Commons Sitting of 14 September 1909

Preamble
The House being met at a Quarter before Three of the clock, the Clerk at the Table (Sir Courtenay Ilbert), informed the House of the unavoidable absence of Mr. SPEAKER from this day's Sitting:—
Whereupon Mr. EMMOTT, the Chairman of Ways and Means, proceeded to the Table, and after Prayers, took the Chair as DEPUTY-SPEAKER, in pursuance of the Standing Order.

EAST INDIA (SUPERSESSION OF OFFICERS).
Address for "Return giving the names of the officers of the cavalry and infantry regiments of the Indian Army who have been superseded by their juniors on the general roll of that Army by reason of the operation of the rule giving permanent Army rank to officers obtaining the post of commandant of their regiment, or by holding certain staff administrative appointments."—[Sir Seymour King.]
ORAL ANSWERS TO QUESTIONS.

  Boycott Movement, Bengal.
  Mr. REESasked whether the European and Anglo-Indian Defence Association had complained to the Bengal Government of the effect of the boycott movement in Bengal; whether many warehouses in Calcutta were crowded with fabrics from England which could not be sold owing to the intimidation practised by the boy-cotters; and whether the Bengal Government was taking any, and, if so, what, action to provide conditions of fair trade for British goods.
  The UNDER-SECRETARY of STATE for INDIA (The Master of Elibank): A letter from the Association to the effect stated appeared in the newspapers last month. The Secretary of State has no official information as to the second part of the question; as regards the third, he has no doubt that the Lieutenant-Governor is alive to the necessity of dealing with any methods of violence and intimidation that this movement may involve.

  Visits of Indian Princes to England (Jam of Nawanagar).
  Mr. JOYNSON-HICKSasked whether the Jam of Nawanagar was a ruling prince in India; and whether such Jam could only come to England with the permission of the Secretary of State?
  The MASTER of ELIBANK: His Highness the Jam of Nawanagar is a ruling prince or chief governing his own territories under the suzerainty of His Majesty. The permission of the Secretary of State is not required to His Highness visiting England; but such visits would be arranged by Indian princes in communication with the Government of India.
  Major RENTON: Is the hon. Gentleman aware that this chief is alleged to owe a great deal of money to small local tradespeople in Sussex?
  Mr. DEPUTY-SPEAKER: That does not arise out of the question.
  Mr. JOYNSON-HICKS: Would the hon. Gentleman be prepared to receive and consider representations from responsible Members of this House before arranging any further visits of this prince?
  The MASTER of ELIBANK: I am afraid the answer I have given must suffice. I have stated that these visits are made only in communication with the Government of India, not that there are any definite arrangements.
  Mr. J. D. REES: Is not the Jam referred to in the question a better jam for Indian consumption in proportion as it is preserved in India?

  Natives in Transvaal Mines (Mortality)
  Mr. RENWICKasked whether any, and what, alterations had been made since July last in the conditions under which African natives working in the Transvaal mines were living in compounds; and could any reason be given for the difference in mortality amongst such natives, namely, 35·408 per 1,000 compared with only 15·959 per 1,000 in the case of the Chinese, also living in compounds?
  The UNDER-SECRETARY of STATE for the COLONIES (Colonel Seely): The Secretary of State is not aware of any alterations having been made. In answer to the second part of the hon. Gentleman's question, I would refer him to my remarks in reply to questions by the Noble Lord

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  the Member for East Marylebone on 24th June and 5th November, 1908, and by the hon. Gentleman the Member for Yarmouth on 29th June and 3rd November, 1908.
  Mr. RENWICK: Can the hon. Gentleman give any statistics or other information with regard to the present conditions under which South African natives are living in compounds, and any reason why there is such a great discrepancy in the rate of mortality as compared with the Chinese?
  Colonel SEELY: As I have stated before, in regard to the Chinese there are so few left, and so many have been sent home, that it may be said to be a case of the survival of the fittest. No one wants to introduce more Chinese, so that it would probably not be worth while to discuss in detail the reason for the death-rate of the Chinese, whether high or low. As regards the native death-rate, I will give any further information that I can obtain. Of course the death-rate is much too high, but it is less than half what it was.
  Sir GILBERT PARKER: Is it not the case that this ratio of mortality between Chinese and natives existed when the whole number—50,000—Chinese were in the mines, and that, therefore, the statement just made is not accurate? Secondly, is it not the case that the excessive mortality among the natives is due to the fact that recruiting from British Central Africa and other parts of tropical Africa is continued, in spite of the dissent of this House from the policy?
  Mr. KILBRIDE: Can the hon. Gentleman tell the House what was the death-rate among white women and children when they were in compounds in South Africa?
  Colonel SEELY: The question of the hon. Member covers a wide field. Perhaps he will put down a question about Central African natives, upon which subject there are already questions on the Paper. With regard to the death-rate of the Chinese, it is difficult to draw any exact parallel, because when the 50,000 were on the Rand the deaths from violence were so numerous.
  Lord R. CECIL: Has there been any decline in the death-rate of natives during the last few months?
  Colonel SEELY: I am not sure about the last few months; but during the last few years the decline has been steady and
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  continuous. I cannot speak from recollection as to the last few months. I shall be glad if the hon. Member will put down a question; it is very important.
  Mr. RENWICK: Will the hon. Gentleman make inquiries as to the conditions under which natives are at present living, and the reason of the excessive mortality?
  Colonel SEELY: Yes. We are constantly making inquiries on this subject. Hardly a mail goes but inquiries are sent. If the hon. Member tells me what specific point he wants inquired about I will endeavour to get the information.

  Crombie Foreshore (Admiralty Purchase).
  Mr. DUNDAS WHITEasked the Lord Advocate with reference to the property of 387 acres of land and 240 acres of foreshore at Crombie, in Fifeshire, on the Firth of Forth, which was purchased by the Admiralty for £30,000 for a magazine establishment in March, 1909, if he could say what was being taken as the annual value for rating of that property at the time of that purchase, or, if that property formed part of a larger subject, by how much the annual value for rating of that larger subject had been reduced in consequence of the severance of the purchased portion?
  The SOLICITOR-GENERAL for SCOTLAND (Mr. A. Dewar): I understand that the land referred to formed part of two farms which were entered in the valuation roll at a total value of £997. In consequence of the severance that total has been reduced by £522.

  Thornliebank Assault Case.
  Mr. LAIDLAWasked the Lord Advocate if, in view of the previous good character of James Walter McEwan, and the penalty of six months' imprisonment that was imposed upon him in connection with an assault case at Thornliebank, in May last, he could see his way to advise his release, or at least some mitigation of the sentence?
  Mr. A. DEWAR: The Secretary for Scotland has received representations in favour of McEwan, to which, after careful consideration and inquiry, he has replied that he sees no sufficient reason for advising any remission. My Noble Friend regrets that he cannot depart from this decision.

  Post Office Contract (Fair Wages Clause).
  Mr. BOWERMANasked the Postmaster-General whether he could now state the result of his further inquiries into the non-compliance with the terms of the Fair Wage Clause by Messrs. Charles Webster, Limited, mail contractors, as regards the farriers in their employ?
  The POSTMASTER-GENERAL (Mr. Sydney Buxton): Messrs. Webster are now paying the recognised rates of 7s. a day for firemen and 6s. a day for doormen to all farriers at present employed on work in connection with the mail contract. I am in communication with the contractors and the Board of Trade respecting the men's hours of labour.
  Mr. BOWERMAN: Will the right hon. Gentleman consider the question of penalising the firm?
  Mr. BUXTON: The firm is already under notice of termination of contract.

  Uncreosoted English Larch Poles (Durability).
  Mr. COURTHOPEasked the Postmaster-General upon what facts or information the Post Office estimates that the life of uncreosoted English larch poles is only from seven to ten years; and whether he was aware that, in the opinion of many timber experts, based upon practical experience, the life of uncreosoted English larch is equal to, if not greater than, that of creosoted foreign pine.
  Mr. BUXTON: My estimate of the time for which uncreosoted larch poles could safely carry the telegraph wires of the Post Office was based upon the reports furnished from time to time by the engineers of my Department. They inform me that a more extended use of uncreosoted timber would be fraught with danger to the general public; and I am not aware of any telegraph engineer who favours the use of such poles. I am, however, at the present moment making inquiries on that and kindred subjects of various departments and associations who may be able to give me information on the question.

  Birmingham Education Authority (Rotton Park District).
  Mr. DUNDAS WHITEasked the President of the Local Government Board if he will say what is the present valuation for rating of the area of 7,020 square yards
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  of land in the Rotton Park district, proposed to be purchased at 10s. per yard by the local education authority for Birmingham as a site for a school?
  The PRESIDENT of the LOCAL GOVERNMENT BOARD (Mr. Burns): I understand that the rateable value of the land of which the proposed site forms part is £54 10s. I may add that in selling the area to the local education authority at 10s. per square yard the vendors have undertaken to make three adjacent roads to give access to the site. If the Corporation had undertaken to make these roads, the price per yard would have been proportionately reduced.

  Vaccination of Infants.
  Mr. POINTERasked the President of the Local Government Board whether he had sanctioned the practice which obtains in most of the lying-in wards of workhouses of vaccinating infants within a few days of birth, to secure their vaccination before the mothers leave the wards; and whether, in view of the risk to such young lives which must be associated with this practice, he would issue a circular to boards of guardians recommending the exhibition of notices in the lying-in wards informing mothers that they are not compelled to have their infants vaccinated before they are six months old, and that, if the parents wish to secure exemption from vaccination altogether, they may do so in the manner provided on the paper issued by the registrar when the birth of the child is registered?
  Mr. BURNS: I am not aware that the practice referred to obtains in most workhouses. It has not been sanctioned by me. As my hon. Friend knows, information is given to the parent with respect to the matters mentioned in the latter part of the question by means of the paper issued by the registrar when the birth of the child is registered. I doubt whether anything further is necessary.
  Mr. POINTER: Am I to understand that due facilities are given to the persons in question to receive that information?
  Mr. BURNS: Certainly.
  Mr. POINTER: It is obligatory?
  Mr. BURNS: Yes.

  Smithfield Market (Sale of British Beef).
  Mr. HUNTasked the hon. Member for South Somerset, as representing the

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  President of the Board of Agriculture, whether the responsible Committee of the City Corporation have decided to restrict future lettings in Smithfield Market, as far as possible, to firms or tenants prepared to enter into an agreement to foster the sale of British beef by every means practicable?
  The TREASURER of the HOUSEHOLD (Sir Edward Strachey): The reply is in the negative.
  Mr. HUNT: May I ask whether the hon. Gentleman is aware there is one man alone in Smithfield Market who has five stalls, at which he sells nothing but American Trust beef, and he is now trying to get another stall, and one of the very biggest in the Market?
  Sir E. STRACHEY: I have answered the question on information supplied to me by the Corporation.

  Sale of Foreign Beef as British.
  Mr. HUNTasked the hon. Member for South Somerset, in how many cases since the Merchandise Marks (Prosecution) Act of 1894 proceedings have been taken by Government officials against persons fraudulently selling foreign beef or mutton as British?
  Sir E. STRACHEY: No such proceedings have been taken by the Board.
  Mr. HUNT: Are we to understand that for 15 years no prosecution has been taken, and that the fraudulent sale of beef and mutton has been going on all the time?
  Sir E. STRACHEY: The reason why no proceedings have been taken is that no case has been brought to the notice of the Board in which the evidence was clear enough for a conviction. Of course, if the hon. Member will bring forward a case the Board will be very glad to take it up.
  Mr. HUNT: Is not the hon. Gentleman perfectly well aware that the fraudulent sale of foreign meat at Smithfield is continually going on, and is it not the duty of the Government, by virtue of the Merchandise Marks Act, to see that the British people are not swindled?
  Sir E. STRACHEY: The hon. Member does not quite understand the facts. It does not arise upon the Merchandise Marks Act. Cases have been brought before us occasionally, but the evidence was not enough to secure a conviction, or
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  we should have been glad to pursue the matter.
  Mr. HUNT: How many cases have been brought before the hon. Member?
  Mr. KILBRIDE: May I inquire whether the inspectors of the Board of Agriculture have not gone about in the City of London and other large towns with the object of detecting these frauds, and can the hon. Gentleman assure the Members that they do not eat foreign meat in this House?
  Sir E. STRACHEY: That question should be addressed to the Chairman of the Kitchen Committee.
  Mr. PATRICK O'BRIEN: They take it "sitting down."

  British War Ships (Electric Light Installations).
  Mr. RENWICKasked the First Lord of the Admiralty whether, in the case of contracts which have recently been placed for the electric light installations and searchlights in British warships now building the contractors for such installations, etc., being British branches of German firms it is made a condition of the contract that only British-made cables, machinery, and fittings shall be used, and only British subjects employed in the superintendence and fitting of same on board the vessels; and whether precautions have been taken to prevent the necessary plans of the ships supplied to the contractors being sent abroad or shown to foreigners.
  The FIRST LORD of the ADMIRALTY (Mr. McKenna): In a contract of the kind referred to in this question, it is made a condition that only British-made cables, machinery and fittings shall be used, and only British subjects employed in the superintendence and fitting of them on board the ships. With regard to the last part of the question, the following provision has been embodied in recent contracts:—"This contract involves an obligation of secrecy within the meaning of Section 2 of the Official Secrets Act, 1889. The contractors shall at their own expense take all such measures and precautions to ensure secrecy in connection with the design, construction, equipment, and completion of the said vessel as may be necessary, including therein all such measures and precautions as may be regarded as necessary by the Commissioners, and the Contractors shall, if so required at

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  any time by the Commissioners, afford to them such evidence as the Commissioners may consider satisfactory that all such measures and precautions have been, are being, and will be taken."
  Mr. RENWICK: May I ask the right hon. Gentleman if precautions are taken to see that these conditions are strictly carried out?
  Mr. McKENNA: Yes, Sir. Any information that is brought to my knowledge that the conditions are not strictly carried out, I shall, of course, be very glad to have.

  Naval Manœuvres.
  Captain FABERasked the First Lord of the Admiralty if he will state whether, in the late naval manœuvres, the operations of the Red Fleet were directed from the Admiralty; and whether the Red Fleet was completely defeated, both strategically and tactically, by the operations of the supposed enemy?
  Mr. McKENNA: The hon. and gallant Gentleman must, I think, be aware that, as has been stated on several occasions in reply to questions in this House, the manœuvres axe confidential. It would accordingly be contrary to the public interest to reply to the present question. It must not, however, be assumed from my inability to reply, that there is the slightest foundation for the suggestions made in the hon. and gallant Gentleman's question.
  Captain FABER: Arising out of that answer, may I inquire if the House can know whether there were too few cruisers employed: that is the only point?
  Mr. McKENNA: That is not the question on -the Paper. I am not able to reply to the hon. and gallant Gentleman's question for the reason I have given.

  Naval Intelligence Department.
  Captain FABERasked the First Lord of the Admiralty if he will state what reorganisation of the Naval Intelligence Department has taken place since the Report of the Sub-committee was issued?
  Mr. McKENNA: As stated in the Report, there was furnished to the Committee a resume of the steps which had recently been taken to develop a war staff at the Admiralty, and advances were indicated which were in contemplation in this direction. These advances are now
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  being undertaken in due course, and notice of them will be promulgated shortly.
  Captain FABER: Is it not the fact that the only reorganisation which has taken place is the suspension of the two officers who refused to give evidence in favour of the Admiralty, and whose safety the Prime Minister guaranteed?
  The PRIME MINISTER (Mr. Asquith): There is no foundation for that statement.
  Mr. McKENNA: The hon. and gallant Gentleman has no foundation for that supplementary statement.
  Captain FABER: Arising out of that, I think I have it in my possession.

  H.M.S. "Highflyer" (Magazines Flooded).
  Lord BALCARRES (for Mr. Ashley)asked the First Lord of the Admiralty whether the "Highflyer" has recently had her after magazines flooded, thereby destroying a quantity of cordite; what was the value of the damaged cordite; whether this was due to a leak in the rudder-head; whether this defect had been reported to the dockyard authorities beforehand; and, if so, why was it not dealt with?
  Mr. McKENNA: The "Highflyer" has recently had her after magazines flooded, thereby wetting a certain amount of cordite. The value of the cordite affected is £385, but the actual loss cannot be stated, as the wetted cordite can be washed and reissued at comparatively small cost. The admission of water to the ship was due to a leak in the rudder-head gland. A defect in gland in the rudder-head was reported in March last. It was examined on that occasion by dockyard officers, and found to be not of sufficient importance to dock the ship specially at that time, in view of the fact that she was shortly coming in hand for refit, when docking would take place in the ordinary course. The ship has been at sea on several occasions since, and the leak in the rudder-head only became serious during the last cruise.
  Lord BALCARRESasked the First Lord of the Admiralty whether any orders have been given that the "Highflyer" is not to steam at her full speed; whether such orders are due to the state of her boilers; and, if so, why have her defects not been taken in hand before this?
  Mr. McKENNA: No orders have been given that the "Highflyer" is not to

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  steam at her full speed. The machinery will, however, be shortly due for thorough refit, for which arrangements are being made.
  Lord BALCARRES: Is the ship capable now of steaming her full registered speed?
  Mr. McKENNA: I should think a ship when just about to have her refit will probably not be able to steam her registered speed.
  Mr. REES: Is not this the same "Highflyer" that was the flagship for a long time on the East Indian station?
  Mr. McKENNA: I am not able to say.

  Education of Naval Officers.
  Captain FABERasked the First Lord of the Admiralty if he has any official reports showing how far the present scheme of education of naval officers provided efficient engineer officers for the Fleet; and, if so, will he state their purport?
  Mr. McKENNA: As the first of the new scheme officers do not reach the period of specialisation until 1913, I should be glad if the hon. Member will postpone his question to a date more approximate to that time.
  Captain FABER: Arising out of that, can the right hon. Gentleman say that the college at Keyham is likely to be shut?
  Mr. McKENNA: Would the hon. Member be so good as to put down on the Paper any question not relating to the question on the Paper?

  Revaccination (Dockyards).
  Mr. LUPTONasked the First Lord of the Admiralty if he will abandon the practice of making revaccination compulsory for candidates for employment in the dockyard, having regard to the statement by the Royal Commissioners on Vaccination, in their Final Report, paragraph 419, that the occurrence of a febrile illness is the desired result of vaccination, and that it is sometimes attended by eruption?
  Mr. McKENNA: I am considering the conditions under which vaccination on entry in the dockyards is made compulsory; but, in view of the difficulties of consultation during the period of the year ordinarily devoted to holidays, I am unable to promise my hon. Friend any early conclusions.
  Sir GILBERT PARKER: Do we understand that the Admiralty are considering the abolition of vaccination?
  Mr. McKENNA: No, Sir; I cannot go beyond what I have actually said—I have been considering the conditions under which vaccination on entering the dockyards is made compulsory.
  Mr. LUPTON: The right hon. Gentleman will be aware that already some of the Government Departments have relaxed their old-fashioned rules?
  Mr. McKENNA: Yes; I believe that in certain Government Departments the question has been brought up for special consideration.
  Mr. ARTHUR LYNCH: Would the right hon. Gentleman be favourable to the appointment of a Special Commission to reconsider the whole question of vaccination?
  Mr. McKENNA: I do not think that would apply particularly to the Admiralty.

  Submarine C11 (Salving Operations)
  Mr. FELLasked the First Lord of the Admiralty if there is any prospect of submarine C11 being raised; and when the inquiry into her loss will take place?
  Mr. McKENNA: We have not yet abandoned all hope of salving the submarine. No further inquiry will be held until a final decision has been come to as to her salvage.
  Mr. FELL: Are steps continuing to be made to attempt to salve her?
  Mr. McKENNA: Yes, at this moment; although I fear there is not much hope.

  FINANCE BILL.

    UNGOTTEN MINERAL DUTY.
    Mr. LAURENCE HARDYasked the Chancellor of the Exchequer whether he can give an estimate of the amount of revenue which he will lose through the abandonment, respectively, of the Ungotten Mineral Duty, the Reversion Duty on minerals, and the Increment Value Duty on all existing mineral leases on working minerals during this financial year?
    The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George): The yield of the Ungotten Mineral Duty was estimated at £175,000 for the current

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    financial year. No separate estimate in regard to minerals was made in the case of either the Reversion Duty or the Increment Value Duty.

    STAMP DUTY ON LAND TRANSACTIONS (IRELAND).
    Mr. HUGH BARRIEasked the Chancellor of the Exchequer whether his attention has been called to the hardship entailed on Irish farmers by the Inland Revenue Department insisting upon payment of Stamp Duty on the redemption value of the Land Commission mortgage on bought-out land where farms change hands or a death occurs; whether the practice of the Department is to tax as property what is really a debt to the State; and will he have this remedied?
    Mr. LLOYD-GEORGE: When a farm changes hands on a sale, the redemption value of the annuity forms part of the consideration for the sale, and is properly charged with Stamp Duty under Section 57 of the Stamp Act, 1891, a section of general application to mortgages in the United Kingdom, which I do not see my way to modify. As regards farms changing hands on death, I may refer the hon. Member to the answer which was given on the 8th instant to a similar question by the hon. Member for North Meath.

    Irish Local Government Board (Labourers Act).
    Mr. MOOREasked the Chief Secretary for Ireland if he will state under what powers certain members of the Irish Local Government Board purport to exercise the judicial or quasi-judicial powers conferred on the whole Board under the Labourers (Ireland) Act, 1906?
    The CHIEF SECRETARY for IRELAND (Mr. Birrell): If the hon. Member refers to the fact that certain Orders made in pursuance of the Labourers (Ireland) Act, 1906, under the seal of the Board have been signed only by two members of the Board, the answer to his question is that the Local Government are advised that the seal of the Board, properly attested in accordance with the provisions of Section 102 of the Local Government (Ireland) Act, 1898, is proof of the Board's corporate action. That Section is held to apply to all acts of the Board, whether Ministerial or judicial.

    Explosion, County Clare (Claim for Compensation).
    Mr. CHARLES CRAIG (for Captain Craig)asked whether an outrage was committed recently in the Sixmilebridge district, county Clare, when a self-binder machine, the property of Mr. Robert Russell, a respectable farmer, which he had lent to a neighbour, was blown up by a bomb consisting of an axle-box filled with blasting-powder and exploded with a fuse; whether the police can supply any information as to the reasons which prompted the outrage; whether any arrests have been made; and whether a claim for compensation has been lodged?
    Mr. BIRRELL: I am informed by the constabulary authorities that a reaping and binding machine belonging to Mr. Robert Russell was blown up as stated in the question. No motive has been suggested—that is altogether a matter of opinion. The police have not as yet been able to make any arrests. Mr. Russell has lodged a claim for £20 compensation.

    River Shannon (Receipts and Expenditure).
    Mr. JOYCEasked the Chief Secretary whether he will grant the Return (River Shannon, Receipts and Expenditure) standing in his name on the Order Paper for this day?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse): The accounts in respect of the River Shannon are kept by financial and not by calendar years. It is not possible to give the figures of receipts and expenditure in such full detail as asked for in the hon. Member's proposed Return. He will, however, find the figures for the year 1908–9 set out in a fairly complete form in an answer given by me to a question by the hon. Member for North Armagh on 5th July last. I am sending the hon. Member a copy of the answer referred to, and in these circumstances it does not appear to me necessary to grant the Return asked for.

    Limerick Estate (Evicted Tenant's Claim).
    Mr. JOYCEasked whether, when the estate of Richard W. Smith, at Rebogue, Limerick, is being sold to the tenants, the case of Martin Quilagan, evicted tenant from the same estate, will be taken into consideration with the view of giving him some portion of the untenanted land on this estate?
    Mr. BIRRELL: This man's application will be considered by the Estates Commissioners when the estate is being dealt with under the Irish Land Act, 1903.

    Amesbury and Salisbury Plain (Repair of Roads).
    Captain FABERasked the Secretary of State for War if he will state whether any special grant is to be made for the repair of roads at Amesbury and on Salisbury Plain, looking at the amount of traffic caused by the late manœuvres?
    The SECRETARY of STATE for WAR (Mr. Haldane): No request for a special grant in connection with the late manœuvres mentioned has so far been received at the War Office. If damage by extraordinary military traffic within the legal meaning of the term has occurred a claim, if made, will receive due consideration.

    Selection Board (Times of Meeting).
    Captain FABERasked whether the meetings of the Board of Selection, of which Lord Kitchener is to be President, will take place when he is in England or while he is abroad on duty?
    Mr. HALDANE: The meetings of the Selection Board, the President of which is the senior officer present, are of necessity held monthly, and every endeavour will be made to hold them on a date suitable to Lord Kitchener should he be present in this country.

    Defence of the Empire.
    Captain FABERasked the Secretary for War if he will state whether Lord Kitchener or the Chief of the General Staff is to be responsible for the general defence of the Empire?
    Mr. HALDANE: The responsibility for the defence of the Empire rests with no one individual, however distinguished, but with the Government of the day. It has the advantage of being able to obtain the advice not only of the Committee of Imperial Defence, but of the Army Council and the Chief of the General Staff, the Board of Admiralty, and other advisers.

    Regimental Races (Contractors' Horses).
    Mr. HUNTasked whether Trooper A. Cairns, a recruit this year of the Lothian and Border Horse Yeomanry, is entitled to the £12 won by him in the regimental races on a horse hired by the Govern-
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    ment, or whether it must be paid to the contractors who supplied the horse and who are now claiming the money?
    Mr. HALDANE: Nothing is known of this matter at the War Office, nor does it come within the purview of the Army Council. I therefore regret that I am not in a position to give the hon. and gallant Member any ruling on the point.
    Mr. HUNT: How is the man to find out whether he is to keep the money? In view of the fact that the right hon. Gentleman is a great lawyer as well as a great war lord, perhaps he would say?
    Mr. HALDANE: Yes; but I am wholly unskilled in the procedure of race meetings. As I already suggested, it would be much better to refer the matter to some person of great eminence in the country, like the hon. Member, for arbitration.
    Mr. HUNT: Is the right hon. Gentleman aware this has nothing to do with race meetings? It is a question of money.
    Mr. HALDANE: I am afraid the whole root of the evil in this case, as in others, lay in the £12.
    Mr. HUNT: Does not the right hon. Gentleman see it was the Government that hired the horse?

    Army Boots (Fair Trade Conditions).
    Mr. ARTHUR HENDERSON (for Mr. Ramsay Macdonald)asked the Secretary for War whether his attention has been drawn to the agreement which has been come to between the boot and shoe manufacturers and the boot and shoe operatives; whether he has received any complaints that the manufacturers patronised by the War Office are not carrying out the agreement; whether, under such circumstances, he proposes to assume that such agreements, arrived at after discussion between representatives of the employers and the men, establish fair conditions in a trade; and whether he proposes to communicate that decision to the Army contractors?
    Mr. HALDANE: The hon. Member probably refers to the agreement arrived at in January and ratified in June last between the Federated Association of Boot and Shoe Manufacturers and the National Union of Boot and Shoe Operatives. This agreement has not been brought specially to the notice of the War Department by

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    either of the parties to it; nor have any complaints been received of the kind indicated in the question. In regard to the latter part of the question, if any agreement as to wages or hours of labour were commonly recognised by employers and trade societies in the trade in the district where the work is carried out, it would certainly establish the minimum standard to be observed by Army contractors, and as this is clear from the wording of the Resolution of the House of 10th March last, no special communication to contractors would appear to be necessary.

    Mr. Cody's Aeroplane.
    Mr. FELLasked if the successful experiments at Aldershot by Mr. Cody with his aeroplane are being conducted at the expense of the War Office; what is the nature of his agreement, if any, with the War Office; and if the Government have any option of purchase of the aeroplane?
    Mr. HALDANE: Mr. Cody's aeroplane is his own property, and the experiments are being carried out at his own expense. There is no agreement with the War Office regarding his aeroplane, and no option of purchase.
    Mr. FELL: Are the Government doing nothing in this matter, taking no steps and expending no money, but leaving it entirely to the enterprise of Mr. Cody?
    Mr. HALDANE: Oh, yes, the Government are taking steps. It does not follow that because they are allowing facilities to Mr. Cody for working with his own machine that they are taking no steps.
    Mr. ARTHUR LYNCH: Would the right hon. Gentleman be favourable to the establishment in this country of a technical school corresponding in some degree to L'Ecole Polytechnique in France?
    Mr. DEPUTY-SPEAKER: Notice must be given of that question.
    Mr. LUPTON: Is not Colonel Cody's success due entirely to the fact that it is a private venture?
    Captain FABER: Can the right hon. Gentleman inform the House whether Mr. Cody is being helped by the Government in any way?
    Mr. HALDANE: He is experimenting purely on his own account.

    Department of Agriculture in Ireland.
    Mr. MOOREasked the Prime Minister if he is aware that, under 62 and 63 Vic., cap. 50, s. 26, the Annual Reports of the Agricultural and Technical Department are to be laid before Parliament, and that the Report for the year 1908 has not yet been laid; whether his attention has been drawn to the fact that the Vice-President of the Department, in a political address at Dundalk, on Tuesday last, purported to state the contents of such Report under various heads, though such Report has not yet been laid; and whether he will take steps to ensure that information contained in Parliamentary Papers should be first supplied to Members of this House?
    The ATTORNEY-GENERAL for IRELAND (Mr. Cherry): The Prime Minister has asked me to reply.
    Mr. MOORE: As the right hon. Gentleman the Attorney-General has no control over the Vice-President, I shall withdraw my question if the Prime Minister will not answer it.

    Poor Relief Disfranchisement (Sunderland).
    Mr. SUMMERBELLasked the Prime Minister if he is aware that there are nearly 1,000 voters less on the list at Sunderland than a year ago; that many hundreds of such voters have been struck off on account of, through poverty, having to accept relief, in the shape of breaking stones, through the board of guardians; and whether he can state if it is the intention of the Government to introduce legislation in the near future having for its object the removal of such penalising of poverty under the circumstances named?
    The PRIME MINISTER: I have no doubt that the facts are as stated by the hon. Member, and they disclose a state of things which, in the opinion of the Government, calls for serious consideration. I cannot, however, give any undertaking as to the introduction of legislation in the immediate future.

    National Expenditure (Recommendations of Select Committee).
    Mr. NUTTALLasked the Prime Minister whether he would favourably consider the recommendation of the Select Committee appointed in 1903 to inquire whether any plan can be advantageously

    1929
    adopted for enabling the House more effectively to make an examination, not involving criticisms of policy, into the details of national expenditure, to the effect that a Select Committee be appointed; that it be called the Estimates Committee; that it be appointed continuously in the same way, and possess the same powers, as the Public Accounts Committee; that, in order to combine and unify the machinery of financial control and, as it were, to dovetail the Estimates Committee on to the Public Accounts Committee, a proportion of Members be appointed to sit on both Committees; that the Estimates Committee, with power to call for witnesses and papers, not of a secret character, should examine a class, portion, or branch of the Estimates for the current year, not exceeding one-fourth of the whole; that this class shall have been selected for them in the previous year by the Public Accounts Committee, who shall likewise notify the Departments concerned and the Treasury that the Public Accounts Committee, while preserving full discretionary power in the selection of the class or portion of the Estimates to be referred to the Estimates Committee, shall endeavour to pass systematically in review each Vote within a limited period of years; that to facilitate examination the selected class or portion shall be presented at the earliest possible date after the day of the meeting of Parliament; and that the consideration of this class by the House of Commons in Committee of Supply shall, if convenient, be deferred until the presentation of the Report of the Estimates Committee thereupon?
    The PRIME MINISTER: This is a proposal which has often been mooted. It possesses many attractions and not a few practical difficulties. I am afraid I cannot do more at present than promise to submit it to the consideration of my colleagues.
    Mr. HUGH FULLERTON: Did not Mr. John Bright make a speech in favour of this method in 1868?
    The PRIME MINISTER: I have no doubt that is so.

    Affairs in Barcelona.
    Mr. ARTHUR HENDERSON (for Mr. Ramsay Macdonald)asked the Secretary of State for Foreign Affairs whether the Spanish Government recently joined with
    1930
    our own in advising the Sultan of Morocco to avoid inhuman punishments by way of reprisals upon those who had revolted against his authority; and whether, in view of what is now happening at Barcelona by way of punishing trade unionists and political reformers, the Government proposes to make any representations to Spain?
    Mr. H. J. TENNANT (Parliamentary Secretary to the Board of Trade): My right hon. Friend has asked me to reply. The answer to the first part of the question is in the affirmative and to the second in the negative.

    Unemployment in Germany and the United Kingdom.
    Mr. ARTHUR PONSONBY (for Mr. Murray Macdonald)asked the President of the Board of Trade what, according to the official figures, have been the proportionate increases in unemployment in Germany and the United Kingdom between the correspoding periods of 1906, when unemployment in both countries was at its lowest point since 1903, and 1909?
    Mr. TENNANT: I regret that I am not able to give the information desired by my hon. Friend. For reasons which have repeatedly been given in this House, and which are set out fully in Appendix 9 to the recent Board of Trade Report on conditions in Germany (Cd. 4032), the official figures relating to unemployment in the United Kingdom and Germany cannot be regarded as comparable, and I am advised that some at least of these reasons would apply also to any comparison between the proportionate variations in the figures over a given period. There is also the difficulty of selecting a fair period for comparison between two countries in which the movements of employment have not exactly synchronised.

    Female Prisoners (Refusal to take Food).
    Mr. H. H. MARKSasked the Secretary of State for the Home Department whether in any, and how many, cases during the present year it has, in consequence of the refusal of female prisoners to take food while in prison, been thought necessary to release them before the expiration of their sentences; whether any complaint or protest has been made by these prisoners against the food or accommodation provided for them; and whether he considers it impossible to introduce

    1931
    such amendments into the prison regulations as will ensure that all prisoners shall serve out the term of the sentences imposed upon them by lawful authority?
    The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Mr. Masterman): The number of cases in which during the present year female prisoners have been released on medical grounds before the expiration of their sentences on account of their self-starvation has been 41. Thirty-seven women in all were so released, four of them twice over. None of them complained of the food supplied to them. Certain complaints as to their accommodation were made by some of those imprisoned at Holloway but, after being fully inquired into, were found to be baseless. The matter is an increasingly grave one, and the best means of dealing with it are now under serious consideration.
    Mr. LUPTON: May I ask the hon. Member whether the complaints were found to be baseless by those against whom they were made, and as a result of this investigation would it not be a good thing to decline to let these women enter these prisons which are so very perfect?
    Mr. MASTERMAN: The complaints were found to be baseless after more than one investigation, including more than one visit by the Secretary of State himself.
    Mr. HORATIO MYER: Will the hon. Member state whether in the case of male prisoners they would have been so released?
    Mr. MASTERMAN: That is purely a hypothetical question which I can scarcely answer.
    Mr. ARTHUR LYNCH: May I ask if the ladies in question were called as witnesses in their own cases, and were they perfectly free?
    Mr. MASTERMAN: I have already said that full inquiries were made into the matter.

ARBITRATION (TREATIES).
Address for "Return showing all general Treaties of Arbitration between the United Kingdom and other States"—[Sir John Brunner.]
DEVELOPMENT AND ROAD IMPROVEMENT FUNDS BILL.

  PROCEDURE ON STANDING COMMITTEE.
  The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)moved, "That, when the Development and Road Improvement Funds Bill is under consideration, Standing Committee C have leave to sit while the House is sitting, and after Four of the clock."
  Mr. LAURENCE HARDY: I wish to ask you, Mr. Deputy-Speaker, whether the Motion standing in the name of the Chancellor of the Exchequer is in order or in accordance with the Standing Orders? As I read Standing Order No. 47, the only authority that has power to give a Standing Committee leave to sit during the earlier part of our sittings is the Committee itself. Standing Order No. 47 says, "and the said Committee shall not sit, whilst the House is sitting, except in pursuance of a Resolution of the Committee, moved by the Member in charge of the Bill before the Committee, and decided without Amendment or Debate."
  Consequently the first part of this Resolution can only be decided by the Committee when it is sitting and when it sees that it is necessary in order to carry on its business beyond a certain hour. The second proceeding arises when the Committee finds it necessary to sit still later, and then it is given an opportunity of coming down to this House and asking for a Motion. It seems to me that in the first place this Motion is not in order in accordance with the Standing Order, and, secondly, it is quite contrary to the intention of the House when the Standing Order was passed.
  Mr. DEPUTY-SPEAKER: The hon. Member has not given me any notice of this matter, but as I understand his complaint, it is that the Committee has not yet sat and asked for leave. Is that the substance of the hon. Member's complaint?
  Mr. LAURENCE HARDY: I am afraid I did not make my point quite clear. My complaint is that the Committee must necessarily ask for leave, because the initiative must come from them. According to the Standing Order which I have quoted the first part of this Motion can only be done by the Proceedings of the Committee itself, and we are being asked to pass a Resolution granting leave to the' Committee to sit while the House is sittings My point is that the Committee itself has-not sanctioned that in any way.
  Mr. DEPUTY-SPEAKER: As I have already stated, the hon. Member has not given me any notice of this question. As I read the Standing Order, in such time as I have been able to give to the matter, it says that the Committee "shall not sit after 4 p.m. without the Order of the House." The Chancellor of the Exchequer is now moving for an Order of the House, and therefore I cannot see there is anything out of order in this Resolution.
  Lord ROBERT CECIL: May I direct your attention, Mr. Deputy-Speaker, to the exact terms of the Resolution of which notice has been given? The Resolution is as follows:—
  "That, when the Development and Road Improvement Funds Bill is under consideration, Standing Committee C have leave to sit while the House is sitting, and after Four of the clock."
  The Standing Order provides for two things. In the first place, it says, "the said Committee shall not sit whilst the House is sitting"; and the other thing is that the Standing Order lays down that the only way out of that is "in pursuance of a Resolution of the Committee moved by the Member in charge of the Bill before the Committee." Therefore if it is desired that the Committee shall sit whilst the House is sitting you have first to get a Resolution passed by the Committee. This is a matter of some importance, because this is an entirely novel Resolution, of which notice was only given this morning. Then comes the second question, that the Committee shall not sit after 4 p.m. without an Order of the House. I submit that the clear intention of the Standing Order is first that you shall ascertain from the Committee upstairs whether they desire to sit after the sittings of the House, and then, when the Committee has decided that point, you are to come down to the House itself to ask whether the House is willing to extend the permission already given by the Committee upstairs in order that the Committee can sit after four o'clock. In this case there has been no Resolution of the Committee, and therefore I submit that this Motion is out of Order.
  Sir F. BANBURY: In confirmation of what my Noble Friend has said, may I point out that on every previous occasion when the Grand Committee has sat during the sittings of the House it has been in pursuance of a statement made at the Grand Committee that leave was going to be asked from the House? I have never
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  known in the history of Grand Committees a Motion of this sort being made until it has been resolved by the Grand Committee to send down to the House and ask leave to continue its sittings. I respectfully submit that the custom of the Committee follows the interpretation which has been put upon it by my hon. Friend the Member for Ashford and my Noble Friend the Member for East Marylebone.
  Mr. DEPUTY-SPEAKER: I think that the power given to the Committee does not deprive the House of its own power to give leave to the Committee. The only question is whether the request in the first place must come from the Committee to the House to give that permission. I do not read the Standing Order as directing that the Resolution must first come from the Committee, and, therefore, I rule that the Motion is in order.
  Mr. LLOYD-GEORGE: I think it will be found that the Government in this matter are really meeting the convenience of hon. Members in submitting this Resolution to the House. A question was put last week by the Leader of the Opposition to the Prime Minister as to whether arrangements could be made so that Members in attendance on the Finance Bill up to a late hour should not be called upon to attend the Committee on the Development Bill at 11 or 12 o'clock next day. Recognising the reasonableness of that request the Prime Minister promised to do his best to meet the wishes of the Leader of the Opposition and the House generally, and really this Resolution is the most effective way of complying with that request. There will be three days this week when the Finance Bill will not be on, and during those days the sittings of the Committee may be extended to three o'clock or four o'clock at the outside. It might be necessary to have sittings next week whilst the Finance Bill is on. I think it is the desire of the Members of the Development Bill Committee that they should sit two or three hours longer in the Committee in order to get through the Bill whilst the House is not considering the Finance Bill. It is really to meet the conveniences of the Members of this Committee that this Motion has been put on the Paper. I do not know that there are any precedents for a Motion before a Bill has been considered at all by the Committee, but I will tell the House why we depart to that extent from the precedents. There are undoubtedly precedents for Motions of this kind. There

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  are two provided by clerical Bills, and I find I opposed both of them. I am not sure that the conditions with regard to one, the Clergy Discipline (Immorality) Bill of 1892, when we sat very late hours, were not similar. The minority against the Bill was very small and very pertinacious, and it used every legitimate weapon in order to thwart the wishes of the promoters. The Chairman came and asked leave to sit. The circumstances are really very similar to these. This is not a contentious Bill, in the sense of being contested between the two parties in the State. The minority on the second reading was a minority of 17. It expressed its feelings with considerable passion, but it was at any rate a small minority, and a considerable number of Members sitting on that side of the House supported the Bill on that occasion.
  Lord R. CECIL: No.
  Mr. LLOYD-GEORGE: I certainly think I saw one or two. I could not tell who they were at the present moment; but it shows that this is not as between the parties a highly contentious measure. I cannot imagine that, if it was really resisted by the Opposition, they would only muster 17 to vote against the second reading, and that minority dwindled to six. The second precedent is also a clerical one—the Benefices Bill, 23rd April, 1896. That was Lord Cranborne's Bill, and I think Lord Cranborne moved the Resolution. Then there is the Companies Bill. Mr. Ritchie, in moving the Resolution, used these words, and I am quite prepared to adopt them:—
  "There is no intention to ask the Committee to suffer any undue strain either of time or attention, but when a heavy Bill has to be dealt with and having regard to the late period of the Session, and the universal desire that this Bill or something like it should be, passed, I hope the House will assent to the Motion."
  Sir F. BANBURY: What time of the Session was that?
  Mr. LLOYD-GEORGE: That was in July. My case is very much stronger. If Mr. Ritchie and the Government, in July, because it was so late in the Session, found it necessary to move a Resolution of this kind, surely there is tenfold justification for my moving one. This can surely be described as rather late in the Session. I am really moving this in the general interest and convenience of Members. Members would infinitely prefer that we should dispose of this Bill. There may be a real desire to amend the Bill, even on the part
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  of those who do not oppose it in principle; and I think they would really like to sit, if necessary, two or three hours later than the usual time rather than, after the late sittings we may possibly have next week, resume business at eleven o'clock in the morning "on the Development Bill. For that reason I move the Resolution which stands in my name.
  Mr. A. J. BALFOUR: I do not think the right hon. Gentleman who has moved this Resolution really appreciates the precise character of the objection; and, by the way, it is somewhat unusual for the Chancellor of the Exchequer rather than the Leader of the House to move it.
  Mr. LLOYD-GEORGE: I beg the right hon. Gentleman's pardon for interrupting. One of the Motions I quoted was in the name of Sir William Walrond and the other was in the name of Mr. Ritchie, who was in charge of the Bill. So I really think I have followed precedents.
  Mr. BALFOUR: I think it will be found that was one of the ordinary Resolutions which come down from Grand Committee. I will not contest that with the right hon. Gentleman, who may have got the references; and, after all, between two Gentlemen equally competent to move the Resolution I am not going to quarrel as to the fortunate individual on whom the lot has fallen. I do not think the right hon. Gentleman's precedents are very apposite. I have not been able to study them all, but an hon. Member on this Bench during the speech of the right hon. Gentleman got "Hansard," which deals with one of the precedents he has quoted, namely, the Benefices Bill, and I notice the Motion then was:—
  "Until the conclusion of the consideration of the Benefices Bill, the Standing Committee on Law have leave to sit every day until Four of the clock, notwithstanding the sittings of the House."
  It is a most extraordinary thing that that should be brought forward seriously as a precedent for a Motion, which, by the admission of the Minister who moves it, is intended to enable the Committee to sit for many hours, not before, but after 4 o'clock. The right hon. Gentleman has told us this Motion is for the convenience of the House. I think it is a practical illustration of the condition to which the House has been brought by the methods with which the Government persist in doing their business. We are now working here in September on Bills of abso-

  1937
  lutely first-class importance with a House which has only a half or a quarter of its Members. That is not the time on which you ought to bring forward new and difficult business, nor a time when you ought to pass special Resolutions to enable that business to be rammed through under conditions which make proper and adequate discussion difficult. We all have to admit the inevitable results of the exhausting process which the Government have forced upon us. The Government themselves are only able to do their business by working in relays. Their followers come up here. They are led by Ministers in various fragments. One fraction of Ministers goes out, and another comes in, and it occurs in most unexpected ways. First we have Ministers engaged in military operations, then we have those interested in local government, and finally we get some engaged in no operations at all. I mention that as an illustration. I do not blame the Government. I do not believe that any Minister in the world could conduct the whole of the tremendous duties which, in ordinary circumstances, naturally devolve on the Chancellor of the Exchequer in connection with the Budget work of the year. I have made many accusations against the right hon. Gentleman. I have brought many charges against him and I am likely to bring more; but I shall never suggest that he does not work hard in this House. I think he does. It is beyond the capacity of flesh and blood for the same Minister—guiding the same Bill, sitting up night after night conducting it against a critical Opposition, and spending his days in revising the very numerous Amendments which it is found necessary to accept—I say it is impossible for this to long continue. And that is a proof that the Government are not behaving properly to the House when they ask us at this stage of the Session and of the year to begin on another new and very controversial Bill.
  The right hon. Gentleman says that it is not controversial as between the two sides of the House. But there are many proposals which are not the less controversial even if they are not disputed on strict party lines, and you cannot have these properly and thoroughly examined if you are going to impose—if, in addition to the tremendous burden borne during the last nine months, you are going to ask hon. Members to sit eight or nine hours a day on Grand Committee—I believe this was the view of the Prime Minister. It is fresh
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  in the recollection of the House that when the right hon. Gentleman went through the operation known as the "slaughter of the innocents" he gave, as he was bound to give, a general description of the prospects of the Bills that remained on the Paper. He will probably remember the words he used. I will give the substance, and I do not think he will quarrel with it. He certainly indicated that this Bill had very little prospect of passing if it turned out to be a controversial Bill, and by controversial he did not mean controversial as between the two sides of the House, but he undoubtedly meant a Bill exciting interests requiring debate and discussion.
  I am sure my right hon. Friend will not deny that the whole framework of his speech on that occasion gave us reason to believe that if the Bill did turn out to be controversial it had very little prospect of passing. He said he hoped the Bill would receive the assent of Parliament, but "about that I do not profess to speak in very sanguine terms." And then, speaking in that happy, disengaged manner which he adopts in dealing with certain sections of his colleagues, he said, "I believe the Chancellor of the Exchequer regards it as non-controversial." I fancy, too, he concluded by saying that he hesitated to pronounce judgment on the prospects until the Bill had been printed and its reception was more clear. The Bill was printed rather late in the day. It was promised in the Budget speech of the right hon. Gentleman so far back in the dim and historic past that I have but the vaguest recollection of the language used. But undoubtedly he did promise in April that this Bill should be printed. Then why on earth was it not printed until after the massacre of the innocents—an event which did not take place until an abnormal period of the Session? That is a puzzle which I fail to solve.
  The Government, I think, have treated, and are treating, the House ill. They promised the Bill in April, and they print it for the first time in September. The massacre of the innocents took place on 28th August. It was clearly indicated that if the Bill proved to be controversial it was not likely it would pass. The Bill has been printed and read a first time, and the Debate on the second reading clearly indicated that it is controversial, though the Debate and Division showed that it was not disputed on party lines. It is clearly disputed because of the variety of subjects which it contains and the extraordi-

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  nary complexity of the general propositions it suggests. Is it not too late to begin its discussion here in September in a House which everybody knows is exhausted? Everybody can see that hon. Members are tired. [HON. MEMBERS "Oh, oh."] These cries are from Gentlemen who have just come back from their holidays. But everybody admits that when you are discussing a Bill which excites such intense interest as the Finance Bill, and when you find that the aggregate number of Members taking part in the Divisions does not exceed 260, it must be clear that if hon. Members are not tired they are very fond of taking their holidays. But as a matter of fact the Government is tired, Ministers are tired, the House is tired, the officers are tired, and everybody is tired, and to ask a Grand Committee to take into consideration at the end of September, in abnormal hours, a Bill of this character appears to me to be reducing our whole Parliamentary procedure to an even lower level than that which it has recently obtained. I most earnestly protest against this whole proceeding. It is not fair to those who are going to work on the Grand Committee; it is not fair to those who wish to see a workmanlike job produced by the Grand Committee; and it is not fair in the interests of the country, who are looking on at the fate and fortunes of the particular measure. For these reasons, I shall certainly oppose the Resolution, which in form is quite unprecedented, which in substance, if you take it in connection with the time at which we are sitting and the circumstances of the Bill on which we are sitting, is quite unprecedented, and, whether it has precedent behind it or not, is certainly not in conformity with the best Parliamentary traditions or workmanship, or the only possible conditions under which Members of these Grand Committees can carry out the task which the Prime Minister intends—indeed, which the House has already entrusted them with. The only way in which you can do it is to allow that Committee to expand the time on particular days, for particular reasons, but do not tell them, as in effect you are telling them, that they have got to get this Bill through Grand Committee, working overtime on Wednesday, Thursday and Friday. That is not fair to the Committee, it is not the kind of consideration which this House ought to give to any Grand Committee, and I think it will do much to bring Grand Committees, to which many Members of this
  1940
  House are gradually being reconciled—I think it will do much to bring that system, into contempt. I shall certainly vote against the Resolution.
  The PRIME MINISTER: The right hon. Gentleman attacked this Motion on two-grounds, the first, that it is a departure from precedent; and the next, that it is in some sense a departure from some assurances, which I am alleged to have given at the time of the annual ceremony of the "massacre of the innocents." In regard to the departure from precedent, in the first place, it is not the case that Motions, of this kind have been habitually or are ever made by the Leader of the House. As far as precedents go, I think it will be found that in nearly all cases the Motion has been made, as a rule, by the Member in charge of the Bill, and I think on one occasion by the Chief Government Whip; so that, in that respect, I am not guilty of disrespect to the House, as has been alleged, in not myself bringing the Motion forward. As regards the second alleged departure from precedent, the right hon. Gentleman has quoted one case, and one case only, in which it is quite true the Resolution was confined to four o'clock. In the two other cases cited by the right hon. Gentleman they were both cases in which the Committee was empowered to sit longer.
  Mr. AUSTEN CHAMBERLAIN: Can the right hon. Gentleman give us the dates of the others? That is the only one we have the date of.
  The PRIME MINISTER: The Clergy Discipline Bill was May, 1892; the second case, the Benefices Bill, was April, 1896; and the third, the Companies Bill, was July, 1900. They were all Conservative precedents, and are exact precedents, and in the case of the last, the precedent of 1900, the substantial Resolution proposed was in substance identical with that which is now before the House, namely, the Committee were empowered to sit up to any hour. At the same time, Mr. Ritchie said what my right hon. Friend has said to-day, that there is no intention of unduly prolonging the sittings of the Committee. So much for precedent. Now as to this particular measure. The right hon. Gentleman has referred to some expressions of mine on the occasion when the final survey of the business of the House is undertaken. My recollection is that it was not I who said that I was not very sanguine of the Bill being treated as a

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  non-controversial measure, but that my right hon. friend the Chancellor of the Exchequer was sanguine that it would be so treated. I am not quite certain about it, and I have not had time to refresh my memory, but that is very immaterial, because the real question is, When this Bill was introduced before the House, and when it was presented for second reading, what was the attitude taken by the Opposition? Every definition that I have ever heard of a non-controversial measure, was satisfied, so far as this measure is concerned, by what then took place. What happened? The Bill was read a second time by a majority of 137 to 17. [An HON. MEMBER: "The normal Government majority."] That is about six to one, and therefore it is larger than the normal majority—it is eight to one. On the question that the Bill be referred to a Committee of the whole House, only 21 voted in favour of that Motion and 128 against it. That, I think, is six to one. And, finally, on the question of the Financial Resolution, the numbers were 105 to six. A small sum in division will show the proportion there. I take these three divisions, and I certainly have never known a measure which at its critical stage of second reading was exposed three times to the ordeal of a Division, and which received more overwhelming majorities.
  Mr. BALFOUR: Do you remember the Aliens Bill?
  The PRIME MINISTER: I do not remember.
  Mr. BALFOUR: We did not divide at all.
  The PRIME MINISTER: I do not know whether it was so, but if a Bill which on the second reading only receives the opposition first of 17, then of 21, and then on the question of the Financial Resolution only six, cannot be described to all intents and purposes as a non-controversial Bill, I do not know what kind of Bill it would be possible to describe as non-controversial. I think we have satisfied the pledges we gave in that respect. The right hon. Gentleman is not in the least to suppose that this Grand Committee will sit for any considerable or undue length of time, or that its labours will make an excessive tax upon the strength and patience of Members, but if the House is really disposed, as I believe the vast majority is, that the Bill should go through with the minimum of public inconvenience, this is the only way in which it can be done.
  4.0 P.M.
  Mr. LAURENCE HARDY: I think, as we have had precedents quoted both by the right hon. Gentleman and the Prima Minister, it ought to be stated in this House that every one of those precedents was, under a Standing Order of an entirely different character to that which is now in force. The Standing Order which, was in existence up to the time the Government came into office was as follows:—"And the said Committee shall not sit after a Quarter-past Two of the clock whilst the House is sitting without the leave of the House." It was necessary, therefore, on every occasion to bring down, a Resolution of this sort to the House, so that the Committee might sit whilst the House was sitting, and they might fix a Bill at four o'clock or, in other cases, an unlimited hour, and it must be remembered that this Standing Order was altered by the Government themselves into another shape, giving the Committee power first of all to decide whether it should go on and then to come down to the House for confirmation of the further sitting. I was on the Committee which sat in the first year of this Parliament, when this matter was very considerably debated in this House, and it was very much hoped that the old Rule would be altered and that the Committee should have some fair field in connection with these matters to settle for themselves the procedure. Therefore these precedents which are given were in accordance with the old Standing Order, and have nothing to do whatever with the Standing Order as altered by the Government themselves. But if the Government really have the desire in their hearts of improving the position of Grand Committees, they ought to consider seriously whether this is a wise precedent to establish. It is well known that there can be nothing so unsatisfactory as a Standing Committee sitting at the same hour when legislative business is being conducted in this House. The Divisions of the sittings are entirely different. In the Standing Committee Members are not summoned to Divisions in this House as they are from outside, and therefore it is impossible for Members to take part both in the business upstairs and the business downstairs without entirely disorganising the business in Grand Committee. For the Grand Committee periodically to adjourn whilst the Members go to a Division downstairs, which may be very necessary on a Bill of such importance as the Irish Land Bill,

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  disorganises business upstairs, makes consecutive argument almost impossible, and ruins the good work which these Committees have been doing. That is why, no doubt, this special provision was put into the new Standing Order, which implies that it is very undesirable to go beyond four of the clock for the sitting of a Grand Committee, and that it should only be sanctioned when it is brought formally down to the House in order that it may judge on a particular day whether this should be or not. I urge on behalf of the good conduct of Grand Committees that the Government should hesitate to destroy the work which they themselves have set up.
  The Prime Minister said he could not discover any better test of a non-controversial Bill than the figures he gave us. I was very glad to see that the Leader of the Opposition interpolated "the Aliens Bill," because I do not think any of us who sat in the last Parliament can forget the Debates that took place on the proposal to send that Bill to a Grand Committee, when hon. Members, and, I think, the Chancellor of the Exchequer, protested most strongly against the Bill being considered as non-controversial, although it had passed second reading without a Division. If the action of the Opposition is to be a test of controversy, there is another Bill in which I was personally interested in the hope that the Government would pursue it, namely, the Hops Bill, about which there was no controversy on this side of the House, and the only possible controversy that could have existed was on the Government Benches. Controversy from the Opposition point of view seems to be the only requisite to make a Bill controversial in the view of the Government. The arguments, either from precedents or from actual reference to the Bill, are not so satisfactory as to persuade us to establish a precedent of this sort, and I hope the House will reject it.
  Sir F. BANBURY: The Prime Minister tells us that this Bill must be regarded as non-controversial because yesterday week it passed its second reading by 127 to 17. That means that there were something like 145 Members in the House altogether out of 670. That alone is an extraordinary coincidence, because one does not know what would have happened if the absent Members had been in the House and listened to the arguments which were
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  brought forward against the Bill. May I point out one of the reasons why the minority was so small, and why in my opinion it is no evidence that the Bill was of a non-controversial character? The Debate was taken on a Monday, therefore a great number of Members had not returned from the country. At this late period of the Session Members go away from Friday to Monday, and if they go any distance in the country they do not come back until late in the evening, and do not come here until Tuesday. The Chancellor of the Exchequer argued that the Finance Bill would not be on. Apparently he thinks that when the Finance Bill is not on most Members go away, and then it is no hardship to get a certain number to sit to any hour. On Monday week the Finance Bill was not on, and a great number of Members had gone away for that very reason, therefore the actual numbers of the minority are not to be considered in any kind of way as indicating whether or not the Bill was controversial. The Debate began I think about 3.30, and it went on till 12.30, and then the Debate had to be closured. That shows that there was a very strong feeling in the House on all sides that this was a measure which requires great consideration. On the Aliens Bill there was no Division at all on the second reading, and if there had been no Division on the second reading of this Bill the Prime Minister might have claimed that that showed that at any rate the principle of the Bill was not controversial. The vast majority of Members of the House did not understand the Bill. There had been no explanation, and nothing but a Memorandum was circulated. The Bill was controversial, and the Debate and Division which took place proved that it was. Mr. Ritchie's motion has also been cited. That was on the Companies Bill, and to the best of my recollection there was no division on the second reading. It was not made till the Bill had been three days in Committee, and Mr. Ritchie in making the Motion stated, what the right hon. Gentleman omitted to read, that it was at the unanimous wish of the House that the Motion was made, and that was not contradicted. That is a very different thing from the Motion now before us, though the general principle of the Development Bill might have been regarded by a certain number of Members as non-controversial. I do not believe in any quarter of the House, except perhaps below the Gangway on both sides, there is a Member who would

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  deny that many of the provisions and details of the Bill are highly controversial, and it is the details that we are now going to discuss in this extraordinary manner.
  This Bill was presented without the slightest word from the Minister in charge of it. I believe that has never been done before with an important Bill of this sort. It was done because, under the abolition of the 11 o'clock Rule, no Bill can be brought in under the 10 minutes Rule. When this Motion is made at the end of the Session it has always been the custom, whatever Government was in power, to regard the making of that Motion as a sign of the closing of the Session, and as an indication that no important Bill will be introduced. Therefore the right hon. Gentleman was unable to take the ordinary course and to explain the Bill. After that there was this one day's discussion, which is all that the Bill has had, and then, after the Closure, the right hon. Gentleman makes this Motion before the Committee has sat. He says the reason of it is that it suits the convenience of Members. It does nothing of the sort. He says it suits the convenience of Members because the Leader of the Opposition suggested that the Committee should not sit during the Finance Bill. That was a very reasonable suggestion. It would be impossible for the Committee to meet during the sitting of the Finance Bill. But the Finance Bill is not the only Bill before the House, and the Irish Land Bill is one of the most controversial Bills which could possibly have been introduced, and it has been fought with great determination, notwithstanding the difficulties which we have to meet, because so many Members are wearied with the Finance Bill and go away. I happen to be a Member of Committee C. I have also taken a very great interest in the Irish Land Bill. I have not been away from the House for a single moment, and I think I have not missed a single Division while the Irish Land Bill was in course of Debate. I take a great interest in the financial part, and offered some words of advice to the Irish Secretary, and I believe he put in a new Clause, more or less founded on the suggestions I made. Am I to be deprived of the advantage of listening to the Irish Land Debate, or am I to be deprived of my shave in the Debate on the Development Bill, which I strongly oppose, and in the Division against which I took part?
  I hope the right hon. Gentleman can give me some consolation with regard to
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  that. I do not see how he can, and I am not at all sure from the look on his face whether he does not regard the situation, with some satisfaction. It struck me, from the look on his face, that he was not sorry to find the difficult position in which I am. If he deprives me of my right to be in the House and take part in the Debate on the Irish Land Bill, will he allow me to divide against the Clauses or the Amendments which are put while Committee C is sitting? If he will not do that we come to this position, that a Member of this House now is not allowed either to speak or to listen to a Debate; he is not even allowed to divide because he cannot be in two places at once. If we are allowed to divide against it, is he going to allow the Committee to adjourn when a Division is called down here, because unless he will do that either the Members of the Committee will be deprived of the right of dividing on any Amendment on the Irish Land Bill, or if they come down they will not know when they go back into the Committee what has taken place. They may miss a Division in the Committee or they may lose the thread of the argument, and consequently they may be put in a very impossible position if they desire to do their duty to their constituents. I would also point out to the right hon. Gentleman that the Motion on the Companies Bill was made on 10th July, 1900. In answer to an interruption of mine when I asked the date on which the Motion on behalf of the Companies Bill was made, the right hon. Gentleman said it was an argument in his favour because it was made in July, while the Motion now before the House is made in September. Surely the right hon. Gentleman was not serious in advancing that argument? But if he was, see what it means. All that he has to do is to postpone all the important measures until after the "massacre of the innocents," and then come forward and closure the second reading of a Bill which has not been discussed on the first reading and say, "It is late in the Session, and therefore we will push it through upstairs." Consequently Parliament would be entirely in the hands of any tyrannical Minister who was regardless of all precedent and indifferent to the customs of the House of Commons. I venture to say that there have been very few Ministers on the other side of the House who have disregarded the customs of the House in the way they are disregarded now. Such a Minister would be able to force any measure through the House without any

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  discussion at all. Therefore my interruption was to the point, for certainly not after June or July should any step of this kind be taken. Earlier in the Session we have time to consider Bills, but at present we have neither time nor vitality to consider important measures of this sort. I suppose it is hopeless to appeal to the Chancellor of the Exchequer. The right hon. Gentleman has brought forward the Development Bill for some reason known to himself, and he is desirous of getting it through. Whether the House of Commons approves of it, and whether they are able to discuss or to understand it, does not matter to the right hon. Gentleman. All he wants is to be able to say, "See what a generous man I am; see how I am going to distribute other people's money, regardless of discussion in this House." That is what he wants to say to the electorate, and in view of possible contingencies the advantages from the electoral point of view of this Bill are so great that they out weigh any minor considerations as to the precedents, habits and customs of the House of Commons.
  Mr. AUSTEN CHAMBERLAIN: The Prime Minister in reply to the Leader of the Opposition showed, I think, an altogether inadequate appreciation of the case which my right hon. Friend laid before the House. The expediency of sending a Bill of this kind to the Grand Committee, and the expediency of allowing the Grand Committee to sit without limit of time, even if the House be sitting, is not to be measured by the Members who take part in the Division on the second reading of the Bill. There are many of us who had no desire to vote against the second reading of the Bill, but who feel the keenest interest in its provisions, and who must regret that a Bill of this importance, forming part of the Budget statement of the Chancellor of the Exchequer, and introduced as an essential part of the finance scheme of the year, should have been divorced from the control of the whole House at any stage of its proceedings; and, though I for one would not vote against the second reading of the Bill, I regret that the strain which the Budget work has placed upon myself, like so many others, makes it impossible for me to take my part in the Committee stage of the Development Bill or to offer the Amendments or criticism in the Committee stage which the Bill certainly calls for in a degree not less than in the case of many Bills which have been fought with
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  great persistence both in the Committee stage and on their second and third readings. I do not rise only to join in the general protest which has been made against the proceedings of the Government or to reinforce the case stated so admirably by my right hon. Friend; I rise for the purpose of moving an Amendment to the Resolution proposed by the Chancellor of the Exchequer. When the Prime Minister was speaking I asked him to give us the dates of the other precedents on which the Government rely, and he seemed surprised and rather annoyed that I should make such a demand. I think it was not unreasonable to ask for the dates.
  Mr. LLOYD-GEORGEindicated dissent.
  Mr. AUSTEN CHAMBERLAIN: Well, the Prime Minister showed certain irritation.
  Mr. LLOYD-GEORGE: I think it was rather due to an observation made by the right hon. Gentleman that we had only furnished him with the date of one precedent. I think the Prime Minister had the impression that the right hon. Gentleman complained that we had not given other precedents. His observation was confined to that, and he did not object to being asked for the precedents.
  Mr. AUSTEN CHAMBERLAIN: I do not think he objected to give the dates, but I think he appeared annoyed at my asking for them. But that is a small matter. It is true that up to that time we had only been told the date of one precedent relied upon by the Chancellor of the Exchequer. That had been given, and my right hon. Friend has had an opportunity of hurriedly consulting it. That as a precedent for this Motion broke down the moment we saw what the terms of the Motion were, and I must observe that, in citing the precedent, the Government were not very candid with the House.
  The PARLIAMENTARY SECRETARY to the TREASURY (Mr. Joseph Pease): The Procedure Rules at that time were different.
  Mr. AUSTEN CHAMBERLAIN: They were very different, and, on the whole, I think they were better. But the right hon. Gentleman will find nothing in the alterations which have since been made to strengthen the case of himself and his colleagues. It is quite the other way. The Prime Minister did give us the other precedents. Let us see what they were. I

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  take first the Clergy Discipline Bill in 1892. The Motion was made by my right hon. Friend, who was then Leader of the House, and he introduced it with these words, "The House will see that the Motion is not without justification when I state that, whereas, according to ordinary precedent and the teaching of experience, a Bill of this kind might be expected to go through Grand Committee in the course of two sittings, yet, as a matter of fact, three sittings have already taken place and only 19 lines of the first Clause have been dealt with, while the Clause itself has not yet been passed." Nothing of the kind has occurred in connection with this Bill. The Committee has not even met. No representations have been received from the Committee or from Members sitting on it, as has, I believe, been the universal practice in previous cases, and there is no possibility of excuse for alleging that the Bill would take any more than the usual or natural time when the Committee enters on its labours. The next precedent cited was the Motion made in 1896 on the Benefices Bill. It asked leave to the Committee to sit every day until Four of the clock. That is the Motion which the right hon. Gentleman opposite cites, without mentioning its terms, but by giving a vague description, as a precedent for asking that the Committee on the Development Bill should be allowed to sit for an unlimited time after four o'clock. Let us see what was said there. The Motion was not made on that occasion by a Member of the Government, but by the Chairman of the Grand Committee, the late Sir James Fergusson. He said that the Bill under the consideration of the Committee had occupied a great deal of time, and that he had obtained the assent of the Committee to ask the House to give them more time. Have you followed the precedent in that respect? Then he observed further that an hon. Member who was, perhaps, the most prominent opponent of the Benefices Bill in Committee had told him that although he would object to an unlimited extension of the Committee he would not object to an extension of one hour. It was not proposed that the Committee should sit until four o'clock every day, but only that it should have power to sit after three o'clock if any matter was before them which could be finished in a short time. That is precedent No. 2 on which the Chancellor of the Exchequer relied. Now let us look at precedent No. 3. It is interesting to find out what the real
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  facts of the cases were on which the Chancellor of the Exchequer relied. Precedent No. 3 was in regard to the Companies Bill in 1900. In that case the Motion was made by Mr. Ritchie, who said that the Committee would not be invited to meet any day or hour which would be inconvenient for the great bulk of the Members, but that it might sometimes sit until four or five o'clock, and, perhaps, on one or two extra days so that it might get through its work. These are the precedents on which the Government rely. It is a pity that the Government did not say what the precedents were, and that they did not draw their Motion in the form of the precedents. I propose to help in that matter. I beg to move that the Motion of the Chancellor of the Exchequer be amended by leaving out the words "and after four of the clock," and inserting the words "but not after five of the clock." If the Government accept that Motion, they will have done something to show that they propose to exercise the powers of this Resolution in the way explained when the other Resolutions were moved, and they will do something at this late hour to justify the use they have attempted to make of the precedents they cited without stating what they were.
  Mr. LLOYD-GEORGE: The right hon. Gentleman has made a very excited speech about an extraordinary small Amendment on the question whether the Grand Committee should sit till four, five, six, or seven o'clock. He has imported a good deal of passion into the matter. Let us take the precedents with which he has dealt. In regard to the Clergy Discipline Bill first of all, the sittings then were very late at night. They went on to seven, or eight, or nine o'clock. I think the right hon. Gentleman has rather strengthened my ease by going into these precedents. He said that before the Motion only 19 lines of the Bill had been carried in three days; the moment the Motion was carried the whole Bill was through in a single sitting. What greater justification than that could there be for the proposal now made? The second precedent I agree was limited to four o'clock, but as the right hon. Gentleman complains that I did not state the whole of the facts, may I also point out that he did not state the whole of the fact. The four o'clock included Fridays, which is a very considerable exception. It meant an addition of four hours on Friday when the House was sitting.
  Mr. STEWART BOWLES: On Wednesdays.
  Mr. LLOYD-GEORGE: I quite agree. I quite forgot that those were the old Wednesday days. I think the first precedent is best of all in a case where you have got two or three men who are very violently opposed to a Bill which the vast majority of Members are rather in favour of. The Members opposed to it might have considerable powers of protracting the discussion by the exercise of ingenuity and of some considerable resource, and I cannot conceive any Minister in charge of a Bill assenting to a proposition which will really encourage them by saying, "All you have got to do is to keep it up to five o'clock, and then automatically the thing comes to an end." The mere fact that you have not a limit of this kind enables you to get it through. That is what enabled the Clerical Discipline Bill to get through, in spite of the resources of my hon. Friend (Sir Samuel Evans) and myself.
  Mr. AUSTEN CHAMBERLAIN: I think the right hon. Gentleman forgets what happened.
  Mr. LLOYD-GEORGE: Indeed I do not.
  Mr. AUSTEN CHAMBERLAIN: I think the right hon. Gentleman and the learned Gentleman sitting next to him (Sir S. Evans) retired, and the obstruction died with them, and the matter went through the next day.
  Mr. LLOYD GEORGE: I agree that if I charge anybody else with obstruction it would be against the Rules of the House, but I do not think it is against the Rules of the House to charge myself with obstruction, which I frankly admit on that occasion. What stopped it was a Motion of this kind. That is the only way. There is nothing better to get a Bill of this kind through than to fix a limit such as we propose. If there was no limit of this kind it might not be got through. It is the mere knowledge that nothing is to be gained by keeping up the thing to a certain hour that prevents obstruction from being continued. It has often been said, as regards the Eleven o'clock Rule, that if it had not been for the Eleven o'clock Rule the guillotine and closure would not be necessary. Old Parliamentarians often tell me so. It was always the knowledge that it might go on to an unlimited time that had the effect of curtailing discussion. It is not that I am anxious to sit after five o'clock. I think very likely it will not be necessary; but merely that if it is known that at five
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  o'clock it automatically comes to an end it is an encouragement for these exceedingly ingenious Gentlemen, of whom the hon. Baronet (Sir F. Banbury) is one. I cannot conceive a greater incentive to the hon. Baronet than the Amendment of the right hon. Gentleman to work up to five o'clock. He is quite capable of doing it. It would be the worst thing in the world for the purpose of getting through a Bill. If there is a desire that a Bill should not be got through limits of this kind would be very useful, but I do not think the right hon. Gentleman takes that view. It may be desirable to have Amendments, but it is also desirable to have a Bill, I will not say exactly on these lines, but a Bill based on these principles. Therefore I cannot accept this Amendment. The hon. Baronet asked me about Divisions. I understand that is purely in the discretion of the Chair. That discretion, I believe, is always exercised, as probably the majority of the Committee would be desirous of attending the Division. However, that is in the discretion of the Committee, and I should simply deal with the Vote as one of the Committee.
  Mr. W. P. BYLES: No one, after all, is so efficient as the poacher who has turned gamekeeper. I think the arguments of my right hon. Friend about the time limit of five o'clock are absolutely conclusive. I only wish he would make a proposition in regard to the Eleven o'clock Rule which automatically stops our proceedings every night. It does seem to me that there has been a great deal of unnecessary party warmth generated by this Debate. I do not propose to deal with that side of it or with anything which would elicit warmth, but I wish to point out that the real question put is purely a domestic question as to the regulation of our proceedings, and from that point of view I wish to speak. I shall not oppose the Motion of the right hon. Gentleman, but I shall give it a reluctant support, because I believe with him that he is proposing it for the general benefit of the House, in accordance with what I believe to be the general wish of the large majority, but, nevertheless, I do desire to utter a mild remonstrance against a proposal of this kind. I am a strong believer in the usefulness of the Grand Committee system. I desire to see it extended; I desire to see a great deal of our work carried on in the useful, friendly, non-party manner, in which the proceedings of the Grand Committee are carried on. But I do not want that to be

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  done at the expense of our duties in this House. I have always opposed when I have been on Grand Committee the Motion made for the Committee to sit after the assembling of this House, and I shall continue to do so solely on the ground that it imposes on us a double duty, and that, In such a case, we must neglect one of our duties. I want to see the maximum output of Government work while this Government is in power.
  Mr. DEPUTY-SPEAKER: The Question is whether the words "and after four of the clock" do remain in, or the words "not after five" be inserted. The hon. Member is dealing with the whole question.
  Mr. BYLES: It is quite true, I was falling back on the original Motion, which I thought, perhaps, might be allowed in this Debate; but I desire to say that I am afraid of our creating a precedent which, in our history, would be gradually broadened down to the injury of the Grand Committee system. But for the reasons which have been given by the right hon. Gentleman, I hope that the Amendment will be rejected.
  Lord ROBERT CECIL: The hon. Gentleman, who has just sat down, gave us some excellent reasons for supporting the Amendment, and concluded by saying that he would vote against it. I understood the hon. Gentleman to say that he deplored the whole of this Motion, because it interfered with the proper working of Grand Committee. The Amendment proposes to limit the operation of the proposals, so that it shall not, at any rate, extend beyond five o'clock. The hon. Gentleman having explained his objection to the proposal, then says he will vote against the Amendment. I will vote in favour of the Amendment, because it is reasonable in itself, and because the reasons which the Chancellor of the Exchequer gave for opposing it to me would be conclusive in its favour. The Chancellor of the Exchequer has many great qualities, as we ail know, but he belongs to a type of men who love tyranny for its own sake. He regards power as only useful in order to enforce his own will without respect to the justice or equity of his opinions.
  Mr. T. P. O'CONNOR: A kind of Robespierre.
  Lord ROBERT CECIL: And the speech of the right hon. Gentleman will give an admirable illustration of what I mean. Like the hon. Gentleman who has just
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  spoken, I am a strong supporter of Grand Committees. I desire to see their use extended, and the reason is because I think they afford opportunity which unfortunately our proceedings in the House at large do not afford for fair, unfettered discussion. The Chancellor of the Exchequer regards the Grand Committees as a means of enabling him to force Government measures through. He makes no answer to my right hon. Friend's Amendment, except this: "If we grant you that, we shall not be able to force the Bill through." That is the whole of his reason, and a very characteristic reason, coming from that quarter of the House. He wishes to use the procedure of Grand Committees as another weapon of the executive Government in order to tyrannise over the House of Commons. That is the reason why I shall support my right hon. Friend's Amendment, and why I shall certainly oppose the Motion of the right hon. Gentleman. The Chancellor of the Exchequer opposes the Amendment because, he said, this is a non-controversial Bill which ought to become law, and ought to be forced through, without regard to the opinions and feelings of the minority. This is a non-controversial Bill: Does anyone know what it contains? I am not going to argue the measure, but does anyone say that a Bill is non-controversial which is going to make free grants to anyone, for anything, anywhere? That is literally true, and this is to be done at the discretion of the Government of the day. The Bill supersedes the Light Railways Act and the Small Holdings Act, it interferes with highway authorities, and it proposes to drive gigantic roads through the length and breadth of this country. And the right hon. Gentleman calls that a non-controversial measure. [Cries of "Question."] I am perfectly in order in pointing that out. I am not going to argue whether it is right or wrong, but the measure proposes to drive these gigantic roads right through the length and breadth of the country.
  Sir HENRY COTTON: Are these observations applicable to the question of five o'clock?
  Lord R. CECIL: It is not only my opinion, but this Bill has been described by one of the leaders of the Labour party, the hon. Member for Merthyr Tydvil (Mr. Keir Hardie), as the most revolutionary measure that has ever been introduced into Parliament, embodying the principles of the Right to Work Bill. It is absurd

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  to call that a non-controversial measure. The only ground the right hon. Gentleman gives for the Motion is that a small minority voted against the second reading. It is a small minority; but, after all, you must consider the conditions under which we are carrying on our work, and you cannot expect Members to attend every day, and night and day, from the end of January to the end of September, under those conditions. I shall oppose the Motion and support the Amendment. I believe it is a Motion without precedent, and, though I agree that I am not capable of arguing the point, I do think that it introduces a most unfortunate precedent for the future. I do hope that next Session, or in the near future, we shall really establish Grand Committees on a sound basis. [Cries of "Order."] I am quite aware that some of my observations are not pleasant to hon. Members opposite; but if Grand Committees are to be used merely as an instrument to oppress the minority; then it will be perfectly impossible that they will ever have that great future before them which is desired, and the last opportunity for the regeneration of the procedure of the House of Commons will have disappeared.
  Captain CRAIGrose to continue the discussion, whereupon—
  Mr. LLOYD-GEORGErose in his place and claimed to move, "That the Question be now put."
  Mr. DEPUTY-SPEAKER: I think the House is prepared to come to a decision shortly.
  Captain CRAIG: I wish to point out that many hon. Members on these benches are interested in the discussion of the Irish Land Bill, and therefore are intensely desirous of being in attendance in the House when that particular measure comes on for debate. I am one of the Members of Committee C, which must sit upstairs, and I really wish to urge on the more fortunate Members opposite that very great hardship is being and has been inflicted upon the occupants of these benches, especially in regard to the attitude which has been taken up on the Amendment moved by the right hon. Gentleman to limit the time during which the Committee upstairs can sit. An hon. Member opposite told me yesterday that he had been away for a month, and that he had come back ready to stay here for a few weeks. That
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  is what happens on the other side. On this side it is quite different. I really think that hon. Members hardly conceive the amount of work which private Members on these benches have to undertake, especially if they interest themselves in the legislation which is going on. The reason why I think it is particularly hard on Irish Members is that the Chancellor of the Exchequer said, "After all, it is not necessary for Members to come down here." What is the Bill we have to discuss on Wednesday, Thursday, and Friday? It is a measure in which £80,000,000 is at stake, yet the Chancellor of the Exchequer, who is supposed to control the finances of the country, says that it is not necessary for Members to come down to the House at all. We have been allowed a most miserable pittance of time for the discussion of that great measure, and then we are told that we need not even come down for a couple of days on the Report stage of a Bill that under ordinary circumstances would have been a first-class measure in any Session of Parliament. Piled on top of the duty to watch Amendments, to meet deputations from Ireland, to take charge of all the difficult negotiations with those who wish Amendments to be moved, the right hon. Gentleman says we are to sit on Wednesdays, Thursdays, and Fridays in a Committee upstairs as long as he desires to keep us there. I say that is quite unfair, and if we are to take any part whatever in legislation we should be released from the Committee at five o'clock at the latest, in order that we may be able to come down here to take our legitimate part in the discussion on the Irish Land Bill. I do not think it is fair on the part of the Chancellor of the Exchequer to-press us to this extraordinary extent. Discussion is to be stifled in the House, while we have to sit to any length in Committee upstairs; that is what it amounts to. The right hon. Gentleman does not wait until the Committee had sat and then say that he could not get on with the work, or that it had been obstructed, or anything of that kind. What he does is to take for granted what he has no right to take for granted, that there will be obstructions, and in order to get the Bill he uses the same method in Committee upstairs that he uses in the House. I complain, not merely for myself, but for my colleagues who have had a fairly long and arduous Session, and I do not think that the right hon. Gentleman or any of the Members behind him have any idea of the effects of the present method under which

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  we are working. The Vice-President of the Department of Agriculture (Ireland) (Mr. T. W. Russell) says that this is a non-controversial measure, and as a Member of the Government he is stumping Ireland and saying what the Bill will do, and actually promising grants under this measure. If the Bill is to be used by Ministers in Ire land for the purpose of catering for sup port, then I say—[Cries of "Order."]—
  Mr. HAMAR GREENWOOD: I wish to know if the hon. and gallant Gentleman is in Order in discussing the whole Bill on the Amendment of the right hon. Gentleman opposite?
  Mr. DEPUTY-SPEAKER: The hon. and gallant Gentleman would not be in Order in discussing the Bill, but he is in Order in referring to it while arguing in support of the Amendments as to "five o'clock." The hon. and gallant Gentleman, however, is repeating himself a good deal.
  Captain CRAIG: I read in the newspapers the speech of the Vice-President of the Board of Agriculture, and I ask the Chief Secretary whether he can get up and deny my statement. This is first of all called a non-controversial measure, and the right hon. Gentleman thinks that, being non-controversial, it ought to be got through at a single sitting of the Committee. [Cries of "No."] The right hon. Gentleman does not deny what he said, that he hoped it would be got through by this system perhaps in one sitting, because it is a non-controversial measure. It is doubtless non-controversial in the country, where the Government themselves are using it, because of this method of popularising it, but in this House what is done is to absolutely stifle discussion. It is said that Members of the Opposition were not here to vote on the second reading. If they had been here the right hon. Gentleman would have moved the Closure. I have sat on these Grand Committees many times, and we have got through all the business in the ordinary way and without the adoption of extraordinary methods of this kind, which reduce not only the work of the House but the work of Grand Committees upstairs to a perfect scandal.
  Mr. HENRY CHAPLIN: I am one of the Members who has the misfortune to sit upon this Committee, and I ask leave to say just a few words, because I am anxious that there should be no mistake as to my attitude with regard to the Bill. I stated on the second reading of the measure that with some of the objects in Part I.
  1958
  I was, in the main, in agreement; but having regard to the methods which are now being pursued by the Government I must say I am so totally and entirely opposed to them that I will alter my whole attitude in reference to the progress of this Bill. My right hon. Friend called attention very directly to the statement made by the Prime Minister when he announced what was and was not to be the future business of this Session. I have the book in my hand containing that statement, and I am bound to say that—having sat in this House for Heaven knows how many years, and having heard that statement made by the Leader of the House with regard to the future business to be transacted at a late period of the Session—that never in the whole course of my career have I known what I should call so complete a departure from a statement such as was made on that occasion, when the right hon. Gentleman put before the House what business he thought might be completed before the end of this Session. The right hon. Gentleman began by pointing out that there were three Bills distinctly controversial which must be proceeded with. He then went on to name them, and to name eight more, which he hoped were not controversial, and which he said it was essential they should pass. Then he came to three others, among them the Development Bill. He said:—
  "There are three other Bills which have not yet been introduced, but which we should hope will receive the assent of Parliament, but about which I do not speak in very sanguine terms."
  He went on to name the Development Bill:
  "which my right hon. Friend the Chancellor of the Exchequer has promised, and"
  and he added:
  "which I believe he regards as of a non-controversial character."
  Is not the Debate to-day, and the cheers with which the speech of my right hon. Friend was received in the earlier part of the evening, complete and conclusive, an unanswerable answer to the absurd statement that this Bill is not by any means controversial? I am content to point to the Debate this evening, not to talk of anything else, to show that that plea will not serve him for a single instant. I repeat again, and I regard this as the gravest part of the whole transaction, I am not justified, and I should not be justified in saying, and I will not say, that it is a breach of faith, but I do

  1959
  remember this, that when statements of that character and importance have been made by every other Minister I remember, whether he was a Tory Minister or a liberal or Radical Minister, those statements have always been regarded and treated as statements to be observed in the spirit as well as the letter. It is with profound regret I say that, in my humble judgment, the action of the Government with regard to this measure is the most complete and the most regrettable departure from the spirit of the statement of that kind that has ever been known before in the records of this House.
  Mr. E. B. BARNARD: I have been present throughout the discussions on this Bill, and I do not think there is any breach of faith on the part of the Government. I am bound to say it is very sad for those who are interested in agriculture to find
  the way in which a matter vitally affecting that interest is contemplated here. The right hon. Gentleman (Mr. Chaplin) has reminded us that he said with perfect frankness that he was in favour of the first part of this Bill, which, in my opinion, affects agriculture so enormously, and now he has told us that he recedes from that position, having regard to the action of the Government. That is the worst part of it, that whenever there is anything proposed here that touches the rural and the agricultural interest in any form invariably it gets "side-tracked."
  Mr. DEPUTY-SPEAKER: That has nothing to do with the Amendment before the House.
  Question put, "That the words proposed to be left out stand part of the Question."
  The Committee divided: Ayes, 213; Noes, 91.

  Division No. 648.]

  AYES.

  [5.5 p.m.

  Abraham, W. (Cork, N.E.)

  Dillon, John

  Joyce, Michael

  Agnew, George William

  Duckworth, Sir James

  Kekewich, Sir George

  Ashton, Thomas Gair

  Duffy, William J.

  Kilbride, Denis

  Asquith, Rt. Hon. Herbert Henry

  Dunne, Major E. Martin (Walsall)

  King, Alfred John (Knutsferd)

  Baker, Sir John (Portsmouth)

  Ellis, Rt. Hon. John Edward

  Laidlaw, Robert

  Baker, Joseph A. (Finsbury, E.)

  Erskine, David C.

  Lambert, George

  Baring, Godfrey (Isle of Wight)

  Esslemont, George Birnie

  Lamont, Norman

  Barker, Sir John

  Evans, Sir S. T.

  Law, Hugh A. (Donegal, W.)

  Barlow, Sir John E. (Somerset)

  Everett, R. Lacey

  Layland-Barratt, Sir Francis

  Barnard, E. B.

  Faber, G. H. (Boston)

  Leese, Sir Joseph F. (Accrington)

  Barran, Rowland Hirst

  Falconer, J.

  Lever, W. N. (Cheshire, Wirral)

  Bern, Sir J. Williams (Devonport)

  Fenwick, Charles

  Levy, Sir Maurice

  Bethell, Sir J. H. (Essex, Romford)

  Flynn, James Christopher

  Lewis, John Herbert

  Bothell, T. R. (Essex, Maldon)

  Foster, Rt. Hon. Sir Walter

  Lloyd-George, Rt. Hon. David

  Birrell, Rt. Hon. Augustine

  Fuller, John Michael F.

  Lupton, Arnold

  Boulton, A. C. F.

  Fullerton, Hugh

  Lynch, A. (Clare, W.)

  Bowerman, C. W.

  Gibb, James (Harrow)

  Macdonald, J. R. (Leicester)

  Brace, William

  Gilhooly, James

  Maclean, Donald

  Branch, James

  Gill, A. H.

  Macnamara, Dr. Thomas J.

  Bright, J. A.

  Glover, Thomas

  Macpherson, J. T.

  Brunner, J. F. L. (Lanes., Leigh)

  Gooch, George Peabody (Bath)

  McKenna, Rt. Hon. Reginald

  Brunner, Rt. Hon. Sir J. T. (Cheshire)

  Guest, Hon. Ivor Churchill

  M'Laren, H. D. (Stafford, W.)

  Bryce, J. Annan

  Haldane, Rt. Hon. Richard B.

  M'Micking, Major G.

  Burns, Rt. Hon. John

  Harcourt, Rt. Hon. L. (Rossendale)

  Maddison, Frederick

  Burnyeat, W. J. D.

  Harcourt, Robert V. (Montrose)

  Mallet, Charles E.

  Burt, Rt. Hon. Thomas

  Hart-Davies, T.

  Marnham, F. J.

  Buxton, Rt. Hon. Sydney Charles

  Harvey, W. E. (Derbyshire, N.E.)

  Massie, J.

  Byles, William Pollard

  Harwood, George

  Masterman, C. F. G.

  Cawley, Sir Frederick

  Haworth, Arthur A.

  Menzies, Sir Walter

  Channing, Sir Francis Allston

  Helme, Norval Watson

  Middlebrook, William

  Cherry, Rt. Hon. R. R.

  Henderson, Arthur (Durham)

  Money, L. G. Chiozza

  Clancy, John Joseph

  Henderson, J. McD. (Aberdeen, W.)

  Mooney, J. J.

  Clough, William

  Higham, John Sharp

  Morgan, J. Lloyd (Carmarthen)

  Clynes, J. R.

  Hobhouse, Rt. Hon. Charles E. H.

  Morrell, Philip

  Cobbold, Fellx Thornley

  Hogan, Michael

  Muldoon, John

  Collins, Stephen (Lambeth)

  Holland, Sir William Henry

  Murphy, John (Kerry, E.)

  Collins, Sir Wm. J. (St. Pancras, W.)

  Holt, Richard Durning

  Murray, James (Aberdeen, E.)

  Condon, Thomas Joseph

  Hooper, A. G.

  Myer, Horatio

  Corbett, C. H. (Sussex, E. Grinstead)

  Hope, John Deans (Fife, West)

  Nicholls, George

  Cornwall, Sir Edwin A.

  Horniman, Emslie John

  Norman, Sir Henry

  Cotton, Sir H. J. S.

  Howard, Hon. Geoffrey

  Nussey, Sir Willans

  Cullinan, J.

  Hutton, Alfred Eddison

  Nuttall, Harry

  Curran, Peter Francis

  Isaacs, Rufus Daniel

  O'Brien, Patrick (Kilkenny)

  Davies, Timothy (Fulham)

  Jardine, Sir J.

  O'Connor, James (Wicklow, W.)

  Davies, Sir W. Howell (Bristol, S.)

  Jones, Leif (Appleby)

  O'Connor, John (Kildare, N.)

  Dewar, Arthur (Edinburgh, S.)

  Jones, William (Carnarvonshire)

  O'Grady, J.

  Dickinson, W. H. (St. Pancras, N.)

  Jowett, F. W.

  O'Kelly, Conor (Mayo, N.)

  Parker, James (Halifax)

  Runciman, Rt. Hon. Walter

  Verney, F. W.

  Partington, Oswald

  Rutherford, V. H. (Brentford)

  Villiers, Ernest Amherst

  Paulton, James Mellor

  Scarisbrick, Sir T. T. L.

  Walsh, Stephen

  Pearce, Robert (Staffs., Leek)

  Seely, Colonel

  Wardle, George J.

  Perks, Sir Robert William

  Shackleton, David James

  Wason, Rt. Hon. E. (Clackmannan)

  Pickersgill, Edward Hare

  Shaw, Sir Charles E. (Stafford)

  Wason, John Cathcart (Orkney)

  Pointer, J.

  Shipman, Dr. John G.

  Watt, Henry A.

  Ponsonby, Arthur A. W. H.

  Snowden, P.

  White, Sir George (Norfolk)

  Price, Sir Robert J. (Norfolk, E.)

  Stanger, H. Y.

  White, J. Dundas (Dumbartonshire)

  Priestley, Sir W. E. B. (Bradford, E.)

  Stanley, Albert (Staffs, N.W.)

  White, Sir Luke (York, E.R.)

  Radford, G. H.

  Stanley, Hon. A. Lyulph (Cheshire)

  White, Patrick (Meath, North)

  Raphael, Herbert H.

  Stewart, Halley (Greenock)

  Whittaker, Rt. Hon. Sir Thomas P.

  Rees, J. D.

  Stewart-Smith, D. (Kendal)

  Wiles, Thomas

  Rendall, Athelstan

  Strachey, Sir Edward

  Williams, W. Llewelyn (Carmarthen)

  Richards, Thomas (W. Monmouth)

  Straus, B. S. (Mile End)

  Wilson, Hon. G. G. (Hull, W.)

  Ridsdale, E. A.

  Strauss, E. A. (Abingdon)

  Wilson, Henry J. (York, W.R.)

  Roberts, Charles H. (Lincoln)

  Summerbell, T.

  Wilson, J. W. (Worcestershire, N.)

  Roberts, G. H. (Norwich)

  Taylor, John W. (Durham)

  Wilson, P. W. (St. Pancras, S.)

  Robertson, Sir G. Scott (Bradford)

  Taylor, Theodore C. (Radcliffe)

  Wilson, W. T. (Westhoughton)

  Robinson, S.

  Tennant, Sir Edward (Salisbury)

  Winfrey, R.

  Robson, Sir William Snowdon

  Tennant, H. J. (Berwickshire)

  Wood, T. M'Kinnon

  Roch, Walter F. (Pembroke)

  Thomas, Sir A. (Glamorgan, E.)

  Young, Samuel

  Roe, Sir Thomas

  Thorne, G. R. (Wolverhampton)

  Rogers, F. E. (Newman)

  Thorne, William (West Ham)

  TELLERS FOR THE AYES.—Mr.

  Rose, Sir Charles Day

  Trevelyan, Charles Philips

  Joseph Pease and Captain Norton.

  NOES.

  Anson, Sir William Reynell

  Fell, Arthur

  Pease, Herbert Pike (Darlington)

  Anstruther-Gray, Major

  Fletcher, J. S.

  Peel, Hon. W. R. W.

  Arkwright, John Stanhope

  Forster, Henry William

  Percy, Earl

  Balcarres, Lord

  Foster, P. S.

  Pretyman, E. G.

  Balfour, Rt. Hon. A. J. (City, Lond.)

  Gibbs, G. A. (Bristol, West)

  Renton, Leslie

  Banbury, Sir Frederick George

  Gordon, J.

  Renwick, George

  Baring, Capt. Hon. G. (Winchester)

  Guinness, Hon. W. E. (B. S. Edm'ds)

  Roberts, S. (Sheffield, Ecclesall)

  Barrie, H. T. (Londonderry, N.)

  Haddock, George B.

  Salter, Arthur Clavell

  Beach, Hon. Michael Hugh Hicks

  Hamilton, Marquess of

  Scott, Sir S. (Marylebone, W.)

  Bowles, G. Stewart

  Hardy, Laurence (Kent, Ashford)

  Sheffield, Sir Berkeley George D.

  Butcher, Samuel Henry

  Harris, Frederick Leverton

  Stanier, Beville

  Carlile, E. Hildred

  Harrison-Broadley, H. B.

  Stanley, Hon. Arthur (Ormskirk)

  Carson, Rt. Hon. Sir Edward H.

  Heaton, John Henniker

  Starkey, John R.

  Castlereagh, Viscount

  Hills, J. W.

  Staveley-Hill, Henry (Staffordshire)

  Cave, George

  Hope, James Fitzalan (Sheffield)

  Stone, Sir Benjamin

  Cecil, Evelyn (Aston Manor)

  Hunt, Rowland

  Talbot, Lord E. (Chichester)

  Cecil, Lord R. (Marylebone, E.)

  Joynson-Hicks, William

  Talbot, Rt. Hon. J. G. (Oxford Univ.)

  Chamberlain, Rt. Hon. J. A. (Worc'r)

  Kerry, Earl of

  Thomson, W. Mitchell- (Lanark)

  Chaplin, Rt. Hon. Henry

  Kimber, Sir Henry

  Thornton, Percy M.

  Clark, George Smith

  King, Sir Henry Seymour (Hull)

  Walker, Col. W. H. (Lancashire)

  Clive, Percy Archer

  Lambton, Hon. Frederick William

  Walrond, Hon. Lionel

  Cochrane, Hon. Thomas H. A. E.

  Law, Andrew Bonar (Dulwich)

  Warde, Col. C. E. (Kent, Mid)

  Courthope, G. Loyd

  Long, Col. Charles W. (Evesham)

  Williams, Col. R. (Dorset, W.)

  Craig, Charles Curtis (Antrim, S.)

  Lowe, Sir Francis William

  Wilson, A. Stanley (York, E.R.)

  Craig, Captain James (Down, E.)

  Lyttelton, Rt. Hon. Alfred

  Winterton, Earl

  Craik, Sir Henry

  M'Arthur, Charles

  Wyndham, Rt. Hon George

  Dalrymple, Viscount

  Mason, James F. (Windsor)

  Younger, George

  Dickson, Rt. Hon. C. Scott

  Meysey-Thompson, E. C.

  Doughty, Sir George

  Moore, William

  Douglas, Rt. Hon. A. Akers-

  Morpeth, Viscount

  TELLERS FOR THE NOES.—Sir A.

  Faber, George Denison (York)

  Nicholson, Wm. G. (Petersfield)

  Acland-Hood and Viscount Valentia.

  Faber, Captain W. V. (Hants, W.)

  Parker, Sir Gilbert (Gravesend)

  Sir E. CARSON: I wish to ask the right hon. Gentleman (Mr. Lloyd-George) if, in fairness, he will give an undertaking that the Committee will not sit past four o'clock to-morrow and the next day, when we are in the Report stage of the Irish Land Bill? On any of the previous days, when we had Committee, and even without this Committee upstairs, there was seldom a quorum of us in the House. Some of the Amendments are in the names of Irish Members who are on the Standing Committee, and it would be very unfair that on these two days the Committee should sit after four o'clock.
  Mr. LLOYD-GEORGE: I should be delighted to respond to the very reasonable appeal of the right hon. Gentleman, but it is a matter for the Committee itself. This Motion merely gives the Committee authority to proceed. I hope we shall make such progress with the Bill that it will be quite unnecessary to sit after four o'clock.
  Main question put.
  The House divided: Ayes, 221; Noes, 92.

  Division No. 649.]

  AYES.

  [5.15 p.m.

  Abraham, W. (Cork, N.E.)

  Hart-Davies, T.

  Paulton, James Mellor

  Acland, Francis Dyke

  Harvey, W. E. (Derbyshire, N.E.)

  Pearce, Robert (Staffs, Leek)

  Agnew, George William

  Harwood, George

  Perks, Sir Robert William

  Ashton, Thomas Gair

  Haworth, Arthur A.

  Pickersgill, Edward Hare

  Asquith, Rt. Hon. Herbert Henry

  Helme, Norval Watson

  Pointer, J.

  Baker, Sir John (Portsmouth)

  Henderson, Arthur (Durham)

  Ponsonby, Arthur A. W. H.

  Baker, Joseph A. (Finsbury, E.)

  Henderson, J. McD. (Aberdeen, W.)

  Price, Sir Robert J. (Norfolk, E.)

  Balfour, Robert (Lanark)

  Higham, John Sharp

  Priestley, Sir W. E. B. (Bradford, E.)

  Baring, Godfrey (Isle of Wight)

  Hobhouse, Rt. Hon. Charles E. H.

  Radford, G. H.

  Barker, Sir John

  Hogan, Michael

  Raphael, Herbert H.

  Barlow, Sir John E. (Somerset)

  Holland, Sir William Henry

  Rees, J. D.

  Barnard, E. B.

  Holt, Richard Durning

  Rendall, Athelstan

  Barran, Rowland Hirst

  Hooper, A. G.

  Richards, Thomas (W. Monmouth)

  Benn, Sir J. Williams (Devonport)

  Hope, John Deans (Fife, West)

  Ridsdale, E. A.

  Bethell, Sir J. H. (Essex, Romford)

  Hope, W. H. B. (Somerset, N.)

  Roberts, Charles H. (Lincoln)

  Bethell, T. R. (Essex, Maldon)

  Horniman, Emslie John

  Roberts, G. H. (Norwich)

  Birrell, Rt. Hon. Augustine

  Howard, Hon. Geoffrey

  Robertson, Sir G. Scott (Bradford)

  Boulton, A. C. F.

  Hutton, Alfred Eddison

  Robinson, S.

  Bowerman, C. W.

  Isaacs, Rufus Daniel

  Robson, Sir William Snowdon

  Brace, William

  Jardine, Sir J.

  Roch, Walter F. (Pembroke)

  Branch, James

  Jones, Leif (Appleby)

  Roe, Sir Thomas

  Bright, J. A.

  Jones, William (Carnarvonshire)

  Rogers, F. E. Newman

  Brodie, H. C.

  Jowett, F. W.

  Rose, Sir Charles Day

  Brunner, J. F. L. (Lanes., Leigh)

  Joyce, Michael

  Rowlands, J.

  Brunner, Rt. Hon. Sir J. T. (Cheshire)

  Kekewich, Sir George

  Runciman, Rt. Hon. Walter

  Bryce, J. Annan

  Kilbride, Denis

  Rutherford, V. H. (Brentford)

  Buckmaster, Stanley O.

  King, Alfred John (Knutsford)

  Scarisbrick, Sir T. T. L.

  Burns, Rt. Hon. John

  Laidlaw, Robert

  Schwann, C. Duncan (Hyde)

  Burnyeat, W. J. D.

  Lambert, George

  Seely, Colonel

  Burt, Rt. Hon. Thomas

  Lamont, Norman

  Shackleton, David James

  Buxton, Rt. Hon. Sydney Charles

  Law, Hugh A. (Donegal, W.)

  Shaw, Sir Charles E. (Stafford)

  Byles, William Pollard

  Layland-Barratt, Sir Francis

  Shipman, Dr. John G.

  Cawley, Sir Frederick

  Leese, Sir Joseph F. (Accrington)

  Snowden, P.

  Cherry, Rt. Hon. R. R.

  Lever, W. H. (Cheshire, Wirral)

  Stanger, H. Y.

  Clancy, John Joseph

  Levy, Sir Maurice

  Stanley, Albert (Staffs, N.W.)

  Clough, William

  Lewis, John Herbert

  Stanley, Hon. A. Lyulph (Cheshire)

  Clynes, J. R.

  Lloyd-George, Rt. Hon. David

  Stewart, Halley (Greenock)

  Cobbold, Felix Thornley

  Lupton, Arnold

  Stewart-Smith, D. (Kendal)

  Collins, Stephen (Lambeth)

  Lynch, A. (Clare, W.)

  Strachey, Sir Edward

  Collins, Sir Wm. J. (St. Pancras, W.)

  Macdonald, J. R. (Leicester)

  Straus, B. S. (Mile End)

  Condon, Thomas Joseph

  Maclean, Donald

  Strauss, E. A. (Abingdon)

  Cooper, G. J.

  Macnamara, Dr. Thomas J.

  Summerbell, T.

  Corbett, C. H. (Sussex, E. Grinstead)

  Macpherson, J. T.

  Taylor, John W. (Durham)

  Cornwall, Sir Edwin A.

  McKenna, Rt. Hon. Reginald

  Taylor, Theodore C. (Radcliffe)

  Cotton, Sir H. J. S.

  M'Laren, Sir C. B. (Leicester)

  Tennant, Sir Edward (Salisbury)

  Cullinan, J.

  M'Laren, H. D. (Stafford, W.)

  Tennant, H. J. (Berwickshire)

  Curran, Peter Francis

  M'Micking, Major G.

  Thomas Sir A. (Glamorgan, E.)

  Davies, Timothy (Fulham)

  Maddison, Frederick

  Thorne, G. R. (Wolverhampton)

  Dewar, Arthur (Edinburgh, S.)

  Mallett, Charles E.

  Thorne, William (West Ham)

  Dickinson, W. H. (St. Pancras, N.)

  Marnham, F. J.

  Trevelyan, Charles Philips

  Dillon, John

  Massie, J.

  Verney, F. W.

  Duckworth, Sir James

  Masterman, C. F. G.

  Villiers, Ernest Amherst

  Duffy, William J.

  Menzies, Sir Walter

  Walsh, Stephen

  Dunne, Major E. Martin (Walsall)

  Middlebrook, William

  Wardle, George J.

  Ellis, Rt. Hon. John Edward

  Money, L. G. Chiozza

  Wason, Rt. Hon. E. (Clackmannan)

  Erskine, David C.

  Mooney, J. J.

  Wason, John Cathcart (Orkney)

  Essex, R. W.

  Morgan, J. Lloyd (Carmarthen)

  Watt, Henry A.

  Esslemont, George Birnie

  Morrell, Philip

  White, Sir George (Norfolk)

  Evans, Sir S. T.

  Morse, L. L.

  White, J. Dundas (Dumbartonshire)

  Everett, R. Lacey

  Muldoon, John

  White, Sir Luke (York, E.R.)

  Faber, G. H. (Boston)

  Murphy, John (Kerry, E.)

  White, Patrick (Meath, North)

  Falconer, James

  Murray, James (Aberdeen, E.)

  Whittaker, Rt. Hon. Sir Thomas P.

  Fenwick, Charles

  Myer, Horatio

  Wiles, Thomas

  Flynn, James Christopher

  Nicholls, George

  Williams, W. Llewelyn (Carmarthen)

  Foster, Rt. Hon. Sir Walter

  Norman, Sir Henry

  Wilson, Hon. G. G. (Hull, W.)

  Fuller, John Michael F.

  Nussey, Sir Willans

  Wilson, Henry J. (York, W.R.)

  Fullerton, Hugh

  Nuttall, Harry

  Wilson, P. W. (St. Pancras, S.)

  Gibb, James (Harrow)

  O'Brien, Patrick (Kilkenny)

  Wilson, W. T. (Westhoughton)

  Gill, A. H.

  O'Connor, James (Wicklow, W.)

  Winfrey, R.

  Glover, Thomas

  O'Connor, John (Kildare, N.)

  Wood, T. M'Kinnon

  Gooch, George Peabody (Bath)

  O'Donnell, C. J. (Walworth)

  Young, Samuel

  Guest, Hon. Ivor Churchill

  O'Grady, J.

  Haldane, Rt. Hon. Richard B.

  O'Kelley, Conor (Mayo, N.)

  TELLERS FOR THE AYES.—Mr.

  Harcourt, Rt. Hon. L. (Rossendale)

  Parker, James (Halifax)

  Joseph Pease and Captain Norton.

  Harcourt, Robert V. (Montrose)

  Partington, Oswald

  NOES.

  Anson, Sir William Reynell

  Balcarres, Lord

  Banbury, Sir Frederick George

  Anstruther-Gray, Major

  Baldwin, Stanley

  Baring, Capt. Hon. (Winchester)

  Arkwright, John Stanhope

  Balfour, Rt. Hon. A. J. (City, Lond.)

  Barrie, H. T. (Londonderry, N.)

  1964

  1965

  Beach, Hon. Michael Hugh Hicks

  Gerdon, J.

  Percy, Earl

  Bowles, G. Stewart

  Gretton, John

  Pretyman, E. G.

  Butcher, Samuel Henry

  Guinness, Hon. W. E. (B. S. Edm'ds)

  Renton, Leslie

  Carlile, E. Hildred

  Haddock, George B.

  Renwick, George

  Carson, Rt. Hon. Sir Edward H.

  Hamilton, Marquess of

  Roberts, S. (Sheffield, Ecclesall)

  Castlereagh, Viscount

  Hardy, Laurence (Kent, Ashford)

  Salter, Arthur Clavell

  Cave, George

  Harris, Frederick Leverton

  Scott, Sir S. (Marylebone, W.)

  Cecil, Evelyn (Aston Manor)

  Harrison-Broadley, H. B.

  Sheffield, Sir Berkeley George D.

  Cecil, Lord R. (Marylebone, E.)

  Heaton, John Henniker

  Stanier, Beville

  Chamberlain, Rt. Hon. J. A. (Worc'r.)

  Hills, J. W.

  Stanley, Hon. Arthur (Ormskirk)

  Chaplin, Rt. Hon. Henry

  Hope, James Fitzalan (Sheffield)

  Starkey, John R.

  Clark, George Smith

  Hunt, Rowland

  Staveley-Hill, Henry (Staffordshire)

  Clive, Percy Archer

  Kerry, Earl of

  Stone, Sir Benjamin

  Cochrane, Hon. Thomas H. A. E.

  Kimber, Sir Henry

  Talbot, Lord E. (Chichester)

  Courthope, G. Loyd

  King, Sir Henry Seymour (Hull)

  Talbot, Rt. Hon. J. G. (Oxford Univ.)

  Craig, Charles Curtis (Antrim, S.)

  Lambton, Hon. Frederick William

  Thomson, W. Mitchell- (Lanark)

  Craig, Captain James (Down, E.)

  Law, Andrew Bonar (Dulwich)

  Thornton, Percy M.

  Craik, Sir Henry

  Long, Col. Charles W. (Evesham)

  Walker, Col. W. H. (Lancashire)

  Dalrymple, Viscount

  Lowe. Sir Francis William

  Walrond, Hon. Lionel

  Dickson, Rt. Hon. C. Scott-

  Lyttelton, Rt. Hon. Alfred

  Warde, Col. C. E. (Kent, Mid)

  Doughty, Sir George

  M'Arthur, Charles

  Williams, Col. R. (Dorset, W.)

  Douglas, Rt. Hon. A. Akers-

  Mason, James F. (Windsor)

  Wilson, A. Stanley (York, E.R.)

  Faber, George Denison (York)

  Meysey-Thompson, E. C.

  Winterton, Earl

  Faber, Capt. W. V. (Hants, W.)

  Moore, William

  Wyndham, Rt. Hon. George

  Fell, Arthur

  Morpeth, Viscount

  Younger, George

  Fletcher, J. S.

  Nicholson, Wm. G. (Petersfield)

  Forster, Henry William

  Parker, Sir Gilbert (Gravesend)

  TELLERS FOR THE NOES.—Sir A.

  Foster, P. S.

  Pease, Herbert Pike (Darlington)

  Acland-Hood and Viscount Valentia.

  Gibbs, G. A. (Bristol, W.)

  Peel, Hon. W. R. W.

FINANCE BILL
Considered in Committee—[29th Day.]
[Mr. CALDWELL (Deputy-chairman) in the chair.]
(IN THE COMMITTE.)

FINANCE BILL
  PART III.—DEATH DUTIES.

    CLAUSE 42.—(Amendment of Rates of Legacy Duty and Succession Duty.)
    (1) Any Legacy or Succession Duty which under the Stamp Act, 1815, or the Succession Duty Act, 1853, or any other Act, is payable at the rate of three per cent. shall be payable at the rate of five per cent., and any Legacy or Succession Duty which under the said Acts is payable at the rate of five per cent. or six per cent. shall be payable at the rate of ten per cent. on the amount or value of the legacy or succession.
    (2) The Legacy and Succession Duty payable at the rate of one per cent. on the amount or value of any legacy or succession under the Stamp Act, 1815, and the Succession Duty Act, 1853, or any other Act, shall be levied and paid not with standing any repeal effected by or anything contained in the principal Act or any other Act, and the duty shall also be levied and paid in cases where the person taking the legacy or succession is the husband or wife of the testator, intestate, or predecessor as in cases where the person taking the legacy or succession is a lineal ancestor or descendant of the testator, intestate, or predecessor.
    Provided that the duty shall not be levied—

    (a) Where the principal value of the property passing on the death of the deceased and chargeable with Estate Duty (other than property in which the deceased never had an interest) does not exceed fifteen thousand pounds, whatever may be the value of the legacy or succession; or

    (b) Where the amount or value of the legacy or succession together with any other legacies or successions derived by the same person from the testator, intestate, or predecessor does not exceed one thousand pounds, whatever may be the principal value of the property so passing and chargeable; or

    (c) Where the person taking the legacy or succession is the widow or a child under the age of twenty-one years of the testator, intestate or predecessor, and the amount or value of the legacy or succession together with any other legacies or successions derived by the same person from the testator, intestate, or predecessor does not exceed two thousand pounds, whatever may be the principal value of the property so passing and chargeable.

    (3) In this Section the expression "deceased" means in the case of a legacy the testator (including a person making a donation mortis causa) or intestate, and in the case of a succession arising through devolution by law, the person on whose death the succession arises, and in the case of a succession arising under a dis-

    1967
    position, the person on whose death the first succession there under arises; and the expression "legacy" includes residue and share of residue and share of residue.
    (4) This Section shall take effect in the case of Legacy Duty only where the testator by whose will the legacy is given or the intestate on whose death the Legacy Duty is payable, dies on or after the thirtieth day of April, nineteen hundred and nine, and in the ease of a- succession arising through devolution by law, only where the succession arises on or after that date, and in the case of a succession arising under a disposition, only if the first succession under the disposition arises on or after that date.
    Amendment proposed [13th September]: In Sub-section (2) to leave out the words "levied and paid notwithstanding any repeal effected by or anything contained in the principal Act or any other Act, and the duty shall also be levied."—[Mr. G. D. Faber.]
    Question again proposed, "That the words proposed to be left out, to the word 'and' ['and the duty'], stand part of the Clause."
    Mr. WALTER GUINNESS: The Amendment really raises a very sample question, but, owing to the love of the Government for legislation by reference, it perhaps needs a word of explanation. Section 1 of the Finance Act, 1894, exempts from the payment of the 1 per cent. Legacy and Succession Duty any legacy which has already paid Estate Duty; and by Section 5(2) that exemption is extended to the whole duration of the settlement. The object of this Amendment is to continue this exemption to lineals and to extend the same benefit to those new successions between husband and wife which are now for the first time being made liable to the 1 per cent. Legacy or Succession Duty. It will still enable Succession Duty to be paid where Estate Duty is not payable. I think such cases may still arise. Under the Finance Act, 1894, where funds were left under will or disposition by someone dying before the Act came into force, no Estate Duty was payable—that is to say, in cases where Probate Duty had been paid. There may be many cases where this exemption from Estate Duty still exists. Take the case of a man who, before 1894, settled property on his son, with remainder to that son's wife. If the son now dies, that legacy will not pay Estate Duty; therefore, under this
    1968
    Clause, if the Amendment is accepted, the 1 per cent. Succession Duty can still be levied. Hence the right hon. Gentleman cannot say that the Amendment will frustrate the whole object of the Clause. I think there is a strong case for lenient treatment of the succession between husband and wife. Their separate estates are treated as one for the purposes of Income Tax, and it seems very unjust to-treat them separately only in those cases, where it is to the advantage of the State so to do. The severe steepening of the lower grades of the Estate Duties must inevitably seriously affect widows, and at this moment there is strong reason against levying this onerous new duty in the case of successions.
    I think it is onerous in the case of small estates where, perhaps, the family has been accustomed to live on a fairly comfortable scale, owing not to large invested funds, but to the earned income of the husband. I think it is very hard, just at the moment when that earned income is cut off, that you should go down and not only increase very considerably the Estate Duty, but also, for the first time, levy Succession Duty, which has previously only in very rare cases been levied. Of course, I know that widows get very little sympathy from hon. Members opposite. [HON. MEMBERS: "Oh."] Well, I think it is within the recollection of the House that they have been mentioned over and over again during the Finance Bill discussions, and during the discussions on other Bills—the Licensing Bill for instance—and they have always been laughed at. I can only imagine that the reason for that is that widows share with dukes an incapacity to vote for hon. Members of this House. But the case of widows does raise a very real grievance. I think it is most unjust that they should be treated separately only when it pays the State. If this Amendment is accepted, it will mitigate the severity of this new 1 per cent. duty.
    Mr. GEORGE CAVE: No doubt the intention and object, or feeling, when the Act of 1894 was framed, and the duties levied under it, was that it was desirable that children should be provided for, and not too heavily burdened by an accumulation of those duties upon estates left to them. If that was thought fair in 1894, surely now—when Esate Duties are being very greatly increased and Settlement Estate Duty is being doubled—the reasons apply with even greater force. As my

    1969
    hon. Friend has said, this is certainly not the time that this particular exemption, which is no doubt a benefit to children who become legatees, should be taken away. It is true that the further charge is limited in this respect, that it is not to apply to estates under certain amounts. But, after all, an estate of £20,000 or £25,000, or even £30,000, is not a large estate, and I think the Committee ought to consider this; in the case of children, which alone we are dealing with in this Amendment—it does not raise the question of widows—the duties are levied just at the moment when they lose the breadwinner of the family, when all earned income disappears, when the means of the family are necessarily very much reduced and straitened, and when, therefore, in many cases, every £100 of estate is of value and importance. It does seem to me to be very hard, when a man has done his best to save a moderate sum for his wife and his children—and in that respect done what is only his duty—that the State can step in and say: "Although you have been doing what is right, we fine you a substantial sum, and annex it for public purposes." I press upon the Government that every exemption in that case ought to be continued. It is not fair or desirable, whatever you are doing in regard to estates left to strangers or more distant relations, to increase the charges upon legacies which a man leaves to his own children. May I add this: Reference has been made to foreign laws. Well, compare in this respect French law with English law. You will find that the French law acts upon the principle to which I have referred. It does look with considerable favour on cases of gifts to children. A question was put to the right hon. Gentleman opposite not long ago asking him to give comparative figures as to the result of the Death Duties under the English law and the French law—the first as it is proposed to be enacted and the second as it is. The figure given to him for the purposes of comparison was a very large one—the estate was put at £5,000,000. I think his figures would be much about the same even in the case of a smaller estate. What was his answer? He said: "If such an estate passes in a direct line, that is, to the children, the Death Duties might be estimated roughly at £700,000 under the existing English law, at £791,500 under the Budget proposals, and under the French law at £246,000. The latter is less than one-third of the amount which the right
    1970
    hon. Gentleman proposes to raise I commend that example to the Government. The French law favours gifts to children, and very rightly and properly so. Our law hitherto has done the same by exempting very small legacies when they put on the heavy Estate Duty. I hope that that exemption in favour of gifts to children will not be taken away.
    Mr. SAMUEL ROBERTS: To my mind the most severe part of these duties are the duties in the direct line. What did Sir William Harcourt find in 1894? There was a fixed Probate Duty of 3 per cent. whatever the value of the property. In addition to that there was this 1 per cent. in the direct line. Sir William Harcourt thought, under the circumstances, when he was graduating his duty from 1 per cent. to 8 per cent., that it was just to do away with the Probate Duty of 3 per cent., and also that it was not fair to keep on this 1 per cent. in the direct line. Now the Government are increasing very much the valuation of Sir William Harcourt, and there is all the more reason, therefore, that this duty of 1 per cent. should not be reimposed. I think, when we consider that, and also that the Settlement Estate Duty is to be raised to 2 per cent., that these are very cogent reasons why the Government should fall in with this proposal. My hon. and learned Friend has mentioned the case of France. He might also have mentioned the case of Germany, because I believe there is no Inheritance Duty at all in the direct line. In fact, the whole of the Inheritance Duty in Germany last year only brought in about £2,000,000. I do hope the Chancellor of the Exchequer will see his way to accept this Amendment, and leave the Legacy and Succession Duties in the direct line standing as at present.
    Mr. CHIOZZA MONEY: May I remind the hon. Member opposite that it is scarcely using equitable language to describe estates of from £10,000 to £25,000 as small estates. It is not really accurate to speak about steepening the lower part of Estate Duties. One has to remember, not merely the estates that are reviewed by the Estates Commissioners, but also the estates that are not reviewed. May I remind the hon. Member who moved this Amendment that in this country about 700,000 persons die in the year. Of those 700,000 only about from 70,000 to 80,000 leave estates that are worth the notice of Somerset House at all. Even of that 70,000 or 80,000 only a small proportion

    1971
    leave that enormous amount of wealth which was reviewed by the hon. and gallant Gentleman the Member for Colchester (Sir Weetman Pearson) in his speech yesterday. The £25,000 estate referred to by the hon. and learned Gentleman the Member for Kingston is not a small estate. It is a very large estate indeed. I am not at all sure that the subject is dealt with from every proper aspect when the hon. and learned Gentleman pleads for special consideration on the ground that these estates are small. Taken in relation to the other wealth in the country, or to the number of people in the country who own property, it is not a small estate. It is difficult to say precisely, but I imagine that the number of families in the country with £25,000 accumulated wealth cannot be larger than about 75,000, or 100,000 at the outside. I do not think the figure can be certainly more than that. I do think when these proportions are taken into consideration they throw much light upon the subject, and alter the perspective very much of the hon. Gentleman who moved the Amendment and the hon. and learned Member who supported it.
    Mr. AUSTEN CHAMBERLAIN: Of course, we shall have an answer from the Government, but I rise to comment upon the observations which we have just heard from the hon. Gentleman the Member for Paddington (Mr. Chiozza Money). I want the Committee to consider whether his point of view is either a just one in itself, or the point of view from which this question ought to be considered. He says that an estate of £25,000, or for the matter of that £20,000, must not be regarded as a small estate, and that my hon. Friend is out of court in pleading for any consideration for children inheriting part of the legacy in such an estate as that.
    Mr. CHIOZZA MONEY: I did not say anything of the kind.
    Mr. AUSTEN CHAMBERLAIN: Well, then, I do not quite see the relevance of the observations which the hon. Member Advanced as an answer to my hon. and learned Friend, who pleaded that in such small estates special relief should be given to the children. The hon. Member says that you cannot consider these estates as small when you have regard to the number of people in this country who possess estates, and the much greater number who die without any estate at all. He solid that in the course of a year some
    1972
    700,000 deaths take place, amongst whom only 70,000 or 80,000 leave estates that are worth any inquiry by Somerset House. Has it occurred to him that many of those whom he includes in the larger figure are infants and children, and naturally have no estate? The relevance has that figure to the matter which we are discussing? The comparison is an idle one, and, in my opinion, in this case as in many others, clouds a naturally clear issue by too much study of irrelevant figures. I am not here to say that there are too many fortunes of over £15,000, or between £15,000 and £50,000. On the contrary, I regret there are so few. Like my hon. and learned Friend I do not complain that there are too many rich men in the country. I do say there are too many poor men. If you can increase the number of those who are comfortably off, especially in the moderate ranks, you are doing a service to the State. I do not think the State can do a great deal in that direction, but, at any rate, it should be careful to do nothing that tends in the opposite direction. How are these fortunes made? Some man, more enterprising than others of his fellows, or more intelligent or more thrifty, lays the foundation of a little fortune, which he leaves to his children. If they are of the same thrifty and industrious turn of mind, they are not content merely to transmit what they received, but they try in turn to transmit something more to their children; and so the individual fortunes and wealth of the country are built up. Like one of my hon. Friends who have spoken, I have no very strong feeling against the proposals if sufficient cause and necessity are shown for increasing the Legacy and Succession Duties when these fortunes go to strangers; but I do think that a case with which we are dealing, that of lineal descendants, rests upon an entirely different footing, and ought to be handled with much greater consideration by the Committee. In many cases, as was pointed out, additional charge involves hardship, and, even though it does not involve hardship, is it not right that you should show consideration which has hitherto been accorded to the direct and natural descendants of the testator?
    It is a curious thing that these duties, which Sir William Harcourt removed at the time when he imposed a much more moderate rate of Death Duties, should be reimposed by his successor at a time when he is increasing the existing heavy scale of Death Duties. I do not know whether the right hon. Gentleman the Secretary of

    1973
    State for War would say, as he did yesterday, that this sum must be paid for the police protection which secures every transference of property. I think the insurance is getting too high for such security as the Government affords to the subjects of this realm, but whatever they may do for others, I appeal to them to have consideration for the case of the children. I must, in frankness and fairness, say I feel at least equally strong about the case of the husband and wife, and I should press for them when we come to the Amendment that raises that question; but I appeal now to the Government on the question before us to withdraw the proposal, which, I think, cannot be very important from the point of view of revenue, and which is, in my opinion, likely to have injurious effects on individuals and in its general results upon our social and family system.
    Mr. LLOYD-GEORGE: I feel it is not possible to deal with the whole of the Succession Duties in the Debate raised by this Amendment. If I did so I am afraid I should have to repeat a good deal of the material I am now putting before the Committee later on. What are the reasons which commended this proposal to the Government and also that commended the second proposals later down in the Clause to the Government? The first of these reasons is a financial one. A Finance Bill is a Bill for raising money. [Laughter.] Hon. Members laugh at that. The right hon. Gentleman the Leader of the Opposition admitted yesterday that at any rate this was a financial scheme. He criticised it, but he admitted it was a financial scheme. I do not think it is a desirable thing to put even 1 per cent. if we could avoid it either upon the children or upon the husband and the wife, but I cannot think of any better method of raising the money when you are about it. That is the first reason, and it is an argument that applies to both the proposals.
    Mr. AUSTEN CHAMBERLAIN: Can the right hon. Gentleman tell us how much money this particular proposal will involve?
    Mr. LLOYD-GEORGE: Yes, it is very difficult to estimate, and no one knows that better than the right hon. Gentleman himself. You can have nothing in the nature of a complete estimate because of if the exemption. That is what makes it difficult. If there were no exemptions it would be easy enough. The estimate is
    1974
    of the amount of money in the next year; you can get no money from these Duties for the first year. We anticipate we shall get £380,000 in the second year, and ultimately £600,000.
    Mr. CAVE: Is that from the whole of the Sub-section or only from the first part?
    Mr. LLOYD-GEORGE: No, we anticipate from the second part £190,000 next year, and ultimately £300,000, so that next year from the whole Sub-section we anticipate £570,000, and ultimately £900,000. What is our proposal? Our proposal is practically to restore the charge imposed by the Act of 1894. The right hon. Gentleman the Member for East Worcestershire says I am dealing much more sternly with this matter than did Sir William Harcourt. Sir William Harcourt raised a certain amount of money; I have to raise more; that is the real reason. I do not think it is an unfair proposal, seeing that the Exchequer requires the cash. What does it mean? In the first place, estates of £15,000 are exempt altogether. That is a very considerable exemption. That exemption is made not really so much on the ground of justice as to meet the case raised by the hon. Member for Kingston (Mr. Cave), when he said it was very hard when the breadwinner was gone and the family plunged in all sorts of griefs that they should have this additional charge put upon them. That argument would be ten times as strong if you applied it to smaller estates. When we exempt estates of £15,000 I think that argument loses a good deal of its force. After all, if a family are left with £15,000—I agree it is not so large, having regard to people's position in life, and so on—it is not a very hard case. The vast majority not only of the artisan class, but of the middle class, live very much under that amount. Take the 85,000 people whose estates passed in review last year. Of these 81,000 odd are under £15,000, and therefore there are only 4,000 estates to which this proposal would apply at all. That is a very considerable exemption, and ii is an exemption that will cover every real case of hardship. Children, after all, must be fairly well provided for if there as £15,000 left by the breadwinner. It is not really a case of hardship.
    The hon. and learned Member spoke of the French law and of its attitude towards lineal descendants and towards the husband and wife. We propose to give the same measure to husband and wife as to the children, and if the hon. Member would look, he would find that on the

    1975
    whole that if you contrast the average treatment meted out to the husband and wife in France and to lineals and if the treatment meted out here it is much the same on the whole. Take the case given by an hon. Member of the £20,000 estate. I agree it is not a very considerable estate, but it is £20,000 net. What does that mean? It means that it will have it pay 1 per cent. upon £20,000, which is £200.
    Mr. CAVE: That is the increase.
    Mr. LLOYD-GEORGE: We are dealing now with the 1 per cent., and the 1 per cent. amounts only to £200 on a £20,000 estate. It is assumed at the present moment that is an addition to the Estate Duty; it is nothing of the kind. The legatee may be escaping altogether. The man who has enjoyed the estate may have contributed nothing up to the present unless he is residuary legatee. If he is residuary legatee he pays Estate Duty. He may have a legacy of £5,000, and pay nothing, and why should he not pay his £50 towards the expenses of the State? Take an estate of £20,000; the residuary legatee will be paying Estate Duty, but one of the legatees who has received £5,000 or £10,000 might be paying nothing, the whole burden falling upon the residuary legatee. Is it really unfair to call upon the legatee, who has escaped altogether up to now, to pay his contribution of 1 per cent. towards the expenses of the State? I do not think it is. This is a question of imposing taxes for raising money, and the whole point is this: Is it really unfair to call upon a man who gets a legacy of £5,000 from his father or his grandfather to pay £50 towards the upkeep of the State?
    Mr. CAVE: If the night hon. Gentleman inquires he will find that tit is comparatively rare that children get a money legacy.
    6.0 P. M.
    Mr. LLOYD-GEORGE: But the other children, at any rate, would take the residue. I do not think the hon. and learned Gentleman will find that what he has stated is usually the case. The usual case is that where £5,000 or £10,000 is given to one child, £3,000 or £4,000 is given to another child who has already received advances. It may be that a sum of money is advanced on the marriage of a daughter, and, therefore, a smaller legacy is given in the will. It is very rare that the legacy is divided between the whole of the children.
    1976
    I know the hon. and learned Member for Kingston has had great experience in this matter, but I think he will agree with me that the majority of the cases are whore direct legacies are given to the children. I do not think it is unfair where one child is called upon to pay to-day to call upon the other children to also pay something. This is not a very burdensome proposal, and I think it is perfectly fair to call upon these other legacies for a small portion of the duty.
    Mr. PRETYMAN: I do not think it is reasonable or just that the right hon. Gentleman in discussing this question should confine himself to this particular duty. My head reels when it is trying to remember all the different taxes which are going to be imposed; in fact, one's life in the future will be mainly spent in dodging the tax collector. The hon. Gentleman put this tax down at 1 per cent., and says it will only amount in the instance which has been given to £200, and he takes the Estate Duty as if it was paid by one of the children, and this £200 by another. The right hon. Gentleman cannot narrow down his argument to this little pin-point and treat each one separately by itself. If he would enlarge the issue, and put it before us in its whole bearing, it would enable the discussion to be carried on upon better lines.
    Mr. LLOYD-GEORGE: I suggested1 that it would have been better if we could have taken the whole of these things into account. If we had had a longer Debate and surveyed the whole of these duties, and then determined the issue, I agree that would have been a better course. I agree that there is a difficulty in dealing with these taxes piecemeal, but you can-not take these Debates over and over again practically upon the same proposals.
    Mr. PRETYMAN: The right hon. Gentleman has interrupted me on a totally different point. I did not suggest that these different proposals should be debated together, because they could not be debated in that way. My point was that when the right hon. Gentleman was-defending a particular duty he treated it as an isolated case, and would not consent to treat it in the only fair way, which is as part of the whole duty levied upon that particular property. It is not fair to put to the House of Commons an addition to the Death Duty, as if it stood wholly by itself and not as part of the whole Death Duty levied upon that particular property.

    1977
    Surely the right hon. Gentleman does not contend for a moment that where a testator leaves a family of children, and where the Estate Duty is payable on the whole estate, the levy on that estate does not affect the whole of the legacies to the different children, and they are necessarily reduced in proportion. It cannot be otherwise. The testator knows what the law is, and he knows he has an estate of a certain gross amount to leave behind him. He knows that so much duty will be levied, and therefore his net estate will be reduced to that extent. If he has to provide for five children, does the right hon. Gentleman mean to suggest that he does not take the duty into account, and that the shares of each of the children will not be reduced by the amount of the duty levied on the whole estate? The Chancellor of the Exchequer cannot contend that. What becomes of his attempt to separate the Estate Duty and treat it as if it were something of no concern whatever, having nothing to do with the 1 per cent. duty levied on one of the children? It has everything to do with it, and the whole duty will fall upon estates of this character.
    May I emphasise the fact that estates of this kind are largely the estates of men in business, and the values are very largely manufactured. Take the case of a tradesman in business in any great town. When you come to value that man's estate you have to take into account all kinds of things; you have to consider the debts which appear on his books, and I have had personal evidence given to me within the last few weeks of the extreme hardship which falls upon businesses of that character under the present law where the whole capital of the business is entirely locked up in the trade, and where the nominal capital which is taxed for duty often consists of thousands of pounds of debts, which are most difficult to recover, because the tradesman knows that if he proceeds against people who owe him money his custom will be very materially reduced. On the death of the head of a large business, consisting entirely of capital sunk in the business, the property is left, say, to the children, and the tax collector demands a considerable sum of ready money to be paid in Death Duties. That money has to be raised from the business; it has to be borrowed, and in one particular case which came to my notice of a tradesman supposed to be in a very large way of business, it took 10 years for the business to pay oft the debt incurred under the pre-
    1978
    sent scale of Death Duties. Of course, under the scale which is now proposed, the problem will be very much aggravated. I think it is a serious hardship that this 1 per cent. duty should be reimposed in addition to the enormously increased scale of Death Duties on small businesses of that character. This duty is being imposed upon property which exists largely on paper, but the duty has to be raised in cash and paid to the Chancellor of the Exchequer.
    I now come to another point of a totally different character, and it is one which raises a legal point. I believe I am correct in stating that Estate Duty has always been treated, and is in its essence a Death Duty levied upon the total estate of the deceased, without reference to the succession. Succession and Legacy Duty has always been treated on a totally different basis. It is not a duty on the magnitude of the estate, and ought not to be treated in that way. Legacy and Succession Duty have always been treated solely in reference to the amount as regards the person who takes the legacy or succession. To attempt to introduce here an increase of the duty on a principle of differentiation—
    Mr. LLOYD-GEORGE: We reduce it.
    Mr. PRETYMAN: This is not a proposal to reduce the duty How can that be when they are not paying the duty now? Who is going to have it- reduced? Not one single individual. This tax is to obtain an excuse for raising the amount upon some people who comprise a large section of the community, and in order to get that excuse you are mixing up the procedure of law and mixing up Succession Duties and Death Duties. I would ask that somebody learned in the law on the Front Ministerial Bench should tell us how they justify the mixing up of the principles of the Estate Duty and the Succession Duty? When we come to the question of deductions and limitations it is quite contrary to the whole principle of the duty to base those deductions upon the amount of the estate from which the legacy or succession is derived. Clearly, under the principles of the Legacy and Succession Duty, this tax ought to be based upon the amount of succession and not on the amount of the estate from which the succession is derived. What the Government are doing in this case is that somehow or other, by confusing the law and confusing the issue, they are taking more money from estates which are passing direct to children. It is quite true, as the

    1979
    Chancellor of the Exchequer says, that he is raising money as a necessity of the State. That is a general argument which I admit the Chancellor of the Exchequer is justified in repeating. That, however, is not what I objected to last night, because it was a different argument altogether. The argument of the Chancellor of the Exchequer is that the necessity of the State knows no law, and that when the State wants money it must get it somewhere. "Must" is all very well, but "cannot" is its master. If the State has arrived at that point when you are actually reducing the capital of general estates from which the resources of the State alone can be derived, there must come a point when your exactions must cease. That point, if it has not already been reached, has very nearly been reached. [Cries of "Oh, oh!"] Hon. Gentlemen below the Gangway do not believe that statement, and think they are perfectly justified in their belief. Time, however, will prove that. If, after the imposition of these enormously increased duties and taxes, employment is maintained and the prosperity of the country is increased, then hon. Members may remind us of what we are stating to-day. If, however, it is found that, on the contrary, the enormous increase of these duties and taxes in every direction does reduce employment and does affect the general prosperity of the working classes of this country, then I hope they will do us the honour to remember the arguments which we have used to-day, and admit that they were justified, not from a selfish, but from a purely national point of view.
    Mr. HALDANE: The speech of the hon. and gallant Member has been a little discursive, but that is not altogether his fault. He has travelled over the whole field of the Death Duties, but I want to recall the Committee to the point we are discussing here. The Amendment proposes to leave out from the word "be" to the word "levied." The meaning of the Amendment is to keep alive the exemptions of duty which the Act of 1894 created.
    Sir EDWARD CARSON: Not to keep alive, but to revive.
    Mr. HALDANE: No; it is intended to keep those exemptions alive. The Act of 1894 did two things. It exempted lineals from the payment of the 1 per cent. in the shape of Succession Duties in two cases. The first is the general case under Section 1
    1980
    of that Act. If Estate Duty had been paid that franked certain duties in the Schedule, and in the Schedule you will find specified the 1 per cent. Then, according to Section 5, Sub-section (2), the payment of duty on settled property with the 1 per cent. franked, to revive the analogy of last night, on the death of B, not only the Estate Duty which would otherwise have been payable then, but the 1 per cent. which the successor would have had to pay. It is proposed by this Bill as it stands to change that, and to say that, notwithstanding these exemptions, the 1 per cent. is to be paid. You must not take the substance of Sub-section (2) of Clause 42 of this Bill by itself. You must treat it in connection with what follows, and what we have tried to do in these provisoes is to distribute in as equitable a form as we can the exemptions under the principal Act. A lineal may get off, although he succeeds to a very large fortune, and, moreover, the burden of the Estate Duty may not fall upon him. The burden will fall upon the estate, whereas the duty of 1 per cent. is all he himself has to pay.
    What will happen under the Clause as it now stands will be that, in the case where the principal value of the property passing on the death of the deceased and chargeable with Estate Duty (other than property in which the deceased never had an interest) does not exceed £15,000, no l per cent. is payable. Again, the 1 per cent. will not be payable where the amount or value of the legacy or succession, together with any other legacies or successions derived by the same person from the testator, intestate, or predecessor does not exceed £1,000, whatever may be the principal value of the property so passing uncharged able; and in the third place, where the person in succession is the widow or a child under the age of 21 years, and the amount does not exceed £2,000. The view taken by the Government is that these exemptions may be more fairly distributed than is the case under the existing system. I am not disputing we are raising taxes and taking more money. That is the very sad but actual essence of this Bill. What we are trying to do is to make a better distribution. The exemption of the 1 per cent. in all cases was not a fair distribution. It worked out very unevenly. We, therefore, abolish that, and make another distribution. The old point which the Committee is discussing at the present moment is this and nothing more: Are you to continue the old exemptions from the lineal duties which were created by

    1981
    Section 1 of the Finance Act of 1894 and by Section 5; and, if you do not continue them, are you to make the new distribution which is contained in this proviso? The point is a very narrow one. Are you to omit these special exemptions which only occur in the event of Estate Duties or Settlement Duty being paid? The sole question before the Committee relates to these two cases, and the case of the Government is that, although they are exacting more money, the system of distribution put in here is a fair and wise system.
    Mr. J. W. HILLS: I agree that the point in one respect is not a big one, but still it is a very important point of principle. The Chancellor of the Exchequer and the Secretary of State for War have both given us a good many reasons in support of their Clause, but they are all of them bad. I should like, first of all, to clear the ground of one or two smaller points. The Chancellor said it was not fair to compare the French law with the English law. He said the French law, no doubt, treats a lineal more favourably than the English law, but it treats the wife much less favourably, and therefore on the average the same justice is meted out in both countries. I do not think that is a very fair argument, but I agree it is a small point. The next point of the Chancellor was that now the legatee escapes all duty, and it is not fair because these legacies are a large amount. I do not think that applies in very many cases. In nearly all cases of personal property, apart from land, the property is divided equally among the children. They do not take specified legacies, but shares of the residue, and the Estate Duty therefore falls proportionately upon each. Of course, in the case of a house or a landed estate, a larger proportion of the personal fortune is left to the eldest son, the person who takes the estate; but in the very large majority of ordinary cases of fortunes in stocks and shares, and not in land, the property goes equally among the children, and therefore all pay the duty equally, and no one child benefits at the expense of the others. The Chancellor said we are really dealing with very few cases, because he proposed to exempt all estates of £15,000 and under. I do not think that is a fair argument. If the thing is wrong in principle, it does not matter very much that very few estates come under it. The chief argument of the Chancellor is that he has got to get the money somehow, and it seems to me this
    1982
    is the very worst way of getting it. You are taxing the fortune which goes from father to son, and I cannot conceive a worse way of raising your money. Surely it is no support for this tax that you have got to get the money somehow. You have got to defend this tax on its merits, and I should have thought the very worst way of collecting the tax was to collect it on money passing from father to son or grandson. By the first part of this Clause we have already considerably changed the duties between relations. Then tendency all round is to treat relations no more favourably than friends and strangers in blood. That is a totally wrong system. If an estate goes to a stranger in blood, that is luck for him, and it is quite fair he should pay something, but I do not think it fair to collect the money if it goes to a relation, and of all cases the very worst is when it passes from father to son.
    Mr. S. O. BUCKMASTER: May I say a few words as to the magnitude of the evil which this Amendment is designed to remedy? It is alleged that the levying of a Succession Duty of 1 per cent. between rather and son will cause, as I gather from the hon. and gallant Member for Chelmsford (Mr. Pretyman), a serious depletion of the capital of the country, and will be productive of very serious consequences to the labour market of the world at large. I would like the Committee to consider for a few moments what this tax really is. For 41 years this tax of 1 per cent. on successions existed without complaint, from 1853 to 1894. It was in 1894 undoubtedly removed because of the imposition of the Estate Duty. It is now proposed to restore the Succession Duty. It is perfectly plain if what the hon. and learned Member who has just sat down (Mr. J. W. Hills) has said is true, that for 41 years this country was pursuing a disastrous policy, because he says the tax on succession under any circumstances from father to son is the very worst and most mischievous form of taxation we can find. If we propose these duties under the present Bill, who will be hurt, and to what extent? Let me take the case which I rather gathered excited the sympathies of the hon. Member—the case of the small estate. The first estate to be subject to this tax under any circumstances is that of the value of £15,000. Let me assume that the testator does what we know quite well is very rare, and leaves it all without exception to his family. If he has one son and that son takes £15,000, what has he to pay? One hundred and fifty pounds.
    Mr. CAVE: Plus 5 per cent. Estate Duty.
    Mr. BUCKMASTER: So far as this tax is concerned he is asked to pay £150 and no more. Let me assume this man wants to live in idleness for the rest of his days, and he invests the £15,000, say in Consols. What is the payment he has made to the State for the protection he is going to receive for the rest of his life? It is £4 10s. per year. That is not a large sum for this man to pay for the privilege of being able, if he chooses, to live in idleness for the rest of his days. It appears to me hon. Members opposite entirely mistake the nature of these Succession Duties. As I understand it, the reason why you levy duties on the passing of an estate at death is that the man who inherits the estate has done nothing whatever to earn it. The amount being charged in this case, if he receives it all, is the sum of £150, or £4 10s. per year. If the testator
    has many children and the estate is split up, they only have to pay an added fraction. If he has live, it will be £30. Is that a large sum, or a sum to excite the vituperation of the hon. and gallant Member for Chelmsford? I cannot imagine it will have the appalling influence upon the capital of the country that he suggests. Is it to be suggested a man is going to become thriftless and cease to make provision for his family because if he dies and leaves the whole of his estate to his children they will pay 1 per cent.? The magnitude of this matter has been entirely exaggerated, and I would urge upon the Committee to reject the Amendment.
    Question put, "That the words proposed to be left out to the word 'and' ['or any other Act, and'] stand part of the Clause."
    The Committee divided: Ayes, 226; Noes, 85.

    Division No. 650.]

    AYES.

    [6.30 p.m.

    Abraham, W. (Cork, N.E.)

    Dillon, John

    Isaacs, Rutus Daniel

    Acland, Francis Dyke

    Duckworth, Sir James

    Jackson, R. S.

    Agnew, George William

    Duffy, William J.

    Jardine, Sir J.

    Allen, A. Acland (Christchurch)

    Dunne, Major E. Martin (Walsall)

    Jones, Sir D. Brynmor (Swansea)

    Allen, Charles P. (Stroud)

    Ellis, Rt. Hon. John Edward

    Jones, Leif (Appleby)

    Ashton, Thomas Gair

    Erskine, David C.

    Jowett, F. W.

    Baker, Sir John (Portsmouth)

    Essex, R. W.

    Joyce, Michael

    Baker, Joseph A. (Finsbury, E.)

    Esslemont, George Birnie

    Keating, Matthew

    Balfour, Robert (Lanark)

    Evans, Sir S. T.

    Kekewich, Sir George

    Baring, Godfrey (Isle of Wight)

    Everett, R. Lacey

    King, Alfred John (Knutstord)

    Barker, Sir John

    Falconer, James

    Lamb, Ernest H. (Rochester)

    Barlow, Sir John E. (Somerset)

    Fenwick, Charles

    Lambert, George

    Barnard, E. B.

    Ferguson, R. C. Munro

    Lamont, Norman

    Beauchamp, E.

    Flynn, James Christopher

    Law, Hugh A. (Donegal, W.)

    Benn, Sir J. Williams (Devonport)

    Foster, Rt. Hon. Sir Walter

    Layland-Barrett, Sir Francis

    Bethell, Sir J. H. (Essex, Romford)

    Fuller, John Michael F.

    Leese, Sir Joseph F. (Accrington)

    Bethell, T. R. (Essex, Maldon)

    Fullerton, Hugh

    Lever, W. H. (Cheshire, Wirral)

    Boulton, A. C. F.

    Gibb, James (Harrow)

    Levy, Sir Maurice

    Bowerman, C. W.

    Gill, A. H.

    Lewis, John Herbert

    Brace, William

    Glover, Thomas

    Lloyd-George, Rt. Hon. David

    Branch, James

    Gooch, George Peabody (Bath)

    Lupton, Arnold

    Brunner, J. F. L. (Lanes., Leigh)

    Grey, Rt. Hon. Sir Edward

    Luttrell, Hugh Fownes

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Guest, Hon. Ivor Churchill

    Lynch, H. B.

    Bryce, J. Annan

    Haldane, Rt. Hon. Richard B.

    Macdonald, J. R. (Leicester)

    Buckmaster, Stanley O.

    Hancock, J. G.

    Maclean, Donald

    Burns, Rt. Hon. John

    Harcourt, Rt. Hon. L. (Rossendale)

    Macnamara, Dr. Thomas J.

    Burnyeat, W. J. D.

    Harcourt, Robert V. (Montrose)

    Macpherson, J. T.

    Burt, Rt. Hon. Thomas

    Hardy, George A. (Suffolk)

    MacVeagh, Jeremiah (Down, S.)

    Buxton, Rt. Hon. Sydney Charles

    Hart-Davies, T.

    M'Laren, H. D. (Stafford, W)

    Byles, William Pollard

    Harvey, W. E. (Derbyshire, N.E.)

    M'Micking, Major G.

    Cawley, Sir Frederick

    Harwood, George

    Maddison, Frederick

    Charming, Sir Francis Allston

    Haworth, Arthur A.

    Mallet, Charles E.

    Cherry, Rt. Hon. R. R.

    Helme, Norval Watson

    Marks, G. Croydon (Launceston)

    Clough, William

    Hemmerde, Edward George

    Marnham, F. J.

    Clynes, J. R.

    Henderson, Arthur (Durham)

    Massie, J.

    Cobbold, Felix Thornley

    Henderson, J. McD. (Aberdeen, W.)

    Masterman, C. F. G.

    Collins, Stephen (Lambeth)

    Higham, John Sharp

    Menzies, Sir Walter

    Collins, Sir Wm. J. (St. Pancras, W.)

    Hobhouse, Rt. Hon. Charles E. H.

    Middlebrook, William

    Condon, Thomas Joseph

    Hogan, Michael

    Molteno, Percy Alport

    Corbett, C. H. (Sussex, E. Grinstead)

    Holland, Sir William Henry

    Money, L. G. Chiozza

    Cornwall, Sir Edwin A.

    Holt, Richard Durning

    Morgan, J. Lloyd (Carmarthen)

    Cotton, Sir H. J. S.

    Hooper, A. G.

    Morse, L. L.

    Cox, Harold

    Hope, John Deans (Fife, West)

    Morton, Alpheus Cleophas

    Curran, Peter Francis

    Hope, W. H. B. (Somerset, N.)

    Muldoon, John

    Davies, Timothy (Fulham)

    Horniman, Emsile John

    Murphy, John (Kerry, E.)

    Dewar, Arthur (Edinburgh, S.)

    Howard, Hon. Geoffrey

    Murray, James (Aberdeen, E.)

    Dickinson, W. H. (St. Pancras, N.)

    Hutton, Alfred Eddison

    Myer, Horatio

    Nicholls, George

    Roch, Walter F. (Pembroke)

    Trevelyan, Charles Phillips

    Norman, Sir Henry

    Roe, Sir Thomas

    Verney, F. W.

    Nussey, Sir Willans

    Rogers, F. E. Newman

    Villiers, Ernest Amherst

    Nuttall, Harry

    Rose, Sir Charles Day

    Vivian, Henry

    O'Brien, K. (Tipperary, Mid)

    Rowlands, J.

    Walsh, Stephen

    O'Brien, Patrick (Kilkenny)

    Runciman, Rt. Hon. Walter

    Wardle, George J.

    O'Connor, John (Kildare, N.)

    Rutherford, V. H. (Brentford)

    Warner, Thomas Courtenay T.

    O'Donnell, C. J. (Walworth)

    Scarisbrick, Sir T. T. L.

    Wason, Rt. Hon. E. (Clackmannan)

    O'Grady, J.

    Schwann, C. Duncan (Hyde)

    Wason, John Cathcart (Orkney)

    O'Kelly, Conor (Mayo, N.)

    Schwann, Sir C. E. (Manchester)

    Watt, Henry A.

    Parker, James (Halifax)

    Seely, Colonel

    White, Sir George (Norfolk)

    Partington, Oswald

    Shackleton, David James

    White, J. Dundas (Dumbartonshire)

    Perks, Sir Robert William

    Shaw, Sir Charles E. (Stafford)

    White, Sir Luke (York, E.R.)

    Pickersgill, Edward Hare

    Shipman, Dr. John G.

    White, Patrick (Meath, North)

    Pointer, J.

    Snowden, P.

    Whittaker, Rt. Hon. Sir Thomas P.

    Ponsonby, Arthur A. W. H.

    Stanger, H. Y.

    Wiles, Thomas

    Price, Sir Robert J. (Norfolk, E.)

    Stanley, Albert (Staffs, N.W.)

    Williams, J. (Glamorgan)

    Priestley, Sir W. E. B. (Bradford, E.)

    Stanley, Hon. A. Lyulph (Cheshire)

    Williams, W. Llewelyn (Carmarthen)

    Radford, G. H.

    Stewart, Halley (Greenock)

    Williamson, Sir A.

    Raphael, Herbert H.

    Stewart-Smith, D. (Kendal)

    Wilson, Henry J. (York, W.R.)

    Rea, Rt. Hon. Russell (Gloucester)

    Strachey, Sir Edward

    Wilson, P. W. (St. Pancras, S.)

    Rees, J. D.

    Straus, B. S. (Mile End)

    Wilson, W. T. (Westhoughton)

    Rendall, Athelstan

    Strauss, E. A. (Abingdon)

    Winfrey, R.

    Richards, Thomas (W. Monmouth)

    Summerbell, T.

    Wood, T. M'Kinnon

    Ridsdale, E. A.

    Taylor, John W. (Durham)

    Young, Samuel

    Roberts, Charles H. (Lincoln)

    Taylor, Theodore C. (Radcliffe)

    Roberts, G. H. (Norwich)

    Tennant, H. J. (Berwickshire)

    Robertson, Sir G. Scott (Bradford)

    Thomas Sir A. (Glamorgan, E.)

    TELLERS FOR THE AYES.—Mr.

    Robinson, S.

    Thorne, G. R. (Wolverhampton)

    Joseph Pease and Captain Norton.

    Robson, Sir William Snowdon

    Thorne, William (West Ham)

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Faher, Capt. W. V. (Hants, W.)

    Peel, Hon. W. R. W.

    Anson, Sir William Reynell

    Fell, Arthur

    Pretyman, E. G.

    Anstruther-Gray, Major

    Fletcher, J. S.

    Rawlinson, John Frederick Peel

    Arkwright, John Stanhope

    Forster, Henry William

    Renton, Leslie

    Balcarres, Lord

    Foster, P. S.

    Renwick, George

    Baldwin, Stanley

    Gibbs, G. A. (Bristol, W.)

    Roberts, S. (Sheffield, Ecclesall)

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Gordon, J.

    Rutherford, Watson (Liverpool)

    Banbury, Sir Frederick George

    Gretton, John

    Salter, Arthur Clavell

    Banner, John S. Harmood-

    Haddock, George B.

    Scott, Sir S. (Marylebone, W.)

    Baring, Capt. Hon. (Winchester)

    Hardy, Laurence (Kent, Ashford)

    Sheffield, Sir Berkeley George D.

    Barrie, H. T. (Londonderry, N.)

    Harris, Frederick Leverton

    Stanier, Beville

    Beach, Hon. Michael Hugh Hicks

    Harrison-Broadley, H. B.

    Starkey, John R.

    Bowles, G. Stewart

    Hay, Hon. Claude George

    Staveley-Hill, Henry (Staffordshire)

    Butcher, Samuel Henry

    Heaton, John Heniker

    Stone, Sir Benjamin

    Carlile, E. Hildred

    Hill, Sir Clement

    Talbot, Lord E. (Chichester)

    Carson, Rt. Hon. Sir Edward H.

    Hope, James Fitzalan (Sheffield)

    Thomson, W. Mitchell-(Lanark)

    Cave, George

    Joynson-Hicks, William

    Thornton, Percy M.

    Cecil, Evelyn (Aston Manor)

    Kerry, Earl of

    Valentia, Viscount

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Keswick, William

    Walker, Col. W. H. (Lancashire)

    Clark, George Smith

    Kimber, Sir Henry

    Walrond, Hon. Lionel

    Coates, Major E. F. (Lewisham)

    King, Sir Henry Seymour (Hull)

    Warde, Col. C. E. (Kent, Mid)

    Courthope, G. Loyd

    Lambton, Hon. Frederick William

    Wilson, A. Stanley (York, E.R.)

    Craig, Charles Curtis (Antrim, S.)

    Long, Col. Charles W. (Evesham)

    Winterton, Earl

    Craig, Captain James (Down, E.)

    Lyttelton, Rt. Hon. Alfred

    Wyndham, Rt. Hon. George

    Craik, Sir Henry

    M'Arthur, Charles

    Younger, George

    Dalrymple, Viscount

    Mason, James F. (Windsor)

    Dickson, Rt. Hon. C. Scott

    Moore, William

    TELLERS FOR THE NOES.—Mr. Walter Guinness and Mr. J. W. Hills.

    Doughty, Sir George

    Morpeth, Viscount

    Douglas, Rt. Hon. A. Akers-

    Nicholson, Wm. G. (Petersfield)

    Faber, George Denison (York)

    Pease, Herbert Pike (Darlington)

    Mr. EVELYN CECILmoved to leave out from Sub-section (3) the following words: "and the duty shall also be levied and paid in cases where the person taking the legacy or succession is the husband or wife of the testator, intestate, or predecessor as in cases where the person taking the legacy or succession is a lineal ancestor or descendant of the testator, intestate, or predecessor."
    I think this is a much stronger case than the one we have just been discussing, because the relationship of the parties is closer. What is perhaps still more re-
    1986
    markable is this. It is the first time that any duty of this kind, so far as I am aware, on property passing between husband and wife has been proposed in this country. The husband and wife, in the eye of the law, are a single person. That is the doctrine of the old common law. It is to be found in Coke upon Littleton and Black-stone, and all the other old law text-books It is also a doctrine founded upon ecclesiastical law. Husband and wife in the eye of the law are one person, with an absolute identity of interests. That is the basis on which our law has always gone.

    1987
    No doubt certain exceptions have in modern times been made, but what is to be noted about particular exceptions is that they have always been made for the benefit of the wife. There is no exception to that at all, until we get to the present one, which is not going to be made for the benefit of the wife or any other party, but solely to enable the Chancellor of the Exchequer to gain more money. The exception is therefore made to the detriment of the wife and of the husband. The exceptions that have been made to the old common law for the wife are such as appear in the Married Women's Property Acts and similar exceptions, such as that the wife is a competent, but not a compellable, witness, and that communications between husband and wife are privileged and confidential, and cannot be compelled to be given in evidence. All these exceptions draw no sort of distinction between husband and wife, and they have been made especially for the benefit of either party. Now we are face to face with an exception deliberately made to the detriment of both parties. That is by no means the strongest point of my case. There is a much stronger argument, to which I hope the Chancellor of the Exchequer will devote his attention, and that is that the property of the husband and wife are lumped together for the purposes of Income Tax, except so far as the wife earns her own income separately, so that by this lumping together the Chancellor of the Exchequer may get a higher rate of tax. Now we are going to calculate on quite a different basis, and the Chancellor of the Exchequer proposes that the properties of the husband and wife shall be separately treated for the purposes of Legacy and Succession Duty, so that duty shall be paid if either of them dies. Really there is no limit to the grasping rapacity of the Chancellor of the Exchequer. Let us at least have the same basis of calculation in these two cases. If the Chancellor of the Exchequer desires to lump together the property of a husband and wife for the purpose of the Income Tax, let them be lumped together equally for the purposes of Legacy and Succession Duty. I cannot understand, except on the very bald defence made just a moment ago that he wants money, why there should be any reason for differentiating between the two bases of calculation, and I hope if any alteration is made it will not be so drastic an alteration as this. I would strongly urge that no alteration ought to be made,
    1988
    that it is not equitable, and that it is treating husband and wife in a totally different way to that in which they have previously been treated. Therefore I say no alteration ought to be made at all. If there is to be any alteration, although I should entirely deprecate any, I would suggest to the Chancellor of the Exchequer that husband and wife should be on the same basis as children have been heretofore, and that there should be no legacy or Succession Duty if Estate Duty has been already paid.
    Mr. LLOYD-GEORGE: The hon. Member thinks that wives ought to be exempted from this additional impost, on the ground that husband and wife are treated as one person so far as Income Tax is concerned. I agree, on the face of it, it does seem unfair that where the State can charge an increased Income Tax, by treating husband and wife as one, it should do so, but where it can, as in the case of Death Duties, get a greater taxation by treating them separately, then it deals with them in that manner. I agree in that way the State is rather unfair, but I am not responsible for that. At the present moment, if the whole of the property is left to one, it may have to pay 5, 10, or 15 per cent. duty, and I simply extend the principle. I am not making a new law, I am not differentiating for the first time, but this principle has been in existence for 100, or 120 years, or at least, since the first imposition of Death Duties. I simply say that, finding that principle in operation, I propose to act upon it. The hon. Member says that if the existing rule is to be changed at all, he hopes the alteration will not be so drastic as this one, but I cannot imagine a method which is less drastic than the one adopted by the Government. I do not want to enter now into the various exceptions. I have previously explained them, and the Secretary of State for War has also entered into them more fully than I have done. These exceptions will protect widows in really hard cases, and the character of them has been fully stated. As a rule, when the wife inherits property, she inherits it as a gift for life. It is not often that it is made an actual gift. She does not inherit the actual corpus of the estate, and it is not her own, and she only has a life interest in it. That is why the duty only produces £300,000, and I confess that anyone would naturally imagine that property passing from husband to wife, or wife to husband,

    1989
    would yield a good deal more than that sum. The reason why it does not, is that there are very large exemptions, and, in the second place, it is rare that the wife should come into the property absolutely, as a share is usually given to the wife for life, and at her death the property passes to the children. The 1 per cent., if it is upon property in which she has the sole interest, is really a very small burden, and I really do not think it is a very great demand to make upon a husband or wife, where property worth over £15,000 passes, that they should make this small contribution to the revenue.
    Mr. BALFOUR: I think in the few observations which it is necessary to make upon this tax neither the Secretary of State for War nor I need look at it except from a purely external and impartial standpoint. I think the Chancellor of the Exchequer had rather a disagreeable task to perform, when he was defending this particular part of the Budget, and he was endeavouring, as I understood him, to rely upon precedents as a defence. It is ordinarily a very good defence, and one which we all have to go back to, when reason utterly fails us. Although I agree with the Chancellor of the Exchequer, however, that there are precedents which are in his favour, I would ask whether he is justified in deliberately going against precedent, as I think he is doing. I understand from those who are more learned in the history of this subject than I am, and who have really studied the cases, that really the Chancellor of the Exchequer is pursuing a new path, on which he will find it very difficult to find any sign-post erected by his predecessors. In these cases, therefore, I think he ought to be more careful. It is quite true that he has excepted the smaller estates. So far so good, but cases may be very had in regard to the larger estates also and is there not gross incongruity, in treating husband and wife as one flesh when you get a little more out of them and treating them as quite separate, when you think that by that expedient you can also get more out of them? It seems to me so utterly absurd to arrange your whole system of taxation not on any single principle except the solitary principle of how to get as much out of the taxpayer as you possibly can, treating him in one category, when you think you will get more out of him and treating him in another and contradictory category when you think that that course will reap a larger harvest to the Exchequer. I do not know
    1990
    what the Secretary of State for War is going to say on the subject, but I have no doubt he has armed himself with all the arguments to be brought forward, and I think he needs rather a good case to defend the position taken up by the Chancellor of the Exchequer. The Chancellor of the Exchequer gave no defence whatever to this, which is the main argument which we advance against the proposition he laid down. You fine husband and wife because they live together, and then you proceed to fine them because they do not die together. I am afraid that really is quite true, but you cannot treat them as two separate individuals when you are considering their estates for purposes of Death Duties and as a single joint individual for the purposes of Income Tax. Just because it suits you financially, you are taking an entirely different view of the relation of husband and wife, as far as property is concerned, in the two cases.
    Mr. LLOYD-GEORGE: I am not responsible for that state of things. It exists without distinction at the present moment, as far as the Death Duties are concerned. Take the residue. If the residue passes to the wife she may pay 5, 10, or 15 per cent. upon it in Death Duty. All I am doing is that I am extending that principle by an additional 1 per cent.
    Mr. BALFOUR: Again, that is a difficulty into which the Chancellor of the Exchequer puts us. He sometimes mixes up all the duties which can fall upon property at the time of anyone's decease, and at another time he draws a sharp distinction between Estate, Legacy and other duties which accrue at the time of, or in consequence of, death. I am sure I am not wrong in saying that he is imposing, I do not say a new Death Duty, but a new Succession Duty, and he is doing so because he draws this distinction between the property of husband and wife. If he really is going to try to get money in this way, I do not think he ought to treat the incomes as being one. I think he should make his Budget self-contained in that respect. I do not care, for my own part, which way he puts it, but I do not think he ought to embody in different parts of his Bill principles which are perfectly impossible to reconcile one with another when the only ground he himself brings forward is that by this utterly illogical proposition he gets a little more money into the Exchequer. I have the highest sympathy with the financial difficulties in which the Chancellor of the Exchequer finds himself

    1991
    but I do not think that this utter abandonment of principle and logic can involve the best way of promoting the interests of the State.
    Mr. HALDANE: The right hon. Gentleman says that this proposal introduces an entirely new principle of taxation, but it really does not do so. At the present time, suppose somebody has £10,000 and leaves it to his wife, she has to pay Estate Duty as executrix.
    Mr. PRETYMAN: The right hon. Gentleman has put in the word "executrix," and the real point is that the lady pays as executrix and not as successor.
    7.0 P.M.
    Mr. HALDANE: She pays out of money which is left to her, and this proposal of the Chancellor of the Exchequer does not introduce any new principle. The Leader of the Opposition speaks as if this is something quite new. Who was it who first introduced this principle? Not my right hon. Friend, but, if my memory does not deceive me, the Chancellor of the Exchequer in 1780. I am not perfectly certain who that was, but in 1780 the first Legacy Duty Act came into operation, and under that wives were taxed. You cannot say there is any question of principle in this, particularly in days when wives' estates are being more and more recognised every year as separate from those of their husbands. We think the distribution, taking these other proposals into account, is a fair distribution.
    Mr. RAWLINSON: As one Who has brought this matter before the House on the occasion of every Budget for many years, may I remind the Chancellor of the Exchequer that both he and his predecessor in office, now the Prime Minister, have promised the most careful consideration for what they have admitted to be a gross injustice under the present law, and instead of amending the present law the Chancellor is adding to the injustice which exists? The Secretary of State for War said, "What would the public say to any such point as that?" What would the public say to the present state of taxation between husband and wife? For the purposes of the £700 exemption, the £160 exemption, and under the exemption of earned incomes up to £3,000 a year, you tax, not only the man's income, supposing he is earning £2,000 a year, you would take that into account, and you add all the pro-
    1992
    perty which his wife has as well, and you treat the two as having a joint income and as being one person. I have never heard any defence put forward for that absolute act of injustice. I will put down my customary Amendment on that point when we come to the Income Tax. Unless that or some similar Amendment is accepted you are treating them for taxation purposes as one person, and that is very hard on professional men who are earning something near the scale of exemption. When it comes to Succession and Legacy Duties it is true that if the husband leaves the whole of his property to his wife she is in one sense exempt from the whole taxation, because Estate Duty has to be paid, but that certainly is a very different matter from putting a Legacy Duty or a Succession Duty on her in respect of the money which goes to her as distinguished from the Estate Duty, and that is the novel proposal which has been put forward for the first time by this Clause. Looking at it from the abstract point of justice, surely it is a wrong tax to put on, and in the case of a professional man you will probably find that the wife is the loser by the death of her husband. When the capital, such as it is, comes to her you are probably taxing her at a time of her life when she can least afford it. The man may have saved up just enough money to enable his wife and children to keep up appearances, and it is just at that moment in their career, when the wife can least afford to pay it, that you are putting on this Succession and Legacy Duty for the first time. Surely the Government ought to give relief either on one side or the other? Personally I should prefer to have the relief upon the Income Tax rather than on this. A very large number of people who are interested in the matter say this is the greater injustice of the two—putting the tax on at the time of the death. I appeal to the Chancellor of the Exchequer, if it is only going to bring in this very small sum of £300,000, not to inflict this additional injustice.
    Mr. SAMUEL ROBERTS: I think this proposal is much worse than the last in the case of the children, and that was bad. I think the relations between husband and wife are so close and so different from any other relationship that there ought to be a differentiation not only for Legacy and Succession Duty but also for the whole of the Estate Duty. At present the wife has to pay Estate Duty, but here you are putting a new duty on altogether, and,

    1993
    therefore, emphasising the grievance, which I think ought not to exist. May I give another reason why the new tax should not be put on. The difference of age between husband and wife is much less than the difference of age between parent and child. Therefore the period of enjoyment of the property after the duty is paid is very much less than the period of enjoyment in the case of parent and son. Probably one will survive the death of the other for only a short period, but for that short period we put on an extra tax of 1 per cent. That is a very real grievance which the Government ought to consider.
    Mr. JOYNSON-HICKS: I want to ask the Chancellor of the Exchequer whether he is really going to support the Secretary of State for War in the precedent which he gave us? It shows the pass to which the Liberal party has come when the only precedent they can give for this act of injustice is to go back to the time of the Tory Lord North. I suggest that we have improved upon Lord North. We on this side of the House, at all events, are not committed to the precedents of Lord North. Since Lord North's time we have abolished that injustice. Parliament has progressed. The Secretary of State does not realise, perhaps, the state of progression of modern Parliaments. We have given Lord North the go-by many years ago, and it is rather hard on the right hon. Gentleman's followers that he has to go back to Lord North in order to find a precedent to re-establish this which is admitted on all hands to be an injustice. The Chancellor of the Exchequer's defence was that he was not responsible for it, but he will be responsible after this Bill. There is an Amendment moved to exempt the wife from Legacy Duty, and I have an Amendment down on the Paper to remedy the injustice to the wife in regard to Income Tax. Therefore, the right hon. Gentleman cannot get out of it after this Bill is passed, and he will be responsible for inflicting an additional injustice in the case
    of a wife in regard to Estate Duty, and he will be responsible as Chancellor of the Exchequer for not removing the injustice, if he does not remove it, when we come to the question of the Income Tax.
    Mr. AUSTEN CHAMBERLAIN: This is a matter of some gravity from the fiscal point of view. No one who has occupied the position of Chancellor of the Exchequer and who has had his mind directed to these matters can fail to see that there is a growing sense of injustice about the present arrangements of Income Tax as they concern husband and wife. It has caused some irritation and some criticism for a long time past, and, as the tax is altogether higher, naturally the grievance is more felt, and the agitation for its removal becomes strengthened. I have not voted, either in opposition or in office, for any alteration of Income Tax law in that respect. I see the greatest difficulties in doing what some of my hon. Friends and hon. Members on the other side of the House have asked, and treating the incomes of husband and wife as totally distinct incomes for the purpose of abatement under the Income Tax Acts. I am anxious that whoever is in the position of Chancellor of the Exchequer should be able to maintain the present Income Tax Regulations in that respect. I think you will make a serious hole in the Income Tax, and give relief to a great number of people who have no particular claim upon your sympathy if you are unable to maintain the present Income Tax view of the property of husband and wife. It is on that pure fiscal ground that, for the sake of a, trifling revenue, you are destroying the ground on which you stood in preserving a very substantial revenue elsewhere that I urge the Government to accept the Amendment.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 212; Noes, 85.

    Division No. 651.]

    AYES.

    [7.15 p.m.

    Abraham, W. (Cork, N.E.)

    Barnard, E. B.

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Acland, Francis Dyke

    Barran, Rowland Hirst

    Bryce, J. Annan

    Agnew, George William

    Beauchamp, E.

    Buckmaster, Stanley O.

    Allen, A. Acland (Christchurch)

    Benn, Sir J. Williams (Devonport)

    Burns, Rt. Hon. John

    Allen, Charles P. (Stroud)

    Berridge, T. H. D.

    Burnyeat, W. J. D.

    Ashton, Thomas Gair

    Bethell, Sir J. H. (Essex, Romford)

    Buxton, Rt. Hon. Sydney Charles

    Baker, Sir John (Portsmouth)

    Bethell, T. R. (Essex, Maldon)

    Byles, William Pollard

    Baker, Joseph A. (Finsbury, E.)

    Boulton, A. C. F.

    Cawley, Sir Frederick

    Balfour, Robert (Lanark)

    Bowerman, C. W.

    Channing, Sir Francis Allston

    Baring, Godfrey (Isle of Wight)

    Brace, William

    Cherry, Rt. Hon. R. R.

    Barker, Sir John

    Branch, James

    Clough, William

    Barlow, Sir John E. (Somerset)

    Brunner, J. F. L. (Lanes., Leigh)

    Clynes, J. R.

    Cobbold, Felix Thornley

    Jowett, F. W.

    Robson, Sir William Snowdon

    Collins, Stephen (Lambeth)

    Joyce, Michael

    Roch, Walter F. (Pembroke)

    Collins, Sir Wm. J. (St. Pancras, W.)

    Keating, M.

    Roe, Sir Thomas

    Corbett, C. H. (Sussex, E. Grinstead)

    Kekewich, Sir George

    Rogers, F. E. Newman

    Cornwall, Sir Edwin A.

    Lamb, Ernest H. (Rochester)

    Rowlands, J.

    Cotton, Sir H. J. S.

    Lambert, George

    Runciman, Rt. Hon. Walter

    Cox, Harold

    Lamont, Norman

    Scarisbrick, Sir T. T. L.

    Cullinan, J.

    Law, Hugh A. (Donegal, W.)

    Schwann, C. Duncan (Hyde)

    Curran, Peter Francis

    Layland-Barratt, Sir Francis

    Schwann, Sir C. E. (Manchester)

    Davies, Timothy (Fulham)

    Leese, Sir Joseph F. (Accrington)

    Seely, Colonel

    Dewar, Arthur (Edinburgh, S.)

    Lever, W. H (Cheshire, Wirral)

    Shackleton, David James

    Dickinson, W. H. (St. Pancras, N.)

    Levy, Sir Maurice

    Shaw, Sir Charles E.

    Duckworth, Sir James

    Lewis, John Herbert

    Shipman, Dr. John G.

    Duffy, William J.

    Lloyd-George, Rt. Hon. David

    Snowden, P.

    Dunne, Major E. Martin (Walsall)

    Luttrell, Hugh Fownes

    Stanger, H. Y

    Ellis, Rt. Hon. John Edward

    Lynch, H. B.

    Stanley, Albert (Staffs, N.W.)

    Erskine, David C.

    Macdonald, J. R. (Leicester)

    Stanley, Hon. A. Lyulph (Cheshire)

    Essex, R. W.

    Maclean, Donald

    Stewart, Halley (Greenock)

    Evans, Sir S. T.

    Macpherson, J. T.

    Stewart-Smith, D. (Kendal)

    Everett, R. Lacey

    M'Laren, Sir C. B. (Leicester)

    Strachey, Sir Edward

    Falconer, James

    M'Laren, H. D. (Stafford, W.)

    Straus, B. S. (Mile End)

    Fenwick, Charles

    Maddison, Frederick

    Strauss, E. A. (Abingdon)

    Ferguson, R. C. Munro

    Mallett, Charles E.

    Summerbell, T.

    Flynn, James Christopher

    Marks, G. Croydon (Launceston)

    Taylor, John W. (Durham)

    Foster, Rt. Hon. Sir Walter

    Marnham, F. J.

    Taylor, Theodore C. (Radcliffe)

    Fuller, John Michael F.

    Massie, J.

    Tennant, Sir Edward (Salisbury)

    Fullerton, Hugh

    Masterman, C. F. G.

    Tennant, H. J. (Berwickshire)

    Gibb, James (Harrow)

    Menzies, Sir Walter

    Thomas, Sir A. (Glamorgan, E.)

    Gill, A. H.

    Middlebrook, William

    Thompson, J. W. H. (Somerset, E.)

    Glover, Thomas

    Molteno, Percy Alport

    Thorne, G. R. (Wolverhampton)

    Gooch, George Peabody (Bath)

    Morgan, J. Lloyd (Carmarthen)

    Thorne, William (West Ham)

    Grayson, Albert Victor

    Morse, L. L.

    Trevelyan, Charles Philips

    Grey, Rt. Hon. Sir Edward

    Morton, Alpheus Cleophas

    Verney, F. W.

    Haldane, Rt. Hon. Richard B.

    Muldoon, John

    Villiers, Ernest Amherst

    Hancock, J. G.

    Murray, James (Aberdeen, E.)

    Vivian, Henry

    Harcourt, Rt. Hon. L. (Rossendale)

    Myer, Horatio

    Walsh, Stephen

    Harcourt, Robert V. (Montrose)

    Newnes, F. (Notts, Bassetlaw)

    Wardle, George J.

    Hardy, George A. (Suffolk)

    Nicholls, George

    Warner, Thomas Courtenay T.

    Harmsworth, R. L. (Caithness-sh.)

    Nuttall, Harry

    Wason, Rt. Hon. E. (Clackmannan)

    Hart-Davies, T.

    O'Brien, K. (Tipperary, Mid)

    Wason, John Cathcart (Orkney)

    Harvey, W. E. (Derbyshire, N.E.)

    O'Brien, Patrick (Kilkenny)

    Watt, Henry A.

    Harwood, George

    O'Connor, John (Kildare, N.)

    White, Sir George (Norfolk)

    Haworth, Arthur A.

    O'Donnell, C. J. (Walworth)

    White, J. Dundas (Dumbartonshire)

    Helme, Norval Watson

    O'Grady, J.

    White, Sir Luke (York, E.R.)

    Henderson, Arthur (Durham)

    Parker, James (Halifax)

    Whittaker, Rt. Hon. Sir Thomas P.

    Henderson, J. McD. (Aberdeen, w.)

    Partington, Oswald

    Wiles, Thomas

    Higham, John Sharp

    Perks, Sir Robert William

    Williams, J. (Glamorgan)

    Hobhouse, Rt. Hon. Charles E. H.

    Pointer, J.

    Williams, W. Llewelyn (Carmarthen)

    Holland, Sir William Henry

    Ponsonby, Arthur A. W. H.

    Wilson, Henry J. (York, W.R.)

    Holt, Richard Durning

    Price, Sir Robert J. (Norfolk, E.)

    Wilson, J. W. (Worcestershire, N.)

    Hooper, A. G.

    Priestley, Sir W. E. B. (Bradford, E.)

    Wilson, P. W. (St. Pancras, S.)

    Horniman, Emslie John

    Raphael, Herbert H.

    Wilson, W. T. (Westhoughton)

    Howard, Hon. Geoffrey

    Rea, Rt. Hon. Russell (Gloucester)

    Winfrey, R.

    Hutton, Alfred Eddison

    Rees, J. D.

    Wood, T. McKinnon

    Isaacs, Rufus Daniel

    Rendall, Athelstan

    Young, Samuel

    Jackson, R. S.

    Richards, Thomas (W. Monmouth)

    Jardine, Sir J.

    Roberts, Charles H. (Lincoln)

    Jones, Sir D. Brynmor (Swansea)

    Roberts, G. H. (Norwich)

    TELLERS FOR THE AYES.—Mr.

    Jones, Leif (Appleby)

    Robertson, Sir G. Scott (Bradford)

    Joseph Pease and Captain Norton.

    Jones, William (Carnarvonshire)

    Robinson, S

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Craig, Captain James (Down, E.)

    Hills, J. W.

    Anson, Sir William Reynell

    Craik, Sir Henry

    Hope, James Fitzalan (Sheffield))

    Anstruther-Gray, Major

    Doughty, Sir George

    Joynson-Hicks, William

    Arkwright, John Stanhope

    Douglas, Rt. Hon. A. Akers-

    Kerry, Earl of

    Balcarres, Lord

    Faber, George Denison (York)

    Keswick, William

    Baldwin, Stanley

    Fell, Arthur

    Kimber, Sir Henry

    Banbury, Sir Frederick George

    Fletcher, J. S.

    King, Alfred John (Knutsford)

    Banner, John S. Harmood-

    Forster, Henry William

    King, Sir Henry Seymour (Hull)

    Baring, Capt. Hon. (Winchester)

    Foster, P. S.

    Lambton, Hon. Frederick William

    Beach, Hon. Michael Hugh Hicks

    Gibbs, G. A. (Bristol, W.)

    Lee, Arthur H. (Hants, Fareham)

    Bowles, G. Stewart

    Gordon, J.

    Long, Col. Charles W. (Evesham)

    Bull, Sir William James

    Gretton, John

    Lowe, Sir Francis William

    Carlile, E. Hildred

    Guinness, Hon. W. E. (B. S. Edm'ds.)

    Lyttelton, Rt. Hon. Alfred

    Castlereagh, Viscount

    Hamilton, Marquess of

    MacCaw, William J. MacGeagh

    Cave, George

    Hardy, Laurence (Kent, Ashford)

    M'Arthur, Charles

    Cecil, Lord R. (Marylebone, E.)

    Harris, Frederick Leverton

    Mason, James F. (Windsor)

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Harrison-Broadley, H. B.

    Moore, William

    Chaplin, Rt. Hon. Henry

    Hay, Hon. Claude George

    Nicholson, Wm. G. (Petersfield)

    Cochrane, Hon. Thomas H. A. E.

    Heaton, John Henniker

    Parker, Sir Gilbert (Gravesend)

    Courthope, G. Loyd

    Hill, Sir Clement

    Parkes, Ebenezer

    1996

    1997

    Peel, Hon. W. R. W.

    Stanier, Beville

    Walrond, Hon. Lionel

    Pretyman, E. G.

    Starkey, John R.

    Warde, Col. C. E. (Kent, Mid)

    Renton, Leslie

    Staveley-Hill, Henry (Staffordshire)

    Williams, Col. R. (Dorset, W.)

    Renwick, George

    Stone, Sir Benjamin

    Wilson, A. Stanley (York, E.R.)

    Roberts, S. (Sheffield, Ecclesall)

    Talbot, Lord E. (Chichester)

    Wyndham, Rt. Hon. George

    Rutherford, Watson (Liverpool)

    Thomson, W. Mitchell-(Lanark)

    Younger, George

    Salter, Arthur Clavell

    Thornton, Percy M.

    Scott, Sir S. (Marylebone, W.)

    Valentia, Viscount

    TELLERS FOR THE NOES.—Mr.

    Sheffield, Sir Berkeley George D.

    Walker, Col. W. H. (Lancashire)

    E. Cecil and Mr. Rawlinson.

    Mr. MITCHELL-THOMSON: I beg to move, in paragraph (a), to leave out the words "in which the deceased never had an interest," and to insert instead thereof the words "of which the deceased was not competent to dispose."
    This Sub-section proposes exemptions from the duty in certain cases. The first of those cases is that of an estate of which the principal value passing at death does not amount to more than £15,000. I do not know what the intention of the draftsman was in putting in the words "other than property in which the deceased never had an interest," but the intention of the words I propose to insert is perfectly clear. The words as they stand in the Clause are very obscure Let me put the case which I wish to deal with. A man has been for some years a life renter of a considerable property under a previous disposition. Perhaps he has very little property of his own. He may have only £10,000 of his own, and at his death he leaves that which is his own to his widow or child, and the life rent flies off to a different branch of the family altogether. The property that passes to the wife or child, amounting to £10,000, is all that he is competent to dispose of. I think the Government mean, at all events they ought to mean, that there ought to be an exemption from the payment of the Legacy Duty in that case. The whole idea underlying the payment of this duty is that the duty is in respect of some property of which the testator has been able to direct the disposition. Here the disposition is made by somebody else, and it only affects this man in so far as he holds a life rent. Nothing he could do could alter that by a jot or tittle. It was the dead hand that made the disposition, and although undoubtedly this man had a life interest in the estate he could not dispose of that interest. If the Government mean the words in the Clause to apply to property in which he never had a disposable interest, I think the words I propose are better than those in the Clause.
    Mr. HALDANE: What the hon. Member proposes to do is to take a value quite different from that assumed in the case
    1998
    to which the paragraph (a) applies. We are dealing here with the duty on estates, and we are making exemptions in the case of certain estates which are of a value which does not exceed £15,000. It very often happens that property passes on a testator's death in which he had no disposable interest, but yet might be of very great value. If the words proposed by the hon. Member were accepted the result would be that in the case of a man who was a life renter a valuable property might on his death pass to his wife or his son, and, being just under £15,000, duty could not be charged. In that case, although it was property of which he was not competent to dispose, it might be property which would bring the estate within the dutiable limit under this Clause.
    Mr. CAVE: The argument of the Secretary of State for War was rather an attack on the words proposed to be put in than a defence of the Bill as it stands. I venture to say that my hon. Friend (Mr. Mitchell-Thomson) has put his finger on a real defect in this Clause. The object of this particular exemption, as I understand, is to relieve from the extra duty small estates passing to the wife or child if the total estate passing does not exceed £15,000. See how that applies in the caste of the life renter instanced by my hon. Friend. He is the life renter of a large estate, and he may have £1,000 or £2,000 a year out of it. On his death that estate passes away to another branch of the family, and the actual estate of the deceased is a good deal under £15,000. It may not represent more than a few thousands passing to the whole of his family. In that ease all that the children get is very small indeed. It might amount to no more than £1,000 a-piece, and yet the effect of the Clause as it stands is to impose payment of duty on these children. Surely that is not what the Clause means. I agree that where an estate does pass from the life renter to the children the effect of the words would be to exempt the estate, and that, of course, I do not ask. What I do suggest is this: Words ought to be inserted subsequently dealing with the point raised. Where, as the result

    1999
    of dispositions made by other people, the children get a very small legacy and the estate passing to the children is a great deal less than £15,000, such a case, I think, ought to be exempted. I have not forgotten Sub-section (b) that where a particular child gets less than £1,000 he is exempted. But I may point to the case in which a child gets no more than £1,000, and yet the estate as a whole is very much less than £15,000. Suppose, for instance, a man's income passes wholly from him to a collateral branch, except say, perhaps, £2,000 which he has saved, and suppose he leaves that £2,000 to his two children, they each of them will get £1,000, but they will not be protected by Sub-section (b), nor will they be protected by Sub-section (a) as it stands. The effect will be that upon that very small estate the extra duty will be levied. I would suggest that the point might be met in the Bill either at this stage or later on.
    Mr. LLOYD-GEORGE: I think the hon. and learned Gentleman sees that the words proposed by the hon. Member (Mr. Mitchell-Thomson) would bring in cases which we could not possibly exempt. For instance, we might have a man with a life interest in a settled property which might be worth half a million, while his own property, of which he alone could dispose, might not be worth £10,000, and that half million might pass to these very children. There might be many cases of that kind. But, if you take the case where a testator has only a life interest in the property, which passes away from him on his death to another branch of the family or even to strangers, and the property which passes to his own family is under £15,000, I think that this amply safeguards cases of that kind. The hon. and learned Gentleman himself admits that words of this description are very dangerous, but I promise to consider the point very carefully. I see the point which has been raised by the hon. and learned Gentleman, and I will endeavour to see if words can be inserted.
    Mr. MITCHELL-THOMSON: I quite recognise the force of what the right hon. Gentleman has said, and I do not wish to press the matter now. I appreciate the point made against the precise form of my Amendment; but, of course, there is no difficulty in meeting that later on. What I do want to emphasise is the real hardship which will remain under this Clause unless you alter it. That is to say, if the
    2000
    property over which a man may have no power of disposition whatsoever is going to be taken into account, in assessing a duty, or rather in preventing a property from being exempted from duty, in the case of estates which may be very small indeed there may be great hardship on the immediate successors. I am glad that the right hon. Gentleman has agreed to consider the matter, and I would ask leave to withdraw.
    Amendment, by leave, withdrawn.
    The EARL of KERRYmoved in Sub-section (2), paragraph (a), to leave out the word "fifteen" ["fifteen thousand pounds"] and to insert instead thereof the word "twenty."
    The object of this Amendment is to raise the limit of the property on which duty shall not be levied from £15,000 to £20,000. The Secretary of State for War just now said that where the duty was being raised the Government were endeavouring to distribute it in the most equitable manner possible. It is because I do not altogether agree in admitting the accuracy of this contention that I move this Amendment. I would like specially to call the attention of the Committee to the fact that there is no graduation in the Legacy and Succession Duty. I have no doubt that in future years Legacy and Succession Duty will be graduated with 1 per cent. as a starting point, but as there is no graduation now the duty is the same for an estate of £1,000 as for an estate of £1,000,000. It does seem rather hard if you admit the principle of graduation in the matter of Estate Duty, that no relief should be given in respect of the small income. The only way to get a system of graduation is by remission in the case of the smaller estates. Small estates by universal consent are those on which the Estate Succession Duties press most hardly, and on no size of estate do they press more hardly than on those between £15,000 and £20,000. I would call the attention of the Committee to the fact that on that particular size of estate the two duties together have been raised from 4 per cent. to 6 per cent. That will fall very hardly on those who succeed to estates of this size. Surely after all an estate of £15,000 or £20,000 is not a large estate from the point of view of income. At 3½ per cent. it would only come to £700 a year. The Government have said a great deal about lifting the burden from the shoulders of those who are less capable of bearing it, and I claim for my Amend-

    2001
    ment that it merely carries out better than they have done the principle to which they have given their adherence.
    Mr. LLOYD-GEORGE: The question raised by this Amendment is not one of principle at all. It is purely a question, not exactly of machinery, but of the extent to which you will make exemption. Personally, I cannot see any particular reason for raising the figure to £20,000. The Noble Lord might have used exactly the same argument in favour of exemption to £25,000. His argument, as far as I followed it, was that it hits the estates between £15,000 and £20,000 very hard. He might have made the same observation in reference to estates between £20,000 and £25,000. Therefore I am bound to look at it purely from the fiscal point of view, relieving hard cases as far as the Exchequer can afford it. Exemption to £15,000 has made a very severe inroad upon the amount which might be derived from what I regard as a perfectly fair impost. If it is extended to £20,000 it will cost a considerable sum, and in the case of concessions made by the Exchequer I have got to consider the respective value and merits of the various demands made in reference to this Bill. I do not think that the money which would be lost in accepting this Amendment would really be well spent from the point of view of making concessions, and therefore I cannot see my way to accept the Amendment.
    The EARL of KERRY: I would ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. AUSTEN CHAMBERLAINmoved, in paragraph (c), after the word "the" ["the widow"] to insert the word "husband."
    I move formally this Amendment, which stands in the name of the hon. Member for Stepney (Mr. Leverton Harris), without saying anything in its favour, but merely to obtain an explanation from the Government why they have not so drafted the Bill as to give the husband the relief which they give to the wife. I do not understand the reasons, and until I know them I will not undertake to comment upon them.
    Mr. LLOYD-GEORGE: I think the reasons have already been stated as arising from considerations of the hard case of the death of the breadwinner and the head of the family. I do not think there is the same case for a compassionate allowance as far as the husband is concerned as there
    2002
    is in the case of the widow. Where the breadwinner has disappeared, you do not want to increase her burden more than is absolutely necessary, and a really good case is made for exemption in her favour. But this does not apply in the other case at all. The husband may be an exceedingly wealthy man. He may be a man earning a very large income, and the wife may leave a small property of, say, £3,000. I do not think that there should be exemption in such circumstances, and that is really the reason why the difference has been made.
    Mr. AUSTEN CHAMBERLAIN: I do not feel strongly in the matter, and I do not care to press it to a Division, but I may say that the Chancellor of the Exchequer's reason is a bad one. He says that in certain cases the husband may be a man of great fortune if the wife dies leaving a small property. That is perfectly true; but, in another case, the wife may be the person of fortune, and the husband may be a person of very small means, and the property of the wife may pass away from the family altogether. Therefore I do not think the reasons given are good, but I do not feel sufficiently strongly on the matter to press the Committee, and, therefore, I ask leave to withdraw.
    Amendment, by leave, withdrawn.
    Mr. JOYNSON-HICKSmoved to leave out of paragraph (c) the words "under the age of twenty-one years."
    I do not see why the exemption should depend upon the age of the child. Really a child of twenty-one may be just as much in need of money as the child under twenty-one. The one is just as much the child of the testator as the other, and why should not the child of twenty-one have the benefit of being free from this tax? I cannot see the reason for putting in these extraordinary words "under the age of twenty-one years." A young man of twenty-one may find £2,000 of far more use to start him in life than the child of two or three years, and similarly, the girl of 23, 24, or 25, who is just going to get married. I merely move the Amendment for the purpose of ascertaining from the Chancellor of the Exchequer the reasons for this curious provision.
    Mr. LLOYD-GEORGE: This provision is really to cover the case where small children are left, and where the testator has provided money to bring them up. I do not think it affects the case of boys or

    2003
    girls of 21 years of age. I do not see that persons of 21 years of age have the right to come to the State for relief on the ground that they are poor and needy, and that a £2,000 legacy is necessary to keep them from starvation or even to complete their education. Therefore I do not see any reason why the Amendment should be made. Otherwise you might get a person who is a millionaire, and who might be 30 or 40 years of age, and thoroughly well established in life, claiming this sort of sympathetic exemption on the ground that he was a child.
    Mr. JOYNSON-HICKS: May I point out that the child who is a millionaire at the age of three is just as likely to be well provided for as the millionaire aged 30.
    Mr. LLOYD-GEORGE: I did not say the person was a millionaire, but might be a millionaire, and evidently he would not come under the same category as the child under 21 years of age.
    Mr. PRETYMAN: Will the right hon. Gentleman alter the age to 25 years? At the age of 21 young men are starting in life, many of them as officers in the Army. I do not wish to press the Chancellor of the Exchequer too much, for I acknowledge there is something in what he said, but I think the exemption might be extended to 25 years of age.
    Mr. LLOYD-GEORGE: I will see what can be done on Report.
    Mr. CAVE: It is very often found that legacies are given to children up to the age of 25 for maintenance and so on, and 25 years of age is becoming the recognised age at which dependence ceases.
    Mr. JOYNSON-HICKS: I had intended to press the Amendment to a Division, but after the undertaking given by the right hon. Gentleman to consider it on Report, I ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. GIBBSmoved, in paragraph (c), to leave out the word "two" ["does not exceed two thousand"], and to insert instead thereof the word "five."
    The right hon. Gentleman referred to the case of the widow, and there are widows left with no more than £80 a year. Two thousand pounds at 4 per cent. is £80 a year; and supposing a widow is left with children and is suffering all the privations and hardships consequent upon the death
    2004
    of the breadwinner, it will be very hard if she is called upon to pay this duty. I think the Government should take those cases into consideration.
    Mr. LLOYD-GEORGE: I hope the hon. Member will not press his Amendment. This is an increase of from £2,000 to £5,000—a very substantial increase. I have already promised to consider the case of the child of 25 years of age.
    Mr. GIBBS: Will the right hon. Gentleman make it £3,500?
    Amendment, by leave, withdrawn.
    Mr. CAVE (for the Earl of Kerry)moved, in Sub-section (4), to leave out the words "first succession under the disposition arises," and to insert instead thereof the words "disposition made."
    I do not quite understand why a distinction is made between the three cases, which is rather important. The Committee will see that this Section is to take effect in the case of Legacy Duty only where the testator dies after 30th April of this year. That is the first case, and there I agree the Bill is not retrospective, except, of course, to the 30th April of this year. The second case is where a "succession arises by devolution of law," and there it only takes effect where the death occurs after 30th April last. There, again, the Bill is not retrospective. But look at the third case, "arising under a disposition only if the first succession under the disposition arises on or after that date." There a real distinction is made between cases which ought to have no difference between them. A settlement by deed was made perhaps ten years ago, and the life tenant does not die until this year or next year; then this extra duty attaches. Why is it not provided that in every case the duty only attaches where the settlement under which the succession arises is made after 30th April last? You are treating the cases on a different footing altogether. In the first two cases you do not make the duty retrospective, and in the third case you practically do so. I ask the Government to treat the three cases in the same way, and confine the duty in the last case to instances where the disposition under which the succession arises is made after 30th April this year.
    The ATTORNEY-GENERAL (Sir William Robson): This Amendment is very important from the fiscal point of view, and it would mean a loss to the revenue in the first year which we cannot afford.
    Mr. PRETYMAN: Do I understand where a disposition is made by will, and under that will the first succession has taken place, namely, the first life in the settlement, then no duty will be charged during the run of that settlement when the person has succeeded under the same settlement, the settlor having died before 30th April, then the increased duty would not be leviable?
    Mr. LLOYD-GEORGEindicated assent.
    Mr. PRETYMAN: Why is the difference made against the settlement where the settlement is by will and not by deed? A man might make a settlement by will or by deed in a marriage settlement say, during the lifetime of his daugther, with remainder to her children. The first succession would not be the first who took from him under the deed, but would be the second life under the settlement—namely, the first child. My hon. Friend's Amendment is to assimilate two cases of succession by will and succession by deed.
    Mr. HALDANE: I think the words as they stand are right. Sub-section (4) does three things. It is to take effect "where the testator by whose will the legacy is given, or the intestate on whose death the Legacy Duty is payable, dies on or after the thirtieth of April," and then "in the case of a succession arising through devolution by law," and "in the case of a succession arising under a disposition, only if the first succession under the disposition arises on or after that date." Therefore, you do not take as the date when you are going to tax the date when the instrument created the succession. What you took was the date of the succession itself. That was the scheme of the Act of 1853.
    Mr. CAVE: I think the effect of the Bill is to make the date so arbitrary that I shall ask the Committee to support this. Amendment.
    Question put, "That the words proposed to be left out stand part of the Clause."
    The Committee divided: Ayes, 200; Noes, 63.

    Division No. 652.]

    AYES.

    [8.10 p.m.

    Abraham, W. (Cork, N.E.)

    Davies, Timothy (Fulham)

    Jones, William (Carnarvonshire)

    Acland, Francis Dyke

    Davies, Sir W. Howell (Bristol, S.)

    Jowett, F. W.

    Agnew, George William

    Dewar, Arthur (Edinburgh, S.)

    Joyce, Michael

    Allen, A. Acland (Christchurch)

    Dickinson, W. H. (St. Pancras, N.)

    Kekewich, Sir George

    Allen, Charles P. (Stroud)

    Duckworth, Sir James

    King, Alfred John (Knutsford)

    Ashton, Thomas Gair

    Duffy, William J.

    Lamb, Ernest H. (Rochester)

    Baker, Sir John (Portsmouth)

    Dunne, Major E. Martin (Walsall)

    Lambert, George

    Baker, Joseph A. (Finsbury, E.)

    Erskine, David C.

    Lamont, Norman

    Balfour, Robert (Lanark)

    Essex, R. W.

    Layland-Barratt, Sir Francis

    Barker, Sir John

    Evans, Sir S. T.

    Leese, Sir Joseph F. (Accrington)

    Barlow, Sir John E. (Somerset)

    Everett, R. Lacey

    Lever, W. H. (Cheshire, Wirral)

    Barran, Rowland Hirst

    Falconer, J.

    Levy, Sir Maurice

    Beauchamp, E.

    Fenwick, Charles

    Lloyd-George, Rt. Hon. David

    Benn, Sir J. Williams (Devonport)

    Ferguson, R. C. Munro

    Luttrell, Hugh Fownes

    Berridge, T. H. D.

    Flynn, James Christopher

    Macdonald, J. R. (Leicester)

    Bethell, Sir J. H. (Essex, Romford)

    Foster, Rt. Hon. Sir Walter

    Maclean, Donald

    Bethell, T. R. (Essex, Maldon)

    Fuller, John Michael F

    Macnamara, Dr. Thomas J.

    Boulton, A. C. F.

    Fullerton, Hugh

    Macpherson, J. T.

    Brace, William

    Gibb, James (Harrow)

    MacVeagh, Jeremiah (Down, S.)

    Branch, James

    Gill, A. H.

    M'Laren, H. D. (Stafford, W.)

    Brunner, J. F. L. (Lanes., Leigh)

    Glover, Thomas

    Maddison, Frederick

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Gooch, George Peabody (Bath)

    Mallett, Charles E.

    Bryce, J. Annan

    Haldane, Rt. Hon. Richard B.

    Marks, G. Croydon (Launceston)

    Buckmaster, Stanley O.

    Hancock, J. G.

    Marnham, F. J.

    Burns, Rt. Hon. John

    Harcourt, Rt. Hon. L. (Rossendale)

    Menzies, Sir Walter

    Burnyeat, W. J. D.

    Hardy, George A. (Suffolk)

    Middlebrook, William

    Burt, Rt. Hon. Thomas

    Harmsworth, R. L. (Caithness-sh.)

    Molteno, Percy Alport

    Buxton, Rt. Hon. Sydney Charles

    Hart-Davies, T.

    Money, L. G. Chiozza

    Byles, William Pollard

    Harvey, W. E. (Derbyshire, N.E.)

    Morgan, J. Lloyd (Carmarthen)

    Cawley, Sir Frederick

    Harwood, George

    Morse, L. L.

    Channing, Sir Francis Allston

    Haworth, Arthur A.

    Morton, Alpheus Cleophas

    Cherry, Rt. Hon. R. R.

    Helme, Norval Watson

    Murray, James (Aberdeen, E.)

    Clancy, John Joseph

    Henderson, Arthur (Durham)

    Myer, Horatio

    Clough, William

    Henderson, J. McD. (Aberdeen, W.)

    Newnes, F. (Notts, Bassetlaw)

    Clynes, J. R.

    Higham, John Sharp

    Nicholls, George

    Cobbold, Felix Thornley

    Hobhouse, Rt. Hon. Charles E. H.

    Nussey, Sir Willans

    Collins, Stephen (Lambeth)

    Hogan, Michael

    Nuttall, Harry

    Collins, Sir Wm. J. (St. Pancras, W.)

    Holland, Sir William Henry

    O'Brien, K. (Tipperary, Mid)

    Corbett, C. H. (Sussex, E. Grinstead)

    Holt, Richard Durning

    O'Connor, John (Kildare, N.)

    Cornwall, Sir Edwin A.

    Howard, Hon. Geoffrey

    O'Donnell, C. J. (Walworth)

    Cotton, Sir H. J. S.

    Hutton, Alfred Eddison

    O'Grady, J.

    Cox, Harold

    Jardine, Sir J.

    O'Kelly, Conor (Mayo, N.)

    Cullinan, J.

    Jones, Sir D. Brynmor (Swansea)

    Parker, James (Halifax)

    Curran, Peter Francis

    Jones, Leif (Appleby)

    Partington, Oswald

    Pearce, Robert (Staffs, Leek)

    Shipman, Dr. John G.

    Wardle, George J.

    Perks, Sir Robert William

    Snowden, P.

    Warner, Thomas Courtenay T.

    Pointer, J.

    Stanger, H. Y.

    Wason, Rt. Hon. E. (Clackmannan)

    Ponsonby, Arthur A. W. H.

    Stanley, Albert (Staffs, N.W.)

    Wason, John Cathcart (Orkney)

    Priestley, Sir W. E. B. (Bradford, E.)

    Stanley, Hon. A. Lyulph (Cheshire)

    Watt, Henry A.

    Radford, G. H.

    Stewart, Halley (Greenock)

    White, Sir George (Norfolk)

    Raphael, Herbert H.

    Stewart-Smith, D. (Kendal)

    White, J. Dundas (Dumbartonshire)

    Rea, Rt. Hon. Russell (Gloucester)

    Straus, B. S. (Mile End)

    White, Sir Luke (York, E.R.)

    Rees, J. D.

    Strauss, E. A. (Abingdon)

    White, Patrick (Meath, North)

    Rendall, Athelstan

    Summerbell, T.

    Whittaker, Rt. Hon. Sir Thomas P.

    Richards, Thomas (W. Monmouth)

    Taylor, John W. (Durham)

    Wiles, Thomas

    Roberts, Charles H. (Lincoln)

    Taylor, Theodore C. (Radcliffe)

    Williams, J. (Glamorgan)

    Roberts, G. H. (Norwich)

    Tennant, Sir Edward (Salisbury)

    Williams, W. Llewelyn (Carmarthen)

    Robertson, Sir G. Scott (Bradford)

    Tennant, H. J. (Berwickshire)

    Wilson, Henry J. (York, W.R.)

    Robinson, S.

    Thomas, Sir A. (Glamorgan, E.)

    Wilson, J. W. (Worcestershire, N.)

    Robson, Sir William Snowdon

    Thomasson, Franklin

    Wilson, P. W. (St. Pancras, S.)

    Roe, Sir Thomas

    Thompson, J. W. H. (Somerset, E.)

    Wilson, W. T. (Westhoughton)

    Rogers, F. E. Newman

    Thorne, G. R. (Wolverhampton)

    Winfrey, R.

    Rowlands, J.

    Thorne, William (West Ham)

    Wood, T. M'Kinnon

    Runciman, Rt. Hon. Walter

    Trevelyan, Charles Philips

    Young, Samuel

    Schwann, C. Duncan (Hyde)

    Verney, F. W.

    Schwann, Sir C. E. (Manchester)

    Villiers, Ernest Amherst

    TELLERS FOR THE AYES.—Mr.

    Shackleton, David James

    Vivian, Henry

    Joseph Pease and Captain Norton.

    Shaw, Sir Charles E. (Stafford)

    Walsh, Stephen

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Faber, George Denison (York)

    Moore, William

    Anson, Sir William Reynell

    Fell, Arthur

    Morpeth, Viscount

    Anstruther-Gray, Major

    Fletcher, J. S.

    Parkes, Ebenezer

    Balcarres, Lord

    Forster, Henry William

    Pretyman, E. G.

    Baldwin, Stanley

    Foster, P. S.

    Renwick, George

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Gardner, Ernest

    Roberts, S. (Sheffield, Ecclesall)

    Banbury, Sir Frederick George

    Gibbs, G. A. (Bristol, West)

    Rutherford, Watson (Liverpool)

    Banner, John S. Harmood-

    Gordon, J.

    Salter, Arthur Clavell

    Baring, Capt. Hon. G. (Winchester)

    Guinness, Hon. W. E. (B. S. Edmunds)

    Sheffield, Sir Berkeley George D.

    Bull, Sir William James

    Hamilton, Marquess of

    Stone, Sir Benjamin

    Burdett-Coutts, W.

    Hardy, Laurence (Kent, Ashford)

    Talbot, Lord E. (Chichester)

    Carlile, E. Hildred

    Hill, Sir Clement

    Thomson, W. Mitchell-(Lanark)

    Cecil, Evelyn (Aston Manor)

    Hope, James Fitzalan (Sheffield)

    Thornton, Percy M.

    Chaplin, Rt. Hon. Henry

    Joynson-Hicks, William

    Valentia, Viscount

    Coates, Major E. F. (Lewisham)

    Kerry, Earl of

    Walker, Col. W. H. (Lancashire)

    Cochrane, Hon. Thomas H. A. E.

    Kimber, Sir Henry

    Walrond, Hon. Lionel

    Courthope, G. Loyd

    King, Sir Henry Seymour (Hull)

    Warde, Col. C. E. (Kent, Mid)

    Craig, Captain James (Down, E.)

    Law, Andrew Bonar (Dulwich)

    Williams, Col. R. (Dorset, W.)

    Dalrymple, Viscount

    Lee, Arthur H. (Hants, Fareham)

    Dickson, Rt. Hon. C. Scott

    MacCaw, William J. MacGeagh

    TELLERS FOR THE NOES.—Mr.

    Doughty, Sir George

    Mason, James F. (Windsor)

    Cave and Mr. Hicks Beach.

    Douglas, Rt. Hon. A. Akers-

    Meysey-Thompson, E. C.

    Question put, "That the Clause stand part of the Bill."
    The Committee divided: Ayes, 192; Noes, 62.

    Division No. 653].

    AYES.

    [8.17 p.m.

    Abraham, W. (Cork, N.E.)

    Burt, Rt. Hon. Thomas

    Evans, Sir S. T.

    Acland, Francis Dyke

    Buxton, Rt. Hon. Sydney Charles

    Everett, R. Lacey

    Agnew, George William

    Byles, William Pollard

    Falconer, J.

    Allen, A. Acland (Christchurch)

    Cawley, Sir Frederick

    Fenwick, Charles

    Allen, Charles P. (Stroud)

    Channing, Sir Francis Allston

    Flynn, James Christopher

    Ashton, Thomas Gair

    Cherry, Rt. Hon. R. R.

    Foster, Rt. Hon. Sir Walter

    Baker, Sir John (Portsmouth)

    Clough, William

    Fuller, John Michael F.

    Baker, Joseph A. (Finsbury, E.)

    Clynes, J. R.

    Fullerton, Hugh

    Balfour, Robert (Lanark)

    Cobbold, Felix Thornley

    Gibb, James (Harrow)

    Barker, Sir John

    Collins, Stephen (Lambeth)

    Gill, A. H.

    Barran, Rowland Hirst

    Collins, Sir Wm. J. (St. Pancras, W.)

    Glover, Thomas

    Beauchamp, E.

    Corbett, C. H. (Sussex, E. Grinstead)

    Gooch, George Peabody (Bath)

    Benn, Sir J. Williams (Devonport)

    Cornwall, Sir Edwin A.

    Haldane, Rt. Hon. Richard B.

    Berridge, T. H. D.

    Cotton, Sir H. J. S.

    Hancock, J. G.

    Bethell, Sir J. H. (Essex, Romford)

    Cox, Harold

    Harcourt, Rt. Hon. L. (Rossendale)

    Bethell, T. R. (Essex, Maldon)

    Cullinan, J.

    Hardy, George A. (Suffolk)

    Boulton, A. C. F.

    Curran, Peter Francis

    Harmsworth, R. L. (Caithness-shire)

    Brace, William

    Davies, Timothy (Fulham)

    Hart-Davies, T.

    Branch, James

    Davies, Sir W. Howell (Bristol, S.)

    Harvey, W. E. (Derbyshire, N.E.)

    Brunner, J. F. L. (Lancs., Leigh)

    Dewar, Arthur (Edinburgh, S.)

    Harwood, George

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Dickinson, W. H. (St. Pancras, N.)

    Haworth, Arthur A.

    Bryce, J. Annan

    Duckworth, Sir James

    Helme, Norval Watson

    Buckmaster, Stanley O.

    Duffy, William J.

    Henderson, Arthur (Durham)

    Burns, Rt. Hon. John

    Dunne, Major E. Martin (Walsall)

    Henderson, J. McD. (Aberdeen, W.)

    Burnyeat, W. J. D.

    Essex, R. W.

    Higham, John Sharp

    Hobhouse, Rt. Hon. Charles E. H.

    Myer, Horatio

    Stewart-Smith, D. (Kendal)

    Hogan, Michael

    Newnes, F. (Notts, Bassetlaw)

    Straus, B. S. (Mile End)

    Holt, Richard Durning

    Nicholls, George

    Strauss, E. A. (Abingdon)

    Howard, Hon. Geoffrey

    Nussey, Sir Willans

    Summerbell, T.

    Hutton, Alfred Eddison

    Nuttall, Harry

    Taylor, John W. (Durham)

    Jardine, Sir J.

    O'Brien, K. (Tipperary, Mid)

    Taylor, Theodore C. (Radcliffe)

    Jones, Sir D. Brynmor (Swansea)

    O'Connor, John (Kildare, N.)

    Tennant, H. J. (Berwickshire)

    Jones, Leif (Appleby)

    O'Donnell, C. J. (Walworth)

    Thomas, Sir A. (Glamorgan, E.)

    Jones, William (Carnarvonshire)

    O'Grady, J.

    Thomasson, Franklin

    Jowett, F. W.

    Parker, James (Halifax)

    Thompson, J. W. H. (Somerset, E.)

    Joyce, Michael

    Partington, Oswald

    Thorne, G. R. (Wolverhampton)

    Kekewich, Sir George

    Perks, Sir Robert William

    Thorne, William (West Ham)

    King, Alfred John (Knutsford)

    Pointer, J.

    Trevelyan, Charles Philips

    Lamb, Ernest H. (Rochester)

    Ponsonby, Arthur A. W. H.

    Verney, F. W.

    Lambert, George

    Priestley, Sir W. E. B. (Bradford, E.)

    Villiers, Ernest Amherst

    Lamont, Norman

    Radford, G. H.

    Vivian, Henry

    Layland-Barrett, Sir Francis

    Raphael, Herbert H

    Walsh, Stephen

    Leese, Sir Joseph F. (Accrington)

    Rea, Rt. Hon. Russell (Gloucester)

    Wardle, George J.

    Lever, W. H. (Cheshire, Wirral)

    Rees, J. D.

    Warner, Thomas Courtenay T.

    Levy, Sir Maurice

    Rendall, Athelstan

    Wason, Rt. Hon. E. (Clackmannan)

    Lewis, John Herbert

    Richards, Thomas (W. Monmouth)

    Wason, John Cathcart (Orkney)

    Lloyd-George, Rt. Hon. David

    Roberts, Charles H. (Lincoln)

    Watt, Henry A.

    Luttrell, Hugh Fownes

    Roberts, G. H. (Norwich)

    White, Sir George (Norfolk)

    Macdonald, J. R. (Leicester)

    Robertson, Sir G. Scott (Bradford)

    White, J. Dundas (Dumbartonshire)

    Maclean, Donald

    Robinson, S.

    White, Sir Luke (York, E.R.)

    Macnamara, Dr. Thomas J.

    Robson, Sir William Snowdon

    White, Patrick (Meath, North)

    Macpherson, J. T.

    Roe, Sir Thomas

    Whittaker, Rt. Hon. Sir Thomas P.

    M'Laren, H. D. (Stafford, W.)

    Rogers, F. E. Newman

    Wiles, Thomas

    Maddison, Frederick

    Rowlands, J.

    Williams, J. (Glamorgan)

    Mallet, Charles E.

    Runciman, Rt. Hon. Walter

    Williams, W. Llewelyn (Carmarthen)

    Marks, G. Croydon (Launceston)

    Schwann, C. Duncan (Hyde)

    Wilson, Henry J. (York, W.R.)

    Marnham, F. J.

    Schwann, Sir C. E. (Manchester)

    Wilson, J. W. (Worcestershire, N.)

    Menzies, Sir Walter

    Shackleton, David James

    Wilson, P. W. (St. Pancras, S.)

    Middlebrook, William

    Shaw, Sir Charles E. (Stafford)

    Wilson, W. T. (Westhoughton)

    Molteno, Percy Alport

    Sherwell, Arthur James

    Winfrey, R.

    Money, L. G. Chiozza

    Shipman, Dr. John G.

    Wood, T. M'Kinnon

    Morgan, J. Lloyd (Carmarthen)

    Snowden, P.

    Young, Samuel

    Morse, L. L.

    Stanger, H. Y.

    Morton, Alpheus Cleophas

    Stanley, Albert (Staffs, N.W.)

    TELLERS FOR THE AYES.—Mr.

    Murray, James (Aberdeen, E.)

    Stanley, Hon. A. Lyulph (Cheshire)

    Joseph Pease and Captain Norton.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Douglas, Rt. Hon. A. Akers-

    Meysey-Thompson, E. C.

    Anson, Sir William Reynell

    Faber, George Denison (York)

    Moore, William

    Anstruther-Gray, Major

    Fell, Arthur

    Morpeth, Viscount

    Balcarres, Lord

    Fletcher, J. S.

    Parkes, Ebenezer

    Baldwin, Stanley

    Forster, Henry William

    Pretyman, E. G.

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Foster, P. S.

    Renwick, George

    Banbury, Sir Frederick George

    Gardner, Ernest

    Roberts, S. (Sheffield, Ecclesall)

    Banner, John S. Harmood-

    Gibbs, G. A. (Bristol, West)

    Rutherford, Watson (Liverpool)

    Baring, Captain Hon. G. (Winchester)

    Gordon, J.

    Salter, Arthur Clavell

    Beach, Hon. Michael Hugh Hicks

    Guinness, Hon. W. E. (B. S. Edmunds)

    Sheffield, Sir Berkeley George D.

    Bull, Sir William James

    Hardy, Laurence (Kent, Ashford)

    Stone, Sir Benjamin

    Burdett-Coutts, W.

    Hill, Sir Clement

    Thomson, W. Mitchell- (Lanark)

    Carlile, E. Hildred

    Hills, J. W.

    Thornton, Percy M.

    Cave, George

    Hope, James Fitzalan (Sheffield)

    Valentia, Viscount

    Cecil, Evelyn (Aston Manor)

    Joynson-Hicks, William

    Walker, Col. W. H. (Lancashire)

    Coates, Major E. F. (Lewisham)

    Kerry, Earl of

    Walrond, Hon. Lionel

    Cochrane, Hon. Thomas H. A. E.

    Kimber, Sir Henry

    Warde, Col. C. E. (Kent, Mid)

    Courthope, G. Loyd

    King, Sir Henry Seymour (Hull)

    Williams, Col. R. (Dorset, W.)

    Craig, Captain James (Down, E.)

    Law, Andrew Bonar (Dulwich)

    Dalrymple, Viscount

    Lee, Arthur H. (Hants, Fareham)

    TELLERS FOR THE NOES.—The

    Dickson, Rt. Hon. C. Scott

    MacCaw, William J. MacGeagh

    Marquess of Hamilton and Lord E. Talbot.

    Doughty, Sir George

    Mason, James F. (Windsor)

    CLAUSE 43.—(Provision as to Gifts and Dispositions Inter Vivos.)
    In the case of a person dying on or after the thirtieth day of April nineteen hundred and nine the period preceding the death of the deceased before which a disposition purporting to operate as an immediate gift inter vivos must have been made, or a surrender, assurance, divesting, or disposition must have been made or effected in order that the property taken under the disposition or affected by the surrender, assur-
    2010
    ance, divesting or disposition may not be included as property passing on the death of the deceased shall be five years instead of twelve months before the death, and accordingly paragraph (a) of Sub-section (2) of Section thirty-eight of the Customs and Inland Revenue Act, 1881 (as amended by Section eleven of the Customs and Inland Revenue Act, 1889, and applied by paragraph (c) of Sub-section (1) of Section two of the principal Act), Sub-section (3) of Section two of the principal Act, and Sec-

    2011
    tion eleven of the Finance Act, 1900, shall be read as if five years were substituted for twelve months:
    Provided that this Section shall not apply to any gift inter vivos, surrender, assurance, divesting, or disposition made or effected before the thirtieth day of April nineteen hundred and eight, or made or effected for the benefit of any institution carried on for purposes which in the opinion of the Commissioners are public purposes or charitable purposes.
    Mr. EVELYN CECILmoved, to leave out the words "five years" ["shall be five years instead of twelve months before the death"], and to insert instead thereof the words "six months."
    This Amendment, though concise, is one of the most important Amendments dealing with this Clause of the Bill. It is felt very strongly by, I think I may say, everyone whom it affects, that five years is a grossly improper time. Whoever heard of death-bed scenes going on for five years? [An HON. MEMBER: "Oh."] I do not know what the hon. Member means by saying "Oh." This particular term of five years in intended to apply to gifts in view of death, and nothing can be more plain than the fact that no gift can be made in view of death in any legal, or, I should say, in any other sense that can in the least support or justify the Chancellor of the Exchequer in proposing such a term as this. The original term proposed was three months. That is a perfectly intelligible proposal. I think it is, indeed, a reasonable proposal that nobody should deliberately, when death is close at hand, transfer his property without, perhaps, paying some of the tax which he would naturally have paid if he had not transferred it immediately before his death. But it is quite another thing when this period is being extended to five years. I do not know why you should not extend it to 10, or 20, or 30 years. There is no logic in it. I cannot help thinking that the whole thing has been done in a very haphazard way. There are numerous Amendments down, as the Government is aware, for making exceptions. Possibly a few of these the Government may think it right to accept. What about marriage settlements? What about allowances to children? What about voluntary pensions to old servants? Have all these things to be lumped together and to be considered as part of the estate which is to be charged with duty because it was done within five years of death? I cannot conceive that
    2012
    the Government have seriously thought out these proposals. It is plain that the original grim determination of the Chancellor of the Exchequer was to sweep in everything, but money that was to be given to charities or money that was to be devoted to public purposes. It is a perfectly ludicrous injustice. I have said in previous Debates with regard to other taxes that they lead to avoidance. This will also certainly lead to avoidance.
    In many cases people in various classes of life have said to me, "Do you mean to say that under this Bill we are not to be allowed to give a £25 cheque to our son without it being brought in as part of our estate if given within five years before death?" Of course I tell them that in the draft Bill that is so, and that that £25 cheque would have to be brought in and duty would have to be paid upon it. Those whom it concerns are intensely irritated, and set about—though they may be perfectly honest persons—to see how they can best evade such an absurd proposition. It is very easily done. I should certainly do it myself if my son were old enough, and I wanted to give him a cheque for £25. Instead of paying the £25 cheque to him I should draw it in favour of myself, and then hand over the money to him when I pleased. My executors would not have the slightest idea as to what had happened to that cheque, and if they had they would have no means of proving it. That is how I should personally choose to drive a carriage and six through the Act. I have no conscience whatever in the matter. I should certainly do it, because I consider it a preposterously foolish proposition, grossly unjust, and I should feel I was justified in resisting it in every possible way. It tries to put a stigma upon what is a perfectly legitimate action, and brands honest, straightforward people as people who are trying to evade the law. Fancy such a situation—fancy forcing honest, straightforward people to resort to such subterfuges! It shows the absurdity of such a provision in itself straightaway. It tries to put a stigma upon what is a perfectly legitimate action, upon an action which Mr. Gladstone himself practised and practised with a very reasonable and proper object in view. His object, as has been the object of many another parent who has done the same thing, was to train up his children to know how to manage sums of money or estates, to train them up at a sufficiently early age to make that training useful. It is a very laudable object. It helps to develop a citizen to a sense of that prac-

    2013
    tical public duty which he ought to practise. To try and prevent this and to discourage it in every possible way by enacting a provision such as the one now before us seems to me the height of folly and unwisdom if you want to train up our citizens properly. There is one other point which I should like to draw attention to, and that is the retrospective effect of this provision. What justification is there for making this Clause retrospective? Nobody has had any notice of it, and I think those whom it affects ought to have had notice of it. I suppose the only justification which the Chancellor of the Exchequer will bring forward will be the old one that he wants money, and that therefore he has got to do this. But equally I reply in the old argument that what is not just or fair to those individuals whom it concerns cannot be right from the point of law, or from the point of view of public policy. I cannot use words strong enough to impress upon this Committee how strongly people feel against this proposal. If it is a means of inducing the Government to alter it, or still better to adopt my Amendment, let me say that I think it will lose them many votes at any election. Though I do not adopt that threatening attitude, I earnestly appeal to their sense of justice to alter this absurd term of five years to the very reasonable term that I propose.
    Mr. HALDANE: I do not wonder at people taking a not lenient view of this Clause if they conceive its operation and purpose are anything like what the hon. Member who has just sat down has told the Committee they are. He has informed the Committee that in future the giving of a cheque for £25 by a father to his son is to come in under this Clause. The Inland Revenue never touch these cases, and would never do so, and there is an Amendment down on the Paper which puts a transaction such as that absolutely out of the question.
    Mr. EVELYN CECIL: I was speaking of the Clause as originally drafted.
    Mr. HALDANE: What is the use of working oneself to a state of mortal indignation when you know that in a few minutes the Clause is to be put into the shape you desire?
    Mr. EVELYN CECIL: It shows the original intention of the Government.
    Mr. HALDANE: There was nothing in the hon. Gentleman's point. Twenty-five
    2014
    pound cheques were never charged, and the Clause merely declares what would happen. The Amendment which is on the Paper, and which, I hope, the Committee will reach before long, says:—
    "So much of paragraph (c) of Sub-section (1) of Section 2 of the principal Act and this Section as makes gifts inter vivos property which is deemed to pass on the death of the deceased shall not apply to gifts which are proved to the satisfaction of the Commissioners to have been part of the normal annual expenditure of the deceased, and to have been reasonable having regard to the amount of his income, or which, in the case of any donee, do not exceed in the aggregate £100 in value or amount."
    Suppose a father, not under covenant but voluntarily, makes an allowance to his eldest son which is reasonable, having regard to the amount of his income, which may be very large, then it is exempt by the Amendment which we have on the Paper. It seems to me that the criticism of the hon. Member, so far as it is based upon that, not only was unreasonable, but was altogether out of the question having regard to the Amendment which has been on the Paper for some time past.
    I come now to the more general part of the hon. Member's objection. He admits that it is necessary to make some provision for these inter vivos gifts. He did not complain that it should be three months, as enacted by the Act of 1881, nor did he complain—at least I did not understand him to do so—that it should be one year according to the Act of 1894. What he complains of is that it should be a period of five years. Well, all I can say is, I have as large an experience as anybody in this House of these transactions, and I have not the least hesitation in telling the Committee that the amount of abuse practised by the making of voluntary transfers which has gone on, and is going on, is very great indeed. When I say abuse, I do not mean legal abuse or anything fraudulent. If there is a hole in the law anybody is entitled to take account of it. Very often people say their object is to avoid having to pay the Death Duties. They are entitled to avoid paying them if the Act of Parliament leaves them a loophole, and they make these transfers in nine cases out of ten for the simple purpose of not having to pay the duty which would otherwise fall upon them. If there is that hole in the law and they can get through it surely the Legislature cannot be reproached for endeavouring to stop it up,

    2015
    when we know that these transactions are entered into and carried out in order to avoid the payment of the Death Duties? The number of such cases has increased enormously and is increasing, and will increase furthers because of the amount of the tax which is being raised.
    People will resort to every means in their power to avoid it, and if they do so we must resort to every means in our power to prevent them. It is hard on people who go straight to know that the law should be left with gaps in it which enable other people who do not desire to pay the duty to resort to this means of avoiding it and getting through without paying. The general form of the transaction when it takes place between father and son is for the father to transfer the property without transferring the real benefit from himself under the deal. The son allows the father to go on perhaps as he did before, and the arrangements between them are such that until the father's death he is virtually as well off as before, but when he dies the son takes his place as if the property had passed at death. That is the normal case. There are many hon. Members in this House who know as well as I do how often that has occurred in recent years. Stop that we must. You cannot do it by putting in a period of three months or of six months or of 12 months. The only way you can stop it is by saying to people, "If you make this disposition of passing your property in substance in order to avoid the duty we shall catch you by putting the period so long that you will not be under the same temptation to do it as you are at the present time.
    I do not say that there are not cases in which fathers transfer their properties to their sons for the purpose of educating them in the business or calling, but I do say that these cases are comparatively rare, and that in the greater number of cases it is done for the purpose of evasion. I am speaking of what I have seen a good deal of. When a father sets his son up for the benefit of his property, he does so in a great many cases under circumstances which will not be affected by this provision. The estate is transferred by him in middle age, and, if he does not die within five years, the duty is not payable. That kind of legitimate case will not often be hit, but the other case is the case in which the vast majority of people enter
    2016
    for the purposes of evading the duty. The duty is getting to be more stringent and the attempts to evade it will be greater than ever they were under the old duties. It is absolutely essential, if this system is to be a reality, that steps should be taken to prevent what will certainly happen on a larger scale if not checked than at the present time. Five years is said to be too long a period. Well, it is not a period which is serious in the case of a middle-aged man who transfers his property for the purpose of educating his son in its management. Hon. Members know that in past years instances of transfer before death have been common in the cases of old gentlemen, and the purpose of the transfer was to avoid the payment of the duties. A great many people in this House, I am sure, are aware of voluntary transactions going on for a long time past in which that has been done. The hon. Member said we had made this Clause retrospective, but if he will look at the proviso at the end of the Clause he will find that it does not apply to gifts inter vivos "made or effected before the 30th day of April, 1908." Already at this moment it is 12 months, and if it takes place within 12 months of the testator's death by the law as it stands, we thought it right to put in the date 1908, but that is not retrospective. All I need to say in conclusion is that unless this step is taken I am certain we shall have to put up with a great deal of loss of revenue which we ought not to suffer incurred by persons who have the deliberate intention, I will not say of evading, but of avoiding, payments of duties which are now being put upon those whose property passes at death. Unless the step of fixing a period as long as five years is taken there will be no security to the revenue against a great loss of this kind.
    Mr. JAMES MASON: I was very much struck with the case which has been mentioned of a man who might offer a portion of his property to his son and die within a period of five years. We are told that is a transaction which is not legitimate, but if the man lived five years it is said that that makes it a perfectly legitimate transaction. The main point to which we should direct our attention is that the duty which is now proposed with this five years period really makes the tax only very slightly connected with the Death Duties at all. The transaction which is taxed is one which may possibly have been carried through four years and eleven months before a man dies. It is really a tax upon gifts. It is perfectly reasonable

    2017
    to say you must have this provision six months or one year, but, to say the least of it, five years is a very excessive period. One of the effects of this prolongation of the period from one year to five will be that it will act detrimentally on the occasion of those generous incidents in life which we all like to see and approve of. Suppose we have the possibility of a man making over large presents, not as part of his normal expenditure; the possibility of a man giving large presents either to his son or some friends or dependents who have done him good service, and they may be those, and they may or may not be those, in receipt of a regular salary. Supposing he wishes to reward them by a present. By the Bill you are going to penalise a transaction of that kind, which no one would blame you for, and for which there is no more reason to penalise than the ordinary wages or salaries the man may be paying to some of those self-same individuals. I cannot see why a present of this kind should be penalised, which may or may not be in return for services rendered, and may or may not be a mark of approval for services to the man who makes the gift, or possibly to the State. If you are going to tax a man in a case of this kind, why not tax all gifts, and why limit your proposal to five years? This is a tax on gifts, and if you are going to tax them you should tax them on the ground that gifts are windfalls.
    My hon. Friend asked whether it was proposed to tax pensions. There are proposals of this kind with which we are going to deal affecting certain limited cases, but the provisions made there are very narrow and hardly adequate to the case. You admit that there are to be exemptions in the case of charitable gifts, and yet you are going to tax acts of kindness or generosity to the immediate circle of relations and friends among whom a man lives. Surely there can be no logical reason why you should tax gifts given from a generous motive any more than you should tax gifts given from a charitable motive. If there is anything at all in the saying, "Charity begins at home," it seems to me the reason for this proposal is very small. The right hon. Gentleman said evasion was practised to a large extent, and he admits it will continue to be practised by the transferring of property during life. It seems to me that the period which has been fixed is very excessive. What has rather puzzled me has been that this proposal seems to be such a contradiction of ordinary Liberal tenets. The Liberals are always professing
    2018
    a great anxiety that property should be more evenly distributed. Surely that is the main justification for the graduation of these taxes and the taxation of capital and land. But here you are carrying out something which is an exact contradiction to that, because you are attempting to discourage distribution and to concentrate wealth more into fewer hands. You are endeavouring to keep it into fewer hands by penalising its distribution. What is the explanation? I cannot help thinking that the explanation may be that the real aim of the Government is not so much the distribution of wealth among many individuals as a concentration of wealth in the hands of only one individual, and that individual is the State.
    Mr. LEIF JONES: I listened to the very uncompromising reply of the Secretary of State for War with very great disappointment and not a little surprise. It will be in the recollection of the Committee that this matter was raised in the second reading Debate. The answer we then received from the Government was by no means of this uncompromising nature, and I have lived in hope that to-night the Government would announce they had considered the matter, and that the five years they had inserted in their Bill was really longer than was necessary for their purpose. I am certain a great deal more justification for five years is required than the Government have yet given us. I quite admit the great experience of the right hon. Gentleman who has spoken, but, after all, there are figures by which we can test whether this is a growing evil, and, so far as I know, there are no figures to show that evasion of the Death Duties is practised more now than it used to be. There may be a certain amount of desire to evade the duty on the part of certain people, but I see nothing to prove that it is growing or that more property is escaping taxation than in the early years after the duties were put on. A year is a very long time for a man to look forward to, and I cannot for a moment assent to the proposition of the Secretary of State for War that a man always knows when he is within a year of his death, and can then set to make arrangements on the supposition that within 12 months he will be in his grave. We none of us know whether this day 12 months we may be alive. If it is true there is a certain amount of evasion, I would put it to the Government whether they have not in mind not the passing of ordinary gifts but the transference of great blocks of landed estates. If there is more,

    2019
    I will not say evasion, because I do not admit it is evasion, but if there is more escaping the duties in the transference of real property, I suggest to the Government that it would be a more practicable proposal to put a limitation on the transference of property requiring formal deeds before transference may take place. I do not much believe in. landowners or anybody else giving up their property without keeping any hold upon it while they are living. It is a very unsafe proceeding.
    I am bound to say that no case has been made out to justify the very long extension to five years of this one year, which in my judgment is a very long time. I always thought that the three months originally proposed was enough to deal with death-bed transactions where a deliberate attempt is made to evade the duty. I am really against the policy of this Clause on the ground just put forward by the hon. Member for Windsor (Mr. James Mason). I think it is contrary to the rest of the Budget. The ideal of the Government in this Clause appears to be that it is desirable to have large accumulations of property in one hand, because, when the owner of that property dies, the State will get a large sum. I hold another view. I hold the view attributed to Liberals by the hon. Member, that the distribution of property is an object at which we ought to aim, and one of the direct advantages of the Death Duties is that it has promoted in some degree the distribution of property into more hands. It was one of the standard objections to the Death Duties of Sir W. Harcourt that they would be evaded by properly being given away during lifetime, and his answer, and the answer of every Liberal was, "So much the better; the more property is distributed the better." What is the meaning of the high graduation which is the feature of this Budget? What is the meaning of the greater and greater taxation you put upon very large fortunes? Surely, in its essence, it means that we think it is desirous to tax more heavily and make more difficult the accumulation of very large fortunes, and to facilitate and multiply small fortunes in the country.
    9.0 P.M.
    It is no disadvantage, the Budget says all through until you come to this Clause, to tax heavily a very large fortune, because, if very large fortunes are not accumulated society will be none the worse. That is the underlying theory in the Budget. This Clause makes in the very
    2020
    opposite direction. The Chancellor of the Exchequer now seems to approach a man who is going to distribute his property and say, "What, break up your property! Give it away among your children! Transfer it by deeds right and left! Why, you are an enemy of society. You are fighting the interests of the State. You are evading taxation. You shall not escape in that way. I will watch your proceedings and investigate your transactions for five years before you die." I take the opposite view. I hold that the more wealthy people distribute their property during life the better. It may be a spendthrift view, but I hold that property is held by people in order that they may spend and distribute it, and not that they may leave it to the Chancellor of the Exchequer to tax at death. Indeed, I thought the policy of the Government meant that when a man left a great fortune at his death they said in effect, "You have failed in your duty; you have not distributed your property; you have left too much, and, therefore, we shall take a much larger proportion from your estate than if you had acted as a good man and distributed your property wisely and to the benefit of all people surrounding." The Government have to justify to the House and to the country this contradiction by Clause 43 of the policy of the rest of their Budget.
    The hon. Member who moved the Amendment attacked the Bill as it stood, but he omitted to notice the amending Clause the Government have put upon the Paper, which undoubtedly, in some degree, lessens some of the evils of the present system, and certainly of the Bill as it is drawn. The Secretary of State for War dismissed the case of the cheque for £25 to the son very contemptuously, saying the tactics of the Inland Revenue were not to tax that £25. That may be their tactics, but it is not the law. Under the existing law, all gifts made within 12 months, however small, are subject to taxation if the Inland Revenue authorities choose to demand it. I am no lawyer, but there is no Clause I can find which defines the nature of the gifts or the transfer. So long as it is a transfer inter vivos without consideration, then it is subject to the tax, and, whether it is a cheque of £25 to the son or a larger sum to somebody else, it is all alike subject to taxation according to the law. I admit that in practice to my knowledge the Inland Revenue authorities have not interpreted this very strictly, but that may be because they were flush of money. When it is in the power of an official or a

    2021
    Department to exact more, if there is a period of stringency and difficulty, then a new interpretation may be given to the words. I for one am very glad that words have been put in which do, to some extent, modify the practice. What are the modifications? The Clause is not to apply to gifts which are part of the "normal annual expenditure" of the deceased. But what is the "normal annual expenditure"? I have in my mind instances of well-to-do men who have made it a practice when their sons have grown up and have reached the age of discretion, instead of continuing their annual allowance, to hand over to them a capital sum, representing the amount of the allowance, because the father thinks that the son, while yet young and in the prime of life, should learn to manage the capital which represents the income upon which he has to depend. Is it not a perfectly common thing, where a man has plenty of money, to hand over capital sums in that way, and are such sums to be treated as part of his "normal annual expenditure"? I know particularly of one large family where these sums have been handed over year after year to sons as they have grown up. I again ask is that to be treated as normal annual expenditure? Again, where is the justice of discriminating between cases where a man gives £1,000 a year away in the form of charitable gifts for ten years, while another man holds his money back until he realises that he is nearing his end, and then gives possibly £10,000 in a single year? Is that £10,000 to be taxed while the £1,000, given away in ten successive years, is to escape taxation? Where is the justification for a discrimination between the two sets of disbursements? Why should one be treated as normal annual expenditure and the other be taxed? Then the Clause goes on to say that the Commissioners are to judge whether the expenditure is reasonable, having regard to the size of a man's income.
    The DEPUTY-CHAIRMAN: I do not think this question can be raised on this Amendment. There are Government Amendments down dealing with the question.
    Mr. BALFOUR: On a point of Order. May I remind you that the Secretary for War reproached the Mover of this Amendment because he had discussed this Clause, and not the Clause as proposed to be amended by the Government. He actually denounced my hon. Friend because he said
    2022
    that an Amendment was going to be proposed by the Government in a very few moments. I do not see how it is possible for us to discuss the Clause unamended when there are Amendments to be proposed which really go to the root of the Clause, and when the Government attack us for our criticisms on the Clause when they have got Amendments down to it.
    The DEPUTY-CHAIRMAN: I quite appreciate the difficulty, but the right hon. Gentleman, with his experience of this House, will recognise the difficulty and inconvenience of now discussing Amendments which will come on later. The question presently before the Committee is not the Clause but a specific Amendment. It is in accordance with the practice of the House to keep each Amendment Separate and to discuss at as it comes on. It seems to me, for instance, that the question of five years is a complete question in itself. The point whether it shall be extended or otherwise must be dealt with separately, and there are Amendments on the Paper dealing with that. Then the question what is normal expenditure is another point to be treated separately, and that I think is dealt with in the Government Amendment.
    Mr. BALFOUR: I quite agree with your view that any detailed discussion of the Government Amendment will be quite out of place, but I take it that your ruling does not exclude any reference to Government Amendments.
    The DEPUTY-CHAIRMAN: Not at all. I think the night hon. Gentleman will have noticed that the hon. Member has been dealing in some detail with those Amendments, especially so far as normal expenditure is concerned.
    Mr. LEIF JONES: I apologise to the Committee if I have trespassed in any way on the rules of Debate, but I must point out that these questions are very much involved, and that the Government Amendments do really go to the root of the Clause. It is almost impossible to discuss the Clause without at the same time referring to the Amendments. May I briefly deal with the question as to the period of five years? Our main objection to that is with regard to the nature of the investigations which it involves into a man's past accounts. It really does not seem to be reasonable to insist that for five years before a man's death, which, be it remembered, may happen at any time, all his payments shall be

    2023
    recorded. If he scrupulously wishes not to escape the burden placed on him by the Government, it will involve a financial procedure such as very few men ever follow. I do not think it is desirable that it should be so. It would be immensely difficult for the official to trace for five years back what a man's expenditure has been. The hon. Member who moved the Amendment pointed out that it would be the simplest thing in the world for a man to draw a large cheque and give away the money, and that it could be done in such a way that no one could trace the transaction. The indirect effect would be, when you are dealing with large fortunes and large estates to penalise good accountancy, and to give a direct incentive to leave matters in as much confusion as possible, so that the Government officials may not be able to trace the payments. I particularly ask the Government to give me, if they can, any justification for the long period of five years which they have chosen. Will they tell me how they propose to avoid the difficulties which I have put before them? I can assure them that they have no more loyal supporter than myself in their Budget proposals, and it is only the practical difficulties which I think attach to this Clause, and which seem to me to derogate from the value of the rest of the Budget that has induced me to take this action.
    Mr. J. W. HILLS: The hon. Member who last spoke and myself are not often in agreement, but I am bound to say that I endorse the words he has said on this matter. It surely cannot be denied that this is a tax on gifts. A short examination of the history of the tax will prove that. It was first imposed in 1881, and then the limit of exemption was three months. In 1889 that limit was raised to 12 months. Now it is proposed to raise it to five years. Surely that is a change not in detail, but in principle, and it passes out of the category of the Estate Duty into the category of a tax on gifts. Within three months of death a man may send for his family and for his solicitor and make over his fortune, but it is quite a different thing when you date the transaction back for five years, especially in view of the fact that one cannot possibly anticipate the date of death. I should like for one minute just to pass outside this House and to look at the thing as the taxpayer looks at it. He will tell you that it does not matter that these taxes were first put on by a Liberal, then by a Conservative, and now again by
    2024
    a Liberal Government. He, poor luckless man, is the shuttlecock between the two parties, and it does not matter to him by whom they are imposed. In the course of the development of the tax it has ceased to be an Estate Duty, and ceased to earn any of the praise which could be given to such a duty, and it becomes a preventive tax against the distribution of estates. As to what this tax includes, I disagree entirely with the Secretary of State for War. Even supposing the Government Amendment is passed, you have to prove, in order to secure exemption, that the expenditure is annual and reasonable. It is not even annual or reasonable. It is annual, normal expenditure, and reasonable expenditure too, and it has to fulfil those two conditions. A periodical payment which is not annual is not inside the exemption, and excessive payments are also outside it; and, supposing a man, in a fit of unreasonable generosity, gives a wedding present to an old friend, it is taxed. Also, if in a period of years, in a single instance, he gives a large sum to his son, that also is taxed, and so it is no good to say that an ordinary or a reasonable expenditure is included; it is not; it is all taxable; and then it is not generally known that the person who pays the tax is the man who gets the gift. Suppose in this case of the wedding present it turns out to be unreasonable four years after, the unfortunate friend is called upon to sink 7 per cent. or 8 per cent. upon the value of that wedding present. I am perfectly certain that that cannot be the intention of the Government, but still it is the meaning of the Clause, as the Clause stands, and, moreover, unless the Amendment of the Chancellor of the Exchequer is very substantially changed, it will remain the meaning of the Clause.
    So much has been said about the inquisitorial character of this tax that I do not think I can say any more, but I really do ask the Committee to consider if they really mean to go back and find out all the sums that are given away in the last five years of a life. You will have to go through every single transaction of that daily life; even the man's bank-book is not sufficient criterion, because he may have drawn money out and paid it away himself, and every single page of the bank-book has to be scrutinised to see if the deceased is paying debt; and then you would have to separate the gifts from the payments for debts, and you have to decide whether

    2025
    they are unreasonable or not. I do say that it is impossible to collect a tax on these lines, and I wish to add, in conclusion, if you want to tax gifts, tax them, but do not call it Estate Duty. You are by Clause 53 imposing a new duty on voluntary transfers on passing. If I transfer shares to somebody as a present—I am not in the habit of doing it—but if I did, I have only to pay 10s. duty on that transfer. But if Clause 53 is passed I shall pay £1 for each £100 of those shares, so you have already increased the tax on voluntary gifts, and now you mean to bring those gifts within the purview of this tax. Surely that cannot be right. I do not agree with the policy of taxing gifts at all. I agree with the last speaker that it is a laudable thing for a man to split up his fortune, and the best way of treating capital is not always to preserve it, and by this Bill the Government are in two ways encouraging the preservation of fortune. They tax a gift, or intend to tax a gift, under Clause 53. That may be right or wrong, but anyhow it is quite a straightforward way of doing it. This additional duty is paid then and there, and the parties know what they have to pay, but here under this Clause it is paid three or four years afterwards. The unfortunate man who has received a gift may be called upon to pay for it. It is not the estate that pays the duty; it is he that pays it. I do hope that the Government even now will see reason to change their mind. I know that no words of mine can have any effect upon them, but I think they may pay some attention to the words that come from behind them.
    Mr. D. STEWART-SMITH: It is with some regret that I object to this Clause. I am fully in sympathy with the Clauses dealing with the Death Duties. I believe them to be just and reasonable, with the single exception of Clause 43. I think that is neither. I am going to ask the Committee to look at this matter from a very practical point of view. I am going to ask them to resolve themselves with me, if they will, into a board of executors, and see what our duties are under this Clause with the Amendment which the Chancellor of the Exchequer proposes, somewhat late, to introduce. The duties of an executor under this Clause, as amended, would be these. He must include the gifts and dispositions of his testator, for the past five yeans, in the account which he delivers to the Inland Revenue. He may, but he is not bound to, pay duties on gifts, because substantially
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    the gifts do not pass to him as executor. Having fulfilled the first pant of these duties he has got to find out the following things: The amount of all the gifts of his testator during the preceding five years, to whom they were given, the purposes for which they were given, and the normal annual expenditure of his testator. The matter is not one easily determined. Men do not generally keep accounts of their domestic expenses. It may be extremely inconvenient to do so. It is always uncomfortable to refer to them. The executor desirous of doing his duty must therefore obtain the best information he can, and in nine cases out of ten the only source of information is the testator's bank book or bank books. He is bound to search these fox five years back. Let us assume that he finds there are considerable sums of money which disappear from the account, and which cannot be traced by the name of the payee to any cheque. What is his duty then? He is bound to hold a sort of court of inquisition to find out what his testator has been doing with his money. He is bound to inquire of the testator's relatives, and if he inquires of the near relatives what they have received from him the executor may get a delusive and perhaps a derisive answer. He is bound to ascertain the names of the charities which the testator has benefited and the amount of the benefits, because unless he does that he cannot possibly tell whether the gifts fall within the exception in the last words of the Clause. He is bound to ascertain the testator's normal income. If his income varies, as it does in the case of a professional man, I defy any executor to ascertain his testator's normal income. It may depend in some years on the amount of Death Duties he has to pay. At all events, it varies in the case of most men who earn their living. Then he has to submit the whole to the Commissioners, who are to say if the testator has been reasonably charitable. That has to be determined ex post facto, and he may have been reasonably charitable, according to his own ideas, at the time when he gave the money. The Commissioners may find out, in consequence of disasters which have subsequently happened, that the expenditure was not reasonable. What are the gifts which the man is to be able to dispose of during the last five years of his life without penalty? Are they to be gifts to his children? No, not if they exceed £100, and the allowance to the boy at college and to the boy in the Army are not to escape the

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    duty. The amounts which he allows to the ladies of his family for dress—no laughing matter, I am told, in some cases—are not to escape the duty either, because they may not be normal expenditure. It entirely depends upon the circumstances of the family whether these allowances are normal in any one year.
    What are public or charitable purposes in the opinion of the Commissioners? In the view of some persons we are nearing a General Election. At such times high-minded persons find money for patriotic purposes. Their names are not necessarily disclosed, but their executor would be bound to make a return of the money so expended, and a period of five years would in the ordinary course oblige any person who did make a return to disclose the matter, because elections as a rule occur within a period of five years, and if the executor happens to be on the other side in politics what an opportunity for him. But supposing the Commissioners admit such a payment, I do not know who would have the courage to put in the account and pay the duty, I suppose it would be one of the Parliamentary Whips—then the Commissioners have to decide that he has been not unreasonably charitable. What is the effect of that? Are they to disallow specific payments in specific years, or is there to be a rateable abatement of all charitable gifts, and over what period? If the gifts exceed the maximum is the executor to bring the facts to the notice of the Attorney-General, and leave him to lay an information, or is he to take proceedings on his own account against the donees to recover the duties? If he does the latter he runs the risk of failing in his action, and having to pay the cost himself. He can protect himself against that by an application to the court for advice. He can get that advice. The court would probably advise him to take no steps at all. Then what is the position of the Government under these conditions? If the executor furnished the information they must make up their minds whether they will act upon it or not. Supposing he does, at whose expense is the information to be furnished? At whose expense are inquiries to be made? Would it be at the expense of the residuary legatee? That would be obviously unfair, because the residuary legatees will pay their share of the duties, or the executor will pay it for them, and they will get the balance. Of course the expense ought to be that of the
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    donees, but what machinery is there by which the executor, if he met the expense out of the residuary estate, could recover it from the donees? Assume that the executor at his own risk ventures to take these proceedings, the result will be that he will certainly have involved his estate in expense which he cannot recover from anyone else. That will go to the debit of the residuary legatees if he succeeds. If he fails he will deplete his residuary estate in the endeavour to recover the duty, and the only person to gain by that will be the Crown.
    What is the object of the present exception from the general rule? The object of bringing gifts made within a year was to prevent those gifts being made by testators in extremis, and that is quite a fair exception to make. I can well remember when Sir William Harcourt referred to this Clause of the Finance Bill of 1894 he said that old men's grip upon property tightened as they grew older, and it is quite true that a man is less likely to part with his property to his descendants at 70 by voluntary gift than he is at 55. Therefore there is no reason for extending the 12 months to five years if your only object is to stop the transfer of property in extremis. What is the object, of extending it to five years at all? I do not know that any explanation has been given by the Government of how they think the revenue will be increased by the extension of the term. Obviously it is very difficult to see how that can be, because the increase of revenue must be a matter of conjecture, and conjecture only. Of course, if there are any figures available, I should be prepared to modify that statement, but I am looking at it only from the point of view of the executor—the man who performs a trust, as a rule, for a relative, running considerable risk, without remuneration. He is asked now to undertake the additional burden which will fall upon him in having to investigate the accounts of the testator for a period of five years. I can only say, as one whose business it is to advise executors, that under these conditions there is only one piece of advice I could give him, and that is that he should renounce probate.
    Mr. WALTER GUINNESS: I think it is somewhat regrettable that the Secretary of State for War is not present to hear the-most interesting speeches made by two hon. Members on his own side, because, in answering the Amendment, the right hon. Gentleman did not deal with any of the

    2029
    points which have been raised. He devoted himself only to the most general grounds for imposing the tax. I think more weighty grounds will have to be found if the Government are to carry their own supporters with them. There were one or two points raised by the Secretary of State for War on which I should like to say a word. The right hon. Gentleman did not agree that this provision as to five years was retrospective. The only justification of the longer period is to prevent the new scale from stimulating people to hand over inter vivos. Of course, by bringing in gifts made between the end of April, 1908, and the end of April, 1909, you go very much further, because you bring into the net people who cannot in any way be said to have tried to evade these new and higher duties. Why should you single them out? A man may have handed over his property, say, last June. He handed it over without contemplation of the higher tax. He handed it over in the ordinary course. If he died in July this year why should he be made liable under this five years' duty when he handed over the property without considering the higher rates now proposed? The Secretary of State for War apparently forget this case altogether. He said that the Finance Bill of this year was ample notice. It was no notice to the man who handed over his property in June last year. I know there is very little sympathy in certain quarters of the House for anybody who has any property on which to pay any Estate Duty whatever; but I think that common justice demands that when they handed over their property in accordance with the law as it stood, and when they made a gift, the poor condemned wretches should be allowed the year on which they reckoned to die in peace. Then the Secretary of State for War urged that we ought to be comforted in the hardships which may be entailed on children who were given large gifts by the fact that it was part of the normal and reasonable annual expenditure, and that it would escape. But I do not think that will take away the injustice in the great majority of cases we have in mind. Take the case of a marriage settlement. It is not normal annual expenditure. A man cannot expect to settle a sum of money every year unless he has a child to marry every year, and I think that is a very rare case. I think a decision of the Irish Court says that a marriage settlement is liable to Estate Duty within a year. I believe it was held that although a marriage was a valuable
    2030
    consideration it was not a consideration for money or money's worth. I think it is a very great hardship if any marriage settlement within the last five years is to be mulcted for Estate Duty, and if a parent who settles money on his son's marriage dies within the five years. I think that is a hardship which this Amendment of the Government will not in any way meet. Apart from that, I think the tax will probably have a very bad effect, for it will stimulate gifts. A great many people probably wait, if they want to avoid the tax, to the time when they think there is a reasonable prospect on account of advancing years, of dying in the course of a year or two, but nobody can be expected to foresee death by five years. The only result will be to encourage a healthy man to hand over in the full vigour of his life, because if he waits until he gets old there will be no chance of evading the tax at all. The result will be an increase in the amount of property passing inter vivos,
    No doubt the Chancellor of the Extion from the general rule? The object of five years there will be a very great drop in the yield to the Government. At the end of five years the Chancellor of the Exchequer then in office will have to face a very great deficit on the Death Duties. I think it is very bad finance to try to dry up the source of this valuable branch of the revenue, and bequeath the difficulty of today to five years hence. If the Government had more consideration for the convenience of the taxpayer I daresay the arguments of the hon. Member for the Kendal Division of Westmoreland (Mr. Stewart-Smith) might have weighed with them very heavily. I think the hon. Member moved us all to very great sympathy with the lot of executors, but unfortunately, the Government seem to think that everyone who is in possession of property should spend his whole time in filling up returns. Under the Finance Bill as originally introduced everybody in the position of holding land was expected to fill up any number of returns on subjects he could form no valuable opinion upon unless he was an expert. It is the same in the case of the Income Tax. I think there will be great hardship on heirs on account of the time which must inevitably be taken before an estate can be wound up. I believe one of the first instructions to executors is in regard to dealing with inter vivos gifts. I believe the first question always asked of executors is, What gifts were made during the past year? I am told there is always very great difficulty in getting probate

    2031
    until all these delicate matters have been traced to the utmost possible extent. For this reason I think it is perfectly certain that an enormous amount of inconvenience will be caused, and, having in view the fact that the revenue from your tax, if not at present, certainly in five years' time, will tend to diminish owing to the stimulus you are now going to give to gifts without any prospect of death, I think this is a most wasteful form of taxation, and I shall certainly vote against it.
    Mr. G. A. HARDY: I have listened to the arguments of the hon. Member who has just sat down, and I cannot say that many of those arguments will ever come into actual realisation. But from the hon. Members who have spoken from this side we have received weighty words, which make some of us feel that perhaps it would be well for us to urge the Government to see if they cannot in some way or another meet the case that has been made. I have supported them from the beginning, because I believe this is the most reasonable Budget that has ever been produced and will be most helpful to the country when carried into effect; but I do feel that if the Government could see their way to in some way reduce the number of years it would help to answer some of the objections that have been made by hon. Members who have spoken on this side of the House. There is the difficulty, and it is a great difficulty, of being able to trace your accounts. I suppose there is hardly a Member of this House who, looking through his bank book of last year, would be able accurately to say as regards every cheque, even up to £20, what that particular cheque was drawn for. If that be so, how much greater will be the difficulty if the responsibility is thrown back as is proposed. For two or three years it might be easy, but at five years I am afraid that some of us would find it difficult.
    Mr. BALFOUR: The hon. Gentleman who has just sat down drew an invidious distinction between the character of the speeches from that side of the House and the character of those which proceed from the benches behind me. I do not know whether he distinguished between the form and substance. So far as regards form, it is not for me to offer an opinion on the merits of speakers sitting either on your right or left hand side; but, as regards the substance I, who have sat through the whole of this Debate, can
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    really see no difference at all. The arguments that have been addressed to the Government on that side of the House, though there may be individual shades of difference, are in substance precisely the same as the arguments addressed from this side of the House, and like the arguments from this side of the House they have, so far, received no reply from the Government.
    Mr. LLOYD-GEORGE: Yes, they have.
    Mr. BALFOUR: I heard a speech from that bench, but I heard no reply, and nobody now sitting on that bench even heard the speech. When it was delivered the Secretary of State for War was the solitary occupant of that bench, and I was the solitary occupant of this. I speak with an authority which no other Front Bench occupant on either side of the House, in the absence of the Secretary of State for War, can profess to have on this point. I am quite confident that those who have followed the whole of the Debate, even those who have only heard the latter half of the Debate, must feel that the Government have absolutely no choice but to give way. I speak as an old Parliamentary hand, and I say I am confident that it is perfectly impossible for the Government to sustain their position. They labour under every conceivable misfortune; they are acting entirely contrary to the whole theory of the Act of 1894. As has been shown by many speakers, and as I shall perhaps show myself, they are throwing upon executors an absolutely impracticable task. The proposals are consistent neither with theory nor with modern possibilities, and cannot be sustained, and will not be sustained. I am perfectly certain that when the Chancellor of the Exchequer or anyone else gets up to finish this Debate he will announce that some concession, enough to satisfy the hon. Gentleman who has just sat down, if not to meet the arguments which he and others have addressed, must be made. It is quite plain oil the face of it. Just consider to what the Government are asking the House to assent. They used to claim, and their predecessors in title, Sir W. Harcourt, and the Government which he led in this House used to boast, that the Finance Act of 1894, in so far as it encouraged gifts inter vivos, was a good Act; that in so far as it distributed property in that way it carried out a great public policy. How on earth can they come down now and, through the mouth of the Minister for War, say to the man who distributes pro-

    2033
    perty among relations or among friends and then happens to die within five years of his gifts, was a public enemy? They cannot sustain that. The Government are absolutely putting a tax on family affection. You choose to leave your property to an institution for the preservation of oats; it escapes duty, and you may die happy within 13 months after that generous gift. The tax collectors have nothing to say to you. Even the Inland Revenue will leave you alone; you have spent your money nobly and profitably. You have spent it as the Government would desire you to spend it. You have spent it on a charitable institution. If you are criminal enough, if you so disregard public interests as to give £5,000 to a son to start in a business and then die within five years, the matter is very different. Then it is a crime; then the Exchequer has a right to come and take toll, in the classical phrase, of your property. You have not used it to the best public advantage; you have tried to evade the tax; you have tried to diminish the property which ought to pay its way for public purposes; you have not sufficiently supported the Chancellor of the Exchequer in his desire to obtain adequate funds to carry on the Government of the country, you must be taxed. How can you possibly justify that? Why may you give it to cats and not to sons? It really does not bear upon the argument, and, mark you, gifts are not touched in the Government Amendment to which the Secretary of State for War in a most disorderly manner called our attention. The Amendment only deals with annual expenditure as I understand it; so that you are really going to enact that no man may part with his property without, if he is foolish enough to die within five years, paying a tax to the community. Observe that this has no relation whatever, logical or illogical, with the limitation of the death bed gift. It has nothing to do with it. To make a gift within five years is in all probability to give in the full vigour of life, with an unknown prospect of enjoyment of your property before you, and that is to give in the full sense of the word; it is parting with that which you might have kept, and which you might have enjoyed. The death bed gift is wholly different. There the warning is before your eyes; the future enjoyment of your property is by hypothesis denied you; you cannot keep it yourself, and you may as well leave it to others. There is no merit
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    in such a gift. The two cases are absolutely different. They are not divided to any extent by degree, and they are not divided to any extent by time; they are divided absolutely by a gulf that cannot be passed over. I do not believe that anybody who accepts the theory of the Act of 1894 will say this is merely screwing up that Act in order to meet the growing evasions of which the Secretary of State for War so bitterly complained. There is another to which I would like to call the attention of the Committee. It has been referred to in the most brilliant speeches of two hon. Members to-night, and I am referring at this moment to the last speech made by the hon. and learned Gentleman who represents the Kendal Division (Mr. Stewart-Smith). He called attention in passing to the duties that are to be thrown on the Commissioners in regard to these gifts that are made in the preceding five years. It would be out of order, I think, to discuss in detail the Government Amendment by which the Chancellor of the Exchequer hopes to get ever all the plain and patent objections to his proposals, but, I think, it would not be out of order to make some reference to them.
    10.0 P.M.
    Just consider what the proposal of the Government is. We have heard a good deal of what Government Commissioners are to do under this Bill, and the earlier portion of it, and under other proposals of the Government. Our whole life, or, at all events, the management of our property, is to be subject to perpetual valuation and perpetual interference by various Government officials. Never before has any Government official been entrusted with a task so difficult and so delicate as that which, I understand, is to be entrusted to the Commissioners under the Clause as the Government propose to pass it into law. They are to consider whether the annual expenditure is reasonable. I suppose they are to discuss whether the allowance a man gives his wife for her dress is, or is not, in excess of what a reasonable man would allow. That is not an easy position in which to place the Commissioners or the executors, because I take it the executors would have to make a preliminary survey of the same kind. They would be a kind of grand jury, and would consider whether or not they should regard the annual allowance which a man has made to his wife is in excess, or is not in excess, of what a reasonable man might be expected to allow. I am told that some

    2035
    wives are extraordinarily extravagant. Amazing figures have been given to me, and I have no means of testing them. I am neither an executor nor a Commissioner, and I have no means of testing the amazing figures which are given to me as to what certain ladies think necessary to keep up their position and to do full justice to their natural beauty. For five years this is to be looked into by the executors and by the Commissioners. It is idiotic. It is a thing which no Government can seriously support. And what is to be the position of the unfortunate man who is considering whether he shall make an allowance or a gift either to his wife or to a relation, or to any other object—remember, charitable object? I do not investigate any of the darker corners that may have to be dealt with by the executors. I take the plain, open, and manifest everyday cases. The Government are going to make no exemption of charity, unless charitable institutions. They are going to make no allowance for lump sums given in charity; they are only going to make allowance for annual gifts. Consider the position of a man who has to ask himself whether it is wise or unwise of him to make a gift. He will consider, "What is the chance of my dying? The doctor says I am in good health; I have no symptoms of organic disease; but life is uncertain." The Government are going to make the tax, which is in itself arbitrary, however you place it, doubly arbitrary by the fact that a man does not know and cannot know when he makes a gift whether or not there will be a tax not merely upon that gift, but in respect of all the property with which that gift is associated for the purpose of aggregation.
    He cannot decide, the Government cannot decide, the courts cannot help him, the Commissioners cannot help him—the whole thing is settled by the Angel of Death, and the Angel of Death is not under the control even of the Commissioners. How can you really think that a system like that is one which free men will tolerate for long? Then, what about the executor? The position of the executor was explained, I am sorry to say, to a thinner House than that which I am addressing, in a speech I have already referred to, by the hon. and learned Member for Kendal. He spoke with authority on the subject. I cannot speak with authority, but it does not require a lawyer to see how impossible is the situation to
    2036
    every executor if this Clause passes in its present form. You are asking him to undertake the duties of a detective, and you are not paying him for the job. That is what it really comes to. He will have to go into the private life of the man of whose estate he is executor. He will have to look into his bank books, to cross-examine his relations and his friends, to look into his whole career, so far as he has means of doing it, and then communicate with the Inland Revenue. Who is going to undertake, unrewarded and unpaid, a task so dangerous and so thankless? Why, nobody in his senses will do it. I really am not lawyer enough to know what happens when everybody refuses to be an executor. I suppose the law has found a remedy, although I do not happen to know what it is. You have a Public Trustee, and I suppose we shall have a Public Executor. The Trustee can act as Public Executor, and, if so, you would have to greatly increase his salary, and you will have to supply him with a large staff of detectives in order to really find out what has been given in the last five years by the owners of every one of the estates which he is called upon to administer. I believe your whole system will break down by its own weight, apart from the resentment which it creates, apart from the collateral objection which I and other people have ventured to put before the Committee. I believe it will break down by its own weight, because it would not work, and nobody would consent to work it for you.
    I am afraid that this really shows you have reached the limit, more than reached the limit, of what you can extract in this form of taxation. Very few people heard the speech, the one speech so far delivered, by the Government in defence of this Clause. The solitary argument of the Secretary of State for War was this. He said evasion was going on, or avoidance; I think he used the word "avoidance." He certainly did not attempt to use any word of condemnation. He said that avoidance of the duties as they stand is going on, and that that avoidance has already reached formidable proportions, and that if these duties are increased, as they will be under the Bill, that avoidance will necessarily augment. I am afraid that is true. I think it is true, but I am quite certain that this remedy will not cure that disease. That disease is inherent in the situation. You cannot prevent people giving in their life—it cannot be done. The Commissioners and the Treasury may set

    2037
    their wits to work against the man who really says "I have got property and I mean to give it," but it is impossible to do it. There are certain kinds of property with which you can do it. Property in trust is subject to inspection, and can avoid nothing. It may be real estate, and that cannot easily avoid the meshes which the Chancellor of the Exchequer proposes to throw out. But real estate, as we ah know, though it is often forgotten outside this House, is but a relatively insignificant fraction of the total wealth of this country, and putting aside that estate and settled estate, other property cannot be caught if people are determined to avoid it. You are righting an impossible battle, and I think you are fighting in a wrong cause. The idea that you can tie a man, that is what the Government are doing. The old Radical view was that it was good, as has been pointed out by one Radical speaker after another, with far greater force than I can put it, that it was desirable that property should be distributed.
    The whole object of the Government is to tie a man to his property until he dies, in order that when he dies you may extract the largest possible sum out of it. Something very like that was tried in the decaying days of the ancient Roman Empire, and that more than anything else brought it to financial ruin. They tied a man to his profession, they tied a man to his trade, they tied a man to his property. You cannot do that kind of thing in the twentieth century; however you may have been able to do it in the fourth century, you cannot do it now. In my judgment, I entirely concur with the Secretary of State for War when he says that avoidance at the present rate of Death Duties is reaching a dangerous height. I entirely agree when he goes on to say, "if you augment these duties avoidance will increase." I believe in both these cases. I am sorry he is not here, for I think he would admit I am not misrepresenting him. That was his whole argument. I say that, although that be true, it is impossible to look for a remedy in the direction which the Government are taking. If you increase the stringency of your position, you only increase the ingenuity of avoidance. Increase the stringency of your provisions, you may here and there prevent a man using his property to the best of his ability in his life, either in charity to other than institutions, or for the purpose of helping his family in the manner which best suits himself; but you really cannot prevent him, if he really
    2038
    chooses, in most cases to give his property away; and you ought not to do it. You ought, not, on broad liberal principles, which I, following other speakers, have endeavoured to express, and you ought not on the most practical ground. Say a man wishes to help his son by giving a. lump sum to start the son in business. He says: "Now, I should like to wait for four or five years till I see how my son's character develops; what strength and vigour of character he shows, whether he is steady, and whether he is intelligent. I should like to see for what business he is best qualified. But if I wait I may go within the five years, and my other heirs and my son are to be mulcted in the Death Duties." You drive that man to give the money before it ought to be given. You prevent him waiting, you make him give it to the immature youth; you prevent him waiting to see what the young man is likely to turn out. Is that a thing people are going to tolerate? Of course, they are not. This is a mad attempt to get over an inevitable difficulty. The magnitude of the difficulty I admit. I believe that the difficulty will grow, and that the augmentation of the difficulty will lead to increased avoidance. I am absolutely certain that this endeavour to deal with that difficulty, this method of stopping that leak, will prove wholly inefficacious, and that it will cause in every class of the community who come under these duties a general feeling of resentment which will make it impossible for any Government, however strong, to retain them in their present shape.
    Mr. LLOYD-GEORGE: What is the point upon which the Committee will be called upon to decide? An Amendment has been moved by the hon. Member for Aston Manor (Mr. E. Cecil) proposing to cut down the twelve months to six. The Government, on the other hand, propose to extend the period to five years. For the moment I ask the Committee to dismiss the question whether it should be five, four, or three years. The point of principle they have to decide is whether there shall be an extension or a curtailment of the period. The case of the Government for extending the period could not have been better put than it was put by the Leader of the Opposition in his concluding observations when he said, "Evasions are inevitable; evasions will grow." His view is that we have got to the limit of this tax, and he practically admits the case of the Government, so far

    2039
    as evasions are concerned. The Government are prompted to submit this proposal to the Committee because there has been a series of notorious cases—I do not want to give any names, because it would look like an attack upon individuals—Owing to which undoubtedly a very considerable proportion of the property of the country has escaped taxation within the last ten years. The question is, Is the Government entitled to take steps, and, if so, what, to see that property does not escape what has been accepted by both parties in the State as a very fair principle and method of taxation? This is the chief method by which property contributes, by which capital contributes, apart from income, apart from commodities; and unless a Government takes steps to prevent these evasions, well, then, I agree with the right hon. Gentleman that this method of taxation would fail altogether, and property would escape taxation in this country as it escapes in other countries. That is the question which the Committee has got to decide. First of all, the question of principle: Whether we are entitled to take steps to prevent such evasions that have come to our knowledge? Some of them are well known. The right hon. Gentleman says, "Why do you exempt charity? If a man gives his property to a charity you exempt it; if a man gives his property to his relatives you do not exempt it." Surely the reasons are perfectly obvious. Men may make arrangements with their relatives to avoid the duty. Men do not give their property away from their relatives to charities merely to escape Death Duties. The right hon. Gentleman, has treated this as if it were some method of penalising the distribution of property inter vivos. This does not prevent the disposition of property inter vivos. On the contrary, what were the observations made in my hearing by the hon. Gentleman the Member for Bury St. Edmunds (Mr. Walter Guinness)? He said:—
    "This will stimulate gifts and encourage a healthy man to distribute his property long before he anticipates his dissolution."
    His view is that so far from our discouraging gifts inter vivos, this five years' limit will encourage them. Why should it discourage it? This is not a penalty upon distribution. The view of the right hon. Gentleman is this: That if you treat property which has been disposed of by gift inter vivos within five, four, three, or two years, as the ease may be—if you treat it as
    2040
    part of the estate of the person, well, that is discouraging. It will discourage no bonâ fide distribution. Supposing a man disposes of £100,000 amongst his relatives during his lifetime. If he dies, say, within 12 months, the duty is paid upon it. But supposing he did not distribute his property, the duty would be paid just the same. If this were a proposal to double the duty because a man had distributed his property within five years that undoubtedly would be a detriment, but it simply means that the same duty will be paid as would be paid if he had not distributed it. Where is the penalty there? I ask again, Why should it be a detriment to the man who wants to distribute his property amongst his children? What is the position? A penalty means that a man would have to pay something for the acts which he had perpetrated which he would not otherwise have had to pay. He does not pay any more here; his property would not pay any more whether distributed or not; it makes no difference at all, and there is no deterrent here to the man who wishes to distribute his property, say two years before his death. [An HON. MEMBER: "Five years."] Take any period for the moment. I am inviting the Committee to consider the question of the principle of extending the period; I will come to the number of years later. There is no deterrent; on the contrary, there is an inducement. If the man dies the property which passes inter vivos only pays exactly the same duty as if he did not distribute it. On the other hand, if he survives the period the property may not pay the same duty at all. Where is the penalty there? There is no penalty upon distribution, and to treat this as if it was a penalty upon distribution is not to take into account in the slightest degree the facts of the case.
    Let me take it a stage further. The right hon. Gentleman the Leader of the Opposition says this involves a new minute and meticulous examination of accounts extending over five years. You, examine, the right hon. Gentleman said, what a man spent upon his wife's dresses and upon his household expenses. Really, the right hon. Gentleman talks as if this were not in operation at the present moment. You have got the 12 months' period now. Does the right hon. Gentleman mean to convey that the Commissioners of Inland Revenue ever enter into questions of that character? You really must assume that those who are administering the revenues of this

    2041
    country are men of great experience and men of great ability, and really they are men gifted with some common-sense, and that is the reason why this system has been conducted up to the present, I venture to say, without the slightest offence. It has been in operation for a good many years. I never heard a discussion in this House of Commons challenging the action of the Commissioners in the administration of their duties in regard to the 12 months' period, and yet everything the right hon. Gentleman urged against the five yeans could be urged against the 12 months.
    Mr. BURDETT-COUTTS: There is nothing about normal expenditure in the twelve months—
    Mr. LLOYD-GEORGE: If the hon. Member knew what the existing law is upon that point he would have known that I am making a concession, and that under the twelve months' period gifts of any sort or kind should, if there was a strict interpretation of the law as it stands, without the limitation which I propose to impose by the Amendment which is on the Paper, come in, and the Commissioners could examine accounts of that kind at the present moment. [An HON. MEMBER dissented.] The hon. Member contradicts me. I can assure him that that is the law at present. There never has been a case where there has been any complaint of the Commissioners entering into this minute examination of accounts of household expenses of the testator and, of course, the way the Commissioners have administered it up to the present will be the way they will administer it in the future, with this difference, that there is the limitation now which we impose for the first time by our Amendment. The right hon. Gentleman criticised that Amendment, but that Amendment is a limitation. If I had not put it down upon the Paper he would probably not have known anything at all about it. Why? Because the Commissioners at the present moment are carrying out their work under those conditions without the slightest trouble or difficulty. There is at present no examination of household expenditure or the money spent upon dress. The only gifts arrested are those obviously outside the annual expenditure of a man. If a man makes a gift of £5,000 or £10,000 to a relative that is not the ordinary expenditure of the year. There is no examination of such items as the right hon.
    2042
    Gentleman has referred to, and if he had made the slightest inquiry he would have known that that was the case. I hope the Committee will not decide this matter upon mere exaggerations of the practice at the present moment or upon the assumption that the Commissioners are going to abuse the powers which are vested in them. Therefore I say that, if the Revenue is to be protected at all, you can only protect it by an extension of the period. Twelve months is quite inadequate, and I think that is admitted by hon. Members on this side of the House. It is admitted that 12 months is inadequate. The whole point is this: Do hon. Members wish to assist property to escape taxation or do they not? That is the real point. If they do wish to assist property to escape taxation, the best thing they can do is to leave the law as it stands at the present moment. If they wish to strengthen the law in seeing that property does pay its fair share upon the occasion of death, which is the occasion seized by the successive Governments as the proper opportunity upon which to take that toll, then I say that the only way to do it is to strengthen the hands of the Revenue Commissioners by extending the period within which gifts inter vivos cannot be made without payment at all.
    Let me put another point. After all, death is simply taken as the occasion upon which to tax property. There are countries where capital is taxed annually. In some countries there is a tax of a small percentage on property annually, but instead of taxing property and capital annually, we have chosen to tax it at death. If that is to be evaded by means of gifts inter vivos in the way some very wealthy persons have done within the last five or ten years, the only alternative open to any Government which desires to put a tax upon property would be by converting that tax upon the occasion of death into an annual tax upon property, otherwise property escapes altogether. I do not think that would be in the interests even of property-owners. I have conversed within the last few days with men who have paid very heavy Death Duties, and they have said to me that they consider it to be the fairest way they knew to make a contribution to the State in respect of property. If this system is to be continued, there is only one way of doing it, and that is by stopping these obvious leakages which have had the effect of depriving the revenue within the last few years of hundreds of thousands of pounds.

    2043
    I come now to the length of the period. I observe that there are three suggestions on the Paper. One is the proposal of the Government making the period five years, and the other extreme is the proposal of the hon. Member opposite to make it six months. Then there is another proposal by the hon. Member for one of the Divisions of Westmoreland (Mr. Leif Jones) to make the period two years. I do not think that two years is sufficient. I should not be doing my duty if I did not inform the Committee that after a careful investigation of the matter with the assistance of the Secretary of State for War, the Attorney-General and the Solicitor-General, I have come to the conclusion that in my judgment two years are quite inadequate. I am quite willing to respond to the obvious feelings amongst a number of hon. Members in this House whose fidelity, at any rate to the general policy of the Government, is beyond suspicion. I certainly do not suggest on their part any unfair carping or criticism, because they have not embarrassed me in the slightest degree during the discussion of this Bill. There have been no more loyal supporters of the Government. Therefore I will be certainly quite willing to defer to their views, but I really could not, with a full sense of responsibility, assent to a proposal that two years is sufficient.
    I make two suggestions to the Committee. The first is this: When I entered the House there was a discussion with regard to the effect upon marriage settlements. I agree that marriage settlements are of a totally different character. No man can compel his son to marry in order to evade the Death Duties. He would probably consider the penalty would be too high. That, therefore, at any rate, is not a transaction with a view to evading the Death Duties. It is a perfectly bonâ fide transaction, and is not the sort of transaction against which we want to have this limitation operating. I should be perfectly prepared to accept an Amendment, which I think is down on the Paper, dealing with that, and putting marriage settlements outside the category altogether of gifts which would come within this Clause. My second proposal is that the period of five years should be reduced to three. I do not even ask my hon. Friends to meet me half-way. I will go more than half-way to meet them. I will go two-thirds of the way if they will come a third, and I will suggest three years. I agree there is a very strong feeling on both sides of the
    2044
    House. I have heard two speeches from the Opposition and one or two speeches from this side, and I judge the right hon. Gentleman (Mr. Balfour) had very strong feeling in regard to this; but I really could not assent to the proposal of six months. I do not think the right hon. Gentleman would support that. He does not propose we should go back. I think, therefore, I am making a very fair proposal on behalf of the Government, that, at any rate, they should see whether three years would not answer the purpose. If it does not, I have not the faintest doubt some future Chancellor of the Exchequer—it may be the right hon. Gentleman—will come and say, "Three years is not enough; I propose to put on a year or two." I am quite willing, in deference to the views so strongly and powerfully expressed by both sides of the House, to meet hon. Members by first of all exempting marriage settlements altogether, and in the second place by cutting down the period of five years to three years.
    Mr. AUSTEN CHAMBERLAIN: The right hon. Gentleman has made a strategic movement to the rear on this question, which will, no doubt, facilitate the passage of this proposal, but which does not diminish its gravity nor remove the objection to it. Nothing could measure more visibly the ground we have travelled since the Budget of Sir W. Harcourt than the speeches which have been delivered by the two right hon. Gentlemen who have spoken from that bench. From this side of the House my predecessors at the time when Sir W. Harcourt's Budget was passed, and others of us since, have again and again drawn the attention of the Government to the fact that if you raise these duties to excessive rates you will stimulate avoidance within the law. Until to-night the Government have laughed at our fears and derided our prophecies. They have denied again and again that there was any foundation for them. If the Chancellor of the Exchequer and his colleagues will look at the speeches made within very recent years they will find that the Prime Minister has ridiculed the idea that there was any danger of avoidance in consequence of an increase of the duties. But now we have the Government coming down and saying that already this avoidance, amounting in their view to evasion, has grown to such an alarming extent that unless they have the power of looking back into what a man had done for years before he died, their tax will become a nullity, and they will cease to get the revenue

    2045
    expected from it. That marks the distance we have travelled since the time of Sir W. Harcourt, who, in answer to criticisms from this side of the House, said that if his proposals resulted in gifts being made among the living that would exercise a most beneficent effect, in which he would be glad to have a part.
    If the statements of the Government are right as to what is taking place now, there can be no greater condemnation, from a purely fiscal point of view, of the proposals they are making to-day. I confess I am astonished to hear the statement of the Chancellor of the Exchequer. It is not so very long ago that I occupied the position he now holds, and I must say he obtains from the Inland Revenue authorities an entirely different report to that which was given to me by the Commissioners of Inland Revenue at the time I held office. Of course, there have been cases in which some ingenious solicitors have found loopholes, and there is one which is still under litigation. But that does not justify the proposal of the right hon. Gentleman; it would not prevent a recurrence of cases like that. I do not want to discuss cases by name, but what I say is that up till the time when I left office the reports of the Commissioners of Inland Revenue and the advice they gave me afforded no foundation for such a general statement as the Chancellor of the Exchequer has made to-night. I had had my attention drawn to a particular case, or to a few cases, where it might be that a gap had been discovered in the enactment of the original law and as to whether some amendment might be necessary, but what the Chancellor of the Exchequer proposes is not a change suitable to meet these cases, and will not prevent these cases from occurring, and, as far as I know, there has been no such general evasion as would justify such a speech as the Chancellor of the Exchequer has made to-night. The information which I had did not go to show any such general evasion as that of which the Government now speak—any such large and frequent evasion as to form any danger to the tax. On the contrary, all the information that I had was to the effect that the tax had done what its authors had intended, it produced the general results which they desired to produce, and would take the toll which they wished to levy. It might have led, as Sir William Harcourt thought and hoped it would, to the larger distribution of property inter vivos, but there had been nothing of a character to call for any
    2046
    general revision of the law. Now the right hon. Gentleman says that the taxes are producing such an effect upon testators that the gifts, inter vivos, come not in the ordinary course and naturally, but come with the intention of evading payment of Death Duties, and have come so much that you must extend the period within which you must carry back your inquisition. I say, what others have said before, that that is the most serious argument that can be adduced against adding to these duties at the present time; and I go one step further, and say if that be true, you cannot stop it by any such contrivance as this. Anybody who has the knowledge which the Chancellor of the Exchequer possesses knows that if you create a feeling of injustice and persecution among those who are subject to these duties, the wits of the taxpayers and of their advisers are set to work to see how they can evade the obligation which the law seeks to impose, and are keener and more inventive than the wits of his advisers. If the public is against the Government the public will always defeat the Government. You will not prevent that by going back from three years or five years. You will only cause the avoidance to take different forms and more insidious forms—forms which it is more difficult to trace. You cannot prevent that kind of thing if you once set up a desire to do it, and a feeling among the taxpayers that it is fair and just to do it, and the great safeguard of the revenue for these taxes, as for all other taxes, can only be if the taxpayers themselves believe that on the whole they are fair and just, and that they apportion the obligation of the State equitably among its citizens. If you once destroy, as you are destroying, the confidence of the taxpayer in the equity of the Stats all precautions that you may take will not serve to protect your revenue.
    Mr. LEIF JONES: I should like to express thanks to the Chancellor of the Exchequer for the offer to substitute three years for five. I should have preferred two years, but if three is all he will give us we will take it and thank him very warmly.
    Mr. W. PEEL: I should like to offer some comments on the extraordinary reasons that the Chancellor of the Exchequer gave for making this, what he would no doubt call a concession. He did it under compulsion and not very willingly. He told Members behind him that their arguments were very powerful, and he was going to

    2047
    give way to them because of their extraordinary fidelity to the Government, because some hon. Members vote steadily, either with or against their consciences, and not because of the larger statesmanship of the matter, not because it inflicts a hardship on particular individuals or classes, not because it is bad for the State or for finance, but simply because of the fidelity of hon. Members. Then the Chancellor of the Exchequer said there is a great deal of property in this country that escapes taxation. His whole assumption seems to be that property is rather wicked if it does not pass at someone's death. He seemed to treat property as though if it did not pass at death and was given away during a man's lifetime, it has in some way escaped proper taxation. But this tax is nothing of the kind. It is a tax upon property which passes at death, and if it does not pass at death there is no reason whatever why Death Duty should fall upon it. The Chancellor of the Exchequer, further, gave us a very remarkable reason in favour of his particular proposal. He repeated his argument two or three times and seemed to think that Members on this side did not understand what he was saying. He said: "Take the case of property which is given away four years before death. It will pay duty if given four years before death, and it will pay duty if it passes at death." The reason why hon. Members on this side were amused was because they saw the obvious answer to that point which the Chancellor of the Exchequer did not seem to be aware of. They saw that the ordinary testator, if the property paid duty, whether he gave it away in his lifetime or whether it passed at death, would naturally desire to retain his property in his own hands. As to what the Chancellor of the Exchequer said about a concession in favour of charities, I would say that it is quite obvious that when these Death Duties are steep there will be a strong reason for giving away a small sum in charity, so that the rest of the estate may come within the smaller amount on the scale and escape some taxation. We have heard a great deal from hon. Members opposite as to the great disturbance that must take place to executors in making inquiries into the actions of men as to gifts and other matters for five years previous to their death. They drew a tearful tale, and the Chancellor of the Exchequer was affected by them. But will the substitution of
    2048
    three for five years make all the difference? Are all these difficulties and objections going to be removed simply by saying that the period is to be three instead of five years?
    11.0 P.M.
    Mr. J. D. REES: I heard with the greatest satisfaction that the Chancellor of the Exchequer is going to give a restriction of the period to three years. I have been asked to put before the Committee the case of people who are seldom represented in this House and who from the electoral point of view are not very important. They provide for the public service of this country. I mean naval and military officers and Civil servants, who send their sons into those Services. While I gratefully accept the concession the Chancellor of the Exchequer has announced, I say that it would have been more acceptable had the period been made two years instead of three, because very often men who have been in the public service and retired with very small incomes strive to provide their children with allowances in order to help them to a better position and it would be very hard on such men that these duties should have a retrospective effect for such a long period as three years. I should be glad if the Chancellor of the Exchequer would consider the possibility of reducing the period to two years. Of course, there is the difficulty of evasion, as to which everybody who has ever been in the public service must sympathise with the Chancellor of the Exchequer. But there also seems to be the inevitable disposition to think that the persons dealt with by taxes of this character are rich men who are giving large sums as gifts to their children. I have risen on behalf of those who have been in the public service, and who, wishing to put their sons into better positions, make them an allowance.
    Mr. LLOYD-GEORGE: Those allowances will not be taxed.
    Mr. REES: Does the Chancellor of the Exchequer say that an allowance of £200 a year to a son in the Army will not be taxed?
    Mr. LLOYD-GEORGE: Certainly not.
    Mr. REES: If so this matter has been much misunderstood, and the fact that those allowances are to be exempt will be a cause of great satisfaction to those on whose behalf I have risen.
    Colonel WILLIAMS: The Chancellor of the Exchequer has just said that the

    2049
    allowances referred to by the last speaker would not come within the scope of this Sub-section. I suppose he means if a further Amendment is passed, because as the Clause stands the effect will be nothing of the kind. On another subject we are often told that protective duties are bad, because the more you protect the more you have to protect. But in the present instance the more you raise the duties the more you have got to protect those duties, and the longer you have got to make your period in which you are going to improve them. There are several maxims of taxation which have been quoted, and one of them is that a tax which leads to evasion is a bad and an immoral tax, because it leads a man to do that which he would not otherwise do. My objection to three years is just as strong as it was to five years, and I should have liked, if the hon. Member for Appleby and other hon.
    Members had stuck to their two years and not accepted the compromise of five years. One year does no great harm, because his estate would be submitted to the executors and to the Commissioners within the year. But when it comes to two years, and still more to three years, and to raking up a man's bank book for three years, it means that the executors cannot wind up the estate. The Chancellor of the Exchequer made a great merit of exempting marriage settlements, but I cannot see that it is any concession at all; it is merely a matter of common-sense and justice.
    Question, "That 'five years' stand part of the Clause," put, and negatived.
    Question put, "That 'six months' be there inserted."
    The Committee divided: Ayes, 95; Noes, 219.

    Division No 654.]

    AYES.

    [11.10 p.m.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Fletcher, J. S.

    Meysey-Thompson, E. C.

    Anson, Sir William Reynell

    Forster, Henry William

    Mooney, J. J.

    Anstruther-Gray, Major

    Foster, P. S.

    Moore, William

    Arkwright, John Stanhope

    Gardner, Ernest

    Morpeth, Viscount

    Balcarres, Lord

    Gibbs, G. A. (Bristol, West)

    Nicholson, Wm. G. (Petersfield)

    Baldwin, Stanley

    Gordon, J.

    Parker, Sir Gilbert (Gravesend)

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Gretton, John

    Parkes, Ebenezer

    Banbury, Sir Frederick George

    Guinness, Hon. W. E. (B. S. Edmunds)

    Percy, Earl of

    Banner, John S. Harmood-

    Hamilton, Marquess of

    Pretyman, E. G.

    Baring, Capt. Hon. G. (Winchester)

    Hardy, Laurence (Kent, Ashford)

    Rawlinson, John Frederick Peel

    Barrie, H. T. (Londonderry, N.)

    Harris, Frederick Leverton

    Renton, Leslie

    Beach, Hon. Michael Hugh Hicks-

    Harrison-Broadley, H. B.

    Renwick, George

    Bull, Sir William James

    Hay, Hon. Claude George

    Roberts, S. (Sheffield, Ecclesall)

    Burdett-Coutts, W.

    Hermon-Hodge, Sir Robert

    Rutherford, Watson (Liverpool)

    Carlile, E. Hildred

    Hill, Sir Clement

    Salter, Arthur Clavell

    Cave, George

    Hills, J. H.

    Scott, Sir S. (Marylebone, W.)

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Hope, James Fitzalan (Sheffield)

    Sheffield, Sir Berkeley George D.

    Clark, George Smith

    Hunt, Rowland

    Stanier, Beville

    Clive, Percy Archer

    Joynson-Hicks, William

    Starkey, John R.

    Coates, Major E. F. (Lewisham)

    Kennaway, Rt. Hon. Sir John H.

    Staveley-Hill, Henry (Staffordshire)

    Cochrane, Hon. Thomas H. A. E.

    Kerry, Earl of

    Talbot, Lord E. (Chichester)

    Corbett, T. L. (Down, North)

    Keswick, William

    Thomson, W. Mitchell- (Lanark)

    Courthops, G. Loyd

    Kimber, Sir Henry

    Thornton, Percy M.

    Craig, Captain James (Down, E.)

    King, Sir Henry Seymour (Hull)

    Valentia, Viscount

    Craik, Sir Henry

    Law, Andrew Bonar (Dulwich)

    Walker, Col. W. H. (Lancashire)

    Dalrymple, Viscount

    Lee, Arthur H. (Hants, Fareham)

    Walrond, Hon. Lionel

    Dickson, Rt. Hon. C. Scott

    Long, Col. Charles W. (Evesham)

    Warde, Col. C. E. (Kent, Mid)

    Doughty, Sir George

    Lonsdale, John Brownlee

    Williams, Col. R. (Dorset, W.)

    Douglas, Rt. Hon. A. Akers-

    Lowe, Sir Francis William

    Wilson, A. Stanley (York, E.R.)

    Du Cros, Arthur

    Lyttelton, Rt. Hon. Alfred

    Faber, George Denison (York)

    MacCaw, Wm. J. MacGeagh

    TELLERS FOR THE AYES.—Mr.

    Faber, Capt. W. V. (Hants, W.)

    M'Arthur, Charles

    Evelyn Cecil and Mr. W. Peel.

    Fell, Arthur

    Mason, James F. (Windsor)

    NOES.

    Abraham, William (Rhondda)

    Barnard, E. B.

    Bryce, J. Annan

    Acland, Francis Dyke

    Barran, Rowland Hirst

    Buckmaster, Stanley O.

    Agar-Robartes, Hon. T. C. R.

    Beauchamp, E.

    Burns, Rt. Hon. John

    Agnew, George William

    Bell, Richard

    Burnyeat, W. J. D.

    Allen, A. Acland (Christchurch)

    Benn, Sir J. Williams (Devonport)

    Burt, Rt. Hon. Thomas

    Allen, Charles P. (Stroud)

    Berridge, T. H. D.

    Buxton, Rt. Hon. Sydney Charles

    Ashton, Thomas Gair

    Boulton, A. C. F.

    Byles, William Pollard

    Asquith, Rt. Hon. Herbert Henry

    Bowerman, C. W.

    Cawley, Sir Frederick

    Baker, Joseph A. (Finsbury, E.)

    Brace, William

    Channing, Sir Francis Allston

    Balfour, Robert (Lanark)

    Branch, James

    Cherry, Rt. Hon. R. R.

    Baring, Godfrey (Isle of Wight)

    Bright, J. A.

    Clough, William

    Barker, Sir John

    Brunner, J. F. L. (Lanes., Leigh)

    Clynes, J. R.

    Barlow, Sir John E. (Somerset)

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Cobbold, Felix Thornley

    Collins, Stephen (Lambeth)

    Lamb, Ernest H. (Rochester)

    Roe, Sir Thomas

    Collins, Sir Wm. J. (St. Pancras, W.)

    Lambert, George

    Rogers, F. E. Newman

    Cooper, G. J.

    Lamon, Norman

    Rose, Sir Charles Day

    Corbett, C. H. (Sussex, E. Grinstead)

    Layland-Barratt, Sir Francis

    Rowlands, J.

    Cornwall, Sir Edwin A.

    Leese, Sir John F. (Accrington)

    Runciman, Rt. Hon. Walter

    Cotton, Sir H. J. S.

    Lever, W. H. (Cheshire, Wirral)

    Rutherford, V. H. (Brentford)

    Crossfield, A. H.

    Levy, Sir Maurice

    Samuel, S. M. (Whitechapel)

    Dalziel, Sir James Henry

    Lewis, John Herbert

    Scanlan, Thomas

    Davies, Timothy (Fulham)

    Lloyd-George, Rt. Hon. David

    Scarisbrick, Sir T. T. L.

    Davies, Sir W. Howell (Bristol, S.)

    Lupton, Arnold

    Schwann, C. Duncan (Hyde)

    Dewar, Arthur (Edinburgh, S.)

    Luttrell, Hugh Fownes

    Schwann, Sir C. E. (Manchester)

    Dickinson, W. H. (St. Pancras, N.)

    Macdonald, J. R. (Leicester)

    Seely, Colonel

    Duckworth, Sir James

    Maclean, Donald

    Shackleton, David James

    Dunne, Major E. Martin (Walsall)

    Macnamara, Dr. Thomas J.

    Shaw, Sir Charles E. (Stafford)

    Edwards, A. Clement (Denbigh)

    Macpherson, J. T.

    Sherwell, Arthur James

    Edwards, Sir Francis (Radnor)

    MacVeagh, Jeremiah (Down, S.)

    Shipman, Dr. John G.

    Erskine, David C.

    McKenna, Rt. Hon. Reginald

    Snowden, P.

    Essex, R. W.

    M'Laren, Sir C. B. (Leicester)

    Stanger, H. Y.

    Esslemont, George Birnie

    M'Laren, H. D. (Stafford, W.)

    Stanley, Albert (Staffs, N.W.)

    Evans, Sir William T.

    M'Micking, Major G.

    Stanley, Hon. A. Lyulph (Cheshire)

    Everett, R. Lacey

    Mallet, Charles E.

    Stewart-Smith, D. (Kendal)

    Falconer, James

    Markham, Arthur Basil

    Strachey, Sir Edward

    Fenwick, Charles

    Marks, G. Croydon (Launceston)

    Straus, B. S. (Mile End)

    Ferguson, R. C. Munro

    Marnham, F. J.

    Strauss, E. A. (Abingdon)

    Ffrench, Peter

    Massie, J.

    Summerbell, T.

    Flynn, James Christopher

    Masterman, C. F. G.

    Taylor, John W. (Durham)

    Foster, Rt. Hon. Sir Walter

    Menzies, Sir Walter

    Taylor, Theodore C. (Radcliffe)

    Fuller, John Michael F.

    Middlebrook, William

    Tennant, Sir Edward (Salisbury)

    Fullerton, Hugh

    Molteno, Percy Alport

    Tennant, H. J. (Berwickshire)

    Gibb, James (Harrow)

    Money, L. G. Chiozza

    Thomas, Sir A. (Glamorgan, E.)

    Gill, A. H.

    Morgan, J. Lloyd (Carmarthen)

    Thomasson, Franklin

    Glover, Thomas

    Morrell, Philip

    Thompson, J. W. H. (Somerset, E.)

    Gooch, George Peabody (Bath)

    Morse, L. L.

    Thorne, G. R. (Wolverhampton)

    Grey, Rt. Hon. Sir Richard

    Morton, Alpheus Cleophas

    Thorne, William (West Ham)

    Haldane, Rt. Hon. Richard B.

    Murray, James (Aberdeen, E.)

    Trevelyan, Charles Philips

    Hancock, J G.

    Myer, Horatio

    Verney, F. W.

    Harcourt, Rt. Hon. L. (Rossendale)

    Newnes, F. (Notts, Bassetlaw)

    Vivian, Henry

    Hardy, George A. (Suffolk)

    Nicholls, George

    Walsh, Stephen

    Harmsworth, R. L. (Caithness-shire)

    Nussey, Sir Willans

    Wardle, George J.

    Harvey, W. E. (Derbyshire, N.E.)

    Nuttall, Harry

    Waring, Walter

    Harwood, George

    O'Brien, K. (Tipperary, Mid)

    Warner, Thomas Courtenay T.

    Haworth, Arthur, A

    O'Donnell, C. J. (Walworth)

    Wason, Rt. Hon. E. (Clackmannan)

    Helme, Norval Watson

    O'Grady, J.

    Wason, John Cathcart (Orkney)

    Henderson, Arthur (Durham)

    Parker, James (Halifax)

    Watt, Henry A.

    Henderson, J. McD. (Aberdeen, W.)

    Partington, Oswald

    White, Sir George (Norfolk)

    Higham, John Sharp

    Pearce, Robert (Staffs, Leek)

    White, J. Dundas (Dumbartonshire)

    Hobhouse, Rt. Hon. Charles E. H.

    Pointer, Joseph

    White, Sir Luke (York, E.R.)

    Hogan, Michael

    Ponsonby, Arthur A. W. H.

    Whittaker, Rt. Hon. Sir Thomas P.

    Holland, Sir William Henry

    Price, Sir Robert J. (Norfolk, E.)

    Wiles, Thomas

    Holt, Richard Durning

    Priestley, Sir W. E. B. (Bradford, E.)

    Williams, J. (Glamorgan)

    Hooper, A. G.

    Rainy, A. Rolland

    Williams, W. Llewelyn (Carmarthen)

    Hope, John Deans (Fife, West)

    Raphael, Herbert H.

    Williamson, Sir A.

    Howard, Hon. Geoffrey

    Rees, J. D.

    Wilson, Henry J. (York, W.R.)

    Jardine, Sir J.

    Rendall, Athelstan

    Wilson, J. W. (Worcestershire, N.)

    Jones, Leif (Appleby)

    Richards, Thomas (W. Monmouth)

    Wilson, P. W. (St. Pancras, S.)

    Jones, William (Carnarvonshire)

    Roberts, Charles H. (Lincoln)

    Wilson, W. T. (Westhoughton)

    Jowett, F. W.

    Roberts, G. H. (Norwich)

    Winfrey, R.

    Keating, M.

    Robertson, Sir G. Scott (Bradford)

    Wood, T. M'Kinnon

    Kekewich, Sir George

    Robinson, S.

    King, Alfred John (Knutsford)

    Robson, Sir William Snowdon

    TELLERS FOR THE NOES.—Mr.

    Laidlaw, Robert

    Roch, Walter F. (Pembroke)

    Joseph Pease and Captain Norton.

    Mr. LLOYD-GEORGEmoved, in place of the words omitted ["five years"] to insert the words "three years."
    Question put, "That those words be there inserted."
    The Committee divided: Ayes, 211; Noes, 96.

    Division No. 655.]

    AYES.

    [11.20 p.m.

    Abraham, William (Rhondda)

    Barlow, Sir John E. (Somerset)

    Bright, J. A.

    Acland, Francis Dyke

    Barnard, E. B.

    Brunner, J. F. L. (Lanes., Leigh)

    Agnew, George William

    Barran, Rowland Hirst

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Allen, A. Acland (Christchurch)

    Beauchamp, E.

    Buckmaster, Stanley O.

    Allen, Charles P. (Stroud)

    Bell, Richard

    Burns, Rt. Hon. John

    Ashton, Thomas Gair

    Benn, Sir J. Williams (Devonport)

    Burnyeat, W. J. D.

    Asquith, Rt. Hon. Herbert Henry

    Berridge, T. H. D.

    Burt, Rt. Hon. Thomas

    Baker, Joseph A. (Finsbury, E.)

    Boulton, A. C. F.

    Buxton, Rt. Hon. Sydney Charles

    Balfour, Robert (Lanark)

    Bowerman, C. W.

    Byles, William Pollard

    Baring, Godfrey (Isle of Wight)

    Brace, William

    Cawley, Sir Frederick

    Barker, Sir John

    Branch, James

    Cherry, Rt. Hon. R. R.

    Clough, William

    Kekewich, Sir George

    Roch, Walter F. (Pembroke)

    Clynes, J. R.

    King, Alfred John (Knutsford)

    Roe, Sir Thomas

    Cobbold, Felix Thornley

    Laidlaw, Robert

    Rogers, F. E. Newman

    Collins, Stephen (Lambeth)

    Lamb, Ernest H. (Rochester)

    Rose, Sir Charles Day

    Cooper, G. J.

    Lambert, George

    Rowlands, J.

    Corbett, C. H. (Sussex, E. Grinstead)

    Lamont, Norman

    Runciman, Rt. Hon. Walter

    Cornwall, Sir Edwin A.

    Layland-Barratt, Sir Francis

    Rutherford, V. H. (Brentford)

    Cotton, Sir H. J. S.

    Leese, Sir Joseph F. (Accrington)

    Samuel, S. M. (Whitechapel)

    Crosfield, A. H.

    Lever, W. H. (Cheshire, Wirral)

    Scanian, Thomas

    Dalziel, Sir James Henry

    Levy, Sir Mourice

    Scarisbrick, Sir T. T. L.

    Davies, Timothy (Fulham)

    Lewis, John Herbert

    Seely, Colonel

    Davies, Sir W. Howell (Bristol, S.)

    Lloyd-George, Rt. Hon. David

    Shackleton, David James

    Dewar, Arthur (Edinburgh, S.)

    Lupton, Arnold

    Shaw, Sir Charles E. (Stafford)

    Dickinson, W. H. (St. Pancras, N.)

    Luttrell, Hugh Fownes

    Sherwell, Arthur James

    Duckworth, Sir James

    Macdonald, J. R. (Leicester)

    Shipman, Dr. John G.

    Dunne, Major E. Martin (Walsall)

    Maclean, Donald

    Snowden, P.

    Edwards, A. Clement (Denbigh)

    Macnamara, Dr. Thomas J.

    Stanger, H. Y.

    Edwards, Sir Francis (Radnor)

    Macpherson, J. T.

    Stanley, Albert (Staffs, N.W.)

    Erskine, David C.

    M'Kenna, Rt Hon. Reginald

    Stanley, Hon. A. Lyulph (Cheshire)

    Essex, R. W.

    M'Laren, Sir C. B. (Leicester)

    Stewart-Smith, D. (Kendal)

    Esslemont, George Birnie

    M'Micking, Major G.

    Strachey, Sir Edward

    Evans, Sir Samuel T.

    Mallet, Charles E.

    Straus, B. S. (Mile End)

    Everett, R. Lacey

    Markham, Arthur Basil

    Strauss, E. A. (Abingdon)

    Falconer, J.

    Marks, G. Croydon (Launceston)

    Summerbell, T.

    Fenwick, Charles

    Marnham, F. J.

    Taylor, John W. (Durham)

    Ferguson, R. C. Munro

    Massie, J.

    Taylor, Theodore C. (Radcliffe)

    Ffrench, Peter

    Masterman, C. F. G.

    Tennant, Sir Edward (Salisbury)

    Flynn, James Christopher

    Menzies, Sir Walter

    Tennant, H. J. (Berwickshire)

    Foster, Rt. Hon. Sir Walter

    Middlebrook, William

    Thomas, Sir A. (Glamorgan, E.)

    Fuller, John Michael F.

    Molteno, Percy Alport

    Thomasson, Franklin

    Fullerton, Hugh

    Morgan, J. Lloyd (Carmarthen)

    Thompson, J. W. H. (Somerset, E.)

    Gibb, James (Harrow)

    Morrell, Philip

    Thorne, G. R. (Wolverhampton)

    Gill, A. H.

    Morse, L. L.

    Thorne, William (West Ham)

    Glover, Thomas

    Morton, Alpheus Cleophas

    Trevelyan, Charles Philips

    Gooch, George Peabody (Bath)

    Murray, James (Aberdeen, E.)

    Verney, F. W.

    Grey, Rt. Hon. Sir Edward

    Myer, Horatio

    Vivian, Henry

    Haldane, Rt. Hon. Richard B.

    Newnes, F. (Notts, Bassetlaw)

    Walsh, Stephen

    Hancock, J. G.

    Nicholls, George

    Wardle, George J.

    Harcourt, Rt. Hon. L. (Rossendale)

    Nuttall, Harry

    Waring, Walter

    Hardy, George A. (Suffolk)

    O'Brien, K. (Tipperary, Mid)

    Warner, Thomas Courtenay T.

    Harmsworth, R. L. (Caithness-shire)

    O'Donnell, C. J. (Walworth)

    Wason, Rt. Hon. E. (Clackmannan)

    Harvey, W. E. (Derbyshire, N.E.)

    O'Grady, J.

    Wason, John Cathcart (Orkney)

    Harwood, George

    O'Kelly, Conor (Mayo, N.)

    Watt, Henry A.

    Haworth, Arthur A.

    Parker, James (Halifax)

    White, Sir George (Norfolk)

    Helme, Norval Watson

    Partington, Oswald

    White, J. Dundas (Dumbartonshire)

    Henderson, Arthur (Durham)

    Pearce, Robert (Staffs, Leek)

    White, Sir Luke (York, E.R.)

    Henderson, J. McD. (Aberdeen, W.)

    Pointer, J.

    Whittaker, Rt. Hon. Sir Thomas P.

    Higham, John Sharp

    Ponsonby, Arthur A. W. H.

    Wiles, Thomas

    Hobhouse, Rt. Hon. Charles E. H.

    Price, Sir Robert J. (Norfolk, E.)

    Williams, J. (Glamorgan)

    Hogan, Michael

    Priestley, Sir W. E. B. (Bradford, E.)

    Williams, W. Llewelyn (Carmarthen)

    Holland, Sir William Henry

    Rainy, A. Rolland

    Williamson, Sir A.

    Holt, Richard Durning

    Raphael, Herbert H.

    Wilson, H. J. (York, W.R.)

    Hooper, A. G.

    Rees, J. D.

    Wilson, J. W. (Worcestershire, N.)

    Hope, John Deans (Fife, West)

    Rendall, Athelstan

    Wilson, P. W. (St. Pancras, S.)

    Howard, Hon. Geoffrey

    Richards, Thomas (W. Monmouth)

    Wilson, W. T. (Westhoughton)

    Jardine, Sir J.

    Roberts, Charles H. (Lincoln)

    Winfrey, R.

    Jones, Leif (Appleby)

    Roberts, G. H. (Norwich)

    Wood, T. M'Kinnon

    Jones, William (Carnarvonshire)

    Robertson, Sir G. Scott (Bradford)

    Jowett, F. W.

    Robinson, S.

    TELLERS FOR THE AYES.—Mr.

    Keating, M.

    Robson, Sir William Snowdon

    Joseph Pease and Captain Norton.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Clive, Percy Archer

    Gretton, John

    Agar-Robartes, Hon. T. C. R.

    Coates, Major E. F. (Lewisham)

    Guinness, Hon. W. E. (B. S. Edmunds)

    Anson, Sir William Reynell

    Cochrane, Hon. Thomas H. A. E.

    Hamilton, Marquess of

    Anstruther-Gray, Major

    Courthope, G. Loyd

    Hardy, Laurence (Kent, Ashford)

    Arkwright, John Stanhope

    Craig, Captain James (Down, E.)

    Harris, Frederick Leverton

    Balcarres, Lord

    Craik, Sir Henry

    Harrison-Broadley, H. B.

    Baldwin, Stanley

    Dalrymple, Viscount

    Hay, Hon. Claude George

    Balfour, Rt. Hon. A. J. (City, Lond.)

    Dickson, Rt. Hon. C. Scott

    Hermon-Hodge, Sir Robert

    Banbury, Sir Frederick George

    Doughty, Sir George

    Hill, Sir Clement

    Banner, John S. Harmood-

    Douglas, Rt. Hon. A. Akers-

    Hope, James Fitzalan (Sheffield)

    Baring, Capt. Hon. G. (Winchester)

    Du Cross, Arthur

    Joynson-Kicks, William

    Barrie, H. T. (Londonderry, N.)

    Faber, George Denison (York)

    Kennaway, Rt. Hon. Sir John H.

    Beach, Hon. Michael Hugh Hicks

    Faber, Captain W. V. (Hants, W.)

    Kerry, Earl of

    Bull, Sir William James

    Fell, Arthur

    Keswick, William

    Burdett-Coutts, W.

    Fletcher, J. S.

    Kimber, Sir Henry

    Carlile, E. Hildred

    Forster, Henry William

    King, Sir Henry Seymour (Hull)

    Cave, George

    Foster, P. S.

    Law, Andrew Bonar (Dulwich)

    Cecil, Evelyn (Aston Manor)

    Gardner, Ernest

    Lee, Arthur H. (Hants, Fareham)

    Chamberlain, Rt. Hon. J. A. (Worc'r)

    Gibbs, G. A. (Bristol, West)

    Long, Col. Charles W. (Evesham)

    Clark, George Smith

    Gordon, J.

    Lonsdale, John Brownlee

    2054

    2055

    Lowe, Sir Francis William

    Pretyman, E. G.

    Talbot, Lord E. (Chichester)

    Lyttelton, Rt. Hon. Alfred

    Radford, G. H.

    Thomson, W. Mitchell-(Lanark)

    MacCaw, William J. MacGeagh

    Rawlinson, John Frederick Peel

    Thornton, Percy M.

    M'Arthur, Charles

    Renton, Leslie

    Valentia, Viscount

    Mason, James F. (Windsor)

    Renwick, George

    Walrond, Hon. Lionel

    Meysey-Thompson, E. C.

    Roberts, S. (Sheffield, Ecclesall)

    Warde, Col. C. E. (Kent, Mid)

    Moore, William

    Rutherford, Watson (Liverpool)

    Williams, Col. R. (Dorset, W.)

    Morpeth, Viscount

    Salter, Arthur Clavell

    Wilson, A. Stanley (York, E.R.)

    Nicholson, Wm. G. (Petersfield)

    Scott, Sir S. (Marylebone, W.)

    Wyndham, Rt. Hon. George

    Parker, Sir Gilbert (Gravesend)

    Sheffield, Sir Berkeley George D.

    Younger, George

    Parkes, Ebenezer

    Stanier, Beville

    Peel, Hon. W. R. W.

    Starkey, John R.

    TELLERS FOR THE NOES.—Mr.

    Percy, Earl

    Staveley-Hill, Henry (Staffordshire)

    R. Hunt and Mr. J. W. Hills.

    Question, "That 'three' be there inserted," put, and agreed to.

    Mr. J. W. HILLS: I wish to move the Amendment standing in the name of the hon. Member for the Luton division of Bedfordshire (Mr. T. G. Ashton) to add at the end of the first paragraph—
    "Provided that the duty shall not be recoverable from executors or trustees, but shall only be recoverable from the person or persons benefited by a gift or disposition in proportion to their interest in it, and." I am not quite sure how the law stands. As I understand it the donee is accountable for the duty on the gift, and the executor is not accountable.
    Mr. HALDANE: If the hon. Member will look at Section 9, Sub-section (1) of the Finance Act, 1904, he will see that this Amendment is quite unnecessary.
    Mr. BALFOUR: Let the Committee consider what an extraordinary injustice may be done. Supposing a man gives his son £5,000 to start in business. If his estate increases, the rate at which the £5,000 is to be taxed goes on increasing. Supposing the son fails in business, and perhaps there is only £500 of the original £5,000 left. In that case you come down upon him and take the whole of that £500. I think that form of taxation is grotesque. How are you going to justify it? Will the hon. Member opposite, who should have moved this Amendment, explain what equity there is in the Exchequer coming down upon a man who may not have a shilling in the world, and asking for a very large tax, simply because somebody who gave him money has died worth a million. That is your just taxation. That is not denied by the Government, and that is what the right hon. Gentleman tells us is going to be the law.
    Mr. PRETYMAN: The right hon. Gentleman has referred us to Section 9, Sub-section (1) of the Finance Act. Will he tell us whether under that Section, in case the property happens to be land that has been sold, that will be exempt because it has been sold?
    Mr. LEVERTON HARRIS: Will the right hon. Gentleman also tell us what would happen in case a father pays his son's debts to the extent of £5,000?
    Mr. HALDANE: I will take the last Question first. The hon. Member asks me supposing the father gives £5,000 to his son to pay his debts, who has to pay the duty? Why, the son has to pay. [An Hon. MEMBER: "But the son has not got it."] Then so much the worse for the Exchequer. Then the hon. and gallant Member asked me what would happen if the property happened to be land which had been sold and purchased by a bonâ fide purchaser? That purchaser would clearly be exempt. The case put by the right hon. Gentleman was this: £5,000 was given to the son, and the father died leaving a million, so that the Death Duties amounted to a very large amount—say, 15 per cent. He asked us why 15 per cent. is to be recovered from the son who may have lost it in business. He got a gift, and all I can say is that anybody who gets £5,000 and only has to pay 15 per cent. is a lucky fellow. He had better take that into account when he gets such a gift and make some provision.
    Mr. BALFOUR: Such is the policy of the Government that a man in that case has to pay every shilling he has in the world simply because he has a relation who has died rich.
    Mr. CAVE: Take the ordinary case. A man wants to set up his son in business, and he gives him £5,000 for the purpose. He dies a rich man, and by the accident of the father's death the son has to pay this large duty. Nobody meant to evade that duty. The father meant to take the money out of his estate once and for all and give it to his son. Yet this heavy fine is put upon the son. Take another case. The father on his daughter's marriage gives her £500. He dies, and the daughter has actually got to raise a percentage on that £500 to pay this duty. The Chancellor of the Exchequer used an argument which I am sure he would not have used

    2057
    if he had had this point in mind. He said: "You object to the duty upon these gifts, but the gifts pay duty either way. If they remain in the estate they pay as part of the estate, and if they are given away within the three years they pay as gifts. Therefore, the result is the same either way." He did not remember that the burden falls upon a different person. If the gift is not made, it falls upon the residue of the estate, which is well able to bear it. In the other case it falls upon the donee, who may not have a shilling with which to pay. The effect is to take out of gifts made in the period of three years a percentage which may be small or large, not according to the amount of the gift or the means of the donee, but according to the estate of the donor and the money he leaves to other people. A more absurd proposal one cannot conceive. It is a gross hardship where no one dreams of evasion that the donee should have to pay this duty. It is not a Death Duty, but a tax on gifts, which will certainly have the result of checking gifts.
    Mr. HALDANE: Why did not the party to which the hon. and learned Gentleman belongs alter this while they were in power? It applies just as much to one year as to more.
    Mr. CAVE: No; a man may look forward to one year, but may not look forward three years.
    Mr. BALFOUR: The right hon. Gentleman is very pat in defending the Government, but he is not so pat in putting awkward questions. Is it likely the contingency I spoke of will occur within a year? It is extremely likely to occur within three or five years, and I ask how can the right hon. Gentleman justify the hardship which will be created—which will be trebled and even quadrupled under his proposal? A man may give his son £5,000 and die within a year. But here you have a period of years during which the man may have done well in business, yet at the last he may have lost everything in the business. In that case this will inflict a gross hardship.
    Mr. LEVERTON HARRIS: I think the light hon. Gentleman has hardly appreciated the very great anomaly this will create if you extend the period, because these gifts to sons and others during the three years previous to decease will be aggregated for the purpose of arriving at the scale of duty. The aggregation in the case of legacies will not only apply to the
    2058
    scale of duty, but the whole tax will be paid out of the aggregate. Therefore the gift would be treated far more severely than the legacy, because the latter will be free of duty, whereas the former is not.
    The CHAIRMAN: Is it proposed to take a division on this Amendment?
    Mr. HILLS: No, I am quite satisfied with the discussion.
    Amendment, by leave, withdrawn.
    Question, "That 'five' stand part of the Clause," put, and negatived.
    The CHAIRMAN: I understand that the subject of the Amendment standing in the name of the hon. Member for Uxbridge will be incorporated by the Government in their Amendment at the end of the Clause.
    Mr. HICKS BEACHmoved in the second paragraph, to leave out the word "eight" ["disposition made or effected before the thirtieth day of April, nineteen hundred and eight"] and to insert instead thereof the word "nine."
    I believe the wording of the Clause makes it retrospective, which I think it would be very unfair to make a new law of this kind, without giving notice to people, in regard to the disposition of their property. I know the Secretary of State for War says that it is not retrospective. Under the Amendment all gifts from now onwards, which are made before the 31st of April, 1909, would be free of duty if the donor happened to die meantime. The view of the right hon. Gentleman is not that of a great many people who have studied the Clause, and therefore I move the Amendment in order to obtain some answer to the argument of those who think this Clause is retrospective.
    Mr. HALDANE: If the Amendment were carried it would be a repeal of the existing law, and it is not applicable to what we are doing to make this Amendment. The "eight" simply represents the effect of the law at the present time.
    Mr. CAVE: Surely that is not quite accurate. This proviso restricts the effect of the present Clause as to gifts made before the 30th of April, 1908, and even if the proviso were altered as proposed, the old law would remain as regards gifts inter vivos,made between that date and the 30th

    2059
    April, 1909. Therefore I do not think the answer of the right hon. Gentleman is satisfactory. May I read to the Committee a letter which I have had from a gentleman who is well known to hon. Members opposite. He raises the very point, and writes:—
    "On the 30th April, 1908. I wrote to my sister, whose husband had recently died, and told her that I should transfer to her some stocks as a gift, and on the 1st of May I signed the transfer to her accordingly. About the same time I transferred other stocks to some of my nieces as gifts to them. The total value of all these stocks was about £6.000. The Finance Bill, as I read it, will require my executors to reckon that sum as part of my estate for Estate Duty purposes unless I live, which is very unlikely, live years from the date of the transfer. If however, the transfer had been made on the 29th of April, 1908, they would not be liable to be put on to the Estate Duty account. Not only, therefore, will the Estate Duty have to be paid on £6,000, but it would, I believe, bring my total estate into a higher category and so increase the total duty. I think that is a very hard case, and that the Bill ought to be amended so as to exclude all gifts inter vivos,made bonâ fide before the 30th of April, 1909, or, at all events, where the donor lives one year after the gift. The 30th of April. 1909, is the date when the new and additional duties were announced by Mr. Lloyd-George, and a gift made one year previous to that date ought to be allowed."
    Therefore the very point has happened, and there would be great hardship unless this Amendment is made. The right hon. Gentleman opposite did not quite follow the point made by the Amendment on the Paper, and I hope he will consider whether the operation of the Bill will not be made retrospective. The effect of the Amendment would be to apply it to all gifts made after the Budget Resolution.
    Mr. AUSTEN CHAMBERLAIN: The Secretary of State for War gave in a single sentence an answer which was incorrect. He stated that if the Amendment were accepted, it would alter the existing law, and that gifts which under the existing law are taxed will go free. That apparently is not the case. Does the Government really intend to rest satisfied with an answer that is proved to be inaccurate, and do they intend to vouchsafe no other answer?
    Mr. HALDANE: Does the right hon. Gentleman, who was Chancellor of the Exchequer, and who may be supposed to be familiar with these things, really mean that there is any precedent whatever for making such a proviso as is suggested here? It would violate the whole of the precedents. By putting in 1908 we have not only preserved the existing state of the law, but we have made it clear that no gift which under that law has lost its contingent liability to estate duty is again contingently chargeable with duty by
    2060
    reason of the five years not having elapsed. It was a generous proviso having regard to precedent.
    Mr. HILLS: I think there is a misunderstanding. May I give a concrete case? On July 1st last year I was concerned in the transfer of property. In the ordinary course on July 1st this year it would become free from Death Duty. If this proviso stands two more years have to run because the transfer was not made before April last year. How can it be contended that the Clause is not retrospective? It takes away an advantage that that special gift has got. As things stand at present that gift is free from Estate Duty. If the Clause is passed two more years have to run before the freedom is complete. The right hon. Gentleman's second point was also, I think, a misunderstanding. All that we want to do is to free gifts which are made before April 30th this year. One year will still have to elapse before these gifts are free of duty. It cannot be contended that a person who-transferred his property before 30th April last knew that the provision was coming in force, and surely a transfer of that sort that is made on the faith of the existing law ought not to be penalised by a new law.
    Mr. HALDANE: My answer is that that has been done in every case of an Amendment of the law up till now. The late Chancellor of the Exchequer, who professes to know all about these, things, will tell the hon. Member.
    Mr. AUSTEN CHAMBERLAIN: I do not profess to know all about these things, but with the aid of my hon. and learned Friend (Mr. Cave), I had sufficient knowledge to see that the answer which the right hon. Gentleman gave was inaccurate and unfounded. So much was that the case that the moment the right hen. Gentleman got up again he changed his ground, and instead of saying, as he did in the first instance, that we were asking to repeal and alter the existing law, he invited us to find precedents for not taking the course which the Government followed. I do not know what the precedents are or whether the right hon. Gentleman's knowledge on this point has been refreshed, and is therefore more accurate than the first information he gave the Committee. I think the case put by my two hon. and learned Friends is unanswerable, that it is unjust, as is now proposed, to retrospectively tax gifts which under the existing law are free.
    Mr. PRETYMAN: Will the right hon. Gentleman tell us what his precedent is? This is a very serious case indeed on the face of it. Under the existing law a man has become possessed of property which is subject to no duty and which he is entitled to deal with as he likes, and now it is proposed to remove that liberty which has been given to him, and to place this property under a ban for three years so that he cannot touch it. He has under the existing law taken that property on the clear understanding that after twelve months he will be able to deal with it without any restriction whatever. It is clearly contrary to public law to alter the law after the event to the detriment of the subject.
    Mr. HALDANE: The precedents are to be found in Section 38 of the Customs and Inland Revenue Act of 1881, Section 11 of the Customs and Inland Revenue Act of 1889, and Section 2, Sub-section (c) of the Finance Act of 1890.
    Mr. GEORGE WYNDHAM: The Secretary of State for War did not refer us to these three Sections unless he wished to carry conviction to the minds of the majority of those who had the privilege of listening to him. I can say with confidence, speaking for the majority, that his references to these Sections by their mere numbers carried no conviction. If it was worth his while to answer my right hon. Friend by saying, "Here are the precedents," it was necessary to his argument to explain what the precedents were, and I invite him to do so.
    12.0 P.M.
    Mr. WATSON RUTHERFORD: It seems to me that it is no real reply to a case of hardship that wants amending to point out that there are precedents. That is the only reply the Government have given us. Some of us are now endeavouring to subject the financial propositions of the Government to something like examination and criticism, and if this is the first time that this serious difficulty has been pointed out, surely it is time to try
    to put it right. The exact point proposed to be put right is this. A large number of transfers of property have been effected during the year ending 30th April this year. The whole of these have been carried out on the footing that at the end of twelve months from 30th April, 1908, the subject matter of these transfers would be freed from duty. Each transaction was entered into on that footing, the property was transferred by the donor on that footing, and the property was received by the donee on that footing. The twelve months having expired, that particular property ceased to be liable to Death Duty. Now the Chancellor of the Exchequer says, "We will rake up the whole of the transactions between 30th April, 1908, and 30th April, 1909, and we will make these duties hark back on them. If the donor dies within three years they will be brought in and made liable for duty." All I can say is that the proposition is eminently unfair in itself, and whether there is precedent for it or not is not an answer. We ought to do something to put it right.
    Mr. J. F. MASON: I may draw attention to the case of a donor handing over to his son a certain sum of money for the purpose of entering into business. That sum of money is invested in the business in such a manner that no part of it can be withdrawn, and being a prudent man he insures against the risk of the eventuality that he may die within 12 months. This transaction may have taken place in the May of last year, and in the May of this year that insurance will run out. There may be a death within 12 months, and then you come down on the donce. The moment he has become, according to the original terms of the arrangement, absolutely free you come down, on him and say, "You are still liable for over two years."
    Question put, "That the word 'eight' stand part of the Clause."
    The Committee divided: Ayes, 174; Noes, 89.

    Division No. 656.]

    AYES.

    [12.5 a.m.

    Abraham, William (Rhondda)

    Barnard, E. B.

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Acland, Francis Dyke

    Barran, Rowland Hirst

    Buckmaster, Stanley O.

    Agnew, George William

    Beauchamp, E.

    Burns, Rt. Hon. John

    Allen, A. Acland (Christchurch)

    Benn, Sir J. Williams (Devonport)

    Burnyeat, W. J. D.

    Allen, Charles P. (Stroud)

    Birrell, Rt. Hon. Augustine

    Buxton, Rt. Hon. Sydney Charles

    Ashton, Thomas Gair

    Boulton, A. C. F.

    Byles, William Pollard

    Baker, Joseph A. (Finsbury, E.)

    Bowerman, C. W.

    Cawley, Sir Frederick

    Balfour, Robert (Lanark)

    Brace, William

    Cherry, Rt. Hon. R R.

    Baring, Godfrey (Isle of Wight)

    Branch, James

    Clough, William

    Barker. Sir John

    Brunner, J. F. L. (Lancs., Leigh)

    Clynes, J. R.

    Cobbold, Felix Thernley

    Lambert, George

    Rose, Sir Charles Day

    Collins, Stephen (Lambeth)

    Lamont, Norman

    Rowlands, J.

    Collins, Sir Wm. J. (St. Pancras, W.)

    Layland-Barratt, Sir Francis

    Runciman, Rt. Hon. Walter

    Cooper, G. J.

    Leese, Sir Joseph F. (Accrington)

    Rutherford, V. H. (Brentford)

    Corbett, C. H. (Sussex, E. Grinstead)

    Levy, Sir Maurice

    Samuel, S. M. (Whitechapel)

    Cornwall, Sir Edwin A.

    Lewis, John Herbert

    Scarisbrick, Sir T. T. L.

    Cotton, Sir H. J. S.

    Lloyd-George, Rt. Hon. David

    Schwann, Sir C. E. (Manchester)

    Crosfield, A. H.

    Lupton, Arnold

    Seely, Colonel

    Dalziel, Sir James Henry

    Macdonald, J. R. (Leicester)

    Shackleton, David James

    Davies, Timothy (Fulham)

    Maclean, Donald

    Shaw, Sir Charles E. (Stafford)

    Davies, Sir w. Howell (Bristol, S.)

    Macnamara, Dr. Thomas J.

    Shipman, Dr. John G.

    Dewar, Arthur (Edinburgh, S.)

    Macpherson, J. T.

    Stanger, H. Y.

    Dickinson, W. H. (St. Pancras, N.)

    M'Laren, Sir C. B. (Leicester)

    Stanley, Albert (Staffs, N.W.)

    Duckworth, Sir James

    M'Laren, H. D. (Stafford, W.)

    Stanley, Hon. A. Lyulph (Cheshire)

    Edwards, Sir Francis (Radnor)

    M'Micking, Major G.

    Stewart-Smith, D. (Kendal)

    Essex, R. W.

    Mallet, Charles E.

    Strachey, Sir Edward

    Esslemont, George Birnie

    Markham, Arthur Basil

    Strauss, E. A. (Abingdon)

    Evans, Sir S. T.

    Marks, G. Croydon (Launceston)

    Summerbell, T.

    Everett, R. Lacey

    Massie, J.

    Taylor, John W. (Durham)

    Falconer, J.

    Masterman, C. F. G.

    Taylor, Theodore C. (Radcliffe)

    Fenwick, Charles

    Menzies, Sir Walter

    Tennant, H. J. (Berwickshire)

    Ferguson, R. C. Munro

    Middlebrook, Williams

    Thomas, Sir A. (Glamorgan, E.)

    Fullerton, Hugh

    Worrell, Philip

    Thomasson, Franklin

    Gill, A. H.

    Morse, L. L.

    Thompson, J. W. H. (Somerset, E.)

    Glover, Thomas

    Myer, Horatio

    Thorne, G. R. (Wolverhampton)

    Gooch, George Peabody (Bath)

    Newnes, F. (Notts, Bassetlaw)

    Trevelyan, Charles Philips

    Grey, Rt. Hon. Sir Edward

    Nicholls, George

    Verney, F. W.

    Haldane, Rt. Hon. Richard B.

    Nuttali, Harry

    Vivian, Henry

    Hancock, J. G.

    O'Donnell, C. J. (Walworth)

    Walsh, Stephen

    Harcourt, Rt. Hon. L. (Rossendale)

    O'Grady, J.

    Wason, Rt. Hon. E. (Clackmannan)

    Harcourt, Robert V. (Montrose)

    Parker, James (Halifax)

    Wason, John Cathcart (Orkney)

    Harmsworth, R. L. (Caithness-shire)

    Partington, Oswald

    White, Sir George (Norfolk)

    Harvey, W. E. (Derbyshire, N.E.)

    Pearce, Robert (Staffs, Leek)

    White, J. Dundas (Dumbartonshire)

    Harwood, George

    Pointer, J.

    White, Sir Luke (York, E.R.)

    Haworth, Arthur A.

    Ponsonby, Arthur A. W. H.

    Whittaker, Rt. Hon. Sir Thomas P.

    Helme, Norval Watson

    Price, Sir Robert J. (Norfolk, E.)

    Wiles, Thomas

    Henderson, Arthur (Durham)

    Priestley, Sir W. E. B. (Bradford, E.)

    Williams, J. (Glamorgan)

    Higham, John Sharp

    Rainy, A. Rolland

    Williams, W. Llewelyn (Carmarthen)

    Hogan, Michael

    Raphael, Herbert H.

    Williamson, Sir A.

    Holland, Sir William Henry

    Rendall, Athelstan

    Wilson, Henry J. (York, W.R.)

    Holt, Richard Durning

    Richards, Thomas (W. Monmouth)

    Wilson, J. W. (Worcestershire, N.)

    Hooper, A. G.

    Roberts, Charles H. (Lincoln)

    Wilson, P. W. (St. Pancras, S.)

    Horniman, Emslie John

    Roberts, G. H. (Norwich)

    Wilson, W. T. (Westhoughton)

    Isaacs, Rufus Daniel

    Robertson, Sir G. Scott (Bradford)

    Winfrey, R.

    Jones, Leif (Appleby)

    Robinson, S.

    Wood, T. M'Kinnon

    Jones, William (Carnarvonshire)

    Robson, Sir William Snowdon

    Jowett, F. W.

    Roch, Walter F. (Pembroke)

    TELLERS FOR THE AYES.—Mr.

    King, Alfred John (Knutsford)

    Roe, Sir Thomas

    Fuller and Captain Norton.

    Laidlaw, Robert

    Rogers, F. E. Newman

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Fell, Arthur

    Morpeth, Viscount

    Anson, Sir William Reynell

    Forster, Henry William

    Nicholson, Wm. G. (Petersfield)

    Arkwright, John Stanhope

    Foster, P. S.

    Parkes, Ebenezer

    Balcarres, Lord

    Gardner, Ernest

    Peel, Hon. W. R. W.

    Baldwin, Stanley

    Gibbs, G. A. (Bristol, West)

    Percy, Earl

    Baltour, Rt. Hon. A. J. (City Lond.)

    Gordon, J.

    Pretyman, E. G.

    Banbury, Sir Frederick George

    Gretton, John

    Rawlinson, John Frederick Peel

    Banner, John S. Harmood-

    Guinness, Hon. W. E. (B. S. Edmunds)

    Renton, Leslie

    Baring, Capt. Hon. G. (Winchester)

    Hamilton, Marquess of

    Renwick, George

    Barrie, H. T. (Londonderry, N.)

    Hardy, Laurence (Kent, Ashford)

    Roberts, S. (Sheffield, Ecclesall)

    Bryce, J. Annan

    Harrison-Broadley, H. B.

    Rutherford, Watson (Liverpool)

    Bull, Sir William James

    Hay, Hon. Claude George

    Salter, Arthur Clavell

    Burdett-Coutts, W.

    Hermon-Hodge, Sir Robert

    Scott, Sir S. (Marylebone, W.)

    Carlile, E. Hildred

    Hill, Sir Clement

    Sheffield, Sir Berkeley George D.

    Castlereagh, Viscount

    Hills, J. W.

    Stanicr, Beville

    Cave, George

    Hope, James Fitzalan (Sheffield)

    Starkey, John R.

    Cecil, Evelyn (Aston Manor)

    Howard, Hon. Geoffrey

    Staveley-Hill, Henry (Staffordshire)

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Hunt, Rowland

    Talbot, Lord E. (Chichester)

    Channing, Sir Francis Allston

    Joynson-Hicks, William

    Tennant, Sir Edward (Salisbury)

    Clark, George Smith

    Kennaway, Rt. Hon. Sir John H.

    Thomson, W. Mitchell- (Lanark)

    Clive, Percy Archer

    Kerry, Earl of

    Thornton, Percy M.

    Coates, Major E. F. (Lewisham)

    Keswick, William

    Valentia, Viscount

    Courthope, G. Loyd

    Kimber, Sir Henry

    Warde, Col. C. E. (Kent, Mid.)

    Craig, Captain James (Down, E.)

    King, Sir Henry Seymour (Hull)

    Williams, Col. R. (Dorset, W.)

    Craik, Sir Henry

    Long, Col. Charles W. (Evesham)

    Wilson, A. Stanley (York, E.R.)

    Dickson, Rt. Hon. C. Scott

    Lonsdale, John Brownlee

    Wyndham, Rt. Hon. George

    Doughty, Sir George

    Lowe, Sir Francis William

    Younger, George

    Douglas, Rt. Hon. A. Akers-

    Lyttelton, Rt. Hon. Alfred

    Du Cros, Arthur

    MacCaw, Wm. J. MacGeagh

    TELLERS FOR THE NOES.—Mr.

    Faber, George Denison (York)

    Mason, James F. (Windsor)

    Hicks Beach and Mr. Leverton Harris.

    Faber, Captain W, V. (Hants, W.)

    Moore, William

    Amendment made: To leave out the words, "for the benefit of any institution" ["made or effected for the benefit of any institution"].—Mr. Pretyman.
    Sir HENRY CRAIKmoved to leave out the words, "for purposes which, in the opinion of the Commissioners, are public purposes or charitable purposes."
    This raises a question of great importance, as to whether these Commissioners, who are to be the tyrants over estates under this measure, shall be left to decide what are for public or charitable purposes.
    Mr. LLOYD-GEORGE: I practically accepted the same thing in regard to Clause 35.
    Amendment agreed to.
    Mr. JAMES HOPEmoved to leave out the word "purposes" ["are public purposes"] and to insert the words "or educational."
    If I am assured that the words "public or charitable" cover the cases where a man gives money to a school for some purpose for the benefit of the school, then I shall not press my Amendment. I have two cases in my mind where an individual presents money to his old school, in one case for scholarships and in the other for purposes connected with sport in the school. I want to be sure that these cases are covered by the words in the Bill; and, in case they are not, I move the Amendment.
    Sir W. ROBSON: The words "charitable purposes" cover educational purposes which are charitable. That is not an unimportant distinction. You may have educational purposes connected with schools carried on purely for private profit; they would not come within the definition of charitable purposes. "Charitable purposes" are words of very wide extent and cover gifts made in relief of poverty, in advancement of religion, for purposes of education, and for general public purposes. Any educational gifts which are charitable in the ordinary sense, not merely gifts to a schoolmaster carrying on a school for private profit, but to advance education, would come within the general definition of "charitable purposes."
    Mr. AUSTEN CHAMBERLAIN: Take the case of an ordinary public school, such as Rugby or Harrow, to which an old pupil bequeaths a sum of money, not necessarily for a scholarship, but for a swim-
    2066
    ming bath, a playing field, or whatever it may be. Is that a "charitable purpose"? I ask the question because on a previous occasion, when we were considering a new ground given to the school by old members, Harrow was described by the Secretary of State for War as "an institution carried on for private profit."
    Sir W. ROBSON: There is sometimes a distinction between one school and another, and between one purpose and another. For instance, if a university is claiming exemption from Income Tax, the Court holds that there is an element of personal profit in the carrying on of the college which may make if subject to Income Tax. If, on the other hand, it is a question of a legacy for a scholarship left to the college, it becomes the duty of the Attorney-General to see that the money is devoted to that purpose, and he would apply to the Court to have it declared that it was an educational purpose given with charitable intent. In construing the words "charitable purpose" in a case like that, the Court would give a very wide construction, whereas in dealing with Income Tax the construction is often somewhat narrower. It is all laid down in a well-known case by Lord Macnaughten. My own opinion is that the case put by the right hon. Gentleman would be held by the Court to be a charitable purpose.
    Mr. J. W. HILLS: May I point out the case of Oxford, where Lord Curzon is at present engaged in raising a fund. Is it a charitable fund or not? Surely there is no harm in inserting the word "educational." In the case of my own college at Oxford a certain gentleman has recently given us a very large sum of money for general purposes. Still, we are not a charity. I should like to know for certain if these two funds I have named are in the exceptions?
    Sir W. ROBSON: I can assure the hon. Gentleman that if in either of the two cases the fund is not devoted to the purpose for which the money has been given, it would be my duty to bring the matter before the Court, and see that the money was devoted to the purposes for which it was given by the subscribers. If it were given for the purposes of charity I should have no jurisdiction at all.
    Mr. JAMES HOPE: I feel very much disposed to withdraw my Amendment after what the right hon. Gentleman has said. There is just one difficulty. Supposing a governing body indirectly got some

    2067
    property, that saved them some expense in building; would the amount saved have to be deducted, and would that deduction vitiate the charitable effect of the gift?
    Sir W. ROBSON: It will be my duty shortly to contend that where a profit of that kind is made an institution cannot plead its general educational purposes as charitable purposes. But the gift is undoubtedly a charitable gift, though it is educational, and given with a charitable intent. It is a charitable purpose, then, for the purpose of this Sub-section. But I warn hon. Members that if they keep in the word "educational" it may have a bad effect upon the construction of the word "charitable." It will be argued that the words "charitable purposes" were not intended to have a wide construction. I do not know what the Court might hold in such a case, but my opinion is that the cases put would be enforced by the Court as charitable.
    Mr. JAMES HOPE: This is the first time in these Debates that the Attorney-General has convinced me.
    Mr. PRETYMAN: Leave out the word "purposes," and do not insert the word "educational."
    Mr. WATSON RUTHERFORD: Before this Amendment is withdrawn I would like to mention to the right hon. Gentleman the case of Liverpool University. A number of wealthy men have of late years been very generous to that University, and have helped us to make it a very great thing for our city. They have given us large sums of money in the shape of buildings and donations, and if it were allowed to go forth that in the passing of the Bill, without this Amendment, that within a period of three years any of those moneys which have been given to the University were liable to be paid by the University in the shape of Death Duties; and in addition to that would be brought into the aggregation of Estate Duties, then I think it would be a very great pity. I hope the Government will make it clear that legacies of that kind, at all events, will not pay duties at all.
    Sir W. ROBSON: I have just, in the case of the Welsh universities, contended that there are certain elements of profit.
    Mr. WATSON RUTHERFORD: There are at Liverpool too; we charge fees.
    Amendment, by leave, withdrawn.
    Mr. PRETYMANmoved to leave out the word "purposes" before the word "or" in the last line of the second paragraph ["which in the opinion of the Commissioners are public purposes or charitable purposes"].
    Amendment agreed to.
    Mr. HALDANEmoved to add at the end of paragraph two the words, "So much of paragraph (c) of Sub-section one of Section two of the principal Act and this section as makes gifts inter vivos property which is deemed to pass on the death of the deceased shall not apply to gifts which are proved to the satisfaction of the Commissioners to have been part of the normal annual expenditure of the deceased, and to have been reasonable, having regard to the amount of his income, or which, in the case of any donee, do not exceed in the aggregate one hundred pounds in value or amount."
    I move this Amendment in fulfilment of the pledge given by the Chancellor of the Exchequer, and in order to give the fullest scope to the Amendment it is necessary to amplify it by inserting after the words "shall not apply to gifts which," the following words: "are made in consideration of marriage or which." I move the Amendment, therefore, in this form.
    Question proposed, at the end of paragraph two to add the words, "So much of paragraph (c) of Sub-section (1) of Section (2) of the principal Act and this Section as makes gifts inter vivos property which is deemed to pass on the death of the deceased shall not apply to gifts which are made in consideration of marriage or which are proved to the satisfaction of the Commissioners to have been part of the normal annual expenditure of the deceased, and to have been reasonable having regard to the amount of his income, or which, in the case of any donee, do not exceed in the aggregate one hundred pounds in value or amount."
    Colonel WILLIAMSmoved in the proposed Amendment after the word "apply" ["shall not apply to gifts which are proved to the satisfaction of the Commissioners"] to insert the words "to a gift to or for the benefit of the wife of the donor or."
    The husband and wife are treated by law as one and the same person. Under the Income Tax Acts the income of the husband and wife are lumped together for the purpose of extracting a little extra Income Tax and if the husband and wife are

    2069
    regarded as one and the same person for the purpose of the extraction of taxes, it is rather hard to treat them as two persons for the purpose of extracting more money when the husband dies. It is only reasonable that if a man does make any provision for his wife that should not be reckoned against him, and the wife should not have to pay duty on that amount. The Secretary of State for War has argued this point on another Clause, but I hope he will consider my Amendment relevant now. I trust when considering exemptions from the general rule the right hon. Gentleman will consider that this is a valid case and will accept this Amendment.
    Sir W. ROBSON: The hon. and gallant Gentleman proposes to exempt from the operation of this Clause a class which above all others it is most important to include. We are really desirous of preventing evasion or avoidance of the Death Duties, and therefore we have to be most particular and careful in regard to the grants which a man makes to his wife or child. These grants are made most easily and therefore the Government could not accept this Amendment.
    Colonel WILLIAMS: I said nothing about the child, and my Amendment relates only to husband and wife.
    Sir W. ROBSON: Yes, but there are other Amendments which do relate to the child, and I might as well for my purpose group the child with the wife, because it comes within the same reasoning so far as I am concerned. It is most important that the gifts of the wife should come within the scope of the Clause, otherwise Death Duties would cease to have the effect they ought to have in benefiting the Exchequer.
    Mr. HICKS BEACH: Though an estate may escape for the moment the Death Duties on passing from the husband it will certainly have to pay when the wife dies. Consequently there is very little to be lost by the Treasury in accepting this Amendment. My hon. and gallant Friend carefully avoided bringing in the case of the child, which is a totally different case altogether. The child is not included in this Amendment, which only refers to the case of the wife. It is not too much to say that a man should be entitled in the future as in the past to make a gift to his wife without her having been compelled to pay the Estate Duty if she loses her husband within three years.
    Amendment to proposed Amendment put, and negatived.
    Mr. GEORGE CAVEmoved, in the proposed Amendment, after the word "apply" ["shall not apply to gifts"], to insert the words "to a gift for setting up or maintaining a son of the donor in any profession, business, or employment, or."
    My Amendment applies to gifts for maintaining a son of the donor in any profession or business. I do not propose to exempt all gifts to a son by any man, but only gifts for a specially limited and temporary purpose. That is the setting up of a son in business or maintaining him until he is able to maintain himself. The point may arise in two ways. Ought a gift of capital by a father to a son for the purpose of either buying a business or starting a business for himself to be subject to a special tax? I suggest not. In one case the object of the gift is to provide the son with capital to be used in business. During the three years the son runs the risk of losing it, and the fact that he may have to pay upon it will make it somewhat difficult for him to deal with it in his business. In the other case, the sum is given to the son to buy a business. He actually pays it away, and yet, if the father dies within three years, that son will have to provide a percentage for the purpose of paying the duty on the sum given him for the purpose of buying a business. It is intended to be spent by the son and not to be retained by him, and he ought not during three years to be subject to be taxed on that sum. Let me put the second point about maintenance. A father starts his son in a business or a profession. The son at the beginning probably cannot keep himself. His father makes him a yearly payment. It cannot be said to be normal annual expenditure of the father. It is an abnormal payment for a temporary period. It may continue only two or three years until the son has attained a position for himself. I suggest that would not come within the words "normal annual expenditure of the deceased." It is special expenditure for a temporary purpose. I want to save that kind of case, and therefore I have put in the words "or maintaining a son in any profession, business, or employment." I think both are reasonable points which the Government will desire to meet. They stand to some extent on the same footing as marriage settlements.
    Mr. HALDANE: I take the two points separately, and deal first with that referring

    2071
    to capital advances. The objection to the proposition to exempt the gift to a son for the purpose of setting him up in business is two-fold. It is, in the first place, a complete innovation, and, in the second place, it seems to me to be wrong in principle, because the son gets the money as an anticipation of his inheritance. Nobody makes a gift to a son without taking it into account in his will. That is an illustration of the extent to which not only the Courts but the public generally look on these as anticipations. If that is so, ought they to be subject to duty? After all, the duty is very much smaller in amount than the sum which would have to be spent on interest were the capital borrowed. Then I come to the case of maintenance. I think the Clause which the Chancellor of the Exchequer has moved with regard to normal expenditure goes as far as we ought to; the words of it represent with fair accuracy what expenditure is normal. We cannot accept the Amendment of the hon. and learned Gentleman.
    Mr. AUSTEN CHAMBERLAIN: Let me first deal with the case of maintenance. My hon. and learned Friend has put the case of a son going to the bar and getting no briefs, a state of affairs which I believe is not uncommon. In the meantime lie is supported by his father. I gather that if the father gives him a bigger allowance than heretofore that would be treated as normal expenditure. If it is so, then I hope the Government will make it clear that that is their intention. I am not competent to argue as to the interpretation which the Courts of Law put on the English language.
    Mr. HALDANE: If the Party of my right hon. Friend is in possession of these benches next year, and it is found necessary to alter the Clause so as to make the meaning more clear I will support the right hon. Gentleman's proposal to the best of my ability.
    Mr. AUSTEN CHAMBERLAIN: I was not casting my mind so far forward as next year. I was thinking about the present. I take it that if the right hon. Gentleman has any doubt on the point he will consult the advisers of the Government, and make the matter perfectly clear. In the course of the Debates we have been told once or twice by the Secretary for War that he can find no precedent for acceding to our demands. But the Government themselves are not shy of making precedents,
    2072
    and cannot they now make one which would be both reasonable and just? This is a small matter; the real point is that the right hon. Gentleman says, that this is in fact some part of the patrimony of the son, which, if he did not have it in this way would probably come to him on his father's death, when he would have to pay these duties. Surely we have got very far from the case which the Government made on setting up this Clause. They did not propose this Clause to prevent gifts inter vivos, and never pretended that they were wrong, or undesirable, but they based it upon the necessity of providing against gifts made to avoid taxation. Can anybody say that the cases which have been put were attempts to evade taxation. The object of the Clause was to prevent gifts passing between living people with a view of avoiding payment of Death Duties. A man gives his son a sum of money to set him up in his business or profession, not in order to avoid the Death Duties. That is part of his normal expenditure, if you regard that expression as meaning the ordinary and customary thing for a man to do when his son arrives at a proper age. It will be an unfortunate and lamentable thing for all concerned if this Clause of the Government brings this kind of gift under taxation. I do ask the Government to be consistent to their own principles, and bear in mind that all they have expressed a desire to do, is to stop gifts made for the purpose of evading taxation.
    Sir HENRY CRAIK: It is unfortunate that we have, in regard to points like this, to listen to the discussion of technicalities between legal gentlemen, and to hear a good deal about the precedents in this and other Parliaments, but the Committee will see that there is a human side to this question. What are the real facts in ordinary life to which this case will apply? We are not speaking of millionaires, but of men who have managed to make a small competence, and who hope to leave something to their family to enable them to keep poverty from their doors. The Secretary of State for War says these gifts are all right, and it is cheaper for the son to be taxed, when they are made, than at the death of his father, when he had an expectation of an inheritance. But in the case of a man who has £8,000, £10,000, or £12,000, if he has a wife and daughter it is not necessary that he should leave his money to his sons, and he will possibly leave it so as to preserve those who cannot

    2073
    make money for themselves, and whom it is his duty to preserve from poverty. What he does, as a matter of fact, is that he diminishes that amount in his lifetime in order to enable his sons to start in life, and he thinks nothing about them when he comes to make his will. He reduces the provision which he may make for his wife and for his unmarried daughters by a sacrifice made probably with their full concurrence, perhaps at their request, and this is what you want to tax. Suppose a man has three sons. He sends one, perhaps, to a ranch in South America, and gives him two or three thousand to start him there. Does the Chancellor of the Exchequer think he will ever get any percentage of that? He may whistle for it. The man would be a fool if he pays any attention to any request that reaches him in South America. His next son he sends to the Bar, and he makes him an allowance. Surely it is not an ordinary allowance that a parent has to pay in starting his son as a solicitor or barrister. There are very high fees to be paid, and I am not prepared to accept the words of the right hon. Gentleman's Amendment as covering any such special expenditure as that. The third son he sends to the Army and gives him an allowance. He goes to war and is killed. Who is to pay the allowance of the dead soldier? Talk as we may, these gifts inter vivos will escape to a great extent, and the man who by any means in his power is able to avoid payment of what is an unjust and extortionate and inquisitorial charge, does right as long as he can keep within the four corners of the law.
    Mr. HILLS: Supposing a father sends his son to the Bar, he has to pay the fees of his call and for reading in chambers for two or three years. Are these normal expenditure or are they not?
    Sir W. ROBSON: Yes.
    Mr. HILLS: Then is the fee for articling a son to a solicitor normal annual expenditure?
    Sir W. ROBSON: That has been the practice of the Department. This Bill will be carried out by men of sense and ability.
    Mr. HILLS: We are passing a new Clause, and if the hon. and learned Gentleman can tell me that the cases I have mentioned will come within it, I shall be satisfied.
    Mr. AUSTEN CHAMBERLAIN: I am rather puzzled by the interpretation which
    2074
    the hon. and learned Gentleman has put on the words "normal annual expenditure." It seems to me that the word "annual" limits the meaning of the Section, because you might have expenditure which would be normal though not annual. An allowance made to some one might, though not annual, be for a specific purpose, and therefore it would be normal. The Attorney-General says that an allowance may be made occasionally, and yet the Government treat that as normal annual expenditure. Take the case of establishing or starting a son before he is able to earn his living. If I understand the Government rightly, we are in a curious position. A man may allow his son £500 a year while he is waiting for briefs at the Bar, and that will escape taxation, but if he gives him £1,500 down, that is to be treated as taxable. I think that is rather a new principle. May I have the attention of the hon. and learned Gentleman for a moment? Perhaps he has not heard what. I have said.
    Sir W. ROBSON: Whether I can listen to the right hon. Gentleman or not, I must, listen to my colleagues.
    Mr. AUSTEN CHAMBERLAIN: I do not know whether the hon. and learned Gentleman realises it, but I am trying to be perfectly courteous to him. If the Attorney-General is prepared to tell me now whether the interpretation I have put on the position is correct or not, I will sit. down at once.
    Sir W. ROBSON: I must say that the right hon. Gentleman adopts a somewhat unusual course in regard to the conversation which necessarily took place on this bench regarding the matter on which he was himself addressing the Committee. It is absolutely necessary and unavoidable that one should sometimes consult his colleagues. If a colleague addresses me, it is necessary to listen to him. It is going beyond Parliamentary custom to make that the subject-matter of debate.
    Mr. AUSTEN CHAMBERLAIN: I did not make it the subject of debate. I said I did not know whether the Attorney-General had heard what I said. All I wish to say is that I was making no complaint about his consulting a colleague.
    10.A.M.
    Sir W. ROBSON: I did hear what the right hon. Gentleman said, and, what is more, I was much impressed. I will make it my duty to inquire as to the administration of

    2075
    this Clause. The word "annual," I think, imports some element of difficulty. I have to consider "the normal annual expenditure" of the testator, which is always worthy of some consideration. The practice in the past has been to exclude the normal expenditure of the testator or deceased. It may very well be that there are some elements that do not occur every year. In drafting these statutes we have always to remember that the fixed rule of the Court in cases brought by the Crown is that the construction most favourable to the subject is always adopted. I have myself very little doubt that the construction I have just given of the word "annual" will be that adopted by the Court. If, on consideration, I find there is no objection to the words "normal expenditure," we will drop the word "annual." Perhaps, therefore, the Committee will allow me to consider this matter before the Report stage. If after consultation with what I may call the Executive Department I find there is no serious objection to the omission of the word we will leave it out.
    Mr. WATSON RUTHERFORD: I have had considerable experience in dealing with the Commissioners of Inland Revenue in respect to matters of this sort, and I will only say, if it is necessary, that I can corroborate what the hon. and learned Gentleman has told us, viz., that the Commissioners of Inland Revenue never in my experience strictly construed the existing law. If they did, no doubt as the law stands to-day they would be entitled to ask how much a man had given in church collections in the year previous to the death? What they do ask in practice is this—and I take it they will continue to I do it—they ask, "Has there been any exceptional payment made by the deceased during the twelve months (now it will be three years), with the object of evading the death duties?" After all, that is the real test. That is the reason for the Section. It never was intended by the original Act to tax gifts. All that is intended by this Section is to prevent evasion. If we are to understand that in spite of the strict words of this Clause, and
    in spite of the strict words of the law, as it stood before, that the same course is to be pursued in the future, and that really in practice the only matters that can be brought to account by this extra taxation are to be sums paid away with the object of evading the Death Duty, I do not think anybody will be prepared to quarrel. The difficulty that we are brought face to face with is this: that the Government propose to introduce an Amendment in which they go into a great deal too much detail. I do not think it necessary to amend the Amendment by putting in the words "to a gift for setting up or maintaining a son of the donor in any profession, business, or employment, or," and the reason I do not think these words are necessary is that if this money were paid by the deceased with a view to evading the duty then it ought to pay the duty; but if it were not paid with a view to evading the duty, but in a boná fide way, and as proper expenditure, it ought not to be brought into account at all. The real test of the matter is the object with which the gift was made.
    Mr. LEVERTON HARRIS: The right hon. Gentleman said he is going to consider the terminology of this phrase, "normal annual expenditure." We have had the case mentioned of the father whose son has gone to the Bar, and has had to pay a premium of £400 or £500. [MINISTERIAL cries of "No, no."] Articled to a solicitor, I mean. It might well be in the case of two sons—the one the son of a poor man and the other the son of a rich man—that what is proposed might be reasonable in regard to the rich man's income, but unreasonable in regard to the poor man's income, and I would respectfully urge the Attorney-General, in considering the terminology of the phrase, to keep that point in mind, so that the poor man may not be handicapped.
    Question put, That the words proposed ["to a gift for setting up or maintaining a son of the donor in any profession, business, or employment, or"] be there inserted.
    The Committee divided: Ayes, 63; Noes, 158.

    Division No. 657.]

    AYES.

    [1.10 a.m.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Beach Hon. Michael Hugh Hicks

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Balcarres, Lord

    Bryce J. Annan

    Channing, Sir Francis Allston

    Baldwin, Stanley

    Bull, Sir William James

    Clive, Percy Archer

    Banner, John S. Harmood-

    Carlile, E. Hildred

    Coates, Major E. F. (Lewisham)

    Baring, Capt. Hon. G. (Winchester)

    Cave, George

    Courthope, G. Loyd

    Barrie, H. T. (Londonderry, N.)

    Cecil, Evelyn (Aston Manor)

    Craig, Captain James (Down, E.)

    Doughty, Sir George

    Hunt, Rowland

    Sheffield, Sir Berkeley George D.

    Douglas, Rt. Hon. A. Akers-

    Kerry, Earl of

    Sianier, Beville

    Faber, George Denison (York)

    Kimber, Sir Henry

    Starkey, John R.

    Fell, Arthur

    King, Sir Henry Seymour (Hull)

    Staveley-Hill, Henry (Staffordshire)

    Forster, Henry William

    Mason James F. (Windsor)

    Talbot, Lord E. (Chichester)

    Foster, P. S.

    Moore, William

    Thomson, w. Mitchell- (Lanark)

    Gibbs, G. A. (Bristol, West)

    Nicholson, Wm. G. (Petersfield)

    Valentia, Viscount

    Gordon, J.

    Peel, Hon. W. Robert Wellesley

    Warde, Col. C. E. (Kent, Mid)

    Guinness, Hon. W. E. (B. S. Edm'ds.)

    Pretyman, E. G.

    Williams, Col. R. (Dorset, W.)

    Hamilton, Marquess of

    Rawlinson, John Frederick Peel

    Wilson, A. Stanley (York, E.R.)

    Hardy, Laurence (Kent, Ashford)

    Renton, Leslie

    Wyndham, Rt. Hon. George

    Harris, Frederick Leverton

    Renwick, George

    Younger, George

    Harrison-Broadley, H. B.

    Roberts, S. (Sheffield, Ecclesall)

    Hay, Hon. Claude George

    Rutherford, Watson (Liverpool)

    TELLERS FOR THE AYES—Mr.

    Hill, Sir Clement

    Salter, Arthur Clavell

    J. W. Hills and Sir H. Craik.

    Hope, James Fitzalan (Sheffield)

    Scott, Sir S. (Marylebone, W.)

    NOES.

    Abraham, William (Rhondda)

    Hancock, J. G.

    Ponsonby, Arthur A. W. H.

    Acland, Francis Dyke

    Harcourt. Rt. Hon. L. (Rossendale)

    Price, Sir Robert J. (Norfolk, E.)

    Agnew, George William

    Harcourt. Robert V. (Montrose)

    Priestley, Sir W. E. B. (Bradford, E.)

    Allen, A. Acland (Christchurch)

    Harmsworth, R. L. (Caithness-shire)

    Rainy, A. Rolland

    Allen, Charles P. (Stroud)

    Harvey, W. E. (Derbyshire, N.E.)

    Rendall, Athelstan

    Ashton, Thomas Gair

    Harwood, George

    Richards, Thomas (W. Monmouth)

    Balfour, Robert (Lanark)

    Haworth, Arthur A.

    Roberts, Charles H. (Lincoln)

    Baring, Godfrey (Isle of Wight)

    Helme, Norval Watson

    Roberts, G. H. (Norwich)

    Barker, Sir John

    Hemmerde, Edward George

    Robertson, Sir G. Scott (Bradford)

    Barnard, E. B.

    Henderson, Arthur (Durham)

    Robinson, S.

    Barran, Rowland Hirst

    Higham, John Sharp

    Robson, Sir William Snowdon

    Birrell, Rt. Hon. Augustine

    Hogan, Michael

    Rogers, F. E. Newman

    Boulton, A. C. F.

    Holt, Richard Durning

    Rose, Sir Charles Day

    Bowerman, C. W.

    Hooper, A. G.

    Rutherford, V. H. (Brentford)

    Brace, William

    Horniman, Emslie John

    Samuel, S. M. (Whitechapel)

    Branch, James

    Howard, Hon. Geoffrey

    Scanlan, Thomas

    Bright, J. A.

    Isaacs, Rufus Daniel

    Scarisbrick, Sir T. T. L.

    Brunner, J. F. L. (Lanes., Leigh)

    Jones, Leif (Appleby)

    Seely, Colonel

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Jones, William (Carnarvonshire)

    Shackleton, David James

    Buckmaster, Stanley O.

    Jowett, F. W.

    Shaw, Sir Charles E. (Stafford)

    Burns, Rt. Hon. John

    Keatina. Matthew

    Stanger, H. Y.

    Buxton, Rt. Hon. Sydney Charles

    King, Alfred John (Knutsford)

    Stanley, Hon. A. Lyulph (Cheshire)

    Cawley, Sir Frederick

    Laidlaw, Robert

    Stewart-Smith, D. (Kendal)

    Cherry, Rt. Hon. R. R.

    Lambert, George

    Strauss, E. A. (Abingdon)

    Clancy, John Joseph

    Lamont, Norman

    Summerbell, T.

    Clough, William

    Layland-Barratt, Sir Francis

    Taylor, John W. (Durham)

    Clyncs, J. R.

    Levy, Sir Maurice

    Taylor, Theodore C. (Radcliffe)

    Collins, Stephen (Lambeth)

    Lloyd-George, Rt. Hon. David

    Tennant, H. J. (Berwickshire)

    Collins, Sir Wm. J. (St. Pancras, W.)

    Lupton, Arnold

    Thomas, Sir A. (Glamorgan, E.)

    Corbett, C. H. (Sussex, E. Grinstead)

    Macdonald, J. R. (Leicester)

    Thomasson, Franklin

    Cornwall, Sir Edwin A.

    Maclean, Donald

    Thorne, G. R. (Wolverhampton)

    Cotton, Sir H. J. S.

    Macnamara, Dr. Thomas J.

    Trevelyan, Charles Philips

    Crosfield, A. H.

    Macpherson, J. T.

    Verney, F. W.

    Dalziel, Sir James Henry

    M'Laren, Sir C. B. (Leicester)

    Walsh, Stephen

    Davies, Sir W. Howell (Bristol, S.)

    M'Laren, H. D. (Stafford, W.)

    Ward, W. Dudley (Southampton)

    Dewar, Arthur (Edinburgh, S.)

    Markham, Arthur Basil

    Wason, John Cathcart (Orkney)

    Dickinson, W. H. (St. Pancras, N.)

    Massie, J.

    Watt, Henry A.

    Dillon, John

    Masterman, C. F. G.

    White, Sir George (Norfolk)

    Duckworth, Sir James

    Menzies, Sir Walter

    White, J. Dundas (Dumbartonshire)

    Dunne, Major E. Martin (Walsall)

    Middlebrook, William

    White, Sir Luke (York, E.R.)

    Edwards, A. Clement (Denbigh)

    Morrell, Philip

    Whittaker, Rt. Hon. Sir Thomas P.

    Edwards, Sir Francis (Radnor)

    Muldoon, John

    Wiles, Thomas

    Essex, R. W.

    Murray, James (Aberdeen, E.)

    Williams, J. (Glamorgan)

    Evans, Sir Samuel T.

    Myer, Horatio

    Williams, W. Llewelyn (Carmarthen)

    Everett, R. Lacey

    Ncwncs, F. (Notts, Bassetlaw)

    Williamson, Sir A.

    Fenwick, Charles

    Nicholls, George

    Wilson, J. W. (Worcestershire, N.)

    Ferguson, R. C. Munro

    Nusscy, Sir Willans

    Wilson, W. T. (Westhoughton)

    Fuller, John Michael F.

    Nuttall, Harry

    Winfrey, R.

    Fullerton, Hugh

    O'Brien, K. (Tipperary, Mid)

    Wood, T. M'Kinnon

    Gill, A, H.

    O'Brien, Patrick (Kilkenny)

    Glover, Thomas

    Parker, James (Halifax)

    Gooch, George Peabody (Bath)

    Partington, Oswald

    TELLERS FOR THE NOES.—Captain

    Guest, Hon. Ivor Churchill

    Pearce, Robert (Staffs, Leek)

    Norton and Sir E. Strachey.

    Haldane, Rt. Hon. Richard B.

    Pointer, J.

    Question, "That the words proposed, as amended, be there added," put, and agreed to.

    Mr. CAVEmoved to omit from the proposed Amendment the words "and to have been reasonable having regard to the amount of his income."
    I rather think this Amendment will be accepted. If a gift, whatever it is, is part
    2078
    of a man's normal expenditure, is that not enough? I suggest that it is rather ridiculous to leave it to the Commissioners to go into the amount of a man's income and consider whether, having regard to his income, this was a reasonable gift for

    2079
    him to make. It may be that in order to help his child a man has made a gift rather beyond what a perfectly prudent man would make. Is it right in that case to penalise the donee—for that is what you are doing here—because his father made a sacrifice for his benefit and has given more than according to his means he ought to have given. Apart altogether from that, it is absurd to lay it down that, when a man is dead, Commissioners should go into all his accounts and see whether the allowances were larger or smaller than they ought to have been to his wife, children or dependents. Where there is a bonâ fide gift and it is found to be part of the normal expenditure of the deceased, that ought to be good enough for the Treasury. It is not right for them to sit in judgment on a man and say whether he acted reasonably or not.
    Mr. HALDANE: I think it would be extremely dangerous if all reference to income were omitted, and that the door would be open to possible serious consequences. The Commissioners have worked matters extremely well up to now, and, with the new Clause putting things as it does, I certainly think the prospects of smooth working in the future are at any rate as good as they have been in the past. Therefore, this is not an Amendment which the Government could accept.
    Mr. AUSTEN CHAMBERLAIN: I think the right hon. Gentleman asks us to rely a little too much on what has been the practice of the Commissioners in the past. The Government are desirous to change the law and the practice in certain respects. It may be that hereafter the Commissioners will interpret the provisions as indicating a wider change than the Government have any intention of making. It must be remembered that whilst the sums we are now considering may in twelve months be a comparatively small amount, about which the Commissioners do not think it worth while to trouble very much, yet when you take all the gifts in three years it must become a more important matter, which they are likely to scrutinise with greater care. It is likely that there will be more cases in which the question whether you aggregate these gifts or not will affect the scale at which the estate of the deceased becomes dutiable, and the whole matter therefore assumes greater importance. I do not think the Commissioners will act in
    2080
    exactly the same way under those circumstances in the future as they have done in the past.
    Just consider, too, what very curious inquiries the Commissioners may fairly conceive themselves to be invited to make by these words. They are to consider not, merely whether the gift has been habitual with the man, or normal in all the circumstances, but whether it is reasonable having regard to his income. Suppose a farmer for some reason makes a very large allowance to one of his sons at the expense of his other children. Are the Commissioners to consider whether a gift which he made to the one son for reasons known to him, but which may or may not be known to others, is reasonable, or whether he ought not to have given a proportion of that sum to his other children? It seems to me you are going to have an inquisition into the private conduct of the deceased. You are to review his family relations, and you are to decide whether what he did was reasonable as between one child and another. I am quite certain that is not the intention of the Government, and I cannot quite understand what is the case they intend to cover by these words that would not be covered by the preceding words, which direct that the gifts shall be part of the normal annual expenditure of the deceased. If they are I do not see that you have any right to go behind them unless you are prepared to alter altogether the law dealing with the disposition of property and limit the powers of a testator in a way of which hitherto we have had no example. If my hon. and learned Friend goes to a division I shall support him. I hope it will not be necessary for him to do so, but that the Government will consent further to consider the matter.
    Mr. WALTER GUINNESS: I am very much disappointed that the Secretary for War does not see his way to accept the Amendment, because I think it is undoubted that the second part of this condition must inevitably rule out quite arbitrarily a large number of cases which would get exemption under the first part of the condition. It must be remembered that; it is a double condition, and that these are not alternatives. I should like to suggest to the right hon. Gentleman that if he cannot accept the Amendment just moved he should make this double condition into alternatives by substituting the word "or" for "and." If he would accept that solution he would remove a good deal of the haphazard effect of the

    2081
    Clause as it stands, because as it is you will have a very unpleasant inquisition into what is reasonable and what is annual expenditure. I think that either of these conditions ought to be a ground for exemption. The right hon. Gentleman the Secretary for War has told us that at present the practice is working very smoothly and these difficult cases do not arise. I think it is very desirable to leave this discretion to the Commissioners, otherwise you will have a very uneven effect. Small gifts which have not been traced will escape, whereas large gifts which are really on all fours will be discovered and will have to pay. If you are to continue what the right hon. Gentleman says is the satisfactory old practice, the best way will be to give a discretion to the Commissioners to enable them to look on this double condition as alternative conditions.
    Mr. HALDANE: I have listened to what the hon. Member and the ex-Chancellor of the Exchequer have said on this point. In reply o them I may say that we really want to meet the situation in a businesslike way. The Amendment of the Chancellor of the Exchequer provides that there shall be exemption in the case of gifts "which are proved to the satisfaction of the Commissioners to have been part of the normal annual expenditure of the deceased, and to have been reasonable having regard to the amount of his income, or which, in the case of any donee, do not exceed in the aggregate one hundred pounds in value or amount." I think the end condition is necessary. I can conceive a case of a father, who might without doing anything unreasonable, having regard to the amount of his income, give £100,000 or £200,000 to his son. Therefore, the Amendment which is to leave out the words altogether is not one that we could accept. On the other hand, I am inclined to agree with the ex-Chancellor of the Exchequer that a little more elasticity is desirable in this case. There is an Amendment down in the name of the hon Member for Wandsworth (Sir Henry Kimber) to insert after "income" the words "or to the circumstances," and I think if they were put in some of the objections which have been raised would fairly be met. It seems to me to cover what has been aimed at in this discussion.
    Mr. J. F. MASON: The right hon. Gentleman in the proposal he has just made maintains it as a necessary part of the condition that it shall be part of the normal expenditure. I would like to ask
    2082
    him whether, for instance, in the case of a father paying his son's election expenses that would be part of the normal expenditure?
    Mr. HALDANE: Certainly.
    Sir HENRY CRAIK: For my own part I am not prepared to accept these words and for this reason: Surely no one knows better than the right hon. Gentleman himself ought to know the circumstances of the poorer classes—I do not mean those who require help or assistance, but those who wish to be independent—in his country and my own. Is he not aware that constantly in Scotland the small farmer educates one son entirely beyond what is reasonable, having regard to the amount of his income—that he strains every resource he can command upon the education of one son, and is it not the case that from such households—the manse and the small farm—in Scotland there have come some of the greatest ornaments of his profession and of the Churches? Would anyone call the expenditure in such a case, of which the right hon. Gentleman knows the circumstances as well as I do, reasonable, having regard to the proportion it bears to his income and to the ideas of those who live south of the Tweed?
    Question put, "That the words proposed to be left out stand part of the proposed Amendment."
    Mr. CAVE: I do not want to put the Committee to the trouble of a division. I cannot actually withdraw, but I propose simply to say "No" and not divide.
    Amendment to proposed Amendment negatived.
    Mr. MITCHELL-THOMSONmoved, in the proposed Amendment, after the word "income" ["having regard to the amount of his income"], to insert the words" or to the circumstances."
    Mr. AUSTEN CHAMBERLAIN: I recognise that the Secretary of State has gone a little way to meet us. I do not desire to prolong the Debate at this point, but I just want to leave on record that this does not satisfy us, because it leaves the inquisition, a distasteful, invidious and improper inquisition, still to be carried on by the Commissioners. Having said that I shall say nothing more.
    Mr. WATSON RUTHERFORDmoved to leave out from the word "income" ["having regard to the amount to his income"] to the end of the proposed Amendment.
    My object is this: If we leave in any such reference to a sum of £100, the effect would be that the Commissioners would consider it their duty to specially investigate every item of a deceased's expenditure that happened to be over £100—say, a hundred guineas. It is, I think, a mistake to put a sum of money like this in the Clause, as it will lead to very great confusion and misconception. I think it would be much better if the Clause stopped after the word "income" with the addition of the words "or to the circumstances," already agreed to. I move that Amendment.
    Mr. HALDANE: I think these words would be useful if you take the case of a very small income indeed. We wish to make it quite clear that such a case is exempt. It will be useful for enabling the Commissioners to make a further exemption in a case where it is a very small income, and I think it would be useful to leave the words in.
    Mr. CAVE: I also hope the words will be left in because they will exempt small gifts to servants and others not exceeding £100. In doing that a large number of cases will be covered.
    Mr. WATSON RUTHERFORD: I fully appreciate the argument used by the right hon. Gentleman and by my hon. and learned Friend, and I ask leave to withdraw the Amendment.
    Amendment to the proposed Amendment, by leave, withdrawn.
    Mr. W. PEELmoved at the end of the Clause to add: "Provided that where both the person making or effecting and the person taking a benefit under any such gift inter vivos, surrender, assurance, divesting, or disposition shall both die within such period of three years, any duty which, but for this proviso, might or would be chargeable on the death of the survivor of such person by reason of any such gift inter vivos, surrender, assurance, divesting, or disposition, shall not be chargeable on such last-mentioned death."
    2084
    This Amendment is moved to meet a certain class of case, a class of case that is likely to increase owing to the previous one year within which gifts become liable to Death Duties having now been increased to three years. Take the case, for instance, where the donee dies within three years. The gift is treated as if it really passed at death for the purposes of taxation, or, to put it in another way, the gift is treated as if it were left by will to the donee, or the son or daughter, as it may be, who takes that particular gift. Of course, in that case there would be only one duty payable. But if the donee dies three years before the donor the gift pays duty on his death, and then within three years the donor dies, the same amount of money pays duty over again. It seems to be a very hard case indeed. This Amendment remedies that hardship and suggests that the "duty which, but for this proviso, might or would be chargeable on the death of the survivor of such persons by reason of any such gift inter vivos, surrender, assurance, divesting, or disposition, shall not be chargeable on such last-mentioned death." Of course, it is quite true that this Amendment goes a little wider than that, because it will also apply to the case where the donee dies within three years after the death of the donor, and it is possible that we ought not to apply it to a case of that kind. If the right hon. Gentleman is ready to accept the Amendment as applying to the first class of cases, which I think are really hard cases, it might possibly be necessary to alter the Amendment so that it should not apply to the second class of cases. As the Death Duties themselves are spasmodic and fall at very irregular intervals, and sometimes too frequent intervals, I think it is fair in this class of case that at least some exemptions should be given and these duties should not be charged twice over for the same amount of money in three years.
    Sir W. ROBSON: The hon. Member (Mr. Peel) has anticipated an objection which is obvious on the face of his Amendment. But we cannot accept the Amendment at all. It is quite true, as the hon. Member has pointed out, there might be cases which might probably be described as hard, but this class of hard case has been found in the past, and will, I think, be found in the future, to be a necessary and useful deterrent against gifts which are intended to escape the Death Duties. One of the most effective deterrents has been the

    2085
    fear that the donee may die, and the property may revert to the donor, and be subject to double taxation. Although I can imagine cases where there is no intention of evading Death Duties, and where they may bear hardly, we must deal with the cases as a whole, and therefore we cannot accept the Amendment.
    Mr. CAVE: It is true that the liability to a double duty may be a deterrent against gifts made to evade duty, but it is also a deterrent against gifts which are not made for that purpose. I hope, however, my hon. Friend will not press the Amendment, because it is not, as he said, in the form in which he would have it, but I hope the Question will be considered sooner or later by the Government.
    Mr. PEEL: I beg to withdraw the Amendment, but as regards the first class of case, I hope the right hon. Gentleman will consider that, and see whether he cannot deal with what I consider is a real hardship.
    Amendment, by leave, withdrawn.
    Mr. CAVEmoved to add at the end of the Clause: "Provided that where the value of the property chargeable by reason of any such gift inter vivos, surrender, assurance, divesting, or disposition for whatever purpose made shall not exceed one thousand pounds, or where, whatever the amount of the property, it becomes chargeable by reason of any such gift, assurance, divesting, or disposition made or effected more than twelve months but less than three years before the death of the deceased, such property for the purpose of Estate Duty shall not be aggregated with any other property, but shall form an estate by itself."
    The proviso is intended to deal with the point that when a gift which is made, the rate of duty is ascertained not by reference to the amount of the gift, but by reference to the whole of the estate passing on the death of the donor. There is really no logical relation between the amount of the gift and the amount of the whole estate. I suggest that you ought to treat the gift as an estate by itself and reckon the rate of duty by the amount of the gift, and not by the amount of the donor's estate.
    Mr. HALDANE: The difficulty about this is that it would open wide the door for evasion. If the words proposed were added to the Clause it would enable the owner of a large fortune, by making gifts,
    2086
    to reduce his Estate Duty to 2 per cent. I do not see any way in which the effect of the Amendment proposed would be workable.
    Mr. AUSTEN CHAMBERLAIN: Would the right hon. Gentleman at any hour—at two o'clock in the morning—present such an argument? Does any Member of the Committee seriously think that a man possessed of £100,000 is going to leave it not to his relatives or to anybody who has interest, but that he is going to give it away in small gifts for the sake of evading the Estate Duty? That appears to be the danger which the Secretary for War says prevents him from accepting the modest proposal of my hon. and learned Friend. I really think the Secretary for War will think better of this matter. If he has no stronger argument then surely he will accept the Amendment. The Debate comes as a curious kind of echo of the Debates of 1896. I remember the case of Dives and Lazarus. Dives was the millionaire who left £1,000 to Lazarus, the old servant, and because it was a gift he would have to pay 8 per cent. Then the opposite case was stated of the old servant who had saved a little money. I daresay many of us have heard of the case of the man—the servant—who, having no relatives or people for whom he cared, left his money to a member of the family in which he had spent all his life. Lazarus having his £100 left it to Dives, and Dives the millionaire paid only 1 per cent., or nothing, because Lazarus was poor. That was an argument at the time. How was it answered? It was argued that when Dives dies he leaves little legacies free of duty. This is a gift which is made outright when the man had no thought of dying, and when he had no suspicion that there would be a tax, and this poor man who is getting but a small gift—amounting to a sum not exceeding £1,000, in the course of three years must pay whatever rate of duty is applicable to the whole estate of the deceased. I am certain the Secretary of State for War feels that his own argument will not do, and as that is the only one that occurred to him, I hope he will show himself conciliatory once again and accept this proposal. After all, in these matters I quite understand the Government's refusal when there are large sums at stake; but in this case the loss to the Treasury would be perfectly insignificant, and the hardship on particular individuals may be very great.
    Mr. STANLEY WILSON: May I press the right hon. Gentleman for some sort of answer to what the last speaker has said. It seems as if the right hon. Gentleman the Chancellor of the Exchequer is going to sit down and give no replies at all. This is the most absurd position that any responsible Minister has ever taken up. He said it is probable that this man of £100,000 will promptly give it all away in small gifts. I cannot imagine why the right; hon. Gentleman should adopt an attitude such as that. That he cannot give some reply to the question raised is too preposterous for words. The Amendment is a reasonable one, and one which the Government can perfectly easily understand. It is going to take nothing, or practically nothing, out of the pocket of the Treasury, and I think from every point of view the Government ought to reconsider the position adopted, and accept the Amendment.
    Sir W. ROBSON: It is not right to say that an Amendment of this kind would only affect a few estates. It may affect a good many estates—a larger number than
    hon. Members are prepared to say I can see no reason why, if the property is to be brought within the estate, and if the gift that has been made has been made within three years, it should not be aggregated. It ought to share in the incidence of the estate, and be aggregated to make up the value of the estate.
    2.0 A.M.
    Mr. PRETYMAN: Is the learned Attorney-General right? I thought the law was that where property passes under two different settlements, then they might not be aggregated. Is there any case where settled property and free property, both passing together on the same death, were not aggregated?
    Sir W. ROBSON: I am not prepared to answer on the spur of the moment, but I am so informed. I am not prepared with any reference.
    Question put, "That the words proposed be there added."
    The Committee divided: Ayes, 55; Noes, 140.

    Division No. 658.]

    AYES.

    [2.3 a.m.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Fell, Arthur

    Renwick, George

    Balcarres, Lord

    Forster, Henry William

    Roberts, S. (Sheffield, Ecclesall)

    Baldwin, Stanley

    Gordon, J.

    Rutherford, Watson (Liverpool)

    Baring, Capt. Hon. G. (Winchester)

    Guinness, Hon. W. E. (B. S. Edmunds)

    Scott, Sir S. (Marylebone, W.)

    Barrie, H. T. (Londonderry, N.)

    Hamilton, Marquess of

    Sheffield, Sir Berkeley George D.

    Bull, Sir William James

    Hardy, Laurence (Kent, Ashford)

    Stanier, Beville

    Carlile. E. Hildred

    Harris, Frederick Leverton

    Starkey, John R.

    Cave, George

    Harrison-Broadley, H. B.

    Staveley-Hill, Henry (Staffordshire)

    Cecil, Evelyn (Aston Manor)

    Hay, Hon. Claude George

    Talbot, Lord E. (Chichester)

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Hill, Sir Clement

    Thomson, W. Mitchell-(Lanark)

    Charming, Sir Francis Allston

    Hills, J. W.

    Valentia, Viscount

    Clive, Percy Archer

    Hunt, Rowland

    Warde, Col. C. E. (Kent, Mid)

    Coates, Major E. F. (Lewisham)

    Kerry, Earl of

    Williams, Col. R. (Dorset, W.)

    Courthope, G. Loyd

    King, Sir Henry Seymour (Hull)

    Wilson, A. Stanley (York, E.R.)

    Craig, Captain James (Down, E.)

    Mason, James F. (Windsor)

    Wyndham, Rt. Hon. George

    Craik, Sir Henry

    Moore, William

    Younger, George

    Dickson, Rt. Hon. C. Scott

    Peel, Hon W. Robert Wellesley

    Doughty, Sir George

    Pretyman, E. G.

    TELLERS FOR THE AYES.—Mr.

    Douglas, Rt. Hon. A. Akers-

    Renton, Leslie

    Hicks Beach and Mr. G. A. Gibbs.

    NOES.

    Acland, Francis Dyke

    Clynes, J. R.

    Everett, R. Lacey

    Agar-Robartes, Hon. T. C R.

    Collins, Stephen (Lambeth)

    Fenwick, Charles

    Agnew, George William

    Collins, Sir Wm. J. (St. Pancras, W.)

    Ferguson, R. C. Munro

    Allen, A. Acland (Christchurch)

    Cooper, G. J.

    Fuller, John Michael F.

    Allen, Charles P. (Stroud)

    Corbett, C. H. (Sussex, E Grinstead)

    Fullerton, Hugh

    Ashton, Thomas Gair

    Cornwall, Sir Edwin A.

    Gill, A. H.

    Barker, Sir John

    Cotton, Sir H. J. S.

    Glover, Thomas

    Barnard, E. B.

    Crosfield, A. H.

    Gooch, George Peabody (Bath)

    Barran, Rowland Hirst

    Cullinan, J.

    Haldane, Rt. Hon. Richard B.

    Boulton, A. C F.

    Dalziel, Sir James Henry

    Harcourt, Rt. Hon. L. (Rossendale)

    Bowerman, C. W.

    Davies, Sir W. Howell (Bristol, S.)

    Harcourt, Robert V. (Montrose)

    Brace, William

    Dewar, Arthur (Edinburgh, S.)

    Harmsworth, R. L. (Caithness-shire)

    Branch, James

    Dickinson, W. H. (St. Pancras, N.)

    Harvey, W. E. (Derbyshire, N.E.)

    Bright, J. A.

    Dillon, John

    Harwood, George

    Brunner, J. F. L. (Lanes., Leigh)

    Duckworth, Sir James

    Haworth, Arthur A.

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Dunne, Major E. Martin (Walsall)

    Helme, Norval Watson

    Bryce, J Annan

    Edwards, A. Clement (Denbigh)

    Hemmerde, Edward George

    Burns, Rt. Hon. John

    Edwards, Sir Francis (Radnor)

    Henderson, Arthur (Durham)

    Buxton, Rt. Hon. Sydney Charles

    Essex, R. W.

    Higham, John Sharp

    Clough, William

    Evans, Sir Samuel T.

    Hogan, Michael

    Holt, Richard Durning

    Newnes, F. (Notts, Bassetlaw)

    Stewart-Smith, D. (Kendal)

    Hooper, A. G.

    Nicholls, George

    Strauss, E. A. (Abingdon)

    Horniman, Emslie John

    Nussey, Sir Willans

    Summerbell, T.

    Howard, Hon. Geoffrey

    Nuttall, Harry

    Taylor, John W. (Durham)

    Isaacs, Rufus Daniel

    O'Brien, K. (Tipperary, Mid)

    Tennant, H. J. (Berwickshire)

    Jones, Leif (Appleby)

    O'Kelly, Conor (Mayo, N.)

    Thomas, Sir A. (Glamorgan, E.)

    Jones, William (Carnarvonshire)

    Parker, James (Halifax)

    Thomasson, Franklin

    Jowett, F. W.

    Partington, Oswald

    Thorne, G. R. (Wolverhampton)

    Keating, Matthew

    Pearce, Robert (Staffs, Leek)

    Trevelyan, Charles Philips

    King, Alfred John (Knutsford)

    Pointer, J.

    Verney, F. W.

    Lambert, George

    Ponsonby, Arthur A. W. H.

    Walsh, Stephen

    Lamont, Norman

    Price, Sir Robert J. (Norfolk, E.)

    Ward, John (Stoke-upon-Trent)

    Layland-Barratt, Sir Francis

    Priestley, Sir W. E. B. (Bradford, E)

    Wason, John Cathcart (Orkney)

    Levy, Sir Maurice

    Rainy, A. Rolland

    Watt, Henry A.

    Lloyd-George, Rt. Hon. David

    Roberts, Charles H. (Lincoln)

    White, Sir George (Norfolk)

    Lupton, Arnold

    Roberts, G. H. (Norwich)

    White, J. Dundas (Dumbartonshire)

    Macdonald, J. R. (Leicester)

    Robertson, Sir G. Scott (Bradford)

    White, Sir Luke (York, E.R.)

    Maclean, Donald

    Robinson, S.

    White, Patrick (Meath, North)

    Macnamara, Dr. Thomas J.

    Robson, Sir William Snowdon

    Wiles, Thomas

    Macpherson, J. T.

    Rogers, F. E. Newman

    Williams, W. Llewelyn (Carmarthen)

    M'Laren, H. D. (Stafford, W.)

    Rutherford, V. H. (Brentford)

    Williamson, Sir A.

    Markham, Arthur Basil

    Samuel, S. M. (Whitechapel)

    Wilson, J. W. (Worcestershire, N.)

    Meagher, Michael

    Scarisbrick, Sir T. T. L.

    Wilson, W. T. (Westhoughton)

    Middlebrook, William

    Seely, Colonel

    Winfrey, R.

    Morrell, Philip

    Shackleton, David James

    Wood, T. M'Kinnon

    Muldoon, John

    Shaw, Sir Charles E. (Stafford)

    Murray, James (Aberdeen, E.)

    Stanger, H. Y.

    TELLERS FOR THE NOES.—Captain

    Myer, Horatio

    Stanley, Hon. A. Lyulph (Cheshire)

    Norton and Sir E. Strachey.

    Mr. CAVEmoved, after the words last inserted, to add the words:
    "Provided that in the case of every person dying on or after the thirtieth day of April, nineteen hundred and nine, property of any kind comprised in any such gift inter vivos, surrender, assurance, divesting, or disposition made or effected by the deceased in or out of which he originally created or reserved an estate or interest for his own benefit, shall not be deemed to pass on the death of the deceased where such estate or interest shall have been surrendered, assured, divested, or disposed of in such manner and within such time as is prescribed by The Finance Act, 1900, Section eleven (1), as amended by this Act in regard to the surrender, assurance, divesting, or disposition of an estate or interest in property within the meaning of the first-mentioned Section in order to exempt the property from being property passing on the death of the deceased."
    I will move this very shortly having regard to an intimation I have received from the right hon. Gentleman in charge
    of the Bill at the present time, and I understand that this will be practically accepted. The purport of it is that when a man makes a gift reserving to himself the life interest, of course that does not free it from the duty, and that when later on he releases the life interest still it is not free from the duty. It should be made free in the latter case.
    Mr. HALDANE: I think this Amendment is a very reasonable one. I am not perfectly satisfied with the words, but we will undertake to bring up a Clause on Report embodying the substance of what the hon. Member has moved. Perhaps under the circumstances he will consent to withdraw the Amendment.
    Mr. CAVE: On those terms I ask leave to withdraw.
    Amendment, by leave, withdrawn.
    Question put, "That the Clause, as amended, stand part of the Bill."
    The Committee divided: Ayes, 135; Noes, 52.

    Division No. 659.]

    AYES.

    [2.15 a.m.

    Acland, Francis Dyke

    Branch, James

    Cornwall, Sir Edwin A.

    Agar-Robartes, Hon. T. C. R.

    Bright, J. A.

    Cotton, Sir H. J. S.

    Agnew, George William

    Brunner, J. F. L. (Lanes., Leigh)

    Crosfield, A. H.

    Allen, A. Acland (Christchurch)

    Brunner, Rt. Hon. Sir J. T. (Cheshire)

    Cullinan, J.

    Allen, Charles P. (Stroud)

    Bryce, J. Annan

    Dalziel, Sir James Henry

    Ashton, Thomas Gair

    Burns, Rt. Hon. John

    Davies, Sir W. Howell (Bristol, S.)

    Barker, Sir John

    Buxton, Rt. Hon. Sydney Charles

    Dewar, Arthur (Edinburgh, S.)

    Barnard, E. B.

    Clough, William

    Dickinson, W. H. (St. Pancras, N.)

    Barran, Rowland Hirst

    Clynes, J. R.

    Dillon, John

    Boulton, A. C. F.

    Collins, Stephen (Lambeth)

    Duckworth, Sir James

    Bowerman, C. W.

    Cooper, G. J.

    Dunne, Major E. Martin (Walsall)

    Brace, William

    Corbett, C. H. (Sussex, E. Grinstead)

    Edwards, A. Clement (Denbigh)

    Edwards, Sir Francis (Radnor)

    Layland-Barratt, Sir Francis

    Samuel, S. M. (Whitechapel)

    Essex, R. W.

    Levy, Sir Maurice

    Scarisbrick, Sir T. T. L.

    Evans, Sir S. T.

    Lloyd-George, Rt. Hon. David

    Seely, Colonel

    Everett, R. Lacey

    Lupton, Arnold

    Shackleton, David James

    Fenwick, Charles

    Macdonald, J. R. (Leicester)

    Shaw, Sir Charles E. (Stafford)

    Ferguson, R. C. Munro

    Maclean, Donald

    Stanger, H. Y.

    Fuller, John Michael F.

    Macnamara, Dr. Thomas J.

    Stanley, Hon. A. Lyulph (Cheshire)

    Fullerton, Hugh

    Macpherson, J. T.

    Stewart-Smith, D. (Kendal)

    Gill, A. H.

    M'Laren, H. D. (Stafford, W.)

    Strauss, E. A. (Abingdon)

    Glover, Thomas

    Markham, Arthur Basil

    Summerbell, T.

    Gooch, George Peabody (Bath)

    Middlebrook, William

    Taylor, John W. (Durham)

    Haldane, Rt. Hon. Richard B.

    Morrell, Philip

    Tennant, H. J. (Berwickshire)

    Harcourt, Rt. Hon. L. (Rossendale)

    Muldoon, John

    Thomas, Sir A. (Glamorgan, E.)

    Harcourt, Robert V. (Montrose)

    Murray, James (Aberdeen, E.)

    Thomasson, Franklin

    Harmsworth, R. L. (Caithness-shire)

    Myer, Horatio

    Thorne, G. R. (Wolverhampton)

    Harvey, W. E. (Derbyshire, N.E.)

    Newnes, F. (Notts, Bassetlaw)

    Trevelyan, Charles Philips

    Harwood, George

    Nicholls, George

    Verney, F. W.

    Haworth, Arthur A.

    Nuttall, Harry

    Walsh, Stephen

    Helme, Norval Watson

    O'Brien, K. (Tipperary, Mid)

    Ward, W. Dudley (Southampton)

    Hemmerde, Edward George

    O'Kelly, Conor (Mayo, N.)

    Wason, John Cathcart (Orkney)

    Henderson, Arthur (Durham)

    Parker, James (Halifax)

    Watt, Henry A.

    Higham, John Sharp

    Partington, Oswald

    White, Sir George (Norfolk)

    Hogan, Michael

    Pearce, Robert (Staffs, Leek)

    White, J. Dundas (Dumbartonshire)

    Holt, Richard Durning

    Pointer, J.

    White, Sir Luke (York, E.R.)

    Hooper, A. G.

    Ponsonby, Arthur A. W. H.

    White, Patrick (Meath, North)

    Horniman, Emslie John

    Price, Sir Robert J. (Norfolk, E.)

    Wiles, Thomas

    Howard, Hon. Geoffrey

    Priestley, Sir W. E. B. (Bradford, E.)

    Williams, W. Llewelyn (Carmarthen)

    Isaacs, Rufus Daniel

    Rainy, A. Rolland

    Williamson, Sir A.

    Jones, Leif (Appleby)

    Roberts, Charles H. (Lincoln)

    Wilson, J. W. (Worcestershire, N.)

    Jones, William (Carnarvonshire)

    Roberts, G. H. (Norwich)

    Wilson, W. T. (Westhoughton)

    Jowett, F. W.

    Robertson, Sir G. Scott (Bradford)

    Wood, T. McKinnon

    King, Alfred John (Knutsford)

    Robinson, S.

    Lambert, George

    Robson, Sir William Snowdon

    TELLERS FOR THE AYES.—Captain

    Lamont, Norman

    Rogers, F. E. Newman

    Norton and Sir E. Strachey.

    NOES.

    Acland-Hood, Rt. Hon. Sir Alex. F.

    Gibbs, G. A. (Bristol, West)

    Renwick, George

    Balcarres, Lord

    Gordon, J.

    Roberts, S. (Sheffield, Ecclesall)

    Baldwin, Stanley

    Guinness, Hon. W. E. (B. S. Edmunds)

    Rutherford, Watson (Liverpool)

    Baring, Capt. Hon. G. (Winchester)

    Hamilton, Marquess of

    Scott, Sir S. (Marylebone, W.)

    Barrie, H. T. (Londonderry, N.)

    Hardy, Laurence (Kent, Ashford)

    Sheffield, Sir Berkeley George D.

    Beach, Hon. Michael H. H.

    Harris, Frederick Leverton

    Stanier, Beville

    Bull, Sir William James

    Harrison-Broadley, H. B.

    Starkey, John R.

    Carlile, E. Hildred

    Hay, Hon. Claude George

    Staveley-Hill, Henry (Staffordshire)

    Cave, George

    Hill, Sir Clement

    Talbot, Lord E. (Chichester)

    Cecil, Evelyn (Aston Manor)

    Hills, J. W.

    Thomson, W. Mitchell-(Lanark)

    Chamberlain, Rt. Hon. J. A. (Worc'r.)

    Hunt, Rowland

    Warde, Col. C. E. (Kent, Mid)

    Channing, Sir Francis Allston

    Kerry, Earl of

    Williams, Col. R. (Dorset, W.)

    Clive, Percy Archer

    King, Sir Henry Seymour (Hull)

    Wilson, A. Stanley (York, E.R.)

    Coates, Major E. F. (Lewisham)

    Long, Col. Charles W. (Evesham)

    Wyndham, Rt. Hon. George

    Courthope, G. Loyd

    Mason, James F. (Windsor)

    Craig, Captain James (Down, E.)

    Moore, William

    Dickson, Rt. Hon. C. Scott

    Peel, Hon. W. R. W.

    TELLERS FOR THE NOES.—Viscount

    Doughty, Sir George

    Pretyman, E. G.

    Valentia and Mr. H. W. Forster.

    Douglas, Rt. Hon. A. Akers-

    Renton, Leslie

    Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.

    Mr. AUSTEN CHAMBERLAIN: I beg to move "That the Chairman do report Progress, and ask leave to sit again." I am unaware what are the intentions of the Government, but I hope they will see their way to accept this Motion. I do not know whether the Chancellor of the Exchequer is tired, but I think we shall all agree that he has done a very good day's work. The next Sub-section raises an entirely new question. It, of course, upsets the settlement come to in 1906 and raises an entirely new question, which we have practically had no opportunity of discussing at all so far. I think it is rather unreasonable to ask us to enter upon it at half-past two in the morning, and I trust the Government will allow us to proceed with it on a new day.
    Mr. LLOYD-GEORGE: I do not like to resist a Motion of this kind, because I must say the Opposition have treated us very fairly in the criticism of the Bill to-day. There has certainly been nothing in the nature of protracted or unreasonable discussion, and therefore we have no reason to complain. But I must say I understood that last night there was, I will not say an arrangement, but an understanding, that we should have Death Duties and Estate Duties to-night, and begin on Monday morning with the Income Tax. I was so much under that impression that, so far as I am concerned, I assented to reporting Progress at an earlier hour than I intended, because my own intention was to go on very much

    2093
    later this morning in order to get further on with the work. There are two points of substance, undoubtedly, upon that Clause. One is the 25 years purchase, and the other is the Sub-section with regard to valuation. Those are two very important points, but, nevertheless, I would suggest to the Committee that it is very much better we should dispense with the Death Duties to-night and begin with Income Tax at the beginning of the week. It is desirable we should not unduly prolong the discussion on the Bill, and I think I should be meeting the general convenience of Members if I were to press the Committee to conclude the Death Duties to-night.
    Mr. AUSTEN CHAMBERLAIN: What the right hon. Gentleman says places me in a little difficulty. If there was an arrangement, of course, neither I nor my friends would want to go back on it in any shape or form, and had I any idea that there was anything like an arrangement I should not have made this Motion. I was not here at the end of the proceedings last night. I had an inquiry addressed to me by the right hon. Gentleman much earlier in the evening as to what I thought would be the course of the proceedings. I did not communicate with him directly. I told the Chief Opposition Whip that I thought we should be able to finish this Clause in reasonable hours within the week, and that if the Government were prepared to give an extra day it would make the thing settled. That is therefore all of which I had knowledge. Of course at that time we had no knowledge that the Government were going to introduce a highly-contentious Resolution at three o'clock to-day, which took two hours or something like that out of the time which would otherwise have been available for the Budget. I think we do well to be jealous of the observance of anything that can be called an agreement, or anything which has given rise to an understanding on which one side or other of the House has acted. Without inquiring further, I accept the right hon. Gentleman's statement that he acted upon the belief that there was such an understanding last night when he consented to the adjournment then, and I beg leave to withdraw the Motion.
    Motion to report Progress, by leave, withdrawn.

    CLAUSE 44.—(Amendment as to Value of Property.)
    (1) In the case of any person dying on or after the thirtieth day of April, nineteen hundred and nine, the proviso to Subsection (5) of Section seven of the principal Act (which relates to the estimation of the principal value of property for the purposes of estate duty) shall cease to have effect.
    (2) In estimating the principal value of any property under Sub-section (5) of Section seven of the principal Act, in the case of any person dying on or after the thirtieth day of April, nineteen hundred and nine, the Commissioners shall fix the price of the property according to the normal market price at the time of the death of the deceased, and shall not make any reduction in the estimate on account of the estimate being made on the assumption that the whole property is to be placed on the market at one and the same time.
    (3) An appeal shall not lie under Section ten of the principal Act, where the question in dispute is a question of the value of any real (including leasehold) property, but if any person is aggrieved by the decision of the Commissioners as to the value of any such property, that question shall, on the application of the person aggrieved, be referred by the Commissioners to one of the referees appointed for the purpose of Part I. of this Act, and the provisions as to appeals under that Part of this Act shall apply accordingly.
    Mr. HICKS BEACHmoved to leave out Sub-section (1).
    I very much regret the decision which the Committee has come to, because the point at which we have arrived is a very important point and mightily affects the most important industry in this country, that of agriculture. I consider that the House is not in a fit state now to enter upon the subject of the future valuation of agricultural property for Estate Duty, and I beg to enter a very strong protest. Clause 44 proposes to repeal the proviso to Sub-section (5) of Section (7) of the Finance Act of 1894. That proviso provides:
    "That in the case of any agricultural property, where no part of the principal value is due to the expectation of an increased income from such property, the principal value shall not exceed twenty-five times the annual value as assessed under Schedule A of the Income Tax Acts, after making such deductions as have not been allowed in that assessment and are allowed under 'The Succes-

    2095
    sion Duty Act, 1853,' and making a deduction for expenses of management not exceeding 5 per cent. of the annual value so assessed."
    That proviso was inserted in the Finance Act of 1894 by general agreement. It was opposed by the then Leader of the Opposition; it was accepted by the Government; there was no discussion upon it; and consequently it was an entirely agreed matter. The Chancellor of the Exchequer told us in his Budget Speech that he proposed to make a change in the valuation for the purposes of Estate Duty, and he said that under the present laws agricultural property enjoys the somewhat peculiar privilege that whatever may be its value in the market its valuation for Death Duty purposes cannot exceed 25 years' purchase of the net rental after allowing the expenses of management. The right hon. Gentleman went on to say that he proposed to change the law in regard to valuation, and that he hoped ultimately to derive a considerable access of revenue. I cannot reconcile that statement of the Chancellor of the Exchequer with the sentence with which he concluded his speech upon the discussion yesterday, when he said that this increase of the Estate Duties would do no damage to any industry. Anybody who knows agricultural property throughout the country will be constrained to admit that if the Death Duties have done any harm anywhere they have done particular harm in the case of agricultural property.
    I suppose anybody who knows any part of the country intimately can at once call to mind various cases of property which has passed from one owner to another, and where real hardship has been caused to the owner, and consequently upon the people who live upon the property and depend upon the owner for their living. A man who is dependent solely upon the income of his agricultural property is affected very much more by the incidence of these Death Duties than a man whose income is derived from personal property. The framers of the 1894 Act thought Death Duties should be provided for in the form of an insurance policy, and if you take it in this way and compare the incomes of two men which in the eyes of the Income Tax Commissioners are £6,000 apiece—that is, a man with an income of £6,000 derived from personal property, and a man with an income from real property of £7,000 gross, which for assessment purposes would be £6,000—you will find that
    2096
    the respective charges upon these two persons are of very varying degree. You will find that in the case of the man whose income is derived from personal property the total charge is about 2s. 8d. in the £, while in the case of the man who derives his income from real property, it is about 4s. in the £, owing to the great expense of keeping his property in a proper state of repair, for which he is not allowed, so that his proper income probably only amounts to about £4,000. Consequently, these charges fall much more heavily upon the owner of real property than upon the owner of personal property.
    The Secretary of State for War tells us that the duties are really chargeable upon capital, and I presume he means that whenever the estate changes hands a lump sum is to be taken out of it. What does that mean in the case of an agricultural estate? I am referring to those cases where the whole of the income is derived from real property. A man succeeds to an estate, say, of £500,000, on which he has to pay Death Duties of about 8 per cent., and it may be 9 per cent. He has got to find that lump sum of money to pay for those Estate Duties, and he has got nothing which he can realise at once as easily as a man with personal property. In all probability it is impossible for him to sell off a portion of the estate without seriously injuring the value of the remainder, and under the provision of the right hon. Gentleman, who proposes that with the consent of both parties the State shall take a proportion of the real property in exchange for the duty, I venture to say there will be very few cases in which the owner would be willing to part with a portion of his property by which the State would be able to say it is a good bargain. I daresay there are many cases in which an owner would be glad to get lid of an outlying farm in order to pay his duties, but I am not at all sure that it would be a good bargain for the State. In a great many cases it would be difficult for the owner of an estate to provide for the Estate Duties by realising a portion of his estate, and the only thing he has to do is to borrow.
    Unless you are going to pile on interminable charges he must make provision to pay off some for a number of years, and that will involve a considerable additional charge upon the annual income of the estate. Can that be met? It can only be met by materially reducing the normal expenditure on the estate. That must mean the

    2097
    curtailment of the natural development of the estate. I am taking the case of the man who only spends an ordinary amount of money to keep up his estate in a proper state of repair, and in a case of that kind you must inflict considerable hardship upon the estate if it is to be kept in a proper state of agricultural value. The consequence wall be that this wall reflect in a serious degree upon the general condition of the farms and buildings on the estate, and will materially affect the welfare and livelihood of those people who have been in the habit of getting their living from the money spent in the employment of labour on the estate. These additional estate duties are a very serious burden upon agricultural property as apposed to other forms of property. Not only does the right hon. Gentleman vastly increase these duties, but he does a more serious thing under this Clause, and that is, he does away altogether with the original valuation of agricultural estates for the purpose of estate duty. We know that Lord Rosebery told us the other day at Glasgow that there was a solemn undertaking in 1894 that agricultural estates should only be valued at 25 years' purchase for the purpose of the Death Duties. I want to quote the words of Sir William Harcourt, who was in charge of the Finance Bill of that year. He said:—
    "It is not necessary for me to add many words to what the right hon. Gentleman the leader of the Opposition (Mr. A. J. Balfour) has said. It is a great satisfaction to the Government to know that as far as it goes this Amendment will be satisfactory to the Government interests on behalf of whom, in this respect, he speaks. The first part of the Amendment expresses what really has always been the intention of the Government. We always meant that the principal value should be the market value. I stated, when this measure was introduced, that it was to be what the property would sell for at the time. As regards agricultural land, I said, at a very early part of the proceedings, I was very desirous that the case of such land should be met in a fair and a favourable spirit."
    I do not think anybody denies that there was a solemn agreement that agricultural property should be valued on a different basis to other forms of property. The valuation was that Income Tax assessment should be taken, and there were to be allowances under the succession Duty Act and 5 per cent. on the expenses of management, and in respect to insurance and returns The Government, in the first place, proposed to adopt the 25 years limit. The Government entirely do away with the deductions that were allowed under the Bill of 1894, and I cannot understand why they have suddenly adopted this procedure. It is absolutely and entirely a violation of the agreement made in 1894, and if the right hon. Gen-
    2098
    tleman comes down to the House and tells us that these duties are not going to have a prejudicial effect upon any industry in the country, I think he is vastly and grievously mistaken as regards agriculture under this Clause. If it has not been the custom to have a 25 years limit in the past what is the Government's reason for raising it up to 25 or more? The right hon. Gentleman is going to put in that "the Commissioners shall fix the price of the property according to the normal market price at the time of the death of the deceased." There is no allowance under that for the expenses of management and upkeep. This simply puts agricultural property on the same basis as other forms of property, and is a violation of the arrangement made in 1894. If the Government do really intend to do something for agriculture in their Development Bill, I say they would do far more good if they left the Estate Duty as under the Bill of 1894 than by any new-fangled attempt to deal with the matter in their Bill. I cannot understand how the right hon. Gentleman can support this new Clause, which, as I say, introduces an entirely new principle for the valuation of agricultural property. I have another great grievance against this Clause, because it includes woodlands. Woodlands and agricultural property are on the same footing for the purposes of the assessment of Estate Duty. The rule has been to assess woodland at no more than £25 under Schedule A. The Poor Rate assessment of woodlands is supposed to be on prairie value. In a few unions of the country that is the assessment, but in a few instances it is assessed at agricultural value, now woodlands have not been over-assessed for Estate Duty purposes; but now you propose to do away with that present assessment altogether, and to substitute for it the normal market price of woodlands. Can anybody tell me what is the normal market price of a woodland which is not ripe to be cut for the next 50 years?
    Will any man here go and buy a wood which is not fit to be cut down and realised for the next fifty years? I daresay you can get at the price by a process of actuarial valuation. But that is not a real valuation, because forestry experts will tell us that in fifty years disease among the trees may ruin the wood and a gale may blow the whole wood down. [MINISTERIAL cries of "No, no."] Well, perhaps that was rather an exaggeration. A great portion of the wood might be blown

    2099
    down. Therefore, I say that the actuarial valuation was an entirely wrong basis. The basis proposed by the Chancellor of the Exchequer is absolutely wrong, and I do hope that the promise that the matter of woodlands should receive favourable consideration under the Chancellor's Finance Bill will be realised, and that the Chancellor of the Exchequer will give very serious attention to this matter. The Arboricultural Society have requested me to urge that the woodlands ought to be assessed only when the actual timber is realised, because then you get their real value. This is a very important subject indeed. I have a very strong case to bring against the right hon. Gentleman. In the first place he is largely increasing the burden on the agricultural industry; secondly, he is violating a solemn agreement arrived at between both parties in this House, when the Act of 1894 was passed, as to the assessment of agricultural property; and, thirdly, he is dealing a great blow at the arboricultural industry throughout the country. If the Government wish to help forestry they are taking a very odd step towards doing so.
    Mr. JOHN DILLON: This Sub-section, proposing as it does the repeal of the proviso of the principal Act, hits Irish farmers in a most extraordinary way, and in a way which I think I shall be able to show the Committee is entirely unjust. I rise for the purpose of making a suggestion to the Chancellor of the Exchequer which I hope will abbreviate the discussion at this hour of the morning. I am quite convinced that the view we hold in this matter will be fully shared when it is understood by the Government and the Members of the Committee. It is a matter of extraordinary complication, and it would be hopeless to embark upon a full discussion of it at this hour. In order to allow the Committee to understand the full importance of the case I have to submit, I may say a few words, however, on the effect of the present Bill upon estates generally throughout the country compared with its effect upon the peculiar cases which I am here to defend. The Bill proposes to raise by a moderate percentage the charge upon estates passing under Death Duties, but as I understand the Bill it does not propose to add anything to the duty on any estate under £5,000. No person dying in England or Ireland with an estate under £5,000 will have his Death Duties increased by a single shilling.
    2100
    I am informed by experts—I do not profess to be an expert on the matter myself—that in consequence of the repeal of this provision it is the opinion of those who are engaged in passing these small estates through probate in Ireland, that the Death Duties of small farmers in Ireland will be doubled, trebled, and even quadrupled, and that will take place on estates worth £300, £400, £500, and £600. I am convinced that nobody on this Committee will say that it is a just Bill which would leave the man with £5,000 with an unchanged Death Duty, and would double or quadruple the Death Duty on a man whose whole means aggregate £500 or £600. That result is brought about by a curious process, and I cannot at this hour undertake to fully explain it, but it arises mainly from a well-known legal decision in an Irish case in the year 1901. That decision set forth the methods by which Death Duties were to be carried out in the case of Irish agricultural holdings, and it is in accordance with that decision that the Commissioners of Inland Revenue have acted, and in accordance with it that these calculations have been made by experts as to the effect of the repeal of this proviso. It was upon this proviso that this judgment was founded, and I am advised that the result of the repeal of the proviso will be that on small estates such as those of tenant farmers, which pay on £300 and thereabouts duty amounting from 30s. to 50s., the duty will be raised to £5, £6, and £10, and in some cases even higher. That would be a grotesque injustice in view of what I have said about the general effect of the Bill. I speak on the authority of solicitors and barristers engaged in these cases, and on the official statement of the Law Society in Dublin, who have sent us documents on the subject drawn up by the men who are engaged in passing these estates through probate. I cannot, as I have explained, attempt to go into this statement, but I may say they have sent us specimen cases showing the items under the present system, and calculations of what the Death Duties would be if this proviso were repealed. The cases I have in my hands according to the experts show that effect to be the doubling, trebling, and, in; some cases, the quadrupling of the Death Duties on small estates in Ireland. The Government, in the answers they have given to questions in the House, and in the statement made by the Chancellor of the Exchequer last night in reply to my appeal on this subject, clearly indicated

    2101
    that this effect upon Ireland is a result of misunderstanding on their part.
    3.0 A.M.
    I cannot believe the Government intended the Bill to have this effect. It is inconceivable. And I am strengthened in that view by the terms of a reply given by the Secretary to the Treasury some time ago to a question by the hon. Member for North Westmeath (Mr. Ginnell). I will only take the main point out of a long answer. He was asked what was the total of the increased Estate Duties from tenants and tenant purchasers in Ireland, and the answer was £2,500 from the whole of Ireland. Everybody in Ireland who knew the actual situation created by the Bill says that is an absolutely ludicrous estimate. If the Government understood the effect of the repeal of the proviso it would be much more, and I conclude from that answer, which was most distinct, that the Government did not understand its effect. The answer of the Secretary of the Treasury was most distinct and full, as its terms show. He said the £2,500 was the total annual increase expected to be derived from Ireland from the death of tenants occupying land, from the death of persons interested in land and paying interest in lieu of rent, and from the death of persons who had purchased land and were subject to an annuity for purchase. That covered the whole of the occupying farmers of Ireland, and the Government expected only £2,500 increase in the Death Duties from them. But with this proviso repealed, if I am rightly informed, the increase will be something nearer £80,000 or £90,000 or £100,000 than the figure named, which is an absurd estimate. Therefore I am entitled to conclude that the Government, or whoever drafted the Bill, was ignorant of the effect it would have upon the small farmers in Ireland. A promise was given by the Chancellor of the Exchequer last night when a question was put to him from this side, that he would accept three of the Amendments on the Paper in the name of my hon. Friend the Member for North Dublin (Mr. Clancy). The right hon. Gentleman stated that he was prepared to accept the Amendment of my hon. Friend, allowing the value of the tenant right to remain exactly where it is at the present moment.
    One of the most important points was that the right hon. Gentleman was prepared to allow the tenant purchaser to have the right he now enjoys of deducting the amount of the advance remaining un-
    2102
    paid from the value of his land before he was assessed for Death Duties. These answers led me to believe that the Government had no intention of carrying out what I understand would be the effect of repealing this Sub-section. But the question to be faced is that the phraseology of the Amendments by which we can secure protection for tenant purchasers in Ireland from this injustice, and which at the same time will be so broad as to apply to the whole of the United Kingdom, so as not to obtain any special treatment for Ireland in the matter, would require most close consideration. Therefore the suggestion I desire to make is that if the Chancellor of the Exchequer can see his way to confirm the statement that the Government really do not desire to increase beyond the sum of £2,500 for the whole of Ireland the Death Duties on these farmers, we should agree to remit the whole of this question—which is difficult and complicated as regards phraseology even when we have agreed on principles—to be dealt with in a new Clause.
    I daresay it would be possible to have the new Clause put on the Paper in agreed terms, and that would obviate the lengthy discussion with which we are loath to trouble the Committee at this hour of the night, but which otherwise I am afraid will be inevitable. I want to make it quite clear to the Committee that we are not in this matter seeking for any special treatment for Ireland. What we are seeking to do is to protect Ireland against a provision which operates in one way in England and in a totally different way in Ireland, owing to the different social conditions of the latter country. You may pass this Subsection for England and it will not affect any English farmers at all. It was the owners of the land, and chiefly, of course, the large owners in England, that the mover of the Amendment was concerned about. In Ireland it is all the other way. This Clause will affect the small tenant farmers, the purchasers, in Ireland, and to a degree infinitely greater than anything the hon. Member (Mr. Hicks Beach) claimed as regards the English landlords. He did not for a moment say that this repeal would in any case double the Death; Duties on landowners in England, whereas I say that it will treble the Death Duties on tenant purchasers in Ireland. What I would ask the Chancellor of the Exchequer to do would be to reassure us as to his intentions and to agree that a special Clause shall be put down so

    2103
    dealing with the situation that these special dangers and disabilities in the case of the tenant purchasers in Ireland will be obviated.
    Mr. LLOYD-GEORGE: Before I deal with the general question raised by the hon. Member for Tewkesbury (Mr. Hicks Beach), perhaps I had better dispose of the suggestion put forward by my hon. Friend, the Member for Mayo (Mr. Dillon) in reference to the peculiar conditions of Ireland. I gave an answer yesterday on the subject in the course of our discussions, and the hon. Member now suggests that instead of accepting Amendments which have been put down by another hon. Member for Ireland it would be better to deal with the matter in the form of a new Clause. Since the hon. and learned Member made the suggestion the draughtsmen have been consulted and they inform me that the course suggested would be quite feasible. That being the case, I am prepared to undertake that the matter shall be dealt with in the form of a new-Clause. The grievance in Ireland is that there are certain anomalies which affect Ireland specially, and which do not interfere with the holding of land in this country. I have gone into the matter very carefully and that undoubtedly is the case. It would, however, be quite impossible to engage in this matter with the idea of making any special exemption which would be applicable to Ireland alone, and the Amendment put down by the Government would be of general application to the whole of the United Kingdom. The hon. Member for Tewkesbury pleaded to the Committee to retain the limitation which was imposed on the valuation of agricultural land in 1894. He has referred to that limitation as a solemn agreement, but that I can hardly accept.
    Mr. HICKS BEACH: I quoted Lord Rosebery's words.
    Mr. LLOYD-GEORGE: I can hardly accept Lord Rosebery as an authority on the Death Duties.
    Mr. HICKS BEACH: He was Prime Minister at the time.
    Mr. LLOYD-GEORGE: I daresay he was, but he has placed an interpretation now on what he did fifteen years ago. He had to explain away why he consented to those drastic Death Duties in 1894, and lie says now that a comparatively slight extension would spread ruin and desola-
    2104
    tion. I repudiate the idea that what the hon. Member (Mr. Hicks Beach) refers to was in any sense a solemn agreement. It was the acceptance of an Amendment, and that is a matter of everyday occurrence during the discussion of a big measure in Parliament. If the Opposition on that occasion had withdrawn the whole of their opposition to the Bill on the definite understanding that this condition was inserted it might have been claimed as a definite agreement, but that was not the case. Further, I would point out that no Amendment accepted in 1894 could possibly bind Chancellors of the Exchequer for all time not to extend taxation. Such a proposition would be ridiculous. The Government merely accepted an Amendment at that time. They did so for reasons which were undoubtedly satisfactory and sufficient for the time being. That is not an agreement, and it could not possibly bind those who are responsible for raising taxation in the future, otherwise Chancellors of the Exchequer might bind their successors in regard to every tax. That would make the condition of things impossible as far as the finances of the country are concerned.
    There was just a suggestion from the other side, as it appeared to me, that there had been a breach of faith on the part of the Government in dealing with the matter at all. You do not impose any limitation upon the value of shares or upon houses. You do not say there shall be ten years' purchase or five years' purchase of a business. You simply say that that business shall be valued at its market value, whatever that is. There is no reason in principle why you should impose any limitation of this kind in regard to agricultural land when you do not impose it in any other case. The hon. Gentleman complains that agricultural land is badly treated in other respects. Those are cases that have to be dealt with on their merits. He referred to the case of woodlands. Very well, we have promised to deal with the case of woodlands. I promised last year, when it was brought forward, to give it favourable consideration. As a matter of fact, I have had an amendment drafted dealing with the question of woodlands, and that will be placed upon the paper. I do not think I can extend that to purely ornamental lands, and I do not think that that is really the case put forward. The case put forward was that of a plantation and woodland generally, and I think it is desirable that they should be included.

    2105
    There is an Amendment put down in the name of the Government dealing with timber of that kind.
    Lord BALCARRES: Is it to be put down on the Report stage, or is it a new clause?
    Mr. LLOYD-GEORGE: I am rather afraid it will be on Report stage. I am not in a position at the present moment to make a statement; I am not quite satisfied as to the form of words, and I should be very glad if hon. Gentlemen specially interested would communicate with me in regard to the matter. I should like the clause to have the general consent of those who are interested in the matter. I think there is a very strong case, and a case we must deal with. Then the hon. Gentleman said there was another reason why agricultural land was treated badly, and that was, that when you came to compare increment in agricultural land with the increment on other property they were not really comparable because there were deductions of a most serious and substantial nature in agricultural land which were quite unavoidable owing to the exceptional circumstances of the case, and that what appeared to be a very large increment was not a real increment because of the repairs, management and other unavoidable expenses. There, again, I have admitted there is a case for special consideration, and I hope, on Monday, I shall be able to move an Amendment. I think there will be a special clause; at any rate, I will undertake to deal with that question. I do not say it will be altogether satisfactory, but I am perfectly certain of this, that the concessions made by the Government will be much more substantial in point of revenue than any that would be derived from the limitation of this 25 years' purchase in this Clause.
    Therefore, taking the debit and credit accounts as between this Clause and what we propose to do in the matter of Schedule A, I have no hesitation in saying that the balance will be in favour of agricultural land. What is our reason for putting this down? The first is that by a limitation of this kind there is an inequality between agricultural land and other property. The second is that there is an inequality between one class of agricultural land and another. Take the class of land where you cannot get 25 years' purchase. This limitation is of no advantage to that land at all, and that land is valued up to its full value to the last
    2106
    penny. As far as that land is concerned this is no protection. Take the class of land, such as that in my own country, where you can get much more than 25 years' purchase as a rule. You can always get a purchaser and almost always at over 25 years' purchase. Even in the worst times if you put up land for sale you can always get a purchaser, when, perhaps, in parts of England you cannot sell at all. This land, then, which is always saleable, and for which you can always get 25 years' purchase has this privilege and protection over land where you can never get twenty-five years' purchase. In the latter case this Clause is of no use, so that the better class of land is protected and the poorer class of land has no protection. Here is another observation of a general nature. Generally speaking, the class of land which derives the most protection is the land which is most expensive to run very often. I venture to say that the class of land for which you get twenty-five years' purchase is a class of land in regard to which the percentage which you deduct in respect of repairs and other matters is much more than in regard to the class of land where you do not get your twenty-five years' purchase. Therefore you have an inequality not merely between realty and personalty, but you have an inequality between one kind of agricultural land and another. There is no reason for this. I am, however, prepared to consider the case of woodlands, and I am prepared to consider it in the case of Schedule A. I do not promise a concession the whole way. There are limitations by the financial exigencies of the Exchequer at the present moment, but I do promise amendment which, I think, will satisfy the Committee that we quite intend to meet the grievance from which owners of agricultural land suffer in respect to their obligations under Schedule A, where they are charged in respect of rents they only formally receive, and do not get credit for deductions which are made entirely in the interests of agriculture. I promise to submit an Amendment that will to a certain extent at any rate remove those inequalities, but in the meantime I cannot possibly accede to the Amendment of the hon. Member.
    Mr. PRETYMAN: I see a great deal of force in the argument of the right hon. Gentleman, and I am entirely prepared to admit that so far as the mere maximum is concerned, I do not think there is very much in it, and the Chancellor of the Exchequer was absolutely correct when he

    2107
    said that poor land derives no benefit from this maximum. I am also prepared to go so far as to say that in the case he mentioned in his district, 25 years' purchase is considerably below the normal selling price of land. If it is below the normal selling price of land there is certainly no reason why the same principle should not be applied to it as is applied to other land. But the really important point is not in the maximum, which, so far as poor land is concerned, has never been operative, but it is in the matter of valuation. That is the point which concerns us. It is necessary in order to understand this to look at Sub-section (5) of Clause 7 of the original Act. You will see there that the value of the property shall be estimated to be the price which in the opinion of the Commissioners such property will fetch if sold in the open market at the time of the death of the owner. In respect to most forms of property there is a comparatively easy method of arriving at the value. But in regard to agricultural property, I do not know what test the Commissioners are to apply, and what has given rise to the greatest anxiety amongst all those who are concerned in land is the implication of the proviso that the method of valuation is to be the number of years' purchase in the market. The matter is left extraordinarily vague as it stands now, and there is a great danger of vagueness in the future. What excites our apprehension is that this proposal accompanies a Finance Bill which provides for a new system of valuation altogether. There is a new system of valuation provided in Part I. of the Finance Bill in which every separate occupation is going to be taken into account for another purpose. Are we going to have that valuation taken for this purpose as well? That means to say that the system of valuation which is going to be applied for the purposes of possible Increment Value Duty is going to be applied in this case as well, and what that may lead to it is impossible to say. That is what has excited so much apprehension. The property should be valued as a whole on a number of years' purchase.
    Mr. LLOYD-GEORGE: That is valuation made on the passing of the Act. This is a valuation of the property on the market value at the date of death, subject to appeal.
    Mr. PRETYMAN: Yes; there must be separate valuation, but it is quite possible
    2108
    that the two things may be brought together. You are going to have two valuations on two different bases. You are going to have an increment value, whether increment is payable or not. The valuation before increment value is to take place whether increment is payable or not.
    Mr. LLOYD-GEORGE: Not on agricultural land.
    Mr. PRETYMAN: It is the doubt on that point that is exciting the greatest possible alarm. Will the right hon. Gentleman assure us that so far as his intentions go the present system of valuing agricultural land will remain in force?
    Mr. LLOYD-GEORGE: Certainly. I am not aware of any intention to alter the valuation, but I do want to get at the real value of the land where the maximum by no means represents the value at the present moment.
    Mr. PRETYMAN: What I understand the right hon. Gentleman to mean is that where, under the present system, a limitation has been offered, and the Commissioners have said "We should have charged 30 years' purchase on this land, but under this proviso of the Act of 1894 we have been stopped, and we can only charge 25 per cent here," he wants to get at the real value of the land. There is to be no alteration whatever in the system of valuation, and it is maintained that by the removal of that limit the injury to agriculture is not very serious. I want to put a particular case in regard to cottages. Let us take the case of two such houses. Here you have a proposal already on the Vote for spending national money for providing houses. The typical case is simply this: The owner builds a pair of houses that cost him £400, and he receives £8—£4 each—rent from them. That is the ordinary rent of agricultural cottages. Under the ordinary system these houses come in and are valued on the rental. Are they to be valued at what they cost?
    Mr. LLOYD-GEORGE: At their market value.
    Mr. PRETYMAN: The market value as part of the estate, which is really valued on the rental. As things now stand, the State, under the present system, is giving some encouragement to owners to build houses, because, if the owner has £400 in money and he has to pay Death Duty, he pays on £400; but if he spends the amount on cottages and they are rented at £4 each

    2109
    and 25 years' purchase, it is only £200 on which he pays the Death Duty. He therefore only pays half the full rate which he otherwise would pay. Are the houses let at £4 a year to be revalued? If so, I am sure it will be most injurious, and I am sure it will do more to stop the building of houses than all the Housing Bills introduced by the Government. If these kinds of elements are going to be brought in, you are opening a door which is going to do enormous harm to the development of agricultural interest throughout the country. Owners in some cases are receiving 1 per cent. in interest, and others are receiving no interest at all upon their agricultural property. On many agricultural estates—and I speak from bitter experience, because I have reason to know—no part of the income goes into the owner' pocket at all—the whole is spent on the estate. If in addition to this fearful burden of Death Duties you are not going to take into consideration the expenditure of the owner, you are going to inflict a most Serious injury on agriculture. I do most earnestly trust that the right hon. Gentleman will allay the apprehensions. Am I to understand the Chancellor of the Exchequer does not intend to do anything of the kind which has been suggested? I will not ask more now than that the right hon. Gentleman will take these points into serious consideration. The difficulty is a real one and I hope he will introduce words to meet it.
    Mr. HICKS BEACH: I am not quite satisfied with what the Chancellor of the Exchequer has said. I understand that all he intends to do is to remove the 25 years' limit, and that he does not intend to remove the basis of valuation, that is to say that agricultural land is still to be valued in the future on the Income Tax assessment of Schedule A, with certain deductions for management and maintenance. Are these deductions still to be allowed. The 25 years' limit is by no means of much importance; the really important matter is the basis of assessment. Is agricultural land to be valued on the capital value of the gross income or the capital value of the net income? That is the material point.
    Mr. LLOYD-GEORGE: Certainly, deductions of the kind mentioned must necessarily be taken into account, and where the deduction are very heavy I should have thought that, on the whole, agricultural land would rather benefit by the method I have adopted here, because
    2110
    the deductions which are made under Schedule A do not represent the total deductions which can be made from the gross income. I cannot ask hon. Members to postpone this discussion until they get the whole of our proposals regarding agricultural land, because they might think they were losing an opportunity of putting their case, but I feel it is very difficult to discuss the matter without having the whole of the Government's proposals with regard to Schedule A before the Committee. When they see those proposals they will find that agricultural land is rather benefited than otherwise.
    Mr. MUNRO FERGUSON: I think the real security for a fair valuation is the recognition for the first time of the outlays which have to be made on agricultural equipment. This is the first Government that has really done that. It will be a valuable element in the valuations of the future. With the recognition which the Chancellor of the Exchequer has promised to make there is no ground whatever for the 25 years' limit. Schedule A and Schedule D and local taxation press heavily on agricultural land. There is no need to press this Amendment because the great security for valuations in the future will be that, subject to the right of appeal, the Commissioners will take under their notice the allowances for deductions which are made with respect to Income Tax. There is one point the Chancellor of the Exchequer might look into. I have an Amendment to this Clause down on the Paper with regard to woodlands. The question of deductions is raised in a very irregular way at the present time. Sometimes there are allowances of 5 per cent. for management and sometimes not. That all depends whether land is valued at 25 years' purchase or not. In some cases an allowance of 10 per cent. is made for maintenance, while in other cases we are told that anyone who has paid 10 per cent. for maintenance is very extravagant in management. In some cases the maintenance charge has been refused altogether. The whole subject is in a difficult position, and I hope the Chancellor of the Exchequer will look into it.
    Captain CLIVE: The last nine speeches have all pointed to the same thing, namely, that it would be most desirable for the Chancellor of the Exchequer to accept now a Motion to report Progress. I do not understand the nature of the bargain

    2111
    to which the hon. Gentleman referred earlier in the morning, but I base my appeal to him on two grounds: He has said that if only we knew what were the great benefits of the proposals he is going to make with regard to agriculture, we should readily accept this Clause.
    Mr. LLOYD-GEORGE: That had to do with the Income Tax.
    Captain CLIVE: Secondly, the right hon. Gentleman said as regards woodlands, favourable consideration had been promised in that case a year ago. As yet, however, no amount has been placed on the Paper, and we are now asked to wait until the Report stage before we can see it. I envy the more fortunate lot of Members from Ireland. They put up one of their number to speak, and they are promised what might be called a most-favoured nation clause, whereupon the whole party retired to bed.
    Mr. LLOYD-GEORGE: I promised nothing to Ireland which is not also applicable to the whole of the United Kingdom. I made that quite clear yesterday, and again to-day. Members for Ireland clearly understood that I could not accept any Amendment which did not give the same benefits to the United Kingdom.
    Captain CLIVE: At any rate, the right hon. Gentleman has given them the most-favoured nation treatment in the same way that if you promise special treatment for wine to Portugal you have to give the same treatment to Germany and Russia. After the speech of my hon. Friend (Mr. Hicks-Beach), and the somewhat vague statement we have had as to the new process of valuation that is to take place in consequence of this Sub-section, it would be most desirable that we should report Progress and deal with this matter next week. The Chancellor of the Exchequer gave us an instance of land in his part of Wales. That seems to be a very strong argument against the removal of the limit and the possible alteration of the method of valuation. I believe in Wales there is something similar to the land hunger which prevails in Ireland. No doubt that would give a fictitious value—perhaps it is not fictitious, because it is the actual value paid in the open market—at any rate, it would be a high value in the market. It is hard on a man whose family has for generations owned the same property to have to
    2112
    pay Death Duties on the normal market price, which will be based, I suppose, on the price some wealthy purchaser, who has saved money in America or elsewhere, would offer for the land. In Herefordshire there has been sold recently a large property at a price which is known to be very high, a price far beyond anything which would bring in any return. Is that to be taken as a basis for valuing other property? That is the sort of thing not unlikely to occur if this Sub-section is passed as it stands. The Chancellor of the Exchequer has foreshadowed some Amendments with regard to the Income Tax, which, he says, will be of considerable benefit to agriculture. It is not reasonable to ask us to set that benefit against the possible injury which may be done to agriculture under this Clause. I will not move to report Progress, but I will appeal to the right hon. Gentleman to say whether, when we have finished this Sub-section, he will not agree to that motion.
    Mr. WATTrose in his place, and claimed to move "That the Question be now put."
    The DEPUTY-CHAIRMANwithheld his assent, and declined then to put that Question.
    Lord BALCARRES: I wish to make a suggestion to the Chancellor of the Exchequer. This will be a very difficult Amendment to draw up, and I very much doubt whether, even with all the resources of the Treasury, it would be possible for the right hon. Gentleman to frame a thoroughly satisfactory Clause. I understand that the right hon. Gentleman expects to do this on Report, and I would point out that it would be a great hardship to have to deal with the question at that stage without having already had the Amendment on the Paper. What I would suggest is that the Chancellor of the Exchequer should carry out his purpose now by means of a new Clause instead of by an Amendment on the Report stage. I believe that if the right hon. Gentleman tries to carry out the matter by an Amendment on the Report stage it will break down.
    Mr. LLOYD-GEORGE: I quite agree with the Noble Lord that it will be an exceedingly difficult Amendment to contrive. This is purely a non-controversial question, and I will accept the suggestion the Noble Lord makes by putting the Amendment on the Paper as a new

    2113
    Clause. I agree that there is a great advantage in dealing with the matter in Committee rather than on Report. It is very much more difficult to amend a thing when you have got to the Report stage than it is to do it in Committee. I will consider the whole matter, and I think it is very likely I shall be able to do as the Noble Lord suggests.
    Mr. AUSTEN CHAMBERLAIN: I should like to ask the right hon. Gentleman a question, and I rather hope that his answer may avoid the necessity for a division. I understand him to say that the only change he wishes to make in the valuation is the removal of the arbitrary limit of twenty-five years. If that is the case then I do not think there is any difference between the two sides. What my hon. Friends behind me were afraid of was that, under cover of removing an arbitrary limit, the right hon. Gentleman was in fact contemplating a change in the system on which the valuations have been made. Of course, if an estate would have been valued at more than 25 years, and if you take off that arbitrary bar, it will make a change to that extent, but it will not make a change in the method. The reason why this proposal has caused so much anxiety in the minds of many of those who are interested in the matter outside, and of many of my hon. Friends here, is that certain phrases have fallen on occasions, I think both from the Chancellor of the Exchequer and the Prime Minister, as to the very large new revenue which the Government expected to get from this proposal. What I want the right hon. Gentleman to tell me is whether I am right in gathering from what he has said that the only effect of the change he proposes is to remove this arbitrary bar, and that there will be no change in the method or character of the valuation?
    Mr. LLOYD-GEORGE: I have no difficulty at all in giving that assurance to the right hon. Gentleman. If he will compare the operative words of the Act of 1894 with the operative words of my Clause he will see that they are exactly the same. I do not think that either the Prime Minister or myself have ever said that the Government anticipated any large increase of revenue from this proposal. It was entirely in connection with building land in the neighbourhood of towns that we looked for that increase. I will not say that the increase from this will be trifling, but, at
    2114
    any rate, I can say that it will not be very considerable.
    Mr. HICKS BEACH: I must confess I am not quite satisfied. Surely this is, according to the Bill, a different basis of valuation. You are going to take the normal market price and you say nothing as all about deductions. In the Finance Act of 1894 you began with the market price, and then there was a proviso to the effect that in the case of agricultural property, where no part of the principal value was due to the expectation of an increased income, the principal value should not exceed 25 times the annual value as assessed under Schedule A of the Income Tax Acts, "After making such deductions as have not been allowed in that assessment and are allowed under the Succession Duty Act 1853, and making a deduction for expenses of management not exceeding 5 per cent of the annual value so assessed." I still maintain that you are making a valuation for agricultural property different from that which was laid down in the 1894 Act.
    4.0 A.M.
    Mr. LLOYD-GEORGE: There is no change in the fundamental basis of valuation. The only difference is that with regard to the limitation of 25 years.
    Mr. WALTER GUINNESSmoved to leave out Sub-section (2).
    The Sub-section forbids the valuer to make any allowance for the fact that a large block of property is put on the market at once, and to that extent it orders that the valuation shall be made on a fictitious basis. I do not know whether the right hon. Gentleman intends this to apply only to personalty or also to realty. As far as one can see it must inevitably apply to all forms of property, because it applies to the Act of 1894, and that applies not only to personalty, which I think the right hon. Gentleman dealt with in his Budget speech, but also realty. If the fact that property is to be sold as a whole, in a large block, affects the value surely it is only fair, in assessing that value, that that fact should be taken into consideration, and consideration of this kind is absolutely necessary unless you want to get an unfair valuation, because, if it does not affect the real value, it is quite certain that no valuer would dream

    2115
    of taking it into consideration. At the present time the valuer asks himself what the owner would get if he chose to sell his property, and if he is convinced that the property is of such a character that it would not suffer by its being sold together there is, of course, no question of any reduction in value. In the majority, perhaps, of landed estates a larger price can be realised by selling the property as a whole, but I think cases may easily arise where the opposite is the case. In the cases of building estates many cases could be imagined where you would get a far larger valuation if you valued the property in small parts than if you took it as a whole. You might take every field separately on the assumption that there was someone willing to buy them. You would allow nothing for the loss of interest, nothing for the period during which the owner would have to wait before he would be able to dispose of the whole By adding all those separate parts together you might get a very much higher figure than could possibly be realised if the whole at any moment by anybody who was not going to hold it and develop. When the value is made up by a very large prospective element it is surely fair to discount the ultimate figure which you expect to bring in when you are taking the present prices.
    I think the right hon. Gentleman has taken a very unfortunate moment for stiffening the regulations as to valuation, because at the same time by this Clause he is taking the appeal from the High Court and he is substituting an appeal from one official to another. Naturally this will cause owners of property, who being assessed, to look with very great suspicion on the valuations of officials, and I do think, although no one could ask for lenient valuation, that a fair valuation should be allowed, and that the owner should get the benefit of what the property is really worth. In the case of owners of shares I do not believe anything is taken off in the majority of cases owing to the largeness of the holding. The general practice in the case of securities which are marketable is to take a price one quarter up from the lowest price, and the only case where that practice is departed from is where the quotations are merely nominal, because the securities are so very slightly dealt in that there is no real market value. In those cases I think you can only proceed by valuation, and a valuer must take into
    2116
    account whether the price has been inflated by the fact that there is no stock on the market, and where, if there was a fair supply of stock, the nominal price would not be realised. I think that valuation, whether it be personalty or realty, must take into consideration all the circumstances of the case. I do not think this Clause will really have very much effect, because I think that valuers will take into consideration all the circumstances of the case. But if it does have any effect at all it must tend to restrict the power of the valuer to arrive at a fair value of the estate—the price, that is to say, what the owner would get if he put it in the market. I beg to move to leave out the Subsection (2).
    Mr. LLOYD-GEORGE: I do not propose to deal with that part of the hon. Member's speech which refers to agricultural land. That has been discussed very extensively, and I think the Committee, having regard to the fact that no division was pressed, agree that there will be no fundamental difference in that respect in the future. The real difference is as to the valuation of shares. What is the position? You are to value a whole block of shares belonging to a man on the assumption that they are all sold at a man's death. That gives a purely artificial value to those shares. What you really want to do is to take the ordinary business view of what an ordinary trustee or executor would do if realising the stocks and shares, and no-trustee or executor would ever dream of putting the whole thing in the market the day a man dies. There are very few stocks or shares that would bear it. Take a man whose stocks and shares are worth a million of money. Take a partner holding about a million's worth of shares in a company. If they were put on the market the very day a man dies, down would go the value of the shares. I am not sure that he would get half the value; he certainly would not get two-thirds. What we propose to do is to take into account what every prudent executor or trustee would do—adopt the best method of realising a property a man has left at his death—and that the valuation should be on that basis. I think it is the only fair way of approaching the question and the only way of getting at the real value and not creating a fictitious value created by an Act of Parliament.
    Mr. AUSTEN CHAMBERLAIN: I think there is some cause of criticism, even in

    2117
    the statement made by the Chancellor of the Exchequer of what he desires to obtain. But I think what he is obtaining is more than he thinks he is asking. Consider such a case as to that mentioned; the case of a partner in a concern, or an investor, who dies. He is known to hold a very large block of shares in the concern. You seek to charge him on the market price on the day of his death. But it is just in that case that death affects the market price, and when his death becomes known the knowledge that a good many of his shares may have to come into the market does depress the market for those shares. In that case. I think the right hon. Gentleman, if he takes the middle market price of the day—that, I am under the impression, is the genera] rule prevailing now—would get something more than he ought to have, and something more than even the prudent executor could get.
    Mr. LLOYD-GEORGE: That will be taken into account.
    Mr. AUSTEN CHAMBERLAIN: That will be taken into account under the new regulations? That is, the normal market price at the time of the death, when, as a matter of fact, the death itself is the cause of the change. I will not say that the words of an Act of Parliament may mean the exactly opposite of what they say, but it does seem odd. I think some account ought to be taken of the magnitude of a man's holding where that magnitude really affects the realisable value of the security. You have not to consider that his executors are going to take his property away, but you have to consider that they have got to realise a part of it. They axe not in the position of the man who, when living, might presumably keep his property indefinitely until a favourable moment came. I want to call the night hon. Gentleman's attention to a specific case just brought to my notice. A firm of solicitors wrote to my hon. and gallant Friend the Member for Chelmsford, and he has placed the letter in my hand. The firm in question have recently had to present the Inland Revenue Commissioners with an affidavit in connection with a deceased client's estate, part of which consisted of between £10,000 and £20,000 of stock, quoted in the official list at a certain price. Having doubts whether that price could be obtained, they took the advice of a firm of brokers who, having made enquiries in the market, found that the price at which the stock could be sold
    2118
    was considerably below the quoted price. The Inland Revenue authorities refused to accept the lower value on account, as they stated, of the express provision contained in the Finance Bill, and insisted on having the price quoted in the Stock Exchange list.
    The POSTMASTER-GENERAL (Mr. Sydney Buxton): Because that was the official record.
    Mr. AUSTEN CHAMBERLAIN: But is the official record to stop all enquiries?
    Mr. SYDNEY BUXTON: Certainly not.
    Mr. AUSTEN CHAMBERLAIN: The Chancellor of the Exchequer agrees with ma that this ought not to happen. This firm of solicitors say that the brokers informed them that for reasons well known to them there had been no dealings in the stock for some time. In consequence of the Inland Revenue authorities refusing the valuation of the brokers, the solicitors again communicated with the latter and ascertained that the best offer was 9½ instead of 10. Then the solicitors give what they understand to be the explanation of this difference between the quoted price and the obtainable price. They say
    "We believe it is a matter of common practice that where there have been no dealings in a stock for a long time, as was the case here, it is a matter of common practice for the official list to maintain the price at which business was last quoted."
    The letter concludes:—
    "We again pointed out to the Revenue Authorities our brokers' views, but were informed that the directions they had received on the passing of the resolution relating to the Finance Bill gave them no discretion to deal with the matter otherwise than by insisting on the official quotations, although they recognised the hardship."
    I have only just had this letter put in my hands by my hon. and gallant Friend, and I judge from the terms of the letter that the correspondents are not people to whom he is known personally. There is the statement of a firm of solicitors that the Inland Revenue authorities twice insisted on a value in excess of the realisable value, and alleging as their reason the recent instructions they have received in consequence of the provisions of this Bill. That cannot possibly be right, and I do not think the Chancellor of the Exchequer thinks it is right.
    Mr. LLOYD-GEORGE: I have no hesitation in saying that there is nothing in the Clause submitted by the Government which would justify the view taken by the right hon. Gentleman. The normal market price is the price that the property would

    2119
    fetch at that date. I understand from the right hon. Gentleman that a firm of solicitors took the correct view. They interpreted this Clause exactly as I have done.
    Mr. HILLS: I think a misunderstanding has arisen over the use of the word "normal," and this sort of thing often occurs. It is perfectly well known that the price marked for unmarketable securities is often not a real price. The word "normal" imparts rather an artificial price, and I would suggest that instead of the words "normal market price" the words "the actual price current at the time," or some words of that sort, would be better. The thing we want to avoid is the fictitious price. Perhaps the Chancellor of the Exchequer will consider these words, and find some other form of words to meet the case. I am sure he wants to meet it.
    Mr. LLOYD-GEORGE: What I want to get at is the real market price at the date of the death. I do not object at all to the substitution of some better word for "normal."
    Mr. G. L. COURTHOPE: I want to ask the right hon. Gentleman whether he will expressly confine it to personal property or, at all events, exclude rural real property for this Sub-section? Because, as I read it, I think it is quite possible that that Sub-section will be taken to have some express application to the valuation of real property as well as to the valuation of personal property, and it will mean great hardship if it is considered, as it might be, to suggest that the valuation of an estate should be made in small pieces and so a larger total made up than if the estate was valued as a whole. I think if the right hon. Gentleman was sincere in saying that he intended it only to apply to personal property he will find some words to confine this Sub-section to personal property.
    Amendment agreed to.
    Mr. HILLSproposed to leave out the word "normal" ["the Commissioners shall fix the price of the property according to the 'normal' market price"]
    Mr. LLOYD-GEORGE: I accept that.
    Amendment agreed to.
    Mr. AUSTEN CHAMBERLAINproposed to omit the words "at the time of"
    2120
    ["according to the market price 'at the time of' the death of the deceased"] and to insert instead thereof the word "on."
    You are bound, absolutely, by the price before the death is known—before these estates become marketable; but the Chancellor of the Exchequer said you must take account of the fact that the Chancellor must act at the proper time. I think the words "at the time of the death" does limit the meaning. The Commissioners may hold the words to mean that they are limited to taking the actual price on the day the man dies. That is tying them too tight, and tighter than the Chancellor of the Exchequer desires. I am not certain whether my words are well chosen, but I do not think the words in the Sub-section are right.
    Mr. LLOYD-GEORGE: I quite agree with the object of the right hon. Gentleman. I think he stated the proposition very fairly, and I accept it. I do not think that if the value of shares is depressed by the mere fact that an individual who constituted the important element in the success of a concern dies, the value should be taken as if he were still alive. I will look into the matter, and if it is necessary I will undertake to bring up words on Report to meet the case put by the right hon. Gentleman.
    Mr. AUSTEN CHAMBERLAIN: I ask leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Mr. HILLS: I wish to move the omission of Sub-section (3) in order to raise the question of appeals. As I understand the Sub-section it takes away the right of appeal on the value of landed property. I ask if the Government intend to deal with this question on the same lines that they have followed in regard to other appeals.
    Mr. LLOYD-GEORGE: Has the hon. Member's attention been drawn to the Amendment I have on the Paper, which gives a very much better form of appeal.
    Mr. HILLS: I had not noticed that.
    Amendment made:
    In Sub-section (3) to leave out the words "that question shall, on the application of the person aggrieved, be referred by the Commissioners to me or the Referee's appointed for the purpose of," and insert the words "he may appeal against the decision in manner prescribed by"—[Mr. Lloyd-George.]
    Question proposed, "That the Clause, as amended, stand part of the Bill."
    Mr. WALTER GUINNESS: I should like to urge the Chancellor of the Exchequer to carefully reconsider the words "market price." The word "normal" has been moved out, but I do not think that in any way meets the real difficulty. The point is that the market price will be taken as the Stock Exchange quotation, whether it is the normal market price or market price alone. Stock Exchange quotations are not reliable in the case of stocks in which there is not a free market. Market price, even if it stands alone, is open to the same objection as the words "normal market price."

    CLAUSE 45.—(Extension of Exemption of Objects of National, Scientific, or Historic Interest. 59 and 60 Vict., c. 28.)
    In the case of any person dying on or after the thirtieth day of April nineteen hundred and nine, Section twenty of the Finance Act, 1896 (which gives an exemption for objects of national, scientific, of historic interest), shall be extended so as to give an exemption from Legacy Duty as well as from Estate Duty, and as so extended shall take effect whether the property in respect of which the exemption is given is settled or not, and as if the reference therein to national, scientific, or historic interest included a reference to artistic interest, and duty shall only become chargeable when the property is sold.
    Amendments made:
    After the word "legacy" ["shall be extended so as to give an exemption from legacy. …"] to insert the words "and succession."—[Mr. Lloyd-George.]
    After the word "sold" ["and duty shall only become chargeable when the property is sold"] to insert the words "and then only in respect of the last death on which the property passed."—[Mr. Lloyd-George.]
    Mr. LLOYD-GEORGE: I move "That the Chairman do now report Progress, and ask leave to sit again."
    Committee report Progress; to sit again upon Monday next (20th September).
    Adjournment: Resolved,—That this House do now adjourn.—[Captain Norton.]
    Adjourned accordingly at Thirty-six minutes after Tour a.m. (Wednesday, 15th September.)