CUSTOMS AND EXCISE.

HC Deb 02 April 1912 vol 36 cc1072-6

5.0 P.M.

Now I come to Customs and Excise. The Exchequer receipts last year from Customs were £33,649,000. I estimate this year that they will produce £33,900,000, which will be an increase of £251,000. Excise last year was £38,380,000. I estimate that this year it will produce £37,700,000, a drop of £680,000. The reason why I take that estimate is that owing to the strike I have come to the conclusion that there will be a heavy loss. That is on the debit side. Coming to the credit side, I estimate that there will be an increase in the consumption of dutiable commodities. There has been a curious change in the last year in the matter of the consumption of alcoholic liquors. I remember the right hon. Gentleman (Mr. Austen Chamberlain) standing here and pointing out that for the first time in a period of prosperity the consumption of intoxicating liquors had gone down, and he rejoiced, with the rest of the Committee, in the prospect that it was a permanent change in the habits of the people. It seemed for some years as if that prediction would be verified. We had very good trade in the time of my right hon. Friend (Mr. Asquith) when he was Chancellor of the Exchequer, but in spite of that the consumption of alcoholic liquors steadily went down, and my advisers came to the conclusion that we must in future reckon upon a steady diminution in the quantity consumed. There is no doubt that, so far as the wine bill of the country is concerned, there is that change in the habits of the wine-drinking section of the community. I made some inquiries of a wine merchant on the subject as to how it was that last year, in spite of the fact that the wine-drinking classes were making very considerable profits, they consumed less wine, and he said it was due to a real change which wine merchants had been noting for years in the habits of those who were drinking wines. That was true also up to last year so far as the classes who consume spirits and beer were concerned. The Budget of 1909 accelerated the downward pace in the consumption of spirits, which now stands at nearly 20 per cent. less than in 1908–9, which I claim is due very largely to the 3s 9d. on spirits put on by that Budget.

But last year there was a change. The heat of the summer will no doubt partly explain it in the case of beer, but I do not think it win explain it in the case of spirits altogether. It may have had something to do with it, but I think it is due to something more permanent than that. There was an increase of 4 per cent. in the consumption of spirits. We budgetted last year for a decrease in beer, but instead of that the receipt from Beer Duty exceeded that of the previous year by £565,000, and the only explanation I can give of it is this: Although during the years 1906 and 1907 we were enjoying great prosperity in this country, the working classes did not get the full benefit of it, because the necessaries of life went up, and therefore they had no margin available for alcohol. I think it is to their credit that they did not start by devoting a certain sum of money for liquor, but began by saying they must obtain necessaries. They said, "We must set aside this money for the increased cost of living, and if there is anything to spare we can spend it on alcoholic liquors, and upon luxuries and indulgence." Therefore the increased cost of living must have affected the money spent on intoxicating liquors, even in a time of prosperity. Last year, for the first time, as I have pointed out, we began to have the benefit of the enormous investments in railway developments in Canada, the Argentine, and elsewhere, and the cost of necessaries began to come down. I think that must have had an effect on the expenditure on intoxicating liquors. This year I have estimated that there will be an increase of 2 per cent in the consumption of beer, and 1.5 per cent. in spirits.

Mr. AUSTEN CHAMBERLAIN

I understand from the last observation of the right hon. Gentleman that he has estimated for an increase in the consumption of both beer and spirits. How is it that he expects less revenue?

Mr. LLOYD GEORGE

I estimate for a 2 per cent increase in Beer and a 1.5 per cent increase in Spirits. But against this must be set a deduction in each case on account of the coal strike and also, further deductions in respect of excess stocks in the case of spirits and on account of the hot summer of 1911 in the case of beer. On the whole, the balance is against the Exchequer. That is why I estimate that there will be a loss on Excise as compared with the actual receipts last year.

Now I come to the Death Duties. These I estimate will be £25,450,000, which is £58,000 up on last year; Stamps I estimate at £9,400,000, which is £54,000 down on last year; Land Tax I estimate to be £700,000, which is £50,000 down on last year, but there were arrears included in last year's revenue; House Duty I estimate to be £2,000,000 which is £130,000 down on last year. That is because there were arrears included in last year's revenue from House Duty. I now come to Income Tax, and I should like to say one word upon that tax, because there is a remarkable development in this respect. Last year we had over £2,500,000 of arrears from the preceding year in our receipts of Income Tax for the year, so that the actual receipts of Income Tax did not represent the real normal Income Tax revenue for that year. We might therefore naturally expect that the Income Tax would be considerably down this year, but there is one circumstance which has intervened to prevent anything like a disastrous drop. The Income Tax, as the Committee know very well, is estimated on the average of the preceding three years' income of every person under a particular schedule. Last year we estimated Income Tax upon the basis of the average of the income derived by people in 1908, 1909, and 1910. This year 1908 drops out and 1911 comes in. The year 1911 was an exceptionally profitable one. The Inland Revenue have secured returns from representative traders in each particular industry, and upon the basis of these, actual returns they have come to the conclusion that the profits for last year were abnormal, and that they increased at a rate almost unprecedented in this country. By taking out the year which preceded the Budget of 1908–9 and substituting for it the third year after the experience of the Budget of 1909–10, the average has been raised so considerably as to go beyond the normal. Therefore this year I expect from the Income Tax—including Super-tax, which is standing for £3,500,000 instead of £3,000,000, as it was last year—a total of £44,100,000. That is a decrease of £704,000 on the actual receipts of last year. The Land Value Duties I expect to produce £545,000. The total tax revenue will be £153,795,000, being a decrease of £1,245,000.

Mr. AUSTEN CHAMBERLAIN

Can the right hon. Gentleman give the Committee the figures of the Mineral Rights Duty separately from the other Land Duties?

Mr. LLOYD GEORGE

I will get the figures by the time I reply and give the right hon. Gentleman the information in the course of the evening. I cannot give the figures at the present moment. The Post Office revenue is considerably up, because this year it includes a full year's revenue of the National Telephone service. This year I expect a revenue for postal, telegraph, and telephone services of £29,175,000. That is an increase of £3,475,000 upon last year. On Crown lands I estimate the revenue at £530,000, and the receipts from the Suez Canal shares and sundry loans are estimated at £1,289,000, being an increase of £8,000. Miscellaneous receipts are estimated at £2,400,000, being a decrease of £139,000. The total non-tax revenue is therefore estimated at £33,394,000. That gives a total revenue of £187,189,000. The total estimated expenditure is £186,885,000. I therefore estimate a surplus of £304,000 at the end of the year. That leaves no margin for reducing taxation, but it is encouraging for the Committee to know that in spite of the increased expenditure owing to insurance, and in spite of the fact that we are short by £500,000 which was properly attributable last year to the Admiralty, there is no need for imposing any fresh taxation.

I have only one or two more sentences I wish to address to the Committee. Lord Lansdowne, in moving the rejection of the Budget in 1909 in the House of Lords, said that he objected to these taxes because they were unproductive, and he added:— We make no secret of the fact that, in our view, this Budget is a confession that you have virtually exhausted the possibilities of a financial system based upon free imports. Lord Curzon, in a very characteristic passage, said:— You are setting a veritable old man of the sea on the shoulders of the respectable and reputable classes of the community. I need hardly quote the well-known words of Lord Rosebery, that it was "the end of all things." Now we have had three years of it, and the country is more prosperous than ever. The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) is looking forward to the day when he will be standing at this table introducing a highly controversial Budget, and I am sure his supporters are looking forward to it with even more eagerness. For him will be the toil, the trouble, the worry and the anxiety, and for them will be the joy of battle. If, after three years' experience of that Budget, assuming that it ever comes into being, he is able to stand at this Table and to say, "This Budget, which was challenged so fiercely by the Opposition, produced a revenue of £12,000,000 the first year, £18,000,000 the second year, and £23,000,000 the third year, and from £24,000,000 to £25,000,000 the fourth year. I have raised that revenue without adding a single penny to the cost of the necessaries of life. I have done it without interfering with any trade or industry in the country. When I introduced that Budget I found trade at a low ebb, passing through a period of deep depression, and unemployment at its highest. Since then trade has gone up by leaps and bounds, and unemployment has decreased, and our present trade is the largest this country has ever seen." If he can say that, at the end of three years, then he will be entitled to congratulate himself upon having, at any rate, falsified the criticisms of his projects and realised the highest anticipations of his best friends. That is the story of the Budget of 1909.