FINANCE BILL.

HC Deb 23 July 1914 vol 65 cc666-781

Order for Third Reading read.

Motion made, and Question proposed, "That the Bill be now read the third time."

Mr. CHAMBERLAIN

I do not propose to move any Amendment to the Motion for the Third Reading of this Bill, nor do I myself propose to challenge a Division upon that question. The Bill itself at this stage is a very different measure from what it was when we first began to discuss it. Its principal interest to everyone at its introduction, and not least to its author, was as a measure for the readjustment of the national burdens between national and local resources, and for the relief of local rates. That part of the Bill has entirely disappeared, if not into the land of forget fulness, at any rate into a dim and very precarious future. The measure as it now stands is much more accurately described by its title as a Finance Bill. I am not going to reiterate in any detail the objections which I have taken on other occasions to various provisions in the Bill. They are notably three. I regret that the Government have again had recourse to an increase of the Death Duties. I regret still more strongly, as I explained to the House yesterday, that they have committed what, in my opinion, is a serious breach of faith with individuals by their retrospective legislation in respect of settled estates. I regret on public grounds, though this is a matter that does not so directly affect the fortunes of any individual, that they should have again raided the Sinking Fund, and I must say that when the Chancellor of the Exchequer found himself, owing to the difficulties of procedure in which he was involved, obliged to abandon his scheme for giving some immediate relief to the rates, and, therefore, in possession of more money than he needed—

Sir WILLIAM BYLES

It is not abandoned; it is only postponed for another year.

Mr. CHAMBERLAIN

Abandoned for this year, and, therefore, in possession of more money than he needed, the first thing he ought to have considered was the replacement in the Sinking Fund of the £1,000,000 which, under pressure of necessity, he had withdrawn from it. I am not going to make any lengthy observations on any of these three points, but I want to say a word in regard specially to the first two, and to their effect, arising out of some observations interposed by the Chancellor of the Exchequer yesterday evening in reply to others made on this side. The Chancellor of the Exchequer then observed in reply to an hon. Friend of mine, that if the effect of his proposals was to break up big estates, that was not, in his opinion, a matter to be regretted. I know that that view has a certain amount of support among hon. Members on the other side of the House, though not, I think, generally of men who have most acquaintance with rural life, or are most familiar with rural conditions. For my part, I am anxious to see very many more small estates in this country, and, above all, to see many more occupying ownerships in this country, but I think that in any reasonable or desirable scheme there is, and always will be, need for the great and middle-sized estates. I think it would be not only a great loss to agriculture, in which estates of that character have often been pioneers in experiments and improvements which little men cannot afford to make and to risk, but it would be a great loss to the country generally, and, indeed, to the national life as a whole, if the effect of our legislation is to wipe out big estates, and, still more, if it is to wipe out middle-sized estates. I venture to add that it is a mistake to speak, as the right hon. Gentleman did last night, as if this was a question of very big estates only. I am not sure that, owing to the circumstances of most of the possessors of these big estates, they may not be able to weather such difficulties better, or, at any rate, longer than, many of the owners of the smaller estates. But I think that men who have moderate sized agricultural estates, and who have no considerable property, no considerable resources, outside, are by the gradual process of raising the duties placed in a position where in no long time, as nations must count time, they will go to the wall, and where the estates cannot be maintained as they have been maintained in the past.

I do not know, and I do not undertake to prophesy, what, when the change is complete, will be the effect on the country. I cannot foresee what may take place. I doubt whether it will be any system worked on the whole in so kindly and considerate a spirit, with so widespread a sense of public duty and of the obligations which property brings, as that which we now enjoy. I think I am a little confirmed in that by contrasting the management of estates which pass into new hands. I do not want to go beyond the truth in the least—I would rather be within it—but contrasting the management of some, at any rate, of the estates which have passed into new hands untaught by the old inherited traditions with estates which are still managed by those traditions, I do not attempt to forecast what will be the ultimate condition of the country when the change is complete in two or three generations, though I do say this—and I think no man of experience or knowledge will deny it—that, whatever may be the ultimate results, be they for good or evil, the process must involve great suffering and great injury in the meantime. Estates will be starved, or life tenants, I think, will have insufficient means to deal with the estates in the old way, and everyone knows that there is nothing more sad in a countryside than an estate where the owner is unable to provide sufficient capital to do justice to the land and the people who are on it. I do not agree with the Chancellor of the Exchequer that there is any cause for satisfaction if, as the result of inordinate taxation, we alter the natural course of things and break up estates which are well managed, well owned, and well conducted, with satisfaction to their owners, and with advantage to all who find a living on, or in connection with, them.

4.0 P.M.

When you raise taxation of this kind to the limits which you have reached, and when you vary it as frequently as you have done in recent years, making all fore-calculations, valueless, and frustrating the efforts of owners to provide by insurance against charges which will fall later on, you do create in the minds of taxpayers a sense of injustice and wrong and inflict upon them a hardship which sets them and their advisers looking for means to evade and avoid your taxes. It was a notorious ground of complaint and criticism against the excessive duties of the tariff system, at the time of the great war and later, that it put public opinion against it and encouraged evasion and avoidance by smuggling. No doubt when the law was enforced smugglers were hardly dealt with, but no one now is inclined to put the whole condemnation on the smugglers. We are generally apt to regard them as very picturesque persons who furnish very good materials for the kind of romance which I confess I like to occupy part of my leisure time in reading. By the sympathy which you produce with the victims of your new tax you create in their minds a sense of injustice, you put public opinion against the law, and you make people, who otherwise would never have thought of trying to escape any duties which the State might impose, think that after all they should, if they can, either in one way or another, lighten burdens which have become intolerable, and which, in their opinion, are unfair as compared with the burden placed upon other members of the community of like fortune, but of like fortune invested in some different form of securities.

My hon. and gallant Friend and other Friends of mine were taunted by the Chancellor of the Exchequer last night with their views as to the taxation of land. The Chancellor of the Exchequer, when he is doing business, is the most open-minded and fairest-minded man that you could wish to meet In the conduct of this Bill he has on several occasions in the most conciliatory spirit made very considerable concessions to views put forward by Members on this side. But there is another Chancellor of the Exchequer whom we see, not when he is convinced that we are wrong, but when he is convinced that he cannot afford to give way, and then I must say that he does habitually and unscrupulously misstate the case which he has to answer. When the Chancellor of the Exchequer has a good case, no man is better capable of making it with success, but when he has a bad case there is no man whom I have ever known to be so clever at evading that case and setting up another which he found it easier to knock down. The Chancellor of the Exchequer is an interesting study in the arts of Parliamentary oratory, of which he is a past-master. But in no form of Parliamentary art are his achievements so consummate as in the art of irrelevancy. My hon. and gallant Friend is commonly recognised in this House as a champion of landed interests, and he deserves to be so. You may think him wrong on particular points; you may think the inferences which he draws mistaken, or that particular criticisms are un- founded, but has he ever brought forward a claim except on the ground of justice? Has he ever asked anything for a landlord except that he should not pay more than, though he should pay as much as, a man of equal means who draws his resources from other forms of property? The whole case of my hon. and gallant Friend and those associated with him, is, rightly or wrongly, that the landlord pays in excess of his due proportion, and the only claim that he has ever sought to put before the House is that the landlord should pay in due proportion and that that proportion should be taken from him with the least necessary expense to him, and in a manner which would serve the necessities of the State because it is the least inconvenient.

The Chancellor of the Exchequer in his taxation fails to observe either of those canons. While in matters of detail, on particular points of great importance, he has shown a very reasonable spirit and has made great concessions, and while dealing with those cases he has shown an insight into and a knowledge of the general conditions of agricultural property and ownership in this country to which his Friends on the other side should pay more attention, and while he has shown an appreciation of the public spirit of these owners, yet at other times, when he is campaigning, the mere mention of a landlord, especially the mention of a duke, altogether upsets his balance and distorts his judgment. I pass away from that to call attention to what I think is very germane to the Third Reading of the Bill, and very important for this House to consider. The passage of this Bill, in the circumstances of this Session, marks the final abandonment of control of finance by this House of Commons. It has no sooner asserted, as the result of General Elections and agitation in Parliament, its supreme and unattackable power over all finance than it is itself forced to abandon its old rights and to surrender into the hands of Ministers the control thereto which it used annually to exercise. What is the position? The Finance Bill, ever since there has been a Finance Bill, has been an opportunity on which the House could review the whole field of taxation, and Members could move Amendments to any part of the taxing law. That is no longer the case. It was not the case last year. That might have been an accident. The House was taken by surprise. If it had been a sufficient protest then the thing would not have occurred. It has occurred again this year. The House was warned of the course upon which it was entering. It made no protest. The precedent is established, and the control of the House is gone.

The position is that a Chancellor of the Exchequer in future will bring in, at a more or less earlier period of the Session, according to his convenience and the convenience of the Government, a Bill to deal with the particular old taxes which would otherwise lapse and which the Chancellor wishes to renew, and the particular new taxes, if any, which the Chancellor wishes to impose, and the House will have lost upon that Bill the opportunity of moving the Amendments which it has always enjoyed, and which alone enabled it to force from the Government an examination, not of new proposals for taxation, but of the working of old proposals and of the injustices or hardships which they might be shown how to avoid. This is not a theoretical question. It is not as if we were by this Bill being deprived of the opportunity which in other years we should have had for discussing these matters without any practical need for that opportunity having arisen. It is not as if I were putting forward a purely theoretical plea for claims which, if allowed, we should not endeavour to exercise and which we do not desire. It is not so. There are questions of the utmost importance for which the legislature admittedly and necessarily would, under the old system, have found a solution. In last year's Revenue Bill a new system was to have found a place. The Finance Bill was necessary to the Government. If these things had been in the Finance Bill they would have got them. A Revenue Bill was not necessary. A Revenue Bill is generally a Bill in its major matter, a Bill of concession. That is not necessary to the Government. It is wholly a Bill of relief to the tax payer, and, accordingly, when any pressure comes, that Bill is sacrificed as it was last year. The Chancellor started the discussion of the Finance Bill with the assurance that there was to be a Revenue Bill. We end with the assurance that there is to be none. Again, for the second year in succession, every Member of the House is deprived of the opportunity which, until last year, he could always enjoy of raising questions, not specifically involving new taxation proposals.

I may give an illustration of the importance of the change as affecting the procedure and the powers of the House. Taking some of those Land Taxes which were open to the criticism that I am passing just now on the Chancellor of the Exchequer as to his dealings with land, there have been, I think, three judgments in respect to points raised on those taxes. There is one in reference to agricultural land under grass which I understand is still subject to appeal, as to which it is only necessary to say that if the judgment of the lower Court is upheld, every agricultural and valuation is invalid and has got to be done over again, with fresh expense to the Crown, and with equally fresh expense to the new taxpayer, whose property is valued. There are two cases, both of which have been carried to the highest Court of Appeal. In one the Government have been successful; in the other they have been unsuccessful, and, upon my word, I do not know in which case the Government is most to be condoled. They have won the case they would have liked to lose, and they have lost the case they would have liked to win. They have lost the Camden case. The Camden declared that the law does what we on this side of the House said ought to be right, and what the Chancellor of the Exchequer said ought not to be done, for it would destroy his reversion. The Camden judgment destroyed his reversion, and all the expenses to which the State and individuals have been put in connection with this case, is really absolutely wasted by the results of that decision. Take the Lumsden case. In that case the Government did not wish to win. On the first decision, when the judgment of the Court had been given, they promised to amend the law and reverse the judgment. They have gone on up to this time without any change in the law, and they have carried this unfortunate man, Mr. Lumsden, from Court to Court, sustaining a decision which they themselves wished to repeal, which they themselves are going to repeal, and in regard to which the Prime Minister promised a one Clause Bill if the House will treat it as non-controversial.

The CHANCELLOR of the EXCHEUER (Mr. Lloyd George)

It was not our appeal.

Mr. CHAMBERLAIN

It was not yours, but the judgment was in your favour, and, therefore, Mr. Lumsden appealed against it; and now you have gone on fighting right up to the House of Lords—fighting though knowing that your claim was un just, and that you did not want to enforce that claim, and you took this unfortunate man right up to the House of Lords, and we are actually told to-day by the Secretary to the Treasury that he declines, though it was a test case, to find the expenses of this man who has been victimised. There was never, under cover of the law, so gross an injustice and wrong as that. What is the result of the judgment that they have been fighting to maintain and which they have inflicted on Mr. Lumsden? I will not give my own words, but I will read the words of the judgment—

Mr. LLOYD GEORGE

On a point of Order. I have no objection to going into a discussion of the details of the Lumsden case, but I should like to know whether we are entitled to discuss it on the Third Beading of the Finance Bill, which contains no reference to them. If the right hon. Gentleman is simply going to advance an argument on the general case, I agree that would be in order; but if he goes into details I certainly could not reply, and they seem to me to be irrelevant.

Mr. SPEAKER

I do not sea that the subject matter of these appeals is dealt with in the Bill, and I do not think that the details would be relevant.

Mr. CHAMBERLAIN

As there is doubt as to their relevancy, I will not pursue that part of the matter. But I have alluded to them to-day for a purpose which is relevant, and I shall confine myself therefore to emphasising what I have said, though I greatly regret I cannot call the attention of the House to those details. What is relevant is that the Government has admitted that there is a grievance on a point of law which the Government themselves have been anxious to amend ever since the middle of last year. Under the old financial procedure the thing would have been done last year, the money would have been sent to this man, the taxpayer, and the injustice would have been redressed; but, under the new procedure, no Member of the House has had any opportunity of bringing this question to a practical issue. The Government themselves pressed for time, and confronted with a little opposition by hon. Members below the Gangway in order to pass their Bill abandoned the attempt to deal with it. And so it will be, and so it must be, under the new financial procedure which is established. Whether you have a tax which the Government propose for the first time, or an annual tax which the Government proposed to renew, the power of the House for effective revision of the whole financial situation has gone, and unless there is a revolution in our procedure, I am afraid it cannot be revived. I am going to deal with one further matter only, and it is this: I have said to the House more than once that I view with great anxiety the rapidity of the growth of our national expenditure. We are challenged when we make observations on costly reforms, as to which we should have wished to cut down. I do not think that is a fair, right, or profitable way to look at the matter.

We in this House who are dealing with the financial affairs of the nation must, after all, look at them in the same way as we look at our own affairs. It is not sufficient to ask whether we will have something that we would like to have that would add to our comfort or improve our position. And it is for the House to ask whether we can afford this thing or that, or all these things at the same time. My complaint is not—though I have had at the proper time criticism to make of the form of expenditure on the proposals of the Government—that the Government are spending money on this object or on that, or that they ought not to spend the money at all. My complaint is that the pace has been too hot, too dangerous a pace at which to go, and which I believe may involve very considerable embarrassment in the future. I often wonder what the Government imagine they would do if they were likely to remain in office a few years longer. There are moments when I should like to pass a Bill for the permanent exclusion—or, rather, the temporary exclusion—from office of the Opposition in order to fix responsibility in the years to come, upon those Gentlemen who spend so freely in the present.

What is the position at the present moment? The Chancellor of the Exchequer has raised all the direct taxes to limits which would have been thought impossible by any of his Liberal predecessors. He has sanctioned expenditure on a scale far exceeding that for which he and his colleagues denounced their predecessors without qualification as extravagant. But that is not all. The reforms for which the Government is responsible are reforms upon which the expenditure is not stationary, but growing. Old age pensions and insurance, be they who they may in power, must inevitably become more expensive rather than less expensive.

The Chancellor of the Exchequer casts his eyes forward to next year. He tells us that next year he will re-impose the penny on the Income Tax which is dropped this year. He told us that even so his resources would be insufficient unless the Government are able to sanction a considerable reduction in the Navy Estimates. I do not think that is a very sound foundation on which to build. The Chancellor of the Exchequer has buoyed himself up with that hope two or three times already, and he is always finding himself disappointed. I do not blame him for not having been able to reduce the expenditure, but I do blame him for being so sanguine as to suppose he could. The expenditure does not depend upon this country alone. It depends on the action of foreign Powers, which we cannot control, and accordingly, on the Chancellor's own showing, there is every probability, in my opinion, that next year, if he be then responsible, he will have not only to re-impose the penny he has dropped at the moment, but to find other and fresh taxation. If trade falls off, and the revenue from existing taxes falls off, as well it may, that will further add to his difficulties. How far is anybody on those benches opposite prepared to go along the path the Government has taken? You have got the Tea Duty, you have the Sugar Duty. The Tea Duty the Government will neither increase nor diminish, as I understand. The Sugar Duty cannot be diminished, and they will not increase it. You have got tobacco, spirits, and beer. I do not think that the Chancellor of the Exchequer imagines that any of those afford him a great source of revenue, with the additions he has already made to the spirit and Tobacco Duties—the very heavy additions which he made to those duties. What remains? The direct taxes. When the next demand comes, owing to increased expenditure or falling revenue, are you again to raise those taxes or are you to put the whole burden on the Income Tax? Do hon. Members opposite ever ask themselves what are the limits to this policy which they have pursued with such great pleasure and satisfaction in late years? Everybody must feel that for the ordinary purposes of peace, if not for great emergencies of the country, we are getting too near the limit of taxation to which under the scheme of the Government the House can now have resort. I ask myself and I ask hon. Members—if they can put aside the memories of the fierce party struggles since 1903—whether there are not many on that side of the House, and perhaps the Chancellor of the Exchequer himself among them, who, if they had a clean sheet, unwritten over with any past declaration, unsmeared by any prejudice aroused in party fight, would not say that the time has come when you must look further afield and when you must broaden the basis from which you draw your resources; and whether men on the opposite side, putting aside all their controversy between the parties as to food duties, would not say that Customs must play a larger part in the finance of the future than they have done in the finance of the last fifty or sixty years. For my part, I am quite certain, whatever be the inconveniences, put them how high you will, whatever be the cost, put it how high you will, of the imposition and collection of Customs Duties, such as has been proposed by my right hon. Friend the Leader of the Opposition, they are not comparable with the cost and inconvenience and injustice worked by the Land Taxes of the right hon. Gentleman. They would yield incomparably more revenue than those taxes, which, as revenue producers, have been and remain a failure, and I am certain that if we on this side are not successful in converting the country to our views of fiscal reform, should the Chancellor of the Exchequer be allowed to pursue his present paths unchecked and unfettered, he will perform that conversion himself and make any effort on our part wholly unnecessary.

The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu)

I trust once again that the right hon. Gentleman who has just spoken will not think my right hon. Friend the Chancellor of the Exchequer in any way discourteous if he prefers to delay his reply to a later period in the Debate. I think I can begin by claiming that the Finance Bill has survived the ordeal of Committee and Report stages, has had adequate and full discussion, and has come unscathed through the ordeal. We have worked to a timetable which has now become, to the regret of some of us, the ordinary procedure for the larger measures of the Session, and, despite that Time Resolution, I claim that every section of this Budget has received adequate and full discussion, and that all the new proposals, by the careful arrangement to which the House assented, received the discussion due to them because they were new proposals, and that a very large number of those proposals which are brought up year after year, and with which everybody is familiar, have also received that too. And I can claim that having once assented to the objects for which this expenditure was necessary, no alternative way of raising this money has been suggested from any part of the House. The Bill which we are now asking the House to read the third time contains a certain number of Clauses for the imposition of taxes and the finding of new revenue, and a certain number of Clauses which make concessions to the taxpayers. They have all been received, it is true, in the same way. They have all been criticised with more or less vigour, and we were told that each one of the taxes never ought to have been imposed, and each one of the concessions ought to have been bigger. If you allow interest of 2 per cent. on settlement it ought to have been compound interest, and if you begin on one day you ought to have begun on another day, and if you make allowance for repairs to houses up to £8 it ought to be £12, and if you make it £12 it ought to be £15, and if you make it £15 it ought to be bigger again.

But despite all that sort of criticism, which is just the characteristic, negative, unconstructive criticism with which every one of the proposals emanating from this bench has been received by the party opposite ever since I have come to this House—a sort of outpouring of ferments and acidulated sawdust, supported by the old criticisms about the security of capital and the taxation of capital and the depreciation of credit, with which each Clause was assailed in its turn—once the objects for which the money was wanted were admitted, there has been no alternative plan put before the House. Tariff Reform, which was once the basis of an Opposition Amendment from the Front Bench, is now the subject of an eloquent peroration by the right hon. Gentleman on the Third Reading. And the only suggestion that I can remember emanated from the hon. and gallant Member for Chelmsford (Mr. Pretyman) and the hon. Member for Sleaford (Mr. Royds). They think that all the ills which we suffer from, and that every necessity for increasing our revenue, and everything wrong in the present organisation of society in this country, could be cured if only the Chancellor of the Exchequer would do one thing—destroy the Land Valuation Department of the Inland Revenue. So that even their one constructive view is in itself destructive, and they refuse to admit the enormous importance, apart altogether from the Land Valuation Duty, of this Valuation Department in the collection of Death Duties, and they refuse to see in it the valuable basis of machinery for the levying both of Imperial and local taxes; and they content themselves with comparing capital expenditure with the annual revenue derived from a great new undertaking, just as if someone subtracted from the receipts of a railway company in the first two years of its existence from the cost of building that railway. The next point which is made against the Budget is that it is not the same Budget as was originally introduced, but a second edition, with the dropping of the temporary Grant and the postponement of the 1d. off the Income Tax. I maintain that the principle of the Budget as incorporated in this Finance Bill and on the Third Reading is the same principle as was there when my right hon. Friend made his Budget Statement—namely, to obtain the money mainly for the increase of our Imperial defences and for giving large new Grants to the relief of local authorities next year. Those Grants have not been postponed for a year. They have been postponed till the 1st of April next, which was the date originally intended for the new scheme. All that has happened is that the temporary Grants have been abandoned. They were really an excrescence on the original scheme, and to be taken as an earnest of the Government of the eager desire as quickly as possible to come to the assistance of the overburdened local authorities. The Budget and the Finance Bill are the instrument for obtaining by fiscal expedients, the results of which will mean revenue this year and larger revenue next year, the money necessary for those large Grants to local authorities, and for the increased cost of the Navy and for the subsidiary purposes which I shall mention later on, and which are included in this year's Estimates. The first Clause reimposes the duty upon tea of 5d. This first Clause was subjected to criticism. It was suggested that you ought, without any consideration to the result, reduce it by at least 1d., and the hon. Members who suggested that realised that it was not they but the Chancellor of the Exchequer who would have to find the million and a quarter necessitated by that Amendment. I do not think that the Government has any reason to reproach itself that the Tea Tax remains unaltered this year. I desire to repeat figures already given in this House which show what has been accomplished since 1905–6 with regard to these taxes. In that year 49.7 of our taxation was indirect, and 50.3 was direct. In this financial year 40.5 will be indirect, and 59.5 will be direct. Of this indirect taxation, the larger proportion consists of sumptuary taxes, the duties on alcoholic liquors and tobacco. Those are taxes which the individual can avoid paying if he chooses. The food taxes proper—the taxes on tea and sugar, coffee, and so on—furnished 11.1 per cent. of our revenue in 1905–6, and they will furnish only 7.1 per cent. of our revenue this year. During the time that this Government have been in office they will have remitted, by the 31st March, 1915, no less a sum than thirty-eight millions from these articles of daily life, if you assume that the consumption has not changed. When one remembers the objects for which this revenue is required, so far as Grants to local authorities are concerned, I think we can claim that the indirect taxpayers are primarily or largely concerned in the Grants, for the co-operation of the local authorities with the Imperial Government is mainly desired for the purpose of social services, and also, and particularly in urban areas, the artisan classes pay their full share of rates in the way of rent.

The second Clause deals with Income Tax. Taking the Income Tax proposals as a whole, and regarding them once again in connection with the increased product of the new rates and taxes next year, they replace a local income, and they do not really increase our total expenditure. Their proceeds, when the force of them is felt, will go largely to relieve existing burdens. [An HON. MEMBER: "No, no!"] Even supposing that the pessimistic view which the hon. Baronet now interjects is true, we will have done something, by means of these subventions to local authorities, to relieve the rate at which those burdens grow and are felt by those who have got to administer our Acts for social reform. It is, I think, an encouraging thing to have seen the indignation of hon. Members opposite when the imposition of the extra penny on the Income Tax was postponed for a year. The hon. and gallant Member for Chelmsford gave us every reason to hope that when that penny is necessary in next year's Budget it will meet with no opposition from hon. Members opposite. It has been described as reducing the Income Tax by a penny, and it has been suggested that there are various alternative forms of reducing taxation which would have been more welcome. But it was not a reduction of taxation. It was a postponement of an increase, and as the money is to be necessary next year it would have been a great mistake of judgment if this penny had been maintained now and some existing taxation taken off. The result of the Bill is that, although new revenue has become necessary, taking together the new Income Tax and the new Super-tax, we have a more scientific, a better graduated, and a better adjusted Income Tax system than we had before this Finance Bill was introduced. It is often said—I think the right hon. Gentleman himself said so—that these taxes are now at too high a level. But I think it is often forgotten that, under our system of Income Tax, we are accustomed to think that the taxes are higher than they really are, and that, when you take into account the adjustments and allowances, they do not press nearly so heavily as some hon. Members sometimes think. Out of one and a quarter million Income Tax payers—1,215,000, I think, is the actual number—a quarter of a million still pay a virtual rate of less than 1d. in the £, and 775,000 still pay less than 6d. in the £. Therefore, as regards the large majority of Income Tax payers, I do not think it can possibly be suggested that, having regard to the amount of our expenditure, the rate is excessive or unduly burdensome.

When one takes into account the various new concessions in the Budget, one can see how much further the tax has been improved. Small incomes, unearned as well as earned, have been relieved from Income Tax. The relief in respect of children, which has not received half enough attention during these Debates, which was begun by the Chancellor of the Exchequer in 1909, and which is the first attempt to differentiate the Income Tax according as the Income Tax payer is burdened with a family or not, has been doubled, and must now make the tax in the lower grades still more equitable as between taxpayer and taxpayer. The friction due to the system of assessing husbands and wives together has been overcome. There has been a further relief to landowners for the maintenance of land and houses. Most important of all, a gap in our Income Tax armoury has been filled most advantageously by the tax on the proceeds of securities, stocks, shares, and rents not remitted to this country. It has often been said in financial discussions during the last eight years that the Income Tax is so unfair, because it presses most severely upon those whose property is not fluid—the landowner, and the man whose property is secured and stationary in this country. Criticisms have been delivered based on the assumption that the Income Tax was so easy to evade and that people were sending their incomes to accumulate abroad, and it has been urged that an effort ought to be made to prevent that leakage. That effort has been made this year, and has been safeguarded, I suggest, so as to get as much as possible out of the man who I believe everybody will agree ought to be taxed—the man who leaves abroad the income he can afford to do without rather than send it here to pay its fair share of the expense of carrying on the government of this country. The man who, to improve the business, leaves the profits that he derives from his business abroad, is exempt from this taxation. The citizen of the Empire who lives in one of our Colonies, and is not domiciled in this country, is exempt from this taxation. The official carrying on the Empire abroad, who pays an occasional visit to this country, but is not ordinarily resident here, is exempt from this taxation. The taxation has been narrowed down by Amendment during Debate, as well as before, in order to secure that we shall have an effective machine for preventing the evasion of Income Tax as far as possible, without doing any injustice to those whom we should not want to tax by this machine.

As regards Death Duties, we have begun in this Budget to redress an ill of which Members opposite have so often complained ever since the Death Duties were first introduced. We have made an allowance for quick succession. It has also to be remembered that these Death Duties are duties which, unless a man chooses to keep intact the property which he leaves for those who come after him, need fall on no man alive at this moment. I have never been impressed by the argument that by the Death Duties you are taxing capital. It does not seem to me that there is any difference in principle between taxing so-called capital by Death Duties, and taxing by Income Tax income which is on its way to become capital. I could never understand why people are so frightened by the alleged sale of securities to pay Death Duties when they are not reassured by the investment of savings from income in those same securities. It certainly is to be contrasted favourably, even if it is a tax on capital, with those taxes on capital levied in foreign countries which have to be paid during the life and not after the death of the man who enjoys the capital.

I do not want to speak again as regards the Settlement Estate Duty, as the debate on that subject is so fresh in the minds of the House. I have listened to all the accusations of breach of faith, but I cannot see that hon. Members opposite have made out their case. You do not deprive a man who has paid Settlement Estate Duty of any of the advantages which he got by means of that payment before the 15th August of this year. The 2 per cent. which a man paid may be regarded as an insurance against Death Duties. He has had that insurance, whether the estate has passed or not, up to the 15th August of this year. Therefore, what he is entitled to on the 15th August is the surrender value of the premium. We are paying him not merely the surrender value, but the whole 2 per cent., as though he had never had any advantage from it, and in addition, because the payment cannot be made on the 15th August, but is to be made at a subsequent date, we are allowing him interest on the 2 per cent. from the 15th August. The last provision of the Budget deals with the National Debt. One hon. Member opposite has the theory, which I venture to think no one in the House will share, that the provision which you make for the National Debt ought to have no relation to the amount of the Debt or to the efforts which you have made to pay it off previously, but ought to bear some fixed proportion to the amount you are spending on other objects. That is, the more you have to take in taxation for the Navy, insurance, and old age pensions, the more you ought at the same time to pay off the National Debt. I do not know what the hon. Member will say in the day when the Chancellor of the Exchequer brings in a £300,000,000 Budget, and at the same time the National Debt has been reduced to, say, one half of its present size. The figures of debt reduction previously given have not been disproved in any of the Debates which have taken place. Up to the end of this year, roughly speaking, £113,000,000 of debt will have been paid off by this Government. After everything has been done, after the £1,000,000 has been taken away, after £750,000 of the Old Sinking Fund has been devoted to the purchase of oil shares, there will still be £6,750,000 for the New Sinking Fund, and £9,000,000 for the reduction of debt this year. This is a larger sum than has ever been applied to the relief of debt in any Administration, except the present under my right hon. Friend and his predecessor the Prime Minister. Having regard to the fact that you have practically wiped out the whole of the debt that was incurred for the South African War, and that national capital and national income have enormously increased, I venture to suggest that it is not a question whether we are putting enough to the payment of debt; rather there is room for grave doubt whether we are not calling upon the taxpayer of to-day to do too much for the relief of those who come after him.

In conclusion, I want to say a word about the general lamentation of the right hon. Gentleman opposite (Mr. Chamberlain) on the size of the Budget and the principles of our finance. He complained of the precedent that had been set, particularly with regard to the limitation of discussion on this Budget. I should have thought that he need not have been so melancholy about it, because if he does not approve of the precedent, and the day ever comes when he finds himself on this side of the House, he probably will not use it. His sober judgment is not disturbed by dukes or landlords, or anything of that kind. If he does not like this way of doing business, we shall take care, if ever that day comes, to remind him of his objections, and to offer the prayer that he will not use a weapon of which he does not approve.

Mr. CHAMBERLAIN

I shall answer that I warned you of the consequences, and that there would be meted out to you the measure which you had meted out to us.

5.0 P.M.

Mr. MONTAGU

Those of us who are spared in those far-off days will, I hope, quote the right hon. Gentleman's speech, and urge him not to soil his fingers with a weapon which he thinks is so wicked. Apart from that, when he and others are mourning the increase in the national expenditure, it is customary for them to include an eloquent passage about my right hon. Friend having converted the Treasury into a spending Department, and to contend that he is therefore not carrying on the traditional control of the nation's finances. I have never been able to see the justification for this charge. As far as it is based on anything, it is based on the fact, I presume, that old age pensions were initiated at the Treasury, and that the Insurance Act will always be associated with the name of the Chancellor of the Exchequer. But the Insurance Act is now administered, not by the Treasury, but from the Duchy of Lancaster. Old age pensions are administered from the Local Government Board, with one exception—that the old Excise officers who were relieved of their duties by the changes made in the Local Taxation Account were the most suitable men, by their training, to become pension officers, and are still under the control of the Customs and Excise Department. But the whole administration of the Act is in the hands of the Local Government Board; therefore, there is no sort of actual instance that you can quote, or that anybody can quote, to show that the traditions of the Treasury are any different to what they were when the right hon. Gentleman himself was Chancellor of the Exchequer—with one exception! I believe that this Budget and this Finance Bill must be taken with all the other Budgets and Finance Bills of this Administration to mark—I agree—a new epoch in finance, and an epoch totally different from those which preceded it. It is quite easy for hon. Gentlemen now to pay a tribute to the memory of Sir William Harcourt and of Mr. Gladstone. They did not do it when these were alive. I do not think it would be taxing the imagination of any body to forsee a Conservative Opposition of the future extolling the memory for orthodox finance of my right hon. Friend the Chancellor of the Exchequer—

Mr. JOYNSON-HICKS

Never, never! We would sooner have the hon. Member for Blackburn.

Mr. MONTAGU

The Conservative of to-day is the Liberal of two generations ago. He remains petrified. Liberalism being, in my opinion, a live creed, goes on! I think this extolling by Conservatives of Liberals of past generations is the extolling of bygone ideals. The old policy used to be to arm against the foreign foes, to maintain a Navy and an Army, and to leave the great social evils which exist in this country without any attempt to meet, to deal with them, or to make any progress in dealing with them. We now recognise our responsibilities. We had Factory Acts and that sort of thing. We relied upon private enterprise. The poor man was left to work out his own damnation. At the end you came to the rescue and you put him into gaol, or the infirmary or the workhouse. Now with your old age pensions, Insurance Act, with, as I think, the marvellous new provision for nursing, for baby clinics, for schools for mothers, for the protection not only of one generation, but of future generations, for averting evils before they arrive, for laying the foundation—as we do in some respects—by this Budget for a State Medical Service for giving assistance to medicine, which has been fighting disease for so many generations without assistance from the State—by all these means you are carrying on a war, as real a war as ever was carried on against a foreign foe. Whereas our ancestors and our predecessors were satisfied with something like a two-Power standard in battleships and no standard at all in their warfare against disease and poverty, this administration has organised and begun—and that is the now finance which hon. Members opposite oppose!—a general well ordered march forward in order to see whether we cannot prevent preventable poverty, and by doing this, by doing it quickly, we, I think', prevent debt and relieve the taxpayer of the future from a burden of which we are capable of relieving him, far better and far more effectively than by the biggest New Sinking Fund to which this House of Commons would ever assent.

Mr. HOARE

One would think from the speech of the Financial Secretary to the Treasury to which we have just listened that this Budget was verbally inspired. It is a curious fact that a Budget so perfect should have gone through more changes during this Debate in Committee than any other Budget within the memory of most of the Members of this House. I am very much surprised at the pride which the Financial Secretary expressed in reference to the full and free debate which this Bill has received. No doubt something was said about most of the Clauses. What did that amount to? When there is a Closure Resolution, such as that to which the Budget was exposed, these Debates are nothing more than academic Debates. You have a short debate upon one of the Clauses up to tea-time or dinner-time, and then again you have an equally academic debate from dinner-time up to eleven o'clock, when the guillotine falls. It did strike me over and over again—and I think I sat through most of the Debates during the Budget—that time after time, just as we were getting to grips with some problem in a Clause, the guillotine fell, and we were switched off to something new and different. Another singular fact that struck me in these Debates—perhaps it was the result of the guillotine—was how very languid has been the interest which both the House and the country have taken in what I should have thought was a very important Budget. No doubt our interests have been directed elsewhere, both here and outside; but attaching all the weight that is necessary to that, the fact still remains that what the Chancellor of the Exchequer evidently expected to be a second edition of the People's Budget has fallen very flat.

It seems to me that there are two chief features which are brought into prominence by the Budget. Both of them excite in me some misgiving. First of all, there is the fact to which the right hon. Gentleman the Member for West Birmingham has already alluded—the great increase in taxation which, already compared with the taxation of other countries, was exceedingly heavy. It should not be forgotten that since the Chancellor of the Exchequer has been in office no less than £56,000,000 has been added to the annual taxation of the country—a sum great enough in itself, but of more immense magnitude when it is remembered that since 1889 our taxes have more than doubled and our national indebtedness has increased. But what, too, is sometimes forgotten is that the rates have gone up from £19,500,000 per year to £57,500,000, and local indebtedness from £235,000,000 to over £629,000,000. In spite of those facts increases of duties have been imposed under this Finance Act which will take another £6,000,000 of Death Duties and Income Tax this year, and £12,000,000—or £11,500,000, according to the Estimate—next year. The White Paper for which the right hon. Gentleman the Member for West Birmingham asked in reference to Death Duties shows how very heavy a charge these increases are placing upon men with a certain amount of property. In calculating the amount of Income Tax the Death Duties are often forgotten. According to that White Paper the Death Duties at their present height mean an additional Income Tax, over and above the Income Tax and Super-tax which is imposed under the Finance Act, of anything from 6d. to 5s. in the £. That ought, surely, to give us pause when this House is asked to sanction, after a very perfunctory debate, these immense increases in direct taxation. It does not seem to me that the evil is restricted to them.

Personally, I am quite ready to pay my full share of taxation. I have once or twice pressed for increased expenditure on various local services. But what causes me anxiety is the feeling that what the Chancellor of the Exchequer really desires, or many hon Members behind him really desire, is not so much increased expenditure upon various local services as the expropriation of certain men and women who own property in this country. I know that is not what they say in this House, but over and over again in the country they have said things which, if they really mean what they say, can lead to no other conclusion than that they think that the ownership of property of a certain magnitude is in itself an evil. That has been brought to my mind over and over again when I read the speeches, some of them made by the Chancellor of the Exchequer. We are quite prepared to pay our full share of taxation if it is to meet the legitimate services of the country, but if taxation is to be used as a medium for expropriating men and women of property, then it is a very different thing, and it is also an unfair way to treat the finances of the country, I should have thought that if the Chancellor of the Exchequer really had his heart in the improvement of local services, some of which the Financial Secretary to the Treasury just alluded to, he would not have gone out of his way to outrage the feelings of many men and women of property. I should have thought he would rather have appealed to them, and attempted to enlist their sympathy by pointing out to them the many ills that are everywhere scattered over the country—that he would have said to them, "Here are great ills to remedy: will you not come in and help us?" That is a very different thing from the campaign of recrimination in which time after time he has taken part against the richer classes.

The other feature which seems to me to call for some comment in the Budget is the encouragement which is to be held out in the form of increased Grants to local authorities. I am quite aware that since the dropping of Part IV. of the Bill it does not come up in the same prominent way in which it would have if we had proceeded with the whole Bill as originally introduced. The Financial Secretary to the Treasury said that really does not affect the principle of the Bill at all, and that this Bill still, even in its expurgated state, is the beginning of the new Grants which will come into operation on the 1st of April next. In that connection I feel we are under some difficulty. As long as Part IV. was in the Finance Bill we had some details as to how these Grants were to be expended. Part IV. has gone, and we are told that the money which we are asked to vote to-day is to be subject to conditions to be imposed in the Revenue Bill about which we know nothing at all. To-day I asked the Chancellor of the Exchequer whether the amounts to be given in the form of local assistance were to be subject to the same conditions. The Financial Secretary to the Treasury replied on his behalf, and informed me we must wait and see the Revenue Bill. That places us in great difficulty. We are asked to sanction large increases in taxation, the ultimate object of which is to make Grants to the local authorities, when we do not know what the conditions are to be, or whether they will be the same conditions as appeared in Part IV. or something quite different when the Revenue Bill is introduced in the autumn. I think, before the Debate is concluded, the Financial Secretary or the Chancellor of the Exchequer should give some answer as to whether any changes are to be made in these Grants, and, if so, what changes?

Mr. SPEAKER

I do not think a discussion on that part would be in order now. On Third Reading, discussion must be confined to the Bill as it stands, and the subject which the hon. Member wishes to discuss is that part of the Bill which has been dropped.

Mr. HOARE

I fully agree, Mr. Speaker, with what you have just ruled. I was drawn into it by the remarks the Financial Secretary made as to this being the beginning of the Grants, and I venture to submit to you that the taxes we are now raising are to be used for this Grant on the 1st of April next. The Grants, therefore, will come into operation as the practical result of the Finance Bill we are discussing to day.

Mr. SPEAKER

I think that is quite legitimate criticism. All I mean is, that the hon. Member must not go into the question of the condition in which these Grants are to be given. He is quite entitled to say this Bill commits the House to making the Grants on the 1st of April. I do not think he can go beyond that, or go into the subject of what these Grants are to be used for, or the conditions under which they are to be employed.

Mr. HOARE

That was the real point I wished to put before the House, and I will not go any further in regard to that. If the Financial Secretary can give a general answer as to whether any changes are to be made, I would be very much obliged, and I think it would be very much desired by both sides of the House. I feel some anxiety as to these Grants from the financial record of the Chancellor of the Exchequer. Every one of the big financial schemes upon which the Chancellor of the Exchequer has embarked has ignored the local authorities, with the result that there has been greatly increased expenditure thrown upon the Exchequer, and frequent blows struck at the independence of local government. There were the cases to which the Financial Secretary had already alluded this afternoon; there was the case of old age pensions, of national insurance, and the case of the Land Duties under the Budget. In each one of these cases the Chancellor of the Exchequer, by acting independently of the local authorities and by refusing to give them the administration to which, by their experience they were undoubtedly entitled, involved the country in large sums of money and undermined the independence of local authorities. I am very much afraid that these Grants are going to be used for the same purpose when passed in the Revenue Bill in the autumn, and upon this early occasion I want to make my protest against the policy of undermining the independence of the local authorities by putting up their expenditure as a result of the bureaucratic conditions imposed in Whitehall, and so far from relieving the rates, probably putting them up much higher than they are at present. That is not a pious opinion unsupported by facts. In the Budget of 1889, when the first great subvention was given to local authorities, it was implied that the rates would not go up. £6,000,000 was then given to the local authorities. And what was the result? Since 1889, when this Exchequer subvention was given, the rates have more than trebled. That makes me look with great anxiety on the proposals in this Finance Bill, which are to be the first step towards revolutionising and reorganising our local government. I cannot help hoping that before the Government introduce their Revenue Bill in the autumn they will take into their confidence the great local authorities throughout the various parts of the country and see whether they cannot alter their proposed Grants in such a way as to allow them full independence.

Mr. C. E. PRICE

I wish to direct the attention of the House to one or two points. I notice that the right hon. Gentleman the Member for West Birmingham always considers the Chancellor of the Exchequer an optimist in the Budgets he presents to the House. I think there has been scarcely a Budget for which the present Chancellor of the Exchequer has been responsible that the right hon. Gentleman has not declared that the yield would not be equal to what the Chancellor of the Exchequer anticipated. I got out figures the other day showing the surpluses realised during the term of office of the present Chancellor of the Exchequer. Beginning with the Budget of 1910–11 the realised surplus was £5,607,000. In the following year it was £6,500,000; in the following year it was £1,600,000, and if it had not been for the disastrous coal strike there would have been an additional amount. In the following year it was £3,040,000. So that there has been in these five years a realised surplus of something like £17,000,000. I think these figures very clearly indicate that the Chancellor of the Exchequer took, what I always thought to be, a Conservative view of the possible sources of revenue in this country. In that connection I might state that the realised surpluses since the Chancellor of the Exchequer has been in power would have wiped out the Sugar Duties entirely, and would still have left a balance on the right side. The Financial Secretary to the Treasury stated just now—and I am sorry I cannot agree with him—that the present burden borne by the State in wiping out National Debt is as great as could be desired. I certainly think that at the present time the amount wiped out is nothing like the burden borne by the people of this country in the years 1870 and 1871. In the year 1871 the amount charged for management and Sinking Fund amounted to £27,000,000, when the population was about 30,000,000. In the next decade, in 1881, the total charge amounted to £28,000,000, whilst this year the charge amounts to £23,500,000, when our population is 46,000,000. If we were to charge ourselves proportionately with the people in 1871 and 1881 we ought to be wiping out something like £37,000,000 of debt. Therefore, I scarcely think we can say that the amount paid to-day is too great. I should like also to say that I regret that the Chancellor of the Exchequer took a penny off the Income Tax. I think it was very unfortunate, and I am quite sure that the number of men on this side who raised the question—I was not one of them—as to the right of the Exchequer to raise money for the expenditure of which no provision was made this year did not anticipate that a penny would be taken off the Income Tax. I regretted that that was done, and that £1,000,000 out of the £2,500,000 which that penny would have realised had not been put to cover the excessive charges upon the finances of this country.

The right hon. Gentleman the Member for West Birmingham referred to what he called the deplorable practice of breaking up big estates, whilst at the same time he said it was very desirable that we should have an increase in the number of smaller estates. I do not see how we are to have an increase in smaller estates unless you break up the larger. He said it was unfortunate for the farmers on those large estates that they should be broken up. I do not agree with that at all. Everybody knows perfectly well that when large estates pass into the hands of wealthy manufacturers very much larger sums of money are spent upon those big estates than before. I know a case in Scotland where an estate changed hands at a purchase price of £250,000. When that estate was transferred, no revenue was being derived from a very large portion of it for want of money being spent upon it; but immediately that it was transferred to a new purchaser, instead of there being no money actually spent upon it, the new proprietor has spent between £10,000 and £20,000 a year. Where there were five foresters before purchase, there are now twenty-two. I am quite sure that anyone who knows the country—and I know it quite well—knows that when estates are transferred more money is spent upon them. Where the pinch comes in, when you come to the second and third generation to people who have severed their connection from business and are depending on the incomes from their estates. You have large estates in the country, such as the Devonshire estate, where no one could complain of the amount of money that is being spent upon them. In many of these cases these large proprietors are deriving income not from the land, but largely from other sources. That supports my argument that where a man is drawing an income from other sources he often spends it in the way I have indicated. The right hon. Gentleman opposite is wrong in saying that it is not a good thing for the country to break up these large estates. There is another matter which I think the Chancellor of the Exchequer should take into consideration, and that is the question of taxes upon food. I deplore these taxes, and I think they are wholly alien to the traditions of the Liberal party. We are pledged to the hilt to give a free breakfast table, and I regret that these taxes are continued.

Take the tax on sugar. I think I am correct in saying that there has been over £70,000,000 realised by the Sugar Taxes since they were instituted, and this money comes largely out of the pockets of the working classes of the country. I know quite well that the great manufacturers who largely use sugar in their productions have advanced the price of their goods much higher than the Duty itself warrants. I regret that the Chancellor of the Exchequer is not here because I feel sure that he does not realise the strength of the feeling against these food taxes. I need only remind hon. Members of the deputation which waited upon the Prime Minister recently when it was shown what miserable wages they got. It may be said that these are extreme eases and they do not represent the condition of the great mass of the workers. I will take the case of railway employés. The largest group of railway employés in this country earned between 25s. and 30s. a week in England and Wales; 19s. to 20s. a week in Scotland, and from 12s. to 15s. a week in Ireland. No less than 68 per cent. of the railway employés in Ireland receive less than 18s. a week, and in the United Kingdom half the employés earn from 20s. to 30s. a week, while only 11 per cent. earn over 30s. per week. Under these circumstances, is it fair to maintain taxes on these articles which take such a very great proportion of the earnings of these people. Take the Tea Duty; roughly speaking, I think it amounts to an ad valorem duty of 8 per cent. So long as we maintain such a Tea Duty as that, the working classes will not believe in the sincerity of our profession that we desire to take taxes off food. I think that ought to be one of the first acts of the Chancellor of the Exchequer. If there is one form of taxation which has been denounced in Scotland more than another it is these taxes on food, and when the Chancellor of the Exchequer introduces his next Budget I hope he will make some provision for reducing the Tea Duty and abolishing the duty upon sugar.

Sir F. BANBURY

The hon. Member who has just sat down said very truly that the whole of the Liberal party are pledged to the abolition of food taxes, and more especially the Tea Duty and the Sugar Duty. They are, however, only pledged to that policy when before the constituences, and they put it in their election addresses, but immediately they get into the House of Commons their pledge disappears, and they vote for these taxes.

Mr. PRICE

I have not voted for either of these taxes for a number of years.

Sir F. BANBURY

The hon. Gentleman is a prominent Member, but he does not represent the whole of the Liberal party, and I was talking about that party. The hon. Member concluded his speech by saying that he wished to put pressure upon the Chancellor of the Exchequer in order to induce him to reduce these taxes. Now it is quite easy to do that, not by making a speech in this House, but by voting in the Lobby, and if the hon. Member was to do that, and was to be accompanied in the Lobby by certain other hon. Members who are equally keen to see these duties reduced, the result would be that they would be reduced. The Financial Secretary to the Treasury said that the charge was often made from the Opposition side of the House against the Chancellor of the Exchequer that, instead of being the guardian of the public purse, the Treasury has become a great spending Department. As the hon. Member knows, the toast given by the Lord Mayor at the annual dinner to the Chancellor of the Exchequer is, "Success and prosperity to the public purse," and the Chancellor of the Exchequer is spoken of as the guardian of that purse. No doubt a great many hon. Members on this side of the House have rather questioned whether the Chancellor of the Exchequer is the guardian of that purse. The Financial Secretary in alluding to this statement said that we were wrong, and that the present Chancellor of the Exchequer was just as much a guardian of the public purse as any of his predecessors. The hon. Member wound up with a very eloquent peroration by saying that the Conservative, who was the Liberal of two generations ago, was now petrified; and he further stated that the object of the Budget was to do away with social evils and prevent poverty which was preventable. Surely that is an admission that our case is right, and that the hon. Gentleman opposite and the Chancellor of the Exchequer are really a spending Department—no doubt with a laudable object. The Treasury has become a great spending Department, whereas they ought to be the watch-dogs of finance to prevent other people spending too much of the taxpayers' money.

The right hon. Gentleman said that the local rates were going to be relieved, and that this Budget would provide money for the relief of the local rates, and that the taxpayer would feel the effect of that. I said in an interruption that I did not think that would be the result, but the Financial Secretary said I was quite wrong, and he proceeded to his own satisfaction to show that I was wrong and that he was right. The hon. Member for Chelsea (Mr. Hoare) pointed out that when the greater part of the Grants to local authorities were made by the late Mr. Goschen, somewhere about 1880, there were Grants for the police, but there were no regular Grants of this kind so far as I can remember. The hon. Member for Chelsea has pointed out that the result has been that the expenditure of the local authorities has increased threefold since those Grants were made, and he has given the figures. The result has been that there has been an enormous increase in expenditure. When I first came into the House there was a proposal made to equalise the rates of London, and it was said that if the rich districts contributed towards the poor districts it would be a great relief. At that time the late Mr. Bartley and myself represented two of the largest constituencies, and two of the poorest which would benefit by this proposal, but we both went into the Lobby against it and our argument was that this kind of assistance tended not to relieve, but to increase expenditure, because it would encourage local authorities to say, "Here we are getting money out of the taxpayer, and therefore we will carry out some of our great ideas in regard to social reform." We proved to be absolutely right, because ever since that date, notwithstanding the fact that the richer localities contributed to the poorer localities, the rates in the poorer districts have continued to go up, and I am sure the Financial Secretary will find that if ever we give further money out of Imperial funds in relief of the ratepayer the only result will be to encourage extravagance on the part of local authorities.

The Financial Secretary, in answer to a question which I put to him, said that out of 1,200,000 people in this country who pay Income Tax, 775,000 persons pay under 6d. Taking five people as being the average family, that leaves 425,000 who pay Income Tax at the rate of 6d. or over. It will be admitted that in all probability the greater portion of the Death Duties are paid by these 425,000 people. Taking five as the average number of a family, that makes 2,000,000 out of the 46,000,000 in this country who bear nearly the whole burden of taxation. That is about the worst thing that could possibly be imagined for any country. Then there is the fact that the 44,000,000 people impose the taxation which the 2,000,000 have to pay. Human nature being what it is, you could not possibly have a worse condition of things if you desire to preserve the credit and the solvency of your country. The Chancellor of the Exchequer a few days ago, in discussing the question of the Sinking Fund, told us that very large sums of money had been invested during the last two years, and from that he drew the conclusion that savings in the country were continued and increasing. As far as I could make out, he arrived at those figures from certain state- ments which were made by Sir George Page, and they were arrived at in this way: The total issues in London, foreign, Colonial and English, were taken, and it was calculated that they came to, say, £100,000,000, and therefore it was concluded that £100,000,000 had been invested. Anyone conversant with what is going on in the City at the present moment knows perfectly well that out of that £100,000,000 only about £30,000,000 were taken up by investors, and the rest taken up by underwriters in the hope that they might sell again to investors. Therefore, any conclusion arrived at on those figures is absolutely false and misleading.

The Chancellor of the Exchequer, in answering an attack I made upon him with regard to the diminution of the Sinking Fund, brought up his old argument against myself that in the days when my party sat on that side of the House, and especially in the year 1899, I supported Sir Michael Hicks Beach when he reduced the Sinking Fund. I have met that argument so often that I really did not think it worth while meeting it again. I am sorry I did not, because the Chancellor of the Exchequer brought it up on that occasion. The two circumstances were absolutely different. In the first place, in 1899, Consols stood at about £110. There was then a very considerable body of financial experts who thought that Consols would always remain at that price, and that it was very bad policy on the part of the Government to buy £100 Consols for £110. It was better to use your Sinking Fund in other directions. As a matter of fact, that has turned out to be correct, because Consols at the present time stand at £75. If you can buy £100 Consols for £75, surely you ought to avail yourselves of the opportunity. It may be quite right to increase your Sinking Fund when you can buy Consols below par, while it maybe quite wrong to increase your Sinking Fund, or right to decrease it when you have to give considerably over par. That is a self-evident proposition which cannot be denied. The Chancellor of the Exchequer has never met that point at all. He has merely said that I am a mere party hack, and, because my Chancellor of the Exchequer under totally different circumstances reduced the Sinking Fund, it is quite wrong of me to say that he ought to reduce the Sinking Fund now. Then, in addition to the fact that you can buy now for £75 £100 Consols, instead of having to give £110, our ordinary expenditure has increased enormously. I believe that I am right in saying that at the time our expenditure was about £110,000,000 or £120,000,000 a year, whereas now it is £209,000,000 or £207,000,000. That is an enormous increase, and it ought to be taken into consideration. The Financial Secretary seems to think that because you are well off and are raising a very large revenue, you ought to pay your debts off slower. If that means anything, it means that the richer a man is the slower he should pay off his debts. I hold that it should be quite the contrary, and that the greater the revenue the more we should pay off debt. I see that the Solicitor-General smiles, but I think that on consideration that he will agree with me.

The SOLICITOR-GENERAL (Sir Stanley Buckmaster)

I was not smiling derisively.

Sir F. BANBURY

I think it is a self-evident proposition that in the days of your prosperity, when you are levying a large revenue, you should provide for an additional redemption of debt. My hon. Friend the Member for Down (Mr. Mitchell-Thomson) gave us some very interesting statistics, which have never been met by the Chancellor of the Exchequer, with regard to the percentage of the money now used in paying off debt. I have not checked the figures, but I assume they are correct, or, at any rate, I do not think that they are very far wrong. I am quite prepared to accept the figures of the hon. Member for the Rushcliffe Division (Mr. Leif Jones) if he will give them to us later, but I think his figures will be something over.4, which is the proportion now as compared with anything varying from 5 to 7 in the earlier days.

Mr. LEIF JONES

The bon. Member for Down, in his calculations, left out of account the actual sum that has been paid off under the Naval and Military Works Loan Act.

Sir F. BANBURY

I am quite prepared to take the figures of the hon. Gentleman opposite, and I am sure I am quite right in saying that the percentage is less now than it used to be in the past. That answers the whole question. Instead of the right hon. Gentleman being the extraordinarily provident person he thinks he is, he is quite the reverse. He is not paying off as much debt as his predecessors in proportion to the revenue of the country; and that, I think, is an extremely serious state of affairs. I do not quite know what is going to happen when we find, as we shall find, that our expenditure is enormously increasing and that the Death Duties do not yield the return which they are yielding at the present moment. I think £400,000,000 has been taken out of the capital of the country in the last twenty years. You cannot go on doing that. There must come a time when the capital of the country will be reduced. I heard yesterday, and I heard again to-day, that those people who do not spend their income but save some of it are denounced as people who roll up money which they do not want to spend, and I gather from the manner in which they are alluded to that they are supposed to be the enemies of their country. I look upon them as the salvation of their country. We are very much too extravagant; we are all anxious to do all these beautiful things in social reform, but in private life we all want to have a motor-car and dine at the Ritz.

The consequence is that we do not roll up any money, and, if people do not, we shall not get any capital in years to come. Hon. Gentlemen say to us, "You say that all these things are going to happen, but they did not happen last year or the year before." That is true. These things take a long time before the eventual result is seen. You do not alter the condition of a country in five or ten years, but this is going on all the time, and it must decrease the capital in the country, and eventually put the Chancellor of the Exchequer into a very difficult position, if he still has to maintain the expenditure and finds the sources from which he draws his revenue has been more or less depleted. Personally, I am afraid that preaching economy is not popular in this House or in the country at the present time. I do not know that it was ever very popular, but it certainly is not popular at the present time. Unless something is done, disaster is bound to overtake us in a few year's time. Extravagance goes on increasing; the appetite increases with eating. People find that £207,000,000 does not seem to make very much difference—only about 425,000 people out of the 46,000,000 are really affected by it—and the result is that if you get up on the platform and preach economy you are not cheered in the same way as you would be if you got up and said, the result would be that poverty would disappear; that people would not find themselves wanting for anything they required, and that they would not have to work so hard, which is the general effect of speeches of hon. Gentlemen opposite, and, I am sorry to say, sometimes even of speeches by hon. Gentlemen on my own side of the House. I am afraid that unless the Chancellor of the Exchequer does seriously consider the position, we shall find that a very great disaster will overtake the country, and that, instead of being able to say he is paying off debt, he will be compelled to borrow.

A few moments ago there were not above a dozen Members on either side of the House present—they have slightly increased during the last few months—and I think it shows the feeling of the House at the present moment. At eleven o'clock we shall vote or not vote, as the case may be, and anything that anyone will say will have no effect upon the Government. That is a very disastrous state of affairs. There was in the older days, when the Budget was under discussion, some pretence by Members on all sides of the House of coming into the House and listening, and even of venturing to make a few remarks. You met Members in the Lobby, and they discussed with you what their opinion was of the Budget and what the result on the country would be of the imposition or, as sometimes happened in those days, of the diminution of taxation. Now the whole thing has changed. Last Session, when I suggested that we should not sit after four o'clock in Committee upstairs because it was Budget night, an hon. Baronet opposite said, "Nobody cares about the Budget. What do we want to hear the Budget for?" And the Committee did not actually adjourn, but continued to sit. The hon. Baronet the Member for the Mansfield Division (Sir A. Markham) yesterday said it was absurd to say that any injustice was done by the operation of the Settlement Estate Duty, because the money which had been paid would be refunded with interest at the rate of 3 per cent., though he thought 4 per cent. would be better. Supposing I sold to him a colliery for £50,000, and it was found to be worth £75,000, and I went to him and I said, "Now, look here, I want that colliery back again. I will give you the £50,000 and pay you interest at 4 per cent. for the time you have held it." Would the hon. Baronet think that no injustice was done? That is absolutely the case with the Settlement Estate Duty. Would the hon. Baronet think that right?

Sir A. MARKHAM

Certainly not!

6.0 P.M.

Sir F. BANBURY

The hon. Baronet would say, and quite rightly, "I have got the better of the hon. Member for the City of London, as I thought I should, and, having done that, I am not going to give anything back.' The unfortunate people who have paid Settlement Estate Duty now find that the charge that was imposed to cover a certain period is to be altered, and that they are to be mulcted, and the only consolation is that they are to have 3 per cent. for half the time upon the money that is returned. Of course, I would not for a moment say that no Government can alter taxation, but what I urge it should have done in this case is to provide that the alteration of the Settlement Estate Duty should only take effect as from this date. If that had been done, nothing would have been said. The effect, no doubt, will be bad, because it will stop estates being settled, and I am foolish enough to think that it is better in these extravagant days not to give people who inherit estates, especially if they do so when they are young, an opportunity of spending the capital as well as the income. No doubt these are views which the Secretary to the Treasury deems to be old-fashioned and petrified. I am, however, in favour of settlements. The increase of duties will probably prevent them, and although it may be foolish, improvident, or bad finance, I do not think there would have been any complaint on the score of injustice, but, as things now stand, no one can deny that the Government proposal is not only foolish, but unjust finance. I hope the hon. Baronet the Member for the Mansfield Division, if he speaks later on, will admit that he has failed to understand the real effect of this Settlement Estate Duty, and then perhaps we shall have the pleasure of his company in our Lobby.

Mr. GODFREY COLLINS

I am afraid the appeal for economy to which we have just listened has fallen on rather deaf ears, and I take it, too, that the hon. Baronet's objection to this Budget is not shared by the right hon. Gentleman on the Front Opposition Bench, because the right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain) has to-night intimated that, so far as he is concerned, he does not intend to divide the House on this Finance Bill. I have I always thought that the attitude of the Opposition on the Second Reading of this Bill was the best justification of the Government for closuring the Bill by compartments, as it is practically an unopposed Bill. The Leader of the Opposition, in his closing remarks on the Second Reading of the Bill referred to the fall in Consols of 13 points, and the drop in German Threes of only five points, and he pointed out that that was the contribution of my right hon. Friend the Chancellor of the Exchequer to the financial security of this country. But he omitted to point out that at the present moment, through the severe trade depression in Germany, bankers there are calling in their money, and that particular money is finding circulation only in gilt-edged stock. If the right hon. Gentleman had made his comparison with a date four years ago, he would have found that Consols during the last four years have only fallen 2½points, whereas there has been a drop in German Threes of 6½ points. In other words, during the last four years, when the Stock Market has more fully appreciated the character of the Chancellor of the Exchequer's financial proposals, the fall in Consols has been stopped in comparison with the fall in German Threes.

If the right hon. Gentleman had been anxious to make a fair comparison between German Threes and British Consols, I submit he should have compared the last ten years of Tory administration and the prices therein obtaining, with the prices which have obtained during the last eight or nine years of Liberal administration, because ho would have found for all practical purposes that the fall in Consols and in German Threes had been identical during that period. It is well known that these stocks fall or rise together, and that they are dependent upon the price of money in different parts of the world. [An HON. MEMBER: "What about Russia?"] I have not the figures relating to Russia. What I wish to point out is that the right hon. Gentleman was anxious to make a debating point against my right hon. Friend, and he flung these figures before the House of Commons without giving a full, complete, and accurate statement of the conditions in the two countries—a course which is characteristic, I believe, of the attitude of Tariff Reformers in dealing with financial and fiscal matters. Although Consols have fallen in value, German Threes and Consols to-day are at the same figure. In other words, Germany, to-day, when she comes on the Money Market to borrow money, has to pay 20 per cent. more in interest than Great Britain, and this, I believe, is a result of this country having consistently followed a Free Trade policy for a course of years. The fall in Consols has always in the minds of hon. Members opposite been a matter of gloomy foreboding. On the other hand I think it can be shown it is a matter for congratulation in two respects. The first is that during the last nine years in which this country has been repaying debt at a very rapid rate, it has been to the advantage of the Exchequer that Consols have been below par, and secondly, during the last nine years this country has been saving money and lending it abroad, and, through the low price of Consols it has been able to receive a higher rate of interest upon its savings. Therefore, from these two points of views, provided peace is maintained in this country, I see no disadvantage in the price of Consols remaining at what it is at the present moment.

On the Second Reading of this Bill I endeavoured to justify the increased taxation which is being raised this year, because the extra revenue is ear-marked for productive purposes. Let me follow up that line of argument by a short analysis of our total State expenditure, both for local and Imperial purposes. My figures are taken from this year's Budget, and from the latest local taxation return. May I remind the House to start with that the total State expenditure, both for local and Imperial purposes, is £258,509,000. The Imperial expenditure spent and administered by the central authorities is £149,550,000. The local expenditure of the whole of the United Kingdom raised by way of rates, and excluding loans, amounts to £77,965,000, and the local authorities administer Grants received from the Imperial Exchequer to the amount of £30,994,000. We have therefore a sum of £108,959,000 which is spent by local authorities in this country. To find the exact sum raised by rates or loans I have to deduct the sum of £9,553,000, profit earned by the Post Office on the holdings in Suez Canal shares and on Crown lands. I arrive therefore at a figure of £248,956,000, which is the sum which is required to be raised yearly by rates or taxation in this country.

Let me analyse that sum under three heads. My three heads are: Productive Expenditure, Non-productive Expenditure, and expenditure for Social Services. In productive expenditure I include education £34,018,000, Roads £20,750,000, cost of Lighting and Parks £3,815,000, Sanitation £9,707,000, and National Insurance £9,312,000. In non-productive expenditure I include the total cost of the National Debt, of the Army and Navy and of the whole machinery of the Imperial Government as well as the Police, which cost 9,978,000, the total being £127,528,000. Under Social Services I include the cost of Old Age Pensions, Poor Relief, and Lunacy. If I summarise, therefore, the total sum raised by rates and taxes under these three heads, I find that the total productive expenditure of this country amounts to £77,002,000, the total non-productive expenditure to nearly £147,854,000, and the total cost of the Social Services to £33,053,000. Certain local services are not allocated exactly, but I have placed them under the heading of non-productive expenditure. Exception may be taken to the classification of these services, but I have no previous guide in this matter. If I analyse this expenditure three points arise. First I am struck with the large percentage of the productive expenditure of the State. This productive expenditure, although it may be said to be strictly productive expenditure, depends on the success of local management, and on the ability of the local authorities to attract to their service the best brains. As the Imperial Exchequer is going to pay a larger share of the cost of these services in the future, and may exercise greater control over it, I trust the Government will take steps to minimise any interference with local work as far as possible.

The pouring out year by year of £77,602,000 for public services to make the nation more fit—I use the word in an economic sense—both mentally and physically, has one effect, and that is to raise the value of land. This expenditure is bound to increase the productive power of this country, and thereby increase the price that men can afford to pay for land. Indeed, I regret that the Government have not gone much further in their reform of the rating system. The next point that strikes one in the analysis of these figures is the large sums spent on Social Services—£33,000,000. It is not creditable that, in the year 1914, this country should be forced to spend £33,000,000 on Poor Belief and Old Age Pension, although personally I do not grudge that expenditure. But the growing consciousness and organising power of this country will not and should not permit such a state of things to continue, and, instead of repairing defects which this expenditure endeavours to rectify can we not seek to remove the causes which bring so many of our people into this unfortunate position. My last point is, Can we afford this expenditure? I will not make a comparison of this expenditure with our total national income. That has been well done by many of my hon. Friends around me. But when I regard the amount of the savings of the working classes, the quantity of furniture, and the number of houses erected by for and on behalf of them, I do not think it can be said that this taxation causes poverty or even comparative poverty. When I regard the conditions of other classes in the community, I consider that of the present taxation, heavy though it be by comparison, these classes are well able to bear their present share, as the money is paid freely and without any undue hardship. I believe that this country can well afford to pay the present taxation, and I do not join with hon. Gentlemen opposite in their gloomy forebodings as to the future.

Mr. HAYES FISHER

The hon. Gentleman who has just sat down made a very astounding statement at the beginning of his speech. He said that hon. Members opposite justified the Closure, for the first time in the history of this country of the Finance Bill, because we did not vote against the Second Beading. Allow me to remind him that directly we saw the Finance Bill in its final form—it took a long time to arrive at that form—I myself moved a reasoned Amendment which was very nearly carried. At all events, the Government majority fell to thirty-eight on that occasion. Had that Amendment been carried, the Finance Bill would have been killed and would have disappeared. We did our very best to oppose it by a reasoned Amendment, which regretted that certain moneys were not placed at the disposal of the local authorities without those conditions which we thought ought not to have been attached in any way to the money which was held out to them.

Mr. LEIF JONES

Are you going to divide to-night?

Mr. HAYES FISHER

The hon. Gentleman had better wait and see what happens in this Debate. I am quite aware that my right hon. Friend the Member for West Birmingham (Mr. Chamberlain) has stated that it is not his intention to divide, but he did not tell his followers that they were not to divide. It is possible that some hon. Gentlemen on this side may desire to divide. Hon. and right hon. Gentlemen opposite have lately set up a very curious argument, that if we do not divide against a Clause or a Bill we must be taken as agreeing to it, and that it therefore obtains the sanction of the House. Let me apply that argument to them. We may be, in the main, in favour of a Clause, but we may think that considerable Amendments ought to be introduced into it. Hon. and right hon. Gentlemen opposite are Home Rulers. They have brought in a Home Rule Bill, but they were not satisfied with it, and have brought in an Amending Bill. Are we to taunt them and say they cannot possibly be in favour of the first Bill because they have brought in an Amending Bill? If we venture to make a suggestion of that kind, they would be the first to repudiate it. Therefore, we on this side were perfectly right in saying that while we might, in the main, agree with the Budget of the right hon. Gentleman, we thought there was much to criticise in it, and we have done our best, in the short time allotted to us for the Committee stage, to bring about Amendments of a considerable and substantial character, which have been granted largely owing to the Amendments put down by Members on this side.

I, for one, am very glad that the Government have allowed us this one day for the Third Reading of the Bill. During the discussion on the Closure Resolution a suggestion was thrown out, I think by the Chancellor of the Exchequer, that we should take one more day for the Committee stage and should forego any discussion on the Third Reading. I am very glad that the Leader of the Opposition did not agree to that, because it would have set yet another very bad precedent. We have moved very fast in bad financial precedents, and it would have been a very bad precedent indeed if this House had once sanctioned procedure under which no opportunity was given for discussing a Finance Bill which had passed through Committee and Report, and which would not have any other chance of being reviewed as a whole except upon the Third Reading stage. Members of this House often lose sight of the enormous amount of financial control with which they have parted, and how such control has passed from this House to the Government of the country. In 1906, when the present Government came into office, it was impossible to impose or to collect any taxes lawfully until those taxes had been put into Resolutions voted in Committee of Ways and Means, until a Finance Bill had been founded upon those Resolutions, and until that Bill had been discussed on First Reading, Second Reading, Committee and Report stages, and on Third Reading, and discussed fully and freely without any Closure, gag or guillotine. After that, we had the additional safeguard that the Bill could be discussed in another place. We have moved very far from that under the present Government. It is now possible for taxes to be imposed by a Resolution passed on one night, almost without any notice, in Committee of Ways and Means, provided it is afterwards ratified in a Finance Bill brought in some time afterwards. We have lost many chances of discussing finance which we used to have. Now, one of our best opportunities is taken away by the fact that hon. and right hon. Gentlemen opposite have concurred in closuring, for the first time, the discussion of the Finance Bill.

The right hon. Gentleman the Member for West Birmingham was challenged today as to whether he, if ever he was again Chancellor of the Exchequer—as we all hope he will be—would adopt the same procedure, and without a moment's hesitation, he said, "Yes, you have put the machinery into my hands, and I shall certainly use it." That is one of my objections to this method of procedure. The Front Benches may agree, but the House itself ought to take a great deal of control over finance, and ought not to let that control be taken out of its hands. All forms of closure, gag, or guillotine have come to stay. I have never known any one of them which after it was introduced, was not adopted by both sides There will come a day, no doubt, when a Budget of a character which will be exceedingly distasteful to a great many right hon. and hon Gentlemen opposite will be introduced, and it will be closured in exactly the same way as this Budget has been closured. That is not a procedure I admire. I regret it particularly when new taxes are imposed and new burdens are put upon the people. You want these various stages, cumbersome as they may seem, when it is proposed, in order to obtain the requisite money for the services of the Crown, that new taxes should be imposed. The Third Reading gives us an opportunity of reviewing the Bill as a whole, and affords the country an opportunity, through the Press, of knowing what burdens are being imposed by the Government of the day. We may fairly say that we made good use of the time given us for the discussion of this measure in Committee. We chiefly directed our attention to Clause 5 and Clause 12, which is now Clause 14, and we had something to say about the other Clause. The Financial Secretary to the Treasury in a very platform-like speech today assured us that the Bill had come through the House entirely unscathed. One would have thought the Bill was exactly the same now as when introduced in Committee. Instead of passing unscathed, it was altered in most material ways in several Clauses. If any one will look at Clause 5 as it first appeared in Committee and as it came out of Committee, they will see how completely it has been altered.

Mr. MONTAGU

Hear, hear.

Mr. HAYES FISHER

We are quite grateful for it. I am not in the habit of expressing my gratitude to the Front Bench, but I have done so on one or two occasions lately, and I can repeat that message of gratitude to the Chancellor of the Exchequer for the very great attention which he gave to the matter and for the way in which he met much of the criticism from this side. Clause 5 has been enormously improved. Many injustices would have been done under that Clause if three very important Amendments had not been accepted. The Clause is still open to a good deal of criticism, and I still hold the opinion that it would have been better, when initiating new taxation of this kind, that the Clause should have gone to the Royal Commission to be well afted by them before the new taxation was imposed. A Third Reading stage might not be necessary for a Bill if it were exactly the same as the measure which passed Second Reading, and particularly if there should be an occasion when a Finance Bill passes its Second Reading without any Division. This Bill is not the same Bill, neither is the Finance Bill of 1914 the Finance Bill of 1913. It very much enlarges the area of the Super-tax, and compels many people to pay it who have not had to pay it previously to this year. I entirely agree with it, and think it is a very proper way of raising money, but it is a tax which affects an enormous number of new people, and what I am pleading for is that we should adequately discuss new taxes, so that those who have to pay them should have some means of knowing that those taxes are being imposed. This Bill very largely increases the amount of money which will have to be paid in Death Duties. It taxes many people who have never been taxed before, and who own property in foreign countries. I entirely agree with the right hon. Gentleman in raising money both by grading the Income Tax and by grading the Death Duties. I do not like the increase in the Death Duties. I have before stated that it is a particularly capricious form of taxation, and, being so, it becomes very unequal as between those in a certain category. It would have been better to raise the money in some other way than by increasing them. That is a personal opinion.

Clauses 6, 7, and 8 were all guillotined without discussion. We might have found in them some of those flaws and failings which were revealed when we discussed Clause 5. It is very often the case in financial matters that a Clause which looks perfectly innocent in itself may, when fully discussed in this House, reveal all kind of sores, hurts, and injuries to different sections of the community, which are not seen on the first blush. Therefore, again I plead for a full discussion of all financial matters, because it is extremely important that all subjects of the Crown should feel that they are adequately protected against any injustice, hurt, or injury which, very likely, would not be inflicted upon them if the House really knew what it was doing. Nobody, however well they may have been trained in financial matters and however considerable their knowledge may be, could at first sight tell what is the effect of a Clause like Clause 5. The discussion which took place on that Clause and on Clause 14 revealed that there were matters in those Clauses which were unfair to certain sections of the community, and through those being revealed in the course of the discussion the Chancellor of the Exchequer was able to produce Amendments to those Clauses which removed a good many of the complaints that were made. The greatest blot on this Bill to my mind is Clause 14, which does away with Settlement Estate Duty. I have listened to all the Debates on this question. I have not personally taken part in any Debate on Clause 14, but after listening to the very vigorous and elaborate defence of the Chancellor of the Exchequer, I still think the House is behaving in a dishonourable way in abolishing Settlement Estate Duty. This House has always rejoiced in being called an honourable House. I cannot help thinking that if it commits many such acts as that which is involved in Clause 14, it will lose the name of honourable House, and will not hold the high position it has always held in the opinion of the country for fair dealing between man and man. It is impossible not to recognise that those people who settled their estates in and after 1894 had the opportunity of avoiding the estate having to pay duty more than once during the currency of the settlement. That offer was made in a Memorandum which was circulated by the Treasury, and that differentiates it from all those cases which the Chancellor of the Exchequer raised and which he thinks are analogous—the question of tariffs and matters of that kind. When you impose or take off a tariff you do not issue a memorandum to a large number of individuals and tell them that is the basis of the new arrangement which you are making. I admit it cannot be called a contract with the State, but this was much more of a specific bargain between the House of Commons and individuals who wished to avail themselves of the opportunity given them by Sir William Harcourt of avoiding what Sir William Harcourt himself thought was an unfair charge upon an estate.

The Chancellor of the Exchequer said there could not be a bargain between two parties who were not equal, and that we imposed this duty upon a number of unwilling landlords and therefore it was not a bargain. In that case there could be no bargain between a landlord and a labourer as to the rent of a cottage. The labourer may say. "You want to charge me three shillings for that cottage. I do not want to pay it. I do not think I ought to pay it and I will only offer you two shillings." The landlord may let it for the two shillings, and may afterwards come along and say, "I made that bargain with you, but inasmuch as I am in a superior position to you, that was not a bargain and I intend to take back the benefit of it, for I now find I can get a bigger rent for the cottage." That is an impossible position to take up, that you cannot make a bargain or an understanding or an arrangement between this House and a group of taxpayers because this House is in a superior position. There was undoubtedly an expectation raised in the minds of a certain number of gentlemen owning land, that if they chose to avail themselves of it they could avoid Death Duties by paying what was then 1 per cent., and afterwards became 2 per cent. They had that arrangement made with them by this honourable House twenty years ago, and I do not think the time has come yet when we should rip up an arrangement of that kind and tell them that, after all, we have repented of our bargain, arangement, or understanding, whatever you like to call it, and we intend to take it back and deprive them of the benefit which they undoubtedly derive from the bargain, or understanding or arrangement, which was made with them by Sir William Harcourt. The right hon. Gentleman says that one House of Commons cannot possibly bind another for all time. It cannot, but I think that, at least for a period of twenty years, we might keep a specific bargain of that character. What, after all, should we lose by it? Possibly a small amount of revenue. The mere fact that the right hon. Gentleman said that this could not be retrospective would not in the least prevent him from making a general law in future that Settlement Estate Duty should be abolished. The right hon. Gentleman always puts this case in the way: "Are you going to say to me that you can allow a certain number of gentlemen who have entered into an arrangement with the State to stand in the way of the House of Commons altering the whole law as regards taxation?" We are not pleading that. We are saying that you can alter the law. You can alter your system for the future, but you ought to keep the bargain, or understanding or arrangement, which you have made. I still think this is a very grave blot, indeed, upon this Bill. I am sorry the House of Commons should have given its support to this matter. The House of Commons, perhaps, can truly foe said not to be able to do any legal wrong, but, at all events, it can inflict a great moral wrong on the community, and in inflicting that wrong on a number of those who have a right to expect fair dealing from it, it will lower its prestige and its credit, and it will not stand in the same way before the world as "this honourable House."

Mr. LEIF JONES

The right hon. Gentleman seems to me a little infirm of purpose. He does not like the Budget. He criticises it in many respects, and he has some very hard words to say about some of the Clauses, but he will not carry his criticism or his dislike to the Budget to the extent of voting against it. Again, he does not like discussing the Budget under the guillotine, but he is quite prepared, when his own party finds itself in office, to make use of the guillotine to carry their Budgets.

Mr. HAYES FISHER

I did not say so.

Mr. LEIF JONES

The right hon. Gentleman seemed to positively gloat over the day when the right hon. Gentleman (Mr. Chamberlain) would be forcing a Budget through this House under the guillotine. I was sorry to hear him say that. I have myself consistently opposed the guillotine, both in regard to ordinary Bills and in regard, certainly, to Finance Bills. I had hoped that the right hon. Gentleman was going to join with me even though we should change places.

Mr. HAYES FISHER

Perhaps I shall.

Mr. LEIF JONES

I shall look forward to that day. I was very sorry to hear the Financial Secretary to the Treasury suggest that in future years, when, as I think, this Government will still be sitting upon these benches, they intend to use the Guillotine Closure for the carrying of the Finance Bill. His words were, "The normal procedure for carrying great Bills," but I hoped the Finance Bill was to be exempted fom the general category, and it was only excused by the Government themselves this year on account of the lateness of the date and the necessity of carrying out the terms of the Gibson Bowles Act. While I protest against the guillotine, and am no more convinced than ever I was, I must say that during the Debates of the last few days on the Finance Bill the condition of the House and the number of Members who have taken an interest in what was going on has not been such as to confirm the argument that I used in protesting against it. In some degree I think that is due to the Closure Resolutions themselves. I think one of the disadvantages of the Closure is that the House loses interest when a Bill has to be discussed under these conditions. But it has one advantage It sets hon. Members on the Government side of House free to cause talk much more readily than if there were no guillotine, because under ordinary circumstances if we get up and make speeches we know we are doing it almost against the frowns of our Whips, whose only anxiety is to get Government business done. I should, therefore, have expected my hon. Friends to be thronging these Benches now that they could make orations to any extent without coming under the censure of the Government Whips. The hon. Baronet (Sir F. Banbury) drew attention to the sparseness of the attendance, and pointed out that the House had filled up while he was on his feet. I observed that myself. I was drawn to the House by the fact that I saw his name on the indicator, and I was very anxious to hear the Chairman of the Estimates Committee—of which I am a member: I sit under the hon. Baronet's chairmanship— preaching that economy which it is the duty of the Estimates Committee to enforce in detail upon the House if they can.

The hon. Baronet and the right hon. Gentleman (Mr. Chamberlain) both criticised the size of the Estimates this year, and I share to the full the anxiety they displayed at the height of expenditure which we have reached. I think it is far higher than is necessary or than is desirable. But we must keep, a sense of proportion, and I think that expenditure must be measured in some degree by the national wealth, and if you take your £200,000,000 Budget this year, I doubt whether it is a bigger fraction of the whole national income than was the £100,000,000 Budget of Sir William Harcourt of twenty years ago. The percentage in Sir William Harcourt's day was a little under 10 per cent. of the National income. Our £200,000,000 of expenditure this year, I am sure, is not more than 10 per cent. of the National income to-day. Therefore, alarming as these figures are, they are the expenditure of a very rich nation. That does not mean that we ought not to scrutinise the expenditure carefully, and I believe there are many items on which we can economise. But the great difficulty is that hon. Members opposite talk of economising in directions where personally I do not think the nation is spending at all too much. Expenditure on social services—old age pensions and so forth—that is expenditure for which I believe we get our real money's worth. And I think that is so much recognised by the nation that I am quite sure if hon. Members opposite found themselves here they would not be able to diminish the expenditure upon these social services. The benefits derived from such expenditure are so great that no party in office in the future will be able to go back on the example which has been set by the present Government in these respects. I have always thought that the great field for economy which statesmen in the future will cultivate is in the matter of national armaments. Europe's expenditure upon that item is monstrous, and I cannot believe that the world can go on spending the proportion of the National revenue on armaments that we, in these unhappy years, are doing. There is a means of saving of which I hope this Government will not lose sight, and which I believe the Governments of Europe will find themselves driven by necessity, for they are in no such case as we are, to follow out and change the present scale of expenditure.

A great deal has been made in the Debate to-day of the raid which has been made by the Chancellor of the Exchequer on the Sinking Fund. I commented on that when the Clause was before the House. I do not think that we have much cause for complaint of the amount of capital paid out of our £200,000,000. I calculate that we are paying off about £9,000,000, and that is the 4½ per cent. to which the hon. Baronet referred. He said that that is a less percentage of the total National revenue than has been used to pay off debt for many years. I agree with him that it is so. It seems to me that the percentage of National revenue is not really a helpful factor at all in considering this matter. I do not see what real use we can make out of it. If all the National Debt were paid off, we should be in the very happy position of having a large National revenue out of which we could not possibly pay 1 per cent. in reducing debt, because there would be no debt to pay off. It is useless to take a mere percentage of National revenue as a measure of whether you are doing your duty in paying off debt. You must take the size of the debt, and you must take also the amount of taxation which is being levied, and consider how far that is pressing upon the people. If you do that, when we are raising £200,000,000, as we are doing this year, with the Income Tax at 1s. 3d., and with the Death Duties as heavy as they are, it seems to me that in paying off £9,000,000 you are doing your duty in paying off National Debt. I do not complain that the Chancellor of the Exchequer has not set aside a larger sum this year for the Sinking Fund.

The hon. Baronet, referring to the Death Duties, made some observations with which, again, I find myself in a good deal of agreement with him. I think the Death Duties have reached a very high figure now, and I am exceedingly sorry that the Government have found it necessary, after only four years, to revise these duties. People have made their arrangements and effected their insurances, and it is a little hard that after four years they should be called upon to make fresh arrangements in these matters. I think the Death Duties ought properly to bear some proportion to the Income Tax, because the Death Duties in a great measure rectify some of the injustices in taxing at the same rate incomes which represent large capital sums and incomes which have no capital behind them. You do that with the Income Tax, but that is rectified in some measure when you come to the Death Duties. If you are to have a high Income Tax you must have high Death Duties at the same time. It would not be well to put it all on the Income Tax. You must divide it between the Income Tax and the Death Duties. I do say that to talk of the Death Duties as using up the capital of the nation is really not facing the facts at all. The hon. Baronet spoke of the nation having spent of its capital £400,000,000 since the Death Duties were put on by Sir William Harcourt. Surely the nation has not spent it all on Death Duties. It is expected that we shall get this year £28,000,000. That is only a small proportion of the national savings, and as long as you are every year increasing the Capital Fund you cannot really say that by raising the Death Duties you are spending the capital of the nation. The truth is that my right hon. Friend has every reason to congratulate himself on the small amount of criticism which really survives now that the Finance Bill has reached its Third Reading.

Mr. T. M. HEALY

Under Closure.

Mr. LEIF JONES

Under Closure, I admit, and I very much dislike it. But the hon. and learned Member must realise, if he faces the facts, that there have been long periods during these few days the Bill has been under discussion, when there was difficulty in keeping the Debate going. There were few Members in the House, and there is no evidence that Members have been shut out from discussing any important matter they wished to bring before the House. I do not say that in justification of the Closure, but I say it is a fortunate accident that it has so happened for the Government. Really, there is not very much force in the interruption of the hon. and learned Member. The right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain) recognised the readiness of the Chancellor of the Exchequer to accept Amendments. I think all Members of the House who have attended the Debates must have recognised the way in which he has tried to meet criticisms and to accept Amendments when he was able to do so. Personally, I want to thank him for dealing with two matters on which I spoke on the Second Reading. One was the Income Tax on small unearned incomes. In regard to that matter I think he has introduced a great improvement in the Bill by exempting them from the higher rates. The other matter was in regard to the much discussed Settlement Estate Duty. I listened to the speech of the hon. Member for Colchester (Mr. Worthington Evans) in which he used very violent language—far stronger, I think, than the case, put at its highest, warrants. You cannot talk of the Government of the day entering into a bargain that some future Government will not revise the system of taxation. What is the utmost grievance that anyone can complain of in relation to the abolition of Settlement Estate Duty? It is that certain settlements which have been made were effected because Sir William Harcourt's scheme provided that the estates would pay a certain percentage so long as the settlements lasted. There was no fixture. What other grievance is there as the result of my right hon. Friend's proposal? He gives back, with interest, to those who have paid the money value of the duty they have paid. The only grievance is that settlements may have been effected which otherwise would not have been carried out. Is it really alleged that there is much property tied up merely because there was this small Settlement Estate Duty? I really do not think so. If you investigate the grievance, you cannot make very much of that particular Clause.

My right hon. Friend has accepted Amendments which I greatly welcome in regard to cases where the husband leaves property to the wife, with the remainder to the children. That is a very desirable form of will, and it is one which it is wise to encourage. I think my right hon. Friend did well when he exempted from Settled Estate Duty that particular form of settlement, and we owe him thanks for having been so ready to accept an Amendment to that effect. He has every reason to be satisfied with the reception the Bill has met both in the House of Commons and in the country. The Secretary to the Treasury pointed out that there is really no alternative in any quarter of the House to the Budget which the Government put forward. The right hon. Gentleman opposite (Mr. Chamberlain) in the last sentence of his speech, made, indeed, a timid sort of reference to Tariff Reform. It was very different from the glowing periods in which that subject used to be put forward on the benches opposite. The utmost he could say for it to-day was that Tariff Reform when enacted would produce more than the Land Taxes. As the Opposition have never ceased to point out how little fruitful, so far, the Land Taxes have been, the star of Tariff Reform has indeed sunk when the right hon. Gentleman can only tell us that it will produce more than the Land Taxes. The truth is that this Budget is a triumph for Free Trade without any such revolution of our social system as has been proposed by hon. and right hon. Gentleman opposite. The Government have met the unexampled total of the Estimates without too greatly burdening any given class in the community. They have done it without attacking trade, and without destroying our credit. I think it is the recognition of that fact which has made the country accept the Budget, and which prevents the Opposition from dividing against the Bill this evening.

7.0 P.M.

Mr. JAMES MASON

The hon. and learned Member (Mr. Leif Jones) commenced his remarks by finding fault with us for criticising this measure against which we are not prepared to divide. Surely that taunt does not come well from hon. Members opposite, who are invariably criticising the Government, but, with very few exceptions never vote against them at all! This Bill contains notably three quite new features, namely, the tax on accumulated income on foreign investments, the abolition of Settlement Estate Duty, and the relief from Death Duties in the case of certain quick successions. Furthermore, it appreciably adds to several of the old burdens, such as Super-tax, Death Duties, and the proportion of direct to indirect taxation. I think Clause 5 in regard to income on foreign investments has been fairly discussed, and I have no desire to add to what has been said. As to the abolition of Settlement Estate Duty, although I fully agree with my hon. Friends on this side of the House who have stated that they think a grave breach of faith has been committed as between the State and the individual, I do not wish to labour that point because it has been very fully dealt with. I should like to raise the question as to whether it was necessary for the purpose of the Chancellor of the Exchequer to abolish Settlement Estate Duty, and whether he could not have attained his object by other means. I should have thought it was a fact that the State desires to encourage thrift. That is shown by the fact that in cases of life insurance premiums up to one-sixth of the income of the person insured are free from the burden of Income Tax. But surely this Settlement Estate Duty in the past must be looked upon as a form of insurance against Death Duties, and it is fair to assume that when the rate of Settlement Estate Duty was fixed, and again when it was raised from 1 to 2 per cent., it was assumed to bear some definite ratio to wards the Death Duties, against which it was, in fact, an insurance. Would it not have been possible, and even reasonable, instead of abolishing the whole system of Settlement Estate Duty, to have it in creased in proportion as you increased the general rate of Death Duty? Would it not have been possible to fix a ratio between Settlement Estate Duty and the Death Duties at a figure which in the end would have given you the result which you now seek to attain by abolishing Settlement Estate Duty and substituting Death Duties on every life instead of certain periodical lives? It seems to me that, in so far as Settlement Estate Duty was a form of insurance, by getting the figures of the two duties in such a ratio that—

Attention called to the fact that forty Members were not present. House counted, and forty Members being found present—

Mr. J. MASON

I was putting the case that it would be possible, if Settlement Estate Duty were looked upon as a form of insurance against Death Duties, for the two figures to be brought into such a ratio, one with the other, that the State might have continued to accept that insurance responsibility, instead of altering the whole system and creating the obvious hardships which have been pointed out already in the abolition of this tax. It is quite clear, of course, that all insurance business is based on actuarial calculation and on the assumption that profit is made by the insurance company. Therefore it is evident that a figure could be arrived at which would not only have avoided the hardship to which I have alluded, but would also have enabled the State to insure against these Death Duties without any loss to itself. In fact it might have been put on such a basis that the State would really have made some profit out of it. That form of alteration on the present system might have been very well considered as an alternative to the abolition of this tax, and the imposition of the full Death Duties on every life. As regards the other new Provision of this Bill, that is the relief in certain cases of quick succession, I most heartily welcome the principle which has been accepted by that innovation, and I very greatly hope that the relief that is there offered may be considerably extended in the future. Unfortunately—and it is one of the greatest evils of this system of the Death Duties, so far as the returns of the Death Duties are concerned—the Death Duties partake far too much of the nature of a gamble. In certain cases there may be long lives, and Death Duties may fall very slowly upon particular families. In that case the burden is not an undue one. But in another case by the mere accidental death of two or three successive owners of the same property, the tax falls with very undue hardship. It would be generally admitted that it is bad taxation to have anything which is unnecessarily in the nature of a gamble. It is much better taxation that all those who have to pay should know what they would have to pay. It is quite arguable that this form of relief in the case of rapid succession is so far good that it would be justifiable to extend it, even if the general rate of Death Duties had to be kept at a higher level because of that relief which had been given in particular cases.

It has been pointed out several times that the increase in the proportion of direct and indirect taxation has been accompanied also by an increase in the amount of capital taxes as contrasted with taxes on income. I cannot agree with what was said by the last speaker that it is the same thing to tax capital as it is to tax income which might possibly become capital. It is a very different thing to tax capital which has already been built up and been employed in a useful manner in the industries of this country, and to tax an income which, though it might possibly have been saved and ultimately become capital, nevertheless at the moment is income, and as such will to a very great extent be spent before it ever arrives at a state of its being capital. Where you have capital employed in the industries of the country and where you take that capital, as you do under some of these capital taxes, and deplete it for the purpose of revenue, you not only disturb the industries in which it is employed—and we know that in many cases this disturbance is productive of very considerable evil—but you undoubtedly, although you may be replacing a considerable part of it by new capital, reduce the capital of the country which is being employed in those particular industries at that particular time. And, in so far as the capital of the country is interfered with, you are, of course, taking away from the industries the power of expansion, and the power of increasing the amount of employment which it can give, and to that extent you are, of course, affecting the industries, the cost of production, and ultimately the cost of living to the people who are employed.

Mr. LLOYD GEORGE

I have not very much to add to what was said by my hon. Friend the Financial Secretary to the Treasury, and I only rise to take notice of a few of the statements which have been made since he sat down. I would first like to say a few words in reference to what fell from the right hon. Gentleman the Member for Fulham, and one or two others, in condemnation of the time limit which is being imposed for the first time this year upon the discussion of the Finance Bill of the year. The right hon. Gentleman followed in this respect the right hon. Gentleman the Member for West Birmingham, who seemed to indicate that this meant the parting of the House of Commons with its control over finance. The right hon. Gentleman was a Member of the Government which took a really serious step in the direction of curtailing the power of this House in controlling finance, and that was in the guillotine of Supply. I have repeatedly in the course of discussions on finance sought to impress upon the House of Commons that it is very little use starting your criticism upon expenditure when the cost has been incurred and the Bill has been presented. The time to criticise the expenditure is when the proposals which involve the spending of money are placed before the House of Commons. That can be done when Bills are brought before the House of Commons, involving expenditure on such matters as insurance, when Amendments are moved to those measures which increase the costliness of the original proposal. Another time for doing that is in Committee of Supply when the money is voted.

The late Unionist Government for the first time curtailed the full liberty which the House had up to that time of discussing the whole Estimates of the year, and a guillotine of finance in its most vital proposal is now a Standing Order of this House as the result of the action of that Government. It is no use talking about this as if it were the first experiment ever made in curtailing the opportunity of the House of Commons for criticising finance. The very source and fountain and origin of all curtailment of discussion on expenditure is found in the Standing Order imposed upon this House, in spite of the protests of the Opposition of the day, by the Unionist Government of which the right hon. Gentleman I believe was himself a Member, and I think Financial Secretary—if not quite at the time, certainly shortly after. It is perfectly true, as the right hon. Gentleman says, that once these precedents are set it is very difficult to go back on them. The only observation which I should like to make about it is this: I hope that when a Unionist Government come to follow the precedent that we have set, they will make as liberal an allocation of time for the discussion of financial proposals as we have made in the case of this Finance Bill. I do not believe that anyone could get up and say honestly, given a time limit at all, and given the precedents set by the Unionist Government as well as by ourselves for the discussion of the Bills of the kind, that on the whole the time allocated for debating the new proposal has not been very liberal. The new proposals were the taxation of foreign income and the abolition of Settlement Estate Duty. Then there were the extension of the Death Duties and the increase in the Super-tax. All those alterations have been discussed very fully, and I do not think that anyone who has been in constant attendance at our Debates during the last few weeks will dispute this. I do not think the statement will be denied that on those parts of the Bill which were most criticised the Opposition found it difficult to make full use of the time allowed. The effort they made was an obvious one. If it was the Income Tax, it was with great difficulty that they were able to keep up a supply of speakers by the usual machinery. I remember perfectly well, with regard to the Sinking Fund, that it was a real effort to keep it going for two and a half hours. I have seen other discussions, as the hon. Gentleman knows quite well, in which the word went round to people to come and take part in the Debate.

Mr. PRETYMAN

I absolutely deny that statement.

Mr. LLOYD GEORGE

The hon. Member is at liberty to deny anything he likes afterwards, if he will try to restrain himself now.

Mr. PRETYMAN

You have no business to say it.

Mr. LLOYD GEORGE

I have absolute "business" to state anything which is within the Rules of Order, and I have no business to state anything which the Speaker would consider out of order. Within those limits I have a right to make this statement, which can be contradicted afterwards, and which the hon. Gentleman can challenge afterwards. But he has really been too excitable in the course of these Debates, and it is not good for his health. I know perfectly well the very persons who attend to discussions of this sort—we know them in any Opposition—and it was quite obvious that in some Debates there was difficulty in occupying the time that was to be consumed. Of course, I am not saying this in regard to those hon. Members who really contributed to the discussion. The hon. and learned Member for West St. Pancras (Mr. Cassel) made real contributions to the discussion, and spent a good deal of industry and great ability to think out our proposals, and his contributions were constructive as well as suggestive. I am certainly not referring to Members like him. It is perfectly true that the House of Commons, in its own defence, and in order to get through any legislation of any consequence, has found itself driven to what is called the time limit. The right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain) said that the procedure on the present Budget is the final parting of the House of Commons with its control over finance. There never was a Bill on which an observation of that kind was less justified. The right hon. Member for Fulham (Mr. Hayes Fisher), even immediately after that statement, said, "This is not the Bill which you brought in; it has been completely altered; you have got Amendments and alterations here, and mitigations in another Clause, and it is a totally different Bill." Yet this is the Bill over which the House of Commons is said to have Completely parted with its control. As a matter of fact, it is a part of the taunt which has been levelled at the Government that they change their Bills so completely from time to time. Why do they do it? It is because of pressure from the House of Commons, purely House of Commons pressure.

The right hon. Gentleman complained that the House of Commons had abandoned control of finance, and then went on to say that the Bill had been completely reformed, and that it was not the same Bill by any means, because of so many concessions and alterations that had been made in the course of discussion in Committee. This Bill is standing proof of the fact that the House of Commons does retain its control over finance, and in so far as taxation is concerned, every new proposal has been amply discussed. When the right hon. Gentleman the Member for West Birmingham said that these time limits have become an essential part of the machinery of the House, his speech is a great speech in favour of Home Rule, because all this has happened in consequence of the undoubtedly congested condition of the business of the House and the difficulty of getting through work which is absolutely essential, and the Finance Bill is, of course, essential. If the hon. Gentleman opposite is to allow any other party to govern in this country besides his own, if you are-going to have party Government in this country at all, it is equally essential that there should be Liberal legislation as Conservative legislation. The Finance Bill is essential, and when a Liberal Government is in it ought to make its contribution to the Statute Book of Liberal legislation. The only way to get through is either by relieving the House of its congested' state of business, or by curtailing the time-given to discussion. So much for the question of the time-limit and the way it works. I think it has worked much better than I am sure hon. Members who have taken part in the Debates anticipated. I should be very glad if the precedent which we are setting is generally followed when the right hon. Gentleman the Member for West Birmingham, or anyone representing a Unionist Government, comes to control the finance of this country. If they then give the same opportunity for the discussion of fresh proposals as we have given in this Budget, I do not think there would be very much ground for complaint on either side.

I come to the question raised by the hon. Gentleman who preceded me in this Debate—that is, the question of the Death Duties. He stated his argument temperately and fairly. It is said that the Death Duty is an interference with industry, and that it takes away money which could be expended in employment. That is an argument against all legislation, it certainly is an argument against all expenditure which is not productive, and whether you take the money by means of Death Duties or by means of Income Tax, substantially, in my judgment, it does not matter. You are taking money away which otherwise would fructify in the pocket of the taxpayer, and which would be spent either on industry or otherwise. It is an argument against expenditure, and that is a matter for Committee of Supply and not for Committee of Ways and Means. The Chancellor of the Exchequer is in the position of having the bill presented to him. He comes to the House, "This is the money we have got to find; this is the money which the House of Commons has insisted that we should find." I will come to the question of expenditure later on. If the hon. Gentleman wants really to see that capital is not wasted, and that employment is not being diminished by legislation, there is only one way he can do it, and that is by devoting his ability and his business capacity to assisting the House of Commons and the Treasury in cutting down expenditure. There is no other way of doing it. He said that the Death Duty works unequally. That is true, but in one way it works very equally. Nothing has struck me as being more remarkable in connection with this taxation than the fact that it has had no great fluctuations. You might have had men of huge property dying in the same year when you would have got five millions or ten millions, and in another year you might only get a million, and there would have been this great difference between one year and another. But that has not been the case. It is very remarkable that the figures have kept pretty steady from year to year when the property comes under review for taxation, and when the fluctuations in the market for private securities, as the hon. Gentleman knows very well, makes a considerable difference in the amount on which to levy the duty. I do not agree that the Death Duties are not a fair kind of taxation, and that they are not as fair as the Income Tax.

I think the Income Tax, if it could be so graduated that every man would pay strictly in accordance with his means, would then be a very fair tax. But even now the Income Tax does not work fairly as between one householder and another. I was criticised very severely the other day when I said that the contributions made as between different households towards the expenditure of the State work out very unequally. The house where you have got no family at all contributes exactly the same as a household where you have a large family. All that is unfair and unequal. Men are not really contributing according to their means as long as that happens. You must always take into account the essentially necessary expenditure of a household. I do not mean expenditure on luxuries, but essential expenditure for the maintenance and education of the children. A man who has a small family and an income of £1,000 may be contributing only one-third, according to his means, what another man with an income of £1,000 and a large family may be contributing, although they send in exactly the same cheque to the coffers of the State. But it is very difficult to get taxation absolutely fair as between one householder and another. There is this to be said in regard to the Death Duty that a man may get a fortuitous accession to his income which is not attributable to his own exertion. That is not true, it may be said, when a man dies and leaves a widow and children, but there is this to be said about a case of that kind, that in such a case the most expensive member of the family as a rule has disappeared.

Mr. LEIF JONES

Oh, oh!

Mr. LLOYD GEORGE

My hon. Friend challenges that proposition.

Mr. LEIF JONES

I express no opinion.

Mr. LLOYD GEORGE

My hon. Friend is hardly entitled to express an opinion. That is true, I think, in the vast majority of cases, almost necessarily true. At any rate, there is one member of the family who has disappeared and who contributed very largely to the expenditure. Coming to properties over £60,000, I should say it is a much fairer opportunity for calling on the subject to make his contribution towards the expenditure of the State than to come to him at a time when perhaps he is educating his children, or to come to a man at a time when he is entirely dependent on an income which is precarious. I should have thought it a much fairer and easier time at which to ask for a contribution towards the expenditure of the State. Not only that, but I think the State is entitled to say, here, under the protection of the law of this country and under the protection of the machinery of the State, you have been able to accumulate £60,000, or £100,000, or £200,000, or £1,000,000, and, had it not been for all this huge machinery we have set up, you could not have accumulated all that money, and, therefore, the State is entitled to a share of that, in order to keep the machinery going. I think that it a perfectly fair claim, and a perfectly fair argument, and although the hon. Gentleman says you are taking it out of capital which at the time is in industry and engaged in something which is productive, that is not really the case. For instance, if the money is in stocks and shares, and if you sell those you are not taking any money from industry. If a man has got a very large share in, say, a railway company, when he dies, if his executors sell those shares, what difference does that make to the industry? Not the slightest. You are not withdrawing money from the industry. The only case in which you could say you were doing that is where a man has got his money in a factory, or in a mill, or in some business.

There, I agree, it is a much more serious proposition, but we have endeavoured to meet that case to a certain extent where there are quick successions. We have done that because we have realised what the hon. Gentleman has very well stated, that there you are withdrawing capital from productive expenditure, and, if you have got to do it twice in the course of five years or so, there is something to be said, and it might be done later, as the right hon. Gentleman the Member for West Birmingham suggested. Those are the only cases in which you could say that money is withdrawn from industry. I do not think you can say that you are withdrawing money from industry where a landowner has to sell part of his estate. What really happens, as the hon. Gentleman knows very well, in those cases, is that there is an insurance effected on the man's life in order to meet that burden when it comes. It is generally done, I believe, in the case of land, and almost always done, I believe, in industry. The man insures so that when something happens to him it will not be necessary to come down on the concern or business and withdraw £5,000 or £10,000 from it. Therefore, when the time comes the money is very rarely withdrawn from the industry itself. Provision is made, either by means of setting aside certain stocks and shares for the purpose, or by insurance. Every prudent man makes those arrangements. I cannot conceive a good business man so arranging his business that when he dies the money will have to be withdrawn from the actual concern or industry. I should say that the men who do that are very, very few. Therefore, the argument that the money is taken away from the industry, although it is conceivable and possible, is, I think, not merely improbable, but I do not believe it is even the fact in those cases that any money is taken away from the business concern itself.

I come to another point which was raised by my hon. Friend the Member for the Rushcliffe Division (Mr. Leif Jones). He raised the question of expenditure, and I am very glad he did so, because, as I pointed out earlier in the Debate, the time to deal with taxation is when you are in Committee of Supply, or when you are dealing with spending proposals in this House. I hope my hon. Friends on this side who are criticising the Budget will bear that in mind. That is the time they can attain their purpose, not by criticising the Treasury and the Budget, but by supporting the Treasury when proposals are made for expenditure. I am sure they would much prefer to do that, and that it is a more pleasant position for them to fill, and it is much more effective. I have seen debates in this House of Commons where, almost without exception, men of all parties have got up and pressed the Government and the Treasury to go far beyond what they thought the needs and the justice of the case demanded, while there were hardly one or two men to say a word for economy. My hon. Friend has referred also to the question of armaments. The right hon. Gentleman the Member for West Birmingham said, in future what are you going to tax when you will want more money? He also not merely assumed but stated that you could not depend upon any economy in armaments. I think that is not so. I think he will find that next year there will be substantial economy without interfering in the slightest degree with the efficiency of the Navy. The expenditure of the last few years has been very largely for the purpose of meeting what is recognised to be a temporary emergency. Hon. Friends on this side thought we were spending too much, but, at any rate, it was an emergency which was put forward as a temporary emergency and, to a certain extent, an emergency which disappears because of the expenditure which we incurred. At least that is the position of the Government, and that was the only justification of the Government for the expenditure. I think it is a very serious thing for the right hon. Gentleman the Member for West Birmingham, who is a man of considerable influence in the councils of a great Party which shares the responsibilities for the Government of this Empire, to assume that this expenditure on armaments is going on, and that there is not likely to be a stop to it. I think there are symptoms, not merely here but in other lands, not merely that the industrial classes, but that the financial interests of the world are getting alarmed. I have always held that you cannot arrest armaments by mere political moves against them and by mere political criticism. I have always thought you could not arrest them by motives of humanity, and I regret that that is so. I am firmly of opinion that they will only be arrested when the great financial interests of the world begin to realise what a menace they are to capital, to property, to industry, to the prosperity of the world, and I think they are beginning to realise it.

The right hon. Gentleman the Member for West Birmingham said that the final word in this matter does not depend on us. I agree with him. It is very difficult for one nation to arrest this very terrible development. You cannot do it. You cannot when other nations are spending huge sums of money which are not merely weapons of defence, but are equally weapons of attack. I realise that, but the encouraging symptom which I observe is that the movement against it is a cosmopolitan one and an international one. Whether it will bear fruit this year or next year, that I am not sure of, but I am certain that it will come. I can see signs, distinct signs, of reaction throughout the world. Take a neighbour of ours. Our relations are very much better than they were a few years ago. There is none of that snarling which we used to see, more especially in the Press of those two great, I will not say rival nations, but two great Empires. The feeling is better altogether between them. They begin to realise they can co-operate for common ends, and that the points of co-operation are greater and more numerous and more important than the points of possible controversy. All that is to the good. I was very much interested the other day, when I was looking up the Debates on the Income Tax, and I recommend hon. and right hon. Gentlemen to read up those Debates on the Income Tax at the time when it was first imposed by Sir Robert Peel. They are extraordinarily interesting Debates. You could spend hours very fruitfully and very instructively reading them, and I have derived a good deal of understanding out of reading those Debates. What amused me and pleased me more than anything was to find that all the phrases used in the course of the last week or two had already been hurled at Sir Robert Peel and had spent their force sixty years before they ever ricochetted against me. That is not the point I wanted to call attention to. I desired to refer to a speech of the Duke of Wellington in defence of the Income Tax. Somebody had said it was a war tax, and ought not to be imposed in times of peace, and this is what he said:— I will not say, my Lord, that we have been at war but I believe we have been at something as like war, if it be not war, as anything could well be. I have had lately opportunities of giving my consideration to the measures which have been carried into execution during the last few years, and I certainly do consider those as measures of war. They have entailed upon the country the expenses of war, and we are now called upon to discharge the bill. That is exactly a description of the present situation, not merely in this country, but throughout the whole world. We have been engaged in something which is as like war as you could imagine, and there is the description by a man who knew war. Let us see what the expenditure was then. The expenditure, which he said was warlike expenditure, upon the Army and Navy, including certain exceptional expenditure in that year, came to £15,440,000. That, he said, was war expenditure, and justified the Income Tax. The total expenditure of that year was £50,000,000. Taking the National Debt charges, which were really expenditure for the last war, and the expenditure upon the Army and Navy, £45,000,000 out of that £50,000,000 was spent upon war and nothing else.

Mr. POLLOCK

. What date was that?

Mr. LLOYD GEORGE

1842. Although expenditure of the kind attacked by the Duke of Wellington has gone up from £15,000,000 to £80,000,000, or, with the National Debt charges, to £103,000,000, at any rate we are not spending the whole of our income upon preparations for war. What I wanted to call attention to was the way in which the Duke of Wellington would have regarded the condition of things in which we are now. What would he have said if he had seen this present expenditure, if he regarded an expenditure of £15,000,000 as like war? Here in Europe we are spending £350,000,000 a year upon all this machinery of slaughter. Is it conceivable that the House of Commons should regard that as a state of things which can continue? I cannot believe it. It would really make one despair of the common sense of nations to imagine that that state, not of armed peace, but of armament which is equivalent to war, could continue. It is true that it is warfare carried on by means of taxes and all sorts of scientific devices, but none the less it is war between the nations. I cannot help thinking that civilisation, which is able to deal with disputes amongst individuals and small communities at home, and is able to regulate these by means of some sane and well-ordered arbitrament, should be able to extend its operations to the larger sphere of disputes amongst States. When that happens there will be a much better method of raising money for social reform than by taxation. I am the last man in the world to criticise the raising of taxation for social reform. If there is no other means of raising money than by taxation, I say to the rich community that we are bound to proceed to the last penny of our resources in order to save millions of our people from the wretchedness they now suffer. It is our duty to do it. It is our duty not merely to them, not merely to humanity, but to the State itself. But I also say that I look forward to the time when the Chancellor of the Exchequer will be able to raise money for that purpose not by increasing the burdens on any individuals in the State, but by being able to say that sanity has re-established itself amongst the people of the world, and that we are able to save all this gigantic expenditure which is now being entailed by devices for war.

Mr. STEEL-MAITLAND

I should not have spoken at this precise moment had it not been for the remark of the Chancellor of the Exchequer with regard to the attendance during these Debates. I have not personally been able to be present the whole time, but I can say after communication with my hon. Friends that the statement of the Chancellor of the Exchequer that there has been difficulty in maintaining the Debates is absolutely without foundation.

Mr. C. DUNCAN

There has been hardly anybody to listen.

Mr. STEEL-MAITLAND

That is not the fault of the speakers. It is the loss of those who should have heard them. The Chancellor of the Exchequer referred to the expenditure incurred by the country in preparations against war. I do not think there is any sane man in the House who for one moment wishes to have £80,000,000 of public money devoted to war expenditure rather than to better objects of social reform. But I would make one appeal to the Chancellor of the Exchequer. None of us like this expenditure, but part of it is due—I do not say this in any respect rudely—to precisely the kind of action which the Chancellor of the Exchequer has taken. Take what happened at the beginning of this year. The Chancellor of the Exchequer gave a New Year's interview to one of the great daily papers. He gave expression to feelings which naturally I do not wish to criticise. But those expressions were followed not much later by a Supplementary Estimate of over £2,000,000 for the Navy, and later on by an increased expenditure for the Navy of £5,000,000 or more. I do not for a moment doubt that the Chancellor of the Exchequer gave that interview in the best of good faith and sincerity. But if anyone reads the suspicions that were aroused abroad and voiced in the Continental Press, ho will come to the conclusion that if the Chancellor of the Exchequer is as earnest as he no doubt is, and as we all are, in desiring that there should be better relations with foreign Powers, and that, there should not be the need for this expenditure in order to preserve our comparative position, the very worst way he could go to work to secure that state of affairs was by such an interview as that which he gave at the beginning of the year, followed by Supplementary Estimates, and increased Estimates after that.

I would like to express my sympathy with the Chancellor of the Exchequer in some of the other matters to which he has referred. He has piped to some Members on this side over Grants to local authorities, and they have not danced. He has mourned for some of them over the insurance they have to make against revolution, and they have not wept He has not got the support which he has told us he had every right to expect. The Chancellor of the Exchequer is like the femme incomprisé of nineteenth century drama. His intentions are invariably excellent, but they are always misunderstood. There was a little Clause put into the Finance Bill which we were told was a mere adjustment of the Estate Duty. It was going to inflict no real hardship or injustice. Then came my hon. and gallant Friend (Mr. Pretyman), and I sympathised with the Chancellor of the Exchequer. My hon. Friend at once accused the right hon. Gentleman of breach of contract, and, what is more, a good many Members on the other side of the House agreed with him. I thought it was very hard on the part of my hon. Friend, and I am the more astonished that he was surprised at such a Clause being inserted in a Finance Bill by the Chancellor of the Exchequer. The right hon. Gentleman suffered hardship in yet one other respect—with regard to the Income Tax on married couples. There, again, I am somewhat shocked by the ingratitude of my hon. and learned Friend the Member for St. Pancras (Mr. Cassel). When I read that Clause in the Finance Bill the first and second Sub-sections were of such an engaging character that one thought that married couples gained everything they had ever any wish to get. Yet when one read further one could see that it was not all roses, even after the Clause had been inserted. About 1 per cent. of married couples—perhaps that is rather overstating it—had a real hardship which they felt alleviated by the Clause, but the remaining 99 per cent. had no alleviation whatsoever of the real hardship which they felt, namely, the exaction of Income Tax at its full rate. But for all that I am bound to say I think my hon. and learned Friend was rather ungrateful, because, after all, he got an alleviation for the 1 per cent., and that is a great deal more than other people have ever been able to extract from the Chancellor of the Exchequer.

What is true of individual Clauses is true with regard to the Finance Bill as a whole. The Chancellor of the Exchequer came forward, much like the prophet Jonah when he started to rebuke the people of Ninevah for their extravagance and luxury. What happened? Not only were the people not impressed by his rebuke, but they were not even inclined to believe that he was like the prophet Jonah at all until his voyage to Ipswich convinced them that there was a real identity between the characters.

When, however, I come to the Budget as a whole let me ask the House not to consider individual taxes—that has been done on Second Reading, in Committee, and on Report—but to get in one focus the history of this record Budget as a whole. What a record Budget it is! It was anticipated not very long ago by one of the other economists on the Treasury Bench in the following words:— In 1885 the suggestion of a £100,000,000 Budget was scouted as a wild idea. The £100,000,000 was now ancient history. We had a £150,000,000 Budget for domestic expenditure, and a £200,000,000 Budget loomed portentously in the future. 8.0 P.M.

That was, perhaps, a rather better anticipation than some others which have been made by the First Lord of the Admiralty. The portent has now come. The net increase of expenditure has been admitted to lie between £50,000,000 and £55,000,000. I ask Members to put themselves back into the position they were in when this Budget was introduced. With the honourable exceptions of the hon. Member for Blackburn (Mr. Snowden) and his Friends, there was hardly a single Member of the House who was not alarmed at its size. There were some hon. Members who tried to make others believe, and honestly endeavoured to make themselves believe, that they were not alarmed at it. But I think I shall be in the memory of the House in saying that there have never been speeches which had such a lack of the ring of conviction in them. All were apprehensive of the size of the Budget. Some Members opposite said that, after all, the proportion borne by the Budget to the total income of the country remained the same. In that there lies one great fallacy. If the amount is deducted for the interest on the debt—as it ought to be deducted, the proportion is not really the same. The amount of debt charged in those former years was nearly half the whole Budget. It is now quite an inconsiderable fraction. The cost of carrying on the government has increased three times in proportion to what it was then. There are others who, perfectly, frankly, are apprehensive of the size to which the Budget has grown. Under these conditions, taking the whole of the history of the record Budget in review, I ask hon. Members of the House whether the Government was not under quite peculiar responsibility as to the way in which it deals with it? I think hon. Members of the House will agree that these responsibilities are of two or three acknowledged kinds. In the first place, in harmony with what the Chancellor of the Exchequer has just said, the conditions of the way in which the money will be spent ought to be known, ought to be approved by the House, before it sanctions raising the money for the expenditure. In the second place, the conduct of the Government ought, beyond all question, to be scrupulously fair both in the way in which they frame and introduce the Budget or in the way in which they allow discussion in the House to be carried on.

In his speech just now the Chancellor of the Exchequer laid quite peculiar stress upon the importance which attaches to the regulation of expenditure. That importance attaches to it in Committee of Supply. But it attaches to it in a much greater degree in regard to new expenditure which is incurred for the first time. I ask the House to consider the history of the Budget from that point of view. In regard to general objects, if there is money enough for them, and if the conditions are approved under which they are to be carried out, we all agree that they are laudable. But the whole point is this: in incurring this expenditure, and in providing the money to meet it, we do not even yet know the conditions under which the. Grants are to be given, and the way in which they are to be expended! We do not even yet know whether the local authorities to whom they are to be given will not think that the remedy is worse than the disease, and that on the whole they may in some cases, prefer to reject the Grants when coupled with conditions so onerous and so distasteful. Let me put the point in another way. The Finance Bill is linked up with the Revenue Bill. We were given an absolute and distinct pledge by the Chancellor of the Exchequer that the Revenue Bill would be introduced early, and that we should have time for a full discussion. I do not think the Chancellor of the Exchequer will for one moment deny that pledge. We have seen the Revenue Bill; but without question that pledge has not been fulfilled. Not only was the Finance Bill linked up with the Revenue Bill, but the Revenue Bill, as the Finance Bill, have got to be construed in the terms of a Rating Bill which we have not even yet seen. Nor is that all. The Finance Bill at an early stage divided itself into two parts, like any low grade natural organism can do. At the time when the division was made we learned quite distinctly from the Chancellor of the Exchequer that the Finance (No. 2) Bill, or whatever name it was to be called by, was going to be introduced within the Session. It is not in print. It has never yet been in the hands of any Member of the House. So here we can apply the right hon. Gentleman's own criterion of the real control of expenditure that there ought to be in the hands of the House. We are asked to put fresh burdens on, to assent to an increase in the Budget, without our knowing or having approved for one single instant the conditions under which the expenditure is to be made.

Under those circumstances what I would point out to the House is that there is small wonder that the hon. Member for Hexham and his Friends made the re-monstrances that they did. I have never said that they were a cave of millionaires, or anything of the kind. I have always looked upon them as being rather alarmed by the broad principle or rather lack of principle shewn in carrying on the finances of the present year. My criticism of them has been something quite different. It is that having principles, they have never really given effect to them. The hon. Member for Rushcliffe is not, perhaps, one of them, but he is like them in having principles and not giving effect to them. He dislikes the guillotine himself immensely, but he voted for it all the same.

Mr. LEIF JONES

The hon. Gentleman, I think, is perhaps pressing a House of Commons condition that he knows too well, and that it is that it is impossible always to give effect by your vote to your opinion, when other things hang upon the question which you are voting upon. You do not vote upon a straight issue.

Mr. STEEL-MAITLAND

That is quite true. How surprised I am then at the hon. Member for making so much point as to whether or not there is going to be a Division on the Third Reading to-night. No, this is not a Parliamentary point, if I may take up the remarks of the hon. Member opposite (Mr. Duncan). If people are in earnest, as the hon. Member for New-castle-under-Lyme and his Friends are in earnest about Site Values, the Chancellor would capitulate to them. He would have done the same to the case put by the hon. Member for Hexham and his Friends. My criticism of them is, as I say, that they do not really stick to their principles. They are like the person of whom the poet said:— A merciful providence fashioned them holler. On purpose that they might their principles swaller, Or else like the kangaroo who, which is stranger, Puts its family into its pouch when there's danger. That is exactly what the hon. Member and his Friends did. Perhaps I may quote one or two principles that they themselves laid down. The hon. Member for Hexham said:— May I remind the House that in order to satisfy hon. Members that the money should not he voted unless the conditions of the Revenue Bill were achieved, we have been told that the Finance Bill would be kept, under the control of the House until the Revenue Bill in its passage through another place is secured. Again, he said:— You are going to have the guillotine and Closure to force your Bills through. Is it conceivable to have a worse procedure than an attempt to reform the relations between the imperial Exchequer and the local authorities on the basis of a combination of obstruction and the guillotine? All I can say is, if the hon. Member and his friends really formed a "cave," as a Scotsman and knowing my Bible I realise that it was much less like the first cave of Adullam, than the second of Engedi, because, if I remember aright in respect of the second cave of Engedi, Saul extracted a promise from the people in it not to hurt him or his progeny, and then he went on with his old bad methods as before.

I have dealt with the size of the Budget, and with the objects and conditions of expenditure. Now for the procedure. What of the division of the Budget? It ought not to have been a complicated matter to frame and introduce it properly. It should have been perfectly simple. Sometimes it has been said that we on this side of the House were to blame for the division. On that I would ask—I do not want to labour the point now—what on earth is the object of procedure at all in this House if it is not to see that legislation and financial legislation is carried on in a proper way? The whole procedure again shows that in this, the biggest Budget, the Government were utterly careless of the way in which they framed and introduced it to the House. I mention this point particularly, because one really significant fact emerges from it: It would be of interest to anyone to know which are the two parts included in the system of Grants the Government have most at heart; whether it is giving the Grant to the local authorities for them to carry out their social reform or whether it is the principle of site value rating which is to accompany it? Here, at least, we have got a test as to which was uppermost in their minds. If it had been the Grants for local authorities, and if the regulations—

Mr. SPEAKER

May I remind the hon. Gentleman that discussion on the Third Reading of a Bill should be limited to the contents of the Bill. I do not think the hon. Member is entitled to go into the conditions under which the Grants should be given.

Mr. STEEL-MAITLAND

I bow to your ruling at once. I will not labour that point further. I was merely induced to do so because of the remarks of the Chancellor of the Exchequer, in which he said, Mr. Speaker, that he was engaged upon a war in this country; and also the remarks of the Financial Secretary to the Treasury, in which he said the Government were at war against disease and squalor. But let me pass to my last point, one with which the Chancellor of the Exchequer dealt—that was, the way in which the Bill has been forced through the House under the guillotine. The Chancellor said: "Surely the allocation of time has been sufficiently generous for the points to be discussed?" Then I ask if there was time under this guillotine motion for fully discussing the points, what on earth was the reason for creating so dangerous a precedent? No one will pretend for a moment that there was obstruction before the guillotine motion was introduced. If there was no obstruction, and if discussion was amply carried on within the limits of the guillotine motion, why on earth was so serious a precedent set up? Let me ask the House once more to remember the circumstances. The Prime Minister and the Chancellor of the Exchequer—of all persons—most strongly condemned the introduction of the same guillotine in regard to non-financial measures. I have the Chancellor of the Exchequer's own words if he would like to see them. [HON. MEMBERS: "Read them!"] I will. Now the guillotine has become an essential part of our machinery for every contentious measure. I always regretted it. I thought it was very undesirable from the point of view of the House of Commons.

Mr. LLOYD GEORGE

I have heard that speech before, and that is why I tempted the hon. Gentleman to read it. I never said that the guillotine was introduced by the right hon. Gentleman the Member for the City of London. I never said the guillotine was not inevitable. I may have criticised it in a particular case, and said you ought to give more latitude. I have always realised that the guillotine was absolutely necessary. I regret it very much. I wish it were possible to provide some better machinery.

Mr. STEEL-MAITLAND

May I say at once if the Chancellor of the Exchequer regrets it even if he thinks it is inevitable, why at the present time did he put it on when there was apparently no need for it to limit Debate? As everyone knows, and as my hon. Friend says, two days were wasted in discussing it, and these two days might have been devoted to Debate. Not only so, but the Prime Minister and the Chancellor of the Exchequer both said that it was worth while sitting up all night in order not to use it on financial measures, and they congratulated themselves on so doing. Again I have got the Chancellor of the Exchequer's words if he cares to hear them. Having congratulated themselves on so doing, they now proceed on entirely different lines. The fact is really that both on this as on the whole question of Grants to local authorities which I do not now go into, both the Chancellor of the Exchequer and the Prime Minister have completely boxed the compass. If ever there was a weathercock turned rusty and setting up for a sign post, it is the right hon. Gentleman. I ask the House to consider, as the Chancellor of the Exchequer has referred to this subject at such length, that there was no justification for their action whatsoever. It was not as if the Bowles Act was not fresh in their memory. There it was, because of the difficulties of last year. They had the whole Time Table before them. There is one other point which I think has never been referred to in this matter, and it is this: The Prime Minister on the Second Reading of the Finance Bill lamented the increased expenditure. He said that he himself individually, at all events, was an economist, and he said, as the Chancellor of the Exchequer said just now that the increase was largely due to the House of Commons. I am bound to say I think that is rather an unworthy abnegation of responsibility for a Government which can alone bring in finance measures. But take the Prime Minister's own premises. What do they lead to? He says the House of Commons has been largely responsible for the increase in expenditure. This is really the one occasion when the House of Commons has been distinctly alarmed at the size of the Budget, and when the House itself wanted to put the brake on and to enforce economy. Yet the Government has chosen this one occasion when the House of Commons wanted to be economical, to curtail its freedom. If ever there was a guillotine motion which was pressed upon the House of Commons without justification it has been in regard to the present Budget.

I do not wish to take up the time of the House further except to make just one other observation. Important as is the history of this Budget in itself yet it is even more important in its general bearing. It has become a platitude in this House to talk of the extreme to which party government has gone. But what is really more important still is to analyse the causes which lead to this extreme being reached. It applies to both parties. Every party in turn draws tighter the reins of its party discipline, and by doing so it gets a differential advantage. But what is the result produced in the country? There is not a Member of the House of Commons on whatever side he sits who does not know that the result is that people in the country generally are getting suspicious of politicians, and of political parties, and of party politics. Everyone knows that, and this is more than anything the result of the extreme to which the party system is carried. It is quite possible if you try that you could get some remedy. The Chancellor of the Exchequer says he wishes it. No party will be altruistic at its sole expense—that we may concede. But that where the remedy could be got is in the shape of a governor to the machine which would act automatically and on all parties. Yet this moment, when the dangers and the drawbacks have been realised, is just the moment that the Government have chosen of their own free will quite unnecessarily for taking a step that makes party government a matter of tighter discipline than ever it was before.

We on this side of the House have done our best with regard to the Finance Bill. We have opposed what we consider bad procedure. We have tried to remedy what we considered unjust in certain taxes. We have done that, and now if we do not go to a Division, may I give the reason why. We could not throw out this Finance Bill, if we would, because of the Government, and its machine-like majority. What is more, I make bold to say for myself I would not throw out the Finance Bill if I could. I will give the reason why. The damage done in the matter of procedure has been done already and cannot be altered, whether we go to a Division or not. And after we have taken objection, as we have, to individual taxes, then, as I say, at the present moment, from my point of view, I see no good even if we could throw out the Finance Bill as a whole in dislocating the whole of the public services of the country just at a time when the country is in a critical position. I commend that answer to hon. Gentlemen opposite. At the same time, if the House reviews the conduct of this record Budget—its size, the fact that we do not know what the new objects are, the way in which it was brought in, and the way in which it was carried through—I think any fair-minded critic will say, it is not a chapter of financial procedure that will reflect credit upon the party which brought it in, or on the system of government under which we live.

Mr. OUTHWAITE

The hon. Member who has just sat down gave a reason for not voting against the Third Reading of this Bill. I think there is another reason, and that is that hon Members opposite have supported and demanded expenditure which has led to increased taxation. They have demanded increased expenditure in advance, and that these subventions should be given to the local authorities, and they have never through these debates brought forward any alternative method by which this taxation could be raised. If they voted against the Third Reading now, the country would say, "There you are, demanding increased expenditure and demanding increased taxation, but you have not got the courage to bring forward any alternative proposal by which this revenue should be raised." There was a time when hon. Members opposite were in rather a difficult position. Those were the good old days when we used to hear that we could raise this revenue by taxing the foreigner. Those days are gone, and Tariff Reform is no longer trotted out, and so we hear very little or no effective criticism of the Budget. In fact we have had none at all. We have had a great deal too much logic chopping and much Biblical instruction, but little or no criticism of the increased taxation of the Budget. There is a particular reason why there has not been criticism levelled at the Budget from this side of the House. I think there are many of us here who do not regard this Budget as being the most perfect instrument by which revenue can be raised. It was criticised to a certain extent by hon. Members around me, and if it was not further criticised it is not because we believe that the most perfect method of raising revenue as set forth in this Budget, but because we are promised in the near future a means by which we think revenue could be raised, and by which more justice could be done. I want to make my few remarks with regard to this method of raising revenue. In the first place, I hold we ought very gravely to consider the increase of taxation in this country. The increase has been very serious, and I think the incidence of the taxation is in many respects unjust. Speeches have been made from the benches behind the Government to some extent glorifying this increase of expenditure, and suggesting that by such expenditure the prosperity of the country will be brought about. That largely depends upon the incidence of taxation. A good many of the statements suggesting that we need not be alarmed at this increased expenditure have been vitiated by the fact that the whole of the increase of that expenditure has not been taken into account. We have been shown the increases in Imperial expenditure, but we have to remember that that has been limited by the fact that the Chancellor of the Exchequer is constantly passing over to the local authorities charges which we realise should have been met by the National Exchequer. Education is calling for increased expenditure and taxation, and instead of meeting that the Chancellor of the Exchequer has turned it over to the local authorities to discharge. We ought to take into account the increased expenditure thrown upon the local authorities by the national services. There is a vague idea abroad that we raise our revenue upon some principle of ability to pay, but that is largely a myth, for at least half the taxation we raise is not raised in accordance with the principle of ability to pay.

The indirect taxes and a number of taxes which are supposed to be levied in accordance with the principle of ability to pay, do not fall upon those who are best able to pay them. Take the Income Tax which is supposed to be levied in accordance with this principle. In the lower grade of Income Tax we do not feel sure that this principle is carried out. A man with a small income and no family is better able to pay than a man with a small income and a large family. Wherever the Income Tax or the Death Duties fall upon the products of labour undoubtedly that tax is passed on. As regards the Income Tax and the Estate Duties a great part of them are levied in accordance with ability to pay, but they are passed on to the consumer, and therefore they are often paid by those least able to pay. Accompanying this expenditure on social reform, we have a rise in the cost of living. The time has come when as our expenditure and our taxation increases, we have to pay a much keener attention and a closer criticism to the taxes which are supposed to be levied in accordance with the principle of ability to pay. Much more criticism would have been forthcoming in regard to these proposals during the Budget debate but for the fact that we realise that no change can be made at present by the Chancellor of the Exchequer, but we believe that in future the Land Valuation Clauses will materially alter our methods of taxation. It may be said that every tax falling upon labour products will be passed on, and the only one that cannot be passed on will be the value of the land and the economic rent. Until we get the land valued and arrive at the true communal value, it is very little use criticising the taxes. I think the criticism of this Budget by the Opposition has been wholly ineffective. We realise that in the future the real contest between the political parties of this country will be in the matter of taxation. Do not imagine for one moment that this Budget is the last word on taxation. The time may come when hon. Members opposite will bring forward their Tariff Reform proposals for taxation, and we on this aide will endeavour to use the valuation of the land as a new basis for taxation.

Sir J. D. REES

This Budget, with its enormous total, is a long stride in the direction of carrying out the policy of the Government, which was so clearly enunciated by the Financial Secretary to the Treasury, who, I have no doubt, is perfectly competent to explain and expound the policy of the Chancellor of the Exchequer. The hon. Member said the other day that the unequal distribution of wealth could only be defended by proving that the State took an adequate subscription from those who had the most for meeting the needs of the country. Who is to judge of the needs of the country? If there were some high impartial authority, some undisputed representative of the Almighty upon earth, to decide such a point, there might be something to be said for this theory, but when the authority to decide is the hon. Gentleman who lays down this theory and his chief, this theory has only to be stated to be promptly rejected. The hon. Gentleman went on to say that taxation was a method of ensuring the wealthy in the enjoyment of their goods. Does he still adhere to those views, and, if so, is the House of Commons prepared to admit that the Budget, instead of being, as it always was until this present dispensation, a method of pro viding for the more elementary needs of the country, is an instrument for altering that distribution of wealth and for enforcing the doctrine of ransom in the manner described by the hon. Gentleman. I confess that the naked and unashamed avowal of this theory by the hon. Gentle man fills roe with apprehension. His theory will never be disavowed by the Chancellor of the Exchequer, who has in the most open manner pursued this policy, but I really do not know that up to now any hon. Gentleman so fortunate as to have a seat on the Front Bench has ever committed himself to so monstrous a theory as that which has been propounded in connection with the administration of funds collected with difficulty and pain from those who have to pay them. This policy comes home more to those whom hon. Gentlemen opposite claim particularly to represent. The poor are hit by every one of these taxes, not only as much as but more than the wealthy. I really had no intention at this stage of entering into a general refutation of the theories which the hon. Gentleman has enunciated. I only know that this Budget is an immense stride in the direction of enabling the shirker to lie upon the worker, by making poverty in itself a valuable asset, out of which a man may make more than by his own labour and industry; and, for my part, I reject with all the emphasis of which I am capable the theory which the hon. Gentle man so clearly expounded in his speech. My own particular object was to call attention to the way in which the present Super tax of 2s. 8d.—hon. Gentlemen opposite will think that I am again considering the case of the wealthy—

Mr. STEPHEN WALSH

Does the hon. Gentleman mean to suggest that it is the poor who pay the Super-tax?

Sir J. D. REES

I am afraid that I did not catch what the hon. Gentleman said.

Sir S. BUCKMASTER

The hon. Gentleman asks if it is the poor man who pays the Super-tax.

Sir J. D. REES

I am surprised to hear so shallow an interrogation from the Solicitor-General. This is a case of a great employer of labour, and I was dealing with it for the purpose of showing how the Super-tax hits labour, which hon. Gentlemen below the Gangway opposite claim to more particularly represent. I am giving a concrete case without mentioning the name of the industry, although those who carry it on would have no objection to my privately communicating it to Members of the Labour Benches, who view with some little suspicion some of the statements that I make. [HON. MEMBERS: "Not at all!"] May I say that feeling is reciprocal, and there need be no ill-feeling between us. I want to show how this Super-tax of 2s. 8d. in the £ strikes at the growth of industries in this country, particularly in cases where the industry is carried on as a private business by one man, or, say, by father and son. They will be driven by this tax to convert their business into a limited liability company, and that, I think, is a very regrettable circumstance. Take the case of a man who has a business in which he employs 1,700 people, paying an average weekly wage of £17s. 10d., the average for 926 men above eighteen years of age being £1 14s. 9d. They decide to enter, let us say, into the motor trade, which is a popular trade at the present moment. They introduce a new industry into the town in which their present business is carried on, and they propose to devote the greater portion of the profits of the established and prosperous trade in introducing this new motor industry. Under the present Budget the whole of the profits of the existing industry would have to pay Super-tax, after the father and son have drawn £2,500 a year each. They would also have to pay Super-tax, at 2s. 8d. in the £, upon all the money which they had intended to leave in their business to help on the new industry. Not expecting a tax of that character, the firm have bought additional land and have erected large buildings required for carrying on the business, giving employment to a large number of people, and encouraging the builder, who has been almost abolished by the Chancellor of the Exchequer, so far as it lay in him to abolish that useful servant of the public. That was followed by their ordering machinery, and in three or four years this firm, in introducing this new industry, would have provided for four or five thousand employés—not wealthy men paying Super-tax, it is true, but persons maintained by the profits of this firm, which was going to use them for this purpose until this Budget came like a clap to further obscure an already obscure situation. Compare their position with the position of the foreigner. Take the Ford Company in America. There has been up to now not even any Income Tax in the place where they are making their machines. They have no Insurance Tax and none of these difficulties to contend with. This firm, to which I have referred, can go to Belgium, where you will find good labour and cheaper material. They can there make their motor cars, and, as mere travelling agents, they can introduce them into England and sell them here without paying directly or indirectly towards our revenue. That is a course of conduct which they are directly incited and almost compelled to adopt by this outrageous tax.

Mr. MONTAGU

I wish to understand the hard case which the hon. Member is putting.

Sir J. D. REES

If the hon. Gentleman will kindly oblige me by hearing me to the end I may be able to succeed in making the position clear, but I cannot help remembering that he has told me that he never agrees with me where-ever I sit. Having regard to his last essay on Indian legislation. I consider that to be an admirable testimonial. I would ask him to hear me out, and then he can contradict me, if he pleases, with all the authority of an occupant of the Front Bench. Take another concrete case that actually happened in my Constituency. The taxes had already driven a lace-making firm to go over to Hungary to make their lace. I quote this avowedly on behalf of friends of mine. There you have a case in which crushing taxes have had the effect of driving this firm, giving employment to some thousands of persons, away from the city of Nottingham. I really do not know why hon. Members on the Labour Benches should exhibit impatience while I endeavour to point out the effect of this crushing tax. I know that taxation is regarded by them, in the light in which they are encouraged to regard it by the Financial Secretary, as a means of redressing the inequalities of fortune, which I cannot help thinking, since they exist in every country and have existed in all ages, are not likely to be corrected by the tinkering of the Treasury Bench.

I want also to take great exception to the manner in which the Chancellor of the Exchequer deals with the Tea Duty. It is not enough for him to put a heavy tax upon tea and to maintain the tax at a terrific rate, but he actually states that the restriction of the consumption of tea amongst the poorer classes is not an unmixed evil, because he has heard that excessive tea-drinking leads to an increase of consumption. Of course we all know it does lead to an increase in the consumption of tea, but it is a new thing to learn that it leads to an increase in the disease of that name. I want to take this opportunity, as one interested in the tea trade, of rejecting that absurd theory with all the emphasis of which I am capable. Last night I introduced an Amendment which was practically carried in the end, although the Attorney-General poured scorn on it. It was a proposal for a slight remission of taxation to be made to public servants in the enjoyment of what an hon. Member represented, from his plutocratic pinnacle, as the enormous income of £1,000 a year. I want to point out to hon. Members who make speeches of that sort that they convict themselves of having little know ledge of the circumstances of the class with which they are dealing, and I want also to assert that a saving of taxation of anything like a £1 per year per child is often a matter of considerable moment to these people, while a remission of £5 in taxation is certainly no small matter for the class which I had the privilege to represent last night. I wish to raise a question with regard to the levying of duty on excessive moisture in unmanufactured tobacco, and in this matter again I may claim a right to represent some very large firms interested in that trade. The duty levied upon unmanufactured tobacco containing moisture in excess of 14 per cent. is at the same rate as that upon tobacco with 10 per cent., and those engaged in this trade, which, fortunately, has not yet attracted the odium—

Mr. DEPUTY-SPEAKER (Mr. Maclean)

As far as I can gather, the hon. Member is referring to a tax which is not within the scope of the Bill, and he is not, therefore, in order.

Sir J. D. REES

I express my regret. In that case I have exhausted the subjects which I intended to speak upon. My last word must be to revert again to what I said about the general principles upon which this Budget is based—principles which I believe to be ineradicably wrong, utterly indefensible, and necessarily disastrous to the country. The Chancellor of the Exchequer, the author of this Budget, resembles one of his great predecessors, Mr. Gladstone, in one respect, that he frequently claims to be a sort of partner with Providence in the collection of taxes, in the dispensation of doles, and in the general management of the finances of the country. Frequently he refers to the Scriptures to bolster up bad cases, and I will conclude my few remarks by commending to his consideration the day when "the congregation of hypocrites shall be desolate, and fire shall consume the tabernacles of bribery."

Mr. S. WALSH

I really had not thought of speaking in this Debate, as there seems very little reality in the whole fight. When we heard several hours ago that the great Conservative party, who had expressed themselves so terribly alarmed at the Budget, were, after all, to allow it to go through without any further challenge, I, for one, thought that a great deal of the spirit of fight had departed from the whole discussion. But listening to the hon. Gentleman the Member for East Birmingham, I must say he did at least endeavour to strike one or two new notes, and some of the points he laid before the House called for a little further consideration. He spoke of the alarm which seized both sides with regard to the size of the Budget, and there certainly is a great deal deserving of very serious consideration in respect of the great magnitude and, in a certain sense, the terrible proportions of the Budget of this year. But it hardly lies in the mouths of Members of the Conservative party to speak about the alarm they feel. I have been in this House for about eight years, and I challenge a single man on that side of the House to say that they have ever come forward with any genuine proposal to reduce the size of the National Budget. Indeed the proportions which the present Budget have attained are due to the tremendous sums that are being set aside for, to put it mildly, defensive purposes. About £80,000,000 is the sum taken from the national resources to meet the charges for the Army and Navy, and I would like to know if a single statement has been made from that side of the House to the effect that that amount is too large.

Mr. STEEL-MAITLAND

I started by saying that I thought it was.

Mr. S. WALSH

The hon. Gentleman has spoken this afternoon for the very first time in this Debate. I can only say this, that the echoes of Croydon have hardly died away, when the whole of that party was bawling out, "We want eight, and we won't wait!" The whole policy of that party is not to reduce this terrible expenditure, but to increase it out of all proportion, swollen as it is. When we know perfectly well that the whole of their policy in this House and out-of-doors, is to increase, as largely as may be, this tremendous expenditure, one is reminded of a couplet, such as the hon. Gentleman opposite seems to be fond of indulging in:— When the devil was sick, the devil a monk would be. When the devil got well, the devil a monk was he. The moment the Tory party conies into power, even £80,000,000—I have not the slightest hesitation in saying—will not nearly touch the figures to which they will swell the Budget. The hon. Member for East Nottingham (Sir J. D. Bees) told us that he was entitled with just as much credit as ourselves to represent the very poor.

Sir J. D. REES

Hear, hear.

Mr. S. WALSH

He was pointing out, with a sad lack of effect, the result of the Super-tax upon an imaginary company. He pictured a father and son who might desire later on to convert themselves into a limited company, which he thought was rather a sad process. He did not mention the reason for the sadness. I believe that even now two people can convert themselves into a limited company, and if a father and son were carrying on a prosperous business together, I do not see why that business should not prosper just as well if it were converted into a limited company. I paid a great deal of attention to the speech made by the hon. Member yesterday or the day before, when he desired to make our flesh creep in regard to the terrible position of poor men who have only £1,000 a year. He put the case of a man who had passed his life in the Civil Service, and who, out of his savings, had been able to put by a little money, sufficient to produce £1,000 a year—the unfortunate case of a retired Civil Servant with £20 a week. Is that the ground on which he claims to specially represent the very poor?

Sir J. D. REES

I am sure that the hon. Gentleman does not desire to be unjust. On that occasion I said, quite frankly, that I got up to represent the case of a particular class, and I said that for that class, and in regard to their requirements, they were poor.

9.0 P.M.

Mr. S. WALSH

The hon. Gentleman is trying to make the best of both ends of the community, one end by those whom he particularly represents, the people with £1,000 a year or £20 a week, and I suppose the other would probably be those with less than 20s. a week. If he represents both classes with the same success as he represented those with £20 a week the night before last, he will certainly be an extremely successful Member. There is something to be said for the point of view urged by the right hon. Gentleman the Member for West Birmingham when he dealt with the statement made by the Prime Minister and added to by the Chancellor of the Exchequer, that this House was responsible for armaments, for policy, and for the tremendous expenditure that is taking place. The light hon. Gentleman said that that was a rather unworthy statement on behalf of the Front Bench and on the part of the Prime Minister and the Chancellor of the Exchequer. I feel in close agreement with him. Whenever we have in this House, however feebly, tried to check expenditure we have been told, sometimes in tones of indignation and sometimes in tones of appeal, to state what particular item of expenditure we would reduce. Such questions as those should not lie in the mouths of right hon. Gentlemen who are responsible for the government of the country and who necessarily have the completest knowledge of the facts, relatively to the knowledge possessed by other Members of the House. It is for them to say, with their full knowledge and the information possessed by their Departmental officials—there is probably not a better set of officials in the world—that this expenditure has increased, and is increasing and to show us the items which can be stopped or on which the expenditure can be lessened. When they ask us which items we wish reduced they are placing the House of Commons in a position in which it ought not to be placed. It is the duty of Ministers, in view of the terrible advance of this expenditure, to place before the House the fullest information possible. When we are told that £80,000,000 is the smallest sum we can spend on the Army and Navy with safety, I absolutely decline to believe it. There might be a great deal to be said for it if our relations with foreign Powers were in a state of jeopardy, say, with France, our great neighbour, with whom for such a long period we were always at a point of tension, and sometimes of bitter and calamitous strife. With France to-day we have one of the most cordial understandings ever entered into, while with our great kinsfolk across the seas, the United States of America, and with Germany we are upon improving friendly terms. The Russian bogey was responsible for many swollen Estimates during the last half-century. With all these causes of fear wholly eliminated or considerably lessened, I cannot see the slightest justification for the terribly swollen expenditure the country now has to bear. It is the duly of Ministers not to wait for private Members, who of necessity cannot possess anything like the knowledge of the facts as is possessed by Ministers, and particularly the duty of Ministers of a Liberal Government, to give information on such occasions as these. We are justified in complaining that the Liberal Government, which for many years has been pledged to relieving the taxes of the very poor, and especially the taxes upon food should for all these years have allowed the Tea Duty to remain at its present large figure. It is perfectly true, as the hon. Member for East Nottingham stated, that the tax is practically 60 per cent. on the first cost. It is a very heavy burden upon poor people, and is most severe on the poorest of the poor. There is also the tax upon sugar. The time has arrived when progressive Members of all parties ought to do their very best to redeem the pledges they have given to their constituents.

Sir F. BANBURY

All Members should do that, whether progressive or not.

Mr. S. WALSH

I was not using the term "progressive" in any narrow or restricted sense. It would be to the advantage of the nation as a whole, to the manufacturer, to the middle-class man, to the respectable artisan, to the very poorest of the poor, and to a great many industries in which sugar is the chief article used, who would receive a remarkable impetus to their prosperity, if this tax could be removed.

Mr. DEPUTY-SPEAKER

I would remind the hon. Member that the Sugar Tax is not included in this Bill.

Mr. S. WALSH

I admit I was outstepping the bounds of order, and will not press the point, although I think in regard to the desire that Budgets should be framed in accordance with the cardinal principle of the ability of the taxpayer to pay the charges levied upon him, it is not altogether outside the limits of proper discussion to make a reference to the matter. I certainly hope that in the near future, whatever the fortunes of political parties may be, that these taxes will be lifted from the shoulders of the poor of this nation. A great deal of the discussion on the Conservative side has been very unreal, because they have suggested no real reduction in this Budget. They have been crying out for many years for the relief of local taxation, and now they complain because at this moment that relief cannot be given. Steps are being taken that it shall be given, but they cry out that it is not being given now. I suppose even if they went to Heaven itself they would complain that their halo did not fit. There is no pleasing them under any circumstances. We are, however, very largely agreed on this side that this kind of Budget does not add to the prosperity of the country, and we are agreed, with one or two exceptions, that a Budget of £200,000,000 is far too large for the nation, that the swollen armaments should be reduced, that we ought to encourage in the highest degree the most friendly relations with foreign powers, and that we ought not to always feel as though foreign nations were prepared to take advantage of it. Personally, I believe that it is on the lines of the inculcation of peace and the attempt—and it ought to be a leading attempt—on the part of this nation to cultivate and develop the most cordial relations with foreign powers that we should get relief from the burdens which at present afflict the nation.

Mr. CURRIE

We have heard from the other side of the House one or two complaints that there has been an absence of attack upon this year's Budget. To a certain extent that may be so, but what is the reason? Is it not quite plain that if the most material part of the Budget had not been withdrawn by the Chancellor of the Exchequer we should have had more opportunity of saying something about it? If the Budget collapses from its own vices, naturally we cannot riddle it with criticism in the way we otherwise should do. I think the present Budget will be remembered in particular for two points. The first is that it is associated with a whole sale attack upon the integrity of local government as we have always known it in this country, and not only with an attack upon it, but with an attempt to bribe it, which is fifty times worse. The Chancellor of the Exchequer's attempt to call over to his side of the argument the existing local authorities—

Mr. DEPUTY-SPEAKER

That is outside the scope of the Bill.

Mr. CURRIE

The second point for which the Budget will be remembered is that it is the first plainly avowed attempt to penalise and tax Colonial enterprise, because I can assure the Chancellor of the Exchequer that that is the view which will be taken in the Colonies of his proposal to tax foreign investments. Nothing could be more hostile to the Colonies than his whole proposal on this head. No one would question for a moment the justice and the wisdom of the proposal that those who deliberately send money abroad should pay their fair share of the Income Tax. What is questioned is whether the means that the Chancellor proposes to adopt have the least probability of being successful I think that very open to question. We are told that our criticisms of this Budget are characterised by unreality. On one or two quite real points I have listened in vain for any explanation. One of them is, How can a Free Trade Government justify the taxation of tea to the extent of 50 per cent. or 60 per cent.? The hon. Member (Mr. Walsh) has practically attributed this to the hypocrisy of his own Front Bench. I hope the next time he gets a chance of dividing, he will show that he is not to be guilty of the same hypocrisy, and will vote in accordance with the principles he has just expounded, but I do not think he is likely to do it. Another question I should like to ask on a real point is, How can a Free Trade Government at present authorise what are Protective taxes for the deepening of the River Thames, levied through the medium of the Port of London Authority, and yet object to money being raised by Tariff Reform taxation for the widening of roads? I do not think any satisfactory answer can be given to that question. It has been perfectly truly said that the problem we are face to face with is one of distribution. I would remind hon. Members opposite of what one of their esteemed leaders, the Lord Chancellor, said on this very question thirty years ago, before votes were at stake. He said in his work on Adam Smith that the case for Free Trade had been overstated, and prophesied in set terms that the battle would require to be fought over again, and a very serious battle it promised to be. I think, as an essayist, the Lord Chancellor is much more interesting than in his capacity as editor of "Hansard."

Mr. DEPUTY-SPEAKER

The hon. Member should confine his remarks to the Third Reading of the Finance Bill.

Mr. CURRIE

I should like to make a remark or two regarding the system of taxation in Vancouver and Alberta, to which our attention has been drawn by the Chancellor of the Exchequer. The right hon. Gentleman speaks as if in Vancouver and Alberta no difficulties were experienced, and no doubts were expressed as to the wisdom of the course they had been adopting in the last few years. Anyone who has read Mr. Harold Cox's article in the "Edinburgh Review" will see very ample evidence that that is not so, and anyone who knows anything at all about the conditions prevailing in Vancouver and Alberta knows that what Mr. Cox said is only in accordance with opinions which are coming to be more widely held in Canada every day. It has been well said that the shortest road to the repeal of a bad tax or a bad law is its rigid enforcement, and on that principle I look forward with a good deal of equanimity, in view of our experience of the Land Taxes, to the result and the fate of the present Budget.

Mr. PRATT

I feel as keenly as any hon. Member opposite that it was a great misfortune that we had to submit to the guillotine in discussing the Finance Bill. It seems to me that the House of Commons must be extremely careful not to lose its ancient hold upon the finances of the country. That hold has been slackened of recent years, and I am sure it is a disappointment to many on these Benches that a Liberal Government should not have done move to tighten, rather than to weaken, that hold. At the same time I believe if that is to be done, and if we are to have more time in this House to discuss finance and to discuss all that has a financial sequel, all the Bills, all the business of Supply, and, what is even more important, questions of foreign policy and of armaments, because these undoubtedly have their financial sequel—if it was not for these how light would be the burden that we should be called upon to bear, and if that is to be so, I, for one, can see no real relief unless we can, as I hope we will before many years are over, give to the different parts of this United Kingdom the right to look after their own local affairs, and leave greater time and opportunity to this House to pay attention to national and Imperial finance. I am very anxious that this lesson should be learned by all of us here, because, after all, the full and free discussion of these subjects is one of the few means we have of exacting economy. If we are to have the economy which has been spoken of from all parts of the House to-day, it can only come from a closer scrutiny of every cause of expenditure, and to do that I think we must have more time. We must be liberated from some of the work that falls upon us now. Thirty years ago Mr. Gladstone said that this House was overwrought and overweighted. If it was true then, how much more true is it to-day? The only road to economy I can see is in some definite effort being made to reduce the great burden of cur expenditure on armaments. I have noticed again and again during these discussions that every plea that has come from this side of the House for economy has been rapturously cheered by hon. and right hon. Gentlemen opposite, but when pleaded in terms of reduced expenditure on armaments, then on those benches there has been a holy calm.

I was very sorry this afternoon to hear one sentence which fell from the hon. Member for West Birmingham (Mr. Chamberlain). He said that he blamed the Chancellor of the Exchequer for being so sanguine as to think that he could reduce naval expenditure. I hope the day will be far distant when any statesman will occupy the high place of Chancellor of the Exchequer in a Liberal Government who will not follow as a beacon the hope that the nations of the world will ere long spend less upon armaments and more upon the upbuilding of the social well-being of the people. It seems to me that that is the only and real hope of some relief from the ever-growing burden of taxation. That will come, I believe, only when the question of armaments and foreign policy is more discussed in a free Parliament. The peoples of Europe do not want war; they do not want misunderstandings; they do not want to pour out their treasure in time of peace, and I hope that, so far from this country being a laggard in the race for reduced armaments, it may be a leader, and that the Chancellor of the Exchequer, whoever he may be, will not be afraid to plead for a reduction, taking every opportunity he can to preach that great and beneficent gospel.

There is one other aspect that has been represented on the other side of the House in several speeches during this discussion. One hon. Gentleman opposite charged those of us who sit on the Liberal benches, and particularly those who sit on the Labour benches, with basing our fiscal policy upon a desire to expropriate persons of great property. We have heard that from time immemorial. I suppose that has always been said about any new tax, or additional tax, that has been proposed. It was certainly said when the Chancellor of the Exchequer brought in his proposals in 1909; it was certainly said of Mr. Gladstone; it was certainly said of Sir Robert Peel; and it was certainly said of Sir William Harcourt, and I have read somewhere that even Sir Stafford Northcote for some of his financial proposals was called a Socialist by men in the City of London. I cannot imagine any proposal to put on a new tax, or to increase an old tax, that has ever failed to be met by such a cry as that. But when the hon. Gentleman tells us that it is our philosophy; that it is the ground of our financial system; that it is why, for instance, we support this Budget, I would certainly like to ask hon. Members what they have to advance when this new finance, as they call it, is doing that. We have heard for years that the financial policy of my right hon. Friend and his predecessors was evidence that the property of men of great wealth has been expropriated. Is the proportion of those who hold great wealth appreciably less today than it was before the reign of my right hon. Friend? Is that proportion of the National income which is enjoyed by that section of the British people who pay Income Tax appreciably less than it was before my right hon. Friend's time? I do not remember that we have had any answer to these important questions. That is not the reason why we are supporters of this policy. I for one—and I know that I speak for many others here—have no wish to expropriate the property of any person, but what we do want to prevent, so far as we can, is something much more serious than that. It is the expropriation of the real wealth of the British people. The real wealth of the British people is the health and well-being of the men, women and children of Great Britain. It must be more than a generation since the late Lord Tennyson said:— Is if well that while we range with Science, glorying in the Time, City children soak and blacken soul and sense in city slime? That surely is to be borne in mind when there have been going on for at least three generations in this country signs of an industrial revolution, signs of a great aggregation of population in the urban communities, there has been going on a serious wastage of human life in all those great communities. Why we support the policy enshrined in this Finance Bill is that we believe it is a contribution—not so large as some would like to see—and that by the use of this national fund we can give a better chance of health, give old age pensions to the aged, set up the great system of national insurance, and surely these things will make some difference in the next generation. Surely the fact that our young working people from sixteen years old upwards are now being attended in time of sickness, and attended at the very first onset of disease, will mean something in the years that are not very far off—

Mr. DEPUTY-SPEAKER

I would remind the hon. Member that we are discussing the Finance Bill.

Mr. PRATT

I must bow to your ruling, but I understood that we were discussing the raising of money that was going towards the purposes of which I am speaking. I will conclude by saying that the use of the financial resources of this country towards the upbuilding of the poorer sections of the community, to cut away at the roots of poverty, is a thing to be commended and that even from the Imperial point of view. We are Imperialists as much as the Gentlemen opposite. We are proud of our Empire as much as they, and we believe that if the day of battle comes this very financial legislation, the very proposals which we are discussing to-day, will give you a people more virile, more healthy and more strong, and it will mean, if the day of battle comes, which heaven forbid, an army corps to you. I cannot forget what did happen at the time of the last war. You called for recruits, and some of them who were willing to go could not serve because of having been brought up in the slums of your great cities. In using the nation's resources on the lines that they are set out here you are fulfilling, to my mind, a great and worthy Imperial purpose.

Mr. FELL

The eloquent words of the last speaker were very interesting, but I am afraid that I must get back to the dull subject of the Finance Bill which is before us. I agree with his opening remarks, which were on the theme taken up by the Member for Birmingham, that the privileges of the House of Commons with regard to the money which is voted each year are being curtailed. My experience here has been comparatively brief. It has lasted only nine years. But since I have come here the changes that have taken place with regard to the discussions which we have on the Finance Bill have been so great that I cannot help noticing that we have not now the privileges that we had of discussing the subjects which should arise on that Bill. The trouble has arisen from this, that there are in this Finance Bill only two subjects mentioned. Those are the Tea Duty and the various direct taxes which are put upon individuals. But those other great sources of revenue are not now in the Finance Bill, and if no changes are made in these duties they cannot be discussed. Take the Sugar Duty, for instance. It is a permanent duty and does not come up each year for discussion and revision. If the Government continued in power and made no changes in these permanent duties, we should never have an opportunity in this House of discussing them, and, however strong the opinion in this House that this or that duty pressed too severely upon the people, and should not now be continued, we have no opportunity of moving to reduce that tax or to vary it in any way.

It may be that it would arise on the Revenue Bill, but for two years we have found that we did not get a Revenue Bill. Therefore I, myself, put down an Amendment reducing the Sugar Tax on the present occasion, but it was out of order, and the subject could not be raised. The public, I am perfectly sure, have no idea that the House of Commons have now no opportunity of touching the subject of the Sugar Duty. Before this Budget came in all the Members of this House received pamphlets and papers from the sugar users. The "Sugar Users' Journal" suddenly revived into activity, and for two or three weeks before the Budget we got copies of that paper. They appeal to Members of this House to carry out their pledges to vote for the reduction of the Sugar Duty, and they publish the names of Members who voted for it. They imagine, and I imagine, that if people in the trade think so, much more must the public think that the House of Commons has now some control over the Sugar Duty. It is absolutely clear that we have no opportunity of discussing this, and these other duties on raisins, and those small kinds of things. However much you might find them objectionable and wish to modify them, there is no possible chance of raising the matter now in the House of Commons. They are permanent duties unless the Government choose to alter them, and we have no possible power of bringing up the question, whether those things should be continued or changed. That is a very unfortunate position. We used in the old days to have most interesting discussion in reference to the Sugar Duty. There is no use in hon. Members talking as they did just now, and saying that sugar is a very useful product, and so on, if we are not allowed to move that the tax be altered. I am only quoting these cases to show how our powers are now cut down. I do not see why the Government should not put the Tea Duty in exactly the same position, and make it a permanent duty of 5d. Then we should not have power to move any Amendment to that or discuss it.

If these things are allowed to go on, this House will have no power of discussing any financial proposal, unless the Government should choose to make changes in the duties. Then, I grant you, that they will have to put it down in some form, either on the Finance Bill or the Revenue Bill, and we shall have an opportunity of moving Amendments and discussing the matters which are contained in the Bill. But at present we are entirely bound, and can only discuss the Tea Duty and these taxes which all fall upon the same people, the Income Tax, the Estate Duties, and the Super-tax, and also the reduction of the National Debt, because on this occasion the Government are going to take £1,000,000 from the Sinking Fund. If that had not been done then I suppose that it would not be in our power to discuss even the question of the National Debt, and how much or how little is being paid off under this Finance Act. Reference has been made to-night to Clause 5 of this Finance Bill. I do not think that a more unfortunate Clause could have been drafted. It was discussed one night on which I know there were very grave differences of opinion as to what it really meant. I differ from some hon. Members on my own side as to what I thought was meant. But that particular point was put straight the next day. But whatever the Clause means we have not heard the last of it. Personally I do not believe that it will have any effect whatever except that it might frighten a certain amount of capital from being invested in the Colony, and that is what our Colonial friends are now viewing with concern, because they think that the investments will not be made.

When the Prime Minister was Chancellor of the Exchequer I heard him make a long and powerful speech in favour of the investment of British capital in the Colonies. That was about five years ago. He quoted the amounts that were being invested in the Colonies, and the increase of trade arising with those Colonies, and he said that the investing of money in the Colonies would result in there being larger quantities of goods sent from this country, and in trade with those Colonies being promoted. If that was his opinion then I do not think that it has greatly changed, and if it was true five years ago it is true now, that it is beneficial for us and beneficial for the Empire, that our surplus money should be invested in the Colonies, where it would draw better rates and promote trade between the two countries, because the money will in all probability be exported in the form of goods. But now an attempt has been made in this Finance Bill to curtail the investments in the Colonies, and keep the money at home. It may have some effect. I cannot say that. But it is having this immediate effect, that as has been pointed out several times, protests are being raised in the Colonies themselves. That is hardly the way in which you can promote business between the Mother Country and the Colonies, and draw the Empire near together. It should be noted that when the Colonies issue bonds, as nearly all of them have to a large extent, in the Money Market, they always make provision that there shall be no local Colonial tax charged upon those bonds, so that if you buy New Zealand or Canadian bonds you get 4 per cent. net received in this country, so far as the Colony is concerned. Of course, you have to pay the English tax of 1s. 2d. in the £ in respect of the bonds. The Colonies therefore have done their part, so far as these very large loans are concerned, in putting no duties or taxes upon them. It is left to us to impose these heavy taxes. If, on the contrary, Colonials were to buy our Consols they would have to pay 1s. 3d. in the £, which would be deducted from the interest upon them, and when the money gets into the Colonies probably they would have to pay Income Tax there on those stocks. If we buy Colonial stocks we pay only the English duty upon them. And now we have this proposal, not only that we shall pay the tax on them here, but if they are left out there the Income Tax has to be paid upon them as far as England is concerned. I am convinced that it will be found in the future to be in the interests of the Empire that some other arrangement should be made to raise our revenue.

There is another important subject to which I must refer, and that is the reduction which the Chancellor of the Exchequer claims to have made in the National Debt. I would like the Financial Secretary to the Treasury to consider this, because the Chancellor of the Exchequer has claimed that he has made a reduction in the National Debt, and he has asked us to put the fact forward in the country when we are talking about expenditure, and to let the country know by how much he has reduced it. I wish to point out some things which the right hon. Gentleman did not say when he made that claim. He was discussing the question of the National Debt, and he said that we on this side had stated that stocks had fallen 14 per cent., and he added that they had fallen 14 per cent. also when we were in power. But the right hon. Gentleman did not say that it is a very different story to have a fail from 100 per cent. to 83 per cent. from the story of a fall from 86 per cent. to 72 per cent., a drop of 14 from 100 to 86 is very different from a drop from 86 to 72. If the process were continued in the same way, a drop of 14 from one point to another, you would reach the position where Consols would stand at 28, and a drop of 14 would reduce them to 14, and a similar drop to nothing at all. [HON. MEMBERS: "Hear, hear!"] I am only attempting to show that it is not fair to say that a reduction from 100 to 86 is the same as a reduction of from 86 to 72. It is not the same thing at all. It is a drop of more like 18 per cent. proportionately from what it was before. The ordinary person might regard a drop of 14 per cent. after a previous drop of 14 per cent. as the same thing. It is not. Our debt is now roughly a little over £600,000,000. The National Debt is guaranteed by the Government by annuities of to £20,000,000 a year; but whether the debt is worth £600,000,000, or £700,000,000 or £500,000,000, does not matter to this country one button. We have to pay every year £20,000,000 a year annuities.

The Government during the time it has been in office has reduced these annuities by £2,500,000 a year, so that the annuities we have to pay amount now to £20,000,000 a year. Whether we extinguish the debt by £100,000,000, £90,000,000 or £70,000,000, does not affect the country. Of course, the cheaper the stock the more can be obtained for £100. All the Government have done is to reduce the annuities by £2,500,000. If you put it in that light, you will see the difference as to how it stands, if you create burdens which are exactly equivalent to those annuities. If you create a burden of £2,500,000 a year it is exactly the same as if you had raised £100,000,000 at 2½ per cent. This Government has increased our fixed burdens, permanent and perpetual burdens, by old age pensions, insurance, and Labour Exchanges, and so forth. That means, if you capitalise it in the same way as the Chancellor does the debt, something like £800,000,000 The Chancellor of the Exchequer, therefore, so far from having reduced the debt by £100,000,000, has increased our burdens by £800,000,000; so that allowing for the reduction in the National Debt, the addition to our burdens imposed by the right hon. Gentleman is £700,000,000. Or to put it the other way, the annuities we have to pay, instead of being £22,500,000, or £20,000,000 since their reduction by £2,500,000, now amount to £40,000,000 per year. That is our financial position now. We have to pay £40,000,000 a year instead of £22,500,000 before the £2,500,000 were taken off. That is a very serious matter. I do not think it is right that the Chancellor of the Exchequer should refer to the way in which he has reduced the debt without also saying how he has increased the debt in the other direction. The right hon. Gentleman referred to the increased expenditure on naval armaments, and asked what we should do. I know nothing about what we will do, but I do say that it is an expenditure that can be reduced, but these sums for old age pensions, insurance, and Labour Exchanges cannot be reduced, because they are guaranteed by this country for ever, and they are guaranteed exactly in the same way as the annuities to holders of Consols. I hope the Chancellor when he describes this matter again will not say that he has taken a 100 millions off the debt, but that he has increased the debt by 700 millions on the other side. That is the net increase, and there has been an increase in annuities to 40 millions from 20. That is the financial position. When the Secretary to the Treasury and the Chancellor are discussing the position, I trust they will put the case in that way.

Mr. HIGHAM

I must confess, of all the criticisms I have heard of the Budget, the last one is the weakest and the most bewildering to a business man. Logically, one might retort that if the Chancellor of the Exchequer, who has reduced the National Debt by 100 millions, has increased it by 700 millions, therefore his predecessors, the Conservative Government, increased the National Debt by 160 millions, and therefore extinguished it. That would be just as logical as the statement the hon. Gentleman has made. I would like to mention a few figures to show how false the arguments are advanced in criticism of the National Debt to-night. This Budget fixes the sum at twenty-three and a half millions as the payment to be made in the Sinking Fund and interest together. I go back to the days of our predecessors, and I find that in 1898–9—a year dear to the heart of the hon. Baronet (Sir F. Banbury)—the amount was fixed at 25 millions, and in 1900 at 23 millions, in 1901 at 18½ millions, in 1902 at 18 millions, in 1903 at 23 millions. Then the shadow of the by-elections were over the Conservative Government, and the amount jumped in two years to 27 millions, the highest figure to which they put it. A speech delivered earlier in the evening by the hon. Member for East Nottingham (Sir J. D. Rees), showed how weak was the attack made, not only on the National Debt part of the Budget, but upon every part of it. He tried to bring before the House an illustration of the effect of the increase in the Super-tax and Income Tax this year. He told us as an actual fact that a firm composed of father and son had intended to increase their business in such a way as to give employment to 4,000 additional men. He gave us to understand that it was in the motor trade or a kindred industry. Everyone acquainted with these matters knows that it takes from £60 to £80 per man in capital to fit up a concern of this kind, and taking the figure of £60, that means that they had intended expending a sum of a quarter of a million, and he told us that they are stopped because of the Budget. How will this Budget effect them? He said they were making £10,000 profit on their existing business, and on that sum this Budget Super-tax and Income Tax will make a difference of £500 per year, and he wishes the House to believe that £500 of taxes on each of those two men has stopped them from going into a business which involved a capital of £250,000. The matter only needs to be put in that way to show how really absurd is the statement advanced by him. He told us we could not hit the rich man. If that is so, and if those men are able to put off the taxes we put upon them, why complain because they get out of the taxes in the easiest way and the poor people are paying them without knowing it, and everybody ought to be satisfied? Everybody would be if it were so, but the hon. Member knows perfectly well that those taxes rest largely where they are put, and that men do not put their premiums of insurance against death in a balance sheet, and that they do not put Super-tax or Income Tax in a balance sheet. Those are part of the working expenses of the concern.

I desire to refer to some of the points mentioned by the hon. Baronet. I said just now he fixed 1899 as the year for comparison with the years we have been in office. He told us that then the price of Consols was exceedingly high, and therefore it would not have been wise for the Conservative Government to have bought Consols in the open market. He must have overlooked the fact that in 1899 a financial transaction was engaged in by the then Chancellor of the Exchequer which resulted in the buying of a large quantity of Consols. In that year the Conservative Government added to the unfunded debt a sum of £8,000,000 and to the terminable annuities £24,000,000. They used that £32,000,000 for the extinction of an equal sum of the funded debt that is of Consols. Instead of considering it unwise to buy Consols in small sums they actually went into the market when Consols were at 110, and spent over 30 millions in buying them. It is all very well for the hon. Baronet to use arguments to-day which are a form of after-wit and which never crossed his mind at the time but which come now from the knowledge of the events of all these years. One would like to leave him to answer the arguments of the hon. Member for East Nottingham as to who pays these taxes, because the complaint of the hon. Baronet was that while the population of this country was roughly speaking 45 millions of people the great bulk of the taxes were paid by two millions of people. That is quite true, but he did not tell us at the same time that practically all the saveable income of the country is taken by those two millions of people, while 40 millions of people only get as much as they can live upon, and that the amount they can save is practically infinitesimal. It is quite true those two millions pay, and it is quite right that they ought to pay.

I would like to say how much I welcomed the words which fell from the hon. Member for Ince (Mr. Stephen Walsh) and that I wish to associate myself with every word he uttered, and in which he impressed upon the Government the importance of dealing with the food taxes as early in the future as they can. He referred to the enormous expenditure upon the Army and the Navy. Every Liberal practically regrets that enormous expenditure. We have not gone into the Division Lobby against it, but what was the alternative. If we had done so and had put the Government out, we would have put hon. Gentlemen opposite into office with the knowledge that they would have spent a bigger sum. We voted for the Government with the knowledge that they will reduce that sum. I welcomed the words uttered by the Chancellor of the Exchequer tonight. It was a pleasure to hear him stating that there was a good prospect in the coming year of spending a lesser sum upon the Navy, and yet retaining it at the highest pitch of efficiency for the defence of the country. When I heard those words I wished that the First Lord of the Admiralty had taken his seat on the Front Bench for a few minutes, and I thought of his father, and I remembered the case of Lord Randolph Churchill, who sacrificed his political career because of what he considered to be the enormous expenditure of the country at that time. Yet upon Army and Navy combined the expenditure in that year was less than £32,000,000, and now it is over £80,000,000. We look with intense longing for a fulfilment of the promise of a serious reduction in the amount of money spent upon Army and Navy.

The hon. Baronet criticised the plea of the Government that we were paying off money borrowed by our predecessors. A few days ago a right hon. Gentleman on the Front Opposition Bench threw across the Table the retort that we were originally responsible for that class of borrowing, and the Chancellor of the Exchequer put him right on that point. I had the curiosity to look up the history of this method of raising public money. I find that since 1888 there had been fifteen Acts of Parliament under which money has been borrowed and expended upon objects for which, before 1888, the money would have been raised out of revenue, and of those fifteen cases, fourteen were brought in by Conservative Governments. For instance, in 1888 the Imperial Defence Act; 1890, Barracks Act; 1892, Telegraphs Act; 1895, Naval Works Act; 1896, Uganda Railway Act; 1897, Military Works Act; and so I might go through them all. The only one brought in by a Liberal Government was for the purchase of the telephones, an expenditure which any reasonable business man would have gone into, but none of the other Acts were for expenditure of that description.

We are adding year by year to our expenditure the interest and Sinking Fund required by those Acts of Parliament. Further, instead of borrowing now we pay the whole of our expenditure out of revenue. There is another reason why our expenditure ought naturally to be greater than that of our predecessors. In the third place, we are devoting sums of money to such objects as the Road Board and Development Fund, which again are reserves to be spent in coming years instead of creating debts. Taken individually, these may be small items, but together they represent a reasonably large sum, and they show that under Liberal policy there is a far wiser and more businesslike system of expenditure at work than ever there was in the days of a Conservative Administration. We have been attacked for using part of the Old Sinking Fund for purposes of social reform. We have had the best of examples for taking money from the Sinking Fund. Take the three years 1896–7–8, when Sir Michael Hicks-Beach was Chancellor of the Exchequer. In the first of those years, he took out of the Sinking Fund no less than £4,250,000, not for social reform but entirely for naval works expenditure; in the following year he took £2,500,000 entirely for military works expenditure; while in the third year he took £2,550,000 for expenditure upon public buildings. It therefore comes with great weakness from the party opposite that they should taunt us with taking small items from the Old Sinking Fund for the purposes for which this Government have done it. One has only to look back a few years to see how the Sinking Fund has been abused by our predecessors in office.

10.0 P.M.

Mr. C. BATHURST

I will not attempt to follow the hon. Member (Mr. Higham) through all the items of his interesting speech, but he referred to one matter to which I should like to call the attention of the House. I would note, in passing, that of all the speakers on the other side who addressed the House on the Second or Third Reading of this Bill, only two have given undiluted praise to the Government's financial proposals. Many of the speakers have deprecated the large expenditure upon the Army and Navy, and others have called attention to the objectionable policy, as they put it, of taxing food. I would like the House to consider the relation between these two subjects. I suggest that there can be no limitation to the continued increase of armaments unless you are doing, something to make this country more self-contained in the matter of its food supply. What we are doing is to put increasing burdens on agricultural land and the food which that land ought to provide for the nation. The objection to food taxes, presumably, is that their imposition involves the increased cost of food. That is perfectly true if you tax imported food which cannot be grown in this country. It is true also if you seriously overtax the home industry which provides food in this country, and that I submit you are doing at the present time. If there were any doubt about it I would ask Members to consider the official statistics which are repeatedly issued from our own Department of Agriculture. From those it will be seen that capital is being steadily withdrawn from the chief industry of this country, with the result that less and less of the most necessary food for the maintenance of our population is being grown at home. There could be no more significant statement than that recently made by the President of the Board of Agriculture when, in answer to a question, he had to admit that, whereas up to last year four-fifths of our wheat supply came from abroad, no less than five-sixths now come from outside sources.

You cannot possibly take steps to limit armaments in this country when you are in the precarious position, in which you are, of getting from abroad a large amount of your necessary foodstuffs, which must be protected by a sufficient Navy if it is not to be interfered with on the high seas, and is ever to reach this country to maintain the crowded population of our towns. It seems to me to be a most suicidal policy to increase and to heap these burdens upon the agricultural land of this country. It may be said that by taxing the so-called rich man who happens to own property in the form of land you are not doing any serious injury to the industry which is carried on upon that land. The answer I would give to that is this: That you have only to keep your eyes open as you pass in a railway train through the country to see the ever-increasing amount of land which is being laid down to grass or is tumbling down to weeds, and is being withdrawn from cultivation as a direct result of the feeling of insecurity which is abroad throughout the country to-day in consequence of this heavy taxation upon agricultural land. The cumulative effect of Income Tax and—in the case of those rich enough to pay it—the Super-tax, the heavy Death Duties, the rates, and these new land duties, tithe, and the like, the cumulative effect must necessarily be an impoverished condition on the part of the owners of landed property, and a less prosperous condition on the part of those who are occupying their land for the purpose of the production of feeding stuffs.

During the last few weeks I have had sent to me a considerable number of Returns showing the actual effect upon the owners of agricultural land of the cumulative effect of modern day public burdens. They go to show that, not in the case of the great territorial magnate who in most cases has outside sources of revenue, but in the case of the owner of the moderate-sized estate—the man who is well worth encouraging in this country, as he is encouraged in other countries—that by the time he has paid his Income Tax, Super-tax, and his insurance against Death Duties, not to mention the ever increasing burden of rates which directly or indirectly fall upon his shoulders—something like 50 per cent. of his total net income is being paid away to the Government. I frankly ask whether it is the intention either of the Chancellor of the Exchequer or of reasonable men in this House to desire that class wiped out of existence? For my part, I venture to say that they are every bit as worthy of consideration as those who are piling up a big fortune out of the industries of this country, sometimes, I must admit, as a result of exploiting the labour which they employ. There is very little serious exploitation of labour on the part of the class to which I refer. On the other hand, I say there is a greater degree of genuine sympathy between your rural employer—particularly your landowner in rural districts—and the men who are to be found upon his property, than is to be found among any other class of employer and employé in any other part of the country. It would be very much fairer in the case of these owners of property to which I refer, if all these various classes of taxation, which cumulatively result in such enormous burdens, and which fall not only upon their shoulders, but upon the shoulders of all persons living in their neighbourhood, and on their estates, if instead of these different classes of taxes, you had one tax only, and that an Income Tax, so as to enable them to see exactly where they stand, and realise exactly what their income, and prospective fortune is likely to be. I am sure you would find in the case of the modern-sized landowner that in one way or another he is paying an equivalent of 10s. in the £, if reckoned in terms of the Income Tax.

Mr. S. WALSH

That is an alarming statement, and I think it is desirable to give some details. Would the hon. Member illustrate the case of a landowner with an income of £10,000 a year?

Mr. BATHURST

The particular type of landlord to whom I was referring would not have as much as £10,000 a year.

Mr. S. WALSH

Then take £5,000.

Mr. ROWLANDS

If he is paying Super-tax, take £3,000.

Mr. BATHURST

I have in my possession returns, some of which I should be quite prepared to show to the hon. Member for Ince (Mr. S. Walsh). I am not at liberty to mention names. He would see then that I am not exaggerating. I was pointing out that the Income Tax and the added Super-tax in the case of such an income as he has mentioned, and the insurance against Death Duties in the case of an estate which produces anything like £10,000, would result in the case of a middle-aged man who now begins his insurance for the first time to at least 50 per cent. of his net income, quite apart from the very large increase in the burden of the rates which he has to pay to a far greater extent than the man who is engaged in industrial pursuits, and who obtains a very much larger return upon his capital, with a very much smaller burden in respect of local taxation. I should very much like to see a Government inquiry upon this subject. I should like, if I may, to ask the hon. Member for Ince to consider this, because I realise he is a fair-minded man, and I always listen with great interest to the speeches that he addresses to the House on the subject of finance. It would be a very fair subject-matter for a Government inquiry to find out what is the actual burden that falls upon your landed classes in this country compared with the burdens that fall upon your rich manufacturers. I am incined to think that in one way or another the cumulative result of this system of talking about your slum-owner—pays, as the cumulative result of this system of taxation, at least 33 per cent. more for the wealth that he is supposed to own than a similar man who owns what is supposed to be a similar amount of industrial wealth.

I want just to refer shortly to the settlement of Estate Duty, because that is one of the two subjects which has raised a good deal of controversy and discussion in the course of the Debates upon this Budget. On the strength of the Finance Act of 1894 a considerable number of persons have since, either by deed or will, made settlements, believing that no such duty would be taxed during the continuance of that particular settlement. I am not going to talk as so many Members have done, about a breach of faith. [An HON MEMBER: "Hear, hear!"] There is a breach of faith in my opinion, but I am not going to waste time talking about it But I do suggest that the least you can do, if you commit a breach of faith of this kind, is to limit the duty on the occasion of death of any person interested under that settlement to the actuarial to the life interest, and not charge it on the whole capital value of the estate over which he has never had absolute control, and from which he enjoys only a very limited income. There is another suggestion that I would make as a fair way to meet the case of these unfortunate people—that is, bearing in mind that this settlement has been made upon this understanding, resulting in the passage of the Act of 1894, and that certain limited interests have sprung up which would have been absolute interests had it not been for this consideration. Surely in all these cases it would only be fair to allow the settlement to be torn up to this extent, that those who at present are interested in that settlement and are sui generis shall be allowed by mutual arrangement to alter that settlement and allot an absolute interest instead of the limited interest which they now enjoy, and which prevents their having free control of the property on the whole capital value of which they will have ultimately to be taxed. Many suggestions have been made that the kind of taxation to be found in this Finance Bill is necessary in order to achieve the purposes of social reform. I do not yield to any man on either side of this House in my genuine interest for practical social reform. But I do ask this, whether if, as I believe, a large proportion of this very heavy taxation which has been deprecated in every quarter of the House, does filter through and fall upon the shoulders of those less able to bear it—and if, as I believe, it does affect seriously the cost of the necessaries of life and prejudices the value of their wages—whether such matters as food and clothing are not even of greater importance than health insurance, improved education, or better roads. If, in fact, you find your heavy taxation results in creating increased disadvantages on the one hand, while providing social improvement on the other, surely you ought to check the rate at which you are imposing, year by year, this additional taxation in order to assure yourselves that those in the lowest social scale are not, in the name of social reform, suffering to their detriment.

We all object to any taxation that actually results in the food of the poor costing them more. Everyone has to admit that during the last eight years in which this Government have been in power the cost of food has steadily increased, as also the cost of other commodities. [HON. MEMBERS: "As in other countries!"] I do not care whether it is so in other countries or not. I say that in this country it is a fact, and surely, whatever may be the case in other countries, some of that increase must necessarily be due to the increased burden thrown upon industries responsible for providing the necessaries of life. I venture to say, in the interest of every class of the community, and not of one class only, it is desirable to put a stop to this ever-increasing taxation and these ever-increasing national burdens, especially at a time when our trade is on the crest of the wave of prosperity, and in a time of piping peace, when, as you have to admit, you are getting near the extreme limit of the nation's taxable capacity, and surely it is right to consider what undoubtedly will happen if there is a serious depression in trade, and of the possibility, as I hope may not be the case, of our finding ourselves embroiled in a war with a foreign Power.

Sir MAURICE LEVY

I desire for a few moments to refer to the extraordinary propositions put forward by the last speaker. He said that we, on this side of the House could never hope to see a reduction on armaments, in consequence of not being a self-contained country so far as our food supplies are concerned. Many of us on this side believe a great deal could be done by way of reducing expenditure on armaments, by diplomatic action, which would materially and substantially reduce the amount of expenditure without in any way decreasing the safety and well-being of this country. His second argument was that taxation upon land at the present time had accumulated to so large an extent that the price of food in this country was abnormally high, and he rather taunted the Liberal party for being responsible for the general rise in the price of food the world over. Surely he must realise that if there is any responsibility resting upon any party for the increased cost of food, it must be a creditable responsibility, because it is the general prosperity of the whole world, and largely the general prosperity of this country that is responsible for the increase in the price of food. He cannot show that there has been any diminution or reduction in the amount of food produced in any of the great food producing countries of the world.

Mr. BATHURST

There has been a reduction in the production of meat in every part of the world.

Sir M. LEVY

There has been a reduction in the quantity of livestock in this country, but if the hon. Member will take the statistics for other parts of the world he will find, for instance, in New Zealand and South America there has been an increase in the production of livestock, and naturally as such an increase in the amount of food. The hon. Gentleman seems to imagine that it is intended that land shall provide the revenue of this country for the Treasury, but if he will take the statistics of the industries of this country, he will find that land is not paying proportionately a larger share when compared with the profits derived from land, than is being paid by the other industries of this country. [An HON. MEMBER: "No!"] I think that is a perfectly fair statement and I do not think it can be contradicted. The hon. Member opposite found fault with us on this side of the House that there were only two or three hon. Members who could give a wholehearted support to this Budget. I believe there never will be a complete appreciation of any Finance Bill so long as there are food taxes in it. While our expenditure is so great the time has not arrived when the whole of the food taxes can be removed, but we on this side all hope that the day is, not far off when the Chancellor of the Exchequer will be in a position not only to reduce, but to remove altogether the majority if not all of the food taxes.

I was interested to hear the hon. Member opposite suggest that food should be made cheaper in this country, but that is hardly the policy of the party opposite. If the hon. Member is prepared to say that all taxation should come off food, I am sure he will find whole-hearted support from the party on this side of the House. I wish for a moment to refer to the speech of the hon. Member for Yarmouth. He produced a balance-sheet for which I am sure he would never find any auditor in any part of this country who would give him a certificate for accuracy. He tried to prove that because the Government were spending £20,000,000 on social reforms that we had in that way increased the National Debt by something like £700,000,000. How can anyone argue that money expended on old age pensions, the Insurance Act, providing relief for the sick, and giving aid in time of distress is a National Debt? It is a liability for the year in which it is asked for in the House of Commons. It has been stated outside of the House by a Member of the party opposite that the Insurance Act will be repealed at the earliest opportunity, you cannot argue both ways. You cannot say that it is a national responsibility equivalent to the National Debt, and at the same time say that you are going to repeal it at the first opportunity. So long as the Act remains on the Statute Book my contention is that there is no National Debt created. There is a national responsibility. The increase in the National Debt was created not by this Government, but by the late Government through the South African War. We have materially reduced that debt, and I believe that the majority of the people of this country realise that this Budget, although it does not remove the food taxes, is fair, just, and equitable. People say that the Income Tax and the Super-tax are high. I venture to think that there are a great many people in this country who are sorry that they are not called upon to pay Super-tax. I believe that the general experience is that the first time the Super-tax was imposed many people disapproved of it, but, having once written their cheques for the Super-tax, they realised the justice of it, and now year after year they are perfectly glad and willing to make their contribution, in order that something may be done to help their poorer brethren of the country.

Mr. BIGLAND

The right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain), in opening the Debate, said that this Bill created a sense of injustice and wrong—and he was right. The Bill has created an intense feeling of injustice in the minds of many taxpayers. It will be remarkable for another thing. It is the first Finance Bill this country has ever seen in consequence of which a British subject will do his utmost to prove that he does not live in England. In Clause 5 we find this extraordinary paragraph:—

"This Section shall not apply in the case of a person who satisfies the Commissioners of Inland Revenue that he is not domiciled in the United Kingdom."

Many of us know many men, British subjects, who have made their money in foreign countries, and have maintained their nationality here and ultimately come home to this country. The effect of this Bill will be that they will always keep some home in some foreign country, and they will only look upon themselves as temporary residents in the United Kingdom in order to escape this unfair and unjust tax. Boast has been made by the Financial Secretary that this Bill came through the Committee scathless. I think everyone who listened to the denunciation of the hon. Member for Colchester (Mr. Worthington Evans) with regard to Clause 12, must feel that it came through Committee anything but scathless, for he brought a charge against the Government of a breach of faith, and I think the minds of the men who drew and drafted this Bill on that point were not of that fair-minded English character that has always characterised the Chancellors of the Exchequer of this country. The Government claim for this Bill that it has to a very great extent maintained the position of the Free Trade party. I was more than interested and surprised to find that great advocate of Free Trade the hon. Member for the Hexham Division (Mr. Holt), when addressing a very important gathering of Liberals, used these words with regard to this Bill:— It was us essential to the party of progress and reform to see that their schemes were financially sound, and based on proper principles, as it was to any private firm in the conduct of its business. I conclude from that the hon. Member did not consider that these schemes were financially sound. Then he goes on to use these remarkable words:— He had warned them that it was probably impossible to maintain permanently the Free Trade system if they were going to go in for excessive national expenditure, for the reason that he did not think that they would get direct taxpayers to consent to pay the taxes necessary.

Mr. JONATHAN SAMUEL

He was speaking of the naval expenditure.

Mr. BIGLAND

No, he was speaking of direct taxation, and I claim that the Government of this country will find that direct taxation will not be possible, and that the direct taxpayers will not go on financing them to the extent of the increase in the expenditure. That is the opinion of the hon. Member for Hexham, and I concur with him. The hon. Member for Edinburgh (Mr. Price) says he has made more speeches in this country with regard to Free Trade, and with regard to the reduction of taxes on food, than any other Member in the House. A curious incident has taken place which knocks to pieces all this theory with regard to taxes on food increasing the cost of the food to the consumer. There is one case, and one case only, that I know of, in which it has lately come prominently into the vision of business men how the cost of food has been materially reduced, and reduced permanently, by a great buyer arranging through the Chancellor of the Exchequer how the increased production of an article shall take place. Members of the House will remember that when the Spanish-American war occurred the Americans conquered Cuba and made it a sovereign State. After doing so the Chancellor of the Exchequer of the United States came to an arrangement with the people of Cuba with regard to sugar, which was very much wanted in the United States. He arranged that, in consideration of the reduction of the duty on manufactured articles going into Cuba, the people of the United States should pay £2 per ton more for sugar grown in Cuba than in the British West Indies or Germany. The extraordinary result, of giving a preference to an article of food largely consumed in the country, was that inside of fifteen years the production of that article has increased from 600,000 tons a year to 2,240,000 tons a year, and that enormous increase in the production has reduced the price of sugar to the lowest point ever known since the duties were taken off in Germany, France, and Austria. In that way we have a direct object-lesson how to obtain enormous supplies of foodstuffs by giving to the country which has the best climate and the best soil a preference in order to induce it to produce an article that is one of the necessities of the people.

Mr. PRICE

Do I understand that the hon. Member repudiates the suggestion that the present tax on sugar has made sugar dearer as well as the articles in which it is employed?

Mr. BIGLAND

Yes, the hon. Gentleman knows it is perfectly clear that if we continue on the old-fashioned and, to my mind, obsolete style of levying taxes without having free imports, or reduced or preferential rates on imports where there is no home production, you certainly force your consumers to pay the tax. The argument very often used in regard to Cuba is perfectly simple from a business man's point of view. If you gave a preference within the Empire which would encourage every man to grow wheat, they would grow it in such an enormous volume that, taking an average of ten years, they would keep the price, notwithstanding the increased demand, at a more moderate level than before. The people of the United States have proved it. They have obtained not only cheap sugar for themselves but cheap sugar for us, because they have increased the total production of the world to a point where it is rather greater than the consumption. The hon. Gentleman opposite (Mr. C. E. Price) may have been engaged in the sugar trade. He knows that to-day the price of sugar in Hamburg is down to 9s. 3d. per cwt. for 88 per cent. beet. At that price it is almost as cheap as cattle food. Even cakes for feeding cattle are nearly the same price, so that we have sugar, which is a human food, down to a price at which we should feed our oxen. [HON. MEMBERS: "That is beet."] That is the price of 88 per cent. beet free on board at Hamburg to-day. [HON. MEMBERS: "No."] If hon. Members had gone to Mincing Lane to-day they could have bought it at 9s. 3d. [HON. MEMBERS: "No."] I will gladly sell them now at 9s. 4½d.

Mr. BENTHAM

I was in Mincing Lane to-day and the price was 11s. 6d. That is for sugar. The hon. Member has made a mistake. He is talking of beet, the raw material, not beet sugar. The price of beet to-day in Mincing Lane was 9s. 3d., but beet sugar was 11s. 6d. I will take the hon. Member on now.

Mr. BIGLAND

The ordinary article of beet sugar as it is dealt with on the Liverpool Exchange and on the London Exchange is the 88 per cent. beet. Of course, if it is a refined article it will be more. The Chancellor of the Exchequer has an opportunity of doing more to better the condition of the people of this country than any other Member of the Government, If he has foresight and business knowledge in future—I trust he will get it as he gets older—he will know that the old theory of taxation for revenue only is dead, and that the new theory must be taxation not only for revenue but for increased production and the safeguarding of the wage limit. If our Chancellors of the Exchequer in future will only take thought and see that in putting on a tax they are going to increase the volume of labour in this country and safeguard the wage limit, at the same time seeing that the tax is a means of revenue, then we shall be using the influence of our taxation in the best possible way.

Let me give the Chancellor of the Exchequer an illustration. Supposing that twenty years ago crude petroleum had been imported into this country without any duty, and that a 1d. a gallon had been put on all the refined products—burning oil, petrol oil for cars, lubricating oil, paraffin wax, and the different products—I state that the Admiralty to-day would not need to go outside the United Kingdom in order to obtain the intermediate or low grade oil which they now want to burn in the Navy, because we should have built up in this country enormous refineries where the crude oil would have come in vessels across the sea, and our engineers, our chemical manufacturers, our boiler-makers, and our workmen of all grades, would have had permanent work which could not have been taken away from them. That is only one case. I could name hundreds and hundreds of industries in this country where the consumer would not pay anything more for the finished article, provided the work was done in this country instead of being done in a foreign country. I do not think the Chancellor of the Exchequer would say for a moment that if petroleum was refined in Bristol, Newcastle, Liverpool, and London, the actual cost of the chemicals and the heat in the stills to refine the petroleum would be greater than it is in the United States, and if by putting on that differential duty you could give permanent work to the people in this country, then as Chancellor of the Exchequer, he would be conferring an enormous boon. This Finance Bill does nothing to assist the wage-earner in obtaining permanent employment. I am one of those whom the Attorney-General gibed at on the Second Reading of this Finance Bill. He used these words:— The time was, before the right hon. Gentleman became the Leader of the Opposition, whenever there was an official Amendment to the Second Heading of the Finance Bill, one used to hear about broadening the basis of taxation. Year after year, in the time of his predecessor, we were told there was a more excellent way. But now it would be true of any Tariff Reformers who sit on the Benches opposite to say, 'Oh no, we never mention it. Its name is never heard.' I am one of those who say that I am for ever speaking on this question from the business point of view, and try and keep the political point of view out of it entirely. The Chancellor of the Exchequer, considering the needs of the people, considering the need of permanent employment in this country, has in his hands the absolute certainty of being able to provide work for the people of this country without costing the consumers of those articles more, by saying that such-and-such a thing shall be made in this country instead of in the United States. I challenge the Chancellor of the Exchequer or the Attorney-General to try and prove to me that if he were to remove the difference between the duty on raw tobacco and the manufactured article, the gigantic monopolies would not take away the handling of the raw leaf in this country. By the wisdom of a Chancellor of the Exchequer in the past, who made a difference of £100 a ton duty between raw leaf and the manufactured imported tobacco, there was secured permanent work for 20,000 to 30,000 hands. Not only did it secure work here, but it enabled our manufacturers to secure the markets of the world. There is no better instance on record than the manner in which our tobacco manufacturers have not only secured for us in England the best smoking tobacco possible, but by the fact that they have the home market, have conquered the foreign market. Wherever you travel you find English manufactured tobacco in the retail stores, and it is owing to our Chancellor of the Exchequer so arranging his Finance Bill that he had this deferential rate which secured permanent work for the men at home and enabling the manufacturer still to do the export trade. It is impossible now to make any changes this year but it is for the sentiment of the men in this House to realise that there is a better way, and despite the fact that the Attorney-General in his gibe spoke of the time past when we always spoke of a better way, there are many of us on these Benches who still believe in that better way.

I want Members of the House to realise that this is not a political matter only. It surely is a national matter. An hon. Member opposite asked some questions as to cattle supply. He said that all the food supply of the world had gone on steadily increasing. I wish to reply to that, because I know something of it. Can the hon. Member maintain that there is a steady increase in the supply of cattle in the world when the United States have had to buy flesh meat from the Argentine? Surely he must know when he speaks of the quantity of food in the world, it must be relative to the population of the world. Having regard to the increase in the population who need flesh meat, the cattle supply has been falling, and no doubt it is on that account that we have had high prices for cattle and meat. The Chancellor of the Exchequer should look not to the next two or three years, but to many years ahead, just as the people of the United States did when they were looking for cheap sugar. If you could increase the population of cattle in the world by giving a preference to those countries with climates best adapted for the growing of cattle, you would get a better supply. The Labour Members may not believe this, but I would ask them to suppose that the whole Kingdom is a wholesale co-operative society, of which everyone in the community is a member, and to suppose also that I am the business head of the concern. I put the proposition as a business man. In order to decrease the cost I would increase the production of beef. That is the only way I know by which you would decrease the cost. I would select the places best adapted for the growing of cattle, and I would say, "You will have a preference for the next thirty years." I know that the people I had to feed would benefit by my far-sighted policy. I would ask the House to remember what happened in Australia with regard to the supply of butter. It was an infant industry in Australia when the steamers fitted with refrigerators began to bring butter across the Equator and deliver it here as good as when it was made. The Government of Australia said, "We will pay a bounty of a penny per pound on butter sent to London and sold at 112s. per cwt." This so encouraged the industry that, after a number of years, the supply of butter had so increased in quantity and quality that the Government had to withdraw the premium. That is an instance of how the Chancellor of the Exchequer in Australia, by his foresight, helped the industry by increasing the production while he also reduced the price of the article. I say we can by some legislation increase the quantity of food and decrease the cost to our people. Taking it as a whole, I condemn this Finance Bill because it in no way assists to uphold the purchasing power of the wages earned by the workers, and that should be one of the first considerations of the Chancellor of the Exchequer. I sincerely trust that the day is not far distant when we shall have Chancellors of the Exchequer making this a first consideration in drafting their Finance Bill.

Sir RYLAND ADKINS

I am afraid that I cannot give the House the wealth of information which it has got from the last speech. But hon. Members on this side of the House are very glad to have heard the arguments of the last speaker as to the price of beef. We now understand that, in spite of the serious absence of Protectionist rhetoric up to this point in the Debates on the Budget, yet still the hearts of hon. Members on the other side are true to Tariff Reform, and we are particularly glad to note that they are true to it in the most cosmopolitan form. For, if I understand the hon. Member's argument aright, it is an argument for giving preferential treatment not to the British farmer with all his burdens of rates, but to the happy inhabitants of more favoured climates in other parts of the world. One would indeed be interested to see if an Argentine benevolent society will spring up as a branch of the Tariff Reform League, and if the argument of the hon. Member is good it ought to be developed inside and outside of this House, that Chancellors of the Exchequer are to foster, by artificial means, the prosperity of those parts of the earth which already have the greatest natural advantages for special kinds of production. I can assure the hon. Member that that is the kind of controversy which no one on this side of the House would shrink from, for it will give a great deal of very interesting material for discussion in the constituencies when the time comes.

I rise merely to say that as the hon. Member opposite concluded by condemning this Bill, I, as one of those who criticised it in, as it seemed to me, important details in its earlier stages, wish to thank my right hon. Friend for the form which this Finance Bill takes now in its final stage. I think that the improvement made in it with regard to the taxation of small incomes, and the way in which he has met to a very considerable extent the criticisms as to the abolition of the Settlement Estate Duty and the very important provision in the Bill for making greater allowance in respect of the upkeep of buildings and land are matters which will be received with great gratitude, and will make this Budget one to be remembered for a number of years to come. In the nature of things no Budgets can ever be exceedingly popular. No Finance Bill can be an engine of popularity any more than, as I believe, it can be an instrument of promoting the specific prosperity of a particular class in the way in which the hon. Member suggested. While I am one of those who regret that the Income Tax is not higher as it was originally, and that we have not another penny to be spent on the relief of local rates, as they are today in existing conditions, yet while regretting that the Bill has not gone further in this direction, but as it stands now with the substantial modifications made since it was first introduced, I for one shall have much pleasure in voting for it if there is a division taken upon it. I welcome an opportunity of supporting in this House a Budget the principle of which is taxation for revenue, and taxation of wealth already accumulated and not taxation which is a hindrance of the processes by which wealth is made.

Mr. COURTHOPE

I wish to correct an astounding misapprehension which exists in the minds of hon. Gentlemen opposite with regard to sugar. When my hon. and learned Friend was speaking just now he quoted and quoted correctly the price of 88 per cent. beet sugar as 9s. 3d. per cwt. He was interrupted by an hon. Gentleman opposite and the interruption was applauded to such an extent that I think that the misapprehension must be general. When the hon. Member says beet he means I presume beet in the root form. [An HON. MEMBER: "Yes!"] There is not a ton of beetroot on the Continent in the raw form at this time of the year. To suggest that 9s. 3d. per cwt. is the price of beet in the root is ridiculous. The price of beetroot on the Continent of Europe varies from 19s. to 22s. 6d. a ton, and for many years 1s. 6d. per cwt. has never been paid on the Continent of Europe for beet. The crop of beet is harvested in October and November, and the whole of it is converted into sugar of sorts before the end of January. My hon. and learned Friend correctly quoted the price of 88 per cent. beet sugar. [An HON. MEMBER: "Not refined."] Beet sugar, nevertheless, in the standard form on which all quotations and calculations for beet sugar throughout the world are based. The price of 11s. 6d., which the hon. Member quoted, is for one of the Continental granulated beet sugars, which is a very different thing. Beet in the root form does not exist at all on the markets of Europe or elsewhere, except what may be retained for the production of seed, and the price of 9s. 3d. is for sugar, and sugar alone.

Mr. DENNISS

Though there is much I should have liked to say if time permitted, I shall confine myself to answering the hon. Baronet, the Member for Loughborough (Sir M. Levy). It is quite clear, in spite of what he said, that the Chancellor of the Exchequer has reduced by £2,500,000 a year the interest on the National Debt, leaving the annuity at £20,000,000. That £2,500,000 represents £100,000,000 reduction of the National Debt. But it is equally true on the other side that the Chancellor of the Exchequer has increased the permanent taxation of this country by the amount of £800,000,000 for National Insurance, Old Age Pensions, and other matters. [HON. MEMBERS: "Hear, hear."] I am not quarrelling with that. [HON. MEMBERS: "Oh! oh!"] I voted for the Second Reading of the National Insurance Bill. I am simply stating the facts. The £20,000,000 which we have to pay as a permanent charge represents £800,000,000, and that permanent charge of £20,000,000 is just the same as if the National Debt had been increased by £800,000,000. Therefore, if you subtract the £100,000,000 taken off the National Debt from the £800,000,000, there remains £700,000,000 liability, the amount by which the Chancellor of the Exchequer has practically increased the Debt of this country.

It being Eleven of the Clock, Mr. SPEAKER proceeded, pursuant to the Order of the House of the 8th July, to put forthwith the Question already proposed from the Chair.

Question, "That the Bill be now read the third time," put, and agreed to.

Bill read the third time, and passed.