Commons Sitting of 7 May 1914

Preamble
The House met at a Quarter before Three of the clock, Mr. SPEAKER in the Chair.

MILITARY MANŒUVRES ACTS, 1897 AND 1911 (ORDER IN COUNCIL).
THE TREASURER OF THE HOUSEHOLD (CAPTAIN GUEST) reported His Majesty's Answer to the humble Address of the 28th day of April last, as followeth:—
I have received your Address praying that I will make an Order in Council under the Military Manœuvres Acts, 1897 and 1911, a draft of which was presented, to your House on the 13th day of February last.
I will comply with your advice.

PRIVATE BUSINESS.
Deal and Walmer Gas and Electricity Bill,
St. Anne's-on-the-Sea Improvement Bill,
Read the third time, and passed.
Great Eastern Railway Bill [Lords] (by Order),
Second Reading deferred till To-morrow.
Electric Lighting Provisional Order (No. 8) [Kingstown] Bill [Lords],
Consideration, as amended, deferred till Thursday next.

NEW WRIT.
For the county of Derby (North-Eastern Division), in the room of William Edwin Harvey, esquire, deceased.—[Mr. Arthur Henderson.]
TREATY SERIES (No. 7, 1914).
Copy presented of Treaties, etc., between the United Kingdom and Foreign States. Accessions, Withdrawals, etc. [by Command]; to lie upon the Table.
EXPLOSIONS (ARDEER, AYRSHIRE).
Copy presented of Report to the Secretary of State for the Home Department on the circumstances attending the explosion which occurred on 20th February, 1914, in an incorporating house in the Factory of Nobel's Explosives Company, Limited, at Ardeer, Ayrshire [by Command]; to lie upon the Table.
FACTORY AND WORKSHOP (SCHEME FOR REGULATION OF HOURS OF EMPLOYMENT, ETC., IN CHARITABLE INSTITUTIONS).
Copy presented of Scheme approved by the Secretary of State for the Home Department, in pursuance of Section 5 (2) (a) of the Factory and Workshop Act, 1907, for the regulation of the Hours of Employment and Intervals for Meals and Rest in respect of the Institution of the Church Army, at 36, St. George's Square, Primrose Hill, London, N.W. [by Act]; to lie upon the Table.
METROPOLITAN WATER STOCK REGULATIONS (AMENDMENT), 1914.
Copy presented of Order made by the Local Government Board amending the Metropolitan Water Stock Regulations, 1903 [by Act]; to lie upon the Table.
THAMES CONSERVANCY.
Paper laid upon the Table by the Clerk of the House:—General Report and Accounts of the Conservators for 1913 [by Act]; to be printed. [No. 217.]
ORAL ANSWERS TO QUESTIONS.

  New Hebrides.
  Mr. WILLIAM REDMONDasked the Secretary of State for Foreign Affairs when he expects to be able to make a statement as to any fresh agreement that may be entered into with France as to the New Hebrides; and whether, in concluding any such agreement, the views of the Government of the Australian Commonwealth will be ascertained?
  The SECRETARY of STATE for FOREIGN AFFAIRS (Sir E. Grey): The arrangements for a conference are now under consideration with the French Government; and as to the latter part of the question, the Secretary of State for the Colonies stated on 23rd April that he had been in correspondence with the Governments of the Commonwealth and New Zealand in regard to the questions to be discussed with the French Government, that he had undertaken to consult them further before any new arrangement was entered into, and that the fullest consideration would be given to any views expressed by the Commonwealth or Dominion Government.

  Under-Secretary's Replies.
  Sir J. D. REESasked whether the answers given in the House by the Under-Secretary are given as from himself and upon his authority?
  Sir E. GREY: I am not sure whether the words "himself" and "his" refer to my hon. Friend or to myself. The answers given by my hon. Friend the Under-Secretary for Foreign Affairs are given in the same way and on the same footing as those given by Under-Secretaries for other Departments. Answers to questions on the Paper given by an Under-Secretary are presumably given with full authority on behalf of the Department and the head of it for whom he speaks, and it is so in the case of the Foreign Office as between my hon. Friend and myself.
  Sir J. D. REES: In that case what am I to understand the Under-Secretary meant when I asked for the opinion of the Foreign Secretary by saying that if I wanted it I must ask the Foreign Secretary?
  Sir E. GREY: I have not seen that particular reference. If the hon. Member will put it on the Paper I will inquire.
  Sir GILBERT PARKER: Would it not conduce to a better understanding of the answer if the Under-Secretary would reply on behalf of the right hon. Gentleman rather than on his own behalf as he often does?
  Sir E. GREY: I understand he replies in precisely the same way as other Under-Secretaries and in just the same way as I myself did when I was Under-Secretary.

  China (Anglo-French Investment Company).
  Sir J. D. REESasked the Secretary for Foreign Affairs whether he will instruct the British Minister in China to use his good offices on behalf of the British share and debenture holders in the Anglo-French Investment Company, the direction of which is now passing into new, and into other than British, hands?
  Sir E. GREY: I have no information on the matter beyond what has appeared in the Press, and it does not appear from that to be a case in which His Majesty's Minister could intervene.

  Uruguay (Laud Tax Reform Bill).
  Mr. DUNDAS WHITEasked the Secretary for Foreign Affairs if he will obtain
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  and print as a Parliamentary Paper a translation of the presidential message to the legislature of Uruguay of 20th March, 1914, on the Uruguay Land Tax Reform Bill, together with a translation of that Bill and full particulars of the system of valuation and registration there?
  Sir E. GREY: As I stated on the 28th ultimo the question of obtaining such information is under consideration. I will let my hon. Friend know as soon as I can what decision is come to.

  Thrace.
  Mr. AUBREY HERBERTasked what steps His Majesty's Government intend to take regarding the recent memorandum addressed to the Ambassadors of the Great Powers by the Porte dealing with the ill-treatment of Moslems in the ceded territories of Thrace, notably in the territory of Karadjova; and if 163,000 Moslems have been compelled to leave their ancient homes through this ill-treatment since November, 1912, and that mosques and cemeteries are being profaned and burned?
  Sir E. GREY: No such memorandum has, as yet, reached His Majesty's Government. Large numbers of Moslems have left the ceded territories during the past year, but I have no official information as to the outrages referred to by the hon. Member.
  Mr. AUBREY HERBERTasked the Secretary for Foreign Affairs whether he is aware that, in spite of the decisions of the London Conference and the Frontier Commission, the Koritza district is being attacked by Greek forces with cannon and that the Albanian gendarmerie has been obliged to withdraw, and that in the Kolonia district many villages have been burned and women and children killed; and whether he proposes to take any action in the matter?
  Sir E. GREY: I have received reports to the effect referred to, but the information which reaches His Majesty's Government from different sources is very contradictory, and they are not in a position to check its accuracy. According to the statement of the Greek Government all their troops have been withdrawn, and are now within the new frontier. The International Commission of Control, at the invitation of the Albanian Government, are endeavouring to secure a settlement of the disorder.

  Treaty of Bucharest.
  Mr. AUBREY HERBERTasked whether Great Britain has yet signified her assent to the Treaty of Bucharest, and the conditions on which that assent was given?
  Sir E. GREY: His Majesty's Government are in communication with the Powers on this subject. Different views are held by the Powers as to whether express recognition of recent territorial changes is required, and, if so, in what form and on what conditions it should be given?

  Outrages (Ireland).
  Mr. NEWMANasked the Chief Secretary for Ireland whether the Attorney-General has been compelled to apply for a change of venue in two county Clare criminal charges on the ground that a fair trial was impossible in Clare owing to the state of terrorism which was prevalent; and, if so, whether he can say if the application was granted, and to what part of Ireland will the hearing of these charges of murder and intimidation be transferred?
  The CHIEF SECRETARY for IRELAND (Mr. Birrell): An application has been made and granted for a change of venue in these cases to the county of Dublin.
  Sir W. BYLES: Could the right hon. Gentleman get a true bill returned on a charge of treason in county Antrim?
  Mr. BIRRELL: I do not know until I try.
  Mr. NEWMANasked the Chief Secretary for Ireland whether he has received information of an attack on a patrol of policemen by a party of moonlighters at Cleggan, county Galway, last week; whether he is aware that the police were subjected to a fusillade of shots from behind a stone wall and retaliated with rifle fire; whether, as a result of the disturbed state of this district, constables are only allowed to patrol in pickets and not singly; and whether, in connection with the shooting affray, any arrests have been made?
  Mr. BIRRELL: I am informed that about ten o'clock on the night of 30th April two shots were fired at a patrol of three constables from Lough George from behind a wall at a distance of 100 yards. The police returned the fire with four shots and went in pursuit of their assailants, who escaped into a wood. Inquiries were immediately instituted, but so far the police have been unable to obtain sufficient evidence
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  to justify any arrests. None of the police or their assailants were injured. The patrols in this locality have for some time past consisted of three men.

  GOVERNMENT OF IRELAND BILL.

    CIVIL AND MILITARY FORCES.
    Mr. JOHN WARDasked the Chief Secretary for Ireland whether he is aware that Larne Harbour is principally owned by a person named M'Kean, a coal factor, who is the owner of the steamship "Roma," now detained for gun-running; will he say whether this same gentleman has recently been made a magistrate for the county of Antrim on the recommendation of Lord Shaftesbury; and, if so, what action docs he propose to take in the matter?
    Mr. BIRRELL: Larne Harbour is owned and worked by a limited company of which the gentleman referred to is a share-holder. He is also a member of the firm of Howden Bros., Limited, who are the owners of the steamer "Roma." This gentleman was appointed in 1912 to the Commission of the Peace for the county Antrim. I will call the Lord Chancellor's attention to the question.

    ULSTER MANUFACTURERS (EXCISE DUTIES).
    Mr. F. HALLasked the Chief Secretary for Ireland if it will be open to the Irish Parliament, under the Government of Ireland Bill, to impose Excise Duties on all goods manufactured in Ireland, provided there is no corresponding Customs Duty; and if this provision would cover the imposition of such duties on practically all articles now manufactured in Ulster?
    Mr. BIRRELL: I would refer the hon. Member to Clause 15 of the Government of Ireland Bill.
    Mr. F. HALL: Docs Clause 15, Subsection (a), override Clause 16, Subsection (2)?
    Mr. BIRRELL: I am prepared to take the opinion of the Law Officers.
    Mr. F. HALL: The right hon. Gentleman referred mo to Clause 15, and I should be glad if he will answer my question?
    Mr. BIRRELL: I will look it up.

    INSTRUCTIONS TO SIR A. PAGET.
    Mr. AMERYasked the Prime Minister whether, as he has now published the record of the verbal instructions given to Sir A. Paget on the 18th March, he will also publish the record of the verbal instructions given to Sir A. Paget on the 19th March, in fulfilment of the promise given by him on the 24th March?
    The PRIME MINISTER (Mr. Asquith): I will circulate the Record with the Votes.—[See Written Answers this date.]

    Public Record Office.
    Mr. KELLYasked the Chief Secretary for Ireland whether it is his intention to carry into effect the recommendations regarding the staff of the Public Record Office made by the Royal Commission on Public Records; and, if so, can he indicate a date when the suggested changes will begin?
    Mr. BIRRELL: The Royal Commission referred to did not extend to Ireland except as regards certain Record publications dealing with the National History of Great Britain and Ireland. No recommendations as regards the staff of the Public Record Office (Ireland) were made by the Commission.

    Land Purchase (Ireland).
    Mr. PATRICK WHITEasked the quantity of untenanted land let on grazing leases or the eleven months' system by Mr. Nicholson, Balrath, county Meath?
    Mr. BIRRELL: The Estates Commissioners are not in a position to furnish the information asked for in this question.
    Mr. PATRICK WHITEasked whether the land upon the Nicholson estate, Carlanstown, county Meath, for the purchase of which an agreement was lodged on behalf of one David Farrell, an infant, has since been offered for sale to the Commissioners as untenanted land, or whether any attempt has since been made in the name of any other person to obtain an advance for the purchase of these lands?
    Mr. BIRRELL: If the hon. Member refers to the holding in the townland of Horath on the Nicholson estate, county Meath, for the purchase of which Joseph P. Farrell signed an agreement to purchase
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    under the Irish Land Act, 1903, the reply to both parts of the question is in the negative.
    Mr. PATRICK WHITEasked the Chief Secretary for Ireland whether purchase agreements have been lodged on behalf of tenants on the Nicholson estate, Balrath, county Meath, so far back as 1909; whether, at the time of lodgment, it was intimated to the Commissioners that the vendor had entered into an agreement with the purchasing tenants to enlarge their holdings by sale to the Commissioners of adjoining untenanted land for that particular purpose; whether land has been offered for sale to the Commissioners for that object; if a price was offered; and, if so, was it accepted; whether a scheme has been drafted applying the land, if acquired, to the enlargement of existing holdings; and whether he will state generally what action has been taken to carry out the intentions of the vendor to enlarge local uneconomic holdings?
    Mr. BIRRELL: The estate referred to is the subject of a sale by the owner direct to the tenants under the Irish Land Act, 1003, and purchase agreements at prices agreed upon between the parties were lodged with the Estates Commissioners in April, 1909. In 1910 the Commissioners received a communication on behalf of the tenants alleging that one of the conditions of the sale was that the vendor should provide additional lands for the tenants of certain holdings. No such condition appears in the purchase agreements signed by the parties, and the vendor's solicitors on being furnished with a copy of the communication in question replied that no such agreement was made by him; that what the vendor did state was that if, after the inspection of the estate, the Commissioners considered that certain holdings should be enlarged he would be willing to give untenanted land to provide such enlargements if an arrangement as to price is arrived at. No additional land has boon included for sale to the Commissioners, and a price has not been offered or a scheme prepared. The estate has been inspected, and the Commissioners have the question of the enlargement of some of the holdings under consideration at present.
    Mr. O'DOWDasked whether the Irish Land Bill will be proceeded with and passed into law during the present Session of Parliament?
    Mr. BIRRELL: I would refer the hon. Member to the reply given to the question on this subject asked by the hon. Member for North Fermanagh on the 16th February.
    Mr. DUFFYasked the Chief Secretary for Ireland whether the tenants on the estate of Frederick Hugh Henry, situate in the townlands of Monard, Caisepark, Ballinvoher, Myra, and Ballylass, county Galway, opened negotiations for the purchase of their holdings several years ago; whether early in June, 1912, Messrs. Conroy and Son, Galway, solicitors for the tenants, communicated with the solicitors representing the landlord, as a result of which negotiations were opened afresh for the purchase of the estate by the Congested Districts Board; whether the Board's inspector visited the lands of the tenants in 1912 with a view to purchase; and how the estate stands at the present moment?
    Mr. BIRRELL: The Congested Districts Board have no information regarding the negotiations which took place between the tenants' representatives and the vendor's solicitors regarding this estate. The estate was offered for sale to the Board in December, 1912, and their valuer inspected the property in July, 1913. The Board have recently come to terms with the owner for the purchase of the estate. The townlands of Caisepark and Ballinvoher referred to have not been purchased by the Board.
    Mr. DUFFYasked the Chief Secretary for Ireland, whether he is aware of the state of congestion that prevails on the estate of Frederick H. Henry, in the townlands of Monard, Myra, etc., county Galway; whether he is aware that the estate consists of some thirty tenants, the most of which holdings are under £6 valuation; that the estate comprises a large grazing farm; that this farm is let from year to year to tenants other than congests; and that the Board was requested by the tenants to acquire this estate over two years ago; and, having regard to the state of congestion amongst the tenants on the land and the avowed willingness of the landlord to sell, will he consider whether definite action should be taken at once by the Board to acquire this estate?
    Mr. BIRRELL: The Congested Districts Board are aware of the circumstances of the tenants on the estate referred to. There are twenty-eight tenants on the property, and of these twelve have holdings
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    under £6 valuation. The estate includes a large grazing farm for the purchase of the tenant's interest in which the Board are negotiating. They understand that the tenant was in the habit of letting the farm in Conacre and grazing. The Board were asked by the tenants to purchase the estate over two years ago as stated and in January last an agreement for the purchase of the estate was entered into with: the owner.
    Mr. HAYDENasked the Chief Secretary for Ireland how long the negotiations between the Congested Districts Board and the Earl of Essex for the sale and purchase of the Essex estate, in county Roscommon, have been in progress; how far they have been advanced; how do they stand at the present time; has any offer been made to the Earl of Essex; if not, when the offer may be expected; and whether the offer, when made, will be made for the whole of the estate in and around the town of Roscommon?
    Mr. BIRRELL: The documents in connection with the estate referred to were transferred to the Congested Districts Board from the Estates Commissioners in November, 1911. The property has been valued and the question of issuing an offer will be considered by the Board at their meeting this month, when it will be decided what portion of the estate will be included in the offer.
    Mr. HAYDEN: Will the right hon. Gentleman bring to the notice of the Board the desirability of purchasing the whole of the estate?
    Mr. BIRRELL: I think that is a point which will be before the Board.

    Somaliland (Oil Deposits).
    Sir J. D. REESasked the Secretary of State for the Colonies, whether he can give the House any information regarding the locality in which oil has been discovered in Somaliland; whether such locality is within the sphere of influence of the British Government; and whether any efforts are being made to develop this discovery?
    The SECRETARY of STATE for the COLONIES (Mr. Harcourt): Indications of oil have been discovered about 28 miles from Berbera and within our sphere of influence. I am considering, in consultation with my expert advisers, what further steps should be taken in the matter.

    East Africa (Native Labour).
    Mr. WEDGWOODasked the Secretary of State for the Colonies whether his attention has been called to the evidence given by Mr. Hilton before the Native Labour Commission in East Africa to the effect that the poll tax on Natives should be increased; that this would provide a sufficient supply of labour; and that the money could be utilised for the general uplifting of the Natives; whether this evidence accords with the views of the Colonial Office; and whether any such steps are to be taken to uplift the Natives?
    Mr. HARCOURT: I would refer my hon. Friend to the answer which I gave to the hon. Member for West Leeds on the 25th April.

    Office of Works (Contracts).
    Mr. MacCALLUM SCOTTasked the Secretary to the Treasury whether he is now able to state what decision has been come to with regard to the desirability, in view of the incidence of the National Insurance Act, of varying the contracts made by certain firms in Glasgow with the Office of Works before the Act was passed; whether the decision is still awaiting the result of arbitration in another similar case; whether he can say how long tills other case has been under arbitration; and whether, in view of the hardship to these firms and other Scottish contractors, he will take steps to secure an early decision?
    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): The award under the arbitration referred to has been given, but proves not to affect the general considerations upon which the Treasury found itself unable to sanction a variation of the terms of the contracts in the other ceases mentioned in the question. In the circumstances I must adhere to the decision not to reopen the terms of those contracts.
    Mr. J. HOGGE: Is the hon. Gentleman aware that a distinct promise was given from the Treasury Bench that this decision should wait upon this arbitration, and, on account of that, no further action was taken by these contractors; and does he not think it is unfair now to say that he refuses to reopen the matter when he put these men aside on that consideration?
    Mr. MONTAGU: What happened was this: The decision was arrived at provisionally. Before refusing to reopen the question the result of the arbitration was awaited. Now that we have found that the arbitration does not affect it, we propose to adhere to it.
    Mr. J. HOGGE: Has not the hon. Member's memory failed him, and were not the circumstances these: that it was not a question of the case being reopened but that the case was never closed.
    Mr. MONTAGU: It was closed and the contract was made. My predecessor refused to give a definite answer as to the reopening of the question until after this arbitration had been decided.

    Junior Technical Schools (Regulations).
    Mr. WEDGWOODasked the President of the Board of Education whether the new regulations for junior technical schools regulating vocational schools binds the parent to make the child work at the trade for which the school trains the child; whether these schools are intended to benefit the children or their future employers; and whether this infringement of the liberty of the subject has been taken into consideration and has his sanction?
    The PRESIDENT of the BOARD of EDUCATION (Mr. J. A. Pease): Article 6 (g) of the Regulations for Junior Technical Schools states that "no pupil may be admitted unless a certificate is given by his parent or guardian that he is intended to enter into employment for which the school provides preparation." There is nothing whatever in the Regulations which binds the parent to make the child work at the trade for which he has been trained. In answer to the second part of the question, the schools are intended to benefit the children, and I cannot see that any question of infringing the liberty of the subject arises.

    Town Lands Charity (Wilby, Suffolk).
    Mr. KINGasked the President of the Board of Education whether the town lands charity of Wilby, Suffolk, produces about £70 per annum, whereof two-sevenths has been since 1869 devoted to education; whether this educational portion of the charity has been since 1902 unapplied but accumulated; and whether, in view of the uselessness of the charity in its present condition to the people of the parish, he will consider an, application

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    from the parish council to enable the accumulated funds to be used in accordance with the wishes of the council?
    Mr. PEASE: The net income of the charity appears to be about £55, of which four-sevenths is applicable towards the support of any school for the education of the poor of Wilby under a scheme made in 1869. I have no recent information as to the application of the income, but I am making inquiries. I am prepared to consider any application for the establishment of a scheme which would not be inconsistent with the existing trusts.

  POST OFFICE.

    TELEPHONE SERVICE.
    Mr. FELLasked the Postmaster-General (1) the reason for the demand of a standing deposit by telephone subscribers equivalent to the average monthly user, whilst up to now the standing deposit has been only 10s. for each subscriber; if this demand is to be insisted on in all cases; and why this new burden should be cast on subscribers; and (2) if interest is going to be allowed on the deposits it is now claimed that telephone subscribers must pay in advance; the amount he expects to have in hand on this account; and what he proposes to do with it?
    The POSTMASTER-GENERAL (Mr. Hobhouse): The hon. Member is under a misapprehension in supposing that the normal deposit in respect of charges for telephone trunk calls and telegrams has been 10s. The ordinary minimum deposit was £1, although in some cases lower amounts have been accepted. As these deposits are made to meet the statutory obligation that charges for trunk calls and telegrams must be prepaid, and as such charges are collected in monthly accounts, it is obviously for general convenience to make the amount of the deposit correspond with the charges incurred during the monthly period. The amounts received are paid forthwith into the Exchequer, and as there is no question of interest being earned none can be paid on such deposits.
    Mr. FELL: The right hon. Gentleman says it is £1 now. I have a case before me in which £8 has been demanded for the deposit. My informant has only paid 10s. up to now, and it is a very serious—
    Mr. SPEAKER: That matter should be dealt with by letter.

    POSTMEN (DISTRIBUTION OF LITERATURE).
    Mr. GRETTONasked the Postmaster-General whether his attention has been called to the fact that several postmen have undertaken to distribute Socialist literature on their rounds during the period from 7th to 14th June, which is described as Red Week; and whether he will take steps to prevent political propaganda being carried on by these means?
    Mr. HOBHOUSE: My attention has been called to a statement on the subject which appeared in the public Press. Postmen are not permitted to distribute circulars which have not passed through the post.
    Mr. BARNES: Has the right hon. Gentleman any means of ascertaining whether the facts are as stated in the question?
    Mr. HOBHOUSE: The newspaper paragraph said that "several postmen have undertaken to distribute literature." I really could not undertake an inquisition amongst all the postmen in the United Kingdom to find out whether several postmen have or have not disobeyed the Regulations on the point.
    Mr. BARNES: Is there nothing in the paragraph to indicate the district?
    Mr. HOBHOUSE: Nothing more definite-than the words I have read to the House.
    Mr. KEIR HARDIE: Is there anything in the Regulations to prohibit Post Office servants from distributing Tariff Reform or Socialist literature when their day's work is over?
    Mr. HOBHOUSE: I should like notice of that question. It is quite clear that postmen cannot be employed in distributing any other matter than that which comes within the ordinary course of their duty.

    POST OFFICE VEHICLES (ACCIDENTS).
    Lord CHARLES BERESFORDasked whether, in the event of an accident on the road between a Post Office motor or other vehicle and motor cars, carts, cycles, or other vehicles belonging to the public, when the driver of the Post Office vehicle is proved to have caused the accident, the Post Office repudiate liability on the ground that the driver is the servant of a Government Department; and, if so, why such a plea is entered,

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    looking to the fact that private persons, on being proved to have caused similar accidents, are mulcted in damages to the injured persons?
    Mr. HOBHOUSE: I am advised that, as an officer of the Crown, I am not legally liable for the acts or defaults of any Post Office servant. Nevertheless, it is the practice of the Post Office to entertain reasonable claims for injury or damage which are shown to be due to negligence on the part of a Post Office servant. The drivers of mail vans are, however, in general not servants of the Crown, but of a contractor.

    PROBATIONER ENGINEERS.
    Mr. F. HALLasked if any steps have yet been taken to give effect to the recommendation of the Post Office Staff Committee as to the creation of a class of probationer engineers from which assistant engineers would be recruited; and, in view of the uncertainty arising in the case of those already in the service who are affected by this recommendation, when a decision is likely to be come to in the matter?
    Mr. HOBHOUSE: The recommendations of the Select Committee that a class of engineer probationers should be created, from which assistant engineers would be recruited, has been accepted. Details of the scheme of examination for the new class are at present under consideration.
    Mr. F. HALL: Will preferential treatment be given to present employés in the Post Office?
    Mr. HOBHOUSE: I do not think that arises out of the question. The whole subject of the probationer engineers is under consideration between my Department and the Treasury. I cannot say more at this moment.

    Westminster Hall (Lighting).
    Mr. LYELLasked the hon. Member for St. George's-in-the-East, as representing the First Commissioner of Works, whether his attention has been called to the inartistic and incongruous character of the present methods of lighting Westminster Hall; and whether the Office of Works is prepared to consider the question of new designs of lighting which might be installed in connection with the repairs now about to be undertaken?
    Mr. WEDGWOOD BENN (Lord of the Treasury): The question of improving the lighting in Westminster Hall can only be considered when the work for the preservation of the roof has been completed.

    Public Parks (Fishing).
    Lord ALEXANDER THYNNEasked the hon. Member for St. George's-in-the-East, as representing the First Commissioner of Works, whether there is any objection to an extension of the present facilities for catching tiddlers or sticklebacks-with nets in the public parks to fishing with rod and line by children of school age under due restrictions as to hours and seasons?
    Mr. W. BENN: The matter is receiving the First Commissioner's consideration.

    Mitford and Launditch (Sanitary Conditions).
    Mr. JAMES PARKERasked the President of the Local Government Board whether in 1906 and again in 1912 the Board, having received Reports from their own inspectors as to the insanitary conditions in the rural district council of Mitford and Launditch, communicated with the rural district council, in the latter cast; stating that the Board regarded with grave concern the existence of unsatisfactory conditions, and urged upon the district council the necessity for immediate action; whether he is aware that the county council of Norfolk have also recently drawn the attention of this rural council to specific instances of insanitary conditions; whether he can state how many houses have been closed in the district mentioned under the Housing Acts in 1912 and 1913, and, of these, how many have not been demolished within the statutory period; and whether in this district at the present moment the greater number of the houses have privies and privy pits in close proximity to the houses and to the shallow wells?
    The PARLIAMENTARY SECRETARY to the LOCAL GOVERNMENT BOARD (Mr. Herbert Lewis): The reply to the first two parts of the question is in the affirmative. As regards the third part, so far as the Local Government Board are aware, three closing Orders and no demolition Orders were made, and, as regards the fourth part, the medical officer of health reported in 1912 that privies were universal in the district, but that the council were each year having a number converted to pan closets.
    Mr. JAMES PARKERasked whether, after a visit of Mr. Collins, an inspector of his Department, the medical officer of health of the rural district council of Mitford and Launditch in 1912 arranged that the inspector of nuisances should see him daily so that he might ascertain from the inspector's daily inspections which, if any, houses were to be reported to the rural district council under the Housing Acts; if so, whether the medical officer of health in July, 1913, reported to the sanitary committee that in Shipdham 217 cottages had been inspected and structural defects found in almost every one of them; and whether it was arising out of that report, which had been prepared by the inspector of nuisances, that the latter was suspended, notwithstanding the expressed opinion of the Board that generally the sanitary administration of this district was lax and that a number of houses in the district were unfit for habitation?
    Mr. HERBERT LEWIS: The Local Government Board have no knowledge of the arrangement referred to in the first part of the question. With regard to the second part I understand that 217 houses were inspected in Shipdham in 1913, most of which were found defective. I am unable to substantiate the assumption in the last part of the question.
    Mr. JAMES PARKERasked the right hon. Gentleman whether Mr. Robert Read, late inspector of nuisances for the rural district of Mitford and Launditch, has recently resigned his office; if so, whether the resignation was the result of the advice of the Board, which, being satisfied that the inspector had consistently reported the existence of gross nuisances in the said district, yet deemed it desirable to avoid friction in the future should the sanitary authority again neglect to take their part in remedying insanitary conditions; will he state for how many years Mr. Copeman, the present chairman of the rural district council, has held that office; and what action he proposes to take to prevent future inspectors of nuisances in this district being penalised by losing their employment through reporting the facts they discover?
    Mr. HERBERT LEWIS: The rural district council reported in October last that they had suspended their inspector of nuisances for failure to carry out their instructions satisfactorily. The Local Government Board sent a medical inspector to inquire into the circumstances,
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    and after considering his report they informed the council that, in their opinion, the inspector of nuisances should not continue in office, and suggested that he should be asked to resign, which he did. I am unable to say for how many years the present chairman of the council has held office.

  ROYAL NAVY.

    CEMENT TRADE (FAIR-WAGES CLAUSE).
    Mr. WILLIAM THORNEasked the First Lord of the Admiralty whether, in connection with the complaint against the Portland cement manufacturers, he is aware that at the Wickham Cement Works, Strood, there are 250 day workers receiving 5d. per hour and less; that the same thing applies at the White's Works, Swanscombe, as regards 296 men; and at Beven's Works, Northfleet, as regards 120 men; and that all the men referred to are between the ages of twenty and fifty, and that none of them are disabled; whether these facts were known before it was decided that the Fair-Wages Clause was not being violated; and whether he will cause further inquiry to be made and receive representations from the organisation of the men concerned?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): I will have further inquiry made in view of the information furnished by my hon. Friend.

    VACCINATION (EX-STOKER PLANT).
    Mr. F. HALLasked if the Admiralty proposes to compensate Henry Plant, the ex-stoker in the Navy who developed a serious disease shortly after undergoing compulsory vaccination, having just before passed a thorough medical examination; or whether it is proposed to investigate any further the claim of Plant to compensation?
    Dr. MACNAMARA: I would refer the hon. Member to the reply which I gave him on the 29th April last, to which I have nothing to add.

    NAVAL POLICY (PACIFIC).
    Mr. F. HALLasked if the understanding with regard to the naval policy to be pursued by Great Britain in the Pacific, which was arrived at with the Governments of Australia and New Zealand, is contained in any agreement or other written Paper; and, if so, whether such document is available for the use of Members of this House?
    Dr. MACNAMARA: The arrangements made at the Imperial Defence Conference of 1909 will be found in Cd. 4948 of that year. The modified arrangement made with New Zealand last year is summarised on page 8 of the printed statement issued with this year's Navy Estimates.

    Public Service (Remuneration).
    Mr. DAWESasked the Prime Minister whether, having regard to the pressure brought to bear on Members of the House of Commons in connection with claims by persons in the public service for increased remuneration, he will consider the desirability of setting up a permanent tribunal, independent of the House of Commons, by which all matters connected with the terms and conditions of employment in the public service would be considered at regular intervals and decided by such tribunal?
    The PRIME MINISTER: The Government will consider the suggestion, but, in view of the fact that this House is ultimately responsible for all public charges, I doubt whether the establishment and working of such a tribunal would be found practicable.

    House of Lords (Reform).
    Mr. LEACHasked if it is the intention of the Government to reconstruct the House of Lords during the lifetime of the present Parliament?
    The PRIME MINISTER: As was stated in the King's Speech, it is the intention of the Government to lay proposals before the House on this subject during the present Session.
    Mr. HARRY LAWSON: Will that be by way of Resolution?
    The PRIME MINISTER: I think I have already said so.

    Redistribution of Seats.
    Mr. LEACHasked the Prime Minister if any proposals have been received by him from the Leader of the Opposition in this House as to a Joint Committee to prepare a scheme for the rearrangement of Parliamentary constituencies?
    The PRIME MINISTER: I would refer my hon. Friend to the reply which I gave yesterday to the hon. Member for North Somerset on this subject.

    London Young Liberal Federation.
    Mr. AMERYasked the Prime Minister whether he received a deputation of the London Young Liberal Federation on Friday last conveying an illuminated memorial congratulating him on his appointment to the War Office, and recording its indignation at the attempt made to induce officers of the Army to refuse obedience to lawful orders on political grounds; and if he will state when and by whom any such attempt has been made?
    The PRIME MINISTER: The answer to the first part of the question is in the affirmative. As regards the latter part, I have no responsibility for statements made to me in memorials.
    Mr. AMERY: Do I understand that the Prime Minister in his answer dissented from the statement made by the memorialists?
    The PRIME MINISTER: I did not make any answer at all.
    Mr. HOGGE: Will the right hon. Gentleman put the memorial in the Tea Room so that we can see it?
    Viscount CASTLEREAGH: Did the right hon. Gentleman allow the memorialists to go away with the idea they entered the room with?
    The PRIME MINISTER: I cannot penetrate into their minds.
    Mr. JOHN WARD: Will the right hon. Gentleman circulate extracts from the speeches of the leaders of the Opposition in justification of this statement?
    Mr. RUPERT GWYNNE: Will the right hon. Gentleman publicly state that these statements are inaccurate?
    The PRIME MINISTER: As I have said, I do not know whether the question is in order at all. I think it is a new burden to cast upon Ministers that they should state the ground of statements contained in memorials.

    Scottish Estimates.
    Mr. JAMES HOGGEasked the Prime Minister whether he can now say when the Scottish Estimates will be taken; and how many days he proposes to give for their discussion?
    The PRIME MINISTER: I cannot yet make a statement, but adequate time will be given for discussion.
    Mr. WATT: Is the right hon. Gentleman aware that Scottish Estimates were discussed on August Bank Holiday last year and will he see that this is not repeated this year?
    Mr. MACPHERSON: Is the right hon. Gentleman aware that two days were allowed last year and that Scottish business is much more important this year?
    The PRIME MINISTER: No one is more alive than I am to the importance of Scottish business.
    Mr. KING: If Scotchmen got more than their due last year, is that any reason why they should get more than their due this year?
    The PRIME MINISTER: I cannot admit that Scottish Members get more than their due.
    Major ANSTRUTHER-GRAY: Is the right hon. Gentleman aware that Scottish business got a great deal too little attention last year?

    Charwomen (Board of Agriculture).
    Mr. JAMES HOGGEasked the President of the Board of Agriculture how many charwomen are employed in his Department; whether they work thirty hours a week for a weekly remuneration of 12s., or less than 5d. an hour; whether they receive any food; whether they receive any allowance for getting to and from the offices twice each day; and, if so, whether he will consider raising their wages?
    Mr. HERBERT LEWIS: The number of charwoman employed by the Board is twenty-two. The answer to the second and fifth parts of the question is in the affirmative, and to the third and fourth parts in the negative.
    Mr. HOGGE: Do we take it that the Board of Agriculture consider that less than 5d. an hour for thirty hours a week is a wage which they care to be judged by?
    Mr. H. LEWIS: I have already informed my hon. Friend that the President of the Board of Agriculture is considering the question of revising the wages.

    Labour Exchanges (South Wales).
    Lord NINIAN CRICHTON-STUARTasked the President of the Board of Trade if a number of Labour Exchanges are being closed in South Wales; if so, what is the number and where are they situated; and whether he can state the reason for such closing?
    The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Robertson): It has been decided to substitute local agencies of the unemployment fund for Labour Exchanges at Pontlottyn, Porth, Treorchy and Ferndale. The Aberkenfig Exchange has also recently been closed. These Exchanges are being closed because there is not enough work to be performed by them which cannot equally well be performed by a local agency. Similar changes are being made in certain districts outside Wales.
    Lord NINIAN CRICHTON-STUART: What is the exact difference in status between an agency and an Exchange?
    Mr. ROBERTSON: It is a more limited organisation. It can do its work at less cost and with a less stall.

    Government Employés (Minimum Wage).
    Mr. BARNESasked the President of the Board of Trade if his attention has been drawn to the intimation of the Postmaster-General of his intention to raise the minimum wage of adult men servants of the Post Office to 22s. per week; if he can make a similar intimation in respect to adult men of the Department over which he presides; and if he will state how many men in his Department are now paid under 22s. per week?
    Mr. ROBERTSON: My attention has been called to the intimation of my right hon. Friend the Postmaster-General to provide a wage of 22s. per week for all full-time male postal servants of twenty-three years of age and over whose incomes from the State are leas than that sum. There are in the service of the Board of Trade three male employés over twenty-three years of age whose weekly wages are at present less than 22s. a week. Two of these are on incremental scales rising to 30s. a week; the other is a man of seventy-nine who is temporarily employed on light work. The above are exclusive of pensioner messengers who are employed in the Board of Trade, as in other Departments, at 21s. a week in addition to their pensions.

    Speed Limit (Sidney Butler, Conviction).
    Mr. F. HALLasked the Secretary of State for the Home Department if he proposes to institute proceedings for perjury against the park inspector who alleges that Sidney Butler, chaf-feur to the First Lord of the Admiralty,

    437
    asked him, at the First Lord of the Admiralty's request, not to take any action with reference to a charge of exceeding the speed limit in St. James's Park, in view of the fact that he does not consider that the evidence bears out this official's allegation?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. McKenna): I presume the hon. Member refers to a conversation between the park inspector and Sergeant Ashley. I have not made any statement such as the hon. Member imputes to me in the last part of his question, and there is no occasion for any action on my part.

  NATIONAL INSURANCE ACT.

    COMPULSORY CONTRIBUTIONS.
    Sir J. D. REESasked the Chancellor of the Exchequer when the Government proposes to appoint a non-party Commission of experts to investigate the inequalities and injustices of the incidence of the national insurance compulsory contributions as a direct tax upon employers, who contribute about £9,000,000 under this enactment?
    Mr. W. BENN: I am unable to accept the assumptions contained in the hon. Member's question, but as regards the appointment of a Commission I would refer him to the reply which I gave to the hon. Member for the Bridgeton Division on the 5th May.

    DOMICILLARY TREATMENT.
    Mr. WORTHINGTON EVANSasked the Chancellor of the Exchequer whether he is aware that the Middlesex Insurance Committee is refusing to carry out its tuberculosis officer's recommendation that no insured person should receive domiciliary treatment with extras unless the insured person has chosen a panel doctor; and whether, in a case where an insured person has provided and paid for his own medical man, who is willing to act in consultation with the tuberculosis officer, it is the intention of the Government that the insured person is to forfeit the extras under the sanatorium benefit which the tuberculosis officer recommends?
    Mr. W. BENN: The recommendation of an insurance committee for sanatorium benefit and the nature of the treatment provided thereunder is, as the hon. Member is aware, a matter for the discretion of the committee. My right hon.
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    Friend is informed, however, that no such advice as the hon. Member suggests has been given by the tuberculosis officer referred to.
    Mr. WORTHINGTON EVANS: If I call the hon. Gentleman's attention to a specific case where the insurance committee acted on the lines indicated in my question, will the Commissioners see that it does not occur again?
    Mr. W. BENN: I think I know the case to which the hon. Member refers.

    CONTRIBUTION CARDS.
    Mr. CHARLES BATHURSTasked the hon. Member for St. George's-in-the-East, as representing the Insurance Commissioners, whether he is aware that it has been the practice of the Insurance Commissioners in the past to issue new cards to approved societies two months before the date prior to which such cards must be distributed; that the Commissioners are now informing approved societies that the new cards which, following the established practice, should already have been in the bands of approved societies, will not reach them until late in May or early in June, whether he realises the consequences of this delay to approved societies in view of the fact that double the work has to be performed owing to the writing up of the new books; if he can state the reason for this delay; and whether he will see that every effort is now made to issue the cards and books to approved societies at the earliest possible moment?
    Mr. W. BENN: It has been the practice to complete the distribution of the contribution cards to approved societies one month before the date the societies are required to issue them to their members. In order that there may be no delay in the issue of the cards for the ensuing half year before the 5th July, and in the preparation of the new insurance books which will be issued by societies after 5th July, arrangements have been made by the Stationery Office for the distribution of cards to be completed by the 20th May. The new insurance books will be distributed to societies as soon as possible after the date.
    Mr. BATHURST: Does the hon. Gentleman realise that any delay on the part of the Commissioners in this matter involves exceptional inconvenience to the centralised societies?
    Mr. W. BENN: Yes, Sir, that is quite realised.
    Mr. WORTHINGTON EVANS: Is it not a fact that these cards and books are being held up because the Government do not care that the public should see what is happening in regard to arrears?
    Mr. W. BENN: That is not correct.
    Mr. WORTHINGTON EVANS: Does the hon. Gentleman know that these new books and cards can only be issued when the arrears regulations are published, and that those are being delayed?
    Mr. W. BENN: No, Sir.

  BUDGET PROPOSALS.

    GRANTS-IN-AID.
    Sir ARTHUR GRIFFITH-BOSCAWENasked the Chancellor of the Exchequer whether the new Grant-in-Aid to local authorities is contingent on the passing of a new Housing Bill; and, if so, when the Government propose to bring in their Bill?
    Mr. BRIDGEMANasked how many Bills it will be necessary to pass through this House in order to carry out all the alterations in local and Imperial taxation and administration embodied in his Budget statement, and what those Bills will be?
    The CHANCELLOR Of the EXCHEQUER (Mr. Lloyd George): I propose making a statement during the course of the Debate on the Financial Resolution, as to the legislation that will be required this year to carry out the Government proposals.

    SUPER-TAX.
    Mr. ALAN SYKESasked whether, when a man is called on to make and makes a return of his income for Super-tax purposes under the new limit it appears that his income exceeds £5,000 per annum, and he has not hitherto paid Super-tax under the old limit, he can be asked to return his income for previous years, and, should it prove to be over £5,000 for previous years, he can be made to pay retrospectively on those years; and, if so, whether at the old rate or the new rate?
    Mr. LLOYD GEORGE: The Special Commissioners are empowered under Section 72 of the Finance (1909–10) Act, 1910, to call upon any person for a return of his income, and, where liability to Super-tax is found to exist, to make assessments, extending,
    440
    if need be, to three years past, at the rate of duty applicable in each year. Penalties are also prescribed by Section 72 (4) of the Act for failure to give notice of liability to Super-tax under Section 72 (3).
    Mr. WORTHINGTON EVANSasked the Chancellor of the Exchequer whether he can estimate how many persons will pay Super-tax at the various rates now fixed, and what amount of tax will be received at each rate?
    Mr. LLOYD GEORGE: I am circulating with the Votes a statement showing the estimated number of persons liable to pay Super-tax under the Budget proposals classified according to the rates of tax in pence in the £ on total income.—[See Written Answers this date.]
    Mr. WORTHINGTON EVANS: Will the statement show the amount expected to be raised in each grade?
    Mr. LLOYD GEORGE: Yes, Sir.

    ABATEMENT CLAIMS.
    Mr. WORTHINGTON EVANSasked the Chancellor of the Exchequer whether his estimate, given on the 2Sth May last, that 1,100,000 persons pay Income Tax, of which 950,000 are entitled to some abatement, requires to be added to now?
    Mr. LLOYD GEORGE: For the year 1914–15 it is estimated that there will be 1,240,000 taxpayers of whom, under the Budget proposals, only 164,000 will pay at the full rate of 1s. 4d.

    EARNINGS (ESTIMATE).
    Mr. WORTHINGTON EVANSasked the Chancellor of the Exchequer whether he can estimate the total income in last year or any recent year of all Income Tax payers; and the total wages of those engaged in manual labour and the earnings of the intermediate classes for the same year?
    Mr. LLOYD GEORGE: As regards the first part of the question the hon. Member will find the latest complete statistics on page 97 of the Fifty-sixth Report of the Commissioners of Inland Revenue (Cd. 7000). As regards the; second part, perhaps the hon. Member will be good enough to address his questions to my right hon. Friend the President of the Board of Trade.
    Mr. WORTHINGTON EVANS: To whom should I address the third part of the question?
    Mr. LLOYD GEORGE: I think that question should be addressed to the President of the Board of Trade.

    AGRICULTURAL RATES.
    Mr. DUNDAS WHITEasked whether, in view of the Budget Statement, it is proposed to omit the Agricultural Rates Acts from the Expiring Laws Continuance Bill of the present Session?
    Mr. CHARLES BATHURSTasked the Chancellor of the Exchequer whether, under his Budget proposals, the Agricultural Rates Act, 1896, will be repealed; and, if so, how the practice of charging purely agricultural land with one-half of the rates levied upon buildings and other hereditaments will be perpetuated?
    The PRESIDENT of the LOCAL GOVERNMENT BOARD (Mr. Herbert Samuel): My right hon. Friend has asked me to reply to these two questions. The withdrawal of the Grant payable under the Agricultural Rates Act, in consequence of the adoption of a new system of Grants does not involve the abandonment of the system of half rates on agricultural land which that Act established.

    CHILDREN (REBATE).
    Mr. F. HALLasked what would be the amount of rebate under the proposals contained in the Budget for 1914–15 to a person with an income of £200 who has four children?
    Mr. LLOYD GEORGE: As I explained in my Financial Statement on Monday, a person with an income of £200 who had two children would be entirely relieved from Income Tax. A person with four children under sixteen would be similarly relieved if his income fell between the limits of £160 and £240.
    Mr. F. HALL: Is the House to understand that a man who comes within this category would get a rebate of £3 in the year?
    Mr. LLOYD GEORGE: There may be a rebate from the Income Tax of 15s. per child.
    Mr. F. HALL: Would not a man in this category have to pay £1 10s. for Income Tax and get £3 back?
    Mr. SPEAKER: The hon. Member should put the question down in writing.

    WALES (FINANCIAL RELATIONS).
    Mr. LLEWELYN WILLIAMSasked the Chancellor of the Exchequer whether, in view of the fact that he was unable to separate the figures of England from those of Wales in his Budget speech, while he was able to give the figures for Scotland and for Ireland, respectively, and that it will be a necessary preliminary to the setting up of a federal system to ascertain the financial relations of England and Wales, he will take immediate steps to obtain separate Returns for and secure the appointment of a Commission to inquire into and report upon the financial relations of the two countries?
    Mr. LLOYD GEORGE: I am considering the suggestion of my hon. and learned Friend.

    EDUCATION GRANTS.
    Mr. MOUNTasked the Chancellor of the Exchequer whether, in the Grant for public health purposes which he proposes in his Budget Statement, he includes any extra Grant for rural districts, as recommended in the Report of the Kempe Committee?
    Mr. LLOYD GEORGE: The hon. Gentleman will find that the basis adopted for allocation is favourable to rural districts.
    Mr. MOUNTasked the Chancellor of the Exchequer whether, in the new Grant from the Exchequer to the cost of education, any amount is included for a Grant to small schools on the lines of the recommendation of the Kempe Committee?
    Mr. LLOYD GEORGE: There will be a Grant in respect of small schools.
    Mr. ORMSBY-GORE: Would these Grants require fresh legislation, or could they be made at once?
    Mr. LLOYD GEORGE: I do not think it would be necessary to have legislation for that particular Grant.
    Mr. KING: May I ask, then, why it would have been necessary to carry legislation last year when it was proposed to give a Grant for the building of council schools, such legislation being opposed by hon. Members opposite, and the Grant therefore dropped?
    Mr. LLOYD GEORGE: I would require-notice of that question.

    INCOME TAX (AGRICULTURAL LAND).
    Mr. C. BATHURSTasked the Chancellor of the Exchequer if he proposes to abandon the present limit of 25 per cent. in the amount which can be claimed by way of abatement of Income Tax under Schedule A in respect of the maintenance, insurance, repairs, and management of agricultural estates; and, if so, whether owners of agricultural property will be entitled in future to make returns for Income Tax under Schedule D?
    Mr. LLOYD GEORGE: The answer to the first part of the question is in the affirmative. As regards the second part, 110 change will be made in the provisions of Section 69 of the Finance (1909–10) Act, 1910, in regard to the method of obtaining the additional allowance.
    Mr. BATHURST: That being so, will the right hon. Gentleman explain why it is necessary to differentiate between the owners of agricultural land and those engaged in any business? Why not put them all under schedule D?
    Mr. LLOYD GEORGE: I cannot enter into that now. That is a matter for discussion. I think the hon. Gentleman will find that the owners of agricultural land will get exactly the same abatement in substance. It is really a matter of collection.

    INCOME TAX AND DEATH DUTIES (CONSOLIDATION OF STATUTES).
    Mr. PATRICK O'BRIENasked the Chancellor of the Exchequer whether, having regard to the public inconvenience caused by the provisions relating to Income Tax and to Death Duties, respectively, being scattered through a number of Statutes, and the likelihood of any steps to remove such inconvenience commanding approval in all quarters of the House, he will during the present Session introduce measures consolidating the statutory provisions regulating the said two matters, subject in the case of Death Duties to the preservation, as regards past deaths, of different dates of death as the commencement dates of different provisions?
    Mr. LLOYD GEORGE: In view of the heavy demands upon Parliamentary time during the present Session, I can hold out no hope of introducing measures to consolidate the laws regulating Income Tax and Death Duties.
    Viscount HELMSLEY: Would not the right hon. Gentleman do what is asked if it was understood that this Bill would meet with the general approval of the House?
    Mr. LLOYD GEORGE: That would put the matter in a totally different position.
    Major ANSTRUTHER-GRAY: Does the right hon. Gentleman propose to have it done in an Autumn Session?

  INDIA.

    PAY OF OFFICERS (DEDUCTIONS).
    Sir J. D. REESasked the Under-Secretary of State for India whether the recent decision of Mr. Justice Macleod in the Bombay High Court that an officer is entitled to receive his pay without deduction applies also to the private soldier; and, if so, whether contributions under the national Insurance Act can be compulsorily deducted from the pay of the private soldier?
    The UNDER-SECRETARY of STATE for INDIA (Mr. C. Roberts): I have seen a newspaper report of Mr. Justice Macleod's decision. So far as I am able to judge from the report, the decision does not appear to apply to private soldiers. With regard to the second part of the question, the Secretary of State is advised that contributions under Section 46 of the National Insurance Act can be compulsorily deducted from the pay of the private soldier in accordance with the terms of Section 136 of the Army Act.
    Sir J. D. REES: Will the hon. Gentleman state why a private soldier should not in equity be in the same position in this respect as an officer? Will the Under-Secretary of State consider that, although not now able to give a decision?
    Mr. C. ROBERTS: It is specifically provided for in the Army Act, and that is the place where it should be dealt with.

    MURDER OF INSPECTOR GHOSE.
    Sir J. D. REESasked the Under-Secretary for India whether any further arrests have been made or action taken in regard to the murder of Inspector Ghose; and whether the Secretary of State will intimate to the Government of India that such a case as that of the accused Roy should have been sent for trial to the special tribunal of the High Court and not to the Criminal Sessions,

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    at which it is matter of notoriety that there is little chance of obtaining a verdict against a Bengali youth who claims to be a politician?
    Mr. C. ROBERTS: No further action has been reported. The Secretary of State has no intention of interfering with the discretion as to the mode of trial left, by the terms of the law in question, to the Governor-General in Council and to the local Government acting with the sanction of the Governor-General in Council.
    Sir J. D. PEES: May I ask whether the Secretary of State is not aware that there is a widespread opinion that a grievous error of judgment was made in this matter?
    Mr. KEIR HARDIE: On a point of Order. May I ask you, Mr. Speaker, whether it is in order to put in the form of a question a grave reflection upon the impartiality of the Criminal Sessions Court of Bengal?
    Sir J. D. REES: It refers to the Government and not to the Court in any way.
    Mr. C. ROBERTS: I cannot make any reference to the point of Order raised. I am not responsible for the form of the question. I am only responsible for my own answer.
    Mr. KEIR HARDIE: I wish, Mr. Speaker, to ask your ruling on the point I have raised.
    Mr. SPEAKER: The part of the question to which the hon. Gentleman objects is that the accused "should have been sent for trial to the special tribunal of the High Court, and not to the criminal sessions at which it is matter of notoriety that there is little chance of obtaining a verdict against a Bengali youth who claims to be a politician." I think it would have been better if these words had not appeared on the Paper.

    Slavery, Peonage, and Forced Labour.
    Dr. CHAPPLEasked the Prime Minister whether the Government will give facilities to the Slavery, Peonage, and Forced Labour Bill?
    The PRIME MINISTER: While I feel I do not see my way to afford facilities for the large Bill referred to, the Government are fully aware of the importance of the subject with which it deals, and are giving it careful attention.

BUSINESS OF THE HOUSE.
Mr. BONAR LAW: May I ask the Prime Minister what the business will be next week?
The PRIME MINISTER: On Monday we propose to continue the general discussion on the Budget, and we hope that night to complete the Committee stage of the Resolutions.
On Tuesday we shall lake the Procedure Resolutions in regard to the time to be given for the Government of Ireland Bill, the Welsh Church Bill, and the Plural Voting Bill—I shall put the Resolution on the Paper to-night—and if time permits we shall take some of the smaller Orders on the Paper.
On Wednesday we shall take the formal Committee stages of those Bills under the Parliament Act and the Financial Resolutions. That will be followed, if time permits, by the Third Reading of the Elementary Education (Defective and Epileptic Children) Bill; the Second Reading of the British Nationality and Status of Aliens Bill; and the Third Reading of the East African Protectorates (Loans) Bill.
On Thursday we hope to complete the Report stage of the Ways and Means Resolutions.
Ordered, That the Business of Ways and Means have precedence this day of the Business of Supply.—[The Prime Minister.]

PUBLIC DEPARTMENTS (ADDITIONAL POSTS).
Return ordered, "showing the number of Additional Posts, established and temporary, created in consequence of legislation passed since 1906, and still in existence, in each of the Public Departments, with the salaries attached, with maxima not exceeding £150, exceeding £150 and not exceeding £500, and exceeding £500, respectively; and stating whether the Posts have been filled (a) without competition, or (b) after competition (open or limited) (in continuation of Parliamentary Paper, No. 213, of Session 1911)."—[Mr. Mitchell-Thomson.]

PRIVATE BILLS.
Gas Provisional Order (No. 1) [Bagnalstown] Bill.
Provisional Order not confirmed; Report to lie upon the Table.
South Bank and Normanby Gaslight and Coke Company Bill [Lords],
Reported, without Amendment; Report to lie upon the Table.
Bill to be read the third time.
Port Talbot Railway and Docks Bill,
Reported, with Amendments; Report to lie upon the Table, and to be printed.
Brecon and Merthyr Tydfil Junction Railway Bill,
Reported, with Amendments [Title amended]; Report to lie upon the Table, and to be printed.
Alexandra (Newport and South Wales) Docks and Railway Bill,
Reported, with Amendments; Report to lie upon the Table, and to be printed.
Skegness Urban District Council Bill [Lards],
Butterley Company Bill [Lords],
Read the first time; and referred to the Examiners of Petitions for Private Bills.
Pauper Children (Ireland) Bill [Lords],
Read the first time; to be read a second time upon Monday next, and to be printed. [Bill 229.]

MESSAGE FROM THE LORDS.
That they have passed a Bill, intituled, "An Act to extend the operations of The Pauper Children (Ireland) Act, 1898." [Pauper Children (Ireland) Bill [Lords.]
Also, a Bill, intituled, "An Act to confer upon the Skegness Urban District Council powers in relation to the supply of electricity, the provision of motor omnibuses, and to the local government of the district." [Skegness Urban District Council Bill [Lords.]
And, also, a Bill, intituled, "An Act to constitute the Butterley Company, Limited, a company limited by shares; to amend the memorandum and articles of association and increase the capital of the company; and for other purposes." [Butterley Company Bill [Lords.]
Consolidation Bills,—That they have appointed a Committee consisting of Five Lords to join with a Committee of this House to consider all Consolidation Bills of the present Session, and request this House to appoint an equal number of their Members to be joined with the said Lords.

SELECTION (STANDING COMMITTEES).
Sir Daniel Goddard reported from the Committee of Selection; That they had added to Standing Committee B the following Fifteen Members (in respect of the Superannuation (Ecclesiastical Commissioners and Queen Anne's Bounty) Bill): Mr. Barran, Mr. Burdett-Coutts, Sir James Fortescue Flannery, Mr. Haddock, Mr. James Hope, Sir Charles Nicholson, Mr. O'Donnell, Mr. O'Shaughnessy, Mr. Parry, Mr. Pointer, Mr. Lees Smith, Sir John Tudor Walters, Sir Joseph Walton, and Mr. Stuart-Wortley.
Sir Daniel Goddard further reported from the Committee; That they had added to Standing Committee B the following Fifteen Members (in respect of the Education (Administrative Provisions) Bill): Dr. Addison, Mr. Alden, Sir Henry Craik, Mr. Denison-Pender, Mr. Field, Mr. Walter Guinness. Mr. Holmes. Mr. Jowett, Mr. Lough. Mr. O'Donnell, Mr. Parry, Mr. Peto, Sir J. D. Rees, Mr. Rothschild, and Mr. Rowntree; and (in respect of the Motor Traffic (Street Noises) Bill) the following Thirteen Members: Sir Stephen Collins, Mr. Dixon, Mr. Du Cros, Mr. Field. Mr. Jowett, Mr. Joynson-Hicks, Mr. Morison, Captain Murray, Sir Henry Norman, Mr. O'Donnell, Mr. Arthur Stanley, Mr. Stewart, and Mr. Arthur Strauss.
Reports to lie upon the Table.

BILL PRESENTED.
  TRADE MARKS BILL.
  "To amend section sixty-four of the Trade Marks Act. 1905." Presented by Mr. NEEDHAM; supported by Sir John Randles, Sir Frederick Cawley, Mr. Butcher, Mr. Harvey, Sir Hildred Carlile, Sir John M'Callum, Captain Gilmour, Mr. Hewart, Major Stanley, Mr. Poland, and Mr. Gill; to be read a second time upon Tuesday, 19th May, and to be printed. [Bill 2.30.]
ORDERS OF THE DAY.
  WAYS AND MEANS.

    BUDGET RESOLUTIONS.—TEA DUTY.
    Considered in Committee.—[Progress, 6th May.]
    [Mr. WHITLEY in the Chair.]
    Motion made, and Question [6th May] again proposed, "That the Customs Duty charged on tea until the first day of July, nineteen hundred and fourteen, shall be charged as from that date until the first day of July, nineteen hundred and fifteen, that is to say:—

    Tea, the pound

    …

    …

    five pence;

    and it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."—[Mr. Lloyd George.]
    Debate resumed.
    Mr. PRETYMAN: Before I make any attempt to deal with the general question raised by this Budget I desire to call attention to the extraordinary position in which we find ourselves. We are asked to vote large increases in taxation, and in the Budget Statement in which these increases are proposed the Committee was informed that the destination of the great proportion of the money was the relief of the rates by Grants to local authorities. The Committee was further informed that those rates were to be paid upon a new form of rating and valuation which were to be embodied in Bills to be submitted to this House. The Chancellor of the Exchequer added, what I think a very remarkable proposition, that unless those Bills were passed into law the Grants would not be given. Now I understand, at least it was stated in the Press, that an official statement has issued from the Government that there is to be no Autumn Session. From that it evidently follows that it is physically impossible that before the House separates the whole of our system of rating and valuation for local purposes can be remodelled. But the Committee has been told that unless that is done the Grants will not be given. If the Grants are not to be given, how can the Chancellor of the Exchequer ask us to vote money for them? It appears to me to be an unprecedented position, and, honestly, I do not understand how we can proceed with

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    the business of voting this money when the Chancellor of the Exchequer has told us definitely that, in an event which is bound to arise, the money will not be devoted to the purposes to which he desires to apply it. I would like to ask the Chancellor of the Exchequer now across the Floor of the House if he will give me a simple straight answer, so that the Committee may know where they are. I do not suppose that any hon. Member would desire to vote a large increase of taxation without understanding distinctly the objects for which the money is voted, and I therefore desire to ask the Chancellor of the Exchequer whether if this money is voted for Grants it will be given to the Grants for which it is voted? Will he give us that pledge quite irrespective of whether these complicated and contentious Bills for the reform of the whole system of local rating and valuation are going to be carried out or not? Can he say yes or no to that?
    The CHANCELLOR of the EXCHEQUER (Mr. Lloyd George): No.
    Mr. PRETYMAN: The Chancellor of the Exchequer refuses to answer.
    Mr. LLOYD GEORGE: The hon. Gentleman is making a speech and he will get an answer in duo course, like any other hon. Member.
    Mr. PRETYMAN: This is not an ordinary matter. It is not a matter of debate and not a matter of opinion. The Chancellor of the Exchequer has made a definite statement to the Committee that unless these Bills are passed, which obviously now cannot be passed, the money will not be applied to these Grants. Therefore the Chancellor of the Exchequer is asking the Committee to vote these enormous increases of taxation and apparently, having voted the money, we are to leave him free to devote it to any purpose which he chooses. I do not know what value we are to attach to the statement of the Chancellor of the Exchequer. He told the House perfectly clearly that unless these Bills were passed these Grants would not be given. He made that definite statement, and what I desire to ask him is whether he adheres to that statement or not. He will give me no answer as to whether he does or does not adhere to that statement. It is impossible without an answer to know under
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    what conditions we can carry on this Debate. It makes the whole difference, because one of the principal arguments upon which the Chancellor of the Exchequer based his request for this money, was that this money was not an increase in taxation, that it was merely a readjustment of burdens, and that the money which has hitherto been provided out of the rates levied by the local authorities is now to be provided out of the Imperial Exchequer. But he says those Grants will not be given unless those Bills are passed. Are we now to vote this money on that understanding or not? I am very much inclined to move to report Progress. Honestly, I do not see how we can carry on the Debate under these circumstances, and without knowing whether the money is going to be applied or not to the purposes to which the Chancellor of the Exchequer desires that they should be applied. [HON. MEMBERS: "Move it!"] Very well, then, I will—
    Mr. LLOYD GEORGE: Why on earth should the hon. Gentleman assume that the money is not to be applied to the purposes which I have stated? Has any Minister said anything to the contrary? I do not know what has appeared in the newspapers; I am not responsible for that. There is no change in any intention of the Government, and I do not sec why the hon. Gentleman should assume so.
    Mr. PRETYMAN: That is an answer. Why could we not have the answer before? I take the answer to mean that the conditions remain. We now know where we are: those Grants are not to be given unless those contentious Bills are passed. As to the Autumn Session, the statement in the Press is apparently official, but I hope that when the Chancellor of the Exchequer replies he will give us a little more information on the subject, which I think is of very great interest to Members on both sides of the House. We may now proceed, apparently, on the assumption—[An HON. MEMBER: "If there is an Autumn Session."] Then all I can say it is perfectly clear that, as it took us something like a year and a half to pass the complicated proposal connected with the valuation of land under the Land Tax system introduced in 1909, it is impossible to see, in the case of these proposals of the Chancellor of the Exchequer, which appear to cover considerably more ground,

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    how the conditions which he has laid down can be fulfilled before the money is voted.
    Therefore we are really being asked, apparently, to vote this money under conditions in which the Grants will not be given. What will that mean? It will mean that at the end of this financial year there will be a large unspent surplus. We shall have the Chancellor saying that he has a large surplus of revenue that has not been applied, and that will enable him to introduce popular measures for the reduction of indirect taxation. Such a prospect is one which nobody can look forward to with equanimity. Having cleared that point, I should like to say one or two words on general points of taxation which have been raised in the course of the Debate. I suppose every hon. Member will agree that we are engaged upon what is our primary and most important function, namely, how taxes are to be raised and how the revenue is to be distributed. One point which arose is not a contentious matter at all, but it is one of very great difficulty, and was debated yesterday on both sides of the House, namely, whether the proportion taxation bears to the general ability of the country to pay is too heavy or not. It is a question which is extremely difficult to answer, and it is a very interesting one. It becomes still more difficult when we see it from two different points of view. I notice a report of a lecture given by Sir George Paish at the National Liberal Club, and this is what he said:—
    "The national expenditure fifty years ago bore exactly the same proportion to national income as it does to-day; and as to the question of the ability of the country to bear that expenditure, they were infinitely better able to bear it now than the country was in the forties."
    His point of view is—I am not putting this forward contentiously—that the income of the country bears exactly the same relation to the expenditure of the country as it did fifty years ago. Let us accept that as one point of view. May I say, also, that I think there is immense force in the contention advanced from the other side of the House, that the visible signs of wealth are greater to-day than fifty years ago. When we see the expenditure on many forms of luxury, what the cost of living is, and the general social life of the nation, it is indisputable—whether it is because we are more extravagant or that we have more money—that it is plain to everybody to see. Every-
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    body must agree in that. If it be true that the national income of the country is as great in proportion to expenditure as it was fifty years ago, why does not the same rate of taxation produce the same results? I am not putting the point in a contentious spirit, but why should it be necessary to raise Income Tax and Death Duties at so heavy a rate, which I suppose is ten times greater than it was fifty years ago?
    Mr. JONATHAN SAMUEL: You had Tariff Reform then?
    Mr. PRETYMAN: We had Tariff Reform then? I am afraid that is not an answer to the question, nor do I think it is one which meets the spirit in which I put the point. I do not push it forward contentiously. I entirely admit that the income of the country has increased, on the whole, as rapidly as the expenditure. There may be something wrong, and I am unable myself to indicate a correct answer to the question, but I do think it deserves the attention of the Committee. Why should we have to raise these taxes at a rate ten times as much as was the case formerly if the national income still bears the same proportion as it did to expenditure? There is another very interesting subject which has been raised, namely, the distribution of the burden of taxation between the different classes of the community, and particularly as to the real distribution. I suppose no more difficult subject can be discussed than the real incidence of taxation. It is a problem which can never be solved, and I do not propose to go into it in any detail, or to go into the ethics of it at all. But I do want to point out that it is quite clear that there is some form of fiscal gravitation, as I think everybody will agree, but to what extent it acts it is impossible to absolutely determine. I do not think, however, that a single hon. Member will disagree with my statement that taxation which is put on one class of the community will to a certain extent gravitate to other classes of the community as well. There can be no doubt on that point. That being so, if it is admitted that if you put too heavy a burden on one class of the community a considerable proportion of it will filter to other classes of the community, if not the whole of it, then it is very dangerous and certainly inconsistent to use that argument both ways as I have heard it used from the other side of the House. It is dangerous

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    for a non-contentious reason. Hon. Members opposite appear to me to be very ready to argue that it is quite right and legitimate and that heavy taxation is justified because it only falls upon a few wealthy people, and that that justifies the imposition of the tax. Then, on the other hand, when it comes to control of the expenditure, they say that control by the majority of the people, the masses of the people, is justified because the tax filters down to them. This is not a question of justice as between one class and another, it has been argued, because the tax filters down and is distributed in that way.
    Let the Committee consider the way that that tends to extravagance. If you tell a majority of the people at one time that it does not matter how much you spend because they are not going to pay, and then at the same time or next day tell them that they can control the expenditure, and that the class who are apparently to pay are to have nothing to say to it, that must tend to national extravagance. From that point of view, I think the doctrine is one which requires handling with some considerable care when it is dealt with from one side of the House or the other. There is a third aspect of the question, and that is not as to the distribution between the classes but as to the distribution of the burden between individuals. There I do think we stand in a very unsatisfactory position. Surely the Committee will agree, quite apart from any contentious or party issue, that it is our bounden duty so to distribute the taxation as to cause the least hardship to individuals and to distribute it as fairly as possible. I am not speaking now as between one class and another, but as between individuals of the same class. I am not speaking of the greater or less hardship on the man who has large wealth, or on the man who is working for a precarious living. What I say is if you are going to impose a certain level of burden according to wealth, it is your duty to see that that burden falls as evenly as possible upon the class who have to pay, and that it should not fall with terrible crushing weight upon one individual, while another individual of approximately equal ability to bear it escapes very much more lightly. So far as the general scheme of taxation in this Budget is concerned, broadly speaking, the Income Tax is much the fairest tax from that point of view—far and away the fairest tax; that is its great merit.
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    If we were to look merely from the point of view of absolute fairness, I suppose there would be no difference of opinion, that the only real fair tax would be an ideally graduated Income Tax, Idea) graduation we can never arrive at. The inequalities which exist in the Income Tax and in our Income Tax become very much more serious when the rate of tax is raised to a very high level. So long as the tax is a comparatively small one, those inequalities adjust themselves without any very great hardship. When you get such a high rate as 1s. 4d., even in regard to the Income Tax, although its essential basis is fair, you are bound to consider very carefully the graduation and the incidence of the tax, not only between the classes, but between the different individuals of the same class of taxpayers in the community. There, I venture to fall foul of the Chancellor of the Exchequer in his proposals in the present Budget. I do not mean particularly his new proposals, but the general effect of the taxes as they will stand when the Budget is passed in regard to earned and unearned incomes. I think the hardship is really accentuated by the Act of which the party opposite, and, in fact, the whole House of Commons is proud, namely, the Old Age Pensions Act. Personally, I think it is extremely hard that a man who has worked all his life for the State or at some industry, and who has put by for himself nothing more than a pension upon which he can live, is to be taxed at the rate of 1s. 4d. in the £ upon his own earnings upon which he is living, in order to provide a pension for another man who is in exactly the same position as himself, only on a slightly lower level. The same spirit surely which has inspired hon. Gentlemen on both sides-of the House to advocate actual relief and grant out of the taxes, to the old age pensioner should also on the same grounds induce them not to support such a heavy burden on the earned money, the hard-earned money of pensioners, who are by no means well-off, but in a slightly higher scale of life. The whole matter between earned and unearned incomes wants very-careful revision and consideration. I hope the Chancellor of the Exchequer will look into it from this point of view, and that he may see his way to some modification, which need not cost much as it is not a large matter, and I hope he will consider it at some later stage in order that something might be done in the direction of graduating or giving some kind of exemption to the incomes of this kind.

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    4.0 P.M.
    A point of very great importance is this: that we here in this House, in discussing taxation, perpetually confine ourselves in discussing any single tax to the incidence and burden of that particular tax upon the individual. Surely it is our duty in doing so to look at the whole burden which falls on the individual from the different taxes which are levied and not merely one tax only. I speak particularly of the combination of Death Duties and Income Tax, because the original justification for Death Duties, which I imagine is still maintained, was that the Death Duties are a form of deferred Income Tax, and that they are accumulations of income over and above what the taxpayer had a right to accumulate, and when he dies that the State should take its arrears. From that point of view, and I think also from the practical point of view, a man who has to pay heavy Death Duties spread over a term of years, pays a heavy Income Tax on a reduced income either through annual payments which he makes or by the reduction of the capital from which his income is derived. Therefore, the Death Duties and the Income Tax are both really in their nature identical charges in reduction of income. It is, therefore, interesting to see what is the whole burden of Income Tax and Death Duties upon particular individuals, and in order to arrive at that, I have looked up the Report of the Committee upon the graduation of the Income Tax which was appointed by the present Prime Minister, who was then Chancellor of the Exchequer, in 1906. An interesting Paper was laid before that Committee by Sir Henry Primrose who was then at the Board of Inland Revenue, and in that Paper in order to elucidate the subject of the graduation of the Income Tax, he translated the Death Duties as though they existed in the form of a charge upon incomes. There is on page 244 of that Report a very interesting statement, to which hon. Members can refer if they desire. A very simple calculation is made showing that, whatever the sum may be upon which the amount of Death Duties upon an estate are charged, 1 per cent. of duty is equal to a threepenny Income Tax. Taking that as a basis, it is very easy to translate Death Duties into Income Tax. Take an estate of £150,000, which is a kind of estate upon which the duties are very heavy, and yet it is not an estate of enormous value bearing the higher burdens.
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    I will assume that the income from that estate is £4,000. I would say in passing that you cannot take the income as representing a rate of interest on the-whole property. Death Duties are charged upon the whole capital of the estate, but a considerable proportion of that capital bears no income at all. If a man has a property which yields an income of £4,000 a year, the average capital value attached to his property at his death would probably be £150,000. The Estate Duty on that property, according to the present proposals, is 11 per cent.; that, at threepence for every 1 per cent., represents 2s. 9d. in the £. Succession Duty I take at 5 per cent.; it might be 3 per cent. or it might be 10 per cent., but I take it at a low figure, because it is only charged on the value of the life estate, and not on the capital in all cases. Therefore, I take it at a 1s. instead of 1s. 3d. Income Tax and Super-tax together, according to the table in the White Paper, would be 1s. 6.4d. Therefore, the total Income Tax and Death Duties converted into an Income Tax paid by that individual is 5s. 3.4d.
    I do not say whether that is too much or too little; I am not putting the matter from a contentious point of view; but it is right that the House of Commons should understand that they are levying an Income Tax of 5s. 3.4d., apart from all the other taxes paid by such an individual. If he is a landowner there will be a good many other taxes and a great deal of expenditure concerned with them. He has Increment Value Duty, Mineral Rights Duty, Reversion Duty, and all the rest of it, besides his share of indirect taxation. There is also Inhabited House Duty, which I have not taken into consideration, and the rates. Taking this one item alone, I do not think it can be said that 5s. 3.4d. is a very low rate of direct taxation to place upon a property of that description. I desire to refer to the Chancellor of the Exchequer's action in regard to the Settlement instate Duty. I do not know whether the Committee really under stands what it is asked to do. A matter of principle of the very highest importance is involved. I suppose that if there is one asset which we value in this House, as any private individual values it, it is our honour and the claim that we can be trusted to carry out any contract which we have made. This Settlement Estate Duty was a bargain or contract made by the State with those who take property

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    under a settlement. It was originally arranged by Sir William Harcourt when he introduced his Budget of 1894. I have here an extract showing the arguments upon which it was based. I do not wish to detain the Committee by reading the whole of it, but the basis of it was that—
    "a settlement covers several lives, but at present Probate Duty is paid only once on property settled by will. The question we have to consider is this: What principle shall we apply to settlements by will or otherwise? Will yon allow one payment to cover settlement, or will you take, as in cases where there are no settlements, full payment on every death?"
    Sir William Harcourt argued the point, and proceeded:—
    "You may have a number of lives, but yon can have only one generation, it may well be that a young life in free testacy may cover a longer period than all the lives in the settlement, and therefore it is not certain that in every ease, a settlement will cover more than a single life. But on the whole and on the average there might be a loss."
    The outcome of it was that the State made a bargain, which has been continued up to now, that where a settlement was created the person who first succeeded or first paid duty under that settlement should pay an additional duty, called Settlement Estate Duty, in consideration of which the State made a definite contract with him not to charge Estate Duty again during the currency of that settlement. What is involved in that is pretty obvious. Does the Committee realise that the most ordinary form of that is where a man dies and leaves a part or the whole of his property to his wife for life, with remainder to the children? There you have one generation, husband and wife; their properties are treated as one for the purposes of Income Tax in order that more may be got out of them; but they are treated separately and Death Duties charged when the property on death passes from one to the other. That is bad enough; but by the present proposal, as I understand it, if a man dies leaving his property to his wife for life, with remainder to the children, two full duties at this enormous rate will be charged instead of one—that is, if the property is money. If it is land or a business, and the two deaths occur within a short period. There will be the rebate suggested by the Chancellor of the Exchequer in one of the Clauses which he proposes to introduce. But if it is money, unless the deaths occur in immediate succession, you are to levy two duties on the one generation, because the money passes from the father, through the mother, to their common family. Not only are you to do that, but, having made a bargain with the husband that that would not be done,
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    and having taken his money on that consideration, you are to turn round and say,. "We repudiate the contract, although we have taken your money, and we shall charge the duty as though the contract did not exist."
    It seems to me an impossible proposal, to make; and all I can say is that the whole standard of morality of fiscal legislation in this country will be lowered if the proposal is persisted in. Is not the question of the maintenance of contracts one of the most difficult and important in the country at this moment? Are not difficulties constantly arising—trade difficulties, business difficulties, and others—because there is a kind of feeling that people cannot be trusted to maintain contracts into which they have entered? What does a contract mean? It means that one party gets something, and promises at some later date to give some consideration in return. The only ground upon which he can expect to get what he asks for in the first instance is that there is real confidence on the part of the other party to the contract that the contract will be fulfilled when the time comes. Is this House, the highest financial authority in the country, to set an example of making a contract, taking a consideration, and then when the time comes for its part of the contract to be fulfilled to repudiate it and say, "It does not suit us to carry out the contract; therefore we go back upon our bargain and refund the money you have given"? Is that principle to be supported and carried out here? It is shameful that the Chancellor of the Exchequer should make such a proposal. It only shows to what a point the right hon. Gentleman has brought the finances of this country. And for what? How much does he hope to get out of this proposal? A paltry few thousand pounds. He could get a great deal more money by simply abolishing the ridiculous system of Land Taxes which he introduced four years ago. It is rather unique to be able, at one and the same time, to obtain revenue and abolish unpopular taxation; and when there is the choice between abolishing a farrago of so-called taxation and valuation embodied in the land taxation, and breaking a solemn contract on account of which you have taken money, it is rather a remarkable commentary on the frame of mind and the principles of the Chancellor of the Exchequer that he would rather break a contract than abolish the Land Taxes.

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    The whole incidence of the Death Duties is unequal, and even cruel to a degree. Admitting, for the sake of argument, that the general wealth of the Income Tax paying classes can bear the burden laid upon them, I come back to the point that the burden should be laid as evenly as possible. In Income Tax an attempt is made to lay it evenly; but in Death Duties it is a pure lottery. The rate of the tax is such that obviously every possible attempt at avoidance must, and I venture to say ought to, be made. [HON. MEMBERS: "Oh!"] Yes, ought to be made for this reason: It is a pure gamble whether the State gets an enormous duty which practically crushes the estate out of existence, or whether it gets nothing at all. There is nothing immoral about a fair avoidance. I think it is immoral and wrong to avoid Income Tax as levied to-day. I personally have no sympathy with the putting of money abroad in order to escape Income Tax. I personally welcome—although I do not know the details—the suggestion that an attempt is to be made to obtain Income Tax from money in that category. But I say that no legislative assembly can forbid one free man from transferring his property to another during his lifetime. You cannot do it.
    Mr. SNOWDEN: You can tax it.
    Mr. PRETYMAN: You cannot put a prohibitive tax upon it. It is not within your competence. There are things which even the present Parliament can hardly venture to do, and you cannot do that, as long as you recognise the right of a man to transfer his property. But by putting these enormous and pressing burdens upon property which passes at death, you are putting an enormous premium on avoidance, and it is absolutely legitimate—not only legitimate, but desirable—that it should be done. Take the case of an agricultural estate. I know that many hon. Gentlemen opposite desire to do what is fair and just, but they do not know the conditions that obtain upon an agricultural estate. They do not understand that on an agricultural estate the available income out of which taxes can be paid is extremely email, and that when the burden of Death Duties on its present level falls upon that agricultural estate, it absolutely crushes the whole machinery of that estate out of existence. From the point of the State it simply means that in order to take a
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    vast sum, wholly out of proportion to the means of the owner of that estate, and put it into the national revenue to be spent for general purposes, the whole reproductive expenditure which enables that estate to be cultivated and worked is stopped over a long period of years. I say that from the point of view of the State—and I can give figures, and go into details, and prove it—where these duties have not paid, that money has been spent, and is being spent, upon reproductive improvements which are increasing the taxable rateable value of every human being living in the area covered by that estate, and is bringing in tax more in fair and reasonable taxation than could have been obtained, or even would have been obtained, by putting a crushing and impossible burden upon the estate in the shape of Death Duties. I say it is wise and right that a man should avoid those crushing Death Duties on his agricultural estate. He does his best for the estate when he hands the money over to his son to be spent on reproductive expenditure on that estate; he is doing good not only for his estate, but for all concerned.
    I should like to take any hon. Member who desired it to an agricultural estate, and let them see what is done; let him look at the figures, at the agent's books, and so on, and let him calculate for himself what these duties would amount to; let him see the effect of them, and let him see whether it is possible to carry on the economical working of that estate under the conditions imposed at this moment by the House of Commons. Look at another feature of it. We have the Chancellor of the Exchequer, and we have those people who are most insistent upon changes in our rating system. What is the principle which they are never tired of putting forward, and which the Chancellor of the Exchequer put forward in his speech? Do not rate, he says, a man on his improvements. [HON. MEMBERS: "Hear, hear."] Hon. Members opposite say "Hear, hear." They desire to make changes in our rating system so that a man should not be rated on his improvement. [HON. MEMBERS: "Hear, hear."] I shall have a word to say on that principle in a moment. May I now say this: That the Death Duties are the worst and heaviest taxes upon improvements that could possibly be conceived? [An HON. MEMBER: "Ah!"] Yes, but does the hon. Member agree or not; does he mean to

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    dissent? Is that ironical or not? I do not suppose the hon. Member has much opinion. Let me point this out: The owner of an agricultural estate builds, let us say, a farmhouse upon a farm which costs him £1,500, and he builds a village school which costs him another £1,500. These are both improvements which do not produce him a penny of income. There are scores of village schools in this country which have been built by the owners of agricultural property. I, myself, built one not long ago. Lots of other owners do so too. It is a common thing. There is nothing remarkable about it. My point is this: There is no merit in it; it is part of an owner's duty to provide for the requirements of the people upon an agricultural estate. Take the farmhouse or the village school, or both, and suppose the owner of the agricultural estate spends £3,000 upon that farmhouse and that village school, not a farthing of increased income does he get! That is recognised in the Income Tax, and I may here say that it will be of great advantage to agriculturists to have that 25 per cent. I suppose that means that agricultural incomes in future will come under Schedule D.
    Mr. CHANCELLOR: Do I understand the hon. and gallant Gentleman to say that a farm without a farmhouse lets for as much as a farm with a farmhouse?
    Mr. PRETYMAN: Does the hon. Gentleman not understand that houses, like other things, wear out, and that an old house has frequently to be replaced by a new one?
    Mr. WATT: And the landlord gets a better rent!
    Mr. PRETYMAN: The hon. Gentleman docs not understand that rural owners do not raise rents because they replace old houses by new ones. The hon. Member does not believe these things! He does not know!
    Mr. WATT: I do know.
    Mr. PRETYMAN: Very well! If a man gets more rent, let him pay the tax; that is my point. What I say is, tax him upon what he gets, not upon an imaginary sum. Here you have a case which I have given, where a man has spent £3,000 upon an improvement. These two improvements are producing no extra income whatever, not a farthing. Under the suggestion of the Chancellor of the Exchequer he would pay
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    no Income Tax upon them. But when you come to the Death Duties, these two properties are valued at what they have cost. Assuming that they cost £3,000—the school and farmhouse on this agricultural estate—the owner would have to pay Estate Duty and Succession Duty altogether of at least 15 per cent. on that property.
    Mr. LEIF JONES: They capitalise the rent.
    Mr. PRETYMAN: I am very glad for that interruption. May I finish my point, and I will come to the hon. Member's point shortly? Under present conditions owners never know what they may be called upon to face. They used to know before the Budget of 1909, The school and farmhouse are now taken at their capital value, £3,000—that is to say, their capital value, and 15 per cent. on £3,000 is £450. There is a fine of £450 in one sum to be placed upon the owner of property who builds this house and school. He has to pay that fine of £450 from some other source where he has money. Where does he get it? Now the hon. Member says he will not pay, because it is a multiple of his income. In former days we had a House of Commons who knew a little more about agricultural land and property than it does now, and that House of Commons realised and recognised that capital expenditure upon agricultural property was not carried on on a thoroughly financial basis. What they enacted was that Death Duties should not be calculated on the normal capital value of property. What we want now is that we should be allowed to add the capital value derived from building, that I say was allowed to be added under Sir William Harcourt's scheme, to the purely agricultural value of the land. The estimate was not taken upon the agricultural value of the property; it was taken on the basis of twenty-five years' purchase. The hon. Member is perfectly right that was the law. By the right hon. Gentleman's Budget of 1909 that system was altered; the system of which I complain was introduced, and it is the greatest blow which has ever been struck at agricultural property. May I say this, that I ventured to make first a proposal in this House, and that was made for an increase of the allowance which is made for improvements on agricultural property. I made that proposal on the Budget Resolution in 1909. I made it with the double object of obtaining

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    relief for agricultural property in Income Tax and in the Death Duties. The principle has been accepted as regards Income Tax.
    I claim, and press upon the Committee, that unless they wish entirely to destroy all agricultural estates which cannot be transferred during the lifetime of the owner from father to son, or from one owner to another, they must apply the same system of deductions from capital value and the same system of calculations of capital value of agricultural estates that they do in the calculation of its income. It must be an advantage to the State that a private owner voluntarily, with his own local knowledge, for his own people, should provide those houses, and that accommodation required for the cultivation of his land, rather than that he should be prevented from doing it, and that a State official, at great expense, should be sent down to do the work that he has been pre-vented from doing. Surely it must be cheaper and more economical to allow people to exorcise their own free will in doing this necessary work in rural districts than depriving them of both of free will and the means by which it can be done? Remember this, so far as building cottages is concerned or the provision of the means of equipment on an agricultural estate: where the owner of that estate has responsibility and free will and he knows that a man wants a house there is the will to provide him with that house. He has the will and the responsibility to supply it, and he does it. It is done with good feeling. He makes the sacrifice. Everybody is the better for it, both morally and actually. Under the proposed system, this burden of enormous taxation, what does it mean? Instead of being a free agent and being allowed to exercise his responsibility, he is to be driven by State compulsion to do his duty instead of desiring to make the utmost sacrifice and to go to the utmost of his responsibility. Seeing he is bound to do it, he will cause as much trouble and of as needless a character as possible.
    I have only one further point to deal with, and I can only deal with it very briefly; that is, the proposal of the Chancellor of the Exchequer for the remodelling of our rating system. It is obviously quite impossible to criticise proposals intil we have seen them, and all I would say is this: that I, to begin with, protest most strongly against any attempt to take the valuation out of the hands of the local
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    authorities and to hand it over to the Valuation Department. I do not think that the evidence in favour of that course is very strong. The Chancellor of the Exchequer appointed a Departmental Committee in 1911 to consider this matter. He told us that he hoped for an immediate Report. There was a great deal of talk then about the taxation of site values. I cannot help thinking that if that Committee had been willing to report, or had found itself able to report in favour of the taxation of site values, that we should have had that Report a very long time ago. But they have not been able to do it. The evidence before that Committee is very interesting. The whole of the practical evidence is one way, and the whole of the theoretical evidence is the other way. The majority of the Committee has reported in perfectly plain terms against any attempt to put a rate upon site values. There is a Minority Report signed by six Members of the Committee in favour of a very small measure of the taxation of land values—10 per cent., I think, is proposed. But it may be, I think, worthy of note that that Report is practically the Report of Mr. Harper. He is really responsible for that Report, and. with all respect to Mr. Harper, I cannot refer to him as an unprejudiced witness.
    Mr. OUTHWAITE: Why should he not be as acceptable as the Tory officials who produced the Majority Report?
    Mr. PRETYMAN: I do not understand what the hon. Member means when he talks about Tory officials. Who were the Tory officials?
    Mr. OUTHWAITE: The Majority Report is signed by Tory officials.
    The CHAIRMAN: Committee of Ways and Means is certainly not a place to discuss that Report.
    Mr. CHANCELLOR: Is it in order for the hon. and gallant Gentleman to attack by name a particular official.
    The CHAIRMAN: That is not a matter of order. Of course, the Report of the Committee is open to criticism at the proper time, and the hon. and gallant Gentleman was only, I think, proceeding to make quite general observations in reply to the Chancellor of the Exchequer. I have already indicated I could not allow hon. Members to go further into detail.
    Mr. PRETYMAN: I shall obey your ruling, Mr. Whitley, which I had in my mind, but it is a little difficult, because the proposals of the Chancellor of the Exchequer were referred to in his speech and were given as reasons for these taxes. In deference to what you say, I will pass away from that particular matter, only saying this—that I do not think it is desirable in the public interests that this House should vote money on the recommendation of persons, whether officials or otherwise, who are at once and the same time in the position of law-makers and administrators. That is a most dangerous position. In regard to these existing Land Taxes and valuation, which are matters for discussion here to-day, for they throw light upon other questions, this is exactly the position we are in. As to Mr. Harper, I make no personal attack upon him whatever. I am merely making a statement as to what action has been taken—
    Mr. CHANCELLOR: You are belittling his opinion.
    Mr. PRETYMAN: No. If I disagreed with the hon. Gentleman, does he mean to say that I am belittling his opinion? I have not made any personal attack of any kind upon Mr. Harper. I am simply pointing out what has been done. Hero we have Mr. Harper as a lawmaker, saying that improvements are not to be subjected to Increment Value Duty, and then we have Mr. Harper as administrator going to the Courts and declaring what are and what are not improvements, and claiming to decide that. That I say is a most dangerous position. What we want is this—that the House should say what is taxable and what is not, and that the Courts of Law should decide whether the legislation passed here is carried out or not. The situation at present is very confused and difficult. The whole valuation for Land Taxes is thoroughly discredited. It has been entirely condemned. The suggestion of site valuation has been condemned by the Departmental Committee; and here is a memorandum by the Land Conference, a body which I think deserves some little consideration as having a right to speak upon agricultural land values. It consists of the Central Association, composed of the Surveyors' Institute, the Auctioneers and Estate Agents' Institute, the Central Chamber of Agriculture, the Farmers' Club, the Central Land Association, the Land Agents' Society, the National Farmers'
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    Union, the Bating Surveyors' Association, the Central Association of Agriculture, and Tenant Right Values, and the 1891 Club. I think I am justified in saying that in that list practically every professional man interested in land is included. Not one of these bodies is political, not one of them is a party body. They comprise in their ranks practically every professional man engaged in the management of laud in this country, and this is what they say:—
    "Apart from the doubtful utility of the valuation of agricultural land when obtained, the uncertainty which at present prevails, as to the true interpretation to be placed upon many of the provision of the Act renders inexpedient further progress with the valuation until that interpretation is authoritatively ascertained and that any attempt to press forward with it in the absence of such knowledge will aggravate the anxiety, confusion, expense and disturbance to ordinary current work which within the delegates personal knowledge, is at present being caused. In no circumstances can any of the values of agricultural land now being ascertained under the Act equitably be made the basis of a scheme of rating or taxation, and that it is a fallacy to suppose that prarie or real unimproved value can by any sound process be deducted from them"
    That is a pretty strong statement. Since then it has been verified by the decision of the Courts that the whole valuation hitherto adopted in agricultural land is a wrong one. The valuations are now being-held up and are not in progress at all, and what the Chancellor of the Exchequer has forgotten to mention to the House is that not only is this costly and useless valuation now carried on in a sort of halting manner, but another valuation is already overdue. The second valuation under the Finance Act was duo on 30th April last. There is Valuation No. 1 held up by Valuation No. 2, which is overdue, and here is the Chancellor of the Exchequer getting up and presenting a third valuation of site values. There are one or two rather interesting questions which arise upon that. You are going to have three different kinds of site valuation. You are going to have one for Undeveloped Land Duty, another for Increment Value Duty, and a third, and I believe a different kind of site value for levying your rates upon. I only see one virtue in these proposals, and that is to maintain the Valuation Department. That really is the sole object of these proposals. It would really pay the country much better to give all these gentlemen very considerable pensions and to exempt them also front this 1s. 4d. Income Tax upon unearned income rather than allow them to go on wasting public money. The right hon. Gentleman does not seem to agree. Taxation is a business matter upon

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    which the prosperity of the whole now depends. The Chancellor of the Exchequer imposes taxation. That taxation is in existence for five years. In the fourth year of its existence every business man in the country concerned in dealing with taxation brought into contact with taxation signed a memorandum to show that this method was futile and useless. Was there ever another such instance in our fiscal history? I do not know of one, but it does not seem to matter to the right hon. Gentleman. He thinks it wasting time to discuss these matters. Practical men throughout the country have a feeling of absolute despair at the way in which the country is being mismanaged. In our daily work we are hampered at every turn by the preposterous fiscal regulations of the Chancellor of the Exchequer. You cannot carry through a settlement of an estate or a sale or a transfer of a piece of land without being hampered by some State official at every hand's turn demanding money. That is what we meet outside. When we come into this House and make our complaints they fall upon deaf ears. The party bell sounds, and, as the hon. and learned Member for North-East Cork (Mr. T. M. Healy) said, hon. Members troop through the neck of the bottle, and decide not upon the merits of the case, however good they may be. You may have a case very good indeed which cannot be answered, but you get no justice in the present House of Commons. I say that the position is eminently unsatisfactory, and I only wish I had the eloquence, as I have the knowledge, to deal with it in a fit manner.
    The PRESIDENT of the LOCAL GOVERNMENT BOARD (Mr. Herbert Samuel): The hon. and gallant Gentleman who has just sat down began by putting some questions to the Chancellor of the Exchequer. He asked whether the Government adhered to their declaration that in their view the new Grant to local authorities should not be given except upon such a basis that the principle is established that they shall go to improvement values and not to land values. Unquestionably the Government do adhere to that declaration, and we regard it as an essential part of this scheme for the relief of rates that the sums which we suggest to Parliament should be voted for that purpose should go only in the relief of improvement values. As my right hon. Friend said in answer
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    to a question this afternoon, he will take the opportunity in the course of this Debate to make a statement as to the legislative measures that will be necessary—such statement as in accordance with the Rules of Order he may be permitted by the Chair to make upon the occasion of the discussion of this Resolution. For myself, in answer to the hon. Gentleman, I can only refer him to the statement that will be made by my right hon. Friend. The Chancellor will also deal with the question of settlement and Death Duties raised by the hon. Member, but might I say, in answer to his attack, that the present House of Commons knows little and cares less about the burdens and necessities of agricultural owners, and that the Chancellor of the Exchequer—
    Sir JOHN SPEAR: Is the right hon. Gentleman aware that the agricultural industry is the largest industry in the country?
    Mr. HERBERT SAMUEL: These are not my views. The hon. Gentleman who has just spoken stated, I think, in terms that this House knows little and cares less about the burdens on agricultural owners—he was referring, no doubt, to the majority in this House—and he referred to my right hon. Friend the Chancellor of the Exchequer as one who sets himself to impose taxes rather for the sake of putting additional burdens upon the agricultural industry. Let me point, in answer to the hon. Member, to four measures, each an improvement upon preceding measures, which had been proposed by the present Chancellor of the Exchequer, mainly for the relief of agricultural industry. In the first place, before he came into office, landowners were allowed to deduct from the incomes they returned for the purposes of Income Tax not more than 12½ per cent. in respect of improvements. That allowance of 12½ per cent. was made by the late Sir William, Harcourt.
    Mr. PRETYMAN: I referred to that and acknowledged it.
    Mr. HERBERT SAMUEL: Only very incidentally. My right hon. Friend has increased that allowance from 12½ per cent. to 25 per cent., and now in the present Budget he proposes to remove that 25 per cent. limit altogether and give the landowners full advantage of all those deductions. Secondly, my right hon. Friend the

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    Chancellor of the Exchequer it was who proposed to Parliament that timber should be exempted altogether from Death Duties—a very great relief to landowners, in addition to works of art and works of historical interest—and again in the present year my right hon. Friend proposes to deal with the very real grievance of repeated Death Duties charged upon properties which pass by quick succession. The fourth improvement which the Chancellor of the Exchequer made was that conferred by the Development Act, which provides a far greater sum than agriculture ever enjoyed before for agricultural instruction and for other purposes of advantage to the industry.
    Sir FREDERICK BANBURY: No good.
    Mr. HERBERT SAMUEL: And although perhaps the farmers in the City of London do not regard this Grant as of very great value, I doubt whether there is any agricultural Member in the House who would cast derision upon expenditure under the Agricultural Development Act.
    Sir F. BANBURY: I was not speaking of the farmers of the City of London, but I was speaking as a farmer myself.
    Mr. HERBERT SAMUEL: I should be very much interested to know whether the hon. Member in this House, who represents the constituency in which the hon. Baronet opposite farms his land, would wish to see the Grants withdrawn which are now given for agricultural instruction.
    Sir F. BANBURY: He knows nothing whatever about it.
    Mr. HERBERT SAMUEL: Let me say finally in this connection that it is since the Budget of 1909, during which period it is alleged that these great and overwhelming burdens have been imposed upon agriculture, that agricultural property has been looking up, that prices of land have been rising, and the agricultural industry has enjoyed much greater prosperity than during the period before my right hon. Friend became Chancellor of the Exchequer.
    Mr. BONAR LAW: Is the Chancellor of the Exchequer responsible for the rise in food?
    Mr. HERBERT SAMUEL: Does the tight hon. Gentleman mean the rise in the
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    price of food? The suggestion is that the very existence of the Chancellor of the Exchequer is in itself inconsistent with the prosperity of agriculture, and that the accumulated burdens upon the agricultural industry are due to my right hon. Friend, and will inevitably be its ruin. I have pointed out four measures of large value passed for the relief of the agricultural industry, and I have pointed out that, as a matter of fact, agriculture, so far from being ruined, is enjoying a prosperity that it had not enjoyed for many years past. The hon. and gallant Gentleman opposite talked, as we anticipated he would, about the valuation which has been made under the Finance Act of 1909–10, and he asserted that the valuations which have hitherto been made will be quite useless for the purpose which they are designed to fill, and which they will be required to fulfil under the provisions of this Budget. That is certainly not so. It is true that they will need to be brought up to date, but the valuers have collected much information of a more recent date than 1909, as they are required to do in the case of properties where there is a sale, or where there has been a reversion since 1909. Further, there will be a quinquennial re-valuation at a very early date, and over three-fourths of the valuation is now complete. In the second place it will be necessary to convert capital values into annual values, but the annual values have already been ascertained, and, indeed, the capital values in the vast majority of cases have been built up from the present annual value. Therefore, the amount of additional work required under that head is exceedingly small. In the third place, with regard to the distinction between improvements and other hereditaments, they are already separately considered in the case of urban land and houses, and while it is true that deductions will have to be made in the case of the agricultural industry, that is the only substantial additional work that will be required to enable the present valuation to be used for the purposes of local rating.
    The hon. and gallant Member opposite has once more, as he very often has done before, derided the small amount of revenue raised by the Land Taxes, and he has emphasised the heavy cost of the valuation. It is true that under the Reversion Duty, so far, comparatively small sums have been taken. That is undoubtedly because there is at the present time much evasion of the duty. My right hon. Friend

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    will propose in the Revenue Bill of this year measures which will stop that evasion and make the tax yield the fruit that was anticipated from it. With respect to the Undeveloped Land Duty, my right hon. Friend's estimate in 1909 was £140,000, and it is now yielding £230,000. [HON. MEMBERS: "No!"] I think the annual yield will be about £230,000. The actual sum received this year will be about £275,000, but there is included in that amount certain arrears, and therefore I must take the smaller figure. I agree that the Chancellor of the Exchequer was in many respects perhaps excessively yielding to hon. Members opposite in the exemptions he allowed from the Undeveloped Land Duty, and there is a widespread feeling that the time is not far distant when some of these exemptions ought to be reconsidered. With respect to the Increment Duty, obviously, in the early years of its levy an Increment Duty cannot, from its very nature, be expected to yield much revenue, especially in view of the fact that my right hon. Friend, again out of deference to hon. Members opposite, agreed that 10 per cent. of any future increment should be free from taxation. Consequently before the Increment Duty can yield any revenue you have not only to wait until the land value rises, but you have to wait until it rises more than 10 per cent. before you can begin to levy any tax at all. Surely it is a very shortsighted view to say that because our original valuations have cost a considerable sum in proportion to the immediate yield, therefore the valuation is not worth doing with a view to the future yield of those taxes.
    It is now about fifty years since John Stuart Mill proposed a tax almost precisely on the lines of the Increment Duty in the Budget of 1909. At that time it was impossible to proceed with it because Members, such as the hon. and gallant Gentleman opposite (Mr. Pretyman), were dominant in this House at that time, but if we had only had a Parliament then of the same composition as the present Parliament; if fifty years ago a valuation had been made of the land at that time, and if Parliament fifty years ago had enacted that one-fifth of any future increases should go to relieve the burdens of the State, what a princely revenue this Parliament would now be enjoying without hardship to anyone, and without taking from any man that
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    property which he had previously enjoyed. Do not let those who come after us say that we in our time were so shortsighted or so timid that we were unable to lay the foundation for the great future revenue which must inevitably come from the growing land values of this country. As a matter of fact, the revenue which has been so far obtained from the Land Taxes up to the end of this year—I am excluding Mineral Rights Duty altogether—will be something more than £1,000,000. The revenue which will have been obtained by the end of this year—I mean the additional revenue through Death Duties owing to the truer valuation of land—will have been £1,200,000, owing to this closer valuation of land by the Land Valuation Office. In this matter I am quoting the opinion of experts, and they say that the revenue which will have been obtained by the end of the present year will be about £1,200,000. So that is a set-off against the cost of the Land Valuation Office up to date. You have £1,000,000 from the Land Taxes, and £1,200,000 from Death Duties, making a total of £2,200,000.
    The hon. and gallant Gentleman stated that the only purpose for which we desire to use the Land Valuation Office as one of the factors in determining future land valuation and general valuation for rating purposes is in order to keep them in existence, and he says that the one virtue of our proposals with regard to local rates is to preserve the Land Valuation Office performing its present function, or even increased functions. The Royal Commission on Local Taxation, which was appointed by the Government, of which the hon. and gallant Gentleman opposite (Mr. Pretyman) was a member, reported that our whole system of valuation was unsatisfactory and needed overhauling, and that professional surveyors ought to be employed whenever practicable to assist in the valuation, and that it should not be left merely to the assessment committees. They further reported that there ought to be quinquennial revisions of the valuations throughout the country, and that there should be supplemental lists. The right hon. Gentleman the Member for the Stand (Mr. Long), when he introduced his Valuation Bill, provided that professional valuers might be appointed by the local authority. The Kempe Committee has just unanimously reported that it was essential that this work should be performed by professional men, and that the

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    Valuation Office was fitted for the performance of this function. The hon. Member opposite considers that the opinion of a majority consisting of seven ought to be accepted on the question of the rating of land values, but he refuses to accept the opinion of the whole body of thirteen that the Land Valuation Office ought to be employed for this purpose. In Scotland professional valuers are employed. In London the surveyors of taxes assist in the valuation, and all the world knows that in London and Scotland the valuation is far more successfully performed than in many other portions of this country. I was only led to deal with this subject because the hon. Member opposite laid such emphasis upon it in the concluding portions of his remarks.
    5.0 P.M.
    Having answered several points raised by the hon. and gallant Gentleman, and as my right hon. Friend will deal later with other points at the conclusion of the Debate, I now turn to some other and perhaps wider topics that arise out of this Budget. Hon. Members opposite speak of an increase in the taxation of the country under the present Administration of £60,000,000. The hon. Member for Sheffield (Mr. S. Roberts) said yesterday that in eight years our expenditure had increased by £60,000,000, and outside this House on the platform that figure is freely quoted as being the amount of the increase in national expenditure under the present Administration. Now that is not true, and the figure is grossly misleading. I will take the last complete year of the late Government, 1904–5, and compare it with the present year, 1914–15, which shows the largest expenditure under the present Administration. It is true that if you look at the bottom of the column you will see that ten years ago the total expenditure was set down as £142,000,000, and if you look at the bottom of the column on the White Paper just circulated you will see the total expenditure set down as £206,000,000, and therefore those who make no study of these matters, and who simply accept whatever figures they see, will not unnaturally draw the conclusion that there has been a total increase in our expenditure of £64,000,000. There are three reasons why that figure cannot be accepted by itself. In the first place, the figure of expenditure ten years ago was more than £142,000,000, because a large part of the naval and military expenditure of that year was paid for out of
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    borrowed money and not out of income. Under the present Administration that vicious system has been stopped, and now the naval and military expenditure is all met out of income. Therefore, you must include in the earlier year the naval and military expenditure we paid out of loan if you are comparing it with the present year, when the naval and military expenditure is wholly paid out of income. The money so spent six years ago was £6,900,000, or £7,000,000 in round figures. That reduces the difference between the two years by £7,000,000. Secondly, in 1907 the present Prime Minister, when Chancellor of the Exchequer, determined that the national balance-sheet ought to show upon its face the whole of the expenditure that passes through the Treasury. Prior to that date a sum of £10,000,000 which was received by the Treasury and paid out straight away to the local authorities out of the Local Taxation Account was excluded from the national balance-sheet, and by bringing it in—it was purely a matter of book-keeping—the apparent expenditure in the following year went up by £10,000,000. There was no increase of expenditure; not a penny more was spent on that account. It was, as I say, purely a matter of book-keeping. Yet this figure of £64,000,000, which is represented as being the difference between our expenditure and your expenditure, includes £10,000,000 which is simply a matter of account and not an item of expenditure at all.

    Thirdly, the total figures of expenditure, as the Committee well knows, include gross Post Office expenditure, as the income includes the gross Post Office revenue. In the course of these ten years, partly through growth of work and partly through the purchase of the National Telephone system, the expenditure of the Post Office has increased by another £10,000,000. It is set down as being an increased expenditure, and it is, in fact, an increased expenditure, but it is counterbalanced by a considerably larger increased revenue from the Post Office. Therefore I am sure that hon. Gentlemen opposite will agree that, in making a fair comparison between the two years, you must necessarily exclude that £10,000,000 of increased expenditure, since it is largely owing to the taking over of the great National Telephone system, with the whole of their revenue at the same time, and since it is largely, in fact, mainly, owing to growth; of work.
    Mr. F. HALL: May I ask if that expenditure has not enabled the Post Office to get a larger annual revenue? [HON. MEMBERS: "He said so!"]
    Mr. HERBERT SAMUEL: That is the very reason why it should be excluded from the comparison. It is represented that the present Government have added to the burdens of the country £64,000,000, and my answer is that from that figure you must in fairness deduct £27,000,000—£7,000,000 because the expenditure ten years ago was £7,000,000 more than it is represented as being, for you must include naval and military works paid for out of loan; £10,000,000, a matter of mere bookkeeping, with regard to the Local Taxation Account; and £10,000,000 for the Post Office, which the hon. Member opposite pertinently says is not a burden upon the country, but is counterbalanced by the increased revenue from it. Deducting £27,000,000 under those heads, the true increase in expenditure amounts, in fact, to £37,000,000. I am not denying that is a large and, indeed, a vast sum. I am not denying that at all. I am only urging upon the Committee that, when they are discussing this matter, they ought to discuss it fairly, and that when statements are made in the country outside to audiences which are not acquainted with the details of our national finance, it is not fair to represent the increase as being £64,000,000, when, as a matter of fact, it is £37,000,000. Further, there has been an increase of population in the ten years of nearly 10 per cent., and the ordinary growth of expenditure, which, as a rule, under many heads, keeps pace with population, would in that period have by itself justified, if it is supposed to be legitimate to increase expenditure with population, a further sum of £11,000,000. These are all facts which ought to be taken into account if we are to discuss this matter in the spirit of candour and of fairness.
    Mr. AUSTEN CHAMBERLAIN: Has the right hon. Gentleman got the figures for the last year for which we were responsible. He has taken the figures of the last year but one.
    Mr. HERBERT SAMUEL: I think that they are very much the same. I took them for 1904–5 and 1914–15 because it was a ten year's period. The hon. Member (Mr. Pretyman) who has just spoken put this
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    question, which is a very interesting economic question: Why is it, if, according to Sir George Paiche, the total national income has increased as fast as the national expenditure, you have to raise the rates of Income Tax and Death Duties? It might have been expected, as the hon. Member says, that the same rates would bring in sufficient for the expenditure if the national income has increased in the same proportion. There are two reasons. In the first place, fifty years ago a much larger proportion of our national revenue was derived from indirect taxes. Great numbers of those indirect taxes have been repealed, and large sources of revenue have been sacrificed by the Exchequer. That has to be made good by increasing the rates of direct taxes. Secondly, we have given immensely increased relief by means of Grants-in-Aid. The amount of expenditure from the central taxes in relief of the local taxes has, in that period, gone up very greatly indeed, and the money has to be found by the Imperial Exchequer for those purposes. It must be remembered, as has been frequently-pointed out, that the income of the country is well able to bear the added burdens that are placed upon it. In the last ten years the amount of income in this country paying Income Tax has increased by just upon 23 per cent. The income of the country above the £160 level, in spite of some fresh abatements that have been given for children, and so forth, has increased in ten years from £608,000,000 to. £746,000,000. It is a marvellous increase in a single decade.
    Mr. STEEL-MAITLAND: May I ask if those are the net assessments?
    Mr. HERBERT SAMUEL: Yes, they are the net assessments for the years 1902–3 to 1912–13. The gross assessments-show an increase in almost exactly the-same proportion. The income chargeable to Super-tax has increased by £8,000,000 in the last two years—from £141,000,000 to £149,000,000. It cannot therefore be suggested that the wealth of the country shows any signs whatever of diminution. There are a large and growing number of men of considerable fortunes who look forward to the day when they can be ranked among the illustrious order of men who pay Super-tax. Many business and professional men look forward with feelings of some pride to the possibility that they may rise so far in their commercial careers as to be ranked

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    amongst the Super-tax payers. Many men, however, find it difficult to reach the figure of £5,000 a year which would qualify them for this purpose. The Government is now meeting them half-way, and, although it is doing so by reducing the income chargeable to Super-tax to £3,000, I am afraid it is not meeting with the expressions of gratitude which might have been anticipated under the circumstances. I was saying that the Grants-in-Aid have of recent years increased considerably. In 1860, the period of which the hon. Member was speaking, this House voted about £1,000,000 for the assistance of local authorities for all purposes—education and everything else. In 1880 the figure had risen only to £5,000,000. By 1890 it had become £12,000,000. The Votes in aid of local authorities for education and other purposes in 1900 had become £20,000,000. Now they amount to £27,000,000. and under the proposals of my right hon. Friend they will be £38,000,000. It is therefore apparent that Grants-in-Aid to local authorities have become a very large and very important element in our national system of finance.
    Sir J. SPEAR: Could the right hon. Gentleman give the expenditure of the local authorities?
    Mr. HERBERT SAMUEL: I am not going into that matter. I am not sure that it would be relevant to this Debate. I am not saying that it is too large, or discussing the amount of it. I am only pointing out that our increased expenditure during that period has been largely a transfer of charge from the ratepayer to the taxpayer. Although in a sense our national expenditure has gone up, if you use the term national as meaning expenditure through the National Exchequer, it has not all been an added national burden if you mean the amount of money spent for public purposes by the whole of the community, whether in their capacity of taxpayer or of ratepayer. There are three reasons why modern Parliaments have, contrary to the practice of Parliaments of earlier days, rapidly developed this system of Grants-in-Aid to local authorities. In the first place, it is generally held that our system of taxes is fairer than our system of rates, and that the more we levy by means of taxes and the less we levy by means of rates the more closely we approximate to equity as between one man and another. Our rating system does not
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    really represent ability to pay. It remains in its main features almost untouched since the time of Elizabeth, and, while in those days a man's means were very largely accurately measured by his real property, no one can say that is so to-day. Our system of local rates really imposes two taxes under the guise of one. Our present rates are partly a tax upon land values and partly a tax upon houses. I do not propose to-day to go into the question of the rating of land values. It will suffice to say, in passing, that we regard the principle of the rating of land values as a good principle, and we do not propose that those rates should be reduced. We, however, regard the principle of the rating of the house? as a bad principle. In the first place, it is obvious it operates unequally between man and man. Take one man living in a large house and with a large income: He pays a certain rate upon that house. Another man happens to have a house equally large, not because he is a man of large means, but because he is a trader who needs the premises for his shop or business, and that man, although his income may only be a tenth of the income of the other man, has to pay the same amount of rates.
    The CHAIRMAN: I really think that I must intervene. The right hon. Gentleman is not now introducing a Bill. If I allowed him to proceed I should have to allow all other Members, and we must really keep to the matters before the Committee of Ways and Means.
    Mr. HERBERT SAMUEL: I am very sorry that I have passed over the line. I will, therefore, merely, in a sentence, say that in our view the purpose of the new taxes which we are asking the House to vote is to substitute income taxation for the taxation of houses—to substitute, in some degree at all events, taxation on income for the taxation of houses, which we regard as a bad principle. I must wait for another occasion to develop the ground upon which we make that proposal, but I think I shall be in order in pointing out the advantage of the alternative which we now propose over another suggestion that has frequently been made, that local authorities should derive part of their revenue from a local Income Tax. The adoption of the central Income Tax in lieu of a local Income Tax, is, I presume, a matter which can be properly discussed now.
    The CHAIRMAN: I do not think we ought to discuss the merits of a local Income Tax in substitution of rates. The purpose of Committee of Ways and Means is the raising of national revenue. The rating system might well be debated on another occasion.
    Mr. PRETYMAN: For the general convenience of both sides of the House, may I point out that this is a rather exceptional case? The Chancellor of the Exchequer, in his Budget statement, referred to proposals in some detail which he intended to carry out in regard to the rating of land, and it would be a convenience for both sides of the House to be allowed to deal with these matters in connection with taxation, with which those proposals deal so intimately. It is rather difficult, I know, but I think it would be convenient if the point could be entered upon without going into much detail.
    The CHAIRMAN: I thought the right hon. Gentleman was going into very considerable detail, and other hon. Members would probably follow him. What I said yesterday holds good. I was anxious, even during the Chancellor of the Exchequer's speech, not to allow the Debate to go too much into detail, and I am quite sure it would be to the advantage of the Committee that this course should be adopted.
    Mr. SNOWDEN: Can we discuss the purposes to which it is proposed to devote the new taxes? That seems to be the matter at issue.
    The CHAIRMAN: I do not know how far I can answer that. Suppose, for instance, the hon. Member wished to discuss the method in which the money for education purposes was going to be allocated—that would certainly not be in order on this occasion.
    Mr. CHAPLIN: I do not wish to question your ruling, but may I remind you of this, that the Chancellor of the Exchequer certainly did deal with the question, which arises on his Budget, of the withdrawal of the Grant given under the Agricultural Rates Act? No explanation was given as to how that would affect agricultural land in the future. At the close of the Debate the Prime Minister asked that we should be allowed to have a general discussion on the statement made by the Chancellor of the Exchequer.

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    May we not be allowed some latitude upon that question, which differs altogether from the raising of taxes? This is a case in which the Grant is to be withdrawn. It is a matter of the utmost importance, and it is exciting the greatest possible attention. We have been told that the Bills are not yet ready. We may never reach them this Session, and, if that is the case, how are we to have any opportunity whatever of dealing with this vastly important question?
    The CHAIRMAN: I do not think that anything I have said now detracts in any way from the arrangement made at the close of the discussion in Ways and Means on Monday. What I protest against is going into further detail than was done by the Chancellor of the Exchequer.
    Mr. HERBERT SAMUEL: I respectfully and very gladly obey your ruling, but I should like to ask you whether or not I should be in order in this. It has been suggested in many quarters that the right method of relieving the present ratepayers is by levying a new local Income Tax. The Government have not adopted that proposal, and do not suggest a local Income Tax, but they suggest using the national Income Tax for the same purpose. That is the reason why we are, by this Resolution, asking the House of Commons to sanction certain increases in the Income Tax. Would I be in order in giving the reasons why this method is preferred to any other?
    The CHAIRMAN: The right hon. Gentleman is quite entitled to argue the question of the allocation of the increased amount of Imperial taxes in aid of rates, but I do not think he would be in order in trying to discuss the merits of the local Income Tax.
    Mr. HERBERT SAMUEL: Not as an alternative?
    The CHAIRMAN: No, I think that would arise on the later Bill.
    Mr. HERBERT SAMUEL: On a later occasion then, I will go on with what I was about to say on these lines. The second purpose of the Grants-in-Aid which have been so much increased in recent-years, and which we now propose further largely to increase, is to secure that in respect of services of national importance, there shall be some approach to equality

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    of burden in various districts. It is quite obvious, in respect of many subjects, that it is of equal importance to every district that the administration in each district should be good. For example, if I live in one borough in London, and if a neighbouring borough in London allows a small-pox epidemic to become rife, it is no consolation to me to know that my own borough is active. Similarly, in regard to roads, it is obvious that all districts of the country are most closely interlaced, and especially is that so in respect of such services as education and sanitation. If, in one town, infant mortality is allowed through slackness of sanitary administration to be unduly high, the whole nation is the poorer by the loss of the citizens it would have had, had the lives of these children been saved. If, in another district of the country, through bad housing or bad education, there arises an unhealthy and degraded population, to that extent the average of the whole national life is lowered, and therefore Parliament requires local authorities should maintain a certain standard of administration, and local authorities themselves are most anxious to do so. The consequence is that the burden becomes grossly unequal—I am not speaking now of the burden as between individuals with different fortunes, but of the burden upon individuals with the same fortune, in different districts—and I say that that burden in respect of national services, is at the present time grossly and notoriously unequal. So far as we devote money from the Exchequer for the assistance of the local authorities, so far we do approximate, in some degree, to the equalisation of rates. Thirdly, the value of the Grant-in-Aid is that it enables the central administration to secure that a proper standard of administration shall be maintained in the localities.
    I know that hon. Members opposite, and possibly in some other quarters of the House, are suspicious lest these new taxes distributed as Grants-in-Aid conditionally on the efficient performance of the duties, may lead to undue interference with the freedom of local authorities. I suggest to them that, if the local authorities are entitled to ask for more money—as they are, because these purposes are subjects of national concern, and it is a proper and right claim—then, for the very same reason. Parliament is entitled to see that the administration everywhere is up to a
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    proper standard. If you say that Parliament shall not interfere in this matter-, then you abandon altogether the case for increased Grants. These purposes of education, sanitation, and so forth, are of national importance, or they are not. If they are of national importance, then the local authorities ought to have national money, but at the same time they ought to maintain a national standard. If they are not of national importance, then, indeed, Parliament should not intervene, and neither should the central Exchequer be called upon to contribute to their cost. Holding the office that I do, it is my duty to express an opinion on this matter.
    I feel as strongly as any Member of this House that it is of profound national importance that our national authorities should be allowed to continue to be self-reliant authorities. The real foundation of our British local government system is that our authorities ought to enjoy a large measure of autonomy. They are permitted to handle their local concerns in a way which is agreeable to the people of the locality, and the Government do not suggest that we should seek to manage their affairs for them. Still loss do we contemplate any policy of pin-pricks, or any policy of continuous fussy interference with their activities. But at the same time it is essential that we should see that no particular local authority falls below what is the national standard—the general standard of local authorities throughout the country in regard to these services. That is already the practice with regard to education and with respect to the police. No Grants are paid over to the education authorities unless the Board of Education are satisfied that the schools are managed efficiently, and no Grants are paid for the police unless the Home Secretary certifies that the police force, in respect of which they are given, is being properly maintained. No one suggests that the local authorities are unduly trammelled by that condition. So it should be also with regard to this. I suggest it would be advantageous to pay a larger amount towards the cost of our local services out of national funds, if only because it does give to this House, and to the Government responsible to this House, the means and the opportunity to secure that a national standard shall be maintained in these matters of national importance. We are now proposing a greatly increased Grant, especially in relation to matters of health. We are shifting the burden from the ratepayer to the taxpayer. These new taxes

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    will be used for the encouragement of national education, to secure the better care of infants, a proper provision of hospitals in the localities, and, not least, to secure that there shall be an adequate nursing service throughout the whole country. These are things which are supremely worth doing, and I, for my part, will never believe that if a nation is better educated and more healthy that nation will fail to become more prosperous also.
    Mr. HAYES FISHER: The Budget Statement of the Chancellor of the Exchequer was distinguished for its length, but not for its lucidity. I ventured to ask one question of the right hon. Gentleman as to whether this new Grant of £1,700,000 per year were to be contingent on a great sheaf of legislation being passed before 1st December, the date on which the payments of the new Grant come into force. The right hon. Gentleman was not able to reply on that occasion, but the President o£ the Local Government Board today, in his opening remarks, told us that no new Grants will be given until legislation has been passed by which there will be a new basis for those Grants, and that in future they are only to be given, as I understand, for improvements in relationship to property. If that be the case, there is very little chance indeed of any of these new Grants being made applicable during the current year, because, without doubt, from all that the right hon. Gentleman has said, following upon what was said by the Chancellor of the Exchequer, we are in for a large measure of local valuation taxation of a nature entirely foreign to anything which this country has ever known before. Before any now Grants can be obtained that legislation will have to be passed by this House and by another House, because it will not be a Money Bill. Decisions will have to be taken upon that legislation. It is quite a common event in the history of this Government for decisions laid down by Departments to be overruled in the Law Courts of the country. Therefore legislation of an extremely intricate and complex character will have to be passed, machinery of a very elaborate character will have to be set up, decisions will have to be given and regulations will have to be made, and, when all that is done, there is little chance indeed of any immediate help or relief to the ratepayers of this country. Yet the Chancellor of the Exchequer drew the most pathetic picture of the condition
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    of the ratepayer at the present moment. He told us that he is in a most desperate plight, and that it was absolutely impossible for him to carry on any municipal business. He said that the present system of rating imposes a grave injustice upon individuals and inflicts serious injury on the highest interests of the community, and that there had been the most emphatic pledges given by the Leaders of the party to deal with it and to deal with it immediately, and that they gave one undertaking which certainly could not be postponed without injury to the interests of the nation. He further said;—
    "Delay means that the nation is suffering incalculable damage, because the service which are essential to its life and to its progress are being starved and crippled."—[OFFICIAL REPORT, 4th May, 1914, col. 65.]
    Yet he proposes to starve and cripple all those services which are essential to the life of the nation, because he says, "If you do not pass my legislation "—and the difficulties ill the way of passing this legislation without an Autumn Session are perfectly enormous—"there shall be no relief for you, and you shall go on suffering incalculable damage, and all the services essential to the life of the nation will be starved and crippled for yet another year." Is not this conclusive proof that my Friend who opened the Debate to-day was absolutely right in saying that we are to vote for these taxes, and that the Government are to impose these taxes and to obtain millions of money, yet those millions are not wanted, and will not be required this year. That is a most vicious principle of finance. I have always understood that one of the soundest canons of finance was that you should not raise more money than was required for the services of the year. It is perfectly patent that here the Government contemplates taking some millions of money out of the pockets of the taxpayers which they cannot possibly use, because they cannot possibly pass legislation upon the passing of which these Grants are entirely contingent.
    The speech of the Chancellor of the Exchequer has provided us with a Debate of very great importance, one in which questions of primary importance have been discussed on a very high level. I should like to make a few general remarks upon the position in which we find ourselves. One of the most interesting questions we have been discussing is, can the nation afford this very large increase in the cost of its services? The right hon. Gentleman says, "You must not go about the country saying that the Government have made an

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    increase, of £64,000,000 on the expenditure which you left." The right hon. Gentleman says it is only £37,000,000. I myself believe that the right figure would be £'44,000,000, which is the figure given by an hon. Gentleman who is a Member of the party opposite, and who is a very trustworthy statistician on most occasions, although perhaps not quite on all—the hon. Member for East Northamptonshire (Mr. Chiozza Money).
    Mr. HERBERT SAMUEL: I have had supplied to me figures in answer to a question asked me by the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamberlain). The figures for 1905–6, which were asked for, show a reduction in expenditure of about £4,000,000 only, which, I think, was largely a reduction in the Naval Estimates. That would make a difference to the extent of £4,000,000.
    Mr. HAYES FISHER: So far as I can make out, the right hon. Gentleman now makes it £41,000,000. If I were to make him a present of the £37,000,000 I should not hurt my argument, which is that the right hon. Gentleman complains that some speakers on this side, not perhaps of the first rank, sometimes exaggerate the amount of the increase in expenditure made by this Government. He ought to remember the innumerable speeches which right hon. Gentlemen opposite made in 1906, when they used in the most merciless way the weapon of extravagance against as at a time when our expenditure, on his own showing, was £37,000,000 less than the expenditure for which the present Government is responsible. I remember that when I was turned out of Parliament in 1906 there was no weapon used against me more mercilessly than that which was directed to showing that I, in my very humble position as Secretary to the Treasury during one year only, was responsible for the enormous Budget of £140,000,000. We could make many quotations, if we desired to do so, to show the kind of use made of our expenditure of £140,000,000. The present Government must be perfectly well aware that they owe their position on the Treasury Bench very largely to the exaggerated accusations they made against the party to which I belong when we had, as they said, heaped up an expenditure of £140,000,000.
    I am much more inclined to treat the matter from a non-party point of view. I want to ask, and I want the country to
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    ask, whether we can or cannot afford this very large expenditure. It is one of the most difficult questions we have ever had to consider in the House of Commons. I agree with hon. Gentlemen who nave made admirable contributions to this Debate that there is no standard by which we can gauge what proportion of the nation's income it can afford to spend and ought to spend, by means of taxation, on the various services of the country. I believe, with one hon. Gentleman opposite, that we can only learn that by experience. Let us hope that the experience will not be too bitter when it conies. Those interested in sound finance must feel that if in a time of a boom period of trade you raise your great taxes, your Income Tax and your Death Duties, to abnormal heights, and if at the same time your indirect taxation is certainly not low, then you are committing the cardinal sin, if, having an enormous expenditure, you raid your Sinking Fund at the same time you are raiding your Reserve Fund. I was surprised when the Secretary to the Treasury, who, I thought, would have uttered some words of warning as regards this excessive expenditure, defended the present Government for diminishing the pace at which they are reducing the debt at the present moment. He used some very remarkable arguments in his speech. He said it is not axiomatic that you need reduce your National Debt rapidly when you are piling up burdens on the Income Tax payers and on the payers of Death Duties, because, he said, that in a case of emergency or of real peril all the taxpayers, from the highest to the lowest, from the richest to the poorest, will come to your rescue and provide you with money for carrying on the war.
    That is a very remarkable argument. Let us suppose that next year the present Government find themselves at war and have to raise, as we had to raise, a sum of something like £230,000,000 to conduct that war. Where would they get it? When the Government, of which I was once a Member, had to raise £230,000,000 for the Boer war, they started with the Income Tax at 8d. only. Lord St. Aldwyn, who was then Chancellor of the Exchequer, first increased it from 8d. to a 1s., and then from 1s. to 1s. 2d. Supposing the present Government had to raise money, at what rate would they find the Income Tax? Not at 8d., but at 1s. 4d:, and much more, and on all the rich people of the country far more, right up to 2s. 7d. Where is their margin for getting any

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    taxes out of the rich people? Take the Death Duties. Since the Boer war, that is, since 1899—the actual yield of the Death Duties has increased by 150 per cent. Where will the Government get any money by increasing the Death Duties? As re-regards this wonderful idea that the poor and that all the taxpayers of the country will come to the rescue and find all these millions of money for the conduct of the war, in what form will they find it? Is it by increasing the Tobacco Duties, which are already intolerably high? Is it by increasing the taxes upon beer and spirits? I think hon. Gentlemen will find that if they were to attempt to increase those to any material extent, so as to draw millions from them, they would find consumption very rapidly falling off and themselves defeated in their intentions. What do they propose? Are they going to double duties on the breakfast table, instead of taking them oft"? In what way does the Secretary to the Treasury think he is going to get the money, when every one of the taxes which are paid now are very high? There never was a greater fallacy uttered by a really clever man than that which was uttered by him when he told the Committee yesterday that he was convinced that you need not reduce the National Debt at any great pace because the poor would always come to your rescue.
    He gave other reasons why we might at this date raid the Sinking Fund. He said, "Look at the amount of debt per head in the country compared with what it was per head in former times, and you will see how utterly unnecessary it is to proceed at any great pace to reduce the debt of the country." He said that in 1899, before the Boer war, the National Debt was 15.52, and to-day it is 15.37, not a very great drop after all. The hon. Gentleman entirely forgot that there are two debts. There is the National Debt and there is the Local Debt. The Local Debt at the present time actually amounts to more than the funded portion of your National Debt. It amounts to £629,000,000. The only fair way is to compare the total indebtedness of the country per head in 1899 with the total indebtedness of the country per head in 1914, and if the hon. Gentleman does that he will see that the comparison is against him. Both are liabilities and both have to be paid practically to a large extent by the same person
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    and by the same property. The same-assets have to meet both.
    Mr. HERBERT SAMUEL: The local authorities have their assets—their tramway systems, gasworks, and waterworks.
    Mr. HAYES FISHER: That is a small portion. It is quite true that a certain proportion of the local debt is remunerative debt, but not so large as the portion that is not remunerative. It is just as much dead weight debt as the greater proportion of the National Debt. The resources of the country must meet it—the same men and the same property. It is a great liability, and you can never cease to-take it into account when you are discussing the question of what you can afford. Besides the vice of raiding the Sinking Fund there is a terrible vice underlying a sentence in the Chancellor's speech, to which no one has yet alluded. He said, "For all my new taxation, for all my raising the Income Tax to an enormous height such as we have never known before, I foresee a gap next year. I must have a deficit next year to face. How am I going to bridge that gap. I am going to bridge it by insisting on a reduction in the Naval Estimates." A more dangerous doctrine was never enunciated by a Chancellor of the Exchequer, that when he knows nothing of the circumstances of the next year, when he knows nothing of the condition of European affairs next year, when he knows nothing of the shipbuilding programme of other nations next year, he should actually say that next year he intends, in addition to raiding the Sinking Fund, in all probability to bridge any gap that he has in making both ends meet, by practically insisting on a reduction of the Naval Estimates. There is a third vicious principle undoubtedly running through all the Budget Statement, and through the speech we have just heard. There is an intention to a large extent to supersede those who are responsible for local government. I quite admit that if new Grants are to be made some central body must insist upon it that there shall be increased effieiency. But what we shall want to know is whether these millions of money are going to be handed over to-departments of the State to give out practically as they like, or whether they are-to be bound by some basic, statutory principles which will be submitted to this House and which will govern them in. their selection of the constituencies to which they will give those Grants. That is a

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    very important matter. One of the greatest vices that this House has ever committed was in handing over to the Road Board some millions of the taxes of this country without having any proper and adequate opportunity of controlling its expenditure or expressing a really practical opinion, so as to mould that Board into a proper state, and to see to it that that money had a proper and a right and equitable destination. I do not want that process repeated, and I am not quite sure that it is not going to be repeated, and that "we are not going to vote these millions of money to Departments of the State which will choose the particular municipalities to whom they will give the money.
    Mr. H. SAMUELindicated dissent.
    Mr. HAYES FISHER: I am glad the right hon. Gentleman shakes his head, but it only shows how difficult it is to discuss this Budget when really so much depends upon the nature of the legislation—not one Bill, but several Bills which will have to be submitted to this House, and which will to a very large extent govern the disposition of these millions which we are now authorising the Chancellor of the Exchequer to raise from the unfortunate taxpayer. Again, there is a new vice. I am very much afraid that unless we are very vigilant the mandamus of the Court may be just transferred, and instead of it we may get the mandamus of a central Government Department. This is the sort of understanding which I think is gradually springing up between the President of the Local Government Board and the Chancellor of the Exchequer, "Hand over the money. I shall see how it is administered and I shall always insist that these local authorities spend pound for pound before I give them any of these new Grants." If that is at all the intention of the Government, it is really not fair to many of the local bodies. It only encourages them in expenditure which very likely they cannot afford. It is quite possible to offer to a local body £800,000 if they will spend £800,000, and to be very generous in making that offer, but the offer may be one which the local body will say is too expensive for us to accept. If the right hon. Gentleman only means what he says, that it was very important from the point of view of locality A and locality B that locality C should not lag behind in the matter of public health, and matters of that kind, we should all be willing in screwing up locality C to see that,
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    in the interests of the nation, the health-of that part of the community was at least as well attended to as the health of the community in locality A and locality B.
    Ought local authorities really to be-grateful for the speech and the promises of the Chancellor of the Exchequer? I see no reason why they should be grateful at all at present, because all that the local authorities are certain of getting this year—and I think I have read the speech and. the White Paper aright, is a share of this new educational Grant of £515,000, and. even then that £515,000 has to be divided amongst educational authorities whose rates are now £13,000,000. What does that mean? Does it mean a reduction of a 9d. rate? It is not even a deduction of a halfpenny rate if distributed amongst them all. That £515,000 has to cover the feeding of school children. I should like to know whether the money has to be given at the rate of £50 for every £50 spent to authorities who feed the children, without their being compelled to feed the children on Saturdays and Sundays, and also in the holidays, because, if so, there again there will not in all probability be a relief of the rates. It will merely be the ratepayer incurring more expense. I admit that in exchange they are getting some bigger Grant. Again, we shall scrutinise very carefully the methods of distribution of this £515,000. I hope-there is no intention to adhere to the, I think, very unfair regulations by which a local authority, even when we are entitled to some share of the necessitous school area Grant, is not allowed to have any share unless it enjoyed that Grant in some former year. I hope that principle will go, because, if not, London will again have to go without a share, and London, according to every system of equity that I can see, is already entitled to be treated as a necessitous school area. There, again, we must wait until we see the legislation by which the distribution of the Grant will be covered. I ask, Ought local authorities to be grateful for these promises? I think they have no reason. This £515,000 is all they are likely to get. The whole of the rest of the Grants for this year, namely, £1,700,000, are entirely contingent for their distribution on the legislation which has yet to be passed, and yet, as the Chancellor of the Exchequer said, promise after promise has been made by him, and by other Members of the Government, that immediate relief would be given to these

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    ratepayers. What is the interpretation of "immediate"? Six years, apparently. We are to wait for the Departmental Committee, and to wait another three years before he can accomplish some further legislation. That Departmental Committee was never necessary at all. in my opinion. It might have taken the Report of the Royal Commission and brought it up to date.
    Mr. LEIF JONES: Why did you not do it when you were in office?
    Mr. HAYES FISHER: There was such a circumstance as a war, which required a large amount of money. There is no such excuse for hon. Members opposite. If they could raise the Income Tax this year, why could they not raise it last year or the year before? Why wait for the Departmental Committee to report? When the Committee were on the eve of reporting, why inform them that the Chancellor of the Exchequer desired that they should inquire into valuation, and very difficult matters of that kind? There never was a desire to find any money for the relief of local authorities. They wanted to please them, and so they made these promises that they would very soon find the money. When we really get the Grant we shall begin to think what measure of thanks is due to the right hon. Gentleman. They seem to me to be very much in the position of a man who acknowledged he owed me £100. He met me one day and said, "I owed you £100 five years ago. I will offer you a £5 note on 1st December and I will give you a promissory note for £50 as well." That is all we are getting at present, so far as I can see.
    6.0 P.M.
    I shall have on a future occasion something to say about the Chancellor of the Exchequer's very cruel charge against the London County Council in the matter of tuberculosis, of its being dilatory, laggard, and obstructive; I am quite sure that when he used these strictures he had not read the correspondence between the Local Government Board and the London County Council. If he had he would have reserved those epithets for the right hon. Gentleman (Mr. John Burns). If there were laches anywhere there were laches with him in the matter. The London County Council have every desire to put forward a complete scheme for the treatment of tuberculosis, and I do not think it will be long before some such scheme is submitted to the county council and before
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    London has the benefit of some complete scheme of that kind. The right hon. Gentleman said he could not help thinking that the question of rates had something to do with that It has a great deal to do with the action of many local authorities. He said, "We pass Acts of Parliament. Municipal authorities tell us they have not the money to carry them out without increasing the rates to such a height as to press unduly on industries." That is the case now, both with the county council and with many local authorities. They are unable to do many things in the direction of housing, of education, and of health, which they would very gladly do if only adequate money were placed at their disposal in accordance with promises which have so frequently been made. There is no doubt that if you carefully examine and scrutinise all the contents of the speech, you cannot help coming to the conclusion that, though the right hon. Gentleman said much about relief to the local ratepayer, the speech is the forerunner of a Bill which will give no immediate relief, if it gives any at all, to the ratepayer from his burdens, while at the same time it is an incentive to an increase both of national and local expenditure. I think the right hon. Gentleman raises money in a way oppressive to the industries of the country, and inimical to the interests of the nation.
    Mr. SNOWDEN: I feel that we are not in possession of sufficient information to be able to offer intelligent criticism upon matters of detail raised by the Budget proposals. There are rumours afloat as to whether there may not be a considerable modification of the programme which was announced in the Chancellor's speech the other day. I cannot follow the hon. Gentleman opposite who began the debate this afternoon into all the windings of the lugubrious oration he gave, but he raised one or two points upon which I wish to offer some criticism. The hon. Gentleman made a contrast between the income of the country fifty years ago and the income of the country to-day, and the yield of taxation fifty years ago and the yield of taxation to-day, and he expressed some surprise at the fact that it requires a much higher rate of Income Tax to-day. I think he put it at ten times greater.
    Mr. PRETYMAN: Income Tax and Death Duties together.
    Mr. SNOWDEN: Yes, Income Tax and Death Duties together. But the hon.

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    Gentleman, like a good many more critics, began his comparison at an earlier date than he might have done. If he had gone back to the beginning of the nineteenth century, he would have found that the Income Tax stood at a rate about as high as the rate in operation to-day, and if he had gone back a little further he would have found an Income Tax of 2s. in the £ on all incomes over £60 a year. If he had gone back two centuries further still, he would have found a Property Tax in operation levying 4s. in the £. One of the fallacies of the hon. Gentleman was disposed of by the President of the Local Government Board, namely, that he ignored the relative proportions of indirect taxation and of direct taxation which were in operation fifty years ago. Let me refer to one other point. It seemed to me that the action of the hon. Gentleman in raising this matter was to argue whether the taxable capacity of the country, or the means of the taxpayers were as great to-day as fifty years ago. I want to point out that if the proportion between income and taxation is the same to-day as it was fifty years ago, it naturally follows that there must be a very considerable increase in the capacity of the country to bear taxation. Let me illustrate that. Assuming—and I think the assumption is not far wide of the actual figure—that the national income was one thousand millions fifty years ago, 10 per cent. taxation on that would yield one hundred millions a year, leaving for the use and consumption of individuals nine hundred millions. Taking the income of the country to-day at two thousand millions, 10 per cent. on that for taxation would yield two hundred millions. But that leaves double the sum that was left in the pockets of the taxpayers fifty years ago, namely, one thousand eight hundred million pounds.
    I am quite aware, of course, that there has been an increase of population in the meantime, but the increase in population has not been proportionate to the increase of income, and the amount which is left to provide for consumption, after the taxes have been paid today, is very much higher per head of the population than fifty years ago, and I submit, therefore, that though the standard of living has increased, the wealth of the country has also largely increased. The hon. Gentleman also repeated the contention which is very often brought forward from the opposite side of the House, that the taxes which are levied in the form of Death Duties and
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    Income Tax filter down to the wage-earning class of the population. He said this afternoon, if I understood him aright, that we argue here on some occasions that that was the case, and then on other occasions argue that the wage-earning parts of the population in all circumstances, and under all conditions, pay all the taxes of the country. I do not think he quite understood the position that we have attempted to maintain. We have never denied that any form of tax—and the Income Tax least of all, but I believe the Income Tax to some slight extent—does filter down, to use his own expression, to other grades of the community. I do not believe it would be possible to levy any tax, so long as land and commercial property are private property, the whole incidence of which would permanently remain on the person on whom it was levied; but we have never said that the whole of the tax filters down to the poorer class of the population.
    Mr. PRETYMAN: I never said that.
    Mr. SNOWDEN: What we maintain is that in a very real sense of the word the great mass of the people pay all taxes. They pay in the sense that they in the main create the wealth by which these taxes must be paid. So much for that point. I wish to say a word about the hon. Gentleman's reference to the Death Duties. I would like to point out what appears to be the fallacy in his reasoning. The Income Tax is levied on the person who in the first instance pays it. It is levied upon a living person who has either earned the income, or received the income in the form of an unearned income. It is not so with the Death Duties. The Death Duties are not paid by the individual who has enjoyed the property during his lifetime. The estate at death passes to some other person, it may be a near relative, but still it does not alter the fact that that person comes into possession of the property as it is. He comes into the enjoyment of a large estate to which he himself has not contributed anything, and, therefore, it seems to be absurd to say that a person who inherits property is charged Income Tax at the rate stated by the hon. Gentleman. The person who inherits ought to be grateful indeed that there is property left to him of the value of £70,000, £80,000, or £90,000 after the deduction of the tax.
    There is another point to which I wish to refer, and it is by no means a new point in our discussions on finance. I think the

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    same thing was mentioned by the Chancellor of the Exchequer the other day. Certainly, he has often made the point in former speeches, and I remember that the Prime Minister made a very powerful reference to it in a speech on the Finance Bill last year. It was urged in opposition to our contention that poverty ought to be altogether exempted from national taxation. The hon. Gentleman said this afternoon that it would not be either good national politics or good social economy that you should have a large part of the population having votes, and being able to determine the incidence of taxation, and not themselves contributing anything to the revenue of the country. In reply, may I point out that that was actually the state of things during practically the whole of the nineteenth century, and when that condition of things did operate the predecessors of hon. Gentlemen opposite never made the slightest move to redress it, and until about 1884 something like two-thirds of the national revenue of this country was raised by means of indirect taxation. That was paid very largely by the wage-earning classes, and yet at that time, practically the whole of the time, the great majority of these people had not votes. They had no voice whatever in determining what the taxation of the country should be. I do not think for a moment that, even it we had the poorer part of our population exempt, as I feel they are entitled to be exempt, from contributing to national taxation, the result which the hon. Gentleman seems to anticipate would follow at all. I think the common sense of the country would be sufficient to prevent any such abuse as that which he seems to expect.
    I now come to the more general question. Speaking four years ago in one of the Budget Debates in this House, I ventured to prophesy that we were within measurable distance of a £200,000,000 Budget, and I remember the forecast was received with derision in every part of the House. It is more than a realised fact now. I venture, encourcaged by my success as a prophet, to make another forecast to-day. I venture to say with assurance that, before ten years have passed, the National Budget of this country will stand £50,000,000 higher than it does today, and I am taking into my computation in making that statement that there may be in the coming ten years a change of Government. But we have arrived at a
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    state of things where national expenditure for social reform purposes cannot be kept down. National revenue may be raised in one way or another. It may be raised by an extension of the efforts which the Chancellor of the Exchequer proposes to adopt in this Budget. It may possibly be proposed, should the party opposite come into power, by methods which they advocated some years ago and of which we hear so little to-day. We have not had yet during the Debates on this question, so far as I have heard them, one hon. Member who has had the courage to rise and suggest as an alternative method the taxation of the food or other necessaries of the people. We have had one or two general statements about the importance of keeping up an even balance between direct and indirect taxation, but these general statements in this connection mean nothing at all. National expenditure will continue to increase as national income will continue to increase. Therefore it seems to me that we are not to be dismayed by the mere size of the figures.
    But we have to examine these figures carefully to try to ascertain: First, is the expenditure necessary, is it beneficial, and do we get value for the money 1 Second, can we afford it? And third, are we raising it in a just and equitable manner? Apply those three tests to this huge Budget. First, is the expenditure necessary and beneficial? I am glad to be able to admit that I will not say in a larger proportion, but to a larger amount, the national expenditure to-day is more beneficial than it has been at any former period of our history. But I regret to have to continue by saying that the larger portion of our national expenditure is, in my opinion, wasteful, unnecessary, and provocative. We are going to raise during the current financial year more than £100,000,000 for the payment for past wars and for preparation for future wars. That represents about £11 per family in this country on the average. It is more than 4s. per week for gunpowder, Empire, glory, and to fill the pockets of the international armament ring—and in passing I may say that I am still waiting for the answer of the Government to the charges that I made in regard to this matter a few weeks ago. Just about one-half of this £200,000,000 is going this year for the purposes which I have indicated—that is to say, we are spending on this one Department alone of our national activity a sum which is nearly double the amount that we are

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    spending upon education and all other schemes of social reform. Therefore, to the extent of nearly two-thirds of our national expenditure, we cannot say that it is either wise or beneficial.
    I come now to my second point—can we afford it? I think that it will not be denied that there never was a time in the history of this country when we could as a nation so well afford this expenditure as we can to-day. I go back for a moment to the illustration which I gave when I was dealing with the point advanced by the hon. Gentleman opposite. Seeing that we have to-day a national income so much larger in the aggregate than we ever had before, if we are taking anything like the same proportion of that income for taxation, there must be a very much larger sum levied. Nobody will deny that. The President of the Local Government Board gave us this afternoon some figures. He gave net figures, which are not nearly so impressive as if he had given gross figures. After all, gross figures ought to be given in this connection, because the figures of gross income, whether that be the amount taxed or not, do represent income and income which has been received by somebody. To point out to what extent the taxable capacity of this country is still unexhausted I may refer to the White Paper which was issued yesterday. Take the table at page 6, which is headed "Income Tax and Super-tax." Take an income of £10,000 per year. When the new taxes are in operation, such an income will be taxed to the extent of 2s. 1d. in the £. The total amount of Income Tax and Super-tax paid upon such an income will be £1,039.
    The right hon. Gentleman the Member for East Worcestershire referred yesterday to a phrase that I had used in a former Debate, that the proper method of taxation was not to look so much to what you took from a man as to look to what was left after you had taken what was needed for your immediate work. Grant for a moment that by the taxation which is being imposed this year—I grant it though I do not admit it—we are supplying our immediate needs, and take this case of an income of £10,000 per year. You take, roughly, £1,000, and there is £9,000 left. Now you could add very considerably to the taxation of an income of £9,000 without reducing the recipient of that income to a condition of poverty. If you took £2,000, or £3,000, or £4,000, or even £5,000 a year more than you are proposing to do this
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    year, that man would still have an income large enough to supply him with every reasonable comfort, and with every luxury that was good for himself, or good for the community. In fact, it would be for the good of that individual, and for the good of the country that the community should act as his saviour, and take temptation away from him. Of course if we take still larger incomes, we see even more glaringly how enormous still is the unexhausted taxable capacity of the country. Take an income of £100,000. The Chancellor of the Exchequer is proposing to take this year in the case of such an income, just over £13,000 Income Tax and Super-tax. That leaves £87,000. Why, if Adam had lived from the time of the Garden of Eden down to the present day, and had worked hard at honest labour the whole of these years, and had been a thrifty man withal, he would not have had left to him an income anything like that.
    It is impossible to contemplate the figures in this Paper without seeing that far from having exhausted the taxable capacity of the country, we have hardly begun to touch it. We had jeremiads yesterday from the Front Bench opposite as to what was going to happen to the country during a time of stress or war, when the source upon which prudent Chancellors of the Exchequer had relied in times past for such emergencies, namely, the Income Tax, would be no longer available. Why you have got hundreds of millions of pounds available here in the higher ranges of income, indisputably, as disclosed by this return, available for such emergencies, or, as I hope, available for much more rational and beneficial purposes. Having dealt with that point of the inexhaustible taxable capacity of the country, I want to pass to another point. The Chancellor of the Exchequer in this Budget is going on right lines. He is not moving very quickly, but I am glad that he has not followed the precedent of 1909 by, to some extent, spoiling the good things by doing some objectionable things. He has upon this occasion confined himself altogether to robbing those "hen roosts" where nothing but good results from the robbery. We are hearing precisely the same complaints that we heard in the Budget Debates of 1909, that the country would be ruined by this excessive taxation. I am not going to say that the extraordinary prosperity which began as soon as the proposals for

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    the Budget of 1909 were announced was due to that Budget, but still it is a hard nut for the Opposition to crack that this unparalleled period of trade prosperity and high profits should have followed the method of taxation which was adopted in 1909. I do not care what test you take, imports, exports, unemployment, profit. Why, in the four years which have elapsed since the Budget of 1909, the gross income assessed for Income Tax has risen by £150,000,000, and that income is being taken mainly by a small number of people.
    About seven or eight years ago, when Sir Charles Dilke's Committee on Income Tax was sitting, Sir Henry Primrose stated in evidence that the Revenue authorities estimated the number of Income Tax payers at about 1,100,000. I gather from a reply by the Treasury to a question today that they estimate the number of Income Tax payers at present at a little over 1,250,000. What a small increase there has been in the number of persons in the Income Tax paying class during the last seven or eight years. What docs it show? It shows that this increase in the gross amount is going to a very small number of people indeed. It is going to them in the form of increased profit; and instead of denouncing the Chancellor of the Exchequer for the impositions which he levied in the Budget of 1909, they ought further to encourage him to be not weary in well-doing, but to increase their taxes still more. Grotesque as on the surface it may appear, I believe that it is the fact that to some extent the taxes imposed in 1909 have contributed to the increased prosperity of the country, and to the increase of profits, and I can amplify the point which I have hinted at rather than touched when I was dealing with some contentions of the hon. Gentleman on the Front Opposition Bench about taxes filtering down. The taxes on the rich, provided that the revenue be used for imposes of social reform, that is, for the better education of the people, and improving their physical condition, must economically benefit the landlord and the employing class. It cannot be otherwise, because if the object of social reform is going to be realised, if by the money which you are spending on education you are going to give the manual workers of the country, the industrial workers of the country, better developed brains, you are going to make them into more efficient
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    workmen; and if they are more efficient workmen they will be more profitable workmen; and under our existing conditions, we may depend upon it that the greater part of the profit will not go to the workmen but will go to the monopolists in the form of increased rents and increased profits of industry. You have only to take the money spent on education as a fair illustration of that. We spend, nationally and locally, something like £30,000,000 a year on education. We were spending practically nothing forty years ago. Has that national expenditure caused industrial profits to decline? On the contrary, they are hundreds of millions more than they were when the people were kept in ignorance.
    So it will be with money spent on better housing, so it must be with money spent on public health. I say, therefore, that although we are not opposed to the use of the weapon of taxation to improve the conditions of the people, we clearly recognise that it has its limitations. We know that taxation alone can never secure to the mass of the people a right and just share of the wealth produced by the nation. I pass on now, after dealing with these three points. to another. I think I am speaking for my colleagues when I say that we welcome the financial features of the Budget Statement so far as they go. They are quite on the right lines. I have in former Debates often said what our principles of taxation are. We believe that taxation should be raised as far as possible by imposing taxes on those best capable of bearing them. We welcome the financial proposals of the Budget, because they conform to that axiom. Having said that word of commendation, I cannot pass on without a word of criticism. It is quite true, and will be generally admitted, that the proportion between direct and indirect taxation is much more favourable, from our point of view, than it was six or eight years ago. But proportions are fallacious, as every Free Trader on this side of the House knows. What you want is actual figures, and although the proportion between in direct and direct taxation is less considerably than it was when the Government came into power eight years ago, still the amount is more, and, after all, it is the amount, and not the proportion of percentage, that matters to the working man.
    The Chancellor of the Exchequer makes no proposal for relieving the working classes of the amount of taxation they are

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    called upon to bear. Last year, the Prime Minister, at some considerable length, replied to a contention that I had put forward as to the actual amount of the indirect taxes of the country contributed by those people who are below the Income Tax limit. I had stated the figure to be about £60,000,000. I had taken the proportion of Customs and Excise Duties contributed by that class as four-fifths of the whole. The Prime Minister maintained that there were certain taxes under the head of Customs and Excise which were not paid by the working classes, but he was extremely unfortunate in his illustration. He said there were about £7,000,000 of Customs and Excise Duties, not a halfpenny of which was paid by the people below the Income Tax limit. How is that £7,000,000 of taxation made up? It is made up by duties upon imported foreign spirits, brandy, rum and gin, taxes upon cigars. Excise licences, auctioneers' licences, grocers' licences, hackney carriage licences, hawkers' licences, and the like; yet the Prime Minister said not a halfpenny of those taxes was paid by the people below the Income Tax limit. Why it is within the knowledge of everybody that a very considerable amount of the tax upon brandy, gin and rum is paid by the working people, and surely the right hon. Gentleman does not mean that a man with an income of less than £3 a week never smokes cigars'. Most of the Excise licences, if you exclude licences for servants and armorial bearings, are paid by poor people. The Prime Minister also included the Motor Spirit Tax. Why, surely, a considerable part of that is paid by poor men! It is a curious thing that just before the Prime Minister made that statement there had been a strike in London among taxi-cab men because they were called upon to pay the Spirit Duty. I submit that my figures stand impregnable, even after the Prime Minister's statement.
    It is indisputable that, of the total of £75,000,000 to be raised by Excise Duties this year, £60,000,000 has to be contributed by those who are below the Income Tax limit. Therefore, we are not satisfied that this high proportion of working-class expenditure should be maintained. As a matter of fact, a working-class family which spends an average sum on drink, unfortunately, are paying quite as much in proportion to their income as is the person with several thousands a year. That, I submit, is a position which cannot
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    be maintained by a democratic Chancellor of the Exchequer, and, therefore, we shall renew the demand that we have made in the several Sessions during which have sat in this House as a party for a repeal of the taxes upon food. I just want to say a word or two in a general way—and it is with considerable hesitation that I approach the point, after the decision from the Chair—about the purposes to which it is proposed to apply these new taxes. I am glad, and I am sure everybody else is glad, that a beginning, though a small beginning, is to be made in the way of doing something to relieve the heavy burdens upon local rates. I do not think that the pressure of the burden of local rates is due so much to the amount of the rates as to the unfair incidence of the rates and the methods by which they are assessed. I have no complaint to make of the character of municipal expenditure. As a matter of fact, I believe there is no expenditure incurred in this country which brings so high a return as the money spent by municipalities.
    I think the right hon. Gentleman the Member for West Birmingham (Mr. Chamberlain) uttered words of weight and wisdom when forty years ago he declared that the model of intelligent municipalities should be a high rate and a healthy town. Increased expenditure by the municipality does not really mean an increase of the expenditure of the individual, because a great part of the municipal expenditure means that the municipality is doing for the individuals collectively what formerly they were left to do, very uneconomically and inefficiently, for themselves. There-tore, they gain a considerable unearned increment when the expenditure is transferred from the individual pocket to the municipality. I say I welcome this proposal on the part of the Chancellor of the Exchequer to deal with this question. He proposes, I understand, to adopt the principle of taxation of site values. I have, no objection to that at all. I believe that it will do a certain amount of good. But I am perfectly certain that it will not realise the expectations of some of my hon. Friends behind me. A far better plan than that would be to give drastic powers to the municipalities to acquire land cheaply, land which is likely to increase in value, so that the full increment, and not a paltry 20 per cent. increment, shall accrue to the. municipal exchequer. I sympathise to a considerable extent with the observations in another part of the speech of the right

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    hon. Gentleman who has just sat down (Mr. Hayes Fisher) as to the inadequacy of this Grant for lightening very much the present burdens of the municipalities. Reform in the assessing of local rates will do a great deal more than the relief which the Chancellor of the Exchequer is proposing to give at the present time. Even supposing that the relief amounted to an average of 9d. in the £, after all, that is not very much when compared with the amount of the average rate in municipalities. Ninepence in the £ is something, but, after all, it is not a very big lightening of the burden of ratepayers if you reduce them from 12s. to 11s. 3d. in the £. We have to remember, too, that this relief, as I understand, is to be given conditionally, and that there is to be a corresponding expenditure on the part of the municipalities. Therefore, unless there be a radical change in the method of raising the municipal revenue, it means that there is really not going to be a lightening of the present burdens of municipal taxation.
    In view of that, I give a still heartier welcome to the proposal of the Chancellor of the Exchequer—and here I differ from hon. Gentlemen opposite—which is one of the best administrative features, perhaps, in this Budget—I refer to the national system of valuation. I think it ought to be uniform. I think a good deal of injustice, Or at any rate, some part of the injustice of local rating, lies in this fact, that in Some parishes property is grossly under-assessed, and assessed upon a different basis from the method adopted in the adjoining parish. When I was a young man I was a member of a school board, and in the very next parish where they had precisely the same amount of accommodation, the character of the two parishes being identical, owing to their different method of valuation, our parish school hoard had to levy 1s. 3d. in the £, whereas in the neighbouring parish they raised practically the same sum by a sevenpenny rate. I hope, therefore, that the method which the Chancellor of the Exchequer proposes to adopt will at any rate remove that gross anomaly and injustice. I am glad that the Chancellor of the Exchequer does not propose to throw the whole cost of the police upon the National Exchequer. I would not like to see the police of this country entirely under the State, and I do not want to see a Royal Irish Constabulary in this country. If you are going to maintain a fairly large measure
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    of local authority, I think it must follow-that there must be a certain amount of financial local responsibility. I do not think that applies to the main roads question. May I offer this suggestion to the Chancellor of the Exchequer? I understand that he proposes that the roads should be divided into three classes. I do-not object to the second and third classes-being kept up partly at the expense of the country, but I do think that the main, roads stand in quite a different position. I think they might be put entirely under the control of the Road Board, and that the cost should be met by the National Exchequer. It seems to me that it would be just as foolish to have the main roads-of the country, which are not for the ser-vice of the localities but for the service of the nation, under the control of hundreds of local bodies with conflicting interests, as it would be to have a-national system of State railways under a combination of municipal and national control.
    There is another subject on which I wish to say a few words. Education is, I think, to a far greater ox-tent a national service than roads. We do not advocate, because I do not believe it would be to the advantage of the country that local control of education should be-abolished altogether. As I have state in another connection, if you are going to-have local control you must have local financial responsibility. But I think the-proportions are much too high, and will be-even after the Grant which the Chancellor proposes has been given, because after all education is really a national service. The children in our schools to-day are not being educated for the locality. They are being educated for the Nation. There is no part of the Chancellor of the Exchequer's statement as to the purposes to which the new taxes were to be devoted which was less definite than that dealing with the Grant for public health purposes. I was surprised and disappointed that there was not a more definite promise of a national Grant for dealing with the question of maternity. Maternity benefit is undoubtedly the most popular feature of the-Insurance Act, but it has only served to-show how much more needs to be done. What I may call the pre-natal death rate-of children owing to neglect and poverty is about as high as the death rate of infants in the first year of their lives. I think there is nothing so pathetic as the sight of a pregnant woman who, through

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    poverty, is compelled, in a weak physical condition, to continue to work at a factory or to perform arduous household duties up to the very hour of childbirth. The serious effects of that on the unborn child and on the mother cannot possibly be exaggerated. A very eminent medical man in London recently stated that 40 per cent. of the mothers who go to the women's department of a London hospital are suffering from the consequences of neglect during pregnancy or neglect at birth. We cannot allow that this thing should go on. We deplore the declining birth-rate, but then we should sec that the children are given the chance to be born well. I am sure there is no expenditure that the Chancellor of the Exchequer could provide which would bring in future generations such a harvest of beneficial results as would accrue from securing the health of every woman during pregnancy and during confinement. I hope the Chancellor will bear in mind this very earnest appeal. I have expressed our satisfaction at certain proposals of this Budget. I have stated that we do not recede in the slightest degree from our demand that the amount of taxation now paid by the working people of the country shall be reduced, and very considerably reduced. If the Chancellor of the Exchequer is prepared to continue to use taxation not merely as a means of raising the necessary revenue, but as a potent, if incomplete, method of social reform, then I can assure him we shall continue to give him all the support which we can.
    Mr. HENRY TERRELL: I would like to associate myself absolutely with the last remarks which were made by the hon. Member for Blackburn (Mr. Snowden). I agree with him that there is nothing so important for the country than that children, being born into this world, should be born under healthy circumstances and brought up in healthy surroundings. The greater part and, indeed, the whole of the hon. Member's speech was devoted to supporting the principle which we all know he holds, that all capital should be nationalised. I do not agree with that, and do not intend to have anything to do with that question now. But I would ask the attention and the careful consideration of some hon. Gentlemen opposite with regard to his observation as to the hundreds of thousands of pounds. Judging by the countenances of some hon. Members opposite, they did not receive that remark with ecstasy or with goodwill. The
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    one thing very remarkable about this Debate is that it shows a total change in the principle which is advocated today on the part of men who to-day call themselves Liberals. If you go back to the Budget speeches of the time of Mr. Gladstone, you will find that Liberals were unanimous in advocating economy in every respect, and that economy and retrenchment were then the main features of the policy which was pursued in the name of Liberalism. To-day, judging from the speeches which have been delivered by hon. Members opposite, instead of economy, we hear nothing but praise of expenditure. They are all advocating expenditure of one kind or another, and justifying the imposition as a permanent tax of the Income Tax at a very high figure, because it enables such expenditure to be made. Let me recall to the Committee what was said with reference to that matter by Mr. Gladstone, who, after all, even to-day, I believe, is recognised as a great authority on the finances of the country. He spoke over and over again on the subject of the Income Tax, and he repeatedly expressed his objection to the Income Tax on the ground that it encouraged extravagance. That was one of the main reasons which he gave in this House and out of it for his opposition to the Income Tax. I have taken from Lord Morley's "Life of Gladstone" two extracts from statements made by him on this subject, and which I would ask the Committee to very carefully consider. He said in a letter which he wrote to Mr. Cobden on this subject:—
    "How is the spirit of expenditure to be exorcised. Not by my preaching; I do not think even by yours. I seriously doubt if it would ever give place to the old spirit of economy as long as we have the Income Tax with us."
    I do commend those words to hon. Gentlemen opposite, for it shows that he at any rate was opposed to this reckless expenditure, and that he recognised that a permanent Income Tax was a source of extravagance on the part of the Government. On another occasion he said this—
    "I am deeply convinced that the facility of recurring to, and of maintaining the Income Tax, has been the main source of extravagance on the part of Governments."
    There, again, he gives as his reason for opposing the Income Tax the very ground that a permanent Income Tax is a source of extravagance on the part of Governments. To-day hon. Members who speak in the name of Liberalism rejoice in the expenditure, and rejoice in the Income Tax, because they say that the Income Tax enables this great expenditure to be made.

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    I would venture, and I wish to do so in as uncontroversial a spirit as possible, to submit to the Committee one or two reasons why it seems to me that it ought to be very carefully considered before we finally recognise a large and growing Income Tax as one of the permanent taxes to be levied in this country. It is agreed, I think I may say, in all quarters of the House, that we desire so far as we can, to levy taxation in such a manner as that the burden of the taxation shall fall upon the shoulders of the people of the country in proportion to their capacity to boar the burden, and the problem we have to solve where we have large sums to raise is how to raise those sums in such a manner as that the burden shall be distributed according to the capacity of the people to bear that burden. It is said that the Income Tax as it is proposed by the present Budget will place the burden, so far as it is a burden of Income Tax, on the shoulders of the rich who are able to bear it. I venture to doubt, and very seriously to doubt, whether a permanent Income Tax, and especially an Income Tax at a high figure, docs really place the burden upon the shoulders of the rich and upon the shoulders of those who are best able to bear it. We must remember in this connection that all Income Tax is derived from one of two sources so far as this country is concerned. It is derived either from investments abroad or from business of one kind or another in this country. It does not matter whether a man is a landlord or what he may be, his income in this country is derived from one or other of those two sources.
    7.0 P.M.
    We have got to see, first of all, how that burden will fall and upon whom it will fall. Take, first of all, the tax, so far as it is levied, upon businesses in this country. I do not know whether the Chancellor of the Exchequer had considered this point—that to-day, and every day in increasing numbers, you find that manufacturers and traders are treating the Income Tax as one of the standing charges in connection with their business. You will find, and I have seen it myself over and over again, that instead of its being regarded as a tax which is being paid by the manufacturer out of his profits, it is treated as a burden upon his business and to be paid out of the business before any profit comes in. In increasing numbers that is being done in
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    this country, and men are treating the Income Tax and putting it in their account books as a permanent charge upon their business. If it becomes a permanent charge upon a business, it means this—that the manufacturer or business man does not pay that Income Tax. He gets his profit after that Income Tax has been paid, and the Income Tax, just like any other outgoing, such as rent and rates, is treated as an outgoing and a standing charge on the business. So that when you impose that tax upon all the men engaged in one particular trade, so that every man in that trade has that burden to bear, and every man in that trade treats that burden as a burden on his business, then that tax is inevitably passed on to the consumer. It is just like all the other expenditure, just an expenditure in the business which must of necessity be passed on to the consumer. When you hit every man in the trade with the same burden, competition in that respect ceases. Every man in the trade has to discharge that burden, and he passes it on to the consumer as a trade charge by increasing the cost of his commodity. If that is so, the more carefully you examine the question and the way in which Income Tax is being treated to-day by many business men, the more you will realise that, instead of Income Tax being a burden upon the rich man and the trader, the burden is passed on to the consumers, who to a very large extent are the working classes of the country. You are not placing the burden on the right shoulders. We all want to place the heavy burdens upon the shouders which are able to bear them. By this means you are not doing it.
    Mr. J. SAMUEL: How are you going to do it?
    Mr. H. TERRELL: That is another question. There are many ways in which it might be done. I am only submitting, quite uncontroversially, that you are not doing it by this means. The more a tax is garded as a trade charge and passed on heavier it is, the more that tax will be regarded as a trade charge, and passed on to the consumer. That is a very serious matter which ought to be considered by the Committee, and particularly by the Chancellor of the Exchequer, when we are asked to make this heavy tax permanent. Let me ask the Committee to consider the tax so far as it is to be levied upon incomes derived from investments abroad. The

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    Chancellor of the Exchequer told us that everybody was to be made to make a declaration of his income. Hon. Members will know that the great majority of investments abroad are on bearer securities. In foreign countries bearer securities are almost universally used. A man invests his money on bearer securities, to which are attached coupons giving him the right to the dividends. Those are bearer coupons, and can be transferred from hand to hand. A man can have those coupons collected abroad, or, if he likes, he may sell the coupons abroad and never collect the dividends at all, the amount so received being transmitted to him by bank draft. You have no possible means of investigating the source of that draft, or of checking whether it is income or not. It cannot be taxed at the source, because the source is a foreign country. You have to rely on the man's declaration, the accuracy of which you have no means whatever of checking. You are putting a premium on dishonesty and an extra burden upon the honest man. It is all very well to say that you are dealing with honest people. How many men are there who are not honest? How many men are there who are prepared to get the better of the Chancellor of the Exchequer if they can? How many are there who are not prepared, if they can, to devise some scheme to evade Income Tax and other taxes?
    It is no use pretending that everybody is so strictly honest that he will make a full disclosure of his income when he knows that a great part of that income cannot be traced at all, and that if he chooses to omit the income derived from foreign investments he can never be found out. How many men do you think will avail themselves of that knowledge to make declarations which are not strictly accurate? I venture to say that there would be a very large number. I do not know if hon. Members observed the other day that the Financial Secretary in Berlin devised a scheme whereby he gave to all men who paid a certain tax promptly a clean sheet as to errors in previous returns as to their income, and he found a tremendous number of people rushing to pay the tax. That was in Germany. Are we more honest than they? And have we not a great many Germans in England? Are there not many Germans in England who ought to pay Income Tax? Would they pay Income Tax on their investments in Germany? Do you think
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    that Americans will pay Income Tax on their investments in America? Plow are you going to get at them? The Chancellor of the Exchequer in Germany got at them by offering a bribe, and it was then that they disclosed how they had cheated the revenue for years past. The more easy you make it to cheat the revenue, the more surely will the revenue be cheated. The more certain people are that they cannot be found out, the more certain it is that they will defraud the revenue. This is a scheme by which you will put a premium upon dishonesty, because you will be telling a man that in regard to a very large percentage of his income, if only he has the courage to make a declaration which is not accurate he cannot be found out. You are trusting a great deal too much to an honesty which does not exist. You will find that a great deal of this Income Tax which ought to be paid by the rich is not paid, and you will have to put a corresponding increase upon the honest people in order to make up for the deficiencies of the dishonest. These are considerations which I submit ought to be borne in mind. After all the Committee is supposed to be constituted of practical men, not of theorists—practical men who know the practice of business, and who can realise what will happen in actual life if a particular system is adopted. The more we consider the question the more we shall realise that, if this Income Tax at a high figure is to become one of our permanent sources of revenue we shall be encouraging, to a very largo extent, the defrauding of the Exchequer.
    I had hoped that this year we might have had from the Chancellor of the Exchequer a suggestion that the law relating to Income Tax would be codified and so reframed that ordinary business men would be able to understand it. As the law exists at present the principal Acts are, some of them, over sixty years old, and those are framed upon Acts over a hundred years old, and they are based upon a state of affairs which existed a hundred years ago, when the sources of income, business concerns, and the ramifications of daily life, were totally different from what they are to-day. These Acts have been patched from time to time, with the result that I venture to say that not even the Chancellor of the Exchequer himself, nor any one of his permanent advisers, can say that he is perfectly familiar with the law relating to Income Tax, or could be cross-examined on the various

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    questions arising therefrom. It is the most confused mass of legislation you can possibly imagine. That is shown by the fact that in the Courts today you constantly have questions arising as to the true construction of these multifarious Acts, questions which come before judges who, although particularly experienced in matters of taxation, cannot make up their minds, but differ as to the true construction. When you have Acts which impose a very heavy burden upon people, and when you have that burden regarded as permanent, the least you can do for the man on whom you impose that burden is to put the legislation by which it is imposed in such a form that he can understand it, and arrive with some degree of certainty at what its true construction is. I have referred to this matter on a previous occasion, and it has been referred to over and over again by various other Members, but nothing has been done. The result is that to-day men often pay a tax to which they are really not liable, and equally, often men do not pay a tax to which they are liable. They make their declarations perfectly innocently, believing they are giving all the necessary information and declaring everything that they ought to declare, simply because they are unable to understand—and no one can really understand—all the ramifications of the Income Tax Acts. I suggest that one of the first things we ought to do before we impose this great burden upon the people and make it a permanent charge is to put the law into language which can be understood by the people upon whom that burden is placed.
    Mr. WEDGWOOD: I am afraid that I am one of those theorists to whom the hon. Member opposite (Mr. H. Terrell) referred, but I am glad to think that on this occasion the theorist and the practical man of business can find themselves on common ground. The hon. Member opposite spent a good deal of his time proving that a tax upon capital was paid by the men who used the capital. That is a great discovery for hon. Members opposite to make. I think it is perfectly true. Whether you tax goods, or corn, or anything else produced by man, the article so produced is dearer by reason of the tax. If you tax capital by an Income Tax or by Death Duties, that tax is, in the long run, transferred to the consumer. It is the user of the capital who has to pay more for its use. The Committee knows perfectly well
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    that the tax upon the employer under the Insurance Act will very rapidly pass on to the consumer. If you tax capital the consumer pays the tax. I disagree entirely with my hon. Friend the Member for Blackburn (Mr. Snowden) in his belief that only a small proportion can sift down to the working classes. The working classes in the long run pay all the taxes of this country, because they produce the wealth of the country; obviously, therefore, that part of wealth which is taken in taxation must come cut of their pockets. The hon. and learned Gentleman who has just sat down made this statement, which I think, as a practical man, he will ultimately see must be wrong: he said that not only do taxes on capital add to the business charge and add to the price of the thing produced, but that rent was treated in the same way. If he considers, he will see that that is not so. All manufacturers are not paying the same rent, although they are all taxed equally on their capital. A manufacturer with a good site pays more than a manufacturer with a bad site. It is, then, because a tax on rent cannot be transferred to the consumer that I prefer a tax on rent to a tax on capital.
    That brings me to a point which I wish to raise on the Budget. The right hon. Gentleman the Member for East Worcestershire (Mr. A. Chamberlain), speaking yesterday, pointed out to us that there was to be long-promised readjustment of Imperial and local taxation. He said that that readjustment, that long-promised readjustment, was to be from personalty to realty. I venture to dispute that. I thought all along that the promise was that it was to be from realty to realty: that the question was whether the ratepayers should benefit by a general tax levied upon property so that property-owners as a whole would not be worse or better off by the change. The doctrine brought forward by the right hon. Gentleman the Member for East Worcestershire is not that there should be some readjustment between the rates and taxes on property, but that the whole corpus of the tax payers of the country should pay upon personalty, in order that that money so paid should be transferred to the relief of the rates of the owners of real estate. Against that I want to enter a very emphatic protest. I ventured to interrupt the right hon. Gentleman—I hope in a courteous manner—and he said I was the solitary exponent of that view. If that is

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    really the opinion of any hon. Member opposite, I should like for one moment to refer them to the Report of the Royal Commission of 1901, a Report signed by two heads of the Treasury Department, Sir George Murray and Sir Edward Hamilton. Discussing exactly a similar point, whether relief should be granted to the ratepayers at the expense of the general taxpayers, they said:—
    "Unless the owners of ground values are to be relieved at the expense of the taxpayers, a course which none would advocate, it seems most necessary to accompany the increase of subventions by the imposition of a site value rate,"
    Exactly what the Government proposes. I refer that to the right hon. Gentleman, who says that I am quite alone in holding this extraordinary view. I will give him the opinion of one of his predecessors in the leadership of his own Party, one of the greatest statesmen who has ever sat on the Conservative Benches. I speak of Lord Goschen, the most distinguished Chancellor of the Exchequer on the Tory side. Now, Lord Goschen dealt with exactly the same point when he, as Chancellor of the Exchequer, was faced by some petitions for the relief of the ratepayers at the expense of the taxpayers. They had been hurled at his head. Sir Julien Goldsmid wrote to him, and Mr. Goschen replied as follows:—
    "It has been held, and correctly held, as an axiom, that rates on land constitute a kind of rent charge upon those lands for the public benefit. Yon, Sir, ignore these hereditary burdensaltogether. Your plea includes the relief of the owners of the land from burdens which they have borne for centuries, which have entered into the selling values of those lands"—
    That is an important point—
    "and have been taken into account in every transaction connected with them."
    If, therefore, according to Lord Goschen, you make a Grant at the expense of the taxpayer for the benefit of the ratepayer, you are thereby conferring upon real estate owners, who are relieved of their rates, a benefit equal to twenty or twenty-five years' purchase of the amount of the rates remitted. You are conferring a benefit upon them in the immediate increase of the selling value of the land at the expense of the general taxpayers of the country. That seems to me an unjust thing to do. Mind you, I draw the attention of the Committee to this, that eighteen years ago it was regarded as an unjust thing by the present Chancellor of the Exchequer, and by the entire Liberal party, because it was one of the main arguments used against the Agricultural Rates Act of 1896. It was said that we were
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    taking from the pocket of the taxpayer money for the relief of agricultural rates, that the money so taken off the rates was added to the rent, and that the landlords were thus able to sell their land by so much more, simply because of that dole from the pockets of the general taxpayer.
    The position we find ourselves in this year is a somewhat peculiar one for the Liberal party. We have again this year a large dole from the taxpayers' pockets for the benefit of the ratepayers—for the benefit of the real estate owners, because, make no mistake, although it may be the tenant-holder who pays the rates, it goes on the rent. It is a benefit to the real estate owners of this country. Are we justified in making that payment for the benefit of the ratepayers of the country at the expense of the taxpayers? We can only justify a readjustment of that sort when the money taken for the dole from the taxpayer is taken from the same real estate owners who get the benefit. Therefore, we on these benches have always maintained that the readjustment between Imperial and local taxation must be dependent upon a tax upon land values, a tax upon real estate, and that the money so raised might be very legitimately used, just as Sir George Murray and Sir Edward Hamilton said, as a subvention towards the local rates. Unfortunately, we find ourselves in this cruel position at the present time—the Government has decided to give their dole to the land-owners just as the Conservative party in 1806 decided to give their dole at the expense of the ordinary taxpayer. They have made this concession: to give the dole on conditions which they believe will satisfy my hon. Friends who sit on these benches, namely, that the relief so given shall be given as relief to rates upon improvements only and not on land values.
    I am not quite clear that, even distributed in that way, that this dole to the real estate owners is not, in fact, a direct capital benefit, but I would urge very strongly upon the Chancellor of the Exchequer and upon any Members of the Government that if they really contemplate making this dole from the taxpayers to the real estate payers of this country, without allocating it specifically for the relief of rates for improvements, then they will be committing a very great injustice, and they will find opposed to them all those Liberal economists who believe in the doctrines which are taught by the old

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    Treasury officials just as much as by Professor Marshall or by Professor Sidgwick. We believe that you are not justified, in order to satisfy the temporary or even permanent clamour of the ratepayers, in giving this dole, when you know, as we know perfectly well as sound economists, that that money is going into the pockets of the real estate owners. The Government have brought forward this scheme. They propose to use this two and a half millions, I think it is, for the relief of rates upon improvements. They are going—1 welcome this particularly—to make a new centralised valuation which shall get rid of all those inequalities which we who work on local governing bodies are so well acquainted with at the present time. They are going to have a new valuation, and are going to separate the value of the improvements made from the value of the site. They are going to use the moneys in this Grant to relieve the burdens of rates upon the improvements.
    That is not all. They are coupling this dole to the real estate owners with a stipulation which docs make this Budget thoroughly palatable to those of us who sit on these benches. They say that, in addition to this dole, they are also going to give the local authorities the power of levying certain of their rates upon new site values; so that, after all, real estate owners will not get a very great advantage from this large dole from the taxpayers without having to look forward at some future time in the case of certain localities—for I fear there will only be a few local authorities which will start on these lines—to that pressure which will surely force land into better use, and bring down the price of land in the locality by increasing the supply available for use Those are the conditions which have been brought forward in this Budget. They are conditions which will secure an enthusiastic support, not only of the land taxation group in this House, but of many of the earnest Liberals in the country who have been long waiting for a move in this direction.
    But I want to know where I am. I think many of us want to know that. We have seen in this morning's "Daily News," whose political information is now supplied by Mr. Nicholson, formerly of the "Times"—his information was always pretty authentic when it appeared in the "Times," and I see no reason to suppose it is less authentic now—that the Govern-
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    ment have decided not to have an Autumn Session, and that the Eating Bill, and this proposal to allocate the dole to the rate-payers so that it shall be a relief merely to the rates on improvements is not to pass; and the Liberals who so wickedly obstructed the Revenue Bill last year are seriously warned that however disappointed they may be at the loss of their Rating Bill, they will have to swallow the Revenue Bill, and make-the best of the business. I do-not know how far Mr. Nicholson's matter in the "Daily News" may be-accepted as inspired, but I can assure hon. Members that we on these benches do not swallow things like that. Our position is perfectly clear. If there is no Rating Bill and Valuation Bill which will give the local authorities the power to-use this dole as a relief of the rates upon improvements alone, then we will do our best to prevent there being any dole, and to prevent there being any other Liberal legislation till we get our way. [HON. MEMBERS: "Oh, oh!" and "Alone!"] Well, I think alone I can do something.
    We, the Radical party of this country, say. If the Government are going to drop these proposals, if they are going to postpone them till next year, as has been asked by the hon. and gallant Gentleman opposite, if they are going to postpone this rating question till next year, we shall consider that we have been betrayed in this matter. Observe the only possible way of getting this rating scheme through is to couple it with this dole, because only such a way will the House of Lords tolerate for a moment, and only in such a way can it got through the House of Commons. If we are going to be told that this dole-is going to be made, and that the ratepayers are to get their money as a temporary scheme for this year only, and that our Kate Bill is to come on next year, we know very well that once the jaws of the ratepayers are closed over the dole it will be impossible to open them. Vested interests will be created, and the landlord will have increased the value of his property, and it will be very difficult then to get a rating scheme passed. I hope there-has been no change in the Government's plan. I heard with great pleasure what the right hon. Gentleman the President of the Local Government Board stated, and I trust there will be no change in the Government's plans, and that we may go straight through with this Budget, as

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    originally laid before us by the Chancellor of the Exchequer, and that we may get our rating scheme and give to the local authorities that home rule in taxation which they have been clamouring for for some time, and which they will use to advantage when they get it, I am very much obliged to the Committee for hearing me. I hope this Budget will be as the Chancellor of the Exchequer stated in his speech, a Budget of great promise for the future. That depends I think upon the carrying of this rating scheme and the general valuation of the land. Otherwise I think that whether we have a Budget of £210,000,000 or a Budget of £190,000,000, we shall still see the workers of this country exploited for the benefit of their masters, and as the hon. Member for Blackburn laid down, all the expenditure of money upon education, on improving the health of the people, or for improving their work, will be used by people of the employer class, and the working classes will remain as they are.
    Mr. MITCHELL-THOMSON: I hope the Committee generally are impressed by the solemn threats which the hon. Gentleman who has just sat down held out to the Government. It is not the first time that he indulges in threats of this kind. It is not the first cave that the hon. Gentleman has tried to lead, but I am bound to say, of many of these caves in the past we have had the unpleasant experience that when a little pressure was applied they always fell in. He is prepared to stand as a solitary figure, if necessary, and for that. I give him credit. I think that even in these circumstances if his opposition were pressed to the point he indicated in his speech it is not unlikely that this Bill might be defeated. I should like to say one word with regard to the speech of the hon. Member for Blackburn (Mr. Snow-den). I hope the Chancellor of the Exchequer was impressed with the certificate he got from the hon. Member for Blackburn, that his Budget was quite upon the right lines. I wonder what Mr. Gladstone would have thought if he were present on the Treasury Bench on hearing one of the leaders of the extreme wing of the Socialist party congratulating the Chancellor of the Exchequer upon the fact that his Budget was proceeding upon quite the right lines, and that the only thing wrong about it was that it did not go far enough. We have marched a long way since Mr. Gladstone's time, and since he was regarded as a financial authority, and his
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    place is now taken by the present Chancellor of the Exchequer.
    The hon. Member for Blackburn dwelt at some little length upon expenditure upon armaments. I have only a word to say with regard to that. He mentioned the figure of £100,000,000. I do not quite know how he arrived at the figure of £100,000,000, but taking £100,000,000 in relation to the total trade of this country, internal and external, it is a premium of less than 1½ per cent. for insurance. And if you regard it only in that light, and I think it is the true light in which to regard it, it is not an unreasonable amount for this country to pay. There is one point upon which there is a considerable measure of agreement in regard to the Chancellor's proposals, and that is, that hon. Gentlemen on both sides, more or less, I think realise that the time has come when the Treasury ought definitely cease to be one of the great spending departments. It is a thoroughly vicious system. It is diverting the Treasury and the officials of the Treasury from the uses for which the Department was instituted, and I should be very glad indeed to think that one effect. of the right hon. Gentleman's Budget was that now at last the Treasury should be once more put back into its proper position, that of watch-dog upon the different Departments to control their affairs and not to be, as it is at the present moment, one of the greatest, if not the greatest, of the spending Departments. I have another word to say about the speech of the Chancellor of the Exchequer. He said a good deal, and his supporters have echoed it, about the great advancement this Government has made as regards the repayment of debt. The right hon. Gentleman. when he spoke about the great provision, for the repayment of debt which the Government has made, never reminded the country or the Committee that they have had the singularly fortunate experience of enjoying the best trade, coupled with complete peace. We have lived, indeed, in piping times of peace, and not only have we lived in piping times of peace, but we have lived in a lime when the price of Consols has been lower than ever before, and when therefore the opportunity for the repayment of debt has been easier than ever before, and when the total amount which could have been repaid by any given sum has been greater than ever before.
    Not only that, but the right hon. Gentleman has been singularly fortunate in the large surpluses he has enjoyed, which

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    have gone to swell the Old Sinking Fund, and so enabled him to make further repayment of debt. But that is not a thing for which the right hon. Gentleman ought to take credit. If you get a large accretion under the Old Sinking Fund, it is much more likely to mean bad budgeting. The right hon. Gentleman has raised these surpluses at a time when a large burden of taxation was not required. Trade was extremely good, though some of us thought it was not going to be so good. I think we are all agreed it is likely to have passed the climax now. Still that has gone to swell the Old Sinking Fund, and now the large reduction of debt has largely been due to good trade in swelling the Old Sinking Fund What he is entitled to take credit for is not the operation of the Old Sinking Fund, but the operation of the New Sinking Fund. The New Sinking Fund is a fund which the Government of the day deliberately set aside for the purpose of making reduction in the national indebtedness, and it is therefore, by the provisions of the New Sinking Fund that he ought to stand or fall.
    Let us look at the provision that was made during his time of the Exchequer in regard to the New Sinking Fund and compare it with former years. I suggest that the way in which an ordinary man would construe this if it were a question of his own private affairs would be to see how large a proportion of his income he devoted every year to the extinction of his liabilities—in other words, what proportion the amount the State sets aside for the reduction of national debt bears to the total revenue of the country. I have taken periods that usually happen to have had changes of Government simply for the sake of making comparison during the last two generations. Here are the figures. In the year 1886–87 the proportion of national revenue set aside from the reduction of debt in the New Sinking Fund was 7.2 per cent.; in 1892–93 it was 8.3 per cent.; in 1895–96 it was 7.9 per cent.; in 1898–99 it was 6.1 per cent.; in 1905, even when we were still paying off what my right hon. Friend rightly called the liquid liability of the war, it was 5.7 per cent.; and in this year the right hon. Gentleman proposes to set aside, and takes great credit to himself for doing so, 3.7 per cent. And not only that, but in the earlier years of which I speak the National Debt, if it happened to be suddenly increased by an unforeseen emergency, such as a great war, had always behind it that grave reservoir now
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    taken away, the reservoir of the Income Tax, as well as the reserves of income from the. Death Duties. And now, not only has the relative provision and the proportion of our income set aside been diminished by the right hon. Gentleman, but the reserves behind incomes for emergency has been steadily drawn upon by increasing the Death Duties, the Income Tax, and the Super-tax. I want to pass on quickly, but I should like to say a word or two with regard to the rates he proposes. I do not think it is much good talking about the Chancellor's proposals because we do not know what they are. We will be told at the close of the Debate, I suppose—that is the usual sort of way the Government conduct their business in these matters—the real ground which we ought to take when speaking of this rating. I do not know whether we shall be told the date on which the right hon. Gentleman proposes to introduce his proposals.
    Mr. LLOYD GEORGE: I certainly do not propose to make any statement of the nature of the proposal. I understand that I should be absolutely out of order if I did so. This is a Finance Bill, and, after all, you must have provision for the purposes of making clear the allocation of funds. This is not the statement I propose to make, and I gather from the ruling of the Chair that I should not be in order if I did so.
    The CHAIRMAN: I think that is quite so. I understood the hon. Gentleman to ask about the Bills to be produced after the statement. Of course, that could not take place upon this Debate.
    Mr. MITCHELL-THOMSON: That I quite agree. But I understand, from what the President of the Local Government Board said, that the Chancellor of the Exchequer was actually going to make that statement in this Debate. I now understand he will make it at an early-date; but I repeat, until we have this it is impossible for hon. Members to talk about the details of the proposals. I only say that, so far as I understand it, I think it is very doubtful whether in districts where there is agricultural land and no industrial centres, they would have the beneficial effect the right hon. Gentleman suggests. And as regards the relief of rates in urban areas, I agree to a certain extent with what has been said, that you have an opportunity of compounding in this country; and now that you have the

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    principle of compounding, I think it very doubtful, as things stand, that this relief of rates will ever filter down to the tenants. I think it is possible it will be anticipated by the middlemen, not by the estate owners, and I think it very doubtful whether in the long run it will reach the tenants. The right hon. Gentleman says that the valuation is nearly done, and that it will be most useful. As a matter of fact, the valuation in Ireland has not yet begun, and the work of the valuation done in the country is no use for the purposes of this Bill. What you want is a valuation based upon a survey of the whole country, plot by plot, and that is not the valuation which is going on. As I have said, the valuation has not yet begun in Ireland.
    Mr. DILLON: There is Griffith's valuation.
    Mr. MITCHELL-THOMSON: I do not know whether the hon. Member suggests that Griffith's valuation is going to be looked upon as satisfactory for the purposes of this measure. If that is so, why have a new valuation in reference to this Budget. I do not think I should be in order in discussing the effect the provisions of this Budget will have upon the provisions made for the better government of Ireland in another Bill. When the time rouies I do not think it will be difficult for me to show from that point of view that a great many of the financial proposals in that Bill, in the light of these new Budget proposals, become perfectly ludicrous shams. With regard to the Income Tax, I think there is one aspect of the increases which ought not to escape the attention of the Committee, and it is that they will undoubtedly operate as a very considerable bar to the investment of foreign money in this country. This steepening of the rate of the Income Tax will have that effect, and that is a matter of considerable importance to a country which is the commercial centre of the world. My hon. Friend pointed out this afternoon the cumulative effect of the Income Tax and Death Duties upon an individual as a burden very much heavier than the Chancellor of the Exchequer would lead us to believe it was in the speech in which he introduced the Budget. I have worked out a calculation converting the Estate Duty into terms of Income Tax. In reply to what the hon. Member for Blackburn (Mr. Snowden) said, I may say that it was the contention of Sir William Harcourt that this tax was properly to be regarded
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    and justified only because it was a deferred Income Tax, and as such it has always been treated by every financial authority, including Sir Henry Primrose.
    I have worked out the figures regarding it as a deferred Income Tax on all incomes from £150 up to £100,000, and in order to arrive at a basis on which to work it out, I have capitalised the income at 4 per cent., and I have assumed that the age of a man wishing to make provision for Death Duties was forty. I know Sir Henry Primrose in his evidence before the Royal Commission put the age at forty-three, but I have put it at forty, because that is nearer middle age, and it has provided me with a figure which I confess is easier to work out. Working out the figures on this basis, one gets some very surprising results. The total amount of tax on this basis which a man with a £150 is going to pay is at the rate of 5. 4d. in the £. In the case of a man with £300 a year the rate is 14.22d. in the £. [An HON. MEMBER: "No."] I am talking of a man with £300 a year, who would be asked to pay a tax equal to 14.22d. for each pound of his income. A man with £500 a year would have to pay 19.58d., and so you go on up to what have been called the big fish at the top, when you reach nearly 5s. 5d. in the pound in an extreme case. When the hon. Member for Blackburn talks about multiplying this by ten or twelve, it is evident that you cannot possibly multiply it by more than four. In fact, you could not multiply by four, because you are already taking from a man with £100,000 nearly 5s. 5d. in Income Tax. I want to call attention to the way in which these proposals press hardly upon the man with a comparatively small income of something like £700 to £1,500 a year. A man with £710 a year is going to be asked to pay at the rate of 2s. 0½ the £. It is all very well for the Chancellor of the Exchequer to stand up here and talk about taxing the rich and getting his income from the very rich, but in this matter he appears to have shot at a hawk, and he is extremely likely to kill a pigeon. The right hon. Gentleman is likely to hit hardly that class who ought to be hit least hardly, because these are generally men with families and very large liabilities, and a position to keep up. The successful working man earning a big income as an artisan does not have the drain of keeping up appearances which fall upon this class, and I suggest in the light of the figures which I have quoted, which I shall

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    be very glad to let the right hon. Gentleman see, that the burden is really heavier than these people ought to be asked to bear.
    Mr. T. E. HARVEY: Is the hon. and learned Gentleman referring to earned or unearned income?
    Mr. LEES SMITH: Surely all these calculations refer to people living on their private means?
    Mr. MITCHELL-THOMSON: That is quite true, but these proposals draw a most unfair distinction between unearned and earned income. The hon. Member forgets that these people are living on their own savings. I wish to say a word or two about the general basis of the Death Duties. I know that in this matter I am rather like a voice crying in the wilderness. I have spoken about it before, but personally I believe that the whole of these Death Duties are calculated upon a wrong basis, which I do not think is a fair one. The basis adopted is an arbitrary percentage upon the total estate of the man who leaves the money, and that operates most unfairly and inequitably in many cases. Take the case of a millionaire who leaves a small legacy of a £1,000 to his housekeeper. That unfortunate housekeeper is called upon, under these proposals, to pay 20 per cent. in Estate Duty and 10 per cent. Legacy Duty, and she only gets £700. Suppose the case is reversed. Suppose the housekeeper, having no other relatives, leaves £1,000 to the millionaire. The millionaire gets off without any Legacy Duty, and with the lowest possible Death Duty. Therefore, there is something wrong in this basis, and I suggest that the right hon. Gentleman and any future Chancellor of the Exchequer should consider whether it is not possible to devise some scale by which Death Duties should fall in part on the legacy and part on the income of the man who receives the legacy. It would be possible to devise a scale based on the amount of the legacy, and I think it would be perfectly fair that a part should be based on the income of the man who is going to receive it. I think that will be much fairer than the present basis. My last observation is that whatever else the right hon. Gentleman's Budget has done, in my opinion it has made it inevitable that within a year or two, or a few years, a tariff, even if it be a tariff for revenue purposes, is absolutely certain to come.
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    This is the end of an old song, and if this is the best which the present fiscal system can do in finance, it is a condemnation of the present fiscal system, and it is very likely to be the end of it.
    8.0 P.M.
    Mr. DUNDAS WHITE: The last speaker has drawn a vivid picture about the taxes which a housekeeper would have to pay who inherited £1,000 from a millionaire. May I remind the Committee of what is, after all, a matter of common knowledge, that the general practice of testators is to leave legacies free of all duty, and those duties are generally paid out of the remainder of the estate. At the conclusion of his remarks the hon. Member said that we have now arrived at a state of things when we should have to adopt something else to raise revenue, and he suggested that it would be some system of tariff, even for revenue purposes only. We are all agreed that this necessary increase in taxation is making people realise what the position is, but I think the conclusion we should draw is somewhat different from that put forward by the hon. and learned Member opposite, and it should be borne in mind that a very great proportion of the taxes we are raising are being devoted to the relief of distress and poverty-in various ways. We want to go beyond this. We want to go beyond this assistance and help given to one and the other, and we ought to use the engine of taxation as far as we can to open up the resources of the country to the people themselves, and thus cut at the root causes of poverty and distress which unfortunately are still so painfully evident in our midst. The matters dealt with in the proposals now before the Committee which appealed to me most are those which deal with the relation of this Budget to the land. They are very important and they may operate in a somewhat different way to that to which my hon. Friend the Member for Newcastle-under-Lyme (Mr. Wedgwood) referred. There is, in the first place, the proposal that in a Revenue Bill, as I understand it, there is to be some definition of site value different from anything we have yet had, and which will be suitable, we hope, ultimately as a basis for rating and taxation. I need hardly remind the Committee that some such proposal was before us in the Revenue Bill of last year. We wish it had been possible to pass that Bill in the form in which it was brought in by the Chancellor of the Exchequer. Speaking for those with whose views I sympathise, I

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    know I can say that we would have been glad to have passed that Bill as it was brought in. Indeed, we gave it our support on the strength of Clause 11, and it was not until we found, in deference to the hostility of hon. Gentlemen opposite, that Clause would not be proceeded with in anything like its then form, that we had, ill deference to fundamental principles, to take the line that, if that Clause was to be cut out, the rest of the Bill would have very great difficulty in passing. We know that reform is necessary, but this is the greatest reform of all, and I venture to take this opportunity of pressing upon the Chancellor of the Exchequer, if a Revenue Bill is to be brought in, that there should be in it first and foremost some new definition of site value which will enable the valuation of property to go on, and which will provide us with a valuation which we can at least use for the rating and taxation of land values.
    We have been told that there will be some provision which will enable us, if possible, to rate land values. We are also told that there is to be some provision, some Grant, in relief of the rates. I myself regard with very great suspicion anything in the nature of a dole, because I know these doles do not really go to the people we want to help. They either go into the pockets of those who own the land or, as the hon. Gentleman, speaking from the opposite benches said a few moments ago, into the hands of some intermediary or middle man. I observed, when the Chancellor of the Exchequer was describing how this would work, that he took the case of three properties that were improved to various degrees, the last of them not being improved at all. He stated that this man would get no benefit whatever from the dole. I venture to doubt whether even that man would get no help from the dole. I would like to tell the Committee why. He may be using the land, or he may be letting it at a very low figure, but you may take it that the reserve price he puts upon it will represent a value far above the valuation at which the land is rated. He can get a certain price now, but, supposing there is this Grant in relief of improvements, then improvements can be got more cheaply. Who gets the benefit? Not the man who makes the improvement, but the man who has the land, because he is enabled to raise his price and hold up the land at that higher price. Indeed, I would like to call the attention of my right hon.
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    Friend to the fact that the Increment Duty in some cases has worked out precisely in this way. I have been going about Scotland and various places, and in several of them I have been told this. I may say, just to make my meaning clear, that in Scotland a system prevails by which if you want land for building purposes you have to feu it. You take it on a perpetual lease. There is generally a reserve price on the land. We call it the reserve feuing price, but we ought more accurately to call it the reserve feu duty. In one particular town, a residential town, I have in my mind, the feuing price of the surrounding land was about £12 per acre. Then the Increment Duty was imposed. That land was being treated as agricultural land, and, if there were any transaction there would be a considerable increment. The landowner promptly says, "My feuing price is the same as before, but, if you want to feu that land from me now, you must pay the amount of the Increment Duty as well," The result is that people who want the land have, in fact, to pay more for the land than they had before. That will be the way with all these fancy duties and all the doles until we go to the root of the matter and say to the landowner that he is to contribute to the needs of the community according to the market value of the land, whether he uses it or not. He may use it or he may not use it; he may let it or he may not let it; but it is for us to see that as long as he holds that land he shall contribute to the needs of the community according to its market value. If we do that we shall break down the monopoly and make land more available, and reduce rents and prices to their natural level; but, if we fail to do that, these various Grants will be nothing but doles which will strengthen the monopolist interest, and will in the long run stand in the way of that social well-being which it is the intention of those who bring them in to promote. I put that point because it seems to me of the greatest importance.
    There is also a grave danger, if we give this dole to which I have referred, that the people who have obtained the dole will find their position strengthened, and when we ask to have the reform of rating we may be answered, "This year, next year, sometime, never!" In these circumstances, I do submit that the two things should go together. I do not like the dole at all, but, if we are to have the

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    dole, we would press the condition upon my right hon. Friend the Chancellor of the Exchequer that the reform of rating should go hand in hand with the dole. The dole, in other words, should be put into the Bating Bill, and I would like to put it as the last Clause of the Bating Bill, so that, if that Rating Bill did not pass, then the dole would not pass either. We should, in fact, adopt the simple principle, "No reform of rating, no dole." It is this reform of rating we are seeking; it is this reform of rating for which we are asking; and I do not say merely a reform of rating, because my hon. Friend the Member for Hanley (Mr. Outhwaite) is as strong on the taxation of land-values, and so are we all. This is the time for these things.
    I put it to the Chancellor of the Exchequer that we should look forward. An hon. Gentleman speaking from the benches opposite—and he was not the only man who made the remark—suggested that our national prosperity had reached a very great height, and that the years of plenty might possibly be followed by years of less plenty and of comparative slackness of trade. If that takes place there will be a great increase of poverty in our midst, and we maintain that a far-seeing Ministry ought to look ahead, and should, even for that reason alone, move to-day in order to secure those fundamental reforms which will make it easier for the people of our country even if trade should go down. There is one other point I would like to put. We have always been impressed with the difficulty, not only of getting these measures through this House, but also of getting them through another place. There is no doubt whatever that anything in the nature of doles to the landed interest will have no difficulty in securing the majority assent in another place. But what will happen when we come to our reform of rating? Then we may have very considerable difficulty after the proposals leave this House. That is an additional reason for linking up these two together, for maintaining that they must go hand in hand, for saying, if the rating reform is not to be carried out, that the dole is not to be granted, and for acting on that rule which couples redress with supply, a rule which has been so closely bound up with the progress of our liberties.
    Mr. NEWMAN: It was obvious that this Budget of 1914 was going to make a
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    big draft on our pockets, but it was not quite so obvious to the Members of the Committee, particularly on the other side of the House, that it was going to make an enormous draft on our time, and, it may be, on our tempers. That dawned upon Members opposite, with the result that a whisper went round that we were going to have an Autumn Session. That has been dealt with. I understand representations have been made, and that we are to have no Autumn Session. Yesterday we had from the unofficial Chancellor of the Exchequer on the Back Benches opposite, the Member for Northampton (Mr. Chiozza Money), a curious and ingenious suggestion. Apparently we were to have some sort of interim Bills, or half Bills; some sort of payment on account. An interim dividend was to be paid to the ratepayers, and later on the whole measure was to be put through, or, as the "Westminster Gazette" put it this evening, the money was to be earmarked for certain specific objects. That suggestion might be pleasing to some, of course, but it has not met with the approval of the new Leader of the Radical party the Member for Newcastle-under-Lyme (Mr. Wedgwood). It is perfectly obvious that this is a great and complicated Finance Bill, and it is perfectly obvious that this great and complicated Finance Bill has had tacked on to it a great local government measure which must take a long time to carry out, and long weeks of discussion and careful consideration. Let us remember that, after all, we are here as fairy godmothers to dole out all round to the various municipalities, to every district, a certain portion of relief. There are to be no Cinderellas.
    We are to dole this great mass of money round on certain conditions laid down by the Chancellor of the Exchequer. He certainly laid down some very good rules indeed to guide us in the distribution. He told us that the basis of the ratepayers' relief was to be the greatest proportion of help to the most hardly-pressed areas. Not merely the poor districts, but the districts which have shown the greatest public spirit in carrying out their municipal duties will receive the largest share of the relief. The Grants must bear a direct relation to expenditure, and, lastly, the central Government will insist on an efficient service as a condition of the receipt of the Grants. That, of course, is all excellent. I do not suppose there is a Member of the Committee who could not

    541
    say "Hear, hear!" to those admirable maxims laid down; but, when one comes to consider how they are to be carried into effect, he must see the difficulty of doling this money out fairly to all parts of the United Kingdom. It is to be distributed, not only in England and Wales, but in England, Wales, Scotland, and Ireland. Therefore, it must be obvious that difficulties occur the very moment you begin to think the thing out. I am going to put to the Committee one difficulty. It is a very small difficulty perhaps, but it may work out in an interesting way. These doles are to be paid out on a certain basis, on the "Goschen proportion," as it is called, and of the dole Ireland, with Ulster, will get something over £600,000. The Chancellor of the Exchequer told us that one would be an education dole. In Ireland we have no education rate. Education is run by the parish priest, and it is paid for from Imperial sources. Again, there are no Grants for the police in Ireland. That force is paid for by this country.
    I do not disagree with the "Goschen proportion," and I do not disagree with giving Ireland her nine parts. But when the Chancellor of the Exchequer admitted that Ireland's position presented a much more difficult problem than the other parts of the United Kingdom, I thought perhaps we were going to be told how this scheme of the Irish Grants would dovetail in with the complicated Clauses of the Government of Ireland Bill. I wondered how the right hon. Gentleman would make his proposal dovetail in with Clauses 14 and 21 of that Bill. I want to know on what terms is this Grant of £600,000 to be made for the relief of the Irish taxpayers. Supposing the Finance Bill becomes law before the Government of Ireland Bill, then, of course, one thing is perfectly certain, that, under Clause 14, this £600,000 will be paid absolutely as part of the transferred sum into the Irish Exchequer, and we shall lose all control over it. I would like to know how, if this is going to be the case, the conditions laid down by the Chancellor of the Exchequer regarding the allocation of the Grants, are going to be carried out. He told us that the central Government would insist on efficient service as a condition' of the Grants. He told us, further, that the districts which have shown the greatest public spirit in carrying out their municipal duties, will receive the largest share of relief. Take the case of the Dublin Corporation. How are you
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    going to insist on those conditions with regard to their part of this £600,000. They are, it is said, to get a relief equal to a 9d. rate, conditionally that the money is spent properly. You cannot insist on that condition, for if the money goes straight into the transferred sum, it maybe spent by the Irish Government in any way it likes. It may indeed prove a very big factor in the settlement of the Home Rule question—and we have been told in regard to that that finance is tight-fitting—if you are going to have this £600,000 poured into the Irish Exchequer.
    Again, the Grants, whether for England' or Ireland, are to be coupled with a: highly technical scheme of valuation and with a new rating system. There is to bean assessment of the real value of the property, and the relief to the ratepayer is to go in reduction of the rate on improvements. We are told that the good landlord who has improved his property and spent a good deal on draining, fencing and so on, will get more relief than the man who has spent very little. That is a very fair proposition, supposing you get an honest valuation. But in Ireland we have to eliminate landlords altogether. The landlord is like the dodo: he is extinct. He has gone, and, instead, you have to-deal with half a million of small owners of land, and you will have to see if they have-improved their property, if they have drained the land, and what gates have been put up, or thrown down and burnt for firewood. The hon. Member for Newcastle-under-Lyme (Mr. Wedgwood) made great claims with regard to the valuation. He said that it was almost complete, that two-thirds of the valuation in England had; been written up, and that it would take but a very short time to complete this new valuation for agricultural land. That may be the case in Great Britain. It certainly-is not the case in Ireland, where you have hardly begun your task, and where you will have to send your valuers to all these small owners, who are jealous and suspicious men. I suggest it will be a long time-before you get the valuation complete for Ireland, and before Ireland, on the conditions laid down, will be able to get her Grant. I could raise many more points, but I will not do so. I trust the Chancellor of the Exchequer, when he replies, will tell us exactly how the Government intend to allocate their time with regard to the Bills they are going to bring in. Are we going to be kept here till September, are we to have an Autumn

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    sitting, or are we to have just a small payment on account? Is the Member for Newcastle-under-Lyme to be braved by the Government?
    Sir CHARLES HENRY: I also would like to be informed by the Government whether we are to have an Autumn Session or to sit right off until the end of September. I am afraid, however, we shall have to wait the turn of events. I agree that in this Budget there are several matters which will require great attention and legislation. I see no reason to be dismayed at the expenditure which this Budget has to meet. It is true it is the first time we have had a Budget for over £200,000,000. I am inclined to agree with the hon. Member for Blackburn (Mr. Snowden) that we cannot look forward to any reduction in our expenditure, but must anticipate that, decade by decade, the expenditure of this country will increase. One may take into consideration the fact that the expenditure of this country has not increased in such large proportions of that of other countries. I saw in one of the papers that the national income now amounted to £2,400,000,000. That means that we are faced with a ratio of national expenditure, as compared with national income of about 8 per cent., and it cannot be considered excessive or disproportionate when compared with what it was a generation or two ago. It has been stated by hon. Members opposite that this increase of expenditure, entailing increased taxation, is a menace to capital, but I cannot lose sight of the fact that by far the largest amount which the Budget of this country raises is money that is placed in circulation, and that it finds its way to sources which must ultimately tend to create fresh capital or to replenish old. No one will contend that the prosperity of any country is more secure if its taxation is on a low basis. On the contrary, we have evidence that where countries prosper there is concurrently increasing taxation.
    As regards the proposals which the Chancellor of the Exchequer unfolded in his Budget speech on Monday last, it was generally anticipated by all parties that he would make further demands upon the Income Tax payers. There cannot be any substantial objection raised to that, but I am inclined to think that he could, to some extent, have diminished his demand on the Income Tax payer and avoided increasing the Death Duties to the extent
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    he has done if he had resorted to another method of finding the necessary money. Considerable objections have been raised to his proposals, but no substantial alternative has been suggested as to how the money can be found. I venture to make this suggestion—it may be regarded as an audacious one, and by some financial purists I may be looked upon as running counter to the policy of Mr. Gladstone; but I maintain the Chancellor of the Exchequer would have been fully justified, instead of reducing the Sinking Fund by £1,000,000, in reducing the New Sinking Fund to the extent of £4,000,000, so that it would remain at £5,000,000. I am not overstating the case when I say that during the last ten years the national in debtedness of this country has been reduced by nearer 20 per cent. than 15 per cent. When one takes into consideration the great assets of the country and its great wealth, the amount of indebtedness is fully justified, and there is no reason why it should be reduced at the expense of the taxpayers of to-day in order to relieve posterity of a certain liability. It may be stated that this would have an injurious effect upon Consols. That is an absolutely fallacious argument. It is often the case that when the largest redemption of Consols has been effected. Consols have fallen the most. Even today, at their present price, Consols still hold their place as the premier security, by which I mean that investors are prepared to take a lower return for Consols than for any other Government security, whether it be that of Germany, France, or any of the other leading countries.
    I am rather disappointed that the Chancellor of the Exchequer, with his great ingenuity, has not tapped some fresh source of revenue. I have long held the view that fresh sources are available. In France and other Continental countries revenue is obtained by putting a small tax on the amusements of the people of all classes. The tendency to-day is for people to seek amusement. As people are asked to pay duties on what are called luxuries, so they might properly be asked to pay duties on what might be called their amusements and diversions. I think the time has arrived when the Chancellor of the Exchequer, if he had the courage to do so, should look around and see whether revenue could not be obtained from the race meetings that are held throughout the country. [An HON. MEMBER: "That would legalise them!"] You cannot disguise

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    the fact that racing does take place and attracts large crowds of people, and that a large amount of money is spent in that direction. If the Chancellor of the Exchequer can obtain revenue from cards and from the speculations on the Stock Exchange by means of stamps, no reason can be adduced why race meetings, and the betting transactions in connection with racing, should not be called upon to contribute to the Exchequer. With the present extent and growth of cinematograph shows a small tax could be imposed and a revenue could be obtained which, in the aggregate, would be substantial. With the expenditure that faces us, the growth of which will be perpetual, we must not rely entirely upon the Income Tax and the Death Duties, but must tax fresh sources of revenue.
    I should also like to refer to the inconsistency and intricacy with which we deal with the Income Tax. It is absurd to say that we have a 1s. 4d. Income Tax on earned incomes. We have nothing of the kind. On looking at the White Paper we see that the 1s. 4d. tax on earned incomes only applies to incomes between £2,500 and £3,000. The time has arrived when we should have a proper scale, showing the actual levy made by the Income Tax on the different amounts. If anyone of us is asked what the Income Tax is, to say that it is 1s. 4d., or that it begins at 1d. and goes up to 2s. 7d., would be misleading. It might cause some trouble to the Treasury officials, but I suggest that the time has arrived when the Super-tax should be merged into the general tax. It would ultimately save expense, for at the present time we have two sets of surveyors and Commissioners, and it would be of great benefit and do away with the present objections. There is one other matter I should like to urge upon the attention of the Chancellor of the Exchequer which I brought forward during the passage of the Budget of 1909. Threats were made—although I do not believe people lived up to their threats—that on account of the increased direct taxation—Death Duties and Income Tax—subscriptions to hospitals and different charities would have to be reduced. It is very hard upon those who have to administer the different charitable organisations that they should be confronted with any loss of income on account of taxation. At the present time deductions are allowed in respect of insurance premiums in the returns for Income Tax, and I ask the Chancellor of the Exchequer to take
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    into consideration whether subscriptions and donations to hospitals, asylums, and kindred institutions, in cases where vouchers can be produced, could not also be deducted in making a declaration of income. I do not think it would amount to very much, but it might be a stimulus and help to these institutions, and an encouragement to those who have to administer them. I hail with satisfaction the intentions of the Government in connection with making Grants in relief of taxation, but I am disappointed that one matter has not been dealt with, because it has been frequently brought under the attention of the Government, and that is the use that is being made of our roads. At present engines carrying two, three and more trucks of goods pay a very little contribution to the roads. The small amount they pay is absolutely absurd. Those engines and that haulage do more damage to the roads by going over them once than all the motor cars do, and not only as a matter of revenue, but as a matter of justice, and also as a means of avoiding great inconvenience to the public, those engines and that system of traction should be taxed to a far heavier degree than it is at present. I do not find myself in agreement with my hon. Friend (Mr. Wedgwood) in regard to the land valuation proposals. I agree that the land should be valued, but I think they take too drastic a view of what will be the outcome of that legislation. One thing I look forward to is that the optimistic view expressed by the Chancellor of the Exchequer that next year a less amount will be required for expenditure in connection with the Fleet may be realised, and that the long anticipated hope that the Sugar Duty will at last be taken off may also be realised. I believe that even in this Budget, if the Chancellor of the Exchequer did not wish to show any mercy to the Income Tax payer by adopting the course of reducing the Sinking Fund to the extent I have suggested, the Sugar Duties might have been taken off. But as regards the Sugar Duty and Tea Duty, we have waited now for some considerable time, and I hope that before this Government relinquishes office that promise will be redeemed and those duties, which are taxes now on the necessities of life, may be done away with.
    Mr. STEWART: With a great deal of what the last speaker said I am in thorough accord, but I do not at all agree with him in his contemplated further raid upon the

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    Sinking Fund. If there is any man in the House who has reason to be satisfied with the present Budget, it is the hon. Member (Mr. Snowden). I think he is to be congratulated on having found such an apt pupil in the Chancellor of the Exchequer. The Budget of 1909 was levelled chiefly at the landed aristocracy. The Budget of 1914 is levelled at the middle classes. The next progressive Budget will no doubt be levelled at all and sundry who have been evilly enough disposed to save any money at all. The salient points of the Budget are, first, that we are spending a very great deal of money, and that we are contemplating reducing the repayment of our debts, and while we are collecting that money from a very small section of the population—it has been stated this afternoon that the Income Tax payers of over £700 a year only amount to 150,000, and from them we collect somewhere about £90,000,000 a year—we are doing our best, under the Plural Voting Bill, to curtail any say they may have in legislation. It abolishes the Agricultural Rating Act, and it revolutionises the whole system of our local administration, and it is certainly an odd thing that while the Government is shaking the country from end to end and from top to bottom to pass Home Rule and to create other bodies to administer public funds, in this Budget they are drawing together all the powers they possibly can and centralising every Department almost of our domestic legislation.
    The hon. Member (Mr. Snowden) went back a very long way and referred to the taxes in the time of Elizabeth. I know on the other side they laugh even at the taxation, and the men who produced it, of the 'seventies and' eighties, but they were very great men. They did a very great deal for this country, and if they got their just due it would be admitted that wisdom did not begin entirely with the new dispensation. In those golden days of Liberalism the Income Tax was 2d. in the £, and I think it will content the hon. Member and his followers to realise the fact that now the ordinary Income Tax has gone up 800 per cent., to 1s. 4d., and that for rich people it has gone up 1,600 per cent., to 2s. 8d. That is not considering the Death Duties, which amount, with Income Tax, to about 5s. 3d. in the £. What makes taxpayers uneasy is that the Chancellor of the Exchequer has turned the Treasury into a sort of branch of the Charity Organisation Society
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    without the thrift and the inquiry which dominates that institution, and it would case the taxpayers' minds if a less tempestuously sympathetic Minister had the dispensing of the great sums of money which he collects. Although he is tempestuously sympathetic in regard to other people's money, he is cool and calculating when he comes to votes, and it is apparent in this Budget that the weaker the voting power of the people concerned, the harder does his administration lie upon them. Capitalists are few, and the taxation put upon them is great, and when he comes to dispense largesse to different people, the only section in the community who are utterly unable to help themselves get the least out of him, because his niggardly subscription to the proper conduct of the Mental Deficiency Bill is a very poor recognition of the most useful measure which this Government has put in during the time I have been in the House. I agree with the last speaker, that one weak point about this Budget is its lack of originality. There are many other sources of revenue which might be very wisely taxed. I remember reading in Lord Randolph Churchill's Life that he proposed to put a penny stamp on every sporting cartridge, so that every man who went shooting would feel that whether he missed or not he was doing good. I think, after what we have heard recently about people in the sister isle, and, perhaps, in this country, arming themselves, an extra charge of 10s. per revolver, and £1 per rifle, would make a considerable increase to the revenue of the country, and might keep people from indulging in weapons of that sort.
    I know that hon. Members opposite do not appreciate the fiscal system which I think would be advisable, but I would ask them what is wrong in taxing luxuries for revenue purposes. It is rather interesting to know what is a luxury, because the luxury of to-day is the necessity of to-morrow. A few years ago a motor was a luxury. To-day every man who rides in a motor omnibus is making use of what used to be regarded as a luxury. What harm would it do to tax things like diamonds, feathers, of which we have heard so much lately, silks, motor cars, and things of that sort? The only man who under this Budget the Chancellor of the Exchequer will not tax is the foreigner. I am sure he is clever enough to devise means of taxing him if he sets about it with an honest desire to do so. I should like to draw the attention of

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    the hon. Member who is now representing the Treasury to one thing. If he will not tax the foreigner, will he use his influence to see that the foreigner does not tax us? A Bill on the subject of naturalisation was announced to-day, and under that measure I hope the right hon. Gentleman will take steps to see that, in this country, which has now free food, free schooling, old age pensions, and things of that sort, naturalisation does not make it too easy for the foreigner to come and settle here as a British citizen. I hope he will take care that if we do not tax the foreigner, he will not allow the foreigner to tax us by bringing in, labour to compete with and replace the labour of our own citizens, for whom we cannot find enough work in this country.
    There are certain points in the Budget which, of course, appeal to everybody. The abatement for children is distinctly good. May I ask the President of the Local Government Board if he could not carry that principle a little further? I think in addition to life insurance, for which abatement is allowed, it would be quite fair to ask that a parent should be allowed to deduct from the assessment for Income Tax in respect of the amount of money he pays for the education of his children. You give an abatement to the improving landlord, and I think that in the case of a parent who wishes to make his son an educated and self-respecting citizen it would be a very fair allowance to make, especially from this point of view, that if you charge Income Tax to the father, that Income Tax is paid twice over, for it is not only paid by him but also by the schoolmaster. If you allow an abatement to the father, you would get one collection of Income Tax.
    I think it is well known in connection with financial considerations that if you tax articles too high you get what is called the smuggling point, and if you put Income Tax too high, you must get evasion. A person has to live in this country six months of the year before any Income Tax can be charged; it is possible, with all the facilities of travel there are nowadays, for a person to live five months in this country and have a pleasant time, and to live five or six months in some other place. In that case you get no Income Tax from him at all. It is in the last degree deplorable that when so many people from this country are scattered away in many quarters of the globe you should raise up a feeling that the taxation in this country is on
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    such an unfair basis that they do not feel inclined to turn their faces homewards when they have made sufficient money to live upon. There is no Income Tax in Jersey and the Isle of Man. Would it be a wise thing to fill up Jersey and the Isle of Man with British men who have lived their lives abroad? I think those places are quite as much devoted to "Home Rule" as the Chancellor of the Exchequer, but it is possible that the right hon. Gentleman might not altogether approve of the immunity from taxation which under these circumstances they would enjoy. I could not quite follow the speech which was made yesterday by the hon. Member for Northamptonshire (Mr. Chiozza Money) if he is a real Free Trader. He said:—
    "I would rather that we applied ourselves to the distribution of wealth by making it possible for people to gain incomes than I would after the inequalities had arisen, simply play the part Robin Hood by robbing the rich and giving to the poor."—OFFICIAL REPORT, 6th May, 1914. col. 329
    It appears to me that that is really the basis of the Tariff Reform argument. I also would rather not have the money earned by a few and distributed among the people afterwards. The same hon. Member spoke of Government enterprises, and referred to railways in Germany. I am not going to say much about railway enterprises. If we were to conduct railway enterprises in this country they certainly would not lead to profit. I think the President of the Local Government Board will bear out that remark, for his successor in the office of Postmaster-General told us a few days ago that, while we have a monopoly with respect to the telegraphs, we give for 6d. telegrams which cost 11d. I think, therefore, that our enterprises are not likely to lead to profit. The hon. Member for the Holm-firth Division (Mr. Sydney Arnold) said that we wanted these payments which the Chancellor of the Exchequer offers to us, and that we should not make any objection to them. It is true that we want them, and if you take them, item by item, there is no particular objection to them. What we object to is the cumulative effect, which we think too heavy by having them all at once. Every bankrupt when he goes through an examination says that he could not have saved on this item or on that item, but his position is due to the effect of the different items taken together. We think that if you were to take 5 per cent. or 10 per cent. from the whole of these accumulations you could spare the taxpayer something, and certainly not be put

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    in the position of raiding the Sinking Fund. The Financial Secretary to the Treasury said that, if war came, the money that was required would be obtained from the poorer classes of the community, who would come to the rescue. It is generally asserted that the poor have no money to spare, and in time of war labour would be less in demand, and wages would be smaller. I think, therefore, that you are leaning on a broken reed if you look to the poorer classes to help you out in time of stress.
    It is a pleasant thing to point to a man and say he has £10,000 or £20,000 a year, and so on, and to feel that large sums are available for the national safety. I am rather sceptical about the enormous figures given as to our national savings. These figures are brought forward in very much the same way as figures are stated by astronomers, who say that it is so many miles to the moon. We are not in a position to contradict the figures, even if we do not accept them. If money is invested in Brazil or Mexico, there is no doubt that the yield is very much lower now than it was some time ago. The whole question of the relief of local taxation is good or bad according as it is applied, and if you throw millions of pounds at the heads of people who are accustomed to deal in small amounts, you may lead them into extravagance, and instead of getting benefit out of what you do, they may suffer from financial indigestion and ill-health, and inefficiency may follow. The harrowing picture drawn by the Chancellor of the Exchequer about certain poor districts does not altogether represent the position. It is generally accepted that where rates are high rents are, low, and a man may get a better house for £20 in a place where rates are high than he would be able to obtain at the same rent where rates are low. I think the Chancellor of the Exchequer would be well advised if he would consider the question of "compounding" in regard to house rent. Every man should pay his own rates and know what he is paying, for otherwise if you give a district a large sum of money, a landlord who holds these houses may not abate rents at all, and you would be giving what might be a contribution to the owner of slum property. There is one effect which this Budget may have on business concerns which I view with apprehension. That is that it will
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    tend to dehumanise the feeling between employers and employed, and for this reason. If direct taxation is levied so heavily on employers, it is quite impossible that they can leave all their eggs in one basket; it will tend to split up businesses, and to the increase of the joint-stock principle which takes away the human element. Senior partners, if they want to have a certain amount of money before they retire, must remain, and keep their younger partners some years waiting for promotion. It is quite true if these heavy taxes on profits are made, that as money cannot be in two places at the same time, it cannot be in the pocket of the tax-gatherer and in the pocket of the wage-earner at the same time. Therefore, I think, there are dangers that the wage-earning class may not get the full benefit which the Chancellor thinks he is giving.
    The right hon. Gentleman the President of the Local Government Board, speaking this afternoon, wrote off millions in the most easy and airy fashion, and congratulated himself on having manufactured an immense number of Super-tax payers. Once you bring Super-tax payers down to £3,000 a year, you increase the stock very-much; but though there are people who do not care whether the whole world knows their incomes and expenditure, there are other people who are sensitive on this point, and do not like to exhibit themselves to the tax-gatherer in their own particular locality, and I would ask the Chancellor whether it would not be possible to appoint referees who would go on circuit, or have an office in London, to whom these people might make their own confession, so as not to be unduly harassed. I entirely disagree with all the proposals to raid the Sinking Fund. We might set before us an ideal that we should not think about that until we bring down the National Debt to a basis of about £10 per head. Then, I believe, that if you so regulate the legislation as to induce people to marry, live, and work at home, you will be assisted by the cradle in-that effort, and the new babies that will come into the world, we hope healthy and strong, will help you to get to that condition, and you will very soon bring the debt down to £10 per head. If you do that you will do a great deal to get this country out of a certain atmosphere of extravagance in which it now is, and we shall not be faced with the almost bloated debts to which the combined Imperial and local indebtedness of this country at present amount.
    9.0 P.M.
    Mr. J. SAMUEL: A cynical Member the other day, since this discussion arose, said that he thought the time for the Budget to have been brought in was before the Committee met in Supply, because for the first five weeks when we sit here at the beginning of the Session voting money everybody in the House is demanding an increased expenditure. I remember when we had a discussion upon armaments a few weeks ago, I pointed out to the hon. Member for York, I think, and to some other Members that when the Budget was brought in they would then be opposing the taxes which would be suggested by the Chancellor of the Exchequer, and while they have been doing this we do know that hon. Members opposite have been demanding large increases of expenditure, especially for armaments. I think that it is very unfair to criticise the proposals in this Budget unless you are prepared to suggest who should pay afterwards the increased expenditure. I have listened to most of this discussion, and I have not heard any suggestions from anyone on the other side as to how he proposes to raise the money to meet this increased expenditure upon the Navy. I think that we are very much indebted to the President of the Local Government Board for giving us the exact facts of the increased expenditure since this Government came into power. He pointed out that the increase was £37,000,000, and not £60,000,000, as had been suggested. The hon. Member who has just sat down said that the Budget of 1909 attacked the upper classes and that this Budget attacks the middle classes. With one exception, to which I will refer later on, this Budget does not attack the middle classes. The Income Tax to-day is very much lower, in fact, it is 3d. in the £ lower than it was when the party opposite left power in 1905. The Income Tax then on all incomes above £160 was 1s. in the £. It is now 9d., and therefore the middle classes practically are paying very much less. But I would call the attention of the Chancellor of the Exchequer to one part of the suggestion in reference to Income Tax, which I regard as extremely unfair. That is the proposal to increase the tax on unearned increment from anything above £160 per annum. I regard that as a blot upon the Budget.
    I have myself heard a very large number of complaints about Income Tax upon unearned income in the case of small incomes up to £500. Personally, I was really going
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    to suggest that in the case of these incomes we should reduce the 1s. 2d. down to a shilling, because we have a very large number of working men to my knowledge who have been thrifty, who have saved money, and who are living upon their income in their old days or when they get to the age of sixty and upwards, and who have an income of from £200 to £300, and we have a very large number of widows who are living on small incomes in this way. It will be very unfair to tax these people with these small incomes at the rate of 1s. 4d. when a man earning £1,000 a year is only taxed at the rate of 9d. I think that that is a blot upon the Budget, and I hope that it will be remedied.
    I will give one or two illustrations. At the present time a person in receipt of £400 a year earned income will pay £9 Income Tax. At 1s. 2d. in the £, a man in receipt of £400 unearned income will pay £14, a difference of £5. Under the new tax the earned income would remain at £9, but the unearned income would pay £16, an increase of £2. When the income reaches £800, the difference is £23 6s. That is a very large increase indeed to ask persons at those two rates of income—£400 and £800 to pay—and I hope the Chancellor of the Exchequer will see his way to consider the suggestions which have been made from all sides of the House with regard to the increase of 2d. upon unearned income, in the earlier part of the Debate a statement was made on the Front Bench opposite with regard to the reason of the increased taxes. The speaker pointed out that, although the income of the nation was increasing largely, yet he could not understand why it was essential to charge so much upon income compared with what was Charged in former years. The President of the Local Government Board pointed out that to-day we have a much larger proportion of our revenue derived from direct taxation rather than indirect. I remember a statement made by a former Chancellor of the Exchequer, Sir Michael Hicks-Beach (now Lord St. Aldwyn) on this subject. He was reviewing, in the year 1897, the year of the anniversary of the fifty years' reign of Queen Victoria, the difference between the taxation in 1836 and the taxation existing in 1897. He stated that indirect taxation in 1836 on commodities was 71.8, and direct taxation was 21.2.
    In 1897, the indirect taxation upon commodities was only 44.3, showing that there

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    had been a remarkable transfer from indirect taxes to direct taxes. The then Chancellor of the Exchequer also pointed out that m 1836 there were no less than 1,100 articles taxed in this country, and I should think that would satisfy any Tariff Reformer. He also stated that a labouring man, with a wage of 13s. 2d. a week, upon sugar, tea, tobacco, soap and pepper paid £2 3s. 5d. per annum in taxation, whereas in the year 1897, on the same articles, he only paid 12s. 5½d. That showed that there was a very remarkable reduction in the taxation upon those articles. In 1897 the direct taxes amounted to 55.7 and the indirect to 44.3. To-day they stand at 60 direct and 40 indirect. On the same occasion the then Chancellor of the Exchequer showed how costly is the collection of indirect taxes. In 1836, he said, at the time when Protection was rife, every £100 of taxes collected cost the Exchequer £5 14s. 2d. In 1897 the cost of collection was reduced to £2 17s. 8d. He further stated that the only trade in the country which had declined between 1836 and 1897 was the trade of smuggling. I am quite certain that if we had the tariff once again we should have smuggling as rife as ever it was in the olden days. I have quoted those figures in order to show that the more direct our taxation is the cheaper is the cost of collection, and the better it is also for the State, and especially for the taxpayer. I wish to ask the Chancellor of the Exchequer one or two questions with regard to the Grants to local authorities.
    In regard to the health Grants— that is money given for rehousing and the clearing away of slums—I hope before they are made that there will be some drastic measure brought in to change the existing law. I think it would be a waste of money to tax anybody, whatever their income, for the purpose of paying very high compensation for the class of property which would have to be removed. I understood from the President of the Local Government Board that before these Grants are made with regard to health and housing a Bill will be brought in changing the law and making it much easier for the local authority to deal with the housing problem. The other point on which I wish to put a question to the right hon. Gentleman has reference to roads. As I understand, the Government are going to pay 50 per cent. towards the
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    main roads. There is a second class of roads which are not well defined. I should like to call the attention of the Chancellor of the Exchequer to the fact that there is a very large number of non-county boroughs and boroughs where the roads, at very great cost, are maintained wholly by the local authorities—the town council or other body, as the case may be. In the borough I represent we have four main roads leading into it, and in each case where the main road touches the borough the county council will not make the roads inside it. There you have a great injustice. The county council will only allow a certain sum of money, £60 per mile, towards the maintenance, and, if you are going to give Grants towards the upkeep of those roads, then I think they ought to be considered as coming within Class II.
    That is a matter which requires very great consideration, and I trust that the-Chancellor of the Exchequer will give it his attention. There are very many boroughs with high rates, amounting to 7s., 8s., and 9s. in the £, that have to maintain the whole of these roads at their own cost, while the county outside are going to receive half the cost from the Exchequer without any relief being given to those boroughs. The next point I wish to mention is with regard to the non-rating of improvements. That is a matter I really do not quite understand. I am bound to say that it has puzzled me up to the present time. I like to deal with things in a practical sense, and I wish to put my point to the Chancellor of the-Exchequer for consideration. Where you have a low rateable value in any town or in any county you have high rates. At the present time all improvements are rated and there is an increased assessment upon the property, and by that means you have the growth of rateable value which keeps pace with the increased expenditure, so that the 1d. in the £ will produce more. Up to the present lime I have not heard very much complaint in the localities and, indeed, everybody takes it for granted. If people come into a town and open shops, and subsequently increase the size of their premises for purposes of extending their business and making profit, the assessment committee will increase the assessment upon that property. I think that is a very just method. The point is whether the site value or the buildings should be assessed. I really

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    cannot understand the difference. If I am assessed at £50 upon the whole of the properly you may separate the site from the buildings, but if I am assessed at £50 upon the site and buildings it does not matter to me whether the increased assessment is upon the site or the buildings as I will have to pay the increased rate upon the assessment. And you have—
    The DEPUTY - CHAIRMAN (Mr. Maclean): This must be reserved for the Bill.
    Mr. J. SAMUEL: There is one other case I would like to mention. We have very large increases in the shape of factories and works sometimes totalling a hundred thousand or two hundred thousand pounds. Is that to come within the term "improvements"? If there is no increased assessment for an improvement of that kind, then the town will lose the rateable value and the other ratepayers will have to bear the cost of the increased rates. Those are a few suggestions which I think the Chancellor might take into consideration before the Bill is brought in, but on the whole I think the Budget is a very fair one. It keeps up the principle which we on this side believe in, that the man with the largest amount of money should pay the largest amount of taxes. That is really the underlying principle of the Budget. I should like to impress on the Committee that I believe we are prone to be too extravagant. That is really the curse of the present House of Commons. It is so with the Navy. I do not say it is so with regard to social work, because I agree with the hon. Member for Blackburn (Mr. Snowden) that much of the money spent in that way will come back to us in the improvement of our people. I do say with regard to armaments that there ought to be a very careful overhauling on the part of the House. I see the hon. Member for Chelmsford (Mr. Pretyman) present. In the last two years he was in office he was responsible for reducing the Navy Vote by over five millions, and now that an increase of twenty millions more has taken place it is not sufficient to meet the requirements of hon. Members opposite. There is however this we all must learn that if we come here at the beginning of the Session, as we do in Committee in Supply, and if we taunt, as we do very often, though I am not guilty of it myself, because I think the Government ought to be responsible for the expenditure, and
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    when hon. Members opposite especially taunt the Government with not increasing this expenditure and the other, then I say they ought to come here and be pre pared to meet increased taxation without any grumbling. If they think the basis of taxation is wrong and want it to be broadened so as to tax food and other commodities, let them say so. We believe m direct taxation, and it is because the Budget carries out that principle that I shall give it my support, but I do hope the Chancellor will take into consideration the suggestions that have been made.
    Mr. HARRIS: I think the hon. Member who has just spoken hit the nail on the head when he said that we were all prone to be too extravagant. I think that is a lesson which is needed to a large extent on the other side of the House. The hon. Member began his speech by suggesting that Members in this House ought to control the Government expenditure. I do not know whether hon. Members opposite have any such control, but we certainly must repudiate any responsibility for the very heavy expenditure which is now put forward. I should like to say, as one who comes here with considerable experience of large municipal administration, that I am much struck at the impotence, as it seems to me, of Members of this House to do anything to promote economy. That, no doubt, is to a large extent due to the fact—and I am not making a party point of it—that we are kept at arm's length from the administration, and it is really impossible to say whether the administration is economical or not. An hon. Member, speaking just now, said he saw no reason to dread increase in national expenditure. I venture to join issue with him in that. The Chancellor of the Exchequer himself last year referred to what he called the alarming growth of national expenditure. I do not think the alarm which he feels has translated itself into any action, or, indeed, any attempt to check the expenditure. It seems to me, if I may say so with respect, that under the auspices of the right hon. Gentleman the Liberal party have thrown to the winds the old principle of economy of which they put themselves forward as champions. If anyone wants to realise how rapidly that process has gone on, he has only got to compare the policy laid down by the present Prime Minister, when he was Chancellor of the Exchequer in 1906, with the policy which now finds favour. In 1906 the Prime

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    Minister, as Chancellor, compared the estimated expenditure of that year of 141 millions (in round figures) with that of 101 millions in 1896, an increase of 40 millions, and he said that those figures
    "spoke with an eloquence which needed no rhetorical embroidery."
    And the conclusion he drew was that
    "a return to a more thrifty and economical Administration was the paramount duty of the Liberal Government."
    Surely the irony of those words, read by the light of subsequent events, is very great! You have a Liberal Chancellor of the Exchequer in 1906 holding up his hands in horror because the national expenditure had gone up by forty millions in ten years, and yet eight years of Liberal administration had sufficed to raise it by a considerably larger figure. If I take the estimated expenditure of £141,000,000 in 1906, to which the Prime Minister was referring, which must be taken as £150,000,000 because the assigned revenues then went direct to the local authorities and compare it with the estimated expenditure this year of £210,000,000, there is an increase of £60,000,000. Surely those figures "speak with an eloquence which needs no rhetorical embroidery," and indicate the desirability of some "return to a more economical and thrifty administration "—the paramount duty of the Liberal Government in 1906. The policy at the present time is the very reverse of that. In fact, if I read the speeches of the Chancellor of the Exchequer correctly, he has banished economy from the vocabularly of the Liberal party. I was reading with great interest recently the right hon. Gentleman's Budget speech of 1909. I noticed that he then said that a Chancellor of the Exchequer, when faced with a deficit, had two courses open to him, either to seek possible economies, or to raise fresh taxes; he expressly stated that he thought there were possible economies, and that it would be well worth the nation's while to go thoroughly into its affairs. He went on to say that the path of the economist was a hard one, and that when he endeavoured to seek economies he was subjected to a great deal of criticism. Therefore, he said, he fell back on the other resource of raising fresh taxes. I quite realise that the new taxation now proposed is not entirely for the purpose of meeting a deficit. It is to a large extent for the purpose of aiding rates, and therefore may be regarded as to some
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    extent a readjustment rather than an increase of taxation. On the other hand, there is a large deficit to be faced.
    I would point out that some of the money which is going to the local authorities is for new services, and also that the avowed object of the increased Grants for old services is to stimulate, encourage, and make possible expenditure which is not now being incurred. We have, therefore, to face the fact that all these proposals mean large and permanent additions to the burdens of the taxpayer. I do not put it as a party point, but I want to plead that the Government should have resort to the other course mentioned by the Chancellor of the Exchequer in 1909, namely, that of seeking possible economies. We are entirely in the hands of the Government in this matter. Unless they seek economies we can do nothing. If economies are not sought the prospects of the taxpayer is appalling. I wish to speak from the point of view of economy of the question of increased Grants to local authorities. I entirely agree with the finding of the Departmental Committee that increased Grants are justifiable and necessary; indeed, I have urged that in this House. But I want to know what is the policy of the Government in relation to the expenditure of local authorities. The Chancellor of the Exchequer said that it was no good ladling out millions into the coffers of the local authorities without any conditions. I quite agree. But are those conditions to be such as to promote economy in the administration of the local authorities, so that the ratepayers will really get the relief which they are expecting; or are the conditions to be such as to increase expenditure, in which case the last state of the ratepayer will be worse than the first? The Kempe Committee laid down two principles. First, there was to be a distinction between rich and poor districts. I quite agree that poorer districts need special assistance, but I do not think they ought to have that assistance at the expense of other districts. All districts ought to get their fair proportion of their expenditure upon semi-national services. The other principle was that there should be a distinction between districts which spend much and those which spend little upon certain services; and the Chancellor of the Exchequer gave examples apparently applauding those who spend much.
    It seems to me that that is a very dangerous policy. If you are going to give largely to those who spend much, it will

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    certainly lead to all-round extravagance. A district may spend much because the necessary cost of its services is very high. London is a case of that kind. On the other hand, a district may spend much because its administration is not economical. That is a point which I am sure will require very careful attention. The policy of the Government will have a tendency to force the pace of both municipal and national expenditure. For that reason the ratepayers will look with a good deal of suspicion on the proposal to create a new rate—the site value rate—because they consider that that means—and I think they are right—an increase in expenditure. As I understand, this site value rate is to be levied alongside the existing rates upon the composite value of site and house. I do not think the right hon. Gentleman stated who was to pay the new rate, but I presume that it is to be paid by the tenant during the currency of his lease, and that after the lease has expired the owner will pay, which, of course, will be taken into consideration when new contracts are made. We do not know enough about it to discuss the matter at present. I wish only to point out that the whole attraction of the rating of site values in the past has been the suggestion that owners do not contribute towards local taxation, and I do not know whether there will be any popular demand for it now, when it is realised—
    The DEPUTY-CHAIRMAN: I think that that is a matter for the Bill when introduced.
    Mr. HARRIS: I will not pursue the matter further, except to say that town tenants will doubtless observe that in the first instance they will have to pay the new rate, and they will not be able to shift it until the conclusion of their contracts. If the Government are proposing to set up a new basis for rating, I think they have to show that the dislocation of value which will be caused by the new basis will be really just and reasonable. The main point upon which I have endeavoured to lay stress is the tendency of the Government policy to pile up expenditure upon expenditure without considering the resultant burdens upon the taxpayer and ratepayer, or the effect upon trade and commerce.
    Mr. LEIF JONES: The hon. Member opposite (Mr. Harris) has given utterance to some sentiments with which I am very heartily in agreement, urging upon the
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    House greater economy in expenditure; but I am bound to say that the lesson would be more impressive if he would tell us in what part of the Estimates he would like economies to be made. We are now in Committee of Ways and Means to find taxes wherewith to raise the money already practically decided upon in the Estimates, and it is in dealing with the Estimates under definite heads of expenditure that economies can be made, if Members of the Committee really desire to give effect to the excellent sentiments which have been expressed. In truth, the criticism of my hon. Friend (Mr. J. Samuel) remains wholly unanswered, that hon. Members in the early part of the Session in Committee of Supply urged expenditure in every direction, and it is only when it comes to the question of finding the means to meet that expenditure that these wholesome views in regard to economy are expressed with emphasis on the benches opposite. I should like, if I may briefly, to refer to the speech made by my right hon. Friend the Chancellor of the Exchequer upon Monday. I do not think that enough credit has been given to him in this Debate for the success of his Budget Estimates of last year. He made his Estimates in the teeth of a great deal of criticism on the other side, which I very veil remember. It was said that he was over-sanguine to expect a continuance of good trade, and that he must anticipate a deficit at the end of the year. Even if the criticisms had been justified by the results, and we had ended the year with a deficit, I still venture to think that my right hon. Friend would have been right not to impose more taxation last year than he put on. If there is a doubt whether or not money will be required, it seems to me far better to leave that money, if I may borrow a phrase from one of the old Liberal financiers, Sir William Harcourt, "to fructify in the pockets of the people" than to draw it out unnecessarily by taxation. I think, therefore, my right hon. Friend was right to rely upon the advice which he received to defy the prophecies of hon. Members opposite and to run the risk even of a deficit rather than impose new taxation. He took that risk. He has his reward. The Budget of 1909 and the taxes then put on justified themselves last year by raising not only money to meet the Estimates which were presented to the House twelve months ago, but to meet besides very large Supplementary Estimates.

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    The right hon. Gentleman meets the House this year with a realised surplus of £750,000. I think a word of comment is deserved upon the series of surpluses which the right hon. Gentleman has achieved in his Budgets. During the five years that as Chancellor of the Exchequer he has presented Budgets his annual average realised surplus has been £2,600,000. Those surpluses would have been very much larger but for the growing practice of Supplementary Estimates, which have used a part of the money raised. I dwell upon this point, because I want, to ask the right hon. Gentleman whether he has not taken too gloomy a view of the coming year. This is his sixth Budget, and I would like to remind him that he will very probably before the General Election introduce his seventh Budget. There is a Scriptural warrant for expecting seven fat years—whatever may follow hereafter. I think that in this sixth year he might well have made more sanguine Estimates than he has presented to the House. I have myself, like other hon. Members, been indulging in prophecy. I venture one, and that is: That the taxes as put before the House in this new Budget will, at the end of the twelve months, if there are no Supplementary Estimates—and I admit that is a very largo "if"—realise a surplus very much beyond the average surplus of the last five years. So much for the past twelve months. I come now to the forecast of expenditure for the coming year. We find ourselves faced with increased Estimates of nearly £10,000,000. That includes the Post Office. The amount required to be raised is £205,985,000. That means, accepting the Estimates of the right hon. Gentleman of the amount to be raised on the present basis of taxation, a deficit of £5,330,000. I must congratulate my right hon. Friend on his courage that, faced with a deficit of nearly five and a halt millions in the coming year, he has not shrunk from gaily adding to that deficit by proposing an expenditure of £4,000,000 for insurance, education, and local government. I do heartily congratulate him on his courage in the year when he is faced with such a deficit on tackling this question of local taxation.
    Neither party can claim much credit in dealing with this matter of local rating. The Royal Commission reported in 1901, and the party opposite had full opportunity for four or five years to deal with the question. They did nothing. The
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    right hon. Gentleman the Member for Fulham (Mr. Hayes Fisher) taunted the Government to-day for not having before dealt with this question. I think it ill becomes any Member of the party opposite to taunt the present Government with not having dealt with this matter. I think that the Committee as a whole ought to-congratulate the Government with at last having dealt with this admittedly difficult and thorny question. There is no difference of opinion on either side that it is high time this question was dealt with. I think my right hon. Friend therefore deserves credit from all sides of the House for having taken the step which he has done. [Laughter.] I confess I do not understand the hilarity of hon. Members opposite. So far as we have gone in this matter the present Government have done what the Government of hon. Members opposite never did, and that is made a serious effort to deal with this most difficult question. The result of it all is that we are faced with an estimated amount to be raised for the coming year of £209,000,000. It is a stupendous total. I am not surprised that the right hon. Gentleman the Member for East Worcestershire and most other speakers, like the hon. Member who spoke last, have seized the opportunity to lecture the Government on their extravagance and on their departure from old Liberal principles—principles of economy very little understood by hon. Members opposite. Two or three times to-day we have been taunted with having won our campaign of 1906 on the extravagant expenditure of the Conservative Government of that day. I plead guilty that in my campaigns in 1905–6—which ended successfully—to having used to the-full what I considered the blunders and errors of the Government of that day in the matter of public expenditure. I submit to hon. Members opposite that it is quite useless, when you are dealing with expenditure, to look at only one side of the account. Our case then was that not merely were there larger Estimates, and that the expenditure of the Government was large, but that we were paying a high price for a bad article. That was really the whole gist of our complaint, a complaint which we succeeded in bringing home to the electors. So far as I know, they have never regretted that they took us at our word in the election of 1906.
    I am bound to say that my right hon. Friend has in a great measure brought

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    upon himself this condemnation in regard to economy. He did one very remarkable thing in his Budget speech of this year, which I have never known done before by the Chancellor of the Exchequer. He himself gave us no lecture on economy. He forgot the tradition which renders it necessary that he should assume a gloomy countenance when he was talking of the expenditure of millions, A certain solemnity of deportment is necessary when you are ladling out money. I suggest to him that he will escape this criticism if he could only manage to look more solemn while making his speech. Let him give grudgingly, as if it were tearing his heart's strings, to let the millions go. As it was, the right hon. Gentleman the Member for East Worcester said the Chancellor of the Exchequer encouraged him in spending. He was like a barman in a popular public-house. My right hon. Friend pulls the handle, and the radiant stream gushes forth, and I am not surprised that the right hon. Gentleman the Member for East Worcester should assume the unfamiliar rôle of temperance advocate and warn my right hon. Friend that there is death in the pot he is filling up. One very gratifying thing emerges from this discussion, and that is that the Treasury is no longer to be burdened with the administration of the Insurance Act. I have nothing but admiration to express for the way in which Mr. Masterman, the late Financial Secretary to the Treasury discharged his onerous duties in regard to the Insurance Act. I think we are all very grateful to him for the work he did in connection with that Act; but I venture to criticise the action of the Government in placing upon the shoulders of an official already so necessarily busy, as the Financial Secretary to the Treasury, the responsibility for so complicated a measure as the Insurance Act. It was an experiment which I hope will not be repeated. [HON. MEMBERS: "Question?"] I think that has to do with the question for this reason, that we require to have at the Treasury a man with leisure for Treasury business, who should not be engaged upon measures outside the Treasury like the Insurance Act.
    The expenditure we are called upon to meet in this Budget is £209,000,000. From that we are bound to deduct the Post Office Estimates, leaving the real expenditure of £183,000,000. I suggest that not even the whole of that £183,000,000 is
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    actually spent, because I think, in the case of old age pensions, you cannot properly say it is expenditure by the Government, but is a transfer from one part of the community to another, and that the actual spending is done by those who receive old age pensions, and if you are to make a just comparison with previous years you must deduct the amount of old age pensions from the total. Therefore the actual expenditure we are called upon to face this year is £170,000,000, and not £183,000,000. I put that forward in all seriousness, because I submit it is in a different category from the ordinary expenditure by the Government where the Government does the-actual spending. I took some pains to-compare the expenditure estimated for the coming year with the expenditure of twenty years ago. Twenty years ago Sir William Harcourt was Chancellor of the Exchequer, and we were then approaching what was felt to be a momentous crisis in our financial history, when something like-a £100,000,000 Budget was in sight. Twenty years later we have a £200,000,000 Budget in sight. It was in connection with that Budget that Sir William Harcourt had recourse to the Death Duties, and placed them on a footing so much developed by his successors, and both parties have been glad to make use of the weapon provided by Sir William Harcourt.
    Deducting the Post Office expenditure, the actual expenditure of 1804–5 was. £91,000,000, and the expenditure now if you accept my view, that old age pensions should be deducted is £170,000,000. That is to say, there has been an increase in the twenty years of £4,000,000 a year. If you examine how that expenditure is made up, you will find the largest increase-is in the Army and Navy. The Army and Navy in 1894–5 cost £35,000,000. The Army and Navy in this Budget cost £80,500,000, so that of the £79,000,000 of increase in these twenty years the Army and Navy alone accounts for £45,000,000, and I gather from the speeches made, there is no one on the other side who criticises the increased expenditure on the Army and Navy in the present Budget, and therefore there are only £34,000,000 o£ actual increase in the twenty years of which £10,000,000 alone has gone for education, so I think when these Estimates are examined the charge which is made of great extravagance in administration is not borne out by the figures. I think that our Budget could be less, but

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    that is because I am one of those, despised by hon. Members opposite, who think we could reduce our Army and Navy expenditure with advantage, but unless we are willing to do that, I am bound to say there is not much room for the economy referred to by the hon. Member who spoke last. There is one aspect of this expenditure, comparing the £91,000,000 with the £170,000,000, to which I want to call attention, and that is that there is an increase of nearly 80 per cent. in our expenditure. Various Estimates have been given of the amount of the national capital and income during these Debates, but I do not think we shall be far wrong if we say that the national capital in 1894–5 was somewhere about £10,000,000,000, and to-day it is somewhere about £15,000,000,000—that is to say, 50 per cent. increase from 1894–5. In our estimated income there is about the same increase. In 1894–5 it was £1,400,000,000 a year. To-day it is estimated by the hon. Member for Blackburn to be £2,000,000,000. I have seen the estimated put at £2,200,000,000—that is to say, it is about 50 per cent. more than in 1894–5, and that is a, point that a little disquiets me in dealing with the figures I have given. It is well to understand, even leaving out old age pensions, that while expenditure has grown by 80 per cent. in twenty years the income and capital of the nation have only grown by about 50 per cent., and, therefore I join with hon. Members in pleading for economy, and I think where economy is possible it should be practised.
    10.0 P.M.
    Leaving out the Army and Navy there is an increase of £34,000,000, which is an increase of 60 per cent. So that while our general expenditure has increased 80 per cent., and the Army and Navy expenditure has grown by more than 80 per cent., our social expenditure has grown by only 60 per cent., which is a good deal nearer the actual rate of the increase of national income. How does my right hon. Friend propose to find this money? He has thought it necessary to take £1,000,000 from the Sinking Fund. I must be frank, and I say that I regret that course. I regret that, when we are prosperous, and at a time when we could well afford it, the Chancellor of the Exchequer should diminish the amount set aside for the payment of debt. It cannot be denied, even by the hon. Member for Blackburn (Mr. Snowden), that taxation is now high upon property in this country,
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    and the question has been asked many times, If an emergency arose how are you going to pay the expenditure of financing a war if war breaks out? It seems to me that the greatest safeguard you can have is to make your debt small, and, therefore, in times of peace we ought to make larger provision for reducing the debt. I do not underestimate what the Government have done. I recognise to the full the successful efforts they have made to get rid of the debt piled up by the Boer war a few-years ago, and we have now bettered the position per head of the population compared with the time before the Boer war. Consequently, we have got rid of the debt which hon. Gentlemen opposite created. But, all the same, I think it is a pity that this £1,000,000 should be taken from the Sinking Fund, and all the more so because I think it is quite unnecessary. I feel quite confident that we are not going to lose by this, because the money will find its way into the Old Sinking Fund, although it has been taken out of the New Sinking Fund. Of course, we have to consider the possibility of Supplementary Estimates, which are so very apt to come in towards the end of the year. All the rest of the money my right hon. Friend proposes to raise by direct taxation. In the year 1894–5 direct taxation was only 45.4 per cent., and indirect taxation was 54.6 per cent. of the total revenue. As far as I can make out in this Budget, indirect taxation would be 41 per cent., and direct taxation 59 per cent. So that in the last twenty years the position has changed, and you are now practically putting direct taxation upon property to the extent of two-thirds of the whole of the whole taxation of the country. It must not be forgotten moreover that much of the new taxation is being devoted to social services. When you lake this into account, I do not feel disposed to complain that taxation has not been taken off sugar or tea this year. In putting the whole of the new taxation upon property as direct taxes, my right hon. Friend has satisfied even the hon. Member for Blackburn, and it must be realised that in this Budget no fresh burdens are imposed upon those who are deriving the greatest benefit from the extra taxes. There is one very surprising thing, and it is the general acceptance on both sides of the House that this extra taxation is properly put upon property. The article in the "Times" on this question has been quoted, and it was

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    a very remarkable article. On this point there has been very little complaint. I think the first full-blooded utterance came from the hon. and gallant Member opposite (Mr. Pretyman), but there has been very little complaint from the other side as to this taxation being entirely put upon property. Practically both sides of the House have accepted this unequal division between direct and indirect taxation. That is a departure from old Liberal and Conservative traditions, because hon. Members are familiar with Mr. Gladstone's speech in 1861 upon direct and indirect taxation, which he described as two attractive sisters, to both of whom it was not only allowable, but an act of duty, for the Chancellor of the Exchequer to pay his addresses. Mr. Gladstone declared himself perfectly impartial as between direct and indirect taxation. On this point no one can accuse the Chancellor of the Exchequer of being impartial in this matter, and he, at any rate, has made up his mind that the lady who is to receive his addresses is direct taxation, and he lets her sister severely alone.
    This taxation is met by the increased graduation of the Income Tax and a stiffening up o£ the Tax. I would like to join in the appeal made by the hon. Member for Stockton (Mr. Jonathan Samuel) in regard to small unearned income. I think the scale on the White Paper presses very hardly upon people with less than £500 a year, and I think the right hon. Gentleman might consider whether he cannot make some relaxation in regard to those incomes. I wish the Chancellor of the Exchequer could add to his Bills a schedule setting forth the number of pence in the pound which any given income will have to pay. It can be worked out by hon. Members who are tolerably good arithmeticians, by laborious hours in the Library, but it would not be difficult for the right hon. Gentleman to add a schedule which would give you a simple multiple to find out what is the amount of tax you would have to pay. I commend that suggestion to the Secretary to the Treasury. I congratulate the right hon. Gentleman upon lowering the amount upon which Super-tax is payable. I am convinced that a very large number of people do not pay Super-tax who ought to be paying it under the law. I am very much surprised at the size of the average income which pays Super-tax. I believe 11,500 people pay Super-tax, and they pay £3,500,000. That is £300 each, and it represents
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    an income of £12,000, and if you add the £3,000 it means that the average income paying Super-tax is £15,000 a year. I think the number of incomes under £10,000 a year paying Super-tax is much smaller than it ought to have been. by lowering it to £3,000, the Chancellor of the Exchequer will undoubtedly catch all those people whose incomes were returned anywhere between £4,000 and £5,000 per year, carefully not reaching £5,000 per year. It was, I think, Sir Robert Peel who, in the same way, increased his Income Tax Return by lowering it from £60 to £50, thereby catching all those people who had previously not reached the £60 limit. On that lowering of the Super-tax limit my right hon. Friend is to be congratulated.
    I must say one word upon the Death Duties, because there, again, I find myself slightly in disagreement with the Government. It is unfortunate that they should have found it necessary again to revise the Death Duties so soon after the last scale-was fixed. They are not going to get a great deal of money out of it. It is only four years since the scale-was fixed. Prudent men, at any rate, have adjusted themselves to that new scale. They have effected insurances, and, if they have been wise, they have reduced their expenditure to come within the limit. It is very hard, at the end of four years, when they have taken these steps, to be called upon again to meet a wholly new-schedule of taxation. If my right hon. Friend were going to get a great deal of money out of it I might think differently; but, as it is, I do not think he is going to get a very much increased amount of money out of it, and he is going to cause a great deal of inconvenience to men of moderate properly—although, from the point of view of the hon. Member for Blackburn, they are people very well off. The hon. Member for Uxbridge (Mr. Mills) yesterday suggested, because the Death Duties were not bringing in as much in proportion as they had formerly done, that we were destroying the capital of the country by this taxation. There is no evidence of that whatever; in fact, the evidence is all the other way. We really cannot maintain for a moment that our taxation, heavy as it is, has reached a scale when we are preventing an accumulation of capital in the country. We are very far away from that, even with our present high rates. People, however, are more

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    and more arranging to escape the payment of the duties on the higher scale, and what is happening is the breaking up of these estates and the dividing of property during the lifetime of the owner, Unlike the hon. Gentleman the Member for Blackburn, I do not regret that at all.
    On the contrary, when the Budget of 1909 was before the House, I protested against the proposed increase of the period during which gifts inter vivos should be taxed. It was proposed to make the period five years, and I proposed to make it one year. A compromise was effected, and it was put at three. I have always regretted that. Personally, I think part of the merit of the Death Duties is that they lead to the diffusion of property throughout the country. I do not think it is to the advantage of the country to have these enormous fortunes in the hands of a few individuals, as here and in the United States. It would be far better that we should have more moderate fortunes and fewer of the great fortunes. Therefore, so far from discouraging gifts inter fims, I should be very glad to sec the Government reverting to the period of one year within which they were taxed. I am afraid I have taxed the patience of the Committee a great deal, but the Budget is a complicated and interesting one, and for my part I think the Government have done well La tackling these problems. It means the raising of an enormous amount of money, but, apart from the Death Duties, I do not think that it is going to mean much additional hardship, and I hope the Government will press forward their proposals and let us have the Bill, necessary to give effect to them. Personally I shall do all I can to assist them in passing them into law.
    Mr. STEEL-MAITLAND: The hon. Member who has just sat down has made a number of interesting remarks, but there was one almost the most interesting of any. He stated, that when he stood as a candidate in the election of 1905–6, the one issue which apparently carried conviction with his electorate was the extravagance of the Government which had then just gone out of office. I rather think that in respect of that one topic on which the hon. Member won his election campaign he is quite unique among the Members of the party opposite, if one remembers the general circumstances of the election of 1906.
    Mr. LEIF JONES: I won by three only.
    Mr. STEEL-MAITLAND: Perhaps that explains what followed. The hon. Member went on to say that he had no doubt the country still remained of the same opinion. I am bound to remark that the Government at present have shown very little inclination to allow any test of whether the statement is true that the country still remains of the same opinion, but I believe at least the particular constituency that showed its appreciation of the hon. Member on the first occasion is not the same which shows its appreciation of him now. Among the many compliments he paid the Chancellor of the Exchequer—I am not quite sure that the Chancellor of the Exchequer was a Johnson altogether happy in his Boswell—was that his estimates for the past year were some £9,000,000 under the mark. To judge, at any rate, by the candid criticisms that have been made by the right hon. Gentleman's predecessors, that is one of the worst faults a Chancellor of the Exchequer can commit, and not one of his best qualities. There is at least one thing which has become quite clear from these Debates, and that is how extraordinarily difficult it is to debate the present situation properly with the comparatively meagre amount of information which at the present moment we necessarily possess. I hope the Chancellor of the Exchequer will not for a moment think that this is intended as any discourtesy on my part. It is quite impossible within any ordinary compass of time to give the information in his Budget speech.
    Mr. LLOYD GEORGE: It did not belong to the Budget.
    Mr. STEEL-MAITLAND: In any case, it would not have been possible, and the right hon. Gentleman will agree, that if any just view is to be formed of the national resources of the country, and of its finance, one has got to take into account not only the increased income, but also the expenditure for which it has to be provided. Later, no doubt, the increase will be considered in detail and the expenditure will be considered in detail, but on previous occasions, at this stage of the proceedings, there has been more or less a general review, and the criticism of the income that has to be raised has always been made in view of the expenditure for which it has had to be furnished. At the present time we are absolutely in the dark as to the way in which that expenditure is really going

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    to be made. Perhaps I may ask the right hon. Gentleman whether, before long, he will give us really fuller information as to the way in which the Grants which he proposed in his Budget speech are going to be made? There is, however, one item in this Budget about which there can be no difference of opinion among the vast majority of Members of this House, and that is the raid upon the Sinking Fund. The Financial Secretary to the Treasury (Mr. Montagu) made, as was his duty, I think, the best defence that could be made, but I wonder whether he would be satisfied if the same principle which he then enunicated were applied to any business with which he was connected. Let mo take two defences which he then put forward for the diminishing of the Sinking Fund. In the first place, he pointed out the total reduction of debt was £104,000,000. This reduction of debt amounts to a diminution of £3,000,000 in that portion of the fixed debt charge which represents interest on the debt. Consequently, in the other portion of the fixed debt charge, there are three more millions available for the repayment of debt. What was the moral he drew? "It was that" as that has automatically happened, let us raid that amount which will be put aside for the reduction of the debt in future." But what on earth is really the whole meaning of the fixed debt charge? If there is any principle in the fixed debt charge whatsoever, it is this: You have one fixed sum set aside in order that, as repayment is made, be that part of it which goes in interest decreases, and that part which goes in repayment automatically increases. There is no other reason for the name "fixed debt charge." To say that because one side has decreased therefore the other part which might go to the repayment of capital has increased, is absolutely no reason whatever for making this raid upon it.
    The other defence which is raised is almost equally inconclusive. The hon. Gentleman gives figures to show that the burden of National Debt at the present moment is much smaller than it has been on previous occasions, as judged either per head of population or, which I think is a rather risky calculation, on the estimated capital wealth of the country. What does that amount to I It amounts to saying that because the debt is so small now, in comparison, therefore you are going to reduce the payment of it. It means when, on his own showing, the shouders are broader that bear
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    it, that is a reason for diminishing the burden upon those shoulders. Was there ever a more contradictory method of making a defence of a raid on the-Sinking Fund of that kind? If there is one thing which has been shown by the course of the Debate, it is proof of the statement made by my right hon. Friend the Member for East Worcestershire (Mr. Chamberlain) as to the extraordinary disparity there is now between the present methods of Liberal finance and those that obtained until quite recently. Here we have a statement that, because the debt, is small in comparison, therefore the Sinking Fund can be safely reduced. I would ask the hon. Member to compare it with the canon that was laid down by Sir William Harcourt not very many years ago, when he said:—
    "I am quite sure that there is no greater reserve of national strength than maintaining the permanent provision for the reduction of debt. It must be remembered that in the days of Sir Robert Peel, when the revenue of this country was about £50,000,000, one-half of revenue went in discharge of interest on debt. Now we have a revenue of upwards of £100,000,000, and the interest of the debt proper is not one-fifth part of the revenue of the country. That is the most remarkable change, inasmuch as we have a very much less burden if we withdrew from the obligation of contributing towards the liquidation of it."
    If any Member of the Committee compares that statement by the late Sir William Harcourt with the principles now followed, he will agree that, at any rate, if there is identity in name, there is no identity in financial policy or principle between the Liberal party of that day and of this, and that perhaps it would be to the benefit of the country if the principles of the present party resembled more those of their predecessors of some ten years ago. When anyone turns to corresponding totals of expenditure now, the same criticism holds good. Various estimates have been made by hon. Members opposite, by the Member for Northamptonshire (Mr. Chiozza Money) and by the hon. Member for one of the Divisions of Cheshire as to the actual increase which has taken place in the expenditure. Another statement was made quite recently by the President of the Local Government Board. I am not certain that I can congratulate the President of the Local Government Board upon his arithmetic. May I give my reasons for that? He put the apparent increase in expenditure—he will correct me if I am wrong in this—at £64,000,000, and he said that to get a true view of the real increase in expenditure you had to make certain deductions for sums under the Naval and

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    Military Works Act, for the increase in the Post Office expenditure, and for the bookkeeping transaction in respect to the Grant to Local Taxation accounts. Thereby he reduced the net increase from £64,000,000 to £37,000,000. So far, I would admit at once that he was correct, but I think he missed out certain things which in justice should have been added since. In the first place, in the Estimates for the last year for which the Unionist Party were responsible there was a decrease of £3,000,000 in the Estimates—I think it was the Navy Estimates—therefore the sum should be raised from £37,000,000 to £40,000,000 in order to allow for that. Also, if you are attempting an accurate statement, has there not been other taxation which has been imposed on the country which ought to be added to under that head. Take, for example, the Insurance Act. Omitting for the moment the sum which has already been included, and which is paid by the State, there is no question whatever that the contributions by employers and employed form just as much an addition to taxation as any item that appears upon the balance sheet of the Chancellor of the Exchequer which we have before us. If, therefore, the right hon. Gentleman is trying to arrive at a true estimate of what the increase in expenditure has been, he ought to add that sum, amounting to £15,000,000 or £17,000,000. That is the way to get a fair and proper estimate of what the actual increase in taxation imposed by the Government has amounted to.
    Many statements have been made on the other side of the Committee by Members who have said that they view the increasing taxation with equanimity, if not with pleasure. I am bound to say, speaking with all consideration, that when Members opposite have made that statement, there has really been no ring of conviction this year about their statements as they made them, and, what is more, there has been very little answering ring of congratulations from the Members who sat around them. Any observer of the Debates during these two days would have realised that among the speakers on both sides of the Committee, no doubt with the exception of the hon. Member for Blackburn (Mr. Snowden), there was an uncommon degree of concern about the very large figures to which our expenditure has now amounted. [HON. MEMBERS: "Oh, oh!"] I have excepted the hon. Member for Blackburn,
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    and I gladly except his hon. Friends on the Labour Benches, but of every other quarter of the House that remark is absolutely true. The objection with which we are met is this: "You deplore all this expenditure, but you refuse to analyse those services which are the cause of it." There is no refusal on our part to analyse them at all. May I, for a minute or two, take into account some of those services which have been the cause of all this expenditure. Take the two great classes of services which have been responsible for this abnormal growth. The hon. Member for Blackburn referred to the sum of £100,000,000 which has been expended in what he calls a provocative way upon armaments. I am not quite sure how he arrived at the total, but take the Naval Estimates of over £51,000,000. Hon. Members opposite have stated that they support them because they see there is need for them. We on this side of the-Committee are at one with them in thinking there is need for the expenditure, and we have supported it, and. if there had been need for a larger expenditure, we should have been ready to support that also.
    Hon. Members opposite at the same time deplored the fact that the need exists, and again I join them perfectly heartily in deploring the fact that the need exists. But I would ask them to consider whose fault and whose responsibility it is that the need exists for the expenditure of £50,000,000 for naval defence. What is the whole object of the policy of this country with regard to the Navy? It is not necessarily to have some particularly large number of vessels. The aggregate amount is nothing whatsoever. The whole policy of the country is that the comparative preponderance of our Navy over those of other Powers should be a certain amount, and that is the policy to which we on this side hold firm. How can that result best be obtained? Front the point of view of the country, without any question, that provided we retain that preponderance, it is infinitely better that it should be upon the lower scale of expenditure rather than upon the higher. Could this have been achieved? If hon. Members would consult those who are experts either in naval matters or in diplomatic-matters, they would come to the conclusion that if throughout we had maintained one consistently firm attitude there would never have been the rivalry in naval expenditure which has forced our Estimates up to this amount. If there is one thing

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    more than another which has been the dominant cause for this competitive expenditure, it is this. Instead of simply maintaining the same ratio of naval superiority we have one year reduced our expenditure and lagged behind, we have proposed a naval holiday, and next year up has gone the expenditure again, while in. the meantime every invitation and every inducement has been given to other countries to enter into competition, which they might otherwise not have been willing to do. First of all you have a proposal for a naval holiday. Then after the expenditure has been sent up you have another phenomenon like the New Year conversation with a newspaper, and anyone who reads the Continental papers of almost any of the leading nations, and their comments upon that conversation, will realise that the result of it has been without any question, not to diminish the possibility of naval expenditure, but to urge on the competition and perhaps send it up to yet higher limits. Therefore, if hon. Members opposite ask how far we approve of the item of naval expenditure, I say I deplore it, while I recognise the need of it, and I think the responsibilily for its present height lies entirely with the lack of a consistent policy which has been shown by the present Government m their administration.
    I will now turn to the other great blanches of one of the services which have sent up the expenditure. We are asked again to support the expenditure upon various branches of social reform, and with regard to most of them I imagine there is hardly a Member of the House who does not approve of those objects. I myself perhaps almost as much as any Member of the House, happen to have spent my time in inquiring into these subjects as closely as possible, and for that reason I naturally approve of a great many of the objects which have been undertaken. But I join the hon. Member (Mr. Snowden) in this. The whole justification really depends on the answer to the question as to whether they are really worth the money, whether they have been most judiciously selected and whether they have been most properly carried out. Of course, everyone who is interested in these matters has his own particular opinions, but I do not think the selection of them has either been wise or upon any proper method. The way they have been carried out has been wasteful in the extreme, and a great deal of the expenditure which has been incurred in these
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    matters is perfectly avoidable. I do not know whether I might call attention to the fact that in new countries, we see that in more and more cases, Commissions are appointed in order to inquire into the conservation of natural resources. What is going on in the United States is likely to be instituted, if it has not already been instituted, in Canada as well.
    If such a Commission is wise in the case of a new country, it is even wiser in the case of an old country in order that there may be some careful stocktaking and some concensus of opinion obtained as to which reforms are most necessary before such an enormous expenditure is incurred. IE anyone examines the history of the past few years, he will see, I think, that reform has been taken in hand very much as though the Chancellor of the Exchequer had plunged his hand into a lucky bag and got whatever he came across first, or whatever suited his purpose best for the moment. At the same time, if we are going in for an extended programme of social reform, there is one thing necessary for the interest of the country, and that is that there should be one body to take stock of the reforms, to estimate their comparative value, and to put a check upon those which cannot be fully justified. Now the only body that can possibly exercise that check is the Treasury, with the Chancellor of the Exchequer at its head. In my apprenticeship at the Treasury—and I suppose I am tainted with the spirit of that Department—ten years ago I had in my possession memoranda, headed "Treasury Control." In view of the expenditure of the past few years, I think nearly every Member will agree with me when I say that it is not control by the Treasury, but control of the Treasury, which is the crying need of the present day, and that the fortunes of the country would be no worse off if a reversion was made to the old conditions and if the Treasury, instead of being the pioneer of new expenditure, were once more to exercise real control over what is proposed by other Departments.
    I should like to turn to one portion of the speech of the Chancellor of the Exchequer, which proposes to stereotype the expenditure on the great Valuation Department. The President of the Local Government Board justified its existence by saying, among other arguments, that it was responsible for the closer assessment to Death Duties. That is a statement which has been so often made and

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    refuted that we hardly expected—I am sure the right hon. Gentleman will allow me to say so without offence—to hear it again made on the floor of the House. I am merely repeating what has been said again and again. To say the Valuation Department is responsible for this closer assessment to Death Duties is to neglect the statements made by the Chancellor of the Exchequer on the floor of the House. With regard to that expenditure which we have to meet enough has been said by my right hon. Friend the Member for East Worcestershire (Mr. Austen Chamberlain) and by my hon. Friend (Mr. Pretyman) about the extent to which the new Valuation Department can carry out its duties. But the consideration which I think should weigh with the Committee before they stereotype this £1,000,000 of expenditure, is whether there is any need for giving up the old Assessment Committee, with which this country has been familiar for many years past.
    It is a little strange that the Chancellor of the Exchequer in proposing to take the local Licence Duties and appropriate them to the State, should, though he takes them for the State, leave the work to be done by the local authorities. On the other hand, while the rates go to benefit the local authorities he proposes that the work is to be done by the central authority. That seems a most extraordinarily contradictory method of proceeding. What are the reasons adduced for any action of the kind? In the first place, we are told—and this is the reason, I suppose for the expenditure—that we are called upon to provide for the Grants to be made to these local authorities, and that, in consequence, we want to have a uniform valuation in order that the Grant may be pro-properly assigned. There would be some reason in that if the Grants were made on the whole on any basis of local rates. If the Chancellor of the Exchequer is following the recommendations of the Committee on Local Taxation there is only one single Grant into which the local rating enters in the very least degree. Now for the other reason for which this expenditure is advocated. The Chancellor of the Exchequer, in his Budget speech, said that is was of primary importance that rating should be more impartial between classes and localities and persons than it is at present. How does that affect the case in point? Take two districts
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    within the same county area. As regards the individual parish or unity it does not matter to individuals in the parish whether the general method of rating is high or low, or whether they pay a high rate on a low assessment or a low rate on a high assessment. And again as between two districts in the country, there is really no reason for your central authority and the expense it causes. The county has every possible power, and does in fact equate differences in rating between two districts, one with the other, especially if it uses Schedule A.
    The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): Two valuations.
    Mr. STEEL-MAITLAND: If you could inquire into these matters locally, you will find that it can equate, and that it can produce uniformity between the two valuations. That has been done in more than one county in England. A particular instance that comes to my mind in Hertfordshire. The last reason for which we are asked to take this step is that there should be equality as between individuals. There have been no complaints from individuals in any large degree. Almost any Member would be willing to concede this. Suppose that the Chancellor of the Exchequer were to have individuals from any locality appearing before him, selected quite independently of any party allegiance, and that he were to to put to them the question, "Would you sooner be rated by the old assessment committee, or by the new great Valuation Department in Whitehall?" Nine out of ten of the farmers who appeared before him would say without any hesitation whatever, "For Heaven's sake let us be rated by our old assessment committee, and steer clear of your great Valuation Department in Whitehall." What is more, if he were able to add, "If you choose to remain under your old assessment committee, there will be £1,000,000 more, either of value that need not be put on, or of Grants that can be made. How will you make your choice?" I do not think that even the one out of ten would remain who preferred the central valuation from London. The Chancellor may think that people prefer the rating bill to go through the House of Commons, but in this respect he will find that the unanimous opinion of the country will be against what someone called irreverently "the top-hatted gentlemen from Whitehall," and strongly in

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    favour of the old assessment committee. For the most part, these committees are quite anxious, to be fair, quite able to be brought up to date in every respect, and cheap beyond comparison with the now Valuation Department, the expense of which the Government want to stereotype.
    The real reason for which the Chancellor of the Exchequer has made this proposal is clear. I dare say that nearly all Members of the Committee followed an instructive little episode which occurred last winter. The Chancellor made a number of speeches on the subject of land, and proposed to make another speech in Glasgow. But, unfortunately, in all his speeches on the land he had made no prominent reference to the question of rating upon the site, and consequently a storm arose among certain portions of the Liberal community. Conversations passed between them and apparently the Chancellor of the Exchequer, and so the meeting that was to take place in December was put off until the end of January. The right hon. Gentleman is always fortunate in the postponement of his speeches. In the first case, that of the land speech, it was rather inopportune—it was at the time of the Balkan war—in the interests of the country that it should be delivered. In this instance it would really have been inconvenient for him to go to Glasgow on the earlier occasion, because a Cabinet meeting demanded his presence in London, so, much as he would have liked to go, he had to postpone his visit to the metropolis of the North. What was really the case, is quite clear. A conversation took place, and some such sort of history followed as this: First he said he "wouldn't," then he said he "couldn't," and then he answered. "Well, I'll see." And he went to Glasgow, and there he blessed the whole system which he had not admitted before, and hence the significant inclussion of it in the present Budget. Perhaps hon. Members will note the way in which it was brought in in his proposals. In the first place, the Chancellor of the Exchequer says that he does not intend that the taxation of site values shall form an integral part of it, and he asks you to have no fear with regard to the present. In other words, as a portion of his followers did not like the notion, he tried to reassure them by saying, "Do not be afraid of it; it does not mean anything; there is going to be very little about any site value rate put on at all." Another portion of his followers are more insistent
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    about it, and I wonder whether they would fulfil their resolution if he did not carry it through. He says, "Be quiet; the germ of the whole business is there; water it and it will grow." Evidently that is what happened. It is just like an equestrian jumping from one horse to another and then trying to keep a leg on both. He has not succeeded in the latter uncomfortable operation any more than in the former. After all, the great cardinal fact, the whole object of the Budget, is to spend over £200,000,000. The hon. Member who has just sat down referred to the phrase "fructifying in the pockets of the people," and he approves of the Chancellor of the Exchequer, because last year he did not put on extra taxation but allowed the money to fructify in the pockets of the people. Not many crops of fruit is the Chancellor of the Exchequer likely to allow. The respite has only lasted for one year, and now, at least, there is no more fructifying taking place, A justification is rather difficult, and it takes this form: We are told that the country shows no ill results. It does appear to me that this is an uncommonly superficial view of the whole situation.
    If there has been one phenomenon more than another which has caused uneasiness in most quarters, though on the Labour Benches hon. Members think it is some movement, at any rate, in the right direction—it is the phenomenon of the industrial unrest in the country during the last three or four years. What is really the driving force behind it? The driving force, without any question up to the present, has been the increase in the cost of living, unaccompanied by any full increase of wages. I cannot imagine that there can be any special pleader for any cause who will press his argument so far as to deny that the increase in the amount of taxation is only one item, but, at any rate, is an item, and a most important item, in causing that increase in prices and in the cost of living. The hon. Member for Blackburn (Mr. Snowden) admitted that a few hours ago, for though he stated that under the Budget of 1909 the Licence Duties were not direct taxes upon beer and spirits, yet indirectly they came upon the consumer. That is going only one step in the sequence. I think in any fair analysis, going a little further, it will be agreed that even if you get advantages from the present system of taxes, yet on

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    the other side there are disadvantages, without any question, and that they have borne quite an important part in the increase in the cost of living, which has been so potent a factor in the industrial unrest of the last three or four years.
    That is important at the present moment, and, if I may, I would in sitting down like to emphasise a remark that was made by the right hon. Member for East Worcestershire (Mr. A. Chamberlain). It is important, and yet at the present moment we are in a period which is at the end, or, at any rate, right at the top of a wave of prosperity. Members on the other side of the House may differ as to the effects of a Free Trade system and a Tariff Reform system upon prosperity taking one year with another, but however we may differ about that, there is one matter as to which I think we all agree, and that fact is this, that trade and industry is never an even course like the flow of a river, but always fluctuating like the waves of the sea. Here we are at the present moment, and have been for the last year or two, on one of the crests of industrial prosperity. An hon. Member opposite, I think it was the hon. Member for North-ants (Mr. Chiozza Money), remarked how long that crest had lasted. Again the reasons are tolerably obvious. At the present moment you have the normal period, the normal crest that comes after depression; but, in addition to that, there has been all the expansion in the new countries, in Canada and in the Argentine, and in other places, which has stimulated production in this country, and has caused that period of prosperity to last to a greater degree than otherwise would be the case. The Chancellor of the Exchequer was right in his Estimate last year, though many Members on this side took a much gloomier view, while the Chancellor of the Exchequer himself would be one of the first to acknowledge that in the middle of last year there was every possibility of a crisis, and that it was only tided over by the uncommon foresight and sagacity on the part of those who had the handling of the financial business of the city. But whatever happened last year, the. Chancellor of the Exchequer knows perfectly well, and every one will agree, that although that crest has lasted a long while, without any question a bad time is coming afterwards. And we have to
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    face what will be the effect of this expenditure not only under present conditions of prices, but also in the harder times which must quite inevitably follow. Yet the whole system on which the Chancellor has based his Budget is not of forethought for the future, but really as though he believed that to-morrow would be as to-day, and even more abundant, I would state my own belief, that much as we wish for projects of social reform, yet we do not think such a course can be to the benefit of any part or class of the country in the long run, and it would have been wiser for the Government to have followed the old principles which animated the Liberal party up to a very few years ago. I would like to read one authoritative statement which was laid down with regard to Liberal financial policy, and it is this:—
    "Sir—I should like to reduce taxation, but how can you reduce taxation? How is it possible to remit a penny of that taxation which at present presses so heavily on the springs of industry, so long as you retain your normal expenditure at this inflated level?"
    This is the Liberal statement of policy—
    "You cannot do it. If you are to pay your way, if you are to strengthen our much improved national credit by providing more adequately for the redemption of the capital liabilities of the State—if you are to do that yon cannot remit taxation. There is the way and one way only, in which it can be done, and that is by a revival in our great spending departments of that spirit of economy and retrenchment which Mr. Gladstone displayed. We Liberals are not in favour of starving the great services of the State. We do not want an inefficient Army or Navy or Civil Service, but we do believe that by wise administration, by the careful handling of problems, by avoiding rash, costly, unthoughtout and therefore futile experiments, you can for a much smaller sum of money secure an even greater degree of efficiency than you at present possess I can assure you, speaking for my colleagues who have to do with spending, as well as for myself whose main duty is to save, that in the administrative sphere there is no object which this Government has more clearly before its eyes or upon which its heart is more earnestly set, than to bring down the normal expenditure of this country to a level compatible with the reduction of taxation and the extinction of debt."
    That was a statement of policy made by the present Prime Minister at the beginning of the new regime. Yet to-day finds us with a Budget of over two hundred millions and a further raid upon the Sinking Fund. I think that many people throughout the country, and possibly some Members on the other side as well, will be of opinion that it would be well for all of us that the party opposite should maintain the principles put forward by the Prime Minister not so very long ago.
    Sir RYLAND ADKINS: The speech to which we have just listened has been almost as pleasant to us on this side as to the immediate colleagues and supporters

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    of the hon. Member. He has indeed opened a fascinating field of argument, but I hope that he will not think me discourteous if in the few minutes that remain I take the opportunity of asking the Chancellor of the Exchequer certain questions to which I hope my right hon. Friend will reply when he speaks on Monday. After all, the curious mixture of lively attacks and characteristic jeremiads which marked the speech of the hon. Member was wanting in one thing, and that is what the hon. Member calls "fruit." There has been any quantity of criticism, but it has been smitten with sterility. He knows, and we know, what is the position is now, but there was not a single suggestion to help us misguided persons. He merely pointed out the follies of our leaders and ourselves. Everybody enjoys that sort of criticism, but nobody profits by it. On a future occasion when these matters are discussed one would be glad to analyse some of the provisions of the Budget with regard to the details of the Income Tax, such, for instance, as whether it is not possible at least to distinguish between the savings of a man and the income which he derives from hereditary fortune; whether it is not possible to make special concessions to those widows or others who may have a great struggle even when they come just above the limit of exemption; and also whether the exact details of graduation in this measure are really the best under the circumstances. On these points I desire to say nothing now. This Budget has for its objects, first of all, the extinction of the deficit, and then the pro-vision of considerable relief for local taxation and the promotion of great measures of social reform. I want to ask my right hon. Friend one or two questions as to the precise meaning of his promises on the relief of local taxation. He said something to the effect that in future half the cost of the police was to be paid from the Central Exchequer. The present system, as we all know, is that we have to pay half their ordinary salaries and their clothing, while police pensions are now paid exclusively from the local rates. I hope the right hon. Gentleman will tell us on Monday whether the 50 per cent. means really half the whole cost of the police, including police pensions, which under the Act of Parliament are automatic, and which are a heavy burden on the rates.
    In the next place, I desire to associate myself to a large extent with what has fallen from the hon. Member for Blackburn
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    with regard to roads. I appreciate the proposal that roads should be classified by an independent authority, but I would make a most earnest appeal to my right hon. Friend as to whether, when he inquires into this matter—as he is doing—he will not see his way to provide that the great trunk roads of this country should be financed to a still larger extent from the central authority. That depends upon the extraordinary change and development of user in the last few years. It may well happen that the Road Board, if they are charged with this duty, may put fewer roads into that category if only half of the money has been spent. I do ask my right hon. Friend not to close his mind to that possibility, because I assure him that the local authorities attach the greatest importance to that point. We do not think, of course, that the Government have gone as far as they would go if they had nothing else to think about except this problem. Like Mr. Goschen in 1888, they have not gone the whole length. We think there are certain services of an entirely national character such as this and pauper lunatics, which ought to be taken over by the State. But we do welcome the raising of this question. We are glad indeed that this great question is now raised in a way which certainly will secure that it will not be forgotten, until great improvement is effected. We quite understand that there are two kinds of relief to be given, one for routine services as they are to be, and another to stimulate developments of social reform, which certainly have sympathy on this aide of the House, and I hope have the sympathy of many on the other side. With regard to routine services, I want to ask if only four months of the current financial year are to get the benefit of my right hon. Friend's proposal? My right hon. Friend is going to abolish the Agricultural Rates Act. After allowing for that abolition will he tell us what will be the net gain to existing ratepayers in respect of what is granted for the last four months? What we do know awakens our gratitude, and will enable us to discuss far better the position of matters in the future. There are, of course, my right hon. Friend's larger projects. I wish for many reasons that we might have had the Bills on which those depend before we are asked to vote the money.
    Mr. LLOYD GEORGE: You shall have them.
    Sir RYLAND ADKINS: Then all I say is that I welcome, and take note of that declaration, and express my gratitude for it. I also desire to say that this Budget will be decided in the country very largely by its effect on local government. While we welcome new valuations, if they are thoroughly carried out, I hope they will strike a true balance between that touching devotion shown on the other side of the House to the local assessment committees, with their occasional limitations of intelligence, and the theoretical devotion that we hear from some quarters of the House from Government officials, as such. You require local knowledge without local prejudice. You require standardisation from the centre without bureaucracy with hard and fast methods, and you require to take note in the valuations the different conditions in the different parts of the country. Therefore we on this side of the House welcome the objects of this Budget, while we do retain our full independence of criticism on the details of the measures to be put before us. And if we are not to have a local Income Tax, which many of us still think ultimately will come, we do welcome the Income Tax itself as being the right source, speaking generally, from which to readjust these matters of local taxation, for it is the Income Tax payer as such, I think, that often does not pay his just proportion of local charges if his income is derived from other sources from those upon which rating at the present time naturally and inevitably falls.
    And it being Eleven of the clock, the Chairman left the Chair to make his Report to the House.
    Committee report Progress; to sit again upon Monday next, 11th May.

    HOTELS (IRELAND) BILL.
    Order for Second Reading read. Objection taken.
    Mr. PATRICK O'BRIEN: Might I appeal to the hon. Member to allow this Bill to go through? It is merely a Bill to enable hotels, with the approval of the police authorities, to obtain an hour's extension mainly for the purpose of charity balls, and such events, and is not for the purpose of increasing drinking facilities. I am perfectly satisfied that what he fears is not likely to happen, I gratefully acknowledge that the hon. Member has
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    supported Home Rule all through, and I would ask him to let us have this little instalment now. It would be very unfortunate if, when the hon. Member came over to visit us on the occasion of the opening of our Parliament, we could not extend to him the hospitality which we should naturally desire.
    Mr. LEIF JONES: When you get Home Rule you can do as you like, but at present I must object.
    Sir F. BANBURY: Might I, as one who has always opposed Home Rule, appeal to the hon. Member to assist us by allowing this small measure to pass?
    Objection again taken.
    Second Reading deferred until tomorrow (Friday).
    The Remaining Orders were read, and postponed.

    GOVERNMENT OF IRELAND [MONEY].
    Committee to consider of authorising the payment out of the Consolidated Fund, and out of moneys provided by Parliament, of any charges which may be incurred under any Act of the present Session to amend the provision for the government of Ireland, and of authorising the imposition of additional Customs Duties in certain cases in pursuance of such Act. (King's Recommendation signified) To-morrow. [Mr. McKenna.]

    ESTABLISHED CHURCH (WALES) [MONEY].
    Committee to consider of authorising the advance out of the Consolidated Fund of any sums necessary for payment of the principal and interest of all or any part of any money borrowed by the Welsh Commissioners and guaranteed by His Majesty's Treasury under any Act of the present Session to terminate the Establishment of the Church of England in Wales and Monmouthshire, and to make provision in respect of the temporalities thereof, and for other purposes in connection with the matters aforesaid. (King's Recommendation signified) To-morrow.—[Mr. McKenna.]
    Adjourned at Ten minutes after Eleven o'clock.