CUSTOMS DUTY ON TEA.

HC Deb 16 May 1911 vol 25 cc1870-961

"That the Customs Duty now charged on Tea shall continue to be charged until the first day of July nineteen hundred and twelve, that is to say:—

"Tea, the pound—fivepence."

Mr. AUSTEN CHAMBERLAIN

The right hon. Gentleman made an unusually short but I think I may also say, an unusually interesting statement in opening his Budget to-day. If he will allow me to add one other complimentary epithet to what I have already said, I would say that he has succeeded in being particularly clear and lucid in the account which he has given to the House. This is after all the occasion on which the Finance Minister as a business man makes a business statement to the country of its revenue, expenditure, and liabilities. And I think the highest praise to a Minister on such an occasion is to say that he has been clear and lucid and conveyed to the Members who listened to him a true state of our affairs. The Chancellor of the Exchequer has been able to make a statement which in many respects must have been extremely satisfactory, and I join with him in rejoicing at the improved prosperity of the country. I agree with him that at the moment the prospects are fair, and I hope they may so continue, for the whole position is infinitely better than it has been in the past few years. I suspect, however, that there is still large room for improvement before we can congratulate ourselves upon widespread and general comfort and well-being among our people.

The right hon. Gentleman concluded his speech with an appeal and a warning to the House in regard to the large measure of Assurance which he introduced the other day and the expenditure which was involved by it. I have too often made somewhat of a similar appeal to criticise what the Chancellor has said or to do otherwise than assure him that as far as I and my Friends on this Bench are concerned we shall scan all the proposals with respect to the Assurance Bill with a due sense of responsibility, not only for making that scheme a good and sound one but for the finances of the country. The Chancellor of the Exchequer would not wish it, and indeed it would not be proper at this stage to attempt to reopen the discussion of the other day or to endeavour to speak of the merits or demerits of that proposal, and all I will say is for the present that the more information that the Chancellor of the Exchequer can afford as to the cost of the various items of his proposal and as to the different details in it, so that we may know in each case what we get and how much we pay, the better we shall be pleased, and the better I think the House of Commons will do its work.

I only refer to the Chancellor's appeal on this occasion to make another appeal to him with regard to it. I hope that the Government too will walk cautiously. I hope that they too will not hurry the House for this year. For my own part I cannot but say that launching out on so vast a scheme as an Invalidity and Sickness Insurance is a scheme involving not merely such great financial responsibility for the State as well as for individuals, but also such numberless details of administrative and executive control that I think they would be well advised to consider seriously whether they would attempt in the same Session of Parliament to press their unemployment proposals. They are of far more restricted scope; they tax everyone not for the benefit of everyone but for the benefit of the few; they rest upon far more problematical grounds, and they are not supported by any such experience as we have to guide us in regard to assurance. That is my justification for mentioning the matter, as it forms a far more hazardous experiment. I cannot say more upon the subject. All I do appeal for at this moment in the strongest possible way is that the House—the whole House—should have a full opportunity of discussing this scheme in which every Member of this House takes I may say a personal interest and to which partly by past experience and partly by recent study an unusually large number of Members have qualified themselves to bring aid and good counsel to the Government. In these matters I believe that the House should have the fullest opportunity for their consideration, and that if there is no time for both the Government should not try to hurry through the whole scheme, but should leave the unemployment part which stands by itself to be considered by itself at another time.

I come back to hat is immediately germane to our discussion this afternoon—I come hack to the account which the Chancellor has given of our finance and to the proposals which he has made. I think perhaps it will be convenient, at any rate I am sure the Committee will allow me, to reverse in some sort the order of the right hon. Gentleman and to begin by making some observations upon the changes which he proposes or which he does not propose to effect. I listened with no surprise hut with considerable amusement to his announcement that he proposed to amend the Cocoa Duty. We were quite prepared for that announcement in the Chancellor's usual organs in the Press. The announcements were made in the way in which the Chancellor usually makes them in the Press in advance of his communications to the House.

Mr. LLOYD GEORGE

I do not repudiate the idea that I do communicate with the Press, but I always communicate with it quite openly, and whatever I have communicated to the Press has been in my own name, and I stand the racket, as I did the day before last. But I have not communicated directly of indirectly with the Press upon this question. If I had I should be quite unworthy of my office, because that is the last thing a Chancellor of the Exchequer should do.

Mr. AUSTEN CHAMBERLAIN

I agree that it is, and I am very glad to hear from the right hon. Gentleman that he has made no communication whatever.

Mr. LLOYD GEORGE

No, I did not.

Mr. A. CHAMBERLAIN

Then I suppose it was intelligent anticipation of the Debate.

Mr. LLOYD GEORGE

It was only an inference.

Mr. A. CHAMBERLAIN

The Treasury has always prided itself, and rightly, that no secret in connection with the Budget has ever leaked out. It is a very high tribute to pay when you remember how many people—I speak of the Treasury and the Treasury Departments, and I am not confining myself to the men in the Treasury building alone—when you think how many people are in the secrets of the Chancellor, and it is the pride of the Department, which I hope we may long retain untarnished. I was not surprised but amused at the Chancellor of the Exchequer saying that he was going to amend the Cocoa Duty. The Government's conscience has not been particularly tender upon this point, and this is strange as they adhere to Free Trade. They have taken a good many years to do away with the protection which the Cocoa Duty confers, and they only do it new because it has become extremely inconvenient to their friends behind them when they go electioneering to be asked "What about the Cocoa Duty?" Of course if the system of this country is to be what it nominally now is—a system under which no British producer is to have any preference over his foreign rivals, there is no justification for maintaining the Cocoa Duties at their present rates. But I myself, who take a different view of what would be financial wisdom, have never attacked the Cocoa Duties, and have never sought to have them altered considering what they have done. They have built up a great and prosperous industry in this country. I am reminded of a speech of Mr. Gladstone on one of his great Budgets—I think in the early sixties. On that occasion—I am speaking from memory, and am not certain about it—he proposed a readjustment of the Tobacco Duty, and then he claimed that the preference he gave to the home manufacturer would amply compensate him in the first place for the revenue restrictions under which he worked, and over and above that would enable him to pay good wages to the people employed in the trade, many of whom were women and young persons.

That is one of the things that the Cocoa Duties have done with the old and great established manufacturers. The duties have enabled them to pay good wages and build up, as we know, an extremely prosperous business. I accept their word for it that they are now in a position to be perfectly independent of any such protection, and do not care to have it continued. I quite accept that when it comes to the old-established and now strongly-established and prosperous firms, but it is not true of some of the smaller firms who have started late, who have had to struggle against very keen home competition, and to whom the small measure of protection which they derived from the duties has been of enormous service in establishing their businesses. The alteration of the duties will hit them very hard by the removal of that protection and it will do that for the sake of financial purism or the political convenience of hon. Gentlemen opposite. No one will buy his chocolate any cheaper in consequence of the alteration which the Chancellor is going to make. As regards the drawback the Chancellor is doing a long delayed justice and nothing more. I do not know why, when the Cocoa Duties were imposed, no drawback was given unless it was because at that time there was no export trade, and no one thought it worth asking for, but they are clearly entitled on all the principles of our finance to have that drawback. It has hampered them unduly and improperly, against the interests of the nation as well as their own, and I heartily support the proposal to give them a drawback. I have nothing to say about the proposal in regard to stamps except that the Chancellor's object was certainly meritorious, and equally meritorious and proper was the alteration which he fore- shadowed in regard to the licensing of licensed premises. The object of the Chancellor of the Exchequer is to exclude which have hitherto been valued with licensed premises, where in fact they have nothing to do with the licensed premises. There have been many cases of hardship which were pointed out, largely on this side, during the passage of the licensing Clauses, and I am very glad the Chancellor has seen his way, a little late in the day, but better late than never, to remedy that injustice. But there will be great disappointment that that is the only alteration which the Chancellor of the Exchequer proposes in regard to licences. I am not going to attempt to cover the whole ground to-day, but licence holders in particular, who undoubtedly and admittedly—I think it is avowed by the Chancellor himself—suffer an injustice under what he has made the law are apparently to receive no relief. Theirs is a pressing and an urgent case which I expected to hear the Chancellor deal with to-day and of which he must be prepared to hear a great deal more before these discussions close, of which he will hear so much more that I hope he will himself think it well to bring proposals before the Committee on the subject.

I go back to the earlier portions of the Chancellor's speech, and turn to his survey of the year. I hope when he comes to reply on the Debate he will be good enough to tell us in broad outline how the £1,200,000 was saved on the expenditure of the year. It is always pleasant to take credit for savings, but their merit sometimes depends on how they are made, whether they are in fact true savings resulting from the more economic use of money, or whether they be due to errors of estimates on the part of the spending Departments, or to the postponement of work which it was anticipated would be done in the year but which is now left over to be provided for in some other year. The Chancellor told us that there had been considerable arrears of Income Tax at the beginning of the year, and he pointed out the other day that that was merely the fulfilment of a prophecy which he had made when he produced the Budget of last year, and when he estimated that £2,000,000 additional arrears of ordinary Income Tax would be outstanding at the end of the year. I told him then that I thought that wholly unnecessary, and that it was a gross overestimate of the amount of Income Tax which would be outstanding. As a matter of fact, it has been a pretty accurate estimate, but for that slack collection is responsible. When you look at the amount of money which was collected on account of Income Tax in the week immediately closing the financial year, the £600,000 or £700,000 that the railway companies were asked to withhold—

Mr. LLOYD GEORGE

Under six.

Mr. AUSTEN CHAMBERLAIN

I am told £680,000.

Mr. LLOYD GEORGE

That was the total amount. I was not aware of it at the time of the Debate; £680,000, it is true, was the amount involved at the beginning. Some of them paid before the end of the financial year, and something between £500,000 and £600,000 is the amount passed over to this year.

Mr. AUSTEN CHAMBERLAIN

I am much obliged, but for the purpose of my immediate argument the lower the figure the better it suits me, because what I was observing was that the money withheld by request by the railway companies was a very small fraction of what, quite obviously, might have been collected in March, but which was in fact not collected till April. The Chancellor of the Exchequer said there is a great hardship in asking people to pay two Income Taxes within one year. That would be so if they had paid their Income Tax regularly in the previous years; but when you remember that they only had to pay two Income Taxes in one year because they had not paid at all in the previous year, the grievance of the taxpayer is very much less. But in any case, put it as high as you like, do you think you improve it by forcing him to pay in the first week of April instead of the last week in March The Income Tax authorities are convicted of slackness in collection in March and the arrears that fall into this year, a nod is as good as a wink to a blind horse—though they have, happily, fulfilled the prophecy of the Chancellor of the Exchequer a year ago, are a sign of had collection and bad work, and are not really a credit to the Chancellor or to the officers who work under him. I believe those arrears ought to be entirely cleared off within the present year, and though I quite agree with the Chancellor that Super-tax must still be in arrear, I imagine he has estimated for reduction of arrears of Super-tax in the current year, and that in due course, and without any undue pressure, with ordinary zeal and exertion, these two will be brought down to the normal figure of such arrears as there must always be within a comparatively short space of time.

The Chancellor ended the two years with a surplus of £5,600,000, which would habitually have gone to the Old Sinking Fund, but he proposes to divert the larger portion of it to other objects. With the objects themselves I find myself in hearty sympathy. The provision of £1,500,000 for sanatoria, the loan to Uganda, the payment to the Development Grant, are all excellent objects and I am glad to see money devoted to them. In particular I am glad that the Chancellor was led to call attention to the success of the Uganda Railway. It seems a good many years ago now that Lord Rosebery said we were engaged in pegging out claims for posterity. We pegged out our claims, and the next work was to develop them, and it fell to the lot of the Unionist Government in. the first instance to start that development work in the great new African dominion which had come under our sway. The most gigantic work of the kind undertaken was the Uganda Railway, and many of us who were in the House or followed politics at that time will remember now with interest and with some satisfaction the criticisms which the then Government received from the party opposite for building that railway. No expenditure ever better justified itself. Apart from its political and diplomatic importance, it has shown once again the truth of the old statement that no honestly constructed railway ever fails for long to pay. It was undoubtedly a very expensive railway, but it was a well built railway. For two or three years already it has more than paid its running expenses, and with feeders such as the right hon. Gentleman and the Colonial Office now propose to construct, I believe it will in time become a most valuable possession of the British Crown, and I rejoice to think that the work which our party began and for which they were responsible, in the midst of a great deal of criticism and not a little abuse, is now justified and continued by our successors. These are all good objects, but the result of them is that instead of paying a little over £5,500,000 to the Old Sinking Fund the Chancellor has reduced the contribution, not for one year, hut for two, which he makes to the Old Sinking Fund to £2,300,000.

That brings me to what he said about debt. The Government have paid off un- doubtedly a large amount of debt, and they take to themselves great credit for having done so. The Prime Minister and the present Chancellor of the Exchequer, when they discuss these transactions, take up an altogether boastful attitude. They pile million upon million in rather a reckless manner I am going to suggest, and they say what fine fellows they are and what a great work they have accomplished. Take an example. The right hon. Gentleman says he provides in the present year £12,500,000 for the reduction of debt. How does he make that out? First of all, he has withdrawn from the Old Sinking Fund the £1,500,000 for what he calls the Development Fund Capital account. That is not debt at all. That was a charge upon revenue at the rate of £500,000 a year for, so many years. Therefore he is not paying off debt in the first place, and he is not entitled to count that £1,500,000 as part of his £12,500,000. But, in the second place, how does he pay it all, even if he were entitled to count it as debt? By taking money which was going to debt in any case. As a matter of fact, he subtracts money which ought to go to debt, which in the normal course would go to debt, to pay what was intended to be a charge out of the Revenue set up by him only two years ago. That is not all. He adds to that the terminable annuities and the military and naval works, public buildings, telegraphs, and so forth. We always kept these separate from the charge for the fixed debt, what is habitually called debt, for which there is nothing to show, meaning thereby that against that debt we have only the British Empire to set as an asset.

We have not got a particular asset like the block of Government buildings in Whitehall or the docks at Portsmouth or Malta or Colombo. These were separate funds set up and increased automatically as the borrowings increased, and were charged to naval and military expenditure. They appear in I he Naval and Military Votes and they ought to be kept entirely separate, I think, from the provision for the dead-weight-debt. That is the usual phrase which we use as to the fixed debt charge. If you take away these sums from the £12,500,000 which the right hon. Gentleman mentioned we come to £9,000,000. I ask the Committee to look at it a little farther. How shall we measure the merits of the Government in this matter of reduction? Surely just as we would measure the merits of an individual, namely, by the sacrifice he makes in a good cause. The Chancellor of the Exchequer is living in prosperous times. He has got a growing revenue. Both he and his predecessor have been fortunate in that respect, apart even from the increased taxation. What additional sacrifice have they made in order to pay off debt snore swiftly? How much have they added to the Sinking Fund? Not a penny. They have not increased the provision which was made by their predecessors in much harder times. On the contrary, the better the times the lower the amount they give. They have not only not increased the amount, but save decreased it.

What is the National Debt? It is ordinarily spoken of as a capital sum of so many hundred millions. But it is not so many hundred millions repayable on demand, Or at any time, unless the State wishes to repay it. The obligation of the State is not to repay the capital but to pay interest at the rate of 2½ per cent., and the amount of relief given to the State is the amount of interest you have saved in respect of debt paid off. The annual interest has been reduced to the tune of £2,000,000 a year. They have reduced the Sinking Fund—that is the fund provided for paying off debt—not merely two and a-half but three and a-half millions, nearly double the amount they have saved in interest. I do not grudge the Chancellor of the Exchequer the credit due to him when he speaks of the number of millions he has paid off. On the contrary, I think any Chancellor of the Exchequer in his position would take pleasure and pride in making a statement of that kind. But I do think when one sees how little they have done in the way of sacrifice for the purpose of clearing off debt, and how very ready they are on the slightest provocation to deduct from the Sinking Fund, they ought to be a little more modest in the claims they put forward.

On the actual finance of the past two years I have very little to say. I hope the Chancellor of the Exchequer will take an early opportunity of making a full statement to us—I do not press for it to-night—about the finance in connection with the purchase of the telephones, an undertaking for which the Government is responsible, and which is now maturing. We shall be glad to be informed how the Chancellor proposes to meet the expenditure. It has been before us for years, and I have no doubt he has got his plans fully matured. The right hon. Gentleman spoke not only with a good deal of satisfaction about the results of his Budget, but he claimed for it that it had produced the money he required without injury to trade or commerce. I think it is a little early to judge of the effects of the changes which have been made. By his own confession they have not begun to be felt, or they are just beginning to be felt. What will strike the House most in regard to the Land Taxes, about which on both sides of the House we spent so much time, is that at present they cost a good deal more to collect than they bring in. I am talking of the Land Taxes only. I wish the Chancellor of the Exchequer could have said with equal confidence and wills a clear conscience that he had raised his money without injustice to individuals. That is a consideration which the Chancellor of the Exchequer ought to bear in mind, and I am afraid that too often in his great need for money to finance the great social schemes of the Government justice to individuals has given way to the great requirements of the State.

I wish to say a word as to the revenue from the duties on spirits. Spirits, as the Chancellor of the Exchequer said, are very volatile. They have forced the right hon. Gentleman to become a quick-change artist. He plays many parts with admirable spirit. Hon. Members will recollect that the increase in the Spirit Duties was proposed as a fiscal instrument which would produce a large amount of revenue. If I remember aright, the right hon. Gentleman anticipated an increased revenue from that source of £1,500,000, but by the end of the Session the Chancellor had come to take an entirely different view. He said that financially they were almost a failure. I do not wish to exaggerate. He said that financially they were a great disappointment, and that they were going to bring in but a very small part of the revenue anticipated from them. In a most interesting speech one in which he spoke from the very depth of his feelings, the right hon. Gentleman said that at any rate it would be his lasting satisfaction that, if he had not got the money for the Exchequer, he had enforced sobriety on the people, that he had done something, to cure the Scotch of the pernicious habit of drinking their national beverage, and to prevail on them to take Saxon beer instead, or to give up alcoholic liquor altogether. It was a most touching and impassioned speech, and here we have the Chancellor coming down and saying that the movement in the direction of temperance, which was first detected by myself, is still proceeding, and that it indicates a change in the habits of the people. But the whisky trade is booming. He said that the £1,600,000 which he expected first of all, fell to £800,000, but now he is going to get £1,800,000, so that temperance has gone by the board and the finance is up in the air. [An HON. MEMBER: "The consumption is less."] The right hon. Gentleman has lessened consumption. It is quite true that but for the increased duties he would not have got his £1,800,000. It is quite-true that he gets it on a less consumption than he would have got it under the old duties, but he is getting it on a much greater consumption than he expected to have when he announced to the House that if he were to leave the House next day, it would be a lasting satisfaction to him to have lessened the consumption. I think he almost wished to have on his tombstone that he had reduced the whisky-drinking habits of the people.

On the expenditure side of the Budget I have little to say. There are only two observations that I will make. Whilst none of us want to spend any more on the Army and Navy than is required, we on this side of the House wish to spend the amount which is necessary, and we do not grudge the sacrifices which it involves. I was glad the Chancellor of the Exchequer did not speculate quite as wildly about the reduction of the Navy Estimates this year as he did a year ago. I think until we know more of the actions of foreign Powers it is dangerous to hold out hopes of our own expenditure being reduced. We are not the masters. We do not lead in this matter; we follow; and by force we have got to spend the money which is necessary for the defence of our Empire. I wish I felt quite certain that the Government were spending what is required for an efficient Army, and especially for the Territorial Force, and for the proper upkeep arid maintenance of the buildings, and so forth, in which our soldiers are housed. It is very easy to put pressure on a War Minister, and it is not difficult for him to put pressure on his subordinates, to cut down expenditure in these matters. If that is done, you are not paying for the current expenditure, and the charges will come upon us with added weight in later years.

There is only one other subject on which I need say a word. In addition to the small changes which he proposes to make, the Chancellor of the Exchequer is going to provide money for the payment of Members. He said that immediately before the General Election, so that the people might know what was in store, the Government announced that they would make such a proposal in the present Parliament. Another mandate! Does the right hon. Gentleman seriously think that one in 10,000 of the electors who went to the poll voted on the question whether Members of this House should have a. salary or not? For my own part I am opposed absolutely and utterly to the proposal to put this House on a salaried basis. I believe we have the only Parliament, or the only Parliament but one, whose Members are the unpaid servants of their people. Cannot we keep to that proud and unique position? It has been the making of our country. Never throughout its long career has there been any difficulty in getting voluntary services for the public from its citizens—rich men and poor men alike. That has been the case, not only in this House, but in every local board throughout the country, on juries, and elsewhere, and if you are going to pay Members of this House, are you also going to pay the members of county councils and district councils and every new authority you set up, or every old authority on which you put added stress of labour? The right hon. Gentleman talked of the additional burden of labour put upon Members during the last few years, and said that made it increasingly difficult for men who have any other business to look after to take part in the affairs of this House. That is true. It is a great misfortune, but it is one of the gravest of all reasons for not asking the House to sit the inordinate length of time we have been asked to sit in the last two years. You are depriving the country thereby year by year to a greater extent of the services of men who cannot give the whole of their time, but who would willingly give what they could, and who would bring to this House the knowledge experience, and public spirit which are invaluable in our counsels.

6.0 P.M

Do you think you are going to compensate them or make it possible for them to come, if it is not possible now, by offering them a stipend of £400 a year? That may be sufficient to make it easy, to make it even vital for a particular class or particular classes of hon. Gentlemen to enter this assembly, but it is not enough to compensate and no payment can be enough to compensate those of whom I have been speaking for the strain and stress to which public life exposes them. You must have due regard to the capacity of its Members so as not to overtax their capacity for work, and not to make too large a demand upon the time of those who without payment and in the discharge of the public duty are ready to come here and take their part as legislators. Does it come well from a Chancellor of the Exchequer, who appeals to this House in the most solemn way not to rush into any fresh expenditure and not to press upon him any alteration in the provision for the insurance of the poor and the needy against sickness or invalidity which will cost more money, in the very speech in which he makes the appeal to us to harden our hearts against the cries of distress, to come at the same time to propose that we should vote ourselves salaries, we who ought to be the guardians of the people's purse, and not the recipients of the people's money?

Mr. RAMSAY MACDONALD

I do not propose to offer many observations with respect to the proposals that we have just heard, and the observations that I do propose to offer will be of the most general character, even with respect to the point which was last mentioned by the right hon Gentleman (Mr. Austen Chamberlain) who has just sat down. I should like to say first of all, with reference to the appeal which the Chancellor made that this House should be careful of its expenditure, that while that appeal is a very good one it must not be allowed to stand alone. It is perfectly true, as he said, that public expenditure is going up very steadily. He might in some respects have said rather rapidly. That is one side. The other side that ought to be examined is this, that the national income is going up very rapidly and very steadily, and when this national income is analysed it is found that the great mass of the people of the country, the wage-earners of the country, and those in that position, are not receiving such a large proportionate share of that income as the classes—that is a word I do not like to use, but it is very convenient on occasions—upon whose backs a wise adjustment of taxation would place far and away the most substantial burden.

I hope that the Chancellor will not weary in well-doing, because even if he has got to mount up gradually this taxation he ought to be aware of the fact that t he pockets into which he has occasionally to dip his hand, the pockets of the classes of the country, are fuller now than ever they were and more capacious than ever they were. Then there is this one single fact, that while the national income is in- creasing so rapidly and while all the stocks and shares which furnish a magnificent description of prosperity have been developing, the wages of the people of the country have actually been falling. That is the wages measured in actual pounds, shillings, and pence, and still more so the real wages measured in relation to the capacity that they give to the individual to increase his standard of living have been falling. Never was a Chancellor of the Exchequer in a better position than is my right hon. Friend to turn boldly and honestly to the people who bear the greater amount of taxation and say that if he has to ask them to bear more burdens, Providence has undoubtedly blessed them with much more benefits than ever He has done with the corresponding classes in any previous period of our financial history.

With reference to an observation which has fallen from the right hon. Gentleman who preceded me I would beg the Chancellor of the Exchequer not hastily to make up his mind as to whether he is or is not going to divide the insurance scheme which is before this House at the present moment. I am not saying that I am in favour of keeping the two sections together. I am not committing myself at all. I think there is a great deal to be said for the division of the scheme and there is a great deal to he said for keeping the scheme together; and might I say, with reference to rumours that are about and that formed the subject of inquiry in this House, yesterday I think, that we put no pressure on the Chancellor of the Exchequer to unify and to bring in his two schemes under one Bill. So far as we are concerned the question is open to us. There is much to be said in favour of division and there is much to be said for keeping them together. I hope the Chancellor of the Exchequer will not lightly or in a hurry make up his mind regarding the division of his scheme.

Then as regards the finances of that scheme, I would like to impress upon the Chancellor of the Exchequer that if we do find, after the careful inquiries we are now making and after the examination which the scheme is now undergoing at our hands and the hands of our expert advisers, the trades unions and other friends whose services are available for us, that we have to ask for a further contribution from the State, the finances of the family are just as important as the finances of the State, and that if he is going to take a proportion from the average income of a working man so large that it means the reduction of the standard of his family life, he is doing far more harm to the State than if he had got to impose extra taxation in order to prevent that sort of thing. We have always got to remember that ultimately the well-being of the State depends upon its family efficiency; if a Chancellor of the Exchequer in order to save putting a burden upon the ordinary taxpayer puts too heavy a burden upon the bread-winner then he would do an incalculable amount of harm which will probably not be voiced by influential parties in this House, but which will certainly be shown as the years go on in the deterioration of the human material with which the nation has got to deal.

My final point is with reference to the payment of Members. Candidly I confess that the payment of Members is a very thorny and very ticklish subject for a Member of the Labour party to touch on. I think it was a candid Member of the party opposite who said in a letter which I read some months ago in the "Manchester Guardian," if my memory does not play me traitor more than it usually does, that if he and his party liked they could make great party capital out of the payment of Members, because they could turn to the country and say we—he mentioned especially the Labour party in particular—have come into the House for the purpose of finding salaries for ourselves. We know perfectly well that that can be said. I am afraid it will he said. We will take the responsibility for it, and we will explain our position to our constituents. The right hon. Gentleman said that the work that has been done in this House has been voluntary work, that we have had Gentlemen who have been engaged in business, and have given part of their lives to business and part of their lives to public work. Might I say—I do not want to be offensive—that that has not been the rule with Ministers. And may I supplement that by saying that there are some hon. Members of this House who sit on neither of the Front. Benches who give as much value to the country if they receive £400 a year as some right hon. Gentlemen sitting on the Front Benches give value to the country for £5,000 a year. As I say, I do not want to be offensive.

But when those questions are raised they must be supplemented by our point of view, and if it is going to be made a taunt to us, and to my hon. Friends who sit around me in particular, and with whom I am very proud to be associated in public work, and who were quite conspicuous long before they came into this House, if that taunt is going to be levelled at us the right hon. Gentlemen must expect that we will follow it up and ask the constituencies and the country to look at the other side of the question. But he has enunciated a most extraordinary proposition this afternoon. He has coolly told us that the Government should regulate this business not according to the needs of the country, but according to the convenience of Members of this House. Supposing, for instance, that the business of legislation is becoming so great that men were required to devote the whole of their lives to it. "Oh," says the right hon. Gentleman, "let us knock our heads against this brick wall. Why should we admit the logic of facts? Let us sleep in an ideal world all by ourselves. We must not admit the necessity of a lifework. We must keep legislation as a byproduct of a few leisurely business men and a few rich landlords who are able to give more time to it." How does it work out if we look into history? What man is there whose name is revered on either side of the House and in the annals of the country who has not been one of those men against whom the taunt is thrown that they are professional politicians at 400 a year or any other sum?

Mr. A. CHAMBERLAIN

The hon. Member is mixing up his answer to other people with his answer to me. I made no taunt against him, and I have never made any taunt against any professional politician.

Mr. RAMSAY MACDONALD

The particular phrase I am using at the moment has never, so far as I am aware, dropped from the right hon. Gentleman. I should be very sorry to seem to associate him with it, but he knows perfectly well that it is part and parcel of the argument which he has been addressing, and the only point I want to make is this, that as a historical fact the men whom we honour most have been, strictly speaking, professional politicians. Mr. Gladstone was a professional politician, and I might say, without in the least reflecting on the right hon. Gentleman—and I am perfectly prepared to apply the same adjective to myself—that he himself is one, and the very fact that he could rise at that box without any notice at all to follow my right hon. Friend (Mr. Lloyd George) in the admirable way he has done shows that finance is not a sort of by-product of a busy life spent mainly in other matters. We are delighted that it should be so, and all that we claim, and all that we urge upon the right hon. Gentleman, is to let him extend his view of political responsibility and political demands.

Whether we like it or not, we must have a wider choice of professional politicians, and I believe you will agree with me when I say that amongst men of poor circumstances, men who cannot come into this House and stay in this House without outside aid, there are those who give admirable service to the country, whose experience is precisely the experience we would like to have here, whose ability to put their case would command the respect of all sides of the House, and who, consequently, ought to be men who represent, at any rate, some constituencies, in order that the House may have the benefit of their valuable experience and great ability. All that means, if I may say so, that the economic foundation of being a Member of Parliament has got to be changed. We are to have an income such as is given by trade unions with which I am associated, about £350 per annum. It is not easy for many hon. Gentlemen opposite to realise what such an income means; indeed, it is absolutely impossible for some of them to understand what it means to be a Member of this House, to do one's duty, and to try and live on the amount which we get, keeping two houses, one here and another perhaps in the North of England, or paying lodgings in London, and frequently paying railway fares to go home, and so on. It is absolutely impossible, I say, for very many hon. Members opposite to understand what an enormous and unnecessary struggle this entails. If the Committee will allow me, I will make one personal reference. I have known what it was to live in the City of London on an income that was not more than 15s. a week; but nothing in that experience was like trying to live as a Member of the House of Commons, and appearing in public and performing all the duties of the position on the exceedingly limited income which the trade unions supply to some of the hon. Members with whom I am associated.

I have always taken the view, and I repeat it this afternoon, that it is an exceedingly bad thing for trade unions to provide income for the maintenance of Members of Parliament. We are not trade union servants here in this House. Members of the Labour party ought to be national servants. If the Members of the Labour party are to receive an income for the performance of their duties here, that income should come from the nation and not from any section of the nation. Hon. Gentlemen opposite are even opposing the continuance of the present unsatisfactory, incomplete, and objectionable salary. I am afraid, however, I have been led into, the discussion of details on this, which is not the proper occasion for such a discussion. I understand that we are to have another and a separate opportunity of discussing this matter, and then I shall pursue the subject, if I should be so fortunate as to catch the Chairman's eye. What I do wish to say is, that so far as I myself am concerned, I take upon myself the responsibility—I am afraid there will be possible misunderstandings and misrepresentations—of saying to the Chancellor of the Exchequer that as regards the payment of Members, we believe that he is doing the right thing, and that he is opening a much wider door to enable members of all classes of the community to serve the State, and to give it the benefit of whatever ability they possess. If the constituencies do not want them they will reject them, but undoubtedly every psychological influence which should surround them, and every economic influence which should surround them, ought to make in the direction of causing them to regard themselves as national servants instead of mere pettifogging servants of sectional interests, whether of landlords, or brewers, or trade unions. These are all equally wrong from the point of view of this House. This proposal involves certain economic consequences, which, I am glad to say, the Chancellor of the Exchequer has boldly faced this afternoon.

Sir FREDERICK BANBURY

The hon. Gentleman who has just sat down said Members on this side of the House regarded Members of his party as professional politicians. That is not my view at all. As far as I can remember, the vast majority of Members on this side of the House, and the vast majority of people opposed to the payment of Members, have never founded their objection to the proposal on any such ground as the hon. Member has mentioned. I have always understood that Members of the Labour party, because certain sections of the community desired to have them here, have been returned to represent them. My objection to payment of Members is that it will encourage those who are able to speak, who have practised elocution, but who have been unsuccessful either at the Bar or in other professions, to endeavour to be returned, and get £400 a year. Besides, there is a possibility, which will not be overlooked, that this payment of Members may lead to something else besides a nominal £400 a year. There will be chance of appointments, a matter which will not be overlooked by the Member who is going to get his salary, and he will think that, if he finds favour with the party in power, he may receive an appointment as well. It is that possibility which I think will alter the character of this House very greatly. I do not propose to follow the hon. Member into his detailed criticism of this subject, which I presume will have to be brought up in Committee of Supply for discussion. I should have thought that as it is a question of policy and of finance, or only partially a question of finance, it should have been embodied in a Bill on which a broader discussion could be taken, and should not have been introduced in this manner in the Budget, to be followed, I suppose, by a vote in Committee of Supply, and a possible discussion upon the Appropriation Bill. Perhaps the Financial Secretary to the Treasury (Mr. Hobhouse) will tell us what exact procedure he intends to follow with regard to this innovation of the payment of Members.

The Budget statement of the right hon. Gentleman as unfolded to us makes very little change in taxation. As to the change in the cocoa duty, alluded to by my right hon. Friend, I shall say nothing. In reference to the change in the duty put upon short bonds imported from abroad, I think the right hon. Gentleman is pursuing a wise policy. I am glad he has found out that he has been losing revenue, and I think he has followed a wise course in reducing the duty to one-eighth one year, and one-quarter for two or three years. In regard to the Sinking Fund, I think that is a very important subject in view of the discussion that took place a short time ago upon the Income Tax. I am sorry the Chancellor of the Exchequer is not in his place at the moment to hear the few words which I have to say on that subject. The Chancellor of the Exchequer admits that, the sum which is appropriated, and, can be used for the purpose of the Sinking Fund, is £5,500,000, instead of £8,500,000. That shows perfectly well that the collection of the tax has not been speeded up in any kind of way, but has been, I think, purposely left over in order that the money, which ought to have gone to the Sinking Fund, may be used in the revenue of the present year. It is a very large amount of money, £3,000,000, and I think it shows a great laxity on the part of the right hon. Gentleman and his officials to allow such a large amount to accumulate.

Of the £5,500,000, apparently there is to be devoted £2,500,000 to the repayment of the Debt, and, of the other £3,500,000, £1,500,000 is to go to what the right hon. Gentleman calls the payment of the Development Fund Grant, and £1,500,000 to the provision of sanatoria and £250,000 to the loan to Uganda. As to the £1,500,000 which is to be devoted to the repayment of the Development Grant, that is not a repayment at all. The Development Fund Grant is a sum which was to be paid out of the revenue of the year—I think half a million a year—to do certain things. Therefore, what the right hon. Gentleman has done is to take money which ought to go to the repayment of the Debt, and use it for the purpose of revenue.

The sum which is devoted to the loan to Uganda is, I think, all right, because the Committee must remember that the Old Sinking Fund has not only reference to Consols, but to the general repayment of the debt, for the statute says it must, be devoted to the repayment of the debt. There is an impression that it means the purchase of Consols, but it does not mean anything of the sort; it means the repayment of the pebt, in whatever form it may happen to be. One word on a statement of the right hon. Gentleman with regard to the attitude I have taken up upon this Sinking Fund question. My attitude has always been very clear on the Sinking Fund. I have looked up a former speech of mine, made on 1st May, 1899, in which I said that I had no objection to the reduction of the New Sinking Fund—which had nothing to do with the Old Sinking Fund—even £25,000,000, or £23,000,000, provided that it was done at a time when the Debt was small, and when the burden did not press heavily on the people. I ask hon. Gentlemen to look at the difference between now and then. At that time the dead weight of the National Debt was £613,000,000. I would ask the right hon. Gentleman when he replies to give us the amount of the dead weight at the present moment. That has always been done in every Budget statement, but the Chancellor of the Exchequer omitted to do so to-day. I think it will be in the interest of those Members who are interested in financial questions to know the actual amount. As far as I can gather from Whittaker the dead weight of the National Debt last year was £713,000,000, or £100,000,000 more than in 1899. In addition we owe £90,000,000 on Irish land, so that there is nearly an increase of £200,000,000. In addition our annual expenditure is over £180,000,000 instead of £130,000,000, and Consols are 81½ instead of 111.

At that particular period of 1899 there was a very great outcry about purchasing Consols because they were such a high price and so much above par, and there was a great deal said at the time for using the Old Sinking Fund for other purposes. This is rather an important point. The price of Consols being very different at present, it might be, and I am inclined to think it would be, wise finance to redeem Consols now in preference to any other form of security, because they stand at something like 19 per cent. below par. Therefore you are getting the advantage of that if at a future time you should have to redeem them at par. I am perfectly aware there is no obligation to redeem Consols, but to pay annuities. There is a provision that before 1921 or 1923 imposing the obligation that you must not pay, but after that date you can repay, but there is no obligation to do so. If there was an obligation to repay in 1923 I should not be standing here rather condoning the purposes to which the right hon. Gentleman is devoting the Old Sinking Fund, but to say that you must devote it to the repayment of Consols because in a short time they would reach a price of 100. Notwithstanding that, it is important and ought to be very carefully considered as to whether or not it would not be good financial wisdom to redeem Consols when they are very much below par. The right hon. Gentleman estimates-that the Death Duties will bring in £25,500,000. That is a very large sum, even out of the enormous expenditure of £181,000,000. I should like to draw the attention of the Committee to the fact that we are living on our capital, that the Death Duties are a dead burden upon industry, and that there must come a time when they will not go on yielding the amount they do now unless there is an enormous increase in those duties. As a matter of fact, we are doing in this matter what a foolish spendthrift does, spending our capital.

I think that the Chancellor of the Exchequer, in view of the fact that he closed his speech with a very wise appeal to the House of Commons to be more economical, might consider also whether it is wise to spend our capital as we are doing at the present moment. I cannot understand why the Super-tax cannot be collected. The right hon. Gentleman said that it was owing to the delay that occurred two years ago in introducing the Budget. That, after all, was his own fault or the fault of the hon. and learned Member for Waterford. I cannot see why it is so, and I should like some explanation upon the point. The right horn Gentleman also said that there was a great decrease in the percentage of unemployment. I should like to know how far that percentage has been arrived at by emigration. As I understand, during the last two or three years there has been a very great increasee in emigration from this country. If the working population of our country is smaller than it was two years ago, and if the employment was exactly the same, the natural result would be that as a large number of the people who wanted employment had gone out of the country the percentage of unemployed would decrease. I do not say that that accounts for it all, but I think before the Chancellor of the Exchequer proceeds to consider, as apparently he did, that the fall was entirely due to the prosperity of the country, he ought to investigate whether or not it is due to the great increase in emigration which has taken place.

With regard to the appeal by the right hon. Gentleman to the House to be more economical, I must say I heartily approve. I listened to it with a considerable amount of surprise, because of all the extravagant Members of the House of Commons whom I have ever met in my time, I have always put down the Chancellor of the Exchequer at the head. He struck me as one of those beings who look at the future with a rosy view, and that he was under the impression that all he had to do was to wave his wand and down from Heaven pleasant showers of money would be sent. Apparently responsibility has altered his views, and he now takes the view which has been held by every Chancellor of the Exchequer in the past. I was not suprised to find that the hon. Member for Leicester did not take the view of the Chancellor of the Exchequer, and entered a caveat at once for his party, and that they were not going to sit down and support the doctrine of economy. He said that the national income was increasing. I am not sure that it is increasing, but it is a very dangerous doctrine if by virtue of sobriety and industry and thrift a person succeeds in saving a certain amount of money that it is immediately to become the object of hon. Gentlemen below the Gangway who would like to provide some of those earnings and savings for themselves. I hope the influence of the Chancellor of the Exchequer will be exercised to inculcate upon Members behind him some idea that they must eventually put a limit to the great expenditure that is going on.

I should like to ask how it is proposed to deal with the appropriation of the Old Sinking Fund. I presume that there will have to be a clause in the Finance Bill dealing with it, because a provision of £1,500,000 cannot be considered a redemption of debt. Here the suggestion of the Chancellor of the Exchequer is perfectly open, it is made to the House of Commons, and it is for them to confirm it. That is very different to the endeavour to induce people to postpone the payment of their taxes without the consent of the House of Commons, or even the knowledge of the House of Commons in order that the revenue of one year should be swollen at the expense of the other. If we are going to make any alteration in the use of the Old Sinking Fund I think we ought to do it with very great care, because unless we are very careful the temptation to a Chancellor of the Exchequer to over estimate his expenses and under estimate his income in order to have a surplus for use is one to which he is almost certain to succumb, and it is one which will be very dangerous to the finances of this country if it is persisted in. With the change of view on the part of the right hon. Gentleman as to economy perhaps my appeal may have some weight.

My right hon. Friend the late Chancellor of the Exchequer seemed to have some little doubt as to the exact amount held over by the railway companies. The amount was £680,000. A certain number of the railway companies, being honest, paid up, notwithstanding the request that they should not pay up. There is one other question, and that is I understood from the Chancellor of the Exchequer that next year the amount of money which he will have to provide for the Insurance Bill is something over £2,000,000. I cannot understand how he arrives at that sum. It is quite true that the Bill will not be in operation until the beginning of May, and that therefore there will only be eleven months in the year instead of twelve. But I understood from the right hon. Gentleman that thirteen millions of people will come under this Bill—nine million males and four million females, and that there would be paid by the State a contribution of twopence per head per week for the thirteen millions of people. I make that out to be over £5,000,000 of money, and I want to know where I am making the mistake.

Mr. HOBHOUSE

made a remark which was inaudible.

Sir F. BANBURY

I cannot understand it. Surely if there is to be a contribution from three sources, the employés, the employers and the State, and if you are going to have the scheme based on actuarial calculations, all those three people must contribute every week equally. Unless you do that, I cannot see where you are going to get financial assistance. It is very much the case of the superannuation funds of the great railway companies. In those cases so much is contributed by the employeé and by the company, and the company pay their contribution every year in exact proportion to what the employeé pays. I should be much obliged if this is explained. After all, we are, under this Budget, dealing with the question of how are we to find the money when the Insurance Bill becomes law. Therefore we really ought to know what the amount is to be. It is the more important, because the Chancellor of the Exchequer has told us that next year he will be able to provide the insurance without finding any fresh sources of taxation. Whether that is to be done by a reduction in the amount proposed for the Navy, or whether it is to be clone by an increase in the produce of the taxes I do not quite know. We on this side, and many on the other side, will certainly deprecate any attempt to reduce the amount spent on the Navy. To my mind it opens a very alarming vista, if, for the sake of the Insurance Bill, we are to reduce the amount spent on the far greater insurance, the insurance of our safety, our first line of defence, the Navy.

Mr. LOUGH

I am glad to have a second opportunity of congratulating the Chancellor of the Exchequer on laying before the Committee a statement which I think will be eminently reassuring to the great trading interests of the country. One can hardly take in the broad outline of the figures which the Chancellor of the Exchequer presented without a strong feeling of gratification at being associated with a State which can show such extraordinary figures. We may comment on them freely, seeing that the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) appears to take the same cheerful view of the situation as far as the immediate future of trade is concerned. The figures show an income of nearly £182,000,000 on which the Chancellor of the Exchequer may calculate with such accuracy that with only slight changes, and without imposing new taxation or straining any of the resources of the State, he can rely upon next year bringing in the same good results. I think that is a most satisfactory feature. It is a great pity there was so much contention over the financial part of the first of the three Budgets which the right hon. Gentleman has laid before the House. The last two have been eminently reassuring, and if the right hon. Gentleman goes on in this way with his Budget statements, as I hope he will for many years to come, he will be looked upon by the country as a steady-going financier in whose hands all the great interests are perfectly safe.

The words in which the Motion has been put from the Chair enables me to raise a small practical point which I have already mentioned to the Chancellor of the Exchequer, and which I was disappointed he did not deal with in his statement. I feel so strongly on the matter that, if it would advance the object I have in view, I would move an Amendment in order to get it discussed. But I will not adopt that course, because there will be an equally good opportunity in connection with the Finance Bill. The Motion is that the Tea Duty shall be levied at a certain rate until 1st July, 1912. I would like to substitute for 1912, the year 1914 or 1915. Speaking as a business man, I think one of the greatest blots on our financial system is the great uncertainty produced in the commercial world by the Budget scares, which derange the commerce of this great country in every sphere, and are caused entirely by this House and its incapacity to take a sensible view of business. I should like to see the Chancellor of the Exchequer fix this tax, not for the shortest time possible, but for the longest time that could be done with due regard to the exigencies of the political party handling the finance. The same thing should be done with the Sugar Tax, the Tobacco Tax, and all these other great taxes. From what the right hon. Gentleman has told us, it is perfectly clear that he will not be able to take off any taxation next year. From the use he is going to make of the money, great benefit will evidently go to those classes of the community who might be supposed to benefit by a reduction of the Tea Duty or the Sugar Duty. As the Chancellor of the Exchequer is giving them to benefit of insurance, and the other great benefits to which he has referred, he might, I think, consider the great difficulties into which the country is plunged by the uncertainty which is now created every year.

There was a great meeting held a few days ago in the City of London, attended by the chief representatives of all the great trades concerned, in reference to this matter. The Chancellor of the Exchequer will cause other great meetings to be held in other parts of the country, if he does not take some such step as I am suggesting to protect the trades from this unnecessary uncertainty. In a little chat which I had with him, the right hon. Gentleman told me that there was a constitutional difficulty in the way—that we must have one tax to discuss freely in the House of Commons, on which the whole subject could be opened up. That is not a constitutional difficulty, and could easily be got over. We could put up a sham tax. We could agree to have a perfectly open discussion, and at the same time the great interests involved might be reassured by the course I have suggested. I wish the Chancellor of the Exchequer would consider the matter between now and the introduction of the Bill, in order to see whether, as he is giving the country no reduction of taxation he cannot at least give the trades an assurance that the Budget scares and the harm they do shall not occur so frequently as they do at present. The extent to which they disturb the industry of the country is not fully realised. The arrangements for commerce have to be on settled lines. A great number of people live by this system of distribution out of which the Chancellor of the Exchequer collects the noble revenue of £69,000,000. If for one month, or two months, or, as happened last year, for six months, trade is convulsed, even if there is not ranch reason for the convulsion, much injury and suffering is caused to large classes of the population which we in this House might well manage to avoid.

There is so little change in the fiscal position caused by the Budget of the year, that we have apparently only one matter to discuss, namely, payment of Members. As I have always been an advocate of this principle, having put it in all my election addresses, of which I have issued six to the same Constituency, and always been returned upon them, perhaps I may say a word in reply to the remarks of the right hon. Gentleman the Member for East Worcestershire on the subject. Nothing could be more appropriate than that on the very day after we have dealt, I hope finally, with the difficulty in which we in this House find ourselves in regard to the House of Lords in dealing with the affairs of the country, the Chancellor of the Exchequer should make this far-reaching proposal. I am one of those who believe that payment of Members will not diminish the utility or the dignity of this House, but that it will have exactly the opposite effect. The Chancellor of the Exchequer said he would not go into the merits of the question, and he did not do so when he made his precise proposal. But towards the end of his speech, in a few eloquent sentences, he made an appeal to us, and I think there was a strange connection between that appeal and his proposal to pay Members of Parliament. He appealed to us to take this matter of expenditure seriously in hand. He appealed to the private Members; he said that we had full control; he asked us to exercise the authority that rests in our hands, and to help him to introduce a more economical system. Looking at the position of the private Member to-day, one might almost think that the Chancellor of the Exchequer was chaffing us. What control have we over expenditure at the present moment? What control have we over anything?

The House is run by the two Front Benches. If one effect of this proposal is that we shall re-establish the House of Commons in this country—that is, a House of Commnos in which the private Member paid for his services, renders good service to the State—the proposal of to-day will make the Chancellor of the Exchequer famous for all time. The right hon. Member for East Worcestershire said that this country had always produced a band of volunteers ready to do the work. I suppose he meant that the country would always produce a band of 670 volunteers, ready to come here to bear the charges, the travelling expenses, and the cost of a house in London, and to do all the work necessary for the State. There could not be a statement more ludicrously removed from the fact. There are no such 670 volunteers. Practically one-third of the House is paid already. But the present system is secret, extravagant, and almost corrupt. It is a splendid suggestion that it should be changed in on blow to such a simple system that the country will understand. When the right hon. Gentleman opposite was speaking about the unpaid Member, I could not help thinking about his own salary. I do not think that any objection to the private Member being paid should be urged in this House by any Member who receives, or has ever received, a salary. The contention that Ministers give a sort of service that the private Member does not give, will not bear looking into for one moment.

The CHAIRMAN

It does not seem to` me that the general discussion on the Budget is the right time at which to discuss the general principle of payment of Members. This is the occasion on which we discuss the finance of the year; but I cannot remember any other occasion on which we have discussed a principle of this kind in this way. I do not think we ought to do so on this occasion. Hon. Members can say that they object to this or that point in the Budget, but to discuss the matter in a general way, as the right hon. Gentleman is now doing, would not be advisable.

Mr. AUSTEN CHAMBERLAIN

The postion in which the Committee finds itself is really a very peculiar one. We have had no opportunity of discussing this question hitherto. The Prime Minister, when asked, has told us to wait for the Budget. We are given to understand that the proposal will not be embodied in the Finance Bill; therefore we shall not have the ordinary opportunity for discussing it later. Under these circumstances I would ask you whether, the case being so exceptional, you do not think that a proposal of this kind, made in the Chancellor of the Exchequer's Budget statement, is a fit subject for the general discussion which follows upon that statement. I put it as an exceptional case, having regard to the fact that we have had no opportunity to discuss it before, that we shall apparently have very little opportunity afterwards, and that the Prime Minister himself has always pointed to this occasion as the one on which we were to be told the truth and to be able to discuss it.

Mr. LOUGH

Of course, no one would differ from the expression of opinion which you have given. But would it not be con- venient that we should have a statement as to what opportunity for discussion there will be? If we do not take the opportunity which seems to be presented now, another opportunity may never occur.

7.0 P.M.

The CHAIRMAN

I am governed, of course, entirely by the ordinary rule of revelancy. I cannot remember any other occasion on which we had a discussion on a question similar to this upon the Budget statement. I do not think that we ought to depart from general practice in this regard. In reference to the point raised by both right hon. Gentlemen—for the point put to me by both is practically the same—as to what opportunity will be given for the discussion of this question, that, of course, does not rest with me. I do not know myself whether the Government intend bringing in a Bill or not—

Mr. A. CHAMBERLAIN

No.

The CHAIRMAN

Or whether they intend to bring in a Supplementary Estimate. But whether it be one or the other clearly that would be the proper occasion on which this principle should be discussed, and not now.

Mr. A. CHAMBERLAIN

On a point of Order. May I put one further consideration. You are necessarily, as you say, governed by precedents largely. I submit to you there is no precedent in this case. I do not think that it is possible to recall a case where an announcement of this character has been made as part of the Budget statement. I submit, therefore, that the precedents of which you are thinking do not cover such a case.

Mr. CHIOZZA MONEY

On a point of Order. The right hon. Gentleman and the hon. Member the Member for Leicester (Mr. Ramsey MacDonald), have already discussed this subject at some length, and I think it will be the general- opinion of the Committee that it would be very desirable to go on with that discussion to a certain point.

The CHAIRMAN

I am very sorry I cannot see my way to depart from the ordinary rules in regard to this matter. It is not a question for me to decide as to what opportunities of discussion ought to be given. I do think that that is a question that might be, and ought to be, put to the Government. Beyond that I cannot go.

Mr. CHIOZZA MONEY

Could not the Government announce now what they propose to do.

Mr. J. W. WILSON

It is hardly a point of order that. I desire to put, but may I express the hope that some word will be conveyed to the Government on this matter. You, Sir, have ruled out of order—and correctly so, technically, I think—a discussion on the payment of Members. This is the first day's discussion on the Budget, and the first day's discussion generally ranges over a very wide area. I hope opportunity will be given for discussion. I think there is reason for some Supplementary Estimate, or something being brought forward if, as I understand, this payment is to be made retrospective from 1st January for instance. It is really a subject that needs to be brought before the House in specific form either by Resolution or other method.

The FINANCIAL SECRETARY to the TREASURY (Mr. Hobhouse)

May I be allowed to intervene for a moment? The Government certainly will offer no opposition if the Chairman now thinks this a convenient opportunity for discussion. The Government certainly would raise no technical objection or opposition if the Chairman rules that this time is convenient, notwithstanding precedent or absolute precedent, for discussion of this particular question. I can make no suggestion to the Chairman, of course, but I certainly shall raise no technical opposition at all. Upon the first question perhaps I may be allowed to confirm the statement of the Prime Minister—namely, that we propose to proceed by means of Estimate and not by Bill. At all events, when the Estimate is submitted the House will have a full opportunity for discussion on this particular subject. If the Chairman rules that he must follow precedent, and cannot permit the discussion to take place now, the Government certainly will afford every opportunity for full discussion upon the subject by means of an Estimate laid before the House. We certainly do not desire in any way whatever to prevent the fullest possible discussion—and that, both from the point of view of the Opposition, and also from the point of view of the exceeding good case which we think we have.

Mr. A. LEE

Does the right hon. Gentleman mean that we can have one day's discussion in Committee of Supply?

Mr. HOBHOUSE

I would not like for the moment to suggest that the discussion will last only for one day or not. I do not want to commit the Government to an undue curtailment of time, nor at the same time can I pledge the Government to an extended discussion. Certainly we do not wish in any way to Burke or shirk discussion.

Mr. LOUGH

May I appeal to you, Mr. Chairman, to reconsider your decision in view of the statement we have had on behalf of the Government, and in view of the fact that this proposal is largely a financial proposal. There is the total amount—there is the amount of the salary, and other things which make this as it seems to me eminently a financial proposal, and surely you cannot rule out the discussion entirely? The right hon. Gentleman the Member for East Worcestershire and the hon. Gentleman the Member for Leicester have mentioned this matter, and therefore a certain amount of latitude has been allowed, and if I may say so should be continued. I plead with you most respectfully to give us as much latitude as possible.

Mr. HAROLD CAWLEY

Would a discussion on the amount of salary as part of the principle be in order?

The CHAIRMAN

The question of amount is certainly in order to some extent. With regard to the general question, it is quite clear to me, having heard this discussion, that we ought to keep to our general rule. There ought to be—I think I may say that—opportunity given for discussion of this matter. Clearly that opportunity ought to be either on the Estimate or on the Bill—but not now. We did not discuss the Old Age Pensions on the Budget, except incidentally. We discussed them in that case upon the Bill. There have been similar cases of grants in Committee of Supply even in my time. There was the £100,000 for building schools, mentioned, I think, in the Budget, but not discussed at length. Then, of course, there was a Grant, for unemployment incidentally mentioned in the Budget. If all these questions are to be made the subject of a prolonged Debate in the Budget discussion we shall be departing from our own rule, and I think that on the whole we shall find it very inconvenient. I am very sorry I cannot go beyond that.

Mr. LOUGH

I bow entirely to your decision, Mr. Emmott, but may I remind the Committee of two points which you will allow me to repeat my allusion to. The one is the very interesting and important statement made by the right hon. Gentleman the Financial Secretary to the Treasury that the procedure is to be not by Bill, but by Estimate, and that it is a Budget matter. The Government, I think, are pursuing a very wise course in that respect, especially if they pursue it in the spirit that the right hon. Gentleman has mentioned, because he has said that at every stage the Government is willing to give full opportunity for discussion. Seeing that the Government has said that, I would appeal to them strongly not to allow undue delay, but to put the matter through as quickly as they can. Then you said that within certain limits—and I will carefully observe them—the amount of the salary might be discussed. I am glad that the Government have not approached this matter in a shabby fashion. I do not think that they have mentioned at all too large an amount. The Chancellor of the Exchequer made that good by reference to the practice in other countries which are not so rich as ours.

I believe when the Government come co consider this question closely, which we cannot do here having regard to your ruling, that they will find that the thing will have to be settled in just the way the salaries of Civil servants are settled, and in respect to the onerous character of the work done in comparison with the payment that is made for similar work in other places. I think the Government have proceeded pretty fairly. If I suggest any Amendment it would be £500 instead of £400. They have not offered too much. I have given a good deal of thought to the question myself, and when one considers that the whole amount involved is only £250,000 out of the Budget of £180,000,000, I believe that it will be found to be not a bad investment for the nation. I close by simply referring to one point. The Chancellor of the Exchequer appealed to us in dealing with the growing figures to think of the taxpayer, and to endeavour to reduce the expenditure. But what can we do in these matters? The Government naturally think of themselves. Our opportunities of touching these subjects are of a most scanty and ineffective character. If Members were paid for their work, and made to do it, and made to give the necessary time to it, I believe the change would be a wholesome one, and in the interest of the country. I believe it would turn out to be one that would result as well in economy for the taxpayer.

Mr. AUSTEN CHAMBERLAIN

May I ask the Financial Secretary to the Treasury just to tell us what the Government propose in regard to the progress of the Budget. I forgot to say anything about it in the one or two observations that I made. It is for the convenience of the Committee that we should understand exactly how we shall be situated. I presume that to-night the Government do not want anything except the Tea Duty Resolution, and to-morrow the Income Tax Resolution. And that would permit the Committee, following the usual practice, to renew the general discussion. After the Tea Duty to-night no other business, I take it, will be taken?

Mr. HOBHOUSE

The right hon. Gentleman I think very accurately has represented the course the Government intend to take. If the discussion ends before eleven o'clock there is no intention of taking any further business. The general discussion will be resumed to-morrow on the Income Tax Resolution, and that will conclude the business to-morrow.

Mr. YOUNGER

If I believed it possible that the prediction of the right hon. Gentleman opposite would be fulfilled that the payment of Members in this House would reduce the power of the two Front Benches, particularly of the Front Bench opposite, I would only he too glad to see Members paid. But I am afraid I do not take that view. Still I am not going to enter into a discussion on that point. I entertain the very strongest objection to the proposal, and shall carry my faith to the Lobby when the time comes. With regard to what the right hon. Gentleman said about stereotyping certain duties for as long a period of years as would conveniently be regarded as fair and reasonable there is no doubt a good deal to be said for it from a commercial point of view. Everybody knows that uncertainty about the duties to be introduced into the Budgets of the last year or two created a great deal of commercial confusion. It is the desire of every one, I should say, to avoid that. But at the same time this House must retain its control over certain taxation, when we have really given away our control over certain other taxes. We have only retained control over the Income Tax and the Tea Duty. As we have to pass each year these Votes involving sums of £50,000,000 or £52,000,000 it appears to me a consideration—which must present itself to this House—that it is desirable, even necessary, to hold some sort of con- trol of this kind over the Government by way of finance. It is a more important thing than even the commercial stability to which the right hon. Gentleman referred.

I do not propose for a single moment to traverse the whole statement of the right hon. Gentleman the Chancellor of the Exchequer. I take leave to congratulate him on the position in which he finds himself. As one who has been actively opposed to him for some time, I heartily welcome his return to the House in the condition of health and strength in which we are pleased to see him. We missed him very much in the Debates on the Revenue Bill, and we welcome his return to his accustomed place among us. The right hon. Gentleman referred to myself in dealing with the question of Spirit Duty. I do not pretend to be an authority on the Spirit Duty. I have no connection with the spirit business, and do not know very much about it. But I do think that the right hon. Gentleman, so far as my knowledge goes, has taken a fairly accurate view of the situation. I believe that the repletion of stocks has gone on to a certain extent during the past twelve months, and that probably it has reached its limit. The allowance of something like £1,000,000 in all probability will be borne out in practice.

I should like to warn the right hon. Gentleman that there are certain factors against even the estimate which he has submitted to the House, and if he does not take some steps to prevent the continuance of what, I am told, has become a very ordinary practice, he will find his estimate somewhat astray. This is a rather serious question. I know nothing of it myself. It was only the other day I heard of it and I mention it now when the right hon. Gentleman in dealing with this estimate for next year gave the figures on which he based his calculation, which showed a tax revenue of £21,400,000 out of 29,000,000 gallons. I do not know whether he has been informed that a very bad practice has arisen in blending cheap grain spirits, which are used now much more largely than before, with some sort of article which I believe is called basis wine, and which is being used to break down the strength of those spirits instead of distilled water. That particular article made from raisins contains from 22 to 24 per cent. of crude spirit, and pays about a shilling duty; and it must be very obvious. that if spirits of 15 or 20 overproof are broken down by an article of that kind instead of distilled water, the revenue stands to lose unless it is controlled by putting a higher tax upon this basis wine. The use of this basis wine has the advantage—I am told has the great advantage—that so far as taste is concerned it practically converts the new raw crude spirit into a mild and delicate article. So that the revenue loses and the consumer loses. Although the right hon. Gentleman has told us he is getting back his revenue from spirits, I do not believe he is getting the same advantage now that the duty is 14s. 9d. as when the duty was only 11s. I make that statement about this new article because I do not think it is fair to good, honest traders that this kind of thing should go on and they will in turn be forced to adopt the same course of action if they are to compete with those who are underselling them.

With regard to the Licence Duties and the concession which the right hon. Gentleman has offered to make with regard to valuation, or rather as to the definition of premises, the Secretary to the Treasury promised to look into that when the Revenue Bill was before the House. I am very glad we are to have that, but the right hon. Gentleman declined to say, and I think quite rightly, how he intended to frame his Clause. When I spoke to the House some time ago I gave instances, bad enough in all conscience, but I heard of a case the other day in which a licence holder was not only charged licence duty upon his house, but also on a farm which he rented, and on which he sold no spirits. I am very grateful that the right hon. Gentleman has made up his mind to remedy that anomaly. He told us to-day that he estimated his revenue from Licence Duty at £4,200,000. I do not think he told us exactly what the yield was in the last year.

Mr. LLOYD GEORGE

I think it was £4.120,000. The actual yield, or the previous yield, was £4,770.000.

Mr. YOUNGER

Does the right hon. Gentleman mean that in 1909–10 it was £4.700,000 and in 1910–11 only £4,120,000?

Mr. LLOYD GEORGE

We did not collect in 1909–10 because we had no power in the Budget of last year to collect it. Therefore the test is what the value was. There was the Wrigglesworth case of £770,000, which brought the revenue down to £4,120,000.

Mr. YOUNGER

That practically brings out the right hon. Gentleman's original estimate in 1909. He expected £2,100,000 and an increased revenue out of his taxes of over £2,000,000. That included the wholesale licences. He now expects that and the yield will be about the same. Then this Estimate of next year gives. back the allowance on the Wrigglesworth case. I am told that the concession which the right hon. Gentleman and the Financial Secretary was kind enough to intimate to the House is going to a large extent to be off-shot by the fact that the Inland Revenue officials are screwing up, valuations on which repayment is to be-made. I aim informed that they are looking into the valuations with a strictness which the right hon. Gentleman did not intend, and that they are not proposing to pay back the actual amount exactly in excess of what ought to have been charged if the law had not been altered but they are beginning fresh valuations with a view of not paying back what they ought to pay back. I hope the right hon. Gentleman will look into that. These concessions are material and important, and the right hon. Gentleman must not run away with the idea that the pressure of these taxes is, not severe.

The exaction of these taxes, particularly in respect to the minimum duty on the small houses in England and Scotland are very severe, and they are crushing these poor people and drawing the very life blood out of them. There was a rapacious biblical person named TiglathPileser—a gentleman whose exactions were probably more extreme than any other gentleman of the same character, but he left Hezekiah something. But the right hon. Gentleman excels TiglathPileser, for he is bleeding these people white, and I certainly hope he may do something or other to mitigate the severity of the minimum duty he is charging. This-minimum might be claimed to be fair and reasonable when the rateable value was taken on a certain basis, but surely there ought to be a reduction made under the system now adopted. I should also like to say that there was great disappointment, and it was very deeply felt that no progress was yet made with the preparation of the-register of any licences. I am not blaming the right hon. Gentleman. What I say is that there was great disappointment. As a matter of fact. I suppose it is hardly completed yet even so far as the £500 houses are concerned. It was said in 1909 that this 50 per cent. charge on annual rateable value would only last a comparatively short time, and that within a year or two there would be a Government register of annual licensed values, a much more correct basis, and that after that the tax would be upon a licensed value. It will be another year before the right hon. Gentleman has this ready. I do not know whether he is told how extraordinarily these values have turned out, but I may tell him frankly I think the whole thing is going to smash up. Only the minimum comes in now because the houses over £500 are returned as of no licence value. How is the right hon. Gentleman to tax these if they have no licence value—how are they to pay the tax at all. Is £250 the minimum to apply to all houses of that kind, and, if not, why not? This is a very serious question, and it raises a difficulty which is a very serious one.

I always thought if we could get a reasonable basis of taxation based upon the trade people are doing it would be fair and reasonable, and the only fair way to tax a man is on the capacity of his business. But if we are to have a system of valuation with large anomalies of that kind the right hon. Gentleman's difficulties will be greater than those of his predecessors. I hope the right hon. Gentleman will give some attention to this because he may have either to alter the system on which these licence values are decided and fixed, or to find some other basis on which he can put that taxation. I am very much obliged to the right hon. Gentleman for his concession, but he must not expect to get through this Budget without having to review these taxes. These burdens do not fall anything like evenly. They are extremely harsh in many respects, and I think the right hon. Gentleman must admit that there are cases of great hardship, and although I recognise the difficulty frankly, at the same time I hope if we can bring before him any real case in which he ought to give some further concession and relief he will do so.

Mr. BALFOUR

I do not rise to continue the line of argument put before the Committee with such admirable force and moderation by my hon. Friend who has just sat down, but I rise to put a single question to the Chancellor of the Exchequer, not upon the merits of his Budget or any parts of his Budget, but upon procedure. I was not in the House when certain questions were put to you, Mr. Emmott, and when you gave certain rulings with regard to the discussion of payment of Members. I understand you then ruled that payment of Members or the merits of payment of Members did not naturally and properly fall under the discussion of the Budget, which indeed provides the money which could be used for payment of Members, as the objects of Budgets are not the expenditure of money but the raising of the money.

If I may say so respectfully, I am sure that ruling is in accordance with the whole practice and tradition of the House. I do not see how we could get through the Budget Debates if the objects for which the money is to be used were to be discussed as well as the objects for which the money is raised. At the same time I might remind the Chancellor of the Exchequer of an answer given by the Prime Minister—I do not think there was the least pledge upon the subject—but which did raise expectations that upon the Budget there would be an opportunity for dealing with payment of Members. I do not know whether the Prime Minister really intended that. It does not alter the situation, and as regards this Debate I have not risen to suggest for a moment that by common consent the Chairman might be asked to modify the ordinary procedure of this House. I do, however, think that we have a right to ask the Government what opportunity they are going to give us to discuss payment of Members, whether that opportunity will come soon, and whether when it comes, it will be ample in its character. Otherwise there will be considerable disappointment to many hon. Members who have come down here expecting the question to be raised, and who are anxious to give their views upon it. Several hon. Members have already been permitted to touch upon it, and if that line of discussion is now stopped I think the Government might very properly tell us what opportunities we shall have for dealing with this very important question.

Mr. LLOYD GEORGE

I think the request of the Leader of the Opposition is a very reasonable one. He has stated the practice of the House quite correctly, for it is not in accordance with precedent, on the introduction of the Budget, to discuss each item which is set forth in the Budget statement, whether it is new or old. The Leader of the Opposition stated very truly that the Government ought now to be in a position to inform the House when there will be an opportunity of discussing the subject. The intention of the Government is not to introduce a Bill this year dealing with payment of Members, but to put down a Supplementary Estimate for the amount. There will then be an opportunity on that Vote to discuss the subject fully, both in Committee and on the Report stage. I can promise on behalf of the Government that there will be a full opportunity this Session of discussing the question.

Mr. BALFOUR

I want to make this matter quite clear. I understand the Government have decided to proceed this year with this question by Estimate alone. I should be prepared to comment upon that decision, but I do not think it would be in order at this stage. I understand the Government have not come to any decision as to what permanent form payment of Members is to take. I wish to ask whether the Chancellor of the Exchequer thinks a single day in Committee of Supply, followed, possibly, by a discussion on Report, is really enough to deal with a question so complicated as payment of Members. I do not press for an answer now, but I suppose there will be an extra day.

Mr. LLOYD GEORGE

I think the right hon. Gentleman had better address that question to the Prime Minister, and then, no doubt, he will receive an answer. I will let the Prime Minister know the view of the Leader of the Opposition on this point, and I have not the faintest doubt he will give the opportunity which the right hon. Gentleman has asked for.

Mr. AINSWORTH

I understand that for t he future stables will not be included in the valuation of an hotel. I hope that principle will be carried further. May I point out to the Chancellor of the Exchequer that if he is right in excluding stables from the valuation of hotels, he ought to bear in mind the fact that in all first-class hotel buildings there is a great deal of expenditure of capital that has nothing at all to do with the part of the premises used for the, sale of intoxicating drinks. The more you spend on the buildings of the higher class of hotels, the less is the value of the part devoted to the sale of liquor. I wish to ask the Chancellor of the Exchequer not to consider a stable as part of the valuation of an hotel, on which the licence is to be calculated, and to remember that the higher class the hotel the less is the quantity of liquor likely to be sold. By valuing a licence according to the money spent on the building he will be imposing a higher licence on a first-class hotel than on one that deals chiefly in intoxicating liquors. I am glad the right hon. Gentleman has acknowledged the validity of this argument by agreeing that stables are not to be included in the valuation of an hotel. The standard which has been laid down is that in a plaec where not more than one-third of the receipts have been received from the sale of liquor, the licence is placed on the lower scale. I want the right hon. Gentleman to raise that proportion from one-third to one-half. I can assure him that in my own Constituency there are a number of hotels largely patronised by visitors in the summer which are not able to show that the sale of drink is less than one-third of the total receipts, and therefore they are licensed on the higher scale. I hope the Chancellor of the Exchequer will take into his earnest consideration the arguments which the hon. Member for Ayr Burghs has brought before his notice, and when considering the valuation of the property I trust everything will be excluded that is not germane to the licensed premises.

Mr. EYRES-MONSELL

I rise to bring a specific case before the attention of the right hon. Gentleman which I consider to be a great hardship in the collection of the Income Tax. I would rather have raised this question in the form of an Amendment, but as the hon. Member for North Islington (Mr. Lough) reminded us it is just as well to seize all the opportunities one has of bringing points forward. On this side of the House we do not seem to have very much luck in the question of Amendments. If one makes an actuarial examination of the Amendments and Clauses which were put down to the Revenue Bill, one discovers that the odds were 53 to I against any particular Amendment being raised. We had 160 new Clauses down for discussion in regard to the Revenue Bill, and only three were discussed, the rest being what the Prime Minister described as "an exuberant. efflorescence of legislative fecundity," and they were not allowed to be discussed by the party opposite who pay such lip service to the principles of free speech. May I remind the Chancellor of the Exchequer of an illustration which he used when discussing the Budget of 1909. He said his proposals were like a wide grating put across the river which caught the big fish and let the little fish go through. I am sure the illustration was quite worthy of him, but I want to tell the right hon. Gentleman that he is not letting all the little fish through, and I wish to bring to his notice the fact that he has caught a very small fish which nobody wishes to be caught, and I am going to ask the right hon. Gentleman to let it go. The case I refer to comes under the Income Tax of 1s. 2d. in the pound, which is being charged on the pensions given to the widows of army and navy officers. I have a case of this kind in my hands. Two years ago it was decided to deduct Income Tax at the rate of 1s. 2d. on the full pension if these widows in receipt of the pensions were residing abroad for any other reason than for the benefit of their health. It appears that the Paymaster-General's Department refrained from charging this tax for two years, hoping the order might be cancelled, but in November last year they were told to get in the two back years' taxes in the four months ending 31st March last. The lady in question was therefore charged £9 6s. 8d. on her pension during that time, and in future she is going to be charged £1 3s. 4d. quarterly. That lady's pension is £80, and she has no other means whatsoever. I do not think the widow of an officer should be asked where she is living or for what reason she is living abroad. If this lady had said she was living abroad because of ill-health, she would have got a rebate, but, because she was honest and said it was not due to ill-health but to causes of economy that she was living abroad, she had to pay the full 1s. 2d. in the £. It is a monstrous thing that high rate should be charged on a total income of £80.

The Chancellor of the Exchequer said some very nice things in introducing his National Insurance Scheme about soldiers and sailors who have been incapacitated from further service. He said he thought it a great scandal better provision was not made for them by the State which they had tried to serve. I am sure those words will be fully appreciated in the Army and Navy. I can at all events answer for the Navy. I am sure they will be appreciated, but I am quite sure what would be more appreciated would be the knowledge to soldiers and sailors that those for whom they were responsible and those whom they have to leave behind on their death would be generously, fairly, and honourably treated by the State which they had done their very best to serve. I wish the First Lord of the Admiralty were here to join with me and plead this case with the Chancellor of the Exchequer. He knows, as I know, that the Navy is judged by small things as well as by big things, and I hope, if he does hear of this, he will try and get this evident injustice removed. The Chancellor of the Exchequer in his Budget speech this afternoon said too much attention is generally given to a case and too little is given to cash. I do not think cash enters very much into this. It will only cost the Treasury a few £5 notes to remove this injustice, and I do ask the right hon. Gentleman to remember a good old maxim we have: "Don't spoil a good ship for a ha'porth of tar."

Mr. CHIOZZA MONEY

The hon. and gallant Gentleman who has just sat down will forgive me if I pass from the interesting case to which he has referred in order to deal with the speech of the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain). I hardly think the right hon. Gentleman did justice to the case of the Cocoa Duty. I can quite understand right hon. and hon. Gentlemen opposite may not be too pleased that the element of protection attaching to the Cocoa Duty should be abolished. It has furnished them with a weapon which they have not been slow to use on thousands of platforms throughout the country, and I daresay they view with great dismay the destruction of that argument. It is perfectly true that with regard to imports there was a distinct flavour of protection about the Cocoa Duty. That has never been denied by any well-informed person. On the other hand, the right hon. Gentleman did not do full justice at least to the fact that the absence of a drawback in connection with the Cocoa Duty did our cocoa trade an extraordinary amount of injury. We have one means of gauging the injury that was done to the cocoa trade. There is a country not far removed from us—Holland—which also has a cocoa trade, and which has the great advantage of absolute free trade in cocoa. What has been the result? The cocoa manufacturers of Holland, who are certainly not superior to our manufacturers in point of ability, have been able to build up an export trade in cocoa which is several times greater than the export trade of this country. When, therefore the right hon. Gentleman pursued the argument that the present position of the trade in this country is largely due to the protective flavour attaching to the Cocoa Duty, he neglected that most pertinent point. I am one of those who hope that the entire removal of the protectionist element in this con- nection will extend our cocoa business, and will put it on level terms with many other trades in this country which have got an exceedingly successful export trade. When I use the term cocoa, I am using it generally to cover the other commodities, chocolate, etc.

I now pass to another point, in connection with which I hardly think the right hon. Gentleman did justice to the case. One could hardly expect him to express enthusiasm with regard to the remarkable success of the Budget of 1909 in meeting the increased calls upon the Exchequer of this country. I was always one of those who held that, when once the finances of this country were straightened out and when taxes were imposed with due regard to ability to bear taxation, from that point Budgets might easily become humdrum Budgets. Why is the Budget of this year a humdrum Budget? Because of the Budget of 1909 which preceded it. When once taxes are placed fairly according to capacity to bear taxation, then with expanding prosperity and with an expanding national income—I admit it very much surprised me to hear the hon. Baronet the Member for the City of London (Sir F. Banbury) deplore that—we may hope and may be justified in hoping that without additional taxation the revenue of the country will be able to bear any legitimate calls upon expenditure. I should like to express some little doubt with regard to the continuance of any prolonged period of the present high condition of prosperity. There is just a shade of doubt exhibiting itself with reference to the Trade Returns of the last two months. Anyone who examines those returns carefully will not fail to note there is a diminution, or at any rate a check, in the rate of importation, especially of raw materials, and, whilst it is early and whilst indeed it would be wrong to be dogmatic upon such evidence as yet appears, still I think it right to express some slight warning, and say it may be that the anticipation of the Chancellor of the Exchequer may not be borne out.

We have to put against that this fact: I do not think the Chancellor of the Exchequer has over-estimated the figures he has placed before us. If we turn to the increase of the Income Tax, for example, although it has reached in the Estimate the extraordinary figure of over £44,000,000 yield, thus making the Income Tax the main instrument of taxation in this country. I think it very likely indeed that figure will be exceeded. I shall not be surprised myself if it is well over £45,000,000. In- deed, the Income Tax has become, as it ought to become in every country, the main and proper instrument of taxation. A hundred years ago, I believe, Pitt was mobbed on this way to this House when he first suggested the Income Tax, and for many years the Income Tax was spoken of as something to be regarded as a war reserve. We have now come to realise, I think, that all taxes, even the Death Duties, really resolve themselves into Income Tax, because they can only be paid out of income. That means that the legitimate and, indeed, the wise thing is to take stock of the incomes of the people of the country and to inquire how far the burden should be apportioned amongst them. Having done that, the course of Budget-making in the future simply resolves itself into a percentage more or a percentage less. When that operation is once effected a Budget discussion almost becomes unnecessary, and the whole question of the finances of the country really resolves itself into the discussion of policy in expenditure and not into a discussion of policy in the means of raising revenue. That settled fairly once and for all, the whole financial discussion resolves itself into what the country needs and what the country ought to spend upon its needs.

I plead once more for greater simplicity in our taxation, and, in spite of the beneficial measures which all parties in this House are joining together to pass in connection with insurance and other matters, I hope it may soon be found possible to entirely abolish our indirect taxation in connection with food. Indeed, I will go further and say I hope the time will come when a civilised State will refuse to impose indirect taxation of any sort or kind. It may be long, perhaps, before we can rule out such a thing as alcohol in that connection, but, apart from that, we ought at any rate to do nothing to interfere with business and to do as little as possible to interfere with contracts made between one man and another. If we take the small instance the Chancellor of the Exchequer is correcting this year, which is a simple matter of readjustment of a tax in connection with contracts, it reminds us of the extraordinary amount of injury that may be done to trade by the imposition of a quite trifling duty. After all, it is surely better to set men perfectly free to carry on industry and commerce, and then, having set them free and having allowed them to pursue their peaceful avocations without disturbance and to gain an income, when the income is made to take from it that which you are bound to take and not to interfere until that point is reached.

8.0 P.M.

The right hon. Gentleman the Chancellor of the Exchequer made a very interesting appeal at the end of his speech for economy. I have yet to learn that economy is the same thing as saving. Literally, the word "economy" means wisdom in expenditure. It is derived from a word connected with household management, and, if economy means anything, it means wise expenditure rather than either wise or unwise saving of expenditure. It does not take a wise man to save, but it takes a wise man to spend money well. Why is it we find ourselves at the beginning of the twentieth century compelled to levy in some respects a high rate of taxation. I would urge upon the Committee that we have to levy taxes in the present very largely because we did not spend enough money in the past. We are to-day, because Lord Beaconsfield bought the Suez Canal shares and made that particular item of expenditure, gaining in interest almost as much as he paid originally for the shares. Take, again, the Uganda Railway. The promoters of it 'were condemned for unwise expenditure. I believe the Uganda Railway will bring not only cent. per cent., but much more to the British Empire. It was a case of wise expenditure. Take again another current instance. Before the Prussian Diet there is a Bill for expending a large amount of money upon the electrification of the Prussian railways. That is economy. It is not saving; it is wise expenditure. What will be the result of that electrification of the Prussian Railways? The Prussian trader will gain even greater advantages than he now possesses, and that is saying a great deal. In addition to pouring out a great amount of power for the working of long-distance traffic on the Prussian railways, they will be able to supply power cheaply both for domestic and industrial purposes, the results of which will be marked on the trade and industry of Germany before many years are passed. We are not making such expenditure in this country, and, because Germany is making it, both countries will have something to reflect upon in the course of the next ten or fifteen years. Take another case. The United States of America are spending immense sums on the Panama Canal.

That is economy, because the expenditure will fructify in the pockets of the United States, and will add much to the wealth not only of the United States but of the world at large. It is because we have not spent money as a community, collectively, sufficiently in the past that we find ourselves in our present position to-day—a position in which the Chancellor of the Exchequer, when he rises to make his Budget statement, has only a few millions of money with which to begin the revenue of the year. There is scarcely a State in the world the Chancellor of th Exchequer of which is in a similar position.

Take the German Empire, the State and the Imperial expenditure. There we find that the railways alone bring in a net revenue of fifty millions a year, and the revenues of State railways in Germany pay for the armaments of the Empire. The Chancellor of the Exchequer of this country is not in that favourable position, and I do seriously suggest to the Committee that if we do not look forward, in matters of this kind, if we do not have regard to the building up of such national revenue, then the need for taxation in time to come, combined with the advance of this nation, will put us in a comparatively inferior position to those States of the world—and they are many—which are building up revenues of this kind. I should like to endorse what was said by the hon. Member for Leicester (Mr. Ramsay Macdonald) with regard to the comparative position of profits and wages in this country. It is true that the national income has increased, but it is not true that that increase of income has been sufficiently shared by the wage-earners of this country.

We should seriously take that into account in considering the Budget of `he right hon. Gentleman, and in considering the proposed social reforms which are now before the House. It was, I think, the late Sir Robert Giffen who said that when the nation was spending less than 10 per cent. of its income upon national purposes it was high time it took thought whether it was spending enough for such purposes. What are we spending at the present time? According to a paper circulated by the right hon. Gentleman the expenditure of this country, properly so-called, reaches £181,000,000. But it does nothing of the kind, because that figure includes the out-goings of the Post Office, all of which come in again as revenue, and more besides. As a matter of fact, the real national expenditure is not more than about £160,000,000.

The national income at this time cannot be less than about £2,000,000.000. Take the dictum of Sir Robert Giffen, and you will find we spend considerably less than 10 per cent. of the national income on national purposes. It. is for this reason that I venture to indulge in this slight difference of opinion as to the concluding part of the speech of the Chancellor of the Exchequer.

It is true we ought to weigh the spending of every halfpenny and every penny. We should not spend anything more, as a nation, than is necessary. But when that is said, who can deny that there is more than one social question in this country which calls aloud for expenditure—expenditure which, if not made, may check the progress of this country among the nations of the world, and reduce its comparative position on earth. Again and again, it is argued that the Government of this country ought, to be a poor Government. I deny that proposition. I believe that the Government of a rich State should be rich, and I believe it is because in the past we have neglected to put our hands to so many social problems, because we have been afraid of the spending of money, it is because of that, in our cities where eight-tenths of the population reside, there are so many evidences of poverty in a land which we know is teeming with wealth. I hope the Chancellor of the Exchequer will forgive me for these few remarks discounting what he said in the concluding part of his speech. It is not because I do not believe in economy, but I do believe that the proper interpretation of economy is wise expenditure rather than unwise saving.

Mr. SAMUEL ROBERTS

I wish to allude in the first place to the concluding part of the speech of the Chancellor of the Exchequer, in which the right hon. Gentleman made a remarkable appeal to the Committee that it should in dealing with his Insurance Bill review the whole financial situation, and that groups of Members or individual Members should not press points upon him without having regard to what the general effect would be if their propositions were accepted. I regard that principle as one of very great importance financially, and as one which ought to be inculcated by every Chancellor of the Exchequer. The responsibility for expenditure must be upon individual Members and on groups of Members, and if they press their claim without regard to what the effect will be on the taxation of the country if they are accepted, the expendi- ture of the country is certain to grow by leaps and bounds. It is a principle which the Chancellor of the Exchequer would do well to apply generally, not only to his Insurance Bill, but to the whole expenditure of the country. I sometimes think that the Government of the day, and I ant here speaking of all Governments, would find it useful if they had what in some local bodies is called a Consultative Committee—a small committee composed of the Chairmen of the Spending Departments, who, before any Estimates are laid before the council or local authority, have to pass those Estimates with regard to their total effect on the rating of the district. That is the sort of thing which, to my mind, is required in our national finance. We want to consider what the general effect will be before claims are pressed by individual Members or groups of Members, and I can only say that, so far as we on this side of the House are concerned, that appeal of the Chancellor of the Exchequer will be listened to, certainly with regard to his Insurance Bill.

I want to say a few words with regard to the Budget. When that is introduced think we are called upon to consider the general trend of finance, and I should like to recall to the Chancellor of the Exchequer what took place five years ago, when the present Prime Minister, in 1906, introduced his Budget. That Budget contained Estimates which the right hon. Gentleman took over from the late Conservative Government. Those Estimates amounted to £141,000,000. The right hon. Gentleman said that that was far too much, that we, on our part, had run up the expenditure of the country to a very extravagant point, and he added these words:— In my opinion they make a return to a more thrifty and economical administration, the first and paramount duty of the Government. But there has been no return. Every Budget since then has shown an increase. The last two Budgets have shown a very large increase. Taking the figures of 1905–6, the last year for which the Conservative administration was responsible, and comparing it with the £181,000,000 estimated for by the Chancellor of the Exchequer this afternoon, we see an increase of £31,000,000, or 20 per cent.; while if you take the figures for 1896, with which the present Prime Minister compared his Budget of 1906, you get an increase of the total expenditure in fifteen years of 69 per cent. In my opinion that is a very dangerous thing, and it calls for grave and serious thought on our part. I should like to deal with the manner in which these increases have been brought about. Of course, we all admit that the large increase with regard to the Navy is absolutely necessary and justifiable.

It is the very first duty of this Committee to look after the defence of this country, and if it is necessary, as, unfortunately, it is at the present time, that our naval expenditure should be abnormal, in order to ensure the safety of the country, that expenditure will be heartily voted on this side of the House, at any rate. The great increase has grown, however, in the different classes of the Civil Service. In Classes 1 to 7 I make out that the increase during the last five years, exclusive of the cost of old age pensions, has been £6,195,000. The large increase has been in Class 4 for Education and Science and Arts. I am not saying anything against that. I agree that that is necessary expenditure, but still it represents nearly £3,000,000. There has been an increase in the item for Law and Justice of 2786,000; Miscellaneous, £136,000; Foreign and Colonial Services, £130,000; Salaries and Expenditure on the Civil Department, £1,272,000; and Public Works and Buildings, £883,000. These are the ways in which the expenditure has been run up. They may be very proper, but in my opinion these increases have grown up from grants being given and increases of salaries being granted to the officials appointed without due regard being had to what the effect would be on general expenditure. The right hon. Gentleman will pardon me if I cleat with the most important tax which he has to deal with, but about which there has not been much said namely, the Income Tax. An Income Tax of 1s. 2d. in the in time of profound peace, which we hope may last a very long time, is, I hold, too high, and that is the opinion of the Prime Minister, or rather it was his pinion five years ago when he introduced his Budget and when the Income Tax was 1s. He then said:— In regard to the Income Tax I do not hesitate to associate myself with the declaration of more than one of my predecessors that an Income Tax at the uniform rate of 1/- in the £ at a time of peace is impossible to justify and difficult to defend. The right hon. Gentleman has heard those words before I have no doubt. The opinion of Mr. Gladstone, as the Committee knows very well, was that in time of peace the Income Tax ought not to be more than 4d. That was in 1865, and afterwards, in 1873, he promised to abolish it altogether. But here we do not seem to have any prospect of a reduction of a uniform Income Tax of 1s. 2d., and there is no hope of anything of the kind being held out. 1s. 2d., I may remind the Committee, was the general rate of Income Tax in both the Crimean War and the Boer War, and since it was reimposed by Sir Robert Peel in 1843 it has only twice exceeded 1s. 2d. —namely, it was 1s. 4d. in 1855, during the Crimean War, and 1s. 3d. during the Boer War for the year 1902–3. We all know what Mr. Gladstone's opinion was, and that he thought that the tax was a demoralising one, which was vexatious both to trade and to industry. But he had another reason why the tax should be kept low, and this reason obtains at the present time. Mr. Gladstone regarded the Income Tax as one of our great national reserves in times of emergency, of which we have two—namely, the fixed contribution towards the Sinking Fund and the Income Tax. In order to keep these national reserves at a very high pitch the Income Tax ought to be kept low and the Sinking Fund high. Why? Because if you keep your Income Tax low you can in times of emergency easily raise it and obtain a very large income. On the other hand, if you keep your fixed fund which goes to the Sinking Fund high you can suspend your Sinking Fund and also get a very large amount of money for your emergency. At the present moment what are we doing? We are keeping the Income Tax abnormally high, and the right hon. Gentleman is at the same time reducing the fixed sum set apart for the Sinking Fund from£28,000,000 to £24,500,000. That sum was fixed by the late Sir Stafford Northcote in the year 1875 as the proper sum for the service of the Sinking Fund, and his reason was that before 1860 there had never been a less sum set apart for that fund.

While I am dealing with the Income Tax I should like to draw the right hon. Gentleman's attention to a class which I think is hit very much by this high rate of 1s. 2d. in the £. I refer to those in the middle class whose incomes range from £300 to £500 or £700 a year. The Committee are aware that abatements are allowed, but there is no reduction from the 1s. 2d. if that income is unearned. A great many of our middle class have saved money by work—by professional and other work—and they have retired on their savings—earned money—which have been invested. The money is equally earned with that on which 9d. is the sum charged to the Income Taxpayers who are getting their money at the present time. On the other hand these people have earned this money, they have invested it, and they have to pay the high rate of 1s. 2d. in the £, although, of course, the abatement is allowed. There are a great Many of these people. Perhaps the right hon. Gentleman has seen a book which the hon. Gentleman the Member for East Northants (Mr. Chiozza Money) has written, called "Riches and Poverty." It is a useful book, although I do not agree with the doctrines it contains, but I think the hon. Member is very often correct in his figures, and in that book he says that there are 1,100,000 payers of Income Tax. But the Committee will be astonished to hear that out of that large number as many as 820,000 only earn incomes between £160 and £700 a year. That is to say, a large part of the Income Taxpayers are people of small means, between £160 a year and £700 a year. They are entitled to abatement and differentiation, but it comes to this if you work it out, that those who are not entitled to the 9d. rate but are charged the whole of the 1s. 2d. have to pay a very high rate indeed, amounting to from 6d. to above 9d. in the £ on their whole income. I should very much agree, though I quite understand the difficulty of the Chancellor of the Exchequer in the present year, that if some further abatement could be made in cases of this kind, where the money is not exactly earned but has been earned and invested, the matter is very worthy of consideration. I should like to make some suggestions with regard to the large amount which we collect on our Customs. We collect £33,140,000 in Customs Duties, principally on tea, tobacco, and spirits, and on a few small things. Does it not seem an extraordinary thing that these things are taxed to the tune of £33,000,000 a year? They are things which we cannot produce in this country, and the whole tax falls on the consumer. Supposing we were starting afresh, does it not seem an extraordinary thing that we should tax all these articles of use and at the same time allow to come into the country absolutely free of duty, as we did last year ending 31st December, £156,000,000 of mainly or wholly manufactured goods? They compete with our industries, but we let them come in absolutely free. I hold that if you put a moderate tax of 10 per cent. on these manufactured goods almost the whole of them will come in and you will get £15,000,000 revenue. That is my view, and it is the view of the hon. Member (Mr. Chiozza Money). I congratulate the right hon. Gentleman on his very lucid statement. I can assure him that from our side of the House he will not have any difficulties, and with regard to his Bill he may depend upon it that we shall do our best to assist him, and certainly I think that the appeal which he has made is a most reasonable and proper one that in our demands we should have regard to the general financial situation.

Mr. GODFREY COLLINS

The hon. Member (Mr. Samuel Roberts) is very concerned as to the size of the Income Tax. I have always felt that it is a fairly small tax. I have felt for many years past that the wealthy classes in this country do not pay their fair share of taxation, and I am glad that in the last few years the Income Tax has been considerably increased. I see no reason why in future years, if the necessity should arise, Income Tax should not be still further increased. The hon. Member told us that if we imposed a 10 per cent. tax on manufactured goods the revenue would benefit to the extent of £15,000,000. In the country we are always told that Tariff Reform would increase employment, but in this House when we come to deal with finance we are told to look to Tariff Reform as a method of raising revenue. I shall be glad if the hon. Member will explain how he can raise £15,000,000 by taxing these goods as they come in while at the same time giving employment in this country.

Mr. SAMUEL ROBERTS

Other countries find they can do it. They can both tax pretty fairly and at the same time receive a larger revenue.

Mr. GODFREY COLLINS

I am dealing with our experience in this country of these goods coming in. How can you bring in fifteen millions of revenue as well as at the same time giving increased employment? It seems to me that the Whisky Tax of the past few years provides a very good object lesson as to what will happen if taxation is put on articles of daily use. We well know that it has been very difficult to forecast the exact revenue that has been received from this tax during the past two years. We had the right hon. Gentleman (Mr. Austen Chamberlain) saying last year that the increased Whisky Tax was a failure—not for this year only, but a permanent failure. This afternoon he told us that the Whisky Duty is booming. That is a considerable difference in the attitude of the right hon. Gentleman in the short space of twelve months. I grant that it is very difficult to assume correctly the role of a prophet when you are dealing with financial matters. I think the short experience which we have had during the past two years should warn hon. Members opposite not to rely in future on the taxation of manufactured goods.

It is very difficult indeed to forecast the exact revenue which will be received in the coffers of the State year by year. We have during the past two weeks received considerable support from hon. Members opposite for the National Insurance Bill. They say they will support it in a wholehearted way. They also wish us to increase expenditure on the Army and the Navy. They take no exception to Old Age Pensions. But directly we come to find the money for these services we part company most acutely. It is well known that there is a certain type of men who are always willing to share good things with you when your pockets are full, but directly you ask them to pay their share you find that your so-called friends readily desert you. The depth of the sincerity of the party opposite in the matter of the Insurance Bill and Old Age Pensions is determined by the measure of support they will give us in raising the necessary revenue. Anyone who raises revenue by increased taxation is bound to raise odium and unpopularity against him. We ask them to share with us the odium and unpopularity which is bound to accrue to a party or to individuals if they increase the taxation required to meet the needs of the nation as a whole.

I know very well they will tell us that the way to raise the revenue required is by Tariff Reform. We have had now eight Budgets since the Tariff Reform cry was raised, and Free Trade is still going strong and raising the money required without in any sense bearing upon the industry of this country. The Leader of the Opposition has more than once told us that we should be forced to broaden the basis of our taxation. Undoubtedly the basis has been broadened, but not in that particular way that the party opposite desire. We have asked them time and again to state their case, to lay their cards on the table, and to let us know exactly what they mean by Tariff Reform. In my own Constituency they appealed for support by offering taxation of foreign refined sugar. I do not know whether hon. Members opposite will support a tax on foreign refined sugar coming into this country. [An HON. MEMBER: "Yes."] In other words, they are quite prepared to put a tax upon the food of the people.

Mr. KEBTY-FLETCHER

You are doing that now.

Mr. GODFREY COLLINS

I take it that the hon. Member is not going to oppose us in that matter. He would also vote for a tax upon sugar.

Mr. KEBTY-FLETCHER

We would tax foreign refined sugar, but if you refine it in Liverpool or Greenock we would not put a tax on it. That is our position.

Mr. GODFREY COLLINS

In other words, you are quite prepared to give protection to the refined sugar manufacturer in Liverpool or Greenock. I quite appreciate that that would be the result, but the benefit of your taxation would not be to increase wages in those factories. It would lead to the profits of the refiners being largely swelled at the expense of the poor people of this country. There are a number of electors in ray Constituency who are sugar refiners. They realise that the result of the Tariff Reform policy would be, not to benefit the people as a whole, but to benefit their own particular pockets at the expense of the general taxpayers. I am proud to say that two of these sugar refiners came on to my platform on the Free Trade ticket at the last election. I thank the hon. Gentleman for interrupting me when I spoke of foreign refined sugar. Tariff Reformers argue that the basis of the necessity for a fiscal change is the necessity of raising revenue. I venture to say that the Budget of this afternoon, and the Budgets of the last three years, will be the death knell of the Tariff Reform cry in this country.

Mr. DUKE

I hope the House will appreciate that the Debate this afternoon illustrates the absolute impotence of the House of Commons in matters of finance at the present time. The Committee listened this afternoon to a Budget speech which it would be impertinence to praise. It was a speech of great lucidity and charm introducing a Budget involving a charge of £182,000,000. I can cast my recollection back to a time thirty years ago when, sitting in the gallery of this House, I heard Mr. Gladstone discuss a Budget where the taxation was somewhere between £70,000,000 and £80,000,000. Mr. Gladstone spoke with trepidation of the possible future when it might reach £100,000,000. This Budget is far removed from the economic views and strict control which Mr. Gladstone expressed and exercised over matters of finance. The present Government came into office at a time when the expenditure of this country was more than 20 per cent. less than it is to-day. The present Prime Minister, in his election address before the 1906 election, condemned the expenditure of that time as expenditure which sapped practically the resources of the country and withdrew from the commerce of the country vast sums of money which ought to circulate in commerce and in providing wages for industry. He may have been right or he may have been wrong. I think he was wrong at that time, but if he was wrong, he has not been candid in the meantime, except in so far as he has been responsible for successive Budgets which have contradicted these protestations.

I do not desire to make a mere debating speech and leave out of sight the great and beneficent expenditure which has been adding to the Budget of this country in recent times. One looks at the expenditure on old age pensions and at the projected expenditure on sickness and invalidity insurance, and I do not think we can doubt that it is beneficent expenditure marking a great advance in the social life of this country. But the expenditure which was part of the nominal expenditure at all times has gone on increasing, and I think the House of Commons is entitled to have from time to time from the Government something in the nature of a complete review of the responsibilities and burdens imposed, or proposed to be imposed, on the country. I have had the gratification, from the intellectual point of view, of listening to two of the right hon. Gentleman's Budget speeches. I daresay he, in the exercise of his responsibility and with the view to performing his duties, has taken some account of the position of the country and its capacity to bear the burdens, and also same account of the question whether the purposes to which these huge sums of money are being annually applied are purposes which are justified by the return which the public gets. That is not shown in practical experience in any of the methods of control over the expenditure of the country. A Budget of £182,000,000 is introduced, and the Debate which follows is a perfunctory Debate, dealing with isolated topics rather than with the wide question of the raising of the money and the control of expenditure. During the years that I have been a Member the House has not taken steps to secure, and this Committee is not in a position to secure, that either the money which is raised shall be raised in the best manner, or that the purposes to which it is applied are the purposes to which it is properly applied. Take the enormous amount of the Civil Service Estimates. I would ask whether the country is getting a proper return for what is spent on education? What grip does the House of Commons take of that expenditure, in order to see that we are spending the right amount and that we are getting a proper return? There is a cant phrase which is sometimes used about the watchdog of the Exchequer. It may be set against the cant phrase about the watchdog of the House of Commons. If there is any watchdog, he does not reside in this neighbourhood. The right hon. Gentleman admonished us against courting popularity by inviting Governments to make expenditure. No Government that I have known have made any expenditure they did not want to make. Every Government with which I have had practical acquaintance were strong enough, if they believed that certain expenditure could not be justified, to refuse to sanction the expenditure.

But except for any resolution which may be found in the Chancellor of the Exchequer himself, the control of this House and Committee over the expenditure of money to the tune of £182,000,000 is an absolute farce. There is not a ha'porth of reality in it. This House or this Committee, so far as it exercises control over expenditure, exercises it in the direction of inflating expenditure. The right hon. Gentleman admonishes us against that, but I cannot put out of mind, in connection with those topics, that during the last four years, no doubt with highly beneficial objects in view, His Majesty's Government from time to time has gained great popularity and deserved great popularity by the expenditure of vast sums of money, and if the maxim of self-denial, which is presented to us here from the Benches where responsibility really dwells, is to be practised it will have to begin further back, and the Government who have the responsibility and the power will have to take care that the duty which the House of Commons cannot discharge is discharged somehow. As my hon. Friend the Member for Sheffield was dealing with this subject, that as finance must some day become a non-party question, as the magnitude of the public burden must take the expenditure of public money out of the old domain of party politics, unless the country is to be ruined by a game of beggar my neighbour between parties and politicians, I could not help wishing that the right hon. Gentleman, who has such a mastery of the position, should apply himself to that question of seeing whether there is not some means by which the public could take control of its expenditure as well as of its burden, in a time when nothing is acclaimed so loudly as the absolute control of the public of its own affairs. The right hon. Gentleman would find it difficult, perhaps, but it is not beyond the bounds of statesmanship. If the expenditure of these great sums is to be taken outside of the contests of party life, if we are not to be brandishing on platforms the trophies of our successes against the Chancellor of the Exchequer, the right hon. Gentleman should devise some means by which responsibility would be again shared between His Majesty's Government and this House.

There are one or two matters which I should like to refer to on questions of detail in this Budget. One is with regard to the plaudits with which the finance of His Majesty's Government has been, I will not say overwhelmed, but at any rate attended during this discussion. It has been said that this Budget is the test of, to put it briefly, in a sentence, Liberal finance, as contrasted with the finance of this side of the House. I take that to mean that this Budget is a test of how the taxes which were a bone of contention in the Budget of 1909 meet the growing charges of that social expenditure on which His Majesty's Government has been engaged—£12,000,000 at the present time, and the greater part of £20,000,000 in view. The taxes about which the country was stirred from end to end were the Land Taxes. Those were the taxes which raised the great constitutional controversy, the taxes which threatened to bring down the House of Lords, and which have divided the constituencies in this country from end to end with a powerful and manifest cleavage. What is the contribution of those taxes which cause so much present evil, and have been the root of so much permanent controversy to these great social objects which His Majesty's Government pursues, and as I think, rightly pursues? If all turns out well, it may be that in the course of the next year they will contribute £700,000. When praise of this system of finance is founded on facts of that kind, it exposes the hollowness of the pretence. The great contribution to these purposes of social reform and social amelioration is being made by the wealthy class of this country, who pay taxes upon considerable incomes. The great contribution is the contribution of Income Tax. There was a certain contribution, no doubt, from the new Whisky Duty, but the great contribution has been from the new Income Taxpayers. [An HON. MEMBER: "Death Duties."] Death Duties are another branch of the same class of taxation on the propertied classes of the country.

All those burdens were cheerfully taken up, as far as I am aware. I do not suggest that there was not the grudging which a taxpayer always has against taxes, but nobody threatened any political violence. Personal dissatisfaction there may be, but when the credit of this system of finance is founded upon its applicability to meet the burdens which His Majesty's Government has to face in respect of these great matters, we contrast the result of the Land Taxes which were the root of all the trouble in the country with the immense sum which is supplied from other sources. There is one other matter. I spoke of the omnipotence of His Majesty's Government with regard to this matter, as I believe it is omnipotent in the present state of our public affairs with respect to every matter which is presented in Parliament. Could you have a more distinct badge of it than the fact that this question of payment. of Members of Parliament, which has been the subject of debate in the political experience of every man in this House, and which divided parties for years before any of us here took any part in public life, is to be dealt with as an item in the Budget, and a Budget which an hon. Gentleman opposite, who I might say is a revolutionist compared with whom the Chancellor of the Exchequer is an exceedingly moderate man, a Budget which the hon. Member for East Northampton (Mr. Chiozza Money) described as a humdrum Budget? We have had a great deal of discussion as to what can be done by a cautious' Budget. This is an excellent, object lesson, for here we have a Budget providing for payment of Members of Parliament, a subject which for the last fifty years at any rate, was one of the dividing questions between the Radical party in this country and the general body of our countrymen.

Mr. ELLIS DAVIES

The Chancellor of the Exchequer spoke of the increasing wealth of the country and of the expanding trade and revenue. He also made a reference, which I thought was very pathetic to anyone who realised its significance. He referred to the increase which had taken place in the price of tea, adding that in consequence of that there was a decrease in consumption. That no doubt shows really what a narrow margin there is between the incomes of the poorer classes of the community and what they have to spend on the necessaries of life. On that point I understand that the real discussion of the Committee is with regard to the Tea Duty. I have only tried to point out that while the Chancellor 'Of the Exchequer in the present state of things can hardly be expected to abolish the whole of the Food Taxes, it should be impressed on the Committee, and through the Committee on the country, that at the present moment the poorer classes of the community are contributing through the Food Taxes practically £10,000,000 a year in taxation. I believe that reference has already been made in the course of the discussion to-day to the fact that while there is an enormous increase in the wealth of the country—there has been an increase of £170,000,000 within the last ten years, in the income assessable for Income Tax—while that increase has taken place in the incomes of the Income Tax classes, there has been no increase in the wages of the workers, while, on the other hand, there has been an increase in the price of food. Under these circumstances, I think it is important to impress upon the Government the necessity of considering to what extent, how far, and how soon they can either substantially reduce, if not altogether abolish, the duty upon food. By abolishing the duty on food to the extent of £10,000,000, including the tea duty, you will increase the purchasing capacity of the working classes of this country by £10,000,000. It would mean better food for them and increased trade, and with that increased trade there would he an increase of their wages, and an increase of their social benefits in the course of a very few years.

9.0 P.M.

Mr. COOPER

I want to confine my few remarks to the remission of the Cocoa Duties. Had it been in order to have diverted the course of this Debate I could have referred to the subject of Tariff Reform, upon which we on these Benches were challenged a few moments ago by the hon. Member for Greenock (Mr, G. P. Collins). That, however, would not be in order, and I shall confine my observation entirely to the subject of the Cocoa Duties. I am sure the Chancellor of the Exchequer himself will recognise that it is rather a difficult matter to deal with, even on the broad principles, because from the very nature of the circumstances it was impossible for the right hon. Gentleman himself this afternoon to do more than give a bare outline of the general proposals by which this remission is to be carried into effect. In the first place there is a sum of £25,000, which he calculates will be lost by the Government in allowing the drawback on cocoa and chocolate to manufacturers in this country who do an export trade. For my part I think the Chancellor of the Exchequer is acting in the very best interests of the country, of the industry, and of the people working in it, in making that remission. I do not want to make too much of this aspect of the question, but I think as a matter of fact his action is in entire conformity with the fiscal reform principles which we on these Benches never tire of putting before the House. So far as it is possible to get any reliable information on the question of the cocoa industry generally, I have ascertained that there are just forty amnufacturers of cocoa and chocolate in this country. But I do not find that there are more than six out of that number who are doing any export trade. The fact is worth noting. So that while admittedly the Government are doing the right thing in remitting £25,000, as explained to us to-day, yet nevertheless there are some thirty odd firms in this country who will not benefit from that remission, whose trade is more particularly directed to the chocolate industry as opposed to the prepared cocoa, and whose trade is almost entirely in the home market of the United Kingdom. To these firms I submit that this remission of £25,000 is going to have no beneficial effect. I want to look at the other item, namely, the £20,000, which the Chancellor of the Exchequer calculates he will lose by a more careful differentiation between the duty that will in future be charged on the raw and manufactured cocoa. He most carefully explained that the object was to clear away the protective nature which, it was admitted by the Prime Minister some time ago, and quite frankly by the Chancellor of the Exchequer this afternoon, has un- doubtedly up to to-day existed in that particular industry. In the imposition, or the adjustment, or the remission of duties on any goods whatever, there are three reasons for taking off those duties. The first is for revenue purposes, and, obviously, no one will deny that there is no intention, in remitting these taxes, of trying to make revenue. The second reason is to protect the industry, or the labour of this country, that is, I would say, to benefit the industry or the labour in some direction or another. I did not hear the Chancellor of the Exchequer make any suggestion that the remission of these duties could possibly be calculated to have that effect. One very prominent manufacturer of cocoa in this country, who is a very ardent supporter of the Government, made the suggestion that the entire removal of all the cocoa duties would involve no loss to the manufacturer. I am referring to the famous letter which appeared about eighteen months ago in the "Standard," and which was mentioned very frequently in the course of our Debate last July.

That authority—and I am sure nobody opposite will deny that one is justified in treating him as an authority—pointed out and emphasised that the difference between the duties on the raw and manufactured articles was not primarily designed to give the home manufacturer the advantage, but to place him on an equality with foreign competitors in the home market. That is his statement, that is his idea, that is his admission. Am I not absolutely justified and correct in concluding from that statement that on the other hand, if you take away that difference which was primarily designed to place the cocoa manufacturers on an equality with foreign competitors, it is a logical conclusion to say that the manufacturers of this country are going to suffer to the extent by which you remove that difference between the raw and manufactured cocoa. I think that is a perfectly fair and uncontrovertible argument. The third reason for this remission is to benefit the consumer. For my part I have no recollection that the Chancellor of the Exchequer made any reference to the effect of it upon the price of cocoa and chocolate in this country, but I have been told that he did make some admission that the change would not have any effect in regard to the price of the articles. As a matter of fact it is very obvious that if you are going to take off anything more than a farthing, a halfpenny, or three farthings per pound, when you come down to an ounce or two ounces, the quantities usually purchased by poorer people, and not a pound or half-pound as purchased by the more wealthy, that you cannot split up this small remission which the Government are going to make. Of those three reasons, and I can conceive no other fair and honourable reasons for which duties like this should be altered, not one fits in with the remission of this £20,000.

We recollect the ardour with which so many hon. Members opposite attacked these duties last July. I remember the hon. Member for Tyneside (Mr. J. M. Roberstson) begging the Government to try in the last Budget to remove the taxes on cocoa in particular, because, as he said, he looked upon the duties as a useful weapon in the hands of Tariff Reformers. I believe I am arguing perfectly fairly when I say that I can see no statesmanlike nor genuine reason why the remission of the £20,000 should be made, and as it does not come under any of the three reasons, we are driven to the conclusion that the remission is being made solely in the interests of party tactics. If I am wrong in that surmise I do hope, that if a responsible Minister does not take the question up, that some hon. Member opposite will point out under which of the reasons to which I have referred, or have failed to refer to, or what logical reason there is for the remission of the £20,000. The point to which I am now brought is this—that, having admitted the drawback to be wise and to be beneficial, and a principle which the Government might well adopt on a very much wider scale, we find that some thirty-two or thirty-three firms in this country, of which two to my knowledge are employing 2,000 hands, who are not engaged in the export trade, must inevitably be injured by the remission of this protection. The trade of those firms has during the last twenty-five years been built up under the protection of those different duties. The hon. Member for East Northampton (Mr. Chiozza Money) made a very brief reference to the cocoa question, and used an argument to this effect—that since the Dutch can carry on such a huge worldwide trade in this industry under what he terms a Free Trade system, so, he maintains, that we in this country, under a Free Trade system as regards cocoa, can equally carry on a large world-wide trade.

As far as the manufacture of cocoa as opposed to chocolate is concerned, I admit that there is a good deal in that argument, but the moment you apply it to chocolate it absolutely breaks down. You do not find in Holland any Holland firm doing any large world-wide trade in chocolates, but you do in cocoa. [An HON. MEMBER: "They do it in chocolate."] There is another point which is rather more detailed, and that is with regard to cocoa butter. The hon. Member did not mention it, and I have no doubt it is a subject upon which hon. Members below the Gangway are absolutely ignorant. I have read a good many references that have been made by their supporters in the Midlands to this subject, and the remarks they have made have proved to me the ignorance with which they spoke upon it. [An HON. MEMBER: "We could not be ignorant after reading your book."] That has often passed my mind while studying this subject. I have no interest in it, but I have been studying it for this reason, that I was very much impressed last July with the strong attitude taken up by the Free Trade party, and admittedly taken up by them from the point of view of party tactics, because of the weapon the Cocoa Duties have been in the hands of Tariff Reformers. As the Budget approached, we never heard a question asked by any Free Trader about them. We heard no movement of any description going on, and it was then absolutely certain to me that the Chancellor of the Exchequer was going to deal with it in some way, and that hon. Members who support the Free Trade policy must have been well aware of it, or else they would not have remained so silent. With regard to this subject of cocoa butter, I have often wondered who it was that agitated in the year 1896 for the original imposition of the penny tax. I admit it is not very relevant, perhaps, but that tax, unless I am wrong in my views on the subject:, cannot be other than of a protective nature, and it is a curious fact that the two large producers in this country of cocoa butter are two of the most prominent supporters of the party who sit on the benches opposite. While they have agitated so continuously for the remission of these duties on cocoa, I wonder they have not been equally honest with themselves and with the people of the country, and urged the remission of the penny duty on cocoa butter, in which these two firms are so much more interested than anybody else. The Chancellor of the Exchequer, in endeavouring to remove the protective nature of these duties will not fulfil the very object he has set out to achieve unless he includes the remission of the duty on cocoa butter. How are the Customs officials to differentiate, as they will have to do, between cocoa butter, on which there is a duty of one penny, and milk fats, on which there is no duty? The remission of this duty is unquestionably the natural outcome of the pressure which has been put upon the Chancellor of the Exchequer by his supporters, in order to take from Tariff Reformers an argument of which, I frankly confess, I have made great use, and so have we all. But if the Chancellor of the Exchequer thinks that he is going to deprive us of the powerful argument we have enjoyed he is very much mistaken. The very fact that he has taken this action will air the subject and bring it to the attention of people who had never studied it before. The more they study it the more will they see the absolute fallacy of the Free Trade principle which is to-day being instilled into the cocoa industry by the Chancellor of the Exchequer.

Mr. POINTER

It will be obvious to every Member of the Committee that we on these benches are more or less in the position of political Oliver Twists. Whatever the Chancellor of the Exchequer brings forward we shall always find it falling short of what we desire. So far as the present Budget is concerned, there are many points in it that we should have liked to have seen extended, and there are many articles which we should have liked to have seen withdrawn altogether from the purview of taxation. Our position in regard to the duties to which the hon. Member has just referred, in a somewhat technical and involved argument, is exactly the position which we take in regard to all indirect taxation. We shall welcome the time when any Chancellor of the Exchequer will say that he is going to abolish all indirect taxation. But we shall not hail with delight any such statement if it is accompanied by the declaration that the desires of hon. Members opposite are to be satisfied, namely, that for the indirect taxation of food and other commodities there is to be substituted a tax upon the £156,000,000 of manufactured goods which come into this country. It is a very peculiar argument to put forward under the guise of concern for the working classes to say that, while you take off the tax on their food you want to arrange some scientific system which the workers will not find out unless they are told about it by which you can get back in another way that which you are professing to give them by the abolition of indirect taxation on food. We hold that the workers are paying even now, in proportion to their income, a greater amount of taxation than any other section of the community.

I listened with great interest and respect to the remarks of my colleague in the representation of Sheffield (Mr. S. Roberts). It seemed to me that his observations were rather in the nature of a funeral dirge. The ground of his complaint was that the Income Tax was too high, and he suggested that any Chancellor of the Exchequer who desired to follow a sound financial policy ought to keep the Sinking Fund high and the Income Tax low, so that in time of stress the Sinking Fund would be a harbour of refuge for a distressed Chancellor of the Exchequer, and the Income Tax might be raised in time of financial difficulty. Up to a certain point I agree with the hon. Member. But while it may be desirable to keep down the ordinary Income Tax, that can only be done by a further inflation of the Super-tax and other taxes of that description, such as the Estates Duties. I know that hon. Members opposite will not agree to that, but I put it forward as a very important point from the standpoint of the workers. Taking the indirect taxation on sugar, tea, cocoa, and the other articles which bulk so largely in the necessities of their life, they pay, in proportion to their income, more than any other class of society. Therefore we want to see indirect taxation utterly abolished. From that standpoint, of course, we think—

Sir F. BANBURY

Do you want to pay nothing?

Mr. POINTER

If the hon. Baronet is asking my personal opinion—and in this I am speaking my personal opinion only—I would abolish all indirect taxation. I would have no taxes but what were direct in their incidence, right from the lowest person who was called upon to pay at all, with a progressive stiffening as the income that was received by that person grew. But we at least recognise that these things have to be a matter of slow growth. While it is true that we are in the position of Oliver Twist, there is no reason why we should not look at the position as it pre- sents itself to us from the immediate practical standpoint. I want in passing to seize upon a remark made by, I believe, the hon. Gentleman the Member for Exeter. He rather ridiculed the idea of the Land Taxes. He said that the total yield this year was to be £700,000. He seemed to be asking the question all the while: "Is it worth it?" Was it worth while to promote a constitutional crisis merely to get £700,000? He seemed to think that if we had been getting about £7,000,000, or possibly £70,000,000, then it might have been all right to have promoted a constitutional crisis. But for a beggarly £700,000, obviously, he thought, it was not worth the turmoil. I would give the advice to the hon. and learned Member to follow the good advice that was tendered to one hon. Gentleman opposite some time ago by the Prime Minister, and that is to "wait and see."

It appears to me that there is something in these Land Taxes more than hon. Gentlemen opposite will admit. At least it passes my comprehension why they fought against the matter so strenuously. I have not forgotten the long nights of 1909, nor that the hon. Baronet and others kept us here night after night while they fought strenuously with their backs to the wall because they thought that the machinery that was to be put-into operation was too big and clumsy for the result that was going to accrue. But was it not rather that they knew that these Land Taxes were such that when they were got into proper working order they would make a very big demand from the people whose special privileges the hon. Baronet and his Friends are so fond of defending in this House. Therefore, it does appear to me that we on these benches, with all our eagerness for the abolition of indirect taxation, are justified in being a little lenient with the Chancellor of the Exchequer, who does not exactly rush into the extreme of granting us all that we want, in the full knowledge that the time is coming, and before long, when the Land Taxes mature that there will be liberated a great amount of money which can be used. I trust it will be used in lightening the burden of the workers, and to bring about the total abolition of indirect taxation.

There is one other matter I want to draw the attention of the right hon. Gentleman who now sits upon the Treasury Bench (Mr. Hobhouse) to. It arises out of the closing remarks of the Chancellor of the Exchequer this afternoon. He was very eager that we should not trouble him with demands for increases here and there. He said we might put forward arguments that it was only a small, and insignificant amount, and that therefore we might press him upon that account to accept our solicitations. He went on to say that probably the number of these small amounts that in the aggregate might come along might place him in. difficulties, and force him to choose between refusing the requests or raising extra taxation. I trust that amongst the things he had in his mind he did not include the cost attendant upon the Amendment of the Old Age Pensions Act, which the right hon. Gentleman who is now upon the Treasury Bench has promised us shall take place within a very short time. I may be permitted to indicate the nature of the change I have in my mind. Several hon. Members sitting upon the opposite side, and some upon this, have drawn the attention of the Treasury upon more than one occasion to cases of great hardship in which certain persons—women, say,—who, although they were English themselves, because they have married a foreign husband, have been declared aliens and outside the operation of this Old Age Pensions Act.

Another case which came within my own knowledge is that of a man living in my Constituency. He went out to one of his sons in Canada, and, after a stay, came back, being away altogether five months. He finds now that his three months' stay abroad has constituted him an alien. He is in the anomalous position that he will have to live to the age of ninety-three before he can claim his old age pension as the Act is at present administered. I trust that the right hon. Gentleman will tell us if he can whether provision has been made in the present Budget for the increased cost attendant upon that change which it appears to me is very desirable and, indeed, urgently necessary. If that change is made I believe the Government will deserve, and I think they will receive, the gratitude, not, perhaps, of a great number of people, but at least of a number, be it small or large, who are in urgent need and against whom this anomalous application of the Clause falls at the present time with great severity.

Mr. KEBTY-FLETCHER

The Chancellor of the Exchequer this afternoon delivered a lecture to the House on the necessity of keeping down the expenditure. But a few moments before he pro- posed the setting aside of a quarter of a million for the payment of Members. It strikes me that this House should have more control over the present expenditure. "Tacking" like this should not be. These subjects should not be thrown into the Budget, but ought to be brought in in a special Bill. It is just like two years ago. We had the "tacking" in the Budget of that year of the licensing clauses. This year we have the old age pensions brought in. It is a most unsound way, in my opinion, of conducting the business of the nation for the Chancellor to throw into a Budget far-reaching measures of this kind. The payment of Members will be money thrown away. The work of this House has been done very well up to the present by the voluntary services of the Members. Now we are going to have introduced into this Chamber glib-tongued, loose-lipped, street-corner orators, instead of having our affairs conducted as they have been conducted in the past. But it will not end where it has commenced. We find that these doles do not stand still. In America they are getting £1,500 a year and travelling expenses; a secretary thrown in, and a room in the House. There is no cessation of expenditure. On the hustings we hear from Radicals large and loud-tongued advocacy of retrenchment. When they come to this House—

The DEPUTY-CHAIRMAN (Mr. Whitley)

It has already been ruled that the principle of the payment of Members must be argued on another occasion.

Mr. KEBTY-FLETCHER

I was not aware of that. I suggest that a Finance Committee should be formed to deal with all this expenditure. In city councils, and on other similar bodies there are finance committees. I think we would not have a £180,000,000 Budget—which will in fact be soon £200,000,000—if we had commercial men in this House analysing the expenditure. I am not talking about the hon. Members on this side of the House only. There are very able commercial men on the other side, men connected with shipping and manufactures. If they were put on a Finance Committee to analyse the expenditure I think we would save many millions in the course of the year. The Chancellor of the Exchequer said that there was more work in the country. It is not so. There is more work, but it is in Canada! We have been exporting abroad nearly five thousand men weekly. There are towns in Scotland near Dundee that have been depopulated. [An HON. MEMBER: "Why?"]

Through the Budget of 1909. It killed the building trade and threw very many men out of work. The Chancellor of the Exchequer's figures were fallacious. They were Free Trade figures, and so were bound to be fallacious. I hope the Chancellor of the Exchequer will take into consideration the suggestion that he should tell the commercial world to the best of his ability what he will put taxes on next year. If he is going to give relief on tea, coffee, sugar and cocoa, the least he might do is to tell the commercial world what he intends to attack next. That would be a fair way instead of creating a feeling of unrest and leaving doubts in the minds of people as to what industries are next to suffer. We have had a long speech from an hon. Member on the cocoa trade. The "Daily News" in this respect has been much to blame. It cannot be called ignorant, like Radical interrupters at meetings. The "Daily News" knows very well that the cocoa trade is a protected trade, but its action in its attitude to that trade was on a par with its conduct in its hints to the electors to ride to the poll on Tory motor cars. I congratulate the Chancellor of the Exchequer on the statesmanlike way he handled matters in regard to the Uganda Railway. That project was bitterly opposed when it was first introduced into this House, and the Government's attitude to-day only shows how frequently time proves people to he in the wrong.

The Chancellor of the Exchequer made a great point, with regard to the reduction of debt. He congratulated himself upon the reduction which the Liberal Government have made, and he referred to the reductions made by Mr. Gladstone, but it is not comparable to contrast a reduction on an eighty million Budget with a reduction on a hundred and eighty million Budget. Another reduction of the capital account for which he took credit was the item in regard to the Development Fund, but that is not a capital reduction at all; he puts it on with one hand and takes it off with the other. That is not a reduction in the sense we understand reduction. We are told this is a humdrum Budget. So it is, and I presume it is better to have a humdrum Budget like this than a Marathon Budget like that of 1909. We suggest on this side that the Chancellor of the Exchequer has omitted to avail of one source of revenue which he might have obtained from a tax on the £150,000,000 of manufactured goods coming into this country. Ten per cent. on that, if these articles continued to come in, would mean £15,000,000. If they were kept out we would have no unemployment.

Mr. WILLIAM CROOKS

There you are.

Mr. KEBTY-FLETCHER

The hon. Member for Woolwich at last has come to see the beauty of Tariff Reform.

Mr. W. CROOKS

No. It is your beautiful theory I have seen.

Mr. KEBTY-FLETCHER

We know that the Labour Members are food taxers. They tax the food of the people; they are going to vote for the Ministerialists to keep taxes on the food of the people. When we ask them to tax manufactured goods, such as silks and satins used by the rich, they refuse. The Labour Members are responsible for the state of destitution and degradation that we have in England, because, as Free Traders, they support taxes on the food of the poor while they let the manufactures used by the rich come in free. What sense is there in allowing expensive silks and satins to come into this country free while you put a tax on tea, sugar, and cocoa. We suggest, on this side of the House, that if sugar be manufactured in this country in refineries in Liverpool and elsewhere it should not be taxed for manufacturing purposes. The Labour Members will be surprised to hear that it was twice passed in their annual congress that sugar should be free. I hope the Chancellor of the Exchequer will take this point into consideration, and that he will agree that a preference should be given to sugar manufactured in this country. The Radical party gave a preference to the cocoa trade and the tobacco trade, and the result is that if you go to buy cigarettes and cocoa you will find them of English manufacture, and workmen in these trades are living under good conditions and are getting good wages. I hope the right hon. Gentleman will consider the advisability of dealing with these matters in a businesslike way by giving a preference to these trades instead of continuing to worship the fetish of Free Trade.

Mr. TIMOTHY DAVIES

I will not follow the arguments of the hon. Gentleman who has just sat down, but I might refer to one or two points he made. He asked why there are so many people emigrating from Scotland. I think at another time and on another occasion we shall be able to show him why so many people are leaving that country. Very likely if the House of Lords had passed the Small Holders Bill for Scotland three or four years ago we should have less emigration than we have to-day. With regard to unemployment, the hon. Gentleman mentioned the building trade. The building trade of this country is in a better position now than it was ten years ago. Figures prove that, and if the hon. Gentleman will only read the report of the Board of Trade and the reports of the "Labour Gazette" he will find that in the building trade in London at the present time unemployment is lower than it was ten years ago.

Mr. KEBTY-FLETCHER

I was not talking of percentages. I admit the percentage is lower, but the number of people employed in the building trade is lower.

Mr. T. DAVIES

If the percentage is lower, less people are out of employment.

Mr. KEBTY-FLETCHER

No, they emigrated.

Mr. T. DAVIES

The hon. Member for Walsall gave us an interesting lecture on the Cocoa Union. I believe the hon. Gentleman went up and down the country denouncing the duty on cocoa as a protective duty. Now they propose to take the protective character away from the Cocoa Duty, and even that does not please the hon. Gentleman opposite. When we leave the tax on cocoa they are not pleased. The hon. and learned Member for Exeter (Mr. Duke) said there was no objection to any part of the Budget of 1909 except the Land Clauses, but those hon. Members who were in the House when the 1909 Budget was passed know that many other Clauses were objected to besides the Land Clauses. I am very glad that this Budget has been introduced and that the Chancellor of the Exchequer has seen his way clear to take away the protective character of the duty on cocoa. That has undoubtedly cleared the field for us as Free Traders, and I hope, if there is anything still lurking in any of our duties of a protective character, that they will follow the example of the Cocoa Duties. The Budget of 1909 has produced for us a surplus of £5,607,000, and this has been achieved after meeting the great increase in our expenditure upon the Navy during the last two years and the Old Age Pension scheme, which cost over £9,000,000 last year and will cost £12,000,000 this year. Notwithstanding all this, the Chancellor of the Exchequer is not asking for a single new tax to cover all that expenditure. I say that is a triumph for the Free Trade Budget of 1909, because all this expenditure has been met without resorting to a tax on either manufactured goods or the food of the people.

The Government are shown in a very favourable light with reference to the amount of the National Debt which has been paid off since the Liberal party came into power, because in six years they have paid off £70,000,000 of the National Debt. How much did the Conservative Government deal with the debt? They put £100,000,000 on the National Debt, whereas we shall have by the end of this year cleared off £70,000,000 of it. Another statement we welcome from the Chancellor of the Exchequer is that the Navy expenditure has now reached its climax, and we have something equal to a promise from the Government that, at any rate next year, the Navy expenditure will be reduced considerably. We rejoice at that promise, and hope it will be fulfilled. We are pleased to hear that we may look forward confidently to a surplus next year, and that the Government will be able to provide for the great scheme of insurance which is now before the House without putting on a single halfpenny more tax on food or any other of the necessities of the people. I believe we shall be able to go on under our present system without putting any more taxes on. I trust that next year the Chancellor of the Exchequer will be able to take a little, if not the whole of the tax off tea. That is a tax which presses very heavily upon the poorest classes of the community, to whom a penny or twopence as a tax upon tea means a great deal. Then there is the question of a person with a small income, part of which is earned and part unearned. I believe it is the custom now to the deduction from the earned income. I think it is only fair that the remission should be equally deducted from the earned and unearned income. I am very glad that the Chancellor of the Exchequer has been able to bring in a Budget this year without asking for a single new tax.

Colonel BURN

It is the great event of the year when the Budget is introduced, because taxation must affect everybody. We are all interested in taxation whether high or low, rich or poor. The Income Tax for many years has always been looked upon as a legitimate source of revenue for the country, but let me remind the House that only four years ago the Prime Minister said that an Income Tax of 1s. in the £ was impossible to justify and difficult to defend. Now we have got an Income Tax at 1s. 2d. in the £. [An HON. MEMBER: "It is 9d."] Yes, it is 9d. for some classes, but for others it is 1s. 2d., and that is a very heavy taxation. People with moderate incomes have to reduce their expenditure in order to pay this tax, and that means that in some way or another unemployment, which, although it may be small, is all in that direction. I defy any hon. Member sitting on the benches opposite to deny that proposition and to say that if the Income Tax is high it can be met in any other way except reducing expenditure by knocking off one or two extra hands. The Land Taxes have also been mentioned by the hon. Member for Montgomeryshire. There is no doubt that the land is hit very hard by the Budget, and we are beginning to live on our capital. You tax the capital value of land, and by doing that you do not collect revenue, because it has all to be valued at enormous cost to the State and for some time to come it will not bring any return to the Exchequer. Not only this, but the owner of land, whether he be a small or a large owner, has to pay for the valuation of that land. He has to answer the questions that are put on Form IV., and he has to give information which costs him money to get. The small man who owns the plot of land on which his cottage stands is hit, and it is the poor man who is most hit in proportion to what he has. You are taxing the capital value of land, and it means that for the first time in the history of this nation property is being confiscated by taxation instead of by direct transfer. I know full well there are many hon. Members below the Gangway opposite who rejoice to think that some time in the future they will see land taxed 20s. in the £. I know that that will please many hon. Members as well, but Land Nationalisation is a scheme of which I do not think any sane or sensible person ever dreams. We all know what Mr. Gladstone said of Land Nationalisation, and I think he is respected by everybody on both sides of the House. He said:— Land Nationalisation with compensation is folly; without compensation it is robbery. I also quote the father of a right hon. Gentleman who sits on the Treasury Bench to-day. The late Sir William Harcourt said:— A man's title to his land is the same as his title to the coat on his back. 10.0 P.M.

It is being filched away from the people now, because the tax is on the capital value and not on the annual value. We think there are many untaxed sources of revenue which might well be experimented on. Why is it that a man who neither drinks wine nor spirits nor beer and does not smoke escape taxation? Why does he not assist the Revenue of the country? There are many possibilities of taxation and many untaxed sources which might bring large revenue to the Exchequer. Why should not a halfpenny per dozen be put on soda water, ginger beer, and aerated waters generally? It is a luxury; it is the luxury of the total abstainer. Why should he not assist the Revenue of the country the same as those who like their glass of beer or whatever else it may be? You are putting a tax upon wines and spirits. Why do you not, if you wish to get more revenue, tax the wines used by the rich instead of the beer used by the working-class and poorer people? If you want more money, you might have further taxation on the higher classes of wine. While you tax tobacco, surely it would be fair and equitable to put a tax on high- priced tobacco and on cigars, and not to tax all alike, so that the working man who smokes tobacco at 3d. or 3½d. per oz. has to pay the same tax as the man who smokes expensive cigars or refined tobacco. I think those matters want some attention, and I feel certain, if they were only attended to and there was a graduated tax in those cases, the poorer workers would be legs hard hit, and those who cat afford it would have to pay a little more for their wine and tobacco. We believe that our method of taxation would relieve the already overburdened taxpayer in this country and that we should make the foreigner assist our revenue. An hon. Gentleman this evening said manufactured goods came into this country to the extent of £156,000,000. We do not for a moment imagine that a 10 per cent. tax on those manufactured goods will keep the whole of them out, but if we keep out one-half, we shall get £7,500,000 paid into the Exchequer, and it would leave the other 275,000,000 worth of goods to be made in this country. We believe there is capital in this country, and all you want is some security for the investor. You want to keep his money in this country, and not have him invest it abroad in factories and works paying foreign workmen, and not a penny of the labour being done by the British workman. We believe it is all a question of work. We know that all the world over the prices of the necessaries of life have risen in the last few years. They have risen considerably in the last ten or fifteen years. If you study the "Board of Trade Gazette," which I am sure hon. Members below the Gangway opposite believe to be perfectly true, you will see that in the year 1908–9 the wages of the members of the trade unions, numbering over 1,000,000, decreased by no less a sum than £66,000 a week. What do you find in the Consul's Report for Germany? Read the report in a Blue Book sent by Sir Francis Oppenheimer, himself a Free Trader, and you will find he said that in Germany the food prices and the prices of the necessaries of life have gone up by 25 per cent. in the last seventeen or eighteen years, but during the same period the wages of the workmen in Germany have risen by 37 per cent.

We maintain that the rise of prices all the world over is a movement that nothing can stop except by the wages rising in a greater proportion, and we say that, if we have work in this country for our own people—British work for British workmen—then we shall do away with these inequalities, or at any rate do away with them to the largest possible extent. We who believe in Tariff Reform do not for one moment say it is a cure for all ills. That would be absurd. There will always be a certain percentage of the population who probably do not want to work, and I say it is a matter for the Government to make them work in some way. But if the maximum of work in this country is done by British workmen, then we shall have more peace and contentment, and we shall see poorer classes raised up. That is one reason why we who sit on this side of the House advocate Tariff Reform. If I did not believe it would raise the people up and better their surroundings and the lives of their children, I should never, for one moment, advocate it. But I am convinced, in my own mind, that the only way in which we can secure an amelioration of the conditions obtaining in this country is to set out on the path trodden by the rest of the world. I believe we must take what is best from foreign nations, and then we shall see the poorest of our people once more enjoy a measure of prosperity with more life and happiness in their homes.

Mr. CROOKS

I should not have spoken to-night but for certain speeches which have been delivered on the other side. I could not soberly accept statements which were put forward in them. The last speaker referred to the fact that £156,000,000 of manufactured goods brought into this country, if compelled to pay a duty of 10 per cent., would bring into our Exchequer £15,000,000, and he said, "If the goods come in, you will get that amount, while if they remain outside, you will get the work." When I uttered a cheer he suggested that I had at last admired the beauty of Tariff Reform. I suggest that my admiration would be for any man who could accept that statement as either practicable or workable. You cannot keep the money for bringing the goods in and at the same time have it for keeping them out. You imagine that if by taxing the foreigner's goods you keep them out, you will have the work of making them in this country, and your argument is that if you reduce the importation of foreign manuactured goods our workmen here will be kept fully employed. I venture to assert that there is nothing in that argument.

The last speaker drew a picture of what good it was going to do for the homes of the working classes, and he said he would not advocate Tariff Reform if he did not think that would be the result. I do not for one moment believe that it will be the result. I would like to point out that while we import £156,000,000 worth of goods we export something like £320,000,000 worth. If you tax a foreigner and keep out his goods, what is to prevent him taxing you and keeping out your goods? [An HON. MEMBER "He does."] No, he does not. If he did that you would not be able to send to him twice as much as you receive. It is perfectly true that you might have the work to do in this country, but under such circumstances I think your workmen would have plenty of time in which to do it. They do not shut our goods out at the present time because we are not a decadent nation.

Great patriots talk as if we in this country had no initiative and no inventive capacity. I venture to assert that in no previous page of our history was there so much inventive and ingenious capacity as there is in our land to-day. You cannot have it both ways. You cannot keep goods out and you cannot at the same time derive the advantage you now have of their coming in. I remember in bygone days a man who said to the working men of this country, "What do I propose to do? I propose to put a 10 per cent. duty on foreign manufactured goods and this will realise ten million sterling. It will be for the industrial community to say what shall be done with that ten millions. "He also said, "You will do more. You will keep the goods out." I wonder how it will be possible to keep the goods out and at the same time to realise this £10,000,000. [An HON. MEMBER "Who said it would?"] My authority is the right hon. Gentleman the Member for West Birmingham, the Gentleman who first started Tariff Reform for the relief of the working classes of this country. I remember an interjection in the House here to the effect that a penny loaf was dear if you had not a penny with which to pay for it. Perhaps some hon. Members now here do not know what my reply was. It was, "If you make it 1½d. it is not any more easy to obtain it."

We have also heard the wonderful story about sugar. Tariff Reformers put a duty on sugar, and we were told that its abolition would mean throwing thousands of people out of work. Are there any hon. Members here present who can go back forty years and can remember the price of jam. Will they compare the price now with what it then was Why in those days if a workman's child saw a pot of jam in his mother's cupboard he would think they were going to have company on a Sunday. Jam every day was a thing never heard of. Such reckless extravagance was unknown.

Colonel YATE

When did the reduction in the Sugar Duty take place? Did that reduce the price of sugar to working men?

Mr. CROOKS

I should think it did.

Colonel YATE

Well, I went round to make inquiries at the grocers' shops in my neighbourhood, and they told me that the reduction of duty was so infinitesimal as to make it impossible to give any reduction in price to working men. They already sold sugar at 2d. per lb., and any relief from a reduction of the duty went to the wholesale dealers and to the manufacturers of jam.

Mr. CROOKS

Can the hon. Member remember the day when sugar was 6d. per lb.? It was his party that put a tax upon sugar. It was a small tax, perhaps, but the effect was that in those days the commonest beet sugar cost 4d. per lb., and loaf sugar went up as high as 6d. and 8d. per pound. But all that is ancient history. One would have thought the great historic party to which the hon. Member belongs would have looked up these particulars. One hon. Member who spoke earlier in the Debate said that the tax on sugar had ruined the trade. As a positive fact it was the taking off of that tax that hurt the refiners of this country more than anything else. It was said that when the duty was taken off sugar many works ceased to exist; that the refiners who used to make a lot of money out of the drawback ceased to import, and that down at St. George's in-the-East hundreds of men were thrown out of employment. I took the trouble to take a census of the men employed in the houses closed after the tax had been taken off sugar, and I found the total did' not exceed 400. At this very moment while I am speaking there are between 1,500 and 1,800 men employed in the sugar refining industry in London. That seems to be news to hon. Gentlemen, but if they go to Tate's they will find 1,000 men employed, and at Albemarle's 700 or 800. If you add to that number the people engaged in the mineral water, jam, and confectionery works, it will be largely increased, and then you ask me to vote for Tariff Reform when no living soul can tell me what is Tariff Reform. Hon. Members have not made up their minds what raw material is. What is raw material to a Tariff Reformer? I do not know, but all I have got to say is that it is a curious way of raising the revenue of the country to make it more difficult for the poor to live, while mouthing the poor all the time, The poor working man! And we are charged with keeping him down of all people in the world—we who have tried to lift him up. It would be a relief to us, and lift an enormous responsibility from us, if the working men could be benefited. We live among these people, and we do not go to them only at election time. We have to stop, and we should hear them ask, "What about the reduction of the cost of living." But hon. Members ask us to make the poor poorer and the rich richer by their scheme, and as I said not long ago if there were only forty Members in this House against Tariff Reform we should fight it to a finish. When I ask what raw material is, I get not a word in reply. If I go to the English farmer and ask, "Do you believe in the importation of foreign hides?" he says, "No, certainly not. We can raise enough cattle to supply hides for the whole country. Look at the prices we can get for hides if we keep the foreigner out." I then go to Bermondsey and ask the manufacturer, and he says, "the more hides imported the better." I tell him the farmer says that hides ought to be kept out, and he rejoins the farmer is a selfish man. Then I go to the boot maker and ask him, "Is leather raw material," and he at once says "Yes," but the tanner says it is a highly finished manufactured article. When I tell the tanner that the shoemaker says it is a raw material, he says "he is a selfish humbug." That is the way the argument goes on, and where do you want to take us? I think I could set hon. Members as many questions as would take them five or six Sessions, with the help of the House of Lords to get through. The fact is the moment you touch the question you are in difficulties, but let me tell the Chancellor of the Exchequer that he is on right lines, and if he does not take hon. Members' advice the people will agree with him. I stated in my simple way at a meeting at a place in the North called Crooks—it may have been my ancestral home, but if so the title deeds are lost—that at this moment it is with the greatest difficulty in the world that the working man makes both ends meet, and a squeaky voice cried out, "Both ends meat. We are glad to get one end bread and the other meat." It strikes me if we get Tariff Reform we shall have one end bone and no bread at the other end.

Mr. ARTHUR STRAUSS

I never heard such a powerful speech in favour of Tariff Reform as that of the hon. Gentleman (Mr. Crooks). He only gave us one instance, and that was sugar refining. He told us that when the duty was taken off only 400 men were employed in the East End, but when it was put on, he knows of his own knowledge that at least 1,500 men are employed now.

Mr. CROOKS

When the duty was on sugar there were 400 men employed in the trade. When the duty was taken off there were 1,800 men, not after the duty, but twenty years ago. They are working now. Tariff Reform did not help them.

Mr. A. STRAUSS

Eighteen hundred men are employed now, and there is a duty, therefore the duty on sugar helps employment. But the great argument of the hon. Member, and he used it with the emphasis which seems very peculiar to him when he makes a mistake, was, how is it that we export twice as much as we import If the hon. Member would only look at the figures he would find that we import twice as much as we export.

Mr. CROOKS

Manufactured goods?

Mr. A. STRAUSS

I did not speak of manufactured goods, neither did the hon. Member. It is quite refreshing to find that the self-imposed silence to which we have been used for the last three or four weeks, has at last ended, although I believe the. Government would rather that it should have continued after the speeches that we have heard from the other side. All the speeches on this side must have been very satisfactory to the Chancellor of the Exchequer. Let me remind him of what the right hon. Gentleman (Mr. Lough) told him. He first of all congratulated him on the accuracy with which he estimated the revenue of the last two years I am quite sure the right hon. Gentleman must have considered that remark as the acme of sarcasm because he was out, as he told us, no less than £5,600,000, and how the right hon. Gentleman can call that accurate except in irony I do not know. The right hon. Gentleman (Mr. Lough) made a further proposal which I did not hear objected to by hon. Members opposite. He suggested that the duties on tea, sugar, and cocoa, and the other articles of food should be fixed once and for all for at least three or four years. We do not like taxes on food, but I do not think any Member on this side ever went so far as to advocate that they should last for at least four years without any chance of their being reduced. That is going further than the greatest food taxer has ever done. Then we had the speech of the hon. Member (Mr. Chiozza Money). He objected to indirect taxation altogether, and wanted all Income Tax. There is a good deal to be said for that proposal, but I should like hon. Members to tell us definitely at what rate of income they want the tax to commence —at £400 a year, or £50 or £80. Then we can go to our Constituents and say that the Labour Members want to put Income Tax on men with 15s. a week. [HON. MEMBERS: "No."] You want to put on nothing at all. Now we know where we are. The hon. Member for East North-amptonshire gave a reason which seemed to me at first blush very good. He said he wanted no indirect taxes whatever, because they came in contact with one another. I am sure the hon. Member for Woolwich (Mr. Crooks) does not agree with that. A week or two ago he advocated interference in contracts between. masters and men. You cannot have it both ways. If you advocate a principle in one direction you cannot object to it in another. I was very much struck with the peroration of the Chancellor of the Exchequer, with which I thoroughly agree. I could not help admiring his advocacy of the principle that before we go in for expenditure we should always consider where we are to get the income from. That is a good, sound business principle, which was advocated by Mr. Gladstone, and I wish that the Chancellor of the Exchequer had acted on that principle a few years ago. When he brought in the Old Age Pensions Bill, with which I thoroughly agree, he did not tell us where he was going to get the money for the scheme. During the discussion of the Bill he was challenged many times to state where he was going to find the money, and he did not favour us with a reply.

My chief reason for getting up was to give the Chancellor of the Exchequer a warning. He spoke of the great prosperity through which we have been passing. Well, that is a matter of opinion. I and a good many Members on this side of the House have a different notion from the right hon. Gentleman as regards prosperity. We have the same notion as hon. Members opposite have. We have heard more than one Member of the Labour party state that wages have gone down in the last few years. Our idea of the prosperity of the country is not that the figures of the Board of Trade should go up, or that the revenue from Income Tax -should rise to an immense sum. It is that working men should have better incomes in order to be able to live under more comfortable conditions. That is my opinion as to prosperity, and I am glad that hon. Members opposite agree with me for once. Therefore the prosperity of which the Chancellor of the Exchequer has spoken is only fictitious prosperity, which may touch certain classes, but does not touch the multitude in this country. But taking this estimate for the following year, I am afraid that he was a little too sanguine as regards the continuation of that prosperity, which, after all, must be taken into account. I remember that last year, when prophesying a very good year, he gave us different reasons for his prophecy from those which he gave to-night. But I must warn him that the Board of Trade returns show a certain tendency to go down, and that the manufacturers all over the country—and I am in a fairly good position to know what is going on in that respect—although they are to a certain extent still full of orders, have not for the last few months been booking orders to the same extent as they were doing last year. I am speaking now more particularly of the industry which has always been the guide of all other industries—that is the iron and metal industry. Taking the iron industry, there is certainly a falling off in the orders and in the prosperity of that particularly important branch, and taking this in connection with the depression which at present is prevalent in the United States, and with the bad crops in some of the Continental countries, I would suggest that tie Chancellor of the Exchequer should make his Estimates in a very careful manner indeed, and should not be too sanguine, as any Chancellor of the Exchequer is always likely to be. The advisers of a Chancellor of the Exchequer are very apt to make their Estimate first and then find out causes for that Estimate after they have made it. Last year, in October, he gave us a prophecy—no doubt on the information supplied by his advisers, because a Chancellor of the Exchequer could not possibly know all these things—that though the price of cotton was very high yet the price would go down, and we should have plenty of cotton. Well, the price of cotton has gone up since then. I am quite sure that the Chancellor of the Exchequer told us what his advisers informed him of, but I would merely point out that he can hardly get proper advice from the officials of the Treasury, and that he must go further than that in order to find out the exact trend of trade, because appearances for the moment are very deceptive.

I would like to ask the Chancellor the same question as was put by my hon. Friend the Member for the City of London (Sir F. Banbury) when the Chancellor of the Exchequer did not happen to be present. It is a matter which will crop up during the next few weeks, and which requires explanation, and no doubt there is a satisfactory explanation to which Members are entitled. We have been told that the man has to pay 4d., the employers 3d., and the State 2d. per week for this insurance. There are about fourteen millions of men and women to come into this scheme, which would mean at 2d. a week, roughly about 10s. a year, or a total of £6,000,000 a year which the State has to give to this insurance fund. We have heard from the Chancellor of the Exchequer that in the first year the amount will he trifling, about £50,000; next year a million and a half, and in the following -year two and a half millions. Anyhow, there will be six or seven millions which would represent the 2d. per week. No -doubt it will be explained that the benefits will only accrue later on, and that the heavy sums will only have to be paid at a future time. At the same time, it will not do for the Chancellor of the Exchequer to assert that the State pays 2d. per week, while the other people pay 4d. and 3d., unless he pays that 2d. at the same time that the employer and employed pay their 7d. a week. It would he to a certain extent misleading the people to tell them that the State pays 2d. a week, when, as a matter of fact, it will only commence to pay the 2d. in three or four Tears' time, while the employers and the workers will at once begin to pay their contribution of 7d. a week. It is not an unreasonable question which I ask, and it is one which was asked by such a high financier as the hon. Gentleman the Member for the City of London (Sir F. Banbury). There is some misapprehension about it, I will not say in my mind, but certainly in the minds of those who do not understand the figures so well as we do. Perhaps the Chancellor of the Exchequer will tell us whether we must give this six millions a quarter at once, or, if not, will he not make a plain statement that the 2d. per week is only to commence in four or five years' time? It is a simple question which can be answered. My object in rising was to warn the Chancellor of the Exchequer that his Estimates may be a little too sanguine, and that I trust he will take the proper precautions.

Mr. HOBHOUSE

The hon. Gentleman who has just sat down suggested that there was distinct evidence of a retrograde rather than a progressive movement in the trade of the country. I recollect that the hon. Member for Bootle (Mr. Bonar Law) made a speech at this time last year of exactly similar tenour to that of the hon. Gentleman who has just sat down. He predicted, amongst other things, that the iron and steel industry, to which the hon. Gentleman referred in his remarks, was in a very parlous condition, and that before the end of the financial year which has just concluded there would be found a very serious set back in that particular trade. I am not an expert in that particular trade; but it is quite clear to anybody who has studied in any way the details of that par- titular trade, as they are ascertainable by the Board of Trade returns, that the fears of the hon. Member for Bootle were entirely unfounded as regards last year, and that there is really no evidence observable for any of the fears which have been suggested in the speech of the hon. Member who has just addressed the House. There is just one remark I should like to make on that subject. It is quite true that in the matter of imports into this country there has been in the month of April a considerable falling off in values as well as products, but more particularly in values. One of the causes of that is due to a very satisfactory reason. There has been a considerable drop in the price of food, and, if my memory serves me right, one of the causes of the falling off in the imports was due to the lessening in values by something like a million-and-a-half of food stuffs. A great quantity of that is due to fall in values, and that is a very satisfactory point for us in this Committee to observe. There is another point which has been mentioned. This time last year Easter came in the month of March, and this year Easter fell in the month of April. In addition to the three days at Easter, during which practically no business is transacted in this country, there was a fifth Sunday falling in the month of April, so that you have to take from the thirty days of April no less than four days upon which ordinarily work is being done, but on which, in this particular year, no business was transacted. That very seriously affected the Returns of the month of imports and exports, and the deficit in the case of imports will, I am perfectly certain, be made up by the increased Returns of the month of May when they are completed.

There are only one or two other points which I think the Committee would expect me to dwell upon before we come to a conclusion on this particular Resolution. One of the hon. Members for Sheffield asked me whether the Government adhered to their decision to introduce a Bill dealing with some of those minor points connected with old age pensions, on which my right hon. Friend the Prime Minister had given some pledges in the earlier part of the Session. We certainly do mean to deal with those minor points. I understand a Bill comes up for discussion, and is the first Order on Friday, introduced by a private Member—one of the Members for London on the Opposition side—and I may probably take that opportunity of making a more definite statement as to the position of the Government. The hon. Gentleman the Member for Ayr Burghs (Mr. Younger) asked a question earlier in the evening, and made some little play on the fact that no register of valuation had yet been arrived at.

Mr. YOUNGER

Only partially.

Mr. HOBHOUSE

Only partially arrived at. That valuation is based on the amount of trade done in particular houses. One of the difficulties in connection with that is that the publicans, perfectly genuinely I have no doubt in many cases, are unable to give details of the trade. They profess to have kept no accounts, and I daresay that is perfectly true. I have no doubt in the matter, but, of course, until they supply the Inland Revenue with those details of accounts of their trade it is impossible to make that progress with the valuation which naturally the hon. Member desires, and which, of course, the Government desire for their system. He admitted that some of the concessions which I was able to make earlier in the year have given satisfaction from his point of view, and he said that our proposed concession with regard to remote stables was satisfactory. My right hon. Friend has promised to deal with that matter, and I will only put in this caveat. We cannot deal with stables attached to hotels. Stables attached to public houses are one thing; stables attached to hotels are quite a different thing. In the case of a hotel, the stables are almost invariably ancillary to the trade of the hotel. In the case of the public house they are in many cases distinct and apart from its business as licensed premises.

Mr. YOUNGER

Does the right hon. Gentleman's remark apply only to stables within the curtilage of the property, or does it apply to stables removed some streets away?

Mr. HOBHOUSE

I have told the Committee quite frankly that the wording of the Clause is not yet settled—

Mr. YOUNGER

I do not press it.

Mr. HOBHOUSE

The hon. Gentleman does not press it, and until the wording is settled I do not propose to make a more definite statement on the subject. The hon. Baronet opposite (Sir F. Banbury) again said that we were living on our capital. That statement is not justified by any facts of which we have knowledge. You can test the capital of the country in two ways—by the amount of income assessable to Income Tax, by the amount of interest and dividends paid by foreign countries and foreign companies to this country. By neither of those tests is the theory of the hon. Baronet supported. The amount of income assessable to Income Tax has increased steadily for a long series of years. Speaking on the subject last year, I think I pointed out that in the course of the last four or five years the amount of income assessable to Income Tax had gone up by something like £300,000,000. The amount this year, although the final figures are not yet ascertainable, shows no diminution of that rate of progress, but rather an increase. The position with regard to the interest and dividend paid by foreign countries and foreign companies to this country is equally remarkable and equally satisfactory. A very interesting statement was put forward in the autumn of last year by the joint editor of "The Statist," the weight of whose evidence the hon. Baronet will not question. In that statement it was pointed out—I am speaking from memory—that the amount of dividends and interest payable by foreign countries and foreign companies to this country amounted to something like £160,000,000 per annum—an amount which has steadily increased. In the exportation of capital, which the hon. Baronet finds a danger, I find a source of great satisfaction. As long as such exportations of capital are not made rashly and are on sound securities they are a source of strength.

The hon. Baronet asked what was our difficulty in collecting the Super-tax. It is a very proper question, and the answer is perfectly simple. We have at present dealt—I will not say on all occasions, but practically all—with the voluntary payers of Super-tax. There are two classes—those who voluntarily make a return of their total income, and who therefore are very easily dealt with. There are also those persons who are suspected of not making a complete personal return of their total income. They may be in doubt as to what it is, and they do not want to put themselves on the wrong side of the dividing line; or it may be that they desire skilfully and wilfully to evade payment of the tax. With this class of person we have not yet dealt finally. As time progresses, and we have more knowledge and more leisure to deal with them, I think the return from the Super-tax will be somewhat larger than it is at the present time. This it is that constitutes the difficutly to which my right hon. Friend alluded to this afternoon.

The right hon. Gentleman the Member for East Worcestershire asked a question about the telephone capital. I will not dwell upon the subject, seeing the right hon. Gentleman is not here, except to say that we are taking over the telephones on 1st January. We shall have to deal with the subject by Bill later. The Bill is now drafted, and it will deal, I hope satisfactorily, certainly fully, with the question of the telephone capital. All I would remark at the present moment is that the price to be paid for the telephones depends upon arbitration. That being the case, the Committee will not expect me to name any sum, even approximately, that we may have to spend. There are only two other points that I need deal with. Questions were asked by the right hon. Gentleman. One was in regard to the £1,200,000 saved on the expenditure of the Budget. He suggested that it might be due either to postponement of work, to error of estimate, or to genuine savings. In nearly every case the difference between the Estimate and actual expenditure is extremely small, having regard to the vast sums dealt with. We do not claim any credit for this Government as having been snore accurate than its predecessors in avoiding error, but I think we are entitled to say that we have shown no greater error in our Estimates.

The difference in expenditure has been due to two main causes. There were £125,000 to be paid out for old age pensions less than anticipated, and there was a saving upon the Exchequer receipts in respect of the Road Board Improvement Fund. Amongst other matters there was a smaller yield on the Motor-car Licences and the Motor Spirit Duties than anticipated. There was therefore less apparent expenditure. There were a number of small alterations in our expenditure which really I could not class together, and which really are not important.

There is only one other point to which I think I need refer, and that is the curious point made by the right hon. Gentleman the Member for East Worcestershire that there was a real obligation in connection with the National Debt to pay interest, but not to repay capital. I confess that surprised me very much. It seems to me if that were true there is a greater obligation on a Government which professes to hold that principle not to increase the capital expenditure by actually borrowing for pur- poses which we on this side of the House have met out of annual revenue. Therefore, if I understand the right hon. Gentleman, we have in a very serious way transgressed the principle that he and his followers hold, but which I hope no Chancellor of the Exchequer will ever be found to follow on this side of the House. I think I have now dealt with all the points raised by hon. Gentlemen opposite.

Mr. EYRES-MONSELL

What about widows, with pensions, living abroad?

Mr. HOBHOUSE

My right hon. Friend will make a note of that. People who go abroad deliberately do so, if not for other purposes, because they believe they can live more cheaply abroad than at home. They are less ashamed if I may say so, of their poverty abroad than at home. If they go abroad I see no reason why this country should not exact from them some contribution towards the expenses of the country which finds them their pensions or which, if they are in possession of independent incomes, guarantees the security of their capital, and while my right hon. Friend will give attention to the points raised I am afraid I cannot hold out very much hope that the result will be satisfactory to the hon. Gentleman who raised the point. With regard to the Insurance Bill it would be very inconvenient to debate the details of a Bill now before the House on an occasion like this. It is but remotely before us on the Budget. Full provision for this year's expenses on Insurances is provided, but I cannot enter upon a discussion of next year's Budget, and I do not think the Committee will expect me to deal with the details of a very complicated Bill which will come up for consideration and discussion in a very short time, both on Second Reading and in Committee. I trust the Committee will permit us to get this Resolution to-night, and all the more so because we shall have this discussion continued to-morrow.

11.0 P.M.

Mr. PETO

I should not have risen to address the Committee were it not for the concluding remarks made by the right hon. Gentleman the Secretary to the Treasury in reply to my hon. Friend. I cannot regard the answer he made in reply to the plea on behalf of the widows of officers as satisfactory in any sense. May I state the question quite simply as it appears to me? The case is as to widows of officers having no means other than the pensions guaranteed to them. She finds it impossible to live on that sum in this country. She puts forward no plea of ill-health, which if she did put forward she would be ganted that remission, and on account of her honest statement that she lives abroad because she cannot afford to live in this country, the sum of 1s. 2d. in the £ is deducted from that pension. I do not think the answer of the right hon. Gentleman is adequate, and I hope that when this matter comes to be considered more maturely by the Chancellor of the Exchequer he will be able to see his way to make this small remission amongst the other trifling remissions he is making this year. The Chancellor of the Exchequer, in giving the Committee his forecast of the sunny year in front of us, based his argument mainly upon the amount of money which is invested by this country in foreign countries, and the large amount of interest which accrues to those who make those investments; and also to the increase in the amount of income assessable to Income Tax. I do not want to belittle this very important index of the prosperity of the country, but personally I find myself infinitely more in sympathy with the hon. Member for Leicester, who preferred to gauge our prosperity by a wholly different measure, namely, that of the wage-earners. The hon. Member pointed out that although the income assessable for Income Tax had increased enormously and our investments in foreign countries grew from year to year, the income of the poorest of the wage-earners had decreased and was going down.

The hon. Baronet the Member for the City of London referred to the question of unemployment, which was also referred to by the Chancellor of the Exchequer. The Chancellor of the Exchequer pointed out as another index of the prosperity of the country how unemployment has diminished according to the trade union returns from 8.2 to 2.8, which is a very remarkable coincidence. The hon. Baronet asked to what extent this was due to emigration from this country. The reply is that there are no accurate figures to go on, and no figures to compare. The returns of unemployment referred to by the Chancellor of the Exchequer are made by about 700,000 trade unionists of this country, but even if they are an index of the total amount of unemployment in the skilled trades of the country, we have an emigration of 250,000 people every year, and it is obvious that the hon. Baronet's point is established, because if it were not for this gigantic emigration we cannot tell to what extent the unemployment returns would increase. If a quarter of a million people leave our shores every year, there is that number less to be employed. We are more concerned with the numbers who are in employment than with those who are out of employment.

I should like to refer to one thing which the hon. Member for Northampton said about the Cocoa Duty. There were two very small remissions of taxation forecasted by the Chancellor of the Exchequer: one with respect to the Cocoa Duty, and one to remove a very small part of the grievance under which licence holders still labour. With regard to Cocoa Duty, there are £20,000 of remission and £25,000 of loss of revenue on the rebate for export. According to our view, the Chancellor of the Exchequer has absolutely taken the stick by the wrong end. The hon. Member for East Northampton-shire (Mr. Chiozza Money) referred to the cocoa industry in Holland. He pointed out how much the Dutch people had prospered because they had free trade in cocoa. He said they had been able to do an export trade in cocoa larger than the trade of this great country, and the reason of that obviously from the hon. Member's speech was that they had free imports of the raw material from which they manufacture the cocoa for export. That is our contention. We, as Tariff Reformers, offer no defence for an import duty on raw materials, but we say that this duty, the protective effect of which is graduated upwards, according to the complexity of the components of the various manufactured articles of consumption, such as chocolate creams and all the rest of it, should not be done away with. In order to relieve hon. Members of a very awkward argument at a very trifling expense to the Exchequer we find this remission of the protectionist element, which is so very small a matter for the Treasury and the retention of the one thing for which we have never offered any excuse whatever—the duty on the raw material. I cannot imagine a better argument for us. At the expense of £45,000, they have furnished us with an example of how not to do it under Free Trade.

Mr. CH IOZZA MONEY

May I ask if the hon. Member is aware that Germany has a duty on cocoa and gives a drawback exactly in the same way as my right hon. Friend proposes?

Mr. PETO

I do not say that any country has an absolutely perfect tariff system. The hon. Gentleman made no reference whatever in his speech to Germany. He did quote Holland as a great example of a Free Trade country in respect to cocoa, and I have given him his answer. The Chancellor of the Exchequer forecasted future economies in our naval expenditure. I do not know half as much as he does from his intimate relation with the Cabinet as to what their intentions may be in the coming year. But I do congratulate those right hon. Gentlemen who have spoken to-day that at least they reserved to us a large measure of freedom in regard to what might be done by other countries in the course of the coming year. They admitted the principle that we have got to defend our country and our trade, and I thank the right hon. Gentleman for that. It seems to me, however, the Chancellor of the Exchequer drew too strong a contrast between the expenditure on the Navy and the expenditure on social reform. Above all things I hope we shall not have these two great and national expenditures contrasted one with the other, and that we shall not be led to suppose that we can only spend what is necessary upon social reform if we spend less than is necessary on naval defence. I think that would be a most unfortunate conclusion to draw from the right hon. Gentleman's speech. I cannot help feeling that there are hon. Members opposite who feel so strongly on the question of Naval expenditure that they would draw the inference from the right hon. Gentleman's speech that the future expansion of our expenditure on social reform is only possible if the anticipation is realised of a retrenchment of Naval expenditure. We cannot tell if retrenchment will be possible, but so far as we are concerned we are determined on this side of the House that nothing shall stand between this country and the legitimate claims of social reform.

Question put, and agreed to.

Resolution to be reported to-morrow (Wednesday); Committee to sit again to-morrow.