HC Deb 21 September 1915 vol 74 cc364-423

Motion made, and Question proposed,

1. "That in lieu of the duty of Customs payable on tea there shall on and after the twenty-second day of September, nineteen hundred and fifteen, and till the first day of August, nineteen hundred and sixteen, be charged the following duty (that is to say):—

Tea, the pound ……………one shilling, 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. Chancellor of the Exchequer.]


Whatever the merits or demerits of the Budget which the right hon. Gentleman has unfolded, I am sure that I shall command general and unanimous assent if I venture to offer to the right hon. Gentleman my congratulations on the admirable lucidity with which he has dealt with a problem, of which it is no exaggeration to say that it is the gravest, the greatest and the most difficult with which any Chancellor of the Exchequer has ever had to deal in this country, or I believe in any other country in the world. The right hon. Gentleman has explained very clearly what is the financial position at the present time, and I am sure that the country will be grateful to him for telling us so plainly what it is. He has also indicated what will be and what must be the requirements of the country in the future, and further than that he has made absolutely clear the methods by which he proposes to finance the means of meeting those requirements. I was very glad to find, what I think everyone must have expected, the right hon. Gentleman resorting so largely to the imposition of Customs duties. Some other proposals, he told us, were rejected not because they were bad, for in his opinion they were undoubtedly good, but because he has a difficulty in his way. It is a matter of machinery which must not be crippled. He must not overwork the staffs at his disposal. As he made those observations there flashed through my mind a means by which, to some extent, this difficulty as to staffs might have been got over. I refer to it now, because I urged it on a former occasion in this House during the present Session. There is a staff, an immense staff we are told, engaged at the present time on a duty which has been wholly unremunerative. That is the land valuation, which has been promised for so long a time. I would suggest to the right hon. Gentleman to consider whether it would not be possible to use that staff for the purpose of some of those desirable proposals to which he has referred without incurring the difficulties and the trouble which he seems to have anticipated.

There is one more subject upon which I may be allowed a word. I do not presume to do anything more than make a suggestion which I think perhaps would deserve serious consideration. Some master financiers with whom I have been intimate for a long time asked me whether it would not be possible in constructing a Budget to suggest some duties which might have the effect, through our numerous favoured-nation treaties, of injuring our great enemy in a very remarkable manner. I had occasion, I remember, at the time when the question of reciprocity between the United States and Canada was very much to the front, to look carefully into the question of favoured-nation treaties. What these gentlemen said to me is this: "Let us carry the War into the finance of Germany as well as against her armies." The thing is not altogether impossible. I believe that perhaps very remarkable results may follow. I do not presume to make this any more than a suggestion to the right hon. Gentleman, nor do I think it necessary to appeal to the Committee any further. I presume that we shall have ample time carefully to consider the proposals of the right hon. Gentleman before there is any formal Debate upon the subject, but I most heartily agree with him in the closing words which fell from him just now. The burden is great and heavy, and indeed there are being imposed burdens that are unprecedented according to him, and according to the recollections of all of us. But be that as it may be, I am absolutely confident of this, that whether the class be rich or poor, or high or low, there will be no class in this country who will not willingly bear the burdens which they are called upon to share when they remember the cause for which they need it, because it is the cause of country, the cause of home, the cause of England itself. For that cause they will bear every burden, and cheerfully respond to every call that may be made upon them.


I rise merely to ask a couple of questions that may perhaps facilitate the progress of the Debate. I was unable to hear what Resolutions were read from the Chair. I would like to ask the Government whether they propose to take all the Resolutions this evening, and whether, if they do so, it would not be convenient that there should be but little debate this evening, and that we should reserve debate till a later stage of the Bill. I do not know whether the right hon. Gentleman will tell me now what Resolutions he proposes to take this evening?


We hope that the House will assent this evening to all the Resolutions which are necessary, reserving one, according to general practice, for the general Debate.


I would like to make one other suggestion, so that we might have some knowledge with which to conduct this Debate at a later stage. I believe, as the right hon. Gentleman who last spoke told jus, that there will be no criticism of the amount of taxation which the right hon. Gentleman is raising in this Budget, but, on the contrary, I believe that the country would be glad to pay more rather than less at the present time. Criticism will only arise on the question whether the distribution of the burden between the various taxpayers is the best possible, and I would like, therefore, to ask the Chancellor of the Exchequer whether he could give us some official figures to show what the new indirect taxations would mean to working-class families. We all know that there is a number of estimates as to the burdens of indirect taxation in ordinary times. There was a very interesting unofficial estimate prepared on this subject some two years ago. But it would be a great pity I think if, in these Debates, we merely had unofficial estimates of what this burden would be. The Board of Trade statisticians could, in a few hours, give us official figures as to the charge on, let us say, a working-class family of, say, two parents and four children, with a family income of, say, 30s., and if we had a collection of typical cases of that kind it would enable us to form a better idea as to whether the burden is adjusted in the best interests of the community. I would earnestly ask the right hon. Gentleman to consider that suggestion. In concluding may I add my own congratulations to the Chancellor of the Exchequer on the Budget which he has unfolded, and may I also add my thanks for the masterly lucidity with which he has presented it to the Committee.


I do not propose to make any lengthened criticism upon the Budget which has just been put before us, because it is a very complex question, and I think that we require some little time in which to consider it; but I would like to make one or two suggestions to the right hon. Gentleman, if he will give me his attention for one moment. I am sorry that the right hon. Gentleman has not broadened more than he has done the basis of taxation, and one of the reasons he gave was that he could not put too great a burden at once upon the staff of the Inland Revenue Department. I would remind the right hon. Gentleman that not so many weeks ago he told me that he had a staff in the Land Valuation Department—a permanent staff—he could not get rid of, and I suggested to him then that he might find employment for them in other offices. Here was an opportunity lost on the part of the right hon. Gentleman, who might have further broadened the basis of taxation without putting any further burden on the Inland Revenue Department, by employing capable men for the purpose of collecting the revenue instead of employing them now for the purpose of losing money. I will not enlarge upon the various items of increase in taxation, but I would like to point out that the right hon. Gentleman, as I understand him, has or will increase his revenue next year, for the full financial year, by something like £100,000,000, in round figures. That is not a very large amount when he has to deal with an expenditure of fifteen hundred and ninety millions.

What I am a little afraid of is that, supposing the War goes on—and it looks as if it would go on for a considerable time, though I do not intend to prophesy—there must be a very large amount to be raised by War Loan. If the right hon. Gentleman puts a big burden on the wealthier classes, where are they going to get the money to subscribe to his loans? It is very essential now, and will be still more essential after the War, that capital should be kept in the country to develop trade. That is a thing which must not be lost sight of. It is quite true that you have to take by loan money from somewhere, but in taking money from every person by way of loan you give them a piece of paper which is, at any rate, a negotiable instrument on which interest is received or money may be borrowed. If you take a considerable sum from each person, and the whole of his money is gone, there is nothing remaining which can be used in order to trade, or to advance money to people who may trade in the future. That is a very important point which ought not to be forgotten. I think the right hon. Gentleman is a little afraid, or is inclined to say that because in past wars we have increased taxation very much, we ought again to do so now. It must be remembered that in past wars we started with taxation on a peace footing; on the present occasion we have started with taxation on a war footing. I need not go into the reasons for that, but I think it is a matter which the right hon. Gentleman should bear in mind, that there is a limit to taxation, because excessive taxation will, whatever else it may do, certainly cripple the industries of the country. I do not say that by way of criticism or anything of the kind. We are all perfectly willing to bear the burden; I am merely talking from a business point of view, and none other. I am glad myself that the right hon. Gentleman has put a tax upon war profits, and so far as I can see I do not think that it is an immoderate one.

I am not quite sure that in order to be just we ought also to tax excessive wages, because no doubt a very large number of the working classes have taken advantage of the opportunity to get increases of wages of from 100 to 200 per cent. That is just as much a war profit as it is in the case of a manufacturer who has made a large profit owing to the War. While I do not think that anybody ought to make a profit out of the War, yet I think that if the manufacturer is to be taxed the worker ought to be taxed also. I do not know whether the right hon. Gentleman will allow me very humbly to congratulate him on his Budget speech. I listened to him from rather a remote corner of the House, but I can say that it was one of the clearest Budget speeches we have ever had. The right hon. Gentleman wound up his statement by an appeal to the nation for economy, and I agree with him to a very great extent. But I do hope that the right hon. Gentleman will insist upon the Government also practising economy. I am not in any way endeavouring to say that it is not doing so, but it is most vital that the Government should practise economy. Only last week, I am told, the Admiralty chartered a vessel, and the crew refused to go unless they were paid £3 a week during the voyage. I am informed that their wages before amounted to £1 a week. The Admiralty gave way. That is not the way to carry on business. One of the great reasons for the enormous expenditure of the Government is that they have been paying through the nose for nearly everything they have bought. I do hope that the right hon. Gentleman will use his high office in a way different from that in which it has been used lately, namely, that it shall no longer be a spending Department but that it shall be a watchdog over the finances of the country, as it was always intended that it should be. I do not want to say anything more at present, as I should like to read carefully the proposals of the right hon. Gentleman, though I think I may venture to say that, certainly so far as I know, those proposals will not be criticised in a hostile manner. I rather hope myself that what is foreshadowed as an increase of taxation will not be lightly entered into later on, because I am afraid that, if you increase taxation to such an enormous degree, you will be dealing a deadly blow at the trade and industry of the country.


I have no intention of making a speech in criticism of the Chancellor of the Exchequer's proposals, my object being to ask a few questions and to elicit replies on points which I did not quite understand. May I in the first place, however, congratulate him on the brevity and lucidity of his speech. I understood the right hon. Gentleman to say that he was broadening taxation so far as Income Tax was concerned, but that he had found a difficulty because of the burden which will be thrown on the Inland Revenue and Excise. Am I to understand that the right hon. Gentleman has no intention of introducing a tax on wages—weekly wages—


Weekly wages will be assessed for Income Tax quarterly, and of course they have always been liable to taxation, but owing to the three years' average they have practically not been taxed. In future we are providing for the taxation of wages, and if a man earns more than £2 10s. a week he will have to pay Income Tax exactly the same as anybody.


I am very glad the right hon. Gentleman has given that explanation, because it has been a great anomaly and injustice that the unfortunate clerk who earns an income of £165 a year has had to pay Income Tax while the working man who has been earning anything from £5, £6 or £8 to £10 a week has escaped taxation. I do not know how the right hon. Gentleman proposes to collect this tax, but if he has any difficulty in doing that he could collect through the employer and through the Post Office by the simple means of obtaining a receipt over a penny stamp or any method of that sort. Another question I wish to ask has reference to excess profits. Am I to understand that these excess profits are profits in any business whether they are made through the War or not? Am I to understand that the period selected for estimating these profits is from the 1st September, 1914, to the 1st July, 1915?


The taxation is determined between those two dates, and if it is not determined between those two dates it will be assessed in the ensuing year. They will not escape.


I take it that the profits on every business will be taxed to the extent of 50 per cent., if they show a profit say of £160 over some previous period. I should like to ask what the period is?


As a rule it will be based on three years' average.


I am sure the right hon. Gentleman will excuse me, but I did not think he made that quite clear, or at least I did not understand, and I am very much obliged to him for his information. Then comes the question about Income Tax and the Super-tax. I take it that the tax on the higher scale will be 2s. 1d. I thought it was higher than that. The right hon. Gentleman's predecessor intimated that it will go up to as high as 2s. 6d.


The Income Tax is 1s. 6d. on earned income, and 40 per cent. added brings it to just over 2s. 1d.; the higher rate on unearned income was a flat rate, and 40 per cent, on that will make it 3s. 6d.


Is there any limit with regard to the earned income?


There are various earned income rates; they will begin at 2s. 1d. and they will end at 3s. 6d.


Prior to the right hon. Gentleman's speech to-day, the Income Tax paid on the higher scale was 2s. 6d. in the pound, and the Super-tax on the higher scale was half a crown, making five shillings in the pound. Then the right hon. Gentleman now proposes to make this 3s. 6d., which collectively amounts to 7s.

Mr. McKENNA assented.


I would like to ask, as I am not altogether an insignificant victim of the right hon. Gentleman's proposals, whether he has worked this out. There is to be Vs. Income Tax and Super-tax of 50 per cent, as well, and, on the basis of three years, the man with a large income is going to be very heavily taxed. It is possible that there might be a minus quantity if the past three years had been bad, and trade had come back to the normal. I thank the right hon. Gentleman very much indeed for his courtesy in answering my points. I may add that every man in the country will willingly pay his share towards this War, but I am quite sure that many like myself will object, and do object, to the extravagant waste going on at the present time. We have the most excessive and extravagant waste not only in the Army, but in the Admiralty. I am not now speaking of the Navy, the fighting part of the Navy. I only speak about the transport services of the Navy. I do not want to go into details beyond pointing this out: The Transport Department of the Admiralty, and rightly so of course, took up a very great number of ships, merchant ships, for the supply of stores, etc., to the Navy. That has had the effect of increasing the freights all over the world. Many of those ships that the Admiralty have on charter have been kept lying idle for long periods, when they might have been released and employed in the mercantile service. The requisitioning has been done in a very indiscriminate manner. I think the right hon. Gentleman will agree with me that he would be quite unable to find the money he wants by taxation unless we have exports. The question of the ships has a very great bearing on this matter. We find that ships are absolutely unprocurable, and many of the "tramp" owners are not coming to this country at all. This is a point which I cannot now discuss at any length, but I hope later on, on some other Vote, to be able to do so.

I would warn the right hon. Gentleman, on the lines of the speech made by the hon. Baronet the Member for the City, that it is a dangerous thing to unduly tax capital, because capital is a very sensitive thing. I am not now speaking of the great landowner, but of money, which is a very fluid matter and can be easily dealt with and transferred. I am not interested in the slightest degree in armament works, or anything like that, but I think it is a great mistake in theory, principle, and practice to take the whole of the War profits over a certain level as you are doing in controlled establishments, because what is the result? The managing directors, or the director, or whoever is in charge of those establishments, have no incentive whatever, if they can make up their maximum, to practise economy. I think the right hon. Gentleman must see that in unduly taxing profits you are to a certain extent interfering with capital that will be largely required. I observe the Home Secretary smiles. I hope he is not smiling in derision at my argument, but rather in approval. Take the shipping trade, for instance, where owing to the War a great number of ships have been withdrawn from the mercantile service for the use of the Government, the Navy, and the Army, while our so-called neutral friends have been very busily engaged in filching our trade, and in many directions have captured it. That will mean that British steamship companies, if we are going to carry on the trade of the country, will be brought face to face with fighting those neutral companies, and will require capital to do so. Again, many of the ships that have been requisitioned by the Admiralty have been partially, or I might almost say practically, destroyed for the purposes for which they have hitherto been used, and there again fresh capital will be required. Therefore, if the right hon. Gentleman is going to tax all so-called profits, he is going to diminish the capital which will be required, and which ought to be available after the War. The right hon. Gentleman, I am sure, must see that to interfere with that capital is really a serious matter. I would suggest to him to tax, and tax heavily, the profits which are made and paid in dividends to the shareholders, but to view with a more lenient eye those portions of the profits, so-called profits, which have been put aside as reserves for building fresh ships, or for replacing ships that have been lost. I think the right hon. Gentleman would be well advised if he would kindly consider that suggestion. I thank him for his courtesy in giving me the information I desired.


I beg to ask the right hon. Gentleman whether he will give us, as was given on the last occasion on which the Income Tax was altered, a White Paper showing the virtual effect of the different alterations which he proposes? That is all I rose for, and I have no more to say except to thank him for his very admirable speech.


That Paper will, I understand, be presented to-morrow.


There are one or two questions I would like to ask with regard to some figures. We were told that on an income of £5,000, the total charge would be £1,029, and on an income of £10,000, the total charge would be £2,529. Those are very much less than the 7s. 6d. in the pound indicated in the speech of the last speaker. Do they refer to the taxation this year, or do they deal with the full rate of Income Tax and Super-tax?


Up to £10,000, the Super-tax is at a lower rate, but over £10,000, the total taxation is 7s. in the pound.


My other question is with regard to appeals on the question of War Profits, and the kind of tribunal that is to decide those appeals. It is quite evident there will be a lot of difficult questions to settle. Is the House of Commons going to have anything to do with the making of the rules or regula- tions of the tribunal, or is that matter to be left entirely to the tribunal itself. I almost gather it will be left to the tribunal itself. There are a whole crop of very difficult questions. I am not interested myself in the manufacture of explosives, but I happen to know of cases in which large Government factories have been erected, and if one can prophesy as to the future, the trade of the people concerned will be destroyed. The profit in a case of that kind is a question which will want to be very carefully handled. The constitution of the tribunal is of the greatest importance, and I hope the House of Commons will have something to say towards regulating and guiding it in its decisions. I could not help thinking when my hon. Friend suggested that 50 per cent. of those profits were to be taken, but that many people might make friends with the mammon of unrighteousness and reduce their present charges in the hope that at the end of the War they might be well remembered, instead of charging high profits now, so that in that way the estimate formed by my right hon. Friend of the yield might turn out to be fallacious. I should like to add my tribute to the conciseness and directness of the right hon. Gentleman's statement which was one which everyone could understand. The right hon. Gentleman did not take any great time, and I think a Budget has never been more clearly presented to the House of Commons than that which we heard to-day.


I am sure a private Member, and one of the junior Members, will not be expected to attempt any exhaustive criticism of the right hon. Gentleman's Budget, but I think the speech and the scheme that he laid before us to-day was really one which left itself open on singularly few points to any criticism and to no adverse criticism on any matter of principle. I desire to call the right hon. Gentleman's attention to one or two points of detail. In the first place, I am very glad that at the very end of his speech he emphasised the fact that the whole of this gigantic dead weight of debt of two thousand two hundred million pounds is not due to expenditure in the ordinary sense of the word, but indicated that a very considerable portion, £423,000,000, was debt which would ultimately be recoverable, and, at any rate, which will bear a rate of interest and will pay for itself. That does help to make the question of the daily expenditure on the War a little bit clearer, because it has hitherto been dealt with as gross expenditure and it is very difficult for people to separate expenditure on the Army and Navy and other war expenses of the country from those large sums advanced to our Allies, or to the Dominions or others engaged in the War on our side. With regard to the new departure on taxation which the right hon. Gentleman mentioned, I refer especially to the Customs Duty, I heard with great pleasure his statement that if you get a duty to restrict imports, keep down consumption and find revenue under the present circumstances you have got an ideal tax. I think that was a statement which will be welcomed, both from those who at other times held certain views of fiscal policy, and those who held opposite views, because we do not want any controversy now over the old nostrums which were put forth from one side or the other, but desire to look at these taxes fairly from the point of view of whether they will help the country in the present stress of circumstances, and really be a contribution both to national economy and to revenue to meet war expenses.

With regard to the question of national economy, although the right hon. Gentleman has given us a fairly comprehensive list of a few of the principal luxuries, fully manufactured articles, I do not think he had gone far enough to make this a measure of real compulsory economy. There are a good many other items which, I have no doubt, have all been passed in review by the right hon. Gentleman when he was considering what he was going to tax, which are items of almost daily expenditure, and which cannot be classed as necessary, and which, if they were put under a 33⅓ per cent, ad valorem duty would not only produce a considerable amount of revenue, but would help the right hon. Gentleman where he most needs help, namely, in restricting imports. I would mention only two—and there are many others—where the question of the machinery—I refer to the Customs officials, which cannot be improvised at a moment's notice, is not in question. The first is that of hops. It is a very curious thing that although Austria and Germany are entirely shut off as exporting hops, while Belgium must have practically ceased, yet the import of hops in 1915 has increased over 1914, and are now at the rate of 147,000 cwts. for the eight months from the month of January to the month of August inclusive. The total was £554,000 for eight months, which compares with £558,000 for the whole of the twelve months of 1914. These hops come from California and Oregon, in America, and they have a very direct bearing on the question of exchange. I cannot help thinking that when the right hon. Gentleman was looking around for subjects of taxation, considering that we are importing now this tremendous amount of foreign hops, practically all from the United States, he might have included this item. In this case he would benefit agriculture in this country, and add that to the other virtues of the ideal tax.

Another point requiring a little explanation is in connection with the tax on plate glass. It is well known that the plate-glass industry, which used to be largely concentrated on the Tyne, has practically disappeared. Why did the right hon. Gentleman stop at plate glass? If there are difficulties in the way of taxing mineral waters and various other minor luxuries, here, in the very article that he proposes to tax in one form, the right hon. Gentleman has ready to hand a method of restricting imports and indirectly placing some small tax on everybody who consumes bottled drinks. The tax might be on the bottle and not on the contents. Why did the right hon. Gentleman stop short of blown glass and particularly of optic glass? I think every form of glass should have been included. Some degree of permanence would be necessary to ensure the full value of such a tax.

With regard to Income Tax, I was glad to hear that the right hon. Gentleman proposes a remission of the whole of the new tax where the actual income received by the taxpayer is one-fifth or more less than the amount of the assessment. There is a large class of taxpayers who, without some such provision, would be in a practically impossible position. In some extreme cases the income would not be enough to meet the tax. I am sorry that the right hon. Gentleman made no reference to another class, where the remission of the whole of the War Tax is certainly due. I refer to the officers fighting at the front, who are asked to carry on their duty in war time for pay reduced by anything from 2s. to 3s. in the £. I cannot believe that the Committee will think that that is right, or that the civil population, who are debarred from taking any active part in defending their country, would not be perfectly willing to bear the slight additional burden necessary to relieve these officers' incomes of this excessive taxation. With regard to the Super-tax, I think the question will require looking into very carefully from the point of view to which the right hon. Gentleman referred. In many cases people in receipt of large incomes have really the spending of only a very small fraction for any personal purposes. There is an enormous difference in the margin of income for personal expenditure according to the source from which the income is derived. This immense all-round increase in taxation, without some distinction as to the source of income, will, in some cases, press extremely hardly upon people who are not the direct recipients of the income, and where a large proportion of the income is expended on absolutely permanent and necessary works.

With regard to the Profits Tax of 50 per cent., I beg the right hon. Gentleman to reconsider his reply to a question put from his own side of the House. He said that the tax was 50 per cent. plus the Income Tax. We are accustomed, in the case of the Super-tax, to the ridiculous position that people are taxed, not on the income they receive, but on some imaginary income which they would have received if there had not been an Income Tax. We are now going to carry that vicious principle further. If the Profits Tax is really a 60 per cent. tax, the right hon. Gentleman should say so, and let the Income Tax stand by itself. The result would be the same, but it would at any rate avoid any extension of the ridiculous principle of taxing people upon incomes which they never receive.

I should like to reinforce the remarks of the hon. Member opposite in regard to the allowance for machinery. Many intricate questions will arise in regard to these remissions. I would ask that the principle should be clearly laid down that a person entitled to abatements on machinery should only have to make it perfectly clear that, owing to the temporary nature of the employment, or to its special character, the machinery would become obsolete in a certain number of years; and that when he has made out a case justifying such-and-such a rate of depreciation, there should be no understanding that, say, 6 per cent. was the rule, and everything else the exception, but that the assessor should be guided simply by the number of years the machinery would last in a state of efficiency, and allow whatever deduction was appropriate. Otherwise, we shall impose this large Profits Tax upon profits which are purely imaginary in another sense from that to which I have already referred. Would it not be wise to draw some distinction? The simpler the tax, the easier it is to understand, the better it is in every way. It sounded very simple when the right hon. Gentleman said that in regard to all profits in excess of peace-time profits the rule would be 50 per cent. But there are two classes of industry in this country which are entirely separate, and, I suggest, governed by different rules. In the case of manufactures in this country, employing a large number of work people, there are a whole class of arguments applicable in war time. When special appeals are made to the working classes, there ought not to be the feeling that if they sacrifice their trade union rules, work harder than usual, and for longer hours, they are merely enriching their employers. They should feel that any sacrifices they make will really substantially assist the country and maintain the necessary revenue. But none of these arguments apply to the export merchant's trade. We are most anxious to keep our exports up to the highest pitch possible, but we do not see how we can materially increase our exports when such a large amount of our labour is necessarily used for other purposes and such a large amount of our manufacturing power is also used for war purposes. If we seriously discourage the export merchants' trade—which is largely an entrepôt trade, and must be much more risky in war time than in peace time—to such an extent that it is not worth his while to push his business, while we have nothing to add to the credit side in satisfaction of the labour argument at all, we may be indirectly diminishing our exports. Possibly a smaller rate of tax would be more appropriate for this merchant business than a 60 per cent. tax applicable to all trades.

Turning to sugar, the right hon. Gentleman mentioned incidentally that the supply of lump sugar was very short, and that consequently prices would be high. He did not indicate how high, although he said that the price of granulated sugar would be 4d. I suggest that we might do something, even during the War, to make sure that in future we shall not be in that unfortunate position. We can produce in this country all the lump sugar we require. I will not go into the question of how this new Import Duty will work. It is a temporary war measure, without any certainty that at some future date a change may not be made by the imposition of a corresponding Excise Duty.


I ought to tell the hon. Member that we do propose an Excise Duty to-day.


Of 9s. 4d. a cwt?


No, 7s. a cwt.

6.0 P.M.


I am much obliged to the right hon. Gentleman. That leaves a margin of 2s. 4d. a cwt. between the Excise Duty and the Import Duty. I suggest that the Government would be doing a good turn to agriculture, to the employment of discharged soldiers, and to the supply of this necessary of life, if they also took steps to see that the production of beet sugar in this country was really started on a serious scale forthwith. The Government have gone a long way in this question of sugar. They have taken control of practically the whole supply, and I suggest that it is only a small further thing that in carrying out their policy they should make sure that some substantial part of this essential commodity is grown and manufactured in this country. It can very easily be done. The Government have only to say that, whatever the duty, this distinction of 2s. 4d. will be maintained for a few years—it would not pledge futurity to any material extent—and that they will provide money from the Development Fund or from the Treasury direct, or in whatever way they chose, to establish this industry firmly and permanently in this country. I understood the right hon. Gentleman to say that in the alterations in the postal charges the halfpenny post is to be abolished. I suppose that means no postcards, and a penny postage for newspapers?


You can send a postcard with a penny stamp.


I do not think there will be many people who desire to pay exactly the same postage upon a communication that you put upon a postcard as on a letter. No doubt the postcards will be used for some special purposes to a minute extent, but to nothing like the extent they are now. My point is, that the halfpenny newspaper wrapper will go, and that there will be a penny newspaper wrapper in future. I want the right hon. Gentleman to consider just how that will work. It means that a person who lives in an isolated part of the country, and who gets his news rather late because he has sent to him only one newspaper in twenty-four hours, will find that his halfpenny newspaper will cost him three halfpence, whilst the person who lives in the Metropolis, or in the centre of things, and who perhaps regularly buys three or four kinds of special war edition newspapers in the course of the afternoon or evening pays also only two pence or three halfpence. It may be, too, that he buys copies of the "Times," the "Daily Telegraph," the "Daily News," and other papers, and while coming up to town in the morning on a half hour's journey has not time to skim through more than a few of them. This man will have the advantage of the other, who will be charged a penny special war tax for his news—for that is what it amounts to—the other will be charged nothing at all.

I suggest that you are putting the stamp in the wrong place. The man in the country is paying a halfpenny now for postage. In future his paper will cost him three halfpence. The other having the advantage will be able to buy so many more papers. If the right hon. Gentleman merely wants to collect some revenue, and really wants to diminish the absolutely indiscriminate buying of newspapers at the present time, I suggest that the halfpenny War stamp should be put upon every paper, and this will bring him in a tremendous amount of revenue. At the same time, those of His Majesty's subjects who want to read the news, whether they live in the town or the country, will be placed upon a more equal footing. This will be a practical method of raising revenue. I have not seen the papers the right hon. Gentleman promised us, and I cannot say what the estimate of the yield of raising newspaper wrappers to a penny will be, but it must be a comparatively small sum. The right hon. Gentleman said that the machinery for any of these taxes was rather troublesome. You do not want any machinery to carry out my suggestion. I would put my suggestion to the Postmaster-General, whom I see present, that the one part of his postal arrangement of which we are all proud should be left as at present—that is a halfpenny internal postage for newspapers—whilst to adopt the suggestion I put forward would be perfectly simple. Its collection would be easy, because no paper would be allowed to be sold without a Government stamp for a halfpenny on it. That could be very easily done at a comparatively small cost compared with the revenue which will be collected by it. I am aware, of course, that the newspapers have lost a great many advertisements during the War, but that does not apply to any material extent to the afternoon and evening editions of the newspapers, the excessive purchase of which is really a most extravagant form of expenditure. I hope the right hon. Gentleman will seriously consider putting this additional halfpenny stamp upon the newspaper instead of upon the wrapper.


I think we must all congratulate the Chancellor of the Exchequer upon the extremely businesslike speech he made in a matter of the greatest complexity. It is the greatest Budget certainly that in my long experience of the House to which I have ever listened, and the right hon. Gentleman managed to compress his remarks within an hour and a quarter. He expressed everything in a surprisingly businesslike way, and invited hon. Members to discuss his proposals in the same spirit. Another point upon which the House must congratulate the right hon. Gentleman is that he does at least try to remedy what I believe the House of Commons thought was a serious defect in Government finance in regard to the War, namely, that enough was not levied in the way of taxation. He has brought in a taxing Budget, and whatever we may think now of the various taxes, we may say that the right hon. Gentleman has endeavoured to make some worthy contribution towards the great cost of the War. I am quite sure that my right hon. Friend deserves to be congratulated on these two points. I would like to call the attention of the House for a moment to this great subject of general expenditure—to the immense national expenditure of the moment. I think we ought to have discussed this subject last week when we had the Resolution for £250,000,000. I think the three days' discussion would have been greatly more profitable if it had been on this particular subject. Even now I do not feel that the House of Commons has given sufficient attention to the tremendous obligations which this House is putting upon the back of the nation. I have this complaint to make against the Government, though in quite a friendly spirit, and it is only that I may not detain the House that I am assuming what may be called the critical attitude in making this one serious complaint in regard to their treatment of this great question of the cost of the War.

The Government, I think, always exaggerates the cost, and for some reason or another gives fictitious figures. I would like to see them more closely examined by the House. I cannot exempt my right hon. Friend this afternoon. Let me mention first the explanation given last week about the cost of the War by my right hon. Friend the Prime Minister. He stated that from April to July the gross cost had been 2.9 millions per day, and the net cost had been 2.7 millions; that from the 17th of July to September 11th the gross cost had been 4.2 millions, and the net cost had been 3.5 millions. The Prime Minister explained that the 4.2 was swollen by tremendous payments, many of which would not be repeated. Yet how did the Prime Minister close his speech? He closed it by saying that we must assume that the cost up to the middle of November will be £5,000,000 a day or £35,000,000 a week. We have no figures at all given—no explanation—as to why the cost should spring up from 4.2 millions per day to £5,000,000, and yet this great figure was lightly thrown at the House. I feel that the Government does not sufficiently realise the immense difference that a million a day makes to this House and to the country which is bearing it. Any expenditure of this kind, of so vast a nature, makes it incumbent upon this House to ask that the Members should be put in possession of the full facts, so as to be enabled to look at them from the standpoint of the taxpayer who has got to bear the burden.

It is all very well to speak of millions a day and these other immense figures, but the difference between some of them might involve either national bankruptcy or a burden which this country, with all its wealth, could not see its way to undertake. I can imagine the reply of the Government. Perhaps if my right hon. Friend were here he would say we have got to state the full cost. My complaint is that whenever the full cost is stated a great many items are put in which are really not expenditure, and I say that fictitious figures are constantly given to the House. So obvious is this that at the close of the speech of my right hon. Friend this afternoon the Prime Minister would not allow him to sit down, but pointed out to him when he said that the total indebtedness at the end of the year would be £2,200,000,000, he had made a slight mistake. The Chancellor of the Exchequer acknowledged that he had made a mistake, and that he had forgotten to take off the loans. How much do these amount to? £400,000,000—as if that were a trifle, and not worth explanation to the House of Commons. I make the demand respectfully, in view of the fact that the figures are on such a large scale, and that this House has to sanction them, that we should be treated to as full an explanation as is possible, treated with all the confidence that is possible, so that we may look closely at the obligations which are being placed upon the nation. I want to press that complaint from the point of view of the right hon. Gentleman, and from the statement he gave us. I hope the House will not mind for a moment having its attention called to this matter. I was greatly startled to hear that the total expenditure for the year ending 31st March would be £1,590,000,000. What about the details of that? Navy, £109,000,000; Army, £750,000,000; then comes the external expenditure, which means loans to our Colonies and to foreign countries, which we believe will be returned to us—a total of £423,000,000.


Not a "bob"!


That is the spirit of the Government. "Not a bob," says my hon. and learned Friend will be returned to us. These loans this year represent just the same kind of loans we are making to the Colonies and to foreign countries in other years, except that they are for different purposes. Does my hon. and learned Friend suppose that the people of Australia and Canada will not repay these loans, and does he say that France will not repay hers, because I should have to say for a certainty they will all be repaid; at any rate they are loans, and the sort of loans we are making every year in this country. They are not national expenditure of the kind that this House is accustomed to criticise. There is another point. The food supplies were given at £56,000,000. But the Government has not given away any food that I know of. The Government has used that £56,000,000 in buying sugar and wheat, and it is selling that sugar at a large profit. I think that sort of trading profit of the Government should be explained, and ought not to be mixed up with the £56,000,000, which is a very large item. We ought to ask that this matter should be treated in a businesslike way. There was £36,000,000 for Bills. There may be a loss upon that. I am greatly afraid there will be, but it ought to be kept in a separate account. Here is no lees than £520,000,000; so that the total expenditure upon the Army and Navy and general national expenditure given by my right hon. Friend only comes to £1,070,000,000, instead of £1,590,000,000.

I do not suggest that this expenditure is going to make the House of Commons tremble. It is a vast, a tremendous responsibility upon the country to have to undertake, but I do think that it is an amount we ought to treat seriously, and we should not have all these things bundled together in one lot. Everything ought to be explained, so that we may have no difficulty in sanctioning it—as we did last week—and put no obstacle in the way of the Chancellor of the Exchequer. This House of Commons represents the taxpayers of the country; the Government has to come here to get everything sanctioned. My feeling is—and I do not wish to put it too strongly—that the Government is not treating the House of Commons with sufficient respect. It is not giving sufficient details; yet sanction is demanded of us for these huge loans. I know there is a great difficulty here, but I really think the Government sooner or later will have to consider it. The difficulty is that if they give to the House of Commons any further particulars, unless some special arrangement is made, that what they tell us is published to the whole world. I think this thing as to publication to the whole world is somewhat exaggerated, and we ought to insist on the principles which have governed our proceedings in the House of Commons. An hon. Friend opposite made a suggestion which had already been made, that we should sit within closed doors and discuss the matter. I agree with the Prime Minister that that would be a fantastic proceeding. We cannot do any good with closed doors, but I do think the Government might consider whether there might not be a large Committee formed from all sections of the House, and fuller particulars given to this Committee than the Government has yet given to the House of Commons. The problem is a serious one. We ought not to be asked to sanction figures with a slight mistake of £400,000,000, say, or with these large items mixed up together. Some means ought to be found by the Government. It is not beyond the wit of man to find a means by which the House of Commons could be treated with ordinary respect and be allowed to examine these great figures. I think at all events all the loans, good or bad, ought to be in a separate account. My right hon. Friend has gone a certain way in that direction. He has told us the amount. We do not want to know to whom they are advanced, but they should be kept in a separate account. The Government is making a great profit, I understand, by insurance, by the sale of ships seized, by sugar, and probably a great profit out of wheat. We are glad that they should make a profit, but these amounts ought to be deducted and kept in another account, and ought not to be all mixed together as expenditure.

The next point I desire to make is that the figures, even on the modest scale to which I have tried to reduce them, are so bad that this House will not do its duty unless it persuades the Government, and, if it cannot persuade the Government, forces the Government, to be economical in every possible direction. I remember the Prime Minister speaking of economy a short time since, when there was a very full bench opposite. He pointed flatteringly to all his Friends, and said that the only economists in the House were seated there. I think it was rather unfair treatment of the House of Commons. At any rate, since the War was started, no Member of the Government can point to a single suggestion coming from the House of Commons of extravagant expenditure.


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


I meant, except connected with the War. I meant on general questions. We have said nothing except ditto to the Government, and therefore the Government is responsible for all the extravagance, and very extravagant the Government is. I will give one or two examples of extravagance. We were discussing another Budget last May, and a certain set of duties were imposed. They fell dead on the floor of the House. My right hon. Friend said that no duties were brought forward in that Budget. He made a mistake. The most tremendous duties ever proposed were brought forward and were stillborn. The point I want to make is only this: The duties were not then withdrawn. We foolishly, in the spirit of agreement with the Government which I thought we carried too far, passed them into law, and then at the end of twenty-one days the whole thing was withdrawn as a futile proposal—a failure. There is a case in which a loss of I do not know how many thousands, but many thousands I am sure, was flung carelessly upon the country by the Government. The same thing was done this time. All clearance of goods was stopped about a fortnight ago, and an Order was issued. Looking at the tax proposed, I think that was a still more futile proceeding than I thought it was. I think it was an illegal proceeding. What right has any individual to go behind the back of this House and say you shall not take a certain article out of bond? I know there was some idea that there was a great forestalment. It always takes place while indirect taxes are in existence. It is not a new thing for the present Government to discover. So far as the business I know anything about is concerned, far greater forestalments took place last May, and they were not necessary at all. All the stock was left on the traders' hands. There is nothing in these forestalments. A million pounds of tea is one day's consumption of this country, and I saw in the "Times" this morning that—perhaps influenced by the Government's order—the differences between the clearance of tea this month was only one and a half million pounds, or one and a half day's consumption. Supposing the forestalment amounted to ten days' consumption, it would mean that for ten days something like the old tax would continue, and the new tax would be passed gently on the country. I say that the Government acted probably illegally in issuing this order, and that it caused the loss of hundreds of thousands to the various trades concerned, and I believe a great loss of revenue to the country. We ought to take steps to bring in revenue, and not cause a loss to revenue, and I think in this matter the Government has been very extravagant.

Then there is another point. My right hon. Friend said to-day what the Government are always saying, that exports ought to be increased. What are the Government doing to increase exports? They are placing every difficulty they possibly can in the way of any exports to any of the neutral countries of the world, and it is extremely difficult to send anything to Russia. One would think our policy would be to expedite any exports to Russia. The War Trade Department is very slow. I do not wish to blame the officials; I think it is the policy of the Government that is at fault. The War Trade Department is very slow in giving its decisions, impeding exports which the Government say they would like to see increased. The old complaint was mentioned as to the extravagance and waste going on in the country. I am afraid there is no improvement in that respect. I saw in my paper this week that there was a prosecution at Guildford of two poor men for selling some Army clothes, and the defence was that they stole it off a sort of funeral byre. These poor men took a few of these clothes. I do not know about the facts—


That hardly comes in to-day. That would be more pertinent tomorrow.


I glady accept the hint. I only wanted to say that economy of every kind, especially in Army expenditure, is required when such drafts are being made on the taxpayers of this country. It is only the Government that can practice this economy. We cannot here take the reins into our own hands. We have to agree to almost everything they suggest, and therefore I would again appeal to the Government to save in every direction they can, and especially to stop the wastage in connection with Army expenditure.

When I come to the taxes generally, I must say in some respect my right hon. Friend is to be congratulated. He is to be congratulated for his courage in lowering the scale of the Income Tax. He is the first Chancellor of the Exchequer I have known who has had the courage to do that, because he knows quite well he is touching the interests of the great majority of voters in the country. I believe the appeal made in the spirit of the Chancellor of the Exchequer, so far as Income Tax is concerned, will be readily responded to, and that all those whom it hits a bit hard in the lower ranks of life by this Budget will recognise that it is an occasion on which they must put their hands into their pockets. With regard to the duties that have been imposed, in some respects we have escaped lightly, and in other respects I think there are little defects. A heavy tax has been imposed on tea—50 per cent. I think the Government forget that tea was already a high price. The same tax of 50 per cent. has been imposed on coffee and cocoa, but there was only a small duty on coffee and on cocoa, so that what is imposed is ¾d. a pound on coffee, and about ½d. a pound on cocoa. These are articles which would readily bear a higher taxation. It is constantly assumed that these two articles are not worth taxation. I always think the Exchequer is unfair about them. Cocoa has become quite a considerable article of consumption, and I think you might have got four times the amount out of cocoa, without materially raising the price. I make that suggestion in a very benevolent spirit to the Government, and perhaps on a future occasion they will make use of it. The Tobacco Duties have been raised 50 per cent., and that is estimated to produce only £5,000,000 in a full year. I would like some explanation. I understand the Tobacco Duties now produce £18,000,000 or £20,000,000, and if they are increased 50 per cent. surely we may expect a much larger revenue than £5,000,000. I have not much to say about these duties, nor the Motor Spirit Duty, and I think the House cannot object much except on the ground I have stated. They are very widely selected.

I come to a point to which I cannot allude with as much satisfaction. My right hon. Friend spoke about the great inroad he is going to make on Free Trade principles, and commenced his speech by some apology, and when he came to expenditure he still had evidently running through his mind the fact that he was running contrary to all the principles for which he and I have contended all the time we have been in this House. So far as I am concerned, I see no reason to change my principles in the present circumstances in which the country is placed. I think they were all right in times of peace, and I think on the whole they will be all right in times of war too. I do not care what was said about imports doing us harm, or about our suffering from excess of imports. I believe the exchange with America can be dealt with, and is being dealt with at this moment, and we ought not to plunge into violent remedies which are contrary to principles. A very curious list of articles was presented to us. Motor cars, clocks, watches, films—I know nothing about them; I was astonished to hear they come to us in such a large amount—musieal instruments, plate glass, and hats. Why hats? [An HON. MEMBER: "Austria."] Why put a heavy tax duty on hats? All these are contrary to Free Trade principles. I simply wish to enter a protest now that may have to be developed a little more at a later date. It is a very curious list. I am glad it is no longer, but I do not know why it is as long as it is. I do not understand fully the proposal to tax excess profits, but I do think it will require a great deal of adjusting, and it may not produce all the revenue expected from it. The case would have to be taken of the business which did not produce any profits at all, but I will not got any further into that subject now. If the Chancellor of the Exchequer said it was to be the excess over 60 per cent. that puts a different complexion upon it, but if he takes 60 per cent. of all profits, I am sure hon. Members will agree with me that it is rather a strong proposal to make. Generally speaking, the proposals of the right hon. Gentleman will be received with a feeling of relief, and although they will require adjustment in certain respects, I think the House generally will congratulate the Chancellor of the Exchequer upon his proposals.


I should like to join in congratulating the Chancellor of the Exchequer alike for the manner and the matter of his first Budget speech. I think my right hon. Friend is to be congratulated that he has produced a Budget which will yield £107,000,000 by new taxation to meet the ever-growing expenditure of the country. In one respect my right hon. Friend is more fortunate than his predecessors, because he is the first Chancellor of the Exchequer who has faced the House of Commons without a Parliamentary opposition. I think the right hon. Gentleman will admit that the reception which his proposals have already met with is a proof of the readiness of the House and the country to undertake the unprecedented burden which the Budget proposes to lay upon the country. I do not think anyone, considering the national situation, can really say that the Government are raising too much money. The right hon. Gentleman opposite (Mr. Lough) devoted part of his speech to criticising the Chancellor of the Exchequer because he did not mention that £450,000,000 of the National Debt has been incurred by loans outside this country which may or may not be repaid hereafter. It was only mentioned in connection with the figure which the National Debt will reach on 31st March next, and whatever you may consider about repayment I do not think anyone is sanguine enough to suppose that it will be repaid by the 31st of March. Therefore, of the National Debt we have to face of £2,200,000,000 at the end of this financial year, £1,300,000,000 will be the outcome of the present financial year. When you realise the amount of interest which will have to be paid for additions to the Debt during the year, I think it will be agreed that £107,000,000, although a great sum, is not too much for us to be providing in the present Budget.

I want to say a word, not on the general proposals of the Budget, but upon those parts which deal with the taxing of imports in which my right hon. Friend implied that he was trenching upon certain principles held in different quarters of the House. I am not disposed to put on a white sheet about Free Trade principles, or to say I am about to abandon them in face of the financial stress of the War. I think the financial strength of this country is largely based upon Free Trade practice in the past, and I think Free Trade practice to the end will carry us through. There is no intention, I understand, in regard to those taxes of departing from Free Trade principles. It is quite true that there are certain dangers. In regard to imports my right hon. Friend gave two reasons why it is desirable to tax imports—the first was the condition of foreign exchange, and the other that it is desirable to curtail the consumption of luxuries. I submit that only in so far as you curtail the consumption of luxuries will you affect the foreign exchange favourably by diminishing imports. If you diminish your imports and substitute the consumption of some home-made article, which otherwise might have been exported, you have done nothing to benefit the exchange, because you are left with the same gap at the end as at the beginning of your transaction. I imagine that that is the view of the Government in spite of the fact that my right hon. Friend put it in two different ways by the articles which he selected for import duty. Take motor-cars. In a great measure they are used in this country as luxuries, and in so far as these taxes prevent the use of motor cars as luxuries, the Government will only be doing their duty by insisting on economy in the country during the War. If you put a large tax on motor cars coming from America and other countries, to that extent you prohibit the use of motor cars in this country.

I am told there are no English motor cars which you can buy at the present time, and therefore that will benefit your exchange. It is only as you diminish the use of motor cars as a luxury that you really benefit the country as a whole or benefit your exchange. There is a danger that you might do something that you would be very sorry to do. If you make it possible for manufacturers by means of these import duties to set about the making of motor cars in this country—I mean manufacturers who are not at present making motor cars—you would do harm by inducing people to produce articles which are luxuries when they should be producing necessaries or munitions of war. That is a theoretical danger because my information is that there are no English makers of motor cars at the present time in this country, and there are not likely to be any, because the Government practically take possession of all the places where motor cars might be manufactured in this country. Like the right hon. Gentleman opposite I must confess that I was rather puzzled about hats. I do not know why that particular article has been chosen because it does not fit in with my understanding as to the necessities of the case. I suppose everybody is going to wear one hat, and nobody will wear more than one when he or she goes out, and therefore it makes no difference whether we wear an English or a foreign hat. If a foreign hat is cheaper it seems to me that you will have damaged your exchange by driving people to wear more expensive hats.


How do these things affect the exchange?


Importing these things from a foreign country puts the exchange against us. In order to get the exchange down more in our favour you must export goods. If you take workmen who are making goods for export to make articles which you would have imported you diminish your exports and at the same time you diminish your imports, and you have not benefited the exchange. It may be that certain people are now engaged in making luxuries when their labour at the present time is required to produce necessities for the health and efficiency of the people or for munitions of war, or those things we have to export in order to get our munitions from foreign countries. If you employ home labour on anything else you are damaging your exchange just as much as importing goods and sending no corresponding exports. I dwell on this point because I think in a great deal of the war-saving literature, and the arguments addressed from the platform and in popular organs in this country, an endeavour has been made to show that the mere consumption of imports is of itself an evil, whereas the evil is the consumption of unnecessary articles, and unless you diminish unnecessary and luxurious consumption you will have dons nothing to benefit foreign exchange or our national financial position. On the whole I think in the subjects which the Government have chosen for import duties they have borne that in mind.

The diminution of consumption brings me to another point. I cannot help regretting that there is no extra taxation to be placed upon spirits. I say that not because of my views, which are sufficiently well known to the House, as to the undesirability of consuming alcohol in any form, but I do think that as they stand at present our taxes upon beer and spirits, are not properly correlated one to the other. We raised the tax on beer in the last taxes we put on, and I think we have overtaxed beer relatively to spirits. [An HON. MEMBER: "Not at all!"] I think that is so, and one proof is that at the present time there is very definite evidence that people are being driven from the consumption of beer to the consumption of spirits. I do not advocate the consumption of either, because I believe that the less alcohol people drink the better. I think, however, that it is very unfortunate that by our taxes we should be driving the people from the consumption of beer to the consumption of spirits. I am not speaking without book in this matter. We have had the figures for the national drink bill published in a letter recently for the half-year ending 30th June, 1915. These statistics have been produced in exactly the same way as in previous letters dealing with the drink bill, and they show two things. One that there has been, as compared with the six months ending 30th June, 1914, a small diminution in the consumption of beer. [An HON. MEMBER: "It is a large diminution!"] I know it is a considerable diminution, but it is not nearly as large a diminution as the present new Minister of Munitions foretold when he introduced his proposals for the taxation of beer. The Minister of Munitions made his calculations and his adjustments of the Beer Tax on the basis that there was going to be a 33 per cent. reduction in the consumption of beer, and as a matter of fact, instead of there being a 33 per cent. reduction for the period named, I think it will probably be nearer 17 or 18 per cent. There has been a diminution, but nothing like the diminution expected.

On the other hand, there has been a considerable increase in the amount of spirits consumed in the six months. The net result of it all is that there has been an increase in this year of war, when everyone is crying out for economy, of £8,000,000 in the drink bill for the six months ending 30th June, 1915, as compared with the first six months of last year. It seems to me a very serious matter, at a time when it is generally agreed that there ought to be a diminished consumption of luxuries, that in six months the drink bill should have gone up from £80,000,000 to £88,000,000. A great part of this increased expenditure took place before the Munitions Areas Bill got into full operation, so that we may look for an improvement owing to the operation of that Bill. It does seem to me a pity, when we are endeavouring to discourage the consumption of luxuries by taxing them, that something should not have been done to restore the balance of the taxation of spirits and the taxation of beer. It is deplorable that we should have to face an expenditure on drink of not far short of £500,000 a day. After all, it is a considerable figure, and, if you added the indirect effect, it would be very nearly double.

It does seem to me a pity, when in all directions we are preaching economy and discouraging the consumption of luxuries, that we have not dealt at all with the further reduction of the consumption of what, after all, must be regarded as very largely in the nature of a luxury. We should have done away with the tendency which there is at present to drive people from the drinking of beer to the drinking of spirits. It is, at any rate, a very unfortunate result of the Beer Tax which was put on the last time this subject was dealt with that people in some degree have given up drinking beer and have taken to the drinking of spirits. I wish that they had given up both, but if that is too much to hope for we should at least, while people go on with it, adjust our taxation so that there is no inducement to people to drink a beverage of more alcoholic strength rather than one of less alcoholic strength, and that, I fear, is the tendency of the present taxation. I congratulate the Chancellor of the Exchequer and the Government on their efforts to reduce consumption, but I think that they might go still further, and I do urge that it is only so far as people are content to give up the consumption of unnecessary commodities that they can really benefit the national finances and so strengthen the nation for the great strain that is laid upon it.


I had no intention of intervening but for the speech of the hon Gentleman opposite, but he is regarded as more or less of an authority on the drink question, and I think that something should be said in reply to what he has just stated. Does he forget that we have got 1,000,000 men in France? Has it not occurred to him what the effect of that must be on the consumption of beer? Has he forgotten the past history of the different relations between the taxes on beer and whisky? It seems to me that when we address the House we are like schoolmasters always addressing new pupils. We do not seem to teach anybody anything, although this has been pointed out for the thirty years and more that I have been here. There has not been a Budget that some Irish Member at some stage or other has not pointed out to the House the real facts in connection with this matter. The hon. Gentleman suggests that people have gone from beer to whisky, but he forgets what happened before that. Does he not know what the result was when 3s. 9d. was put on whisky some four or five years ago. Many people gave up considerably the drinking of whisky and took to the drinking of beer. Many distilleries in Ireland were closed down. What happened? Guinness' shares rose £1 the day after that Budget was introduced, such was the inevitable Stock Exchange opinion of the effect upon beer of the tax on whisky. This afternoon I was getting dinner and I asked for a bottle of English lager beer, and to my astonishment I was made to pay 5d. for an article the price of which in ordinary times before these taxes were put on, according to my recollection, was 2d. There has been an inevitable see-saw. When you put a tax on whisky you forced people to go on beer, but of course, when you put a penny on the pint of beer and the man gets his free choice as to which particular stimulant he will take, he has his own favourite drink and not the drink forced on him by taxation.


That is exactly my point. The time has come for the swing of the pendulum towards spirits.


Three-fourths of the price at which beer is sold to the consumer represents labour and material. That is not the case with whisky. There is not one-twentieth part of the price of whisky represented by labour or material. This House must take into account national characteristics, and it is idle to suppose we will allow you to pick out a particular article and say, "We will tax that because it suits the larger country and does not suit the smaller country." I congratulate the Chancellor of the Exchequer on the way in which he has brought in his Budget. He has not revived any old controversies. He has no doubt put very severely increased taxation on popular articles of consumption, but we must only grin and bear it, and he will have the satisfaction, so far as I can understand, of showing to the enemy a practically unanimous House of Commons in the face of increased taxation of an enormous amount. The moral effect of that alone is well worth the sacrifice which he has been called upon to make.

I quite agree with what the Prime Minister said last Tuesday that we ought not to give our enemies any knowledge of the amount of the loans which we make to Allied countries. That is a proposition with which we must all agree, but it was not the course originally taken by the Government, because last year they stated that we had given a loan to Servia of £900,000 and a loan to Belgium of £10,000,000. I was of the opinion then, and I remain of the opinion still, that those loans should have taken statutory shape. I do not think that they did. Although we had the confessed and admitted fact that we were giving these loans of £10,000,000 and £900,000, I do not think that there was any Clause in the Finance Act of that year which recognised the fact and empowered the Government to make the loans. I conceive that is a very sad state of affairs. While giving the Government an absolutely free hand, which they must have in war time—I do not care whether you give them £10,000,000 or £20,000,000—when they say that they have given £10,000,000, when there is no longer any international secret, and when the information cannot affect our enemies, I do say that we should follow the constitutional course and that the matter should have statutory sanction, as in previous years. Take the loan to Egypt. You got statutory sanction for that. I could cite many loans for which you got statutory sanction.

I may be asked what I would do with regard to more important Grants to Allies of the major sort. I would insist upon passing a Statute enabling a loan to be made to Allies. I would not mention who were the Allies or what was the amount. That would have the salutary effect that you would have compelled the Government of the country, even in a time of war, to pay to the British Constitution and this House the tribute and homage of getting the House of Commons' sanction to the loan. I could well understand a communication being made to Mr. Speaker with regard to the amount. Mr. Speaker is regarded in financial matters as in one sense the guardian of the liberties and privileges of this House, and, supposing we made a loan of £100,000,000 to a particular Power, I could well understand there being a preamble that the guardian of this House in financial matters had been informed of the amount of the loan. This War may go on and last a considerable time, and that at all events would be some check on the public Departments concerned. We should have for future time a guarantee and a warrant in this communication that the Government had at all events had some fetter put upon them. I want to make one remark with regard to rumours of what is going on in New York at the present time. We have, without the consent of Parliament, a sort of Embassy there negotiating a loan. At one moment you read that we shall have to pay 5 per cent, and at another time it is 6 per cent., and then it is a question of collateral securities. This House is being legislated for in a banker's parlour in New York. We have delegated our powers to two or three gentlemen.


This has really nothing to do with Committee of Ways and Means. On a Vote of Credit or to-morrow the question of the general conduct of the War would be in order, but it is not in order to-day in Committee of Ways and Means.

7.0 P.M.


I bow to your decision. I only mentioned the matter in connection with the loan because when the right hon. Gentleman was passing the subject over it was in consequence of a reminder by the Prime Minister that he stated the fact that some £400,000,000 of the estimated expenditure was loan capital which he expected to have returned. Still, as this has been ruled out of order, I, of course, bow to the ruling. I am very glad that the Chancellor of the Exchequer, in his powerful and very able speech, on which I heartily congratulate him, has brought in some taxes upon imported articles. It is useful to know that the Free Trade fetish is dead, and certainly it is somewhat of a comic spectacle to learn from the Free Trade Press that colours—say, for instance, blue—which formerly cost 4s. 7d. per pound, now cost something like 7s. per pound, because we had to go to Germany for them, and we can no longer get such things imported from Germany. It was all very well to carry on this system as long as we were not at war; but, the moment you go to war, what becomes of your Free Trade? That is what has happened with regard to that great principle which was described to-day by the Chancellor of the Exchequer as reduced to the position of a fiscal theory. I trust the right hon. Gentleman will be justified in his hope that these taxes will realise the full amount which he has budgeted for. Keeping, as he has done, within what I conceive to be a fair distribution of burdens, and no more, I do not think he need fear that any section in any part of the House will show itself in any way desirous of injuring or paralysing the arms of His Majesty's Government.


I want to ask one or two questions on the statement of the right hon. Gentleman. A little while ago we were promised a White Paper in reference to Income Tax. May I ask whether it will also include some definite explanation of the new Profits Tax? Before we proceed to discuss that tax, the day after tomorrow, we should have some fuller explanation than the right hon. Gentleman could possibly give in his speech of its actual intentions, and also of the exemptions which may be allowed ultimately. I would further ask the right hon. Gentleman whether agriculture is included among the trades which will come under the Profits Tax?




I wanted to allude to one matter in connection with agriculture, namely, the extraordinary increase of the tax in connection with farms under Schedule B. I rather understood from what the right hon. Gentleman said, that agriculture was to come under the Profits Tax, and had that been the case, it would have been a very serious matter indeed. Still, even without that, the idea of the sweeping away of the principle of the third—I do not wish to enter into that question now—is a serious matter in connection with this particular industry. It is a serious matter that, besides the reduction of abatement and other increases, you multiply this particular tax practically three times. We have at this very moment in the country a campaign carried on by the Minister of Agriculture to urge farmers to do all they can in order to promote production during the coming year. If they are to promote production, it means a great expenditure of capital, and at the very moment when you are asking them to increase production, you are trebling the taxation which they have to pay in connection with Income Tax, in addition to the other burdens which necessarily fall upon them in connection with this Budget. This is a serious matter, which perhaps will have to be criticised to some extent. While I am quite sure there is no class more ready to pay its share of the increased national taxation than the farming class of this country, I do not think this moment, when a special call is being made upon it to use its capital to the best advantage of the nation, too heavy a burden should be laid upon it in connection with Income Tax.

By means of an interruption, we obtain the information that there was to be an Excise Duty on sugar. Perhaps the right hon. Gentleman will say if there is to be an Excise Duty on tobacco grown in this country also. I think we should know whether on tobacco, which has been somewhat extensively cultivated both in this country and in Ireland, there is to be such a duty. I should also like to know whether the right hon. Gentleman can give us any idea of the manner in which taxation will be collected from employés. I presume the employers are not going to be asked to collect it.

Mr. McKENNA indicated dissent.


I think they have enough collecting to do already in connection with national insurance, and I hope their work will not be added to in this direction. So far as the now taxation is concerned I rather regretted the right hon. Gentleman did not when dealing with films carry his ideas further and put a tax upon those who attend places of amusement. I believe he might gather a very considerable amount from that source, and I cannot cenceive a better manner of raising taxation than taking a small amount from persons who attend places of amusement during this particular crisis. This might have been a very good opportunity for the right hon. Gentleman to have included hops among those things upon which he is putting an Import Duty. They certainly come directly under the matter of exchange, because they must all practically come across the Atlantic at the present time. The whole of the hops that may be required can easily be produced here, and there would not be the slightest difficulty, so far as collecting is concerned. The duty would be perfectly easy to collect in fact. It is only a small amount, no doubt, but I think it was a pity, seeing that this does directly affect exchange, that hops have not been dealt with in this Budget.

I think the country perhaps expected to hear a little more from the right hon. Gentleman in connection with the general subject of economy. The economy suggested by the right hon. Gentleman is a very considerable matter, no doubt, as affecting one Department, but the country is looking forward to economies going far beyond the Post Office, and in many ways the right hon. Gentleman might have given us a lead in his Budget speech in connection with this subject.

There is one thing which I am sure the country will regret very largely, and that is that in the right hon. Gentleman's speech he was not able to tell us definitely that the Members of the House of Commons were going to set an example to the country by abandoning, if not entirely, at any rate almost entirely, the salary which was voted not so very long ago. Many of us feel, I myself feel very strongly, that it is not right to accept that salary during war time, considering the circumstances in which we live. I think, and it is a view which is very widely entertained outside, that no better example could be given in the form of a guarantee of economy than if we abandoned this salary, or at all events secured that it should only be paid in cases where there was excellent need and necessity for it. It would have set a good example. I regret we have not been told how far economy is to be exercised in other public Departments. We give the right hon. Gentleman every credit for the decisive steps he is taking in the Post Office, and we hope that these will be extended to other Departments very soon. I desire to say no more, except to assure the right hon. Gentleman that from no quarter of the House will his proposals be adversely criticised. On the whole, his speech was a well thought out plan for the benefit of the nation at large.


I desire to join very heartily in the congratulations which my right hon. Friend has received on the concise and able speech in which he brought in this record-making Budget. He has touched on a great many subjects capable of taxation, but there was one which he did not hint at, and which I wish to bring strongly under his notice, and, indeed, under the notice of the House. I regret there was no suggestion in his speech of the fundamental principle in regard to the land, which after all is being defended by this War, that there should be a special tax imposed on those who hold the land, with the whole of its natural resources, and that these should be called upon to make a special contribution in proportion to the natural resources which they hold. There are a good many of us who entertain strong views on this subject, and who consider that the natural resources of the land—I am not referring to houses, buildings or improvements—but the natural resources themselves, ought to be the principal source from which to get those silver bullets which are to bring the War to a successful conclusion. The proposition I put forward is that there should be no delay whatever in calling upon those who hold those natural resources to make this special contribution. Indeed, this rests on the right of the community to the natural resources of the country, and that right has been the foundation of every reasonable land system. The feudal system, with all its faults, was based upon this, that those who hold the land should furnish the King with soldiers and military equipment. Upon that our land system was based until the gradual break up of the feudal system, when the lucky people who held the natural resources of the country, and their successors in title, succeeded in retaining their hold on the land, while gradually transferring the financial burden to other shoulders. We maintain that the time has come to set things right, and to assert the fundamental principle, that those who hold the natural resources should bear the biggest share of the burden of defending them. I should like to point out, too, as the Chancellor of the Exchequer has told us—these are his very words—that it is very important we should not hamper production. He has spoken of the burden which the War imposes on the country. The system of taxation to which the right hon. Gentleman should look at the present moment is not merely a tax system that will bring in money, but a tax system that will bring in money without hampering and without penalising production.


And that will increase production.


I say that, in the first place, we should ask those who hold the land to contribute according to its value, and put the tax, not upon buildings or improvements, but upon the land itself. If you ask them to do that you do not hamper production in the least. The factors of production are land, labour, and capital. Labour and capital are applied to the land and produce from the land. It does not matter to the labourer who gives his labour to the land, and it does not matter to the capitalist who applies his capital to the land, to whom the rent is paid, because so far as he is concerned it is of very little moment whether that rent or land value goes into private pockets or into the coffers of the State, or whether in part it goes into the one and in part goes into the other. My hon. Friend (Mr. Raffan) has reminded me that I go a step further. I believe you will find that every economist who has studied the question will go a step further. The taxation of land values means calling upon people to contribute to the needs of the nation according to the value of the natural resources they hold. This system will not hamper production in any way, but will rather promote production, because it will bring more land into the market, and make the natural resources of the country more available for use than they ever yet have been. Take the case of the land round our towns. I take the case of Glasgow, for instance, which I represent. There you have several thousands of acres of land. More houses are wanted. House rents have gone up and there is a house famine. If you try to get the surrounding land, even if it is being put to agricultural uses, for the housing of human beings who are overcrowded, you find that for land valued for the purposes of Income Tax at 30s. an acre you have to pay a Feu Duty of something like £30 an acre if you want to build houses upon it. That checks building and the setting up of manufactures, and it checks almost every other industry in the country. Every industry wants land upon which it can build.

If you adopt the simple principle that these gentlemen are to contribute to the needs of the nation, not in proportion to the rent they are getting from the land just now, and are not to go free if they are not getting any rent at all, but are to contribute on a basis of its capital value whether they are using it or not, you will find that land will come into the market at a reasonable figure, and that the strangulation of the town will stop. The town will expand, there will be more spaces for building, manufactures will increase, and agriculture itself will benefit. There are many agricultural districts where, though the land is not being used, if you want the land for a labourer's cottage or an acre or two for allotments or small holdings, you have to pay such a price for it which makes it impossible as a commercial transaction. It is said in some quarters that those who are holding up land are already foregoing their rent, and that a small tax will make very little difference. The tax need not be very small, but I maintain that even a small tax would make a good deal of difference. That point was put to me by a friend of mine not long ago. He had some investments, I believe, in South African mines. I said to him, "Do you appreciate the difference between standing out of dividends and having to pay a continuous call?" He said, "Oh, yes, I begin to see your point now, because I have some shares. I did not trouble myself so long as they were not paying a dividend, but when I found the calls began to come I did my best to get rid of them in the shortest possible time." So it will be if these gentlemen who are not using the land or not letting it to be used adequately have to pay according to its value. Where a dog in the manger policy is adopted, we should tax the dog out of the manger.

We know, in fact, that on all hands there is a land hunger. There will be an increasing land hunger when the men come back from the War. What do we find? We have had wonderful schemes of land purchase, under which the unfortunate taxpayer, already heavily burdened, is to be called in to finance the transaction between the man who has the land and the man who wants it. In all our schemes of land purchase we have to pay too high a price. Everyone knows that. I agree that there are compulsory powers, but those compulsory powers do not secure fair prices, and most people know that though the prices are so high that they would rather pay the excess price than an excess price plus the price of the costs under the Lands Clauses Act. This is a matter for which the remedy is in the hands of the Chancellor of the Exchequer by way of taxation. You have two people; you have the man who is good enough to hold the land—mind, he did not put it there, but he is good enough to hold it—and you have the man who wants the land, and you want him to be settled upon the land. The first thing to do is to say to the man who has the land, whether he uses it or not, "We call upon you to contribute to the needs of the nation according to the value of that land." If you do that in fact, the two men will come to terms at once and there will be no need to call in the taxpayer at all. We insist upon the right of the people to a fair share in their own native land. At present, in many cases land is being held back because, as the pressure of the population increases, the land will rise in value and higher prices will be obtained for it. The way to stop that is to apply this system. It would stop the evil in two ways. In the first place, it would show the man who was holding the land with the continuous tax that he will pay more than the prospective profits through holding it back; and, secondly, it would have the effect of bringing more land into the market, it would reduce rents and the price of land to what they ought to be, to a reasonable level.

A good deal has been said about the balance of exchange. We are told we lose on the balance of exchange and that the way to stop that is to stop the import of various articles. I must say that that savours to me of the old mercantile theory which found favour before the days of Adam Smith. Without going into the details of that, I would like to point out that what we want to do is to increase production at home. We shall never increase production at home until we take the fundamental step for opening these storehouses of nature by making the land more available to the people than it is now. I should also like to point out that the difficulty of such a scheme as we propose is exaggerated. If the Chancellor of the Exchequer wants a scheme, a scheme has been worked out, and I for one will be only too pleased to show it to him. If this scheme is considered impracticable, there are a great many valuations already. The valuations we have had in the 1909–10 Finance Act are unnecessarily complicated, because they went in for various fancy taxes—the Increment Value Duty, the Reversion Duty and the Mineral Rights Duty—instead of going straight for a tax on land values and asking those who hold the natural resources to pay according to the value of what they hold. Once you do that, the whole thing could be straightened out. You could have your valuation within a year, and if you make preparation this year you could have the tax, say, next year. Something has been said of the Income Tax under Schedule A and Schedule B. Schedule B deals with what an hon. Friend of mine called the agricultural farmer. As regards that, I would only say that the first thing to encourage the farmer and every cultivator is to let him know that once and for all his improvements will be tax free. Tax him according to the market value of his land, do not tax his improvements, and you do not hamper his industry.

The same observation applies to Schedule A. If I may recall the fact, I raised this question on the Budget of last year when, as hon. Members will recollect, the Income Tax was doubled. I said that we had to face that doubling of the Income Tax, and that that Schedule related to houses and various other things as much as the other Schedule. I pointed out that it would have a very damaging effect upon building, because it would mean that buildings and profits from buildings, instead of being taxed at their proper rate, would be taxed at about double the previous rate, and that capital would be diverted from the building industry. I regret to know that that forecast has come true. It has come true all over the country. It has come true particularly in Glasgow, and while I for one support the higher Income Tax which is proposed now—an Income Tax of which the normal rate will be 3s. 6d. in the £—I think it right to again point out to the Committee that, so far as Income Tax under Schedule A is concerned, it means that the building of houses will be even more penalised than it is now, and that the housing difficulty will become even greater than it is at present. I think it right to bring these facts before the notice of the Committee.

What I plead for, in the first instance, is that preparation should be made by the Chancellor of the Exchequer—if he cannot make it now he should at least make it in the Revenue Bill—for laying the foundation of the necessary development of valuation to get this system started. I suggest it as a national tax standing by itself, but, if the Chancellor of the Exchequer wants an alternative, he has an alternative in this: that the whole Income Tax system ought to be thoroughly revised from head to foot. The Income Tax system is very complicated, it is difficult to understand, and it is difficult to work. When this Income Tax system comes to be overhauled, I suggest to him that, so far as land is concerned, the land itself should be distinguished from the buildings and other improvements, that the land should be taxed on the basis of its market value, whether it is being used or not, and that that tax should be payable by the parties interested in that land in proportion as they share its land value. As much as the tax should be put on land values as possible, and as little as possible on buildings and improvements. I bring these matters before the Chancellor of the Exchequer, because there are some here who regret that they were not even foreshadowed in the Budget speech. We may hope for better things, and I trust we shall see something of better things in the Revenue Bill, but I warn the Chancellor that he has before him a double problem. He has not only the problem of finding fresh sources of revenue to meet the altered conditions of the time, but also of opening up natural resources, so as to increase that production which is so grievously hampered by the War. Difficulties of that kind, great as they are now, will be even greater in the days to come. He will find men coming home from the War seeking employment. He will find a great many of those who are employed in munition factories and various other occupations that serve warlike purposes will be thrown on the labour market. Our customers in other countries will be greatly impoverished, our foreign trade will not recover all at once, and the pressure in the industrial world will be very great. What preparation is he making to meet that? I put it to him that he should try to lay the foundations of a system which, instead of hampering industry, will encourage it and lead to its development. If he does that his tenure of the high office which he holds will be characterised in a way which will go down to posterity, and the work he undertakes will do as much to promote production as the adoption of the principles of Free Trade did to promote exchange.


I think there is in the country a general desire to support the Government in allocating increases of taxation upon all classes, but the change in Schedule B, whereby farmers are assessed, not upon a third of their rental, as before, but on their whole rental, is one which will press extremely hardly upon farmers. This change is made at a time when profits are by no means so large as the public often assume. The price of labour has gone up enormously and other charges and expenses have all risen, and now that Income Tax is being raised upon the whole rental, I think a burden is being placed upon many farmers which is more than they should be asked to bear. It is done at a time when food production is a very urgent matter. We have had Commissions appointed in the three countries to report as to how food production can be increased, but I think this burden which is now being placed upon farmers is going to discourage and to stop the increase of food which otherwise might have been attained. Just consider for a minute how this increase in taxation differs as regards different men. The farmer whose rent is £1 an acre will pay Income Tax on £l an acre, but where his rent is higher, where his land is rented at £4 an acre, he is going to pay Income Tax on £4 an acre, and yet his profits per acre may be not one whit higher than in the case of £1 an acre. I think that is an anomaly, and if the right hon. Gentleman desires to bring the farming community into what you might call equal treatment, he should differentiate and make some concessions.

Personally, I should rather like to have seen less taxation and more borrowing. At present Germany is not raising taxation. She is conducting this War by borrowing. I do not think Germany has anything to learn in the way of conducting war, and when we see what she is doing, and when we consider that after all in this current year this fresh taxation is only going to bring £30,000,000, while our extra expenditure is to be something like £1,400,000,000, and this £30,000,000 is a mere drop in the bucket, would it not have been wiser to refrain from so much extra taxation, whereby people are landed into heavy burdens when they may not have the same ability and determination to carry on the War to the very finish, and to take a leaf out of the German book and adopt more borrowing? I think if we had done that we might have avoided creating feelings of hardship in the country, and after the War was over we should then be able to determine as to how the burden might be borne.


I entirely disagree with the hon. Member opposite. I am delighted to know that the Chancellor of the Exchequer has at last proposed that this living generation should itself bear some of the burdens of this War, and not leave it all to posterity. There was a squire once who was planting trees on his estate. A friend asked him why he was planting them, and the squire answered, "To give umbrage to my remote posterity." That is what the hon. Member would do. Borrowing money and handing over the payment of the War to future generations is only giving umbrage to our remote posterity. I have risen in order to criticise one of the smaller proposals shadowed forth by my right hon. Friend—the postal arrangements by which the ½d. post, as I understand it, is to be entirely swept away. If the result of that great change were of great importance perhaps we might put up with it, but I understand that only £4,000,000 or £5,000,000 would be realised by abolishing the ½d. post entirely and by reducing facilities for Press telegrams, and other restrictions. I am afraid my right hon. Friend will hear a pretty loud outcry from the country when it is understood that the postcard, the ½d. stamp, and the familiar newspaper are all to be swept away after they have become thoroughly established in this country by a good many years' usage. Take, for instance, the postcard itself, which is an enormous convenience to millions of people—not only the rich, but the very poor—in regard to their domestic and business intercourse. Take, again, the ½d. postage on circulars. I know perfectly well that—amongst Members of this House at any rate—the advertising circular is very unpopular, and I entirely agree that this facility has been very much abused and has exalted the usefulness of the waste-paper basket in everyone's house; but, nevertheless, it should be remembered that there are many businesses which have been actually built up on the ½d. post. There are many businesses which depend on circularising for getting their customers.

I pass from that to the ½d. wrapper for newspapers. I think this proposal strikes a very severe blow at the newspaper trade. For many years newspapers have been accustomed to cultivate their postal circulation by the vise of the ½d. wrapper, and if they have to pay 1d. they will lose a vast amount of their circulation. I do not think that blow ought to be struck at newspapers unless the results were very much more advantageous than they are. In addition to that I understand it is proposed to increase the charge for Press telegrams, and it was put forward, and it has often been put forward, that the Post Office Department is losing money by the cheapness of Press telegrams. I do not believe it at all. I think the calculation is altogether based on a fallacy. I am old enough to remember—indeed, I was connected with the Press at that time, when the cheaper Press telegrams were introduced, and it was said then, as a recommendation of the change, that the wires, which now belong to the State, were all idle during the night, and that this was a use of what might be called idle plant and must be regarded really as a waste product, and if the profits of the Department are calculated on that basis I do not for a moment believe that Press telegrams would' be found to be unremunerative, but very much the reverse, for now the wires are being used all night through for sending Press telegrams. Then, of course, the news so conveyed is of enormous use to the public, and in so far as that is restricted I think the public will severely suffer. In order to make such vitally important changes in domestic intercourse, and in the conduct of newspapers and to justify such important innovations, you ought to have an equivalent result. You ought to have a game that is worth the candle, and I do not think it is, and I think my right hon. Friend will hear of it from a good many quarters.


My hon. Friend has said wisely that the Chancellor of the Exchequer has done a great stroke for the country in proposing to raise so large a proportion of the vast sums which are needed by extra taxation. I cannot help thinking that if the hon. Member (Mr. Hope) had thought of the fact that Germany has not attempted to raise any additional taxation since the War began, he would have seen that a very great effect would be produced upon neutral countries by the fact that we are preparing to bear a considerable part of the burdens of the War by additional taxation. I have not been able to follow the reasons which have induced the Chancellor of the Exchequer, in his otherwise generally broad and statesmanlike proposals, to put taxation on the import of the particular articles to which he had applied it. He gave us a mysterious indication to the effect that everyone would understand why he proposed the taxes on these particular articles, but I myself have not been able to follow, for instance, why he proposes to tax hats. It seems to me that you will not diminish the consumption of hats by taxing them, because hats will surely be produced in sufficient numbers in this country. It may be that the imposition of a tax on foreign hats will raise the price here, and in that way diminish the total consumption of hats, but I can hardly think that that was a particularly fortunate case in which to apply his principle. Surely it would have been better to have applied the principle to articles which could not by any possibility have been produced here. For instance, articles such as silk, velvet, and so on, which, so far as a large part of them is concerned, are imported from abroad, and a diminished consumption of which would help to affect the balance of trade. In that way the right hon. Gentleman would have abolished the sarcasm of the hon. and learned Member for Cork (Mr. T. M. Healy).

My principal object in rising was to ask the Chancellor of the Exchequer if he would kindly explain in rather more detail, to enable us to judge better when we get all the details of the Budget, his proposal in regard to the payment of Income Tax by the banks. I did not quite hear the latter part of his statement on that particular point. As I understand it, it means that the banks shall in future pay Income Tax on the interest paid to their depositors, and he said that that would have a particular result, the wording of which I did not hear. I would like to associate myself with what fell from a right hon. Gentleman a short time ago in regard to further details about the scope of the taxation of war profits. It is extremely important that the country should have in rather more detail to-night, if it is possible to give it, exactly what trades are to be included in this proposal. There are an enormous number of trades in regard to which it may be said that although the actual work done by them is not in connection with the War yet their profits are very largely affected by the War. Therefore, if the Chancellor of the Exchequer could give any further explanation on that point I think it would be a very great advantage to the country. The Chancellor of the Exchequer is to be congratulated on the very thoughtful way in which, apparently, he and his advisers have worked out the particular incidence of the proposals in regard to the extra profits made in the trades which he proposes to bring under the scope of his proposals. It seems to me that these have been thought out with very great care, and I hope, in fact I believe, they will gain general acceptance in the country. There has been a great deal of speculation in regard to the way in which the Chancellor of the Exchequer would work this matter. I am speaking-for those with whom I have discussed the question, and I think that all of them, and I have spoken to a great many, will be satisfied with the safeguards which the Chancellor of the Exchequer proposes.


I think the Chancellor of the Exchequer may fairly be congratulated warmly upon having made provision for raising enormous and gigantic revenue with reasonable fairness to all classes of taxpayers in the community. Criticism has been made that he ought to have borrowed more, and raised less money by taxation. I think that if any criticism can be made on the Budget it is that the Chancellor might have raised even more money by taxation than he has done. However, the yield to be raised in a full year is exceedingly large, and it will be time enough, possibly, to review the amount to be raised by taxation when the next Budget comes on. Therefore I cannot agree with my hon. Friend (Mr. Harry Hope), who thinks that we might have done more by borrowing and in that way have imitated Germany. I have never seen anything in which we ought to imitate Germany, except in making provision for what we know to be inevitable. In matters of finance I think we can very well take care of ourselves.

There was one provision in the Budget statement which particularly gratified me, and I think it gratified the House at large, and that was the provision for the taxation of war profits. I gather that the tax will be 50 per cent, on war profits nominally, and that it will work out to something more like 60 per cent. I would have liked to have seen the whole of these war profits taken. If the principle is this, and I think it is a sound princple to go upon, that no man ought to be allowed to make money out of the War and put it into his pocket, then why not take the whole of these war profits instead of the 50 per cent, or 60 per cent.? If the principle is right, what right have they to keep any of these war profits? Of course, I agree with the Chancellor of the Exchequer that in estimating the war profits you must make proper allowance for increased capital in order to ascertain what are the profits due to the War, but when you have ascertained fairly what is the amount of these War profits, I cannot for the life of me understand why you should not take the whole lot.


You would have to bring in the farmers' profits.


My hon. Friend says that that would mean bringing in the farmers' profits. I have not yet heard a reason why they are not brought in, but probably there are good reasons for that. As regards the classes who are included in this particular taxation, I see no reason why they should keep any of these war profits at all. After all, they are keeping these profits at the expense of the community. They have made profits when other men are laying down their lives. These men stay at home; they are not going to the front, volunteering for service, and when they stay at home I think they may be very fairly asked to pay any extra profits they have made during the War to the Exchequer as a fair contribution for the privilege of staying at home. There is one point in connection with the Income Tax to which I would call the attention of the Chancellor of the Exchequer. We are raising the Income Tax to the figure of 3s. 6d. I do not say that that is too much, but may I ask the right hon. Gentleman to consider an exemption in favour of officers who are fighting at the front, and also privates, because we know that there are some men who have joined as privates who are payers of Income Tax? I do urge the Chancellor to consider the case of these men. These men are making sacrifices in fighting our battles, sacrifices out of all proportion to any sacrifices we who stay at home are making. Is it not a little unreasonable to say to these men, "Sacrifices must be made in the way of taxation, and we shall call upon you, who are already making sacrifices by risking your lives for your country, to pay exactly the same amount in the way of Income Tax as the man who stays at home and makes money"? What I would suggest to the Chancellor of the Exchequer is that these men who have joined the Forces, and are fighting our battles, should have some reasonable exemption from the 3s. 6d. Income Tax. I do not suppose it would cost us very much, but I think it would be an act of fairness.

There is only one other point to which I would draw attention, and that is the question of whisky. I have asked several hon. Friends of mine since the Budget was introduced this afternoon why whisky is not more largely taxed, why there is no increased taxation on whisky, and I have not met anyone who could explain it. It seems to me that there is every reason why the taxation on whisky should be increased. We know that since the last increase of taxation on beer the rush to spirits has been very considerable. Less beer and more whisky has been drunk. I think that is a bad thing in itself. If you can make an alteration in the habits of the people as regards whisky and beer drinking by means of taxation, I think yon ought to do it, and that it is a good thing to do. It may be said the Chancellor of the Exchequer will lose revenue by increasing the taxation on whisky. That is a point on which his experts will advise him, and I should think that that would be extremely doubtful. Men are earning very large wages now, and it seems extremely probable that the men who drink whisky now will go on drinking whisky even if they have to pay 1d. or 2d. per glass more. Therefore, unless the increase in the whisky tax was so very much as necessarily to reduce the consumption to a far greater proportion than the tax was increased, you would have no loss in revenue. Look at it from another point of view. Supposing the effect of the increase of the taxation on whisky were to drive men from whisky to beer. In that case the Chancellor of the Exchequer would get more revenue out of beer, and on the whole he would probably lose no revenue at all. Even if he were to tell us that the effect of increasing the taxation on whisky would mean a loss of revenue, I think it would be a very good thing for the country. I do not pretend to be a purist in these matters, and I do not say this hypocritically; but I think that the less whisky you drink, especially in war time, the better. There is no article of consumption, especially articles of luxury, upon which taxation might be more fairly imposed than upon whisky, even if it should result in some diminution of revenue.

I shall be told that hon. Gentlemen from Ireland will object to any increased taxation on whisky. I do not think that is sufficient reason for not imposing such taxation. The Irish whisky drinker, if the whisky tax is put up, has three alternatives. He can either go on drinking his whisky and paying a little more for it, or he can drink less whisky, which will be far the best thing he could do, or he can turn his attention to porter. I dare say the Chancellor of the Exchequer knows that porter is a very congenial drink for Irishmen. Indeed, I think it is a congenial drink for most people who drink alcohol. I should not object to encouraging my own countrymen to resort to porter to a greater extent than to whisky. The effects of porter, as seen at fairs which perhaps the Chancellor of the Exchequer has attended, are far less deleterious than the drinking of whisky at fairs. You see none of that horrible stuff which is produced out of whisky in Irish fairs, stuff which drives men half mad, and which, besides interfering with their health, deters them from conducting their business affairs properly. Therefore, if the right hon. Gentleman is thinking of Ireland in this matter, let him persuade the Irish Members that it would be exceedingly desirable to put a little more tax upon whisky, with the object of inducing people to turn to porter. I think, so far as the effect in England is concerned, anyone, whether he is a teetotaller or a moderate drinker, would welcome an increase in beer consumption at the expense of a diminution in whisky consumption. On the whole, I congratulate the Chancellor of the Exchequer on his Budget. If it is not too late I would ask him to think over the whisky question, and we shall have reason to be grateful to him if he remodels his Budget in that direction.

8.0 P.M.


I want to call attention to one of the proposals in this excellent Budget. The point I wish to refer to is that of the taxation of all profit which may have been caused by the War. What I would like to suggest on the subject is that by bringing what we all call abnormal profits under the eye of the Chancellor of the Exchequer we may be able to relieve one of the great difficulties of the present day. By that I mean the disputes between employers and employés. Anyone who knows the circumstances knows that the feeling in the hearts of many of the working people in this country is that the employers at the present time are able to obtain very large returns, and the workers feel that they have the opportunity of getting something for themselves at the same time, and are determined to get it if they can. One of the speakers this evening referred to the feelings of Germany on hearing of labour disputes in this country. It ought to be the object of everybody, whether employer or employé, to try in every possible way to put an end to all the disputes which at present arise between employers and employés. One of the greatest causes of these unfortunate disputes is the feeling of the men that the masters are filling their pockets, and that they, the men, should get what they can for themselves.

I am speaking as an employer. I am speaking as one whose family has been engaged in industry as employers for certainly more than a hundred years, and I do believe that the great obstacle to industrial peace at the present time is this distrust and suspicion which the workers feel. The worker does feel a suspicion that his employer is benefiting himself and that he, the worker, is not receiving anything like a proportionate amount. The result is that instead of referring matters to arbitration, and instead of doing their utmost as regards the amount of work which they can do, they are far too much inclined to have resort to strikes. The taxation which is proposed is, I think, perfectly reasonable and perfectly legitimate, and, if it is carried out on proper lines and if you find a means of persuading the workers that they are not being unfairly treated, and that the employers are not anxious to make a profit out of them, you will go further than anything that has yet been done in dealing with the trouble which has done so much harm. A labour dispute in this country at the present moment is the worst thing that can happen. But if you introduce a fair system by which the profits of employers can be taxed I think at the same time that you are entitled to ask from the working man more regular attendance at their work in the first instance, and that they should agree to maintain the agreements arrived at that all disputes should be referred to some kind of arbitration. I would like to impress on the Chancellor of the Exchequer and on the whole Front Bench the necessity of doing something of the kind in order to get rid of all sorts of labour disputes, and enable the industries of the country to be carried on as they should be carried on. I think that this would do more to promote the industry and the fruitful taxation of the country than anything else that I can imagine. I am sorry to have to detain the Committee, but I desire to congratulate the Government on the proposals which they have laid before the House to-day, and I trust that they may have the benefit of the taxation proposed, and which the country is prepared to accept, as soon as possible.


It is superfluous to congratulate the right hon. Gentleman upon the lucidity with which he presented his Budget. He certainly showed himself to be an eminently model Chancellor of the Exchequer in submitting his proposals. In all sincerity I congratulate him. I think that the House also is to be congratulated upon the hilarity with which it received these proposals. It is certainly amusing to find that the proposal to impose such enormous taxes on the country should have been received by everybody in the House in such an hilarious way. I sincerely trust that when they come to pay the taxes hon. Members will pay them equally cheerfully as they received them when they were laid before the House. At the same time I want to say quite frankly that I cannot congratulate the right hon Gentleman himself on the variety of new taxes which he proposed. I have always been a Free Trader, and I have fought a great many Free Trade causes, and I did not expect to live to see the day when with a Liberal Prime Minister and a Liberal Chancellor of the Exchequer we should get Free Trade given away as it has been this afternoon. I listened to the terms of the speech with very profound regret. I have not had time to examine what will be the effect of these taxes, and what you are going to get by them, but certainly the announcement of the hon. Member for Cork, "What a blessing this Free Trade has been killed!" was received with great gratification by a good many Members who sit on the other side of the House. Therefore we must take it that this Budget has given away a great cause.


Oh, no!


I am not going to elaborate that, as I shall, I expect, have other opportunities of doing so. But to me it has been a matter of profound regret to listen to the announcement this afternoon, and what surprised me above all was that we should have these taxes imposed upon these things when, strange to say, the Prime Minister, above all men in the country, declared years ago that there was one new source from which revenue would be got, and that is the taxation of land values. That is the one subject to which he was committed above all others as the new source of revenue. No reference was made to that this afternoon. Therefore to me it is a matter of profound regret that he should state that that was to be the new source of revenue, and that soon after the formation of this Coalition Government we should be found taxing things against the taxation of which we have been fighting all our lives, while the one subject which, twenty-five years ago, he said should be the new source of revenue is not sought in this Budget. It was announced at the beginning of this Coalition Government that no cause should suffer. I consider that this cause of the taxation of land values has suffered enormously by this Budget. First of all, why did not you double or treble the taxes at present levied upon land? Why should you single out all these things, tea, sugar, and so on, for a general increase while you do not at the same time increase your taxes upon land? Therefore I say that the new proposals in the Budget have distinctly put back the cause of the taxation of land values. I think that that is scarcely fair.

I will give an illustration, and perhaps the House will excuse me for referring to an experience of my own. When I retired from business I was compelled, of course, to invest my money in various things. I bought shares in railways, banks, and insurance companies, many of which shares, I regret to say, have fallen enormously in value. Take, for instance, Lloyd's Bank which was always looked upon as a first-class bank. I bought shares at thirty-two and they now stand at twenty-two. London Joint Stock, bought at thirty-one and a half are now nineteen. National Bank Stock, bought at 456 are now 270. That is an illustration of the great depreciation of capital value. Like a prudent man I did not put everything into banks, insurance companies, and railways. I put some money into land, and, strange to say, that is the one subject which has not decreased in value, but which has increased in value, and I can get higher rates for the land which I bought than I paid myself. Yet that is the one security which the Government has not come at, and upon which it does not ask me to contribute as it should under a fair scheme of taxation. I regret now very much indeed that I did not put all the money into land, notwithstanding the fact that I am chairman of the Land Values Group.

I say that in my judgment this Budget has very materially affected our cause. Both the Chancellor of the Exchequer and the Prime Minister, in particular, are committed to this new source of revenue, and yet when they are so anxious to find out where they can get money the one subject which has increased in value is the one subject which they altogether ignore. Assume for a moment that the Germans landed in this country; what value to me would my land be then? It would be of no value at all, because they would take it if they landed here. But everybody is called on to contribute a like security while the land is not called upon to contribute. Surely that is not fair. I sincerely trust that the right hon. Gentleman, as I dare say he will have to find money elsewhere, will see that this cause does not suffer as it has suffered by the introduction of this Budget. I regret very much to have to speak like this, but it is only fair to say, speaking for a great many men, that the result of this Budget is that our cause has suffered enormously. I am not speaking without experience, because I own land and other subjects. I speak from practical experience from house property, and so on. And there is no property which has gone up so much as workmen's houses. I trust, therefore, that the working people of this country will examine this Budget with very great care. They have been taxed in different forms, while this one great security which it has always been assumed would bear a substantial burden at this particular time, a time of war, is the one subject which has been ignored. I regret very much that where there has been so much praise I should have to introduce a hint of discord, but it is only right, speaking for a great many people, that I should let the Government know that, so far as that aspect of the Budget is concerned, it will cause very great despondency in the country.


The speech of the Chancellor of the Exchequer this afternoon is of very painful import to the future of this country. I suppose that the method in which we raise taxation is of greater import to the people of this country than to any of the other belligerents. For instance, the prosperity and the maintenance of the national existence of Russia are determined by the condition of her peasantry producing from the soil. The same rule holds good to a very great extent of Austria and France, and to a lesser extent of Germany. But the whole national prosperity and the condition of this country depend in the main upon the maintenance of the fiscal system which has given us our pre-eminence in finance and trade, and which the vast majority of our population are anxious to defend. The most striking fact in connection with this Budget, and the one which, apart from the amount involved, differentiates it from all the Budgets of the last sixty or seventy years, is that in this Budget the Chancellor of the Exchequer has scrapped the Free Trade policy of this House. [HON MEMBERS: "No!"] You may say "no." I dare say that the Chancellor says "no" because only a few items have been singled out for the imposition of duties. But in every country where Protection has been introduced in almost every case it was introduced as the result of war, and it always started with the imposition of a few taxes for the purpose of revenue. If you scrap the principle you virtually scrap Free Trade. Where are we to-day? We know that this is only the beginning of great increases of taxation. This is not the last word in war taxation; it is only the first word; and, consequently, we have to regard very carefully the new sources of taxation which have to be found and the direction in which the Chancellor of the Exchequer is going. If we are to have taxation on imports to raise £2,000,000 for certain economic results, we are going to have further taxation on imports for further economic results in the future.

This taxation of imports—plate glass for motor cars, and other articles—is a concession to Tariff Reformers. If it were necessary, I could understand the imposition of these taxes, but, until we have exhausted every other source of revenue, these taxes should not be imposed. If taxes are necessary for the conduct of the War, there is another vast source of revenue in this country, a source which the Prime Minister has pointed out in the past, a source to which we must go in the future, and a source from which enormous revenue can be raised, and which has been long untouched by the Chancellor of the Exchequer, namely, the communal value of land. You may tax imports, you may levy taxation on the poor by way of a duty on sugar and on tea, but the land monopoly is sacrosanct; you must not raise an extra penny from it; that is the position declared by the Chancellor of the Exchequer. We have to realise this fact: Owing to the War and the necessities which have arisen, we have to find a new source of taxation, and, perhaps, a new principle of taxation; or, as I prefer to put it, we have to revert to an old principle, namely, that if this country is in danger, the first people who should make special contribution to its defence are those who own the land. The first who ought to defend the land are those who own the land. That is no new principle; it is reverting to the fundamental principle of the feudal system of this country. We see these vast revenues that are at present being raised, and we recognise that greater revenues have to be found in future. It is impossible for the people of this country to maintain two systems of taxation in future. No longer should the people out of the wealth they create render up their hundreds of millions a year for the simple right to live in their country, getting no services in return; and, at the same time, it should be remembered that besides rendering to the State these hundreds of millions, they are going to be called upon in the future to pay further for the cost of this War.

The only way in which you can relieve the burdens of the people is to transfer to the Treasury for the cost of the War every part of that tribute which monopoly is levying on the country. You will be driven by necessity in the future to direct taxation on the communal value of the land, or you will be driven in the direction of Protection and the taxing of imports. You have a clear issue now—either you are going to put taxation on land values or you are going to have Tariff Reform or Protection; and, in this Budget, the Chancellor of the Exchequer has turned his eyes in the direction of Tariff Reform and Protection. I hope such opposition will be aroused to this taxation that the right hon. Gentleman will be compelled to withdraw these proposals. Some people think that a great gain to liberty and civilisation is to come from the success of this War. I, for my part, see no gain that can be equivalent in any way to the loss of prosperity, and the degradation and the sinking of the people, if this Budget means that it is going in the direction of Tariff Reform, and that it is to be followed by the introduction of Protection. I believe it is only on the lines I have suggested that the prosperity of the people of this country can be maintained. I deeply regret this particular blot upon the Budget, and I do trust that it will receive such opposition in this House and the country that the Chancellor of the Exchequer will be compelled to withdraw these particular proposals.


I desire to join hon. Members in congratulating the Chancellor of the Exchequer upon the gift of clear exposition which he has shown in putting his Budget before the House, and I am quite sure that in all quarters of the House that the right hon. Gentleman will be congratulated. There are many features of this Budget, and of the speech in which it was explained, with which I am in agreement, but I take it that the Chancellor of the Exchequer will realise that if I say something by way of criticism it is criticism confined to one particular corner, while I congratulate him on the main features of the statement he has made. I think he dismissed rather too lightly the apprehension of my two hon. Friends who have spoken last. I am quite sure that the House will see that fear was justified by the cheers which the hon. Member for Cork received when he stated that in his view this was the last of Free Trade. Whatever the right hon. Gentleman may think the Protectionists of this country feel that they are on the way to success. If I run through the articles I see that taxes are to be imposed on hats, watches and clocks, and I do not see the object of those taxes unless they are expected to be a protective tariff. What would the revenue on hats, clocks and watches amount to? It would be infinitesimal, a mere drop in the bucket. It would not produce revenue enough to finance the War for twenty-four hours.


For twelve hours.


For twelve hours my hon. Friend says. We were told that it was desirable to have some taxes for checking consumption. Surely it is not a desirable thing that poor children should go without hats and without good hats. Surely it is not a desirable thing that the cheap watch, which during the last few years has been in the possession practically of every lad in this country, should no longer be available to him. The tax may act as a protective tax and stimulate the watch industry in this country, and similarly hat making in this country. But unless it has that advantage and that it acts as a protective tariff I would like to be informed what other advantage it has. The tax on films, I admit, does secure a substantial sum, but surely the right hon. Gentleman does not suggest that the effect of this tax will be in any way to reduce the amount of money spent upon the attendance at cinemas in this country. The only result, I think, will be that your films will not be so good. We all know that they are produced in California in a way in which they cannot be produced in this country, so that people who take amusement in that way will not be able to secure such satisfactory results. The cinema, too, will be less educational in future and will be more a mere matter of amusement, because the finest films which have the greatest educational value are films which come from abroad.

I pass from that aspect of the subject because I rose merely to emphasise the point which has been made by my hon. Friend the Member for the Tradeston Division of Glasgow (Mr. Dundas White) and by the two hon. Gentlemen who have spoken last, and that is to express my deep regret that while the right hon. Gentleman feels it is desirable, and as I agree he was bound to feel it desirable, to increase every tax, yet I am right, I think, in saying that practically every tax except the taxes on beer and spirits, which were largely increased by his predecessor, including an increased Income Tax and taxes on tea and sugar, the food of the people, every tax has been increased with the exception of one tax which stands still, and that is any increase on the tax on land values. We have heard a great deal of criticism from the other side with regard to those particular taxes. I do not know what is weighing with the right hon. Gentleman. Is the idea that if he increased those taxes he would be raising a matter of party controversy? Surely it could not be said to be a matter of acute controversy to increase existing taxes anticipated by this House while at the same time he throws down the apple of discord with regard to the Free Trade question! What is the other criticism? We hear it said that those taxes have produced so much disappointment because the yield has been so small. Is that a reason why the landowners of the country should not be called on for an increased contribution? When those taxes were imposed—whatever the result has been—the clear intention of this House and of the country was that the landowners of the country should be called upon to make a real contribution to the revenue of the country. If in practice difficulties have arisen as a result of legal decisions, and so on, so that the yield is small, surely that is a reason, not that they should be allowed to stand still while every other tax increased, but a reason for a substantial increase.

We may be informed that because of those legal decisions it would be impossible if you increased the existing taxes—that is, Increment Duty and the tax on undeveloped land, and so on—to get a full yield. We may be told that they are unsatisfactory taxes, and that experience has shown that they are so in certain directions. If that be so, I suggest to the right hon. Gentleman that he might merge all those taxes—that is, the Increment Tax, Undeveloped Land Duty, and Reversion Duty—in a straight tax upon land values and place, say, a penny in the pound on the capital value of land in this country and let all those other taxes go. It cannot be alleged that such a tax would be impossible to collect because a similar tax is collected in every one of the great Colonies—in Australia and in Canada—and what has been possible there should not be impossible here. We may be told it cannot be done this year. I think I am speaking for my hon. Friends as well as for myself when I say that if the right hon. Gentleman will inform us that he is prepared to put the valuation right so that it can be done in the next Budget, then we will be quite satisfied not to press the point further now. I am sure there is a great body of public opinion outside this House which will say that "we could not be satisfied to go on to the end of the War and beyond the War feeling that all the revenue for carrying it on is to be obtained from every source while land values are not to be called upon to make their fair contribution." Hon. Gentlemen on the other side of the House to-day once or twice suggested that the temporary members of the staff of the Land Valuation Department who have been served with notice terminating their employment might be found employment in other Government offices. I should like to suggest to the right hon. Gentleman that those members of the staff might be retained for the purpose of bringing the valuation up to date, or even, as my hon. Friend (Mr. Dundas White) suggests, in order to complete the valuation. If that were done and if the valuation were brought up to date, then I think by the time of his next Budget it would be possible for the right hon. Gentleman to impose a tax of the kind I have suggested. I appeal to the right hon. Gentleman not to close his ears and his mind against this proposal, which I can assure him has been pressed with great earnestness by a large body of people who believe it to be a fair and just way of financing this War.

Question put, and agreed to.

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