HC Deb 31 August 1914 vol 66 cc393-9

(1) Section fourteen of the Finance Act, 1900 (which relates to the remission of Death Duties in case of persons killed in war), shall have effect as respects the present War as if it applied to property passing to ancestors as well as to property passing to the widow or lineal descendants, and as if the amount of the duty to be remitted or repaid under that Section were, instead of the amount therein mentioned, the following amounts:—

  1. (a) Where the value for the purpose of Estate Duty of the property passing to the widow, lineal descendants, or lineal ancestors does not exceed five thousand pounds, the whole of the Death Duties leviable in respect of that property; and
  2. (b) Where the said value exceeds five thousand pounds—
    1. (i) in respect of the first five thousand pounds, the whole of the Death Duties; and
    2. (ii) so much of the duties leviable in respect of the duties leviable in respect of the remainder as exceeds the sum which, if accumulated at compound interest at the rate of three per centum per annum from the date of death with half-yearly rests would, at the expiration of the period of the normal expectation of life of a person of the age of the deceased at the time of death (calculated in accordance with the Tables of Mortality of Government Life Annuitants, 1912), amount to the whole of the Duties so leviable.

(2) The benefits of the relief given by this Section as respects the first five thousand pounds shall be enjoyed rateably by the several beneficiaries entitled to the relief according to the amount but without regard to the priorities of their several beneficial interests.

(3) Where the relief in respect of Estate Duty afforded to the widow, lineal descendants, or lineal ancestors by Section fifteen of the Finance Act, 1914, would be greater than that afforded to them in respect of Estate Duty by this Section, the relief in respect of Estate Duty shall be that under the said Section fifteen and not that under this Section, but in other cases the relief afforded by the said Section fifteen shall not apply to any Estate Duty to which this Section applies.

The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu)

I beg to move, in Sub-section (1), after the word "to" ["property passing to ancestors"], to insert the word "lineal."

This is a purely drafting Amendment. The object was stated by the Chancellor on Friday last. It was thought that the words "ancestor" alone was not quite clear.

Question, "That the word 'lineal' be there inserted," put, and agreed to.

Mr. PETO

I beg to move, in Sub-section (1) (b) (ii), to leave out the word "three" ["three per centum"], and to insert instead thereof the word "four."

When the Chancellor of the Exchequer referred to this matter on Thursday last he said:— The Government consider that it would be unjust and unseemly that the revenue should profit by the premature death of those who sacrifice their lives m the service of their country, and especially so if it were to the detriment of their widows and children."—[OFFICIAL REPORT, 27th August, 1914, col. 176.] Those words make it quite clear that the intention was that the revenue should not benefit by the premature death of those who lose their lives in the service of their country. That is the basis of the Bill. That being so, it is necessary to consider exactly what the Chancellor of the Exchequer proposes in this Sub-section. He proposes that Death Duties in these cases should not be paid in full, but that a calculation should be made as to the normal expectation of life, and that, subject to the 3 per cent. tables, the sum which would have been due in the ordinary course should be reduced by a certain amount. I have consulted several tables to see what is the expectation of life of a person of, approximately, the age who is likely to be subject to this provision. I find that a male person of the age of thirty has an expectation of life of 33.07 years. I find in the 3 per cent. scale that the present worth of a reversion of £100, payable at the end of thirty-three years, is £37.702. All we have to consider, with a view of carrying out the intention of the Chancellor of the Exchequer, is whether or not 3 per cent under the circumstances is a reasonable estimate of the value of money. I turn to the "Times" Financial Supplement of 31st July, the last day on which the Stock Exchange was open. I find that on that day 2½ per cent. Consols were quoted at 67–70. Two and a half per cent. Consols at 67 and 70 represents an interest of 3 4–7 per cent. That being so before the actual outbreak of war, and considering, as I pointed out to the Chancellor of the Exchequer when he was here on Thursday, that these deaths will occur during the period of War, or very shortly after the termination of the War, is it reasonable to suppose that our premier security, 2½ per cent. Consols, will be so appreciated in value by the operation of the War that instead of representing an investment at 3 4–7 per cent., they are likely to represent an investment at 3 per cent?

On the contrary, I think anyone would take a very sanguine view of the financial position if they estimated that it was probable that at the termination of the War, when the Stock Exchange was opened again, or at periods during the currency of the War, the 2½ per cent. Consols would stand at 62½. Standing at that, they represent an investment of 4 per cent. The purpose of my Amendment is, that if the Treasury really mean to make no profit, and if they really mean in this case, on the succession to an estate of the lineal descendant or the direct ancestors of the deceased, that the estate should not be made to pay anything in consequence of the earlier death of the deceased, then they must take a reasonable rate of interest, probably representing approximately the value of money during the period for which they are dealing. Is this 3 per cent. table really put in as a matter of form, and is it the sort of thing that would do in any ordinary Bill dealing with any subject of the kind in a time of peace? In recent years we have got into the habit of thinking that 3 per cent. is the probable value of money of an absolutely safe Government security. I ask the Chancellor of the Exchequer or his representatives on the Treasury Bench to give effect to what he said himself on Thursday. Do not let us pretend to give from the Treasury the equivalent of the loss to the estate due to the premature death, when really we are putting in words in this Bill which means that we are keeping back at least one-fourth of what is due to the deceased's estate.

Mr. MONTAGU

I hope the hon. Member will not press his Amendment. The intention of the Chancellor of the Exchequer will be carried out by the figure given, and the 3 per cent. table is what an insurance company would take in its calculations in this matter. The hon. Member may take into his calculation the value of money now. What we have to consider is the probable value of money during the probable remainder of the testator's life, if he had not been killed. I think 3 per cent. is a fair table, and a table that would be used in a commercial transaction.

Mr. PETO

I called the attention of the Chancellor of the Exchequer on Friday to the fact that I should raise this question. I object to the calculation on a 3 per cent. basis. I have dealt with the difficult case of a person meeting his death at the age of thirty, and I think if the hon. Gentleman will consult his financial advisers, he will find that my estimate of 4 per cent. is much more nearly the general accepted estimate than 3 per cent.

Amendment negatived.

The SOLICITOR-GENERAL (Sir S. Buckmaster)

I beg to move, in Sub-section (2), to leave out the words, "enjoyed rateably by the several beneficiaries entitled to the relief according to the amount but without regard to the priorities of their several beneficial interests," in order to insert the words, "apportioned rateably among the several persons who would otherwise bear the duties remitted or repaid according to the amounts which they would so bear, and without regard to their respective rights of priority."

Perhaps I may explain in detail the meaning of this Amendment. It deals with a matter which I think the House will understand is a matter of considerable difficulty. It is a very easy thing, if you only had to consider a sum of £500 passing on the death of the deceased. You can make it equitable in respect of Estate Duty and Succession Duty without any consideration of the character of the interests of the lineal descendants who receive the benefit of the £5,000. If you are dealing with an estate which passes to lineal descendants or lineal ancestors that is larger than £5,000 you are then faced with this difficulty: that you have to consider the first £5,000 as free from duty, and it may well be that the first £5,000 is so disposed of by the will as between the various lineal descendants, or the lineal ancestors, as that the whole of it might come to the widow, whilst the balance of the estate passes to the children. In such a case, unless proper arrangements were made in the Bill, the person, whoever he or she might be, who took advantage of the first £5,000 would get the relief by statute. It is desired that the relief should be equitably apportioned amongst all the people who take the benefit. The Clause as originally drawn was drawn for that purpose, and I think it did carry it out, but the words that are proposed to be substituted are possibly more clear, and it is for that purpose that the House is asked to introduce them. I think the House will see in the circumstances that that was exactly the object it wished to secure, that the benefit of this remission shall be properly and equitably divided amongst all the people coming within the class of lineal descendants, and that it should not be by the mere accident of some priority that one person should take the larger benefit.

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

Words, "apportioned rateably among the several persons who would otherwise hear the Duties remitted or repaid according to the amounts which they would so bear and without regard to their respective rights of priority," there inserted.

Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."

Mr. POLLOCK

On this question I desire to call attention to a point merely for the purpose of publicity. The hon. Member for Cambridge has put down a question not for oral answer, and I would like to call public attention to that matter on the discussion of the Bill. On the title of this Bill it only applies to the remission of Death Duties in the case of persons killed in the War, and the question I wish to ask is as to whether or not other cases are covered, such as persons who, having been injured in the War, died subsequently after the War had been determined. This is a matter upon which the public would like to be reassured, because the relief at present as given by this Bill, as interpreted by any person who merely takes the Bill in his hand and reads it through, would be relief merely in the cases of persons killed in the present War, and no relief will be extended in the cases of deaths caused by the War which did not fall within the chronological limit of the War. I, therefore, desire to ask the Solicitor-General if the purposes of this Bill are not very much wider. The Clause which it is proposed to make applicable in the present Bill is Clause 14 of the Finance Act of 1900. That Clause is to my mind not very perfect and not very easy to understand, but as I interpret its purpose, it means that whether any person dies from wounds or accident or disease inflicted incurred or contracted during the course of the War within twelve months after the ceasing of the War, he shall be entitled to the relief provided if at the time that the disease or the wounds or the accident was inflicted, incurred or contracted the deceased was subject to the Naval Discipline Act or to military law; in other words, while the forces, both by land and sea, were mobilised by His Majesty. That, I understand, is the purpose of Section 14 of the Act of 1900. If so, the relief intended to be given by this Bill is much wider than appears upon the face of it. I hope the Solicitor-General will make a public announcement that what is included is much wider than appears upon the face of this Bill, and that what we are passing is relief to the mobilised forces of the Crown, not merely where the combatant falls in war, but where he falls within twelve months after the ceasing of the War, provided that the cause of death is wound, accident or disease inflicted or contracted in the course of serving His Majesty the King during the War.

Sir STANLEY BUCKMASTER

I am very glad indeed to give the assurance not to the hon. and learned Member, who, I am sure, knows very well no such restrictions are intended, but to others who do not know, that the Bill bears the interpretation he desires and not the interpretation that unlearned persons might think from reading Section 3. The real fact is that, as the hon. Member knows very well, it has been decided again and again that the short title of a Bill is nothing but a label, and that the label cannot be used for the purpose of interpreting the contents of a measure. It might have been better to put in words that the Bill had not such limited operations as suggested, and I am glad to give the assurance the hon. and learned Gentleman asks for, and to assure him that the whole of Section 14, which he rightly interpreted, applies to this Bill.

Question, "That the Clause, as amended, stand part of the Bill," put, and agreed to.