HC Deb 29 April 1913 vol 52 cc1025-147

Considered in Committee.—[Progress, 28th April.]

[Mr. WHITLEY in the Chair.]

Motion made, and Question proposed [28th April], "That the Customs Duty charged on tea until the first day of July, nineteen hundred and thirteen, shall be charged as from that date until the first day of July, nineteen hundred and fourteen, that is to say:—

Tea, the pound … … five pence, and it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."

Question again proposed. Debate resumed.


When the Debate stood adjourned last night I was dealing with the case of an Irish holding where a fair rent had been fixed and all the particulars ascertained and recorded on what we term in Ireland a clean schedule. Even in so exceptional a case, which does not apply to one-half of the agricultural land in Ireland, there are grave doubts whether any prudent owner would accept a valuation framed on that clean schedule or whether the Government would accept the valuation as showing the gross and total value and the assessable site value. As I understand it the valuation authorities do this: They get hold of the clean schedule; they ascertain from it what is the fair rent; they multiply that fair rent by a certain number of years' purchase—say, twenty—and that they serve up as the total value and the gross value. Then they take the buildings which are recorded in the schedule, multiply the value of them by a certain number of years; capitalise them; take the capitalised value from the total value of the holding—agricultural and building—and so get at the assessable site value. I may mention two items in such a valuation which, at any rate, are inaccurate, if not illegal. First, there is the question of live fences. Neither the Chancellor of the Exchequer nor the Secretary to the Treasury will find anything about live fences, although there are a certain number in Ireland which ought to be allowed for. Again, no deduction is made for timber. There is nothing about that in the clean schedule.

By Section 25, the gross value of the land means the amount it would fetch if sold in the open market by a willing seller. So far as Irish landlords are concerned, they have only one buyer, the tenant. The tenant can sell his right in the open market. The tenant right is a valuable one, and means something quite different from what it does in England. Last night at eleven o'clock I was about to give an instance to the Committee, as I am perhaps more conversant with Irish land than they are. It is the case of a small farm of twenty-five acres just outside my own demesne, in respect of which a second term rent was fixed for fifteen years at £17 10s. The farmer who had the rent fixed desired to sell his tenant right, and put it up for auction. For the privilege of paying £17 10s. to the landlord, he found a man willing to give him £500. That is a fairly big figure. Curiously enough, a year afterwards the man who bought the tenant right for £500 got tired of the farm and put it up for auction again, and it was sold for about £500. What does that mean? The Irish Valuation Commission come along and capitalise the £17 10s. at twenty years' purchase, which is £350. That is the total value. They find that the buildings are worth, say, £50, leaving a site value of £300. The man who accepts the site value of £300 and the total value of £350 is doing a very rash thing. If he is going to sell that land a year afterwards and gets £500 for the tenant right alone, he is running a very grave risk. I understand that there is going to be an Irish Chancellor of the Exchequer and an English Chancellor of the Exchequer, both looking out for taxable people in Ireland. What better man to tax could be found than the man who has this lucky windfall? Perhaps a relative comes back from America with dollars jingling in his pocket and willing to give this price for the tenant right. The man with such a windfall might well be taxed by an Irish Chancellor of the Exchequer. It may be said that Ireland will be exempt from English taxation. That is not so, for the Postmaster-General, in reply to a question last year, said:— Under the terms of the Government of Ireland Bill the power of the Imperial Parliament to levy taxes in Ireland will not be affected. It comes to this: That the Irish will not merely be whipped with the whips of the Irish Chancellor of the Exchequer, but scourged with the scorpions of the English Chancellor of the Exchequer. It is bound to be so. As common-sense people, let us look at what there is in Ireland to tax. Everything there which we can tax has been taken from us under the terms of the Government of Ireland Bill, except one thing—the land. Therefore, any Chancellor of the Exchequer will be forced to turn to Irish land to raise the extra revenue if he wants to run the country.


We must not discuss the provisions of a Bill which is not yet law.


I ask hon. Members below the Gangway opposite who are single-taxers, and who are anxious to tax the value of land, to remember that they are not going to tax the Irish baron, duke, or earl, or even the landlord, because the landlord is almost as extinct and out of date as the four-wheeled cab and the hansom cab. In a very few years he will be completely gone, and there will be left in his place 500,000 peasant proprietors, men who are paying annuities to the British Government for the land they have bought on Imperial credit, and if you tax them you take away the sole source from which you can get the interest on the money you have lent to them. I ask the Treasury to put an end to this kind of thing one way or the other. There is great uncertainly in Ireland as to how these Land Taxes are going to operate. I say that every one of these provisional valuations which has been served, which does not show the total value as well as the gross value, or the assessable site value as well as site value, is illegal, and that if anyone in Ireland chose to go to the Irish Courts the provisional valuations would be one Clause for Mr. Lumsden ought to be Northumberland, is going to have a Clause added to the Revenue Bill exempting him from the trouble to which the Government have put him. He was winged, but not altogether killed by the Chancellor of the Exchequer. What is going to be done in one Clause for Mr. Lumsden ought to be done for a farmer in county Cork. Let the Government add a second Clause to their Revenue Bill making regular the position of the Irish small owner. I desire to put one final question to the Treasury. The English Domesday Book, as we heard in the House yesterday, is being written up by a skilled staff of some 4,000 odd valuers who are being paid salaries amounting to £400,000. That is Imperial money. The Irish Domesday Book is being written up by valuers who are engaged in the general valuation and who are paid out of the local rates. That is absolutely unfair to the Irish counties. The Irish Domesday Book is as much an Imperial business as the English Domesday Book, and should be paid for out of Imperial funds. Therefore, these men ought to be taken from their job and their salaries no longer paid by the Irish counties, or else a fresh set of men ought to be appointed up and down Ireland and paid by the Imperial Parliament. I hope that in the course of the reply from the Secretary to the Treasury, I shall have some answer in regard to these two matters. They are of very great interest in Ireland, and the illegal valuations ought to be stopped at once.

4.0 P.M.


I shall be very glad in the course of a very few remarks I shall address to the Committee to give a reply to the hon. Gentleman who has just sat down. I can assure him that if he can make out a case of injustice such as he has suggested, either in the incidence of the tax on Irish landowners or in the valuation which is now being recorded, we shall be glad to consider such Amendments to the Revenue Bill which is going to be proposed I have listened now to eight successive Debates on Budget Resolutions, and I think this Debate has been the most remarkable of all. What is it that we are accustomed to hear discussed during this, one of the most important Debates of the year? The statement of the Chancellor of the Exchequer, the question of the revenue of the country, the question of the expenditure of the country, the question of how to make one balance the other, the question of the condition of the people revealed by the statistics given by the Chancellor of the Exchequer—and no question can be more important—and the question of alternative Budgets; and for seven years the whole Debate has turned on various alternative suggestions and better and easier methods of raising immense sums of revenue than those suggested by the Chancellor of The Exchequer. What has been the history of the two days we have already spent on the Budget Debate? The right hon. Gentleman (Mr. Austen Chamberlain) commenced to deal with those subjects in a most interesting speech after my right hon. Friend sat down. The two Gentlemen who represent the Labour party—the hon. Member (Mr. Parker) and the hon. Member (Mr. Wardle)—took us straight into the heart of this question, and the hon. Member (Mr. Arnold), in what those who heard it will agree is one of the most successful maiden speeches heard in this House, also entered into this large survey. Every hon. Member who spoke from the benches opposite dealt, not with the question of the Budget Statement of the Chancellor of the Exchequer, but with the question of the expenditure of something like one-five-hundredth part of the expenditure he was presenting before the country, and I think it is about time that we might agree that we should pass from the consideration of the Land Taxes and the land valuation, upon which no substantial Amendment can be proposed, to the general question of the finance of the country.


made an observation which was inaudible.


There are some adumbrations of Amendments on the Revenue Bill, but practically the discussion has been on the continuous process of valuation which has been going on for the last four years, and the continuous process of the collection of the various taxes taken with the Land Values Duty. [An HON. MEMBER: "I wish to propose several Amendments to the Land Clauses."] I think my hon. Friend mistakes my point. It is a point that is leading up to an inquiry, because it has puzzled my own mind as well as the minds of others. My point is the difficulty of understanding why hon. Members opposite should have concentrated their attention upon this particular item of the Budget. I do not want to suggest by that that anyone on this side of the House has any reluctance to discuss the Land Taxes. We have discussed them over and over again. We had a discussion on the King's Speech exactly similar to yesterday's discussion—the same facts and the same arguments—we had a discussion on the Consolidated Fund Bill with the same facts and the same arguments, we had several discussions last year, we had a discussion in 1909 that lasted the whole of that year, three months in the House, three months in the country, and one month at the General Election, and to a very large extent the arguments advanced yesterday, such as those of the hon. and learned Gentleman (Sir A. Cripps), had nothing to do with the administration of the Land Taxes but with valuation. They were simply a repetition of the old arguments against these taxes as we heard them in all the days and most of the nights of 1909. Nor have I any wish to refuse to accept the challenge offered by the hon. Gentleman (Mr. Pretyman). Those of us who believe in land valuation and in land taxation are prepared to meet him at any time in this House. We are also prepared to meet him in the country. We are also prepared to meet him, as he suggested, in the open air and at the street corner, and with illustrative examples to defend both the necessity for the valuation and the justice of the Land Taxes of the country. Perhaps before the controversy was over he would be desiring not quite so many illustrative examples as we should be prepared to give him.

I think I can find two reasons why the Budget Debate of this year has taken such a remarkable turn—a negative reason and a positive reason. The negative reason is a disinclination to discuss the Budget Statement which my right hon. Friend presents to the House, and I judge that, not only by what has happened inside the House, but by what has happened outside, because, as far as I can see, the majority of the critics of that Statement have been more or less stunned by the amazing results my right hon. Friend was able to present to the House. It is very remarkable. I have heard every word in this House, and I have been reading the critics outside. The least generous of the critics outside are sceptical as to the returns of the estimated revenue which the Chancellor is presenting to the House. The more generous, including a large number of prominent Conservative papers, announce almost dismally that they expect his forecast to be fulfilled and they attribute it, not to the intelligence or the skill, but to the recognised luck of the Chancellor of the Exchequer. Long may that luck last! If this subject is the result of luck, that luck is an asset, not only to the party, but to the country as a whole. The most generous—and here I include a considerable number of Conservative comments—find in the Statement presented something more than a question of making a party point, and they find that when they see this result presented as the financial statement of this country, and when they compare that result with the financial schemes which are being presented in other countries of the world, their patriotism is found to be in excess of their party spirit, and they gladly rejoice at the result. That is the negative reason. The positive reason why I should suggest that the Opposition desire so much to concentrate attention in this Budget Debate upon the Land Taxes is because, in the familiar phrase, they know that their time is short. They have always shown infinitely greater hatred of valuation than hatred of the taxes that depend on valuation, because they are not at all sure what the people of the country will do, and especially the great local authorities, if once they are given an accurate and impartial valuation, not only of the total value but of the site value. They know that every year makes it more impossible to destroy the valuation. Whereas last year we had valued only some 17 per cent. of the hereditaments of the country, this year we are able to announce that we have valued 43 per cent., next year it is estimated we shall have valued 75 per cent., and by 31st March, 1915, 100 per cent. of the hereditaments of the country. Therefore they know that unless they make a special effort this year which might result in the destruction of this gigantic machine, which, I believe, is constructing a gigantic instrument of reform, there is very little chance of being able to make any effective protest in years to come, and even then, if they came to office, they would be unable to undo the work of valuation.

Certain general questions were raised in connection with this valuation after the Chancellor of the Exchequer had replied, which I think should be placed before the Committee and before the country. Every hon. Member who has spoken from that side of the House has compared the cost of valuation with the cost of the taxes collected, and has made great merriment—none more than the Leader of the Opposition—at the incongruity of the one figure and the other, and has announced that we are spending enormous sums of money on the one side of the profit and loss account, and are only receiving inadequate sums on the other. But that is not in any way a fair or accurate method of considering this problem. I was sitting here four years ago, on the Budget of 1909, when the Prime Minister announced the valuation scheme to the House of Commons. He stated then, as I state to-day, that the valuation as from 30th April, 1909, was a capital expenditure which, if we had followed the precedent of former Governments on the other side, we might have met by a loan.


There is no precedent on the land.


There is no precedent on the land, but there are plenty of precedents for Army and Navy loans and other works. He said then that the valuation would take some five years to complete, and it will take some five years to complete. He said then that the capital cost of that valuation would be something like £2,000,000, and the capital cost of that valuation will be something like £2,000,000 spread over five years. All the time that capital expenditure on valuation has gone on there has also been the expense of collecting revenues by the same Department—revenue in connection with the Land Value Taxes and revenue in connection with the Estate Duties—and if you set-off the revenue collected during these years against the expense of the Land Valuation Department you will find as the result at the end of it that you have paid the whole of the capital expense of the valuation out of the revenue which has been collected—exactly a similar result as a merchant ship on its first voyage paying the cost of the construction of the ship itself. It is estimated that on the completion of the valuation on 31st March, 1915, the total amount spent, both on the capital valuation and in the cost of the Valuation Department, will be something like £2,800,000, of which something like £2,000,000 may be rightly attributed to the making of the initial valuation itself. Against that it is estimated that the Land Duties themselves will have brought in £1,000,000—not including Mineral Rights Duties, concerning which there is some controversy—that the increase of Death Duties produced by the Land Valuation Department will amount to something like £1,295,000, and the other services rendered to the Government Departments, which would have to be paid for outside, will be something like £150,000—that is a total of £2,500,000. On that point may I again correct the statement, which has been corrected several times, but which has been made again and again, and again yesterday, by speaker after speaker, as though they were all inspired from some one source of which I have no knowledge—[An HON. MEMBER: "Rosenbaum."] It is continually being asserted that, because my right hon. Friend the Chancellor of the Exchequer in the early months of 1909 was gathering together a body of valuers for the first time for land valuation work, and immediately to deal with the returns as to real estate for the purposes of the Death Duties, and further in order to prepare for local taxation valuation, therefore none of the enormous additional revenue which is being brought in on the revaluation of estates by the Land Valuation Department should be credited to the exertions of that Department. Of course, the truth is absolutely otherwise. Before the Land Valuation Department was established, in challenging the returns of real estate, the general average which the Government was able to obtain was a 3 per cent. increase, but since the Department has been working and challenging the returns of real estate, the result has been an increase of 6¾per cent., and every farthing of that increase has been due to the Land Valuation Department. It will amount, as I say, to over £1,000,000 in a very short time. Every farthing of that must be included as one of the direct results of the establishment of the Land Valuation Department.


Does that remark apply to the three Kingdoms?


I think that in Ireland there has been a separate valuation.


It is worse in Ireland.


I ask the Committee now to consider the result of that change. It is idle for hon. Gentlemen opposite to attack us because the Land Value Taxes are designed rather for to-morrow than to-day. I listened to a great many speeches made in 1909 by my right hon. Friend the Chancellor of the Exchequer, and in every case he differentiated the new duties put on by what the Leader of the Opposition called the "People's Budget." [An HON. MEMBER: "The Chancellor of the Exchequer called it so."] Well, the right hon. Gentleman (Mr. Bonar Law) sneeringly called it the People's Budget. In every case my right hon. Friend differentiated between the immediate financial expedients for obtaining revenue and the wise foresight and provision for future expenditure. In every case the Land Value Duties were placed among the latter. Just think what an assistance to our national finance we should find if some previous Chancellor of the Exchequer ten, twenty, thirty, or fifty years ago, had devised a valuation as from that date, had caused the State to enter into partnership in connection with the acquisition of unearned increment, and had taken one-fourth of that amount, which the State might reasonably have taken during all that time! We should have had an increment tax providing the Exchequer with hundreds of thousands, if not millions of revenue, unless the whole commercial and industrial prosperity of this country was to shrink, and therefore the value of land was to shrink also, for the continued prosperity of commerce and industry finds reflection in the value of land. Ten, twenty, or thirty years hence people will be paying a tribute to the foresight of my right hon. Friend the Chancellor of the Exchequer in providing for the taking of some of the increment which rightly belongs to the whole community in order to meet our national and Imperial expenses.

Apart from that, what will we obtain by this self-paying valuation? We shall obtain, in the first place, a general valuation of the land of this country which has never been obtained before, and which is in existence at the present time in many European countries, in most of the States in the American Union, and in most of our Colonial Dominions beyond the seas. Of course, there are objects we desire when that information has been supplied. We shall have been provided with a datum line as from 30th April, 1909, from which to calculate all future increments through decades, and even centuries, and that is a permanent work of achievement. Then we shall have provided something which many people may consider even more important than that. We shall have provided a register of the total value of every property, which can easily, if it is so desired, be transferred into a register of annual value—uniform, impartial, and equal throughout the whole country—and that will be done at an expense met by the time the valuation is completed, instead of—as in the case of every Valuation, Bill that I ever heard of, and certainly in the one I was connected with when at the Local Government Board—at an expense which had to be borne out of future Grants to local authorities or out of the public revenue. We shall have provided also an equal, uniform, and impartial register—which there will be no difficulty in bringing up to date, once it is established—of the capital site value of this country. Such a valuation is the inevitable demand, whatever changes may be brought in, in relation to future adjustments of local and Imperial taxation. Site valuation is a necessity if the recommendation of the Majority Report of the Royal Commission, which was signed by the Chairman, is to be carried out, namely, that municipalities should be allowed to supplement their present revenue by a rate on site values.


I am sorry to interrupt the right hon. Gentleman. He will remember that the Royal Commission proposed to relieve certain owners of some charges, and that in substitution there might be a tax imposed upon site values.


It does not make much difference. The point I was endeavouring to make was that this valuation would be necessary, and therefore the State is doing what these eminent specialists on local taxation desired to be carried out. The valuers will be able to present to the House material for carrying out the recommendations of the Royal Commission, and so relieve the local authorities of the enormous burden of preparing the valuation. I submit that without a shadow of doubt these great results would justify the expenditure which is being incurred by this country on valuation, even if no taxes had been collected during the time the valuation is being carried out. The only criticism that can be made against this is the criticisms as to the accuracy of the valuation, and I would ask anyone who has listened to these Debates, and remembers the many times I have been compelled to speak in defence of the officers engaged in the work, whether any substantial material has really been given to challenge the accuracy of that valuation? I have heard the cases which have been brought forward. I heard them a month ago, and two months ago. In connection with Income Tax assessment or any other assessment, when you are dealing with millions, there is no difficulty in providing two or three or even 200 or 300 cases, but substantially I have three convincing reasons why I believe this valuation to be accurate and impartial as between one owner and another. The first is the reason which was advanced by my right hon. Friend yesterday, and it is a very remarkable fact. Making what deductions you like for the unwillingness to appeal, the fact that 3,500,000 claims have been settled, that there have been only 236 appeals to the impartial Referees, and that even in these cases an overwhelming majority of decisions have been given in favour of the Government, must show that there is no wide, general dissatisfaction with the work of valuation.


May I ask one question? According to my information this morning there are 23,000 appeals now pending before the Referees and the special men who have had to be taken on to deal with the appeals which are falling in against the valuations and assessments.


I do not think these figures represent anything like the facts. I know that the cases dealt with amount to 3,500,000, and that only in 236 cases was notice of appeal lodged. I am speaking without consultation with my advisers, but I think these are the figures. Of these appeal cases 200 were settled out of Court.


I am quite sure the right hon. Gentleman would not wish to mislead the House. It may be that my information is inaccurate, but it is to the effect that notice of appeals to the Referees has been given in 23,000 cases altogether. It may be a little less than that.


I will look into these figures. There may have been notices of objections.


No, they were appeals to the Referee.


The facts are that 3,500,000 have already been settled. There were 236 appeals, of which 200 were settled out of Court, and in the cases which went before the impartial Referee the verdicts given were in favour of the Land Valuation Department. I say, quite apart from the evidence in any particular cases, that if there was any great insurgent feeling that the land valuation officers were doing their work badly, or not giving accurate valuations, there is not the slightest doubt that I would be peppered with questions on the subject, as I was in regard to matters relating to the administration of the Insurance Act. I am quite sure that one of the things people are not complaining of is inaccurate valuation by the Land Valuation Department. The second reason why I venture to submit to the Committee that this is tan accurate valuation is that the very best valuers available have been engaged by the Inland Revenue to do the work. I could read to this Committee many letters sent in spontaneously by owners of property thanking the Valuation Department and its officers for their efficiency, and for the ready service they have given in connection with the carrying out of this work.


How many?


I cannot say. I could show the hon. Baronet many letters stating that the land valuers in the various districts throughout the country are meeting property owners in a manner totally different from that prophesied in the pamphlets of the Land Union, and the result of which is exhibited in the rapidly declining subscripton list of that unfortunate body. The third reason for regarding this as an accurate valuation is this: If hon. Members really believed that our land valuation was being conducted in such a manner as to provide absence of uniformity between different districts, and that wrong instructions were given by the Inland Revenue, either to overvalue or to undervalue, or to do anything else which should not be done in connection with the valuation by our expert valuers, and which they would not regard as right, then long ago they would have accepted the offer given by my right hon. Friend the Chancellor of the Exchequer. He offered them then—and I have often wondered why they did not accept it in the hope of something turning up—a Committee of experts of the highest authority who knew everything about valuation that is to be known. They have been offered a complete examination through those experts of all these charges that were so widely spread as to wrong methods of valuation and wrong regulations issued by the Government Valuation Department. I cannot help thinking that why they refused it is because they realised that the result of that Committee's inquiry would have been a vindication of the officers of the Inland Revenue. When we are then faced with those facts: first, as to the enormous utility to this country of the evaluation; and, second, as to the evidence which has been given that the valuation is an accurate one and can be very readily brought up to date when wanted, I think that all the charges made by hon. Members opposite crumble into dust. There are one or two specific points on which I shall not occupy much of the time of the Committee. A question was asked by the hon. and learned Member for South Bucks (Sir A. Cripps), and a great deal of humour was imported into the discussion by the hon. and gallant Member for Chelmsford (Mr. Pretyman), by reading out statements in which the Inland Revenue refused to give specific statements as to valuations, but said that they were made in accordance with the provisions of the Finance Act of 1909–10. On the broad question of tenant right of both kinds, including tenant right in buildings, appeals are now lodged and the question is sub judice, and it would have been quite impossible under those conditions for the Inland Revenue, who have got to present their case before a judicial tribunal, to allow correspondents to write to them to find out upon what basis they interpret the Act. I am told that quite early next month we are likely to have an authoritative decision on both subjects and by that decision, of course, the Inland Revenue will be bound.


But is it impossible to say now, not upon what basis they took their action, but what their action is? The question which has been asked is, are they including tenant right or not? I quite agree with the right hon. Gentleman that it would not be desirable from their point of view to disclose the reasons for their action, which will be disclosed in the Court of Law, but could not the right hon. Gentleman tell the Members of this House what their action is, and whether they are included or excluded?


I think that in about a fortnight these actions will come on, and then I shall be very glad to make a full statement. The whole question will be raised in both these cases.


It has already been raised by you.


The question is raised as to the judicial decision on the interpretation of the Act. There is an appeal before the Court, and that decision will settle the matter as to what the interpretation of the Act is.


I cannot understand the right hon. Gentleman's difficulty. It is not a question of what the Inland Revenue thinks the right interpretation or what the decision of the Court will be, or what the ground of action of the Inland Revenue is. We only want to know what they are doing.


Perhaps the right hon. Gentleman will allow me to leave that to my right hon. Friend who wants to take legal advice on the matter. He will speak later on in the evening, and will deal with the subject if the right hon. Gentleman desires. The second question is a very remarkable and important one. The accusation has been made—the expression has been used in this House—that the Inland Revenue were engaged in the work of blackmailing owners of property. I have made the fullest possible inquiries into the matter and can find no shadow of justification for such a statement against our officers. It is perfectly true that where the principal value on the passing of an estate at death coincides with total value under the Finance Act of 1909–10, the Inland Revenue valuers, in endeavouring to settle up the question, do endeavour to deal with the landlords in such a way that the two questions can be settled at the same time, instead of coming perhaps months afterwards, on a separate visit, to that estate. But whenever there is any suggestion that those two valuations do not coincide I can find no evidence of any attempt being made by the Inland Revenue valuers to compel the valuers to make them coincide, and I think that when such strong language is used, not against the Government—the Government are used to it—but against the officials of a Government Department rather more evidence should be given than was given by the hon. and gallant Gentleman. A further point was asked on the question of the Revenue Bill. I thought that my right hon. Friend the Chancellor of the Exchequer made perfectly clear last night the main outline of what he intends to propose. We have been accused of taxing builders' profits, and the accusation has been grounded on the evidence of one very special case where we were not taxing builders' profits, but were taxing a monopoly. We cannot find, and the Commissioners cannot find, any case of taxing any builder upon a site.


But it must invariably follow that portion of the profit upon the house itself and the value created on the site of the house by the building of the house thereon must enter into the amount.


That is not in the law or in the administration of the law. When we find a universal scare sedulously spread which must injure the development of building, and when we find that so far from taxing builders' profits we have not even taxed the builder, then the best thing which we can do is, by a definite form of words in the Revenue Bill, to show the builders that they will not be taxed. That is what the right hon. Gentleman has promised, and that is what will be carried out in the Clause submitted to the House. The second question is in reference to minus values. That matter is sub judice, and therefore I have no remark to make about it, but I submit once more that all the information required in the case of assessable site values finally becoming minus values is in every case, where assessable site values are registered as minus quantities, in the hands of the Valuation Department, and so far from any necessity arising for a revaluation—I think the hon. and gallant Gentleman said that there were 60,000 hereditaments where minus valuations have been registered—a mere alteration of what is purely a book-keeping transaction will be sufficient, and exactly the same valuations in the register will be assessable site values instead of minus valuations, and that is an equally legitimate standard from which to measure one thing or another. The last case is the addition to the valuation roll of a column showing the site value of agricultural land after exhausted improvements have been deducted. We could not make that change last year because the question was ruled out of order, I think by you, Mr. Whitley, as not being appropriate to a purely Money Bill, but we have never had any objection to making that addition. It has not been required up to the present for any of the Land Taxes, but if it seems to be the general wish of the whole House—and we have had appeals for it from benches on both sides—that there should be added to the valuation roll a column giving the site value of agricultural land when you have deducted unexhausted improvements, the Government will be quite prepared to pass a Clause giving effect to that wish.

Two points were put to me apart from valuation as definite questions which I think I might answer. One was asked by the hon. Member for East Nottingham (Sir J. D. Rees), who told me that he was not going to be here to-day, but he asked me to answer the question. It had reference to the calculation of the increase in the Tea Duties. In the present Estimate he said that the increase of £298,000 made an almost unprecedented calculation as to the quantity of tea which would be consumed in this country. In the figures which my right hon. Friend has supplied a very conservative estimate has been given of the actual increase in the consumption of tea, less than the estimate in the consumption I think of any other commodity for which my right hon. Friend has estimated. He has estimated for a normal increase of 1 per cent., making only £58,000, and all the remaining elements that make up the £298,000 are not estimates on the increase of the actual amount of tea which will be consumed, but are elements which caused a variation from both the Estimate and the revenue of last year, due to extraneous influence which we do not anticipate will take place this year. Eighty thousand pounds was lost on the coal strike. I am thankful that we have not to bring in a Budget now on an Estimate made in the middle of a coal strike. Last year lost £100,000 by postponements at the end, but gaining £40,000 by similar postponed clearances from 1911–12, making a net loss of £60,000 owing to postponements. This year gains £100,000, making the total gain £160,000. So that the estimate of the alteration in the amount of the Tea Duties which may be anticipated this year, so far from being an excessive amount which will not be realised, has I think erred on the moderate side, and if our present prosperity continues I have no doubt that the normal increase will be substantially more than the 1 per cent. for which we have budgeted.

Another question raised was that of the Sugar Duties. I do not want to deal with those at length because we shall probably have a discussion on them later in the Session, but I may make one remark in passing. The right hon. Gentleman the Member for East Worcestershire in answering the speech of the hon. Baronet the Member for Swansea, said that the Sugar Duties were not imposed specially as a war tax, but I think that he will agree with me that had there been no war there would have been no Sugar Tax. There is no doubt about that. The South African war is ended but the obligations laid upon the nation by that war have not ended, and despite the enormous efforts made by this country to pay off the debt, we have to-day £50,000,000 more debt to pay owing to the war than we should have had if there had been no war; and persons who criticise those duties might take into consideration that if you apply the £3,000,000 as interest and sinking fund in repayment of that £50,000,000 you are not doing more with the Sugar Duties than paying off the war debt. These duties would not have been established if there had been no war, and it is not a bad thing, on the whole, when you are dealing with the people of this country who have largely forgotten the results of the war twelve years ago, if you can remind them from time to time that wars have to be paid for, not only while the wars are being waged, but even ten or twelve years after everyone has tried to forget all about them.


You should make the people who made the war pay for it.


I do not think that any class in this country can claim to have nothing to do with the making of wars. There are just one or two general considerations which have been raised by the right hon. Gentleman the Member for East Worcestershire, and the other hon. Member who dealt with the subject in a general way. In all there has been a note of satisfaction and of generous congratulations by the right hon. Gentleman himself of my right hon. Friend on the success of his finance, and in all the congratulations on the condition of the country, which has helped to produce the success of that finance, I detected also, from all sides of the House, a tone which I must say I regard with the utmost gratification. The right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain) and the hon. and learned Member for South Bucks (Sir A. Cripps), the representatives who spoke for the Labour party, and my right hon. Friend who spoke from behind me, all agreed that in their opinion the industrial classes of this country were not getting their fair share of the enormous prosperity which the country at present enjoys. If that is common ground with all parties in the State, surely we might advance somewhat further and find common agreement of all parties in the State as to how that can be remedied. I agree with the right hon. Gentleman that the facts of the Budget provide material for seriousness as well as satisfaction. There is evidence of an amazing extravagance in all classes of the community. There is little evidence of laying up, or even anticipation of bad times that may succeed good times. The criticism has been made by uninformed persons outside, who do not understand our financial system, that my right hon. Friend the Chancellor of the Exchequer ought to have definitely suggested laying up money from one year to the other. Of course, under the existing conditions of our finance, revenue vanishes on the 31st March, and what is suggested is impossible so far as the Government is concerned. But what we have been able to do—such for instance as providing £2,000,000 to be laid out with the Road Board, the providing of a great national unemployment and insurance scheme—we have done. There is another cause for seriousness in the stalling-off of that sharp edge of discontent, which is the real motive for social progress, in the general enjoyment of material prosperity. I think it will be a reproach to the people of our time if this great prosperity rises and passes away without dealing especially with two classes over whose heads this prosperity has largely passed without giving them any benefit at all—the people who walk in darkness in the slums of great cities, and the agricultural labourers in the slums of the country-side.

It is inexpedient for us to indulge in undue boasting over our material prosperity; still, when the whole problem of these last five years is presented to us, arising from the Budget of 1909, and leading up to the present, what an amazing result it is! If there was one mandate which stood out beyond all others, in the mandate given to us in 1906, it was the mandate for the saving of Free Trade. Those five Budgets have saved Free Trade—saved freedom of trade, if I may paraphrase a famous saying, in England by their energy, and saved freedom of trade throughout the world by their example. While other nations, tormented by the two evils of Conscription and Protection, our great trade rivals, are resorting to the desperate expedient of meeting current liabilities by future borrowings, my right hon. Friend in his Budgets has been paying off capital liabilities of this country, not by hundreds of thousands, but literally by tens of millions. While other nations, in the new proposals which they are compelled to submit every year to reluctant Legislatures, find that the result of those proposals is the sharp division into a class war between two classes united only on one principle, that the other shall bear the burden of taxation, this nation has no trace of class war within its borders owing to the fiscal system, which all classes realise, in the main, places the burdens upon those who are able to bear them. While other nations have been compelled to shut down their schemes of social progress, due partly to the growth of their military expenditure and partly to the existence of taxes, which take large sums from the people and leave little revenue to the Exchequer, my right hon. Friend has been able to launch and finance the most gigantic scheme of social amelioration that the world has ever seen, not only relieving the misery of sickness, of unemployment and old age, but relieving what is perhaps more, the terrors that come from anticipation. Judged not by the ordinary controversies of politics, but by the verdict of someone standing quite apart from our ordinary party rancour, or by the quiet voice of history, I say that, without a shadow of doubt, both in its courage and in its triumph, the work of my right hon. Friend the Chancellor of the Exchequer should be regarded as one of the most amazing financial achievements that the world has ever known.


The right hon. Gentleman has referred to points which characterised the last eight Budgets, but I want to refer to a point which was raised in all those Budgets, and which has been the subject of discussion for a much longer period. Ever since Irish representation united itself into a separate interest in this House, one of its most important duties has been to put forward year after year a claim for justice to Ireland, and to protest against the injustice which she has suffered for many years. We did so year after year, whatever party was in power, until the year which has become the storm centre of financial debate both in England and in Ireland, namely, the year of the Budget of the right hon. Gentleman the Chancellor of the Exchequer, who, in the discharge of his task, has managed to still the barking of the Irish Cerberus without offering it the proverbial sop. I rise to-night to continue the immemorial protest from Ireland as to this financial injustice, and to say that, so far from the necessity for that protest having been terminated by the Budget of the right hon. Gentleman, speaking deliberately, advisedly, and certainly without any personal hostility to the right hon. Gentleman, my opinion is that the Budget of the right hon. Gentleman in 1909 was the worst Budget for Ireland passed in the whole history of the United Parliament of Great Britain and Ireland. I will not content myself with making merely an assertion; I will endeavour to prove it. There have been notable Budgets in the past which have inflicted injury on Ireland. The Budget of Mr. Gladstone, in 1853, extended the Income Tax to Ireland. It was a very bad Budget for that country, but it was not comparable, in the injury it inflicted, to the Budget of the right hon. Gentleman.

5.0 P.M.

In the first place, the imposition of the Income Tax in Ireland was put forward as a kind of quid pro quo for a large capital Grant which the English Government professed to make in that year to wipe out certain famine loans. It was professedly imposed as a temporary tax, Mr. Gladstone stating that he intended that it should last only for seven years. Therefore the tax was temporary, and imposed, it was supposed, for good consideration. But leaving out those two considerations which distinguished Mr. Gladstone's Budget, I say that in financial results the imposition of the Income Tax in those days was not at all comparable to the burden which the Chancellor of the Exchequer has laid on the shoulders of Ireland. Other well-known Budgets which also inflicted injury on Ireland, and brought her almost to financial ruin, were brought in by Mr. Gladstone and Mr. Disraeli, but I submit that the burdens which those Budgets imposed upon Ireland were not at all comparable with the burdens imposed by the Budgets of the right hon. Gentleman. Therefore, instead of there being a reason for Irish representatives abating their vigilance and moderating their attacks upon the English Treasury, there was nothing contained in those Budgets which did not furnish motives for strenuous action in quite the contrary direction. The right hon. Gentleman in his Budget Statement made no direct reference to Ireland. I do not complain of that, because I quite agree that it has not been the practice of Chancellors of the Exchequer in their exposition of the financial proposals of the year to consider them in their relation to the different nationalities of the United Kingdom. The right hon. Gentleman did make one reference which had a very distinct interest for Ireland. He referred to the Whisky Tax, and not to apologise for it, but to glorify it. It occurred to me that in taking that line the right hon. Gentleman was somewhat cruel to his Irish supporters, because if there was one element in the Budget which all Irish Members joined in condemning that was this very Whisky Tax. It was attacked by the hon. Member for Waterford (Mr. J. Redmond) and condemned by the hon. Member for East Mayo (Mr. J. Dillon), and even the "Freeman's Journal" denounced it. I venture to say, if you take the speeches of any Irish Member throughout the whole history of the Budget, there is not a single one of them who did not join in condemning and denouncing the right hon. Gentleman's Whisky Tax as a cruel wrong to Ireland. The right hon. Gentleman now says that it was not only good as a measure of finance, but that it was glorious as a matter of morals and economic reform. As a rule, I think, Chancellors of the Exchequer are disposed to test the soundness of their proposals by two questions. The first is, does the tax produce the revenue expected from it; and the second is, does it produce that revenue without hurting the interest or trade which it affects? That, I think, is the standard principle of English finance—first, revenue; and, second, revenue without mischief to the interests concerned. The right hon. Gentleman has for the first time in history departed from that principle, and glories, not merely in the fact that this Whisky Tax produced the finance he expected from it, but that, accompanied with that result, he has succeeded in seriously hurting and injuring the trade which it affects. I am not here certainly to defend the whisky trade. My sympathies are somewhat in the other direction, and if this Kingdom were homogeneous, so that all the parts would be equally affected by legislation, then I am not at all sure that I would not sympathise with the attitude which the right hon. Gentleman has declared on this subject; but what is the fact? On this issue this country is not only not homogeneous, but it is notorious that this Whisky Tax hits Ireland in a manner in which it hits no other part of the Kingdom.

Therefore, with the most appalling ingenuity, the right hon. Gentleman boasts that his financial whip has two lashes. With the first lash he levies the tax, and with the other lash of his whip he strikes the industry a deadly blow. That is the one reference which the right hon. Gentleman has made in his Budget Statement which in any way affects or relates to Ireland. That is the comfort which he holds out to his Irish supporters. He is not only an impenitent sinner on this subject of the Whisky Tax, but he glories in the result of his attitude. This Whisky Tax was so obnoxious in Ireland that the brother of the Leader of the Irish party went down to his constituents within a month of the passing of the Budget, and declared, as we all understood officially, that either the Budget would not pass, or that it would pass without the Whisky Tax. That was the hon. Member for East Clare (Mr. W. Redmond). So little consideration has the right hon. Gentleman for the Irish Members, who are supporting him so faithfully, and to each of whom he must know this tax is hurtful and hateful, he comforts Ireland and her representatives by telling us that he is pleased, not only to have drawn extra revenue from this Irish trade, but he is equally pleased in securing that result that he has struck that industry a deadly blow. I have said that the right hon. Gentleman did not make any specific reference to Ireland in his Budget Statement, and in that form of abstinence, the right hon. Gentleman has not departed from precedent, but I do submit to him that there were special reasons this year why he might have referred to Ireland. One of the most astonishing things that ever happened in the financial history of any country occurred in Ireland last year. The right hon. Gentleman has very properly expressed his complaisant satisfaction with the fact that his Budget Estimate has, as a rule, not merely been justified by the results, but actually exceeded. I think he told us that the yield of taxes which he expected from the Budget of £20,000,000 in the present year actually came to £23,000,000. That is a contemptible result compared with the result he attained in Ireland. In Ireland he budgeted for half a million and he got a million and a half. Let there be no mistake on that subject. I ask what would be thought of a Chancellor of the Exchequer who told us he was budgeting for £180,000,000 in this country and got £360,000,000? He would be impeached, and if treatment of that kind is unfair and unjust to England, which is a rich country and can afford all kind of financial experiments without doing it very much mischief, what is to be said of treatment of that kind meted out to a poor country? I assert that it is beyond any doubt or question that the right hon. Gentleman not merely budgeted for an increase of half a million pounds from Ireland as the result of his Budget, but that from that bench something like a pledge was given that that £500,000 would never be increased. I proceed to justify that by one or two references to the OFFICIAL REPORT. I take, in the first place, the OFFICIAL REPORT of 9th March, 1910. One of the hon. Members behind me on that day asked this question:— Mr. Hazleton: Am I to understand from the figures given by the right hon. Gentleman that under no circumstances will the Budget, even if passed into law, impose for the financial year a burden on Ireland of halt a million pounds? Mr. Lloyd George: The extra taxes will amount to £438,000".—[OFFICIAL REPORT, 9th March, 1910, col. 1468, Vol. XIV.] I pass from that date to the 20th April. The Irish Members had raised a debate on the question. We in this quarter of the House had put forward our view that the Budget was unjust to Ireland, that the Treasury Estimates were wrong, and cruelly underestimated the amount that was to come from Ireland. Hon. Members behind me were therefore compelled to defend their position, and this is what the hon. Member for East Mayo (Mr. J. Dillon) said on that occasion:— I assert that the Budget, as it originally stood, would have laid upon Ireland an additional burden of £540,000 a year. As it now turns out, owing to the failure of the Spirit Duties and other matters, the actual additional load placed upon Ireland by this Budget will be considerably under £500,000 a year. Then the hon. Member proceeded to castigate myself most severely for the exaggerated spirit in which I was disposed to deal with this question, and he went on:— This Budget in my opinion, passing as it now will pass, will lay upon Ireland the charge this year of about £480,000."—[OFFICIAL REPORT, 20th April, 1910, col. 2112, Vol. XVI.] The right hon. Gentleman was not satisfied that the hon. Member for East Mayo was doing him justice, and thought he was wronging him in suggesting that he was taxing Ireland to the extent of £480,000, and he said that the figure was not £480,000, but £435,000. It may be said that those are only the Estimates for that particular year. If that reply were made to me, I would not consider it a good reply, because the Chancellor of the Exchequer's Budget is not for a year, but for all time. I would consider it no answer to our complaints to be told that for the first year the Budget would only tax Ireland £435,000—because it is the claim of the right hon. Gentleman, it is the basis upon which he has put the Budget before the House, that its full effect cannot be obtained in the first year, and that until some years had passed we could not know what the final figures would be. Accordingly it might be said that the figure of £435,000, or half a million, does not fairly represent the facts, and that what the Treasury Bench were saying was merely that that would be the figure for that year. I turn to the speech of the Home Secretary on the same date. He puts the matter beyond the reach of argument. He also anathematised me and my hon. Friend for suggesting that the Budget was unjust to Ireland and imposed a much greater burden than the Treasury contended He said:— I am endeavouring to deal with the argument that this Budget is costing the Irish taxpayers £2,000,000, and I am endeavouring to show that so far from that being true for last year the cost of the Budget to Ireland was well under £450,000, and we do not anticipate that ever in the future it will exceed £500,000. That is something like a pledge from the Treasury Bench that the Budget was never to tax Ireland to an extent greater than £500,000 a year. And that was the spirit in which hon. Members behind me understood the speech of the Home Secretary, because within a few days the hon. Member for East Mayo went to Ireland and declared— that Mr. McKenna had given a distinct pledge to the Irish party that at no future period would Ireland be called upon to contribute more than half a million under the Budget. It was not only the hon. Member for East Mayo who was misled, because the Leader of the Irish party himself, on 18th November, 1909, made this statement:— I do not accept the estimate that these taxes will bring in £535,000 a year. That is the Government estimate, but I believe you will find that if these taxes are ever levied at all they will produce very much less than the Government estimate. The hon. Member for Waterford was sceptical that the taxes would ever be passed at all. He and his party were voting for them, they were condemning us for resisting them, but apparently in the back of his head the hon. Gentleman had some strange idea that the taxes would never be levied at all, and that if they were levied they would produce something less than the Treasury estimate. What is the final fact in this indictment? It is not alone that Ireland and the Irish Members were misled, but a Committee specially appointed by the Government to advise them on Irish finance—the Primrose Committee—was very grossly misled. In the Primrose Report, published in 1911, the Committee, after hearing expert witnesses from the Treasury, estimated that for the year 1911–12 the deficit in Irish revenue as compared with Irish expenditure would be £1,500,000, that figure being based upon the Treasury proposition that the Budget was never to produce more than £500,000. We all know that within six months after that Report had been presented, and the Government had entirely disregarded it, the annual return presented to Parliament demonstrated that the deficit, with which we had been taunted throughout the length and breadth of the country, instead of being £1,500,000 was £845,000. That I say was also the result of the extraordinary financial blunder made by the right hon. Gentleman. Unfortunately, I have not been able to ascertain the figures for the present year. I put a question to the right hon. Gentleman last night asking for the figures. It is notorious that the Irish taxation is greater for the last financial year than for the preceding year. By some strange magic the information corresponding to that for which I asked yesterday was ready thirteen months ago; it was issued in the shape of a return a month earlier last year, but when, in the simplicity of my heart, believing that the Treasury would be anxious to facilitate my efforts, I asked the question last night, by some strange blunder or negligence on the part of some official the information was not forthcoming. We must wait to know the financial position of Ireland for the past twelve months until all Parliamentary opportunity for discussing it is passed.

That is the way the Treasury deals with Ireland. That is the financial treatment which we get from the right hon. Gentleman. I am not attacking the Chancellor of the Exchequer. I try not to regard him as an enemy of Ireland. I do not in the least think that he means to do Ireland any wrong. I believe that he is making calculations for a community which is so different in its circumstances from Ireland, that any calculation suitable for that community must be mischievous, harmful, and erroneous in regard to Ireland. We all remember the extraordinary episode in the history of the Budget of 1909 when the right hon. Gentleman had to put up his own Solicitor-General (Sir Samuel Evans) to denounce the Schedule containing the Licence Duties for Ireland, which he demonstrated to the satisfaction of everybody, were so unjust and so indefensible that it was amazing that his Treasury advisers should have ever induced him to bring them forward in that shape. With these facts in our mind, the Financial Secretary will probably have some sympathy with us in the view which we put forward. It may be that, if I were an Englishman, I would take a different view of the matter, but I am sure the right hon. Gentleman will not blame me if I discuss the Budget from the point of view of Ireland and of Ireland alone. I think I have demonstrated that that Budget is a gross and monstrous financial injustice to Ireland. I have already mentioned that, whereas the Chancellor of the Exchequer budgeted for a taxation of £500,000 on Ireland, the actual increase for the year 1911–12, as compared with the year before the Budget was passed, was £1,464,000. The Treasury attribute to the Budget £1,100,000. Even that would be bad enough, but I do not accept the Treasury figure. I believe that every penny of it came from the Budget. I refer, not merely to the direct, but also to the indirect effects.

The Financial Secretary and the Chancellor of the Exchequer have referred more than once to the tremendous financial results which will follow from valuation entirely apart from taxation. I share that view. While I believe that the result in Ireland and in England from the Land Taxes will be absolutely insignificant, that the result of the valuation will be insignificant I do not believe at all. The right hon. Gentleman has told us that, whereas before the valuation the increase of Death Duties imposed by the Treasury officials as compared with the valuations submitted for assessment was something like 3 per cent., since the Budget it has been 7 per cent. I believe that the figures are still larger in Ireland. The whole system of assessing has been changed, not as the result of any enactment, but as the result of administration since the passing of the Budget. Before, practically any schedule which a solicitor presented was passed without question. In every large town a valuation office has been opened. On my last visit to the city of Cork I was honoured with the attendance of two officials from the Cork valuation office. It is the same in every place throughout Ireland. Instead of the free-and-easy method of assessing for Death Duties which previously prevailed, no valuation is now accepted as final. It is passed provisionally; an official is sent down, and some months afterwards, when you have forgotten the whole case, you find that the valuation officials treat your figures very freely, and make demands upon your time which were never expected. Therefore I do not accept the view of the Treasury that the whole of the £1,464,000 is not the result of the Budget. I believe that every penny of it is the result of the Budget, directly or indirectly. If this fact be true, then I say that in the whole record of English Treasury transaction towards Ireland a more shameful story was never told than the Budget of 1909. The right hon. Gentleman, in closing his speech, made a powerful appeal for philanthropic treatment for the dwellers in the town slums and for the dwellers in the agricultural slums. Questions were put to the right hon. Gentleman the Chief Secretary for Ireland as to what could be done for the dwellers in the agricultural slums in Ireland. The right hon. Gentleman replied himself in the most sympathetic spirit, certainly; but according to the mandate of the right hon. Gentleman he was gravelled for lack of money, and in defence fell back upon the stony-hearted Chancellor of the Exchequer, who would not help him to do what he evidently himself desired to do. The hon. Gentleman behind me, a month ago, raised a demand on behalf of Ireland for fair treatment for the dwellers in the town slums. He got very unsympathetic treatment when he put his demand before the Chancellor of the Exchequer. I did not intend to trespass so much upon the patience of the Committee, but I only desire to say that we, in this quarter of the House, whatever attitude may be adopted elsewhere, this year, as last year, will once more put on record the solemn protest of Ireland against unjust taxation.


I am not myself concerned to answer the speech of the hon. Gentleman who has just sat down. I have no doubt he has very fully expressed the grievances of Ireland with regard to the Budget; grievances we heard a very great deal about in the Debates in 1909. I thought, however, when he was giving us the large figures that he did, that at all events they represented a great prosperity in Ireland, which might give some cause for satisfaction. In the very interesting speech which the right hon. Gentleman the Chancellor of the Exchequer made yesterday afternoon he claimed that very little had been said except in respect to the important—I agree—subjects of land valuation and taxation. I do not myself propose to say anything on these subjects at all, but I cannot begin what I have to say about one or two special matters, which I do not think have been dealt with, without expressing my own view as to what the Chancellor of the Exchequer said with respect to the income of the year. With others, I cordially congratulate the right hon. Gentleman on the fact that he is able to come down to this House, and, facing an expenditure of £195,000,000, not propose any further taxation. But I cannot myself feel very sure about his Estimates, unless it be that there is some feature known to him, but not disclosed to the House, which may entitle him to take the risk of budgeting rather extremely with respect to certain items this year and to come out with an even balance at the end of the year. The right hon. Gentleman incidentally remarked at the beginning of his speech that there was some sort of idea that there were a good many arrears of Income Tax not collected before the end of the last financial year. I hold that idea pretty strongly myself. I think there must be considerable arrears in the collection of the Super-tax, and I think this from facts within my own knowledge. I know many people who had to pay their Super-tax in January and February of last year who have not yet been asked to pay it this year, although their returns were sent in at the usual time, October and November of last year. Judging from this it appears to me, knowing as I do a good many cases, that there must be a great many more, that there was therefore a larger amount of un- collected Super-tax on 31st March of this year than there was on 31st March of last year, and that to that extent the Chancellor of the Exchequer feels comfortable in regard to the prospects of his total income. He may also be aware—I do not know—that some delay in the collection has taken place in regard to the Death Duties towards the end of the last financial year.

It would be interesting to know what the system really is for this matter. Are the whole of the payments made into the bank accounts over the whole country to the Exchequer up to 31st March credited to the financial year, or are they sometimes held back? One does not know. But I am living in hope that the Chancellor of the Exchequer's Estimate of income and expenditure will balance this year, because it is my belief that he has something up his sleeve in respect of Income Tax and Super-tax. He is therefore taking a risk which under other circumstances might be a very dangerous thing to do. The right hon. Gentleman claimed that the effect and results of the Budget during the last four or five years had saved Free Trade. That is not the view I take. I think that the heavy expenditure which the Chancellor of the Exchequer has incurred in relation to many of his schemes, progressive as it is will inevitably make it impossible for him, to continue for long a Free Trade policy, and that we shall be bound to find some other sources of income. I should not be a bit surprised myself if the right hon. Gentleman remains in office for two or three years longer, to find the present Chancellor of the Exchequer coming down to this House and proposing to put on a Revenue Duty—he will call it that of course—on imported manufactured goods; but it will mean the same thing as a protective duty. I really do think that if there has been any enemy to the Free Trade system of this country it has been the present Government, and the present Chancellor of the Exchequer, by the enormous additional burdens they have placed upon the taxpayer, and by the fact that is now shown that the new taxes, although they have met their expenditure for the last four or five years, cannot in the future be relied upon to do so; that the income will not progress correspondingly with the expenditure, and that further taxation of some kind or other will have to be made. I meant to ask a question yesterday—I do not know whether it was asked in the Debate—as to how the Chancellor of the Exchequer arrives at the figure of debt reductions.

I have looked at the Return issued the other day, and I cannot find that the debt reduction is £101,000,000, or anything like it. The Chancellor of the Exchequer appeared to deal with what he called dead-weight debt only, but it is no use dealing with that. What you should deal with is the total capital liabilities of one sort and another. The difference between the liabilities in 1904–5—that is the year preceding the advent of the present Government to power—I find at the end of the statement the figure — is not £101,000,000, but £78,000,000. Therefore that is the extent, and the only extent, to which the debt has been reduced. That is a very large sum, but if the right hon. Gentleman the Financial Secretary will look at the last page of this Return—


I do not wish to interrupt the hon. Gentleman, but I can assure him I have all the figures here, and without a shadow of doubt the reduction is £102,000,000.


Yes, but that is on the dead-weight debt only.


No, the present capital liabilities, except the telephone account.


I may be wrong—I hope I am wrong—but I will leave that point, and say that the reduction of debt has largely arisen from two facts—persistent under-estimation of the income of the country, and an equally persistent over-estimation of the expenditure. By taking out of the taxpayers' pockets a good deal more money than they knew to be necessary, first the Prime Minister and then the present Chancellor of the Exchequer were able, in addition to the Old Sinking Fund, to pay off a great deal of debt in an indirect way without the people realising that they were paying excessive taxes during these years and making very large sacrifices to reduce the National Debt. The generally made claim for the success of the new taxes does not, as we believe on this side of the House, hold good. Take the result of the Land Taxes. Neither do I think the good result claimed arises—I cannot make out the figures here again—as the Chancellor of the Exchequer explained, from the new Spirit Duties. As a matter of fact, the most productive taxes have been increases and variations upon the older taxes, and they have been in many cases productive enough. The Land Taxes have not been productive, although we all knew perfectly well that for the first two or three years no great promise could be expected from these taxes. At the same time, the right hon. Gentleman budgeted for something like £400,000 or £500,000 a year. We were told that the produce of these taxes would rapidly fructify, and that they would provide for a great deal of the expense of the social reform which the Chancellor of the Exchequer had in his mind when he proposed the Budget of 1909–10. The right hon. Gentleman took a long view of the situation—as he told us. He looked forward and took a series of years. Indeed, he said he was imposing these taxes with a long view, having in view, I presume, also the expenditure which he intended to propose. He estimated he would have sufficient income to meet that expenditure. That has not taken place.

With regard to the Spirit Duties, in which I am interested, not personally, but from the fact that there are some twenty-three or twenty-four distilleries in my Constituency, and from the fact that the right hon. Gentleman claims better results on the point than I can quite make out, the right hon. Gentleman says that in the four years before the Budget the consumption of spirits fell from 40,000,000 gallons to 39,000,000 gallons. That is not quite accurate. He has taken the wrong year; he has taken the fifth year and not the fourth year; he ought to have taken the year 1906. As a matter of fact, he took the year 1905, and in 1905 the consumption of spirits was 40,108,599 gallons. In 1906 it was only 39,259,166 gallons, which was the fourth year before the Budget of 1909–10.

The Chancellor also pointed out that in the four years since the Budget there had been a falling off of 8,000,000 gallons. Not only, said the right hon. Gentleman, did that happen, but the revenue had profited by £2,000,000, for, taking the last four years, there had been a total less consumption of 28,750,000 gallons, while the revenue had profited to the extent of £5,000,000. I positively cannot reconcile those figures with any figures I can find in the Blue Book. Here are the actual figures—I am sorry to weary the House with them, because they are wearisome and not very interesting, but I want, if I can, to see how the Chancellor of the Exchequer arrives at his figures. In the four years preceding the Budget of 1909 there was a total consumption of spirits of 157,743,685 proof gallons. In the four years since the Budget that figure has fallen to 118,283,219 proof gallons, a difference, not of 28,758,000 gallons, but of 39,460,466 gallons. These are figures taken from the Customs and Excise Blue Books. The revenue in these two periods was, in the first period £86,877,328, and in the second period £86,135,199, a difference of £742,129. You get £742,000 less in the second period than in the first four years, although the right hon. Gentleman says he has five millions. I know it is possible to juggle with figures in almost every possible way, but the conclusion I have arrived at, when looking into these figures, is that the Chancellor of the Exchequer did not express himself perfectly clearly when he made his statement. He has failed to explain how he arrived at these figures.

Everybody knows that there were considerable forestalments before the Budget of 1909. I do not know if we ever knew exactly how much they were. If you look at the Report of the Customs and Excise for 1910, you will find that they say that the forestalments up to 31st March amounted to £500,000, and that there was considerable forestalment between that date and the end of April, when the right hon. Gentleman introduced his Budget. What it was he did not say, and no one knows. I do not think that affects the question really, because, as a matter of fact, in the last three years, if there were forestalments in 1909, and there was a great drop as we all know in 1910, in the succeeding years when the amount of spirits consumed remained almost steady, the figures were for 1911, £30,000,000; for 1912, £30,887,257; and the estimated figure for 1913, £30,500,000. That is the estimate as nearly as possible for 1913. I think the Chancellor of the Exchequer must have assumed something in making his totals. Supposing this falling off of 39,460,000 gallons had occurred, with no change in the duty, the actual loss to the revenue would be £21,703,236, but if you take the extra duty of 3s. 9d. per gallon imposed upon spirits since the Budget of 1909 on the total consumption of 118,283,219 gallons, it would mean an additional revenue of £22,172,478, or an actual gain to the revenue during the past four years of only £469,242, but that, remember, supposes a perfectly impossible condition that there would have been a drop of 8,000,000 gallons a year under the old system of taxation. It is the new system of taxation which is responsible almost entirely for the drop of consumption, and I think that is proved by the fact that during the three years preceding the Budget the consumption was practically steady. In 1907 the figures were 39,847,388 gallons; in 1908, 39,697,166 gallons; and in 1909, although we are told there were great forestalments, the figures were 38,939,685 gallons. The forestalments were equally large in 1906, 1907, and 1908, in fear of largely increased taxation. In the last three years the average is less by 8,000,000 gallons than in the former averages. How the Chancellor of the Exchequer makes out five millions I cannot understand, and I cannot find out anybody else who does. Perhaps he would be good enough to give some explanation to show how this calculation is arrived at, because it would be very interesting to everyone to know, and I can assure him that at the present time no one that I consulted can understand. What about the Budget this year? The right hon. Gentleman has budgeted this year for an increase of £670,000. I should be surprised if he gets that. We have had three years of very good trade in which the consumption of spirits has remained practically stationary. The right hon. Gentleman has actually budgeted for 900,000 or nearly 1,000,000 gallons more, which would be an enormous rise as things are now, and as people's habits are now, on the amount of spirits sold last year.


Perhaps the hon. Baronet would allow me; he has not budgeted for that as a normal increase, but after taking into consideration what he allowed last year for the coal strike and also for clearances.


Yes, be has allowed for a normal increase of £270,000 and £400,000 for the coal strike. That is a large figure to take, and as to the question of stocks, I cannot think what he meant. Stocks were reduced to the lowest in 1910, and they have been kept at the lowest possible limit for the last three years, and they will continue to remain very much the same. He might expect to get more money out of whisky in the future by reducing the duty. I do not think there will be found anyone who would think of getting more money by increasing it. Although the Chancellor of the Exchequer claims great credit for the moral effect produced by his Budgets, he was not out for moral effect in 1909. Surely there are other financial losses that must also be taken into account in connection with this loss on spirits. There is the loss of Income Tax in regard to distillation and on publicans' profits, and there is the loss of employment. I do not know how many people have emigrated—from Campbeltown alone because twenty-three or twenty-four distilleries were badly hit, and some of them killed right out by this taxation. We have to consider all these facts when dealing with the financial results of such a policy; and what about the social advantages? There is a great deal of nonsense talked about that. One would imagine that these 8,000,000 gallons of spirits were not now being consumed by the people who consumed spirits before to excess. Of course, the revenue is paid not by the drunkard but by the moderate drinker. These are the men who pay the revenue. Under the new arrangement of 1909 the drinker was extremely annoyed that he was charged a little more for his whisky, and he went on to something else, but that there is any moral effect, whether a man takes a whisky and soda at his dinner or spirits in some other form, is hardly open to argument.

The drop in spirits arose from the annoyance which people felt at the increase they had to pay and which they thought in Scotland was an unfair increase upon their favourite tipple, and they have gone on to something else perhaps lighter, and I have no reason to grumble that they have done so. But I think there is a lot of nonsense talked about this matter. I am sorry to say that as a result of the increase in the cost of good spirits there has been a large consumption of substitutes of a very deleterious character. I had the other day evidence of that. There are very serious complaints of the quantities of methylated spirits which are now drunk by some of the poorer people instead of whisky. It is an extraordinary thing how they can swallow it. It is 60 per cent. overproof, and spirits are usually sold 22 or 23 underproof, so that the Committee will realise the difference in strength and potency between the two. And the people are drinking it because they cannot afford to buy decent whisky. That is a very grave matter, and one of the moral results which I suppose the Chancellor of the Exchequer would not like to include when claiming success for his campaign. I have no doubt, also, that spirits are now sold not so mature as they used to be, and therefore not quite so wholesome as matured spirits. I hope the right hon. Gentleman will let us know how he reconciles the figures he gave the House on his Budget statement, figures which did not appear to be on the face of it correct.

I have only one other subject to bring to the notice of the Committee, and that is in regard to the Licence Duties. I do not think I have made any appeal to the Chancellor of the Exchequer since 1909–10 to consider the question of assessing Licence Duties. I appeal to him to do so now in view of the very much larger sum he has taken out of those duties than he told the House in 1909 he thought he was entitled to take. The yield from on- and off-licences in 1908–9 was £1,952,293. He proposed an addition of £1,500,000, making £3,452,293. During the four years since then he has taken out of these Licence Duties £2,060,488 beyond the sum that he told the House he would desire to take. He has taken an average of £515,122 per annum, or 33 1–3 per cent. over the Estimate. That is a very serious matter. Of course, it is a drop in the ocean in the national revenue, and £515,000 is an inconsiderable amount when taken in connection with the £195,000,000 or £196,000,000 Budget. But it is a very serious matter all the same. The Chancellor of the Exchequer realised that he was imposing a very heavy burden when he asked a million and a half, and the right hon. Gentleman will remember how he said he fixed the Spirit Duty in order that the publican should have a chance of an extra halfpenny, and that after what he would pay to the Exchequer in increased duty he would have a margin to relieve himself of the heavy strain. Well, of course, he knows now that the halfpenny was no use, because of the reduced consumption, and partly because they were not able to get it, and yet this £500,000 is taken from those people. It is a matter of life and death for those people, and therefore I think the time has come when we might ask the Chancellor of the Exchequer to reconsider this question. He was pledged under Clause 44 of the Budget to bring into being as soon as possible a new basis of assessment; that he has failed to do. He has completed his register so far as houses of over £500 a year are concerned, but that does not meet the case. No attempt, as far as I can make out, has been made to complete the other part of the register, and therefore the old anomalies which he condemned still exist, and so far as I can see there seems to be very little chance of completion.

A very strong case for revision can be made out from the figures which he gave, and which the Postmaster-General gave, when these duties were imposed. His expectations have been disappointed, and the register, as far as I can see, is not likely to be completed until some new system is adopted. I hope now that the Chancellor, although he has not got any money to spare, will at least do something. These are the two points I particularly rose to mention. I notice that during the course of the Chancellor of the Exchequer's speech in introducing the Budget, he made an historical reference, and contrasted the period of 1861 with the present time. If he will carry his inquiry into the dependence of the National Revenue upon these Licence and Spirit Duties, and so on, a little further, he will, I think, find that he is as much dependent to-day, and more so, than was the Chancellor in 1861 upon that particular source of revenue, and I do think he ought to try and give it a little more consideration than he has done in the past.

6.0 P.M.


It is almost something of a relief to find that for the first time since the speech of the right hon. Gentleman the Member for East Worcester, we have had some attempt at criticism of the Budget as a whole. It is indeed, as my right hon. Friend has already pointed out, one of the most remarkable things that in a two days' debate, which was supposed to be a general discussion of the statement of the Chancellor of the Exchequer, the Opposition hitherto confined itself almost entirely to the minutest points of criticism of the administration of the Valuation Department with regard to land values. I do not want to go back to the question of the land valuation and the Land Taxes, except to say that certainly on these Benches we have no reason to forget the discussion which has taken place in regard to them. The discussion has served to show that the Government realises the enormous importance of the valuation which is being made, and they are not going to be turned aside by any such partial criticisms as we have heard from the hon. Member for Chelmsford, or prevented from completing in the best possible way the great Domesday Book, as it has been called, which is now being made. We welcome the announcement that the Government propose to make the valuation of rural land uniform in the valuation of urban land, and that ultimately that valuation will be made the basis for exempting the improvements from rating. As for the rest of the Budget, it is not surprising that we have had so little criticism. The Opposition is faced by a very serious difficulty with regard to the Budget speech, because the Budget of this year is not really a new one at all, and substantially it is the same Budget as that which the Opposition denounced in 1909, with the difference that we have now had four years' experience of those taxes. We were told in 1909 that the Budget was not merely robbery and spoliation and plunder, but the favourite attack then made by the right hon. Gentleman the Member for East Worcestershire, and by practically the whole of the Opposition, was that it was bad finance, that it was going to ruin the trade of the country and cause the greatest possible disturbance, and in every way interfering with every industry and interest. That was the burden of their attacks upon the Budget in this House and in the country. If the object of a Budget is to raise the greatest possible revenue with the least possible disturbance of trade, there has never been a Budget which has been so completely vindicated during the last four years as the Budget of 1909.

Before that Budget was introduced the revenue stood at something like £150,000,000, and to-day it stands at £195,000,000, an increase in four years of 30 per cent. As we all know, that period has been marked by the greatest prosperity and the greatest trade boom ever seen in the history of this country. Therefore I am inclined to think that the Opposition acted wisely in confining themselves during the whole of yesterday to such comparatively small matters as the Lumsden and the Richmond cases. But while we all most sincerely congratulate the Chancellor of the Exchequer on the amazing success of his 1909 Budget as shown by this year's statement, I must say that a good many of us are entitled to feel all the more disappointment that in a time of unparalleled prosperity like this a Government which came into office upon the denunciation of food taxes should continue to draw so large a revenue as £10,250,000 from taxes on tea and sugar, and other articles of food. With regard to the tax on tea I quite agree that there is a great deal to be said in defence of it, although it seems to me much too high, and I hope we are going to have it lowered. Tea is not itself a necessary of life, for it is a stimulant. The Tea Tax is one which it is easy to collect, and, therefore, it has not the same objections as some other taxes. With regard to the taxation of sugar I must say, with due deference to my right hon. Friend's speech, which I listened to with great attention, I do not think it is possible to make any sort of defence from a Liberal point of view for the continuance of taxation on sugar.

A small tax on tea can be defended, but it seems to me that a tax on sugar has probably every fault which a tax can have. It is extremely expensive to collect, and I am not sure that it may not become a protective tax. It is not only expensive, but it is complicated, and it is a tax on food and upon a necessary of life. It is a tax upon an article which is probably the most necessary after bread, and it is a burden which falls on the poorest of the poor. We all know that it is also a tax upon a raw material. It is quite unnecessary for any back bench Liberal Member to trouble about criticising this tax, because it has already been denounced with such extraordinary eloquence by almost every Member of the present Government, and you could make up a very considerable book of quotations from speeches of all the occupants of the present Treasury Bench in denunciation of the Sugar Duty. This is what the Prime Minister said on this point:— This is a tax which is vicious in principle, burden-some in its incidence, unequal in its operation as between different classes and interests, and it is a tax which ought not to form a part of the permanent fiscal machinery of the country. Not only did Ministers speak against it on all occasions, but all those who were engaged in politics before the 1906 election will remember the denunciations which came from every Liberal platform, and practically every Member of the present Front Bench when in Opposition went into the Lobby in favour of the abolition of the Sugar Duty. In 1904, and again in 1905, Resolutions were proposed by the present Lord Channing in favour of the abolition of this tax, and practically every Member of the Government, in the House of Commons voted in favour of that Resolution, and the Opposition Whips told against the tax and in favour of that Resolution. The present Chancellor of the Exchequer and the President of the Board of Trade were then leaders of the attack upon the Sugar Tax. We have been told that we must pay off the debt caused by the war, and that this is really a war tax. That is the excuse which has been put forward by the Financial Secretary to the Treasury. All I have to say is that that was not the view taken by the Chancellor of the Exchequer in 1904. I have here the speech which was made by the Chancellor of the Exchequer upon the abolition of the Sugar Duties, and this is what he said:— If the country were confronted with a great peril and had to put forth all its reserved energy, I am sure that in every section of the community, rich and poor, high and low, we should find the people ready to take their share of the burden, but when that trouble was passed and the only difficulties were the difficulties of the Government, then he thought the poor classes of the people had a right to say that they really ought to be released from this burden. At that point there was a count, and afterwards the right hon. Gentleman proceeded:— He protested against this tax because it imposed a heavy burden upon the poorest of the poor, because it was necessitated not by a great national emergency but by the extravagance and mismanagement of the Government. That was two years after the tax was imposed. In 1904 the Liberal Opposition were saying the Sugar Tax had been on long enough, and ought to be taken off. If in 1905 it could have been foretold that seven years afterwards the Liberal Government of the day would have been found extracting £30,000,000 by means of this kind of taxation, I am sure it would have been a considerable surprise to some of us. We are told with more reason that the conditions have changed, and that since then you have had old age pensions, the Insurance Act, and Labour Exchanges, and that we are spending £21,000,000 this year upon social reform, and that the people who are receiving the benefits of all this ought to be willing to contribute their share towards that burden. It is quite true that the conditions have changed since the Government came into office, but in one respect, I think, we may say they have changed for the worst, and that is in the contrast, the hideous contrast, that still exists between the luxury and the wealth of the few and the sordid poverty of great masses of the population.

The Chancellor of the Exchequer, in his Budget speech, has given us, with his usual frankness, figures which tell very strongly against himself, of the large estates which passed at death last year. He told us that 292 people left £92,000,000, that 4,000 people left £184,000,000, an average in the first case of £300,000 each, and in the second case £46,000. He told us also that 350,000 people died leaving practically no property at all, or so little that it was not worth taking out letters of administration. The right hon. Gentleman might have gone on and given the figures for two years before, because last year was in no way exceptional in this respect. I have here the figures for estates of the value of £100,000 and upwards for the two preceding years. In 1911–12 315 people died, leaving between them an aggregate of £87,000,000, or an average of £270,000 each. In 1910–11, the year before that 282 people died, leaving between them £85,000,000, or an average of £300,000 each. There were in England at that time every day an average number of something like 750,000 people in the workhouses, people who could not pay their way. There were something like 3,000,000 people who, from one cause or another, applied for Poor Law relief in the course of the year. Then there were the people who were too proud to apply for relief. They are the most cruel cases of all, because something like 100 people a year actually die of starvation, half of them in the streets of London, because they have not the sense or because they are too proud to apply for Poor Law relief. I say that in face of the figures of wealth on the one hand and of poverty on the other, is it not a humiliating thing that a Liberal Government should still go on taxing poverty by means of the Sugar Tax. How, we are asked, are you going to get the money? We are told that, after all, this is an enormous expenditure, and that there is a prospective deficiency of £7,500,000. Is it reasonable, we are asked, to expect the Chancellor of the Exchequer at a time like this to find £3,250,000 in order to get rid of this Sugar Tax? Why is it that there is this £7,500,000 prospective deficit this year? What is it that has put out our calculations? Two years ago, in 1911, my right hon. Friend in his Budget speech, speaking of the Naval Estimates, said:— No sane person could possibly wish, and I do not think any sound person will expect, a continuance of our present inflated naval and military expenditure. The First Lord of the Admiralty and the Prime Minister have already indicated that we have reached the climax of our naval expenditure. Next year (that is last year) we may look forward to a substantial reduction to be followed in the succeeding year (that is this year) by a still greater reduction. Instead of that, I think I am right in saying that the Naval Estimates have risen since those words were spoken by something like £4,000,000, and there has also been an increase in the military expenditure. I do not believe anyone doubts that with more effective Treasury control than we have at present a great deal of this expenditure might be saved, with no substantial loss of efficiency at all. My right hon. Friend the Chancellor of the Exchequer is continually reproaching the House of Commons with its extravagance. He says that we are, none of us, in favour of economy now, and that we are all ready to spend money. It is unreasonable to expect Members of the House of Commons to undertake the responsibility of saying that the Naval Estimates are more than is required for the safety of the country. We may all of us suspect that the Naval Estimates are excessive. War scares are worked up in this country just as they are in Germany, and we say that it rests with the Treasury and with the Chancellor of the Exchequer to provide an effective check upon this expenditure. If they did so, then I think the Chancellor of the Exchequer might be sure of support. If all this expenditure is really necessary, and I am not in a position to deny it, then I say, rather than continue a tax like the Sugar Tax, against all the traditions of Liberalism and against the interests of Free Trade, my right hon. Friend ought to face the necessities of the case and impose extra taxation in other directions.

Considering the amount that passes on big estates at death, I believe that the Death Duties could easily be called upon to raise the other £3,000,000 that is required. He has the Super-tax, and he has the Income Tax on unearned incomes, and I cannot believe that it is necessary simply for want of money to-day in a country as rich as this to continue to tax the poverty of the people. My right hon. Friend, in his great Budget speech, in a passage I well remember, said that it was a very shabby rich man who would wish to save his own pockets at the expense of the bare pockets of the poor. He went on to say that at any rate these two necessaries of life, sugar and tea, ought, as far as possible, to be exempted from taxation. I do not believe, considering the state of prosperity of trade and considering the wealth of this country, that it would be a very great demand to make on the rich classes to find another £3,250,000 in order to save the Sugar Tax. I do not believe that the demand or the sacrifice would be great, but I am confident that the remission of those taxes would be a great act of justice.


The hon. Member for Burnley (Mr. Morrell) has done distinct service by reminding his leaders of their immoral conduct in climbing into office very largely by denouncing the party to which I belong for taxes on tea and sugar which they themselves have never seen it in their power to remit, and for denouncing the party to which I belong for an expenditure of £150,000,000 when they themselves are responsible for an expenditure of £195,000,000. The hon. Gentleman complained that the course of the Debate had been too confined. That was one of the great complaints of the right hon. Gentleman the Financial Secretary to the Treasury (Mr. Masterman), who, if he will allow me to say so, delivered a clever and able speech, and if I had not got the fear of my right hon. Friend and Leader (Mr. Bonar Law) in front of me, I might also add a speech that was marked by real eloquence—but my Leader has banished eloquence from the House of Commons. I do not propose to occupy much time of the Committee in dealing with the land value taxation part of the Budget, but when the right hon. Gentleman complains that we have spent a whole day in talking of the land value taxation contained in the Budget, and that some of the facts and some of the arguments are used again and again in Debates, I would remind him of one reason why we are obliged to call attention to this question. Let me remind him that in every election for many years past, right up to the election taking place in Whitechapel to-day, the same arguments have been advanced by hon. Gentlemen opposite, and by their leaders when they have entered into the struggle; that by this land value taxation money will be found for all kinds of objects, that old age pensions can be increased and the age diminished, that the national insurance obligations can be taken off the shoulders of the people, that more money can be found for housing and for slum clearances, and that money can be found for taking off the taxes on tea and sugar, so vividly denounced by the hon. Member for Burnley. The electors are always told by hon. Gentlemen opposite and their leaders that if only they will allow them to tax the value of land money can be found for all these objects.


"Hear, hear."


I know the hon. Gentleman sincerely believes that is so. He at all events occupies a sincere and an honest position in the matter, but do right hon. Gentlemen opposite occupy a sincere and honest position? When they go down to their constituencies and take part in elections and say to the people, "Oh, if only we continue to tax the value of land, millions upon millions of money can be found for all these objects." Are they sincere and honest, or are they guilty of great duplicity in deceiving the electorate? We are obliged to take up time in showing that these taxes have not been productive in finding this money, and that they are not likely to be productive of these millions for these objects. The right hon. Gentleman joined in the pæan of prolonged delight and pleasure and satisfaction at this Budget. He told us that the right hon. Gentleman the Chancellor of the Exchequer, was right in saying that this Budget had financed all the needs of the nation. The great claim the Chancellor of the Exchequer made for this Budget was that it would finance all the growing needs of the nation from year to year. He went on to say that one of the purposes of the Budget was the assistance of local authorities to help towards relieving the burden of the rates. We have had four different Budgets from the right hon. Gentleman, and not one of them has helped to relieve the burden of the rates substantially. Let me remind him of one speech at all events in which he did practically promise the local authorities that out of this land value taxation they would get considerable relief of their local taxation. He said he was going to use it for that purpose. The right hon. Gentleman yesterday denied that he ever held out any hope of any immediate result of a substantial kind from these Land Taxes. Let me remind the right hon. Gentleman of a certain deputation that went to him in July, 1909, from the Association of Municipal Corporations, attended by a great many Members of Parliament on both sides of the House. The deputation approached him and said there was a desire in the first instance to receive an assurance that the Budget, whatever its defects, would not at any rate restrict or diminish the resources already at the command of the local authorities. What did the right hon. Gentleman say to that?— I shall show you that the contributions which will come from the Exchequer will far more than outbalance any possible diminution due to my Budget How did he proceed to show it?— I want the local authorities to recollect what there is on the other side. There will be, first of all, some £600,000 going towards the roads. It is perfectly true that £600,000 is not a Grant-in-Aid of the rates, but it does go towards the improvement of the roads. Now there is another matter. The other matter is with regard to half the Land Taxes. I estimate that this year (the first year) the Land Taxes will produce £500,000, so that yon will have £600,000 to be spent upon road development, and then there will be £250,000, half the proceeds of the Land Taxes, so that there will he £850,000 of the revenue raised by this Budget which will this year go direct to the local authorities. Next year (that is 1910) the yield of the Land Taxes will, I estimate, at least be doubled, so that the local authorities will get £500,000 of money instead of £250,000. That will far more than compensate for any possible reduction in the revenue of the local authorities. If there had been £500,000, that £500,000 would have been taken away by the right hon. Gentleman himself. I want to remind him that he did make a distinct assurance that in the second year these Land Taxes were going to produce £1,000,000, and it is therefore impossible for him to say, either inside or outside this House, that he never held out any expectation whatever that there would be any yield of a substantial character in the course of the next two or three years. The great criticism I have to make upon his Budget is that it has failed to finance the needs of the nation. The right hon. Gentleman, who set out in his Budget to finance the needs of the Imperial Exchequer and to finance to a large extent the needs of the local authorities, has utterly failed in four years to find anything whatever for the local authorities. I may quote just another passage to the same effect. The right hon. Gentleman said:— Speakers have pressed upon me the desirability of making a larger contribution towards the increasing demands on the local rates. I have always fully recognised the justice of that demand. During recent years there have been enormous increased burdens placed on the shoulders of the local ratepayers, and I quite agree it is a very fair expectation on the part of the local authorities that the Imperial Exchequer should recognise the additional expenditure which has resulted from the duties imposed by us here sitting in this Parliament on the shoulders of local ratepayers. It is part of the plan of the Government to devote a portion—a substantial portion—of our Budget to meet the burdens on local rates. I am not merely expressing a pious opinion as to the desirability of doing so. It is part of a definite plan that we should take into account these burdens, and that something should be done in the course of next year to make some progress with the readjustment of the relationship of local and Imperial finance. That is our definite policy and our intention. It may have been the definite policy and intention of the right hon. Gentleman at that time, but he has not yet carried it out. This year, no doubt, he had to choose between the disagreeable alternative of imposing new taxation or breaking his promise. He chose to break his promise. He has not found anything for the local authorities. Only two or three days ago, in the Guildhall, there was a large assembly of representatives of local authorities, who had met particularly to discuss the matter of the increased cost of educa- tion. Once and all of them, no matter what were their politics, bitterly complained of, may I say, a breach of faith on the part of the right hon. Gentleman in not having fulfilled the promises he has made in this House and outside, here, there and everywhere, to find some money for the local authorities, particularly in the matter of education. This has become a very serious thing. The local authorities are at their wits end to find money for the growing expenditure on education and on social reforms of various kinds. It is not an easy matter for them to resist the unpopularity which is actually attending the administration of education in the counties and boroughs because of the very heavy pressure of the rates. In London itself only the other day we were obliged to increase the rate from 1s. 9¼d. to 1s. 11d., and the chairman of the finance committee felt it his duty to inform the ratepayers of London that another 4¼d. rate would very soon have to be imposed. The rate in London for education will very soon be 2s. 3¼d., and that is in order to meet the demands which are made by the Education Department.

I wish to say this to the right hon. Gentleman: Either the Government of which he is a Member should cease to demand from the local authorities enormous sums of money to be spent on new developments of education, and matters of that kind, or the right hon. Gentleman should carry out his promise and find some substantial relief for them in that respect. For my own part, I think the time has come when this Government—and if not this Government, some other Government—must consider the question from the point of view of some relative Grant. The Exchequer ought to be compelled to find, for all new subjects and all new developments of local expenditure, some of the money required. There was a time when, in matters of education, the Treasury found 60 per cent. and the ratepayers 40 per cent. From the point of view of London, it would be a happy day for the Metropolis if she could go back to that time, when the ratepayers only had to find 40 per cent. of the whole expenditure on education. This is one very solid argument to show that this Budget, of which we have heard so much boasting, has not fulfilled the many promises held out by the Chancellor of the Exchequer—promises which, I believe, he is still holding out to the House and to the local authorities.

Even if this Budget were capable of providing all the money necessary for the various purposes of the nation, I think there would still be very much to criticise in it. It will not provide, as I have shown, for the needs of the nation. It is not going to provide for local needs, and surely there is not much cause for triumph when in this year, which, we are told, is to be the most glowing year for British trade that has ever been known, in this year which is to be a record year for trade, we can only just balance expenditure and revenue! That is all we are told we shall be able to do in this record year—this year of excellent trade. But there must come lean years—years in which we shall have to husband our resources. One of my complaints of the present system of taxation is that we have got our Income Tax, our Death Duties, and other duties too high for times of peace, and that we have not a sufficient reserve left for times of emergency and war. I can see no hope during the next few years of diminishing the amount of money that must be spent on armaments. The Chancellor of the Exchequer told us that he could not hold out any hope of diminishing that expenditure, and I cannot understand why he should have recalled the time when Sir Charles Napier dreaded invasions, and got up some panic or scare. No doubt, from time to time, there are prominent men in every country who indulge in language of a kind which is prejudicial to their nation. They indulge in prophecies of war which are followed by peace and not by war. But that is not the really dangerous man. The really dangerous man is he who prophesies peace and finds that his prophecy is quickly followed by a war for which the nation has made no adequate preparation.

Let me remind the Chancellor of the Exchequer that greater Chancellors of the Exchequer than he have made miscalculations in forecasting peace. Mr. William Pitt himself came down to this House in 1792 and presented a Budget. He said that unquestionably there never was a time in the history of this country when, from the general situation, we might more reasonably expect fifteen years' peace than at the present moment. He then moved to reduce the number of our seamen by several thousand. He withdrew certain subsidies, and repealed many taxes, and yet, within twelve months of that prophecy, we were engaged in a very severe war with France. So it is always possible for any man, however learned and however experienced, to make miscalculations. Armaments are matters on which we are bound to spend money, particularly as other nations are spending money on them, and because they are a form of national insurance. I believe that the whole argument about armaments being non-productive has been very much overdone. The right hon. Gentleman said, I believe, that it was the only expenditure which was unproductive. It may not be as productive as money spent on industry or on the production of food or clothes or matters of that kind, but I do not see how it can be termed unproductive. Is not expenditure incurred for the sake of insurance so that we may make progress with our other industries? Unless we spend a considerable amount on armaments, we are not sure of being able to enjoy the produce of other nations. I am not certain the right hon. Gentleman is right when he says that this is the only unproductive expenditure. It depends upon what he means by productive. I am not sure that all the money spent on national insurance is productive. It depends upon whether it is a good or a bad scheme, and how far it is really effective for its purpose or to what extent it is wasteful. The same thing may be said of many other items of cur expenditure. We cannot assert that all the money spent on education is productive in teaching people to produce something. Therefore I say that that criticism is very much overdone. I regret that the Chancellor of the Exchequer should have struck the note he did in speaking on this question of armaments, because I am sure that everybody in his position, at the present time, ought to try and teach the people of this country that, so long as other countries are spending a tremendous amount on armaments, we ourselves cannot afford to do with a less expenditure than we have at this moment.

The expenditure of this country has gone up by leaps and bounds. Only in 1894 a famous predecessor of the right hon. Gentleman, the late Sir William Harcourt, bitterly complained in this House that the expenditure of the country had risen by £24,000,000 during the preceding twenty years. But in the twenty years that have since elapsed the expenditure of this country has risen by no less than £80,000,000—an enormous increase, and one which everybody almost who speaks with any authority ought to call the attention of the country to. It is going up by leaps and bounds. I am not sure whether we are not leaping out of bounds in this matter. The right hon. Gentleman may ask, "What would you do to cut it down? You yourself are in favour of the present expenditure on armaments." Yes, I am; but it is not for me to say what should be done. Personally, I was always in favour of old age pensions being made contributory for all under forty years of age. I always spoke to that effect, but I was not in the House at the time when old age pensions were introduced. The right hon. Gentleman knows very well that, though I thought his intentions were admirable and that his act would effect an immense improvement, yet I have always thought that it was too expensive a system. There are many who believe that the right hon. Gentleman and his very able Secretary to the Treasury are hardly the men to guard the Treasury. They always seem to partake much more of the nature of the dog belonging to the gamekeeper which went out regularly with the poacher. So long as these right hon. Gentlemen are at the Treasury we can hardly hope that they will keep very much control over the other spending Departments while they are so ready and so anxious themselves to encourage expenditure.

We have come to this: We cannot afford more expenditure at this time unless we recast our fiscal system. One of the first duties of a new Government will be to recast the whole of our Imperial and local fiscal system from top to bottom. I believe it to be absolutely wrong. We could get an Imperial and local fiscal system which would press less heavily on the very poor, for whom an hon. Gentleman opposite pleaded so eloquently just now—a system which would enable us to continue in the path of social reform, and do something to finance the local authorities when they are spending money on national rather than on local services. This is not the occasion when I should be allowed, neither perhaps would it be consistent with due humility if I were to attempt to forecast the future, as to some rival system to our present Free Trade system. I was regarded as a heretic even when I was at the Treasury. I always believed you could put Revenue Duties on many articles, and so raise money with far less pressure on the people and industries of this country than you put on them at the present time. I would remind the Chancellor of the Exchequer that under this Government no less than 2,200 articles are in the schedule of goods coming into the Port of London upon which dues are paid for the purposes of the Port of London. I cannot see why right hon. and hon. Gentlemen opposite, who support a system by which 2,200 articles are subject to dues for the purpose of deepening the port and doing things necessary to the service of the port, should be so averse to putting on other duties for purposes such as the education of our people, the carrying out of social reforms, and other such matters. From such examination as I have been able to give this question, and I have given it some attention, I believe that duties of that kind on many articles would press far less heavily on the poor and on the industries of the poor than the Sugar Tax or the Tea Tax, or the very heavy rates which have to be borne in many districts. Those rates press far more heavily in connection with the competition of the foreigner upon the industries and those who live by them than would any moderate duty put upon certain classes of goods for revenue purposes. It is not for me to construct a Budget, but I shall at the proper time have the courage of my opinions, and, both inside and outside the House, I shall invariably argue that the day for perfect Free Trade or free imports, such as we have in this country, has come to an end, and that it is necessary to reconstruct the whole of our Imperial and local system of finance, and to broaden the basis of taxation so as to meet our local and national needs.


The right hon. Gentleman who has just sat down referred to the very eloquent plea made by my hon. Friend the Member for Burnley (Mr. Morrell) for some relief of the cost of living to the poorer classes. The right hon. Gentleman suggested that it would benefit the poor more if we adopted the remedy of a reorganised fiscal system. To take the tax off sugar and tea and to tax the rest of the food seems most illogical, and not calculated to bring about the effect the right hon. Gentleman desires. I desire to confine my observations more to the balance sheet as a whole rather than to the Land Taxes or any of the separate taxes in the balance sheet. The Secretary to the Treasury challenged us to offer some alternative Budget or to address our remarks to the Budget as a whole. I propose to accept that invitation, and to offer some criticism of the figures now before us. I am quite at a loss to understand how the Chancellor of the Exchequer can justify what I may call the sanguine Estimates as to the future revenue. He told us very frankly, in the very able and lucid speech to which we had the privilege of listening, that he was faced in the coming year with a deficit of something like £7,500,000. He proposes to get rid of that deficit by writing up his Customs by £1,715,000, Excise by £850,000, the Estate Duties by £1,500,000, and so on. This brings us into the domain of prophecy. The right hon. Gentleman told us that he had consulted able authorities, who led him to believe that we were entering upon the most glowing period in British trade. He anticipated that the current year will outrun, as it must outrun, previous years, because he does not propose to do anything to reduce expenditure in order to balance his accounts, and he must therefore anticipate an increase in the principal sources of his revenue. I do not believe that he is justified in taking so sanguine a view of the coming year. The right hon. Gentleman referred to the large development which has been going on all over the world, to the great prosperity in trade, and to the large export of capital which has been coincident with that development. It is well known that when you have a large export of capital to various parts of the world it unquestionably stimulates trade and commerce. The savings of this country are something like £300,000,000.


Three hundred and fifty millions.


I have taken an average of about £300,000,000. That sum of money is invested, and largely goes into various undertakings in different parts of the world. That has been going on for the past three or five years, coincident with the enormous expansion in our trade. If we examine the figures of recent months we shall be able to draw some deductions from the facts. On turning to the export of capital, I find that the amount of capital raised for various undertakings, railways and so forth, in various parts of the world shows considerable shrinkage for the month of March. The "Statist" says that the new issues of capital in March of this year were much smaller than in the two previous months, and a little larger than last year; and that the total of £14,000,000 compares against £12,500,000 last year, £27,000,000 in 1911, and over £27,000,000 in 1910. That is a very striking fact, because we see there has been a considerable shrinkage in the amount of capital coming forward for development purposes in various parts of the world. With regard to the Continent of Europe, I find that there also a great shrinkage took place. I am quoting from a report from Berlin:— In February the new capital called for by joint stock companies, new and old, showed a remarkable shrinkage, having been less than one-third of last year's figures. The report also states:— From all sides come reports of great difficulty in making collections, and new outers for goods are being held back because of dear money and doubts about the willingness of consumers to pay the present high prices. That is a striking fact which should make us pause in taking the Estimates of the Chancellor of the Exchequer, and make us ask him to give us some justification for so lightly assuming that he is likely to raise so large a sum as £7,500,000 to meet this expenditure from the same sources. The right hon. Gentleman referred to the uncertainty of the Balkan war, and to the possibility of peace being either nearer or further away in that part of the world. I do not know whether he thinks that recent events have brought peace any nearer in the Balkan Peninsula, but I should imagine, without being unduly pessimistic—God forbid that there should be a development of war in that part of the world!—that the position does look very grave indeed. Whether it will result in a further development of war we cannot tell at the present moment. If there should be peace, as the Secretary to the Treasury pointed out, after a war has terminated, you have to pay for the war. If the present war should come to an end, we know that the impoverishment of the country, the losses and terrible devastation which has taken place in the Balkan Peninsula will mean a still further increase in the drain upon the capital resources of the world. We find that on the present basis there is a great shrinkage and scarcity of capital. That does not necessarily mean poverty, for you will find that in periods of great prosperity there is a scarcity of loanable capital. During recent years there has been a large transference of floating and loanable capital. Money has been going to different parts of the world, which cannot for some years be reproductive. When capital goes into various developments, such as harbours, railways, and so forth, it tends abnormally to create the very shrinkage to which I refer. If, in addition, you have a great waste of capital, you ought to have regard to that in drawing up your Budget for the current year. In view of these facts, without being unduly pessimistic, we are justified in asking the Chancellor of the Exchequer how he is going to get over these facts.

7.0 P.M.

When we are enjoying a great period of prosperity are we not justified in asking the Chancellor of the Exchequer to do something more to build up our reserves of taxation, that is to say, should he not give relief from taxation in a period of great prosperity? Are we not justified in asking for some remission of this enormous expenditure? I offer the opinion that one better way of meeting this deficit, instead of writing up the income side, would be to reduce the expenditure side. I agree with the right hon. Gentleman (Mr. Hayes Fisher) in his plea for economy. I am sorry that one so often finds a difficulty in co-operating with hon. Members opposite, because they will not, when making their plea for economy, recognise any possibility of economy in armaments. I am no supporter of a little Navy, and I recognise, as many do on this side of the House, the necessity of adequate armaments. I submit that we have adequate armaments. Figures have been published showing that during the last twelve years the expenditure of the world upon armaments has increased from £88,000,000 to £151,000,000, and that we are now spending £46,000,000, compared with Germany's £22,000,000. What will satisfy hon. Members opposite? Unless we can unite to recognise economy all round we shall never get any further. Hon. Members opposite wish to have economy in the Civil Service; the right hon. Gentleman opposite wants to have a contributory old age pensions' scheme, and Members on this side make a plea for economy in armaments, and the result is that one side just about offsets the other side. The plea for economy all round does not necessarily mean that we do not wish for an adequate naval defence. We submit that we have an adequate naval defence, and we believe that these figures amply demonstrate that. The right hon. Gentleman (Mr. Austen Chamberlain) has often raised his voice for economy, and I believe he realises that he can have an adequate naval defence, and you can strengthen your financial reserves, which are surely necessary in view of any war or possible trouble. But we can never get the Sinking Fund increased, and we can never get our credit improved unless we can unite or do something to reduce this most sterilising expenditure upon armaments. I believe that really lies at the very root of the stringency in the money market. It is one of the great contributing causes. Of course, there is a variety of causes, the great prosperity of trade, and so on. The right hon. Gentleman said surely the police force and the fire brigades were unproductive. Of course they are in the sense to which he referred. But at the same time no one has suggested, that you should do away with your armaments. The whole question seems to be that we never can arrive at what is adequate in the matter of armaments. Is it not possible for us to come to some agreement? In the history of the great Conservative party it was possible in the past. The Conservative party produced Disraeli, Lord Randolph Churchill, and Peel, and it produced many economists who are in favour of adequate naval armaments, but were also alive to the fact that policy should govern expenditure, and that you had to do something or other, to come to some conclusion if you really wished for economy. You will never get economy unless you can plead for it all round. I hope hon. Members opposite will see that many of us on this side are not little Englanders or little Navy men who do not realise the necessities of this Empire as a whole, but we plead that if we are to have this improvement in our credit, and if we are to have sound finance a balance sheet which will do something rather to reduce the expenditure side of the account than to unduly write up the income side is one which will redound to the credit and honour of any Government.


I do not think I can very usefully follow the hon. Member into a discussion of the amount that we ought to spend upon the Navy or Army Votes on this occasion. He said truly that the party to which I belong has, in the past, contributed as many stern economists to the councils of the country as the party opposite, and for a long time it was the reckless and unskilful finance of the Whig party which made the fortunes of their Conservative opponents and damaged their own. The hon. Member should not have omitted Mr. Pitt. Pitt made his reputation as a financial reformer and economist; but, with a true sense of relative importance, when the defence of the country was at stake, and when he was faced with a real crisis he spent money as freely as previously he had endeavoured to save it. What I have tried on previous occasions to impress on those who put forward the views which the hon. Gentleman has expressed is that in this matter at the present time we are faced with the necessity, which we cannot ourselves control, that the scale and standard of our expenditure is laid down not by our own will or fancy but by the expenditure of other Powers, and if we say, since we are upon this subject, that if it be well to remember how much we spend upon these particular purposes when we come to finance, it is at least as important to those who sit on these Benches to remember when we come to discuss the Army and Navy, what their attitude has been in regard to foreign affairs. Take a little episode which occurred in the House the other day when the Foreign Secretary made a most important statement on a most delicate foreign situation. He spoke with obvious anxiety lest any word that he might use should do harm rather than good in the present tension and difficulty in the Balkans. The Prime Minister was asked if that statement would be discussed by a Gentleman on those benches. He expressed the strong feeling of the Government that it would be most inopportune, but said that, of course, if the Leader of the Opposition demanded a day he would be forced to grant it. My right hon. Friend rose at once and said that he concurred with the Prime Minister that any discussion would be inopportune and dangerous and he certainly did not ask for a day. What followed? The hon. Member himself, who now pleads for a diminution of armaments, regardless of the danger in which he was placing the peace of Europe and the peace of this country, rose to support a Motion for the Adjournment of the House in order to take a discussion which the Leaders of the two sides of the House united in deprecating as inopportune and dangerous.


Subsequent events have justified that.


That only shows that between the hon. Member's reading of subsequent events and mine, there is, I am afraid, an unbridgeable gulf. It appeared to me that the hon. Member and his Friends acted with great levity in the then situation of Europe and of this House, but that it was particularly unfortunate that the people who felt bound to try to force a discussion at a time when it was deprecated by responsible leaders on both sides should be those who grudged the money which is necessary to support our own foreign policy or to defend our own interests. Our Debate this afternoon began with a remarkable speech from the right hon. Gentleman (Mr. Masterman), of great ability, great power, and great eloquence. He commented with some severity upon the Opposition for having devoted a day to the discussion of the Land Taxes rather than the general lines of the Budget Statement of the Chancellor of the Exchequer. We thought one day might well be devoted to that purpose, and I think it was very usefully employed. We had not intended that the discussion should lap over on to the second day, which we hoped to reserve for more general subjects, but the greater portion of the right hon. Gentleman's speech was occupied with that one topic. He repeated the answer of the Chancellor of the Exchequer, that the case which my hon. Friend made was the same case with the same facts and the same arguments that we have so often heard. Yes, and that would have been a very good reply to my hon. Friend, in fact, if the case had been dealt with and the arguments answered when they were raised before.

The Chancellor of the Exchequer says we have only proved one case of serious non-administration, and the gentleman who was responsible for it has ceased to be a member of the valuation body. How many times did we have to bring that case to the knowledge of the Committee before we could get any redress whatever? It was defended by the right hon. Gentleman's predecessor twice or three times. First of all they knew nothing about it, and then the Chancellor of the Exchequer himself was not in the House when it was previously discussed. Not until we had debated it four times did we at last get the advantage of the presence of the Chancellor of the Exchequer. He was then at once so much impressed by the case which was made that he promised an investigation. If the Government had promised that investigation the first time, four Debates would not have been necessary. Take the Lumsden case. How many times have we had to debate that before we could get from the Chancellor of the Exchequer a promise that the wording of his Act should be amended, so that the injustice permitted in the Lumsden case should not be permitted in any other? I do not know how many times, but if these Debates have to be repeated and repeated, it is because the Government, even when they know they have an indefensible case, will not say so at once, and say, "We will deal with it as soon as we can," but wait until we have debated it time after time before they will make any concession whatever.

Another general observation I must make about valuation. The right hon. Gentleman, like the Chancellor of the Exchequer, spoke of the offer which the Chancellor made in response to a request from me—for the suggestion first came I think from myself, and certainly from my side of the House—the offer of a Committee, and I interrupted the Chancellor about the names yesterday only because I did not want it to go forth to the gentlemen themselves or to the public that we criticised their names. We did not know their names, but I thought it would have been very unfortunate if it had appeared that these gentlemen, who, as it turns out, had never even been approached, had been the subject of adverse criticism or comment by us. That was not so, and it was not the composition of the Committee to which we objected, but it was that the Committee, as limited by the Chancellor of the Exchequer, would not have got at the truth, and what we wanted was the truth. In the first place, they were debarred from pursuing any question which raised the policy of the Act in any way. It would have been sufficient for any witness to say when his administration was challenged, "That is my interpretation of the Act. That is Section so-and-so of the Act," and the Committee would have been estopped from pursuing their inquiries. More than that, here is an essential question which goes to the whole root of the justice of the Land Taxes: Are you doing what the Chancellor said he was doing, and what he again and again told the House his Bill would do? We say you are not. We say not only are you not, but outside this House, when you come to the Courts, you do not pretend that you are. Here in the House we have been told again and again that no man is to be charged an increment where there was not a rise in the value of the site which is the subject of taxation, but in the Courts the Government have actually claimed that there might be a rise in site value when there was no rise in the value of the site, and that I believe is declared to be the law of the land. If so, then the Government are avowedly doing what they said they would not do, and it is their business, without waiting for us to raise this question, to bring in an Amending Bill to restore the Act to the shape in which they thought it was when it passed through the House, and by describing it as which they induced the House to pass it. That is all I want to say about land valuation, and I would not have recurred to it, but for what was said in the latter portion of the Financial Secretary's speech.

I wish to say a word or two supplementary to those which I used immediately after the Chancellor of the Exchequer had finished his Budget speech. The subsequent reflection which I have given to the matter, and further study of his speech has not shown me cause to unsay anything I said at that time, or to modify it. I think that the forecast of the Chancellor of the Exchequer is dangerously speculative. I agree with the hon. Gentleman opposite (Mr. D. Mason) that the estimates of revenue which the right hon. Gentleman has put forward are not fair estimates, having regard to the circumstance of the present time. No doubt they may be realised if every circumstance is favourable, but we have no right to count upon so many favourable circumstances, and so great favourableness in each of them, as the Chancellor of the Exchequer appears to do. The right hon. Gentleman, as I understand from his speech, founds his Budget estimates upon the assumption that the present year is going to witness a greater trade boom than anything we have yet seen, that there will be no considerable industrial disturbances, that there will be no fresh cause for anxiety in foreign affairs, and that the trade of the world will be not merely what it has been during the last twelve months, but much better. I say that is more than you have a right to count upon, standing here to-day in the month of April. It is most unwise to reckon that by the end of the month of March next such a forecast as that will have been fulfilled. Let me say a word in regard to the forecast. I hope the Chancellor of the Exchequer will give the explanation which my hon. Friend the Member for the Ayr Burghs (Sir G. Younger) asked in regard to the estimate of the Whisky Duty. I was a good deal puzzled by his figures in regard to the Whisky Duty. Neither I nor anyone I have been able to consult, any more than my hon. Friend who has great means of knowledge, as his constituency is largely interested in this subject, has been able to follow the calculation of the Chancellor of the Exchequer as to the four years preceding the Budget, and the four years following it. I just emphasise the request made by my hon. Friend, that we may have an answer on that point.

I was equally puzzled by the estimate of the Tea Duty. I understood when I heard the Budget speech on Tuesday last, and I partly understand from a more careful reading of the speech, that in fact though he estimates that the revenue receives the benefit of a consumption of 14,000,000 additional pounds weight of tea in the present year as compared with last year, it does not mean that he is budgeting for a normal increase in the consumption of that amount. That would be wholly abnormal, because for several years past the normal increase, though considerable, only amounted to half of that. A great part of the 14,000,000 pounds is due to holding back at the end of last year. That brings me direct to another point of importance to which I wish to direct the attention of the Committee in regard to the Budget Statement. The Chancellor of the Exchequer has made, I think, a very sanguine and hopeful estimate, and by taking £1,000,000 out of the Exchequer balances he just manages to balance revenue against expenditure, with a surplus of, roughly, £100,000. That being so, is it true to say that the revenue of the year meets the expenditure. No, Sir, it is not. In the first place, in regard to taxes, the Tea Duty this year is not the normal Tea Duty. It is composed, I think, to the extent of £450,000 of arrears from last year. Let me say that on the whole of Customs and Excise, out of an estimated increase of £2,500,000, the Chancellor of the Exchequer attributes a figure at which I could not arrive exactly, but I think it is over £500,000 to arrears of taxes, which amount is really part of the normal revenue of last year. When you come to the Land Taxes, the whole of the increased revenue this year is arrears of revenue of last year, and not the normal revenue of the next year.

In the first place, he has the advantage of, I think, £2,000,000 this year of revenue which ought to have been got in previous years, and which cannot be counted upon as part of the normal revenue of future years. In the second place, he asked for this £1,000,000 from the Exchequer balances. What is the history of this? He asks it on the ground that the Admiralty have under-spent, and that that under-spending was no real saving, as, of course, it was not, and that we must still have the things which ought to have been obtained before this date; and he postdates this £1,000,000 of the revenue of the year before last and uses it for expenditure which will fall due this year. The Chancellor of the Exchequer in making his Budget Statement last year held up the realised surplus of the year, amounting to £6,500,000, partly on account of contingencies which he thought might mature in the course of the year. At a later date he said that one of these contingencies had arisen. There had been a new increase in the German Navy that necessitated an addition to our naval force, and for that purpose he took the £1,000,000. I ask the Chancellor of the Exchequer to follow me, because, if he dissents from me, I should like to be corrected. When the First Lord of the Admiralty came to make his statement he explained that the £1,000,000 was wanted for things which were to be bought then, which must be ordered then, and which would be complete within the year. It had nothing to do with under-spending. It was for an additional estimate to meet the additional German programme. Has it not been spent? The First Lord of the Admiralty, speaking comparatively late in the year, said he could spend £900,000 odd within the year. I believe it has been spent, and it was not true that the £1,000,000 was held up for under-expenditure of the previous year. It was intended for additional expenditure last year, and it was so spent. The right hon. Gentleman ought not to be taking credit for it again at the present time on the ground of under-expenditure. What was the under-expenditure, even if I grant that there was under-expenditure? It was not £1,000,000. It was £700,000. If he only took the amount which he under-spent last year, instead of the Budget balancing on the right side, it would even now balance on the wrong side. I have gone into that rather intricate transaction, because I think, if I may say so, most of the interest of the present year's statement has reference to Budgets of future years.

The right hon. Gentleman is taking great risk, and he is leaving somebody to find a rather unfortunate and unhappy settlement in the future. We know that old age pensions have grown year by year, because we deal with a population which reaches seventy, and as the population of our country has been steadily growing throughout a whole century, as each ten years pass the population has been larger, and as each new ten years come we shall have the survivors of a larger population, and therefore a larger number of people will reecive pensions. We know that insurance must increase. What about the Navy or the Army? Do not let the hon. Member (Mr. D. Mason) or any other Member think that I wish to discourage attempts to get full value for every penny spent, or to prevent the striking off of anything which would be useless. That is a process which ought always to be going on. The Estimates ought to be always revised in the different offices with the view of striking off any expenditure which has become useless or is redundant. Making allowance for all that, does anybody believe that expenditure is going to grow less? If the right hon. Gentleman had said that expenditure on the Navy was abnormal, and if he still, in view of what has happened, made the sanguine speeches which were quoted by the hon. Member for Burnley—such speeches as he made two or three years ago when he said that Navy expenditure had reached the climax, that in two years it would be less, and that in two years more it would be less still—if he thought that there would be no great criticism to be made as to the taking of the £1,000,000 to stop a gap this year, knowing that he would not want it next year, I could understand his position But who thinks it? What prospect is there that you will be able to reduce the building programme? It remains as true to-day as when it was said by the Foreign Secretary that we have to rebuild our fleet as well as to build to meet the increases in the fleets of other Powers. We are now nearer the time at which it has to be done, and that expenditure will go on. We ail know that the Admiralty deferred too long the provision of men, and we heard from the First Lord that year by year they have got to enrol a very large number of new men. Anyone who has to deal with the Army or Navy Estimates knows that as you increase the number of men you increase every Vote in the whole Navy or Army Estimates. I say that under these circumstances you cannot look forward to a reduction in the Navy Estimates. You have to look forward to an increase.

Then when you come to the Army the same considerations apply. I hope that I do not very often make prophecies; I trust that I still less often quote my own prophecies; but I remember some years ago saying to the then Secretary of State for War, when he propounded his Army scheme, that he was wrong in his estimates somewhere, and either he would not get the men or the money which he estimated would not pay for what was required. The Army Estimates are kept down because we have not got what the Government told us then it was necessary that we should have, and what they told us was necessary that we should have at a time when the armies of other Powers were less than they are at present and when the scale of military expenditure throughout Europe was less than it is. And if a certain standard was desirable and right at that time, no lesser standard can make us safe to-day. In fact, it must be evident that if there is any change in the standard owing to the change in the circumstances it would be a change in the direction of increase. If the Army is to be kept down it is because we have not realised the standard which the Government themselves set up a few years ago. You are not able to finance the expenditure of this year except by the aid of very sanguine Estimates, and of arrears of taxation which should have been paid in past years, and by the taking of the money which ought to have been spent and was spent in the past year, which really ought now go out of the Exchequer balances in reduction of debt. You have to do all that to show a balance of under £200,000 on the right side for this year; and this is the year which the Chancellor says is going to exceed anything which we have ever known in respect of prosperity, and it is on that basis that he is estimating. What provision has he made through all the years, during which he has been responsible, for the bad times which he knows must come? He has made none. He spends every penny he can get; he mortgages every penny of future money he can receive; he does not look forward and make provision for the expenses of the future. If he squeezes through without putting on new taxation he leaves to his successor the unpleasant duty of making sound a position which he has left thoroughly unsound.


The right hon. Gentleman has made a speech so fair and temperate in tone and form that it is a matter of personal regret to me that I am unable to agree with him in the conclusions to which he has come. I do not propose to follow him in the opening part of his speech, which was of a general kind, and related to matters which I believe were discussed yesterday. I only wish to turn to what I may call the sub- stantial part of his speech, which related to the Budget for the present year. The first ground of the right hon. Gentleman's complaint is that the Chancellor of the Exchequer, in estimating the revenue for the current year, has assumed that there would be a greater trade boom than exists at the present time. That is an error: My right hon. Friend has made no such assumption. What he has assumed, and what I submit to the Committee is a proper assumption for him to make, is that trade will continue on its present level for such periods, as he may be sure that existing orders which have been given are more or less guaranteed. That is all he has done. After inquiry, he finds that in the great trades of the country such large orders have been given that there is a fair assurance that the existing trade boom will continue.


May I ask the right hon. Gentleman—


If the hon. Member will allow me to continue my argument, he will have an opportunity of making a speech. On that assumption the right hon. Gentleman has estimated the revenue for the current year. I do not think that it is open to a Chancellor of the Exchequer to estimate upon any other basis. I have been a number of years in this House, and I do not think that I have ever failed to hear the substantial part of the Debates on the Budgets, no matter what Government was in office. The Opposition invariably assume one of two things: either that the Chancellor of the Exchequer has overestimated his revenue or that he has underestimated his revenue. The particular complaint against my right hon. Friend in the past has been that he always underestimated and imposed upon the country burdens for which he could only obtain a fictitious justification. For several years it has been shown that my right hon. Friend was right in his Estimates of coming revenue. He has estimated not, as was stated, entirely inaccurately in order to justify an increase of taxation, but he has estimated in every case according to the reasonable prospect at the time the Estimate was made. Now it suits the Opposition to desire or to anticipate that fresh taxation should be imposed this year in order to meet an anticipated deficit. It is therefore assumed that my right hon. Friend has on this occasion taken too favourable a view of the product of the taxes. I can assure the Committee that there has been no exception this year as compared with other years, and my right hon. Friend, who, I know, has received the most competent advice upon the subject, is thoroughly justified in the Estimates which he has presented to the House. The right hon. Gentleman argued two points in order to substantiate his case, that the revenue of the year did not reach the expenditure. His first point was that £2,000,000 of revenue is not revenue really attributable to the current year, but is revenue which had been received last year, revenue in respect of holding back. I think that he has greatly overestimated the figure. It is nothing like £2,000,000. But suppose that the figure was as he states, what would be his remedy? With a revenue of £2,000,000 actually coming in during the current year, whether attributable to this year or to last year, would he impose new taxation? Would he pay it into the Old Sinking Fund, and impose new taxation in order to raise this £2,000,000 again? Of course he would not. The proposition is unthinkable, and neither the present nor any other Chancellor of the Exchequer has ever failed to avail himself of such revenue when he obtains it.

The second point turns upon the £1,000,000 taken out of the Exchequer balances. The right hon. Gentleman has not quite done justice to the case with regard to that £1,000,000. May I state briefly to the Committee how the particular Estimates with regard to the Admiralty arise? In any year the Admiralty enter into a liability in respect of the new programme of the year. The Admiralty give orders perhaps to take an arbitrary figure to an amount of £15,000,000 in any one year. Before the new programme will be completed the Admiralty will have made itself liable to pay a total sum of £15,000,000. The orders cannot be executed in the year in which they are given. They take something like two years or two and a half years to complete. In consequence the orders will run over three financial years. The Admiralty have to estimate how much of the £15,000,000 liabilities incurred in the first year will fall to be paid during each of the three years. Again I will take arbitrary figures. Suppose in the first year they settle that they will have to find £2,000,000 and that in the second year they will have to find £8,000,000, and in the third year £5,000,000, and that it so happens, for reasons quite outside the control of the Government—the shipbuilders are full, or some other reason—that in the first year the orders to the value of £2,000,000 are not executed, and only £1,000,000 worth of work is completed on the ships, the consequence is that at the end of the year the Admiralty has to return to the Exchequer £1,000,000, which the taxpayers have found and contributed for a specific purpose—to pay off part of the £15,000,000 in the first year of the order. If that money goes to the Old Sinking Fund the taxpayers will have to find the £1,000,000 over again, because, instead of having paid off £2,000,000, leaving outstanding £13,000,000, they will have paid off only £1,000,000, leaving an outstanding liability of £14,000,000, and the taxpayers, having found £2,000,000, might reasonably expect that they would have only to find £13,000,000 more. In 1911–12 there were great under-spending amounting to £1,600,000, and these under-spending would affect the Estimates of the two following years. In the case of the smaller ships, which would be completed in the second year, the under-spending would affect the Estimates of that year, and in the case of the larger ships, not completed until the third year, the under-spending would affect the third year. My right hon. Friend put this £1,000,000 into the balance in order that the taxpayer should not be called upon ultimately to find £16,000,000 in order to pay off a liability of £15,000,000. The second year comes. My right hon. Friend expects in the second year that the £1,000,000 will be drawn from the balance in order to meet the additional expenditure on shipbuilding caused by the arrears of the previous year. As a matter of fact, it was partly that and partly owing to the expenditure of Germany on armaments.


It was stated that the £1,000,000 was taken to meet additional expenditure because of additional German armaments.


The facts can be easily verified, but my memory is quite clear, so far as one can rely on one's memory, that to a certain extent the £1,000,000 was partly for deferred expenditure on liabilities, and partly to meet the increased expenditure by Germany upon armaments. As a matter of fact, there were again arrears in shipbuilding. Instead of the former arrears having been wiped off, there were new arrears. The shipyards were very full indeed, with the result that the proportion in regard to the second year was not actually expended in the second year. What, then, would be the right course to adopt? The right hon. Gentleman says that as the money was not expended in the second year, the whole of the £1,000,000 ought to be taken out of balances and paid into the Old Sinking Fund.


I am sorry to interrupt. That was not what I said. What I said was that you had spent it, that you took it to apply to the new German programme of armaments.


We are at issue on the question of fact. The question of fact is whether the £1,000,000 was ear-marked in respect of increased German expenditure, or whether it was for arrears in shipbuilding, plus the German expenditure, and I say that it was ear-marked for the two purposes. So far as I am entitled to argue that, I may point out that in the year 1913–14 we had to take into account the arrears of expenditure which occurred in 1911–12, and the further arrears which occurred in 1912–13, and all sets of arrears together—all of which will have to be paid for—in the year 1913–14, will cover £1,000,000. Surely, in these circumstances, it is proper that the Chancellor of the Exchequer should take out of the Exchequer balances this £1,000,000, which was originally intended for the purposes of the Navy, and devote it in the year 1913–14 to meet so much of the expenditure of 1913–14 as may be due to arrears in payment in consequence of the orders given in 1911, not having been completed, I think the Committee will agree that it is an ordinary and businesslike course which the Chancellor of the Exchequer has adopted. The right hon. Gentleman referred to the question of the Whisky Duties, upon which the hon. Baronet, the Member for Ayr Burghs (Sir G. Younger), had spoken earlier. Upon that my right hon. Friend the Chancellor of the Exchequer states that I can give the assurance that a statement on the subject will be issued. I think it will be agreed that the figures are too difficult to enter into on the floor of the House. There remains only one point to refer to. The right hon. Gentleman pointed out, with perfect truth—I do not think he exaggerated it at all—the increasing liabilities which lie ahead of the State. I agree with him that with the increase in numbers and the greater longevity of old age pensioners, we have to look forward to a steady increase of amount year by year. While we have to look forward to an increase of expenditure, as my right hon. Friend stated in introducing his Bill for National Insurance, may we not also reasonably look forward to an increase of revenue? The very same causes which lead to increased expenditure on old age pensions—the greater number of people, their better health which leads to greater longevity—operate just as well in increasing the wealth of the country, and, so far as normal expenditure is concerned, the normal increase of revenue will suffice to meet liabilities.

The right hon. Gentleman put another case. He said that in a year of abounding trade we have only provided a surplus of £180,000. "How are you going to meet all your liabilities when trade is bad" he asked, "the dark days are coming, what resources have you got? You have made no provision for bad times, you have not put by a penny." That is his case. Let the Committee remember that this Government has been in office since December, 1905. The close of the first financial year for which the Government was responsible was 31st March, 1906. Since then, and until the close of the present financial year on the 31st March, 1914, we have to account for eight years. During those eight years the right hon. Member for East Worcestershire says that we have not laid by for a rainy day, that we have no resources upon which we can draw in the event of bad times coming. My right hon. Friend has already stated the figures in the gross, but I think it may not be unimportant that the figures should be stated in detail. What is the precise provision which has been made during those eight years? The deadweight debt has been cancelled during those eight years to the amount of £81,740,000. There is money now in hand merely waiting for a favourable opportunity to repurchase Consols. Let the Committee remember that the provision which is made in the present Budget is not a provision which can be reversed. Suppose the exigencies of the Government were such that they wished to take a little money from the present provision in the Budget, it could not be taken. Provision is actually made in the present Budget for the cancellation of a further £15,000,000 of dead-weight debt. These two figures together amount to a cancellation of dead-weight debt of £96,746,000. But that is not all. Besides the dead-weight debt, we have other capital liabilities. As my right hon. Friend stated, and it cannot be repeated too often, it would not be proper in taking our capital liabilities to include under the same head capital liabilities which produce income and capital liabilities which do not produce income.

I do not say that they are reproductive; I do not say whether the capital liabilities are advantageous to the State or not in another sense; the only consideration I am pressing on the Committee now is that capital liabilities which produce income ought not to be included with other forms of capital liability which bring in no income. That is too clear to need argument. Therefore, I leave out the capital liabilities in respect of telegraphs and telephones, which produce income. Leaving those two liabilities outside the account, there has been during the seven years which expired on 31st March last a reduction of debt amounting to £4,287,000. I add to that figure the reduction which is provided for in the present year to the amount of £1,600,000, making a total deduction of debt during the eight years of £102,633,000. Is it a reasonable comment to make upon the Budget that no provision is made for a rainy day because the actual surplus for the year is only £180,000, when, year after year, for eight years, the Government have made an annual average provision of £12,800,000 in reduction of the debt, and are making a reduction this year not less large than in the other years? In those circumstances, I think the Committee will agree that the criticism of the right hon. Gentleman is not justified, that not only is the expenditure of the year fairly met by my right hon. Friend, but that in the gigantic provision which he has made for the reduction of past debt we have a very large provision against a rainy day.


I wish to try and clear up the point about which there seems to be some dispute, in regard to the £1,000,000 taken by the Chancellor of the Exchequer from the Exchequer balances, as my right hon. Friend the Member for East Worcestershire said, to enable him to balance his account, and without which the account could not possibly be balanced. It was said by the Chancellor of the Exchequer in his speech the other day that he was quite justified in taking that £1,000,000, because it was an expenditure which ought not to have fallen upon this year at all, which should have been made in the ordinary course last year, but which has been held over for this year; and the right hon. Gentleman the Home Secretary has elaborated that in Committee to-day. He has taken a hypothetical case, and explained how naval construction is necessarily spread over three years, and any delay which takes place in one year is merely postponed to another year, and on that ground he has argued that it is perfectly justifiable for the Chancellor of the Exchequer, having the postponed liability to meet this, or to take the sum set aside last year for the purpose of meeting that liability, but which was not then required for that liability, and deal with it as he always intended to deal with it. I believe I have stated fairly the case which the right hon. Gentleman has made. On the 24th June last the Chancellor of the Exchequer, having been challenged as to what he was going to do with the £6,500,000 he then had, came down to this House and explained what he was going to do. He said that he held it up for certain contingencies. One had reference to the strike. Then he went on to say:— The second contingency which I mentioned was that of a possible increase in the demands of the Admiralty upon the Exchequer. The First Lord of the Admiralty, in presenting his Estimates this year, stated quite clearly that he based his Estimates upon the assumption that the German naval law remained unaltered. There was a Bill which I think was before the Reichstag at that moment for a very considerable addition to the provision made by the old Naval Law for the German fleet. Since then that Bill has become an Act of Parliament, and it is no longer a contingency hut a fact with which we are confronted.…The contingency which I then indicated as one of those which would render it necessary for us to draw upon that reserve has actually arisen, and my right hon. Friend will in due course submit to Parliament Supplementary Estimates. It is not for me to anticipate any statement he has got to make, and I only refer to it in so far as it is necessary in order to explain the financial statement which I am making at the present moment."—[OFFICIAL REPORT, 24th June, 1912, cols. 49–50, Vol. XL.] 8.0 P.M.

Then the Chancellor of the Exchequer went on to say that he would give back £5,000,000 to the Sinking Fund, but that he would keep a million pounds for the Naval contingency he was referring to, and half a million for Uganda. We are now dealing with the million that was to be used for the purposes of the Naval contingency. He said that the First Lord of the Admiralty would be presently submitting a Supplementary Estimate, and that he would not then deal with the subject in detail. On the 22nd July last the First Lord of the Admiralty did submit a Supplementary Estimate, but he took very good care to distinguish between that Supplementary Estimate, which was for £990,000, and which was in fact the million to which the Chancellor was referring, and the under-spending to which in the same speech he referred. His words on that occasion were:— The Supplementary Estimates before us this afternoon has nothing whatever to do with that under-spending. It is for specific purposes quite apart from the objects on which the under-spending occurred, and is additional to them. A sum of £990,000 is asked for because the items in the Estimates are needed now, ought to be begun now, and because it is believed that the money can be usefully spent within the currency of the year. Therefore, I hope the Committee will not be led into confusing in any way two quite different and separate matters."—[OFFICIAL REPORT, 22nd July, 1912, col. 843, Vol. XLI.] The one matter was the under-spending, which is now made the basis for taking this million, and the other matter was the contingency to which the Chancellor of the Exchequer had referred as the New German Naval Law, which was then made the excuse for taking a million pounds. What actually happened was the Chancellor of the Exchequer, in June, came down here with one excuse for taking a million pounds from the Sinking Fund, or, rather, not letting it go there. He said we wanted it for the contingency which had arisen with regard to the new German Naval Estimates, and he got it for that purpose. As a matter of fact, the revenue last year was sufficient to meet all the expenditure on the Navy last year out of revenue, and it was not used for that purpose. To-day the right hon. Gentleman comes down, and also the Home Secretary, and they say, "That million was kept back for under-spending, and now that there has been under-spending we will take it for this year's under-spending." It was not the purpose for which it was kept back, and it is entirely contradicted by the statement which the Chancellor made at the time when the money was warm in his hand. If it is justified, or attempted to be justified, on the ground of under-spending, then, if the right hon. Gentleman will look at the Budget Statement, he will see that the amount of under-spending on all Naval Votes was £710,000, and not a million pounds. That is the real test of what has happened. If he had only £710,000, his Budget Statement would not balance, and instead of having £185,000 in hand, he would be short £105,000, and he would have to admit that his income and expenditure did not balance, so he gave up the under-spending theory and advanced the other theory, because the other theory enabled him to take £1,000,000, which he was going to have at any price on any excuse, in order to balance the figures of his Budget. That induced him to look back at those figures that he had spoken of last year. My right hon. Friend the Member for East Worcestershire (Mr. Austen Chamberlain) pointed out, and I think perfectly accurately, that the Budget could not balance unless £1,000,000 had been got from somewhere. He also referred to the fact, which I think cannot be denied, that the Budget could not balance on real recurrent income. There is, for instance, in this Budget, £1,350,000 from Excise and Customs for holding back and arrears due to the strike. There was a figure of £800,000 due to holding back, and that is the Chancellor's own figure.


That is a comparison of the addition this year against the reduced income last year. You have got to compare the additional income.


The right hon. Gentleman is right. It is £400,000. You have £400,000 on that account, and £550,000 on account of the strike. So that there is nearly a million on Customs and Excise alone. In addition, there are arrears of Land Duties and some other figures. It is not necessary to name the exact amount, but it is over a million, and probably at least a million and a half. That is not recurrent revenue, and the point I understood my right hon. Friend was making was this, that in order to balance at all you have got to take into account non-recurrent revenue. His comment was that the interest in this year's Budget is the outlook for next year's Budget. The liabilities are not likely to decrease, but, on the contrary, are bound to increase, whereas the revenue which this year is used for the purpose of balancing its expenditure is in a considerable item non-recurrent revenue, and such, therefore, that the Chancellor of the Exchequer, whoever he may be, cannot count upon. Even with that and the stretching of taxes to the greatest extent by an optimistic Chancellor, yet there would be a large deficit of £815,000 unless this extraordinary performance of borrowing a million from the Exchequer balance has been gone through. It seems to me there has been at present no answer except the answer, "We must have a million, and we will take it, and we have to give an excuse for it." That excuse has been given, and I venture to submit that it is not borne out by the excuses previously given.


The right hon. Gentleman the Home Secretary has doubtless not been informed, as I think he should have been of a challenge made in reference to a speech of his, which I wish to bring to his notice, and to ask whether the Government stand by it. The matter assumes great importance by reason of this fact, by the time-table of the Government and the declarations of the Member for Waterford (Mr. J. Redmond). This is the last Budget of the British Empire that the Irish Members will be present to debate in their existing strength. We shall, if the statements that are held out to us, with perfect good faith, are correct, next year be reduced to forty-two Members. The Home Rule Bill has been so changed that we are to remain liable for the whole of the British Budget—all the fluctuations whether of advance or decrease, while our representation has been cut down practically by two-thirds. That is what gives this Debate special importance, and requires us to ask from the Government what their views are as regards the future taxation of our country. It does not lie in my mouth to complain that the Chancellor of the Exchequer had introduced no new taxes. On the contrary, speaking as an Irishman, I am extremely glad that by whatever finesse, ingenuity, skill, or whatever the phrase be, and whether it be a phrase of condemnation or of compliment, that he has seen his way to balance the account, and not to introduce any new taxes. I think, to some extent, he is only keeping faith with us in taking that stand, because, undoubtedly, promises have been held out to Ireland on the fiscal question, and had there been an increase of duty on any of the articles which we consume the charges which we have had to make in the course of recent years would have been greatly and gravely intensified.

The speech of the right hon. Gentleman, to which I have to call attention, put the matter in an extremely neat and condensed way. This is the first occasion that I remember in which the Treasury have not found it convenient to prepare what I may call its Irish Budget. A month before the present date last year the Treasury had the figures of the Irish balance sheet ready. Why are they not ready to-night? Why are they not ready on the last occasion on which the Irish Members in their full strength can bring pressure on the Government, and are we to be told that in this year, 1913, they have not been able to get their figures ready? I conceive that the refusal of the Government to have their Irish figures ready for this Debate is nothing short of a public scandal, and the reason is perfectly plain, because, bad as were the figures for last year and thoroughly as they contradict both the promises of right hon. Gentlemen opposite and statements that were made by right hon. Gentlemen behind him, the figures for the present year, the concealed figures, would, I believe, tell a tale of a still more serious and terrible character. The matter can be put shortly in this way. You obtained the Budget of 1909–10 by the votes of the Irish Members. Without them you could not obtain it—not my vote, I voted against it—you are under no obligation whatever to me—but by reason of those votes you have been enabled to carry out a programme of the most tremendous and extensive kind. You have passed your Insurance Act. You could not have done that without the votes of the Irish Members. You could not have financed the Old Age Pensions Act without your Budget, passed by their assistance. You could not have faced Germany by means of the Navy you have put together without that assistance. Consequently the Liberal party, and to some extent the English people, are under a considerable debt of obligation to those who faced some resentment at home and some condemnation from their colleagues, they are under a considerable burden of obligation to them, and especially under a burden of obligation to keep their promises then made. What was the promise made by the Government? The promise, upon the faith of which the General Election of January, 1910 was carried and the Irish people assented to their representatives accepting the Budget, was that the extra taxation caused by that Budget would afflict Ireland only to the extent of £400,000. The Minister who is chiefly responsible for giving that pledge for the future was the present Home Secretary. I have never said a harsh word about the right hon. Gentleman, because I believe that he thought his figures were perfectly accurate. I am quite satisfied that he believed that he was speaking what was accurate and true. We were arguing that the Budget would cost Ireland £2,000,000, and the Home Secretary was put up to say, "No, I will tell you what it will cost." Here is the promise that he made, and I maintain that it contains a pledge as to futurity:— I am endeavouring to deal with the argument that this Budget is costing the Irish taxpayer £2,000,000, and I am endeavouring to show that so far from that being true, for last year the cost of the Budget for Ireland was well under £450,000, and we do not anticipate that ever in the future it will exceed half a million—a quarter of the alleged charge which it is supposed we are imposing upon the Irish taxpayer."—[OFFICIAL REPORT, 20th April, 1910, col. 2132, Vol. XVI.] The right hon. Gentleman was then at the Admiralty, but he had achieved great renown as Secretary to the Treasury. He was not speaking merely as First Lord of the Admiralty, great and high as that office is: he had justly gained a reputation in this House, because he had been several years at the Treasury, and we all remember that when he was in Opposition he was a constant critic of the then Chancellor of the Exchequer, Sir Michael Hicks-Beach, when certainly we backed and cheered him on many occasions. What has happened? We want to test that promise to-night. Where are the figures? The figures are suppressed; they are kept back. Why are they kept back? Last year the figures were ready a month before the present date. They are kept back, I believe, because they would overtop the figures of last year, when, instead of the Budget bringing upon us extra taxation of £400,000, the figures proved the extra taxation to be £1,400,000. If the same rate of progression has gone on in the present year, I do not think I shall be at all a false prophet if I say that we are now somewhere in the neighbourhood of the £2,000,000 which we prophesied four years ago. But I must not confine my criticism to the statement of the Home Secretary; he was backed by the then Secretary to the Treasury, the present Chancellor of the Duchy (Mr. Hobhouse). On that occasion I was somewhat in error, as I had not made allowance for the fact that there had been a double collection by reason of the rejection of the Budget in the Lords. But here is what the right hon. Gentleman said on 9th August, 1911:— In confirmation of what I have said, if the hon. Member for Cork had referred to another Return, which was issued by myself on 28th April, 1910, he would have seen that the amount to be collected in excess from Ireland in a full year—that is when the Land Value Duties have reached their maximum"— Therefore he was making a promise for the future, because he says, "When the Land Value Duties have reached their maximum,"— in respect of the new duties imposed by that Act will amount to £84,000, and in respect of the existing duties will amount to about £518,000 or somewhere there-abouts."—[OFFICIAL REPORT, 9th August, 1911, col. 1297, Vol. XXIX.] So that the then Secretary to the Treasury put the highest amount of extra taxation then and for the future at something like £600,000. What are the facts now? You keep back the figures, and we have to debate the matter, relying upon the figures of last year. That is an extraordinary way for the Treasury, whose competence we hear so much about and see so little of, to treat the Irish representation. As compared with the voice of the hon. Member for Waterford, if he were able to be present to address the Committee on this question, my voice is extremely feeble. He was one of those who no doubt must have been greatly disappointed by these figures. He had promised the Irish people again and again that at the very utmost the extra taxation would not amount to £500,000. He did more, because he promised the Irish people that the drainage of their rivers was going to be attended to, and especially as an offset to this extra taxation, he announced that he had it in command almost, from the Chancellor of the Exchequer to tell the people of Ireland that the drainage of the Barrow would be immediately put in hand, which job alone would cost £500,000, if not more. The first sign we had of any doubt as to the accuracy of that statement was when an unkindly Member above the Gangway asked the Chancellor of the Exchequer whether his attention had been drawn to the speech of the hon. Member for Waterford, and whether it was true that he was going to drain the Barrow. The drainage of the Barrow is one of the most urgent reforms which we would like to see carried out, because the river floods thousands of acres every year. This flooding of the Barrow and the Shannon is undoubtedly one of the causes that lead to the sickness, and especially the tuberculosis which exists in the counties through which these rivers flow. The Tory Member above the Gangway having put his question to the Chancellor of the Exchequer as to the speech of the hon. and learned Gentlemen the Member for Waterford, at Arklow, the Chancellor of the Exchequer replied that there was not one word of truth in the story; and the right hon. and learned Gentleman the Member for Waterford has never, from that hour to the present, explained to the people of these counties from where he got his fairy tale, by the aid of which he carried the General Election. As between the hon. and learned Member for Water- ford and the Chancellor of the Exchequer, it is a very difficult position in which to put an Irish Member when you ask him, "Which do you believe?" But the Irish people believed the Member for Waterford. From that hour to the present day we have been waiting for the fulfilment of the promises. Let the House remember this: The right hon. Gentleman the Financial Secretary to the Treasury, to-night, in what no doubt from an English point of view was an excellent, eloquent, touching speech, a speech which showed an anxiety for the poor which certainly becomes a Treasury official, depicted all the great gains derived from the Budget, and held out the promise to the English working man that the slums of the towns and of the country would be dealt with.

We in Ireland are especially keen upon this point. We have undoubtedly done something to better the position of the agricultural labourer. Since I was a boy the condition of the agricultural labourer has been largely improved. As a result of the efforts which we have made in the past, instead of horrible hovels, which one used to see as one went through the country, one now sees new cottages. I have always thought the money well expended, because these little houses enable a man to bring up his family in decency and provide the future labourers and other workmen for the country. Although we have done something for the labourers of our country in the counties, little or nothing has been done for the labouring classes in the towns. In respect of the capital of Ireland it is appalling to go through some of the ancient houses of Dublin where there are seven or eight in a family, and these living in one room—sometimes almost without a single article of furniture beyond a stool or it may be a table. Accordingly we made the claim that some Grant should be given on behalf of the labourers in the town. With the speech of the Secretary to the Treasury to-night ringing in my ears, I cannot but recall the way in which only a month ago that demand was met by the Chancellor of the Exchequer. Where was the sympathy he has wrung out of us under this Budget; wrung out under false pretences? Year after year since then one and a half millions of money have been obtained, and we cannot get even a loan from him for the extension of the Labourers Acts either in town or country. Then these fine, flowery speeches—platitudes!—are made by the Secretary to the Treasury of all the Government are going to do for the working man, and when the point is put to them, where they are spending millions on officials—which in regard to Ireland, so far as I am concerned, are wholly unnecessary—we see their attitude. Compare the two Islands. To pass the same Acts for both is a perfect scandal. You do want an Insurance Act in this country. The labour of the working classes is excessive. Their sweating toil and their work in factories undoubtedly leads to sickness, and undoubtedly that sickness has increased, but how can you compare that state of things in this country with a country where you have to deal with agriculture?

The agricultural labourer of Ireland is one of the healthiest men in the whole world. Yet this system of insurance is a tax not only upon the labourer, but a tax upon the farmer, and upon the shopkeeper; everybody is taxed simply because you maintain that the two countries should have a similar system of taxation. Now we are told that we are going to be freed in that we are going to get a Parliament of our own. What a keepsake we are going to have! The annual Budget of the Chancellor of the Exchequer will be discussed with only forty-two Irish Members. That is why I now ask, What are you going to do for us out of this million and a half which you have wrung from us under false pretences? I make you a present now and here of the £400,000 beyond which you said the amount would not go; but give us back our million. You maintain that it was only a £400,000 Budget so far as we are concerned. We know last year it was more than a million. This year you keep the figures from us. Surely we are entitled to say as regards these labourers' cottages that at least the loan which we have been claiming we are entitled to get from the Chancellor of the Exchequer? This Budget has hit not merely those in the country, but it is, in effect, a tax on town tenant right. Instead of apologising, the Chancellor of the Exchequer, in reference to this matter, cynically—because there is no other word for it—when I put a question to him, cynically suggested that though a nominal tax on the landlord, it could be easily turned into a tax on the tenant. If there is one question more than another which excites townspeople in Ireland it is the question of town tenant right. This House passed a Statute for Ireland the like of which does not exist in England. Although it is very difficult to construe, the substance of it is that, speaking roughly, a man at the end of his lease shall have a tenant right in his house, and shall not be put out of it without some form of compensation, if it appears to be the justice of the case that his lease should not suddenly be finished.

What did the Chancellor of the Exchequer do? I beg the House to remember that this is an especially important matter in the North of Ireland, because in the North of Ireland you have the Ulster custom—not merely the Ulster custom as defined by Mr. Gladstone in 1871, which is the Ulster custom only applicable to agricultural land—but the Ulster custom in Ireland known as the legal Ulster custom. The town of Coleraine, and many streets in Derry, and also greatly in Belfast, were built upon the faith of those who put up the buildings that the landlord could not put a rent upon them. Let me leave the North and come to the South of Ireland, which I know better. There are some towns in the South of Ireland every brick in the town of which has been put up by the tenant. I wish to say that for many landlords—I do not say that my words are true in every case—but in the case of many landlords the only charge to the tenant is a ground rent. Let us suppose the landlord charges a rent of £4 a year for the house, the tenant having taken the lease for ninety-nine, or, it may be, forty-one years, in respect of the house, when the lease drops out the landlord does not exact a rack rent from the tenant. By the custom of the estate he either renews the lease at the old rent or puts down a nominal additional rent instead. I speak now with respect to the better class of landlord, men like the Duke of Devonshire, Lord Portsmouth, and others, who own land in the large towns in Ireland. The case of which I am speaking is this: The old tenant's lease was £4. It fell in; the landlord renewed it at £8; the real value of the house was £100 a year. The Treasury, under the 13th Section of the Budget of 1909–10, said, "the real value of this house is not £8 a year; we will take the capital value," and they capitalised the value of that house, to which the landlord did not contribute one penny, at £800, and the Government said, "We are entitled under this Reversion Section to a tax of 10 per cent. on that £800," and they levied £80 nominally, of course, upon the landlord. Do you think the landlord paid it? Nothing of the kind. The landlord said to the tenant, "I am not getting a penny out of this house; why should I pay twenty years' purchase of my £4 a year rent? You must pay the £80," and the tenant was obliged to pay a duty of £80 to the Treasury for getting this new lease. Now what happened in that case will happen all over Ireland.

There is not an Irish tenancy, practically speaking, in any large town with few exceptions, and, of course, there are exceptions, that the building is not the tenant's; they are not the landlord's buildings, and accordingly if the landlord renews the lease according to the custom of the estate and does not charge a rack rent and gains nothing by the renewal, the tenant will have to pay the 10 per cent. upon the whole capital value of his own buildings. And this, the People's Budget, and they are people who cry "God bless the Budget." I say that this Budget involves a tax of 10 per cent. upon the capital value of every town tenant in Ireland as soon as the lease falls in. People say, "Read the powers given in this Act; it is a tax upon landlords." The landlord of course will not renew the lease unless the tenant bears this burden, and it was on pretences like this that the Budget was passed. This is not a tax upon the landlord. All the landlord has to do is to say, "I will not renew your lease unless you pay this. Mr. Lloyd George has taken £80 out of my pocket and you must make it up to me." Remember this: this Section exempt landlord's buildings. That is quite a fair thing in England, because, of course, in England there are landlords' improvements. It is quite right in England, because the people in this country do not put up the buildings. I do not blame the right hon. Gentleman; he acted possibly in ignorance. He knows no more about Ireland than I do about Wales, although I have spent many happy days in that country, I am glad to say, and I hope to do so again. But to an English statesman the notion that the tenants would build the whole of a town, the notion that he would lay out their money on such buildings even without a lease, is unknown. There are Irish landlords, men like the late Duke of Devonshire, whose word was their bond. The same is true of the county Wicklow. I proved the Ulster custom on the Portsmouth estate and I got it recorded on the only estate outside Ulster on which it was ever done. In your mind no tenant ever builds anything, and accordingly the section runs:—

"For the purposes of this Section the value of the benefit accruing to the lessor shall be deemed to be the amount (if any) … of the land at the time the lease determines, subject to the deduction of any part of the total value which is attributed to any works executed or expenditure of a capital nature incurred by the lessor during the term of the lease."

That leaves us in Ireland with a 10 per cent. Reversion Duty upon the tenant every time the lease is renewed. I maintain, therefore, that as we believe we are to quit this House in our strength of 103 Members, and that we are to be reduced next year to forty-three if the Government plans are realised, and as this is the last opportunity of addressing the House in our full strength, we should protest against the reckless, foolish, and, I think, thoughtless system of taxation which has been imposed upon our country. I noticed that when the Budget was going through the right hon. Gentleman, whenever there was a little interest of a Liberal kind affected, always dropped the tax. Take cider! There was a group of Liberal Members who said, "If you tax cider we may lose all the cider seats," and cider was struck out. Once it got about that taxes upon football clubs and cricket clubs would make the Government unpopular, they were dropped. Whenever the right hon. Gentleman thought he was hitting an English Liberal interest, he at once settled the matter. Yesterday I heard him with admiration upon the builders. Lumsden is going to have an Act of Parliament all to himself, and I congratulate the right hon. Gentleman. I think he showed the true spirit of statesmanship. Whenever you have a grievance that you can point to you say, "If this is inequitable I will repair the mischief." I think that is statesmanship. Some people may say the right hon. Gentleman is only trimming his sails to the popular gusts. Is not that what everybody is doing? It is no reproach to the right hon. Gentleman. The Tory party, I am sure, would be happy to get all the wind they can. I am not blaming the right hon. Gentleman. The right hon. Gentleman takes credit to himself for having imposed taxation that has shut up distilleries. I never knew until I heard the right hon. Gentleman that the Chancellor of the Exchequer should be a moralist. He says, "With regard to this Whisky Duty I have not only reduced the gallons, but I have increased taxation." Why does he not say that about beer? Because English Members- would not stand it for a moment.

When the tax was brought in the beautiful excuse was made that it is so difficult to tax beer, because you could not get a farthing on the pint. Accordingly the only measure which a tax could be put upon was the gallon of whisky, in regard to which I remember that the right hon. Gentleman's predecessor, Sir Michael Hicks-Beach, said had already been taxed to its highest point. Although I have noticed recently a good deal of activity on the part of the constabulary, we have never been told that there has been an increase in this illicit distillation in Ireland. The old smuggler as a class has died out, and I wonder that more smuggling is not done with this extra tax upon whisky. This is not my complaint. The words of my complaint are the words that were used by the hon. and learned Member for Waterford, the hon. Member for East Mayo, the hon. Member for Longford, and by every Irish Member three years ago. Everyone of them uttered this complaint, and the hon. and learned Member for Waterford promised the country that in the ensuing year, the year 1911, the tax would be repealed. So far from the tax being repealed, it has been perpetuated in this way. We shall leave this House with something like sixty of our representatives struck off, and we are going to our own country with this knowledge that so long as grass grows and water runs Ireland is hit by this tax, and the Irish Parliament will have no more power to repeal than it will have to abolish the Irish Sea.

You have made us liable for British Budgets. You do not even give our Parliament the miserable £1,400,000 which this Budget gives you. You give us £500,000 as a perpetual dowry, which is to be reduced to £200,000, but if we got the benefit of this Budget alone, if the promises of Ministers were fulfilled that this Budget would only tax us to the extent of £400,000, when last year it actually taxed us to the extent of £1,400,000, you should at least give us the additional increment this Budget has brought you. That money I claim to be ear-marked for Ireland. You budgeted for £400,000, and it has brought you in £1,400,000. Therefore we are entitled to claim, and I make the claim, that bad as the form of the Budget is, and in view of the promises of Ministers that they will exact the smaller sum, if we are to continue with these Budgets, the least figure you can give us for the future development of our country would be the product of this Budget over £400,000 a year, namely, £1,000,000 a year.


The hon. and learned Member for North-East Cork, speaking as an Irish Member looking forward to Home Rule, is naturally pleased that there should be no new imposition of taxes. I approach this question from a broader point of view. There are certain joint stock companies, associated more particularly with the United States, which speculate largely in their shares. They produce very curious balance sheets. At the board meetings they send for their manager and tell him either that they want an exceptionally small dividend or that they want an unexpectedly large dividend, and they instruct him to make his balance sheet accordingly. The manager, with the danger of being dismissed if he does not do so, manages his accounts in such a way as to apparently justify an exceptionally large dividend. That is a very easy matter if you have a little practice, and if you are slightly unscrupulous, and if you are quite certain that amongst the shareholders the chairman can command a majority of votes whatever he may do or whatever he may say. This system is bad enough in a company, but when it is applied to the finance of the State, it is not only foolish but unpardonable.

There was this year a deficiency of about £7,000,000 to be made up, and for political reasons the Government did not want to impose new taxes. The Estimates which have been produced are as extraordinary as they are wrong, and the only explanation the Chancellor of the Exchequer offers is the assumption that we have entered upon the most glowing year that British trade has yet seen. Even on that assumption, no previous Chancellor of the Exchequer ever had the hardihood to estimate for an increase of from £6,000,000 to £7,000,000 in the year's Budget without imposing fresh taxation. Of course, the Chancellor of the Exchequer is treating us to what is called in the City, Lloyd Georgian Finance. Ever since 1910, in every Budget which the Chancellor of the Exchequer has produced, he has dwelt on his great foresight and his prophetic in- stinct so much that a great many people actually believe him, and strange to say he has repeated it so often that I fear he has begun to believe it himself. In the Estimates, which the right hon. Gentleman now formulates, it is quite clear that he has taken as a basis for realisation all his prognostications; otherwise, I do not see how he could possibly have produced those Estimates. I hope to show that ever since 1910 he has been absolutely wrong in every forecast he has made and in every prediction he has uttered, and, what is far worse, he has not framed his Budget on acknowledged principles and on a sound basis, but he has changed his principles and found a new basis for the Estimates which he wanted to produce. In his first Estimate, to which I had the pleasure of listening in June, 1910, he did what he has done ever since; he gave a glowing forecast of the trade of the year. What was his first reason? I quote his own words:— Cotton which was giving us a good deal of anxiety promised by October to be abundant in the supply of raw material. That was in June, 1910, when the price was 7.82d. In October cotton was dear. The price of cotton did not go down until the following August in 1911. That was the first prediction and the first argument which he gave for the increased revenue he then foretold. What other reasons did he give for his increased Estimates? The Post Office is a very good test of either good or bad trade. The Mint is almost better, because when the purchasing power of the people goes up, there is a greater demand for small change. The Mint is doing uncommonly well, and there is a great demand for silver, very largely for home use. He found there was a great demand for silver in the Mint, and he immediately used that argument in order to tell us what a splendid trade we had. This year the Mint is going to do very badly. [HON. MEMBERS: "Why?"] I will tell you why in the words of the Chancellor of the Exchequer himself. This is what he said a week ago:— During the years following the Coronation there has been an increase in the demand for new silver coinage. It was no longer good trade, but the Coronation which created the demand. This demand we do not expect to keep up this year, and we are confronted with a considerable loss in this respect. The Mint will no longer serve his purpose, so he casts it aside and simply gives another excuse for the reduction in the profit in the Mint. Now we come to another reason which he gave us in 1910:— Stamps which especially show the state of trade activity, like bills of exchange, cheques, receipt stamps and marine policies, all these which are particularly affected by trade activity are doing brilliantly. Therefore, we were going to have an excellent trade in 1910. This year, when he predicts the most glowing trade we have ever had, he tells us stamps are going to give us less:— As to stamps we cannot anticipate that these will be kept at the high level of last year, in spite of the growing activity of the estate market. We therefore estimate a decrease of £259,000. 9.0 P.M.

Of course, we all know that the revenue from stamps was heavy last year on account of the large business in Marconi shares, but there must be some speculation this year. In spite of this he reduces the Estimate by £259,000. He, therefore, throws stamps overboard. Every argument he used in 1910 for better trade is thrown overboard this year, and he has to find new arguments. When you come to the Budget of 1911 you find different arguments again for the excellent trade that is coming. This is what he told us in May, 1911:— There was a considerable withholding of tea and sugar when it was understood that there was a large realised surplus. I can quite understand a considerable withholding of those two articles when it is understood that there is a large realised surplus, because, of course, every dealer expects or hopes that the duty may be reduced, but this year, when there was a large realised deficit which everybody expected, he again told us there was a large withholding of tea and sugar on account of that expected realised deficit. He cannot have it both ways. People either withhold tea and sugar when they expect a deficit or when they expect a surplus. If, as I suppose, the argument is that they hope every year there will be a reduction in the duty whether there is a surplus or whether there is a deficit, then that state has become normal, and it will repeat itself every year, and it is perfectly unfair to reckon upon withholdings of tea and sugar or any of those dutiable articles, because they will reappear every year until the duties are taken off altogether. Therefore the £400,000 which the Chancellor of the Exchequer calculates were withheld last year and the £400,000 which he is going to have this year on account of withholdings are absolutely chimerical, because we are told they take place whether there is a deficiency or a surplus. We have got some more ideas of the Chancellor of the Exchequer as to what are the best indexes of trade:— The best index of the condition of our trade are spirits, beer, and the Mint. He comes again to the Mint:— Our trade has gone up by leaps and bounds. We have got large bankers' clearances. That was in 1911. Why did we not hear about the large bankers' clearances this year? Last year there was an increase of 9.22 per cent.; this year, from January to April, there is only an increase of 4.33 per cent. That argument does not suit him this year. Trade this year is dependent upon other matters, and not on bankers' clearances, so, of course, bankers' clearances are forgotten altogether. They do not fit in any more, and he has to find new arguments this year:— Death Duties are an appreciable disappointment in the matter of revenue. Although the result is disappointing, the cause is full of cheer. It was entirely due to the abnormally low death rate of last year. That was in 1911. Since then the revenue from Death Duties has not increased at all. During the last two years the explanation suggested has been that the death rate has been reduced, but now that excuse is no longer put forward, and we are told that the reason for the falling off is to be found in the fact that delay has occurred in the settlement of certain large estates. Thus a new argument was found. In regard to the income from Death Duties, the Chancellor of the Exchequer makes a vast mistake in expecting a further increase, and especially such a very much larger increase, in his Budget for this year. We know that in the Budget of 1909 there was a very heavy increase of Death Duties, and in the opinion of many people that was the only Socialistic part of the Budget. It is the view of Socialists that (here should be a 100 per cent. Death Duty, so that in about thirty or forty years all the capital of the country will be wiped out. The Government, I admit, have not gone quite so far as to impose a 100 per cent. duty, but in some cases they have imposed one of 15 per cent. Naturally, with such high Death Duties, large fortunes in this country cannot increase. I will not go so far as to say that 15 per cent. is sufficient to make capital decrease, but it certainly cannot increase, because there is a constant drain upon it. It is impossible, therefore, that the revenue from Death Duties will increase for the next few years, and upon what the Government base their Estimates I cannot understand.

Another prediction made by the Chancellor of the Exchequer on that occasion has been falsified. He spoke about sugar. He said he was estimating for an increase of £420,000 because the harvest was promising. That was in 1911. In his next Budget Statement, in 1912, he again spoke about sugar. He said his Estimate had not been realised by some hundreds of thousands of pounds because the sugar harvest had failed. The right hon. Gentleman speaks on expert advice. He is supposed to get better advice from his Treasury officials than is open to the ordinary mortal. How came he to make a blunder of this nature; how came he to speak of good harvests when, as a matter of fact, the harvest proved a failure? He had further ideas as to what constitutes an index of good trade. He said, "Taking taxes generally as a test of good or bad trade they had done exceedingly well, spirits and beer, the petrol and motor taxes, the Income Tax, factories working overtime, and excellent freights. There is no doubt that excellent freights do indicate good trade. Why did not the right hon. Gentleman mention freights this year, seeing that he expects that we shall have the greatest boom in trade that we ever had. If he had made inquiries he would have found that the freight market is in a most depressed condition, that freights have gone down during the last month or two, and, consequently, if he had based his prediction of excellent trade on the freight markets he certainly would have been guilty of a glaring mistake. He did not mention freight this time, and he had to look for other arguments, leaving those he had used in previous years severely alone. He made one remark which is very true. He said:— Nations are becoming more and more interdependent in trade, and as our international trade is the greatest in the world, we are more dependent to that extent upon healthy conditions in other countries as well as our own, and I am told the conditions throughout the world would appear exceptionally healthy. Now the "Economist," which has been backing the Chancellor of the Exchequer through thick and thin, gives a different version. It says that if the Chancellor of the Exchequer bases his good trade prospects for this year on international trade he has made a big blunder. It adds:— Mr. Lloyd George over states the activity of trade on the Continent. Since last summer there has been much depression in Italy, Austria, Russia and Roumania, and bankruptcies have been rife. Later on it says:— In spite of Mr. Lloyd George's predictions, a general easing off in commercial activity is anticipated. And finally, a well-informed correspondent in New York telegraphs that there are symptoms of an approaching business reaction. The Chancellor of the Exchequer has this year brought forward hardly any arguments for his prediction of the boom in trade. He spoke of good harvests, he said that manufacturers are very busy, that they have sufficient orders for the next few months. Orders are not coming in, but they will come in. The right hon. Gentleman knows better than the merchants and buyers whether or not the orders will come in. He thinks he knows better than the buyer who makes a study of his own business, and who surely, in the event of a boom year, would book his orders as far ahead as possible. Surely it is the buyer who is more likely to know what will probably happen than the officials or technical advisers of the right hon. Gentleman. We know one thing for certain, and that is that the iron trade is going down fast. I should like to read too what the "Times" said this morning with regard to the tinplate trade. It said:— Great depression still continues in the tinplate trade of South Wales, and that 125 mills and nearly 6,000 men are idle. The workmen's leaders are suggesting to the employers that all the mills should be kept idle for four weeks in July in order to adjust the supply and demand. Now the tinplate trade is a very important trade. Are we to take that as one of the indications of the excellent boom in trade which we are told we are going to have this year? On what basis the Chancellor of the Exchequer can possibly have budgeted for a more glowing trade this year than ever before I cannot conceive. But I think I have said enough to show how many of his predictions in previous Budgets were wrong. The Chancellor of the Exchequer last year showed what he himself thought of the Estimates he brought in. Last year he required a revenue of £186,800,000. The receipts from the previous year were only £185,000,000, and he had to find an additional £1,700,000. Last year he reduced his Estimate of the Income Tax by £700,000. He was wrong in his Estimate by exactly £700,000, because the Income Tax brought in the same amount. He got the additional amount he required by £3,000,000 additional revenue from the telephones, and, having that additional revenue, he did not require any further addition to his estimated revenue. This year, when he does require it, he only puts on a trifle of £6,000,000 by the ringing of the changes. Taking the view that the Death Duties are not likely to bring in more than last year, taking the clear view that the £800,000 budgeted for in respect to withholdings of tea and sugar are strictly chimerical, and taking an opposite view to the right hon. Gentleman with regard to £400,000 less having been spent on beer and tobacco on account of the strike—a most remarkable idea that men on strike, who have nothing to do, should neither smoke nor drink—taking all these things together, and making allowance for the increased revenue of the Post Office of £1,700,000, I am afraid that the Chancellor of the Exchequer at the end of this year will find that he has made a vast mistake. The Chancellor of the Exchequer stated that 350,000 adults died last year with insufficient property to warrant the taking out of letters of administration. Naturally that was taken up by the Labour party and hon. Gentlemen opposite, who ought to have known that those figures have been about the same every year. We all admit it is very sad that there should be so many people without any property to leave. I should like to ask the Chancellor of the Exchequer whether there is any other remedy for this most unfortunate state of things than to impart to the people who are wage-earners a proper sense of thrift? Is there any other way of enabling them to accumulate little fortunes or a small capital than by teaching them the virtue of thrift? I do not know of any, and I doubt if the Chancellor of the Exchequer, with all his ingenuity, can discover one. What has the Chancellor of the Exchequer ever done as an incentive to thrift? Does he consider that old age pensions are an incentive to thrift? [An HON. MEMBER: "Why not?"] That is very easily explained. If a man knows that in old age he will get his pension, he does not save.


He does not know he is going to get old.


Is insurance an incentive to thrift? Are Labour Exchanges an incentive to thrift? I agree with all these things, but I say they are not an incentive to thrift, and that the only way to change the sad position of these men who have no savings is to induce them to practise virtue of thrift. So far as I know there is only one way to do this—that is to give them an opportunity of having their own bit of land as a freehold, or their own house. It has been proved everywhere that the greatest incentive to thrift is the possibility of possession of land or houses. I hope that the Chancellor of the Exchequer will be right in his Estimates. I should like nothing better than to see next year all his wishes and Estimates realised, but I do hope that if next year his revenue should fall far short of all his Estimates, that he will not tell us that he has overestimated the revenue for the benefit of the people.


I am sorry to bring the Committee back from the thrilling subjects which have just been discussed to the more prosaic and dull subject debated at some length during the last two days—the Land Taxes of the Budget of 1909–10. I can promise that the few criticisms I shall make will be addressed from an entirely different standpoint than those to which we have listened from the Opposition, because my criticisms are the observations of one who entirely believes in taxing the unearned increment on land, and who is anxious to secure an effective and complete valuation of the entire country. The hon. and gallant Member for Chelmsford (Mr. Pretyman) was unduly severe in his criticism of the valuation yesterday. I have had a good deal of experience of many district valuers and superintendent valuers, and with one solitary exception—I think it is the gentleman to whom the Chancellor of the Exchequer referred, who has ceased to be a valuer—I find them all very skilful, competent, and very fair-minded men. I do not think the criticisms which have been levelled against the valuation show a quite fair appreciation and consideration of the difficult work the valuers have to do. It is an extremely difficult matter to make a large valuation like this. We must always bear in mind that a valuation at the best is merely an expert opinion. It is liable to be found to be incorrect, however carefully it may be made, and however competent the man may be, by subsequent open market transactions. Therefore the first criticism I have to offer upon the valuation is this. I do not think it is sufficiently elastic. I think we have made a mistake in fixing for all the time the original valuation when it is once agreed. I believe there ought to be opportunities from time to time, when it is clearly shown that any item of the valuation is incorrect, for a revision. You can never, by any possibility, have a complete and uniform and reliable valuation unless there is some elasticity and some possibility of subsequent Amendment.

But the great difficulty of all is this, and I think it is from this source that the complaints have arisen in various parts of the country. It is a difficulty not created by the valuers at all, and from which they should not be held responsible. It is a difficulty for which this House must take full responsibility. It is that the datum line was fixed in the year 1909 when property, certainly houses and building land, were at a lower level than they have ever been for ten, fifteen, or twenty years. The greater part of the houses and building land in this country have been put in the provisional valuation at a lower price than was actually paid for them by the purchaser. Therefore I think you will find, in a very short time, cases of this kind arising. You will have a working man who has given £250 for a house ten years before 1909, which at the date of the provisional valuation is put down at £180, and a few years later, when there has been a recovery in value owing to the shortage of houses, he will sell it for £230, and will then be asked to pay Increment Duty on what is euphemistically called profit when he stands certainly at a net loss. There will be tens of thousands of these cases all up and down the country, and I do not envy the position of the district valuer who has to collect the Increment Duty, and I do not envy the position of the Member for the division, if he happens to be a supporter of the Government, when he has to explain to the man that he has really made a profit when he knows he has not. I may be referred to Sub-section (2), which provides for substituted site value, but that, though given in good faith by the Government, is an entirely unreliable provision, because substituted site value must be claimed within a limited number of days after the receipt of the provisional valuation. The ordinary working man and the small property owner do not understand all these forms and in all probability the deed, which they could produce to satisfy the Commissioners, is in the hands of a friendly solicitor or a building society, and to produce it would involve a fee and a great deal of trouble. The time passes, and they have not secured the substituted site value, and that cannot be rectified. They have lost the opportunity of obtaining substituted site value for all time. I want to ask the Government quite plainly and directly that they should, in this forthcoming Revenue Bill, alter that provision. I suggest that the proper time to prove substituted site value is on the occasion of increment. When increment is claimed the man is dealing with his securities, and can easily produce the evidence, and there is no kind of reason whatever why the occasion of sale, when the increment is demanded, should not be the time when substituted site value is obtained. That will remove 75 per cent. of the grievances and difficulties which have been occasioned all up and down the country.

I said I believe in the taxation of unearned increment in land—I emphasise "unearned" and I emphasise "land"—but I do not believe—and I base my belief and my doctrine in this matter entirely upon the statements made by the Chancellor of the Exchequer—in taxing earned increment, and I do not believe in taxing increment on houses. I do not object to taxing unearned increment in land by 100 per cent. I say that advisedly. I do not care how high the proportion is, but I do not think you ought to take a farthing of earned increment in land or half a farthing of earned increment in houses. The discussion of this question has usually centred about what is called builders' profits. I was very much amused when the right hon. Gentleman (Mr. Masterman) talked about monopoly value and fortuitous windfalls. Supposing a poor builder does sign a contract and borrow money to build a dozen houses, and when they are nice and new manages to sell two or three at above their market value. That is the only chance to keep him solvent, because those that he does not sell until they cease to be nice and new will probably be sold either at less than they cost or at any figure which can be obtained by the mortgagee in possession. A man is entitled to get a good price for the few houses he can sell, because he knows he has to keep the remainder for a considerable time. I have looked into the matter and on the present method of valuing on occasion practically in every case the builder is exposed to the risk and almost the certainty of paying increment on the profit he makes on the houses. You have the site value fixed in the original valuation, then when you come to the occasion of increment—the sale—how does the valuer got to work? How must he go to work according to the directions of the Act? He takes the sale price and he deducts from it his own estimate of the value of the house as apart from the land. He makes certain other deductions for money that has been spent in the improvement of the site and then the balance he calls site value. Was ever any method devised more unsuited to obtain the real site value? Because, if he does not correctly base his estimates on what is the market value of the house—if he places it too low—the whole of the extra price goes on to the site. If he does obtain an additional figure because he has employed a specially skilled architect to design his house—I might have designed it for him—he will get an extra price for it, and the whole of that is added to the site value and he has to pay increment.

The Chancellor of the Exchequer promised yesterday, and I entirely accept the promise, that he would remove builders' profits entirely from the operation of the Increment Duty. There is only one way in which he can do it, and that is to provide that on the occasion of sale the site shall be valued as a site, not by a process of deduction but the original site having been valued the site value on the occasion of sale must be valued. I do not, even in that case, want the builder or the owner of the property to be called upon to pay an increment upon an increase in the value of the land by reason of the house he has put upon it. I do not think the Financial Secretary to the Treasury has ever really quite grasped this rather important point in connection with building a house—if you put a house on a piece of land, you do increase the value of that piece of land.


Not only have I grasped it and explained it to the House more than seven times, but it is contained in the instructions issued to the Inland Revenue officers.


It is not grasped in the allowance in the deduction for Increment Duty. But not only is the land made more valuable by putting a house upon it, but the house itself becomes more valuable, because it stands on the piece of land.




I do not want to appear to be discourteous to the right hon. Gentleman, but I must select someone to be responsible, and I dare not select the Chancellor of the Exchequer. No one has more respectful appreciation of the Financial Secretary than I have, and I hope he will not imagine there is anything personal to himself. He is simply a lay-figure for my purpose. I wish emphatically to impress upon the Government that in order to fulfil the pledges which have been given so many times, in order to justify themselves and their supporters who voted for this measure on the understanding that it was taxing the unearned increment on land, they should remove beyond the possibility of doubt or suspicion any increment on the builders' profit from the operations of this Act. It is not only the question of builders' profits the House has to consider. There is another aspect of the question. Land has to be prepared for building by a considerable expenditure of money. It is sometimes done by the owner, but usually someone purchases from the owner and does that work. Let me give an illustration. It is no uncommon thing in preparing land purchased at £100 an acre to have £300 to £500 spent in road-making and development. The owner will be a fortunate individual if the cost of improvement comes to less than £200 or £300 an acre, so that practically land for which you gave £100 an acre may cost £800 to £1,000 an acre before it is suitable for building purposes. There is a provision in Section 25 of the Finance Act of 1909–10 which provides that there shall be deducted the value created by improvements so made. I am given to understand that the Department have instructed their valuers that for the purpose of this deduction the owners are only to be allowed the actual expenditure incurred. That is to say, if the actual expenditure is £400 in road-making and the like, that is to be the sum of the total deduction, though clearly you require some deduction on account of the margin between what you have given for the land and the value with the improvements on it.

I am not putting this proposition from the landowner's standpoint at all. The class of people it affects more than anyone else are those connected with garden suburb schemes, such as you find at Letchworth and Hampstead, and with the housing scheme pioneered by Mr. Henry Vivian. The object of these schemes is to provide that there shall be fewer houses to an acre, that the land shall be more artistically laid out, that there shall be elaborate provision of open spaces, and that the houses built there shall be better for working men than have ever been provided by the speculative builder. Supposing that at Letchworth a co-partnery have incurred by way of purchase and road-making expenditure of £900 or £1,000 and they are called upon to pay Increment Value Duty upon a hypothetical profit of £200 to £300 of that amount, I say what an inducement that is for people to carry out their housing schemes in the old, bad, unsatisfactory, and insanitary way, instead of encouraging them to employ their capital in laying out streets and houses of the most modern and healthy description. I wish the Committee to realise that the actual expenditure upon the raw land bears a comparatively small proportion of the ground rent—the rent of the land on which the house stands. If the expenditure of £100 on mere land means a total expenditure of £800 or £900 before you get the land into a state fit for building, it is obviously not of much advantage to reduce the price of the land if you at the same time diminish the inducement of people to provide capital for building. You may have land cheap, and yet have houses dear. Just in proportion as you lessen inducements to people to embark on a new enterprise that provides housing, so you diminish the cheapness and the attractiveness of the houses the working people have to live in. I do not want to dwell on the agricultural side of the question, because I do not profess to be an expert in agricultural land, but I do think that in preparing valuations of agricultural land the deductions made are not adequate to the necessities of the case. I think there ought to be inserted in the measure which has been promised clauses to provide for deductions in respect of money expended on permanent improvements.


was understood to assent.


If it is the intention of the Government to insert these provisions it is all to the good. It is important also that tenant right should not be included in the valuation. To treat tenant right as part of the value is the same thing as if in valuing shop property you were to value the tenant's loose fixtures, utensils, and stock-in-trade as part of the freehold value of the land. I think it should be made perfectly clear that these deductions and exemptions should be granted. There has been a good deal of question and answer in this House from time to time as to whether there has been a decline in building, and whether the Budget of 1909 has affected the provision of houses. There is no doubt whatever that there has been a considerable decline in building. I do not wish to weary the House with figures but I would say that, judging from the normal increase of houses of £20 a year in times of good trade as in 1905–6, or similar years, there has been in the provision of such houses a shortage of 140,000 houses in recent years. That is a serious matter. I have no doubt that considerable responsibility for that rests with hon. Gentlemen opposite. I have no doubt that when they advised their friends in the country that the Land Taxes were going to ruin the building trade, there was considerable inducement given to act upon their prophecy and to anticipate its fulfilment. I do not think it would have been of such extent as it has been if we had not had doctrines propagated by hon. Gentlemen on this side which encouraged that view. If we had not propagated doctrines as to a considerable extension of the Land Taxes, we could have persuaded hon. Members opposite that they were false prophets. Whatever the reason—whether it was the speeches of Members of the Opposition, or speeches of hon. Members below the Gangway—there has been undoubtedly a very serious diminution in building. There is no use of hon. Members coming here and citing statistics about unemployment, and the like. If they had had to do, as we have had to do, spend a considerable portion of the last few years in trying to sell houses, they would have had a very different tale to tell. For some mysterious reason — it may be partly previous overbuilding, partly local rates, partly speeches of hon. Gentlemen opposite, partly speeches of hon. Gentlemen around me, and partly a study of some of the Clauses in the Finance Act—there has been a considerable diminution in building. I think the time has come when we should do our utmost to restore confidence in the building trade. I believe the speech made by the Chancellor of the Exchequer yesterday will go a long way to restore confidence. I believe that if he will translate into an Act of Parliament the Amendments foreshadowed, and do me the honour of accepting a few of the suggestions I have made, public confidence would be in a measure restored. You must make it clear to people that it is not a crime to own houses.

When we considered the small returns and the amount of worry and trouble that result from the ownership of small property I think that any man who invests his money in providing workmen's houses is a public benefactor. I do not think that anything ought to be done to diminish the confidence of people in house property as an investment, because I do not think that people generally realise to what an extent house property is the investment of the small man. I spent some time studying the Inland Revenue Returns for the last ten years, and came to the conclusion that house property, workmen's houses under £20 a year, was represented by a capital value of something like £875,000,000, and after a very careful study of the Death Duties I came to the conclusion that about £650,000,000, or possibly £700,000,000, of that total was owned by people who at their death left less than £5,000. Those are not the millionaires. The great landowner does not own a considerable number of houses. He does not find it profitable to do so. The wealthy man does not invest his money in house property. He has it in a more mobile and easily realised form. The man who buys house property is the small man who is in employment, and who saves his money through building societies and the like, and if you do anything to frighten that man or to diminish the moderate return that he receives, he does not buy houses; and if he does not buy houses, that means that builders cannot sell their houses; and, if not, they cannot realise the money which they have sunk in a particular piece of work to pay off their loans and to go on building more houses. There is then created a vicious circle. By diminishing the inducement to invest in this class of property, you cease to obtain a supply of that property.

What happens? During the last twelve months the rents of small houses have gone up from 6d. to 1s. a week. If you make inquiries in the urban districts throughout the country, you will find that that is so. It is because of that that the Financial Secretary to the Treasury was able to inform the House that the supply of houses last year had gone up from the abnormally low figure of 11,000 to 80,000, because the increase of rents had largely neutralised the effect of the Land Taxes, and building operations had therefore been resumed. There is no use propounding academic theories about these questions. All I say seems very commonplace. It is hardly worth saying such commonplace things in the House of Commons, but these are the facts, and unless we are very careful in our experiments in land taxation and land reform, we shall put such a burden, in the shape of additional rent and inconvenience on the working classes that we shall do a great deal more harm than good. It is natural, when we talk about land reform and land taxation, that we are always thinking about the great ground landlords who inherit the great estates. Of course, if one could get at these great gentlemen we might tax them mercilessly. We do not mind taxing a class to which we do not belong, and that is natural; but we ought to remember this, that the different classes of the community and the different social problems with which we have to deal are very closely correlated together. There is an interplay of social and economic forces. If we fail to realise that, then if we improve in one direction we may do harm in another. I yield to no one in my zeal for land reform and improved housing. These are the two principles I lay out for myself. Any scheme for housing reform must produce cheaper and better houses for their workmen, and any scheme for land reform must produce more out of the land and put more people on it, and for the life of me I cannot see how any schemes of taxation are going to do that.

I am very anxious to be converted to all these things, but the more I read these documents I find that they are really intellectual people who propound them, people for whom I have the greatest possible respect, visionaries, enthusiasts—I almost love them, but I will not put them in charge of the development of any estates in which I am interested: and I do ask this, that into their zeal and enthusiasm, which I very much respect and admire, they should put a little bit of practical sagacity and common knowledge and experience. While we have our heads in the clouds we should have our feet on the ground. It is very necessary to do that. I do not myself think that these Land Taxes, even with the improvement which I have no doubt the Chancellor will shortly put into the Act, are suitable to form a permanent portion of our national system of taxation. I believe that they entrench too considerably upon the area that ought to be devoted to local rates. I think that they would be very much better brought within the purview of local rating. I would like to see the valuation carried on to completion. I would like to see it finished as soon as possible, and then I do not think that it would pass the wit of statesmen to devise some scheme which, instead of our present chaos of national taxation and local rates, our Grants-in-Aid, our unequal assessment, and all the other ridiculous expedient to which we resort would enable us to possess a proper scheme of local and national taxation founded upon a scientific basis, so that the two branches would not overlap, but would work harmoniously together.


I did not intend to speak to-night on the question of land valuations, but I must say that the speech to which we have just listened is an extraordinarily interesting one. It is interesting from this point of view. We on this side have been told over and over again that we are everlastingly introducing the question of land valuation; that we put forward the same questions, the same arguments, and the same instances. Now we have heard it very well expressed from the other side, which shows that, not only hon. Members on this side of the House, but some hon. Members on the other side realise the gravity of the position and the harm that is being done in many ways by what has been called the People's Budget of 1909. The hon. Member spoke in a most interesting manner about the effect of the Budget upon the building of houses. It is absolutely true that the Budget has most adversely affected building and housing, and that in two respects. In the first place, a most important matter in housing is the rate at which you can borrow money. Owing to the depreciation of securities, which, in my opinion, has been largely caused by the Budget of 1909, it is impossible for local authorities to borrow money at the same low rate as they used to do. The result is that the cost of building has gone up, and rents have had to go up in consequence. I may give an example which is rather instructive. The London County Council have been developing for working-class dwellings a large estate on the outskirts of London. Certain dwellings, three-roomed, working-class houses, are let at 7s. a week. If the County Council could have borrowed the money at 1 per cent. less the rents could be reduced by 9d., which is more than three times the amount of rent that is due for the cost of the land. But owing to the fact that it is impossible now to borrow the money at the same cheap rate as it could be got at a few years ago the County Council are obliged to charge higher rent, and the working-class are the sufferers from what is called "The People's Budget."

I may give another example. The Chancellor of the Exchequer has tried very hard to prove that the building trade has not been affected by the Budget. He gave some remarkable figures as to the unemployment in the building trade. We heard him state yesterday that in March, 1909, the unemployment in the building trade was only 13.3, and in March, 1910—that is after the Budget—it fell to 8.9. He triumphantly pointed to those figures and said, "How can you say that the building trade has been adversely affected by the Budget when I can show that the unemployment in the building trade has so far fallen?" He entirely forgot to point out that the total number of men employed in the building trade has very largely decreased. If you take the twelve largest building unions, it is found that where 154,000 men were employed there are only 135,000 employed; in other words, a decrease of 19,000 men in those unions out of employment. The percentage of unemployment is such that there is very much less building being done, and I say that this is undoubtedly the effect of the Budget carried in 1909. I did not rise for the purpose of speaking so much about the Land Taxes as to make a few remarks about the position which is revealed by the Chancellor of the Exchequer's statement. I listened with the greatest interest to that statement, and it seems to me that his Budget is pure gambling, and nothing else. The Chancellor of the Exchequer was faced by the fact of a probable deficit at the end of the financial year of £7,000,000. How does he make up that £7,000,000? Of that total he makes up £6,000,000 by increasing the Estimates. I submit that there is absolutely nothing to go on or to justify his increase of the Estimates. Some of his Estimates, I agree, have a solid foundation. I agree that the Income Tax has a solid foundation. Of course it is perfectly true that a bad year comes on, and a good year may go off, but as far as the Income Tax is concerned, I admit that it has a solid foundation.

10.0 P.M.

But when it comes to the question of an improvement of trade or the maintenance of trade, what has he to go upon? I represent a big industrial constituency where there are a great many different works. They have got iron works, steel works, chain works, and also the biggest sausage factory. I have not consulted the sausage makers, although no doubt they would possibly be able to give a fair indication of the prosperity of the people. I have had the opportunity of discussing the situation with many leading people in the iron and brass works, and they all say exactly the same thing, that although of course they are busy now, yet they are busy on orders received some months ago, while no fresh orders are coming in, and there is no prospect, so far as they know, of fresh orders coming in Trade has probably reached its zenith, and is going off in every department. If that be so, what justification has the Chancellor of the Exchequer to suppose that his large Estimates are likely to be realised, or that the present trade is likely to be maintained. So much for the £6,000,000. But then the right hon. Gentleman has £1,000,000 which he cannot get out of the increased Estimates. He takes it out of balances. The history of that £1,000,000 is rather interesting. It was first of all suspended from the Sinking Fund of last year, and it was then allocated to the Navy. It was not then spent on the Navy, and it went into the balances, and eventually it has been pinched by the Chancellor of the Exchequer for this year's revenue. What does that mean? It means that if in this bumper year our revenue is not balancing our expenditure, we are living beyond our income. This is a very serious matter having regard to the fact that the country is committed to a very much larger expenditure, and it is almost impossible to say where the money is to come from. The right hon. Gentleman spoke about the great expenditure upon the Army and Navy. Docs he really think it has reached its limit? For my part, I think it is likely further to grow. The Chancellor of the Exchequer cannot get up and tell us that it has reached its limit. Then take the measures to which the country is already committed, and upon which there is bound to be an automatic growth of expenditure. Take old age pensions. Everybody knows that the cost of old age pensions is bound to rise whether we wish it or not. The simple growth of population, the fact that the death rate has fallen, that people live longer, are causes sufficient to increase the cost of old age pensions, and whether we want it or not we cannot help it.

Then take the Insurance Act. The Chancellor of the Exchequer knows perfectly well that the expenditure under that Act must increase from year to year. At the end of eighteen and a half years there is to be large growth of expenditure. That cannot be stopped. The Insurance Act is bound to be amended in many directions. Already we have had an alteration of the system under which the doctors are employed, costing £2,000,000. There are many other amendments that are bound to take place in the Insurance Act, and every one of those will cost more money. It is not only that the country is already committed to a large expenditure under these measures, but we know that there must be an increase of future expenditure. Let me give the Chancellor of the Exchequer an example. There is the question of housing. The hon. Member opposite has spoken of it from the point of view of the Budget of 1909, but this is certain that something will have to be done by the Exchequer in the direction of State-aided housing. This House is committed to a Bill for State-aided housing. It is quite true that the President of the Local Government Board opposed it, but I am quite sure that his early Victorian economics will not carry the country very long, and so far as we know, we are bound to have State-aided housing, and perhaps the right hon. Gentleman may carry it. Nobody has spoken more strongly than the Chancellor of the Exchequer on the necessity of housing reform, for he told us at Swansea last year that a large portion of the population are housed in miserable dens seething with disease and death. I know that the Chancellor of the Exchequer is perfectly in earnest in his wish to remove that evil, but it cannot be done without large additional expenditure.


All to be given to the landlords.


Not a penny of it to the landlords.


Every bit of it.


Then I would not support it. But this question has to be dealt with as a national question, and it involves a large item of expenditure. Take the whole question of local taxation. You have got £42,000,000 now being raised out of local rates for what are called national services, and that money is bound to be to a large extent put upon the broader shoulders of the taxpayer before very long. There is a Committee at present considering the relations of Imperial and local expenditure. How long is that Committee going to sit? How much longer are the local ratepayers to wait before they get some relief? It is a positive scandal that some relief has not been given up to the present time. Let me give an example, a small one no doubt, but one on which local authorities are pressing very hard—the question of the Grant towards education in necessitous areas. That amounts almost to a public scandal. There is a large number of local areas where the education rate is exceedingly high, and they do not get a penny at the present time. I asked a question some time ago as to why places which have only lately come within the purview of the Act do not get the Grant at the present time. The answer was, because the whole matter is being considered by this Committee on Imperial and Local Expenditure, and until they report nothing can be done. But, of course, that will have to be done before very long, and when it is done a great sum of money which is now paid out of local rates will have to be placed on the backs of the Imperial taxpayer. What, then, is the position we are in? In this bumper year we are not paying our way out of revenue. The country is committed already by the Acts which are passed to large additional expenditure, and, on the top of that, the country is waiting for other measures which will incur additional expenditure, while we find this year we are not paying our way, and the only conclusion I can draw is that the present system of Free Trade finance has broken down altogether. The only solution is—


Tax food.


No, not tax food. You are doing that now. As Members of the Labour party have pointed out over and over again, notwithstanding the fact that you are not balancing your expenditure, you are raising £10,000,000 on food. I do not say tax food, but I do say you must widen the area of taxation by imposing duties on foreign manufactured articles. I say that that is absolutely necessary. Your Free Trade finance has broken down, and for purely fiscal reasons, if for no other reasons, you must widen the area of taxation. The only way you can widen it is by imposing duties on foreign manufactured goods.


To broaden the basis of taxation is the proper term.


Whether you widen the area or broaden the basis, the effect will be precisely the same, and the sooner the country adopts it the better it will be for the Chancellor of the Exchequer and this House.

The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)

I hope we may be able shortly to bring the discussion to a close, as I understand we have got three Resolutions to put to the Committee. There is one thing which is very significant in the speech of the hon. Member for Dudley (Sir A. Griffith-Boscawen). I think it is the most significant thing that has happened in this Debate. This is the third day of the Debate upon the Financial Statement of the year. We have had speeches from all quarters of the House; we have had speeches from the Front Bench opposite, and we have had speeches from hon. Members behind, but the first reference made to Tariff Reform in the whole of the Debate is at the fag-end of the Debate, in the fag-end of a speech in a casual reference by the hon. Member for Dudley. [An HON. MEMBER: "You will have another."] That would rather strengthen my point. If the hon. Member wants proof of the triumph of Free Trade finance he will find it in his own speech. I remember perfectly well, when I introduced the Budget of 1909, that before that we had constant references in articles and speeches to the bankruptcy of Free Trade, and we were told that we could not find the money within the limits of Free Trade. This is the fifth Budget we have had since, and in four or five years of Free Trade Budgets we have raised £20,000,000 of money, and on the fifth discussion Tariff Reform has just vanished out of the scene, or, rather, it just appears in the peroration of a speech, and one of the last speeches on the last day of the third day's Debate. Really, I do not know what greater justification one could find for the finance of 1909 than that very remarkable circumstance!

I did not quite know what the hon. Gentleman was driving at until he came quite to the peroration. He elaborated the prospect of expenditure in future years. I agree with him, and I do know we are going to spend more money, and that there is a prospect of increased expenditure I agree. Lord St. Aldwyn said so in the House of Lords, and that whichever party was in power would have to face increased expenditure. I should be very glad to know that the expenditure on armaments had come to an end, but I still say that does not depend entirely on us. The only observation I make about that is this: It does depend partly on us, and unless there are discussions upon the increase of armaments, and unless someone in every country points out the alarming growth of armaments, and unless there are speeches made, not merely from the back benches but by the Front Benches in every Parliament in the world, then you will never stop it. If you say the responsibility belongs to country "A" and country "B" and "C" and "D" but never to your own country, and if everybody does the same in every Parliament in the world, you will simply have this growth going on of millions year after year until it strangles civilisation. That is why I do not think it is quite enough to say that it does not depend merely on us. It does depend partly on us, and I think it is the duty of all those who are responsible for government, and good government, in every land, including our own, to endeavour to cease and to enter a protest in the name of humanity against this cruel growth of armaments in every land, which is imperilling the progress of civilisation.

I agree with the hon. Gentleman, and I wish I could be as sanguine about that as about the trade of the year. I am not. I think the prospect is gloomy as far as the growth of armaments is concerned. I think we shall probably have to meet increased expenditure. The hon. Member said housing will involve increased expenditure, whether it is upon local charges or upon the Treasury, and he went on to say that there is increased expenditure in respect of the local authorities. I agree with him there, and what I would say to him is this: That where Protectionist countries have, by means of Protectionist finance, failed to meet those growing needs, and where they have had, as my right hon. Friend pointed out yesterday, actually to stop social reforms because they cannot finance them, we have financed them five years successfully, and when the demand comes for more I have every confidence Free Trade will rise to the emergency. We have done it without taxing the necessities of life for anyone. The hon. Gentleman says that we have put £10,000,000 on food. I found them there in 1909. The only thing that the present Government have done in respect of the taxation of food is to reduce it. They have reduced the taxation on food by something like £4,000,000 or £5,000,000. It is £10,000,000; it was £15,000,000 when we came into office. We have reduced it in spite of the fact that we have had to find another £26,000,000 to meet the expenditure of the country. We have taxed luxuries and wealth; we have reduced the burden upon small incomes; we have reduced the burden in respect of those who are spending money upon legitimate improvements in their property. We have only taxed wealth which would be recognised in every land as surplus wealth, and that we have done in such a way that undoubtedly the prosperity of this country since then, so far from having been retarded, has grown in an unparalleled degree. That is the history of the finance of 1909.

The hon. Gentleman repeated in rather scathing tones an observation about "The People's Budget." It has been repeated in various quarters; there seems to be only the one joke among Members opposite, and I have come to the conclusion that their sense of humour must be absolutely bankrupt. But what is the truth about that Budget? It has provided the finance for taking scores of thousands of people out of the workhouse. It has provided the finance for keeping nearly a million old people from going into the workhouse. It has provided the finance for giving medical attendance to millions of people, many of whom could never afford it before. It has provided the finance for keeping people in time of sickness from going on the parish, and their children from suffering privation. It is a good joke to call a Budget which has found £20,000,000 for people in distress, "The People's Budget"! What a jest What a sense of humour! I admire it The next time you tell the joke to the people, just explain to them what it means. They will understand it. Those laugh best who laugh last. The hon. Gentleman went on to discuss the Estimates. They are too sanguine. He is perfectly certain they will not be realised. Is he really? I should like to get one man on the other side to pin his reputation to the statement that the revenue which I am expecting for this year will not be forthcoming.


Are you quite certain that you will get it?


I have said so. If I have made a mistake, it is in print. Is there any responsible person on the other side who will stake his reputation that the money will not be forthcoming? I have only had a sort of general criticism: "You will not get it." Which of these taxes is it that I will not get? Will you point out which of these taxes I have grossly over-estimated? For instance, stamps, I am told, are under-estimated; therefore I shall get more money from them. Income Tax, the hon. Gentleman says that he is certain I will get. That is a considerable item. Death Duties is it that the hon. and learned Gentleman was perfectly certain I would get? Do the other side realise that that is half the increase already got? The other half, about three millions, I am not going to get out of the taxes. What, not out of spirits, beer, tobacco? It is all very well to say that all these Estimates are exaggerated. But which of them is exaggerated? Do they pledge their reputation, as the Chancellor of the Exchequer is bound to pledge his, when he gives his Estimates, as to which of these it is that is over-estimated? The hon. Gentleman said, "You are living beyond your income: this is beyond your means." So far from our living beyond our means we are actually paying off debts incurred by the party opposite. War debts! debts upon barracks derelict in different parts of the Empire. In addition we are paying for things which you would have borrowed the money for. Rosyth—that is capital expenditure! We are building docks which will last for all time. We are paying for all this out of the revenue of the year. Where is the living beyond our means? The hon. Member said, "Oh, but you are taking a million out of the Exchequer balances." But we are getting it out of the expenditure of the year! That is the kind of criticism to which we have been subjected. It is really very remarkable. Here you have a statement for the fifth year—a Free Trade Budget, which was challenged at the first as the last effort of Free Trade. It was to be the end of Free Trade, and of all things including Free Trade, but Free Trade first! At the end of the fifth year, when you make a statement showing how it has financed you every year, for the first year the debate has steered clear of finance, and taken to criticising one small part of the whole financial scheme. Those concerned have been very careful in this matter until the very last moment, when the right hon. Gentleman opposite, who does know something about it, has managed to compress within twenty-five minutes all he had got to say by way of criticism of the fifth Budget. It shows the growth of Free Trade finance. So much for that part.

I would like to say a word or two about the speech of my hon. Friend the Member for Sheffield (Sir Tudor Walters). If he read my speech yesterday he would have found it unnecessary to deliver that speech, but I am not sorry that he had not an excuse to deliver it. I have been a private Member myself, and I know what a private Member must necessarily suffer if he cannot deliver his speech which he has prepared very carefully. My hon. Friend dealt with builders' profits and deductions for agricultural improvements. These two things I dealt with yesterday. I promised to deal with them. I am fully alive to the points put by my hon. Friend, and I mean to deal with them. I think I shall deal with that in a way which will satisfy my hon. Friend, if he will allow me to say so, and I hope he will give me his assistance, because there is no man better qualified in this House to give an opinion upon this subject, and I shall welcome very much any assistance he can give me. That is as much as I think it necessary to deal with on this occasion.


May I remind the right hon. Gentleman he promised to state the practice of the Inland Revenue—


I did not promise to state it, I promised to deal with it.


Yes, to deal with it.


I will give the reason I did not deal with that yesterday. There are two cases sub judice, one conies on on the 8th May and the other on the 15th, and both deal with two branches of tenant right—the one with temporary improvements and the other with permanent improvements. There is, for instance, manurial improvements, grafting improvements, and seeds; these I call temporary. The other deals with questions like fencing, drains, permanent pasturage, and so on. [An HON. MEMBER: "And buildings."] Buildings are already in the Act. These two cases cover practically the whole ground. The Inland Revenue rather suspect that some of the correspondence quoted yesterday was correspondence simply directed rather with a view to eliciting information to help one of the parties to the litigation. That is their explanation, and that is why I did not reply to the letters quoted yesterday. I have not really gone into it, so I cannot say whether there is anything in that or not. I am just telling the right hon. Gentleman frankly how it was put to me. I do not think, when it is within a few days of coming up to be heard, that I ought to be called upon to make a statement which I think would be far better made by one of the Law Officers, when the whole thing is sub judice, and when the Referees have to decide two very important cases because, although nothing which I say in the House would be binding in law in the cases, still there is always the question of the quotation of what is said in the House of Commons. You have to state these things in words of technical precision, otherwise some casual phrase is always distorted in arguments of that kind, and I do not really think I ought to be called upon immediately before the trial of these two cases to make a statement in regard to them. That is the only objection to stating clearly what the position is. There is no difficulty about it. It is simply a matter which I think it would be unfair to the Inland Revenue at the present moment, on the eve of the trial of these two cases, to make a statement upon, because, after all, I represent one of the parties to the case, and to be called upon to make a statement now, when I have to appear before the judge who has to decide the matter in which I am, as it were, one of the parties, would not be right.


I understand the right hon. Gentleman's answer, if it is an answer to my question. I will not debate the matter with him now, but I want to make certain that he understands my question. I merely want to know what the practice of the Inland Revenue has been; I am trying to do justice to the Chancellor of the Exchequer's argument, for I cannot follow his reason for not stating "Yes" or "No" to the inquiry, "Have the Inland Revenue included or excluded this practice?" If that is a question the Chancellor of the Exchequer refuses to answer I must be satisfied.


That is exactly one of the points which is in dispute. [An HON. MEMBER: "Surely they know."]


Do they not know whether they have been adopting the practice or not?


Certainly they do, but that is exactly the matter which is in dispute. The point put by the right hon. Gentleman is one of the things to be argued, namely, what is temporary and what is permament. I will give an illustration. Take the manurial improvements, which is one of the points raised. That is purely temporary, and they have to consider whether that ought to be in or not.


Is it in or not?


No, it is not in. I give that as an illustration, but if the right hon. Gentleman goes through the process of cross-examination he gets the whole thing in dispute. That is not in, for the reason that you date your valuation from 1909, and that is one reason why that would not be included. I hope for the moment that the right hon. Gentleman will not press me any further upon that point, as there will be a full opportunity after the trial of these cases to discuss the matter in the House of Commons. I should think the decision will be given before the Second Reading of the Finance Bill.

I think I have now disposed of all the points that have been raised since the Home Secretary replied. We have had a discussion which has been a very valuable one. I am anxious that all these grievances with regard to the valuation should be removed, and I am also anxious to deal with any misappresions, and that even imaginary grievances should be removed, because that is an important element in restoring confidence. I am also anxious that the valuation itself should command confidence. The last part of the speech of my right hon. Friend dwelt upon the value of having a survey of this kind for future purposes, and the only way in which you can make that survey useful and valuable for Imperial and local purposes is to get one that will command the confidence of every class of the community.


The right hon. Gentleman who has just sat dawn told us that the Government had reduced taxation on food. However that may be, there is no doubt that food has increased very much in price. We were told when the Government were electioneering, in 1906, that when the Liberals were in we should have cheap food, and that we certainly have not had. The right hon. Gentleman forget to mention that he has put considerable extra taxation on to the land, and therefore on to the food we grow in this country. The taxation on the food of the people grown here has been considerably increased since the present Government came into office. The Chancellor of the Exchequer said that the prosperity of the country was unparalleled since the People's Budget. I do not know who that is supposed to apply to. The hon. Member for East Northamptonshire (Mr. Chiozza Money), who is one of the great statisticians of the Liberal party, on the 20th February last, told us— that real wages had fallen and it ought to be the first business of the nation not merely to restore them to their old level, but to increase them. I say to the Chancellor of the Exchequer that there can be no real prosperity in this country as long as you have real wages going down, because it means—and the labour people know it perfectly well—that the great mass of the people are worse off than they were before. Moreover, when yon come to the taxation of the people the hon. Member dare not go below £75 a year, because he knows how it would tell against the Liberal party and the Free Trade system. Even taking a man earning £75 a year, he is far more heavily taxed in proportion to his income than the man who has got £10,000 a year. [Cheers.] I am somewhat surprised to hear those cheers. You do not dispute it. The poor man is more heavily taxed than the rich man after sixty years of what is called the Free Trade system, which hon. Gentlemen on the Labour Benches as well as on the benches above the Gangway, tell us has brought such untold blessings to the working people of this country. All I can say is, what infernal humbugs you all are. [HON. MEMBERS: "Withdraw."] I shall of course withdraw if I am told to do so by the Chairman, but I do not think the epithet that I used is a very, very severe one. I want to point out how very differently the Chancellor of the Exchequer speaks in various parts of the country. On 22nd April, in his Budget speech, he said:— Without exception last year was the most prosperous year the British trade has probably ever seen. Judged by any test—volume of trade, profits, employment, wages—business was thoroughly sound and healthy."—[OFFICIAL REPORT, 22nd April, 1913, col. 258.] On 29th November, 1912, not very long ago, he told a very different tale:— In this country investigations have proved that you have in Great Britain and Ireland millions of people who are not earning enough to build up and maintain sufficient strength to adequately discharge their daily task, millions, millions of them. I have had the emigration statistics. What do I find? Scores of thousands every year of the most able-bodied, robust young fellows in your rural districts fleeing from their native land as if it were stricken with pestilence. It is stricken with the pestilence of what is called a Free Trade system. Under that system of taxation the Labour party feel compelled to hang on to the tail of the Radical party and to leave their unfortunate fellow workers to look after themselves as best they can or to emigrate to countries which protect their own industries and their own working people. It speaks very badly for men who are supposed to voice the cause of labour in this House that they should desert their fellow workmen in the way they do. I could quote plenty of statements by Liberals and labour men on the poverty and misery that there is in this country after sixty years' experience of this so-called Free Trade. I may quote the hon. Member for Burnley who told us the country was full of sordid poverty; that 750,000 people were, on the average, in the workhouses, and that every year 3,000,000 applied for relief. Is that satisfactory? Surely there must be something wrong with the system.

An hon. Member opposite just now called out "Tax the landlords." The Chancellor of the Exchequer has tried that; he has tried his wonderful land taxation, and what did he get out of it? It cost him about a sovereign for every half crown he collected. That is not going to save the country. I would remind the House that both Liberal and Labour Free Traders have spoken very strongly in this Debate against the taxation at present levied on tea and sugar, and especially against that on sugar, as they say—and rightly say—is not only a raw material, but is also the food of the people. Tea, they say, is just as necessary as bread. On all these things outside alcohol and tobacco the present Government within six years has levied taxation to the extent of more than £66,000,000, and they call themselves Free Traders. Trade is exchange, and if we had Free Trade, we should be free to exchange our goods and buy and sell freely with other nations. You go about the country humbugging people—


It will save trouble if I remind the hon. Member of the rule that his remarks must be addressed to me in the Chair.


I humbly apologise to you, Sir. I quite forgot. The hon. Members on the Labour benches interest me so much that I had my eye on them. I was venturing to say that hon. and right hon. Gentlemen opposite go about the country and call the system of taxation now put forward by the Chancellor of the Exchequer by the name of Free Trade. The word they use is purposely used to deceive and humbug the people of this country. [Interruption.] Yes, and they know it. They tell them that this system which they call Free Trade is almost entirely for the benefit of the working people of this country. What do they do? They tax the poor woman's tea—the necessity of the very poor—from £75 to £100 or more on every £100 worth. On £100 worth of the smart dresses of the rich woman is there any import tax? No, not one half-penny! The reason is that you dare not put it on because you are tied down by a system of finance that is called Free Trade. Hon. Gentlemen opposite are such friends of the poor when they are in the country. The Labour Members who are sent here by their fellow workmen, they, too, continue to tell the working people that it is to their interest that the absolute necessities of the very poor should be taxed, heavily taxed, while the absolute luxuries of the very rich should not be taxed at all. People who call themselves the friends of the poor have no business to humbug the people, and it is a disgraceful shame that they should go about the country and deceive the people in that way. This system not only heavily taxes the poor and lets off almost altogether in import taxation the rich, but because of this system we are not able in this country to grow sugar nor are we able to grow tobacco, because the Chancellor of the Exchequer says, "No. Under this system if there is any taxation on the import of any article you must of necessity put equal taxation on whatever you grow in this country."

I should like to put one other point. You have just added to the taxation of this country the Insurance Act. It never seems to have struck you that you are adding to the taxation of all that you produce in this country whilst the competing foods from abroad come in absolutely free, not only of that taxation but of all other taxation as well. A man employing a couple of hundred men to produce steel has to pay under the Insurance Act £130. The merchant who imports it would employ a warehouseman, a clerk, and an office boy. He would pay about £2 under the Insurance Act. Therefore under the Insurance Act alone, on the employment of 200 men, you are extra taxing the British employer about £128 every year, and that is altogether outside the £160 or thereabouts which his own workmen have to pay. That is not all, because you have all the other taxation as well, coming altogether, local and Imperial, to somewhere about £300,000,000 a year. I think it is rather more now. That has nearly all got to come out of production. It comes out of the workman's wages as well as out of the manufacturer. The workman earns wages by producing wheat or steel. Out of the wages ho earns he has to pay very heavy taxation—heavier import taxation than the working people of any other great country in the world. He has to pay heavy import taxation on his tea and coffee and tobacco, local rates, and so on. It comes to about £12 or £15 on every £100 worth of everything we produce. Therefore, when you allow competing goods of the same sort to come in here from foreign countries absolutely free you are in effect protecting foreign workmen and foreign employers against your own employers and your own working people. I say to you, and especially to those who are particularly supposed to represent the interests of labour, that is a bad system. You are penalising yourselves of your own accord, and giving State-aid out of your own pockets to foreign industries and to foreign working people. If hon. Members could be persuaded to think the matter out, if your constituents, the working people of this country, understood the tariff question, do not make any mistake about it, they would not have you as their representatives for a week.


I rise to protest against the conduct of the Government in passing a Motion earlier in the day suspending the Eleven o'clock Rule in order that there might be debate on the Budget, and of the Chancellor of the Exchequer in afterwards requesting the Committee to cease from further criticisms of the Budget. The right hon. Gentleman also complained that the scope of the Debate had not been extended to a general debate on the fiscal system of the country. We have been addressing ourselves to what is supposed to be a Free Trade Budget, and I hold that there was not only no necessity to discuss a wider and wholly different question, but that it would have served no useful purpose if it had been introduced in the Debate. The Chancellor of the Exchequer, in his brief speech, claimed to have dealt with all the criticisms brought forward since the Home Secretary spoke. He was present in the House during part of the speech delivered by the hon. Member for East Mayo, and in reference to that he did not say a single word. I am not surprised that he passed by the speech entirely.


The speech was delivered by the hon. and learned Member for North-East Cork (Mr. T. M. Healy).


I beg the hon. and learned Gentleman's pardon. [Interruption.]


May I ask, Mr. Chairman, if you are going to allow this disorder to continue?


Perhaps the hon. Member will allow me to use my discretion.


It is usual for the Chair to repress disorder.


The hon. Member is well aware that it is not entirely disorderly, within limits, for hon. Members to express themselves, and in regard to the interruptions, I trust I shall be able to use my discretion to the satisfaction of the Committee.

11.0 P.M.


I was saying when the hon. and learned Member endeavoured to assist me by his intervention that I am not surprised that the Chancellor of the Exchequer dismissed his speech without a word, though I happen to know that he heard a very considerable part of the extraordinarily powerful indictment against the whole of the Governments policy of the Budget in relation to Ireland. There is another matter to which the Chancellor of the Exchequer did not think it worth while to address more than a single remark—that is the taking of the £1,000,000 from the Exchequer balance in order to balance his Budget. The hon. Member for Colchester (Mr. Worthington-Evans) dealt with that part of the speech of the right hon. Gentleman the Member for East Worcestershire in, I think, an extraordinarily able manner, and explained perfectly clearly that what the Chancellor of the Exchequer said with regard to that £1,000,000 could not be substantiated for a single moment. The Chancellor of the Exchequer was not present during any portion of that speech. At the opening portion of the speech of the Home Secretary I desired to interrupt him, not with any words of mine, but in order to save him from making a very large part of his speech in which he tried to destroy the argument of the right hon. Gentleman the Member for East Worcestershire with regard to the basis upon which the Chancellor of the Exchequer has raised his Budget. The right hon. Gentleman said that the Chancellor of the Exchequer had budgetted for a more prosperous year of trade than that through which the country has just gone. The Home Secretary said that that was not so, and that what he had done was to claim that for part of the year at any rate trade would not be worse than it was during the year through which we have passed. As that speech has been made it is desirable that the Committee should know exactly what it was that the Chancellor of the Exchequer said, and the passage in his speech to which I have no doubt the right hon. Gentleman the Member for East Worcestershire referred. The Chancellor of the Exchequer said:— I feel justified upon the basis of the opinion that has been given to me by some of the ablest and most experienced business men in the country, in forecasting my revenue this year on the assumption that we have entered upon the most glowing year that British trade has yet seen. That follows upon the statement that the year through which we have just passed was the most prosperous year that British trade probably has ever seen, and it is perfectly clear that he budgeted upon the assumption that the coming year will be more prosperous still—in fact, the most glowing that British trade has ever seen. There is no one in any part of this House who is not anxious that the Chancellor of the Exchequer's forecast should be realised. The Chancellor of the Exchequer pointed out last year that he had three adverse circumstances—the strike, the bad harvest in this country, and the war—which he had not against him this year. In racing parlance, the right hon. Gentleman is speculating on the triple event, but that is a little too risky for a safe basis for the finances of the whole year. The Chancellor of the Exchequer said that our home trade had never reached such dimensions. If the right hon. Gentleman has any figures by which he can compare the volume of home trade with the volume of home trade in other years, I hope he will produce them at the earliest possible moment. It is a more important factor than the oversea trade, and it is one in regard to which no practical basis is given at all. In the matter of the harvest the Chancellor of the Exchequer bases his Estimate in very large measure on the fact that last year there was a cereal harvest throughout the world of 250,000,000 quarters extra. The right hon. Gentleman said, in spite of the bad harvest here, that this larger foreign harvest, among other things, promoted international trade, and reduced the cost of living. I want to know where the cost of living in this country has been reduced by this bounteous cereal harvest in other parts of the world. It is quite true that when you turn to the Board of Trade figures of the prices of cereals, in the home trade wheat, barley, and oats are down by from 3s. to 5s. on the average, compared with a year ago. That is due almost entirely to the poor quality of the grain this year in this country. But all the good wheat grown in this country reached as high a price this year as at the time before this bumper foreign crop of 250,000,000 quarters extra. English wheat was sold at 37s. 6d. in Canterbury market on Saturday. The "Times" of 25th April quotes Karachi 39s., and No. 1 Northern Manitoba was 39s. 1½d. I want to know where the reduction of the cost of living is which the Chancellor of the Exchequer says can be attributed to this bumper harvest. What it proves is that the prosperity of other countries has been so great that they have been able to consume this additional 250,000,000 quarters without any reduction at all in the price of the main cereal commodities. It is no testimony to the prosperity of this country at all, but to the prosperity of other countries, reflected more or less in our trade here. The Chancellor of the Exchequer referred to the question of armaments, and said since he had been in his present office the expenditure on armaments had increased by £15,000,000 and since 1861 by £46,000,000. He said he saw no prospect of this immense growth coming to an end. I desire to call the attention of the Committee to the extraordinary contrast between that statement made a week ago and the statement in the same speech.


rose in his place, and claimed to move, "That the Question be now put"; but the Chairman withheld his assent and declined then to put that Question.


In 1911 the Chancellor of the Exchequer clearly stated that our expenditure on armaments in his opinion had reached its climax, and that it would be reduced from year to year. In his speech a week ago he said we all anticipated that the high-water mark was in 1910. I wonder who the "we" he referred to are. There were no Members, as far as I am aware, from this side who believed for one moment in the policy of the reduction of armaments which was then in force and fashionable on the Government Front Bench. We believe firmly that in very large measure the great expenditure that is necessary in the coming year is due to those rosy forecasts of the Chancellor of the Exchequer, which were absolutely baseless, and were only put forward for the purpose of indicating that all was well because he was at the helm of the Exchequer, and that therefore there would be no need for further taxes. If he had made the statement in 1910 that he made a week ago, that he saw no reason to believe there would be any diminution in expenditure we should be called on to incur, it is very likely it would have produced the result of lessening the competition of foreign armaments, because foreign Governments would have known we were in earnest in the matter.

With regard to the Super-tax, the Chancellor told us that last year the revenue from this source was up by a sum of £100,000, and that that was due entirely to the mode of collection. I would have liked to know, if I had had the opportunity of addressing the Committee before the Chancellor spoke, why he stated in this year of increased trade that the whole of the increased Super-tax was due entirely to the mode of collection, and was not any of that increase due to the fact that trade profits must have increased enormously, and to the fact that there must have been a certain number of people whose rose above the £5,000 limit on account of the good trade the country has been through? More remarkable still, the Chancellor of the Exchequer estimates that in the coming year the yield from Super-tax will be down by £350,000, as in that case he will have no arrears of Super-tax to collect. If we are to have a more glowing year of trade, does the right hon. Gentleman anticipate that we shall have a smaller collection of Super-tax? I should very much like to know how many now pay Super- tax, and what the increase is as between the number of the year before and last year and the estimated number who will pay Super-tax in the coming year, because this question of the payment of the Super-tax is one which clearly has a very large bearing on the distribution of wealth, which is one of the most important questions that can possibly be considered in connection with a Budget statement.

A matter which may seem a comparatively small one, but to which I attach enormous importance is the Chancellor of the Exchequer's reference to oil-fuel reserves. Are amendments of the tax upon petrol among those which he said he would regard in a very favourable light and which he hoped would be put down to the Revenue Bill? I consider that if he made a reasonable difference between the tax charged upon petrol refined in this country and the tax charged upon petrol refined abroad, a very large part of the £1,000,000 capital expenditure for oil reserves would be wholly unnecessary, even in view of the fact that the Navy is to become a large user of oil in the near future. If the tax upon oil refined in this country were half that upon oil refined abroad, there would grow up here an immense oil-refining industry, and automatically without paying a halfpenny, let alone a million sterling for capital expenditure, we should have an immense reserve of oil in the oil refineries of this country. The Chancellor of the Exchequer said that immense expenditure was being incurred upon scrapping old machinery, providing new machinery, and erecting new workshops. Another of the amendments which I hope the Chancellor of the Exchequer will regard favourably, and which I believe he did regard with some favour last year when moved by the hon. Member for Warwick and Leamington, and seconded by myself, has reference to the collection of Income Tax on wasting assets. If the Chancellor of the Exchequer is so fully alive to the importance of the expenditure upon new machinery and new buildings for trade purposes, I hope he will allow a reasonable deduction from these wasting assets before he claims Income Tax on the expenditure. I would ask him to consider the cumulative effect that this expenditure will have when the present trade boom is over. It is very natural that he should congratulate the country on this great expenditure, which means an enormous increase in the productive power of the trade of the country as long as there is a demand for the output. But this expenditure has been going on all over the world, and when the demand slackens the competition for orders for these enlarged factories will mean a rapid diminution of profits on manufactures in this country, which must be reflected most seriously in the collection of Income Tax.

There is one other point—[Interruption.] That interruption enables me to remember a second point. The first of the points refers to the remarks of the Chancellor of the Exchequer that the increase of population provides him automatically with a certain increase of Revenue, which can be calculated by every Chancellor of the Exchequer in times of good or bad trade. He made a very interesting comparison between the new expenditure he is budgeting for and the expenditure of fifty years ago. The Revenue, he said, per head of the population fifty years ago, was 48s. 3d; at present it is 86s. 3d. There emigrated from this country last year 265,000 persons, mostly, no doubt, of the working classes. They would have yielded Revenue on the basis per head given, if they had been allowed reasonable opportunities for rising in the social scale, £1,150,000. This is not, I admit, a very high standpoint from which to take the question of emigration, but it is the only point of view that is pertinent to the Budget. The Chancellor of the Exchequer, in comparing employment now and nine or ten years ago—at the beginning of the century—said that then a very large number of the working-class population were absent at the South African war. The number that went out to South Africa to fight is wholly incomparable with the number leaving these shores yearly to get employment in other countries. It has been estimated that every one of these emigrants is worth to Canada from £200 to £400 per head. It means so much loss to the revenue, as I have shown. The Chancellor of the Exchequer mentioned—naturally he did not dwell upon the fact—that in the last fifty years the taxation of the country per head of the population has increased very nearly two-fold. Several hon. Members have commented on the fact that, in spite of every effort and every shift to arrange the figures, the Chancellor of the Exchequer has only been able to show an increase on the right side of £185,000 in order to balance his Budget. I do not believe that that is really the state of mind of the Chancellor of the Exchequer. I do not believe for a moment he would have put this Budget before the Committee with only that margin of less than £1 in every thousand for which he is Budgeting, if he had not known quite well that he had a very important factor up his sleeve which he did not think it worth while to disclose to this Committee. I refer to the fact that in the financial year now closed he had two Easters. In the financial year which has just opened there will be no Easter at all. That makes a difference of nearly a week from the revenue point of view, and of between £2,000,000 and £3,000,000 sterling. The Chancellor of the Exchequer mentioned all sorts of small items to the Committee, arrears of revenue collected, and so on, but if he wished to make a fair statement he should have said he was budgeting for a year that had no Easter, and he should have compared that with a year which had practically a week less of revenue collection in it. Therefore, although I regard this Budget as a high piece of speculation, I think the Chancellor of the Exchequer has got something on the right side, which he did not disclose, but at the same time, I do not think that that is a method of procedure that ought to be commended. I always thought it was the duty of a Chancellor of the Exchequer, in making his financial statement, to put the whole of his case as fairly and clearly as possible before the Committee. I do not think there is the slightest doubt in this case material facts have been kept back. I ask the Chancellor of the Exchequer either to confirm or deny the statement I have made with regard to the extra revenue he will derive from the fact that there is no Easter in the current financial year?

There has hardly been a single reference to the Tea Resolution in this Debate. The hon. Member for Burnley, who deprecated that so much of the time of the Committee was taken up with the discussion of the Land Taxes, did refer to the Tea Duty, and commended the Tea Duty as at present imposed. He said there was much to be said for it. I say that a Tea Duty on a flat basis of 5d. per pound is an inequitable and an utterly unjustifiable tax, and when the Resolution imposing it is put from the Chair I shall divide against it.


This night week at Eight o'clock the Chancellor of the Exchequer moved to report Progress, and as I understood upon the distinct understanding that there was to be full latitude and freedom of debate on the occasion when this Resolution came up, I do not think we have had it. We conceded to the Government the fact that they should get an early evening. Two of us ventured to address the Committee to-night in somewhat difficult circumstances, the Chair doing its duty with great accuracy and correctness separated as far as possible the Irish portion of the debate from the other portions. I do not complain of that. What I complain of is that we have had no reply whatever to the case of Ireland. For my own part I do not object to being ignored, and I make no complaint of it.


When I was speaking I looked for the hon. and learned Member, and he was not present. I had a note to reply to him and he was not here.


I did not get my dinner until nine o'clock in order to have an opportunity of speaking. There were five of my hon. Friends here whom I asked to remain, and call me if the right hon. Gentleman had alluded to the Irish portion of the case, but he did not do so. The whole of the time my hon. Friend was speaking the Financial Secretary to the Treasury and the Home Secretary were present, and we have had three Ministerial speeches in reply, and not one of them contained even the smallest notice of the case of Ireland. I rise for the purpose of saying that on the last occasion, when the Irish party will be here in full strength, that I wish to make this protest, and I regret that for historic purposes my protest was drowned by the derision of the Irish party.


I hardly ever speak in this House, but I do so to-night in order to enter my protest from the point of view of the agricultural community against the answer that has been given by the Chancellor of the Exchequer on the question of tenant right. This evening and during the afternoon we had only from the Chancellor of the Exchequer merely ginger and generalities, and there was no specific answer to this extremely important question. From the Financial Secretary we had a speech and a good deal of a somewhat supercilious self-satisfaction from the point of view of his Department in general and himself in particular. I am perfectly certain that the right hon. Gentleman does not realise what the effect of the answer is which he has given here to- night. It is no good saying that the whole question of tenant right is still sub judice, because that does not affect the question in the least. From the point of view of the agricultural community, the important aspect of the question is that we know from him that as far as agricultural land is concerned no revenue is likely to accrue from the land taxes. Therefore, we may fairly ask what is going to accrue. We have been told that we are going to have a great "Domesday Book" which will form an important and equitable basis for future taxation. My answer to that is that you cannot get a fair and equitable basis of taxation unless you are able to differentiate between the fixed capital of the landlord on the one hand and the moving capital of the tenant on the other hand, and that is represented by his tenant right.

In the first place there is the amount the tenant has invested in ungotten corn and other crops, unexhausted improvements, feeding stuffs, fertilisers and dry crops. That is a moving figure each year, with a Lady Day tenancy between the 6th of April one year and the 6th of April another year. That is a moving value which can only be arrived at by means of a valuation as between the out-goer and the ingoer. If it was not arrived at in the year in which the value accrued, it is hopeless to endeavour to arrive at it three or four years afterwards. We hear from the Chancellor of the Exchequer that 4,000,000 valuations have finally been settled, but everyone of those valuations is vitiated unless at the 30th April, 1909, you had a definite value placed upon the tenant's interest in every holding. It seems to me that if you have not differentiated between the landlord's interest and the tenant's interest, you have got to face the fact of having to throw over the whole of these 4,000,000 valuations that have already been made, and I know perfectly well from my own experience that it is absolutely impossible for any of those valuations, ordinary outgoing and incoming valuations, to have been made. You cannot arrive at an equitable valuation of a single acre of agricultural land in this country unless you have on the one hand valued the fixed interest of the landlord, allowing for house, farm buildings, drains, water supply, fences, and so on, and the moving interest of the tenant on the other hand. So far as the landlord's interest is concerned, it seems to me that, according to the Finance Act as it is now on the Statute Book, it is as hard to find out when a fence is not a fence as it is to find out when speculations are not investments. [HON. MEMBERS: "Divide," and "Withdraw."] Surely that is perfectly fair comment. Possibly the mind of the Chancellor of the Exchequer is more trained to deal with mercantile investments than with manurial ingredients.


Has this any relevancy to the Resolution now before the Committee?


Unless hon. Members are a little more quiet, I am afraid I am not able to follow the hon. Member's remarks.


The only effect which this land valuation has had on the agricultural community is that it has created a feeling of insecurity which has militated against the best interests of agriculture. Those are not my words; those are words incorporated in the report of the Departmental Committee set up by this Government last year to inquire into the breaking up of large agricultural estates. That has been the only effect which has accrued from your land valuation. I submit that the Chancellor of the Exchequer must realise unless he is prepared to face the whole of this question of tenant right he is not justified in coming down to the House and asking the country to spend £750,000 a year on a valuation which cannot get the country any revenue and which cannot give the country any fair or any equitable basis for any future taxation.

Question put, and agreed to.

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