§ Where the licence holder is bound by any covenant, agreement, or undertaking, or is otherwise under any direct or indirect obligation of any kind, to obtain a supply of intoxicating liquor from any person or persons, the licence holder shall be entitled to recover as a debt due from any such person such part of any sum paid by him in respect of the duty on his licence as may be agreed upon, or in default of agreement determined by the Commissioners to be just under the circumstances.
Mr. G. D. FABER (for Mr. Staveley-Hill)moved to leave out the words "by any covenant, agreement, or undertaking, or is otherwise under any direct or indirect obligation of any kind."
It appears to me that these words are entirely unnecessary. Either a man is bound or he is not, and to introduce all this surplusage can serve no useful purpose. It has been more than once pointed out that portions of this Bill are a réchauffé of our dear departed friend, the Licensing Bill of last year. If the Committee will compare the words in the two 1313 Bills they will see how closely allied they are. In Clause 37 of the Licensing Bill, dealing with clubs, the words were "on the ground that the club is bound by any covenant, agreement, or undertaking, or is otherwise under an obligation." The words here are the same until you get to "obligation," when they are stiffened up by the insertion of "direct or indirect." I beg the Government to preserve simplicity of style. You cannot have a stronger word than "bound." I hope the Amendment will be accepted.
§ The SOLICITOR-GENERAL (Sir Samuel Evans)The hon. Member said that this Clause was a réchauffé of a dear departed friend. A réchauffé is never really agreeable, and I should imagine that nothing could be less agreeable than a réchauffé of a corpse. I should prefer to say that the Clause is a resurrection. I admit that the words are similar to those used in the Licensing Bill of last year in relation to clubs. The hon. Member proposes to leave out the words after "bound" which indicate the way in which a tie is brought about in these houses. If we left the provision at "bound," I am afraid we should be asked over and ever again, "Bound, how? In what circumstances"—and so forth. Therefore the Government cannot accept the Amendment. These words were very carefully considered after the long Debates on the Licensing Bill, and, subject to further argument, I do not think that better words could be found to indicate our meaning.
§ Mr. GEORGE YOUNGERAs far as I am concerned, a good deal will depend, in reference to this Amendment, on what the 'Government intend to do in connection with my proposal to leave out the words "or indirect." That Amendment does not go so far as the present proposal, but I agree with my hon. Friend that these words are quite unnecessary. I do not think that in this particular case you want to rope-in certain arrangements which may be very beneficial to the licence holder, and which are not in the nature of a binding covenant such as you often find in tied-house agreements in England. But I will deal with the case I have in mind when we reach my Amendment.
§ Mr. GEORGE CAVEThe words "any covenant, agreement, or undertaking" are very wide words, and would cover every legal obligation I can think of. I cannot imagine what the words "direct or indirect obligation" are intended to cover, or of what use they will be. I suggest that 1314 the point could be met by leaving out the extremely vague words referring to direct or indirect obligations. We ought to be precise in a statute of this kind. These words might be twisted to mean something which is not intended; at all events, their meaning is not plain. I hope, therefore, that they will be left out, and that we shall keep to the plain words "covenant, agreement, or undertaking."
§ Mr. F. E. SMITHI do not think that any lawyer will dispute that the words of the Clause as at present drafted—the two expressions, "bound by any covenant, agreement, or undertaking" and "any direct or indirect obligation of any kind"—are tautology. It really does not matter whether you, in regard to the licence holder, make the provision the one or the other, but I state, without fear of contradiction from the distinguished lawyers on the Front Bench opposite, that the words "any direct or indirect obligation" add nothing to the words "any covenant, agreement, or undertaking," and in the same way the words "any covenant, agreement, or undertaking" can add nothing to the sentence that follows. But what follows if you thus repeat in its duplicated form the expression of the same thing? Anyone familiar with the practice of the Law Courts is aware of what happens. Some lawyer gets up and argues that the Legislature would never have used the further expression if they had not meant to add something to the phrasing and meaning of the first. I hope the Government will destroy the tautology of this phrase, and make up their minds which of the two sentences they mean to adopt as being more calculated to convey their meaning.
§ Mr. STEWART BOWLESI thought, when I first saw this Amendment, that the point was a small and unimportant one. I confess on listening to my hon. and learned Friend that I have reconsidered the matter. He knows what he is talking about in these matters. The hon. and learned Gentleman the Member for Kingston (Mr. Gave) has also told us that so-far as his ingenuity and imagination go, every legal obligation would be covered by the words "any covenant, agreement, or undertaking." Putting, therefore, these two considerations together, the court might be compelled to hold, against its will, that not a legal, but a purely moral obligation of some sort existed. The tenant of a tied house might be under a. moral obligation—gratitude or something of the sort—not expressed in the words 1315 "any covenant, agreement, or undertaking" and it might be that a moral obligation of the sort would be held to enable the licence holder to pass some portion of the duty on.
§ Mr. J. F. REMNANTThose who practice in the courts know perfectly well that the point that the hon. and learned Gentleman (Mr. Smith) has mentioned is constantly being raised in the way he has suggested. No doubt outside there is considerable doubt as to what these words mean. I would like to ask the Solicitor-General if he will say whether they apply to a case similar to that stated to me the other day, where the tenant is tied by a loan from a person?
§ Sir SAMUEL EVANSindicated an affirmative reply.
§ Mr. REMNANTThe Solicitor-General says that is included. That will settle that point. I would also like to ask the Solicitor-General another question: Cases occur where the tenant occupies a house, and takes the commodity from the landlord. There is no tie in the ordinary sense of the word, but he might be turned out if he did not take the commodity from that particular trader. Is he included in this Clause? It is not a direct tie, but a most indirect tie. Do the provisions of the Clause apply to Ireland and Scotland? There are a tremendous lot of tied houses in the Cork district.
Mr. BALFOURI think this brief discussion is illustrative of the kind of difficulty which we must get into when we attempt t to deal with these complicated relations of modern industry. The difficulty chiefly centres round the, words of the Clause "or indirect obligation." It is very difficult to understand precisely what the Government themselves mean by "indirect obligation." My hon. and learned Friend who has just sat down mentioned a case in which there was a mortgage where, without any specific obligation on the part of the tenant to buy his beer and spirits from that source, there was an understanding that he should buy his liquor from the firm that lent him the money. My hon. Friend rather went on the hypothesis that there would be a fear that this should be used as an instrument of compulsion to induce the tenant to buy the liquor of a particular manufacturer. A more difficult case than that arises, because there may be no attempt to use this mortgage as an 1316 instrument of oppression, but the man who has borrowed the money may be well aware that he is merely a mortgagor like anybody else. There is no reason why those who lend the money should not call up the-mortgage just as they would with the ordinary borrower in the ordinary market, whereas if he is one of their assured customers he might expect more favourable terms than merely the ordinary borrower in the ordinary market. That case must be not an uncommon one. Is that case aimed at by the words "indirect obligation"? Is the mortgagor in these circumstances under an indirect obligation to buy his liquor from a particular manufacturer? There is another case which I think is more difficult, and more difficult because it is more common and universal. I understand that one of the most familiar practices in the relations between wholesale traders of all descriptions and the retail traders of all descriptions—not merely the wholesale and retail liquor traders, but between the wholesale manufacturers and retail dealers in all businesses—is that some wholesale firms will supply their retailers with goods of a particular kind or class, and will, if the trader requires it,, not exact immediate payment. The matter will hang up as a sort of obligation between the two, and no doubt the practice and the result in all cases is that the retail dealer in these circumstances has a strong motive for continuing to use the particular wholesale manufacturer as the person from: whom he buys his goods, whatever those goods may be. That is a common practice, and a practice which, on the whole, is for the advantage of both parties. At all events, it is a practice that this House never would think of interfering with. Is that kind of relation between the wholes sale dealer and the retail dealer, and the resultant motives given to the retail dealer to continue his custom with the wholesale dealer—is that practice to be regarded as in the nature of that indirect obligation with which this Clause is in tended to deal?
I think the Committee will see we are really embarking on a rather difficult and delicate question, and while there are certain cases plain and simple, the case of the free house may be simple and the case of the tied house, in relation to a particular kind of liquor, beer or spirits, or both, may be perfectly clear, there is the great middle position in no sense characteristic of the liquor trade, but common to all retail and all wholesale dealing, and with 1317 this kind of transaction I understand the Government do mean to interfere in some way in this Clause. I should like to know exactly how they are going to interfere, and what view they take. I suppose the Prime Minister will answer that he recognises the difficulty, and that, adopting the usual expedient of the Government, he is going to invoke the aid of the Commissioners. That, of course, really means they are going to give some gentleman £1,000 a year to solve the problem. I do not know that that is a satisfactory arrangement, and I hardly think it fair to the Commissioners themselves, unless something is laid down either in this Clause or in the regulations, or by a schedule to the Bill, which will give them some guidance. At all events, I hope I have made the sort of difficulty that suggests itself to me perfectly clear to the Government.
§ The SOLICITOR-GENERAL (Sir Samuel Evans)The right hon. Gentleman has stated some difficulties which arise from this middle case. We appreciate these difficulties as much as the right hon. Gentleman and his Friends, but I think they will concede that if a provision of this kind is required at all, it ought to meet some cases of that description. Let me put two concrete cases, one mentioned by the right hon. Gentleman and another analogous case. Take the case of a loan made to a tenant, in which there is no covenant, no agreement, no legal obligation, but where it is well understood between the parties that something will happen, if I may say so, unless the beer or other liquor is bought from the person who lends the money and who may be the brewer. The other case was the case put in the course of the discussion last year, and it was this: Supposing a brewer supplies intoxicants to a tenant of a house without there being any legal tie or obligation, and he allows a considerable balance owing to him, which is held, so to speak, in terrorem, or is intended as an obligation, whether moral or terrifying, or otherwise, upon the tenant, and if, thereby, an advantage is gained by the person who supplies the beer, is not that a case which every fair-minded man would admit ought to come within this Clause?
§ Mr. T. M. HEALYSupposing he raises the price of the beer—
§ 4.0 P.M.
§ Sir SAMUEL EVANSOne question at a time is sufficient, and I am now dealing with those of the right hon. Gentleman 1318 the Leader of the Opposition. If such an arrangement or understanding existed—neither of these is a legal term—I think everybody will admit that as to the duty in this case some distinction ought to be made. I may say at once, we intend to accept an Amendment which will only make the Clause operative in the case of the increased amount of duty under this Bill. Some distinction of that kind ought to be made. The right hon. Gentleman said that apparently this is to be decided by the Commissioners. It is to be decided by the Commissioners, as we think it ought; it is not to be decided by lawyers.
§ Mr. F. E. SMITHAre the Commissioners to decide and to construe words relating to tie? Is not the function of the Commissioners really the determination of the amount?
§ Sir SAMUEL EVANSCertainly. They will have to determine the adjustment between the tenant and the landlord, or the brewer or the person who has the tie. No Member of this House, whether lawyer or not, would have any difficulty in saying what would be the fair adjustment of the increased duty in any circumstances. You do not want a lawyer for that at all; any fair-minded man could do it, and that is what we intend the procedure to be under this Clause. As I have already indicated that the Clause in its final shape will only be made to apply to the increased form of the duty, I also desire to indicate we are prepared to accept, instead of our own words, the words proposed by the hon. Member for Kingston, which would come in at the end of the Clause. The hon. and learned Member for Kingston proposes to leave out the words we have put in, "just under the circumstances," in order to insert the words "proportionate to the benefit obtained by such person from the licensee." I think I have already indicated that we want to make it perfectly clear that there should be an adjustment of the increased duties, and it must be conceded that these middle cases, where there cannot be said to be any legal obligation, ought to be dealt with. I submit that the words "direct or indirect obligation" ought to stand to enable the Commissioners to do justice between the parties concerned.
§ Mr. GEORGE YOUNGERFrom the case stated by the Solicitor-General, I imagine that he supposes under an obligation of that kind there would probably be 1319 a certain price charged, and the tenant would be under the obligation to pay more than the ordinary free trade price. The Amendment I have on the Paper is designed to make it apply only in that case. It will apply, for instance, where a man borrows a few hundred pounds from the brewer or distiller, as is frequently done in Scotland, where he is placed under no tie whatever, and where he gets his beer and spirits at the ordinary price. Of course you cannot have it both ways.
§ Sir SAMUEL EVANSI am much obliged to the hon. Member for his explanation. I omitted to deal with the case of a mortgage. In the case of an ordinary mortgage where no benefit accrues to the mortgagee, there would be no. adjustment at all. It is only intended to make a fair and equitable adjustment such as any reasonable man would make between a person who uses the position he has whether by loan of money or in any other way to obtain for himself an advantage from that position entirely outside the mortgage.
§ Mr. GEORGE YOUNGERAre you going to accept my Amendment?
§ Sir SAMUEL EVANSProbably, or at any rate something of that kind.
§ Mr. CLAVELL SALTERI want to bring this Debate back to the real point. I am glad to hear it is intended to accept the Amendment of my hon. and learned Friend the Member for Kingston. In this case the duty will be an exceedingly important matter, and this is a Clause which proposes that in the case of tied tenants the duty shall be adjusted. It is perfectly clear that the point which this Amendment raises is not of a drafting character, but it raises a principle of the greatest importance not merely as affecting this Bill, but as affecting the very much wider question of legislation. It is a question of defining the class of tied tenants who are to have the benefit of this Clause. The free tenant is not to have the benefit, but the tied man is to have the benefit. How is this class defined? It is defined as those persons who are tied by law, and the opening words of the Clause are enough for that. Every lawyer will agree that that exhausts the class of tied tenants in the eye of the law. This question—which will be the initial and main question—whether a given publican, asking for this relief, comes, or does not some, within this class of tenants, is not 1320 going to be determined by the Commissioners but by the court. The court will determine that according to legal principles. This Clause proposes to define the class of tied tenants, and it defines them as those who are legally tied. This is a matter of great importance. Who are the second class? They are persons who, in the eye of the law, are not tied tenants.
Therefore, you are proposing to create a class for legal purposes upon whom you are going to impose legal liabilities who, nevertheless, are not bound in law. What are they bound in? How can a court of law judge in this matter? If they are not bound in law how can the court judge whether they come within this class or not? Is this going to be a matter of right feeling or emotion, and not a matter of law? I know the Solicitor-General sees this great difficulty, and to meet it he keeps putting in words which are getting him into strange regions. If this was intended by both parties as an obligation the words are unnecessary, and we are once more on the safe, familiar ground of legal obligations. But that is not so. Here is to be a class of persons who are to be brought within the Clause, or stand outside it, according as to whether they entertain or do not entertain an apprehension. It need not be a reasonable apprehension. Supposing a publican has borrowed money from his brewer without any tie at all, and he says, "I am not bound to take my beer from this man; he has never spoken to me about it, and he has never threatened to call his money in. I am afraid, however, if I do not take my beer from him he will call his money in." The brewer might be called before the court, and he might say, "I assure you on my honour I have no intention of doing anything of the kind." Has the court to say under those circumstances, "No, we believe this man's fear is well grounded, and we think you would; therefore we shall treat him as a tied tenant, although he is not a tied tenant"? Take another case. A publican might say, "I have no tie or loan of any sort, and the brewer is not my landlord, but I am afraid he might put up the price of my beer, or he might set people against me, and I am afraid if I do not take my beer from him he might set up another public-house in my neighbourhood." There is no fear too fantastic or remote which could not be set up. If this Committee is going outside legal obligations and allow a court of law to take note of all the matters I have sug- 1321 gested, then I say we are embarking upon a new and an enormous field.
The CHAIRMANThis Amendment deals with the words "any direct or indirect obligation," and I think it is not desirable that we should have a fresh discussion on this point. We are now merely discussing those words.
§ Mr. G. D. FABER (York)Probably the Amendment in the name of the hon. and learned Member for Kingston is a better Amendment upon which to have this discussion than the one I have moved.
§ Mr. G. D. FABERI am quite willing to withdraw my Amendment.
Colonel WALKERThe remarks I wish 'to make apply more to the first than to the second Amendment, therefore I would like to state my point here. The case I raise is such a peculiar one that I think it requires special attention. Take the concrete case of the licensed victualler who ties himself voluntarily to the brewer in order that he may obtain the advantage of selling that particular brewer's goods under that brewer's name. This is an actual case with which I am familiar. The custom is as follows: A free house desires to sell the goods of a particular brewery under the brewer's name. The brewer goes to a particular licensed victualler in a certain street, and says, "I understand you want to take my goods. There is another man wants to sell them a little lower down in your street, but if I supply you my condition is that you take my goods, and no other, and sell them under my name." That is a particular case to which I wish to draw the attention of the Prime Minister. It is a case with which I am personally familiar, and it has been the practice for the last 60 years. Under this Amendment that brewer is responsible for the Licence Duty.
§ Sir SAMUEL EVANSNo.
Colonel WALKERYes, because it is a direct obligation, and this particular publican I have alluded to is tied by this agreement as long as the lamp of the brewer is fixed outside his premises, because he can take no other goods, and therefore it is an absolute agreement.
§ Sir SAMUEL EVANSI was not denying that it was an agreement. The hon. and gallant Member said the brewer 1322 would be bound to pay the whole of the Licence Duty, and that is why I denied it.
Colonel WALKERThe Clause says, "under any direct or indirect obligation of any kind." I contend that where goods are of a certain value, and are appreciated more than other goods of the same character, the goodwill attaches to the brewer, and not to the publican. It is an extraordinary thing that under this Bill such firms are hit all round, because they have to pay extra Licence Duty upon the goodwill of the article they supply. This shows the extraordinary folly of a Bill of this kind being framed by people who do not know anything about the trade, and they have never taken the trouble to consult the trade. Nobody has asked the brewers' opinion and advice as to how this proposal will affect the trade. The Government go to the professional scribbler, probably a most worthy and estimable individual, but he cannot be familiar with all the technicalities of a vast trade which represents £200,000,000 or £300,000,000, and which is collecting for the State £38,000,000 free of expense. This is a case totally different from those which have been discussed. We are familiar with the case in which the brewer gets the advantage. In this particular case, with which I am personally familiar, it is entirely the other way. I want something definite put in the Bill, and not leave it to the individual opinion of some unknown person called a Commissioner. I think I am entitled, before this Amendment is withdrawn, to press for an answer from some responsible Member of the Government as to what will be the effect on that particular case.
§ Mr. AUSTEN CHAMBERLAINThe case put by my hon. Friend certainly deserves an answer. It is not met by the Bill as it stands, whatever may be the effect of the Amendments the Government intend to accept. I would like, before the Government answer, to ask another question in regard to those words which deal with the case of direct obligation. I shall not speak at this moment about the indirect obligation. Is it, or is it not, the intention of the Government, where there is a direct obligation, as there constantly is on the owner of a licensed house, to take his mineral waters from a particular firm, that the mineral-water firm should pay a portion of the new Licence Duty?
§ Sir SAMUEL EVANSThe words are "intoxicating liquors."
§ Mr. AUSTEN CHAMBERLAINThose are the words, but I want to know whether they really express the meaning of the Government. If so, on what possible ground do you make the distinction? You make this charge upon the brewer who has a tie over the house on the ground that he derives a benefit from the licence. He secures a place and a market for the sale of his goods which, but for the licence and the tie he would not have, and accordingly you say, deriving that benefit from the licence through the tie, he is at any rate to be charged with a part of the new Licence Duty. What possible distinction is there between his position and that of the mineral water manufacturer who has a similar tie? Do you mean to tell me that the right to sell mineral waters in a fully licensed public-house is of no value, or at any rate that it is of no more value than the right to sell in any house in the same street where there is no licence? Do you mean to tell me there is no value given to the right to sell mineral waters in a particular house by the fact that that house is licensed at the same time to sell spirits? It would be the greatest nonsense to pretend any thing of the kind. The advantage to the mineral-water manufacturer in the case I have named is exactly on a par, whatever its worth, with the advantage to the brewer who has a tie in beer, or to the distiller who has a tie in spirits. Having, thanks to the courtesy of the Solicitor-General, got it that the words of the Bill do express the intention of the Government, I now invite them to justify that intention, and to explain to the House the distinction between the two cases which renders it just that you should tax the brewer for the advantage which the licence confers upon him, and should allow the mineral water manufacturer, who receives a similar advantage, to go free.
§ Mr. T. M. HEALYI wish to ask a few questions. This is the first of the Licensing Clauses with which I entertain any sympathy, strange as it may appear, because, as a rule, I represent the tenant class in this controversy. I should, therefore, be glad if I could see any effective clause which would enable the burden to be thrown upon another class. I make that avowal frankly. There will be two innocent persons, and I have to consider which of them should suffer. Naturally, I prefer that the poorer man should escape, and that the richer man should have thrown upon him a burden which prob- 1324 ably his shoulders would be more able to bear. I have, therefore, brought to this Clause the most benevolent intentions on my part. At least, I will say I will not cast an evil eye upon it. I am, however, convinced it will do no harm to the hon. Gentlemen above the Gangway. I am convinced it is futile as it now stands, and it will not be of the smallest advantage to the tied tenant. The first words are "bound by any covenant, agreement, or undertaking." It must be a legal covenant, a legal agreement, and a legal undertaking. It must be something that the law will recognise and act upon. I think the next words, "under any direct or indirect obligation," are mere moonshine. The courts treat adjectives and adverbs with very scant courtesy. Unless you have a legal obligation, you may take it for granted that men learned in the law will pay very small attention to any embroidery that precedes it in the way of adjectives. You must, therefore, have a legal obligation. Then what is the good of putting in mere poetry? The point is, there must be a legal, enforceable obligation. It is perfectly idle to contend that these words have any force.
That is on the legal aspect. Let me put it on the human aspect. Take the case of a monthly tenant. Unless you are going to give that man fixity of tenure, what is the good of providing for a fair rent? If he can be ejected at the end of his month, and if the annual tenant can be evicted from his premises at the end of twelve months, what is the good of making this provision? The Clause, as I understand, only applies to existing agreements. It would be perfectly futile to apply it to future agreements, because the man who is tieing the house would then know what fatal number he had drawn in his register, like the French conscript who had drawn his fatal number in the recruiting field, and he would know the exact amount of his liability, and he would say to his tenant, "Do not blame me, I am only a poor brewer. My rent is only £60, but the British Government want £150 more. Your rent, therefore, will be the total of the two amounts." Mr. Gladstone saw this point when dealing with the landlord and tenant case. Why does not the present Government see it? Unless you give the tenant absolute freedom, these words are not of the smallest importance. Supposing a man is tied to one house for beer and to another house for whisky, who is going to pay? I have known that class of case. Sometimes a 1325 man is free to take his whisky where he pleases and is tied only for beer. I want to know against whom he is going to bring his action? I take it this matter has to be decided by an action before a jury. The Commissioner, if there is no agreement, would certify that a particular amount was due, and then the man would bring his action in the High Court. The Court would say, "The Commissioner was not a lawyer. He told you you would be entitled to recover £100, but this is a court of law, and we very much regret you have had your action for your pains." Would it not be a fairer way to deal with it if it was sufficient for the Commissioner to certify that John Smith had to be repaid £50, and not drive the man into the law court in order to ascertain whether the amount is repayable or not?
I come to the next point. How is it, when dealing with the criminal law, you are always so generous in your language and do not leave a single loophole? Take the case of conspiracy. It is not "obligation," but "compel or induce." The most effective tie is enforced in Ireland by a system of inducement that is as absolutely ^coercive as the alleged obligation under this Bill. A publican in the poorer parts of Dublin dare not have the dray of any other brewer outside his door unless it is Gtuinness's. I remember once a brewer told me about his business. He said, "I can only deliver my beer at night, because the population who do custom in this public-house, if they saw beer of a class not suitable to their palate, would not go to that house." Guinness's label is most potent and coercive. A man puts it in his window, and it means no other goods in the world are sold in that house. You cannot say there is an indirect obligation, but, if you ask any person acquainted with these matters, he would tell you that, so far as the tie is concerned, it is a sort of wireless telegram that reaches everybody through the palate. The public will not "have anything else. While Guinness's reap their profits as usual, the whole of these tenants—and there are whole streets of them—will still be compelled to pay the higher duty. I suggest this Clause is not strong enough. Hon. Gentlemen above the Gangway want to weaken the Clause, but I want to buck up the Government to strengthen it. That is the test of their bona fides. Now let me put this case to my hon. and learned Friend. It is the very common case of one man starting another in business in Ireland. He starts him in a grocery business. You do not use 1326 the word "publican" at all in Ireland. When one publican speaks of another he calls him a grocer, and the trade is called, the "grocery trade," because they also sell commodities which are not intoxicating liquors. Nothing could be easier in the world than for an arrangement to be made whereby this Clause would be absolutely defeated, and I want to know why is the man who is tied to a public-house to get an advantage which the free man does; not get? That is the astonishing point. The tied man is a bird of passage—
§ Mr. T. M. HEALYVery well, I thoroughly accept your ruling, and I will confine myself to asking the questions which I put sympathetically to the Government. I ask the hon. and learned Gentleman not to cut down this Clause by accepting any Amendment so as to weaken it in anyway, because it is true there is a trembling class of tied tenants seeking relief and hoping to get it under this Bill. The right hon. Gentleman, instead of weakening, should strengthen and extend the Clause and give it a far wider application than is at present contemplated.
§ Mr. E. B. BARNARDSeveral hon. and learned Gentlemen who have discussed the question of mortgage seem to have, I think, a rather different idea of the form which many of these mortgages take. As far as my experience goes—of course, I do not pit it against their knowledge—mortgages have been somewhat in this way. The lender of money, if he happens to be engaged in the trade, says, "You may have this money for the purpose of acquiring the business, but in the deed you will be called upon to pay me a certain interest." And then there is a further provision that that interest shall be reduced to a lower rate as long as the tenant takes all his malt liquor, or whatever it may be, from the lender. I venture, with all respect, to say that that is a very well-known form of mortgage. It is the constant practice in places with which I have been connected. I do not believe myself it matters very much what you say. I do not believe that under any conditions you will be able to effect the good object which the Government have in view. There is no-doubt that people can, by either raising the rent or raising the price of beer, practically speaking, render this Clause in operative.
§ The SOLICITOR-GENERAL (Sir Samuel Evans)Perhaps it would be convenient I should say a word or two in reply to this Amendment before it is withdrawn, and before the Amendment to leave out the Word "indirect" is put from the Chair. The hon. Member for the Widnes Division (Colonel Walker) asked whether in a particular case which he put clearly before the House, the essence of which, as I under stood, was whether the landlord under certain conditions was to bear the whole burden of the duty. In reply to that I would suggest that the Commissioners would say that where the benefit of the tie accrued to the brewer alone he would have to pay the duty. The very essence of the case put by the hon. Member was, I believe, that no benefit did accrue to the brewer, and, in that event, I venture to say he would not be saddled with any portion of the duty. Then there was the question put to me by the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) whether or not mineral waters would be taken into account—
§ Mr. A. J. BALFOURIn the interests of brevity perhaps I may rise to a point of Order. I understand that an hon. Friend of mine has put down an Amendment later in the Clause to leave out the words "intoxicating liquors." Therefore, perhaps this point may be deferred until that Amendment is reached.
§ Sir SAMUEL EVANSCertainly, and that makes it unnecessary for me to answer the question of the right hon. Gentleman, if he will consent to that. Other speeches have been made, but I think I need only now deal with that of my hon. and learned Friend the Member for Louth (Mr. T. M. Healy). He says he looks upon this Clause as excellent in intention, but nevertheless he thinks it is all moonshine, and says that, instead of basking in the light of the sun it only has the inconstant light of the moon. I can assure my hon. and learned Friend there was no necessity for him to use to me the colloquial phrase "buck up." All I think is necessary is that we shall put our heads together in order to deal with a matter which everybody admits ought to be dealt with and to be dealt with clearly as between all the parties concerned. My hon. and learned Friend said that in his opinion the Clause would prove futile. An argument of that kind does not, of course, fall without effect on me. I see all the difficulties ahead. A man may be a monthly tenant; he may be a tenant 1328 capable of being turned out at three or six months' notice. I admit all these difficulties, and I say that all we can aim at is to do our best. Surely the monthly tenant, in the case put by the hon. and learned Gentleman, will be able to say that the Legislature intended that some particular portion of the burden should be borne by the brewer in proportion to the-benefit he receives, and some additional pressure might in that case be brought to bear on the brewer, inasmuch as the new tenant will be coming in under precisely similar circumstances. I quite agree the-Clause might be rendered futile by increases of rent, but the hon. and learned! Gentleman will surely agree with me that it is impossible for us to provide for all these different tenures. If we attempted to do that it might be suggested, with some degree of justice, that this is not merely a fiscal Bill, but that it deals with matters outside fiscal questions. All I can; say is that so far as we can we propose that what is considered by fair minded men to be the equity of the case, and what is considered to be a fair adjustment of the increased duty as between the tenant of the premises and the person who gains, some benefit from the tie, shall take place. The hon. Gentleman criticised the use of the word "obligation." I admit it is very difficult to get a word which expresses, exactly our meaning without its being open to very considerable criticisms. The word "obligation" would no doubt carry with it the idea of a legal obligation. The words have been here used in connection with the words "direct" or "indirect," and I think it is fair to believe that a court might so construe the words "indirect obligation" as an obligation not binding directly in law but one of a more or less moral kind.
§ Mr. T. M. HEALYPut in the words "moral obligations."
§ Sir SAMUEL EVANSI will consider that phrase, but I must say that my hon. and learned Friend does not like adjectives except he uses them himself. Suppose we had put in this Clause the words "moral obligation," what a torrent of abuse and invective we might have had from him! There is no question at all about the intentions of the Government. Everybody knows what we mean. We mean that persons who levy money or give credit and intend to have the benefit of it shall bear their fair share of these duties. I again admit that the mere word "obligation" would by itself imply a legal 1329 obligation, and we intend to express something different when we couple with it the word "indirect." If the hon. and learned Gentleman can suggest a better word there will be no difficulty on the part of the Government in accepting it. I do not want to say any more. I have answered the question put to me. I have indicated, and reiterated, perhaps too often, what the idea of the Government is. It is that this increased duty put upon the trade in intoxicating liquors should be borne fairly, equitably and justly by the persons who benefit from the sale of the liquor which is sold or consumed on the premises.
§ Mr. JOHN GRETTONI gather from the explanation just given by the Solicitor-General that the Government are now engaged on another fishing expedition. They think there is something they would like to catch, but they cannot determine how to proceed to do it. I think I can point out to them a matter of which they appear to have entirely lost sight. They have laid down for their own guidance certain principles with regard to dividing the increased duties among the different persons who benefit from the sale of intoxicating liquors. But they have forgotten altogether the case of the tenant who has taken licensed premises from the landlord and paid that landlord an increased rent because of the licence attached to the premises he had taken. They have forgotten to look into that side of the question, although they had some precedent for doing so under the Act of 1904, where we were careful to give compensation to the ground landlords and all the other interests concerned. Then I would ask, What is to become of the free tenant? It is only provided under this Clause that the increased Licence Duty shall be shared by the tenant and the persons who supply him with intoxicating liquors if he is under some obligation to purchase his liquors from them; but where a man is under no such obligation, how will he be affected? You must remember always that the Government have announced, and have never denied, that these new duties are very high; they have, an fact, been described as swingeing duties on platforms in the country—as duties which press so heavily on the licensed trade as to crush out a considerable number of the persons who are engaged in it. What is the free licenced person to do, if the only remedy that he has is to enter 1330 into some obligations, such as those which are described in this Clause as direct or indirect, with some particular person? That is all. He has no resource but to enter into such an obligation and share the burden with some one who is willing to share it with him. What does that mean? It means that every free publican in this country—and there are not a large number of them—that every free tenant in this country, must proceed to "tie" himself as soon as possible to some wholesale dealer who will supply him with the wines and spirits necessary for carrying on his business. The real difficulty in this Clause, as in so many others, is, that the Government are acting on imperfect information and imperfect knowledge in regard to-their speeches, and such information as they obtain is from sources which are not able to inform them correctly. On this particular point I have no objection whatever to the principle that all the persons interested in the licence should share the cost of it, but the Government have not taken means to ensure that that shall be done, and the means adopted in this Clause are of a nature to crush out the free tenants who have not shared their burdens with somebody else. I think that is absurd. We all agree, however, that those who are interested in the property shall pay their share of the obligations.
§ Mr. CHARLES ROBERTSI want to intervene for a few minutes in this Debate, because I am in the unusual position of having received a letter from the Lincolnshire Licensed Victuallers' Association, asking me to support this Clause. They appear to think that I am a fit and proper person to do so, although, of course, I assume that the hon. Member for Widnes (Col. Walker) may not be of that opinion. They not only wish me to support it, but ishey wish it supported in the stronger form which is suggested by the Amendment of the hon. Member for Mid-Leicestershire (Sir M. Levy), who has an Amendment on the Paper, and for once I find myself in some agreement with them. It has been said that it is too difficult to-enforce what is proposed in this Clause. It is urged that the task of adjusting the burden of the new Licence Duty between the classes generally known, or popularly known, as "tied" tenants and those to whom they are "tide," is impossible for-legislation to do.
§ Mr. F. E. SMITHOn a point of Order, Sir. I myself wanted to discuss this point, 1331 but I thought that the proper place would be on the discussion of the Clause. Is the hon. Member in order in discussing it now?
§ Mr. CHARLES ROBERTSOn that point I myself thought that the discussion was confined to the narrower limit, but the hon. Member for Rutlandshire (Mr. Gretton) dealt with very much larger limits.
The CHAIRMANThe hon. Member for Rutland took the opportunity from time to time of actually referring to the Amendment. As to what the hon. Member is now saying, he has not said anything yet which has anything to do with the Amendment, and he seems to be discussing the general effect of the Clause, which cannot be permitted.
§ Mr. CHARLES ROBERTSI think the lion. Member for Louth (Mr. T. M. Healy) said the language of the Clause was illusive, and he therefore referred to it.
§ Mr. T. M. HEALYShould we not hear the letter, which my hon. Friend has stated he is going to read, before we know whether it will be in order to read it or not?
§ Mr. CHARLES ROBERTSI was not going to read anything at all, but if I am confined to the narrow point as to whether it is desirable strictly to construe this Clause so as to confine it to "tied" houses, in which the tenants are bound by a direct obligation, and to leave out those who are under some indirect obligation, and that I think is the point involved, then I should ask the Government certainly to leave the Clause wide, because everyone knows that it is quite possible to have a very substantial and effective "tie" without having any written or legal document. I have certainly come across cases in my own experience where, by means of loans and leases, the tenant was for all purposes "tied," and certainly was not free to be supplied with liquor by any other firm than that to which he was "tied." But if the Government were to restrict the application of this Clause to those tenants who were "tied" by an absolutely direct obligation, I am quite certain that they would then make their Clause illusive, because a system of "tie" can be built up in the form of indirect obligation, 1332 and in that way the Clause could be entirely nullified. Personally, it seems to me that the Clause is really logical. You tax monopoly value and you tax those in whose hands the monopoly values are. The free tenant is the man who has this monopoly value in his hands, but the "tied" tenant does not. You can get rid of the "tied" tenant and his interest for a £5 or a £10 note, and, therefore, it is really to throw the burden of the taxation of monopoly value upon those in whose hands the monopoly value rests, and there is a precedent for that in the case of the compensation levy—the sum of £1,000,000 — which is deducted by the tenant from the brewer, so that there is little difficulty. If it is possible for the tenant to-day to deduct that million of money, and we have always understood that it was the brewery companies who paid that compensation, if this is levied in exactly a similar way, this one and a half million of money can be deducted, and will be deducted under this Clause. I think it might be strengthened with some subsequent Amendment, but I think it does absolutely carry out that object.
§ Mr. G. L. COURTHOPEI did not quite follow the hon. Member who has just sat down in the discussion of the Clause, but I want to make one more appeal to the Government to accept this Amendment. From the many kind speeches which the Solicitor-General has delivered on this subject, and I use the word kindly in appreciation because, to my mind, those speeches are in favour of the Amendment, the hon. and learned Gentleman made it abundantly clear what the intentions of the Government are, and he wishes to get in, and this is the whole point, the obligation, whether it be a legal or a moral obligation. Then let him accept this Amendment and leave it at the word "bound." We know what the intentions of the Government are, but the members of the trade who will be affected by them, whether landlord or tenant, those who supply or those who receive the intoxicating liquors will not have the opportunity of knowing what those intentions are, and the Law Courts—even if they know what they are—will not care a snap of the fingers for them. They will go by what is put in the Bill, and they will assume that all these other words are put in for some definite purpose, and they will want to know what that purpose is, and the only result of leaving these words in will be to mislead all the members of 1333 the public, give unnecessary trouble to the courts, and give a large quantity of entirely unmerited employment to the members of the legal profession.
I think there is no doubt that if these words are left in they will give rise to a considerable amount of trouble and dispute, and a considerable amount of litigation. Let me take a case. Let us assume for a moment a free house, the tenant of which has an outstanding account with a brewer, or a spirit distiller, or a wine merchant, and he feels in his own mind, probably rightly, that he must go on getting his supplies of beer, wine, and spirits from those firms. His account with one of them is outstanding; an inconvenient pressure may be put upon him to settle it. The Government do not intend, we know, that an indirect obligation of that kind should hi included, but it is very reasonable for the tenant who reads this Section, if it remains as it is at present, to think he would come under the wording of the Bill as it now stands. Personally, I think he does; but all these cases would give rise to incessant litigation, and I do appeal to the Government to give effect to their own express intention to leave the question whether a person is or is not bound in fact, and cut out all these words which, however meaningless they may be intended to be, will be held to have some meaning in them by the licensee and the court who will interpret them.
§ Mr. JAMES HOPEThere is one small point on which I think some explanation is needed. I think it was said that the credit which the licence holder had from the wine merchant or the brewer would, in fact, constitute an obligation. If that is admitted, it is rather dangerous for the tenant, and the only result will be that his credit from the person who supplies him with goods for his business will at once dry up, and he will be deprived of that which he has hitherto enjoyed. I do not know whether the hon. and learned Gentleman insists upon that point, but if he does I think it is very dangerous.
§ 5.0 P.M.
§ Mr. W. P. BEALESpeaking as one who has had a good many years' experience, both of these indirect obligations, if such things do exist, and the way they are handled by the courts, may I say that I fail entirely to understand the apprehension of litigation which is put forward by so many speakers on the other side. The hon. Member for Basingstoke (Mr. Clavell Salter), for instance, seemed to think that you must be convinced that it is a legal 1334 obligation, or that it is something in itself enforceable in the courts. The point is that it is not in itself enforceable, but it may be indirectly enforceable through the medium of some other agreement between the parties. I cannot see where all this danger of litigation arises. The tenant is supposed to come forward and say, "I am under an obligation of this sort, and therefore this man, with whom I am directly or indirectly bound, must bear his share of these duties." The other man's answer is, "You are not under any such obligation, and where is the litigation to come from? If he is not, let him record that he is not, and the subject matter of litigation will disappear altogether. I know that it may be that the obligation may be so remote a possibility of turning him out that the Commissioners may have some difficulty in fixing the amount. Therefore, I shall be very glad to see the words "the amount if any," introduced into the Clause. But I do not see that there is any danger at all of giving rise to litigation. The Clause is, of course, imperfect. In such a case as this, where people have indirect power arising from their relationship, you cannot define everything in language, and I must not be supposed to commit myself to the opinion that this matter could not very well be left out altogether. But the apprehension may be in practice very well founded, as we know from the letter received by the hon. Member (Mr. Charles Roberts), and the attempt to meet it is, I think, fairly expressed by the words of the Clause as they stand.
§ Mr. T. M. HEALYThe speech of the hon. Member who has just sat down is quite out of harmony with the speech of the Solicitor-General. The hon. and learned Gentleman made an admirable speech, and no one enjoyed it more than I did, but he has asked us, and he is entitled to some response to his appeal, 10 suggest an effective Clause instead of the ineffective Clause which he admits the Government have put upon the Paper. It is not very easy to suggest effective words, and I am far from saying the words I am going to suggest will be effective, but I think they will be more effective than the words in the Bill. The Solicitor-General has stated that the anxiety of the Government is to fairly divide the application of the new duties between the brewer and the publican, or to throw upon the brewer the whole enhanced duty recoverable 1335 under the Bill. If that be so, that is the first word of encouragement which the publicans have yet had. The Government have now declared that the intention is that it is the brewers who should pay this tax, and I suggest some such words as these, "Where the licence holder is not free to obtain a supply of intoxicating liquor from any brewer that he wishes to resort to," or if he does not like that form, "where for any reason the licence holder has exclusively obtained in the three years last before the passing of the Act, his supply of intoxicating liquor exclusively from one person," in either of these cases let the increased duty be paid by the brewer. What we are doing is to hold out a promise apparently to the hope, and deceiving it in reality to the head or the heart as the case may be. The Clause as it now stands will do no one any good. It will not hit a single brewer or distiller, and yet the hope is held out to tied men and publicans all over the country that the Clause does not throw upon the licence holder the obligations which the Government suggest. The Clause will relieve practically no one. The hon. Gentleman who has just sat down deprecates litigation. How is a man to decide his rights when they are contested except by litigation?
§ Mr. BEALEMy observation was that if one party says, "He put me under an obligation," and the other says, "No, I have not," they are under no obligation to go to litigation.
§ Mr. T. M. HEALYThat is not human nature. The hon. Gentleman is not dealing with beings on this planet, but with people I have never met. That is not the way they act in real life. The brewer upon the one side simply does nothing whatever. He is ramparted round in his fortress. The publican has to pay the Licence Duty in October, and then he looks for the amount to the brewer, who is ironclad behind his defences, and, of course, the brewer says, "My good friend, it was the Liberal Government who imposed this tax upon you. It was not I. Go to Mr. Lloyd-George, or to the Law Courts." That will be the song which the brewer will sing. So far as I can make out this Clause is intended to suggest to publicans all over the country that in fact this obligation is being thrown upon the brewer, when I say that you have put down words which will not effect it, and which the Solicitor- 1336 General has practically admitted wall not effect it I suggest an alternative. The alternative the Government want is to make the brewer pay. Then why not say so? The words are so simple. If you are dealing exclusively with the brewer let the brewer exclusively pay the tax. That being the intention of the Government there is absolutely no difficulty in carrying it out. One of the ways would be to-put the whole tax on the brewer. You do not do that. You put it on the publican I suggest the words should be "where the licence holder is not free"—do not say from whatever cause—"to obtain a supply of intoxicating liquors where he pleases the brewer shall pay." If the Government mean business in this Clause, they ought to suggest some such words.
§ Mr. AUSTEN CHAMBERLAINI am interested in the suggestion made by the hon. and learned Gentleman opposite (Mr. Beale) a moment ago for the avoidance of all litigation and dispute under the Clause. I invite him to consider how it would work, if it worked at all. He says the tenant will come to the landlord or to the brewer to whom he is tied, and to whom he is under an obligation of some kind, and will say, "I am under an obligation to buy from you." The brewer will reply, "You are under no such obligation," and thereupon all matters for litigation will be at an end, the tenant's mind will be set at rest, and everyone will be perfectly satisfied. But is it as simple as that? The hon. and learned Member (Mr. T. M. Healy) suggested that the brewer will not meet the tenant in that friendly spirit. But suppose he does? Suppose he is perfectly free, and says "No, there is no obligation existing between us. You are at liberty to buy where you like." Does that settle everything? Does it settle the question of the credits which are to be allowed? Does that settle the question of the duration of the loan which he may have? Does that settle any of the 101 suggestive methods by which the tenant is induced, or persuaded, or coerced into dealing with a particular person rather than anyone else in the same trade?
§ Mr. BEALEI admit the thing can only be partial, it can only go a certain way, but I do not confine myself to such a very simple case as that where the brewer says "You are under no obligation to buy." The tenant might say, "You have it in your power to turn me out next term if I do not buy from you," and the 1337 brewer might say, "You need not fear that." It does not go all the way, but it goes that far.
§ Mr. AUSTEN CHAMBERLAINThe hon. and learned Gentleman's defence is also not a complete one to the proposals of the Government. It is only a partial defence, and he hardly disguised from the Committee that he thought that the Government had better let the whole matter alone. I am trying to persuade him that the Government has not done nearly as much as he thinks they have. What he says is that the person who is alleged to have a hold over the other is to record that he has no such hold. But a man who has lent money cannot record that he will not call it in. He may record that he has no present intention of doing it, but he cannot bind himself under all circumstances. What trader is going to bind himself that his discounts and his credits will always be the same, and that no matter what the changes in his circumstances or in the circumstances of the trade, he will always allow the credit which he has been accustomed to give the customer? No man would be such a fool. No bank would make loans on those terms. No wholesale dealer or manufacturer would supply on such terms as those. What the hon. and learned Gentleman suggests that the presumed holder of the obligation should do is not practicable; and I am quite certain his business experience would be sufficient to convince him that in any other trade except this one, which is always supposed to have conditions wholly different from those in any other trade, such conditions would not be possible. I do not speak as a person who thinks the Government had better let the matter alone altogether, or, indeed, that they could let it alone. The hon. and learned Member (Mr. T. M. Healy) spoke as though all of us on these benches held a direct brief for the licensing trade, or had some different interest to represent from what he has. I suppose he is trying to represent the publican's interest, and so are we, who are trying to do justice as between man and man. I have no personal interest in the trade of any sort whatever. If your assumption is that this duty is going to be paid by the individuals engaged in the trade, it is of great importance that you should apportion it fairly between those individuals. What surprises me is that they have always held the doctrine that this was not a tax on the trade, but a tax upon the consumers 1338 of alcoholic liquor, and that accordingly the trade will recover the whole of it from the consumer. If they recover the whole of it from the consumer, what does it matter whether you take it out of one pocket or the other so long as the consumer is obliged to put back all that you have taken out? From that point of view, if the Government's contention about the tax, and the Prime Minister's advice to the trade, be accurate and feasible, these matters become of very little consequence; but if it be true that the licence holder cannot get it back from the consumer, it is of great consequence that the burden should be distributed among those who benefit by the licence. If, as has been suggested, the trade will not get the tax back from the consumer, the proposals of the Government, as this discussion has disclosed, are partial and ineffective.
§ Mr. G. D. FABERI moved the Amendment for the purpose of making perfectly clear what the intention of the Government was. It appeared to me that the Clause does break contracts, for, according to the custom of the trade, where there is a tied house the licensee is under covenant to pay the licence. Under the provisions of the Bill you are making these enormous additions to the Licence Duties, and, as the hon. and learned Member for Louth (Mr. T. M. Healy) stated, they will fall on innocent parties. I perfectly agree that the brewer, where the house is tied, should pay part of these duties, but the Clause is so drawn that I do not see that it will obtain that object. I proposed to cut out the words "by any covenant, agreement, or undertaking, or is otherwise under any direct or indirect obligation of any kind." Having drawn the attention of this Committee to the language of the Clause, I have attained my object, and I do not wish to carry the Amendment to a Division. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Mr. YOUNGERI do not wish to move the Amendment, of which I have given, notice, to leave out the words "or indirect" ["or is otherwise under any direct or indirect obligation of any kind "].
§ Mr. BALFOURI understood that we were to take the discussion on the word "indirect" on this Amendment.
§ Mr. BALFOURI move the Amendment formally, for I really do not think that we have yet got to the bottom of this question at all. I shall endeavour to prove that to the Committee. In the first place, I should like to ask the Government—on whom do they mean that these duties are to fall? That is a fundamental question. In the earlier part of our discussions we were led to understand that any tax put on the trade could always be put on the consumer by the trade. I take it that that cannot be intended on this point.
§ Mr. HERBERT SAMUELDoes that question really arise on the word "indirect"?
§ Mr. BALFOURYes, I think it does. I take the word "indirect," and I wish to know whether that covers the case of a man who has a free house and gets credit from a firm of brewers. If it does, I am afraid it will be very injurious to the licence holder. To me it seems that in the case of the tied house the shareholders of the brewery must pay, whatever clause you put in. They must pay the whole of the duty in the case of a public-house where the holder of the licence is merely their servant. They cannot throw it on the consumer.
§ Sir S. EVANSThere are two distinct classes of cases— the ordinary tenant, whether for a short period or not, and the manager of the tied house, who is the brewer's servant.
§ Mr. BALFOURThat really is a technical distinction. I think the man who is merely there for six months may be in the position, whatever you put in your Bill, of being dependent entirely on the brewer, leaving the brewer, if he can, to get the duty out of the public. I do not think the Clause is necessary, though I do not at all object to its being put in, but I am entirely against the general principle of the Clause if it means that you are going to throw the duty on the trade in improper proportions, leaving the trade, if they can, to get it out of the public. That is where the question of direct or indirect obligation comes in. If the public are going to pay, neither the licence holder nor the brewer are going to pay. I put aside the case where there is a direct covenant, and I must press the Government on this question of "indirect obligation." If the Government hold, and if the Commissioners are going to hold, that the man who has got credit from a brewer 1340 is under some obligation to him, the result must be that the credit of the publican must stop. At all events, it will be checked. I think it will be stopped. Take the case of what is called a free house. I take it that what is called a free house is not necessarily outside the provisions of this Clause at all. This or that manufacturer may have supplied the licence holder with beer, whisky, mineral waters, or tobacco. I want to know whether that man is to get the benefit of this Clause or not. I should say that if the result of getting that credit is to drive him to a particular manufacturer he should have the advantage of the Clause. But I am not sure that he will get the benefit of the Clause, and you may immediately drive him out of credit. That is the difficulty of all those attempts at interference in arrangements between man and man. You may give the licence holder of a nominally tied house, or a free house, a case to go to the Commissioners or a law court, and say, "I have received credit from this particular firm of brewers for years, I have neverbeen actually under obligation to them, but practically I have always dealt with them." The litigant may say further, "I think that gives me a title to relief under the Clause." If the courts decide that this is an indirect obligation, are you doing the licence holder and his kind a service, or are you not? I am entirely in favour of doing all that can be done to apportion the burden between those connected with the trade who benefit by the licence, leaving supply and demand to say whether the public will ultimately pay, but do not let us, under the guise of doing justice to the trade, do an injury to the licence holder. I am not sure that under the word "indirect" you are not doing a grave injury to certain classes of licence holders. I am not sure that you will not penalise them in connection with the giving of credit by wholesale men to retailers. I understand that the giving of credit by wholesale men to retailers is good for the retailer and for the general public, and that it helps in the working of our great industrial system. If I am right in that assumption then I am inclined to think that these words, instead of helping the small licence holder, will, in effect, deprive him of that credit by the help of which hitherto he has been able to carry on his business. I would, ask the Government if they have considered that point, and if they see any way of avoiding the danger, which I am afraid is a real one. We are all agreed as to what we want, but do not let us do what this House too often 1341 does when, with the idea of carrying out a certain object, we pass a clause which appears to carry out that object, but whose ultimate operation is really injurious to those whom it is intended to benefit.
§ Sir S. EVANSThe right hon. Gentleman has dealt with this matter in a narrow groove. He has put the case of a licence holder where there is an indirect obligation arising from the position of debtor and creditor. The right hon. Gentleman has asked, or rather dealt with, two questions which I shall avoid, because I think in the first place they are not relevant to this Amendment, and secondly because it is not competent to deal with the question as to whom these duties will fall upon. We are not here to discuss the question of whether they will fall on the publican on the one hand—
§ Mr. A. J. BALFOURI quite admit that my reference to that matter may seem irrelevant, but I will tell the Committee why I referred to it. I think if the public are going to pay, it is relatively of small importance how we arrange the Clause, for we shall do no permanent harm to those in the trade.
§ Sir S. EVANSThe right hon. Gentleman says that we are now dealing with those interested in the trade, and that we may leave the law of supply and demand to determine whether ultimately the duties which are to be added will fall on the consumer. He raised the other big question whether it is good to have debtor and creditor at all. That is a very large question, upon which I do not propose to enter now at all, but I assume that in the ordinary case of the trader there is the relation of creditor and debtor. In the first place, it is essential to remember that in our discussion upon this Clause we are trying to deal with the case where the increased duty would be unduly burdened, and, therefore, unfair, between the two people—debtor and creditor. The case in which you have a great portion of the benefit accruing to the creditor and not to the debtor. In the ordinary case of creditor and debtor, where no advantage is gained, where there is no indirect advantage—the word indirect in this sense is constantly used—the position between the creditor and debtor will not be disturbed in the slightest degree. The case we are trying to deal with—and the right hon. Gentleman would not say that it is a case that we ought not to try to deal with—is that in which a man becomes a creditor 1342 in order to screw extra profit out of the trader. For instance, the case where a man does not try to get the tenant to pay up, but keeps the arrears against the tenant, thereby compelling him, by this sort of indirect means, to pay him more. If there were only the bonâ fide position of debt6r and creditor, without any lever of that kind being employed by reason of the position of the creditor, there would be no difficulty at all, because if in such case the tenant thinks he is not aggrieved, he-need not claim the reduction of the duty. He can agree with his landlord if he likes that there is to be no reduction. It is only in default of agreement that the Commissioners are to be called on. Therefore, so far as that is concerned, the ordinary position of debtor and creditor is not interfered with, except in so far as the creditor, by means of his position as creditor, seeks to get something out of the tenant which otherwise he will not get. Take, for instance, the ordinary case of free houses. Suppose that in the case of a free house-beer would be supplied at a certain figure, but that in the case of a man who is a brewer and is dealing with a tenant who is a licence holder and a debtor to the brewer he gets 36s. a barrel probably instead of 32s. a barrel for beer.
§ Mr. T. M. HEALYSix months' credit.
§ Sir SAMUEL EVANSIt is to deal with cases of that kind that we have put in these words.
§ Mr. BALFOURSuppose the brewer in that case sells it to this man who is in his debt for the ordinary trade price, his advantage being that he has a customer—not that he gets more out of that customer than out of the general public, but in order to secure his customer. I understand that this is in order to get customers more or less bound to him by mutual obligations on both sides. If that is touched in this Clause, then I fear you are doing great injury to the trade.
§ Sir SAMUEL EVANSI do not think that that kind of case would be touched at all. In such cases the Commissioners would not say that there should be any readjustment. That is the case which was raised by the hon. Member behind. We will discuss it when we come to it. I am very anxious to do what is right in the matter. I am not quite sure that these words will do it. But in answer to the case put by the right hon. Gentleman I do not think that any portion of the increased duty would fall upon the brewer if it was 1343 really for the sake of having the custom without any other advantage, and that he sells to the tenant at the ordinary price for which the tenant might get supplied elsewhere.
§ Mr. CAVEI think we all want the same thing, but we want to make clear the meaning of the Clause. If I agreed with the learned Solicitor-General as to what this Clause means as it stands I may say I should be very strongly opposed to including these words, because it seems to me if he is right that the Clause is a mere trap for the tenant. Take the simplest case of all—the case where the tenant becomes indebted to a landlord who is a brewer. According to the learned Gentleman, if there is a mere relation of debtor and creditor, this law does not operate, but if, as is the case suggested, the landlord becomes a creditor with the indirect purpose of putting pressure on his tenant—
§ Sir SAMUEL EVANSTo get an advantage for himself.
§ Mr. CAVEWith a view to putting pressure on his tenant, not to withdraw his custom—is not that what you said?
§ Sir SAMUEL EVANSI did not say that.
§ Mr. CAVEAt all events, the hon. and learned Gentleman did say this: that it was only if the landlord gave credit with the purpose of obtaining some indirect advantage from the sales of liquor above the proper price, this Clause would operate. If that is the meaning of the Clause, see what an almost impossible duty you will impose upon the court or whoever has to construe it. They will have to dive into the minds of both landlord and tenant. They will have to consider how much the debt is and why the landlord gave credit, and was it to increase his profit on sales. How is the court to attribute some indirect motive of this kind? How much was the tenant frightened? Was he really induced by this to continue his custom? All these things will be subject to inquiry by a tribunal not accustomed to consider, I am happy to say, matters of that kind, and the result would be that in every case, I suppose, a tenant who owes his landlord anything would make a claim. First he would go to the Commissioners for their certificate, and that inquiry before the Commissioners would not determine the point at all. The Commissioners would 1344 determine the adjustment of the amount. Then there would have to be another inquiry, an action in some court of law for the recovery of the amount certified by the Commissioners, and on that the landlord or the brewer would try to show that there was no indirect purpose. It would be like an action on an award, with which we arc perfectly familiar. So you would have two actions before your conclusion could be come to, and in the end it would very likely happen that the court would hold that there was no indirect obligation, and the whole of this litigation and inquiry would go for nothing. I think that that would not only produce litigation but trouble for the tenant, and I would strongly object to those words if I thought that that was the effect of the Clause. I am of opinion that the words are very vague, and not apt for the purpose of conveying a legal meaning; but still, putting an interpretation on them, I still agree with the hon. Member below me that, notwithstanding the word "indirect," obligation means legal obligation. That the thing a tenant must show is a legal obligation of an indirect character, but still a legal obligation.
§ Sir SAMUEL EVANSWhat is a legal obligation of an indirect character?
§ Mr. CAVEAn excellent illustration was given by an hon. Member for Kidderminster (Mr. Barnard)—the case of a brewer who lends money on interest with an express provision in the mortgage that if the tenant buys his liquor from the lender the rate of interest shall be reduced. I think that is a very fair example of what may be called indirect.
§ Sir SAMUEL EVANSThat is very direct.
§ Mr. CAVEIt is not direct. The landlord agrees to give the tenant some benefit on certain conditions, and that is an indirect obligation. Putting the best construction you can on it the mere fact of indebtedness, coupled with the possibility of inducement, would not bring the tenant within this Clause. I do not think it necessary to pursue the subject further after the discussion we have had. I think that the view of the learned Solicitor-General is far too wide as to this Clause and the effect of it, and that it will only operate in cases where there is a real obligation, though indirect. Therefore, I did not think it necessary to discuss the matter further or to move an Amendment.
§ Mr. T. M. HEALYI cannot accept the suggestion that these words should be omitted. They have a very distinct value; whatever the amount of the value may be I doubt, but that they have some value in the interests of the trader I have not the smallest doubt. But the hon. and learned Member for Kingston (Mr. Cave) has raised a point full of substance in connection with this matter. With much that was said by the Leader of the Opposition we may agree, but in the end there will come a moment when the tenant thinks he is being wronged, and thinks he has a claim, under this Act, and he makes this claim. He makes this claim, in the first instance, to a gentleman who is not a lawyer. I take it he makes it behind the back of the brewer or the distiller. That must be so. I take it he would make it by affidavit, because the Commissioner will be in London. The Commissioners of Inland Revenue are in Somerset House, and the only way in which Scotch and Irish tenants could make a claim would be by affidavit. The hon. and learned Member for Kingston suggested that an affidavit was necessary, but of an ex parte kind, and he suggested that the Commissioners of Inland Revenue would act upon that. I venture to doubt that proposition, because I think that the Commissioners of Inland Revenue, if they were acting fairly, would say that this indirect motive, which is dealt with here, is a very indirect motive, and the fact of indirection at once attracts the idea of hearing the other side.
§ Mr. CAVEWhat I said is they would hear both sides and decide, but that would not settle the matter.
§ Mr. T. M. HEALYBut the mere fact that the motive is indirect throws upon the Commissioners of Inland Revenue a far more severe duty, and, as I suggest, compels them to hear the person who is to be overweighted with these sums, which perhaps amounts to £200, £300, or £400. Therefore you will have two inquiries. In the absence of agreement you will have this inquiry before the Commissioner, and then if the Commissioner decides against the tenant he cannot go to law. Although the coercion may be of the most positive kind, the tenant is out in the cold the moment the Commissioner says, "I refuse to certify; this is too indirect." Curiously enough you are making the certificate of the Commissioner as to amount final in the brewer's favour, whereas if it is against the brewer and in favour of the 1346 tenant, the tenant has yet to litigate in a court of law. I respectfully submit that this word "indirect" necessarily involves the Government—as I trust the Government see—in the addition of some clause to the effect that where there is an indirect motive disclosed the certificate of the Commissioner should be final. The Solicitor-General said that it is true the word "obligation" is a word of legal character, and he added, "We have endeavoured to colour it with some suggestion of indefiniteness, some suggestion of indirect motive." My suggestion to the Government is that whenever the Commissioners can find an indirect motive, or an indirect obligation, this certificate in the tenant's favour should be final and binding upon the brewer, and that there should be no right of litigation on the part of the brewer in that case. That seems to me to be the only fair way. The right hon. Gentleman the Leader of the Opposition has moved the omission of these words. I could not support him in that, because the Clause would then read, "or is otherwise under any direct obligation of any kind." It there was a direct obligation it would be so patent that no Commissioner could refuse his certificate. That would also carry with it the corollary that it should not be subject to objection in a court of law. So that either way it appears to me that the Government will be better advised in leaving these words in than by their omission. I am sorry, however, that the dual system of litigation is going to be created. I think the method of recovering this tax ought to be "short, sharp, and decisive." Here is a heavy tax suddenly put upon a poor man. The poor man should have the right to resort at once to the Commissioner, and the Commissioner's decision should be final. I certainly support the retention of the words in the Clause.
§ Mr. F. E. SMITHSpeaking for myself, I should not be able to support the Amendment to omit the words "or indirect," because it would involve the wording of this Clause in even more pitiable confusion than it is at present. It would read then, "Where the licence holder is bound by any covenant, agreement, or undertaking, or is otherwise under any direct obligation of any kind." The effect o£ leaving out the words "or indirect" would obviously leave a direct obligation, and the two together in that case would mean precisely the same thing. 1347 A covenant or agreement is a direct obligation. It must be assumed that they do net mean the same thing, and I am driven to the conclusion that the whole of this two hours' discussion which has taken place upon these two Lines would have been avoided if the Government had succeeded in giving such clear instructions to their draftsman as would have enabled him to avoid the clumsy tautology of this expression. What is the explanation which the Solicitor-General has given to these words "direct or indirect obligation?" On the whole, I am satisfied that the construction which the hon. and learned Gentleman places on these words is ill-founded. Obligation means a legal obligation, a legal bond. It has a well-ascertained legal meaning. What the Solicitor-General or the draftsman has done is to try and incorporate some shoddy journalism into an Act of Parliament. No judge and no statute would ever use the word "obligation" in the sense in which it has been employed by the Solicitor-General. The Solicitor-General asks: "What does an indirect obligation mean if it does not mean what I say?" That is exactly what would be argued in the Law Courts. When you use the expression "or indirect obligation" as meaning something more than a direct obligation, what does it mean? It would be quite easy to take other instances besides those given by the hon. and learned Gentleman below the Gangway. Suppose, for instance, a licence had been transferred and the original licence holder had been under tie to a firm of brewers. In that case when the licence was transferred it might well be that the tie being for five years, it would not change hands with the licence, and the man who originally had the licence might well find himself under a direct obligation to the brewer. Then there would be the new contract, the new licence holder, and this state of things would occur. As between the new licence holder and the firm of brewers there would be an obligation; it would not be an indirect obligation, but a direct obligation
§ Mr. ARNOLD LUPTONWhere lawyers differ laymen may have an opinion. After listening to the hon. and learned Gentleman, I have come to the conclusion that the two people who know when there is any direct or indirect obligation upon them are the licence holder and the brewer who has lent the money. These two people will know in their own minds 1348 whether or not there is an obligation existing between them. In my experience of life I have always found that it is a great thing to have a good moral case. A good moral case gives you courage to speak, to write, or to instruct your solicitor if necessary, but in 19 cases out of 20 such a case is never heard in the courts, because it is settled outside. There are a great many licence holders who are in a very poor financial position. A man may pay £100 or so for furniture and fittings, and that is all he has got. If he has to pay a largely increased duty which he cannot afford, and if someone else has to pay that duty according to this Clause, we have then to consider the case of the Official Receiver, when the licence holder has become bankrupt, which he very shortly would. The knowledge of the brewer that the Official Receiver would have the law at his back, and that he would have the licence holder as a witness against him, would operate towards reducing the brewer to pay the duty, or otherwise the court might be applied to.
§ Mr. BALFOURI agree that the question is one of difficulty, nor do I disguise from the Committee that I looked with considerable misgiving to the result of these words, but unless a substitute can be found for them, they had better be left in, and therefore I beg to withdraw my Amendment.
§ Amendment by leave withdrawn.
§ 6.0 P.M.
§ Mr. YOUNGERActing on the hint which the hon. and learned Gentleman threw out a moment or two ago, I propose to submit an Amendment in the earlier portion of the Clause. I propose, after the word "kind" ["obligation of any kind "] to insert the words "to pay for his licensed premises other than the ordinary rent, or." That would make the Clause read "Where the licence holder is bound by any covenant, agreement, or undertaking, or is otherwise under any direct or indirect obligation of any kind, to pay for his licensed premises other than the ordinary rent, or to obtain a supply of intoxicating liquor," and then would follow my next Amendment—"at other than ordinary market prices." These words, I think, would rake in the two elements which the hon. and learned Gentleman had in his mind, and they would protect the man in the event of his being rack rented just as they would in the event of his being charged the price over the ordinary market price. My desire is to 1349 keep the burden fair, but I do not think he is entitled to interest unless he is placed under some obligation. He cannot have it both ways. If he is going to buy his goods at the very lowest possible price he naturally must pay the whole of the Licence Duty. On the other hand, if he is to be rack rented or charged an extra price, then of course he ought to be put in a position in which he could get the matter settled. I am thinking more of Scotland in proposing these Amendments. In that country the public-houses are not owned by the brewers. In Glasgow the public-houses are owned by landlords who are not connected with the trade, but they invariably add something to the rent of a public-house. If the rent of an ordinary house were £100, it is very nearly certain that if it became a licensed house the rent would be £150. If a rack rent is being charged obviously some apportionment ought to take place between the licence holder and the landlord. I beg to move.
§ Sir SAMUEL EVANSObviously it is a very difficult matter, and I would suggest to cover it in this way by the words "or otherwise by way of payment of rent" instead of "the ordinary rate of rent."
§ Mr. YOUNGERI do not in the least care what the words are.
§ Sir SAMUEL EVANSMy suggestion is we should consider the words. We are substantially in agreement. I will communicate with him personally to see whether or not we could not get another form of words.
§ Mr. J. M. HENDERSONIt will be very difficult to say when a rack rent is being paid. What happens is where a house is tied the brewer lets at a normal rent and gets his profit out of an extra charge on goods. The ordinary landlord always puts on something. You recognised that in the Licensing Bill, since compensation value was to be the difference between the normal rent and the rent which the premises would fetch if licensed. That has been recognised in the Act of 1904. The compensation levy in that Act was borne between the landlord and the tenant sometimes running up to 60 years. There are many tenants who have got 40, 50, or 60 years, and why not have a similar scale, or at all events, leave it to the Commissioners to say what is the proportion the landlord of a free house ought to pay? If you merely say if he has put on a rack rent you will be put to enormous difficulty. 1350 It will be assumed that the landlord puts on an extra rent where he has licensed premises to let.
§ Mr. AUSTEN CHAMBERLAINWith reference to the observations of the hon. Gentleman (Mr. Henderson), there is not as much difference between him and other Members as he would appear to think. He divided the cases we have to consider into the cases of the tenant who is tied to the brewer and the tenant of a free house rented direct from a landlord not in the trade. Surely there is another case, that of a double tenancy of the publican tenant tied to the brewer, and the brewer renting it from a landlord. In that case the landlord will have taken part of the monopoly value; that is the phrase used, or the licence value, or whatever you call it, from the brewer, and the brewer may have taken something more from the tenant either in rent or in goods. I do not know whether the Government have had that case in their minds in what they say. Clearly, in that case the brewer ought to have the same against his landlord as the free tenant would have against his landlord. As to the suggestion of the Solicitor-General, I understood he did not confine himself to those words, but his meaning was to turn upon whether the rent was an ordinary rent or not.
§ Sir SAMUEL EVANSThat is the suggestion.
§ Mr. AUSTEN CHAMBERLAINWhat do you mean by an ordinary rent? I am not crticising the Government for the sake of criticising them, but I am really trying to get at the meaning of the words, to see whether they affect the case which both sides of the House have expressed the desire to meet. The ordinary rent of the public-house would be a rent which took into account the fact that it was a licensed house. My hon. Friend mentioned the case of a house which would let, say, to a baker for £100, but which, if licensed, would let for £150. In that case the ordinary rent of the house would be £150. I do not know what view the Solicitor-General takes of the legal construction of the words which he has suggested.
§ Sir SAMUEL EVANSIt means the additional rent which the landlord might endeavour to obtain.
§ Mr. AUSTEN CHAMBERLAINThat would be the ordinary rent for such a house, so that the words "ordinary rent" will not do.
§ Mr. F. W. VERNEYI venture to suggest an experiment which I have been able to try myself, and which may possibly get us out of the difficulty. I happen to have been the owner of a public-house, and being desirous that there should be no pressure brought to bear on the tenant of the house, I gave him a fixed salary. It seems to me, if you really want to protect the tenant of the public-house, of which you are going to keep a register and particulars of which are to be given to a State Department, I cannot help thinking the experiment which is now being very extensively made by the Bishop of Chester and Lord Grey in a society with which they are connected might help us in this juncture. It seems to me if you insist upon a fixed minimum salary you will for the first time really protect the tenant against any pressure that may be brought to bear upon him, because he will always have that to fall back upon. Of course, at the same time, the amount of the rent which he paid should be known so that it may be a contract, and thus he will for the first time receive adequate protection. I do not see any other way in which you can thoroughly protect the tenant. It may be said that that will be undue interference as between the landlord and the tenant, but I do not think it would be any more so than what is proposed within the four corners of this Bill. I must say that listening to the speakers on both sides of the House, and particularly the hon. and learned Member for North Louth, one is minded of the old definition of Calvinism, that you cannot be good if you would, and it would do you no good if you could. I think there is a sort of pessimism which really makes anyone almost despair of anything being put in this Bill which would carry out the desire of everybody, or almost everybody, that the tenant should be treated on perfectly fair terms, and on terms by which he shall not be subject to this extreme pressure, which I have heard described by tenants of public-houses themselves as a pressure which means that either he must be selling the whole day long liquor from behind the bar or else that he cannot provide for himself and his wife and family. That is the kind of pressure we who have gone deeply into this question have come across when we have known intimately and personally public4iouse keepers, and have sympathised, as many of us have, with the hard case in which they find themselves with owners, who have not any personal 1352 dealings with them, but who have the strictest legal dealing with them, and care very little about any other. I do not for a moment mean to say that there are not many owners of breweries who deal perfectly fairly with their tenants, nor deny that they treat them just as any other landlord might deal fairly with a tenant. I do think, on the other hand, those cases in which fairness cannot be looked for or expected can only be dealt with in the way I venture to suggest, namely, that there should be the minimum salary, and that the rent should also appear in the contract, which will carry out what I believe we all most desire to see.
§ Mr. BALFOURThe Government do not mean to accept the words of my hon. Friend (Mr. Younger), and want time to consider it. I think that is a reasonable request, because, the more I consider the matter, the more difficult I think it is. My right hon. Friend (Mr. A. Chamberlain) has pointed out, and unanswerably pointed out, if you are going to give this relief as against the landlord of a tied house, then you must give it also to the brewer as against another landlord. In other words, if the brewer takes the house from an ordinary landlord, and then ties the tenant under him, there must be relief not merely to the occupant of the tied house, but also to the brewer. The great difficulty which the Government have to face brings in our old friend, "Who is going to pay this duty?" Clearly it would be very unfair to reduce the landlord's rent if the tax does not fall on the publican and brewer. A tax is suddenly put on to the monopoly value; the landlord gets some of the monopoly value, and therefore the landlord ought to bear some part of the tax. But if the tax is to be thrown on to the public by the brewer and the publican, it is quite clear that they ought to have no relief against the landlord. If the first incidence of this tax is upon the publican and the brewer, and remains upon them for a few months, and they appeal to the Commissioners, the Commissioners would say, "Certainly; you are paying the tax, and some of the relief ought to be got out of the landlord." But if they then raise the price of the beer and the whole tax is thrown on to the public, what remedy are you going to give the landlord? None of the tax is being paid by the brewer or the publican; the whole of it is being paid by the consumer of beer. The brewer and publican will, under false pretences, I do not say dishonest pretences, have got some relief out 1353 of the landlord. That case must be somehow dealt with. I hope the Government when considering this matter between now and Report, will remember that they have to deal with the landlord and the brewer, as well as with the landlord and the publican; and that, while they have every right, in my opinion, to take part of the rent from the landlord if the burden of this tax is falling upon the monopoly value, they have no right to take a penny from the landlord if the whole of this tax is thrown upon the public. In view of that plain principle of equity I hope they will frame their new provision so as to take account of both the alternatives between which at present they are unable to decide, namely, the alternative of the trade paying the tax, and the alternative of the public paying the tax. They sometimes say the one, and sometimes the other, according as it suits the particular provision before them. I hope, however, that in considering this matter they will look at both alternatives, and take care that in endeavouring to do away with one injustice they do not inflict another.
§ Sir SAMUEL EVANSWe must remember what this Clause proposes and what was the Amendment moved by the hon. Member for Ayr Burghs (Mr. Younger). We are not dealing with the free house at all, but with the tied house.
§ Mr. A. J. BALFOURI beg your pardon; my hon. Friend's whole case was the Scotch case, where there are no tied houses.
§ Sir SAMUEL EVANSIf the right hon. Gentleman will consider the Amendment he will see that it dealt only with persons dealing in intoxicating liquor. This Clause only deals with tied houses, and only purports to deal with the incidence of the tax as between the people dealing in intoxicating liquor. It is in connection with that that I made a promise to consider the matter between now and Report.
§ Mr. T. M. HEALYI fully admit that the Solicitor-General has dealt frankly with the Committee. At the same time you cannot deny the justice of the observations of the Leader of the Opposition. The hon. Member for North Bucks (Mr. Verney) referred to my cynicism in this matter. It is not cynicism; it is experience.
§ Mr. VERNEYI did not say cynicism, but pessimism.
§ Mr. T. M. HEALYMy reply is the same. A lawyer comes into touch with all the bad cases that arise; he knows how Acts of Parliament have coaches-and-fours driven through them, and he knows how badly certain people have been hit. All my life I have been engaged in fighting the battle of the tenant against the landlord, and I am satisfied that this Clause is absolutely useless for the tenant. Supposing you make this Clause to apply only to every person who within three months of the passing of the Act says that he is a tied tenant; then, at all events, you would confine it to a definite class. Then sift that class, and if they establish their claim give them relief. The hon. Member for North Bucks was taking the case of the fair man. Legislation does not take note of the Christian at all; it deals only with the unfair man. That is what is always forgotten. We are legislating for the sinner, not for the just. We are legislating for the man who is going to do you in the eye. Personally, I think the Government are right in resisting this Amendment. I should oppose any attempt to whittle down the Clause, even by an eighth of an inch. It is not half wide enough, and my crime is that I say so. But small as it is, an effort is being made to whittle it down through a groundless misapprehension. Those who take the pessimistic view which I do have been asked to make suggestions. I have made my suggestions—let the Commissioners decide the matter without litigation; let their certificate be final; spare the tenant the expense of a lawsuit. I hope the Solicitor-General will not think that I am blaming him. I am doing nothing of the kind. His difficulty is that he is wrestling with the insoluble. He is trying to enable a particular class of persons who, because they are in an unprotected position, are to have this burden cast upon them, to recover the money against the brewer and distiller. The answer would be a notice to quit, a suggestion to raise the price of beer or whisky, or a threat to reduce their discount. All this Clause is, I will not use the word "moonshine," as that is objected to by the Solicitor-General, but it is a mere soap bubble. I freely admit that the Government are trying to do something; but are they doing their best? I do not think so. This Clause, as I understand it, is brought substantially from the Licensing Bill of last year, and I respectfully ask the Government to agree to nothing that will have the effect of 1355 weakening the Clause. The Leader of the Opposition asked why, if you are charging the publican with this extra duty, the landlord should then have to pay? I dealt with that on a previous occasion, and it would not be in order to deal with it now. But the Member for Kidderminster (Mr. Barnard), in an Amendment on the Paper, proposes a far bolder course than I then advocated. I only advocated it in the case where a tenant is bound to give up his licence. The hon. Member is going to advocate that the deduction should be as of right against the rent in every case. I believe the Government, by the course they are advocating here, are not aiding the tenant to escape from these onerous duties. It would be franker to say, "We cannot escape them; we can see no way out of the difficulty." You might propose Amendments until to-morrow morning, but as long as the tenant is at the mercy of the landlord, whether in the shape of rent, or of discount, or of anything else, that man will be the landlord's slave. I do not use the word offensively as against the good landlord, such as the hon. Member for North Bucks (Mr. Verney), but we are dealing all through with the men who try to act unfairly.
§ Mr. JOHN GRETTONThe hon. and learned Member (Mr. T. M. Healy) has missed the point of the Amendment, because his gaze is exclusively fixed on the Irish case where, possibly, it may not apply. This Amendment is intended to relieve the free tenant. The Government admit that their Amendment is intended to afford some relief only to the tied tenant. My hon. Friend (Mr. Younger) wants to find some relief for the free tenant in England as well as in Scotland.
§ Sir SAMUEL EVANSOn a point of Order. Can the hon. Member discuss free houses, seeing that the hon. Member who moved the Amendment asked leave to withdraw?
§ Mr. GRETTONThe Amendment was not withdrawn, and my hon. Friend has not asked leave to withdraw.
The CHAIRMANI understood that the hon. Member had asked leave to withdraw, and I was simply refraining from putting the Question until hon. Members ceased to speak upon the Amendment, so that leave to withdraw should not be refused. On the point of order, free houses do not come within this Clause at all, 1356 except in so far as some of them may be argued to come under its terms.
§ Mr. YOUNGERI did not ask leave to withdraw; I merely said that I was satisfied.
§ Sir SAMUEL EVANSI think it is only fair to say that when an hon. Member seeks to withdraw an Amendment and the discussion goes on, we cannot be expected to allow the withdrawal.
§ Mr. WATSON RUTHERFORDIs not this Clause intended to apply entirely to tied houses? If so, is it not out of order to introduce an Amendment relating to free houses?
The CHAIRMANI was told that the hon. Member was going to withdraw the Amendment, but I did not put the Question, "That leave be given," because hon. Members rose to speak.
§ Amendment, by leave, withdrawn.
§ Mr. AUSTEN CHAMBERLAINmoved to leave out the words "intoxicating liquor" ["to obtain a supply of intoxicating liquor from any person or persons "], and to insert the word "goods." This Amendment raises the question which I raised on an earlier Amendment. Then it was thought more convenient that the discussion should be taken later as a separate issue. The Solicitor-General has explained that the object of this Clause is that the burden shall be borne equitably, reasonably and fairly between the persons who benefit by the sale of liquor. The Solicitor-General confines it to the persons who benefit by the sale of liquor, and the Clause so defines it. But there are other persons who benefit by the licence. The men who have tied the house for mineral waters and for tobacco derive a part of the advantage —whatever it is—that is due to the possession of the licence. I ask the Government how can they defend the exclusion from the purview of the Clause of either party who equally derives a part of the benefit? In order that all may be treated alike in this matter, without favouritism, and with no special penalty for any particular class, I beg to move my Amendment.
§ Sir SAMUEL EVANSI am not certain whether the right hon. Gentleman wishes us to take this Amendment seriously, or only wants to draw attention to the fact that we are only dealing with intoxicating liquor and not other goods, such as mineral waters or tobacco. This Clause deals, and is only intended to deal with the increased 1357 duties put upon those who deal in intoxicating liquors under the provisions of this Act. Therefore it will be enough for me to say that mineral waters and tobacco never entered our minds at all when we were considering this Clause. I submit it should not enter into the minds of the Committee in framing the Clause. Everybody who is interested in compensation cases knows that you never fix the compensation value of licensed houses by a reference to the mineral waters, or tobacco, or any other commodities sold upon the premises. We are here dealing only with the case of additional duty in respect, of the sale of intoxicating liquor. I submit that it would not be advisable to bring in these other smaller matters, and to insert the word "goods" instead of "intoxicating liquor."
§ Mr. T. M. HEALYIf you accept this Amendment it will kill all the Amendments later on which propose to better divide the burden between the landlord and others. What benefit there may be in the Amendment of the hon. Member for Kidderminster (Mr. Barnard) that the landlord should pay a portion of this increased tax will foe doubtful, if in fact it can be shown that there had been no increased tax at all by reason of the articles being non-excisable.
§ Mr. JAMES HOPESurely the seller of mineral waters has a very direct interest in the licence? It is well known that a great portion of intoxicating liquors would not be consumed by many without the additional mineral waters. [An Hon. MEMBER: "Soda water."] The mineral water manufacturer has undoubtedly an interest in the sale of intoxicating liquors, because he gets some of his own goods sold thereby, and his interest also in the licence where he has a tie gives a fine ready-made distributing channel, whereby he gets through his goods. The object of this Clause, that a portion of the duty should be paid by those whom the licence benefits, includes, undoubtedly, the person who has a tie, for the sale of those ether goods suggest an indirect interest in the licence. Therefore the latter ought to bear his fair proportion if that fact can be shown to the Commissioners. I cannot see how it is fair to give a tenant a claim upon one class of dealer to whom he is tied and not give him some claim against another class who have a substantial interest in the sales of the licensed premises.
§ Mr. AUSTEN CHAMBERLAINI did not quite appreciate the objection of the 1358 hon. and learned Gentleman (Mr. Healy). Is he certain that he is dealing with the right Amendment?
§ Mr. T. M. HEALYMay I explain? Some of these Clauses are seeking that the increased burden should either be divided between the landlord and the tenant, or paid by the landlord, or paid by them both. We are seeking that because of the increased duty. There is no increased duty upon non-excisable liquors. How, then, can it be urged that any person should pay this duty when there is no result—when the sale is of commodities which are not taxed?
§ Mr. AUSTEN CHAMBERLAINI think the flaw in the argument of the hon. and learned Member is that he loses sight of the fact that the Government are proposing a duty on the monopoly value of public-houses.
§ Mr. T. M. HEALYThere is no licence to sell mineral waters.
§ Mr. AUSTEN CHAMBERLAINOf course there is not, but I think the hon. and learned Member will see that my point is a sound point. There is no licence for the sale of mineral waters. That is perfectly true. But what the Government say they are doing is to get from the Treasury a part of the monopoly value conferred on the public-house by the licence. What this Clause proposes to do is to show where that monopoly value is not all in the possession of the tenant at the time, a sum to be paid to the Treasury shall be divided amongst the people sharing the monopoly value, in so far as they deal in excisable liquors. Why that limitation? Why confine it to people who deal in excisable liquors? The hon. and learned Gentleman says because the others are non-excisable. If there is any desire or ground for the tax at all, surely it ought to be shared by all those who have a part in the monopoly value? I do not think the Solicitor-General attempted to deny for one moment that as long as trade is carried on the mineral water manufacturer has a distinct share in the monopoly value. If he says that the same amount of mineral waters would be sold in the house without as with a licence, he is asserting what we must all feel is absurd. I think that the refusal of the Government to accept this Amendment makes their position not merely ridiculous, but very invidious. It shows their determination not merely to put a tax on a particular value where they 1359 find it, but to tax a particular trade, a particular interest against which they have vehement animosities, and whom they are seeking to punish for their political misdemeanours. I am not particularly concerned to make their Bill more consistent on their own theories, or more palatable to the parties concerned. If the Government say they will not accept the Amendment I will not press it.
§ Amendment by leave withdrawn.
§ Mr. YOUNGERproposed, after the word "liquor" ["a supply of intoxicating liquor"] and to insert the words "at other than ordinary market prices." I understand that the Government propose to accept this Amendment.
§ Sir SAMUEL EVANSI think the words suggested are good, but are not the best. Might I suggest the Amendment this way, to leave out the words, "sum paid by him in respect of the duty on his licence as may be agreed upon" ["to recover as a debt due from any such person such part of any sum paid by him in respect of the duty on his licence as may be agreed upon, or in default of"], and insert these words, "increase of duty payable in respect of the licence occasioned by this Act."
§ Mr. YOUNGERI accept that.
§ Mr. T. M. HEALYThis is a very serious inroad on the substance of the Clause. Surely it is weak enough already. This Clause, as originally proposed, gave the tenant something substantial—supposing he got it—supposing he was a successful litigant. It gave him a considerable matter of substance—that is to say, the duty was to be deducted in a given case. What is the given case? Where a man is bound by any "covenant, agreement, or undertaking." In other words, "bound" there means "coerce." You say to him: "You are the object of public interest. You have been terrorised my friend, and the law comes to your aid, and says—like a relieving angel — that the oppressor shall be dealt with." What does now the right hon. Gentleman and Solicitor-General say? He says, "No; you are only half and half a present tenant, and the Government are going to do the thing by halves. We will not allow you to deduct the whole of your duty "(which was the original proposal). The strange thing about this Amendment is this — that the Solicitor-General has accepted it, and it is the first 1360 Amendment he has accepted off his own bat. He has accepted this Amendment as against the tenant under the pressure that has been put upon him. Would it not be better to leave the matter over for Report? We are told there will be a number of considerations on the Report stage, which are not now before us. If the tied tenant is in the state which the Government contends, surely their original proposal was the equitable one? The hon. Member for Lincoln was about to read out, when he was stopped, a communication from the Licensed Victuallers' Association of Lincolnshire, saying that this Clause was not half strong enough. Does the hon. Member not see now that the Government proposed to cut down its-value and to limit the operations of the Section, and is there no one to say anything on behalf of the tenants? The hon. Member did hold out some ray of illumination, but now the light of the dark lantern has been shut down, and we are only going to have half the amount of light. I say the Government, as I apprehended they would by pressure from the Opposition side of the House, have minimised and attenuated this Clause. Either this evil of tied houses exists or it does not; the men are coerced or they are not. If they are coerced the relief they were getting is so casual and precarious that to cut it down further is most undesirable.
§ Mr. HERBERT SAMUELI should like to point out that the hon. and learned Member is really under a misapprehension. This Amendment makes clearer what is the intention of the Clause. What is it the Clause says? The Clause says what is to be paid by the brewer instead of by the tenant. It is such proportion of the duty as may be agreed upon between the panties or as the Commissioners may think just under the circumstances. Of course, when the master came up to be decided by the Commissioners, they would only take into account the increased duty.
§ Mr. T. M. HEALYWhy?
§ Mr. HERBERT SAMUELBecause there are a great number of duties not-increased at all by the Bill. Except in the case of the minimum all public-houses under £50 are not having their duties increased at all. They remain in the same position as they do to-day, and it is absurd to suggest that the law should interfere, and although the duty is in no way being raised, still, that in the bargains between the brewers and the tenants, which are in no way interfered with, the tenants 1361 should have the right of making the brewer pay the same duty which the tenant has been paying for the last 15 or 20 years. That is not the intention of the Clause, and if the claim was made to the Commissioners that the old duty should be taken from the shoulders of the tenant and transferred to those of the brewer they would say that is not the intention of the Clause, and the tenant must go on paying what he paid before. The only question that arises is that of the increased duty. That is the intention of the Clause, but as it is possible some people might feel under a misapprehension, and that some disagreement might take place between the brewers and their tenants, it was decided to accept an Amendment tantamount to that placed upon the Paper by the hon. Member for the Ayr Burghs.
§ Mr. T. M. HEALYIn other words, you do not trust to the Commissioners. It is suggested now that the Commissioners would act unfairly. ["No, no."] Why not leave the discretion of the Commissioners unfettered? There may be preceding circumstances of these cases. Suppose a man, in contemplation of this Act, raised his tenant's rent, and made it twice what he paid before, would it not be a fair thing that the tenant should be entitled to the reduction? Am I to be told that the brewers and distillers are standing, with folded arms, awaiting this Bill, and doing nothing against their tenants? I venture to say all along the country every man owning tied houses has been considering the case, and in many oases, I venture to think, the rent has been raised already in anticipation of this duty. I put this point, and I suggest it is unanswerable. The only agreement which will be possible for the Commissioners to decide upon will be the agreements which are enforced after the passing of the Act. Let us suppose the Act passes on 1st December. You can only deal with the agreements which are in force on 1st December, and it may be before the Act came into force there had determinated a number of tenancies at three months' notice. That was the case I was contemplating, yet what have the Government done?
The brewer, who has already taken advantage of the passing of this Bill, and treated it as an Act, having regard to the Resolution of the House of Commons— because, remember, the great force in these Budget Resolutions which have the effect of law when they come into operation—the brewer will say to the tenant, 1362 "I must put upon you this new duty," and the Government, when that occasion will have arisen, will have deprived the Commissioners of the power of dealing with it; and the Government have done this thing, while at the same time they are professing the keenest interest on behalf of the oppressed tenants. Will the Commissioners take into account any agreement cancelled, broken, or withdrawn? If it be true that while these tied-house tenants hold as monthly or quarterly notices— [An Hon. MEMBER: "And 24 hours' notice "]— and 24 hours' notice—am I to he told that these agreements are not already determined and new agreements put in their places? Yet, with the acceptance of this Amendment, we shall only be dealing with agreements in existence and in operation when this Bill becomes an Act, and when the oppression has taken place, and when the brewers can laugh at your Clause. It seems to me a most extraordinary thing. I have been at this all the morning. I beg that the Government will agree to nothing that will attenuate this Clause, and I suggested that tremendous pressure would be put upon them, and now an hon. Member says that these tenants very often hold at 24 hours' notice. If that is so they are already deprived of the benefit they would get under this Act. The draftsman must have considered this matter. Someone can tell us what is the usual tenure of these tenants. I will not take a 24 hours' notice man, but there must be many cases of three-monthly tenancies, and now when this Act is passed, which was to do so much good for the tied house man the evil will have taken place, and instead of agreeing to leave the whole circumstances to the Commissioners, in whom you have so much faith, you have foreclosed by this Amendment the possibility of its application.
§ Mr. A. J. SHERWELLThere is just one remark I wish to make on this Amendment. I hope the Government will not accept even substantially anything like the form of the second half of the Amendment.
The CHAIRMANWe had really better leave this matter. We are talking about an Amendment which we have not got before us. This Amendment will be withdrawn, and later the Government Amendment can be moved.
§ Amendment, by leave, withdrawn.
§ Mr. E. B. BARNARDmoved to leave out "recover as a debt due from" ["the 1363 licence holder shall be entitled to recover as a debt due from any such person such part of any sum paid by him in respect to the duty on his licence"], and to insert "deduct from any rent interest upon mortgage, payment for goods supplied, or other payments due to."
7.0 P.M.
The Amendment is one of a group of five which all hang together and give effect to one another. The effect of the Amendment is perfectly clear. It is to alter the arrangements about the relation of the particular parties to the Commissioners. As the Clause stands at the present moment, a. tied house tenant has a right by agreement to make a deduction, and, failing that, he will have a right of appeal to the Commissioners. Now I think there should be an obligation that a tied house tenant can make deduction, and that when he is called upon to pay money in October he should have a right to take a receipt and make deductions just as he was entitled to under the Act of 1904. I have listened with great care to the speeches of several hon. Members who are King's Counsel, and while it may be that one or other of them is right, the real position of the Clause is summed up by the Leader of the Opposition. He was in doubt as to whether the Clause would hurt. I do not think it would hurt, but I do not believe it is likely to achieve in any degree the benefit that some people suppose. I think it is perfectly self-evident that it can, practically speaking, be evaded; but, nevertheless, it is to be placed upon the Statute Book and carries a certain amount of influence, and it will finally result in the custom of the trade controlling nearly all these transactions. The Leader of the Opposition asks the question regarding the probable effect of the Clause, and he went on to point out that he rather dreaded that it might injure the credit of certain people and affect their relationship. As far as I understand it from a business point of view, there will be two classes of credit going on in connection with this trade. There will be the credit of persons who are lending money to the trader by reason of the trade he does with them. Supposing some of the banks—and it is the custom of some of them, as some of us know, to lend money to enable the people to really become tenants of the freehold—obviously the bank has no intention of getting any liquor trade, and, equally, if the brewers lend money, their general point of credit is perfectly well 1364 understood amongst all parties concerned, and I fancy, apart from any technical knowledge of the law, that if the tenant was given the right which I seek to secure by my Amendment, of taking the receipt to whoever has the tie and claiming the money back that will effect the necessary purpose. Some hon. Members have expressed fear of litigation. I do not think there will be much litigation. To put the tenant into the position of appealing to the Commissioners against the person who possesses the tie is to put him in a very unfortunate position. Many tenants would not feel inclined for reasons I need not mention, to appeal to if the Commissioners. I think it would be very much better to say that they should have the right, as the Act of 1904 gave them, of deduction, and if the person from whom they deducted the money disliked it they could go to the Commissioners and appeal. I think there would be very few appeals. It is perfectly understood by all the parties concerned that the brewer for the moment is the person who is going to pay. We had a report of the meeting of one of the largest London breweries published within the last month or six weeks, and I noticed that the chairman drew attention to the huge sum of money the brewery company would have to provide. The same remark was made in reference to one of the biggest breweries in the Midlands, and the claim to raise the price of beer in some places has been based upon the fact that the brewer knows he is going to pay. It would be more convenient and much fairer to lay down once for all in this Clause that the tenants are entitled to deduct the money from the persons possessing the tie who will be perfectly safeguarded by the right of appeal they will have to the Commissioners. The intention of my group of Amendments is to throw upon the other side the onus of the appeal. If you do not do that I am certain you are not really giving the tenant any of the advantages you assume. I will say no more except express the hope that the Government will sec their way to accept the general spirit of what I am urging. Perhaps my words are not the best or the most suitable for the purpose. The question is whether the essence of what I am arguing is acceptable to the Government or not?
§ Sir SAMUEL EVANSI am not quite sure that I gather correctly the object my hon. Friend has in view in moving this Amendment. I think he intends that the 1365 whole of the increased duty should be deductable from any sum due from the tenant, allowing the adjustment to take place afterwards.
§ Mr. BARNARDI understood that we were only dealing with the extra sum, and my contention was that the person who pays it shall be entitled to make the deduction, and if there is any dispute then of course the person from whom the money is taken can appeal.
§ Sir SAMUEL EVANSIn that sense I could not accept the Amendment. There are many difficulties in the way. We are imposing increased duties upon the licence holders, and they are liable. Ties of more than one nature will have to be considered. It would be impossible to allow the tenant to deduct the duty from any one person to whom he is tied. I read the Amendment of the hon. Member in quite a different sense. According to the framework of the Clause as it stands we give a right of recovery. I want to make one thing clear. Before anything can be done either by way of recovery or deduction or set-off, the adjustment must first take place. The burden must be distributed by the decision of the Commissioners. When that has once been done I have no objection, if the Committee think fit, to allow a deduction after that.
§ Mr. BARNARDBut the tenant will be out of pocket all the time.
§ Sir SAMUEL EVANSIn the whole course of my profession I have never advised anybody to go to law. I have advised them whether it is likely they may recover or may not. In order to avoid unnecessary litigation, I suggest an Amendment in this form: To retain the words "recover as a debt due from" and to add the words, "or deduct from any sum due for rent, interest upon mortgage, goods supplied, or other sums due to." I am bound to alter the phraseology of the hon. Member's Amendment, because you cannot deduct from a payment, you must deduct from a sum. I commend this to the Committee, in order to avoid putting the obligation on the tenant to recover.
§ Mr. CLAVELL SALTERI have some difficulty in seeing that the Solicitor-General is making any concession at all. The proposed Amendment appears to be to some extent against the interest of the tenant, and it limits his rights. How does the matter stand now? Under the Clause as I understand it, a tenant obtaining this 1366 relief, supposing he fails to agree with his brewer, will have to have recourse to the Commissioners. He will say, "I claim to be a tied tenant under this Clause, and I claim that you shall arbitrate in my case." The brewer will say, "I deny that you are a tied tenant," and the Commissioners will have to decide. If they agree that there is a tie they will make an adjustment of the duty. Thereupon the tenant has a right to go to law and recover. In that action it would be competent for the brewer to say, "There is no tie here; you are not within the class entitled to relief, and the Commissioners were wrong in giving you this relief." That can be done under the Clause as it stands, and the court will have to decide ultimately whether the tie exists or not. Under the Amendment suggested by the Solicitor-General the Commissioners will determine the tie and make the adjustment. Then, says the Solicitor-General, "instead of making the man sue let us give him a right to deduct." Of course, that would only be a right he would exercise at his peril, and the brewer could bring an action. Is that any more right than he has got at the present time? I doubt very much whether this is a concession at all. I am anxious to know whether the Solicitor-General agrees that it will be open to the brewer to defend the action on the ground that there is no tie to be determined by the court.
§ Mr. T. M. HEALYIt appears to me that what the Government are doing is that they are slightly shifting the burden in favour of the tenant. I agree that they are not giving the tenant any new right. Let it not be supposed for a moment that the Solicitor-General is going one inch to meet the point raised by the hon. Member for Kidderminster, because that is not so. They still make the Commissioners the authority to decide first the tie and then the amount of the tie. What the hon. Member for Kidderminster wants to do is not so easy as he seems to think. He wants the tied tenant to be able to say, "I am a. tied tenant," and, asserting that, he wishes him to be able to deduct the amount from his rent. I think in that the hon. Member for Kidderminster is going a little too far. You must give the man against whom a claim is made the protection of a law court or an arbitration. What it really means is to allow a person who thinks he is aggrieved to say, "As I am a tied tenant I deduct from the amount my rent and let the landlord 1367 sue. "I do not think the Government are well advised in accepting that view, and you must allow the landlord some legal protection in this matter. I think this Amendment would go too far in saying the tenant should have this right of deduction. There will be disputes, and I think the Government are wise in proceeding cautiously in so nice and delicate a method. Let there be a decision by a tribunal, whether it be the Commissioners or a court of law. The hon. Member uses the word "rent." I would go further than that. I intend to argue later on that in the case of the tenant who is pinned to a lease and is bound to maintain it, it is unjust to require him to keep the licence up under more onerous conditions than when the lease was made. The Government are not acting unfairly in refusing to accept this Amendment in its present form.
§ Mr. F. E. SMITHIt has been assumed once or twice on these benches that, in drafting this Clause, the Government contemplated that at some stage or other in the proceedings it should be possible to obtain the view of the High Court, and I want to know whether my hon. and learned Friend (Mr. Clavell Salter) is right in the view he has put before the Committee that the means by which the view of the High Court will be ascertained will be by an action brought from the judgment of the Commissioners to recover the amount. So far as one can judge, that will be a little one-sided. The action, presumably, would only be brought in the ordinary course by the tenant against the brewer where the brewer had secured the award of the Commissioners. I imagine, unless an action was brought upon that award, there would be no appeal.
§ Sir SAMUEL EVANSI think the hon. and learned Member for Basingstoke (Mr. Clavell Salter) is entitled to an answer. I say "Yes" to everything he said. I think he put it perfectly clearly. I agree with every word the hon. Member for Louth said—
§ Mr. T. M. HEALYThe proudest moment of my life.
§ Sir SAMUEL EVANSAnd one of the happiest moments of my life. I agreed with every word the hon. Member for Louth said until he foreshadowed the speech he is going to make on a subsequent Amendment.
§ Mr. AUSTEN CHAMBERLAINI want the Committee for a moment to consider a point which I think arises on what the hon. and learned Member for Liverpool (Mr. F. E. Smith) said. At first sight I took exactly the same view as the Solicitor-General and the hon. and learned Member for Louth, that this was not a very important matter, but that it did make some concession to the tenant which it was perhaps worth his while to have, and was very reasonable. It was that he should be allowed to make this deduction from his payments instead of having to make his payments in full, and then recover the amount afterwards. What is going to happen, and how are you affecting the right of appeal of the two parties by that action? In the former case, the money was due to be paid to the landlord if the Commissioners found in his favour. It was, therefore, passable at any moment for the tenant, under those circumstances, to get a decision of a court of law on a decision of the Commissioners which was unfavourable to him. He had simply to refuse to make the payment the Commissioners had ordered him to make, and the landlord could not get payment except by going to a court of law. The tenant, therefore, could get a decision of a court of law on any finding of the Commissioners which was adverse to him. You now reverse the position. It is the landlord who will be able to get the decision of a court of law on any finding of the Commissioners adverse to him, and the tenant will have no opportunity of getting his case in the court if the finding is against him. If the finding is that there is no right to deduct, the tenant cannot get a decision of the court. I am not quite certain this is the change which is to the advantage of the tenant.
§ Mr. S. ROBERTSI think if this Amendment were accepted' the tenant would lose his right to go to the court. The words "recover as a debt due from" are to be omitted.
§ Mr. HERBERT SAMUELThe hon. Member is mistaken. As the Amendment is proposed to be moved by the Government, those wards remain. If he has the right, as the Clause stands, he will, therefore, still have the right.
§ Mr. S. ROBERTSIf that is so, my observation falls to the ground. I understand, in addition to that, he will have-the right to retain any amount he has in. his bands for rent.
§ Mr. CAVEThe Bill says the tenant may recover this money as a debt due. If he may recover it, he may deduct it from any money due to him. That being so, the Bill, as it stood, covered the point also covered by the proposed Amendment. We are only adding words and giving nothing whatever to the tenant, but, as it seems to make the tenant happier, the hon. Member for Kidderminster (Mr. Barnard) happier, and the hon. and learned Member for Loath (Mr. T. M. Healy) happier, I think we should not further contest these perfectly harmless words.
§ Mr. BARNARDI accept the Government Amendment, and beg to ask leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Sir SAMUEL EVANSmoved, after the word "from" ["as a debt due from"], to insert the words "or deduct from any sum due for rent, interest upon mortgage, goods supplied, or other sum due to."
§ Mr. CAVEDo you want all these words? Would it not be enough to say," deduct from any sum due to "? What is the use of specifying certain particular kinds of sums?
§ Sir SAMUEL EVANSI am content to put it in that simple form.
Question, "That the words 'or deduct from any sum due to' be there inserted," put, and agreed to.
An Amendment stood upon the Order Paper, in the name of Sir Maurice Levy, to insert after the word "person" ["recover as a debt due from any such person"] the following words, "the amount paid by the licence holder as Licence Duty in excess of the amount paid by him as Licence Duty prior to the passing of this Act, such person to whom the licence holder is bound shall not be entitled to recover from the licence holder directly or indirectly by increased rent, or price of articles supplied, or reduced discount, the amount of such extra Licence Duty paid by him in consequence of this Act."
§ Sir MAURICE LEVYI expect the latter part of my Amendment is out of order, but can I not move the first part?
The CHAIRMANThere is another Amendment to that effect. The Government have promised to meet the point on line 20
§ Sir MAURICE LEVYI want to raise the point of putting the whole onus on to the brewer.
The CHAIRMANIt does not raise anything more than the Government Amendment. I think the Government Amendment comes next.
§ Sir SAMUEL EVANSmoved to leave out the words "sum paid by him in respect of the duty on," and to insert instead thereof the words "increase of duty payable in respect of," and after the word "licence" ["his licence as may be agreed upon"] to insert the words "occasioned by this Act." I move this Amendment in pursuance of my promise to the hon. Member for Ayr Burghs (Mr. G. Younger).
§ Mr. T. M. HEALYI appeal to the Government not to make this Clause worse than it is. I cannot allow this Amendment to be accepted without a protest. The Clause has some value, but its value will be enormously cut down by this Amendment. It is now four months since the Bill was introduced. It has been read by the proprietor of every tied house in England. Is it likely they have not taken steps accordingly in order to put the whole of the prospective Licence Duty upon the existing tenant? I do not propose to argue it further, but I make my protest. I deplore the action of the Government, and my opinion is that when this Clause becomes law in another couple of months there will be practically nothing for it to operate upon.
§ Mr. F. E. SMITHI confess I do not assent to the view stated by the Chancellor of the Duchy that in the Clause as originally drafted the reference was only to the new Licence Duty introduced by this Act. I think, in construing this Finance Act according to the ordinary canons of legal construction, and taking it with earlier statutes dealing with similar subject matter, I should feel inclined to say the Licence Duty spoken of could not in any sense be limited to the duty of the present year. I am certainly encouraged in that view by the fact that the Government thought it worth their while to accept the Amendment moved by my hon. Friend, or, at least, to substitute for it an Amendment of their own. That is a legal point, but what matters a great deal is whether this is a wise limitation or not. I have a large number of tied tenants, and also a large number of brewers in my Constituency, and probably the communications I have received resemble those 1371 received by other hon. Gentlemen. One gets letters constantly from tied tenants and from the Licensed Victuallers' Association, laying stress on the importance of having some protection such as that contemplated by this Clause. The aid given them in this Clause is largely illusory, but, if you are going to whittle it down and say it only applies to the new duty, it has no value at all. I do not state at this moment whether the aid given to the tied tenant is well conceived or not, but, if it is well conceived, I cannot think of any reason in common-sense why it should be limited to the new Licence Duty and should not be extended to the old.
§ Mr. HERBERT SAMUELThe hon. Member has just delivered a speech in the interests of his constituents which is of a most remarkable character. We have heard all through these discussions that this increase of the Licence Duties was so oppressive that the whole liquor trade was going to be ruined, and now we have been told practically that that increase is hardly worth going into. I should like to ask whether the hon. Member really agrees with the proposal that the Government should transfer from the tenant to the brewer the duties that are now being paid?
§ Mr. F. E. SMITHThere is no question of transfer. We say that the provisions under this Clause for regulating and adjusting these duties between these parties ought to be applied. I do not say it is right or wrong. What I do say is, that if it is right to do it in relation to the new Licence Duty, it must be right to do it in relation to the old ones.
§ Mr. HERBERT SAMUELThat is a remarkable doctrine. This Act proposes to impose upon licensed victuallers certain new taxes which it is alleged will constitute a heavy burden, and the Commissioners are asked to transfer so much of the burden as they think just to the brewer. But the hon. and learned Member says, "If you do that you must logically go back to the duties imposed in the year 1880 and paid ever since by the tenant." You are to go back on these bargains in the past and say that, in the future, the Commissioners are to have power to say that the whole Licence Duty whether increased or not is to be paid by the owners of tied houses. That is a most extraordinary doctrine.
§ Mr. T. M. HEALYI think the right hon. Gentleman is a little unreasonable. We ask him only to deal with agreements which had been made since the Budget was introduced. That covers the scope of my observation. We want to narrow it down to the case of agreements entered into since the Budget was introduced. I quite agree that the tenant sitting as a tenant under the Act of 1880 cannot escape his obligations. We say it is unjust that the Commissioners should be prevented considering any matter except that which arises as soon as the Budget becomes law. That point has not been answered at all by the right hon. Gentleman. It is a solid and a good point, and that has been admitted practically by the treatment of the remarks we have made. They have been met by silence, or by suggestions as to our motives. All I ask is that we should have the right to ransack transactions after the Budget was introduced. I think it is unjust, when we only make our protest for the purpose of showing the absurdities of the Bill as now drawn, that the argument used by us should be received either with silence or derision.
§ Sir SAMUEL EVANSI do not want to make any comment on the statement of my hon. and learned Friend, but I think he is under a little misapprehension as to the operation of this Clause. This particular Licence Duty is a duty which has not yet become payable.
§ Mr. T. M. HEALYWe are under no misapprehension whatever. We say that the brewer has taken time by the forelock. He has estimated what the amount is which he can fairly put on to his tenants' rent. If a quarterly tenancy is in existence it has been determined, and a new tenancy has been created under more onerous conditions. Why should not the Commissioners take that into account? This grievance has been pointed out, and we say that in the case of agreements made in the present year the Clause should be applicable, but the Government have absolutely ignored that point.
§ Mr. HERBERT SAMUELThe point is not whether the agreement was made since the Act came into operation; it is a question of the Licence Duties imposed by the Bill.
§ Mr. YOUNGERThat is one of the points the Commissioners will have to deal with. I think the hon. and learned Member for Louth is altogether wasting his energy on this occasion.
§ Mr. MARKHAMIt is rather dangerous for a layman to enter into a discussion where learned lawyers disagree, but, assuming that the tenant under this Bill, after its passing, is under an agreement, and if the duty is recoverable against him, as it will be under the Act, will he, if he is turned out by his landlord at the present time, be able to claim that the Commissioners, under their powers after the passing of the Act, shall take cognisance of the fact that the new agreement has been made? I think the argument of the hon. Member for Louth is quite unanswerable. If these agreements are terminated now by the Bill, and many of them are held under 21 hours' notice, are the Commissioners bound to take cognisance of that fact or are they not? Will the brewers be able to shift the whole burden of these new taxes on to the tenant, or can the tenants claim, by virtue of this agreement, to be relieved because the agreement was made after the introduction of the Budget? This is a very complicated matter, but I think the hon. Member for Louth has put it quite clearly.
§ Question, "That the word 'sum' ['any sum paid by him in respect of the duty '] be omitted," put, and agreed to.
§ Question, after the word "licence" ["his licence as may be agreed upon"], to insert the words "occasioned by this Act," put, and agreed to.
§ Viscount CASTLEREAGHI handed in my Amendment at the Table, and the object is to insert after the word "Commissioners" the words "subject to regulations made by the Treasury."
I move this Amendment for the purpose of obtaining some information from the Government in regard to the character of the Commission. At the present moment we are being governed more and more by Commission. I desire to gain a little information with regard to the powers and duties of these Commissioners from the Chancellor of the Duchy of Lancaster. At the present moment the Commissioners have an entirely free hand under this Clause. They are not governed by anything at all. They are not guided in any way, and there is no appeal whatsoever from their decision. The Clauses in this Finance Bill alter from hour to hour. I venture to ask whether it is the intention of the Government to add to this Clause the power of appeal, as they have done in regard to other clauses? I should like 1374 to say a few words with regard to my own idea why these words should be inserted in the Clause. At the present moment there is no guide for the action of the Commissioners. I have no doubt the right hon. Gentleman will say that these powers cover such a wide field that it would be impossible to lay down regulations; but, after all, Treasury Regulations are laid down for the purposes of procedure, and I think it is all-important that these Commissioners should be guided in matters of procedure with regard to this Clause. First of all, as I understand it, where there is an absolutely private agreement between the owner of the house and the tenant, the Commissioners are to be called upon to decide points connected with their agreement. But there is no provision for the expenses thereby entailed. I should like to know how these expenses are to be met. I think the Committee will agree with me when I say that this is an entirely new departure from the duties with which the Commissioners have already been entrusted. They are to be asked to interfere with the private transactions and agreements between two individuals — if there is a difference of opinion between those two individuals on any of the matters arising —if there is a difference of opinion between the brewer and his tenant. At present these difficulties are decided in the county court if the amount does not exceed £100, and if it exceeds £100 it must be decided in the High Court. But, under this Bill, the Commissioners are to be called in to decide these matters, but they are guided by nothing whatsoever. They are to be asked to give their own opinion. I think we are entitled to have some information from the Government as regards the methods of procedure, and I therefore beg to move my Amendment.
§ Mr. AUSTEN CHAMBERLAINOn a point of Order, Sir. Before you put that Amendment of my Noble Friend, I have an Amendment for the introduction after the word "Commissioners" of the words "of Inland Revenue." I should like to move those words, but I understand that my Noble Friend's Amendment would shut me out unless I moved it at once.
The CHAIRMANThe right hon. Gentleman is entitled to move his Amendment if, and only if, the Noble Lord gives way. I understand the Noble Lord gives way.
§ Mr. AUSTEN CHAMBERLAINmoved, in Sub-section (1), after the word "Com- 1375 missioners" ["or in default of agreement determined by the Commissioners"], to insert the words, "of Inland Revenue."
I think this must be practically an oversight on the part of the Government. The Commissioners, where not otherwise named, are the Commissioners of Customs and Excise, and therefore, if this work is to be done by the Commissioners of Inland Revenue, it would be necessary to show it in this place. In Sub-section (2), Clause 30, we have both the Commissioners named, and we asked why bring in two sets of Commissioners when one would do? And it was explained that the Commissioners of Customs and Excise were the people who did the machinery of collecting this duty, and the Commissioners of Inland Revenue were the people who, under the Licensing Act, had habitually to deal with these problems, which were dealt with in that Clause, that is, all the problems of value of licences. Here you have got exactly a cognate problem arising. Having arrived at the value of your licence, which is done by the Commissioners of Inland Revenue, having assessed the amount of the tax, and that being again done by the Commissioners of Inland Revenue, you now have to apportion the tax between the various interests concerned, and does the Government mean to say that the Commissioners of Customs and Excise, who have been merely collectors of information throughout the country for the purpose of providing it to the Commissioners of Inland Revenue, in order that they may assess the compensation, now for the first time the Commissioners of Customs and Excise come in as the judicial authority to apportion the tax? I can hardly believe that that is the intention, and I think that having allotted to the Inland Revenue the duty of both determining the value and assessing the tax it must be right to leave to the Inland Revenue also the duty of apportioning the tax among the various interests affected.
§ Mr. HERBERT SAMUELThe right lion. Gentleman has correctly interpreted what is the purpose of the Clause, and the Commissioners of Customs and Excise might be considered to be the natural parties to deal with these questions relating to the liquor trade, because they are in daily touch with that trade, and have their officers throughout the country, who are accustomed to deal with these matters under the Act of 1904. One special function—a very special function—that of 1376 assessing the amount of compensation due to parties under Clause 2 of that Act, was entrusted to the Commissioners of Inland Revenue and in the previous Clause, while we leave to the Customs and Excise the collection of the information for making up the register, we do not think it necessary or desirable to take away from them a duty which was identical with that that they were compelled to perform under the Act of 1904. In this case there is no reason to depart from what would be the normal circumstances, namely, to leave the Commissioners of Customs and Excise, so to speak, as guardians of the liquor traffic. It might be argued, and argued with force, that the exceptional provision under the previous Clause giving powers to the Commissioners of Inland Revenue ought not to be maintained.
§ Mr. AUSTEN CHAMBERLAINMay I interrupt the right hon. Gentleman? Under the Compensation Act it is the Commissioners of Inland Revenue who do everything, and amongst their duties is the apportioning of compensation. This is exactly an analogous case as that of determining the apportionment of compensation. I think I am right in saying it goes to quarter sessions in the first instance.
§ The PRIME MINISTERThe Commissioners of Inland Revenue are also Commissioners of Excise, and the functions of the Department have been transferred.
§ Mr. AUSTEN CHAMBERLAINI do not say that you should think it necessary to amend the Compensation Act—the Act of 1904 and transfer the whole of the duties from the one Board to the other. That might be a very arguable thing. It is a big question, and I do not want to argue it. I want to confine myself to the much narrower point, that at the present time these duties are imposed upon the Inland Revenue, and I only want to put the specific point that ultimately the Commissioners of Inland Revenue should apportion the compensation as well as determine it. They determine the compensation under that Act, and might they not have the authority of this Bill to determine the value, and be the authority to apportion the tax, just as they are in the other Bill the authority to apportion the compensation?
§ Mr. HERBERT SAMUELThe function of the Commissioners of Inland Revenue, in respect of the Compensation Act of 1377 1904, is really a survival of the duties that they performed when they were also Commissioners of Excise. Otherwise they would not have been chosen—the Customs and Excise in regard to one branch, and the Inland Revenue in regard to another. The promoters of the Act of 1904 allocated the duties of that Act to the Commissioners, and, as there were Commissioners of Inland Revenue, the functions were given to that Department. When the duties of the Department were reallocated it was found impracticable to transfer to the new Commissioners of Customs and Excise the duties previously performed under the Act of 1904 by the Commissioners of Inland Revenue, and, because we did not wish to divide the compensation levy work, we left the position as it was. But it is undoubtedly an anomaly that the Commissioners of Inland Revenue should have to deal with these matters at all. The natural order would be that they should go to the Customs and Excise, and, when you are imposing a fresh duty on a Government Department, the natural course is to hand it to the Customs, because the Inland Revenue are only indirectly concerned in the liquor traffic at all. The matter, of course, is really one of administrative organisation, and does not raise any question of large public policy. It is not a question of the relation between the taxpayers and the Government; it is merely a question whether the taxpayers shall have relations with this branch of the Government Department or that branch. If, however, the right hon. Member attaches importance to the matter, and considers that the Commissioners of Inland Revenue are the parties who, on a general review of the case, ought to have been chosen for these functions, under this Clause, we will consider the matter again on Report.
§ Mr. YOUNGERI really think that in this case the Government are right. The new Department of Customs and Excise have now all the facilities to do the work, and they will make the inquiries necessary. Everybody who knows anything about them has perfect confidence in their integrity and fairness, and I think the right hon. Gentleman below me had forgotten the effect of the reorganisation and the new duties apportioned to them. So far as the trade is concerned, I think, they would have more confidence in dealing with the particular body mentioned in the Bill than they would have in the old Commissioners of Inland Revenue.
§ Amendment, by leave, withdrawn.
§ Viscount CASTLEREAGHI beg leave to withdraw the Amendment.
§ Mr. CAVEmoved, to leave out, at the end of Sub-section (1), the words, "to be just under the circumstances," and to insert, instead thereof, the words, "proportionate to the benefit obtained by such person from the licence."
§ Sir SAMUEL EVANSI accepted the Amendment of my hon. and learned Friend earlier in the day. I think the words of the hon. and learned Member are better, inasmuch as they are clearer and more definite. They will be better in the interests of the public, and I think also they will give information to the Commissioners.
§ Mr. T. M. HEALYThis would be putting the Commissioners in the position of a judge. What, however, I want to know from the Government is this. Supposing the Commissioners should find that £20 is to be the amount properly deducted, is that final, or can the tenant go to a court of law? Would it not be fairer, in the cases of small sums under £30, to say that the decision is final, except in very important cases?
§ Sir SAMUEL EVANSThe amount would always be final unless they went entirely outside of their jurisdiction.
§ Amendment agreed to.
§ Mr. GIBBSmoved, at the end of Subsection (1), to add the words, "but in any action for the recovery of such part of any sum paid as Licence Duty it may be pleaded that the amount claimed is not proportionate to the benefit obtained by the defendant from the licence, and the court shall give judgment for such sum only as shall appear to the court to be proportionate to the benefit obtained by the defendant from the licence."
I wish to move this Amendment because I think there is such a case where a brewer or wholesale dealer will be dissatisfied with the decision of the Commissioners. The effect of my Amendment will be to give an appeal to the court from the decision of the Commissioners. I will not say a word against the Commissioners, who, no doubt, at all times would do their very best, bat, with the best intentions in 1379 the world, they might make mistakes and cause dissatisfaction.
8.0 P.M.
I think this is a case where there should; most certainly be an appeal. I believe the Commissioners themselves would wish there should be an appeal, and I feel certain the brewers and the licence holders also wish there should be some court to which they could appeal. If the brewer considers himself very badly treated by the Commissioners there will always be a grievance and bad blood, whereas if there was a court to which the brewer could appeal, both sides would be more satisfied.
§ Sir SAMUEL EVANSThe Government cannot accept the Amendment, The position has been very clearly stated by the hon. Member (Mr. Clavell Salter) and it was assented to fully by me, as also, I think, every legal Member of the House. It cannot be right and proper that a court should decide on the amounts which are to be ascertained by the Commissioners. If they go outside their province—that is to say, if they decide there is a tie when there is no tie—that is a different matter, but we intend that their decision in a case which is properly within this Section shall be final, and not subject to any appeal.
§ Mr. F. E. SMITHWhat the hon. Member (Mr. Clavell Salter) did was not to prejudge in any way the merits of this Amendment, but really to express his opinion as to the effect of the Bill as at present drafted, and to that, as the Solicitor-General says, every legal Member agrees. But the point raised now is quite a different one. When you are dealing merely with the amount, ought there not to be an appeal on fact? We all agree that the appeal is safeguarded on points of law. It is not desirable in every small dispute which may arise that there should be an appeal from the Commissioners to the court, but there are many cases in which the amounts involved are very considerable, and I cannot for the life of me see, if it is right that you should be able to appeal on a pure point of law from a county court to a divisional court, very often on mere questions of amount, where no legal principle is involved, why, in an extreme case, which might go into four figures the Government should say, merely because it is a matter of amount, they will not give an appeal. Surely the whole question should be: Is the determination whether or not the payment is 1380 proportionate to the benefit obtained from the licence, an inquiry of such complexity as to be fairly comparable to other inquiries of fact on which it has been our common practice to give an appeal? I should have thought the simple method of dealing with it, which would prevent dissatisfaction, would be for the Government to adopt the course of fixing a limit, and saying that where the amount is small there is to be no appeal, but that above a certain amount there should be an appeal from the Commissioners to the court. If there were such a limit it might reasonably be put at a considerable figure. It would be considered a great hardship where the Commissioners were construing, as they are under this Clause, a quite new expression if, without any appeal at all, their decision was to be treated as final.
§ Mr. T. M. HEALYI hope the Government will adhere to their position. The Solicitor-General has shown that he was impressed by the argument, and has made a most valuable and useful statement. As I understand now, he says the decision of the Commissioners that there is a tie will be a final decision.
§ Sir SAMUEL EVANSI said in a case properly coming within the operation of this Clause the decision of the Commissioners as to any question of amount is final, but if they purport to deal with a case saying there is a tie when there is in fact no tie, that is a matter in which they will be going outside their jurisdiction.
§ Mr. GRETTONI think this appeal which we are urging upon the Government is valuable not only in cases of large amounts, but also in cases of small amounts. The small amounts are quite as important to small men as the large amounts are to men in a larger way of business, and there is no doubt this appeal is of great value, and not only in the cases where it is absolutely exercised, because there is about these decisions the possibility that they may be disputed and appealed against, and therefore they will be made with great care and consideration.
§ Mr. CAVEMy objection to the Amendment is this, that if it is passed the appeal will be given to one side only. It is only the landlord or the brewer who can plead that the sum is not proportionate to the benefit under the licence, and by some over-sight, no doubt, a similar right of appeal is not given to the tenant. I suggest that the Amendment need not be pressed, but it might be considered whether there 1381 should be given to the other side, in cases where the amount is really considerable, say something like £250, a direct right of appeal against an award.
§ Viscount CASTLEREAGHPerhaps on consideration the Government will allow an appeal in this case. If an appeal is justifiable in any part of the Bill it is justifiable on the lines which the hon. and learned Gentleman has put forward, and I hope my hon. Friend will go to a Division.
§ Question, "That those words be there added," put, and negatived.
§ Question proposed, "That the Clause stand part of the Bill."
§ Viscount HELMSLEYThe Clause seems to me to involve a very important principle of legislation. I do not for a moment wish it to be supposed that I want to prevent the object of the Clause as such, namely, that the Licence Duties should be apportioned between the brewer and the publican. If you put this duty upon the licence, it is quite clear that it should be apportioned between the different people who benefit. The Clause attempts to regulate by statute the effect of any given tax, and I think it will be shown that all such attempts are absolutely futile, and, therefore, that is an argument that the tax itself is a bad one. It has been shown very clearly by the hon. Member (Mr. T. M. Healy) that as a matter of fact this Clause can have very little effect, and that it is perfectly easy for anyone who wishes to get round it. They have the alternative either of putting up the price of the drink supplied to the tenant, or of raising his rent, and increasing the interest under any of the conditions in which he might be bound, by express covenant or otherwise, to the landlord. It is so easy got round that, as a matter of fact, it amounts to nothing. The hon. Member for Louth (Mr. T. M. Healy) indeed, in addresing various arguments to the House on this question, seemed, to me to have at the back of his mind the whole time the question of Irish land, where it was found that any arrangement between landlord and tenant could be defeated until you gave the tenant absolute security of tenure and fixed his rent. These two things in this case are absent, and therefore, of course, any brewer who wishes to drive a coach and four through the Clause will be able to do so. What does it lead to? It does not lead to the conclusion that 1382 you ought to give the tenant in this case fixity of tenure, or that you should fix his rent by a court. Such a proposal is ridiculous. It only shows that with a high Licence Duty it is absurd to suppose that, because it does not fall on the person on whom you wish it to fall, in imposing the duty it is the wish of the Government, in the case of tied houses at all events, that it should fall on the brewer. They cannot guarantee that by this Clause it will fall on the brewer. In a great many cases it will fall on the publican, and in a few cases it will fall on the public. Therefore it is grossly absurd to first of all put a high Licence Duty of this kind, and then try to regulate by statute on whom it is to fall. It surely must be almost an axiom of taxation that taxes are distributed, no matter where first imposed, according to economic laws. It does not matter what the Clause does, the economic laws which govern the actual, as distinct from the nominal, payment of the tax will hold good. It seems that it would have been far better, instead of having this proposal of a high Licence Duty, that you should have put the tax— if you are going to put it on the already heavily taxed licensed trade at all—on the article of consumption itself, when the probability is that the filtration of the tax through the various strata to the community will be fairer than if you put it on the publican in the first instance, as you are doing by this proposal.
There is another, to my mind, very grave disadvantage of this tax, and that is the effect it will have as between the tied house and the free house. It is perfectly obvious by this Clause that you are giving a great advantage to the tenant of the tied house, and it is equally obvious that the licensee of the free house will be in a very bad position as compared with his tied-house brother. I was under the impression that all temperance reformers were in favour of the free house as opposed to the tied house, and certainly it is my experience that so far as good conditions are concerned they are more likely to be found in the free house than in the tied house. Therefore, it is a great pity that by imposing such taxation as this in the first instance on the publican you should so encourage the tied house at the expense of the free house. It seems to me that it does not much matter whether this Clause is passed or not. I regard it as an absolutely useless, and indeed a. very foolish, endeavour to try by legislation to alter the effect of your taxes. I 1383 think if you want taxes to be other than they appear to be nominally, it is better to alter the tax than to try by legislation to alter their distribution.
§ Mr. ROWLAND HUNTI understand that under this Clause free houses are going to be made to pay, while the people in the tied houses are going to be let off. I was under the impression that the Government had always patted the holders of the free-house licences on the back, and said they were the people they wanted to encourage. As I understand the Clause the tied-house man will be let off from the tax, and in many cases the free-house man will be practically ruined if the Clause is carried. It certainly seems an extraordinary thing, after all the Government has said against the tied house and in favour of the free house, that they are now going to penalise the free-house people and let the tied-house people off altogether. They are going to drive the free houses into the hands of the brewers, because they will not be able to carry on as free houses. I hope the Solicitor-General will explain why the Government make this proposal. It appears to me also that this Clause will be very unfair to the brewer. According to the Government's own account they are going to make the brewer pay all this extra taxation on the tied houses. Therefore you are going to super-tax the brewer in this case very heavily, and you are going to let, the this Clause considerably. Surely, accord-you are going to be fair, and if the taxation is to be equal, you should put something, at all events, on foreign beer coming into the country. By compelling the brewer to pay instead of the publican you are super-taxiing the British brewer under this Clause considerably. Surely, according to your own Free Trade principles, if you super-tax the British brewer, you ought to put a countervailing Customs Duty on beer that comes from abroad. I think this is a Clause which the Government might very well leave out. If this Clause passes you are going to rub out the free houses. I know cases already where free houses have applied to be tied to breweries, because they say they cannot go on as free houses. I hope we shall hear something from the Solicitor-General on these two definite points.
§ Mr. BALFOURI do not think my hon. Friend (Mr. Hunt) will hear anything from 1384 the Solicitor-General on either of these two points. He has touched upon a branch of this question to which there is absolutely no possibility of reply on the part of the Government in their present admitted state of ignorance as to the question on whom this tax is going to fall. The whole of the Clause goes on the theory that the tax will fall upon the licence holder in the first instance, and that some others, notably the brewer, ought to bear half the charge, inasumch as he benefits from the monopoly, which is the ground on which the whole taxation is based. This Clause, as we all know, is an attempt — I think not a very unsuccessful attempt — to provide machinery for that allocation. But the Government have to explain to us two things. The first is whether they contemplate that the ordinary trading relations of debtor and creditor between the wholesale manufacturer and the free house are going to constitute a tie within the meaning of this Act. We had a discussion on that, and I did not gather from the Solicitor-General any clear statement on this point. Take the case of a brewer who treated a free public-house in the same manner as a wholesale merchant, let us say, treats a draper's establishment in a country town in which credit is given,, and it is understood, tactily or otherwise, that in consequence of the credit being given the wholesale trade is to go to that particular firm. I did not gather from the learned Solicitor-General whether such a case was included in or excluded from the operation of this Clause. We are all agreed, if the result of the tie is that the wholesale article is sold at a higher price than the ordinary price, that that constitutes a tie. I do not understand from the learned Solicitor-General that the other tie, which is just as powerful but which did not issue in any rise of price, but only in the perpetuation of custom,, was in the view of the Government included in or excluded from the operation of the Clause. It may have been my fault. The Government may have made themselves perfectly clear to the House on that point, but I do not think that those clear ideas are embodied in the language of the Bill. Take the case of a free house in debt to a brewer. The brewer only charges that free house the market price of the beer. Nevertheless, the debt runs on, as very often is the case, month after month, and perhaps year after year, and the owner of that free house would never think of compelling the brewer to call up the debt by going to some other house; 1385 but there is no rise in the price of beer. If the question was put to an impartial person, "Is that a tied relation contemplated by this Clause or not?" he could not answer it.
§ Sir SAMUEL EVANSI said clearly that such a case is not contemplated. In such a case the Commissioners would not put any of the additional duty upon the brewer.
§ Mr. BALFOURI wonder whether that is right either in law or in equity. The owner of the free house has what you call the advantage of monopoly value. This monopoly value enables him to sell without competitors a particular commodity. People who benefit from that monopoly value are not merely the persons who sell, but the persons who buy the thing that is sold. In other words, the people who benefit from that monopoly are not merely in this case the free house, but the brewer who makes the wholesale article that is sold to the free house. Even though it may be sold at the market price, it is a great advantage to have the profits. Trade profits are not made out of values artificially raised. They are made out of natural values. It seems to me, if there is any truth in the doctrine of the Government, that there are two parties who benefit by the monopoly in so far as anybody benefits, namely, the owner of the free house, and the owner of the brewery, who, practically, has got the custom of that free house owing to this particular trade relation with him. Therefore, though I understand the policy of the Government would be distinctly to exclude that case, I frankly say that, as I read the Clause, I am not at all sure that a court of law would take the view of the Solicitor-General. At all events, he absolutely declined to put in any qualifying word to make clear that the avowed policy of the Government is to be embodied in the Bill. There is one other point to which I must call the attention of the learned Solicitor-General: This tax is imposed upon the licence holder, and the licence holder in certain cases has a remedy against the brewer, and, therefore, the first result of the tax would be that the licence holder pays, and after possibly some controversy, he forces the brewer—and, I think, perfectly rightly —so far, to share the burden. Suppose, then, the tax being now a tax on trade production issues in a rise in the price of beer. The result of a rise in the price of beer is that the public pays this tax and not either the licence holder or the 1386 brewer. What becomes, then, of all your partition between the two, if that result happens immediately, and I think the Prime Minister anticipates it will?
§ The PRIME MINISTERNo.
§ Mr. BALFOURSome of the speeches of the Prime Minister rather indicated that the price of beer would be raised.
§ The PRIME MINISTERI was speaking of the brewer.
§ Mr. BALFOURIt makes no difference to my argument. The point is: If this is a tax upon the trade, as it well may be— nobody can tell; the Government cannot tell; I do not pretend to have an opinion, upon it;—but if it be a tax on the trade, and that tax on the trade issues in an immediate rise in the price of beer, then there is nothing to be partitioned. There ought to be no appeal then from the licence holder against the brewer, because neither the licence holder nor the brewer really pay anything—it is the public who pay the whole tax. Therefore, it seems to me that the whole of this Clause —if I am right and if the tax is put upon the public—produces nothing but injustice, because it will give the licence holder an opportunity of appealing against a burden which does not fall on him. There is one other consequence of that which is referred to by my hon. Friend who has just sat down, on which I will not dwell, as I think it more or less outside the scope of the Clause; but, if it be true that the incidence of this tax is so uncertain that we do not know whether it is going to fall on the licence holder in the first place and on the brewer in the second place, or, on the other hand, on the public, then I think that the Government ought to take precautions in the former event to see that the foreign importer of beer does not gain anything from which his British brother is excluded. I think that the Government are good enough to make a concession on that point in consequence of some observations I made at a very early stage of the Bill. I do not propose to press this matter further now— I doubt whether it would be strictly in order; but, as my hon. Friend behind me has referred to it, I hope that the Government will be careful that they do take power in their Bill if they find that the tax wholly falls on the trade and not on the public, to have some machinery by which the foreign competitor of the brewer is going to be met by a duty which will prevent him having an unfair advantage over the home producer.
§ Mr. HERBERT SAMUELThis Clause of the Bill seems to be in the exceptional and very fortunate position of having, for its main purpose, the approval of the right hon. Gentleman the Leader of the Opposition. The main purpose is that the Licence Duty imposed upon tied tenants should be in part borne by those who gain a benefit from the tie. The right hon. Gentleman stated two or three different grounds. In the first place, he said, "If you are making this arrangement with respect to the brewer who has an interest in the sales of a tied house, similarly you ought to make identical arrangements in the case of a brewer who makes a profit on the sales in a free house."
§ Mr. BALFOURIn certain circumstances.
§ Mr. HERBERT SAMUELHe has the same benefit from the monopoly value attaching to that public-house. It is an outlet to his trade, and, therefore, he ought to be called upon to pay a portion of the Licence Duty imposed upon that free house.
§ Mr. BALFOURAllow me to explain. It is the interests which he has secured by giving credit to that particular house.
§ Mr. HERBERT SAMUELIt is the special case of a publican who is under on obligation to the brewer. Although he himself has a free house, and the brewer is not the owner of the house, yet he is under an obligation, because the brewer has given him goods on credit, or has lent him money. If the brewer, as a matter of fact, is able to get higher prices from the tenant than he would obtain in the open market, that of course is an advantage, in respect of which the Commissioners would allocate some proportionate amount to him of the Licence Duty, and consequently that case is met. If he does not sell his goods at a higher price, or to no greater advantage in that house than in any other house, then I cannot see that he gains, or that he is owner of any portion of the monopoly value of that house, any more than a boot manufacturer may be considered to participate in the profits that are gained from a boot shop which is a place of sale. The retail profits belong to the retailer who occupies the shop, and the wholesale profits belong to the manufacturer of the goods who supplies that boot shop; and if you were imposing a Licence Duty on boot shops, and giving 1388 them monopoly value, naturally that Licence Duty would be payable by the retailer. The right hon. Gentleman went on to say—"Does the Government assert that these taxes will not in the long run be borne by the public at large, or will they be borne by the trade? If they are to be borne by the public at large then there is no need of a clause of this character."
As the right hon. Gentleman is very well aware, there is nothing more difficult than to attempt to allocate the incidence of a particular tax to various parts of the community. I should be very rash to lay down any general rule or to say with respect to the whole of this tax or any particular portion of this tax that it would necessarily be borne by this party or by that. But in any case I cannot agree with the right hon. Gentleman that, if the public do pay this tax in the form of higher prices, this Clause is unnecessary. Take it from the point of view of the tied tenant. The hypothesis is that the brewer raises the price of his liquor and that the public pay the tax. Therefore, the right hon. Gentleman says, "This is a public tax, and we need not concern ourselves with the relationship between the tenant and the brewer." The tax-gatherer, however, does not go to members of the public and collect their halfpence as they pay for the liquor over the counter. The public in the long run may indirectly bear the burden, but the person who has to pay in hard cash to the exciseman or to the tax collector who goes to the particular public-house is the publican, and he is the only man. He is the licensee, and it will make all the difference in the world to him whether he is able legally to shift that burden or part of it to the shoulders of the person who is owner of the house or owner of the tie. The right hon. Gentleman's position seems to be this: The brewer charges a higher price to the publican and the publican charges a higher price to the public, but it makes no difference at all whether the publican is charged with the tax or whether the brewer is charged with the tax. I think if the right hon. Gentleman were to discuss the matter with any tied tenant he would very soon find that it makes all the difference in the world to the publican whether the law gives him the power to shift this burden or part of it on to the shoulders of the owner of the tie or whether it is to be borne by himself.
§ Mr. YOUNGERI cannot say that this Clause has been satisfactorily dealt with, and I hope it will be more satisfactorily dealt with when we come to the Report stage. The right hon. Gentleman (Mr. Herbert Samuel) stated perfectly truly that the main purpose of this Clause is generally approved on both sides of the House. With that I quite agree. Of course it would be an absurdity that a tied tenant should have a rebate of Licence Duty against a man who had received nothing but the ordinary wholesale profit on the articles supplied. That, of course, would be quite impossible. In reference to the tax falling upon the public at large, there we at once touch upon one of the most difficult features of this Budget. The Government has all along taken up the position that they must raise this particular revenue out of licences. They have got the fetish that this revenue must be raised out of licences, and that the sum so raised will have a totally different effect from a revenue raised out of the article. That is quite ridiculous. It will have a totally different incidence, I agree, in the first instance. The incidence of the tax will fall on the tied owner, but it will not be very long in that particular position. It will find its level, and in the ordinary way of a tax of that kind it will be paid somehow or other by the consumer. It must in this case be paid by the consumer, because this particular trade is not in a position to bear the tax. It is already taxed to death. Hon. Members opposite have an idea that it is not. They may take it from me that the trade is taxed to death, and the publican is taxed to death. [An HON. MEMBER: "How do they live?"] They are only existing, and their existence will not be particularly luxurious after this tax is imposed. The essential error throughout the whole of these Debates, and the essential error in the position of the Government, is in supposing that if you put the tax on the licence it will be borne by the publican, but that if you put it on the article it will be paid by the public. The position is perfectly ridiculous, and I think it is a very great misfortune to the public. It does not matter to me, for I happen to be largely a free trade brewer, that the Government have committed themselves to that position, and that they have raised their money by taxing the licence and not the article. You have attempted to raise money out of spirits, but you have gone too far, and you have practically ruined a very important and very necessary trade in Scotland. 1390 That is the only advantage they get out of that. They are already a million and a half to the bad, and with a million and a half which the Chancellor of the Exchequer wants there is something like three millions to get out of the next seven months, and I am quite sure they will do nothing of the kind.
The very fact that they have adopted this system has created very great inequalities in the trade itself. I suppose the Government has calculated upon that very fact in the hope that the competition from those who will not have to pay this tax may compel the unfortunate people who have to do so to sell their property. That may be an element in the Government's calculations, but it is rather a wicked one. Perhaps in some districts that result will be effected. I do not think though that it will happen in many cases. I do not think it will happen in the South. It may happen in the North, where the Scotch brewers are in competition with the English brewers, and where, of course, the Licence Duty will not be paid by the Free Trade Scotch brewer. I do not think that this Clause will work satisfactorily as I myself should like to see it work. I think there will be very great difficulties in connection with it. I know that the Royal Commission considered this question, and that the majority were anxious to deal with the difficulties, but they met with difficulties of all sorts, and it ended that the Royal Commission made no recommendation at all. They said that they did not propose to suggest any interference with the system, at least that is my recollection. I know that the difficulties have been found to be very great and almost insuperable, and I think the Clause, well-intentioned as it is, will cause a great deal of difficulty to the Commissioners of Customs and Excise, who will have to make these very intricate calculations which the Solicitor-General, I think, said any ordinary person could make, but which I am told will be a very difficult thing to do. We shall, I suppose, find out some way of doing it when the tax is imposed and the duty has got to be collected. I am sure of this, that while in some cases the results will be quite satisfactory, in others they will lead to litigation and trouble. Personally, I do not propose to provide myself against the taxes, I accept the statement of the position which the right hon. Gentleman the Leader of the Opposition has made, and substantially in agreement with the Clause 1391 I believe as it will be finally amended on Report it will be considerably improved beyond the point which it has reached now.
§ Viscount CASTLEREAGHI do not think we have heard in the speech of the right hon. Gentleman the Chancellor of the Duchy any justification whatsoever for the insertion of this Clause. My belief is that the Clause has been inserted for the purpose of dealing a blow at the brewer. I think it is thinly veiled to injure the brewer, and that suggestion is borne out by the speeches of the colleagues of the right hon. Gentleman, who sit on the Front Bench, in the country. They strive very strenuously in this House to repudiate any suggestion of that kind. I think we are able to detect the sentiments of the Government from its provisions, but I do not think those objects will be carried out, because we know perfectly well, in any dealings between the brewer and the owner of the tied house, that everything is a matter of adjustment, and that the tax is adjusted in the form of higher or lower rent paid, and also in other matters between the brewer and the owner of the tied house. I am perfectly convinced of this, that whatever may happen with regard to the arrangement between the tied house and the brewer, that in the end the person who will pay is the member of the public at large. I think this should be a lesson to the Government, if they did not know it before, that it is impossible for them to lay down the actual individual on whom taxation will fall. The question I should like to ask the Government is this: Why they have decided suddenly to single out tied houses for what is, I believe, meant to be a concession? At one time there was nothing bad enough for tied houses, while the only effect of this legislation will be to make every single house in the country a, tied house. I do not think it can be denied by anyone that legislation of this sort must have the effect of dealing a blow, and a very serious blow at all free houses in the country, and I have every reason to know that in a very short time there will be hardly a free house existing in the whole country. I think the object of the Government could have been far more honestly obtained if they had decided to place a tax on the beer instead of endeavouring in this indirect manner to raise taxation. I do not know if it is proposed to divide against this Clause, and I can only say that I. for my part, should like very much to divide 1392 as a protest against the Government inserting this Clause.
§ Sir E. CARSONI do not intend to take any part in the discussion upon the general bearing of this Clause, but as a lawyer I cannot sit here without entering my protest against an enactment relating to what the draftsman of this Bill, or the Government, or whoever is responsible, calls an "indirect obligation." So far as I know in my 30 years, in which I have had experience of the Bar, such an obligation as that has never been invented by any writers on law, and has certainly never been given effect to in any of the courts in which I have had the honour to practice, whether on the other side of the water or here, and I do not believe that any lawyer could suggest to any court, and this of course will have to be construed by the court, that there does exist such a thing known to the law as an "indirect obligation." The law knows nothing but obligation, and there is no necessity to call it direct or indirect. It is either obligation or it is not. If it is not an obligation the courts will not enforce it, and if it is an obligation it is not made any more so by putting these words, whether direct or indirect. I really think that it is almost a pity at this stage of our jurisprudence, and after the number of years' experience we have of statutes, and of the exposition of statutes in the court, that the Solicitor-General or those with whom he co-operates should have invented this fantastic phrase in our Acts of Parliament, and which he knows as well as I know has no meaning whatsoever. Certainly, so far as I am concerned, I should be very sorry, if I ever had to argue on this Section in a court of justice, if I should not be able to say that so far as I was concerned I had made my protest as a Member of this House of Commons against any such ridiculous phrase being put into an Act of Parliament.
§ Mr. J. F. REMNANTI as a London Member, representing a division in London where a great number of breweries are situated, should like to add my word of protest against this Clause as it is now submitted to the Committee. This is another instance of proceeding to legislate by Budget. The object of this Clause has often been the object of private and ether legislation in this House, legislation which has never got very far in its progress towards becoming the law of the land. This Clause has, beyond doubt, been 1393 framed with the idea of satisfying some of the numerous sections of the Radical party. There seems to be an idea that the brewing trade can stand any amount of taxation that the Government choose to put upon it. The Committee must not forget the enormous and increasing amount of taxation, dating from 1880, which has been piled upon this trade; and an endeavour is now being made to throw upon it further onerous burdens such as it cannot possibly stand. It is all very well to talk about the tie. One would imagine that brewing was the only industry in which a tie is part of the trade itself. The milling trade is notoriously one in which the tie exists; but you do not have hon. and right hon. Gentlemen opposite attempting to throw taxation upon the milling trade. Oh, no: that might, perhaps, make their bread and milk slightly dearer. It is a sight the Solicitor-General would thoroughly enjoy to go into the tea-room between nine and eleven o'clock and see dozens of the party opposite sitting round tables lapping their bread and milk. The hon. Member for the Ayr Burghs (Mr. Younger) has been able to upset the whole of the Clause so far as Scotland is concerned by a concession which, we are told, the Government have made. I have seen very little concession. The whole of the so called concessions are admissions of faulty framing and faulty business methods. The Government have had to admit, in the face of arguments from this side, that their proposals were unworkable, and accordingly they have had to frame them on more businesslike and more workable lines. The indirect obligation to which the right hon. Member below me (Sir E. Carson) referred has not been explained. Possibly the Solicitor-General may remember an incident which occurred before the Royal Commission on Licensing Laws when Lord Peel was discussing this question of indirect obligations. One witness said there was no tie, no obligation at all, but that there was "an honourable understanding" to take the commodity from a particular brewer. Lord Peel asked him, "Supposing, for some reason or another, the man took his commodity for a short time from somebody else, what would that be?" The witness said he imagined that that would be a misunderstanding. That shows the impossibility of trying to legislate on the lines which the Government are following. There are indirect obligations which it is almost impossible to define. You may try to throw the taxation on to the 1394 brewers. Why not do it straight away, and done with it? You are anxious to smash and to rob them. Why not do it by straight means instead of by these crooked methods? The House would then know exactly where it is.
§ Mr. JAMES HOPEFor the first time we have had an admission from the Government which goes somewhat beyond the present Debate. The Government by their speeches and by this Clause admit that under certain circumstances you can put the taxation of a commodity on the producer. We on this side have often argued that that is possible. In this Clause the Government wish to put the taxation for intoxicating liquor on the producer. That is an extremely valuable admission. It is a point we have often contended for. I think we may very well be satisfied to let the Debate rest there. The Government by this Clause have cut the ground from under their own theory of taxation, and we very much welcome the admission they have made.
§ Clause, as amended, agreed to.