HC Deb 26 October 1909 vol 12 cc851-913

There shall be charged, levied, and paid on the licences for the manufacture or sale of intoxicating liquor specified in the First Schedule to this Act, the duties of excise specified in that Schedule, and the provisions expressed in that Schedule to be applicable to any such licences shall have effect with respect to those licences. The said duties shall be charged on any licences which shall have been granted after the first day of July, nineteen hundred and nine, or may hereafter be granted, but in the case of any such licences granted before the thirtieth day of September, nineteen hundred and nine, the amount of the duty shall be adjusted so as to make the sum payable in respect of the period up to that date such sum only as would have been payable if this Act had not passed.

Mr. GEORGE YOUNGER moved to leave out the Clause.

I do this in order to discuss shortly the general position of the Clause with reference to the Schedule. The discussion on the Schedule in Committee was no doubt pretty exhaustive, but it suffered very seriously from the fact that it came at the very end of our work and that there was a considerable interval of time between the discussion of Clause 29 and the dealing with the Schedule. Clause 43 embodies serious changes in the conditions of taxation on the liquor trade generally—changes which are of a very important and far-reaching character. I think it is for the House to take into consideration the position of the trade before seeking to impose these enormously enhanced burdens. We have a trade which in the past has been the mainstay of the taxation of this country. Last year it produced over 37 millions of taxation in one way and another and 29.6 per cent. of the total tax revenue of the country. It has also had placed upon it in recent years by Parliament burdens to the tune of £1,100,000 a year in England to provide compensation for redundant licences. It has had a very serious burden placed upon it by the general increase in assessments and the enormous additions to local rates, and taking the State and the municipal taxation together—this is an estimate which has never been contradicted or challenged—no less than one-third of the total proceeds of the trade are taken by the State and the municipalities. That is surely in all conscience a sufficiently heavy burden, but for that very reason I suppose, and because it has been admitted and acknowledged by competent authorities for a very long time that the trade can bear no more taxation, it is singled out to be penalised by this Budget just as other interests have been. I, of course, realise that if it were possible fairly to tax this trade without seriously interfering with the revenue it would be a perfectly fair thing to do it under just conditions, and I by no means suggest that this trade, or any other similar trade, should at the present moment escape from the new burdens imposed upon the country. The evidence which has come before us during the last four or five months of the effect of some of these burdens goes to show that instead of producing increased revenue they are more likely to kill the goose which lays the golden eggs. There is also apart from that a considerable fall in the consumption of these articles in this country. There is also a gradual change in the channels of distribution.

The competition of clubs, for example, is very much more extreme than it was, and you are changing the channel of distribution gradually from that which produces the largest revenue to the country to that which produces the smallest, and to that which is not under your control in the same way as the other, and which will be able to make itself felt in Parliament in a way which the licensed trade cannot do, and which will make it in future less likely that the revenue from this particular source will be an increasing revenue. Three and a half million barrels of beer and nine million gallons of spirits are being sold less than 10 years ago, and that proves that the position of the trade, owing to the greater sobriety, which everyone is pleased to know exists, and this particular kind of competition, is being decreased as a source of revenue upon which we have depended largely in the past, but which I do not think in the future will be so dependable as it has been. The scale which this Clause will enact is really a Licensing Bill itself, and if ever there was an example of tacking in a Budget Bill you will find it in the Licensing Clauses. In the numerous charges which are proposed to be enacted in the Schedules of this Bill we have an entirely new principle introduced in the manufacturers' scale which has hitherto been, and which ought to be properly, a Registration Duty, but which is to be a duty charged proportionately to output. It is not possible to justify a progressive tax of this kind upon a perfectly free industry, which receives no sort of monopoly in return, and the Prime Minister, to give him his due, has never attempted to defend it on that ground. The Prime Minister has had a very uncomfortable past in this matter, and the only manner in which he has been able to deal with it is by entirely ignoring it, and by endeavouring to show by other arguments that the necessities of his present financial position warrant him in proposing something which he cannot defend, and which he knows, and has said before, is totally unwarrantable. I do not intend to go into the question again. We thrashed it out very thoroughly on the last occasion. There are no fresh arguments which I have to bring forward, and I fancy the arguments which the Prime Minister sought to bring forward on that occasion will not be brought forward again, because they were met and answered on this side most conclusively. We have an entirely new scale, a very punitive new scale being applied. The licensees at the present moment who have to pay from £4 10s. to £60, under the new scale will have to pay 50 per cent. of their rateable value for the first year, or if they have fully licensed beerhouses 33⅓ per cent. of their rental. If they are beerhouses there is a minimum of £50 in some cases.

Then there is to be a different form of rating which no man in this House can understand and which I hope, the Chancellor of the Duchy of Lancaster or the Prime Minister will try to explain. How it is to apply I cannot tell, although I have tried very hard to find out, but we shall discuss that on Clause 44, and I hope we shall have an interesting time. This scale is a very, very severe one and it is, I think, unjustifiable, in this respect, that it seeks to apply, with the exception that I have given, a 50 per cent. rate from the very lowest up to the, at all events, £500 house. It is a scheme which in many cases will be infinitely more onerous than the monopoly value which the Prime Minister proposed to take from the trade under the Licensing Bill of last year at the end of 21 years, and it will be taken now without any warning and without any time limit, and if the right hon. Gentleman is to be consistent with his past—a very difficult thing, I agree—he will say that he will modify the scale as proposed to be passed into law. I am sorry when we dealt with this scale in Committee the Prime Minister was not in his place, although we were all looking forward with interest to his justification of the change. The right hon. Gentleman came in at the end of the discussion to deal with an Irish question, but he did not favour us with his views on the matter and he did not come here to justify or explain his new proposals, and perhaps he will to-day do us the kindness to explain them now. The scale which is applied to houses of over £500 in value appears to me to be a most illusory one, and those who know something about these matters say it will not be any advantage to them at all, and I am perfectly bewildered to discover how the new figures of the Chancellor of the Exchequer, with reference to them, can be justified. He says in the White Paper which we got this morning with our Parliamentary Papers, that the concession—I do not think that is the proper word, and I have never used it, although it is used by hon. and right hon. Gentlemen opposite—involves a loss of £300,000. I cannot understand how he gets that figure, and the House will see that it must be an erroneous one. For what are the facts of the case? Here they are: There are, of course, very few beerhouses above £500 in value. There are very very few, a negligible quantity, and you could count them on the fingers of one hand, I should think.

There are 680 fully licensed houses in the United Kingdom, of a rental of between £500 and £600. There are 413 of a rental between £600 and £700. The aggregate value of the whole of these houses cannot possibly be more than £650,000 a year, and the 50 per cent. tax on that, if you gave them no option at all, would be £325,000. Does the Chancellor of the Exchequer mean to say that the option will only leave them with £25,000 a year out of these houses when he is getting £54,000 out of them now under the present Licence Duty? The figures are perfectly absurd and ridiculous, and they must be wrong. Even if you take the minimum of £250 which each has to pay, they will pay £275,000 a year—only £50,000 less than the 50 per cent. I cannot understand how the mistake has teen made. The actual 50 per cent. of £650,000 is £325,000 a year. You have about 1,100 houses, and the minimum by your new scale will be £250. If you multiply 1,110 by £250 it is something like £275,000, or only about £50,000 less than the figure which he would get if he charged 50 per cent. How can you therefore lose £300,000? This is the first occasion on which we have had anything like a detailed estimate, and the moment we examine it we find it quite wrong. I am not surprised that in the past we have always been refused details. If this is the kind of thing we are going to get it was a very wise proceeding always to refuse the information asked for. That, I think, disposes pretty effectually of the statement that the concessions on this scale amount to £500,000. They cannot amount to anything like that figure. The right hon. Gentleman, if he revises his estimate, will find that he has a good deal to give away to the on-licence holders if he concedes the fairness and justice of doing so. One of the main contentions of the chancellor of the Exchequer in his opening speech was that while he admitted that this was a very heavy duty to place on these people the advance of the price of a glass of spirits would yield to the publican over and above the 3s. 9d. duty a pretty considerable sum, which would go far to pay the increased cost of the licence. That calculation, of course, has been wholly falsified by the same mistake in the speech as there was in the estimate. The Chancellor of the Exchequer did not allow for the fact that there would be such an enormous reduction in the consumption as there has been. That has affected the unfortunate publican in exactly the same way as, with perfect justice, it has affected the Treasury. Here are two cases showing the effect up to now of the increased price, and the decreased profit owing to the loss of business. In one case—I can give the detailed figures afterwards—with the increased price of spirits, and the reduced consumption, there is an actual loss of profit, calculated to the end of the year, of £128 16s., while the increased Licence Duty will be £176, so that the unfortunate person, instead of having any money to pay that will be £304 16s. to the bad. In the other case the loss of profit, owing to this 30 per cent. or 35 per cent. reduction, is £191, and the new Licence Duty is £180, so that there will be a loss of £371. This can only be got by increasing the price of beer or reducing the measure, and, if that were done, exactly the same result would happen as in the case of spirits. It will please the hon. Member (Mr. Leif Jones), but it would not satisfy the Treasury. There would be a very much smaller consumption, and the wretched publicans case in the end would be even worse than it is now.

Much too little attention has been paid in dealing with this question to the position of the 1869 beerhouses. They, at all events, had what very little property in this country has, they had an absolute Parliamentary title to their licence. There was good ground for compensating these people out of the national revenue in 1904 if the party then in power had thought fit to do so. But that was not done. They came into the general arrangement which was then made. They agreed to pay their compensation levy and to take their compensation. The raising of their tax from £3 10s. in every case to a rateable licence of one-third of the annual value with a high minimum is very certain, I am told, to crush out a great many of the smaller houses which had that Parliamentary title and which have been most grossly and unfairly treated in this new scale. The treatment of these houses, and especially of the on-licensed houses, contrasts very peculiarly with the treatment of the off-licences. I find no fault with the concessions made to them—I am very glad they have got them—but the kow-towing to the off-licence holder has only accentuated the injustice to the on-licence holder by the scale now sought to be enacted. No concession whatever has been offered to him except one, which is purely and wholly illusory. It behoves the Government, before they come to the Schedule, to consider well whether they will allow it to stand as it remains. We have also penalised the free house as compared with the tied house, and, so far as I can see, the only way in which the man with a free house can live at all is to tie himself as rapidly as possible—to borrow from someone who, by Clause 46, will have to pay a share of the increased tax.

4.0 P.M.

It seems very clear to me that something more than revenue is desired in enacting this scale. We have had endless Ministerial statements as to what would happen if the Licensing Bill were rejected. We have had all sorts of threats from the First Lord of the Admiralty, from that astounding politician the Lord Advocate, who has even excelled his record since that time, and from other Ministers, that swingeing duties, and I do not know what else, would be placed on the trade if the House of Lords did not pass the Licensing Bill. In the first place that is pretty hard on the Scotch and the Irish trade, who had nothing to do with it, and, in the second place, no such scale as this, which has been ruthlessly condemned by the hon. Member (Mr. Sherwell), can properly be applied right up to the top. It must break down. Will the right hon. Gentleman take a house rated at £500 and take his new proposals with regard to it? He is going to take the difference between the Schedule A rental when it is a licensed house and the rent if it was an unlicensed house. He is going to take the annual profit of the business and these two factors together, as far as I understand, are to give the annual licence value. Does he mean to tell me that a third of that is going to be an improvement on his present scale? A third of that, in the case of a £500 house doing a trade yielding £900 profit, will be £400 a year, instead of £250. It will behalf of £800, and not half of £500. If he does not know it, I can tell him that the difference between the two rentals will be about £350. If the right hon. Gentleman adds these two together, he will find that they come to £1,200. If he is only going to take the difference between the rentals, and leave profits alone, I can understand that the proposal in the Clause may have something reasonable in it, but certainly not otherwise. It seems only perfectly fair to say that as regards this scale as proposed, at all events so far as the on-licence holder is concerned, and so far as the brewer is concerned, there are motives for proposing it other than those which a Chancellor of the Exchequer ought only to have in view in coming forward to this House with a Finance Bill. I can only say that, so far from being fair or just, and so far from taking into consideration such questions, for example, as licence compensation, towards the fund for which they have been paying all these years, he wholly ignore every element of fairness and every element of Parliamentary honour, and places on these people an impost which, I venture to say, is most unfair and most unjust.

Mr. G. D. FABER (York)

I desire to second the Amendment, and in doing so I need hardly say that I entirely associate myself with the remarks made by my hon. Friend in regard to the omission of this Clause from the Bill. Although, no doubt, the penultimate stage of the measure has now been reached, when I suppose the time for concessions may be considered to have passed—[An HON. MEMBER: "Let us hope so."] Whatever concessions may have been made to Ireland on this Clause, the on-licence trade of this country is left practically in the condition as regards the hardship inflicted upon it by this Bill it was in when the Bill was first laid on the Table of the House of Commons. The trade may be regarded by some as anathema maranatha and undeserving of consideration. Chastise it with whips or scorpions! No treat- ment you can give to it can be too severe. Although the time is late, I would venture, as one who is entirely unconnected with the trade, to make one more appeal for justice in this matter. This is not a mere increase of taxation. The Prime Minister himself, in one of his speeches on this part of the Bill so asseverated. The expression he used was that this Clause for the first time enabled the State to reap a fair toll on the monopoly value. That phrase has a familiar ring in the ears of those who went through the discussions on the Licensing Bill. The fundamental vice of the Licensing Clauses of this Bill is that they are a hash-up of the Licensing Bill of last year. I agree with the Prime Minister that this is a new departure. I could give hundreds of illustrations to show what the effect of these new duties will be. I might mention the case of Whitbread and Buxton. They showed conclusively by figures drawn from their own concern that by the time the new Licence Duties were paid the ordinary shareholders would be left, not only with nothing, but that there would be a deficit. That is the case also with the Cannon Brewery, Meux's Brewery, and many of the other great breweries of the country. The ordinary shareholders will lose their dividends if this Clause goes through.

My hon. Friend referred to the case of the free house—the pet child of the Government 18 months ago. Nothing was good enough for the free house. It was the tied house held by the wicked brewer which was to be chastised through the wicked brewer. Under this Bill the tied house will be in an infinitely better position than the free house. The free house licence-holder will not be able to have recourse to anybody, and will have to rely on his own exchequer. I have particulars of the case here showing how the duties are enormously increased under this Bill, and, of course, you can multiply cases in which the effects will be similar. In the case of a free house of £500 rental the duty will be £250 instead of £50. An enormous hardship, therefore, will be inflicted on the free house. You desire to chastise the brewer and the tied house, yet you will find yourself unable in the nature of the case to do anything to help the free house, whose last state will be much worse than the first. Let me illustrate generally the extraordinary severe impost which the duties under this Clause will be on the licensed trade of this country. At present the Licence Duties under Mr. Gladstone's scale of 1880 come to £2,200,000. What do you propose to do? You are putting £2,600,000 on the top of the £2,200,000, and if what we fear results from the next Clause in regard to the valuation of licensed premises, there will be many hundreds of thousands of pounds added on the top of the £2,600,000.

You do not stop there, because, indissolubly linked together with the increased Licence Duties is the Whisky Tax. Although it falls into a different compartment of the Bill, you cannot in the discussion of this matter dissociate the Whisky Tax from the increased licences. During the late war there was only 6d. per gallon added to the Whisky Duty. Now you are putting on 3s. 9d. per gallon. You are multiplying the 6d. 1½ times. The trade may well throw up its hands in despair, and say that Parliament, invoked by the Government, is putting on its back, in the shape of increased licences and Whisky Duty, burdens absolutely unprecedented in its history, whether in time of peace or war. Look at the moment you select for doing it. The Prime Minister, in each of his three Budget speeches, called attention—I think perfectly accurately—to the fact that the alcoholic group of taxes was stagnant. The right hon. Gentleman said that the revenue not only did not keep up for alcohol, but was actually receding. Ever since 1900 it is common knowledge that the revenue from that source has been more or less stagnant. The Chancellor of the Exchequer called particular notice to that fact in the Budget Memorandum this year. He said that, as regards the Beer Duty, it had been practically stationary in the three preceding years, and that it showed a considerable decline last year. In the same Memorandum he said that the Spirit Duty continued to decline, and that the falling off would have been much larger, except for the considerable clearances which took place in the March quarter. He said that on the whole matter it had also been necessary to take into account the diminishing consumption of alcoholic liquor, which, though to some extent attributable to the recent depression in trade, was the result of the continuous change in the habits of the people, which had been in progress for some time, and which seemed likely to be permanent. I ask the House—without distinction of party—what would any of the Chancellors of the Exchequer of the past have done in a matter of that kind when it was a question of imposing taxation upon a falling revenue? I do not care whether it is alcohol or anything else. What would their financial conduct have been? It would have been what it has always been in such cases the moment the revenue is seen to be falling. It would have been to take off the hand of the tax imposer, and treat the particular article lightly. Many a Chancellor of the Exchequer has said rightly in the past that there comes a breaking point in taxation where the higher the taxation you impose the less revenue results. You could not possibly have a better illustration of that than the Whisky Tax, and yet you put 3s. 9d. per gallon on whisky! Taking the analogy of the sixpenny Whisky Tax, which produced £1,000,000 in 1900, this new duty ought to have produced £7,500,000. Of course, the Chancellor of the Exchequer had to allow for a decrease in the consumption, owing to the punitive nature of the taxation. He only anticipated an increased revenue of £1,600,000. What did he tell us last Friday? He staled that he anticipated that he would only get £800,000. Therefore the 3s. 9d. tax, instead of producing £7,500,000, or £1,600,000, as originally estimated, is only going to produce £800,000, which is £200,000 less than the amount which was realised by the additional sixpence which was imposed on whisky by Sir Michael Hicks Beach when he was Chancellor of the Exchequer in 1900. Could anything afford a more eloquent commentary on the financial madness of putting a tax of this kind upon the great whisky trade of this country Talk about robbing hen-roosts! You are cutting the throat of the best layer in the whole farmyard. The hen that has laid for years past a quarter of the national revenue is the hen whose head you are going to cut off. That hen has been laying nearly £40,000,000 per annum.

Some great French financier, I believe, is responsible for the utterance that the hand of the Chancellor of the Exchequer ought to be so delicately used that the bird hardly knew it was being plucked. Nobody can say that of the Chancellor of the Exchequer with regard to his treatment of the liquor trade. He is pulling the feathers out by the roots. And this same unfortunate result that has been produced already by the excessive tax on whisky may, for aught we know, follow the Licensing Duty itself, because we have not forgotten the words of the Prime Minister that he did not think it would be a bad thing if the effect of the increased Licence Duties was to extinguish the worst class of houses. By the worst class of houses I imagine the right hon. Gentleman meant the smaller houses, and with regard to them the same calamitous result may follow. Now that you are putting this terrific licence tax upon the licensed houses it may well be that your revenue from that source will begin to fall. The Chancellor of the Duchy lately, when discussing this matter, lent rather eloquent testimony to that fact, because as regards the off-licences and the concessions that have been made to them, he said that the concessions made to them did not much maatter, as if they had not been made a great many of the off-licensees would no longer have taken out the off-licences. One is driven to ask, as my hon. Friend asked a few minutes ago, what is the reason for this drastic treatment? It cannot be revenue, because the figures show that as a revenue-raising expedient it is disastrous. Is it temperance? Surely the Chancellor of the Exchequer can no longer pose as an apostle of temperance after his conjuring tricks over the "little bottle." I thought that last Friday the Chancellor of the Exchequer, when he produced his revised estimate, was a little bit perhaps wanting in austerity in dealing with the drink question, and adopted a tone which would be hardly commended by some of the temperance reformers on the Back Benches. He really made a laugh of the reduction in the consumption of liquor, and as to whether it might not be merely temporary, and said they could only hope for the best, but that even if it was only temporary the effect on this Bill was disastrous, because even if people went back to the old habits they could not make up for lost time. Therefore I do not imagine, so far as the Chancellor of the Exchequer is concerned, that this can be called temperance. What is it? It is an open secret.

Everybody in the House and out of it knows by this time that it is an attempt by the Government, and a successful attempt if this Budget goes through, to avenge themselves for the loss of the Licensing Bill. It has been preached from every house-top. Everybody has said so. The whole variegated vocabulary, as the Prime Minister has well expressed it, of the Radical party has been poured out upon us. "The Licensing Bill was thrown out by the House of Lords. We will heap the furnace seven times hotter. Rehashing the Licensing Bill, we will put the red pepper into it, so that the trade shall have something to cry for." The Chancellor of the Exchequer and the President of the Board of Trade go about calling the brewers thieves and swindlers, and exhausting the fertility of their vocabulary. There need be no secret about it. You are out for blood. You have gone much further than the Licensing Bill, as my hon. Friend pointed out, because the Licensing Bill only comprehended England, and here you are roping in wretched Ireland and Scotland. They are to pay for the lost Licensing Bill. The Licensing Bill only dealt with on-licences. Here you have the manufacturer, the grocer, and the wholesale and retail trader. Everybody is to be comprehended under this Bill. Can the scheme be compared with Mr. Gladstone's treatment in 1880? Really, it would be worth the while of many hon. Gentlemen opposite to read one of the many speeches of Mr. Gladstone during the discussion of the Bill in 1880. There is one phrase which sticks in my memory yet. It was really the pivot of his measure. He said he was endeavouring to proceed not with too much severity. That was a Bill brought in by a fresh Government coming with a mandate from the country and with a large majority, and it was brought in by one of the most experienced financiers that the House of Commons had ever known. They were to proceed in respect of the trade "not with too much severity." Can anyone say that that has been done in this proposal? Mr. Gladstone's Licence Duty began at £4 10s. and ended with £60. You, when your minimum comes into play, begin with £35 and you soared up into the thousands—when the Bill was originally brought in, into many thousands as regards the big hotels. And you still in the upper category will soar into many hundreds.

Mr. Gladstone, with regard to the beerhouses of the country, established a fixed duty of £3 10s. You are making them pay one-third of the gross annual value, which is a tremendous increase. Mr. Gladstone no doubt had in mind that the beerhouses of the country had a statutory title, and he treated them gently and kindly and tenderly in comparison with the on-licences. He did not treat them at all according to their annual value. The off-licences were not put into the annual value category at all. They had a fixed duty. Look at Mr. Gladstone's scale, however, and compare it with this. The equity is all with Mr. Gladstone and all against the right hon. Gentleman. I am not here to deny that after 29 years some alteration might not well have been made in Mr. Gladstone's scale, so that certain inequalities should be lifted up and brought more up to date, but I do not care how you bring it up to date, Mr. Gladstone could never have sanctioned a scale of this kind. I was astonished to hear the Prime Minister say in the course of one of his speeches on this subject that Mr. Gladstone's scale was wholly irreconcileable with equity. I venture to say that if any judge of equity had the two scales before him, and was asked which approached nearer the rules of equity, there could be no doubt whatever as to which scale would be found to sin against the cardinal principles of equity. It is because it is wanting so in that respect and because it was never planned according to the criteria of all the Chancellors of the Exchequer of the past, and because it is merely an attempt to gratify spite and vengeance against the trade, that it deserves the condemnation of this House. In one phrase, it is not a Budget. This Clause is blackmailing.

The CHANCELLOR of the DUCHY of LANCASTER (Mr. Herbert Samuel)

This portion of the Finance Bill has been attacked ever since its introduction with the utmost vehemence by a trade powerfully organised, and seeking, very naturally, to defend its own financial interests against the tax-gatherer. It has been attacked with much force and some ability by hon. Members opposite who speak on behalf of that trade. Hon. Members who have spoken to-day have repeated arguments which are not unfamiliar to us, but perhaps it may be expedient, since this is the last occasion on which we shall be able to treat this matter as a whole, if I were to review some of the general considerations which have led the Government to propose these Licence Duties, and to reply to the general objections which have been raised against them. Hon. Members opposite, and specially perhaps those who have spoken to-day, urge that these proposals are not only excessive in themselves, and that these taxes are not only unduly onerous upon the trade, but that they are outside the scope of a Finance Bill. The hon. Member who moved this Amendment said that these proposals are a Licensing Bill in themselves.


No I did not say so. What I said was that the conditions attached to them were quite beyond the scope of a Finance Bill.


He said that there are elements in these proposals at all events that do not properly find a place in a Finance Bill, but which ought, if proposed to Parliament at all, legitimately be included in licensing legislation. Which provisions are they to which that objection can properly apply? What particular proposal is there in this Part II. of the Bill and the Schedule that attaches to it which is really beyond the strict border of finance, however narrowly you may define it? What proposal is there which has not had many precedents in the financial legislation of the country? I do not know whether hon. Members who turn to the Amendments which have been made, very small in themselves, with respect to quantities saleable under particular licences, may say that the quantity of liquor of various kinds which could be sold under a full licence or under a limited licence, should be dealt with in licensing legislation, and not in financial legislation. All these questions have hitherto been dealt with in Excise Bills, which are Financial Bills. Never, so far as I am aware, have they been dealt with in licensing legislation. Is it re-valuation of licensed houses on the basis of licence value instead of the basis of rateable value, or is it the minimum according to the population which is said to be in the nature of a licensing proposal, and not in the nature of a financial proposal? Surely it is not only the rate of the tax, but also the basis on which that rate shall be applied which is financial legislation. If the tax be charged on the rateable value of the premises, that is clearly a matter of finance. If, in place of that, we were to say that the tax is to be charged, as in the case of clubs, on the quantity sold on those premises, that again is clearly a matter of finance. If, further, as an alternative, we proposed that the tax should be levied upon the difference between the value of the premises licensed and unlicensed, that is equally financial legislation. With regard to the population minimum, and charging a Licence Duty varying with the population of the district in which the licensed premises are situated, a Committee of this House which sat in 1853 recommended that the whole of the Licence Duties should be charged on that basis alone, and should in no respect vary with the character of the premises, but merely vary with the size of the towns in which the premises were situated. It is clearly within the scope of financial legislation to declare that basis as a proper basis for the imposition of the tax.


What was the proposal of the Committee?


Their recommendation was never carried out, but it was that the Licence Duties should no longer be charged at all on the basis of the value of the premises, but solely on the character of the towns in which the premises were situated. If that had been done, of course, it could only have been done in a Finance Bill. I invite the right hon. Gentlemen opposite to point to a single definite proposal in this Bill which in the strictest and narrowest interpretation of our constitutional principles could properly be held to be outside the scope of the Finance Bill. Hon. Members opposite may say—"Even if your methods in this Budget are unobjectionable, what of your purpose? That purpose is one which in the guise of finance really carries out your licence policy." The hon. Member who has just spoken, again and again in most indignant tones called up spirits from the vasty deep to testify to our iniquities in proposing, under the guise of finance, measures so oppressive as to be similar to those which the most drastic Licensing Bill would seek to effect. The conclusion is suggested to the House, that if the Licensing Bill of last year had never been introduced, had never been thought of, these proposals would not have been made for the purposes of finance. If we had never proposed the Licensing Bill, and the Licensing Bill had never been rejected in another place, these proposals or analagous proposals for raising revenue from the liquor trade would never, so it is suggested, have been put into this year's Finance Bill with a view to meeting the deficit which the Chancellor of the Exchequer has to deal with. If hon. Members had taken the trouble to read any statements of financial policy made any time during the last ten years by any responsible statesman of the party to which I have the honour to belong, they would have found in every case that a remodelling of the scale of Licence Duties was included in their proposals. Whenever in the Debates of recent years, the question was raised how a Liberal Government would raise fresh revenue, if not by taxation on sugar, and if not by taxation on imported goods and so on, the answer was always given that among the proposals would be an increase in the Licence Duties. In the speech made by the late Sir Henry Campbell-Bannerman in 1901, when he occupied the position of Leader of the Opposition—he was opposing at that time the imposition of the Sugar Duty—and the then Chancellor of the Exchequer asked him across the floor of the House how he would get revenue if not by such a tax as that, Sir Henry replied that if they wanted some five or six millions of money it could be obtained by reassessing the duties on licensed premises. It is not only Liberal opinion that has for many years past urged this financial reform, but neutral opinion also has supported it. The Royal Commission on Local Taxation pointed to the Licence Duties as being a source from which further revenue could be obtained, and as being at that time on too low a scale. Nor do I confine myself to Liberal opinion and neutral opinion alone—the right hon. Gentlemen opposite and their colleagues on many occasions have declared that the existing scale of Licence Duties was anomalous and indefensible, and should be increased on the larger houses. Lord Lansdowne, in another place last year, expressed an opinion to that effect. Sir Michael Hicks-Beach, now Lord St. Aldwyn, when he was Chancellor of the Exchequer, said the present scale of duties was utterly unfair to the smaller houses as compared with the bigger houses, and that the bigger houses might very well bear additional taxation; the large hotels, he said, should be more highly taxed. The right hon. Gentleman the Member for St. Augustine, when he was Home Secretary in the last Parliament, in introducing the Licensing Bill of 1904, expressed the opinion that many of the larger houses and hotels under the then scale of Licence Duties, and present scale of Licence Duties, escaped very cheaply indeed. Hon. Members, again, have admitted in the course of these Debates that this scale is anomalous, that it should be readjusted, and that the larger houses could afford to pay more. [Mr. YOUNGER: "Hear, hear."] The hon. Member who moved this Amendment to-day by his cheering that statement fully agrees with me.

Do they say that because the Licensing Bill was introduced last year and was not passed, therefore the present Government are absolutely precluded from imposing the increased Licence Duties which have long been advocated as part of our policy. Do they say—"True, you, the Government, are in urgent need of revenue; true, you have advocated an increase of licensed duties; true, our own leaders have admitted that an increase of Licence Duties is justified, but you must not do it, because last year you proposed the Licensing Bill, which was rejected, and if you proceed now to carry out your own financial policy you can be actuated only by a sinister motive of revenge"? But these proposals will bring in for the present year a sum of £2,100,000, three times as much as the increase of the Stamp Duties, almost as much as the Super-tax, and not far short of the increase in the Death Duties. This revenue is essential to the equilibrium of the Budget, and it is ludicrous to say that it is not legitimate to levy this sum on the trade because the Licensing Bill was introduced last year and was rejected. It is no doubt true that this measure will have an indirect effect. All new taxes, of course, have social effects as well as financial effects. That is found in all such legislation. The increase in the Tobacco Duty may assist the efforts of the Anti-Smoking League, but that is not a reason why the Tobacco Duty is a bad form of tax. I believe it is also said that a tariff is not only for the purpose of revenue, but has also the effect of giving encouragement to our national industries. I do not know whether, if at some future time—I trust and believe it will be a distant time—a tariff is proposed to this House, the purists opposite will raise their voice in protest, and say, "This is not a Finance Bill, this is not intended for revenue. This is a means for relieving unemployment; this is a means encouraging agriculture, a method of promoting national industry. All those may be very good objects, or may be bad objects, but at all events, do not confuse them with the financial proposals of the year." Of course, a tax must have an indirect effect, and if you raise the price of the article you discourage the purchaser. If you raise the price of licences pro tanto you discourage the purchase of licences. As a matter of fact, in 1880, after the Budget to which reference has been made, a certain number—not a very large number—of licences were discontinued. Persons who found themselves on the border line where their business hardly paid did not take out their licences when the scale of duties was increased. But I do not know that anyone at that time, or since, has said that the fact made a readjustment of the Licence Duties an illegitimate means of raising revenue. There will be cases, though I believe not a large number, in which the owners of licensed premises may find that the increased duty makes the difference in the margin of profit. There are many houses now which are continued open not really because they give any income or profit worth having, but because the owners anticipate that sooner or later they may be suppressed under the Act of 1904, and be the subject of compensation under that Act. They are kept open for that purpose, and not for purposes of profitable trade, and it may be taken as certain that a number of them will disappear. There is unquestionably in this country a notorious over-supply of public-houses. The fact that the over-supply exists, and the fact that there is a certain number of public-houses which now hardly pay at all are facts, I submit, which afford no reason why the State should not get the revenue which it is justly entitled to obtain from this particular trade.

The House has to take into account these considerations, and, if they do so, I trust they will agree that the Government on making these proposals have not departed one inch from the straight and narrow path of financial legislation.

The question then arises whether the taxes in themselves are too high. We again have the argument about taxing a declining trade. The consumption of alcoholic liquor is decreasing, but I must once more point out, as I have done on many occasions, that the decline which has taken place in the last ten years followed on a very rapid increase. We are now on the descending curve, which succeeded an ascending curve. The consumption of alcoholic liquor per head of the population now is about the same as it was 20 years ago. While these are the facts with regard to consumption, the sources of supply have also declined. The number of public-houses is declining year by year, and the increase of clubs in no way counterbalance that decline. I have quoted figures in this House on previous occasions giving precisely the number of clubs that have been opened and the number of public-houses which have been closed, pointing out that the average membership of the clubs has not increased. That being so, we must take into account the fact that the sources of supply have been diminishing almost pari passu with the diminution of consumption. Taking the consumption per public-house, there is not much decrease even within the last 10 years, and there has been an increase within the last 20 years. I will not repeat all the figures, because I gave them somewhat elaborately in the Committee stage on this Bill on the last occasion when we discussed this Clause. Further, with reference to the compensation levy, which has been given as a reason why the trade cannot afford to pay increased duties, I again repeat that the compensation levy can in no way be regarded in the light of taxation. The compensation levy is the price of the insecurity of the licence prior to the Act of 1904. The cost of the insurance funds, money put to reserve, the writing down of capital, which took place before the Act of 1901, was all in consequence of the knowledge of the insecurity of licences.

With reference to these taxes, are they too high? Hon. Members opposite tell us that they are, and they have proposed their own alternative scheme. When we discussed the matter in Committee, with much elaboration they placed upon the Paper the proposal they were prepared to make in order to secure from the trade increased contributions to the revenue, and that scheme—according to their own estimate—would have given to the Chancellor of the Exchequer a sum of £23,000 yearly. They said: "We will not refuse altogether to respond to your demand for a contribution by the trade to a larger Navy. We realise that the nation is called upon to make some sacrifice, and we are prepared to bear our share, and we will contribute year by year," not a "Dreadnought," not a cruiser, not a torpedo destroyer, not a submarine, but we will give you £23,000, which will enable you to add one Admiralty tug." That is the offer of the trade. They have long boasted that the whole of the Navy, and part of the Army, were paid for from revenue derived from the liquor trade. They are prepared still to assist the Empire in its needs, and they will go so far as to give the Admiralty, year by year, one tug boat for the maintenance of the Fleet. We consider that the sum of £23,000, which was the offer made by the trade through the Amendment of hon. Members opposite, is inadequate to the circumstances of the moment. We propose a contribution of £2,100,000, of which about £500,000 is drawn from the manufacturers and dealers; and the retail licence-holders of all kinds, publicans, beerhouse keepers, grocers, hotels, and clubs as well, will contribute to the revenue a sum of £1,600,000.


Those figures have been challenged.


We will come to that further on. We stand by them, and our estimate is that a sum of £1,600,000 is asked from the retail trade of this country, and, in consideration of the requirements of the State, we submit that from a trade with so vast a turnover, as the liquor trade in this country has, that that is not an excessive sum to demand. With reference to the scale of duties which is challenged is it asserted that on a house with the annual value of £50 half the rateable value is an excessive sum to ask? That is the scale of Licence Duty which the hon. Member for York says is unprecedented in history, but that scale of Licence Duty on a £50 house of half the rateable value has been the law of the land for 30 years, and has been paid without difficulty by those houses.


I said £2,600,000 on the top of £2,200,000.


I understood him to say that to charge half the rateable value was an exorbitant and oppressive sum. I may have misunderstood him, but the argument has been advanced repeatedly in that form, in this House and out of it, that under no circumstances ought you to charge half duty, but on the greater number of houses in this country the Licence Duty of half the rateable value has been charged for 30 years and has been paid. I fail to understand the justice of charging a house of £50 value a Licence Duty of £25 and charging a house of £500 value, or ten times the value, only twice the Licence Duty. A house ten times the value of the £50 only pays twice the Licence Duty that the house of £50 pays. The house of £50 pays a Licence Duty equal to six months of its rent. A great gin palace in London, with a rateable value perhaps of £2,000, pays only 3 per cent. instead of 50 per cent., or pays only 10 days' rent as compared with six months rent.


That is on site value, not on trade.


We propose to alter the basis, and to place it on the basis of trade, which is, I admit, a more just basis; but even taking rateable value it is surely indefensible to charge 3 per cent. on a house of £2,000 value and 50 per cent. on a house of £50 value. Hon. Members opposite have said that the free house is prejudiced by our proposals in comparison with the tied house. I cannot agree. The duty on the free house and on the tied house of equal value doing the same trade will be precisely the same. There is no discrimination at all with respect to the Licence Duty payable on those two houses. No differentiation is made either for or against the free house as compared with the tied house. In relation to the amount of Licence Duty which is payable, many hon. Members opposite have quoted figures to show that those duties are oppressive. Those figures are many of them open to challenge. I regret that the hon. Member for Holborn (Mr. Remnant) is not in the House at the moment, but he, on more than one occasion, quoted figures which I venture to say would not satisfy examination. On one occasion he quoted some figures which I know impressed the House and hon. Members on this side as to the excessive amount of Licence Duty chargeable on certain houses in London. I asked him, across the floor, whether those figures had taken into account that on all houses above £500 valuation a much lower Licence Duty is chargeable, and that it will be chargeable on the basis of licence value. He replied, across the floor, that allowance had been made in respect of those figures. The hon. Member for Lincoln, who followed him, said that he was quoting from precisely the same document in respect of the same houses. He read out words from the document to the effect that the concession made to the larger houses over £500 valuation had not been taken into account in assessing the amount of duty payable. I am sorry that the hon. Member for Holborn is not here. It would be interesting to have some explanation from him of that discrepancy. Again, the hon. Member declared that the Holborn Restaurant would pay a Licence Duty of no less than £4,000 a year. I have asked him to substantiate that figure, and he is quite unable to do so, and on application to the Holborn Restaurant they are unable to say that they would not come under the restaurant Clause and would be charged on the rateable value basis as if they were an ordinary public-house. [An HON. MEMBER: "Can they say how much?"] That was not the question. It would undoubtedly be very much lower than the amount named. The hon. Member would not suggest that one-fourth of their licence value would amount to £4,000. Four thousand pounds is half the rateable value, which is £8,000. The hon. Member for Holborn quoted that figure as if the Hol- born Restaurant were going to be charged half rateable value which would certainly not be the case. Across the floor of the House I asked hon. Members who had given figures to submit them for examination, but none of those figures have been submitted. I asked across the floor of the House during the last Debate when hon. Members quoted very large figures, and I said that, with our experience last year with regard to the Licensing Bill, we could not accept those figures without examination. None of the figures relating to public-houses, as to the large sums which it was said we were going to charge on public-houses, have been presented for examination. I very much suspect from some which have come to me from other quarters, most of which have been found to be wrong, that they in the main have been very greatly exaggerated. Hon. Members representing Scotland have had representations made to them that in Scotland at all events these Licence Duties will press with peculiar severity, first, because the Scottish public-houses are very highly assessed compared with English public-houses; secondly, because they have no Sunday sale, and that, therefore, they are under a disadvantage compared with public-houses in England.


And shorter hours.


With regard to the higher assessment it is true that the assessment in Scotland is a little more strict than in England, but against that there is an important consideration to be set off. In Scotland the justices do not allow as a rule, I think with very few exceptions, the publican to live on his premises. The premises which form the basis of the tax are merely the liquor shop, and not the dwelling-house. It is the shop alone which is assessed, consequently the assessment is on a smaller subject than in England, where not only the liquor shop but also the place of residence of the publican is included in the valuation. In Scotland it is the shop only which is assessed. In England it is both the shop and the dwelling-house, and in Ireland it is the shop and the dwelling-house, and the grocery store as well which is assessed. Consequently the Scotsman gets off most lightly, and the Irishman if treated most heavily in this matter of assessment. That is a sufficient set-off to the greater strictness in making valuations in Scotland. With regard to Sunday sale the duty payable is reduced by one-seventh for all houses which are closed on Sundays, so that that contention is completely met by a reduction on the Licence Duty.

5.0 P.M.

I am sorry to weary the House with so many details, but these matters are of great importance, and there is much misunderstanding with regard to them in the country and amongst some hon. Members in this House. Therefore, while I apologise for detaining the House, I feel I must still detain them a little longer to deal with the special case of the beerhouses. Hon. Members who have just spoken, and the Leader of the Opposition the other day, made a very strong attack on the Government for increasing the Licence Duty on beerhouses. They said that they at all events are entitled to more consideration than the public-houses receive, In 1830 Parliament allowed anyone to sell beer if he paid a duty of £2 2s. There was no monopoly. Anyone could obtain that licence. Immediately after that 20,000 persons took out licences, much to the detriment of the sobriety of the nation. In 1869 those houses were brought within the control of the justices, and in 1872 they were subjected to more stringent control. Under the Licensing Act of that year no new houses could be opened to compete with the existing houses without the consent of the justices, and the relation between the State and those houses was completely altered by the law of 1869 and 1872. It was no longer possible for anyone who wished to open a house to compete with the beerhouses, merely on payment of the low Licence Duties of £2 2s., subsequently raised to £3 10s. What did they buy for their payments of £2 2s.? The right to sell subject to the competition of all and sundry. Any man who chose might go and compete with them. There was nothing in the nature of monopoly value. Since 1869, and still more since 1872, a monopoly has been created, and no one has been able to open beerhouses without the sanction of the local justices, which is rarely, if ever, given. Consequently it is, I submit, absurd to say, the conditions having been altered by the State to the advantage of those houses, that it is illegitimate for the State to charge a Licence Duty which is in some degree proportionate to the monopoly which has since their creation been conferred on that class of houses. In any case, even if that had not been done, I fail to see how the Act of 1830 or of 1869 could be used as an argument to the effect that under no circumstances should the State increase the Licence Duty on these houses. Does the Leader of the Opposition really seriously contend that the past relations between Parliament and these houses——


Will the right hon. Gentleman quote?


I have not the words with me, but the right hon. Gentleman said the other day in Committee, in discussing the Schedule, that these houses having had a statutory right, people having been invited by the State, so to speak, to invest their money in them, the houses being opened free from any onerous Licence Duty, and free from the justices' control, it is a monstrous exercise of legislative authority now to come down upon them and charge them this increased Licence Duty.


I do not think I said that.


Then I do not know what the right hon. Gentleman's argument was.


I quite admit that my recollection of my speeches is shadowy, but in regard to the speeches to which the right hon. Gentleman refers, what I think I said was that the Government had no right to impose a tax which had for its known result the squeezing out of existence of these houses which had a statutory right—the Government having stated not merely that they were raising the tax, but that the result would be to squeeze these houses out and destroy them altogether.


In the first place, I think the right hon. Gentleman is putting the statutory title much too high. In the second place, he is making an assumption that the necessary consequence of these duties will be to squeeze out a large number of houses.


That is admitted by the Government.


I do not think so. I have admitted that there may be some cases in which the licences will be discontinued just as they were in 1880. But my point is this. The right hon. Gentleman surely cannot argue that the past history of these houses is such that under no circumstances is the State justified in increasing the Licence Duty upon them. He agrees. That being so, that supports and enforces my argument that the question at issue is one not of prin- ciple, but merely of amount. You may say that these duties are too high; but I do not think you can say that on the ground of principle, in view of previous legislation, it is illegitimate for the State to impose increased duties upon ante-1869 public-houses. As a matter of fact, the increased duty will be only about £10 per house on the average. The larger houses will pay more, the smaller houses less; but the average increase will be £10. I put it somewhat too high in a previous Debate, when, by a mistake in arithmetic, I put it at £13. The increase will be about £10, which, I submit, is not an excessive charge to lay upon them. It is true that that is an increase of three times the present duty; but that is because the present duty is absurdly low, for houses frequently doing a large trade, and which when they receive compensation, are paid for at the rate of many hundreds, even of thousands, of pounds. Three pounds ten shillings annual duty is a derisory sum. The increase is not the measure of our future oppression, but the measure of their past quite indefensible immunity.

I come, lastly, to the case of hotels. At the present time an hotel which is used bonâ fide as an hotel, and which has no bar, or has a bar of less than £25 annual value, pays only £20 in Licence Duty. The rateable value may be £50 or £20,000; its liquor sales may be £50 or, as they sometimes are, £20,000, the Licence Duty charged is the same. It is precisely the same as for a public-house rated at £40. Hotels like the Savoy, the Metropole, the Grand, and others in London, are now paying to the revenue only £20 per annum. If hotels have a bar worth worth more than £25 a year they may have to pay a larger sum, but never more than £60. That is all that is paid by the Hotel Cecil. It is said that these houses have no monopoly value. But under the Act of 1904 it is distinctly declared that where a new hotel is opened, it is to pay a sum in respect of its monopoly value. New hotels that have been opened in London and elsewhere during the last five years are to-day paying from £20 up to £500, and in one case £1,000 a year, for monopoly value under the Act of 1904, passed by the party opposite. The hotels have made representations to the Government, and the Government have been very anxious to meet them. Some time ago a committee appointed by the hotel and restaurant trades of the United Kingdom circulated to Members of this House and the Government a memorandum stating what they desired. Of course they said that they would prefer no increase of taxation at all; but they went on to say that if there had to be increased taxation on the lines of this Bill they thought that certain drastic Amendments, to use their own term, were necessary unless serious injury was to be done to the hotel and restaurant business. The Government, being most anxious not in any degree to impose an undue burden upon this important industry, met the hotel and restaurant proprietors, and we have adopted practically the whole of the proposals included in this memorandum. In the first place they say, as the House is aware, that special conditions are allowed to hotels and restaurants, which are defined as being places bonâ fide used for this purpose, and in which the proportion of liquor receipts are 33 per cent. or less of the total receipts. They must do two-thirds of their trade in non-alcoholics. The committee who represented the hotel and restaurant keepers urged that this one-third should be altered to 40 per cent. for the sake of the restaurants. They said that some bonâ-fide restaurants would otherwise be treated as public-houses, and not get the benefit of the Clause. An Amendment stands on the Paper in my name which will effect that alteration. Secondly, it was proposed in the Bill as introduced that the Licence Duty might be reduced in the case of hotels and restaurants to a proportion of the full duty payable being double that which the liquor receipts bear to the total receipts. The hotel keepers urged that the words "double that" should be omitted. That would effect a halving of the proposed duty. We have accepted that representation, and as the Bill now stands the words "double that" are being omitted. The next proposal is to me incomprehensible, namely, to insert after the word "payable" the words "on the annual compensation value." I think that must have been put down by some mistake. I cannot understand its purpose, and no one has been able to explain it to me. Then they proposed that the tax, if it is on the basis of annual licence value, should be not 33 per cent. but 25 per cent. of that value. We have accepted that also, and in the Committee stage 25 per cent. was substituted for 33 per cent. Lastly, they asked for the deletion of the minimum duty, which, it was proposed, should be one-twentieth of the rateable value. We have not been able to delete that altogether, because, if we did so, it would allow some hotels to escape with an absurdly low amount, perhaps of £2 or £3, although in some cases they might be doing a considerable trade. If the minimum were omitted, there would be cases in which hotels would pay less than they are now paying. We have, however, to a very large extent met this contention, and, in the place of one-twentieth, we propose it should be one-thirtieth of the rateable value, which is an exceedingly low minimum. Therefore, I think we may claim that in these respects we have accepted practically the whole of the proposals of the hotel and restaurant trade, and we consider that we have met the views of that important industry very fairly.

Not only in regard to the hotels and restaurants have we done this, but in other cases where hardships have been proved to exist we have endeavoured by Amendments in the Bill to mitigate those hardships. In the first place, as far as the larger public-houses are concerned, houses doing a small trade but having highly assessed premises, they will greatly gain by being charged on their licence value instead of on their rateable value. Not only that, but we have reduced the charge on their licence value from one-half, which was originally proposed, to one-third. That is a great concession, and it will reduce the revenue receipts from these houses by 33 per cent. That will mean a very large lowering of the Licence Duties payable in London. Further, in Ireland, while we keep the same scale of duty in both countries, we have altered the minimum in respect of the population in the areas in which the public-houses are situated, because, as has been pointed out, the valuation of licensed houses in Ireland is on a totally different basis from that in England. Further, we have reduced the scale for off-licence holders, and that scale is now agreed with the off-licence trade. It has also been urged that seasonal hotels in the Highlands, and at seaside resorts, might not be able to claim the benefit of the hotel exemption, because their liuqor receipts are higher than one-third of the total. Their case has been met by a special provision. Theatres in the provinces, which, in some cases, were able to show that they would be charged too heavily, have also received a concession. Music-halls having public-houses attached to them, which would have been charged on the basis of half the rateable value of the whole of the premises, have also been satisfied by an Amendment which fully meets the justice of their case. The special case of the pottery towns has been met by a special provision. We have conceded to the brewers and to other licence holders the right of paying their duty by instalments, which, I admit, is a poor consolation if the duty is high, but it is an arrangement of some convenience to the trade. The date of the brewers' Licence Duty has been altered to meet their views. Further, although we do not share the distrust of hon. Members opposite of the discretion of the Inland Revenue and Excise Commissioners, we have given a full right of appeal to the courts of law wherever it has been asked for in this part of the Bill. In addition, the House must not forget that our proposals effect a much-needed simplification of our whole system of Excise licences. It must also be remembered that the Licence Duties as they will be charged will still be lower than the duties in many of our Colonies and in the United States. Taking all these facts into consideration, I have no hesitation in commending this scheme as worthy of the approval of the House and the country.


I doubt if anybody is now astonished at anything that happens on the part of the Government. Had it not been for that fact I think everybody would have been amazed at the situation in which we find ourselves. It is well known that the Government are extremely anxious to terminate further Debates on this stage of the Bill as rapidly as possible. It is an open secret that appeals and suggestions have been made, and are directly made, for our Debates on certain portions of the Bill to conclude rapidly. And now, Sir, at the eleventh hour, on the Report stage, when a Motion before the House is that a particular Clause should be omitted, the Minister in charge of the Bill has made a speech which is in itself the strongest confirmation that you could possibly ask for of the views advanced by my hon. Friends behind me who have moved the rejection of this Clause. A very able speech—as all the right hon. Gentleman's speeches are—has been made by the Chancellor of the Duchy, a very comprehensive speech and a very long speech, as he admitted himself. I venture to say that if he had been the Minister in charge, not of a Finance Bill, but of a new Licensing Bill; if he had set himself the difficult task of justifying the rearrangement of the licensing system of this country, that he could not reasonably, I think, have occupied for a much longer period the time of the House. I do not think he could have made a speech more suitable to the occasion. But we are not, as he has assured us, and as the Government frequently have assured us, dealing with a Licensing Bill. We are told we are dealing with a Finance Bill pure and simple, and that our contention that this Bill is directed against a particular trade, and is not a Bill which seeks to establish a revenue, are contentions for which there is no foundation. I am bound to say that it would have been a little more to the point if the right hon. Gentleman, in the course of his prolonged and interesting remarks, had found it possible to deal with the main contentions advanced by my right hon. Friend behind me, who moved the rejection of this Bill. The two contentions are condemnatory of the proposals of the Government, and the right hon. Gentleman has not found time, or found it convenient, to make one single word in reply to them. I propose to make a few observations which occurred to me while sitting here, and which also are probably familiar to all of us. The right hon. Gentleman has failed, as I say, to deal with the argument of my hon. Friend owing to the fact—he will not, I am sure, imagine that I wish to be discourteous to him—that he came armed, as Ministers generally are when they have to move the second reading of a great measure, with a carefully prepared oration. By some mistake, and unlike his usual acuteness, he did not anticipate the arguments addressed from this side of the House. Consequently, in the course of his very interesting speech, he has not dealt with either of the two arguments which my hon. Friend put before the House. The right hon. Gentleman dealt with the question that has been frequently dealt with before, and that is the fall in the consumption of spirituous liquors. In the conclusion of his speech, what did he tell us? He appealed to the House to support this great measure—I think he used the words "great measure" to a particular part of a Bill dealing with parts of the licensing proposals—on general grounds. He told us in his peroration that the Government had made great concessions to the hotels and various other branches of the licensing trade. In listening to the right hon. Gentleman one would believe that everybody connected with this trade would be in a state, not of deep indignation at the way in which they are being treated, but of profound gratitude to the Government for the way in which they have meted out to them the most generous proposals.

I have not personal knowledge of the incidence of these new taxes upon the trade, but I have had a great many communications and a great many interviews with people interested in the trade, and I have done my best to find out on the spot what is the effect upon a variety of the smaller hotels and public-houses of the new taxes. I do not hesitate to say that without a single exception the answer given by the people concerned is entirely opposed to the view which the Chancellor of the Duchy has sought to put before the House. The main contention, the grounds upon which my hon. Friend moved the rejection of this Clause, are twofold. First of all, he said that it is unsound to increase your taxes upon a source of revenue which is in itself decreasing. To that I think the right hon. Gentleman advanced some general reply. He tells us that on the whole the consumption is getting back very much to what it was, that there has been a tremendous decrease, but that decrease is not to be regarded as a real decrease, it is only one which is consequent upon an inflated period of trade. The right hon. Gentleman may be right. All I can say is that he is not confirmed in his views by those concerned with the trade. What he says may be so in certain parts of the country, in very populous parts, in some of our larger and more populous towns, and then in parts of those towns only. I venture to suggest that the different reports come from everywhere—and let me point out that the hon. Gentleman the Member for Westmoreland (Mr. Leif Jones) and those who agree with him are constantly dwelling upon the fact with profound gratification that there are in all these cities to be found signs of diminution. You cannot have it both ways. You cannot say that either by your legislation or education you are producing a diminution in the consumption of spirituous liquors and beer, and at the same time justify the increase which you are laying upon taxation. But come from these general remarks to the particular objections mentioned by my hon. Friend. I will take them in a different order to that in which he put them forward. He dealt with the White Paper issued this morning, and also with particular cases. My hon. Friend gave what the Chancellor of the Duchy carefully avoided touching upon, that was specific cases of owners of properties in the country, and he gave present conditions in regard to their payments for licences, etc. He showed what the increase would be and he showed—he said what everybody knows to be true—that those cases could be multiplied to an almost unlimited extent. He showed that the result of this new form of revenue will be ruinous to these people. What was the answer of the Chancellor of the Duchy? It was to refer us to the history of legislation upon these points, and to go back to the Report of the Commission of 1853. He not only did that, but he made what I thought a more extraordinary statement still in support of his conclusion. He referred to the fact that it had been stated by all parties that there was to be a rearrangement of licences. I am not aware that anybody has ever denied that the grades in which licences are placed by the taxes of the country are not open to alteration. If that alteration were justly and properly done it would probably not meet with opposition. What was the argument of the Chancellor of the Duchy. He referred to the fact that the Commission have recommended that this should be done in connection with local taxation. It was a most astounding argument for the Government to use in defence of their present proposals, because they are now making changes and putting the receipts of those changes into the Imperial Exchequer. Then they try to justify it by pointing to the Report which recommended that this rearrangement should be made for purely local purposes! If there is anything in the argument which the right hon. Gentleman has used at all, the force of it tells against the Government and against their proposals—not for them! Let me give the second argument of my hon. Friend. He called the attention of the Government to the White Paper which I have referred to, and he referred to the fact that this White Paper claims that there will be a decrease under the new arrangement of the Government of £300,000. He went on to show that this is a peculiar conclusion to arrive at, that the figure is a grossly exaggerated one, and that the reduction is nothing of the kind. The Chancellor of the Duchy never made one single word in reply on a most important point put forward, and that anybody speaking for the Government might have been expected to deal with.


I said I would deal with it when we came to the question of the licensing part of the Clause, to which this matter would be more appropriate, and when we were considering the basis on which the new Licence Duties are to be made.


The right hon. Gentleman would have been a little fairer to us if he had confined himself in his speech to the special points raised by my hon. Friend, and not have selected those particular points which seem more suitable for him to answer. We have great reason to complain that in a speech of the length and character delivered by the right hon. Gentleman the main points—what we, at all events, refer to as the main points to justify our arguments—are not referred to at all. The reason why we object to this Clause is not only that we believe that you are taxing a class of property which cannot bear more taxation except under a system of rearrangement which is very carefully calculated and suited to the requirements and conditions of each case; not only because we believe that the effect of it will be to strike a very heavy blow at a trade which some people refuse to regard as specially entitled to be attacked, and a trade which, I believe, is as respectable and well worth fair treatment as any other trade in the country. These are not the only reasons. There are in addition to them the right hon. Gentleman's complaint, that there was a suggestion that this legislation was not conceived solely from a desire to get revenue, but that there was something to do with past history. We are blamed that that is the view we take. We are not to blame on this side of the House. My hon. Friend behind me asked the Government to answer the specific cases he gave. He said that by this new rearrangement of the taxation of the country many respectable people would be absolutely ruined, and he quoted individual cases. Not one of these cases has been dealt with. I do not propose now to quote the numerous speeches which have been made. But I could quote speeches made—by whom? Not by Gentlemen on this side of the House, not by people interested in the trade, but by prominent leading Members of the Government. These speeches were made last year, and this, I think, is the most important point of all. The speeches were made not after the fate of the Licensing Bill had been declared, but when the Licensing Bill was still under consideration. We all remember the threats—there were nothing else—which were uttered at that time: the adjurations addressed to another place to pass the Bill, and to the trade to do their very best to get the House of Lords to pass it. Why? Because we were told: "If we fail in our at- tempt to legislate in order to alter the licensing laws of the country there is another measure by which we can do it. We can impose License Duties, which will be the same thing in another way." That is not our language. It is not the language of those who are interested in defending themselves against these attacks. It is the language of Members opposite, Members of the Government, and leading Members of the Government. If I remember rightly the Chancellor of the Exchequer was one who used language of that kind. So, also, I believe, was the Chancellor of the Duchy.

Mr. HERBERT SAMUEL dissented.


If the Chancellor of the Duchy says he made no use of such language I accept his statement, but my contention is that Members of the Government used it. They then brought forward a great measure which they declared was a temperance measure. I appeal to the House—I do not care to which side—what were the grounds upon which that licensing measure were supported? Were they not because it was a great temperance measure? When they found, or thought, it was likely they would be unable to carry it and to effect their reforms in that way they turned round and said, "We will do it in another way. We will tax you and make these changes." My hon. Friend did not give quotations. I am not going to give them now. I have not come down prepared for a second reading speech like the Chancellor of the Duchy. If I had made the same preparations I would have had these extracts.

To that there has been no reply. All we have heard from the Chancellor of the Duchy was in regard to one or two statements, not made now, but on previous occasions, and then this general statement that the whole trade has been met in a singularly generous way, and that the Government have listened to their demands and, in some cases, have conceded more than they have asked, and that it is a most unreasonable thing that a great scheme of this kind should not be supported by Parliament. All I can say is, so far as the trade is concerned, I do not care whether you go to the trade representing the large or the smaller class, whether you take the case of public-houses whether they are ante-1869 beerhouses, or whether you take the case—and I think, perhaps, these are the hardest of all cases—of the smaller class of hotels of the country, I venture to say that to the general trade of the country these hotels are of the utmost consequence. They are the only places where people who come to many of our towns either for business or for pleasure can stay. They ought to be encouraged to conduct their business as they are anxious to do in a thoroughly respectable way, yet the Chancellor of the Duchy tells us that the concessions of the Government are going to put them in a better position than ever they were before. Not one of these hotels think that. There is no owner or occupier who holds any view but that the proposals of the Government are going to strike a fatal blow at them. Under these circumstances, while I listened with interest, as I always do, to the speech of the Chancellor of the Duchy, and realise that he was putting this great scheme and measure before us as such measures are put before us on second reading, I have heard nothing to make me alter my view that this is not a great measure to regulate the liquor trade as he described it, but that it is really one that does nothing but gross injustice to a very great and, as I hold, to a very respectably-conducted trade. I think we are entitled to claim that when it is alleged, as it is alleged—and this House surely cannot ignore the statements made by representative men connected with a great industry like this, who speak from personal knowledge and give figures which have never been disputed, and which now at the eleventh hour remain undisputed, I think we are entitled to claim that these statements cannot be ignored; statements of men who are as well entitled to be listened to as any other body of men in the country. I believe that this part of the Government's proposals are really not part of a Finance Bill, but that they are licensing proposals, and that they are unjust, and that they will work irreparable injury to the trade. I regret very much that in any concession made there has been no real attempt to grapple with the question of licensing, to do so in such a way as to do the minimum amount of injury to that particular class of houses, the small country hotel, to which I referred, and which, if comparisons are to be made, have the strongest claim of all. I said nothing of the larger hotels. The right hon. Gentleman the Chancellor of the Duchy referred to a statement made by the Waldorf Hotel. That statement was made in the Committee stage, and it was claimed to be one to which there was no reply; but it has now turned out that that state- ment was made under a complete misapprehension. I was rather surprised to hear the right hon. Gentleman refer to it again. There is a general consensus of opinion that you are doing great injury to these hotels, and in these circumstances it seems to me that nothing we have heard from the right hon. Gentleman ought to alter the view we have taken that this is an unjust and unsound proposal, and is one which ought to be rejected by this House.


I hope the right hon. Gentleman will acquit me of having come here either with the intention or with the necessary preparation for a Second Heading speech. I should not have intervened at all in the Debate, after the most able and exhaustive speech of my right hon. Friend the Chancellor of the Duchy, except for the fact that the right hon. Gentleman complains that one or two points have been left unnoticed. I think the right hon. Gentleman is rather difficult to please, because he finds first that my right hon. Friend's speech was too long and then he thought it was not long enough. For my own part, I venture to say that it covered the whole ground, and that every reasonable objection made in the course of this Debate to the licensing proposals was dealt with, and that it was an appropriate speech to make upon this occasion, when the hon. Gentleman opposite proposed to omit practically the whole of our licensing proposals. But out of deference and courtesy to the right hon. Gentleman, I will endeavour now for two or three minutes to deal with the points he raised. First of all, he repeated the argument that it is bad finance to lay additional taxation upon a dwindling source of revenue. No doubt that, as a general proposition, is very sound canon both of local and Imperial finance, but when you speak of the revenue from intoxicating liquor as being a dwindling source that statement is perfectly true if you regard the consumption per head of the population to-day compared with what it was ten years ago; but it is not in the least true if you compare the amount of business which is done in the average public-house with the amount of business done in such a house ten years ago. The right hon. Gentleman has omitted to observe, or has not given due weight, to the fact that while it is perfectly true that the amount of liquor consumed per head is decreasing, simultaneously there has been a very substantial diminution of the number of public-houses, and if I may once more quote the figures already given by my right hon. Friend the Chancellor of the Duchy, you will find—this takes a period of 20 years, 1888, 1898, and 1908—you will find that, taking the consumption of liquors per licensed house, in 1888 it was, in spirits, 323 gallons; in 1898 it was 385 gallons; and 1908 357; and in beer, 184, 234, and 224 gallons. So that per licensed house the consumption has very largely increased during the 20 years, although it is not quite so high in the case of spirits, and not quite so high in the case of beer as it was 10 years ago. Yet the consumption per licensed house shows a very much smaller falling off than the consumption per head of the population——


I am not sure whether I understand the right hon. Gentleman. If I do, he divides the total consumption of the country by the number of public-houses—he is not referring at all to the amount actually consumed—but he is dividing the whole consumption of the country whether in or out of public-houses—


That is quite true. I quite admit that private consumption or house to house consumption ought to be mathematically and strictly excluded, but I do not know that it is possible to make such a calculation——


Yes, it is.


I quite agree that is the basis upon which the figures should be arrived at, because you are dealing with the same class of figures at each stage, in 1888, 1898, and 1908. You are dealing on the one hand with the number of licensed houses, and on the other with the total consumption of liquor.


There has been a great change in the methods of distribution.


All that must be allowed for. I say you are dealing with the same figures. [An HON. MEMBER: "There has been an increase of clubs."] It is possible that there has been a large increase of clubs, but I think it will be found that there has been a larger percentage of diminution of consumption in private houses than in public-houses. I agree you must take all these factors into account, but the net result will be found to be that the consumption per licensed house has not diminished in anything like the same proportion, even if it his diminished in the 20 years, as com- pared with the consumption per head of the population, and these Licence Duties with which we are dealing in this particular Clause are duties imposed upon licensed houses. They are imposed, in other words, upon the monopoly value which these licensed houses have to their owners or occupiers. When you are considering—I am still dealing with the argument that you ought not to tax a dwindling source of revenue—what is the subject-matter of the tax, namely, the monopoly value of the house, and, on the other hand, when you observe that as regards the average consumption per house there has been nothing like the diminution suggested per head of population, the argument loses, if not the whole, at least a great part of its weight.

Let me come to another point. The right hon. Gentleman is surprised that my right hon. Friend the Chancellor of the Duchy should refer to the Report of the Royal Commission on Local Taxation and to their recommendations of an increased Licensed Duty as a possible, and, indeed, as a practical source of additional revenue. He says you are taking this revenue in the shape of taxation and not of rates. What possible relevance has that to the position taken up by my right hon. Friend? My right hon. Friend was arguing that the licensed house could bear this additional burden, that at the present they were being undertaxed, and that the duties were on an insufficient scale. It does not matter whether you apply the additional revenue you receive to rates or taxes. You are not justified in deriving the increased revenue at all unless you are satisfied that the Royal Commission on Local Taxation were right in saying that the existing revenue is not equal to the requirements of justice, and that the licensed holder could easily bear an additional charge.

Then let me come to another and much more serious point raised by the right hon. Gentleman. He says that some of the arguments used in defence of this part of the Finance Bill proves that the object of these particular provisions is not a proper object for a Finance Bill, but is an object which would more properly be aimed at in a Licensing Bill.


I said from the speeches that have been made.


Well, I seem to remember that last year, when we were engaged in the discussion of the Licensing Bill, hon. Members who sit behind the right hon. Gentleman complained that the purposes of the Bill would be more properly included in a Finance Bill than in a Licensing Bill. I remember perfectly well that when we were dealing with the monopoly value and proposing that the State, after the expiration of a term of 21 years, should be entitled to resume the monopoly value which they themselves created, they said that that has nothing whatever to do with licensing or with temperance; it is merely a means of securing for the State an additional source of revenue; so that when we introduced those proposals in a Licensing Bill we were told it was a Bill for the relief of the fiscal situation, and when we introduce it in a Finance Bill we are told that it properly belongs to a Licensing Bill. We cannot get it right whatever way we try to do it. But as a matter of fact we here start in regard to these Licence Duties from the fiscal point of view. For years and years past we have stated, quite independently of any reform in our licensing laws, that the present scale of duties as applied to licensed houses is wholly indefensible, and if you are entitled to expect, as we think you are, from the lower class of houses a rate of duties on a scale established in 1880, you cannot possibly justify letting off the higher class of houses on the derisory duty they at present pay, and you have there a most legitimate source of revenue That has been the position which I believe every responsible leader of this party has taken up ever since I have been in Parliament. Remember always that these License Duties—as I have said before, and cannot too often repeat—are duties upon the monopoly value which the State has created, and upon a privilege which the State has granted. Last year, wishing as we did for a comprehensive settlement of our Licensing Laws, we proposed to defer the right of the State to resume that monopoly value for a fixed term of years, allowing it in the interval to continue to be enjoyed by those who are at present licence-holders in consideration of the enormous and beneficial change which we believed they would bring about in the conditions of temperance and the consumption and sale of intoxicating liquor. I have been accused of using a threat, but I am sure I did not, although I admit I did utter warnings, and that I did say—and I am not at all ashamed of having said it—that if that proposal on our part which would have foregone the right of the State to all intents and purposes to enjoy for many years to come any substantial addition to the revenue from these sources were rejected, the trade of the country must not be surprised if we reverted to our original position, and said, "Here is a source of revenue ready to our hand to which we may justly resort to meet the exceptional necessities of the State for social reform and national defence."


I was not referring to any statement made by the right hon. Gentleman. I was referring to explicit statements made by his colleagues in the Cabinet.


I hope we shall never arrive at a time in this country when the speeches of Cabinet Ministers will not be read with interest. Well, I have known times when they were not treated in all quarters with becoming respect, but I am not aware that anything which my colleagues have said on this matter is in any way inconsistent with the position I have just stated. At any rate, that is the view of the Government. Our proposals for deferring for a long period the possibility of resorting to these sources of revenue having been deliberately rejected, we are perfectly entitled now, as a matter of fiscal expediency and justice—and I put it upon that ground alone—to demand from the persons to whom the State has granted as a privilege this valuable monopoly, that they should in the shape of additional taxation render something more like an equivalent return for the privileges they enjoy. I come lastly to the crucial point. The right hon. Gentleman himself does not deny that the existing scale of duties is indefensible. Neither the Mover nor the Seconder of this Amendment have attempted to defend it. It has been condemned in most explicit and emphatic terms by statesmen belonging to both parties sitting on both sides of the House. To exact a Licence Duty which averages something like, I suppose, 50 per cent. on the lower-value houses, and when you get to the higher-value houses, the great gin palaces of our large towns—which everyone will admit are, from a moral point of view, more potent sources of demoralisation, and, from a fiscal point of view, are certainly fit subjects for taxation—these great establishments escape not altogether scot free, but pay a contribution to the State which it is impossible for any man of fairness or common-sense to justify. I think the hon. Member who seconded the Amendment paraded, as they always do on these occasions, the great authority of Mr. Glad- stone. They build tombs for the prophets, nevertheless they stone them to death. The collection of epitaphs upon Mr. Glad stone which we have heard from Dukes downwards in the course of the criticism inside and outside of this House of the Budget Bill would occupy an amount of space which I do not think any lapidary could estimate. It is some consolation to remember that Mr. Gladstone was denounced with exactly the same epithets, and, I think, with even more vehemence of spirit, than are the degenerate successors who at present unworthily occupy his place. That is my parenthesis. What Mr. Gladstone did in 1880 when he established this scale was, I think, a tentative matter, and in some senses a new departure, but I think it was very much more in conformity with the then existing state of facts than it is to-day. What was the state of things then? The great bulk of the public-houses in this country then were of the small class. It is during the 30 years which have elapsed since 1880 that there has been this enormous multiplication and addition to the bigger class of houses at the top of the scale. Mr. Gladstone, framing his Budget as he did quite properly for the primary purpose of raising revenue, placed the burden of the tax upon the average house, which was the house normally in existence at that time, and which the Chancellor of the Exchequer had to keep constantly and steadily in view. Those who have witnessed the great transformation and change which has taken place in the trade since 1880 will agree that the scale of 1880, even if justified at the time, has become hopelessly obsolete and impossible to reconcile with the elementary principles of taxation to-day.

That being so, what is the objection to our proposal? We are applying all the way up the same ratio which Mr. Gladstone applied to the normal and average public-house in 1880, neither more nor less, but precisely the same. Admitting, as we do, in regard to some of the larger houses, that the application of such a scale might be oppressive and in some cases even ruinous to the persons concerned, we have offered them an alternative which we believe will prevent any case of real substantial hardship, which my right hon. Friend was right in saying might more properly be discussed when we come to the Clause which specially deals with it. In regard to the hotels a simple cast-iron inflexible 50 per cent. would have presented cases of considerable hardship, and in regard to them we have practically met all the demands made by their representatives when the Budget was introduced. I do ask those who take part in future stages of this Debate to address themselves to this question which I have never heard touched upon in these discussions. You admit the present scale to be unjust. Everyone admits that. What do you propose, or have you anything to propose in place of the scale adopted by the Government which would bring about these two results, both of which you ought equally to have in view, first to establish something in the nature of equity as between the different classes of licence holders, and in the next place to produce to the State an adequate contribution to the revenue for the necessities of the State? For a solution of that question the Government proposals hold the field.

Mr. A. E. W. MASON

We have all listened with great interest to the speech of the Prime Minister, and from my point of view certain words he uttered towards the end throw a rather different complexion upon the whole matter. All through these Debates we have been labouring under a certain difficulty, because we are not aware what are the actual Amendments to be brought forward by the Chancellor of the Duchy of Lancaster. The Prime Minister expressed the opinion that they would prevent any actual hardship being inflicted in individual cases. I think it has been admitted by those sitting on the Government Bench and those who sit behind them that as a result of these Licence Duties great hardship will be inflicted upon particular members of the community. I think it is perfectly true, as the Prime Minister has stated, that our main difficulty is the consideration of the actual amount which ought to be levied upon the licensed trade. In that question of the amount there is undoubtedly raised a very large question of principle. Any hon. Member sitting on the Ministerial side of the House is quite certain to accept any statement falling from the Prime Minister, and when he declares that the object of this Clause is a fiscal object and not a social one, and that incidentally it is only to aid temperance reform; when the right hon. Gentleman declares that its real object is to raise necessary revenue we are bound to accept his statement. On the other hand, I do say that the statement which the Prime Minister has just made was a very necessary one, because we have had the hon. Member for the Appleby Division (Mr. Leif Jones) declaring publicly that you cannot put too heavy a duty upon the trade, and therefore it is necessary for someone to state clearly and precisely that the object of the Budget proposals in this case is to raise revenue. I want to ask the Prime Minister whether he believes that as a result of these Clauses no man earning his livelihood at the present moment protected by the laws of England will be prevented from making his living in the same way when these taxes are imposed? After all, if the object of this Budget is to raise money and nothing else, surely it is an essential consideration whether you are levying taxes which will prevent people from continuing to earn their living in the way they were doing before. I am not aware of any principle of taxation which would justify the levying of a tax so high that a man would have to turn to another trade in order to get his living. It certainly would not be placing the burden upon the shoulders of people best able to bear it. I, for my part, would certainly accept in that sense the statement just now made to us, that the new Clauses and the Amendments of those Clauses to be put forward by the Chancellor of the Duchy will prevent any case of individual hardship which it was generally admitted would occur without those emendations.

6.0 P.M.


The Prime Minister, just before he sat down, challenged us on this side of the House to produce some scale as an alternative. The right hon. Gentleman was not here when in Committee I moved a scale which we said would meet the justice of the case, and would distribute the present duties in a more equitable manner, and which was so arranged to produce £23,000 more than the present revenue. I mention that because I think the Prime Minister was not aware that we had produced a scale. What is the origin of these proposals in this Budget? I have no doubt they originated 12 months ago when the Licensing Bill was rejected. We had it from hon. and right hon. Gentlemen on that side of the House over and over again that if the Licensing Bill was rejected other means would be taken to attain its object, which was to reduce the number of licensed houses by one-third during 21 years, and not to obtain revenue. No revenue was to come in until 21 years had expired, and, not only was no revenue to be obtained, but there was to be a loss from the licences, which were to be reduced by one-third during that time. That, as the Government stated, was a temperance measure, and its object was to reduce the licences. The object of a Budget is to produce revenue. But supporters of the Government have stated that a reduction in the number of licences would be obtained by taxing them so that they would have to close their doors. There is no doubt about that. The right hon. Gentleman the Member for Spen Valley (Sir T. P. Whittaker) said that if they could not get the Licensing Bill passed the obvious plan was to increase the duty. The object was to diminish the value of licences. That is the Budget, according to the right hon. Gentleman. The Lord Advocate, who is always so accurate in his statements, made it plain that in the event of the House of Lords throwing out, or mangling, the Bill to any extent, the Prime Minister and the Chancellor of the Exchequer would impose such a Licence Duty that fully one-fourth of the public-houses would have to close their doors. The right hon. Gentleman the Patronage Secretary (Mr. Joseph Pease), on 4th December last, said:— I imagine people will expect that, the Chancellor of the Exchequer will cause the abolition of redundant licenses by placing taxation on them so that people may get back their own. The Prime Minister himself has just now admitted that he stated in June of the present year that the question of whether the effect might not be to discourage the growth, and, indeed, the existence, of the worst class of houses, may be taken into account by the Chancellor of the Exchequer, and that it would be perfectly justified. I do not want to enter at any great length into the general arguments. We have had them over and over again during the last two months. Shortly, they are these: The trade is already taxed up to the hilt, and the point has been reached when no further revenue can be obtained. That is quite clear from the Spirit Duty. We also say that the taxes borne at the present moment by the trade amount to no less than about 29 per cent. of the total taxes and some of them consist of taxes which were put on by various Chancellors of the Exchequer as a temporary expedient only, as, for instance, the Whisky Tax and the War Taxes. Then the trade has to bear an extra burden in the levies under the Act of 1904 towards the compensation money. If we compare the total amount now being paid under the head of taxation for liquor with that which is paid in other countries we find we are very greatly ahead. The Beer and Spirit Taxes in the United Kingdom last year worked out at 16s. 9d. per head, whilst in France they amounted to only 9s. 5d., in Germany to only 4s. 5d., and in the United States of America to 10s. 7d. The House will, therefore, see we are very greatly ahead of our rivals in this direction, and that we are certainly overtaxed at the present time. The result, no doubt, would be very severely felt, especially in our large city, where the minimum duties will operate. The House will remember that the minimum duty on all beerhouses is to be £23 10s. and on fully licensed public-houses in all cities with a population of 100,000 and more it is to be £35. The result is going to be very disastrous in our large towns. In Bristol the increase in the amount that will be paid will be 165 per cent.; in Norwich, 141 per cent.; in Dover, 172 per cent.; in Birmingham, 193 per cent.; in Sheffield, 165 per cent.; and in Bradford, as much as 340 per cent. The ante-1869 beerhouses are in a very special sense deserving of the consideration of the House. They were created in 1830 on the invitation of the Government of the day. Owing to various causes beer had deteriorated, and the population of the country took to drinking inferior spirits that was considered to be bad for the people, and the policy of the Government was, therefore, changed from what it had been for 300 years, and they said that any householder should be able to take out a licence to sell beer on the payment of an Excise Duty of two guineas only. Immediately a great number of beerhouses were opened all over the country, and they continued till 1869, when I think there were about 50,000 of them. Parliament then changed the law, and said these houses must come under the general jurisdiction of the magistrates, but Mr. Gladstone's Government, in so changing the law, recognised that these houses had obtained a vested interest, and it was provided that the licences should not be taken away by the justices unless for misconduct. That went on till 1904, when the Act of my right hon. Friend (Mr. Balfour) provided that they were again to come under the general conditions, and that, if these beerhouses were considered redundant, the magistrates should have power to close them on due and adequate market value being paid. The Government now say, "We will make them close their doors by taxing them so much that they cannot pay, and we will not pay them a single penny for compensation." There is a wide difference between the principles of the Act of my right hon. Friend and the principles of the Government. I hope it is not too late to make an appeal to the Government on this question. I should like to appeal to them, not in my own words, but in the words of their own Foreign Secretary (Sir E. Grey), who the other day, in a speech in the country said:— There is far too much goodwill about the British community to make any large section really wish to see others taxed for the sake of penalising them, and so anything in the nature of a vindictive Budget, I am convinced, would have no chance in the country. I hope the Government will give us the opportunity of seeing whether this vindictive Budget has any chance in the country. I believe they will find that the people of the country have a very different opinion as to what is justice from what they think justice. I believe the people of the country, when they are appealed to, will say that all the provisions of the Budget, and especially these Licensing Clauses, will create and inflict a grievous injury on a large number of persons who have done nothing wrong and who have a right to claim from the Government of the day and from the law that same protection which all citizens have in this country.


The Prime Minister defended the increased scale of duties on the ground that the consumption of spirits and beer is divided by the number of public-houses, though he did not altogether adhere to that statement. It is an undoubted fact that, stating the total consumption of beer in any one year and dividing those figures by the number of licensed houses, will give a most inexact and fallacious view as to the business done upon the licensed premises generally. The conditions of the licensed trade in this country have changed very much during the last 20 years. My hon. Friend has pointed out that during that time there has been a great increase in the number of clubs, and that there has been very considerable alteration in the methods of distributing beer and spirits. There has, for instance, been a very great increase in the amount of beer bottled, and, as a consequence, there has been much less supplied in tankards and glasses across the counter. That means that there has been a proportionate loss on sales on licensed premises during the last two decades. I think the Prime Minister must have for gotten that taxation on liquor itself has increased. The Budget has already pro- duced a very large reduction in the amount of spirits consumed on licensed premises in this country, and this, of course, means taking away a very considerable proportion of the revenue of these licensed premises. I think, too, the right hon. Gentleman must have forgotten that there has also been a constant increase of rates. The Government are coming in rather late. The local authorities have been before them. Those authorities have been carefully watching any increase which may have taken place in the value of licensed premises. There has been a continual process of screwing up the rates by the local authorities, and the Government are coming into the field very late in the day in their endeavour to secure for Imperial taxation what has already been paid for years in the form of local rates. The London County Council woke up to that fact the other day when it stated in terms that this increased taxation on licences will result in a reduction of the rates in London by upwards of £200,000, a sum which represents, on the remaining property in London, over one penny in the pound. These facts ought to be borne in mind.

I will only, in passing, refer to the comparisons which have been made with licence taxes in foreign countries. They have been mentioned by different speakers, but I would like to suggest that these comparisons are misleading and not worth notice, unless they take into account not merely the taxes imposed by the local authorities, but also the contributions which it has been the custom in foreign countries to exact on the means of the distribution. But under this Budget the Government are taxing the article higher than ever before: they are increasing the tax on whisky and beer, and at the same time they are adding to the taxation on the licences themselves out of all measure. I think the case of the '69 beerhouses is peculiarly hard. These licences, prior to the Act of 1904, had an absolute statutory right by Act of Parliament which the financial proposals of this Budget will destroy. The new principle introduced into the Schedule with regard to minimum duties will seriously affect these houses. They are chiefly houses of small value, but they will be wiped out practically by the proposed minimum scale. There is not the slightest intention to treat them with any consideration whatsoever. The Chancellor of the Exchequer has never attempted to show one tittle of consideration for the position of these beerhouses. The Government have made concessions to grocers, and they have very much reduced the scale for off-licence holders, and, though that scale may be considered more bearable, bitter complaint is still made that the Government have taken away one of the most valuable considerations which they offered for the acceptance of the increased scale. Hotels undoubtedly have had some consideration shown them, but, again, it should be understood that these concessions only affect the larger hotels which have sprung up in recent years, and will not affect the smaller hotels. The case of the latter is hard and almost intolerable. These so-called concessions are practically of no value at all as regards a very large class of on-licences in this country. There has really been nothing done to meet their case, and no one connected with the trade or who has to do with these houses attaches the slightest value to these so-called concessions. The fact, as my hon. Friend the Member for Ayr Burghs stated very plainly, is that the total amount to be collected under the new scale from this class of houses throughout the United Kingdom only amounts to £325,000. The concessions represent £300,000, and these bring practically the large houses back to the value on which they are paying at the present moment. As to other classes no attempt whatsoever has been made to meet them, except in one case, where there has been a slight adjustment of the minimum scale. I do not propose to repeat the argument which has been urged on the consideration of the Government, showing the overwhelming weight and crushing effect of these duties. They evidently mean wiping out a large number of the houses. It has been admitted by the Government itself that that must be the effect, and calculations have been made showing that at least one-third of the houses will be wiped out as a result of the duties. The produce of the licences will be at least one million more than the Government has put down in its estimate, and that, too, shows that they intend to wipe out one-third of the licences, and have arranged their estimates of revenue accordingly. I maintain that this is not a Finance Bill, so much as a proposal to revive the worst and most unbearable provisions of the Licensing Bill of last year, and to carry into effect abortive proposals which never received the assent of the country. The Government, in my opinion, are not seeking to raise revenue on sound economic lines, but they are endeavouring to extort and exact it by methods which might be more natural to Eastern potentates.


My hon. Friend the Member for Coventry put an explicit question just now, which I think every one will agree, went very largely to the root of this question. His question was this: "Can the Government give an assurance that the scale proposed in this Finance Bill will not lead to the suppression of a single existing licensing interest at the present moment. That is a fundamental point, because if it is to receive anything like universal and compulsory application it will have financial consequences which are not agreeable to the hon. Gentleman opposite. I imagine that the equitable application of the principle must entirely depend on the assumption that since the existing taxes were first calculated there has been no change in circumstances or conditions which in any way disturbs the equity of the taxation as it at present exists. Speaking from a personal point of view alone, I say that the whole argument for the increased taxation proposed by the Government in their Finance Bill rests on the overwhelming and perfectly unanswerable fact that since the existing set of taxes was levied by Parliament the value and character of licences has been changed, and has been changed by the action of Parliament without any fiscal or financial consequences. My point in defending the Government scheme and my ground for supporting that scheme is this: that Parliament from time to time, and since the present taxes have been in vogue, has most substantially and materially changed the character of the licences and enormously enhanced their value by diminishing, but not at the same time adjusting, its scale of taxation to the change made in the character and value of the licence. Therefore, if I am to ask myself how far the existing standard of taxation is a proper standard, I must, to arrive at a conclusion, enter upon an examination of the condition of things which existed when it was imposed and the conditions which are prevailing to-day under the altered circumstances. Moreover, the Amendment of my hon. Friend, if carried to its logical issue, would not only be financially indefensible, but also entirely unprecedented. It will be within the recollection of the House that when Mr. Gladstone in 1880 proposed his certainly very moderate scale of licence taxation, although the standard then imposed, as I, for one, believe, and as anyone who has regard to the history of the question will admit, was exceedingly moderate, and, as I hold, an entirely inadequate one, yet the effect of that alteration was to lead three or four thousand public-house holders in Scotland to surrender their licences and take up another kind of licence in their places, namely, the grocer's licence.

When that consequence took place there was no question as to the equity of the scale of taxation brought about, and it is the first time I ever heard it suggested that those licensees who in 1880 surrendered their licences rather than pay the additional amount of taxation were entitled to a great amount of sympathy from the House. Moreover, there is a fact which is very partinent to the arguments we have heard this afternoon as to the ethical or moral right of Parliament to impose a new scale of taxation, or to alter the law in a way which drives licensees out of existence. We have heard that there is a special hardship in the case of the licensee holding an ante-1869 beerhouse, but we have not had a single reminder of the perfectly analogous case of the holders of the ante-1869 off-beerhouse licences, who had precisely the same statutory right as the ante-1869 on-beer licensees. What happened? At the instance, and with the support of the trade Mr. Ritchie introduced a Bill which deprived the ante-1869 off-beerhouse licensees of their statutory rights without the payment of a single penny of compensation, and I cannot help thinking that this historic precedent is a sufficient answer to much of the argument that has been heard as to the special hardship to the ante-1869 beerhouse licensees this afternoon. But I think we shall all admit that the point which the House is primarily concerned with is the general equitableness of the scale of taxation proposed by the Government, modified as they are by the Amendments on the Paper—the broad, equitable defence and justification of that scheme. I have tried to work out the actual effect on existing licensees of the present proposals, and it has not been possible until all the Amendments have been brought together.

I have been trying to work out very elaborately and carefully what will be the actual financial effect of the Government scheme upon the existing licensees of the Kingdom, and I should like to give just a few figures which will enable me to show what will be the actual financial effect of the new scale moved by the Government. I will take first of all the case of England and Wales, taking merely houses under £500 annual value, which represent something like 97 per cent. or 98 per cent. of the whole. The present average annual Licence Duty they pay at present is £20, and the effect of the proposals of this Bill will be that the future average duty for those same licences will be £41, or just double the present duty. Taking in all the public-houses now public-houses under this Bill above and below £500, and excluding houses rated above £3,000, which are not public-houses proper but hotels and restaurants, which take out at present the ordinary publican's licence—including all public-house licences above and below £500 in England and Wales—the present annual duty averages at present £21, and in future under the effect of this Bill it will be £49. I cannot for a moment conceive that that difference justifies the very strong language we have heard concerning punitive taxation which is constantly being addressed to Members on this side of the House. Take the case of Scotland. The new taxes proposed are less severe there. The present average of duty on all public-houses is £20 15s., and the average future duty under this Bill will be £39 10s., an increase of £19 a year. In Ireland the effect is almost negligible, and that is not due owing to the special concession which the Government made, which I think was a perfectly righteous concession in regard to the minimum duties. It did not mean very much. Owing to the low rateable value which exists in Ireland the effect of the new scale is almost inappreciable. At present the average duty is £8, and in future under this Bill it will be £9 9s.

May I give the House some details which I think will bring home much more clearly the actual effect of this Bill in the case of England and Wales. I take England and Wales, because they represent 73 per cent. of all the public-houses in the United Kingdom, and the new scale happens to press with greater severity in the case of England and Wales than in any other part of the United Kingdom. The effect of the new scale, making full allowance for the actual rateable value of all the public-houses in every town and urban district in England and Wales, and making the fullest possible allowance for the scale of minimum duties in the Bill set up by the Government—the actual effect of the new scale will be this, that in the case of 5 per cent. of the whole of the public-houses in England and Wales the amount of the Licence Duty will be actually reduced by this Bill. In the case of 28 per cent. the average increase will range from 5s. to 10s. a year, and in the case of a further 8½ per cent. the average increase will range from £1 to £2 10s. In another 6 per cent. the average increase will be from £3 to £7, and in the case of another 23½ per cent. the average increase will not exceed from £9 to £12 10s. a year. In other words, 5 per cent. of all licensed public-houses in England and Wales will actually have their Licence Duty reduced, while another 66 per cent. of the whole number will have their Licence Duty increased by an average sum ranging from 5s. to £12 10s.


I beg the hon. Gentleman's pardon for interrupting. But where does the revenue come from? I cannot follow his figures, nor do I see how such figures can be reconciled with the estimated revenue which the Chancellor of the Exchequer stated.


I can give the right hon. Gentleman the actual estimates of increased revenue which I calculate the Treasury will receive, and which I estimate will be a large sum.


Will it be the same as the estimate of the Chancellor of the Exchequer?


I am not at all sure. I will give it as my own personal view of the situation that the Chancellor of the Exchequer will not suffer to the extent of £500,000, but, broadly speaking, I think the Chancellor of the Exchequer's estimate of expected revenue will be realised. I think my own figures would not fall very far short of the estimate originally made by the Chancellor of the Exchequer. But I can give the right hon. Gentleman the detailed figures which will show him how the revenue is to be raised. In respect of the low figures, but setting aside certain small intervening increases between £12 10s. and a higher sum, 13 per cent. of the licensees will have their duties raised by £45 a year, or 17s. a week. The figures I have given represent altogether 84 per cent. of the licences in England and Wales. There is no doubt that the scale of the Government Bill does hit somewhat heavily a certain number of highly-rated public-houses, but those highly-rated public-houses are rela- tively very few, although the revenue to be derived from them is substantial in view of their number. They really represent all those houses of over £500 annual value, although public-houses are probably represented by only 2 per cent. of their total number in the United Kingdom, and while I admit that the fewness of these public-houses does not justify an excessive taxation of them, I cannot subscribe to the view that a house rated at £500 gross rateable value is excessively taxed if called upon to pay a Licence Duty of £250 per annum. There is enough evidence to show that a Licence Duty of £250 per annum for a house rated at £500 is well within the taxable capacity of the publican if he is protected from unfair competition. The essential equity of the new scale is that it does broadly adjust the weight of the taxation to the character and size of the premises. An anomaly which has been freely admitted to exist in connection with the existing scale of Licence Duty is that the small houses pay quite a disproportionate amount to their annual rateable value as compared with the larger and more heavily rated portion, and so it comes about that under the existing scale the villages and the rural districts and the small towns pay a much higher proportion of Licence Duty than is paid by the publicans in the larger towns.

Perhaps the House will permit me without trespassing unduly on its patience to give a few figures showing how equitable the incidence of the tax is to the small houses in the towns and villages of the country. I will take the Government's own line of demarcation. Take rural districts and urban centres having a population of less than 2,000 people, and in the case of 11 per cent. of all the public-houses in these areas the Licence Duty under the Bill will actually be reduced. In the case of 70 per cent. of the others the average increase will range from 5s. to 15s. a year, and in the case of 8 per cent. the average increase will be £2 10s. a year, so that in the case of all the public-houses in the rural or urban districts in places with a population under 2,000 people in the case of 90 per cent. of the public-houses the Licence Duty will either be reduced or raised by an amount varying from 5s. to £2 10s. I cannot see any justification in those figures for the charge of punitive taxation. May I take the next population group given by the Government? Urban districts having a population of from 2,000 to 5,000 and upwards. In this group 11 per cent. of the total number of licensees will have their Licence Duty reduced under the Bill, 33 per cent. will have an average increase of from 5s. to 10s., and 23 per cent. will have an average increase: of from £2 to £2 10s. Here again you have 70 per cent. of all the public-houses in these small places of from 2,000 to 5,000 inhabitants in which the Licence Duty is actually reduced or is raised on the average by sums of from 5s. to £2 10s. a year.

May I take a further group of places having from 5,000 to 10,000 population? In 27 per cent. of these cases the Licence Duty under the Bill will be raised front 10s. to £1. In the cases of 13 per cent. more the duty will be raised by £2 10s. a year; in the case of 11 per cent. more the duty will be raised by £4 a year; in the case of another 9 per cent. by £7, and in the case of another 22 per cent. by £12 10s. Here, again, you have in towns of from 5,000 to 10,000 population 83 per cent. of the whole number of public-houses raised by average sums ranging from 10s. up to £12 10s. a year. Let me take a group of towns having from 10,000 to 50,000 inhabitants; 27 per cent. of the public-houses in that group of towns will have their Licence Duty raised under the Bill by from £2 to £3 per annum; 7 per cent. more will have their Licence Duty raised by £6 per annum; and 41 per cent. more will have their Licence Duty raised from £9 to £12 per annum, or 3s. 6d. to 5s. a week. These figures cover 75 per cent. of all the public-houses in that group of towns. To take the larger cities. It is inevitable that, under any readjusted scale of taxation which has any regard to equitable principles, the incidence of that readjusted scale must fall much more heavily upon a large city than upon a small town or rural district. But, taking a group of towns having from 50,000 to 100,000 inhabitants, 11 per cent. are raised by £10 a year, or 4s. a week; 45 per cent. more are raised by £12 to £13, or 5s. a week; 7 per cent. are raised by £16 to £20; 22 per cent. more are raised by £45 a year, or 17s. a week; while 7 per cent. more are raised by £90, or 34s. 7d. a week. Here, again, the figures are 92 per cent. of the whole of the public-houses in that particular group of towns. When you come to houses above £500 annual value, I admit that the increase is substantial, but if any regard were to be had to justice and to equity the increase was bound to be disproportionate in a number of cases; and I still suggest my own personal belief that there is nothing under the revised scheme of the Government that can constitute any reasonable justification for the characterisation of this scheme as being a revengeful or punitive scheme of taxation. The figures I have quoted are actually higher than the actual figures, because I have been bound to treat all licences on the basis of a tax of 50 per cent. of their gross rateable value, because the new valuations of annual licence values are not ascertainable at present. I have also had to include in public-houses a number of hotels and restaurants and refreshment rooms which took out an ordinary publican's licence, but which, under the Bill, will receive special concessions and exceptional treatment. The figures I have given are really outside figures, and it is on the strength of those figures that I, for one, have no hesitation in supporting the scheme of the Government.


It is with very great diffidence that I follow, upon such a subject as this, an expert like the hon. Gentleman. He has devoted an immense amount of labour to the consideration of licensing questions, and he has written a very elaborate and authoritative treatise on the subject, and, of course, I do not for a moment put my authority against his in matters of detail. He will forgive me for saying, however, that there are certain broad aspects of the question touched upon in earlier speeches this evening on which he does not seem to me to have thrown any important light. We have heard a good deal of the Licence Tax being lightened on certain classes of licensed property, and that bulked rather largely in the hon. Gentleman's statement, but somehow everything in the nature of an increase seemed to be glossed over, and almost to vanish in the statement which be gave to the House. If no one is going to pay anything, how comes it that the Exchequer is going to get over £2,000,000? If the whole of this £2,000,000 is going to be got out of a particular trade, it is really going rather far to assume that it will have no ill consequences to any members of the trade. I will ask the House to consider the general view of finance in connection with the subject which has been given us by the Prime Minister and the Chancellor of the Duchy. They have told us that we are most unjust to accuse them of having brought forward a Licensing Bill under the guise of a Finance Bill, because, adding to the licences has always been a part of Liberal finance, and when they are asked for authority for that state- ment, they go back to the speech of the late Prime Minister eight or nine years ago, in which he appears to have thrown across the floor of the House a suggestion to the then Chancellor of the Exchequer that he might increase the Licence Duties. I do not traverse the authenticity of that history, but, after all, what were the Government doing last year when they brought forward their Licensing Bill? They knew then practically the whole extent of the financial obligations which would have to be met in this Budget. They knew then the full burdens of the old age pensions. No new class of liability has come upon them since then. They knew what was being done in foreign countries in the way of shipbuilding. They had already had the authentic information which has made them, and still more us, deeply anxious about the condition of the Navy and brought home to everyone the necessity of an increased expenditure upon that branch of our defensive services. They knew, broadly speaking, what the financial situation was, and I do not understand in those circumstances how they can, with a clear conscience, have abandoned Sir Henry Campbell Bannerman's principles of finance and brought forward a Licensing Bill which entirely destroyed that broad system of finance which was a source of revenue for 21 years. If they have been looking ever since 1901 to an increase of the Licensing Duties as a proper way of meeting that expenditure, how was it that they tried to destroy that source of revenue a year ago, when they were fully conscious of all the new strains which were going to be put upon our national finances by old age pensions, the increase of shipbuilding and social reforms? All this history and quotation from the speech of 1901 is a mere afterthought. It is done with the intention of getting over the objection which we have urged from these benches, that in truth those Members of the Government were right, including the Chancellor of the Duchy, who said that this part of the Budget was an alternative to the Licensing Bill, and as they were deprived of the Licensing Bill they proposed to bring forward this alternative in a form in which it could not be amended in another place.


Is the right hon. Gentleman quoting my words? I have no recollection personally of saying so.


I have not the quotation, but I believe the right hon. Gentleman will find that the substance is this, that the Government were now going to propose a way of doing what had been done by the Bill of last year, although the way they were now going to do it was not so good. There is no one in the House who doubts for a moment that the broad contention I am making is accurate, that Members and supporters of the Government have over and over again, since it appeared that the Bill of last year was in peril, made statements of which only one interpretation can be given, namely, that if the Bill of last year failed there was another way of doing what it would have done, with the additional consolation of bringing in some immediate resources to the Exchequer. In that case I do not think the Prime Minister ever succeeded or could succeed in inducing the House to believe that there is no relation between the financial proposals of 1909 and the licensing proposals of 1908. Both had an effect, near or remote, on the revenue, but that in this Bill the Government have the deliberate object not merely of getting revenue but of doing something which they have tried to do by another means.

I do not believe any candid inquirer will deny, and however ingeniously the theme may be treated by hon. Gentlemen opposite everyone in his heart knows that the general statement I have made is perfectly accurate.

7.0 P.M.

Now I come to what is even a more serious objection to the scheme of the Government, and that is the equity of this tax, tested by any of the canons by which we judge the equity of a tax. I venture to lay down the proposition that a tax which has for its object the avowed and admitted effect of squeezing out of any legitimate business a certain number of people who are practising it is a tax which so far stands condemned. If you put a tax on of such magnitude that you so utterly alter the conditions of business that people are no longer able to carry it on who were carrying it on, that may not be a conclusive argument against the tax, but it shows that it is a very oppressive tax. I do not think anybody will deny that. I ask, Is this new scheme of duties framed in a manner which can be defended? The defence which has been made by hon. Gentlemen opposite is that Mr. Gladstone in 1880 left the scale at the lower end so framed that about one-half of the rateable value was paid to the Exchequer. They say, "That is quite inequitable, and we propose to alter it." I believe that many people hearing this are under the impression that Mr. Gladstone imposed for the first time on small licensed holders a tax equal to half the annual value. He did nothing of the kind. He found the tax of about that amount. The hon. Member who has just sat down will correct me if I am wrong, but I believe I am not wrong in saying that Mr. Gladstone, in 1880, did not greatly raise the scale of duties on the smaller houses. It is not accurate to represent, as the supporters of this Bill seem to represent, that Mr. Gladstone began by raising the duty from nothing to half the rateable value, and that the Government are merely carrying on that beneficent operation from one end of the scale to the other end. Mr. Gladstone found these duties not differing very substantially from those which the present Government are proposing at the lower end. He therefore did not put on any punitive taxation. The Government are undoubtedly putting on punitive taxation at the other end of the scale.

Nobody will pretend that when you come to a house with a rateable value of £450 or £500, and suddenly put on a tax of £200 on that house, you are dealing with the particular individual engaged in a particular industry as this country has ever dealt with a particular industry, so far as I know, in the whole history of its finance. I do not think that either the Chancellor of the Duchy or the Prime Minister has made the smallest reply to that case. All they have said is that you bring forward the case of the man having licensed premises of the annual value of £400 or £500. They say that the man who has licensed premises of small value has long been taxed half the rateable value. That is true, but these two obvious observations have to be made. Iu the first place, the rateable value at the higher scale has not the same relation to the trade as in the case of the smaller house. The second observation is whether that condition of the licence was fair or unfair on the small houses, not merely since 1880, but for a much longer time, the tax has been imposed, and therefore the original inequity, if inequity there was, has constantly changed hands, and has not now that oppressive effect which it may originally have had, and which your new tax will have at present. Unquestionably you are practically going down to these people and saying, "The Chancellor of the Exchequer wants £2,000,000. You inhabit a house worth £500; you should pay £200 a year more than before." That will have a most oppressive effect on a large number of licence holders, and surely to ask us to believe the proposition that it is just is to ask us to accept something at which commonsense absolutely revolts. I say you cannot find a precedent in regard to the larger licence holders in anything which Mr. Gladstone did in 1880 in regard to the small licences. That is our case, broadly speaking, in regard to the licence holders in the larger and more valuable houses. How about the licence holders in the small houses? Anybody who listened to the speech of the hon. Member who has just sat down would suppose that they had been left where they were, and that they had suffered no wrong or injustice under this Bill. It is perfectly true that in many districts of the country the licence will not have been seriously increased in value, or increased in value at all. Is that the case all over the country? On the contrary, directly you get to the areas of large populations, you have imposed a minimum which may increase seven or eight times the tax which these people are now paying. Can that be described as otherwise than oppressive to that particular class of individuals? Granted, with the hon. Gentleman opposite that there are licence holders in the country who have no special reason to complain of the taxation now proposed. That is not my criticism of the Budget proposals as regards licences. My criticism is that while there may be people who have no reason to complain, there are people who have a perfect right to say, "You are specially selecting a class of individuals in the community, and you are treating us with special hardship; you are driving us out of our business; you are asking us to pay more than any individual specially selected ought to be asked to pay out of his earnings." Of course, it is quite true that the obligations of the country have to be met. It is quite true that it may be a very disagreeable and onerous business for the community at large to meet them, but nobody complains of taxation diffused over the community upon understood and accepted principles. My complaint as regards this part of the Budget is that licence holders are worse treated than any other class. You are selecting certain individuals merely because they happen to be carrying on a legitimate business in houses rated at something between £400 and £500 a year, and you come down upon them and ask a contribution to the State out of all proportion to their general means and far beyond what you are asking any other member of the community, be he rich or poor, to contribute, and the result must be in some cases that these persons will be not merely made much poorer but driven out of business altogether.

Nobody will make me believe that that is legitimate finance. I am perfectly certain that if you insist upon leaving this part of the Bill what it is intended to be namely, a substitute for the measure the object of which was to squeeze publicans out of existence, and as long as you leave it an effective substitute for that Bill for squeezing publicans out, so long will it leave a sense of rancourous wrong in those who are oppressed, and those who have, unfortunately for themselves, anything directly or indirectly to do with the licensed trade will have a feeling that this House cannot be trusted to deal fairly between interest and interest, and that political and social prejudices are allowed to interfere with the fair use of your financial power, with the result of throwing upon one small class of the community a burden which indeed must be borne, but which should be diffused over every class of the community benefiting by the finance which the Government are endeavouring to raise. That is the reason that makes me feel that both in principle and practice it is bad to impose taxation in this manner, and that it is bad if you look at it in relation to the broad principles of taxation which have hitherto governed taxation in this country. For both of these reasons I heartily support my hon. Friends, and if they go, as I trust they will, to a Division, and ask the last judgment which this House will be in a position to pass upon this part of the Budget in isolation from the other proposals, I shall vote with them. I have no doubt that the Government are ill-advised in their proceedings. They have shown considerable ingenuity to-night in trying to disguise the general trend of their policy, but I think the plain Statement of fact which I have ventured to make will show perfectly clearly what are the grounds that move us to object to their proposals, and I think we shall have the general sense of equity in the community on our side.

Question put, "That the words proposed to be left out, to the word 'or' ['for the manufacture or'] stand part of the Bill."

The House divided: Ayes, 213; Noes, 91.

Division No. 841.] AYES. [7.15 p.m.
Abraham, William (Rhondda) Gooch, George Peabody (Bath) Molteno, Percy Alport
Acland, Francis Dyke Greenwood, G. (Peterborough) Morse, L. L.
Agnew, George William Greenwood, Hamar (York) Morton, Alpheus Cleophas
Ainsworth, John Stirling Grey, Rt. Hon. Sir Edward Murray, Capt. Hon. A. C. (Kincard.)
Alden, Percy Griffith, Ellis J. Myer, Horatio
Allen, A. Acland (Christchurch) Gulland, John W. Napier, T. B.
Allen, Charles P. (Stroud) Hall, Frederick Nicholls, George
Ashton, Thomas Gair Harcourt, Rt. Hon. L. (Rossendale) Nuttall, Harry
Asquith, Rt. Hon. Herbert Henry Harcourt, Robert V. (Montrose) O'Donnell, C. J. (Walworth)
Astbury, John Meir Hardy, George A. (Suffolk) Parker, James (Halifax)
Atherley-Jones, L. Harmsworth, Cecil B. (Worcester) Pearce, William (Limehouse)
Baker, Sir John (Portsmouth) Harmsworth, R. L. (Caithness-shire) Philipps, Owen C. (Pembroke)
Balfour, Robert (Lanark) Hart-Davies, T. Pollard, Dr. G. H.
Baring, Godfrey (Isle of Wight) Haslam, James (Derbyshire) Ponsonby, Arthur A. W. H.
Barker, Sir John Haslam, Lewis (Monmouth) Price, C. E. (Edinburgh, Central)
Barran, Rowland Hirst Haworth, Arthur A. Priestley, Sir W. E. B. (Bradford, E.)
Beale, W. P. Hazel, Dr. A. E. W. Radford, G. H.
Beauchamp, E. Hedges, A. Paget Rea, Rt. Hon. Russell (Gloucester)
Beck, A. Cecil Helme, Norval Watson Rea, Walter Russell (Scarborough)
Bennett, E. N. Hemmerde, Edward George Rees, J. D.
Berridge, T. H. D. Henderson, Arthur (Durham) Rendall, Athelstan
Bethell, Sir J. R. (Essex, Romford) Henderson, J. McD. (Aberdeen, W.) Richards, Thomas (W. Monmouth)
Bethell, T. R. (Essex, Maldon) Henry, Charles S. Richards, T. F. (Wolverhampton, W.)
Birrell, Rt. Hon. Augustine Herbert, T. Arnold (Wycombe) Ridsdale, E. A.
Black, Arthur W. Higham, John Sharp Roberts, Charles H. (Lincoln)
Boulton, A. C. F. Hobart, Sir Robert Roberts, Sir J. H. (Denbighs)
Bowerman, C. W. Hobhouse, Rt. Hon. Charles E. H. Roberson, Sir G. Scott (Bradford)
Brace, William Hodge, John Robinson, S.
Brigg, John Holland, Sir William Henry Roch, Walter F. (Pembroke)
Bright, J. A. Holt, Richard Durning Roe, Sir Thomas
Brodie, H. C. Hooper, A. G. Rogers, F. E. Newman
Brooke, Stopford Hope, W. H. B. (Somerset, N.) Rose, Sir Charles Day
Brunner, J. F. L. (Lancs., Leigh) Horniman, Emslie John Runciman, Rt. Hon. Walter
Brunner, Rt. Hon. Sir J. T. (Cheshire) Howard, Hon. Geoffrey Rutherford, V. H. (Brentford)
Bryce, J. Annan Hudson, Walter Samuel, Rt. Hon. H. L. (Cleveland)
Burns, Rt. Hon. John Hyde, Clarendon G. Scott, A. H. (Ashton-under-Lyne)
Buxton, Rt. Hon. Sydney Charles Illingworth, Percy H. Sears, J. E.
Byles, William Pollard Isaacs, Rufus Daniel Seely, Colonel
Cameron, Robert Jackson, R. S. Shackleton, David James
Channing, Sir Francis Allston Johnson, John (Gateshead) Sherwell, Arthur James
Cheetham, John Frederick Jones, Sir D. Brynmor (Swansea) Simon, John Allsebrook
Clough, William Jones, Leif (Appleby) Snowden, P.
Cobbold, Felix Thornley Jones, William (Carnarvonshire) Stanger, H. Y.
Collins, Stephen (Lambeth) Kearley, Rt. Hon. Sir Hudson Stanley, Hon. A. Lyulph (Cheshire)
Compton-Rickett, Sir J. King, Alfred John (Knutsford) Steadman, W. C.
Corbett, A. Cameron (Glasgow) Laidlaw, Robert Stewart, Halley (Greenock)
Corbett, C. H. (Sussex, E. Grinstead) Lamb, Ernest H. (Rochester) Strachey, Sir Edward
Cornwall, Sir Edwin A. Lambert, George Summerbell, T.
Cotton, Sir H. J. S. Lamont, Norman Sutherland, J. E.
Crosfield, A. H. Layland-Barratt, Sir Francis Taylor, John W. (Durham)
Crossley, William J. Lehmann, R. C. Taylor, Theodore C. (Radcliffe)
Davies, David (Montgomery Co.) Lever, A. Levy (Essex, Harwich) Thomas, Abel Carmarthen, E.)
Davies, Elis William (Eifion) Levy, Sir Maurice Toulmin, George
Davies, M. Vaughan- (Cardigan) Lewis, John Herbert Villiers, Ernest Amherst
Davies, Sir W. Howell (Bristol, S.) Lloyd-George, Rt. Hon. David Vivian, Henry
Dickinson, W. H. (St. Pancras, N.) Lupton, Arnold Wadsworth, J.
Duncan, J. Hastings (York, Otley) Lynch, H. B. Wardle, George J.
Dunne, Major E. Martin (Walsall) Macdonald, J. M. (Falkirk Burghs) Wason, John Cathcart (Orkney)
Elibank, Master of Mackarness, Frederick C. Waterlow, D. S.
Erskine, David C. Maclean, Donald White, Sir George (Norfolk)
Esslemont, George Birnie Macnamara, Dr. Thomas J. White, J. Dundas (Dumbartonshire)
Evans, Sir S. T. M'Callum, John M. Whitehead, Rowland
Everett, R. Lacey M'Kenna, Rt. Hon. Reginald Wilkie, Alexander
Falconer, J. M'Laren, H. D. (Stafford, W.) Williamson, Sir A.
Ferens, T. R. M'Micking, Major G. Wilson, Hon. G. G. (Hull, W.)
Fiennes, Hon. Eustace Maddison, Frederick Wilson, P. W. (St. Pancras, S.)
Findlay, Alexander Mallet, Charles E. Wilson, W. T. (Westhoughton)
Foster, Rt. Hon. Sir Walter Marks, G. Croydon (Launceston) Winfrey, R.
Fuller, John Michael F. Marnham, F. J. Wood, T. M'Kinnon
Glendinning, R. G. Massie, J.
Glover, Thomas Menzies, Sir Walter TELLERS FOR THE AYES.—Mr. Joseph Pease and Captain Norton.
Goddard, Sir Daniel Ford Micklem, Nathaniel
Arkwright, John Stanhope Bignold, Sir Arthur Castlereagh, Viscount
Balcarres, Lord Bowles, G. Stewart Cecil, Evelyn (Aston Manor)
Balfour, Rt. Hon. A. J. (City, Lond.) Bridgeman, W. Clive Cecil, Lord John P. Joicey
Banbury, Sir Frederick George Bull, Sir William James Cecil, Lord R. (Marylebone, E.)
Banner, John S. Harmood- Carlile, E. Hildred Chamberlain, Rt. Hon. J. A. (Worc'r)
Barrie, H. T. (Londonderry, N.) Carson, Rt. Hon. Sir Edward H. Clive, Percy Archer
Cochrane, Hon. Thomas H. A. E. Hunt, Rowland Renwick, George
Courthope, G. Loyd Joynson-Hicks, William Roberts, S. (Sheffield, Ecclesall)
Craig, Charles Curtis (Antrim, S.) Kennaway, Rt. Hon. Sir John H. Ronaldshay, Earl of
Craik, Sir Henry Kerry, Earl of Rutherford, John (Lancashire)
Douglas, Rt. Hon. A. Akers- Keswick, William Rutherford, Watson (Liverpool)
Duncan, Robert (Lanark, Govan) Kimber, Sir Henry Salter, Arthur Clavell
Faber, George Denison (York) King, Sir Henry Seymour (Hull) Scott, Sir S. (Marylebone, W.)
Faber, Captain W. V. (Hants, W.) Lane-Fox, G. R. Smith, F. E. (Liverpool, Walton)
Fell, Arthur Lockwood, Rt. Hon. Lt.-Col. A. R. Stanier, Beville
Fletcher, J. S. Long, Col. Charles W. (Evesham) Starkey, John R.
Forster, Henry William Lonsdale, John Brownlee Stone, Sir Benjamin
Foster, P. S. Lowe, Sir Francis William Strauss, E. A. (Abingdon)
Gardner, Ernest Mason, A. E. W. (Coventry) Thornton, Percy M.
Gibbs, G. A. (Bristol, West) Mason, James F. (Windsor) Tuke, Sir John Batty
Gooch, Henry Cubitt (Peckham) Meysey-Thompson, E. C. Walrond, Hon. Lionel
Goulding, Edward Alfred Newdegate, F. A. Warde, Col. C. E. (Kent, Mid)
Gretton, John Nicholson, Wm. G. (Petersfield) Whitbread, S. Howard
Guinness, Hon. R. (Haggerston) Nield, Herbert White, Patrick (Meath, North)
Guinness, Hon. W. E. (B. S. Edmunds) Nolan, Joseph Wortley, Rt. Hon. C. B. Stuart-
Hamilton, Marquess of Oddy, John James Wyndham, Rt. Hon. George
Hardy, Laurence (Kent, Ashford) O'Kelly, James (Roscommon, N.) Younger, George
Harrison-Broadley, H. B. Parkes, Ebenezer
Hay, Hon. Claude George Pease, Herbert Pike (Darlington) TELLERS FOR THE NOES.—Sir A. Acland-Hood and Viscount Valentia.
Hill, Sir Clement Peel, Hon. W. R. W.
Hills, J. W. Percy, Earl
Hope, James Fitzalan (Sheffield) Powell, Sir Francis Sharp