FINANCE BILL.

HC Deb 09 August 1911 vol 29 cc1151-225

Order for the Second Beading read.

Motion made and Question proposed, "That the Bill be now read a Second time."

Mr. AUSTEN CHAMBERLAIN

This Bill does not open much novel matter, and my criticisms will be directed more to what it has not done than to what it has done. The first remarkable fact about it is that the Government should not have thought it worth while to ask the House of Commons to read their Finance Bill a second time until nearly the middle of August, and on the verge of an Adjournment. I venture to say the utter disregard which the Government have shown of all precedent in this respect proves, if any further proof were needed, how absolutely in recent times they have made finances subservient to party ends, and have neglected the old and better traditions of the House. I will only say further on that subject that I desire to represent to the Chancellor of the Exchequer, in the strongest terms the feelings of my friends on this side, that it is impossible that the Government, having delayed the Second Heading so long, and put it off to this day, should ask us to hurry through the Committee stage, where several important questions may and must arise in the very short time which remains un allotted before the close of this portion of the Session The Bill itself does not contain much, but in the course of the few observations I wish to make to the House I shall, I think, show the Chancellor of the Exchequer there are questions not included in his Bill which will form the proper subject of Amendments to it, and which we think urgently require attention and alteration of the law. The Committee stage would be the proper opportunity for us to make those Amendments. I hope, therefore, as he has shown he can govern as well without the Budget as with it, as he has shown that the whole cry against the House of Lords for postponing the passage of the Budget was the hollowest of party cries, and merely a weapon in a political game, as he has shown it is a matter of perfect indifference whether the taxes are collected under the Budget or under the Resolutions, he will at least give us proper time on a proper occasion to discuss the final stages of this Bill.

The Second Reading of the Finance Bill does give us an opportunity to consider for a moment our general financial posi- tion, the state of our expenditure, the state of our revenue, and the state of our national credit. I do not think anyone can view the condition of those various factors of national well-being without feelings of some gravity. When the Government first came into office, they had by the mouths of their leaders held out to the country expectations of a reduction of expenditure and of great and widespread reductions of taxation. Not only are we keeping nearly every tax at a high figure, not only is the Income Tax now permanently or semipermanently placed at a figure which a short time ago would have shocked the predecessors of the right hon. Gentleman from whichever party they had been chosen, not only are we raising a revenue more than double that at which Mr. Gladstone even in my memory stood aghast, but every penny of the revenue that we are raising is pledged for our immediate necessities and every penny of expansion that in sanguine moments the Chancellor of the Exchequer anticipates—with greater or less accracy I do not anticipate to say—he may get in the future from these same taxes or from additional prosperity in the country is also pledged to meet the liabilities which we are now creating, and nothing is left over out of the taxation which we are now levying—vast as that is and heavy as the increases are which have been made to it by the present Government—for unforeseen contingencies, whilst the resources upon which the nation would be able to draw in cases of international complications are, of course, steadily reduced by the policy which he has followed. The right hon. Gentleman, before he was Chancellor of the Exchequer, held wiser views upon this subject than now. As a general rule, the progress of Gentlemen who have had the honour to reach that post is in the opposite direction. They make very extravagant utterances or very extravagant proposals when they sit in all freedom on Back Benches, and when they arrive at his office they begin to talk seriously about the liabilities of the State, and the responsibility anyone would incur who increased them, but my attention was directed to a speech the right hon. Gentleman made in 1904.

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

Was it after an all-night sitting?

Mr. AUSTEN CHAMBERLAIN

It was when the Debate on the Budget was resumed. I am quite confident—for I have seen him often—the Chancellor of the Exchequer is quite as able to say what he means after an all-night's sitting as at any other time. I think I ought to say, to be quite frank, that he was especially attacking the practice of borrowing for naval and military works; but his observations were much wider, and went much further afield than that.

Mr. LOUGH

The Government has stopped the practice.

Mr. AUSTEN CHAMBERLAIN

The right hon. Gentleman the Member for West Islington, says the Government has stopped it. They have stopped incurring fresh liabilities on that head, but they did not stop borrowing. They eased their conscience, and continued to borrow for some time. Observe, though they stop borrowing for military and naval works for the defence of the country which they are enabled to do because those works were in the main brought up to date by this very system of naval and military loans by their predecessors, they have continued to borrow under exactly the same system for other purposes not more important to the nation than its naval or military defence. For my part, I have never been able to understand the policy of a Government which could borrow to house the President of the Local Government Board and its clerks, but thought it was sinful to borrow for the defence of the Empire, which could borrow to carry out a telephone extension, but would not borrow to house the soldiers or sailors in our service properly. That is a nice financial distinction for which I can find no basis in common sense, and for which, therefore, I do not think the Government can take any credit. I was not going to quote the observations of the Chancellor of the Exchequer on that. I was going to quote them on the question of our financial reserve. What did he say? He said, in concluding his observations:— After all, the great strength of the country was its great financial reserve. It was so in the Napoleonic wars. "We fought and won, not with lead, but with gold. That is a statement which, incidentally, I again say is a very partial statement of the truth.

France was beaten by exhaustion after its long struggle against a large part of Europe. But it was not so much financial exhaustion that beat France as the exhaustion of her population in the constant deadly campaigns which she was waging. Let me continue the words of the Chancellor of the Exchequer. He went on to say:— We fought and won, not with lead but with gold "We ought to carefully safeguard the same reserve and see that we were in a good financial position, so that if an hour of trial came Britain might give the same good account of herself as in the past. We were squandering her reserve, and the Chancellor of the Exchequer, who declined to face, the situation courageously, was not one taking a patriotic view of his duty to the country. I am afraid that the Chancellor of the Exchequer's courage has oozed out since he came to occupy that office. What is the great financial reserve of the country? What has it always been for the immediate necessities of such a crisis as he pointed out? In the first place, it was a large Sinking Fund used in times of peace and prosperity to lighten our national obligations, and capable of being suspended at the outbreak of war, so as to give at once millions of money in hand out of your existing revenue towards the expense of that war. And the second reserve was the power in such a case at once to raise the Income Tax from a low figure to a high figure. Now the Chancellor of the Exchequer keeps the Income Tax at that high figure, and he has put the Sinking Fund at a low figure. He has diminished the reserve for war at both ends. He is not playing that part of the courageous Chancellor of the Exchequer whom seven years ago he painted in the passage I have read to the House. It is not only that our immediate reserves are diminished by the course the Government employs, but by the spirit of their legislation, by the tone of their speeches, as well as by the high rate of their taxation and of their expenditure they have caused a feeling of unrest and distrust which has adversely affected the credit of this country.

I have heard the Chancellor of the Exchequer reply to this charge on more than one occasion, and I do not think that the reply which he makes is satisfactory. He sometimes, in dealing with the fall in Government securities, lays great stress on a measure which was carried by the Government to which we belonged and which largely widened the area of trustee securities. No doubt that had a great effect, it was bound to have a large effect. But that does not account and cannot be made to account for the phenomena we have before us. It affected other stocks besides Government stocks, and if that was the only thing which was causing the depreciation of Government stocks, other stocks which were affected, such as municipal securities, ought to have suffered and to continue to be suffering to the same extent as Government stocks themselves. But that is not the case. It is those stocks which are most directly affected by Government action, or by suspicion of what the Government action may be, that show the worst results. It is therefore, I think, a fair influence that Government action and Government speeches are not without effect on that result. There is another answer the Chancellor of the Exchequer gives—the usual and generally extremely unsatisfactory one of the tu quoque. He says that Consols fell in the time of the Unionist Government from 114, or very nearly 114—the highest price they had ever reached—to, I think——

Mr. LLOYD GEORGE

Ninety.

Mr. AUSTEN CHAMBERLAIN

I ought to have provided myself with the exact figure, but I will take the one which the right hon. Gentleman suggests to me. I have not had time to get the exact figures in fact. But my argument will not be affected if I do put the price at the latter date too low. It is, however, suggested that Consols fell in our time from 114 to ninety. Has the fall been as great or greater since? Does the Chancellor of the Exchequer really think, or do those who use that argument think, that it meets our case at all? During the time the Unionist Government was in office they had to wage a great war and to borrow on a large scale, and, of course, such proceedings as that were bound to have a depressing effect on the market for Government securities, not only at the time it was done, but I think it was reasonable to expect that they would continue to have that effect, and have it even a little stronger, when the war was over. During the war the patriotism of the country was stirred and working in the City through financial houses and others it tended to keep off the full effects of the depression, which only declared itself after peace had been announced, and when in the relaxation of the strain there came a reaction from the efforts that had been made during the war. You may blame the Government for making the war. You may say that the war ought never to have taken place. But that is not the question I want to discuss now, nor is it a question that we can here discuss. It is beside the point. It is sufficient for me to say that it had the full approval of the House at that time, that it was regarded as inevitable, and that the proposals made by the British Government in the hope of averting it were regarded as moderate and just by the cherished Ministers of the party opposite—by the Prime Minister, by Lord Morley—who declared that the last proposal put forward by the British Government was a very moderate proposal—and by other leaders. I do not, however, want to return to that old controversy. I am not ashamed of the part we played at that time. We did our duty, and I do not think we could have done less. I do not want to reopen the controversy. I only say that if the war and the necessity fox borrowing depressed the price of Government securities, the lower we had to depress them the more one might have expected them to-rise. The inference to be drawn from the fact that they had fallen under us from the inflated price—for it was a perfectly inflated and artificial price when they touched 114, even allowing for the additional interest payable—the very fact that they had fallen from that inflated price that was a reason to anticipate that with wise statesmanship, prudent finance, and a Government and Ministry that was trusted there would be a recovery and not a further fall. Whenever there has been a recovery, even momentary, the Chancellor of the Exchequer rapidly claims it as the result of his own effort. I remember after his great Budget was introduced there was a little rise in Consols. We suspected at the time, and we have since learnt, that it was caused by the Government sending their own broker into the market to buy. We got it from the Chancellor of the Exchequer months afterwards, and yet he was not ashamed to quote that rise as showing the confidence of the money market in his Budget, and that it could have no bad results. Hon. Gentlemen opposite will not attach importance to what I say, speaking-after the event and with the experience which has since come to us, but may I refer them to some observations of the Prime Minister, who was, at the time he made them, Chancellor of the Exchequer. This was a speech on 10th July, 1907, reported in "The Times" of the following day. The right hon. Gentleman was attending a great function in connection with a very large insurance company. He said: He did not know if that insurance company were engaged in the gloomy proceeding of writing down, a practice which he thought was very much to be deprecated unless taken at comparatively long intervals and with full consideration, not only of the past and the present, but of all the probabilities and prospects of the future. A great deal of nonsense had been talked and still more nonsense had been written in the course of the last twelve months on the supposed depreciation of our national credit.… He thought, and he spoke with some knowledge of the case, that they might fairly consider that in this matter we had touched bottom, and that the upward process had begun, although it was far from him to predict the number of curves and gyrations which might take place, but there were distinct signs that the upward movement was in progress and was likely to continue. I wonder whether the Prime Minister would like to repeat to-day that advice to insurance companies or banks, not to write down their investments. They are usually gilt-edged investments of the highest class; they have depreciated notably in the years since the Prime Minister spoke and the consequences of that depreciation are only too patent in the news that we have read of great commercial catastrophes and changes. I did not blame the Chancellor of the Exchequer or the Government when, having to raise a vast new revenue two years ago, they took part of the money that they needed by reducing the Sinking Fund. But in the light of what has! followed, in view of the price of Consols to-day—even when the Prime Minister said they had touched bottom, they were 84⅛—it is of primary importance to-day that we should have an effective Sinking Fund—a large Sinking Fund—and that it should be brought effectively to bear upon Consols and for the maintenance of the Government credit. Whilst the Chancellor of the Exchequer may have been right to reduce the Sinking Fund two years ago, he is not right, having regard to all the circumstances which has since occurred, in spending every penny of revenue he receives up to the hilt without making any further provision for the reduction of debt, and not only using the present receipt of the taxes but mortgaging any future increase of yield which may come.

I want to turn to one matter which is included in the Bill. The only alteration in taxation of importance, in the sense of being detrimental to those whom it affects, or some of them, is part of the change which the Chancellor of the Exchequer proposes in the cocoa duty. The grant of a rebate on export of cocoa is a mere act of justice which I think the traders were entitled to have at any time they chose to ask for it, but the withdrawal of the protection—it is frankly protection—which in varying proportions according to the nature of their trade they have received is fiscally pure pedantry and politically pure expediency to ease the party situation of embarrassed Free Trade orators. For the sake of doing that the Government are going to throw into confusion at any rate a portion of the trade, and whatever happens and whoever gains by the proposal which the Chancellor of the Exchequer makes, it is not going to be the consumer. He cannot. Of the duty that is remitted, the middle man may get the advantage because it is an amount which you can express in figures applicable to the size of the purchases which he makes. But the reduction is not capable of being expressed in any figure applicable to the size of the purchase of the ordinary consumer. The consumers have nothing to gain. The trade and the workpeople have much to lose, and they are being sacrificed not for the benefit of the consumers, but in order to servo the political and party convenience of hon. Gentlemen opposite. It is only one more instance of the way in which, throughout our recent controversies, finance in the hands of the present Government has never been treated on its own merits but has always been used to forward the party gain.

4.0 P.M.

What is even more important than what is in the Budget is what is left out of it. The Chancellor of the Exchequer has now seen his great Budget, over which we contended so long and so vigorously, at work. He is, or ought to be, able to form, if his other occupations leave him any time to attend to what are, after all, the primary duties of his office, some judgment on its working, and granting that it is to remain, upon the Statute Book substantially unaltered, which, of course) I take to be his view and the only view on which I can approach it at the present time, I say it is high time that he should consider the undoubted hardships and grievances which the working of these taxes is inflicting, and should seek remedies for them not inconsistent with the principles of his Bill or the maintenance of his taxes, but such as will relieve men from the injustice which, when it is brought to his notice, ho cannot defend. I take the case of the scale of minimum duties. How long is it going to be before the right hon. Gentlemen puts the Licence Duties on some reasonable basis. He does not pretend that the present basis is permanent. His argument was that it was tentative, and I do not think any portion of the Finance Act has worked more harshly, or, let me say, more absurdly than the minimum taxes. Take the illustration we had before us the other night when a Provisional Order Bill was under discussion. Is it not intolerable that a man's taxes are to be settled not by a public and general Act of Parliament, but by a Private Bill, and that because the Corporation of some city or borough desires, for some very good reasons, to extend its boundaries, therefore every publican's licence or nearly every publican's licence within the city or borough is to be varied and increased to the extent of 50 per cent. or 100 per cent., or even more than 100 per cent. Can anybody defend such an absurdity as that? Take the Cambridge case, which we had the other day. If the duties which will now be levied on the Cambridge publicans are just they ought to have been levied by the general law of the realm, and not by the provisions of a Private Bill promoted by the Cambridge Corporation, with the different object of preventing a particular event happening, if they could do it. If it was not right that they should pay before, it cannot be right that they should pay now. The same thing applies exactly to the added areas outside. The Chancellor of the Exchequer concedes this to the extent of a very small alteration which he proposes to make in the Budget to deal with houses included in the borough boundary, but which are entirely separate, and in a purely rural district. That is quite an inadequate tinkering with what is a vicious principle. The minimum duty as applied by the Chancellor of the Exchequer—that is to say, the minimum duty, which is on a considerable scale is no fit way to treat this subject. It must work out with harshness in individual cases, and it does not even bring proportionate advantage to the revenue. The Chancellor of the Exchequer has all the disadvantage of being regarded as grossly oppressive without the advantage which oppressors of the people usually expect in return in the way of getting a very large revenue from their oppression. That is one thing which, in my opinion, this Budget ought to deal with and does not.

There is another matter to which I wish to refer. There was a pledge given by the Chancellor of the Exchequer to which I wish to call his special attention. When the great Budget was under discussion he had in it a provision abrogating the rule that purely agricultural estates were not to be assessed for Death Duties at above twenty-five years' purchase of their annual value. That is to say, the Chancellor of the Exchequer in his Budget made provision for abrogating that which was the old rule. He put it to us that he only wanted to deal with certain cases which we ourselves would not wish to defend as cases for exemption. He said that there are estates which are clearly worth thirty years' purchase, and that there is no reason why a man who is in the fortunate possession of better land with greater advantages should have a special exemption made on his behalf which is not allowed to other people. What we were very anxious about was what was covered by the Clause which was inserted. Many of my hon. Friends were afraid of what would happen. I was greatly reassured by a statement of the Chancellor of the Exchequer, and I was too much reassured unfortunately. I am not charging the right hon. Gentleman with any breach of faith, because now that I bring this to his notice I am confident he will alter it. I say that the Chancellor of the Exchequer was mistaken as to the facts, and we asked him to alter the Clause in order to prevent that arising which he said would not arise. My hon. Friends were afraid that there was going to be an alteration in the method of the valuation of agricultural property, and I asked the Chancellor of the Exchequer this question:— What I want the right hon. Gentleman to tell me is whether I am right in gathering from what he has said, that the only effect of the change he proposes is to remove this arbitrary bar, and that there will be no change in the method or character of the valuation? The Chancellor of the Exchequer rose immediately and said:— I have no difficulty at all in giving that assurance to the right hon. Gentleman. If he will compare the operative words of the Act of 1894 with the operative words of my Clause, he will see that they are exactly the same."—[OFFICIAL REPORT, 14th September. 1909, col. 2113.] Later, in answer to the hon. Member for the Tewkesbury Division of Gloucestershire (Mr. Hicks Beach) the right hon. Gentleman said:— There is no change in the fundamental basis of valuation. The only difference is that with regard to the limitation of twenty-five years."—[OFFICIAL REPORT. 14th September, 1909, col. 2114.] The point which I raise is this. If the Chancellor of the Exchequer will inquire at Somerset House I am confident he will find that there has been a complete change in the method of valuation, and that the effect of it is specially to adversely affect cottage property. Cottage property on agricultural estates is no longer valued as it used to be It is let for the purpose of the proper cultivation of the estate; but it is valued as if it were being let to the highest bidder—perhaps one of those people who take cottages and make fancy dwellings of them, or as if a speculator had come in. This is a very serious matter. I think it is a serious matter for the land, and it is an even more serious matter for the working classes of the country. All of us would like to do something to improve the housing conditions in the rural districts, but this provision, as worked by the inland revenue, is a direct deterrent to the building of cottages, while at the same time it penalises the landowner. I ask the Chancellor of the Exchequer to give his serious consideration to this matter. I think he will find that the action which Somerset House officials do feel bound to take under the provision in the Bill is directly contrary alike to his assurances and his intentions. I hope he will undertake to deal with this matter, or to favourably consider Amendments moved from this side of the House when we come to the Committee stage of the Bill.

There is another matter of which the House in one sense is very tired, and yet it is one of which it is likely, unless the Government take some further steps, to hear a great deal more. I refer to the valuations of site values for the purpose of Increment Duty under the Budget of 1909-10. We had a controversy not long ago on this subject in the absence of the Chancellor of the Exchequer, and when his representative, the Financial Secretary to the Treasury, was present. We gave notice that we were going to raise one or two particular cases so that the Government might be prepared with an answer. The first case was that of the two ladies at Richmond, in Yorkshire. The interest attaching to their case was that it was illustrative of what we are convinced has happened, and is happening now every day in the country, namely, people passing valuations which are inaccurate because they do not understand the effect which they may have, and how their future position may be damnified by them in respect of taxation being unjustly increased. We specially complained of that. The two ladies, I think, are of the most moderate means, and their whole annual income was to be swallowed up in the payment of Increment Duty, which there was good reason for saying did not occur except in the mind of an imaginative valuer. We specially complained that these ladies had been refused a slight extension of time to state their grievance on appeal, so that they might present their whole case to the court. I am glad to say that I understand since we brought that case be- fore the House of Commons an extension of time has been granted by, I have no doubt, the desire and the direction of the Treasury; and that these ladies will have an opportunity of bringing their whole case before the court. I certainly do not intend to say a word on the merits of the case under the circumstances, but I do want to say something about the action of the Inland Revenue. That was a case where common justice demanded that the Inland Revenue should use the discretion specially given to them by Act of Parliament to enable these ladies to get a fair hearing of their case, but not until we raised this case—which is in itself quite a trifling one—in this House, and not until after the Debate here had exposed the injustice and hardship which would be inflicted, did the Inland Revenue allow this extension of time. I call that harsh and unconscionable action, and a denial of justice would have been perpetrated by the Inland Revenue if it had not been for the intervention of the Government as the result of the Debate in this House. I call upon the Chancellor of the Exchequer to take such steps as will prevent the denial of justice in the future by what is a semi-independent, but at the same time in this essential a department of the office which he holds.

I now come to another case which we brought to the notice of the House on the authority of Mr. Holmes Ivory. The representative of the Government, the Financial Secretary to the Treasury, on that occasion had had put into his hands an explanation of the discrepancy. The House will remember, perhaps, what that case was. The allegation was that a property which had been valued for site value at a little over £20,600 was raised by the same valuer to £45,000. The careful valuation made on behalf of the Government as the basis of collecting taxes was £25,000 wrong, and £5,000 duty which was not by law exigible from the taxpayer, would have been charged because of that valuer's mistake, because, to use no other word, of his incompetence had not the taxpayer been rich enough to employ skilled advice to re-do the work which the valuer ought to have done, and to correct the mistake which the valuer ought not to have made. The Financial Secretary to the Treasury had put into his hands a defence of that case. The charge being known before the Debate, he had had the opportunity of referring to the Department and to the valuer concerned. The defence was that between the first valuation and the second there had been brought into the unit to be valued a new area which not only increased the value of the whole by that added portion, but wholly altered the character of the original valuation. There is not one word of truth in the statement with which the Financial Secretary was supplied. The area which the valuer was called upon to value was the same in both cases. He had the correct figures before him. They were sent to him by Mr. Holmes Ivory in the original form, and the only basis for saying that anything was brought in is that the valuer now alleges that some clerk in his office copied the figures wrongly. I suppose he did not go and view the site, and see if it corresponded with the figures given. But on the incorrect copy of Mr. Holmes Ivory's return the valuer undertook to say what the value of the property was. The man who has the greatest right to complain in this case is the Financial Secretary to the Treasury. He applied to his officials for an account of the case. He had given them notice of it. Did they tell him these facts? I am bound to suppose that they did not, or he could not have made the answer he did make to the House.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)

I can assure the right hon. Gentleman that the facts given to the House were as they were supplied to me. But on the statement now being made I will make further inquiry. It may be that the right hon. Gentleman is correct. If so, then I was misinformed.

Mr. AUSTEN CHAMBERLAIN

I hope I made it perfectly clear that I did not make any personal charge against the right hon. Gentleman.

Mr. HOBHOUSE

Certainly.

Mr. AUSTEN CHAMBERLAIN

Nobody in my position likes to attack a Civil servant, but in this case I have no option but to place the responsibility upon the Civil servant. The right hon. Gentleman, when we asked him supplementary questions, said he could only act on the information with which he had been supplied. It is perfectly true that the right hon. Gentleman was supplied with misleading information to cover up a gross fault, and I think that such conduct requires notice on the part of the superiors of the people who are concerned. I will read the Chan- cellor of the Exchequer's portion of a letter which I have received from Mr. Holmes Ivory. He is the Writer to the Signet, the person who originally brought this case forward. He is a man of high standing in his profession and well-known in the public life of Edinburgh and of Scotland. He refers to what I said in the previous Debate and he says:— You are absolutely correct, I added no new territory. I stated the property to be ti655 square yards when the provisional valuation was made. The statement was of course in writing and speaks for itself. The valuer, in his amended valuation, states the site at 655 square yards—my figure. A mistake of sixty-nine square yards was made by a clerical error of the valuer's own clerk, but I have nothing to do with this. I think the whole proceeding is not very creditable to the valuer or the Valuation Office up to this point, but if the error of the clerk was really to determine in fact the valuer's valuation and the error that he made, of course that error would reflect itself not merely in the site value but in the total value of the site and buildings as well, and would bear some sort of proportion to the difference between the site value of the larger acreage and the lesser acreage and the total value of the lesser and the larger acreage with the buildings on it; but the provisional valuation, which the valuer, I understand, now says is due to a clerk's mistake, of the site and the buildings together is £58,780, while the amended valuation, when he had discovered the clerk's mistake, which he led the Financial Secretary and through him the House of Commons to believe was the explanation of the mistake, was £62,244, or a difference of £3,464 due to the clerk's mistake in the total valuation against a difference of £25,000, which this man has the impudence to state is due to the same mistake, in the site valuation.

I call that the grossest scandal in the administration of the law as it affects the property of the taxpayers. I say that the Government are employing incompetent men to do their work, and I repeat the claim now, which I pressed upon the Government the other day, that we should have an impartial inquiry into the work of the hundreds of agents whom they have got together in a hurry, after receiving refusals from many of the most competent men because they would not undertake work of this kind under these conditions. I demand again, in the interests of justice and fair dealing, that we should have an inquiry into the work of these persons by some competent and impartial Committee. I do not suggest a Committee of this House; I prefer not to have that; but a small, impartial tribunal, which would find out whether these are rare exceptions due to the misfeasance or mistakes of particular officers, or whether, as we believe, they are commonly going on throughout the country. I venture to say these things because, whilst wealthy men, who can get good advice, may be able to protect themselves against robbery and fraud under the name of valuation, poor people are going to suffer cruelly, because they cannot afford to expend on their little property the same amount of money on law charges or land agents' advice, unless the Chancellor of the Exchequer can do two things: first of all, agree that a man shall have the right of appeal against the original valuation, at the time when taxes are first attempted to be levied on him, and when he first really knows what that valuation means; and equally, unless he will take steps by public inquiry to purify the service and secure that only efficient and careful men shall be employed on it, and that these scandals will not occur. Otherwise this tax will break down, not on its merits, but because of the inherent in competency or carelessness of the men employed to work its machinery, and because of the injustice which that machinery will bring home to hundreds and thousands of poor people in the country.

Mr. LLOYD GEORGE

I think I had better deal at once with the subject which the right hon. Gentleman alluded to in the latter part of his speech. I agree with him that unless a great valuation of this kind is conducted on a principle and in a manner which will command the general confidence of the Committee, it must inevitably break down; and I will not say that I am as much concerned as he, but that I am more concerned than he, that this valuation should be absolutely free from any suggestion of unfairness or partiality, and certainly from any taint of the kind of scandal which he imputes to the last case to which he referred. With regard to this particular case, all I can say is that up to yesterday the gentleman concerned still adhered to the statement which he made. The last time that the matter was debated in the House, I intimated to the Noble Lord, the Chief Whip, that if the Vote were put down on that date I would be unable to attend to it. But the right hon. Gentleman preferred having a Debate on that date, and my right hon. Friend the Financial Secretary——

Mr. AUSTEN CHAMBERLAIN

I hope that the right hon. Gentleman does not think that it was because of his absence on that occasion.

Mr. LLOYD GEORGE

No, but I hear these facts for the first time now as stated by the right hon. Gentleman. I agree that it is a case for an inquiry. All I can say is that on such inquiry as I have been able to make now, our official adheres to the statement which he has made. But when a charge of this kind is brought by the right hon. Gentleman in this House, it is evidently a case where there should be most careful inquiry, and, after all, the proper official to make that inquiry is the Member of the Government who is responsible to the House of Commons for the action of these officials in the first instance. It is my responsibility to institute this inquiry, and I shall certainly do so. In the meantime it would not be fair to this officer to express any opinion at all, because we must hear his side of the case, and the matter is one which may involve in this case something which is very serious to his career. The right hon. Gentleman has been responsible for the administration of this office just as long as I have been, and he would do exactly what I am doing. He would see that the official of the Government gets absolutely fair play in stating his case. All I can promise at the present moment is that there shall be a very careful inquiry into the whole of the circumstances, and that justice shall be done.

Mr. AUSTEN CHAMBERLAIN

Will both sides be heard?

Mr. LLOYD GEORGE

Certainly. I will give every opportunity, of course, to both sides to be represented, but I should like to make this general comment upon these cases. The policy of valuation is something which has been settled by the House of Commons. It was settled by the House of Commons after a great many Debates, in which it formed the subject matter of contention. It was decided that there should be such a valuation. In fact, the valuation was even more in the forefront than the taxes themselves. We decided upon the valuation, which is not a very easy thing to carry out. It is full of difficulties. We had to organise a great staff—a new staff for the purpose. I think it will pass the wit of man to conduct a huge operation involving the assessment and valuation of hundreds and thousands of hereditaments in the course of five years without some mistakes being made. It would be quite impossible to avoid mistakes being made, and it would be quite impossible in the choice of a staff to avoid mistakes even there. In choosing hundreds of men, for the first time, to supervise and exercise the functions of this new organisation, it was impossible to avoid choosing one or two men capable of making mistakes. All I can say is this. We have made valuations involving eight hundred thousand premises up to the present, and I think it is a very remarkable fact that, having done that, we have had very few cases of complaint.

There is an organisation whose special function is to scrutinise the action of the Department in no sympathetic spirit. The hon. and gallant Gentleman has, with extraordinary ability and with amazing industry, devoted himself during the last two or three years to the task of criticising these taxes and their administration. He has got his representatives in every part of the country, and I have not the faintest doubt that if there was any approach to a miscarriage of justice it would be reported next morning in the offices of the Union. I have no doubt the hon. and gallant Gentleman would hear of it before breakfast—if anything had gone wrong in any part of the country. He has picked the choicest specimens, and there can be nothing worse, else I would have heard of it. We have dealt with eight hundred thousand cases, and I am really surprised that with a new organisation like this there have been so far so few cases of miscarriage of justice.

Mr. AUSTEN CHAMBERLAIN

It is a serious matter. The right hon. Gentleman can have no knowledge except by testing individual cases how many valuations are at fault. Take the case of the Yorkshire ladies. Nobody knew anything about it until it came to paying the tax. Up to that time the ladies were well satisfied because they believed it had nothing to do with them. They were well satisfied because it was a low valuation.

Mr. LLOYD GEORGE

There are in this country the owners of millions of hereditaments who have had professional assistance of the first order to check everything. Unless the right hon. Gentleman is prepared to make this charge against the officials, that they deliberately discriminated between these cases and the cases of those who have no protector. Of course he would not. But what I want to point out is this; There are hundreds of thousands of cases in which the people concerned have got land agents, solicitors, and surveyors, who are there to check the valuations. The hon. and gallant Gentleman may depend upon it there are not many cases of that kind in which there have been gross miscarriages of justice. In the main, the land valuation has been well put through.

I have met the principal men and I have no hesitation in saying they are a very able body of men. If the right hon. Gentleman tells me they are not, and if he has any indication they are not up to their work, it is to my interest to examine the matter and find substitutes up to the mark. But certainly that is not my impression. It is not the result of inquiries I have made. Such land owners as I have had the privilege of conversing with speak in the highest possible way, not merely of the result of the valuation, but the way in which it has been done, and especially of the conciliatory way in which the staff have dealt with these matters. It says a good deal for the admirable way in which they have done their work that there are only about twenty-five cases of appeal. I think that is a very remarkable result. I do not know if the right hon. Gentleman has any experience of valuation. I have had some experience of valuation for local purposes, and I remember perfectly well, when the whole of our union was revalued, I was then acting for those who challenged the valuation. We employed another man, and his report was that the other report was a perfectly grotesque valuation. There was great contention between the two forces. Eventually there was a compromise, and they have been as happy as any people can be who pay taxes. I am perfectly certain there were in that union 500 cases of the grossest scandals which would have shocked and electrified the House of Commons if they had been exposed in the indignant tones of the right hon. Gentleman. Does the right hon. Gentleman say his inference is that you must never have a valuation. The valuation machinery provided in the Bill was accepted by the House of Commons. It was not the machinery originally inserted in the Bill; it was machinery which the House accepted without a division. It was introduced into the Bill with the general consent of all parts of the House. The referees are not chosen by us, they are chosen carefully by the Lord Chief Justice of England, than whom there is no better judge on the great principles of valuation. If a taxpayer will not appeal what more can we do except what I am proposing to do. Everybody has access to the House of Commons, and I will undertake that any case brought to my notice will be scrutinised most carefully. If there is anything approaching a miscarriage of justice, I will, in the interests of the success of the Act, deal with it very rigorously indeed. I again invite the attention of the House to this, there is a great revaluation of the country going on, and up to the present there have been only twenty-five appeals. I have heard of very few cases which could in the slightest degree justify the language the right hon. Gentleman has used. I think he may depend upon it that the staff are acting with the strictest impartiality. Most of them are drawn, I am told, from the party to which the hon. and gallant Member belongs—most of the employment which gentlemen of that kind get is derived from the landed classes of this country.

I come now to the other part of the speech. He was very severe with regard to the minimum scale of Licence Duties. I said to this House that I thought the soundest principle upon which it could tax licensed property in this country was the business transacted under the protection of that licence. I made a real effort to get a revaluation for the purposes of ascertaining what the value of a licensed house is. You may have a small house conducting an enormous business. That happens in these days of motor cars and cycles, and these houses, if sold in the market, would fetch big prices. On the other hand there are licensed houses with large rateable values and small businesses. I agree there are inequalities, but it is no fault of ours they have not been redressed. Publicans were invited to supply the Inland Revenue with all information in their power to enable us to make this revaluation. I do not believe I have got any returns at all.

Sir GEORGE YOUNGER

They could not fill them up.

Mr. LLOYD GEORGE

They have been withdrawn because publicans did not assist. The forms would not have been ridiculous if they had been supplied to any other branch of the business community in this country. Grocers, drapers, and ironmongers could have filled them up. The publican could not do so purely and simply because he does not keep books. He does not know what his business is. It is difficult to have a revaluation if the publican himself is not in a position to give particulars except when he claims compensation, and then the accuracy of his information is wonderful. But when it comes to a question of compensation he is full of information. When it is a question of revaluing he knows nothing. At any rate the publican could have returned those forms filled up to the extent to which he had information. [An HON. MEMBER: "He has."] That is exactly what he has not done. He gave it up in despair. He said: "I have no books. I do not know what I have sold, and I really cannot help you." That means the process of revaluation will take a very long time, and will involve a system of considerable checks. But it is entirely the fault of the publican. If he is prepared to assist then I agree with him that the general basis of revaluation on the business done is a sound one. It is entirely a matter for himself, and the sooner he supplies the information the sooner we will get the revaluation done. If he does not, then it will be a very slow matter, and what might be done probably in a few months must necessarily now take years, if the trade, whose interest I should have thought it was to secure this revaluation, neglects to assist us in the matter. I can quite understand that a certain type of publican—a man not highly rated, and with a low valuation, and doing a very good business, naturally would not want a revaluation; probably we could hardly expect it. But there is a considerable number of publicans in this country who have most commodious and convenient houses, but in which the trade in liquors does not bear the same proportion to the size of the premises as in the case of the small houses. I should have thought it was to the interest of these houses to supply such information as quickly as they could.

Mr. BRIDGEMAN

Why were the forms withdrawn?

Mr. LLOYD GEORGE

Because we could not get any answer from the publicans.

Sir G. YOUNGER

They were withdrawn because it was not possible for the publicans to fill them up.

Mr. T. M. HEALY

Will the right hon. Gentleman give us the same information with regard to Ireland?

Mr. LLOYD GEORGE

I gave an answer some time ago about that. I do not know the circumstances with regard to it, but my own recollection is that Ireland did not want a revaluation, and that England and Scotland raised a demand for revaluation. If the hon. and learned Gentleman, Member for North-East Cork, tells me that he is anxious for a revaluation he could assist me in securing it, but I do not understand that that is his position.

Mr. T. M. HEALY

I am going to discuss it.

Mr. LLOYD GEORGE

I cannot discuss it again. Would the hon. and learned Member mind discussing it now?

Mr. T. M. HEALY

I cannot answer in a moment.

Mr. LLOYD GEORGE

I think the hon. and learned Gentleman has exercised a very wise discretion. With regard to the form, I now understand that it has not been withdrawn.

Sir G. YOUNGER

It was publicly announced that the first four pages of the Schedule were withdrawn.

Mr. LLOYD GEORGE

I do not like to challenge the accuracy of the hon. Gentleman's information. I have generally good reason to know that he is accurate in his statements. I am stating what I have just heard from the Secretary to the Treasury. At any rate, I am stating the general position of the publicans of this country who are anxious for revaluation on the business done, so long as the Government undertake that in the aggregate the charge upon the trade shall not be increased. The hon. Gentleman, the Member for North-East Cork, is not quite sure whether he is or is not in the same position, but, at any rate, the publicans of this country are anxious for a revaluation. I understand that the majority of the Irish publicans are not anxious for a revaluation. It is not a question of revenue, but purely a question of readjustment. I am perfectly willing to facilitate readjustment between these houses with a view to getting taxation on a just and equitable basis. If the hon. Gentleman (Sir G. Younger) says that these forms are not so drawn as to induce the publican to give us information, I shall be very happy to get him and the hon. Member near him (Mr. Gretton) to give me any suggestions with regard to the questions to be put to the publicans and which would be useful to secure information. If they are anxious to secure a revaluation it is entirely within their power. Let them frame questions that will be useful, and then I will see whether we can draft something between us which will not merely satisfy the Customs and Excise, but also satisfy the trade.

Mr. GRETTON

Is the revaluation to have any effect on the minimum scale?

Mr. LLOYD GEORGE

I would certainly have first to get the information, and then I would have to consider the whole position. That certainly is one of the things we shall have to consider, but if I am asked to give a pledge now, and before I receive the information, I cannot do so. But really it is not a matter of revenue from the licences of the country. From the revenue point of view it does not matter. Then comes the question of the readjustment as between the various public houses in the country. If the minimum is taken away, then the only effect would be that you would have to put up the licence of other premises. That is all. Therefore it is as broad as it is long from the point of view of the publicans of this country, but it may relieve one publican at the expense of putting it on the licence of another publican. I think the man who has a low valuation, if the charge upon him were to be doubled, would have something to say that, would not be quite pleasant, but something to which I have been quite accustomed during the last two or three years.

Mr. GRETTON

It is the right hon. Gentleman's suggestion, not mine.

Mr. LLOYD GEORGE

I was speaking of the minimum, and I simply dealt with it in reply to the hon. Gentleman's question. My view is that there ought to be a readjustment with a view to arriving at the real licence value, exactly the same as was done with regard to hotels and houses over a certain annual value. I am told on all hands that in the main they are satisfied, and they were very gratified that it was not as high as they expected.

Sir G. YOUNGER

The right hon. Gentleman said he had only 2,000 of these to value, and he has 120,000 of the others, and he has taken all this time to get the information from the 2,000.

Mr. LLOYD GEORGE

There are 2,000 people in one case who could give the information, and in the other, 120,000 who are in the category that they cannot supply the information.

Sir G. YOUNGER

I do not think that is so.

Mr. LLOYD GEORGE

I do not like to say they will not, but they have not done it up to the present. The hotel keepers of the country not only supplied the information, but they have done their best to assist us. What is the result? A valuation has emerged which on the whole is satisfactory. They have put up their Licence Duty in some cases and in others reduced it, but in the main I think I am entitled to say the hotel keepers of this country are fairly satisfied with the result of the valuation. The same thing applies to those whose duty is over £500. If the same thing were done with regard to those whose duty is under £500 I think it would be satisfactory to the better type of publicans in this country—the publicans who have accommodation not merely for drinking but for other purposes as well. I would invite hon. Gentlemen, especially those who specially represent the trade, to help in readjusting the duty in such a way as not to bear harshly upon the better type of publicans. With regard to the Death Duties it has been represented that the change effected in the Finance Act of 1909, has had the effect of exaggerating the value of cottage property for valuation purposes. I think that is undeniable, in the sense that the effect has been that cottages used for the housing of labourers who are essential to the conduct of the business of the estate, have been treated as a sort of separate property which could be put up to the highest bidder and sold to any man who had taken a fancy to it merely for summer holidays, and not to treat it as a component part of the whole estate. That I think is very undesirable. I will look into the matter very carefully. The hon. and gallant Gentleman was kind enough to mention it to me last night, and I have made inquiry, but he will not expect me to give an answer at the present moment. I think that the financial arrangements that are made, so far as they affect the matter, ought rather to encourage the building of agricultural cottages in rural districts rather than discourage their being built. So far as financial arrangements can affect the matter, I think every encouragement ought to be given to the landowner, not merely to build cottages but to keep them in repair. So far as that matter is concerned, I certainly look upon it from exactly the same point of view as the hon. and gallant Gentleman opposite.

Mr. PRETYMAN

There is the question of the Death Duties and ornamental timber.

5.0 P.M.

Mr. LLOYD GEORGE

The hon. and gallant Gentleman knows that in 1909 we gave a very substantial concession in regard to ornamental timber, which has never paid. It is only when it ceases to be ornamental timber, or when it is realised, that payment is made with respect to it. The hon. and gallant Gentleman says if the value of the timber rises to a scale just over £100,000 we are charging in another way. If the hon. and gallant Gentleman puts down an Amendment on the Committee stage I shall be prepared to give him an answer at that time. I think I have dealt with everything except the question put by the right hon. Gentleman with regard to the Sinking Fund. He was good enough to quote a speech of mine delivered in 1904. I am very much disappointed to find that the hon. Baronet the Member for the City did not get up on that occasion. It is only since then that he has discovered those great financial truths, and, I have no doubt, as a result of the precepts which I taught him in those days. The hon. Baronet has extraordinary intelligence, and yet it has taken him at least five years to understand those precepts which I and others who sat below the Gangway occasionally taught him. I agree with the principles of that speech still, and I am doing my best to carry them out. The complaint which I made was that although the Sinking Fund was nominally bigger that there was no real payment of debts for the year, because, whilst we were apparently paying off some eight or nine millions of the old debts, we were incurring fresh debts in respect of naval loans and military loans, and the net result was that we were increasing our indebtedness instead of diminishing it. In the year 1904, the very year in which I made that speech, we were apparently paying off about eight millions of debts, but we incurred £11,750,000 of fresh liabilities, so that the net result was not a reduction of debt, but an increase in our liabilities of £2,238,000. What happens this year? This year the reduction of debt is a net one, and the same thing applies to the whole of the years during which the present Government has been responsible for the finances of the country. I know that the right hon. Gentleman, in the year following that to which I have referred, reduced the debt by £7,746,000.

Sir F. BANBURY

made a remark which was inaudible.

Mr. LLOYD GEORGE

I say that the result of all those transactions was that whilst apparently you were paying off debt you were, on the whole, increasing the amount of our indebtedness. The hon. Baronet's view is that it really does not matter how much you borrow and how much you increase your debts so long as you have got a nominal Sinking Fund. What you ought to look at is the net increase or decrease of liability. I cannot say that the reduction effected by the right hon. Gentleman was the result of my speech, but, at any rate, it was the result of the Debate we had on that occasion. In the following year (1906), when my right hon. Friend the Prime Minister was Chancellor of the Exchequer, there was a net reduction of £9,800,000, and the following year £16,000,000. Then came the Budget when we had to borrow about £26,000,000 for temporary purposes. The net reduction each year has been seven or eight millions. I am taking the whole of these years. I have not got the actual figures now, but they represent something like £50,000,000 or £60,000,000 net reduction in our liabilities during the time we have been responsible. As a matter of fact, I am certain there is no Government that has ever reduced the liabilities of this country at the same rate, I will not say or in any other country, because the United States did make a tremendous effort after the Civil War, but apart from that instance there is no Government of this or any other country that has effected such a net reduction in the liabilities of the State. Then the right hon. Gentleman said: "Look at the way gilt-edged securities are coming down." It is true, but he did not dwell upon, although I think he alluded to the fact, that the reduction of the value of our gilt-edged securities was much greater when he and his predecessors were responsible for the Exchequer and for the finances of the country.

Mr. AUSTEN CHAMBERLAIN

made a remark which was inaudible.

Mr. LLOYD GEORGE

I agree that the right hon. Gentleman did refer to it, but I have got the actual figures. In 1898 Consols were 113⅛.

Sir F. BANBURY

1896 was the highest. They were 113⅞.

Mr. LLOYD GEORGE

I am taking 1898, when they were 113⅛ In 1905 they were 87½. That is a reduction of twenty-six points. Since then they have come down to seventy-nine, a reduction of between eight and nine points. Thus there is a reduction in the one case of twenty-six points in the time of the Unionist Government, and there is a reduction since we came into office of only nine points. That shows, at any rate, that depreciation in gilt-edged securities is due to something for which the Government is not in the main responsible. The right hon. Gentleman sought to find an explanation, and he is perfectly fair about it. He did admit that the war must have had a very considerable effect, and he also said that the effect of the war remained for a considerable time after the war itself had passed away. That is perfectly true. A war is like a fever, it searches out the weak points of the constitution, and not only that, but it is a very long time after the immediate effects have passed away before the constitution recovers its normal vigour and spring. The same thing applies to a war. Once you introduce it into the body politic it is a very long time before its effects completely pass away. Take what happened with regard to that war; take the prices of commodities. They went up, and they never quite recovered from the effects of the South African, war, and partly also the Russo-Japanese War. It affected the price of the necessities of life.

It is only slowly, after years, that the constitution, as it were, is able to repair the ravages of war to finance, industry, commerce, and trade. The whole world, in fact, takes years to recover the effects of the ravages of the war. I agree with the right hon. Gentleman that the question of the merits of the war is one which for the moment we cannot go into, but you must take note of the fact that the enormous sum of money which was expended on the South African war had a very great effect upon gilt-edged securities. It is true, when we come to total up the wealth of a country, we will say it is worth, in the case of this country, thousands of millions, but, as well as that, there is the sort of floating cash necessary to run the concern, and a war consumes that. The amount of money which you have got to run. even a great concern like the British Empire is very small compared with the huge amount of property we have got. We run it on a very small cash basis, which the war consumes. The result is that in a few years you got a depreciation of securities running up to thousands of millions for that very reason, and because you are operating on that very narrow, small basis. In the case of the Russo-Japanese war they had to come to us to raise money.

Sir F. BANBURY

made a remark which was inaudible.

Mr. LLOYD GEORGE

I am quite willing to deal with that. I have dealt with it once before. The right hon. Gentleman very fairly stated that the opening to trustee securities of the whole of the British Empire had an enormous effect upon gilt-edged securities, because, as is very well known, with the limited amount of money you get in the market in cash, if you introduce new securities for the purpose of investment, which are substantially as good for the ordinary person as the security of the British Empire, such as in Canada, Australia, and our self-governing Dominions, that must have an effect upon your gilt-edged securities. If trustees are able to get a ½ per cent. more or 1 per cent. more when they know that it is perfectly safe it must have that effect, and it has that effect.

Mr. DAVID MASON

Although it is quite true, yet if you have a given quantity of cash if you introduce new securities you do not reduce the amount of cash.

Mr. LLOYD GEORGE

I should have thought if you had, say, a hundred or a hundred and fifty millions surplus available for investment outside your business, and that if you introduce into the market other securities to compete with your own, of course that must affect the gilt-edged security.

Mr. DAVID MASON

I think I can reply to that later.

Mr. LLOYD GEORGE

I should be very much surprised if the hon. Gentleman really challenges the statement I made. If he challenges my statement that the effect of throwing open of trustee securities and trust funds to colonial investment had an effect on gilt-edged securities, then he is the first financier I ever knew who would deny that statement. I do not know whether he does or not; he has not made up his mind.

Mr. DAVID MASON

This is not fair to me. You asked me for an answer just now and the House does not wish me to interrupt you.

Mr. SPEAKER

The hon. Member should address the Chair.

Mr. DAVID MASON

The right hon. Gentleman rather addressed himself to me. If an opportunity occurs, I will explain my attitude later.

Mr. LLOYD GEORGE

I do not know quite what the hon. Gentleman wants to explain, but he will have an opportunity later on. I will go to another point. There has been an enormous expansion of trade in the last few years, not only of the trade of this country but of the trade of the world. That must have an effect upon gilt-edged securities. We have had great enterprises in the Argentine, Brazil, and other parts of the world, the opening up of new railways in our Colonies, and so on. All this is very useful to the trade of this country. It inures more to our advantage than to that of any other country in the world, because we are the great international traders of the world, and anything that opens up the resources of the world, such as new railways, must inure in the main to the advantage of this country, apart from the country where the money is expended. That must have the effect of depressing the value of gilt-edged securities. In recent years there has been a great fashion in regard to investing in some of these securities. As the hon. Baronet knows, there is a great desire for a high rate of interest. Brokers now, to a far larger extent than before, get instructions to invest money in something that will produce a pretty substantial rate of interest. There used to be a general desire in favour of investment in something regarded as very, very safe, although the rate of interest was low. Mr. Goschen took advantage of that fashion to convert the 2½ per cents. Now the fashion, if it has changed at all, is in the direction of getting a higher rate of interest. I do not know whether it is that the general peace of the world seems to be more assured, and that people therefore have more confidence in securities producing 5 per cent. You cannot get them in this country, but you may get them abroad. If you ask for a high rate of interest with a perfectly safe security in this country, I do not think you can get it. You can get nothing which is absolutely free from risk. But if you take the security which corresponds to it abroad, such as a great railway company, you get a rate of interest higher by 1 per cent. or 2 per cent. in respect of the same class of security.

Sir F. BANBURY

made an observation which was inaudible in the Press Gallery.

Mr. LLOYD GEORGE

I do not know whether the hon. Baronet means that it is not as safe. I agree that there is a greater element of risk than if you invest in a country with a sound fiscal system like ours. These are some of the reasons why at the present moment there is a depression in gilt-edged securities, which is by no means confined to this country. The hon. Baronet says that in certain other countries national securities have gone up. Of course they have gone up. In Russia, for instance, at the time of the war, there was a great revolution. No one could predict exactly what was going to happen. If, as a trustee, you were looking out for safe investments, I do not think you would have put your money in Russian securities at a time when a great revolution was pending. People were afraid to invest there, because there were great disturbances; it was thought that the Government was not secure; it turned out that it was, but at the time it was thought to be insecure. Therefore Russian securities dropped, not merely in consequence of the war, but far more because of the insecure state of things in that country. As far as Japan is concerned, the war was a great revelation of its power to the world. Prior to the war, people regarded Japan merely as an Oriental power, since then it has taken its place as one of the great powers of the world, and it is now in a totally different position in the eyes of the world at large, certainly in the eyes of the financiers of the world. Therefore I can well understand that the war might eventually have the effect of consolidating the position of Japan and increasing the value of its securities. But let the hon. Baronet take the securities of other countries. There is some special reason in the case of the United States of America, therefore I will not allude to that Power. But in the great European countries, Austria, Germany, and France, gilt-edged securities have gone down. In Austria and France—I am not sure about Germany—they have gone down much more since 1906 than ours have.

Sir F. BANBURY

No.

Mr. LLOYD GEORGE

I will get the figures before the Debate is over.

[Mr. WORTHINGTON-EVANS

handed a document to Mr. Lloyd George, and there followed between the Chancellor of the Exchequer and two or three Members of the Opposition an interchange of remarks which were wholly inaudible in the Press Gallery.]

Mr. SPEAKER

Debate is becoming impossible. This is conversation. The hon. Baronet and others will have an opportunity later on. They have the full night before them.

Mr. LLOYD GEORGE

There has been a drop in our securities, and I am sure it will be found that there has been a corresponding drop in the securities of other countries. At any rate, there has been a constant depression in the value of securities. In Germany, for example, I think it was 4 per cent. that was offered, and they only just succeeded in getting their money. The London County Council at the same time issued stock on which they were paying only 3¼ per cent. or 3½ per cent., and it was subscribed I forget how many times over. Every country is suffering from this depression at the present moment. Some of the causes, such as war, we must all deplore, but the depression is also due to a fact at which we must all be gratified—namely, the great expansion in trade in this and many other countries. I have heard of a great firm in this country who a short time ago sold Consols in order to extend their works. That process is going on all over the world. It is not merely this country; we have not a monopoly in the great expansion of trade. But you cannot make these great expansions without extending your capital. You have to increase your machinery, plant, and buildings, all of which means capital expenditure, and if you incur capital expenditure upon the mechanism of your trade and commerce you must necessarily have less money to invest in gilt-edged securities. I do not think it is a matter to be deplored at all that so much money should be spent in every part of the world in the capital of business. It is a guarantee of peace, and that has a value of its own. I apologise for detaining the House at such length. I have dealt quite cursorily with some of the questions put to me, but I might refer to one other reason why securities have been depressed, and that is the constant loans in connection with Irish land purchase. It is not merely the aggregate amount; it is the fact that you are constantly going to the market. The market knows that you are not done with it, and that you will have to come again. That must have a discouraging effect on the price of securities. There have been several small borrowings, and that always has a great effect.

I will conclude by referring to the remarks of the right hon. Gentleman about the Cocoa Duty. He really cannot have it both ways. A year or two ago hon. and right hon. Gentlemen opposite were always complaining about the protective character of the Cocoa Duty, and they made great party capital out of it in the country. They suggested that our own particular friends in the industry were protected, and that they started newspapers to support the Government out of the enormous profits which they derived from the protective duty. We always told them that it was no advantage to the particular industry, because they were suffering more from the fact that the rebate was not given, that, therefore, they were not in the same position to compete with their foreign rivals, and that it would be far better to put them on an absolute Free Trade basis. I remember that when I said that in this House it was mocked and scoffed at by the right hon. Member for Bootle (Mr. Bonar Law). Now we have taken off the protective duty with the full consent and support of the very industries which were supposed to be making huge profits out of it. What is the answer? The answer is an attack and a complaint that we are doing something which is unfair to the industries in this country. I have received no complaint from the industries connected with the Cocoa Duty; they are perfectly satisfied to be put on the same position as all other industries in this country, namely, a purely Free Trade basis. They are perfectly satisfied that they can hold their own, and more than hold their own. They are also satisfied that the moment you eliminate this very dangerous protection out of the industries which they conduct, that they will be able, on the whole, to do even better than they have done in the past. They will certainly avoid the very unfair criticism which is levelled at them that these duties are continued in their interests, and for ulterior purposes.

Mr. T. M. HEALY

The right hon. Gentleman who has just sat down has given an explanation that the fall in Consols has been due to the constant issue of loans for Irish land stock. I do not propose to follow him in that statement, but I would like to point out that although, of course, he has existing obligations to provide for, he and his Government have taken very good care that in the Land Purchase Act of 1906 they prevent that reason for depreciating Consols from ever again becoming operative. His position also with regard to existing obligations is this: That persons who have applied for the sale of their land, and sold it, on the faith of a public statute that they would get their money on selling their land, have had to take under the Birrell Act a depreciated paper in exchange; and some of them may have to wait ten, twenty, or thirty years before they will be paid. So that the most miserable South American Republic—I do not know which that is, but say Venezuela—enjoys from the point of view of Ireland a better and more honourable position in the discharge of its obligation than does the Government of the right hon. Gentleman. So much for the question of land purchase.

But I rose to answer his question with regard to licensing. The right hon. Gentleman has put to me the most remarkable question ever addressed by a high Minister of the Crown to a humble and uninfluential private Member. The right hon. Gentleman has altered the law twice within twelve months as regards Irish licensing, and he proposes, by this Budget, to make a further alteration in the law in regard to the valuation of Irish licences. Then he turns round to me in the course of his speech on a mere interlocutory observation, and asks: "Does the hon. Member desire, or does he not desire, the law to be altered in regard to Irish licences?" What a question for a Minister who has made two statutory alterations within twelve months, and by this Bill proposes to make another. Is it by my volition that I can determine whether the law is to be altered in regard to Irish licences? Are the statutes of the British realm to be altered at my will or wish? And if I have the power to ward off a new valuation in Ireland has the hon. Baronet who sits above the Gangway (Sir G. Younger) that same power in regard to Scotland, or the hon. Baronet the Member for the City (Sir F. Banbury) that same power in regard to England? Are British statutes, the statutes of this realm, to be treated like a conjuror's pack of cards, wave them and they disappear up your sleeve? "You do not like this particular statute?" a Minister of Finance says across the floor to a private Member who is asking for information as to whether a particular condition of affairs will apply in Ireland, and the Minister—the law being that of the King, Lords and Commons—suggests to that Member that it can be altered. What is an Act for?

I think, therefore, I am perfectly entitled to say that the right hon. Gentleman's question was not one which could be answered by either "yes or no." It is one that requires me to expose the extraordinary position of the Government, namely, they provide by a common Act applicable to England and Scotland, in the Budget of last year, for a particular state of the law in regard to licensing. That was not our fault. We fought against it. Then I ask the right hon. Gentleman: Is he applying that law to Ireland, and the suggestion he makes in reply is: If I do not like the state of the law it may be changed. What are the facts? That so recently as March of this year, in consequence of the protest, principally made by me, against the Irish Clause in the Budget Act of last year, the right hon. Gentleman has made a total innovation in the law of last year. I do not propose to debate that matter now, but I rise for the purpose of asking: "What is the position of the Government towards the Irish licence holder?'' because I will show the right hon. Gentleman, when I come to examine the return, that extraordinary increases are being put into these licences in consequence of the pretence that they were not affected by the Budget of last year. Here, let me say, Mr. Speaker, that I do not think any more vicious system was ever introduced by any Government than the practice of having two Budgets in one year. We had practically in last Session to construe the Budget of last year by a second Statute. The present Statute will have to be construed by an Act passed called the Revenue Act, 1911.

On 31st March last that Revenue Act, altering vitally many of the provisions of the Budget Act of last year, was passed. I do not think that has been without precedent in times past, but I say that it is a second time this Government has done it. Yesterday we had a big Debate as to whether you, Mr. Speaker, should be assisted by the Chairman of Ways and Means and the Chairman of the Public Accounts Committee in determining what was and what was not a Money Bill. I can only say that if this system of legislation goes on the Chair will be placed in far greater difficulties, because I should like anybody to turn to this Revenue Act, 1911, and put his hand on his heart and say honestly that it is or is not in all its provisions a Money Bill. If this system goes on, having in view the Parliament Bill, you are adding enormously to the difficulties of any occupant of that Chair. In the Budget Act of last year it is provided by Section 44 what is the annual value of licensed premises. We were told then that that annual value was to be in some cases, I understand, upon the existing valuation of the country—that is to say, Griffith's valuation.

But we were told that in England annual value would depend—and I am not quarrelling now with the justice of the position taken up by the Chancellor of the Exchequer, which was reasonable, because he took it up again to-day—he said we only desire—and I shall show him how in the present Budget Bill before us now he completely departs from the position he took up at that box a few minutes ago. "We only desire—in relation to the publicans of England and Scotland—to tax you upon the amount of liquor consumed." That was after considerable Debate, and many interchanges and conferences had passed across the floor. Very well! The right hon. Gentleman has repeated the same doctrine to-day as regards England and Scotland, and the offence which I committed was that I got up to ask him was that the principle which he was endeavouring to force on Ireland? If it is a fair principle as regards England and Scotland, I asked him what was the Government's intention with regard to our country? One may ask a question without formulating any opinion in reference to the interrogatory until you hear the answer. I put the question, asking for information, because my experience is this, that neither the right hon. Gentleman nor the Financial Secretary to the Treasury know what they are doing. The only Gentlemen who do know what they are doing are the Gentlemen who do not belong to the House at all, but who are sitting under the clock. They tell the Government one thing at one moment and an answer is given, perfectly straightly by the right hon. Gentleman, for I have always found him perfectly accurate and consistent, so far as he is instructed. But the notion that a Minister can remember all the details, can be conversant with all the convolutions of a measure, the notion that he can be au fait with all the details of the Finance Act, would be misplaced if even he had a hundred heads instead of one! A Minister can hardly be master of a department in a matter of this kind.

Therefore I say, that last year this House was fooled, and Ireland was fooled, on the Licensing question. The proof of that is this, that in March of this year Ministers had to come down and, practically by a Bill which was scarcely debated, had to admit the justice of the entire representations which we made from these benches as to the state of the law. But now in this Bill, having altered the law in March last, in this present Budget Bill—and I venture to say the right hon. Gentleman has not had his attention called to it—he proposes to make another total change in the law as regards these licences. I suppose his instructors under the Gallery, just as counsel are occasionally misled by solicitors in the court—his instructors have told him there is no change whatever contemplated, that this long Clause which is to be imposed upon this occasion will have no effect whatever upon extracting any further money from the publicans of Ireland. Before I come to the change proposed in this Bill, let me show the total departure from the Budget of last year. Although it was not a year ago the total departure from the Budget of last year made by the Bill of March last, the Revenue Act, 1911, was great. Certainly, Mr. Speaker, if you are, under the Parliament Bill, asked to decide as to a Clause of this kind, whether it is or is not a Money Bill, I certainly would not envy you the task. Here is the change made with regard to Ireland—I do not trouble with regard to England. What you do is you alter the basis of valuation. You do not seem to be getting an extra sum of money from anybody, but you are raising the wind! In Ireland the machinery of the Revenue Act, 1911, Section (4), Sub-section (2) says:— In Ireland the annual value of any premises for the purpose of duty on any Excise licence charged by reference to annual value, shall be determined by the Commissioners of Customs and Excise in accordance with the Acts relating to Excise, but subject …. to the Inland Revenue Act, 1880.…. I make the avowal that this was in the case of Ireland. I think the right hon. Gentleman is entitled to the credit for having, however belatedly, recognised in March that our arguments on the previous year had more in them than he was disposed to acknowledge for the moment. I say that is a provision distinctly in ease of Ireland, following to some extent as it does the decision in the English courts with regard to England. I believe I am right that Ireland has got by a statute what England has got by a judicial decision.

I am only giving my view, but now what does the Government propose to do by this Bill? In Ireland the mere publican practically does not exist, except in the cities of Belfast, Dublin, and two or three other places. Everybody knows that the publican is a man who carries on a mixed business, and we were especially strong upon that a year ago. The Finance Act of last year provided, and provided in a way that I thought was fair and reasonable with regard to this mixed business. It made a provision which the Government are now trying, as I suggest, to entirely go back upon. Here is the provision in Section 52 of the Act:—

The expression 'premises' in relation to the value of licensed premises includes any offices, courts, yards, and gardens, occupied together with the house in which the liquor is sold, except any such offices, courts, yards, or gardens as are proved to the satisfaction of the Commissioners to be used for any trade or business distinct from any trade or business carried on upon the premises by the licence holder."

Was not that sufficient for you? Did not that reasonably detach from the business of the publican any other business he might fairly carry on? What is the proposal now? The fourth Clause of this Bill says:—

"The expression 'premises' in relation to the annual value of licensed premises includes any offices, courts, yards, and gardens which are occupied together with and within the courtilage or in the immediate vicinity of the house or place where the liquor is sold, except any such offices, courts, yards, or gardens as are proved to the satisfaction of the Commissioners to be used exclusively for any trade or business which is entirely distinct from the trade or business carried on upon the premises by the licence-holder as such, and also includes any building or place which are not within the courtilage of the immediate vicinity of the house or place where the liquor is sold is used by the licence-holder for receiving or storing liquor."

I could not, of course, quarrel with the second portion of the proposition. What I ask is this, and I think we are entitled, having regard to the fact that the Government have chopped and changed in these amendments of the law for licensed premises—for what purpose is this change made as between the years 1910 and 1911? What facts came to the knowledge of the Commissioners that require these drastic changes? Here we have a Statute which practically, so far as Ireland was concerned, was hardly more than put in force. The same was true as regards England, but it is only in Ireland that to any extent the system of mixed business is carried on. In England it is carried on on a small scale, but with us in Ireland it is almost universal. What consideration was it that caused premises in relation to the annual value of licensed premises to include "any offices, courts, yards, and gardens … proved to the satisfaction of the Commissioners to be used exclusively for any trade or business which is entirely distinct from the trade or business carried on upon the premises by the licensed holder as such." What consideration was it that caused that to be put in?

I am sorry to say I have seen a butcher's shop and licensed premises conducted together in Ireland, and as for grocery shops, drapery shops, flour and meal shops, they are very common as licensed premises as well, carried on under the one roof, and that was the reason why I questioned the right hon. Gentleman when he stated to those who represent the trade in Great Britain that he had been endeavouring to ascertain from the publicans in Great Britain what their trade is, so that there should be no increase in their licensed duties provided the entire amount remain the same. Did he address any similar question to the Irish trade? In ibis matter I am simply a seeker for information. I am not entitled to speak for the Irish trade. I am only a lawyer trying to construe a statute and to see how it works. I have no authority whatever to go further, and I have no idea as to what would be the difference in the fiscal result as between a system carried on such as is to apply to England and in regard to that which is to apply to Ireland. The definition of last year's Budget on the question of mixed trading was amply sufficient and adequate, and the time has not yet come when the right hon. Gentleman or the Revenue authorities are entitled to say that the alteration now to be made is required. Surely under a Budget only a year old you might let the law run for three, four, or five years, and then, if you found the law eventually to be defective, you could bring in another Clause. But by this means you have alarmed the trade. You have made the licensed traders bear an enormously high burden of increased revenue. Why then create further alarm by this new system?

The claim was made last year that the Budget practically made no difference in Ireland. Let the House remember that by Statute in 1903 it was provided that we could not have any increase in the number of public houses in Ireland. We may have, and we do have, large diminutions where men give up business and where the licences cease. Of course, we have too many licences. I wish there were far fewer, but my point is you can have no more licences existing than there was in 1903, except for a few hotels, which are really not worth consideration. In the return issued by the Treasury on the 12th of July this year I find that, page 6, that if you take £200,000 to be the normal Licence Duty under the Act of 1880, the Budget which we were told was to do no harm in the country made an increase in licences alone from £200,000 to £356,000. That is to say, you put an increased burden upon the publicans by reason of the Budget of something like £150,000 a year. I admit that the word "licence" may include brewers' licences, and that therefore this increase may not fall entirely upon the licensed holder, but I get a return and I can only construe it in any way open to me, and I find that the difference between the present year and last year as a result of the Budget in licences alone is £150,000. Therefore I do think that where a sum like that is so considerable to a poor country we are entitled to claim that further changes should not be made in the law by this Budget without some special explanation for the proposed alteration.

We were also told a year ago that when the Budget of this year was introduced tremendous efforts would be made with regard to the increased Whisky Duty. I listened to the right hon. Gentleman's statement, and I find in it nothing whatever in the nature of holding out any hope that that increased Whisky Duty was in any way to be tampered by legislation in the present Session, I read many eloquent speeches of Irish Members to the-effect that owing last year to the fact that the Government ware in a crisis they would not intervene to their prejudice, or embarrassment, but that as soon as this year came round there would be a fair field and no embarrassment, and that a strong and stalwart effort would be made to deal with this question of increased Whisky Duty. But there has not been a word said about it. So far as I can see the Chancellor of the Exchequer treats Irish opinion upon that matter as a negligible quantity. The Irish public were also assured that the entire difference which the Budget of last year would make was £400,000. I think that was the figure put forward by the hon. Member for Mayo (Mr. Dillon). Others said £500,000, but the hon. Member for Mayo who is always moderate put it at £400,000 What does the Treasury Return show upon this subject? The Treasury Return shows that instead of a difference of revenue of £400,000 there is an increase of over £2,000,000, and I have arrived at that £2,000,000 not by taking the revenue for 1909–10 because if I take the revenue of 1909–10 it would be £3,500,000, but that was not all fully collected in that year, and, of course, to that extent also some allowance must be made for the figures of 1910–11, because you have a system of double collection going on to the credit of 1910–11, which would require some adjustment to be made.

6.0 P.M.

Therefore in order to arrive at what really is the effect of the Budget in Ireland you must take the figures not merely for 1908–9, but for 1909–10 as well, and, taking the difference between the two, you arrive at a conclusion, and when I stated last year in this House that this Budget brought to Ireland an infliction and a burden of at least £2,000,000, I was mocked and scoffed at by Irish members. But now I can hold up the charter and confirmation for my statement in this Treasury Return., signed "C. Hobhouse," No doubt if it was signed "J. Dillon" it would be much more important. If these gentlemen behind me were in a position to issue a White Paper containing their views and imaginations it would be very useful and important, but I have to deal with the Government, and I can only deal with the Government figures and papers, and I am therefore driven, much as the hon. Member for Mayo may hope to enjoy apostolic succession, to deal with the actual figures placed before the House by the Treasury Department. One other observation I should like to make upon this branch of the case is that these figures are not yet complete, and why? Because the Budget is not yet in operative working order in Ireland. It would not have suited the General Election to have put the Budget in working order. It was passed on 29th April, and the General Election took place in December, and practically, so far as Ireland was concerned, the Budget was allowed to remain a dead letter in that country for electoral objects. If I am wrong in that, if it would have had no deleterious electoral effect, I should like to ask why the forms which were issued in England and Scotland were not issued in Ireland? We are dealing with the finance system applicable to the three kingdoms. This financial system was applied to Ireland just as much as it was applied to England and Wales, and the first thing that is to be noticed was the section which said that a new valuation should take place of all the land of Ireland as well as the land of England and Scotland. That would have been most inconvenient for electoral purposes, and so the right hon. Gentleman the Chancellor of the Exchequer said, "Oh, it is true we have passed a Statute for the three countries; we have had to pass it for England, Ireland, and Scotland, but in Ireland we winked the other eye. The fact is that in Ireland we have such a wealth of information and such a plethora of knowledge as regards the land in the shape of information collected under the Land Act of 1881 and the Purchase Act of 1903, and the system of Griffith's valuation." Sir John Barton, the Commissioner of Valuations, has already told the Chancellor of the Exchequer that they possess a wealth of information on this point, and that there is no necessity whatever to put the law in force in Ireland. If there, is no necessity to put the law into force why did he pass the law for Ireland? Is it not an extraordinay claim for a Minister to make that he will pass an Act for Ireland and avow in the same breath that he will not enforce it in Ireland? Already the Government are putting the law into force in Ireland because the General Election is over.

Those who have been talking about the supposed exceptional treatment which Ireland is going to receive, may be perfectly sure that whatever may be the fluctuations and vagaries of politics at an election, when the Treasury gets its pincers in its hands, and as soon as the political crisis is passed the people will not be spared. My information is that all over the county Dublin and county Wicklow, wherever site value is supposed to exist, a board of valuers has been sent out from Sir John Barton's office. All over Ireland and all over the seaboard of Dublin these valuers are at work. That has been done by Sir John Barton, in spite of this plethora of information which we are told he possesses. Observe what is taking place. The same thing is being done in Belfast, because there is a residential seaboard fringe which will no doubt have some special site value. The moment the standard has been created in the Metropolitan area and in the Belfast area, which are the richest parts of the country, no doubt these valuers will go from one county to the other, and by the time the next General Election comes round we shall know a little more about the result of the Budget than we do to-day. Accordingly, I say that the Budget of last year was intended to be, and will be, a blister on the back of Ireland. The importance of this will be seen when it is remembered that we have been told in speeches by the hon. and learned Member for Waterford that whatever takes place under Home Rule these Finance Bills will be the law of the three Kingdoms. That is why this is not merely a discussion relating to the Finance Bill of yesterday or to-day, because we are dealing, as I understand the position, in regard to the proposed Home Rule measure, with what will be the law in Ireland even under the ægis of a Dublin Parliament. The Dublin Parliament will have no power to deal with licensing questions or Irish valuation questions if the statement of the hon. and learned Member for Waterford be rightly construed by me. Accordingly these Finance Acts and Budgets will be just as great a blister under Home Rule as they are now. Therefore, I say it behoves the Irish representatives to watch carefully measures of this kind. I only know that if these measures had been proposed by a Conservative Government they would have been immediately attacked by the seventy horse-power of the Irish party. Whether proposed by a Liberal or a Conservative Government, the effect financially is the same. I do not see why we should not be allowed to raise our voices in protest or by way of caution whenever these changes in the law are made or proposed.

One of the dangers which exist to the taxpayer in Ireland is to be found in this system of using forms for valuation. It -was well pointed out the other day from the Front Bench that unless you give the owner of a holding an opportunity of stating what is his estimate of the valuation of that holding you enormously increase the power of the Revenue Department when a sale takes place, or at death, to exact an undue amount from the taxpayer. If a man says his holding is worth £1,000, and he sells it for £2,000, the fault is his own if the Government take 20 per cent. of the extra £1,000. If he has to pay £200 Stamp Duty on that transaction he has brought it on his own head. The scheme of the Government is, if that man declares the real value at £2,000 he should only be assessed at £2,000 when he dies or for the purpose of a sale. What the Government are doing is that they are leaving the whole thing fluid, and nobody knows what the valuation is, and they are doing this on the pretence that it is a concession to the Irish party. The result will be that your Stamp Duty will be fixed at whatever valuation the Commissioner of valuation chooses to fix. If you get a form filled up as to what the valuation is, at all events you will have the power to bring in your personal element to bear upon the valuation, but if you get no form, thanks to the statesmanship of the Irish party, this great concession will either, at death or at sale, be used as a whip to scourge the persons who are the owners of the property. What is the reason? The reason is politics. They do not get these forms because it would not suit the politicians, and amongst them I include the Chancellor of the Exchequer, who is one of the most astute of all politicians. Accordingly as the Government depends on the Irish Vote for its existence, and as it does not suit the Irish Members that these forms should be issued, except in the town of Dublin, in a bit of Wicklow, and a bit of county Down, these forms are kept in the Customs House, Dublin. That, in my judgment, is an injustice to every person whom the Budget will ultimately hit.

In the case of the Income Tax the Income Tax payer gets a form, and he has an opportunity of valuing himself and putting a valuation on his own income. What would be said if he was asked no question, if he was not asked to fill up a form, and if the amount of his annual income was assessed by a gentleman in the Customs House, practically without an appeal, because the notion that there is any substantial appeal except by a most expensive process is ludicrous. We have had our struggle over the Budget of last year. Personally, I think financial matters ought to be placed above politics. Having passed the Budget and taken the responsibility for it, you should not shrink from its consequences. It has been said that this is a great and good Budget. Hon. Members opposite said: "God bless the Budget," and having blessed it in this manner by a solemn party benediction, I say every consequence of the Budget should be brought home to the taxpayers of Ireland. One of those consequences is that the forms should be sent out. Another is that the valuations should be made. The Nationalist Members are attempting to hide and mask and cloak the consequences of their own statute. The report which I have mentioned gives us, at all events, the first fruits of the Budget, and it showed £2,000,000 a year of extra taxation for Ireland. No doubt when the representative of the Treasury gets up that will all be explained away.

Mr. DILLON

It will be explained away before the Treasury replies.

Mr. T. M. HEALY

Then the hon. Member for East Mayo is going to have precedence over the Secretary to the Treasury. Does the right hon. Gentleman yield precedence to the hon. Member for East Mayo? It is a most remarkable thing that a Nationalist Member should claim that he will explain a Treasury Return which the Treasury themselves have issued.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)

I am afraid I did not follow the remark of the hon. and learned Gentleman.

Mr. T. M. HEALY

It would have been quite impossible.

Mr. HOBHOUSE

How does the hon. and learned Member arrive at his figure of £2,000,000?

Mr. T. M. HEALY

Is the right hon. Gentleman prepared to tell me that his figures are erroneous?

Mr. HOBHOUSE

No, I only want to know from the hon. and learned Member who is seeking after knowledge, how he arrives at his figure of £2,000,000?

Mr. T. M. HEALY

I will read the figures from the Report. The revenue for 1910–11 is given, and the total revenue collected in Ireland is £13,519,000. Then I take as a comparison the year 1908–9, when the total was £11,285,000, which, according to my humble calculation shows an increase of £2,200,000. Taking 1909–10 the amount is £9,846,000, as against £13,519,000 in 1910–11. I hope I have satisfied the right hon. Gentleman. Let me also tell him he is entitled to a slight Amendment on what he calls the true revenue. That is a fake of the representatives of the Treasury which I have never believed in except as regards such articles as whisky and beer, as to which no doubt more exactness can be arrived at. It is given on page 20. The estimated true revenue is given as £11,665,500, which of course would make the entire excess on Ireland something less. It is odd to me that the Secretary to the Treasury should need information from me as regards a Return issued by himself. No doubt it should have been signed by the hon. Member for Mayo, and that is why he is so much in the dark about it, because the hon. Member for Mayo says he will take upon himself the burden of explanation.

There is one other observation to be made about this Return. At the time this Budget was passing an arranged question was put, I think to the hon. Gentleman who is now the respected Deputy-Chairman, and who then occupied some post connected with the Treasury. We were attacking the Budget, and the question was asked as to what in fact the Government were getting out of Ireland for Imperial purposes. Amid salvos of applause the right hon. Gentleman read out a statement showing that Ireland was being run at about a loss of £2,000,000. That fake has also been exposed by this Return. We were told the local expenditure in Ireland last year was £2,357,500 in excess of the actual revenue. "How can you Irish," we were asked, "complain?" You are going to get old age pensions, invalidity and insurance funds, and all the rest we get out of the British poor box. "How can you complain of the fact that a Budget is being passed which simply asks you to recoup us to some slight extent?" Even the Treasury cannot keep up the fiction of a loss of £2,357,00. In 1909–10, even on their own estimate of what are Imperial and local charges, they show they are making a profit of £321,000. These are not our figures or even the figures of the hon. Member for Mayo. They are the best figures that can be produced to make a case for the Government. When that case has been made, not upon any figures issued by us, but upon the figures issued by the British Treasury, the plain result is that instead of this Budget or measure only making a difference of £400,000, which against the old age pensions was a mere fleabite, Ireland is mulcted to over £2,000,000 sterling.

Mr. JOHN DILLON

The hon. Member for North East Cork has renewed his complaint, which he has frequently made in this House before, because Form IV. has not been issued in Ireland. He reminds me of the little child endeavouring to get Pears' soap, and who, it is said, will "never be happy until he gets it." He charged the Chancellor of the Exchequer with abstaining from issuing Form IV. for electioneering purposes. What is the hon. Member's grievance? He went down to the country and declared this Budget would result in Form IV. falling like snowflakes on all the small - holders for electoral purposes, although he knew perfectly well the Chancellor of the Exchequer had stated again and again in this House it would not be necessary to issue Form IV. in those cases of agricultural land where there was no possibility of an increase in site value arising for an indefinite number of years to come. Furthermore, he described in that lurid language of which he is a master that another deplorable result of the Budget would be that every small farmer would be instantly assailed by a swarm of valuers from Somerset House. It was good electioneering, only it did not come off. When the small farmers of Ireland found they did not receive Form IV., that the Budget was not going to tax them, as we had told them, and that it was not going to tax agricultural land at all, naturally the hon. Gentleman's election perorations fell flat, and the result was not very prosperous for the hon. Gentleman at the General Election. Therefore, it is not unnatural he should come now and indict the Chancellor of the Exchequer for this horrible crime in not issuing Form IV.

The hon. Member says Form IV. has been issued in the neighbourhood of Dublin, Wicklow, and Belfast. Of course, we always knew it would be. Wherever in Ireland there is the prospect of an increase in site value, there Form IV. would be issued. I congratulate the hon. Member; he lives near Dublin, where there is every prospect of an increase in site value. He is more fortunate than I am. I live in a house in a back street in Dublin where I do not think there is any prospect of an increase in site value, and I got Form IV. the other day. Perhaps he will say the Chancellor of the Exchequer from corrupt motives abstained from issuing Form IV. in my case. He says Form IV. has been issued in Dublin and Belfast. Of course, and perfectly properly. It has been issued where an increase in site value may possibly accrue. As a matter of fact, the truth is the administration of Form IV. in Ireland, so far as I know, has been exactly similar to its administration in England, with one difference with regard to a general re-valuation. Strange to say, the hon. Member appears now to be passionately eager for a general valuation to be carried out. I have heard him make speeches burning with eloquence denouncing any Government which dared to propose a re-valuation of Ireland. It has been frequently explained by the Chancellor of the Exchequer during the Budget Debates that the reason why he does not propose to re-value Ireland is that Ireland has been valued and re-valued by Government valuers to such an extent that it would be a criminal waste of money to revalue Ireland again. They have material in the offices in Dublin of the most elaborate valuations, and to compare the administration in this country, where you have no valuation at all, and the administration in Ireland, where you have several most costly valuations, one superimposed upon the other, is really to throw dust in the eyes of the House of Commons. I was anxious to hear whether the hon. member would come to another grievance. He described these land taxes as going to crush the sole remaining Irish industry. What has been the produce of the Land Taxes? He did not read that. In Great Britain the Land Taxes in their first year produced £435,000.

Mr. PRETYMAN

The Land Taxes in Great Britain depending on valuation produced in the last financial year under £2,500.

Mr. DILLON

In Ireland the Land Taxes produced £1,000. I am quoting from a Government Return figures under the same head. When the Chancellor of the Exchequer was interrupted by the hon. Member for North-East Cork, the right hon. Gentleman put to the hon. Member a very pointed and simple question in reference to licences. The hon. Member has dwelt upon that matter at great length, but I am bound to say I am still in the dark as to what he means or what he is driving at. It may be my want of intelligence, but I doubt whether anybody in the House knows what is his griev- ance. The Chancellor of the Exchequer put to him a very plain and simple question:— Do you want a revaluation for the licence holders of Ireland? The hon. Member did not answer. He said he would take time when he came to speak himself to make a reply. When we listened to his speech, we easily understood why he took time, because, although he made a considerable speech, he never answered the question at all. Does he want a revaluation of the licences of Ireland? Is he authorised on behalf of the licence holders of Ireland to claim a revaluation? He went on in a vague way to blame the Chancellor of the Exchequer because, having made the law last year with regard to the issue of these forms to licence holders for the preparation of the revaluation, those forms were not issued. I always understood, and I understand still, the idea of this valuation was rather in relief of the licence holders than the reverse, and there was a most distinct understanding, not secretly at all, but across the floor of the House, that if the licence holders did not wish a revaluation they would not be forced to have it. There is therefore no mystery about it; it is a perfectly clear and straightforward transaction, and we have heard what has passed between the Chancellor of the Exchequer and the hon. Gentleman below the Gangway. The Chancellor of the Exchequer has over and over again stated this revaluation was rather in the interests of the licensed holders than the reverse.

Sir G. YOUNGER

made a remark which was inaudible in the gallery.

Mr. DILLON

That is exactly why it was, but now comes the hon. Member for North-East Cork and says, "you will not allow the Irish licence holders to be revalued." Unless the hon. Member will stand up and say he is entitled to speak for the licence holders of Ireland in this matter, I shall still hold to my view. I want to draw the attention of the House to the tone and the method in which the hon. Member for North-East Cork deals with all these matters. He was very indignant with me because perhaps in an unguarded moment I said I would explain away the £2,000,000. What I object to in the hon. Gentleman is that he seems to think any man in Ireland who endeavours to look at these figures and tell the actual truth is injuring his country. I do not share that view. I think our only strong ground to stand on with the Treasury, and from which to conduct our controversies with it, is to tell the truth and not to be afraid of the truth, and if we seek to palm off deceptive or indefensible figures that do not represent the facts of the case the Treasury will very soon remind us of it. Before passing away from the question of licences I should like to point to one statement by the hon. Member which is calculated to deceive us here, although, on the face of it, it is true. He drew attention to the enormous increase in the Irish Licence Duties this year. I want to utter a word of warning on that point. The figures for 1910–11 are subject to correction because they carry arrears, and they must, therefore, be carefully analysed. When the hon. Member said that the increased burden amounted to £153,000 he must have forgotten the charge upon the breweries. The general impression from what he said was that this £153,000 was falling upon the licensed holders of Ireland, but, as a matter of fact, I am told that £36,000 of it is paid by Guinness' brewery alone. Under the old licensing system that brewery paid, I believe, £3 a year. To-day it is paying £36,000. Will anybody in this House get up and say that this is unjust?

Sir F. BANBURY

I do.

Mr. DILLON

Is the hon. Baronet aware that Guinness' brewery has, since the Budget, added no less than £200,000 a year to their profits. They have never been so prosperous, and if they are making a net profit of over £150,000 a year out of the Budget, surely they can have no cause for complaint if they are called upon to pay £36,000 a year. I have never heard that they do complain. We have no ground in Dublin to think that Lord Iveagh has the slightest idea of reducing his subscriptions or lessening his benefactions to the city of Dublin in consequence of this increase in the Licence Duties. But my point in connection with this is that no man who heard the complaint of the hon. Member as to the burden on the licence holders could gather from what he said that £36,000 of the increase was drawn from Guinness' Brewery alone. That, however, is a comparatively small offence. The hon. Member wound up by declaring that the hon. Member for East Mayo had gone to Ireland, after the Budget, and had declared that it would only impose an increased burden of £400,000 a year on the Irish people, instead of the £2,000,000 or £3,000,000 mentioned by the hon. Member and his Friends. His memory is not quite accurate. What I said was that in the first year of the Budget, as far as I could make out, it would impose an additional burden of £450,000 a year; that when it got into operation the burden on Ireland would be £500,000 a year, and I ventured to say that it might in the future increase to £700,000. The hon. Member triumphantly takes up the Returns and attempts to show, from the Government statistics, that, as a matter of fact, the Budget has actually imposed an extra burden of taxation on Ireland of £2,000,000 a year. He was very severe on me. But what are the facts? The hon. Member commenced by saying that he wanted to be extremely fair, and, in order to be so, he compared the revenue of Ireland in 1910–11 with the revenue of 1908–9, the year before the Budget. As a matter of fact, the figures for the year 1910–11 include over a million of arrears, and that is a trifling balance which the hon. Member entirely overlooked. It includes the whole of the Income Tax for two years and various other arrears.

I have looked into these figures, and I find that the only way in which you can arrive at the truth as to what extra taxation has been placed on Ireland by the Budget is by taking the two years previous to the passing of the Budget and comparing them with the total for the two years subsequent to its becoming law. Hon. Members, if they will examine the figures, will find that that is the only honest and just way of dealing with them. I challenge hon. Members who wish to understand the truth of this matter to examine the figures for themselves. I will recapitulate them. In the year 1907–8 the revenue of Ireland, omitting, the non-taxable revenue, was £8,383,000; in 1908–9 it was £8,016,000; in 1909–10, the year of the Budget, it was £7,103,000, because in Ireland, as in this country, a good deal of the taxation was not collected. In 1910-11 it was £10,371,000, which, of course, included a great deal of the taxation of the previous year.

Mr. LOUGH

On what page are these figures to be found?

Mr. DILLON

I cannot say. I extracted them from the Returns in which they are set forth. I have checked them very carefully. If you add together the revenue of the first two years I have mentioned you get a total of £16,399,000—that is for the two years previous to the Budget—and if you divide that by two you get an average yearly revenue of £8,199,500. Now add the revenue of the two years subsequent to the introduction of the Budget, and you get a total of £17,474,000, which, divided by two, gives an average yearly revenue of £8,737,000. Deduct from that the £8,199,000, the average revenue before the Budget was introduced, and the result is we get an annual increase of £538,000. That is the effect of the Budget on Ireland, and what the hon. Member endeavoured to palm off on to the House was an. absurd invention—absolutely the reverse of the truth. In the great controversies that are before us, when we are going to endeavour to lay the foundation on sound finance in Ireland, that is not the way to get concessions from the British Treasury or to gain the assent of this House to our just claims by endeavouring to deceive it with manipulated figures. I have sufficient confidence in the intelligence of this House to be convinced that the resort to such methods would be fatal, and that, instead of benefiting our people, we should inflict enormous injury on them when the Chancellor of the Exchequer and his experts had turned our figures inside out and proved to the public how we have endeavoured to humbug them.

The hon. Member says that Ireland is now paying her way. We on these benches have had to sorrowfully admit that Ireland has not paid her way, according to these figures, during the last few years. I do not admit the accuracy of the Treasury figures. We shall have to challenge them and endeavour to go behind them in days to come. But they are the only figures available at the present time, and, of course, the hon. Member for North-East Cork relied on them. But when he road out the figures from the last Returns to show that there was a balance of £378,000 coming from Ireland, I would point out that he did not look back to the figures for the previous year. There is a balance of £378,000 this year coming from Ireland, but it is because the arrears of last year's taxation, to the amount of more than a million sterling, are included in the Return. There are no arrears of expenditure on the other side. It is no use setting up a contention of this kind. You are utterly unable to prove it, and there is nothing to be gained in this House by making statements of that character. Some time ago we were denounced in this House as robbers of Ireland and accomplices and slaves of that arch robber Lloyd George. That is common language on platforms in Ireland when men are not pleading for conciliation. I have rarely read a report of a meeting attended by the hon. Member for North-East Cork, or any of his Friends, in which the Chancellor of the Exchequer has not been denounced over and over again as "Lloyd George, the robber." And because we have recognised and admitted the benefits which have been conferred upon Ireland under this Government, we also have been denounced as robbers and traitors, and have been made the subjects of other very strong terms. There has been hardly a meeting at which we have not been challenged and told that we do not dare to face our constituents. We have been told we would not dare face the people of Ireland. That was prior to the last General Election; and we were warned that the people would "wipe out the traitors who had sold them to the robber Lloyd George, who had imposed this imaginary burden of £2,000,000 upon them." Well, we did face our constituents, and we were not wiped out.

Mr. CREAN

You burnt your books.

Mr. DILLON

The result was extremely different. The hon. Member, in one portion of his speech spoke in very strong language of the destruction of Land Purchase, and he challenged a statement of the Chancellor of the Exchequer that the constant appearance of Irish Land Loans on the market was a source of the depression in Consols; and he said, "You are the last person belonging to this Government who has a right to make that complaint, because you killed Land Purchase in Ireland." That is another instance of inaccuracy. The Land Loans have been larger and payment for land has been going on more rapidly under the present Government than it ever went on. The hon. Gentleman, as usual, referred to King Charles's head and the fatal effects to Ireland of the Land Act of 1909. That Act rescued Land Purchase from sudden death. Had it not been for that Act it would have completely ceased, or else the people of Ireland would have been ruined by the burden of the rates. Hon. Members talk as they ought to be ashamed to talk of this Government being financially on a level with low-class Southern American Republics. That is not a very judicious way to get more loans out of Great Britain. At the same time it is silly and disgusting language. What is the fact as regards the Land Act of 1909? It cost the British Treasury £15,000,000, and yet the Chief Secretary is denounced for having killed Land Purchase. To my own knowledge he fought one of the hardest battles that ever was fought with the British Treasury to save Land Purchase, and though he did not succeed in getting all we desired him to get, he succeeded in saving Land Purchase from destruction and in conferring on the West of Ireland, for which I speak, the most beneficent Act that ever was passed. This man, who has restored the evicted tenants in Ireland under circumstances of generosity, and who has saved Land Purchase, is denounced by irresponsible politicians who speak for an exceedingly limited section of the Irish population, as the enemy of Ireland and the murderer of Land Purchase. It is a degradation of our country. No matter how great the indignation of the hon. Member (Mr. William O'Brien) I shall never be ashamed or afraid to tell the truth about Ireland's affairs.

Sir F. BANBURY

The Chancellor of the Exchequer addressed to me a few questions which I will endeavour to answer. He asked me whether it was not a fact that investors in trustee stocks had sold their English securities and bought Colonial securities because they get a larger return by about ½ to 1 per cent. The return given by Colonial Government stock is rather less than the return given by English railway preference or debenture stock. I think it is something like 1s. 6d. or 2s. a year less. Therefore that argument, advanced by him as an excuse for the fall of English securities, falls to the-ground. He also asked whether it was not true that some years ago it was the fashion to invest in English securities regardless of the yield—rather to take securities which were absolutely safe than those which yielded a high interest. He then asked whether that fashion had not changed, and whether it was not now the fact that people were inclined, instead of buying English securities, to take foreign securities which yielded a very much higher rate of interest, something like 1 per cent. or 2 per cent. There is a certain amount of truth in that statement. Some years ago it was generally the custom amongst people who were conservative and prudent in their investments to take English securities irrespective of the yield, but there has been a change and those people now will not take English but prefer foreign securities. It is not because of the increase of yield, because what has taken place is that the difference in yield between English securities and foreign now is much less than it was before. The yield given by first class American railway debentures is at the outside 4 per cent., whereas on English railway debentures it is £3 12s. or £3 13s. Midland debentures at present yield £3 12s. The best debentures of that class of security in the Argentine Republic now yield about 4 per cent. Whereas English securities ten or fifteen years ago yielded a much higher rate, something like 4½ per cent., their yield has diminished while the yield of English gilt-edged securities has increased, and therefore the very reverse of what the Chancellor of the Exchequer said ought to have taken place. The inducement to sell English securities in order to get a larger yield in foreign securities is nothing like as great as it was because the yield of the foreign securities has decreased while the yield of the best class of English securities has increased. That is a fact which cannot be controverted.

The right hon. Gentleman also said that the fall in English securities since he came into power had been no greater than the fall in foreign Government securities. There was some little discussion across the floor of the House as to what the exact price of Consols was when the Government came into power. My recollection was that in January, 1906, it was 90, and in December, 1905, I find that it was 89 9–16ths, so that the difference between my figure and the real figure was not worth discussing. The present price is 78, so that there has been a fall of 11½ per cent., whereas there has only been a fall of 6 per cent. in German stock. The fall in German stock is greater than that in any other kind of foreign securities. There has been, I admit, a fall of about 4 per cent. in Austrian, Hungarian, and similar securities, while Russia and Japan, who have been at war, have risen a very little. I do not deal with French securities for the moment, though the fall has not been 5 per cent., because French Rentes have been affected during the last year or two by the fact that the French Government is proposing an Income Tax upon them. If you take the price of French Rentes before the French Government proposed the Income Tax the fall was only about 2 or 3 per cent.

7.0 P.M.

The last time I raised this question I gave the Chancellor of the Exchequer the price of Russian and Japanese stock, and I proved beyond any question that in both countries the effects of the war have passed away, and their stocks have largely risen, while their war occurred at a much later period than ours, and while the effect of the Boer war, instead of having passed away, had increased, and our stock had continued to fall. The Chancellor of the Exchequer said I had taken no notice of American Government stocks. I find that American Government stocks have fail en in that period from 133 to 116. The right hon. Gentleman's statement was received by cheers by hon. Gentlemen opposite. American Government 4 per cent. stock has fallen, but it is redeemable at par in fourteen years from now, therefore it is absolutely certain that as the period of redemption draws nigh they will fall in value. I have got out the exact figures with regard to the United States interest-bearing debt, and I find at present that of the 4 per cent. stock which is redeemable at 100 in 1925, the outstanding amount at present is $118,000,000, of 3 per cent. stock the outstanding amount is $68,000,000, and of 2½ per cent. stock the outstanding amount is $646,000,000. The 2½ percent stock a few days ago was at par. The right hon. Gentleman took one portion of United States debt, and that the smallest portion, which had not the slightest analogy to the subject under discussion, because of the redemption, and left out all allusion to the fact that United States 2½ per cent. stock, which is the barometer of United States credit, now stands at 100. I can remember some time in the early seventies—I think it was about 1872 or 1873—United States Government 5 per cent. stock stood at par, while Consols stood at 93. What is the reason for 'the extraordinary change in the credit of the two countries? I am perfectly well aware what the right hon. Gentleman (Mr. Hobhouse) is going to say, and I am going to say it too. I have never in the discussions which have taken place in this House in regard to this particular point, or in my letters which I have written to the papers, used the illustration of American Government stock, and I never should have used it unless the Chancellor of the Exchequer had done so, because I think it is not an absolutely fair criterion. It is not fair for this reason. The National Banks of America, which hold United States Government stocks, are allowed to issue notes against them. Therefore it is not an absolutely fair illustration. The Chancellor of the Exchequer used that illustra- tion the last time I raised the question a few weeks ago. I have no desire whatever to deceive the House in any way.

Mr. ANNAN BRYCE

The hon. Baronet will admit that the fact United States 2½ per cent. stock stands at par has nothing to do with the credit of the United States under the special circumstances?

Sir F. BANBURY

I do not admit that at all and I will tell the hon. Member why I do not. I have endeavoured to find out when power was given to the National Banks of America to issue notes against their holding of Government stocks. I have applied to the best houses in the City, and every one says, "It is such a long time ago, we cannot remember." My reply to the hon. Gentleman opposite is that I believe the power existed in the seventies, when the 5 per cent. stock was at 100. Now their 2½ per cent. stock stands at 100.

Mr. ANNAN BRYCE

The difference in amount is enormous.

Mr. SPEAKER

I would ask the hon. Member to allow the Debate to proceed.

Sir F. BANBURY

My belief is that the power existed in the days when United States 5 per cent. stock stood at par, and that is a fact which should be remembered when you find that the 2½ per cent. stock stands at 100. I think I have shown that the arguments advanced by the Chancellor of the Exchequer for the fall in Consols are illusory, with one exception, and that was the argument as to the extent of the issue of Irish Land Stock. There I respectfully agree with him. There is no doubt that continually holding over the head of the market the possibility of further large issues of Irish Land stock does tend to discourage people. I have always said so in this House, and the Chancellor of the Exchequer is entitled to whatever credit he can get from that circumstance. There is no doubt that Irish Land stock has added to the stocks in the gilt-edged market, and the more stock you have to issue the lower the price will probably be. That brings me to this point. What is the Financial Secretary to the Treasury or the Chancellor of the Exchequer doing to remedy this? Are they taking any steps to remedy it? Looking at the Finance Bill, I find an extraordinary Clause printed in italics. I do not know why it is printed in italics unless it is because it is not founded on a resolution of the Com- mittee of this House. We ought to have had a resolution of the Committee of this House, but apparently there was not one. I do not say that that is so, because the whole time of a private Member is so taken up that it is quite impossible to remember all the circumstances that occur. I have been sitting since Eleven o'clock to-day on the Coal Mines Bill, and my time was occupied in the same way yesterday. Clause 8 of the Finance Bill provides:—

(1) The Old Sinking Fund for the financial year ending the thirty-first day of March, nineteen hundred and eleven, as calculated under Section nineteen of the. Revenue Act, 1911, shall, notwithstanding anything in the Sinking Fund Act, 1875—

"(a) to the extent of one million five hundred thousand pounds, be issued and paid by the Treasury at such times as they direct to the development fund under the Development and Road Improvement Funds Act. 1009, in lieu of the sums to be issued out of the Consolidated Fund under Sub-section (2) of Section Two of that Act in the years ending the thirty-first day of March, nineteen hundred and thirteen, nineteen hundred and fourteen, and nineteen hundred and fifteen respectively; and

"(b) to the extent of one million five hundred thousand pounds, be issued by the Treasury at such times as they direct, and carried by the Treasury to a separate account, and made available in such manner as Parliament may determine for the purposes of the provision of sanatoria and other institutions for the treatment of tuberculosis, or such other diseases as the Local Government Board, with the approval of the Treasury, may appoint; and

"(c) to the extent of two hundred and fifty thousand pounds, shall be issued by the Treasury at such times as they may direct for the purpose of the ad vance authorised by this Act to the Government of the East African Protectorate."

It is proposed, therefore, to take £3,250,000 out of the Old Sinking Fund and devote it to purposes for which it was never intended. I venture to say that in view of the fall in English securities the very first thing which the right hon. Gentleman should do should be to see that the Old Sinking Fund is applied to the purposes for which it was intended. I am glad to see that the hon. Member for Blackburn (Mr. Snowden) and other Members of the Labour party now in the House. During the last five or six years the Labour party have always laughed at me when I have endeavoured to show that the fall in gilt-edged securities would recoil on the working classes more than any other class. I do not want to mention names, but it is a well-known fact to those who have studied financial questions that two institutions have suffered very severe loss, and that in consequence the working classes have suffered very severe loss through the depreciation of gilt-edged securities. Therefore, I contend I was right when I said that the depreciation in gilt-edged securities was a matter which should engage the attention of hon. Members, because it was causing serious loss to many great institutions in this country. This is the moment the right hon. Gentleman chooses to divert the Old Sinking Fund from its purpose to three other objects. I dare say these three objects may be very excellent. When the Development Act was passed I was not aware that there was any intention to utilise the Old Sinking Fund for the funds required under that Act. I was on the Committee which sat when the Development Bill was under consideration, and I do not remember that any indication was given that the Old Sinking Fund was to be used for the purposes of that measure.

Then there is the sum of £1,500,000 which is to be used for the purposes of sanatoria for the treatment of tuberculosis. I admit that the Insurance Bill is so complicated, that it consists of such an extraordinary number of Clauses, and that it has been altered to such an extent that I really do not know what is in it and what is not in it. It may be that there is a Clause which provides that £1,500,000 should be taken from the Old Sinking Fund and devoted to sanatoria. That was not my impression of what the Chancellor of the Exchequer said when introducing the Insurance Bill. [An HON. MEMBER: "He did say so."] Of course, if he said so I accept the statement. I understood that what he intended to do was to provide £1,500,000 to make a starting grant, but I understood that it was to be taken from the surplus which would accrue from the 7d. and two-ninths paid by the Government.

Mr. HOBHOUSE indicated dissent.

Sir F. BANBURY

I do not pretend to know. I do not attach very much importance to the Insurance Bill; but if it is to be used as a weapon to destroy the Old Sinking Fund, I attach still less importance to it than I did before.

Come to the question of the £250,000 which is to be issued for East Africa. I dare say again that is a very good thing. But why take it from the Old Sinking Fund? I can remember again and again eminent financiers like the right hon. Gentleman the Member for West Islington (Mr. Lough) getting up and saying that we ought to meet our obligations out of the resources of the year, and that it should clearly defined how the money should be spent was obtained. Always, with that exception, the whole of the Members of that party stated that the Sinking Funds both old and new should only be devoted to the purpose for which they are intended—namely, the cancellation of debt. But here is a party, of which the right hon. Gentleman is so distinguished an economic ornament, actually proposing, at a time when our national security stands at about the lowest price at which it has stood for years, and when we have reduced the new Sinking Fund from £28,000,000 to £24,500,000, to take from the Old Sinking Fund £3,250,000 and vote it for these objects. Attempts were made, unfortunately with success, by the Government to cause a certain portion of the taxes which should have been collected last year to stand over until this year, so as not to be taken into the Old Sinking Fund. When one comes to remember that the Government has done that, and sees what they are prepared to do with what is left of the Old Sinking Fund, one's hopes that the financial question will ever present itself in its true aspect to any Member of the Treasury vanish altogether, and one is driven to the conclusion that not only the Chancellor of the Exchequer, but the Financial Secretary to the Treasury, instead of endeavouring to do what I think they ought to do, and what the Chancellor of the Exchequer says he has done, exercise economy and foresight upon the finances of the country, are using these finances for electoral purposes.

The hon. and learned Gentleman below the Gangway (Mr. T. M. Healy) accused the Government a short time ago of using the Budget for electoral purposes in Ireland. They are doing the same in England in a different manner, because, in order to avoid putting on increased taxation, they are diverting money which should go in the Old Sinking Fund to expenditure for the year for which it was never intended. I do not know whether the right hon. Gentleman opposite realises what is going to take place if this fall in securities continues. Suppose, for the sake of argument that when recently the Prime Minister read at that table a very serious communication, certain eventualities had unfortunately taken place. Where should we be with Consols at seventy-eight, with the Income Tax at 1s. 2d., or, including the Super-tax, at 1s. 8d., and with the present position of the Sinking Fund, which I can remember in the days when I was in the City was always held to be a great national reserve in time of war. Over and over again I have heard financial authorities in the City discuss whether it would be better or not to have a gold chest, as in those days Russia and Germany did—I do not know whether they do so now—or to have a reserve in our Sinking Fund which we had. All that has departed, and the old refrain, which I can remember:— We've got the ships, we've got the men and we've got the money too. has departed also. [An HON. MEMBER: "No."] I do not think that the hon. Member is going to provide them. He would have some little difficulty in doing so, and nobody would congratulate him more than I if that were done. I am glad that the right hon. Gentleman has reduced the tax upon short bonds to one-half and one-quarter per cent. By endeavouring to get too much it is evident that the Treasury have got nothing.

There is no question but that very large amounts of reserve bonds have been purchased and left abroad and never brought over to England. The consequence was the Government got nothing, whereas if they had been content to put a moderate stamp on at the commencement they would have had a considerable sum of money. The only doubt in my mind is whether, as the Government have overreached themselves, investors in London, having found that by leaving securities in foreign countries, they do not pay any tax at all, will not continue that practice, and not pay the tax at the reduced figure. This never would have occurred if the right hon. Gentleman—I do not wish to be offensive—had not been a little too previous. With regard to the provision that Consols shall be transferred by deed as well as by transfer of bank, I presume the transfer of banks will not be done away with, but will be an alternative. The transfer by deed I think is a very-good thing. It will save a considerable amount of trouble, though I do not think it will have any effect on the price, and I congratulate the right hon. Gentleman on having introduced it. With regard to the Super-tax, I presume that we shall have plenty of opportunity in the Committee stage to discuss it and to move Amendments, because this is the 9th August, and it is an extraordinary thing that the first opportunity we have had of discussing the Budget has been at this late date in the dog-days. I would draw the attention of the Chancellor of the Exchequer to this state of facts. A man and woman live together. They have an income of £3,000 a year each. If they are married that income becomes £6,000, and only one sum of £3,000 is deducted, and they are subject to Super-tax on £3,000. If they are not married the Income does not become liable to Super-tax, and nothing is deducted from it. The right hon. Gentleman is rather putting a premium on immorality, besides putting very-great hardship upon certain people. Suppose I take the example of brother and sister living together, each having £6,000 a year, which, added together, would be £12,000. From each you would deduct £3,000, or £6,000 in all, so that the amount on which they have to pay Super-tax would be £6,000. But if they were man and wife living together they could only deduct £3,000, so that Super-tax would be payable on £9,000. I trust that the right hon. Gentleman will give me some support when I move an Amendment on this point.

Coming to the fall in Consols and gilt-edged securities generally, the Chancellor of the Exchequer said that one of the reasons was that the country was being run on a very small cash basis. I think very likely that that is true. One of the reasons that that is so is on account of the Death Duties. They mount up to such great sums, and they must be paid in cash, so that a large amount of money which would have been available for carrying on business has been taken away. The Death Duties ought to be capitalised. They have not been used by the State as capital but as income, and the natural sequence of that, which must go on as years go on if these enormous Death Duties continue, is that the available cash basis for the business transactions of the country must become less and less. Therefore, as the right hon. Gentleman is responsible for a considerable increase in the Death Duties he is responsible largely from that point of view alone for the fall in these first-class securities. I hope there will be a little economy shown by the hon. Members on the other side of the House, because I do to a certain extent sympathise with the Chancellor of the Exchequer. He has not very much chance of exercising economy, because he is always being pressed on by hon. Gentlemen behind him to do some little thing which will add to expenditure. All these little things tell. If hon. Gentlemen opposite really want to restore and readjust the finances to the position which they have completely lost the best they can do will be to try to be a little more economical and not spend so much money, oven though the objects be good.

Mr. LOUGH

The House is indebted to the hon. Baronet who has just sat down for calling us in the latter part of his speech back to the Finance Bill, and he will forgive me for saying that if he had left out all that rather doubtful allusion which he made to some American bonds in the earlier part of his speech and devoted himself to a criticism of the Bill and a plea for economy we would have enjoyed the speech even more than we did. The great question before us is what we think of the Bill. On the whole, I think that very slight attacks have been made on the Bill, and even the hon. Baronet admits that the Budget contains several useful provisions. There is no new tax; it contains a series of remissions and adjustments that will do something to make the present system of taxation rest more lightly on the shoulders of the nation than it does. The hon. Baronet acknowledges that, and his only criticism has been that, something more should be done in that direction. That is a very good way to put it. and when he puts down the Amendment which he promises perhaps some of us may see our way to support it. Meantime that ought not to make us ungrateful for what we are getting in the Bill. I believe that the country will receive, and indeed has already received the Bill, with considerable gratification. If Clause 4, which deals with the definition of premises, which has already been criticised, is open to the objection which the hon. Member for North-East Cork urges against it, I hope that the Chancellor of the Exchequer will reconsider the point of including it in the Bill. But. I think that a very useful provision with regard to licensed premises in urban areas which are thinly populated is included in Clause 5, and these with the remission of Stamp Duties and the facility for the transfer of Government stock make a fair instalment of useful small adjustments to find in one Budget.

I had hoped to be able to make these compliments to my right hon. Friend the Chancellor of the Exchequer himself, because I want to put in a plea for one or two other little adjustments to be granted. I hope that my right hon. Friend the Secretary to the Treasury will take note of these points, and if they commend themselves to his favour, I should be very glad if he could see his way to introduce some Amendments into the Bill afterwards. The first question that I want to call attention to is that of the Tea Duty; and I want to press on my right hon. Friend a consideration of the Amendment on this point which I have mentioned to the House before. It would be desirable to give this great industry, which affects some of our greatest Colonies, and so many people in this country, protection from the scares which take place every year owing to the fact that this tax is never settled for more than one year. It is always held as the one tax that may be altered at the last moment owing to emergencies which arise. Why could not my right hon. Friend see his way to fix this tax for three or four years instead of the one year in the Bill, or in some other way do something to protect the market from these annual scares. We had a great meeting in the city on this point. It was a perfectly non-party meeting, and was attended by men who have very large interests in this business. All were unanimous that the treatment of this great industry by this House is most unfair.

Nobody can do anything for two or three months during which some sixty or seventy thousand businesses all over the country and all the people interested in this trade are kept in a state of perpetual confusion with no operations going on and with many men almost reduced to the brink of starvation, wondering when the Budget will come out, and all because of a possible financial alteration which there is no likelihood of taking place. I think that the Government might reconsider this matter and readjust it in a more businesslike way than they have done at the present time. We have great difficulties concerned with the City of London at the present time, and it is a pity that the Government should add other artificial difficulties which could easily be removed from our path. There is another little point on which I have written a letter to the Treasury and about which I intend to put down an Amendment, and that is in reference to the coffee trade. There is some old rule in this country in the Customs by which if duty is paid on green coffee and the coffee is exported again the duty will not be given back. That rule does not apply to any other article and does not exist in any other country in the world. It is nonsensical, and I venture to ask my right hon. Friend whether he could not see his way to put a Clause in the Budget to enable the duty to be given back which was paid on green coffee that was admitted and exported again. These are very small adjustments, and I hope that my right hon. Friend will not think them beneath his notice. I shall be very much obliged if he can see his way to do something for me with regard to them.

We had an interesting Debate on the far side of the House about a matter in which I always took a great deal of interest. I used often to feel when I sat on the other side of the House that the Chancellor of the Exchequer should not introduce the Budget until the White Paper about Ireland had been circulated, for the simple reason that the financial system in Ireland, however much you may try to bring them together, is different from that which exists in England, and it would have been most useful for him to have had in the old days the use of this White Paper which has provided the interesting entertainment this afternoon before we came to discuss this Budget. This White Paper is a really remarkable document. I may remind the House of the view that was taken in this country a year ago with regard to this matter. Then a Paper was circulated which was as faulty in one respect as this new Paper is, but it was a Paper against Ireland and in favour of Great Britain. It was immediately commented on in every organ of publicity in the country, and it was said that Ireland was costing this country £2,000,000 a year. It was the first time for 110 years that Ireland had cost this country anything, and it was a mistake in calculation. It was merely owing to the non-collection of revenue that the thing occurred. After that time that mistaken opinion about Ireland had scarcely died out when the new Paper appears and we find that our old friend the Imperial contribution re-appears to the extent of some £320,000. We had a lively Debate on the far side of the House with regard to these figures. I do not believe that either of my hon. Friends was correct. The hon. Member for North-East Cork in taking the White Paper published this year, as giving a fair indication of the contribution of Ireland, was not correct at all. The two years ought to be added together just as they must be added together with regard to the figures for Great Britain. The method is to add these two last years together and take the mean of the two years. But I cannot agree at all with my hon. Friend the Member for East Mayo, that we should add to it two former years. The same reason does not exist. My hon. Friend brought the former years in, I am afraid, as the figure for Ireland, because they are before the Sugar Tax was taken off. If you make a calculation in the way I have ventured to suggest, you will find there is an increase of taxation of about £800,000 to £1,000,000. I venture to think the real increase is larger than that because the new taxes under the Budget could not be collected so quickly in Ireland as in this country. The result is, perhaps, that the year 1911 produced a revenue considerably larger than the year ending in March, 1910. I believe the Treasury is a very wicked body with regard to Ireland, but I will accept their Estimates. Could they give us an Estimate for the year ending March, 1912, as it will be very useful?

I go into this Irish matter for another reason—with a view to elucidating this question of Irish finance. The Government have got a Committee at work, and I am not very hopeful about the result of its efforts. It is working in the dark. Nobody knows what reference has been made to it. This new Committee, which the Government have appointed, I call a hole-and-corner Committee. A Committee was appointed some four years ago to consider the finance of the Land Act. It was a secret Committee, we did not know its reference, and if it did not like the evidence anybody was going to give it did not take it. The result was a most ex parte report. We have had this muddle with regard to Irish land to the great loss of the Exchequer and the people of Ireland. This finance of Irish land was used as a battle-cry between my two Friends opposite. The Bill of 1903, which started this Irish Land Purchase, was introduced by the hon. Members opposite when they were in power. We have got to take up the burden and put through the business of purchase. The hon. Member for North-East Cork said it was at a standstill. I believe there is some purchase going on in the congested districts. In the rest of Ireland there has not been a single bargain since the Land Act of 1909 was passed—or very few bargains.

Mr. FFRENCH

That is perhaps not quite true. There have been some sales in Wexford.

Mr. LOUGH

I think very little land put-chase is going on under the new Act. It is a pity we, who are friends of Ireland, should quarrel about the reason. We should try to seek it out. I think the reason is perfectly clear, and it is, that the wrong stock was established in this country. Its denomination—the calling of it Irish Land Stock, caused it to stink in the market, and for every £100 issued there has been a loss of 6 per cent., because of that name. Why should not the Chancellor of the Exchequer consider the issuing of Consols. He would immediately get the money 6 per cent. cheaper than he gets it for Irish Land Stock. Surely an issue of ten, or twenty, or thirty millions of Consols would not seriously affect the market. At least it would not more seriously affect the market than these continuous issues of Land Stock.

The argument that was adopted by the Runciman Committee was that Consols would be injured by a fresh issue for the purpose of buying Land Stock. They did not see that Consols were even more injured by a rival stock, which pays a quarter per cent. more interest, which can be bought at a cheaper rate, and has exactly the same security. The two rival stocks have competed with each other. The bankers in the city have changed their opinion. I believe that now they will express the greatest relief if not another pound of Land Stock is issued. The money should be raised by issuing the best security this country has. Here is a difficulty of any impartial, non-political financier asked to deal in stock which has an Irish name. How can he get any facts with regard to that stock which will encourage him to touch it even with a pitchfork. He hears that the Irish are a people who never pay any rent, and that the chief sport in Ireland is shooting landlords. While such stories are in circulation, and while there is so much suspicion about Irish stock, no statement of the payment annually, such as Roumania, Turkey, or Italy can furnish, when there are no facts on which to base an opinion, I ask my hon. Friend can he blame the financier. That is the feeling of this House with regard to Ireland. Hon. Members have laboured to create it in their own country. A more false and unjust aspersion upon a country celebrated for its honesty could not be made. The rents are better paid there than here. There has not been a financial crisis in Ireland for fifty years. The facts have only to be known for Ireland to raise her money in a fair way, just as any country in the world. The Treasury will not allow the facts to be known, and through not allowing them to be known they incur £6 loss for every £100 issued. They do this through their stupidity and obstinacy. Seeing that the Consolidated Fund, in the long run, is responsible, why should not the House be sensible and issue the premier security. It was this House that undertook an obligation to the landlords—as sacred an obligation on it as has ever obtained. It is not a party matter. The sooner we get rid of the obligation the better, and we are never likely to get rid of it unless we take this sensible view which I press. The reason I mentioned it was the bad turn which Irish finance took in facilitating the raising of money. It is all going to be repeated with regard to this wretched Committee which is considering Home Rule finance. The reference is not known. It is something that is to be sprung on the House, suddenly if it suits.

Mr. SPEAKER

It is wholly irrelevant to the Finance Bill.

Mr. LOUGH

So much was said about Irish finance that I considered I might refer to it. Whether the hon. Member for North-East Cork is right, or the hon. Member for East Mayo with his smaller figure, we are increasing the taxation of Ireland steadily in each year. The Treasury has started a plan by which they make Ireland pay for every old age pension, and every sop and dole received. I think the Treasury are right in that. I do not want Ireland to be a pauper. I say that Ireland could pay for every facility her people are getting, but she is a country which requires economy in the management of her finance. It is all very well for the hon. Baronet (Sir Frederick Banbury) to plead for economy in Great Britain. It is a matter of vital importance with regard to Ireland, and I would venture to give one point which is not entirely fresh to the House. There are plenty of hon. Members who are urging the Government to spend money. They say the country is rich; they say there are ample funds between what is a margin of subsistence and the taxes of the country. I saw remarks the other day, made from the Socialist point of view by the hon. Member for Blackburn. He indicated that we had a thousand millions which we might fall back upon for taxation. I do not know if I have given the figure rightly, but he said there was a sum which we might utilise in case of emergency in this country. I know how that fund is built up by some not very well-informed friends on this side of the House. They take the income of the country, and they allow a small sum per year for living. They say the rest is available. I never heard of such folly. If this country proceeds into extravagance the population of our cities will sink, our industrial population will go, and we shall be ruined just as the island on our western border has been ruined. The very thing that we shrink from we are doing in regard to Ireland. We are levying taxation in Ireland on the whole taxable income of the country. In Great Britain we are not levying on a fourth or a third of the whole taxable income, but in Ireland we are wringing taxation out of the people on the whole taxable income for the year. Ireland can only live in one way, and that is that these burdens shall be reduced, and that we shall have economy, at any rate in that respect. That is the strongest argument that can be brought forward for giving Ireland the right to deal with her own affairs. Until we do that, we ought to consider the heavy burdens which this House puts upon Ireland. I believe we ought to do everything in our power to reduce the burdens upon the Irish people. If anybody will examine the White Paper that has been issued, they will come to that conclusion. Let us leave out the dispute about the revenue of Ireland; the expenditure of Ire-land has increased by £600,000. The expenditure is £11,300,000. Ireland cannot pay that sum, and for these reasons I appeal to my right hon. Friend to consider the circumstances. If we are to plunge into more Debates upon financial relations with Ireland, as we shall have to do next spring, this House should be very well prepared for the discussion, and I would ask the right hon. Gentleman the Secretary to the Treasury whether the Department, without reference to any Committee, might not put the actual facts before the country so as to give this House fair play when it comes to consider these grave matters.

Mr. PRETYMAN

I ask the indulgence of the House, and I apologise for inflicting another speech on this Bill in this comparative early stage of the Debate, but I think the House has some right to complain of the action of the Government in regard to the Finance Bill of this year. It is true there are no novel proposals in the Bill, but there are a number of details of finance which cover a great deal more than. is thought, and if anything has been shown in this Debate, it is the obvious desire of hon. Members to take part in it in regard to many important subjects. Here we are, on the 9th August, in weather which more resembles the atmosphere of a stoke-hole than that of a deliberative assembly, and the Government are bringing forward the Second Reading of the Finance Bill for which this one night is allotted. And at 8.15 p.m. you are to have an important private Bill which is expected to go on until very nearly eleven o'clock. It is true that the Debate on the Finance Bill may be prolonged beyond that hour, but it is not likely that hon. Members will care to stay to debate matters, however important, at such a time of the Session as this, when very little good can come of it. The last information we have from the Government Bench was that they expected to get all the remaining stages of the Finance Bill next week. We have already heard to-day from the Chancellor of the Exchequer that Monday and Tuesday next are to be given up to Supply. We have been informed by the Prime Minister that the Adjournment is to be moved on the 18th. We have the Appropriation Bill to get, and other measures. There are many important Amendments in various quarters of the House which will be put down for discussion in Committee. Is it conceivable or imaginable that the Government can ask this House, first of all, to take the Second Reading of the Finance Bill in half a day, and get through it, and then next week to take all the remaining stages in the short time available. May I say this, further, we have the Budget of 1909, which made vast changes in our system of taxation, and now we have just got enough information to enable the House to review some of its provisions, and consider their effect upon the taxpayers and upon the State at large.

This is our only opportunity, and I am sure I have the opinion of the entire House on both sides with me when I say that the opportunity is wholly inadequate. I make complaint about that, not from the party point of view, but from the point of view of the whole community. To reinforce that, I may say there are many matters I should like to look into, matters of great interest on which I should like to say a few words, but obviously there is no opportunity to do that. This Debate closes for the moment at 8.15 p.m., and, therefore, I must leave those matters, though more germane to the Second Reading, and reply to one or two arguments used by the Chancellor of the Exchequer in reply to the speech of my right hon. Friend, the Member for East Worcestershire (Mr. Austen Chamberlain) particularly in regard to the question of valuation. The Chancellor of the Exchequer had to face the figures placed before the House by my right hon. Friend, who showed that there had been, to say the least, very gross errors in certain particular cases which have been brought before the House. The Chancellor of the Exchequer airily assumed that these cases were, I will not say exactly solitary, but that they were rather exceptional, and that we could not bring many other cases. May I remind the Secretary to the Treasury who is here, and the Chancellor of the Exchequer who unfortunately is not here, that cases of an exactly similar nature and character have been brought up here before, and promises have been made that the whole of the circumstances would be considered. As far as I am aware those promises have not been fulfilled, and no notice has been taken until the anger of the country and of the House as a whole, has been aroused, and the attention of the House has been called to these iniquities. The Chancellor of the Exchequer said that it was impossible to avoid mistakes with a new staff. Later on in his speech he paid a tribute to the general excellence and quality of the staff whom he had appointed. I have no quarrel with the statement of the Chancellor of the Exchequer; I entirely admit that with a new staff dealing with a new valuation of this character, a few mistakes would be inevitable. I also agree with the Chancellor of the Exchequer that so far as my information goes, the general conduct of individual valuers has been admirable, that they have been most conciliatory, and that they have endeavoured to the best of their ability to carry out the practically impos- sible task which they have been set. Therefore I make no attack on the valuers as a body of any sort or kind.

May I at this very early stage call the attention of the Committee to a document issued to-day? I think in that document we shall find a good deal of ground for the action of the valuer. The Chancellor of the Exchequer, or the Secretary to the Treasury was good enough, at my instance I think, to lay upon the Table a copy of the instructions to valuers, which were issued on the 21st January, 1911. It is a rather interesting document. When this House imposed Increment Value Duty, if there was one statement made more frequently than another, and repeated every time this matter was discussed, it was this that these duties, the. Increment Value Duty and the Undeveloped Land Duty, were laid upon land only, and not upon buildings. The idea was that buildings were to be relieved. Now let us see what the instructions to valuers were. They go-in some detail into the methods on which valuation is to be carried out. Then it goes on to say what the results of this method will be. These are the words:— By this method the following results should be achieved: (1) The transferor will not be called upon to pay Increment Value Duty in respect of any recovery in the value of buildings. That seems to me to admit that buildings may increase in value. Next:— Increment Value Duty would be collectible in all cases where there has been either (a) an increase in the value of the site compared with the original site value, or— That is the form of tax which was sanctioned by this House:— (b) the unit of valuation (or an interest therein) has actually been sold for more than its worth at the time Does the House appreciate that? The valuers are instructed by the Department of Inland Revenue that the duty is collectible where "the unit of valuation (or interest therein) has been sold for more than—in the opinion of the valuer, I suppose—it is worth at the time. May I ask the Treasury Bench what authority they have got from this House to impose the duty under those circumstances? Where is that authority? There is no such authority. Even in the Act where there is authority for a good many iniquities, there is no authority for that particular iniquity. It has been repudiated, over and over again. Hon. Members below the Gangway, who take an interest in taxation on land values, are agreed that buildings should be absolutely free from taxation. Here we have the valuers instructed in so many words what they are to do in regard to buildings. I do not know whether the right hon. Gentleman remembers that I asked a question in debate not long ago on this subject. I said: "Are you taxing occasional profits, or is only land being taxed?" Here are the instructions:— Where occasional profit is made on the entire unit Increment Value Duty will be collected. 8.0 P.M.

It may be wholly on the building, as my right hon. Friend near me says. That is a very serious matter, affecting millions of owners of buildings in this country. The House has not enacted that, and that is perhaps the most serious part of the charge. Here is this House claiming absolute and sole control over all legislation, particularly financial legislation, yet the House has parted with this control, apparently, to a bureaucracy of officials and valuers, to whom large salaries are paid, and who, I suppose, in consideration of the magnitude of their salaries, are capable of taking over the functions which used to be exercised by this House and the other House as well. There is no authority for it, absolutely no authority for it, in any shape or form. This bureaucracy, without the authority of the legislature, are demanding from every owner of realty who sells his property, and who receives a price for it which is something greater than they consider he ought to get, or "more than it is worth at the time," in the opinion of the valuer, of course—the owner of realty who receives any occasional profit has to pay a tax upon it. Will the House sanction that? The House has not sanctioned it. I do ask the support of hon. Members on both sides of the House to put an end to this system of taxation, not by this House, but by a Department without the authority of this House. What is the result of all this? And what kind of profits are going to be taxed? The case given by Mr. Holmes Ivory, brought forward by my right hon. Friend the Member for East Worcestershire, is pretty fresh in the minds of the House. The Chancellor of the Exchequer said that this was a Land Union case, and that he was quite sure if the Land Union had any stronger cases they would have brought them forward, and he assumed there were no stronger cases. I have a paper here which contains the record of a pretty considerable number of worse cases. Here is one. It is the case of a property in Glasgow, of which the original gross value was put at £150,000, and the fee simple of the land divested of the buildings £89,000, bringing out an original assessable site value of £61,000. That value was objected to exactly under similar circumstances to the other case, also in Glasgow, mentioned by my right hon. Friend. The valuer ultimately agreed to alter the original gross value to £179,000, and the deduction to £80,000, leaving the original assessable site value at £99,454. In other words he raised the assessable site value by no less than £38,374 in this one property. The difference between the two sums would, had the original valuation been allowed to stand, mean an Increment Tax of £7,075. In the other case £5,000 of duty would have been claimed. Therefore I have accepted the Chancellor's challenge, and, without going any further than the papers actually in my hand, I have produced a worse case, where there would have been nothing less than a fraudulent charge of £7,000 on the owner of the property in Scotland. The Chancellor of the Exchequer airily assumed that these cases are few in number. I tell the House, with all sense of responsibility, that there are tens of thousands of such cases, but they are in their earlier stages. These cases and the Richmond case differ in no degree from tens of thousands, except that the value taken has actually been consummated. I use strong words, but not at all in an offensive sense.

Mr. HOBHOUSE

That case, as a matter of fact, is under adjudication, and it may be that the courts will entirely repudiate the complexion which he has put upon it.

Mr. PRETYMAN

I regret it slipped my memory that the matter was under adjudication. I withdraw any statement which could be considered as referring improperly to a case under adjudication. In the Richmond case the entire procedure had been completed and there we were able to show the case in all its details. Cases exactly similar have been before the House and can be produced when the procedure has been completed and where there has been an under-valuation. The Chancellor of the Exchequer said they are very few, but the fact is they come in not in ones or twos, but in hundreds. If the right hon. Gentleman will look back through the Debates he will find dozens of cases have been referred to, and we are always receiving many new ones. Here is a letter from the secretary of the Small Dwellings Acquisition Company, Limited, of 11, Ironmonger Lane, London, in which he says:— We are a small company formed with the object of giving working men the opportunity of purchasing their houses on the instalment system. We have been served with a notice of provisional valuation (Form 36, Land) to the effect that our houses have been valued at an average of £215, whereas they actually cost us an average of £283 per house, with the result that we are liable for an Increment Duty amounting to £15 per house on completion of a sale. We have objected to the valuation on the ground that we have sold the houses at slightly above the actual cost price. We notice under Section 25 of the Finance Act, 1910, Valuation is to be considered as if sold in the open market,' and have been informed no alteration in the valuer's figures can be made. You have here then a case in which there is no profit at all, but on the principle of the last paragraph of the instructions, when they sell their houses there is an imaginary profit, and Increment Value Duty is to be levied. These cases are in thousands, and the only difference is that the duty has not yet been actually claimed. The Chancellor of the Exchequer asked another very important question. Did we claim that the valuers were distinguishing between the well-to-do people, who had the advantage of professional advice, and the small owner, who had not that advantage. I shall not charge the valuers with knowingly and wilfully making those distinctions, but events force it upon me. What they are doing is systematically under-valuing—I cannot say it is so in every place—but all I can say is that information comes from every part of the country that they are systematically undervaluing land which is built upon in order to get Increment Value Duty, and that they over-value land which has not been built upon in order to get Undeveloped Land Duty. Several concrete cases have come to my notice of that where that under-valuation is taking place on all his property built upon. It is obvious that where the owner is a well-to-do person he has the advantage of professional advice, and makes objection. He protests, and as in the case of Mr. Holmes Ivory, and as in the £35,000 case, which I quoted just now, the figure is put right. The small owner who has no knowledge, and cannot employ professional advice, is always content with the idea, naturally, that a low valuation means a low tax. He does not protest, the sixty days go by, and he is for ever saddled with this under-valuation. Then, when he parts with the property, the duty is fastened on him, and there is no opportunity of appealing. That is what has happened. It is no new story.

What I object to is that all these points have been mentioned months ago, and no action is taken, and no action would be taken if it were not that the attention of the House and of the country has been drawn to this matter, and that there is a feeling growing throughout the country that these matters must be put right. The Government had their attention called to them, and have taken no action. I will give the right hon. Gentleman a case in point. I brought forward figures from the town of Nottingham where property in the centre of the town had been valued at 2s. per square yard. That is the property of a considerable property owner. The figures were sent to the Treasury. The owner's solicitor objected, and he got that valuation raised to 3s. 6d. per square yard, but all the property of the small owners in the same neighbourhood remains to-day, as far as I know, at 2s. That is what I claim as actual discrimination. I have nothing to do with motives. I do not accuse the valuer or the Department of going and wilfully placing less taxes on the rich man than the poor man, but I say that is the effect of the procedure, because one person is capable of resisting and protecting himself while the other is not. There is a further point which arises out of that. If this under-valuation of property is to stand, and if the sixty days have expired, there is to be no further opportunity of appeal, and the burden is fastened upon those small owners for ever. It appears to me, and I think my right hon. Friend suggested it, that there is only one course which this House in fairness can take in the tens of thousands of those small owners who have these valuations fixed upon them and where the sixty days have expired. It is obvious that the only thing which calls the attention of the small owner to the real consequences of the valuation is, as in the Richmond case, when the claim for the tax is made. Therefore the opportunity to appeal ought not only to lie at the time the provisional valuation is served, but every owner ought to have the opportunity of a period of, say, sixty days from the time of the first claim being served upon him either for Increment Value Duty or Undeveloped Land Duty to appeal so that the under-valuation can be reviewed and so that there may be some result or comparative fairness.

There is another matter again which arises out of this. Here you have a valuation. What is the object of this valuation? We are told that all the land is being valued and that the knowledge as to its value will be of infinite use in the assessment of rates and taxes. May I ask the House seriously to consider of what value can the valuation of this kind be when in cases which are brought here you have errors of 50 and 60 per cent. in the values fixed by the valuers. In one case alone of one house there is an error of £25,000, and in another a sum of £38,000. May I say that in that case of the £38,000 the writer of the letter goes on to say that similar cases occur all over Glasgow, but that in many cases the owners do not understand what is going on and do not object. What is the value of figures obtained for Glasgow under those circumstances, and probably the same thing applies in most of the large towns of the country. The whole object of this valuation appears to me to be defeated by these errors. I will not now detain the House as I have made the particular point I desired to make and have called the attention of the House to the instruction issued to valuers. I hope when we get a reply from the Treasury Bench some justification will be given us of the instructions by which a tax is charged upon occasional profit. There are many other matters I should like to refer to, but I will defer those till we get what I hope will be an extended and better opportunity in Committee of moving new Clauses.

And, it being a Quarter past Eight of the Clock, and there being private Business set down by direction of the Chairman of Ways and Means, under Standing Order No. 8, further proceedings were postponed without Question put.