HOUSE OF COMMONS (PAYMENT OF MEMBERS). (Hansard, 10 July 1913)

§ Mr. CASSEL
I desire to call attention to the last instalment of salary which the Members of this House have received and to the fact that instalment included Income Tax payable on a uniform allowance in respect to expenses at the rate of £100 per annum, which had been allowed to Members of the House, in other words, although we received £100 we were only required to pay on £75. I desire to call the attention of the House to the fact that this has been done, notwithstanding that the legality of the allowance has been questioned in this House, notwithstanding that the Comptroller and Auditor-General has questioned its legality, and notwithstanding that the Prime Minister gave an assurance that this practice, the legality of which was questioned, should not be continued until after the Public Accounts Committee had considered the matter. Hon. Members 750 will bear in mind that we first received salaries as from the 1st April, 1911. In the first year no such uniform deduction was made. If any Member wished for a reduction in respect to expenses he had, like any other of His Majesty's subjects, to prove that he had incurred those expenses and that they were expenses which came within the meaning of the Income Tax Acts. In the autumn of 1912 the Chancellor of the Exchequer seems to have considered that it was inconvenient that hon. Members of this House should be put to the trouble of proving that they had actually incurred the expenditure, although the right hon. Gentleman had not shown much consideration in putting other people to inconvenience in connection with forms that they had to fill up.
In the case of Members of this House he seemed to think it was too much inconvenience to them to be put to the trouble of proving that they had actually incurred the expenditure, so notwithstanding that there is no statutory expenditure—as the Public Accounts Committee has found—for allowing a uniform exemption of this description, and without consulting the House or saying a word to Members, without taking their, views as to whether or not they wished for this uniform exemption, he proceeded to instruct the Treasury that they should allow every Member in this House a uniform remission in the case of Income Tax of £100 out of £400, that is, he should only pay Income Tax on £300 without having to prove that he had incurred any expenditure. The right hon. Gentleman should bear in mind that the expenses allowed to be deducted under the Income Tax Act have received a very narrow interpretation indeed. In my own case I should feel considerable doubt whether I could make out £100 expenditure which is allowed under the Act. In these circumstances I raised the question in this House. After having asked a number of questions about it, I asked the Chancellor of the Exchequer finally, whether he would take the opinion of the Law Officers of the Crown upon this point, On 14th February, 1912, I asked the right hon. Gentleman whether he would not now take the opinion of the Law Officers of the Crown upon the question of a uniform reduction of the Income Tax, and he said, "I will consider that suggestion." I do not know what consideration the right hon. Gentleman subsequently gave to it, but his consideration never resulted in any action, because the Comptroller and Auditor-General afterwards 751 appears to have taken the same view, and on 13th November, 1912, that officer wrote to the Treasury calling into question the legality of the practice, and asking whether it had been fortified by any opinion of the Law Officers of the Crown. He made his report on the 28th of January, 1913, and he then stated he had received no reply to his letter. The letter of the Comptroller and Auditor-General to the Treasury of the 13th November was only answered on the 15th February, 1913. What the reply was I am unable to say, because when asked by me to let me see it the right hon. Gentleman declined to produce it, as he said it was before the Public Accounts Committee, and it was not in accordance with practice to lay it on the Table of the House. On the 1st of April, 1913, the same thing happened again, and after that I raised the question whether, pending a final decision of this matter, we could have some assurance that this practice, the legality of which had, at all events, been doubted not only by Members of the House, but by the Comptroller and Auditor-General, could be stopped until it had been finally adjudicated upon. Later on I asked the Prime Minister whether his attention had been called to the Report of the Comptroller and Auditor-General as to this allowance of £100 without proof of actual expenditure for the purpose of assessing Income Tax on salaries of Members of Parliament, whether it was being legally made, and whether he would afford the House an opportunity of discussing the question? The Prime Minister replied:— The question is now engaging the attention of the Public Accounts Committee, and no action will be taken until that Committee has reported. I asked the Prime Minister if he would endeavour to persuade the Chancellor of the Exchequer not to continue this practice, the propriety of which had been called into question by the Comptroller and Auditor-General. I also asked the Prime Minister if he would endeavour to induce the Chancellor of the Exchequer to take the opinion of the Law Officers on the matter, and he replied:— I think we had better wait until the Public Accounts Committee has reported. I am quite sure my right hon. Friend will not take any action meanwhile. I interpreted that as meaning, and I think that anyone reading the question and answer together would have interpreted it to mean, that a practice, the legality of which had been called in question, he was 752 sure would not be continued by the right hon. Gentleman pending consideration by the Public Accounts Committee. That is the way in which I understood it, and I would submit that that was a reasonable interpretation of what the Prime Minister said. Notwithstanding that, on the 1st July the right hon. Gentleman again repeated the practice. [HON. MEMBERS: "Time!"] I shall leave the right hon. Gentleman the same amount of time as I occupy myself. The Public Accounts Committee Report was presented to the House on the 30th June, 1913. I suppose the right hon. Gentleman could not have seen it before he made the payment on the 1st July. At all events, the Public Accounts Committee found that there is no statutory sanction for this practice, and that if it is to be continued in future it ought to be properly and legally sanctioned by Act of Parliament. Notwithstanding the assurance of the Prime Minister and the protests of the Comptroller and Auditor-General, the right hon. Gentleman, as I say, continued that practice on 1st July. The right hon. Gentleman may say that the figure involved is small, but I put it to the House that the principle at stake is large. The principle at stake is this: That in matters which affect our own pecuniary interests we should be absolutely scrupulous and strict in observing the law, and that if we err at all we should err rather on the side of severity against ourselves than in allowing to ourselves privileges and conveniences which are not allowed uniformly to the rest of His Majesty's subjects. We are acting as trustees of the national finances, paying ourselves our own salaries out of national money. We ourselves make the law with regard to the Income Tax and administer it. Under those circumstances I do put it that it was never so incumbent upon anybody to be so absolutely strict to the very last letter in the observance of the law. I submit to the right hon. Gentleman that he ought at least to give to the House to-night this assurance. I do not know when we are going to discuss the Report of the Public Accounts Committee, although we have been told that we shall have a day for it, but I do ask the right hon. Gentleman to give the House the assurance to-night, the unequivocal assurance, that on the next payment, on the 1st October, he will not repeat this practice, the legality of which has been called in question by the Comptroller and Auditor-General.

§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George)
The hon. and learned Gentleman seems to assume that this is some practice which I have initiated, that there is no precedent for it, and that I went beyond my warrant as Chancellor of the Exchequer in making this allowance. If he had pursued his investigations a little further into the evidence given before the Public Accounts Committee, he would have discovered that there were at least two very important precedents, set not by Liberal Governments, but by Conservative Governments, for this course. The first was set by Sir Robert Peel with regard to revising barristers. He made an allowance of £78 15s. per annum to every revising barrister. That was an allowance of three-eighths. He took a definite arbitrary proportion of that kind. That did not mean that every revising barrister spent all the money. Some spent more upon their expenses, and some less. Sir Robert Peel, not so much in the interests of the revising barrister as in the interests of the Inland Revenue, came to the conclusion that, making for simplicity, it would help them in their work, and that on the whole it was a desirable practice, and he established that precedent. That precedent was also followed in 1888 again by a Unionist Government when the payments to revising barristers having been increased the allowance was reconsidered. It was assumed that the additional payment was all remuneration, and the allowance for expenses was fixed at the same amount as before, namely, £78 15s. per annum, and that deduction was made from the salary of every revising barrister throughout the Kingdom at the instance of Mr. Goschen. So we have Sir Robert Peel and Mr. Goschen, two of the greatest authorities I could possibly quote as far as finance is concerned, who laid down this principle. That practice has been followed for years. If the hon. and learned Gentleman had gone more carefully into the Report of the Public Accounts Committee, he would have found that the Report of that Committee does not confine its condemnation, or rather its criticism, to my action, but the same observation applies to the whole of these cases—a practice which has obtained from 1843 down to the present day, which was confirmed by Mr. Goschen in 1888. Again a Unionist Government set a third precedent in the case of Army officers in receipt of consolidated rates of 754 pay to cover all allowances. There are three precedents. They were all quoted to the Public Accounts Committee. They had, it is true, criticised the whole lot. That is a question to be considered not in reference to anything that I have initiated but in reference to the practice which has been established for about fifty or sixty years, set by a Unionist Government and followed by every Government, Unionist and Liberal, since that date. I think that this practice is on the whole animadverted upon by the Public Accounts Committee. They suggest that it should be regularised by some method. But when they make that suggestion the Government are not merely bound to take it into account, but they are bound to give it the most favourable consideration, and I propose to do so. I propose immediately to act upon that Report, and the first step that I propose to take in order to make it absolutely clear will be—and I shall take the opinion of the House on the subject—to divide the amount into £300 salary and £100 expenses and put it down in the Estimates this year. If the hon. Gentleman wants to take a discussion upon it, he has his way of obtaining that discussion. It is for the Front Bench to choose the particular topic on which they desire to challenge the action of the Government in administrative matters, and they have only to demand that the first available opportunity shall be allocated for the discussion of it. It is a matter for the Opposition, and not for the Government. We propose to put it down definitely and formally in that particular manner. I propose, too, to go beyond that; also, in order to carry out the recommendation of the Public Accounts Committee I propose to have a Clause inserted in the Revenue Bill which will put in legislative form somethng that will regularise not merely our proceedings in reference to the £400, but the proceedings of Sir Robert Peel and Mr. Goschen, for, after all, this criticism is directed against these two great financiers. The hon. and learned Gentleman and the Public Accounts Committee seem to take up the attitude of criticism and in order to put Sir Robert Peel right, we propose to insert a Clause in the Revenue Bill of this year. I think that meets the almost censorious views of the hon. Member.

§ Mr. PRETYMAN
The only comment I should like to make on that is that I think it would have been better for the reputa- 755 tion of the Government and the whole history of these proceedings if the right hon. Gentleman had thought it better to take these steps to regularise he proceeding before he applied it to Members of Parliament. It seems to me that the precedent he refers to obviously did not deal—from the very explanation he gave— with—

§ Mr. LLOYD GEORGE
Will the hon. Gentleman allow me to interrupt him? There was one question put by the hon. and learned Gentleman (Mr. Cassel) which I did not answer. I can only answer it now with his consent.

§ Mr. PRETYMAN
Certainly, I will give way.

§ Mr. LLOYD GEORGE
It is in reference to the answer given by the Prime Minister. [HON. MEMBERS: "Hear, hear."] I agree that I ought to have answered it. I saw the Prime Minister about it, and asked him what his intention was when he gave that answer. His explanation of the answer is that what he meant was that the matter should be left exactly as it was until the Public Accounts Committee's Report should criticise it. That is the view I took of his answer. I certainly do not think that the Prime Minister has said that the deduction should not be made until the Public Accounts Committee should have decided the matter. What I thought was that it meant that there should be no further extension of that practice until the Public Accounts Committee had declared their opinion in reference to it. That is certainly the view the Prime Minister takes, and it is clearly the view that anyone reading the answer would take.

§ Mr. PRETYMAN
It was certainly not the impression made upon this side of the House. I only rose to state that the objection we have to the whole of these proceedings is as to their furtive character, if I may use such an expression. This little sop is given to Members of Parliament, and it is clearly withheld from other subjects of the Crown, whose claims are equally good. That is the feeling in the country about it. As my hon. and learned Friend (Mr. Cassel) very clearly expressed it, where there is doubt we ought not to come to a decision in our own favour as regards our own personal concerns here, and give it against other subjects of the Crown who have not the same oppor- 756 tunities of voting money for themselves as we have. The whole incident is rather repugnant to those who look nicely upon matters of this description.

Mr. WORTHINGTON-EVANS
The Chancellor of the Exchequer said that he interpreted what the Prime Minister said as intending to imply that there would be no further extension of this practice. That is precisely what we complain of, for after the Public Accounts Committee had reported a still further instalment of salary was paid, and the allowance was made in respect of that instalment. What, in fact has happened is this: The Chancellor of the Exchequer, according to the Public Accounts Committee, without statutory sanction has made a present during each of the years this allowance has been made, of £5 16s. 8d. to every Member of this House; certainly to all those Members who could not justify the £100 expenditure for expenses. The Chancellor of the Exchequer has endeavoured to justify that allowance by saying that he follows precedent. But he does not. The precedent that he quotes doss not apply in the least degree to this particular case. That was a precedent for an allowance for Army officers and for revising barristers who have travelling and other expenses necessary in the conduct of their business for which they are paid; but the grant to us is a grant by way of salary—it is not a grant for expenses or salary and expenses, and the Chancellor of the Exchequer has admitted that, for he tells us how he proposes to legalise it in future. He proposes to divide the sum of £400, as to £300 for salary and £100 for expenses, and in his own proposal to legalise the position in the future he has admitted the illegality in the past. It seems to me that while there was any doubt during that three months that he was wondering what answer to give to the Comptroller and Auditor-General, at least he ought not to have continued a practice upon which doubt had been cast by the very man who is over all of us in Parliament and whose duty it is to call attention to just exactly the sort of illegality of which the Chancellor of the Exchequer has now been guilty.