§ Order for the Second Reading read.
§ Motion made and Question proposed, "That the Bill be now read a second time."—[Mr. Lloyd-George.]865
§ 4.0 P.M.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)
In moving the Second Reading of this Bill I should just like to put one matter right. Yesterday the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) asked me a question which was not strictly relevant to this Bill, but perhaps I had better put the matter right now, although it is really more relevant to the second Bill. It may, however, facilitate matters if I give the actual figures now. We have bought more War Loans during the current year than in the previous year. I will give the House the actual figures. In 1907–8 we bought £6,041,000, in 1908–9 £2,620,000, and last year only £339,000, making a total of £9,000,000, the reason being that assigned by me yesterday, that you cannot purchase War Loan now at the figure at which you can purchase Consols. As a matter of fact, it makes a difference of about 4s. 6d. per cent. We purchased War Loan at a very considerable rate up to December, 1908, but, as the right hon. Gentleman knows perfectly well, if you purchase at a considerable rate you send up the price. The result was we drove up the War Loan to something like par. Then we discovered in December, 1908, three or four months before the Budget, that we could not purchase War Loan at the figure we could purchase Consols. As a matter of fact, we were 4s. 6d. per cent. to the bad. Then three months before the Budget we applied the whole of our money to the purchase of Consols instead of War Loan. The change of policy came then. Since we have been able to purchase a very considerable quantity of War Loan on fairly reasonable terms, but on the whole, as the hon. Baronet knows very well, now we are approaching the day for redemption, it is quite impossible for us to purchase at any figure which would make it worth our while investing. I thought it worth while to give that to the House, inasmuch as I gave yesterday figures which were not strictly accurate.
§ Sir F. BANBURY
I should not have said anything upon the second reading of the Bill if it had not been for the mistaken idea, which I am sorry to say my right hon. Friend below me (Mr. Austen Chamberlain) shares, which was given to the House yesterday, and also to a certain portion of the Press, because I see that in its leading article "The Times" stated it was absurd—it did not use those words, 866 but it led us to suppose that it was absurd—to pay off debt when you were at the same time borrowing. That is a platitude of the very worst description. It all depends upon the circumstances of the case. I would ask the Financial Secretary whether, if he happened to owe money on which he was paying interest at the rate of 5 per cent., and somebody offered to lend him it at 4 per cent., he would not accept the offer, and whether he would not thus be borrowing at the same time that he was paying off debt? I think that is a statement that nobody can deny. The Chancellor of the Exchequer has just told us that, instead of buying £1,500,000 of War Loan, he only bought £300,000, and that, instead of having bought in the previous year £400,000 or £500,000, he bought,£2,600,000. The reason he gave for that was that he was able to buy Consols at 4s. 6d. per cent. cheaper than he could have bought War Loan. The Treasury Loan Bill, the second reading of which we are discussing, enables the right hon. Gentleman to borrow for seven months. I believe he has been borrowing on six months' Treasury bills at the rate of 2¼ per cent.
§ Sir F. BANBURY
That makes my case all the stronger, but I am content to rest it on 2¼ per cent. Supposing the right hon. Gentleman, instead of reducing the whole of the Sinking Fund, had kept the balance of the Sinking Fund by deducting £3,500,000 and by borrowing the difference for six months, he could have bought Consols, which he told us yesterday or the day before would return £3 1s. 2d., and he would have obtained the money to buy them at £2 5s. He would, therefore, have made the difference between £2 5s. and £3 1s. 2d., and I say that is not a bad operation. The right hon. Gentleman may say to me, "Yes, that is true, but what is going to happen at the end of the six months?" That is the reason I moved my Amendment at £3,500,000. It was not because I approve of it. The right hon. Gentleman made his Budget on the assumption that he was going to take £3,500,000 from the Sinking Fund in order to meet the expenditure of the year, and he only provided sufficient taxes to meet the expenditure of the year, less £3,500,000. I took that £3,500,000 off because I am quite certain no House of Commons will if we have a Budget for 1909–10–and I hope we shall—increase the taxes. That ought 867 to have been done before, but, not having done it, they will not do it now. Therefore, that £3,500,000 had to be found. The balance which the right hon. Gentleman is taking from the Sinking Fund he is only taking until the revenue is collected, and when the revenue is collected, which, I presume, will be sooner or later, and at any rate before September, he will have the money to repay the Bill.
§ Mr. LLOYD-GEORGE
May I interrupt the hon. Baronet? I do not want to enter into an argument with false premises. I think I pointed out yesterday that you cannot guarantee to get these taxes. The stamps you cannot get at all. You get no stamps for this year; they only accrue after the passage of the Budget.
§ Mr. LLOYD-GEORGE
Yes, I mean the new Stamp Duties. Of course, you will have the old Stamp Duties. The ordinary Stamp Duties are producing well. Then, in addition to that, you have got one or two other duties. You cannot get the Land Taxes this year, and no one can tell how much I am going to lose on the Income Tax. I should not like to guarantee to the House of Commons that we collect the whole of that amount or anything approximating to the whole of that amount. The Super-tax is another. One hon. Member, I think the Noble Lord the Member for Oxford University (Lord Hugh Cecil) or the right hon. Gentleman opposite (Mr. Austen Chamberlain), said we could not possibly get the Super-tax this year.
§ Mr. LLOYD-GEORGE
Oh, a great financial authority. At any rate, I think there is a great deal in it. I have no money to meet this £2,800,000 in that time, and I must go on borrowing.
§ Sir F. BANBURY
Now I understand the real reason the right hon. Gentleman is proposing to practically suspend the whole of the Sinking Fund. He does not believe his Budget is going to realise what he thought it was going to realise. I do not doubt that.
§ Mr. LLOYD-GEORGE
I must put that right. The hon. Baronet is not quite fair 868 in that respect. It is not that it will not realise what I anticipated. What I anticipated it would realise was on the assumption that it would pass in its ordinary course. It has not passed in its ordinary course, and that is the reason why I cannot collect these taxes and why I am not able to guarantee to the House that I will be able to find this £2,800,000.
§ Sir F. BANBURY
I do not want to go into past history, but I could point out that there is no reason why we should not be discussing the Budget now, and, if we were, this necessity would not arise. The right hon. Gentleman talks about the Land Taxes. They only yield a net return of £37,000, and the sum we are discussing is £2,800,000.
§ Sir F. BANBURY
Yes, after paying for valuation and dividing it with the local authorities the net result is £37,000, so really that is not worth discussing. We now understand that the right hon. Gentleman does not believe his Budget is going to bring in what he thought by £2,800,000. That, of course, is the real reason why the Sinking Fund is being suspended. Perhaps I may point out to my right hon. Friend (Mr. Austen Chamberlain) the danger of doing this. What is really going to take place is that the public will not know what the deficiency on the Budget of 1909–10 is. My right hon. Friend will know, because he will add, beyond what is taken from the Sinking Fund, what has been received, and, having deducted the expenditure, he will know the deficit. The right hon. Gentleman (Mr. Lloyd-George) will say, "Our Budget brings in so much; our expenditure is so much, and the difference is the surplus." He will leave out the fact that they have taken away the whole of the Sinking Fund, and the vast majority of the people will not remember that the Sinking Fund has been taken. The result will be that the country will be under a delusion as to its finances and the result of the Budget. I wanted to put that right. Though, no doubt, it is not wise to pay off debt if you have to pay a higher rate of interest, it is wise if you save money by so doing. You cannot lay down a hard and fast line that you must not pay off debt with one hand and borrow with the other. My right hon. Friend (Mr. Austen Chamberlain) and his predecessors when they were responsible for the finances of the country 869 borrowed large sums for naval and military expenditure, whilst at the same time paying off debt, so that my right hon. Friend borrowed with one hand whilst paying off with the other. I want to ask one question of the Financial Secretary to the Treasury. Does he remember what he said on 23rd July, 1909?
§ Sir F. BANBURY
Then I will tell him.The price of Consols was kept up even to the low level at which it stands to-day, by constant purchases in the open market by the National Debt Commissioners. If these purchases were to stop the price of Consols would drop very much at once.Does he still hold that opinion? The result of the policy of the Government is not only to place our finances in inextricable muddle, but to depress the price of Consols, and I would remind my hon. Friends below the Gangway that if Consols fall Irish Land Stock will fall too. They are, therefore, supporting the Government in a policy which will tend to depress Consols and Irish Land Stock at the same time. That is all I want to say, and I should be surprised to find that the Chancellor of the Exchequer or my right hon. Friend can prove that what I have said is in any way inaccurate.
§ Mr. HOBHOUSE
I should just like to take up that one point which the hon. Baronet has just dealt with. I think it is of interest not only to this House, but to people outside to know exactly what is going to happen in respect of the so-called suspension of the Sinking Fund with which this Bill deals. The provision for the interest and reduction of the fixed debt charge is £28,000,000, as fixed by the Act of 1905. Interest and management, including the interest on' terminable annuities, absorbs £18,200,000; and terminable annuities, capital charge, £2,500,000 The new Sinking Fund is £7,300,000, and out of the £28,000,000, therefore, the right hon. Gentleman will see there is a deadweight charge of £9,800,000. But you have to add to that sum various items, such as the China indemnity, Land Tax Redemption, Stamp Duty Composition, drawn Suez Canal shares—a further sum of £700,000, the existence of which has been entirely overlooked by the hon. Baronet the Member for the City of London. Of this amount, therefore, there will be used in reduction of debt—terminable annuities, capital, £2,500,000; what are called lottery bonds, 870 for which the right hon. Gentleman, the Member for East Worcestershire was responsible, £1,000,000; and for the China indemnity, etc., £700,000. And in this year, arising from the operations of the fixed debt charge, there will be available for the reduction of debt, and this is a fact which the hon. Baronet opposite entirely overlooked, £4,200,000. But there is a further sum available for the reduction of permanent debt beyond that. It is a sum which arises from the remanet money available for the new Sinking Fund in the previous year. The complaint of the hon. Baronet was that the Sinking Fund was to be entirely suspended during this year. The provision for this year will amount to £4,200,000, but there will be a further available sum, the remanet of last year. Perhaps I had better repeat these rather complicated figures. In addition to the sum of £4,200,000, there will be available the remanet of last year (£7,600,000), less £2,100,000, leaving available from last year £5,566,000.
§ Mr. HOBHOUSE
By the repayment of deficiency advances £1,500,000, and buying up the Savings Bank deficiency of Account, £600,000. The sum, as I have said, will be £5,566,000, and if you add to this the £4,200,000, less the £1,000,000 for lottery bonds, there will be available £8,766,000 altogether.
§ Mr. AUSTEN CHAMBERLAIN
We find considerable trouble in following the figures. There is a sum of £2,500,000 capital charge for the redemption of annuities, £1,000,000 for lottery bonds, £700,000 China indemnity, etc., making in all £4,200,000. There is the remanet of last year, £7,600,000, less £2,100,000, making £5,500,000, which, added to the £4,200,000, gives a total of £9,700,000.
§ Mr. HOBHOUSE
Quite true. The sum available for the reduction of National Debt are £1,000,000 lottery bonds, £2,500,000 terminable annuities, and £700,000 China indemnity—total, £4,200,000, in addition to the remanet of £5,566,000. The right hon. Gentleman will remember, however, that these lottery bonds are not paid off until 18th April, which is just outside the financial year, and, therefore, that £1,000,000 does not come in. It is not lost, but it is gone before. It leaves, therefore, as the sum available for this year, £8,766,000. I only enumerate these very 871 difficult and complicated figures because there seems to be some doubt, a reasonable one, in the minds of the House as to the amount really available for the reduction of debt during the current year. If I may give two or three more simple figures I will point out that they leave us in this position. On 1st April, in the just concluding financial year, our deadweight debt amounted to £702,688,000. We apply towards the reduction of that debt £8,766,000, which, allowing for the price of Consols, will reduce the debt by about £9,500,000, so that when the operations for this year are complete, as they will be in the course of three weeks, we shall have got our deadweight debt down to £693,188,000–a not unsatisfactory record in a year, which, after all, had been one of very great financial difficulty.
§ Mr. AUSTEN CHAMBERLAIN
I had no intention of taking part in this Debate at all. Indeed I was not here when the Chancellor of the Exchequer opened the discussion, and I am sorry I did not hear his speech, but my hon. Friend the Member for the City of London and the right hon. Gentleman the Financial Secretary have both pointedly referred to me, and, therefore, although I did not wish to embark upon this discussion, I feel compelled to do so. My hon. Friend's contention was, I think, mainly as to the effect which our operation was going to have on the price of Consols. He suggested it would stop the purchase of Consols. The Financial Secretary, in reply to that, has shown how much money is available for the reduction of debt. But the whole of what he is calculating upon is not available for the reduction of Consols. The amount available for the reduction of debt—available at the Government's choice, and not specifically cither lottery bonds or annuities—would be about £6,200,000. But that sum, I presume, has, in the main, been already expended, and not much of it is available at the present moment. If my recollection serves me right, the Government are obliged to apply Sinking Fund money within a specified period, and cannot wait indefinitely for the prospects of the market which may be better for them, because it is worse for the holders of the stock. I think, therefore, the whole of the remanent of last year must be spent already, and it is not consequently available for the purchase of Consols. I imagine there is not much dispute between the Financial Secretary and myself 872 on the point that there is very little money now available for the specific purpose of purchasing Consols or supporting the market. I confess I was more interested in and surprised at the statement of the Chancellor of the Exchequer. Just bear in mind what occurred last year. Just before the introduction of the Budget it was rumoured that the Government brokers were active purchasers of Consols. We observed, and it seemed to justify the rumour, that the Government had carried over a very large amount of Sinking Fund money which, under ordinary circumstances, they would have applied at an earlier date—no less a sum than £6,000,000. The Chancellor of the Exchequer very hotly, and, I will admit, very naturally, resented the suggestion that he or any officials coming within his control were in any way manipulating the Sinking Fund in order to support Consols or to use them to support his Budget. He said that the reason why he had carried forward the very large sum of £6,000,000 was because he wished to purchase the War Loan. That War Loan was an expiring debt, and the nearer the date of the expiry the more the premium must wear down. He therefore desired to wait and get better terms on which to purchase, so that the price might approximate par more nearly. He, or the National Debt Commissioners, who, no doubt, acted in consultation with him—[Mr. LLOYD-GEORGE shook his head]—well, in my time, the Chancellor of the Exchequer used to be consulted in these matters, and I have no doubt he is now. But, at any rate, this money was held over in order to purchase the War Loan on more favourable terms. This occurred within a month or three weeks of the introduction of the Budget. If that be challenged, I have no doubt I can find it in Hansard. Questions were put to the Chancellor of the Exchequer, and I myself took part in the interrogations. As I have said, the right hon. Gentleman rebuked me hotly for giving any credit to the suggestion that he was operating on the Consol market in any unusual way. He added that he was not then prepared to give me the information for which I asked, as if he were to state exactly what he was doing that might prejudice his operations. He promised to do so, however, at a later stage, and, indeed, he did at a very much later stage, when we were far in advance with the Finance Bill, give me the explanation which I have repeated to the House, in re- 873 gard to his desire to purchase the War Loan. I accepted that to be a perfectly reasonable and natural explanation, and it seems to me that it would be so now if only the Chancellor of the Exchequer and the National Debt Commissioners had pursued that course. I supposed they would, therefore, have bought £3,000,000 or £4,000,000 of War Loan, but yesterday the Chancellor of tie Exchequer told me that was not so, and they had only bought £1,500,000, but much more than they did in the year before. I understand that now he has corrected those figures, and the actual facts are that he has bought only £300,000 War Loan, that being not more, but much less, than they had done in the previous year, when they had purchased £2,000,000. They did not hold over £6,000,000 in order to purchase £300,000; and what is the explanation of their course in holding over this very large sum, and of the discrepancy between their action as now revealed by the Chancellor and their intention as explained by him in the last Session of the last Parliament? It is a past business; it is not a matter which we can alter now if we could, and I do not desire to suggest that, if we got to the root of the matter, it would not be found that the Chancellor of the Exchequer and the National Debt Commissioners have really taken a course which is in the best interests of the country, although it is not the course which the Chancellor told us they were going to take, and which he equally explained at that time was in the best interest of the country. It now appears that, so far from having bought more War Loan than had been the case in the previous year, they had bought very much less; and therefore, so far from having bought less Consols during the time of which we are speaking and at which this question was put, they had bought more Consols, and the £6,000,000 was employed in purchasing Consols, and not in purchasing War Loan.
§ Mr. LLOYD-GEORGE
I can only speak by the leave of the House. I have no recollection of the answer which the right hon. Gentleman refers to, but I know he is very accurate in these matters, and his memory is only too good. Therefore I am not prepared to challenge his statement if he has a clear recollection of the matter. If the right hon. Gentleman will look at the figures which I had before me and he had been responsible for the purchase he would have come to exactly the same conclusion as the National Debt Commissioners. It is purely a question of buying 874 in the best interests of the country. If you can buy Consols in such a way as to save an extra two or three shillings in interest, whereas if you buy War Loan you pay two or three shillings more, it is obviously in the interests of the country to buy Consols, all things being equal. It is a difference of a saving of 4s. 6d. per cent. We thought that by buying War Loan we were sending up the price, and undoubtedly there was a feeling in the City that it was the policy of the Government to buy War Loan. That is undoubtedly one of the disadvantages of discussing these questions across the floor of the House, as the information given is soon known in the City. The Government are asked questions as to their policy, and if they say, "To buy Consols," they advance Consols in the market. If I announce that their policy is to buy War Loan the price of War Loan goes up, and that is one of the disadvantages of discussing these matters in this way.
§ Mr. AUSTEN CHAMBERLAIN
If the right hon. Gentleman will permit me to interrupt him, may I say he is doing himself an injustice. He did not consent to discuss the War Loan, and it is only when he came to the Sinking Fund clause of his Budget that he made the statement that he would buy more.
§ Mr. LLOYD-GEORGE
The question is had the statement been made that it was more or less the policy of the Government to buy War Loan. We bought steadily from 29th April until 31st December, 1908, with the inevitable result that War Loan went up to par. It was clear at that date that you could buy Consols at a price which would be infinitely more beneficial to the Exchequer than the War Loan price was, so we dropped the policy of purchasing War Loan in favour of the policy of buying Consols, much to the interest of the Exchequer. Then I was under the impression that the War Loan might conceivably come down, once we had abandoned the policy of buying it, and it may be, but I do not recollect, that I gave the answer referred to, which led to the impression that we might, later on in the course of the year, be able to buy War Loan at a better figure. We were under the necessity of reducing the War Loan to a lower figure if we could, and here we are later bringing in a Bill to borrow. Having accepted the statement of the right hon. Gentleman, I will read from the OFFICIAL REPORT what took place on 6th May, 875 1909, when the right hon. Gentleman questioned me:—Mr. AUSTEN CHAMBERLAIN: Did the right hon. Gentleman have in mind the effect of these Government purchases when congratulating himself that the effect of his Budget was to send up the price of Consols?Mr. LLOYD-GEORGE: The right hon. Gentleman is making a suggestion for which he has no warrant. If I may say to him, as one who has been in the Treasury, he is the last man in the House who ought to make such a suggestion. The Commissioners of National Debt are purchasing and have been purchasing because they have got money available for the reduction of debt, but there have been no exceptional transactions either before or after the Budget.Mr. AUSTEN CHAMBERLAIN: May I ask whether the right hon. Gentleman did not state to the House that he had refrained from expending on the redemption of debt the sum of £7,000,000 which was available for that purpose last year, and that he had this money to spend now; and whether it has not been so applied since his Budget statement?Mr. LLOYD-GEORGE: I still say I am not buying in any exceptional form. The right hon. Gentleman is making a suggestion for which he has absolutely no warrant in fact. It was being applied steadily long before the Budget, and we have not increased The amount of purchases since.That is all that passed, and there I did not say a word about the War Loan, but that accurately represents the real state of things when I answered the right hon. Gentleman. We were before the Budget steadily purchasing Consols, and if he looks at this White Paper he will see that also in December, 1908, which was four months before the Budget, we had then dropped purchasing War Loan because we found it was not profitable, and we went on buying Consols because the operation was more profitable. That is the real explanation, and if the right hon. Gentleman says that at any time I stated that it was our intention to revert to the practice of clearing off the War Loan, I cannot find anything there of that character.
§ Mr. LLOYD-GEORGE
Then it means that at that time we had some hope that the War Loan would go down to some figure which would enable us to buy on advantageous terms. The real answer is that if the right hon. Gentleman will look at the price of the War Loan at the time we bought Consols he will come to the conclusion that it was in the public interest to go on buying Consols. I am very much obliged to the House for listening to me.
§ Mr. BOTTOMLEY
I do not propose to follow the Socratic discussion between the two Front Benches, which tends to reduce the position of a private Member to that of a passive and extremely bored nonentity. I rise, with the indulgence of 876 the House, for a few moments to say this, that I for one will not retain my seat and see this Bill quietly go through when it is introduced for the purpose of giving effect to that grotesque system of finance which consists of borrowing from your own debtors, and also of placing a premium upon the avoidance by the public of their moral obligations to the State. If it be right and fair that the Government should permit the taxpayer who has not paid his taxes this year to retain the money in his pocket, and if it be right and fair that the Government should go even further and offer to borrow the money from him on interest, surely by every principle of justice and fair play the Government ought to grant a rebate by way of interest to those more public-spirited citizens who have paid all their taxes without waiting for legislation. Incidentally, also, may I just remind the House how the much-maligned brewer and distiller comes so splendidly out of this ordeal? He has paid up his taxes, it is the more reputable members of the community who are waiting until a more legal document is presented to them. For the life of me—perhaps I lack the business intelligence of some hon. Members—I cannot understand where we are and why it is we are here. Why cannot we face the simple fact? I am the last man in the world to care two pins about Parliamentary debating points—we are not a young men's debating society—and there is this indisputable fact: We had a General Election on two main issues—the position of the House of Lords and the Budget. On one the Government has had a victory; on the other it has had a defeat, and because the Government is not now in a position to pass the Budget through this House any more than it will be in a position to pass many other of us show measures of the last Parliament—because it cannot pass its Budget, is it not its paramount duty to act the statesman and put all questions of personal dignity and pride on one side and do that which can be done, and done easily, to prevent the absolute deadlock in the working of the financial machinery of the country?
I ask the Chancellor of the Exchequer what is the reason why we do not at once proceed to the collection of the Income Tax, and to the collection of it by means of the legalisation of the collection of it? I speak subject to correction, but we have only to pass the Resolution in Committee of this House, and from that moment the tax becomes legally collectable, and if it be a question of the dignity of the 877 Government that is how they can save their dignity. I am dealing with the present position. The Government can save its dignity by adopting that course, because, unlike this particular Bill, that Resolution need not be sent to another place for its sanction. Here is a Government protesting that it will have no truck, negotiation, or dealing with the other House on the matter of finance, and yet we are asked to-day to assent to the second reading of a Bill which must go up to the other House for sanction. Why cannot we pass our Resolution? It can be done with two days' notice, and the tax will be collected next day. I say it is fatuity on the part of the Government. They may call it dignity, or what they like, but the man in the street calls it pique and folly. I press again for some definite simply-worded explanation of why the House cannot go into Committee on Monday next and legalise the collection of Income Tax?
The Chancellor of the Exchequer prefers adopting another course. Authority was quoted by the hon. Baronet (Sir F. Banbury) the other day, going back some years, against the system of borrowing unless as a last resource. The Chancellor of the Exchequer himself, in his Budget statement in the last Parliament, said he would not resort to what he called the vicious expedient of borrowing. That was his own phrase. And yet he reverts to it now out of sheer perversity, under no compulsion and under no necessity, and I re-echo what has been said as to the danger of annexing the whole of your available Sinking Fund and leaving yourself unable to cope with any sudden condition in the market for Consols. The Chancellor says "we will take the money from the Sinking Fund, we will not collect what is waiting for us, we prefer the vicious expedient of borrowing." No business Government, or business man would adopt such a course for two moments. I conclude, being one of those who are in favour of speaking for a short time and saying something during that time which has some plain meaning for the man in the street, by saying that this system of borrowing money from people who owe you money and refusing to ask them to pay you that which they owe, and offering them interest on their own money, is a ludicrous negation of every sound principle of finance and is the apotheosis of business ineptitude.
§ Lord HUGH CECIL
The hon. Member has used arguments which sound unanswer- 878 able and assuredly have not yet been answered in any previous contribution which the Government have made to the discussion. It is perfectly easy to propose an Income Tax Resolution which would certainly be uncontroversial. I do not think the Irish Members, or any party in the House, have ever protested against the increased Income Tax. The matter could be done with the briefest possible Debate, if any at all. They have nothing to do but to put down an Income Tax Resolution for to-morrow, and if they like to make security abundantly secured they can also suspend the Eleven o'clock Rule. There would not be the smallest difficulty in the whole matter. Silly as is their doctrine about the dignity of the House and going to the House of Lords and all the rest of it, it is not involved because it is done by Resolution in this House and there is no reference to the House of Lords at all. As a matter of fact, we do refer it to them by sending it in a legislative form instead of passing an Income Tax Resolution. It is the business of the Executive Government to conduct the country's affairs in a statesmanlike way. The House of Lords may have been right or wrong, but they were unquestionably exercising their legal powers, and the situation which has arisen has therefore arisen in the course of law, and the Government business is to do the best they can in the circumstances and not in a spirit of merely idiotic temper to refuse to spend five minutes of the House's time in securing a regular Resolution which would make the levying of Income Tax legal. I think the Government owe an explanation to the House and an apology to all reasonable men, and I am quite certain that if they persist in their action the country at large will know what to think of them and will set them down as party intriguers who are masquerading as statesmen.
§ The FIRST LORD of the ADMIRALTY (Mr. McKenna)
The Chancellor of the Exchequer gave a full explanation, and as he has already spoken twice he has asked me now to repeat the explanation given yesterday. The Noble Lord and the hon. Member have laid down as facts certain propositions which are by no means so indisputable as they would have the House to think. They say, "Introduce a Resolution in Committee of this House and immediately you legalise the collection of the Income Tax and you save the public from this terrible iniquity of having to borrow money from their debtors." The legal case is not quite what the hon. Member and 879 the Noble Lord believe. The mere introduction of a Resolution in Committee of this House would not legalise the collection of a penny of the Income Tax.
§ Mr. BOTTOMLEY
Am I wrong in thinking that the courts have held that a Resolution of this House does legalise the collection of any tax provided that subsequently, before the termination of the Session, it is embodied in an Act?
§ Mr. McKENNA
Even with the proviso which, with the acuteness we should expect of my hon. Friend, he added, the statement is not quite right. The introduction of a Resolution in this House would not legalise the collection of one pennyworth of Income Tax—neither the passing of the Resolution nor the Report of a Resolution. I will explain what the practice is—not what the law is, because that is very difficult to state. It has been generally recognised that when a Resolution has been introduced in Committee of Ways and Means with the intention of founding a Finance Bill upon that Resolution, the taxes imposed on the strength of the Resolution have been for a long period of time collected, and though the collection has not been resisted, and therefore the question in its naked form has not been tried, it has been assumed that the collection should be enforced, because the expected Act of Parliament is retrospective in its effect, and hence the legality of the collection of the tax from the date of the passing of the Resolution, and not from the date of the passing of the Act. A bare Resolution introduced in Committee of this House would only have the customary effect of financial Resolutions if it were to be the foundation of a future Act of Parliament legalising the taxes in the same Session. The Government are confronted with the fact that they are bound to proceed with certain necessary business in Supply, and they have only a very limited time before Easter during which that business must be concluded. It is perfectly true that a simple Resolution introduced in Committee of this House might be carried through with the consent of the whole House in a single evening, but that would not be enough. It would be necessary in following out the custom, which is the sole basis really for the enforcement of the tax, at the same time that you introduce your Resolution to lay before the Committee the whole financial scheme of the 880 Bill of which the Resolution forms the basis. There is no case in which a financial Resolution has been introduced in this House except upon the statement of a coming Bill. The coming Bill in this case would have to be the Finance Bill for the year 1909–10. Does the hon. Gentleman opposite assume that if the Government were to introduce this Resolution and at the same time were to lay down their financial plan for the year 1910, which would be the Budget which was fought for six months last year, hon. Gentlemen opposite would accept that Budget sub silentio? They would not. Now the Noble Lord tells us what his plan is. He says: "Have a series of financial Bills, one for Income Tax, one for the Land Tax, and one for the Super-tax." Whatever course this Government pursues they will not follow the course laid down by the House of Lords.
§ Lord HUGH CECIL
The right hon. Gentleman misapprehends me. I do not suggest that he should bring in a number of Bills, but when we are dealing with the legal or customary effect of a Resolution, it is not necessary to look beyond the Resolution. No one knows whether the Government mean to bring in one Bill or another Bill. The effect of the Resolution is the same so long as some legislative effect is given to it.
§ Mr. McKENNA
The Noble Lord is a great constitutional expert, but on this occasion I am quite unable to agree with him. The Resolution which is to be the foundation of a Bill is of no value at all.
§ Mr. McKENNA
Of what Bill? Whether the Noble Lord likes it or not, let him understand once for all that the only Bill of which the Resolution would be a foundation is the Budget. If the Noble Lord believes that that would be acceptable in this House without discussion, so that we could get it through and get the time to carry our necessary Supply before Easter, I can assure him that he is mistaken. A mere barren Resolution by itself would legalise nothing. The Resolution, if it has to be construed in the, law courts, would be construed as a Resolution forming the foundation of a Bill. The only Bill which we would introduce a Resolution to form the foundation of would be the Budget of last year, and we cannot assume that such a Bill as that could possibly pass before Easter in the present House of Commons.
§ Mr. E. G. PRETYMAN
I think the right hon. Gentleman makes a very reasonable assumption in supposing that the entire Budget of last year would not be passed without discussion on this side of the House, but how can it be more illegal to collect under another Resolution of this House the Income Tax still un paid—
§ Mr. PRETYMAN
There has been a large amount of Income Tax collected, and what objection can there be to the Government sending their demands for the uncollected part?
§ 5.0 P.M.
§ Mr. PRETYMAN
On the faith of the Resolution of this House. The right hon. Gentleman has pointed out that a Resolution must be the foundation of a Bill, and I think he will admit that all that is necessary is that it should be understood that the Resolution will be the foundation of a Bill which will include the actual provision covered by the Resolution.
§ Mr PRETYMAN
Not at all. Omne majus continet minus. You will have a Resolution limited in its scope, and so long as the Bill subsequently passed covers that Resolution, it is immaterial how much more the Bill contains. I presume that we shall not be engaged for two years in passing the Budget Bill through this House and into law.
§ Mr. PRETYMAN
It depends on the Government. Both the House of Lords and the Opposition are waiting for the Government to introduce it. There is no reluctance to discuss the Budget on this side of the House, and I presume that if a Resolution is passed here by the consent of both parties legalising the imposition of the Income Tax, it may be taken as an absolute certainty that whatever Government is in office—well, I do not wish to say the words, but my meaning is perfectly clear. It has been hitherto held that a Resolution legalises the imposition 882 of a tax. I will put it no higher than that. At any rate, Income Tax has been collected on such a Resolution for years, and such a Resolution can again be passed. It must follow that if a Resolution is passed without opposition, and with the consent of both parties, whatever patty brings in the subsequent Budget for the year 1910–11 will legalise that Resolution. It is obvious that that must be so. It is mere sophistry to play with words and to pretend that this cannot be done. The right hon. Gentleman opposite cannot say that if the Government really desire to do so they could not bring in this Resolution, that it would not result in the payment of the bulk or practically the whole of the Income Tax, and that there would not be an immense saving to the country. It would be an advantage to every business man concerned in the matter, and the names are legion and the interests at stake are very considerable. I cannot see on what ground except mere pettiness the Government will not do their best in this matter. The Government are making no effort of any kind to use the forms of the House to enable them to collect the Income Tax. Instead of that they are raising and making difficulties.
§ Mr. PRETYMAN
If they really wish to pass a Resolution they could find better reasons for doing it than for not doing it. I hope the right hon. Gentleman will bring in a Resolution. If he does so, I do not think he will find that the consequences will be at all serious to the Government. It is not for us on this side of the House to support the credit of the Government in the country, but I say that they will lose a great deal of credit in the country if they do not bring in a Resolution to enable the Income Tax to be collected. The country will understand that they could do this if they liked, and that for party interests they are sacrificing the whole finance of the country.
§ Mr. JOHN WARD
I happened to be a Member of the last Parliament and I remember the speeches which were delivered by hon. and right hon. Gentlemen opposite declaring the absolute absurdity of our scheme, and asserting that a Resolution of this House gave us no right whatever to impose taxation. I listened to these speeches for about six months, and now the Noble Lord (Lord Hugh Cecil) comes and informs us that all the speeches 883 delivered by his friends during that period were absolutely absurd, and now, as a matter of fact, what the House is asked to do is to pass a Resolution at once. The Chancellor of the Exchequer has pointed out that a Resolution has no consequence whatever unless it is the basis of a Bill immediately to follow. Consequently, what the Noble Lord and his Friends propose would mean that we would be no further forward until the Resolution was followed up by a Bill to be placed before the House of Lords legalising the collection of the tax. It seems to me that that would be to admit the right of the House of Lords to interfere in the matter of finance, and to carry out the suggestion which has been made would be to place us in an utterly ridiculous position. We have no intention to do so. Let it be observed that we passed a Resolution imposing this Income Tax, and it includes a Super-tax in respect of incomes over a certain amount. We debated that Resolution for three nights before we got it passed, and it is included in the Finance Bill. We gave that part of the Legislature which is at the absolute disposal of the Noble Lord and his friends an opportunity of legalising the tax, and they objected to it. It is they who have made the trouble. It is they who have caused all this financial confusion. It is they who have caused all this loss, and on their shoulders must rest the responsibility.
§ Sir ALFRED CRIPPS
I would like to say one word in reply to what the right hon. Gentleman opposite calls the legal or constitutional side of the Question. I do not wish to follow the hon. Member for Stoke-upon-Trent (Mr. J. Ward) because he has seized the occasion for raising the constitutional question, but this does not seem to me to be the proper time to go into a question of that kind. The matter stands in this way. I think it has been clearly shown that on business grounds it would be an advantage to the national finance that the Income Tax should be levied in the ordinary way. Neither the Chancellor of the Exchequer nor the First Lord of the Admiralty who spoke on the Front Bench suggested for a moment that it is a satisfactory way of dealing with the finance to borrow from debtors instead of making them perform their duty by paying their taxes directly. The question involved is whether or not there is any technical difficulty in passing an Income Tax Resolution and putting the payment of Income Tax on a proper legal basis. Let me say, 884 in reference to that, that I cannot agree with the view put forward by the right hon. Gentleman opposite. Both as a matter of law and a matter of custom—I believe custom without any breach—Income Tax has been levied and paid on Resolutions passed in this House. The right hon. Gentleman opposite said that the matter has never been tried in the courts, and so far as I know that is so, and perhaps the Solicitor-General will tell me if it is so. I do not think that there has been any necessity to try it in the courts. I am sure that the right hon. Gentleman will agree with me in this that when a Resolution is passed it is contemplated at some time or other in the future that a Bill should be passed carrying everything that is proposed in the Resolution. The right hon. Gentleman must know perfectly well that the Income Tax will have to be levied under a Bill passed under the present conditions of the Constitution or under some conditions. I do not want to argue that point one way or another, but the Income Tax will certainly have to be levied under a Bill properly sanctioned in order that the finance of the country may be put in a proper position. After the passing of a Resolution by the House at this time, the Income Tax could be levied, as it always has been levied, and it would be practically impossible that any question should be raised.
§ Sir ALFRED CRIPPS
The right hon. Gentleman shakes his head, but I challenge him to show that that is not so. A Bill would be required to legalise ultimately what was in the Resolution. I want to separate the technical side of this question from matters of substance. No one can propose a Resolution of this kind except the Government. That is provided for by the Standing Orders, and, of course, if the Government do not propose a Resolution, other Members have no power in a matter of this sort. If the Government were to propose a Resolution and the subsequent steps necessary were carried out, then the Income Tax would be paid exactly as it has been for centuries in the past.
§ Sir ALFRED CRIPPS
Well, I will not say centuries, but for fifty years. That will be sufficient for my argument. [An HON. MEMBER: "How about the Bill?"] I do not want to raise a controversial 885 question at present. A Bill must be passed in some form or another. There is no question about that. I say that a Bill is bound to be passed, because the finance of the country cannot go on without one. We are agreed upon that point. That being so, I say without any hesitation that any Resolution passed in this House under these conditions with the sanction of the Government would give the legal right to levy the Income Tax in the same way as it has been raised for a large number of years, and no question could be effectively raised at all. Under those circumstances, instead of getting our debts paid you increase the indebtedness of the country and go upon the most expensive possible lines as regards national finance. I am quite certain that the Chancellor of the Exchequer will agree with me that as a matter of prudent finance the Income Tax ought to be regularised. I say that as a matter of constitutional practice and law there is not the least difficulty in the Government introducing a Resolution which will bring about that result. As I understand the right hon. Gentleman opposite there seems to be fear that if action of this kind is taken, what was done by the House of Lords will be in some way condoned and recognised. I do not admit that that is so at all, and if that is not so, what is the reason for refusing to introduce a Resolution? I know of no financial or business reason of any sort or kind why this should not be done, and if a Resolution of that kind were adopted, then, under these circumstances, the Income Tax would be raised legally and in accordance with the recognised practice. I say legally, and I believe legally. The right hon. Gentleman shakes his head. I can only say with humility that I disagree with him on this point. It can be raised legally, as it has always been raised, without any question. There is no greater difficulty in raising the rest of the Income Tax than in raising the portion that has been already paid. I would urge the Chancellor of the Exchequer to adopt what would be the ordinary course, and what is admittedly a proper financial expedient, and not on any outside grounds to be led away into what is an extraordinary experiment, and an unfortunate experiment, namely, raising money by adding to your debts, when, if you collect your debts, you would be able to meet the requirements of national finance.
I would wish to ask the Chancellor of the Exchequer is it 886 not the case that formerly every tax was passed under a Bill of its own, and that it is therefore perfectly easy if the Income Tax was passed—
Is not this a fact, that Budgets are a modern invention, and that formerly every tax had its own Bill? I know something about the feeling of business men in the City, and I am quite certain that the party in the House which is going to gain most in the eyes of the people is that which consults the convenience of the business people. [An HON. MEMBER: "Who threw out the Budget?"] I have kept out of the question of the Budget. I was rather appealing to the Government for once to—
§ The SOLICITOR-GENERAL (Sir Samuel Evans)
I am not sorry that the hon. Gentleman (Colonel Williams) has exceeded the question which he first proposed to ask when he got up, and has given his views of what the Government ought to do, according to the Opposition, about the finances of the year. It is a historic fact that in the old days every tax had its own Bill. It was a mischievous rule, and it was on account of the mischief caused by a rule of that kind that it was determined, some fifty or sixty years ago, that the Budget ought to be one financial Bill for the whole year. No doubt the hon. Member and the party which he supports would be very glad indeed to have all the taxes in separate Bills so that another place might deal with them quite freely, and might accept such taxes as they liked, and reject those which they did not like. The hon. Member opposite (Sir A. Cripps) used the word legalised several times with regard to the Income Tax. I do not want to say anything that would preclude any decision by the courts that a Resolution of the House of Commons is sufficient for the collection of the tax, but I entirely join issue with the hon. and learned Gentleman when he says that the passing of a Resolution in the House of Commons legalises, as the law now stands, the payment of any tax at all. I do not say that the courts might not decide that the Resolution of the House of Commons would be enough. I should be 887 very glad if they did so decide, but they certainly never have so decided up to now. Who are the Gentlemen who ask that this course of passing a Resolution should be adopted, and who want to dictate to the Government the arrangement of the business in this House?
When was it that the Noble Lord (Lord Hugh Cecil) took an interest in the commercial interests of the country, and when was it that the party to which he has now been added thought first of all of the interests of commerce and of the people? I will tell my hon. and learned Friend opposite that by reason of the conduct of his Friends in another place there is not a penny of Income Tax which has already been paid which might not have to be re turned if an action or a petition of right were brought. The view of the hon. and learned Gentleman is this, that unless the Resolution of the House of Commons legalised it the collection of the tax would be illegal. Why then render absolutely illegal the levying of all the millions of taxes—Income Tax, Tea Duties, and those in the same category last year—to suit these Gentlemen now, because they want to arrange the business of the Government which the Government prefer to arrange for themselves? They want two or three weeks to pass a Resolution which might be tested in a court of law. There is not a single person who could be compelled on that Resolution, without having re course to the courts of law, to pay Income Tax. They pay it voluntarily. The business community are sensible in this country, and they paid it voluntarily last year, and they paid it voluntarily since the defeat of the Budget in the House of Lords, and they will go on paying if voluntarily—
§ Mr. AUSTEN CHAMBERLAIN
Does the hon. and learned Gentleman assert that if the Resolution as to Income Tax were passed, and it were collected on that Resolution with a view to a Bill being subsequently introduced, the courts would order the refund of the tax?
§ Sir SAMUEL EVANS
I have not said so. I carefully said that the matter had not been decided by the courts. What I did say was that the question might be raised, that anybody might refuse to pay that Income Tax unless he were willing to pay it voluntarily, and that on that question being raised it would have to be decided by the courts. And all this is 888 to be done in order, apparently to put the Government in what is thought by the other side, and quite erroneously thought, a difficulty, in disarranging the business of the Government up to Easter in accordance with the course that has been planned by the Government and laid before the House of Commons by the Prime Minister. They may argue as much as they like upon this question. As my right hon. Friends have said, the time between this and Easter is fully allocated, and we are prohibited from embarking on the discussion of any such Resolution; it cannot be done now. Is there anyone who says that such a Resolution would be passed before Easter? Is there anybody who, speaking with responsibility for the side opposite, will give some pledge that if a Resolution were put forward now it would go on without being discussed? But whether that be so or not it is for the Government of the day to decide what is to be done.
§ Sir SAMUEL EVANS
The Noble Lord really assumes too much to himself in assuming that the Government of the day have no regard to the public interest. The public interest is their main consideration. What is the public interest in passing such a Resolution now unless it have a legal binding effect? I have already said that it has never been decided. I should be very glad if it were so decided. One thing is made perfectly clear by the discussion which we have had on this matter—whether the courts of law decide the legality of such a Resolution as is suggested or not, it only shows how absolutely important it is that the arranging of the finances of the country should be in the hands of one Assembly. Never before has there been any difficulty upon this matter, because it has always been assumed that what has passed this House would pass the other. These difficulties have been created entirely by the Noble Lord's Friends.
§ Sir ROBERT FINLAY
The hon. and learned Gentleman (Sir S. Evans) asks who can assure him that if a Resolution for the payment of the Income Tax is introduced it would pass through without opposition on this side of the House. I think I may speak for every Member of the party which whom I have the honour to be associated in saying that such a 889 Resolution would certainly have their most cordial support. There might be opposition, but it would proceed from the Friends and allies of the hon. and learned Gentleman. It would not be in the public interest. It would be purely for the purposes of party intrigue. The hon. and learned Gentleman says that the Unionist party are responsible for the confusion which has been occasioned in the finances of the country and the loss which the taxpayers suffer. You are responsible. You wore told that there was aboslute readiness on this side of the House among the Unionists, here and elsewhere, to concur in any measures necessary for regularising the collection of revenue. Upon a childish point of honour you decline to avail of this offer, and rather than have it said of you that you accept any suggestion, however reasonable, coming from a quarter that you dislike, you have preferred to throw the whole finances of the country into disorder and to occasion very great loss to the taxpayer. I think that the conduct of Gentlemen on that bench will undergo the judgment of the country. [An HON. MEMBER: "The two elections yesterday."] We say that the Treasury Bench are engaged in promoting measures for the purpose of borrowing money, and they decline to take any measure for the purpose of ensuring payment of the moneys which ought to be recovered by the Government. Was there ever a more extravagant system of finance created than all these borrowings at interest of money which you will not take any steps for the purpose of recovering? For what purpose are such tactics being resorted to? Is it in the public interest? Is it not upon a pitiable and miserable point of honour as to whether or not you are to have your whole Budget at once?
The hon. and learned Member says that the practice has been to introduce all the taxes in one Budget. That has been the practice since the year 1861, and it was introduced for reasons which are familiar probably to most Members of the House; but will anyone tell me that, on a legal pedantry of this kind, you are going on borrowing money instead of raising it, as you know perfectly well you can, by regularising the payment under legal statute. You decline to do it for no valid reason, and we do put it to the House that it is simply monstrous that the Government should be borrowing money when they might pass a Resolution, bring in a Bill, and have the payment of the Income Tax legalised. I have really listened with 890 amazement to the observations made by the hon. and learned Gentleman with regard to this matter. The whole responsibility for this waste of public money rests with him and his Friends.
§ Mr. DILLON
The plea for financial purity which has to-day come from right hon. and hon. Members above the Gangway is amazing. After long constitutional experience the hon. and learned Gentleman the Member for Edinburgh University spoke deliberately of the change that was made in the financial system of this country as a pitiable point. That change was made by Mr. Gladstone.
§ Sir R. FINLAY
I never said anything of the kind. I never said a word against that principle. I said it was ridiculous to insist on adhering to it rigorously under all the circumstances, when it is perfectly clear that a great loss is being occasioned to the taxpayer of the country by adhering to it.
§ Mr. DILLON
I quote the right hon. Gentleman's words. He said:—It is a pitiable point of order that you should insist upon having the whole of your Budget at once.Is it a pitiable point of Order that this House should go back to the condition of things from which the financial policy of Mr. Gladstone rescued us? We had the whole inner meaning of this party trickery, as hon. Members above the Gangway call it—though we call their proceedings party trickery—revealed by those who put the question to the Solicitor-General, "Why not recur to the principle of passing several Finance Bills"? That would practically enable the House of Lords to dictate what were to be the taxes of this country—a practice which was put a stop to by Mr. Gladstone more than half a century ago, when he established the supremacy of this House on questions of finance. You are invited now, in order to get clear of the financial muddle which hon. Members above the Gangway alone have made, to rescue them from the indignation of the business people of this country. You are invited, as I say, to bow your necks under the yoke of the House of Lords, and you are invited to recur to that system of passing half a dozen Finance Bills, so that the House of Lords can pick and choose and reject certain taxes without throwing the whole finances of the country into confusion. No; in vain is the net spread in sight of any bird. The Liberal party, I trust, will never be fools enough to be caught by such chaff as that. The House of Lords has created this financial confusion. 891 I do not wonder that hon. Members above the Gangway are pitiably anxious that something should be done to clear up this financial situation. They are extremely uneasy about the state of finances for which they are responsible. [An HON. MEMBER: "You would have had the Budget if it were not for yourselves."] Are you going to support the Budget? Answer me that question. You are calling for the Budget to be produced, are you going to support it? Answer me, and I will answer you. The point at issue at this moment is whether the House of Commons, on the invitation of the hon. Gentlemen above the Gangway, is going to recur to the old British principle of having half a dozen Finance Bills. [An HON. MEMBER: "Certainly not."] I rather think the House of Commons has made up its mind to adopt a very different course indeed. It is not going to go back, and I hope and trust it is going to go forward.
There is great anxiety among hon. Members above the Gangway to hear what the party to which I belong will do about the Budget, but we on the Irish Benches are anxious to know what they will do. There is another House of Parliament. Who will tell us what they have to say about the Budget? Supposing we were to pass the Budget to-morrow, what man living could give this House security that it will not get another slap in the face? Who can speak for the House of Lords? Lord Lansdowne cannot speak for the House of Lords. I remember more than one case where Lord Lansdowne was opposed, I suppose by "the wild men of the woods." Hon. Members above the Gangway are very eloquent on the question of the indignation of the business community, but I ask them why they did not go to St. George's-in-the-East, where there was a bye-election?
§ Mr. DILLON
I was speaking about the business community of Great Britain, and, for myself, I see no sign of the rising indignation of business men, though I think there is a great deal of indignation against the House of Lords, for they, and they alone, are responsible.
§ Mr. GIBSON BOWLES
I rise with some trepidation in this tremendous conflict between the hon. and learned Gentleman, the Solicitor-General, and the most learned First Lord of the Admiralty. I believe much of their law not to be quite sound, and as to the hon. Gentleman who has just spoken, I am afraid his history is at fault. It is not half a century ago that the Budget was first put into one Bill. No, Sir, it was first put into one Bill, first called a Finance Bill, and first made an omnibus Bill, in the year 1894. So little is it true, that even since then the whole finance of the year has not been put into one Bill. We have the War Loans Bill before us now. Ten years ago that was a separate Bill, yet it was passed as a part of the finance of the year, and a very important part. Therefore the hon. Member opposite will recognise that I am telling him the facts of history, but whether the learned Gentleman who has just spoken will agree with what I believe to be the law, I do not know. But we have had from the opposite benches an engaging exhibition to-day. They are not full of enmity or hatred; on the contrary, they are very friendly, very caressing, and they offer us all sorts of presents if we agree to the course they are pleased to suggest. There is an old Latin tag, Timeo Danaos et dona ferentes, which for the benefit of Members representing universities I will translate. It means: I fear the Greeks even when they are bearing presents." Those are my feelings with regard to hon. Gentlemen opposite. The Noble Lord says that if the Resolution were introduced it would not meet with any opposition. Does the Noble Lord speak for his Leader in this House? He has endeavoured on many occasions to explain to an admiring world what his Leader intended to mean, and every time the action of his Leader has disappointed and falsified his expectation. I do not think he has any quality to make such a promise on behalf of his Leader, and still less any quality to make a promise on behalf of the House of Lords. But even with such a promise that the Resolution would be passed, as the First Lord of the Admiralty pointed out, without some undertaking that the Bill to be founded upon it would be passed, the Resolution would be idle. May I come to what I conceive to be the effect of these Resolutions. I do not agree with the First Lord of the Admiralty that the Resolution with regard to Income Tax only takes effect from the date when it has passed this House. Does he adhere to that statement?
§ Mr. McKENNA
The Resolution usually states the date, but the date is not the same date as that of the passing of the Act. The Act dates back retrospectively.
§ Mr. GIBSON BOWLES
Quite so. The First Lord of the Admiralty will recollect that last year the Resolution was not passed by this House until the 29th of May, but it was retroactive hack to the 5th April, which is the Income Tax day. There is always some difficulty as to the interval between the 5th April and the 29th May. I do not see how this is to be bridged over. With regard to the Resolutions, therefore, although I do not know what the courts of law might hold, certainly the practice, the very long and unbroken practice is this—and this long and unbroken practice I conceive to amount to a usage, which becomes part of the common law, which could be enforced in the courts—the practice has been this: That you pass the Resolution in order to avoid inconvenience, months of palpable inconvenience, that will arise to the revenue from giving people time to rush in goods—you tax and you immediately begin to levy duties; that is because you anticipate with certainty that the Act imposing the duty will be passed, and be passed soon. The Resolution is made active for a month or two, which is taken up in the passing of the Act, but it has never been considered, and will not, I believe, be considered possible to keep the virtue of the Resolution during nine, ten, or eleven months; therefore, even if the Finance Bill had not been rejected, I should have very great doubt as to the virtue of the Resolutions passed in the last Parliament. The House will know from the speech I made the day before yesterday that I am strongly impressed with the necessity of doing something, and at once, in order to legalise the taxes that have been levied. The Income Tax Commissioners came to me with a bludgeon and extorted from me the Income Tax, telling me that they acted by virtue of an Act of Parliament. It was not true, but I believed it. These Commissioners ought to be protected against the evil fate which befell Empson and Dudley for doing exactly the same thing. They ought to have some indemnity for their conduct. I have no doubt they acted, poor things, for the best, but that they acted under the order of the Treasury I presume is almost certain. The Chancellor of the Exchequer does not deny it, I believe. I think, first of all, it is very important that their action should be legalised, and, secondly, that 894 this £25,000,000 of money which is waiting us should be collected, and the difficulty removed. I have been, and am still, anxious to see this carried out, as I do think it is the most pressing and instant thing that this House has to deal with, or that His Majesty's? Government have to deal with. I do think, and I know, that the country at large is looking with the gravest anxiety for some settlement of this question of taxes paid and of taxes unpaid. It is not so simple as the Noble Lord thinks, but I will assume for the moment that the Noble Lord's Leader will follow him, which is a large assumption. However, I assume it for the moment, and I assume that the Resolution passes this House quickly. I am not sure that it would, but I will assume it—and then what about the Bill? Can the Noble Lord give us any undertaking about the Bill, because, as the First Lord of the Admiralty has said, the Resolution is not effective, and can never really and fairly be acted upon, and would never be enforced by the courts, only in view of the probability—or the certainty, indeed—that you meant to found a Bill upon it. What will the Noble Lord say about the Bill? Will he promise the Bill? No, I am afraid he will not. That really leaves us in the same difficulty, that here we pass a Resolution without founding a Bill upon it.
I had hoped that perhaps the Leader of the Opposition might have thought it worth his while to be present on an occasion of this sort, although it may not, perhaps, be possible, to give us some assurance. I should then feel very differently about the matter, convinced as I am of the instant necessity for levying the taxes, and persuaded as I am that the Resolution would be passed without probably any great difficulty in this House. It must be a Resolution dealing with a Bill, and there must be a Bill passed through all its stages in this House, and so far I have received no assurance or anything like an assurance that the whole of the party opposite would join in facilitating the Resolution and in passing the Bill. And, if they would, what about the hon. Gentlemen from Ireland. I observed that when the hon. Gentleman who spoke last was asked whether they would agree to passing the Budget or pass this part of it, instead of replying like an Irishman he asked another question like a Scotsman. Therefore I am still in doubt about this course, which I should very much like to see adopted. I should wish to see the course adopted that is now so strongly 895 recommended by hon. Gentlemen opposite, but I foresee difficulties, and, above all, I can see no adequate assurance that either the Resolution would be carried without opposition or that the Bill founded upon it would not be stopped either in this place or in another place.
§ Mr. J. G. BUTCHER
I have been wondering during this discussion what is the real reason why the Government object to bringing forward their Resolution. I take it that the real reason is that if they brought forward and passed that Resolution they would have to bring in a Bill subsequently founded upon that Resolution and pass it through this House. There are only two alternatives. One is to bring in a Bill dealing with the Income Tax alone, which, for some mysterious party reason, founded, I presume, upon some party tactics, they have the strongest possible objection to do. The other alternative is to bring in the Budget Bill at the earliest possible opportunity, but that is the last thing they want to do. When this House met, apparently the Budget Bill was to be introduced at an early stage, or, at any rate, pushed forward as far as the House will allow it to go; but under the pressure from these benches that desire to bring forward the Budget Bill has faded and faded away until it appears to me that the last Bill which the Government—this great Government, with its majority of 124–want to produce is the people's Budget, and put it before the judgment of the House. Have they got tired of the people's Budget already? Is the Chancellor of the Exchequer ashamed of this people's Budget of which we heard so much during the election and before it, and, if not, why cannot we see it, why can it not be brought forward and submitted either for acceptance or rejection at the hands of this House?
Surely the time has come when these discreditable party tactics might be abandoned? Let the Government have the courage of their convictions. Are you going to pass the Budget at all, are you even going to bring it forward before this House. If I had been asked that question on the first Monday the House met, and having listened to the Prime Minister on that day, I should say of course we should see the Budget. He told us we should not only see it but pass it through this House before the spring recess. When I listened to the Prime Minister last Monday my mind was a complete blank and confusion. 896 It was, and I do not mind saying so, and anyone listening to the Prime Minister on that occasion would be in a similar state. When I listened to the Chancellor of the Exchequer it seemed to me exceedingly doubtful whether we shall ever see that people's Budget in this House, and still more doubtful whether that people's Budget will be ever submitted to the judgment of the people. Let me appeal to the Chancellor of the Exchequer, let him put aside these tactics, let him come to business, let him produce his Resolutions, let him produce his Budget Bill as soon after it as he can, and if you are beaten as you probably will be take your beating like men. And the country will respect you far more than if the Government of this country is to be carried on by a system of cabal, of intrigue, and of surrender.
§ Mr. LINCOLN
I rise to give expression to my utter amazement and boundless bewilderment at the arguments used by hon. and right hon. Gentlemen on the opposite benches. They seem to me over anxious to pass the Budget which they denounced in the country. We are told that they have submitted the Budget to the judgment of the people, and we have been told by the Leader of the Opposition that the judgment of the people is against the Budget. Why, then, should hon. and right hon. Gentlemen be so anxious to pass a Budget of which they disapprove?
§ Mr. SPEAKER
The hon. Member is not addressing himself to the point we have been discussing during the last two or three hours. The general discussion upon which he is now entering forms no part of the discussion hitherto.
§ Mr. LINCOLN
I beg to apologise. The Government wants to borrow money because they cannot introduce the Budget, and they cannot introduce the Budget first of all because there is no time, and hence we must proceed by way of borrowing to pay the necessary monies to carry on the Government of the country. I was amazed to hear the profuse professions of hon. and right hon. Gentlemen opposite about the business interests of the country. They said why are you going to borrow money, as it is against the business interests of the country. That was certainly a question to be considered last year when they threw out the Budget. It is too late to consider the business interests of the country now. Furthermore, how in the name of reason could we even if we had the time to introduce the Budget, send it up 897 to the same House which rejected it once before? It would be quite illogical, and we cannot send up the Budget to the other House before we have taken away the power from that House to reject it once more. That is an additional reason why the Government should raise money not by a Finance Bill, but by borrowing. If any serious financial crisis will result from that it is only hon. and right hon. Gentlemen on the opposite benches who will be blamed for it. I am quite sure that we are not afraid of an election or the judgment of the people. We are quite willing to submit our procedure to the judgment of the people, and we shall ask them who is to blame that the Government, for the first time perhaps in British history, has been refused supplies for the year, and that we have to borrow large sums of money for which we have to pay. Who is to blame for that, and for the fact that we have no Budget for 1909–1910? Surely it is too late in the day to blame us for this. It is the other House and the Opposition who are responsible for this deadlock in the financial situation of the country. I am quite certain that the wrath and indignation of the people will pass judgment on the Opposition. I heartily support raising the money by borrowing and keeping back the Budget until the power is taken away from the other House of refusing it once more.
§ 6.0 P.M.
§ Mr. R. A. COOPER
My position as a new Member in this House is very analogous to that of the medical student when he attempts his first lecture in the operating room, and for this reason, that it is very patent, at any rate to myself as a new Member, what the interests of the country are in this matter that is before the House, i.e., the question as to whether it is wise for the Government to have the opportunity of borrowing or to put into force the alternative scheme of raising money by such Resolutions as have been referred to and the levying at once of the Income Tax. The reasons, I have learned from hon. Members, particularly on the other side, as to why they are borrowing in preference to any attempt to immediately raise the Income Tax for this year, is, first, the fear as to what will be the fate such a Resolution would meet with when it got to the other House. I do not believe that there can be any Members in this House who have the slightest doubt that if such a Resolution were passed in 898 this House that, in the interests of the ratepayers, it would meet with no opposition from the other House. Is it not a fact that these very Bills we are discussing this afternoon, the Treasury (Temporary Borrowing) Bill and the War Loan (Redemption) Bill, have themselves got to go before the House of Lords? The second reason why I understand it is urged that the Income Tax should not be at once levied is because hon. Members on the other side of the House regard it as breaking financial precedents since the year 1861 of levying the taxes of the country in one whole Budget instead of in separate Bills, which, as they suggest with perfect correctness, do give the other House the opportunity of picking and choosing which taxes they will have and which they will refuse. But we are not at the present time discussing the financial arrangements for the whole of the year. We are in exceptional circumstances, and whilst we may all agree that as a general rule taxes should be raised in one Budget and not in parts, those special circumstances would justify, if it is the interests of the taxpayer, the putting into force at once of a Resolution levying the Income Tax. The hon. Member for East Mayo (Mr. Dillon) asked last night why we on these benches were so anxious to see brought before the House a Budget which we so heartily detest. There are many reasons, but one reason why I personally should like to see the Budget brought forward is that it would give an opportunity to show the country to what an extent the bartering of political principles is going on in this House between one group and another, to the detriment of the interests of the country at large.
Bill read a second time; and committed to a Committee of the Whole House for to-morrow.