(3) INCREMENT VALUE DUTY ON MINERALS.

HC Deb 19 April 1910 vol 16 cc1904-2008

That any duty charged on the increment value of minerals which are comprised in a mining lease or are being worked shall be charged annually, and the increment value shall be taken to be the sum by which in each year the rental value of the minerals exceeds the annual equivalent of the original capital value of the minerals, or the capital value of the minerals on the last preceding occasion on which Increment Value Duty has been collected.

Mr. AUSTEN CHAMBERLAIN

On a point of Order, Sir. It perhaps will be a convenience to the Committee if you will tell us whether the Guillotine Resolution passed yesterday does in fact apply to this Resolution. The terms of that Guillotine Resolution were: "If the Resolutions to be proposed in Committee of Ways and Means correspond with those on which the Finance Bill, 1909, was brought in and amended, so far as effect was given to those Resolutions by that Bill, as passed by this House"—that in such a case the Resolutions shall be put in a series of blocks and not separately. May I ask you what is the technical meaning of the word "correspond"?

Mr. LAURENCE HARDY

With reference to the course of business, may I inquire first as to how the discussion will be carried on? Will it follow the usual lines of Debate after the Chancellor of the Exchequer's statement, and therefore be in the nature of a Debate on the whole Resolution; will it be confined to the first block of Resolutions which have to be put as one question; will it be confined to the first Resolution, or will discussion be allowed on each Resolution separately?

The CHAIRMAN

The right hon. Gentleman the Member for East Worcestershire has asked me a question. I do not know that I can on the spur of the moment give a scientific definition of the meaning of the word "correspond." Perhaps I can indicate in a general way what I think is meant. In many cases the Resolutions are identically the same Resolutions as last year, with the exception that the words "on and after" are altered to "as from," in view of the alteration of the date of the Budget, and as we are to impose taxes from the date which it was intended to do. These are cases in which I think the new Resolutions correspond with the old. Again, in respect to alterations which we made in Committee of the Bill, the new Resolutions I think allow for certain changes which were made in the Schedules, and represent these changes in the Schedule instead of the original form of the Resolution as passed in Committee of Ways and Means last year. I think in that respect also they correspond. I have carefully examined them, and I think they do correspond. Therefore I propose to put them in groups as ordered by the Resolution of yesterday. In reply to the hon. Gentleman the Member for Ashford, who wants to know, I understand, whether there will be a general Debate allowed on the first group of the Resolutions (because I have to put the group and not the first Resolution), I think a general Debate will be a convenient plan and meet the wishes of the Committee. That is to say, we shall not be confined to the first group of Resolutions, but we shall have a discussion on the whole as usual in Committee of Ways and Means. After the first group, of course, discussion will be confined to the group under consideration.

Mr. LLOYD GEORGE

I am not introducing in any sense of the term a new Budget, and therefore I do not intend to make what is known as a Budget speech. That, no doubt, will be a source of great comfort to hon. Gentlemen who were present last year. Still, I think it would be desirable if I were just to make a few observations about the present financial position. I shall first of all deal with the taxes, explaining the extent to which our anticipations have been realised and where they have fallen short, and the reason why. I shall deal first with Customs and Excise. We have done badly with one tax, and only one. As for the rest of the taxes imposed by the Budget of last year several of them have come quite up to our anticipations. Three or four have exceeded our expectations. But in regard to whisky —spirits—we have done very badly. It is a matter of some comfort that in the other taxes we have exceeded the Estimate by an amount corresponding almost within a few thousand pounds to the loss which we have realised on the spirits. In Customs, and Excise it will be observed by those who have followed the figures that we are apparently down by something like £5,500,000. That is not due to the fact that the revenue has disappointed us altogether. For instance, we have not received some Licence Duties at all; we have not received the licences in respect of motor-cars, we have not received a penny in respect of the additional liquor-licences.

Mr. AUSTEN CHAMBERLAIN

Customs or Excise?

Mr. LLOYD GEORGE

Both. Customs and Excise, I am dealing with them as a whole. They are grouped together. We are down in these by something like £5,500,000. A very great part of that is attributable to the fact that we have not been able to collect our additional Licence Duty in respect to motor-car licences and liquor licences. Still that does not account altogether for the discrepancy. There is a loss—over £3,100,000 on the cash receipts, but this will be reduced to about £2,800,000 when outstanding deposits come in—upon spirits as compared with the Estimates. There have been increases in chicory, cocoa, dried fruits, and sugar, and slight increases in wine and one or two other articles. There have been slight decreases in tea and in beer, and in patent medicines and playing cards.

The deficit in tea is attributable in the main, if not entirely, to forestalments. There were very considerable forestalments in anticipation of the Budget. A good many people thought that tea would have to bear a share of the increased taxation, and the forestalments were heavier than we quite realised, and therefore we are down in tea to the extent of £131,000. But in the main the deficit in Customs and Excise is due to spirits. In regard to the Spirit Duty it is desirable to assign the cause, or at any rate to allocate the proportion which is attributable to the various causes. We find that there is a considerable diminution due to the fact that there were heavy forestalments. For instance I can give figures to show how heavy they were. In March of this year 1,600,000 gallons were withdrawn from bond and cleared. Last year the number of gallons withdrawn from bond and cleared was 4,255,000.

Mr. YOUNGER

Was that in March last?

Mr. LLOYD GEORGE

Yes, in March last. That was not due to a diminution in the drinking of spirits altogether, or to anything like it. It is due particularly, or very largely, to the fact that there were considerable clearances in March in anticipation of the Budget. If we come to April this year we find that the Budget was introduced on 29th April, and that the clearances in April were 5,130,000 gallons, as compared with 3,175,000 gallons the previous year. There were 3,500,000 gallons of forestalments. That does not entirely account, I think, for the diminution. In fact I am certain it does not. There is another cause. Undoubtedly the traders engaged in this business have been trading on the lowest possible reserve of stock. They got their stock down to the last keg, if I may say so. As one of them said to me: "We hardly kept a bottle in stock. We just lived from hand to mouth." [Laughter.] I can assure hon. Members I did not intend that as a joke. There is no doubt at all that they have reduced their stocks. The revenue from spirits suffered very largely also from the political uncertainty. No one knew quite what was going to happen; no one knew whether the Budget would be thrown out or not, and I have no doubt about it there were very sanguine anticipations, especially in the spirit trade, that if it was thrown out the country might not ratify the action of the late Parliament. I only put that now, not by way of controversy but as an explanation of why they thought it good business to keep their stocks down to the lowest possible degree.

I tried to discover, before I made my last estimate, what stocks were generally kept by traders, and I found it almost impossible to do so accurately. There were some who told me that their stocks were represented by about a fortnight's supply only. Others kept a reserve of six weeks, and others far beyond that. It is impossible to strike an average. That upset our estimates to a very considerable extent because we had no means of ascertaining what reserve of spirits the traders had in stock. One thing we did know, and that is that these reserves were drawn upon to the utmost. There is a third cause which accounts for the diminution, and that is the very striking decrease in the consumption of whisky which has been the result to a large extent, I have no doubt at all, of the imposition of the additional duty. I think the additional charge put upon the consumer by the retail traders was in some cases a ½d. and in other cases a 1d.

Mr. GEORGE YOUNGER

In other cases they did not charge anything additional at all.

Mr. LLOYD GEORGE

The cases in which they did not charge at all were the first-class hotels where the ordinary charge leaves a good margin of profit. I made some inquiries about it, and as a rule that only refers to cases where there is a very considerable charge in respect of whisky and where they could afford to pay the extra 3s. 9d. and at the same time have a very ample margin of profit. Some traders charged a ½d. and some a 1d., and that seemed to have a very extraordinary effect upon the drinking habits of the population. Some people resented and were angry at the additional charge, and some people refused to drink because they were angry with the Government for forcing up the charge. But between one thing and the other, undoubtedly there has been a startling diminution in the quantity of whisky drunk in this country since the Budget of 1909 was introduced. I have been trying from the best sources to find out some data which I could give the Committee and which would afford information as to the general average diminution, but I am not sure that I have got it. My officials have done their best by inquiry in every part of the Kingdom. I made inquiries, and I received very considerable assistance from the trade, and I may say the trade has been very helpful to me. But my information varies. For instance, to-day I got information from a reliable quarter that, taking a certain set of houses—some in England, some in Ireland, and some in Scotland— there is a diminution of something like 35 per cent. of the quantity. In other cases the diminution is about 30 per cent. That is the only case I can make, and no one can go beyond that at the present moment. It will take a couple of years at least before we arrive at the exact average of the depression in the whisky trade attributable to the increased duty. But, on the whole, I am disposed to believe at the moment that, taking a cautious estimate, the total average decrease is about 22 per cent., of which a considerable proportion, no doubt, is attributable to the tax of 3s. 9d. imposed last year.

Mr. AUSTEN CHAMBERLAIN

Is not the decrease understated?

Mr. LLOYD GEORGE

I think not. I should be surprised if it is up to that. My own experience is it is somewhere between 20 and 25 per cent., but I could not give an actually exact figure at the present moment. But, all the same, I think we should have realised a bigger revenue out of spirits this year had it not been for the uncertainty of the last three months. What happened? I should like the Committee to follow the figures in the clearances of spirits from bond during the year. In April, the month preceding the Budget, there were 5,130,000 gallons cleared out of bond. In May there were only 666,000 gallons. In the next month there were only 956,000 gallons. Then it goes up gradually until November, when it reached 2,246,000 gallons. That proves that up to that period the trade had been living upon its forestalments, and even upon short stocks and upon their reserves. Then we come to Christmas. Christmas always makes a difference in the withdrawal of spirits from bond. It is undoubtedly the best time for the Excise and Customs. At Christmas the figure rose to 4,293,000. That is the month when the Budget was thrown out.

Mr. GEORGE YOUNGER

That is in December.

Mr. LLOYD GEORGE

Yes, in December. The figure was almost double in the course of a single month. Why was that? There were two reasons. First of all, the Christmas trade is much heavier in spirits in the month of December than in any other month of the year. But that does not account for it altogether. I think the main reason was that the trade knew fairly well that whatever party came in they would not take the 3s. 9d. off up to the end of the financial year. They assumed that if it was taken off it would be taken off probably at the end of the financial year. So that they said, "We have got three months in front of us during which we shall have to pay the 14s. 9d.," so they cleared out of bond a sufficient quantity of spirits to enable them to trade in an easy and comfortable way for the next three or four months. And that accounts, in my judgment, for the reason why they cleared 4,000,000 gallons in December. But, then, the revenue suffered in the next three months of January, February, and March, during which the figure went down again steadily from 4,000,000 gallons to 1,900,000 gallons; then from 1,900,000 to 1,600,000; and in March another 1,600,000 gallons. So that the last three months compared with the corresponding three months of the preceding year only 5,000,000 was drawn out of bond, whereas in the corresponding period last year 10,000,000 gallons were drawn out.

Mr. GEORGE YOUNGER

March included the forestalments.

Mr. LLOYD GEORGE

Only to the extent of 1,250,000, and if you deduct that there is still 9,000,000 without forestalments, as compared with 5,000,000 this year. I do not believe anyone would say that there has been a diminution to the extent of 4,000,000 a quarter in the quantity of spirits consumed in this country. Therefore, the real explanation of that is that during the last three months they have been trading again on short stocks. The revenue suffered, and that is why I say here to-day that we are £2,800,000 down in respect of whisky; "whereas I think if there was any doubt in the minds of the trade as to what was going to happen to the 3s. 9d., I believe we should have another 1,750,000 gallons drawn out, and I should probably be better to the extent of £1,250,000 on spirits.

Mr. GEORGE YOUNGER

Do you intend to carry on the extra duty for another year?

Mr. LLOYD GEORGE

The hon. Member must wait until I come to the next Budget statement.

Mr. AUSTEN CHAMBERLAIN

The right hon. Gentleman speaks of being £2,800,000 below his estimate. Is he referring to the original estimate or to the revised estimate?

Mr. LLOYD GEORGE

I am very much obliged to the right hon. Gentleman. I am referring to the original estimate. I think I should make it quite clear I am talking about what is known as the Budget Estimate of last April, and for the moment I hope the Committee will put out of their minds the second estimate. I am dealing purely now with my forecast in April and what I have realised at the end of the year.

Now I come to the Death Duties. The Budget estimate was £21,450,000, and the actual receipts were £21,766,000. But that is not all. In addition to that there are arrears in respect of the new taxes refused until the Finance Bill passed, because the parties retained the whole amount in their own hands until the Budget controversy was settled, and that represents a sum of £1,380,000; so that the Budget estimate has not only been realised in respect of the Estate Duties, but it has been surpassed to the extent of £1,700,000, or, to be perfectly accurate, £1,696,000 more than the estimate. In regard to stamps, the Budget estimate was £8,250,000, and the actual receipts have been £8,079,000. I want the Committee to bear in mind that owing to the fact that the Budget was thrown out we lose the whole of the new taxation on stamps, because the new tax would have given us £600,000. My estimate was £650,000, but the yield would have been £50,000 less owing to the concessions in Committee. As a matter of fact, I should have had more owing to the booming times they have had on the Stock Exchange. [HON. MEMBERS: "NO, no."] Undoubtedly I should have had more. I have done very much better under the old Stamp Duties than I had expected, otherwise my deficit, instead of being £171,000, would have been £600,000. It the Budget had passed in due course, instead of having a deficit of £171,000 in respect of stamps, I should have had a surplus of £429,000. I think that is worth bearing in mind.

Now I come to the Land Tax and the Inhabited House Duty. Here the receipts have been £710,000. We have not been able to collect the Land Tax and House Duty for reasons which I have explained before. In the first place, it would be a very expensive matter to collect these taxes except at the same time you collect the Income Tax, and for the convenience of the officers it was thought much better to put that off, seeing that there is no danger of losing the money by the delay. On the Land Tax we have made the assessment very carefully, and we have concluded that the estimate will be realised to the penny. There are arrears on the Land Tax and Inhabited House Duty amounting to-£1,940,000, but we hope soon to realise them fully.

As to the Income Tax, after having examined the estimates, I have come to the conclusion, on the advice of the Inland Revenue, that had the Budget not been thrown out, we should have realised to the penny the whole of our Income Tax. We shall, I think, be short by £350,000 for reasons I would rather not for the moment explain, as I hope to recover a good deal of it. At any rate, most of this £350,000 loss occurred before Parliament met this year, and it occurred very largely in the month of January. We received £13,295,000, and we hope to be able to collect another £23,455,000. That means the whole of the Budget estimate in respect of the Income Tax with the exception of the £350,000 to which I have just referred, and the £300,000, the cost of the concessions under Schedule A.

Mr. SNOWDEN

Before the right hon. Gentleman passes from the Income Tax, I wish to ask him whether any assessments have been made with regard to the Supertax?

Mr. LLOYD GEORGE

No assessments could be made to the Super-tax until the Budget is through, but the officials are in a better position now than they were in a year ago to make an accurate estimate as to the amount that would be realised in respect of last year's income, and they think the estimate will be realised to the full in respect of the Super-tax. As to the Land Value Duties, I need say hardly anything here, because they were not to come into force until the Finance Bill was passed into law, and consequently have not been in operation. We hope, however, to realise £490,000 in respect of these taxes for last year.

Now I come to the Post Office, which has done very well, in fact, in regard to all taxes which are an indication of the prosperity or otherwise of the country, we have done exceedingly well. The Income Tax has come quite up to our expectation, and the Post Office has exceeded it. Stamps have exceeded our expectation by £400,000 or £500,000. The Death Duties are, to a very large extent, a test of the value of securities, and, therefore, they are not a bad test of the prosperity of the country. All those taxes have done well. The Budget estimate for the Post Office was £22,400,000, and the actual receipts were £23,030,000. I owe my right hon. Friend (Mr. Buxton) a considerable debt of gratitude, for not merely have the receipts of the Post Office gone up by £630,000 under his administration, but he has also saved, I think, about £300,000, and therefore he is responsible for something like £1,000,000 of the improvement on the estimate.

Sir P. MAGNUS

Is that due to the circumstance of the General Election?

Mr. LLOYD GEORGE

I think not, and I will say why. I estimated for an increase, but I think this large increase is undoubtedly due to an improvement in trade. There is no better test of an improvement in trade than the Post Office. When there is a depression the Post Office is very sensitive, and, on the other hand, when things are beginning to improve there is no Department in the country so responsive to the touch of improving trade as the Post Office. Therefore it is very gratifying that I am able to announce that the Post Office receipts have exceeded the Estimates by over £600,000. My right hon. Friend (Mr. Buxton) tells me the election is very disappointing, because it only brought in about £40,000.

The next item is Crown lands. The estimate under this head was £530,000, and the actual receipts £480,000. As to the Suez Canal shares, which are not a bad test of the prosperity of the country, my estimate was £1,166,000, whereas the actual receipts amounted to £1,269,000, an improvement of £103,000 upon the estimated revenue from the Suez Canal Shares. In regard to the Miscellaneous Receipts, the Budget estimate was £1,394,000, and the actual receipts £1,687,000, showing an improvement of something like £300,000, most of which has been realised by the profits on silver coinage.

Mr. AUSTEN CHAMBERLAIN

Home or export?

Mr. LLOYD GEORGE

Both, I think. Now I come to the figures which will show the actual position. If hon. Members will just look at the figures they will find that the increases we have realised in respect of Death Duties, the Post Office, Stamps, the Suez Canal Shares, and miscellaneous items between them are just equal to the loss we have sustained under the 3s. 9d. extra Spirit Duties.

Mr. SAMUEL ROBERTS

The right hon. Gentleman has omitted the item of tobacco.

Mr. LLOYD GEORGE

Under tobacco there is a diminution, or rather an apparent diminution of £159,000. But then I understand that £106,000 has been deposited, or rather security in respect of it has been deposited, in respect to the revenue of last year, so that the real loss is only £53,000. So that tobacco has substantially come up to the estimate, and I consider that is a very good estimate. Now I come to the whole financial position. The total expenditure for the year was £157,945,000. The total revenue—that is, the money actually received — is £131,697,000. The realised deficit is, therefore, £26,248,000. How is that to be made up? It will be more than made up out of the arrears of revenue which would have been received in 1909 if the course of the Budget had run smoothly, and will, I confidently hope, be collected before the borrowings become due. I will now give the sums which we hope to collect in respect of the taxation of last year: Spirits, £304,000—I believe in regard to spirits security has been given to this amount in respect of the 3s. 9d. per gallon additional charge.

Mr. YOUNGER

Mostly in Ireland.

5.0 P.M.

Mr. LLOYD GEORGE

Wherever it is I hope it will be in the Exchequer by-and-by. The next item is tea. In respect of tea the amount is £1,000, tobacco £106,000, liquor licences £2,100,000, motor-car licences £260,000. Estate Duties, etc., £1,380,000, Land Tax and Inhabited House Duty £1,940,000, Income Tax (including the Super-tax) £23,455,000, Land Value Duties £490,000. Those I expect to receive every penny of, and the total amount is £30,036,000. From that total you have to deduct the payment to the Road Board of the whole of the motor licences, £260.000; the Petrol Duty already received amounting to £320,000. The estimate for this duty was £340,000, and we have actually received £320,000. You have also to deduct the payment to local authorities of half the proceeds of the land value duties £245,000, making the total deductions £825,000, and leaving a balance of £29,211,000.

Mr. C. BATHURST

May I ask the right hon. Gentleman whether he has made any allowance in respect of Income Tax under Schedule A?

Mr. LLOYD GEORGE

Yes, £300,000 has been allowed under Schedule A. If the Committee will deduct from that £29,211,000, the £26,248,000, the realised deficit, they will find that there will be a balance on the right side in respect of the revenue of last year of £2,963,000. As we have been subjected to very considerable criticism, and I think on the whole rather unfair criticism, I think it is right we should just examine this a little further. I have seen wild suggestions that we are responsible for the deficit of £26,000,000, that Free Trade finance has failed, and that the whole fiscal system of this country has broken down. The proof, it is said, is that we are short by £26,000,000 of the revenue of the year. As a matter of fact we shall have £2,900,000 to the good. That is not all. Had the Finance Bill actually passed in the ordinary course we should have had £350,000 more in respect of Income Tax, we should have had £600,000 in respect of stamps, and we should have saved interest to the extent of £350,000. If you add those figures together, that is £1,300,000, so we should have, had, not £2,900,000, but £4,200,000, after making provision for the Services of the year.

I think I can carry it further than that. We might fairly assume, I think, that the Spirit Duty would have been more productive, not that there would have been more drinking, but once it was thoroughly realised that the 3s. 9d. duty was an established fact and that there was no going back upon it, there would have been no inducement to the trade to keep down the reserves at their present very low figure, and therefore, I think, we should have had —that is the estimate—something like 1,750,000 gallons cleared out of bond, and have had an addition of £1,250,000 to the revenue in that respect.

Let the Committee realise what that means. Here you have got £2,900,000. It is true the Sinking Fund has been suspended, but the total amount withdrawn from the Sinking Fund owing to the Budget having been thrown out is £2,700,000, so, even if we paid back the whole £2,700,000, we should have a surplus of £200,000.

I do not believe a financial estimate has ever been put to so severe a strain as the present one. Let the Committee quite realise what happened. I do not wish to become controversial. I am merely relating the facts. For four months the finances of the country have been thrown into confusion. Let us put on one side now who is to blame. I am looking at it purely from the point of view of testing the Estimates. There is £1,300,000 directly lost owing to the delay—a loss of £600,000 owing to the delay in the putting on of the Stamp Duties, a loss of £350,000 in the Income Tax, and a sum of £350,000 added for interest on loans. We have had a period of very severe trade depression, and still we paid over £3,500,000 towards reducing the debt of the country out of the revenue of the year. In spite of all that, we have a balance of £2,900,000, which can either be applied to that purpose or to any other purpose the House of Commons chooses to direct. All I can say is that I do not believe there is any other country that could have done it. I am perfectly certain of this, that, looking at what has happened in other countries, there is no other fiscal system which could have emerged as triumphantly out of so severe a strain as we have put upon ourselves.

Mr. AUSTEN CHAMBERLAIN

It was indeed high time that we should once again approach the consideration of the Budget for the year which has already closed, but I confess I do so personally with the greatest reluctance, and I shall not be sorry when I bid it a final farewell. The right hon. Gentleman, in the concluding observations of the interesting statement that he has made, congratulated himself on the accuracy of the estimates which he had made, and on the success with which he has withstood the very severe strain on our financial arrangements. He observed that he did not think there was any other country in the world where so much disturbance could have been gone through at so little loss or real inconvenience to the revenue. I think that is certainly a most remarkable position. It is not wholly consideration for the revenue which has produced this result, but it is due partly to a natural and legitimate desire on the part of traders themselves to protect the course of trade and prevent those damaging fluctuations and reckless speculations which would not inure to the benefit of the ordinary traders, and might disorganise the whole market in which they were dealing. That legitimate wish expressed by them to preserve continuity and to have some measure of security even in the midst of all this turmoil, was, of course, fortified as far as possible by the assurance of the Government on their side, and by the assurance on our side, which the Leader of the Opposition and I myself thought it right under the circumstances to give, that if the recent election had resulted otherwise than as it did, and the two parties had changed places, the Unionist party would have confirmed the collection of these duties as far as the past is concerned. I do not know of any other country in which you would have found that measure of co-operation, not merely between the Opposition and the Government, but between the Government, the Opposition, and the trading interests concerned where a real public interest was involved. I do not pretend we did it in the interest of the Government. I think it is a very remarkable thing that, as a result of this combination as far as Customs and Excise are concerned, there has been the least possible measure of disturbance to trade and an infinitesimal loss to the Treasury.

I think the willingness of taxpayers to bear their burden is shown in a wider field than Customs and Excise, and, had the Government been willing, as we repeatedly pressed them to do, to pass their Income Tax Resolution in anticipation of the moment when they felt able to devote time to the Budget as a whole, they could on that Resolution have got in the great bulk of the Income Tax this year, and have largely reduced the expenditure for interest which they themselves have incurred, and they would have been met by the same desire to co-operate with them on the part of the direct taxpayer as they have encountered on the part of the indirect taxpayer. They did not, however, choose to do that, and all I desire to say is, that it speaks well for the public spirit of all concerned that what might have been a great and difficult crisis in our finances has passed over with so little permanent injury in its effects upon the Treasury. I go further, and concur with, the right hon. Gentleman in saying that the success of his Estimates, taken as a whole, is remarkable—that is to say, not the immediate success, but assuming the sums are realised which he expects to be realised. We are not talking of accomplished facts, but we are still in a certain sense in the region of estimates. On the whole, the results will apparently be very remarkable. It reflects great credit on the Chancellor of the Exchequer, and still greater credit, as I know he would be the first to say, on his advisers. The position of the Chancellor of the Exchequer is this. If his estimate turns out bad he is discredited, but if the estimate turns out well then we pay a tribute to his advisers. That is the course taken by all Chancellors of the Exchequer, and I am sure the present Chancellor of the Exchequer will himself take the same line of action. But this precision in the whole is compatible with extraordinary divergence in detail, and I think it is worth while to spend a couple of minutes in calling attention to two of these divergences. The Income Tax estimate is a remarkable one, but the right hon. Gentleman has two bad estimates—the Death Duties and the Whisky Tax. The Death Duties estimate was a bad one, because the yield was prodigiously under-estimated. Anybody who has had anything to do with Death Duties knows that they are a most unsatisfactory revenue, and no great blame can attach to a Chancellor of, the Exchequer because he fails to foresee that, in a particular year, the number of large estates becoming amenable to Death Duty will be far in excess of the average of preceding years. That is exactly what has happened. The Chancellor of the Exchequer has been extraordinarily fortunate in the number of very big estates which have to pay duty, and he has been doubly fortunate, because not only have they come in at a time when he needs the revenue badly to make up his deficit on other items, but they have come in so soon after his Budget that the ill-effects which may be anticipated from his raising of the Death Duty has had no time to tell upon them; he, therefore, gets the full yield estimated. But he or his successors will not be so fortunate in future years.

More than once we have, from this side of the House, warned right hon. Gentle- men opposite that, though the Death Duties are a very reasonable and useful form of taxation if they are kept to moderate figures, they lose their special merits when they are raised to immoderate amounts. Why? In the first place, because when you raise them to immoderate amounts the Treasury is not living on revenue, it is living on capital. When the Death Duties stood at moderate figures prudent men made provision for them in their lifetime by a system of insurance. That is what Sir William Harcourt hoped would be done, and he urged those who were subject to them to do it. As long as they did that they, in effect, accumulated year by year out of savings the sum which would be payable on their death, and when they died the corpus of the property was not diminished. The tax was a kind of deferred Income Tax. It was paid out of income and not out of capital, and the country did not have its capital reduced because the capital of individuals in the country was not reduced. When you raised the duties to the immoderate sums at which they now stand, that kind of provision on the part of individuals became impassible, and they had to cut off slices of their property on every fresh death. The result is that the State is no longer living on the income of the country, it is living on the capital of the country. That is the first disadvantage of raising the duty to the immoderate figures at which they are now fixed.

The second is a disadvantage which in its effects will, I think, be even more quickly felt by the Treasury. It is that as you make these duties such a source of hardship to the individual, so you set him contriving means to avoid their payment. The right hon. Gentleman the Prime Minister, when he was Chancellor of the Exchequer, repeatedly laughed at our suggestion that this raising of the duties encouraged and extended evasion or avoidance. Right hon. Gentlemen opposite repeatedly laughed, and the Prime Minister, when he made his increase in the duties, said there was not the slightest evidence of that. He told us that we were prophets of evil and that our prophecies could safely be disregarded. So the Chancellor of the Exchequer said in the early part of last year, but then, when we came to a clause in the Budget which required a different line of argument, and which disclosed the real facts of the case, both the Prime Minister and the Chancellor of the Exchequer made a right about face of a most sudden character, and entirely changed the tune they sang. They repeated from those benches the very statements they had denied when we had put them forward. The clause to which I allude is the clause extending the time during which donations inter vivos are still to be treated as property passing at death. The term was fixed by Sir William Harcourt at one year, in order to prevent actual death-bed gifts for the patent purpose of avoiding the duty, and one year it remained from that time till the present Budget. Sir William Harcourt was told that his Budget might result in sums being handed over by fathers to their children in order to avoid payment of the duty. He welcomed the idea. He ranged himself on the side of the sons, and not on the side of the fathers. He said it would be a very good thing if fathers handed over more of their property in their lifetime to their sons, and did not keep them so much on allowances as had been the practice in the past. But now the Government came down to the House saying so much property is passing in this way that nothing else will do than being allowed to examine all gifts that a man has made for five years before he died, and taking not merely an examination, but assuming that each one of these gifts for five years back was made in the anticipation of death and is to be treated as if it were property passing at death. They said nothing short of that would meet the case. It is quite true that under protest, either in Committee or on the Report stage, they satisfied themselves with three years in place of five, because, I am glad to think, there was some revolt even on those benches against the more extreme proposal. Three years, they said, they must have, and nothing less, to protect the revenue. What does that mean? It means that the result which we foretold from these high Death Duties has been produced, and, in order to prevent the avoidance which we foretold, and which right hon. Gentlemen opposite ridiculed, the Government are now obliged to make the law more stringent. The Government may set their wits against the taxpayer, but after all, as we are told every day, everybody is wiser than anybody, and the wits of the taxpayers when they are clearly set against the Government by a sense of injustice and wrong will always, sooner or later, find a way of getting through Acts of Parliament. The Government will find, I am quite certain, though the Chancellor of the Exchequer may boast that in this year he gets every penny that he anticipated out of the Death Duties, as years go on that process which they now admit to have been taking place, and against which they seek to guard in their present Budget, will be increased, aggravated, and accelerated, and that what they grasp or seek to grasp in one way they will lose in another. That is the objection which I feel to the high Death Duties which the Government are now proposing. The fact that the tax this year has brought in more than they expected does not in the least mitigate my objections to it.

I said it was very fortunate for the Government that their Estimates had been very much exceeded in respect of the Death Duties. That is so, for they have been wofully disappointed in the matter of the Whisky Duty. The Chancellor of the Exchequer, when he had to admit last autumn that he had been over-sanguine, and that the new Whisky Duty was not going to produce more than one-half of what he anticipated, took comfort in the fact that other people had been as little far-seeing, and had made worse Estimates than himself. I think he suggested that we on this side were not in a position to cast a stone at him in that respect.

Mr. LLOYD-GEORGE

I am not now indulging in tu quoque at all. It is not merely that the right hon. Gentleman had himself overestimated; the extraordinary thing is that the trade itself thought so too, and I was attacked by the organs of the trade, and by their leaders, because they said I had so grossly underestimated the revenue I expected to get.

Mr. AUSTEN CHAMBERLAIN

I think that is so. I think, so far as I remember, my own line was that, although the Government had overestimated the amount of profit which they stated was derived by the trade over and above the tax from the extra charge of one halfpenny per glass which the trade put on, they grossly underestimated the revenue that they would get, because the profits of the trade and the revenue of the Government depended on the same thing, namely, the extent to which sales continued unaltered or were diminished by the new taxes. The Government wanted to prove that they only got a very moderate return, and that the trade was going to get an enormous share. But they could not prove both under any circumstances. As a matter of fact they have not got what they expected, and the trade has suffered tremendous loss and injury, not confined to those directly engaged in distilling, but ruinous in its character to those dependent on distilling, whether in subsidiary manufacturing industries or in agriculture. Gould you have a greater condemnation of a tax than that it should have been ruinous to the trade and produced effects on the trade of which the Chancellor of the Exchequer had no conception when he proposed it? It threw vast numbers of people out of work. It destroyed agricultural prosperity in certain districts—in districts which had not too much prosperity. All this was done by the right hon. Gentleman for the sake of revenue which he has not got. He estimated that he was going to get £1,600,000 in May; in November his estimate had fallen to £800,000. As a matter of fact he has got nothing. [An HON. MEMBER: "Less than nothing."] He has got less than nothing into the Treasury. I was making some allowance for forestalments, but I am reminded that that allowance was made by the right hon. Gentleman in his original Estimate, and therefore we need not make it over again. Anyhow, whether my recollection is right or not, the fact remains that he has not got any of the revenue he expected. The whole question as to forestalments resolves itself into this: How much had the stocks been depleted, and how much will they ever be filled up again? The Chancellor of the Exchequer thinks that this depletion of stocks is merely temporary, but although I think a portion of it is temporary, I think also he has taught the trade a lesson which they will be slow to unlearn, and he will find in future that they will trade on lower stocks than they have ever done before; but in any circumstances, that would merely be a single increase in a single order, and it would not be a permanent increase in the consumption. It would be an accidental increase in one year corresponding really to such an increase as takes place when a reduction of the tax is expected in the Budget statement, and therefore the withdrawals before the Budget, instead of being larger, as was the case in the forestalments last year, would be much less than usual, and then, in the course of the next three months they would become larger. What I am dealing with, however, is the permanent effect on this source of revenue of what the Chancellor has done, and I say that the experience which we have before us shows that the Chancellor of the Exchequer would have been wise to have stuck to the old tax and never to have had anything to do with the additional duty.

The right hon. Gentleman can go on temperance platforms and pose as a great promoter of temperance by means of his 3s. 9d. tax, but that was not his intention. That is an accidental accretion of virtue, although the fact that it is accidental has not prevented, and will not prevent, the Chancellor of the Exchequer from taking all the credit he can get over it when in those friendly surroundings. But as the Chancellor of the Exchequer it was not his business to stop but to get revenue, and his object was in this instance to get revenue, and he has failed, and his failure, I believe, will not be limited to this year, but will be a permanent failure, and I think the revenue from this source would have been better, more satisfactory, and more stable if he had abandoned this proposal altogether. I am also quite certain that his revenue in the present year would have been very much better than it is. I therefore do not congratulate him on that part of his Budget. I do not think any better of it now than when it was first proposed and when I first criticised it in this House. I have very little to say about the rest of the Estimates. Stamps I see have done well, and I think the Chancellor of the Exchequer, indirectly, has had a little flutter in rubber and oil. He has had his share after all of some of the money which he would have collected for Income Tax, and which has gone in speculations, but although he did not collect it as Income Tax he has got it in the form of stamps. Land Tax and House Duty he has not collected. He may have been wise. I do not say whether he was or not. I really do not profess to have formed an opinion on the subject, but I take note of the fact that he has exercised the dispensing power without the authority of Parliament. That is democratic finance, and is just like the statement he made to me the other day that he was spending money without the authority of Parliament in the case of a sum which was not voted. There was one observation in regard to the Income Tax, and only one, upon which I want the Chancellor of the Exchequer to give us later some information. He said that the Income Tax officials were now in a much better position to estimate the Super-tax for the past year than they were at the time of the Budget. I cannot follow that explanation. The Super-tax must be estimated not by the income of the past year, but on the income of the previous year. Therefore what is the extra knowledge which the Income Tax officials have obtained which makes their estimate now more reliable than it was at that time? It is a small matter, but is of some interest to us if the Chancellor of the Exchequer would tell us how that comes about.

On the whole, the Chancellor of the Exchequer's figures, if his present expectations are realised, would come out much better than he had any hope of seeing, and he himself will now feel that his violent denunciations of the confusion occasioned by the House of Lords were singularly out of place when he was able to get in practically the whole of the revenue so far as it was collectable. Of course he cannot get the Whisky Tax because he has destroyed the consumption, but as far as taxation can be collected he will get the money. I had hoped that the Chancellor of the Exchequer would have gone on to say, in amplification of the statement which the Prime Minister made yesterday, what are the changes the Government are going to make in the Budget. I, of course, have only had a few minutes to give the most hasty glance at the new Budget which has been placed in the Vote Office this afternoon. But I confess that, looking at it, I cannot trace the first concession which was announced by the Prime Minister. The Prime Minister announced yesterday that a General Election had been successful in producing in the mind of the Government a conversion which all our arguments in the six months and more we spent over the Budget last Session were unable to effect, and they were now satisfied that there must be further protection for agricultural land introduced in the Bill. I have looked for that, and I presume it is there. I think that what the Prime Minister referred to were words to be added to Clause 7. I do not know whether other Members of the Committee have got the Budget, but let me call their attention to what these words are. The original Clause 7 ran:— Increment Value Duty shall not be charged in respect of agricultural land while that land has no higher value than its value for agricultural purposes only. And the Government—

Mr. LLOYD-GEORGE

I rise to a point of Order. This Bill has been circulated as a matter of courtesy, and of course the right hon. Gentleman has got a copy of it. I do not wish to deprive the Opposition of an opportunity for discussion, but I submit as a point of order you cannot discuss Amendments on the Bill at this stage. The kind of discussion which can be conducted now is similar to that which is always conducted on the first Resolution in Committee, and is a general discussion of the financial statement and of the taxes as a whole, but I confess I do not think the right hon. Gentleman can discuss an Amendment to the Bill at this stage.

Mr. AUSTEN CHAMBERLAIN

I do not know whether I might say on the point of Order, Sir, that I do not propose to deal with it as with a Committee point. This House was told in general terms in a statement made by the Prime Minister that certain alterations would be made in the Bill, the effect of which he stated. I want to make some comments upon that statement and see whether the alterations which are proposed do carry out what is suggested. I understood from the Chairman of Ways and Means that we were to have a general discussion on this first Resolution of such a character as would be ordinarily in order on a Budget statement.

Mr. GIBSON BOWLES

On the point of Order. I submit that the discussion adumbrated by the right hon. Gentleman opposite could not possibly extend to the exact effect of inserting words in the Bill.

Sir FREDERICK BANBURY

May I ask if it would not be in order supposing this was a new Resolution introduced for the first time in the Budget to discuss the effect of a tax and of all these taxes in the Budget as affecting the land?

The DEPUTY-CHAIRMAN (Mr. Whitley)

It is quite in order for the right hon. Gentleman to refer to the statement made by the Prime Minister as to the differences or alterations in the Bill when it comes before the House; but, of course, it would be inconvenient here to anticipate the Committee stage of the discussion and to prevent the representative of the Government saying that he would prefer to answer the question put by the right hon. Gentleman at a later stage. As far as this stage is concerned, he would be quite in order in referring to the statement made by the Prime Minister.

Mr. AUSTEN CHAMBERLAIN

I am much obliged to you, Sir, and I put it that we shall not have a very large opportunity of discussing this matter, and I should have thought that, as this is a very severe guillotine which the Government have administered to us, they might have been content to let us discuss the question how we pleased in the few hours in which we have to do it. I find that the protection for agriculture, of which the Prime Minister told us, is the addition to those words which I have already read of the words: "If sold at the time in the open market." We have no conception of any meaning that can be attached to those words. They are absolutely no protection to agriculture, and the Bill as it is proposed to be reintroduced by the Prime Minister no more protects agricultural land than the old Bill did, and is as unlike the Bill described to the constituencies by the Prime Minister and by hon. Members opposite who have spoken, as was the Bill of last Session. Repeatedly they have stated on platforms that agricultural land is exempt. It is not, and the addition of those words will not exempt it. On the Report stage of the last Bill Liberal Members sitting for agricultural constituencies for the first time began to find out what the Bill was, and they got up one after another to implore the Government one afternoon to change it, and they expressed a passionate and earnest hope that what the Attorney-General said the Bill would do it would not do, and that it was not the intention of the Government to do it. The Attorney-General, in words that many of us will remember, said that if a piece of agricultural land valued at £30 has its price increased in value by agricultural revival or agricultural improvements by the tenant up to £50, and if, then, it further increased, say £10, in value for building purposes that then agricultural values were by the Bill superseded and ignored and the tax was to be levied, not merely on the additional building value which the land had attained and on the difference between the agricultural value which the man had given to it, by his exertions and his expenditure, and that new building value, but on the difference between the original base price and the new value. That is your Bill. It is still your Bill, and the Chancellor of the Exchequer himself, even to-day, does not know his Bill; it is high time we had more discussion about it.

Mr. LLOYD-GEORGE

Does the right hon. Gentleman say that the Attorney-General said that taxation would be levied in respect of values created by the man's own exertions?

Mr. AUSTEN CHAMBERLAIN

Let me make my case perfectly clear. An original agricultural value of £30, an increase of agricultural value in a future period to £50, due it may be to the man's exertions, aided by agricultural recovery. The then agricultural value is £50. If the land is worth £51 for building, you charge increment value, not on £l, but on £21, not on the £1 of building value over its agricultural value, but on the £20 of agricultural value that the man has put into the land. In the words of the Attorney-General, you supersede and ignore the agricultural value. You supersede and ignore the exertions of the man, and you charge him on them as unearned increment, as if they were in no sense due to his exertions or to his expenditure. That is the Bill. That was admitted to be the Bill by the Attorney-General on the Report stage, and it was against that that protests came in quick succession from hon. Members opposite. That is still the Bill, and the new concession you have made is a fraud and a sham. The words mean nothing, and I do not believe they were ever meant to mean anything. I will not go into the other Amendments, though I hope we shall have, before we have done, some further explanation than the Prime Minister gave us the other day. He said in curious language that these changes were simple and technical. My experience is that when changes are technical they are not simple, and I think this case bears it out. I only say that the greatest and the most important concession announced by the Prime Minister, and the only one which was supposed to have any universal application, although it was Irish anxiety which the Prime Minister specially dwelt upon as leading him to make an Amendment in the Bill, is a sham and a fraud and is not worth the paper on which it is written.

Mr. GIBSON BOWLES

The right hon. Gentleman is inconsistent, I think, about these words. He said they meant nothing, and he then said they meant the same as they mean in the Bill as it stands now. I myself think I understand the Bill, but I should not explain what I understand it to mean until we arrive at the words themselves in the Bill. It is extremely inconvenient when we are debating, as we are now, solely the general principle of Land Taxes and the Resolution applying to them generally, to go into the exact words of the Bill, which may, perhaps, be susceptible of alteration. Of course, we are in a most peculiar position in regard to this Budget. Our estimates, on which the right hon. Gentleman relied, and which are so encouraging, are not estimates for a future year, but estimates for the past year, in which they differ from all estimates ever put before a Committee of this House before. But the right hon. Gentleman has this great advantage, that he has necessarily more knowledge of what his estimates for the last year will produce than he could have had were they estimates for the forthcoming year. The rosy account he has given us is extremely encouraging. Yet the situation at present is deplorable as it looks on paper. I am afraid that in point of debt alone we are about £30,000,000 worse off than we expected to be. I understand that will all be cleared off, except that part represented by the stoppage of the new Sinking Fund, when we get the revenue. I think the right hon. Gentleman (Mr. Austen Chamberlain) was very mild and very amiable in his criticism of the Budget, except with regard to that part of his speech, which I think entirely out of order, which dealt with the Amendments to the words of the Bill. That should be appreciated all the more because he hates and abominates the Budget, for the reason he has given, that it switches off Tariff Reform and switches on another policy, which is the policy of Free Trade, and also that it is the death warrant of Tariff Reform, for which reason I support it. These two reasons have been avowed twice in public speeches on considered occasions by Lord Lansdowne, who is more or less an authority on this matter. Therefore, it is that the right hon. Gentleman and his Friends opposite, I am afraid, consider that this Budget is anathema maranatha, for unless you pronounce Tariff Reform, although you speak with the voice of men and angels and give all your goods to the poor, and have your body burnt for the faith, you are still as a tinkling cymbal and sounding brass. Of course, we who are in that unfortunate position must tinkle as best we can for the faith that is in us.

I will pass very rapidly over the elements of this Budget, and especially the Resolution now before us. As a student of finance who has studied in the old school, I have my doubts about the land values system of taxation. It is not that I think land should not be taxed. My belief is that land is crying out for extra taxation, but I think I should have acted more directly. I should have been inclined to restore and revive and increase the old, brutal, direct Land Tax which formerly played so large a part in the revenues of this country. It was because of one shilling in the Land Tax that we lost the. North American Colonies, but at that time the Land Tax was a tremendous part of the Revenue. It was at least one-eighth or one-ninth of the whole Revenue. Suppose it was one-eighth or one-ninth of the whole Revenue now; a direct land tax of that kind would be worth having. There are difficulties about re-imposing it, but when land is to be taxed, as taxed it certainly will have to be in some shape or another, I would rather see the direct, brutal, old Land Tax re-imposed and greatly enlarged than this indirect method which is embodied in Land Valuation.

Now I come to the Death Duties and the Income Tax. It is extremely remarkable that in the last twenty years, while the total amount of income on which Income Tax is levied has been increasing in the most remarkable manner, the total amount of capital on which Death Duties are paid has not increased in at all the same proportion as I should have expected it to do, and during the last three years, while Income Tax has been going up, the capital on which the Death Duties have been paid has absolutely diminished. I am very curious to know whether that is the case with the total capital of the last year. My belief is that that is due to the unfortunate exaggeration of the graduation of the Death Duties. In fiscal matters, although people are very absolute and very positive, nothing is quite absolute in itself, and although graduation in my belief is a mistaken fiscal policy for the revenue, still, if it is mild and moderate, it does not have much effect on the revenue. But if you exaggerate, if you make your graduation too violent and your steps too long and your increases too great, you may have a very considerable effect on the revenue. There is the celebrated Duke of Richmond case. He got rid of the whole of the duties by a most ingenious device which made a great hole in the Death Duties. The Attorney-General has drafted a clause, which is what I call the collision-mat clause, to stop the hole. I do not think it stops the hole, and if that be so the whole of your Death Duties in regard it settled property are at this moment in the greatest peril. That, I think, is largely on account of graduation, and what I say of Death Duties is equally true, of the Income Tax. A small amount of graduation such as has existed for some time does no harm, and does not interfere with the tax, but if you graduate steeply and very severely and with very long steps you will induce people to secrete their income and withdraw it from the purview of the taxpayer. It must always be remembered, as Mr. Gladstone said, that in this country taxation is by consent. If you do not get the consent of the taxpayer you will not get your taxes, and if you give a very great inducement by severe graduation in Death Duties or in Income Tax, to lawful avoidance of the tax or an unlawful evasion, both avoidance and evasion will certainly take place. I only wish to make these general remarks. I am afraid I am belated in making them, but if you continue to exaggerate graduation, you will end by most seriously impairing, if not by largely destroying the two best taxes you have—the Death Duties and the Income Tax.

The Chancellor of the Exchequer's statement does credit to everybody. It does credit to his estimates and it does vast credit to the taxpayers of this country, who have paid their taxes without compulsion and with readiness in order to come to the assistance of a distressed set of officials and a depleted Treasury. With regard to these officials, they have done what they held to be their duty, and at great risk. I am not sure that the indemnity really covers all their acts. I do not know that their conduct during the last year, in levying taxes which they had no lawful authority to collect, and in requiring payments which they had no ground to require, was not so serious an infraction of their duty that it required a specific clause, not merely "ifs" and "ans" and "as ifs" as this is, but a specific clause actually indemnifying them for what undoubtedly was their unlawful conduct. I am not sure that the Chancellor of the Exchequer does not require a similar clause, because whatever has been done by the Inland Revenue or the Customs was undoubtedly done by virtue of a Treasury Order, issued, of course, without lawful authority.

6.0 P.M.

It would not become me, nor do I think it is ever right, to enter into a Budget statement at the moment it is delivered, as the matter requires consideration and the figures require a certain amount of study. They are always new, though this year perhaps less new than usual. I rose to make these few general remarks, and I will end, as I began, by saying that this new Budget has so far had varied fortunes, but in its figures and rendition in taxation it has had, I think, most encouraging results. I believe that the re- sources of the old system of finance are by no means exhausted. I believe you could raise, not merely these £160,000,000, and not merely £170,000,000, as you will probably require to do next year, but I believe you could with the greatest ease raise from this country without going into the vagaries of Tariff Reform or in any way abandoning the canons of sound finance as much as £200,000,000 a year. I think that could be done without violating any of the canons of sound taxation. It may be that before long we shall have to do it. We have had a trying period this year. The Chancellor of the Exchequer will have to pay much interest which, had his Budget gone through last year, he would have escaped, and next year, I fear, that will be made apparent. So far as we have gone, I think he may be congratulated upon the promise of the estimates of last year being realised if the taxes are all collected.

Sir ALFRED CRIPPS

I wish to limit the remarks I have to make to the Land Value Duties, and let me say first of all, in answer to the hon. Member for King's Lynn (Mr. Gibson Bowles) that he does not seem to appreciate the distinction which now exists between the present land burdens and those of former times, say, 150 years ago. This question of land taxation was very carefully considered some years ago. It was gone into in great detail by the Royal Commission on Local Taxation, on which I had the honour of sitting. The result of its investigation showed that land, as compared with other sources of income in this country was much more heavily taxed now than in previous years. That was shown by not merely taking the Imperial Tax, which is a very small proportion of the burden that really falls on the land of this country, for you have to take both Imperial and local taxes to see that the burden has increased very enormously in recent years as regards the real charge upon the land. The rate charge has grown from year to year owing to the large increase in local demands for what I shall call local service purposes. I am not objecting for a moment to rates being raised where necessary for those purposes, but I think anyone who has studied the question at all must agree with what I am saying, that the combined charge upon land in respect of Imperial and local taxation was never heavier than at the present time, and not only was it never heavier, but never heavier if you compare the charges on land with those on personal property and on foreign investments held by people in this country.

Mr. GIBSON BOWLES

I understand the hon. Gentleman is suggesting that in the comparison I made I stated that land bore a greater burden in 1785 than now. What I said was that it then bore a very much larger proportion of the whole revenue, and that now it bears a very much smaller proportion.

Sir ALFRED CRIPPS

The hon. Gentleman has not appreciated my point. Since 1785 the burden of rates upon land in this country has increased 200 or 300 per cent., and that increase, as compared with the burden on other property, is altogether and enormously out of proportion to what it was in 1785. What I say is this—and I am sure the hon. Gentleman will find it in statistics—if you take the burden of local rating and add it to the burden of taxation for Imperial purposes so far as land is concerned, you will find land is much more heavily burdened now than it ever was in the past. I may quote Mr. Gladstone's view on this point. He said several times that as you have no longer Protection in this country, there ought to be some change to diminish the charge upon land in rating for local purposes. From time to time no doubt certain Grants have been made in the direction of diminishing that charge, but meanwhile the total charge has grown so enormously that the charge upon land at the present moment is really greater than it ever was before.

Mr. GIBSON BOWLES

indicated dissent.

Sir ALFRED CRIPPS

I am not going to argue with the hon. Gentleman, except to say that, according to my view, statistics show that the value of other sources of income has gone up so enormously in recent years, and that the income derived from foreign investments and personal property is so enormously in excess of what it was in the old days; that if you take the ratio between land and other property, there is a very unfair burden upon land if you take into consideration both Imperial and local burdens. As regards the Land Duty as proposed in the Budget, let me say that if you want prosperity in a country you ought to encourage, so far as possible, expenditure in relation to the land of that country. It is the source from which you get the best classes of employment. It is the means by which you keep the people in the country as distinguished from crowding into large towns, and I think it is an advantage in connection with the employment of the people not to discourage employment upon the land by putting upon it undue burdens. You ought rather to encourage this by treating landowners as favourably as people who enjoy income from other forms of investment, and especially from money which is sent abroad.

I wish to say a word in regard to the three heads of the Land Value Duty in the Resolutions which are now before the Committee. The first Resolution deals with increment values of land. Now, why should land be separated in order to be charged Increment Value Duty? Why should it be differentiated from other classes of property where you have either increment or decrement? I think one of the great objections to Land Value Duties is that you separate land and suggest that it is a particular class of property in reference to which you may impose a particular class of duties which would not be fairly applicable in other classes of property in this country. I think the answer to that is twofold. I have had some experience myself as regards land values, not only in agricultural districts, but also in the neighbourhood of large towns, and I think I can make this statement without fear of contradiction. It is not only in agricultural land that there has been decrement, as against increment, but even in the largest towns you find large areas where, so far from there being increment values, there is decrement in value, with the result that if you were to treat land quite fairly, you ought, both as regards agricultural land and as regards land in large towns, to consider the question of decrements as well as the question of increments.

There is another reason why these Land Values, and particularly this Increment Tax, should be further considered. The Royal Commission on Local Taxation did suggest in one of its Reports that you might tax these increment values in the neighbourhood of large towns for local purposes. That is quite different from taxing them for Imperial purposes, and if this source of income is to be taxed at all, it ought to be exclusively taxed for local purposes, and not as a source from which you are to get Imperial revenue. The reason for that is twofold. First of all the local increment is almost entirely due to local energy and development, so that the local town where increment takes place is really the locality entitled to benefit. Consequently, under this proposal, you are putting an additional burden on the ratepayers of a particular locality without giving them the advantage of the duty. It is pointed out by the Commission to which I have referred that as regards local taxation you would have redistribution of taxation between properties in a particular area, and as regards that redistribution it is fair enough, according to the views expressed in the Minority Report, that something in the nature of an Increment Tax should be imposed. I entirely agree with that. If it is a mere question of the redistribution of the burden in a particular area, I think an Increment Duty may be imposed; but really on the basis that existing land is already very highly taxed, I say that what is proposed here is not to do that in the sense of allowing each local area to have advantage of its own taxes, but to levy this first as an Imperial tax, and only to regrant a proportion of it for local purposes; and how that is to be done no one knows.

There is one other point in regard to increment value to which I want to call attention, namely, the question of agricultural land. It is grossly unfair, it seems to me, that you should put any burden under this Increment Land Duty on the agricultural industry of this country. I am not going at the moment to discuss the particular words in the amended Bill. I think these words really mean that you are to take the market value as the test. That is not what I am arguing. There are hundreds and thousands of acres used for agriculture in the country where the land has little more than agricultural value. The extent of such land is extremely indefinite. One of the hardships of a proposal of this kind is that officials who have probably little knowledge in the matter will have to determine one of the most difficult questions, namely, whether land has a building value attached to it in addition to its agricultural value. Those who have dealt with matters of this kind and with questions of local taxation know from practical experience that there is nothing more difficult to determine than the point at which agricultural land has an additional value for building purposes. My point goes beyond that. I say that land which is used for agriculture ought not to have any additional tax thrown upon it, and that directly you leave that practical test, which is the only test of real value, you get into a quagmire of complicated questions which will result in costly inquiries to the agriculturists and to the owners. In my opinion the result will afford very little revenue to the Imperial Exchequer, because the cost of assessment and collection will be so large. What I want to put to the Committee is this. It ought not to be possible to raise any of these questions in connection with our agricultural industry. It ought not to be a question of difficulty or inquiry at all. We want to encourage agriculture, of course fairly, to the maximum extent in this country. We want to develop it either by small holdings or small ownership, or in any way we can. We are all agreed on that point, but it is fatal when we desire to increase the prosperity of our agricultural industries, and increase employment for workmen in agricultural districts, to impose a tax of this kind, which not only puts a direct burden on agriculture, but, what is worse in my view, raises a series of questions which must put a very heavy burden of taxation on anyone who is interested in our agricultural industries.

I hope the Committee will realise that there are enormous tracts of land—it is no exaggeration to say hundreds of thousands of acres—used for agriculture in this country, to which, under the proposed provisions, the Increment Tax would apply. There are large tracts of land to my knowledge where it could be said that although the land was used for agriculture there is an element of building value, and, as a result, an increment tax would be imposed. As regards what was said by the right hon. Gentleman the Member for East Worcestershire, in the account he gave of the operation of the increment value section of the Finance Bill, he was absolutely correct. And immediately one realises that the result which we pointed out inevitably follows. You may have agricultural land substantially increased in value by the energy and industry of those who give their work and capital to its development. If, as the result the increment value so given, together with an element of building value, raises the price above a certain figure—say £50, say to £51 or £52—then the Increment Tax is imposed upon the whole value of the land— not only the original site value, but the site value as improved and increased by the industry of agriculture, and by the capital invested for agricultural purposes. And it would be a unique case if land values are passed in this case of a tax on industry in this country in an exceptional manner, especially at a time when there is no industry which ought to be more carefully safeguarded against exceptional taxation of the kind than the great industry of agriculture, which in recent years unfortunately has not been too prosperous. In the same way the Reversion Duty will affect all agricultural land in which there is something more than an agricultural interest; and more than that it affects agricultural land where the relationship between landlord and tenant is best, and where the greatest expenditure has been given. For instance, if you have land let at a rack rent practically there will be no tax to be imposed on the principle of Reversion Duty, but when the reversion comes in it will be worth more than the rack rent. But if, on the other hand, you grant an improvement lease at a low rent, the very object of the low rent being that you may encourage capital and industry to the greatest extent as regards agricultural land, which is the proper way of dealing with agriculture in this country, then just in that case where the principle was favourable to the development of agriculture the Reversion Tax would hit all agriculturists in the hardest way. In other words, you tax those who are dealing with land in the best possible manner —you tax those who are attempting to improve its agricultural value by a proper expenditure of capital and industry. Is that right? Ought we not, as regards, at any rate these Reversion Duties, to have absolute exemption of all land used for agriculture under all conditions whatsoever? If you do not, you bring about what I think the Government would not desire, namely, taxation of those who are doing their best to put agriculture in a prosperous position, and you are letting off those who, under a system of rack rent, are trying to take all they can out of the land, and putting on one side all questions of improvement.

The Development Tax, of course, is on the capital charge, and is altogether on a new principle, because you tax a man in reference to his use of land, to which in fact he is not putting the land which he owns. Here, again, let me urge the point that I have repeatedly raised before the Committee that there ought to be entire exemption as regards agriculture. Do the Committee realise that if land is said to be ripe for development, although it is not at present being built on, it is always being used either for agricultural purposes or for market-garden purposes? If that is so, is it not monstrous that under the name of the Development Tax you should put on a tax which will only fall on land either used for agricultural or market-garden purposes? I admit, as I have said, at the outset that I am against the principle of all taxes of this sort, but I do urge that if taxes of this kind are to be sanctioned at all we ought to make certain that agriculture is really and wholly exempt. No words are of the slightest value unless you go the whole length and exempt from the taxes land used for the purposes of agriculture. What I want to know is, are we to have exemption in that form or not? If we do not have exemption in that form it is of no value; and if we are to have exemption in that form it will only place agriculture in the same position as other industries, and save it from having a special and particular burden thrown upon it. And I think that no Member of the Committee ought to desire to do this. I do not wish to travel over the other matters, but merely to deal with the Land Value Duties, and as regards these I say that they are wholly bad in principle, and that the agricultural industry ought to be wholly exempt.

Mr. KETTLE

I think we are all agreed that the point raised by the right hon. Gentleman the Member for East Worcestershire is one of a very serious character. I do not think this is the proper time for a discussion of the technical meaning and effect of the words which have been inserted in Clause 7; but I cannot help thinking that the right hon. Gentleman is a little hasty perhaps in staking his Parliamentary reputation, as he practically did, upon his assertion that these words are a sham and a fraud, that they do not carry out the promise given by the Prime Minister only yesterday. The right hon. Gentleman may, be right; he may be wrong. The only point I wish to make is, I think he was extremely hasty, and I do not think that the occasion of this general discussion was the correct occasion on which to discuss whether these words do or do not carry out the Prime Minister's pledge. For the moment I think it is more appropriate perhaps to remind the Committee of the perfectly clear and definite terms in which the Prime Minister gave that pledge yesterday. He said:— Certainly there were doubts and anxieties expressed upon the point in Ireland. And let me hope in advance that when we who sit for Irish constituencies have succeeded in saving the agricultural land of England from the imposition of Land Duty we shall have a little more gratitude than is usually given to Irish Members. Therefore, he said, we are inserting declaratory words in the seventh clause, to deal with that matter. These will make it perfectly clear that as regards the Increment Duty, that increase in value in purely agricultural land will not be subject to it. That is a perfectly clear and definite promise. I suppose if I say that our influence in this House will be used to see that it is carried into statutory effect it will be another peg on which to hang the old story as to the present unhappy Government being under the dictation of the Irish party. I will only say at the moment regarding the point that an undertaking has been given that agricultural land shall be exempt from this Increment Duty, and it will be our duty, I say quite frankly, to see that the promise is carried into statutory effect. In passing, I may say, as there has been so much discussion in regard to the attitude of Irish public opinion towards this Budget, that in my own Constituency, while strong exception was taken to the whole Budget on grounds of principle, the chief matter of detail on which attention was concentrated was this particular matter of extending the Increment Duty to agricultural land. When we go to the special clause in the Bill dealing with this matter we shall naturally have to discuss in some greater detail the exact meaning and precise effect of these words.

On the Budget generally the attitude of our party upon all Budgets is moderately well known. We have invariably taken our stand, not upon haggling over this or that special duty; we have said that every Budget, whether Liberal or Tory, introduced since the Act of Union, especially since 1817 and still more since 1853, has been a Budget unjust to Ireland, on the general ground that it drew from her revenue out of proportion to her capacity to contribute revenue. But when I am asked, as we have been asked, to seek salvation for Ireland from over-taxation, by throwing out the party that now holds office and to put in the party that sits on these benches, that seems to me a suggestion better suited to comic opera than to practical politics. Are we in Ireland to find salvation from our over-taxation in the Tory party? The last time that the Tory party was in power for ten years they increased our annual taxation in Ireland by more than £2,000,000 a year. They increased it year after year, in face of the Report of the Financial Relations Commission which was first presented in this House while they were in office; and I now challenge the Leader of the Opposition, who was to save us in Ireland from all these evils, to say what is the official attitude of his party with regard to the over-taxation of Ireland? Does he believe that Ireland is over-taxed? [An HON. MEMBER: "No."] I am much obliged to the hon. Gentleman. I trust that he has authority to speak for the Leader of the Opposition. Is the present position of the Leader of the Opposition what it was when this matter of finance was first formally raised in this House, namely, that Ireland is not over-taxed, but is under-taxed? In determining our attitude on this Budget we must naturally contrast it with our anticipation of the future Budget that Tariff Reform is going to give us. I notice that in a letter published the other day, the Leader of the Opposition has thrown over completely the agricultural interests of Ireland. The duty on corn is gone from the future Tariff Reform Budget. Is there going to be a revolt against the Leader of the Opposition? [An HON. MEMBER: "Colonial corn."] Colonial corn is to be introduced duty free. The right hon. Gentleman should have been up in my constituency during the election and listened to the promises that Colonial corn was to pay the full duty. And when his friends come they will give not this miserable Land Tax Budget, but a project to provide import duties on corn and agricultural produce from the Colonies or elsewhere, and this is to make the green wilderness of Ireland blossom like the rose. That is the prospect held out to us by a future Tariff Reform Budget, and it seems to me to be a relevant consideration in regard to our attitude on Free Trade. On that ground our votes have been given for this Budget. For my part, I am voting for this Finance Bill, not in the interests of this particular measure, but in the interests of Home Rule. I can well understand how hon. Gentlemen from Irish constituencies, who seem to have abandoned their Home Rule principles, should be found in a different Lobby. It is perfectly intelligible that the hon. Gentlemen returned for an Irish constituency with the aid of Tory votes, should have to pay his price when he comes to express his opinion, or rather their opinion, to this House. I think one fact clearly emerges from the mass of detail which was put before us in such an interesting form by the Chancellor of the Exchequer. I think it has become apparent even to him that this 3s. 9d. duty on whisky has to go. He has not got any revenue from it. As regards this particular duty of 3s. 9d. on whisky, one is placed in a somewhat ambiguous position. My own view on the subject is very simple, though perhaps not easily realised. I should like to see a great deal more whisky manufactured in Ireland and a great deal less drunk. When you consider whisky as a form of industry upon which the corn-growing districts largely depend you naturally wish to see it thrive and prosper. But when you consider whisky in regard to its consumption you have very naturally a somewhat contrary view. On this point I cannot help recalling the curiously self-contradictory criticism that was made in the discussion of this duty in Ireland. One knows that Ireland has such a good case against over-taxation that it makes one extremely angry to see it badly stated. We were told that the extra duty of 3s. 9d. would not only reduce the consumption of whisky in Ireland, but practically prevent it from being consumed at all. Then we were told, on the other hand, in making this famous £2,000,000 calculation, which has now been officially abandoned, that exactly the same quantity of whisky would continue to be drunk, and that we would arrive at the figure of £2,000,000 by taking 3s. 9d. extra on every gallon of whisky. I do not think that was an accurate or good way to state the case. I do not think it very much helps Ireland in the controversy. I think it does clearly emerge on the figures which the Chancellor of the Exchequer himself has given, that this 3s. 9d. tax has to go, not in the interests of morality, but in the interests of the revenue. I will tell him something else. There has got to be a radical change in the Budget which will shortly be presented. I observe that he is going to have surplus, an unexpectedly large surplus. I was pleased to see the former Chancellor of the Exchequer joining with him in rejoicing in the fact that Great Britain is the most prosperous country in the world, with the most magnificent people, under the best fiscal and financial system. I quite accept that.

Since Great Britain is so prosperous and so thriving that it leaves the right hon. Gentleman with a surplus of £2,900,000 to deal with, he can now well afford some remission of the taxation in Ireland. That seems to me to be the logical conclusion from his optimistic statement. I think the sooner his next Budget is produced, holding out an immediate prospect of a remission of taxation, which, for special and unique reasons do not appear in his present proposals, the better it will be.

Captain BRYAN COOPER

What reasons?

Mr. KETTLE

I believe the hon. and gallant Gentleman who has interrupted me is one of the Tory candidates who in Ireland during the course of the election said this talk about the over-taxation of Ireland was an absolute myth.

Captain COOPER

No, I did not.

Mr. KETTLE

The hon. and gallant Gentleman is good enough to correct me.

Captain COOPER

I said nothing of the sort. I think the hon. and learned Member must be referring to someone else.

Mr. KETTLE

I accept the statement, but it seems to me that the hon. and gallant Gentleman has forgotten his speeches, which are well worth remembering, and I hope on some future occasion to produce the quotation on which I rely. I have no desire to misrepresent anything which he said, and I am very glad to see that he now does think Ireland is over-taxed; so I trust that he and his party will immediately make representations to the Leader of the Opposition, requesting him to alter the official Tory attitude on the question of Irish taxation. I look forward to seeing that accomplished at an early date. I was about to express my regret with regard to one particular point. We have had, as I said, fantastic estimates with regard to increase of revenue that this Budget would draw from Ireland. It seems to me we have had a very sincere protest against the drawing of any additional revenue from Ireland at all. I think it would have been to the advantage of everybody—I think it was required by the Act of Union and by the pretence to administer Irish affairs from Westminster —that separate accounts should have been given us of the yield of taxes, new and old, in Ireland, as distinguished from Great Britain. We have always got a separate financial statement of that kind in a White Paper, made annually available for Members of this House. The date of the issue of the White Paper, in the ordinary course, would have been, I think, some time next month or the month after that; but in the exceptional circumstances of this year, I think the Chancellor of the Exchequer might very well have produced separate figures for Ireland, and certainly some of my hon. Friends will, by questions in this House, give him an opportunity of doing that at a very early date. To summarise my whole statement with regard to this Budget, I am going to vote for it because I prefer it to Tariff Reform, bad as it is, and I am going to vote for it frankly and openly, as it helps forward the cause of Home Rule.

Mr. FRANCIS NEILSON

I have paid very great attention to the speech delivered by the hon. and learned Member for South Bucks (Sir Alfred Cripps), but it is something new to me to learn that there are great burdens of rates upon land, at least in this country. I know that there is a great difference of opinion as to whether land is rated or not in Scotland, but it seems to me that the whole burden of the rates falls not upon the land, but upon the use to which that land is put. Land in this country is not rated at all. It is peculiar, at a time like this, when we agree with the principle of the Budget, in trying to differentiate between the value of unimproved land and the value given to land by the industry and skill of the individual, that we should have so many conflicting opinions. The Budget has for its principle the differentiation of the unimproved value from the improved value. Once this value is obtained, it seems to me that there is going to be a movement, so far as agriculture is concerned, that will give to it one of the greatest impetuses it has ever had. To-day the agriculturist, no matter how much he improves his land, is faced by the increase of rates. To-day, with the idea of having small holdings, we want to take a 300-acre farm and split it up into ten different holdings, with the additional buildings, the additional fences and the additional drainage, and all the improvements that would be made on these small holdings would increase the rate-able value and place enormous additional burdens upon the industry of agriculture. But if we have the unimproved value of land distinguished from the improved value, then it seems to me that if the small holdings scheme develops in this country, there will be great encouragement to men to continue in and sink capital in their holding, because they will know that whatever improvements they may make will be free from this enormous burden that hon. Gentlemen opposite are so much troubled about. So far as taxation is concerned, I agree with the hon. Member for King's Lynn that one one-hundred-and-sixtieth part of the revenue comes from land as land. The other revenue chiefly comes from the use to which the land is put. Again, the whole system of taxation, with the exception of the one one-hundred-and-sixtieth part, is a burden upon industry. No matter how you look at it, our scheme of taxation, whether it be Income Tax, Death Duties, or indirect taxation—these taxes all fall with great severity upon the efforts of the people in the production of wealth. Such a system is a bad system. The hon. and learned Member for South Bucks said he wished to see agriculture prosper. I do not see how you are going to make agriculture prosper unless you do something to bring more land into cultivation. We want more land under cultivation in this country, and it seems to me that once you get the unimproved value of the land as a basis of taxing, or of rating, if you like, it will be a very simple thing through economic pressure on the land that is not properly cultivated to force more land into the market for use. Hon. Gentlemen sometimes refer to land as if really to farmers and small holders the high price of land in itself is a boon and blessing to agriculture, but it seems to me that the great trouble in this country is that if you want to produce more wealth and to stimulate agriculture or building, or any industry, the way to do so is to get land as cheap as you possibly can. The cheaper land is the easier it is to produce wealth, and the cheaper land is the more people you will attract to the production of wealth. That follows as the night the day. There is only one just way in which you can bring about land at a value at which it will attract more people for the cultivation of it, and that is through economic pressure of rates and taxes falling, instead of on the industry itself, on the unimproved value of the land, whether it is used or not. We had an argument a little while ago by the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain). I am sorry I did not hear the whole of his argument. I came into the House when he was speaking about the rise in the value of agricultural land from £30 per acre to £50 per acre. He spoke of that increase as an increase that had come about by the rise in the value of agricultural products, and owing to the industry of the individual who cultivated the land. Surely this Budget, if it does anything at all in differentiating between unimproved values and improved values shows that it wants to have that differentiation based so as to exempt improvements from further burdens. [HON. MEMBERS: "NO, no."] The right hon. Gentleman states that there is some of the rise in value that has been given by the skill of the individual, but in drawing his conclusion the right hon. Gentleman did not deduct that value which the Budget in all those Clauses referring to land states will be deducted.

Mr. AUSTEN CHAMBERLAIN

No it does not. The hon. Member is mistaken.

Mr. NEILSON

I have been under that impression, and I have read the Finance Bill over and over again, and I have been through the Finance Bill within the past two or three days, and I cannot understand one Clause as saying that any improvement on the part of the cultivator would be liable to taxation. I shall be very glad if the right hon. Gentleman will point out to me the Clause in the Budget that states that any tax, whether it be Increment Duty, Reversion Duty, or Undeveloped Land Duty where any improvement on the part of the user of the land is liable to taxation. That is the vital principle that we have fought for any way, irrespective entirely of the different taxes that are imposed in the Budget. The principle that we have fought for for years and years in this country is that we shall get a new basis of taxation, which shall be on the unimproved value—the value that is created by the community, the value that is not added to by the individual at all, so that we shall be able to exempt the efforts of the individual in the future, and so encourage him. If that Clause is in the Budget, which the right hon. Gentleman says is there, I shall be very glád to know where it is, and I shall be just as anxious as the right hon. Gentleman to vote that Clause out of the Budget, or as anybody else on the other side of the House.

Let us look at the larger question for a moment. I can remember the first day I sat in this House listening to the Leader of the Opposition, and I remember the sympathetic plea that he put forward that something should be done by this Government in the way of stimulating industry, and helping to find more employment for the people, for raising wages, for doing something to deal with all those problems of poverty that face Englishmen to-day. As I listened, I thought there was rather real sympathy in his voice. I do not doubt the right hon. Gentleman's sympathy for a moment, but I do say that it is a little tiresome for a new Member of the House, after studying the speeches of hon. and right hon. Gentlemen opposite for years and years, indeed, after listening to a great many of them, whether they are speaking on Tariff Reform, or any subject that is kindred to the ambitions of their party, to hear about their desire to be democratic, and to deal with these economic problems; and when you find this opposition to the Budget that we are bringing forward at this time, and especially when in Australia, New Zealand, many places in the United States, and the North West of Canada the party of the advanced progressive nations, of our Colonies and other places, are to-day concentrating upon this very point. They are taking up this question for the solving of these particular problems the right hon. Gentleman spoke about. Another hon. and learned Member also said that what we ought to do is to encourage industry, to encourage agriculture. This is the way that we wish to carry out those aims and those ideals. This is the only way that we can see that we can bring about the stimulation of industry in this country, that we can help towards more employment, that we can begin to solve such problems as the sweating and slum problems, and the thousand and one things that are agitating the minds of statesmen to-day. Why do we rant so much on this Budget? It is because we say that land is the basis of existence. Man cannot live or work without land, it does not matter what you work at. Even in the case of the hon. Gentleman, the Baronet who sits for the City (Sir F. Banbury), it does not matter how busy they are in the City in parchment, land is the basis of existence there, as well as it is the basis of existence in agriculture. This idea that land is something that appertains to agriculture only is something that really has not to do with the twentieth century. We have got to face these problems, which are economic, with economic solutions. That is the only way you can do so. You cannot do so by tinkering at them by Tariff Reform, which, for instance, has not helped the United States. If a six-hundred dollar per year family cannot live there without charity Tariff Reform is not doing much for them. I say that the only way you can deal with these economic problems is by trying to solve them in an economic manner. Land being the basis of existence, we say that we have got to solve them through the land question, and that our way is through the economic pressure of rates and taxes. Hon. Gentlemen on the other side are very busy putting a land programme before the agricultural population in which salvation is through peasant proprietorship. That is to do away with the small body of large landowners and raising a large body of small landowners. That is, according to them, going to lead us out of the troubles—

The CHAIRMAN

The hon. Member is now travelling outside the subject, which is the taxation of land on a certain basis proposed in these Resolutions.

Mr. NEILSON

I bow to your ruling. I hope I shall be in order when I say that land as land is not rated to-day. The Budget wants to find a new basis, I hope, for rating this unimproved value, so that instead of in the future hearing so much about the enormous burdens, national and local, that fall upon land—

Lord HUGH CECIL

Would the hon. Member say to whom the advantage of the Agricultural Rating Act goes—to the landowner or the ratepayers?

Mr. NEILSON

To the landowner, generally speaking. I can quote a right hon. Gentleman, who in 1897, when the Act was passing, said that ultimately it would go to the landowner.

Lord HUGH CECIL

The landowner does pay the rating.

Mr. NEILSON

The landowner gets the benefit of 50 per cent, exemption. So far as the payment of it is concerned, it seems to me that is only a question of making one section of the community find the rates for another section of the community, while the landlord benefits' from the proceeding. If, as I have said, there is any clause in the Budget that the right hon. Gentleman can show me putting a burden upon improved value, then I say I shall associate myself with him in doing all I possibly can to get the Government to take that clause out. The Budget may have many faults—indeed, I believe it has a good many faults—but we say this for the Budget, that in it there is an entirely new principle that we are starting forward—that is to say, that we get unimproved value of land, so that in future we can do less in taxing a man's efforts.

Mr. STEEL-MAITLAND

I only propose to address myself to one point before the Committee, and that is the question of the Land Duties, which have been dealt with by the hon. Member (Mr. Neilson). There is, however, one point previously to which I would wish to make some allusion, and that is the statement made both by the right hon. Gentleman the Chancellor of the Exchequer, and also, I think, by the hon. Member for East Tyrone (Mr. Kettle), to the effect that this Budget proves the triumph of Free Trade finance.

Mr. KETTLE

I did not say that.

Mr. STEEL-MAITLAND

Of course, I accept the hon. Member's assurance. I think it must have been by the hon. Member for King's Lynn (Mr. Gibson Bowles), as well as the Chancellor of the Exchequer, who said that this Budget was the triumph of Free Trade finance. It can hardly be disputed that in any country, if you wish, it may be possible to extract revenue considerably greater than the proportion of revenue at present extracted in this country, but there is only one barometer of the finance system set up by this Budget, and that is the state of the public credit of the country at the time.

7.0 P.M.

If any hon. Member compares the course of British credit from 1905 to the present day, during which time Liberal and Free Trade Finance has had full play, he will find that there is not a single leading country the course of whose credit does not compare favourably with that of the United Kingdom. I have figures beside me showing that from December, 1905, to the present day the fall in British credit has been far greater than that of France, Germany, Italy, Japan, Russia, or any other of the leading countries whose securities can be compared for that period, while the absolute credit of one foreign country, France, stands at present in a better position than that of the United Kingdom—a phenomenon that had not occurred during the thirty years preceding the advent of the Liberal Government to office. The comparison is even more significant when the course of public credit of the national Government is compared with that of some.of the chief municipal authorities in the United Kingdom. Though their credit has declined, the fall in regard to the municipal authorities of nearly all the great cities has been considerably less than with regard to the national Government. The course is still more worthy of attention with regard to London County Council finance. The fall in London County Council finance under Progressive administration was even greater than that of British credit under the national Government; but since then there has been an appreciation in the credit of London County Council finance, and it has passed in degree that of the national Government. As a barometer showing whether Free Trade and Liberal finance emerges successfully out of the present trial, nothing can be compared except the state of credit, and judged by the state of credit, our course has been unfavourable compared with that of our great commercial rivals.

With regard to the Land Duties, the hon. Member opposite (Mr. Neilson) followed the course, which is not unusual with some people, of arrogating to himself and his friends all the virtues of the calendar, and denying them to others who do not happen to agree with their particular views in regard to the Budget. The hon. Member set out to state, but I do not think he set set out to prove that the Land Duties would improve the slums and afford an economic solution of industrial and housing problems. The reason why many of us on this side take strong exception to some of the Land Duties, and particularly to the Undeveloped Land Duty, is that we believe that, analysed properly and judged on their merits, they will not do anything to relieve the slums, but will cause greater congestion; and that, instead of doing anything to afford an economic solution, they will only make worse many of the evils which we on this side just as much as hon Members opposite wish to see remedied. In that connection may I refer to two points —first, the probable increase in the cost of houses and house rent which the Undeveloped Land Duty in particular is likely to cause, and, secondly, the greater congestion to which it is likely to lead in the matter of housing. The whole essence of the question with regard to the cost of houses or house rent lies in the relative proportions of the cost of a house attributable to the land on which it stands, and to the bricks, mortar, and other works of construction. So much has been said in many parts of the country as to the extravagant cost of land that I think many people are unaware of the proportion which on the average the value of the land bears to the cost of the house upon it. It was my duty to analyse carefully for the Poor Law Commission the cost of a large number of buildings put up as artisans dwellings in many of our great cities. In the cost of the whole of those dwellings, on an average, the cost of the bricks and mortar and works of construction remained at from twelve to sixteen times as great as the cost of the land on which the houses were built—even high-priced building land. My own experience has been precisely the same. I was instrumental in getting started on a small scale a Garden City in Scotland, where exactly the same phenomenon occurred. In this case we gave the land gratis, but the cost of the houses was from twelve to sixteen times as great as the full building value of the land. The result becomes perfectly clear. If the building trade is made unpopular to the investor who wishes to lend money, or if it is made harder for the ordinary builder, who builds artisans' dwellings, almost invariably by the aid of borrowed capital, to borrow money, there will be an added cost to the houses quite out of proportion to any advantage which either the community at large or the locality will derive from the whole of the Undeveloped Land Duty. That there has been that additional cost and that there is likely to be greater additional cost for this reason, is clear from the facts. Many builders have been somewhat inclined after the Chancellor of the Exchequer's speeches about being generous to the poor and just to all, to look upon him as a sort of Robin Hood, who is going to redress inequalities in this way. I do not agree with them, except perhaps as to the facility which Robin Hood had for drawing an extremely long bow. At the same time there is no question that, more perhaps for the way in which he introduced his duties and the manner in which he talked about them than for the duties themselves, there has been an increasing apprehension on the part of builders and those who lend money to them. An industry always finds it harder to borrow money if there is any uncertainty or any speculative tax hanging over it. The result has been quite accountable in the cost of houses. In the case of the Garden City cottages in Scotland, an addition of 1 per cent, to the rate which the builder has to pay for his borrowed capital is equivalent, not only to the amount of the Undeveloped Land Duty that might be got from such land, but to three times the whole of the building value of the land put together. That was not very high-priced land, and in order to take a typical instance of a comparatively high-priced house, I may refer to some artisans' dwellings in a large provincial town. The cost of a house was about £175. In this case the builder was hardly able to borrow at all after the Budget was brought in. But an increase of 1 per cent, would be equivalent to an additional charge—which ultimately comes upon the man who lives in the house—of at least 35s. per annum. With rates added, the additional charge comes to 49s. The annual value of the cost of the site was 23s., and the amount of the duty would be only a few shillings. In that case the cost, in the addition to house rent, is more than twice as much as the whole of the land value put together.

The only other point to which I would call attention is again one which, through the duties I had to perform, came under my own personal observation. Members on both sides are doubtless equally anxious in the abstract to prevent overcrowding in large towns. I should like to deal with that point, not from the point of view of property, but rather from the point of view of public health and housing. If anyone were to pass from this House to St. Margaret's Place, in Bethnal Green, or to Tabard Street, in Southwark, or to some other of the less-favoured localities of the Metropolis, they would find as they passed from the less to the more overcrowded districts a constant increase in the rates of mortality and in the rates of attack from all those diseases which cause most suffering to the bulk of the community. This is not a matter of sentimentality. I have the figures with me showing that as one passes from the less to the more overcrowded districts in London the rate of consumption goes up. One-seventh of the whole of the cases under the Poor Law are probably due to consumption alone. The attack rate and the death rate from consumption goes up twofold passing from the less to the more overcrowded parts of London. If the actually overcrowded districts are taken out it increases fourfold. If Glasgow be taken, the figures for four-room, three-room, two-room, and one-room tenements will show that the death rate from consumption goes up nearly fourfold. The same is true of bronchitis and of most of the other diseases which inflict the greatest hardship on the bulk of the population. The result of these duties, and of the Undeveloped Land Duty in particular, can hardly fail to increase overcrowding with all the results which that entails. [Several HON. MEMBERS: "HOW?"] How is perfectly obvious. I am talking now not of agricultural land, or of market gardens, or of land reserved subject to exemption for open spaces, but of land being used as building land. The whole object of the Undeveloped Land Duty is to cause land to be put to its most developed use.

Mr. WEDGWOOD

No; it is to increase the supply of such land.

Mr. STEEL-MAITLAND

I am quoting from the official statements of right hon. Gentlemen opposite. If the hon. Member were Chancellor of the Exchequer perhaps a different duty would be brought in. The general object of this duty is to cause land to be put to its most developed use, and the definition of its most developed use given by the Chancellor of the Exchequer last year was that use which gives the best commercial advantage. And there is no other best commercial advantage except that which brings in the most money. The whole assumption that underlies the Land Duty, and the whole argument by which it is supported, is that the use which puts land to the best commercial advantage is the use which is best for the community. I submit that when the matter is analysed precisely the reverse of that is the case. Come down, if I may, for a moment to concrete facts. Only a year ago I myself was engaged in coming to terms with a builder for putting up houses in a developing suburb. The builder is now putting up the houses at the rate of fifteen houses per acre. He was willing to give a larger annual payment if he were allowed to put up twenty houses per acre. In other words, there would have been, had I. chosen to take it, a better commercial advantage if I had allowed the builder to put up twenty houses to the acre instead of fifteen. That same builder or other of his neighbours would have been willing to give still higher value if they had been able to put thirty houses to the acre instead of twenty. The reason is perfectly obvious. The builder sells the houses generally for a lump sum down. He is quite willing to give a larger amount for the land if he can put more houses upon it to sell. At the same time it stands to reason that though there is a higher commercial advantage if thirty houses are put upon the land than if fifteen are, it is not better value for the community, for it leads to congestion. I notice in the Debates in the last Parliament that the Lord Advocate said that "no doubt in the matter of valuation it would be decided what was the proper number of houses to be put on to any piece of land, and as to whether they should be terraced houses or semi-detached villas, or houses of other kind. You therefore assess your Undeveloped Land Duty accordingly."

I would only submit, if I could take the Lord Advocate away from a rather imaginative disposition down to actual streets, that he would find it impossible for himself or any landlord to work out a principle of that kind. Moreover, a more absolutely incompatible statement than his is with the principle of the tax I cannot conceive. He is proposing to set up, not an Undeveloped Land Duty based on the highest value, but an arbitrary value, which is to be settled by himself, so that his own proposal would knock the bottom out of the tax entirely without putting anything else in its stead. I am asked for proof as to the advantage to the builder if a larger value is given by him if he is allowed to put up thirty houses than if he is restricted to twenty. I know instances where a larger value would be given by the builder if he were allowed to put forty houses on to the acre, instead of being restricted to thirty, and a higher value still would be given by a man if he were allowed to erect big block-dwellings—and I think anyone conversant with the effect of 'block-dwellings will not be in favour of them. A higher value still is given if a man is allowed to put up either a common lodging-house or a public-house. There, again, the facts are beyond dispute. I was personally offered a higher value if I would allow a certain space of land to be used to put a public-house upon. This value was far in excess of the building value of the land for ordinary houses. It was a question of £50 against £25. Now I do not profess for one moment to be a Puritan. At the same time a public-house was not wanted in the locality, although I was told the plans had been passed, and the licence might have been got. There was a refusal in that instance to take the higher value.

I would submit to the judgment of hon. Gentlemen opposite that if you are to give play to the logical effects of the tax you have got to tax that piece of ground as though it could bring in money at the rate of the £50 which was offered. You have got to do it, and there is no way out of it. Will anyone stand out of the additional value that they might get if they are going to be penalised for so doing by having to pay a tax on a higher value than they are content in the interests of the community to take? I hope I may be pardoned for dealing with this matter. I only submit it for the consideration of the Chancellor of the Exchequer because, though he no doubt has heard all these arguments ad nauseam in the last Parliament, yet there is just this special reason for dealing with this Undeveloped Land Duty—the reason that by a certain question the conditions have changed. The conditions have changed by reason of the passing of the Housing and Town Planning Act of last Session. That Act purported to get in large measure the same object by a different and, I believe, much more satisfactory method. Therefore that Act having been passed, surely there is some reason for postponing a duty intended to have largely the same object, the effects of which, I believe, are a matter of serious and considerable doubt even to those hon. Gentlemen who support it. The Chancellor of the Exchequer brought in last year an Undeveloped Minerals Duty, and because that was found to be unworkable he substituted for it a Mineral Rights Duty, which, whether equitable or not, was at least practicable. Just in the same way, when the Housing and Town Planning Act has been passed, achieving largely the same objects, is it not only reasonable and fair to ask that that Act may be given something of a chance before this new measure is passed largely aiming at the same thing, but the results of which, I believe, in the minds of many hon. Members opposite, are doubtful and possibly very dangerous?

Mr. MUNRO FERGUSON

It is very difficult to tell what the exact effect of a tax will be. But to ordinary people like myself it is difficult to understand how a tax of this kind applied to a piece of vacant building land will increase overcrowding and slum property. I believe that anyone who has any practical knowledge of building land is inclined to believe—I admit we cannot be certain—that the effect of a Development Tax or an Increment Tax, or any other tax, upon building land will tend to bring that land more readily into the market, and will tend to diminish overcrowding. That is not merely my own impressions, but it is the impression of nearly everybody who lives in the great centres of population, apart from certain interests. This is no new subject which we are discussing tonight. It was fairly well discussed last Session. It has been before the House m many forms for a great many years past. When I remember it first the fashionable form was "Leasehold Enfranchisement," which was introduced by my hon. Friend the Member for Mile End. Several of us —I think eight or ten of us upon this side of the House—I do not see any of them present at this moment—opposed leasehold enfranchisement in favour of the principle that values created by the community should belong to the community. That is more or less the principle in a more moderate form which underlies the Land Taxes in the Budget. The hon. Member for South Bucks was exercised as to the burden borne by land, and especially so as to the effect of the Land Taxes upon agricultural land. With respect to the burdens upon land, it is undoubtedly true that upon the whole they are heavy. But we must discriminate. If the taxes upon agricultural land are heavy, certainly the taxes upon unoccupied building land have hitherto been light. They have been light upon that form of property belonging to the individual, the value of which has been given in 999 cases out of a 1,000, not by the individual, but by the community. Therefore the values given to the individual by the community have been lightly taxed, whereas the values given by the individual to his property in the form of agricultural land have been heavily taxed. Now as to the effect of these Clauses upon agriculture. I think the hon. and learned Gentleman should have remembered that if the burden upon agriculture would have been increased by the Budget, as it was originally introduced, those burdens were considerably reduced by the Budget when it was in Committee. The deductions were doubled for Income Tax. Woodlands were practically excluded from Death Duties. They, indeed, escaped to a great extent from taxation altogether. The Stamp Duties for small transfers under £500 were left as they were, and small transfers on land and houses have now become a considerable factor in the land. Under the Development Act much may be done to promote the interests of agriculture, and I believe it will be done, and something will be done to lighten the burdens upon the agricultural interest. I quite agree with the hon. and learned Gentleman that it would be inexpedient that the Increment Tax, even if it might be more fully applied than at present under the Budget to building land, should be applied to agricultural land because of its inapplicability It was opposed very strongly by hon. Gentleman from Ireland, and eventually that tax was dropped. It is fair, when we are considering the burdens upon agriculture in view of these Resolutions, to remember what was done for the agricultural community in the Budget last year. I think that those interested in agriculture upon the other side of the House have hardly done justice to the concessions which the Chancellor of the Exchequer has made. To what has been done already the Chancellor of the Exchequer was favourably inclined to give another 5 per cent, reduction on the Income Tax. The right hon. Gentleman expressed himself favourably in that direction, and he has frankly admitted the need for a readjustment of the incidence of local taxation There is an admirable Report upon the question of local taxation by Lord Balfour of Burleigh, which was printed during the late Government. The late Government, I suppose on the principle that "a bird in the hand is worth two in the bush" passed the Agricultural Relief Act, which has been a very doubtful advantage to agriculture as compared with what the readjustment of local taxation would be. There is no doubt that the consideration of the whole question of the incidence of local taxation upon agriculture was vitally prejudiced by the policy under which what we on this side of the House commonly called "doles to agriculture" were given.

I attach great importance to the fact that the Chancellor of the Exchequer has given such prominence to his recognition of the need of the readjustment of local taxation, and however great the new burdens may be in some respects upon capital—I think necessary burdens—this at any rate may be said, that the true interests of agriculture have never received greater attention than they did during the discussion of the I Budget in this House. I say that frankly. There were some points on which I opposed the Budget, but on all these points where I opposed it I do not know one where my contentions were not fairly considered and practically met in the Budget. I think my brother agriculturists might make a little more frank recognition of that.

With respect to the Increment Taxes, abjection has been taken to the fact that the product of these taxes does not all go to the local authority. There would be great difficulty in devising any scheme under which the local authorities could raise this money for themselves. I think the money could be much better raised under State machinery. Only half of these taxes is to go back to the local authorities, I think this distribution may be better than if the money was raised and spent locally. Half of the proceeds of the yield of the Mineral Taxes to which my hon. Friend opposite has referred is to go to the local authority, and that will make good some of what is lost by the transfer of the yield of the increment to the National Exchequer. I think that is an extremely moderate and satisfactory proposal. I should like to know which of the new Members or the old Members who contested seats in any of the towns, or seats in the North, would refuse to acknowledge that the feeling is practically unanimous in favour of the taxation of land values?

Mr. GEORGE YOUNGER

In favour of the rating of them?

Mr. MUNRO FERGUSON

lam talking of the taxation of values. I have just given an explanation that the system of raising taxation by a central authority is superior to anything that can be devised by the local authorities. I talked this matter over with the principal burgh Chamberlain and others in Scotland, who have intimate knowledge of the case, and who generally belong to the same politics as my hon. Friend opposite, and there are great differences of opinion. I found it myself, assisting in drafting Bills which I brought into this House upon the subject. There is immense practical difficulty in raising the money locally. I think it is much better done by this system, and to meet the objection that part of the tax was for the Imperial Exchequer, the produce of half the Mineral Tax will go to the local authority to make good any Exchequer deficit. At any rate, I am perfectly certain that in Scotland and the North of England neither hon. Gentlemen opposite nor their Friends will deny the feeling is practically unanimous in favour of the taxation of land values. I have found—and I have been upon many inquiries and connected with many Bills— that under the Budget the best and most workmanlike scheme is produced that was yet devised to carry out what is the general opinion of the country.

This proposal has often been called Socialistic. I am certainly against Socialism, but I doubt if there is any line of action in which you can better combat Socialism than by recognising the rights of the community in matters of this kind and meeting the just claims that the community has a right to make upon individual property which is now recognised in the Budget. Those who, recognising what public opinion is, and knowing what the circumstances are, opposed this measure of common justice to the community, are doing far more than Socialists themselves to promote the cause of Socialism in this country.

Mr. GEORGE YOUNGER

I very frankly agree that in Scotland there is undoubtedly a very strong desire for some better taxation of land values. I prefer to say the desire is for the rating of land values for local purposes. I have certainly myself advocated something of that kind for many long years, but while I have done that, I cannot say that I at all agree with the taxes imposed by the Budget or with the conditions under which these taxes are levied. I entirely agree that it is a very important subject, and I wholly agree that there are circumstances in which it is very fair indeed to rate such values for local purposes. But I do say, and I am in the recollection of those who were in the last House of Commons when the right hon. Gentleman made his Budget speech, that the root foundation of the increment taxation imposed by the right hon. Gentleman was a proposal to tax increment value which had accrued to individuals who themselves had done nothing whatever to create it. That was the root principle underlying that taxation, and while I am not going to weary the House with a re-echo of the interminable speeches I made last year upon this question, I wish to refer to it now and to that root principle for the purpose of protesting, as I did last year, against the Scotch feuars being roped in for increment taxes under this Budget. I say it is totally contrary to the principle laid down by the right hon. Gentleman who introduced them. Instead of taxing increment in that particular case in the possession of someone who did not create it, he is taxing the increment which has practically been created in all the urban land in Scotland by the feuars in Scotland. There is a great deal of contention about this. I found it so during my election. I made a pretty strong point about the extremely harsh manner in which I thought the Scotch feuars were being treated. I believe I owe my return to the fact that I was able to do so. I believe the feuars of Ayr saved my skin, as the saying goes. Yet, notwithstanding that, I found a very great deal of ignorance upon the subject on the part of those who one would have thought should have understood it. I was assailed on every occasion by the chief local organ of Liberalism in my Constituency—a very important, a very influential, and a very powerful paper—which stated that I was throwing dust in the eyes of the feuars by this statement.

They stated that a Scotch feuar was not touched or affected by this tax, and that under the circumstances he was not likely to be a sufferer. Everybody in this House who went through the Debates of last year knows perfectly well that the Scotch feuar is roped in in the first clause of the Bill. If anyone wants to satisfy himself on that point he has only to read Clause 8, where he will find certain exemptions provided for certain of those people from this tax. Of course, it must be pretty clear there would be no need to take them out unless they were brought in in an earlier part of the Bill. And if anyone looks at the Definition Clause 42, he will find the Scotch feuar for all practical purposes of the Budget the owner of the land. I cannot get rid of this charge against my political honour. I am still charged with having misrepresented the position. I think those who make that charge do it mistakenly, not from knowledge, but from the depths of their ignorance. I only hope, when the right hon. Gentleman's official papers come to the. feuars of Scotland demanding all sorts of information from them about the. size and condition of their feus, they will take a very different view with regard to the Budget and with regard to this tax from what some of them do at present. When we get to the next election, which I hope will be sufficiently far off to enable those papers to reach the feuars, I am hopeful that as a result I may get back quite comfortably to this House again. I make that statement here publicly an the House of Commons, where I can be contradicted if I am wrong, and I say now, fortunately, in the presence of the Chancellor, that I was perfectly justified in stating that the Scotch feuars are affected, and the Chancellor of the Exchequer would contradict me if I were wrong.

I listened with very great interest to-day to the figures which the Chancellor of the Exchequer submitted to the Committee. I am very glad, indeed, that he was able to present so hopeful a case to the Committee as to the balancing of the revenue and expenditure of last year. He takes credit for a good many sums outstanding, which he hopes to collect. Amongst these, of course, are the Liquor Licence Duties. I do not intend to deal with them, or to discuss them now but I observe the Chancellor of the Exchequer stated he expected to receive £2,100,000 from that source. If my memory serves me correctly, when he introduced his Budget last year, he said the sum he anticipated to raise from that source of income was £2,600,000, and that the concessions he made—some of which were not concessions at all—reduced that sum to £2,100,000. I mention that in order to put this point. I think he will get that, and I think he will get more. The burden of my complaint last year was that the officials at the Treasury and the Chancellor of the Exchequer had never taken the trouble to mike a careful and specific estimate of the field of these duties. The present Licence Duties yield something like £2,200,000. Under the new conditions, provided the licence holders are not strangled, the money to be yielded out of these taxes ought certainly to be a great deal more. We advanced that argument over and over again. It was impossible to give definite data, because, of course, these taxes were not being raised on specific sums, but on sums varying between £20 and £30, or £30 and £40, and so on, and without knowing the rentals of houses between the different points it was impossible to make an accurate estimate. The Chancellor of the Exchequer was asked for the information; he was in a position to get it. His officials had been during the last few months having a well-deserved holiday, but he might have had a return prepared, and then the Chancellor of the Exchequer could have come down and told the House to a shilling what he could get out of these duties with this exception, that it would have been impossible, of course, to say what the new valuation of houses over £500 would amount to and how far they would or would not have affected it. We have shown over and over again that that is an illusory concession, and that this valuation would be higher than the existing one.

Mr. LLOYD-GEORGE

How am I to arrive at any accurate estimate of the number of licence holders? I cannot possibly do it, and I have not had the time.

Mr. GEORGE YOUNGER

The important point is the on-licences and the beerhouses. I think the right hon. Gentleman ought to have made some attempt to come down here with a much more correct estimate than he has presented. I do not think this would have mattered very much in ordinary circumstances, but we are now dealing with extraordinary circumstances, and the Chancellor of the Exchequer is going this year to collect two sets of licences on the existing scale. How on earth they are going to be paid, or how the London brewers are going to pay this double taxation in a single year, I am sure I do not know, but I should not like to be in their position. This makes it all the more necessary that a very correct estimate should have been made in order that not more than the £2,000.000 required should be taken out of the pockets of these people. You are now dealing with a two-year period, and you will crush these people more than ever. I think that is a matter which we have a right to complain of, and some effort should have been made to arrive at a much more correct estimate. With regard to the dismal failure which has attended the additional 3s. 9d. duty on spirits, I was inclined to gather from the Chancellor of the Exchequer's remarks that he could not tell exactly how it was going to work until after a two years' trial, and apparently he has an idea of continuing it for another year. I hope hon. Members below the Gangway will be able to stop him doing that. I hope, in the interests of my Constituents, who are extremely hard hit by tins tax, he will see his way to revert to more moderate and reasonable finance in this matter. My own impression is that the right hon. Gentleman would get more out of an 11s. tax than he is likely to get out of a tax at 14s. 9d. The facts show a great reduction in the consumption of spirits, and even if the duty is restored to its old figure, it will take some little time before those habits of the people return which he has taken so much credit for having to a certain extent diminished. If you change the habits of the people only for seven, eight, or nine months, they do not return to their old love immediately. It does not, however, rest with me to discuss that point. The right hon. Gentleman knows that this has been a very serious matter, not only in Ireland, but also in Scotland. I am sure he realises that if any reduction in the Spirit Duty is to be made for Ireland that cannot be done without applying it to Scotland also. I had hoped that to-day the 14s. 9d. duty would have been fixed up to a certain date, after which it would have been automatically reduced. That has not been done, and consequently the trade will remain in the same disturbed and uncomfortable position it has been in ever since this taxation was brought forward. I think the right hon. Gentleman is perfectly right in what he says about the extraordinary depletion in the stocks at present held by various traders. That is a very natural state of things, because they know that no other Chancellor of the Exchequer will ever put the duty above 14s. 9d., and there is always the off-chance that some sensible Chancellor of the Exchequer will take the duty down. The trade has hopes that the right hon. Gentleman is showing some glimmerings of sense in that direction, and they hope there may be a reduction in this respect in the next Budget. I believe I am right in thinking that the right hon. Gentleman expects to get very nearly the whole of his estimate from the Income Tax.

Mr. LLOYD-GEORGE

Within £350,000.

Mr. GEORGE YOUNGER

Have the right hon. Gentleman and his advisers! considered the effect of the Budget upon the returns which have already been made under the Income Tax assessments? Has he considered the effect of Clause 134 of the Act of 1842 on the three-years' average of assessments that have been sent in to his surveyors of taxes upon which he has based the estimate he has given to the House to-day? In view of the disturbance created by the passing of the Budget in a great many trades, together with the enormous loss to the distilling trade, the licensed trade, and many other trades, have the right hon. Gentleman's advisers considered that all these people are entitled to plead that specific causes have arisen owing to the passing of this Budget which will enable them to have a reduction of their assessments over the last three years? I doubt whether the right hon. Gentleman has considered that point, because he does not take any notice. This is a very important point, and I always know from the expression of the right hon. Gentleman's countenance whether he has taken into account particular points or not. This is a matter to which he ought to give his special attention. If by any chance it is held that the passing of this Budget is a specific cause of that character, and that these reassessments can be demanded, do not let him forget that he will have to assess them on the profits of this year, and not on the average of the previous three years; he will have to begin from that point to set up his new average of three years. It is a serious matter which may involve a very large sum of money, and which may to a great extent vitiate his estimate.

Mr. LLOYD-GEORGE

Does the hon. Member mean brewers and distillers?

Mr. GEORGE YOUNGER

Yes, I mean brewers, distillers, and all traders who can show that the Budget has specifically affected their trade. This point is worth the Chancellor of the Exchequer's notice because it has been brought to my attention by those who understand what they are talking about. Probably the right hon. Gentleman will say that it is a question for the local Commissioners and not the Treasury. It is a point of enormous importance whether they come within the purview of the particular clause I have quoted, and it is a point which should be decided upon by headquarters here, who ought to give us a definite pronouncement. I think it is a mistake that this Budget taxes people not on what they have got, but on the kind of property they have, and in that respect it is unfair. As for the liquor licence duty, it is very hard upon the traders, and it is bound to ruin a great many people. I agree that there are many anomalies in the existing scale which ought to be redressed, but I think the right hon. Gentleman has gone much too far, and has been very harsh to the trade. I am sorry in the new Budget he has not made any concessions whatever to the appeals made to him during our long Debates last year.

Mr. SNOWDEN

I rise mainly for the purpose of dealing with one or two observations which have been made by hon. Members opposite. I would like to offer my congratulations to the Chancellor of the Exchequer upon the remarkably satisfactory statement which he put before the Committee at the earlier part of this Debate. I have all the more pleasure in doing that because there have been one or two occasions upon which I had to make remarks perhaps not quite so complimentary to the right hon. Gentleman. I hope before very long he will be the happy possessor of an estimated surplus of something like £3,000,000. I do not think the right hon. Gentleman was justified in his statement that if the stocks of the licensed trade had not been reduced to their present point he would have had an additional revenue of something over £1,000,000. The right hon. Gentleman does not appear to have taken into consideration the fact that the higher the duty the less will be the consumption and the amount of duty paid, and this involves the locking-up of a large amount of stock.

Mr. LLOYD-GEORGE

Yes, I took that fact into consideration, and I allowed for it £1,500,000.

Mr. SNOWDEN

I think everybody, including the right hon. Gentleman himself, anticipated that a very large increase in the Spirit Duty would be followed by a considerable reduction in consumption. Personally I do not deplore that. I am one of those who have taken up the position that you cannot altogether dissociate taxation and the form of taxation from its effect upon social questions. I think in previous experiments the increase of the Spirit Duty proved that the limit had been reached, and that any further increase in the tax was certain to bring about diminished returns. The right hon. Gentleman told us that he calculated that the reduction in the consumption of spirits was something between 20 and 25 per cent. I do not gather from the statement made by the Chancellor of the Exchequer that the reduction in the consumption of spirits has been followed by any increase at all in the consumption of other forms of alcoholic liquor.

8.0 P.M.

If that be the case I think the right hon. Gentleman may congratulate himself upon having achieved a larger measure of temperance reform than has ever been achieved before by any attempt of the Legislature, and from that point of view I do not at all deplore the experiment the right hon. Gentleman has gained. There is just one other point arising out of the right hon. Gentleman's statement which I may perhaps be allowed to mention. There is a very considerable loss in the revenue from spirits, one form of indirect taxation, and I understood the right hon. Gentleman to say that there was also a falling off in the receipts from the Tea Duty, though not a very large one, I admit. The right hon. Gentleman attempted to account for it by forestalments. Then the Tobacco-Duty has only just realised expectations.

Mr. LLOYD-GEORGE

Not quite.

Mr. SNOWDEN

My point is that in all the items of indirect taxation there has been a falling off, and the surplus is accounted for wholly by the returns from direct taxation—the Income Tax, the Death Duties, and the other forms of direct taxation proposed in the Budget. What is the moral of that? The lesson of that, to my mind at any rate, is that we have reached the limits of indirect taxation, and that the people upon whom indirect taxation falls cannot possibly afford to pay a larger amount of taxation, to the national revenue. It also proves something else; it proves that we have not by any means reached the limits of direct taxation. I think, therefore, the right hon. Gentleman, if he requires, as he certainly will require, increased taxation, he ought to raise that increase in, such a way and in such a form as will probably realise his anticipations and his needs.

I was very much interested in the speech of the hon. Member for the Southern Division of Buckinghamshire (Sir A. Cripps). He objected altogether to any part of the increment value of the land going for Imperial purposes. He made the extraordinary assumption that the whole of the increment value of land is due to local effort or arises from local causes. It is some satisfaction to those who sit upon these benches to have a recognition from the opposite side of the House that there is such a thing as unearned increment in the value of land, and that there is a value of land hitherto appropriated by landlords that has not been earned by the landlords and that should be applied for social purposes. If we once have that concession made, then I think the justification for taxation, either local or national, is established. The hon. Member put forward the extraordinary contention that the social value of land is due entirely to local causes. Really, I cannot think that he himself can believe such a statement as that. Take the enormous land values in any large centre of population; take Glasgow or Liverpool. The enormous increase in the value of the land which has been required for the purpose of making docks in Liverpool is known to everyone. Was that due to Liverpool? The very existence of Liverpool is due to the other parts of the country. Take away Lancashire and what becomes of Liverpool? What becomes of the good of docks in Liverpool? It is not possible to assign the relative value of land in any locality due to national or local causes, but we know there does enter into the social value of land national and local causes. I therefore think the proposal in this Budget to halve it as between national and local revenue is the easiest, the best, and most practical way of getting out of the difficulty.

The same hon. Gentleman protested against any taxation of land which was used for agricultural purposes. My position and the position I took up on the Debates on the Finance Bill last year is this: I would tax the social value of land and the increment value of land, if it were due to social causes, or if it were not the result of the expenditure of the individual's capital. I would tax it, whether it was agricultural land or any other form of land. If it has a social value, then that value belongs to the community, and no individual has a right to appropriate it. The hon. Member would go infinitely further than is proposed in the Finance Bill. He would not only have all agricultural land exempted from the Increment Tax, but he would have all land, whatever its market value might be, exempted if it were used for agricultural purposes. The very purpose of the Undeveloped Land Tax is to get at land which is used for agricultural purposes, but which has a higher market value. If I were in the position of the right hon. Gentleman I might make a bargain with the hon. Member opposite. If the owner of that land were willing to sell it for public purposes at agricultural value, then I might close with him. The hon. Member knows quite well that, although it may be at any given time used for agricultural purposes only, still if it be required through the necessities of the community for some other purpose, it suddenly takes a highly inflated value. Every Member of the Committee is perfectly familiar with hundreds of cases to which that would apply.

The other point I want to refer to is that put forward by an hon. Member for one of the Divisions of Birmingham (Mr. Steel-Maitland). He contended that the Undeveloped Land Tax will not do anything for social reform, that it will not help unemployment, that it will not touch the slums, and that it will tend to overcrowding. He was asked from these benches how it is going to have that effect, but, although the hon. Member made a long speech, he never answered the question. He went on to talk about builders putting thirty houses on the acre where, under other conditions, they might be inclined to put only fifteen. Is not that what is done at present? A builder gets as big a return from his land as he possibly can, and the question of overcrowding is not going to be dealt with altogether by the Undeveloped Land Tax; it will have to be dealt with by Public Health Legislation. An ounce of fact is worth a ton of theory, and we have established facts to prove what is going to be the effect of the Undeveloped Land Tax upon the building trade. Hon. Members are no doubt familiar with a Blue Book published in the early days of the last Parliament, giving reports from our Colonies in regard to to the effect of such a tax in Australia and in New Zealand. There were differences of opinion expressed by those who made those reports, but they were all agreed upon one point. They were all agreed that the Undeveloped Land Tax had had a remarkable effect upon the building trade. It had stimulated the building trade, and had increased employment in the building trade. If we can improve the building trade, we improve every other trade in the country. The building trade cannot be flourishing without setting every occupation in the country into activity.

The party with which I am associated did not support the Budget last year in its entirety. We supported the Land Proposals of the Budget, the Increment Tax Proposals, and the Death Duties, but we objected to the increase in indirect taxation. The circumstances to-day are quite different. We must take the Budget as a whole. I am opposed, of course, as strongly as ever to the Tea Duty which is proposed in the Budget. Hon. Members who were in the last Parliament know that every year I moved a reduction in the Tea Duty. I am opposed to it still; but I should vote even for the Tea Duty upon this occasion, because I recognise that I must vote for the Budget as a whole. The Budget has been submitted to the consideration of the country, and the country has approved of the Budget, and I am sufficiently a democrat to obey the will of the people.

Sir FREDERICK BANBURY

I only wish to ask a few questions of the Chancellor of the Exchequer, and to draw his attention to a few facts. The Chancellor of the Exchequer congratulated himself, and the hon. Member who has just sat down congratulated the right hon. Gentleman, upon the successful issue of the Budget controversy. The right hon. Gentleman told us that the result of all this was that he had a surplus of £2,800,000 or £2,900,000. Is it not a fact that he has arrived at that surplus entirely by the appropriation of the Sinking Fund? If he had left the amount devoted to the service of the debt at £28,000,000, instead of having a surplus of £2,900,000, he would have had a deficit of very nearly £4,000,000. The Chancellor of the Exchequer told us the annual expenditure was £157,000,000. Has he not, in making that statement, taken the service of the debt at £22,000,000 and not £28,000,000? If he has done that, my statement is accurate that he will have a deficit of somewhere about £4,000,000. We never could get at the exact amount taken from the Sinking Fund, but I believe I am correct in saying that at first it was £3,000,000, then there was another £500,000, and finally there was £2,500,000, making in all £6,000,000. Therefore, as a matter of fact, instead of there being a surplus of £2,900,000, there is a deficit of £4,000,000. What does he propose to do to give effect to his statement that this surplus could be used either for the payment of debt or for any other purpose. I do not think it can be used for any other purpose. It is a surplus which has arisen in the financial year which is passed, and, according to the laws under which we are living, any surplus which arises in the financial year becomes, at the conclusion of that financial year, part of the old Sinking Fund, and is obliged to be devoted to the extinction of debt. Unless the Chancellor of the Exchequer intends to revive in some way his proposal for the abolition of a Sinking Fund, I do not see how he can use this surplus for any purpose except the reduction of debt.

The hon. Member for one of the Divisions of Birmingham said the best test of the prosperity of the country was the standard of its credit. He pointed out that since 1906, while English credit had decreased in value the credit of every foreign country had increased. The right hon. Gentleman the Chancellor of the Exchequer was not in the House at the time, but I believe he will agree that that statement is absolutely correct. The fact is very extraordinary that since April, 1908, Consols have decreased by something like 6 per cent.—1908 was the year in which the right hon. Gentleman came into office— whereas Germany, France, Russia, Japan, and, as far as I know, every other great country, while increasing its National Debt, has increased the value of its stocks.

Mr. LLOYD-GEORGE

How much did Consols fail when the hon. Baronet's Leaders were in office?

Sir F. BANBURY

That is not the point. According to the right hon. Gentleman opposite my Leaders were always wrong in their policy, and he and his Friends were going to rectify their wrong-doing when they came into power. They have not done so, at any rate so far as finances are concerned. The fall in Consuls is as great now as it has been at any time during the last seven or eight years.

Mr. LLOYD-GEORGE

No.

Sir F. BANBURY

I think they were at 80.

Mr. LLOYD-GEORGE

Does the hon. Baronet mean to say that the fall during the last two years has been greater than at any other time? Does he say it has been greater during the last two years than it was between 1899 and 1904?

Sir F. BANBURY

I said during the last ten years. In 1899 Consols were, I think, at 111. They were then Two and Three-quarter per Cent. Stock, whereas they are now Two and a Half per Cent., and that is a fact which must be taken into consideration. They did not become Two and a Half per Cent. Stock until 1902, and the fall between those dates had been greater than at any other time. It must also be remembered there is no war. Here we have times of peace, and I repeat that the value has decreased in an extraordinary way, while at the same time the credit of all other countries has increased. I only rose to put these two questions to the Chancellor of the Exchequer. I should have liked to deal with other points that have been raised, but it is now twenty minutes past eight, and as I have not had my dinner I will defer any further remarks to a later stage.

Mr. CHARLES ROBERTS

I wish to join in the chorus of congratulations to the Chancellor of the Exchequer from this side of the House. I do not imagine any one of us thought that, after having to face so many disturbing elements, such good results would have been finally arrived at as the right hon. Gentleman has been able to show to-day. I only wish to deal with one or two points in the statement which he submitted to us. This Debate, it seems to me, is a somewhat dim and distant echo of the half-remembered battles of last year. There are some points of reality about it, however. I am sure we all listened with great interest to the facts which the Chancellor of the Exchequer told us in reference to his fiscal experiences in connection with the Spirit Duties. It is on that subject I wish to say a word or two. I desire to say something on what the hon. Member for Ayr Burghs described as "the dismal failure of the Spirit Duties." I protest against the attitude which was taken up by the Front Opposition Bench, and especially by the right hon. Gentleman the Member for East Worcestershire, that it is the duty of a Chancellor of the Exchequer, in regard to his taxation to pay attention only to fiscal considerations, and not to have regard to the indirect social effects of his taxes. I am sure that the doctrine that you must not go into the secondary effects of such taxes has not been held by Chancellors of the Exchequer on the Conservative side. I remember a well-known statement by Sir Stafford North-cote when he was Chancellor of the Exchequer, and when he was faced by a decline in the revenue from spirits. He boldly stated— '' If the reduction of the revenue should he due to a material and considerable change in the habits of the people and to increasing habits of temperance and abstinence from the use of ardent spirits, I venture to say that the amount of wealth such a change would bring to the nation would utterly throw into the shade the amount of revenue now derived from the Spirit Duty, and we should not only see with satisfaction a diminution of the revenue from such a cause, but would find in various ways that the Exchequer would not suffer from the loss it might sustain in that direction. When he found that the revenue from the Spirit Duty was drying up he did not complain, as the right hon. Gentleman the Member for East Worcestershire did today, that the Chancellor of the Exchequer was drying up this single source of revenue, without thinking also of the social effects which might follow on that. I notice, too, that the liquor trade itself quite recognises that Chancellors of the Exchequer should have regard to these secondary considerations, for I have here an extract from the case which was really written against the system of high licences then being foreshadowed by Mr. Frederick Thompson, a director of brewing companies in England and the United States. That gentleman said:— It is the aim of all civilised Governments in taxing alcoholic liquors not only to raise revenue but also to guide the public taste towards the consumption of less alcoholic beverages. In that effort the Chancellor of the Exchequer has succeeded, if he has not succeeded in getting the revenue he expected. I think the fall in the revenue from the Spirit Duty cannot be ascribed entirely to the effect of the increased taxes. It was due partly to bad trade, from which a natural fall might have been expected, and the reduction of licences going on in the country also tended to make one believe that a lesser revenue would result. Besides that—and this is a point, I think, which has not really been dealt with—the reduction has been very largely due to the action of the trade itself. The Chancellor of the Exchequer supposed the trade would recoup itself by putting an extra halfpenny on the threepenny glass of spirits—a rise of about 16 per cent. But that is not what the trade did. It put on an extra penny, and thereby increased the price by 32 per cent. Shortly after the duty was imposed I bought a good deal of spirits for scientific investigation and had the drink analysed. Care in calculation is needed, because the real price depends upon the strength of the spirits and the amount of water and other innocuous beverages which may be included in the liquor sold over the counter; but I found, certainly in the working-class public-houses in London, that the price charged was the extra penny and not the extra half-penny which the Chancellor of the Exchequer expected the trade would charge.

Apparently, the trade thought if it had to raise the price at all it would raise it substantially, and I think that has accounted largely for the reduction of the consumption which the Chancellor of the Exchequer estimates at about 22 per cent. I notice the tendency to always speak of this tax as a Whisky Tax, but I think hon. Members from Ireland must forgive English Members for saying that the Spirit Duty concerns them least of all. Ninety per cent. of it is actually paid by the consumer in Great Britain, and 55 per cent. by the English consumer, and therefore it does not fall as a special grievance on Ireland. I do not wish to take up an unsympathetic attitude towards the Irish claim for a reduction of taxation. I have an uneasy suspicion myself that we are taxing Ireland heavily, and that we are getting a revenue from Ireland as a poor population which is really out of proportion to the wealth of that country; but I cannot forget that all the money that we received from Ireland this year goes back to Ireland with two and a quarter million pounds extra in addition, so that the Budget, taken in connection with the grant of old age pensions, means that there is really a deficit in regard to Ireland for the first time for many years. I do not know how far that figure is absolutely accurate, it may be affected by later calculations, but that was the figure which was given, and the real grievance of Ireland seems to me to be far more that the expenditure of Ireland is on an extravagant scale, and I am quite ready to believe that if they had the management of their own affairs they would be able to reduce that expenditure. I do not think, therefore, that we are bleeding Ireland for the benefit of the Empire; on the contrary, Ireland is bleeding the Empire, perhaps in the interests of extravagant administration, but it is getting out of the United Kingdom as a whole more proportionately than other parts. I can quite understand, however, that wherever the Irish feel a tax to which they contribute they would wish to get rid of it. If there are any taxes which are going to be taken off in the future I hope it will be some other form of indirect taxation rather than the Spirit Duty. I hope it will be the duty on tea and sugar rather than that on spirits, and I believe there is much more chance of Ireland getting a reduction of its taxation in that way than in any other.

I have said that I think we are entitled to pay real attention to secondary effects of taxation. Certainly that was Mr. Gladstone's view, because he introduced grocers' licences, not merely for the benefit of the revenue, but also because he thought—mistakenly as it turned out— that it would be of great advantage to the social well-being of the people. Mr. Gladstone's precedent certainly gave effect to the doctrine that a great financier should regard the great and indirect social effects of the taxation which he imposed, and, after all, there has been an indirect effect of this social character in the case of the Spirit Duty. If you go from one end of the United Kingdom to another you find not only a diminution in the consumption, but a very large and striking diminution in the convictions for drunkenness. Taking Scotland, in Glasgow, Edinburgh and Dundee, in 1909, the figures for drunkenness from April to December fell from 24,616 to 18,152. The diminution has not been uniform, but it has been conspicuous in different parts of the country; and in Scotland, whether because they are a thrifty people, and because the additional penny on the glass has been the last straw which breaks the camel's back, I do not know, but for some reason there the results have been more striking than anyone would have imagined probable. In Ireland—parts of Ireland—the reduction of drunkenness has been very great, and in our own country also. I have not obtained complete figures, but I have made it my business to get returns from a great number of Brewster Sessions as to the decrease of intemperance in the past year, I am making all allowances for the tact that there has been bad trade in certain parts of the country, and that that tends to bring down the figures; but having gone through some 200 reports, I find the reduction in drunkenness is very heavy. In Sunderland it is 26 per cent., in Berwick 28 per cent., in Bristol 27 per cent., Grimsby 21 per cent., South Shields 24 per cent., and Birkenhead 31 per cent., and in some cases it rises even to 50 per cent. That is the result of this taxation, and then there is the reduction in consumption also. This is not the time at which—and it would not be in order—to discuss what tax must stay or must go. One hon. Member has already spoken from the other side of the House, saying what "must go," and the hon. Member for Ayr Burghs (Mr. George Younger), who always conducts his business with great geniality, pressed his case upon the Chancellor of the Exchequer. I have only to say to the Chancellor of the Exchequer that there are many Members in this House, and a great body of public opinion outside it in the country, which would regard the withdrawal of these Spirit Duties as deplorable. There is a great body of opinion which attaches great and profound importance to the retention of these taxes.

Mr. CHARLES BATHURST

In addressing this House in a speech for the first time, I feel I can claim, and I am sure that I shall receive its indulgence. The hon. Member for Lincoln find the hon. Member for Blackburn have both referred to the social effects of this taxation. May I remind the House that the effects of such taxation in the case of many items in this Budget are not always what are expected. For instance, the imposition of these high Spirit Duties has had the effect of seriously injuring the cause of higher education in this country, and I venture to-hope when the Chancellor of the Exchequer replies to many of the speeches which have been made to-day, he will re- assure some of us who are interested in higher or secondary education in this country that the gap which has been created largely, if not mainly, by the imposition of these duties will be filled from some other source. Personally I consider it most unfortunate that education should in any way depend upon the consumption of drink, and now that it has been found utterly impossible for most of the counties in England to adequately maintain any proper system of higher education on such a basis, I earnestly hope the Government will take the earliest opportunity of showing that they intend to make good that deficiency from other than local sources. As regards the Licensing Duties I am not quite satisfied that the social effects are going to be quite what the hon. Member (Mr. Charles.Roberts) anticipates. It is perfectly clear to me that the duties are going to have the effect of putting a premium on the tied house, and certainly doing a deal of damage, possibly crushing out altogether the free or non-tied house, which, comparing the two kinds of houses, is certainly the house which, in the interests of temperance, I should prefer to see perpetuated. I act upon the licensing committee for the county of Gloucester, and since the Licensing Act of 1904 came into operation, at any rate until these proposals were brought before Parliament, there was a steady decrease in the number of superfluous houses, and we anticipated that, if only the administration of the law were allowed to take its normal course without interference, the whole of the superfluous houses in that county would have been abolished in the course of five years without any injustice being done to a class which may carry on a traffic which is unpopular in the minds of the present Government, but which includes a large number of honest men, who are perfectly entitled to receive some sort of compensation in the event of their business being destroyed.

I want to refer to a little rebuke which was administered just now to Members on this side of the House by the hon. Member (Mr. Munro Ferguson). He said, and possibly with some justice, that we had not recognised the concessions which the right hon. Gentleman had made to the agricultural interests in the course of last year's discussions on the Budget. I am prepared to recognise to the full certain concessions which the right hon. Gentleman made. I collected certain facts and figures for him, as being then the secretary of the Central Land Association, in order to bring to his notice the fact that agricultural landowners were, in the matter of Income Tax under Schedule A, being most seriously, and as I think he ultimately admitted, most unfairly, overtaxed in comparison with the owners of other forms of property and persons interested in trade and industry. The Chancellor of the Exchequer said he was prepared to make a concession to the extent of half a million of money in order to remedy this admitted injustice. From what the right hon. Gentleman has said to-day I gather that the sum is not quite half a million. It appears to be reduced to£300,000.

Mr. LLOYD-GEORGE

I do not want there to be any mistake as to that. Only £300,000 will be paid in the course of the financial year. It will be quite impossible to examine the claims. But the Government have not withdrawn at all from their position. It is proposed to allocate £500,000, but it is only £300,000 for the financial year.

Mr. CHARLES BATHURST

I am glad to receive that assurance, but I think on the right hon. Gentleman's own admission this concesion of £500,000 in no way represents what is really due to agricultural landowners in this country, if they are going to be treated on the same footing as persons interested in other kinds of property and in trade and industry. I cannot believe myself that even the present Government will consider that agricultural landowners are being properly treated until something nearer that three millions of money, the amount to which admittedly agricultural landowners are entitled, if justice is done in this matter, has been, allowed to them in respect of Income Tax under Schedule A. The hon. Member (Mr. Munro Ferguson) congratulated the right hon. Gentleman on having expressed some sympathy with the idea of readjusting Imperial and local burdens. I think he said the right hon. Gentleman had frankly admitted the need of such readjustment. Those who are interested in the agricultural industry would like to see something more than a frank admission-on the part of the right hon. Gentleman. We should like to see that readjustment carried into effect as soon as possible, so as in some measure to reduce these local burdens which so largely are imposed for national services.

No reference whatever has been made to that one item in the financial proposals upon which, in my opinion, the Chancellor of the Exchequer is entitled to more commendation than for any part of these proposals—the institution of the Development Fund. It is true it is not part of the Finance Bill, but it is part of the original financial proposals which I, for one, welcome most heartily, and which I have every reason to believe will be the means in the future of developing agricultural land to a greater extent than it has ever been developed in its recent history, and something more on a par with the developments which are going on in other countries in Europe. When I hear hon. Gentlemen on the other side of the House state, and keep on repeating, that it is right to levy these Land Taxes, because increased value has been given to the land by the community—and the hon. Member (Mr. Munro Ferguson) went further and said he thought it was desirable that such taxation should be levied by a central authority—I would remind the Committee that if the increased value is given by the community it is mainly, if not wholly, by the local community, and therefore the proceeds of these taxes should go to the local authority in reduction of the rates, and further that it is not intended, as I understand the right hon. Gentleman's proposals, even if a certain proportion of the funds so derived does go in alleviation of rates, to apply such sum in the locality, the community of which has added value to that land. In fact so far as I can understand the system it is quite possible that the duties derived from land, say, in the neighbourhood of Manchester, which has derived additional value from the local community of Manchester, may be applied not to reduce the rates in Manchester, but to reduce the rates in some distant district in Ireland. That to my mind is not a proper use to make of that portion of the fund which is going to be allocated to the reduction of local rates.

The hon. Member (Mr. Gibson Bowles), whom I am proud to include amongst my Constituents—I always recognise and appreciate that spirit of moderation and compromise upon which he very justly prides himself—referred us as a parallel to the old Land Tax of 1785. In those days land was not only a source of considerable wealth, but it was practically the only considerable source of wealth in the country, and, therefore, any reference to a tax of that sort has no bearing upon existing conditions under which we find that agricultural land, at any rate, produces for its capital value a smaller return than any kind of property or any industry in the country. What are the reasons given for the imposition of these Land Taxes? What is the underlying principle? We are told in the first place that land is held up out of the building market, and in the second place that added value is given by the local community, which derives no return in the matter of rates levied upon such land, because, as a matter of fact, that land, although it has a high capital value, is either returning no income at all to its owner or a very small income indeed. Surely the remedy lies in the hands of the Chancellor of the Exchequer and the Government, if they choose to apply it. I think I am right in saying that when the Royal Commission came to consider this question of rating of land values they recommended one of two courses. Both of them, I suggest, are open for adoption to-day. One of them is to give the local authority compulsory power to purchase at a value which can be estimated by independent valuation, and the other is to rate that land upon the basis of a hypothetical income derived from its equivalent value if invested in Government securities. Well, either of these methods of taking toll upon that land or bringing it into the building market would have effected the purpose of the Government without taxing the capital value of this land, mainly for Imperial purposes, without any regard whatever to the amount such land produces to its owner.

May I return to the much referred to Increment Duty as affecting agricultural land? It seems to me that the addition to the original clause which the Government have made can in no way affect agricultural land of a particular kind and the payment of Increment Value Duty. That particular agricultural land is the very sort of which, speaking as an agriculturist, I for one would desire to see the cultivation encouraged in every possible way, namely, land which is to be found outside most of our larger towns and cities and which is given up to the cultivation of market gardens and allotments. May I say that so far as any increment may result to that land, the tenant is already, under the Market Gardeners Compensation Act and the Agricultural Holdings Act of 1908, entitled to be repaid by the landlord the full value of any improvements he may effect on such land. Now we are told that somehow or other this land is not to be subjected to this Increment Duty. I should have liked to ask the Chancellor of the Exchequer whether it is not the fact that land which, we will say on 30th April last year, had a value of £30 per acre— which may, by intensive cultivation, just the sort of cultivation we ought to encourage, have gone up in value to £60 per acre, and which, when subsequently built upon, or at any rate, apart from being actually built upon, has a value for building purposes owing to its being in the neighbourhood of a town—whether it is not the fact that the whole of that additional value is to be taken into account in estimating Increment Land Duty? As regards Undeveloped Land Duty, it seems to me that a serious discount is going to be placed by that duty upon just such land as I have referred to. Under this proposal of the Government, what is undeveloped land? It is not land which is not being developed; it is not land which is not being developed possibly in the best possible way and with the greatest amount of industry on the part of the person developing it. No, it is land which does not happen to have been developed for building purposes, and it seems to me that if you are going by this artificial means to try to force into the building market an enormous amount of land which is at the present time used in the best possible way, you are going to do an immense amount of injury to a most deserving body of men who are engaged in the intensive cultivation which is being carried on with increasing success on the outskirts of the larger towns and cities.

Now there comes the question, How much of this land is really required for building development 1 In my humble opinion it is most unfair to put this Undeveloped Land Duty upon any land which would not be capable of immediate development for building purposes. But when you come to consider that on the Chancellor of the Exchequer's own admission this duty is going to apply to between 2,000,000 and 3,000,000 acres of land in this country, you will realise, if you make a simple calculation, and keep in view the area taken up by the average house, that the amount of land which is going to be subjected to this Undeveloped Land Duty is an area five times as great as that upon which the whole of the present population of this country is now living. What excuse can there be for subjecting to this Undeveloped Land Tax this large area on the footing presumably that it is not being put to the purposes it ought to be put to, namely, building purposes, when it is absolutely impossible in the course of the next twenty years, even if the population increased at the rate it is doing at present, to bring any substantial portion of that land into development for building purposes? There is one question which I should have liked to ask the Chancellor of the Exchequer if he had been present, but I see before me an empty Government Bench, and I do not know to whom I should make my appeal. I was going to-ask, how is it possible to arrive at the real market value of any property? As I understand, in estimating the real value of any property you have to consider its capacity for going up in value in the future, and also its capacity for going down in value—its capacity for depreciation as well as its capacity for appreciation. This certainly would apply if you were purchasing a picture, or old silver, or lace, or any other form of property you like to choose. But these proposals of the Chancellor of the Exchequer appear to be based on the assumption that land alone of all kinds of property must in the future appreciate and not depreciate, and that the State is to take its levy from the individual in the event of appreciation, but give no sort of compensation to the individual in the event of depreciation. Does not that amount to this? You are proposing to deprive existing owners of land of part of the actuarial capital value of that land. Let me put it in this way. Supposing that two years ago certain property came into the market, and that a certain sum would have been given for that property on the footing that it had no such burden upon it as that which is now proposed to be put upon it, and supposing that same property were to come into the market now an actuary would very properly say that that land has a present capital value based upon the fact that a levy is going to be made by the Government in the future upon any appreciation which it may receive, but that no compensation will be paid on the footing that it sometimes depreciates.

In other words, the agricultural capital value of that property has been decreased in the hands of the present owner; or, to put it another way, the Government are in effect robbing the present owner of a portion of the capital value of his property. I say the present owner advisedly, because every future owner will buy with a full knowledge that this tax is going to be imposed on the property in his hands. What defence can there be in justice or equity for such a proposal which will have the effect of transferring a slice of the property of the present owner to the State when no such slice is going to be taken out of any other kind of property in this country, and no such slice is going to be taken away, as I suggest, from the future owner of such property? I understand that there are ninety-one Members of this House who are members of the Land Nationalisation Society. They are that the whole of the Members sitting below the Gangway on the other side are members of that society. I notice that they had their annual meeting only yesterday, and no doubt they threw up their hats at the prospect of this Socialistic Budget being carried through Parliament. I have some little sympathy, not very much, but a little, with the theories and the principles which underlie the policy of the Land Nationalisation Society. They said that the whole of the land in this country ought to be acquired by the State, but that the State ought to pay its fair value. All I can say is that if that is so I have some little sympathy with the theories which underlie that proposal. But it is not the proposal of the present Government. Their proposal is, as far as I can see, ultimately to transfer the ownership of land in this country to the State, but not to pay for it its fair and full commercial value.

9.0 P.M.

Let me remind the Committee of this, now that agricultural land and agricultural landowners seem to be at such a discount, and are submitted to obloquy upon almost every Radical political platform, that as regards agricultural property, which is not a source of great wealth as compared with other kinds of property, during the last twenty-seven years there has been a loss in its annual value of £17,000,000, the difference between £59,500,000 in 1880 and £42,500,000 in 1907. That is a difference, representing on the basis of twenty years' purchase, a loss of £340,000,000 capital value of agricultural land in the course of twenty-seven years. Is this the time, when many of us are talking about the desirability of further developing agricultural land and reducing these great areas of so-called permanent pasture in the country, and to a greater extent cultivating land in order to produce more of the supplies which our large popu- lation requires—is this the time to put a further tax on agricultural property and to penalise it in comparison with other forms of property in this country? If you are going to penalise owners of agricultural land in this special way, why should other kinds of property be free from such penalties, and what security is there that other forms of property will not be subjected to the same treatment in future? If land is to be so treated, why cannot you, in common fairness, treat in a similar way the shares, we will say, in shipping companies, in cocoa companies, in chemical companies, or in soap companies? I would suggest to those Gentlemen who are interested in these large and prosperous concerns, who sit on the other side of the House, and, as I understand, largely finance the somewhat depleted exchequer of the Radical party, that this is the thin end of the wedge so far as they are concerned.

If you once deal a blow at the security of landed property, you are indirectly dealing a blow at all other kinds of property, and through property you are dealing a blow at every trade and industry in the country, because property, and particularly landed property, is the basis of all trade and industry. I would venture to remind those hon. Gentlemen who will no doubt troop into the Lobby in favour of this Budget, that the time has not yet come, but that it shortly will come, when, having once impaired the security of the basis of all property, the insecurity of all trade and industry in this country will follow. May I remind the House of the dictum of that most famous of all jurists, one of the greatest Liberals who ever lived, Jeremy Bentham, when he said that the objects of legislation were in effect four in number: First, to produce for a population subsistence, and when you obtain subsistence to produce if possible abundance; then to produce so far, as you could equality of person and equality of property; but, above all, to consider the absolute necessity of maintaining security. In fact he made the greatest aim of the Legislature the maintenance of security, and said that if you could not by your legislation maintain security you would not in effect be able to produce the other desiderata which it should be the business of every Legislature to have before it as its goal.

In conclusion, as regards agricultural property, I think that everyone must recognise that the burdens on such pro- perty are very much heavier than most landowners of moderate means are able at the present time to bear without the danger of throwing people out of employment, just where we want most to retain them in employment, without the risk of emptying to some extent the country villages, the interests of which every right-minded landowner Has at heart. If you are going not merely by these new Land Taxes, but by your increased Death Duties, your increased Income Tax, and the Super-tax, to add to the burden of that particular class of men, and are going by this cumulative method of taxation to make the lot of that class of men harder, you are going, so far from developing your country districts, to deplete your country districts, and you are going to do an enormous amount of harm to a body of men who, in spite of all the abuse from Radical platforms, are, as I think was admitted by many Liberals in the course of the last Parliament, the best agricultural landowners to be found in the whole Continent of Europe.

Mr. DUNDAS WHITE

The speech to which we have just listened recalls some of the controversies of last Session. I was interested in the reasons which the hon. Gentleman gave as the reasons which were supposed to have influenced the Chancellor of the Exchequer in taking the course which he did. The principal question which was asked again and again last Session was as to why it was the Government had put the land on a special basis, and why it was that it had been chosen as being different from other forms of property. The answer to that, to put it very shortly, took this form. In the first place, the land was there naturally; in the second place, its supply was only limited and could not be increased; and in the third place, it was a necessary of life. If the hon. Gentleman will mention any other form of property to which the same observations apply, then I can say that we on this side of the House will be ready to consider them too. I myself give these Budget proposals my most hearty support, particularly the land proposals, which seem to me to be of the most far-reaching and of the most beneficial character. I value very highly the proposal for the valuation of all land on the basis of its market value; it seems to me to be the first step towards reform, because it seems to me that those who hold the natural resources of the country are under a special obligation to contribute to the needs of the community. As regards the concession to which the hon. Gentleman alluded, I would point out that it will amount, I think, to about £300,000. It is really a concession, not to the landowners at all, but to those who make improvements in order to enable them to reap the benefits of those improvements—which is a very different thing. The concession is, in fact, an allowance on improvements.

Mr. CHARLES BATHURST

Nothing which the Chancellor of the Exchequer said indicated what the hon. Gentleman is now stating. As a fact, it has nothing whatever to do with the value of improvements under the existing Agricultural Holdings Act.

Mr. DUNDAS WHITE

If the hon. Member will look at the Section of the Budget he will see that it comes under the Income Tax Act, and that it is an allowance in respect of Income Tax. The allowance is only in respect of actual expenditure in improvements.

Mr. CHARLES BATHURST

I happen to have had more to do with this subject than any other Member of this House or the previous House of Commons, and I would remind the hon. Gentleman that the sole question which was brought before the Chancellor of the Exchequer was as to whether agricultural owners.should be taxed for Income Tax on their net income, as other people are taxed, or whether they should be taxed on the gross income, less such allowance as is always made, namely, one-eighth in the case of land and one-sixth in the case of buildings for the purpose of maintenance and repair.

Mr. DUNDAS WHITE

If the hon. Member will look at Clause 69 of the Budget he will see that this allowance is only made in respect of maintenance and improvement of landed property.

Mr. CHARLES BATHURST

I should like to make it perfectly clear to the House if I might [HON. MEMBERS: "Order, order."] I believe I drafted that particular Clause to which the hon. Member has referred.

Mr. DUNDAS WHITE

We have, in the first place, as I said, the valuation on the basis of market value; we have, in the second place, the selection of land, with all its peculiar characteristics, as a proper basis of taxation; and in the third place, we have the allowance in respect of main- tenance and repairs. These constitute the most valuable steps in the history of the economic development of the country and the improvement of our land. I listened with very great interest to several speeches from hon. Gentlemen opposite. I think it was the hon. Member for South Bucks (Sir Alfred Cripps) who urged that land which was used for agriculture should be altogether exempt from these Budget Resolutions and from the Finance Bill. But he, like a good many other people, did not tell us what he meant by agricultural land. Supposing land was used for pasture, or for grazing, or for some limited form of agriculture, or supposing that it was hardly used at all, what would be done? Or what would be done in respect of vacant land waiting, perhaps, for a market, at a reserve price, in a neighbourhood where there are large towns. The hon. Member for South Bucks laid down the proposition that the basis of valuation should be the value of user to which the land is being actually put. I understand that to be the position of hon. Gentlemen opposite — namely, that the actual user should be the basis of valuation. Again, suppose we have, as in many of our large towns, undeveloped land which is kept back at a reserve price until the needs of the community will force people to pay that price. There you have no user at all, and no value for user. At what do they propose to value that land? I believe there is only one true system of valuation, and that is to value the land on the basis of its market value—that is, on the value which it would have if put in the open market, and sold with freedom of user. That is the basis on which this valuation is to proceed, and so far as the argument is concerned, I do not think it is at all against parks, gardens, or open spaces, with which the Chancellor of the Exchequer dealt in the most complete way in the Finance Bill which was passed last Session, and which we hope will become law before many days have passed. Those cases are adequately provided for. The great part of the argument we have heard from the other side was devoted to this—that if you have this tax you send up the price of land, and, by increasing the amount which is to be paid for the land for building purposes, you will discourage building. But we maintain that if you take land on the basis of market value, and treat that as the basis of taxation, instead of sending up the price of land, you will rather tend to reduce the price for this reason, that the value of land, like anything else, depends on the ratio of supply and demand. The demand, we may take it, is pretty constant. But at present a great deal of land is held back, is not put to its best use, is, in fact, free-from valuation, but, when you come to buy it, the figure is very different indeed. I myself adduced an instance from Scotland recently in which some land which was valued for rating at £11 2s. per year was wanted by the Admiralty for the purposes of national defence, and they had to pay more than £22,000 for it, or more than 2,400 years' purchase. I think where such a state of things as that is possible there is something very wrong. I would ask hon. Gentlemen opposite if they say that the value of the user is the true basis for valuation for taxation, then is the value of the user also to be taken as the true basis for the purpose of compulsory purchase? I know it is said that compulsory purchase is the way out of the difficulty. Yes, but it must be compulsory purchase at a proper value. As a matter of fact, the provisions for valuing land for compulsory purchase are absolutely inadequate and absurd. So much is that so that in some of the cases where the highest prices, or the price highest in proportion to the rating value, have been paid they have been paid as the lesser of two evils. The purchasers have paid voluntarily rather than go to the costs of compulsory purchase. They preferred, if I may put it in a word, being fleeced to being skinned. When you have the land properly valued, a great deal more land will come into the market, and you will increase the available supply. In that way, instead of discouraging building we will encourage building. We have also been told about the desire under present conditions to build a great many houses on one acre of land. I quite agree under present conditions, but that is not because people want to live in congested areas, but because land cannot be got in many places at anything like a fair price. Once land is made more available, I am convinced we will have fewer congested areas, and that when we have a good land system congested areas may be left to take care of themselves, and that there will soon be no congestion at all.

As one who has taken a great interest in this movement not only of facilitating the obtaining of land, but, as far as we possibly can, of untaxing buildings and improvements in order that building improvement and industrial development may have their course under present conditions, I believe, as Sir Henry Campbell-Bannerman said shortly before his death, the existing system of rating and taxation is a hostile tariff to our industries. That is one of the evils which we hope will be solved by the getting of the land for the people, which this Budget will lead to. It is, in my opinion, the most important and the true remedy for the prevailing distress we see all round us. It is said that agriculturists suffered under Free Trade, but it was not Free Trade, but our thoroughly bad land system. That was recognised even by our opponents. In a memorable speech by Lord Rosebery he took the particular case of a man who invested £5,000, which I think he was supposed to get from a maiden aunt, in land near a growing community, not with a view to developing it, but to its appreciation, and to the man getting back more than his interest in the shape of an increased price later on. That instance given by Lord Rosebery as an instance against the Budget is one of the very instances with which we wish to deal, because we recognise what that means to the communities. We recognise here is a growing community, here is land rated at practically nothing which you cannot get at anything under a reserve price; which price makes the purchase of land not commercially payable. What happens? The community need that land to develop in order that there may be more room for houses and industries, in order that industries may be started and that existing industries! may be developed, but production is checked at its very source, because that land is not made available. There may be builders who want it, or quarrymen who want work, there may be a thousand and one things that are required in the building of houses; but so long as that land is held back, so long is the employment and the means of livelihood of those people restricted. Therefore we say that the market value of the land is the true basis on which we ought to go. With this Budget I believe we are making a change which will have far-reaching effects.

I most cordially welcome this valuation, and I would like to mention one point which has not yet been mentioned as regards agricultural land. Not only is agricultural land, which no one would want for any other purpose, wholly exempt from these duties, but, in addition to that. if the land has an agricultural value and a building value, the amount of the agricultural value is deducted before the valuation for certain duties is arrived at. The hon. Gentleman (Mr. Charles Bathurst) referred to the effects of intensive cultivation as sending up the value of the land. I quite agree it sends up the value of the land in the ordinary sense, but it does not send up the land value as-defined in this measure, because such value as that which is given to it by improvements and intensive agriculture would not be included in the value that is-proposed as the basis of taxation. I venture to think that so far from hindering: agriculture, in the long run this will prove a boon to agriculture, not only because of the concessions, but still more because it puts matters on a sound basis, and makes the land from which the agriculturist must get his living more available, and also because it opens the way for that relief from rating and taxation of improvements, which is the first thing we ought to do if we want to encourage agriculture.

Mr. KENNETH FOSTER

In rising to address the House for the first time I may claim that indulgence which is always so freely granted to young speakers. I propose to say a few words about the Death Duties. Unfortunately for myself I am in the very middle of negotiations on the subject, and therefore I am sure it will be recognised that what I say is sincere. I think that on both sides it is fully acknowledged that the Death Duties have come to stay. I think we all admit the principle, and we say that the principle is a right and just one, up to a point. Although it is some years ago since I was at Oxford, I seem to remember that in Ricardo, and even in ancient Adam Smith, it was hammered into our heads, above all things, that taxation ought to be fair, and just, and equitable. To show the injustice of the-system I will take three instances. Take, first, a man who leaves a million of money to one son. We all agree that it is right and proper that that son should pay a considerable amount to the State; he can afford to do it, because you do not take from him his recuperative power. Then take the case of a man who leaves a million of money between ten sons, each of whom inherits £100,000. In each of those cases the amount of Death Duties wall be the same. The one man will pay £150,000, and the ten sons will pay £150,000 between them. But the recuperative power of the ten sons is vastly different from that of the one son. Take, as a third instance, a man who dies leaving £100,000 to one son. How much does that son pay? Under the Schedule the duty is 8 per cent. Is it right or just that those ten sons should pay more in proportion than this one man? I should have liked to have put this point to the Chancellor of the Exchequer in his presence. Perhaps it has been considered, perhaps not. In any case, I hope that in the next Budget it will be taken into consideration, so that this inequality, and, as I consider it, injustice may be corrected.

Another point in connection with the Death Duties is the tendency of high taxation to send money abroad. The question was debated to a considerable extent in the last House of Commons, and I believe the Prime Minister himself said that he did not object to or view with apprehension this flight of capital abroad. If he said that I think it was a very rash and unjustifiable statement. Personally I view the flight of money abroad with the greatest apprehension. We have been asked time after time to say where this money goes. Many hon. Members present know that it is flying to the United States of America, where there is no Income Tax. The faster it goes the greater the harm it does to this country and to the Metropolis in which we dwell. If you export money abroad in this fashion you lessen the profits to be made in the City by bankers, brokers and jobbers, and you tend to lessen employment in the country. By their own act the Government are deliberately increasing unemployment—the subject which, above all others, is troubling both sides of the House. I am afraid that this taxation of capital is not going to be confined to our own country. It has perhaps escaped the attention of hon. Members that the Transvaal has already got a 4 per cent, or 5 per cent. Death Duty. If you invest in companies connected with the Transvaal you have to pay Death Duties, not only in this country, but also in the Transvaal. If our Colonies are going to adopt this system of taxation, and if we have to pay double Death Duties on our Colonial investments, the export of capital to foreign countries and America will increase at an even greater rate than before, and there will be an absolute premium placed upon foreign investments. By the proposals of the Chancellor of the Exchequer, and by the Budget, which has been acclaimed with so much joy by the party opposite, our railway companies have been brought practically to the point that it is extremely difficult for them to get any capital if they want it. Is that a proper or a happy state of things? I say emphatically that it is one of the worst things that could happen. There are great railway companies who, if only the money market were favourable to their investments, would at once undertake work which would doubtless be of a profitable character to the public at large. But how can they possibly get the capital with railway investments in the state in which they now are? Fifteen or twenty years ago a block of £20,000 or £30,000 of best English railway securities could be sold without the slightest trouble, but if you went on the Stock Exchange now you would have the greatest difficulty in negotiating such a transaction; whereas, on the other hand, people who have invested their money in foreign securities can always find a free, open, and ample market.

The action of the Government in depreciating our own securities will do incalculable harm to the working classes. I have made that statement on the platform, and I repeat it in the House of Commons. There is no doubt that if hon. Members live a little longer they will see what harm this course of action will do. These taxes cannot possibly become really effective, nor will it be seen what murder they are going to do until the tax gatherer has been round three or four times. At present he has only rapped at the door once. Wait until the tax gatherer has rapped at some poor man's door something like three times, and you will see what I may call, in sporting parlance, that the man will be "broke to the world," and to his successors, too. There is one other point which I should just like to bring to the notice of the Chancellor of the Exchequer. We all know that these Death Duties have to be met as well as we can meet them, and the usual and perhaps the most economical and best way to meet them is for a man to insure his life. Even here I think there is a great injustice being done to men who have the precaution, wisdom and forethought for the benefit of their children to do that. If a man insures his own life in order to avoid his children having to pay these duties, the amount of his insurance is aggregated when he dies with his fortune. I maintain that it is a very unjust and unfair thing that the insurance on a man's life should be aggregated with the rest of his fortune.

There have been a great many remarks made to-night about land values and land taxation. I strongly disapprove of land taxation as proposed in this Budget. I think it is going to work detrimentally to the consumer, and also against the British working man. There again, I think that in a few years we will see that it is not going to be the boon and the blessing which the right hon. Gentleman imagined it would be. I strongly disapprove of the, I think, very unjust increase of the Licensing Duties. I maintain, when you see the revenue from the breweries diminishing to the extent which it has been doing, that it is a wrong time to bring forth fresh taxes in order to make the position of the unfortunate people who own brewery shares worse than it was before. I strongly disagree with the Death Duties—not to the principle as I have said before—but to the way they are acting at the present moment.

Mr. MAURICE HEALY

The hon. Member for East Tyrone (Mr. Kettle) is horribly shocked that any Irish Member should become so degenerate as to get up in this House and protest against his country being robbed. The horrible misrepresentations to which the matter has been subjected in Ireland has driven the iron into his soul. Well, persons like myself may not be able to be as efficient as the hon. Gentleman to appreciate the effect of this measure upon our country. The hon. Member ought to mercifully bear in mind that we are not like him, holding positions as professors of national economics. Accordingly, he should bear with our little weaknesses, and not be too hard upon us if we do not come up to the high ideal which he, no doubt, sets us. I think it very unfortunate that in this Debate, in which such large Irish interests are involved, that some Member of the great majority of Irish Nationalist representatives should not rise and deal seriously with the question as to how this Budget affects Ireland. I think we are entitled to something of the kind. This is the occasion corresponding to the occasion in every year that the Chancellor of the Exchequer makes his Budget statement. To-night he made what corresponds to the Budget statement dealing with the measure which is now before us. It is usual when a statement of that kind is made that it should be dealt with from the Irish point of view by an Irish Leader, and not by any of his lieutenants or underlings. I take leave to say the hon. Gentleman the Member for Waterford was particularly unfortunate in the selection that he made to represent him to-night. Whatever else may be said on this subject, nobody can deny that it is a grave and serious matter for Ireland, that it raises large issues, and that it has been much discussed and much debated throughout the length and breadth of Ireland. When we come, to deal with it on the floor of {his House I think it would be more respectful to the House and to the country not to treat it with the feeble flippancies which the hon. Gentleman the Member for Tyrone thought good enough for the Debate. We should have directed to it the serious attention of grave Parliamentarians.

In the matter of this Budget I profess myself an unconverted sinner. I was one of the Nationalist Members who on the Third Reading voted against the Budget. I thought it then a bad measure. I think it so still. I, at any rate, can make this feeble boast that my attitude towards it preserves its consistency. I did not vote against it in April last, refrained from April to last December, and now only come to April again to occupy a third position and declare to the House that I shall vote for it. Accordingly I claim the right of an Irish Nationalist Member to express the view which I believe is entertained with respect to this Budget by the great majority of Irish people. [An HON. MEMBER: "Tories."] Some hon. Gentleman at the back shouts "Tories." The hon. Gentleman the Member for East Tyrone did not sit down without telling the House that those who were going to vote against it on these benches were returned by Tory votes. I was returned unopposed by a Constituency which for twenty-five years has returned a Nationalist Member, and in which no Tory candidate dares to show his face. So that in whomsoever "the galled jade may wince, my withers are not unwrung." I am not in that position so far as Tory votes are concerned. Perhaps the hon. Gentleman who interrupted me will have the sense to refrain from further comment until at any rate his interruptions have more relevance to the particular speaker who happens to be addressing the House. I said I was opposed to this Budget. When I say that I mean I am seriously opposed to it, and not that I am pretending to be opposed to it. We have heard in literature of "Damning with faint praise." There is the converse proposition "Of helping through with faint condemnation."

That is the attitude of some gentlemen on these benches, who profess to regard the Budget as an injustice to Ireland and yet are greatly concerned lest any of its provisions should be misrepresented. I said I think it is unfortunate that the Leader of the Irish was not present in order that he might speak the mind of the majority of the Irish representatives upon it. That is particularly to be regretted, because the Members of the party which contains the majority of the Nationalist representatives have hitherto spoken, with divided voice upon this subject. There is one school of thought of which the most prominent member is the Member for East Mayo (Mr. John Dillon), who do not think that the Budget is a bad one at all. That hon. Member had the courage to tell the Irish people, speaking of the Budget, that we were dealing with the most generous Government that ever occupied power since the Union, coming up fully to the level of tie Prime Minister.

Mr. DILLON

Would the hon. Member quote my words?

Mr. MAURICE HEALY

Oh, I did not bring them with me.

Mr. DILLON

If the hon. Member is going to make a charge against me, he ought to be able to substantiate what he says.

Mr. MAURICE HEALY

Does the hon. Member quest-ion the fact, which has been over and over again repeated on Irish platforms, that in a well known and notorious speech of his, speaking of the Budget, he declared that this was the most generous Government that ever governed Ireland?

Mr. DILLON

No, I did nothing of the kind. The hon. Member will have to submit now to the painful duty of listening to what I did say. What I said was this— and I beg to draw his attention to the fact that I said it when submitting to a convention of my own Constituents for selection for Parliament—I said: "If we take the financial record of this Government since they took office in 1906, they have treated Ireland more generously and better financially than any Government since the Act of Union."

Mr. E. CREAN

By killing Land Purchase.

Mr. DILLON

And I am here to repeat that to-night, and I challenge the hon. Member to prove the contrary.

Mr. MAURICE HEALY

I said tweedledum. It appears I should have said tweedledee. The Committee has heard me and has heard the hon. Member. I thought from the solemn tones of his rebuke, that I was going to be utterly confounded. I may be utterly dull of comprehension, but up to this moment I cannot see any distinction between what I said and the correction which the hon. Member has made.

Mr. DILLON

There is a distinction.

Mr. MAURICE HEALY

I am sure that it is quite clear to the mind of the hon. Gentleman when he says so, but I am surely free to say that it is not clear to my mind. At any rate I selected the hon. Member for East Mayo as a very distinguished example of what I described as one school of thought upon the subject, namely, a school that thought this was a good Budget for Ireland.

Mr. DILLON

That is where the hon. Member misrepresents what I said. I ask him again to quote the passage of my speech. I was speaking of the whole financial record of this Government since they took office in 1906.

Mr. MAURICE HEALY

I am entitled to my free appreciation. Discussing the Budget in an Irish assembly, the hon. Member told that assembly that we were dealing with the most generous Government that has ruled Ireland since the Union. I am entitled to draw from that fact the inference that the hon. Member thinks this is a good Budget. If he does not think it is a good Budget ho can get up and say so. The hon. Member is not singular in his view, because he knows there was a section in this party last year which proposed to vote for this Budget, and I have read speeches in Ireland by some of his colleagues who solemnly declared that their one regret in connection with this Budget was that the party had not decided to vote for it. Does the hon. Member deny that?

Mr. DILLON

Can the hon. Gentleman quote any speech of mine to that effect. My position, is this, I deny the right of the hon. Member to make any charges against me without quoting the passage upon which he bases his charge.

Mr. MAURICE HEALY

The hon. Member is too full of himself. My last charge did not relate to him, it related to Gentlemen whom I described as his colleagues. Now a man cannot be himself and his colleagues at the same time. I humbly submit that the hon. Gentleman may now at least restrain his repeated interruptions and permit me to continue the thread of my discourse. I said there were two schools of thought in the Irish party upon this question. One of these regarded this Budget as an excellent measure, and their only regret was that they could not vote for it, and the other and more responsible school represented by the hon. and learned Member for Waterford, who did not think that this Budget was a good Budget, and who thought it a bad Budget, and who profess that they are driven to vote for it by political exigencies which they consider make it the price for Home Rule. When the hon. Member for Waterford, however, avowed his intention of voting for the Budget, he told the world very loudly that if he was going to vote for it he was going to get certain large concessions. They were to be had for the asking. We heard all about them last night, and I am not going into them again. But without going into these concessions in detail it does occur to me that the statement which the right hon. Gentleman the Chancellor of the Exchequer made to-night was of such a character as might well have drawn forth speech from a Gentleman who has shown himself so little reticent as the hon. Member for Waterford.

10.0 P.M.

We have heard to-night that we are to have no concessions, and we see that revealed in the Budget as it is put before us. The Government make no concealment about it; in fact, they avow it naked and unashamed. Ireland has bulked sufficiently large in this controversy both in this House and the country since it started, and though the importance of Ireland in the controversy has received renewed force since the electoral state of affairs which has developed after the General Election, the Chancellor of the Exchequer felt himself so indebted to Irish votes and so little bound to consult Irish prejudices or to inform Irish intelligence that he did not think it necessary when he made his statement to-night to make even the smallest allusion to it. As the Chancellor of the Exchequer does not think Ireland worthy of mention, and as the hon. and learned Member for Waterford leaves the case of Ireland to the feeble pleasantries of the hon. Member for Tyrone, it only remains for some incompetent person like myself to express as well as I can my views as to the relations of Ireland towards the Budget. It is said we have been talking in the wildest manner about this Budget, exaggerating it out of all recognition, and indeed the Chancellor of the Exchequer has not been left to his own strength to defend the Irish position, but he has from time to time received assistance from those who, instead of helping the Chancellor of the Exchequer, should have been helping Ireland. We are told we have exaggerated the effect of the Whisky Tax. But have we? A question has been arranged and asked from these benches to show that we have greatly exaggerated the effect of the Whisky Tax. That answer was given in the course of the last ten days, and it has been triumphantly shown that the Whisky Tax is only to yield about £500,000, or some figure of that kind. When the Chancellor of the Exchequer wants to show how skilful his financial advisers are he tells the House that the Whisky Tax has fallen below his expectation, but he says it has only so fallen from special causes which will not apply in any other year. The Whisky Tax in Ireland only yielded about £500,000 last year, and that has been trumpeted all over Ireland to confront the inventions and misstatements of men like myself who have represented that its effect will be very different. The yield of the Whisky Tax is going to be very large when the anticipations of the Treasury estimates have to be justified, and when explanations have to be given as to why it did not reach the original estimate the yield is going to be small. You have been told that, instead of £500,000, which this tax yielded last year in normal times— instead of that being the amount, the yield will be £760,000, which it would have yielded in a normal year. We have also been told that the yield of the tax has been diminished by anticipation, and that is notorious. The fact is also notorious that the trade kept their stocks reduced almost to vanishing point. We hear also that the tax has been reduced by the fact that when the Budget was finally passed through the House of Commons uncertainty still prevailed as to whether it would be> accepted by the country, and that almost to the last month of the year the trade kept their stocks reduced to the lowest possible point, and thereby produced for this year an abnor- mally low yield which cannot be expected to prevail in any subsequent year.

The right hon. Gentleman told us that a fourth condition prevailed, namely, that the effect of the imposition of the tax was to reduce the consumption of spirits not only in Ireland, but also in the rest of the United Kingdom. He did not tell us to-night what he told us on the previous occasion that he anticipated that the turning away from whisky produced by his Budget would not be a permanent effect of the Whisky Tax in Ireland. In spite of the "put up" questions from behind me, I think our estimate of the effect of the Whisky Tax in Ireland is far more likely to be correct than the figures extracted from the Chancellor of the Exchequer in order to mislead the Irish people as to what the ultimate effect of this tax will be upon a great Irish industry. But it is not the Whisky Tax alone that affects Ireland. I would almost take leave to say that nearly every provision in this Budget has been framed with a kind of malignant ingenuity to hit Ireland specially. There are some exceptions to that proposition, and the hon. Member opposite referred to one of them, namely, the Super-tax. I quite agree with the Super-tax, and I will also concede that the Income Tax generally will not be specially unjust to Ireland, and that it will not have any special effect upon Ireland. I also admit that the Land Taxes, with the promise that they shall not apply to agricultural land, are not burdensome upon Ireland. I would even go so far as to agree with the Chancellor of the Exchequer in anticipating that a comparatively small yield from these taxes in Ireland does not greatly misrepresent the fact, but then I anticipate a small yield from these taxes in England. I think, with regard to these Land Taxes, it is a case of great cry and little wool, and that when they come into law, though they will not, no doubt, be specially unjust to Ireland, the Chancellor of the Exchequer may also receive a sad disappointment as to their effect in England. Still, I could never accept the view of the hon. Member for Waterford that these taxes make no difference to Ireland. They are a substantial increase of the Irish burden, they add to an already swollen taxation, and the fact that they hit specially one particular class in Ireland does not make them very much sweeter to me. I am better pleased, no doubt, if they are to come from Ireland at all, that they should come from the quarter they do than from some other quarter, but I do not want them to come from Ireland at all. These taxes have been defended in Ireland on the proposition that they only affect persons like Lord De Vesci and Lord Pembroke, and that has been repeated ad nauseumin Ireland. I come from the city of Cork, and I tell the hon. Member for Waterford that we have no Lord De Vesci in Cork. The land of Cork, I am glad to think, is owned by the masses of the people in Cork. We have no great landlords to extract rents from us in that city. The rents from Cork go, for the most part, into the pockets of local residents, and I do not want to see any resident in Cork robbed by this Budget, whether he is a landlord or a tenant.

As regards the tax on reversions, I am satisfied that in all parts of Ireland and England that that tax will be ultimately paid by the occupying tenant. I am as satisfied of that as I am that I am here. Instead of Lord De Vesci, Lord Pembroke, and other obnoxious persons of that kind paying the Reversion Tax, the unfortunate tenants who occupy their houses in Kingstown and elsewhere will bleed to the nose whenever this Budget comes into law. That is my position even as regards these Land Taxes, though I can see that they are less burdensome to Ireland and less objectionable than other parts of the Budget. As an Irish representative, I will never be a party as long as the Irish people send me here, if I can help it, to submitting to having any class or section pay toll or tithe to the English Exchequer when we know that an English Royal Commission has already reported that some £3,000,000 a year of unjust taxation are being extracted from Ireland. I now come to the Death Duties. I said that most of the Clauses in this Bill were devised with a malignant ingenuity to hit Ireland specially. That is especially true with regard to one particular Clause relating to the Death Duties. I mean that Clause so often discussed last year and introduced, as I believe, for no other object than to deprive the Irish tenant farmer of the benefit of a judgment in a case, the Attorney-Generalv. Robinson, which the Queen's Bench Division conferred on him ten years ago. Hitherto the Irish tenant farmer has paid practically no Death Duties. Is that an injustice to this country?

Mr. MARKHAM

Yes.

Mr. MAURICE HEALY

You do not settle the question by saying "Yes." It is the question I am going to discuss. Is it unjust to the United Kingdom, as a whole, that the Irish tenant farmer should have the benefit of a decision which practically exempted him from Land Taxes? The English tenant farmer does not pay Death Duties.

Mr. MARKHAM

Yes, he does.

Mr. MAURICE HEALY

Let us not quibble. The English tenant farmer, if he has £10,000, pays Death Duties, and so does the Irish tenant farmer; but the English tenant farmer, as a rule, has no such interest in his farm as makes it subject to Death Duties. He is either a yearly tenant or he is a tenant at what is technically called a rack-rent. He has no saleable interest in his farm. He has not built the buildings or made improvements on it. If he is unable to pay his rent, he hands over his farm to the landlord; he cannot sell his interest. Accordingly the English tenant farmer is in the position that, so far as his interest in his farm goes, he pays no Death Duties. What the right hon. Gentleman the Chancellor of the Exchequer proposes is that Ireland should pay two Death Duties where England pays one. In England the landlord pays the Death Duty on his land, and in Ireland the landlord pays the Death Duty on his land", but the landlord in Ireland will pay exactly the same Death Duty when, under this Bill, the tenant farmer has also to pay as he now pays when the tenant farmer pays none. That is a fact that cannot be denied. In Ireland, according to the Irish law, the Irish landlord pays his Death Duty under the Poor Law Valuation. That is the mode of assessment that prevails in Ireland instead of the mode that prevails in England. He pays according to so many years valuation under the Poor Law Valuation. He pays now, but the Irish tenant farmer in the past has paid no Death Duty. When this Bill passes into law the Irish landlord will pay his Death Duty just as before, and the Chancellor of the Exchequer will get a second Death Duty from the tenant farmer. I am treating this question from the national point of view—from the position as between two nations. I am not treating it from the position as between two individuals. It may be perfectly fair to say that, as between one individual and another, each owning certain property, each pays the duty on it. But if you are comparing the condition of two countries, and if you find that on the landed property in one country the Chancellor of the Exchequer gets the Death Duty once, while on the landed property in the other and the poorer country he is not content with getting it once, but claims it a second time, then I say he is doing an injustice to the poorer country. Let there be no mistake about this question. The law is exactly as I have described it. We Irish Members in this House have never attempted to make demands which cannot be justified by reason and justice. If I were satisfied that England would be treated in respect of these duties exactly as Ireland is, I would cry "Content!" but we cannot in a matter of this kind accept differential treatment. The Irish Members, as a body, have protested against these Death Duties for the reason I have given, namely, that, as between the two countries, they will enable the Chancellor of the Exchequer to get two taxes in Ireland where he only gets one in England. So much for the Death Duties. Next, I come to the Stamp Duties. Will anyone say that the Stamp Duties also do not affect Ireland in a manner in which they do not effect England? Of course they do. We all know that over half the area of Ireland the landed property is now held by tenant farmers, each of whom holds his farm subject to a substantial mortgage payable to the Irish Exchequer. Hitherto when an Irish tenant sold his farm, Death Duty was paid on the money got for the farm. Now, when he sells it, he pays Stamp Duty first on the money he gets for his farm, and next on the balance of the loan held by the Irish Land Commission, a loan which, in a few years more, if Irish Land Purchase had continued to work, would have amounted to over £100,000,000 sterling, and which, even as it is now, amounts to £75,000,000 sterling. When the Irish tenant farmer goes to sell his farm, the conveyance is taxed, and a tax is also levied upon the loan, as if the Irish tenant farmer, in selling his farm, was getting so much money put into his pocket. We are told that the same state of thing prevails in England? There you have the instalment mortgage, and no doubt there are in large English cities a considerable number of these instalment, mortgages, and we claim for the Irish farmer the same terms as are given to the English instalment mortgagee. The Chancellor of the Exchequer has taken care to protect the English instalment mortgagee by giving him a special exemption. He fixes the sum in his case at £500, but in Ireland that limitation "will not relieve this class. I am only going through the headings of the Budget very briefly. [HON. MEMBERS: "Oh."] I am sorry that hon. Gentlemen opposite should think my speech prolonged, but I do not come here of my own good will. We Irish Members are dragged here whether we like it or not. With great respect to hon. Gentlemen, I will say that I am the second Irish Member who has spoken this evening on this question, and I take the liberty to say that it is one on which the views of Ireland are entitled to be fully heard, even though at the end of the hearing we get very little satisfaction.

The raising of the Legacy Duty from 3 to 5 per cent, in the case of brothers will hit Ireland more than any other part of the United Kingdom, owing to the great extent to which celibacy prevails in rural life, and to which families consisting of brothers and sisters live together and work their holding together. Now when a death takes place in a case of that kind, these near relatives—members of the same family —are to be treated as distant relations and have to pay 5 instead of 3 per cent., thus hitting Ireland in a way in which England is not hit at all. I claim, therefore, that those representatives of Ireland who are content, not as they did last year to stand by and see their country robbed by the Treasury, but who this year go a step further and are prepared to assist actively by their votes in the perpetration of that act of plunder, are betraying Irish interests. We are told that we forget old age pensions, but I might retort that Ireland is getting nothing in the way of old age pensions which England is not getting. Is Ireland specially favoured in the matter of old age pensions, and were we told last year when the Act was being passed that, though we should get them, we should have to pay the piper ourselves? No. When the old age pensions were introduced they were given to us, as we understood, as a free boon, and not one word was said of what we might expect in the coming year, when we were to find that we were to be fed up indeed, but it was to be a case of the dog being fed with a joint of his own tail. What is the fact about these old age pensions? Figures show that there are undoubtedly a larger proportion of old age pensioners to population in Ireland than there are in England and Scotland. But that is a temporary state of things. It arises from notorious historical facts. For the past fifty years the young and the strong have been emigrating from Ireland. Only the aged are left, and naturally there is in the year 1910 a larger number of persons over seventy per thousand of the population than in any other part of the United Kingdom. That is a state of things which will be lessening every year. The emigration is now fifty years old. It has been, thank God, for twenty years past steadily abating, and last year it reached a lower level than it had ever done since the famine. It therefore follows that the high proportion of old age pensioners in Ireland is a temporary state of things which will lessen year after year, while, as we are frankly told by the Chancellor of the Exchequer, the taxes to be levied by this Budget will increase year after year, and in ten years time we shall have less of the advantage which we are getting from the old age pensions, while the taxes which the right hon. Gentleman has inflicted on us will still remain.

I have now only to deal with the question of the Amendment to this Clause relating to the Increment Duty so far as it affects agricultural land. As I understand, it has always been the position of the Government that they did not intend that the Increment Duty should apply to agricultural land. We heard to-night a somewhat fatuous boast that that was an Amendment which had been secured, for sooth, by the pressure of the Irish party. The right hon. Gentleman did not hear that boast, or no doubt he would have repudiated it. We know in fact that the Irish party had as much to do with this concession, if it is a concession, relating to agricultural land as they have to do with the changes in the moon. But that is not the important matter. The important matter is to secure for Ireland that the pledge which the Government has given upon this subject shall be carried out. As I understand, the right hon. Gentleman was of opinion that under the Budget Bill as it was originally introduced, this tax did not apply to agricultural land. To make the matter clear, he introduced a Clause making it, as he conceived, still more clear that the increment did not apply to agricultural land, and he has now, as I understand, in response to pressure both from Ireland and from England, introduced some words into this Clause which he considers have the effect of making that position still clearer. But I do not consider that the new words which he has introduced at all effect the object he has in view, or, indeed, make even the most trivial difference in the Clause as it originally stood. However, I admit that I do not understand the effect of the words. I have given them such attention as I could, and discussed them with other hon. and learned Members, but I do not even understand how the right hon. Gentleman could think they effected his object. They are to me a perfect masterpiece of obscurity. I am quite willing to give a candid hearing to anything which the right hon. Gentleman, says in favour of the view that the words he has now introduced have the effect of substantially changing the clause, but, speaking for myself, and having given the matter such attention as I could, it appears to me that the words leave the clause as it stood, even if their effect is not somewhat worse and if they have not the effect of introducing a new element of obscurity. I thank the House most heartily for the patience with which they have listened to me.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)

The hon. Member (Mr. M. Healy) concluded what we all thought an interesting speech by saying that the Amendment which the Chancellor of the Exchequer has put upon the Paper in no sense changes the sense of the clause in which it is proposed to be inserted. That exactly carries out the intention of my right hon. Friend, because—

Mr. MAURICE HEALY

I did not say that the words made no change in the clause. I was perfectly aware that the right hon. Gentleman professed to make no change in the clause. What I contended was that the words did not carry out the expressed intention of the Government to make the clause clearer.

Mr. HOBHOUSE

That is a different point which is well worthy of argument when the proper time comes, and when the Amendment itself is being discussed, but it does not happen to be the exact point made by the hon. Gentleman. I pass that by, and for the moment, at all events, I do not profess to follow the hon. Gentleman into all the questions he raised in the course of his speech, because another, and I think a better, opportunity will be found for their discussion when the actual Amendments come before the Committee. I shall, however, endeavour to answer as best I can the questions put to me by the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) and other speakers in the course of the Debate. The right hon. Gentleman the Member for East Worcestershire spoke with admiration of the extraordinary closeness of the estimates of the Budget, and he told us, first of all, that the Death Duties estimate was an exceedingly bad one. I think that was almost the only point in the Budget to which he took serious exception. It is quite true that the estimate in the Budget has not been realised to the extent of £978,000. That was not because the duties were not payable had the Finance Bill gone through, but because there is still an amount to be realised under the new scale when it is brought into operation. When that is realised it will be found that the estimated yield of the Death Duties will be within a small fraction of the original estimate. Then he went on to say that we laid much too great charges upon the capital of the country, and we were reducing that capital to the serious injury of the financial position of the country. That was a point that was also taken up, I think, by the hon. Gentleman the Member for Coventry (Mr. J. K. Foster) in a speech made later in the evening. Now there is no sign of this disappearance of capital when tested by the amount of income which has become assessible to tax every year, nor is there any sign of it in taking into consideration the amount of capital which pays toll to Death Duties in the course of succeeding years. Indeed, the contrary is the case, because, taking the year just ended and the period of ten years immediately preceding it, the amount of capital which has come under review for the purpose of Death Duties has risen from an annual value of £202,000,000 to £230,000,000, which is a substantial increase in the wealth of the country, while" the revenue has given a very satisfactory yield to the Chancellor of the Exchequer. On the other hand, they have not imposed any impossible or any undue burden upon the industrial and commercial community of this country. As the right hon. Gentleman is not here I will not go into all the smaller criticisms which he made, but there is one point to which I would like to refer. He charged us both in the case of the Land Tax and of the Inhabited House Duty, with doing something which was illegal. He said, "Why not, as you are bound to do, collect these two taxes?" and almost in the same breath he went on to complain of the charge which was laid upon the revenues of the country by the raising of money for the purpose of meeting the deficiencies of revenue. Now, both the Land Tax and the Inhabited House Duty, as the hon. Gentleman opposite probably knows, are collected at the same time and by the same agency as the Income Tax. I do not want to raise a controversial topic on this point, but it was impossible to collect the Income Tax this year. We had no authority to do so. If you proceeded to collect the Land Tax and the Inhabited House Duty by the same agency as collects the Income Tax, you would have burdened those two taxes with a very large sum for their collection. Therefore, from the purely fiscal point of view, it was much better to leave these taxes uncollected until later on, when we could collect the Income Tax.

Mr. PRETYMAN

May I ask the right hon. Gentleman to explain how that is? I do not think that there is any charge for stamps or postage.

Mr. HOBHOUSE

There is the cost of stationery and of delivery.

Mr. PRETYMAN

The stationery is the same whether it is sent out with the others or by itself.

Mr. HOBHOUSE

There would be the cost of collection in February or March. You would then have to make a fresh collection, with fresh statistics, subsequently in the month of April or May. I assure the right hon. Gentleman that that is so. Take the case of the Land Tax. As the hon. Gentleman knows, that is payable by each parish, either upon the rateable value or upon Schedule A. The Commissioners, on one of those forms of valuation, would have issued their demand notes for payment, and then they would have had to go through precisely the same process later in the year. If you duplicate the collection of the tax, it is evident that you must increase the cost of the collection. The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) asked why we should be in a better position to estimate the yield of the Super-tax than we were in at this time last year. The answer to that is very simple. In the course of collecting such Income Tax as has been collected, and the making of such assessments as have been made, the collectors of Income Tax had only to be on the alert to notice and report the payers of large amounts of Income Tax. Wherever in the course of their ordinary assessments for Income Tax they have come across such large payers they naturally at once communicated that fact to the Inland Revenue, and that has put them on the track of any large payers of Income Tax. Preparations have already been made, when the Super-tax goes through, as I hope it will at no very distant date, to make demands upon those potential Super-tax payers. A point was raised by the hon. Member for South Bucks. He made a claim which would have entirely defeated the whole purpose of my right hon. Friend the Chancellor of the Exchequer in the case of the Undeveloped Land Duty if it had been admitted, namely, that no tax should be laid upon agricultural land so long as it is used for agricultural purposes. The only result of allowing such a claim as that would have been that all land in the vicinity of towns which is ripe for building, and therefore ripe for the application of this tax, and in a condition proper to lay this tax upon it, would only have to be used for agricultural purposes in order to prevent any Undeveloped Land Duty being paid upon it. There is in existence at this moment an admirable society called the Society for the Cultivation of Vacant Lands, which lands are used for the purpose of employing persons who would otherwise be out of work. If the claim of the hon. Member for South Bucks were admitted, under the operations of this society a set of persons could be set to cultivate vacant spaces lying on the edges of a piece of land in order to defeat the whole purpose of this proposal. That is a claim which surely cannot be sustained even by hon. Gentlemen opposite, who, at all events, have agreed to the fact that such land should be laid under the impost proposed by these Resolutions, whether that impost should be devoted to local or to Imperial purposes. With regard to what was said on the benches opposite in regard to whether it is proper to place such land under contribution for Imperial purposes, I would remind the House that since it met this Session, in Germany, at all events, they have passed from theory to fact, and they have actually produced a Bill for the levy of Imperial taxation upon undeveloped land, and they propose, at any rate in the first years of their collection, to raise something like a million of money, and that, let it be remembered by hon. Gentlemen opposite, has been universally supported,- I am not certain that the prin- ciple was not introduced, by the agrarian or agricultural party in that Empire. There is a point which I wish to deal with which I do not think has been noticed by any speaker, at all events on this Bide, and which seems to me the most important point which has been raised yet in this Debate. It has been raised constantly by the hon. Baronet the Member for the City of London (Sir F. Banbury) and has been alluded to by other speakers in the course of the day. In an admirable speech, if I may venture to say so, by the hon. Member for East Birmingham (Mr. Steel-Maitland), he opened his remarks by saying that the credit of the United Kingdom was in a very unsatisfactory condition as compared with that of other countries. That is a favourite theme of the hon. Baronet opposite, and a theme entirely without justification, as I shall endeavour to prove, and which does incalculable evil to trade and commerce in this country, and which, if persisted in, as it is being persisted in by hon. Gentlemen opposite, cannot but react most disastrously upon the finances of this country. I will endeavour to deal with this point in detail. Take the case of the great cities of this country. Which will raise money most easily in the money markets of the world, the City of New York or the City of London, the City of Liverpool or the City of Philadelphia? I will come to the national question later, and am now dealing with the local question. What great community in the United States could raise money so cheaply as the great cities of this country? The answer is absolutely complete. There is hardly a great municipality in this country which cannot go to the money market of the City of London, and which, for either local or national purposes cannot raise loans at 3 per cent. [An HON. MEMBER: "Liverpool."] Liverpool has £2 12s. At what rate did the City of New York raise money the other day? It had to pay 4 per cent, for the money which it needed for municipal purposes.

Sir F. BANBURY

May I point out that the stock of the City of Liverpool now yields £3 7s. 9d., and not £2 12s. Further, may I say that the point at issue is not what the City of Liverpool or any other city in England can raise money at now, and what the City of New York can raise money at now, but at what rate the City of New York could raise money ten years ago, and at what rate the City of Liver- pool could raise money at ten years ago. You will find that while the City of Liverpool has decreased in its credit the other has increased.

Mr. HOBHOUSE

I am coming to that point later on. I am dealing now with purely local finances, no unimportant factor in municipal considerations, both in this country and in the United States and elsewhere, because, after all, most of the moneys raised for the purpose of national development in this country have been raised as municipal loans in the course of the last ten years. Take the national question. What have we been doing? In the course of the last four or five months we have gone to the Money Market for the purpose of raising £41,000,000 by Treasury Bills. What other country in the world could have raised the money we have raised at an average of from 3¼ to 3¾ per cent.?[An HON. MEMBER: "France."]Certainly not. France could not have raised the sum at the price which we have done. I am not going into the question of who was light or who was wrong in the rejection of the Finance Bill; but it was the rejection of the Finance Bill which compelled us to raise that sum of money, and it was the necessity of raising that sum of money which has altered by an infinitesimal fraction the percentage at which this country can raise money for national purposes. The last time this question was raised here the hon. Baronet (Sir F. Banbury) told the House, which believes him, I believe, sometimes very recklessly in financial matters, that the credit of this country was not equal to that of France. It was not only equal, it was better. What is the case at the present moment? After raising something like £30,000,000 since that remark was made, the credit of this country stands on a parity with that of France. I will ask another question of hon. Gentlemen opposite. What other country, with the exception, I think, of Japan, is at this moment paying off any debt? What other country in the world is paying off its debt at the rate at which this country is? The hon. Baronet is silent, and he is bound to be, because there is no other country that I know of, with the exception of Japan, which has a regular Sinking Fund, is paying off its debt, and is reducing its liabilities; and there is hardly any country which is not financing itself at the end of the year by means of loans.

Sir F. BANBURY

The right hon. Gentleman said that I was silent. All I wish to say is that if his statements are correct, the credit of other countries ought to stand much lower than ours, whereas the reverse is the case.

Mr. HOBHOUSE

I will go into that particular point. What has been the real cause of the present position of Consols? It all arose from the conversion of the Two and Three-quarter per cents, by Mr. Goschen. Everybody knows that that conversion was made at a time singularly advantageous to the conversion itself, but far too previous from the point of view of the basis upon which this country ought to stand. The country was not ripe to stand on a 2½ per cent, basis; it is not ripe to do so at the present moment. The consequence is that the country has been working back to a 3 per cent, basis, and every other country in the world has been working up to a 3 per cent, basis. I do not wish to go into the whole of that controversy, which is a most interesting one. I will deal with another statement made by the hon. Member for Coventry (Mr. Kenneth Foster). There is no greater fallacy in the whole of the present fiscal controversy than the belief that if you export capital you decrease the wealth of the country. In the periods when this country has been exporting capital, her export trade has always gone up. In the periods when this country has ceased to export capital, her export trade and her home trade has contracted. What was the origin of the present fiscal controversy? It began in 1903, which was the end of a period at which the export of capital from this country to foreign countries had ceased. After 1903 the exportation of capital from this country again began, and flowed in ever-increasing streams. From then up to the present time the export trade, and the whole trade, of the country has expanded in every direction, both exports and imports, to an amazing and unprecedented extent. These are fiscal facts which can be traced for a series of years with unceasing regularity, and constitute, not an accident, but economic truth.

Another point: In what direction, and to what countries does this export of capital at the present time proceed? Take the case of railways. There is a large export from this country to foreign countries, to the Colonies, and to India, for the purposes of railway capital. That came to £55,000,000 last year. During the same period—last year—there were £5,000,000 employed in the creation of railway enterprises in this country. Why? Because you have in foreign countries large undeveloped tracts of land that require capital to exploit them and to create wealth; because what wealth there is is devoted to the creation of houses and buildings and the ordinary conveniences of life, and because all the old countries of the world have an immense amount of capital waiting for export, development, and profits. When you go from railways to commercial and industrial concerns, you find quite a different thing. A railway requires a great continental tract of undeveloped land. When you come to factories that can be put up in a comparatively few square yards, you find this— that the export of capital to foreign countries for the creation of industrial and commercial concerns amounted to £6,000,000, whereas the devotion of capital in this country to this kind of enterprise took no less than £8,000,000.

You have room here for the creation of industrial concerns. You have not got room in this country for the creation of new railway systems. That is why you have a large amount of capital devoted in this country to the creation of industrial concerns relatively to the very small amount going into the creation of railway enterprises. The same argument and the same figures are true wherever you apply them to commercial undertakings which require a small amount of capital in contradistinction to those enterprises that require a great area of land. Ample answers to the many points which have arisen might be made, but I have endeavoured in the remarks that I have addressed to the Committee to devote them to the really serious aspect of the case, the continued prosecution of which I am quite certain does infinite harm and injury to every industry and every individual in this country.

Mr. DILLON

I beg to Move the Adjournment of the Debate.

The CHAIRMAN

I can only take a Motion to report Progress from the Government.

Mr. DILLON

I suppose, then, I had better, in the few moments left to me, say a few words—

And it being Eleven of the clock, the Chairman left the Chair to make his report to the House.

Committee report Progress; to sit again to-morrow (Wednesday).