CLAUSE 10.—(Abolition of Settlement Estate Duty and of Relief in respect of Settled Property.)

HC Deb 14 July 1914 vol 64 cc1781-849

Any relief from the payment of Estate Duty given by (Sub-section (2) of Section five, or by Sub-section (1) of Section twenty-one of the Finance Act, 1894 (which relate to settled property), or by Sub-section (16) of Section twenty-three of that Act (which relates to entailed estates in Scotland) shall cease in the case of any person dying after the fifteenth day of August nineteen hundred and fourteen, and Settlement Estate Duty shall not be levied in the case of persons dying after the eleventh day of May, nineteen hundred and fourteen.

Provided that—

1. (a) Nothing in this Section shall affect the relief given by the above-mentioned provisions of the Finance Act, 1894, in cases where Estate Duty or any of the duties specified in Sub-section (1) of Section twenty-one of that Act have been paid upon the death of one of the parties to a marriage, so fas as respects the payment of Estate Duty on the death of the other party to the marriage; and
2. (b) on the first occasion on which Estate Duty becomes payable in respect of any property, which would not have been payable but for this Section, the amount of Settlement Estate Duty, if any, which has been paid in respect of that property, shall be allowed against the amount of Estate Duty payable on that occasion, and if it exceeds that amount, the excess shall be repaid to the Estate.

Mr. BUTCHER

On a point of Order. I want to put to you, Mr. Whitley, whether this Clause as drafted does not go beyond the Resolution upon which the Clause is founded; in other words, whether the taxation proposed by the Clause on the Paper is not in excess of the taxation authorised by the Resolution upon which the Bill is brought in? May I say shortly that the Resolution as originally drafted, upon which this Clause is founded, had this effect, that it made settled property pay duty when passing at death. When that Resolution came up on Report I proposed an exemption which the Chancellor of the Exchequer accepted, and which was that when settled property passed from husband to wife, or from wife to husband, Estate Duty should not be payable. When we come to see how that exemption is worked out in the Clause it appears to me, at any rate, that the Clause does not carry out the intention of the Resolution. Proviso (a) says:—

"Provided that nothing in this Section shall affect the relief given by the above-mentioned provisions of the Finance Act, 1894, in cases where Estate Duty or any of the duties specified in the Sub-section (1) of Section twenty-one of that Act have been passed upon the death of one of the parties to a marriage, as far as respects the payment of Estate Duty on the death of the other party to the marriage."

If you read these words in their natural signification they would limit this exemption to cases where Death Duties were paid before the passing of the Act, and in that way would give a more restricted exemption than authorised by the Resolution; and the result would be that the Clause would impose more taxation than was authorised by the Resolution. Therefore my point is this: that the words "have been paid" referred to settled duties paid before the passing of this Act, and I submit that the Clause is out of order, and that if the words include cases where the duties are paid after the Act has come into operation, then the Clause would be out of order. As the Clause is drafted it appears to me that these words require consideration before they are inserted. If the Chancellor of the Exchequer or the Solicitor-General will tell me they will introduce an Amendment which I think is absolutely necessary to make it clear and to make it in order according to the Resolution, well and good. I do not think it would be in order for them to do so, but my point at present is that the Clause, as drafted, goes beyond the Resolution upon which it is founded.

The CHAIRMAN

I am obliged to the hon. and learned Member for having given me sufficient time to look carefully into this point which he has raised. I have done so. I do not hold the view which he has just submitted to me as to the meaning of these words. I do not read them at all as if they had after them the words "before the commencement of this Act." My opinion of the drafting is that it carries out what the House decided in Ways and Means. On a point of Order, I do not think the hon. Member's point holds good that the Clause failed for the reason that it goes beyond the decision of the House on the Resolution of Ways and Means.

Mr. PRETYMAN

May I point out to you that this Act abolishes that Section dealing with cases where Estate Duty or any of the duties specified in Section 21 of that Act, and therefore I cannot see how they can continue to be paid in the future, because this Act abolishes the Subsection under which these payments have been made. Therefore, when that Subsection is abolished the payments can no longer continue, and the result will be that the duty will fall between husband and wife and go beyond the Act.

The SOLICITOR-GENERAL (Sir S. Buckmaster)

This Clause makes certain provision that the relief should apply to the altered circumstances. I have not the least doubt that the words carry out what the hon. Member opposite desires, but if there is any doubt about it I will take care that the words are made quite clear.

Mr. WORTHINGTON EVANS

The hon. Member for Chelmsford (Mr. Pretyman) has raised another point of order not entirely on all-fours with that upon which you, Mr. Whitley, have just ruled. This Section of the Finance Act, 1894, is found in a Schedule of Repeals, and therefore that is a separate point. If that part of the Act is repealed, then the exemptions given by that Act go, and therefore persons who would otherwise have escaped taxation had those exemptions been retained will now be taxed because those exemptions are by this Act repealed. Under the Resolution there is a complete exemption intended in certain circumstances for property passing from husband to wife, or from wife to husband. The Bill provides that that shall occur only in certain circumstances to which the Finance Act of 1894 applies, but these Clauses of the Finance Act of 1894 are repealed by this Act, and so that limitation is simply added to the Resolution, and really, now a new set of people will suffer taxation in the sense that they will not be exempted.

The CHAIRMAN

As I read the Clause, I think the proviso gives the relief set out in the Resolution on which this Clause is founded. As I read this Section, it does carry out the relief which was assented to by the House in the Resolution of Ways and Means.

Mr. WATSON RUTHERFORD

The difficulty has arisen from leaving out the words "or payable," which words are found in Section 21 of the Act of 1894. If the words "or payable" were added after the word "pay" it would make the Clause exactly the same as Section 21 of the Act of 1894, and would get rid of all the difficulty, and then you would not have to-refer to a former Bill. I think the Government will probably accept that suggestion.

Mr. LLOYD GEORGE

That is a point of legal interpretation which I do not feel competent to argue upon, but I am advised that it is already covered by the Clause as drafted. If there is the slightest doubt about it we shall be prepared to accept any words that would place, the matter beyond question.

Mr. PRETYMAN

I cannot quite see how an exemption under a Clause which is repealed can continue. That is the whole point. The exemption is given here from payment under a certain Clause, but that Clause is actually repealed by this very Bill we are now passing. If you look at the Fifth Schedule on page 24 of the Bill you will see:—

57 & 58 Vict. c. 30.

The Finance Act, 1894.

Sub-sections (1) and (4) of Section five; Section nineteen; Sub-section (4) of Section twenty-one.

That Sub-section is definitely repealed by this very Bill, and I cannot see how it is possible that the exemption under the Clause can still continue.

The ATTORNEY-GENERAL (Sir J. Simon)

The hon. and gallant Gentleman opposite makes a very ingenious point, but there is one thing very well understood, and it is that every Bill has to be taken as a whole. In Section 10 (a) you find an express reference to an express concession, and therefore that concession exists and continues whatever you find in the repealing Schedule.

The CHAIRMAN

It is possible that an Amendment may be needed on that point in the Schedule. I notice that the Chancellor of the Exchequer has some Amendments down on that very line. I think that disposes of the point of Order. With regard to the Amendments on this Clause, the first one I propose to call upon is that standing in the name of the hon. Member for St. Pancras.

Mr. CASSEL

I beg to move, after the words "Provided that," to insert the folloiwng,

"(a) Nothing in this Section shall affect the relief given by the above-mentioned provisions of the Finance Act, 1894, when Settlement Estate Duty has been paid, or become payable, before the passing of this Act; and."

This Amendment is to prevent this Clause applying retrospectively to settlements in respect of which Settlement Estate Duty has been paid before this Bill comes into force. We are dealing now not merely with a question of policy or expediency, but a question of justice, honour, and good faith on the part of the State. I think the right hon. Gentleman himself when he realises how unfairly this proposal would operate if it were carried out retrospectively, when I have called his attention to what he has said about this duty as a proposition, he will find himself compelled to adopt this Amendment. In order to consider this question you have to go back to the Act of 1894, when these graduated Estate Duties were first introduced by Sir William Harcourt. Up to that date only personal property was subject to the 3 per cent. Probate Duty, and Sir William Harcourt made, for the first time, real property subject to Death Duties, and he made settled and unsettled property alike subject to those duties in a graduated form. When he was dealing with the whole question he considered very carefully the case of settled property in regard to which he deliberately came to the conclusion that it would not be fair to impose the Estate Duties on the death of every tenant for life under the settlement. I shall refer to the passage in which Sir William Harcourt said it would not be fair, because the tenant for life has, after all, only a limited interest, and he cannot dispose of the property as he likes. He could not, for instance, avoid the Death Duties by making a gift during his lifetime, and so the State has the advantage in the case of a settlement that the duty cannot be avoided by that means. Taking all these facts into consideration Sir William Harcourt stated deliberately that he thought it was only fair that the duty should be only payable once during the currency of the settlement. But as that might give some advantage to settled property over unsettled property, he imposed this additional duty called the Settlement Estate Duty which was originally 1 per cent., but which the Chancellor of the Exchequer has now raised to 2 per cent. At the time when the Finance Bill of 1894 was introduced a Memorandum was circulated which makes it perfectly clear that this was intended to be a bargain between the State and the House of Commons, not in the sense of an ordinary contract, because that does not take place; but it is such action on the part of the State that the subject was reasonably entitled to suppose that upon any principle of fair and honest dealing the State would never go back upon that which it said it was going to do. Here are the words of the Memorandum which accompanied the Act of 1894:—

"Settled property having paid Estate Duty will be exempted from further payment of that duty during the continuance of the settlement, but in consideration of that exemption will pay an additional Estate Duty of 1 per cent."

The very words of the Memorandum are couched in the language of a bargain, because it is said to be in consideration of the payment of 1 per cent. that the settlement is to have the benefit of this exemption. I should like also to call attention to what Sir William Harcourt said when he was introducing the duty in the course of the Budget when this duty was first imposed. He said:— In the case of settlement, when property is now settled by will, probate is charged once on the corpus of the property, and this payment covers all the limitations of the settlement. I should like to call particular attention to the following words:— It is felt that it would not be fair to require a full payment on each devolution within the scope of the settlement when the beneficiary takes only limited interest, and thus treat a man with only a life interest on the same footing as one who had the absolute disposal of the estate. So that on the original introduction of the duty. Sir William Harcourt made it perfectly clear that he considered this to be unfair. He goes on to say:— We now, therefore, propose to assimilate the treatment of property under all kinds of settlements to that now in force respecting settlements made by will. But, as the single payment in respect of the whole settlement may result in a diminished total produce of the tax, we propose to levy an additional 1 per cent. on all property under settlement to recoup this loss. The right hon. Gentleman to-day takes a different view from Sir William Harcourt, and he now thinks that is fair which Sir William Harcourt considered unfair. If I may say so he has relegated the views of Sir William Harcourt in this respect to the dust-bin of ancient precedents, although 1894 is not very long ago. I am prepared for the moment even to admit that the right hon. Gentleman is entitled to have a different mind from Sir William Harcourt, and to say he considers that fair which Sir William Harcourt considered unfair, but the right hon. Gentleman is not entitled to rip up transactions for value which have actually been carried out by the payment of money under that which Sir William Harcourt prescribed. It may be that so far as the future is concerned he is entitled to say, "I take a different view from Sir William Harcourt," but, with regard to the past where payments have been made on the faith of that which Sir William Harcourt said was fair, he is not entitled to rip up those transactions and to attempt to make repayment which he will find it quite impossible to make to the right person. The right hon. Gentleman himself has dealt with this matter before, because he increased the Settlement Estate Duty from 1 per cent. to 2 per cent. in 1909. I would first call attention to the fact that he did not make that retrospective, but on his present principle he ought to have exacted the 2 per cent. from the people who had already paid 1 per cent. In those days the right hon. Gentleman recognised the real nature of this transaction because he described it as a "composition." When introducing the Budget of 1909–10 by which he increased the Settlement Estate Duty, he said: The duty must therefore be regarded as a sort of composition for further payments of Estate Duty to which the property would become subject in the absence of the settlement. He himself described this as a "composition." Is not a composition, if it is not an actual bargain, in the nature of a bargain? Can a man first compound with his creditors, and afterwards, if he finds it is more to his advantage, annul that bargain and say, "I will return the composition and exact the full amount?" Surely that is contrary to every principle of honesty. I hold the right hon. Gentleman to his own word "composition." I say that he cannot get over that word. He himself has described this duty as a "composition." It has been paid on an understanding with the State to purchase exemption. The consideration was the 2 per cent. and exemption from Estate Duty on any further occasion during the currency of the same settlement wais what was purchased with that 2 per cent. Supposing a local authority made an arrangement with owners of property in a district that they should compound for rates, could the local authority turn back upon that bargain, if they found it to their disadvantage, pay back the amount paid, and say, "We will be no longer bound by it"? This payment really is something in the nature of insurance. The Subject paid 1 per cent. more immediately, and the Government had the advantage of getting it at once. It got the present value, which is an important matter, because in the course of twenty years at compound interest it would double itself. The State immediately on the settlement got the additional 1 per cent., and by that the subject insured himself against payment of further Estate Duty on the falling in of the various life interests under the settlement. When the claim under that policy falls due the right hon. Gentleman says to the subject, "I am going to pay you back your premiums without interest, and I am not going to honour the claim."

Take the case of the right hon. Gentleman's own insurance tax, which may be regarded as an analogy, because, whatever may be said about it, it is a tax. By virtue of that tax certain benefits have been held out to the insured. Would the right hon. Gentleman be justified, when a man fell ill, and the time came for him to get his sick pay, to say, "I am not going to pay you your sick pay, but I will give you back your fourpences without interest"? That is the analogy. Take the case of club subscriptions. You might compound—the word the right hon. Gentleman used was "composition"—for your future subscriptions to a club and make one payment down at once in order that you might not have to make any further payments. Could the club come subsequently and say, "I think it would suit us more to get more out of you, and therefore we will pay you back what you have paid without a halfpenny of interest, and charge you the same as any other member"? If a club did that, the member would be entitled to take the matter into the Courts and say von haec in fœdera veni. The subject, too, if the State acted in such a manner, could say it was dishonourable and dishonest. I am confident that when the attention of the right hon. Gentleman is drawn to how he has described it, he will not persist in an action which would be so discreditable to the State. I am not sure that the Committee have realised the iniquity—I cannot describe it otherwise—of the proposal. Even after he has announced that he is going back upon that arrangement, he is not going to pay back at once on the passing of the Act the composition which the taxpayer has paid, but he is going to pay that composition on the death of the first tenant for life, which may be twenty or thirty years hence. He is therefore, even now he has repudiated the bargain, going to keep the taxpayers' money for another twenty years. The right hon. Gentleman must remember that in the course of twenty or it may be thirty years the capital may double or treble itself, and the 2 per cent. may represent 6 per cent. by that time.

Suppose the right hon. Gentleman went so far as even to repay the money with compound interest, he could not really cure this ripping up of transactions, because he would pay the interest to the wrong person. Who is the person who has suffered the loss? It is the tenant for life who has received less interest, because 2 per cent. or 1 per cent. has been taken from the capital value of the property. There has recently been a case in which annuitants have actually had their annuities reduced under certain circumstances because of the Settlement Estate Duty. I hope the right hon. Gentleman will pay interest, because that will at least be something, though he will pay it to the wrong person. The tenant for life will suffer the loss of interest, and his successor will be paid compound interest. The right hon. Gentleman cannot really completely cure it. It will, I quite agree, be some measure of relief, because, after all, the whole settlement hangs together, and somebody under the settlement will get it, but it is only an illustration showing how monstrous it is—I cannot describe it otherwise—for the the State to try and rip up transactions for value, described by the right hon. Gentleman as a "composition." On the last occasion when this matter was under discussion the right hon. Gentleman said that every subject was exposed to the risk of any duty being increased. I quite agree, but I say that no subject ought to be exposed to the risk, when he has made a payment in consideration of receiving an exemption, of the State going back upon that arrangement. The right hon. Gentleman gave us the case of the repeal of the Corn Laws, and he said that persons might have laid out their lands on the assumption that the Corn Laws would not be repealed. That is not an analogous case at all. Every body runs the risk of taxation being in creased, or of new taxation being imposed. If the State had gone to the farmers and said, "If you will now pay us 1 per cent. on your rent, we will not repeal the Corn Laws for ten years," and if, after having done that, and having taken the 1 per cent., they had nevertheless repealed the duty within that period, that would have been an analogous case. The State here has taken the payment, and that very fact, and the fact that they are going to repay it, is an indication that it is not merely an ordinary case of duties being raised or of new duties being imposed upon new articles.

There is one Clause in the Bill itself which shows that this is not a case of that kind. The right hon. Gentleman has dealt with the case of purchasers of mortgages. He has provided, in the case of purchasers, that they should pay no additional duty. If this were merely an ordinary case of raising the duty, why should that provision be in the Bill? Is a tenant for life under a settlement so much more meritorious because he sells his interest than another who keeps it? Is there such a virtue in being so lavish with your patrimony that you cannot keep it yourself, and have to sell it at any price, that you should be in a better position, so far as taxation is concerned, than another person who is not so lavish? That Clause is really put in because this is not an ordinary case of increasing the duty. It is going back upon a composition and an arrangement that ought to be honoured and kept by the State. The Inland Revenue Commissioners actually give certificates in these cases that no more Estate Duty is payable in respect of that settlement. The case you have to deal with is this: Duty originally introduced upon a memorandum that in consideration of the payment of the duty the settlement should be exempt, a certificate given by the Commissioners that it is exempt, and the right hon. Gentleman coming down to this House and saying that he will withdraw that exemption by payment, possibly twenty or thirty years hence, of the sum paid twenty years ago, without any interest for the use of the money in the meantime, or, if he pays interest, paying it to some person other than the person who loses. The whole business and commerce of this country depends upon credit and good faith. The State itself enforces obligations and contracts through the Courts, and it rests upon the State, in the first instance, to show a good example, and be scrupulously honourable and fair in observing arrangements which the taxpayer has every legitimate and proper reason to suppose will be observed and carried out. If the right hon. Gentleman cannot raise his revenue by any more legitimate means than this, he will have confessed the bankruptcy of the financial system for which he is responsible, and I ask him, in his own interests, not to place on the Statute Book so unjust and so inequitable a tax.

Mr. LLOYD GEORGE

I will deal at once with the points raised by the hon. and learned Gentleman, and if there is any further need for a Member of the Government to take part in the Debate, my hon. and learned Friend the Solicitor-General will, later on, speak on behalf of the Government. The hon. and learned Gentleman has, as usual, put forward a plethora of superlatives, which he uses on every conceivable occasion and on every Amendment, great or small. They are of the less force, because they are so absolutely indiscriminate, and there is a certain monotony about them which does not make them in the slightest effective, even when they are repeated for about the fiftieth time.

Mr. WORTHINGTON EVANS

You do not like them.

Mr. LLOYD GEORGE

Oh, I do not mind them if the hon. Gentleman thinks fit to repeat them. I propose, first of all, to deal with the question of the imposition of a duty of this kind upon settled estates, without any reference to the contract point. My recollection is that the right hon. Gentleman now the Member for West Birmingham (Mr. Chamberlain) admitted that there was a good deal to be said in favour of abolishing the distinction between settled property and property not settled. And so there is. It is no use saying in one case that property is settled for life, for in both cases it really is a life property. The hon. and learned Gentleman knows perfectly well that there are large landed estates in this country which are not settled, and which have passed, as a matter of custom, or habit, or family tradition, without any settlement at all, in the same way as settled estates do. They pass strictly in the same line of succession. I will take Estate "A," which is settled, and Estate "B," which is not settled. They both pass in the same way to the eldest son, and just the same arrangements are made in each case. [A laugh.] Is not that so? The hon. Member seems rather amused at the idea that real property passes from father to son, but it does so in this country.

Mr. BUTCHER

If a man is owner in fee, he can sell the estate, and spend the money on himself.

Mr. LLOYD GEORGE

Perhaps the hon. and learned Member will listen to what I am saying. I said that, as a matter of family custom or tradition, there is no difference in the way in which property passes in the cases of both settled and unsettled estates. In both cases it generally passes to the eldest son. I agree there is a difference in respect of the fact that in one case the estates can be disposed of, and I am referring to the ordinary habit in the case of estates of this kind, and I say there is no distinction, as a rule, between the way in which the property is transmitted.

Mr. PRETYMAN

The difference is this. I agree absolutely with the Chancellor of the Exchequer that, where there is an eldest son, the estates do pass in the same way, but where there are three or four brothers and the youngest brother only has a son, where an estate is not settled, the owner can pass it direct to the younger generation, whereas, in the case where it is settled, he has no such power.

Mr. LLOYD GEORGE

Of course, he can pass over the eldest son if he likes, but I am taking the practice and custom, and I still say that, whether these great properties are settled or not, you will find that they are transmitted in practically the same line of succession. It is done, whether there is a document to say it shall be or not. If an estate is settled under the Act of 1894 the owner is let off Estate Duty merely on payment of the fee of 2 per cent. In the other case the whole Death Duty has to be paid at each death. On the merits, is there any reason why we should allow a man, simply by the preparation of a document transmitting property in his family in exactly the same line, to deprive the State of money which it requires for public purposes and for the good of the community? It is unfair to the owner of the unsettled property. Let me take the case of the small yeoman. He does not settle his property. Say he has a farm of about 100 acres. He has no marriage settlement. The farm usually passes to the eldest son, and when the son comes into occupation of the property he has to pay the full Estate Duties. But a great landed proprietor whose estate is in settlement is not compelled to pay the full Death Duty, because he has paid the fee. It is not fair between the two owners of realty.

I now come to the question of personalty. The vast bulk of personal property is not settled, and when it passes to members of the family they have to pay the full Death Duties. There is practically the same line of transmission, whether it is settled or not. Take the ordinary settlement—that to the husband and wife for life and afterwards to the issue. After all, it is a simple register of the ordinary habits of disposition of the propertied classes of this country. The person who represents the family gets the bulk of the property in order to keep the family going. Substantially the arrangements are the same, whether there is a settlement or not, and the only difference is that under the Act of 1894, if there is a settlement, the person who inherits the property gets rid of the large share of the Death Duties, whereas, if there is no settlement, he has to pay them in full. There is no justice as between the owners of settled and unsettled property, and, as I have already stated, the right hon. Gentleman the Member for East Worcester admitted that. He said that if we were making a fresh start there was a good deal to be said for abolishing the distinction between settled and unsettled property. That is my recollection of his words. I do not want to do him an injustice. I stated the same thing in debate in his presence, and he did not challenge it. Suppose you were imposing Death Duties for the first time, would you draw this distinction between settled and unsettled property? Of course you could not do so.

I come now to the question of contracts. I wanted first to establish the point whether on the merits it is fair to put settled property on the same basis as unsettled property, and I say it is a very serious thing to contend in this House that any class of taxation on property can be fixed by contract for all time. The hon. and learned Member has quoted the case of tariffs. As a matter of fact, the same argument was used against the abolition of tariffs as has been used to-day, namely, that it is a breach of faith. There was this to be said for it: Men had converted pasture land into arable land, had expended huge sums of money on it, and had so adapted the whole machinery of agriculture as to enable them to raise wheat on it. No doubt when the change came it hit both the cultivator and the landowner very severely. There is no doubt about that; for years it was a very severe blow to those who had incurred this heavy expenditure in adapting their agriculture to a tariff set up by the State. All this was altered without very much warning. I am not sure that it was known at the beginning of the Session by Sir Robert Peel's followers that the tariff was going to be swept away by their leader, but at any rate the notice was a very short one. When it happened they said, "We have spent enormous sums of money on the faith of a particular duty imposed by the State. You have swept it away, and we contend that that is a breach of faith."

Sir A. MARKHAM

There was no contract.

Mr. LLOYD GEORGE

I will come to that presently. I am not going to shirk any point. Suppose there was a contract. Suppose the State had said, "For ten years we will impose this duty, in order to enable you to grow corn," or suppose they had done what Ave have done here, and said, "We will do it for a whole generation," does the hon. and learned Member mean to assert that because some thing he calls a contract entered into by one party—

Captain JESSEL

There was payment for it.

Mr. LLOYD GEORGE

I will put it as the hon. Gentleman likes. Suppose they had paid a fee, and suppose the State had said, "Because you have paid a fee—a fee, if you like, of £1 an acre—we will keep this going for you in order to enable you to raise corn"—does the hon. Member mean to say that, if the interests of the State demanded there should be a change in its fiscal system, and if the necessary arrangements were made for the return of the cash which had been paid—and that is another point which I will deal with presently—does the hon. and learned Member mean to say that he is entitled to claim that such a contract, entered into by a previous Parliament, shall be binding for all time, whatever may be the interests of the community? It is at death the exemption takes place, whatever the period may be.

Mr. HILLS

It is not for all time.

Mr. LLOYD GEORGE

It is very difficult for me to continue my arguments with all these interruptions. There has been a good deal of violent language directed personally against me.

Mr. CASSEL

Not personally.

8.0 P.M.

Mr. LLOYD GEORGE

I only want to develop my case. Does he mean to say that you can under these conditions, by the payment of a fee, if you like, to the State, set up a fiscal system which is unfair to other members of the community? My suggestion is that it is unfair to the owners of unsettled property that you should maintain this distinction. Does he say you can maintain a distinction which is unfair to other taxpayers merely because a generation ago a fee was paid of one or two pounds, as the case may be. That is a proposition which is a very serious one for any Parliament to accept. I will now give him a case—not my own case. The hon. and learned Gentleman talked about; the credit and the honour of this country. I will give him the name of a statesman who I am sure he will say maintained the credit of this country beyond the shadow of any question—Mr. Pitt. What did Mr. Pitt do? Money had been borrowed by the State on ah expressed contract. [A laugh.] I am sure the hon. Gentleman has no notion of what I am going to say, yet he is laughing in advance. It was an expressed contract that no rates or taxes should be paid upon the interest on that money. Mr. Pitt introduced the Income Tax Act. He swept aside the whole of that arrangement by contract and he imposed the Income Tax upon the interest which the State had guaranteed should be free from taxation.

Viscount CASTLEREAGH

It was a war tax.

Mr. LLOYD GEORGE

Really, what difference does it make whether it is a war tax? [An HON. MEMBER: "All the difference in the world!"] Does the hon. Member mean to say that if this were a war tax the question of a breach of contract would not have arisen? Is that his argument? You may raise money for war on settled property and it is not a breach of contract, but for public health, for education—HON. MEMBERS: "Oh, oh!"] Is war the only great public necessity? Is not the public health just as important or, to put it at the very least, is it not just as important to keep men alive as to kill them? The hon. Member said it would be perfectly legitimate to break contracts and to be guilty of a breach of faith if you were raising money for the purposes of a war, but it is not legitimate for any other public purpose. I think the Noble Lord has given away the whole case. I think even my hon. Friends behind me who do not see quite eye to eye with me will admit that if that is true their case would disappear.

Viscount CASTLEREAGH

I do not think the right hon. Gentleman wants to misrepresent me. I should like to point out that when money is to be raised in an emergency you have to take steps you would not do in peace time.

Mr. LLOYD GEORGE

That means that we are entitled to break contracts, to be guilty of dishonourable and dishonest action and to raise money by dishonourable means for the purposes of war; but that you cannot do it for the objects upon which we are spending the money. I am quite willing to leave that to the Committee, and I think the Committee has already judged it. I am quite sure the hon. and learned Gentleman is much too shrewd a man to base his case upon that distinction. It is the old argument that the end justifies the means. Let me come back again to the point with which I was dealing when the Noble Lord interrupted me—the question of Income Tax. Mr. Pitt, in spite of that contract, imposed the same Income Tax in respect of the money which had been lent to the State on that condition. That was a written contract—I repudiate the idea that this is a written contract—which the State gave to each holder of these bonds. He imposed it. Why? There were men like the hon. and learned Gentleman who brought the same charges against Mr. Pitt. One distinguished Member of the House said:— No condition whatever ought, in my opinion, to induce this House of Commons to countenance any paltry evasion by which the solemn faith pledged to the public creditors can to the smallest extent be violated.' That is almost the same language, short of the adjectives. In substance it is the same charge—violation of public faith, and nothing ought to induce statesmen to do it! He did not call Mr. Pitt names. That is the only difference. Mr. Pitt defended his action on the ground that There can be no question of a breach of good faith with a public creditor by thus imposing upon him what every other subject in the Realm is to incur. That is exactly what we are doing now. We are not picking out these men who have what the hon. and learned Gentleman called a contract, and leaving the others without any charge, we are doing exactly what Mr. Pitt did, we are putting every subject of the Realm on exactly the same footing. That is all we are doing, and Mr. Pitt's authority, in spite of the hon. and learned Gentleman's superlatives, is quite good enough for me when I come to a question either of public faith or of finance. Let me take another case. Does the hon. and learned Gentleman know, in regard to the owners of settled property, that when the Succession Duty was imposed for the first time by Mr. Gladstone, exactly the same charge was brought against him? He said that the owner of settled property had paid a stamp duty to the State upon the settlement, and had paid it upon the faith of the State. He did not use the word "guarantee," but he said that he did pay it upon the basis of an implication that if he did so the State would respect that settlement, and he also said that now we are altering all that and we are tearing the settlements to pieces. It was said that if they had known it they would never have settled the property in that way. It may have been true. But that is true of every duty you impose. If you put a shilling Export Duty on coal there are certainly collieries in this country which would be extraordinarily hit by it. The capitalist might say, "Had I known that an Export Duty was to be put upon coal, which has made property that otherwise would be a paying one a property which does not pay, I would not have invested in it." That is not an argument upon which to base a charge of breach of faith. The State must be free to adjust its taxes from generation to generation, according to the needs and demands of the community. If at any time the State picks out any particular class in order to impose a tax upon it and is to be open to a charge of breach of faith, what would happen would be this: One Parliament could practically guarantee that a certain class should never be taxed, by making arrangements for the payment of 1 per cent. or 2 per cent for a generation, which would be a guarantee that that class could never be touched in future. That is an impossible position for Parliament to accept. Parliament does not enter into a contract with the subject, whatever its fiscal arrangements are, that it will not alter those duties if the need arises.

The hon. and learned Gentleman may contend that when you come to the alterations there is a consideration due from the community to the persons in respect of that fee. That is the third point to which I am coming. But to say that we are to be bound by some contract, and that when Budgets are put on the Statute Book that it is henceforth a contract that they should not be altered to the detriment of the people who are taxed, is a principle which would go to the very root of democratic government in this country. It would interfere more with the rights and privileges of the House of Commons than, any doctrine of which the hon. and learned Gentleman can conceive. Let me come to his third point. He says that they have paid 1 per cent., and since 1909 2 per cent., in order to frank or, as he puts it, to insure the property against the Death Duties in certain contingencies. I will accept that. That has paid their premium. Up to the present the premium has covered the risk. No one can challenge that. What are you entitled to give back if the State comes to the conclusion that settled property ought to be put on the same basis as any other property in the matter of Death Duties? The hon. and learned Gentleman must remember that so far as the past is concerned the risk has materialised. If he will take the premiums which have been paid since 1894 the risk has gone, or at least one-half of the risk has gone, for lives have fallen in without any payment of the duty. In those cases they would not be entitled to the return of the whole of the 1 or 2 per cent., as the case may be. A life has already fallen in and the Death Duties have not been charged, so the premium has materialised in respect to that life. Our view was that if we returned the whole of the premium it would do substantial justice. In the case of an insurance contract you would not return the whole of the premium, because the people have already had the benefit of, at any rate, 50 per cent. of it. But we propose to go beyond that. The hon. and learned Gentleman says, "At least you ought to pay interest." I think he said compound interest. I do not agree with him. Compound interest is a device which I do not think the State ought to encourage in an Act of Parliament in these days.

What is our view? That up to the present the insurance has covered the risk. What I mean is that if any death has occurred before the particular date mentioned in this Bill, the 2 per cent. would have covered that particular death. From the moment this Bill becomes an Act of Parliament that 2 per cent. ceases to cover the risk. In that case the State could do one of two things. It could at the present moment return the whole of the money, or a certain proportion of the money. I do not think they are entitled to the whole, because many of them have already had half of the value out of it, and some of them very much more than half. They would be entitled, at any rate, to a portion of the money at the present moment. The other way is to return the money by way of deduction from the Death Duties the next time with interest. That is the proposal which we are now making. We shall treat the 2 per cent. and 1 per cent. as an insurance which has covered the risk up to the present. The moment this becomes an Act of Parliament it ceases to cover the risk. Therefore, we either return the cash now or return it on the occasion of death with interest. [HON. MEMBERS: "From when?"] I think from May, the date of the Bill.

Mr. JOYNSON-HICKS

Is that an alternative proposal?

Mr. LLOYD GEORGE

No. The proposal I am making is to deduct the amount. It is simply grafted on to the proposal of the Bill. The proposal of the Bill is that you should deduct the 2 per cent. or the 1 per cent. as the case may be. We propose to add to that interest from the date when the insurance comes to an end, which means May this year—simple interest.

Mr. WORTHINGTON EVANS

Why do you say that the premium as from now ceases to cover the risk?

Mr. LLOYD GEORGE

If there were a death before May, no Death Duty would be payable in respect of that settled property, so the 2 per cent. would materialise in that case.

Sir LUKE WHITE

I think my right hon. Friend is under a misapprehension. At present if a testator dies and leaves property, say, to a son for life, and then to the son's children, the estate pays the Estate Duty on the whole estate, and because a life intervenes then he has, in addition to paying the Estate Duty, to pay Settlement Estate Duty. But he pays the whole of the Estate Dnty.

Mr. LLOYD GEORGE

I am under no misapprehension. I did not think it was necessary to explain that. I assumed that everybody knew it. We make no alteration in that respect. The only alteration is that in the intervening case Death Duties will be paid. I fully realise that in the first case Death Duties are paid plus the 2 per cent. That is the whole point of it, and in future we propose that Death Duties shall be paid on the occasion of every death. The difference in the case of settled estate will be that the 2 per cent. will be returned, and I propose that in addition to that, interest shall be paid from the moment this money ceases to cover the risk. I come to the other point of the hon and learned Gentleman. He says that if you paid interest under this proposal it would go to the wrong person. He will be very surprised to find that I agree with him. I hope he will not be distressed. The loss of interest is not a loss only on the settled property but for the life tenant.

Mr. CASSEL

Or annuitant.

Mr. LLOYD GEORGE

That is another point.

Mr. CASSEL

A very important point.

Mr. LLOYD GEORGE

I agree, but in the main it is a question of the life tenant. I will not quarrel with the hon. and learned Gentleman. I agree that the interest is not interest which ought to go to the settled property. I am taking for the first time the simple case of the life tenant. It is the life tenant who loses the use of the money, and therefore on death interest ought to go, in our judgment, to the estate of the life tenant. The 2 per cent. was deducted out of the settled property, and therefore ought to go to the settled property. The interest is on a totally different footing. If the hon. Gentleman were to move his Amendment in that form I should be very pleased to accept it to-night, assuming this is fought and we come to a conclusion upon it, otherwise I shall move it on Report. If anyone likes to move to make it compound interest that is a matter on which the House would adjudicate.

Mr. CASSEL

May I ask whether each tenant for life and each annuitant would get this interest for the period during which they were annuitants or tenants for life?

Mr. LLOYD GEORGE

When that occurs the 2 per cent. is paid and there is an end to the interest.

Mr. CASSEL

There may be a number of annuitants.

Mr. LLOYD GEORGE

The moment the £2 or £1 is paid the interest ceases to run. One advantage of moving it in Committee rather than on Report is this. If I move it on the Report stage I shall have to move it without one part which I think it is desirable to have in. Take the case of a life tenant who dies with property. That is a very easy matter to deduct, but there might be a life tenant who died without any property except settled property. There is nothing to deduct from in that case. We propose that the money shall be paid over in that case. I cannot propose that on Report. I could propose it in Committee. So if the hon. Member moves it in that form, I can accept it tonight.

Mr. JOYNSON-HICKS

The right hon. Gentleman does not expect me to give him an answer at the moment?

Mr. LLOYD GEORGE

No, I only want to make it clear. I am not trying to buy off opposition to this particular Amend- ment. I assume that the Debate will go on. I am assuming that this is concluded, and that the Amendment with regard to it will come on next. I am making that offer. That is the position which the Government take. The hon. Baronet (Sir F. Cawley) has put down something which is not quite in this form. He proposes repayment of the tax at the present moment. That would involve raising £10,000,000 in order to distribute the money at present. We think it very much better that the deduction should be made as the estates fall in, with simple interest at 3 per cent. We propose that as an alternative. I regret that I cannot go quite to the extent my hon. Friend proposes, but we are really going a long way towards meeting his views. We have really striven to try and make this change with as little hardship as we possibly can. Every new tax is a hardship. Taxes on property are regarded as hardships by the owners. We have done our very best to meet the various objections which have been raised in the course of the Debate by Members on both sides of the House, and I hope that hon. Members, however great their dissatisfaction may be, will agree that on the whole we have done our best to deal with the position.

Mr. BONAR LAW

I was rather surprised that the right hon. Gentleman at the beginning of his speech should, of all men, talk of adjectives and superlatives. I think that was surprising coming from him, for if he does not know how to use them, I do not know anyone in the House of Commons who does. But I got the explanation at the end of his speech. I could not at first understand his irritation with my hon. and learned Friend, but when I saw the pathetic way in which the right, hon. Gentleman turned to those on whose votes he relies, and who, he fears, are against him on this occasion, I began to understand that his indignation with my hon. and learned Friend was because he felt that it was not quite safe to direct it to his Friends behind him. I am lost in admiration at the length of time which the right hon. Gentleman has taken to say what he had to say to-night. It is really wonderful that he should take something like twenty minutes to say what was said by Mr. Larkin in five words. I am not sure that it would be Parliamentary to quote the words. He said, "To hell with contracts!" [An HON. MEMBER: "Four words!"] The right hon. Gentleman has taken twenty minutes to express what was expressed in that way in four words. The right hon. Gentleman really never touched at all the whole point on which serious objection is made to this proposal. He began by saying that my right hon. Friend (Mr. Chamberlain) had said that he could not say he was opposed to this particular tax. I have not looked up what my right hon. Friend said, but what I think he said is exactly what I have said. Apart altogether from the merits of the case, which is an arguable proposition for which something might be said on both sides, what the Government are doing is something which in ordinary business life, or the ordinary relations between two honourable men, would not be considered fair or honourable. That is the whole thing. How does he meet it?

I will take the first justification he gave in his reference to the example of Pitt. There is one thing I have learned from my long experience of the right hon. Gentleman, and that is that, though I do not pretend for a moment that he deliberately misrepresents facts, you cannot accept any fact from him without examination and analysis. I do not know exactly what this illustration is, but the difference between it and what the right hon. Gentleman is doing is, on the face of it, probable, and it makes a very great difference. If the right hon. Gentleman assumes that Pitt raised that loan and made it a condition that it was to bear no taxation—

Mr. LLOYD GEORGE

indicated dissent.

Mr. BONAR LAW

It does not matter. Suppose the position was that when the loan was raised the Minister said it would bear no taxation, what he meant was that it would bear no excess on the taxation to which other loans were liable at the time. It was to impose an entirely new tax, and certainly a great deal can be said in favour of an obligation not to impose future taxation. What is the real defence of the right hon. Gentleman? He says it is exactly the same as the obligation which the State comes under to individuals carrying on business under a tariff. The frame of mind of a man who can take that view seems to me to be absolutely incomprehensible. There is no resemblance—not the least in the world—between the two cases. Tariff or no tariff is a question of general taxation. This arrangement is a bargain, and as we hold a contract, with an individual person, and has no bearing whatever on the general taxation applied to the whole country. I will tell the right hon. Gentleman a case which seems to me to be exactly analogous, and which has some relation to a tariff, though not exactly. Suppose, as happens in new countries, the Government of a country attracts capital by saying, "We will give you State land on which to erect buildings, and for fifty years, or whatever the time may be, we will allow you to have that land without paying any rent for it, but at the end of fifty years you will have to pay rent." A man goes to the country and starts business on these terms. Another generation comes, and says: "It is monstrous that one generation can bind another. We entirely repudiate the idea that this man, who is making millions, should go on owning this land and paying no rent. We insist on his paying rent." I say these two cases are exactly parallel. The question is: is there or is there not a contract? I think there is. It is not a legal contract, of course, for this simple reason, in my judgment, that Parliament can do anything it pleases. It can break up contracts. It can take money from me and give it to the right hon. Gentleman, or anybody else, and but for that this would be an absolutely binding contract on the State. Really the position is borne out by the illustration given by my hon. and learned Friend. The illustration he gave was that of a club. We all know that when a new club, say a golf club, is founded, they are anxious to get members and to get money, and they make arrangements with new people that if they will come in before a certain date they will only have to pay a certain amount. It is a bargain made with those who come in. Afterwards the club becomes prosperous and other people have to pay a higher rate, and they say, "We will not adhere to that," but in that case the contract which has been made is legal. The sole difference in this case is that Parliament, being above them, has taken a course which would not be taken by any honourable business man.

I quite admit that the interests of the State might make it necessary, but the State should look very closely at any bargain of that kind. If it was to be a bargain, as the right hon. Gentleman said, for all time, I do not think the State even then would be justified in doing anything which is not upright. But there would be the great difference that it would be a kind of bargain which the State had no right to make for all time, and something could be said for that view. But this is nothing of the kind. The time is limited. A settlement can only apply, as I understand, to one unborn generation. That is a strictly limited time, and surely the need of money is not so great that the Chancellor of the Exchequer cannot find some other means of raising that money than by breaking a bargain which was absolutely understood by one party. They paid their money on that understanding, and they based their whole livelihood upon the words used by the right hon. Gentleman in 1909, when he said that he looked upon it as a bargain and as something which was being done which would free that estate from obligation under which other estates were. I do not think there is any justification for what is now being done. In my view the right hon. Gentleman showed in the suggestion which he made, as to what he is willing to offer, that he himself recognises that there was a bargain. I am not going into that offer. It seems to me to add meanness to something worse. The right hon. Gentleman showed himself that it was a bargain when he spoke of it. He said that they had the insurance up to the time that this Act was going to pass. Why? They have paid the insurance up to the day after the Act was passed. If it takes place the day before, they have got the insurance. If it takes place the day after, they have not got the insurance. Then what is the meaning of that remark except this, that until we broke that contract everybody believed that he had a binding insurance. I do not understand why the right hon. Gentleman should take this step. There is not enough in it to make it worth while. I can only explain it on the ground that the right hon. Gentleman has an obsession against landowners. I do not own, and as long as we are liable to have Chancellor of the Exchequers like the right hon. Gentleman I am not likely to own, a yard of land, but I do say that there is nothing else which can explain to my mind why be should persist in this. It is clear, I think, to every fair-minded mind, in view of what happened in 1909–10, that this is going against what was understood as a bargain by one party to the contract and admitted as a bargain by the other party at the time.

Sir FREDERICK LOW

In the course of this Debate a great deal of false analogy has been used concerning the matters which we are discussing. What is it that we are endeavouring to do under this Clause? It is to make persons in the future taking an interest under settlements pay Death Duties. Why should not they? It is said that they themselves should not because they have made a contract, and have paid money as part of the consideration. The first person who would have to pay duty under this Clause would be the next tenant for life under the settlement. Has that tenant for life paid anything at all? The hon. and learned Member who introduced this Amendment stated candidly that he had not.

Mr. CASSEL

I beg the hon. and learned Member's pardon. The tenant for life has paid in the reduced interest on his capital.

Sir F. LOW

The hon. and learned Gentleman does not appreciate my point. I am talking about the tenant for life who is coming in on the next failure by death. He is the person who will have to pay the next duty. The tenant for life at present in the enjoyment of the estate has paid in this sense, that he has incurred a loss of income in the shape of the interest on the 2 per cent. which the Government have received, but the tenant for life who will have to pay the duty under this settlement has not paid a shilling. The analogy that has been drawn with regard to membership of clubs, compounding for rates and composition with creditors, is entirely false. The person who is going to pay under this Clause is the person who on the next death will become tenant for life under the settlement. The only person who has hitherto paid anything, and that in the shape of loss of interest, is the person who at the moment now is enjoying that estate, and of course, any tenant for life who has been enjoying that estate, since the provision as to 1 per cent. or 2 per cent., as the case may be, was introduced, has been paying it, but the tenant for life who will have to pay this duty, in my humble opinion, has not paid a shilling, and has not paid any consideration money for any contract, and is in the position of a person who is seeking to get a benefit for money paid by somebody else. That is really the fact, and it is uncontrovertible that the person who is sought to be brought in as a person to pay duty under the provision of this Section is not a person who has paid a shilling in pursuance of any contract, because the 2 per cent., or if it was before 1909, the 1 per cent., which has been paid will be refunded, paid, I suppose, to the trustees of the settlement. It will again form part of the estate, and he will get his income from that. Therefore he loses nothing at all. He is a man who is coming into benefit by the devolution of property. The object of this Clause, as I understand it, is to put persons inheriting settled estate in the same position in future as persons inheriting or acquiring unsettled estate. That is our scheme.

How is the future tenant for life damaged? He is only damaged, if he is damaged at all, in this sense, that he is losing the benefit of a bargain that is made by somebody else, and the cost of which has been paid by somebody else, and the capita] which that cost represents, which is all that the tenant for life is interested in, is now going to be refunded to the estate. With regard to the question of interest, of course, there, no doubt, is a matter which presents some difficulty, because I appreciate the point which was taken by, I think, the hon. and learned Member for St. Pancras, who asked to whom are you going to pay back? Clearly the person to whom it should be paid back is the tenant for life, and it is conceivable that some difficulty might arise in cases in which, since the 1 per cent. and 2 per cent. has been paid, there has been a succession. Of course, that does present some difficulty, but these cases, like many others, must be dealt with on more or less broad principles. It is impossible, or may be impossible, to refund small sums to a number of representatives of successive tenants for life. This presents great difficulty. Therefore, I do submit that the Government, in cases where there has been a number of successive tenants for life, which are comparatively few, is adopting a not unfair way of dealing with the matter. It seems to me that the proposition which is now made, that the interest as from the date of the cessation of the insurance should be paid to the tenant for life, is the proper scheme. The premium itself, which has covered a very substantial risk up to the present moment, is refunded to the capital of the estate, and for the future, persons inheriting settled property will, it seems to me, very properly come under the same burden as persons who inherit or acquire unsettled property.

How it can be said with any show of justice, or with any show of consistency, that there is any contract at all with the future tenant for life, really is outside my comprehension. I agree that there has been a contract, but this has been met in the way in which the Chancellor of the Exchequer has stated, and I submit to the Committee that the House, in the exercise of its undoubted power, is entitled to vary a transaction of this sort, provided that it acts in the matter with reasonable equity and fairness. I think that is what it is doing. It is providing for refunding to the persons who have been deprived, either by way of capital or by way of income, of the 1 per cent. or the 2 per cent., and it is enacting that for the future there shall be no preferential treatment in these matters. That is a point that we upon this side of the House, or, at all events, a great many of us, have very strong feelings. We consider that it is not right that merely because property is put into settlement that therefore it should escape the burdens which fall upon many poor persons who, from their circumstances or other reasons, are not in so good a position. For the future settled property and unsettled property should, having regard to fiscal burdens, be on an equality. I submit to the Committee that the House of Commons is perfectly entitled to make this provision, and that the argument that has been put before it, based on notions of contract and on analogies which have no real application to such a transaction as this, are not arguments that this House of Commons can take into its consideration, and I shall certainly vote for this Clause.

Captain JESSEL

I am not going to follow the hon. and learned Member through the whole merits of the case whether settled property should or should not pay. I shall simply confine myself to the Amendment before the House. The hon. and learned Member no doubt reprepresented the views of many Members on his side of the House, and he sought to make a case out that there should be no difference between settled and unsettled property. That may be. But I should like to remark that I listened very carefully to the previous Debate in which the right hon. Gentleman (Mr. Austen Chamberlain) took part. The right hon. Gentleman did not express any opinion at all upon that point, but what he drew attention to was that if you owed money to the State for duties and taxes you ought to pay interest. He drew attention strongly to that fact; but now, so far as I can understand, the Government have taken this money away and are going to pay hardly any interest at all. I think the Chancellor of the Exchequer was not very fair upon my hon. and learned Friend the Member for West St. Pancras (Mr. Cassel). The right hon. Gentleman seemed to be very indignant at the language of the hon. and learned Member. I cannot imagine why, unless it was he had an exceedingly bad case. He made a very lengthy statement, and took a great deal of time to get to the point, and, when he did get to the point, I do not think he at all met it. The Leader of the Opposition referred to the case of Mr. Pitt. So far as I can understand the right hon. Gentleman's argument, the case was pot at all parallel, but even if it were, two blacks do not make one white. If Mr. Pitt did something he ought not to have done, that is no excuse for the Chancellor of the Exchequer perpetrating something entirely unjustifiable.

It would seem that in the Chancellor of the Exchequer's opinion all these cases apply to landed estates; he has debated the matter, and has justified his case, only with reference to landed estates. At very considerable length he described the difference between a landed estate which was not settled and a landed estate that was settled. He told us about the eldest son succeeding in the ordinary course in both cases. But that is not altogether true; because sometimes the eldest son does not behave as he ought, and finds himself cut off with the proverbial shilling. Anyone acquainted with the legal aspects of this subject must know that it does not entirely apply to landed estates. There are many other cases in which property is settled. A testator may not trust his own children, and, having brothers or sisters, he provides that his estate shall not be dealt with for a considerable period. Therefore it is not a matter affecting only landed estates. There is one point to which I should like to call the attention of the Committee. A testator may make provision which, poor deluded man, he thinks will be respected, and he leaves his estate in a particular way. Take, for example, the case of a man who has two brothers: He has no children of his own, but he has a nephew; he wishes to do the right thing by his brothers, and he leaves each of them a livelihood in the estate, the money to go, in course of time, to the eldest of the nephews, the first of the litter," as the Chancellor of the Exchequer expressed it.

The testator has done that, believing in the Parliamentary bargain—I do not call it by the sacred name of contract—under Sir William Harcourt's Budget of 1894, and further amended by the present Chancellor of the Exchequer in the "People's Budget" of 1909, and this is rather hard on the testator, and no doubt if he had thought that for one moment that the thing would be altered, he would have left his property in a different way. He would have given his brothers a lump sum and made an entirely different disposition. I do not think that case has been dealt with. It must be remembered in this connection that the brothers have only got a life interest and are not therefore free to deal with the estate as if they had the full disposal of the property. That is an exceedingly important consideration. Those people are being severely handicapped in the matter. In the case of a settled estate you cannot dispose of a certain amount of the property so as to lessen the burden of Death Duties when the estate passes. Everything that is left is tied up in settlement and has to pay the full Estate Duty. That is a point that has not been considered. An ordinary person who has got an unsettled estate, if he thinks the State is going to press too hardly by the burden of Death Duties, can within the prescribed time, quite legitimately, hand over portion of it. That period is three years now, and by doing that pro tanto reduces the Death Duties on the estate.

I do not think those points have been fully met by the Chancellor of the Exchequer. If this Amendment or something of the sort is not carried, you will create a great deal of unsettlement and distrust in the minds of everybody. I am not arguing the question of whether you should or not treat settled and unsettled estates in a different manner, but I do think you ought to have made a sort of bargain. The Chancellor used the word "composition" in the Act of 1909, and my hon. and learned Friend the Member for St. Pancras doubted if he could get over that word. The Chancellor in his speech very judiciously avoided it, and got round it in the way he always does—on a side issue. He referred to what some hon. Members would have done in the case of a war, and said if you could do it for the killing of men why could you not adopt a certain course to preserve people's lives and better administration. That is, if I may respectfully say so, entirely beside the point, and the Chancellor did not really touch the whole question of the reversal of the contract. I hope the hon. Member opposite (Mr. R. Harcourt), the son of a distinguished Chancellor, will agree with the principles laid down on that very important occasion by his father.

Mr. R. HARCOURT

To a certain extent I agree with the hon. Member.

9.0 P.M.

Captain JESSEL

I am very glad that the hon. Member who, of course, has read the subject in which his eminent father played such a distinguished part, agrees with me that settlements more or less of this kind should not lightly be abolished. I would like to know how much is going to be gained by this. The Chancellor of the Exchequer said that settled estates were expected to run for a generation, which is thirty years. Nineteen years have passed and what money is to be gained out of this? Is it really worth while to do what I may call a small and shabby trick of this kind for so little money for the revenue. I should like to have an estimate of the amount, as at present it is mixed up in the general view of what the Settlement Duty is going to bring in. I am not at all clear as to the nature of the concession mentioned. As I understand, until the Resolution of the House the 2 per cent. is not to have any interest, but that the estate is to be regarded as having been franked up to that time and to be insured up to the date when the Resolution was brought in, and there fore no interest is to be paid on that. After that 3 per cent. simple interest is going to be paid. I understood the Chancellor to say that, but hon. Members opposite had the advantage that he turned to them, and we could not hear him on this side. Who is that money to be paid to—is it to the existing tenant for life or to his executors?

Sir S. BUCKMASTER

May I interrupt the hon. Member simply in order that he may be acquainted with the proposal. The proposal is when the next period arrives at which Estate Duty is payable when the rebate of 1 per cent. or 2 per cent. is made under the Bill, then there shall also be allowed interest on the 1 or 2 per cent to the tenant for life whose death has caused the Estate Duty to be paid—that is, of course, to his representatives.

Captain JESSEL

His executors.

Sir S. BUCKMASTER

Yes, that is right.

Mr. CASSEL

In the case of annuitants will it be similar?

Sir S. BUCKMASTER

The annuitant, as the hon. and learned Member knows, is treated under the Statute as being pro tanto the tenant for life. Therefore arrangements would have to be made, so that the words would cover the annuitants as well as the tenants for life. Any death that has already occurred cannot give rise to payment of Estate Duty in the future.

Captain JESSEL

I am very glad to have elicited that answer which, I think, makes the whole of the case much worse than before. I say so as the Chancellor of the Exchequer has admitted that the person who is being done, so to speak, is the actual tenant for life. As far as I can make out, he is going to get no benefit at all. It is to be paid over to his representatives when he is dead. When is he going to get any enjoyment from that compensation—up there, or down there, or where? I say that the proposal makes the matter a great deal worse. I am exceedingly sorry, on the broader ground, that the Government should have gone out of their way to perpetrate a mean trick of this kind, which will do a great deal to upset belief in the good faith of British Governments. I really think it is hardly worth their while to perpetrate such a shabby trick as they propose in this case.

Sir FREDERICK CAWLEY

The Chancellor of the Exchequer complained of the hon. Member for St. Pancras (Mr. Cassel) using superlatives in regard to this matter. I think it is a case when superlatives are necessary to express our detestation of the course which the Government have taken. The Chancellor of the Exchequer said that he was raising money in the interests of the community. In my opinion in the interests of the community it is a great deal better not to do a shabby or unjust transaction in order to find money. You will do a great deal more harm to the community by doing a dishonourable thing than you will do good by any amount of money that you may raise by such a means. The Chancellor of the Exchequer, when defending his proposal on the Resolution, said that if he took a certain course he would lose a million pounds in the first year, and £800,000 or £900,000 a year afterwards. I do not know how he arrived at those figures; they are extremely large, and I should like to know on what they are based. But they are no sort of an answer to our contention that it is a breach of contract. Whether it is a question of £1 or of £1,000,000 does not enter into the matter at all. The State can surely afford to be just. We often hear, especially from below the Gangway, that the State ought to be a model employer. Equally, the State ought to set a good example in the matter of business and the sanctity of contracts. If the State does not do so, it will do a great amount of harm to the community. The Chancellor of the Exchequer seemed to think that one Government need not carry out contracts made by a preceding Government. He did not say so in so many words, but that is the import of what he said. He also stated that there was an analogy between the abolition of the Corn Duty and the abolition of the Settlement Duty without compensation. In my opinion there is no analogy whatever. There was no contract at all between the landlords and farmers and the State. The landlords and farmers gave no consideration whatever to the State. The present case is utterly different. There has been a consideration paid.

I wish to put a point to which attention has not yet been called. I do not look upon this Settlement Duty as a tax at all. A tax is something which is imposed upon everybody, and what everybody is bound to pay, but the Settlement Duty did not fall upon everybody. Only those people paid it who chose to accept the terms of the bargain offered them. Therefore it is absolutely distinct from a tax in the ordinary sense of the word. Sir William Harcourt made the offer: "If you come to the Exchequer and offer to pay, ready-money down, 2 per cent. on your estate, we will frank that estate for so many lives." That was a distinct bargain; it was not a tax in any sense of the word; it was a bargain pure and simple for cash down. There is no doubt that many people were induced to settle their estates by that means. In fact, as far as I can see, Sir William Harcourt offered the inducement as an encouragement to people to settle their estates, and also to get ready-money down. Therefore, I think it is a bargain which ought to be kept. The Chancellor of the Exchequer now proposes to penalise the unfortunate settlor. Of course he is dead now, and cannot be repaid; but I think that the sanctity of contracts on the part of the British Government ought to be considered absolutely binding. In my opinion the Government, instead of setting an example of rectitude, are setting an example more or less of what I should call sharp practice. How that can contribute any advantage to the community I fail to see. The Chancellor of the Exchequer said that settled land would benefit through the rates, and he seemed to suggest that therefore the settled lands owner ought not to complain. Of course, if the Bill passes, all land is supposed to gain through the rates, but settled land will gain no more than any other land. Therefore I do not see that it has much to congratulate itself upon there. The Chancellor of the Exchequer also put forward an argument as to compensation being given to the settlor of the land. I do not agree. If it is a compensation, it does not alter the case at all. It does not alter the question of the sanctity of contracts.

Personally, I am in favour of the abolition of the Settlement Duty. That is a point to which the Chancellor of the Exchequer devoted a great deal of his speech. I think that the country will not be in agreement with the Government in doing anything which savours at all of a breach of contract, and that this is breach of contract I think there can be no doubt. Although the Chancellor of the Exchequer has offered some kind of concession, I do not think he has offered enough. I think he ought to carry out the contract which has been made and nothing less. The concession, to my mind, which he proposes to make—if I may say so—is rather mean. I do not suppose for a moment that we shall get the Chancellor to alter his intention. The Chancellor of the Exchequer said that if this Settlement Duty were abolished it would cost £10,000,000; so he proposed to hold that £10,000,000 in hand and to pay 3 per cent. simple interest on it. I think that that is rather mean, because, after all, in these times people can make 4 per cent. on their money in trust securities. If, therefore, he does not want to make compensation in that way, he should offer to give 4 per cent. compound interest. I know why he is offering this compromise or compensation, or whatever you like to call it, but whatever he may say or may put forward in defence of his policy, if the protection that has been paid is taken away by this Bill, the money should be refunded. Whatever arguments may be offered for other parts of the scheme, there can be no excuse for keeping money taken for a specified contract if you do not perform that contract. Therefore, I myself think that the money, the 2 per cent. or 1, or whatever it is, ought to be paid back at once, because you are not giving a quid pro quo for it. If the Chancellor of the Exchequer does not see his way to get the £10,000,000 required, I think at least he ought to say to the men whose money he has taken, or to the others concerned: "We will pay you 4 per cent., which is the price of trust securities to-day, and we will also pay you compound interest for the use of that money."

Mr. EVELYN CECIL

I was very much interested in the speech which has just been delivered. It shows that hon. Members on the other side of the House appreciate the arguments which have been used by my hon. Friend and others in putting forward our case, and that they fully realise that this proposal of the Chancellor of the Exchequer can be severely attacked as a breach of contract on the part of the Government. What astonished me much more was the speech which we heard from the hon. and learned Member for Norwich (Sir F. Low). I am sorry he has now left the House, but he is one of the very few apologists for the Government who have urged that this proposal of the Chancellor of the Exchequer should be carried on the ground of broad general principles. I listened with great attention to what he was saying in relation to these apparent broad general principles, and it seemed to amount to this: that because the tenant for life—or the second life tenant, I should say—has succeeded, and has benefited under the settlement, not having made the settlement himself, he was not therefore entitled to gain anything by that settlement. That was the broad, general principle on which the hon. and learned Gentleman argued, and anything more fatuous, I might almost say dishonest, I have never heard. If matters generally were to be treated on such broad general principles, there would be a very extraordinary state of things. If, say, the founder or chief partner in a firm makes a contract with the Government or with anyone else and then dies, and other partners are taken in, is it to be said that the new partners, who have come in since the contract was made, are not to realise any benefit under it? That would be a most startling statement to make, yet it is absolutely parallel with the conduct of the Government.

The hon. and learned Gentleman seemed to suggest that it was quite fair to treat settled property and unsettled property on the same footing. I should have thought that it was self-evident that it was not fair to do so. In the first case, that of settled property, there is a life interest with which you are dealing; in the case of unsettled property, the interest is absolute. Indeed, Sir William Harcourt in 1890 made it extremely clear in his Budget speech that that kind of property did deserve separate treatment. Again, I think I can truly say that it has been frequently the practice of solicitors and family lawyers to advocate settlements on the ground that by the payment of Settlement Estate Duty the funds settled were on the first death cleared, once and for all, of estate duty during the life of the settlement. That advice they gave, thoroughly relying on the good faith of the State under which these settlements have been made. I would like to point out that the return of duty paid does not rectify the injustice proposed in regard to existing settlements. The hon. and learned Member for Norwich talked about the future. Whatever view you may take as to future settlements on this charge, it seems to me quite clear that as regards existing settlements we should adhere to the arrangements which have been made. Further, in the case of existing settlements, the parties cannot by a revocation of the deeds be put back into the positions they would have occupied had the settlement not been executed, so even if a power to revoke was given, it would not justify the alteration proposed. The parties cannot put themselves in a new and different position. Nothing can put them back. Therefore it is all the more unjust and all the greater breach of contract on the part of the Government to say, "Oh, we will pay you back the duty you paid us in consideration of this settlement being made, although we will not, in fact, either put you back into the position you were in before you signed those deeds or carry out our own part of the bargain. The whole position seems to me exceedingly unfair. In all these matters, no doubt, Parliament can do as it pleases. Parlia- ment can make things legal which are inequitable, unjust, or immoral. There is nothing to prevent Parliament from doing so, but if it does, Parliament cannot remove the sense of injustice which is created, and cannot prevent the feeling of resentment and wrong which necessarily must be aroused in all the parties concerned. In this matter whatever Parliament may do as regards taxation of this and of a similar kind, it must be borne in mind that it is the taxpayer himself who is largely the practical judge of injustice so far as the public is concerned. And if the taxpayer has this feeling of resentment and dislike and wrong from the State, you will encourage on his part a desire to evade taxes which, under ordinary circumstances, all of us should condemn. I say that quite advisedly, because, although many of us may feel that an evasion of taxes, for instance by way of giving money intra vivos is not for the advantage of the State, nevertheless it is perfectly justifiable if the States comes forward in this fashion and by mean and dishonest behaviour attacks the property of the taxpayer. Under these circumstances, I hope the Government will reconsider their own position and withdraw the Clause.

Mr. RADFORD

I agree with the hon. Gentleman who has just spoken, that the question we have to decide is not what is the law, but what is right to be laid down. At the moment we are not subjects of the law; we are legislators, devising what the law ought to be. And in regard to that question I agree with my hon. and learned Friend the Member for Norwich and the Chancellor of the Exchequer, that it is desirable that there should in future be no distinction between settled property and unsettled property. I congratulate the Chancellor of the Exchequer on being able to do what I regard as the completion of the work begun by Sir William Harcourt in 1894. Why Sir William Harcourt proposed the Settled Estate Duty I do not know, but I think it is quite likely that it was a concession to the payers of the duty, because his Parliamentary majority at that time, when be proposed Estate Duty, was so small that he had to make any concession he could in order to conciliate opposition. The wonder is not that he made some concession to the owners of real estate and other persons liable to Estate Duty, but that he ever carried Estate Duty through the House at all. I congratulate the Chancellor of the Exchequer on living in happier times and being able to carry out a reform which probably was impossible in the days of Sir William Harcourt, and I approve personally of raising in this manner the deplorably large sum which it is necessary to raise in the present year. It is better, in my opinion, to tax persons who have something than persons who have nothing, and it is better to tax a man about to succeed to property he has not earned than to tax a man without anything and whom you can only tax by intercepting his food before it reaches his month.

I say frankly I regret the Chancellor of the Exchequer has not accepted the Amendment proposed by the hon. and learned Member for St. Pancras. The hon. and learned Member for St. Pancras has stated the case with great ability and lucidity, and he relieves me from the necessity of repeating the arguments. Barring some rhetorical vituperative expressions which he used in regard to the Chancellor of the Exchequer, I would adopt for all practical purposes the arguments he has used. In a few words I would state this, that persons who paid Estate Duty at 1 per cent. under the Act of 1894 and persons who have since paid increased Estate Duty under the Act of 1909–10 have the assurance that during the settlement in respect of which Settlement Estate Duty has been paid no further Estate Duty shall be paid by them. I agree with what has been said that Parliament may do anything it likes. It may rescind any law that has been passed and cancel any privileges granted. What we have to see now is whether it is just and right that that should be done. I think it is not. I do not want to quibble about the question raised whether there is a contract or not. Strictly, there is not. A contract is a bilateral mutual engagement. In this case there are no two parties; but you can incur obligations otherwise than by contract, and the most solemn way is by an act of the Legislature to which the King, Lords and Commons are party, and that is the right that persons who have paid Settlement Estate Duty have acquired. I, for one, should be very loth to take away that right from them.

The Chancellor of the Exchequer, in some playful and kindly references to me at the close of his speech, has disclosed to an unfeeling Committee the fact that I am a solicitor. I admit that I am a humble member of that melancholy profession which the Chancellor of the Exchequer adorns, and this sad disclosure induces me to make a personal appeal to him, and it is this: I shall be very glad if he will tell me what I am to say to my client who comes and ask me what he shall do when he is the victim of the Clause we are now considering. My client comes to me and says, "A claim has been made upon me for the payment of Estate Duty, and I understand that under the Finance Act of 1894 I am exempt from payment." "Yes," I say, "that is so, but the present Chancellor of the Exchequer repudiated the pledge given by Sir William Harcourt and has repealed the Clause of the Act on which you rely." My client will say to me, "No, sir, I am an Englishman. I am not a subject of a Mid-American Republic. Finance Ministers in this country do not repudiate their obligations." Well, I say all I can for my Chancellor and my party, and I say, "It is not wholly repudiated, because under the Act of 1914 the Chancellor of the Exchequer will refund Settlement Estate Duty with interest from the 11th May this year." Then I explain to him how a payment is made and how it is likely under this provision some of it will be refunded. But my client will say, "Then it is a partial repudiation. I expect the Chancellor of the Exchequer of this great country to pay 20s. in the £ as I do." I confess I have not a word to say to my client, and I should be deeply grateful to the Chancellor of the Exchequer if he will tell me what I should say to him.

There are some 20,000 solicitors in this country. Some of them have not got much practice, but all of them have some clients though it may be but a bad sheep in the wilderness, and that kind of conversation will go on in every solicitor's office in this country. Why is it desirable or necessary to incur the hostility of the whole legal profession? If this were some great policy of land reform, or if it involved great national interests, I would encourage the Chancellor of the Exchequer to defy the legal profession and defeat them, but as one of his humble supporters it occurs to me we are dealing with transactions where it seems to be superlative folly to incur the opposition of a widespread and critical profession in an attempt to raise a little money by questionable means. I do not want to weary the Committee. The argument has already been exhausted. But I should like to say the Chancellor of the Exchequer, in his very spirited and brilliant reply, used several arguments. He has given the analogy of the Corn Laws and an analogy relating to insurance, and another analogy relating to something else which I forget. But I should like to call the attention of my right hon. Friend to the dictum of a very distinguished and learned judge, who said, "Every analogy presents either a truism or a misrepresentation." The analogies cited by the Chancellor of the Exchequer did not suggest truism, and therefore I think we must select the other alternative. The right hon. Gentleman very unkindly said of me that I preferred the text of a strict settlement to that of holy writ. I disclaim that, and I assure hon. Members that there is no foundation for the suggestion. But since the Chancellor of the Exchequer has referred to the subject of holy writ, let me commend to him the passage in the Psalms, which commends "The good man who sweareth to his own hurt, and changeth not." It may be expected that after what I have said I should follow the hon. and learned Member for St. Pancras into the Division Lobby, but I am sorry to say I cannot do so. I do not mean to withhold my support from the Government, although I think the finance of the Chancellor of the Exchequer is in no way satisfactory. Not that I think the concessions offered are adequate, but that I will not refuse my vote to a Government that carries the cargo of Home Rule, Welsh Disestablishment, and Plural Voting.

Mr. CAVE

I think you, Mr. Chairman, must be placed in some difficulty in selecting speakers in this Debate, because whenever you have called on an hon. Member on the back benches, in the natural expectation that he will support the Clause and speak against the Amendment, you and the House are disappointed by hearing some very severe blows against the Bill itself. The hon. Member who has just spoken is no exception to that rule, but most of us were rather surprised that after a speech in which he attacked this Clause hip and thigh, and used powerful arguments in favour of the Amendment, he has not the courage to go into the Lobby in support of his views. The lame reason he gave for that course will persuade all of us that he must lie under the imputation that his failing courage has prevented him from supporting his views in the Division Lobby. With regard to the Clause itself, I do not wish to dwell on the general question at any length, but I want to say that I think the whole Clause is a mistake, and that the principle of the Settlement Estate Duty is the right one. The hon. Gentleman is mistaken in saying that Sir William Harcourt adopted the principle of the Settlement Estate Duty because he was forced into it by way of a concession, because he said plainly that it was a fair thing to do. The whole purpose and object of the Estate Duty is to acquire for the State some portion of the property which passes on death, and usually on death the corpus of the property itself passes to the successor, and you take a portion of what he gets. But when a tenant for life dies, the property does not pass. All that happens is that the person who has enjoyed the property for his life dies, and the life interest ceases. That property has really passed once for all on the death of the original testator or settlor, and therefore it is not true to say that that property in fact passes at death. If you take full Estate Duty in the case of death on settled property you will be exacting much more than you do in the ordinary case of death. The fact is that it is a great mistake to discourage settlements as you are now proceeding to do. They are not all settlements of land, and even in settlements of land they do not now prevent a sale of the property. Many of the settlements made are settlements of money, and those are the most useful of all settlements. I have known, and the Solicitor-General must have known, very many cases where the existence of a money settlement has saved a whole family from destitution. If the money is left unsettled, the first donee is allowed to spend the whole of it. If you give a life estate to your son, and provide that on his death the property goes to his children, you prevent him spending the whole amount, and you provide something for his widow and children. I think great harm will be done if settlements of this kind are discouraged by such a Clause as this.

May I repeat the question as to what is the amount involved in this Amendment. I want to know how much is involved, and what is the loss to the State by the acceptance of this Amendment, because that might have some effect upon the mind of the Committee. I do not think it can mean a large sum even in the first year, but plainly it will be a diminishing sum from year to year. It is not a question as the Chancellor said of franking one particular class. It is not a fact that the Settlement Estate Duty franks a class, and that you are now going to throw a burden on that class. It is not a question of a class, but of keeping your bargain with individuals, and the whole argument of my hon. and learned Friend rested upon that point. I agree that it is not a case of a contract in the sense that one side offers terms and the other side accepts them. It is not a contract in the ordinary sense; but you put into an Act of Parliament in 1894 a provision that if an additional sum of money were paid on a death, then the settlement made on that death should be freed from Estate Duty so long as the settlement ran. That is, in my opinion, a Parliamentary bargain.

Parliament told the taxpayer that he should pay a certain sum and should be free from further Estate Duty for a certain period, or a period easily ascertainable. On the faith of that offer, money was paid not as a yearly premium but as one payment paid once for all, so that the insurer paid his premium then, and bought his exemption for the whole period. On the faith of this arrangement settlements were made. Settlors, of course, were told by their advisers that if they made a settlement, Estate Duty would not have to be paid on every death, but that the duty would be paid once and for all. On the faith of that enactment and of that advice, they have made settlements. More than that, the hon. Member probably knows, and many of his profession know, that settlements were made, in view of this enactment for longer periods, and for more lives than they otherwise would have been made, so that people acted on this Parliamentary offer, and by so acting accepted the offer, and made what in effect and equity is a contract. When the Settlement Estate Duty is paid the authorities give a certificate that the settlement is for the future exempt, or free from Estate Duty. How are you going to deal with those certificates? Are you going to recall them? You have no right to do so. They remain in the possession of the holders of the settlements as the representation of the State that the property is free from Estate Duty. There surely is something which does amount to all intents and purposes to a contract. You have got the money, the certificate of exemption has been given, and it cannot be denied, if you now throw Estate Duty upon those settled properties, that you are committing a breach of your plain written obligation contained in the certificate that the estate is free. I do not think it is possible to get over that fact, or to persuade any man who understands these things that you can pass this Clause in its present form, and without the Amendment, without committing a plain breach of faith towards the taxpayer.

Let me deal with one or two of the arguments which have been advanced on that side of the House. The Chancellor of the Exchequer put the case of farmers having paid a certain percentage on their estates on the understanding that the Corn Laws would be imposed for a certain number of years. He said that was a contract which no Parliament could make so as to bind its successors. I am not sure of that. I am disposed to think, that if such a bargain were made, it would have to be kept, and would under ordinary conditions be kept in this country, but this is not quite the same thing. It is not a representation that for certain considerations a duty will be imposed upon other people for all time to come. It is a representation that for a consideration a tax will not be imposed upon the person who pays the money and those whom he represents for a limited time. It seems to me a very different bargain altogether, and one which does not come within the general principle laid down by the right hon. Gentleman. Then it is said that Mr. Pitt made a similar bargain and did not keep it. I am not familiar with the case cited, but, if it is properly cited, I do not think that in our day we should take the same course as Mr. Pitt is said to have taken. I know of cases where under Acts of Parliament land was conveyed or vested free of all rates and taxes, and where until to-day that land is free of rates and taxes, to the great loss of the Exchequer and of the local authorities. I know of a bargain stronger than that put by the Chancellor of the Exchequer which to-day is kept, and which I suppose for all time will be kept, rather than that the State should repudiate it.

The case of the Stamp Duty was put. It was said that in 1853 people argued that because settlements had paid Stamp Duty they must be free from Succession Duty. I do not think the case is the same at all. There was no provision in the Stamp Acts that Stamp Duty should be paid and no Succession Duty should be levied, and therefore the case is quite different. The answer there may probably have been a good one, but here the argument may be entirely fallacious. I do not think any case has been put where provision in an Act of Parliament that a certain sum should be paid and that on the payment of that sum exemption should be given has been broken by a subsequent Bill. Really no defence has been put forward for this provision. The hon. Gentleman who spoke just now seemed to think that it was the solicitors who would have cause to complain. The Chancellor of the Exchequer was not here at the time when he was appealed to to say what answer a solicitor would give to his client who failed to understand how the State could break its bargain in this way. I have sympathy with the solicitor, but it is not the solicitor who would suffer most. It is the client, the man who has had to pay the money, and who now loses the consideration. If it be for the public good that a law should be changed, let it be changed; but when individuals have acquired rights and interests under such a law the uniform practice, at all events until recent years, has always been that in changing the general law for the public benefit you safeguard the interest of the individual. If it is a case for compensation, you compensate him. If it is a case where rights have been acquired, you leave him—the individual—those rights, and forego the public profit so long as those rights last.

It is not a case in this instance for compensation, because the rights are money rights. You have only to say, as regards contracts already made and rights already acquired, "We leave them untouched, but for the future we decline to repeat the bargain, and it shall not hold in the case of any settlement effected hereafter." I should like to hear the Solicitor-General's honest opinion of the transaction. I cannot conceive that he will really defend it with his whole heart. Here is a premium paid once for all to ensure exemption during a defined period, the period of the settlement, but before that period expires, we are asked to concur in this that the person who has received the premium shall say, "I no longer like my bargain, and I repudiate it altogether. Take your premium back, and I will be no longer liable on my policy." I do not deal in the superlatives to which the right hon. Gentleman has referred, and I do not need to, though I agree with every word my hon. Friend the Member for St. Pancras (Mr. Cassel) said, but I think it is sufficient to say in simple words that this transaction is really not honest. You cannot so recede from your bargains, and the right hon. Gentleman will be forced, sooner or later, to recognise that fact.

10.0 P.M.

Mr. DUNDAS WHITE

A good deal has been said upon this matter, but the arguments generally are based on the theory of contract, bargain, and inducement. I do not think the suggestion of inducement to people to settle is based on fact. When the Settlement Duty was put forward, it was put forward with the ordinary duties on unsettled property; it was a matter of choice whether the people should settle or not, and the duties were proportioned as the individuals thought best in their own particular case. Therefore, I do not think the idea of inducement is justified. Then the question of contract or bargain has been advanced. The whole case against the Clause depends upon whether the critics can show that there is anything which may fairly be called a contract or bargain. Our proposition is this: At the outset the Settlement Estate Duty was proportioned to a similar duty on unsettled property, and if at a subsequent stage the similar duty on unsettled property was varied, then the Settlement Duty on settled property should be varied proportionately, assuming, of course, that a fair allowance is made for past payments. I would like to remind the critics of this Clause what their proposition is. It is that this was a contract entered into, when, as the hon. and learned Member has just said, a premium was paid against future payments. It seems a difficult proposition to make out when one remembers the length of time over which a settlement may be spread—it is common for a settlement to extend over a life or lives, and twenty-one years afterwards, so that it may possibly run for a hundred years—[HON. MEMBERS: "Why not?"]—I am not saying it should not—what I am saying is that if the proposition is put forward that the payment is to cover it for all that period, then a stronger case must be made out for the contention. I think the critics are rather assuming proof, instead of proving their assumption. I do not know what is meant by the phrase used by the hon. and learned Member for Kingston (Mr. Cave), who spoke with such moderation and force—the phrase about a contract which is not a contract in the ordinary sense of the word, but it seems to me that, in ordinary language, a con- tract is either a contract or a bargain or it is not. There has been a great deal of talk about contracts, but I am inclined to ask, Who are the parties to this contract? That, to my mind, is the first and fundamental question, and it is a question which, I notice, the critics of this Clause are not very willing to answer. It has been suggested that a contract is made with the man who pays the duty, but I venture to say that that cannot be borne out. The settlement was made on a certain basis by the settlor, and when it was made the tenant for life, or the man called the second tenant for life, may have been an indeterminate person altogether. If, therefore, the contract is with any one person it is made with the settlor, and if hon. Members accept that view, and if there was a contract which was made by the settlor, then I venture to submit that this Amendment of the hon. Member for St. Pancras does not go nearly far enough, because it reads—

"except in the case of any settlement in respect of which Settlement Estate Duty has been paid before the passing of this Act."

Take the question of contract. Suppose a marriage settlement was made last year as between two young persons getting married. According to the theory of the critics of the Clause they made it on the basis of this Settlement Duty, and in that case, though there may be no property passing for a generation, the contract should be as strictly observed. My criticism is, even assuming the general proposition to be correct, if it is correct, then this Amendment does not go far enough, because the critics of this Clause have not faced the fundamental question who the contract was made with, and in the absence of that I do not see how they can make out there has been any contract at all; in fact, no case has been made out for a contract. There has been a good deal of loose talk to the effect that if the parties had anticipated what would happen in the future they would not have made settlements, and various arguments like that, but I do not think they carry much weight with them. The great question is whether the case for a contract has been made out. In my opinion no such case has been made out, and the Chancellor of the Exchequer is justified in making this variation—provided, of course, that a fair allowance is made in respect of payments that have already been made.

Mr. PRETYMAN

Before a Division is taken I should like to say a few words upon what has fallen from the last speaker about contracts. He has asked who are the parties to the contract. The answer is perfectly plain. There are two parties: one party is the State or Parliament and the other party to the contract are the persons concerned in the settlement.

Mr. DUNDAS WHITE

Even if those persons were indeterminate at the time?

Mr. PRETYMAN

All persons who are interested in the settlement. Surely that is a perfectly plain and obvious fact, and not a subject for argument at all. The hon. Gentleman says that the contract can be made as in a marriage settlement, without payment, but he does not mean without consideration. There is a consideration. Where the consideration is a payment I believe it is always held that the payment is a kind of seal to the contract; it is recognised as binding the contract.

Mr. DUNDAS WHITE

Does the hon. Member suggest there is no binding contract until the payment is made, even although a marriage settlement has been entered into?

Mr. PRETYMAN

That is exactly contrary to what I said. I have said that marriage was in itself a consideration. There must be a consideration. Marriage may be a consideration, but it is always held that where the consideration is a payment that makes it specially binding. It is a seal to the contract. What has happened in this particular case is this. There are two parties to the contract. The State is on one side. I hope hon. Members will listen to this carefully, because it is really a question of the honour of this House. A mere trifling sum of money may be involved, but a great precedent is being created—such a precedent as has never been proposed to this House before. For a small trifling sum of money we are to break the contract. The contract which has been made is a perfectly plain one. A particular duty was imposed by the State, called Estate Duty. When the duty was imposed the Chancellor of the Exchequer who imposed it made a certain difference in the way the duty was levied upon settled property and upon unsettled property. He did so without any pressure, and not, as was suggested by one hon. Member who spoke, under the pressure of a majority. The present Chancellor of the Exchequer confirmed that bargain in his Budget of 1909–10 by doubling the consideration for the contract paid by the settled estate. When he doubled that Estate Duty, he exempted from that double payment those who had already made the payment, thereby admitting that the contract which had been made and under which the payment had been made, could not be interfered with. He said what the hon. Gentleman said at the beginning of his speech, namely, that where the duty was imposed at a certain rate a particular part of it was imposed upon settled property with reference to the general rate upon the property as a whole. So that when the general rate was altered the rate on settled property might also be altered. That was done in 1909–10. The rate was then increased, and the Chancellor of the Exchequer said that, as the rate was higher, the insurance must be higher. Therefore, instead of 1 per cent. insurance he proposed to take 2 per cent. insurance, but where the 1 per cent. bargain had been created and was in existence he did not propose to disturb it.

If he now said that he would again raise the insurance rate to 3 per cent., but would not disturb existing contracts, then he would be pursuing a course which, although we might differ from him in regard to it, we should have no right to say was dishonest. In these cases the different rate of duty was imposed for a very good reason. It is important that the Committee should understand it, and that there should be no sort of feeling in the Committee that this was in any sense a wrong or corrupt bargain. The Chancellor of the Exchequer has not suggested that it was a corrupt bargain, but rather suggested that it was a very bad bargain for the State. I do not think it was nearly so bad a bargain as hon. Gentlemen may suppose, for when a settlement is made there is a very heavy Stamp Duty to be paid which the right hon. Gentleman himself has doubled. On the making or remaking of a settlement, a very heavy Stamp Duty has to be paid, and when the settlement is in existence, then for a number of lives the succession is fixed, and no individual has any power to alter that succession. You may have property passing from one brother to another. It frequently happens that there are three or four deaths of people all nearly of the same age, who would equally succeed to the property. It is a common practice under the enormous scale of Death Duties which now obtains, where the owner of the property is competent to dispose of and do what he likes with the property, not to pass the property from one brother to another, but to do what the Chancellor of the Exchequer himself referred to as normal, namely, pass the property to the next generation. Under a settlement he cannot do that. I believe it is the opinion and feeling of many Members of the Committee that what the Chancellor of the Exchequer is now proposing to do is to put settled property on the same basis as unsettled property. That was the argument of the hon. Gentleman who has just sat down. You are doing nothing of the kind. You are putting settled property in an infinitely worse position than unsettled property, because you have got this property tied by the leg. It has paid Settlement Estate Duty, it has paid a heavy Stamp Duty, and now you are removing the privileges for which that property has made double payment, and leaving it tied to the sacrificial post in order that you may extract the last drop of blood out of it, whereas unsettled property is free property, and can escape the duty. Therefore, you are putting settled property in an infinitely worse position.

Having regard to the different position, to the tied position of settled property, to the duties it had already paid to the State, and to the free position of unsettled property, the imposition of this different kind of duty, whatever the insurance might necessarily be, was justified, was right, and was according to public policy. However that may be, during the existence of this law, certain individuals have made this definite bargain or contract with the State. I believe I am correct in calling the bargain a Parliamentary contract, and that I am using a phrase which is recognised in law. If I am wrong the Solicitor-General will correct me. Is there not such a thing in law, and has it not been referred to in the important financial business done upstairs? Has not a Parliamentary contract been considered up to now as one of the highest and most binding forms of contract in this country? A company goes upstairs before a Parliamentary Committee to deal with vast financial interests, and contracts are entered into under an Act of Parliament which are called Parliamentary contracts. What is going to be thought of a Parliamentary contract if this Clause is passed in its present form? What is it to mean in future? A Parliamentary contract, instead of being the highest form and the most binding form of contract, will be looked upon as a by-word, and there will be no such thing any longer as a Parliamentary contract in the full sense of the word. Parliament has, in respect of a definite tax already in existence—not in respect of general taxes, or in respect of future taxation—which it has itself imposed, gone of its own accord to certain individuals and had said to them, "In consideration of a payment which we ask you to make, we contract to exempt you from any payment of this tax during the settlement."

The persons interested in that settlement are given a certificate. That certificate is a bond, and the persons interested in the settlement hold from this House of Commons and this Legislature a certificate or bond upon which it is written that no further payment shall be made of this tax during the term of that settlement. The right hon. Gentleman proposes to repudiate that bargain, and is asking Members of the Committee to follow him into the Lobby to help him to do that and to repudiate the just debts of this country. It is a debt. There is no difference between the payment of debt and the remittance of a payment. There is morally arid, indeed, actually no difference between the repudiation of a portion of the National Debt and the repudiation of this contract. You are repudiating a definite contract you have made with an individual in respect of money. The right hon. Gentleman was not present a few moments ago, and I should like to read to him what was said by one of his own supporters, the hon. Member for East Islington (Mr. Radford). He said:— What am I, as a solicitor, to say to one of my clients when my client comes to me and asks whether a contract in respect of which he has made a payment has been repudiated by Parliament? When I explain to him that the present Chancellor of the Exchequer has altered that contract, he will say to me,' I am an Englishman. I am not the subject of a South American Republic. Englishmen do not repudiate their obligations.' He says Englishmen do not repudiate their obligations. The Chancellor of the Exchequer is asking the House of Commons to set Englishmen the example of repudiating their obligations. Let him do it, and take his party into the Lobby. He is creating a precedent of which every man behind him who knows anything about it is ashamed. I defy any hon. Member to say he would willingly and with a good heart follow the Chancellor of the Exchequer into the Lobby upon this. It is breaking faith with people with whom you have entered into an honourable obligation. If you can do it, and take your people into the Lobby to do it after you, the shame is upon your head, and the consequences will be upon you too, and they will not end here.

Sir S. BUCKMASTER

If strong and violent language could have recommended this Amendment to the House, it certainly would not have lacked recommendation in the course of this evening. We have heard many speeches, most of them of the same type and temperature as that which we have just heard.

Sir F. BANBURY

My hon. and learned Friend (Mr. Cave) did not speak in that way.

Sir S. BUCKMASTER

No, and this is not the first time I find myself in agreement with the hon. Baronet. The proposals of the hon. Baronet have been condemned on several grounds. It is alleged that they constitute a breach of faith, that they are in effect breaking a bargain, that they are dishonourable and, as I gather from the last speech, they are equivalent to a repudiation of the National Debt. I think much of this language is due to a misconception of what the proposals really are. The first proposal which the Bill contains is to remove the difference that now exists between passage of property on death when that property is subject to a settlement and the passage of property on death where the property is free, and the whole question arises because the Finance Act of 1894, which dealt with the same two classes of property, made certain deductions as between settled and unsettled property which the Chancellor of the Exchequer proposes now to reverse. It is said that what was done in 1894 was a bargain, and to have heard the language of hon. Members opposite you would have thought you could find in the Statute the Parliamentary contract to which the hon. Gentleman (Mr. Pretyman) seemed so much attached. There is no such thing in terms to be found in the Statute at all. The Statute as it stands, first of all, imposes a duty on all property that passes at a man's death, and for the first time in the history of our financial legislation, it caused duties to be paid on a man's death or property which he did not own and which he could not dispose. In addition to that it caused property that passes, whether he owned it or whether he did not, to be aggregated with the property that he did own in order to form one united estate which was subject to a graduated scale of duty, and finally it, for the first time in the history of English law, made the Death Duties equal as between real and personal estate, and imposed them on both alike. So far as Settlement Estate Duty was concerned, it is quite obvious that the main scheme of the Statute was that the property that passed, and not the property that was disposed of at death, was the property that was to be subject to the tax. I quite agree that the Act provided that if the property was subject to settlement, and the property had paid Estate Duty, it should not pay Estate Duty again.

Mr. PRETYMAN

made a remark which was inaudible in the Reporters' Gallery.

Sir S. BUCKMASTER

That is exactly what the Statute did not say. I am not saying that the effect of the Statute may not produce the same thing. [Interruption.] I really do think that hon. Members should take the trouble to read the Statute, and if they do not do that, they should do me the honour of listening to what I have to say, and they will find that I do not misinterpret the Statute. In terms the Statute did not do what the hon. and gallant Member for Chelmsford (Mr. Pretyman) thought it did, and that was to provide that if settlement was once paid for, Settlement Estate Duty should not be paid again. It provided that there should be levied and charged upon all settled property a further duty which was known as Settlement Estate Duty, and fixed at 1 per cent. These two duties were imposed by two totally different and separate subsections of one Section, and so far as the language of the Statute is concerned, it is quite inaccurate to say that the Statute provided any such bargain or contract as that suggested. The result of that Section was this, that settled property was subject to an added burden and had the advantage of a separate exemption, and that added burden, which had the exemption with Estate Duty, should not be twice paid. Now the Chancellor of the Exchequer proposes that the settlement property should not have the exemption any longer. There is nothing to prevent that being done in the Act of Parliament. What is to prevent your repealing any Section you please in an Act of Parliament? You repeat, "You are breaking a contract." I am pointing out that you are not. So far as the Statute is concerned, there is nothing to prevent the provision of exemption being altered if required. I quite agree it would be unfair to alter the exemption. [HON. MEMBERS: "Hear, hear!"] I would ask hon. Members to listen to me. I quite agree that it would be unfair to repeal the provision which exempted the settlement from double Estate Duty, unless at the same time some provision was made with regard to the Settlement Estate Duty that had been paid, and that provision ought, in my mind, to be a provision which would be adequate and fair for the purpose of restoring persons who had made that payment to the position they would have been in if it had not been paid. Even that does not appear to satisfy hon. Members. [HON. MEMBERS: "No!"]

The CHAIRMAN

Hon. Members have made strong speeches, and I think that they should listen to the reasons which are being urged against them.

Sir S. BUCKMASTER

I am anxious to show that what is proposed does place the settled property in a position which is the equivalent to what it would have been if the duty had not been paid. Of course, you cannot turn back the wheels of the clock. You cannot make it exactly as though the duty had never been paid, for the simple and sufficient reason that twenty years have elapsed, and that in many cases settlements have received the full advantage of the exemption. An hon. Member shakes his head. In twenty years many settlements have, in point of fact—we are not now speaking of hypothesis, I only said some, and I was contradicted—some settlements have received the full advantage, and it is perfectly clear that by nothing which you can do can you restore the position to exactly what it was before. All you can do is to provide a fair equivalent for payments that have been made. [Interruption.] There has not been a single word of interruption from this side of the House while language of an extremely violent character has been used by hon. Members opposite. [HON. MEMBERS: "Justified!"] When an attempt is made to place before you what I suggest is a reasoned answer to this Amendment, it is not to be heard. I was pointing out that you can by no possibility put everybody as he was in 1894 or in the years that have elapsed from 1894 onwards. What we propose first of all is that the full Settlement Estate Duty that has been paid should be repaid. The next proposition is that during the whole of the period over which that Settlement Estate Duty fails to frank the estate interest shall be allowed on the amount. The real question is whether or not that is a fair equivalent. Nothing of course that I say will satisfy the hon. and gallant Member for Chelmsford, but I have not heard a single speech from the other side directed to show that it is in fact unjust. But I ask the Committee to say that it is a perfectly fair and, in some cases, more than a full return. [HON. MEMBERS: "Oh!"] The hon. and learned Member who moved this Amendment said that he treated the Settlement Estate Duty as being an insurance. That was his view of the matter. I do not think that it was an unfair view. But an insurance against what? Against the accident of death during the continuance of the settlement and the avoidance of duty when the death occurred. That was the risk against which the insurance was to run. During the whole of the time over which this duty has been running the risk has been secured; and I would beg hon. Members opposite to notice that if only one death occurs in the settlement, a greater advantage than the money point is instantly received, because the money paid was 1 per cent. from 1909, and only 2 per cent. from that date. And they know quite well that 2 per cent. pays the duty on a £500 estate.

I think it is quite obvious that whenever a death occurs, though it is only the death of one tenant for life, the settlement receives at once more than the duty it has paid. I quite agree that it does not receive all that the Statute enabled it to enjoy, because the Statute enabled it to enjoy immunity from Estate Duty so long as the settlement ran, and till it got into the hands of some person capable and competent to dispose of it. At any rate, no one can deny that it did receive the advantage in that time in cases where death occurred, and measured in cash value; and in cases where death did not occur it received the advantage of being secured against the double incidence of the duty. No one can deny this advantage. The question of the measure of the value is another thing. That advantage is enjoyed up to the present time. As from the present time that advantage will be enjoyed no more. Who are the people who have suffered up to now by the payment of the duty. Of course it is impossible to put back the settlor where he was before. That is impossible.

It may be well that a settlor who has settled his property by will—a contingency that never seems to have suggested itself to the hon. and gallant Member for Chelmsford (Mr. Pretyman), who imagined every settlement bore a heavy stamp duty—has provided that the settlement of estate should be paid out of the residuary estate, not at all an uncommon thing; so that the settlement itself has, in fact, never been depleted by a penny piece, and it will be extremely difficult to find people who have in fact suffered by reason of the payment of the duty. [An HON. MEMBER: "Oh, oh!"] The estate, I agree, but it is difficult to find the person who has suffered—There may be residuary legatees and others—and everybody knows that I am saying nothing unreasonable—and they might be very numerous, while the amount might be trifling. But that is not quite the point. The duty has to some extent attached itself to the settlement, and the view taken by the Government is that the proper way of repaying the 1 per cent. or 2 per cent. duty is to pay it as against the Estate Duty, which, after the passage of this Bill, the settlement would not have to bear. I think that is a perfectly fair method of repayment of the money. Does anyone suggest that it is not a fair method of repayment? The question is not only whether it is a fair method of repayment, but whether it is a sufficiently adequate method of repayment. Nobody suggests that we should pay more than the duty, The only question, and the only support for all the violent and vituperative adjectives we have heard in this Debate, is this—whether we should repay, from now to the time when the settlement of Estate Duty is repaid, at simple interest or whether it should be at compound interest.

Mr. CAVE

That is not the main point at all. The main point is that you should keep to your contracts.

Mr. PRETYMAN

On a point of Order. Is not the point we are discussing one that does not arise on this Amendment?

The CHAIRMAN

The point was referred to by the Member who moved the Amendment, and I have allowed reference to it.

Sir S. BUCKMASTER

The hon. Gentleman was not here when questions were asked about this, and I did my best to explain to hon. Members behind him who desired information. The hon. and learned Member for Kingston (Mr. Cave) goes back to the beginning and assumes whatever you do, whatever payment you make, however much you may restore the whole of the money, you still could not do it. That is to profess impotence. If Parliament is not at liberty to act independently of what has gone before, taking at the same time care to see that nothing that is being done by virtue of arrangements made under previous Statutes has caused mischief—

Mr. BONAR LAW

If the case is as the hon. and learned Gentleman puts it, why did the Chancellor of the Exchequer in 1909 not make previous settlement contracts pay the additional Settlement Duty?

Sir S. BUCKMASTER

If the right hon. Gentleman wants to ask the Chancellor of the Exchequer a question, he had better ask him and not me. I repeat that to suggest that when Parliament has once passed a taxing Statute that it is unable to readjust or to change those taxes—[An HON. MEMBER: "No, no!"] That is the proposition: To suggest that Parliament, when it has once passed a taxing Statute, is unable to readjust or change those taxes because those taxes were so arranged as that property was exempted to some extent from their burden by virtue of an added payment—that is to say, that you have an encased fiscal system in this country, and to put it in fetters which never can be changed. The matter does not end there. Hon. and right hon. Members opposite have been talking through the whole of this evening as though we, the Liberal party, had been guilty of some gross breach of faith which it shocks their souls to think about. More than one hon. Member who spoke suggested that what would really happen was to induce people to settle property upon the idea that the payment of this duty would enable the property to remain from duty to the end of the settlement. That was supposed to be the head and front of our offence. I wonder if hon. Members opposite ever realise what they did themselves in 1900. Under the Act of 1894 there was exempted from the provisions as to the aggregation of duty settlements which had been made by a person other than the man who died under which the property passed upon his death to people other than lineal ancestors or descendants, and that property was not aggregated for the purpose of Estate Duty with his own property, but to be treated as property by itself. The hon. and learned Member opposite will see that that is Section 4 of the Act of 1894. That provided that any person who chose to settle property so that he gave a life interest to a particular individual, and the remainder to other people who were not his lineal ancestors or descendants, should find that that property would never be subjected to an excessive rate of duty by reason of the fact that the tenant for life, to whom he limited the life interest, might die possessed of considerable property. In 1900, I believe, in accordance with the report of a Committee with which the hon. Member for Chelmsford (Mr. Pretyman) was associated, that very provision was repealed, and these properties were all aggregated together, with this obvious result, that if you had a settled property of £75,000 and a free estate of £75,000, the effect of your Statute of 1900 was practically to double the duty on the settled property of £75,000, and make it rank with the £75,000 free estate as one aggregated property of £150,000. I am not saying that the two things are identical; but I do ask, if one was a Parliamentary bargain, why was not the other? Why is it a Parliamentary bargain when contained in one Section of a Statute, and then when you come to an exempting Clause in another Statute it is not a Parliamentary bargain? I will tell you the reason. It is because hon. Members opposite thought it right to alter one, and we think it right to alter the other. But the matter does not end there. The Section by which that was altered contained the provision which we find in our Bill.

Mr. PRETYMAN

What is the Section?

Sir S. BUCKMASTER

Section 12 of the Act of 1900. I am sorry the hon. Member has forgotten it.

Mr. PRETYMAN

made an observation which was inaudible in the Reporters' Gallery.

Sir S. BUCKMASTER

You do not think I am stating it correctly? If you have not the Statute before you, I suggest that you should look at it before you say that.

The CHAIRMAN

I must ask the hon. and learned Member always to address the Chair.

Sir S. BUCKMASTER

I suggest to you, Mr. Whitley, that if the hon. Member has not the Statute before him, it is rather rash and hazardous, not to say somewhat discourteous, to contradict the man who is speaking from the Act of Parliament. The Clause found in our Bill which exempts certain dealings excites the suspicion of the hon. and learned Member who moved this Amendment. He asked what was the need of having this Clause in unless we realised that we were doing something wrong. The hon. and learned Member should really have been more sensible of the compliment we were paying to his party. We have taken the Clause verbatim from his own Act of 1900. I cannot help thinking that when he reflects upon this he will see that for once his zeal has lent wings to his judgment, and his judgment has used the loan. I shall be glad if, when the hon. Member has read the Statute, he has any statement to make, to hear it. The real point is this: I trust that I am as sensitive as anyone who is sincerely anxious for the honour and reputation of this House, that nothing should be done in a Statute which could give reasonable colour to the complaints which have been made this evening. The whole case that I have attempted to make has been directed to show that if you consider what is proposed to be done in its entirety—and I would ask, even though the condition of the atmosphere is what it is, and that I myself may have helped to raise the temperature—I would nevertheless ask that, as far as possible, these proceedings should be considered dispassionately. After all, if a thing were done that bore the interpretation which has been suggested by hon. Members opposite, the reflection for that act does not only rest with us—I am not saying for a moment that you as a minority can defeat it—but the Act becomes the act of the House of Commons. Everybody would, I am certain, be anxious to see, not that something which was going to be, done was a disgrace, but that it was fair—if it appealed to them in that light.

What I really want to ask hon. Members opposite is this: If you start with the assumption that the scheme of taxation laid down by the Act of 1894 can be altered, and is capable of being fairly and honestly altered; if you admit that settled property can be made the subject of taxation from succession to succession notwithstanding that Act; then, if that admission is made, I would respectfully ask the House what is it which constitutes any of those ill and ominous actions which it is said we have been guilty of? We proceed to repay—not at once—for, after all, we have got, in the interests of the taxpayer, to consider the way in which this can be best arranged; you pay it when the next duty falls on the estate. Remember that nobody on the estate suffers until the moment the duty comes to be paid. It is only when duty is imposed that suffering is felt. It is only then that hardship arises. At that moment the repayment which is being made is made. I do agree with the suggestion that it is not adequate; that there is still something left; that as you are seeking to take away the protection which the duty confers, that it is to be only right that you should compensate the person who has suffered by reason of the duty being paid. That person is the tenant for life, because he loses the interest on the capital. In many cases it will be a trifling sum, but whatever the sum, it should be repaid, and it is repaid with interest at 3 per cent., which I fancy is the invariable rate of interest that is paid by the Government. I do not suppose that anybody would suggest that with Government security interest should stand at anything higher than 3 per cent., and the only question left is one between simple and compound interest. It is fair to observe that when interest is charged upon Estate Duty that is unpaid it runs at simple and not at compound interest. It was originally thought in the Act of 1894 that it might run at compound interest. For the purpose of avoiding that it was expressly enacted in 1896 that it should be simple interest. I think it would be hard for any hon. Member to find any statutory precedent for saying that money which was to be repaid, and that bears interest, bears that interest at a compound rate. I do not quite know whether hon. and learned Members opposite all know that in the ordinary way interest calculated on all moneys for which the Government gives interest, apart from contract, is always at simple interest and not at compound interest. [An HON. MEMBER: "Four per cent."] That is trading on commercial interest, not Government interests; and surely Hon. Members are not anxious to deprecate the security of the Government. Then there is the case for this Clause, and I do respectfully ask the Committee to consider it, not for the purpose of seeing if for the moment they can find, or think they can find, something which will form a convenient subject of abuse of any persons or of the Government, but for the purpose of seeing whether, assuming settlements are to be taxed, the proposals made under this Bill for their taxation are not, on the whole, a proper, fair, reasonable, and just adjustment as between settled property and estate.

Mr. BUTCHER

The learned Solicitor-General has dealt with some heat, and with some more or less success, with various subsidiary points with which we are not much concerned, such as the rate of interest, and whether it should be compound interest or simple interest, and so on. He has addressed himself very heatedly to the two main points of this discussion: first, has Parliament a right to break a Parliamentary contract; and secondly, is Parliament entitled any more than an individual to perpetrate a breach of faith which would disgrace an ordinary individual? This discussion has brought into rather striking relief the contrast between the methods adopted by Sir William Harcourt when Chancellor of the Exchequer and those adopted by the present holder of that office in regard to taxation and finance. Sir William Harcourt knew something about the way taxation should be imposed and he knew something about property, and one thing he knew was the difference between having a life interest in property, in which you enjoy the income for life, and having an absolute interest by which you can dispose of it as you like. He knew that when he said it would not be fair to enforce full payment on each devolution of settlement to a beneficiary who only takes a life interest, or to treat a man with a life interest on the same footing as a man with an absolute interest. That was Sir William Harcourt's view. What does the present Chancellor of the Exchequer say? He lays down for the first time in this or any other assembly that there is no difference between settled and unsettled property, and that there is no difference between life interest and absolute interest. The only satisfaction I had from the speech of the Solicitor-General was that he did not endorse that absurd theory. Yet that was the only justification the Chancellor of the Exchequer put forward for departing from the principle on which Sir William Harcourt treated settled property. The Solicitor-General spoke about the Parliamentary bargain, and he told us it was not, in terms, contained within the Statute. What a plea! If we find a thing in substance in a Statute are we to ride off on the plea that it is not there in black and white? The bargain was made between Parliament on the one hand and those who left their property. Parliament says to the owner, "Settle your property and in consideration of that you shall only pay one Estate Duty and one Settlement Estate Duty." That is acted upon by the settlor who settles his property and leaves himself only a life interest. The Solicitor-General talks about restoring people to their original position, but how can you do that in such cases as this? This is not the only way in which the offer was acted upon. On the faith of that Parliamentary offer and pledge, money was paid in the shape of Settlement Estate Duty, and it is a new doctrine to tell me that when a man has altered his position and when money has been paid on the faith of an offer, that you are to go back upon that and say it is no bargain at all. What would be thought of an individual who said that? He would very soon be brought up in the Law Courts, and no man would be more eloquent than the Solicitor-General to convict him. It is a breach of Parliamentary good faith

which, if perpetrated by an individual, would be scouted as disgraceful. The Chancellor of the Exchequer said this payment of Settlement Estate Duty is just as though a man were insuring by paying Settlement Estate Duty as against future payments of Estate Duty. Supposing an insurance company were to receive one premium for the insurance of a man's life, and, after it had gone on for some time, the insurance company wish to revise their bargain, and they say to this man, "It is true we promised to pay you so much money when you die, but we will pay you back your premium now with 3 per cent." What would be thought of an insurance company which did that? There is the fraudulent insurance company sitting on the Treasury Bench! The Chancellor of the Exchequer indulged in a good many false analogies, and, amongst others, he referred to Mr. Pitt, and I think he compared himself with that great statesman. That reminds me of a rhyme:— I hold the office held by Pitt, Where Peel and Gladstone sat I sit; You pay me fifteen pounds a day And yet I say the things I say.

Question put, "That those words be there added."

The Committee divided: Ayes, 208; Noes, 297.

Division No. 168.]	AYES	[11.0 p.m.
Agg-Gardner, James Tynte	Cator, John	Gardner, Ernest
Aitken, Sir William Max	Cautley, H. S.	Gastrell, Major W. Houghton
Amery, L. C. M. S.	Cave, George	Gibbs, George Abraham
Anstruther-Gray, Major William	Cecil, Evelyn (Aston Manor)	Glazebrook, Captain Philip K.
Archer-Shee, Major Martin	Cecil, Lord Hugh (Oxford University)	Goldman, C. S.
Astor, Waldorf	Cecil, Lord R. (Herts, Hitchin)	Goldsmith, Frank
Baird, John Lawrence	Chaloner, Colonel R. G. W.	Goulding, Edward Alfred
Baker, Sir Randolf L. (Dorset, N.)	Clay, Captain H. H. Spender	Grant, James Augustus
Baldwin, Stanley	Clive, Captain Percy Archer	Greene, Walter Raymond
Banbury, Sir Frederick George	Clyde, James Avon	Gretton, John
Baring, Maj. Hon. Guy V. (Winchester)	Coates, Major Sir Edward Feetham	Guinness, Hon. Rupert (Essex, S.E.)
Barlow, Montague (Salford, South)	Cooper, Sir Richard Ashmole	Guinness, Hon. W. E. (Bury S Edmunds)
Barnston, Harry	Courthope, George Loyd	Gwynne, R. S. (Sussex, Eastbourne)
Bathurst, Hon. Allen B. (Glouc.)	Craig, Ernest (Cheshire, Crewe)	Haddock, George Bahr
Bathurst, Charles (Wilts, Wilton)	Craig, Norman (Kent, Thanet)	Hall, Frederick (Dulwich)
Beach, Hon. Michael Hugh Hicks	Craik, Sir Henry	Hall, E. Marshall (E. Toxteth)
Beckett, Hon. Gervase	Croft, Henry Page	Hamilton, C. G. C. (Ches., Altrincham)
Bann, Arthur Shirley (Plymouth)	Currie, George W.	Hamilton, Lord C. J. (Kensington, S.)
Bonn, Ion Hamilton (Greenwich)	Dalrymple, Viscount	Hardy, Rt. Hon. Laurence
Bennett-Goldney, Francis	Dalziel, Davison (Brixton)	Harris, Henry Percy
Bentinck, Lord H. Cavendish-	Denison-Pender, J. C.	Harrison-Broadley, H. B.
Bird, Alfred	Denniss, E. R. B.	Henderson, Major H. (Berks, Abingdon)
Blair, Reginald	Dickson, Rt. Hon. C. Scott	Henderson, Sir A. (St. Geo., Han. Sq.)
Boscawen, Sir Arthur S. T. Griffith-	Du Cros, Arthur Philip	Hewins, William Albert Samuel
Boyle, William (Norfolk, Mid)	Duncannon, Viscount	Hibbert, Sir Henry E.
Boyton, James	Du Pre, W. Baring	Hills, John Waller
Brassey, H. Leonard Campbell	Eyres-Monsell, B. M.	Hill-Wood, Samuel
Bridgeman, William Clive	Faber, George Denison (Clapham)	Hoare, Samuel John Gurney
Bull, Sir William James	Falle, Bertram Godfrey	Hohler, G. F.
Burdett-Coutts, W.	Fell, Arthur	Hope, James Fitzalan (Sheffield)
Burgoyne, A. H.	Finlay, Rt. Hon. Sir Robert	Hope, Major J. A. (Midlothian)
Burn, Colonel C. R.	Fisher, Rt. Hon. W. Hayes	Horne, E. (Surrey, Guildford)
Butcher, John George	Fitzroy, Hon. Edward A.	Houston, Robert Paterson
Campbell, Captain Duncan F. (Ayr, N.)	Fletcher, John Samuel	Hunt, Rowland
Campion, W. R.	Forster, Henry William	Hunter, Sir C. R.
Carlile, Sir Edward Hildred	Foster, Philip Staveley	Ingleby, Holcombe
Castlereagh, Viscount	Ganzoni, Francis John C.	Jackson, Sir John
Jessel, Captain H. M.	Peel, Lieut.-Colonel R. F.	Swift, Rigby
Kerry, Earl of	Perkins. Walter F.	Sykes, Alan John (Ches., Knutsford)
Keswick, Henry	Peto, Basil Edward	Sykes, Sir Mark (Hull, Central)
Kinloch-Cooke, Sir Clement	Pretyman, Ernest George	Talbot, Lord Edmund
Lane-Fox, G. R.	Prothero, Rowland Edmund	Terrell, George (Wilts, N.W.)
Larmor, Sir J.	Pryce-Jones, Colonel E.	Terrell, Henry (Gloucester)
Law, Rt. Hon. A. Bonar (Bootle)	Randles, Sir John S.	Thomas-Stanford, Charles
Lawson, Hon. Harry (Mile End)	Ratcliff, R. F.	Thynne, Lord Alexander
Lee, Arthur Hamilton	Rawlinson, John Frederick Peel	Tickler, T. G.
Lloyd, George Ambrose (Stafford, W.)	Rawson, Colonel Richard H.	Tobin, Alfred Aspinall
Lloyd, George Butler (Shrewsbury)	Rees, Sir J. D.	Touche, George Alexander
Locker-Lampson, G. (Salisbury)	Rolleston, Sir John	Tryon, Captain George Clement
Locker-Lampson, O. (Ramsey)	Ronaldshay, Earl of	Valentia, Viscount
Lockwood, Rt. Hon. Lieut.-Colonel A. R.	Rothschild, Lionel de	Walker, Colonel William Hall
Lowe, Sir F. W. (Birm., Edgbaston)	Royds, Edmund	Walrond, Hon. Lionel
Lyttelton, Hon. J. C.	Rutherford, John (Lancs., Darwen)	Warde, Colonel C. E. (Kent, Mid)
Mackinder, Halford J.	Rutherford, Watson (L'pool, W. Derby)	Watson, Hon. W.
Macmaster, Donald	Salter, Arthur Clavell	Weigall, Captain A. G.
Magnus, Sir Philip	Samuel, Sir Harry (Norwood)	Weston, Colonel J. W.
Malcolm, Ian	Samuel, Samuel (Wandsworth)	Wheler, Granville C. H.
Mallaby-Deeley, Harry	Sanders, Robert Arthur	Williams, Colonel R. (Dorset, W.)
Mason, James F. (Windsor)	Sanderson, Lancelot	Wills, Sir Gilbert
Morrison-Bell, Capt. E. F. (Ashburton)	Sandys, John George	Wilson, A. Stanley (Yorks, E.R.)
Morrison-Bell, Major A. C. (Honiton)	Sassoon, Sir Philip	Wilson, Hon. G. G. (Hull, W.)
Mount, William Arthur	Scott, Sir S. (Marylebone, W.)	Wilson, Captain Leslie O. (Reading)
Neville, Reginald J. N.	Spear, Sir John Ward	Wilson, Maj. Sir M. (Bethnal Green, S.W.)
Newdegate, F. A.	Stanier, Beville	Wood, Hon. E. F. L. (Yorks, Ripon)
Newton, Harry Kottingham	Stanley, Hon, Arthur (Ormskirk)	Worthington Evans, L.
Nield, Herbert	Stanley, Hon. G. F. (Preston)	Yate, Colonel C. E.
Orde-Powlett, Hon. W. G. A.	Starkey, John Ralph	Younger, Sir George
Ormsby-Gore, Hon. William	Staveley-Hill, Henry	TELLERS FOR THE AYES.—Mr.
Paget, Almeric Hugh	Steel-Maitland, A. D.	Cassel and Mr. Pollock
Parker, Sir Gilbert (Gravesend)	Stewart, Gershom
Parkes, Ebenezer
NOES.
Abraham, William (Dublin, Harbour)	Collins, Sir Stephen (Lambeth)	Greenwood, Hamar (Sunderland)
Acland, Francis Dyke.	Compton-Rickett, Rt. Hon. Sir J.	Greig, Colonel James William
Adamson, William	Cornwall, Sir Edwin A.	Grey, Rt. Hon. Sir Edward
Addison, Dr. Christopher	Cotton, William Francis	Griffith, Rt. Hon. Ellis Jones
Adkins, Sir W. Ryland D.	Cowan, W. H.	Gulland, John William
Agar-Robartes, Hon. T. C. R.	Craig, Herbert J. (Tynemouth)	Gwynn, Stephen Lucius (Galway)
Ainsworth, John Stirling	Crooks, William	Hackett, John
Alden, Percy	Crumley, Patrick	Hancock, John George
Allen, Arthur A. (Dumbartonshire)	Cullinan, John	Harcourt, Robert V. (Montrose)
Allen, Rt. Hon. Charles P. (Stroud)	Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)	Harmsworth, Cecil (Luton, Beds)
Armitage, R.	Davies, David (Montgomery Co.)	Harvey, A. G. C. (Rochdale)
Arnold Sydney	Davies, Ellis William (Eifion)	Harvey, T. E. (Leeds, West)
Asquith, Rt. Hon. Herbert Henry	Davies, Timothy (Lincs., Louth)	Hayward, Evan
Baker, Harold T. (Accrington)	Davies, Sir W. Howell (Bristol, S.)	Hayden, John Patrick
Baker, Joseph Allen (Finsbury, E.)	Dawes, James Arthur	Helme, Sir Norval Watson
Balfour, Sir Robert (Lanark)	De Forest, Baron	Henderson, Arthur (Durham)
Baring Sir Godfrey (Barnstaple)	Delany, William	Henderson, John M. (Aberdeen, W.)
Barlow, Sir John Emmott (Somerset)	Denman, Hon. Richard Douglas	Higham, John Sharp
Barnes George N.	Dewar, Sir J. A.	Hinds, John
Barran, Sir J. (Hawick Burghs)	Dickinson, Rt. Hon. Willoughby H.	Hobhouse, Rt. Hon. Charles E. H.
Barran Rowland Hurst (Leeds, N.)	Dillon, John	Hodge, John
Beale, Sir William Phipson	Donelan, Captain A.	Hogge, James Myles
Benn, W. W. (T. Hamlets, St. George)	Doris, William	Holmes, Daniel Turner
Bentham, George Jackson	Duffy, William J.	Holt, Richard Durning
Black, Arthur W.	Duncan, C. (Barrow-in-Furness)	Hope, John Deans (Haddington)
Boland, John Pius	Duncan, Sir J. Hastings (Yorks, Otley)	Hudson, Walter
Booth, Frederick Handel	Edwards, Clement (Glamorgan, E.)	Hughes, Spencer Leigh
Bowerman, Charles W.	Edwards, Sir Francis (Radnor)	Illingworth, Percy H.
Boyle, Daniel (Mayo, North)	Edwards, John Hugh (Glamorgan, Mid)	Jardine, Sir J. (Roxburgh)
Brace, William	Elverston, Sir Harold	John, Edward Thomas
Brady, Patrick Joseph	Esmonde, Dr. John (Tipperary, N.)	Johnson, William
Brocklehurst, William B.	Esmonde, Sir Thomas (Wexford, N.)	Jones, Rt. Hon. Sir D. Brynmor (Swansea)
Brunner, John F. L.	Esslemont, George Birnie	Jones, Edgar (Merthyr Tydvil)
Bryce, J. Annan	Falconer, James	Jones, Henry Haydn (Merioneth)
Buckmaster, Sir Stanley O.	Farrell, James Patrick	Jones, J. Towyn (Carmarthen, East)
Burns, Rt. Hon. John	Fenwick, Rt. Hon. Charles	Jones, Leif (Notts, Rushcliffe)
Burt, Rt. Hon. Thomas	Ffrench, Peter	Jones, William (Carnarvonshire)
Buxton Noel (Norfolk, North)	Field, William	Jones, William S. Glyn- (Stepney)
Byles, Sir William Pollard	Fiennes, Hon. Eustace Edward	Joyce, Michael
Carr-Gomm, H. W.	Flavin, Michael Joseph	Kellaway, Frederick George
Cawley Harold T. (Lancs., Heywood)	France, Gerald Ashburner	Kelly, Edward
Chancellor, Henry George	Furness, Sir Stephen Wilson	Kennedy, Vincent Paul
Chapple, Dr. William Allen	Gelder, Sir W. A.	Kenyon, Barnet
Churchill, Rt. Hon. Winston S.	George, Rt. Hon. D. Lloyd	Kilbride, Denis
Clancy, John Joseph	Gladstone, W. G. C.	King, Joseph
Clough, William	Glanville, Harold James	Lambert, Rt. Hon. G. (Devon, S. Molton)
Clynes, John R.	Goddard, Sir Daniel Ford	Lambert, Richard (Wilts, Cricklade)
Collins, Godfrey P. (Greenock)	Goldstone, Frank	Law, Hugh A. (Donegal, West)

Lawson, Sir W. (Cumb'rld, Cockerm'th)	O'Neill, Dr. Charles (Armagh, S.)	Smyth, Thomas F. (Leitrim, S.)
Leach, Charles	O'Shaughnessy, P. J	Soames, Arthur Wellesley
Levy, Sir Maurice	O'Sullivan, Timothy	Spicer, Rt. Hon. Sir Albert
Lewis, Rt. Hon. John Herbert	Outhwaite, R. L.	Strauss, Edward A. (Southwark, West)
Lough, Rt. Hon. Thomas	Palmer, Godfrey Mark	Sutherland, John E.
Low, Sir Frederick (Norwich)	Parker, James (Halifax)	Sutton, John E.
Lundon, Thomas	Parry, Thomas H.	Taylor, John W. (Durham)
Lyell, Charles Henry	Pearce, Robert (Staffs, Leek)	Taylor, Theodore C. (Radcliffe)
Lynch, Arthur Alfred	Pearce, William (Limehouse)	Taylor, Thomas (Bolton)
Macdonald, J. Ramsay (Leiceser)	Pearson, Hon. Weetman H. M.	Tennant, Rt. Hon. Harold John
Macdonald, John M. (Falkirk Burghs)	Phillips, John (Longford, S.)	Thomas, James Henry
McGhee, Richard	Pirie, Duncan V.	Thorne, G. R. (Wolverhampton)
Maclean, Donald	Pollard, Sir George H.	Thorne, William (West Ham)
Macnamara, Rt. Hon. Dr. T. J.	Ponsonby, Arthur A. W. H.	Toulmin, Sir George
MacNeill, J. G. Swift (Donegal, South)	Pratt, J. W.	Trevelyan, Charles Philips
MacVeagh, Jeremiah	Price, C. E. (Edinburgh, Central)	Verney, Sir Harry
M'Callum, Sir John M.	Priestley, Sir Arthur (Grantham)	Walsh, Stephen (Lancs., Ince)
McKenna, Rt. Hon. Reginald	Priestley, Sir W. E. B. (Bradford, E.)	Walters, Sir John Tudor
M'Laren, Hon. F.W.S. (Lincs., Spalding)	Primrose, Hon. Neil James	Walton, Sir Joseph
Manfield, Harry	Pringle, William M. R.	Ward, John (Stoke-upon-Trent)
Marks, Sir George Croydon	Radford, George Heynes	Ward, W. Dudley (Southampton)
Marshall, Arthur Harold	Raffan, Peter Wilson	Wardle, George J.
Meagher, Michael	Rea, Rt. Hon. Russell (South Shields)	Waring, Walter
Meehan, Francis E. (Leitrim, N.)	Rea, Walter Russell (Scarborough)	Warner, Sir Thomas Courtenay T.
Meehan, Patrick J. (Queen's Co., Leix)	Reddy, Michael	Wason, Rt. Hon. E. (Clackmannan)
Millar, James Duncan	Redmond, John E. (Waterford)	Wason, John Cathcart (Orkney)
Molloy, Michael	Redmond, William(Clare, E.)	Watt, Henry A.
Molteno, Percy Alport	Redmond, William Archer (Tyrone, E.)	Webb, H.
Mond, Rt. Hon. Sir Alfred	Rendall, Athelstan	Wedgwood, Josiah C.
Montagu, Hon. E. S.	Richardson, Albion (Peckham)	White, J. Dundas (Glasgow, Tradeston)
Mooney, John J.	Richardson, Thomas (Whitehaven)	White, Sir Luke (Yorks, E.R.)
Morgan, George Hay	Roberts, Charles H. (Lincoln)	White, Patrick (Meath, North)
Morrell, Philip	Roberts, George H. (Norwich)	Whitehouse, John Howard
Morison, Hector	Roberts, Sir J. H. (Denbighs)	Whittaker, Rt. Hon. Sir Thomas P.
Morton, Alpheas Cleophas	Robertson, Sir G. Scott (Bradford)	Whyte, Alexander F. (Perth)
Muldoon, John	Robertson, John M. (Tyneside)	Wiles, Thomas
Munro, Rt. Hon. Robert	Robinson, Sidney	Wilkie, Alexander
Murray, Captain Hon. Arthur C.	Roch, Walter F. (Pembroke)	Williams, Aneurin (Durham, N.W.)
Needham, Christopher T.	Roche, Augustine (Louth)	Williams, John (Glamorgan)
Neilson, Francis	Roe, Sir Thomas	Williams, Penry (Middlesbrough)
Nolan, Joseph	Rowlands, James	Williamson, Sir Archibald
Norton, Captain Cecil W.	Rowntree, Arnold	Wilson, Rt. Hon. J. W. (Worcs., N.)
Nugent, Sir Walter Richard	Runciman, Rt. Hon. Walter	Wilson, W. T. (Westhoughton)
Nuttall, Harry	Russell, Rt. Hon. Thomas W.	Winfrey, Sir Richard
O'Brien, Patrick (Kilkenny)	Samuel, Rt. Hon. H. L. (Cleveland)	Wing, Thomas Edward
O'Connor, T. P. (Liverpool)	Scanlan, Thomas	Wood, Rt. Hon. T. McKinnon (Glasgow)
O'Doherty, Philip	Scott, A. MacCallum (Glas., Bridgeton)	Yeo, Alfred William
O'Donnell, Thomas	Seely, Rt. Hon. Colonel J. E. B.	Young, William (Perth, East)
O'Dowd, John	Sheehy, David	Yoxall, Sir James Henry
O'Kelly, Edward P. (Wicklow, W.)	Sherwell, Arthur James	TELLERS FOR THE NOES.—Mr.
O'Kelly, James (Roscommon, N.)	Simon, Rt. Hon. Sir John Allsebrook	Geoffrey Howard and Captain Guest.
O'Malley, William	Smith, Albert (Lancs., Clitheroe)

It being Eleven of the clock, the CHAIRMAN proceeded, pursuant to the Order of the House of the 8th July, to put forthwith the Question necessary to dispose of the Clause to be concluded at Eleven of the clock at this day's sitting.

Question put, "That the Clause stand part of the Bill."

The Committee divided: Ayes, 295; Noes, 204.

Division No. 169.]	AYES.	[11.10 p.m.
Abraham, William (Dublin, Harbour)	Barran, Rowland Hurst (Leeds, N.)	Cawley, Harold T. (Lancs., Heywood)
Acland, Francis Dyke	Beale, Sir William Phipson	Chancellor, Henry George
Adamson, William	Benn, W. W. (T. Hamlets, St. George)	Chapple, Dr. William Allen
Addison, Dr. Christopher	Bentham, G. J.	Churchill, Rt. Hon. Winston S.
Adkins, Sir W. Ryland D.	Black, Arthur W.	Clancy, John Joseph
Agar-Robartes, Hon. T. C. R.	Boland, John Pius	Clough, William
Ainsworth, John Stirling	Booth, Frederick Handel	Clynes, John R.
Aldcn, Percy	Bowerman, Charles W.	Collins, Godfrey P. (Greenock)
Allen, Arthur A. (Dumbartonshire)	Boyle, Daniel (Mayo, North)	Collins, Sir Stephen (Lambeth)
Allen, Rt. Hon. Charles P. (Stroud)	Brace, William	Compton-Rickett, Rt. Hon. Sir J.
Armitage, R.	Brady, Patrick Joseph	Cornwall, Sir Edwin A.
Arnold, Sydney	Brocklehurst, W. B.	Cotton, William Francis
Asquith, Rt. Hon. Herbert Henry	Brunner, J. F. L.	Cowan, W. H.
Baker, H. T. (Accrington)	Bryce, J. Annan	Craig, Herbert J. (Tynemouth)
Baker, Joseph Allen (Finsbury, E.)	Buckmaster, Sir Stanley O.	Crooks, William
Balfour, Sir Robert (Lanark)	Burns, Rt. Hon. John	Crumley, Patrick
Baring, Sir Godfrey (Barnstaple)	Burt, Rt. Hon. Thomas	Cullinan, John
Barlow, Sir John Emmott (Somerset)	Buxton, Noel (Norfolk, North)	Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)
Barnes, George N.	Byles, Sir William Pollard	Davies, David (Montgomery Co.)
Barran, Sir John N. (Hawick, Burghs)	Carr-Gomm, H. W.	Davies, Ellis William (Eifion)
Davies, Timothy (Lincs., Louth)	Lambert, Rt. Hon. G. (Devon, S. Molton)	Redmond, John E. (Waterford
Davies, Sir W. Howell (Bristol, S.)	Lambert, Richard (Wilts, Cricklade)	Redmond, William (Clare, E.)
Dawes, James Arthur	Law, Hugh A. (Donegal, West)	Redmond, William Archer (Tyrone, E.)
De Forest, Baron	Lawson, Sir W. (Cumb'rld, Cockerm'th)	Rendall, Athelstan
Delany, William	Leach, Charles	Richardson, Albion (Peckham)
Denman, Hon. Richard Douglas	Levy, Sir Maurice	Richardson, Thomas (Whitehaven)
Dewar, Sir J. A.	Lewis, Rt. Hon. John Herbert	Roberts, Charles H. (Lincoln)
Dickinson, Rt. Hon. Willoughby H.	Lough, Rt. Hon. Thomas	Roberts, George H. (Norwich)
Dillon, John	Low, Sir Frederick (Norwich)	Roberts, Sir J. Herbert (Denbighs)
Donelan, Captain A.	Lundon, Thomas	Robertson, Sir G. Scott (Bradford)
Doris, William	Lyell, Charles Henry	Robertson, John M. (Tyneside)
Duffy, William J.	Lynch, Arthur Alfred	Robinson, Sidney
Duncan, C. (Barrow-in-Furness)	Macdonald, J. Ramsay (Leicester)	Roch, Walter F. (Pembroke)
Duncan, Sir J. Hastings (Yorks, Otley)	Macdonald, J. M. (Falkirk Burghs)	Roche, Augustine (Louth)
Edwards, Clement (Glamorgan, E.)	McGhee, Richard	Roe, Sir Thomas
Edwards, Sir Francis (Radnor)	Maclean, Donald	Rowlands, James
Edwards, John Hugh (Glamorgan, Mid)	Macnamara, Rt. Hon. Dr. T. J.	Rowntree, Arnold
Elverston, Sir Harold	MacNeill, J. G. Swift (Donegal, South)	Runciman, Rt. Hon. Walter
Esmonde, Dr. John (Tipperary, N.)	MacVeagh, Jeremiah	Russell, Rt. Hon. Thomas W.
Esmonde, Sir Thomas (Wexford, N.)	M'Callum, Sir John M.	Samuel, Rt. Hon. H. L. (Cleveland)
Esslemont, George Birnie	McKenna, Rt. Hon. Reginald	Scanlan, Thomas
Falconer, James	M'Laren, Hon. F.W.S. (Lincs., Spalding)	Scott, A. MacCallum (Glas., Bridgeton)
Farrell, James Patrick	Manfield, Harry	Seely, Rt. Hon. Colonel J. E. B.
Fenwick, Rt. Hon. Charles	Marks, Sir George Croydon	Sheehy, David
Ffrench, Peter	Marshall, Arthur Harold	Sherwell, Arthur James
Field, William	Meagher, Michael	Simon, Rt. Hon. Sir John Allsebrook
Fiennes, Hon. Eustace Edward	Meehan, Francis E. (Leitrim, N.)	Smith, Albert (Lancs., Clitheroe)
Flavin, Michael Joseph	Meehan, Patrick J. (Queen's Co., Leix.)	Smyth, Thomas F. (Leitrim, S.)
France, G. A.	Millar, James Duncan	Soames, Arthur Wellesley
Furness, Sir Stephen Wilson	Molloy, Michael	Spicer, Rt. Hon. Sir Albert
Gelder, Sir William Alfred	Molteno, Percy Alport	Strauss, Edward A. (Southwark, West)
George, Rt. Hon. D. Lloyd	Mond, Rt. Hon. Sir Alfred	Sutherland, John E.
Gladstone, W. G. C.	Montagu, Hon. E. S.	Sutton, John E.
Glanville, Harold James	Mooney, John J.	Taylor, John W. (Durham)
Goddard, Sir Daniel Ford	Morgan, George Hay	Taylor, Theodore C. (Radcliffe)
Goldstone, Frank	Morrell, Philip	Taylor, Thomas (Bolton)
Greenwood, Hamar (Sunderland)	Morison, Hector	Tennant, Rt. Hon. Harold John
Greig, Colonel J. W.	Morton, Alpheus Cleophas	Thomas, J. H.
Grey, Rt. Hon. Sir Edward	Muldoon, John	Thorne, G. R. (Wolverhampton)
Griffith, Rt. Hon. Ellis Jones	Munro, Rt. Hon. Robert	Thorne, William (West Ham)
Gulland, John William	Murray, Captain Hon. Arthur C.	Toulmin, Sir George
Gwynn, Stephen Lucius (Galway)	Needham, Christopher Thomas	Trevelyan, Charles Philips
Hackett, John	Neilson, Francis	Verney, Sir Harry
Hancock, J. G.	Nolan, Joseph	Walsh. Stephen (Lancs., Ince)
Harcourt, Robert V. (Montrose)	Norton, Captain Cecil W.	Walters, Sir John Tudor
Harmsworth, Cecil (Luton, Beds)	Nugent, Sir Walter Richard	Walton, Sir Joseph
Harvey, A. G. C. (Rochdale)	Nuttall, Harry	Ward, John (Stoke-upon-Trent)
Harvey, T. E. (Leeds, West)	O'Brien, Patrick (Kilkenny)	Ward, W. Dudley (Southampton)
Hayden, John Patrick	O'Connor, T. P. (Liverpool)	Wardle, George J.
Hayward, Evan	O'Doherty, Philip	Waring, Walter
Helme, Sir Norval Watson	O'Donnell, Thomas	Warner, Sir Thomas Courtenay T.
Henderson, Arthur (Durham)	O'Dowd, John	Wason, Rt. Hon. E. (Clackmannan)
Henderson, J. M. (Aberdeen, W.)	O'Kelly, Edward P. (Wicklow, W.)	Wason, John Cathcart (Orkney)
Higliam, John Sharp	O'Kelly, James (Roscommon, N.)	Watt, Henry A.
Hinds, John	O'Malley, William	Webb, H.
Hobhouse, Rt. Hon. Charles E. H.	O'Neill, Dr. Charles (Armagh, S.)	Wedgwood, Josiah C.
Hodge, John	O'Shaughnessy, P. J.	White, J. Dundas (Glasgow, Tradeston)
Hogge, James Styles	O'Sullivan, Timothy	White, Sir Luke (Yorks, E.R.)
Holmes, Daniel Turner	Outhwaite, R. L.	White, Patrick (Meath, North)
Holt, Richard Burning	Palmer, Godfrey Mark	Whitehouse, John Howard
Hope, John Deans (Haddington)	Parker, James (Halifax)	Whittaker, Rt. Hon. Sir Thomas P.
Hudson, Walter	Parry, Thomas H.	Whyte, Alexander F. (Perth)
Hughes, Spencer Leigh	Pearce, Robert (Staffs, Leek)	Wiles, Thomas
Illingworth, Percy H.	Pearce, William (Limehouse)	Wilkie, Alexander
Jardine, Sir J. (Roxburgh)	Pearson, Hon. Weetman H. M.	Williams, Aneurin (Durham, N.W.)
John, Edward Thomas	Phillips, John (Longford, S.)	Williams, John (Glamorgan)
Johnson, W.	Pirie, Duncan V.	Williams, Penry (Middlesbrough)
Jones, Edgar (Merthyr Tydvil)	Pollard, Sir George H.	Williamson, Sir Archibald
Jones, Henry Hayden (Merioneth)	Ponsonby, Arthur A. W. H.	Wilson, Rt. Hon. J. W. (Worcs., N.)
Jones, J. Towyn (Carmarthen, East)	Pratt, J. W.	Wilson, W. T. (Westhoughton)
Jones, Leif (Notts, Rushcliffe)	Price, C. E. (Edinburgh, Central)	Winfrey, Sir Richard
Jones, William (Carnarvonshire)	Priestley, Sir Arthur (Grantham)	Wing, Thomas Edward
Jones, W. S. Glyn- (T. H'mts., Stepney)	Priestley, Sir W. E. B. (Bradford, E.)	Wood, Rt. Hon. T. McKinnon (Glasgow)
Joyce, Michael	Primrose, Hon. Neil James	Yeo, Alfred William
Kellaway, Frederick George	Pringle, William M. R.	Young, William (Perth, East)
Kelly, Edward	Radford, George Heynes	Yoxall, Sir James Henry
Kennedy, Vincent Paul	Raffan, Peter Wilson	TELLERS FOR THE AYES.—Mr.
Kenyon, Barnet	Rea, Walter Russell (Scarborough)	Geoffrey Howard and Capt. Guest.
Kilbride, Denis	Reddy, Michael
King, Joseph
NOES.
Agg-Gardner, James Tynts	Anstruther-Gray, Major William	Baird, John Lawrence
Aitken, Sir William Max	Archer-Shee, Major M.	Baker, Sir Randolf L. (Dorset, N.)
Amery, L. C. M. S.	Astor, Waldorf	Baldwin, Stanley

Banbury, Sir Frederick George	Gibbs, G. A.	Peel, Lieut.-Colonel R. F.
Baring, Maj. Hon. Guy V. (Winchester)	Glazebrook, Captain Philip K.	Perkins, Walter Frank
Barlow, Montague (Salford, South)	Goldman, C. S.	Peto, Basil Edward
Barnston, Harry	Goldsmith, Frank	Pollock, Ernest Murray
Bathurst, Hon. A. B. (Glouc, E.)	Goulding, Edward Alfred	Pretyman, Ernest George
Bathurst, Charles (Wilts, Wilton)	Grant, J. A.	Prothero, Rowland Edmund
Beach, Hon. Michael Hugh Hicks	Greene, Walter Raymond	Pryce-Jones, Colonel E.
Beckett, Hon. Gervase	Guinness, Hon. Rupert (Essex, S.E.)	Randles, Sir John S.
Benn, Arthur Shirley (Plymouth)	Guinness, Hon. W. E. (Bury S. Edmunds)	Ratcliff, R. F.
Benn, Ion Hamilton (Greenwich)	Gwynne, R. S. (Sussex, Eastbourne)	Rawlinson, John Frederick Peel
Bennett-Goldney, Francis	Haddock, George Bahr	Rawson, Colonel Richard H.
Bentinck, Lord H. Cavendish-	Hall, Frederick (Dulwich)	Rees, Sir J. D.
Bird, A.	Hamilton, C. G. C. (Ches., Altrincham)	Rolleston, Sir John
Blair, Reginald	Hamilton, Lord C. J. (Kensington, S.)	Ronaldshay, Earl of
Boscawen, Sir Arthur S. T. Griffith-	Hardy, Rt. Hon. Laurence	Rothschild, Lionel de
Boyle, William (Norfolk, Mid)	Harris, Henry Percy	Royds, Edmund
Boyton, James	Harrison-Broadley, H. B.	Rutherford, John (Lancs., Darwen)
Brassey, H. Leonard Campbell	Henderson, Major H. (Berks, Abingdon)	Rutherford, Watson (L'pool, W. Derby)
Bridgeman, William Clive	Henderson, Sir A. (St. Geo., Han. Sq.)	Salter, Arthur Clavell
Bull, Sir William James	Hawins, William Albert Samuel	Samuel, Sir Harry (Norwood)
Burdett-Coutts, William	Hibbert, Sir Henry F.	Samuel, Samuel (Wandsworth)
Burgoyne, A. H.	Hills, John Waller	Sanders, Robert Arthur
Burn, Colonel C. R.	Hill-Wood, Samuel	Sanderson, Lancelot
Butcher, John George	Hoare, Samuel John Gurney	Sandys, G. J.
Campbell, Captain Duncan F. (Ayr, N.)	Hohler, Gerald Fitzroy	Sassoon, Sir Philip
Campion, W. R.	Hope, James Fitzalan (Sheffield)	Scott, Sir S. (Marylebone, W.)
Carlile, Sir Edward Hildred	Hope, Major J. A. (Midlothian)	Spear, Sir John Ward
Cassel, Felix	Horne, E.	Stanier, Beville
Castlereagh, Viscount	Houston, Robert Paterson	Stanley, Hon. Arthur (Ormskirk)
Cater, John	Hunt, Rowland	Stanley, Hon. G. F. (Preston)
Cautley, H. S.	Hunter, Sir Charles Rodk.	Starkey, John Ralph
Cave, George	Ingleby, Holcombe	Staveley-Hill, Henry
Cecil, Evelyn (Aston Manor)	Jackson, Sir John	Steel-Maitland, A. D.
Cecil, Lord Hugh (Oxford University)	Jessel, Captain H. M.	Stewart, Gershom
Cecil, Lord R. (Herts, Hitchin)	Kerry, Earl of	Swift, Rigby
Clay, Captain H. H. Spender	Keswick, Henry	Sykes, Alan John (Ches., Knutsford)
Clive, Captain Percy Archer	Kinloche-Cooke, Sir Clement	Sykes, Sir Mark (Hull, Central)
Clyde, James Avon	Lane-Fox, G. R.	Talbot, Lord Edmund
Coates, Major Sir Edward Feetham	Larmor, Sir J.	Terrell, George (Wilts, N.W.)
Cooper, Sir Richard Ashmole	Law, Rt. Hon. A. Bonar (Bootle)	Terrell, Henry (Gloucester)
Courthope, George Loyd	Lawson, Hon. H. (T. H'mts, Mile End)	Thomas-Stanford, Charles
Craig, Ernest (Cheshire, Crewe)	Lee, Arthur Hamilton	Thynne, Lord A.
Craig, Norman (Kent, Thanet)	Lloyd, George Butler (Shrewsbury)	Tickler, T. G.
Craik, Sir Henry	Locker-Lampson, G. (Salisbury)	Tobin, Alfred Aspinall
Croft, H. P.	Locker-Lampson, O. (Ramsey)	Touche, George Alexander
Currie, George W.	Lockwood, Rt. Hon. Lt.-Colonel A. R.	Tryon, Captain George Clement
Dalrymple, Viscount	Lowe, Sir F. W. (Birm., Edgbaston)	Valentia, Viscount
Dalziel, Davison (Brixton)	Lyttelton, Hon. J. C. (Droitwich)	Walker, Colonel William Hall
Denison-Pender, J. C.	Mackinder, H. J.	Walrond, Hon. Lionel
Denniss, E. R. B.	Macmaster, Donald	Warde, Colonel C. E. (Kent, Mid)
Dickson, Rt. Hon. C. Scott	Magnus, Sir Philip	Watson, Hon. W.
Du Cros, Arthur Philip	Malcolm, Ian	Weigall, Captain A. G.
Duncannon, Viscount	Mallaby-Deeley, Harry	Weston, Colonel J. W.
Du Pre, W. Baring	Mason, James (Windsor)	Wheler, Granville C. H.
Eyres-Monsell, Bolton M.	Morrison-Bell, Capt. E. F. (Ashburton)	Williams, Colonel R. (Dorset, W.)
Faber, George Denison (Clapham)	Morrison-Bell, Major A. C. (Honiton)	Wills, Sir Gilbert
Falle, Bertram Godfray	Mount, William Arthur	Wilson, A. Stanley (Yorks, E.R.)
Fell, Arthur	Neville, Reginald J. N.	Wilson, Captain Leslie O. (Reading)
Finlay, Rt. Hon. Sir Robert	Newdegate, F. A.	Wilson, Maj. Sir M. (Bethnal Green, S.W.)
Fisher, Rt. Hon. W. Hayes	Newton, Harry Kottingham	Wood, Hon. E. F. L. (Yorks, Ripon)
Fitzroy, Hon. E. A.	Nield, Herbert	Worthington Evans, L.
Fletcher, John Samuel	Orde-Powlett, Hon. W. G. A.	Yate, Colonel C. E.
Forster, Henry William	Ormsby-Gore, Hon. William	Younger, Sir George
Foster, Philip Staveley	Paget, Almeric Hugh	TELLERS FOR THE NOES.—Colonel
Ganzoni, Francis John C.	Parker, Sir Gilbert (Gravesend)	Chaloner and Mr. Gretton
Gastrell, Major W. H.	Parkes, Ebenezer

Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.

Committee report Progress; to sit again to-morrow (Wednesday).

The CHAIRMAN then proceeded to put forthwith the Question necessary to dispose of the business to be concluded at Eleven of the clock at this day's sitting.