HC Deb 01 October 1909 vol 11 cc1598-601

Where property passes on the death of the deceased includes any moneys payable on such death, if occurring on or after the thirtieth day of April, nineteen hundred and nine, in respect of any policy effected by the deceased on his life, and maintained by him, such moneys, to the extent of an amount equal to one twenty-fifth part of the total aggregated value of such property, shall not for the purpose of enhancing the rate of duty, be aggregated with any other property, but shall form an estate by itself.

The object of this Clause is to provide that a man who has had the prudence to insure his life shall not, because he insured, cause the estate to be burdened at his death, provided that it is less than one twenty-fifth part of the total estate. If a man insures during his lifetime it is going to have a rather curious effect in regard to Death Duties. For instance, if a man leaves £20,000 and pays 5 per cent. Death Duty, that is equal to £1,000 Death Duty, but if he leaves £20,000 plus £1,000 insurance he then pays 6 per cent. on £21,000, or £1,260 Death Duty. This extra £1,000 life insurance pays £260 Death Duty. Surely the Chancellor of the Exchequer could not have considered this effect in connection with a policy bought and paid for during the man's lifetime, and for which he made a sacrifice during the whole of his life. I wish to call the attention of the right hon. Gentleman to these figures. Look at the matter from the other point of view. If the £1,000 is treated as a separate estate, as I ask it should be under this Clause, it works out that the £20,000 would pay 5 per cent., equal to £1,000. If the £1,000 is treated separately it would pay 2 per cent., or £20 in place of the £260 as at present. I think those figures alone are sufficient to commend my proposal to the sympathetic attention of the right hon. Gentleman. I have endeavoured at different times during these discussions to gain the sympathy of the right hon. Gentleman, but I have invariably failed. Nevertheless, I make one more appeal to him. I know that to-morrow week the Chancellor of the Exchequer is going down to my Constituency to smite me hip and thigh, and I want to be able to say that the right hon. Gentleman has treated me generously in regard to this important Amendment. I think that ought to clinch the question, and I expect on this occasion to get something more substantial than the sympathy of the right hon. Gentleman. I hope I shall be met substantially by this Clause being accepted, because it is a cruel thing in the case of a man in business—he may be rich to-day and poor to-morrow, and therefore it is important that he should provide for his wife and family by insuring—when he has insured that the State should step in and penalise him to the extent I have shown by the figures which I have quoted.


I was under the impression that upon one occasion I had met the hon. Member, not with generosity, because you ought not to do that at the public expense, but at any rate substantially. I am sorry that I cannot meet him here. In the first place his demands under this Clause are too expensive, and they would cost the Exchequer an enormous sum of money. Under his proposal not merely should we lose the percentage, but we should lose upon the whole of the rest of the estate. It is almost incalculable what we should lose. The provision which a man makes for his family is a very proper one, and so is any form of savings, but I cannot see any difference between the two. Supposing one man takes out an insurance policy for £500, and another man pays into a bank year by year a sum of money to save it up. In both cases the principle is the same. A man who insures does it in that way because he wants to make provision in case anything happens to him within a short period of time, in which case his relatives would be sure of a certain sum of money, whereas the life of a man who is saving year by year might come to an abrupt end. The principle, however, is the same. As far as the State is concerned, if you are going to spare these savings at all, you cannot confine it to insurance.


I think the right hon. Gentleman has over-estimated the sacrifices which the State would make in this case. My proposal only applies in cases where the property does not exceed one-twenty-fifth of the whole estate, and therefore the amount would be comparatively small. There is a great difference between putting £500 in a savings bank and taking out an insurance policy for £500. If a person dies in the first year he gets the better of the insurance company, but, as a rule, the insurance companies get the best of the bargain on account of the large number of transactions they undertake. From that point of view, I think the Chancellor of the Exchequer might have given my proposal a more sympathetic consideration.


I would ask the Chancellor of the Exchequer to consider this Clause in a sympathetic way before the next year's Budget, because this question of insurance is a matter in which we are more interested than any other. Under this proposal he would receive his money immediately, without any question whatsoever, and this would enormously benefit the Exchequer. It would mean an increase in the business of insurance, which would be good for insurance companies. It would also mean that the testator during his lifetime would be able to make such arrangements that he would know how much money he would leave at his death.


I am inclined to think that the Chancellor of the Exchequer has considerably over-estimated the effect of this Clause upon the Exchequer. The loss must be an unknown quantity, and it is not fair to assume that it would be extensive. There is another distinction to be drawn. The right hon. Gentleman says that insurance is very much the same as if a man puts something annually into the savings bank. In actual experience it is not the same. A man with an insurance policy running knows he is liable for the premium, and on that account he will make greater efforts to keep his expenditure at such a level as to make sure that he can meet his premium, and that fortification of his moral strength grows stronger every year. Therefore it means something to the State to encourage insurance by legislation.

Question, "That the Clause be read a second time," put, and negatived.

Sir SEYMOUR KING moved to insert the following Clause:—