get a house of their own.

Now I come to the land taxes, which I believe are the most important part of this Budget. I do not say that by reason of the amount of money to be obtained from them, because, as a matter of fact, the amount is not large—yet, at all events—but I say it on general principles. These proposals seem to me to strike landlordism in its least attractive and most sordid aspects. There may be something to be said for agricultural landlords; I do not know; I do not know much about them. An hon. Friend near me says that there is not much to be said for them. I do not commit myself to that; I simply say I do not know much about it. I imagine, however, at all events, agricultural landlords feel some sense of responsibility towards their tenants, and they protect them in some way; but it seems to me that there is nothing of that sort to be said for urban landlords. The landlord in the town, as I know, because I have spent my life in the towns, reaches down to the deepest cellar and up to the topmost garret to exact his tribute for the mere right to live on the part of the people. Landlords in the towns protect nobody and nothing, except their own sordid interests. Therefore, I am glad that after many days, and a great deal of agitation, we have got included in the Budget a proposal to reach these landlords, and make them disgorge some of their ill-gotten gains. Moreover, the curse of landlordism—and it is a curse—is not only in what it takes, but in what it wastes; therefore I am particularly glad that there is a tax—the second proposed tax in regard to land—which will, I believe, bring into use land which is now held out of use, and thereby do something to diminish unemployment and lighten the load of poverty which the people have to bear. The Leader of the Opposition said that he pleaded only for justice to landlords. We are not so cruel as that. I believe that if justice were meted out to present landlords, as the representatives of landlordism, something would be done to them even equal to whipping by scorpions. As I understand, the proposals are three in number: first, a tax of 20 per cent. on the future increment of land values in towns; secondly, a halfpenny tax on the capitalised value of unimproved land; and, thirdly, 10 per cent. on the reversion at the end of leases. It seems to me that the first proposal is entirely just. I do not see how anybody can oppose it on any logical or reasonable grounds. It was suggested as an alternative this afternoon by the Leader of the Opposition that we should buy land. I am entirely with him. I am in favour both of buying and of taxing, but I am in favour of taxing first, because there would be less to buy. [OPPOSITION cheers.] I am glad that that point is appreciated, and I am also glad to have had from the Leader of the Opposition an admission of the fact that it would diminish the selling price of land—an admission which we had also from the hon. Member for Preston a week or two ago—because it is a conclusive answer to many who still say with regard to the proposition to tax land that the landlord is going to shunt it on to somebody else. The landlords know better than that. They know that they are not going to shunt it on to anybody else, and that is the true inwardness of their opposition to the taxation of land values. Therefore I am in favour of the taxation of land values first; we will have that to be going on with, and later on, when the community realises that they have a right not only to the economic rent, but also to determine what use shall be made of the land, we shall have less to buy. Meantime I am quite in favour of the 20 per cent. to be exacted in the way of a tax upon future increment. If it is said that there may be no future increment, but a decrement, as I believe there is in some cases, in that case there will be nothing there, and there will be no tax. If, on the other hand, there is an increase of land value—and I believe it is guarded in this way—by virtue of the increase of population, from improved methods of production, the greater demand for land or from any other cause, it is entirely just that we should take that 20 per cent.; in fact, we should be quite justified in taking the lot, for the benefit of the community, since the community makes it. I think the halfpenny tax on the capitalised value of unimproved land is no less, just, and the need for it no less obvious. The Leader of the Opposition this afternoon said that he doubted the expediency of this particular tax, and he wanted to know as to its operation. Why should land not be put to its full use? As I understand this proposal, it is entirely a tax on land, either not used at all or not used to its full capacity. It is obvious that in a comparatively small country like ours, with our limited area and growing population, it is of the utmost importance that land should be put to its full use. Therefore it seems to me that the object is one for which we ought to strive, and one which is far more important than the half million of revenue to be derived from it this year—although I should not be at all sorry or surprised if a great deal more than that half a million were obtained. The Leader of the Opposition instanced Glasgow in this connection, where he said there was assimilated by the increase of population something like 40 acres of land per year, an amount so small compared with the immense area of land round Glasgow that it would make very little, if any, difference. But a few minutes afterwards, he was arguing that the difference to land values—or prices—by this tax would be so great, that buyers would be so few and sellers so many, that the effect would be to attract large numbers of people from the country districts. He cannot have it both ways; I believe that his second way of putting it is really the true one, and that as a result of this tax upon unimproved, land in the vicinity of Glasgow and elsewhere land will be a good deal cheaper than it has been, that consequently houses will be put up by enterprising builders who now find it impossible to pay the price asked for the land, that in every way encouragement will be given to industry, and that therefore unemployment will be lessened. Further, it seems to me that the tax of 10 per cent. on the termination of leases is no less just. But I think the Leader of the Opposition had a good point this afternoon when he referred to the going off of the man who happened to sell before the termination of his lease. For my part, I can see very little difference in equity between him and the man who becomes the landlord; nor can I see any difference between a landlord and a man who happens to have a perpetual lease, because the latter is himself a landlord and gaining all the time by the increase of land values, and he is protected by the payment of a certain sum annually which bears no relation at all to the actual land value. Therefore I should be glad to see the Chancellor of the Exchequer or some future holder of the office reach the man who had gone off with the swag by selling out the unexpired term of his lease and the perpetual leaseholder as well as the ground landlord pure and simple.

I come to the last two taxes, and the only taxes of an indirect character, namely, those on whisky and tobacco. If we are to have indirect taxes at all I suppose that these are perhaps the articles on which they could best be imposed. I am extremely sorry to find that our Irish colleagues take such a serious view of the whisky tax; but, having regard to the fact that their main grievance is that they pay more indirect taxation than other parts of the country, and also to the fact that the Budget on the whole does to some extent redress the balance in favour of the indirect taxpayer, I think they have in some degree a set-off in that particular direction, as well as other parts of the country. Moreover, Scotland suffers just as much as Ireland in regard to this whisky duty, perhaps more, because there is as much or more whisky consumed there. For my part I should not be at all sorry if this particuar tax led to a lessening in the consumption of whisky and perhaps an increased consumption of beer or some less irritant spirit than whisky. With regard to the increased tax on tobacco, I heard the hon. Member for Waterford speak of the hardships involved to the poor people of Ireland by it. I have considerable sympathy with him. I know many people in Scotland who are placed very much in the same position as the poor people of Ireland, and to whom tobacco is to a large extent a solace in life. In fact, tobacco largely ceases to be a luxury, and becomes a necessity to a great many people. Therefore I hope that even now something may be done to lighten the tobacco duty so far as the cheaper forms are concerned.

I have finished. I have tried, in my awkward manner, perhaps, to give Labour's distinctive view upon the Budget as a whole and upon some of the items included in it. Let me say in conclusion that we congratulate ourselves as well as the Government on having included in the Budget principles which have long been fought for, and the application of which I believe are long overdue. This Budget will draw wealth from sources which ought to have been tapped long ago. It will do something to bring the nation's resources into use for the nation's good, and to lighten the terrible load of poverty which the people of this country have so long and so uncomplainingly borne. Therefore the Labour party will give it its whole-hearted support, and do all they can to carry it into law. It may be that another place will reject it. If so, their blood be upon their own heads. For my part, I have sufficient faith in my fellow countrymen to believe that once the constitutional issue is fairly and squarely raised the verdict will be on our side. If once it is put clearly to them whether the elected representatives or the other House are to be the custodians of the people's purse, the promoters of the interests of the nation, and the arbiters of the nation's destiny, the verdict will be unmistakably in favour of this House. I do not want that issue raised. I want this Budget passed into law by this House, and endorsed by the other House, and we of the Labour party will give the Government all the support we can in getting that done, while reserving to ourselves that freedom to which we think we are entitled to examine critically any of its details which we may find necessary.


In his speech, interesting as usual, the hon. Member who has just sat down, in his remarks, and also in his peroration, took credit to himself and his party for having inspired the Budget. I think there is no doubt that that was the case. That is why so many of us on this side of the House are so bitterly opposed to it. He told us of the wish of those with whom he associated to get social reform for the people, and he said he approved particularly of the taxation of the landed interest. I notice that the right hon. Gentleman the Member for the Northwich Division of Cheshire most heartily applauded. The hon. Member a few minutes later referred to the super-tax, and said he supported the right hon. Gentleman in regard to that. The hon. Member for Glasgow told us that he approved of some of these duties and that he disapproved of the stamp duty. It is rather curious why it is that he thinks as he does of the stamp duty. I thought it was one of the articles of his creed that no one should hold property at all. I gather, however, the reason of his exception is that the Society with which he is connected, or which the members of his association are connected with, own houses in certain localities. He wishes to save them from the result of this duty. He wants to tax landlords. Why does he wish that those who own houses in towns should hand them over at a cheaper rate than is proposed in this Bill? Why are they to have houses? Would they not be urban landlords?


Certainly not. They own houses for their own occupation, not to exact rent from other people. That makes the difference.


Are they not allowed to let their houses?


They have one house to dwell in, and only one, and that they must have. If they let that house they would have to pay rent for another.


The hon. Member has given his usual answer. It is a sort of answer one always gets from that quarter of the House. He told us that this Budget was on lines which he approved of, and his friends approved of. That is very likely true. I am sorry that the Chancellor of the Exchequer is not in the House at the present moment. I should like to read something he said at Liverpool in December last in reply to a speech by the hon. Member for Dover. It was a speech on Free Trade. He put forward five propositions at the meeting I refer to, and he was speaking then not merely to that audience, but to the whole of the country. He said we had the greatest international trade in the world; we had the greatest shipping business in the world; we had the greatest surplus of wealth; we had the cheapest living (in house, food, clothing, etc.), and, fifthly, we had the highest wages, the shortest hours of labour and the best conditions of all other countries. My point in reading this extract is to ask the Chancellor of the Exchequer if he still professes to accept those five propositions he put forward at Liverpool. To judge by the speech he made the other night he certainly does not.

In the first place, I should like to make a general remark or two about his Budget. The right hon. Gentleman said he brought it in on two grounds. The first was national defence, and the second was social reform. He took a great deal of credit to himself in his wish for a strong Navy, but I think those remarks were rather perfunctory. He only used them, I think, to carry out his part of the bargain with the Cabinet. That bargain was that the Prime Minister should have his warships and the Chancellor of the Exchequer his Socialism. The right hon. Gentleman the Member for the Northwich Division, as is well known, believes—I do not know whether he has concerted his leader, or his Leader has converted him—in the big Navy school. But the Chancellor of the Exchequer says he desires to have a powerful Navy. The right hon. Gentleman the Member for Northwich Division objected to that for a long time on grounds which most people did not understand. Does he agree with the Chancellor of the Exchequer now?


I did not catch those words?


repeated his question.


He is not asking for a big Navy; he is asking for money.


Then the hon. Member suggests that his Leader is not speaking the truth. [Cries of "Order, order."] Hon. Members on the opposite side of the House are very sensitive to criticisms on this side, but they think they may say anything they like about us, and we have not to reply. It proves my contention that the heart of the right hon. Gentleman, the Chancellor of the Exchequer, is not in this demand for an increase in the Navy. His heart is in what he calls social reform, which has been called by me and by some other Members by some other name. I should like in this connection to quote from that interesting book, "The Speeches of Cromwell" (edited by Carlyle). Cromwell was Lord Protector of the Commonwealth, a title that is not likely to descend on the right hon. Gentleman, whatever his ambitions. Cromwell said to his Parliament:— You may talk about your being and your well-being but surely you must consider your 'being' first. He pointed out to the House of Commons then, in 1651, that it was no use talking about "circumstances" and "well-being" and matters of that sort if they were to risk their "being." He pointed out in most forcible language the combination of the great Powers on the Continent against England. Continuing to point out to the House the danger and its duty, Cromwell said:— Whether there is danger or not, I have done my duty before God. That is the sort of language which Ministers of the Crown used, which Cromwell used, when he was in power. The sort of language that the right hon. Gentleman uses in these days is that he is not going to build against nightmares, though he knows perfectly well that it is not a nightmare. He knows as well as all of us that there is a present danger, that there are designs against the integrity of this country. The right hon. Gentleman goes on to speak of well-being. It is a "well-being" that one class must share the burden of. Of course, we know that the right hon. Gentleman outside of this House used the well-known expression, "robbing the hen-roosts." He has most thoroughly carried out his promise. He has not only robbed the hen-roost above ground, but he has sneaked down into the area and the coal cellar. The right hon. Gentleman is looked upon by hon. Members on the opposite side and the hon. Members below the Gangway as a sort of champion against landlordism—as a champion who is to overthrow the Philistines and Goliath. I rather agree with that, and picture myself the right hon. Gentleman going forth with the pebbles of David in one hand and the precepts of Ahab in the other. There is nothing in this Bill which shows that the taxes are to be placed on the shoulders of those who ought to bear them. The right hon. Gentleman made some pleasant remarks about agricultural land and about agriculturists. He considered that owners of land were not a bad sort after all, but I should have liked this Bill to show some evidence of these complimentary remarks, for he is going to bleed them to death. The hon. Gentleman who spoke just now pointed out that he wished to be rid of landlordism by taxation—to transfer the land, I suppose, from one class to the other. As my right hon. Friend the Leader of the Opposition pointed out, for some reason or another the imposition of this taxation is upon those who are the political foes of the right hon. Gentleman the Chancellor of the Exchequer rather than upon those who are his political friends. I think it is a mistake to suppose, as hon. Members below the Gangway do, I believe, that the most of the wealth of this country—you talk about the taxable income—the most of the wealth of this country comes from land or belongs to land. It is also thought that land is the sole source of wealth. I think that is the proper expression to use.


Land and labour.


Yes, land and labour. The belief is that a vast number of people own land that had no land 200 years ago. The vast number of the peers who sit in another place derived their fortunes from the exercise of their talents in other walks of life. Such, for instance, as the law. In the same way a great amount of the land in the country is now held by men who made vast fortunes in trade, and who then became peers. These men have invested large amounts of money in property which consists of land. You have only got to look at the provisions of this Bill to see that the owners of land are taxed not once or twice, but they are taxed upon the present value and the prospective value of every transaction which they have in land. It has been pointed out, and it is well known to the Chancellor of the Exchequer, that landlords do not receive the full income which most other forms of property yield to their owners. Income tax upon the land is based almost upon the gross value. Very little of that goes into the pockets of the landlords, yet that is seized on by the Chancellor. What does the right hon. Gentleman do? He is putting a tax upon minerals. Surely that is putting a tax upon a small class of the community, and upon a class that have no vote. That is the reason, as the Leader of the Opposition pointed out, that the Chancellor of the Exchequer is making such provisions as this. Let us take the case of the tax which is to be imposed upon ungotten minerals. How is he going to determine the amount of ungotten minerals? Who is going to decide whether there are ungotten minerals?

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)

The same sort of people are to decide it as those who decided that there were minerals at Rosyth, for which the hon. Gentleman's Government paid.


Does the right hon. Gentleman mean to have a survey in every county in England to see whether there are minerals there, and to tell us whether they are workable? Is he going to send some adventurer into each county to say whether there is coal there, and are these ungotten minerals to depend upon the fancy of this particular individual? Most of these propositions on prospective value and ungotten minerals depend upon the view chosen to be taken by some person appointed by the Government—by the Inland Revenue Commissioners—to entitle them to screw every penny they can out of the unfortunate victim who owns land. Now, with regard to this tax upon royalties and the extra taxation of royalties. You have to pay upon the prospective value, upon the value of the ungotten minerals, then you must pay when they are got, and you must pay income tax and succession duties. Why are these forms of property to be taxed higher and more often than any other form of property? I should like to read Lord Cairns' view upon the subject from the Report of the Royal Commission on Mining Royalties published in 1893. I do not think the right hon. Gentleman the Chancellor of the Exchequer could have read it. Lord Cairns pointed out that the contract was not in any sense the same as when we speak of agricultural land. [The hon. Member read the extract.]

It is well known coal is a property sold out and out, yet the right hon. Gentleman is going to tax this before it is got. Then he is going to put an income tax upon it and make it pat State duty. In this he wishes to follow the example alluded to by the right hon. Gentleman. He will admit with me what an American witness stated in answer to a question when examined before the Royal Commission, when he stated that we must get many years further before it would be necessary for the State to confiscate private property.

That was the opinion of an American, and it is my opinion now. What is proposed by the right hon. Gentleman is confiscation of property, and it is the landlord's property which is selected for confiscation. Hon. Members below the Gangway approved that because they wish to wipe out landlords, but that is not the way a Budget should be made. Taxation should be placed upon the shoulders of those best able to bear it. I quite agree with that, but it should not be placed upon the shoulders of one class only. Hon. Members below the Gangway talk as if they were the only representa- tives of the working people of this country, but I do not think that the working people of this country wish to be supported on charity. If you are going to lay the whole of the taxation of this country upon the shoulders of the rich I do not think that the revenue will benefit. It will lose eventually until you come to that happy position when these things will pay no taxes at all, and when the owners of them will be reduced to the condition of paupers. These conditions are not desired by the English people, nor by the working classes of this country. I do not think the working classes desire the confiscation or the spoliation of the property of those who have any. We have only got to look round the country to see that every person in this country has a chance of raising himself to-day. We have only to look at this House and see the general condition of trade, and to know, however much we may suffer at one time of the year, yet there are enormous opportunities for the people of this country to make comfortable livelihoods and good fortunes for themselves. There is a fair field for everybody, and to talk of landlordism as being responsible for the evils of our country is to show want of knowledge of the true condition of things.


The hon. Gentleman who has just sat down used a phrase which, if I may say so, was not original with him, when he talked about placing the burden upon the right shoulders. I am a supporter of this Budget of the right hon. Gentleman the Chancellor of the Exchequer, because I believe it places the burden upon the right shoulders. That is the first great test by which I judge the proposals before us. I should like to be allowed to say—and I am only sorry my right hon. Friend is not here to hear it—I think I may speak for every Member on this side of the House when I say that the right hon. Gentleman has risen to the height of a great occasion. He not only deserves but he will receive support from every Member of this side of the House. I say that the first test that should be applied to a Budget is the very one put by the right hon. Member opposite, namely: Has the burden been placed upon the right shoulders? When, in 1907, I ventured to direct the attention of this House to the Question of Taxation, what did I show? I made some very careful calculations with regard to the question of the burden of taxation, and what was the result? I calculated every tax in terms of income tax, and what was the remarkable result? I was able to prove to this House—and it remains unchallenged—that the working classes of this country paid as great income tax as the richest people of this country, the class with over £5,000 a year. Is that putting the burden on the right shoulders, when a man who has 20s.a week has income tax demanded from him at quite as great a rate as that of the man who has £5,000 a year.


How is it taken?


By the levying of imposts upon such articles as are consumed by this class.


They might be teetotallers.


The hon. Member talks about teetotallers. I might remind him it is intended by the Unionist party, if not by the hon. Member himself, to place a further burden upon the shoulders of the working classes by taxing every necessary of life consumed by other than teetotallers. I have stated that the income tax paid is a very heavy burden on the working classes. The Budget which was introduced last year somewhat mitigated these figures, and I am glad to think made the incidence more equitable. But it remained for the present Chancellor, in raising a further considerable sum required for the purposes of the country, to still further adjust the incidence, and I am glad to say it has been so adjusted. What is the second great test? It is this: that in addition to meeting the exigencies of the moment we should place our free trade taxation upon such a basis as to safeguard our financial future, to provide for the certain growing needs of the future. This Budget certainly does that, as "The Times" has admitted. The Chancellor of the Exchequer has laid broad and deep the basis of the future revenue for future years. That is the second great test. What is the alternative of hon. Members opposite? Their alternative is Tariff Reform, placing further burdens upon the shoulders that already bear a great burden. The same confusion of thought appears in their mind in this connection as existed 90 years ago. A Committee which sat 90 years ago spoke of the confusion of thought which underlay our then existing financial system. A confusion of thought which at one and the same time suggests that you can get a protective effect out of duties and yet get revenue from the same duties from which you expect a protective effect. Ninety years after the same confusion of ideas still exists in the minds of hon. Members opposite. We know that in countries which have Tariff Reform in operation, like Germany, they have to resort to large loans in order to meet the deficit of the current Budget. At the present time we have Imperial Germany borrowing £11,500,000 merely to meet the deficit of the current year's expenditure. I congratulate the Chancellor of the Exchequer upon the fact that he has not attempted to make an excessive raid upon the Sinking Fund. I say that all the more heartily because I feared, in view of the large sum to be raised, he might have been tempted to raise a considerable part by a larger raid upon the Sinking Fund. The £3,000,000 he has taken amounts to a reduction of the appropriation in repayment of debt of only £1,750,000, as compared with the position which obtained three or four years ago in view of the fact that about £1,250,000 of interest payment has been saved in that period. We ought to remember that the right hon. Gentleman, by setting up this national Development Grant, is doing much to remedy what I may describe as one of the chief faults of our national financial position, namely, that we have no national assets against a very great national debt. I hope in years to come the result of this appropriation for national development and organisation may be to develop national assets of a substantial character to put against our national debt.

There is another point in connection with the Sinking Fund, and it is one which I view with apprehension—I allude to the abolition of the old Sinking Fund. Some hon. Members have described the old Sinking Fund as a keystone. It is, however, nothing of the sort, because it is an accident, and the ideal Budget has no old Sinking Fund. In view of the national purposes to which this money is to be devoted, surely the more important those purposes are the less they ought to depend upon a sum which never ought to accrue. Take the financial year 1903–4. In that year the old Sinking Fund was a minus quantity, and the same applies to the year which has just closed. If the Finance Act, which we are going to set up, had been in operation there would have been nothing to add to the national development grant in the year that has just closed. In the years 1904–5 it was about £1,000,000, in 1905–6 it was £3,000,000, and in 1907–8 it was £5,000,000. Surely this suggests that if we are to effect great national purposes they ought not to be fed by a fund so irregular. But that is not the chief point, which is that whilst now the old Sinking Fund is an accident, surely it is likely to be legislated for in the time to come if we make these unfortunate alterations in our financial system.

In this connection there is a point which I should like to direct attention, I mean the remarkable savings in expenditure which have occurred in recent financial years, and which have resulted in addition to the old Sinking Fund. How is it that in the last five financial years there has been an average annual saving of £2,000,000 per annum in the sums voted by this House. If you go back to the 70's this is a rare thing. Take the 16 years before 1902–3 and you will find the savings over the estimated expenditure have not been more than £1,000,000 save on two occasions. And yet in the last five financial years you have had this very great saving of expenditure. I think this is a subject which is worth inquiry and investigation, and the Public Accounts Committee are devoting their attention to it.

What are the main features of this Budget? The alteration of the licence duties has been largely touched upon this evening. I do not intend to devote much time to that question, because there are hon. Members on this side of the House who have given the subject much more careful attention than I have. But apart from that consideration, I do not regard the reform of the licence duties as an extensive permanent addition to our revenue. We all hope that the habits of sobriety will so grow that the revenue from licence duties will fall. I will brush aside this subject, because I wish to refer to the graduation of the income tax. I think the Chancellor of the Exchequer is to be congratulated upon the effect of what he has done, and, after all, the effect is the chief thing. Graduation in effect is arrived at by the system for which I have so long pleaded. I find amongst my private acquaintances and amongst hon. Members of this House that there is a great deal of misunderstanding as to what has actually been done, and certainly as to its effect. The rate on earned incomes is 9d. up to £2,000, it is 1s. between £2,000 and £3,000, and 1s. 2d. over £3,000. The nominal rate on all earned incomes is 1s. 2d. In addition, you get a nominal super-tax of 6d. in the £ on incomes over £5,000 on so much of the income as exceeds. £3,000.

Then you get the abatement system, which graduates the small incomes not exceeding £700, whether earned or unearned. What member of the public or citizen, however intelligent, can possibly understand all that these complicated provisions mean? How can he understand his own relation to others, whether poorer than himself or richer? How can he understand whether justice is being done in his case or not? I have taken a good deal of trouble to work out what it means, and if hon. Members will bear with me I will try to explain it. If we take earned incomes of £200, they have to pay, as nearly as possible, l¾d. in the £1, £300 incomes pay 4¼d., £400 incomes 5½d., £500 6½d., £700 8d., and £800 9d., the latter remaining until £2,000 is reached. At the point immediately over £2,000 you get a big increase to 12d., that is on £2,100, which means that the latter income has to pay £30 more in taxation. When we reach £3,000 we get another jump. Three thousand pounds pays £150 in taxation, and £3,100 has to pay £30 more. Take the case of a man with £5,000 a year; he pays £291. If he has £5,100 he becomes subject to the super-tax and pays £350. After all, if there was no graduation, those at the bottom of the scale would be very much harder hit. If they feel inclined to grumble they must console themselves with the reflection that if nothing of this sort were done they would be harder dealt with than they are at present. At the same time it ought not to be the case that a man with £701 pays exactly at the same rate as a man with £5,000 in the case of unearned incomes. I think that a better graduation might have been effected. The Chancellor of the Exchequer has introduced proposals which strongly favour the middle classes, though it is easy to represent those classes as being hit by them. A considerable amount of new taxation has to be raised, and if the position of the middle classes is no better than before it has relatively improved. If the actual taxation on them is not increased, the relative taxation on them has decreased. A middle-class man with £500 a year and three children paid 8½d. in the pound per annum income-tax under the Tories, 6½d. under the present Prime Minister's reduction of the nominal rate from 1s. to 9d., and 5¾d. under the present Budget. What thanks has the Government received for this Budget which favours the middle class? They are held up in the popular newspapers written for the very men who got assistance as "attacking the middle class." There is the disgraceful cartoon, which played so important a part in the county council elections, issued by the "Daily Express," with reference to the Chancellor of the Exchequer, who is made to say: "It is your money we want." Who is the average reader of the "Daily Express"? He is a clerk with £150 to £200 a year. He is appealed to by the "Daily Express"; but he is the very man who is assisted by the Budget. I suppose that the "Daily Express" does not understand the subject. I venture heartily to congratulate the Government on their proposal with reference to abatement in respect to children. It is a proposal which I have long made, and which I suggested in this House only a few weeks ago. It does not seem to be generally understood that under the provision a man with £200 a year and four children escapes income tax altogether. It is one of similar provisions that ought to be made in a democratic Budget. I hope that we shall have the payment of income tax quarterly instead of annually. As to the super-tax, when a new tax is levied the estimate of yield ought to err on the side of moderation. But I am bound to say that the Budget estimate of super-tax, namely, £500,000, is absurdly low. I remember Professor Bowley, in a Paper which we found in the Appendix of the Income Tax Report, proves that, whatever is right, Sir Henry Primrose's £120,000,000 over £5,000 a year is quite out of the question. Indeed, it must be much more than that. If you take only £200,000,000 and make a deduction of £45,000,000, £155,000,000 is subject to the super-tax. That at 6d. in the pound yields £3,800,000. Let us suppose in the first year of the super-tax there is considerable leakage. It seems to me ridiculous to suppose that less than 1½ millions or two millions will be raised by the super-tax. My right hon. Friend was, however, doubtless justified in taking the lowest estimate of yield. If he is wrong, I am quite sure that hon. Members opposite will not mind the raising of four millions instead of half a million from that particular source. Obviously, they do not want to figure as close-fisted patriots. Another point has been raised in regard to the income tax, that is, that it has been called inquisitorial. I expected that when we submitted the rich to the same methods as we submit the poor we should be told that it was inquisitorial. I would remind the House that when a clerk with £400 a year fails to declare his income he is fined £6 for not declaring. I remember the other day the Member for one of the Nottingham divisions brought forward a case of a middle-class man who forgot to make his declaration, and he had to pay a much higher rate than he should have been legally called upon to do. I think this same principle should be applied to the rich as to the poor in the matter of income tax. With regard to the death duties I am very glad that my right hon. Friend has introduced provisions with regard to their evasion. Undoubtedly these provisions will lead to a very much larger yield in the death duties. I point out that in the last ten years, while income tax assessments have risen from 760 millions to 1,040 millions, the estates reviewed annually have remained practically stationary. I now pass to another matter, viz., the long-delayed enactment of John Stuart Mills's proposal on unearned increment. I do not think it has been pointed out in this Debate that what the Chancellor of the Exchequer is doing is not to carry out the principle of Henry George, but to simply put into practice the proposal made long years ago by John Stuart Mill on unearned increment. It is strange that the real author of the proposal should be thus forgotten. The Leader of the Opposition entirely misinterpreted what the Government is doing in this matter. What the Government is doing is simply to tax future unearned increment. The present proposal is not Henry George's at all. The present proposal is to draw a line—to value land at the present, and in regard to the future unearned increment the tax falls on the person who comes into possession and has ability to hear taxation. That is a proposition against which no just argument can be advanced. I should like to remind hon. Gentlemen opposite who are in favour of Tariff Reform that in Germany this same principle which the Government are introducing is now in operation in a number of important towns. It has been recently introduced into Berlin, and it is certainly in my knowledge in operation, and has been in operation, for a considerable time in Frankfort. Every time the land passes, either at death or sale, the town of Frankfort takes the proportion of increment which has accrued, and that proportion has regard first to the amount of the increase, and secondly as to the time which has elapsed since it was last transferred. That latter point deserves the close attention of the House, and I shall await with interest the detail proposals of my right hon. Friend on that point. It certainly would be inequitable to take toll irrespective of the time which has elapsed since the last taxation was effected. Frankfort has regard to that important point, and I do not think it id too much to ask that the right hon. Gentleman should have regard to it also.

Something has been said about decrement. The right hon. Gentleman the Leader of the Opposition complained that he himself had suffered decrement in regard to his landed property. I can only offer one consolation to those whose land has gone down in price—the consolation that their taxation is lessened pro tanto in proportion to the increase on the land which has gone up. I will only add that if the loss is very great and land owning is such a tremendously unsuccessful and undesirable occupation, then I should strongly recommend the Unionist party to take up land nationalisation as one of the planks of their platform. They can then shift this burden from their own shoulders and throw it upon the shoulders of the State, and I can assure them the shoulders of the State will be broad enough to bear it. As to the taxation of undeveloped land, what the right hon. Gentleman said seemed to me to prove exactly the opposite of what he meant to prove. He referred to Glasgow, and said that 40 acres a year was sufficient for the expansion of Glasgow, which he said was a very tiny addition. I agree with him that it is a very tiny addition, but I would say that it ought not to be so small, and 40 acres ought not to be enough. The population of Glasgow is 800,000 people, and there are in that city nearly as many people as there are in New Zealand.


There are many thousands of unoccupied houses there at present.


There are many empty houses, and in addition to that there are other houses—tenement houses of seven reeking, noisome floors, of that kind where there is a family in each corner and a lodger in the middle, and that is in the same neighbourhood where there are many untenanted houses. That is the result, as the hon. Gentleman knows very well—that is one of the doleful results of poverty, but it does not alter the fact that the expansion of Glasgow ought to be greater than 40 acres a year. What is the reason that it is not greater? I take it that Glasgow must grow by quite 1,500 or 2,000 families a year, and therefore the lowest expansion which could be expected from Glasgow, if it was expanding healthily, would be 200 acres. I only hope that the result of these taxes will be to assist that expansion, and to assist Glasgow and other towns to grow more healthily than they do now. I have passed through very imperfectly the main features of my right hon. Friend's Budget, but I should like to make one or two general observations with regard to the things which have been said in this Debate so far. It is said that the provisions of this Bill are likely to diminish the capital savings, and that they are likely to touch what has been called the war reserve of this country. Upon that head I should like first of all to submit the plain facts of the case, and I can submit them now with more confidence than I did a few weeks ago, when I brought this matter before the House of Commons. In the years between 1899 and 1909, the income reviewed by the Income Tax Commissioners has grown from 763 millions to one thousand and forty millions. These are now the official figures, but when I brought this same point to the attention of the House a few weeks ago I gave my own estimate of income in 1909 as 1,025 millions, and, therefore, my estimate was fifteen millions under the figures that it has turned out to be, namely, 1,040 millions. That is the gross income of the people of this country who have more than £3 per week, and it is a most extraordinary increase in only 11 years (and it is the income of the classes not the masses) which has increased by 36.3, when every allowance has been made for possible strictness of collection. There is a most tremendous growth and expansion shown by these figures.

What has the national expenditure been? The national expenditure rose from 118 millions in 1899 to 162 millions in the year for which we are now Budgetting. The increase, therefore, has been 44 millions, while the increase in the growth of income is 277 millions. Thus while the income has increased 36.3, the expenditure has increased 37.2. In other words, while I have taken the period most unfavourable and one during which our national expenditure has grown, as it has never grown before in our history—the period covered by the South African War—the income of the classes in this country has kept pace with the extraordinary growth in expendi- ture. It is the fact, moreover, that the only period during which the growth of expenditure rose as rapidly as the growth of income was during the period of the war itself. What, in view of these facts, can be truly said on the point that we are trenching on our war reserve or that our Budget will diminish capital savings? I should be the very first to agree that in a country where any prospect of the application of industrial capital by the people at large in any effective fashion is very far off—I should be the first to say that any Budget which made it more difficult for capital to be applied to industries would be a Budget which ought not to command the support of this House. But the figures which I have given show most clearly that so far from reaching any such point, we have not trenched upon the margin or upon the fringe of the possibilities of capital saving. The right hon. Gentleman said something about the rich and the poor. He uttered an aphorism with which I suppose everybody in this House will agree, that we have not too many rich men, but too many poor men. He seemed to imply from the tone in which he said it that it was an exceedingly good thing for the country that there should be great accumulations of wealth in a few hands. I hope I do not do him an injustice in saying so, but he did certainly seem to imply that by what he said.


It is quite contrary to what he said.


That is the impression made upon my mind. The impression he made upon my mind was that it was rather a cause of congratulation that there were so many rich men in this country. I have heard that opinion expressed in other quarters. I would ask those who think like that to reflect whether the rich man is the cause or the consequence of the riches of the country. If anybody has any doubt upon that point I would ask them to reflect upon the speech of the hon. Member for Waterford, reminding the House that in Ireland, where there are no natural riches, there are no rich men. I might point out that in Great Britain, where there is a considerable amount of coal and other riches, you get a great many rich men, and if you go to the United States of America, where the mineral resources are very great indeed, you get a very great number of rich men. Therefore I would suggest that these rich men are rather the consequence than the cause of the riches of the country.

If anyone cared to investigate the subject he will find that the progress of a great nation cannot be attributed to its rich men. Great inventions, the great movements which have been made, and the great additions to progress which have been made, have been brought about chiefly by men who certainly did not found great fortunes and did not enjoy riches or leave great riches to pass on to their descendants. I see that the right hon. Gentleman the Member for Worcestershire dissents, but let him consider as an example the particular invention which had more than anything to do with the development of the world—the invention of railways. The locomotive engine was invented by one poor man, Trevethick, and improved by another poor man, George Stephenson. I do not think either of these men made a fortune for himself or left a fortune for his descendants. That is only one instance, of course, of many which I might bring before the House.

Generally, it is certainly true that the masses of this country undoubtedly spend upon objects which do not further national or individual progress a very considerable sum of money. The number of times the National Drink Bill is mentioned in the House is very great, but how often is the other consideration brought forward that the amount of money which is spent annually by the "classes" of this country upon objects which do not make for individual or national progress is not a hundred million pounds, but probably something nearer three hundred million pounds. Professor Marshall in his "Principles of Economics" gives the figure £100,000,000 for the poor, and £300,000,000, for the rich. These figures can only be approximations, but they are approximately true. The Budget only imposes £13,000,000 of new taxation on a country, the poor of which can afford to waste £100,000,000, and the rich of which can afford to waste £300,000,000. Finally, I should ask hon. Members opposite to regard the Budget not as a destroyer, but as a creator of wealth. Every item of the money which has been spent during the past years upon social expenditure was opposed from the benches opposite. Every time we proposed to spend money upon the improvement of the masses of the people we found resistance, I will not say wholly confined to Members opposite, but chiefly centred there. May I ask them to reflect that if we in the past generation had refused to raise money for such great and noble purposes as those foreshadowed in this Budget, the income of the income tax paying classes would not at present be £1,000,000,000 a year. The present Budget has to be regarded not as pulling down the rich man, but as building up the poor man, not as destroying wealth but as creating it. If we look at the matter from what may be called a sentimental point of view, I am perfectly sure that those who enjoy the greater part of the wealth of the country will not refuse their consent to provisions which make for the uplifting of the great masses of the people, for obviously it is not possible to enjoy wealth in a country where misery surrounds us on every hand, and where it is really difficult to get away from the evidences of distress and poverty, where even in the very capital of the Empire one has very carefully to walk in the main streets if one does not want to be shocked by the most terrible evidences of poverty. But to take the other point of view, to regard it merely from the hardest and most material point of view, if our object was simply to create conditions under which the greatest amount of material wealth could be created, we should still accord heartily our support to the right hon. Gentleman in the proposals which he has made.


The hon. Member has travelled over an enormous amount of ground. He has given the House many interesting disquisitions on this, that, and the other proposal of the Budget. He has plied us with aphorisms which, as far as I know, would not be contradicted by anyone. What I am concerned to complain of is the extremely sketchy and ineffective reply which the Postmaster-General made this afternoon to the speech of the Leader of the Opposition. I do not think I have heard a more feeble attempt to answer a very grave, a very clear and lucid, and, I think, a very strong indictment against the large policy which is embraced in the present Budget. We are entitled to complain of the obvious ignorance shown by the Postmaster-General on many of the questions to which he undertook to reply. There was certainly in the conditions of land-holding a want of knowledge which was inexcusable in anyone attempting to answer the very strong case which the Leader of the Opposition made against the treatment of unearned increment in certain cases in this country, and particularly in Scotland. I hope we shall have a little more information than we have already had about the manner of the valuation which is to be applied in these particular cases. We have had, during the last two or three years, very interesting discussions on this subject here. The present Government, which is not always very consistent, is, I suppose, anxious to be consistent while it can, and I should be very glad to know whether it intends to apply in the valuation of these lands the basis which it adopted in the Scotch Land Values Bill which passed the House of Lords last year and the year before. Is the valuation to be made upon the principle contained in that measure? Is the Government going to endeavour, in one thing at all events, to be consistent? If so, perhaps he will explain on what calculation he bases the expected amount which the tax will yield.

What struck me most about these land taxes was the extremely small amount of money which it is expected to get from them. I think the total sum was £500,000 a year, and I wondered when I heard him say so what hon. Gentlemen like the hon. Member for Newcastle-under-Lyme and the Lord Advocate for Scotland, who has wasted breath and bought any amount of railway tickets in going about the country pleading for this particular system, which the Lord Chancellor called both dishonest and nonsensical, pleading for a new source of income which was to bring millions into our pockets, and to relieve industry from taxes and place them on land—I wonder what they thought of the ridiculus mus of £500,000 a year which this tax is apparently going to bring to the national Exchequer during the present financial year. To my mind it seemed a terrible piece of pathos, and I am sure it did so to them, Whether they hope it may be a process on which in the future they can build some of their fairy and airy schemes I do not know, but that can and may be the consolation which at this moment they are finding in the immediate disappointment to which the right hon. Gentleman has subjected them.

There is another point in that particular matter which I think may have escaped the notice of the Government. It is one which I think they will hear a good deal about, and that is as to why they propose to absorb the increment and deny it to municipalities. This whole case has been a case for the municipalities, but I do not say that I agree with it. Who is the person that has created this increment? The local ratepayer and the local community. Why does the Government think it is entitled to step in and absorb the increment which has been created by the community? What has the State done to create that increment? Nothing whatever, and, therefore, I submit that it will be disappointing to the local ratepayers who have been looking forward to a system of taxation of this kind to fill their coffers when they find that the money they believe to foe their own is to be put not in their pockets but in the maw of the Treasury, and when they find a champion revenue snatcher like the right hon. Gentleman filching from them with a pistol at their head the great increment in value which they think they themselves created, they will not be likely to erect a statue to him in George-square, Glasgow, they being largely the people who have forced it on the attention of this House. I was very glad to hear, after a certain amount of coaching from the Prime Minister, the Postmaster-General answer an interruption which was made in the interest of the Scottish feuars. I do not think he knew very much about Scottish feuars. I do not know that the right hon. Gentleman knows exactly what a feuar is. He feus a piece of land from the ground landlord at a certain price per acre. That feu never alters for all time coming. If the feu duty is £10, £20, or £30 a year, it remains fixed. Therefore, the whole increment or improvement on that feu belongs to, and is caused by, the outlay of the man who takes the feu. The house he builds on it, whatever else he may do for it, is his own. I was interested and anxious to know whether a Scottish feuar was to pay the Government a toll on the increment he himself created, and I was glad to hear the right hon. Gentleman assure me that it was the Government's intention in this proposal not to take any portion of the increment created by anyone, but only to take a toll on the increment going into the pocket of some person who did not create it.


indicated assent.


I am glad my hon. Friend nods in answer to that, because it will be interesting and satisfactory information to feuars in Scotland, who really are the bulk of the community, but I should imagine that it will not be pleasant for people in England to realise that all this increment in Scotland is to remain untaxed; whilst theirs, in one capacity or another—and I suppose in Ireland also—is to be taxed. I wish to say a few words on the question of ungotten minerals. I do not precisely know what is meant by that. There were two occasions in the right hon. Gentleman's Budget speech in which he alluded to minerals. In one case he spoke of taxing mining royalties, and later on he spoke of taxing ungotten minerals. I do not know whether he means that there are to be two taxes. Does he propose to tax royalties as well as ungotten minerals?


You will see when you get the Bill.


I think that is discourteous. The hon. Gentleman seems to think it is perfectly useless answering my question. I suppose the hon. Gentleman does not know whether there is to be a tax on mining royalties or not. I rather assume that there will be, but I do not wish the hon. Gentleman to answer me if he does not desire to do so. I think it is a very simple question. Take the case of ungotten minerals. How are these to be taxed. We know that there are mineral estates possessing undeveloped resources. We hear that there is a field at Rosyth, the minerals of which will, no doubt, be paid for on a certain principle which is perfectly well understood. I suppose—in fact I know—that there are lots of minerals in my own country which certainly have never been worked. There are fields which have never been proved, and where it is only supposed that minerals exist. It is impossible to tell whether they do exist or not until you prove a field, and the proving of a field costs an enormous amount of money. Are the Government going to prove these fields? If they are not going to take a suppositious view of the question, it will be necessary to prove the fields in order to ascertain the taxable value. If the ungotten minerals are taxed, and if after the field begins to be worked it is found that the minerals are not there, are the Government going to pay back to the landowner the taxation which has been imposed? I know an estate not far from my own home for which a large price was paid on the assumption that it contained minerals, and that a large income would be got from those minerals. When they put down a pit it was found that there was a mere patch of coal, which was worked out in a few months. They came on faults all round, and an enormous amount was lost on the equipment of a huge shaft and other works to develop that field. That is a case in point where minerals were believed to exist. It is a case which proves the extraordinary difficulty and the very grave uncertainty which must attend the valuation of any land that is supposed to have minerals below it.

I do not wish to make any comments on the income tax or the old Sinking Fund. There is not anyone on this side of the House who is not prepared to pay a reasonable share of the cost of social reforms and of the defence of the country. But there are two ways of finding the money. There is a fair way and an unfair way, and I think some of the proposals in this Budget are not fair and just. That leads me to discuss the question of the liquor licences, brewers' licences, and the various taxes proposed to be placed on the trade. I do not think that the Chancellor of the Exchequer himself has realised what those burdens mean.

He looked quite alarmed to-day when my right hon. Friend below me stated the effect of this taxation upon one very important and well-known firm in the City of London. When the right hon. Gentleman the Postmaster-General attempted to answer the question all he had to say was he had some relations in the trade—I rather gathered he was out of it himself—and that naturally he would oppose anything that was extreme, that the value of brewery shares had not fallen, and that Consols still retained their original position. I do not think the brewers themselves even have been quite able yet to ascertain how very severely these taxes will bear on them. There is a great deal of uncertainty as to what the Chancellor of the Exchequer really meant. I do not find myself in any uncertainty about it, listening to him as I did and having read most carefully his speech since. I am quite satisfied what his proposals are, but I am equally satisfied that he does not know the effect of them, and I judge that from the fact that he only expects to get, he says, £2,600,000 from these increased licence duties in the course of the current year. I am pretty certain myself that the sum will be a very much larger one than that. When we come to those Resolutions which no doubt have got some figures that may be accepted as fairly accurate, we shall no doubt be able to say exactly what we think these licence duties will produce. I am pretty certain that £2,600,000 is far too small a sum, and I think those hon. Members who heard the figures of Messrs. Whitbread's taxation this afternoon will agree that if in one case there will be no less than £30,000 extra this year, there must be a great deal more than £2,600,000 to be got out of the whole trade.

The existing licence duties produced something like two and a quarter millions, and the new ones are far more than double. Indeed it perfectly surprises me to find any Chancellor of the Exchequer who would have thought at all of adopting such a scale. The right hon. Gentleman, in discussing this 50 per cent. scale, based upon the charge of the small houses, said at the present time they are charged 50 per cent. I do not defend the present scale; I think it is an anomalous scale. I have always thought so. I think it stops too early, and it is practically fair and right to readjust it. I have nothing whatever to say against that. But the way in which the Chancellor readjusts it is perfectly ridiculous. He takes 50 per cent. on the rateable value (Schedule A) on each house. Whatever sort of a house, or whatever kind of trade it does, it has got to pay 50 per cent. on its value. It is perfectly well known that in the case of many of these houses in the City of London, for example, a large part of the value is in respect of its site value, its building value, and not for the trade that it does at all. We had endless cases of that sort when discussing the Licensing Bill last year. If the Chancellor of the Exchequer wished to be perfectly fair, what ho ought to have done was to do what he has done with clubs. He ought to have placed a tax upon the liquor sold in these places, and not on the rateable value. I do not say that it would be an easy thing to do, but it would be possible. There is no difficulty about spirits. Everybody knows that spirits have to be accompanied by a permit. There is no reason why beer should not also be accompanied by a permit, and with a little care it could be quite easily ascertained what trade these houses are doing, and therefore what taxation they ought to pay. It would be, at all events, an equitable system.

The effect of this new system is that, for the sake of consistency, they are charging 50 per cent. of the annual valuation. Does the right hon. Gentleman know that there are cases of publican's licences in the City of London valued at from £20,000 to £30,000 a year? Does he suppose they can afford to pay £10,000 or £15,000 for their licences? I wonder does he know that? I am sorry he is not here; I do not believe he does know that. I do not believe it has been brought under his notice, or that he realises, while the present scale is in operation, that there is a point at which taxation must either stop or be a very largely increased burden, and that it is impossible for these places to pay taxation of this kind. It would, no doubt, conduce in many cases to closing up the places or, rather, the dropping of the licences. In many large hotels they would content themselves, I suppose, by keeping slips in the hands of the German waiters, and orders would be taken from the various clients for what they wanted, and it would be sent out for to the nearest public-house. That is quite a possible thing to do. The Financial Secretary shakes his head, as if that was not a possible thing to do.


Hotels do not pay on the public-house scale.


I know they do not. They do if the liquor they sell is more than one-third of the whole of their trade. I had many letters to-day from hotel keepers stating that the liquor they sell is more than one-third, and therefore they will have to pay public-house licence. One man tells me his increased licence duty would be £900 a year, which would absolve the whole of the profit he made last year and leave him nothing to live on. That is a case in Edinburgh. I do not know the man, but there are many cases of the same kind. When discussing the Licensing Bill we had declaration after declaration from the Government that all that the Government was entitled to was the monopoly value, and that only after a period of 21 years. I wonder if the right hon. Gentleman knows what he is taking now. I do not honestly believe it. He is taking infinitely more than the monopoly value. As defined by himself, that value was the difference between the ordinary valuation and the valuation under Schedule A. Does the Under-Secretary of State mean that 50 per cent. of the annual valuation in many of these cases does not make far more than that difference, and that it does not take at the moment far more than the monopoly value, which the Prime Minister proposed last year should be taken at the end of 21 years? If that is not punitive taxation going back on all the declarations we heard from that bench last year I do not know what is going back. It is the most astonishing and most ridiculous position a Government was ever placed in, because they put in that Bill the definition of what monopoly value was, and they were only going to take it at the end of 21 years. We shall have no difficulty in showing in. this Debate, which will be a very prolonged one, that they are now asking a "ruination" sum, infinitely greater than that which you said they were entitled to in the Licensing Bill last year, and in. proposing those licence duties the right hon. Gentleman alluded to the American, scale, and he maintained, of course, as, many people do, and it is perfectly true, that the scale of licence duty in America is very much higher than in this country. That is perfectly true, but when you deal with the licence duty you must also deal with taxation on liquor. You must take the whole thing together. As the hon. Member for Huddersfield knows, you must estimate what the taxation on the liquor is in the various forms in which it stands. You must also go further than that. That is one thing which the right hon. Gentleman opposite did not notice. You must also take the number of people who are served by each licence. I do not think the' hon. Gentleman did bring out this particular difference, because I think, taking; Massachusetts for instance—I am speaking from memory—each licence there supplied 2,000 people, and each licence in England only supplied about 400 or 500.


The hon. Member is probably aware that the consumptions per capital is considerably less than here. The difference between the number of the populations is a circumstance to which reference must be made in dealing with this question.


I do not know whether that is so; I do not contradict the hon. Member at all, but there are other considerations in America which do not exist here. There is the fact that the owners of these licences not only supply their own. neighbourhood but the prohibition neighbourhood next door. They have large numbers of customers from the surrounding districts, and, therefore, their ability to pay the licence tax is one which the unfortunate publican in England or Scotland does not possess. Although, I daresay, I may be contradicted by the hon. Member opposite, who knows the subject so well, and who has written upon it with great ability, I am bound to say, and I say it deliberately, that if you take into account the population that these licences supply in America, as compared with the population supplied here, and if you apply the taxation in this country on licences, on spirits, on beer, and on wine to American consumption, you will find that the American taxes on our basis would have yielded many more millions last year than they did—I think something like 22 millions. In point of fact, the spirit tax alone in this country, if applied to the consumption of spirits in America, would itself be more than the whole of the existing income in America from the taxation of liquor licences. Whichever way you take it, if you apply the British scale to America you get much more money, or if you apply the American scale to Great Britain you would have so much less money—four or five millions. Whichever way you take if, you are not entitled to say that taxation in this country is less than in America, as the Chancellor of the Exchequer has suggested. Therefore, that argument fails entirely, just as this scale is entirely upset by the Prime Minister's argument from that Bench last year.

In point of fact, this is an extraordinary Government. It never seems to know where it is, and, no one Minister ever seems to agree with another. Take the new brewer's licence, for example. The old brewer's licence duty was included in the beer duty, when Mr. Gladstone made the change in 1880. The old brewer's licence was a tax of 1s. on malt, and, in order to make up for the hop duty, it was taken off. Mr. Gladstone took the whole of the taxation on beer, and relieved the brewers from the malt tax. The State grants no monopoly to a distiller or a brewer. I am a brewer, as most people know. I am a Free Trade brewer, as it happens. Probably I am not so hard hit by this Budget as many other members of my trade, but I want to know on what principle my taxation is to be raised from a guinea to £2,500? What does the State do for me in return? There is no guarantee that the Chancellor of the Exchequer might not put a brewery down on the opposite side of the street to mine. There is no monopoly; there is no justice's licence required; anybody can start a brewery or a distillery; it is a perfectly free trade like anything else. As my right hon. Friend opposite knows, there is a huge concern for making yarn; why not charge a duty upon making yarn? It is perfectly true that a commodity may be taxed, and that there is a perfect right to do so; but why tax my capital? What business have you to impose a tax on me unless you offer me a monopoly? If you are going to prevent any more breweries being put down where mine is I am ready to pay the tax. If you are not willing to do that, then I protest against it as unjust. I do not think that it can be defended on any sort of principle or by any sort of argument. I am very sorry the right hon. Gentleman is not here, but he will hear a great deal about this before he has done, and he will have an opportunity of replying to criticisms a little later, and of telling us how it is that for some reason he disagrees with the Prime Minister. It is so very interesting to see great men disagree with one another, knocking each other down like ninepins; but some day it will be found, like old Aunt Sally, that their noses will be knocked off. Notice was taken by my right hon. Friend of the fact that while the spirit duty was increased no taxation was put on beer. The Postmaster-General alluded to me in his speech, and said he wondered what the hon. Gentleman sitting behind the Leader of the Opposition had to say about that, and whether I agreed with it. There are two ways of taxing an article—a direct and indirect way. In this case the Chancellor of the Exchequer has put the taxation on beer in an indirect way. He has put 3d. on the barrel in the shape of a brewer's licence, and I do not know what he has put on the barrel in the shape of extra taxation on the liquor licence. That is a calculation which I have not been able to go into, but I think most hon. Members will agree that it does not very much matter whether it is put as a tax on beer or whether in an indirect way you take the money out of their pockets—the charge falls on beer. I do not know what may be the result of it, excepting this: that it is certain largely to reduce the income from the monopoly. The dearer you make an article the less likely it is to be largely consumed. ["Hear, hear."] Yes, that is all very well; from the teetotal and temperance point of view no doubt it is a satisafctory result, but from the revenue point of view it is not. Even with the reduced consumption it is perfectly clear that the Chancellor of the Exchequer is going to take an enormously increased sum out of these sources of taxation—sources continually attacked in this House. We have perfect spates of Bills, which nearly overwhelm me, in order to prevent people from being able to sell drink at all. I am very glad to see that the Chancellor of the Exchequer has returned. It appears to me that the right hon. Gentleman is making a mistake in going to this particular source for a much larger proportion of national income. I do not think it is very wise—


You refer to licences?


As to licences, I am perfectly certain that the right hon. Gentleman has been misinformed as to the effect of this tax upon them. Instead of crushing out small houses he is more likely to crush out the large ones—that heavy taxation applies to certain houses largely rated which have expensive sites or expensive buildings, and the burden on them will be out of all proportion to the trade they do in liquor.

It would have been far more equitable for the right hon. Gentleman to have devised a scheme by which those houses would have been taxed upon the liquor they sold and not upon the rateable value. I know the difficulty. I have said there is a difficulty, but it is the only fair way if he is going to take huge sums of that kind. He never will get them; half of them will go, but if he wishes to get those it will be a much more equitable way. I have endeavoured in a perfectly fair way to put the question from my point of view. Opportunities will arise again when those Resolutions are submitted, when I dare say the right hon. Gentleman will hear a good deal about them, and when I hope he will see his way to change his mind. I do not believe that the scale of licence duties which he has adopted will even command the support of the hon. Member for Huddersfield. I am perfectly certain that there is one thing we cannot do, that is to impose a high rate of duty, and at the same time a higher scale of licences. I do not know who the right hon. Gentleman's adviser was. If it was the hon Member for Spen Valley he has done him the same service as he did the Government last year. He has put him on the wrong track and on the wrong scent. I am perfectly certain, and I believe that the right hon. Gentleman wants to be fair, but he succeeds in being most unfair. I do hope that in the course of the discussion he will see that very considerable modification is required, and that he will not make the proposals, as they are now impossible. I am sure he felt from the figures given to-day that with these new taxes it is perfectly impossible for people in that business to carry on.


I congratulate my right hon. Friend the Chancellor of the Exchequer on having introduced into this House a Budget containing as, I believe, and securing the greatest readjustment of the incidence of taxation on equitable lines of any Budget that I have heard introduced since I had the honour to be a Member of this House. The question of national expenditure is one that ought to be no party question. We must all realise, on whichever side of the House we sit, that for our national expenditure to have grown until it amounts to £165,000,000 in time of peace, that that certainly ought to give us cause for reflection and cause to consider most seriously where at any rate we are getting the best possible value for our money, whether it is being expended in the most desirable directions, so that we shall get the greatest possible return for the benefit of the whole nation. The prospect of a reduction in our national expenditure in the future is far away indeed. In what part of our expenditure could we make reductions? Take the item of education. That in the future is certain to go up and not to diminish, and I rejoice in the rise of the grant for educational purposes, because I believe of all the money included in our national expenditure that spent on education is devoted for the best purposes. I fear that as regards expenditure on the Army and Navy there is no prospect of a reduction in the near future. Indeed, the probability is that our expenditure on those defensive forces will also increase. I am a peace-loving man, but still I do not hesitate to say that I do feel that as matters stand in the world I believe we are really best promoting the interests of peace by having our defensive forces thoroughly prepared, so that other countries, knowing that we are in a state of preparedness, will hesitate very much before they attack this country.

In what direction, I ask myself, in considering the huge national expenditure, we now have is there any chance of any substantial reduction, and I look around in vain. I believe our national expenditure will not remain at £165,000,000, but that it will rise even higher. In front of us we have one much-needed change, which will increase the burden of expenditure still more, and that is the removal of the pauper's qualification in connection with old age pensions. Everybody on both sides of the House must have recognised it could only be a question of a very short time before that pauper qualification would have to be removed, and, as my right hon. Friend told us, it would involve an expenditure of £5,000,000 sterling. We all desire, in the interests of the unemployed, that there should be the rapid development of some great schemes of afforestation. We also desire an insurance scheme making provision for unemployed workmen in the time when they are out of employment, and in the time when they are rendered unable to follow their employment by sickness, that they should be partially supported out of the funds of the State, and that there also should be provided labour exchanges. Reference has been made to the reduction in the amounts devoted to the Sinking Fund, that is, to the reduction of £3,000,000 sterling. The speeches from Gentlemen opposite would seem to indicate that we were not paying our way as a Liberal Party as we go. That is certainly not true, be cause we should be paying £8,000,000 to the reduction of the National Debt, and probably, in the end, £15,000,000 in the course of the current year. If my right hon. Friend was here the other night, and followed the Debate, he would find that statement very clearly made by the Chancellor of the Exchequer; a statement in which he showed that £8,788,000 would be the reduction in the first instance, and that out of the Exchequer balance otherwise, as I understand it, the final diminution would be about £15,000,000 for the current year. He will find on page 497 of the Official Report of Thursday last that statement—


That is the last financial year.


I beg his pardon. It is the current financial year. I was mistaken in that. To turn to another subject, the Chancellor of the Exchequer has hit some Members tolerably hard. I happen to be a motorist, and when one finds that he has not been content to hit us with one barrel, but has given us a double-barrelled dose, in the shape of an increase of licence duty from 4 guineas to 20 guineas on a 40 horsepower car, and also a duty on petrol, naturally one feels oneself pretty hardly hit. But one has to recognise, after all, that motor cars do wear out the roads to a considerable degree, particularly if one has in one's car my right hon. Friend the Member for Clackmannan and Kinross—a pleasure which I often have. Therefore it is only right that motorists should make a fair contribution, towards the mainten- ance of the main roads of the country. If only we can be assured by my right hon. Friend that the £600,000 so raised will be devoted, not to relieving the rateable burdens on the localities to that extent, but to supplementing the expenditure they are already making, in order to bring the roads into a more perfect state for motor travelling, I think motorists will not have much reason to complain.

Then, again, the Chancellor of the Exchequer hits us fairly hard in the matter of income tax; and when I have regard to the extra taxation in the matter of income-tax and estate duties, I am driven back to consider the matter from a broad standpoint. What is the principle upon which taxation ought to proceed? My answer is that the Government ought to seek to adjust the incidence of taxation so that each man is called upon to bear the burden that he is able to carry. That being so, when I consider the whole question of local and national taxation, I feel that this Budget, even with its increased death duties and income tax, really creates a more just system of taxation right through, and more nearly levies taxation according to people's ability to bear it. Therefore, I can offer no objection to the increased estate duties or the increased income tax proposed by my right hon. Friend; and certainly his scheme of graduation makes both taxes much more equitable. Then my right hon. Friend proposes to tax the area of ungotten coal. In other words, I take it that that means taxing coal royalties. [An HON. MEMBER: "No."] I believe that what this proposal really means is the taxation of mining royalties. I do not know the details of how my right hon. Friend proposes to arrive at the amount which the owners of coal royalties ought to pay, but of the taxation of mine royalties I decidedly approve; and I have no doubt that when my right hon. Friend produces the detailed scheme it will be one that will secure the support of the great majority of this House. If there is one thing above another which specially gratified me in connection with this Budget it is that my right hon. Friend did not allow himself to be tempted to increase the taxation on tea or on sugar. Those commodities are indeed necessaries of life. I am sorry to find that opposition comes from Ireland to the increased taxation on tobacco. Tobacco is certainly a solace; I find it so myself, but, all the same, it cannot be classed as a necessary of life. When £16,500,000 additional had to be raised from taxation, I think the great majority of Members will agree that it was infinitely better to put a little more on tobacco than to revert to the further taxation either of tea or of sugar or of any of those commodities that are really necessaries of life. I am quite aware that great opposition will arise from the trade to the proposals affecting them. We listened with pleasure and respect to the speech of the hon. Member for Ayr Burghs; I question whether the trade could possibly have anyone in this House to represent them so powerfully and with so much tact and good feeling as the hon. Member. But when £16,500,000 additional have to be raised, surely the trade ought to bear an additional share. The monopoly value of the licensed houses in this country has been created by the State limiting the number of licences issued; and when the hon. Member for Ayr Burghs tried to show that the taxation in the United States is less than it will be here under the present Budget, I think he cannot have taken into consideration the charges for licences in the State of New York at any rate, because I believe that there they are much in excess of what is contemplated by the Chancellor of the Exchequer. Personally, though I have 36 working men's clubs in my Constituency, with 12,000 members, I do not hesitate to say that I welcome the charge of 3d. in the pound on the takings for drink in connection with clubs. I think it would be absolutely inequitable largely to increase the charges for licences to licensed victuallers, and to allow clubs again to go absolutely free of taxation; and I shall be very much surprised indeed if members of working men's clubs in any part of the land raise any serious objection to this small contribution towards the taxation of the country, especially when they remember, working men that they are, that £9,000,000 out of the £16,000,000 additional will go for old age pensions to make more comfortable the last years of over 600,000 old men and women throughout the kingdom. I again congratulate my right hon. Friend on the great work he has undertaken in this encyclopedic Budget—a Budget of a character which secures the just taxation of every class and of every interest in the country, and which I believe is approved of by an enormous majority of the nation.


It appears to me that the hon. Member who has just sat down, and who has referred to the Budget as an encyclopædic Budget, hardly gives sufficient point to the fact that its en- cyclopædic nature consists of its adopting all the nostrums of the Radical party, and putting them into the Finance Bill, raw, cooked, or otherwise. What is obnoxious about the Budget is that it is taxing the same class over and over and over again under different names. The figures in each respect are enormous. The class legislation to my mind is obvious. I think it must be remembered that you cannot injure one class without injuring all others also. It is alleged it was done sometimes in the past as regards the poor. I am exceedingly sorry if it should be so. I hope it will never be dreamt of again. I do not see that is any argument why you should insist upon doing the same with another class. If you are to be fair all round and to treat all classes equally, let us remember if you injure one class you do injure another. Then as regards this particular Budget, I observe that one of the hon. Members of the Front Bench, the Parliamentary Secretary to the Local Government Board, talks of the Budget as a triumph of Socialism. [Loud cries of "No, no."]


The hon. Member only perhaps read the report in the paper, which has been contradicted by the hon. Member. He never said anything of the sort.


I was wondering whether the Chancellor of the Exchequer—


My hon. Friend assured me he never said anything of the kind.


I never knew of the contradiction, otherwise I would not have referred to the matter. Apparently there seems to be a general idea that at any rate all incomes above a certain amount are to be extremely severely taxed, and that the State is to take the rest of it. That seems to be the principle on which this Budget is based. I cannot understand the justice of such a principle. I do not think it is right to assume that anybody who has an income of, let us say, £500 or £700 a year should practically have the surplus taken away and treated in any way that the Government of the day or Parliament may determine—in fact, treated as if the surplus was no longer his own property. That is a practical discouragement of enterprise. I cannot see if enterprise is to be encouraged, if trade is to be encouraged, how you are going to do it by saying if a man reaches a certain point all the surplus money will be taken away from him, or, at any rate, an enormous percentage of it will.

The first effect of that is, let me suggest, that the charities will suffer. I have reflected with considerable uneasiness upon the effect of this policy of the Chancellor of the Exchequer upon charities in general. I think there is not the least doubt that those who give largely to charities at the present time are necessarily the class against which the Chancellor of the Exchequer is most severe. The effect will be to cut down the contributions to these charities on the ground that they cannot afford to pay these enormous extra taxes and also to give to charity as largely as before. I think this is a great misfortune. I do not know whether the Chancellor of the Exchequer intended it, but that undoubtedly is one of the first effects that this Budget will have. Those who take a real interest in charities, and believe in their advantage and efficacy, and desire to promote them—to them, I am certain, this Budget is causing a great deal of uneasiness.

Then there is another point—the reserve in time of war. The Chancellor of the Exchequer promised us that he meant to raid as many hen-roosts as he could find. He has certainly succeeded in doing so. I should like to know, supposing we were going to war this year—which Heaven prevent—but supposing we were driven to a quarrel and went to war, what further hen-roosts would the Chancellor of the Exchequer possibly find unless it were Tariff Reform? I do not see what else he could make use of. He is squeezing every class, certainly the upper and the middle classes, to the utmost extent, and I do not believe it would be easy for him to squeeze anything more out of them. What strikes me also about this Budget is that the Chancellor of the Exchequer has taken in it many of the recommendations of the Income Tax Committee of 1906, but has disregarded the advice and opinion given before that Committee by nearly all the expert witnesses. It is most remarkable. I spent some time on Saturday in studying the Blue Book to discover how constantly the Chancellor of the Exchequer has been advised by Sir Henry Primrose that a certain course was impracticable and very undesirable. In every case he has overthrown Sir Henry Primrose's advice, and has adopted radical views of his own. Sir Henry Primrose told him that if he imposed a super-tax, or if he increased the tax very largely, the temptation to avoid it would be largely increased. That appears not to have frightened him at all. He has told us, in fact, that he does not believe in it. Well, I am bound to say I believe Sir Henry Primrose in the matter, as he has had much more experience of taxation than even the right hon. Gentleman the Chancellor of the Exchequer. At any rate Sir Henry Primrose is an acknowledged expert authority, and he has warned us that very high taxation of this kind does increase the temptation to avoid the tax.

Many financial experts, from Mr. Gladstone onwards, have strongly advised against the abolition of the Sinking Fund. The Chancellor of the Exchequer has without hesitation abolished it. Sir Henry Primrose, in his evidence, speaks of the imposition of the super-tax as almost impossible to work effectively. The Chancellor of the Exchequer has equally without hesitation imposed a super-tax. Sir Henry Primrose and other witnesses have enlarged on the importance of maintaining a careful proportion between direct and indirect taxation. The Chancellor of the Exchequer has upset that balance, and does it apparently with a very light heart. And why is all this necessary? Because, apparently, as an hon. Member observes, because of the necessity for "Dreadnoughts." I am quite certain that hardly any Member of this House, and very few people outside, would not be willing to pay considerable extra taxation for necessary "Dreadnoughts." Certainly I am not one of them. But it is only a quarter of the extra taxation which is required for these "Dreadnoughts." Three-fourths of it is required for old age pensions. I have no objection to old ago pensions. In fact, I have frequently stated I wished to see a proper scheme of old age pensions, which would have regard to thrift, which did no harm to friendly societies, and which was based upon sound financial footing. Is that what we are paying for? Old age pensions for which we are paying are on a non-contributory basis, which I strenuously opposed throughout, and it is because this basis is non-contributory that so heavy a tax has now to be put on. If we had only consulted German and other foreign systems before so rapidly and hastily, for electioneering purposes, passing the Old Age Pensions Act, we should have done much more wisely, and should not now be face to face with all these necessary requirements of money. But it is largely industrial trades, small traders and the like, that will be effected by this extra impost. I represent a trading constituency, and I have every reason to know that we shall suffer severely from the taxes that have been imposed. Of course the workpeople will suffer from the imposts on tobacco and the licensing duties, but the small traders will suffer largely from the increased income tax and from the restriction of expenditure in home industries, the migration of industries to the Colonies and abroad and the consequent discharge of the workpeople. There will be general instability and pressure on capital. I do not understand why the hon. Member for the Blackfriars Division of Glasgow who spoke from below the Gangway, was so nervously anxious with regard to the future of the motor industry because petrol is going to be taxed and motors are going to be taxed. He is connected with the engineering trade. Well, he forgets that those connected with other similar trades will equally feel the effects of new imposts, and will equally suffer in their trade. It is not to be forgotten, as was repeated in the House quite recently, that 20 years previous to 1905 some £22,000,000 of British capital were annually invested abroad, while in the last three years something like £130,000,000 of capital has been annually invested abroad. And now this Budget will make capital go out of the country even more rapidly. I find in the Blue Book of the Income Tax Committee of 1906 some very interesting evidence was given by the hon. Member for Blackburn, who was examined before the Committee as representing the Labour party. I think it is a pity that that evidence should sink into oblivion. It is useful as showing what the hon. Member for Blackfriars said just now, that this is only the thin end of the wedge. The hon. Member for Blackburn, in his evidence, said:— Supposing avoidance of taxes took place by the transfer abroad of business which might be carried on elsewhere he did not think much natural disadvantage would follow. That was forestalling the Prime Minister's calculation when he said that he thought good was to be got from the transfer of British capital abroad. Remember that taxes upon capital are even more serious from a differentiating point of view in this country than they are in any other. That may seem a somewhat strong statement, but I have it upon the opinion of Mr. Bernard Mallet, one of the Commissioners of Inland Revenue, who was asked what he thought as regards the effect of our present system. He was asked this:— You say that the effect of our present system is practically equal in severity to that in force in any foreign country or colony as to the combination of th death duties and the income tax and his reply was 'yes for differentiation.' He was again asked:— Differentiation is as great in our country as in any? and he answered I certainly arrived at that conclusion when I compared those figures of my own with what foreign countries do. We derive a higher portion of our revenue from income tax than almost any other country? and the answer was yes. That shows that the differentiation at the present time as regards income tax, legacy duties and succession duties, whether in respect of earned and unearned incomes or the amount of the estate, is already now at least as great as in any foreign country in the world. That being so, it is simply amazing that the Chancellor of the Exchequer should propose to increase that differentiation enormously in spite of the evidence given before the Committee. Does he suppose that this project will really bring growing returns? Sir Henry Primrose, who is an impartial witness, and who is one of the permanent officials with very great experience, said:— Speaking generally on a matter of this kind, everything would depend on the kind of assent with which a tax of this kind was received by the people to whom it is applied. Signs are not wanting that it is not received "lying down" by the people to whom it is applied, and to that extent it is not likely to be extremely efficacious. I must also ask the Committee to bear in mind the opinion of the right hon. Gentleman the Member for Spen Valley, who, in his draft report for the Income Tax Committee, said:— We would, however, point out that if in ordinary times the total rate of the tax on large incomes were already very high that would materially limit the power of the Chancellor of the Exchequer to increase the rate substantially in times of national necessity. That expresses the opinion I expressed a few moments ago. When I further look at the opinions of the hon. Member for Blackburn on this matter, and discover how far he is ready to go, I think it is enough to take the breath away from most impartial judges. The hon. Member said he was prepared to go, as far as the higher incomes were concerned, to a rate of 7s. in the £ on the income tax, and that amounts to 30 per cent. of one's income. I do not know to what indefinite extension of that proposal the hon. Member for Blackburn and his associates look forward to. Arguing as the hon. Member does, that such a tax would be immensely popular, because a good many people are not affected by it and very few are, I do not think that is a judicial spirit of justice, and if by such proposals there is invoked a spirit of passive resistance, which is likely to be found, I shall do nothing to discourage it if anyone asks my advice in the matter, because they will only be adopting that spirit of passive resistance of which the Chancellor of the Exchequer himself is the advocate, the apostle, and the saint. Without further developing at this stage the other duties which the Chancellor of the Exchequer has imposed, let me say that there is a widespread feeling among the different classes concerned that these imposts are unjust and unfair, and means are almost sure to be found to avoid them. Large businesses which have hitherto been established in this country will be induced to transfer the main portions of their business abroad, and collect their profits abroad, and practically will turn their branches in this country to act as mere shareholders in the business, while the profits are being collected abroad. With that the Chancellor of the Exchequer cannot possibly deal. Profits will be collected abroad by the large firms which used to be collected in this country, and the effect will be that you will not only fail to get the super-tax which is to be imposed, but you will also fail to get the present income tax on those profits, which will have passed out of the reach of the Chancellor of the Exchequer. All that has apparently not been considered, or, if it has, it largely accounts for the underestimating of the receipts under these various heads. Time alone will show whether the Chancellor of the Exchequer is right or wrong; whether those taxed will evade the tax as I have suggested; and whether the right hon. Gentleman can impose these grossly unfair, unjust duties without any fear of reaction on the national Exchequer.

The PRESIDENT Of the BOARD of TRADE (Mr. Churchill)

The Leader of the Opposition this afternoon told us that we were at the beginning of what would be a very complex and a very protracted discussion Sir, if that discussion continues on the lines upon which it has begun the Government will have no reason to complain of it. We have made extensive and even daring proposals, and those proposals have been accepted, and on the whole acclaimed by the public at large. [OPPOSITION cries of "Oh! oh!"] They have not been substantially challenged in this House. The right hon. Gentleman the Leader of the Opposition, it is true, devoted his reasoned and temperate speech to making a careful inquiry into the foundations and the character of certain of the taxes by which my right hon. Friend proposes to raise the revenue for the year. I gather that the right hon. Gentleman accepts—with such reservations as are proper to all persons engaged in a large discussion, and which are particularly appropriate to a party leader—the general principle of differentiation of taxation in regard to the amount of property, but he demurs to and condemns the differentiation in regard to the character of the property. He singled out for special censure and animadversion the two sets of taxes which figure in the present Budget in relation to the land and the licensing trade. The right hon. Gentleman used expressions about certain forms of taxation proposed by my right hon. Friend, which he said was a striking one, and which diverged from the principles which have hitherto dominated civilised society. We on this side of the House have always asserted a different position with regard to the taxation of land and liquor licences than in regard to the taxation of other classes of property. We claim that taxation of land and liquor is in a different category to other classes of property. That is a fundamental point, and we do not wish to aggravate it. The immemorial custom practically of every moderate State, and the conclusions of the greatest thinkers of the world, have always placed the tenure and transfer of blocks of land on a wholly different category from other property. There has always been an obvious distinction between that class of property, which is a vital interest to every human being, and which is limited in extent, and other kinds of property. The treatment of land has always been differentiated by the State from other property. When the right hon. Gentleman seeks, by comparison, to show that the same reason which is applied to land ought also, by every argument of symmetry and in logic, to apply to other processes which are at work in modern civilisation, he only shows by each example he takes how different the conditions are which attach to the possession of land and the value of land from other forms of business speculation. It is asked: "If you tax unearned increment from land, why do not you tax unearned increment on stocks?" If I buy a piece of land and I buy stocks, and their value rises, their operations are entirely distinct and different. The unearned income derived from land arises from a wholly sterile operation. Land is a commodity which is needed by the community, and the unearned income is derived from that sterile operation. It is always something that is needed. On the other hand, the investment by an individual in a block of shares is not withholding from the community what the community needs, but it is stimulating by a judicious and economical investment. The one operation is an operation in restraint of trade and in clear conflict with the general interests; the other is part of a natural and healthy process by which the capital fund of the world and the economical plant of the world is nourished and year by year is notably increased. Then the right hon. Gentleman dealt with the railway and the country district enriched by the railway. The railway is built to open up a new district. The farmers—the landowners—in that district are endowed with unearned increment in consequence of the building of the railways; but after a while their business aptitude and industry creates a large carrying trade. Then, he says, the railway gets its unearned increment in its turn. The right hon. Gentleman cannot call the increment which the railway acquires by a regular service of carrying goods as unearned and the methods adopted a process of getting rich merely by sitting still. The right hon. Gentleman's intellect is so acute and so clear that he needs only to look fixedly on this question to realise the embarrassment this kind of attitude is likely to place him in these next few months. Then the right hon. Gentleman went on to say that my right hon. Friend's proposals were based upon the general assumption that there was a corner in land, and that land was being unduly held up by the owners in order to secure a very high profit, and he said that was a fallacious argument, and that there was no corner in land. The right hon. Gentleman instanced the case of Glasgow. I do not think he could have introduced a more unfortunate instance. He said the demand of the great community of Glasgow for land was not more than from 40 to 60 acres a year. Is that the natural demand of the people of Glasgow for land? Does that really represent their complete economic and natural demand for the amount of land that a population of that size require to live on? I will admit that at the present crisis it may be all that they can afford, but there are 120,000 persons in Glasgow who are living in one-room tenements. We are told that the utmost land that these people can absorb economically and naturally is from 40 to 60 acres a year—[An HON. MEMBER: "Forty acres"]—we are told it is 40 acres a year. Because the population is congested in the City the price of land is high in the suburbs, and because the price of land is high in the suburbs the population must remain congested in the City.

That is the position which we are asked to believe is in accordance with the principles which have hitherto dominated civilised society. But when we seek to rectify this system, to break this unnatural and vicious circle, by interrupting this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of owners. That is put in a minor position. Something else is put forward, as is always put forward in these cases, to shield the actual landowner or capitalist from the logic of argument, or from the force of Parliamentary movement. Sometimes it is a widow, but that person has been used to exhaustion. It would be sweating in the cruellest sense of the word, and overtime of the grossest description to bring the widow out again so soon. She must have a rest for a bit, so instead of the widow we have the market gardener. The market gardener is liable to be disturbed on the outskirts of great cities. If the population of these cities extend, and the new areas which they require for their health and daily life is larger than it is at present, the market gardener may be disturbed. I should like to point out to the Committee that the right hon. Gentleman in using that argument about the market gardener, recognises, and very clearly, and I think beyond the possibility of withdrawal, he recognises the possibility at any rate of these cities expanding and taking up a larger area of ground in consequence of the kind of taxation which my right hon. Friend seeks in these land taxes to impose, because if the cities are not going to expand it is clear that the market gardener will not be disturbed. Let us see the spectacle which is created by the speech which the right hon. Gentleman has made this afternoon. On the one hand you have 120,000 persons occupying one-room tenements, and on the other you have the land of Scotland, and between the two stands the market gardener. We are to determine for the sake of the market gardener to keep that population within a limit which is unnaturally restricted, to an unnatural supply of land, which can bear no relation to the social, physical and economic need of the population for the sake of a market gardener, who can perfectly well move further out as the city spreads, and who will not be in the least injured, but in many cases will benefit by the proposals which Parliament is now making.

We take the view that land cannot be regarded as an ordinary commodity; neither are we prepared to place licence duties nor to regard publicans' licences in the same position as ordinary property. A licence is a grant from the State. The licensing trade is a trade subject to special restrictions and taxation, recognised by all parties and by all Governments that have ever held office in this country, and the position in regard to licences as we know perfectly well has been notably and sensibly altered in the course of last year. We have seen an assertion on the part of the licensed trade of their right to convert an annual tenancy into what, in the opinion of their friends, amounts to something almost indistinguishable from a practical freehold, and as they have asserted the position they must take the logical consequences of their argument and of their action. If there are hardships in the taxation which has been proposed let them be exposed to Parliament, and they will be considered in no spirit of malice or of prejudice by those who sit on this Bench. Do not let us have attempts to represent the tax as one which involves an increase in the cost of production as distinguished from the profits of an industry. An increase, even a serious increase, in the cost of production, does not necessarily eliminate the profits of an industry. It is an incident in the turnover, and not the elimination or destruction of the resulting profits of the industry. If there are hard cases and incidents which are severe and vexatious let them be discussed, and we are prepared to meet them with the closest attention and with every desire to avoid severity or anything like the appearance of harsh treatment to individuals. But we decline in regard either to liquor licences or to land to place them on the same footing as ordinary property. We do not regard them as on the same footing as ordinary property. So far as land is concerned I have stated the main primary distinction which will occur to anyone. So far as licences are concerned we do not regard them as private pro- perty, but as public property, which should never have been alienated wholly from the State, and which in present circumstances unquestionably requires a special reassertion of State rights and State claims upon them.

I do not think anyone will deny that we are making very considerable proposals to Parliament for the finance of the year. But the party opposite have gravely compromised their power of resisting any financial proposals which the Government may put forward. Those, of course, who desire to see armaments restricted to the minimum consistent with national security, those who labour to combat scares and war alarms which have no real foundation, who assert their belief that trust against trust and confidence between nations increases the security for the peace of the whole world are indeed not ill situated if they chose to make criticisms of the scale and the scope of the finance which is required for this year and of the expenditure which has called that finance into being, but an Opposition which would each day, day after day, expose the First Lord of the Admiralty and the Prime Minister to a running fire of questions and cross-questionings, the important object of which is to promote a feeling of insecurity and to involve demands and liabilities for new expenditure of an almost indefinite character; those who, like the right hon. Gentleman the Member for Dover, have been running about the country, hurrying to and fro in the land, saying or singing, "We want eight, and we will not wait"—they at least are not in the best position to tell the tax-gatherer to call on someone else.

Surely a reputation for patriotism would be cheaply gained by clamouring for ships that are not wanted, with money which is to come from other people. It is not only in that channel of expenditure that the party opposite have compromised their power to resist the financial proposals now before the Committee. As my right hon. Friend pointed out in the Budget speech, how many Amendments to the old age pension scheme received official support from the party opposite and had to be resisted by the Government, not on the merits, but in the interests of public economy, and we remember how Lord Halsbury, one of the great leaders and authorities in the Conservative party, informed us after the Old Age Pensions Bill had been passed that the scheme was so paltry as to be almost a mockery. Well, I fancy that those who have used arguments of that character, and who, at any rate, profess that for public security more expenditure is required, are not in a position to turn round and take up the attitude of offering resistance to that taxation so long as it is proposed with general regard to the principles of social justice.

There is another set of arguments to which I should like to refer. We have been long told that this Budget would reveal the bankruptcy of Free Trade finance. The right hon. Gentleman the Leader of the Opposition, seeking about from time to time for a sound economic foothold, has always endeavoured to rest the sole of his foot upon Tariff Reform for revenue. Whatever other arguments may or may not apply, the adoption of a policy of Tariff Reform, we have been told, is absolutely essential if the revenue of the country is to be obtained, and if natural expansion is to be imparted to it. But if we may judge from the newspapers what is the complaint, or one of the complaints, that will be made against the system of Free Trade and the Free Trade Budget of the Chancellor of the Exchequer? It is not that the revenue will expand too little, but that there is a possibility that it will expand too much; it is not that we have reached the limits of practicable Free Trade taxation, it is that the taxes which we now ask Parliament to assent to will yield us something in future more abundant than in the first year, and that will grow with the strength of the country and will wax as subsequent years pass by. In the words of "The Times" newspaper, my right hon. Friend has laid broad and deep the foundations of future revenue. Some of those who thought that we were arrested by the dead wall of Cobdenite principles are trying to abuse us because we have opened out broad avenues of finance for future revenue, and those leader writers who bewail the deficit of this year will have to devote their pens to the writing of articles with respect to the surplus of next. But we may in future hear arguments that Protection will revive industry, increase employment, and enable foreign tariffs to be corrected and countervailed, and so forth. All that we have heard before, and we will no doubt hear it again. But there is one argument which I should think it unlikely would be effectively used against us in the future, and that is that the Free Trade system cannot produce revenue, because one of the criticisms directed against this Budget in the most serious and emphatic manner is on account of that very expansiveness of revenue, which tariff reformers have declared a Free Trade system never could produce.

Free Trade has produced an expansiveness in this country. How have foreign countries fared? A year of depression has passed all over the world. The shortfall of the revenue under the estimate in this country last year was less than two millions. In Germany it was eight millions. In the United States the short-fall was over 19 millions. Let the House see what fair weather friends these protective duties are. In a time of depression they shrink; in time of war they may fail. When they are wanted they dwindle; when they are wanted most earnestly they die away altogether. What is true of the taxation of manufactured articles, the foundation for any fiscal policy, is true still more of the taxation of food. In no country in the world is it so true as in this island. If we were ever engaged in a war which rendered the highways of the ocean unsafe or insecure the rise in prices in this country would be such that all food taxation would have to be swept away at once by any Government who desired to use the whole vigour of the people in prosecuting the war. This year, with its trade depression and its excellent maintenance of revenue, has seen the vindication of Free Trade as a revenue-producing institution. Next year will see its triumph. I have no apprehensions about the Budget which is now before the Committee. Mr. Gladstone said, in introducing the Reform Bill of 1884: "What is wanted to carry this measure is concentration, and concentration only. What will lose this measure is division, and division only." I venture to think that it will not only be a demonstration of the soundness of the economic fiscal policy we have long followed, but that it will also be a demonstration of the fiscal and financial strength of Great Britain, which will not be without its use and value upon the diplomatic and perhaps upon the naval situation in Europe. The hon. Member for Waterford said that he thought that the speech of my right hon. Friend the Chancellor of the Exchequer was several speeches in one, and the right hon. Gentleman the Member for East Worcestershire said that it was the work of several Sessions, if not of several Parliaments. No doubt those are statements which are exaggerated.

The proposals which have been outlined or positively put forward do not, I think, in any degree transcend the limits of the practical having regard to the facts of the situation in which we stand. A social policy may be very large, but at the same time it may be very simple. These projects of economic development, labour exchanges, insurance for unemployment, and other aspects of prudential insurance, which depend on money grants and on contributions, may require very careful and elaborate administrative adjustment in dealing with the interests and parties particularly concerned, but so far as Parliament is concerned they do not impose difficulties or make demands on the time of the House in any way comparable with those which are connected with the passage of an education or a licensing Bill. I am bound to say that I see no reason whatever why we should anticipate that in the course of this Session and next Session we should not be able to establish a wide and general system of national insurance, which, more than any device within the reach of this generation of workers in this country, will help to hold off some of the most fatal and cruel perils which smash their households and ruin the lives and families of the workmen. On many grounds we may commend this Budget to the Committee. It makes provision for the present; it makes greater provision for the future. Indirect taxation reaches its minimum and food taxation reaches its minimum since the South African war. The working classes at least have no reason to complain. Nothing in the Budget touches the physical efficiency and energy of labour; nothing in the Budget touches the economy of the cottage home. Middle-class people with between £300 and £2,000 a year are not affected to a considerable degree, except by the estate duties, and not to any large extent by them, and in some cases they are distinctly benefited in the way of general taxation. The very rich are not singled out for peculiar, special, or invidious forms of imposition. The main burden of increase in the present year is placed upon the main body of the wealthy classes of this country—a class which in numbers and in wealth is much greater than in any equal community, if not indeed in any other modern State in the whole world. And that class I venture to think have got opportunities for pleasure and for all the amenities of life, and in their freedom from penalties and obligations and dangers are more fortunate than any other equally numerous class of citizens in any age or in any country. That class has more to gain from dwelling amid a healthy and contented people and an unravaged land than any other class of His Majesty's subjects.

I do not agree with the hon. Gentleman who has just sat down in thinking that they will meet, as he suggested, and as the right hon. Gentleman was rather inclined to suggest, the charges which are placed upon them for the needs of this year, by evasion and fraud, and by cutting down the charities which their good feelings have permited them to give. I am bound to say that I think the man who proposed to meet the Budget charges by cutting down his charities is not the sort of man who is likely to find a very extensive source of economy in the charities which he has hitherto given: as for evasion, I think that the right hon. Gentleman underrated the high public spirit which animates at any rate a very large proportion of the class who will be most notably affected by the present Budget. And that class have, at any rate, one assurance, one great assurance, which is worth much more to them than a few millions one way or the other in taxation, and it is this—that we are this year taking all we are likely to need for the policy which has now been placed before the country, and which will absorb the energies of this Parliament, and that, so far as this Parliament is concerned, it is extremely unlikely, in the absence of some great national calamity, which there is no reason to apprehend, that any further demand will be made, and it is extremely unlikely that the shifting and vague shadows of the impending Budget will darken the prospects of improving trade in the future.

When all that may be said on those grounds, we do not attempt to deny that the Budget raises some fundamental issues which divide the historic parties in British politics. We do not want to embitter those issues, but we admit that they are raised nakedly and bluntly with hon. and right hon. Gentlemen opposite. We know that they believe that the revenue of the country could be better raised by a Protective Tariff. We are confident that a Free Trade system alone would stand the strain of modern life, and would alone yield the expansive power which is necessary at the present time. Our proof shall be the swiftly accomplished fact. The right hon. Gentleman and his Friends opposite would have usrely much more on indirect taxation. They seek, and we have often battled to arrest the tendency, to increase the proportion and to decrease the proportion of direct taxation, a policy which has marked in unbroken continuity the course of the last 60 years.

We, on the other hand, regard that tendency as of deep-seated social significance. We are resolved that it shall be arrested as far as we are concerned, and that it shall be attended in the ultimate future, and that in the ultimate end by our exertion the entire public charge shall be defrayed from the profits of accumulated capital by the taxation of those indulgencies—those popular indulgencies which cannot be said in any way to affect the physical condition of the land. That is our policy. The policy of the hon. Gentleman and his friends is to multiply and extend the volume and variety of taxes on food and necessaries. They will repose, not only as we to some extent are forced to do on tea and sugar, but also on bread and meat, and place taxes not merely on luxuries, but also upon articles of prime necessity. Our policy is not to increase, but whenever possible to decrease, and ultimately to abolish altogether, the taxes upon articles of food and necessaries of life.

If there is a divergence between us broad, clear, and wide, in regard to the methods by which we are to raise our revenue, I think there is also divergence in regard to the objects on which we are to spend them. We, both sides and parties, are inclined sometimes, and, I think, without exaggeration, to agree that we may be approaching if we have not actually entered upon one of the climaterics in our long history. We see new forces at work in the world, and they are not all friendly forces. We see new conditions abroad around us, and they are not all favourable conditions. I think there is a great deal to be said for those on both sides of politics who, irrespective of any political party, are urging that we should make an effort to achieve a more earnest, a more strenuous, and a more consciously national form of life. But there we part. There we may be agreed, but there we part, because I think hon. Gentlemen and right hon. Gentlemen opposite, certainly the party generally, are inclined, much too much, to repose their faith upon the future; the security and pre-eminence of this country upon naval and military preparations. And the least intelligent and not always the most silent of our critics out of doors believe you can make this country more secure and respected by the mere multiplication of "Dread- noughts." We shall not neglect that, and we now ask the Committee to enable us to take steps to secure us that expansion of resources which will place our finances beyond the capacity of any Power which we ought to take into consideration. But we take a broader view. We are not going to measure the strength of Great Powers only in their material forces. We think that the security and the predominance of our country depends upon the maintenance of the vigour and health of its population, just as its true glory will always be found in the happiness of its cottage homes. We believe that if Great Britain is to remain great and famous in the world we cannot allow the present social and industrial disorders, with their profound physical and moral reaction, to continue unabated and unchecked. We propose to you a financial system; we also unfold a policy of social reorganisation which will demand sacrifice from all classes, but which will give security to all classes. By its means we shall be able notably to control some of the most wasteful processes at work in our social life; and without it let the Committee be sure that our country will remain exposed to some fatal dangers against which fleets and armies are of no avail.

Committee report Progress; to sit again to-morrow (4th May).

The House adjourned at Nine minutes after Eleven of the clock.