HC Deb 17 May 1911 vol 25 cc2021-97

Motion made, and Question proposed, "That Income Tax shall be charged for the year beginning the 6th day of April, nineteen hundred and eleven, at the rate of one shilling and two pence in the pound, and that the same Super-tax be charged for that year as was charged for the year beginning the 6th day of April, nineteen hundred and ten."—[Mr. Lloyd George.]


I think we shall all be agreed that this is the first Budget since 1909 on which there has been a normal discussion, and the atmosphere to-day is very different from what it was on this question two years ago. I think that this atmosphere is a good deal more agreeable and satisfactory to the Chancellor of the Exchequer than that which met him in 1900. [An HON. MEMBER: "No."] Well, there are some people who like a row. I am of a peaceful disposition, and I hope that nothing which I am going to say will in any way restore the same turgid atmosphere as existed two years ago. I notice that in the speech the Chancellor made yesterday in introducing his Budget, he was very optimistic both as to the revenue he was going to raise and as to the expenditure. I do not know really whether he intended that optimism to be comparative or actual. If comparative, I could understand it, because there is no doubt his difficulties to-day are very much less than two years ago, and I could understand his being happy and peaceful when drawing comparison between his position to-day and what he had to face two years ago. If it is actual I must say it is rather overstrained. I do not know whether the Chancellor of the Exchequer means the country to understand that he considers a 1s. 2d. Income Tax as normal and satisfactory in a time of profound peace, or whether he considers the present rate of Death Duties entirely satisfactory. Perhaps the right hon. Gentleman will throw a little light upon that subject when he speaks, and tell us whether he considers it is right to continue spending capital as income in the form of Death Duties, and whether he regards this state of things with equanimity. There are one or two disturbing factors for the future which the Chancellor of the Exchequer forgot to allude to. He said nothing, for instance, as to how his future revenue and his future Balance Sheet would be affected by the Report of the Committee which is now sitting upon the financial relations between England and Ireland in view of the Government policy. He did not tell us what action will be taken in regard to that point. I cannot imagine that future revenue will not be affected by that.

Then there is a much larger question of the relation between the Imperial and local Exchequer. The Chancellor of the Exchequer did refer to that point, but his only reference to it was a remark about his own generosity in foregoing £1,500,000 which he had proposed to extract from the local authorities as compensation for granting old age pensions to those who had been in receipt of indoor and outdoor relief. That only touches upon one very small aspect of the question, but it was one which happened to fit in with his argument. If the right hon. Gentleman looks at this question from a broad point of view in regard to its future effect upon the National Exchequer, he will see that he is largely indebted to local authorities from the point of view of local expenditure which is clearly national. The Chancellor of the Exchequer has got to reckon with the fact that a very large number of millions of expenditure are now borne by the local exchequer which are obviously to meet expenses of a national character, and the way in which the right hon. Gentleman and his successors propose to deal with that problem must profoundly affect national finance from the point of view of the future. I believe myself that a very large sum will have to be in some form or another withdrawn from the local rates and met by taxation levied fairly and evenly over all classes of the community.

I hear that a deputation of hon. Members opposite is going to approach the Prime Minister to-morrow to suggest that that burden is one which ought to be placed upon the land. I can hardly suppose that that proposal is likely to meet with favour in view of the experiment which has already been made in that direction, and its want of success financially. Whatever may be the method adopted to meet this new charge it is certain to upset in future the balance which is established for the moment. There is another point which the Chancellor of the Exchequer referred to, upon which I should like to ask for an explanation. The right hon. Gentleman referred to the insurance scheme and to its financial effect upon the National Exchequer, and he said that he hoped the receipts from his present taxation, subject to clue economy, would be sufficient to meet that liability. It is quite obvious that there is another side to this question. What I cannot understand, and what I do not think the House understands clearly, is the exact amount of the Imperial State contribution to this insurance fund. As the Chancellor of the Exchequer put it to the House, the employer and employed together were to contribute 7d. That was to be the contribution of the individuals, and the State was to contribute 2d.

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

The equivalent of 2d.


I am afraid the word "equivalent" was rather left out in the public mind. I do not suggest that anything was left out of the speech of the Chancellor of the Exchequer; but the effect of it on the public mind is that the State is going to contribute 2d. and that employer and employed are to contribute 7d. It is estimated that benefits are to be conferred upon 15,000.000 people. May I point out that if 15,000,000 people contribute 2d. each it amounts to about £6,000,000, and yet we are told that the contribution of the State will be £1,700,000 in the first eleven months. That, of course, is assuming that the scheme starts on 1st May 1912. From what the Chancellor of the Exchequer said yesterday, it appears to me that instead of there being a contribution of 7d. from the individuals and 2d. from the State the position is to be that the State is to take 7d. from the individuals and assume the liability for paying benefits at some future time which, on an actuarial calculation, will cost 9d. That is not quite the same thing as contributing 2d. from the beginning.

It seems to me that from a point of view of finance the State is assuming an unlimited liability. [HON MEMBERS: "No."] Well, you cannot have it both ways. The contribution of the State may be more or less than 2d., and obviously it is going to begin by being much less. The sum of £1,750,000 only is to he the contribution of the State for the first year, and this will eventually work up to between £5,000,000 and £6,000,000. For the first two or three years the State will contribute much less than 2d., and the individuals will be able to say, "You were going to give us the equivalent of 2d. throughout the scheme, and therefore we are entitled to have benefits which will cost, not only the £5,000,000 you are now contributing, but also the arrears of the twopences which were not contributed by the State in the first two or three years." It seems to me rather speculative finance for the State to undertake an indefinite liability of that character. It may be that in the first instance the contribution of the State will be a great deal less than twopence, and it may eventually turn out to be more than twopence. That is certainly another disturbing factor in the Chancellor of the Exchequer's calculations. Taking all these three items into account—Home Rule and its financial effect, local taxation, which is a very large question indeed, and the very indefinite character of the State contribution to the insurance scheme—all these three factors must come in to upset the finance of the future and vitiate any attempts to prophesy with any certainty at the present time.

One feature having considerable political effect is the alteration of the Cocoa Duty. Up to this time it has been practically impossible on any single point of this great fiscal controversy to get upon common ground. On this question we never can agree, even upon a foundation for an argument much less upon an argument; but we are here really for once on common ground, for we have actually got it agreed on both sides that there has been a protective duty on cocoa. We never got that admitted before. [HON. MEMBERS: "Oh, yes."] No, not in that full manner, and certainly it has not been admitted on the platform. [HON MEMBERS: "Yes."] At any rate, I have not realised it before, but perhaps the fault is mine. I was still in the darkness, and I thought there was still a doubt in some minds on that subject. I am now glad to know there are no doubts on this question, and that the cocoa industry was protected. I think we are entitled to inquire what the result of that was upon the cocoa industry. I think we are on common ground in saying that that industry is in a state of high prosperity.

I think we are also on common ground in saying that those employed in the cocoa industry are receiving good wages, and work under conditions even more satisfactory than other sections of the industrial community. So that, from the point of view of profit to the employer, and the conditions under which the employment is carried on, the cocoa industry is an example to every other industry in the country. It is rather significant that the Chancellor of the Exchequer told us yesterday that there will be a loss of £20,000 on the import duty upon cocoa owing to the removal of this protection, and there will be a still larger loss upon drawbacks. Therefore, it follows that this protected industry, with a splendid trade at home, in spite of all this protection, has been able to export to Protectionist countries more than was imported to this country from those countries from which our competition comes. In those countries our exports of cocoa were larger than our imports. [HON. MEMBERS: "No."] I know there has been protection upon certain articles which I include under the term cocoa, but that protection has been removed over the whole area, and the exports which are affected are larger than the imports.


That is not so. The imports of manufactured cocoa are greater than the exports.


Not reckoned in money, at any rate, because the Chancellor of the Exchequer is only going to lose £20,000 in imports, and he is going to lose £25,000 in drawbacks. The difference is very small, but it certainly does not look as if the trade was considerably affected by this duty. Of course, this trade is thoroughly established, and I have no doubt they will be able to stand it, but it will be rather interesting to see what relation the imports in the future will bear to the imports in the past. I should like to say a word with reference to the taking over of the National Telephone service by the Post Office. I most firmly believe there is no tax more injurious to the community than a tax upon communications. Increased facility of communications is the life blood of any industrial community, and I do most sincerely urge upon the Chancellor of the Exchequer to watch, in this matter of the taking over of the telephones, that there is no pressure brought to bear from the Treasury upon the Post Office to obtain increased revenue from that source at the expense of the public facilities, or at the expense of the rate at which those facilities are granted. It is a most important matter for the whole of the mercantile community. It is suspected, I hope quite wrongly, that the result of the Post Office taking over these telephones will in many cases be an increase in the rates. I sincerely hope that fear is unfounded, and that nothing of the kind will happen.

I now come to ground which is a little more controversial. I still hold to my opinion that the Death Duties in their present form and in their present amount constitute a most mischievous and crushing burden from many points of view upon the industries of this country, and more particularly upon the rural industries. In saying that, may I acknowledge that we have received from the Chancellor of the Exchequer in the same Budget an additional allowance for expenditure on agricultural land, raising the allowance to 25 per cent. I bear that in my mind, and I am grateful for it as far as it goes, but I must reiterate that the character of the Death Duties is such as to make them particularly onerous upon rural property. Their incidence is most unequal, and they are now raised to such a point that avoidance of them where possible really becomes a duty. The income of a rural estate is its life blood, and, if the Death Duties calculated as they are now fall in full upon a rural property the whole of its life blood is drained for years, and the capacity of the owner of that estate to carry out his duties to those who live upon the estate is so limited that it is disastrous to everyone concerned. It therefore becomes his duty, not so much in his own personal interest as in the interest of those on the estate, to mitigate this burden. It is in certain cases, owing to the accidents of life, crushing and unbearable. It is especially injurious in two particulars. I think the Committee will agree with me that of all the social matters we have to deal with in this House, and of all the efforts being made now to deal with questions of social reform, the one in which we have done least and the one most difficult to deal with is that of rural housing. It is at the root of the matter of rural depopulation. There was, as the Death Duties stood before the Chancellor of the Exchequer introduced his Budget of 1909, an advantage obtained by the owner who built cottages for his labourers. The right hon. Gentleman, by Section 60 of that Act, has removed that benefit. I do not believe he himself realises the seriousness of it.

The Death Duties, as the Act of Sir William Harcourt originally stood, were calculated upon a certain number of years' purchase of the income of a rural estate, so that if an owner built a pair of four or five-roomed cottages for labourers for £400 and let them, as they normally are let, with a quarter of an acre of land, for 1s. 6d. per week, they were valued for Death Duties at so many years' purchase of the income, and, instead of having to pay on £400, he would only pay on say twenty years' purchase of the income he received. If he indirectly obtained a further advantage in the way of increased rents for farms that was also multiplied so that he paid Death Duties upon whatever income he got. That method of calculation is now abolished by Section 60. Everyone knows what my opinion is of the Clauses in that Budget, but of all the Clauses, I regard that as the most mischievous from the rural standpoint. There was a direct encouragement to the rural owner to spend money for the benefit of the estate and to sacrifice his income for the benefit of those upon the property, but now, according to this method of calculation, these houses are to be valued entirely independent of their rent, and presumably Death Duties are to be charged on what they actually cost. If a pair of new cottages are put up for £400, they are to be valued at £400. The Death Duties on a rural estate may frequently amount to 20 per cent., which means a fine on those cottages of £80 on the death of the man who built them. Is that reasonable, and is it the way to get cottages built in rural districts? I have built hundreds of these cottages myself, and I say we cannot afford to pay £400 for a pair of cottages, receive £4 rent, and then be fined £80 for doing it.

The second point is the right hon. Gentleman's treatment of afforestation. If there is one subject dear to the would-be rural reformer when he comes from an urban or a suburban district it is that of afforestation. How many trees have they planted? How many trees have owners of land planted, and how many would they like to go on planting? Under another Section in the same Budget, tree-planting becomes a ruinous occupation. When that Section was passed Sir Hugh Beevor, President of the Royal English Arboricultural Society, wrote to me and said he considered the Death Duties on timber-planting were increased by 700 per cent. That was the opinion of the leading arboricultural authority in the kingdom. The trees are valued at their standing value all over the property. That value is to be added to the value of the whole of the rest of the estate, for the purpose of calculating the rate of the Death Duty. So there may be a very large increase, and the same rate of duty is put on every tree when they are felled and put on the market. That is prohibitive. The right hon. Gentleman in that Budget introduced another relieving Clause, making it easier to lighten the duty upon pictures and works of art.


On trees, too.


No doubt that was the right hon. Gentleman's intention, but we have to look upon the effect of what he has done. If that is his intention, I am sure he will find means of carrying it out. Of course, we do not know what was in his mind, but we know what was the effect of his Budget, or at least we think we do. That Clause was considered at the end of a most contentious Session, when everyone was absolutely weary of the whole subject.


It was agreed.


I do not think it was agreed, except in the sense that everybody was wearied to death by fighting. The question, however, is not what was done, but what is right and what is wrong.


I know the hon. and gallant Gentleman wants to be perfectly fair. My recollection is that it was a Clause which was submitted to and accepted by Lord Ancaster. My impression is that it was also submitted to the hon. and gallant Gentleman, but if he tells me that was not so, of course I accept his correction. The impression of the Inland Revenue is that it has a very disastrous effect on the amount we can charge in respect of estates which are heavily timbered, and a very large owner who has this kind of property told me the other day it would make a very considerable difference to his estate.


That is the exact contrary to the impression I have received. The Clause was never submitted to me, and has never been considered, so far as I am aware, by those with whom I am associated. I admit it is extremely obscure, and, if the right hon. Gentleman's wish and intention is that the duty on timber should be lightened, then I think I need not waste Lime in discussing it. If he will tell as that the matter shall be reconsidered, and that the Treasury and those interested in timber shall have an opportunity of considering the effects of this Clause, then I think something will have been gained. I am sure the Committee will agree that hedgerow and estate timber is one of the beauties of our country which we cannot afford to lose, and is quite as important from the point of view of the community as pictures and objects of art, and ought at least to be put on as favourable a footing. I should rather like, as this matter is questioned, to read an extract from a report that the Royal English Arboricultural Society published. It is a report by Mr. J. W. Openshaw, who has sold some £12,000 worth of growing timber in the West of England this winter. It indicates very clearly that the new Land Taxes are having a most injurious effect upon afforestation in this country, and that it will make a difference of from 60 to 70 per cent. to the Death Duties on many large estates, and will take from twelve to fifteen years' net income of the property to pay off these duties. The result has been that over £100,000 worth of timber (mostly oak) has come on the market this season over the usual falls. That shows that an expert in afforestry and a valuer is of opinion that is the effect of the Clause. It will show I did not speak without support. My suggestion is that in the interests of the country as regards housing and as regards afforestation the only simple and proper method, both for the estate and for the individual, is to retain the system imposed by Sir William Harcourt and to charge the duties on a fair number of years' purchase of whatever income the owner of the estate receives, whether it be from timber, or land, or houses, or from any other source. If the owner makes a profit on selling timber, he ought to pay on that profit just as much as on any form of industry. I should be the last to ask for anything else than a fair duty where he sells timber and makes a profit. But the Committee will admit that there are millions of trees in this country, the property of owners of land, which ought never to be and indeed never are felled. Yet they are all valued! Hedgerow timber, park timber, and ornamental timber is often allowed to stand until it is past sale, and often until it falls. I am not speaking of neglected woods. But I want to point out that under this Act, as the Chancellor of the Exchequer will admit, every tree has to be valued. There is no exception. Take a comparatively small estate with no woodland and with nothing but ornamental timber. Probably under a succession of owners not a 6d. will be made out of the timber; there is and never will be any income from it. It is there for the pleasure of the owner, and at the same time it is an advantage to the community. If the owner cuts down the trees and sells them he pays. The case should be exactly parallel with that of a picture. Pictures are not valued now, nor is the value of the pictures added to the value of the estate for the purpose of determining the rate of duty. But that is what is done in the case of trees. I have no objection to the owner being called upon to pay on the value of the timber he actually sells, but private ornamental timber ought not to be valued as its value will never be realised. It ought not to be valued in order to run up the rate of the Estate Duty on the rest of the property. That is where the hardship comes in.

I come now to more debateable ground, and that is the matter of the Land Taxes. The Chancellor of the Exchequer said very little about those taxes. I dare say he did not find the subject a very congenial one. These taxes have now been in full operation for a year, and I should like to make a comment on their financial result. According to the figures given us yesterday the total yield of the taxes last year was £520,000, and the estimated yield for the current year is £700,000. We have no particulars as to how the £520,000 is made up; how much is due to Increment Duty, how much to Undeveloped Land Duty, how much to Reversion Duty, and how much to the Mineral Rights Duty. But as to the Estimate of £700,000 for this year, we are told that £50,000 is the Increment Value Duty, £200,000 is Undeveloped Land Duty, and the remainder Reversion Duty and Mineral Rights Duty. It is best to clear the ground by pointing out that the last two duties have no concern of any sort or description with the valuation now being carried out in the country. They are entirely independent of it. They are purely local in character, and if ever there were taxes which ought to belong to the locality in which they are raised and to no other it is these two taxes. I am not justifying their existence. We have to realise that they do exist.

Surely the Chancellor of the Exchequer knows that there are towns—why, nobody can say—it may be the caprice of the owners—where the leasehold system is general. There are other towns where the freehold system is general, and so far as I am aware the conditions of rent are just the same in both cases. Nobody has ever yet been able to point out that the leasehold or the freehold system is responsible for rents being higher or lower. These taxes are levied solely in towns where the leasehold system prevails. Let me take the case of two towns of much the same size. At Grimsby practically the whole of the houses are built on the leasehold system. In Ipswich practically every house is freehold. I do not believe there is a long leasehold in the place. The Reversion Duty imposes a heavy burden on the community at Grimsby, but not one single farthing of that burden falls on the community at Ipswich. Why should that tax which is levied wholly on Grimsby be taken for the benefit of the people of Ipswich. I can see no justification for it. If there is to be a Reversion Duty it should be a duty levied for local purposes in the district where it is levied and nowhere else.

Then in regard to Mineral Rights Duty exactly the same thing applies. This duty is easy to raise. But in its character it is a very unjust tax, because it really amounts to double Income Tax upon what is not really income. The so-called mineral right or royalty is really the sale of minerals paid for by annual instalments until the minerals are exhausted. Therefore it is really an Income Tax levied on the instalments of capital as they are being wasted. The matter of wasting assets has often been discussed in this House as applying to the Mineral Rights Duty. There is in fact a double duty placed on minerals. As far as the ordinary Income Tax is concerned it is. raised on other industries as well, and the argument would not apply, but so far as this special duty on minerals is concerned the same argument applies as in the case of the Reversion Duty. The proceeds certainly ought to be applied in the locality where they are raised. I see no reason why they should be abstracted from one district and expended in another which contributes nothing whatever to this particular source of revenue.

We may put these two duties aside for the moment. Out of £700,000 which the Land Taxes are to raise, only £250,000 is estimated by the Chancellor of the Exchequer to come from the Increment Value Duty and the Undeveloped Land Duty, both of which depend on the valuation now being made. What has that valuation cost? All we know is that we have had a Supplementary Estimate for the last year amounting to £480,000. We also have a list of the valuation staff, and we gather from it that there are 817 salaried officials at salaries varying from £1,500 a year downwards, the total salaries amounting to £250,000 a year. That is exclusive of draftsmen and writers, and also of referees, of whom there are a large number at a minimum salary of £500 each. What is the revenue? The salaries of the officials alone, without those of the referees, the writers, and the draftsmen, will consume the entire estimated revenue, not for last year only, but also for this year, which the Chancellor of the Exchequer expects to derive from these taxes.

But what about the future? When are these taxes going to pay? I am rather reminded of the old lady in a sermon who was heard to declare that "something is coomin, coomin, and coomin, but it never cooms." Hon. Members will not deny that, in looking at the expense of this valuation, we have to bear in mind not only the expense to the State but also the expense to the individual, which at least doubles the amount. We may put as the lowest estimate, in view of the Supplementary Estimate we have had of £480,000, and this of course is an increasing expense, that the cost of the valuation will be for the two years at least £1,000,000. I think that is putting it very low. Last year we got practically nothing from either the Undeveloped Land Duty or the Increment Value Duty. This year we get £250,000, and thus we shall have a revenue of about £300,000 to set against an expenditure of £1,000,000 by the State, and at least another £1,000,000 by private individuals for making valuations themselves. Look at the worry, trouble, and anxiety which is inflicted upon innocent individuals in this way. I do not wish to deal with this in a bitter spirit, neither do I wish to make any attack on the Chancellor of the Exchequer. But I think the right hon. Gentleman must admit that this is a financial mistake. He has been misled; he was induced to believe that the valuation could be easily and simply carried out, and that has not been proved to be possible. Over and above the expenses to which I have referred, the valuation has, so far as I can understand it, absolutely broken down. It cannot be carried out on the present lines. In fact it has had to be dropped. The suggestion under the Act was that the whole of the land in the country was to be valued now. Then the value was to be obtained of every separate piece of laud sold on some future occasion, and the owner was to be taxed on the difference. That has been proved to be impossible. It cannot be done. You cannot compare like with unlike. The two things are not comparable.

5.0 P.M.

My private information is that instructions are now issued to valuers that when land is sold another valuation is to be made; the second valuation is to be compared with the first, and there is to be a tax on the difference. That is a peculiar method of taxation. You are to have two arbitrary valuations, and to be taxed on the difference between them. Let me take a London example—one only a few days old. Hon. Members will have seen in the newspapers a report of the arbitration case which took place at Cockspur Street in regard to a house which is to be pulled down to make the entrance to the new processional road in the Mall. That house had to be valued. What was the position? One valuer was appointed for the owner of the property and another for those who, wished to buy it. The valuer for the owner valued the property at £84,000; the valuer for the purchaser put it at £38,000. The value was eventually agreed upon at. £58,000. Surely there is a mine of information in those simple figures, and it illustrates the whole principle of valuation in this country. I dare say it is in the minds of some hon. Members that there was something dishonest—I will not say dishonest, but that these valuers acted in a manner perhaps unprofessional, or from any interest of that kind. Not at all. What is the practice of valuation is to look at the property so that you may see and say what it is worth. But you can say with truth that there is an immense margin between the highest sum which that property may fetch on the chances of the market and the lowest sum at which it might have to be sold if forced into the market. That is the case, and there is no property which might not fetch the same sum under different conditions and on different occasions. Indeed, it may fetch double on one occasion to what it did on the other.

What do valuers do? The valuer interested in the sale of the property values it at the highest margin that it may be expected to fetch under favourable conditions. The valuer on the other side values it at the lowest point to which it might be expected to go under unfavourable conditions, and that leaves an immense margin. But it is the invariable practice of valuation. What do the Government do? They send the valuer who has these traditions and they ask that valuer to value for them in order to get a tax. What naturally happens? There are two taxes, Increment. Value Duty, which you impose upon land already built upon, and Undeveloped Land Duty, which you impose upon land not yet built upon. It is in the interest of the Government to have land with houses valued low—I will not say in the interests of the Government—but the State will get more if houses on their sites are valued low, because they will get Increment Duty at their sale. But, on the other hand, if undeveloped land is valued high that is in the interest of the State, because they will get Undeveloped Land Duty at a larger figure, and that is what has happened. The Government valuers are valuing built houses and sites extremely low and un- built-upon land extremely high. I could quote case after case, and this has been going on on an immense scale. It is only natural that they should do this, they are out to get taxes and money and revenue, but the valuation is a thing which is so uncertain that it is absolutely necessary that there should be a compromise, and in these cases there is no compromise. What is there? Merely the right of the owner to object, and that is limited to sixty days. That sixty days is an absurdity. There are tens of thousands of owners in this country and the majority of them have not the remotest comprehension of the methods or principles of this Act. Indeed, I fancy a good many Members of this House would find it difficult to pass an examination in that subject now, and how is the small owner of property to know? How is it possible for him to study the Act and look after his own interests?

They have always been used for generations to see a low valuation under the Land Tax, and if their properties are valued under this Act they do not understand the valuation. How is a small owner who has bought a small plot of land, say, on an improving estate, to know that he is entitled to claim deduction for expenditure made by the previous owner twenty years back for a sea wall? How is the present owner to know what improvements were made thirty years ago by the previous owner of that land? He knows nothing about that, and within sixty days his time has run out, he is too late and he is saddled with a tax which is unjust. If the right hon. Gentleman does desire to continue this form of taxation and does desire that it should be carried out on the principle that he proposed himself, that all improvements that had been made by the owner of the land or any previous owner, should be exempted from taxation, he is bound to extend that period of sixty days, and it must not only be extended for a short, but for a very long period. It ought to be at least five years, with a reasonable condition as to its being shown that the owner did not know that he could claim a deduction any time within five years. If that could be shown he ought to be allowed to claim it. Another point is that the owner now has no means of testing the valuation except by obtaining professional advice, which is extremely expensive.

The right hon. Gentleman told the people of this country that the valuers would give every possible assistance and information to the owners of land, and he made a great point of that. I claim that where an owner has a provisional valuation served upon him that owner is at least entitled to write to the valuer or the valuation office from which the provisional valuation has been received, and to ask for particulars of how it was arrived at, and for details and information merely to enable him to form a judgment in his own mind as to whether he ought to object to pay and to put in an appeal to the referee or not. Applications with that object have been made, but they have been refused, and no information is given beyond the bare figure entered upon the provisional valuation. The consequence is the owner has to accept the valuation or to go to a solicitor or valuer, or both, and to obtain advice, and he has to pay for it. I believe that that is a matter which the Chancellor would probably be able to give us some information upon, and it is, I think, a question for lawyers whether under the wording and construction of the Act the owner is not entitled to the information. The question is now under consideration whether a test case will not have to be brought before the court in the absence of some satisfactory arrangement.

As the Chancellor of the Exchequer knows, a test case was decided recently on Form VIII., and that form was decided to be without validity and to be wrongly issued, and that when it was issued with a penalty of £50 if you did not give the information for which the State are not entitled to ask. I am told that there is another form—Form VIII. (2) —which asks for confidential information from solicitors, which is even more impossible, and I believe more illegal than Form VIII. The Chancellor of the Exchequer invited us to bring test cases. Well, we have brought a test case, and we have won, and I asked the Chancellor of the Exchequer whther he would pay the expenses and he refused to pay them. The right hon. Gentleman said the answer was in the negative, but I hope he will reconsider the reply, because the only reason why the costs of the appellant were not paid was because the proceedings were against the Crown. Had the case been between two private individuals the costs would have been given in favour of the successful litigant. As it was, the judge asked whether a claim was made for costs, as the action was one of great difficulty, but the costs could hot be claimed, as the other party to the litigation was the Crown. The matter was dealt with without costs being awarded, although the private party had been put to considerable expense and risk in the matter. Therefore I think the Chancellor of the Exchequer ought to pay the costs unless he desires to appeal, although I think the case is very clear. I have here many concrete eases, but I do not want to weary the House with them, though really the way in which these valuations are being carried out is remarkable, and not quite in accordance with the statements made when the Act was being passed through this House. If there was one thing which the Chancellor insisted upon more than another it was that the deductions for expenditure by the owner were in respect not of the actual expenditure, but of the value which that expenditure produced. I am glad to see the Chancellor agrees with that, and I am sure he will look into this matter. I have here a letter from a solicitor in Staffordshire, who says:— A road has been put through the estate. The superintendent valuer of Birmingham, in whose district the estate is situate, informs us that he will only allow the bare cost of the road to be added to the cost of the land as these are his instructions from the officials in London. That is directly contrary to the statement of the Chancellor.


Will the hon. Gentleman send me the particulars?


Yes, I will send the particulars to the right hon. Gentleman immediately. To show the extraordinary divergence of figures I may quote the case of a property consisting of two fields near Shrewsbury. These two fields were valued, one at £1,570 and the other at £2,300, or a total provisional valuation of £3,870. The owner objected to that valuation, and a competent valuer told him to object. He refused to give any figures of his own, but he said that the valuation was ridiculous. The valuer withdrew the valuation, and valued one field at £858 and the other at £1,847, a difference in one case alone of 85 per cent., and in the other case of 25 per cent. The owner of these fields happened to be a lawyer, and he knew the Act and his business, and consequently he made that protest. But had he been a private individual with no knowledge of the law, he would have had to employ a solicitor or accept the valuation and pay duty upon it. Then I have here another valuation of two houses on two plots of land at Dorking. The land on which they stand cost £275, and the two houses at a contract price £1,280 when they were built eight years ago. That is a total cost of £1,555. The provisional valuation after great difficulty of those two houses together was increased from £800 to £1,000. First of all the valuation was put at £800, but finally it was brought up to £1,000 after some trouble. The difficulty is that if the owner sells that property at £1,200, or at a loss of £355 upon the sum which those houses cost him eight years ago, plus costs, there will be an increment upon which a duty will be payable after deducting the 10 per cent. allowance of £173. That really does not seem to be a reasonable form of taxation. Here we have another most extraordinary case, which shows the complete muddle into which this valuation has got. Here is a valuation at Fulham, £655 for the total value of the house, £130 being for site and £525 for building. The owner protested, and the valuation was altered to £750, the site value being left at £130, and the buildings increased to £620. Then the owner again protested, and pointed out that he had paid the local authority £36 for paving. Then there came another amended valuation in which the total value was put at £750, the site value was still kept at £130, £36 was allowed for the paving, and the buildings were put down to £584. You have the building site value left absolutely the same, and here you have an owner who claims £36 deduction for expenditure which he has incurred, and for which he is entitled to a reduction under the Act for the improvement of the land by paving and draining, and that deduction is actually taken off the building, and not off the land, The buildings are valued at £620, and when he says he has spent £36 on drains the buildings are brought down to £584 and the site value is left absolutely the same. This valuation is merely farcical.

Nothing can be more amusing than the minus valuations in Scotland. I have two or three cases here, one is already before the Chancellor of the Exchequer, and have here another. Here is chapter and verse. One of the value of £463 was referred to at Question time, so I will not refer to that. Here is Mrs. Mary Ann Galt and others in Great George Street and Hillhead Street, Glasgow, and here is a property of the original total value of £6,898, with deductions £1,200, and it is brought up at a value of minus £252 I suppose if Mrs. Mary Ann Galt is fortunate enough to be able to give her property away for nothing, she will have to pay Increment Value Duty on,£252. Really absurdity can hardly go further than that. The Chancellor of the Exchequer referred yesterday to the building trade as in a satisfactory condition. He said what he thought, but what is really not the fact if he had not looked into it a little closer. These unemployment returns are most deceptive. They are taken simply from those men who are on the books of the societies, and who are unemployed, and when a man goes off the society because he is unemployed as long as he remains on the books he counts, but when unemployment has lasted so long that he has to emigrate and go off the society altogether he does not count any longer. That is what has happened. I can give figures to show that the number of the men in these societies has been reduced, and that the amount of unemployment has been so great, and trade has fallen to such an extent, that the men no longer pay their subscriptions. They have left the society, and are emigrating to other countries where there are no Land Taxes of this description upon the building industry, and the consequence is that the Chancellor of the Exchequer is able to come forward and produce returns to show that unemployment is decreasing. This is a letter from a gentleman I have not met, but it shows what he thinks, and he is in the trade himself. He writes from Grimsby:— I may say that owing to the Budget and Form IV., property in this town has gone down to half its value. That is what he says. [An HON. MEMBER: "Do you believe it?"] Yes, I do in many cases. I heard of a case the other day where twenty-four houses were put up as a prize in a golf competition, and no one would enter for fear he got the houses. I can send the particulars; it is quite genuine. Perhaps we might be able to get up a team of hon. Gentlemen opposite who would have the houses, then they would have a little experience. I may say that owing to the Budget and Form IV., property in this town has gone down to half its value. Property which was readily selling at £300 now reaches £150. So much for the Budget and Form IV. The builders are at a standstill and the houses half finished. I am quite ready to give the Chancellor the letter and the name. The houses are taxed in the name of the land. Houses and land go together. You cannot separate them. They are not cheaper; you only have to pay more taxes. You do not cheapen land by taxing it.. Hon. Gentlemen are full of excellent theories I know, but these theories are now being put to a practical test, and the people who are engaged in these industries are suffering from them. Hon. Gentlemen still believe in their theories, but I wish they would go and talk to practical builders and estate agents. I have yet to find one single practical valuer or estate agent who knows his business who is in favour of their form of taxation. You cannot find people who are in the business and understand it who are in favour of this method of taxation in any shape or form. Here is another letter from George Hewitt and Sons, contractors, builders' merchants, and general agents at Leicester. They say:— The effect of the new Land Taxes in this district is that where mortgagees are awake and are not calling them in (as some are, but as yet we have not been troubled), many are requiring revaluations for which the mortgagors are being called upon to pay the professional charges, and in every such case the securities are considered to have been reduced and the mortgages are being reduced. We have already felt this seriously. As to the buying and selling of house property, that is absolutely a dead letter except where mortgagees force the sale, and then for well-built property the best price obtainable is about the cost of the buildings only, and the land thrown in for nothing. We are simply holding on in the hope that things will be better. No speculator in his senses will build, firstly, because mortgages cannot be obtained to any adequate proportion of the cost, and secondly, because there is absolutely no sale at cost prices. The only ray of hope we can see is that rents must consequently harden, and (unless the predatory legislators crush us out before we can recover) enable us to realise. England is no place for the builder at present. That is the fact in normal districts. There are places where there is special development going on. Look at what is going on in London now. Look at the thousands of tons of timber which are now being used for Coronation stands all over the city. Normally, these would be withdrawn from the building trade and the price of timber would rise. But there is so little demand for timber in the building trade that the price has remained perfectly stationary. That is the kind of thing which throws a little light on the matter. I will finish the paragraph in this letter. It is not written for publication. This man simply writes what he feels Hon. Members below the Gangway laugh at this. You cannot ask for any greater condemnation of legislation than that. Here is a man whose trade is ruined, and he writes to complain. Surely he is entitled to sympathy. [An HON. MEMBER:"I do not believe it."] Perhaps the hon. Member will go to Leicester and inquire? Personally we are worn down in body and spirit, and from time to time feel that life is not worth living The wicked waste of values is heartrending. But there are hundreds here ten times worse than ourselves. That is the position as it comes from Leicester, and I think it is right that the Committee should understand it. I contend that this legislation has failed, and has broken down. The Chancellor of the Exchequer must admit that he has made an experiment and, so far he cannot claim it to be a success from any point of view. It is causing great irritation, great expense, and great injury to a very large section of the people. Surely I am entitled to ask the Chancellor of the Exchequer to look into this matter from a national standpoint, and to see whether he can really now hold the same hopes and anticipations which he held when he introduced this new form of taxation. I am perfectly aware that the theories upon which this taxation is based are very taking, and I do not wish to throw any stones at those who are responsible for it. They believed quite honestly, no doubt, that they were going to benefit the people of the country and to obtain a great revenue by this novel experiment in taxation. So long as the tax justifies them in continuing that hope, so long will they be justified in supporting it, but they will not be doing their duty, and the Chancellor of the Exchequer will not be doing his duty, to the country if he persists in this form of legislation when he really sees by experience and by the facts which must be before his eyes, and from the reports that he must daily get from his own valuers, that it is an impossible method of taxation. I ask him to consider it from that point of view and not from the party point of view. I am not putting it now from a party point of view. I am trying to state my case moderately and fairly. I have attacked no one's motives. I do not approach this from the point of view of the rich man who desires to avoid taxation. If I wanted to attack the taxation of the rich man I should attack the Super-tax, but I have never said a word against it. I regard it as a tax which has a certain element of fairness about it. I attack this tax not from the point of view of those who are going to pay it but from a purely national point of view. I consider that it will not and cannot do what is claimed for it. It is a blot at present upon our financial system; it will have to be dropped; it cannot be carried out on its present lines. Is there a single hon. Gentleman on that side of the House who has any real knowledge of the subject who will say that this tax can be carried out on anything like its present lines? They will not and cannot do so. No man of any knowledge and experience can do so, and I ask the Chancellor of the Exchequer from that national point of view, not to persist in legislation which is injurious to the community, and either to abolish the taxes in their present form or modify them if he can, and I do not believe he can, so that they will be workable, and the evils which I complain of will be a thing of the past, and we may go back to the normal taxation according to ability to pay, and not according to theories, which, when introduced in practice, fail to produce the effect which has been expected by the promoters.


I greatly rejoiced to hear what fell from the Chancellor of the Exchequer with reference to the Navy Estimates. He told the House that he took a sanguine view as to the future of the expenditure on the Navy, which has horrified many Members, and, I think, a large section of the public. I find it very difficult to share his view entirely, and I do not believe he will be able to carry out the somewhat rosy view he took of the future of the Navy Estimates in England, unless he gets more earnest support from Members of this House and from the public outside for the programme which he laid before the House. The story which he unfolded and the figures which he gave with reference to the Navy Estimates were absolutely horrible. The Navy Estimates have expanded in the last twenty years from £14,000,000 a year to £44,000,000 a year. In the previous twenty years—and this is a thing which hon. Members should keep before their minds—the expansion in the Navy Estimates was only £4,000,000 or £5,000,000 in the whole period. If that kind of geometrical progression is to go on, what is to become of this country, and what is to become of the vista opened out by the Insurance Bill which the Chancellor of the Exchequer has laid before the House. I say it will be impossible, unless some stop is put to this insane career of armaments, to carry out the munificent scheme which the Chancellor of the Exchequer has inaugurated this Session. Nothing has been said in the course of the Debates this year which has in the least converted me to the view that the recent expansion in the Navy Estimates is justified by any circumstances within our knowledge.

The hon. and gallant Member for Chelmsford (Mr. Pretyman) said that one of the difficulties which the Chancellor of the Exchequer had given the go—by to in his statement was the expense of financing Home Rule. This is not the time or the occasion to debate the financing of Home Rule. When the time comes I have no doubt it will be fully debated, and I wish to tell the hon. and gallant Member, and also the Chancellor of the Exchequer, that whatever the difficulties may be in financing Home Rule so far as the British Exchequer is concerned, it will be very much better to finance Home Rule than that the Government of Ireland should remain in its present position. Ireland will be a much more expensive part of your expenditure under the present system of the Union than if you throw on the Irish people the responsibility of managing their own concerns and give them the opportunity of managing them with some approach to economy. We, in 1886, addressed a warning to the British Exchequer that if they did not give Home Rule, they would find that it would cost more than if they had done so. I think the British Exchequer is convinced of the truth of that warning by experience since then. I would ask the Chancellor of the Exchequer to give us at the earliest possible date and in the greatest possible detail the Irish figures of the last financial year—that is to say, the White Paper containing the particulars of the effects of the Budget on Ireland. I would also ask, in view of the new taxes which have been laid on, that he should give us the figures after they have been checked and examined with the greatest possible care.

I only propose in a few sentences to allude mainly to matters with which the Chancellor of the Exchequer did not deal. First of all, I desire to say that I was very sorry he did not give us a little more information as to his intentions with regard to local taxation and the relations between local taxation and the Imperial Exchequer. I know that a Committee has been appointed and is about to inquire into the matter, and therefore I quite recognise that we are not entitled to expect from the Chancellor of the Exchequer on the present occasion a statement as to any permanent settlement of this question. But I did expect, and I still hope to elicit from the right hon. Gentleman, some statement as to what he proposes to do in the interval while the Committee is considering the matter. The state of the local taxation account, both in Ireland asd Great Britain, is very various, and I do most earnestly represent to the Chancellor of the Exchequer that, pending the report of the Committee, he ought to make some provision for continuing on the old scale the grants in respect of local taxation which used to be paid up to last year out of the local taxation account of Great Britain and Ireland. I think it would be very unjust and would lead to a great deal of dissatisfaction and friction if in the interval between some comprehensive settlement which has been promised by successive Governments for many years, and in view of the shortage which arose for the first time last year, that deficiency were thrown on the taxpayers pending a final settlement. Therefore I would respectfully urge upon the Secretary to the Treasury, who is now representing the Treasury, that we in the course of the Debates on the Second Reading of the Finance Bill, or tonight should expect from the Treasury some statement as to their scheme and the proposals for dealing with the question of the breakdown of the local taxation account in Great Britain and Ireland, pending the report of the Committee. Of course, I am chiefly interested in Ireland. I need not go into the history of how that breakdown arose. It has been debated again and again, and is perfectly familiar to Members of the House.

I shall only reiterate and press upon the attention of the Treasury the fact that in 1898 the Local Taxation Account was set up by the proceeds of certain licence duties in Ireland. They were set apart and ear-marked for certain purposes. Many of the Irish Members, myself included, warned the Chancellor of the Exchequer of the day (Sir Michael Hicks-Beach, now Lord St. Aldwyn) that we could not expect the Licence Duties then set apart would meet the requirements. We warned the Chancellor of the Exchequer that a deficiency would arise. I thought it would arise much sooner than it did. We also warned him that we would press for further grants when that deficiency arose. What occurred was this. In Ireland, owing to special circumstances not prevailing in Great Britain, there was a rapid increase in lunacy from various causes, and there was a strong demand—a demand with which we sympathised very much—that there should be an improvement in the treatment of lunatics. Until the Act of 1898 and the setting aside of this special fund which provided for these grants to lunatic asylums, the Local Government Board in Ireland had rather discouraged any improvement in the treatment given in lunatic asylums. But the moment the responsibility was taken off the Treasury, and when they knew that the extra expense would fall upon the taxpayers, then the Local Government Board put pressure on the local bodies to improve the treatment. I think that was a most beneficent and proper policy. But it was rather a suspicious policy in view of the change which had been made in the financing of these great and expensive institutions. The local bodies did not resist this, but the expense mounted up by leaps and bounds, and the improvement has been enormous in connection with the treatment of lunatics. I have examined the figures before 1898, and I can prove that this increase has come and that no provision was made for it. I refer briefly to that historical retrospect for the purpose of saying that this is not a case of a bargain made by the Irish party in which they have found they made a mistake, and are now coming to the Treasury and saying: "You must give us more money because we miscalculated the cost." I turned up the other day the debates on this subject, and I found that there were eight or nine speeches made from these benches as to the probable effects of that change. What has happened was prophesied by the Irish party.

I now make an earnest appeal to the Secretary to the Treasury that some temporary provision will be made—without commitment or prejudice as to the final decision of their scheme for the adjustment between local taxation and the Imperial Exchequer—to continue the grants on the old scale. That is the first claim I wish to make. The next is that the Chancellor of the Exchequer will make some statement in regard to the grants for intermediary education. Here I want to point out that from certain observations which have been made by hon. Gentlemen opposite it would appear that they have not grasped the difference in the situation in regard to this matter in Ireland and in Great Britain. In Great Britain the question of grants in lieu of the Whisky Money for secondary and technical education is part and parcel of the larger question of the relations between local and Imperial finance. In England the complaint of the local bodies has been that they were driven back on the rates when the revenue from the Whisky Duties fell off in both countries. It fell off in a larger proportion in Ireland. For the last ten years they were obliged to throw a greater burden on the rates, and when the revenue from the Whisky Duties collapsed under the influence of the Budget of 1909–10 the local bodies were obliged to draw upon the rates more heavily. In England the question of the rates for this purpose forms part of the larger question of the relation between local and Imperial taxation. In Ireland that is not the case. This question of the Whisky Money Grant and the provision for secondary education, stands apart absolutely and cannot, and will not, come under the scope of the reference to the local taxation committee.

Therefore, we in Ireland in pressing our claim are obliged to impress upon the Treasury that we stand on an entirely different basis from Great Britain in this particular matter, and that we really have to ask a settlement quite apart from the Report of the Committee. I dwell upon that point because on a previous occasion the Secretary to the Treasury said that it was a question which would come before the Committee. I understand it is outside the scope of the reference, because in Ireland the failure of the Whisky Money has not had, and cannot have, the effect of throwing any additional burden upon the rates. The Intermediate Board in Ireland cannot have recourse to the rates, and, therefore, the failure of the Whisky being made in place of the Whisky Money, Money, and the decrease of the grant now will have the effect of starving intermediate education and making it impossible to carry it on. Our case in that particular matter is a peculiarly strong one, and I hope the Secretary to the Treasury will impress it upon his colleagues. It is particularly strong for this reason. In England you have in the first place large endowments. In the next place you have the rates, and for reasons which I do not care to enter into now, though I may do so at some time when it will be more in order, we cannot have recourse to the rates at all. In the third place, owing to the historical circumstance of the previous poverty of Ireland, which is beginning to pass away, the fees in the secondary schools have been fixed at so low a rate that it is absolutely impossible for intermediary education to be carried on with any decent provision for the teachers. In Great Britain you have three advantages. You have those endowments which are enjoyed by a vast number of English institutions; in the second place, you have large grants; and in the third place, you have much larger fees. What has been the result in Ireland? Most of the schools in Ireland have been built by private bodies and by subscription, and the teaching has been largely given by ecclesiastics of the Christian Brothers. Why has that been the case? I would commend to the notice of Members opposite who may not approve of the whole system of secondary education in Ireland the fact that unless these men had undertaken the work there would have been no secondary education in Ireland at all.

The resources of our schools were so deplorably limited that you could not pay laymen to teach in the schools, and they really had to be taught by ecclesiastical teachers for rewards which no layman could accept. The present position is that there is a considerable body of laymen in these schools, and their wages are set by the conditions of the school. They are among the most sweated and oppressed of all the employés, considering the education they are required to have for their work, in the whole of the country. Their condition is absolutely deplorable. It is not for want of any generosity or any disposition to be fair on the part of the proprietors of these schools. It is because that they have not got the resources to pay them and they have no choice in many of these schools but either to dismiss the laymen altogether, or to fall back purely on ecclesiastical teaching, or pay laymen such wages that it is a heartbreaking and a disgusting condition of things that a large body of important citizens who are doing most important work should be treated in such a way. That is the condition we have to face in Ireland. Why is the condition so critical? This is another point which the Treasury appear entirely to have overlooked. This crisis in intermediate education in Ireland is not a crisis of yesterday. It commenced ten years ago, owing to a decrease in the consumption of whisky in Ireland. The Whisky Money fell elf progressively from 1900, when it reached its maximum of £75,000 a year, down to the year 1908–09, when it reached £45,000. That is to say, it fell £30,000 in those ten years.

And while there was this progressive fall of nearly 25 per cent. in the resources of the Intermediate Board the number of pupils in the intermediate schools in Ireland increased by nearly 30 per cent., so that even in the year 1908–9, the year before the Budget, the condition of intermediate education in Ireland had become almost desperate. Then came the crisis when, as the effect of the first year of the Budget, the Whisky Money fell down to £15,000 a year. What the Government has undertaken to do, as I understand, is this. They say, "We will take the year 1908–09 before the Budget, and we will stereotype the Intermediate Education Grant at the figure which the Whisky Money attained in that year, about £45,000, and we will give you a Grant to make up the deficiency for the year 1909–10 to £47,000, and we will continue it then at that figure." That is a deplorable and most unjust proposal, and I think that the Treasury were in error when they made that proposal, because what I understood, before I heard the figures given, was that they were going to take the Whisky Money at its highest point, and to give us a grant equal to the highest figure that the Whisky Money reached, which was £71.000 as well as I remember in the year 1900. Instead of that they have taken the worst year of the last ten years and fixed a stereotyped grant at that figure. I really do not think that the Treasury can possibly imagine that that will be acceptable as a tolerable or satisfactory proposal so far as the Whisky Money is concerned. But that is not all. Because, even supposing they gave us what we would accept or could reasonably accept as a fair equivalent and substitute for the Whisky Money we are still in a position of great disadvantage as compared with England. England is a richer country. I do not for a moment claim, though the Secretary to the Treasury (Mr. Hobhouse) thought I did the other day, that we should get from the Imperal Exchequer a grant to make up the deficiency of the rates in Ireland. That is our misfortune. We cannot get the rates, and we must bear the loss. But what I do say is it is a piece of injustice to say to the poorer country "because you cannot get assistance from the rates as. England can, therefore we will reduce the Imperial grant."

All I claim is that we should get shilling for shilling ill proportion from the Imperial Exchequer without reference to the rates. And whereas in England you give the Whisky Money, or the equivalent of it to intermediate education you also give a direct grant of about, as well as I can make out, £700,000 a year from the Exchequer which is on the Votes, and you also give a considerable grant for the administration of intermediate education to the Board of Education. In Ireland we get not a penny from the Imperial Exchequer, in addition to the Whisky Money, and nothing equivalent to the £700,000 which is given to England. Therefore we are really in that respect penalised for our poverty. I myself think it is a great national misfortune in Ireland that we have never been able to have recourse to the rates to aid education, but I could explain to the full satisfaction of Members of this House, if this were the suitable occasion for explaining it, why that is so. I may say, however, it was due to the fact, as the Chief Secretary for Ireland well knows, and every Chief Secretary has learnt to know, that the Irish people never had control over their own education. It is a foreign system controlled without reference to the people, and consequently no Chief Secretary has ever had the courage to propose that the rates should be made to contribute. That is one reason. Another is that the rates in Ireland are exceedingly high. But the first reason I have given is the real reason, for the rates were never called upon or never allowed to contribute to the system of education, which is a foreign system, and which for many years was a most unpopular system, though in recent years it has been modified somewhat by public opinion, and is not so unpopular. There is the difficulty in which we stand. Our claim on the Treasury is very simple. First of all, pending a final settlement, the grant in the place of the Whisky Money should be fixed at the highest point that the Whisky Money reached, so that at least we will not have this extraordinary injustice that according as the number of pupils in the schools increases the grant is decreased. Therefore we should get £70,000 a year in place of the Whisky Money Grant. In the second place, we should get a grant from the Imperial Exchequer, put upon the Votes so that we should have an opportunity of discussing Irish intermediate education in this House, which we have never been allowed except by accident, as on the present occasion, and the grant should be equivalent to the amount of the grant given to Great Britain, and to England especially, because the Scotch system is more generous.

The Scotch, to their credit be it said, grab all money that they can manage to get for the spread of education, and Scotland is the only part of the United Kingdom where education is valued at its true value. Therefore, it is very hard to draw comparison between Scotland and England and Ireland. But the comparison between England and Ireland is perfectly easy. All we ask for is equality and fair play. I really do make the most earnest appeal in this matter. There is a long arrear to be made up to Ireland on this subject of education. Ireland is enthusiastic on this subject. There is a tremendous desire, a passionate desire, among the people of Ireland to obtain a good education, and though we know in this House there is a grave and bitter difference of opinion as to the future of Ireland, whether we succeed in our policy, and that the present Government succeed in their, policy, or not, I think that all sides will agree that this House does owe some debt to Ireland, in view of the past history of the relations between the two countries and mainly on this question of education, and if we win, as I trust we may win, then indeed the necessity and the duty of this House will be doubly great to prepare Ireland for the great future that lies before her by educating her. In conclusion, I say that an opportunity is now offered to this House in this particular respect and connection to do a very great work for a very deserving class of Irishmen who have been horribly neglected in the past—the intermediate teachers of Ireland. I have not exaggerated the injustice from which they are suffering. We have now obtained a great national University. Not only has that University been a success, but it has done what I always prophesied and believed it would do. It has greatly contributed to the success of the old Universities—Trinity College, Dublin, and the Queen's College, Belfast—and, though the Queen's College, Belfast, did not like it at the time, I venture to say that there is not a Member sitting on that bench, not even the Member for Armagh (Mr. Moore), who would stand up and say that he would like to see that Act repealed.


I would like to see it repealed to-morrow.


I venture to say you will not get one man in twenty in Belfast to support your view.


I may be allowed to differ with the hon. Gentleman.


I differ from the hon. Member very profoundly. All I can say is I know that the success of the Belfast University has been of the most striking character and—


It is not denominational.


It is the creation of that University Act. I say, with confidence, that the University Act has been an enormous success already, and that the one thing wanted to crown that success is to repair and reconstruct the worst link we have in Irish education—that is, the link between the primary schools and the Universities schools.



I trust that I may have the indulgence of the Committee for venturing so early in my Parliamentary career to address the Committee on so an important and great a subject as the year's Budget. I know that I cannot rival the eloquence of the hon. Member (Mr. Dillon) below the Gangway, who has just sat down, nor could I attempt to go into the intricacies of the Budget with that wonderful lucidity and grasp which was shown by the hon. Member for Chelmsford (Mr. Pretyman). What I would like to do, if you have patience with me, is to make a few reflections on the general features not only of the Budget as it stands to-day, but on the financial situation of this country as indicated by this Budget. Before I come to more general topics I should like to say how pleased, as one who has spent a little while in East Africa, I was to hear the Chancellor of the Exchequer say that the pledge given some three years ago by the Home Secretary as regards East Africa is to be fulfilled, and that a loan is to be advanced for the purpose of extending a feeder to the Uganda Railway in East Africa, and that money is to be spent on the splendid harbour of Kilindini and in improving the condition of the town of Mombasa. I am glad to say that there was almost universal approval on the other side of the House of the working and the success of the Uganda Railway. I may say that the success attained has been very striking, considering the great cost of that undertaking. I am not going to say that the work was extravagantly done, in the sense that money was wasted, but the railway was, in the opinion of engineers of Colonial experience in such matters, carried out on much too careful a scale and was much too well done for a new country. Even so, the railway has begun to pay its way. What is important is, that it should have feeders to help to develop East Africa. At present a great part of the traffic over that railway is not contributing to the development of British East Africa, but is bringing traffic from German East Africa from the south shore of Lake Victoria Nyanza. I was very glad to find the hon. Member for East Northants (Mr. Chiozza Money) come out as such an eloquent advocate of a policy of wisely spending money on the development of our possessions. I believe that there is no wiser way in which we can spend money. I May not be a financial purist, but I entirely agree with one who is considered to be so, the hon. Member for the City of London (Sir F. Banbury), who expressed the hope that the surplus might sometimes be devoted to development loans for productive works. The instance of the Uganda railway has not had so much attention paid to it in this House as it deserves. Immense good followed as the result of the loan advanced to the Transvaal and Orange River Colony. There you had a country as empty and utterly desolate as any part of East Africa to-day. There was hardly a farm standing. Ten millions of money spent on railways, and the building of various public works, and ten millions more spent in restoring farms, in bringing to them cattle and stock, brought that country, in six or seven years, into a condition far exceeding anything that could be claimed during the previous fifty years of its history. The lesson which I draw is that what has been done in what, to all intents and purposes was a wilderness, can be done in other wildernesses which exist in our Empire to-day. The Chancellor of the Exchequer said it was sometimes necessary to spend money to utilise previous expenditure. So it is with the expenditure in East Africa on the railway and on the improvement of the harbour of Kilinclini; but we do not know whether the benefit is to accrue to the German East Africa line or to British industry. It is a heavily subsidised line. The hon. Member for East Northants welcomed what the United States are doing in the case of the Panama Canal. The Chancellor of the Exchequer, like many Chancellors of the Exchequer before, has referred to the income which this country derives from the Suez Canal shares.

For an original cost of less than £4,000,000 we are now earning over a million a year, the company paying between 25 and 30 per cent. But it is doing so at the cost of a very heavy burden laid upon shipping, certainly 78 per cent. of which is British. If I might make the suggestion, it is impossible, I believe, for this country with only a minority of representation upon the Canal Board, to insist upon the rate being lowered. What the Chancellor of the Exchequer himself suggested at the Imperial Conference four years ago was that a rebate might be given to British shipping off the Canal dues. There is this further advantage in that, if they are prepared to give two or three hundred thousand pounds of rebate, we should without doubt get a substantial further grant towards rebate from the Governments of Australia and New Zealand. Again I regret that there was no mention made in the Chancellor of the Exchequer's statement of the All Red Route, a subject to which four years ago he promised to devote most earnest attention, but of which we have heard nothing since. It is the one subject on which His Majesty's Government have shown the least indication of readiness to bind the Empire together. The Imperial Conference will meet in a few days, and one would imagine that at any rate the possibility of some contribution being made towards this scheme would be brought forward. I hold with the Member for Northants that every development of opportunities for trade, the opening up of pathways for commerce and finding employment, is money well spent. Money is better spent if you give five shillings to a workman to enable him to earn thirty shillings a week than if you give him five shillings for a week's pittance. Let me return to the main question, the relation of our revenue to our expenditure. The right hon. Gentleman the Chancellor of the Exchequer spoke with eloquent contentment of the state of trade, and he was ready to wager that we should have another prosperous year. I think he is probably right. A year like the last, which was a very prosperous year, is always followed by large revenue. But the drop in the importation of raw material might indicate a slight check in that movement; whether that is so or not I do not know. But what I do know is that the present movement is not going to last for ever.

There will be sooner or later, possibly sooner rather than later, a period of worse trade. In fact what other justification is there for that great scheme of insurance against unemployment which has been introduced to the House? The Chancellor of the Exchequer boasted of the present prosperity, and suggested that some of it was due to his own Budget. The hon. Member for Chelmsford (Mr. Pretyman) dealt with some of the details. But might I say that another part of the right hon. Gentleman's speech somewhat demolished the credit accruing from these taxes against which we protested most strongly in this House, from which we foretold serious consequences, and taxes which, according to him, have not matured yet and have not begun to exercise their in fluence. When the present period of trade prosperity is over, and those taxes are beginning to mature, does he really think they will relieve a depression of British industry, or is it not very likely that they will tend to accentuate that depression? I will not attempt to follow the hon. Member for Chelmsford and the hon. Baronet the Member for the City of London into the discussion as to the extent to which the Death Duties are actually a tax on capital and not on income, or whether they are heavy burdens upon industry. The difficulty is you have the evil in operation, but the effect of it may not be seen for a very considerable period of time, but, generally speaking, I do not think any one who listened to the final remarks of the Chancellor of the Exchequer can doubt that even in this period of good trade we are perilously near the margin of elasticity of our revenue when compared with the steady and ever-growing burdens laid upon it. The Chancellor of the Exchequer has shown a spirit of optimism as to the future burdens to be laid on this country. I noticed that he said nothing about the possible future cost in connection with Ireland. The hon. Member for Chelmsford has referred to the possibilities of increased expenditure in connection with the scheme of Home Rule, and we had an eloquent plea made just now by the hon. Member below the Gangway. It seems to me if we have measures in contemplation of that character on that side of the House, we on our side will, in the same spirit, have to approach the question of Ireland as for the development of East Africa, and possibly to incur substantial burdens in order to develop Irish trade, and if possible to bring back to the population that prosperity which they should enjoy with the rest of the Empire.

Then comes the question of naval expenditure. The right hon. Gentleman is sanguine because under the statutory provision now in force in Germany there will be a decrease in the German naval estimates in the next few years. But is the statutory provision now in existence in Germany to be the only and the last statutory provision to be put in force in that country? The only test you can apply as to what is likely to happen in the future is the general trend of German policy, and the general trend of German industrial development. The other day, at a meeting of the Iron and Steel Institute, they were deploring the fact that the German iron and steel industry is now twice as large as ours. Can Members of this Committee contemplate that, in the long run, we can attempt to maintain a two-to-one standard of battleships when the other side have got a two-to-one standard against us in the iron and steel industry? Apart from that, let us consider, not only the possibility of statutory provision being made in Germany, but the fact that there are new statutory provisions made in Austria. There may be a great problem before us in the Pacific. Certainly this concentration of the Navy in Home waters is a thing which cannot be continued always. If there should be a demand for warships in other waters, we would have at once either a large naval increase or we should have a considerable increase of military preparation. I for my part, own that our military preparations are utterly inadequate, and the expenditure of five millions more will not be sufficient, even with a cheap and effective system of national service, to secure our home safety, but even on present lines there must be increase of expenditure We have heard a great deal about the shortage of officers, and the fact that the pay of officers is inadequate. We have also heard of the shortage of horses, and if we are to have horses we must pay for them. We have also heard a great deal in the last few weeks about the serious state of the Territorial Army, and it is likely to be still more serious. If the Territorial Army be put on its proper basis, and is to be made to respond to what the Secretary for War expected it to be, it will have to have a very considerable expenditure made upon it. Naval and Military expenditure is necessary, and it is bound to increase.

I consider it necessary, and I do think it has compensating advantages on which the right hon. Gentleman did not dwell. Certainly as regards naval expenditure it provides a great deal of skilled employment, and, furthermore, it does indirectly give a great deal more unskilled employment, payment for which does not come out of the pockets of the taxpayers. Take the great amounts given for building battleships for foreign Powers—a subsidiary development which is pure profit for the people of this country. Let me now come to the expenditure under this great scheme of insurance. The Bill has been welcomed in all quarters. The sickness part of the scheme has some basis of admitted calculation behind it, though it is bound to exceed the estimate already formed. But as to the unemployment part of this scheme, we have practically no evidence as to what the cost will be on the present narrow and restricted basis, or of what it would cost if other industries insist upon being included in its benefits. When you consider what this will involve in taxation, you must remember the weekly levy upon the employer and the workman, upon which the hon. Member for Leicester (Mr. Ramsay Macdonald) has eloquently insisted. What is the effect of this taxation going to be? The Chancellor of the Exchequer considers, according to an interview reported in the "Daily Telegraph" the other day, that the extra cost will fall on the consumers of this country. Why! he asked, should not the consumer contribute in some measure to the health, comfort, and happiness of those who produce. That is a very significant admission of the Chancellor of the Exchequer. There can be no one stronger on behalf of the cause of Free Trade than the right hon. Gentleman when he is conscious of the fact that he is discussing the fiscal question, but when his mind is on other matters his utterances must be a continual and terrible source of anxiety to the hon. Member for East Northants. If it is the case that the burden falls on the consumer, then what about its effect upon production? In his speech yesterday the Chancellor of the Exchequer noticed that a very small increase in the price of tea appreciably diminished consumption. An increase like this upon the cost of goods in this country would, judging by that, have a very serious effect upon consumption and upon production and employment, and possibly would do a considerable amount of harm to industry. I confess I do not hold the view that this burden is going to fall on the consumer. While, the consumer has got an alternative supply to draw upon, he is not subject to that burden. It would be imperative on the producers unless they wished to lose their employment to pay the tax them- selves. If they do the question is upon what part of their expenditure will it fall? The hon. Member for Leicester (Mr. Ramsay MacDonald) suggested that it would fall upon the necessaries of life of the working people. If, as he suggests, the result of this scheme of insurance was going to be that the children of the working men will get less food or clothing, or that they will have to live in worse homes, then I am not sure whether the final result of that scheme will be a great benefit. But let us suppose that they pay it out of luxuries; the Chancellor of the Exchequer suggested that the money they would contribute would be equivalent more or less to an ounce of tobacco and two glasses of beer per week. Supposing it does fall in that way, has the right hon. Gentleman considered that practically six-sevenths of the cost of that ounce of tobacco and two glasses of beer per week is money taken away from the revenue, and that the revenue will thus lose, and that the shrinkage in the consumption of the working man's luxuries, represented by the ounce of tobacco and the two glasses of beer, would have a very serious effect on the calculations of the right hon. Gentleman?

Apart from that actual issue of the way in which the tax will be met there remains the fact that these measures add considerably to the burden resting upon the industries of this country. A few years ago a calculation was made, and I think it is generally admitted, that of the cost of production, or the price of any British article in a shop window, something like 12½ per cent. or 2s. 6d. in the £ represented local and Imperial taxation. I think the extra burdens imposed in the last few years, together with the burden now imposed by the Insurance scheme, would bring that amount somewhat nearer t o 15 per cent. If you have a burden of that extent resting on the production of goods of English manufacture, sold in the shops of this country, is it reasonable, and I am not talking at this moment from the point of view of a Tariff Reformer, but from the point of view of the Chancellor of the Exchequer, that £156,000,000 of manufactures coming into this country should he exempt from that duty. That exemption is equivalent in essence to having an Excise and no Customs to correspond with it. I can only imagine that any Chancellor of the Exchequer, who would really face the problem from that point of view, would be bound to deal with it. It is not satisfac- tory from the point of view of the consumer either, who now imagines that he saves money when he buys untaxed goods; he has still got to meet the burdens that fall on the industries of the country and to meet the taxation himself. Let me give a concrete instance. A man goes into a shop and sees two articles, one costing a sovereign and English made, and the other 19s. 6d. and German made. Hon. Gentlemen opposite recommend him to buy the cheaper article and save 6d., but the so-called dearer article really only costs 17s. 6d., and the remainder went to the Chancellor of the Exchequer. The man makes this assumed saving, but he has forgotten that he is defrauding the Chancellor of the Exchequer of half a crown or three shillings. The Chancellor of the Exchequer does not forget that and when the time comes round he has got to make him pay that sum of money, so that along with the cost there is to be added the half-crown, and thus, instead of having paid 19s. 6d., he has paid 22s. for the article.

That is not the end of the story, for after buying that foreign article there is somebody unemployed in this country, somebody whose family are suffering and who is suffering himself. That suffering may not attract the attention of the Free Trade purchaser, but it attracts the warm-hearted sympathy of hon. Members opposite and of the Chancellor of the Exchequer, who comes to this House with a large scheme for insurance and relief which involves taxation. The Free Trade purchaser finds he has also got to pay for keeping the man whom he deprives of his employment? Even there the story does not finish, because this German article he has bought goes to strengthen the wealth and prosperity of Germany, and a considerable portion of it goes towards the revenues of that country, and a considerable portion of that may be devoted to battleships. Then the First Lord of the Admiralty comes down here and tells this House that he has discovered some time after the event that the Ger man navy has been increased, and the Chancellor of the Exchequer, hoping against hope that this may be the last time, asks for a further increase in the Naval Estimates. Thus your Free Trade purchaser who followed the advice of hon. Gentlemen opposite finds that the article for which he paid 19s. 6d. costs him from 24s. to 25s. I wish to suggest that to impose an equivalent burden upon those £156,000,000 manufactured in other countries equivalent to the burden upon our industries is not protection but equalisation. Hon. Members opposite, on the reasoning which they so very often employ against the advocacy of Protection, say that a disadvantage from the revenue point of view of a system of Protection is that you tax part of the supply, and only part, and that only the taxation on that part supplies revenue, and that the price of the whole supply is raised, and that consequently a heavy burden of taxation falls on the consumer and which does not find its way into the Treasury, but into the pockets of capitalists. If that is so I would ask the Members of the Committee to consider the present case, where we have a burden of from 12½ to 15 per cent. put upon the goods made in this country, and that the portion of the supply coming from abroad does not pay anything.

The conclusion, according to the argument of hon. Gentlemen opposite, is that this country at this moment is paying from £15,000,000 to £20,000.000 to the capitalists of other countries and capitalists who are not amenable to the Chancellor of the Exchequer, whose incomes he cannot touch and whose deaths give him no satisfaction. To put on equalising duties, by the argument of hon. Members, would only mean that the revenue would be getting what at the present moment is going to foreign capitalists. As a matter of fact, I do not share that view in its entirety, and I do not hold that foreign capitalists are making a profit to that extent; but I imagine, in those instances where they are making a substantial profit, that an equalising duty would cause them to lower their prices to contribute the cost of that and relieve the taxpayer of this country. In other instances I believe the real truth is that they are not producing as cheaply as our manufacturers, but owing to the unfair handicap caused by their not having to pay an equalising share in our taxes, they at present can compete where they ought not to compete.

That brings me to the point, or dilemma, that was raised by the hon. Member for Greenock, and also by the hon. Member for Woolwich. They said, "If you do impose those duties for revenue on the foreign importations, and if you do get your revenues, where does the case for employment come to, and if you do keep out those goods and get employment, what happens to your revenue?" A more absurd dilemma there never was. There is no dilemma. If the goods come in then the revenue gets the money; if the goods do not come in, and instead of that are produced in this country, then by all the channels of revenue that production will yield the extra money to the revenue. According to the existing basis of taxation they yield to the revenue at the rate of something like from 12½ to 15 per cent. Therefore there is no question of having a dilemma from which we cannot escape. If we can find employment and production, the revenue will come. That is really the main point. Look after the production of the country and the revenue will look after itself. That was the great point Mr. Gladstone made in his great Budget speeches when he said in taking off one tax and adding another, he did not care so long as they made for the development of commerce.

The whole issue between hon. Members on this side and the other is that we hold that you raise your revenue from the production of the country, and that wherever you raise it and in whatever particular way you raise it, the cost of that burden is inevitably diffused over the whole of the production. Hon. Members opposite, more particularly the hon. Member for Leicester, the hon. Member for East Northants, and to a very large extent the Chancellor of the Exchequer himself, have a sort of notion that the annual wealth of the country is something that is taken out of a large sack, and distributed in unequal amounts into the pockets of different classes of persons, and that it is there, and that it ought to be taken to a larger extent out of those pockets where they are most full, and to a less extent where they are not so. That is an entire misconception of the nature of the income of this country. The income of this country is not something which is distributed and then remains in various pockets. It is something that is continually in circulation. To use the phrase of a leading economist, there is a continuous wheel of wealth production.

Money goes into the pockets of one class, and is spent in supporting another class. That goes in its turn to still another class, and so on. To this rule there are certain exceptions. There is such a thing first of all as the circulation of wealth within a certain limited class. A very appreciable portion of the large nominal incomes of what the hon. Member for Leicester called the classes is due to the fact that they pay each other large sums. Thus you have successful barristers and doctors who exchange with each other in the guise of high fees. These fees are not a real addition to wealth, but they represent a certain scale or convention of living. Take the wealthier parts of London where you have high rents, which the same landlord class pay out in high fees to doctors who pay those rents and to barristers who pay those rents, and to dear shops and restaurants. In one way or another a very appreciable proportion of the nominal income of the so-called classes is money that circulates among themselves. If you tax income at a moderate rate you do not prevent the process of circulation amongst them, but if you raise Income Tax beyond a certain point you may find them stopping the circulation of money and you will have an appreciable shrinkage of wealth from which you can get revenue. There is a further point. The circulation of wealth need not take place wholly within the country. There is a necessary and salutary circulation, in which raw materials that are required are brought in from outside, and manufactured articles are sent out by us. There is also a circulation in which only a small part of the process is in this country. People get income from investments in other countries, and they spend income in supporting the labour of those other countries. In that case only a small portion of the circulation is in this country, and a very small portion of the income will serve its natural and proper purpose of providing income for other classes. I will not attempt to labour that somewhat elaborate economical point further.

The ultimate source of revenue is the production in this country. If you want to lighten the burdens of the working people the task to which you should devote yourself is not that of discovering elaborate means of punishing this or that class, with a view to getting more out of one class than out of another, but that of finding means to increase the amount of production in this country, and to increase the demand for labour. In conclusion, though I believe the condition of the revenue can be enormously improved by a different fiscal system, I feel that the responsibilities which are going to be laid upon this country in future are so great that no fiscal system based on the resources of the United Kingdom alone can ever bear them. We have to face an immense task—a task which two islands like these can never face alone. If I may adapt the famous words of Canning we must call a new world of Empire into being to redress the balance of the old. The lesson I draw from that is that when you consider the proposals which have been made for drawing the Empire closer together by preferential tariffs, by expenditure on better means of communication, and so on, you should not look at them from the point of view of fiscal theory, or from the point of view of the immediate expenditure involved, but you should consider what their effect is to be on the Budgets and the social programmes of the future. Hon. Members should remember that every quarter of wheat brought from Canada carries in itself some contribution towards the ultimate solution of the great problem of defence, because the man in Canada is prepared to take a share in the defence of the Empire, either in his own person or in contributing to the revenues of a Government which has already done something, and mill in time to come do more. By that very act we are also contributing some thing towards solving the social problems of the country. I am not talking of the advantages to trade, because I am not now making a speech on Tariff Reform, except in its revenue aspect, but even in that aspect the task of the social reformer will be lightened.

I conceive that the true object for social reformers to have in view is, not to aim at the impossible, not to demand reductions or armaments which would bring the country into danger, and undermine the whole groundwork on which any social reform must rest, but to find ways and means of diminishing the intolerable nature of the burden by calling in others to share that burden. May I appeal still more earnestly to Members of the Government, who in the next few days are going to enter into discussion with representatives of the dominions beyond the seas as to how best the Empire may be drawn together and strengthened? I ask there to forget for the moment that they are a party majority in this House, and to remember that they are the representatives not only of the England of to-day, but of the England of the future. I ask that, in considering the schemes brought before them, they should judge them not in a narrow spirit, but broadly, looking to what they may mean in the long run to the revenues of this country and its prosperity.


I should like to congratulate the hon. Member opposite (Mr. Amery) and ourselves that, after some period of delay, he has been able to transfer his eloquence and his knowledge from the platform to the benches opposite. I was about to congratulate hon. Members opposite on the fact that they had received a powerful recruit to the army of Tariff Reform; but after the hon. Member's disclaimer that he was not speaking at all on the subject of Tariff Reform I am afraid I cannot do so. The hon. Member seems to have left entirely out of account the fact that any scheme of Tariff Reform, however it might benefit if it could end with one single industry alone, must, by increasing the cost of production in a great many others, damage all those other industries. He quoted Mr. Gladstone's statement to the effect that we have to look after our own industries. So say we. The hon. Member seemed to have entirely overlooked the fact that it is owing to our cheapness of production we are the great exporting country that we are to-day—an exporting country in the sense that no other country in the world is—and that any scheme of Tariff Reform must inevitably handicap us in our great exporting trade.

I rose, however, to remind the Chancellor of the Exchequer of one specific point in connection with the Budget of 1909. When the Clause imposing the Super-tax was under discussion, I tried to show that there was some discrepancy between those members of private firms who drew incomes and became amenable to the Super-tax, as compared with those shareholders in joint-stock companies, whose firms might be making large sums of money, but who became amenable to Income Tax only on the part of the profits of the company actually distributed in dividends. We went to a division on the point in Committee, but were beaten. On the Report stage I put down another Amendment, but I received a letter from the Chancellor of the Exchequer explaining some of the difficulties of dealing with the matter then. The right hon. Gentleman assured me that he had made a note of the point, and that, though it was impossible to deal with it then, should he still be at the Treasury he would undertake to deal with it in due course. As a result I withdrew my Amendment. In connection with last year's Budget it was very inconvenient to introduce the question, so that one year's Budget has gone by. I thought it would be more convenient to remind my right hon. Friend now of the promise he gave on 28th October, 1909, and ask him to carry it out in the way most convenient to himself, than that I should put down an Amendment at some future stage.


I do not wish to intervene in the general discussion. I rise only to ask the Chancellor of the Exchequr to exercise, as I am sure he will be ready to do, a certain caution in carrying out one part of his scheme which must have great attractions to all of us—namely, the application of large capital sums to the building of sanatoria throughout the country. I think that perhaps there has been in the public mind an undue or slightly exaggerated enthusiasm with regard to this particular method of dealing with tuberculosis. The public have the idea that the mere open air treatment by itself produces such marvellous results that we may through it, and it alone, look to, if not the extermination of the appalling scourge of tuberculosis, at all events to an immense diminution in the disease, and that we may reduce it to one of the rarer of the zymotic diseases from which we suffer in these islands. I am not quite sure that the most recent investigations into the results of the mere treatment in sanatoria—the fresh air, adequate food, and so on—bear out all the hopes that we were at one time prepared to entertain in regard to it. There are very able investigators in this country who take a much less sanguine view, who, after examining, as far as they can, the actual results obtained in this country and in Germany, have come to the conclusion that we must not expect quite the same proportion of complete cures as at one time we had all hoped. I certainly take a sanguine view as to the treatment of tuberculosis. I believe that medical science has made, is making, and is destined to make, immense strides. But when we come to such large capital sums as those dealt with by the Chancellor of the Exchequer, I hope he will bear in mind what I am sure is the truth: that while it is possible to waste money upon vast permanent and expensive structures, it is not really possible to waste money if you devote it judiciously to scientific, medical investigations into the causes and cure of disease.

There is a great movement abroad as well as here in favour of attempting to deal with tuberculosis, not merely in these great sanatoria, but in the homes of the rich and of the poor, and probably, as medical science advances, it will be found possible to deal with it in that way. To remove a man in the early stages of the disease and to put him apart in one of these places may have great advantages merely from the point of view of segregation. If he happens to be in a very infectious condition he is himself a source of danger to those nearest and dearest to him, and the mere removal from his home to one of these hospitals no doubt diminishes the disease by diminishing the infection. But I am looking at the matter from the point of view of curing the disease. From that point of view I think we ought to be careful, and that we ought to exercise caution in the way in which we spend money. Do not let us assume that the cure of tuberculosis in all its forms has been discovered, and that all we have to do is to spend money in carrying out that cure.

That really I think is not the fact. What is the fact is that medical science has made great progress. We require further investigation and perpetual study of how these people are being treated when in the sanatoria. That is not a completed page of medical inquiry; far from it. Perhaps one of the great benefits that we will get from these sanatoria will consist, not so much in carrying out what may be thought a well-understood cure of tuberculosis, but in giving expert medical authorities the power of carrying on investigations which will enable them in future to deal with this disease in a manner that I am not quite sure they are able to deal with at the present time. I am sure the Chancellor of the Exchequer will understand that I am not making these remarks in a discouraging spirit. That is really not the case. I am an optimist in all these questions of dealing with zymotics. I myself welcome most cordially the expenditure of public money for the purpose of dealing with them in a national spirit and on a national scale. But let us take care that in so dealing with the matter on a national basis, and on a national scale, we do not spend too much of our money on inanimate structures, which in themselves may be no good, and that we spend a little more in carrying out those further schemes of research and investigation on which the real progress of the race in these medical matters most assuredly depends.


I am sure the Committee are very much indebted for the important contribution which the right hon. Gentleman has made to the consideration of a problem which, although it does not arise strictly upon the Budget, we have taken money for, and therefore it is relevant to. The point which he has put is a point which I may assure him has engaged our attention, as it is a point which engages the attention of any one who looks at all into the matter. I have no doubt at all that a short time ago too perfect results were expected from sanatoria. I am not sure that the reason why they have not been, I will not say not complete successes, but the reason they have not effected cures in more cases than they have done, is that they did not receive patients at a sufficiently early stage. That I am assured on all hands. I also think that doctors have as a general idea rather exaggerated what might be expected, and that, in fact, we cannot expect so much from sanatoria as was hoped at one time. The right hon. Gentleman said, and he said very truly, that after all the most important thing was to encourage scientific investigation into the cases with a view to discovering the best method of cure. That he will find provided for in the National Insurance Bill. I realise the enormous importance of it. I have provided out of Government funds a contribution for sanatoria. I have also specially set aside a special fund for the purpose of scientific research, I agree so thoroughly with the right hon. Gentleman.

I do not think sanatoria by any means the last word, but they are a stage on the road. I do not think even that if sanatoria turn out to be, not perhaps a mistaken idea, but a crude idea, the money would be wasted, because what would happen would be that in the case of a great many patients—20,000 or 30,000 it might be—they will have doctors who will be specialists in this particular kind of disease. These will be watching it day by day in its development, and they are bound to get to know far more about it than at the present time. In the end, especially if there is a fund of this kind set up, we may be able to find something far more perfect in the way of treatment than is known up to the present time. At any rate, the money will not be thrown away, although eventually the cure may be in a system that provides for special diet, good sound, healthy diet, under healthy conditions. That is bound to assist in the cure of the patient. Therefore, these buildings will not be thrown away whatever happens. The most important thing of all is what the right hon. Gentleman incidentally referred to, that we should not have merely expensive buildings. In Germany, I am told, they spend much more money upon architecture than is really absolutely necessary—this is not my opinion, therefore it must not be taken that it has decided the action of the Government—but it is one complaint against the German authorities that a good deal of capital has been thrown away on the architecture of the buildings. It is quite possible that some time or other these sanatoria may have to be reconstructed or adapted to new ideas, therefore it is important that we should put up useful, serviceable buildings, and that money should not be squandered upon the architectural side.

I am told that the way in which you approach this matter makes such a difference. For instance, you may spend money on these buildings similar to the way it has been done in Germany, where the cost has been £1,000 a bed, whereas £100 a bed, I am assured by those who have studied the thing thoroughly, will provide quite good buildings, and even better for the purpose. What, therefore, rather is of importance is that the money shall be well, usefully, and economically spent. That is the first thing to consider; that it should be spent under conditions where you can get the best kind of doctor to watch the progress of the disease, that it be done under the direction of the best scientific authority in the land, that it may end in our discovering something which will enable us to end the disease as effectively as smallpox was stamped out over a century ago. That is really what I think we ought to aim at. I am exceedingly grateful to the right hon. Gentleman, in the position of authority in which he is here and in the country, for having made a pronouncement of that kind, because I really believe it will be a good thing, if I may respectfully say so, rather to attract attention to that side of the work. It is a mistake to encourage false hopes in a matter of this sort. The most important thing is that our immediate efforts should be directed into the right channel: To say that by merely building sanatoria costing £1,500.000 in this country we shall necessarily find a cure would be to encourage false hope. What we will do will be I think a little in making a contribution, under proper scientific direction, which will enable us to arrive at something sooner or later which will enable us effectively to stamp out this terrible disease. I am exceedingly obliged to the right hon. Gentleman for calling attention to the matter. It has also enabled me to point out what I ought to have pointed out when I introduced the Bill, that we are making a contribution towards Scientific Research.


May I ask the right hon. Gentleman whether he proposes to assist existing sanatoria, such as Benenden, and others?


Certainly! We could not hope really to build a sufficient number of sanatoria without depending also upon those which have been built by voluntary contributions, and even those which are being built by private enterprise. May I call the attention of the right hon. Gentleman to the National Insurance Bill, Clause 15, Sub-section (2), Paragraph (b). I am rather surprised that no attention has been drawn to it. It has escaped even the attention of the Press. The paragraph says:—

"Provided that the Insurance Commissioners may retain the whole or any part of the sums so payable out of the moneys provided by Parliament for the purposes of research."

That will cover the whole ground which the right hon. Gentleman brought before the House.

I now go to my next subject. I will not say it is more agreeable, but it is more controversial. I go from sanatoria to reply to the hon. Gentleman whose interests are in Land Taxes and Death Duties, and I trust to give him a satisfactory answer with regard to this matter of timber on estates. I think he will find that the kind of case alluded to was covered by the Act of 1909. I was under the impression that it was at the time the hon. Gentleman was speaking, but I did not like to interrupt because I then was simply dependent upon my memory. Since then I have fortified my memory, and if the hon. Gentleman looks at Section 61 he will find that, really I will not say that I have done all that he has asked, but I have gone a long way towards protecting estates in the way he mentioned. He very properly said that it was very unfair to charge Death Duties prospectively, inasmuch as it is desirable that you should keep the ornamental timber as long as possible, and not offer an inducement to have it cut down to pay the Death Duties. What really happened in the case of Section 61 was that it embodied an Amendment which I accepted, and I moved the insertion of the Clause which provides that you shall not charge timber in cases of the kind mentioned until it is felled.


I just want the thing to be perfectly clear, and I do not interrupt in any controversial spirit, but it is not the charge on the timber I referred to, but assessing and aggregating it with the rest of the estate to raise the duty. Subsection (5) deals with it. The valuation of the timber is there added to the estate to raise the duty.


The hon. Gentleman did not quite say that. If he had said that I would have assented at once. The impression the right hon. Gentleman conveyed by his speech was that we were charging Death Duties under the Finance Act of 1909 in respect of that timber he alluded to, whereas we are not charging in respect of that timber until it is felled. The hon. Gentleman says: "Yes, but you are taking the value of the timber in order to decide in what scale you shall put the property in. "Surely that is perfectly right? I will tell him why. The whole point is what the estate would sell at. The whole point is what is the value of the property. When you come to assess the value of the property you must, of course, consider whether that property is improved or whether it is depreciated by the fact that there is timber, ornamental or otherwise, upon it. Therefore when you come to decide the scale and value the whole estate you must take the timber into account. All we have said is we will not charge in respect of that timber until you fell it for the purpose of sale. I have gone very far, I think, to meet the hon. Gentleman. Let me point out to the hon. Gentleman that this is a concession which was made for the first time in the. Finance Act of 1909. Up to that point timber was charged exactly like any other property or value upon an estate, whether it was felled or not. Ornamental timber was charged up to that point, although it is not in the interests of the community that it should be cut down at all. The alteration made by the Finance Act of 1909 was not merely in the interests of the owner, but in the interests of the whole community, and the country as well.

7.0 P.M.

I come now to the other point. The hon. Gentleman was very hard upon the Land Taxes, not for the first time. He said the whole of the valuation was a failure and a complete muddle. It is very remarkable, if that is the case, that up to the present at any rate all the symptoms are the other way. We have already had, I think, 381,000 valuations made under this Act, and out of the 381,000 valuations there were only thirty appeals, and out of the thirty appeals eight have already been settled. So that out of 381,000 valuations there are only twenty-two not settled altogether. Therefore, if his view is apparent outside it is not apparent in any transactions between the Inland Revenue and the owners of property. I do not mean to say when you have valuation covering all the tenements of the country that you will not have a case here and there which is exceptional, and that you will not even have a grotesque one here and there. We are dealing with millions of hereditaments, and I am not going to say you are going to get a perfect valuation in every case. Valuations for public purposes are not new. There are valuations for local authorities.

Take the revaluation of a parish or a union. There you have constant disputes going on for two or three years. There is a good deal of confusion, and no end of complaints, and you will have some hard cases, but after all, when the thing is fought out for two or three years the valuation is accepted; the hard cases are settled, and in the long run people are more or less satisfied, or as satisfied as you can expect a man to be satisfied who is taxed. Exactly the same thing happens in this instance. I have seen and met these valuers upon two or three occasions rather with a view to knowing how things are going on. I think that they are an exceedingly able body of men, and they assured me that things were going on very smoothly, and that they were getting on very well with the owners of property. I am certain they are showing the owners of property every desire to be perfectly fair to them. In so far as any instructions are given they are to deal with the matter in a most conciliatory way, and to give no offence except the offence incidental to putting up a man's valuation. You cannot help that. These are the instructions given, and I am certain they will carry out these instructions according to the account I have given.

The hon. Gentleman has quoted three or four cases which upon the face of them require explanation. But how can I explain them now. I have had these cases, one from Shrewsbury, one from Hull, and one from somewhere else, but I could not possibly, even by telegraph, get the particulars and check them and give an undertaking, or say what happened. But if the hon. Gentleman's figures are right I agree they require some explanation. But it is impossible in cases flung across the Table an hour or two ago to offer any explanation until I get the full particulars. There may be a misapprehension on the part of the taxpayer, or a misunderstanding, or some explanation of that kind. I cannot quite understand these cases except on that supposition, especially as I met some of the gentlemen who must have conducted the valuations in these cases, and I cannot understand their proceeding upon the principle mentioned by the hon. Gentleman. Now, about the produce of these taxes.


Before the right hon. Gentleman leaves the valuation question, will he answer the request of my hon. Friend that particulars should be given in cases where they are asked as to the way in which the valuation was arrived at, so that the owner may have some means of judging whether it is worth his while to go to the expense of consulting with his advisers.


I am much obliged to the right hon. Gentleman for reminding me, but that is a matter which I think must he carefully considered, and the right hon. Gentleman will see the reason why. Take the valuation for Poor Law rating purposes, to which I have referred. I do not believe explanations of that kind are ever given by the parish or the union valuer. I never heard of their being given, and I think there is very good reason for that. Because, if you assign reasons of that kind for your valuation once it is contested you are really supplying unnecessary material for appeals. Up to the present no explanation of that kind was ever given in local valuations, and I think it would be a very dangerous practice to invite the Inland Revenue to alter the practice, not confined merely to Government valuations, but to local valuations and valuations under Schedule A. Once you did it here, you would have to do it all round.


I cannot, of course, argue the matter across the floor of the House with the Chancellor of the Exchequer, and I am sorry for these interruptions, but these local valuations are of something known to the market. What you are valuing here is something not dealt with under any known system. They are unknown to any part of our legislation, or to the practice of valuers in any part of the country. And it has become of an enormous importance for a man to know by what method the valuation is arrived at if he is to know whether the valuation is likely to be upheld or not.


The right hon. Gentleman will find there are a good many cases of this kind in connection with local valuation. For instance, in the case of a, railway; there is no standard of value for a little bit of a railway in a parish, and you have to arrive at it by some rough and ready method. There are the same difficulties in local valuation exactly as in this, and they have only been solved by the experience and practice of years. Once you supply particulars of that kind you would be giving encouragement to litigation; and it would be infinitely better for the owners, and they are discovering it for themselves, that the valuation should proceed rather by means of negotiation and arrangement with the valuers rather than by something that would increase litigation by referees or otherwise. That is what is happening now. [An Hon. MEMBER: "You do not give details now."] As my hon. Friend says, no details are given, but they are quite prepared to give any reasonable information.


That is all we ask.


I think the right hon. Gentleman is asking a little more, and any lawyer in the House will know the, difference between the request of the hon. Member for Chelmsford and the remark of my hon. Friend. There is an important difference between giving information and giving a document which says, "I valued at £500 on the following grounds." You would by that means be providing a case for litigation. The hon. Member for Chelmsford gave a case of a man who went to the valuer and said, "You valued me at £1,500." I do not suppose the conversation ended there. I am perfectly certain it went beyond that. He said, "Why on earth did you value me at £1,500?" And the hon. Gentleman then gave a case where the valuer gave reasons to the taxpayer. I do not think that was a creditable story. It is far the best way to arrive at it. The valuer received reasons and assigned the value, and an agreement is struck between the parties which is a businesslike way of doing it, and one that causes less irritation. I do not think, with all respect to lawyers and courts, that they are the best method of arriving at a reasonable valuation.

I come now to the other point raised by the hon. Gentleman as to the produce of the taxes. I never put them forward as taxes that would produce money within the first few years. I never relied upon them for the first few years. The hon. Gentleman said you are spending more money upon valuation than you are getting. That is not strictly accurate. We are getting much more out of Estate Duties as a result of this valuation, and out of rural landowners, because the valuation for agricultural purposes is not proceeded upon. We are getting more money in Death Duties out of the valuation of urban sites. Up to the present urban sites used to be valued at something like twenty to twenty-two years' purchase of the agricultural value, whereas they have enormous value as building property; and the valuation more than pays because of that.

But even assuming we were not getting at the present moment as much as the cost of the valuation, it must be remembered that valuation is something which is only temporary. It only lasts five years. The hon. Gentleman said it cost last year £400,000, and £450,000 this year. The valuation is estimated to cost £2,000,000, but once that is made it is done with. [HON MEMBERS: "No, no."] Yes, as far as the great initial expenditure is concerned. I do not mean to say there will be no more valuation. That would not be accurate, but what I say is that as to the first comprehensive valuation of every tenement in the United Kingdom there is an end of it. There will be every five years a review of the valuation; but there is this difference between a review of a valuation already arrived at, and a fresh valuation starting from the beginning. Then there will be a valuation on what are called "occasions." But they will not involve all this machinery, and t he hon. Gentleman will he the first to discover that sooner or later this valuation will be of great importance when you come to settle the question of local taxation.

I believe it will be a relief to purely agricultural land, because now there is a good deal of land in this country supposed to be agricultural land and valued as such and paying local rates as such, that is not agricultural land at all, so that purely agricultural land has to bear a heavier burden solely and simply because this other land is escaping, and I believe agricultural land will, in the long run, be relieved, and I venture to predict purely agricultural land, as the result of this revaluation and adjustment of burdens of local taxation which must necessarily come within the next few years, whichever party is responsible, will get that relief. The right hon. Gentleman the Member for East Worcester complained at the beginning of the Session that I was taking away from, and depriving the local authorities of half the produce in the Land Taxes. I stated, in return for half the produce of the Land Taxes, I was offering £1,500,000. The right hon. Gentleman said your bargain was that the local authorities should take half of the Land Taxes.


That is not the figure.


What is the figure?


I am not giving any figure.


I am quite willing to take it at whatever figure the right hon. Gentleman puts it. Does the right hon. Gentleman contend it was a million? I have investigated the figure and he has not. The figure is the whole burden which the Guardians bore in respect of pensioners who were taken off the rates, and I defy the right hon. Gentleman to arrive at any figure, by any process, which is is under £1,000,000. Our estimate is £1,500,000, but I defy him to find any figure under £1,000,000. The right hon. Gentleman, with true foresight—and he is perfectly right—said, "I would rather have the Land Taxes for ever than a guarantee of £1,500,000." That is perfectly right. When this valuation is complete there will be a very large increment, especially in certain districts where there is no development in land, but where all the tendency of the future is to put up the price of land, in those great urban and even in rural districts. People are moving out, new districts are being opened up by improved methods of locomotion, they are opening out new districts; and not only that, but where a man used to be satisfied with just a little bit of land on which he built his house, and a few square yards outside, he wants more land now than he did before. Consequently, land becomes more and more occupied by building than it ever was in the past, and that puts up the price inevitably in this country.

The increase of population and wealth also puts it up, because you are putting up the standard of living and the size of your houses and the area you require in connection with those houses, and everything points to an enormous extension of value, at any rate in certain districts, as the result of inevitable tendencies. All that must bring money to the Exchequer, and therefore I do not think it is fair that you should now begin to talk about what the Increment Duty is producing, when you have barely fixed your datum line. You have only just crossed the frontier, and you have not fixed your datum line in many cases. The productive tax is the Increment Tax. The Undeveloped Land Duty will remain pretty well what it is, and so will the Mineral Rights Duty, except where you open new mines. The Reversion Duty you will find will probably fluctuate a great deal, one year being very small, and another year, when valuable leases fall in, you will get an increase; but the really productive tax that will grow is the Increment Duty, and that is entirely a question of time. That is why I am looking forward with very great confidence to what that duty will produce. The hon. Gentleman opposite said something about the building trade being in a very bad way. I do not think he could possibly have examined the case all over the country. In this matter the unemployment figures are a very good rest, but if he looks at every test, if he looks at the number of plans submitted to local authorities for building contracts, if he compares the number of contracts passed by them during the first quarter of this year with the first quarter of last year, he will find an increase of 17 per cent. in the amount of work which has been passed by the local authorities as compared with last year.

The hon. Gentleman talks about some houses which were offered to golfers as a prize, and they were so bad that they would not touch them. If those houses were as bad as the golf of some of the golfers they must have been very bad indeed. Of course, it all depends very largely on the houses. I have heard of houses owned by very respectable owners which were not fit for habitation, but to say all that is due to the Land Taxes is absurd, and it cannot be so. No mistake in valuation could possibly depress the valuation to that extent. The returns we have with regard to the House Duty shows that the value of houses is going up and not down, and therefore I do not think the hon. Gentleman has any cause to complain. There is only one other question for me to deal with, and that is with regard to the cost of the test case. That is the subject of consideration at the present moment, and I should not like to give an answer on this point until I know the advice of the Law Officers of the Crown upon it. I do not think he will find that the Treasury will deal unfairly with those who made a mistake in that case. I think I have disposed pretty much of all the questions put to me by the hon. Gentleman opposite. I am not going to follow the hon. Member for South Birmingham (Mr. Amery) in his very interesting and eloquent speech, which, I am very sorry, I did not hear all through. I heard with great delight the brilliancy of his first appearance in the House, and I give him my respectful congratulations and congratulate the party opposite upon having such a valuable accession of strength. I do not, however, think it would be advisable to follow him into those very wide subjects which he has raised, and I shall confine myself to the purely technical but nevertheless highly important questions connected with the finance of the year. I hope that now it will be possible for us to get these Resolutions, which are not of a novel character, as they have been passed every year since I have been in the House.


I merely wish to put two or three points to the Chancellor of the Exchequer. My first point is one to which I directed his attention by means of a question I put to him at Question time to-day, which related to the curious question of minus values at which some of the assessable site values come out. In that question I drew attention to the fact that a particular house which I cited in Glasgow has had the assessable site value put upon it of no less than minus £446, and I also drew his attention to the fact that a large number of such minus assessments had been arrived at in Glasgow as well as in other places in Scotland. I believe that something like one-third of the assessable site values in Glasgow have been brought out at a minus figure. That is a matter of very large importance, because it has caused very considerable anxiety on the part of property owners in Glasgow. The reply given to me to-day was that it is the intention of the Government to count increment from the minus quantity on which the provisional assessable site value has been brought out. I did not put a supplementary question on this point because I recognise that this was an intricate matter, and no satisfaction would come to those for whom I am speaking from a short answer given to a supplementary question. You are in this position, that, owing to the artificial methods by which you arrive at your assessment, you have arrived at a very large number of quite impossible figures. It is ludicrous to say that these sites have no value, because many of them are very valuable sites. It is bad enough to be taxed on valuations at all, and not on actual transactions of a concrete character, but it is bad indeed when your assessment for this purpose is a pure fiction and bears no obvious relation to the value of the property itself.

You are inviting constant and lasting agitation against your taxes by this method of assessment. Everyone who has to pay increment based upon a minus assessment will be tempted as years go by to always call in question the justice of your methods. What I want to get from the Chancellor of the Exchequer is some explanation in regard to these minus values. On the face of it your position is either this is not a fiction and when all the charges are taken into account there is a liability and not a property and you are taxing a man on his debts and not on his possessions which is an impossible situation; or else the methods by which you arrive at this process are ludicrous and you are inviting from now onwards constant discussion and resistance. I submit there is something to be explained and set right in this matter which affects a large number of cases, and you have to remove the injustice in order to clear away what will cause constant irritation and friction in regard to the levying of this tax. I hope the right hon. Gentleman will be able to tell us something which will give satisfaction to these owners of property. The right hon. Gentleman told us with a great deal of truth that the tendency of things at the present time was for values of property not everywhere but in many places to increase. I submit there is one reason why they are increasing and why they are likely to increase which gives you no justification whatever for assessing a tax upon them, and that is a change in the value of buildings. This is a matter which was referred to by the Chancellor of the Exchequer himself. He referred to the effect which the increasing output of gold is having on prices and trade, and I submit also upon the assessment of value.

A great deal of the increment will be no real increment whatever, but will be due simply and solely to the diminution in the value of gold. We all know what has resulted from putting values of this kind on land. The right hon. Gentleman is attempting to base his system of taxation on what in a large measure I submit will be no real increase in the value of these properties, but simply a change in the denomination by which you measure your prices. Under those circumstances I am inclined to agree that there will be an increment, but the effect of the tax will be very different from what was intended, and it will put an actual and increasing burden upon the owner of the land which will increase out of all proportion to any variations in the rate which may be imposed by legislation, and will increase solely in proportion to the output of the gold mines of the world. The only other point I want to put is not a controversial one but one which I think all parties ought to bear in mind. We are embarking upon a great system of insurance, and we all welcome it. It is obvious that if this insurance scheme succeeds it will he the beginning of a system which we hope will affect all sections of our country and alleviate many of the difficulties from which we have suffered in the past. That system of insurance, especially in regard to unemployment, is meant to remedy the ills which come to us owing to a fundamental cause to which the Chancellor of the Exchequer referred yesterday, namely, the varying yield in a term of years of the harvest of the world. I agree, behind all questions of speculation and everything else, there is that great and fundamental cause. That is a permanent cause, and we are never, so far as we can see, going to get rid of it with any of the resources of science. Therefore, as you embark on insurance schemes and construct, them on the basis of the State striving to ease this difficulty, so will the State become directly interested in diminishing rather than increasing fluctuations in the prosperity of trade. I submit the mode of finance at the present time is directly calculated to increase the fluctuations and not to diminish them. What is your present system and the system which, to a certain extent, has been followed in the past and is now, I submit, being followed under the lead of the Chancellor of the Exchequer to a greater extent than ever before? You have got a system which would bring the heaviest criticism down on any joint-stock company that followed it. You have a period of boom in trade, when the yield of your ordinary taxes is at its maximum or nearly so. I submit this increment which the Chancellor of the Exchequer is hoping for will constitute no exception to my statement, because it is obvious, when once you have established your taxes, the increase of their yield will bear relation to the prosperity or the reverse of the country exactly as in the case of the Income Tax or anything else.

You have got a boom in trade, and I believe Mr. Gladstone would have seized upon that as a time for remitting taxation. A joint-stock company, properly managed, seizes upon the opportunity to lay by its reserve, and, if it is wisely run, to lay by a hidden reserve in order that it may maintain the dividends if possible at a level right through the period of depression which is coming. Your insurance schemes bear a similar relation to the national finances as the dividends do in the case of a joint-stock company, and I submit that to increase your taxation in a time of a boom in trade and to spend a large part, at any rate, of your surplus on other than reserve, thereby diminishing the National Debt, is to do what you would condemn a joint-stock company for doing. You are spending up to the hilt in a time of prosperity, and you will have to lay on heavier taxation to meet your liabilities when you get to the time of depression. We have got to represent to the taxpayer of the country what is the true cost of these schemes which we are all anxious to see realised. The true cost to the individual is measured in the share of taxation which each individual has to pay, and you are going to see what that share is, not merely by the present time, but by the time of depression, which is coming sooner or later, and since you have used your tax to the full at its highest yield, when the yield goes down you will have to impose further taxation and therefore increase the tax burden borne by the individual taxpayer. We all rejoice, of course, in the establishment of these insurance schemes, but I venture to think that is a matter which the House and all parties alike must consider. You are now placing upon the State a new kind of burden, this burden of insurance, which will vary with the changing yield of the harvest and with changing conditions of trade. It will, therefore, be directly to the interest of the State to diminish the pressure on our finances in a time of bad trade. We ought, in other words, to study the remission of taxation in a time of boom in trade in order that we may not have to impose taxation and burden trade and increase unemployment in a time of bad trade. I am not sure whether it will be possible to do even something further.

I cannot help feeling myself it ought to be possible. It is known pretty fairly now within a year or two what will be the period of boom and what the period of depression, and it ought to be possible to equalise our national finances in such a way that we do definitely lay by in the period of success and prosperity something to meet the period of depression and to save us from having to impose fresh taxation. That takes up the point put last night by the hon. Member for Islington, when he spoke of the harm done to trade by the variation of taxation. I submit, if you want to give confidence to trade, you want, if possible, to have a flat rate of taxation, both in good years and bad, and, if you are to do that you must equalise to a certain extent. If you are going to carry the burden of the State in the matter of insurance, then you ought to readjust your finances to that purpose. You will not be able to cut it all off from the New Sinking Fund. I know that is a frequent source, and that in bad times you save taxation by not paying off debt, but a bad time is the very time you ought to support your credit because it is the very time you may have to resort to borrowing. I know this is a matter which requires long thought, and I do not want to argue it further now, but I do wish to draw attention to the point, and to express the hope it is one which will be carefully considered with regard to the future. I venture to hope the right hon. Gentleman will in the course of his remarks sooner or later, at this stage or another, give some satisfaction to those for whom I have been speaking—the property owners, a large number of whom are discontented.


I wish to call the attention of the Committee to one or two matters in connection with State insurance, and especially with regard to health insurance. In doing so I would like to express my appreciation of the fact that the Government are taking up the question of public health. I could not help thinking, when the right hon. Gentleman the Member for the City of London (Mr. Balfour) was pointing out it was wise not to spend all our money on putting up large sanatoria or places for treatment, that the Committee ought also to consider whether it is wise to only spend our money on dealing with disease when it has arisen, and whether we ought not rather to deal with the causes of disease, pure and simple.


I think the hon. Member's remarks are much more relevant to the Second Reading stage of the National Insurance Bill. This is a discussion on the finances of the country, and the hon. Member does not seem to me to be addressing himself to that point.


I am going to try to show that we are going to spend a considerable amount of money on dealing with disease, and I want to show we ought to be spending a considerable amount of money on preventing disease. I was following the right hon. Gentleman opposite, who raised, I think, a very important point in the same connection, namely, the question of further investigations as to how to deal with this matter. It is no use instituting a system of insurance to deal with people when they are sick or when they are unemployed, unless you take the necessary measures to prevent them getting sick or unemployed.


Our purpose here is the finding of the money and not the spending of it. The hon. Member is dealing with the spending of money. The particular question raised by the Leader of the Opposition referred to the spending of £1,500,000 to be taken from the Old Sinking Fund, and therefore to some extent that is relevant.


I will, if you will allow me, try to address my remarks to that particular point. I understand there is £1,500,000 to be spent on sanatoria to deal with phthisis and tuberculosis generally. I want to point out very respectfully that, in my opinion, we ought to spend a similar, and probably a larger sum, on dealing with the housing conditions of the people and the health conditions generally of the people. It is very much more important that people should be dealt with, not merely in the early days of phthisis, but long before they reach any critical stage at all. I do not know whether your ruling applies to the unemployment insurance. If it does, I shall sit down, but I am only following all the speakers who have wandered over a very large field.


I will try to explain to the hon. Member how far it arises. I think the finances of the National Insurance Bill arise in this way: the Bill in future may make large demands on the national finances. The provisions of the Bill, however, are for discussion on the Second Reading and Committee stage of the Bill itself and not now.


I quite understand that, but hon. Members, earlier in the evening, went at great length into the question of dealing with unemployment by the adoption of some tariff taxes. I do not know whether we are allowed to discuss that. I do not want to disobey your ruling at all, but I want to answer some of the arguments.


Surely the hon. Member must see that is an alternative method of taxation which hon. Members were recommending and is in order in this Debate.


If that is your ruling, I will reserve my remarks.


The Chancellor of the Exchequer has again shirked the question which I put to him. The question was why we tax our own people to the extent of 12 per cent. or 15 per cent., and let foreigners send their goods here and use our markets without paying a halfpenny. That question has never been answered. The right hon. Gentleman indeed refused to answer it the other day on the ground that there was no time. But he has had lots of time to reply to it. The fact is he cannot answer it. There is no answer to it. I regret the right hon. Gentleman is not here at the present moment. I want to read to the House what the Prime Minister said on the subject of the taxation of goods in this country. Mr. Wesley Martin, an Essex gentleman farming his own land, wrote to the Prime Minister pointing out that even in a good year the taxation on all the corn, meat, and fruit that his farm produced amounted to about £15 on every £100 worth of produce, and he asked why he should be made to pay that £15 while the foreigner was allowed to send goods of the same kind to our markets to compete with his without paying anything at all. The writer of the letter added:— You are giving him an advantage over me in my own home markets of 15 per cent. on competing goods. The reply was as follows:— In reply to your letter I am desired by the Chancellor of the Exchequer to say that he fully recognises that the national and local taxation of the country in which the commodities are produced is an important element in the cost of production. From this it is clear that the Prime Minister agrees that the taxation comes out of the pockets of this country. I should like to read to the House extracts from two very significant speeches—one by the German Minister of the Interior, and one by our own Home Secretary. The speeches are significant as to the effect of the different systems of taxation obtaining in the two countries. The German Minister of the Interior in his speech declared that the value of the Protective system could not be judged by theoretical considerations, but only by its success. Could it be contended that the fiscal system of thirty years' standing under which the national fortune in the past decade had increased by £500,000,000 Was wrong? Could a system be false under which during the same period and notwithstanding that the population had grown at the rate of 880,000 a year there had been such abundance of wages and employment opportunities that emigration had almost ceased. Then he went on:— I do not need to remind the House that our fiscal policy enabled us up to the year 1907 to devote over £400,000,000 to the amelioration of the social conditions of the working classes, of which £75,000,000 came directly from the pocket of the Empire. It is not true that the conditions of our working classes has grown worse in recent times. Our impartial economist Cal-wer has calculated that while German wages rose 37½ per cent between 1896 and 1910 the aggregate cost of living of the working man increased by only 22½ per cent. The German working man may be paying more for bread and meat, but their quality at the same time has risen considerably. I will not trouble the House with more of this quotation, but I may say that the speaker went on to remark that the prosperity of all classes in Germany during the period that they had protected their own industries and their own working people had been something wonderful. That is what the German Home Secretary says about the period which is covered by this policy. Now I come to what our own Home Secretary said. When this speech was delivered we had had sixty years of what is called Free Trade. I do not think that hon. Members from Ireland need complain of these quotations, for Ireland has suffered more than any other part of the country. But this is what the Home Secretary said at Birmingham. I take the report from "The Times":— The fortunate people in Britain are more happy than any other equally numerous class has been in the whole history of the world. I believe the left-out millions are more miserable. Our vanguard enjoys all the delights of the age. Our rearguard straggles out into conditions which are crueller than barbarism. These are statements by responsible Cabinet Ministers in each country, and I think even hon. Members who speak specially for labour ought to take some interest in these very definite pronouncements. One speech points to the almost unequalled progress and prosperity that rules in Germany, while the other points to the fact that after sixty years of what is called Free Trade our people are more miserable than the people of any other country in the world. Surely if hon. Members are capable of thinking at all—I do not mean that in an offensive sense—they should he able to see that, at all events, there is something wrong in the condition of this country. They propose no remedy. There is no remedy under Free Trade. They hardly pretend that there is. Indeed some right hon. Gentleman has said there is not.

Although this is supposed to be a Free Trade Budget, it does appear to me to be very unsatisfactory that you are going to pile more taxation on the people of this country, and that you are not making things better for the working classes. I do not think it is disputed by hon. Members opposite that things are very bad in this country. The hon. Member for East Leeds (Mr. O'Grady) assured us that the problem of unemployment was becoming more and more serious, and that skilled workmen over forty years of age could not now get employment. He went on to say, as the Home Secretary said, that, while wealth is increasing, poverty is also increasing. Under this system I do not see how you can expect anything else. More and more you are giving your work away to the foreigner. You are taking it away from your own people. Nobody has yet been able to answer the question on the point about taxation to which I have already referred, and the consequence is you keep on putting more and more taxes upon your own people while you put nothing upon the foreigner. In fact, you are doubly taxing your own people. Some-body has to find the money, and it comes from their pockets.

Suppose a man had a theatre in London capable of seating 2,000 foreigners to use it without allowed 1,000 Britishers who used it would have to pay double in order to make up for the non-payment by foreigners. So it is with taxation in this country. Our working people are more heavily taxed in regard to certain commodities than the people of any other country in the world, and it is acknowledged that this is a result of your Free Trade system, which puts a burden on the tea and tobacco consumed mainly by the working classes, while the luxuries manufactured abroad and admitted here without paying a single halfpenny are largely consumed by other classes.

You call yourselves Free Traders, but you put your taxation on the tea of the working woman to the extent of 75 or 100 per cent., and you tax the tobacco of the working man to the extent of 600 per cent. Of course the money has to be found somewhere. Even a Liberal Chancellor of the Exchequer cannot do without it. But what can be the sense in making your working classes pay the greater part of the taxation. Why cannot you get the taxation out of the luxuries and manufactured goods which come into this country and which the working people never use? It is perfectly obvious that our system is wrong, and I cannot understand why the Labour Members should stick to it.

8.0 P.M.

I have heard two reasons for doing so. One working man said: "We must, at present at all events, stick to Free Trade, because we want to get our feet firmly planted in the House of Commons." That may be a good excuse. But now they have got their feet firmly planted here, and, therefore, I suggest that it is time they went in for a reasonable fiscal policy. The other reason which has been suggested was put forward by a man who said, "I am a Socialist, and I want things to be divided up." [An Hon. MEMBER: "No, no."] Well, perhaps I had better put it in another way. The Socialists want the State to own everything, and they say that, "As long as the Free Trade system obtains the worse things will become and the better chance we shall have of a real social revolution." That certainly is one way in which some people look at it. I have seen that indicated in the Labour Press on two or three occasions. It may not be quite a reasonable way of looking at it, but there is no other way that I can make out. The hon. Member for Woolwich (Mr. Crooks) spoke yesterday and condemned Tariff Reform root and branch. But Tariff Reform is really the charter of the working man. He has under it a chance of getting regular, work and wages. He cannot get them as we are situated at present, because we are exposed to the competition of the surplus goods and the cheap labour of the whole of the world. Have we not got plenty of competition in our own country, and why should we invite the rest of the world to send their surplus goods made by cheap labour to our markets? You will have yellow labour and black labour to compete with if these goods come in free.


The hon. Member must make his remarks somewhat relevant to the question which is before the Committee. At present they are not relevant.


I am sorry I am out of order, but I hope I may say a word or two as to what the hon. Member for Woolwich told us the other day. I think the hon. Member said that everybody ought to have 30s. a week. I quite agree with him that they ought to have 30s. a week, and in America we know workmen get pounds a day. [Hon. MEMBER: "Where?"] One place is in Indianapolis, where I have friends. And so it would be in this country if we gave our people a chance, which we do not. We cannot give our people a chance under the present system. The thing is impossible, and a good many hon. Gentlemen who belong to the same party as the hon. Gentleman who last spoke quite agree that it is absolutely necessary to protect the labour of the people of this country. I could quote speeches by several of them putting it very strongly indeed that unless you tax competing goods, and unless the natural resources and industries of a nation are protected against being undersold by people abroad, it is impossible to employ all the people in the country at good wages. You cannot do it, and nobody can say that you can. The trade union leaders ought not to agree with the present way of taxing pursued by the present Chancellor of the Exchequer for this reason. They can and do, rightly protect their members from being unfairly treated by their employers in this country. But under the present so-called Free Trade system they are absolutely helpless to protect either their own members, the trade unionists, or the ten times larger number of other working people from other employers abroad. They are absolutely helpless, and it is a most extraordinary thing that they cannot see it. I will put it to them in rather a different way. What possible sense is there in bringing in black labour?


How does this bear upon the Budget? The hon. Member is not dealing with the Budget. He is talking about the social and to some extent the economic effects of our fiscal system, but he must bring his observations to some extent to bear upon the finances of the country, or else he is out of order.


I am sorry for it, and I shall not detain the Committee much longer. I say that these are at all events the facts of the situation, and as far as I can make out the Labour Members in this House have never, somehow or other, managed to find it out. I think I shall be in order in answering what the hon. Member for Woolwich said. He said you cannot keep goods out and at the same time derive the advantage that you now have from their coming in, but if you arrange your revenue as other nations do by taxing competing goods you do really get it both ways. I will show how that is done, and hon. Members can dispute it afterwards if they like, but I hope they will let me put the case. We are importing into this country every year about £4,000,000 worth of motor cars. The hon. Member for Woolwich says that you can not have it both ways and make any profit for the people who work in the way of wages and at the same time get revenue. That is not the case, and I put it in this way. If we put 20 per cent. duty upon foreign motor cars, and it has the effect of causing us to make £2,000,000 worth of motor ears a year instead of having them brought into the country, the result would certainly be that we should pay in wages to our own working people at least and probably considerably more than a million pounds in wages, and from a 20 per cent. tax on £2,000,000 of motor cars that we still import we should also get a revenue of £400,000. Then on the motor cars made here the revenue would get £240,000 in the ordinary way. We should therefore get a benefit both ways.

These are the facts, and they apply to everything which you produce in this country, and I do not think myself that they can be disputed or ever can be disputed, and all foreign nations believe in this system. Under such a system in our own home commerce both the employers would gain profits on the one side and the workmen who are employed would receive Wages and spend their money in this coun- try. I put it to hon. Members who represent labour more than any other Gentlemen who are in this House that they are bound to face this question of altering the taxation of this country. You must face it because there are millions of coloured people in the East who are beginning to manufacture to a large extent, and they have already began to swamp our markets with their goods, which are imported through various agencies. It is no use laughing at it, and you have got to face it unless you are willing that our people should compete with yellow and black people, and work for a few pence a day. Even the Socialists will have to acknowledge these facts, and I hope the question will not be shirked until the present system brings a great deal more misery into this country than there already is. As it is the fact that there is so much misery and destitution in the country should really lead hon. Members to try to help the working men by considering this question of free imports, and if they find we have made a huge mistake in our system of taxation, as all the rest of the nations believe, I think hon. Gentlemen on the other side of the House should have the courage to acknowledge it.


I wish to ask a question of the Financial Secretary to the Treasury as the Chancellor of the Exchequer is not present. The Chancellor told the Committee that he had about 350,000 valuations made up to now, but he did not expect any increase of revenue or any largely increased revenue from the taxation of minerals. I did not share his view at the time of the passing of the Act of 1909, because I am quite sure that the calculations of the Treasury officials are wrong on that point as they did not take into account the many different seams which are being worked in the collieries, and as one seam is worked out, another takes its place. I should like to know what has been done in the case of minerals. We have had the information in respect to one part of the Budget, but as to this more important part we have not received it. The minerals are, as the right hon. Gentleman is well aware, more important, because the Government get 20 per cent. on them under the Act of 1909.


I cannot answer the hon. Member at this moment, but if he will put down a question on the Paper I will endeavour to give him the information.


I wish to draw attention to a very considerable grievance which affects the home-made cigar trade. The tax on tobacco containing less than 10 per cent. of moisture is 4s. When the moisture rises above 10 per cent. it is 3s. 8d. This arrangement meets the grievance of the ordinary manufacturer of pipe and cigarette tobacco, but it is far otherwise with the manufacturer of cigars. While the pipe tobacco manufacturer can artificially dry his tobacco down to the 10 per cent. level, the cigar manufacturer is obliged to import his tobacco in a moist condition. I believe the higher quality the tobacco is, the more moisture it contains. The result is that the unfortunate cigar manufacturer is paying nominally at the rate of 3s. 8d., but really up to 4s. 7d. and 4s. 10d. per pound. In other words, he is paying at the rate of 3d. or 4d. a pound extra, not on tobacco, but on moisture. All that is asked for is that the man who imports tobacco should be assessed for his tax in the same way as the man who takes tobacco out of bond for export, and when he declares that that tobacco contains more than 10 per cent. of moisture, and the tobacco is examined and tested and found to contain more than 10 per cent. of moisture, he should have ½d a pound returned to him for every 1 per cent. of moisture over 14 per cent. This is no novel practice. It is only assimilating the practice of import to what obtains in export, because when the manufacturer wishes to take tobacco out of bond for export he should have his tobacco tested, and if it is found to contain more than 14 per cent. of moisture he can have ½d. a pound returned for every 1 per cent. over 14 per cent

We have, by deputation and letter, brought this grievance before the Chancellor of the Exchequer, but up to the present without any result at all, and if the Chancellor determines to turn a deaf ear to the grievance of those manufacturers, he ought to be able to explain why it is that tobacco should be treated in another way from sugar and alcohol. Sugar is taxed not on its gross value, but on the amount of saccharine matter in it. Alcohol is also taxed, not on its gross amount, but on the amount of proof spirit contained in it. Tobacco, particularly for cigar manufacture, is taxed not on the net amount of tobacco contained in it, but on the moisture as well. In other words, the manufacturer is paying on water which is neither fit to drink, nor of any use to him in the process of manufacture. Hon. Members opposite have indulged in a pan of self-complacent praise as to the merits of the Budget and the triumph of Free Trade finance, but, as far as my constituents are concerned, the Budget lays a very heavy tax upon the raw material of the industries in which they work. It lays a very heavy tax on sugar, and also on tobacco. The grievance which they suffer from in this respect will not be made any easier to bear by the fact that the. Chancellor of the Exchequer is giving his followers £400 a year.


While heartily supporting the right hon. Gentleman in making provision for his great scheme of Insurance against unemployment, I feel that those engaged in local administration will feel some disappointment that he has held out no hope of assisting or relieving them of the increased burden that is annually coming upon them in carrying out administrative work. We all feel, and I expect every member of the committee heartily approves of the right hon. Gentleman's provision for his great scheme, that except with regard to some of the details which we shall have to consider carefully, the burden on the poorer class of employer should not be made too heavy. At the same time we all wish heartily well to his project. As one who has been connected in some humble degree with sanatoria for consumption, I most heartily welcome that part of his scheme. He laid great stress on the importance of dealing with consumption in its early stages which is most important, but it is equally important that the cases being dealt with shall be kept in the sanatoria sufficiently long that the cure may be complete and effective. The evil results that I have seen in a sanatorium we have in Devon, is that owing to lack of funds, and therefore limited accommodation, persons apparently pretty well cured have been obliged to leave and go home and live under conditions which have menaced the lasting effect of the recovery. I earnestly hope the right hon. Gentleman will make provision in his scheme so that persons may be kept there until they are completely convalescent.

I am disappointed that the right hon. Gentleman has not held out, at any rate, some hope to local bodies of an increased grant from the Imperial Exchequer in carrying out county work, which is largely national work. I know he has taken the step of appointing a committee to consider the question of a rearrangement of the basis of local taxation and we all admit that that is a sound policy. But in the meantime I feel that the increased pressure of the rates on the small trader and the small producer is very serious indeed, and unless something is done these local services will suffer and injustice will be done to a class of producers who are indispensable to the commercial completeness of our system and whose power to carry on their work with this increased burden will be seriously menaced. The increased cost of education is an extremely serious matter, and it has been contributed to by special orders given to the Board of Education as to the prevention of children coming to the public schools on medical grounds. I doubt not that that is a wise step, but it has so reduced the grant that it is made absolutely necessary if education is to be efficient that there should be an increased grant from the Imperial Exchequer to make up for the diminution in the grants earned in carrying out the directions of the Board of Education.

The increased cost of the main roads is a very serious matter. In Devon during the last twenty-two years they have nearly doubled—from £37,000 to £80,000 per annum. Certainly the maintenance of roads is a national responsibility, and there should be a larger contribution from the Imperial Exchequer than is at present the case. In one particular the action of the Chancellor of the Exchequer has reduced the income of the public authority who have to carry out the maintenance of the main roads. I allude to the operation of Section 18 of the Revenue Act of 1910–11. I submit—and I ask the Financial Secretary to kindly give this his consideration—that it is hardly fair on the part of the Chancellor to commute the income derived from motor licences, which is an ever-increasing income, and to allow county councils to receive only the licences from carriages, which is a diminishing income. We must all recognise that motor power is coming into greater use, and it is not fair to deprive the county councils of the full fruits of the increasing taxation, especially so as it is largely the motor traffic that has caused the necessity for the very greatly increased expenditure on main roads. I ask the Financial Secretary to the Treasury to consider that point, and to put before the Chancellor of the Exchequer the justice of repealing Section 18 of the Act. That would be a considerable relief to the local bodies. Then we are told that the Road Board will lessen the burden on the ratepayers with reference to the maintenance of the roads, but that is not so. From an answer which the right hon. Gentleman gave me it was perfectly clear that up to a month ago the Road Board had not done very much, and that what they had done was that they had granted towards the cost of improvements which they had sanctioned sums of money amounting to £105,000 less than the estimated cost of carrying out these improvements. Therefore, instead of there being a relief to the local ratepayers through the Roads Board, the effect will be exactly the opposite. It will increase the cost to the county councils for the maintenance of the roads.

We recognise it is desirable that these improvements should be made, but surely that they should be paid for entirely by the Road Board, or that no considerable portion of the cost of the improvements, which are not necessary for the maintenance of good roads, but are desirable for making our roads still better, by taking off crooked corners and so forth, should fall on the local ratepayers. I say that with reference to the importance of lessening the burdens on the local taxpayers, because the Land Clauses of 1909 have much reduced the paying power of local tradesmen and of agricultural men. I know that the right hon. Gentleman disputes that, but I can tell him with a practical knowledge of agriculture that the increase in the Death Duties has compelled many a land owner to insure his life so as to provide for the payment of these duties. Therefore they have limited his power to carry out improvements which are most desirable and necessary to the tenant when the landlord deals fairly with his land. Not only that, but it has certain deterrent effects on the provision of cottages in the rural districts for the working classes. We all know that the provision of cottages is not a good policy financially. We recognise the moral responsibility that rests upon an owner of land to provide cottages for his employés, but there is in all rural districts a shifting population, where the people have no particular claim to be provided with cottage accommodation. We are all anxious to do something to reduce the movement of the people from the country districts to the towns, and the provision of better houses will be useful in that direction. The effect of the Finance Act of 1909–10 has been to almost entirely put a stop to this desirable policy as to the better housing of the working classes. It is not only the initial cost of building a cottage, but directly a cottage has been erected the owner is rated heavily for the upkeep of roads, for police, and for sanitary matters, while in the Death Duties he is, by his own philanthropic expenditure in providing better houses for the working classes, mulcted under the land Clauses of the 1909 Budget by having to contribute something under that measure.

The result is that people cannot afford to build cottages. If they take the £200 which is necessary, under favourable conditions, to build a cottage, they are at once heavily rated and penalised in Death Duties, whereas if they take the money and invest it in foreign countries they contribute neither to the one nor the other. From that point of view I would suggest to the right hon. Gentleman the importance of doing what he can to mitigate the evil effect which this increased burden has in hindering the better provision of cottages for the working classes. I would point out also that the increase in the Stamp Duties is militating against the securing of more owners of the soil, and in other directions the Act is having a disastrous effect on agriculture. I do not hesitate to say that the measure of 1909–10 is the hardest blow which agriculture in this country has had for a generation. One result of it is that it is compelling a large number of land-owners, partly because of the increased burden and partly because of the most unjustifiable attacks made upon land-owners by the Chancellor of the Exchequer, to sell their properties. Unfortunately, tenants are not in a position to buy their farms. A few of them have done it by borrowing money for the purpose, which means embarrassing their position, and even where they succeed in doing that the result is that the old landlord is obliged to sell. Hitherto the average landlord and the average tenant have gone on on the most friendly and considerate terms, but now a new man comes in—a moneylender, perhaps, and buys the property.


I do not see how this arises on the question which is now before the Committee.


I bow to your ruling, but I was trying to show that as one Budget increased the burden this Budget should do something to meet the impoverished position of the people affected, and should at least give assistance towards the maintenance of the public roads. I do hope the Chancellor of the Exchequer will recognise the evil that is being inflicted because of this policy, and will do something to promote a system of land purchase, and enable the tenants to become the owners of the land they till. With reference to what has been said about valuation, I feel it is very important that we ought to have details as to the basis of the valuation. The Chancellor of the Exchequer said that that was a matter for the rating authorities. I beg to differ from him. We have a separate assessment on land and houses at present, and it is desirable that a man who is assessed shall know exactly on what basis he has to pay. The right hon. Gentleman said it would lead to litigation. I am sure the right hon. Gentleman does not really want an injustice to pass into law because the revelation of the details would give a man an opportunity of appealing against his assessment. Therefore, I think it is most important that we should have details of the valuation. As to the proceeds of the Land Taxes we have been told by an hon. Member on this side of the House that at present the income barely meets the cost of the valuation. I cannot help thinking that that is a serious matter. Surely it would be much better if the local administrative body, which has some knowledge of the district, with, of course, some Imperial control, had been utilised in valuing the land instead of having this system established by some 810 highly paid officials. The time has come when local administrative bodies have a right to expect that in carrying out these great national requirements the maintenance of education and the roads, they should get larger payments from the Imperial Exchequer instead of having increased burdens placed upon the ratepayers. I hope the right hon. Gentleman will kindly consider these points, and will see his way to remedy the grievances to which I have referred.


There is a small point which, I think, should receive the attention of the Chancellor of the Exchequer. The proprietors of hackney carriages have suffered very severely, as we all know, from the increased competition of mechanically driven conveyances, and from the increased tram competition. They have to pay a tax of 15s. for each vehicle, in addition to the licence which has to be paid to the police. The abolition of this tax was recommended by a House of. Commons Committee in 1906. It is a small matter, and it cannot cost the Treasury much to give effect to that recommendation, but those engaged in this industry have suffered a great deal of distress, both employers and drivers, and I think that the abolition of this tax should receive the consideration of the Chancellor of the Exchequer. I trust that he will deal with it on this occasion, because if there is to be no relief from taxation in a year like this, a year of large revenue, I am afraid that those who are suffering from taxation of an oppressive character cannot possibly look forward to relief in future years when trade has gone back, and that it will be necessary to impose new taxes in order to provide for the constantly increasing reuirements of the State. I hope sincerely, therefore, that the right hon. Gentleman will take this matter into consideration, and will not overlook it because it is so small.


I would like to put before the Chancellor of the Exchequer the case of those who are engaged in the industry of the distillation of alcohol for technical purposes. In the present Budget, and for the past two years there has been, it seems to me almost a mistake, a technical mistake, made in this assessment. It is quite right to charge a considerable tax for the distillation of alcohol for the purpose of whisky and other drinks, but where the alcohol is used for technical purposes only I would submit that this enormous taxation, because it is enormous in relation to the amount previously charged, should be remitted. In Liverpool one firm that I know of imports a very large quantity of molasses from which they distill alcohol. At least from 93 to 95 per cent. of the alcohol which they distill is used for technical purposes. The point I want to raise is, Is it not possible to reduce this licence for distillation? It is not a licence on alcohol, but it is a tax on the right to distill, and I submit that in this particular case, where the cost of a licence to distill used to be £10 per annum, and has now risen in one year to £670, and in the next year to £702, that enormous increase in taxation is very severe, and for this reason that the man on the Continent who is making methylated spirits and selling it in this country has not to pay a tax on the right to distill it. He only pays a tax on the amount of the alcohol produced, and I venture to point out that while it is a small matter in this country, taking the aggregate, it presses with exceeding severity on the few firms now engaged in this trade, In the instance I have mentioned, it is 5 per cent. on the capital employed in that factory. I think this is a case where the taxation should be reduced or cancelled. I know of parties who import other things which they distill for various technical purposes. It will be just as sensible if a man imports 1,000 tons of grease and distils them and produces oleum which he sells to a soap factory to charge him for the right of distilling that grease as it is for the Government to charge for the distillation of alcohol where used for technical purposes. I submit that point, and trust that something may be done.


From the very great satisfaction which the Chancellor of the Exchequer displayed this afternoon, one would think that we were all entirely satisfied with the Budget as it is now before us. It was with feelings of very great satisfaction that he mentioned that no fewer than 381,000 valuations had been made, and he said that only thirty of them had been subject to appeal, and that only eight of those appeals were still unsettled. I have no doubt that the Chancellor of the Exchequer has better means than most men of ascertaining what is the true state of affairs in the Valuation Department. I venture to say that there must be very great congestion there, not from the valuations being made under the Finance Act, but from the fact that the officers there have quite enough to do in dealing with valuations on what is described on occasions, valuations which come in, which have to be dealt with, and which are afterwards hung up for a very long time until the valuation staff have time to deal with them. There must also be congestion in the Death Duties Department of the Inland Revenue, because the distribution of estates and the settlement of the duty is being hung up to a very considerable extent. From my own practical experience, as well as from my having been informed of the facts, there is considerable congestion in that Department, and therefore when the Chancellor of the Exchequer comes here and speaks with a sense of satisfaction of 331,000 valuations having been made out of, to use the right hon. Gentleman's words, "many millions" he is only begging the question. I do not think the Chancellor of the Exchequer can speak with very great satisfaction of the state of things which now exist. One wonders how he can make such a statement, knowing what he did in the country a year or two ago, and knowing how he went about dealing death and destruction to all those interested in land and houses. I do not know how he can say that rents are going up, and that building is prosperous. It is really a burlesque and a travesty of the real state of things. I know that he quotes with satisfaction from the "Board of Trade Gazette" the percentage of those employed in building operations as being larger than existed at this time last year.

There are certain returns from trade unions and correspondents which have been referred to, but I deny that they really represent the real state of the facts. The various trades allied to the building trade are in a very bad way indeed, and it is a burlesque and travesty of the real state of things to say that the building trade and allied trades which come under the scheme for insurance are at all in a prosperous state. In regard to the Undeveloped Land Tax, those who own undeveloped land, and are subject to the tax, really do not know where they are. The Chancellor of the Exchequer said this afternoon that the valuations would very soon be made, and that they will be productive of a considerable increase; but those who have undeveloped land are in a state of great uncertainty. The valuations have not been made, and owners are liable to an accumulated tax, a tax which commenced on 30th March, 1909. The valuations have not been made, the tax has not been levied, and a very heavy liability is being piled up which in fairness should be set free quickly, for I can imagine nothing more disturbing to the development of land in the suburbs and in districts around large towns than this overhanging liability, which must be a source of grave dissatisfaction to those unfortunate people who are liable to pay the tax.

Question put, and agreed to.