HC Deb 12 August 1913 vol 56 cc2432-44

"(1) Where the Treasury are satisfied with respect to any class of persons in receipt of any salary, fees, or emoluments payable o out of the public revenue that such persons are obliged to lay out and expend money wholly, exclusively, and necessarily in the performance of the duties in respect of which such salary, fees, or emoluments are payable, the Treasury may fix such sum as in their opinion represents a fair equivalent of the average annual amount laid out and expended as aforesaid by persons of that class, and in assessing the Income Tax on the salary, fees, or emoluments of persons of that class, there shall be deducted from the amount thereof the sums so fixed by the Treasury.

(2) The provisions of Section 51 of the Income Tax Act, 1853, shall not apply in cases to which this Section is applicable."

Clause read a second time.—[11th August.]


The next Amendment, standing in the name of the hon. Member for Tewkesbury (Mr. Hicks Beach) would impose a charge.

The Amendment was in Sub-section (1) — after the word "persons" to insert the words "except Members of Parliament" ["satisfied with respect to any class of persons in receipt"].


I beg to move in Subsection (1) to leave out the words "payable out of the public revenue."

The difficulty is that we are dealing with a Bill which has not yet been printed with the new Clause, so that I can only deal with the Clause as it appeared on the Paper in the Committee stage. The effect of the Amendment is that the discretion which is given to the Treasury is limited to the case of persons who derive their salary, fees, or emoluments from the public revenue. It seems to me there is no reason whatever for making that limitation. If it be necessary at all to give any such special exemption or privilege it ought to be open to all classes, because the benefit given under this Clause as now amended is a benefit of a very peculiar description. The persons who get the benefit of this Clause are not only relieved from the anxiety of proving their expenditure, but they are to be given the benefit of an average, even although their expenditure may be below that average. If, on the other hand, their expenditure is above the average, they may make full claim for their expenditure. What I say is this: if you are going to give that benefit to a Member of Parliament you ought to give it to other people as well. You ought not to limit it to the case of public revenue.

When I assented to this Clause yesterday I did not fully appreciate its effect. The right hon. Gentleman altered it at the moment in manuscript. I am only mentioning that as my excuse for not having fully appreciated its effect yesterday, and I do submit that if you are going to give this privilege to Members of Parliament there ought to be opportunity given to other people to endeavour to obtain it, because it is merely a discretion you give to the Treasury. You say to the Treasury that in a case which they think right they may give to certain classes of person engaged in certain classes of employment the extraordinary privilege of "Heads I win, tails you lose." The Treasury says: "You need not prove your expenses at all like everyone else, but we will fix a certain average, and if you go below that you will still have the benefit without proving any expenditure, and if you go above the average you may prove your actual expenditure and get the benefit of more than that actual expenditure. It is a distinction given to the Treasury, who need not exercise it unless they like; but I say you ought not to insert words which restrict it to the case of persons whose salaries and emoluments are payable out of public revenue. What about local authorities? Why should it not apply to persons who derive their salaries or emoluments from the rates, or from public companies? These persons may stand much more in need than Members of Parliament, and on these grounds I do press that, at least, if we are to have this in our own favour, the Clause ought to be framed in such a way that other classes, irrespective of any such limitation as the words "Public Revenue" afford, ought to be able to obtain this privilege as well.


I beg to second the Amendment, arid I would like, if I may, to make one observation about the reply the Chancellor of the Exchequer gave to me yesterday. He led the House to infer that any deduction paid under this Clause would be for travelling expenses. I ventured rather to question the interpretation of the wording of the Clause in that respect, and the only reply I got was a general intimation by a shake of the head that I was entirely incorrect. I gather from a perusal of the proceedings before the Public Accounts Committee that this allowance for abatement out of the salary paid to Members of Parliament is allowed by the Treasury not on Members' travelling expenses only, but as a sort of general average to try and meet the case of what they thought would be the ordinary expenses of a Member of Parliament. In fact, the representative of the Treasury said, in answer to question 1793, that he thought £100 was a fair figure to take. He was further questioned by a member of the Committee on what grounds Members had claimed exemption, and a very striking list was given by the representative of the Treasury showing the various grounds.

Some Members claimed for travelling expenses from their constituency to their residence; others from their constituency to London; others charged for postage and telegrams; others for stationery; others for subsistence while in London; others for apartments and hotels in London; others for secretary's salary; others for clerical assistance; another for maintaining a political organisation in his constituency; another for entertainments in the House of Commons and in his constituency, and another one for rent of office. The Treasury very naturally decided that a lot of those claims could not be justified. They said that the only one that really could be justified in their opinion was that for postage and telegrams, but they said that of course hon. Members perhaps were in a better position to judge what were the actual expenses incurred by a Member of Parliament in fulfilling his duties, and, therefore, in order to avoid much discussion and much correspondence between various Members of Parliament and the Paymaster-General's Office, they agreed with the Paymaster-General's Office to come to a rough and ready compromise by this allowance of £100 for exemption of Income Tax on salaries of Members of Parliament. I venture to say that in the case of Members of Parliament this is absolutely unjustified by the Resolution that was passed by the House of Commons itself on 10th August, 1911. The words in that Resolution were—


The hon. Member appears to have forgotten the Amendment he is seconding. He seems about to move the one which Mr. Speaker just now ruled out of order. The proposal now is to extend this relief to other persons than those paid out of public revenue.


I was venturing to submit that, if it is justifiable under the Clause to apply this exemption to Members of Parliament, it is therefore, much more justifiable to apply the exemption to other members of the community. The Chancellor of the Exchequer, in moving the original Resolution, said these orders would be made out for the proper sum, less income tax, in each case. Therefore, there was in the minds of hon. Members who voted for that Resolution, no idea of an exemption from income tax being allowed out of this sum. If it is justifiable at all—which I submit it is not—to make this allowance out of salaries received by Members of Parliament, it is equally justifiable, and more so, to make an allowance, not only for other people paid by public bodies, but for every person who earns a salary in his ordinary vocation. If it is justifiable for Members of Parliament to, claim for travelling expenses, and postage and other things which some hon. Members put forward, surely a clerk in any office in the City of London is justified in putting forward a claim for travelling expenses to and from his residence to his place of business. It is just as necessary for him to travel from his residence to his place of business, as it is for a Member of Parliament to travel to and from his Constituency. I submit that this sum was paid to Members of Parliament, not to enable them to travel to and from their Constituencies, but to enable them to come up to London and to attend to their duties properly in the House of Commons. Take any other case. The civil servant does not live actually over his office. He has to spend a considerable sum of money in travelling from his residence to his place of business. Therefore, he would be perfectly justified, on the same ground, in putting in a claim. If you can justify that claim at all, in the case of a Member of Parliament, you ought to justify it also in the case of every other individual taxpayer. For that reason, I second the Motion.


Though I agree it was impossible for the hon. and learned Gentleman to have put his Amendment on the Paper, I think he might have given me a copy of the Amendment. I had not a notion that he was about to move it, and in these cases it is always the practice for a Minister to have an opportunity of consulting the officials of the Inland Revenue as to what the effect of the proposals would be. I regret that he could not sees his way, at least, to give me notice, so that I could see what the effect of the Amendment would be.


I had intended to give the right hon. Gentleman some notice, but accidentally forgot to do it. I can only express my regret.


Then, I have certainly nothing more to say on that subject, although it is rather difficult to know what the effect of an Amendment will be without having a consultation with the officials. I think the hon. and learned Gentleman has rather overlooked what the effect of this Clause is, and why it was introduced. It was introduced entirely because of the report of the Public Accounts Committee. That Committee, without expressing any opinion on the merits, stated that such deductions as were made in regard to Members of Parliament, and other deductions, to which they had called attention, which had, from time to time, been made by other Chancellors of the Exchequer, should be legalised by statute. This Clause was introduced purely in deference to the expressed opinion of the Public Accounts Committee in their report with a view to regularising these transactions. We are not raising the general question of what allowances should be made in regard to the other things which the hon. and learned Gentleman referred to. That is a totally different issue, and I do not think that it could be dealt with here. Taking the case of the revenue, I do not think the hon. and learned Gentleman would suggest that you could have a fixed sum for, say, directors of companies, wherever they lived, and whatever the nature of the concern with which they were connected. There is such a variety in the nature of the companies and the matters involved. Of course, in the case of revising barristers, one might say that the expenses in some cases are very much heavier than in others. In some counties they have to do a good deal of posting, in other districts they can travel about in trains, whilst in other districts, again, there is very little travelling to do at all. But here there is a regular fixed deduction, because their work is work of the same character, in the main, and the expenses are substantially the same in each case and within certain limits. That is the reason why these two or three cases have been selected.

I am sure hon. and learned Gentlemen would never seriously propose that you should give the Treasury unlimited powers to make deductions, of a fixed amount, applicable to whole classes of the community. Their powers are very sufficiently exercised up to the present time. During the whole time the Income Tax has been in operation—for over sixty years—there have been only three cases in which this has been done. The hon. and learned Gentleman has suggested that we should equip the Treasury with these gigantic powers, which should be applicable to every class of the community engaged in industry. Great as is my confidence in the Treasury under its present management, I really would hesitate to accept an invitation to exercise and to wield such gigantic powers. At the same time, I have every confidence in the present management of the Treasury. I think the hon. and learned Gentleman is really moving this Amendment in order to raise a totally different issue, which could not be raised in any other way. It deals with the question of making and fixing deduction without any limit, and it would be very dangerous to give such powers to the Treasury.


The Chancellor of the Exchequer has rather misconceived my hon. and learned Friend's object. His object simply is to carry to a logical conclusion the Chancellor's own action. That is really the whole point, and when he talks about the enormously wide powers I quite sympathise with him. I think he found himself in a very great difficulty indeed. The right hon. Gentleman, with his usual skill, very carefully avoided his own share in the difficulty and made the most of that which he could attribute to this side of the House. The real problem has arisen from the public feeling that what Members of Parliament do for themselves they ought to do for everyone else in the country. That is the whole point. I do not want to debate the matter at any length at this hour of the night, but the right hon. Gentleman ought to have thought of that before he opened the door—


I did not open the door.


He opened the door.


Not at all. I just walked through a door which was opened by Sir Robert Peel, and still further opened by Lord St. Aldwyn, and Mr. Goschen.


Quite different cases.


Well, I pushed the door open a little wider.


Yes, but people who walked through that door before, were people very different from those in the House of Commons to-day. The whole principle is absolutely different when the House of Commons is dealing with its own Members than when it is dealing with people who are not under its jurisdiction. It was a very different matter so long as it was confined to a small class of civil servants, for, as the old proverb says, "De minimis non. curat lex." But when you are dealing with Members, everybody throughout the country naturally says, "Why should hon. Members in the House of Commons vote themselves privileges and save themselves trouble when we are denied such privileges?" The Chancellor of the Exchequer has opened a door not opened before and clearly the whole thing has an unpleasant savour in the country. It puts us in a false position, and I do not think the relief is worth it. I think the feeling in the country is perfectly justified. If we save ourselves trouble in that way and enable ourselves to claim a lump sum, everybody should be treated alike.


It is rather amusing to listen to the hon. and gallant Member for Chelmsford who blows hot and cold in a quarter of an hour. But what I rose to say was that I agree to a great extent with the hon. and learned Member for St. Pancras who moved the Amendment. I spend a great deal more on railway fares than the hon. and learned Member, and therefore I am entitled to

more exemption than he is. It was generally understood when payment of Members was discussed that it was not going to be a salary at all, but an allowance to enable Members of this House to meet the extra expense they were called upon to make. The mistake was made in calling it a salary at all. We are told that it is only a step from the sublime to the ridiculous and it seems to me that the hon. Member for Tewkesbury takes that step every time that an opportunity presents itself. If the hon. Member's chauffeur moved fifty or sixty miles away from his home and claimed that he was entitled to his fare as well as to his salary the hon. Member would be the first to protest. I think that Members who live long distances from London are entitled to relief of Income Tax in respect of the expense they are put to in travelling that distance. I have in my mind the case of one of my hon. Friends who goes home to Scotland every week-end. I only regret that the Chancellor of the Exchequer, when he decided in favour of the payment of Members of Parliament, did not call it an allowance instead of a salary. The mistake is there. I certainly cannot agree with the argument used that Members of Parliament are in the same position as directors of companies or persons in the employ of large insurance companies who may live close to or within a few miles of their places of business. Members of Parliament cannot do that, and they are compelled, owing to their position, to be present in their constituencies on frequent occasions. That being so, I think Members of Parliament can claim that they are not in the position of ordinary business men.

Question put, "That the words proposed to be left out stand part of the Bill."

The House divided: Ayes, 131; Noes, 20.

Division No. 277.] AYES. [1.46 a.m.
Abraham, William (Dublin, Harbour) Carr-Gomm, H. W. Essex, Sir Richard Walter
Acland, Francis Dyke Chancellor, Henry George Ffrench, Peter
Adamson, William Clancy, John Joseph Field, William
Allen. Rt. Hon. Charles P. (Stroud) Clough, William Flavin, Michael Joseph
Arnold, Sydney Condon, Thomas Joseph George, Rt. Hon. D. Lloyd
Baker, Harold T. (Accrington) Crumley, Patrick Gill, A. H.
Benn, W. W. (T. Hamlets, St. George) Cullinan, John Gladstone. W. G. C.
Boland, John Pius Davies, David (Montgomery Co.) Greig, Colonel James William
Booth, Frederick Handel Davies, Sir W. Howell (Bristol, S.) Griffith, Ellis Jones
Bowerman, Charles W. Delany, William Guest, Hon. Frederick E. (Dorset, E.)
Brady, Patrick Joseph Denman, Hon. Richard Douglas Gwynn. Stephen Lucius (Galway)
Bryce, J. Annan Doris, William Hackett, John
Burke. E. Haviland- Duffy, William J. Harcourt. Robert V. (Montrose)
Buxton, Noel (Norfolk, North) Edwards, Clement (Glamorgan, E.) Hardie, J. Keir
Buxton, Rt. Hon. Sydney C. (Poplar) Esmonde, Dr. John (Tipperary, N.) Harmsworth, Cecil (Luton, Beds)
Harvey, T. E. (Leeds, West) Macpherson, James Ian Raffan, Peter Wilson
Hayden, John Patrick MacVeagh, Jeremiah Rea, Walter Russell (Scarborough)
Hayward, Evan McGhee, Richard Reddy, Michael
Hazleton, Richard Marshall, Arthur Harold Redmond, John E. (Waterford)
Higham, John Sharp Masterman, Rt. Hon. C. F. G. Redmond, William (Clare, E.)
Hobhouse, Rt. Hon. Charles E. H. Meagher, Michael Redmond, William Archer (Tyrone, E.)
Hogge, James Myles Meehan, Francis E. (Leitrim, N.) Roberts, Charles H. (Lincoln)
Howard, Hon. Geoffrey Meehan, Patrick J. (Queen's Co., Leix) Robertson, John M. (Tyneside)
Hughes, Spencer Leigh Molloy, Michael Robinson, Sidney
Isaacs, Rt. Hon. Sir Rufus Muldoon, John Scanlan, Thomas
John, Edward Thomas Munro, Robert Scott, A. MacCallum (Glas., Bridgeton)
Jones, Rt.Hon.Sir D.Brynmor (Swansea) Neilson, Francis Sheehy, David
Jones, J. Towyn (Carmarthen, East) Nolan, Joseph Simon, Rt. Hon. Sir John Allsebrook
Jones, William (Carnarvonshire) O'Brien, Patrick (Kilkenny) Smith, Albert (Lancs., Clitheroe)
Joyce, Michael O'Connor, John (Kildare, N.) Smyth, Thomas F. (Leitrim, S.)
Keating, Matthew O'Connor, T. P. (Liverpool) Taylor, Thomas (Bolton)
Kelly, Edward O'Doherty, Philip Tennant, Harold John
Kilbride, Denis O'Dowd, John Thorne, G. R. (Wolverhampton)
King, Joseph O'Kelly, Edward P. (Wicklow, W.) Toulmin, Sir George
Lambert, Rt. Hon. G. (Devon, S. Molten) O'Malley, William Waring, Walter
Lambert, Richard (Wilts, Cricklade) O'Neill, Dr. Charles (Armagh, S.) Watt, Henry A.
Lardner, James C. R. O'Shaughfressy, P. J. Webb, H.
Lawson, Sir W. (Cumb'rld, Cockerm'th) O'Shee, James John White, J. Dundas (Glasgow, Tradeston)
Lewis, Rt. Hon. John Herbert O'Sullivan, Timothy White, Sir Luke (Yorks, E.R.)
London, Thomas Parker, James (Halifax) White, Patrick (Meath, North)
Lyell, Charles Henry Parry, Thomas H. Wilson, W. T (Westhoughton)
Lynch, Arthur Alfred Ponsonby, Arthur A. W. H.
Macdonald. J. Ramsay (Leicester) Price, C. E. (Edinburgh, Central) TELLERS FOR THE AYES.—Mr. Illingworth and Mr. Gulland.
Maclean, Donald Pringle. William M. R.
Macnamara, Rt. Hon. Dr. T. J.
Anson, Rt. Hon. Sir William R. Hamilton, C. G. C. (Ches., Altrincham) Stanley, Hon. G. F. (Preston)
Cecil, Lord Hugh (Oxford University) Henderson, Major H (Berks, Abingdon) Thynne, Lord Alexander
Chaloner, Colonel R. G. W. Mount, William Arthur Wheler, Granville C. H.
Clive, Captain Percy Archer Pretyman, Ernest George Wolmer, Viscount
Eyres-Monsell, Bolton M. Pryce-Jones, Colonel E.
Gilmour, Captain John Rawlinson, John Frederick Peel TELLERS FOR THE NOES.—Mr. Cassel and Mr. Hicks Beach.
Goldsmith, Frank Sanders, Robert Arthur
Grant, J. A.

Bill read the third time, and passed, with Amendments.


The next Amendment, which is the only other one I propose to move, is after the word "may" ["the Treasury may"], to add the words "by regulation." I am afraid this will rather disturb the right hon. Gentleman, in view of the fact that I said I had great confidence in the Treasury, because, all the time I had in mind that I was going to move the next Amendment, which was to make it by regulation subject to the approval of the House. I do think it is desirable, in a case of this kind, that there should be control by the House of Commons, because you are giving to the Treasury absolute power of fixing any amount they please. Up to the present, it has been £100, but I cannot establish anything like £100 for expenses. I have very carefully considered the matter, and I must say that in the case of a London Member, living in London, I cannot see how it is possible to make out £100 for expenses.


He can send the conscience money back.


The hon. Member has made an interruption. As a matter of fact, I did return it to the right hon. Gentleman, who acknowledged it, without admitting that I was right in my contention that it was not allowable. That is a matter with which I should not have dealt unless the hon. Member had interrupted me. You are giving the Treasury power to fix any amount they please in particular eases, and in cases affecting the House. I think, in these circumstances, it is right that the House of Commons should have an opportunity of controlling the action of the Treasury regarding the amount fixed.


I beg to second the Amendment.

I do so because I observe that the Select Committee on Public Accounts say that "they are of opinion that Parliament should decide whether the £400, either as a whole or part, should be treated as salary or allowances." It is obvious, in studying the evidence of the witnesses before the Committee that there was considerable difficulty in arriving at this sum of £100, and, therefore, I think it is most desirable that there should be some con- trol by this House, particularly over the allowances made to Members of Parliament under this new Clause. It should riot be left to the Treasury to decide whether £100, £200, £300, or even £400 is to be exempt from Income Tax in the future. It surely can do no harm for this House to settle this thing in whatever way it thinks best for Members, and in the interests of the House as a whole I cannot think that the Chancellor of the Exchequer can seriously object to this.


I think the hon. and learned Gentleman (Mr. Cassel) will see that he wants to establish control by the House which has already been completely established by the method that is being pursued in obtaining sanction for this particular transaction. It has been discussed on the Vote in Committee, which specifically challenges this point. It was discussed on the Report stage. That is twice.


There has been no opportunity this Session.


That is no fault of ours. The hon. Gentleman who is familiar with the procedure of this House, is perfectly well aware that the Opposition only have to ask for a Vote to be put down for the Government, by the custom and tradition of the House, to put it down, and if it is not discussed, it is because the Opposition do not want it discussed. The House can discuss it in Committee, on Report, on the Second Reading and on the Third Reading of the Appropriation Bill, on the Finance Bill, Second Reading, Committee stage and Report stage, and I do not think it possible for the House to have a more complete control. It has at least ten opportunities, and I may also point out that there is another course, and that is to challenge the salaries of the Commissioners of Inland Revenue, and I think also the salary of the Chancellor of the Exchequer.


It was ruled out of Order on that point.


Very well, then, I will say eleven. There are no end of opportunities of challenging it.

Question put, "That those words be there inserted in the Bill," put, and negatived.

Bill to be read the third time to-morrow (Wednesday.)—[Mr. Gulland.]