FINANCE BUSINESS (PROCEDURE).

HC Deb 21 March 1910 vol 15 cc777-839

Mr. STEEL-MAITLAND

I cannot allow the Second Reading of this Bill to pass without some protest against the maladministration that has taken place in the Revenue Department under the present Government during the past two months. At the time when the Consolidated Fund Bill was before this House last year the Financial Secretary to the Treasury prided himself upon the financial rectitude of the Government. They apparently were not as other administrators, or even as bad as the Unionists had been. [Cheers.] I can well understand those cheers from hon. Gentlemen opposite, and perhaps I may be permitted to adapt a well-known phrase:— The temple of finance has echoed and re-echoed for years with the Pharisee's prayer, and the accent of its unmistakably radical. It is not as if there are only one or two taxes with regard to which mismanagement has taken place. It concerns not only the taxes of a temporary character, but others which do not depend primarily on the Budget at all for their continuance. In the first place, the Income Tax and the Tea Duty are of a temporary nature, and have been affected by the mismanagement, but apart from those taxes the whole question of the Death Duties, the additional Spirit Duties, the extra Tobacco Duties, and other taxes have been affected by the maladministration of His Majesty's Government. Beyond the taxes in. the Budget and the Finance Bill, there are other taxes, and here the breach of principle is worse, although the amount involved is not so great. The taxes affected include the Land Tax and the House Duty, which are not imposed by the annual Budget, but are a matter of permanent enactment.

If I may I will deal with some of these taxes in order, taking first of all the question of the Income Tax. I take it first, because, for one reason, the loss involved is so infinitely great. Up to the date of the publication of the last figures of revenue in the "Gazette" of 12th March, the loss involved through the non-collection of Income Tax which might have been collected amounted to something like £19,500,000, and by the end of the financial year that sum will probably be increased to something like £22,000,000. Another reason for taking the Income Tax first is that the mess, the muddle, and the make-belief that there has been have reached their maximum in the case of that tax. As a matter of fact, the whole of this business of the collection of the Income Tax would really have been a ludicrous farce if it had not been for the magnitude of the sum involved and for the extraordinary ineptitude of the Government, as evidenced by the way in which the difficulty is being met. If hon. Members wish to know what the chaos is with regard to the Income Tax they can take for one moment the matter of demand notes. I am informed that demand notes have been issued by the Local Commissioners in Essex, but not, I believe, in Kent; that they have been issued in Somerset, but not, I believe, in parts of Lancashire; that they have been issued in Coventry, but not in its next-door neighbour, Birmingham; and that they have been issued in one part of the City of London, but not in another part of the same City. Again, as another instance if the chaos that exists, you may take the degree to which the Government have been receiving or abstaining from receiving the Income Tax when it has been readily offered to them. In some cases demand notes have been issued, and where deductions have been made by bankers and financial houses the Government have been ready to take the money; but in other cases of banks next door to the same bank where they have taken the money, the Government have not demanded the money where they might have done so; and, again, where private individuals have spontaneously offered the Income Tax the Government have, in some instances, refused to take it.

A great part of the Income Tax, as every Member probably knows, is levied by means of deductions, but up to this year I believe not even the banks and the financial houses themselves have realised the variation that exists in their treatment of the matter. Quite apart from the deductions made from dividends due to their own shareholders are the deductions they make on the coupons which they present for their clients. They deduct the Income Tax before they credit their clients with the amount. It has in certain cases been the practice of banks when deducting Income Tax from coupons to pay the money straight over to the collector of Inland Revenue. In other cases, where they do not pay the money straight over, they have been accustomed to let the money remain at their own credit, and to inform the collectors that they can have it as soon as they want it. When the bank has adopted the first method the collector has received the Income Tax on the part of the Government, but when the bank has deducted the Income Tax and notified the collector that he has merely to call or to write in order to get it, then the collector has refused to receive it on behalf of the Government. Surely that is a perfectly absurd distinction. Really and truly, if they are going to require this sort of theological acumen on the part of their collectors, and if their collectors are to decide that to take money when it is paid over to them is consistent with the dignity of the Government, but that to ask for the money when they have been informed it is there for their asking is inconsistent with the dignity of the Government, then will they not have to pay them at a rather higher rate?

That is the case with regard to deductions. Take the case with regard to the demand notes. We have been informed by the Chancellor of the Exchequer that the chaos and difference with regard to the demand notes are due to the Local Commissioners. A few days ago, in answer to a question, the right hon. Gentleman said:— The issue of demand notes is primarily a matter for the decision of the Local Commissioners of Taxes, "with whose discretion the Chancellor of the Exchequer has no power to interfere. 4.0 P.M.

If I may say so with all deference, that answer is verbally perfectly accurate, but, in substance, it is entirely disingenuous. The answer in theory assumes that the Local Commissioners and the Government are distinct bodies, and that the Government have no power whatever to interfere with the Local Commissioners. The Local Commissioners are, no doubt, in theory independent gentlemen appointed from the Land Tax Commissioners. In theory, they appoint their own clerks, their own assessors, and their own local or parochial collectors. Then, on the other hand, there is, in theory, the distinct hierarchy of the Government—the Commissioners of Inland Revenue, responsible to the Chancellor of the Exchequer, who appoint their own inspectors, their own surveyors, and their own collectors, the collectors of Customs and Inland Revenue. The Local Commissioners and the Government, to start with, therefore, are quite distinct from one another. What is the case in actual practice? In the case of incomes under Schedule E, incomes of public officials, officers of the Army, and others of like position, it is the Inland Revenue who collect the tax. But, in the case of incomes under Schedule D, the great schedule which contains the profits of businesses throughout the country, the Local Commissioners have it in their own power to collect them. In a large number of cases, however, they have agreed, as they are empowered to do, I believe under the Taxes Management Act, that the Inland Revenue should take over the whole of the collection of profits under Schedule D, and in that case I believe it is generally done by the collectors of Customs and Inland Revenue, who are officials of the Inland Revenue Department. In cases where the Local Commissioners have not actually handed it over to the Inland Revenue, but where the money is collected by local or parochial collectors, the Local Commissioners can arrange that those officials shall be appointed and be the servants of the Inland Revenue Department, and in a very large number of cases they have done so. Very often the same individual who holds office under the Inland Revenue Department also holds the office of assessor under the Local Commissioners. When that is the case, and when these officials are appointed, paid, dismissed, and found fault with by the Inland Revenue Department, can anyone really maintain that the Local Commissioners act entirely on their own discretion, without any interference, and that their sphere of action and that of the Government are quite, distinct? The same is the case when one inquires into the power of the Chancellor of the Exchequer to interfere with the discretion of the Local Commissioners. Theoretically, he has no power to interfere; but the Surveyor of Inland Revenue, who is the direct servant of the Chancellor of the Exchequer, sits by the side of the Local Commissioners at all their meetings; he supervises what they do, looks over their assessments, and he makes representations to them which they find it very hard not to follow. Not only is this the case, but when any point of difficulty comes up down comes a circular to the Local Commissioners from the Board of Inland Revenue suggesting to them, as a matter of request, but in terms sufficiently imperative, the course they should follow. It comes to this: When, anyone has gone through the whole technicalities of the relations between the Local Commissioners and the Board of Inland Revenue the conclusion that they arrive at, in the end, is precisely the same conclusion that any business man would form to start with, and that is that it is the Chancellor of the Exchequer who has power over the collection of Income Tax, that it is the Chancellor of the Exchequer who could, if he had the wish, see that the Income Tax was collected by administrative methods in the ordinary way, and that it is the Chancellor of the Exchequer who of set purpose has said it shall not be collected in this financial year. If the Government had really wished to avoid financial confusion in the matter of the Income Tax, why could not they have gone ahead in precisely the same manner that they have gone ahead with regard to the Tea Duty, the additional Spirit Duty, the Tobacco Duty, or other Custom duties which have been collected, not by obligation, but of will? The Income Tax could have been collected in precisely the same way if the Government had shown any desire. There is no reason why the local collectors of Income Tax should not have sent out their demand notes with a notice that they were requests asking for the Income Tax to be gathered in in the usual way. As a matter of fact, why did they not send them out? From the information I have received the Local Commissioners and the collectors were perfectly willing to send out their demand notes with a notice of request that Income Tax should be got in in the ordinary way. Why were they not sent out? It was because a circular was sent down by the Board of Inland Revenue—a Government Department—to the Local Commissioners—the gentlemen with whose discretion the Chancellor of the Exchequer has no power to interfere !—a circular was sent down to them asking them to prepare assessments and duplicate of assessments, but not to send out the demand notes, which otherwise the Local Commissioners were willing to do. What reason, in the name of Heaven, could the Government have had for sending round that circular? Is it be- cause the Government did not wish to strain the legal powers conferred on them with regard to Income Tax? If they had really not wished to strain their legal powers why did they do it in other cases of precisely the same nature? The Government have overstepped their legal powers to some degree with regard to the incomes of public officials and officers of the Army under Schedule E. There was no power and no obligation to deduct that tax any more than there was a power or obligation to collect taxes under Schedule D. There was power to ask for payment in both cases alike, but not to demand it. A case has come to my notice where a certain officer asked why his Income Tax was deducted. The information he received from the Bank was that the War Office, had said, "Deduct the tax as if the Budget had been passed." Surely if the conscience of the Government is not so scrupulous with regard to Schedule E it might have encouraged the local collectors, instead of discouraging them, to send the demand notes with a form of request.

It is not only the question of the Schedule E. What has happened with regard to the Bank of England? I am not speaking of the most recent development this morning, which is likely to prove most interesting. I believe it is a commonplace in law that the Bank of England are agents to the Government as regards matters connected with the National Debt; yet, at the same time, the Government, through their agents, the Bank of England, have been at any rate deducting Income Tax on dividends from the National Debt. In a notice sent out by the Bank of England, they say they are deducting Income Tax at the rate of 1s. 2d. in the £ on all dividends on the National Debt, and they go on to state in their notice that their action is in agreement with the suggestion of the Board of Inland Revenue, as authorised by the Lords Commissioners of His Majesty's Treasury. The same course, not so very nice in conscience, has been followed by the Government in other matters. Of course, Members on this side of the House are quite willing to accept the answers of the right hon. Gentleman with regard to the bond demanded for the additional Spirit Duty of 3s. 9d, We can only say, however, that that demand for the bond for the additional 3s. 9d. has reached some of us in a very different form to that in which it has been presented by the Chancellor of the Exchequer. According to our account of the action of the Commissioners of Customs and Excise, they had been practically wrestling with the distillers as Jacob wrestled with the angel. They have refused to let the spirits go until they had been told that the bond for the additional 3s. 9d. should safely be handed over to them.

If the House will have forbearance with me I should like to deal with one other technical point. It is this. The Government might say that they would be willing to take the risk themselves of collecting the Income Tax where it is not strictly due, although they might feel they could not ask some independent body like the Local Commissioners to take the risk. At the start that might seem to have some reason, but I confess that the Government's action in the matter has been very self-contradictory. If the Local Commissioners wished to be secure they could have asked the Government to undertake to refund the money which had been paid. As a matter of fact, the Local Commissioners have asked the Government for such an undertaking. Why should not the Government have given it? There was another case in which they gave such an undertaking; they gave it to the bankers for collecting Income Tax upon deduction. This is the undertaking:— In reply to your letter I am directed by the Lords Commissioners of His Majesty's Treasury to inform yon that they are ready In undertake that any sum deducted on account of income Tax at 1s. 2d. in the £ will be refunded should Parliament hereafter decide that the tax for the year 1909–10 should he collected at some lower rate. That is a perfectly businesslike proceeding. Why on earth could not the Government have given the same undertaking to refund to the Local Commissioners? They have given a like undertaking in other branches of the Revenue. They have given it with regard to the Tea Duty. Why should they not have given it to Local Commissioners in regard to Schedule D? I hope the House will pardon these technical details. The fact of the matter is that when Members on this side of the House have asked the Government questions with regard to Income Tax we have had these technical details fobbed on to us as reasons for some course of action, which does not stand examination when anyone gets away from these technical grounds. There is no question but that anyone conversant with Income Tax administration realises there has been most extraordinary folly and muddle throughout the whole business. There has been a vast sum of money outstanding, which, from every business point of view, was the property of the Government had they only chosen to take it. That would have been released had the Government chosen to ask for it, but it purposely refused doing so. If the Government were willing to outstep the law I am sure the business people of this country would have gladly welcomed their so doing if it would have enabled these sums to be collected. If the Government were not willing, why did they outstep the law to a far greater extent in the matter of the Land Tax and the House Duty? If their conscience had been so nice in the matter there would have been one quite straight path for them. If they had condescended to pass one Income Tax Resolution at an earlier date the whole difficulty and the whole muddle and the whole maladministration would have come to an end, and the Income Tax would have been got in. There would have been no financial difficulty and none of the borrowing which is going on to-day. When one hears the strictures of right hon. Gentlemen opposite of the methods by which the Unionists conduct finance, one is reminded of one of the old heroes who, we are told, rebuked Sin, and rebuked it with great gusto, like a very learned clerk.

I will not take up the time of the House with the Death Duties or the taxes on tea or spirits, but I wish to touch on two other taxes particularly, namely, the Land Tax and the House Duty. Are these two taxes being collected to their proper and full extent at this minute? The Land Tax and the House Duty are not dependent on the annual Budget. They are duties which are dependent for their validity on Statute. The duties are of a permanent character. The Land Tax is dependent on an old Act of 1798, with its modifications. The House Duty is dependent on the Act of 1851, with its modifications. They are not dependent for one instant on the Budget of the year. There is every legal obligation on the individual to pay the Land Tax and the House Duty whether the Finance Bill be passed or not. There is every legal obligation on the Government to levy the Land Tax and House Duty whether the Finance Bill be passed or not. We are entitled to ask the Government whether the Land Tax and the House Duty are being brought in or not. The estimate for the financial year of their yield was £2,650,000, and the proportionate amount which should have been properly collected at the date of the issue of the "Gazette" of 12th March wag £2,400,000. The amount actually collected was little more than one-fourth of that sum. What, I ask, is the reason for the non-collection of a tax which depends on the Statute for its collection? Is it the fact that no attempt has been made to collect it, and that the people have not been paying it? I have an instance present to my mind which needs corroboration, but it is a case in which an individual who offered to pay the Inhabited House Duty, has had his money refused. May I ask if, because this tax has not been collected, the Local Commissioners are again to be the scapegoats for the non-collection? Fortunately, we possess some documents which show where the responsibility lies in the case of the Land Tax and the House Duty as between the Government and the Revenue Department, on the one side, and the Local Commissioners, on the other. If the Chancellor of the Exchequer will listen he will recognise some of the circulars, if he has read them, which have been sent out under his authority:— Inland Revenue, Somerset House. London. W.C., 4th December, 1909. Sir. INCOME TAX AND INHABITED HOUSE DUTY, 1909–10. I am directed by the Board of Inland Revenue to state fur the information of your Commissioner that, acting under the instructions of the Lords Commissioners of His Majesty's Treasury, they suggest that progress should be made with the Assessments and Appeals in the usual way, and that, the collector's Duplicates should be prepared for signature, but that they should not be signed or issued at present. In cases where the collector's Duplicates and Warrants have already been signed and issued, the Board desire to record their opinion that it is advisable that they should be recalled forthwith. I am, Sir. Your obedient servant. J. E. CHAPMAN, Secretary. There is a similar circular with regard to Land Tax, where it is also the legal duty of the Chancellor of the Exchequer to collect the sum. It is as follows:— Inland Revenue, Somerset House, London, 4th December, 1909. Sir, LAND TAX, 1909–10—COLLECTOR'S DUPLICATES AND WARRANTS. I am directed by the Board of Inland Revenue to draw your attention to the Circular of this date on the subject of the Income Tax and Inhabited House Duty Assessments, etc., and to point out that, in view of the fact that collectors of Income Tax are, with few exceptions, also collectors of Income Tax and Inhabited House Duty, and that the Land Tax is included with Income Tax and Inhabited House Duty in the same Demand Note, inconvenience might arise if the collection of Land Tax alone were proceeded with. In these circumstances, the Board direct me to surest that the collector's Duplicates and Warrants should not at present be signed or issued, and that in cases where they have already been issued, they should be recalled forthwith. I am, Sir. Your obedient servant, J. E. CHAPMAN, Secretary. That, as I have said, is another tax which it is the legal duty of the Chancellor of the Exchequer to collect, and where Local Commissioners, with whose discretion he has no power to interfere, have felt constrained to follow his injunctions. What are the inferences from those two circulars which any business men will draw? The fact is that it is awkward and inconvenient to collect the Land Tax and the Inhabited House Duty if you do not collect the Income Tax as well—for administrative reasons it is awkward and inconvenient. In the first place, what an extraordinary side inference it affords upon the Income Tax. If the Local Commissioners will follow the Chancellor of the Exchequer's directions in this matter, with regard to the Land Tax and the House Duty, they would have followed his advice in regard to Schedule D for the collection of the Income Tax if he so wished it. But with regard to the Land Tax and the House Duty, we hear that it is awkward and difficult to collect them unless you collect the Income Tax as well. What is the inference, again, which a plain business man would have drawn? It would have been that if, on the one hand, the mess and muddle with regard to the Income Tax is bound up with the breaking of the law over the Land Tax and the Inhabited House Duty, then keep the law over the Inhabited House Duty and the Land Tax and do away with the mess and muddle over the Income Tax by amending it. The conclusion the Government have drawn is quite different. They are quite willing to jettison the law in regard to the Land Tax and the Inhabited House Duty, but the mess and muddle over the Income Tax must be continued in order to maintain the dignity of the Government.

Does not the financial rectitude of the Government, of the Financial Secretary to the Treasury, and the Chancellor of the Exchequer, seem like the rectitude of their henchman the hon. Member for Swansea (Mr. Mond)—something that is more a matter of precept than of practice and something which has been more honoured in the breach than in the observance? It resembles another case of another gentleman whose piety was in exact accord with the financial rectitude of those who are responsible for the Government. There was a celebrated Dr. Campbell whose piety was called into question, and Dr. Johnson came to his rescue and said:— Campbell is a good man and a pious man. It is true that lie has not been inside a place of public worship for years, but he never passes one without pulling off his, hat, and that shows that he has good principles. I will only trouble the House for a minute or two more while I inquire further whether there is any real excuse which can palliate the maladministration which has taken place. I can well imagine from any sane point of view that any sane man would be willing that the law should be strained to ensure uniformity of administration or to ensure that there should not be loss to the Exchequer or that loss should be avoided to the business community. The Government, by their action, have not been avoiding these difficulties, they have been creating them. If I may appeal for one minute to the hon. Members on the Labour Benches, I would say with regard to the matter of administration, that there are no reforms which Labour Members wish for more anxiously than those reforms involving the extension of the area of administration, and if the area of administration is extended, then it is of primary importance that the administration should be uniform and regular. Take the case of the inspection of factories. Hon. Members may wish for an increase in the number of factory inspectors, and so do I, but if they are increased, then it is absolutely necessary that there should be an equal standard of requirement in force throughout the country.

It is the same by analogy with regard to the Poor Law. If hon. Members wish for the reform of the Poor Law, as I do, even if the reform of the Poor Law, which I wish for and they wish for differ, yet the one thing essential in reform is that there should be equal administration throughout the country, and that there should not be a lack of uniformity which, as between Whitechapel and Poplar, adds much to the difficulty in London to-day. If that be the ease may we not ask them, at any rate, to avoid constituting a precedent which is so dangerous from their own point of view, and which will have the result of throwing administration into disorder for party purposes. Then, again, there is no excuse from the point of view of the loss of revenue. The Chancellor of the Exchequer has stated that the loss to the revenue will amount to some £28,500,000, but he does not wish to anticipate his Budget statement by showing how that £28,500,000 will be made up. May I give the items of which it will be made up, roughly speaking:— Customs, a little over £400,000; Excise about £2,100,000; Death Duties, slightly over £1,000,000; Stamps, about £450,000; Land Tax and House Duty, about £1,950,000; Income Tax, without the Super-tax, about £22,000,000; the Super-tax, £500,000; and the Land Tax, for the sake of which all this muddle has been created, £50,000. That is, approximately, how that sum of £28,500,000 will be made up, but I calculated out the items separately without adding up the total, and the total adds up to a figure slightly over £28,500,000. Much of this will be recoverable, but not all. In addition to that loss there is the loss which is caused by temporary borrowing. Much has been said in general about the folly of paying interest on money when it is to all intents and purpose your own. The crucial question is what has occurred with regard to the Bank of England—the Government's own agents.

The Bank of England are holding a sum of over £200,000 on suspense account for Income Tax on interest on the National Debt, and at the same time the Government are borrowing from them not under Treasury Bills, but in the way of ordinary Deficiency Advances, under the Treasury Act. They have borrowed, up to a certain date in March, £1,500,000 at interest, although the Bank holds, without interest, £200,000 which is lying idle at this minute; consequently the country is asked to pay for borrowing a maximum sum of £50,000 or £60,000 a month, and this sum will probably be greater if the rates harden, as they have been doing lately. To judge from what happened on Saturday last, the loss will be £50,000 or £60,000, or more. Hon. Members opposite are most scrupulous with regard to the expenditure of money upon elections, and, perhaps, they will insert a clause in their Bill to the effect that this £50,000 or £60,000 is to be debited against the expenditure of candidates on the other side.

Lastly, there is injury to the business community. The Prime Minister spoke recently of the uncommonly handsome way in which the traders of the country had come to his assistance, but he is answering them in a very sorry way. If the traders of the country have been relying upon one thing when the Government have collected the Spirit Duty, and they have paid that duty voluntarily, it is that the position should be regularised with the least possible delay, and yet, for what purpose it is not difficult to conjecture, the Government are refusing to regularise the position, and so they are beginning to create distrust with regard to other taxes than the Income Tax. But the situation in the City is over and above that grievance. Anyone in the City will say that the action of the Government in borrowing just recently, the likelihood of further borrowing, and the general uncertainty that has been caused by the action of the Government, is one of the reasons of a rise in the Bank Rate recently from 3 to 4 per cent., and it has occurred to me that perhaps that consideration may appeal peculiarly to Nationalist Members on the Irish Benches.

If there is one thing that I believe Nationalist Members desire in common with Unionist Members it is that land purchase should be pursued and shall not be hampered or clogged. If there is anything which will hamper and clog the progress of land purchase in Ireland it is that money should become dearer, so that it is more difficult for the Government to issue Shamrock Stock, and to finance Land Purchase without loss. If, therefore, hon. Members below the Gangway are going to support the Government in a policy which will raise the rate of interest, they will be still further responsible for hampering the process of land purchase in Ireland.

It is not only the rates of interest at the present moment that are important, it is also what is likely to happen in the near future. It is a matter of common knowledge that here in the spring the rates of interest are generally easier than at other times, but this year they have continued to go up. In the autumn, however, unless something peculiar happens to affect the Money Market or the Exchanges, the rates of interest regularly tend to go up, because of the demand for money, for the American grain crop and so on. But if the Government are going to come forward for the payment of additional taxes in the autumn, just at the precise time when the demand for money from other causes is most acute, then not only will the rate rise from 3 to 4 per cent., as it did last Thursday, but we may expect the bank rate to show a rise in the autumn from 4 to 5 or 6 per cent, to the probable disturbance of the whole of the trading community and of the industries and employment dependent upon them. What is the whole cause of the situation? It is simply that quite apart from the Budget the Government could have got in the money by administrative action. If hon. Gentlemen laugh at that, and say that the responsibility for the Budget rests elsewhere, then the only thing that, if we wish to convert them, we can do is to direct them to the speeches of the Chancellor of the Exchequer in his more expansive moments in Wales. What does he say in Wales? That a trap has been set for another place. I quote from the "Mid-Glamorgan Herald."

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)

All I can say is that the "Mid-Glamorgan Herald" has misreported me. I am perfectly certain I never said anything of the kind. I was not referring at all to the House of Lords at the time, but to something else, and I have already stated so more than once.

Mr. STEEL-MAITLAND

I am sorry I have not seen the right hon. Gentleman's explanation. The Government, quite apart from the passing of the Budget, might easily have got in the money by ordinary administrative methods, as they got in the money of the rest of the Budget. The only reason why they did not do so is that they wanted to create the confusion for their own purposes which has resulted. The consequence is that the Income Tax has been in some measure lost—in any case lost in the present year—that the administration has been thrown into disorder, that the actual law with regard to Land Tax and House Duty has been neglected, that there has been confusion caused and possibly apprehension of further damage in the City. But, after all, there is the reward. The Government have preserved their dignity, and they are going off to enjoy their prolonged Recess—Otium cum dignitate.

The FIRST LORD of the ADMIRALTY (Mr. McKenna)

The hon. Gentleman has spoken with great force, and, if his facts were only right, he would have received a great deal of support in all quarters of the House. It happens, however, very unfortunately—I do not know how he managed it—that he was wrong in every particular. He reminded us that the Inhabited House Duty and the Land Tax are permanent taxes, not in the least dependent on the Budget, and that we might have collected them, but for some unexplained reason we failed to collect them. The hon. Gentleman little knows the mischief he and his Friends did when they advised them to reject the Budget in another place. If he had read that Bill, which received its Third Reading in this House, he would have seen in it a particular clause which had reference to the Inhabited House Duty. Does he know that clause? He omitted to mention it. Under the general law under which the Inhabited House Duty is raised a revaluation has to take place every year. The practice is only to take the valuation every five years. The valuation has not taken place in the last preceding year, and consequently it would not have been legal to raise the tax, but in last year's Budget—a fact which the hon. Gentleman, I understand, was thoroughly familiar with—there was a clause suspending the operation of the five years' provision, and providing that the last valuation should be taken as sufficient. Without that clause Inhabited House Duty cannot be raised, because the valuation has not been made.

Mr. STEEL-MAITLAND

The Land Tax?

Mr. GEORGE YOUNGER

Does the right hon. Gentleman suggest that that applies to Scotland, because it does not. [OPPOSITION cheers.]

Mr. McKENNA

I am perfectly willing that hon. Members should have all their cheers if they provide any food for cheering.

Mr. AUSTEN CHAMBERLAIN

Would the right hon. Gentleman say whether he means to assert that it does apply to Scotland?

Mr. McKENNA

I am making my statement. I am interrupted in the statement, and I say that if the hon. Gentleman can get any satisfaction from the interruption to justify his cheering, he is at liberty to cheer as much as he pleases. I am going on with my statement.

Mr. AUSTEN CHAMBERLAIN

The right hon. Gentleman made a perfectly general statement, which was, as to half of it, inaccurate. It was inaccurate as to Scotland.

Mr. McKENNA

The right hon. Gentlemen will see in a moment that neither the point of Scotland nor the point of the Land Tax is really material. The point is raised that this Inhabited House Duty and the Land Tax raised between them between two and three millions of money, and a very small amount of it has been collected so far. But the Land Tax is only £600,000 out of it. It would not be worth while to go through the whole machinery of collecting the Land Tax, which is only postponed for a little while, and to set the whole of the same machinery up again in order to collect the Inhabited House Duty separately. As the large tax which covers the great bulk of the amount to be raised cannot be legally raised, the two are being held up, and will be raised together as soon as we are able to legalise our taxes. At the beginning of the Session the Government proposed to take the time of the House, with the assent of hon. Gentlemen opposite, for the purpose of getting the Supply which was absolutely necessary to be taken before the close of the financial year. Did the right hon. Gentleman (Mr. Austen Chamberlain) stipulate that the Budget should be included amongst the subjects which the Government were to take? Not at all.

Mr. AUSTEN CHAMBERLAIN

I did press that the Budget should be taken at the earliest possible moment before any other contentious business.

Mr. McKENNA

We have not yet reached 24th March, and the whole of the pressure that has been brought to bear upon us is that we should take the Budget before we got through our Supply. Did the right hon. Gentleman and his Friends, when they assented to give us the time of the House, including all private Members' time, for the purpose of taking Supply, ever suggest that the Budget should be included?

Mr. AUSTEN CHAMBERLAIN

I pressed from the very first that the Income Tax should be taken. When the Prime Minister challenged me across the floor as to whether I was willing to take the Budget, I said officially, on behalf of the Opposition, that that was a better offer than what I was asking for, and we would gladly take the Budget at once.

Mr. McKENNA

All I can say is that we have now the whole time of the House, including all private Members' time up to the Ecclesiastical Easter, and we have that with the assent of the Opposition for the sole purpose of getting Supply.

Mr. AUSTEN CHAMBERLAIN

made an observation which did not reach the Gallery.

Mr. McKENNA

I do not think the right hon. Gentleman is justified in saying that. That was an arrangement. We have the private Members' time up till Easter for the purpose of Supply, and the right hon. Gentleman and his friends did not divide against it.

Mr. AUSTEN CHAMBERLAIN

Certainly. My Friends stated that they would not divide against the Prime Minister's Motion to take the time of the House for necessary business. I offered on behalf of the party to include the Budget in that necessary business.

Mr. McKENNA

What date was that?

Mr. AUSTEN CHAMBERLAIN

I cannot give the date.

Mr. McKENNA

That is the whole point.

Mr. AUSTEN CHAMBERLAIN

I understand the right hon. Gentleman to be raising this defence, that it would have been a breach of an agreement with us.

Mr. McKENNA

No.

Mr. AUSTEN CHAMBERLAIN

Then I do not understand him.

Mr. SPEAKER

I think the Debate had better be conducted in the usual way.

Mr. McKENNA

I am not suggesting for a, moment any breach of agreement. I am suggesting, and I reaffirm, that all these complaints against not taking the Budget have been raised by hon. Gentlemen opposite since the date when they agreed to give the Government the whole time of the House for the special purpose of getting through Supply, and that no stipulation was made at the time, nor was any protest raised that the Government were not immediately taking the Budget. The reason why the Budget was not immediately taken was because the Government were bound to pass Supply before the close of the financial year. If they had failed to pass Supply there would have been a breakdown of the administrative services on 1st April, and the Government had no option except to devote the whole of their time before Easter to passing the necessary financial business. My right hon. Friend (Mr. Lloyd-George) points out that Scotland is included in the clause in the Finance Bill.

Mr. GEORGE YOUNGER

There is no five-year valuation in Scotland.

Mr. McKENNA

In the first part of his speech the hon. Member (Mr. Steel-Mait- land) complained that the Government had not done all that they could in order to induce people to pay the Income Tax voluntarily. He said that if the Government applied to the Local Commissioners to press upon them the need for getting the Income Tax in the people would have paid the Income Tax voluntarily, just as they paid the Tea Tax and the Spirit Tax. The second half of the hon. Member's speech was made up of complaints against the Government because they have done what they are not entitled to do in deducting Income Tax from the salaries of soldiers and public servants. He does not explain under what possible motive the Government could have been acting in adopting these two contradictory policies, but he can only assume that the Government was probably wrong in both.

Mr. STEEL-MAITLAND

No. I think that in deducting Income Tax as they did under Schedule D they were doing a perfectly businesslike proceeding, and the only marvellous matter was that they did not take the same course with regard to the Local Commissioners.

Mr. McKENNA

As the hon. Member forgot the clause of the Finance Bill so he has forgotten a very important fact in relation to the Local Commissioners. The Local Commissioners cannot enforce their demand otherwise than by distraint. Does he suggest that they should send out demand notes for Income Tax upon the face of which there is the claim that distress will be levied—illegal distress which they could not enforce? The Local Commissioners, in spite of what the hon. Gentleman says, are in no sense the servants of the Treasury. In fact; the resistance to any such claim by the Treasury is as old as the Income Tax Acts themselves. It is quite true that, like what is done in all good business arrangements, the Board of Inland Revenue do their best to work in harmony with the general public, and if the Board were to assume any title to give these Commissioners orders, I venture to say that there would be an immediate resistance to them. The Board have no power to enforce the tax. So far as the Board of Inland Revenue are concerned, everything they have in their power in order to collect the money due under the Income Tax Acts has been done. The hon. Gentleman says, regarding deductions under Schedule E, that they have done all that is in their power. Now, he says, if they had pursued the same policy with regard to Income Tax as they have pursued with regard to Customs, such as the Tea Tax and Tobacco Tax, they would have been able to get in a large part, or the bulk, of the £20,000,000 now outstanding. The hon. Gentleman, if he were not wishing to make a case against the Government, would be far too acute to be deceived by any such argument. The Tea Tax and the Income Tax are on an entirely different footing. With regard to the Tea Tax it is to the benefit of the tea trade to pay the tax in the first instance, and that they should go on paying the tax. What would be their position if they did not? If the tea trade were only to pay on the smaller tax and sell tea to their customers with only the smaller tax paid—

Mr. BONAR LAW

You mean the Tobacco Duty.

Mr. McKENNA

Yes, the Tobacco Duty. Substitute tobacco for tea. Supposing the great tobacco traders, when they take tobacco out of bond, were to pay duty only on, the smaller rates and then, sell the tobacco with only that amount of duty paid, they would themselves be liable hereafter, if the Budget passes, for the difference in the duty. The traders would have no means themselves of recovering, because the tobacco would have been disposed of. It would have passed into the hands of the consumers who bought the tobacco at so much per ounce, and it would be absolutely impossible to recover a ½d. or a ¼d. per ounce afterwards. It is therefore better for the wholesale traders themselves to pay the duty in the first instance. It would have this remarkable advantage, that should the duty hereafter not be imposed by Parliament they will have received the full price plus the higher duty from those who bought from them, and they would be entitled to come to the Government to recover the higher duty which they themselves have paid. Therefore that would be something for nothing. If the duty is imposed they do not lose anything, and if it is not imposed they get back the duty which they paid to the Customs authorities. It is the same with regard to tea. The Income Tax is quite different. That is the difference between a direct and an indirect tax. If a man declines to pay Income Tax and prefers to leave the money with his own banker he gets something for nothing. When the tax is imposed he withdraws the money from the bank and pays it into the Ex- chequer. If the Income Tax is not imposed, then he is so much better off, and he keeps the money he has lodged at his bank, so that we have two entirely different sets of motives at work. The trader who pays the Tobacco Tax wants to pay it, and the other man who is charged with Income Tax does not want to pay it. Therefore the arguments with respect to the indirect tax do not in the least apply to the direct tax. The hon. Gentleman ought to have been aware from the consideration of his own case that the Board of Inland Revenue are likely to have done everything in their power to get in all the Income Tax they could. There could be no conceivable motive—[OPPOSITION laughter.]Hon. Gentlemen laugh, but there could be no conceivable motive, either in the mind of the Board of Inland Revenue or in the mind of the Government, for not taking as much taxation as possible in the course of the present financial year. The hon. Gentleman illustrated his argument by mentioning cases in which the Board of Inland Revenue had in fact deducted Income Tax. Why did they do that? Upon what conceivable motive except that of getting as much as they could? In every case in which the Board of Inland Revenue have authorised deduction of Income Tax they have done it where they themselves are masters of the situation. Take the case of the salaries of Ministers. Income Tax has been deducted in the case of these salaries at the source by the Treasury, and the only way in which we could recover would be by ourselves proceeding to an action of law, which would be a very doubtful course to take. The hon. Gentleman will find that in every case the Board of Inland Revenue have exercised their full powers, and have gone possibly beyond the limits of the law where they could, in order to get revenue, and they have only refrained from exercising these powers where in their judgment they would be likely to be losers rather than gainers if they attempted the task. The hon. Gentleman is not quite 60 much in the counsels of the Board of Inland Revenue as I am myself, or some of my hon. Friends, and I can assure him he is entirely mistaken when he supposes that they have any other motive than to get in as much revenue as they can without danger. When he presses for procedure under the Income Tax Acts, which would be a violation of the law, which could not be enforced, and which, in our judgment, if they were to follow it, would mean that they would find themselves immediately brought to book by an action of law, I can assure him that the Inland Revenue are perfectly well advised in not taking any such step. But I beg the House to believe that the Government will take every step in their power in order to collect these taxes at the earliest possible moment. The notion that some barren Resolution of this House imposing Income Tax would of itself legalise the tax has not the slightest foundation in law or in fact. Resolutions to legalise taxes would only be Resolutions intended as the foundation of an Act of Parliament. It has been stated again and again in this House that the only Finance Bill which this Government will introduce to this House and attempt to carry through Parliament is the Finance Bill of last year. It is idle, whether the hon. Gentleman agrees or disagrees, to press the Government again and again to pass a mere Income Tax Resolution. The Government would not propose a Resolution except as the foundation of the Finance Bill for the whole year. And it is equally idle to imagine that we should be able to get through the necessary financial business before 31st March if we were to introduce one Resolution, or rather a number of Resolutions, as the foundation of the Finance Bill of last year. Therefore it is a mere attempt to throw dust in the eyes of the public to suggest that by some simple procedure we could legalise the tax without further delay. It cannot be done.[An Hoy. MEMBER: "Why?"] Because if we attempted to introduce the Finance Bill at the present moment we should find ourselves delayed at every point in the other necessary financial business we have to pass before 31st March. Why make any concealment about it? Why hide your heads in the sand? There is not a single hon. Gentleman on the Opposition side of the House who really himself believes that if we introduced the Budget at this moment we would be able to get through our Supply. If we cannot get the Budget through an Income Tax Resolution would have no validity. A Resolution is only passed on the faith that it will be the foundation of an Act of Parliament, but it has not the smallest validity by itself. I hope my hon. Friends will concur with the Government that it is necessary to pass in the first instance all the Supply business in order to secure that the business of the country can be carried on after 1st April. [An HON. MEMBER: "For how long?"] For six weeks- full time enough to settle all outstanding business, including the business of the Budget. The hon. Gentleman asks, "For how long?"Is he willing to grant longer Supplies than for six weeks, or is he willing to grant a Vote of Credit lasting for the whole Session till the month of August? We have asked sufficient Supply to enable us to carry on the necessary business of the Government up to the holidays, and I ask the House to endorse that course.

Mr. BONAR LAW

The right hon. Gentleman commenced his reply to what I thought the exceedingly able speech of my hon. Friend (Mr. Steel-Maitland) by saying at once that every one of his statements were wrong. That is the kind of statement which could be made by everybody, but we do not expect it to be made by a Cabinet Minister without some little attempt to prove it. My hon. Friend made a great number of very important statements, and I will not accept as statements of fact what has been said by the right hon. Gentleman any more than he accepted my hon. Friend's statements. He has established the fact, if he has done anything at all, that my hon. Friend was wrong in saying that Inhabited House Duty could be collected as an old tax, and that it was the legal duty of the-Government to collect it, but even on that point he has to admit that the argument of my hon. Friend is true as regards the Land Tax. It is not a question as to whether the amount is small or large. My hon. Friend's whole argument is that the Government chose to break the law in one case, and refused to stretch the law when it was in the interest of the Treasury to do so. The right hon. Gentleman used another extraordinary argument in support of his assertion that my hon. Friend was wrong in another particular. My hon. Friend's whole argument was that by administrative action we could have got in a very large part of the Income Tax without any action by this House at all. My hon. Friend gave arguments which seemed to me to be absolutely conclusive in proof of that. What argument does the right hon. Gentleman give in reply? He says there is no comparison between the man who-pays income tax and the man who deals in tea or tobacco.

5.0 P.M.

It is the interest of the person dealing in tea or tobacco to pay the duty, because, after he has sold it, he can never get the money back if the duty is increased—or some argument of that kind. I would point out to the right hon. Gentleman that if he were engaged in that trade there is no man in this world who would have discovered more quickly that there was another course open to the dealer in tea or tobacco, and that was to take out the tea or tobacco without paying the duty and charge the customer the full duty; and the whole argument, therefore, not only falls to the ground but is absurd. If you are looking to the selfish interest of the traders merely it is their interest not to pay the duty except on the broad ground, the ground on which they do pay it, that they rely on the Government of the day, whatever Government that is, to do its best to keep the finances of the country in proper order.

I must say I felt that my hon. Friend expended a great deal of ingenuity in trying to find out a principle—not a principle which they could have justified, because we do not expect that—but any intelligible principle on which the financial policy of the Government has been carried on during this Parliament. I think it is a vain effort. If a thing does not exist you cannot find it. The Government have no principle, and no amount of ingenuity therefore can enable them to find it. It would be very unreasonable—to take an analogy which has just occurred to me— to ask a fox to give a reasoned explanation of the twistings and turnings to which it has recourse when its strength is exhausted, and it feels that the hounds are close upon it. In such a case the fox acts upon a blind impulse, and so do His Majesty's Government. All the manœuvring, all the finessing, all the clever shifting, is simply part of an effort, and a futile effort, to dodge or perhaps postpone the inevitable catastrophe which is fast following upon them. I would like to deal not so much with the detailed points which the right hon. Gentleman has brought forward as with the wider issues of these financial questions which so often have been put before the present House of Commons for days on this side of the House. It is only four weeks to-day since this Parliament first met. On that occasion the Prime Minister made a speech, to which I at least listened with the greatest respect. I thought it was the speech of a statesman, but what has happened since has proved, though proof is scarcely necessary, how much easier it is to speak like a statesman than to act like one. A more extraordi- nary four weeks in regard to the finances of the Government than we have been experiencing it is difficult to imagine. I am going to take two aspects of the financial question. Both have been referred to today. The first, and by far of less importance, is the giving of Supply for a much shorter time than usual. Gentlemen on that bench have several times tried to explain their motives in taking that course. The right hon. Gentleman tried it just now. But I am sure they have not made it clear to any human being, and I doubt very much if it is clear to themselves, what is the idea underlying it.

A sort of glimmering of sense in it occurred to me when I read the Prime Minister's speech at Oxford on Friday. He made a speech there in which he pointed out for the benefit of the hon. Member for Waterford (Mr. John Redmond), whom I am glad to see present, that the Budget is no weapon against anybody, and that the real weapon is withholding Supplies. Perhaps he had an idea that the hon. Member, who is an old Parliamentary hand, might be induced to give them the Budget, which they so much wish, and to trust to this curtailing of the Votes in Supply for the weapon which they are going to use later on in this fight in which they have engaged. The Budget, I admit, is no weapon; but what is the use of Supply as a weapon, especially in the struggle against the House of Lords? Supply never has been, and never can be, used, and cannot be contemplated as being used by any sane person as a weapon against anybody except the Government of the day, except against the Executive. Then it is obvious that if the present Government is to be in power when the time comes, the limiting of Supply is simply silly. There is no object in it. But perhaps that is not the idea. They think it possible—this is where the extreme cleverness comes in—that my right hon. Friend the Leader of the Opposition may be called upon to form a Government, and they then threaten him with short Supplies. Notice how cleverly they have done. They have given adequate supplies for Army and Navy, and it does seem difficult to imagine that they or anybody else could direct the Government of the day to say in the face of a coming election, "We refuse to grant you Supplies to pay old age pensions, and the expenses of the Civil Service." That is the skill with which this has been arranged.

I happened to be in Scotland when this great manœuvre was carried out, and I read the account next day in a Scotch paper, and the writer of a London letter in that paper gave what seemed to me the best account I have yet seen of it. He said that when the Chancellor of the Exchequer first showed his hand, his Friends behind him were delighted. It was another splendid proof of the cleverness of the Chancellor of the Exchequer, but later on, when they understood a little, they began to ask each other—is it really clever or is it only stupid? Well, I think it is both. There is a kind of cleverness which is known in colloquial language as too clever by half, and which in actual practice is the highest form of stupidity. I can assure the right hon. Gentleman that that cleverness which is suitable to an artful dodger engaged in picking pockets is the kind of thing that does not pay in public. It can be met at once without any cleverness on either side, by honesty and straightforwardness. I now come to what is by far the most important part of this financial question, and that is the deficit which has been caused in relation to the income. The Prime Minister, in that speech to which I have already referred, stated, as anyone in his position might be expected to state, that it was his duty to carry on the King's Government, and as a part and a very necessary part of carrying on the King's Government we must take into account the very necessary financial business. We now know what that means from their point of view. Necessary financial business means the arrangements necessary to be made for the spending of money, but it does not include an arrangement for the prevention of the absolute throwing away of public money, of which they have the administration. Everyone in this House is familiar with the facts. Here is a Government which has been passing through this House Bills to borrow money, money which is already their own, which they do not need to borrow, and which they could get without borrowing at a moment's notice if they chose to ask for it.

Mr. McKENNA

That is not true.

Mr. BONAR LAW

I will make my statement good in a moment in a better way than the right hon. Gentleman made his. I say they could get the money without borrowing at all. I ask the House to consider what is the effect of what the Government are doing upon the interests of this country. They have injured in this way our national finance in at least three distinct ways. In the first place, as pointed out by my hon. Friend, and this is by far the least important, they are paying large sums of money every week in interest on money which they could get without paying interest. The next is more important. For every week's delay in collecting the Income Tax they are permanently losing a part of that Income Tax. That was admitted by the Prime Minister, so that it cannot be denied. But by far the most important injury which they are doing to the country is in regard to our national credit. At this moment our national security stands at almost the lowest point at which it has stood in our time, and it happens that that same period was the time of the doing away with the Sinking Fund, and we had therefore no longer the power of using that Sinking Fund to steady this security by buying at any time if there was need. Under those circumstances I am perfectly sure that there is no business man in this country, no man who has given any thought to the finances of this country who would not say that the most important thing for us is to avoid as far as we can any new borrowing. But instead of that the Government are going out of their way to borrow when they could get the money without borrowing it at all. On what grounds do they justify the course which they have adopted? They pretend, and it is only a pretence, that they could not collect this Income Tax except by breaking the precedent which was established, I think, in 1894 of having all the financial business of the year in one Bill.

Mr. LLOYD-GEORGE

1861.

Mr. BONAR LAW

The right hon. Gentleman if he looks it up will find that he is wrong. That sometimes happens. They say they are going to break this very good precedent. If that were true I should say I could understand from their point of view, though I think it would be difficult to justify it on any ground, the waste of public money. Suppose that were the only alternative, that they should introduce a special Bill for the Income Tax, would they not be bound to do it? I think they would. Why do they not? It as, they tell us, because of this great constitutional struggle in which they are engaged with another place. Just think what that means. They are engaged in promoting a revolution. Everyone in this House and out of it knows that that revolution can only be carried out, not by a scratch majority, but by a real majority of the people of this country. Are they so timid, have they so little faith in their own cause as to believe that creating a precedent, even a bad precedent, which is justified by the condition of affairs at the present moment, is going to have a feather's weight in deciding the question? Even in that case they would be bound to do it. But the right hon. Gentleman has repeated what was said before that a Resolution as ordinarily introduced has no legal binding effect. I suppose he is a lawyer; at least, he is a kind of a lawyer. I do not mean that offensively. He is something greater than a lawyer in his office. But the Gentleman who represented the legal opinion of the Government, Sir Samuel Evans, distinctly stated, in contradiction to what the right hon. Gentleman has just said, that that is not the law that, as he understood it, the question had not been decided; that he did not know whether it was or was not the law; but that, at all events, all experience shows that until now the passing of a Resolution by itself has been sufficient to collect the tax.

Mr. McKENNA

That the Resolution in itself is not sufficient unless it is intended as the foundation of an Act of Parliament.

Mr. BONAR LAW

The right hon. Gentleman assumes that Members of the House of Commons are extraordinarily ignorant. Of course it is implied, when the Resolution is introduced, that it is the intention of the Government to found a Finance Bill upon it. Does the right hon. Gentleman say that he does not mean to introduce the Finance Bill? All that is required either by law or precedent is that, when the time comes, the Finance Bill should embody the Resolution and nothing more. Everybody knows that at any time during the last four weeks the Government could have passed a Resolution the effect of which in practice would have been to at once bring into the Treasury all the money which is held by banks and by other institutions ready to be paid. More than that, we think that if the Government had sent out demands the result would have been that before the end of this month a very large part of the arrears would have been paid. I am bound to say I cannot conceive, even from their own point of view, what their object is in not pursuing that course. I would like to read an extract from an article by Mr. E. C. Cooke, which appeared in the "Contemporary Review." Mr. Cooke is a supporter of the Government, and a frequent writer in the periodical press. Writing on this very point, Mr. Cooke says:— The Income Tax is greatly in arrear. Some eager politicians here and there say 'What matters the confusion; it is the fault of the House of Lords.' So it is— Says this gentleman, but he is a partisan, like many Members opposite:— But the common-sense of the country might transfer the fault to the House of Commons if, having the power to end the confusion, it abstained from doing it. I think the country will have that amount of common-sense. I am perfectly at a loss to understand the course of the Government even from their own point of view. They are very good electioneerers, but not so good as they think. If that be good electioneering then I am a very bad judge of what is good. But there is an explanation which, I think, is possible of the action of the Government. The hon. and learned Gentleman the Member for Waterford (Mr. John Redmond) has said the same thing in this House, and he said it in a rather brutal way—I do not use that word in an offensive sense—as he said the other day at Newcastle. He said—I am quoting, I think, almost the exact words:— It will he the maddest course to do anything to mitigate the acuteness of the present financial crisis. The country has got to be worse before it is better. We must use revolutionary tactics. That is really the principle which actuates his Majesty's Government. I think there are some Members of the Government, at least, who would not readily adopt that method, even in the present crisis, but needs must when somebody drives. I do not think they will readily adopt that method, but I must say that though they will not avow it, that though they are ashamed to avow it, that is the principle on which they are acting. They are ashamed to avow it, but they are by no means ashamed to act upon it. Another remark I should like to make in connection with the attitude of the hon. Member for Waterford. In one of his speeches in this House he said that he was quite willing to support the Budget, but he must be paid for it. Of course we all understand the sense in which he used those words. I am bound to say if he chose to support the Budget now he would be paid in full, in the extent of the humiliation he has inflicted upon the Benches opposite—a humiliation which must be all the more galling because of the ostentatious way in which it has been imposed.

Mr. GIBSON BOWLES

I certainly feel with the right hon. Gentleman who has just spoken that it is an important and imperative and instant duty to wipe up the mess in which the financial arrangements of the last year have been left through the action of the House of Lords, but I think the argument used on the Treasury Bench is a perfectly fair one and a perfectly sound one, that it is absolutely necessary in the few remaining days between this and 31st March that the Government should have money to meet their engagements on 1st April. That cannot be denied, that is the task on which we are now engaged, and which we shall scarcely be able to finish by the time 31st March arrives. The right hon. Gentleman remarked that it is easier to speak like a statesman than to act like one. When he said that I believed him at the beginning of his speech, but at the end of it I began to doubt it, because I do not think his speech was the speech of a statesman. If it was so easy to speak like a statesman, I think he would have done it. In the course of a speech I always look for its true inwardness in the metaphors with which it is adorned. He said that the Government is like a beaten fox, ready to die, and doing the best it can. That is the figure before the mind of the right hon. Gentleman—the beaten fox on this side, the hounds on that side. But if the fox is beaten, why do you not run into him and chop him up? Is there any reason at all for whipping off these hounds? Is there any reason at all for delaying the final catastrophe? I am really surprised at seeing the right hon. Gentleman and his colleagues taking up an attitude of financial purity. Why, they were the most abandoned financial rakes that ever sat upon the Treasury Bench. Let me recall what they did, because apparently they have forgotten. When the late Government was formed, the right hon. Gentleman the Member for the City of London (Mr. Balfour)—whose absence we regret, though I am glad to hear ho is in excellent health—said never had so able a set of Ministers taken office. Here are their financial exploits during the ten years they held office. Having found the expenditure at £110,000,000, they left it at £166,000,000, an increase of the annual expenditure by £56,000,000, or 52 per cent. Having found a funded and unfunded Debt of £659,000,000, they left it at £789,000,000, an increase of the Debt by £130,000,000, or 20 per cent. It is scarcely becoming on the part of hon. and right hon. Gentlemen opposite to affect such great financial purity. Let them affect purity, if they will, in other directions. I have myself always been deeply interested in national finance, and I can scarcely picture to myself the three right hon. Gentlemen opposite sitting there like three plaster busts of the cardinal virtues. Of course, there are seven cardinal virtues, but four of them are absent—Faith, Hope and Charity, I suppose, amongst them.

Let me remind the House that this Consolidated Fund Bill is not in itself a granting Bill; it is only a Bill which enables the Government to spend the money already granted. When it was a question of granting Supply, hon. Members opposite were tumbling over each other to increase the grants. The Army, the Navy especially, they said, were ill-provided for, and the Noble Lord the Member for Portsmouth (Lord Charles Beresford) read a list as long as a yard-arm of people who wanted their pay or salaries raised, and which he said ought to be raised. I believe it included almost every man in the Navy except admirals, who, I suppose, were already properly remunerated. Hon. and right hon. Gentlemen opposite oppose this Bill, though they have granted the money, and the only question now is whether the Government are to be allowed to spend the money that has been granted. The whole Votes on Account for the Navy, for the Army, and for the Civil Service represent about £24,000,000 or £25,000,000, and can it now be suggested that, after having urged that these grants should be increased, the Government ought not be allowed to issue the money? That is all this Bill does. This is not a granting Bill—it is a Bill to enable the Government to issue and to apply the money granted. Therefore the criticism, if any, is rather belated. You should have thought of these things when you were granting the money. I have for many years endeavoured to get the House to think of that. When the money is granted it is useless for these same purists, like the right hon. Gentleman, say that it is monstrous that the Government should spend all this money. The right hon. Gentleman, however, complains that the Government are not collecting the money that they might collect, and he says that it is a perfectly legal thing to collect the taxes by mere virtue of the Resolution passed by this House. Let me tell him that he is entirely at variance with an authority on Parliamentary procedure who is at least his equal—Sir Erskine May.

Mr. BONAR LAW

I stated exactly what the position was, that the Law Officer of the Crown, himself admitted that it was at least doubtful if it was a sufficiently legal method of collecting.

Mr. GIBSON BOWLES

I submit that Sir Erskine May is a greater authority on Parliamentary procedure than even a Law Officer of the Crown. There is no higher authority than Sir Erskine May on the legal validity of proceedings in this House. In the 1879 edition of his book, before it was revised by scholiasts, he says that to levy taxes by sole virtue of a Resolution of this House is obviously not legal, and that there is no legal authority for acts done by sole virtue thereof.

Of coarse it is illegal, but when you have passed the Resolution, and it is certain that the Finance Bill will be founded upon it within a month or two, the taxpayer cannot refuse to pay, because, if he did, before his case was settled, the tax would be based on the authority of an Act. It is a very different thing when, in consequence of the action of another House, your Finance Bill, founded on your Resolution, instead of passing, lags, and is finally rejected. It never can be pretended or supposed that a Resolution of this House would retain its vitality, not for one month or two, but for eleven or twelve, and it never could be supposed that it would retain its validity after the Bill founded on it had been rejected. It is a fact that is clear that the levy of taxes by the mere virtue of a Resolution of this House is illegal; and that the full and only authority which can authorise the levy of taxes upon the subject in this country is an Act of Parliament.

I think it must be admitted that there has been some irresolution on the part of the authorities of Inland Revenue in the collection of the Income Tax. They first of all thought, with the right hon. Gentleman, that the levy of Income Tax by mere virtue of a Resolution was lawful; then they took better advice, and came to the conclusion it was not lawful, but that it might be lawful to receive the tax. I think they have now recovered from that position. It must be remembered that the situation that has been created with regard to the Finance Bill of last year is entirely and wholly unprecedented. It is one which could not fail to lead up to irresolution, and finally some inaction on the part of the authorities of Inland Revenue and other authorities too. I confess that it seems to me that the Govern- ment have been put to making a choice between various difficulties. Whether they have chosen the smallest of the difficulties, and taken the easiest means of getting out of their trouble, I will not pretend to say, but the difficutly is there. Do right hon. Gentlemen opposite mean to prevent the Government from carrying on as far as they can the financial business of this country? That, and that alone, would result from successful opposition to this particular Bill. That, and that alone, must be the effect of their speeches, when it is complained that the money that the Government have asked for is not sufficient. Why so much charity for the Government. Hon. and right hon. Gentlemen opposite begin to bewail the fate of the Government. They say they will not have enough money to spend; the poor Government say they will be starved, and will perish of inanition, and so they proceed to feed them with supplies by a stomach-pump as if they were Suffragettes.

I do think the financial situation in this country is very grave and very serious. I have not seen any candid offer on the part of hon. and right hon. Gentlemen opposite to co-operate in bringing that situation to an end. I wish I had. I have heard many taunts, many reproaches, addressed to the Government, but I have not seen, what I should have expected to see, a candid and open offer of co-operation in carrying through measures that are required, first of all to supply the funds which will be required from 1st April next, and secondly to aid in recovering and levying the taxes which are partly levied and partly un-levied. If I had seen any such desire on the part of hon. and right hon. Gentlemen I should join with them in appealing to the Government not merely to provide themselves, as they have done, with this Bill and Votes of Supply, but also to do something and to take certain measures, if heroic measures, to invest them with lawful authority for the collection of taxes which have already been paid, and to complete it for those which have not already been paid. I am sorry instead of that spirit on the opposite side to see a spirit of cavilling of objections, and a great many of them not well founded as to the law, and, I think, on an entire misunderstanding of what the law is.

Sir FORTESCUE FLANNERY

The excess of zeal which always characterises the action of the hon. Member who has just spoken has given away the whole case of the party which now is so fortunate as to possess his support. He stated at the commencement of his speech that the financial mess and muddle is the fault of the House of Lords. That statement being cheered by hon. Gentlemen opposite, is evidently the case they desire to make in this House, as they have already attempted to make it in the country, that it is part of the strategic whole to create inextricable confusion in the finances of the country in order that they may afterwards blame the House of Lords, and say that the whole fault rests with that body. In the course of the Debate on 4th March on the Temporary Borrowing Bill the Chancellor of the Exchequer made this statement:— There is nothing to prevent our receiving cheques for Income Tax from Income Taxpayers in any part of the country. What are the facts? The House of Lords referred the Budget to the judgment of the country on 3rd December, and on 4th December certain action was taken by the authorities of Somerset House. My principal object in rising is to justify the allegations of my hon. Friend the Member for Birmingham. He indicated that the Income Tax might not only be collected, as the Chancellor said, with the consent of the Income Tax payers, but he indicated that there has been round the country very great diffidence in the manner in which voluntary taxpayers have been received by the Government. I wanted to justify what I have sought to obtain by question of the Chancellor of the Exchequer, and which I failed to obtain, and that is a statement of the facts as to what happened in the county which I have the honour to represent. In the town of Maldon, in the county of Essex, a case in point has arisen. On 4th December, the day following the reference to the country of the Budget by the House of Lords, the authorities at Somerset House sent instructions to the Clerk of the Income Tax Commissioners at Maldon to prepare the necessary documents for the collection of Income Tax, but not to issue them, and they said if any had been issued they were to be withdrawn. About 8th December the surveyor of taxes for the district, an official who is directly under the authority of the Treasury through Somerset House, wrote to all the collectors to surrender and deposit all the publications, all the forms of receipt, and all the books that were in their custody. The Chancellor of the Exchequer has sought to ride off from responsibility in regard to this burking of payment of Income Tax. He said that his Department had no control over the Local Commissioners, but it is not denied that he has absolute control over the surveyors of taxes.

The surveyors of taxes are like ambassadors of a foreign state; they are the direct representatives of the Treasury in regard to these Local Commissioners of Income Tax, and it was from the surveyors that instructions were issued to the collectors to surrender their books, and so to paralyse them as possible receivers of Income Tax. Those books were surrendered the next day or within a week of the rejection of the Budget, the reference of the Budget by the House of Lords, to the direct agents of the Chancellor of the Exchequer, and remained until a week ago in the custody of those to whom they were surrendered. That is to say, that for three and a half months those books which were, necessary for the receivers of Income Tax, not merely to give receipts, but even to ascertain the amounts which were due from voluntary payers of the tax, were kept out of the custody of the collectors, so that they could not even tell the amount receivable from any voluntary payer of Income Tax. That has been changed. The books have been returned within the week, but when the Chancellor of the Exchequer seeks to make the excuse that he, has no control over the means that have been adopted of burking the collection of Income Tax, then I say this is a case in point whereby, under the direct instructions of officials who are his own officials, the payment of the Income Tax has been rendered impossible.Ex uno disce omnes.I believe what has happened in one county has happened in more than one. It is all part and parcel of the strategic position of making the finances of the country in a greater muddle than they could possibly be otherwise, and of so piling up a case of artificial accusation against the House of Lords. That is the policy of the Government. That is the policy which they have adopted, and which I feel and I believe the country will never accept as other than an organised system and an attempt to throw dust in the eyes of the country, and an attempt to create an electioneering device which cannot possibly succeed.

Mr. LANE-FOX

I think the attitude which the Government are taking up on this question is one which gives the impression that they must think a very large number of the people of this country are extremely stupid. I think the large bulk of the technical arguments such as those as to the collection of the Income Tax will not convince the great majority of those who will consider this question when it comes to be decided, as it shortly will. The hon. Member for King's Lynn made great point of the technical illegality of the collection of Income Tax under Resolution. Is there any man in the country who really believes but that though there might be some technical illegality, still that might have been avoided, because the people of the country know perfectly well that a Resolution of that kind passed in this House would constitute a guarantee of good faith of the Government of the country, and that it would be recognised and allowed as a perfectly legal method of collecting the tax, which would be legalised and sanctioned in the proper way. The First Lord of the Admiralty made the point that you could not pass a Resolution of that sort, because it would have to depend upon the Finance Bill. Everybody knows that; but look at what the right hon. Gentleman's argument leads us into. He says it is impossible to pass this Resolution by itself. He based that on the argument we have heard of before, that the dignity of the Government would not allow that. We know that the position of the Government is that they do not want particular sections of the Finance Bill to pass. The whole difficulty of the Government is that the Finance Bill cannot be passed in this House, and that is the reason why the Government feel they cannot get their Supplies. They know that to pass a Resolution of the sort would involve bringing in the Finance Bill, which they cannot pass in this House. That is the real reason for the delay and why the Finance Bill has not been brought in.

Another argument which seemed to me extraordinarily thin was that there had been an agreement with the Opposition that only necessary Supplies should be granted, and that that precluded the Finance Bill being brought in again. Everybody knows that much stronger influences than that prevented the Government from bringing their Bill. It is not the technical question of an agreement with the Opposition, but the position taken up by hon. Members from Ireland. If the Government had wished to press the Finance Bill through the House by means of all-night sittings or other methods of Parliamentary procedure they could have done what they required. But they have deliberately refused to take that course, and it is impossible for them to throw dust in the eyes of the country by giving such thin reasons for the financial chaos which they have brought about. Everybody knows that the main reason why the Government have not brought in their Finance Bill is that it would not command the support of a majority in this House. In a short time we shall be going before the country again, and the argument is already being used by unscrupulous supporters of the party opposite that those who are liable to Income Tax and who are supposed to represent the richer classes are making difficulties in regard to payment, while the working man—good, honest fellow—does not mind paying the tax on his tobacco and spirits. That is not a very fair argument, and I hope it will not be used by many supporters of the Government. In all fairness, it should be recognised that the great bulk of Income Tax payers are perfectly willing to pay the tax, but that obstacles are put in their way which make such payment absolutely impossible, and which even prevent, a legal receipt being given if the tax is tendered. The Government could have removed these difficulties if they had chosen to do so. The electors of the country, when they consider the position which has been created, will lay the blame upon the Government, and the attempt of Ministers to hide their misdeeds under a constitutional crisis will fail.

Mr. H. S. FOSTER

I desire to add my respectful protest to those, of my hon. Friend at the neglect of the Government of the real interests of the taxpayers. His Majesty's Ministers seem incapable of rising above considerations of party expediency. The Prime Minister at Oxford on Friday spoke of the present condition as "unexampled financial confusion." He apparently has lent himself and his Government to the deliberate organisation of confusion, with the one object of laying it at the door of the House of Lords. He referred to the necessity of organising in advance of an election, and apparently an election being now in view, a part of the method of organising is to be to disorganise the finances of the country. On such a vital matter as the revision of our ancient Constitution the Prime Minister can find no higher conception of duty than that which is tactical and strategical. Any steps to be taken, the Prime Minister said, were not to be disclosed in advance either to his political opponents or to the country, and Income Tax was not to be collected in order to suit the convenience and wishes of friends of the House of Lords in this House. The Government do not seem to think very much of the wishes or the convenience of the taxpayers. If anything which is proposed gives satisfaction to this side of the House, however advantageous to the country it may be, on party grounds it is to be resisted. In regard to solemn pledges we have now a new reading. In future, if it is found inconvenient to the tactics or the strategy of the party to observe solemn undertakings, they are to be described as merely statements of intention. Nothing could have been more solemn or more formal than the statement of the Prime Minister on the eve of the Prorogation of the last Parliament:— His Majesty has been graciously pleased to accept that advice [that is of dissolution], and the result I trust will be that a new House of Commons will assemble at such a time as to make it possible for it to provide both retrospectively and prospectively for the needs of the current financial year. The Prime Minister also said—and I cannot conceive a more definite pledge to the taxpayers who were asked to pay their taxes in anticipation of legalisation:— If we are fortunate enough to enjoy its confidence our first act would be to reimpose from this week all the taxes and duties which were embodied in the Finance Bill, and to validate all past collections and deductions. It is because of that distinct pledge that taxpayers have been willing to go on paying their taxes and to submit to the demands of the Excise officers. We know that that was the policy of the Government down to a quite recent date, and that this makeshift policy of six weeks' Supply, which it has been attempted to justify on the ground that it will increase the financial control of this House, was another of those many changes which have been made in the tactical and strategical arrangements of the Government during the last three weeks. In the ordinary way the Vote on Account would have been something like £60,000,000, instead of £25,000,000. We have had a public statement of that fact on the authority of the Government itself, for in the "Observer" of a few days ago, there appeared a signed article in which Sir Henry Lucy stated:— Three weeks ago, at a time when public attention was concentrated on the Budget, and there was general agreement that it should and must be the first business of the Session, it was pointed out in this column that there are Votes on Account for the coming year which present themselves with imperative urgency. It is roughly calculated that such Supply for the Army and Navy and the Civil Service will approach the sum of £60,000,000. It may be stated that that information is based upon Ministerial authority, and that it represented the view and intentions of the Cabinet at the time. There is no doubt that that was the intention, and it is shown by the way in which the Army Estimates were prepared. But a sudden change was made to a six weeks' Vote on Account. Why? Obviously for the purpose of creating in a certain event in the month of May greater financial confusion in order that the Government should lay still further blame at the door of the House of Lords. In November they prophesied, almost promised, that there should be financial confusion if the House of Lords did not pass the Budget. The financial confusion did not follow, and matters went on well. Then came a further opportunity. When large receipts were expected from Income Tax, the Government decree was: "Financial confusion has been promised by us; it has not happened; therefore financial confusion must be created in order that we may have a bludgeon with which to strike at the House of Lords." Something besides party duty devolves upon the Government. I submit that the Government are in the position of trustees for the taxpayers of the country, and that their action in imposing upon the taxpayers a burden which ought never to have been imposed is something very akin to a breach of trust. I am consoled with the knowledge that through the action which they have taken, through the manifest trick by which they are endeavouring to create this confusion and to put it to the blame of the House of Lords, they have already lost the respect of the country, and they must be approaching that period, if they have not already reached it, when they will have lost respect for one another, and even for themselves. I earnestly hope that before many weeks are over that state of things will arise for which the Government themselves are preparing, that they will quit that bench, being unable to carry the "People's Budget" through the people's House, and that other and better advisers will be called in.

Mr. AUSTEN CHAMBERLAIN

Everyone who has listened to this Debate will feel that my hon. Friend (Mr. Steel-Maitland) was fully justified in bringing before the House the question of the non-regularisation of our taxation and of the refusal of the Government to take the necessary and possible steps to prevent further loss to the Treasury and further expense to the taxpayers. My hon. Friend presented his case in a speech of singular power and lucidity, to which the First Lord of the Admiralty undertook to reply, but which he did not answer. So far the case made by my hon. Friend remains, in all its main features, unanswered and uncontradicted by anything that His Majesty's Ministers have said. The First Lord of the Admiralty introduced a matter which, I think, was scarcely relevant, and to which I wish to make some allusion. My hon. Friend asked: What is the attitude of the Government in this matter? On what principles are they acting? What policy are they pursuing? The right hon. Gentleman found his easiest method of reply to be to taunt the Opposition with finding a newborn zeal for the discussion of the financial arrangements which they did not evince when the time of the House was, on the Motion of the Prime Minister, given to the Government without a Division for the purposes of necessary Supply and Finance. The First Lord was under an entire misapprehension as to what took place on that occasion. In the course of the Debate on the Prime Minister's Motion, in defining, on behalf of my Friends, the attitude of the Opposition, I said:— We are governed by the principles laid clown for us by my right hon. Friend (the Leader of the Opposition) when he said that in all that was necessary for carrying on the King's Government we shall be ready to give His Majesty's Ministers any support we see necessary, as long as they concentrate their efforts on those measures that are so necessary, and still refrain from interposing between the House and the consideration of the Budget, which is long overdue, and is only one degree less necessary than the financial business of which I have already spoken, any other contentious business. If that was not clear enough, I went on to say:— The Prime Minister and his colleagues, both in this House, the last Parliament, and in the country, dwelt on the confusion introduced into finance, the injury caused to trade, and the great interests adversely affected by the postponement of the Budget until the opinion of the country was expressed upon it. The opinion of the country has been expressed upon it. You can have that issue before the House at any moment. Why do yon not do it? 6.0 P.M.

There was no shadow of foundation for the insinuation which underlay the whole of that part of the speech of the First Lord of the Admiralty that it was the action of the Opposition which stood in the way of His Majesty's Government dealing with the financial mess which they had created, or prevented them from regularising the Income Tax, or proceeding to discuss the Budget. At that very moment the Prime Minister and moved to take the time of the House. I referred in an interruption —I am afraid my interruptions were a little frequent—and I owe a little apology to the First Lord of the Admiralty for having interrupted him so much—to a later occasion. On 3rd March I said that the House had adjourned three nights running at eight o'clock, and that it was proposed to adjourn again at eight o'clock, thus showing clearly that time was available for the Government to proceed with the Income Tax Resolution. I said that for the third day running half the Parliamentary day had been wasted; and that this was at a time when the Government themselves had admitted that money was being lost and expense being caused by the non-collection of the taxes. Why, I asked, did they not use the time which the House gave them for the purpose? At that point, before I had finished my sentence, the Prime Minister interrupted me with a question: "For the Budget?"

The Debate goes on:— Mr. AUSTEN CHAMBERLAIN: Yes. Use it for the Budget if you like. I am very glad to accept the offer of the right hon. Gentleman. "Will they put down the Budget? That is better than I expected. And if the Prime Minister was going to do that, of coarse no one would be more gratified than we. It is therefore not true to say, as the First Lord of the Admiralty alleged, that we did not, from the first, press the Government to take the course that we now condemn them for not taking, and that we had not first offered to proceed, in the first intervals of Parliamentary time that were available, to the discussion of the Income Tax Resolutions—either for their ordinary tax at 1s. 2d., which they could have had as unopposed business, or, if they preferred it, with the Budget as a whole. Of course, we should have been bound to come to an issue with them upon that, and take the decision of the House on that very question which was referred to the country and on which the Government will not allow the country's opinion to be expressed. So much for the attitude of the Opposition.

I come now to the attitude of His Majesty's Government. I confess that even after the explanation of the First Lord of the Admiralty I am still at a loss to understand on what principles the Government have acted. I believe the reason why I and others are at a loss is, in fact, because the Government have not acted on any principles whatever. What are the facts as we know them? The Bank of England, as stated to my hon. Friend, has deducted Income Tax from Consols. To use the words of the Bank of England, it:— In agreement with the Board of Inland Revenue, is authorised by the Lords Commissioners of the Treasury. The Government have therefore encouraged the Bank of England to deduct that tax from the dividends due to individuals. That is every bit as illegal as to take their money into the Treasury. Why the Government are prepared to take it from those who for the moment are its only legal owners, and are not prepared to take it and to use it for the only purposes for which there is any possible justification for deducting it, namely, for the taxes due to His Majesty the King, I do not know. They advise, they encourage the Bank to refuse to pay to the owner. They refuse to take money, or to collect money, from the Bank. They borrow it from the Bank instead.

In the next place we have the War Office, which tells the Bank that they are to deduct the tax as if the Budget had passed. There is a direct instruction from the War Office. What on earth the War Office has to do with it I do not quite know, but on a direct instruction from the War Office the tax is to be deducted. Then we have the Government themselves, who direct the deduction of the tax from all salaries paid by them. On what ground do they do that? If it is illegal to ask for money from a private citizen, a citizen not in Government employ; if it is still more illegal to take money which has been collected from a private citizen and is held by the banker; by what right do you deduct it from the Civil servants who are under your control? What is the explanation the First Lord of the Admiralty gave us? He said: "We will not take it from the ordinary taxpayer, because that might involve us in a troublesome and extensive loss." They take it from their own employés, because, I suppose, they feel they have such a hold upon them that they could not bring the Government to book! Can you have a greater injustice as between man and man than the Government have produced by the course of action which they are taking? I have already shown, I think pretty clearly, that the action of the Government is wholly inconsistent with their following out any settled plan. They are living from hand to mouth. They make a new law for each individual case, and the result is what you would expect—an arbitrary tyranny which deducts money without lawful authority, and does not collect it for the purpose for which it was deducted; which takes money from one man and allows another man to go without paying what is as much or as little due from him. The Chancellor of the Exchequer, in answer to a good many ques- tions at Question Time to-day, gave us some further information. He stated definitely, and I understood the First Lord of the Admiralty to say the same thing, that since the rejection of the Finance Bill no official coming under the authority of the Government has made any demand for the Income-Tax. He distinguishes between some officials whom he professes to have no control over, but who would not act in defiance of his advice, and others whom he has direct control over. He says where he has direct control no tax has been demanded since the rejection of the Budget. I venture to refer him to a Board of Inland Revenue circular letter (Number 52), dated 4th December last year—therefore, after the Budget had been rejected. The circular is headed:— A circular to bankers…entrusted with the payment of foreign and colonial dividends, and pensions paid out of Indian funds. it concludes:— The Board are authorised— they did not do it without that authorisation— by the Lords Commissioners of His Majesty's Treasury to suggest that Income Tax should continue to be deducted at the rate of 14d. in the £, pending the introduction of another Finance Bill for the current year. The deduction of the tax during the annually recurring interval between the expiration of one and the passing of the other Resolution, which is referred to in the earlier paragraph of the circular, which. I hold in my hand:— The deduction of the tax— the circular goes on— has hitherto given rise to no difficulty, if, on the present occasion, any objection is taken, you may, if necessary, refer the matter to the Department. Why did not the Government pass the Resolution, or collect their tax for general application, instead of taking it out of particular people? No, they did not collect the tax, but they do all the injury to the-individual taxpayer which is involved in the deduction of the tax from his dividend without securing the corresponding benefit to the Treasury which is involved in the payment of that money into the Exchequer. Then they go to the Money Market and borrow at 3 per cent.—from money which is waiting to be paid in! They decline to assume to themselves the risks which they have hitherto invited bankers and others to take upon their own shoulders. That is what the Government has done.

Let us go a little further. Their inconsistency, their injustices, do not stop with the collection of taxes. I asked the Chancellor of the Exchequer to-day whether it was a fact that the Board of Inland Revenue were refunding to individual persons sums deducted from their dividends for Income Tax, but held up by bankers, and which, therefore, had never jet reached the Treasury. What did the Chancellor of the Exchequer reply? The Board of Inland Revenue have in a few cases made refund on account of Income Tax deducted on dividends by those entitled to claim such refund, although the tax inself has not been paid into the Exchequer. So that, first of all, the Government would not collect the tax; then they borrow money that is waiting to pay the tax with; then out of the borrowed money they refund money which they have not received I Was there ever a Government conducted on such principles which did not come to speedy and deserved grief? Why have the Board of Inland Revenue done it in a few cases only? Let them do it in all cases or none. Then I understand in future from the concluding paragraph that the right hon. Gentleman believes in the criticism of mine that if the Board of Inland Revenue are to do this at all they had better deal out—shall I call it even-handed justice or even-handed injustice?— to all taxpayers alike. His answer to me concluded:— I may add that I have authorised the Board to follow the normal practice in regard to the repayment of Income Tax in the cases where the claim can be substantiated. I do not know what he means by that. I shall be much obliged if he will explain what it means. Does it mean that every man who has had Income Tax deducted at the instigation of the Government, though not by its direct action, can get his Income Tax back from the Government, whether the Government had ever received it or not? Or does it only mean that if the shareholder can prove that the Income Tax has been collected, or, may be, has been paid over by the bankers or companies, and collected by the Treasury, that he will get relief? If it means the former, the injustice to the individual taxpayer would be remedied at the expense of grave loss to the Treasury—an injustice which I think is almost necessary, because the hardship to little people of small income in having 1s. 2d. in the £ deducted from their income when no tax is due or a much less amount is due because their incomes are below £160 or below the final limit of abatement £700, would be tremendous. And the disturbance to domestic economy of poor families would be very serious indeed. If it means giving it back to all of them without expense, then you entail great and quite unnecessary loss to the Exchequer, which is involved by neglect of collecting the money which the Government refunds before they receive it. Refund here means that you are giving back what you received. Dr. Murray will now have to give a new meaning to the word, so that it will mean in future giving back something which you have not got—authority, "the Chancellor of the Exchequer." If it does not mean that it means that each individual taxpayer has to prove that not only has the money been deducted, but that these sums have been paid over to the Exchequer. See what an intolerable task you are putting upon these people. These little incomes may be scattered over numberless investments, and these people will have to write to ascertain whether the company has or has not handed over the money to the Treasury, and, if they have, to get a certificate from which company that this money has been handed over before they can get their refund of the tax taken from them. This is an inconvenience to the taxpayer, an inconvenience to the official and an inconvenience to the banks and to the companies which do this business as agents for the Government. It is wholly unnecessary, and it is maintained purely to suit the party exigencies of His Majesty's Government.

I do not know how the Inland Revenue selected the few hundreds of pounds in which they have hitherto refunded Income Tax. I know the case of an individual who is certainly not entitled to a rebate on account of the smallness of his income: He is entitled to rebate under that provision of the Act which allows exemption from Income Tax for insurance premiums on a man's life, provided the amount of the premium does not exceed one-sixth of his income. I know the case of an individual whose Income Tax, I think, has been deducted, and not a penny of it has gone into the coffers of the Government, because the Government would not collect it. He applied for a rebate under this provision, and he got in the ordinary way a rebate for a sum which was nearer £1,000 than £500, and many poor people cannot get their rebate. Is that democratic finance? To pass away from details on this matter to the general results, let us consider what this democratic finance is. This triumph of demo- cratic finance has proved what? That you can carry on Government for eighteen months without a Finance Bill, that you can collect taxes without legal authority, and that half of that financial control upon which this House has been wont to pride itself is the flimsiest mockery when you have a Government in power that wishes to break through it. Meanwhile you are receiving all the Customs duties or practically all the Customs duty and the Excise duty upon the higher scale. What is the result? The result is that that part of the late Budget—the suspended Budget— which was intended to produce the contribution from the working classes of this country is in full operation. Everything you intended to get from the indirect taxpayer as distinguished from the direct taxpayer is being taken from him, and I believe almost all that is being received by the Government. The extra Whisky Duty is being paid by the consumer, the extra Tobacco Duty has been paid by the consumer. From the poorer classes of the people you are collecting what you intended to be their taxation.

What a triumph of democratic finance! You take the taxes of the poor without legal authority. The only thing you will not do is to collect the taxes of the rich. What is the sole defence of the Government? Not that there was no time to proceed with the Budget Resolutions—those Budget Resolutions under which, as the circular pointed out, the Income Tax has always been collected—it was not that they had not time, it was that it did not suit the Government's policy to proceed to carry out the pledge—I will not call it a pledge—but to carry out the statement of their intention which the Prime Minister solemnly made in this House upon the last day of last Session, upon which he went to the country, and for which he professes to have received a mandate. It does not suit their intention to do that. They prefer to create confusion which did not arise until they engineered it. From the very moment of the rejection of the Budget the Government began to talk of the confusion that would arise. The Prime Minister has admitted that, thanks to the Government, and, perhaps, in part to the interest of the traders and also, I think, though he did not mention it, thanks to the co-operation of the Opposition with the Government, in order to prevent confusion and injury to trade, the great mass of these duties were being collected and paid without any trouble and without any friction. It was only in respect of one of them that serious trouble has arisen, and that one was the Income Tax. No trouble had arisen in regard to that when this House met. Its collection was in arrear— not its collections from individuals to any large extent, not mainly its collections from individuals. It was in arrear in regard to certain cases, but a vast amount of it had been collected from individuals, and was at the disposal of the Government the moment they choose to take authority to ask for it. It was held in the expectation that they would take that authority at the earliest possible moment. They were pressed to do so from this side of the House, and they might have done it in the time at their disposal. They refused to do so. What is now the result? They have the confusion which they had predicted, but which had not then arisen; that is the collection of the tax, which was easy if they took action at once, has become, increasingly difficult day by day. We see the injustice of it in the papers to-day, when the Bank of England, having waited four weeks for His Majesty's Government to take a single step in the direction of legalising the deductions they made at the suggestions of His Majesty's Government, are now announcing that they will repay the money to the individuals from whom it was taken because His Majesty's Government have done nothing of the kind.

I hope the Chancellor of the Exchequer will tell us whether His Majesty's Government propose even now, in view of that contingency, to take any step whatever to prevent the loss to the revenue and cost to the Exchequer and difficulty both to the banks and their clients which have arisen from the Government's previous neglect. I am afraid it is not very likely. The Government are not dealing with finance with a view to the financial interests of the country—they are openly making it a tool which they use for the purpose of a party game, played, as my hon. Friend the Member for Dulwich (Mr. Bonar Law) said, so cleverly that I think it is too clever by half. I fail to find in the speech of the First Lord to the Admiralty any justification or any explanation of the conduct of the Government. For that you have to go to the speech of the Prime Minister delivered at Oxford a couple of nights ago. He did give an explanation. He said:— I ask you—it is not I think too strong a claim to make— I agree with him. I ask you to believe that we shrill subordinate everything to the attainment of our ends. And the first thing the Government have chosen to subordinate to the attainment of their ends is the collection of the taxes, the credit of His Majesty's Government, and the interests of the people whom they represent.

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)

The right hon. Gentleman's speech has one phase in common with all the other speeches delivered on the other side. He has given to the House of Commons a lurid picture of the financial confusion which has arisen in consequence of the inability of the Government to collect the taxes. I have only one criticism to make upon his speech, and it is a criticism that will apply to all the other speeches. They are speeches that ought to be delivered in support of the Resolutions of His Majesty Government to put an end for ever to the interference of the House of Lords with finance. They were quite irrelevant to the Consolidated Fund Bill. They would have been excellent speeches if delivered upon platforms belonging to the House of Lords. Let the right hon. Gentleman reflect upon what he has told us about the present position of affairs. He said, "Here you have millions of money neglected, lying idly in the banks. You have people whose Income Tax is not collected, who would only be delighted to pay it. You are interfering with business." All that is absolutely true; but who is responsible?

On 3rd December the Finance Bill of the year was rejected. No one would complain that we gave too little time for discussion. As a matter of fact, we gave time sufficient to satisfy everybody. We could not have done anything before 3rd December. As soon as the Finance Bill had been rejected, the first thing we did afterwards was to make arrangements for an appeal to the country upon the whole position. I do not believe anyone who went through the labours and the Parliamentary experience of the last Session of Parliament will complain that the Government did not summon Parliament earlier than the date upon which we met this year. Up to that date the whole of the financial responsibility must rest at the doors of those who rejected the Finance Bill. [HON. MEMBEES: "NO."] At any rate, His Majesty's Government are not to blame. They submitted their financial proposals, and took every step to lgalise them; they sent them up to the House of Lords, and there they were flung out, and consequently the confusion up to that time must lie at the doors of those who rejected the provision made by the Government, and rejected it for the first time in the history of this country. We took a week over the Address. It is not suggested that we could legalise the Income Tax or any other tax before the Address is voted. That brings us up to March, so that the responsibility for the confusion in December, in January, and in February rests entirely upon those who rejected the Budget. There has been three months of confusion, and how far have we been responsible? This is 21st of March, and, therefore, three months of that responsibility belongs to the Lords and only three weeks to the Government. The right hon. Gentleman cannot possibly lay the responsibility at our doors. And yet we are told that we have upset the whole finance of the country, that we have destroyed business—

Earl WINTERTON

Hear, hear.

Mr. LLOYD-GEORGE

We know the Noble Lord is such an authority on business.

Earl WINTERTON

Quite as great as the right hon. Gentleman.

Mr. LLOYD-GEORGE

The Noble Lord's commercial sense is outraged by it. But what about the three months confusion which the Lords are responsible for as compared with the three weeks for which we are responsible? That is what has made the Noble Lord feel a sense of indignation which he cannot possibly restrain. But I repudiate the idea that we are responsible even for three weeks of the confusion. What happened? I will refer the House to a speech made by the Leader of the Opposition. We had business to transact which the right hon. Gentleman in his speech said he regarded as primary. He himself admitted in that speech that our first duty was Supply; otherwise there would have been no money to pay anybody. It is agreed that our first urgent duty was Supply. What course did we take? For Supply we have taken every hour. If we had really wanted to dawdle away the time of the House we could have said, "We are not going to interfere with private Members," and we could have quoted many speeches delivered by those sitting opposite protesting against taking the time of private Members. If we had really wanted, I will not say to waste time, but at any rate to find a legitimate excuse for not bringing forward our financial proposals, we could have proceeded in the usual way without bringing forward a Motion for taking up the time of the House usually devoted to private Members.

But what did the Prime Minister say? He just looked at the time at our disposal, and he took up the whole of the time that was available for Supply. He looked at the Supply we could get through, which was unusually heavy. The Navy Estimates were unusually heavy, but this question had formed part of the controversy around which the General Election raged. There were exceptionally heavy Estimates as Supplementary Estimates, and as the ordinary Estimates of the year, and in addition to that there were Supplementary Estimates for Ireland and for Labour Exchanges, which came for the first time on the Estimates, and which everybody expected would raise a very prolonged discussion. I ask any hon. or right hon. Gentleman who has had experience in this House whether, looking at that programme of business, he would not have said at once the time is undoubtedly insufficient to get through all that work, and that is how it struck those sitting on this bench. This programme of business was submitted to the House, and it was assented to on the understanding that the Budget and the Veto Resolutions were not included in it. There was one speech made from the Front Opposition Bench on this Question, and it was made by the Leader of the Opposition. When the Prime Minister made his statement justifying his proposal to take nip the whole time of the House because of the condition of Supply the Leader of the Opposition quite accepted that view. H? did not say, "Why do you not give a day to the Budget? Why do you not give a day to the Income Tax?" He realised perfectly that the whole of the time the Opposition had followed the course which every Opposition has followed in criticising, I will not say at undue length, but at legitimate length. Estimates which they themselves criticised on every platform throughout the country during the election.

Mr. AUSTEN CHAMBERLAIN

Let me interrupt the right hon. Gentleman. He is making a contrast between the speeches made by the Leader of the Opposition and myself. My speech from 'which I quoted was made after consulta- tion with my right hon. Friend, and had his full approval and assent.

Mr. LLOYD-GEORGE

Is that not very remarkable? Let the House consider what it means. Here is great financial confusion, which is the one dominant factor, ruining business, and the Leader of the Opposition, in the course of his speech, did not even think it worth giving even a sentence to it. He delivers a speech occupying half an hour or three-quarters of an hour, and as a sort of afterthought he says, "I quite forgot the financial confusion. It never occurred to me while speaking. Do you mind mentioning that fact?" And the right hon. Gentleman does it. But how does he do it? This heartrending situation he dismisses in a few rather obscure sentences. The right hon. Gentleman is not usually obscure. I have sat opposite the right hon. Gentleman, and I have never had reason to complain of his want of lucidity, but here he tells me that is what he meant, and I am willing to accept it, although, if the right hon. Gentleman had not assured me that that was his meaning, I should not have gathered it from his speech. Just think of the financial situation. A few perfunctory sentences at the end of a Debate after the Leader of the Opposition and every Member on the Opposition side had forgotten all about it—just at the end of a few obscure sentences referring to the matter. Does the right hon. Gentleman mean to say that that would have been his view if the Opposition had taken the view which they have now taken, that it is the imperative duty of the Government in the interests of the finances of this country to deal with the business of this country?

Let us assume that they had decided upon the course which they have now determined upon. Does he really mean to say that that is the way they would have proceeded? What they really mean is that the whole thing is an afterthought, an absolute afterthought on their part. He knows perfectly well why this has arisen. There was a great agitation in the papers; but it did not occur even to the intellect of the Noble Lord who is seated in the corner there on that particular day that the country was being ruined. Even he discovered it from the columns of the "Morning Post," of which I have no doubt he is a regular reader. What is more, he discovers it from an anonymous correspondent in the "Morning Post." It is not even the Leader of the Opposition; it is not the Noble Lord himself, but it is a purely anonymous letter-writer in a Tory newspaper in London—that is the man who starts the whole of this "financial confusion and ruin of the country." Up to that date no one denies that the Government could not have done anything to regularise the situation. They could have done nothing except pass an alternative Budget. That would have been accepting dictation at the hands of the Lords, and I cannot imagine even a Conservative Government doing that. What! Accept from the House of Lords dictation as to what the Finance Bill for the year is going to be! That claim has never been put as far as that up to the present time. The House of Lords never claimed it; all the House of Lords has claimed is the right of referring the Budget to the people, and they have never claimed the right to dictate the terms of the Finance Bill. [Cheers.] I note from those cheers that there are a few hon. Gentlemen who agree with me. Their claim now is not that the House of Lords has a right to dictate to the House of Commons, but that they have a right to dictate an alternative Budget. That is an intolerable demand.

Mr. T. L. CORBETT

Only the hon. and learned Member for Waterford has a right to dictate.

Mr. LLOYD-GEORGE

I can assure the hon. Member that our view is that every hon. Member of the House of Commons, whatever constituency he represents— whether he comes from Ulster or Con-naught, or whether he comes from England, Scotland or Wales, has an equal right to express an opinion in this House. With regard to the condemnation of the Budget hon. Gentlemen opposite think the Irish vote is everything. May I point out that there is a British majority for the Budget Hon. Members opposite think the people have condemned it, and why? Because they assume that the Irish people have condemned it. But when it comes to a question of the House of Lords, they say, "What right has any Irishman, unless he comes from Ulster, to express an opinion upon anything? It is sheer impertinence on the part of an Irishman, unless he comes from somewhere North of the Boyne, to express an opinion upon any subject except when it agrees with our opinions." Our view is that the House of Commons, as a whole, has a right to dictate the finances-of the country, and that the other House has no right to meddle.

Mr. T. L. CORBETT

What about your Budget?

Mr. LLOYD-GEORGE

I shall come to that, but the hon. Member must really wait. I now come to the second part of the right hon. Gentleman's speech. I really do not know even now what his complaint is. He does not say whether we should carry the Budget. Surely he does not imagine that any Government can carry the Budget in the interval between 1st March and our adjournment for Easter. If he does he raises a very important question. Does he think that the Budget can be got through in twenty-four hours? That is the first time I have heard such an expression of opinion. It seems to me that in their opinion we ought to pass so much of the Budget as suits the right hon. Gentleman and his Friends, and we should postpone the rest. That, again, is accepting dictation at the hands of the House of Lords, which this House could not possibly tolerate, and it is a departure from a time-honoured precedent, and a precedent upon which the privileges of this House are firmly founded, the precedent of 1861. The hon. Member for Dulwich, who is always positive and always incorrect—[HON. MEMBERS: "Withdraw."] He is the last man who has a right to complain of hard things. He said some hard things in the course of his speech. He even went so far as to insinuate dishonesty on our part. I have not gone so far as that, but I think I am entitled to say his statements are inaccurate. He said that it was in 1894 that the taxes were for the first time put together in one Bill. That is wrong; it was in 1861. All that happened in 1894 was that a sort of general financial provision of the year which used to form a separate Bill—

Mr. BONAR LAW

I would point out that what I said was that all the financial arrangements of the year were included in one Bill, and that is precisely the precedent of 1894.

Mr. LLOYD-GEORGE

I will just remind the hon. Gentleman what he did say, because his memory is rather bad. [HON. MEMBERS: "Oh, oh !"] Really, hon. Members are very sensitive. I think the hon. Gentleman is the last man who requires protection from young Members. The hon. Member's argument was that the Income Tax could very well be dealt with separately. It was not a question of general financial clauses; it was a question of taxes.

Mr. BONAR LAW

I beg the right hon. Gentleman's pardon.

Mr. LLOYD-GEORGE

Surely the hon. Member was dealing with the question of the Income Tax. I appeal to the House with confidence. He said the Income Tax could very well be dealt with separately, and then he said:— The reason why it is not dealt with separately, I am told, is because it interferes with the precedent of 1861. The hon. Gentleman then said it was not in 1861, but in 1894, that the financial arrangements for the year were for the first time brought together. I say that it was the precedent of 1861 which brought all the taxes of the year into one Bill, and it has never been departed from since.

Mr. BONAR LAW

It is simply a recollection of what I said, and the best test will be the OFFICIAL REPOBT, when we see it to-morrow. I did not mention 1861; the right hon. Gentleman mentioned it in correcting me, and in answer to that I stated that the precedent for having all the financial arrangements in one Bill was that of 1894, and not of 1861.

Mr. LLOYD-GEORGE

That is exactly what I said, and the hon. Member is wrong. The first precedent for having all the financial taxation of the year in one Bill is that of 1861 and not that of 1894, and to depart from that would be to depart from the precedent which undoubtedly assured and established more firmly the position of the House of Commons in the matter of finance than it ever had before; and that is the reason why we cannot possibly depart from it. The right hon. Gentleman opposite (Mr. Austen Chamberlain) asks why we are deducting the Income Tax in some cases, and not collecting it from individuals? Really I should like to know what is the complaint of the right hon. Gentleman. We have done everything in our power to minimise the financial confusion without contravening the law. We have done our very best to persuade banks to deduct. We have done the same thing with the Bank of England. We have clearly indicated our opinion, and we have given every encouragement to companies to deduct from their dividends. We could not collect from individuals, and the right hon. Gentleman knows perfectly well the reason why. The very duplicates upon which you collect are an authority to the Commissioners to issue warrants of distress. Does the right hon. Gentleman say there is no difference between intimating to the banks that it would be a great convenience to the Government, not merely to the present Government, but to the Government of the country, and to individuals, that they should deduct Income Tax from dividends, and sending, out documents which would authorise the issue of warrants of distress to sell people up for Income Tax when there is no legal authority for doing it?

Mr. AUSTEN CHAMBERLAIN

I have never suggested that the Government should issue threatening notices, or asserted that they have a right to collect taxes they have not a right to collect. I asked why they have encouraged banks to deduct money which they will not themselves collect, and why they treat different classes of taxpayers differently.

Mr. LLOYD-GEORGE

The right hon. Gentleman is quite wrong. We could say to the Banks: "It is a convenience for the Government, whichever Government comes in after the General Election, that you should deduct from the dividends, and it is convenient for you, because the money will be collected from you, and not from individuals," but we could not go to individuals, and say, "Unless you pay within three days we shall take proceedings." We could not take proceedings. Were we then to send collectors round from door to-door, and say, "Will you pay your Income Tax? We have no authority to collect it, but we shall be very much obliged if you will pay."

An HON. MEMBER

You did.

Mr. LLOYD-GEORGE

The City of London Commissioners have done it purely on their own authority. It was done voluntarily by the City, and I think it was a very creditable transaction, but it was not done on the initiative of the Government, because we knew perfectly well we could not legally enforce the demand notes. Every step any Chancellor of the Exchequer could take within the powers he possesses I have taken to minimise the confusion; I have encouraged banks to deduct and, the right hon. Gentleman condemns me for it. I have taken steps to deduct from public servants. I think that can be done, because public servants pay their Income- Tax by deduction. Their case is not like that of the ordinary man in receipt of a salary who does not pay by deduction, but pays his own Income Tax direct. The right hon. Gentleman complains that we have taken steps to refund. He started by condemning us for not refunding, and then he condemns us because we are doing it. I appeal to business men on both sides of the House as to whether we are not taking the right course. The banks, I think, in every case have actually deducted the Income Tax, where it could have been collected if a Resolution had been passed through this House, and if it were legalised. They are retaining it in their own hands, and I think, on the whole, they are right; but that is a matter entirely for themselves. Most of them are holding it over in order to see what will be done.

Then comes the individual taxpayer, who says, "You have deducted from my money at the rate of 1s. 2d., but I am not liable for 1s. 2d. I am a man with only £200, £300, or £500, as the case may be, therefore I am not liable for the full 1s. 2d." What are we to do? Are we to say that we must wait until the whole of the machinery has been legalised, and that then we will consider your claim? We have discovered that the banks have deducted the money, and we know perfectly well that the money will be handed over to the present Government or to its successors when the time comes. We have treated that as if it were a payment to the Government, and, so far from injuring these poor people for whom the right hon. Gentleman so pathetically pleaded, we have gone on as though the money had come to our hands and have handed it back. Is not that the right course to adopt? Who is injured? We are protecting the poor people whose money has been held up. The Government is not suffering, except to the extent of those remissions. The right hon. Gentleman asks why there are so few of these people. Really I am surprised at him asking. I could well understand some hon. Member who has had no experience of the Treasury asking, but he knows perfectly well that these remissions begin in April. The examination for claims for refunding always begins in April, and they take an enormous length of time. He complains there are people who have not had their money refunded, but he knows that the process goes on almost to the end of the year, not only this year, but it went on last year, and when the right hon. Gentle- man was the Chancellor of the Exchequer. Why should he complain when we are pursuing exactly the same course as has always been pursued? He must have forgotten what the process was.

I have only one or two more questions to answer. What is the real reason why right hon. and hon. Gentlemen opposite have suddenly become so anxious for the Budget? I should like him to answer me candidly. I have heard a good deal about "being too clever by half" and about the "ingenuity exercised." Would they mind giving me a frank answer? Is it really the financial confusion that is impelling them to this action? Is it not this: that they are under the impression that the moment the Budget is introduced and pressed forward, for political reasons some Members of this House who think it a great weapon against the House of Lords may decline to vote for it? That is their real motive. Their anxiety for the Budget reminds me of what Sir Ernest Shackleton said to me the other day when he was talking about the stupidity of the penguins. He said that if, when they carried their young, one of the little ones fell in the march, all the rest fell on him, and in their anxiety to set him up again dragged the poor little creature to pieces. That is what is happening now. This poor old Budget has fallen in its march, thrown down by a cruel House of Lords, and all the penguins are pecking at it. There is one there (Mr. Austen Chamberlain), and I can see another lying in wait there (Lord Hugh Cecil). Is all this in order to set it up again? Not a bit of it. It is in order to tear it limb from limb. What will become of the financial confusion then? I am proceeding now on their assumption that there are Members who say, "This is such a great weapon that we cannot possibly allow it to go through until the Veto Resolution has been discussed." Oh, yes, this is the assumption which is operating in the right hon. Gentleman's mind. The operative assumption of hon. and right hon. Gentlemen opposite is that if we press the Budget now it may come to grief.

Mr. AUSTEN CHAMBERLAIN

Hear, hear.

7.0 P.M.

Mr. LLOYD-GEORGE

That is it, and all this has been done in the name of saving the finances of the country from confusion. The right hon. Gentleman has admitted that his real motive is to defeat the Budget. If the Budget is defeated, does he really think that in this House of Commons we would allow any alternative Budget such as he and his hon. Friends imagine to be set up? They might appeal to the country. But what would happen to the financial confusion? How long would that last? When would that come to an end? The Dissolution itself would take five weeks. You cannot summon your Parliament for five weeks, even if you summon it for the first possible day. They you get a week for swearing in, and you cannot get at your Budget until the month of May or June. The financial confusion will be going on all that time. I have heard something about engineering confusion, but the hon. and right hon. Gentlemen opposite are the engineers. The right hon. Gentleman the Member for East Worcestershire is the engineer-in-chief. He is not trying to put an end to the financial confusion. He is only jealous. He only wants his own confusion. He does not like the one provided by the House of Lords. He will try his own, and he will thereby make worse confusion than ever. We can get the Budget through long before it will be possible by his method.

A word about the method by which the confusion has arisen. We have to take a very important step in considering that. The right hon. Gentleman need not be afraid; we will not give it consideration. We are willing to risk the life of the Government and the life of this Parliament in putting forward our proposals with regard to the financial year. The right hon. Gentleman talks about our collecting from the poor and not from the rich. Is it not the fact that another House is objecting to the taxes upon the rich? It was not upon tobacco that they threw out the Budget. It was not even upon whisky that the hon. Members from Ulster voted for the House of Lords. It was not the 1s. 2d. Income Tax upon the middle classes which caused the trouble. It was purely the tax upon rich people, and that is why we have had all this difficulty. Will the right hon. Gentleman say where, at the present moment, the taxes on the poor are collected and those on the rich are not? He is one of those primarily responsible for the advice given to the House of Lords. He and his friends are responsible, and they alone are responsible for it, and one part of our duty, a duty which we shall not shirk, will be to make it impossible for that to happen again.

Lord HUGH CECIL

The right hon. Gentleman concluded his speech with ob- servations of a not unfamiliar character, suggesting that the Lords were resisting the Budget because it taxed the rich—

Mr. LLOYD-GEORGE

I simply quoted the right hon. Gentleman opposite.

Mr. AUSTEN CHAMBERLAIN

I cannot allow that to pass. The right hon. Gentleman is imputing to me a great many things, and I think I ought to be allowed an opportunity of contradicting him.

Mr. LLOYD-GEORGE

If the right hon. Gentleman says he did not say that, I accept it at once, but what I gathered he did say was that what we were now doing was to collect the taxes imposed upon the poor, and not to collect the taxes imposed on the rich; that is all that I suggested.

Lord HUGH CECIL

I think the right hon. Gentleman misunderstood me. What I was saying was that he was throwing the blame on the House of Lords by saying that they resisted the Budget because it taxed the rich. As a matter of fact, the taxes that were most severely criticised in another place were precisely those against which the hon. Members from Ireland mainly protested, and those hon. Members certainly represented the poorest part of the United Kingdom.[Mr. DILLON dissented.]Does the hon. Member for East Mayo dispute that an Irish Member opposed the Land Taxes?

Mr. DILLON

We certainly support the Land Taxes.

Lord HUGH CECIL

But the hon. Member for Waterford declared against them. The opposition to them in Ireland was very formidable.

Mr. JOHN REDMOND

The Noble Lord must allow me to say that we obtained certain concessions on the Land Taxes last year, and after that we heartily supported them both in Debate and in the Lobby.

Lord HUGH CECIL

But you did not vote for the Third Beading of the Bill, and there are other hon. Members from Ireland who will bear out the view which I have put forward. Indeed, I may be permitted to express some doubt whether the next General Election in Ireland will not show that the hon. Member for Cork more truly represents Irish opinion.

Mr. JOHN REDMOND

Not at all.

Lord HUGH CECIL

At any rate, there is no sign that the Budget is peculiarly acceptable to the very poor people in Ireland. But the point which we are really discussing is the financial confusion which has arisen, and who is to blame for it? Our ease is this, that the Government have not encountered their confusion in the spirit of statesmen. They have done so rather in the spirit of sulky and mischievous children, who are aggrieved because they are not allowed to have their own way. I do not know whether hon. Members will remember the story of the little boy who sat in a puddle on purpose to spoil his trousers. Evidently the Government are anxious to sit in a puddle and make as much dirt as possible in order to be able to charge the House of Lords with having dirtied their fine clothes. Let it be observed that the right hon. Gentleman does not quite understand the able speech my hon. Friend the Member for East Birmingham made in opening this Debate. The point he made was that for a large part of the taxation the Government have already exercised their discretionary power. They have refunded in certain cases, and in others they have incited the banks to deduct the taxation. But they have not the courage to consult the interests of the public service and bring the money into the Treasury, and, consequently, there is injustice as between taxpayer and taxpayer, there is loss to the Exchequer, and there is general financial confusion, and the Government would not have been justified in that, according to their own or anyone else's professions, except that it is a moral certainty that these taxes will, sooner or later, be sanctioned by Parliament. There is, however, a formal obstacle in the way, and by a measure of extraordinary perversity in financial administrations, they have refused to remove this formal obstacle. We know in reality that the tax will be levied in the end. It may be there will be a considerable loss, but, eventually, the taxation will be gathered from the taxpayer. The formal obstacle prevents it being done regularly, and the Government will not take the trouble to remove it. They say that the House of Lords is to blame. Could there be a more grotesque contention? The right hon. Gentleman asks: What could we have done, seeing the House of Lords rejected our Bill? My answer is that they could have made temporary arrangements to carry on the financial business of the country. No one asks them to accept from the House of Lords any tax which this House has not already passed. No one asks them to make any permanent arrangement whatever for the taxation of the year. No one suggests that they should depart from the precedent of 1861. which established the principle that the provision for the taxation of the year should be made in that one year. We suggest a temporary Bill, merely doing what all the world recognises is convenient, and what both parties desire to see carried out—we suggest that a temporary Bill might have been passed at the end of last Parliament, and then the whole difficulty would have been avoided. How would such action have jeopardised their case against the House of Lords? How would it have altered the constitutional issue by one iota? It is an empty pretence. They wanted a cry against the House of Lords. They worked themselves into a passion, and, having done that, they did all the perverse and unreasonable things they could in order to make the country either sympathise or suffer. Then they complain that the Opposition did not draw their attention to this matter. Surely it is the strangest possible conception that it is the duty of an Opposition to foresee administrative difficulties. But, as a matter of fact, the Chancellor of the Exchequer has done an injustice to my right hon. Friend the Member for East Worcestershire, because on 21st February my right hon. Friend drew attention to this very matter of the Income Tax, and asked was he going to pass a Resolution as early as he could, and thereupon begin the collection of the Income Tax, or would he withhold that collection until perhaps after the close of the financial year? Therefore the Opposition did, in fact, call the attention of the Government to the matter at the opening of the Session. May I say it would have been quite easy to give a whole week to the business of Ways and Means? The Government may tell us they have taken the whole time of the House. How have they spent that time? They spent a good deal of it on the Temporary Borrowing Powers Bill, which would not have been necessary had they made better financial arrangements.

Mr. LLOYD-GEORGE

The Noble Lord is quite wrong. Even if we had passed our Income Tax Resolutions on the very first day of the Session a Temporary Borrowing Powers Bill would still have been necessary.

Lord HUGH CECIL

But it would not have taken up any time. The right hon. Gentleman knows we took the opportunity of that Bill to criticise the financial policy of the Government. Then in addition to that there are three days in March which the Government will be using for the Veto Resolutions, and one day—Thursday— which they are not going to use at all. Then there were several half days which were wasted on Supplementary Estimates. These make more than a week, which could have been devoted to Ways and Means, and the Government could have carried through any temporary arrangement, indeed they might have got their Budget practically through in that time. But the Government would not bring forward the Budget because it might have been unacceptable to a majority of the House. Surely they cannot have it both ways. Our plan would have been to carry a temporary Bill adjusting the finances, and that would have been perfectly in accordance with the best traditions of national finance. But they would not have that? They pretended it would weaken their case against the House of Lords. They can give no authority for that. You cannot refuse to pass part of your financial proposals. Something you must do. The right hon. Gentleman has the assurance to look forward to future confusion. I quite agree that if the majority of this House are always going to behave as the majority is behaving, there never will be an end to the financial confusion, because it is obvious that difficulties arise just as much when the House of Commons rejects a Budget as when the House of Lords rejects one. You cannot conduct the Government of this country on the basis that the majority of this House is going to act in a spirit of partisan self will. If the principle is going to be that a large party in the House of Commons are going to use their influence only to pursue their party objects at whatever cost to the national finances, then certainly we shall have a series of confusions until the country entrusts their confidence in a better direction. The right hon. Gentleman contends that you must regard Irish opinion in these matters, while it is obvious that Irish opinion on the question of the House of Lords is confessedly directed to the question of Home Rule. The hon. Member for Waterford (Mr. John Redmond) has repeatedly said that he regards j the policy of the veto as tantamount to Home Rule, but he can hardly expect that to carry weight with those who are convinced that the vast majority of the electors are against Home Rule.

Mr. SPEAKER

I think the Noble Lord is travelling rather wide of the question before the House.

Lord HUGH CECIL

I was misled by the Chancellor of Exchequer. I thought he was out of order, and I wondered you did not call him to order, but I will not pursue the matter further. In the case of the Budget, or in the case of national finance, I quite agree with the proposition of the right hon. Gentleman that all Members of the House of Commons are entitled to have their voice heard, but what is so strange is that the Government will not give an opportunity to the House of Commons of making its voice heard. There is evident reluctance at all events to hasten the day when this final judgment shall be given, and this confusion which has arisen over Ways and Means, we are now threatened shall be repeated over Supply. The Government are not satisfied with one set of financial confusions in this House, and they are already planning to produce another in the month of May over Supply. I am sorry the Prime Minister is not in his place, but it is really so very remarkable that he should now solemnly assert as he did down at Oxford, that the proper weapon of the House, of Commons is to control Supply and to go on withholding it, and that, measures have been taken to keep that weapon ready. That he should make that statement for the first time when it is perfectly plain that the Government never thought of using it until a comparatively recent period is, I think, strange. I remember the second night of the Session, when the Home Secretary got up, and the Prime Minister sat by on that bench looking like the proud father who was seeing the good child's performance, and feeling on the whole how much less anxiety the right hon. Gentleman the Home Secretary gave him than that other child the Chancellor of the Exchequer. The Home Secretary said it was foolish and revolutionary to withhold Supply, and that it was an obsolete weapon; but now the Government, having never meditated upon it, suddenly turn round and discover that they can control the Executive in the month of May by withholding Supply. Nobody supposes that the Government really will withhold Supply in the month of May; but it is too much the practice of this Government to threaten to do something revolutionary in the future and then not carry out their threats. We have had it all before at the Albert Hall. They are always going to do something violent the day after to-morrow. I suppose hon. Members opposite like to be soothed by these assurances, but I protest very energetically against their adopting so grave a step as altering the customs of this House in regard to Supply in order that they may satisfy the criticism of their own side or that from the Irish Benches. It is not fitting that there should be this menace of such a thing if the Government are not prepared to act up to their word. Merely to make the voting of Supplies part of the mechanism of their practice, part of the way in which they satisfy this critic or another is not a seemly proceeding. I do not know whether hon. Gentlemen opposite will think it is a proper course, that if once more they are disappointed in their hopes of receiving assurances they want, they will have these votes to assert their independence upon. So far as their independence is concerned it has rather looked like the independence of a little dog which runs about, but always comes to heel. That is the position of the Labour party. But I am satisfied that the country at large. whatever may be the feeling of that party, are getting tired of a policy of mingled braggadocio and vacillation. They are sick of hearing threats which are not carried out. It is time that the Government addressed themselves to the business of the country. It is time that they preferred national objects to party objects. It is time that we who are accustomed in this country to see the King's Government carried on by the King's Ministers in the interests of the King's people should declare that the methods of thwarted wirepullers are not fitting for the Ministers of the Crown.