Commons Sitting of 12 July 1916

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

SHOPS ACT, 1912.
Copies presented of Orders made by the Council of the undermentioned local authority, and confirmed by the Secretary of State for the Home Department:—
Borough of Chorley (two) [by Act]; to lie upon the Table.

ARMY (TERRITORIAL FORCE).
Copy presented of Scheme made by the Army Council for the establishment and constitution of an Association for the county of Berks, under the Territorial and Reserve Forces Act, 1907 [by Act]; to lie upon the Table.

HOUSE OF COMMONS (KITCHEN AND REFRESHMENT ROOMS).
Report and Special Report brought up, and read;
Report and Special Report to lie upon the Table, and to be printed. [No. 98.]

ORAL ANSWERS TO QUESTIONS.
  WAR.

    NAVAL ENGINEERS.
    Sir BERTRAM FALLEasked the First Lord of the Admiralty if he will amalgamate the naval engineer department and abolish the distinction now existing between the new and old style naval engineer, seeing that these gentlemen are now working side by side but have different titles and different uniforms; and if he will consider whether the present state of war forms an admirable opportunity for an amalgamation?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): Present arrangements as regards the officers referred to are found to work quite satisfactorily. It is therefore not proposed to make any change therein.

    COMMISSIONED RANKS (ROYAL NAVY).
    Mr. ASHLEYasked what are the corresponding commissioned ranks in the Navy, as compared with the Army, who will benefit by the concessions recently given to subalterns enabling them to put in a claim for a grant to meet rent and other liabilities?
    Dr. MACNAMARA: The commissioned ranks in the Royal Navy corresponding to subalterns in the Army are sub-lieutenants, engineer sub-lieutenants, and assistant paymasters under four years' seniority. Officers of the Royal Marines hold ranks similar to officers of the Army. The ranks named will be eligible for the same concessions as subalterns in the Army.
    Mr. ASHLEY: Will the right hon. Gentleman take steps to let that be known in the Navy? I think that it is not known in the Navy, though it is known in the Army.
    Dr. MACNAMARA: If this answer does not give sufficient publicity I will do so.

    ORKNEY MAIL SERVICE.
    Mr. CATHCART WASONasked the Secretary to the Admiralty, if he is aware that owing to the action of the Admiralty the contractors of the Post Office have abandoned their contract for the conveyance of the Orkney mail and now demand a 50 per cent. increase for a greatly reduced and unsatisfactory service; and whether he will consent to carrying mails by the Admiralty on the days when the mail boat does not run?
    Dr. MACNAMARA: Naval requirements have necessitated a change in the route specified in the Post Office contract, and it is understood that the service has been reduced by the General Post Office to three days a week instead of six. I am afraid the Admiralty cannot undertake the carrying of mails as suggested in the latter part of the question.
    Mr. WASON: In consideration of the circumstances of the case will the Admiralty discuss with the Postmaster-General the commandeering of a ship for this purpose of public use?
    Dr. MACNAMARA: I cannot undertake to carry mails.

    UNTRIED PRISONERS IN ENGLAND.
    Mr. GINNELLasked the Under-Secretary of State for Foreign Affairs whether the American Government has sent an inspector, or has been asked to send one, to inquire into the condition of untried prisoners and internees, British and Belgian, in prisons and penitentiary internment camps in this country; if so, whether such an inspector will be invited to visit the penitentiary camp in which Belgians are detained at Reading; and, if not, will he say why this is not to be done?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Herbert Samuel): The answer to the first part of the question is in the negative. There is no ground for adopting the course suggested.
    Mr. GINNELL: Will the right hon. Gentleman answer the last part of the question? Why will this not be done?
    Mr. SAMUEL: I have answered that. There is no ground.

    EXCHANGED PRISONERS.
    Mr. R. McNEILLasked whether any and, if so, what precautions are taken to secure that all prisoners returned from Germany in exchange for German prisoners in England are bonâ-fide British citizens, without hostile origin or association.
    The UNDERSECRETARY of STATE for FOREIGN AFFAIRS (Lord Robert Cecil): All persons proceeding to this country from the Continent must be supplied with passports which require the visa of the British Consular Officer at the port of embarkation. The passports and other documents carried by persons arriving in this country from the Continent are closely scrutinised at the port of arrival by officials of the Home Office
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    and War Office, who take all possible steps to prevent persons of enemy nationality entering the country.

    SIR FRANCIS OPPENHEIMER.
    Mr. R. McNEILLasked the Under-Secretary of State for Foreign Affairs what diplomatic position is now filled at The Hague by Sir Francis Oppenheimer; whether this gentleman is a person of hostile origin or association; if he is aware that members of Sir Francis Oppenheimer's family have remained at Frankfurt-am-Main since the outbreak of war; and if he will say why British interests in neutral countries are not entrusted exclusively to men of British birth and association?
    Lord R. CECIL: Sir Francis Oppenheimer is at The Hague in virtue of his appointment as Commercial Attaché to His Majesty's Legation, which he has held since January, 1912, with the personal rank of Acting Counsellor in the Diplomatic Service. He is a natural-born British subject, his father having come to this country in 1855, and having been naturalised in 1864. I am not aware that members of Sir F. Oppenheimer's family have remained at Frankfort-am-Main, though I understand that his mother was required to leave that city by the German authorities. His Majesty's Government consider him exceptionally qualified for his appointment, and have the highest opinion of his services to this country, the value of which it would be difficult to overestimate.
    Mr. McNEILL: The Noble Lord has not answered the last part of the question—why British interests in neutral countries are not entrusted exclusively to men of British birth and association?
    Lord R. CECIL: He is of British birth and association. He is entrusted with these duties because His Majesty's Government are quite satisfied that no one could discharge them better.

    PEAT FUEL (IRELAND).
    Mr. GINNELLasked the Under-Secretary of State for Foreign Affairs whether he has obtained and will make available to those interested in the promotion of peat industries in Ireland after the

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    War any of the information frequently asked regarding the working of such industries in other countries, especially in Sweden, the nature of the bogs, conditions of labour, number employed, processes, cost of Anrep and other machinery, output, facilities of transit, value, and financial results for the latest period for which these are available; if not, whether any deputation is being sent to Sweden to study those things there; and, if not, whether facilities will be afforded to private inquirers to go to Sweden for this purpose?
    Lord R. CECIL: As I informed the Hon. Member on 23rd March, this matter cannot be inquired into at this moment by officials who are already most heavily burdened by the extra work entailed by the War; but inquiries will certainly be made after the termination of hostilities. So far as I am aware no deputation is being sent to Sweden to study the question, but if any competent and properly accredited private individuals wish to go there for this purpose His Majesty's Minister at Stockholm will, of course, afford them all proper assistance.

    GERMANS IN NEUTRAL SHIPS.
    Mr. SWIFT MacNEILLasked whether the Foreign Office rule still obtains that Germans of military age, being subject to military service, are to be regarded as members of the enemy's forces and liable to capture if found on board neutral ships; and, if that rule has been modified or abrogated, what are the reasons of the change, regard being had to the fact that any modification will release thousands of German reservists now resident in the United States and the South American Republics?
    Lord R. CECIL: No change is contemplated in connection with the rule or practice referred to in the question. His Majesty's Government believe that that practice is in full accordance with the Law of Nations.

    CEYLON.
    Sir HERBERT ROBERTSasked the Secretary of State for the Colonies whether he is aware that the auction sales of arrack rents for Ceylon have produced over £70,000 more for the year 1916–17 than for the previous year, and that every district shows an increase except
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    Negombo, Western Province; whether this is the only district where the temperance movement has continued in active existence; whether, throughout nearly the whole of Ceylon, temperance meetings have ceased to be held owing to the fear of the people of incurring the displeasure of the Government; and whether he can cause an announcement to be made that the Ceylonese may resume their temperance work with the approval of the Government?
    The SECRETARY of STATE for the COLONIES (Mr. Bonar Law): I have not yet received the figures for the year 1916–17, but the Estimates for the current year show a decrease of Rs.550,000 in the revenue from arrack, rum, and toddy licences as compared with the previous year. The attitude of the Ceylon Government towards legitimate temperance work has been fully explained in the Legislative Council and in published correspondence, and I have no reason to believe that misapprehension now exists.
    Mr. GINNELLasked whether Mr. V. L. Samarasinghe, of Baddegama, Ceylon, a petition drawer by profession, and certified by Mr. Robert Bailey Hellings to have an excellent knowledge of English, is one of the persons whom he alleges to be illiterate and not responsible for his affidavit made before a magistrate on the 7th July, 1915, setting forth certain illegalities practised upon him by the military and police; whether the new trial ordered by Chief Justice Wood Renton in this man's case, on account of the conviction without evidence in the first trial, has yet been held; whether any form of redress has been given to Mr. Samarasinghe; and what explanation Sir Robert Chalmers has given of this case?
    Mr. BONAR LAW: I have read the affidavit in question. I have received no separate report in this case; but, since it appears that it received the careful consideration of the Chief Justice of Ceylon, I see no sufficient reason for intervening in the matter.

    HARVEST LABOUR (SCOTLAND).
    Mr. WATTasked the Secretary of State for War whether he is aware that farmers in Scotland found much greater difficulty in getting soldier help at their harvests than did farmers in England; that practically all the applications in

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    England were satisfactorily dealt with, whereas few of the demands of the Scottish farmers succeeded in getting the desired assistance; will he say why this was so; and whether any arrangements are being made this year by his Department whereby soldiers will be available in greater numbers in Scotland?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): I have not seen any figures which bear out what is stated in the first part of the question, nor is there any record of complaints having been received to that effect. I do not think it is the case that all applications in England were met. I can, however, assure the hon. Member that the arrangements this year are the same for England and for Scotland, and a report has been received from the Scottish command which has been in communication with the Scottish Board of Agriculture, that the arrangements are considered satisfactory.
    Mr. WATT: May we rely on getting this soldier help for the harvest in Scotland?
    Mr. FORSTER: I should hope so.

    MILITARY SERVICE.

      MEDICAL BOARD EXAMINATIONS.
      Mr. REND ALLasked whether men of military age who were examined by the medical board for their district before 1st June last and passed for garrison service only are exempt from immediate service, and have received notice that they will not be called up till 30th August next, while men who were so examined and passed since 1st June last are liable to be called up immediately; and, if so, what is the reason for this difference of treatment based merely on the date of the medical board's examination, which may result in the immediate calling up of men, passed for garrison service only, attested as long ago as 1915, but who did not go before the medical board until after 1st June last, while a man who attested on, say 30th May, who went before the medical board on 31st May, and was passed for similar service, is not called up till 30th August or after?
      Mr. FORSTER: The requirements of the Army change from time to time, and in the beginning of June it was found to be
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      necessary to take the men fit for garrison duty, and it may be that owing to the changing exigencies of the Service there have been some inequalities of treatment, such as the hon. Member has in mind. But amongst those who have not yet been called up the younger unattested men will be taken first.

      UNATTESTED MEN.
      Mr. RENDALLasked whether the temporary exemption of men, passed for garrison service, applies to unattested men as well as attested ones, if they were examined by the medical board before 1st June last; and does it make any difference if such men go before the medical board first and attest afterwards?
      Mr. FORSTER: The answer to the first part of the question is in the affirmative, subject to the proviso that the men must have received a certificate of exemption. The answer to the second part of the question is in the negative, but I would point out that there are comparatively few men who can still attest and join a group. There are only those who were previously rejected as unfit and lads who were born in 1898, and who have not yet attained their eighteenth birthday.

      CONSCIENTIOUS OBJECTORS.
      Mr. RENDALLasked the Secretary of State for War whether he is aware that Thomas Merrick, a conscientious objector at Bristol, who had declined to join the Army and was living at home liable to arrest, was induced by a Mr. Brownrigg, acting for the recruiting authorities, to go to the recruiting office to see a Major Carr, on a pledge that he would not be detained there; that Merrick did this and was then arrested, and was thereby deprived of the civil trial he would otherwise have been entitled to; and will he take such steps as will reinstate Merrick in his right to have the question of his arrest decided by the Bristol magistrates?
      Mr. WATTasked the Secretary of State for War whether there has been a widespread outbreak of scabies among the soldiers in Dublin during the last few weeks; and, if so, whether this has been traced to the uncleanliness of the bedclothes used; and whether any precautions are now being taken in Dublin and elsewhere to have the blankets, etc., thoroughly cleansed at much more frequent intervals?
      Mr. CHANCELLORasked (1) whether Willoughby Perrin, No. 4992, a conscientious objector conscripted into A Company, 2/7th Cheshire Regiment, now at Old Warden, Bedford, was forcibly vaccinated in June, his arms being held by soldiers whilst the operation was per performed; seeing that this was a violation of the undertaking given to this House, whether the officer who performed this operation will be punished, and what disciplinary measures will be taken with officers guilty of such conduct in future; (2) whether he is aware that Private William Good, No. 24495, 3rd Battalion K.S.L.I., G Company, who joined the Colours on Friday, 2nd June, and was sent to Pembroke Dock, whilst suffering from inflamed arm and sore throat following vaccination, was compelled to attend drill on 20th June, when he complained of giddiness, became unconscious, and died in Pembroke Hospital without re covering consciousness at five o'clock the next morning, 21st June, and that in the last letter received from him by his wife four days before his death he complained of his suffering from vaccination; whether he was buried without an inquest, though his wife, had been informed that an in quest would be held; whether, after his burial on 24th June, she was informed that the cause of death was meningitis, though the illness resulting in death commenced with vaccination; and whether any and, if so, what compensation the widow will receive for the loss of her husband in the Army service; and (3) whether he is aware that smallpox recently broke out among the ⅙th Battalion Essex Regiment, C Company, encamped in Egypt, that out of seven men in one tent two vaccinated men, Corporal Jackson and Private Edrey, contracted the disease, that the only unvaccinated and uninoculated man in the tent, Private Crofts, escaped infection, and that Private Crofts was selected, by his own desire, to nurse the small-pox patients for three days pending their removal to the base hospital; whether he is aware that two other men subsequently fell victims to fever and were nursed a further three days by Private Crofts in an isolation tent; whether, in view of these facts, it is still maintained by the War Office that un vaccinated and uninoculated men are a danger to their comrades; and whether he will honour the last promise given by Lord Kitchener that no pressure should be put
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      upon conscientious objectors to vaccination and inoculation by punishing officers guilty of using such pressure?
      Mr. FORSTER: Inquiry will be made about the matter dealt with in these questions, and with the permission of the hon. Gentleman the Under-Secretary of State will send them the results of the inquiries by letter.
      Mr. E. HARVEYasked the Home-Secretary whether he is able to state the progress that has been made with regard to the arrangements for the conscientious objectors to military service who have been transferred to civil prisons from the Army?
      Mr. SAMUEL: The Committee appointed by me have now, practically completed the necessary arrangements for the transfer from prison to work of national importance of those men whose objection to military service may be held to be genuine by the Central Appeal Tribunal. The arrangements can be put into operation as soon as the cases are dealt with by the tribunal.

      ARRESTED AS ABSENTEE.
      Mr. E. HARVEYasked the Secretary of State for War whether he has yet received a report on the case of Mr. Sidney J. C. Warr, of Southend, who made his claim for exemption before the Appeal Tribunal on Saturday, 17th June, and on the 24th received a telegram from the tribunal granting him leave to appeal to the Central Tribunal, but not withstanding that he had returned his calling-up paper to the recruiting officer with the information that he was appealing to the Central Tribunal was arrested on 27th June as an absentee; and what steps he is taking to remedy the injustice that has been done?
      Mr. FORSTER: I have received a report from the Southend Recruiting Office about a man of the name of Warr whose Christian names are Reginald Moss Newport. This man does not seem to be identical with the man named in the question, who does not appear to be known. If Reginald Moss Newport Warr is the man in whom the hon. Member is interested, the particulars contained in the report will be sent to him by letter, with his permission.
      Mr. HARVEY: It is not the same person at all. The facts given refer to a different person.
      Mr. FORSTER: I said I did not take it that it was the same person, but further inquiries will be made.

      CORPORALS REDUCED TO PRIVATES.
      Mr. HOGGEasked the Secretary of State for War why men who are corporals when in France are reverted to privates when they return to this country?
      Mr. FORSTER: If men who have been made substantive corporals have been reverted to the rank of private on return to this country this would be wrong. If my hon. Friend will send particulars of any cases he has in mind to the War Office by letter, inquiry will be made with a view to rectification of errors if there have been any. It occurs to me, however, that my hon. Friend may be referring to men who have been given the acting rank of corporal. The essence of acting rank is that it is only held while the duties of the acting rank are actually performed. Acting rank is given up if the soldier comes home and ceases to perform the duties of the rank in which he had been appointed to act.
      Mr. WATT: Is the hon. Gentleman aware that there is widespread dissatisfaction, not only amongst the soldiers but among their relatives at their being reduced?
      Mr. FORSTER: I am afraid that is one of the drawbacks attaching to acting-rank.

      CIVIL SERVANTS.
      Colonel YATEasked the Prime Minister whether, considering that since the Military Service Act is now in force and the scheme for making grants for meeting rent, rates, taxes, and other liabilities has been applied to all lieutenants and second lieutenants joining the Army,' and to the fact that conditions are now entirely different from those existing at the commencement of the War, he will reconsider the decision of the Government in the case of those Civil servants whose desire to join the Forces of the Crown for the War has not been acceded to on account of the cost to the State involved in making up their military pay to the amount of their Civil Service salaries at the time of joining?
      The FINANCIAL SECRETARY to the TREASURY (Mr. McKinnon Wood): All Civil servants are released for military service if, and as soon as, they can be spared
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      from their ordinary duties, and in no case has permission to join the Forces been refused on account of the cost to the State involved in making up military pay to the amount of civil pay. As my hon. and gallant Friend was informed on the 6th instant, the Government do not think that the change in the conditions since the outbreak of war would justify an alteration of the present arrangements as regards the pay of Civil servants when serving with the Colours.
      Colonel YATE: Is this not constituting a privileged class among young Government clerks who arc being treated differently from all others?
      Mr. McKINNON WOOD: I do not think so. The terms offered by some great municipal authorities are more generous

      FRIENDLY ALIENS.
      Sir W. BYLESasked the Home Secretary whether the decision of the Government, recently announced, that men of Allied nationality must either join the British Army or be deported to their own country is irrevocable, or will it need the sanction of Parliament; can he give any estimate of the existing number of Russian Jews who have sought asylum in this country because they are denied religious and political rights in their own; and is he aware that there are hundreds of such men in Manchester and Salford, most of whom have settled there to enjoy freedom of conscience?
      Mr. SAMUEL: I would refer the hon. Member to the answers I gave yesterday on this subject. I have no information that would enable me to give an estimate of numbers such as is asked for in the second part of the question.
      Mr. WHITEHOUSE: Is legislative sanction required for the deportation of these people?
      Mr. SAMUEL: No, Sir.

      SOLDIERS PHYSICALLY UNFIT.
      Mr. PATRICK MEEHANasked the Secretary for War (1) whether a pension will be granted to Private John Powders, No. 5032, Leinster Regiment, who was discharged from the Army on the 5th May, 1916, as physically unfit for war service; whether he is aware that Powders served sixteen years in the Army before reenlisting on the 27th July, 1915, and took part in the South African Campaign;

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      whether, in arriving at the amount of his pension, his full service in the Army will be taken into consideration; (2) whether he is aware that Sapper James Gunne, No. 40375, Royal Engineers, who was discharged from the Army on the 20th December, 1915, as physically unfit for war service, having contracted rheumatism as a result of wettings received while in the Army, has been in receipt of a weekly payment of 10s. 9d. up to the 20th June, 1916; if he will state why the weekly payment to Gunne, who has a wife and six children to support, has now been reduced to 4s. 6d. per week; and (3) whether he is aware that Private Christopher Dunbar, No. 2466, Leinster Regiment, who was discharged from the Army last year, having lost his right leg, has been in receipt of a pension of 25s. per week until May last; and if he will state why the pension of Dunbar, who has an aged father dependent on him, has now been reduced to 12s. 6d. per week?
      Mr. FORSTER: I am making inquiries into these cases, and will let my hon. Friend know the result as soon as possible.

      UNDER-AGE SOLDIERS.
      Mr. P. MEEHANasked the Secretary of State for War if he is aware that Private Michael M'Loughlin, No. 22691, Dublin Fusiliers, 3rd battalion, will not attain the age of sixteen years until the 1st December next; if he is aware that the boy's birth certificate was forwarded to his commanding officer last January; whether M'Loughlin is now in France or on his way thereto; and whether this boy will be forthwith discharged from the Army?
      Mr. FORSTER: I am not aware whether the facts as stated are correct; but inquiries will be made, and if the statement of Private M'Loughlin's age is found to be correct he will be forthwith discharged from the Army.
      Mr. WATTasked the Minister of Munitions whether he has any complaints from Scotland, and in particular from Argyleshire, as to the members of tribunals moving for and influencing exemption for their own tenants so that such members of tribunals may be ensured their rents during the currency of the War; and, if so, will he circularise tribunals that men with pecuniary interests in the cases ought not to sit on them while these cases are being tried?
      The LORD ADVOCATE (Mr. Munro): The answer to the first portion of the question is in the negative. As regards the second portion, the regulations and instructions under which the tribunals work provide that a member shall not take part in the consideration of or vote upon any question relating to an application in the decision of which he is personally interested. This being so, further instructions would only be redundant.
      Mr. PRINGLE: Is my right hon. Friend not aware that in one case a tradesman who was a tenant of one of the members of the tribunal was exempted, whilst a competitor in business, who had been much longer in business, was sent into the Army?
      Mr. MUNRO: I am not aware of that, but if my hon. and learned Friend will give me particulars I will inquire.
      Mr. WATT: Is my right hon. Friend aware of the fact that lawyers and factors on tribunals speak for their servants and their clinets?
      Mr. MUNRO: No, I am not aware of that, but if my hon. and learned Friend will follow the example of my other hon. and learned Friend I will inquire.

      DEPENDANTS' ALLOWANCES.
      Mr. MacCALLUM SCOTTasked the Financial Secretary to the War Office whether a soldier who can prove to the satisfaction of the authorities that he supported his mother prior to enlistment, but who, whether through negligence or through some relative supporting his mother, omitted to apply for a dependant's allowance for her till after December, 1915, is now prohibited from applying for an allowance?
      Mr. FORSTER: The rule referred to by the hon. Member is not interpreted harshly, and many cases are favourably considered in which, owing to a genuine misunderstanding or some exceptional circumstances, the soldier omitted to claim separation allowance within the time prescribed in Regulations.
      Mr. MacCALLUM SCOTT: If the soldier can show to the satisfaction of the military authorities that his parent was, as a matter of fact, dependent upon him, although he

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      has delayed making application for the allowance, will he receive the allowance in that case?
      Mr. FORSTER: Yes, I think in that case we should certainly allow the claim.
      Mr. MacCALLUM SCOTT: The question which I asked was, if the soldier can show to the satisfaction of the military authorities that his parent was dependent on him as a matter of fact before he enlisted, will they then grant the allowance, even although he delayed making an application?
      Mr. FORSTER: Yes, I think so—certainly.
      Mr. CURRIE: In that case, will the allowance be retrospective, or is the hon. Gentleman only referring to the future?
      Mr. FORSTER: I think it will have to date from the time when the application was made.
      Mr. MacCALLUM SCOTTasked whether a time-expired man who, before the passing of the second Military Service Act, voluntarily reenlisted for another term of service is penalised as compared with a new recruit by being prohibited from applying for a separation allowance for his dependants, if he had not already done so, even if he can prove prewar dependence?
      Mr. FORSTER: If the hon. Member will furnish particulars of time-expired men who voluntarily reenlisted and who are desirous of claiming separation allowance for their dependants, the cases will be specially considered on their merits. It is not the intention that they should be penalised.

      RELEASE OF RAILWAYMEN.
      Mr. THOMAS(by Private Notice) asked the First Commissioner of Works whether he is aware that the President of the Board of Trade on the 25th May invited the Labour party and also the National Union of Railwaymen to co-operate in the setting up of a committee for the purpose of dealing with cases arising out of the Military Service Act; that the offer was accepted by the National Union of Railwaymen, who have made every effort to bring the suggested committee into existence, but that the railway companies definitely refuse to
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      give effect to the suggestion, with the result that preferential treatment in the release of railwaymen for military service is taking place in all parts of the country; and, having regard to the importance of this question and the determination of the men to resist any unfair treatment, whether he will take immediate steps to give effect to the suggestion of the President of the Board of Trade?
      The FIRST COMMISSIONER of WORKS (Mr. Harcourt): I am aware that the President of the Board of Trade wrote to both the Labour party and the National Union of Railwaymen, asking them whether they would approve of and cooperate in the setting up of committees to deal with the enlistment of railwaymen on similar lines to colliery tribunals. These latter were represented as composed of miners and coalowners or managers in equal numbers, but I find that the tribunal consists of the District Inspector of Mines with two assessors representing the men and the management, and nothing exactly equivalent would be possible in the case of the railways.
      The President's illness, unfortunately, occurred before he had had an opportunity of inviting the assistance of the railway companies in the matter, but communications passed between the Board of Trade and the Railway Executive Committee. The Committee drew up recommendations to the individual companies, and I understand that copies of these recommendations were given to representatives of the National Union of Railwaymen at a meeting on the 29th June.
      Subsequently the National Union of Railwaymen were informed by the Board of Trade that if there were any alterations in the circular which they would wish to suggest, the Railway Committee would be quite willing to meet them for the purpose of discussing such amendments, and would further consider with them what course should be taken in the event of instances occurring in which the recommendations were not observed.
      I understand that a meeting took place this morning and I was told that, whilst the recommendations were discussed and an amendment accepted, no decision was come to as to the method of dealing with complaints of disregard of the recommendations.
      I will consider what action I can usefully take, without loss of time.
      Mr. THOMAS: Is the right hon. Gentleman aware that at the meeting this morning the railway companies said definitely they would refuse to accept the Government's decision, and having regard to that will he act at once?
      Mr. HARCOURT: Yes, Sir, I propose to act immediately.

    DISTURBANCES IN IRELAND.

      WOUNDED MEN (DUBLIN).
      Mr. GINNELLasked the Secretary of State for War if he can now state the result of his inquiry with reference to Messrs. Lemass and Manning, left lying wounded in a courtyard in the Custom House, Dublin, for three days of the insurrection, thereby complicating their neglected wounds with other sickness; whether they have died or are recovering; and what the intention of the Government is with regard to them?
      Mr. FORSTER: The General Officer Commanding-in-Chief states in reply to the inquiry made that no information bearing out the statements contained in this question has been received. It seems probable, therefore, that these allegations are without foundation, but inquiry is still being prosecuted.
      Mr. GINNELL: Is not one of these men dead and the other dying?
      Mr. FORSTER: I can only say that the General Officer Commanding says that no information bearing out the statement contained in the question has been received.

      FUNERALS FROM DUBLIN TO GLASNEVIN.
      Mr. GINNELLasked the Secretary of State for War the number of funerals from Dublin to Glasnevin, after the suppression of the insurrection, which even the nearest relatives were not allowed to accompany, with the official reason for this prevention; the number of coffins burst open on the way by the military and police, with the official reason for this desecration; whether anything was found in any of the coffins to justify this interference; and, in view of the Irish feeling that the dead should be inviolable, will he say who was responsible for what was regarded as a violation of the dead and an outrage on the living?
      Mr. FORSTER: This question was answered by my right hon. Friend the
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      present Secretary for Scotland on the 6th July. It is not proposed to make inquiry on the points mentioned additional to that already made, the results of which were communicated to the hon. Member in, the answer given to him on the 10th May.
      Mr. GINNELL: What is the number of cases?
      Mr. FORSTER: If the hon. Gentleman wishes, I will repeat the answer, at some future date, which has already been given.

      CHARGE OF LOOTING AGAINST SOLDIERS.
      Mr. GINNELLasked the Secretary of State for War whether the military authorities administering martial law in Ireland have yet allowed any civil investigation of the picking of pockets of prisoners and of the persons shot and buried surreptitiously, and of the looting done in houses under pretext of searching them; whether property so acquired, including table linen and ladies' dresses used to carry smaller articles, is deemed to belong to the individual soldier taking it; whether the property so taken from the houses of Madame O'Rahilly and Countess Plunkett has yet been restored; and whether the soldiers who took the property are being detained in Dublin for a public civil inquiry into such matters?
      Mr. FORSTER: Every case of alleged loss of property from houses entered by the troops has been carefully inquired into. I am informed that there is no ground for the allegations made in the question.
      Mr. GINNELL: Is it not the fact that the soldiers who went to these houses tied up small articles of value in ladies' dresses and tablecloths, and carried the bundles away on their shoulders?
      Mr. FORSTER: No, Sir; I am told that is not so.

      MR. GERARD CROFTS (DUBLIN).
      Mr. GINNELLasked the Secretary of State for War if he has yet ascertained whether Mr. Gerard Crofts, of Dublin, has been convicted of anything but the singing of patriotic songs; if so, what it is, on what evidence, and whether in an open Court; whether Mr. Crofts is the only prisoner now undergoing penal servitude for the singing of patriotic songs; and, having regard to his delicate health and the character of the offence, if he is to be kept longer in custody whether it will be as a political prisoner?
      Mr. FORSTER: The evidence in this case shows that Gerard Crofts was concerned in the rebellion. He was taken from the cellar of a house with a number of armed men who had been firing at the troops. He was tried by a field general court-martial under exactly similar circumstances to those under which the other prisoners were tried. There are no grounds for discriminating between Crofts and other convicted prisoners.
      Mr. GINNELL: Can the hon. Gentleman inform the House whether there has been a particle of evidence produced of Mr. Crofts' connection with the insurrection other than that of his singing patriotic songs?

      PAPERS AND POEMS OF P. H. PEARSE.
      Mr. GINNELLasked the Secretary of State for War the result of the inquiry into Major Price's authority for telling Mrs. Pearse that she shall not be given the papers and poems written for her by her son, Patrick H. Pearse, before his execution; and whether all those papers and poems, Mr. Pearse's sword, watch, and all the papers found on his person at the time of surrender have been or will be given to Mrs. Pearse, also all the property taken from St. Enda's School by the military when searching, including Mrs. Pearse's two rings, the lease of St. Enda's, account books, photographs of her sons, 10s. 6d. in silver, and a 10s. Treasury note?
      Mr. FORSTER: Any action taken by Major Price—I am not referring to action attributed to him by the hon. Member—was taken by direction of the General Officer Commanding-in-Chief. Certain poems and other documents were withheld, but copies of all papers relating to finance were sent to Mrs. Pearse. The watch and leather chain and a whistle and chain have also been sent to Mrs. Pearse. A sum of £8 8s. 0½d. found on P. H. Pearse was also paid over to Mrs. Pearse. Certain documents taken when St. Enda's School was searched are still in .possession of the military authorities. I cannot give any undertaking that they will be returned. Nothing is known of the alleged taking of the ring. Two postal orders, one for 1s. 6d. and one for 1s. were found, but there were circumstances which rendered investigation desirable in connection with these postal orders, and this has not yet been completed.
      Mr. GINNELL: Does the hon. Gentleman refuse to return the documents written by Mr. Pearse for his mother between sentence and execution?
      Mr. FORSTER: What I said was that certain documents have not been settled yet.
      Mr. GINNELL: The hon. Gentleman has sent a copy of these documents. We want the originals, because of certain information they contain.
      Mr. FORSTER: The copies related to certain financial matters.
      Mr. GINNELL: Are we to get the original papers written by Pearse at that time?
      Mr. LYNCH: May I ask the hon. Gentleman if, after shooting Mr. Pearse, the Government withheld his last poem from his mother, such conduct is not absolutely despicable?
      Mr. SPEAKER: That is the same question in other words.

      ARRESTS.
      Mr. PATRICK MEEHANasked the Prime Minister whether a man named Frowley, who was arrested at Wolfhill, Queen's County, during the recent disturbance in Ireland and deported to Perth Prison, has yet been released; and, if not, will he state when the investigations into his case will be completed?
      Mr. J. P. FARRELLasked the Secretary of State for the Home Department if he will say on what grounds Messrs. Hubert Wilson, of Longford; Paul Cusack, of Granard; and John Cawley, of Granard, are still detained in Frongoch Internment Camp; whether he is aware that neither of these three gentlemen had any part in the late rebellion; whether, in the case of Mr. Cawley, who was manager of Granard Creamery, he is aware that the business of the creamery has suffered; and will he now direct the release of all three?
      Mr. SAMUEL: The cases referred to are under consideration by the Advisory Committee, who are dealing with all cases as rapidly as possible.
      Mr. FIELDasked the Home Secretary whether he is aware that dissatisfaction exists respecting the continued detention of persons arrested on suspicion; and

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      whether he will press the examination of those who are detained, so that innocent persons may be released at once?
      Mr. SAMUEL: The Advisory Committee have now examined more than a third of the cases of the interned Irish prisoners, and I received yesterday a list of those whose release they recommend. I understand that the Committee have unanimously arrived at the opinion that a large number of the men who took part in the rising in Dublin had been successfully kept in ignorance by their leaders as to the enterprise in which they were to be engaged, and that it is the case that they thought they were being called out on Easter Monday for a route march such as they had often previously undertaken. Once embarked in the rising they were unable or unwilling to draw back. Taking into account these circumstances and the fact that the men have now been in detention for a period of nearly three months, the Committee, after an examination of each case individually, recommend the release, out of those whose cases have so far been considered, of 460 prisoners, and this recommendation will be carried into effect.
      Mr. BYRNE: When?
      Mr. SAMUEL: As speedily as the necessary transport arrangements can be made.
      Mr. LOUGH: How many cases?
      Mr. SAMUEL: Nearly one-third of the whole number. A certain number are still under consideration; they have been partially considered, but not finally.

      NORTH KING STREET CASES.
      Mr. FIELDasked the Home Secretary whether he has received statements respecting the case of Mr. George Ewing, who was killed, and Mr. Joseph Hayes, who was wounded, in North King Street on 29th April last; whether he is aware that there is an expressed desire on the part of their relatives and others that a public inquiry be held; and whether he will arrange to have such an inquiry held in connection with those two specific cases?
      Mr. SAMUEL: I have no information about the cases referred to. I would refer the hon. Member to the answer which the Prime Minister gave yesterday to the hon. Member for North Westmeath.

      WOUNDED PRISONERS.
      Mr. BYRNEasked the Home Secretary whether he will consider the advis-
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      ability of allowing to go free on leaving hospital Irish prisoners who were wounded during the rising in Ireland?
      Mr. SAMUEL: I understand that the persons to whom the hon. Member refers are some of those in respect of whom internment orders have been made. In that event their cases will be dealt with by the Advisory Committee like the rest, and I fear I cannot give directions for them to be set at liberty pending the decision.
      Mr. BYRNE: Is the right hon. Gentleman aware that some of these men have been discharged from hospitals to English prisons, where they are now confined to bed and are not getting proper hospital treatment?
      Mr. SAMUEL: I am not aware of that. If the hon. Member will draw my attention to any particular case I will certainly have it carefully inquired into.

      LADY PRISONERS.
      Mr. BYRNEasked the Home Secretary if he is aware of the indignation and ill-feeling that is being caused in Ireland owing to the treatment of the Irish lady prisoners; if he is aware that they have been detained in English prisons three months; if he is aware that they were tried by the Advisory Committee thirteen days ago; if he can state when they are likely to be released; and if, to satisfy the public that it is not the wish of the Government to make war on women, he will order their immediate discharge?
      Mr. SAMUEL: The answer to the first and second questions is in the negative. I received the recommendations of the Advisory Committee yesterday. Miss Perolz and Miss Foley will be released. The internment of the other three will be maintained.

      NATIONAL VOLUNTEERS.
      Major W. GUINNESSasked the Home Secretary whether last week National Volunteers were parading armed in the Dublin streets; whether, these Volunteers wear the same uniform as the Sinn Fein Volunteers; and by what means the authorities can distinguish between the two forces?
      Mr. SAMUEL: The reply to the first and second parts of the question is in the negative. The characteristics other than uniform distinguishing these forces were explained in reply to a question asked by the hon. and gallant Member for Enfield on the 27th January last.
      Major GUINNESS: Was not such a parade of National Volunteers held in Lad Lane, Lower Bagot Street, Dublin, last Monday week?
      Mr. SAMUEL: I will inquire of the Irish Government, but I am informed that the allegations in the first part of the question is unfounded.

    GERMAN PRISONERS.
    Mr. RENDALLasked the Secretary of State for War whether Dr. Spiers was for some time attached in the capacity of a doctor to Kinmel camp, Wales; whether he is aware that his name does not appear in the register of British practitioners; that he is said to have been German speaking with a German accent and with German sympathies; whether he subsequently went to the front and if he is now dead; and what was the cause of death?
    Mr. FORSTER: Lieutenant H. Spiers was employed at Kinmel Park from 17th January, 1916, until 3rd April, 1916. On the second point I think the hon. Member has been misinformed. He will find the name of Dr. Spiers in the Medical Register as M.B., Ch.B. Edinburgh. He is also M.D., F.R.C.S. Edinburgh. He was recommended for a temporary commission in the R.A.M.C. by the Scottish Medical Service Emergency Committee. There is no reason to think that he has German sympathies. He is now serving in France.
    Mr. RENDALLasked the Secretary of State for War whether the senior medical officer at Kinmel camp has lately resigned his post; and, if so, whether he has stated that he has done so because he is tired of being worried with questions about the alleged German doctor at Kinmel camp?
    Mr. FORSTER: Captain G. L. Travis was appointed sanitary officer to Kinmel Park on 7th May, 1916, and he still holds that appointment.
    Mr. ASHLEYasked the Secretary of State for War whether he is aware that on the afternoon of 6th July some 650 German non-commissioned officers and men, unwounded prisoners of war, were sent from Southampton to the North in a train consisting almost entirely of first-class corridor carriages and saloons; whether similar accommodation is provided by the German military authorities for our men when captured; and will he state whether
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    English privates in the United Kingdom when moved by train or when travelling under a railway warrant travel first class?
    Mr. FORSTER: I am informed that two trains were run to the North on the day named carrying German prisoners of war. In the whole of the two trains there were ten first-class compartments. The military authorities specially asked for corridor carriages in order to provide for escort duties, and the rolling stock mentioned was all that was available. As regards the second part of the question, I imagine the German authorities would in similar circumstances use any rolling stock available. The answer to the third part of the question is in the negative.
    Mr. ASHLEY: Can the right hon. Gentleman say why the War Office could not have perfectly well communicated with the railway authorities in order that third-class carriages might be provided? Also, is the hon. Gentleman aware that one train consisted entirely of first-class carriages, except two carriages?
    Sir A. MARKHAM: Is not the hon. Gentleman aware that British prisoners of war in Germany are conveyed in cattle trucks?
    Mr. FORSTER: I imagine that the Germans, just as ourselves, convey prisoners in any rolling stock available.
    An HON. MEMBER: They would not.
    Mr. G. FABER: They are laughing at you!
    Mr. GILBERTasked the Secretary of State for War if he will state the number of German prisoners interned in this country on 30th June last, and what number of them are employed on any work of a remunerative or national character; if he will state the class of work on which they are employed; and whether, in view of the shortage of labour in many industries at present, he will state why all able-bodied German prisoners are not being employed on some kind of work?
    Mr. FORSTER: Eleven thousand three hundred and eighty-four combatant prisoners of war, excluding officers, were interned in this country on the 30th June. Arrangements have already been made or are in progress for the employment of some 4,400 of these men. In addition to this a considerable number are employed in their camps in making mail bags, in baking, shoemaking, tailoring, etc.; all

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    of which work would otherwise have to be done by others. Every opportunity is seized to employ prisoners of war on work in such conditions and in such numbers as would prove remunerative.

    VOLUNTEERS' UNIFORM.
    Mr. AINSWORTHasked the Secretary of State for War when he expects to be able to decide on the uniform for Volunteers; what is the objection to adopting khaki cloth and silver buttons; and whether he is aware that many of the regiments already enrolled are provided with the necessary funds to meet the expenditure as soon as the necessary authority is given?
    Mr. FORSTER: I am afraid that I can only say that no decision has yet been come to on the question of the dress of the Volunteers. I believe the facts are as stated in the last part of the question, but the fact that funds are available does not settle the question as to the nature of the uniform which should be worn.
    Mr. AINSWORTH: Will the hon. Gentleman deal with the matter as early as possible?
    Mr. FORSTER: It will be done as soon as possible.

    NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
    Mr. R. MCNEILLasked the Secretary of State for War whether, in the event of the death of a soldier's wife who has been in receipt of allotment and separation allowance, there are any means by which these allowances can be paid to a female relative of the soldier who undertakes the care of his children and who has no other means of support; and whether, if no such machinery exists, he will amend the Regulations on the subject so as to cover such cages?
    Mr. FORSTER: If a soldier's wife dies, separation allowance for the children is paid at the special rate applicable to motherless children, namely, 5s. per week for each child. The children's allowances are paid to the relative or the guardian who undertakes the care of the children. This allowance is irrespective of any allotment which the soldier may make.
    Mr. McNEILL: Is it not the fact that where the wife of a soldier on active service dies, and a sister of the man, or some
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    other person, takes charge of the soldier's child, the allowance of 17s. 6d. that had been made to the deceased wife is reduced to 5s. a week, and in the circumstances how can the house possibly be kept together?
    Mr. FORSTER: My hon. Friend's statement is not quite correct. The 17s. 6d. to which he refers of course includes the compulsory or necessary allotment made by the soldier. The 5s. is irrespective of any allotment the soldier may make. There is a difference after the death of the wife, as the flat rate ceases and the motherless rate takes its place.
    Mr. McNEILL: Is there any reason why the soldier whose wife dies while he is on active service should be in a worse position than a man who is a widower when he enlists?
    Mr. FORSTER: That is the direct recommendation made by the Select Committee.
    Mr. M. BARLOWasked the Secretary of State for War whether he is aware of the delay that still exists in making arrangements for granting pensions in many cases to wounded and disabled soldiers; and whether he can make provision for securing that the assessing of pensions can be accelerated?
    Mr. FORSTER: Arrangements have been made to accelerate the assessment of pension to these men, and, in the meantime, an allowance of 10s. or 20s. a week is being paid from date of discharge as an advance of pension. If my hon. Friend knows of actual cases in which not even this allowance is being received, I should be glad to have particulars of them.
    Mr. BARLOW: I beg to give notice that I shall raise this question on the Adjournment at an early date.
    Mr. HOGGE: Can the hon. Gentleman say if the War Office will pay the 10s. or 20s.?
    Mr. FORSTER: The War Office.
    Mr. HOGGEasked when the warrant dealing with pensions for the widows and dependants of men who have died from disease contracted in or aggravated by service will be issued?
    Mr. FORSTER: This was published with July Army Orders. My hon. Friend has, I hope, received the copy which I sent to him yesterday.
    Mr. HOGGE: Can the hon. Gentleman say where the application for these pensions is to be made, and whether there is a time limit?
    Mr. FORSTER: Perhaps the hon. Gentleman will give notice.
    Mr. T. WILSON: Will the hon. Gentleman issue this Warrant amongst the Parliamentary Papers, so that every Member of the House may see it?
    Mr. FORSTER: I think so. I will see to it.
    Sir B. FALLEasked the Financial Secretary to the War Office if he is aware that Private F. Wallis, No. 32341, D Company, 84th provisional battalion Hants Regiment, now at Herne Bay, has been called up over four weeks, and that a ring paper sent to Mrs. Wallis omits any payment for her five children, though forms and their birth certificates have been sent in; if he will have this matter seen to; and if he is aware that this is not an isolated case in this battalion?
    Mr. FORSTER: Inquiry will be made, and the hon. Member informed of the result.
    Mr. DIXONasked the Financial Secretary to the War Office if it is still the policy of the Government under the Naval and Military Pensions Act, 1915, to make a certain Grant to the Statutory Committee and to leave any deficiency to be made up by private charity; and if the Government have received any protests from public bodies asking that all pensions and all expenses of administering the Act should be paid for out of moneys provided by Parliament?
    The CHANCELLOR of the EXCHEQUER (Mr. McKenna): It has not been the policy of the Government to prohibit private benevolence to disabled soldiers and sailors, which would be the effect of requiring all payments to the Statutory Committee to be made from the Exchequer. Such protests as have been received have apparently been made under a misapprehension which I hope to take an early opportunity of removing.
    Mr. DIXON: Will the non-county boroughs be entitled to form their own committees?
    Mr. McKENNA: That question should be put to the Parliamentary Secretary to the Local Government Board.
    Mr. J. SAMUEL: May I ask if it is not the intention of the Treasury to find all the money for Supplementary Grants for pensions? If that was made clear it would settle it.
    Mr. McKENNA: The Treasury is finding sufficient money for that purpose, but the Treasury does not make itself responsible for the actual method of the spending of the money.

    DISCHARGED SOLDIERS.
    Colonel YATEasked the Secretary of State for War whether he will consider the question of permitting invalided and wounded soldiers discharged from the Service to continue to wear their uniform till the end of the War?
    Mr. FORSTER: This proposal has been considered and rejected as inexpedient and impracticable. It would open the door to fraud and to serious misuse of uniform, of which one result would be to bring His Majesty's uniform into disrepute. There are already a considerable number of cases of frauds perpetrated and made possible by the bogus use of uniform. There would also be difficulties about the maintenance of uniform in proper condition. My hon. and gallant Friend will be aware that a special badge for soldiers, discharged owing to physical disability due to service in the field, has been approved. Instructions as to the supply of this badge will very shortly be issued.

    2ND NORFOLK YEOMANRY REGIMENT.
    Major HUNTasked the Secretary of State for War if he will explain why, in view of the fact that Lord Hastings was only a temporary major and has had no war service, and refused to sign on for foreign service, he has been put in command of the 2nd Norfolk Yeomanry Regiment over the heads of four senior permanent majors who have all been on active service and one of whom was mentioned in dispatches in the Boer War, was second in command of the 1st Norfolk Yeomanry in Gallipoli, and was recommended by the Norfolk County Association for the command of the 2nd Norfolk Yeomanry, and if he will say whether he proposes to take any action in the matter?
    Mr. FORSTER: It is not usual nor desirable to canvass the qualifications or disqualifications of particular officers for particular appointments by means of question and answer. I may say, however, that the appointment made in this case was approved after the Field-Marshal Commanding the Home Forces had consulted the Divisional Commander as to what was best in the public interest.
    Major HUNT: Is the hon. Gentleman aware that there is very strong feeling against it in the regiment, both among officers and men, and it looks like a very bad job indeed?
    Mr. ASHLEY: Will the hon. Gentleman say why the four senior majors were passed over?
    Mr. WATT: Was it because of the social status of this gentleman?

    ENEMY ALIENS.
    Mr. GILBERTasked the Secretary of State for War how many interned alien enemies in this country are now being employed on any national or remunerative work; and if he will state why all able-bodied interned alien enemies should not be empolyed on some work of a public character instead of remaining idle in their various camps?
    Mr. FORSTER: Perhaps my hon. Friend will kindly put this question to my right hon. Friend the Home Secretary tomorrow.
    Mr. PENNEFATHERasked the Home Secretary if it is still the policy of the Government to leave at large aliens who may reasonably be suspected of being of enemy birth and who cannot conclusively prove that they are subjects of friendly or neutral countries?
    Mr. SAMUEL: No, Sir. The Government have never had any such policy. I would refer the hon. Member to the answers I gave him on the 20th January, 29th February, and 8th March of this year.

    COLONIAL SERVICE (EX-SOLDIERS).
    Sir J. HARMOOD-BANNERasked if all men of military age in the Colonial service who have had previous service in the Regulars or Reserve have been called up to their regiments and replaced by
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    older men qualified satisfactorily to perform the duties of the Colonial service but, over military age?
    Mr. FORSTER: I am not quite sure to what men the hon. Member is referring, but I may point out the liability for service under the Military Service Acts applies only to men ordinarily resident in Great Britain, except so far as the Acts extend the service of men already serving.
    Sir J. HARMOOD-BANNER: Will the hon. Gentleman look into the question, as there are a number of young officers ready to take their places?
    Mr. FORSTER: Perhaps my hon. Friend would talk to me about it privately?

    EGYPT (TREATMENT OF TROOPS).
    Sir J. HARMOOD-BANNERasked the Secretary of State for War if any report has been received from Egypt of sending troops at five in the morning in open iron cattle-trucks, arriving at Luxor at four in the afternoon, and were all carted off in stretchers to hospital, of the death of forty men and sending 150 men to hospital in consequence of the non-arrival of the water-carts in the desert near Suez, and of the punishment of Australian troops in Egypt by making them undertake a forced march in the extreme heat, where by five died and 100 went to hospital?
    Mr. FORSTER: No, Sir. No report has been received of any such incidents as those mentioned in the question, but inquiries shall be made.

    WOOL (WAR PRICES).
    Mr. KINGasked the Financial Secretary to the War Office whether he has been made aware by reports from various districts that to pay 30 per cent. advance on wool over the 1914 price would leave farmers in many districts heavy losers on the clip of this year; and whether he will adopt such an alternative method of fixing the price as will afford to the owners of flocks the encouragement of having made a moderate profit in supplying national needs?
    Mr. FORSTER: I have had the advantage of meeting a very large and representative deputation this morning, and after going very fully into all aspects of

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    the matter the percentage above the prewar prices has been increased from 30 per cent. to 35 per cent.
    Captain DOUGLAS HALL: May I ask why the War Office deals with this matter, and not the Board of Agriculture?
    Mr. FORSTER: It is obviously a matter for the War Office to make sure of its own supplies.

    TOOTING MILITARY HOSPITAL.
    Mr. CROOKSasked the Financial Secretary to the War Office whether he is aware that scrubbers and cleaners employed at the Tooting Military Hospital have to sign an agreement stating that their wages shall be 18s. 6d. a week to cover all time worked; whether he is aware that while in the employment of the board of guardians and until shortly after transfer to the military authorities these women received 19s. 6d. per week of forty-eight hours and dinner every day, and besides suffering a reduction in wages with no limit to the working hours they now receive no meals; and whether he will have these conditions considered with a view to improvements
    Mr. FORSTER: The women referred to are entitled to 18s. outside London, or 20s. if within the London area, without food and lodging. I know nothing regarding 18s. 6d. rate, nor as to their wages when in the employment of the board of guardians, but I will have further inquiries made if my hon. Friend desires it.

    WAR SAVINGS COMMITTEE (SALISBURY HOTEL).
    Mr. ASHLEYasked the Chancellor of the Exchequer whether the Salisbury Hotel, Salisbury Square, has been requisitioned by the War Savings Committee; and, if so, for what purpose was it taken over?
    Mr. McKENNA: Arrangements have been made by the Office of Works to rent the hotel in question for the period of the War, for the use of the National War Savings Committee. The hotel has not been requisitioned. The reasons for this action are that the existing premises of the Committee are altogether inadequate to accommodate the
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    staff required to deal with the volume of work, which, I am glad to say, is still expanding very rapidly.
    Mr. ASHLEY: Does it mean much saving to take extra premises with more clerks?
    Mr. McKENNA: In the one case we are dealing with a rent for the whole year of, I think, £2,000, and in the other case we are dealing with, I hope, £100,000,000.

    TABLE WATERS DUTY.
    Mr. HOGGEasked the Chancellor of the Exchequer why he is including Skeechen in the category of table waters and subjecting it to a tax and the purveyors to a Licence Duty?
    Mr. McKENNA: I must confess that neither I nor my advisers are familiar with the beverage referred to. But inquiry is being made in the light of the information kindly supplied to me by my hon. Friend as to its liability to the tax.
    Mr. HOGGE: Is my right hon. Friend aware that it is a very common drink sold by old women in small shops in industrial districts, and is not in any sense a table water?
    Mr. McKENNA: I am not aware of it; I will make further inquiry.

    LAND SETTLEMENT (SOLDIERS).
    Mr. L. SCOTTasked the Parliamentary Secretary to the Board of Agriculture whether any inquiries have been made to ascertain what percentage of the troops at the front want an open-air life after the War, and from what types of regiment, e.g., whether urban or rural; what was the total number asked and what was the average result; and to what extent this average varied as between urban and rural units?
    The PARLIAMENTARY SECRETARY to the BOARD Of AGRICULTURE (Mr. Acland): At the request of Lord Selborne, Sir Douglas Haig asked the Army Commanders in France to arrange for the commanding officers of certain regiments to have inquiries made through the company officers as to whether any of their men contemplate settling on the land either in the United Kingdom or in the Dominions when the War is over. 97,000

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    men drawn from a huge number of different units were questioned accordingly, and 17,000 men expressed themselves as desirous of settling on the land, either in the United Kingdom or in the Dominions. The Board have not been supplied in all cases with separate figures for each unit selected, but in the case of those of which particulars are available the percentage varied from nil in one battalion of the Rifle Brigade to 46 per cent. in a battalion of the Suffolk Regiment. In two battalions mainly composed of townsmen the percentage was 5, in two battalions mainly composed of miners it was 9, and in two battalions drawn from rural areas it was 28 per cent.

    MUNITIONS.

      EXHIBITION OF MACHINERY.
      Mr. P. MEEHANasked the Minister of Munitions, in view of the importance of developing the agricultural resources in Ireland and forwarding up-to-date agricultural methods, whether he will relax the prohibition against the exhibition of machinery, metal ware, and implements to such extent as to allow local merchants and traders who have these articles in stock to exhibit such articles at local and county agricultural shows?
      The PARLIAMENTARY SECRETARY to the MUNITIONS DEPARTMENT (Dr. Addison): It has been found necessary, in the interest of the supply of munitions, to apply this restriction generally to agricultural shows throughout the United Kingdom, and I regret that it is not practicable to make an exception in favour of Ireland.

    EXCHANGED CIVILIAN PRISONERS.
    Mr. R. McNEILLasked the Home Secretary whether he has any official information to the effect that the British civilian prisoners selected by the German authorities for exchange who passed through Holland from Germany on the 6th of July included a large proportion of women who are either German wives of British husbands or British wives of German husbands and of children only able to speak German, and that these exchanged prisoners for the most part express German sympathies; and whether all returned
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    prisoners who are either alien enemies or persons of hostile origin or association are immediately interned on arrival in this country?
    Mr. SAMUEL: A party of twenty-two British civilians arrived in this country on the 7th instant. It contained nine men, who were exchanged prisoners; the others were seven women and six children repatriated by the German authorities. Four of the women were German-born wives of British husbands, and some of them and their children could speak very little English. But none were of German nationality; otherwise they would not have been allowed to land. The greatest care is taken in the examination on their arrival in this country of all persons repatriated from Germany, and all proper means are employed to secure that their admission will not involve danger to the realm.
    Mr. McNEILL: Have these women been interned, or are they going to be repatriated?
    Mr. SAMUEL: They are British subjects. Any necessary steps will be taken.
    Mr. G. FABER: Cannot a fair exchange be arranged?
    Mr. SAMUEL: That is a question for the Foreign Office.

    METROPOLITAN POLICE (TIME-EXPIRED MEN).
    Mr. GILBERTasked the Home Secretary whether the police officers and constables who have been retained in the Metropolitan Police Force after their twenty-five or twenty-six years' completed service will be granted any extra pension for the additional years they may serve in the force or, failing that, will they be given any bonus when they are released from service; and, if not, will some special treatment be given to these time-expired men, considering that pensioned men now being employed in similar duties are receiving both their pensions and full pay?
    Mr. SAMUEL: I fear I cannot add anything to the reply I gave to the hon. Member on 31st May last. The majority of the men who have been retained had only 25 years' service, and by their retention in the force they are enabled to earn the maximum pension.

    HYDE POLICE COURT CASE.
    Sir W. BYLESasked the Home Secretary whether his attention has been called to the fine of £10 inflicted on Mr. C. J. Bandock, at the Hyde Police Court on Friday week, for a speech in which he advocated that peace should be secured by negotiation; whether he is aware that the evidence given against him was police evidence given from memory and not from notes, and that the incriminating sentences were quotations from the "Contemporary Review" and the "Manchester Guardian"; and whether, if he considers on reviewing the evidence that the bounds of legitimate political criticism were not passed by the defendant, he will exercise his power and have the fine remitted?
    Mr. SAMUEL: My attention has not previously been called to this case. I have asked the justices for a report, but there has not been time for me to receive it.
    Sir W. BYLES: Are these proceedings taken under the Defence of the Realm Act? If so, does the right hon Gentleman think the realm will much longer be worth defending?
    Mr. SAMUEL: I cannot say under what Statute they have been taken, as I have not yet received the report from the justices.

    SCOTTISH UNIVERSITIES (STUDENTS).
    Mr. HOGGEasked the Secretary for Scotland what proportion of students in the last year for which statistics arc available entered each of the Scottish universities through the preliminary examination and through the leaving certificate examination, respectively; and whether these figures will be given due weight in considering the proposed new ordinance perpetuating the preliminary examination?
    Mr. MUNRO: My right hon. Friend informs me that there is no official Return in his Department containing the statistics asked for. He has no doubt that any figures which may be submitted on the point will be duly considered.
    Mr. PRINGLE: Will the right hon. Gentleman look into the statistics which can be obtained and prevent the extension
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    of the preliminary examination, which will only be available for 10 per cent. of the entrants to the university?
    Mr. MUNRO: I will convey the suggestion to my right hon. Friend.
    An HON. MEMBER: When he comes back again!

    POST OFFICE (CABLE DEPARTMENT).
    Mr. SHIRLEY BENNasked the Postmaster-General whether a German named F. Lange is employed in the cable department; whether he has been removed once and put back again; and whether the cypher decoding of important naval cables is passing through his hands?
    The POSTMASTER-GENERAL (Mr. Joseph Pease): My attention has been drawn to public statements which have been made to this effect, and which the hon. Member has doubtless seen. I have made inquiries as to the case referred to, and I may say that the allegations quoted are without exception incorrect. Mr. Lange is not a German, but a British subject born in London in 1864. His father was a German who came to London about 1850, his mother was English, so also is his wife. He has never been removed, and has therefore not been restored. He states that his sympathies are entirely with the Allied cause, and there is no evidence to the contrary. He has been in the service of the Post Office thirty-four years. I need hardly say that neither he nor any other officer of the Post Office is charged with the decoding of Government cypher telegrams nor has access to any of the Government codes or cyphers. In my opinion it is regrettable that currency should be given to such statements before inquiry has been made as to their accuracy.

    POSTAL VACANCIES.
    Mr. WARDLEasked the Postmaster-General whether he will reserve all vacancies in commissioned sub-offices to be filled either by expostal officials who have been compelled to return through wounds or ill-health contracted during service with the Colours or by the widows of postal servants who have been killed or have died while in the Army or Navy; and whether, in order to ensure equitable treatment,

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    he will direct that all vacancies shall be filled direct from headquarters without reference to district surveyors, and that a notice be placed in the Post Office circular asking for names of persons desiring to be considered as candidates to be forwarded to the secretary of the Post Office?
    Mr. PEASE: To be qualified for appointment to vacant scale-payment sub-post offices applicants must be in a position to provide suitable premises and assistance. General instructions have already been issued to ensure that disabled postal servants and widows of postal servants who have lost their lives while engaged on naval or military service shall receive preferential consideration for vacant sub-offices, provided that they can fulfil the conditions attaching to such appointments.
    Mr. WARDLE: Could the right hon. Gentleman not see that they are assisted to provide these facilities?
    Mr. PEASE: I do not think that I have any financial resources to enable me to provide capital in connection with the provision of premises—if that is what the hon. Member refers to.

    MAIL SERVICE (ORKNEY).
    Mr. C. WASONasked the Assistant Postmaster-General if he is aware of the inconvenience to which the county of Orkney and the burghs of Stromness and Kirkwall are subjected to by the action of the contractors to the Post Office; and if he will state the exact terms under which the abridged mail service is now carried on?
    Mr. PEASE: I am aware that some inconvenience must be caused by the action referred to. No definite terms in regard to the abridged service have been yet settled. The company are asking for the full subsidy which was previously fixed for the six-day a week service.
    Mr. WASON: Is the hon. Gentleman aware that at a large public meeting it was unanimously resolved that the Post Office should be asked to call for tenders from another company; will he take that fact into due consideration?
    Mr. PEASE: Yes, Sir, I am considering the matter. I am writing to my hon. Friend rather fully in connection with the whole of this matter.

    ENEMY TRADING.
    Mr. TICKLERasked the President of the Board of Trade if his attention has been called to a firm of varnish manufacturers at Carpenters Road, Stratford, trading under the name of W. Conrad Schmidt, a German, and owned by a Ger man named F. A. Glaeser, residing in Wiesbaden; will he say why this firm has not been wound up under the Defence of the Realm Act; and will he take prompt measures to stop this enemy trading in our midst?
    Mr. HARCOURT: The business of Conrad William Schmidt (F. A Glaeser), Limited, has been considered by the Advisory Committee, who have reported that the business is one which it is desirable to maintain, and have recommended that the enemy interest should be vested in the Public Trustee with a view to a sale to British subjects, instead of an order being made to wind up the business. That course is now being taken.
    Mr. G. TERRELLasked the President of the Board of Trade when he will be prepared to make a statement as to the progress of the work of the Committee dealing with enemy companies and share holders?
    Mr. HARCOURT: I propose to publish a statement of the work of the Advisory Committee under the Trading With the Enemy Amendment Act, 1916, within a. few days.
    Mr. TERRELLasked the President of the Board of Trade whether, in connection with the sale of enemy shares in British companies, full uncontrolled authority to make whatever bargains he pleases is vested in the Public Trustee; and whether, in view of the importance of the property involved and the urgency of clearing our industries of all enemy interests, he will see his way to appoint a Committee to assist the Public Trustee in the prompt execution of his duties?
    Mr. HARCOURT: The Public Trustee has full authority to complete sales of enemy shares in British companies, and he is in close communication with the Board of Trade in the matter. He is free to consult the Board of Trade Advisory Committee on points of difficulty which may arise in carrying out his duties, and I doubt whether the sale of enemy shares would be expedited by the appointment of another Committee.
    Mr. TERRELL: Is there not a great deal of delay in carrying this work through?
    Mr. HARCOURT: I hope not, Sir; if there is curable delay I will attempt to cure it.
    Sir A. MARKHAM: Is it not the fact that the Public Trustee refuses to give information to manufacturers who desire to buy these German firm interests that will enable them to arrive at an early decision?
    Mr. HARCOURT: I note the information which my hon. Friend has given me.

    FOOD SUPPLIES.
    Mr. W. THORNEasked the President of the Board of Trade if he is aware of the complaints of the East London butchers because they do not get their fair share of the surplus supply of lamb put upon the market for sale; if he is aware that some of the American shops get supplied with more than their share; and if he will give instructions to the Government's agents to see that the East London butchers get their proper share of lamb put upon the market for sale?
    Mr. HARCOURT: I am aware that complaints have been made by butchers in the East End as to their share of the Australasian lamb placed on the market by the Board of Trade. The Department take care to ensure a fair division of the supplies available, and the shortage in the East End to which my hon. Friend refers is, I think, due to the reduction in our supplies rather than to any other cause.

    RESTRICTION OF IMPORTS.
    Mr. CROOKSasked the President of the Board of Trade whether the importation of furniture wood from Sweden is prohibited whilst the importation of wood-wool is permitted; whether he is aware that 1 ton of wood-wool takes up as much room as 10 tons of any hard-wood; and will he explain the reason for the differentiation?
    Mr. HARCOURT: The prohibition of imports extends both to furniture woods and to wood manufactures. Wood-wool is not at present regarded as prohibited under the latter head, but I shall be happy
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    to consider any evidence with which my hon. Friend can furnish me showing that an appreciable amount of tonnage space would be saved if its import were prohibited, and that it is an article which can be dispensed with.

    MESOPOTAMIA.
    Colonel AUBREY HERBERTasked the Prime Minister whether he will give a day for the discussion of the conduct of the campaign in Mesopotamia?
    The PRIME MINISTER (Mr. Asquith): I do not think that the present moment is opportune for such a discussion, but I will, of course, bear my hon. Friend's question in mind.
    Sir E. CARSON: May I ask the right hon. Gentleman is this House and the country never to get, from time to time, any kind of reports of what is going on in Mesopotamia? May I ask the right hon. Gentleman if these reports are being purposely kept back? May I also ask him whether he does not know that there is amongst a considerable portion of people, who have had communications from that country, and from gentlemen like my hon. Friend who asked the question, the very gravest anxiety as to the negligence that has taken place in reference to the whole of the operations in Mesopotamia?
    Sir A. MARKHAM: Worse than the Dardanelles!
    The PRIME MINISTER: There is no desire, I need hardly say, to keep back anything. [HON. MEMBERS: "Oh, oh!"] Why should there be? The House is entitled to have, and I hope it will have, the fullest possible information given to it. No one is more desirous than the Government—[HON. MEMBERS: "Oh!"]—that the matter should be thoroughly discussed, but I do not think this is a particularly opportune moment for it.
    HON. MEMBERS: Why?
    The PRIME MINISTER: For reasons which I cannot properly disclose. I do not think it is a very opportune moment. The other suggestion that we are burking the matter, or desire to avoid discussion, is entirely unfounded. In regard to what the right hon. and learned Gentleman has said as to

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    the condition of the troops in Mesopotamia, that is a matter which is engaging our daily attention, and most careful steps are being taken to remedy the defects which have been proved to exist and to. supply immediate necessities. I can assure my right hon. and learned Friend that no one is more alive to the need of doing that than is His Majesty's Government itself, but I do not think the present the proper moment for discussion.
    Sir E. CARSON: I shall put a question to the right hon. Gentleman early next week, and, in the event of not getting a satisfactory answer, I shall ask leave to move the Adjournment of the House.
    Sir H. DALZIEL: Will the right hon. Gentleman be good enough to see whether it would not be possible to give the additional Papers promised as early as possible?
    The PRIME MINISTER: I will deal with that tomorrow.
    Colonel HERBERT: May I ask if the right hon. Gentleman does not consider that it would be in the national interest now to fix the responsibility for the economy that has governed and hampered the whole of the Mesopotamia Campaign from its initiation until a few months ago upon individuals?
    Mr. SPEAKER: That is the same question as has already been asked.

    DUKE OF CUMBERLAND.
    Mr. SWIFT MacNEILLasked the Prime Minister whether he is aware that His Royal Highness the Duke of Cumberland and Teviot, Earl of Armagh, and Prince of the United Kingdom of Great Britain and Ireland, has sent to the German Emperor a letter, which has appeared in the press of those countries, offering to the German Emperor, as the creator and developer of the German Navy, his heartiest congratulations on the occasion of the recent victory in the North Sea; and whether, having regard to the disgust and indignation of a large section of the people of these countries at this traitorous personage being permitted to retain all but the highest rank, title, and dignity of the Realm, any and, if so, what steps will be taken to remedy this grievance?
    The PRIME MINISTER: The answer to the first part of the question is in the
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    affirmative. With regard to the last part I do not think that the matter is worthy of the attention of Parliament.
    Mr. McNEILL: How long is this traitorous person to be allowed to hold the Earldom of Armagh, having regard to the services of men of Armagh in the present War; and how long is he to be allowed to retain the Dukedom of Cumberland, having regard to the fact that Cumberland is at present represented in this House by the Speaker of the House of Commons?

    ECONOMIC CONFERENCE IN PARIS.
    Mr. G. TERRELLasked the Prime Minister if he is now in a position to make a statement as to the course which the Government propose to take to give effect to the Resolutions passed at the Paris Economic Conference?
    The PRIME MINISTER: His Majesty's Government have approved these Resolutions.
    Sir E. CARSON: Will these Resolutions be explained by any Minister in this House, and, if so, when? Because there are a great many I cannot understand.
    Mr. PRINGLE: They are not intended to be understood.
    The PRIME MINISTER: I do not know what "explanation" means precisely, but I promise to make a statement myself with such limited powers as I possess.
    Sir E. CARSON: I do not know that I will understand them any better then.
    Mr. TERRELL: When will the right hon. Gentleman make his statement!
    The PRIME MINISTER: I hope next week.
    Mr. PRINGLE: Will it be as ample and definite as his statement on Ireland?

    GOVERNMENT OF IRELAND.

      REPRESENTATIVES IN BRITISH HOUSE OF COMMONS.
      Major W. GUINNESSasked the Prime Minister whether, under the proposed Irish settlement, it is proposed to reduce the representatives of the self-governing area in the British House of Commons to the number laid down in the Government of Ireland Act?
      The PRIME MINISTER: With regard to this question, and a question of which the hon. Member for Hereford has given me private notice, I must ask the hon. Members to await the introduction of the Bill to give effect to the proposals of the Government.

    INTERNED IRISH PRISONERS.
    Mr. FLAVIN: Can the right hon. Gentleman say what is being done in regard to the release of the interned Irish prisoners?
    Mr. SAMUEL: I answered that point in reply to a question put by one of the hon. Members for Dublin.
    Mr. FLAVIN: Can the right hon. Gentleman say what will be done with those 460 men? Will he, on behalf of the Government, see that proper railway facilities are provided for these men, and that those who have been in prison for three months and who are judicially decided to be innocent, will be sent home not at their own expense!
    Mr. SAMUEL: It must not for a moment be assumed that the innocence of these men has been established. They will be sent back in the ordinary way at the expense of the Government. [An HON. MEMBER: "First class?"]

    DEFENCE OF THE REALM (ACQUISITION OF LAND) BILL.
    Sir F. BANBURY: May I ask the right hon. Gentleman whether, in accordance with his promise yesterday, he will tell the House what he proposes to do with regard to taking the Defence of the Realm (Acquisition of Land) Bill?
    The PRIME MINISTER: We shall not take it tomorrow.

    REGISTRATION AND FRANCHISE.

      SELECT COMMITTEE TO BE APPOINTED.
      Sir E. CARSON: I wish to ask the Prime Minister if he can now state when he can make a statement about the Parliament Act and the Franchise and Registration questions?
      The PRIME MINISTER: I think I had better make it now. The Cabinet
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      have for a long time had this matter in all its aspects under consideration It raises questions of great difficulty and perplexity, not only in regard to registration, but also the franchise, for which they have been unable so far to find any practical and uncontroversial solution. As the matter is one which concerns the House of Commons even more than the Government, they propose to ask the House to set up at once a Select Committee to which they will be ready to submit all the information at their disposal.
      Sir E. CARSON: With reference to the Prime Minister's answer a moment ago, I should like to ask whether, before this Committee is set up, he will give us an opportunity of discussing the Motion which stands in my name, whether this Committee is really for the purpose of delay, and whether we were not told many months ago that we were on the eve of a solution of this question; and also I should like to ask the right hon. Gentleman if he will tell us what will be the kind of Committee, when he supposes they will report, and whether he proposes to pro long the life of this Parliament at the will of the Government, without having any Register ready, and thereby disfranchising a great number of people in this country?
      The PRIME MINISTER: I need not say that these are all important and relevant considerations which have occupied our anxious attention for a long time. I think, perhaps, the right hon. Gentleman's purpose might be served on the Motion for the appointment of a Committee just as well as on his Motion.
      Sir E. CARSON: Of course, a good deal depends upon what is the reference to the Committee. For instance, take an example. Will it be a reference to the Committee as to whether the life of this Parliament ought to be prolonged? That does not seem to me to be a satisfactory way of discussing that question. However, if the right hon. Gentleman will let us know by communications what the form of the reference is, probably that would give us, if we were allowed to discuss the point, an opportunity of expressing our views. May I also express the hope that there will be no further delay in this matter, which seems to me to be becoming almost a public scandal.
      The PRIME MINISTER: It is quite obvious that the life of this Parliament must he prolonged to some extent. As to the

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      form of the Register, it is not a Register which would come into operation before the month of September next. So far, I think that is common ground between us, and this Parliament comes to an end in September. With regard to the terms of reference, we will consult the usual channels. When the right hon. Gentleman talks of a public scandal I think when the Committee which is to be appointed proceeds to investigate the subject, it will find the same difficulties we experienced, and they will have to experience them also.
      Mr. OUTHWAITE: May I ask the Prime Minister whether the terms of reference will enable steps to be taken for the sending out of election literature to the troops at the front if they are to be called upon to vote. [An HON. MEMBER: "Spare them that."]
      Sir E. CARSON: German literature.
      Sir F. BANBURY: May I ask whether when the question arises as to whether a Committee is to be appointed, the House will be at liberty to discuss not only the appointment of the Committee, but the whole question. I am rather afraid that the discussion might be limited to discussing the question whether or not a Committee should be appointed, and what my right hon. and learned Friend wants is a discussion of the whole question.
      The PRIME MINISTER: I am sure I am as anxious as anybody that the whole subject should be discussed, and I feel sure that the more it is discussed the more apparent will be the difficulties.
      Mr. PRINGLE: Will the right hon. Gentleman say by what machinery the members of this Committee will be chosen?
      The PRIME MINISTER: Each name will be put to the House.
      Mr. PRINGLE: My right hon. Friend knows perfectly well that the names are selected' in the first instance, and it is very invidious to substitute names on the floor of the House. My question was as to who will select the names?
      Sir E. CARSON: Might I ask the right hon. Gentleman if the reference will be put down next week?
      The PRIME MINISTER: With regard to the composition of the Committee that is a matter entirely for the House. The only thing I say about it is that no member of the Government intends to sit upon it.
      Mr. RAWLINSON: Will the revision of the Voting Lists go on as usual?
      Sir A. MARKHAM: If the House gives facilities for the passing of the Bill which the Prime Minister is going to introduce, may I ask the right hon. Gentleman whether the War Minister will answer questions in Parliament, because during the last six months he has not done so?
      Mr. SPEAKER: One depends upon the other.

BILL PRESENTED.
MUNICIPAL SAVINGS BANKS (WAS LOAN INVESTMENT) (No. 2) BILL,—" to facilitate the investment of savings in securities issued for the purposes of the present War by means of the establishment of Municipal Savings Banks," presented by Mr. MCKINNON WOOD; supported by Mr. Chancellor of the Exchequer and Mr. Solicitor-General; to be read a second time Tomorrow, and to be printed. [Bill 65.]
ORDERS OF THE DAY.

  BUSINESS OF THE HOUSE.
  The following Notice of Motion stood on the Paper in the name of the Chancellor of the Exchequer:—"That, on the conclusion of the Consideration of the Finance Bill, as amended, this day, that Bill may be recommitted in respect of the Amendment standing on the Notice Paper in the name of Mr. Chancellor of the Exchequer, may be considered in Committee and, immediately on its being reported to the House, as amended, on re-committal, may be considered, notwithstanding the practice of the House relating to the interval between the various stages of a Bill relating to Finance."
  Mr. McKENNA: With regard to the Motion in my name on the Paper, I find that its terms are inconsistent with the statement I made to the House yesterday, and therefore I do not propose to move it. I shall, however, put down another Motion to-morrow, which will enable the House to save, if the House agrees to it, one day's proceedings on the Bill.
  Sir E. CARSON: Would it not be well to refer that to a Select Committee?
  Mr. McKENNA: No, Sir; that is a matter with which the House can deal at once.
  Mr. PRINGLE: Would it not be well if there were a permanent Select Committee to keep the Government right?
  Mr. J. SAMUEL: Does that mean that the Third Reading of the Finance Bill will not be taken to-morrow?
  Mr. McKENNA: The Motion for the Third Reading will not be taken to-morrow. We are going to take the Motion for the re-committal of the Bill and the Report stage to-morrow in order to enable us to take the Third Reading on one day next week.
  Sir F. BANBURY: Is the right hon. Gentleman not aware that it is in contravention of all the rules and customs of the House that two stages of a Money Bill should be taken on one day, and as there is a considerable volume of opinion against doing that, will he agree not to take that Motion to-morrow?
  Mr. McKENNA: Of course, if the opinion of the House is against taking the two stages on one day, I should not attempt
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  to do it, but I hope the House will hear me on the point because it is a purely formal matter.
  Sir F. BANBURY: Not at all.

  RE-ELECTION OF MINISTERS.
  The PRIME MINISTER (Mr. Asquith): I beg to move, "That leave be given to introduce a Bill to make temporary provision rendering unnecessary the reelection of Members of the House of Commons on acceptance of certain offices."
  4.0 P.M.
  The Bill which I am asking leave to introduce is rendered necessary in consequence of an Amendment to the Re-Election of Ministers Bill of 1915, which was accepted by the House in the course of the passage of that Bill through Committee. The Bill, as some hon. Members will recollect, as introduced, exempted from the necessity of re-election Ministers who accepted office between the 1st May, 1915, and the date of the Dissolution of Parliament next after the termination of the War; in other words, during the whole of the lifetime of this Parliament. The Amendment which was inserted confined the operation of the Bill to the months of May and June, 1915, and in that form it became an Act with consequences which I am sure were unforeseen, and, I am still more sure, were undesirable. In the first place, as the Bill for creating the Ministry of Munitions was introduced on the same day as the Reelection of Ministers Bill, the Munitions Bill, relying upon the provisions of the other Bill, did not provide, as was customarily done on the creation of a new office, for the inclusion of the office of Minister of Munitions among those which are mentioned in Schedule H of the Representation of the People Act of 1867, that is to say, the offices the transfer of a Minister from one to another of which does not necessitate re-election. If the Ministry of Munitions Bill had been in the ordinary form it would have automatically provided for that, but as on the same day the other Bill was introduced, it was expected that it would have had the same effect, and the Munitions Bill omitted that common form. Then came the Amendment which was accepted to the Re-election of Ministers Bill, with the result that a person who was appointed to the office of Minister of Munitions had

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  to be re-elected, and a person who had been appointed to that office, and was transferred to another office, was also subject to reelection. That affects two of my right hon. Friends-the present Secretary of State for War (Mr. Lloyd George) and the new Minister for Munitions (Mr. Montagu). The Secretary for War when he accepted office as Minister of Munitions was exempted from reelection by the operation of the Act which applies to the months of May and June, because he accepted office in the month of May. But that particular protection no longer extended after that, and it does not extend to his successor, nor does it extend to the late Minister of Munitions in his transference to the office of Secretary for War, because the Minister of Munitions was not provided for, and included in Schedule H of the Act of 1867. That is highly technical, and is the effect of these Acts. We think, and I think the House will agree, it is eminently undesirable at a time like this, in a critical state of the War, that the holders of these two offices, one that of Secretary for War, and the other that of Minister of Munitions, should be obliged to go back to their constituencies and to remain out of this House for a considerable time, and possibly go through the ordeal of a contested election. I think that is a purely technical fault that ought to be cured. Certainly if Parliament had foreseen the creation of this new office, it would have provided against these Ministers going through the ordeal of a new election.
  There is a second point which is also technical, indeed, still more technical, the exemption from re-election of my right hon. and learned Friend the Attorney-General (Sir F. E. Smith). The reason why I am the spokesman of the Government in introducing this Bill is because my right hon. and learned Friend the Attorney-General, whose duty it should be, is affected by it, and is unable to be here today. These are the reasons, the technical reasons, as the House will see, why he is not exempted from reelection. In respect to the offices mentioned in Schedule H of the Act of 1867, that applies only to a Minister being reelected as a Member of Parliament on the acceptance of one of those offices. It does not apply to a Member who was first appointed to an office mentioned in Schedule H in May or June, 1915. This is a very obscure point. My right hon. and learned Friend
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  was appointed Solicitor-General in the month of May, 1915. By virtue of the Act then passed it was not necessary that he should seek reelection, but when to the great detriment of the Government, and I think to the public disadvantage, my right hon. Friend (Sir Edward Carson) thought it necessary to resign the office of Attorney-General in the month of October and the Solicitor-General took his place, he under normal conditions was under no obligation to vacate his seat because transference from the office of Solicitor-General to the office of Attorney-General is sanctioned by the Act of 1867 without the necessity for re-election. But having taken the benefit of the Act which enabled him to become Solicitor-General without reelection, he was not technically a person who had been elected. The result must be, and has been, to prevent him from sitting in this House, and he has been doing so without qualification for some time. It is no reflection upon my right hon. and learned Friend, as I do not think he was consulted in any way, nor do I think it is any reflection upon anyone else. This matter escaped the attention of lawyers, draftsmen, and politicians in the House, and I hope the House, which always shows itself in such matters reasonable and generous, will be prepared to grant the necessary relief. The effect of the Bill I am asking leave to introduce will be to deal with both of these cases, and to give effect to what was undoubtedly the intention of the House, and, incidentally, it will relieve the right hon. Gentleman from certain consequences which otherwise would have fallen upon him. I trust that after this explanation the House will give leave to introduce the Bill. I do not ask them to-day, without seeing it, to pass it, but on to-morrow, after Members have had an opportunity of studying the Bill, which is a very short one, though highly technical, I hope they will be disposed to pass it through all its stages, thus preventing the necessity for the re-election of these two Ministers.
  Sir E.CARSON: I have not the slightest intention of offering any opposition to the Bill in question. I think the real history of the difficulty arises from the fact that the Bill which was brought in in June, and which saved myself and other Ministers from having to go to their constituencies, was amended in Committee. It was meant to be general throughout the War. I would suggest to the right hon. Gentleman that it would be well now, in

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  bringing in this Bill, not merely to make it applicable to these two Ministers, but to go further, and to not having us going through this farce at a time when it is really far more important that both the House and the Ministers should be attending to their duties in relation to the War than going through these mere formal matters. As regards the position of my right hon. Friend the Attorney-General, it is a painful one because he ought to have known the law, and I attribute the error entirely to the fact that, to my regret, I had myself to leave the Government. However, it is not a unique experience on his part. I myself was once solemnly offered by the Lord Chancellor, when I was a law officer, a judicial appointment for which I was not qualified, and for which I did not know I was not qualified.
  Question put, and agreed to.
  Bill ordered to be brought in by the Prime Minister and the Solicitor-General; presented accordingly, and read the first time; to be read a second time To-morrow, and to be printed. [Bill 66.]

  WAYS AND MEANS [11TH JULY].
  Resolution reported,
  "That the relief given under Section fifty-four of the Income Tax Act, 1853, as amended by any subsequent enactment, in respect of insurances and contracts for deferred annuities shall not—

  (a) be given at a greater rate than that of three shillings in the pound; or

  (b) be given for the purposes of Supertax;

  and that the said relief shall not, as respects insurances or contracts for deferred annuities made after the twenty-second day of June, nineteen hundred and sixteen—

  (a) be given except in respect of premiums or other payments payable on policies for securing a capital sum on death, whether in conjunction with any other benefit or not; or

  (b) be given in respect of premiums or payments payable on a policy which becomes fully operative only after the expiration of a certain period until after the expiration of that period."

  Resolution read a second time.
  Sir J. D. REES: I beg to move, after the word "annuities" ["contracts for deferred annuities shall not"], to insert the words "entered into after the eleventh day of July, nineteen hundred and sixteen."
  I think I need not add anything to what was said by myself and the hon. Member for Rochester (Sir E. Lamb) in regard to this proposal of the Chancellor of the Exchequer. As I understood him, it increases the amount payable by people who are liable to Income Tax or Super-tax. It is no uncommon thing to hear of people who over-insure themselves, who insure for a larger amount than they would probably have otherwise done in order to obtain the benefit of the provisions of this law. But I do not think all should be penalised on this account, because some may have done it to make a provision for their families, rather than to get the benefit in regard to the Income Tax. As I understood the Chancellor of the Exchequer, all the calculations upon which they proceeded have been rendered null and void, and a larger amount will be levied from some of them than that for which they made arrangements. My right hon. Friend knows perfectly well that in a great many families the provision for insurance is a sort of sheetanchor of domestic finance. Upon it depends not only the provision for widows and children, but also the other financial arrangements made. A family of small means might base their arrangements for the education of their children, for their domestic affairs, upon arrangements so concluded upon the faith of a law existing at the time. I do not remember myself a similar proposal to this being laid before Parliament, and I confess that when I got up to ask the Chancellor of the Exchequer as to what it was I expected him to disclaim any retrospective effect attaching to this Resolution. Apparently I was mistaken in that respect, and my hon. Friend opposite (Sir E. Lamb), who took the same point, is under the same impression.
  Sir E. LAMB: I want to ask the Chancellor of the Exchequer, in view of his saying yesterday that he was maintaining an open mind on the question, not only to approach it sympathetically, but to concede the point, because when, on the 22nd June, he introduced this Clause he distinctly said to the House, and not only to the House, but to the country, that it was not going to be retrospective—the

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  Clause he then introduced I agree, but is a Clause dealing with this question. He said, in introducing the Resolution:
  "This Resolution relates to insurance premiums and the relief which is now a statutory right with regard to those premiums."
  And later on in the same speech he said:
  "We do not propose to interfere with bona-fide investments of this kind which have been made in the past. We think that in the future there should be a strict limit upon the right to obtain deduction of Income Tax in respect of premiums."
  When later, on the 28th June, he asked the House to accept this Resolution, stating in explanation that he was going to meet the insurance companies, and that if they would agree to some form that would cover the point he would then withdraw the Resolution then introduced and substitute another in an agreed form, in answer to an interjection he then again stated that the Clause is prospective. I want to point out that while the insurance companies, qua insurance companies, may have agreed to this alteration, they, after all, are not so intimately affected as the tens of thousands of policyholders who have already entered into contracts bearing on this point. So far as insurance companies are concerned, if it is to continue prospective, they are not thereby handicapped in the obtaining of new business, and are not so much concerned as regards business already entered into. But when we remember the many thousands of people in this country who are heavily insured, and who have insured in many cases up to the limit of the one-sixth of their income, taking into account their other liabilities and thinking that they were going to have this relief then allowed under statutory authority as regards relief from Income Tax, I ask the Chancellor of the Exchequer to consider one other point.
  When, in the Finance Bill last year, he brought in an Amendment which affected policy holders, he limited it, in addition to the amount already limited to one-sixth of a man's income, to 7 per cent. of the capital sum, and he did not take the total premiums of a man, but the individual premiums. A man, therefore, might have many premiums running that were only 4 per cent, or 5 per cent., and he might, on the other hand, have one of 7 per cent., or considerably over 7 per cent. The right hon. Gentleman did not take the total premiums, but the individual premiums, paid, and therefore, if
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  you take the case of a man who had a ten years' endowment running for £1,000, and having to pay a premium of 95 per cent., he only gets relief upon £70, and still has to pay in full on the balance of £25. The right hon. Gentleman did not make this further limitation of relief retrospective. The consequence is that those who have already entered into these contracts find themselves in the position of not getting relief to which they thought they had a statutory right, and they feel that to be a grievance. There was little notice, because I think the Chancellor of the Exchequer will agree that no one had any idea of this alteration until he announced it in the House yesterday. When you bear in mind that it is in a sense to be rushed through the House, for reasons which I agree are satisfactory in view of the need for getting the Finance Bill, it does not give the people of the country the opportunity they would otherwise have of communicating with their representatives and bringing pressure to bear on the Government in an endeavour to ensure that they shall not be handicapped in this way. The Chancellor of the Exchequer has told us that he is maintaining an open mind, and I do hope that in order to save the time of the House and to make the passage of this Resolution through the House more easy, he will concede this point that it shall not be retrospective. If we cannot go to our Constituents and say that it does not affect contracts already entered into, those people who have insured, believing that they were going to get this relief all the time their policies were in force, but who suddenly find that at short notice, without time for making any representations to the Chancellor of the Exchequer, they are going to lose the advantage in so far as it exceeds 3s., will have a just cause of complaint. I ask him to concede this point, and, if he must do it, that he will alter it so that it will only be prospective. I do ask the right hon. Gentleman to see whether he cannot meet us on this point.
  The CHANCELLOR of the EXCHEQUER (Mr. McKenna): My hon. Friend wishes the House now to decide the question as to whether this Clause should apply to contracts already entered into as well as to future contracts. For my part, I think the House would be better advised to decide the question when it sees the Clause. It is just as easy to decide it then as now, and nothing is prejudiced by

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  allowing it to stand over until to-morrow. I adhere to the view I expressed yesterday—
  Sir J. D. REES: Not to-morrow.
  Mr. McKENNA: I think it is to-morrow; there is no bar to my re-committing the Bill. I think it would be a very convenient form The case has to be argued in the House. As I have said, I am quite prepared to take the decision of the House naturally either way, but I do not wish to influence it either way in regard to the matter. I think, however, that the facts ought to be stated to the House as to what is the argument on both sides of the question. I recognise the force of the argument my hon. Friend has put forward. There is another argument to the contrary, and it would be more convenient to take the discussion when we have the Clause. As regards the Resolution itself, I ought to correct one statement which my hon. Friend (Sir E. Lamb) made by inadvertence. The representatives of the companies have not agreed to this Clause being made applicable to existing contracts. They have agreed to the Clause in all other respects.
  Mr. LOUGH: No.
  Mr. McKENNA: Yes, I think so.
  Mr. LOUGH: They have agreed in principle, but not to the Clause as now drawn.
  Mr. McKENNA: The representatives of the companies have agreed to the Clause in all respects except with regard to its application to existing contracts. Therefore, I would submit to the House that the more convenient procedure would be that we should take the Resolution now as it stands, leaving the House perfect liberty of action to decide to-morrow on the Clause, quickly I hope, the simple question of whether it should apply to existing contracts or not. That, I understand, is the only outstanding question. There is no criticism of the proposal in any other respect.
  Mr. LOUGH: Yes, there is.
  Mr. McKENNA: It has not come to my knowledge.
  Mr. LOUGH: The 3s.
  Mr. McKENNA: That is agreed.
  Mr. LOUGH: Not in the House of Commons.
  Mr. McKENNA: No, not in the House, but my right hon. Friend seems to forget the history of this Clause. There is already in the Bill a Clause dealing with this subject.
  Mr. LOUGH: Which Clause?
  Mr. McKENNA: Endowment. The Clause was introduced in order to hit particular people. There was already a Clause in the Bill, and for my part, so far as the revenue is concerned, I should be content with that Clause as it stands. It is in order to meet the difficulties of the companies and policy holders that we have agreed that if we can find another method of dealing with this evil satisfactory to all parties, we will substitute this Clause for the existing Clause. If my right hon. Friend is going to object to all Clauses, then I shall have no alternative but to go on with the existing Clause. I think it would be more convenient to go on with the Clause that has run the gauntlet of the criticism of experts on all sides, who represent policy holders just as much as the companies. I would submit to the House that it would be most convenient to allow us to have the Resolution now, and to discuss the question tomorrow.
  Sir E. CARSON: The question that is raised with reference to these insurances is a very much more important one to the country than I think the right hon. Gentleman seems to imagine, and for my own part I doubt very much if the country is at all aware of what is being attempted to be done by the Clause which the right hon. Gentleman proposes now to insert in the Bill. The history of the Income Tax Act is perfectly clear. I think it was in 1854, or 1853, that it was decided to encourage people to make provision for their families. There were exemptions given up to a certain amount to those who insured themselves and thereby claimed that provision. That has lasted ever since, and has, I think, fulfilled the objects for which the Statute was enacted in promoting the insuring of people against death, and thereby making provision for their families. Now, in the middle of a war, at a time when everybody has much less means of carrying out the obligations into which they have entered, the right hon. Gentleman comes down and wants to upset the whole of this arrangement—selecting a particular class of persons which, up to this, the Government have always tried to encourage—and to penalise those who have

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  been thriftful and have attempted to make provision, and to put upon them what really amounts to an extra tax. As originally framed, this Bill dealt only, as I understand it, with endowment policies. The right hon. Gentleman did not mean to touch the ordinary policies at all. I can see very good reasons, so long as you do not affect past contracts, for dealing with endowment policies. People at the present day, when Income Tax is very high, and Death Duties are very high, may have been induced—and in fact, as one knows by the many advertisements one sees, have been induced—to invest very large sums of money in policies for a short period of years, thereby saving Income Tax, and getting at the same time a very large, and a very certain, return for their money at the end of the period, or, if they die in the meanwhile, very considerable advantages for their families or for those to whom they leave their money. For my own part, I do not think it was unfair, if that was limited to future contracts, for the Chancellor of the Exchequer to try to stop that method of evading the Income Tax to a certain extent.
  But he has abandoned that, which was really a much fairer and much sounder proposition. Now he proposes to affect all people who have taken out insurances upon their lives. I can tell the Chancellor of the Exchequer that there are thousands of people in this country who are, to use a popular phrase, put in a corner to pay their insurances, and if they are to be made to pay in the ordinary case an additional 2s. 6d. in the £ Income Tax, as he proposes, I believe there are many people who will have to abandon the policies on which they have been paying or to surrender the policies and take the surrender value. I believe he will create a great hardship.
  What is the case of the right hon. Gentleman? He says, "I have settled all this with the insurance companies." I do not care about the insurance companies. Insurance companies are the most illiberal companies I know. They go on, according as we pass laws and spend a great deal of money in hygienic legislation in order to prolong the life of the people, which undoubtedly it has done according to the tables-they go on charging the old rates and amassing enormous sums of money. No doubt in some cases they are mutual companies, but in some cases they are
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  companies for profit—the profit of their shareholders. They are not the people to be considered at all.
  The people to be considered are the poor insurers, many of them just over the limit of exemption in the Insurance Act. I protest, when you are saddling them with every other kind of expense—the increased prices of living, of which we hear sometimes so much in relation merely to the working classes, who are very often better off than poor clerks and other people who have to make provision for their children—I protest that at this time, with an Income Tax at 5s. in the £, as it is at present, that you should put upon them what is an extra tax because they have in the past done what all prudent citizens ought to do, try to make a small or comparatively large, as it may be, according to their means, provision for their children. For my part I shall oppose this with all the power I can command, and I shall certainly divide the House tomorrow, if the right hon. Gentleman puts it off until tomorrow, not only against the Clause but I shall also divide against the 3s. which he has down and ask him, so far as these ordinary policies are concerned, at all events up to some limit which he can easily name, to say that these people are not to be saddled with this exceptional tax. With regard to what the right hon. Gentleman said that we ought not to divide against it now, I can only say that I really do not know enough of Parliamentary technicalities to know whether it is more convenient not to divide today than tomorrow.
  Mr. McKENNA: May I explain to the right hon. Gentleman. Tomorrow we get the Clause in Committee. Then I can speak more than once and hon. Members can speak more than once, and we get a chance of agreeing to Amendments and getting something settled to the satisfaction to the whole House. I cannot answer the right hon. Gentleman now except by leave of the House. The Report stage is not an opportunity for coming to a settlement. I would much rather come to a settlement in Committee tomorrow. I have listened with respect to what the right hon. Gentleman has said, and I do not think we shall be unable to come to a settlement. That is the only reason for my request.
  Sir E. CARSON: I do not want to be in the least unreasonable. I know the Government are anxious to get the Bill and

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  that it is necessary for Revenue to get the Bill. The only thing that appears to me as an innocent individual is that passing this Resolution with this retrospective Clause in it does seem to mean that we shall be prejudiced in the Committee. If, however, the right hon. Gentleman makes it perfectly clear that the whole of his matter will be done without any prejudice—
  Mr. McKENNA: Hear, hear. That is perfectly clear.
  Sir E. CARSON: Then, so far as I am concerned, I shall not pursue the matter further to-day. That will give me an opportunity of communicating in the ordinary way with hon. Gentlemen on this side of the House, at all events with whom I generally work, asking them to come down here and vigorously oppose the proposal of the right hon. Gentleman unless it is modified and made just towards the ordinary insurer.
  Sir E. LAMB: On a point of Order. I understand that the Chancellor of the Exchequer asks us to postpone this until to-morrow. The meaning of the Amendment is that, if it is passed, we shall make it impossible for him to draw his Clause so as to make it retrospective. I desire to know whether, if we pass the Amendment, we shall make it impossible for him to draw his Clause so as to make it retrospective?
  Mr. SPEAKER: Certainly if the Report is not amended to-day it is open to Amendment to-morrow, but if the Report is amended today in the restricting sense, it will not be open to the Chancellor of the Exchequer to expand it to-morrow.
  Sir T. WHITTAKER: I should like to say a few words upon this proposal. I happen to be in some difficulty, because there is no doubt that the view which the right hon. and learned Gentleman (Sir E. Carson) has expressed is the view which the insurance companies will hold. They would desire the reduction to be continued. I know, being personally interested in insurance and being able to speak from the interests of the office with which I am connected and other companies, that they would desire this limit to apply only to the future. But one has to act here, I presume, in the interests of the community and of what is the right thing. Therefore, I want to express the opinion that it is just and equitable that this should apply to all policies. What is the origin of this? Can
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  any hon. Member give a bonâ-fide and sound reason why the allowance should be made at all?
  Sir E. CARSON: To encourage insurance.
  An HON. MEMBER: Thrift!
  Sir T. WHITTAKER: No! that is not the origin of this. If you want to encourage thrift, why is the encouragement to be limited to one particular kind of thrift? If it is to encourage thrift, why is it not allowed on every investment into which a man who is saving his money is putting it? The origin of this was not to encourage thrift. There is another thing. The allowance of 3s. in the £ would practically cover people who are earning up to £1,000 a year. It is the wealthier people who are going to be touched by this restriction of the allowance. They are not the people for whom we need to go out of our way to encourage thrift. We have gentleman insuring for £100,000, £200,000 and £300,000, and paying £5,000, £10,000 and £15,000 a year in premiums. They are to have an allowance of 8s. 6d. in £! I say it is monstrous that they should be relieved of taxation in wartime to that extent. It is the wealthy people who get this allowance beyond 3s. in the £. What was the origin of this allowance? Anyone who will read Mr. Gladstone's speech in 1853 will see it. In those days the Income Tax was at one level. There was one rate in the £ for all kinds and classes of income. It was felt that to levy the same rate of tax on people who had an earned income as upon those who derived the same income from investments was inequitable, and that the person who was earning £1,000 a year and who had no other income was in a very different position as regards his family from the man who received £1,000 from investments, because the man who was earning £l,000 a year had out of it to provide for his family. In those days it was considered impracticable—as hon. Members know, for a great many years it was the opinion of the authorities—to have differentiation as between earned and unearned income. In order to meet the difficulty it was conceded that the persons who insured their lives should have an allowance off the Income Tax. It was pointed out at that time that practically the only persons who insured their lives were persons earning an income, or who had life incomes only—persons earning incomes from business or professions. There

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  was no necessity because of big Death Duties and that kind of thing to insure. They did not exist. That big kind of insurance did not exist at all in those days. It was only really the professional and trading people who were earning their incomes who insured, and this concession was made to them as a setoff against the inequality of the tax upon earned and unearned incomes being at the same rate. That was the only reason for that allowance. It is the only reason that can be given. When this House in 1907 decided to differentiate between earned and unearned income and to levy a lower rate of tax on earned incomes than on unearned incomes the whole reason for this allowance disappeared. [HON. MEMBERS: "No, no!"] It was the only reason that could be given for it.
  Sir E. CARSON: May I ask the right hon. Gentleman, are not those people who pay insurance money liable to the Death Duties?
  Sir T. WHITTAKER: So has everyone else. If a man puts his savings into a house, the value of that house is subject to Death Duties. In just the same way, if he has put it into railway stock, the value of the railway stock is liable to Death Duties. He does not get any allowance.
  Sir E. CARSON: The right hon. Gentleman did not quite appreciate my question. He is talking of a difference. There were not these enormous Death Duties at the time the tax was put on.
  Sir T. WHITTAKER: That is why, as a practical matter of good insurance in those days, we limited the allowance to persons who had only life incomes, either earned or life interest. That is why the allowance was made. We have these others with large insurances now, and now no such reason exists. In the vast majority of cases of the insurance contracts entered into, the persons who entered into them had no conception whatever of getting an allowance of 5s. and sometime 8s. 6d. in the £. When the Income Tax stood at 8d., 10d., 1s., or 1s. 2d. in the £—1s. 2d. was thought to be an enormous tax-they never entered into the contract with any expectation of getting an allowance of 8s. 6d. in the £. To say that this is retrospective is scarcely the correct way of expressing it. You are not taxing anybody backwards at all. You are settling the allowance to be made now and for the
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  future. If you do not make the allowance to apply to the existing policies, you will have some men with policies they have taken out before this date on which they will be getting a very large allowance and others taken out afterwards on which they will be getting a smaller allowance. You will have some persons getting one allowance and others getting another. There is no reason for it. It is unreasonable and inequitable when they never took out the insurance expecting such an allowance. They never thought there would be such a tax. We ought not to allow people, the wealthier people, 5s. to 8s. in the £ during wartime off their Income Tax. They ought to pay their share like anybody else. It would be a gross injustice to continue this allowance. It is retrospective only in this sense, that you are allowing it on an old bargain which was made when they never expected any such relief. Now with regard to the number of people who will be affected. Three shillings in the £ will represent the tax practically on all those whose incomes are under £1,000 a year. They are the enormous bulk of the policy holders of the country, and they will get a full reduction on their income They will get the full amount. In my judgment they are the people who are entitled to it. Even if you suggest the idea, of thrift, Members of this House since the War began have taken up policies for £100,000, and are paying premiums of £5,000 or £6,000 a year. It is ridiculous totalk about thrift in a case like that, and to allow them 8s. 6d. in the £ off. It means that smaller people have to pay a bigger rate of tax because you are making this allowance to wealthy people. Three shillings will cover all the class of people for whom the allowance was originally intended, and I hope we shall be able to rise above our own interests in this matter and determine to do what is the equitable and just thing.
  Sir F. BANBURY: The right hon. Gentleman has delivered what seems to me to be a very curious argument. He says, "Do not do this if it touches someone whose income is less than £l,500 a year, but if it touches someone whose income is larger, then we can do it."
  Sir T. WHITTAKER: No, that is a gross misrepresentation. My point was that persons above this income are not persons who ought to require encouragement in the matter of thrift, if that was the argument.
  Sir F. BANBURY: It is not a question whether these people require to be encouraged to be thrifty or not. It is a question as to whether, having entered into a contract, that contract is to be observed. I think I am speaking within the recollection of the House when I say that the right hon. Gentleman's argument was founded upon what I said just now, namely, that as rich people were not very numerous, and as they were rich, it was right to break a contract with them.
  Mr. McKENNA: There is no contract.
  Sir F. BANBURY: I will explain what I mean by contract. In the would apply to a very large number of people whose income was under £1,500 a year and as long as they were not touched the right hon. Gentlemen did not mind. That is what I understood him say. If he withdraws it—
  Sir T. WHITTAKER: I do not withdraw it because I never said it
  Sir F. BANBURY: Then I do not really understand what was the object of the right hon. Gentleman's speech. The Chancellor of the Exchequer said there was no contract. The right hon. Gentleman (Sir T. Whittaker) told us that in the year 1853 Mr. Gladstone introduced this provision into the Finance Bill, and it has been in force ever since. I call that a contract. On the faith of that statutory enactment, which has been in force for sixty-three years, people have invested, believing that these privileges would occur. It may be that it was a mistake to do it. It may be that the right hon. Gentleman is quite right in the course he is going to pursue, but it must be for the future and not for the past, so that people who insure in the future will know what they are doing. I am sorry my right hon. Friend (Sir E. Carson) has not insisted upon a Division today, because by passing this Resolution we are going to assent to the principle that you may impose a retrospective tax. I say that is wrong. I have not looked up the precedents, because the Motion came suddenly before us, and we did not know what we were doing, but I do not believe we have ever had a retrospective tax in this House before.
  Mr. McKENNA: You have not now.
  Sir F. BANBURY: But we are giving the Government power to impose a retrospective tax if we pass this Resolution.
  McKENNA: No, we are not.
  Sir F. BANBURY: Certainly we are, and if we carry the Amendment we shall prevent the Government imposing a retrospective tax. Even now, if my hon. Friend goes to a Division, I shall be very happy to vote with him. I view with great regret and with great fear the growing tendency on the part of the Government to override all the old rules dealing with finance—trying to take two stages in one day, making mistakes as they did yesterday, and then trying to alter them by putting Motions on the Paper which they have to withdraw—and I look on that with the greatest fear and misgiving, especially in view of the fact that we are now the only House which has any control over finance, and that ought to make us far more careful than we were before. We ought not to give any Government the power which the present Government are demanding. I am against the principle of this Resolution that you should make a tax retrospective, and I shall certainly vote with my hon. Friend if he goes to a Division.
  Sir COURTENAY WARNER: I hope the Chancellor of the Exchequer will not stick to the point of deferring this. It is not a question of amending the Clause that we are objecting to at present, but a question of principle. Is this to be retrospective or not? It will be very much easier to put the Clause in its proper form if this has been decided beforehand, and the Amendments and the discussion of details could be very properly left to the Committee stage. But with regard to this question of whether it is to be retrospective or not, in spite of all that has been said by my right hon. Friend (Sir T. Whittaker) I think it is retrospective taxation, and there are a great many cases of men with incomes of £2,000 a year who have very little to spend and who have always put away a very considerable proportion of that income to provide for their families, and who will suddenly be required to pay extra Income Tax of 2s. on that amount when they have only £300 or £400 to live on. There are many men rated at £2,000 a year who have certainly less than £600 a year to live on, because if their investment is in real property the taxes come out a great deal more than a quarter of the income nowadays and they have certain charges, and they very often have less than £500 a year. These men will have to pay, perhaps, £50 or £100 a year more and they will not be able to do it.
  Mr. McKENNA: How do you make that out?
  Sir C. WARNER: They will have to pay 2s. on the money that they have paid to the insurance company. That 2s. will have to come out of their income and not out of the insurance company.
  Mr. McKENNA: Your figures are hopelessly wrong.
  Sir C. WARNER: If a man is paying a premium of £300 a year, which I do not think is a very extraordinary large sum, and you put 2s. in the £ on £300 a year, I calculate that is £60 a year.
  Mr. McKENNA: Thirty pounds a year.
  Sir C. WARNER: If it is £600 a year, it is £60. Six hundred pounds a year is not a very large provision to make.
  Mr. McKENNA: Six hundred pounds a year on a £2,000 a year income?
  Sir C. WARNER: It is not a question of getting relief on the £600 a year. It is a question of the £600 a year being placed with the insurance company.
  Mr. McKENNAmade an observation which was not heard in the Reporters' Gallery.
  Sir C. WARNER: I originally began with £300, and I have changed the figure. It means that he has £3,600 gross income, and in that case, instead of having about £500 or £600 a year, he might have £800 or £l,000 to spend after he had paid his insurance money. I do not think that man can pay £60 or £100 a year if he has a family to keep up, and if he has been in the habit of having nearly half as much again as he has now, because taxation has brought his income down enormously. It is a hard case, and one in which we ought not to put retrospective action in force. If the Chancellor of the Exchequer was to alter the date so as to catch the people who have been doing it in the last few months there would be something to be said for it, but when he is putting it back for all the insurances which have been made for providing for families it is unfair, and I hope my right hon. Friend will give way on this point of making this retrospective. I prefer the original Clause, though the insurance companies will not like it very much, to the new one, and I think if we are to have the new one in its present form it will be a very much greater evil than the old one, though
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  perhaps it will do less harm to the insurance companies; but I am not concerned with them; I am concerned with the general public, and I think it would be fairer and more just of this House to keep the old Clause than to pass the new Clause as it stands now. I think we ought to take the question of whether it is to be retrospective or not at this stage, and not on the Committee stage.
  5.0 P.M
  Mr. CHURCHILL: I was going to ask the right hon. Gentleman about a point which has a direct bearing on the question we have to decide, namely, the effect of the proposal on the extra war premiums which officers have had in so many cases to pay when ordered on active service. There have been cases of extraordinary hardship in that connection. I remember at the beginning of the War bringing this matter to the notice of the Treasury, but I do not think anything was done to help the officers affected. In some cases the premium asked is as much as 12 per cent. or 15 per cent., and even with old subscribers it comes to 7 per cent, or 8 per cent. This is money which the man has to pay simply because he is going into danger for the public, and it seems to me very hard indeed that that premium should not be deducted from a man's income, because this is a charge which will last as long as the War goes on and very likely will be an increasing charge, and it seems very hard on officers who have to make provision for their families, who have the choice between letting their investment fall to the ground and paying these very heavy premiums, if when they have done that this extra charge which they have paid cannot even be deducted from the income of the year. Take, for instance, the case of a commanding officer whose pay is £500 a year, and he has to pay £300 or £400 war premiums to go out and take up his duty. In such a case surely the whole of the extra sum he has to pay for going on active service ought to be deducted from his income for the purpose of Income Tax. I think the Chancellor of the Exchequer would be well advised to give attention to that point, which would certainly relieve my feelings in the matter.
  Mr. CURRIE: I do not wish to prolong the discussion upon the merits of the Clause, but I wish to point out to the Chancellor of the Exchequer, and I think he realises it himself, that the undertaking

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  which he gave in the course of discussion the other day to the effect that this Clause was to be prospective and not retrospective has brought about rather a curious position. I think I am speaking fairly when I say that the other day he gave us that undertaking really for value received across the floor of the House, and I scarcely think in connection with this Finance Bill that he is quite at liberty to consider the whole question as still open for discussion, and that it is enough to say that the Debate tomorrow will not be prejudiced. I rather think that as he gave policy holders—for that is what it comes to—to understand that no retrospective proposal was being made, and that now it is proposed that this levy should be made so as to refer to existing or old contracts he should defer proceeding with that part of the proposal until he brings forward another Finance Bill. It would be unfair to policy holders that they should feel that they have been deprived of the opportunity of organising themselves and expressing their views in the ordinary way, or, rather, that they have been thrown off their guard, because the right hon. Gentleman gave them to understand there was no necessity for doing anything of the sort. Speaking as a private Member of the House, I think the Chancellor of the Exchequer would bring about rather an unfortunate position if he gave an undertaking or promise of that kind and then quite inadvertently went back upon it in a way that there seems to be a risk of our being asked to do tomorrow. It is quite clear from the context of the Chancellor of the Exchequer's remarks as to the Clause being prospective, that he really meant to assure us that the Clause was not to be retrospective. I am quite in favour of this practice of the insurance companies being brought to an end once for all; I think it has been tolerated far too long. I do not think it is fair to say that it is retrospective taxation. Whether it should refer back to old contracts is a fair matter for debate in view of what the Chancellor of the Exchequer said the other day.
  Mr. BRYCE: I want to emphasise what has been said by the right hon. Member for Dundee (Mr. Churchill). As a director of one of the large insurance companies I know what an extreme hardship this inflicts upon very large numbers of people, not of large means, who are serving in the Army and with other forces of the Crown. It is a point which I brought before the
  378
  Chancellor of the Exchequer when this Resolution was up for Second Beading. He promised to consider the Amendment which I then gave him to provide for this particular point, but I do not think that in the Clause he has done that.
  Mr. McKENNA: What is the point?
  Mr. BRYCE: The point as to the deduction of the extra premiums payable in respect of war risks being counted in the sixth or the seventh of the income. That is a point which the Chancellor of the Exchequer promised to consider, but it does not appear in the Clause. There is one other point which I think the Chancellor of the Exchequer ought to consider, and that is the limitation of the age to sixty.
  Mr. McKENNAmade a remark which was inaudible in the Reporters' Gallery.
  Mr. BRYCE: I understand that the Chancellor of the Exchequer has taken out the limit of sixty years. I am glad of that, because that would have affected also a very large number of cases which is is very desirable should be insured.
  Mr. McKENNA: I should like to say a few words upon the point raised in regard to extra levies paid by officers as war risks. I quite agree that that is a case which we ought to consider. I will look into the matter, but it is not the same point as that which has been spoken of by the hon. Member (Mr. Bryce), because an additional single payment made by an officer in respect of war risks does not get any relief at all whether inside or outside the sixth. Belief is only given in respect of annual payments.
  Mr. CHURCHILL: These are annual payments during the War.
  Mr. McKENNA: I cannot say whether that would be an annual payment for the purpose of the Act. If I am right in that view, it makes a still stronger case for relief. I will consider it.
  Mr. JOYNSON-HICKS: The Chancellor of the Exchequer told us just now that there is no contract in regard to this rebate. As an old lawyer, he will know of the old principle of "holding out." The Government has held out to the insurer that he would get this rebate. We are asked to alter that now. I maintain that the Government, having held out to A, B, and C that if they insured their lives they would get this rebate, cannot

  379
  possibly go back on a policy which has been taken out on the faith of the Government holding out that inducement. The right hon. Member (Sir T. Whittaker) sneered at the large insurers, people who, he said, had insured for £200,000 or £300,000. That is the very best thing that could happen to the country at the present time. The real reason why the House of Commons has given this rebate on insurance premiums is because we desire to encourage thrift, and because we desire to encourage the accumulation of capital. At this time, of all others, it is absolutely essential that we should encourage the accumulation of capital in the largest possible manner. It is the big insurance policy which is really needed to put the country right at the present time. The right hon. Gentleman (Sir T. Whittaker) may smile, or do more than smile if he likes, but I emphasise that point. During the last two years we have been blowing away capital in thousands of millions, and we want to encourage everybody today to replace that capital by stinting themselves in their daily life, and instead of spending all their income, whether it be large or small, to put it into insurance companies. The right hon. Gentleman knows—and certainly I know, as a director of a small company—that nearly all the premiums now go into Government War Loans, or Exchequer Bonds, so that the money invested in insurance is really coining back to the Chancellor of the Exchequer in another form. What we are doing is to encourage the accumulation of capital, and that is the very thing we want to encourage to the utmost extent while the War is going on.
  Sir H. ELVERSTON: I think the object of the Treasury is to stop the exploitation of the huge Income Tax which has been put on during the last two years. The people who insured prior to the outbreak of War in 1914 are really in a far better position today as regards the rebate on Income Tax than ever they expected to be. A great many people, however, have been exploiting the Income Tax by means of insurance. They have been taking out policies purely to get the rebate, and they have been using the accumulative rebate to pay future premiums. I will give one example of what has been going on. In one company I know of, a man took out a short term policy under a scheme which the company put forward.
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  He pays to that company one premium only, and he gets from the Treasury a tax rebate which exceeds 25 per cent. of the premium. He then pays the rebate over to the company, and the company loan to him the balance of the premium, and that goes on for ten years. At the end of the ten years the man has only paid one premium to the company, and the Government has paid the rest of the premiums, with the exception of loans, which have been secured from the company. The result is that at the end of the ten years the man is owing to the company about £7,000, and he gets from the company £10,000, leaving a balance of £3,000. He has been insured the whole of this time for nothing. The Government rebates have paid the whole of the premiums. It is perfectly right and correct for the Treasury to step in and say that in wartime, when the Income Tax has become so heavy, a stop should be put to the exploiting of the Income Tax in the manner in which it has been done. That is the whole position, and that is the whole object of the Treasury. I am quite sure that the Treasury is not doing the slightest damage to the genuine insurer, certainly no damage to those who insured prior to 1914, because they are getting today three times as much rebate as they ever expected prior to 1914. These insurances were taken out not by the extremely wealthy people, but by the middleclass people, as I pointed out to the House a short time ago, and it is only the very wealthy people who are exploiting the tax today. Under the amended Clause a middleclass person, the person who genuinely needs this help from the Government, will receive this help as before. I consider that the amended Clause is a great improvement upon the Clause which was put to us before.
  Mr. LOUGH: I think the House is greatly indebted to the hon. Baronet, because he has just brought us back to the position in which we were when the Chancellor of the Exchequer dealt with this matter in the Finance Bill. When the Chancellor of the Exchequer explained the position to us, he said there was a growing evil on account of the high Income Tax, and he aimed his prospective Clause at that growing evil, and the House generally agreed with him. In what position do we find ourselves now? The Chancellor of the Exchequer has abandoned the policy of penalising the people

  381
  who are taking out these large new policies, and instead is depriving all the people who have enjoyed it for sixty years of the allowance which they receive under the Act of 1853. That is the change which is to be made in the Act. That is the reason why we are having this inconvenient discussion on the Resolution in Committee. It is because the Chancellor of the Exchequer is not pursuing the policy which he stated in Committee. It is all very well for the right hon. Member for Spen Valley (Sir T. Whittaker) to shake his head. His argument was devoted to the point that it was a good thing to change the general law. I want to present the case against that. We are in war time, and we ought not to have these violent changes of principle made, and especially made for a very small purpose. The Chancellor of the Exchequer gave a reason when the Bill was before the House. He said that in order to avoid the heavy Income Tax, a particularly clever kind of policy had been developed. He gave us his explanation and his proposals for meeting the situation, and there would not have been any serious objection if his proposal had been confined to that matter. What do we find now? We find that, misled I believe by ingenious Gentlemen like the right hon. Member for Spen Valley, he goes into a proposal for a violent change of the whole Income Tax law, and to deprive people of a small advantage for no great gain to the Treasury. He alters the character of thousands, I might say hundreds of thousands of policies, that are in existence, and deprives people of an allowance that they have enjoyed for over sixty years. My hon. Friend behind me (Mr. Currie), who is a most consistent supporter of the Chancellor of the Exchequer and of the Government, and who has helped to carry the right hon. Gentleman through some difficulties, has warned him, and I would venture to do the same thing. Let the Chancellor of the Exchequer go back to his Clause, and all his difficulties will disappear, but if he persists in this violent change of the Income Tax law of 1853 we shall have long discussions upon it. We will not have this explanation from the right hon. Member for Spen Valley as to what Mr. Gladstone meant in 1853. How does he know what Mr. Gladstone meant?
  Sir T. WHITTAKER: I know what he said.
  Mr. LOUGH: We know what he said, and we are just as well able to judge as to what he meant as the right hon. Member for Spen Valley. I suspect all that these experts say to us on a point of this kind. I put this simply to the House, that this is not a convenient time to reduce to three-fifths the allowance that has been made and steadily maintained by this House for over two generations, and I appeal to the House not to assent to it.
  Mr. J. SAMUEL: In discussing this matter I feel that the right hon. Gentleman who has just sat down has described exactly the effect of this Clause upon policy holders. I do certainly not agree with my right' hon. Friend the Member for Spen Valley in his review of the history of the rebate on the payment of Income Tax granted to policy holders, because that does not apply to this Clause at all. I certainly hold that the Chancellor of the Exchequer has rather broken faith with the House of Commons. When the Clause in the Finance Bill, that was amended in Committee, was under consideration he brought in a New Clause in which he proposed certain alterations affecting two classes of policies. One was the life and endowment and the other was the deferred annuities, and he proposed to affect very considerably every new policy holder who took out a policy in either of these classes. At the present time there are hundreds of thousands of policies taken out every year with the insurance companies. I could give statistics of one of the largest which insures something like £103,000,000 of policies in the ordinary branch. So we have hundreds of thousands of policies taken out by people under what is called the fifteen years', twenty years', or twenty-five years' endowment. Under the Clause in the existing Bill it would read in this way—
  Mr. McKENNA: We do not propose to alter it.
  Mr. SAMUEL: I know that, but I want to explain the difference between this Clause and what is proposed, because it has been suggested that we should resuscitate the existing Clause, and every insurance company and policy holder are opposed to it, and for this reason: Supposing a man took up a policy at twenty years of age to insure for twenty or twenty-five years, he would have no Income Tax abatement. That

  383
  would be a very serious matter to many of these young men who took out insurance policies under the existing Clause. We opposed that very strongly in Committee. The result was that the Chancellor of the Exchequer said that he would take it back and further consider it. He has further considered it. Now the objection which I have to the new suggestion is this: The Chancellor of the Exchequer in this Clause made it operative after the 22nd of June, 1916, so that all policies before that date would continue to receive the abatement of the Income Tax. Now the Chancellor of the Exchequer proposes to reverse that. That is where I object to this new suggestion. I disagree entirely with the hon. Baronet's suggestion—and I am rather surprised that he should make it—that men who have taken out policies, whatever the size of the policies may be, previous to the introduction of the original Bill should be penalised by having the Income Tax abatement declined or refused. That, I think, would be absolutely wrong, and I think that the new proposal is infinitely better than the existing Clause. The Chancellor of the Exchequer now proposes to allow all policies, whatever they are, to have an abatement of 3s. in the £. That would cover all men with an earned income up to £1,500 a year—that is to say, if a man was earning £1,500 a year, this new Clause would not affect his policy. But if he earned from £1,500 to £2,000 a year, it would affect him to the extent of 8d. in the £. He would have a rebate of 3s., the 8d. would not be allowed, and he would have to pay the 8d. on the amount of the premium which he was paying to the insurance companies.
  Mr. RAWLINSON: How much is the insurance?
  Mr. SAMUEL: That is immaterial. It does not affect the amount of the insurance. It simply affects the amount that the man is paying in the form of Income Tax. If a man is paying, say, 5s. in the £ Income Tax, he would be allowed up to 3s. in the £ on his insurance premiums. The other 2s. he would have to pay on the insurance premiums. But this new Clause, in my opinion, will not touch the vast majority of policy holders in this country. I believe that the vast bulk of people who do insure are people up to £2,000, and those who insure up to
  384
  that income will not be touched very severely. They will only be touched to the extent of 8d, in the £, but if we were to pass the Clause which is now in the Bill, they would be deprived entirely of the whole of the abatement that is allowed on the endowment and life policies which they drew before they were sixty years of age. That is a most serious matter, and I have taken it up entirely in the interests of the policy holders and not in the interests of the insurance companies. They have nothing to do with it because they do not pay the premiums. The premiums are paid by the policy holder, and if this abatement were stopped it would affect the policy holders and the policy holders only. I do appeal to the Chancellor of the Exchequer to keep faith with the Committee—that is to say, to restore to this new Clause that he will introduce to-morrow—the time limit—that is to say, in June or July—so that the existing policies would not be affected by any change.
  Mr. J. M. HENDERSON: There is one point which has not been mentioned to which I would like to call the attention of ray right hon. Friend. He proposes to limit the allowance on all policies, whenever they are taken out, to 3s. in the £. A great many of these policies—in fact, the majority—are taken out under what is called the accumulation of profits system. Is the right hon. Gentleman aware that this year, for the first time in the history of some of these insurance companies, who have a quinquennial period in which they used to declare bonuses, they are passing it, and they will do so next year, because they have had very heavy claims on them? Many people who have insured for twenty, thirty, or forty years will find that very hard, and they really deserve some consideration. With regard to the big amounts, special policies which have come into vogue, since the 1907 Budget particularly, to provide for Death Duties, I admit that the Chancellor has a case, but for ordinary policies which were taken out, ordinary continuation of life policies, or policies payable at sixty, or whatever it may be, I do not know why he should depart from the old allowance to which we were all accustomed. I think that he ought to reconsider that, particularly in view of the fact, which is common knowledge, that all the large offices, even the best offices, are passing bonuses this year and next year they will do the same thing, because their

  385
  losses on claims during the War have been very great. In reference to the point raised by the right hon. Gentleman the Member for Dundee (Mr. Churchill) the right hon. Gentleman promised to consider that. I will just give him an instance of an officer with some £300 a year. He had a policy for £500, and instead of paying the visual premium of about £16, he had to pay about £56. That is a very serious matter, and he will have to pay that during the time he is alive, or while the War lasts. In these circumstances I think that the right hon. Gentleman ought not to touch the holders of the common policies which have been existing or continuing to exist, and that they should have the benefits of the reduction of Income Tax, whatever it may be.
  Sir GEORGE YOUNGER: I trust that the right hon. Gentleman will realise that the opinion of the House is against his proposal to make this new arrangement retrospective. It is not fair for him to introduce a very controversial question of this kind in the House of Commons. We do not at present deal with those questions as in ordinary times. We are tied very much by our obligations to the Government in almost everything that is proposed, and we are placed in a very unfair position in dealing with this proposal. I do not think that anything has been said about the policy holder who takes the highest possible insurance and will be terribly penalised by the retrospective Clause. Take the man with, say, £1,500 a year, who takes out the highest possible policy and spends the largest possible portion of his income in this way—
  Mr. McKENNA: He would not be affected.
  Sir G. YOUNGER: Two thousand pounds a year is quite a common income for people of this class. It is very hard on them to make this retrospective. I agree entirely that the right hon. Gentleman is bound to protect the revenue with regard to future business, and I am sure that the insurance companies think so too. There is another point to be remembered. If you alter the old arrangement and make these policies subject to an amount of tax over 3s., you very largely reduce their value as securities for borrowing purposes. That is a very important point. The right hon. Gentleman the Member for Spen Valley shakes his head. Does he suggest that a policy which is liable to
  386
  be taxed up to this extent is not a less valuable security than one which is not so liable?
  Sir T. WHITTAKER: It has precisely the same value. The loan value depends upon the surrender value of the policy. The surrender value of the policy is not affected by the amount of tax on the premium at all.
  Sir G. YOUNGER: That may be true from the point of view of the insurance company.
  Sir T. WHITTAKER: It is true from the point of view of the banker.
  Sir G. YOUNGER: Securities of that kind would be accepted very often owing to the fact that the man who borrows the money is supposed to be able to pay the premium. The right hon. Gentleman shakes his head, but that is an ordinary commercial transaction. The banker takes the security on the strength of the personal position of the man, and because that personal position warrants his doing so.
  Sir T. WHITTAKER: Not a single banker would ever lend on a policy beyond the surrender value.
  Sir G. YOUNGER: All I have got to say is that the right hon. Gentleman has never been a banker, or he would know that he is talking utter nonsense when he says that. There is one reason which the Chancellor of the Exchequer ought to bear in mind, and which ought to prevent his being too drastic in regard to the future. The insurance business at the present moment was never so bad as it is now. Very few people are insuring their lives, and the amount of insurances effected at the present moment has fallen enormously. Therefore difficulty should not be put in the way of the insurance companies at the present moment, when they require encouragement and not discouragement.
  Mr. ANEURIN WILLIAMS: The hon. Member said just now that the sense of the House was against the Government in this matter. I very much doubt that; at any rate, for my part, I do not feel that the Government are doing wrong in this matter at all. I am not going over the arguments that have been used before, but I desire to put a view which appears to me to have a bearing on this matter, and which has not been put hitherto. It is this: No attempt, or practically no

  387
  attempt, has been made to show that the proposal of the Government would inflict any hardship on insurers who insure from now onwards. No attempt has been made, or practically no attempt, to show that any hardship will be inflicted upon those who have insured since the beginning of the War until the present time; because the great majority of those who would be affected by this change insured with the express purpose of getting hold of an investment which would escape the heavy war taxation. It has been said that this would be a hardship on the ordinary common insurer who insured before the War broke out. I would like to put the case between two men, two investors, one of whom insured long before the War broke out and the other had made up his mind to a definite course of saving. If, twenty years ago, one of the two men, in the same position, and who have remained in the same position since then, made up his mind to invest £100 a year in an insurance policy and the other to invest £100 a year in the purchase of small property to leave to his family, the one who invested in an insurance policy would have been receiving, possibly for good reasons, an advantage from the State every year since that date, as compared with his friend who had made his thrift in another form. If you are now going on to give the insured man a benefit to the extent of 5s., and even up to 8s. in the £, you are going to give him an enormous and a very unfair advantage as against the man who has put his thrift in another form. It therefore does seem to me that this proposal of the Government is going to do justice as between man and man, between all citizens, in whatever form they made up their minds to save long before this War broke out.
  Mr. PETO: The hon. Member for Ayr Burghs put the case of the professional policy; I quite agree that that is a strong case; but I ask in the case of a perfectly genuine policy, taken out years ago, to meet the Death Duties, whether it is a reasonable thing to say in the case of a man liable to Income Tax and Super-tax, on an average of 5s. and 2s., that he shall only be able to claim 3s. in the £ on the premiums? The effect of that would be to leave him to pay 4s. in the £ himself—that is, his premium is increased by 20 per cent. at the very moment his income is greatly reduced, while, for other reasons, he has the greatest difficulty in keeping
  388
  up the insurance. This is the very antithesis of what the Chancellor of the Exchequer put in the Clause which was originally before the House, for he now hits and hits hard the very man who is already heavily burdened in regard to Death Duties—and who seeks to make provision to meet that burden. I cannot believe, in a contract of insurance made three, four, five or ten years ago, for the definite purpose of finding money to meet the Death Duties, that such an injustice will be done by the Chancellor of the Exchequer. I submit that it is utterly wrong, in the middle of the War, to alter the whole form of contract of these insurers, and throw this extra burden upon men who have sought to make this provision.
  Sir J. D. REES: Notwithstanding the strong support which it has received, I ask leave to withdraw the Amendment, on the understanding that the right hon. Gentleman will make a full statement tomorrow, and will not deprecate discussion or Division without Government Whips.
  Mr. McKENNA: I have said all I have to say on the matter, and I will keep an open mind until we come to the discussion on the Committee stage.
  Sir J. D. REES: As regards the Government Whips?
  Mr. McKENNA: I can give no assurance on that.
  Sir J. D. REES: I beg leave to withdraw my Amendment.
  Amendment, by leave, withdrawn.
  Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
  Mr. RAWLINSON: On the main question I wish to say a few words. I have read the new Clause very carefully, and I am not quite sure, as regards the future, what effect it will have in regard to the insurance of teachers in secondary schools. In future there is to be a policy of encouraging teachers to take up insurance policies, with Government consent, as a matter of fact. We are asking them to take pension policies which would give them pensions at the age of fifty-five, so as to let them retire. It is of advantage, not only to themselves, but to efficiency in educational matters, that they should retire at that age. As many policies we hope will be taken out for the purpose of giving them an annuity at that age, it

  389
  seems to me that the new Clause does affect those cases. Exemption was intended to be given under the scheme, and the point is whether the Clause does not apply to those teachers. If the Chancellor of the Exchequer would answer that point, he may save some trouble tomorrow. I think that the Amendment as it stands does touch these teachers.
  Mr. McKENNA: I know the point which the hon. and learned Member has in view, and, primâ facie, the case is affected by paragraph (6) of Sub-secton (2) of the Resolution. I will go into the Clause with my advisers between now and placing it on the Paper. We have no intention of depriving the teachers of the benefit of the reduction.
  Sir ALBERT SPICER: I think the case of the family man should be put before the House. As I understand, the question is to come up again, but I would suggest to the Government whether they are not at the present time, although it may seem a comparatively small matter, striking a certain blow at that saving, at that provision for families—and for larger families than those to which we are too much accustimed to-day—which is being made by those who are just turning the scale as regards putting so much compulsory saving into insurance. Hitherto, whatever is put into insurance up to a certain limit, we have been allowed to deduct Income Tax on the premiums. You are now going to say in future that, whatever the Income Tax is, you are only to deduct 3s. in the £. In some cases that may mean—and this is a point well worthy of further consideration—that it would just be the turning point in regard to this question of providing for the family. After all, we do not want another hindrance with regard to families in future. We want to put every premium we can on large families, and not to be ashamed of large families, which has been too much the case in the last few years. I am here to admit that I am one of the, large family men, and I am proud of it. I ask the Government to reconsider this question with a view to seeing, in regard to saving for the family, that we are not striking a blow which might prove injurious to the country.
  Question put and agreed to.
  Ordered, That it be an Instruction to the Committee on the Finance (recommitted) Bill that they have power to make provision therein pursuant to the said Resolution.

  FINANCE BILL.
  As amended, considered.
  FINANCE BILL.

    NEW CLAUSE.—(Further Provision as to Profits Applied in Extinction of Previous Losses.)
    Paragraph (7) of Part I of the Fourth Schedule of the principal Act (which allows deductions to be made in respect of profits applied in extinction of losses) shall apply to a case where the capital account of any trade or business shows a debit balance as it applies to a case where the percentage standard is adopted as the the prewar standard of profits.—[Mr. McKenna.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, " That the Clause be read a second time."
    Mr. McKENNA: This new Clause, which stands first on the Paper in my name, is to be inserted after Clause 44. It makes further provision as to profits applied in extinction of previous losses. The case is a very simple one. It was brought before the Committee by the hon. Member for Paddington, who moved an Amendment on the Committee stage of the Bill, and I promised to look further into the matter, and, if possible, produce a new Clause to carry out the object. A company which has no assets cannot take the 6 per cent. basis; consequently, a company of that kind, where there has been three years partly of losses and partly of gain, might be in a position that it could take no standard at all for its profit—I mean profit standard—and would not really get such relief from the Act as was intended to be given. Take a concrete case of a firm which made in the first year £10,000 loss, in the second year £5,000 profit, and in the third year £1,000 profit, but has no assets. Such a firm would be able to take its total loss of three years as £4,000 as a setoff to the profits for Excess Profits Duty, and at the same time under this new Clause would be able to take as its basis line any two out of the three years. In a case of that kind where the percentage standard is taken as the basis, the company can set off the balance of loss on the three years against its total profits. It can only have the advantage of that Clause where the percentage standard is taken as the basis of the profits. I am assuming the case of a company which has got no capital assets at all, and therefore the percentage basis would give you

    391
    nothing and the balance is all liability. Therefore I propose to give the benefit of the power to deduct the balance of the loss in the three years from the profits and at the same time to give the company the right to take two out of the three years as the basis standard. In the case I have in mind the company would take the last two years, the average of which would give a basis standard of £3,000 per year. It would be also able to deduct the total loss in the three years from the excess profits and would get the benefit consequently of both measures of relief. It is a rather complicated and technical matter, but I can recommend the new Clause with the assuraice that it is a very proper relief to give in cases of this kind.
    Mr. JAMES MASON: I desire to ask whether it is proposed that this arrangement should be retrospective in cases where firms have already had the standard fixed. Otherwise considerable difficulty would arise. I take it that the three years means the three previous years to the period which is to be taxed.
    Mr. McKENNA: This is an Amendment to the principal Act, and it will apply to obligations therefore under the principal Act.
    Mr. MASON:It will apply.
    Mr. McKENNA: It will apply.
    Mr. HENDERSON: I am very much obliged to the right hon. Gentleman for what is undoubtedly a considerable concession. The intention of the principal Act was to divide businesses into certain classes. But I think it will be realised now that when you touch commerce or business it is impossible to put them all under one classification. The case I have in mind is of a business which was being mismanaged in 1912 and was insolvent. The creditors instead of winding-up changed the management, and there has been gradually less loss until last year they became solvent.
    Mr. McKENNA: On a point of Order. The hon. Gentleman is now dealing with a subsequent Amendment which has nothing to do with the proposed new Clause.
    Mr. HENDERSON: I think this Clause might meet the case by Amendment.
    Mr. SPEAKER: The hon. Gentleman had better wait until his Amendment is reached.
    Sir J. HARMOOD-BANNER: I greatly appreciate what the Chancellor has said, and there is no doubt this is a considerable gift to many firms which have a difficult position to fill. The Chancellor did not quite answer as to the meaning of a debit balance. Does this mean where there is no capital, or would it include a case, say, where £20,000 was gone on a capital of £100,000, and where a company has not got sufficient assets to represent its capital? Does it mean where all capital is gone, or will it include a case where some capital is left but the company is trading with a deficiency of capital?
    Mr. McKENNA: Where there is no capital so that the percentage standard would be of no use, where it would be 6 per cent. on nothing, and not in the other.
    Question put, and agreed to.
    Clause added to the Bill.

    NEW CLAUSE.—(Drawback on Exported Coffee and Chicory and Mixtures of Coffee and Chicory.)
    On the exportation or shipment for use as ships' stores of any roasted coffee or roasted chicory, or any mixture of roasted coffee and roasted chicory, there shall, if it is shown to the satisfaction of the Commissioners of Customs and Excise that the duties on importation or the duties of Excise, as the case may be, imposed under this Act have been duly paid, and subject to such conditions as the Commissioners may prescribe, be allowed drawbacks at the following rates, that is to say:

    £

    s.

    d.

    Coffee, for every hundred pounds

    2

    2

    0

    Chicory, for every hundred pounds

    1

    14

    4

    Mixtures of coffee and chicory, for every hundred pounds

    1

    14

    4

    Provided always that no drawback shall be allowed on any such coffee, chicory, or mixture if any substance other than coffee, chicory, or a substance necessarily or ordinarily used in the manufacturing of chicory is mixed therewith.—[Mr. McKenna.]
    Clause brought up, and read the first time.
    Motion made, and Question, "That the Clause be read a second time," put, and agreed to.
    Clause added to the Bill.

    NEW CLAUSE.—(Reduction of Duty on Herb Beer.)
    (1) The Table Water Duty charged under Section four of the Finance (New Duties) Act, 1916, and the duty of Customs on table waters charged under this Act, shall be reduced in the case of herb beer so as to be at the rate of twopence per gallon.
    (2) "Herb beer" means the beverage usually known as herb beer on botanic beer, but does not include ginger beer.—[Mr. McKenna.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, " That the Clause be read a second time."
    Mr. GLYN-JONES: This Clause is clearly in response to or in fulfilment of an undertaking given by the Financial Secretary to the Treasury. In Committee there was a proposal to have the tax on table waters in regard to herb beer and the then Financial Secretary said,
    "We are now seeking a method of differentiating herb beer scientifically from ginger beer and all other similar beverages. If we get that definition we propose, on the Report stage, to reduce the tax on such herb beers to 2d. from 4d."
    About that time I did not think it was possible to provide any definition which would do that, but apparently the Government think it can be done, and this Clause purports to do it, as follows:
    "'Herb beer' means the beverage usually known as herb beer or botanic beer, but does not include ginger beer."
    I have a proposal later on which asks for a reduction of the tax on other beverages which come within the definition of table waters. When the Finance (New Duties) Bill was going through the House the then Financial Secretary saw a deputation of the trade on the morning that the Clauses were going through the House and made an arrangement, first, in regard to the collection of the duties, and then as to what articles should be included within the definition. He said that he would consider what alterations were necessary, both as to the incidence and as to the articles to be taxed, and he gave an undertaking that he would deal with the matter in the Finance Bill which he would bring in later on in the Session. Acting on behalf of a representative committee of the trade, recognised by the Government as representatives, I saw the Government and they told me that this Bill we are now considering was a Bill in which this matter could
    394
    not be touched at all. He explained that the Bill had been in print in April and that it was no good for the trade to ask them to do anything in this Bill. In Committee on this Bill I asked the Chancellor whether the pledge given by the Financial Secretary, that he would consult with that representative committee and that if he were satisfied that modifications were necessary in the provisions he would introduce them in the subsequent Finance Bill, would be kept, and, as that Bill has now been abandoned, whether he would give that opportunity on a Bill introduced ad hoc. The Chancellor said that that pledge would still be adhered to. One is really surprised now to find that although the Government said they could not deal with the matter in this Bill they are now attempting to deal with one little bit of the trouble and propose to reduce the tax on herb beer. I have read the definition. I do not know what it means and I do not think anybody else can possibly say. I think what has happened is probably this: The Chancellor has heard some case about this particular beverage and he has been told that people in a very small way, widows and others, sell what they call herb beer and that it would be a hardship if they had to pay 4d., and in the goodness of his heart he proposes to reduce it to 2d., without consulting anybody, as far as I can find out, as to what that is going to lead to.
    6.0 P.M.
    Before the House can be sure what it is they are now going to release of half the duty—namely, herb beer—they have to get to know the articles which the existing duties are imposed upon. The Finance New Duties Bill passed in April imposed a duty upon all beverages—beverage is the definition they gave of table water—and they say table water includes all beverages sold in bottles. By that definition herb beer and anything else which is a beverage sold in bottle is liable to this tax. What the definition says is, "Table waters for the purpose of this Act include any aerated waters and any beverages sold or kept for sale in bottles." It is because herb beer, ginger beer, and these various drinks are beverages sold in bottles that this duty is imposed upon them. The matter is extremely complicated because of the definition of beer itself. If the House is not interested in knowing what the Government means by herb beer, perhaps it is of some interest to know what beer is for

    395
    the purposes of the revenue. Beer is defined now as an article sold under the description of beer or as an imitation of beer containing more than 2 per cent, of proof spirit." The predecessor of the present Financial Secretary to the Treasury was concerned in taxing these beverages, but now that he is Minister of Munitions he is concerned in producing one himself, namely, the beer which is called auto-shell beer. This beer is produced under the auspices of the Minister of Munitions. What is this shell beer? Is it herb beer? It is a beer; that is quite clear. The position at this moment is this: it is a beer which contains less than 2 per cent, of proof spirit. The result is that if it is brewed in a brewery it is charged as an excisable beer, and pays a duty in proportion to its proof spirit as if it was an excisable beer. That will be much less than the Table Water Duty. But if it is brewed outside a brewery it becomes a table water within the meaning of this Act, and pays Table Water Duty, which is very much higher. The whole thing, I assure the right hon. Gentleman, is in a state of hopeless confusion.
    Speaking for a moment for the trade they cannot approve of the Chancellor of the Exchequer going part of the way to meet their demand that the duty on all these kindred things should be reduced to half. They cannot say, " Well, you are going this far, we do not want you to do that." But, speaking personally, I am bound to say that in my view the Chancellor has made a great mistake in doing it in this way apart from the whole question. The difficulty the Government is in is that they are under a pledge, which I am sure they will keep, to consider the whole question of the new duties upon these table waters, and of the definitions that come within them, with a view to making such amendment of the present law in a small ad hoc Bill this Session as they may find to be necessary. I want to make this appeal to the right hon. Gentleman: If, in consequence of an undertaking he is bound to do, he grants this concession with respect to herb beer—that beer which he says is usually known as herb beer—will he also at once set up a Departmental Committee—a Committee of his Department—to go into the whole question of these new duties upon table waters and the question of the definitions? I have Amendments further down on the Paper, which I do not think would need to be discussed in the House if we could
    396
    get from the Government an undertaking that this Committee would be set up at once, and if they would allow the representative committee of the trade—that is, the committee which they recognise as representing it—to come and place before them all their difficulties in regard to the incidence of these taxes, their methods of collection and the definitions. I am sure it would help the Government and the Department out of the difficulties that they are bound to get into the moment this becomes law if they consented to that.
    The hon. Members who have been asking for this concession for beers say that they have been doing it for the little shopkeeper—persons in a very small way of business, who only just sell what they call herb beer. But what is going to happen? All the great men when they find it is possible for them to sell a thing which can be called herb beer at half the duty will, of course, come into this trade, and I think in the end, in all probability, the small people will meet with competition which at present they do not have to meet. I suppose it is too late at this moment—and I am not doing it—to ask the Chancellor to withdraw this concession which he is now about to make, but I am asking, and I think I am entitled to ask, in view of the fact that I am speaking at the moment as the mouthpiece of a Committee which his Department has recognised speaks for the trade—in fact, when he introduced his new Bill he said he was convinced the Committee spoke for 90 per cent. of the trade—I am asking that this Committee should be set up. In view of the fact that he has all along told that Committee it is no good their coming to him on this Bill, and that he is prepared to consider all the difficulties which they have mentioned in a special Bill, he ought to set up a Committee which will at once begin to hear anyone who chooses to come forward and speak of these difficulties. If the Treasury are then satisfied, as I think they will be, that Amendments are necessary, I hope that these Amendments will be embodied in a small Bill, as the Chancellor has promised to deal with the matter this Session.
    Mr. DENNISS: I am rather surprised that my hon. Friend the Member for Stepney (Mr. Glyn-Jones) has gone back upon what I understand was arranged yesterday at the Committee that this was not to be opposed. I have a letter to that effect.
    Mr. GLYN-JONES: I expressly stated that, whilst I criticised the Bill, I was not prepared to press this particular thing, and I am sorry the hon. Member should have said what he has.
    Mr. DENNISS: I think the Chancellor of the Exchequer and those who advise him were quite wise in not attempting a scientific definition of herb beer. You can no more define beer or herb beer than you can define bread. They have taken here what seems to me to be a course which will commend itself to any ordinary person of common sense who is not a lawyer in saying that herb beer means the beverage usually known as herb beer or botanic beer. We all know what bread is. It would be difficult to distinguish it from biscuits scientifically, but we all know what it is, and everybody knows who has ever known it at all what that beverage is which is known as herb beer, and knows what beer is usually known as herb beer. A former Member for Oldham used to drink it. In Lancashire it is very largely drunk by putters in the ironworks. As a rule they buy it in half-gallon and gallon jars at the small price of 3d. and 6d. respectively, and there can be no doubt whatever so far as the Revenue officials are concerned as to what constitutes herb beer. My hon. Friend talks about another Bill being introduced by and by to put all these taxes upon mineral waters upon perhaps a more satisfactory basis. Meanwhile let me remind him that these small businesses for which I originally brought in an Amendment in Committee will be done for altogether. At the present moment the officials of the Customs and Excise know quite w ell that the small businesses have lost from 70 par cent, to 80 per cent. already of their sales on account of this tax, and they cannot wait for another Bill.
    Mr. SPEAKER: Will the hon. Member deal with herb beer?
    Mr. DENNISS: I was saying that the herb beer sellers have lost 70 to 80 per cent. of their sales, and if there was to be, as the Member for Stepney asks, a Committee set up to inquire and report, of course there would be no occasion to move this Amendment at all, because by the time a further Bill was brought in the herb beer sellers would all have been swept out of existence. The hon. Member says large firms and manufacturers will be able to make herb beer and sell it over the counter in glasses just like ordinary beer, but that
    398
    would be got rid of if the subsequent Amendment which is put upon the Paper is ultimately passed and also the Amendment which has been handed in to you, Sir. That includes fomented ginger beer sold direct to consumers in stone jars or other receptacles of less than half a gallon. That would stop it being sold over the counter in half-pint glasses.
    The FINANCIAL SECRETARY to the TREASURY (Mr. McKinnon Wood): I must ask the House for a considerable amount of indulgence, because it is obvious I cannot be acquainted with the conferences and the negotiations that have been going on during the past few weeks, and there may be facts in connection with this Bill which are not known to me. But there is no such difficulty in the present case. I think the matter is perfectly simple, and I propose to persevere with the Amendment and to meet the hon. and learned Member who spoke last. I also propose to meet my hon. Friend the Member for Stepney. I can see no objection but a good deal of advantage in what he proposes. We shall keep an eye upon these taxes and watch their effect upon the trade, and see what distinctions can be drawn. In my experience of Acts of Parliament the question of introducing an effective definition in them is one of the most difficult that is attempted by any draftsman and is not very often successful. Very often a common phrase, as the hon. and learned Gentleman says, serves the purpose of an Act of Parliament better than an attempt at a scientific definition. Undoubtedly the hon. Member for Stepney has shown that there are difficulties in this case which one can only discover after some degree of investigation. With these two assurances I hope that this Amendment may be allowed to go through.
    Sir J. D. REES: May I inquire whether it would not be possible to charge upon the value of this beverage, whatever it might be, or may be made of? By paying upon the measure instead of upon the value there is no real adjustment.
    Mr. McKINNON WOOD: There are considerable difficulties, but this is the sort of question of which the Committee, as it has to consider the whole question, might deal.
    Sir F. LOWE: I should like to know whether I am in order in asking the right hon. Gentleman to explain why herb beer should be singled out for a reduction of

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    duty in preference to other table waters? I hear from manufacturers of table waters generally that they have been very hard hit, indeed, by the duty which has been imposed upon them under this new Act. It has had the effect of lessening their trade by 60 per cent. If that is so—and I believe it is the fact—it would be well worth while for the Chancellor of the Exchequer to reduce the duty all round. If there is virtue in what I am saying I think this Clause might be applied to table waters in a very simple manner by simply leaving out—
    Mr. SPEAKER: That would alter the new Clause altogether.
    Mr. GLYN-JONES: On a point of Order. If this Clause is disposed of will it make out of order the new Clause that I have later on the Order Paper?
    Mr. SPEAKER: To what Clause does the hon. Member refer?
    Mr. GLYN-JONES: To move that the duties on table waters shall not be charged on milk or non-aerated distilled water.
    Question, "That the Clause be now read a second time" put, and agreed to.
    Sir J. WALTON: I beg to move, at the end of Subsection (2) to add the words "other than fermented ginger beer sold direct to the consumer in stone jars, or other receptacles, containing not less than half a gallon."
    The makers of herb and botanical beers will certainly be grateful to the Chancellor of the Exchequer for the concession already made in reducing the tax on these beers from 4d., as originally proposed, to 2d. The levying of this tax was a most flagrant instance of the unequal incidence of taxation. The right hon. Gentleman proposed to tax table waters, which before the War were sold at 6d. per gallon, and which have already been taxed to the extent of 2d. in connection with sugar and other saccharine materials, a further 50 per cent., or 4d. On the other hand, most expensive table waters, such as the ginger ale manufactured by Schweppes and other firms, the price of which goes up to 10s. per gallon, in small bottles, were only to be 8d., as compared with the 4d. on the cheap table waters used by the working classes of this country. This meant extra taxation of 50 per cent. in the one case and 6 per cent. in the other. One could not conceive a more flagrant example of
    400
    the unequal incidence of taxation. It is absolutely indefensible. I am sure that the Chancellor of the Exchequer himself recognises that these proposals, as originally made, are indefensible. It is clear to me that the only method of revenue by which we can get equal incidence of taxation is to levy a tax, not on the gallonage, but on the poundage, on the value on the selling price of the different qualities of table waters—
    Mr. SPEAKER: The hon. Member must really confine himself to beer. He must not indulge in water at all. The beer, I may add, may be either botanic or ginger beer.
    Sir J. WALTON: I rejoice to know that the consumption of botanic, herbal, and ginger beers, and other non-intoxicating drinks, is very considerable indeed in this country. I submit that our object, in the best interests of the nation, ought to be to encourage and increase the consumption of these most wholesome and harmless beverages. No Government ought to ruin that little industry—for it is a small industry. As my hon. Friend the Member for Oldham has already informed the House, while this tax remains unaltered it means absolute ruin to these small manufacturers of botanic and herb beer, and these cheaper distributants of ginger beer. The Government have no right whatever to destroy any industry in the country by excessive taxation, and especially on the most unjust lines proposed by the Government. The Government Amendment covers, probably, about 60 per cent. of the produce of the herb, ginger, and botanic beers of these particular manufacturers, and of the ginger beer possibly a fair estimate would be that it comprises 40 per cent. of their output. Therefore, the Government relief does not extend to more than two-thirds of the various beers that these particular manufacturers produce, and I desire by my Amendment to have the concession extended to the whole of their produce. I hope the Chancellor of the Exchequer will see his way to agree to it. I am informed that it will be quite possible to apply the Amendment and to differentiate between fermented ginger beer sold direct to the consumer, especially when confined to beer sold in stone jars or other receptacles containing not less than half a gallon. That limits it more than I should desire to limit it. I am not speaking against any concession being given to my hon. Friend behind me, but I think that

    401
    the Government might well extend this concession to the other cheaper kinds of table waters, and I submit that that is a perfectly fair demand to make.
    Mr. SPEAKER: The hon. Member must keep to the terms of his Amendment.
    Sir J. WALTON: I apologise for my unintentional transgression. I have only to urge, in the interests of just finance and taxation, that the concession now asked for should be granted.
    Mr. G. THORNE: I beg to second the Amendment. I desire to give the House some of the information which has been supplied to me by herbalists and botanical beer brewers in my Constituency. This information they have personally handed to me, and I believe it to be true. It does seem to me that the effects of the proposed taxation must be to tax these businesses entirely out of existence. I cannot see how that is a fair thing to do to the individual, nor how it is good for the nation. It certainly cannot produce profit to the State. I may make my position clear by just giving the figures which have been furnished to me, and by my keeping, Mr. Speaker, rigidly within your ruling. In the case of one firm I am told that in May their decrease in sales from their four branches was 75 per cent. on last year, whereas for June the decrease was 84 per cent., this leaving only 16 per cent. This means absolutely closing the business. The second firm have given me these figures for May-not a hot month in either year. In May, 1915, the gallonage was 11,529, while in May, 1916, it was only 2,954. The disastrous effect of the taxation is therefore manifest. Those concerned are very grateful for the concession made, but it only goes to a certain extent. I am told that the concession will only apply to about one-third of this trade, and therefore, unless the Amendment moved by my hon. Friend is accepted, it must be disastrous to the trade. That I cannot conceive the Government desire. Therefore, I sincerely hope they will accept the Amendment.
    Mr. DENNISS: I know that the Movers of this Amendment have the sympathy of the Treasury in this matter. It is not a matter which will in any way be to the detriment of the Treasury so far as money is concerned if this is passed. The Treasury know the facts. They know that
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    everything stated by the Mover and Seconder of the Amendment is quite true. They are very anxious to meet them in the matter in order not to wipe out of existence these very admirable small traders, who perform such a very useful function in certain parts of the country, and particuarly in Lancashire. These people sell one-third herb beer, while two-thirds of their sale is ginger beer. That ginger beer is totally different to the ginger beer of which ordinary people know—that is, that which in sold by Schweppes and Caileys. It is a nonaerated ginger beer formed by a herbal decoction of ginger root. It is sold in not less than half-gallon jars, generally in gallon jars, at 3d. per half-gallon, or 6d. per gallon. It is generally consumed by miners, iron-workers and others, all the year round, in the winter time as well as in the summer time, not merely in the hot weather, for it is not a seasonal drink like ginger beer, soda water, and what are called summer drinks. I hope the right hon. Gentleman will be able to give us this concession, although we are very grateful to him for the new Clause which he has accepted. I am afraid, however, it will not save the businesses to which I have referred, 'which will only have one-third of their business left, with two-thirds gone, and that is the trouble! I do not know whether the right hon. Gentleman is aware that the words "direct to the consumer" have been brought in to meet the views of the Treasury itself and the Customs, because it might be, as we gathered from the hon. Member for Stepney earlier in the evening, that some of the big manufacturers might make this and sell it over the counter in pint or half-pint glasses, so that that class of business not meant to be exempted from the Act would be able to get out of paying the tax. I do hope the right hon. Gentleman will be able to see his way to accept the Amendment, which I know has the sympathy of the Treasury and the officials, and I know it will do all that the Treasury can possibly do to keep these little businesses alive during the War.
    Mr. GLYN-JONES: The form of this Amendment is to improve the definition of "herb beer" in the Bill, and if the Amendment be carried this is what the Act of Parliament will say:
    "'Herb beer' means the beverage usually known as herb beer or botanic beer, but does not include ginger beer other than fermented ginger beer sold

    403
    direct to the consumer in stone jars or other receptacles containing not less than half a gallon."
    Does anyone want to do more than read a definition of that sort to the House to see that obviously it cannot be accepted? In substance what the hon. Gentlemen who are moving this Amendment are seeking is to get rid of the words "but does not include ginger beer," so that "herb beer means the beverage usually known as herb beer." That would be all right but they do not do that at all. They say that the definition includes ginger beer, but not if it is fermented and in a stone jar. I do suggest to the Government, in view of the undertaking they have now given, that they will at once set up this Committee who will go into the whole question, because really the people for whom the hon. Members are now speaking cannot be satisfied with this. It is a perfectly hopeless thing in practice. Why should ginger beer in a jar not be herb beer, but ginger beer in cask be herb beer? Why should ginger beer in a bottle be herb beer, but if you put it in a gallon or half-gallon jar be not herb beer? [HON. MEMBERS: "It is the other way!"] Or the other way; I do not think it makes the least difference. My hon. Friends are represented on the representative committee of the trade I spoke about, and what I would ask them to do is to join hands with them to show to the Government that what they have to do is to get rid of these differences, and reduce the tax all round on ginger beer as well as herb beer. But I hope the Government will not make confusion worse confounded by adding this to the definition.
    Sir F. LOWE: I wish to support the Amendment. I should like to include many other forms of table water, but if we cannot include any others, I think we might include fermented ginger beer. I say the more mineral water is reduced to 2d. the better I shall be pleased, but I understand there are two sorts of ginger beer, the one fermented and the other not fermented. The fermented is a kind of beer just the same as herb beer, and should be included in any provisions dealing with herb beer; therefore I support the Amendment of my hon. Friend.
    Mr. McKINNON WOOD: This is a very technical matter, and my technical advisers think there is considerable difficulty in being assured that they can define the particular kinds of ginger beer and other
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    drinks, and difficulty in preventing large manufacturers from making something which might escape taxation. I would appeal to my hon. Friends to leave this matter to the investigation I have already promised. The hon Member for Edgbaston (Sir F. Lowe) has pointed out the real danger. If you include one thing after another there is no particular reason why you should ever stop. I think it would be better not to try to distinguish between ginger beers until we have had a little more experience of the working of the tax The hon. Baronet the Member for Barnsley (Sir J. Walton) has made some very severe strictures on the tax. In time of peace a case might be put forward, but, after all, it is a time of war, and our taxes are altogether exceptional. You cannot criticise them without bearing that in mind. You have to spread the burden over all classes of the community, and you have to take in things you would not trouble to tax in ordinary times of peace. This matter will be considered with the other matters. I hope my hon. Friends will accept that, and I can assure them the investigators will be perfectly open-minded and will look at the matter as fairly as possible when they have the information.
    Sir G. YOUNGER: I do not want to say a single word against any desire on the part of the Treasury to reduce the tax on either fermented or unfermented ginger beer. I only hope it will be noted that it has been suggested that fermented ginger beer ought to be placed on the level of herb beer, and charged at a lower rate of duty. Why should it be so? Does the House know that fermented ginger beer may be in many cases stronger alcoholically than ordinary beer? An hon. Friend of mine has seen the effects. of it already on a particular individual. [HON MEMBERS: "Name!"] And he will bear out what I say. I am only concerned to suggest that that particular phase of this question has not been noticed in the Debate to-day, and the Treasury, when considering the matter, should bear in mind that if this is not artificially aerated it is an alcoholic drink, and gives off carbonic acid gas when corked up in bottles.
    Amendment negatived.
    Question, "That the Clause be added to the Bill," put, and agreed to.
    Clause added to the Bill.

    NEW CLAUSE.—(Exemption of Newly Planted Woodland.)
    Notwithstanding anything contained in Section twenty-two of the Finance (No. 2) Act, 1915, no occupier of land shall be assessed for Income Tax, except as an owner under Schedule A in respect of any land which shall hereafter be wholly planted or replanted with timber for a period of fifteen years after such plantation or replantation.—[Captain C. Bathurst.]
    Clause brought up, and read the first time.
    Captain C. BATHURST: I beg to move, "That the Clause be read a second time."
    I want, at the outset, to make it perfectly clear that I do not move this Clause in the interest of the landowner or the land occupier, or, in fact, any Income Tax payer whatever. I move this Clause because, as a matter of fact, our woodland is being depleted of its timber all over the country. Timber was never more valuable as a national asset than it is to-day, and no new planting whatever is being carried on, simply because there is no inducement to any occupying owner of suitable land to make such plantations. I do not know whether the Government themselves intend to take over the whole onerous task of afforestation in the United Kingdom, but if they do, I am inclined to think it will involve an enormous outlay of public money, and that it will not be so efficiently done as it would be if they shared their task with the owners of property in the country. Of course, in prewar days, although there was no great inducement to owners of land to plant fresh timber, at any rate the tax burden upon them was not such as to deter those who were sufficiently enterprising from adding to their existing woodland. But the cumulative effect of the present taxation is such that no one but an extremely rich man is the least likely, even out of public spirit, to plant woodland at the present time, and henceforth, and for this reason the persons who are in a position to plant fresh woodland, or replant existing woodland where the timber has been cut, are those who are taxed at the present time under Schedule A, and are now trebly assessed under Schedule B as occupiers—that is the important point—and also pay Income Tax at a high rate, in addition to Super-tax.
    I incidentally referred on the Committee stage of this Bill to the fact that
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    a large owner of land in Northamptonshire—and I have found many similar cases since—was able to present a case to the Board of Agriculture in which he was being taxed to-day at the rate of 17s. 9d. per £ of assessable value of woodland. That does not take into account in the smallest degree the cost of making a new plantation, which is at least £5 an acre, apart from fencing, or the annual value represented in rent or otherwise, which must be taken into account and computed at compound interest for a long period of years. I suggest seventy as not too long, representing two generations, during which also Estate Duty possibly would have to be paid twice over before there is any complete return from the timber on felling. As I say, it is not in the interest of the landowner that I submit this Clause to the House, but I do suggest to the right hon. Gentleman that, if he does expect owners of land to share the task of afforestation with him, he is bound to admit that some sort of inducement must be presented to them to enable them to do so. I should just like to point out the difference between the present burden upon that land when it is not planted and the burden that will fall upon that land after plantation has taken place. If left in poor grass—and most of these lands which are most suitable, particuarly in Scotland and parts of Wales, for plantation for woodlands is poor grass—it remains in the hands of the tenant and not the occupying owner, and it yields annually some return which bears some relation to the taxation imposed upon it. If this land is put under woodland it yields no return for a long period of years, it pays a lower rate of Income Tax, it pays no Super-tax, and under the Agricultural Rating Act it pays half rates instead of full rates, which the owner would have to pay. I think I am right in saying that it is estimated that there are 2,000,000 acres of land in Scotland alone at the present timefit for immediate afforestation. There must be something like 1,000,000 acres in various parts of Wales fit for similar treatment, and there must be a large area in. various parts of England. Is the House going to impose any deterrent whatever upon public-spirited men who are prepared, at no profit to themselves, to plant their land in the public interest? I suggest that that would be unfair, and it would not be encouraging the one class of landowner for which this House has always endeavoured to show some sympathy.

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    I am asking in this Amendment that no taxation, save only under Schedule A as owner, shall be imposed upon a person desiring to plant new woodlands or replant old woodlands for a period of fifteen years. I have made some inquiry as to the earliest periods within which some small return can be made from a new plantation, and in no part of the country can I hear of any woodland—even in the shape of thin poles and sticks suitable for estate purposes—producing any commercial return under a period of less than fifteen years. In many cases where the land is poor the earliest tillings come very much later than that. I think my new Clause is expressed in very modest terms. I do not ask, as I might ask on the merits of the case, to have even Schedule A in respect of such new plantations remitted. I ask that Schedule A shall be maintained, but I ask that there shall not be added under Schedule B or the Super-tax any other financial burden.
    Mr. LAURENCE HARDY: I beg to second the Clause which has just been moved by my hon. Friend. This is a question which was raised at a previous stage of the Bill, and it received a sympathetic answer from the right hon. Gentleman who has now gone to another position in the Government. It has arisen a good deal from the fact that the new Clause which was introduced into the last Finance Bill has not really proved of any great assistance to the industry for which we pleaded. Owing to the wording of the Clause and the shape it took during the passage of the Bill through the House, there has been undoubtedly a very large reluctance on the part of owners of woodland to commit ourselves to the transference from Schedule B to Schedule D, because, when once accomplished, that is a step which cannot be retraced, and therefore they are now feeling the serious burden which is thrown upon them by an increase of Schedule B. Since we met last year the whole question of woodland has become very much more serious. The Government have had to put on very great exertions to fell large quantities of timber in this country, and we see a possibility of our timber being so seriously depleted that it is in my opinion absolutely necessary that we should do nothing in any way to hinder the encouragement of more planting or of keeping up our woodland in this country.
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    I do not know whether this is the most satisfactory way of dealing with the question. At any rate, it is one which encourages new planting, and in that way it is an advantage. In seconding this Clause I do so with a perfectly open mind in case the Government can make any other suggestion which will enable us to give that relief to woodlands which is really what we desire to obtain. It may be said that this has already been met in the case of new plantations by the transference from day to day. That is not really quite the case. The question of taxation does arise in rather a peculiar way, as was alluded to by my hon. Friend in connection with large areas of woodland. Almost all the large areas of woodland in this country are necessarily held by persons who come under the highest grades of taxation, including the Supertax, and the very highest grades of the various forms of the Income Tax. Therefore taxation does fall extremely heavily upon those persons who are endeavouring to cultivate woodland and timber in this country. The aggregation of taxation is large, and therefore we feel that our only chance is to endeavour to mitigate it, and it is on these grounds that we recommend this Clause to the consideration of the Government. Our desire is that replanting should take place at the earliest possible time, and if we can get this Clause it will be proof that the Government have the matter in hand. I hope the Government will not put us off with any suggestions that the whole matter has to be dealt with, and that they will wait until they can bring forward a complete scheme. I hope they will give us this small encouragement which the Clause suggests at the present moment.
    Mr. MacCALLUM SCOTT: I desire to support this Amendment, and I do so in the same spirit as the Mover and Seconder, with a perfectly open mind as to any other suggestions which the Government may make. I think it may be said of this proposal, unlike many proposals made here, that there is no private interest that stands to gain by the granting of this concession It may also be said that the Treasury itself stands to lose nothing from it, and it is not giving away any revenue in the shape of taxes, because if this concession is not granted that particular land affected is not going to produce any taxable revenue and will not be planted, and many of the lands on which timber has now been felled on a large scale will simply

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    become derelict and waste land. There is an urgent need, not merely on behalf of the timber industry, but on behalf of the general welfare of the country, for something to be done to encourage the planting of timber, and the prevention of land become in derelict, and to secure that this land will produce the valuable crops which will add to the wealth of the country and which it might produce. It is the sole aim of this Amendment to endeavour to give the Government an opportunity either of accepting this proposal or making some suggestion of their own to achieve that purpose.
    Sir G. YOUNGER: This is a very serious question, and this was present to the mind of the present Minister of Munitions when he dealt with the subject, for he promised to deal with the question in a fair and reasonable way. The Chancellor of the Exchequer was not here on that occasion, but I do not doubt that he entertains the same view. This is really a very serious matter, because the amount of wood which is now being cut down is so great that if this War were to last for another two or three years there would be no timber left in the place at all. No private interest is concerned except an estate here and there; but as to profit or anything of that sort it is impossible to expect that for another generation, and therefore it is really essential in the public interests that the Treasury should do something to meet the proposal of my hon. Friend. I know quite well that we cannot expect very much planting to be done at the present time, because it is impossible to get the labour, and so long as the War lasts that difficulty will remain. To a certain extent it would be possible to put prisoners to cutting wood, as they are now doing in certain parts of Scotland, but that it a very limited matter. I only rose to express the hope that the Chancellor of the Exchequer, or the new Financial Secretary to the Treasury, whom I am delighted to congratulate upon his new position, although I am sorry that he has left his old position, will be able to make some suggestion to meet the case.
    Mr. McKINNON WOOD: I am much obliged to hon. Members for their very kind words, and to all who have spoken on this Amendment for the very leasonable way in which they have put their case. For some time past in my late office I have been looking from another point of view at this question of the woodlands of the
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    country. The demand of ourselves and our Allies for timber has been enormous, and it was perfectly evident that whether you looked at it from the point of view of transport or exchange, or finance generally, it was greatly to the advantage of this country to use the timber which had been grown here as far as possible. It also follows that our Allies should use their own timber rather than import it, because, as everybody knows, the amount of tonnage required to transport timber is very extravagant as compared with other classes of goods. Under these circumstances, a very large quantity of timber is. being cut down in this country, and it is not merely in the interests of the landlords, but in the interests of the country, that the land should be replanted. Therefore I approach this question with the greatest sympathy, and I may tell the House that I have been looking at this question, and the Government is looking at it, from the point of view of securing the replanting of the depleted land. The question arises: What can we do from the point of view of finance and taxation in this matter? There are some very obvious objections to the Amendment. In the first place, it applies to all classes of woodland and would include woodland planted for the purpose of sport, but we want to deal with woodland planted for commercial purposes.
    Sir A. MARKHAM: What woodland is planted for sport?
    7.0 P.M.
    Mr. McKINNON WOOD: Plenty of woodland is planted for sport. I also think the term of years is unsatisfactory. We have been accustomed to think that it would take a very long time to get any return from planting. But my advisers in my last office advised me that by planting certain selected species returns could be obtained in a less period than that which is mentioned in the Clause. The period, therefore, is unsatisfactory, and it is also unsatisfactory that there should be a period during which there is no Income Tax paid, and after which, when the timber is sold, perhaps for an extra price, the owner may prefer to place himself under Schedule B, and thus escape from an adequate contribution. We have considered this matter, and what we propose is this: Of course it can be discussed in detail tomorrow. We propose to allow an option to the taxpayer to prove that

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    the woodland is used for commercial purposes either to the General Commissioner or to the Special Commissioner. In the next place, to allow any woodlands planted or to be planted after this date to be treated as woodlands on a separate estate. In the third place, to allow woodlands used for commercial purposes to be in the same position as trades and businesses for the purpose of relief which is given in respect of losses under Section 23 of the Customs and Inland Revenue Act of 1890. I do not want the House to discuss this now. We will have an opportunity of discussing it tomorrow. I hope that in these circumstances, and in view of the very reasonable way in which the proposals were put forward, and the fact that we have all the same object in view, we may be allowed an opportunity of discussing the matter on the new Clause proposed by the Government.
    Captain BATHURST: In view of the satisfactory nature of the reply given by the right hon. Gentleman, I ask leave to withdraw the Motion for the new Clause.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Income Tax. Woodlands.)
    The following Clause appeared on the Paper in the names of Sir G. Younger and other hon. Members:
    Any person electing to be charged to Income Tax in respect of woodlands under Schedule D instead of under Schedule B, in pursuance of Section twenty-two (4) of the Finance (No. 2) Act, 1915, shall have the same right of appeal from the decision of the general Commissioners on the subject of whether the woodlands in his occupation, and in respect of which such election is made, are or are not managed on a commercial basis, and with a view to the realisation of profits as he has in respect of the assessment of such woodlands.
    Sir G. YOUNGER: I do not think it is possible TO move the Clause which I have on the Paper, because this gives an appeal to an official, whereas the right hon. Gentleman says he intends to give power to make a selection. I think that is satisfactory, and I do not move.

    NEW CLAUSE.—(Assessment for Income Tax of Controlled Establishments.)
    For the purposes of assessment of Income Tax in respect of the profits of a controlled establishment, and where such
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    assessment would be diminished by the provisions of this Section, the net profits of such establishment for the accounting period under this Act shall be deemed to be the amount of the net profits of such establishment as ascertained for the purposes of the Munitions of War Act, 1915, of any accounting period or periods under that Act which expire during the currency of the accounting period under this Act.—[Mr. J. Mason.]
    Clause brought up, and read the first time.
    Mr. J. MASON: I beg to move, "That the Clause be read a second time."
    The Clause which I now move has reference to the effect of the Income Tax upon the money which is expended upon building and plant for special war purposes, which are admittedly useless at the end of the War. The system by which the collection of Income Tax is now pursued is bound up somewhat with the matter of allowance for depreciation. As it now stands, this of course means that with increasing taxation there is decreasing capital in many cases. As we now stand, it is quite clear that unless something is done, Income Tax will be paid upon sums which are now allowed by the Government to be spent in capital expenditure on buildings and plant, and which are not subject to two other duties, the Munitions Levy and the Excess Profits Duty. Let me take a concrete instance. I take a case where the Government desires for the purposes of the War that buildings shall be erected to the value of £80,000, and it is admitted that these buildings are useless after the War, and are not necessary for the purpose of the company or firm whose property they are, being erected by the desire of the Government purely for War purposes. Suppose that out of this £80,000, it is agreed that special depreciation of £50,000 is to be allowed, and therefore the Munitions Levy and Excess Profits Tax is collected, not on £80.000 but on £30,000, that is to say, £80,000, less the special depreciation of £50,000. As things stand now, I suggest that Income Tax must necessarily be collected on the £80,000 and not on the £30,000, as in the case of the other two taxes. Consequently, Income Tax will have to be paid to the amount of £20,000 on money, which is being expended by the firm which is admittedly useless after the War, and therefore should not be taxed in this severe way. The reason why I think something is necessary is that under the existing

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    practice of the Income Tax collector, or in accordance with the Income Tax law, it is the custom not to allow any depreciation upon bricks or mortar on buildings. Therefore, unless something is done, I fear that the depreciation which it is admittedly possible may be granted in the case of Munitions Levy and the Excess Profits Tax, cannot be granted, unless some precaution is taken, in the case of the Income Tax. I can hardly think that is what is intended by the Government, and I think it is desirable to raise this question now. Of course the right hon. Gentleman may be prepared to have the matter considered, but I would point out that so far as I know, it was not raised on the other Clauses of the Bill.
    Mr. S. ROBERTS: I beg to second the new Clause which my hon. Friend has moved in such suitable terms. The House is aware that this question of the excess profits was under discussion before We had a long discussion and I do not propose now to repeat any of the arguments which I used on that occasion, but the outcome of that Debate was this, that a large number of the representatives of the controlled firms met the Prime Minister, the Chancellor of the Exchequer, and the Minister of Munitions in a Committee Room upstairs, and they received us most cordially, and the Prime Minister assured us how very much the Government values the services which the controlled firms are rendering to the country, and they assured us of their desire to cooperate with us in every way they could in an amicable and friendly manner. Following that deputation a meeting took place yesterday afternoon, at the Treasury, between the right hon. Gentleman the Chancellor of the Exchequer and the new Minister of Munitions. Unfortunately, the office having been transferred from the late Minister to the new Minister of that Department in the intervening time, the controlled firms had not the advantage of having a Minister before them who could appreciate their case in the same way that the other Minister could. Well, I understand that the deputation were disappointed generally with the result, and one of my objects in rising to second this new Clause is to ask the right hon. Gentleman whether he will be able in the course of his reply to kindly state to the House what the concessions were. There were some concessions made yesterday. I understand that these concessions are of such a character that legislation is not necessary; they will be Departmental,
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    and will be done by regulation. I would very much like the right hon. Gentleman, if he will, and I think it is convenient, and it will promote the progress of this Clause, and other Clauses, to state what those concessions were, and how he proposes to carry them out.
    Mr. McKENNA: I recognise the strength of the case that was made out by my hon. Friends in moving this new Clause. It is true that it would appear to be somewhat unfair to give with the one hand, as expenses of the business, the special allowance which is permitted to controlled firms for depreciation, and then, with the other hand, to refuse to give the same special allowance for Income Tax purposes. The House will remember that in the case of controlled firms we have agreed to accept the munitions regulation for certain purposes, including the deduction for depreciation, having regard to the special circumstances of the controlled firms. They have in many cases put up new buildings and laid down new plant, at the express request of the Government, not primarily' with the object of making profit, but in most cases entirely for the purpose of increasing the output without regard to profit, and the Munitions Department in most cases quite properly, if I may say so, entered into an arrangement that the firm should be allowed to write down the cost of the new buildings and plant especially erected by them to the postwar value of the plant. Of course they have to pay during the War a high price, and it is possible that after the War there may be a very great difference between the value of that plant for which allowance had to be made. Therefore we were content to make that allowance both for the purpose of Excess Profits and Income Tax. We think that we can accept my hon. Friend's proposal, but, while accepting it, we consider that we can put it into somewhat better language, and I propose, therefore, in moving at a later stage to recommit the Bill, to recommit it in respect to this new Clause and other new Clauses dealt with today. I think that is a more convenient method of dealing with the subject than by dealing with Amendments to the Clause moved by my hon. Friend. We will put forward our proposal as a new Clause, and it will then be discussed in its entirety, without all the difficulty which would arise from dealing with the Amendment of the Clause

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    on the Paper. The following is the new Clause, which I will put on the Paper tomorrow:
    (1) Where in calculating for the purposes of Part II. of the Munitions of War Act, 1915, the profits of a controlled establishment a deduction has been allowed under that Part of that Act or rules made thereunder in respect of exceptional depreciation or obsolescence of buildings, plant, or machinery, and the sums so deducted have not been deducted or allowed in computing the amount upon which Income Tax has been paid in respect of those profits, there shall be allowed a repayment of Income Tax equal to the amount of the Income Tax at the rate at which that tax has been paid on the amount of the sums so deducted.
    Provided that the repayment of Income Tax under this Section—

    (a) shall be made in respect of the Income Tax year which includes the end of the period of assessment in respect of which the said deductions have been allowed under the Munitions of War Act, 1915; and

    (b) shall be deemed to have effected a reduction of the Income Tax assessment by the amount upon which Income Tax has been so repaid.

    (2) Any application for relief under this Section shall be made to the Commissioners by whom the Income Tax assessment has been made, and those Commissioners upon proof of the facts to their satisfaction shall certify to the Commissioners of Inland Revenue the sum repay able, and the Commissioners of Inland Revenue shall cause repayment to be made accordingly.
    I think that covers substantially what has been put forward, and I shall be happy to place this new Clause upon the Paper tomorrow.
    Sir A. MARKHAM: I desire to ask my right hon. Friend to be very cautious in accepting the principle embodied in the Amendment moved by the hon. Member for Windsor (Mr. J. Mason). I took exception in the Committee stage to what I understood was the bargain made by the Minister of Munitions at Manchester with certain controlled firms. I do not want to enter into details nor should I be in order if I did so, but what I do want to point out to the right hon. Gentleman is this: That these buildings which have been erected, many of them by armament
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    firms, are, I say without any hesitation and speaking as an engineer myself, capable of being used by the owners for engineering purposes afterwards. They are much better buildings, and are better equipped for making machinery than the existing shops the engineers had before the War. It is very important that we who have been in the engineering business should not, after the War, have to compete with armament firms who have built these big factories in which they are making shells, guns, and other munitions, and if they are going to acquire these buildings at a very small price as I take it they are, because the Chancellor of the Exchequer said, "I am only going to take the difference between the prewar balance and the increased cost occasioned by the making of the buildings—
    Mr. McKENNA: Post-war.
    Sir A. MARKHAMI beg pardon; post-war. Nevertheless, owing to the large amount of depreciation that is allowed, which has been settled by the Ministry of Munitions with the controlled firms, I am not at all clear whether this is going to work equitably to the engineering firms who were engaged in the manufacturing industry prior to the War. I think it would be most regrettable if all the engineering works of the country eventually became centred in the munition people, and I hope the right hon. Gentleman will pay some attention to the fact that these buildings erected during the War are not as the hon. Member said—I can assure him it is not so-of very little value or incapable of being used for any commercial purpose. I differ from the hon. Gentleman, and say that from the point of view of engineering work they are better suited to manufacture in competition with the old engineering firms than the hon. Gentleman or the House seem to. believe.
    Sir J. HARMOOD-BANNER: I should like first to assure the Chancellor of the Exchequer that the suggestions he made in the new Clause are very acceptable to those who are interested in the business of controlled establishments. Until we have seen the Clause and studied it, of course, we cannot quite tell how far it will meet all the various points, but it appears so far as possible to have met the position which has arisen. There is no doubt whatever that there is an enormous difference between the ordinary Income Tax allowance and the allowance which has

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    been arranged with certain firms because they have erected at the desire of the Munitions Department works at the present time which have cost very much larger sums by 50, 60, and more per cent. than they would have cost if the War had not been in existence. The suggestion now made, therefore, that these questions will be met in a fair spirit should meet the want of the community. I should like to say in reference to what has been said by the hon. Member for Mansfield (Sir A. Markham) that I think he was rather inclined to strain his point, because I do happen to know that in very many cases the works have been valued for after the War, and the only allowance is between the difference in their cost and the valuation that is made by a very competent valuer. The suggestion, therefore, that these controlled firms are going to get property for nothing at the expense of the State is a very extreme one. It may be so in some instances in which the Department has been caught, but as a rule the firms have to bear the cost both of the plant and of the machinery without knowing whether at the end of the time it will be of any use to them at all. Some firms are doing entirely different work from that on which they are usually engaged. They have no goodwill and no trade to apply to those works, and therefore they cannot be of the same value as works of the same nature as those which have been carried on. It may be engineering work, and the engineering works may have a trade for double the plant and buildings it had in the first instance, and therefore I do not think the complaint the hon. Gentleman made applies to any great extent. I admit it may happen in a few cases, but they are so few that they are not of importance. At any rate, I think we all have to express our thanks to the Chancellor of the Exchequer for having considered this matter. I must confess that after what we heard at the meeting yesterday we had very poor spirits during the day until we heard the right hon. Gentleman's announcement. We do, however, feel, I assure him, that we are being dealt with in a proper spirit, and I would only add—and I would like to add it—that whilst we were not content with the way in which we were treated as controlled establishments, I can assure the right hon. Gentleman from all I know, and I know many of them very much interested in the matter, that whatever he might do to tax us nearly out of exist
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    ence, we should continue to give the Munitions Department, in the same patriotic spirit in which we have given it, the timely aid that we have given up to the present.
    Sir W. PEARCE: I hope the House will not think that this only affects the big engineering works. Nearly the whole of the chemical industry has been controlled, and they certainly do not ask for anything such as was described by the hon. Member for Mansfield (Sir A. Markham). At the same time chemical plant and buildings have been put up for the special purposes of this War, and it is really meeting a real grievance when the Chancellor, as I understand he now does, proposes to make readjustments for repairs, renewals, and obsolescence of plant, made by the Ministry of Munitions under Rule 9 as expenses of business in the same way as materials and wages are, and, therefore, do not count for Income Tax. That really requires to be done at the present time. Unless these are treated as expenses of the business a very great injustice will be done, and I can only say personally, speaking for other industries besides the engineering industry, hat the announcment of the Chancellor of the Exchequer will give the greatest satisfaction.
    Mr. WARDLE: The very fact that the hon. Gentlemen interested in these industries are so profuse in their thanks makes one inclined to be a little bit suspicious of the Clause. I do not intend, however, to pursue that line. I only want to ask the Chancellor of the Exchequer one question of which I think the House should see the importance. For my part, I want to ask him whether in any arrangements which are made with regard to the postwar value of the plant and the buildings, the Treasury will be consulted as well as the Ministry of Munitions. I think it is exceedingly necessary that that should be done, and I should like to know whether that is part of the arrangement to which the Chancellor has come. I should be much more satisfied myself, at any rate, in regard to the bargain that is to be made in the matter of the postwar value if I were sure that the watchdogs of the Treasury were looking after the interests of the nation.
    Mr. HENDERSON: I am not going to be profuse in my thanks to the Chancellor of the Exchequer. I recognise he has seen a little justice, and that if he had done anything else than what he has done he would have done a very grave injustice

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    [Laughter] Hon. Gentlemen laugh, but they do not know very much about it. The hon. Member for Mansfield (Sir A. Markham) spoke of these big engineering firms being given something for nothing, or what is equivalent to nothing. I am perfectly certain that the Ministry of Munitions will do nothing of the kind. If the buildings are of value to them for the purposes of their business they will be so valued. To put the other case a little stronger, the munition firms are only about five or six. My right hon. Friend has commandeered 4,000. He has gone about the country in order to swell up the amount, and to make the thing bigger. Wherever he found a boiler and an engine and a little overhead shafting he has made them a controlled firm. He has said, "You make munitions; put in lathes." There is the soap maker, case makers, thousands of people who never saw a shell made in their lives, and could not have made one for the life of them; and the consequence has been that they have had thousands and thousands of these things rejected because they undertook to do something under the aegis of the Ministry of Munitions, and of a patriotic desire to make munitions, which they were perfectly incapable of doing. When the War is over, here will be a place full of machinery absolutely useless to them. Of what use is a hydraulic machine for forging shells to a soap maker? There are plenty of people having any number of machines which will be perfectly useless to them.
    Last week in Manchester I went into one of these controlled establishments, and I saw half-a-dozen lathes almost new ordered by the Ministry of Munitions. There they were. They had performed their functions twice. I said, "What are these?" and the reply was, "These were made for So-and-so, but in the meantime the War Office have altered their gauges, and they are no use." At the end of the War, when it comes to excess profits, the Ministry of Munitions and his staff must admit these things. They are of no use to these people, and the solution to my mind is this: The firm can say, "Here are these machines; they are absolutely no use to us." "Very well, we will take them away." "Do so, and allow us for them." When you suggest that there is a great warehouse full of these machines costing thousand of pounds, the Minister of
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    Munitions should see the justice of that £20,000, or a portion of it at all events, being charged as expenditure, because it is absolutely useless to them, or he should take away the machinery. He allows 20 per cent., and the Income Tax Commissioner comes along and says, "He has allowed 20 per cent. For the purpose of your Income Tax I am only going to allow 5 per cent."—and the man will have to pay 15s. in the £ on stock that is absolutely useless to him. Although my hon. Friend thanks the Chancellor, he could not have done anything else. I do not assume for a moment that they will make extravagant allowances. I do not believe they will. I know them too well; and if the Treasury have anything to do with it they will not do so. The fault will be on the other side; and let me tell the right hon. Gentleman and the House—and it is the absolute truth-that out of 4,000 men and upwards who have been controlled, at least one-third of them will lose money. Take note of that. When you come to settle up you will find that a great many of them, so far from having excess profits, will have serious losses to face. It must be so. Men undertake to do things they are not qualified to do, and which they have never done before. It is the experience of all life that, as an American humorist says, when a man undertakes to do too much he generally succeeds.
    Mr. SPEAKER: Would it not be better to defer this discussion until the Government Clause is before hon. Members? I understand they are going to bring one in.
    Mr. HENDERSON: I only desire to answer one or two of my hon. Friend's observations, and will say no more.
    Mr. BARNES: I should like to say a few words—
    Mr. SPEAKER: Would it not be better for the right hon. Gentleman to wait until to-morrow, when he will see the New Clause? understand that this Clause is not going to be proceeded with.
    Mr. BARNES: With all due respect, I should like to say a word, because it seems to me that the more that is said by those who have been interested in pressing this change upon the Chancellor of the Exchequer the more it becomes clear that we shall have to watch it very care

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    fully. I wish to say a few words in support of my hon. Friend the Member, for Mansfield (Sir A. Markham). I also happen to have had experience of engineering workshops, and of some of them which have been put up during the course of the War. It is perfectly true, as my hon. Friend the Member for West Aberdeenshire (Mr. J. M. Henderson) said, that although 4,000 firms have been commandeered for war purposes for the Government orders, only about five of them count. That is an argument not in his favour but in ours, because if you are going to have five great corporations throughout this country who are to make bargains with the Ministry of Munitions, the Ministry of Munitions is going to have the worst of it every time. These buildings which have been put up during the War are some of the best buildings which could be used for the purposes of ordinary engineering business after the War. There is a danger arising here. We are told that they are going to have the difference as between the cost price and the postwar value, which, I take it, means the value immediately after the War. That will be a time of great slackness. But very soon after the War winds up that slackness will be over, provided, as I hope will be the case, State credit is used to make good the ravages of war. Those firms will then be full up with work, and they will be using these workshops and splendid tools which are right up to date, and which have been imported from America and all over the world, for the purpose of making large profits. I join with my hon. Friend the Member for Stockport (Mr. Wardle) in impressing upon the Chancellor of the Exchequer the necessity of the Treasury being consulted when these bargains are made. I am not particularly anxious about soap boilers and small firms, because probably they will get the worst of it, but I am anxious that these big firms, when making bargains with the Ministry of Munitions, shall have the Treasury upon their track as well.
    Mr. J. MASON: I beg to thank the right hon. Gentleman for his statement, and ask leave to withdraw the Clause.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Amendment of 5 and 6 Geo. V., c. 89, Fourth Schedule.)
    To Sub-clause four, Part I., of Schedule Four, of the Finance (No. 2) Act, 1915, the
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    following words shall be added at the end, namely:
    Whenever Excess Profits Duty or similar duty shall have been paid outside the United Kingdom in respect of any accounting period for which Excess Profits Duty has been paid in the United Kingdom the amount of such excess profits or similar duty so paid shall forthwith be refunded.—[Sir J. D. Rees.]
    Clause brought up, and read the first time.
    Sir J. D. REES: I beg to move, "That the Clause be read a second time."
    In the Fourth Schedule to the principal Act dealing with the computation of profits, it is provided that deductions shall be allowed "for any sum which has been paid in respect of the profits on account of any Excess Profits Duty or similar duty imposed in any country outside the United Kingdom."
    There is not, however, any provision for any refund. I do not suggest that the Chancellor of the Exchequer is likely to impound money or use it as Ways and Means and refuse to restore it, but there is a little difficulty in getting back money that has once been paid, especially Income Tax. Firms who are in business, both in the United Kingdom and in foreign possessions, feel that there should be some specific provision for an immediate refund, so that when the Income Tax is as high as it is at present they should not be kept for a long time out of their money. I can hardly imagine that there is any great objection to the addition of this Clause.
    Motion not seconded.
    Mr. SPEAKER: The next Clause, standing in the name of the hon. Member for East Nottingham (Sir J. D. Rees)—[Income Tax, Foreign Possessions]—is out of order, because it might increase the charge.

    NEW CLAUSE.—(Computation of Excess Profits Duty in Certain Cases.)
    Where it is shown to the satisfaction of the Commissioners of Inland Revenue that on a fair and reasonable valuation of the assets of a company or firm the payment of any Excess Profits Duty would render the company or firm insolvent,

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    only such part of the duty shall be exigible as will leave the company or firm solvent.—[Mr. J. M. Henderson.]
    Clause brought up, and read a first time.
    Mr. HENDERSON: I beg to move, " That the Clause be read a second time."
    This deals with the case I was mentioning when I was very properly ruled out of order. It is that of a firm which became insolvent through bad manage in 1912. In that year the creditors allowed it to go on, and with improved management the position also improved. They did not make money in 1913, but did not lose any. In 1914 the position got better, and in 1915 they made so much profit, but still a profit which, under the Excess Profits Duty and on the percentage basis, will show a sum due to the Exchequer in respect of excess profits. The capital of the company was only £l,000, but the debts of the company on which it was trading amounted to £15,000. In that case there would be no prewar standard, and the computation of 6 per cent. on £1,000 in £60, while the payment which would have to be made under the Excess Profits Tax would be something like £3,000. Such a payment would be impossible to that firm without making it again insolvent. This Clause is intended to meet cases of that kind. I am rather encouraged to press this Clause, having regard to the concession my right hon. Friend made by his first Amendment, which I do not think will cover this case. I should like to have some assurance that the Treasury will not exact Excess Profits Duty where the creditors will not be met, and where there is not sufficient money after paying the duty to meet the ordinary claims of creditors or debenture holders, as the case may be, of the company. I would ask him to consider the point and see if he cannot make the concession that where the payment of the Excess Profits Duty would make a company insolvent I hope he will say that he will not exact it, or will only exact so much of it as will not leave the company still insolvent.
    Sir A. MOND: I beg to second the Motion.
    Mr. CURRIE: I am dead against the Chancellor of the Exchequer being persuaded to accept this Clause. I hope he will turn it out. My hon. Friend (Mr. J. M. Henderson), in the course of his long and
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    distinguished professional career, has acted as undertaker at the obsequies of many companies. He has been guide, friend, and, I have no doubt, philosopher, to many such in his day. I am afraid the effect on him is that he has contracted a tender solicitude for people who are in financial difficulties, which I hope the House does not share. If people do business with companies or individuals who are either bankrupt or liable to bankruptcy there is no reason why the Chancellor of the Exchequer should step in and afford protection to concerns in that position. On the contrary, a company or person who trades in a state almost of insolvency is an extremely mischievous influence. The fact that this is a war tax and a tax on excess profits does not make any difference. The provisions of the Code Napoleon, which make that sort of thing very much more difficult in France than here, might very well be copied by us. Therefore I hope this Clause will be rejected. I am very sorry that the Chancellor of the Exchequer accepted from my hon. Friend the other day Clause 51 because he has accepted something which will not bring him revenue.
    Mr. McKENNA: I do not propose to accept this Clause, and I do not think that my hon. Friend (Mr. Henderson) thought I should accept it.
    Mr. HENDERSON: In justice, you ought to do so.
    Mr. McKENNA: I do not think so. If a firm of this kind is trading and making profits, the profits ought to be under the same rules as those of other firms. If it is insolvent, the firm should not trade at all. If it does trade and make profits, it cannot expect to get exemption from taxation merely on the ground that it ought never to have traded at all.
    Mr. HENDERSON: Will you wind it up?
    Mr. McKENNA: My hon. Friend does; not mean that by his Clause, which speaks of a company or firm which "on a fair and reasonable valuation of the assets," etc. Those terms are too vague. Many firms may, on a fair and reasonable valuation at a certain moment, owing to temporary fluctuations in the price of commodities, not be at that particular moment solvent, and they would claim the right to retain all excess profits. I do not think my hon. Friend has fully considered this Clause, and I regret I cannot accept it.
    Question put, and negatived.
    Mr. HENDERSON: I have given notice of two other new Clauses—1 (Provision as to Fixing Pre-War Standard of Profits); and 2 (Provision in Respect of Acceptance by Commissioners of Inland Revenue of Arrangements Made by Ministry of Munitions)—but having regard to the Clause which my right hon. Friend is going to introduce when the Bill is recommitted, I do not move them. The second Clause covers all the questions I wish to raise.

    NEW CLAUSE.—(Modification of Entertainments Duty.)
    On and after the thirty-first day of July no Entertainments Duty shall be levied where the price of admission, excluding the amount of the duty, does not exceed sixpence.—[Mr. Hogge.]
    Clause brought up, and read the first time.
    Mr. HOGGE: I beg to move, "That the Clause be read a second time."
    This raises a very important point which I have discussed privately at some length with the Chancellor of the Exchequer, therefore I do not propose to detain the House at any great length with the arguments which I hope to adduce in favour of the acceptance of this new Clause. The House will remember that in the last Budget we dealt with the whole subject of entertainments in a special way and for the first time. I have no doubt that the Chancellor of the Exchequer anticipated that he would get quite a considerable revenue out of the various entertainments he was taxing for the first time. The right hon. Gentleman stated quite definitely—I think he will agree with me in this at once—that in imposing that tax he had no intention of levying it upon the proprietors of these entertainments, but that it was a device on his part to compel people who otherwise did not contribute to the revenue of the country, to contribute to war taxation which he was raising from all classes of the community. If I can prove to him, as I hope to do, that the results of his tax are proving disastrous in many respects to the machinery which is collecting the tax for him, I hope he will be prepared to reconsider it. The taxes which were put upon entertainments were rather curiously contrived. The heaviest proportion of the taxation lay upon the cheaper class of seats. The lowest sum of taxation which was imposed amounted to 50 per cent, of the entrance money paid,
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    whereas the largest sum imposed only amounted to 8 per cent., and the people who were able to pay the largest sumof money for their amusements are contributing very much less than the industrial classes, who cannot afford large sums for these entertainments. If you take an industry which has perhaps been hit harder than any other by the Entertainment Tax—namely, the cinema industry—what has happened has been what one might expect would happen, and what I predicted would happen when the tax was imposed. People have been in the habit of paying anything from 1d. up to 6d. for admission. Supposing they have been in the habit of sitting in a seat which cost them 4d., when the tax was imposed these people immediately transferred 'themselves to the seats which were charged 3d., with the result that the Chancellor of the Exchequer got his Id. in taxation because there is a 1d. taxation upon a 3d. seat, but the proprietor of the industry lost 1d. of the income which he requires to keep his show going. The result of that has been very disastrous in many cases.
    I have here a series of figures which I have shown to the Chancellor of the Exchequer's officials. In these figures I have practically laid all my cards on the table and met him perfectly fairly in regard to information. I have a series of forty separate cinema undertakings from all parts of the country. Included in this list there are such places as Manchester. Wakefield, Preston, Nottingham, Eccles. Liverpool, Oldham, Bolton, and Blackpool. The net result of the imposition of the tax on these forty halls has been that whereas they have contributed £630 in tax during the period the figures cover the loss to the proprietors of the concerns has been £671. Not one of these halls has made a single penny of profit since the tax was imposed, and there have been more cinema theatres closed down during the weeks in which it has operated than there have been for a very considerable time. I am not arguing as to whether cinema theatres ought to be closed down or not. The right hon. Gentleman himself has stated deliberately that the tax was not intended to fall on the proprietor of the entertainment, who is already reached in his Income Tax and who will be reached more and more according as his income increases, but upon the patron whom he could not get in any other way. It is a serious consideration for the right hon. Gentleman as to whether the machinery which he is making

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    use of to collect this tax is not going to be destroyed in a great many parts by the imposition of the tax. I have figures here which perhaps provide the only example I need give to emphasise this point. Here is a theatre in Manchester for which I have the figures for six weeks of the tax, six weeks immediately preceding the tax and six weeks of last year corresponding with the period liable to the imposition of the tax this year. If you take the first six weeks of the imposition of the tax of this theatre, and it is a typical theatre, one of what I call the industrial cinemas, this man lost in his first week £6 9s. 4d., in the second week £6 18s., £12 15s., £12 17s., £18 10s., and £9 9s. Altogether in six weeks he lost £67 0s. 9d., and he paid the Chancellor of the Exchequer £46 11s 6d. in tax. That is to say, the result of the tax upon him was that while he had to provide the Government with £50 worth of tax he himself lost £67, including the tax for the Chancellor. In the preceding six weeks his profit was £61. and for the corresponding period last year his profit was £26. A tax, the incidence of which falls in that way, is obviously one that requires to be reconsidered. I am certain the right hon. Gentleman was perfectly sincere when he thought there was a very large amount of money to be got out of taxing amusements. I did not agree, and never have agreed with him, and I do not agree with him yet. I am certain that particularly the working classes of this country have not got so very much money to waste in amusements, and I can give case after case of working men who go with their wives and children to cinema theatres who before had no chance at all of rational amusement who now come at long periods, or who only come once a week instead of twice a week—because the entertainment is changed twice a week—and in that way hit both the proprietor and the Chancellor of the Exchequer, because, while the proprietor wants their money, the Chancellor wants his tax.
    I think this tax is meant to be a permanent tax. I do not know whether the right hon. Gentleman has in his mind the idea that it is to be a permanent tax, but I am perfectly certain that no Chancellor of the Exchequer for the next ten or fifteen years, in the state of finances in which we find ourselves, will be willing to drop any tax out of which he can get any considerable amount of revenue. Therefore, I
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    begin with the proposition that this tax is likely to be permanent. If that is so, I suggest that it is bad business to smother the machine at the outset of what may become a permanant tax with every possible imposition which can be put on it. The percentage of the tax runs out in this way. Penny seats are taxed at 50 per cent., 2d. seats at 25 per cent., 3d. seats at 33⅓ per cent., 4d. seats at 25 per cent., 6d. seats at 16 per cent., 1s. seats at 16 per cent., 2s. 6d. seats only 6 per cent., 5s. seats 5 per cent., and over 10s. only 8 per cent. Therefore the right hon. Gentleman " is bound to get a better revenue and one which will come more evenly later if he starts with the imposition of a tax which will bring him that amount of revenue which the trade can carry at the moment, and he can increase it as the trade is able to meet it. I moved an Amendment, which he disposed of in a couple of sentences, asking him to postpone the operation of the tax until October, because the summer months are the leanest months of the year for people who cater for amusements, and if this tax had been imposed in October perhaps it might have been carried much more easily than it could possibly be carried at any other period of the year. I am convinced, from my own experience, and from figures which have been supplied to me from all over the country, that the Chancellor of the Exchequer is doing a great disservice to rational amusement in persisting in the tax as it is at the moment. When it was imposed there was the promise of a second Budget, when this could be reconsidered with the other taxes. Firms which were interested in the taxation of aerated waters got a definite promise that they should have their tax reconsidered, and that they might be dealt with in the second Bill. No hope of a second Bill is held out now. Perhaps that is a good enough thing from many points of view, but that opportunity will not arise. The tax is therefore bound to run until a fresh opportunity arises. In the meantime a large number of people in the trade who have been, and are, acting at the moment as collectors of revenue for the Chancellor of the Exchequer, are being driven out of their business. Many of them are being ruined.
    8.0 P.M.
    The House has always to remember the distinction that there is in the entertainment industry. There are very large wealthy corporations in big cities, and there are industrial concerns in provincial towns. The difference between the

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    two is very considerable, and the second of these concerns certainly cannot stand taxation of this kind. Therefore I am suggesting that the right hon. Gentleman should decree that after 31st July all the taxes should disappear below 6d., and that he should begin his tax there, and in future years, from year to year, impose heavier taxation downwards, when the trade is better able to meet it. I see by the right hon. Gentleman's look that he is not going to agree to the deletion of taxes under 6d If not, may I suggest that he might be able to meet the situation by agreeing to a lower figure. I think those interested in the trade would be prepared meanwhile to take the abolition of the tax on everything below, say, 3d. or 2d., in order that institutions which were carrying on quite well before the tax was put on shall not be driven out by the tax, and I am certain the Chancellor does not want to drive these people out of business. That is the last thing he has in his head. I think he has also had evidence that these people do not wish to evade taxation, and are as willing as anyone else to help him in raising revenue, but from the evidence which I have advanced now, and from a great deal more which I have given him personally, I think he is convinced that I have a case, and that I am not putting it too high. I am suggesting that the difficulty might reasonably be met, and I think with goodwill on the part of everyone, if he would agree to the figure which I have suggested since I put the Clause on the Paper that everything from 2d. down should go, and that he should be content with the Id. that he gets on 3d., 4d., 5d., and 6d., and that he can reimpose the tax on these other prices when he is assured from the experience of the tax on the higher tickets that the machinery which he has asked to collect is able to collect I hope he will be able to say something which will bring some comfort to the trade. I would remind him that a large number of people are scattered throughout the country in our smaller villages and towns who have every penny of their capital in these particular undertakings, and they are people who cannot hold out if this tax continues in this way. There are some people in the trade, perhaps a considerable number of people, who can stand the loss at the present moment which is accruing to them in collecting the tax; but there are others who cannot stand that loss and who
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    are being driven out of the trade, and their trade is being taken by the larger combinations who have always the capital at their disposal to buy up and get rid of the smaller men. I do not think the Government is entitled to drive anybody out of business by the imposition of a tax which is not meant to be put upon them, but which they are asked to collect. Therefore, I hope the Chancellor of the Exchequer—I am sure he will after the conversations I have had with him—will be prepared to meet us in some way.
    Mr. PRINGLE: I beg to second the Motion. I do not desire, after the very full and detailed statement of the case which my hon. Friend has given, to enter into any considerations on the merits. I think it is only necessary to state that in my opinion, and I am sure every hon. Member who has listened to my hon. Friend's speech will agree, he has made out a case that the incidence of this tax, so far as the low-priced tickets of admission are concerned, has not been as was intended and expected when the tax was imposed. Instead of the tax falling upon the frequenters of these entertainments the tax has in actual practice fallen upon those who purvey the entertainments. Not only has that been the effect, but as a result of its incidence many of those who have been providing this perfectly legitimate entertainment have been so adversely affected that they have been forced to contemplate going out of business. Their losses have been so great that, especially in the case of the smaller men, they are likely to go out of business, and as a result their loss will ultimately accrue to the advantage of the larger people in the business who, in the meantime, can bear this loss, because of the higher class trade they do in other directions. I think in view of the secondary effects of the tax, and in view of the fact that the Chancellor of the Exchequer is unlikely to reap anything like the revenue which he anticipated in the cases now being considered, that he ought to accept the new. Clause which my hon. Friend has moved.
    Mr. McKENNA: My hon. Friend who moved this new Clause has made out a case with considerable force in favour of his Motion. I have had the advantage of more than one interview with my hon. Friend, and he has laid before me, with very great fairness, the figures which he had in his possession. My difficulty in dealing with the subject does not arise

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    from the difficulty of answering his particular argument but from the nature of the tax itself. Everything which my hon. Friend says about this kind of tax in its effect upon the smaller man in competition with his bigger and more powerful rival is true and unavoidable. That is a condition of all taxation. Taxation of this kind, which has the same effect as increasing the cost of raw material, always operates "with greater harshness upon the man with small capital than upon the man with large capital. The Committee must accept all the evils necessarily connected with taxes of this kind, if they have indirect taxation at all. I do not see that we can go back upon the policy which the House has accepted in this respect. We have to take our system of taxation as a whole, and while we admit, and must admit, the peculiar effect of indirect taxation, there is no other means known to us or known to any other country by which you can get from everybody contributions towards the cost of the State anything at all proportionate to their means.
    Mr. WING: Will the right hon. Gentleman say what is the revenue from the tax now?
    Mr. McKENNA: If the hon. Member will allow me to pursue my argument, I will not conceal anything from him. The Committee must remember that this tax only came into operation on the 15th of May last. In ordinary years it would be a bad time, in the middle of May, for a tax of this kind to come into operation, but this year it was a peculiarly bad time because the 15th of May was almost coincident with the date of the new summer time, a date which, to judge from the weather we have since enjoyed, was very badly made. It also coincided with a time when the cinema has been much affected by the Board of Trade Regulations, and there has also been an increase in the cost of electric light. Therefore, quite apart from the tax, there was bound to be a very serious decline in the amount of money expended by the public upon amusements. It is always known, and my hon. Friend will agree with me on that point, that the summer time is less productive in the way of amusement revenue than the winter time.
    Mr. HOGGE: That is why I suggested you should have begun in October.
    Mr. McKENNA: Notwithstanding the bad season of the year, how has our in
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    come from the tax come in? Not at all badly. We have raised in six weeks £400,000. That would give us an average of between £3,000,000 and £3,500,000 a year. Our estimate was only for £5,000,000. Therefore, we may assume that if during the worst six weeks in the year, from the 15th May, we have been able to raise £400,000, we may assume that our original estimate has a very fair chance of being realised. When in these six weeks, and under these conditions, we can obtain a revenue of that kind, can it be said that the tax has ruined the industry? I do not think that can be said.
    Mr. HOGGE: I never maintained that, as the right hon. Gentleman knows. I have been quite frank with him. I have shown him how some people are overcoming it. I am not so much concerned with that argument as with this argument: Is the Government entitled to use the cinema proprietor to collect this tax, and in the collection of the tax to destroy the machinery? You are getting taxation from the people who attend these places, but you ask the provider of the entertainment to collect the tax from the people, and I have brought forward facts to show that the collection is shutting down these people who provide the entertainment. I say that is not fair. That is my point.
    Mr. McKENNA: My answer is that it is much too early to say that the effect of this tax is to shut down any large number of people or firms engaged in the amusements industry. The effect of summer time, both natural and by statute, is far more serious in our judgment upon these amusements than the tax. We say that in any event a tax of this kind must have, unavoidably, somewhat the effect which has been outlined by my hon. Friend, because every tax which adds to the cost of production must operate to put out of trade those who are only just living upon the margin of profit. Therefore, the argument of my hon. Friend if it is worth anything at all is an argument against all taxation of this kind. In regard to this particular case, I say that it is much too early to come to the conclusion that the tax is not a proper tax. If we find, when we have had sufficient time to consider its whole effect, that the tax does not permit of entertainments being given to a class and in a way which they were given before the introduction of the tax, then I admit a case will have been made out for reconsidering the incidence of the present tax;

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    but for the reasons I have given I do not think such a case is by any means proved now. In the instances given by my hon. Friend, the proprietors of the houses would have lost money owing to the other causes I have mentioned even if there had been no tax at all. It would not be fair in regard to this or any other tax to close one's mind against evidence as to the ill effects of the tax, when the conditions have been such as to enable evidence to be properly taken. But, as I have said, I do not think we have had sufficient time yet to judge the operation of the tax. I hope my hon. Friend will be satisfied with the same assurance which shall be given to him as has been given to the table water manufacturers, that we will examine the facts and keep an open mind, and if when sufficient time has elapsed we find that the hon. Member's case is as good as he makes it out today we shall be only too glad to introduce an Amendment.
    Mr. LOUGH: I think my right hon. Friend has not given quite a fair reply to the very able speech made by the Mover of this new Clause. It is a most interesting subject and the House will yet have to consider it. The Chancellor of the Exchequer has rather exaggerated one or two things and he has made one or two statements which I think in a short time he will find it necessary to correct. He compared this to an indirect tax. It is not an indirect tax, but a direct tax, and that is the mistake which the Treasury has made. When it comes to Income Tax my right hon. Friend knows exactly what to do. He knows that the Income Tax upon a man with a small income will be light. He does not take the same proportion from a man with, say, £100, as he does from a man who has £10,000. He puts a lighter tax upon the man with little money. My hon. Friend (Mr. Hogge) has shown that in this particular case the Chancellor of the Exchequer is taking exactly the opposite course. He takes 50 per cent. of the takings in one case, and where it is graduated up he only takes 5 per cent, in the other case. Therefore, I think the Chancellor of the Exchequer is making a mistake. We are sympathetic with him in desiring to get money for the War, but I believe an unanswerable case has been presented by the mover of this Clause. He has shown that the effect of pursuing this tax will be to destroy the industry, so that the Chancellor of the Exchequer will kill the goose that lays the golden eggs. I gave
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    him an example, although I did not press it, and I am not going to press it now at any length, and that is an example which is occurring in London in regard to penny entertainments—the charge made by municipal and various authorities in the public parks. These will be all stamped out of existence if the Entertainments Tax is levied upon them as it now is. My hon. Friend (Mr. Hogge) was very wise in asking the Chancellor of the Exchequer to fix some low scale, whether it be 3d., 2d., or Id., and to graduate the tax a little more wisely. I do not suppose that we will succeed with the Chancellor of the Exchequer now, but that we will have to rest satisfied with the answer which he has given. I am very glad my hon. Friend has raised the question. I believe we shall find that the Chancellor of the Exchequer is proceeding on a most unfair and unsafe principle. It is not judicious to impose a tax which will cause a greater loss to any section of the community than the tax produces. That is an axiom. The Chancellor of the Exchequer will find it very difficult to trace the loss which he may be causing to owners of penny entertainments. They are a humble class, scattered over the community, with but a small capital, but if the total loss exceeds the amount of the tax a great injury will have been done by the imposition of the tax. I do think it a manifest injustice to take such a large proportion of the poor people's money as compared with the small proportion of the rich people's money which is taken, and I do think that a little more might be done in the matter. If there was any disposition generally to support my hon. Friend I would be glad to do anything I could to secure acceptance of the principle which he has laid down.
    Mr. MORRELL: I desire to express to my hon. Friend who moved this Clause the gratitude which we all feel for the able way in which he did so, and I hope sincerely that my right hon. Friend, as I am sure he will when the time comes, give sympathetic consideration to the proposals of my hon. Friend. I am specially interested in some c f those small places of entertainment in my own Constituency, and I can assure the Chancellor of the Exchequer that the evidence which I get as to the immense hardship caused by this tax is very real. I have here the takings from 15th May to 3rd July of a very respectable small cinema house in

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    my Constituency, and I find that the takings of that period in 1915 were £1,843, and in 1916 £1,425, showing a decrease of £418. In addition to that this man has had to pay a tax of £279. He gives me a very interesting comparison of what happened in the week ending 3rd July, when he had the same company as he had in the corresponding week last year. This year the takings for the week were £162, whereas in the corresponding week last year they amounted to as much as £314—that is to say, they have been reduced by one-half, and in addition to that he has had to pay £31 in tax, and in the letter accompanying these figures he points out that they have not only had this tax, but they have been deprived of their men who have had to attest and were called up, and were put to extra expense. He goes on to say that the only result will be that unless some relief is provided he will have to close down this particular place of entertainment. On those grounds I am very glad that my right hon. Friend has promised consideration for this proposal.
    Sir H. CRAIK: It is suggested that this tax is to be considered solely in the interests of those people on whom it happens to fall. They may be, for all I know, a very deserving class, but I do not think that their industry is one which is essential for this country, and that they should have to pay a certain tax is not only fair but absolutely just. There is another aspect which hon. Members opposite might do well to consider. Do they really think that these entertainments are of any use, and that in fighting for them they are doing any good either for the country or for the public generally? I am prepared to speak not in the interests of any particular taxpayer, but in the interest of the children who chiefly throng these very cheap entertainments, absolutely, in the vast majority of cases, to their physical destruction. I am not going to make any attacks in reference to their moral tendencies. I do not know what they may be, but I am perfectly certain that the bulk of the teachers all through the country, and the medical attendants in the schools, will tell you, what my own experience abundantly confirms, that the physical effects and the effect upon the eyesight of the children are most deleterious, and are increasing. If incidentally this additional tax, which I think, from the liberal figures quoted by the hon. Member who has just sat down, must not fall
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    upon a particularly poverty-stricken class of persons, is to check this sort of entertainment, and lessen the number of children going to it, it will have worked very considerable good. I know that that is not a proper motive for taxation, but in recent taxation we have learned a great deal, and we have been told that we are becoming moral, sober, and everything else by means of taxation. If, incidentally, this tax closes down some of these entertainments, which are certainly not of any great benefit to this country, and physically do harm to a very large number of children and injure their eyesight to a great extent, I for one shall be very pleased that the Chancellor of the Exchequer has not given way to the appeal.
    Mr. HOGGE: In view of the promise of the Chancellor that he is prepared to consider the incidence of this taxation at some period in the near future, if a case can be shown, I beg leave to withdraw the Amendment, and I thank him for what he has said.
    Motion and Clause, by leave, withdrawn.

    NEW CLAUSE.—(Rebate for Superannuation Funds.)
    A rebate of all Income Tax in excess of one shilling and threepence in the pound shall be granted on the income arising from investments made prior to the fourth day of August, nineteen hundred and fourteen, for the behoof of superannuation funds.—[Mr. E. Harvey.]
    Clause brought up, and read the first time.
    Mr. E. HARVEY: I beg to move, "That this Clause be read a second time."
    I hope that the Treasury will accept the principle of this Clause, which is to protect the position of a number of provident funds in different parts of the country which have been built up out of the income of working people who mostly are not subject in any way to Income Tax, and if the Bill goes through in the form in which it is, without any allowance whatever for the position of these funds, the result will be that a large number of working people, when they come to get their pensions out of these funds, will have reduced pensions. They would not in any case have to pay Income Tax, and they will be penalised in a way which I am sure the Government do not contemplate. The position is

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    made especially difficult because investments have depreciated in consequence of the War, and what I propose is a very modest attempt to meet the difficulty in which these funds will be placed by allowing them to pay simply the old rate of Income Tax on the investments that have been made previous to the War. I am speaking on behalf of a number of these funds whose managers have placed their case before the Treasury, and the new Clause which I propose would meet substantially the grievance which they feel. Funds like that of the Railway Clearing House Superannuation Fund, the Oceanic Steam Navigation Company's Fund, the Royal Mail Steam Packet Fund, and a number of others, representing a very large number of employés, are affected.
    I do not want to labour the question at all, but I will just give the figures of one of these funds which I think will make the point quite clear. I take, as a typical instance, the case of the Bourneville Works Pension Fund. That fund now consists of investments of the value of upwards of £270,000, and that represents contributions by the company and by the employés. The net interest revenue from those investments last year was over £8,000. A result of the War has been, as in other cases to reduce the value of the investments, and if, in addition, the full Income Tax of 5s. in the £ has to be paid on the income from the funds, the result must be a considerable reduction in the pensions. This is all the more inequitable because by far the greater part of the employés to whom the fund belongs, are either exempt altogether from Income Tax, or are allowed to pay the tax on a much reduced rate in respect of a small part of their income. That affects a small proportion of the contributors, and this saving by employés will be discouraged by being subjected to the tax at the maximum rate. This effect on one of the large pension funds is typical of a large number of other works, and I hope the Government can see their way to meet this very modest demand. It will not make a great demand on the Treasury, but will have a very marked effect on the position of a large number of the working people whose hard-earned savings are their right, and whose position I am sure the Government do not wish to make worse in consequence of this legislation.
    Mr. WARDLE: I beg to second the Motion.
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    I do so in order to get some idea of what the Treasury think about this Clause. I know many cases of this kind where the superannuation funds rely upon investments, and it would be a very great hardship in many of these cases if the interest, which is part of the funds from which the employés have to draw their pension, is reduced in consequence of the very high Income Tax.
    Mr. McKINNON WOOD: I am sorry that I cannot accept this new Clause. Of course, there are innumerable cases in which, on general grounds, one would desire to benefit such funds, but I cannot see any ground on which it can be proposed that the investments of these funds are only to pay Income Tax at the prewar rate. My hon. Friend who moved this Clause said that it was a very small thing; on the contrary, I think it is an enormous thing, and it is quite impossible to say where it would end, and you might as well say that educational superannuation funds should not pay the tax. What the hon. Member has alluded to in regard to the effect of the tax upon the fund to which he referred is only one of the consequences of the War. There are other institutions of a desirable character whose funds have fallen in value in consequence of the War; and it might also be asked that relief should be given in consequence of the fall of the price of shares through the War. I am afraid to admit the principle of this new Clause would be to admit something which would undermine the whole basis of taxation. I am afraid I cannot encourage my hon. Friends to think that this proposal could be accepted. We could not possibly accept it.
    Question, "That the Clause be read a second time," put, and negatived.

    NEW CLAUSE.—(Exemption of School Entertainments from Entertainments Duty.)
    Entertainments Duty within the meaning of Section one of the Finance (New Duties) Act, 1916, shall not be charged on payments for admission to any entertainment, where the Commissioners of Customs and Excise are satisfied—

    (a) That the entertainment is provided by or on behalf of a school or other educational institution; and

    (b) that the school or institution is not conducted or established for profit; and

    439

    (c) that the entertainment is provided solely for the purpose of promoting some object in connection with the school or institution; and

    (d) that all the persons taking part as performers in the entertainment are persons who are under the age of six teen years and who are receiving or have received instruction in the school or institution—[Mr. Goldstone].

    Clause brought up, and read the first time.
    Motion made, and Question proposed, " That the Clause be read a second time."
    Mr. GOLDSTONE: The Clause, which stands in my name, is to secure the exemption of school entertainments from the Entertainments Duty. I have in view school sports, football, cricket, athletic meetings, and so forth, on which the tax will have the effect of diminishing the attendance and in consequence reducing the revenue. In practice, the result will be to throw a large portion of the cost upon the voluntary workers, who, while drawing no salaries, would have to draw upon their private means to meet the cost of maintaining the very desirable work of the physical, moral, and educational interests of the children. I am desirous of saving the time of the House, and if there is any indication from the Government that they will accept my proposal I will content myself by formally moving its adoption.
    Mr. McKINNON WOOD: I beg to accept the Clause.
    Question, "That the Clause be read a second time," put, and agreed to.
    Clause added to the Bill.

    CLAUSE 7.—(Customs Duties on Table Waters.)
    (1) There shall as from the first day of May, nineteen hundred and sixteen, be charged, levied, and paid upon table waters as defined by this Section imported into Great Britain or Ireland, the following duties of Customs, that is to say:—
    On table waters which contain as the result of the ordinary process of manufacture, or are prepared in the ordinary process of manufacture with, sugar or other sweetening material, or which are fermented beverages, a duty at the rate of fourpence per gallon; and
    On any other table waters a duty at the rate of eightpence per gallon.
    (2) In this Section "table waters" includes any aerated waters and any beverages to be sold or kept for sale in bottles other than—

    (a) any liquor for the retail sale of which an Excise licence was at the time of the passing of the Finance (New Duties) Act, 1916, required; and

    (b) syrups or other liquors intended to be consumed only in a diluted form. Amendment made: In Subsection (2), after the word "bottles" ["for sale in bottles"], insert the words "or in casks or other corked or closed receptacles."—[Mr. McKinnon Wood.]

    CLAUSE 10.—(Duties on Tinder Boxes, etc.)
    (1) There shall be charged, levied, and paid on any tinder box, tinder lighter, or other mechanical and portable contrivance for producing a spark or flame, imported into Great Britain or Ireland, a duty of Customs of five shillings.
    (2) There shall be charged, levied, and paid on any tinder box, tinder lighter, or other mechanical and portable contrivance for producing a spark or flame, manufactured in Great Britain or Ireland, an Excise duty of five shillings.
    (3) If any person manufactures for sale a tinder box, tinder lighter, or other mechanical and portable contrivance for producing a flame, without paying duty in accordance with this Section, that person shall be liable in respect of each offence to an Excise penalty of fifty pounds.
    Amendments made:
    In Subsection (1), after the word "flame" ["spark or flame"], insert the words "in this Act referred to as mechanical lighters." In the same Subsection, leave out the words "five shillings" ["Customs of five shillings"], and insert instead thereof the words "one shilling in the case of mechanical lighters requiring the use of spirit, and of sixpence in any other case."
    In Subsection (2), leave out the words "tinder box, tinder lighter, or other mechanical and portable contrivance for producing a spark or flame," and insert instead thereof the words "mechanical lighter." In the same Subsection, leave out the words "five shillings" ["duty of five shillings"], and insert instead thereof the words "one shilling in the case of mechanical lighters requiring the use of spirit, and of sixpence in any other case."
    In Subsection (3), leave out the words "tinder box, tinder lighter, or other

    441
    mechanical and portable contrivance for producing a flame," and insert instead thereof the words "mechanical lighter."
    After Subsection (3) add the following new Sub-section:
    "(4) The Commissioners of Customs and Excise may make regulations prohibiting the manufacture of mechanical lighters except by persons holding a licence and having made entry for the purpose, and for fixing the date of the expiration of the licence, and also for regulating the manufacture of mechanical lighters and the removal from the manufactory of mechanical lighters with a view to securing and collecting the Excise duty imposed by this Act, and may by those regulations apply to the Excise duty on mechanical lighters and to manufacturers of mechanical lighters any enactments relating to any duty of Excise or Customs and to persons carrying on any trade subject to the laws of Excise.
    If any person acts in contravention of, or fails to comply with, any of those regulations, the article in respect of which the offence was committed shall be forfeited, and the person committing the offence shall be liable in respect of each offence to an Excise penalty of fifty pounds."—[Mr. McKinnon Wood.]

    CLAUSE 11.—(Provisions as to Motor Cars Used as Hackney Carriages.)
    (1) It is hereby declared that a motor car is not exempt under Subsection (4), of Section eighty-six, of the Finance (190910) Act, 1910, as being a hackney carriage within the meaning of Section four of the Customs and Inland Revenue Act, 1888, unless the car is used solely as such a hackney carriage.
    (2) There shall be fixed on every motor car which is exempted from duty, under Section eighty-six of the Finance (190910) Act, 1910, as amended by this or any other Act, as being a hackney carriage 'in conjunction with the mark fixed on the car indicating the registered number of the car and the council with which the car is registered, a further mark indicating that the car is to be solely used as a hackney carriage, and Regulations made by the Local Government Board under the Motor Car Act, 1908, shall provide for the additional mark to be so fixed.
    The penalties imposed by Subsection (4), of Section two, of the Motor Car Act,
    442
    1903, shall apply to the mark to be fixed under this provision as it applies to the marks to be fixed under that Section.
    Amendments made:
    In Subsection (1) leave out "(4)" and insert instead thereof "(3)"; leave out the word "unless" ["unless the car"] and insert instead thereof the word " if "; leave out the words "solely as such a hackney carriage" and insert instead thereof the words "on any occasion as a carriage within the meaning of Subsection (3) of the said Section Four."
    In Subsection (2) leave out the word "fixed" ["shall be fixed"] and insert instead thereof the word " exhibited"; leave out the words " further mark" and insert instead thereof the words "distinctive sign"; leave out the words "to be solely used as a hackney carriage" and insert instead thereof the words " so exempt"; leave out the words "additional mark" and insert instead thereof the word " sign"; leave out the word "fixed " ["to be so fixed"] and insert instead thereof the word "exhibited"; leave out the words "mark to be fixed" and insert instead thereof the words "sign to be exhibited."—[Mr. McKenna.]

    CLAUSE 12.—(Extension of Belief in Respect of Motor Car Licence Duty.)
    (1) Sub-section (4) of Section eighty-six of the Finance (190910) Act, 1910 (which provides for the repayment in certain cases to duly qualified medical practitioners of half the duty on motor car licences) shall apply to registered veterinary surgeons in like manner as it applies. to duly qualified medical practitioners.
    (2) If any person proves to the satisfaction of the Commissioners of Customs and. Excise or the council by whom the licence is granted, by the production of such certificate as the Commissioners may approve, that any motor car kept by him has during any year been used exclusively for the purpose of any Government service, he shall be entitled to the repayment of any duty paid for that year under Section eighty six of the Finance (1909–10) Act, 1910, on. the licence for the car.
    Sir ROBERT FINLAY: I beg to move in Sub-section (1) after the word "to" ["applied to registered veterinary surgeons"], to insert the words "clergymen of all denominations."
    The object of this Amendment is to extend to clergymen the benefit which is extended by the Section referred to in the

    443
    principal Act to medical practitioners and which it is proposed by Clause 12 of this Bill to extend to veterinary surgeons. I submit that there is a very strong case for extending this benefit to clergymen. Subsection (4) of Section 86 of the Finance Act, 1910, provides:
    "If a duly qualified medical practitioner proves to the satisfaction of the Commissioners or council by whom the licence is granted that any motor car kept by him is kept for the purpose of his profession he shall be entitled to an allowance in respect of the duty payable under this Section on the licence for the car equal to half the amount of duty so payable."
    The amount of the duty has not been increased by this Bill. Clergymen are a most deserving class of men who are engaged on work which is quite as meritorious as that of medical men and render public service of great necessity at a time like this, and in many, many instances they have to go great distances for the purpose of discharging their spiritual functions. I refer to clergymen of all denominations, and I put it that they are entitled to this exemption. I would therefore ask the Government to consider the case of those whom in this matter I represent. A Clause was moved in Committee which applied to clergymen and to a great many other persons, but it was withdrawn, I understand, in consequence of the objection taken to its sweeping nature. My Amendment in confined to a class the numbers of which cannot be so many as to very seriously affect the revenue, but still there is a considerable number of them on whom the pressure of this duty falls with very great severity. From the nature of the purposes for which these motor cars are used, I submit that they are entitled to exemption.
    Mr. MORTON: I beg to second the Amendment. We discussed this matter at some length in Committee, and I hope that the Government, having had some time, will have fairly reconsidered it. It is well known that clergymen in some places are not too well paid, while at the same time, especially in the Highlands of Scotland and in some other parts of the United Kingdom, it is necessary for them to make long journeys for the purpose of carrying out their duties. I very much regret that we fail to induce the Government to take much interest in religious matters. Of
    444
    course I am not entirely surprised at that, because I have noticed for a good many years that they never come into prayers in this House, whether it is that they are so good that they do not need religious instruction, or that they are so bad that they are past redemption, I do not know, but I do say that religious services and religion are perhaps more needed now than ever they were. I do trust that the Government will give way and do something to meet this demand. I am sure it will not cost very much, and that it would be fully appreciated by the people concerned, and is certainly well worthy of the consideration of the Government.
    Sir H. CRAIK: I wish to urge upon the Financial Secretary how little he would lose, how much he would gain, and what a large amount of benefit he would confer by accepting this Amendment. The numbers involved are not very large. The right hon. Gentleman's experience in the office which he has held with high benefit to Scotland has enabled him to know how long are the distances which have to be covered by clergymen in that country. It is often impossible for them to cover their parishes without some sort of vehicular help. There are two considerations that I would like the right hon. Gentleman to bear in mind. The first is that the scarcity of clergymen has been very much increased in some of the country districts by the fact that so many clergymen have been called upon to act as chaplains; in some cases they have actually enlisted in the Army and are now fighting abroad. These clergymen have left their duties to be carried out by their brethren living near. That enormously extends the district over which those who are left have to travel and makes it the more necessary for them to make use of mechanical means of conveyance. The other consideration is that in the old days these clergymen were in the habit of keeping a horse either for use with a gig or for riding. In many cases these horses were commandeered at the beginning of the War, and even where they were not commandeered the clergyman felt that he was really contributing to assist the Army by giving up his horse and taking to a motor car. These motor cars are generally of the humblest kind. They are used not for joy rides or for anything like that, but for business of the most necessary and most merciful kind. I hope, therefore, the right hon. Gentleman will accept the Amendment.
    Sir F. CAWLEY: I hope the right hon. Gentleman will not accept the Amendment. The position of clergymen is not at all comparable with that of doctors and veterinary surgeons. I do not know much about Scotland. I believe that there there are sometimes long distances to travel and there might be something in the proposal so far as Scotland is concerned, but I know that in England there are very few parishes more than two or three miles in diameter.
    Mr. MORTON: There are many in Yorkshire.
    Sir F. CAWLEY: The bulk of the parishes in England are not so large that the clergy require a motor car.
    Sir H. CRAIK: I know parishes 40 miles long.
    Sir F. CAWLEY: In Scotland. Doctors, on the other hand, have to travel seven, eight, or nine miles to visit patients, and veterinary surgeons have even longer distances to go. The two professions are not comparable at all. As to horses having been commandeered, it is true that many horses—both those belonging to clergymen and those belonging to farmers—were commandeered, but generally very fair and even very good prices were given for them. From my knowledge of horses, I know that those horses could be replaced today for much less than the price which the clergymen or farmers got for them. Therefore that argument does not hold. For these reasons I think the right hon. Gentleman would not be wise in accepting this Amendment just for the sake of a few parishes in Scotland where it might be an advantage.
    Mr. PETO: I desire to demolish the arguments put forward by the hon. Member opposite (Sir F. Cawley). He says that there are few parishes in England where any means of mechanical transport is necessary for ministers of religion. When I was unsuccessfully addressing the Committee on this question I quoted the case of the Roman Catholic. I want now to quote the case of the very opposite religious sect. I have had a letter from a gentleman in my Constituency, belonging to the sect of the Strict Baptists, and he says:
    "Happening to be one of those who conduct religious services every Sabbath in different towns and villages in Wiltshire, Berkshire and Oxfordshire, a motor cycle has become to me a necessity."
    The hon. Member for Nottingham, when this matter was last before the House,
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    rather ridiculed the whole proposal, and spoke of there being no need for expensive motor cars and no possibility of paying for them. Since it has been stated that it is only in the North of Scotland there are parishes where a motor cycle or something of the sort is necessary, I quote now a passage from a letter received by me from the extreme North of Ireland from a number of Presbyterian clergymen, including one or two Moderators of Assembly:
    "In order to reduce the excessive cost of travel, some have had to take to motor cycles to get round their pastoral work. In this they again contribute to the taxes a duty of £1 a year, and in the tax on petrol still further."
    Take another case in my own Constituency-that of a clergyman in the ordinary position of a clergyman of the Church of England in a large country parish. He writes:
    " My own case is typical. Three years ago I sold my horse and trap and gave £70 for a secondhand Ford. I have run it since some 23,000 miles, mostly on Red Cross work. The value of it on the market today is about £30."
    That shows the kind of conveyance dealt with by the Amendment. I notice that my right hon. and learned Friend deals also with the Petrol Tax, and asks for a remission in the case of clergymen of all denominations. I cannot conceive that the Secretary to the Treasury, who is new to his position, will wish to take up the cudgels in opposition to this proposal or that after having granted the remission to doctors and veterinary surgeons on the ground that their duties were in the relief of suffering, he will refuse the same concession to ministers of religion, who are not paid by the visit, and whose expenses are necessarily paid out of their own meagre stipends. Now that the proposal has the support of the right hon. and learned Member for Edinburgh and St. Andrews Universities, I hope that the Treasury will not be so mean as to attempt to defend the decision to shut ministers of religion out of the relief which they have already given to doctors.
    Mr. McKINNON WOOD: This is a matter which has been considerably discussed in Committee. I am bound to say, in spite of the persuasiveness of my hon. Friend who seconded the Amendment, and of the arguments of the hon. Member who spoke last, I cannot see why we should depart from our original intention.
    Sir R. FINLAY: The discussion in Committee was very much larger. This is

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    strictly confined to clergymen, who, for this purpose, are on as good a footing as veterinary surgeons and others.
    Mr. McKINNON WOOD: Of course, that well illustrates the difficulty. If you make an exception it is not because it is really an appropriate case—
    Mr. PETO: It is!
    Mr. McKINNON WOOD: But because you can find a few cases in which you can put forward a plausible argument; then you let in other large classes of exceptions. I think the fact that there were other cases included with the first Amendment is a very strong argument for not making this exception now. Let us look at the matter on its merits. It is not going to help the poor parson, I know, in England and Scotland; he cannot afford a motor car. If he has a motor cycle, what does he pay?—£l a year! We are not here dealing with increased taxation; we are only dealing with the old scale of duties. It is proposed to half exempt the class specified. The case of the £l a year motor cycle really is not worth raising exceptions for under the Act. As to the other cases, they are not cases applying to a whole class, but to a very small number of individuals Nearly all clergymen who can afford to run motor cars have private means; they are not objects of charity.
    Mr. WATT: Hear, hear!
    Mr. McKINNON WOOD: That is true. I do not, of course, make the suggested distinction between doctors and veterinary surgeons and clergy as to the value of their work, but I do make this distinction, and it is a very great distinction; in the case of a doctor or a veterinary surgeon you have a man whose professional business requires him to be constantly travelling. His work for the relief of suffering is his normal and typical work, but it is not the normal and typical work of the clergyman to be going about the country in motors—
    Mr. PETO: It is his profession.
    Mr. McKINNON WOOD: It is not his normal and typical work.
    Sir H. CRAIK: What is it, then?
    Mr. McKINNON WOOD: There are very few who do it.
    Mr. PETO: Make it more easy for them to do it, then!
    Mr. LUNDON: What is the duty of the clergyman?
    Mr. McKINNON WOOD: Hon. Members misinterpret what I said. What I meant was that it was not the normal work of clergymen, as a class, to travel by motor car. If they use motor cars or motor cycles, and we were to give the concession asked for, it would be making an exception for a very small number of people I do not think that a case has been made that clergymen, as a class, stand on anything like the same basis as the doctor, or the veterinary surgeon, or that any case of necessity has been made out to apply to any large proportion.
    9.0 P.M.
    Mr. CURRIE: I think what has fallen from the Financial Secretary rather opens the door to a halfway position on behalf of the Treasury. He suggests that there are very few clergymen who move about in motor cars, and that is perfectly true. As to those who do, I quite agree with him, that they are mostly man of private means. At the same time, there are a small number of men working country parishes on small stipends, and I rather understand the right hon. Gentleman to feel, at least, that if he could see his way to meet these poor men he would be disposed to do so. I would, there fore, ask him whether he could not modify the Bill so as to meet the case of the country clergymen who use small motor cars or motor cycles, and whose incomes are, say, less than £400 a year? I was rather surprised to hear the Financial Secretary say that there are very few men who use this means of locomotion. On the spur of the moment I could mention three or four ministers amongst my own friends who do no end of good work in country parishes simply because they have this kind of motorcycle. For men of this kind I think one is bound to feel sympathy. I appeal to the right hon. Gentleman to hold out some hope in this matter.
    Mr. LUNDON: It may be that in the North of England or in Scotland, or other parts of Great Britain, there are very few districts where any great number of clergymen have to travel any distance. But take the Catholic clergymen of the North and South of Ireland. There may be two parishes adjoining, and the priest who ministers to either parish may be called miles away from one to the other, it may be five or it may be ten miles

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    The result is that he has to find some means of locomotion to attend to the wants of his people.
    Sir F. CAWLEY: He can get a motor car or a motor cycle.
    Mr. LUNDON: I will come to that point in a moment. The Financial Secretary says that it is not their usual business to go amongst their people more than it is that of doctors or veterinary surgeons. I say they attend more to the suffering poor than any doctor or veterinary surgeon, because after all, the veterinary surgeon attends to the wants of animals, and, of course, we know what the doctor does, but the duties of a Catholic clergyman means that if anyone of his religious persuasion is in danger of dying and has to receive Extreme Unction, the priest has to get there by any means that he can. In cases of life or death, he has to attend his flock by night or by day, and this even if he is sick himself. Some of the younger clergymen in Ireland in parts of the country have stipends of £120 to £150 a year, and before the War broke out they kept horses for the purpose of getting from one parish to another. When the War broke out their horses were commandeered by the Government and they naturally had to give them up.
    Sir F. CAWLEY: Cannot they buy other horses now?
    Mr. LUNDON: No, they invested in cheap Ford motor cars. They have run them ever since, and you could not, even if the priest sold his motor car, which would not be worth a great deal now, get a horse as cheap now as at the beginning of the War.
    Sir F. CAWLEY: Not a highclass hunter, certainly!
    Mr. LUNDON: And the result of it all is that you are going to put a tax upon them.
    Mr. McKINNON WOODmade an observation which was inaudible in the Reporters' Gallery.
    Mr. LUNDON: We are only asking for a remission, which, of course, is a very different thing. All the same, I do think that a clergyman, whether Catholic or Protestant, ought not to be put on the same footing as a veterinary surgeon or doctor. One is doing as good a work, if not better in the eyes of some people, than the other. At least, I am speaking from the particular point of view of the
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    Catholic, and for my colleagues, when I say the Irish priest is far more deserving of the remission of this duty than either a veterinary surgeon or a doctor.
    Mr. O'DOWD: I appeal for clergymen of all denominations. I come from a rural district, and, as chairman of the county council of my native county, and as one who is entitled to speak here in the interests of clergymen of all denominations in my county of Sligo, I say a more hard worked class of gentlemen is not to be found than that of the clergymen, especially in the rural districts. As my hon. Friend has said, people here do not exactly know the conditions prevailing in Ireland. They do not know how clergymen have to go from one part of the country to the other in discharge of a sacred duty in attending the sick and the dead. I would place them on a higher plane, or at least as high a plane, in regard to the duties they have to perform day after day as I would the profession of doctors. It is all very fine to say that a poor clergyman, no matter what religious denomination he belongs to, can supply himself with a horse and car, but it is not easy for a poor clergyman living in a poor district in the country so to provide himself. The price is outside the sphere of his financial resources. If any consideration is to be given to physicians, veterinary surgeons, and others in regard to this particular matter, i would appeal to the Financial Secretary to the Treasury to include clergymen of all religious denominations in that consideration.
    Mr. REND ALL: The hon. Gentleman opposite suggested that there should be some limitation, if possible, with regard to the duty in the case of clergymen with incomes not over £400 a year. It would be an impossible distinction to draw, and one which would be extremely invidious. A man with £410 a year may have a large parish, very heavy parochial liabilities, and a large family, and he is not to have the advantage of which the hon. Member is in favour. You may have the bachelor parson, and we all know some pride themselves on that, with an income of £390 and a comparatively small parish, and yet he is to have this advantage given him.
    Mr. CURRIE: You could graduate the rate.
    Mr. RENDALL: You cannot graduate bachelors and married men, men with ten children and men with none, those with an expensive wife and those with no wife

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    at all. You cannot graduate these things. Human nature is extraordinarily diverse. The Bishop of London is a bachelor. Whether he has a car or not I am not aware, but I assume he requires one for his work. By the Amendment he is to be exempted. It seems to me an impossible arrangement. The vast majority of hardworking clergymen in England, I should say—I do not know much about Ireland, although I should have thought it ought to apply to Ireland—certainly those who have any sort of locomotion besides their own legs—and most of them do use their own legs for parish work—use horses and carriages, and there is no suggestion that licences on carriages should be decreased, and no suggestion that if the income is under £400 a year the clergyman is to be able to avoid that Licence Duty. Doctors are used by the whole population, except the few that are Christian Scientists—and I believe they require them in the end. But clergymen do not cater for much more than a half or, say, threequarters of the population, and to give preferential treat-
    ment to persons who happen to be exponents of various forms of faith is to raise, I think, questions of a most delicate nature, and certainly a nature which ought not to be raised on a Finance Bill, of all things. Then, as regards the argument as to the Irish priest who has bought a Ford motor car, I thought the hon. Member would have been able to give figures to convince us, and that he would have said how many priests there were in Ireland, how many had horses before the War, that so many now had Ford motor cars, that so many, owing to the War, had been compelled to make use of motor cars instead of horses, and that, therefore, this Amendment is necessary for their protection. He has not been able to give us the slightest solid facts, and there again, I think, that argument falls to the ground. I am very glad the Financial Secretary to the Treasury has decided not to accept this Amendment.
    Question put, "That those words be there inserted in the Bill."
    The House divided: Ayes, 37; Noes, 93.

    Division No. 33.]

    AYES.

    [9.13 p.m.

    Agg-Gardner, Sir James Tynte

    Hackett, John

    Peto, Basil Edward

    Banner, Sir John S. Harmood

    Hazleton, Richard

    Pollock, Ernest Murray

    Bathurst, Capt. C. (Wilts, Wilton)

    Henderson, John M. (Aberdeen, W.)

    Rawlinson, John Frederick Peel

    Beale, Sir William Phipson

    Kilbride, Denis

    Reddy, Michael

    Boland, John Pius

    Lundon, Thomas

    Salter, Arthur Clavell

    Boyton, James

    Meehan, Francis E. (Leitrim, N.)

    Samuel, Samuel (Wandsworth)

    Bryce, J. Annan

    Nolan, Joseph

    Scanlan, Thomas

    Byrne, Alfred

    O'Connor, T. P. (Liverpool)

    Walker, Colonel William Hall

    Craik, Sir Henry

    O'Dowd, John

    White, Patrick (Meath, North)

    Currie, George W.

    O'Neill, Dr. Charles (Armagh, S.)

    Whitty, Patrick Joseph

    Dillon, John

    O'Sullivan, Timothy

    Field, William

    Pennefather, De Fonblanque

    TELLERS FOR THE AYES.—Sir R. Finlay and Mr. Morton

    Guinness, Hon.w. E. (Bury S. Edmunds)

    Perkins, Walter Frank

    Gwynne, R. S. (Sussex, Eastbourne)

    NOES.

    Acland, Rt. Hon. Francis Dyke

    Fletcher, John Samuel

    M'Callum, Sir John M.

    Adamson, William

    Gilbert, J. D.

    Macdonald, J. Ramsay (Leicester)

    Agnew, Sir George William

    Goddard, Rt. Hon. Sir Daniel Ford

    McKenna, Rt. Hon. Reginald

    Anderson, W. C.

    Goldstone, Frank

    Macmaster, Donald

    Baker, Joseph Allen (Finsbury, E.)

    Greenwood, Sir G. G. (Peterborough)

    Mond, Rt. Hon. Sir Alfred

    Barnes, Rt. Hon. George N.

    Harmsworth, Cecll (Luton, Beds)

    Morgan, George Hay

    Barran, Rowland Hurst (Leeds, N.)

    Harvey, A. G. C. (Rochdale)

    Munro, Rt. Hon. Robert

    Benn, Arthur Shirley (Plymouth)

    Harvey, T. E. (Leeds, West)

    Newdegate, F. A.

    Bliss, Joseph

    Hewins, William Albert Samuel

    Pearce, Sir Robert (Staffs, Leek)

    Bowerman, Rt. Hon. C. W.

    Higham, John Sharp

    Pearce, Sir William (Limehouse)

    Brace, William

    Hinds, John

    Pease, Herbert Pike (Darlington)

    Brunner, John F. L.

    Hodge, John

    PryceJones, Colonel E.

    Byles, Sir William Pollard

    Hohler, Gerald Fitzroy

    Raffan, Peter Wilson

    Cautley, H. S.

    Hope, Harry (Bute)

    Rea, Walter Russell (Scarborough)

    Cawley, Sir Frederick (Prestwich)

    Horne, E.

    Rees, G. C. (Carnarvonshire, Arfon)

    Cornwall, Sir Edwin A.

    Howard, Hon. Geoffrey

    Rees, Sir J. D. (Nottingham, E.)

    Craig, Ernest (Cheshire, Crewe)

    Jacobsen, Thomas Owen

    Rendall, Athelstan

    Crooks, Rt. Hon. William

    Jones, Edgar (Merthyr Tydvll)

    Roberts, Charles H. (Lincoln)

    Davies, Ellis William (Eifion)

    Jones, Henry Haydn (Merioneth)

    Roberts, George H. (Norwich)

    Davies, Timothy (Lines., Louth)

    Jones, Leif (Notts, Rushcliffe)

    Robinson, Sidney

    Davies, Sir W. Howell (Bristol, S.)

    Jones, William S. Glyn-(Stepney)

    Samuel, J. (Stockton-on-Tees)

    Denniss, E. R. B.

    Jowett, Frederick William

    Scott, A. MacCallum (Glas., Bridgeton)

    Edge, Captain William

    King, Joseph

    Shortt, Edward

    Edwards, Sir Francis (Radnor)

    Lambert, Richard (Wilts, Cricklade)

    Smith, Sir Swire (Keighley, Yorks)

    Esslemont, George Birnie

    Levy, Sir Maurice

    Spear, Sir John Ward

    Fell, Arthur

    Lloyd, George Butler (Shrewsbury)

    Steel-Maitland, A. D.

    Flannery, Sir J. Fortescue

    Lowe, Sir F. W. (Birm., Edgbaston)

    Sykes, Col. Alan John (Ches., Knutsf'd)

    Talbot, Lord Edmund

    Watt, Henry A.

    Younger, Sir George

    Thorne, G. R. (Wolverhampton)

    Williams, Aneurln (Durham, N.W.)

    Yoxall, Sir James Henry

    Tickler, T. G.

    Wilson, W. T. (Westhoughton)

    Toulmin, Sir George

    Wing, Thomas Edward

    TELLERS FOR THE NOES.—Mr. Gulland and Mr. Bridgeman.

    Valentia, Viscount

    Wood, Rt. Hon. T. McKinnon (Glasgow)

    Amendments made:
    In Subsection (2) leave out the words "or the council by whom the licence is granted, by the production of such certificate as the Commissioners may approve."
    After the word "year" ["during any year being used exclusively "] insert the words "or any continuous part of a year, not being less than two months."
    Leave out the words "Government service," and insert instead thereof the words "ambulance or hospital work, or any other work undertaken by agreement with the Government in connection with any naval or military services."
    At the end of the Subsection add the words "or of a proportionate part of the duty."—[Mr. McKenna.]

    CLAUSE 13.—(Motor Spirit Licence Duty.)
    (1) In addition to any other duties imposed by law in respect to motor spirit, there shall be charged, levied, and paid 3n a licence to be taken out by any person who desires to be supplied with motor spirit a duty at the rate of sixpence for every gallon of motor spirit with which he is authorised to be supplied by the licence:
    Provided that—

    (a) Any person using motor spirit for purposes other than supplying motive power to a motor car or motor cycle or for supplying motive power to any motor car or motor cycle in respect of which duty is not payable under Section eighty-six of the Finance (1909–10) Act, 1910, shall be entitled, in accordance with Regulations made under this Section, to an allowance or repayment of the whole duty payable under this Section in respect of a licence authorising the supply of that motor spirit; and

    (b) Any duly qualified medical practitioner or registered veterinary surgeon using motor spirit for the purpose of supplying motive power to a motor car or motor cycle kept by him, while it is being used by him for the purposes of his profession, shall be entitled, in accordance with Regulations made under this Section, to an allowance or repay
    454
    ment of half the amount of duty payable under this Section in respect of a licence authorising the supply of that motor spirit.

    (2) A licence shall be in such form, and shall be issued in such manner and subject to such conditions as may be prescribed by Regulations made for the purposes of this Section by the Board of Trade, and the Regulations may provide for the use of different forms of licence according to the purpose for which the supply of motor spirit is required, and every licence shall specify the amount of motor spirit au thorised by the licence to be supplied to the holder.
    Regulations may provide for the surrender of any licence under this Section authorising the supply of motor spirit, and for any consequent repayment of duty.
    (3) Nothing in this Section or in any provisions supplemental to this Section shall apply to the supply of motor spirit to licensed dealers for the purpose of sale to customers.
    (4) In this Section, "motor spirit" has the same meaning as in Part VI. of the Finance (190910) Act, 1910.
    Amendments made:
    In Subsection (1), after the word "shall" ["there shall be charged'], insert the words "on and after the first day of August, nineteen hundred and sixteen."
    At the end of paragraph (a) insert the following paragraph:
    "(b) Any person who, under the preceding Section of this Act, has received repayment of Motorcar Licence Duty by reason of the use of his car during any period for any such purpose as therein mentioned shall be entitled, in accordance with regulations made under this Section, to an allowance or repayment of the duty payable under this Section in respect of the motor spirit used during that period; and"—[Mr. McKenna.]
    Sir R. FINLAY: I beg to move, in Subsection (1), paragraph (b), after the word "any" ["any duly qualified medical practitioner"], to insert the words "clergymen of any denomination." One argument used by the Financial Secretary in

    455
    regard to the last Amendment was that no increased duty was proposed as regards motor licences, but in this case that argument cannot be used. A return is to be made in respect of the proportion of the spirit used in the performance of his profession, and in these respects my Amendment differs from the previous Amendment. I hope the right hon. Gentleman will be able to accede to my proposal.
    Mr. MORTON: I desire to second this Amendment, and I trust the Government will be a little more liberal with regard to it. The Financial Secretary told the House that such an Amendment as this would be opening the door to something, but I cannot understand why the Government should refuse this concession. I agree that doctors and veterinary surgeons should have relief, but I cannot understand why it should not be extended in the way proposed by the Amendment. I hope that even at this late moment the right hon. Gentleman will do something, as by this time he has had an opportunity of fully considering the matter. I hope he will allow this Amendment to be made, which is not a very big thing. It would please the people of Scotland, especially—Scotland, which is bearing such a large amount of the expenses of the War—and I think there should be some consideration given to the Members from Scotland when they propose these Amendments. I admit that there are some parts of England, and, no doubt, parts of Ireland, where it would be welcomed; but in Scotland it is particularly wanted. We want to encourage the ministry to do their duty as much as possible and to give them means of locomotion of doing that duty to a greater number of people by affording them greater facilities for going amongst them where they live. The ministers of Scotland are most anxious to do their duty, and anxious to have accommodation allowed to them in order to get about, what are in some cases very large parishes. There are a. great many places where the minister has to travel more than twenty miles. Although I cannot get my right hon. Friend to do much in other directions, and in other parts of the country, I hope he will give this some consideration. I do not know whether he is going to reply himself, but I should like it to have his consideration. I should like him to tell the House plainly his opinion, and if not the Chancellor of the Exchequer, then the Financial Secretary to the Trea
    456
    sury, who has gone from us in Scotland, but I hope has not, deserted us. I hope he will still bear in mind where Scotland is and what a great country it is in the interests of the people of this United Kingdom. There are some Members who do not know where Sutherlandshire is, and others who have never seen it. I hope he will make this little allowance to enable us to give consolation to those people who are seeking for relief. I think it is only a fair thing for this Parliament to do.
    Mr. McKINNON WOOD: It is quite true, as my right hon. and learned Friend has said, that there is a difference. This is an increased duty upon petrol, but apart from that there is no difference between the two cases. I think I shall consult the wishes of the House if I give the same answer. I would like to impress upon the House the desirability of not making exceptions in matters of taxation unless you have really a substantial case. There seems to be some misapprehension about the necessity for this Amendment. What I want to say is that in the case of doctors, most of them have to use motor cars for the purpose of their profession; with clergymen that is a very exceptional case. There may be a few motor bicycles in Sutherlandshire, but I do not think that many clergymen in Sutherlandshire can afford to run motor cars. I do not think there is any case for making an exception in the case of motor cycles. It is only a small tax. It is only the highest orders of the clergy who can afford motor cars. There is no case for exemption with respect to them any more than for barristers or anyone else. In the case of large parishes it is a very exceptional thing for a clergyman to have a motor car, and they must have a more substantial case to justify exemption from the tax. The matter has been discussed and therefore I think it is unnecessary to go further, and I hope that the House will take up the same position.
    Mr. MORTON: Why do you make an exception in England for the Church of England?
    Amendment negatived.
    Mr. BOYTON: I beg to move, in Subsection (1), paragraph (b), at the end to insert the words:
    "Where a private motor car is hired, unless it shall be a hackney carriage, the hirer shall obtain the necessary permit."
    Mr. BOYTON: The jobmasters of the country, owing to the changed conditions, have had to adopt another business, and they have gone into the motor trade, and they are in the habit of letting out motor cars on hire for a considerable period mostly by the year, and this increase in the petrol tax will hit them very hard. Many of them contract to let out motor cars for four or five hundred a year to run for four, five, or six thousand miles. They have already cheerfully borne the increased petrol taxes, but this extra sixpence will hit them exceedingly hard, and I hope the Chancellor of the Exchequer will see his way to adopt my Amendment and give relief to the trade.
    The CHAIRMAN: It seems to me that this Amendment is imposing a charge or rather varies the charge upon certain persons.
    Mr. BOYTON: A permit will be granted to the user of the motor car, and I think that is the spirit of the alteration by the Chancellor of the Exchequer in the incidence of the taxation. Previously it would have been a case that the Licence Duty on the car would have been met by the hirer. I think that, in view of the increase of the amount of the taxes, the permit shall be issued.
    The CHAIRMAN: I am afraid it is imposing a charge, and it could not be done on the Report stage.
    Amendments made:
    At the end of Subsection (3) insert the words, " but those provisions shall apply to the appropriation of motor spirit by a supplier of motor spirit for purposes other than the supply to customers in the same manner as they apply to obtaining a supply of motor spirit." In Subsection (4), after the word " Section," insert the words "and in any provisions supplemental to this Section."—[Mr. McKenna.]

    CLAUSE 14.—(Supplemental Provisions as to Motor Spirit Licence Duty.)
    (1) A person shall not obtain or attempt to obtain a supply of motor spirit unless he is the holder of a licence for the time being in force under this Section, or in excess of the amount with which he is authorised to be supplied by the licence.
    (2) A person shall not supply motor spirit to a person unless he is the holder of a licence for the time being in force
    458
    under this Section, or in excess of the amount authorised to be supplied by the licence.
    (3) A person supplying motor spirit shall, in such manner as may be directed by Regulations made under the preceding Section of this Act, enter on the licence of the person supplied the name and address of the supplier, the amount sup plied, and the date on which it was supplied.
    (4) A person shall not use motor spirit with which he is authorised to be supplied for any special purpose by his licence for any other purpose.
    (5) If any person acts in contravention of or fails to comply with any provision of this Section or makes any entry on a licence which is false in any material particular or makes any statement which is false in any material particular for the purpose of obtaining a licence he shall be liable to an Excise penalty of one hundred pounds.
    Amendments made:
    In Subsection (1), after the word "not," insert the words "on or after the first day of August, nineteen hundred and sixteen."
    Leave out the words "this Section," and insert instead thereof the words "the preceding Section of this Act."
    In Subsection (2), after the word "not," insert the words "on or after the first day of August, nineteen hundred and sixteen."
    Leave out the words "unless he is," and insert instead thereof the words "who is not."
    Leave out the words "this Section," and insert instead thereof the words "the preceding Section of this Act."
    In Subsection (3), after the word "shall," insert the words "on and after the first day of August, nineteen hundred and sixteen."
    In Subsection (5), after the word "licence," insert the words "or allowance or repayment of duty."—[Mr. McKenna.]

    CLAUSE 24.—(Additional Income Tax on Securities which the Treasury are Willing to Purchase.)
    (1) In addition to any other Income Tax or Supertax charged under this or any other Act, there shall, subject to the provisions of this Section, be charged,

    459
    levied, and paid for the year beginning on the sixth day of April, nineteen hundred and sixteen, in respect of any part of the income of any person to which this Section applies an additional duty of Income Tax at the rate of two shillings for every pound of that part of the income.
    The income to which this Section applies is the income derived from securities which are for the time being included in the Treasury special list as denned by this Section, while those securities are so included; and the income shall, for the purposes of this Section, be deemed to be derived at the time when the interest or dividends payable in respect of the securities become payable.
    (2) The additional duty under this Section shall not be charged on any income derived before the first day of July, nineteen hundred and sixteen.
    (3) A person shall be entitled to relief from the additional duty imposed by this Section—

    (a) in respect of income derived between the date of the publication of the Treasury special list and a date twenty-eight days thereafter if the securities are during that period offered to the Treasury and ultimately become at the absolute disposal of the Treasury; and

    (b) in respect of income derived from any securities included in the Treasury special list after the securities have been placed at the absolute disposal of the Treasury; and

    (c) in respect of income derived from any such securities after a person has placed the securities conditionally at the disposal of the Treasury, if the securities ultimately become at the absolute disposal of the Treasury without unreasonable delay on the part of that person; and

    (d) in respect of income derived from any such securities which ultimately become at the absolute disposal of the Treasury, if it is shown to the satisfaction of the Treasury that any delay in placing those securities at the disposal of the Treasury has arisen from circumstances beyond the control of the holders of the securities; and

    (e) in respect of income derived from any such securities held, in any country outside the United King-
    460
    dom, by persons who are not domiciled in the United Kingdom, or by trustees who are prevented by the terms of their trust from placing the securities at the disposal of the Treasury, and are not entitled to the benefit of any indemnity conferred by Act of Parliament in respect of the contravention of those terms, if the securities were so held before the twenty-ninth day of May, nineteen hundred and sixteen; and

    (f) in respect of income derived from any such securities which are deposited with persons outside the United Kingdom as a security for a loan from those persons or have otherwise been made security for a loan from persons outside the United Kingdom, if they were so deposited or made security before the twenty-ninth day of May, nineten hundred and sixteen, or after that date with the approval of the Treasury, and if the Treasury are satisfied that the securities cannot be released without impairing the security for the loan; and

    (g) in respect of income derived from any such securities which are proved to the special Commissioners to be held by any company or persons concerned in trade or business in any country outside the United Kingdom as a condition (imposed in that country) of carrying on that trade or business.

    The provisions of this Subsection shall apply to an offer of securities for deposit in the same manner as they apply to an offer of securities for sale, and securities when accepted for deposit shall, while so deposited, for the purposes of this Subsection, be deemed to be at the absolute disposal of the Treasury.
    (4) The power under the Income Tax Acts to require a person to make returns for the purposes of those Acts shall, include power to require him to make such returns as appear to the Commissioners of Inland Revenue to be necessary for the purpose of ascertaining whether any of the income of that person (whether or not Income Tax thereon is chargeable by deduction) is income to which this Section applies, including such particulars as to that income as the Commissioners may require, and those Acts, including the provisions imposing penalties, shall apply accordingly.
    (5) Where any income to which this Section applies is derived from securities which are held on trust by more than one trustee the securities may be placed at the disposal of the Treasury if, where there are two trustees, one trustee and the persons entitled to the income of the securities, and, where there are more than two trustees, one-half or more of the number of the trustees and the persons entitled to the income of the securities, are willing that the securities should be so placed at the disposal of the Treasury; and any action taken by such trustees or beneficiaries for the purpose of placing any such securities at the disposal of the Treasury shall, notwithstanding anything in the terms of the trust or any rule of law to the contrary, be as valid and effectual in all respects as though all the trustees had consented thereto and had joined therein.
    (6) A person shall not be entitled to any exemption, abatement, or relief under the Income Tax Acts (other than relief depending solely on residence or domicile) in respect of the additional Income Tax imposed by this Section, but in all other respects the provisions of the Income Tax Acts relating to persons who are to be chargeable with duty, assessments, and appeals against those assessments, and to the collection and recovery of duty, and to cases to be stated for the opinion of the High Court shall, so far as they are applicable, apply to the charge, assessment, collection, and recovery of duty under this Section:
    Provided that the Treasury may give directions that the additional duty imposed by this Section shall, instead of being charged by deduction, be charged up to the same amount by direct assessment for the period, and in the cases mentioned in those directions, and where any such directions are given, the Income Tax Acts shall have effect accordingly.
    (7) In this Section—
    The expression "securities" includes stocks, shares, and other securities; and
    The expression " the Treasury special list" means any list published by the Treasury in the " Gazette," and for the time being in force, of securities which the Treasury are willing to purchase in connection with any arrangements for the regulation and maintenance of the foreign exchanges.
    Amendments made:
    In Sub-section (2) leave out the word "first" ["first day of July"], to insert instead thereof the word "twenty-ninth."
    In Subsection (3), paragraph (d), leave out the word "which" ["which ultimately become"] and insert instead thereof the words "whether they"; after the word "Treasury" ["disposal of the Treasury"] insert the words "or not"; after the word "placing" ["any delay in placing"] insert the words "or failure to place."—[Mr. McKenna.]
    Mr. BRADY: I beg to move, in Subsection (3), paragraph (e), after the word "trustees" ["or by Trustees"], to insert the words "or guardians."
    This Amendment is proposed in order to deal with the case where there is a guardian in this country dealing with property outside the United Kingdom, and who is precluded by the law obtaining in that country from either selling or lending securities to the Treasury. I hope the right hon. Gentleman will not object to this.
    Mr. POLLOCK: I beg to second the Amendment.
    Mr. McKENNA: In dealing with the three Amendments on the Paper in the name of the hon. Member for St. Stephens' Green (Mr. Brady) I would like to say with regard to the first he has just moved that I think it is quite unnecessary, as any guardians who are in a position to place securities at the disposal of the Treasury must be trustees. With regard to his other Amendments, however, I am prepared to accept them, but I hope he will not press the first as it will only add verbiage to the Clause.
    Mr. BRADY: In view of the right hon. Gentleman's statement, I do not propose to press the Amendment, but I shall have a word or two to say on the further Amendment.
    Amendment, by leave, withdrawn.
    Mr. BRADY: I beg formally to move, in Subsection (3), paragraph (e), after the word "sixteen" ["nineteen hundred and sixteen"], to insert the words "or where such securities are under the jurisdiction of a Court in such other country and it would be contrary to the laws of such other country to place such security at the disposal of the Treasury."
    I move this because, in a subsequent Amendment, the right hon. Gentleman

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    leaves out the words which occur in my Amendment—"or where such securities are under the jurisdiction of a Court in such other country."
    Mr. McKENNA: That is a later Amendment. The hon. Member has another Amendment—In paragraph (e) after the word "the" ["are prevented by the"] to insert the words " laws of such other country or by the."
    Mr. POLLOCK: That is accepted.
    Mr. BRADY: If that be so I am quite satisfied, and I Beg to move the Amendment to which the Chancellor of the Exchequer has referred.
    Amendment agreed to.
    Mr. McKENNA: In view of the Amendment we have just accepted I do not need my next Amendment, but I move, in Subsection (3), paragraph (e), to leave out the words "of those terms'" ["contravention of those terms"], and to insert instead thereof the word "thereof."
    Mr. BRADY: On a point of Order. I want to cover my Amendment—at the end of paragraph (e) to insert the words "or where such securities are under the jurisdiction of a Court," etc., which I read previously. I am very anxious that these words should be retained, inasmuch as it is possible that investments may not be contrary to the law of the other country, but still a Court of Jurisdiction in the other country might forbid investment in the United Kingdom, or a loan to this country.
    Mr. McKENNA: I do not move my next Amendment, then, and the hon. Gentleman's Amendment will come on
    Sir G. YOUNGER: I would like to ask how the matter stands. The laws of the country are talked about—
    Mr. DEPUTYSPEAKER: There is no Amendment before the House.
    Sir G. YOUNGER: I beg to move the Chancellor of the Exchequer's Amendment, then, in order to ask the question. I move the Amendment: Subsection (3), paragraph (e), to leave out the words, "from placing the securities at the disposal of the Treasury," and to insert instead thereof the words "or by the laws of the country from investing money in securities outside the country."
    I wish to ask the right hon. Gentleman whether he has now provided
    464
    for the case of, say, insurance investments in America which are not met connection with the demand that the law makes, of course, that a certain amount of the securities shall be deposited by any particular company of that kind in the States as a guarantee of financial stability, and of that sort of thing. Has the right hon. Gentleman provided for the case where considerable quantities of these securities are held for the purpose of increasing the credit of the Government securities which are now compelled to be left where they are, and not only that, but where the vast profits made during the War by the insurance companies in this country are prevented from being sent home? An official who, I think, is called a superintendent, has not only laid an embargo on the shares, but also on the profits of the company, and has prevented them being sent home. It is very doubtful whether this particular official is able to do that. I am told he is not, but it is easily seen that any company with a huge trade in the United States cannot afford to overlook the order of this man who could make it pretty hot for them, and as a matter of fact they cannot bring it home.
    Mr. POLLOCK: I want to ask the Chancellor of the Exchequer whether he does not think that the effect of only accepting the words of the hon. Member for St. Stephen's Green (Mr. Brady) is important? His draftsman drew the words in line eighteen, "or by the laws of the country from investing money in securities outside the country." As the Clause will now read with the Amendment of the hon. Member from St. Stephen's Green, it will read in this way: "In respect of income derived from any such securities held in any country outside the United Kingdom by persons who are not domiciled in the United Kingdom, or by trustees who are prevented by the laws of such other country or by the terms of their trust from placing the securities at the disposal of the Treasury." So that the only laws referred to are laws which prevent the trust from placing the securities at the disposal of the Treasury and no more. If the draftsman thought it was also important that the laws referred to should relate to investing securities outside the country, I am inclined to think that in accepting the shorter Amendment the right hon. Gentleman is confining the laws to laws which prevent the trust from placing securities at the disposal of the Treasury, and if the draftsman thought those

    465
    other words necessary I suggest the right hon. Gentleman ought to move an Amendment to the Amendment of the hon. Member of St. Stephen's Green, and to put in those words "or investing money in securities outside the country." I do not know, but I think we ought not by incaution to allow those words to slip out, as they have been thought to be necessary, and to make it relate only to laws which relate to the actual terms of the trust.
    Mr. McKENNA: I should have said—
    Mr. DEPUTY-SPEAKER: I have not put the Question, and I will just point out, on the hon. and learned Member's point, that the Amendment which I am now going to put, standing on the Paper in the name of the Chancellor of the Exchequer, but which has been moved by the hon. Member for Ayr Burghs (Sir G. Younger), is in two parts: to leave out something and to insert something else. It is competent for the House, of course, if it pleases, to insert words without leaving out the earlier words. I mention that because it may meet the point. I now put the Amendment.
    Mr. McKENNA: I did not move this Amendment myself because, having already accepted the Amendment of the hon. Member for St. Stephen s Green, it will not be necessary to insert these words as well. For my own part, I think that the draftsman's words, which stood in my name, were more apt for the purpose. I understood that we had endeavoured to explain to the hon. Member for St. Stephen's Green that we thought so, but as his words are also apt for the purpose, although not so apt, we did not wish to waste the time of the House in a long discussion over a matter upon which we were agreed in principle. The draftsman's words, as I read them, state explicitly what we propose to do. The words of the hon. Member state the means by which you come to get at your conclusion. The draftsman's words were "or by the laws of the country from investing money in securities outside the country." The words we have inserted say "by the laws of such other country are prevented from placing the securities at the disposal of the Treasury." They could not place them at the disposal of the Treasury unless they did invest them in securities of the other country.
    Sir G. YOUNGER: What becomes of my point, which is that it is not necessarily done by law?
    Mr. McKENNA: I do not take the point.
    Sir G. YOUNGER: The point I take is that the official in the United States who has entire control of this question has absolutely laid an embargo on insurance companies.
    Mr. McKENNA: He does it under law.
    Sir G. YOUNGER: That is just the point. We say it is illegal.
    Mr. McKENNA: Somebody thinks he makes an illegal order, but he has authority to make the order. He only has it under law. It is not an arbitrary act.
    Sir G. YOUNGER: Yes, it is.
    Mr. McKENNA: The person injured may think so, but so long as the official's action is not upset by the due authority of law, he is acting under the law.
    Sir G. YOUNGER: The point is that we do not want you to double the injury done by the superintendent or whoever he is over there. There is no reason why a man should be injured by his own Chancellor of the Exchequer.
    Mr. POLLOCK: May I point out to the Chancellor of the Exchequer why the leaving out of these words has become unnecessary? It is a very confused matter. If he now leaves out the words
    "from placing the securities at the disposal of the Treasury"
    the way in which this Clause, so amended, would read is
    "who are not domiciled in the United Kingdom, or by trustees who are prevented by the laws of such other country or by the terms of their trust"
    are not entitled to the benefit. The Clause will not read if you leave out these words now.
    Mr. McKENNA: That is so. This Amendment cannot be accepted. I did not move it because it would make nonsense of the Clause. I know that the hon. Baronet (Sir G. Younger) only moved it in order to raise a question. I do not think the Amendment in the form moved by the hon. Member for St. Stephen's Green will do any harm. His words will carry out his purpose, but they are not so good as the words we placed on the Paper with the same object.
    Mr. CURRIE: I would ask the Chancellor to explain whether the point raised by the hon. Baronet (Sir G. Younger) is really met. There is no doubt that people are placed in such a position that, although they may be full of anxiety to do what the Chancellor of the Exchequer wants them to do, they cannot do it. It is no answer to say that somebody in America has done something which six months later may be found in some American Court to be illegal. It would be inequitable to the last degree that people so placed should not be relieved temporarily by the Chancellor of the Exchequer. I hope he sees that, and will promise to give the relief. It is a most just request.
    Sir G. YOUNGER: I ask leave to withdraw the Amendment, although I have not had the least satisfaction from the right hon. Gentleman. It is very unfortunate he does not give me the satisfaction that, wherever people are absolutely estopped he should insert words to relieve them.
    Mr. McKENNA: I believe they are relieved by the Bill.
    Sir G. YOUNGER: They are not. Amendment, by leave, withdrawn.
    Mr. BRADY: I beg to move, in Subsection (3), paragraph (e), after the word "sixteen" [" twenty ninth day of May, nineteen hundred and sixteen"], to insert the words " or where such securities are under the jurisdiction of a Court in such other country and it would be contrary to the laws of such other country to place such securities at the disposal of the Treasury."
    I propose this Amendment to meet the case of securities which are under the jurisdiction of a Court in another country. I know of a case where there are children resident in the United Kingdom who are in the enjoyment of an income derived from securities in America. Their guardian or trustee, however anxious he may be to do so, is unable to sell those securities or transfer them to the Treasury by reason of the law of the United States or by reason of the jurisdiction of the Court over the minors' property.
    Mr. McKENNA: This is agreed. Amendment agreed to.
    Sir F. BANBURY: I beg to move, to leave out Subsection (7).
    468
    I am sorry that this Amendment is not on the Paper, but it is such a simple one that everybody can understand it. The Subsection says:
    "The expression 'the Treasury's special list' means any list published by the Treasury in the 'Gazette.'"
    Nobody ever looks at the "Gazette." I do not know how many people in this House have ever seen it. I have never seen the "Gazette," and I never look at it. It will be impossible for people, upon whom this penal Clause may fall, to be continually looking in the "Gazette" to see whether or not their securities are included. I know there are certain lists published in the papers, but they vary almost every day. One day certain securities will be included, and another day they will be omitted. It is expecting too much of the holders of these securities to ask that they shall spend their lives in looking through all the daily papers to search for a "Gazette." I myself do not know where to get the "Gazette." I suppose I can buy one, but I have never seen it in a club or any other place. I would suggest to the right hon. Gentleman that he should—I do not know whether he can do it now—publish the list once a month in a paper which people read—[HON. MEMBERS: "The 'Daily Mail'?"]—in the "Daily News" for all I care—which can be obtained at a bookstall and on a given day, so that people should know on the first of each month that they must look to see whether or not their securities are included in the list. As the Bill stands now, it is quite a chance that a person living in a county town and looking at only one or two papers will see the lists in which his securities are published. It is a very simple request. It is one that ought to be received with consideration by the right hon. Gentleman. I move the Amendment in order to obtain a discussion upon it.
    Mr. McKENNA: I am the more astonished that so great a financial authority as my right hon. Friend, or the Member for the City of London, should be unaware of the functions of the "Gazette."
    Sir F. BANBURY: I said I had never seen it.
    Mr. McKENNA: That is amazing to me that the Member for the City of London and a great financial authority should be unaware of the functions of the "Gazette."
    Sir F. BANBURY: I said nothing about its functions. I said I never saw it.
    Mr. McKENNA: The right hon. Baronet's speech was entirely inconsistent with knowledge of the functions of the "Gazette." All official publications are made through the "Gazette." If the right hon. Baronet does not see it, newspaper proprietors, editors, and those concerned in informing the public of the events of the day invariably see the "Gazette." Of course, we have to have a statutory record of the official list. In Committee I undertook to publish regularly through the Press not only those future lists which we should issue, but also the lists which we have already issued, so that we should be quite sure of bringing home to the public the whole list of the securities.
    Mr. J. SAMUEL: The right hon. Baronet wants to make the "Daily News " the official medium.
    Mr. McKENNA: I am not astonished at his moving the Amendment, but at his not knowing anything about the "Gazette."
    Mr. WATT: It is extraordinary!
    Mr. McKENNA: He seems to argue as if our primary object were to get revenue, while it is really to get the securities, and therefore publicity is our object. His whole argument is quite inconsistent with everything he has said about the tax. I hope the right hon. Baronet, who has no greater desire for publicity in the matter than I have, will not press his Amendment further.
    Mr. MACMASTER: It is all very well to make amusing remarks, but I understand the "Gazette" costs 1s. I have only seen two or three copies of it in the whole of my life, and I can quite understand that the right hon. Baronet does not see it. People do not look at the "Gazette" for a list of these securities. I suppose the Government has to have some official medium, and naturally that is the official "Gazette." But they should have something more, so that all holders of these securities may see the list through the ordinary means of communication—not a separate list one day and another list another day, but at the outset when this comes into operation there should be published a complete list up to date through the ordinary means of communicating information to the public, namely,
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    through the ordinary daily Press. Very few people will ever see the "Gazette," but what those who hold the securities wish to know is what they are bound to respond to in consequence of the legislation to which we are giving effect. Surely that publication should be of the clearest possible character, and should be communicated to the public generally, 90 per cent, of whom never see the "Gazette." Sir G. YOUNGER: Whether the right hon. Gentleman ought to publish this list more widely than in the London "Gazette " I am not prepared to say, but I was really surprised to hear what he said about that paper. Does he know that where, under the law, notices are required to be given by a limited company, they expressly take power in their articles of association only to publish them in either the London or the Edinburgh "Gazette," because they know that no shareholder will ever see them? They are buried in impenetrable darkness when published in these papers.
    10.0P.M.
    Sir J. D. REES: Is it not the case that everyone is presumed to see the "Gazette" and know what is published in it? I believe the rule that ignorance of the law excuses no one applies also to publications in the "Gazette."
    Sir F. BANBURY: I should be quite willing to withdraw the Amendment. I only brought it forward in order to endeavour to obtain an assurance that this will be published in some other paper than the "Gazette," and should be published at fixed intervals so that people should not be continually looking for it. I plead guilty to having never seen the "Gazette."
    Amendment, by leave, withdrawn.

    CLAUSE 2.—(Right of Soldiers and Sailors to Pay Reduced Bates of Income Tax in Respect of their Fay.)
    (1) Where any person who, during the current Income Tax year, has served or is serving as a member of any of the naval or military forces of the Crown, or in service of a naval or military character in connection with the present War for which payment is made out of money provided by Parliament, or in any work abroad of the British Bed Cross Society or the St. John Ambulance Association, or any other body with similar objects, proves that he is assessed or charged to Income

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    Tax, or has paid Income Tax either by way of deduction or otherwise on his pay in connection with any such service, he shall be entitled to claim such relief from Income Tax as will reduce the amount of Income Tax on that pay to the amount which would have been payable if the tax were charged on that pay at the rate of—

    9d. if his total income from all sources does not exceed three hundred pounds; 1s. 3d. if his total income exceeds three hundred pounds and does not exceed five hundred pounds;

    1s. 9d. if his total income exceeds five hundred pounds and does not exceed one thousand pounds;

    1s. 3d. if his total income exceeds one thousand pounds and does not exceed one thousand five hundred pounds;

    2s. 9d. if his total income exceeds one thousand five hundred pounds and does not exceed two thousand pounds;

    3s. 3d. if his total income exceeds two thousand pounds and does not exceed two thousand five hundred pounds;

    3s. 6d. if his total income exceeds two thousand five hundred pounds.

    (2) The relief given under this Section shall be in addition to and not in derogation of any exemption or other relief or abatement under the Income Tax Acts and in cases where the total income does not exceed three hundred pounds shall not be subject to the reduction of exemption and abatements for which provision is made under the Finance (No. 2) Act, 1915; but relief in respect of earned income shall be given in respect of the pay by reference to the rates under this Section; and in calculating any earned income on which relief is to be given, any deductions from earned income made under Subsection (2) of Section nineteen of the Finance Act, 1907, shall be made primarily from the pay.
    Mr. PETO: I beg to move, in Subsection (1), to leave out "3d." [1s. 3d. if his total income"].
    This is one of a series of Amendments the effect of which will be to reduce the Schedule in this Clause of the rates of Income Tax on officers' pay on the middle five items of the Schedule in each case by the sum of 3d. When the question of a further remission of Income Tax on officers' pay came up in Committee a few minutes before eleven o'clock in an almost empty House, I pleaded with the Chancellor of the Exchequer to report
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    Progress, so that this important matter might be discussed before a more reasonable number of members of the Committee. The right hon. Gentleman, while refusing the Amendment I then moved, which was to extend the partial remission of Income Tax which has been granted in the Finance Bill of 1915 to persons serving in the naval and military forces of the Crown whose total income from all sources was less than £300 a year to other people who were not entitled to claim any remission because they have a larger income-in fact, to make it general—told us that he was going to propose an alteration in what was then the proposal of the Government, which was in the case of officers with a larger income than £300 a year to leave them to pay the Income Tax on the scale imposed by the last 1915 Act instead of the increased rate under the present Bill. He read out this Schedule to an almost empty House in Committee, and I naturally, while expressing no enthusiasm for the offer of the Treasury, had by force majeure to to accept with what gratitude I could show this very partial remission. When we obtained from the Treasury the concession in respect of those who had an income of less than £300 a year from all sources, it was upon a definite principle that they should pay the rate that was in force before the declaration of hostilities—that is, that they should pay at the prewar rate, or peace rate of Income Tax. That seemed to me to be a concession which was based upon the definite principle, which I could enunciate in a single phrase, that it is not fair to ask people to fight and to pay for fighting as well, and that the great increase in direct taxation necessary to defray the cost of the War should come from the civilian population and not out of the pockets of the officers. Under this proposal, which is now incorporated in this Clause as apiended in Committee, the earlier part of the Schedule is not based upon any principle at all and therefore I merely ask the right hon. Gentleman to make it a reasonable and a simple Schedule. I naturally ask why this 3d. is added in every case. Instead of a plain 1s. and 1s. 6d. and so forth, why is it 1s. 3d., 1s. 9d., 2s. 3d., 2s. 9d. and 3s. 3d.? The obvious suggestion occurred to me that there was a little bit put on from which the right hon Gentleman would have been quite prepared to give way if he had seen any general feeling in the

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    Committee that thre was not substantial justice in the proposal that he made. I would point out that in respect of the first two items, the 9d. and the 1s. 3d. which are the subject of the Amendment I am moving, there is a jump of 6d., although in income there is only a jump of £200 a year. If an officer or any person in the service of the Crown has a total income that does not exceed £300 he pays at the rate of 9d., but if he has £310 he pays at the rate of 1s. 3d. At the other end of the scale there is a tax of 3s. 3d. if the total income exceeds £2,000 and does not exceed £2,500, and then there is a jump of only 3d. if the total income is £10,000, or any other sum. That, again, confirms my impression that the Chancellor of the Exchequer should be quite prepared to accept the very reasonable Amendment I put forward. I did not have any opportunity of considering the scale which the Chancellor of the Exchequer read out in Committee, and I am sure on seeing it now in print it will be obvious to all hon. Members that it will be a very much more reasonable scale if we reduce it by 3d., as I propose.
    Mr. POLLOCK: I desire to second this Amendment. I have made some sort of calculation, and it appears to me that the amount of revenue which the Chancellor of the Exchequer would lose under this altered scale is very small. If the threepences had to be paid on about £1,500,000 the total loss would be £20,000, and no more. If they had to be paid on less, as probably they would be, the loss would be something between £10,000 and £12,000. Therefore, from the Chancellor of the Exchequer's point of view, this is simply a matter of pounds, shillings, and pence in the Treasury. There cannot be any matter of principle between 1s. and 1s, 3d., or between 1s. 6d. and 1s. 9d. It is purely a question of how much the right hon. Gentleman would lose on this new Schedule. If the amount is very small, might we not offer a further concession to the persons who are affected under this Section? It is almost an infinitesimal sum for the country, but to an officer with a small income, and to many a small home, it means a good deal. One more point has to be remembered. When we are dealing with our soldiers and sailors at the present time we must remember that we are relying now, not upon the men who have been always soldiers and sailors, but upon a rather different class. In the old days before the War, there was some sort
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    of presumption that when a man became an officer as a soldier or a sailor he had some sort of resources of his own. We have now got the services of a great number of professional men who are, certainly in their civil circumstances, very poorly off, and who find the difficulties of their situation in the Army or the Navy somewhat extreme. Therefore, we really ought to try to palliate for these men, where we possibly can, the difficulties under which they suffer. We should remember that when we are talking of officers now we are talking of barristers, architects, and men in all sorts of humble spheres, where they have not got large incomes. Under these circumstances I think we should try to meet them in every possible way. If the Chancellor of the Exchequer tells us that there is very little money one way or the other in this proposal, I hope he will make a concession which I am sure will be very gratefully received by those to whom a small concession on Income Tax is of great value.
    Mr. McKENNA: Usually I receive such fair treatment from all quarters of the House in dealing with the Finance Bill that it is quite by exception that I have to say that I do not think the hon. Member for Devizes (Mr. Peto) is treating me quite fairly. If we go back to the history of this Clause I think even he will agree that his argument this evening was not justified. In the last year's Budget we had, I will not say a fight, but a considerable amount of disagreement on the subject of the proper rate to be allowed in respect of Income Tax for officers. At a late hour of the evening, after a protracted Debate we came to an agreement. I accepted the major part of an Amendment which was then moved, and inserted a provision in last year's Bill, limiting the amount of Income Tax to 9d. in those cases in which the total income from all sources does not exceed £300. Last year that was accepted by the whole House as a settlement. This year, when I introduced the new Budget, I left that settlement untouched. Although the Income Tax is increased for all other persons, I left it in the Bill introduced this year on the footing at which it had been left by the settlement made in the last year's Budget. When I examined, however, what the settlement meant in the incidence of the tax I found that between an income of £300 and £500 there was a great jump. The rate of tax under £300 was 9d., in

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    accordance with the settlement, but between £300 and £500, if my recollection serves me, the rate was no less than 2s. 1d. There was a jump of from 9d. to 2s. 1d. in the case of incomes between £300 and £500. Thereupon, I proposed in Committee to make a further concession and graduated the scale. Instead of charging 2s. 1d. on incomes between £300 and £500 I reduced the rate to 1s. 3d., and then graduated it up by steps of 6d. and 3d. in the last case, until it reached the year's maximum of 3s. 6d. Now this very concession is used as an argument against me. Because I have given something away on last year's settlement it is said that I am not acting on any principle and that I might as well give away a further 3d. I do not think that is treating me fairly. I think we have gone a very long way. There is considerable argument to be made against the concession being given at all. The hon. Member (Mr. Peto) says that it is an understandable principle that the man who fights shall not pay any more Income Tax than he does in peace. Is that his Amendment?
    Mr. PETO: It was my Amendment.
    Mr. McKENNA: Not at all.
    Mr. PETO: It was my Amendment in Committee.
    Mr. McKENNA: Does the man who fights only get the relief? Not at all. The person who gets relief is
    "any person … who has served or is serving as a member of any of the naval or military forces of the Crown."
    What proportion of the naval or military forces of the Crown fight? That is not all. The Clause goes on to say
    "or in service of a naval or military character in connection with the present War."
    What proportion of persons in service of a naval or military character fight? It is not really on any principle such as the hon. Member advocates that his Amendment is founded. I do put it to the Committee that this matter having been fought out last year, and having agreed to reduce to the prewar Income Tax on earned income in respect of incomes up to £300 a year, and not having increased the rate on persons serving in the naval or military forces of the Crown in the present year, but on the contrary having graduated down that rate so as to put it on easy
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    stages, that we should leave the settlement where it now stands and not make any further alteration.
    Captain BATHURST: I have no knowledge except from what the right hon. Gentleman has said of the arrangement that was come to a year ago.
    Mr. PETO: There was none.
    Captain BATHURST: Because I was not then attending the House of Commons. But I have had for the last twelve months very considerable experience of the sort of man who during the last twelve or fifteen months has been made an officer in His Majesty's Army, and I want to speak for an entirely different class of men from that to which my hon. and learned Friend referred. During this period a very large proportion of the men who received promotion to the rank of captain in His Majesty's Army were men who had previously been regimental sergeant-majors, colour-sergeants or other men whose promotion has been from the ranks, and what I want to point out is the very great difficulty in which many of those men have found themselves. First of all they have to incur expense to which they are wholly unused, and they have no private income to meet it. I refer to men in receipt of from £330 to £360 a year, entirely as Army pay. They have to live lives at a much higher standard than they lived before. To my mind very properly, and in order to keep up appearances, which they have to do very often with very great difficulty to themselves, they have to place their wives and families in a better position before they go overseas than they were in before, when they occupied a different social rank. Those men require consideration, especially in view of the fact that the cost of living has gone up considerably during the last twelve months. I have had some pathetic appeals made to me while I have been staff officer at headquarters of the southern command, by the wives of men serving overseas, who find themselves in just that position, with an income received from their husbands who have recently been promoted from the ranks to the rank of captain. These are the people for whom consideration is required.
    Mr. McKENNA: We have shown it.
    Captain BATHURST: I have no sympathy with any other of these Amendments, but you suggest by this Clause

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    that it is right to make an increase of 66 per cent, in the taxation of a man who derives his income wholly from his pay when that pay is over £300, as compared with the taxation which is imposed upon him if he receives from that source less than £300. In the interests of that class I desire to support this Amendment.
    Amendment negatived.
    Mr. PETO: I beg to move, in Subsection (2), to leave out the words, "in cases where the total income does not exceed three hundred pounds."
    The effect of these words is to limit the concession with regard to abatements from income to the case of those men whose income from all sources is under £300. Therefore the argument of the hon. Member for Wilton (Captain Bathurst) will be particularly appropriate to this Amendment. The Chancellor of the Exchequer made what he called a settlement. I do not admit that there was a settlement at all, because Parliament protested with regard to men whose incomes were between £300 and £400 a year, and whose cases, where they had families to support, were harder than any others. We said that these cases deserved the same consideration as men with incomes under £300 a year. The Chancellor of the Exchequer limits the abatement to men with incomes under £300 a year. The exact effect of that is that the abatements which were reduced in the Finance Act (No. 2), 1915, makes abatements only in respect of £120, as against £160, which are allowed to those who have the smaller income. If the Act of 1898 was right in principle in prewar days, giving an abatement of from £160 to £70 on incomes varying from £400 to £700, I cannot see why that is not done under the Schedule which the Chancellor of the Exchequer has now introduced. On the Amendment which I proposed in Committee, it was clearly appropriate, because we suggested similar treatment for persons in respect of their pay, no matter what their income was; but it is graduated now, and I do not see any reason for the abrupt refusal of the abatement which was in force before the War, in fact, before the Finance Act of 1915. What is the reason for this abrupt refusal of that abatement in respect of any whose income is beyond £300 a year? I ask the Chancellor of the Exchequer, now that he has recognised that something must be done in respect of the pay of all persons who are in the service of the
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    Crown, to leave the amount of abatement where it stood before the Finance Act of 1915, and to leave this particular Subsection exactly as it stood in Clause 25 of the Finance Act (No. 2), 1915, and not withhold from those with incomes between £300 and £400 a year the abatement to which they would have been entitled but for the Clause passed in the Finance Act of 1915, Section 21, which limited the abatement for incomes that did not exceed £400 to £120.
    Mr. McKENNA: I could not quite gather from the hon. Gentleman's speech whether he appreciates either the effect of the Clause or of his Amendment. The effect of the Clause as it stands now is that officers and persons serving in the naval and military forces whose total income is less than £300 a year are entitled to a reduction for the purpose of Income Tax of £160. Persons whose income are over £300 come under the ordinary law, and would only be entitled to a reduction of £120 instead of £160. That alteration having been made by the Act of last year, the whole of the persons receiving incomes between £300 and £500 a year would be entitled to the same reduction as any other taxpayer, the difference between them and the position of the other taxpayers being that they pay Income Tax at the rate of 1s. 3d. instead of at the rate, I think, of 2s. 3d.—I am not sure—or 2s. 6d. What the hon. Gentleman complains of is a want of logic in the better treatment we have given to persons with incomes of less than £300, who are now better off than other persons, not only by the fact that they pay a smaller Income Tax, but are also allowed an abatement of £160 instead of £120. That was the arrangement, I call it "settlement," although the hon. Gentleman objects to that, but it was agreed to by the great majority of the House, and the hon. Gentleman, who intended to force a Division, had to abandon his intention. I may say with regard to this, as to the other point, that I hope the House will not reopen the question.
    Mr. POLLOCK: I desire to support the Amendment for this purpose: There are two unfortunate features in discussing this Clause. The first is that on Report, owing to our procedure, we cannot discuss its effect as a whole, but have to consider the immediate effect of each Amendment, and dealing with it piecemeal is not satisfactory. The other feature which is unfortunate is this: I hope the Chancellor

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    does not suppose that in any quarter of the House there is any desire to increase his difficulties or not to realise that throughout the whole of this Bill he has done his very best to meet a number of Amendments which have been proposed, to meet objections which have been fairly put forward and which, I venture to say on behalf of myself and a great number of others, have been most fairly and even generously met by the Chancellor. I hope he will not think that in discussing this Amendment we are in any way tilting either at the way in which he has dealt with the Bill or met those who moved the Amendments, and I hope that he will give the same appreciative and generous consideration to these Amendment and to this Clause as a whole, which he has given to other portions of the Bill. The object with which these Amendments have been put down is to increase the exemption which is given to officers, and I say officers because it is really officers who come within the ambit of this scale of charges on £300 or over £300. I think the House as a whole is inclined to treat those men generously, and I am quite sure the Chancellor of the Exchequer appreciates what my hon. and gallant Friend (Captain Bathurst) has said about the officers who have come under his personal control from the point of view of income. If one could treat all those questions as a whole it would be very easy to say what one wants to do to meet hard cases and to increase the exemptions to officers with small incomes. That is the purpose. The object of the Amendment is to cut out what apparently is a limitation and what I understand from my reading of the Income Tax Acts is a limitation, because you only give this particular concession in the case where the total income does not exceed £300. There are concessions which are given under the Clause which I quite acknowledge. We want to increase the number of cases which fall under this more fortunate scale. There is another Amendment later on designed for the same purpose. If the Chancellor of the Exchequer says, "I cannot do anything more, even to the extent of £5, £10, or £20," there is an end of it, we cannot press the matter further. But the real object we have is to try to improve the position of officers who deserve recognition. I am not talking merely of men who are fighting, or any
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    thing of that sort. I have cases where men have come from civil employment and undertaken naval or military duties with responsibilities to which they find themselves ill-matched, having regard to the scale of pay given. I think the whole question from the point of view of the Chancellor of the Exchequer is, "How much shall I lose?" If he loses very little he may make some concession. If it is a question of merely £20,000 or £30,000 I think the money would be well distributed by a further exemption. If it is a very large sum, we are all quite reasonable, and we know the country cannot afford it. But so long as it is a small sum, I hope the Chancellor of the Exchequer will allow us to put these Amendments forward in the belief that we are endeavouring to meet cases of hardship and to provide for men whom all quarters of the House desire to treat generously and fairly.
    Captain BATHURST: I do not want again to press to any great extent the point I have already made, but I sincerely wish that the Chancellor of the Exchequer, if he cannot accept the present Amendment, would change the word "three" into "four," so that the Clause would read "in cases where the total income does not exceed four hundred pounds." The reason why I suggest that is that the position of a captain of a company who has risen from the ranks is a very difficult one, and sometimes an extremely embarrassing one, both to himself and to his wife and children. After all, it does not matter much about the Army subaltern. He has not to maintain any great position either in the officers' mess or so far as his family is concerned. But it is very different with the commander of a company. A large number of these men, as a result of their military progress, have been raised from the ranks very rapidly to the position of commanders of companies and receive a nominal income of something short of £400. That they should not be entitled to exemptions and abatements provided for other men who have nothing like the same position to keep up, I feel operates to some extent as an injustice. I appeal to the Chancellor of the Exchequer, if it is not too late, to make some concession in favour of this class.
    Amendment negatived.
    Mr. PETO: I beg to move, after the word "from" ["primarily from the pay"], to insert the words "income other than."

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    I regard this Amendment as being of much greater importance than either of the other two. I have found, to my amazement, that in the carrying out of the concession which the Chancellor of the Exchequer has called a settlement of the matter arrived at in 1915, that the effect of the words at the end of this Clause has been practically to negative the whole intention of the House in granting relief to officers on their pay whose income did not exceed £300 The words which were then in Clause 25 of the Finance Act of 1915 to which I refer, and which show the intention of the House, are these:
    "Re shall be entitled to claim such relief from Income Tax as will reduce the amount of Income Tax on that pay to the amount which would have been payable at the rate in force immediately before the commencement of the War."
    Those words seem quite clear. That amount was 9d. One would naturally infer that in the case of a man in receipt of a total income of £300, of which £160 was in respect of pay and £140 of which was the interest on some legacy or prewar saving, or represented something received in lieu of earned income, making up his income to what he was in receipt of before he joined the Army for the period of the War, the pay would be on that portion of his income derived from pay, namely, £160, at the rate of 9d. The effect of the interpretation of these words, which I now wish to amend, is exactly the opposite. The Income Tax authorities say, " Oh, the words of the Act are perfectly clear: these abatements are to be deducted primarily from pay, so that, in the case of a person in receipt of an income of £160 from pay, it works out to this." They say, " Oh, you are entitled under the previous words of Subsection (2) to the full abatement which was granted in the Act of 1898 of £160, because your income is under £400 a year; your abatement is £160, and your pay is £160, and, of course, as it has to be deducted primarily from pay, that washes out the pay; therefore we charge you, if it is earned income, at the rate of 2s. 3d., and, if unearned income, at the rate of 3s. on the rest." The net position is that this officer, who as a class has made in very many cases great sacrifice of previous income in order to join the Army or Navy, is in precisely the same position as if he had never joined at all—except that he is entitled to an abatement of £160 instead of £120.
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    I desire to give the House one concrete case showing how exactly it is worked out. I have all the letters from the Income Tax authorities, so that there is no question whatever in regard to interpretation. The man whose case I give is a sergeantmajor in receipt of 5s. per day—actually £91 5s., or, in round figures, £90 a year. Under the interpretation of setting the abatement primarily against the pay, the Income Tax authorities work it out like this: Army pay, less £90 part allowance of statutory abatement, £160; net result, nil; no Income Tax payable. Ordinary earned income, £210, less balance of abatement £70; chidren's allowances (two children at £50); duty at the lowest rate of earned income, 1s. 6d. plus one-fifth—that is, 1s. 9d. and three-fifths; total Income Tax to pay, £8 2s. Now comes the reason. This man had an income in addition to his pay. He was the head master of a grammar school. The Governors of his school agreed when he enlisted in the Army at the beginning of the War to pay him the same salary that he was in receipt of before, as many other people in various walks of life have done. Whether employers or governors of schools, they have pursued the same course from patriotic motives. The result of that is that this man is in exactly the same position, with the small exception that I have already mentioned, on the question of the total abatement, as if he had never joined the Army. To finish his case, he ought to be paying about £3 7s. 6d. The first claim was for £11 odd, and that was corrected into £8 2s., and his wife has to pay that amount this year, which, owing to the rise in Income Tax, is over double that chargeable before the Chancellor of the Exchequer made his settlement, as be calls it, of this concession to officers on their small income.
    Take a much more ordinary case, that of someone who has been in receipt of £160 a year pay, or thereabouts, and £140 of unearned income. Of course, in that case he has no advantage whatever, except the small difference of abatement. As it is worked out on the wording of the Act he is charged an Income Tax of £21. If he had £120 abatement he would pay £27 a year, and the real Income Tax he ought to pay, in accordance with the intention, and the obvious understanding, of the House, who did not observe these words at the end of the Clause, if the Clause had really carried out the intention of the House, and had given a real abatement in

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    the rate of Income Tax, would be £5 5s., instead of £21. I think it is really carrying the Treasury rule a little bit too far. I understand that wherever there is a composite income, and there is any question of abatement or allowance, it is the custom always to set abatement or allowance against that portion of income chargeable at the lowest rate. When a special concession is made in specific words, particularly in view of what the Chancellor of the Exchequer said about settlement, that these men were to pay at the rate of 9d. on their pay, and we find, as a matter of fact, the whole of that pay is washed out in nine cases out of ten, and in all cases where men receive the smallest amount of pay it is washed out entirely on abatement, and they are charged the full rate on the rest of the income, I really think the House has not been fairly dealt with. The Chancellor of the Exchequer said I did not deal fairly with him in my previous Amendment, but keeping in these words, of which no one really understood the effect, now we have had six months' operation of the Act of 1915, the effect is to deprive these men in receipt of small pay of practically any concession whatever, and only to give it in the case of men with larger pay and no other income. It is really not fair to carry out that Treasury rule and take away with one hand what the Treasury appear to give by way of concession with the other.
    Mr. POLLOCK: I beg to second the Amendment. I do not desire again to go over the general observations I made about the relief that we desired to secure under this Section, but the exemption which has been given, and which the Chancellor of the Exchequer, I think, intended to give, has certainly proved to be much less than was understood. Those who came within the exemption and the Section, which was intended to be a relieving Section, have found that in Income Tax, as in many other things, things are not always what they seem. They thought undoubtedly, as letters in the public Press indicate, that there was going to be a real concession of considerable value to them. It has proved otherwise for a valid reason. I think that Section 51 of the Income Tax Act of 1853 has probably militated against this concession being given to the full, and unless some statutory authority is given for altering the practice the Treasury was bound by the rules and Sections of this
    484
    old Statute as it stood and the result has proved that the exemption has not applied in the way intended or as we understood it was intended to apply. It may be that those of us who listened to the discussion of the question of exemption were not very alert, and that the Chancellor of the Exchequer thought that we had in mind the ordinary practice. The Chancellor of the Exchequer will quite understand that I am not saying more than it is quite possible that none of us at the time realised that by virtue of an old Statute there was in truth and in fact a negation of the relief which we all understood was to be granted. It all comes back to this: That you make these deductions from the pay, and the result is that you leave the matter of the unearned income exactly where it was, and although the officer is in some small measure better off he has not received the full measure of relief that it was anticipated he would get and which we believed he would receive. I ask the Chancellor of the Exchequer how much money is there in this? It is not a question of bargains or settlements, but it is that when from time to time we find that the effect has not been so good as we hoped we may call for a little more relief. If the amount the right hon. Gentleman would lose is by no means large, I ask him to satisfy those gallant officers at the front by relieving their pockets and assisting them by introducing the words of this Amendment. The deduction should be made primarily from income other than pay. I hope the Chancellor of the Exchequer will give an explanation why he insists upon his present attitude and tell us how much he would be likely to lose if this concession were granted.
    Mr. McKENNA: I do not think that there is any room in the language of the Clause for the misconception which appears to have existed in the mind of the hon. Member for Devizes (Mr. Peto), or my hon. Friend who spoke last.
    Mr. POLLOCK: And hundreds of others.
    Mr. McKENNA: I do not think there is any room for that in the actual language of the Clause. First of all, the Clause gives relief expressly, not in respect of the whole income, but only in respect of the pay. The lower rate of 9d., where the total is under £300 a year, would not be paid from the total income, but that lower rate would only be paid on that part of

    485
    the income which consisted of pay, and the remainder would have to pay at the full rate. There was a distinction made on the face of the Clause as to the rate payable on the pay and the rate payable on the other parts of the income. Then the Clause specifically gave the concession in the form which would make the taxed rate on the pay the same as existed before the War. Well now, by the law, so recently passed as 1907, which distinguished between earned and unearned income in fixing the rate of tax, it was laid down that the deduction shall be made from that part of the income which is paying the lower tax. It was not merely by practice or inference from the Act of 1853, but by express enactment in 1907 that this practice existed. Where, upon the face of the Clause, there is a distinction between rate payable upon the pay and the rate payable upon the remainder; where, upon the face of the Clause with regard to the whole income the taxpayer is referred back to the conditions which existed before the War; where every taxpayer knew before the War that his allowance or abatement was made in respect to that part of the income which bore the lower rate of tax, it cannot be said that there was any ground for the misundersanding which appears to exist in the Amendment of the hon. Member for Devizes (Mr. Peto). To accept this Amendment would be to make a complete change in the statutory practice since earned and unearned income were initiated. Of course, by the selection of a particular case, where a precise sum is taken which shows an apparent hardship, an hon. Member can make out a plausible case.
    Mr PETO: It is not a particular case. It is all cases below £160. Where the pay is below £160 they get no relief at all.
    Mr. McKENNA: Where the pay is below £160 and there is no other income they get no relief at all from the concession, and I suppose the hon. Gentleman suggests that where there is other income they should get relief. What about the case of the unfortunate officer whose pay is below £160 and who has no other income? It is not suggested that he should get relief, unless hon. Gentlemen propose to pay him something for having no other income. There is no end to the possible exceptions which may be brought forward. I can assure hon. Members, who stand up as the friends of the officers who are being dealt with hardly, I have as strong a sympathy with the hard case as they have,
    486
    but they are in the happy position of being able to make these appeals, expressing broad sympathy, against an unfeeling Chancellor of the Exchequer, who has to remember his duty and vindicate the interests of the taxpayers. I do not think we can go back upon the concession which has been already made. I put it to the House that we have already done enough, and I ask the House to accept the Clause as it stands.
    Mr. RAWLINSON: I am not surprised at the statement of the Chancellor of the Exchequer. I put an Amendment down myself which raised the same point, and it is shortly this: The House has agreed, and the Chancellor of the Exchequer has sanctioned, a special concession to those men, chiefly schoolmasters and other professional men, who joined the Army and got pay in the Army and sometimes got money from other sources. I am not suggesting that there was any difficulty in following what the right hon. Gentleman said about the proper construction of that Section; I do not suggest that there could be any difficulty on reading the Section quietly. There was certainly in the House a very widespread idea that a special concession was being made to these men, and I am sure it was the intention of the House that concessions should be made to them. It is a very small one indeed as the law stands at present, and I do appeal very strongly to the Chancellor of the Exchequer to see, while yet there is time, whether this concession, which would be a real one, should not be given It means this: that a person has, say, £300 a year; £160 of which is earned, and £140 unearned. In that case he practically gets nothing under this concession at all. As regards these incomes I think a very small sum indeed would be involved, and in spite of the right hon. Gentleman's duty of safeguarding the Treasury I believe the House intended to act more liberally than they have done with these special classes, who are deserving of more, I will not say sympathy, which is said to be like mustard without beef.
    Sir A. MARKHAM: I think the right hon. Gentleman is under a misapprehension as to what happened in the House this time last year. I understood that the concession he made was a concession to all officers having incomes under £300 a year. There is one point on which I should like the right hon. Gentleman to give me an answer, and that was the one raised by the hon. Member for Devizes

    487
    (Mr. Peto) as to allowances or free gifts given to men now serving with the Colours, officers now serving abroad. Assuming that an employer gives to a young officer, or a married man, who has been in his employment a free payment, say, a gift of £200 a year: Is that officer bound to bring that gift into his income and pay Income Tax on it? The case given by the hon. Member for Devizes was one of a schoolmaster where, I understand, the employer continued the salary formerly paid to him as a free gift. Does he have to make an account of it in his income?
    Mr. McKENNA: No.
    Sir A. MARKHAM: The right hon. Gentleman says "No," and, therefore, that case regarding which the hon. Member for Devizes has just given me a letter—
    Mr. McKENNA: If they are under contract to pay it would not be a free gift.
    Sir A. MARKHAM: The hon. Member for Devizes is not entitled to speak again, so he has given me this letter, which says
    that for the year 1915–16, Mr.—was to receive, as headmaster of the grammar school at—,such amount of salary as would give him £300 a year and prewar emoluments, and that taking that estimate at £90 the assessment would be as has already been given by the hon. Member for Devizes. If the Chancellor of the Exchequer says that if there is no contract between the trustees, or whoever it may be, and the man that he was to have such an income, he was not liable—
    Mr. McKENNA: If it is a free gift he is not liable.

    Division No. 34.]

    AYES.

    [11.0 p.m.

    Banner, Sir John S. Harmood

    Macmaster, Donald

    Samuel, Samuel (Wandsworth)

    Bathurst, Capt. C. (Wilts, Wilton)

    Markham, Sir Arthur Basil

    Stewart, Gershom

    Bonn. Arthur Shirley (Plymouth)

    Paget, Almeric Hugh

    Sykes, Col. Alan John (Ches., Knutsf'd)

    Cowan, W. H.

    Pennefather, De Fonblanque

    Craik, Sir Henry

    Perkins, Walter Frank

    TELLERS FOR THE AYES.—Mr. Peto and Mr. Pollock.

    Flannery, Sir J. Fortescue

    Rawlinson, John Frederick Peel

    NOES.

    Acland, Rt. Hon. Francis Dyke

    Byles, Sir William Pollard

    Fletcher, John Samuel

    Adamson, William

    Cave, Rt. Hon. Sir George

    Foster, Philip Staveley

    Agg-Gardner, Sir James Tynte

    Collins, Sir Stephen (Lambeth)

    Goldstone, Frank

    Ainsworth, John Stirling

    Craig, Ernest (Cheshire, Crewe)

    Greenwood, Sir G. G. (Peterborough)

    Banbury, Rt. Hon. Sir F. G.

    Currie, George W.

    Gulland, John William

    Barran, Sir John N. (Hawick Burgh's)

    Davies, Timothy (Lines., Louth)

    Harmsworth, Cecil (Luton, Beds)

    Beale, Sir William Phipson

    Davies, Sir W. Howell (Bristol, S.)

    Harris, Percy A. (Leicester, S.)

    Beck, Arthur Cecil

    Edge, Captain William

    Harvey, A. G. C. (Rochdale)

    Bewerman, Rt. Hon. C. W.

    Edwards, Sir Francis (Radnor)

    Harvey, T. E. (Leeds, West)

    Bridgeman, William Clive

    Fell, Arthur

    Higham, John Sharp

    Brunner, John F. L.

    Ffrench, Peter

    Hinds, John

    Sir A. MARKHAM: Any employer, then, who makes a free gift. How are you going to differentiate this particular case from a free gift? If the governors have agreed to continue the stipend there is no legal—
    Mr. RAWLINSON: They agree to it.
    Sir A. MARKHAM: That is a legal point. If the governors of the school, of their own free will, without it being any contractual obligation—
    Mr. McKENNA: If there is no obligation, there is no Income Tax.
    Sir A. MARKHAM: Very well, then.
    Mr. HODGE: I was under the impression, as was stated by the Chancellor of the Exchequer, that the concession made was a very handsome concession to the officers. We have been hearing a great deal during the course of this Debate with respect to hardships. I am sure none of us desire to press hardly on the officers, but I think we have to remember that there are other hard cases than those of the officers. I know of many men who are serving as privates, having given up £250, £300, and over per annum, and the only thing they have to depend on is the private's pay of 1s. 2d. a day. I think that if anything is to be done further in the way of concessions men in a position such as I have indicated ought to have the first consideration. I really think that, in view of the concessions already made, those who are pressing the Chancellor would be well advised to withdraw their opposition to this particular Clause as it stands.
    Question put, "That the words 'income other than' be there inserted in the Bill."
    The House divided: Ayes, 15; Noes, 79.

    Hodge, John

    Pease, Herbert Pike (Darlington)

    Toulmin, Sir George

    Hope, Harry (Bute)

    Pryce-Jones, Colonel E.

    Valentia, Viscount

    Jones, Edgar (Merthyr Tydvil)

    Rea, Walter Russell (Scarborough)

    Walker, Colonel William Hall

    Jones, Henry Haydn (Merioneth)

    Rees, G. C. (Carnarvon, Arfon)

    Warner, Sir Thomas Courtenay T.

    Jones, Leif (Notts, Rushcliffe)

    Pees, Sir J. D. (Nottingham, E.)

    Watt, Henry A.

    Jowett, Frederick William

    Roberts, Charles H. (Lincoln)

    White, Patrick (Meath, North)

    King, Joseph

    Roberts, George H. (Norwich)

    Whiteley, Herbert J.

    Lambert, Richard (Wilts, Cricklade)

    Robinson, Sidney

    Wiles, Thomas

    Levy, Sir Maurice

    Roch, Walter F. (Pembroke)

    Williams, Aneurin (Durham, N.W.)

    Lloyd, George Butler (Shrewsbury)

    Rowlands, James

    Wilson, Rt. Hon. J. W. (Worcs, N.)

    Macdonald, J. Ramsay (Leicester)

    Scott, A. MacCallum (Glas., Bridgeton)

    Wilson, W. T. (Westhoughton)

    McKenna, Rt. Hon. Reginald

    Shortt, Edward

    Wing, Thomas Edward

    Mono, Rt. Hon. Sir Alfred

    Simon, Rt. Hon. Sir John Allsebrook

    Wood, Rt. Hon. T. McKinnon (Glasgow)

    Morgan, George Hay

    Spear, Sir John Ward

    Munro, Rt. Hon. Robert

    Strauss, Edward A. (Southwark, West)

    TELLERS FOR THE NOES.—Lord E. Talbot and Mr. G. Howard.

    Newdegate, F. A.

    Thome, G. R. (Wolverhampton)

    O'Brien. Patrick (Kiikenry)

    CLAUSE 38.—(Provision as to Government Securities Issued Free of Tax.)
    (1) Section forty-seven of the Finance (No. 2) Act, 1915 (which confers power on the Treasury to issue securities free of taxation in certain cases), shall, so far as Income Tax (including Super-tax) is concerned, have effect as though the reference to persons not domiciled in the United Kingdom were omitted there from.
    (2) Where securities issued under Section forty-seven of the Finance (No. 2) Act, 1915 (which gives power to the Treasury to issue securities free of taxation), for the time being form part of the investments of the foreign life assurance fund of an assurance company, the income arising from those securities if applied for the purposes of that fund or reinvested so as to form part of that fund, shall not be liable to Income Tax.
    Amendments made:
    At the end of the Clause, add the following new Sub-sections:
    "(3) Where the Special Commissioners are satisfied that any income arising abroad from the investments of the foreign life assurance fund of an assurance company has been remitted to the United Kingdom and invested, as part of the investments of that fund, in any securities issued under Section forty-seven of the Finance (No. 2) Act, 1915, that income shall not be liable to Income Tax, and any Income Tax paid thereon shall if necessary be repaid to the company.
    (4) In this Section the expressions 'assurance company' and ' foreign life assurance fund ' have the same meaning as in the Finance Act, 1915."—[Mr. McKenna.

    CLAUSE 39.—(Exemption from Taxation of Municipal Securities Issued in America.)
    Any securities issued in the United States of America by a municipal cor-
    490
    poration, county council, or other local authority in the United Kingdom for the purpose of raising any money which they are authorised to borrow, if issued under the authority of the Treasury, shall not be liable to any taxation present or future, except where they are held by persons domiciled in the United Kingdom or by British subjects ordinarily resident in the United Kingdom.
    Amendment made: At the end of the Clause, add the words " The expression 'local authority' in this Section includes the Metropolitan Water Board and any other public body which is recognised as a local authority for the purposes of this Section by the Local Government Board."—[Mr. McKenna.

  PART III.—EXCESS PROFITS DUTY.

    CLAUSE 40.—(Continuance and Increase of Bate of Excess Profits Duty.)
    (1) The Finance (No. 2) Act, 1915 (in this Part of this Act referred to as the principal Act), shall, so far as it relates to Excess Profits Duty, apply, until Parliament otherwise determines, to any accounting period ending on or after the first day of July, nineteen hundred and fifteen, as it applies to accounting periods ended after the fourth day of August, nineteen hundred and fourteen, and before the said first day of July.
    (2) Section thirty-eight of the principal Act shall, as respects excess profits arising in any accounting period beginning after the expiration of a year from the commencement of the first accounting period, have effect as if sixty per cent, of the excess were substituted as the rate of duty for fifty per cent. of the excess.
    Where part of an accounting period is after and part before the date of the expiration of a year from the commencement of the first accounting period, the total excess profits and deficiencies or

    491
    losses arising in. the accounting period shall be apportioned between the time up to and including, and the time after, that date in proportion to the length of those times respectively, and the rate attributable to the time after and the time before and including that date shall respectively be sixty and fifty per cent. of the excess.
    In the case of trades or businesses commencing after the fourth day of August, ninteen hundred and fourteen, the rate of duty shall be sixty per cent. of the excess in respect of any accounting period ending after the fourth day of August, nineteen hundred and fifteen.
    In calculating any repayment or set off under Subsection (3) of Section thirty-eight of the principal Act any amount to be repaid or set off on account of a deficiency or loss arising in any period in respect of which duty would be payable at the rate of fifty per cent. of the excess, shall be calculated by reference to that rate of duty.
    Any additional duty payable by virtue of this Section in respect of a past accounting period may be assessed and recovered notwithstanding that duty has already been assessed in respect of that period.
    (3) It shall be the duty of every person chargeable to Excess Profits Duty under Part III. of the principal Act as extended by this Act, if he has not previously given notice of his liability to be charged with Excess Profits Duty in respect of any accounting period, to give notice to the Commissioners of Inland Revenue before the expiration of two months after the termination of any accounting period in respect of which he is chargeable, or if the accounting period terminated before the passing of this Act, within one month after the passing of this Act,
    If any person fails to give the notice required by this provision he shall be liable on summary conviction to a fine not exceeding one hundred pounds, and to a further fine not exceeding ten pounds a day for every day during which the offence continues after conviction therefor.
    Amendments made:
    In Sub-section (1), leave out the word "until" ["until Parliament otherwise determines"], and insert instead thereof the word "unless."
    After the word "fifteen" ["first day of July, nineteen hundred and fifteen"],
    492
    insert the words "and before the first day of August, nineteen hundred and seventeen."—[Mr. McKenna.]
    Sir J. D. REES: I beg to move, in Subsection (2), to leave out the words "In calculating any repayment or setoff under Subsection (3) of Section thirty-eight of the principal Act any amount to be repaid or set off on account of a deficiency or loss arising in any period in respect of which duty would be payable at the rate of 50 per cent, of the excess, shall be calculated by reference to that rate of duty."
    Under the principal Act it is provided that the Excess Profits Duty is only paid on the net excess over the whole period, but since the rate has been raised from 50 to 60 per cent, the lines which I propose to leave out have been added. It was considered before, and no doubt it was the case that the deficiency of the first accounting period was to be deducted from the excess of the second accounting period, and that the duty should be paid on the remaining amount. By the words which I propose to leave out an alteration is introduced in the method of accounting laid down by the principal Act. In these words, as I understand them—and I believe it to be the correct interpretation—60 per cent. is taken of the profit of the second accounting period, and all that is allowed is a deduction from the sum so arrived at of 50 per cent. of the deficiency of the first accounting period. I will put it into figures. Suppose a concern has a deficiency in the first accounting period of £50,000, and in the second accounting period there is an excess of £50,000. Under the principal Act the excess of £50,000 would be set off against the deficiency of £50,000, and there would be nothing to pay under the head of excess profits. If the words which I now propose should be left out stand part of the Clause, what will happen, apparently, will be this, that the concern would have to pay 60 per cent. on the £50,000 excess, which amounts to £30,000, and would only get a setoff of 50 per cent. on the other £50,000, or £25,000. In the two periods one £50,000 is set off against the other £50,000, so that there is no sum upon which excess profit could be taken by the Government; but under the new method of calculation it becomes a case of £30,000 against a setoff of £25,000, and £5,000 has to be paid as excess profits to the Government This is an actual case of there being an excess of £50,000 in one

    493
    period and a deficiency of £50,000 in another. I hope I have made it quite clear by the figures I have quoted that the present method of calculation is not fair, and I put it to the Chancellor of the Exchequer that it is not what was intended. This is a case which has actually happened and which may happen, and no doubt does happen in regard to a large number of concerns. I do urge that the words I propose to leave out should be omitted, but if that does not find favour with the right hon. Gentleman that some other method should be adopted to prevent the exaction of Excess Profits Duty to the amount of £5,000 where there actually is no excess profit, because the period of deficiency exactly equalises the period of excess.
    Sir J. HARMOOD-BANNER: I beg to second the Amendment. I put this question to the Chancellor of the Exchequer when we were in Committee and he promised to look into it. It is rather intricate. As it stands at present it looks as if, under the new method, there is penalising to the extent of £5,000. I do not think that it is intended to come out in that way. I have received a good many representations from various people asking what is the meaning of it. They do not understand it no more than I do myself.
    Mr. McKINNON WOOD: This is only a particular case of the general principle that you have to pay taxation on the amount which is fixed by Parliament for the year. A similar case to that put by the hon. Member could be mentioned. Take the case of two men, one of whom earns a certain income in the year when the Income Tax is 2s. 6d., and the other earns the same income the next year when the Income Tax is 5s. The first man pays nothing in the second year and the second man pays nothing in the first. You have got an exactly parallel case. It is only an illustration of the principle on which you go that a man has to take his chance and to pay his tax on the year in which his income is earned.
    Sir J. D. REES: It is not a parallel case.
    Amendment negatived.

    CLAUSE 41.—(Increase of Rate of Excess Mineral Bights Duty.)
    (1) Section forty-three of the principal Act (which relates to excess mineral rights duty) shall have effect as if sixty per cent. of the excess were substituted as the rate of duty for fifty per cent. of the
    494
    excess, in the case of minerals which have become subject to a mining lease after the fourth day of August, nineteen hundred and fourteen, for all accounting years, and in the case of other minerals for any accounting year ending after the completion of the first accounting year, and any additional duty may be recovered accordingly.
    (2) It is hereby declared that the words in Subsection (1) of Section forty-three of the principal Act "assets of any trade or business" refer only to assets of the trade or business of the person receiving the rent for the right to work the minerals or for the mineral wayleaves.
    Mr. CURRIE: I be to move, at the end of Sub-section (1), to insert the words,
    "Provided that no person shall be liable to pay Excess Mineral Eights Duty whose mineral rent in the accounting year is less than the average of any two of the three last prewar rent values, and any person to whom this proviso applies who has already been assessed, or has already paid Excess Mineral Rights Duty, shall be entitled to repayment or relief accordingly as the case requires."
    This is not the first occasion on which I have drawn the attention of the House to this point. In Committee the Chancellor explained to me that the drafting of my Clause was not very appropriate. On the present occasion I would not be surprised if he told me now that my effort was something worse. I have to choose between being intelligible to myself and being unintelligible to other people in a more remote part of the House, When I drew the attention of the Chancellor of the Exchequer to the matter he explained what the principle of the Excess Mineral Rights Duty really is. Sometimes when an explanation begins in that way I begin to be just a little suspicious, because if there is one thing more than another that I like about the Chancellor of the Exchequer just now it is the complacency, if not the actual pleasure, with which he faces the fact that he has temporarily mislaid all his principles, a position which we all know he must enjoy because he lives in the certainty that he can do no violence to them, and he leaves us with the hope that when he resumes the practice of keeping principles he will acquire a new set altogether. His explanation was that the principle is to charge the recipient of universal royalties who, owing to the increase in the selling

    495
    price of minerals in the accounting year has received as rent in respect of the right to take minerals, an amount in excess of such rent had it been based on prewar prices. Emphasis should be laid on the Chancellor's use of the words "has received." That is the principle. The Chancellor admits that the practice is rather at variance with the principle. I did not notice when the Bill was brought forward last year that a case of this kind might arise. Perhaps for that reason I am not in a position to throw stones at other people. But it is one thing for a private Member not to notice a thing like that and it is quite another thing for the Chancellor to let it pass.
    I may draw the attention of the House to what is actually going on. The facts are not disputed. The Chancellor goes to an owner of mining royalties and says to him, "Your ordinary income before the War was £10,000 a year. Now, owing to the War it is down to £9,000 a year. Therefore hand over to me £l,000 as Excess Tax." Then there is a case in which he says, "Your income was £5,000 a year. It is now £5,500 a year. Because you have got an actual excess of £500, you must pay me £1,000 of tax." I am using round figures but am using them perfectly fairly. I have all the evidence here, but it would take something like thirty minutes to go through it. I think a position of that kind only requires to be stated in order to see hat the House never had such an intention in passing this duty. A really ludicrous position has been allowed to arise. It seems impossible to argue that the Excess Tax should ever be allowed to be greater than the Excess itself. The Chancellor of the Exchequer admits that he knows cases of that kind are really arising. A case of that kind having arisen which he had never contemplated, I think, when it is pointed out to him, he ought to put it right. I think it is fair criticism to say that the sliding scale places undue reliance on certain hypothetical calculations. I only meant the Chancellor of the Exchequer to amend the Bill in such a way that an obvious anomaly and injustice will not be allowed to arise. The sliding scale is perfectly logical, I admit, but while logic may be a very good servant, it can be a very bad master. I hope, on investigation, the right hon. Gentleman will accept the Amendment.
    Mr. POLLOCK: I beg to second the Amendment.
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    The difficulty can be very simply stated. Under the present system two standards are adopted—one what is received; the other, what is the price paid and obtained for the minerals which are sold. The Chancellor of the Exchequer intended to have his tax on what was actually received, and a mistake has arisen owing to that not really being the standard, and in order to obviate this glaring anomaly it seems perfectly fair to apply the old rule of Income Tax in every case where you can, if you want to mitigate absurdities—the rule of taking an average, and, under the provision of my hon. Friend, taking any two of three years—which is another system decided quite recently—and in that way getting rid of some of these anomalies.
    Mr. McKENNA: My hon. Friends the Mover and Seconder of the Amendment have made their remarks upon the assumption that the Government do not intend to treat the Mineral Eights Duty on a different basis from the ordinary excess profits. It is quite clear from the Act that we have always intended to do so. Had we desired to follow the principle of the Excess Profits Tax we need not have had a separate Clause dealing with the Excess Mineral Rights Duty. The circumstances of the Excess Mineral Rights Duty were different from the excess profits in ordinary business. In that case we deliberately abandoned the Excess Profits Duty, and introduced a special Clause dealing with the Excess Mineral Rights Duty. On what principle have we proceeded? The point or comparison has been the price of the minerals sold. Where the duty on mineral rights has varied with the price of the minerals, we have based our charge upon the price of the mineral. Supposing that in any colliery less coal was worked but a higher price charged for the output, then it might be true that less would be paid in respect of mineral rights, because the output is less; but the rate of mineral rights would be higher, because the price of the coal was higher. The owner of the mineral rights if the coal is not worked has still got his mineral rights on the un worked coal, and he will have received in respect of the amount of the coal which has been worked an increased income, not in total amount, but according to the amount of coal worked, because of the rise in the price of coal. We take the view, and I submit it is the correct view, that that increase of income

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    ought to be subject to Excess Duty. If we did not, the owner of the mineral rights could escape paying Excess Profits Duty altogether. We therefore adopted a different principle in dealing with mineral rights for profits, and we have charged Excess Mineral Eights Duty according to the value of the minerals, and not according to the 'amount of minerals worked.
    Amendment negatived.

    CLAUSE 44.—(Provision as to Directors' Fees.)
    (1) Where the prewar standard of profits is taken to be the percentage standard or is calculated by reference to the statutory percentage in the case of any trade or business owned or carried on by a company or other body corporate whose directors have a controlling interest, the Commissioners of Inland Revenue may, if they think fit, as respects any accounting period, including a past accounting period, for the purpose of the provisions relating to the statutory percentage and for the purpose of the determination and computation of profits under Part I. of the Fourth Schedule to the principal Act, treat the company or body corporate as if it were a firm and not a company or body corporate and the directors or any of them as if they were partners in the firm.
    (2) In this Section, the expression "directors" includes any managers or persons concerned in the management of the trade or business who are remunerated out of the funds of the company or body corporate.
    Amendments made:
    At the end of Subsection (1) insert the following new Subsection:
    "(2) If as respects any accounting period ending on or after the first day of July, nineteen hundred and fifteen, the Commissioners of Inland Revenue refuse to allow a deduction in respect of any increase in the remuneration of directors of any trade or business, and the taxpayer is required to pay Excess Profits Duty in respect of the disallowed deduction, the taxpayer shall be entitled to recover from any such director the amount which the taxpayer has paid by way of Excess Profits Duty in respect of the increase; but any amount so recovered shall, unless the Commissioners otherwise direct, be treated as Excess
    Profits Duty paid by the director from whom it is recovered and not as Excess Profits Duty paid by the taxpayer."
    In Subsection (2), leave out the words "Company or body corporate," and insert instead thereof the words "trade or business."—[Mr. McKenna.]

    CLAUSE 45.—(Amendment of 5 and 6 Geo. V., c. 89, Fourth Schedule.)
    Amendment to Section five of Part I. (Computation of Profits) of Fourth Schedule, at end, add the following proviso:
    "Provided that if the Commissioners of Inland Revenue or the Board of Referees shall refuse to allow a deduction for any increase in the remuneration of directors, managers, or other persons concerned in the management of any trade or business, and the taxpayer shall be required to pay Excess Profits Duty in respect of such disallowed deduction, the taxpayer shall be entitled to recover from any such director, manager, or other person the amount which he shall have paid by way of Excess Profits Duty in respect of such increase."
    Mr. McKENNA: I beg to move, to leave out the Clause. An Amendment just adopted has been substituted for this Clause.
    Amendment agreed to.

    CLAUSE 46.—(Provision as to Accounting Period.)
    It is hereby declared that, for the purpose of Subsection (2) of Section thirty-eight of the principal Act, any period for which the books of a trade or business have been actually made up for any interim or other purpose in such a manner that the profits for that period can be readily ascertained is (without prejudice to the powers of the Commissioners of Inland Revenue under that provision) to be taken as an accounting period, notwithstanding that under the articles of association of the company carrying on the trade or business or under any other Regulations affecting the carrying on of the trade or business the accounts are also required to be made up for some other period, and notwithstanding that such accounts are not issued.
    Sir J. HARMOOD-BANNER: I beg to move, after the word "actually," to insert the words " or can be."

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    I think the Chancellor of the Exchequer will acknowledge that I assisted him to stop a leakage, and I hope he will give a little consideration to this Amendment. The Chancellor of the Exchequer has given an extension of the period for making up accounts by putting in the word "actually," which remedies a great grievance of some firms which made up their accounts just about the time war commenced. The words "can be" would allow them to make up their accounts in such a way as to satisfy Somerset House and to give an accurate representation of their position. If it is as near as possible to the date 4th August it would create a real and true representation of the pre-war standard in a fairer way than it does at present.
    Sir J. D. REES: I beg to second the Amendment.
    Mr. McKINNON WOOD: I appeal to my hon. Friend not to press the Amendment. It is entirely belated. Thousands of standards have already been fixed—nearly the whole—and millions of money have been collected on the basis already enacted. It is far too late to alter that basis now. I do not think I need go into other arguments against the Amendment.
    Amendment negatived.
    Sir J. HARMOOD-BANNER: I beg to move, at the end of the Clause, to add the words, "Provided that where there has not been one pre-war trade year and where the actual profits of a trade or business for a portion of a year prior to the fifth day of August, nineteen hundred and fourteen, amounted to more than the percentage standard for the same period as defined by the principal Act, the pre-war standard of profits shall be taken to be the amount of the actual profits earned prior to the fifth day of August, nineteen hundred and fourteen, and the first accounting period shall be appointed accordingly." This Amendment has the same object as the last.
    Mr. McKENNA: It is all disposed of.
    Sir J. HARMOOD-BANNER: In what way?
    Mr. McKENNA: The tax is collected.
    Sir J. HARMOOD-BANNER: I do not quite understand. The tax was only due
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    on 1st July, and there are many firms which have not yet had the application for it; therefore, it cannot be collected.
    Mr. McKENNA: The Amendment would affect the first year. Out of the first year £8,000,000 have been collected, while the total estimate is £26,000,000. We have the accounts of £23,000,000 out of £26,000,000. Therefore, to go back upon the principle now would be quite impossible.
    Sir J. HARMOOD-BANNER: A man may have been carrying on a very successful business until the 30th June and earned a good deal more than the 6 per cent. upon his capital. It is very hard that he should have to go back to the 6 per cent. for the purposes of Excess Profits Tax. There are many young firms upon whom this is pressing very hardly indeed. The average of their profits up to 30th June would be a much fairer basis than the 6 per cent. upon their capital when they have been earning a greatly increased percentage.
    Sir F. CAWLEY: I beg to second the Amendment.
    As the matter stands at present a very gross injustice is done. The case I have in mind is of two young men who started business with a capital of £l,000, and made in the first six months an income at the rate of £1,438 per year. The Income Tax Commissioners come along and say, "We will not take that amount into consideration at all, but we will take your joint salaries." These were put at £330 per year. The Income Tax Commissioners come forward and say, "You must pay Excess Profits Duty on over £600 a year," whereas the basis of the six months profits should have been £l,438 for the year. It is grossly unfair to take their joint salaries, which had nothing whatever to do with the case. This Excess Profits Tax, I take it, is on profits in excess of those made before the War. That is very easy to ascertain, because those people made up their books for the first six months, and thus provided a basis for calculating the excess profits. To take those men's joint salaries as the basis for excess profits is very unfair and I hope the Chancellor of the Exchequer will consider the point. The amount could not come to a great deal, because there are very few cases who make a large profit in the first year. In this case one of the young men only earned £100 a year, as he was just out

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    of his time. The basis of profit is very easily ascertainable by chartered accountants.
    Mr. McKENNA: This Clause would in many cases operate with the greatest hardship on firms which have just begun business and which very often do not expect to make profits during the first few months. Yet we are asked to take the six months' profits as the standard. What my hon. Friend really does mean is that such a firm as he has described should have an option; if by good luck they have made a lot of money that they might object to our standard.
    Sir F. CAWLEY: You can have the actual profits that they have made.
    Mr. McKENNA: Where, on the other hand, they have had bad luck, we are asked to have some other standard. That is to say that they may be allowed to take such a standard as will reduce the amount they have to pay on excess profits. I cannot conceive a case more proper for the payment of excess profits than the case raised by my hon. Friend. Their profit was made entirely owing to the circumstances of the War.
    Sir F. CAWLEY: The profit was made before the War.
    Mr. McKENNA: I happen to know this case, and the firm have done extremely well. You could not have a better case for this taxation than that of a firm, or persons, who, having been accustomed only to a salary, suddenly find themselves in possession of a large income. I regret that I am unable to accept the Amendment.
    Amendment negatived.

    CLAUSE 49.—(Deposit of Sums for Payment of Excess Profits Duty.)
    Any person may deposit with the Commissioners of Inland Revenue any sums for the purpose of satisfying any Excess Profits Duty which may thereafter become payable by him; and sums so deposited shall be applied in payment of any such duty as and when it becomes payable.
    In calculating the amount to be so applied in payment of duty interest shall be allowed at such rate as may be determined by the Treasury.
    Amendment made: After the word "may" ["as may be determined"] insert the words "for the time being."—[Mr. McKenna.]

    CLAUSE 58.—(Payment of Interest on Exchequer Bonds in Certain Cases Without Deduction of Income Tax.)
    The Treasury may direct that any Exchequer Bonds issued under their authority during the continuance of the present War and a period of six months thereafter shall be issued subject to the condition that the interest on those bonds shall be paid without deduction of Income Tax, and the interest shall be so paid accordingly; but any such interest shall be accounted for and charged to Income Tax under the third case of Schedule D, subject, however, to any provisions of the Income Tax Acts with respect to exemptions or abatements.
    Amendment made: After the word "issued" ["issued subject to the condition"], insert the words "or shall be deemed to have been issued."—[Mr. McKenna.]
    Mr. McKENNA: I beg to move,
    "That the Bill be recommitted to a Committee of the Whole House for Tomorrow in respect of Clause 33 and of new Clauses moved by the Government and relating to
    The limitation of relief from Income Tax in respect of insurance premiums;
    Income Tax relief on war insurance premiums;
    Amendments of law with respect to Income Tax on woodlands; and
    The repayment of Income Tax on sums deducted from profits under the Munitions of War Act, 1915."
    The remaining Orders were read and postponed.
    It being after half-past Eleven of the clock, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
    Adjourned at Eighteen minutes before Twelve o'clock.