HC Deb 27 February 1912 vol 34 cc1273-316

I beg to move, "That this House is of opinion that National Expenditure has been increased by His Majesty's Government in contravention of their pledges, so that past and future commitments of the country are a matter for serious anxiety; and considers further that recent taxation and its methods have damaged our financial credit by shaking public confidence."

The Motion is, I hope, as it is intended to be, simple and unadorned by epithets and unvarnished by oratorical devices. It is merely a statement of facts, which I intend to prove. I am only sorry that, as I understand, the very serious crisis with regard to the coal strike will prevent the Chancellor of the Exchequer from being present, for I should have very much liked to put my argument before him personally. No doubt he has an excellent substitute, and I shall perhaps obtain some observations, satisfactory or otherwise, from him. I propose in the first place to take this Resolution piecemeal, step by step, and prove each of its assertions. In the first place, it states that national expenditure has been increased by His Majesty's Government. I imagine few will deny that. None can deny it reasonably, and the only question really is, what is the amount of that increase? It is well to bear in mind, in the first place, that the whole of this increase since His Majesty's present Government came into office is an increase which has occurred in time of peace, and it is quite unprecedented, I believe, that so large an increase should have taken place when the nation was not at war and there was no special warlike reason for expenditure increasing.

I propose to take for the purpose of comparison the expenditure during the last year the late Unionist Government was responsible, and to contrast that with the Radical expenditure as estimated for 1911–12. I merely make a statement of facts at present. In 1905–6 the Unionist expenditure on the Navy was £33,300,000. The Radical expenditure for 1911–12 is £44,393,000—that is to say, an increase of £11,093,000. On the Civil Services—excluding old age pensions, national insurance, and payment of Members—the Unionist expenditure for 1905–6 was £28,430,000, and the Radical expenditure is now £34,373,000. That is an increase of £5,943,000. Under the Unionist Government there was no payment for old age pensions. The Radical expenditure is £12,415,000. That is increased expenditure. There was nothing for national insurance under the Unionist Government, and the estimated amount for that this year is £50,000, with prospective increases. There was nothing in 1906 for payment of Members. The amount for 1911–12 is £250,000. The Army cost £28,850,000 under the Unionist Government, while under the Radical Government the amount is now £27,690,000. That is a decrease of £1,160,000, partly the result of the reduction in our number of men and the substitution of Territorials for Regular soldiers. The total expenditure chargeable to revenue for 1905–6, including payments out of revenue to local taxation account, was £150,413,245. The Radical expenditure estimated for this year is £181,284,000. That is an increase of £30,870,755. I think I am entitled to add that the New Sinking Fund has been raided by the present Chancellor of the Exchequer, as compared with the year 1905–6, to the extent of £3,525,027, which makes a total increase of expenditure—adding the £3,525,027 to the £30,870,755—of £34,395,782.

It is perfectly true, and I wish to give credit to the Government where they deserve it, that the amount of debt which they have repaid in the five years they have been in office amounts, I believe, roughly, to £56,000,000 as compared with £32,000,000 in the five years immediately preceding the South African war. I give them all due praise for that action, but that action, after all, was intended to raise the price of Consols. It has not done so, and there is no indication of its doing so. I think it is worth while to call the attention of the House to the circumstance that in the last year before the South African war, which I think is the fairest year to take for this particular comparison—namely, 1898–99—Lord St. Aldwyn allotted about 7 per cent. of the revenue—£7,576,000 out of a revenue of £108,336,000—to the extinction of national indebtedness. The revenue has very largely increased, but the present Chancellor of the Exchequer has only allotted £6,855,000 to the repayment of national debt, or 3¾ per cent. as against 7 per cent.

To some of these increases we on this side do not object. There are three classes of increase: those to which we do not object at all, those to which we do not object on principle, and those to which we do object on principle. Obviously among those to which we do not object is the increase with regard to the Navy. Let that be perfectly clear. Nor do we object to the increases with regard to Labour Exchanges or the Post Office, because while the expenditure on the Post Office has increased the revenue from the Post Office has increased to almost a proportionate extent. The increases to which we do not object on principle are those for old age pensions and the Insurance Act. The increase to which I certainly object for myself very strongly—it may be considered a small one in one respect perhaps—is for the payment of Members, and we also object to the increase due to the creation of the large number of Government officials which all their legislation has necessitated. Take the land valuation staffs, who are appointed more particularly to value for Undeveloped Land Duty and Increment Value Duty. The annual charge for salaries for the payment of these staffs, according to the Government return of last November, was £378,480. I do not know-to what figure that is likely to swell. The yield on the other hand is absurdly small, and it is also very problematical what it is going to be. The money spent on the salaries of these staffs all at once in such profusion are totally unreasonable compared with the yield produced. I have no doubt that the hon. Gentleman (Mr. Robertson) is likely to ask me on this point will I repeal the Old Age Pensions Act, or the Insurance Act? The hon. Gentleman knows very well that obligations partly performed into which this country has solemnly entered, are not obligations which anybody can lightly throw aside. Naturally in those circumstances I say no. But what I do blame the Government for severely is the incurring of these liabilities all together and piling one on top of the other all at once so that they cannot be met without shaking seriously the credit of the country.

In a matter of private concern no one would dream of incurring these enormous liabilities all at once. Many of us have preached in the small clubs in our constituencies that the great secret of future success is to have a good balance-sheet and not incur undue liabilities. That applies just as much to nations as to people. I believe strongly that the real duty of the Chancellor of the Exchequer was not to incur these enormous liabilities in so wholesale a fashion, all together, but to proceed if necessary step by step. Take old age pensions. He ought to have made them contributory, and not non-contributory. I voted for that in this House, and I have a very strong opinion on the subject. He ought to have proceeded with greater caution as regards the Insurance Act, and I should have thought that he would have been wise if he had limited compulsory insurance in the first instance to permanent disablement. He could then have foreseen how the thing would work out, and acted according to the principle that in the incurring of these constant fresh liabilities it is desirable to proceed by cautious experiment. The fact is that he is far too ready to yield to influences within his own party or influences from his supporters. He is influenced also, no doubt, by Members of the Labour party, and though I do not agree as a rule with the observations of Lord Welby—in fact, I disagree fundamentally with almost every one of them—I do agree with this particular observation of his:— The Labour party distinctly favours expenditure. It does not recognise that strict vigilance over expenditure is essential to sound finance, and that the working, classes are deeply interested in the maintenance of sound finance. I am sorry to say that this constant pressure from his own supporters in various quarters of the House is not sufficiently resisted by the Chancellor of the Exchequer. So far I have dealt only with past commitments. My Resolution also refers to proposed future commitments. I object still more to future commitments largely because of their indefiniteness. We really do not know where we are. We do not know to what these vague Estimates will swell, and it is the Chancellor of the Exchequer's successors who will have to provide the payment. It is, no doubt, very satisfactory to escape responsibility for doing so, but the Chancellor cannot escape this responsibility if he is the man who incurs it in the manner in which he has done. The individual Members of the Government used to be fond in this House of denouncing the Unionist Government for incurring loans to meet special expenses. They all of them maintained that that was bad policy, but surely the kind of future commitment which the Chancellor of the Exchequer has now incurred is just as much charging posterity as any loans could have done, and is just as reprehensible, if it is reprehensible.

Take old age pensions. Where are we as regards the Estimates? The Estimate for the old age pensions is to be found in the Budget speech of the present Prime Minister delivered on 7th May, 1908. He there tells us that the maximum cost is not likely to exceed, and will probably fall somewhat short of, about £6,000,000 sterling a year. What has become of that £6,000,000? What is it going to grow to? The right hon. Gentleman made that statement in the full knowledge that in the case of old age pensions in other places the Estimates had been seriously exceeded. That was so in Denmark and in New Zealand. In New Zealand, in 1898–99, the cost was £127,319. Eight years afterwards the cost was £338,084, or more than twice and a half the original amount. In the case of the United Kingdom the amount has gone up from an Estimate of £6,000,000 sterling to £12,500,000. That is to say, the Government in four years are spending on old age pensions more than double the figure which they estimated for in the beginning, and for aught we know, it may go up to £26,000,000 before very long. Translate that £12,500,000 into a capital addition to the National Debt, calculated at 3 per cent., and it means an addition of £400,000,000. Is that trivial? Is that to be undertaken airily? The Chancellor of the Exchequer has done it when he combined it with all the other expenses which he has incurred. The Insurance Act, again, is estimated to have cost £50,000 this year, and it is likely to be £6,000,000 a year. I believe that is not seriously denied.


It has been denied on your side.


We take your Estimates, which appear to be too low, and if they are anything like that amount of £6,000,000 a year it means £200,000,000 added to the National Debt. So that we have got £400,000,000 in respect of old age pensions and £200,000,000 in respect of the Insurance Act—that is to say, £600,000,000 of the amounts are capitalised, added to the National Debt—something like the total amount at which it now stands. No wonder there were searchings of heart among the supporters of the right hon. Gentleman when the National Insurance Act was passed. This is a very serious matter, in regard to which I seriously complain that he should continually foist these vast and increasing liabilities and expenses upon the nation, and, at the same time, do so in the airy way in which he has undertaken them. Where is our reserve in time of war? He does not appear to attempt to answer that. And if we had to borrow now it would be at a rate greatly above 3 per cent. Those facts are elementary; they are facts which appear to be disregarded, but which every Chancellor of the Exchequer ought to have at his finger's ends. My Resolution goes on to say that all this in crease by His Majesty's Government has been made in contravention of their pledges. I do not know whether they are prepared to deny that. The history of their position is an extremely interesting one.

As a small child I remember being told that the great watchwords of the Liberal party under Mr. Gladstone were, "Peace, retrenchment, and reform." Retrenchment was one of the cardinal virtues of the old Liberal party. What has become of it now? Retrenchment was the watchword, was the pledge, I will say, by which they aspired to get into office in 1906, and it had been the attitude which they had held out, blazoned out to the country, so many years previously. In 1901 the late Lord Wolverhampton (Sir Henry Fowler) moved an Amendment on the Second Reading of the Finance Bill on the 20th May, 1901. He made a long speech on the subject, in which he pointed out that he thought that the then gross expenditure of the country, exclusive of war, £125,500,000, was excessive, and he wanted not merely a particular reduction as regarded the War Office, but, as his speech was directed to showing he wanted a reduction in education, the Post Office, local taxation, and so on. His Amendment was:— That this House, while ready to make adequate provision for the Naval and Military requirements of the Empire, is of opinion that the financial proposals of His Majesty's Government are objectionable, both with regard to taxation and to debt, are calculated injuriously to affect industry and commerce, and do not exhibit that regard for economy which the alarming increase that has recently taken place in the normal expenditure of the country imperatively demands. For that Amendment there voted, among others, the Prime Minister, the present Secretary for Foreign Affairs, the present Home Secretary, the present Lord Chancellor, the present Chief Whip, the President of the Board of Trade, and other Members of the Ministry. But that is only the beginning of their action. In the following year, 1902, on the 14th May—this is after all only a sample of what other Members on that side of the House keep repeating—the Home Secretary (Mr. McKenna) said, in criticising Unionist finance:— We must revert to the principles which still survive on this side of the House—the principles of economy in finance and efficiency in administration. The late Sir William Harcourt in 1903, on the Budget, made a memorable speech, and he concluded by observing:— For dilapidated finance such as yours (pointing with the finger of scorn to these benches) there remain only the sovereign remedies of retrenchment and reform. In 1904, the late Sir Henry Campbell-Bannerman spoke on the Finance Bill, on the 16th May. He made some very interesting remarks. He said:— I believe that the Eastern—the Oriental - fiscal method is to say, 'here is a taxable matter; let us tax it.' Here is a man with money, let us take some of it from him. But that has never been our way. Our principle has been to take only what is strictly required for public purposes. It is largely due to the watchfulness exercised over expenditure that the wealth of the country, which is being cut to pieces by taxation, is increased, and that its commerce is greatly developed. He moved, in making this speech, the following Amendment to the Finance Bill:— That this House, having regard to the heavy burden of taxation proposed by this Bill in a time of peace, deems it necessary to declare its condemnation of the large and continuous increase of the national expenditure in recent years. That is interesting, but by no means abnormal. Let us go to the next year, 1905, the year before the present Government came into office. So anxious were they to emphasise the position they intended to take up with regard to expenditure to economy, that an Amendment to the Address was moved on the 1st March, 1905. It was moved by Mr. Buchanan, who was afterwards made Under-Secretary for India. The Amendment was as follows:— That the increase of national expenditure has been excessive, and has imposed heavy burdens upon the people, for the relief of which it is urgently necessary that at the earliest moment the expenditure of the State should be revised and reduced. He supported that Amendment at the end of his speech in very interesting sentences. He said:— The final words of the Amendment were taken from a Motion moved by Mr. Gladstone in 1857. They were obviously following out the traditions of the Liberal party. A dissolution was impending, and he supposed the Government would not deny that another was impending now. Mr. Gladstone said then, and he tried to urge now, that these matters were of supreme importance to the welfare of the country, and that they should be brought prominently before the judgment of the country at the General Election, so that when the new Parliament came into being the Government which should represent its opinion should be irrevocably committed, after a full discussion before the nation, and with their approval, to a real retrenchment and a substantial reduction of our expenditure. For that Motion the Prime Minister, the Chancellor of the Exchequer, the Secretary of State for Foreign Affairs, Lord Morley, Lord Haldane, the President of the Board of Agriculture, the Solicitor-General, the Home Secretary, the President of the Local Government Board, and others voted. In 1906, after they had taken their places on the other side, we have had one more statement to show that economy was still, I suppose, their watchword. Speaking on 30th April, 1906, the Prime Minister, after quoting figures showing the increased expenditure of Unionists, said that:— They (the figures) make a return to a more thrifty and economical administration the first and paramount duty of the Government. Where are we now? Are all those pledges to be relegated to the rubbish heap now that they have served their purpose, very much like that interesting contortion of veracity which the Lord Advocate indulged in when he said that this party, the Unionist party, were going to repeal the Old Age Pensions Act when they came into office—[An HON. MEMBER: "He never said that!"]—or to be put aside like that curious statement about black bread and horse-flesh which was telegraphed all over the country, and which everybody knew was not a correct statement of the facts; or like that still more notorious terminological inexactitude about Chinese slavery? Those protestations of economy sound indeed queer when we see what His Majesty's Government have since resorted to. My Motion goes on to observe that recent taxation and its methods have damaged our financial credit. As to the recent taxation I do not propose to enlarge. Those who follow me may do so, but we all have clearly in our minds what it is. We have the enormously increased Income Tax, the preposterously increased Land Taxes, the vastly increased Death Duties, to say nothing of the Super-tax, the effect of which altogether probably makes those imposts far greater I believe, according to the authorities of Somerset House from their evidence put before the Income Tax Committee, than any other country in the world, and causes a more flagrant sense of injustice in consequence of their imposition; to say nothing of the Licence Duties, which are a particular duty on a particular trade, and for which no adequate defence has yet been given. As to their methods, we know that they have been inquisitorial, menacing demands that taxes should be paid within ten days, Government valuers prying into people's houses, Form IV., Form VIII., futile, irritating, illegal. Those are the methods that we complain of, those are the causes of the feeling of injustice which is so widespread, along with the enormous imposition of taxes themselves.

I say that those tremendous taxes have damaged our financial credit. I do not know whether the Government is prepared to deny that. One of the best tests no doubt is the value of Consols. Consols in 1905, on the average, were—[An HON. MEMBER: "Go back further."] I will do that with pleasure, but I was merely giving the year for which the Unionist Government were last responsible. In 1905 the average price of Consols was 89 13–16ths, and to-day the price is 78¾. Last year they were down to a fraction above 76. Hon. Gentlemen opposite asked me to go back. I am ready to do that, especially because I want to deal with one of the defences which I know the Chancellor of the Exchequer brings forward. He says that those prices are entirely discounted because of the reductions in interest which have taken place. The interest on Consols was reduced in the first place in 1888 from 3 per cent. to 2¾ per cent., and again in 1903 from 2¾ per cent. to 2½ per cent. In 1888 the price of Consols was 101. In the following year, although the interest had been reduced, and one would have expected a greater fall, the price was 98. Is that the particular figure to which hon. Gentlemen opposite want me to go back? After that reduction in interest had taken place, and in the years 1896–7–8 Consols not only rose, but went to the very high figure of 113 during those three years, and I believe some say even to 114. Coming then to the next reduction in interest in 1903, we find that in 1902 the price of Consols was 94⅜, and in 1903, when the reduction had taken place, they only went down to 90¾, so that the fall was by no means commensurate with the reduction in the interest.

I will ask the House to bear in mind, and I think it is important to do so, that when the interest is at 2½ per cent. that 83 is the price at which Consols ought to be in order to be equivalent to Consols at 100 with 3 per cent. interest. Thus 83 is the equivalent of the old par value of Consols. In 1905, when the Unionists were last in office, and bearing in mind that calculation, Consols were not 83 but 89 13–16ths, so that they were well above the old par value, and nobody could say that the national credit therefore was severely shaken so long as the Unionist Government were in office. It is a very different story now. They are not 83, they are 78, and they have been hovering at a lower figure, and, for aught I know, will go lower if this Government remains in office. There is another excuse which the Chancellor of the Exchequer is very fond of making, and that is that trustees have been allowed to make investments in Colonial and other securities, which they were not able to do before 1888–89, and that their inability to do so was the cause of Consols keeping up to their then value. The field for trustee investments was widened mainly in the years 1889, 1893, and 1900. Will the hon. Gentleman really tell me that that is a cause which continues to persistently operate? I submit that it is a cause, the force of which must have become extinct. The year 1900 is now twelve years ago, and if the value of Consols was affected by these alterations, and no doubt it was to some extent, I think that the effect of those alterations is now discounted. You cannot suppose that the price of Consols will persistently fall because additional trustee investments have been allowed. So far as it has fallen, it ought to have fallen to its full extent by this time, and no further reduction can be due to that particular cause. I assert that everyone, who is not a Radical first and a financier afterwards, would admit that these were only very partial causes.

9.0 P.M.

There is, however, quite a different argument which the Chancellor of the Exchequer is apt to use in regard to this particular matter. He says, "Oh, the low price of Consols is quite unreasonable. Look at the excellence of our commercial returns. The increase in our external trade last year was £27,000,000. We are in a state of prosperity, and Consols are no barometer as to that prosperity." No doubt there was an increase in our external trade, but the merest tyro in politics knows perfectly well that there are cycles in the condition of our trade, that sometimes there are periods of increase and prosperity, sometimes periods of depression; sometimes fat years, sometimes lean years. No doubt we are in the midst of a cycle of prosperity at present. Our trade has increased; but you ought to look at what the trade of other countries has done. In the United States the similar figure is £40,000,000, and in Germany £60,000,000. Observe that these are not percentages of increase, but bulk increases. It is quite clear that those countries are on the crest of the wave of prosperity, whereas, to my mind, our figures show that we are in the wash and backwater. My resolution further says that this damage to our financial credit, which I submit the value of Consols very clearly shows, has been caused by shaking public confidence. I do not know whether the party opposite are prepared to doubt that they have shaken public confidence. We can test the truth of the assertion very well by taking, for instance, the price of land, more particularly in regard to its prospective building value. I will not give specific instances; possibly some of my hon. Friends will do that; but valuers who have been professionally engaged in such inquiries have told me that the prospective building value of land has almost everywhere gone down, and that it is directly owing to the Finance Act of 1909–10. Still better, or at any rate quite as well, we can take the price of British industrial securities. I have had supplied to me a few representative samples of the changes in price. I will compare the prices of February, 1906, with the prices of February, 1912, the first year being just after the General Election, when the party opposite came into power. Take for instance the London and North-Western Railway. The ordinary shares in 1906 were 160⅛, now 138¼; the debentures in 1906 were 96, now 82. Take a different kind of British industry—W. G. Armstrong. Whitworth and Co. Their ordinary shares in 1906 was 3⅛, now 2¼. Take again a different kind of trade—I am taking these largely haphazard, but they are intended to be representative of different trades—Dick Kerr and Co., Engineers and Contractors. The price of the equivalent of a £1 share in 1906 was £1 16s., now 18s. 1½d. Bass, Ratcliffe and Gretton's 5 per cent. preference stock, in 1906, 111½, now 96½. City of London Brewery ordinary stock, in 1906, 49½, now 10½. D. H. Evans and Co., drapers and silk mercers, ordinary £1 shares in 1906, 4, now 2½, In all these cases, which I have tried to make as representative as possible, the price of British industrial securities has gone down, and I submit with confidence that that shows that public confidence has been shaken.

It is an equally well-known fact that capital has been going abroad to an enormous extent. In the five years before the Unionist party left office it is on record that £114,000,000 worth of capital went abroad. In the five years after the present Government took office £387,000,000 went abroad—a vast increase, and to my mind a most obvious proof that public confidence has been shaken. I know the Prime Minister has observed before now that he rejoices in this capital going abroad. Hon. Members opposite seem to share that delight. How they imagine that the investing of British money in, say, American rails or Brazilian bonds is going to benefit this country I am at a loss to understand.


Do you include the Colonies?


I do not think that figure does, but I am not quite sure as to that. It may be that it does include the Colonies. In any case, it makes very little difference. The amount of money that went abroad before the Government took office, as compared with what has gone abroad since, is something quite phenomenal, and needs a very marked explanation. I suggest that hon. Gentlemen opposite should set themselves to explain how this investment of British capital in the United States or Brazil can possibly benefit the commercial prosperity of this country. I say, on the contrary, that it shows that public confidence has been shaken. There are one or two results which have been brought about which I do not think the Chancellor of the Exchequer can altogether rejoice over, and which I should like just to call the attention of the House to. I was in Canada last autumn, under doctor's advice, and I came across more than one person who said that he had either emigrated there himself or had friends who had done so, in order to avoid the injustices of the taxation of the Chancellor of the Exchequer. [Laughter.] I do not see that it is any laughing matter. I have no doubt they were very good emigrants. Certainly, Canada is to be congratulated upon their arrival, and I daresay that the Chancellor of the Exchequer is to be congratulated, from one point of view, on the result of his legislation. Nevertheless the fact remains, and I do not think that, in truth, it is altogether to the credit of the Chancellor of the Exchequer.

There is another effect that legislation of the right hon. Gentleman is having, and that is that this enormously increased expenditure is a splendid fillip to Tariff Reform. If he really wants to thoroughly unite every shade of opinion amongst his opponents the right hon. Gentleman cannot do better than increase the expenditure of the country, because it will become more and more evident that the only way of fairly obtaining revenue to meet the charges put upon the country is by Tariff Reform. Several remedies have been suggested for this vast increase of national expenditure. I know it has been canvassed as to whether it would not be desirable to institute a Standing Committee on Estimates. I think the matter is worth consideration. It may possibly be useful; but, after all, it only touches the very fringe of the question: it will not make any great difference in itself to the amount that we annually spend. Some have suggested the rehabilitation of Consols, and putting them again on a 3 per cent. basis. Others have suggested that you should repay the Income Tax of holders of Consols. I am very doubtful whether any of these remedies would be efficient, but they are worth considering. We want something much more radical than these if we are to stop this constant flow of expenditure.

The Chancellor of the Exchequer must not be so ready to give in to the doctrines of his extreme supporters. Socialism discourages the production of wealth, and weakens the sense of civic responsibility. I wish the Chancellor of the Exchequer would not lend himself to the suggestions of increased expenditure so far as they come from his Socialistic supporters, and that altogether he would nerve himself, as is the absolutely necessary duty of the Chancellor of the Exchequer, to resist increased expenditure, and not to propose it to anything like the extent he does. "Ich bin der Geist der stets verneint"—I am the spirit who is constantly saying "No." "No" should be the motto of the Chancellor of the Exchequer, and he ought to be much more frequently disposed to say "No," and to stick to his guns. I am sorry to say that it is not merely in that respect that we want a change. I think we want a change in the personality of the Chancellor of the Exchequer himself. We do not want that rude ineptitude of the Limehouse speeches, that setting of class against class, that consulting of electioneering success rather than wise statesmanship, or the seeking for popularity rather than for sound finance. The right hon. Gentleman seems to forget that sound finance does not mix well with party politics. In the case of a private individual we usually measure his riches or prosperity by the margin he has between his income and expenditure, and by the reserve upon which he is able to fall back. Those are excellent tests for the nation, but in the hands of the present. Chancellor of the Exchequer I am afraid the national property has been very much in the position of an estate in the hands of a spendthrift. What we really want, and what the object of this Resolution is to bring about, is a complete change. I cannot urge that better than in the words of the late Sir Henry Campbell-Bannerman, who, speaking on the 1st March, 1905, said:— Our high expenditure. … is the fruit of the policy of His Majesty's Government, and it is by changing that policy, and by such means alone, that expenditure can be reduced.


I beg to second the Resolution. I think that the indifferent benches opposite are characteristic of the attitude towards finance of the Liberal party at the present time. The Liberal party got into office largely upon a policy of retrenchment. They have been in office six years, and they have largely increased the national expenditure, as my hon. Friend has shown, and they have largely reduced the repayment of the debt. Now that a Motion on finance is made in a very able speech by my hon. Friend there are exactly six Members on the Government Benches. It seems to me that the motto of hon. Members is, especially in view of recent by-elections:— Let us eat, drink, and be merry, for to-morrow we die. After the very able and exhaustive speech of my hon. Friend, I propose to be quite brief. I think he has absolutely proved his point. He has proved conclusively that the Liberal party came in on a cry of retrenchment. Hon. Members know very well that, in 1906, that after the Chinese Slavery fraud the thing that gave most votes to the other side was the cry of retrenchment. I can remember in my own Constituency every hoarding being placarded with geometrical figures showing the enormous amount of extra taxes that the Conservative Government had put on the people. [An HON. MEMBER: "Hear, hear."] Yes, and the people were told that if they returned a Liberal Government there would be retrenchment in the future. My hon. Friend has referred to a Debate on the Budget in the year 1904. I remember that Debate very well. He has quoted the late Sir Henry Campbell-Bannerman. Let me quote the present Prime Minister, who said, in that Debate, on 16th May, 1904:— The sum and substance of the Debate which has taken place in the last two nights may, I think, be fairly expressed with slight modification of language, in the closing words of a Resolution once passed by this House: 'That our expenditure has increased, is increasing, and ought to be diminished.' That was what the present Prime Minister said in May, 1904. He could use exactly the same language now. Not only has our expenditure increased, and is increasing, but it is a fact the increase has been at a much greater ratio since the party opposite came into power. Take what the present First Lord of the Admiralty said in the same Debate:— Their expenditure was advancing by 'leaps and bounds,' and had, in fact, acquired a momentum of its own. Like an estate in the hands of a spendthrift, our financial position was steadily deteriorating, and our finances were becoming more and more demoralised. He had done his best to bring forward this question of economy during the time he had been in the House. The right hon. Gentleman, although he had been but a short time in the House then, had been for most of that time a supporter of the Government. He has since then become a Member of the Government. Has he brought the question of economy before the House of Commons since he became a Member of the present Government. Far from it. He has been a partner in the firm which has so largely increased the expenditure in the last six years. Let us see what precisely has happened. My hon. Friend has given the figures. This party of retrenchment have increased the national expenditure by over £30,000,000 a year. It is no good saying their object is a good object. It does not matter what the object is. They came into office with the absolute cry of retrenchment in every Department. They have reduced the redemption of National Debt by £3,500,000. That is all the more serious for this reason. My hon. Friend admitted that in the first few years they were in office they paid more National Debt than the Unionists had done before. Let me point out that when the Unionists were in power the price of Consols was very high, buying of stock was very expensive and an uneconomic process—£100 in cash only cancelled about £90 of stock. At the present time £100 of cash would be worth £110 or £120 of stock, but really the figure does not matter. Now, when they might be cancelling debt to the greatest advantage to the nation, the Government have deliberately raided the Sinking Fund. That is not all. The credit of the country has gone down.

My hon. Friend has mentioned the price of Consols. The other day the Chancellor of the Exchequer, speaking in reply to my right hon. Friend the Leader of the Opposition, said, "Oh, yes, but the securities of leading nations have gone down also." Have they gone down to the same extent? Consols, on the admission of the Chancellor of the Exchequer, have fallen 12 points in the last six years. Take German Imperial Three per Cents.; they have only fallen 6 points. Take French Rentes; they have only fallen 4½ points. Take Japanes Four and a Half per Cents.; they have only fallen ¾ of a point. In many of these cases, especially in the case of Japan, there has been a foreign war, yet in Japan after a foreign war their 4½ per cent. stock was only three-quarters of a point down, while our Consols in times of peace have fallen 12 points. Take the question which appeals to most hon. Members opposite, the driving of capital abroad. That seems to them to be an excellent thing. I do not know myself how, if capital is driven abroad and employs foreign labour, it is going to benefit our people in this country. At all events, I submit it is far more beneficial to have the capital invested at home. At all events, it is true that we see this process of investing abroad going on, and it is a pretty clear sign that the investor believes his money is safer abroad than at home, and that in itself is a condemnation of the present Government. In 1907, according to an estimate made by the "Statist," which is, I believe, a Free Trade paper, of British capital invested, 31.7 per cent. was invested abroad, and the proportion invested at home had fallen from 31.7 to 15.3, which fact alone shows that the plans of the present Government is to drive investors abroad.

Take another case! Look at the insecurity! Look at the failures of banks, like the Birkbeck Bank. What is it that was the cause of that failure. Not reckless finance. It was the depreciation of what was considered to be gilt-edged securities. One of the leading managers of the bank, when asked his opinion as to the real reason of the failure, did not hesitate to say it was Lloyd Georgian finance. I think, in these circumstances, we have some right to question the whole finance of the present Government.

I am not quite prepared to admit that these disastrous results have of themselves entirely followed during the whole period in which the party opposite have been in office, but rather since the present Chancellor of the Exchequer came into office. In the first two years, I agree, there was retrenchment in some respects: there was too much retrenchment. They cut down the Shipbuilding Vote in a manner which simply meant greater expenditure later on. It is quite true also they paid off a lot of debt and did not raid the Sinking Fund in the first two years. Also the greater drop in Consols dates not from the beginning of the Government, but from the year 1908. There was a drop between 1906 and 1908, but there was a recovery. The causes which the Chancellor alleged as the reason for the depreciation in Consols had worked themselves out by 1908. There had been a recovery between August, 1907, and the spring of 1908 as between 82⅞ and 89¾, but then something occurred to arrest this recovery and to cause a further fall of Consols and a further depreciation in credit, and without in any way being personal, we can only attribute that to the conduct of affairs by the present Chancellor of the Exchequer. I think I can sum up the position in a single sentence, which may sound paradoxical but which is perfectly true, namely, that the present Chancellor of the Exchequer is not a Chancellor of the Exchequer at all.

I speak with some little experience, because I was for five years private secretary to one of the greatest of modern Chancellors of the Exchequer, I mean the present Lord St. Aldwyn, formerly Sir Michael Hicks-Beach. I know in those days, and in the case of every Chancellor of the Exchequer up to the present one, the duty of the Chancellor of the Exchequer was to husband the nation's resources, to take every care of the nation's credit, to resist the expensive scheme of his colleagues, and never to propose any expenditure himself. The present Chancellor of the Exchequer is exactly the opposite. He is the chief spendthrift of them all. All these expensive schemes, be they good or bad, I will not go into that matter now, emanate from the Chancellor of the Exchequer, and we are in this position, that whereas the Treasury used to be the watchdog of the Departments, the Treasury has now become the principal spending department in the country. That is the great difficulty, and that is the reason of the fall in our credit and the extravagance that has occurred in the last four years. Not only that, but the present Chancellor of the Exchequer invented a new system of taxation which has done infinite harm to the credit of the country. His system is that you should tax a man, not according to his ability to pay, but according to the character of the property he happens to possess. That is an entirely new financial doctrine. Let me give an example. There are certain forms of property which the Chancellor of the Exchequer has a great dislike for. He appears to think it is absolutely wicked to be a landlord, and even criminal to be in the licensed trade. If you are a land owner or happen to be in the licensed trade, you are to have special taxes put upon you, not because you are richer than other people but because you possess that particular kind of property. The Chancellor of the Exchequer openly avowed that that was his policy. I remember his speech on 23rd March, 1910, in which he spoke of 2,500 landlords who owned the greater part of the land of this country, although I believe he was speaking inaccurately in that respect. Somebody in the audience shouted out, "Tax them out of existence," and the right hon. Gentleman replied, "Well, I have made a start." That may be a good thing or a bad thing, but it is not finance, and that is not the business of a Chancellor of the Exchequer. Take his tax on mineral royalties. That is nothing more nor less than a second Income Tax. I have a relation with an income largely derived from mining royalties, and this particular person pays in respect of his income from that source a double Income Tax. Next to him there is a person who is ten times richer than he is, and he only pays a single tax. That is not justice, and that sort of taxation has done an enormous amount of harm in the direction of destroying the credit of this country.

Take the liquor trade and their treatment in the Budget of 1909. We all know that the Budget, or that particular part of it, was deliberately introduced to tack on to the Finance Act a part of the Licensing Bill which was thrown out by the House of Lords the year before. I know there were certain Members of the Government who did not care in the least whether the House of Lords threw out the Licensing Bill or not, in fact, the Lord Advocate said he was Jack easy about it, because the Chancellor of the Exchequer would put on a swingeing Licensing Duty and accomplish the same result. That is not finance, and that was not the duty of the Chancellor of the Exchequer. I charge the Government with having deliberately, on a great many occasions, sacrificed the finances of the country to the party exigencies of the moment. Let me give one or two examples. There is the well-known examples of the Government about two years ago deliberately trying to create financial chaos. It was predicted by the Government that if the House of Lords threw out the Budget there would be financial chaos. The chaos did not come off; people paid the taxes all the same, and only 1 per cent. of the duties on tea, sugar, and spirits remained unpaid when the Budget was reintroduced in May, 1910. As the Government could not create financial chaos in that way, they deliberately created it by refusing to collect the Income Tax, thereby inflicting heavy financial loss on the country. The Chancellor of the Exchequer admitted that £350,000,000 was absolutely lost in the shape of Income Tax to the country. But that was not all. A great deal of Income Tax is collected at the source by joint-stock companies and banks who hold the shares. This money was deducted, and it was paid; and what did the Government do with it? They put it into a Suspense Account at the Bank of England, and would not use it themselves; and then they absolutely borowed money from the Bank of England in order to pay interest on their own money. That was done simply for a political object.

We all remember quite well a year ago, just before the 31st March, the Government asked the big railway companies and others not to pay their Income Tax until after the close of the financial year, simply because anything that was paid before the 31st March would have gone to swell the realised surplus which by law goes to the Old Sinking Fund for the payment of debt. The Government wanted that money carried over until the next year in order that they might have more money to spend. If the directors of a public company kept the funds of the shareholders in that way I think there would be a public inquiry, and they would very likely find themselves in the dock. This kind of thing has been allowed to go on openly under the regime of the present Chancellor of the Exchequer. Take the postponement of the Budget. I have not the least idea why the Budget was postponed last year to nearly the end of the year, when it was discussed under the guillotine with no possibility of discussion whatever. No doubt some party bargain was being driven with the Irish Members. Nothing does more harm to the financial position of the country or affects more the conduct of commerce than the postponement of the Budget in the way it was postponed last year. I think all our finances have suffered in consequence of the way the Government have carried on the business of the country during the last few years. My hon. Friend spoke about future commitments, and that is a very serious question. What is our position? The Chancellor of the Exchequer told us in his Budget speech last year that we were living in very prosperous times, that our income was growing and was likely to be at the highest point during the present year, but at the same time we are living right up to our income with no margin. With the Income Tax at 1s. 2d. in the £ we are piling up future commitments to an unknown amount.

My hon. Friend mentioned old age pensions. I am not going into the merits of old age pensions for one moment, but really their finance is one of the most ridiculous things in financial history. On the 7th May, 1908, the Prime Minister estimated old age pensions would cost less than £6,000,000 a year, but on the 15th June, 1908, a month later, the Chancellor of the Exchequer said the ultimate charge would be £7,500,000, or an increase of £1,500,000 in one month. Last year we actually found the real cost of old age pensions was £12,415,000. A financial expert in the "Times" said that old age pensions in thirty years time would probably amount to £54,000,000 per annum, and that is a nice little legacy which the Chancellor of the Exchequer is leaving for his successors in office. The finance of the Insurance Act has been so skilfully arranged that the Chancellor of the Exchequer will find himself as little money as possible during the time he is in office, and he will leave as much as can be for his successors to find hereafter. In the first place, the State does not pay 2d. a week, but only 2–9ths of the benefit, and that puts off the payment of any share of invalidity benefits for two years. Then there is the reserve values for 18½ years of which the State pays 2–9ths, and these are very largely reduced in order that the societies may pay off the imaginary debt of £66,000,000 in the very short space of 18½ years. What is the result? The Insurance Act looks very cheap when first it is brought into operation, and it remains comparatively cheap during the short time remaining that the present Chancellor of the Exchequer is likely to be in office, but after that the cost mounts up very rapidly. It is estimated that in next year's Budget it will only cost £1,388,000, and in the year after £3,677,000. After that there is a tremendous rise year after year, until we come to 18½ years, and then there is another sudden jump of no less than £1,600,000, and it is estimated that In thirty years the cost will come to about £40,000,000. That is a legacy left by the present Chancellor of the Exchequer to his successors in office.

The Chancellor of the Exchequer is always telling us of the great revenue he is going to get from the Land Taxes. Can we believe his Estimates? Taking three taxes only—the Increment Value Duty, the Undeveloped Land Duty, and the Reversion Duty—he estimated that in June, 1910, he would get £255,000 for the coming year. What has he got? The figures are really most remarkable. Up to 7th November, 1011, the Increment Value Duty only brought in £1,950. Up to the same date the Undeveloped Land Duty had only brought in £13,900, and the Reversion Duty £7,000. Altogether, in eighteen months these wonderful Land Taxes which were to bring in £255,000 had only brought in £22,850. Here is the cost on the other side for one year. One thousand one hundred and fifty-four valuers, drawing salaries amounting to £260,000, eighteen assistants drawing salaries amounting to £2,880, 128 draughts-men, drawing salaries amounting to £12,600, and 1,001 clerks, drawing salaries amounting to £47,900. The total cost comes to £323,380, or, adding postage, rent of offices, and stationery, to £368,680. In other words, it has cost 25s. to collect every single shilling that has been brought in by the Land Taxes. These facts are quite sufficient to justify the Motion of my hon. Friend. I feel it is clearly proved the Government promised retrenchment and have never attempted to retrench. They have largely destroyed the credit of the country; they have added to the burdens of the people, and in a time of peace they have reduced the amount of money laid aside to pay off debt. For these reasons, I think it is high time there was a regular inquiry into the present course of our finance, and I beg to second the Resolution so ably moved by my hon. Friend.


The hon. Gentleman who moved the Resolution divided his indictment against the Government under three distinct heads. He stated there was part of that expenditure to which he and those for whom he spoke were opposed, and he then went on to say there were other items to which they did not object on principle, but to which they did object on account of the method and mode of procedure adopted by the Government. In the third place the hon. Gentleman said there were specific items of expenditure where he and his Friends were very stoutly opposed to the methods adopted by the Government. In the course of his interesting speech, he said the Government had been influenced by the Labour party. We do not question for a moment that in certain directions the Government has entered upon new responsibilities, and have in some measure been influenced by the Labour party in this House and in the country. It is important to note, however, that whilst, as the hon. Gentleman was careful to point out, he and his Friends were in favour of such expenditure the Labour party do not support the growing expenditure on our Navy and on our Army. Whilst the mover was careful to say he was not opposed in principle to old age pensions, the hon. Member who seconded said the finance of the Old Age Pensions Act was simply ridiculous. I imagine it is not doing hon. Members opposite and their party any justice to suggest that their serious complaint is not to the method of procedure, but to the fact that there has been placed upon the Statute Book an Old Age Pensions Act which is non-contributory, and which gives at least an instalment, though only an instalment, of that justice which is due to the aged veterans of toil and of industry in this country.


If the hon. Member refers to what I said I should like to say the statement which he has just made is a complete misrepresentation of anything I said.


I cannot be responsible for what the hon. Gentleman intended me to understand he said. I quoted his words. He said specifically that the finance of the Old Age Pensions Act was simply ridiculous.


What I simply pointed out was that these Estimates were all wrong, and that was the ridiculous part of it.


I have no objection to the hon. Gentleman correcting his statement, but I was very careful to note down the exact words. The hon. Gentleman is very much alarmed and concerned because of a prophecy by the financial expert of one of the leading newspapers, that within a certain number of years the total expenditure under this head will be 100 per cent. more than it is now. I think it is perfectly reasonable to assume in regard to the instalment that has been conceded by this House in the form of old age pensions, given at seventy years of age, even should the Opposition come into power they will find themselves so influenced by public opinion that they will have to make further concessions in the direction of dealing more fairly with the aged veterans of toil and industry in this country.

The hon. Gentleman made it clear that he and his party are very much concerned and alarmed about the high taxes—the Land Tax, the Income Tax, the Super-tax, and the Death Duties. But so far as we on these benches are concerned our position is well defined in this House and is well understood throughout the country. We not only commend the Government for having accepted certain social responsibilities, and for having spent a certain sum of money for the purposes of such beneficent Acts as the Old Age Pensions Act, but we say to the Government that, so far as your Death Duties and Land and other taxes are concerned, we not only approve of your line of policy and suggest that you ought to be courageous and go much further than you have attempted to do up to the present: we want you to go further in the same direction, and to take from those people who have what they possess to-day, as the result of the underpaid labour of the industrial toilers of this country, some measure of what has been withheld from them. And, so far as the Labour party is concerned, we will not rest satisfied with the present Land Taxes, we will demand an extension of the principle, and, as regards the Income Tax, the Super-tax, and the Death Duties, we submit to the Government that, in face of the fact the expenditure for social services must inevitably increase, we express the hope that they will not hesitate to take full advantage of these sources of revenue, to see that the burdens, so far as the overtaxed working classes of this country are concerned, are relieved.


I have listened with very great attention and interest to the speeches delivered by the hon. Members who moved and seconded this Resolution, and the criticism I desire to make is this, that when a statement is made as to the gross expenditure of this nation it is only presenting a partial picture if that statement is given without any reference to the growth of population, or to the social needs of the nation, or to the kind of expenditure that has taken place. My criticism is that the picture which was presented to-night by the two hon. Members was a picture lacking in these vital elements. I have not time to follow in detail the statements they made, but I want to show that the hon. Members did not give us a fair picture, or one which we can accept as accurate. The hon. Member suggested that the finance of the present Government was ruining the country, and that this was proved by the depreciation in Consols. He gave certain reasons for that depreciation. I will give one instance of his methods. He quoted the statement that one cause for the depreciation of Consols was the extension of the field of trustee securities. But then he went on to give us the date of the Trustees Act, and said the effect in depreciating Consols was expected only to be temporary, and that twelve years after the Act had been passed its influence would have ceased. But I want to point out to the House that the influence of broadening the field of investment has been a permanent, and not merely a passing, influence. It grows stronger every year. I will take another example. The hon. Member spoke of the enormous difference now in the total capital invested abroad and the total invested abroad under the Conservative Government. But he could not have been aware of the fact that the total so frequently referred to as "foreign investments" includes investments in colonial securities, and I was surprised to hear criticism of British money being used for promoting the industrial and economic efficiency of our Colonies.

The final criticism I desire to make is this. The hon. Members who introduced this Motion to the House, while avoiding inquiry into the question of the burdens placed upon this nation by the great increase in the expense of the Navy, have condemned the expenditure in promoting necessary social reforms. I will refer to old age pensions. I do not wish to do an injustice to the hon. Member, but he will forgive me for saying that his second intervention in the Debate did not entirely uphold the attitude he first took up with regard to old age pensions. On this subject the hon. Gentleman said it had been stated that in thirteen years' time our annual expenditure on old age pensions would be £24,000,000, and he condemned the Chancellor of the Exchequer for committing us to a future possible expenditure of £24,000,000 for old age pensions.




The hon. Member will perhaps forgive me for finishing my reference to his statement. He did say that he condemned these future commitments. He did not condemn this or any Government for having committed us to a great increase of expenditure upon the Army or the Navy in future years. Why did not the hon. Member do so? Because, he would reply, such expenditure is necessary for the defence of the nation. Our reply to this attack against being committed to this expenditure on old age pensions is that the expenditure is necessary in the interests of our aged poor. I put this further question to the hon. Member: if his own party had carried out its pledge, and had themselves introduced an old age pensions measure and carried it into law, how could they have done so without committing this nation to the future annual cost of old age pensions? Perhaps the hon. Member will say that the old age pensioners should themselves pay the pensions.


No, no.


Either the nation or the pensioners have to find the pensions. Therefore, because this Motion has given us this very partial and very prejudiced, and, I think, in its material particulars, its very inaccurate picture of the expenditure of the nation and of what it stands for, I venture to resist it.

10.0 P.M.


I can hardly congratulate the Government on the defence that has been made so far to the Motion which has been so admirably introduced by my hon. Friends below me. The hon. Member for Whitehaven (Mr. T. Richardson) has been perfectly candid. He has not attempted any defence whatever of the Motion, but has simply stated that those taxes which are such a burden to the whole community are a first instalment, and that so far as his party are concerned they are not satisfied with the Land Taxes as they at present stand. One has to consider what is really meant by Consols. Surely the price of Consols has always been regarded to some extent as the index of the national credit. I believe that, strictly speaking, the Government have no responsibility whatever for the price of Consols; the responsibility of the Government is to pay £2 10s. per cent. on the nominal value of the stock. They have no further responsibility of any kind, either to keep up the market or to try to regulate in any way the price of the stock. That is their responsibility. With that responsibility they have the right to deduct whatever they please from the dividends on Consols in the shape of taxation. Now we have taxation which has affected Consols—first, in the form of the Income Tax, which in the case of big incomes may amount to a deduction of 1s. 8d. in the £, or a reduction of 4s. on every £2 10s. Then you have also the heavy deduction in the shape of Death Duties, so that when the holder of Consols dies in some cases 10 per cent. is deducted, which in substance means that the Government deduct perhaps three or four years of the income That naturally tends to depreciate the value of the security, and without a doubt it has operated in that direction.

The Chancellor of the Exchequer attributed the present low price of Consols to what he called the widening of the range of trustee investments. He said that in 1888 there were a thousand millions of investments from which trustees could select their securities, and that since that date the range of these investments had been increased, so that now there is 2,500 millions. Of course, an enormous increase in the range of investments might, as has been very properly pointed out, have influenced the price of Consols for a considerable period of time, and it would divert money from our own national securities to the new securities which have been introduced for trustee investments. But if you look at the Colonial and Indian securities—in fact, if you look at every class of investment which is within the grasp of the British tax-gatherer—you find the same enormous depreciation. You would have thought that although Consols might have depreciated, Colonial and Indian securities would have appreciated. Instead of that, you find the same deplorable depreciation in every possible direction. In fact, the only securities that have shown any signs of steadiness at all are foreign government securities and foreign railways, in regard to which, where people are so disposed, they can altogether evade British taxation. I suggest that it is a matter of some importance to show that we should have a national security of fairly fixed value, which is fairly realisable, and which is subject to no violent fluctuations Consols have now been brought into greater competition, with the result that you get, a low rate of interest, with a very risky security, a security so risky that I do not think there is any other security in the market which shows a greater fluctuation. When you look at them from the point of view of what an investment a few years ago of £100 in Consols meant, you find that in 1897 they were 114, and if they were realised last December they were seventy-seven, which represents a loss of £37 of capital. During that period, if you had put by and saved the whole of the income you would receive from Consols, you would therefore have received £38 15s. of income in fifteen years, and lost £37 of capital. There is no doubt that the reason is that it is not something out of the range of the politician, but the whole reason of this depreciation is purely political. You have added to these burdens by the National Insurance Bill, which is equivalent to the creation of something like £500,000,000 of Consols. If you capitalise the contribution which the State has to make, it means an addition to the permanent debt of the country of something like £500,000,000. You can test it. It would have been a perfectly feasible transaction, when the Chancellor of the Exchequer introduced his Old Age Pensions Bill, to have suggested that Consols to the extent of £500,000,000 should have been created and deposited in the hands of the Old Age Pension Commissioners. The same thing applies to the National Insurance Bill. There you get a liability which is equivalent to a sum of from £200,000,000 to £300,000,000 looking a few years ahead, and probably a great deal more if you look any distance ahead. In these two figures alone you get an increase in the capital liabilities of the country which more than double the whole Consol debt. The Chancellor of the Exchequer has made a boast that he has reduced the national liabilities in the last six years by £60,000,000. What on earth is a reduction of £60,000,000 on one hand when you get an increase of £700,000,000 or £800,000,000 on the other? You have added enormously to the liabilities of the country, and it is, I believe, on that account alone that we see the present depression in all our markets.

Though every security which is within the reach of the Chancellor of the Exchequer has depreciated, yet when we look at those investments which are outside his reach, it is true we find some depreciation, but it is small in comparison. The figures were published recently, which are of some considerable interest, of the public issues of capital which were made last year. A total of £190,000,000 of capital was offered to the public in this country, of which £70,000,000 was for foreign governments and foreign railways, and hardly anything for any English industry—the great bulk was for the Colonies and other places abroad. It shows there is an anxious desire on the part of all who have anything to lose or anything at stake in the country, by any means, and at any cost, and at any risk, to escape the burden of taxation by carrying their investments out of the reach of our Chancellor. These are arguments, I know, which are laughed at by hon. Members opposite. They pay little or no attention to anything beyond their measure of social reform. No doubt one section is engrossed in social reform and another is very busily engaged in the promotion of all sorts of trusts and combines which are being constantly announced in the daily Press. We have a shipping trust, a ring which is not formed for the benefit of our people who seek to emigrate. The chief aim and object, I believe, is to put up prices. You have your chemical ring and your soap ring, and you have now a Portland cement ring, and the greatest trust of the lot is the new labour trust, a combination of the different groups of labour into one great combine, so as to enhance their interests to the detriment of every other interest in the country. If the affairs of the country are to be handed over to these various groups and rings, which are scratching one another's backs, a bad time is indeed before us. I much regret that no Member of the Cabinet has been present to listen to this Debate or to show the slightest interest in what has happened this evening, but surely the questions which have been debated are questions of vital consequence and vital interest to the country.


I think the House will realise that two and three-quarter hours are hardly sufficient to deal adequately with a question of this character, and that it should be relegated to a Tuesday evening is rather a commentary upon the attitude of the present House of Commons towards finance. The hon. Member (Mr. Richardson) stated the general case of the Labour party, which is that they welcome all taxation which does not fall directly upon labour. They make the rather wide assumption that labour cannot possibly feel any tax which it does not directly pay.


We know better than that.


If hon. Members know better than that, why do they adopt that policy in their speeches in this House? The hon. Member can only mean that he knows that super-taxation, in any form and whoever it may fall upon, must reduce the wages fund.




The hon. Member does not know that. I have no right to put opinions in the hon. Member's mouth. I will give it as my own view, and one which I think can be maintained, that super-taxation in any form must reduce opportunities for earning wages.


Not necessarily.


In the first place, because money which is withdrawn for taxation purposes and has to be spent even on such beneficial objects as old age pensions, is withdrawn from reproductive industry, which reduces the prospective wealth of the country from which the wage-earning power of future generations is to be satisfied, and secondly for the reason which has already been touched upon by the Mover and Seconder, the effect of super-taxation in any country is necessarily to drive the capital of that country abroad and out of the country of its origin. Therefore, for these two reasons, the wages fund is reduced. May I on that point say a word as to the effect of driving capital abroad? We are told that when capital is driven abroad it can only go abroad in the form of goods, manufactured products, and that consequently no evil results to labour, because those products must be the result of labour. I think that statement is open to qualification and argument, but for my part I am willing for the moment to admit that it is so, and that you can only export capital in the form of goods. Let us follow that out and see where it is that labour suffers. It is not so much the fact that a particular sum of capital has gone abroad, but it is that, having gone abroad, it is employing foreign industry, and what is important to the wage-earner in this country is not so much the actual expenditure of capital on which enterprise is founded as where the turnover which that capital induces takes place. That is where the labour of this country is suffering, and I have never yet heard any answer to that argument. In fact, it is not capable of being answered. It must be to the benefit of labour in a country that the turnover should take place in that country, and that the labour there should be thus employed.

Take the engineering industry, where, let us say, there is £100,000 capital invested. That £100,000 is the property of the citizens of this country if it is invested here. The turnover might be as much as £300,000 or £500,000 a year. I take that as a moderate estimate, for the sum might be very much greater. That at 5 per cent. would be £5,000, and the important thing to labour is not where the £100,000 goes, and not where the £5,000 interest is spent, but where the £300,000 or £500,000 turnover is used in constantly giving employment to labour. That is where labour suffers from this enormous export of capital. As to capital being driven abroad, we have heard arguments to-night, and we have heard them repeatedly, that it is an advantage for capital to go abroad from this country. I am quite prepared to admit that within certain limits, and if I may define these limits in two words I would do so in this way. So long as surplus capital is fairly attracted abroad by favourable opportunities for investment, that is a beneficent process for which we have only to express satisfaction. But when, instead of surplus capital being attracted abroad you have capital which is wanted in this country driven abroad, then it is an unmixed evil, and there is no hon. Member on the opposite side of the House who has any knowledge of the present business conditions existing in this country who will get up and tell the House of Commons that the industries of this country, such for instance as the great railways, can at this moment get the capital they require. [Several hon. Members indicated dissent.] Is there any business man in this House who will not tell me that the English railway companies have much more difficulty in getting capital to-day than they would have had five or six years ago?


I would ask the hon. Member if English railways cannot at the present moment borrow money by the issue of preference and debenture stock more easily and more cheaply than any railway companies in any Colony?


If asked that question I should answer it directly in the negative.


It is so.


My statement is not as to the parity between English and other railway companies at this moment, although I am perfectly prepared to enter into that, but that British railway companies cannot borrow money now on as good terms as they could five or six years ago.


There is no point in that.


The hon. Member would not say that if he were engaged in financial business.


I am.


I do not mean any disrespect to the hon. Member, but I am rather sorry if that is the principle on which the financial business is conducted. My point is a pretty good one. The statement of the Government is that the country is so prosperous that all this vast mass of surplus capital is available for foreign expenditure. If there is this immense surplus available through the great prosperity of the country, how is it that the railways find so much difficulty in getting it, and that it all goes abroad?


The rate of interest has risen.


I do not want to labour it. I think that that point is fairly made good. It is a matter of common knowledge. The hon. Member for Whitehaven (Mr. T. Richardson) devoted the whole of his speech to an attempt to convict hon. Members on this side of the House of using expressions derogatory to old age pensions. I do not think that he went beyond that. However much I may approve of the principle of old age pensions or any other beneficent social reform, I do not imagine that the subject is so sacred that it is heresy to criticise the method by which the money is raised. Nor is it wrong, nor am I afraid, to ask the Chancellor of the Exchequer whether it was not his duty before embarking on any expenditure, however beneficent, to consider its effect upon the general finances of the country, and whether it can be afforded? It is considered apparently by hon. Gentlemen opposite to be a complete answer to any charge of extravagance if they are able to ask in return: "Don't you approve of the manner in which this money is going to be spent?"

That is the whole answer. Would hon. Gentlemen apply that to their own business, to their own daily personal expenditure? Would they consider themselves justified in spending anything, whether they could afford it or not, because the object is a desirable one? Surely the statement has only to be made to show its absurdity. But that is what the defence amounts to. This House is entitled, and not only is it entitled, but it is its bounden duty to look into the expenditure of this country, and, above all, this House would fail in its duty to the recipients of old age pensions if it did not grip the matter from the point of view of providing money both now and in the future, as well as from the point of view of paying it out and taking credit for having passed a beneficent Act, as though the money was to come like manna from Heaven. The Chancellor of the Exchequer himself, in a recent speech, stated to the country that within a term of years the total expenditure on old age pensions and national insurance would amount to no less a sum than £42,000,000 annually—that is, of course, including the contributions, amounting to about £22,000,000 out of the £42,000,000 paid by the employers and employed. I do not think it makes very much difference to the employer or employed whether he pays his contribution to the Exchequer, in the form of a tax, or whether he pays it to the National Insurance Commissioners, in the form of a contribution. From either point of view it has to be found. There is one legitimate reduction, and that is the amount of money already devoted to the purpose, which it is impossible accurately to calculate now. Six millions of people are now making provision, and sixteen millions will make provision in the future.

Therefore, if you take something like that proportion you reduce the £42,000,000 of new burden—I do not use the word in any offensive sense—for old age pensions and national insurance to something like £35,000,000. That is a matter which demands the most careful consideration of the House. The methods of taxation adopted by the Chancellor of the Exchequer do not, to my mind, hold out much prospect that these demands can be met, supposing the strain upon all forms of taxable property is such as will jeopardise the wages fund upon which the people of this country have to depend. It is clearly the duty of this or of any other assembly to realise that the first essential of the working population of this country is the opportunity of earning wages. That is the desideratum of their existence, and compared with that old age pensions and national insurance are a luxury. It is our duty to see, in raising the money for old age pensions and national insurance, that we do nothing to impair the opportunity which they have during their working lives of earning the wages upon which their existence and that of the whole country depend. The only defence we have to deal with is that made by the Chancellor of the Exchequer in a recent speech which he delivered in the City, and in which he referred to the nature of the expenditure.

The first item I think was naval expenditure, and the Chancellor of the Exchequer asked if we had any criticism upon that I point. I have criticism to make on the naval expenditure. This is what the Chancellor of the Exchequer said:— The Navy has gone up by seven and three-quarter millions, and first of all you will remember it came down. Later on in the same speech he said:— Naval expenditure had gone down for two or three years, and then came a great scare and up it went, and it has gone up since then. Do not those words arouse any recollections with the feeling of Members in this House. Why is it that the expenditure has gone up. Is it not simply because the Government, notwithstanding the warning which they had received from their predecessors, unduly reduced the expenditure on the Navy in the first two years in which they were in office. That was an encouragement to other Powers, of which they were not slow to take advantage. [An HON. MEMBER: "You reduced the expenditure also."] I was just coming to that. When we reduced the naval expenditure we had an ample margin. Notwithstanding our reduction, I have the most lively recollection when on the opposite side of undergoing the most violent attacks from Lord Robertson, who was the hon. Member for Dundee, because the reduction was insufficient, and we were accused of reckless extravagance during the last year we were in office, and our expenditure on building was contrasted with the expenditure on building programmes of other countries, and we were accused of wholly unnecessary expenditure upon naval armaments. We maintain, and I do maintain, that that reduction was a reasonable reduction, permissible because we then had an ample and sufficient margin on the two-Power standard. When we left office a certain standard of naval strength to maintain was laid down for our successors. The Government departed from that, and this immense expenditure to which we are now committed is very largely due to the attempt then made, in spite of warnings given to them at that time, by the Government to reduce naval expenditure below its proper and reasonable limits in regard to the proper requirements of this country. That is the position and, adopting the words of the Chancellor of the Exchequer, it is that penny wise and pound foolish policy which is largely responsible for our present commitments in that direction. The Chancellor of the Exchequer proceeded to refer to a speech which had been made by my right hon. Friend the Leader of the Opposition in regard to the cost of the Land Taxes. I have not time to deal fully with the speech, but a considerable proportion of it has already been answered by my hon. Friends who moved and seconded this Motion. I must, however, refer to one statement, because it is current on the other side of the House, and which was repeated by the Chancellor of the Exchequer, and that is that a large proportion of the expenditure upon the collection of the Land Taxes and on the valuation has been recovered through the increased yield of the Death Duties due to the valuation. That statement is frequently made, and I am sure is believed in. I think if hon. Gentlemen will allow me to quote a statement made by the Chancellor of the Exchequer in October, 1909, before the Budget was passed, they will see that that claim has really no foundation in fact. The Chancellor of the Exchequer, in October, 1909, had already, under the powers which he possessed under the Finance Act of 1894, when Sir William Harcourt imposed the Death Duties, created a new valuation department for the purpose of valuing what he calls suburban land. This was the language which he then used, and I am quoting from the OFFICIAL REPORT of 29th October, 1909:— The increase in the Death Duties"— That is the increase in the Death Duties which he had already obtained in 1909— ….is attributable partly to the very Clause pointed out by the Prime Minister, namely, the improvement already effected in valuation. One of the first things we did this year was to reorganise the Valuation Department.….Land which has been passed as agricultural laud we have discovered is valuable building land, and that has made a difference in the Death Duties, and a very substantial portion of the £1,300,000 is attributable to the fact that we have got an efficient valuation department."—[OFFICIAL REPORT, 29th October, 1909, col. 1361.] In October, 1909, according to his own statement, the Chancellor of the Exchequer had already got an efficient valuation department, and had already obtained the particular valuation which he now claims he has only got through the Land Taxes of the Budget passed a year later. Surely that is sufficient to condemn excuses of that character. I have some little knowledge of the working of the Land Taxes and Death Duties, and I say without hesitation that, so far as the new valuation for Land Taxes is concerned, it has had the effect of diminishing rather than of increasing the Death Duties. I quoted the other day in the public Press an instance, one out of many which have come to my knowledge, where the valuation officials have actually reduced the figures presented to them by executors and have accepted lower figures as to the value of estates—no doubt with the object of getting Increment Value Duty. [Several HON. MEMBERS: "Oh!"] I do not know what other object there can be.


The impartiality of the Department.


I admit that it requires a little justification. Unfortunately one of the results of this taxation, and particularly of the Land Taxing Clauses of the Budget, has been to degrade the position of the Revenue Department of the State in the mind of the public. The Revenue Department used to be regarded as impartial. Executors and their solicitors were able to go to the Department and always counted on obtaining impartial advice and a fair and proper explanation of the meaning of an Act of Parliament. That is no longer their position. A new spirit has been introduced at the Revenue Department, and, unfortunately—and I think it is a matter of far-reaching evil arising out of this method of finance—the confidence which existed between business men and the taxing department is largely shattered. Unless these methods are altered and the revenue is administered in the spirit in which it was administered before the present Chancellor of the Exchequer came into office, the result on the revenue and on the business community will be of a most serious character. It is very difficult to deal with a subject of this magnitude in the time at our disposal and in the time the hon. Gentleman has to reply, and I am aware that the case I have presented is very incomplete. But I am sure that this is a matter in regard to which in the course of the next year or two the Debates will be of much greater length. I do not think as time advances and as the country gains experience of the consequences of the finance of the present Government, the character of the Debates will be more pleasant to hon. Members opposite than has been the case on the present occasion.


I am thankful to the hon. and gallant Gentleman for having given me time to reply, and may I also express my entire agreement with the last sentences that he uttered. The topics that have been raised to-night are of far greater interest and importance than can be dealt with in even a few hours' Debate. I can assure him and hon. Gentlemen on that side of the House that hon. Gentlemen on this side of the House are as anxious as hon. Gentlemen on the opposite side of the House that these matters should be dealt with at greater length in subsequent Sessions. I am also asked to say that the Chancellor of the Exchequer very greatly regrets his absence from, this Debate. I think his regret will be emphasised by the knowledge that attacks have been made upon his personality. On the other hand, I think the whole House will agree that, at least on this single night, the duty of the Chancellor of the Exchequer is in another place. No one regrets his absence more than I do.

I have been listening during the whole Debate for information and suggestions in connection with my new office, for the ensuring of economy in national affairs, and during the Debate I have only received two suggestions from hon. Gentlemen on the other side. [An HON. MEMBER: "From whom?"] One was a suggestion that we should not have passed payment of Members, which accounts for one seven hundred and twentieth part of the national expenditure, and the second was a suggestion in connection with land valuation. I hope I shall be able to show in this latter case that it is more than repaying all the Government expenditure upon it.

On the general question I should like to submit to the House that I entirely agree with the various suggestions made by hon. Members opposite this afternoon in the discussion on the Supplementary Estimates that this question of national expenditure should be considered as a business proposition. In submitting the increases which have been made by the Liberal Government, I should like to ask hon. Gentlemen opposite how far they have tried to prevent or to assist these increases, and how far they will do either in the future? If the expenditure under the various Military and other Loan Acts be added to the expenditure chargeable against revenue, and if the Local Taxation Grants, and money provided for revenue for the reduction of debt be excluded, the result is to show that for 1911–12 the net increase of expenditure over 1905 amounts to £29,000,000. The charge on interest on debt has been diminished by £1,400,000, so the real increase on the other heads of expenditure has been about £30,500,000. Let me give these various items: First, there is an increase in expenditure on the Army and Navy of £4,800,000. Do hon. Gentlemen opposite who promote this Motion object to that item of expenditure? The only influence I have known that they have exercised in the country has been to attack us frequently, and sometimes in concentrated efforts for not proposing greater expenditure on the Navy. "We want eight, and we won't wait." Schemes in the rich region of fantasy were put forward which would have increased that additional £4,000,000 to £14,000,000, or even £40,000,000. The next item in this increase is nearly £3,000,000 on education, almost entirely automatic votes due to the increase of population. Only last week the Chancellor of the Exchequer had to stand at this box resisting demands for greater Grants for national education from hon. Members opposite in order to relieve the rates. How can they now get up and say that item is one in which there ought to be greater economy so far as the National Exchequer is concerned. The next item is £12,400,000 for old age pensions. I had the honour of being on this bench during the time the Old Age Pensions Act was being passed, and what was the policy of hon. Gentlemen opposite? It was to make a series of impossible demands for increasing the old age pensions vote, and then in the subsequent elections to go down to the country and say that we were refusing pensions to various classes of persons. I remember a man in the subsequent election, a convinced Liberal, who refused to vote for me any longer on the ground that he had seen in print that the Conservatives supported the removal of the pauper disqualification for old age pensions, and that the Liberals were opposed to it. Of course you may make an Estimate such as was mentioned of £6,000,000 for a certain matter; but if, after making it, you are continually pressed for concessions and have to give concessions, that Estimate must of necessity go up. At the elections the Conservatives stated in widespread literature, that we were refusing to allow paupers to have old age pensions; now they criticise the plan because the expenditure has gone up. It has gone up by nearly £2,000,000 by the removal of the pauper disqualification, and has incidentally made a saving upon the rates of £1,500,000 to the advantage of the ratepayers and the taxpayers of the country.

The next item which makes up the increased expenditure is an item of nearly £5,000,000 on the Post Office. Owing to our increasing trade as the Chancellor of the Exchequer has already pointed out that has been largely remunerative expenditure, of which nearly £4,000,000 has come back in increased revenue to the Post Office. Does the hon. Member opposite object to that?


I said I approved of it.


I am trying to find out what item it is the hon. Gentleman disapproves of. In the other services, as they are classed, there is an increase of something like £5,500,000. What are the items? The most important is £1,200,000 for the Development Fund and Road Board, and during the whole of yesterday hon. Gentlemen opposite got up one after the other thanking my right hon. Friend the President of the Board of Agriculture for the Grants that have been made by the Development Commission, and their only criticism was that the amount was not larger. The next item is Labour Exchanges, £350,000 approved by hon. Gentlemen opposite as a non-controversial measure and not opposed by them in the House of Commons. The next item is Congested Districts Board for Ireland and Land Purchase for Ireland, automatic increases both for similar amount. Then there is Coronation and similar expenses, and I do not believe that any of these are strongly objected to by hon. Gentlemen opposite. The only item to which anyone can take exception is £840,000 increase in the Revenue Department, partly from the necessity of getting in the increased taxes and partly in connection with a subject so dear to the hearts of hon. Members opposite, the continuance of land valuation. Therefore, I think I have a right to say all this paraphernalia of lack of economy, except the last items I have mentioned, are all increases which hon. Gentlemen opposite themselves have only been too anxious to increase.

Now as to the new commitments under the Insurance Act. I will ask hon. Members to recall the debates on the Insurance Act and to refresh their memories with what has been said since by hon. Gentlemen opposite at by-elections concerning the Insurance Act. I would like to pay a particular tribute to the hon. Member for East Worcestershire (Mr. Austen Chamberlain), a distinguished predecessor of mine in office, who in those Debates again and again damped down the energy of his own party in their efforts to demand fresh expenditure on the Insurance Act, and told them such things were impossible. What was the general action of hon. Gentlemen opposite? They were always demanding that more money should be spent on the Insurance Act, and they were always trying to get credit for their party and discredit for the Government, because they were not able to spend more. What did they say at the by-elections? That there was not enough money for the Post Office contributors, the doctors, the reserve values for the married women, or to prevent this horrible tax being imposed on a contributory basis on the working people of this country. All the effect of their argument at by-elections has been to make the working people revolt against a contributory system as intolerable and in the direction of throwing the whole cost of the £11,000,000 which the working people are called upon to pay on to the National Exchequer. Under these circumstances we are asked to accept a criticism demanding greater economy in future commitments.

One word about the special subject of land valuation. Hon. Members know that the land valuation from the beginning was very much in the nature of a capital expenditure which both the Chancellor of the Exchequer and myself in repeated Debates demonstrated would thoroughly repay itself in the future. If hon. Members would only consider what the effect of the Increment Tax would have been if the datum line had been established 100 years ago they would realise how many millions would be now coming into the Exchequer without doing any injustice to anyone. The Chancellor of the Exchequer made another claim. He said that not only would the land valuation ultimately repay itself in Increment and Undeveloped Land Duty, but that it would repay itself on the Death Duties. No less than 54,000 cases dealing with real property have been considered by the staff of the valuation department, and the result of that examination has been to raise the accepted capital value of those estates from £113,000,000 to £120,500,000, an increase of £7,500,000 on the declared value, or nearly 7 per cent. upon the original estates, showing an increase to the Exchequer of £580,000. Before the new valuation was established the average increase was something like 3 per cent., but since the valuation the increase has been something like 7 per cent. Thus there is an additional increase through the work of the special valuation department of something like £330,000, and it may be expected that the total increase will be more than the whole expense incurred on the original valuation. I think hon. Gentlemen will agree with me that that is a good business proposition. One other point was raised by the Seconder of the Resolution. He said we made many assertions of economy, and had attacked the Conservatives for not having economised, whereas the Conservatives had produced economy in their time, and our assertions had all been disproved in our time. Let me contrast their expenditure and ours. Between 1895–6 and 1905–6 the Unionists' expenditure, outside the expenditure of the war, increased by over £40,000,000. The Liberal expenditure in the six years we have been in power has been increased by £30,000,000. What are the items? The Unionist increase in the Army and Navy was £26,000,000. The Liberal increase has been £5,000,000. The Unionist increase on Education was £6,000,000. The Liberal increase has been £3,000,000. The increase in the Post Office in the ten years of Tory rule was £5,000,000, due, I suppose, to expanding trade; and the same increase of £5,000,000 was in the Liberal six years due to expansion of trade. The increase for other services in the Conservative case was £3,000,000, and in ours £5,000,000. The balance is represented by old age pensions, which the Unionists promised and we gave. The Unionist expenditure was nil, and our expenditure has been £12,000,000. The redemption by one political party of a promise out of which the old people had been denied, and which had practically become a scandal, makes not only for the popularity of a particular Government, but also for the redemption of the whole of Parliamentary Government in its position among the poorer clases of the community. One last word as to the charge of reckless expenditure brought by the hon. Member. No Government in the history of this world has taken more care to pay off debt than the present Ministry, and no Government that has ever existed in this country has ever paid off anything approaching what the present Government has done. Apart from the price of Consols, no Government has ever given so much capital money to redeem debt as this Government. An average of £11,000,000 a year has been put aside during six years in order to pay off the debt of this country. The debt of this country before the South African war amounted to £628,000,000. The amount that was added by the war, and which possibly might have been saved with wiser statesmanship before, was £159,000,000. If that war had not been waged, and if the Government, instead of spending money on war had reduced the debt, as we have done ever since the war by £11,000,000 a year, the National Debt now would be well under £500,000,000. One last word. If you wish economy, consider what makes for war, and consider also the advisability of supporting the Government in social reform when they are trying to put a

Division No. 21.] AYES. [11.0 p.m.
Agg-Gardner, James Tynte Fisher, Rt. Hon. W. Hayes Mills, Hon. Charles Thomas
Aitken, Sir William Max Fletcher, John Samuel (Hampstead) Morrison-Bell, Capt. E. F. (Ashburton)
Amery, L. C. M. S. Forster, Henry William Morrison-Bell, Major A. C. (Honiton)
Anson, Rt. Hon. Sir William R. Foster, Philip Staveley Mount, William Arthur
Archer-Shee, Major Martin Gardner, Ernest Neville, Reginald J. N.
Astor, Waldorf Gibbs, G. A. Newdegate, F. A.
Bagot, Lieut.-Colonel J. Gilmour, Captain John Newman, John R. P.
Baker, Sir Randolf L. (Dorset, N.) Goldman, C. S. Newton, Harry Kottingham
Balcarres, Lord Goldsmith, Frank Nicholson, William G. (Petersfield)
Banbury, Sir Frederick George Gordon, John (Londonderry, South) Nield, Herbert
Banner, John S. Harmood- Goulding, Edward Alfred O'Neill, Hon. A. E. B. (Antrim, Mid)
Baring, Maj. Hon. Guy V. (Winchester) Greene, Walter Raymond Orde-Powlett, Hon. W. G. A.
Barlow, Montagu (Salford, South) Gretton, John Ormsby-Gore, Hon. William
Barnston, H. Guinness, Hon. Walter Edward Paget, Almeric Hugh
Bathurst, Charles (Wilton) Gwynne, R. S. (Sussex, Eastbourne) Parkes, Ebenezer
Bathurst, Hon. Allen B. (Glouc. E.) Haddock, George Bahr Peel, Capt. R. F. (Woodbridge)
Beckett, Hon. Gervase Hall, Fred (Dulwich) Peto, Basil Edward
Benn, Arthur Shirley (Plymouth) Hall, Marshall (E. Toxteth) Pollock, Ernest Murray
Bennett-Goldney, Francis Hambro, Angus Valdemar Pretyman, Ernest George
Eentinck, Lord H. Cavendish Hamersley, Alfred St. George Quilter, Sir William Eley C.
Beresford, Lord C. Hardy, Rt. Hon. Laurence Rawson, Col. Richard H.
Bigland, Alfred Harrison-Broadley, H. B. Remnant, James Farquharson
Bird, Alfred Helmsley, Viscount Roberts, S. (Sheffield, Ecclesall)
Boles, Lieut.-Col. Dennis Fortescue Henderson, Major H. (Berks, Abingdon) Rolleston, Sir John
Boscawen, Sir Arthur S. T. Griffith- Herbert, Hon. A. (Somerset, S.) Royds, Edmund
Boyle, W. L. (Norfolk, Mid) Hickman, Colonel T. E. Rutherford, Watson (L'pool, W. Derby)
Boyton, J. Hill, Sir Clement Salter, Arthur Clavell
Brassey, Leonard Campbell Hills, J. W. Samuel, Sir Harry (Norwood)
Bridgeman, W. Clive Hill-Wood, Samuel Sanders, Robert A.
Burdett-Coutts, W. Hohler, G. F. Sanderson, Lancelot
Burgoyne, A. H. Hope, Harry (Bute) Sandys, G. J. (Somerset, Wells)
Burn, Colonel C. R. Hope, James Fitzalan (Sheffield) Scott, Sir S. (Marylebone, W.)
Butcher, J. G. (York) Horner, Andrew Long Smith, Harold (Warrington)
Campbell, Capt. Duncan F. (Ayr, N.) Houston, Robert Paterson Spear, Sir John Ward
Campion, W. R. Hunter, Sir Charles Rodk. (Bath) Stanier, Beville
Cassel, Felix Jackson, Sir John Stanley, Hon. Arthur (Ormskirk)
Castlereagh, Viscount Jardine, Ernest (Somerset, East) Stanley, Hon. G. F. (Preston)
Cator, John Joynson-Hicks, William Starkey, John Ralph
Cave, George Kerr-Smiley, Peter Kerr Staveley-Hill, Henry
Cecil, Evelyn (Aston Manor) Kerry, Earl of Steel-Maitland, A. D.
Cecil, Lord Hugh (Oxford University) Kinloch-Cooke, Sir Clement Stewart, Gershom
Cecil, Lord R. (Herts, Hitchin) Lane-Fox, G. R. Sykes, Alan John (Ches., Knutsford)
Chamberlain, Rt. Hon. J. A. (Worc'r) Larmor, Sir J. Talbot, Lord E.
Chaplin, Rt. Hon. Henry Law, Rt. Hon. A. Bonar (Bootle) Terrell, G. (Wilts, N. W.)
Coates, Major Sir Edward Feetham Lawson, Hon. Harry (Mile End) Terrell, Henry (Gloucester)
Cooper Richard Ashmole Lee, Arthur H. Thomson, W. Mitchell (Down, North)
Courthope, George Loyd Lewisham, Viscount Thynne, Lord Alexander
Craig, Charles Curtis (Antrim, S.) Lloyd, G. A. Touche, George Alexander
Craig, Captain James (Down, E.) Locker-Lampson, G. (Salisbury) Tryon, Capt. George Clement
Craik, Sir Henry Locker-Lampson, O. (Ramsey) Tullibardine, Marquess of
Dalziel, D. (Brixton) Long, Rt. Hon. Walter Valentia, Viscount
Denniss, E. R. B. Lonsdale, Sir John Brownlee Walrond, Hon. Lionel
Dixon, C. H. Lyttelton, Rt. Hon. A. (St. Geo., Han. S.) Ward, Arnold (Herts, Watford)
Doughty, Sir George Lyttelton, Hon. J. G. (Droltwich) Weigall, Captain A. G.
Duke, Henry Edward MacCaw, Wm J. MacGeagh Wheler, Granville C. H.
Faber, George Denison (Clapham) Mackinder, Halford J. White, Major G. D. (Lancs., Southport)
Fiber, Capt. W. V. (Hants, W.) Macmaster, Donald Williams, Col. R. (Dorset, W.)
Fell, Arthur M'Calmont, Colonel James Willoughby, Major Hon. Claud
Fetherstonhaugh, Godfrey M'Neill, Ronald (Kent, St. Augustine) Wilson, A. Stanley (York, E. R.)
Finlay, Rt. Hon. Sir Robert Magnus, Sir Philip Winterton, Earl

barrier against claims made by the hon. Gentlemen opposite.

Question put, "That this House is of opinion that National Expenditure has been increased by His Majesty's Government in contravention of their pledges, so that past and future commitments of the country are a matter for serious anxiety; and considers further that recent taxation and its methods have damaged our financial credit by shaking public confidence."

The House divided: Ayes, 187; Noes, 231.

Wolmer, Viscount Worthington-Evans, L.
Wood, Hon. E. F. L. (Yorks, Ripon) Yate, Colonel C. E. TELLERS FOR THE AYES.—Mr. Pike Pease and Mr. Ashley.
Wood, John (Stalybridge) Younger, Sir George
Wortley, Rt. Hon. C. B. Stuart-
Abraham, Rt. Hon. William (Rhondda) Guest, Hon Frederick E. (Dorset, E.) O'Dowd, John
Abraham, William (Dublin Harbour) Gwynn, Stephen Lucius (Galway) Ogden, Fred
Acland, Francis Dyke Hackett, J. O'Kelly, Edward P. (Wicklow, W.)
Adamson, William Harcourt, Robert V. (Montrose) O'Malley, William
Addison, Dr. Christopher Hardie, J. Keir (Merthyr Tydvil) O'Neill, Dr. Charles (Armagh, S.)
Agar-Robartes, Hon. T. C. R. Harmsworth, Cecil (Luton, Beds.) Palmer, Godfrey Mark
Agnew, Sir George William Harvey, A. G. C. (Rochdale) Parker, James (Halifax)
Ainsworth, John Stirling Harvey, T. E. (Leeds, West) Pearce, Robert (Staffs, Leek)
Armitage, R. Harvey, W. E. (Derbyshire, N. E.) Pease, Rt. Hon. Joseph A. (Rotherham)
Baker, Harold T. (Accrington) Haslam, Lewis (Monmouth) Phillips, John (Langford, S.)
Baker, Joseph Allen (Finsbury, E.) Havelock-Allan, Sir Henry Pirie, Duncan V.
Balfour, Sir Robert (Lanark) Henry, Sir Charles S. Pollard, Sir George H.
Baring, Sir Godfrey (Barnstaple) Higham, John Sharp Power, Patrick Joseph
Barran, Sir J. (Hawick) Hinds, John Price, Sir Robert J. (Norfolk, E.)
Barran, Rowland Hurst (Leeds, N.) Hodge, John Primrose, Hon. Neil James
Barton, William Hogge, James Myles Pringle, William M. R.
Beauchamp, Sir Edward Holmes, Daniel Thomas Radford, G. H.
Beck, Arthur Cecil Holt, Richard Durning Raphael, Sir Herbert Henry
Benn, W. W. (T. H'mts., St. George) Howard, Hon. Geoffrey Rea, Walter Russell (Scarborough)
Bentham, George Jackson Hudson, Walter Rendall, Athelstan
Birrell, Rt. Hon. Augustine Hughes, Spencer Leigh Richardson, Albion (Peckham)
Black, Arthur W. Isaacs, Rt. Hon. Sir Rufus Richardson, Thomas (Whitehaven)
Boland, John Pius Jardine, Sir J. (Roxburgh) Roberts, George H. (Norwich)
Booth, Frederick Handel John, Edward Thomas Roberts, Sir J. H. (Denbighs)
Bowerman, Charles W. Johnson, William Robertson, Sir G. Scott (Bradford)
Brace, William Jones, Edgar R. (Merthyr Tydvil) Robertson, John M. (Tyneside)
Brady, P. J. Jones, H. Haydn (Merioneth) Robinson, Sidney
Brocklehurst, William B. Jones, Leif Stratten (Notts, Rushcliffe) Roch, Walter F. (Pembroke)
Brunner, John F. L. Jones, William (Carnarvonshire) Roe, Sir Thomas
Bryce, John Annan Jowett, Frederick William Rose, Sir Charles Day
Buckmaster, Stanley O. Joyce, Michael Rowlands, James
Burns, Rt. Hon. John Keating, Matthew Rowntree, Arnold
Burt, Rt. Hon. Thomas Kilbride, Denis Russell, Rt. Hon. Thomas W.
Carr-Gomm, H. W. Lambert, Rt. Hon. G. (Devon, S. Molton) Samuel, J. (Stockton-on-Tees)
Cawley, Sir Frederick (Prestwich) Lambert, Richard (Wilts Cricklade) Samuel, S. M. (Whitechapel)
Cawley, H. T. (Lancs., Heyward) Lansbury, George Scanlan, Thomas
Chancellor, H. G. Lawson, Sir W. (Cumb'r'ld, Cockerm'th) Schwann, Rt. Hon. Sir C. E.
Chapple, Dr. William Allen Levy, Sir Maurice Scott, A. MacCallum (Glas., Bridgeton)
Churchill, Rt. Hon. Winston S. Lewis, John Herbert Seely, Col. Rt. Hon. J. E. B.
Clough, William Low, Sir Frederick (Norwich) Sheehy, David
Clynes, J. R. Lundon, Thomas Short, Edward
Collins, Godfrey P. (Greenock) Lyell, Charles Henry Simon, Sir John Allsebrook
Collins, Stephen (Lambeth) Lynch, Arthur Alfred Smith, Albert (Lancs., Clitheroe)
Compton-Rickett, Rt. Hon. Sir J. Macdonald, J. Ramsay (Leicester) Soames, Arthur Wellesley
Cotton, William Francis McGhee, Richard Stanley, Albert (Staffs, N. W.)
Cowan, W. H. Macnamara, Rt. Hon. Dr. T. J. Strauss, Edward A. (Southwark, West)
Crawshay-Williams, Eliot MacNeill, John G. S. (Donegal, South) Taylor, John (Durham)
Crooks, William Macpherson, James Ian Taylor, Theodore C. (Radcliffe)
Crumley, Patrick MacVeagh, Jeremiah Tennant, Harold John
Davies, E. William (Eifion) M'Callum, John M. Thomas, James Henry (Derby)
Davies, Timothy (Lincs., Louth) McKenna, Rt. Hon. Reginald Thorne, G. R. (Wolverhampton)
Davies, Sir W. Howell (Bristol, S.) M'Laren, Hon. H. D. (Leics.) Trevelyan, Charles Philips
Delany, William M'Laren, Hon. F. W. S. (Lincs., Spalding) Ure, Rt. Hon. Alexander
Denman, Hon. Richard Douglas M'Micking, Major Gilbert Verney, Sir Harry
Devlin, Joseph Markham, Sir Arthur Basil Walton, Sir Joseph
Dickinson, W. H. (St. Pancras, N.) Marks, Sir George Croydon Ward, John (Stoke-upon-Trent)
Dillon, John Marshall, Arthur Harold Wardle, George J.
Doris, William Martin, J. Waring, Walter
Duffy, William J. Mason, David M. (Coventry) Warner, Sir Thomas Courtenay
Duncan, C. (Barrow-in-Furness) Masterman, C. F. G. Wason, Rt. Hon. E. (Clackmannan)
Edwards, Enoch (Hanley) Meagher, Michael Wason, John Cathcart (Orkney)
Edwards, Sir Francis (Radnor) Meehan, Francis E. (Leitrim, N.) Watt, Henry A.
Elibank, Rt. Hon. Master of Menzies, Sir Walter Webb, H.
Elverston, Sir Harold Molloy, Michael White, Sir Luke (York, E. R.)
Esmonde, Dr. John (Tipperary, N.) Molteno, Percy Alport White, Patrick (Meath, North)
Ferens, Rt. Hon. Thomas Robinson Morgan, George Hay Whitehouse, John Howard
Flavin, Michael Joseph Morton, Alpheus Cleophas Whittaker, Rt. Hon. Sir Thomas P.
Furness, Stephen Munro, Robert Wiles, Thomas
Gelder, Sir W. A. Murray, Capt. Hon. Arthur C. Wilkie, Alexander
Gill, Alfred Henry Nannetti, Joseph P. Williams, Penry (Middlesbrough)
Gladstone, W. G. C. Needham, Christopher T. Williamson, Sir A.
Glanville, H. J. Neilson, Francis Wilson, Hon. G. G. (Hull, W.)
Goldstone, Frank Nolan, Joseph Wilson, Rt. Hon. J. W. (Worcs., N)
Greenwood, Granville G. (Peterborough) Norman, Sir Henry Wilson, W. T. (Westhoughton)
Greenwood, Hamar (Sunderland) Norton, Captain Cecil William Yoxall, Sir James Henry
Grey, Rt. Hon. Sir Edward Nuttall, Harry
Griffith, Ellis Jones (Anglesey) O'Connor, John (Kildare, N.) TELLERS FOR THE NOES.—Mr. Illingworth and Mr. Gulland.
Guest, Major Hon. C. H. C. (Pembroke) O'Connor, T. P. (Liverpool)
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