Commons Sitting of 26 June 1916

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

PRIVATE BUSINESS.
Private Bill Petitions [Lords] (Standing Orders not complied with),—Mr. SPEAKER laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That, in the case of the Petition for the following Bill, originating in the Lords, the Standing Orders have not been complied with, namely:—
Conway and Colwyn Bay Joint Water Supply [Lords].
Ordered, That the Report be referred to the Select Committee on Standing Orders.
Beighton and District Gas Bill,
Order [2nd March] that the Beighton and District Gas Bill be committed, read, and discharged:—Bill withdrawn.—[The Chairman of Ways and Means.]

EXAMINATION OF MAILS (MISCELLANEOUS, No. 20, 1916).
Copy presented of Note to the United States Government regarding the Examination of Parcels and Letter Mails [by Command]; to lie upon the Table.
EAST INDIA (CIVIL SERVICE).
Copy presented of Provisional Rule, dated 17th June, 1916, made by the Secretary of State for India in Council under the Government of India Act, 1915 [by Act]; to lie upon the Table.
ELECTRIC LIGHTING ACTS, 1882 to 1909 (PROCEEDINGS).
Copy presented of Report by the Board of Trade respecting the Applications to and Proceedings of the Board of Trade under the Electric Lighting Acts, 1882 to 1909, during the past year [by Act]; to lie upon the Table, and to be printed.
FACTORIES AND WORKSHOPS.
Copy presented of Annual Report of the Chief Inspector of Factories and Workshops for the year 1915 [by Command]; to lie upon the Table.
IRELAND DEVELOPMENT GRANT ACT, 1903.
Copy presented of Report of the Lord Lieutenant of Ireland of all his Proceedings under the Act, for the year ended 31st March, 1916 [by Command]; to lie upon the Table.

INTERMEDIATE EDUCATION (IRELAND).
Copy presented of Rule determining the maximum number of Superintendents to be appointed, 1916 [by Act]; to lie upon the Table.
Copy presented of Rule appointing' Places of Examination, 1916 [by Act]; to lie upon the Table.

IRISH UNIVERSITIES ACT, 1908.
Copy presented of Statute VIII. of the National University of Ireland [by Act]; to lie upon the Table, and to be printed. [No. 92.]

SHOPS ACT, 1912.
Copy presented of Order made by the Council of the borough of Clitheroe, and confirmed, with Amendment, by the Secretary of State for the Home Department [by Act]; to lie upon the Table.
Copies presented of Orders made by the Councils of the undermentioned local authorities, and confirmed by the Secretary of State for the Home Department:—
Urban districts of Ilford, Acton, Edmonton, Barry, and Ashington [by Act]; to lie upon the Table.

NATIONAL INSURANCE ACT.
Copy presented of Regulations, dated 23rd June, 1916, made by the Welsh Insurance Commissioners, entitled the National Health Insurance (Insurance Committees) Regulations (Wales), 1916 [by Act]; to lie upon the Table.
FINANCE ACCOUNTS.
Copy presented of Finance Accounts of the United Kingdom for the year ended 31st March, 1916 [by Act]; to lie upon the Table, and to be printed. [No. 93.]
SETTLEMENT AND EMPLOYMENT OF DISCHARGED SAILORS AND SOLDIERS ON THE LAND (DEPARTMENTAL COMMITTEE).
Copy presented of Part II. of the Final Report of the Departmental Committee appointed by the President of the Board of Agriculture and Fisheries to consider the Settlement and Employment on the Land in England and Wales of Discharged Sailors and Soldiers [by Command]; to lie upon the Table.
DESTRUCTIVE INSECTS AND PESTS ACTS, 1877 AND 1907.
Copies presented of Orders numbered D.I.P. 362 and 363 declaring the areas described in the respective Schedules thereto to be infected with American Gooseberry Mildew and infected areas for the purposes of the American Gooseberry Mildew (Infected Areas) Order of 1915 [by Act]; to lie upon the Table.
MEDWAY CONSERVANCY.
Paper laid upon the Table by the Clerk of the House:—Copy of Statement of Receipts and Expenditure of the Conservators for the year ending 25th March, 1916 [by Act].
ORAL ANSWERS TO QUESTIONS.
  WAR.

    EGYPT.
    Mr. GINNELLasked the Secretary of State for Foreign Affairs on what grounds in such cases as the attempt on the life of the Sultan, Egyptians are tried by Military Courts instead of by the Assize Courts, which are equally under British control;
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    whether they are allowed Egyptian barristers to defend them in their own language; and whether any mitigation is intended in these respects?
    The UNDER-SECRETARY of STATE for FOREIGN AFFAIRS (Lord Robert Cecil): Cases of the nature indicated by the hon. Member are, under martial law, properly tried by Military Courts. As regards the second point, I can assure the hon. Member that at all trials proper provision is made for the representation of the accused and, when necessary, for interpreting from and into his own language. So far as I am aware, no change is intended.

    PERSIA.
    Colonel YATEasked the Secretary of State for Foreign Affairs whether the Russian railway from Julfa to Tabriz, in North Persia, has been completed; and what progress has been made with the British concession for the Mohammerah-Khoramabad railway in South Persia?
    Lord R. CECIL: The answer to the first part of the question is, I believe, in the affirmative. As regards the second part, the survey of the Mohammerah-Khorama-bad line has inevitably been delayed by the disturbed local conditions.

    SYDNEY WOOL SALES.
    Mr. EUGENE WASONasked the Secretary of State for Foreign Affairs whether his attention has been called to the large purchase of wool by Italy at the recent wool sales at Sydney; and whether, as Italy has not the machinery to use all the wool she has taken from various sources since the war started and as she has not as yet declared war upon Germany, he will make special representations to the Italian Government that none of such wool is permitted to go into Germany or Austria?
    Lord R. CECIL: The importance of preventing wool from reaching Germany and Austria-Hungary has frequently been brought to the notice of the Italian Government, who have prohibited the export of all wool from Italy and have taken strict measures to prevent smuggling which I have every reason to believe are effective.
    Mr. EUGENe WASONaaked the President of the Board of Trade whether he is aware that, as the result of permitting all the Allies to compete for wool in Sydney, Italy had taken most of the wool and compelled another serious advance in prices; and whether these continued heavy Colonial purchases will receive the serious attention of the Government?
    The FIRST COMMISSIONER Of WORKS (Mr. Harcourt): The decision to allow the Allies to take part in the recent wool sales in Australia was arrived at after the most careful consideration, and after consultation with the Australian Prime Minister. The whole position is receiving the closest attention of His Majesty's Government.

    BLOCKADE OF ENEMY PORTS.
    Major HUNTasked the Secretary of State for Foreign Affairs whether, in view of the resolution of the Paris Conference of the necessity of tightening up the blockade before the new German harvest is available, he can give the House the assurance that the Navy will at once be allowed to enforce a strict blockade on all goods like to have enemy countries as their final destination?
    Lord R. CECIL: The policy advocated by the hon. Member is now being carried out, and there is no intention to abandon it.

    FRANCE (MOVEMENTS OF BRITISH SUBJECTS).
    Sir JOHn LONSDALEasked the Secretary of State for Foreign Affairs if he will put himself into communication with the French Government with a view to expediting the granting of passes to British subjects living in or wishing to enter the area in France now occupied by the British Army, as these individuals are at a disadvantage as compared with other nationalities?
    Lord R. CECIL: The matter is already engaging attention, but private interests must be subordinated to military necessities. The French authorities are carrying out the wishes of the British military authorities in this matter.
    Sir J. LONSDALE: Will the attention of the military authorities be drawn to the case of a well-known British dentist practising at Compiegne, who was allowed to circulate freely during the whole time that French troops were in occupation of that area, but since the arrival of the British has been refused permission to move about, and his practice has therefore been entirely suspended?
    Lord R. CECIL: If the hon. Member will ascertain the name of the individual in question, full inquiries will be made.

    FOOD PRICES.
    Mr. WINGasked the President of the Board of Trade if ho is aware of the statement of Mr. Burton, Minister of Finance, Railways and Harbours, South Africa, to the effect that he had requested the High Commissioner to press upon the Imperial Government the fact that increased freight facilities would procure more and cheaper meat for England; and, if so, are any steps being taken with that object in view?
    Mr. HARCOURT: The utilisation of the cattle resources of South Africa has for some time engaged the attention of the Board of Trade and the Department of the High Commissioner of the Union. What insulated space there is on the ships usually trading to South Africa is being used to its full capacity, and there are no ships that could usefully be diverted from other routes. My hon. Friend will be aware of the difficulties which at present attend the building of new ships.
    Mr. MacCALLUM SCOTTasked the President of the Board of Trade whether he is aware that the Home production of sausage skins is utterly inadequate to meet the demand, and that owing to the prohibition of the import of such goods their price has increased, with the result of restricting still further the sources of the supply of cheap food; whether the object of the restriction of imports is to prevent, as far as possible, the rise in the price of food; and, if so, in view of the fact that the prohibition of this article defeats the object of the restriction of imports, whether he will remove the prohibition?
    Mr. HARCOURT: My information is to the effect that the supply of sausage skins

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    in this country is at present adequate, and T am not prepared to remove the prohibition.
    Mr. WINGasked the President of the Board of Trade if he has received representations from the Houghton-le-Spring Board of Guardians, and other similar authorities in the North of England, calling his attention to the increased cost of maintaining the poor, which results in additional taxation on the ratepayer, and their appeal to the Government to facilitate the cheapening of the necessaries of life; and, if so, what steps are proposed with that object?
    Mr. HARCOURT: a Committee has been appointed to go into the whole question of the increase of price of necessaries, and I have therefore caused copies of the representations made to me to be forwarded to the Committee for their consideration.
    Mr. BYRNEasked the President of the Board of Trade whether he is aware that a number of victuallers' shops have been closed down in Ireland owing to a shortage of meat; if he is aware that cattle has now reached the price of 8d. per pound live weight, which is equivalent to 1s. 2d. per pound dead weight; if he will cause an inquiry to be made as to whether the increase in price and the shortage in supplies have been caused by an undue amount of imported meat being hoarded in cold storage in England; if, to obviate further speculation in the people's food supply, the Government will, as in the recent wool market, curtail dealings except under Government supervision; and if he will take the necessary steps to prevent shippers and others making any undue profit on food supplies during the War?
    Mr. HARCOURT: I am aware that the prices of meat and cattle have reached a level considerably above the normal. The information at present in my possession does not indicate that the rise is to any material degree the result of speculative dealings, or that an undue amount of imported meat is being detained in cold storage. I am, however, transmitting a copy of the hon. Member's question to the Committee which is investigating the causes of the rise of price of necessaries, and it would be well if the hon. Member would put any evidence in his possession before that Committee. In the event of
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    the result showing that prices are being artificially forced up by market manipulation, I should not hesitate to take or propose drastic administrative or legislative action.

    TRADING WITH THE ENEMY (AMENDMENT) ACT, 1916.
    Mr. G. TERRELLasked the President of the Board of Trade if he can furnish a list of German-owned or partly-owned firms who have up to the present, at the request of the naval or munitions-authorities, been withdrawn from the operations of the Committee dealing with the winding-up or sale of enemy firms?
    Mr. HARCOURT: The views of the Departments concerned with munitions as to the expediency of making orders-requiring businesses to be wound up under Section 1 of the Trading With the Enemy (Amendment) Act, 1916, have been obtained for the information of the Committee advising the Board of Trade on the matter, but no firms have been withdrawn from the consideration of that Committee.
    Mr. TERRELL: Is it not the fact that particular firms, at the request of the naval and military authorities, have been withdrawn or, it may be, temporarily protected from the operations of the Committee?
    Mr. HARCOURT: I am not sure whether that is so, but I will speak to the hon. Member on the subject.
    Mr. TERRELL: I will put the question, down for another day.

    PARIS ECONOMIC CONFERENCE.
    Mr. R. McNEILLasked the President of the Board of Trade whether he intends to give immediate effect, so far as it can be done by administrative action under the existing law, to all the recommendations of the Paris Economic Conference relating to measures for the War period; if he will say which, if any, of such recommendations cannot be carried out under the existing law; and if he intends to introduce without delay whatever legislation may be requisite for giving effect to all such recommendations?
    Mr. HARCOURT: I understand that the Prime Minister will make a statement on

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    èthe whole subject shortly, and I do not think it would be desirable to anticipate that statement.
    Colonel NORTON GRIFFITHSasked the Prime Minister if he will give a day for the discussion of the Resolutions passed at the Paris Conference?
    Sir CLEMENT KINLOCH-COOKEasked the Prime Minister when an opportunity will be given the House for the discussion of the recommendations of the Economic Conference of the Allies recently held in Paris?
    The PRIME MINISTER (Mr. Asquith): Yes, Sir, if there is any general desire for such a discussion the Government will endeavour to provide an early opportunity for it.
    Mr. HOGGE: Can my right hon. Friend say whether the Secretary of State for the Colonies was right in saying the other day that the Paris Conference Resolutions were the policy of the Cabinet?
    The PRIME MINISTER: I must ask for notice of that.
    Mr. OUTHWAITE: Does the right hon. Gentleman think that one day will be sufficient to discuss a question which means the abandonment of the Free Trade policy of this country?
    Sir E. CORNWALLasked the Prime Minister whether the Resolutions passed at the Economic Conference in Paris will, so far as possible, at once be given effect to by the British Government; and whether the House of Commons will be given an early opportunity of expressing its adherence and support to the policy recommended?
    Mr. R. McNEILLasked the Prime Minister whether the statement of Mr. Hughes, one of the British representatives at the Paris Economic Conference, that the necessity for immediate action on the Resolutions of the Conference applies t5 Great Britain in a special way, and that not to act promptly is, so far as results go, as fatal as not to act at all, expresses the views of the Government; whether the Government have yet considered what action will be necessary to give effect to the Resolutions of the Conference; whether effect can be given to any and, if so, which of the Resolutions without resort to fresh legislation; and if he will say when it is proposed to introduce such legislation as may be required?
    Mr. G. TERRELLasked the Prime Minister if he can make a statement as to the steps which the Government propose to take to give effect to the recommendations of the recent Paris Economic Conference?
    Major HUNTasked the Prime Minister (1) whether his attention has been called to the warning of the French Minister of Commerce to the Allies against the employment of Germans in national industries; and what steps he proposes to take to prevent alien enemies from coming to the United Kingdom after the War for the purpose of spying in the interest of their own country and depriving our own people of work and wages in the United Kingdom; (2) whether he can give the House the assurance that immediate steps will be taken by the Government to carry out the Resolutions of the Paris Conference, in view of the fact that the Allies expect the British Government to give the lead; and (3) whether his attention has been called to the statement of the French Minister of Commerce to the effect that the Germans were at present manufacturing and assembling immense stocks of all classes of goods for the purpose of dumping them at half price on the world's markets after the War; and, in view of this evidence, can he now say what immediate steps the Government propose to take to prevent our industries from being ruined and our working people from being starved for want of employment?
    The PRIME MINISTER: I propose to make a general statement on this subject at an early date.
    Mr. HOGGE: Can my right hon. Friend say whether he thinks the same as his colleague the Colonial Secretary?
    The PRIMe MINISTER: Time will show. [An HON. MEMBER: "Wait and see!"]

    RUBEL BRONZE AND METAL COMPANY, LIMITED.
    Mr. R. McNEILLasked the President of the Board of Trade whether, in sanctioning the scheme of reconstruction of the Rubel Bronze and Metal Company, Limited, necessitated by the large enemy alien interest in the company, he made it a condition that the company should give the German shareholders three months within which

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    to take up their shares and to pay the application money thereon; whether more than 40,000 shares were applied for by and allotted to Germans, and whether the German shareholders have remitted through a neutral country sums amounting to 4s. per share upon their holdings, which sums the company has received under permission from the British Government?
    Mr. HARCOURT: The facts stated in the question are substantially accurate, but, taken by themselves, they give a totally misleading account of what has taken place. They require to be supplemented by the statement that the whole of the shares allotted to enemies under the reconstruction scheme have been vested in the custodian of enemy property in order that they may be sold to British subjects. I may add that the reconstruction scheme itself arose out of circumstances independent of the enemy interest in the concern, and that the licences granted by the Board of Trade were necessary incidents in the reconstruction.

    MERCHANT SHIPPING.
    Colonel NORTOn GRIFFITHSasked the President of the Board of Trade whether steps have been taken by owners who have lost ships insured against war risk to replace such ships; and, if so, whether he can state the percentage of ships being so replaced or on stocks, having regard to the total of ships lost and insured against war risk?
    Mr. HARCOURT: The action taken by individual owners in the way of replacing lost ships is not reported to the Board of Trade, and it is therefore not possible to give exact information or percentages, but I know of no reason to think that owners are refraining from ordering new ships. There is no lack of orders; the difficulty is in getting them completed owing to war conditions.
    Colonel GRIFFITHS: May I ask if the Government are taking the necessary steps to ensure that the carrying capacity of the nation is being maintained?
    Mr. HARCOURT: Yes, it is being watched daily.

    MESOPOTAMIA.
    Sir HENRy DALZIELasked the Secretary of State for India whether he
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    can give any information as to the position and prospects of our troops in Mesopotamia?
    The UNDER-SECRETARy of STATE for WAR (Mr. Tennant): Such information as can be made public without prejudice to the success of the operations has been and will be issued to the Press in the form of communiqués. I am afraid that it is not at present desirable in the public interest to give further particulars.
    Sir J. JARDINE: Is the right hon. Gentleman aware of the interest and anxiety taken in all parts of England as regards the forces on the Euphrates and for some kind of information about them?
    Mr. TENNANT: I am very well aware of the general interest taken in this subject. I cannot give any information today, but perhaps my right hon. Friend would be good enough to repeat the question.
    Sir H. DALZIEL: I will repeat it on this day week.
    Mr. JOYNSON-HICKSasked the Secretary of State for India when it was decided to dispatch the two divisions from France to the assistance of General Townshend as mentioned in General Nixon's telegram, No. 7, of the 11th April, 1916?
    The FINANCIAl SECRETARY to the TREASURY (Mr. Montagu): My right hon. Friend, who is unable to be present, asks me to refer my hon. Friend to Sir John Nixon's letter of 11th April, 1916 (No. 7 of the White Book), in which he says that the decision reached him on 24th October. It was taken on the preceding day.
    Mr. JOYNSON-HICKSasked whether General Townshend, at any time after his telegraphic communication to the Chief of the Staff of 3rd October, 1915, sent to the General Commanding any dispatch as to the first battle of Kut-el-Amara; and, if so, whether that dispatch contained an appreciation confirming the said telegram?
    Mr. MONTAGU: My right hon. Friend would refer my hon. Friend to the statement in General Sir J. Nixon's letter of 12th April (No. 10 in the White Paper) that he received no representation from General Townshend subsequent to his telegram of the 3rd October.
    Mr. JOYNSON-HICKSasked whether General Nixon communicated General Townshend's definite opinion, expressed in his telegram of 3rd October, 1915, to the effect that great risk would be run in the advance upon Bagdad without two divisions to the Government of India or to the Secretary of State; and when the Cabinet first became aware of such opinion?
    Mr. MONTAGU: If my hon. Friend will refer to Command Paper Cd. 8253 recently published, he will see that before April last neither the Government of India nor the Secretary of State had any knowledge of the opinion which General Townshend had expressed to Sir John Nixon. Its existence was made known to His Majesty's Government by the Viceroy's telegram of 9th April.
    Mr. JOYNSON-HICKSasked (1) whether the Cabinet were warned by the military authorities in Mesopotamia that strong Turkish reinforcements had been dispatched from the North to reinforce the Bagdad Army prior to the Battle of Ctesiphon; and whether it was these forces which contributed to the compulsory retirement of General Townshend after that battle; and (2) whether the advance upon Bagdad was decided on political rather than military reasons; and whether lie will publish the whole of the dispatches and telegrams passing between the Secretary of State and the Government of India or the Officer Commanding in Mesopotamia containing the orders for such advance?
    Mr. MONTAGU: My right hon. Friend asks my hon. Friend to wait for the promised Papers on the Mesopotamian Expedition. Every effort is being made to present them as soon as possible and to make them complete.

    MALT EXPORTS.
    Colonel GRETTONasked the Parliamentary Secretary to the Board of Agriculture what quantity of malt remains to be exported from the United Kingdom under contracts already sanctioned; and if any further export of malt will be licensed when these contracts are finished?
    Mr. HARCOURT: My hon. Friend has asked me to reply to this question. From inquiries which have been made by my Department it appears that considerable
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    stocks of malt have been manufactured during the recent malting season which have been specially prepared for the brewing of lager beer and for which there is no market in this country. As at present advised I see no advantage in refusing to allow the export of malt of this description, but I am considering whether such export should not be confined to British Possessions and to the territories of our Allies; and, further, whether exports to our Allies should not be limited, so far as possible, to cases in which it can be shown that it is required for brewing beer for the British or Allied troops. Communications with the English and Scottish Boards of Agriculture are, however, still proceeding. I have no precise information as to the amount of these stocks, but I will take steps to procure it.
    Colonel GRETTON: Is the right hon. Gentleman aware that malt, which he describes as specially prepared for lager beer, can easily and at small expense be converted for ordinary use for English ales?
    Mr. HARCOURT: I will take the hon. Member's word for it.

  MUNITIONS.

    BUILDING OPERATIONS (DIRECT LABOUR).
    Mr. ASHLEYasked the Minister of Munitions whether, in view of the fact that large buildings are being erected near a southern seaport by his Department by direct labour, he will state what other Government Departments are carrying out building operations in this manner; and what precedents there are for its adoption?
    The PARLIAMENTARY SECRETARY to the MUNITIONS DEPARTMENT (Dr. Addison): The Minister of Munitions is not in a position to give the information asked for with respect to other Government Departments. For many years Government factories have been in the habit of employing direct labour for carrying out building operations.
    Mr. ASHLEY: If the right hon. Gentleman says that Government Departments have been doing it, can he not give the information? He must have the information or he could not state that it has been done in the past.
    Dr. ADDISON: I said that Government factories had done it in the past. I do not know whether other Government Departments are doing it at the present time

    CONTROLLED ESTABLISHMENTS (HOLIDAYS).
    Mr. G. TERRELLasked the Minister of Munitions if he can now make an announcement as to what extra holidays it is proposed to grant to the men employed in controlled establishments next August?
    Dr. ADDISON: As my hon. Friend is aware, the Whitsun Bank Holiday has been postponed to 8th August. As regards special local holidays, it is the intention of the Government that, subject to the military exigencies of the moment, the full holiday which would otherwise have been given in June and July shall be given in each district on the date fixed locally for taking the postponed holiday.
    Mr. TERRELL: Can the right hon. Gentleman make an announcement in the different localities as to when these holidays will be given? Is he not aware that it is very inconvenient to have the matter held up until the last moment?
    Dr. ADDISON: We are not holding it up at all. We are deliberately advising the employers and the men's representatives in each district to meet and make the arrangements most suitable to their own district. It would be very undesirable to lay it down from headquarters.

    CENTRAL CONTROL BOARD (LIQUOR TRAFFIC).
    Sir J. D. REESasked the Minister of Munitions when he proposes to make a statement of the policy of which the State purchase of the licensed liquor trade in certain localities in England and Scotland is a part; and whether he will explain whether further developments of this new departure are contemplated?
    Dr. ADDISON: a statement of the grounds on which this purchase has been undertaken will be found in chapter VI. of the recently published Second Report of the Central Control Board (Cd. 8243). Since that Report was published it has been decided to extend one of the districts mentioned in the Report so as to include Carlisle. The further action of the Board in this matter will be guided by local requirements and by acquired experience.
    Colonel GRETTONasked what is the estimated cost of purchasing the breweries and the licensed trade in the Carlisle area?
    Dr. ADDISON: The amount cannot be properly stated in advance of the determination by the Defence of the Realm (Losses) Commission which will adjudicate upon the claims.
    Colonel GRETTON: Will the amount, if any, agreed upon be referred to this House for approval before the State is committed to purchase?
    Dr. ADDISON: I should like notice of that question.
    Sir J. D. REESasked the Chancellor of the Exchequer whether any and, if so, what allowances are made to or expenses are paid on behalf of the Commissioners of the Board of Control (Liquor Traffic)?
    Dr. ADDISON: Members of the Central Control Board (Liquor Traffic), when travelling on the business of the Department, are entitled to claim travelling and subsistence allowances at the rates laid down by the Treasury as applicable to temporary Commissions.

    COTTON WASTE.
    Sir J. LONSDALEasked the Parliamentary Secretary to the Ministry of Munitions if any contracts made by his Department for the supply of bleached cotton waste are arranged upon the basis of a profit on cost; if he is aware that the adoption of this system has resulted in an abnormal increase in the market price of the raw material and that, whilst the Government have to pay enhanced prices for their supplies and contractors who supply waste on the basis of a fixed price are unfairly handicapped, loss is occasioned to the entire cotton industry; and if he will take steps to terminate the system of contracting on a profit on cost basis?
    Dr. ADDISON: There is no contract for cotton waste of the kind indicated by the hon Member wherein the amount of profit increases with the cost. The contract to which he may refer provides for a fixed profit per ton of waste supplied.
    Sir J. LONSDALE: Does the right hon. Gentleman suggest that there is no contract under the terms of which cotton waste is acquired upon the basis of a commission on cost?
    Dr. ADDISON: That is so. There is no contract of the nature referred to by

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    the hon. Member. The contracts referred to gives a definite profit; it does not take into account the cost of production. The profit does not vary with the cost.

    NATURALISED GERMANS (NAMES CHANGED).
    Colonel YATEasked the Home Secretary what measures he proposes to take to prevent naturalised Germans from changing their names before they have been officially discarded from German nationality by German law?
    The SECRETARY of STATE for the HOME DEPARTMENT (Mr. Herbert Samuel): It is not possible to discriminate on the lines suggested by the hon. and gallant Member, for the reason that definite information cannot be ascertained in individual cases.
    Colonel YATE: Why can it not be obtained?
    Mr. SAMUEL: The laws of Germany, with regard to naturalisation, are such that one can never be sure that any individual German naturalised in this country may not have retained his nationality in his own country.
    Colonel YATE: Will the right hon. Gentleman take steps to prevent any naturalised Germans from changing their names?
    Mr. SAMUEL: I have already answered that question.
    Mr. STEWART: Is it not the case that any German who has been naturalised gets a certificate to that effect from his own country?
    Mr. SAMUEL: In any case, if one refers to the existing German law, I am not sure that that would prove a complete security.

    "SERMON ON THE MOUNT" (ALLEGED SEIZURE OF BOOK).
    Mr. PONSONBYasked the Home Secretary whether he is aware that among the pamphlets seized by the police from a private residence in Penarth was one on the "Sermon on the Mount," by the Bishop of Oxford; and whether this publication is on the list of prohibited pamphlets mentioned by him on the 1st June?
    Mr. SAMUEL: I have made inquiry inquiry into this matter, as I undertook to do in answer to questions last week.
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    The hon. Members who took an interest in this case will be glad to learn that there is no foundation for the statement that the Bishop of Oxford's book was seized by the police. The story appears to have originated from the fact that, when the police seized some pamphlets at Penarth, the owner of the pamphlets handed a copy of the Bishop's book to the police inspector, and asked him to read and return it. I have no doubt the inspector will return it when he has completed his perusal.

  DEFENCE OF THE REALM ACT.

    SEIZURE or PUBLICATIONS.
    Mr. PONSONBYasked the Home Secretary whether he is aware that the police authorities at Port Talbot asked for power to destroy publications of the Woman's Labour League, issued in 1913, namely, "The Need for Baby Clinics, and Help for Babies," and that they obtained this permission on the ground that they were prejudicial to the Government and the conduct of the War; and will he say what action he proposes to take?
    Mr. SAMUEL: a few copies of a pamplet or leaflet, called "Help the Babies," appear to be included in a large mass of literature seized by the police near Port Talbot, but as an appeal is now pending from a decision of a Court of Summary Jurisdiction with regard to this case, I can make no statement with regard to it. The other publication is not included in the list of seizures which has been furnished to me.
    Mr. PONSONBYasked the Home Secretary whether he is aware that the police authorities have seized, and in some cases destroyed, a number of leaflets and pamphlets found on the premises of the Independent Labour Party at Port Talbot and at Bargoed, as well as in private houses in Cudworth and Penarth; that they refused to produce the list of pamphlets they were instructed to seize which he stated had been sent to the police in all parts of the country; that the pamphlets seized had not been condemned by the Court, and a number of them issued by the Union of Democratic Control were, after examination as far back as August, 1915, restored to that organisation both in Manchester and London, with an intimation from the Home Office that there was no objection to their distribution; and

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    whether he will prevent any further action of this kind by the police authorities in these districts?
    Mr. SAMUEL: I understand that a number of pamphlets were seized by the police at the places mentioned. The proceedings appear to have been taken on a magistrate's warrant under Regulation 51A, and therefore the documents seized either have been or will be brought before the magistrates. I do not know that any of them have yet been destroyed—in one case they are being preserved pending an appeal. I propose to make a statement on the general question in the Debate on tile Home Office Estimates on Thursday.
    Sir W. BYLESasked the Home Secretary whether the recent raid on the offices of the Council against Conscription and the seizure of their books and papers are authorised by the Government or by any Minister; and, if so, which Minister?
    Mr. SAMUEL: I understand that the Under-Secretary of State for War will deal with this question in answering Question 67.
    Mr. HOLTasked the Prime Minister if he, as acting Secretary of State for War, was consulted before the offices of the National Council Against Conscription were raided on 6th June, and their books, documents, and other property removed by the military authorities; if the Secretary of State for the Home Department was consulted; and whether the property seized has been returned to the National Council Against Conscription?
    Mr. TENNANT: The action was taken under the Defence of the Realm Regulation No. 51, which makes the competent military authority responsible for the search of premises suspected of being used in contravention of the Defence of the Realm Regulations. It was within his competence and the scope of his duties. The property removed has been returned, except four copies of a pamphlet which contravened the Regulations.
    Mr. HOGGE: Are there to be any prosecutions as a result of the raid on these premises?
    Mr. TENNANT: I am not quite sure. Perhaps the hon. Member will give me notice.
    Mr. WHITEHOUSE: Was the sanction of the Home Secretary obtained before this raid took place?
    Mr. TENNANT: No, Sir; nor is there any reason why it should be.
    Mr. SNOWDEN: Why, then, did the police assist the military authorities in carrying out this raid?
    Mr. TENNANT: The military authorities are perfectly entitled to ask the assistance of the civil authority.
    Sir W. BYLES: May I ask whether the objects of this council are not entirely legitimate and legal; and, if so, why this arbitrary ease of violence can be justified?
    Mr. TENNANT: If a perfectly legal body chooses to undertake purely illegal actions they must put up with the consequences.

    SUMMER TIME ACT (ELECTRIC LIGHT CHARGES).
    Sir F. LOWEasked the President of the Board of Trade whether he is aware that certain electric lighting companies are increasing the charge made for the supply of electricity to consumers in order to compensate themselves for the loss occasioned to them by the operation of the Summer Time Act; and whether he proposes to take any action, by legislation or otherwise, to prevent this attempt to defeat the objects for which the Act was passed?
    Mr. HARCOURT: I am aware that certain electric lighting companies, as well as local authorities, are increasing their charges to consumers, and that the operation of the Summer Time Act is given as one of the reasons for the increase. The Acts and Orders authorising the supply of electric light fix the maximum charges which may be made to consumers, and undertakers are acting within their statutory powers in increasing their prices so long as the prescribed maximum is not exceeded. The chief object of the Summer Time Act was to effect economy in the use of coal by public utility bodies, and I do not see my way to promote legislation to prevent electric lighting undertakers from increasing their prices for current actually used to compensate them for the reduced consumption.
    Sir F. LOWE: Will the right hon. Gentleman undertake to see that the increased

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    charge is not continued during that portion of the year when the Summer Time Act will not be in operation?
    Mr. HARCOURT: I should like to see exactly what are my powers of preventing it?

  DISTURBANCES IN IRELAND.

    ABEESTS.
    Mr. BYRNEasked the Home Secretary whether he will state the charge and the nature of the inquiry on which the five Irish ladies were deported from Mount joy to internment camps in this country; if he will say whether any evidence was taken from the ladies, or if they were allowed any opportunity to defend themselves at the inquiry which ordered their deportation; and, if not, will he say why this was not permitted?
    Mr. SAMUEL: These ladies are interned because of their hostile associations and of their having favoured, promoted, and assisted an armed insurrection against the King. Very careful inquiries were made by the military authorities before they recommended internment. Their cases will now be considered by the Advisory Committee, who will allow them to make any statements they desire in their own defence, personally, as well as in writing.
    Mr. GINNELLasked the Prime Minister whether the case of Dr. Richard Hayes, of Lusk, county Dublin, has been or will be considered by the Government; whether he is aware that for having gone to Ashbourne and given medical aid to the wounded there, irrespective of the side to which they belonged, and having no other than this professional connection with the occurrence, he has been sentenced by a court-martial to penal servitude for twenty years; and whether he will take immediate steps to have this gentleman released and reinstated in the public position which he has been filling?
    Mr. TENNANT: Dr. Richard Hayes was tried and convicted by court-martial for complicity in the rebellion, and it is not proposed at present to interfere with the finding and sentence of the Court.
    Mr. GINNELL: May I ask what has been done with his motor car?
    Mr. TENNANT: I am afraid I shall require notice of that question.
    Mr. GINNELLasked the Prime Minister whether he has received from Belfast a memorial signed by the Bishop of Down and Connor and other prominent citizens, and by many thousands of Belfast people of all political and religious opinions, asking, in the interest of justice and peace, for the immediate release of the Belfast men imprisoned without charge or trial, or an immediate trial if there be any charge; whether he is aware that evidence is available showing that all those men were at their ordinary avocations in Belfast or its vicinity during the week of the insurrection in Dublin; and whether, in all these circumstances, their immediate release or trial will be ordered?
    Mr. TENNANT: This case, in common with others similar, will no doubt receive the immediate attention of the Advisory Committee.
    Mr. GINNELLasked the Prime Minister, having regard to the credit claimed for the dietary treatment of insurrectionary prisoners on the occasion of his visit to Richmond Barracks, Dublin, will he say why that scale has been substantially departed from in all the places in which those prisoners are now detained; those men being untried and detained against their will, by what rule or principle is the food given them in all those places so inferior in quality and insufficient in quantity that they would starve but for the additional food sent in by friends; and, if unwilling to order them a sufficiency of wholesome food for the maintenance of health, whether he will immediately order them at least the same dietary scale set up on the occasion of his visit to Richmond Barracks?
    Mr. TENNANT: This question is a repetition of that put by the hon. Member on the 20th June. I have nothing to add to the answer I then gave.
    Mr. GINNELL: Will the Prime Minister say whether the scale of rations ordered on the occasion of his visit was for a political purpose; if not, for what purpose was it?
    The PRIME MINISTER: There was no alteration in the scale of rations on my visit—
    Mr. GINNELL: Yes! Will the right hon. Gentleman see that the scale is carried out in the camp as well?
    The PRIME MINISTER: It is.

    TREATMENT OF PRISONERS.
    Mr. BYRNEasked the Postmaster-General if he is aware that parcels of perishable foodstuffs sent to Irish prisoners of war in English and Welsh camps have not been delivered for seven or eight days; if he is aware that, owing to this delay in delivery, parcels of food were rendered useless and prisoners left hungry; if he is aware that letters to and from Irish prisoners have been delayed for more than a week before delivery; and if he will take steps to remedy this grievance?
    The POSTMASTER-GENERAL (Mr. Joseph Pease): I have no knowledge of any delay in the Post of letters or parcels addressed to or sent by Irishmen who, since the recent disturbances in Ireland, have been detained by the military. If particulars are sent me I shall be glad to investigate the same, but I should point out to the hon. Member that if there has been any delay due to censoring correspondence it would take place at the camps, and any question, therefore, relating to delay thus caused should be addressed to the War Office.
    Mr. GINNELL: May I ask whether the right hon. Gentleman's control over these letters ceases when they are delivered by the postman; whether he can relieve the congestion of a heap of letters for prisoners in the camp in Wales lying at the entrance not delivered; when will they be delivered, and what protection is there against people to whom they do not belong picking them up?
    Mr. PEASE: Letters are delivered at the camps and as soon as they are delivered the Post Office has no further responsibility in connection with their distribution amongst those who are regarded as prisoners.
    Mr. GINNELL: Will the Under-Secretary for War account for these letters?
    Mr. TENNANT: If the hon. Member will tell me where I can get the letters.
    Mr. GINNELL: At the entrance to the camp in Wales.
    Mr. BYRNE: Will the right hon. Gentleman arrange for the censoring of the letters in the Post Office so that they could be delivered when they do arrive at the camps?
    Mr. PEASE: The censoring is done by the military censor and not by the authorities connected with the Post Office. The
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    Post Office authorities endeavour to facilitate the censoring, and if the War Office desire that the censoring should take place in some other place during the period of transition, of course we shall endeavour to meet their wishes.
    Mr. BYRNE: I hope they will.
    Mr. GINNELLasked the Under-Secretary of State for War the names of Irish prisoners of war who have died in this country since internment, and the names of those now sick?
    Mr. TENNANT: Michael McCarthy died at Wakefield on 14th May. As the numbers on the sick list vary from day to day it would be impossible to give this information.
    Mr. GINNELL: Did Michael McCarthy die from a wetting sustained while in custody in Dublin from sheer neglect?
    Mr. TENNANT: I am afraid I do not know what he died from.
    Mr. BYRNEasked the Under-Secretary of State for War whether he is aware of the dissatisfaction that is being caused in Ireland owing to the treatment and visiting regulations for Irish prisoners of war at Frongoeh camp; if he is aware that the general treatment and visiting to the camp is much worse than when prisoners were in English gaols; and if he will take steps to see that such treatment shall not continue?
    Mr. TENNANT: The regulations as to visiting these prisoners were laid down by the Home Office. Perhaps my hon. Friend would refer to my right hon. Friend the Home Secretary.
    Major NEWMAN: Are these men prisoners of war or interned rebels?
    Mr. TENNANT: As to what their precise designation is, I do not think it has ever been decided, but they are treated as prisoners of war.
    Major NEWMAN: Are they treated as prisoners of war?
    Mr. TENNANT: Yes.
    Major NEWMAN: Then they are prisoners of war.
    Mr. RONALD McNEILL: Has war been declared between England and Ireland?
    Mr. TENNANT: Better ask your hon. Friend.
    Mr. BYRNEasked the Under-Secretary of State for War whether he will print and circulate for the information of the Members of the House the evidence upon which the Irish prisoners of war were convicted and sentenced to various terms of imprisonment ranging from six months to life sentences; and if he will also cause the evidence submitted on their behalf to be made public?
    Mr. TENNANT: I would refer my hon. Friend to the answer given by my right lion. Friend the Prime Minister to the hon. Member for East Mayo on 1st June.

    TRIAL OF PRISONERS.
    Mr. GRAHAMasked the Under-Secretary of State for War whether the prisoners from Tullamore, who were taken out of the Civil authorities' hands by Sir John Maxwell in respect of an alleged offence occurring five weeks previous to the revolt in Dublin, have been tried by court-martial; if so, what was the date of their trial, and what sentence, if any, has been imposed; and whether the Government will see their way to release these prisoners, who have now been over three months in prison?
    Mr. TENNANT: The result of this trial has now appeared in the Press. The proceedings were not confirmed, and the prisoners were released.
    Mr. GINNELL: Was the trial in camera??
    Mr. TENNANT: I do not know.

    MARTIAL LAW.
    The following question was on the Paper in the name of Sir W. BYLES:—
    61. To ask the Prime Minister whether the Government will now put an end to so-called martial law in Ireland, having regard to the peaceful condition of the people and to the feeling produced by this extra-legal form of government?
    Sir W. BYLES: I put in the word "angry" before the word "feeling"; it seems to be necessary for the sense. I would like to ask you, Mr. Speaker, whether it is a rigid rule that all adjectives must be taken out of the questions handed in?
    The PRIME MINISTER: My hon. Friend may rest assured that the Government are as anxious as he is to restore ordinary conditions in Ireland as soon as circumstances permit.

    CITY OF DUBLIN.
    Major NEWMANasked the Chief Secretary for Ireland whether he has any official information to give the House with regard to the present state of the city of Dublin; has sniping been totally suppressed in all quarters; and are officers and men of His Majesty's Forces wearing uniform able to land in Dublin and traverse the streets without molestation or insult whether singly or in parties?
    Mr. SAMUEL: As regards the first part of the question, the present state of the city is quiet and orderly. The reply to the remaining parts is in the affirmative.

    NAVAL AND MILITARY WAR PENSIONS (STATUTORY COMMITTEE).
    Mr. BUTLER LLOYDasked the President of the Local Government Board if his attention has been called to the fact that the Statutory Committee (Naval and Military War Pensions, etc., Act, 1915) have refused to allow Shrewsbury to set up a separate local committee, in spite of a unanimous resolution of the town council and of all friendly societies and labour associations in the borough humbly asking for this; and whether he will give instructions that this decision shall be reversed in the case of Shrewsbury and other town and urban district councils of a similar nature, or take such steps as may be necessary to so alter the powers delegated to the Statutory Committee as to prevent the boroughs being entirely deprived of the privilege accorded them by Section 2, Sub-section (1), of the Act of having a local committee established in boroughs and urban districts on the application of the council thereof?
    Mr. R. NcNEILLasked the President of the Local Government Board if he is aware that the War Pensions Statutory Committee has refused a request of the borough of Folkestone that a local committee for the borough be established under the provisions of the Naval and Military War Pensions Act, 1915; that Folkestone has a population of 35,000, and is a military centre from which some 4,000 men, many of whom are married, have joined the Army; that many boroughs with a smaller population than Folkestone have been granted local committees; and if he will bring pressure to bear on the Statutory Committee to reconsider

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    their decision as regards Folkestone, especially in view of the fact that the circumstances of the town differ in many respects from those in other parts of the county of Kent, and that a local committee would better appreciate the position of applicants in the town than a county committee?
    The PARLIAMENTARY SECRETARY to the LOCAL GOVERNMENT BOARd (Mr. Hayes Fisher): It is the case that the War Pensions, etc., Statutory Committee have not assented to the formation of separate local committees under the Act of 1915 for the boroughs of Shrewsbury and Folkestone. I would point out that the Act does not confer upon either of these places a right to a separate local committee on the application of the town council. Under Section 2 (1) a separate local committee can only be established for a borough with a population of less than 50,000 if the Statutory Committee consider this desirable, having regard to the special circumstances of the case. As regards neither of the two places referred to did the Statutory Committee consider that there were such special circumstances as to render a separate local committee desirable, and hence they did not feel themselves able to assent to the application. My right hon. Friend does not consider that the matter is one in which he could interfere, as he has no control over the Statutory Committee. I may add that at the instance of the Statutory Committee the Salop County Council have included in their scheme establishing a local committee for the county special provisions for the representation of Shrewsbury on the local committee, and that the Statutory Committee have suggested to the Kent County Council to recommend the county local committee to consider the question of forming a special sub-committee for the borough of Folkestone together, possibly, with some adjoining area which could be suitably administered with it.
    Mr. McNEILL: Do I understand from my right hon. Friend that he is prepared to use his influence on the Statutory Committee in order to get these local committees appointed?
    Mr. HAYES FISHER: I hope nothing I have said will lead my hon. Friend to think that I shall use my influence one way or the other.
    Mr. McNEILL: In that case why does the right hon. Gentleman give me a long, answer which has given me no information that I had not before?
    Mr. J. SAMUEL: Was it not the intention of this House, when this matter was under discussion, that special considerations should be given to important towns like these?
    Mr. HAYES FISHER: My hon. Friend is as1 able as myself to judge of the discission.

    OLD AGE PENSIONS.
    Mr. WINGasked the President of the Local Government Board (1) if his attention has been called to the many resolutions passed by representatives of public bodies in conference and public bodies separately in the North of England appealing for increased assistance to old age pensioners; what steps are being taken to deal with this almost unanimous request; and (2) the Chancellor of the Exchequer if his attention has been called to the many representations from conferences and public bodies in the North of England expressing regret that nothing has been done to assist old age pensioners by an increased payment to meet the increased cost of living; and will he say if the Treasury is determined to resist this public demand?
    The CHANCELLOR of the EXCHEQUER (Mr. McKenna): My right hon. Friend has asked me to reply to these questions. I fear I can add nothing to my previous answers on this subject.
    Mr. WING: Owing to the nature of the reply of the right hon. Gentleman, I beg to give notice that I shall call attention to the matter on the Adjournment.
    Mr. BYRNEasked the Prime Minister whether he has received any resolution from Dublin asking) him to-consider the advisability of increasing the old age pension and reducing the age limit to qualify for the same; and, if so, whether he proposes to take any action in this matter?
    The PRIME MINISTER: The answer to both parts of the question is in the negative.
    Mr. GRAHAM: Is the right hon. Gentleman aware that many of the old age pensioners are seeking relief from the workhouse authorities?
    The PRIMe MINISTER: The question does not affect Ireland only, but also Great Britain.

  MILITARY SERVICE.

    CONSCIENTIOUS OBJECTORS.
    Mr. WINGasked the Prime Minister if a different method of dealing with conscientious objectors, as suggested by the late Lord Kitchener and further emphasised to a deputation of the leaders of the free churches, is about to be put in operation; and, if so, when this is to be done?
    The PRIME MINISTER: I hope to be able to make a general statement on this subject to-morrow.
    Mr. MORRELLasked the Prime Minister whether Private Howard Marten and three other conscientious objectors now serving in France have been sentenced by court-martial to be shot; and, if so, whether these sentences have been commuted?
    Mr. E. HARVEYasked the Prime Minister whether his attention has been called to the court-martial held at Boulogne upon Howard Marten, a member of the Society of Friends, and three other conscientious objectors to military service, at which the Court sentenced these men to death by shooting; whether this sentence was subsequently commuted to ten years' penal servitude by the Commander-in-Chief of the British Forces in France; and whether, in view of the promises given in Parliament by various members of the Government and the provisions of the Military Service Act, any steps are to be taken to prevent similar action by courts-martial in future?
    Mr. WHITEHOUSEasked the Prime Minister, as acting Secretary of State for War, (1) whether four conscientious objectors were court-martialled in France on 2nd June and sentenced to death by shooting; whether this sentence has been commuted to ten years' penal servitude; what action he proposes to take; and (2) whether the four conscientious objectors who, on 2nd June, were sentenced to death by shooting, the sentence being commuted to ten years' penal servitude, were Howard Marten, a member of the Society of Friends, who had previously been sentenced at Harwich to twenty-eight days' cells, a diet of bread and water, and confinement in irons;
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    Henry Scullard, a Congregationalist and secretary of a Young Men's Christian Association; John Ring, of Barnet, who had previously suffered solitary confinement, bread and water diet, and confinement in irons; and J. Foister, of Cambridge?
    Mr. SNOWDENasked the Under-Secretary of State for War (1) if four conscientious objectors named Marten, Scullard, Foister, and Ring, were sentenced to be shot at Boulogne on 17th June; if this sentence has been commuted to ten years' penal servitude; if the men are now in the prison at Rouen; if so, why the Army Order of 25th May last, directing that conscientious objectors sentenced to imprisonment must be immediately sent to a civil prison, has not been carried out in these cases, will this course be followed at once in these cases; and (2) if twenty-one conscientious objectors were court-martialled at Boulogne on 17th June, and if four of this number had the death sentence imposed, which was later commuted to ten years' penal servitude; if the sentences on the other seventeen have since been promulgated, if so, what are the sentences; if the sentences are imprisonment, will all these men be immediately brought to England for confinement in a civil prison; and if the eleven men now in prison at Henriville and the nine in prison at Rouen will also be immediately treated under the Army Order of 25th May last?
    Sir W. BYLESasked whether it is intended to send another batch of conscientious objectors to France this week; and whether any of those already sent have been condemned to be shot?
    Mr. E. HARVEYasked the Under-Secretary of State for War (1) whether Messrs. J. Foister, H. Marten, Ring, and Scullard, who, as conscientious objectors to military service and members of the Non-Combatant Corps, were, for refusing to obey military orders, sentenced on 17th June to death by shooting, and whose sentence was at once commuted to ten years' penal servitude, have been taken from Boulogne to Rouen; whether any steps have yet been taken for their removal to a civil prison in England; and (2) whether he is now able to make any statement as to the position of conscientious objectors who have been drafted into the Army under protest and are continuing to resist military orders?
    Mr. TENNANT: My right hon. Friend the Prime Minister has asked me to answer Questions Nos. 57, 68 and 69, and I will also answer the other questions which are addressed to myself and deal with the same matters. It is the case that courts-martial held in France have, in the exercise of their judicial functions, sentenced certain men professing conscientious objections to death for offences punishable by death under the Army Act. In all these cases—thirty-four in number—I am informed the sentence has been commuted to penal servitude by the Commander-in-Chief in France. In accordance with Sections 61 and 62 of the Army Act, prisoners sentenced to penal servitude must undergo their sentence in the United Kingdom in a civil prison, and this statutory provision will, of course, be given effect. In reply to Question 103, I would state that no companies of the Non-Combatant Corps are to be sent to France this week. On the matter generally, I may inform those hon. Members who are interested that my right hon. Friend the Prime Minister hopes to make a statement on this subject to-morrow.
    Mr. MORRELL: May I, in the first place, ask whether the Prime Minister's statement will be made in such a form as to allow of debate afterwards?
    The PRIME MINISTER: I cannot say that, but opportunity will doubtless be given in debate afterwards.
    Mr. MORRELL: May I ask, further, whether all the conscientious objectors who have been sent to France, and are and have been disobeying orders on conscientious grounds since they have been in France, will now be immediately recalled to this country?
    The PRIME MINISTER: No, Sir, I can not give such a pledge.
    Mr. OUTHWAITE: How can the right hon. Gentleman account for the fact that he has again and again misled the House as to the condition—[HON. MEMBERS: "Order, order!"]—yes—
    Mr. SPEAKER: The hon. Member can hardly expect a reply if he puts his question in that form.
    Mr. KING: Are we to understand that thirty-four men have been sentenced to be shot, and that all of these have had their sentences commuted to penal servitude for ten years, or some other period?
    Mr. TENNANT: The reply to the first part of the hon. Member's question is in the affirmative—that is to say, that all the sentences have been commuted. Whether or not they have all been commuted for ten years I do not know, but the first lot, at any rate, have been.
    Mr. SNOWDEN: If these cases have been commuted to penal servitude or imprisonment, as I understand they have, why are these men not to come back to England at once and put into a civil prison?
    Mr. TENNANT: If my hon. Friend had listened to my answer—
    Mr. SNOWDEN: I did listen to it.
    Mr. TENNANT: He would have understood that they have been.
    Mr. CHANCELLOR: Are persons liable to the death penalty other than those who are guilty of desertion in the face of the enemy?
    Mr. TENNANT: If my hon. Friend will refer to Section 9 of the Army Act he will see the offences for which the death penalty can be applied.
    Colonel GRIFFITHS: If these thirty-four men are sentenced to death for disobeying the orders of their superior officers, why are they not shot like other soldiers?
    Mr. KING: Inasmuch as the Non-Combatant Corps are never brought in face of the enemy, are we to understand that these men were not in the Non-Combatant Corps, but in a combatant unit?
    Mr. TENNANT: I do not think that is so, but I think the majority, if not all of these men, would be in the Non-Combatant Corps.
    Mr. KING: In view of what the right hon. Gentleman said on Thursday night, he must remember when he stated—
    Mr. SPEAKER: The hon. Member is not now asking a question.
    Mr. MORRELLasked the Prime Minister if he will institute inquiries into the allegations that have been made by many persons of the ill-treatment suffered by a number of conscientious objectors, whose names can be given, on or about 17th June, at Prees Heath Camp, near Whitchurch, Salop, and in particular if he

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    will ascertain whether these men after being kept some time without food were punched, kicked, knocked down, and undressed and scrubbed with a stiff sink brush till they were sore and bleeding; whether a man named Lance-Corporal Barker was brought in specially to give this treatment; whether appeals were made by the men to be tried by court-martial; whether this was refused by the commanding officer, Colonel Bolton; and whether, in view of the fact that these allegations are made by men of the highest respectability, coming from Burnley, Nelson, and other Lancashire towns, and that their failure to obey orders was due to conscientious motives, he will see that a searching investigation is made into all the circumstances of the case?
    Mr. TENNANT: Inquiry is being made into these allegations, the correctness of which J. must not be taken as accepting.
    Mr. MORRELL: Can the right hon. Gentleman tell me how the inquiry will be made and whether the result will be published?
    Mr. TENNANT: As a rule we do not publish the result of inquiries of this kind which are directed to an individual case. My hon. Friend has addressed many similar inquiries to me and I have always given an answer.
    Mr. SNOWDEN: May I ask whether, in view of the allegation of brutal treatment by non-commissioned officers and officers of conscientious objectors, the right hon. Gentleman will have a thorough inquiry made and the evidence of these men taken?
    Mr. TENNANT: I would ask my hon. Friend to remember that we are in the middle of a great war, and that we are endeavouring to obtain soldiers. I have never refused to cause inquiries to be made into individual cases where there is any reason to suppose anything has been done which ought not to be done which is either cruel or contrary to the instructions which we give, but I really would ask hon. Members to make some kind of inquiry for themselves first, in order that they may be reasonably sure that a primâ facie case is made out, before I take up the time of my office in conducting that kind of inquiry.
    Mr. MORRELL: Will the inquiry take any more precise form than a mere letter
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    addressed by the Adjutant-General to the Commanding Officer and the Commanding Officer's reply? Will it be in any sense an independent inquiry?
    Mr. TENNANT: All these inquiries are made by communicating with the General Officer in Command, who puts the machinery in motion.
    Mr. SNOWDEN: That is to say, then, that the only evidence the War Office takes is the evidence of the incriminated parties themselves?
    Mr. WHITEHOUSEasked the Prime Minister, as acting Secretary of State for War, whether Mr. C. H. Norman is still confined in Wandsworth Detention Barracks; whether, on 23rd May, he was confined in a straight jacket, which was too small and caused him great agony; whether the then commandant, who has since been removed, mocked at him; whether Mr. Norman fainted and was left unconscious on the floor for an hour; whether he was afterwards taken to hospital; and whether he returned to the barracks on 31st May and was again subjected to brutality by the then commandant?
    Mr. TENNANT: Norman is still in Wandsworth Detention Barracks. As he threatened suicide he was placed in restraint on the date mentioned. He was removed to hospital. On the 31st May he was sent to detention barracks. The punishment inflicted and the treatment accorded to Norman have been in accordance with the rules for detention barracks, and it is not right to say that he was subjected to brutality by the commandant, though that officer behaved incorrectly and without discretion in expressing his personal views.
    Mr. KINGasked whether the Rev. F. B. Meyer was permitted by the late Lord Kitchener to visit camps in France where conscientious objectors are now detained; whether Mr. Meyer in one camp saw and conversed with fourteen such men, now prisoners, who had been for some time on bread and water diet; whether in another camp Mr. Meyer interviewed twenty-one conscientious objectors undergoing detention punishment, who were confined under guard; and whether the report which Mr. Meyer has published of his visit, relating to these and other facts, was submitted to the War Office?
    Mr. TENNANT: No, sir. No report by the Rev. F. B. Meyer has been submitted to the War Office, and I was unaware that he had prepared any report.
    Mr. E. HARVEYasked the Under-Secretary of State for War whether his attention has been called to the treatment by the local military authorities at Chelmsford Detention Barracks of Frank Ward, a member of the Society of Friends and a conscientious objector to military service; whether, because of his persistent refusal to take part in military drill, he was bound with ropes and dragged along the ground until blood was drawn; whether in consequence of his ill-treatment he had to be removed to a hospital; whether he will be placed again under the same conditions; and whether any steps are to be taken to prevent the continuance of this method of persecution?
    Mr. TENNANT: I am making inquiries, but in the meantime I must not be taken as accepting the allegations contained in the question as accurate.
    Mr. SNOWDENasked the Under-Secretary of State for War if the late commandant at Wandsworth Detention Barracks, who was dismissed for the brutal treatment of conscientious objectors, has been appointed to some other post; and, if so, where and what is the appointment?
    Mr. TENNANT: No, Sir; the late commandant at Wandsworth was not dismissed for brutal treatment of conscientious objectors. He has not been appointed to another post for further employment. He did not ask.
    Mr. SNOWDENasked the Under-Secretary of State for War if a conscientious objector named Arthur Slater is detained in the military prison at St. Alban's; if so, what is the sentence he is serving; by what Court he has been sentenced; what is his present state of health; when will he be allowed a visit; and why is he not given the benefit of the Army Order of 25th May last?
    Mr. TENNANT: If my hon. Friend, from the information evidently in his possession, will state the man's regimental number and regiment, it might be possible to afford information, but as there is no allegation of ill-treatment there is no primâ facie case for inquiry.
    Mr. SNOWDEN: As this young man is a conscientious objector, it follows that he has not got either a regiment or num-
    528
    ber which he recognises, and therefore I am unable to give the right hon. Gentleman the information.
    Mr. TENNANT: Perhaps my hon. Friend will ascertain what his company or number is in the Non-Combatant Force.

    CIVIL LIABILITIES.
    Major NEWMANasked the President of the Local Government Board what progress has been made by the Committee set up to deal with the civil liabilities of those on military service; have commissioners been appointed and started their work for all districts; what arrangement has been made for Ireland; and what means have been adopted to enable soldiers serving outside the United Kingdom to make application for help if they desire?
    Mr. HAYEs FISHER: I am glad to be in a position to assure my hon. and gallant Friend that very considerable progress has been made, and much of the credit for this is due to the Advisory Committee whose appointment I announced to the House on the 1st June last. Commissioners have been at work in every district in Great Britain since the 29th May. Arrangements have been made for bringing the scheme into operation in Ireland, where there has been some delay owing to causes which will be readily understood. It is proposed to start with four Commissioners, one for each province, whose headquarters will be Dublin, Belfast, Cork, and Galway. Forms of application will be in the Irish Post Offices in the course of this week. The War Office are arranging for forms of application to be sent to the front. It has been arranged that application forms filled in by men at the front shall be forwarded by the War Office to the Committee's offices, where they will be sorted and sent on to the appropriate Commissioners.
    Major NEWMAN: Does the right hon. Gentleman say that the War Office are arranging, or have arranged?
    Mr. HAYEs FISHER: The War Office are arranging—I think, as a matter of fact, they have arranged!

    ARREST PENDING APPLICATION (EXETER).
    Mr. SNOWDENasked the President of the Local Government Board if he has considered the case submitted to him by Mr. Thomas Bailey, a dairyman, of Exeter, who has been arrested by the military while his application for a revision

    529
    of his certificate under the Military Service Act was pending; and if he has instructed the tribunal to rehear the case?
    Mr. HAYES FISHER: My right hon. Friend has considered this case and is not prepared to intervene. The military authorities are not precluded from calling up for service a man who has a certificate of exemption from combatant service only, and has applied for a review of his certificate or for the rehearing of his case.

    BLUE MEDICAL FORM.
    Mr. GINNELLasked the Under-Secretary of State for War under what rule Private Daniel Collins, No. 26,816, 4th battalion Royal Dublin Fusiliers, now in Mullingar, was deprived in the recruiting office, Manchester, of his blue medical form certifying him unfit for military service, forced to join the Army, is now denied permission to report his case to a Member of this House, and that, being dressed in khaki, no civilian doctor can venture to examine him for fitness; and whether, in these circumstances, he will recover the certificate of unfitness taken from Collins at Manchester, and allow him the liberty to which it entitles him?
    Mr. TENNANT: I would refer the hon. Member to the answer I gave to the hon. Member for South-East Cork on the 23rd May. As I then stated, this man when he went before the medical board was found to be of exceptionally good physique, and he was posted to the regiment in which he expressed a desire to serve, namely, the Dublin Fusiliers.

    RECRUITS UNFIT FOR SERVICE.
    Captain DOUGLAS HALLasked the Under-Secretary of State for War if he will consider the case of those men of military age who come under the Military Service Act and have been certified as physically poor, and cause arrangements to be made so that such men can be definitely informed as to whether they will be required in the Army or not, so that they can know what to do about finding civil employment, seeing that under existing conditions this is almost impossible for them to obtain owing to the uncertainty of their position, which causes serious hardship?
    Mr. TENNANT: The present arrangements for dealing with men found unfit for service by the Recruiting Medical Board
    530
    have been drawn up with the express purpose of obviating the alleged hardship. Recruits rejected at the primary military examination as being unsuited to any form of military service, i.e., not likely to be fit within six months, are given a certificate and exempted from service. Recruits who are not likely to be fit for service within a month are sent back to their homes reverted to the Army Reserve Class B. Each man after examination by the Medical Board is given a certificate showing him in which category he has been placed, and is informed whether men of that category are being taken for service or not. Should their service be required in the future they will be given as much notice as possible. At present there is no intention of calling up men relegated to the Reserve after medical examination, but what may happen in the future is impossible to foretell.
    Mr. ANDERSON: Is the right hon. Gentleman aware that cases are repeatedly happening where men are actually called out and on presenting themselves finally are sent back to their homes indefinitely after giving up their businesses or employment; and, in that case, does the War Office accept any financial responsibility towards the men who have given up their businesses?
    Mr. TENNANT: Of course, I cannot pretend that mistakes have not arisen; inevitably they must in dealing with such vast numbers of men. I cannot hold out any hope that my right hon. Friend the Financial Secretary will accept responsibility.

    LOCAL TRIBUNALS.
    Mr. E. HARVEYasked the Under-Secretary of State for War whether his attention has been called to the case of Michael Harris, now Private No. 4,683 in the West Yorkshire Regiment at Clipstone Camp, Mansfield, who was granted conditional exemption on domestic grounds by the Leeds Tribunal over six weeks ago, but who has not hitherto been released by the military authorities, in spite of repeated requests by his father, who has five sons in the Army, is in feeble health, and needs his help; whether he is aware that the father, Mr. Abram S. Harris, in addition to communications addressed to the commanding officer, has twice sent registered letters to the War Office enclosing stamped envelopes for reply, and

    531
    has also forwarded his son's exemption card to the War Office, but has received neither reply nor acknowledgment of any kind; and whether he will take steps to give effect forthwith to the decision of the tribunal?
    Mr. TENNANT: I have ascertained that this man is being relegated to the Reserve, so that no further action is necessary.

    ATTESTED YOUTHS.
    Mr. SNOWDENasked the Under-Secretary of State for War if attested youths who are not nineteen years of age will be called to the Colours before they reach the age of nineteen; and if they have the option of joining the Army now or waiting at home till they reach the age of nineteen?
    Mr. TENNANT: Whether attested youths will be called to the Colours before they reach the age of nineteen or not depends upon the military needs of the future. It is not improbable that they will be so called. At present the option of joining at once or waiting at home until the age of nineteen is reached is open to them. Those who elect to join the Colours are to be trained in squads separate from the men until they reach the age of eighteen years and eight months. They will not be sent abroad before they are nineteen years of age. These are the present arrangements, and there is no intention of modifying them unless and until the military situation demands. Though it is conceivable that circumstances might arise which would make it imperative to send lads under nineteen years of age abroad, there is, as I have stated, no present intention of doing this. As regards under-age soldiers serving at home, those under seventeen years of age will be discharged, those over seventeen but under eighteen will be transferred, if willing, to Class W. Army Reserve or Class W. (T) Territorial Force Reserve. Those over eighteen but under nineteen years of ago will be posted to a Reserve unit until such time as they attain the age of nineteen years. Under-age soldiers serving with an Expeditionary Force will, if under eighteen years of age, be sent home, if willing, and posted to a Reserve unit. If over eighteen but under nineteen years of age, they will be posted to a training or other unit behind the firing line. Before
    532
    any action is taken in these cases the real age of the soldier will be verified by reference to his birth certificate.
    Mr. ASHLEY: Could the right hon. Gentleman say whether the age of these soldiers may be taken as their real age or the official age given when they attested?
    Mr. TENNANT: It was to overcome the difficulty we found in accepting the given age as the real age that we have made this departure from our previous custom. We are now having recourse entirely to the birth certificate.
    Mr. GINNELL: Will the right hon. Gentleman make it clear, if a lad enlists while under age and gives a false age, that he will be released when the birth certificate is sent to the military authorities? There are several cases.
    Mr. TENNANT: I have just given to the House, I am afraid rather lengthily but necessarily so, the action we propose to take at various ages. If he is under seventeen he will be discharged.

    NATIONAL RELIEF FUND.
    Mr. HOGGEasked the Prime Minister whether the amount due to be repaid by the War Office to the National Relief Fund has yet been settled?
    The PRIME MINISTER: No, Sir.
    Mr. HOGGE: Can my right hon. Friend say when the arbitration is likely to be settled?
    The PRIME MINISTER: We hope before long.

    DARDANELLES (PAPERS).
    Sir H. DALZIELasked the Prime Minister whether he is able to give any indication as to when the Dardanelles Papers that have been promised will be circulated?
    The PRIME MINISTER: a considerable period must elapse before these Papers are likely to be ready.
    Sir H. DALZIEL: Will the next issue be before the end of the Session and in time for a Debate, should it be desired?
    The PRIME MINISTER: I hope so.

    SALONIKA OPERATIONS.
    The following question stood in the name of Mr. LYNCH:—
    59. To ask the Prime Minister whether, in view of the delay in the appointment of the new Secretary of State for War, he is taking appropriate steps so that the question of a vigorous plan of campaign from the Salonika base may be kept under examination; and that, in the event of a decision in that direction, all preparations under British control will be found adequate to make the campaign successful?
    Mr. LYNCH: On representation, I will, with your permission, Mr. Speaker, withdraw this question.

  GOVERNMENT OF IRELAND.

    PROPOSED SETTLEMENT.
    Major NEWMANasked the Prime Minister whether any resolutions by any public body in Ireland have reached him or been brought to his notice expressing consent with the proposal to permanently exclude six counties and provisionally bring into operation the Home Rule Act of 1912 for the remainder of Ireland?
    The PRIME MINISTER: No resolutions have been submitted to me, but I understand that certain important bodies in Ireland have expressed their agreement with the proposals submitted by my right hon. Friend the Minister of Munitions.

    LOSS OF H.M.S. "HAMPSHIRE."
    Major HUNTasked the Prime Minister if he can now say when a definite report may be expected from the Admiralty as to whether the ship on which Lord Kitchener was carried was sunk accidentally by a mine, or whether it was the result of a mine or torpedo brought about by a spy or spies in this country?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): The considered conclusion of the Commander-in-Chief of the Grand Fleet is that the ship was sunk accidentally by a mine.
    Major HUNT: Is the right hon Gentlemen aware that there is a very strong feeling in the country that the Government is very much to blame for not having provided a sufficient escort for the most valuable subject of the King?
    Mr. SPEAKER: That does not arise out of the question on the Paper.

    TOBACCO GROWING (IRELAND).
    Mr. GRAHAMasked the Secretary to the Treasury the amount of the Grant given by the Government for encouraging the growing of tobacco in Ireland; in what manner the money is applied; who is responsible for the preparation and administration of the schemes; and whether a public audit is made of the accounts in respect thereto?
    Mr. MONTAGU: Provision is made in the Estimates for a Grant not exceeding £6,375 for this purpose in 1916–17. Payment of the Grant is made to the Department of Agriculture and Technical Instruction, who are responsible for its application in accordance with schemes approved by the Development Commissioners, and whose accounts are open to inspection by the Comptroller and Auditor-General in the usual way. The hon. Member should apply to the Vice-President of the Department if he desires any information as to the details of administration.

    BONDED WAREHOUSES (SHIP STORES).
    Sir H. DALZIELasked the Secretary to the Treasury how many bonded warehouses used principally for ship stores in the United Kingdom are wholly or partly owned by or conducted for the benefit of alien enemies, their dependants, or natives of neutral countries?
    Mr. MONTAGU: I am afraid I have no information on this subject. I should be glad to endeavour to obtain it for him, but all I could do would be to supply from the Customs records to the Board of Trade or the Homo Office a list of the warehouse keepers to whom bonding privileges have been granted. This list does not, of course, disclose the parties who are interested in the warehouses.

    SCOTTISH WOUNDEd SOLDIERS (IRISH HOSPITALS).
    Mr. HOGGEasked the Under-Secretary of State for War whether the War Office will arrange for Scottish soldiers who are in Randalstown, in Ireland, in hospital, to be transferred to Scotland within reach of their relatives?
    Mr. TENNANT: The troops in question are not in hospital, but are convalescents in a command depot. It is not possible to move this depot to Scotland, as suitable accommodation is not available there, whilst there is very good accommodation for the purpose at Randalstown.
    Mr. HOGGE: Can my right hon. Friend not try at any rate to avoid sending Scottish wounded soldiers or Scottish convalescents to Ireland, on account of the difficulty of their relatives visiting them?
    Mr. TENNANT: Of course I see the difficulty, and I also see other difficulties where there is no accommodation.
    Mr. HOGGE: Is the right hon. Gentleman aware that there are a large number of Irish convalescents in Scotland?

    NAVAL AND MILITARY SERVICES (PENSIONS AND GRANTS).
    Sir F. LOWEasked the Under-Secretary of State for War whether his attention has been drawn to a case in which a police magistrate on being asked by a soldier whose wife was serving a sentence for drunkenness whether he could draw the allowances, as he had four children to support, replied in the negative, and that the only thing to be done was to send the children to the workhouse; and will he say whether the allowances mentioned are granted in such cases?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): During the time a soldier's wife is in prison separation allowance for the children is issued at the higher rate applicable to motherless children, namely, 5s. per week for the child. The attention of the magistrate has been drawn to this rule.
    Sir F. LOWE: Are we to understand that the magistrate was wrong?
    Mr. FORSTER: Entirely wrong.
    Sir F. LOWE: Has he been put right?
    Mr. FORSTER: I hope so.

    SMALL-POX (PROTECTION OF SOLDIERS).
    Mr. CHANCELLORasked the Under-Secretary of State for War whether an Army Order was issued in May prohibiting soldiers from visiting their homes in parts of Northumberland, Durham, Lancashire, Glamorgan, and Monmouth owing to a few cases of small-pox in these counties; whether this Order is due to loss of faith in the protective virtues of vaccination; or, if not, whether he will at once withdraw this Order?
    Mr. TENNANT: Orders in the sense mentioned were issued, but have now been withdrawn as no longer necessary except in the case of three towns, where cases of small-pox recently occurred. The restrictions were not enforced for men recently vaccinated. The Orders were a measure of precaution and not indicative of any loss of faith in the protective virtues of vaccination. The War Office docs not abjure its faith so easily as my hon. Friend seems to suppose, but it will omit nothing which is calculated to preserve the health of His Majesty's Forces.
    Mr. WING: Are any of the exempted towns mentioned in the right hon. Gentleman's reply in the county of Durham?
    Mr. TENNANT: I am unable to say.

    APPLICATIONS FOR COMMISSIONS (CASE OF PRIVATE R. A. JONES).
    Mr. LLEWELYN WILLIANISasked the Under-Secretary of State for War whether he will inquire into the case of Private R. A. Jones, who enlisted on Friday, 15th June, in the Motor Transport, Army Service Corps, at Grove Park, London; whether he is aware that Private Jones had applied for a commission at the end of May; that on 14th June he received a printed notice from the War Office asking him to call with reference to his application on Tuesday, 20th June; that he called at the War Office on Tuesday as instructed and saw two officers, a major and a captain; that the major told him that, as he had enlisted, his application could not be entertained without the signature of his commanding officer; that Private Jones had obtained leave from his commanding officer to call at the War Office after he had shown him the form he had received from the War Office; that on his return to Grove Park an order was

    537
    received from the War Office that Private Jones should be mobilised at once because he had proceeded without authority to the War Office, and that it would be better for his health that he should go at once Overseas; that he was taken on Thursday, 22nd June, to the Army Service Corps depot, Catford, to proceed Overseas as an interpreter; whether any steps had been taken to ascertain the qualifications of Private Jones as an interpreter, inasmuch as he is entirely ignorant of any modern language except English and Welsh; whether it is in accordance with Army Regulations that a recruit should be sent Overseas within a week of the date of his enlistment; and, if not, whether he will take steps to bring Private Jones back to this country to undergo the usual training?
    Mr. TENNANT: Mr. R. A. Jones forwarded an application for a commission, and he was invited to attend for an interview at the War Office on the 20th June, with a view to his qualifications being examined, but Private R. A. Jones, a serving soldier, actually attended in answer to the invitation. As Mr. R. A. Jones had become Private R. A. Jones in the interval, he was rightly and properly informed that his application could not be considered unless it were signed by his commanding officer giving the necessary recommendation and permission to apply. I am informed that Private R. A. Jones had not the permission of his commanding officer to attend at the War Office on the 20th June. His form of application was forwarded to his commanding officer for the necessary recommendation, and Private R. A. Jones will doubtless be permitted to attend at the War Office with a view to obtaining a commission if his commanding officer is able to recommend him. There is no question of his being ordered away until it has been decided whether or no he is fitted for commissioned rank.
    Mr. WILLIAMS: Is it not a fact that Private Jones was mobilised, was given his kit and told that he was going to be embarked last Friday for East Africa, and that the countermanding order from the War Office was only received after this question was put down?
    Mr. TENNANT: I could not be expected to be aware of those facts.
    Mr. PRINGLE: Is Private Jones a baptist?

    WAR OFFICE (TEMPORARY WOMEn OLERKS).
    Lord H. CAVENDISH-BENTINCKasked the Under-Secretary of State for War why the temporary women clerks in the War Office are required to work forty-eight hours a week, whereas the temporary male clerks are required to work only forty-two hours a week; and whether the working week of women clerks can be reduced from forty-eight to forty-two hours as in the case of men?
    Mr. TENNANT: The Noble Lord will probably be aware that there were no pre-war regulations in regard to the employment of women clerks in the War Office. When the rate of pay was fixed, it was specially fixed to cover forty-eight hours. If it had been fixed to cover forty-two hours only, the rate of pay would have been proportionately less. Both men and women clerks at the War Office work for forty-eight hours, and in the majority of cases considerably more.

  BRITISH PRISONERS IN GERMANY.

    REDUCED DIETAKV SCALE.
    Mr. IAN MALCOLM(by Private Notice) asked the Under-Secretary of State for Foreign Affairs whether any further reports have been received from the United States Ambassador about the dietary in force at Ruhleben and the conditions at that camp since the issue of the last White Paper on the subject, and whether he will give the House any information he may possess regarding these matters?
    Lord R. CECIL: On the 31st ultimo we received a further report by Dr. Taylor on the food supply and nutrition at Ruhleben showing that, since Dr. Taylor's first report was drawn up, a fresh scale of diet had been put in force, and that civilians at Ruhleben were receiving only a little more than one-third of the protein carrying foods allowed to combatant prisoners of war, while the potato rations of the civilians had been reduced to less than one-half of those issued to combatant prisoners.
    On 3rd June we informed the German Government, through the United States Ambassador, that if they were not in a position to feed prisoners of war in their hands properly it was clearly their duty to release them. We pointed out at the same

    539
    time that, so far from doing so, they were detaining persons entitled to repatriation on the ground of ill-health, and had made no reply to our proposal that civilians over fifty should be repatriated and those over forty-five also if unfit for service in the field. We pointed out that the German prisoners in our hands were not dependent on parcels for nourishment. We said we were ready to consider any proposals for an exchange of civilians on an extended scale. We asked the United States Ambassador to inquire the numbers, and, if possible, the names of the men at Ruhleben who were receiving no parcels.
    On 8th June we asked Mr. Gerard to obtain permission, if possible, for us to send at fixed intervals sufficient food in bulk for 500 men.
    As the result of Dr. Taylor's report, the Prisoners of War Help Committee decided to send parcels for 250 men, in addition to those previously sent.
    On 21st June we received a still more unfavourable report by Dr. Taylor, from which it appears that the German authorities have deliberately reduced the official food rations at Ruhleben, and that they have accumulated a large sum of money estimated at between 60,000 and 200,000 Marks, which should have been spent in rations. Dr. Taylor states that the food supplied during the week ending 14th June, if applied to all the men interned at Ruhleben, represents less than half of the requisite food units, and that matters are made worse by the fact that much of the bread coming from outside Germany during the last month is of inferior quality, or has arrived in bad condition.
    As the result of this report, we addressed a Note to Mr. Page for communication to the German Government by telegraph, recapitulating the observations in our Note of the 3rd instant as to the duty of the German Government to feed the prisoners properly, or to release them, and as to their failure to reply to our proposals to release civilians over fifty and over forty-five in certain conditions, and concluding by proposing that all the British civilians at Ruhleben should be released in exchange for a similar number of German civilians, and stating that, should the German Government not accept this proposal within a week from the receipt by them of the telegraphic summary of this Note, we
    540
    should be compelled to consider what course to adopt with regard to the rations of German civilians interned here.
    The correspondence will be laid before Parliament as soon as possible.

    Juvenile Offences.
    Mr. WINGasked the Home Secretary if his attention has been called to the increase of juvenile offences; and will he say what steps he proposes for dealing with this problem?
    Mr. SAMUEL: I would refer my hon. Friend to a circular letter on this subject which I issued last month to clerks to justices and chief constables, a copy of which I will send him.

    Chief Factory Inspector (Report).
    Lord H. CAVENDISH-BENTINCKasked the Home Secretary whether the Report of the chief factory inspector will be issued before the Home Office Vote is taken?
    Mr. SAMUEL: The issue of this Report has been delayed by the great pressure both on the Factory Department and on the Government printers, but arrangements have been made to ensure its being in the hands of Members on Wednesday.

    Supreme Court of Judicature.
    Mr. ROWLANDSasked the Attorney-General what number of officials are engaged in the various offices of the Supreme Court of Judicature above the age of sixty-five; and whether it is the intention of the Government to give effect to the recommendation of the Royal Commission that all such officials should be compulsorily retired?
    Mr. HAYES FISHER: My right hon. Friend has asked me to answer this question, as he is engaged elsewhere. There are several officers of the Supreme Court above sixty-five years of age. Perhaps the hon. Member will be satisfied with that statement; but, if he presses for a return no doubt it can be obtained. As for the latter part of his question, the Government have invited a small Committee to work out the details of the recommendations of the Royal Commission, including those which relate to the age of retirement. The hon. Member is not accurate

    541
    in saying that the Royal Commission recommended the compulsory retirement of all officers of the Supreme Court who are over the age of sixty-five.
    Mr. ROWLANDS: Will the right hon. Gentleman consider the case of those who are over seventy and seventy-five?
    An HON. MEMBER: And ninety!

    Ceylon.
    Mr. GINNELLasked the Secretary of State for the Colonies whether he has read the affidavit of Mirissage Kathohamy Silva that, on the night of the 6th June, 1915, some Moormen, under the command of Lieutenant W. Dickinson, and another Englishman, forcibly entered her house, called her husband, Andris Silva, shot him dead in the house in her presence, and gave an order for the burial of the body, signed W. Dickinson, Lieutenant C.M.R.; whether Sir Robert Chalmers, then Governor of Ceylon, has given any explanation of this particular case; and whether Lieutenant W. Dickinson is now in His Majesty's service?
    The UNDER-SECRETARY Of STATE for the COLONIES (Mr. Steel-Maitland): I have read what purports to be a transcript of the affidavit in question, but I have no reason to believe that it accurately represents the facts.
    Mr. GINNELL: The Under-Secretary has failed to answer the last part of the question: Whether Lieutenant Dickinson is still in His Majesty's service, and what action Lieutenant Dickinson proposes to take to clear his character of the allegation contained in this question?
    Mr. STEEL-MAITLAND: I am not aware that Lieutenant Dickinson needs to take any action whatsoever in order to clear his character in this connection.
    Mr. GINNELL: Is he still in the public service?
    Mr. STEEL-MAITLAND: As far as I am aware, he is still in the public service.
    Mr. GINNELL: He is a rascal!

    Motor Fishing Boats (County Louth).
    Mr. NOLANasked the Chief Secretary for Ireland whether he is aware of the loss caused to the inshore fishermen on the sea coast of county Louth by the depredations of ring-net motor fishing boats; whether it has been pointed out to him
    542
    that the hardship caused to the local fishing population by this interference with their means of living is all the greater from the fact that almost the whole of the able-bodied men from that quarter are away serving in the Navy; and what steps he proposes to take to protect the interest?, of the elderly men and boys engaged in the line-fishing industry of the coast in question?
    Mr. SAMUEL: The Department have so far failed to obtain any detailed statement in support of allegations made as to injury by ring nets to line fishing and other fishing on the coast of county Louth. They are willing to hold public inquiries into the matter, but do not consider the present time propitious in the absence on naval or military service of a large proportion of the persons interested in the general fisheries of the district.

    Fermoy (Late Head Constable).
    Mr. GINNELLasked the Chief Secretary for Ireland why no inquest was held into the death of the late head constable Rowe, of Fermoy; why the Lord Lieutenant has not yet acceded to the request of Cork County Council for the exhumation of the body and a post-mortem examination by duly qualified medical practitioners, for which the council was willing to pay; and, seeing that this delay of the Government may result in defeating justice, whether the Government accept responsibility for dealing with the claim for £2,500 made against the council in connection with this death?
    Mr. SAMUEL: In view of the clear and notorious circumstances under which the late head constable met his death, the holding of an inquest in his case would have served no useful purpose. The claim for compensation referred to in the question of the hon. Member was decided against by the Recorder of Cork upon the ground that the case upon the facts did not come within the terms of the Statute authorising compensation.

    BILL PRESENTED.
    ROYAL MARINES BILL,—"to extend further the term of service of the Royal Marine Force during the present War," presented by Dr. MACNAMABA; supported by Mr. Balfour; to be read a second time To-morrow, and to be printed. [Bill 57.]
ORDERS OF THE DAY.

  MEMORIAL TO FIELD-MARSHAL EARL KITCHENER.
  Resolution reported,
  "That an humble Address be presented to His Majesty, praying that His Majesty will give directions that a monument be erected at the public charge to the memory of the late Field-Marshal Earl Kitchener, with an inscription expressing the admiration of this House for his illustrious military career and its gratitude for his devoted services to the State, and to assure His Majesty that this House will make good the expenses attending the same."
  Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.
  Address to be presented by Privy Councillors and Members of His Majesty's Household.

  WAYS AND MEANS [22ND JUNE]
  Resolutions reported,
  WAYS AND MEANS [22ND JUNE]
    CONTINUANCE OF DUTIES.

      1. CUSTOMS DUTIES.
      1. "That the following duties of Customs, imposed by Part I. of the Finance (No. 2) Act, 1915, until the nrst day of August, nineteen hundred and sixteen, shall continue to be charged until the first day of August, nineteen hundred and seventeen, that is to say:—

      Duty

      Section of Act.

      Increased Duty on Tea

      …

      1

      Additional Duties on Dried Fruit

      …

      8

      Additional Duties on Tobacco

      …

      9 (1)

      Additional Duty on Motor Spirit

      …

      10(1)

      New Import Duties

      …

      12"

      Mr. LOUGH: I desire, Mr. Speaker, to ask your ruling on a point of Order with regard to this Resolution. Perhaps I may explain to my right hon. Friend opposite that I do not do so in any hostile spirit to the Resolution itself I am very glad to see it brought forward, and I do not intend to obstruct it in any way. But I desire to take your ruling on the point, whether the Resolution is in the form in which the House can pass it? We were unable to raise the point in
      560
      Committee because the Resolution was not before us, and we had not time to consider the form of it. I take these two points, that while the words of the Resolution say "the following duties," no duties are afterwards specified, and in a matter of taxation it is important that, in Resolutions sanctioning it, the House should have the duties carefully stated. The second point is that the universal precedent in the House has been that there shall be a separate Resolution for each particular tax, whereas here we have tea, dried fruit, tobacco, and something else all combined in one Resolution. Carrying out that plan would make it extremely difficult for this House to amend them if it were so disposed, and it also makes it difficult for the House to follow the Resolution. There is this point which is worse still with regard to the fifth item in the Resolution. It says simply "new import duties." The Resolution says the following duties shall be carried on, and then it adds "new import duties," but it does not specify any duties, and it is extremely difficult for the House to know, for instance, that motor cars, or films, are included in these duties. I suggest it is a bad example of legislation by reference, which we certainly ought not to introduce in taxation Resolutions. It is opposed to the ancient forms and privileges of this House, and it is not in accordance with the principle and practice universally followed in this House, which is that we should have a separate Resolution for each duty, and that the precise nature of the tax should be stated therein. I hope you will see your way to ruling that the Resolution should not be brought up in the form it, has been.
      Sir F. BANBURY: I did not know the right hon. Gentleman was going to raise this point, and I have not been able to look it up, but my recollection is—and on this I ask your ruling—that never—certainly during the time I have been in Parliament—have several duties been introduced in one Resolution. As far as my recollection goes, there has always been a separate Resolution for each duty.
      Mr. SPEAKER: The right hon. Gentleman's recollection is faulty. I can give him at once two occasions on which that has occurred—on the 25th April, 1901, and the 11th May, 1909. In both of those cases a number of duties were combined in one Resolution, and, therefore, we have

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      two clear precedents. I cannot now intervene. Both the right hon. Gentlemen should have intervened when the Motion was first put from the Chair in Committee if they wished to raise the point. The House has received the Resolution as agreed to in Committee, and it is impossible for mo to divide the Report which the House has made. The House has ordered the Resolution to be reported. I quite agree, speaking on the general subject, that it would be extremely undesirable to put into a Resolution a combined number of new duties, but I would point out that this does not contain any new duties they are all old duties.
      Mr. LOUGH: Will you not consider that the House was placed in a very difficult position when the Resolution was read? We had not the terms of it in our hands. It may be said we ought to have been quick to follow it. I pointed out, however, I did not want to delay or obstruct it in any way. I do ask, in the interests of the most ancient and valuable privileges of this House, if it cannot be altered now, you will give us some assistance to prevent this practice being pursued in the future.
      Mr. SPEAKER: What is the "ancient and valuable privilege" to which the right hon. Gentleman refers? I have already pointed out what was done when the right hon. Gentleman was a Member of the Government.
      Mr. LOUGH: No, no!
      Mr. SPEAKER: I beg pardon I thought it was so. But there are these two clear cases, perfectly clear cases, which are exactly on all-fours with this Resolution. While I quite agree that it would be exceedingly undesirable to introduce a Resolution into Committee which combined a number of new duties, I would point out that this Resolution does not do so. It simply continues some of the old existing duties which have been already imposed.
      4.0 p.m.
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Sir WALTER ESSEX: Would anyone be able to express their dissent from one of these taxes without voting against the whole block? I would respectfully point out that the Petrol Tax is an increased tax for new purposes.
      The FINANCIAL SECRETARY to the TREASURY (Mr. Montagu): No.
      Mr. SPEAKER: That is another Resolution altogether.
      Sir W. ESSEX: I beg your pardon, Sir.
      Mr. SPEAKER: The hon. Member should remember that this is only a preliminary step, and that if he objects to continuing any one of these taxes on tea, dried fruit, or tobacco, or whatever it may be, really the best time is when it is proposed to insert that duty in the Bill. Then he gets a clear issue upon which he can raise the matter, and then it can be discussed and decided.
      Question put, and agreed to.

      EXCISE DUTIES.
      Resolution reported,
      2. "That the following Duties of Excise imposed by Part I. of the Finance (No. 2) Act, 1915, until the first day of August, nineteen hundred and sixteen, shall continue to be charged until the first day of August, nineteen hundred and seventeen, that is to say:

      Duty.

      Section, of Act

      Additional Duties on Tobacco

      …

      9(2)

      Additional Duty on Motor Spirit

      …

      10 (2)

      Additional Medicine Duties

      …

      11"

      Resolution agreed to.

      MOTOR SPIRIT LICENCE DUTY.
      Resolution reported,
      3. "That there shall be charged on 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 with which he is authorised to be supplied by the licence."
      Resolution read a second time.
      Mr. LOUGH: I beg to move to leave out the words "authorised to be," and to insert instead thereof the word "actually."
      I would point out to the House, in support of the unusual action of objecting at this stage, the extraordinary form upon which this Resolution is based. It is another matter upon which we had very imperfect information when the Resolution was passed in Committee. That may be an excuse for the House looking closer into it now. This Resolution deals with the proposed new tax on motor spirit, and the tax is embodied in such a form that the House ought to hesitate before

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      sanctioning it. The machinery is this—many Members will be acquainted with it by this time—a licence is to be issued, say, for one hundred gallons of petrol, and on the licence the duty is to be paid. The man who obtains the licence might never obtain the petrol. He might die; a great many things might happen, and a man might not use the petrol if he takes it. To authorise a tax because you are permitted to use some taxable article is a new step which this House ought not to take without full consideration. The Amendment I propose would provide that the tax should be imposed on the petrol actually used or supplied. That is the ordinary way in which all Customs Duties are levied. This Resolution, which levies the tax on the grant of a licence, seems to be extremely inconvenient to everybody and to make it almost impossible for the tax to be fairly or properly levied. Therefore, in order to avoid doing great injustice to people who try to work under it, I move this Amendment.
      Mr. MONTAGU: My right hon. Friend has really chosen the most inconvenient method possible of airing his views on this subject. Surely he had much better wait to discuss the scheme until it is before us in detail. The right hon. Gentleman complains that he had very little information on the last occasion. He had all the information for which he asked. He was here, the scheme was explained to him, and he voted for the Resolution.
      Mr. LOUGH: No, I did not.
      Mr. MONTAGU: Well, he did not vote against it, and he has shown that he understood it from what he said to the House just now. When we get to the Clause it will be possible for him to suggest to the Committee that they should make the alterations he desires. The whole basis of this new tax, on the subject of which the Committee agreed to drop Clause 11 in the Finance Bill as originally introduced, is that it should be a Licence Duty and that it should be payable when the licence is taken out. If the man who applies for the licence is not likely to use the whole of the petrol, then let him apply for less. It will be no gain to the State if some private consumer of petrol asks for petrol he does not really want. The intention is to get the man to apply for the amount of petrol that he wants. If he does not get it all there will be a refund.
      Mr. LOUGH: What will happen if he does not use it?
      Mr. MONTAGU: He will get a refund, and if he does not apply for all he is licensed to get there will be a refund.
      Mr. LOUGH: Does the right hon. Gentleman mean to say that if a licence is granted for a larger quantity than is used a refund will be given?
      Mr. MONTAGU: Yes.
      Mr. LOUGH: That is not clear.
      Mr. MONTAGU: The user of petrol will say, "i want a hundred gallons of petrol in the next month." The Petrol Committee will say, "We cannot give you a hundred gallons; we will give you eighty gallons. That will be your rate." He will have a licence to get eighty gallons of petrol, and he will pay for that licence eighty sixpences, or forty shillings. With that licence he will go to the shop where he buys petrol and demand as much petrol as he wants on the occasion he wants it. His licence will be endorsed to the effect that he has had that petrol. He will go on being supplied with petrol in that way until he has had the eighty gallons; he will not be entitled to any more. If he does not apply for the whole of his eighty gallons, and he will send his licence back at the end of the three months, he will be entitled to a refund of the difference between the amount endorsed upon the licence as having been supplied to him and the amount to which he is entitled. Surely that is a very simple scheme. If the right hon. Gentleman does not like the scheme he can go into it on the Clause, when all the details of the new Licence Duty will be before the Committee. Before sitting down I should like to correct one statement I made when I spoke on the last occasion. It had been the intention of the Government to impose half duties on petrol used for trade cars. Representations have been received since then, and although we propose to persist in the proposal to ration trade cars, there will be no duty charged on the petrol.
      Mr. HOUSTON: Is the licence for three months?
      Mr. MONTAGU: It will be for different times. If the hon. Member will look at the Clause he will see that it is in the power of the Licensing Committee to frame regulations.
      Mr. PETO: Arising out of the right hon. Gentleman's statement, which has a great deal of interest for the trade, I should like to ask whether under the heading of trade cars, for which no Petrol Licence Duty will be charged, the Government include petrol used for testing purposes in the air, on the road, or on the bench?
      Mr. MONTAGU: That is all trade.
      Sir H. CRAIK: Will the freedom from the duty, which the right hon. Gentleman says will apply to trade cars, apply also to doctors and veterinary surgeons?
      Mr. MONTAGU: They pay half duty.
      Colonel GRETTON: There is another point arising out of this increased duty—to which I am not objecting—which is that the price of petrol has been artificially increased with a view to limiting consumption. Will the Government consider, before we go into Committee, whether anything can be done to reduce the price? There is no reason for any artificial high price if the Government are going to limit consumption, as they foreshadow in this Resolution. I do not ask for an answer now, and only raise the point by way of giving notice that I shall raise it in Committee.
      Sir GEORGE YOUNGER: I should like to take the opportunity of bringing to the notice of the Chancellor of the Exchequer a certain inconsistency of policy in this matter on his part. He proposes here, quite fairly and properly, to pay back any duty paid on petrol not purchased under the licence. That is perfectly fair and honest. Why did he not do the same thing in 1914 with the Brewers' Licence Duty? Why did he then keep 3d. in his pocket and not return it? I tried to get him to return it, but could not.
      The CHANCELLOR of the EXCHEQUER (Mr. McKenna): I was not Chancellor of the Exchequer then.
      Sir G. YOUNGER: Of course, it did not arise until last year. The right hon. Gentleman then repudiated it. I have some hope in the matter, and I shall go to him and ask for it again.
      Mr. KEATING: The House will be interested to know what method will be adopted for supplying petrol to users. Many men have applied at the places where they usually have obtained it, and find they cannot get it at all.
      Sir JOHN JARDINE: With regard to exemptions from the charge on petrol, can the right hon. Gentleman inform the House whether farmers using motor cars for going to market or attending fairs, or in any other business of their farms, will be charged the whole amount, or only half, or none at all?
      Mr. LOUGH: In view of the explanation given by the Government, I would ask leave to withdraw my Amendment.
      Amendment, by leave, withdrawn.
      Question, "That this House doth agree with the Committee in the said Resolution," put, and agreed to.
      Resolutions reported,

      EXCESS PROFITS DUTY (SALE OF SHIPS).
      4. "That it is expedient in calculating Excess Profits Duty in cases where a ship has been sold since the fourth day of August, nineteen hundred and fourteen, to take the pre-war standard of profits to be—

      (1) where the standard adopted is a profits standard, the profits arising from the use of the ship during the pre-war trade years; and

      (2) where the standard adopted is a percentage standard, the same standard as if the ship had not been sold or, in the case of a ship which was used for the first time after the fourth day of August, nineteen hundred and fourteen, the capital represented by the ship at the date when it was first used;

      and to make further provisions as a consequence of the alteration of the standard."

    INSURANCE PREMIUMS.

      1. RESTRICTION OF RELIEF.
      5. "That the relief given under Section fifty-four of the Income Tax Act, 1853, as amended by any subsequent enactment, shall not, as respects insurances or contracts for deferred annuities made after the twenty-second day of June, nineteen

      567
      hundred and sixteen, be given except given respect of premiums or payments for—

      (1) an insurance limited to the payment of a capital sum on death; or

      (2) an insurance limited to the payment of a capital sum on death and the payment of a sum on reaching a certain age, so long as—

      (a) the age is not less than sixty-years; and

      (b) there is an interval of at least twenty years between the date of the contract of insurance and the date on which the sum becomes payable; and

      (c) the sum payable on attaining the required age is not greater than the sum payable on death;

      (3) contracts for deferred annuities, where—

      (a) the contract is limited to the payment of an annuity commencing at an age not less than sixty years; and

      (b) there is an interval of at least twenty years between the date of the contract and the date on which the annuity commences;

      and that the relief under that Section by way of repayment of tax and the deductions from income allowed for the purposes of Super-tax under Sub-section (2) of Section sixty-six of the Finance (1909–10) Act, 1910, shall be accordingly limited."

      2. TAX ON SUBKENDEES, ETC.
      6. "That where relief has been given under Section fifty-four of the Income Tax Act, 1853, as amended by any subsequent enactment, in respect of premiums or other sums payable on insurances or contracts for deferred annuities, and the policy of insurance or the contract for a deferred annuity is surrendered or alienated, there shall be paid as a debt due to His Majesty a sum equal to that which would be payable if Income Tax (including Super-tax) were charged on the amount received in respect of the surrender or alienation of the policy of contract at the rates at which the relief was last given in respect of the premiums or other sums payable."
      Resolutions agreed to.
      Ordered, That it be an Instruction to the Committee on the Finance Bill that they have power to make provision therein pursuant to the said Resolution.

FINANCE BILL.
Considered in Committee.—[Progress, Considered 22nd June.]
[Mr. WHITLEY in the Chair.]

FINANCE BILL.
  EXCESS PROFITS DUTY.

    CLAUSE 29.—(Continuance and Increase of Rate 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 any deficiencies or 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, nineteen 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 Sub-section (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

    569
    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 there-for.
    Amendment proposed [22nd June]: In Sub-section (1), after the word "apply," to insert the words, "except as to controlled establishments under the Munitions of War Act, 1915, during the period they are under such control."—[Mr. Samuel Roberts.]
    Question again proposed, "That those words be there inserted." Debate resumed.
    Sir A. MOND: I, unfortunately, was not able to be present on the last occasion when this Amendment was before the Committee. But I have taken the trouble to acquaint myself with what passed on that occasion by reading the OFFICIAL REPORT of that Debate. It seems to me to have generated rather more heat than light, and therefore I should like to present to the Committee the case of the controlled establishments and the reason why they objected to the proposal of the Chancellor of the Exchequer. The case of the controlled establishments falls under two heads, and I do not think the Chancellor of the Exchequer has quite adequately dealt with either of those heads. In the first instance I must put the question of complication of accounts. The right hon. Gentleman passed over that very lightly. In dealing with the question of accounts he quite rightly observed that a considerable portion of the work had to be done by the controlled establishments for In-
    570
    come Tax returns, and that I fully agree to. But there is a great deal more to be done for the Excess Profits Tax, involving a considerable amount of labour, than for Income Tax returns. Might I put to the right hon. Gentleman the unfortunate position in which those who are in charge of controlled establishments are placed as it is? With a depleted staff, and large proportion of their financial and clerical staff gone, there is an excessive amount of work to do, and they are already in the position of having to produce three sets of accounts, namely, Income Tax account, controlled account, and their own balance sheets, and the unfortunate thing is that the complication is so much added to by the fact that the periods of the different accounts do not coincide a most unfortunate thing about this legislation is that it does not seem to have occurred to those who drew it what complication this will cause if you have to produce one set of accounts for the calendar year, from January to December, one set for the Government's financial year for Income Tax purposes, and another set for the company's own financial year whatever that may be, and there has been no provision made for intervening periods, to allow practically proportionate periods to be used in order to deal with this question of accounts in the intervening periods. I can assure the right hon. Gentleman that this question is a very serious one. I have discussed it not only with staffs connected with controlled establishments, with which I am connected myself, but with the heads of some of the largest controlled establishments throughout the country, and I can assure the right hon. Gentleman that they would not bring this forward as a serious thing if it was not a serious thing. The right hon. Gentleman cannot assume that those who are responsible for the control and management of vast businesses in this country know nothing at all about them.
    Mr. McKENNA: When did I assume that?
    Sir A. MOND: The right hon. Gentleman dealt with a protest of this kind in a very slender kind of way, practically, as far as I can gather from his speech, pushing aside this part of the case as an unimportant one.
    Mr. McKENNAdissented.
    Sir A. MOND: He devoted very little time to it in his speech. He said the datum line had to be fixed, and the additional work of the Excess Profits Tax would be

    571
    relatively small, and he assumes from that, I take it, that there will be no new work imposed by the Excess Profits Duty of any very material amount. I think that is not an unfair summary of his statement. I think he is mistaken in the amount of work which will be involved. I am assured by those who, like myself, have had practically to deal with these matters that the amount of work involved is extremely great, and we do not want any more forms to fill up, and we do not want any more clerical work than can possibly be helped. I do not think it is sufficiently realised that already a controlled establishment has got to fill up endless forms and has got to wrestle with various and different kinds of accounts about many matters. The basis in some cases has not yet been arrived at, but apart from that those connected with these things look with horror on having to deal with two sets of officials instead of one. They will have to deal with the officials of the Ministry of Munitions on the question of settling their controlled profits, and they will have to deal with the surveyor of taxes regarding excess profits. I do not see how that can be avoided. The right hon. Gentleman and the Financial Secretary made a point which seems to me an extraordinarily weak one, that what we pay under control is not a tax but a levy, and that kind of point is presented to the business men of England as the best argument which the Treasury can produce. I am not in the least concerned, and I think very few people are, whether money that is paid over to the Government is called a levy or a tax. It makes no difference to the cheques we have to draw. It makes no difference to the forms we have to fill in. It is a purely technical point which has absolutely no interest at all, except, perhaps, to the different Government Departments. The right hon. Gentleman is entitled to say, and he has said, that his is the only taxing Department, but if that is so, he ought to have objected to another Department undertaking taxation, and he ought to have either carried that protest to the Cabinet or to have given it up. What the right hon. Gentleman does is this. He comes down to the wretched taxpayer and says, "Another Department having entered into a novel and, I think, entirely wrong form of taxation, I refuse to call that a tax, and I will now begin to tax you all over agian." That, surely,
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    is not the way in which to deal with a serious business proposition in a very serious and difficult time.
    The right hon. Gentleman gives, to my mind, a very distorted picture of what happened when the Munitions Act was passed. He tried to conjure up a picture of a bargain which apparently had the following kind of form, that the owners of controlled establishments, in order to get more control over their labour, went to the Munitions Minister and asked to have their profits practically fixed as a quid pro quo. Nothing of the kind happened. I am not aware that the control of labour in munition factories has been asked for by employers. It was demanded by the Minister of Munitions, quite rightly, in order to increase the output of munitions in this country, and having settled with the trade unions that they would make certain concessions he went to the employers and said to them, "You must make concessions, not a concession advantageous to you, but a concession advantageous to the State," and the employers agreed to do this. There are something like 3,600 controlled works in this country. I do not think ten of these were ever consulted about this matter at all. All that happens when you become a controlled works is not that you are asked whether you want to make a bargain, but you receive an official notification from the Ministry of Munitions that he has established this control. I cannot see how the right hon. Gentleman can rely on his argument that there was a bargain made which was a quid pro quo of labour and limitation of profits, and that he is not in any way bound now to take any regard of the considerations then given by employers because they have already had their reward. That is not the true state of affairs at all, or what really occurred.
    What really occurred was that at that time there was no Excess Profits Tax in existence, although one was foreshadowed, and the Ministry of Munitions did not want this Excess Profits Tax to be put into operation, which would, I believe, have been the right course to pursue, but made a special arrangement with those who were manufacturing munitions to limit their profits, and, of course, many thought that when the Excess Profits Tax came into operation, this dualism of taxation would cease, and then you would unify them by having only one form of Excess Profits Tax, and I think, on the

    573
    whole, those who now have their profits controlled would prefer to be under the Excess Profits Tax. It would certainly be more remunerative for most of them to be under the Excess Profits Tax than under the present conditions. They would accept either solution, but what they object to most strongly is that they are to have the worst of two worlds. It seems to me most grossly unfair. Here you have a number of works whose one crime is that they are really making things necessary in order to win the War. Their works have very largely been turned from their usual purpose to purposes which destroy, to a large extent, the businesses they have built up for years. They are in reality Government institutions, and you might as well apply the Excess Profits Tax to Woolwich Arsenal as to controlled works, properly understood, and yet they are to be put in a worse position than anyone making the most useless articles in the country. Anyone producing the most useless luxuries—the things the Chancellor of the Exchequer would like to see stopped because they are wasting the money of the country—is to be put in a better position than people who are devoting all their energies to producing war material. That is really the position. The right hon. Gentleman does not say, "I am going to equalise your position." He says, "If in regard to any of these controlled profits you have paid more than you should under the tax, I am not going to give you a refund. You will pay. But if you have paid less, then you are going to pay more." He says that is imposing equality of taxation. Where is the equality? There is no equality. It is the most unfair proposition ever put forward from the Treasury Bench. There is another point which demands attention. The arrangements already existing between the controlled works and the Ministry of Munitions are of a most complicated character. They are the result of long, tedious bargaining between the representatives of different works and the Ministry of Munitions. I want to put a specific case. In some cases, in order to induce a larger output and to increase the work generally, the Ministry of Munitions have agreed with manufacturers that they would remit, under the controlled profits levy, a certain percentage in order to pay for the increased capital cost of erecting works at the present time.
    Mr. McKENNA: When was that? I have no trace of it.
    Sir A. MOND: I understand an arrangement has been made with the spelter industry, and it is being negotiated in the steel industry. I understand there is a form in the Munitions Department which you have simply got to fill up. I have applied under this myself.
    Mr. J. M. HENDERSON: a co-operative agreement.
    Sir A. MOND: That is only one instance. How is the right hon. Gentleman going to deal with that in all these cases?
    Mr. PRINGLE: It is dealt with in the limitations of profits under the Munitions Act.
    Sir A. MOND: The arrangements are very vague. There is another class of case of this character. People have been induced to put up works to manufacture explosives, factories which are liable to come to an end and be useless at the end of the War, and they have made arrangements by which they indemnify themselves for their capital outlay in their prices. That is to say, they have made bargains as to prices, the profit on which is calculated to repay them the capital outlay within a given period. Obviously the right hon. Gentleman, when he makes these proposals under the Excess Profits Tax, destroys the whole financial basis on which, these kind of arrangements are made.
    Mr. McKENNAindicated dissent.
    Sir A. MOND: It will do, so far as I understand it, and so far as I can see from any explanation which has been given up to the present time. Many of us would like to know how far the right hon. Gentleman proposes to safeguard these arrangements, and how far he proposes to make exceptions. If he does, does he not then, give away practically the whole value of his proposal so far as any Exchequer point is concerned? The Income Tax is already a very great hardship to many who have made arrangements of this character with the Ministry of Munitions, but they know that the Income Tax is an old-established tax and they do not complain; but this is an additional difficulty, and difficult of, adjustment. What is the right hon. Gentleman going to gain? What really is the motive, except certain uniformity of taxation, for making this proposed change? I do not believe that he will find that he will get much in the way of additional revenue. I think, in the huge majority of cases, the amount payable under the controlled levy will be greater than the amount payable

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    under the Excess Profits Tax. Therefore, I do not think he is going to get much revenue, but he is going to give a great deal of trouble, and he is going to stir up an enormous amount of bad feeling. He has already stirred it up. Is it worth while to do that? Is it wise to do it? You are dealing with men who have an enormous amount of heavy, responsible work on their shoulders—more than is recognised. They are already overworked. They are men who have loyally and earnestly been doing their best all this time for the country in the manufacture of munitions, working day and night, and surely it would pay the State better not to continue to adopt a policy which will drive these people, I will not say into opposition, but to diminish the effort, to diminish the good will, and to diminish the heartiness with which they support the Ministry of Munitions in every direction. That feeling exists, and I should be wrong if I disguised it. I have had an opportunity recently of speaking to men in the industrial world whose names are household words, as the heads of great concerns. They are serious men, earnest men, responsible men, and the spirit this proposal is generating amongst them is, to say the least of it, most deplorable and most unhappy, and unless the right hon. Gentleman has an overwhelming reason, much greater than any reason which has yet been given, for insisting upon pushing this through, I would ask him most seriously, in the interests of the whole community, and in the interests of winning this War, even at this moment, to withdraw a proposal which I think is most unfortunate to have introduced into this Bill.
    Mr. McKENNA: The right hon. Gentleman opened his speech by prophesying that he was going to throw more light upon the Debate than we had last Thursday. He assured us that he had carefully read all that had taken place in that Debate. Perhaps he will forgive me if I say that he appears to have made some remarkable omissions in his reading, if he had studied that Debate, he would have observed that every argument which he has repeated to-day was used on Thursday, and so far as the arguments against his point of view are concerned, I am bound to say that I think he has stated them very badly. He charged me with conjuring up a picture of a kind of bargain, by which the employers agreed to
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    have their profits limited as a consideration for certain concessions made by the trade unions. That picture, if it was conjured up by me, is not my picture. When my right hon. Friend the Minister of Munitions introduced his proposals he used this language about the limitation of profits:
    "I come to the point where the trade unions insisted, and I think properly insisted, on their share of the bargain. They said workmen are quite willing to work for the State, to exert their whole strength, and to suspend their trade union regulations, as long as they know that the work is of advantage to the country. But the objection in their minds always is that they are suspending trade union regulations important to them in order to increase the profits of individual employers. That they will not assent to, and they say, as a condition of all the other conditions to which they have given their assent, there must be a Clause in the Bill which will limit the profits of those establishments which are working for the State, and that the provisions which I have enumerated only apply to establishments where the profits are limited. We propose to set up controlled establishments, so that where the State assumes control of a workshop all the conditions which I have referred to shall apply to that workshop. That means that the State assumes control of the profits of those establishments where munitions of war are being supplied at the present moment: that whatever suspension of regulations takes place it will be entirely for the benefit of the State and not of the individual employer. Upon those conditions the trade union leaders are prepared to accept those suggestions which I have already made."—[OFFICIAL REPORT, 23rd June, 1915, col. 1203. Vol. LXXII]
    Therefore the picture of the bargain as to the conditions upon which the trade union leaders were willing to give up their restrictions, and were willing to give the employers the right to retain men in their employment, was that the profits of the employers should be restricted. My right hon. Friend the Minister of Munitions rightly spoke of the trade unions insisting on their share of the bargain. What was the result of that arrangement? The result was that the controlled firms were put, so far as the making of profit was concerned, in a worse position than any other firms in the country. The right hon. Gentleman (Sir A. Mond) says to me, "Do you wish to put these firms in a worse position than other firms engaged in making luxuries which you desire to keep out?" How is that relevant to this argument to-day? Those firms were put in a worse position by the Munitions Act in relation to other firms, and in an infinitely worse position than they are to-day compared with other firms since the introduction of the Excess Profits Duty. At the time when the Munitions Act was introduced they, and they alone, had their profits restricted. Now all firms are made to give up 60 per cent. of their excess profits from the datum line or the standard. Therefore the effect of the

    577
    legislation for which I have been responsible is, so far from making the position of the controlled firms worse in relation to others, has been to bring their position very closely into relation to the position of other firms. We have got to get down to the root facts of this case before we can fully appreciate it. The right hon. Gentleman says that I am placing a new hardship on the controlled firms. Let me answer that point. The limitation of profits was originally imposed on the controlled firms as a payment which the employers were bound to make in compensation to the trade unions for the restrictions which the trade unions had to give up. That was so stated. I have read the words of the Minister of Munitions in introducing the Munitions of War Act, and there can be no doubt about it that it was a bargain. It was a bargain to which the employers on one side were parties and the trade unions on the other side were parties, and the State intervened to complete the bargain.
    Mr. HENDERSON: To take the money.
    Mr. McKENNA: There is no question about it that both sides gave up something. The employers on one side gave up their right to make unrestricted profits and the trade unions on their side gave up their trade union regulations.
    Sir A. MOND: The bargain was between the trade unions and the State, and the only way that bargain could be carried out was by the employers consenting to make another bargain with the State. If the employers had refused to make this bargain, which they had every right to do in their own interests, the whole thing would have fallen through.
    HON. MEMBERS: No, no!
    Sir A. MOND: Yes, it would have fallen through. It was not a bargain made by the State for the benefit of the employers and the workmen, but it was a bargain made by the workmen and the employers for the benefit of the State.
    Mr. McKENNA: I have read the language. I can do no more. The right hon. Gentleman and the House must draw their own conclusion. But I do not know that it is very material to my argument. Whatever the nature of the bargain, the fact stands that in the month of June, 1915, these controlled firms had these restrictions imposed upon them, and they were
    578
    restrictions which were in the nature of a penalty as compared with all other firms. I put this as the first proposition to the House: Is it right that that which was originally imposed as something in the nature of a penalty on controlled firms—as to whether rightly or wrongly imposed I have nothing to say now—should be turned now into a boon in regard to profits? I will not quarrel about words. I will use other language. In the month of June, 1915, as a condition of the trade unions giving up their restrictions, the controlled firms were limited in the amount of profits which they could receive. They were at that moment in a worse position than all other firms. Could this House tolerate the proposition that subsequent legislation should be so partial in its operation that the controlled firms, which were then worse off than any other firms, should be put in a position of being better oil than other firms? [HON. MEMBERS: "Yes!"] Hon. Members say "Yes!"—that what was originally imposed as a restriction of profit is to become in relation to the new taxation an advantage to these firms as compared with other firms, and so far from the trade unions having got any satisfaction out of the restriction of the employers' profits, a restriction in return for which they have given up their regulations, these controlled firms are to be better off than other firms. I hope that I am not stating the case unfairly.
    Sir F. LOWE: It is an advantage to some and a disadvantage to others.
    Mr. McKENNA: I am very much obliged to the hon. Member for what he has said. It is an advantage to some and a disadvantage to others. I only propose to deal with those firms to whom it is an advantage. The whole of my argument—and what I propose to do is directed simply and solely to this—is that the taxation which affects all firms must not fall more lightly, less heavily, upon controlled firms than upon other firms, and that the joint effect of the munitions levy and the Excess Profits Duty may be such that the controlled firms shall not get off more lightly than other firms. I ask for no more than that. At the proper and suitable time let the right hon. Gentleman bring up his case for amendment of the Munitions Act. I have no doubt that he can then make out a very strong case for himself, as he has always done. That is right and proper. We are dealing now with taxation, and I submit to this House that there ought to

    579
    be no exception to taxation. Taxation must be universal and applied on equal lines to all.
    Let me come back now, and find points in which I am in complete agreement with the right hon. Gentleman and those who have spoken on that side of the House. First, I am in complete agreement with him in thinking that it is most undesirable to do anything which would shake the willingness of the controlled firms to go on working as they have worked in the past to turn out munitions. I call it a matter of first-class importance that their energies and patriotism should remain as stimulated in the future as they have been in the past, and certainly I do not for one moment want to get at cross purposes with these great firms who have been doing such magnificent work for the State, and whom we rightly look upon as the best friends of the State. The next point on which we are entirely at one is this. He brought to the notice of the House cases in which controlled firms have erected new buildings and put up new plant, and introduced new capital into their business, with the object of increasing their output. He said in some of these cases an arrangement had been entered into with the Minister of Munitions that the depreciation of this plant, these buildings, and this new capital, should be at such a rate as would reduce the value of the capital in the books of the company after the War to the post-war value. I hope I make the point clear. I go much further than that. The arrangement, he says, has been made in some cases. I am prepared to accept that in every case, and for the determination of Excess Profits Duty I am perfectly prepared, and I publicly stated it, to accept the rules of the Munitions Act, and to agree that the allowance for depreciation in those cases should be in accordance with the Munitions Act rules, and not in accordance with the rules for Excess Profits Duty.
    Sir A. MOND: The right hon. Gentleman mentioned the word "depreciation." Take a case where, say, out of £100,000 taxation, £50,000 has been allowed, not for depreciation, but for new capital expenditure. Does the right hon. Gentleman propose to cover that?
    Mr. McKENNA: I gave an assurance some time ago—and I am sure the House would expect me to give the assurance—that every bargain that had been entered
    580
    into by my right hon. Friend the Minister of Munitions or his Department would be respected by me. But I am informed by the Department that no bargain had in fact been entered into. If the right hon. Gentleman is right and there has been such an agreement, I shall respect it.
    Mr. HENDERSON: Where there have been co-partner arrangements?
    Mr. McKENNA: Then I shall respect them all. I am sure that the House would wish it. There is one other point which was not raised by the right hon. Gentleman, but was raised in the Debate on Thursday. There is, in some cases, great hardship in connection with controlled firms. Take the case of a firm which has been engaged in a certain class of business. I suggest something—I do not know if there is any such case—a firm which has been making needles, and that firm has been completely turned off its original business of making needles, in which it had a large trade, and has been given up to the work of making gun sights. I daresay it is a ridiculous suggestion, but I will take that as an example. That firm in the course of two years has lost the whole of its outside trade, and after the War when it goes back to making needles it may have to-begin again with practically no goodwill. I am perfectly prepared to allow a write-off for such loss of goodwill as is shown to have been effected after the War. And, as the House knows, in connection with the Excess Profits Duty there is a provision for the repayment of such loss which brings the profit after the War below the standard. When I have met the case of arrangements entered into by the Munitions Department, the case of depreciation and of the loss of goodwill, in what other respects are controlled firms hit in a manner in which other firms are not? If they are hit in other ways, and any special cases are brought forward, they will always find that we are willing to meet them according to all independent ideas of equity and justice.
    But if you get to the larger question and say that these firms should be excluded from the general taxation applicable to all other firms, then I must ask the House to support the views of the Treasury in this matter, and not only the views of the Treasury but the views of the Government. The right hon. Gentleman made a point with regard to the keeping of accounts. I do not think that he did

    581
    either what I stated or the facts the least justice. He complained of the multiplication of accounts in consequence of the Excess Profits Duty. I am sorry to have to go over the ground again, but I must remind the House of the facts. In the first place, every controlled firm in the country has got to make up its accounts for Excess Profits Duty for the year 1914–15. The result of having to make up their accounts for that year—this is, for the year before they became controlled firms—is that they have already had to settle their datum line. They have not now got to go through all the complicated questions involved in inquiry as to what is the datum line. All that has been done once for all when the datum line is settled. I am dealing solely with the point as to whether the existence of the Excess Profits Duty in 1915–16 really adds so very materially to the complications of the firms' accounts. They have got the datum line because they had it in 1914–15, and it is the same line.
    Mr. HENDERSON: a different standard for controlled establishments.
    5.0 p.m.
    Mr. McKENNA: a controlled establishment admittedly has got to pay Excess Profits Duty for 1914–15. Therefore every controlled establishment has already done all the necessary work of establishing a datum line. Next they have got to keep accounts for Income Tax purposes. The right hon. Gentleman forgot that so far as Excess Profits Duty is concerned the basis taken is the year of account, and therefore the year of account is the ordinary business year of the firm, and there is no additional task of making up accounts for Excess Profits Duty required of the firms. It is their ordinary business account. It is made up in a different form in respect of certain particulars for depreciation, and they are made up in a different form as regards certain other minor items, but they are not very important. They are not such difficult or important items as to give trouble. We take the business year and therefore any trouble in making up the accounts is not due to the Excess Profits Duty, but is due to the Munitions Act. That was accepted in 1914–15. Something was said as to a bargain, that the controlled firms were not to be subject to further taxation. That was said by the hon. Member for Liverpool (Mr. Pennefather), who described my conduct as that of one partner who refused to honour the cheque of another partner. I really thought the hon. Gentleman must
    582
    have spoken with some knowledge or with some ground for what he said, and therefore I made the very closest inquiries in both Departments in regard to this matter, and from beginning to end I can find no trace anywhere, not the slightest evidence of a bargain, or hint of a bargain, or suggestion of a bargain, either explicit or implied, that controlled firms were to be freed from further taxation, or that they were not to come under the Excess Profits Tax.
    Mr. PENNEFATHER: I will not interrupt the right hon. Gentleman now, but I may have an opportunity of saying a few words later.
    Mr. McKENNA: I think it is necessary for me, in vindication, to say this, because, as I understood the hon. Gentleman, I thought he meant to imply that there had been something said to the employers by the Departments to justify them in saying that the Departments are honourably bound, as between themselves, not to bring in any further tax affecting excess profits. I can assure the Committee that after the closest inquiry I could not find that there was any bargain, or hint of any bargain of that kind, and that the Government are absolutely free to introduce, and ought to be free to introduce, this taxation. It would be unfair upon this House if a bargain of that kind were made. The hands of the Government are absolutely free to introduce such taxes as they think this House will in due course approve. One other point was raised on the other side. It has been said—and it was said by the right hon. Gentleman again to-day—why enter into all this discussion if the result of it is gong to be no real or no appreciable increase to the revenue? I agree that is a forcible argument. Whatever the principle of the case may be, if there was no revenue in it, there would be no good in disturbing the whole business world, who have got a grievance—I do not think they have, though they think they have—if there were no advantage to the revenue. I have had inquiry made, and I find that there is considerable difficulty in framing an estimate so far as the Munitions Act is concerned, and it is quite impossible to say what the return of revenue will be. The munitions levy, not being a tax, but a limitation of profits erected upon a bargain, or a series of bargains, as the right hon. Gentleman said, is largely discretionary, both in fixing the datum line and

    583
    in fixing the ultimate amount to be paid. The Minister has very wide discretionary powers which will enable him to ultimately determine what is the amount which should be paid. It may be very proper that on a limitation of profits which is the result of a bargain that such powers should be vested in a Minister, but I do not think that any such discretionary powers ought to be vested in a Minister with regard to any tax.
    That is the first difficulty with which I am confronted, that I do not know what the munitions levy is going to be because of the discretionary element. My second difficulty is that I do not think that we can admit a discretionary element, nor do I think the House would be willing to admit a discretionary element in regard to taxes. I feel, and I hope the House will support me in it, that whatever ultimately might be adopted in the way of Excess Profits Tax, it ought to be of general application, and, therefore, in making inquiries, what would be the charge to the revenue if the Excess Profits Duty were so amended that nobody would have to pay more duty than would leave him a balance of 20 per cent. in excess of the standard, I thought that if it did not come to a very large sum that might be a way of meeting the complaint of the controlled firms, in their getting what they hoped they would get, a clear 20 per cent, over the standard; but I hold the view that if the controlled firms were allowed to keep that 20 per cent, other firms also must be allowed to keep the 20 per cent. I am sorry to say that the loss to the revenue would be such that I would not be justified in recommending it to the House. It would cost £10,000,000. [An HON. MEMBER: "A rough estimate?"] It is a very fair estimate, and we have had a great deal of data to go upon. My first argument is that I cannot distinguish between controlled firms and other firms as to taxes; and my second argument is that any concession made to controlled firms must apply to all; and a concession of this kind, which is of general application, would cost £10,000,000, and I do not feel justified in recommending the Committee to accept a reduction upon our revenue of that amount. The Excess Profits Duty has been accepted by this House and by the country with general approval. We have repeatedly adhered to our other duties and our Customs Duties—tea, sugar, and other foodstuffs of the people. We have made no concessions with
    584
    regard to those duties, and I think it would have a very bad effect on public opinion outside if we were to make such a gigantic concession as regards the excess profits. I put it to the Committee, who, I hope, will support me, that in dealing with this tax we should leave it as it stands. When in time of war firms get 40 per cent, of excess profits over the standard, it cannot be said that firms making those profits are doing badly, and I hope the Committee will support the Government in their proposal.
    Sir J. HARMOOD-BANNER: I do not think I have ever heard on any occasion such a special plea or statement as that which has just been put before us by the right hon. Gentleman. All the difficulties have been laid before us but none of the advantages of the present relations between the firms and the Departments. In the first place, as to account keeping, while it is, of course, objectionable to have so many accounts, I do not think it is a matter worth saying anything more about. So far as I am concerned, I have found the Munitions Department very reasonable and very ready to hear everything. I have found the Somerset House authorities dealing with these matters in exactly the same way. I am chairman of two controlled establishments and a director of three, and in all these cases we have settled our differences, though we strongly object to all these formal accounts which we are asked to keep. But the whole question is so paltry that it is not worth while taking up the time of the Committee upon it. As regards the main question, I would put it to the Chancellor of the Exchequer whether the position is not this: that as regards professional men, doctors and barristers, and others who made 100 or 1,000 per cent. of excess profits, nothing is said, while every firm in the country, except controlled establishments—shipowners, corn millers, weavers, cotton spinners, and all other uncontrolled establishments—are entitled to 40 per cent, of their extra profits. That is to say that, whatever they earn above their pre-war standard, they are entitled to 40 per cent. As to controlled establishments, they are limited to 8 per cent, above their pre-war standard of excess profits.
    Mr. McKENNAdissented.
    Sir J. HARMOOD-BANNER: In the position which the Chancellor of the Exchequer takes up, the controlled establishments cannot possibly make more than

    585
    8 per cent, over their pre-war standard. If that is so, does he consider that he can expect these controlled establishments to accept calmly and without discontent such a position as he is now taking up? It is needless to go over the controversy as to why controlled establishments were created. Undoubtedly the labour question had a good deal to do with it, and, in order to satisfy labour, controlled establishments were asked to agree to a limitation of their profits They have agreed to a limitation of the profits, and remember what that limitation meant. It meant that for an extra 20 per cent, they were prepared to advance whatever money or find whatever capital was needed for an increase of their works. They were expected, being controlled establishments, to themselves bear the cost of any loss that might be made on their trading. I say that because I know it, for I put this question to the Munitions Department, "If you interfere with our works and carry them on in this way, who will bear the loss? Will you bear the loss?" They said, "No, you will have to bear the loss." So that for 8 per cent, we have to bear all the burden of going to the bankers and raising money for this expenditure, which is to be incurred according to the direction, or losses incurred to carry on works according to the direction of parties who do not it all times know the nature of our works, and we are bound to 8 per cent, to take that on. Do you think that controlled establishments are likely to be content with that position? a firm came to me on Saturday and told me they were summoned by the Munitions Department and wove going to be a controlled establishment. They were expected to give up their other work and double their output and make all arrangements accordingly. Just now the Chancellor seemed to raise the question as to whether there were any agreements made between controlled establishments and the Munitions Department. I can assure him I have put my hand to the seals of a good many a discussion was going on between the Munitions Department and the firm to which I have just now referred as to whether they should execute this work, and the representative of the firm said to me, "What do you say about it?" I asked what did the firm expect, and he said, "We expect to get 20 per cent, above the pre-war standard, and we want no more." All I could say to this gentleman was, "I re-
    586
    commend you to get the Chancellor of the Exchequer to back the bill of the Minister of Munitions. The Munitions Department will lead you on and make you think you are getting all sorts of things." I can assure the right hon. Gentleman that every controlled establishment in the Kingdom considers they were in a position which has been put before him, and that they had a definite arrangement of an excess of 20 per cent. I think the right hon. Gentleman will find, and the Munitions Department will find, that they will not get their work done with extensions and extra supplies when we find that the bargain which has been made with the Munitions Department is to be departed from and refused.
    I would ask the Chancellor whether it is not the fact that the controlled establishments cannot possibly get more than 8 per cent.?
    Mr. McKENNA: If the profits of a controlled firm are 50 per cent, above the standard they pay nothing in Excess Profits Duty. Consequently they will get the full allowance of 20 per cent, which the Munitions Department gives them. Any payment to the Munitions Department is reckoned by us as payment on account of Excess Profits Duty.
    Sir J. HARMOOD-BANNER: They would get that under the Excess Profits Duty.
    Mr. McKENNA: We do not touch the 20 per cent, in any case in which 60 per cent, of the full profits has already been paid.
    Sir J. HARMOOD-BANNER: I really cannot follow that. You take the 20 per cent, profit and then you take your 60 per cent, of it.
    Mr. McKENNA: Not necessarily.
    Sir J. HARMOOD-BANNER: On the first 20 per cent, you take your 60 per cent, and that leaves 8 per cent.
    Mr. McKENNA: That is not so. We do not do that. We estimate what would be 60 per cent, of the total of the profits above the datum line. If that 60 per cent. is less than an amount in excess of 20 per cent, above the datum line, we do not take anything. Therefore we do not touch any profits of any controlled firm which exceed by 50 per cent, the datum line.
    Sir F. LOWE: Supposing the total of the excess profits is, we will say, £2,000,

    587
    and that that represents 20 per cent, on the pre-war standard, does the Chancellor of the Exchequer propose to take any proportion of that £2,000?
    Mr. McKENNA: Yes, in that identical case where it is reduced to 8 per cent.
    Mr. DENNISS: You take £920 and leave £1,080.
    Mr. McKENNA: In that identical case, but in any ease in which the controlled establishment makes 50 per cent, above the pre-war standard we take nothing.
    Sir J. HARMOOD-BANNER: The establishment in that case will pay out of the £2,000 a sum of £1,200 and will retain £800. If it happens to be 30 per cent., then the establishment pays £1,000 as Munitions Duty and £800 as Excess Profits Duty. If it is 40 per cent, it pays £2,400 as Excess Profits Duty and it retains £400 for itself. When it comes to 50 per cent. profit, then the balance becomes normal, because 50 per cent, is £3,000 and that makes it normal, so that there is nothing further to pay. But for all sums above 50 per cent, the controlled establishment suffers. Is not that so, and in that case are not the controlled establishments heavily penalised and are they not allowed to have no more than 8 per cent.? I do not consider that that is a fair profit. When you give shipowners 40 per cent., corn millers 40 per cent., and all other firms in the Kingdom 40 per cent, of the excess profits, is it right or proper that you are to limit the controlled establishments in the way you are going to do by the added taxes you are putting on them. The arrangement with them was clear and distinct. I will not say it was a legal arrangement, and, as the Chancellor has pointed out, Parliament can override any bargain. Still there was a clear bargain in their mind. Let the right hon. Gentleman ask in Sheffield, in Newcastle, Glasgow, Manchester, Liverpool, Birmingham, Leeds, or any other place, whether or not there was not a clear understanding. Now, having got that clear understanding in accordance with an arrangement made with the Labour Party, I hope that they will confirm it.
    Mr. SNOWDEN: There is no Labour Member here who made that bargain.
    Sir J. HARMOOD-BANNER: You ask for the goodwill of the controlled establishments, and, having done that, you
    588
    really, although I do not like to use the word, commit a fraud upon the agreement which they made with the Munitions Department. I do not attack the Chancellor of the Exchequer in any way. I do say distinctly that the Munitions Department led the controlled establishments to believe that this was the arrangement. The Chancellor of the Exchequer is entirely within his rights in coming here and saying, "I do not uphold it," but I do say that the Munitions Department ought to have been represented here and stated what their views were. We have not had a word from the Minister of Munitions as to what he considered to be the agreement from first to last, even from the Budget in April, when all these questions were put before the Chancellor. I am sure the Chancellor cannot but admit that the controlled establishments did state what they understood. The controlled establishments complain bitterly that the Minister of Munitions has not put out a finger in support of the proposals which he induced us to enter into, and he has not put out one hand or said one word to us such as, "I made those arrangements with you, and I will do my best to see that they are fulfilled." I mentioned already that I had to instruct a gentleman to-day who was entering into arrangements with the Munitions Department. I had to tell him, "Do not accept a word or condition the Munitions Department make with you unless you get an endorsement of that bill by the Chancellor of the Exchequer." [An HON. MEMBER: "YOU know Lloyd George."] Now when we come here and speak of the agreement we are told to "Go to Jericho." and you know what happened to the man who went from Jerusalem to Jericho.
    Sir CROYDON MARKS: I have come in contact with many thousands of workmen who have interpreted the arrangement made by employers precisely in the way that the employers themselves have interpreted it. I have had to discuss these matters with many thousands of men collectively and with leaders of trade unions and with men individually, and asked them, when making concessions, to understand that the employers were not going to get more than 20 per cent, increase upon the dividend they had paid in pre-war time, that is, if they had paid 5 per cent, before, they were to be, limited solely to 6 per cent, no matter how large

    589
    profits they might earn. I have pointed out to the men that where some workmen had previously 30s. per week they now would be receiving £3 or £4 per week, while the employer on his 40s. earning would be limited now to 48s. per week, and that that being so there has been, so far as the employers earning is concerned, a greater sacrifice on their part than on the part of labour in giving up that which they had. I have been asked repeatedly why we have not had in any Act of Parliament something which would make clear to the workmen that the conditions under which they are now permitting things to be done whereby their trade is diluted and whereby their period of apprenticeship of years has been set at naught by people coming in and getting the same money that would give to them the assurance that when the War was over the conditions under which they worked before the War would be reverted to. My answer has been, "You can trust those who have made the promise. You can trust those who have told you that there shall be a reversion to the pre-war conditions without any Act of Parliament." What then is to be the condition of mind of 4,000 manufacturers throughout this Kingdom, who are meeting to-day in different centres, and who are asking themselves whether they have not been deceived, not by that which is proposed now, but by a misunderstanding in their minds as to what the conditions were? They are asking themselves, "What faith can we have hereafter? How can we go forward, believing that that which we are going to do is going to be justified by that which the Department was understood to be going to do by us when we went forward?" I have known men, directors of the largest firms in this country who have slept in beds in their offices while their men have been working night and day. [Laughter.] That shows how little hon. Gentlemen understand. There is such a thing as two shifts, and hon. Members are laughing as if the men were working right through. There are three shifts in some firms, but only one set of directors, the directors sleeping in their offices while the men go to their homes and rest.
    Mr. PRINGLE: We knew that.
    Sir C. MARKS: If you knew it your laughing was ill-timed. The suggestion employers make is: "We, as controlled firms, have worked as hard as we can
    590
    work. We have given our time when other people have not given theirs, and this is how it works out. If we as a firm previously have paid 5 per cent, and our profit has been, say, £10,000, on a capital of £200,000, and we increase by a three-shift arrangement our profits so that they hereafter become £15,000, out of that £15,000 we only receive £2,000, and the State takes the £3,000. We are willing to stand by that. But now there is a proposal by which the State is further coming in and taking £1,200 out of that £2,000 that has been left"—leaving them, therefore, with £15,000 earnings, £10,800 only as the net amount to be paid to them, while the corresponding firms who are not controlled have less taken from them, and they have not been giving of their best or helped the State as the others have been doing. Take the case of a firm who has been engaged in making jewellery; and the jewellery trade has had a great time during the War. Large sums have been spent. They increase their profits from £10,000 to £20,000. The controlled firm increasing its profit from £10,000 to £20,000 has, out of that £10,000 increase, {he State now proposes to take £9,200. From the jeweller, who has not worked night and day, who has not been contributing his work to the upkeep of the country, from that firm, uncontrolled, you only take £6,000. £9,200 in the one case, and £6,000 in the other. Those who have discussed somewhat lightly the troubles of a controlled firm, and their reverting to their old conditions, know-little of the difficulties with which the firm will be faced after the War in endeavouring to recapture the trade that has gone to the firm that is not controlled, or that has gone to a neutral who has captured that trade, and who probably intends to hold it. These firms, who have had their lathes altered from dealing with the production of articles of commerce to deal now with the production of things they have never made before, who have given the whole of their benefit, find themselves going down, while the other firm not controlled is going up. Then this proposal comes, that that which they have made up their mind was to be their own, the £2,000, if it is to be an increase of £2,000, is taken down to £800. It is not worth while to disturb 4,000 firms in this country and to have 4,000 firms feeling that you have broken faith with them, even though it may not be that they are entitled to say that you have broken faith.

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    No person who knows the present Chancellor of the Exchequer would make a single suggestion that he was not always fair, and did not always seek to meet conditions brought fairly to him. I am persuaded that he cannot have had the conditions of the controlled firms brought clearly home to him when this arrangement was proposed. I know that there are Government officials who may perhaps have come in contact with him, or with those giving him the information, who would put it in such a way as would not give to him that technical knowledge he should possess in order to appreciate the difficulties the firms are in. There are some Government officials who are only skilful in one thing, and that is in making forms and schedules for other firms and other people to fill up a controlled firm lives in harass; it lives in worry; the owner's works are not his own; ho is manager no longer of his own works, and this has been put into his mind: "There is one thing certain, the Government are going to stand by me, and I am going to get 20 per cent, increase on my previous profit." Now it is not 20 per cent. The Chancellor of the Exchequer suggested that he wanted equality, and that is what the controlled firms want. Instead of losing money under the arrangement, controlled firms say, "Get more money. We have given you of our best, we have given you of our skill, and of our goodwill. What have the other people given you?"
    Mr. CROOKS: Their lives!
    Sir C. MARKS: I am not talking about lives; I am talking about uncontrolled firms. If the hon. Member for Woolwich had been a little longer in the House tonight he would not have made that interruption. I am speaking of uncontrolled firms who are going to have only £6,000 taken from them for making jewellery, and not making ships, while other firms get £9,200 taken from them. That is what they have given. They cannot have given their lives. They have given nothing. Their pockets are being filled, and now the controlled firms ask for equality to put everybody on the same basis. If you are going to deal with 20 per cent, as being enough for firms who are maintaining the country, 20 per cent, is enough for anybody else too. Make it 20 per cent, all round. Make your deduction, if you are going to do it, but do not take 60 per cent, of 20 per
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    cent, of this profit, and thus leave all these firms under a misapprehension that they entered into a bargain believing that they were sure of this. They have made their financial arrangements believing they were sure of it, and now, at the last moment, they find the Government standing, as it were, firm upon a misconception that has arisen. It is a misconception, but it is such a misconception as ought to have been prevented inside the Cabinet before it was brought to this House, so that there could not be any possible suggestions of one Department saying it was the other that did it, or that it was a bargain by one or a compact by the other. All the firms know is that they are going to get less than they were told they were going to get, and my fear is that when this passes, and if the Government carry this Vote, they will have 4,000 disaffected firms, who will still work, but you will have taken out of those firms that spirit which makes them feel they can sacrifice even more because everybody is sacrificing the same. When these men, who have lost their goodwill, who have lost their trade, and who have doubts whether they will ever get it back again, see these other people not making these sacrifices, they ask, "Why should we out of the earnings we have given be made to give you more than the other man who has given you nothing, and is himself rich out of the War which we have been trying to bring to an end?" I appeal to the Government not to go on with this. You are going to undermine the confidence of the employers, and in time you will undermine the confidence of the men.
    Mr. SNOWDEN: Oh, oh!
    Sir C. MARKS: I have met the men the hon. Member has never met, and whom, possibly, he would not dare to meet. I have met them, and I know what they have to say. They have to believe in the good words of a Government official and a Government Department for restoring to them by and by, without Parliamentary power, that which they have promised shall be restored. The right hon. Gentleman the late Home Secretary (Sir J. Simon) stated on that bench that the conditions were going to be restored. There is no Act of Parliament to bring it about, but they believe his word because he was a Minister Ministers promised the employers that they were going to have 20 per cent., and the employers made their arrangements believing it was so. All the firms in

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    the country should be brought on to the same level, if there is to be a levelling, but this proposal, while it may cost £10,000,000, is going to be more than £10,000,000 discredit to a Government that would go to 4,000 firms in a time of stress and anxiety and add to their responsibility and worries by taking away the profits they thought they were going to have.
    Sir J. SIMON: It appears to me that the difference of opinion which develops in this Debate is due to two feelings which every Member of the House of Commons is very willing to recognise as feelings which will influence his judgment. On the one hand, as the hon. Member who has just spoken has so powerfully urged, there is the feeling that if a bargain was made the bargain must be stuck to. On the other hand, I think the House of Commons is equally determined to maintain this principle and to be governed by this feeling that when you impose taxation, taxation ought not to pick and choose between cases that stand on the same footing. The difficulty is to say, as between those two good principles, what is the right course for the Committee now to steer. My hon. Friend (Sir C. Marks) made reference to the fact that in the Debates of last summer on the Munitions Bill I took some part, and I have refreshed my own memory about it by reading what was then said. There can be no question that in June of last year there was in many quarters a statement that something in the nature of a bargain had been arrived at. Nobody doubts it, but the only material question is, what is the nature of that bargain and what are the limitations of the bargain? On the one side, which is represented by the speech we have just heard, it seems to be thought that the bargain among other things involved the understanding that the firms which were going to be controlled should not be exposed to any general Excess Profits Duty. My recollection does not in the least serve me that anything of the sort was said, and I do not think it was implied in what was said. Indeed I think it would astonish anyone who took part in those Debates last year if they thought that they were guaranteeing such firms as might afterwards be controlled such a privileged or exceptional position as contrasted with the mass of other firms throughout the country. What was involved and what was most certainly intended was not that they should be put in a position of exemption as compared
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    with others, but, so far as it went, in a position which involved a greater burden upon them than upon others.
    An HON. MEMBER: Why a burden?
    Sir J. SIMON: Certainly! There can be no question whatever but that it was because of that that those who spoke in the name of organised trade unionism were prepared, in those establishments, to see for the time being a suspension of trade union rules. I may remind hon. Members here what the position then was. May I take a simple illustration I Take the situation as it was in June of last year. You had two establishments side by side, neither of them was controlled, because the arrangements for controlling establishments had not been made. Both of them were under the same law as regards taxation. Both of them were quite aware that in time of war taxation was likely to be heavy Both of them were aware that if the War was prolonged taxation was likely to get heavier. Both of them were quite aware that as their profits, so was their taxation likely to be. In these circumstances then the two firms, being like to one another, one became a controlled firm and the other did not. So far as the controlled firm was concerned the trade unionists were prepared to waive their trade union rules in order to secure a more rapid production of munitions. In return for that, and as part and parcel of the arrangement, they wanted to be satisfied that there was not going to be an unlimited profit made by the firm that had thus at its hand a labour organisation not protected by trade union rules.
    In my, understanding, and I think it was in the understanding of everybody at the time, the essence of this bargain was not that the controlled firm was, for all time to come, never to have put upon it a greater burden than the maximum of the 20 per cent, profit, but that the trade unions were, to be satisfied that, to that extent, the firm was going to give up unlimited profits which it otherwise would make. I cannot see how an arrangement of that sort made at that time in the least ties the hand of the Government. I draw no distinction between the Chancellor of the Exchequer and the Minister of Munitions—it is one Government and answerable for a consistent policy. I cannot see how that arrangement, made in June of last year, in the least ties the hand of the-Government when afterwards it comes forward and proposes that upon allpersons—

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    like, persons—shall be imposed an Excess Profits Duty. If I am not right, see what follows: Of these two establishments that were side by side and in the same position before the Munitions Act was put into force, one of which, getting the advantage of the relaxation of trade union rules on certain conditions, has in the interval therefore been so far in the position of having to make a certain contribution to the State, is now going to be put into this position: that the other firm is going to be made to make its full contribution to the Excess Profits Tax, while the Excess Profits Tax is to have no operation in any conceivable circumstances to the firm which has got the trade union labour removed from restrictions! I cannot believe that it was ever the intention of Parliament that firms which in the first instance adopted limitation of profits in return for special labour privileges should now be the firms that have the special privilege of being exempted from the Excess Profits Tax altogether! [HON. MEMBERS: "NO, no!]
    Sir A. MOND: May I ask the right hon. Gentleman if he alleges that the relaxation of trade union rules was made for the benefit of the employer, or for the benefit of the State?
    Mr. PRINGLE: It was made for the benefit of the employer!
    Sir J. SIMON: I will very gladly answer my right hon. Friend opposite. If a firm can secure unlimited supplies of labour with the assistance of the Government without any relaxation of trade union rules, I apprehend they are in a fair way to make much larger profits than if trade union rules are applied. It is just because greater production was to be expected from the removal of trade union rules that the trade unionists insisted that there should be this limitation of profits.
    Sir A. MOND: May I—
    Sir J. SIMON: Really, my right hon. Friend has had his answer. He may not like it, but I think it is perfectly true. One thing further. It is perfectly true that last year, in the previous Finance Bill, that the Chancellor of the Exchequer limited his proposals in regard to Excess Profits Duty so that they should not in any way overlap the period during which these controlled establishments were having a portion of their profits taken. That is quite true. But did anybody at that time
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    suggest that it would be impossible for him, when he extended his Excess Profits Duty—if ever he did so—to apply them to these firms? It seems to me, therefore, that the position now comes to this: Here is a general proposal for the taxation of excess profits. It should, therefore, apply to everybody who is in like case. There can be no justification for excluding from its application firms merely because they come within the Munitions Act. If any adjustment has to be made, it cannot, I submit, be made properly by exemption from the operation of the Excess Profits Duty. Indeed, as I understand it, the Excess Profits Duty is a measure of that which is to be taken from anybody who is in the same position, whether his firm is or is not a controlled one. In these circumstances, while I have a very clear recollection of what happened last summer, I am in candour bound to say, as I understood the matter then, and as I understand it now, there is nothing in what happened which, in my belief, prevents the Chancellor of the Exchequer, and the Government, from making the proposal the right hon. Gentleman has now made to the House.
    Mr. DENNISS: I wish at the outset to associate myself in the strongest possible way with those who object to the personal charges made on the last occasion against the Chancellor of the Exchequer and the Financial Secretary to the Treasury. I had hoped they would not be mentioned, again. I am sure that the Chancellor of the Exchequer has not been guilty of the slightest breach of good faith. At the same time I feel quite convinced that he is absolutely wrong in this matter. The right hon. Gentleman has this afternoon given us the result of his promised inquiry. He has told us something in regard to the firms in the Kingdom that are taxed on excess profits which do not exceed 20 per cent, above the pre-War standard. His suggestion is that if they were let off he would lose £10,000,000. Inasmuch as these firms number many, many thousands now—possibly tens of thousands—and there are only between 3,000 and 4,000 firms which are controlled, and more than half of these controlled firms will not come under the Excess Profits Duty at all, it is perfectly clear that the portion of that £10,000,000 which would be raised from those controlled firms would be very, very small indeed. Let me point out to the Chancellor of the Exchequer one or two things. First of all, he has told us that he is going

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    to take into consideration the loss of goodwill. The moment he does that he will find—if he takes goodwill into proper consideration—that the amount of excess profits that these controlled firms make would be very small indeed. I really wish that the Chancellor's statement had been before us before the House adjourned, in order that the Chancellor might have taken that part of the question into his consideration before he made his answer here to-day. Again, he told us just now that under the Munitions Act there is a discretionary clement in the datum and as to the amount to be paid. That being so, how can the Chancellor of the Exchequer say that the accounting will be so simple? The datum under the Munitions Act is going to be one thing, and the datum under this Excess Profits Tax is going to be another. I do not see how he can get out of the difficulty he has got himself into by his statement. The principle on which the excess profits above a certain datum is calculated must be different in the case of the Munitions Act and of the Finance Act. That may prove to be a very great difficulty, and may put the whole matter into confusion. The Chancellor of the Exchequer cannot put a discretionary element into the tax, but he can have a single total assessment, I think, with regard to the Munitions Act and with regard to the Excess Profits Tax under the Finance Act.
    6.0 P.M.
    The basis of the argument of the Chancellor of the Exchequer last time—I noted it very carefully—was that the employer reaped all the benefit by this arrangement with the Minister of Munitions. As a matter of fact, I am going to show that he did nothing of the kind, but that he mostly reaped a disadvantage. What happened was this: The great difficulty was not the employer; the difficulty was the trade unions, who, it was feared, would not allow their members to give up their privileges and customs for the purpose of greater production and doing more work than they were accustomed to do. That was the difficulty. The Minister of Munitions had to persuade the trade union members to relax their rules. When he had persuaded them to relax their rules, their leaders turned to him and said, "Yes, we will relax our rules, but if we relax them we are not going to do it for the benefit of the employer, and the employers must not make a profit out of the relaxation of our rules."
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    That is exactly how the matter stood. Thereupon the Minister of Munitions called together a few—and only a few— representatives of the manufacturers of this country and asked them whether they would be willing to fall into line with the request of the trade union leaders. It was of no benefit to them. On the contrary, it was a hindrance to them. It was taking them out of the category of those who could make as much excess profits as they pleased, only paying 50 per cent, or 60 per cent, to the State. These few employers came in and agreed on the basis that the trade unions should relax their rules, that the employers should not get more than one-fifth more profit than they had in the previous pre-war year. That was agreed to, but that was of no benefit to the employers. It was a drawback. Then the Act was passed. It was a compulsory Act, and 3,600 employers have come in since. These 3,600 employers never agreed with the Minister of Munitions to limit their profits. It was only a few representative men whom the Chancellor of the Exchequer first consulted. The rest of the employers have been compelled to come in against their will—many of them—and to fall into line, so that they are compulsorily put under this disability. I submit, therefore, that I have disproved, or partially disproved, as my first argument the argument of the Chancellor of the Exchequer, that the employers reaped all the benefit. They did nothing of the kind. What happened was that the Act of Parliament was passed in which a fixed limit was put on the profits that the employers could make. Limit to what profits? Excess profits—profits over the profits earned before the War. Therefore that Statute fixed the limit of excess profits which the employer was allowed by the bargain, as it is called. It fixed that absolutely. If the excess profits are once fixed by Statute, how can you whittle them away by putting on a tax which makes them less than was fixed? I put it to the Government that this Munitions Act dealt with the remuneration of the employer above pre-war rate—with excess profits, and having fixed it it was incapable of alteration by taxation by the Chancellor of the Exchequer. So long as the Section stands in the Statute you cannot whittle it away by a tax, because I submit that that Statute is a limitation itself of excess profits. The Chancellor of the Exchequer asked whether anyone could say the con-

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    trolled firms should have better terms than the uncontrolled? Certainly, I do. They are carrying out great national work. They have been blindfolded, so to speak, forced to work under this Act. They do not know what effect that will have on their business. The lion. Member for Launceston (Sir C. Marks), who spoke so clearly just now, pointed out the difficulties under which these controlled firms labour—how they have abandoned their ordinary businesses. One firm which made needles is now making gun-sights. Another firm, instead of making textile machinery, makes shells a motor-ear firm, instead of making motor-cars, makes munitions of war. What is the result in the case of the motor-car company? The owner loses his goodwill. He no longer makes motor cars, but motor cars come over from America. Traders who buy-heavy motor cars, and other people who buy lighter cars, especially the traders who buy the heavy cars, buying a fleet of two, three, four or up to twenty, might naturally continue to supply themselves after the War with similar cars, and the goodwill of the motor-car manufacturers here has gone in many cases for good to America. They have sacrificed something which the uncontrolled firms do not sacrifice. The uncontrolled firms are not risking their goodwill, but are increasing it by continuing to manufacture the products of their own business. Controlled firms are losing their goodwill by being obliged to discontinue their ordinary business and to divert it to the manufacture of munitions.
    Again, they are using their machinery night and day with no time to stop for repairs. I hope the Chancellor of the Exchequer will allow for depreciation if this tax goes through. The machinery wears out at a much greater rate, because no pause is given to it, and no necessary repairs get done. Then there is capital outlay, which has been referred to before. There is another consideration which the uncontrolled firm is not put under. The prices for the articles turned out by the controlled firms are strictly fixed by the Minister of Munitions, so that, although expenses may be very heavy, the manufacturer cannot put what price he likes on his goods, as can the uncontrolled firm. He cannot make unlimited profits even if he wishes to, because the actual prices are regulated. The only way in which the controlled firm can make larger profits than heretofore must be by greater output and
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    not by higher price; and greater output means greater energy and greater attention to the business—in fact, putting the whole soul of a man into it, which is for the benefit of the country and the reason why the Munitions Act was passed. On the other hand, the uncontrolled firm can simply put up prices and get the same result without putting much more energy into the business. The Chancellor of the Exchequer says that taxation must be upon an equal basis. In order that this taxation may be on an equal basis, if you are going to charge these firms excess profits the same as uncontrolled firms, you must discontinue the control of those firms and allow them to revert to their own business. Then you will have put them, on the same terms. But if you do not, they are not upon the same terms. The two cases are not parallel, and when the right hon. and learned Member for Walthamstow said just now that everybody must be upon the same footing if they are to be taxed the same, I think they are not upon the same footing, and therefore ought not to be taxed the same. Unless you put them on the same footing by doing away with the control and let them revert to their own business again, they are not on the same footing. The tax is not equal; it is not just. To do that you must repeal the Munitions Act, and you cannot do that, and therefore you ought not to put on this tax.
    These are the short arguments I wish to put before the right hon. Gentleman. I should have liked the Chancellor of the Exchequer to have heard them as well as the Financial Secretary to the Treasury, because it is a little inconvenient when one point is replied to by one Minister and another point by another Minister. I am not in the least decrying the abilities of the Financial Secretary, or in the least suggesting that the arguments I am putting would not be understood by him. But it is almost impossible in the course of debate to convey to the Chancellor of the Exchequer, who after all decides, what has been said by this Member or that Member, or what argument has been put forward. I do hope that the right hon. Gentleman will reconsider his decision. All through the Debate some Members have been jeering and laughing at the position of the controlled firms. After all, they are exerting all their energies to win this War. Without them this War cannot be won. Those Members who have been jeering and laughing at the controlled

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    firms all this time are those who have not lifted a finger in this War. They have not helped England in recruiting, or helped England in any, way. I do put it to the Chancellor of the Exchequer that these controlled firms ought to be treated differently from the uncontrolled firms, who are making large fortunes out of this War without in the least helping this country to win its way through.
    Mr. ARMITAGE: There is one point I should like to ask the Financial Secretary about, and that is the question of depreciation, which the Chancellor of the Exchequer has just mentioned. I understand that there are two ways of arriving at depreciation—under the Munitions Act and under the ordinary Income Tax Act. Now the Chancellor of the Exchequer has said that he will adopt the depreciation allowed by the Minister of Munitions, but under the Income Tax Act I believe it is impossible for him to allow any depreciation upon buildings and upon land bought at excessive prices to increase works and to put up new establishments. What I really want to find out is whether the Chancellor of the Exchequer is going to introduce legislation so that that depreciation can be allowed upon buildings and upon land.
    Mr. MONTAGU: There is no question of the Income Tax Act. The Chancellor of the Exchequer does not propose to alter the Income Tax law at all. The Income Tax Act will be in existence long after the Excess Profits Tax is dead and done with. The depreciation will be allowed for in estimating excess profits, and will be the same depreciation as is allowed by the Munitions Department in estimating the munitions levy. The Income Tax does not come into it at all.
    Mr. A1NSWORTH: I would venture to ask the question which was asked by the Chancellor of the Exchequer on Thursday, and which, I think, should go a long way to shorten the Debate. The Chancellor of the Exchequer said, in answer to the hon. Member for the Kirkdale Division of Liverpool (Mr. Pennefather), "Will the hon. Member point to any contract which liberated controlled firms from future taxation?" If hon. Members who have spoken on this matter are really able to give us a specific by which we can clear ourselves of the danger of future taxation, we shall all be delighted. We want to avoid taxation, no doubt, but I would like
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    to remind the House in this crisis of what was said to me by a former Conservative Member of this House, a friend of mine who is much respected, who, I am sorry to say, is not here now, but who, I am glad to say, is quite well. He met me not long after the commencement of the War, and he said, "I do feel sorry I cannot take any part at present, but I do like paying my taxes."I would like that idea to sink a little into the minds of hon. Members. We have been talking to-day, and we did last week, about the difficulties, the dangers, and the troubles of controlled firms. I was very much amused by one speaker who lately sat down who asked what controlled firms were to do after the War. Really I think we may be satisfied to get to the end of the War, and then we can begin to talk about what controlled firms will have to do. But I would ask controlled firms and all men in business who feel distressed and anxious at the present state of affairs just to consider what the Chancellor of the Exchequer said to-day on this subject and how he promised that whenever justice required that a point should receive consideration he was quite certain the authorities would be ready to deal with it. Do not we all know that if these questions do arise, as they do arise, you have only to go to the tax authorities or to Somerset House and you get your case dealt with?
    When these Gentlemen speak so eloquently about the troubles of controlled firms, I wonder how^ they would like to be in the trenches for five minutes, or whether they would prefer to be in an ironclad when a shell had just gone through the boiler. Upon my word, it is difficult to speak without heat with regard to what has been going on every day. There might be no war. No one might be killed, no household made desolate, no human hearts torn with sorrow. Yet hon. Members can meet here and talk about grievances of controlled firms. Let me get back to business. What do we mean by controlled firms? We all know that the output of munitions is essential to this country. The Government formulated a scheme which, I think, we might all agree was a good one. What did people gain who joined the controlled firms? They got free of all trouble with the workmen and with labour questions, and they also were sure, probably altogether, but, at all events, very largely, of Government work. I ask any hon. Member here who knows about the conduct of business at the present day whether that

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    is nothing. What are they asked to do now in regard to which there is all this trouble? Merely, like every other subject, to be liable to pay taxes. I would like to call attention to an excellent speech made by my hon. Friend the Member for the Attercliffe Division (Mr. Anderson), who said distinctly that the arrangements as to the dilution of labour with the trade unions were agreed to on the understanding that the employers gave up a part of their profits. If you disturb that arrangement now you must not only deal with the employers but the workmen as well, and are you going to raise the whole question again? Personally I should like to see savings enormously increased in this country, and if this could take place the nation would be more healthy and more sober. However this War may end, we know one thing, and it is that the British Empire is going to be bigger than it ever has been before, and it is the duty of every hon. Member here to put his shoulder to the wheel. We are tired of hearing talk about small troubles, and we want to get on with what we are doing. We want to win the War, and leave this country and ourselves and our Allies stronger and more capable as a nation than we have yet been.
    Mr. HEWINS: There are one or two points I should like to allude to before we go to a Division. I listened almost to the whole of the Debate on the First Beading, and I am bound to say that I do not think the case which was then made for the controlled firms has been met in any way. The Committee will remember that at the conclusion of the proceedings on Thursday evening the Chancellor of the Exchequer promised that he would look into the figures with a view of meeting the arguments advanced by several hon. Members. He has now looked into those figures. I should like first of all to draw attention to the fact that the Chancellor of the Exchequer brought forward this scheme, which is regarded with the keenest hostility by so many great firms in the country, without knowing what sum of money or any approximation to it would be involved. That was a reflection upon the efficiency of the Treasury which, I trust, is not true, and whatever else may be said about this proposal it is a very important one. I think too little in this Debate has been said about the important industrial complications arising in connection with it. One would think from the speeches made by Members of the Government that we
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    were engaged merely with little questions, of ordinary public importance as to how to screw this or that amount of money out of a given number of people. These great firms, now controlled firms, engaged in the production of munitions, and the workmen they employ, are the pick of the brain and energy and inventive skill of the country. The opinion amongst these firms is unanimous that if the proposals of the Chancellor of the Exchequer are carried they will be seriously handicapped in the conditions they will have to cope with after the War. I protest against the explanation of what has been called a bargain given from the Front Bench, and I think too highly of the working men and employers to think that this is merely a question of a quid pro quo between the two. The working men of England have behaved throughout the War in a highly patriotic manner, and so have the employers. This was not a question addressed to working men as to whether they would give up the principles and customs to which they always held so closely in return for the sacrifice of a sum of money by the employers, but it was more a question of what my hon. Friend on the Front Bench stated in the course of his speech. This is a very important question, and I should have thought the Treasury ought to have made full inquiry into the statistics of what they are proposing before they introduced it at all. They have not done so, and now we know from the Chancellor of the Exchequer that they have not got the figures at the Treasury. The Chancellor of the Exchequer, instead of doing what he said in answer to a question on Thursday night, proposes now to give an approximate answer to another question that was not asked. On the score of the figure which the Chancellor of the Exchequer has given, he appeals to the Committee to support him in carrying this particular proposal. That does not seem a very strong argument, and it is certainly not the way to meet the arguments put forward against this proposal.
    There are two other points in the Chancellor of the Exchequer's speech which I would like to deal with. First of all, there is the allowance he was going to make for depreciation. I suppose I am right in concluding that the several headings in the rules under the Munitions Act are to be included. The Chancellor of the Exchequer was asked this question on Thursday night, but he did not give a

    605
    very clear answer, and before a decision is come to on a matter like that we ought to know what is meant, and any modification of this proposal requires the consideration of the original parties. The Chancellor of the Exchequer said that he was prepared to make an allowance or take into consideration or compensate— I forget the exact phrase—in regard to the question of the goodwill of the firm lost in consequence of munition activities during the War. I do ask my right hon. Friend to consider what on earth he is promising. The controlled firms have not asked for that. At the present time, in connection with most of these firms, their trade and markets have been lost never to be recovered. Trading routes have been altered. All the conditions of trade have been revolutionised, and yet the Chancellor of the Exchequer actually comes down here and, instead of accepting the reasonable proposals which have been put forward, he says, "I will make a bargain with you after the War." But on what basis? I can mention firms in the North and in the Midlands who have had established trades generation after generation in particular parts of the world, and those trades are now gone for ever; before, they were trades which rested upon continuity. They have all gone, and how does the Chancellor of the Exchequer propose to compensate them. I would like to know exactly and precisely what the right hon. Gentleman means by his proposal. It is perfectly obvious that it will have to be very carefully studied. I do not believe that the controlled firms have asked for anything of the kind, and I think they are prepared to take the risk. I should have thought it would have been simpler to have taken the line of argument expressed on behalf of the controlled firms by several of my hon. Friends than to enter into vague promises of that kind. At any rate, the consideration which the Chancellor of the Exchequer puts forward are extremely vague, and require a great deal of consideration before they can be accepted. The proposal which has been put forward on behalf of the people who object to the scheme of the Finance Bill is really so very much more reasonable and easier to carry out, that if it is not accepted my hon. Friend has no option except to go to a Division.
    Mr. BOOTH: I want to put before the Committee the case of the machine tool-makers in this country which has not been brought into this Debate. I think
    606
    a good deal of the Debate would have been better directed if it had more basis of fact. If I understood the Chancellor of the Exchequer aright, the opposition to the Bill has now been largely modified. I join issue with the last speaker in belittling what I think was an important and just concession, and one which is, capable of being estimated easily and fairly. I took it that the suggestion was not to compensate every tradesman for the loss of his business because of the War. If so, what about all those individuals who have given up shops and little businesses? I understand that where a controlled firm, at the instance of the Government, has diverted its operations away from its legitimate lines to something the Government prefer, in assessing the tax you take into account their loss of goodwill.
    Mr. HEWINS: How can they?
    Mr. BOOTH: I will give an instance in the business with which I am associated. We diverted our trade entirely to making munitions. We had not made one before. Our drawings and patterns, for our legitimate trade of wood working have become obsolete, and we do not know whether we shall ever be able to use one of them again, and they stand in our books at a reasonable cost. When the Government take over a firm like this, when the point of taxation is reached, you must consider how far those patterns will have been made obsolete and useless through following the lead of the Government. I understand that to be the suggestion of the right hon. Gentleman, and it is a matter which it is perfectly easy to estimate. I do not think any controlled firm wall want that pushed to any unreasonable extent, but the fact that it will be taken into account shows that the Government wish to act fairly. I say quite candidly to the House, as I have made a personal allusion, that whether this Amendment is carried or not, it will not make one pennyworth of difference to my firm. Therefore, I feel the more free to speak. Being associated with three establishments, one of which is under the Excess Profits Tax alone, another of which is half under the Munitions Tax and half under the Excess Profits Tax, and a third of which is entirely under the Munitions Tax, I air probably in as good a position as even older and more experienced men to judge. There is one firm of each kind, and one

    607
    half-and-half. The last thing that I want to do is to lessen the revenue to the Exchequer. It would be imagined from some remarks that have been made that when the Government controls a firm it is a sort of onerous burden and a miser-able life for the men conducting the business. There is no doubt that there are hundreds who are in a better position under control, but that is no reason for doing an injustice to others. I do not see, however, what is to be derived by an over-statement of the case. I want to put a point to the Chancellor of the Exchequer with regard to two machine-tool firms who, so far as I know, do not resent Government control. Naturally, a man likes to fancy that he is the sole arbiter of the destiny of his own business, but when he gets over that feeling it is really not the irksome thing that some hon. Members seem to imagine. The machine-tool makers will have to be considered by the Chancellor of the Exchequer in connection with his promise where there is a special case. I do not say that there are others, but I think this is one. The Minister of Munitions called the machine-tool makers together and announced that he was going to control them. It had nothing to do with labour. Many of the firms have been brought in since last year when there was an Excess Profits Tax, and it did not apply to them.
    Mr. PRINGLE: Oh, yes, it did!
    Mr. BOOTH: The Chancellor of the Exchequer can correct me if I am wrong. I remember very well the distinction drawn last year. The machine tool makers were asked to increase their output, and a distinct promise was made—I am perfectly sure that the shorthand note will confirm it—that if they would increase their out put they would be allowed to keep a larger reward than those firms who did not increase their output. If in a time of national emergency you call the whole of a trade together and make a distinct condition that you will reward merit—
    Mr. PRINGLE: What was the condition?
    Mr. BOOTH: I am stating it. If you make a distinct condition that you will reward merit by allowing those who increase their output through their own diligence to receive a larger share of the profits, that should be respected. My hon. and learned Friend (Mr. Pringle) does
    608
    not understand what I mean. I am sure it is my fault, because, if I may say so, he is one of the clearest-headed men in the House. They were assured that the shareholders in a company which increased its output by its own diligence in following the lead of the Ministry of Munitions should be allowed a larger division of the profits than those who refused the appeal of the Ministry of Munitions. The right hon. Gentleman said that he was going to respect every bargain made by the Ministry of Munitions and all these agreements. That is all I am asking. If he does, he will have to make some distinction between controlled firms and those who are not controlled. The question of the bargain with labour is not at all as stated by the right hon. Gentleman the Member for Walthamstow (Sir J. Simon). He cannot be in the least aware what it meant when the trade unions removed their restrictions. He seemed to think that every time they did that it was a concession to the employers. It was nothing of the kind. In many cases the employers did not want it. They very much preferred the older method. Take, for example, the question of Sunday work at time and a half or double time. What employer desires to pay time and a half or double pay for Sunday work? All trade unions were opposed to female work and to dilution of labour. The firms were entirely in agreement with the trade unions on some of these points. If my hon. Friends would go down into the industrial districts before they make their speeches they would not make these mistakes. I know one firm who have had the task of trying to enforce female labour and dilution of labour. They know they have the resistance of their staff as well as of the trade unions. When the trade unions removed these restrictions they did it in response to a lot of their own members. If this thing is gone into at all it should be gone into thoroughly.
    As far as I can understand his speech to-day, and I have also carefully read his speech last Thursday, the Chancellor of the Exchequer had solely in mind in the control of a firm the limitation of profits. But prices and profits have been limited before that point is reached. Supposing a firm, has a refund of £15,000 to make because the Ministry of Munitions has been charged too high prices? The customer has been glad enough to pay. It is a perfectly straightforward bargain, and the customer knew what he was

    609
    about and paid higher prices in preference to buying American goods. He got better quality. Now the Machine Tool Committee of the Munitions Department—I want to pay a tribute to them for their magnificent work on behalf of the State—quite rightly review all these orders and cut down the prices and order refunds to be made. They will not allow contracts to be entered into unless they pass the price. When a firm has had its profits cut down by the direct intervention of the State and the great bulk taken away, and when the Chancellor of the Exchequer takes over 60 per cent., is it treating that firm fairly when compared with one never interfered with at all? Probably I shall get the support of the hon. Member for Blackburn (Mr. Snowden). I would have liked—it may not be feasible—that in the interests of the State you should have power to go into non - controlled firms, and particularly luxury firms, and where they have been charging too much cut them down and make them refund, and then for the Chancellor of the Exchequer after that to take his 60 per cent. I hope he will say that the treatment of the machine tool firms is not fair compared with those firms who have never been approached by the State at all, or whose profits and contracts have never been interfered with. I give no support whatever to any idea of making a sacrifice of £10,000,000, and I think the Chancellor of the Exchequer will have the support of the Committee in remaining firm upon a point like that. I am perfectly certain that the only way out of this quagmire is to have one system for all firms. I am not suggesting removing the control. I think the firms should be controlled with regard to labour conditions, prices, and methods of working—that is unavoidable—but when it comes to the limitation of profits, if all firms were treated alike, I feel sure that there would be satisfaction, and there can be satisfaction in no other way.
    Mr. PRINGLE: I desire to associate myself particularly with the concluding words of my hon. Friend's speech. It is of the utmost importance to treat not only controlled and uncontrolled alike, but that all of them should be under a single system of taxation. If I express my own individual preference, it is that all should be subject to the Excess Profits Duty in the Budget. During the whole course of this Debate a great deal of prejudice and a great deal
    610
    of feeling have been aroused quite unnecessarily. I can understand the heads of controlled firms being somewhat worried by the necessity which is imposed upon them of rendering accounts both in connection with the Excess Profits Duty and in connection with the Muntions Department, but apart from that grievance nothing of any real consequence has emerged in the course of the Debate. After all, that is an administrative matter, and the removal of this dual system would not only be an economy to the firms, but an economy to the State. It is absurd at a time when national economy is required that two Departments should have a staff of accountants doing precisely the same work. Under these circumstances, as the Treasury has to do the work for all the uncontrolled firms, the obvious course would be for the State to abolish the unnecessary accounting department in the Ministry of Munitions and have the uniform system I suggest. There is no foundation at all for the argument regarding the bargain being for ever binding on the State so that no further Excess Profits Duty can be drawn from these firms than is embodied in the Munitions Act and in the rules under that Act. It was long before the Munitions Act was passed that the first negotiations in regard to excess profits, or at least to the limitation of profits, took place, and at that time there was no idea whatever that there would be an Excess Profits Duty affecting any firms in the country. The solo object of the limitation of profits was to secure greater output of munitions not only by the withdrawal of trade union restrictions, but also by the complete control of labour—a control of labour far greater than was ever anticipated. We have, for example, not only the withdrawal of these restrictions, but we have the employer with a tie upon his workpeople, or a right to retain his workpeople, in a particular department. The employer has the power to get his workpeople fined if they are late in going to their work. With all these new conditions, with all this additional control over labour, it was perfectly fair and equitable that those who represented the working men should insist that the increased profits due to that greater control of labour should go, not to the employers, but to the State, and if subsequently the State for the purpose of financing the War decided that everybody should pay on their excess profits, that fact should not exempt from

    611
    that taxation those people who had agreed to these limitations at a time when there were no excess profits for anybody. I think under these circumstances the Chancellor of the Exchequer is absolutely justified in the course he has taken, and he might fairly have been saved from the attacks of the hon. Member for the Brightside Division and of the hon. Baronet the Member for Mansfield (Sir A. Markham), the latter of whom seems to have substituted in his affections the Chancellor of the Exchequer for the late Secretary of State for War.
    Mr. HENDERSON: I hope the Committee, before we go to a Division, will clearly understand the position on which we are to divide, and will appreciate what it is the controlled establishments want, because there has been a good deal of misrepresentation with regard to their wishes in certain quarters. The Chancellor of the Exchequer, in his speech, said that the limitation of profits was a tax, or penalty, or levy, imposed on the controlled firms as a quid pro quo for the arrangement made with the trade unions. May I ask if that is so?
    Mr. McKENNA: I quoted the language of the Minister of Munitions on the subject, and I endorse absolutely what the right hon. Gentleman said.
    Mr. HENDERSON: Then, if that is so, I want to appeal to my right hon. Friend to be quite logical. The controlled firms had a standard fixed for them in the Munitions Act. That standard was two prewar year plus 20 per cent. They had no profit over and above that, and that was given as a quid pro quo for the concessions made by the trade unions. It was a penalty, or fine, or whatever you may choose to call it, imposed upon these establishments. If the right hon. Gentleman is logical, the controlled firms had no profit beyond that 20 per cent. Will anyone say that when the profit was limited to 20 per cent., they were to get no more, however much work they did? Will anyone say that the controlled establishments believed that that 20 per cent, was subsequently to be subjected to an Excess Profits Tax? They certainly do not want anything which nobody else is going to get, and they are asking no favours for themselves. I do not know whether the OFFICIAL REPORT of last Thursday is correct, but if it is, the Secretary
    612
    to the Treasury repeated what it was that the controlled establishments wanted. He said:—
    "The position seems to me perfectly plain and straightforward. These gentlemen who are making munitions for the State are, like every other trader, to pay a Tax which will leave them 40 per cent, more profits than they made before the War, as a consequence of their activities during the War. Is that a bad thing in principle?"—[OFFICIAL REPORT, 22nd. June, 1916, col. 406.]
    That is exactly what we want, and it is what the Treasury want. The Treasury are taking all the rest of the profits beyond the 20 per cent, as a fine for the arrangement that was made with the trade unions. To be logical, you ought to tax the 20 per cent, because they have no other profit. The controlled firms, in fact, are barred from making any other profit, and all the rest goes to the Treasury. They took the pre-war standard plus the 20 per cent.—
    Mr. McKENNA: That is not in the Munitions Act. The datum line is not necessarily that mentioned. The level may be altered, either above or below.
    Mr. HENDERSON: The firms only want to be put in the same position as other firms. If you tell them now that they misunderstood, and that all this excess on their earnings was to go as a quid pro quo for the removal of the trades union limitations, then all I can say is that that is not what they understood. They do not ask to be treated any better than anybody else, but they say they ought to be treated no worse. I will make one appeal to the right hon. Gentleman. He knows there is a very great feeling of antagonism amongst the controlled establishments. They feel, rightly or wrongly, that they are being badly used. They may be wrong in that view. I think that they are right. But I ask the right hon. Gentleman not to finally decide this matter until the Report stage. In the interval something may, and very likely will happen, which may relieve the situation. And may I say I never intended to make any attack on my right hon. Friend. The right hon. Gentleman the Member for Spen Valley (Sir T. Whittaker) thought it right to come in here and suggest that I have made charges of bad faith against the Front Bench. One is apt to say something in the heat of the moment, and I thought, perhaps, I might have done so, but I have looked carefully in the OFFICIAL REPORT at all that I said, and I challenge the right hon. Gentleman to produce a single sentence which

    613
    could give offence to my right hon. Friend. I never intended to use such language, and I am sure now I never did.
    Mr. SAMUEL ROBERTS: I should like to join with my hon. Friend the last speaker in making a final appeal to the Chancellor of the Exchequer, and I will use his words. I will appeal to him not to come to a final conclusion on this matter until the Report stage is reached. I have a reason for doing so. I do not think the right hon. Gentleman appreciates the hostility of the controlled firms to this proposal. This afternoon, at a large meeting at Westminster Palace Hotel, an association of controlled firms was formed, representative of all the munition areas, so strongly do they feel that on this and other matters they are being unfairly used by the Government, although they have been giving their best to the country—both masters and men. In this question they do feel they have a real grievance, and I am appealing to the right hon. Gentleman not to push matters too far. We do not want to quarrel. This is not the time for quarrelling. We should like very much to come to an amicable arrangement, and, personally, I feel that that can be done. Therefore, let the right hon. Gentleman do nothing in a hurry. I am sure if he does he will regret it afterwards. I should like him to postpone his final decision until the Report stage. I do not think it is to the interest of the State that two Departments of the State should be opposed to one another in an important matter like this. The Minister of Munitions is with us.
    Mr. McKENNA: How do you know that?
    Mr. ROBERTS: I know it from his Parliamentary Secretary. He told me. I should not have mentioned it if the right hon. Gentleman had not asked me for my authority, but being asked I was bound to give it. That is the second reason why I think the final decision ought not to be taken now, and I sincerely hope the right hon. Gentleman will see his way to fall in with this suggestion.
    Mr. McKENNA: I think it is in the interest of the House of Commons that it should not go out to the public that there is a divergence of opinion between two Departments, and it is necessary for me therefore to say, in view of what the hon. Gentleman has just stated, that the language I used on the Budget, in dealing with this part of my Bill was put into
    614
    writing by me, submitted to the whole Cabinet, and accepted by the Minister of Munitions, as well as by the rest of my colleagues. Before the introduction of the Bill there were one or two questions about which my right hon. Friend the Minister of Munitions desired to have assurances from me. I gave him those assurances, and in his letter, in which he asked for some information about the collection of the tax, he stated that my assurances were completely satisfactory to him. I told the right hon. Gentleman that the taxes would be collected in accordance with the plans he suggested, and there the whole incident closed. It is absolutely without foundation to allege that there is a divergence of opinion between the Minister of Munitions and myself upon this subject. If the hon. Gentleman, whose opinions I hold in very high esteem, and who I am sure would make no statement unless he implicitly believed in the truth of it—if he desires I will show him the correspondence.
    Sir W. ESSEX: When the hon. Member for Sheffield (Mr. Roberts) rose to urge the Chancellor of Exchequer to give more time to the consideration of this matter, he might have gone a step further and enabled that consideration to be given by withdrawing his Amendment. He would thus have avoided calling upon the Committee to takes sides on the matter, it might be to the harm of any possible consideration later on.
    Mr. ROBERTS: I should.be only too glad to take that case if I could get the slighest hint from the right hon. Gentleman—
    7.0.p.m.
    Sir W. ESSEX: I suggest it should be done without any pledge at all. I think the hon. Gentleman would be justified in withdrawing the Amendment, seeing that he will have an opportunity of raising the question again later on, and it may be that meantime these various meetings in London to which he has referred may be able to produce such arguments that the splendid, and to my mind unanswerable, case built up by the Chancellor of the Exchequer to-day, might be weakened or destroyed. But evidently the hon. Gentleman has not the courage of his opinions. He feels the matter ought now to go to a Division, with the result that the position may be hardened for him in the future. I hope the Government will sit tight in this matter. These 4,000 firms are in many respects regarded by the many

    615
    thousands of other firms, which are not controlled and are not in munition work, with considerable envy. They have had their undertakings supported by the Government with gigantic contracts. They could not as a body of men have expected, in the rotten conditions that necessarily followed for trade upon a great War like this, to have maintained their output in their various factories. Their trade would have shrunk, they would not have had excess profits, but diminished profits, and even absolute losses in many cases. Another point I would urge, even at this late moment, is that large numbers of these firms, as I know, will come out of this association with the Government, wherein they have had the advantage of consultation, advice and counsel from the splendid experts of the Ministry of Munitions, better in their workshop practice, in the possession of different and higher methods of organisation, with better equipment and tools, and in a number of cases they will find what many of us who are not in those trades and who are not benefiting feel, that their bread is buttered on both sides and in many cases the crusts cut off. Firms which are losing money to-day are asked, apart from their losses having regard to the law of average with regard to Income Tax, to make a further contribution out of their losses to outset this possible £10,000,000 referred to by the Chancellor of the Exchequer. The whole position is grossly unfair. I yield to no one in the admiration I feel
    for what these firms have done for the nation and the Allied nations in this time of stress for everybody, but what is their position? Their profits have been maintained.
    Mr. HENDERSON: How do you know?
    Sir W. ESSEX: It is pretty evident it is so, because it is excess profits we are dealing with now. In regard to the bulk of the trading community there is no complaint where there have been excess profits. The bulk of the trading community are suffering in these times, but are paying their taxes without grumbling or gruntling, yet they see the 4,000 firms over whom the benefit of the protecting arm of the State has been thrown, grumbling at this. It makes them feel that there ought not to be any excess profits for anybody in this hour of the nation's stress. It is a sorry spectacle. My hon. Friends who support this Amendment no doubt feel their case strongly, but they might have withdrawn this bone of contention for the present and still have put pressure on the Chancellor of the Exchequer, who is not unamenable to pressure, because some of us have had anxious hours during the weekend for fear that he was going to weaken.
    Question put, "That the words 'except as to controlled establishments under the Munitions of War Act, 1915, during the period they are under such control,' be there inserted."
    The Committee divided: Ayes, 72; Noes, 158.

    Division No. 28.]

    AYES.

    [7.4 p.m.

    Armitage, Robert

    Ferens, Rt. Hon. Thomas Robinson

    Newdegate, F. A

    Ashley, Wilfrid W.

    Gelder, Sir W. A.

    Newman, John R. P.

    Astor, Hon. Waldorf

    Grant, J. A.

    Nicholson, William G. (Petersfield)

    Banbury, Rt. Hon. Sir F. G.

    Gretton, John

    Nield, Herbert

    Banner, Sir John S. Harmood-

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

    Norton Griffiths, J.

    Beach, William F. H.

    Haddock, George Bahr

    Pearce, Sir William (Limehouse)

    Bellairs, Commander C. W.

    Hardy, Rt. Hon. Laurence

    Peel, Lieut.-Colonel R. F.

    Bonn, Arthur Shirley (Plymouth)

    Henderson, John M. (Aberdeen, W.)

    Pennefather, De Fonblanque

    Bigland, Alfred

    Herbert, General Sir Ivor (Mon., S.)

    Perkins, Walter F.

    Bird, Alfred

    Hewins, William Albert Samuel

    Peto, Basil Edward

    Boyton, James

    Hickman, Colonel Thomas E.

    Pollock, Ernest Murray

    Bryce, J. Annan

    Hunt, Major Rowland

    Pryce-Jones, Colonel E.

    Burn, Colonel C. R.

    Joynson-Hicks, William

    Rutherford, Sir John (Lancs., Darwen)

    Carson, Rt. Hon. Sir Edward H.

    Lonsdale, Sir John Brownlee

    Rutherford, Watson (L'pool, W. Derby)

    Cautley, Henry Strother

    Lough, Rt. Hon. Thomas

    Samuel, Samuel (Wandsworth)

    Cecil, Evelyn (Aston Manor)

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

    Terrell, George (Wilts, N.W.)

    Coats, Sir Stuart A. (Wimbledon)

    MacCaw, William J. MacGeagh

    Thomas-Stanford, Charles

    Cooper, Sir Richard Ashmole

    Mackinder, Halford J.

    Warde, Col. C. E. (Kent, Mid)

    Cory, Sir Clifford John (St. Ives)

    M'Laren, Hon. H. D. (Leics.)

    Willoughby, Major Hon. Claud

    Cory, James H. (Cardiff)

    Macleod, John Mackintosh

    Wood, John (Stalybridge)

    Cowan, W. H.

    M'Neill, Ronald (Kent, St. Augustine's)

    Wortley, Rt. Hon. C. B. Stuart-

    Craig, Col. James (Down, E.)

    Malcolm, Ian

    Yate, Colonel C. E.

    Dalziel, Davison (Brixton)

    Marks, Sir George Croydon

    Denniss, E. R. B.

    Mason, James F. (Windsor)

    TELLERS FOR THE AYES.—Mr.

    Falle, Bertram Godfray

    Mond, Rt. Hon. Sir Alfred

    S. Roberts and Sir Tuder Walters.

    NOES.

    Addison, Dr. Christopher

    Harcourt, Rt. Hon. Lewis (Rossendale)

    Phillips, Sir Owen (Chester)

    Ainsworth, John Stirling

    Harmsworth, Cecil (Luton, Beds)

    Pratt, J. W.

    Allen, Arthur A. (Dumbartonshire)

    Harmsworth, R. L. (Caithness-shire)

    Pretyman, Ernest George

    Anderson, W. C.

    Harris, Percy A. (Leicester, S.)

    Price, Sir R. J. (Norfolk, E.)

    Baring, Sir Godfrey (Barnstaple)

    Harvey, A. G. C. (Rochdale)

    Pringle, William M. R.

    Barlow, Sir John Emmott (Somerset)

    Harvey, T. E. (Leeds, West)

    Prothero, Rowland Edmund

    Barnes, Rt. Hon. George N.

    Helme, Sir Norval Watson

    Radford, Sir George Heynes

    Bathurst, Col. Hon. A. B. (Glouc, E.)

    Hemmerde, Edward George

    Raffan, Peter Wilson

    Beale, Sir William Phipson

    Henderson, Rt. Hon. Arthur (Durham)

    Rawlinson, John Frederick Peel

    Beauchamp, Sir Edward

    Hinds, John

    Rea, Walter Russell (Scarborough)

    Beck, Arthur Cecil

    Hobhouse, Rt. Hon. Charles E. H.

    Rees, G. C. (Carnarvon, Arfon)

    Bethell, Sir J. H.

    Hogge, James Myles

    Roberts, Charles H. (Lincoln)

    Birrell, Rt. Hon. Augustine

    Hohler, Gerald Fitzroy

    Roberts, George H. (Norwich)

    Bowerman, Rt. Hon. C. W.

    Hope, Harry (Bute)

    Robertson, Rt. Hon. J. M. (Tyneside)

    Brace, William

    Hudson, Walter

    Roch, Walter F. (Pembroke)

    Broughton, Urban Hanlon

    Jacobsen, Thomas Owen

    Rowland, James

    Bull, Sir William James

    John, Edward Thomas

    Samuel, Rt. Hon. H. L. (Cleveland)

    Burns, Rt. Hon. John

    Jones, Edgar (Merthyr Tydvil)

    Samuel, J. (Stockton-on-Tees)

    Butcher, John George

    Jones, William S. Glyn- (Stepney)

    Sherwell, Arthur James

    Byles, Sir William Pollard

    Jowett, Frederick William

    Simon, Rt. Hon. Sir John Alisebrook

    Cawley, Sir Frederick (Prestwich)

    King, Joseph

    Snowden, Philip

    Chaloner, Colonel R. G W.

    Lambert, Rt. Hon. G. (Devon, S. Molten)

    Spear, Sir John Ward

    Chancellor, Henry George

    Lambert, Richard (Wilts, Cricklade)

    Strauss, Arthur (Paddington, North)

    Cochrane, Cecil Algernon

    Law, Rt. Hon. A. Bonar (Bootle)

    Strauss, Edward A. (Southwark, West)

    Collins, Sir Stephen (Lambeth)

    Layland-Barrett, Sir F.

    Swift, Rigby

    Compton-Rickett, Rt. Hon. Sir J.

    Levy, Sir Maurice

    Talbot, Lord Edmund

    Cornwall, Sir Edwin A.

    Lewis, Rt. Hon. John Herbert

    Tennant, Rt. Hon. Harold John

    Craig, Ernest (Cheshire, Crewe)

    Lloyd, George Butler (Shrewsbury)

    Thomas, James Henry

    Crooks, Rt. Hon. William

    Lynch, Arthur Alfred

    Thorne, G. R. (Wolverhampton)

    Currie, George W.

    Macdonald, J. Ramsay (Leicester)

    Tickler, T. G.

    Dairymple, Hon. H. H.

    McKenna, Rt. Hon. Reginald

    Toulmin, Sir George

    Davies, Ellis William (Eifion)

    Maclean, Rt. Hon. Donald

    Turton, Edmund Russborough

    Davies, Timothy (Lincs., Louth)

    Macmaster, Donald

    Valentia, Viscount

    Dickinson, Rt. Hon. Willoughby H.

    M'Micking, Major Gilbert

    Walton, Sir Joseph

    Dougherty, Rt. Hon. Sir J. B.

    Macnamara, Rt. Hon. Dr. T. J.

    Wardle, George J.

    Duncan, Sir J. Hastings (Yorks, Otley)

    Macpherson, James Ian

    Wason, Rt. Hon. E. (Clackmannan)

    Edwards, Sir Francis (Radnor)

    Magnus, Sir Philip

    Wason, John Cathcart (Orkney)

    Elverston, Sir Harold

    Manfield, Harry

    Watson, Hon. W.

    Essex, Sir Richard Walter

    Mason, David M. (Coventry)

    Watt, Henry Anderson

    Falconer, James

    Middlebrook, Sir William

    White, J. Dundas (Glasgow, Tradeston)

    Fell, Arthur

    Molteno, Percy Alport

    Whittaker, Rt. Hon. Sir Thomas P.

    Fenwick, Rt. Hon. Charles

    Montagu, Rt. Hon. E. S.

    Wiles, Thomas

    Finney, Samuel

    Morgan, George Hay

    Williams, Aneurin (Durham, N.W.)

    Fitzgibbon, John

    Morrell, Philip

    Williams, Llewelyn (Carmarthen)

    Flannery, Sir J. Fortescue

    Morison, Hector

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

    Fletcher, John Samuel

    Morton, Alpheus Cleophas

    Wing, Thomas Edward

    Galbraith, Samuel

    Munro, Rt. Hon. Robert

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

    Gardner, Ernest

    Nolan, Joseph

    Yeo, Alfred William

    Gilbert, J. D.

    Nuttall, Harry

    Young, William (Perthshire, East)

    Glanville, Harold James

    O'Connor, T. P. (Liverpool)

    Yoxall, Sir James Henry

    Goddard, Rt. Hon. Sir Daniel Ford

    Outhwalte, R. L.

    Goldstone, Frank

    Paget, Almeric Hugh

    TELLERS FOR THE NOES.—Mr. G.

    Greenwood, Sir G. G. (Peterborough)

    Pearce, Sir Robert (Leek)

    Howard and Mr. Bridgeman.

    Gulland, John William

    Question put, and agreed to.

    Mr. LOUGH: I beg to move, in Subsection (1), to leave out the words "until Parliament otherwise determines, to any," and to insert instead thereof the words "to the."
    This Amendment will not involve such a long and, may I say, pleasant Debate as the last one. The point I desire to put before the Committee is very simple. The words I propose to leave out are those which make the Excess Profits Tax permanent. It will come with astonishment to the Committee that the suggestion should be made by the Government that the tax should be permanent. It contradicts everything the Chancellor of the Exchequer said with regard to it.
    Mr. MONTAGU: Hear, hear!
    Mr. LOUGH: I was going to quote two statements to make that good. The
    618
    Chancellor of the Exchequer said, when introducing the Bill,
    "For this purpose we ought not to take into account revenue obtained from a temporary tax such as the Excess Profits Tax."
    Note later on he said again:
    "Of this sum a certain amount is attributed to Excess Profits Tax, which can only be temporary in character."
    After these two direct statements the Bill is brought in and it is made a permanent tax, and words are used which do not oblige the Government to come before Parliament ever again in regard to this tax. If the Bill stood as it is it would go on for ever without any renewal. I think there must have been some oversight in drawing the Bill in this form. I believe it is contrary to everything we have heard with regard to the tax and I hope the Government will be willing to put it back in

    619
    the shape in which every one thought it would rest on the Statute Book. All I ask is that the same course should be adopted in regard to this tax as to many other taxes, such as the Excess Tea Tax and the Sugar Tax, that it will go on from year to year as long as the War lasts or it may be necessary, and that this permanent character which has been given to it in a phrase which must have come in, I think, by mistake shall not be maintained.
    Mr. MONTAGU: I do not think this Amendment need take us long. I quite appreciate what my right hon. Friend has in mind and what he wants. He apprehends that this tax may, despite the assurances given, be permanent, and he is very anxious that that should not be so. So are we, and it was not the intention to prejudge that question at all. I am quite prepared to draft some words which will limit it, say, to 31st July next year. I would not adopt the right hon. Gentleman's suggestion.
    Mr. HENDERSON: I quite agree to the suggestion of my right hon. Friend and I would recall the words of the Chancellor of the Exchequer when we were discussing the tax last year:
    "It would be, in my judgment, as a permanent measure absolutely indefensible."
    Mr. LOUGH: I am glad to accept the answer I have received from my right hon. Friend. As I understand it it is that the tax shall remain in operation until 31st July next year.
    Mr. McKENNA: Till the accounting period ending 31st July, 1917.
    Amendment, by leave, withdrawn.
    Mr. PENNEFATHER: I beg to move, in Sub-section (2), to leave out the words "in any accounting period beginning," and to insert instead thereof the words "on or."
    I do not propose anything which is going to cost the Government any money, at least that is not my intention. I think you, Sir, have received notice of an Amendment to a consequential Amendment to this to substitute the words 1st September for 1st July. Upon more mature consideration I have come to the conclusion that that would be a more convenient date from the point of view of the Chancellor of the Exchequer. There was a great discussion on the Finance (No. 2) Bill, 1915, in regard to the hardship admittedly inflicted upon a great many people whose Accounting periods began nine, ten, and
    620
    eleven months before the War. The Chancellor of the Exchequer, for very-good reasons, did not see his way at that time to make the suggested alteration which would remove that admitted hardship from these people. But Clause 2 in this Bill as it stands now would throw a new and additional hardship upon those same people who had suffered that hardship before, because if the Clause passed into law as it now stands people whose accounting periods began six, nine, ten, or eleven months before the War would not only have been called upon to pay pre-war profits during that long period before the War, but to pay those profits over for many months before their competitors were called upon to pay excess profits, and this Clause would mean that again this year these same unfortunate people would be called upon to pay the increased 10 per cent, tax many months before their more fortunate competitors. I do not think I need say another word about it than that. I am sure that the Chancellor of the Exchequer and the Financial Secretary will see that what I have stated is absolutely correct, and that the Clause, as drawn, will heap further hardship upon people who have already suffered hardship, the only difference being that the first hardship was perhaps inevitable but this is not inevitable, because the very next Clause provides the machinery for the apportionment of this increased 10 per cent, tax between any stated periods which the right hon. Gentleman likes to take.
    Mr. McKENNA: The principle which we have adopted in the Bill is that where Excess Profits Tax is payable by a firm the firm should pay Excess Profits Tax on the first year's profits of 50 per cent, and on the subsequent year's profits at 60 per cent. It is quite true that the profits in one case may have been earned a long time before the beginning of the War, and in the case of another firm they have only been earned practically during the War. The hon. Member thinks that may operate as a hardship. In some cases it may, but in other cases the hardship might be the other way. The War may not be a particularly fortunate time for earning additional profits. The principle on which we have proceeded throughout is not to ask whether the profits have been earned or not earned in consequence of the War, or earned or not earned during the War, but whether they are enjoyed during the War. And if we once abandon that principle and

    621
    adopt the principle of the hon. Member we shall get into new and unending difficulties. I quite see the force of his argument, but that does not end the question. The hon. Member (Mr. J. Mason) has also got a remedy. We admit the difficulties and always have admitted them, but we say, after careful examination of the whole question, that the proposal which we adopt is, on the whole, the simplest of them all, and in the long run will work out, we believe, the fairest on the whole. It must be remembered that we have agreed to repay, in the last year of the operation of the tax, any amount up to the full amount of the payment by any firm if it can show that its profits had dropped below the datum line. That repayment will operate in favour of those firms who, according to the argument of the hon. Member, are most injuriously affected by the first accounting period covering only a short period of the War. Of course, we quite admit it may depend to a certain extent on the date at which the War ends. We cannot tell what that may be. Looking at the whole effect of the tax we believe that the system we have adopted is the fairest one on the whole, and it will be quite impossible for us to accept the Amendment.
    Mr. JAMES MASON: The difference between my Amendment and that which we are now discussing is really only one of date. It has exactly the same effect, but the object of the Amendments is to avoid, if possible, aggravating an injustice or hardship which we all admit exists in the case where the accounting period finished shortly after the outbreak of the War. I think it is undeniable that this does aggravate the hardship, and I cannot think from anything the right hon. Gentleman has said that there is any objection to making the 60 per cent, apply to all people equally on a given date. Take a particular case which clearly shows how extraordinarily hardly this would fall in certain particular cases. I have taken two exactly similar cases, the only difference between them being that in the one case, A,the accounting period ends on the last day of June, and in the other case, B, it ends at the end of September. A's accounting period began in June, and it will have paid in June 1915—that is, ten months after the beginning of the War— £50,000 out of £100,000, which I have taken in each case as being the amount of excess of profit over the standard period. For the next three months it will be liable to a
    622
    quarter of a year at 60 per cent., that is assuming that £100,000 will still be the amount of the excess profit; therefore, in September, after fifteen months of paying the tax, firm a will have paid £50,000, which is 50 per cent, of the year's profits, and £15,000, which is a quarter of 60 per cent, on the second year's profits, making a total of £65,000. The other firm, in September, 1914—that is, within two months after the outbreak of the War—will have paid £50,000, or 50 per cent, of the excess profits, which was due very largely to pre-war conditions, because after all that is a very common case. I have the most striking cases of firms which through other accidents than the War made larger profits just before the War than they did a year or two previously. So that in September, 1914, that firm pays £50,000, and in September, 1915, on the same date at which firm a pays £15,000 out of the second year, the second firm will have to pay in full £60,000, making a total of £110,000. The difference between the two firms up to September, 1915, due to nothing but the accident of the dates of the accounting periods happening to finish, is £45,000. It seems to me that although the original hardship cannot be overcome entirely it would be very much better if the 60 per cent, was made to apply to a definite date for all alike. The right hon. Gentleman says that this can be put right at the end of the War. I am sure he will not mind my quoting some words, which I think he will recognise:
    "An opportunity will, however, arise in connection with the repeal of the duty for considering the question of making such adjustment as will compensate for any difference in the date at which the tax commenced to operate."
    According to that statement at the end of the War an adjustment can be made which puts matters right between one firm and another, but I do not think that can be seriously contended. It cannot be contended that a special tax of this nature can be carried after the end of the War for the sake of allowing one firm to be put on an equality with another firm. These are special War taxes, which must be brought to an end at the earliest possible date on which we can consider them after the War is over. Even supposing it was not so. Supposing you were going to keep certain firms subject to these Excess Profits Taxes for perhaps nine months longer than certain other firms, in order to put them on an equality. Supposing those firms had been engaged

    623
    in making munitions on which very large profits could be made which were the subject of this tax. Surely you are not going to make munitions nine months after the War is over in order to enable one establishment to get even with another! That idea of bringing about equality between different competing firms after the War is one which I am sure will not hold water, and I cannot see why this suggestion should be refused now, because it does something towards remedying the hardship which undoubtedly exists.
    Mr. McKENNA: The error into which the hon. Gentleman is falling I think explains the difference between us. He gives the case of two firms, a and B. The principle of the tax is that both a and B shall be taxed for excess profits over the same number of years. The Excess Profits Tax does not come to an end at a fixed date. It will come to an end, say, at the end of four accounting years. In that case it will come to an end for every firm when every firm has been taxed four times. In the case that the hon. Member gives we must not stop short at September and say that one firm will pay £50,000 in June, 1915, and will owe another £15,000 in September, 1915. That firm will have to pay for the whole year whether the tax is repealed or not in principle before the expiration of its accounting year. It will have to pay for two whole years. In the second year it will pay £60,000, and will pay altogether £110,000. For the first firm, whose accounts end earlier in the year, the tax will cease earlier. For the second firm, whose accounts end later in the year, the tax will go on later.
    Mr. MASON: There will be nothing to tax if they have gone out of business.
    Mr. McKENNA: If there is nothing to tax because he has given up his business and he is no longer making money, instead of the tax being a hardship upon him it will be a boon to him, because he will be entitled to get back-from what he has paid an allowance in respect of the amount by which the income on that account would have fallen short of the standard income. That is why I say that these hardships are quite evident in the early stages of the tax, but if you take the tax throughout the period of its operation it is the fairest to all concerned.
    Mr. HENDERSON: If there is to be four accounting periods then the right hon. Gentleman's argument will be all right, and I quite agree with him that it would have to be levelled up. I think that there is a very great hardship in the earlier cases. The first accounting period dates back according to this Bill to 5th August, 1913. The 6th August, 1914, two days after the War had broken out, is the first accounting period a year after the War there is the second accounting period. This year there will be a third accounting period in a short time, Up to 14th August a man pays 50 per cent. On 15th August according to this Bill he pays 60 per cent. Another man whose balance sheet was made up to the 30th June, 1915, which would be his first accounting period, would only have to pay 50 per cent. So that you have two people within range of thirty or forty days of each other, one paying 50 per cent, and the other paying 60 per cent. I have nothing to say against the 60 per cent., but I do think that up to a certain day the 50 per cent, should obtain, and I have put down an Amendment to that effect. To that extent I think the 50 per cent, should obtain and not the 60 per cent., because you can never make it right if you take 10 per cent, more from one man. If the four years that the right hon. Gentleman adumbrates are all the same, that is all right, but if you take 50 per cent, from one and 60 per cent, in another case you cannot get right.
    Mr. McKENNAmade a remark which was inaudible in the Reporters' Gallery.
    Mr. HENDERSON: If that is your idea, that there should be one year at 50 per cent, and the subsequent years should be at 60 per cent.—
    Mr. McKENNA: Or whatever scale Parliament accepts.
    Mr. HENDERSON: One never knows where you are. The trouble of this thing is that it is all retrospective taxation, which is always a very difficult subject. Therefore I think if the right hon. Gentleman could possibly limit the 50 per cent, to one date and commence the 60 per cent, on another date for everybody it would be better. I do not know whether that can be done, but it does seem to me that if you have a 70 per cent, tax next year, and 80 per cent, in the following year, if the War unfortunately lasts so long, you will have a very big reckoning to make, and you will impose a deal of injustice if you

    625
    have these verying rates for varying periods. I think you will do better to adopt the suggestion I make, and then things would come right. I would appeal to the right hon. Gentleman to do that if he can. If not, it is not worth while my proceeding further.
    Mr. PENNEFATHER: I beg leave to withdraw my Amendment.
    Amendment, by leave, withdrawn.
    Mr. HENDERSON: The Amendment which stands in my name is to leave out, in Sub-section (2), the word "commencement" ["the commencement of the first accounting period"], and to insert instead thereof the word "end." That raises the whole question. I suppose my right hon. Friend cannot see his way to agree to that?
    Mr. McKENNA: That gives two years at 50 per cent.
    Mr. HENDERSON: Yes.
    Mr. McKENNA: That is altering the tax.
    Mr. HENDERSON: Then I will not move it.
    The CHAIRMAN: The next Amendments, standing in the name of the hon. Member for Liverpool (Mr. Pennefather) and the hon. Member for Windsor (Mr. J. Mason), are consequential. I think that applies to the Amendment standing in the name of the hon. Member for West Aberdeenshire (Mr. Henderson).
    Mr. HENDERSON: It is not quite the same. My Amendment relates to a business starting after the 4th August, 1915, and provides that it shall pay 50 per cent, for one accounting period and 60 per cent, for any other accounting period.
    The CHAIRMAN: So that there will be one year at 50 per cent.?
    Mr. HENDERSON: Yes. I beg to move, in Sub-section (2), to leave out the words "fourteen, the rate of duty shall be 60 per cent, of the excess in respect of any accounting period ending after the fourth day of August, nineteen hundred and fifteen," and to insert instead thereof the words "fifteen, the rate of duty shall be 50 per cent, of the excess in respect of the first accounting period, and at the rate of 60 per cent, for any subsequent accounting period."
    Mr. McKENNA: I am afraid my lion. Friend's Amendment would not read.
    Mr. HENDERSON: You can put it as you like, but I should like to see everybody having one year at 50 per cent. Therefore my Amendment provides that for the first year it shall be 50 and for subsequent years 60. I only want my right hon. Friend to carry out the principle he has enunciated, so that a firm may have one year at 50 per cent, before it is raised to 60.
    Mr. McKENNA: Take the case of a new business which has not had a full year of accounting period before the 60 per cent, comes into operation. Clearly for that-new business, because it has not been in existence for a whole year at the 50 per cent, rate, it will pay partly at 50 and partly at the 60 per cent. rate.
    Mr. HENDERSON: Not partly at 50 because this Bill says 60.
    Mr. McKENNA: Until this Bill comes, into operation the rate is 50. Suppose a new business is started during the year. Part of the first year it would pay at 50, and later on it would pay at 60. What we propose is, that 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 any deficiencies or 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 60 and 50 per cent, of the excess. If the Amendment of my hon. Friend is accepted and it reads: "Before the date of the expiration of a year from the end of the first accounting period, etc," what is to happen in the intervening period? I do not think it reads. It is-nonsense. I cannot make anything of it.
    Mr. HENDERSON: My point is that in that, in the case of a business commencing after the 4th August, 1915, the rate of duty shall be 50 per cent, of the excess in respect of the first accounting period, and at the rate of 60 per cent, for any subsequent accounting period.
    Mr. McKENNA: That is the hon. Member's next Amendment.
    Mr. HENDERSON: No, it is the Amendment I have moved.
    Mr. McKENNA: I am sorry, we are at cross purposes.
    Mr. LOUGH: I think the right hem. Gentleman ought to look a little more closely into the hon. Member's Amendment, because it is plain from this Section that if a business was started, say, after the 4th August, 1914—that is to say, if it was started on the 1st September, 1914, the rate of duty for that business would be 60 per cent, for part of 1914 and for 1915. That is not what the Chancellor of the Exchequer means. The Chancellor of the Exchequer means that there should be three years running at 50 per cent., whatever the accounting period might be, and that it is not until that period has expired that the 60 per cent, comes into operation. I do no think that the Chancellor's intention is carried out in the Sub-section, and I would suggest that some words are required to do so.
    Mr. McKENNA: Consider the effect of these words. What is to happen to a business commencing after the 1st of August, 1914?
    Mr. HENDERSON: I beg your pardon. Now that you have decided the other point, it should be 1914.
    Mr. McKENNA: 1915 is the second period, because the firm must have already paid from August, 1914, to August, 1915, at 50 per cent. If a firm came into existence during that period, it will pay 50 per cent, for that portion of the period to which the 50 per cent, applied and 60 per cent, on the balance.
    Colonel GRIFFITHS: Would it have a clear run?
    Mr. McKENNA: a new firm does not have a clear run. For a portion of the period it was not in existence.
    Amendment negatived.
    Mr. HENDERSON: I beg to move to leave out from the words "In calculating" to the end of the Sub-section.
    Sir J. HARMOOD-BANNER: I would like to be quite clear as to the effect of this Amendment. If there is a deficiency in 1915 as compared with 1914—say, that there is a difference of £3,000 between the two—will they get the whole sum back on the calculation or will they only get 50 per cent.?
    Mr. McKENNA: I think that the words are quite clear, but I will inquire into that.
    Amendment negatived.
    Sir W. PEARCE: I beg to move, at the end of Sub-section (2), to insert the words "This Section shall not apply to any trade or business which is subject to munitions Exchequer payments."
    The CHAIRMAN: I am under the impression that the effect of this Amendment is identical with the effect of that which we discussed at such length.
    Sir W. PEARCE: I submit that it limits the duty to 50 per cent. The object of my Amendment is to plead with the Chancellor that controlled establishments should be only subject to 50 per cent, instead of 60 per cent., and I suggest this as a sort of compromise on the matter which was discussed at such length this afternoon.
    The CHAIRMAN: What the hon. Member desires is to provide that the Subsection shall not apply. He has put "Section" on the Paper.
    Sir W. PEARCE: Yes, I leg to move to add to the Sub-section the words "This Sub-section shall not apply to any trade or business which is subject to munitions Exchequer payments."
    I would recommend to the Chancellor of the Exchequer this suggestion, that a controlled establishment should be subject to Excess Profits Duty limited to 50 per cent, instead of 60 per cent. I think that it would make a great deal of difference in many cases in which large establishments are subject to Excess Profits Duty. I would like the Chancellor of the Exchequer to consider this as a means of alleviating what is known to be a great hardship to the businesses referred to in the long discussion this afternoon.
    Mr. McKENNA: I regret that I cannot advise the Committee to accept this proposal. It would run counter to the principle which I think ought to be in force, that taxation must not discriminate between firms and businesses. I do not think that it would be wise to accept one standard for one set of firms and another standard for another.
    Mr. DENNISS: These controlled establishments came into existence a year after the War. They are put in a more invidious position than uncontrolled establishments, because uncontrolled establishments for the first year pay only 50 per cent, and for the second year 60 per cent.

    629
    It struck me that you might treat the eon-trolled establishments in the same way, and in the first year they should pay 50 per cent.
    Mr. McKENNA: They do pay 50 per cent, the first year.
    Mr. DENNISS: Then I am satisfied.
    Mr. McKENNA: Not as controlled firms but as firms.
    Amendment negatived.
    Clause ordered to stand part of the Bill.

    CLAUSE 30.—(Increase of Rate of Excess Mineral Rights Duty.)
    (1) Section forty-three of the principal Act (which relates to excess Mineral Eights 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 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 Sub-section (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 beg to propose, at the end of Sub-section (1) to insert the following new Sub-section:
    "(2) Section forty-three of the principal Act shall have effect as if it provided as follows:—

    {a) Excess Mineral Eights Duty shall not be payable by any person unless the rent payable to him in the accounting year exceeds the actual pre-war standard of that rent;

    (b) The actual pre-war standard of rent shall for the purpose of this Section be taken to be the average of any two of the three last pre-war rents to be selected by the taxpayer;

    (c) The pre-war rents shall, as respects each of the three years immediately preceding the first accounting year, be taken to be the sum actually payable in respect of rent for the year in question;

    (d) The amount of excess Mineral Rights Duty payable by any person shall,
    630
    where necessary, be reduced so as not to exceed the difference between the rent for the year of accounting and the actual pre-war standard of rent."

    When the House imposed this tax last year it did so in order to bring minerals into line with other businesses, but we never intended, I am sure, that the mineral landlord whose income, through the operation of the sliding scale, was reduced, should be liable for the payment of Excess Profits Duty. What we meant was that where the income was increased then the tax should be paid. The Chancellor of the Exchequer said in reply to a question of mine a month ago that he was aware of cases in which the state of affairs of which I complain was beginning to be a trouble. All I want is that where the owner of a mineral field finds his income reduced he should not be made to pay the excess tax. That would be quite a mistaken application, and I am sure that it was never intended. I would ask the Chancellor whether he cannot meet a case of this difficulty.
    Mr. McKENNA: I am really sorry that I am not in a position to accept my hon. Friend's Amendment. I am not sure that the Amendment, as it stands, effects his purpose. It is a somewhat complicated matter, but as I read it there is a double construction which might be put upon his Amendment. One construction would be out of order, and the other would represent a proposal which the House has already discussed and rejected. I know the object which my hon. Friend has in view. I am afraid that it is inconsistent with the principle upon which, unlike the rest, the excess profits—the Excess Mineral Rights Duty—is levied. We do take into account, in the Excess Profits Duty on mineral rights, and we do not take into account anywhere else pre-war prices, and we have to do so because the profit on mineral rights is unlike the profit which may be obtained in other matters. The additional revenue to the owner may depend either upon more minerals being worked, in which case he is getting a larger return on his capital, or it may depend upon the higher prices of those minerals which are worked. We have to discriminate between those two cases. I am not sure that my hon. Friend's Amendment has taken full regard to those differences, and I regret that I am not in a position to accept his proposal.
    Mr. CURRIE: I dare say that it is quite possible that my drafting is very faulty, but without wishing to upset the principle of the sliding scale, my point is that surely a bar of some kind might be put upon the application of the tax in a case of such extreme hardship as this. The House never intended that a man whose income had been reduced should be made to pay an Excess Profits Tax. I think that the Chancellor of the Exchequer could meet this to a certain extent without trenching on the principle. In one case which was brought to my notice, the effect has been that a man who spent a great deal of money in encouraging the miners in his place to enlist—he was asked to do so by the War Office—finds that as a result he is deprived of labour and cannot get out his coal. It is not the case that he is holding up his coal. I think that the Chancellor of the Exchequer should meet cases of that kind to a certain extent.
    Mr. McKENNA: I am afraid I cannot add anything to what I have already said, but if the hon. Member will put down a question I shall be glad to consider it.
    8.0 P.M.
    Mr. AINSWORTH: May I point out that in place of a fixed royalty these royalties are now on a sliding scale, meaning that the amount of the royalty is in proportion to the price of the mineral when it is sold.' The result of that is that the proprietors during a good year have the advantage of getting a larger proportion in royalties, for when prices are high the receipts are enormously larger. It seems to me that the Chancellor of the Exchequer has in these royalties a very large source of revenue towards Imperial expenditure. The royalty being fixed in relation to the selling price means that in a good year the landlord receives a larger amount than he would in normal times. In consequence of the War there is a vastly larger proportion of royalties than there would have been if the War had not been going on. The price of minerals would not be what it is now if there had been no war, and the royalties would have been correspondingly reduced. I hope, therefore, that the Chancellor of the Exchequer will see that he has a large source of income here, and that he will leave the Bill as it is, so that he may be able to have this source of revenue.
    Amendment negatived.
    Clause ordered to stand part of the Bill.

    CLAUSE 31.—(Computation of Excess Profits. Duty in Case of Sale of Ships.)
    Where any ship has been sold since the fourth day of August, nineteen hundred and fourteen, in such circumstances that the proceeds of the sale are not the profits of a trade or business, the following special provisions shall, if the Commissioners of Inland Revenue so require, be applied in the computation of the liability of the purchaser to Excess Profits Duty in respect of the profits arising from the use of the ship:

    (a) The pre-war standard of profits as respects the ship shall, where the standard of the trade or business of the vendor is a profits standard, be the profits arising from the use of the ship by the vendor or his predecessors in title during the pre-war trade years, and shall be ascertained in accordance with the provisions of the principal Act, but calculated as if the use of the ship were a separate business; and where that standard is a percentage standard the pre-war standard of profits as respects the ship shall be the same as if the ship had not been sold, or, in the case of a ship which was used for the first time after the fourth of August, nineteen hundred and fourteen, shall be calculated by reference to the capital represented by the ship at the date when it was first used; and the pre-war standard of profits of the trade or business of the vendor and of the purchaser shall respectively be reduced and increased accordingly.

    (b) For the purpose of estimating separately the profits arising from the use of the ship, an apportionment shall, where necessary, be made of the total profits of the vendor's trade or business, regard being had to the earning capacity of the ship as compared with the earning capacity of the other assets employed in the trade or business.

    Any appeal under Sub-section (5) of Section forty-five of the principal Act, so far as it involves any question of an apportionment under this provision, shall be to the Special Commissioners.

    (c) The power to require returns under Sub-section (1) of Section forty-four of the principal Act shall include power for the Commissioners of

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    Inland Revenue to require the vendor of the ship to give such information to them and to the purchaser as the Commissioners think necessary in order to enable the provisions of this Section to be carried into effect.

    (d)Nothing in Sub-section (3) of Section forty of the principal Act or in paragraph three of Part I. of the Fourth Schedule to the principal Act shall operate so as to enable the purchaser of the ship to obtain any greater relief than could have been obtained by the vendor if the ship had not been sold, other than relief in connection with expenditure by the purchaser on improvements or repairs.

    (e) In the application of Section forty-one of the principal Act to any trade or business whose pre-war standard of profits has been adjusted under this Section any increase or decrease of capital attributable to the purchase or sale of the ship shall be disregarded, and where any such adjustment has taken place both in respect of the sale of a ship and the purchase of another ship for the same trade or business, paragraph six of Part II. of the Fourth Schedule to the principal Act shall not apply.

    Mr. McKENNA: I have a series of Amendments to move on this Clause, but the major part of them are purely drafting Amendments.
    Amendments made: Leave out the word "proceeds" ["proceeds of the sale"], and insert instead thereof the word "profits."
    Leave out the words "of the purchaser" ["liability of the purchaser to excess"].
    In paragraph (a), after the word "profits" ["standard of profits"], insert the words "of the purchaser."
    Mr. McKENNA: I beg to move, after the word "be" ["profits standard be"], to insert the words "calculated by reference to."
    The object of this Amendment, and the succeeding one, is this, that if we do not insert the words which I have put on the Paper it might be held that the standard was to be the aggregate of three years' profits, instead of the average profit of the two last of the pre-war years.
    Amendment agreed to.
    Further Amendment made: Leave out the words "by the vendor or his predecessors in title."—[Mr. McKenna.]
    Mr. McKENNA: I beg to move, in paragraph (a), after the word "calculated" ["but calculated as if"], to insert the words "where necessary."
    This Amendment is to obviate this Clause being regarded as if it only applied to selling one ship of a fleet of ships, and not to the case of a single ship which might constitute the whole business. The words are intended to meet that case.
    Amendment agreed to.
    Mr. McKENNA: I beg to move, in paragraph (a), after the word "fourth" ["fourth of August"], to insert the word "day."
    This and the following Amendment are more important. The object of the Clause is that the taxable excess in the hands of the purchaser shall be the same as if the vendor had continued ownership, and that principle might be endangered unless there is some provision such as that made in the second of the two Amendments, to insert the words "as the case may require with any adjustments which may be necessary to meet the case of borrowed money, or unpaid purchase money, or other similar matter." For example, the present vendor may in his day have purchased the ship with his own capital, whereas the new purchaser may borrow a large part of the purchase money and be obliged to pay interest thereupon. It is not sufficient in that case that the pre-war standard of the purchaser should be represented by the average war profits made by the vendor. The vendor's profit is not diminished by payment of interest, whereas the purchaser's profit will be so diminished that an adjustment to maintain the true standard will have to be made between the two. Therefore, for these reasons I propose that these words be inserted.
    Amendment agreed to.
    Further Amendments made: In the same paragraph leave out the word "accordingly" ["increased accordingly"], and insert instead thereof "as the case may require, with any adjustments which may be necessary to meet the case of borrowed money, or unpaid purchase money, or other similar matters."
    In paragraph (b) leave out the word "vendor's" ["vendor's trade or business"].—[Mr. MeKenna.]
    Mr. McKENNA: I beg to move, after the word "business" ["business regard being had"], to insert the words "in which the ship has been used."
    This and the next Amendment which is on the Paper deal with the question of the actual earnings as against the earning capacity. The standard is fixed in all cases by reference to the profits actually earned, and not by reference to the earning capacity of the business, and unless this Amendment is inserted we shall not be really carrying out the purpose of the Clause.
    Mr. DENNISS: Does this refer to the profits of the ship, or the allocation of profits?
    Mr. McKENNA: To the profits of the ship. My hon. Friend has put the question to me rather hurriedly, but I assume it applies to the profits of the ship. I will make inquiry, however.
    Mr. DENNISS: After making allowance for the ship's charges?
    Mr. McKENNA: Yes.
    Amendment agreed to.
    Further Amendment made in the same paragraph: Leave out the words "earning capacity" ["earning capacity of the ship "], and insert the word "earnings."
    In paragraph (c) leave out the word "the" ["require the vendor"], and insert instead thereof the word "any."
    In paragraph (e), after the word "been" ["has been adjusted"], insert the words "determined or."
    In the same paragraph, after the word "such" ["where any such adjustment"], insert the words "determination or."— [Mr. McKenna.]
    Clause, as amended, ordered to stand part of the Bill.

    CLAUSE 32.—(Adjustment of Excess Profits Duty and Munitions Exchequer Payments in Case of Controlled Establishments.)
    (1) The Commissioners of Inland Revenue may treat any sums actually paid in respect of munitions Exchequer payments, which appear to the Commissioners to be attributable to the same period and subject matter as that for which Excess Profits Duty is to be paid, as a payment on account of Excess Profits Duty, or, if the amount of the munitions Exchequer payments is larger than the amount pay-
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    able as Excess Profits Duty, as extinguishing the duty for the purposes of collection; and may arrange with the Minister of Munitions if in any case Excess Profits Duty is paid before the munitions Exchequer payment for the deduction of Excess Profits Duty payments from any sums to be collected in respect of munitions Exchequer payments, which appear to the Commissioners to be attributable to the same period and subject matter as that for which the Excess Profits Duty payments have been made, or, if the amount of the Excess Profits Duty payments is greater than the amount to be collected on account of munitions Exchequer payments, for the extinction of the amount to be so collected.
    For the purpose of determining the period to which any profits are to be attributed under this Section, profits shall be deemed to accrue from day to day at a uniform rate.
    (2) Any Excess Profits Duty and any munitions Exchequer payments which are remitted under this Section for the purpose of collection shall not be deemed to have been paid for the purposes of Section thirty-five of the principal Act (which relates to computation of profits and gains in relation to Excess Profits Duty) as extended by this Act.
    (3) Deductions shall not be allowed on account of munitions Exchequer payments in computing profits for the purpose of Excess Profits Duty.
    Mr. CECIL: I beg to move, at the beginning of the Clause, to insert the words, "(1) Notwithstanding any Act of Parliament to the contrary, the entire reponsibility and final decision in all matters relating both to Excess Profits Duty and munitions Exchequer payments shall rest with the Treasury and not with the Minister of Munitions; and there shall be no dual assessment in respect of such Excess Profits Duty and munitions Exchequer payments."
    As the Bill stands there are two taxing authorities, which must lead to overlap ping. Surely there ought to be only one administration and collection. My Amendment lays down that there shall be no dual assessment in respect of excess profits; in other words, that there shall not be two bases of assessment for these two imposts.
    The CHAIRMAN: If the hon. Member's Amendment goes so far as that it is traversing the same ground that we had

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    on Thursday. I thought the hon. Member's proposal included only the small point of making the Treasury the final arbiter. I think the hon. Member was not in the House on Thursday, when we had a long Debate on the general question.
    Mr. CECIL: I will confine myself to the earlier part of my Amendment, and I think that will come entirely within your ruling. To return to what I was saying. It does not seem wise or desirable that there should be two taxing authorities, for it does not tend to economical or simple administration. It cannot be economical from a purely departmental view that you should have these two taxing authorities and two sets of Government clerks employed on what should be done by the Treasury clerks alone. I am sure I may appeal more personally to the Chancellor, because he and I have worked, I am sure I may, say very amicably, on the Retrenchment Committee. That Committee in commenting on the Treasury and spending Departments went further and said the Treasury had a "very important duty to secure public economy and financial regularity." I submit that the present administration of these two taxes neither works for public economy nor is it a matter of financial regularity. If we are to attain those very desirable objects, in which it is always the duty of the Government to show a good example, it seems to me that the Munitions Act ought to be amended so as to bring the whole of these considerations under the control of the Treasury, and we should then obtain that financial regularity of which I speak, and also secure to the public the benefit of economical machinery in administration.
    Mr. McKENNA: I observe that this Amendment is not only down in the name of the hon. Member, but also, though perhaps not precisely in the same form, in the name of the hon. Member for the Everton Division of Liverpool (Sir J. Har-mood-Banner) and other hon. Members who have taken an active part in the Debate of to-day and Thursday. I recognise the hardship involved on firms in having to make separate accounts, perhaps for different purposes, made up in different ways. All must recognise that hardship, but as I have said in Debate, and I must repeat now, that hardship does not arise from this Act, it arises from the Munitions Act. Now it is suggested that we should have an Amendment to this Act which would do away in effect with the munitions
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    levy, and replace it by the Excess Profits Duty on the scale of 60 per cent, of the excess profits. It is very difficult for me in the absence of my right hon. Friend the Minister of Munitions—
    Sir G. YOUNGER: He ought to be here.
    Mr. McKENNA: To defend his case, but I am bound to say this, that on the principle of taking excess profits, whether as munitions levy—that is to say the excess over the datum line, or by way of Excess Profits Duty, that he was first in the field in adopting that principle by Act of Parliament. I could not admit that he was first in the field in making public announcement with regard to it, but so far as the Act itself is concerned, in embodying the principle in an Act of Parliament, he was first in the field. I am quite sure that he would feel it a little hard that his work should now be unceremoniously thrust on one side, and that we should have to substitute for it the work of the Treasury. Something was said by the hon. Member for Sheffield that he hoped that this subject would not be considered as finally disposed of by to-day's vote. I should be only too glad if some arrangement could be made which would relieve firms of the great difficulties they are placed in with regard to dual accounting. On the other hand, it would be under any circumstances quite impossible for the Ministry of Munitions to accept the Amendment which is now before us, or the somewhat less drastic Amendment in the name of the hon. Member for Liverpool to which I have already referred. The munitions levy in many respects would have to be retained in the interests of the controlled firms themselves. They have entered into certain arrangements as in the case of certain firms mentioned to-day by my hon Friend who pointed out that various arrangements had been made with the employers in response to which they had invested money in the business.
    Sir G. YOUNGER: The right hon. Gentleman has already told the Committee that he will respect those arrangements.
    Mr. McKENNA: The munitions levy must remain, for they alone know what the arrangements are. I do not know what they are. [An HON. MEMBER: "NO one does!"] The Munitions Department know. Consequently, assuming even that the principle were accepted for many purposes the financial powers of the Munitions Department would have to con-

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    tinue. But subject to that, for my part, I should be perfectly willing that an arrangement should be come to, and to enter into an arrangement, and provided that the principle of uniform and certain taxation is retained I can assure hon. Gentlemen I have no desire to increase by one iota the already overwhelming task which has been imposed upon munition firms.
    Sir J. HARMOOD-BANNER: I do not think that controlled establishments would like to be put under the Treasury entirely a great many conditions have to be considered. With regard to my Amendment to which the right hon. Gentleman has referred, after the discussion I do not think he is likely to accept it, and so I do not propose to move it. As regards the matter of accounting, I hope he will consider it, but I would not like him to take it too seriously, because I have managed very well with matters as they at present stand, and I think a great many others do the same thing.
    Mr. CECIL: As the right hon. Gentleman is disposed to give further consideration to this matter, I would ask' leave to withdraw the Amendment. I do not know whether he will attempt to amend the Munitions Act.
    Mr. McKENNAindicated dissent.
    Mr. CECIL: If the Ministry of Munitions is wrong, the matter ought to be put right.
    Mr. DENNISS: The difficulty is that the Minister of Munitions has discretion as to the datum line and as to the amount to be paid, and that could not be exercised by the Treasury, who do not know the facts.
    Amendment, by leave, withdrawn.
    Mr. JOYNSON-HICKS: I beg to move, in Sub-section (1), to leave out the word" may "["Inland Revenue may "], and to insert instead thereof the word "shall."
    I believe in practice it has been held that "may" in this case means "shall," but I think it is better to insert the word "shall," and that it should be obligatory on the Treasury to do what is here set forth.
    Mr. McKENNA: I do not think this Amendment is necessary, because it has already been decided that "may" in these circumstances means "shall."
    Mr. JOYNSON-HICKS: I understood that it had been previously held in that case. If the Chancellor of the Exchequer accepts it here, I beg leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Sir J. HARMOOD-BANNER: I beg to move, at the end of Sub-section (1). to insert the words,
    "If any taxpayer is dissatisfied with the decision of the Commissioners on any matter arising under this Sub-section, he may require the Commissioners to refer the case to a Board of Referees to be appointed for the purposes of this Part of this Act by the Treasury, and that Board shall consider any case so referred and have the same powers with respect thereto as the Commissioners have."
    A good many parties interested in this matter consider that there ought to" be a right of appeal.
    Mr. McKENNA: I do not think that my hon. Friend, if he recalls the purpose for which the Board of Referees was appointed, will consider it right that an appeal on the matter referred to here should go to that Board. It is entirely foreign to the scope of their work.
    Sir G. YOUNGER: You do not require permission to appeal to the Board of Referees. It is an absolute right.
    Mr. McKENNA: There is an absolute right on the matters referred to them. The main function of the Board of Referees is to determine what is the proper percentage to be allowed upon capital. There are a number of other matters which are referred to them in the principal Act, but that is the main function. It would be quite foreign to let any individual question of this kind go before them.
    Sir C. CORY: Would not the question of depreciation arise in this case? Where a man had spent a large amount on munitions plant, if he was not satisfied in regard to the Excess Profits Duty, would he not have a right of appeal on that point?
    Mr. DENNISS: Personally, I do not think that the Board of Referees is the proper tribunal at all. If, however, there is no appeal to the Board, my hon. Friend would like to have one to the High Court. Perhaps the Chancellor of the Exchequer

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    will consider whether it is not right that a matter of this importance should be settled by judges and not by the Board of Referees.
    Mr. McKENNA: I think there is a misunderstanding. There could not be a case for appeal here. All that the Clause says is that if an amount is to be paid by way of munitions levy, that amount is to be accepted pro tanto for the purposes of Excess Profits Duty. There is no possible point of appeal, unless it is to be assumed that the Inland Revenue Commissioners are unable to read, write, add, or subtract. There is no question of law or of fact.
    Mr. DENNISS: If they did not accept their jurisdiction a mandamus would lie.
    Mr. McKENNA: If they acted improperly I imagine it would be brought very promptly to the notice of the House.
    Amendment, by leave, withdrawn.
    Sir J. HARMOOD-BANNER: I beg to move, at the end of Sub-section (1), to insert the words— "
    "(2) Notwithstanding anything in the principal Act any allowances agreed to between the owners of a controlled establishment and the Minister of Munitions or awarded by a referee appointed by him on account of—

    (a) Exceptional wear and tear of plant, buildings, and machinery;

    (b) Capital expenditure specially incurred for the purposes of munitions work;

    (c) The probable value to the controlled owner at the end of the period of control of any plant, buildings, or machinery erected or installed, or other expenditure incurred for munitions work since the fourth day of August, nineteen hundred and fourteen;

    (d) Special provisions or terms of any contracts entered into between the Government and the controlled owner;

    (e) Any exceptional services rendered by the controlled owner in connection with the controlled establishment;

    (f) Any increase in salaries or other emoluments of any persons engaged in the management or direction of the controlled establishment made since the end of the standard period,
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    or any steps taken since the end of that period which might operate to decrease net profits;

    (g) Any other matter which may appear to the Minister, or to the referee, as the case may be, material to be taken into account;

    in order to determine the net profits oh which munition Exchequer payments are payable shall, on the application of such owners be also allowed by the Commissioners of Inland Revenue in order to determine the net profits on which Excess Profits Duty is payable, due adjustment being made in respect of any difference in the respective accounting periods."
    The Chancellor of the Exchequer gave us a full explanation of what he is going to allow. I do not know how far he is going to deal with some of the smaller matters. I would like to know whether what he has stated is contained in any Amendment on the Paper, so that we may check it. In any case I move this Amendment for the purpose of obtaining information.
    Mr. McKENNA: What we have agreed is to take the sums found by the Ministry of Munitions in respect of subheads (a) and (c) in the Amendment.
    Sir J. HARMOOD-BANNER: Not (b)?
    Mr. McKENNA: (b) appears to be involved in (a) and (c). I am not quite sure that I am right.
    Mr. JOYNSON-HICKS: It has nothing to do with (a).
    Mr. McKENNA: I am not sure. Capital expenditure is to be written down, I assume. The principle is quite clear.. Where new capital is put into works for the production of munitions, the Ministry of Munitions will be the authorty to determine the rate at which capital is to be written down in order to bring it to the value at which it will stand at post-war rates. It appears to me that that general principle covers (a), (b), and (c). As regards (d) to (g), they are not matters of which we take account. I do not see how we could. They have all an uncertain or discretionary element, which could hardly be accepted in the case of a tax. It may very properly be accepted where profits are limited in consequence of a bargain, but when we have to have a tax of general application covering thousands of firms it is impossible to put a value on any exceptional services rendered by the controlled

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    owner in connection with the controlled establishment. It may be much; it may be little. It may mean all the profits earned, or it may mean nothing. In (g) we have, "Any other matter which may appear to the Minister, or to the Referee, as the case may be, material to be taken into account." These, again, are words of which the interpretation can hardly be given in any levying of a new tax. The main substantial points are those contained in (a) and (c), and, as I have stated, we have agreed to accept the sums found under the Munitions Rules as the sums to be taken by us.
    Sir J. HARMOOD-BANNER: What about (d)—"Special provisions or terms of any contracts entered into," etc.
    Mr. McKENNA: I have already said that any contracts entered into between the Ministry and a contractor will, of course, be honoured by the Treasury. I am, however, not quite sure that I understand what paragraph (d) may mean.
    Sir J. HARMOOD-BANNER: We take it to mean—it might mean !—a special provision whereby a firm having spent £50,000 will have allowance made to it for any sum between that amount and the amount of depreciation. We do not want to have this matter apparently settled and then to find that we have not got all that we wanted.
    Mr. McKENNA: The example my hon. Friend has given me is one, clearly, which is included. Where £50,000 have been put into a business in the shape of new plant bought at the high prices of the War for a purpose which may be mainly useful in the War, and in view of the fact that that plant after the War, instead of being worth £50,000 may be only worth £10,000, it is quite obvious that the owner of the controlled establishment or firm must be compensated for that loss of capital. There is no misunderstanding between the Munitions Department and ourselves upon that subject. It must be understood that we do not propose to adopt the rules of the Ministry of Munitions. What we propose to do is to accept their finding as to the amount of exceptional wear and tear for plant, building, machinery, and as to the probable value to the controlled owner at the end of the period.
    Sir G. YOUNGER: And obsolescence as well?
    Mr. McKENNA: I think in our rules obsolescence is the same as the others.
    Mr. JOYNSON-HICKS: Perhaps this will be a convenient opportunity to speak. I have a little later another Amendment, which takes in all that this Amendment does, and also all that is under Rules 9 and 10 of the Munitions Rules. If I speak now I can then move my Amendment pro forma. I do not know whether the right hon. Gentleman is going to put a new Clause down to include all this, but we should like to see the exact wording of the concession he is going to make a very large number of controlled establishments have put their case before me in regard to this very Clause. There are many controlled establishments which really have no prewar standard of profit at all. I believe the right hon. Gentleman has had a request to receive a deputation from the Society of Aircraft Constructors, though, perhaps, being busy, it may have passed him. There is a very important branch of munitions work now being carried out by the aircraft industry, and they look forward to the acceptance of this Amendment, or perhaps large concessions, made by the right hon. Gentleman. I do not at this period of the evening want to go into the general position of aircraft manufacturers, but everybody knows that up to the period of the War they made no profits at all. I suppose there is not a single aircraft firm that has any standard of pre-war profits. The 6 per cent, declared was no profit at all. It appeared to them, therefore, that they were likely to get a return in respect of the enormous amount of expenditure and loss in the experiments they had made in the previous five or six years when the aircraft became a possibility in regard to the War. It does appear that the Ministry of Munitions have come to certain arrangements which were included in these Rules 9 and 10. I do not think anything could be fairer than that the right hon. Gentleman should insert in his Bill some such provisions as are contained in those rules. Otherwise inevitably there will be two clashing series of accounts—a matter discussed earlier in the afternoon, and to which I will not further allude.
    Certainly, however, in relation to this question of capital expenditure, I venture to suggest that it is absolutely essential in regard to that particular class of controlled establishment to which I have referred. One knows that many aircraft constructors who, before the War, only

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    received orders for five or six machines at a time, immediately the War began were asked by the Government to make machines in hundreds. They are now turning out hundreds of machines where they were turning out five or six. To do that the whole of the profits which they are making are going back into the business in the form of sheds, buildings, and plant, and these sheds, buildings, and plant are going to be of no possible use to them after the War is over. I know there are some people who think that after the War aircraft will in a short time be used for all sorts of commercial purposes. I am not of that opinion. Personally, I am not in any way financially interested in aircraft, but these men have asked that their side of the case should be put before the Chancellor of the Exchequer. They are exceedingly concerned at the position. They are pouring money into the businesses, and unless they are entitled to have against this particular tax—if I may use the expression—the whole allowance which the Ministry of Munitions is going to give them in regard to the munitions levy, they will be very severely hit. They are a class of people who are so essential to the progress of the War that I do not think really the Chancellor of the Exchquer would wish them to be hit at the present time. I venture, therefore, to ask him— if he cannot come to a decision at the moment, which, perhaps, he cannot—that between now and the time he puts the actual wording of his concession in concrete form—for I am assuming that he is going to do so—he will consider very carefully the conditions of this particular industry, and see whether he cannot, not merely give them depreciation, but the capital expenditure absolutely, because it is used for no other purpose than that of the War, and it will be absolutely useless as soon as the War is over. I would also ask for Munitions Rule 10.
    Sir GEORGE TOULMIN: How is the right hon. Gentleman the Chancellor of the Exchequer going to accept the finding of the Munitions Department? Is it to be a purely administrative Act, or will another Clause have to be put down on the Paper?
    Mr. McKENNA: No, Sir; under the original Act, Section 40, Sub-section (3), the Commissioners of Inland Revenue have power to make regulations regarding a series of matters. These matters
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    include the subject-matters of paragraph (a) and (c). Consequently we do not require any new Clause to give us the necessary power. We can, administratively, under Section 40 of the original Act, do what I have described, namely, accept the findings of the Ministry of Munitions in regard to these matters. I quite appreciate the force of what the hon. Gentleman who spoke last from the other side said, but I am sure he will agree with me that we have gone a very long way in meeting his arguments. Of course, it must not be overlooked that that which is perfectly proper in the case of the munitions levy would be quite out of place in administering the Excess Profits Tax. For instance, take the power of the Minister to add to the 20 per cent, margin of profit such amount as he thinks proper as a compensation for additional output. If there were no such power of adding to the amount allowed the controlled firm under the munitions levy there obviously would be no inducement to a firm to increase its output so long as it earned its maximum profit. The principle of maximum profit puts an end to all the ordinary stimulus in increasing output, and therefore a regulation of that kind in the munitions levy is not only perfectly proper but it is even necessary. When you get to the Excess Profits Duty there is no such need. There is the stimulus to additional output. The firm retains 40 per cent, of all excess profits.
    Mr. DENNISSmade a remark which was inaudible in the Reporters' Gallery.
    Mr. McKENNA: Why does it not?
    Mr. DENNISS: In small cases.
    Mr. McKENNA: In some cases it may not. But, really, I have endeavoured to argue this case now for two whole days, and the hon. Gentleman still makes the same interruption.
    Mr. DENNISS: I beg pardon; I was thinking of those it does not apply to.
    Mr. McKENNA: Of course there are some it does not apply to, but it does to others, and I think the great majority. Therefore, it would not do for us in dealing with the Excess Profits Duty to accept the regulations which are quite appropriate to the munitions levy. That is one reason why it is quite out of the question to accept the Amendments as they stand on the Paper. I have given public assurances

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    to the Committee as to what we propose to do. I have power to give effect to those assurances under Section 40 of the original Act, and I hope with those assurances the Committee will now allow me to proceed with the other Sections of the Bill.
    Mr. JOYNSON-HICKS: Will the right hon. Gentleman give any idea as to when he will make the regulations, and whether we shall be able to see them? This is an important point. He has had his way all along the line, but really this is an Amendment of great importance, and all we get is the suggestion that at a future time regulations will be made by the Treasury. This House ought to have a deciding hand on this point, because regulations may be framed and we have no control over them. We have no possibility of criticising them effectively, and these manufacturers come to the House and ask for certain protection which they cannot get from regulations made by the Treasury. If the right hon. Gentleman can tell us that, either the regulations or a draft of them, can be submitted to the House before the Report stage of this Bill, that at all events will give us an opportunity of raising this Amendment again, and, if need be, of pressing the matter to a Division, which of course I do not intend to do to-night.
    Mr. McKENNA: If I used the phrase, "Regulations to be made by the Treasury," in general terms, I see on reference to the Act I accepted the provision in the Act itself. There would be regulations required to meet certain cases. For instance, I think the subject of goodwill could only be met by a regulation made by the Treasury, but the other matters do not require regulations at all. The words of Sub-section (3) are as follows:
    "Where it appears to the Commissioners of Inland Revenue, on the application of a taxpayer in any particular case, that any provision of the Fourth Schedule to this Act should be modified in his case, owing to a change in the constitution of a partnership, or to the postponement or suspension, as a consequence of the present War, of renewals or repairs, or to exceptional depreciation or obsolescence of assets employed in the trade or business due to the present war, or to the necessity in connection with the present War of provid-
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    ing a plant which will not be wanted for the purposes of the trade or business after the termination of the Wary or to any other special circumstances specified in regulations made by the Treasury, those Commissioners shall have power to allow such modifications of any of the provisions of that Schedule as they think necessary in order to meet the particular case."
    Therefore, the Act has given the Commissioners of Inland Revenue the power necessary to enable them to accept the findings of the Minister of Munitions as regards (a) and (c), and the Inland Revenue Commissioners will accept those findings. There is nothing more I can say to the Committee than that fact.
    Mr. JOYNSON-HICKS: The right hon. Gentleman says they will accept them. There is no order that they shall. The right hon. Gentleman may disappear, and the Commissioners of Inland Revenue may say, "We do not agree, and we are not going to be bound by the Minister of Munitions. There is no regulation to make us." Merely for the Chancellor of the Exchequer to say they would accept is—forgive me for saying so—not very binding on anyone. I do not want to use the term "slip-shod," but there is no binding contract by which any manufacturer can say to the Commissioners of Inland Revenue, "The Minister of Munitions has done so-and-so, and made us certain allowances, and now you have to make us certain allowances with regard to this Excess Profits Tax."
    Mr. McKENNA: The hon. Member is really not doing justice to the case. Parliament has given the Commissioners of Inland Revenue authority to allow such modifications of any of the provisions of the Schedule—that is the Schedule referring to these allowances—as they consider necessary in order to meet a particular case a Parliamentary pledge is made that that power will be exercised in a certain way. Parliament has given them the power already. I do not see what more Parliament can do. Does the hon. Gentleman suggest that there should be a new Clause to say they should exercise that power in that way? I think it is quite understood, and I think it would be most undesirable. Parliament may wish to reconsider the matter, but until Parliament does reconsider the matter it will be administered in the way I have described.
    Sir G. TOULMIN: I am not doubtful as to the Chancellor of the Exchequer and his Department carrying out the pledges he has made, but I am a little doubtful whether he has gone quite as far as to satisfy those in a difficult position at the present moment. I refer to the class of firm entering on rather speculative business such as making aeroplanes, and so on, and which has practically lost a great deal of its capital. Such a firm will be making what will be called, under the rules of the Excess Profits Tax, excess profits for a year or two. Then the end of the War comes, and they find, although they have been earning excess profits, a great deal of their capital has disappeared. If I understand the Chancellor of the Exchequer's pledges include an undertaking to take into consideration all matters connected with capital, such as those included in Rule 10 under the Ministry of Munitions, then, I think, that would go very far to satisfy opinion.
    Sir J. HARMOOD-BANNER: There is an Amendment on the Paper in the name of the Chancellor of the Exchequer of Section 40 (3) of the principal Act. Does not that cover the matter we are dealing with, because there the referee is to be appointed by the Minister of Munitions, so that he would have the power to deal with that question? Otherwise, what is that Amendment for?
    Mr. POLLOCK: I would like to ask whether Regulations have been issued under the powers given in the last Act under the provision "or any other special circumstances specified in Regulations made by the Treasury"? I remember the Debate, after which the Chancellor of the Exchequer was good enough to put in those words contained in an Amendment which I moved, because it was indicated there would be certain special circumstances which ought to be dealt with by those Regulations. Now that Debate took place on the 4th November last, and the Chancellor agreed to the insertion of those words. He has relied on those words tonight, and I would like to know whether any Regulations have been issued under that proviso between the 4th November last and the present time. It appears to mo that in the pressure of work the Treasury have overlooked the importance of such special circumstances being regulated in the manner provided by those words, and they seem to have been somewhat lost sight of.
    Mr. McKENNA: I do not think the hon. and learned Gentleman has really done justice to himself. May I point out what occurred in the original discussion? On this bench we asserted that all the items we had named really covered the ground sufficiently, but my hon. and learned Friend opposite (Mr. Pollock) wished to have additional power and a larger power put into the Bill by way of a precautionary measure, and we afterwards accepted the words which gave us discretion, if anything new should turn up, to go outside the limit of the precise words to which we wish to confine the Clause. The prevision of my hon. and learned Friend has turned out to be amply justified, because when something quite new arises, as has been the case to-day, like the question of goodwill in the special case of controlled firms, it may be that they will have to be dealt with under the words which have just been quoted by my hon. and learned Friend. That we have not made Regulations up to now means that the particular words included in the Clause have dealt with all the circumstances which have arisen, and if any other special circumstances arise we shall have to make Regulations to deal with them.
    Mr. JOYNSON-HICKS: From what the right hon. Gentleman has just said it appears now that Regulations are not needed to carry out the pledge given by the Chancellor of the Exchequer. Here is a certain Act of Parliament, and there are certain directions as to what the Commissioners of Inland Revenue may do. This pledge is given, but it will merely be enshrined in the volumes of the OFFICIAL REPORT, and probably will not be reported in public, and controlled firms will not know what has occurred unless they go to the OFFICIAL REPORT. No Regulations are to be issued, but the Chancellor of the Exchequer has simply given a pledge that controlled firms shall have certain rights when they go to the Commissioners. The knowledge of that pledge will be found nowhere but in the pages of the OFFICIAL REPORT. If the right hon. Gentleman would issue Regulations they would be part of the machinery of the Act, and all controlled firms would have a knowledge of them, and then they would be able to say, "We are entitled to so-and-so." But they will hear nothing about this pledge, and the right hon. Gentleman ought to issue some public Regulation or a circular from the Treasury to the controlled firms informing them of

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    this concession. Otherwise how are they to know? They do not read my speeches, and at this period of the evening speeches will not be reported in full in the newspapers, and I doubt whether they will have the benefit of seeing my right hon. Friend's speech in the papers.
    Mr. McKENNA: I really think the hon. Member is over anxious on this point. There is not a controlled firm in the country that is not watching this question with the greatest interest. All the controlled firms will have to go to the Minister of Munitions to determine what they are to be allowed for wear and tear, and when they have got their allowance I am quite sure every one of them will believe that that allowance will be accepted by the Commissioners of Inland Revenue in regard to the Excess Profits Duty, and there will not be a firm in the country that will not know this.
    9.0 P.M.
    Mr. HEWINS: I really think we ought to go further than that. I rather suspect the reason why the Chancellor of the Exchequer cannot be more definite is that he has experienced a great deal of difficulty in interpreting the Rules already made. With all these complicated Regulations, does the right hon. Gentleman suspect that his Excess Profits Tax will not yield him all the results he anticipates, and is he afraid that this is going to be a case of the Land Tax over again? If the Chancellor of the Exchequer is prepared to make concessions, surely it is most important for him to be precise and definite, if not absolute. There are thousands of firms who want to know all about these things.
    Sir J. HARMOOD-BANNER: I ask leave to withdraw my Amendment.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. HENDERSON: The right hon. Gentleman has referred to depreciation. There are other things besides depreciation which the Minister of Munitions is bound to allow, such as an allowance for excess output. That point was referred to when the Act was passed by the right hon. Gentleman the Member for Walthamstow (Sir J. Simon). The Chancellor of the Exchequer has only referred to the case of depreciation. We want to know whether the Commissioners will give effect to these
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    allowances in the excess profits, the same as the Minister of Munitions will give effect to them in the munitions levy.
    Mr. MONTAGU: We are now dealing with depreciation, and nothing more.
    Sir G. TOULMIN: Will the right hon. Gentleman explain the third Sub-section of Clause 32, which provides that:
    "(3) Deductions shall not be allowed on account of munitions Exchequer payments in computing profits for the purpose of Excess Profits Duty."
    I rather understood the beginning of the Clause to suggest that they should be taken into consideration.
    Mr. HENDERSON: I think we are entitled to some sort of an explanation as to what this means. I do not know what it means. Payments on account of Excess Profits Duty are allowed to be deducted for the next year's assessment It may be that the Chancellor of the Exchequer will not allow payments on account of munitions, and, if so, it is most unfair. It should be the same for any payments on account of munitions.
    Mr. MONTAGU: It follows exactly the provisions of Schedule 4, Part I., paragraph (4) of the principle Act, which, if my hon. Friend will look at it, he will find says:
    "Deductions shall not be allowed on account of the liability to pay or the payment of Income Tax or Excess Profits Duty."
    These words make exactly similar provisions in the case of Munitions Levy Tax. Clearly the rule which applies to Income Tax and Excess Profits Tax must also apply to Munitions Payments.
    Mr. HENDERSON:
    "But a deduction 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."
    Mr. POLLOCK: Surely it is clear that the deduction is not to be allowed in respect of the Exchequer payments. It is allowed in the case of the Excess Profits Duty, but it is not allowed in respect of Exchequer payments on account of munitions. It just makes the difference, and it is really going back to the point we discussed last Thursday and also this afternoon. You are not treating payments

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    on account of munitions and Exchequer payments as payments which can be deducted in order to arrive at the Excess Profits Duty.
    Mr. HENDERSON: The former part of this Section says that the munitions contribution or levy shall be accepted in payment of the Excess Profits Duty, or shall take its place if it is big enough. To the extent that it does take its place, it becomes Excess Profits Duty and is entitled to be deducted in the next accounting period as if it were Excess Profits Duty. If it takes the place of Excess Profits Duty it ought to have its advantages.
    Mr. MONTAGU: I am obliged to my hon. and learned Friend, but I think my hon. Friend is wrong. The charge for Excess Profits Duty is made on the gross profit before the payment of any Income Tax, and these would have been included in the original Act if the original Act had dealt with munitions.
    Clause ordered to stand part of the Bill.

    CLAUSES 33 (Provision as to Directors' Fees) and 34 (Provision as to Accounting Period) ordered to stand part of the Bill.

      CLAUSE 35.—(Provision as to Accumulating Profits.)
      It is hereby declared that, for the purpose of Excess Profits Duty, profits of any trade or business arising and accumulating during any accounting period are not, during that period, to be treated as accumulated profits within the meaning of Part III. of the Fourth Schedule to the principal Act or as capital employed in the trade or business.
      Mr. GRETTON: I beg to move, to leave out the word "not." The Clause refers to the third part of the Fourth Schedule of the principal Act, and in the form of which it stands it would have the effect of nulifying the provision of that Schedule—
      "nothing in this Part of this Schedule shall prevent accumulated profits employed in the business being treated as capital."
      For some reason which has not been explained, they propose to reverse that provision, and any accumulating profits affecting the business and employed as capital will be taxed under the present Govern-
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      ment proposal to the full amount of the Excess Profits Duty. The effect of that change would be that accumulated profits necessary to carry on the business affected would be reduced by 60 per cent. There will be very severe stress and great competition after the War, and if a business firm requires to take £10,000 of its accumulated profits as additional capital, the Government now propose to take £6,000 and only allow £4,000 to be taken into the business and used as new capital. That is a most drastic change, and I contend is of a most harmful character. There are many businesses in this country which are necessary and which will require considerable development if we are to be able to carry on after the War. I take the case of the trade which I am acquainted with. In this country we formerly imported bottles greatly from Germany, Belgium, and Holland, especially from Germany, and since the stoppage of the German and Belgium supplies the works in this country of that character have had to produce a larger quantity, and the sources of production have been increased. At the end of the War it will be found that a very large quantity of bottles will be sent into this country from Germany or other countries. The Chancellor of the Exchequer will therefore sea that this is an important Amendment which covers a very large number of factories. If the bottle industry is not kept in this country we shall then be inundated with imported bottles, and, even as it is now, if the manufacturers put down the necessary plant it will cost 50 per cent, more than the normal price. If they are not allowed to use the accumulated profits, instead of creating further capital, to extend the business the industry at the termination of the War will be overburdened with capital and will be hampered in the competition that will come afterwards. This covers a very large case, and it cannot be looked upon as a small Amendment. The Government proposal seems to me to be absolutely reversing the policy which was agreed upon by this House last year. There may be some reason for it, but I do think that there should be strong and sufficient reason given before the Committee passes the Clause as it now stands.
      The DEPUTY-CHAIRMAN (Mr. Maclean): I do not know in what form the hon. Member intends to move his Amendment. The greater part of his speech seemed to be directed against the inclusion of the Clause.
      Mr. MONTAGU: There is a difference between this Amendment and the omission of the Clause. If the reason for moving this Amendment had been a good one, I think your suggestion would have been right, and it would have been the same thing to move to leave out the Clause; but I venture to submit to the Committee that the motives for moving the Amendment are not good ones. There is a difference. Our contention is that this is purely a declaratory Clause. The hon. Member says that it is a direct contradiction of the existing practice and of existing legislation. I contend that this Clause simply declares what is the true meaning of the legislation which was passed last year. If, therefore, he is successful, he reverses the meaning of last year's legislation, whereas if he moved simply to leave out the Clause, as my hon. Friend the Member for West Aberdeenshire (Mr. Henderson) proposes to do later on, the result, according to our view, would be to leave the law vague and to lead to litigation. I would far rather decide the question on this Amendment than leave out the Clause, because then we should know where we stand. In the Act of last year, in the Fourth Schedule, Part III., it was stated that nothing should prevent accumulated profits employed in the business being treated as capital, and from this it was argued by the hon. Member opposite and by certain taxpayers and their representatives who take the same view that when we use the words "accumulated profits" we mean "accumulating profits." I am sure it was the intention of the House not to include "accumulating profits." The effect would be that whereas the Bill of last year imposed an Excess Profits Tax of 50 per cent, in the case of public companies, this Amendment would reduce that tax by 3 per cent., and in the case of a private firm by 3½ per cent, because it must be remembered that a private firm is allowed 7 per cent, of the capital and the other firms are allowed 6 per cent, of the capital. The accumulating profits in the example I have taken affect to exactly half their amount on the average the capital on which we allow 6 per cent, or v per cent, as excess profits, and therefore he would simply reduce the amount of the tax. I am quite sure that was not the intention of the House at the time, and I may quote the
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      words of the Chancellor of the Exchequer on the 23rd of November, 1915, in which he said this:
      "My hon. Friend will know eases where money is retained for distribution as dividends. Clearly that ought not to be included as capital."
      There was the case of profits which were accumulating and had accumulated for a particular purpose, and he expressed the view that these accumulated profits ought to be excluded, but we found that unworkable, and our interpretation by this Clause is to except all accumulating profits, whether they are kept for dividend or not. I make that quotation to show what was clearly the intention of Parliament when this Act was passed. You except only accumulated profits and not accumulating profits. If we were to adopt this Amendment we should make a big hole in the revenue by exempting certain firms and we should create considerable confusion, but if we pass this Clause, which as I said is a declaratory Clause, we shall make quite clear the meaning of the Act which was passed last year. It has been introduced with a view to preventing litigation, and it is in no sense a reversal of our previous decision.
      Mr. HENDERSON: I have no objection to a discussion on this Amendment of the point which I intended to make on my own Amendment later on. So long as the Clause will make it clear that accumulated profits are to be considered as part of the capital. I quite understand that you object to accumulated profits since the date of the passing of the Finance Act. The question is what meaning you will allow to be taken as the meaning of the words "accumulated profits." You must remember that the accumulated profits are very often, and in fact nearly always, profits which are used necessarily in the business. Suppose that a company has paid for two or three years profit of £50,000 or £60,000 and it wants new machinery; it must either go and borrow fresh capital or let the shareholders go with a smaller dividend and use these accumulated profits for the purpose of obtaining this new material and new machinery. That is a very common case, and the consequence is that the undivided profits in the balance sheets of a great many companies do not represent cash immediately available, but represent, at any rate, a great part of it, sunk capital for the purpose of developing or taking the business. Suppose that the capital is sunk in machinery it takes the shape of assets, and it must take that

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      shape because it must have fructified in the building up of the business. If you say nothing accumulated after the passing of the Act, or nothing afterwards accumulated, then there is not very much in the case. People will take care there is nothing accumulated. They will deal with it in some other way. Last year's Act distinctly says that accumulated profits shall be taken. There is nothing to prevent them being taken as capital. There is one other point I should like to clear up. I take it that this Clause only appertains to percentage standards. I do not think it affects any company or firm paying Excess Profits Tax. It only applies, so far as I can make out, where you adopt a percentage standard and pay a percentage upon your capital employed. But there is no such thing where the excess profits are available on the ordinary standard of prewar profits, and I do not think in that case that the Clause has any effect. I would suggest to my right hon. Friend that between now and the Report stage he should consider whether he will fix a date for the "accumulating" as distinct from the "accumulated."
      Mr. MONTAGU: I shall be glad to take any hon. Friend's advice and consider the matter before the Report stage, but I do not think that there is any difficulty. The Clause defines accumulating profits. It says
      "profit arising and accumulating during any accounting period."
      As soon as the end of the accounting period or year comes the profits are then accumulated, provided they are not almost immediately paid out in dividends.
      Mr. HENDERSON: You are not reading from the Act.
      Mr. MONTAGU: No, I am suggesting that. If the hon. Member will look at the Clause, he will see it says:
      "It is hereby declared that, for the purpose of Excess Profits Duty, profits of any trade or business arising and accumulating during any accounting period."
      The accounting period is the date fixed already in the Clause for the end of accumulating profits. After that they become accumulated. As regards profits which are used for plant, as soon as they are employed in plant they become accumulated, and the percentage is applied to those profits as being new capital put in during the War. In all such cases the percentage basis applies.
      Colonel GRETTON: I am afraid the right hon. Gentleman has rather darkened counsel by his explanation. He explained to us that the effect of this Clause is not to repeal the provision in the principal Act, the words of which are most distinct. It says:
      "Nothing in this Part of this Schedule shall prevent accumulated profits employed in the business being treated as capital."
      This Clause says that until the end of the accounting period those profits are to be treated as accumulating profits. Therefore, before the end of the accounting period they become accumulated profits and may be employed as capital. While they are accumulating they may not be employed, but when they are accumulated they may be employed. Do I understand that is his explanation?
      Mr. MONTAGUindicated assent.
      Colonel GRETTON: That is rather different from what the right hon. Gentleman desired the Committee to understand. I have no policy in this matter, and I frankly explain to the Committee that my purpose is to enable businesses to develop themselves in order to meet the exigencies of the time of War, in the time that comes after the War, and that their profits, not being invested and kept outside the business, but actually used in it, should not be taxed as proposed in the Bill. I gather that the right hon. Gentleman does not wish that profits which are necessary to carry on a business or for the efficiency of a business, if the business is a sound one and carried on for the benefit of the community, shall be taken for the Excess Profits Tax in such a way as may cripple the business. If that is so there is no serious difference between us. I would only ask the right hon. Gentleman to look at this matter again before the Report stage, and by that time I do not think there will be any great difference between him and myself and the hon. Member for West Aberdeenshire (Mr. Henderson). All that we are anxious to do is to preserve certain things from the devastating effects of the Excess Profits Duty which are necessary to carry on the business, the money which is actually embodied in the business, and the money put by to enable them to pay later on. By grasping too avariciously at the tax for the moment you may do great harm to the taxable capacity of the business and to the prosperity of the

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      business as an asset of the State at a later stage. I think the right hon. Gentleman will agree with what I have said on that matter.
      Mr. MONTAGUindicated assent.
      Colonel GRETTON: I am quite satisfied with his assurance that he will give the matter most careful consideration and try to carry out what I have endeavoured to explain to the Committee. On that assurance, and on the understanding that I shall be able to raise the matter again on the Report stage, I ask leave to withdraw the Amendment.
      Amendment, by leave, withdrawn.

    CLAUSE 36.—(Application of Section 35 of the Finance (No. 2) Act, 1915, to Munitions Exchequer Payments.)
    Section thirty-five of the principal Act (which relates to the computation of profits and gains for the purpose of Income Tax in relation to Excess Profits Duty) shall apply to sums actually paid in respect of munitions Exchequer payments as it applies to Excess Profits Duty, except that the relief to the taxpayer under Subsection (2) of that Section shall in all cases be given by means of repayment and not by deduction.
    Mr. HENDERSON: I propose that Clause 35 be left out.
    The DEPUTY-CHAIRMAN: We are now on Clause 36. We have passed Clause 35.
    The following Clauses were also ordered to stand part of the Bill: CLAUSE 37 (Definition—5 and 6 Geo. V., c. 54); Part IV.— NATIONAL DEBT AND LOANS—CLAUSE 38 (Limited Power to Borrow on Exchequer Bonds for Ways and Means Purposes); CLAUSE 39 (Suspension of New Sinking Fund); CLAUSE 40 (Arrangements for Exchange of Securities Issued under War Loan Acts); CLAUSE 41 (Repeal of 29 and 30 Vic, c. 25, Section 4) and CLAUSE 42 (Lost or Destroyed Exchequer Bonds).

    CLAUSE 43.—(Transfer of Stock on Authority of Order of a Court.)
    Any order or decree of any Court in the United Kingdom having authority to make the same whereby the right to trans-
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    fer or call for a transfer of any Government Stock is vested in any person shall be sufficient authority to the Banks of England and Ireland, to the National Debt Commissioners, to the Postmaster-General, and to any savings bank authority to allow the transfer of the stock in accordance with the tenour of the order or decree.
    An official extract of any such appointment as is mentioned in Section thirteen of the Judicial Factors (Scotland) Act, 1889, shall, where any Government Stock forming part of the estate under the charge of the person so appointed is specified in such official extract or in a certificate under seal by the Accountant of Court produced along with such extract, be deemed for the purposes of this Section to be a decree whereby the right to transfer such Government Stock is vested in the person so appointed.
    In this Section the expression "Government Stock" has the same meaning as in the Savings Bank Act, 1893, as amended by any subsequent enactment.
    Amendment made: Leave out the words "having authority to make the same."—[Mr. Montagu.]
    Mr. CURRIE: I beg to move, after the word "Stock" ["transfer of any Government Stock"], to insert the words "Colonial Government Stock, India Stock, or other investment or property."
    I wish to acknowledge, in the first place, that on more than one occasion, when I have drawn the attention of the right hon. Gentleman to some trouble which we encounter in Scotland, he has met me in the most reasonable spirit, and I hope he will do so once more. What I may call the original position in this matter was really a very absurd one. It consisted in this that if a judicial factor, acting under the instructions of the Court of Session in Scotland, our Supreme Court, found himself in possession of a miserable holding of, perhaps, £100 of public debt, and was given a good title to that by the Court of Session, he was condemned to spend a sum of about £30 in having his title recognised in England as effective when he came to do business with the Bank of England. That position, of course, is very unreasonable, and, so far as the British Public Debt is concerned, the right hon. Gentleman's Clause does away with it. I should like to ask how such a state of matters can have arisen as the refusal of the Bank of

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    England to accept the official extract of their appointments despite the provisions of Section 13 of the Judicial Factors (Scotland) Act, 1899? It is quite well understood that judicial factors in Scotland hold a very large amount of our Public Debt. The figure cannot possibly be less than £5,000,000. It is also well known that the Accountant of Court, who has the supervision of these judicial factors, recently gave these factors to understand that he practically required them to invest their money in Exchequer Bonds and ' securities of that kind. He went the length of saying that, although he was anxious to do so, and in fact did so, unless the Bank of England would in some way or other depart from this attitude he would reconsider his decision. I wish to ask what underlies this attitude of the Treasury and the Bank of England. It appears to me to be purely due to ignorance in high quarters here of matters with which I think they should be rather ashamed to confess that they are not perfectly familiar. I have here a copy of a Treasury letter, dated only a couple of months ago, in which the statement is made that
    "My Lords are not aware what orders the Scottish Courts have power to make."
    It appears to me that my Lords, who have supervision of Scotland as well as England, should really be ashamed to make a statement of this kind. Further, I understand the opinion was given by Sir William Latham in 1902 that the officers of the Bank accustomed to English law and practice are in a difficulty when confronted with such a document as the Interim Act and Decree of the Court of Session. Are the functions of the Bank of England not to act as bankers for the Imperial Government? Is the Bank of England itself not an Imperial institution, and, if that be so, is it not unreasonable to the last degree that the Bank of England should think that it is entitled to disclaim all knowledge of what goes on in the Court of Session in Scotland? If the Bank of England had ever had some difficulty in knowing what went on in some small Burgh Court in Scotland, I could quite understand that, but for the Bank of England and the Treasury to take up the position that they know little and practically care less about the powers and proceedings of the Supreme Court in Scotland is, I think, a position which is very hard to justify. I am sorry the Lord Advocate is not here, because I wish to make sure from him that
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    he is satisfied that the Government's Clause, even as far as it purports to go, is really quite watertight. I dare say the right hon. Gentleman will be able to give me that assurance, but at one stage there was doubt as to whether the Clause really was watertight—that is to say, doubt as to whether an official extract such as we deal with in Scotland was of the same character as a vesting order under Section 35 of the Trustee Act, 1893, or Section 136 of the Lunacy Act, 1890. Of course the object of the Clause will be defeated altogether unless that is so.
    But I wish the right hon. Gentleman to go somewhat further than his Clause goes. This affects us in Scotland in so far as our judicial factors hold considerable blocks of the public debts of the various Colonies, and it appears to me that the injustice to the judicial factors in Scotland is just as clear in the one case as in the other. I do not think the right hon. Gentleman will really argue that it is quite a justifiable position that if a judicial factor in Scotland holds £100 of some public Colonial debt, possibly of some debt issued for the purposes of the War, he should be obliged to spend some £25 or £30 in London in getting his title, given to him by the Court of Session, recognised as effective by the Bank of England. I do not know whether this Bill itself will be the most convenient Way of dealing with the difficulty, but in one way or another the difficulty should be dealt with, because it is not only a great inconvenience to us in Scotland. We decidedly object to spending £25 to £30 in this way. We regard it as simply shovelling money unnecessarily into the pockets of English lawyers. But apart from that it is a great injustice to the Colonies. Why should the Colonies, which come into our market and borrow, feel that if people in Scotland take up their debts in this way they do so at the risk of having to spend £25 in payment to English lawyers and English officials to serve no good end, but simply because they happen to hold such an investment? I think a policy of this kind is quite out of date. I hope the right hon. Gentleman, if he cannot deal with the matter just now, will at least give us a promise of some kind that he will deal with it at some convenient opportunity. On this point the Accountant of Court writes that
    "Unless 'Government Stock' covers all Government securities in which trustees (and consequently judicial

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    factors) can invest, including Colonial Inscribed Stocks and Current War Loans, we shall be no better oft" than before."
    I do not think that really is the intention of the right hon. Gentleman. I have once or twice said rather hard things of the practice of the Bank of England. At the same time I should not like the idea to get abroad that we in Scotland are unmindful of the great services which the Bank of England can render. We are not in the least likely to forget that the Bank of England was founded by a Scotsman in the first place, and all through this troublous time it has been managed by a Scotsman, of whom we in Scotland are really proud. My sole object is to relieve the Bank of England of some antiquated fetters which I am perfectly confident place it in lather a false position, and so far from seeking to derogate from their powers and responsibilities I only wish to enable the Bank of England to render a fuller account of them to us in Scotland who are so anxious to support the Bank in every way in its heavy task of co-operating with the Treasury at present.
    Mr. HENDERSON: There is a good deal of substance in what my hon. Friend has said. It appears that the Bank of England is a law unto itself, and is declining to do a great many things which it ought to do. The title of a judicial factor in Scotland is precisely the same title as a trustee in bankruptcy or a liquidator here. The Bank of England are bound to recognise that, and bound to issue whatever stock remains in the name of the trust, yet the Bank of England make a great deal of difficulty and require certain procedure and cost to be incurred, which is quite wrong. Some of the Scottish bankers raise no difficulty about it. The Bank of England ought to be made to give effect to these things without necessitating costs, expenses, and fees in London before the Scottish official Trustee can get registration as the owner of the stock for the benefit of those concerned.
    Mr. MONTAGU: My hon. Friend knows so much about Scottish banking law that it is impossible for an Englishman who is not a lawyer to follow him in the intricacies of his case. Ask any Englishman to look at Clauses 43 and 44 of this Bill, and to realise from those two Clauses that we are face to face with an historic grievance from the great country of Scotland which has been in existence for generations. It is due entirely to the great per-
    664
    tinacity of my hon. Friend (Mr. Currie) that, after bringing this subject up again and again, he has succeeded in bringing together the conflicting interests and getting put down upon the Paper an agreed Clause to deal with the grievance which he discovered. He asked for a pledge from the Government to incorporate that Clause in this Finance Bill, and we promised him that such a Clause would be incorporated if we could get agreement. We stated from time to time, in answer to his oft-repeated questions, that, if we could get agreement, we hoped to incorporate it in the Finance Bill. I now congratulate him upon having achieved his object, and I venture with all friendliness, and without overstating my point, to ask him not to go further now than what he asked for and what he has got. He asked for an alteration of the law. The poor old Bank of England is not a law unto itself. Like everybody else in this country, it is governed by Statute, and it is to alter those Statutes that the hon. Member has concentrated all his energy. He asked for an alteration of the law and he got it, and now he discovers that he did not ask for enough. If he knew of all the negotiations and the dovetailing of the different interests which have had to take place in order to get this agreed Clause he would understand how serious is the new request. He is going right outside the limits of the Finance Bill. He is seeking by an innocent Amendment to alter the general law as to the transfer of property. I deprecate going any further to-night. We have got the assent of the judicial authorities concerned; we have got agreement with the judicial authorities in Scotland, and we have got agreement with the Bank of England to the proposition which we put before them. Do not let us try to set right in five minutes the wrongs of centuries. Let it be sufficient for the hon. Member that he has made order out of chaos in the particular matter on which he has concentrated his attention ever since he entered this House. Let him use that as a stepping stone for further achievement, and spend his remaining energy on the remaining portion of the grievance during the remainder of this Parliament. Let his present achievement be sufficient for this Budget.
    Mr. CURRIE: On the understanding that the matter is not foreclosed and that the next time it is raised, as it will be, the right hon. Gentleman will give me

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    another instalment. I shall be glad to postpone this discussion. I thank him very cordially for what he has done in the present case. I should like to assure him that it was not at any late date that I made my discovery that I was entitled to more than I was asking. I was merely proceeding on the principle that it is well to ask for the most obvious part of a request in the first place and to leave the rest to a later date. I beg leave to withdraw the Amendment.
    Amendment, by leave, withdrawn.
    Amendments made: After the word "Stock" ["any Government Stock is"] insert the words "or to receive any dividends thereon"; after the word "is" insert the words "expressed to be":
    After the word "stock" ["transfer of the stock in accordance with the tenour of of"] insert the word "or to pav the dividends."
    Leave out the words "the tenour of".
    Leave out the words "forming part of the estate under the charge of the person so appointed is specified in such official extract or in a certificate under seal by the Accountant of Court produced along with such extract," and insert instead thereof the words "is specified in such official extract or in a certificate under seal by the Accountant of Court produced along with such extract to or forming part of the estate under the charge of the person named in the extract."
    Leave out the word "appointed" ["in the person so appointed "] and insert the, word "named."—[Mr. Montagu.]
    Clause, as amended, ordered to stand part of the Bill.

    CLAUSE 44 (Indemnity on Transfer of Government Stock) and CLAUSE 45 (Construction, Repeal, and Short Title) ordered to stand part of the Bill.

      NEW CLAUSE.—(Extension of Relief in Respect of Children.)
      Section sixty-eight of the Finance (1909‒10) Act, 1910 (which gives to individuals whose total income does not exceed five hundred pounds relief from Income Tax in respect of children), shall, as amended by any subsequent Act, have effect as if seven hundred pounds were substituted, as the limit of income, for five hundred pounds.—[Mr. McKenna.]
      Clause brought up and read the first time.
      Mr. MONTAGU: I beg to move, "That the Clause be read a second time."
      This is to redeem the promise which was made by the Chancellor of the Exchequer in the Debate on the Income Tax that we would raise the limit for abatement for children from £500 to £700, so that anyone with an income of under £700 will be able to get what is known now as the children's allowance.
      Clause read a second time, and added to the Bill.

    NEW CLAUSE.—(Provisions as to Motor Cars Used as Hackney Carriages.)
    (1) It is hereby declared that a motor car is not exempt under Sub-section (4) of Section eighty-six of the Finance (1909–10) 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 (1909–10) 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, 1903, shall provide for the additional mark to be so fixed.
    The penalties imposed by Sub-section (4) of Section two of the Motor Car Act, 1903, shall apply to the mark to be fixed under this provision 'as it applies to the marks to be fixed under that Section.—[Mr. McKenna.]
    Clause brought up, and read the first time.
    Mr. MONTAGU: I beg to move, "That the Clause be read a second time."
    This is a provision as to motor cars used as hackney carriages.
    Mr. PETO: From the brief commendation given to this Clause by the Financial Secretary I would not have concluded, if I had not read the Clause, that in Sub-Section (1) it stiffens up the provisions of the Finance Act 1909–10. I cannot see exactly the reason for it, and I would like

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    some explanation. It provides that the exemption from the Licence Duty on hackney carriages is to be granted only if the car is used solely as such a hackney carriage. On previous occasions I have had a little controversy with the Treasury on this question. When the old cab was done away with and people in the country towns had to march with the times, and have hackney carriages driven by power to meet the trains at the station and so forth, they might be occasionally used not strictly under the provisions of plying for hire as provided by the Government in earlier Acts. I would like to ask why it is considered necessary to go away from the old provisions in the Act of 1909–10, Sub-section (3), which says:
    "Nothing in this Section shall be construed so as to increase or affect the duty now payable in respect of any motor cab, motor omnibus, or other vehicle, being a hackney carriage within the meaning of Section 4 of the Customs and Inland Revenue Act, 1888, or to require a licence to be taken out for any motor car which is not a carriage within the meaning of that Section."
    That has been good enough so far. The right hon. Gentleman has not explained why it is necessary, in order to do some thing, which I presume was for the benefit of hackney carriage owners, to begin by stiffening up and putting in this word "solely," which seems to be designed to run counter to the obvious ordinary use in country towns of a little motor car which usually plies for hire in the station or public square, or may be occasionally let out for a short period for private hire. At a period when everybody is putting away cars in order to reduce consumption of petrol we should not make it more difficult for people who have a certain; number of these cars which they can sometimes let out to keep those cars without paying full Licence Duty. I much regret to see by this Clause that the Chancellor of the Exchequer is not taking the opportunity of simplifying all these exemptions from Motor Licence Duties, and increased Petrol Duties, and putting in a certain category or Schedule people who may be considered to be using the cars mainly for trade purposes, in connection with agriculture or any other trade, veterinary surgeons and all the rest of them, and putting into one omnibus Clause some provision making quite clear
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    who, and on what principle, are exempted from full Petrol Duty and full Motor Licence Duty.
    Mr. MONTAGU: This Clause is introduced precisely to deal with the difficulty of definition of what is a carriage plying for hire. Representations have been made by certain local authorities that it is very difficult to collect Motor-car Licences, and that the taxes are frequently not paid by those who ought to pay them. One of the difficulties which the local authorities find in the collection of these duties is the difficulty of defining hackney carriages. Often it is said that a carriage is a hackney carriage plying for hire when there is no method of proving that this is the case. It has been held, under Section 4, Subsection (3) of the Customs and Inland Revenue Act, 1888, which contains a definition, that if a motor is ever let for hire or plies for hire it escapes motor-ear taxation altogether, as a hackney carriage. It is clearly unfair that people who take out a hackney carriage licence, for 15s. or £2 17s., as the case may be, should escape motor licence altogether on the representation that they are the owners of a hackney carriage. I do not believe that that was the intention of Parliament. This Clause was intended to clear up the difficulty of defining what a hackney carriage was, so that full Motor Car Duty may be collected from those which are not hackney carriages.
    10.0 P.M.
    Mr. PETO: The right hon. Gentleman has not satisfied me. I have a clear recollection of when this question was raised on the Finance Bill, and the definition "standing or plying for hire" was held to be correct. We debated the question whether if a motor car which usually stood in the ranks, or at a station, were let for a short period—a week, or something of that kind—for some special job, it would thereby become liable for full Licence Duty, and it was settled at that time that clearly it would not be. Now under the wording of this Clause it seems quite clear that unless it is solely plying for hire, as a hackney carriage, it will immediately have to pay the full licensing duty. I ask the right hon. Gentleman to reconsider the question whether, with motor ears being shut up all over the place, and when from the most patriotic motives you are not to employ people needlessly when they are not wanted, that is the moment to select for

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    interfering with the supply of cars available at short notice and cars let out for special jobs, which would be almost entirely in connection with Government or War Service?
    Clause read a second time, and added to the Bill.

    NEW CLAUSE.—(Extension of Belief in Respect of Motor-Car Licence Duties.)
    (1) Sub-section (4) of Section eighty-six of the Finance (1909–10) 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 Customsand 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.—[Mr. McKenna.}
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read' a second time."
    Mr. MONTAGU: My right hon. Friend promised that veterinary surgeons should be exempted from a portion of the Motor Licence Duty in the same manner as doctors. Doctors and veterinary surgeons who use motor cars stand in a different position from the members of any other profession. Their object is the saving of suffering and life. Therefore I see no reason, and I believe that the Committee see no reason, for persisting in a differentiation between the two classes. This reform has often been pressed on the Government.
    Mr. HENDERSON: I would like my right hon. Friend to consider, between now and the Report stage, whether some sort of a reduction should not be made in the case of clergymen whose parishes are very widespread. I know several who have got parishes twenty miles in one direction. They cannot possibly visit their parishioners by hackney carriage, even if they
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    could get one. I think that in certain cases of outlying sparsely populated parishes there is a distinct claim.
    Mr. PETO: I desire to support the hon. Member for Aberdeen and to add this consideration to which I hope the Financial Secretary will give his special attention. I have not a word to say against the extension to veterinary surgeons of the rebate given to doctors, because I have advocated it on every occasion when it was put forward in this House. But I would remind the right hon. Gentleman that both the doctor and the veterinary surgeon, when they make a visit by motor car, are naturally entitled to charge something to the patient, or the owner of the patient in the case of the veterinary surgeon, to whom the visit is paid. But the class of people for whom the hon. Member has just put in a plea, ministers of religion, have to keep a car or motor cycle or some means of getting about these widespread parishes. It is common in the North of Ireland, in Scotland and in many parts of England—the rural parts which I represent. They have to make those visits without any remuneration whatever in addition to their stipend, which is often very little over £100 a year. From that point of view the case is even stronger than that of those professions which, the right hon. Gentleman has already conceded, are entitled to this consideration because they are carrying on their work in order to alleviate suffering or prevent sickness. The right hon. Gentleman made absolutely no mention of Sub-section (2) of the Clause of the Bill, which is a very important part of it. Speeches were made by several Members previous to this new Clause appearing upon the Paper, and they urged that these cars are in many cases almost exclusively or mainly used in connection with Red Cross work, and that some remission should be made. The new Clause, as drafted, does not meet that at all. It only provides where it can be proved that the car is used wholly and exclusively for patriotic service they are entitled to remission. I do not think that is a satisfactory way of meeting the actualities of the case, because if anybody uses a car exclusively, during the whole year, for the Government, presumably the Government would have taken that car over. I ask the Government to see whether the Clause cannot be so framed as to meet these practical points. As the Clause stands on the Paper, there is absolutely nothing in it

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    to meet the case of those people who use their ears for public service without charging the Government at all.
    Sir W. BEALE: I have an Amendment on the Paper which asks for relief for ministers of religion and others similarly circumstanced, in the form of an abatement on the Spirit Duty. I want in one form or another that in proper cases there may be an abatement or relief both for ministers and others similarly circumstanced. I only mention it now, because I wish to reinforce what has already been said, that adequate relief or partial relief should be given on the Spirit Duty.
    Mr. MORTON: I understood that the Chancellor of the Exchequer was to make a general statement when these Clauses came up for consideration. Is the right hon. Gentleman prepared to make that statement after the verbal assurance which he gave me that he intended to make it? I had a letter from the right hon. Gentleman in which he stated that "the case of ministers in the North of Scotland will not be lost sight of." I have that assurance in writing, and also the verbal assurance given me the other night, and I think I am entitled to ask whether the Chancellor of the Exchequer is prepared not to lose sight of the ministers of the North of Scotland a minister in Scotland endeavours on a Sunday to attend to more than one church or chapel, and, consequently, if the distance is great he cannot attend the services unless he has something in the nature of a motor car. Ministers do their best to attend the services where they can. They have very limited incomes; very few of them get large salaries at all, and I do not suppose that many get more than £100 a year. Can the right hon. Gentleman the Secretary to the Treasury tell me whether we are going to have this statement which was promised. Of course if the right hon. Gentleman likes to wait until to-morrow it will come up again in the shape of a Motion by my hon. Friend and also one which stands in my name. It possibly might be urged that if we allowed this Clause now before us to be carried it would shut out the consideration of our Clauses. I would like to know what the right hon. Gentleman intends to do in the matter.
    Mr. LOUGH: I do not think we have had sufficient opportunity of considering these Clauses. We are now getting into
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    the second Budget, and I would humbly submit to my right hon. Friend that we should be given a little time. I question whether my right hon. Friend has read these Clauses. The right hon. Gentleman very politely offered us some explanation about this Clause, and I listened in the hope that he would give us some information, but I found to my astonishment that he confined himself entirely to the first and least novel and least important part of the Clause. Not a word was said about the latter part of it, that part to which my hon. Friend (Mr. Peto) called attention, about the exemption of Government cars. Really this is a matter which requires a considerable amount of attention before it can be carried into law. Is a car which is doing Government work to be exempted entirely? I believe a great deal of the extravagance and waste of petrol which is complained of, and for which the Government is punishing this House and the people of the country, is taking place on what are called Government cars. [An HON. MEMBER: "They ought to have a licence."] Yes, they ought to have a licence, for in London it is really almost dangerous to go about the streets because of the great risk of being run over by Government cars.
    Mr. PETO: What I was speaking of was not Government cars, which I presume get their petrol free of taxation, but cars in private ownership and which are mainly doing Government service.
    Mr. LOUGH: I am extremely obliged to my hon. Friend for that answer, but my difficulty is that he is not the Government, and it is to the Government that I must look in this matter. I humbly ask my right hon. Friend if encouragement may not be given by the Clause to this question of Government cars. I do not want to say a word against the appeal which has been made on behalf of ministers in Scotland, but in Ireland I believe that substantial expenses are allowed by all the Departments to owners of cars, and are they to get the relief of this Clause and at the same time 6d. or 8d. per mile for running the car which the Government has made so cheap. I think we ought to have a good deal of explanation.
    Sir A. MARKHAM: May I ask, Sir, if you have put the second part of this Clause?
    Mr. LOUGH: I think I am in order, and if my hon. Friend will restrain his enthusiasm I will not stand in his way any longer. I do ask the right hon. Gentleman as a reasonable member of the Government to give further consideration to this.
    Mr. MONTAGU: With regard to the first appeal made by the hon. Member for Sutherland (Mr. Morton) for a general statement, I think he was out of the House this afternoon, and I think he was out of the House on Thursday when two statements were made by me—as clear as I could possibly make them—about the new Licence Duty. When we come to the new duty, if he requires any further explanation, I shall be very happy to supply it.
    Mr. MORTON: Can you give me a reply to the latter part of the letter which I will read again: "The case of ministers in the North of Scotland shall not be lost sight of," and signed, "Yours sincerely R. McKenna."
    Mr. MONTAGU: I heard and understood it when the hon. Member read it for the first time. I was going to deal with the appeal for the exemption of ministers of religion. We have given very careful consideration to this question; we have not lost sight of it; but I do appeal to the Committee to withstand the appeal from another further exemption. After all, there is nothing very new in the case of clergymen. Their parishes are the same size as they always were; as they were before motor cars were invented. If you give exemption to ministers, then the next case which comes is that of farmers going to market, and that of Members of Parliament, and others. Doctors and veterinary surgeons seem to me to stand in a different category from any other. Their activities are directed directly to the amelioration of suffering and the prevention or loss of life of human beings and of animals. I think we ought to leave the matter there, where we have a clear dividing line between those and other professions. With regard to the remarks of the right hon. Gentleman the Member for Islington (Mr. Lough), I am very sorry that he was able to point to a part of the Clause which I had omitted to explain. It is not put down out of wanton lightheartedness by the Government. It does not deal with Government motor cars at all, but with motor cars on
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    Government service. It is specially directed to Red Cross cars, cars used for ambulance purposes, and private cars used solely for the discharge of Government duty. The words "solely and exclusively" must be kept in, or we shall open the door very widely. The appeal has been as widely made as that of the veterinary surgeons. It is not a very complicated matter, and I did not think it necessary to detain the Committee by making a long explanation.
    Mr. GLYN-JONES: The experience the Government have had in this matter shows the danger of making any divergence at all in the Clause which provides that in the case of veterinary surgeons there shall be an exemption. There is not so strong a case, in my opinion, as the right hon. Gentleman makes out. It is a profession which uses motor cars in the same way as other people use them for the purposes of their particular calling, and we have now been led to a demand on behalf of another profession. The same difficulty arises in regard to the remaining part of the Clause. It seems to me that a great deal of difficulty will arise, because it is not only the Commissioners of Customs and Excise who are to have the power of giving the rebate: the council—which, I suppose, means the local council—may also use their discretion, and will have to decide whether a car has been used exclusively for Government service. What is Government service? I cannot for the life of me see why the Treasury should choose this way of subsidising work done for the Government. If a car is lent to the Government, why cannot the Department to which it is lent pay something, instead of having this method of giving rebates from taxation—a method which will give rise to so many difficulties? It is not fair to the local councils, which have quite enough to do already, that they should have thrust upon them the duty of deciding which cars are to escape this duty. The right hon. Gentleman has mentioned Red Cross work and ambulance work. Are they, in fact, Government services? Some people would argue, I think with effect, that neither of them is Government service. I am certain that the desire on the part of the right hon. Gentleman to meet what I confess seems a reasonable demand for a rebate will lead him, and those who have to give effect to this Clause, into a great deal of difficulty, and I am personally sorry that the Government have introduced the Clause.
    Mr. MORTON: I am not at all satisfied with the reply of the right hon. Gentleman. I am glad that the Chancellor of the Exchequer is now present, and I hope he will treat me in a different way. I will read his letter to him. There is nothing private about it. It is dated "Treasury Chambers Whitehall, S.W., 24th May, 1916." Therefore the Treasury have had plenty of time to consider the matter.
    "My dear Morton,"
    [Laughter.] I thought Members would laugh at that, that is why I read it—
    "I am proposing to make a statement with regard to the increased Licence Duty on motor cars on the Committee stage of the Finance Bill, and meantime I do not think I can usefully say anything except that the case of ministers in the North of Scotland will not be lost sight of.
    Yours sincerely, R. McKENNA."
    That is a very polite and courteous letter indeed. I recommend it to other Ministers. But now the Secretary to the Treasury has done the reverse of this promise, because, although we were told that the ministers of the North of Scotland would not be lost sight of, from what the Secretary to the Treasury has now said, they have been lost sight of altogether. Surely I will not be acting; unfairly, or doing wrong, in appealing to the Chancellor of the Exchequer simply to do what he has promised to do—to think of these ministers of religion in the North of Scotland. They travel long distances to conduct services in the church. I am most anxious to meet the ministers who have very small stipends. I want nothing more than I would give to others in similar circumstances.
    Sir H. DALZIEL: The Clause, as drawn, would give relief to every veterinary surgeon who happens to be on the register. Has the right hon. Gentleman considered the question of retired veterinary surgeons, of whom there are a very large number, who may still be on the register I How does the Clause apply in the case of doctors who have retired? Is a doctor to have this privilege although he is not in practice, and simply because he happens to be on the Medical Register? The Clause of the right hon. Gentleman, it seems to me, as drawn, would carry us further than the Committee intends to go.
    Sir F. BANBURY: Before the Chancellor of the Exchequer replies I would like a word. I do not quite agree with my hon. Friend opposite who rather cavilled at the idea that veterinary surgeons should be exempted. Extremely useful work is per-
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    formed by veterinary surgeons. They have very great distances to travel to their work, their fees are much lower than those of doctors, and very often they are required to do their work in a very great hurry. I think if there is—as I think undoubtedly there is—a strong case for the exemption of doctors, there is a still stronger case for the exemption of veterinary surgeons, and the veterinary surgeon's charges are quite irrespective of distance. Anyone who lives in the country knows the great advantage it is that when a veterinary surgeon is summoned now that he can get to his destination quickly, instead of as in the old days the people having to wait till he drove a pony ten, twelve, or fifteen miles. I do not quite agree with the hon. Gentleman opposite as to what he said about veterinary surgeons, but I do rather agree with him as to what he said in regard to the second part of the Clause. This part of the Clause may serve a very useful purpose. The intention of it may be very good, but it seems to me that it is drawn very vaguely. There are apparently two different sets of bodies to be consulted. Their decisions may be different in different cases, and may lead to much confusion. If the hon. Gentleman would allow me to support his suggestion, I think the proper course to pursue is not to have another exemption, but that the Government should, if they think that a particular motor car has been used mainly or exclusively in their service, cither to make a payment to defray the expenses, or to cover the amount of the actual licence. This would be saving the extra trouble and expense, and would save time in ultimately having to go to the Post Office and fill up a form asking for a rebate. If the Government think it right and proper to tax people who come forward patriotically to lend their motor cars, let them make those people a small contribution, or, at any rate, meet the cost of their licence. That is, I think, the proper business-like way of doing it, and I propose later to move the omission of Subsection (2).
    Sir T. WALTERS: I cannot see any adequate reason why private motor cars that are used exclusively in Government service should be exempt. If cars that are used exclusively are exempt, why should not cars which are used during part of their time be partially exempt? It is common knowledge that in most provincial towns hundreds of cars are used

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    for the transport of wounded soldiers between stations and hospitals and to places of various kinds. The owners of these cars very gladly and cheerfully place them at the disposal of local authorities, hospital authorities, and others for these purposes. They do not ask for any exemption. It is one of the privileges of those who own motor cars to place them freely at the disposal of the Government. It is a mean process for those who keep motor cars to ask for total or partial exemption because they lend them to the Government, and I hope the Treasury will not grant any such exemption at all.
    Mr. PETO: The right lion. Gentleman said that scattered parishes had not grown in size, and what did ministers do before there were any motor cars? The answer to that is quite simple. They necessarily kept a horse and trap of some kind to get about. But sometime ago, and particularly owing to the demand for horses by the Government, they gave up the horse and trap and bought some very cheap motor car—some small and disused car which somebody would not use—in substitution of a horse and trap, which it was not in the interests of the country they should keep. Therefore, it is very unfair to charge the full Licence Duty which is paid by those who keep expensive cars for pleasure purposes. I hope the Chancellor of the Exchequer is going to listen to that appeal. I would just support what the hon. Baronet for the City of London has said as providing a very simple solution of the difficulty of cars used mainly for Government purposes a great many people are quite able to pay the full Licence Duty, and would not wish to make any claim for remission at all, but there are a great many people who could hardly keep a motor car, but who have been struggling to keep it going because of rendering services to the wounded and so forth. If the right hon. Gentleman will consider the suggestion of the hon. Baronet to omit this Sub-section altogether, and agree that where a claim is put in, because that would only be put in by people to whom the payment of the full Licence Duty might prevent their keeping their car going at all, he will remit the duty, or pay a sum in consideration of the services of the car, which are mainly devoted to Government purposes, which will be roughly commensurate with the amount of the extra Licence Duty. I think that would be a solution of the difficulty, and it would clear away an Amendment I
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    handed in to omit the word "exclusively." But if the Chancellor of the Exchequer does not meet my right hon. Friend's request, I would ask you, Sir, to protect my Amendment when you put the Question.
    Sir STEPHEN COLLINS: I wish to put in a plea not only for the ministers in the North of Scotland but for ministers of religion in England and Wales generally. You are granting relief to doctors and veterinary surgeons to whom their profession is more a matter of business, but this is not so with the ministers of religion to whom their profession is more a labour of love. As a rule they are men with very small salaries. When the right hon. Gentleman the Financial Secretary to the Treasury was referring to the importance of doctors visiting their patients he did not mean to infer any less importance should be attached to the ministration of ministers of religion and the friends in dire distress whom they go to see. I hope the Chancellor of the Exchequer will seriously consider the importance of his promise to the hon. Member for Suther-landshire (Mr. Morton), and take into consideration the case of ministers of religion.
    Sir A. MARKHAM: I would like to ask if there is really any need for this proposal at all. I lent some motor cars, some time ago, to the Government to convey the wounded, and I was informed by the Kent County Council in my district that it was not necessary for me to take any licences out for those cars. I put them at the disposal of the hospital authorities, and surely it is not necessary that I should pay for licences in respect of those cars which are being used for Government purposes only. The Kent County Council informed me that for all cars engaged exclusively on Government work no licences were required, and I have not paid for any licences for those cars. I do not see why you should give exemption to medical men, because they are now earning far more money under the Insurance Act than they were getting before. The men who do require relief are ministers of religion. You have given these medical men enormously increased incomes, and they are far better off than they ever were before, and when you are giving these exemptions right and left you must inevitably extend the principle, not only to veterinary surgeons and doctors, but also to the much more needy class, the ministers of religion. I hope the right hon. Gentleman will not

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    dismiss the matter in this light way, but have regard to the interests of this class, seeing that the doctors are much better able to afford to pay this increase than ministers of religion.
    Mr. MONTAGU: With regard to the question which has been asked me, this Clause as drawn imposes the same condition for veterinary surgeons as for qualified medical practitioners, namely, that the car should be used for the purpose of their profession, and thus in both cases excludes those who have retired from the profession. I have listened to the arguments put forward by various hon. Members on the part of ministers of religion, and the only argument I can use against that proposal is the one which I have already put before the House, namely, that there is a definite and logical reason for the exemption of doctors and veterinary surgeons. The hon. Member for Mansfield suggests that the time has come to take this relief away from the doctors, but I would remind the hon. Baronet of an axiom which is often quoted that, "It is very difficult to take butter out of a dog's mouth." Even if that were not so, I venture to think that at this moment, when doctors are peculiarly scarce, to put any difficulties in the way of a doctor reaching his patients would be very ill advised. That is a quality which the work of doctors and veterinary surgeons has in common that no other profession has. By their activities and ministrations they seek to alleviate bodily suffering and save life. I do not think there is any other class of which that can be said, and it would be dangerous to go any further. With regard to the second part of the Clause, this has been pressed upon us by associations of motor-car owners, and by owners of cars which are working as hundreds of motor car are now working, on Government work. They say, "I have got a car. I am perfectly willing to put it to the exclusive use of the Government, but it seems unfair, when I get no use out of my car at all, that I should have to pay the Licence Duty. The word "exclusively" is most important. As soon as you get away to vague words like "mainly" or "generally," you open the way to all sorts of evasion. a man who uses his car for private purposes will find that by using it for Government purposes a day or two he can avoid the duty. We must stick to the word "exclusively" very rigidly, but if the Committee vote against
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    the second part of the Clause, well, relief to the taxpayer is not dear to the Treasury's heart, and we shall not press it on an unwilling Committee.
    Sir A. MARKHAM: Will you answer my question about the licence?
    Mr. MONTAGU: I will gladly inquire. I am told that this Clause is necessary. I am surprised at the version of the law which the hon. Baronet has obtained from the local authority concerned. I cannot answer it off-hand. I must take legal advice.
    Mr. MORTON: I have had no answer.
    The CHAIRMAN (Mr. Whitley): I must point out that the course the discussion is taking will mean that the matter cannot be raised again on the Amendment coming later.
    Mr. MORTON: Do I understand that we can bring it on again then?
    The CHAIRMAN: No.
    Mr. MORTON: That is why I want to get an answer to-night. I have had no answer yet with regard to the promise of the Chancellor of the Exchequer that the ministers in the North of Scotland would not be forgotten. I am entitled to have respect to my Constituents, whom I do my best to represent and to insist on having an answer from these well-paid Gentlemen on the Front Bench.
    Mr. McKENNA: I can assure my hon. Friend that I did not lose sight of the matter, and that their case has not been neglected. I examined it, as I did many others, but, after consultation with my right hon. Friend, we eventually came to the conclusion that we ought not properly to ask this House to give further exemptions than those we have proposed. We have proposed, as the Committee is aware, to go outside doctors and veterinary surgeons and to include the case of cars exclusively used for public service. That will not cover the case of the car which is used from time to time in taking about wounded soldiers; it applies only to cars which are entirely given up by the owner to the public service. Where the Government has the exclusive use of the cars it would be a great mistake to impose the duty, and the case has been represented to me as follows: a number of these cars are owned by people who have borne all the expense of the cars and have given the whole service of the cars to the State, and

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    if upon the top of that we were still further to tax them for the maintenance of the cars it would be hardly fair, and it has been represented to us that the effect would be that a number of these cars would be withdrawn from the public service, with the consequence that the State would have to obtain cars in substitution for them. Having regard to the use of the word "exclusively," I do not think that the Committee will run any risk in accepting the Clause.
    Mr. PETO: This Clause refers to the Motor Duty only. There is a Clause on the Paper in my name dealing with the payment of Motor Spirit Duty and licences and veterinary surgeons' allowances.
    The CHAIRMAN: I will deal with that when we reach it.
    Clause read a second time.
    Sir F. BANBURY: I beg to move to leave out Sub-section (2).
    I quite, agree with what the Chancellor of the Exchequer has just said, that there has been a demand lately to introduce some Clause of this sort, and I think myself that probably something of this sort is necessary, but I also think it would be advisable that the Sub-section should be omitted. The right hon. Gentleman says the word "exclusively" is in the Clause and will protect the Clause, and I agree it is necessary that that word should be inserted. It would not do to make this provision in the case of owners who once or twice a week or once or twice a month lent their cars to the Government. I would point out that the Clause as worded in such a way as to give a great deal of trouble to the person who would claim a reduction. It says: "If any person proves to the satisfaction of the Commissioners of Customs and Excise or the council by whom the licence is granted"—that, I presume, will be the county council in a county and the London County Council in London—and it goes on to say. "by the production of such certificate as the Commissioners may approve." Does that mean that, first of all, the applicant is to fill up a certificate for the Commissioners' approval, and then, having done that, he is to submit a certificate to the Commissioners of Customs and Excise, or the council by whom the licence is granted, and having gone through all these forms, then the remission will be made? I ask whether that is sol The Clause is not
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    clearly drawn, and I think that might be the effect of it. The Commissioners of Customs and Excise and the council by whom the licence is granted may take different views of the evidence that has been brought before them as to whether th car has been or has not been exclusively used, and different decisions may be given. If my proposal is adopted the Government themselves—there are no better judges than the Government themselves—will decide whether the car has or has not been used exclusively for Government purposes. Why at this moment, when it is so difficult to get clerks and other officials, should we go on to create more forms to be filled up and that more clerks and more officials be used, when the Government themselves on the application "being made to them by a certain car owner can say at once, because they know themselves, "the car has been exclusively employed in the service of the State and we will therefore remit such sum as may be necessary to cover your loss." It seems to be much the simplest way. It will give far less trouble to the car owner and to the Government. The only reasons I can conceive why it should not be adopted are that it will not be in an Act of Parliament, so that possibly people will not understand that they have this power, or that the Government might change their minds. It could be arranged with Parliament that the Treasury should be the authority. In that case the Treasury could give an undertaking in the House that they would make some such arrangement and nothing further need be done. Unless there are very strong reasons in favour of the Sub-section which I cannot see, I hope the Government will allow it to be omitted.
    Mr. GLYN-JONES: I hope the Government will accept this Amendment. I do not wish to repeat the arguments I used when I drew the attention of the Government to what I considered to be the difficulty of giving effect to this Clause, except to emphasise the difficulty of anyone deciding whether or not a car comes within a provision of this kind. I understand the right hon. Baronet (Sir F. Banbury) to suggest that if a Government Department utilised the services of a car which belonged to a gentleman who could not afford to lend it exclusively to that Department and pay the Licence Duty, it should be open to the Department, if they wanted the car, to make some payment which would enable the Licence Duty to be paid.
    Sir F. BANBURY: To the holder of the licence.
    Mr. GLYN-JONES: I should prefer no exception at all being made in a matter of taxation. The right hon. Gentleman this afternoon, in dealing with the Excess Profits Tax, made a great point about the danger of differentiation in regard to taxation. That difficulty arises here to a smaller degree. I should like the right hon. Gentleman to tell the House what he means by "Government service." The Financial Secretary to the Treasury mentioned Red Cross and St. John's Ambulance work. Are you sure that every local authority will take the view that Red Cross work is Government service? In all probability the Red Cross Society itself would say that it is not strictly a Government Department or doing Government service. What is to happen in the case of some one who uses a car for running from a controlled munitions establishment up to Whitehall? He may say his car is used in connection with the making of munitions, and that that is Government service. Who is to decide these questions? If the local authority is given power to decide them, the instance already given by the hon. Baronet the Member for Mansfield (Sir A. Mark-ham) shows that the local authority there has already decided, without this Clause, that a car which was exclusively used in connection with a voluntary hospital has not to pay the duty. Who is going to decide whether a particular voluntary hospital is a hospital which entitles the people who lend their cars to it, to come within this provision? Further, it leads to extravagance in the use of these cars. I am perfectly certain that in many cases, owing to the good nature of the people who lend these cars—one sees it if he looks around—more cars are used, or misused, than are necessary. And if a Government Department, using a car or allows it to be used in its exclusive service, felt that they would have to pay or make some contribution if the owner of the car could not afford to pay the duty and lent them the car, it would be a much sounder system of finance than this method.
    Sir H. DALZIEL: I think we ought to have from the Government a more detailed statement of what they intend this Sub-section to apply to. For example, it is very difficult to say when a ear is on Government service. Would it apply to a Cabinet Minister?
    Mr. McKENNA: Certainly not. a Cabinet Minister does not use it exclusively on Government service a Cabinet Minister lives also outside Government service.
    Sir H. DALZIEL: a Cabinet Minister uses it for joy rides, I suppose?
    Mr. McKENNA: The right hon. Gentleman must not say that. He stated the principles himself very fully on Thursday, and applied them to the Government as a whole. He must not make individual charges.
    Sir H. DALZIEL: I am glad my right hon. Friend has reminded me of the excellent principles I laid down last Thursday. Will it apply to cars used by the Government? You must in this case depart from the strict line which I laid down on Thursday. It surely is possible under this Clause as drafted for a Minister to say, "When I am travelling from my home in the country to Whitehall to discharge the affairs of the Government, I am on Government service," and it is further possible for him to argue that when he goes for a drive in the country it is for the benefit of his health, and therefore for the benefit of the Government. I take my right hon. Friend's assurance that he speaks on behalf of a united Cabinet and that they in this case claim no exemption. Take the case again of a tax collector. Is he to be able to say that his car is on Government service? I think he ought to, under the Clause. Take the case of a Customs officer or anyone travelling about the country in an official capacity. If he engages the car, as I read the Clause, and then is able to say, "I am a Government official and have used this only on Government service," he is bound to get exemption. I appeal to my right hon. Friend. I think he ought to give us a very definite statement on this point that if it is for the purpose which he intends, I think a very laudable purpose, where anyone gives a car exclusively to hospitals and wounded, it should not go beyond that and should not give a privilege to a Government official, which ho does not enjoy at present.
    Mr. McKENNA: a small matter like this is not really worth all this discussion. If my hon. Friends do not like this additional exemption I am perfectly willing to abandon it. The history of it is quite simple. It was represented to me on behalf of the Red Cross Society that they

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    have the exclusive use of a number of motor cars lent to them by people who bear the whole cost of upkeep, and they felt that in cases of that kind it would be a very poor return that the State should make money out of the cars which were exclusively used in that way. [HON. MEMBERS: "Why not limit it?"] There are other cases besides the Red Cross There is the St. John Ambulance Society and other societies of a similar kind which are doing public work. If it is felt so keenly, and certainly if there is supposed to be any suggestion underlying it that Cabinet Ministers are endeavouring to avoid the payment of Licence Duty—
    Sir H. DALZIEL: I did not suggest that.
    Mr. McKENNA: I should certainly ask the Committee to let me abandon this part of the Clause at once. If there is any suggestion that there is any illicit purpose of escaping Motor Licence Duty I can assure the Committee that we have not. I do not think any Government has ever attempted to argue that if he uses a car and goes into the country and is thereby improving his health he is in consequence on Government service. I can answer my hon. Friends that if any of my colleagues made such a suggestion with regard to any tax for which I am responsible I should refuse to listen to him.
    11.0 p.m.
    Mr. LOUGH: The whole of the Committee are with the right hon. Gentleman in what he has said about the Red Cross Society cars, or other cars used for ambulance work. Such cars are being used in every part of the country. The difficulty we are in is that when we read the Clause it does not look as if it covered that case at all; it apparently applies to something quite different.
    Mr. McKENNA: If the right hon. Gentleman will withdraw his Amendment I will consider proper words between now and the Report stage, and if I find them I will abandon this Clause.
    Sir F. BANBURY: I understand that the right hon. Gentleman will see whether or not he can draw up a Clause which will allow cars used by the Red Cross Society and others for ambulance work to be exempted?
    Mr. McKENNA: Or for public work of that kind. The definition shall be satisfactory to the right hon. Gentleman and his Friends.
    Sir F. BANBURY: Under those circumstances I will withdraw my Amendment.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed, "That the Clause be added to the Bill."
    Mr. LOUGH: I would appeal to the right hon. Gentleman that we might stop now. We are going into a new class of subject.
    Mr. McKENNA: Let us get rid of it.
    Mr. LOUGH: I assure the right hon. Gentleman from long experience of the House that he would make a great deal better speed on the whole not to press the Committee too far. It is after eleven o'clock now, and we have done a great deal of work.
    Mr. McKENNA: I recognise that we have made very great progress to-day, but I would ask my right hon. Friend to look at the subsequent Clauses which stand upon the Paper. I do not propose to ask the Committee to take the Motor Spirit Licence Duty, which has appeared on the Paper for the first time to-day. I think that the other matters will be accepted universally. There will not be the slightest controversy about them. It would be better to finish them.
    Clause added to the Bill.

    NEW CLAUSE.—(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 therefrom.
    (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.—[Mr. McKenna.]
    Clause brought up, and read the first time.
    Mr. MONTAGU: I beg to move "That the Clause be read a second time."
    This new Clause makes a slight alteration in the power of the Treasury to issue securities during the time of war, free of Income Tax. The Section as passed in the Act of 1915 gave us power to issue these securities to people who are neither domiciled in nor ordinarily resident in the United Kingdom a difficulty has arisen because of the word "domiciled." The legal meaning of the term "domiciled" is that a person is domiciled in the United Kingdom if he has the intention of returning. The consequence is that it has been found that Indian Civil servants, and persons carrying on business in foreign countries, have got to pay Income Tax upon securities which other people resident abroad do not have to pay, because they are still domiciled in the United Kingdom. An hon. Member drew the attention of the Chancellor of the Exchequer to this, and on behalf of many Anglo-Indians and Anglo-Chinese it was decided to ask the Committee to assent to a slight alteration of that power, which leaves out the question of domicile and makes it apply equally to all citizens not ordinarily resident in the United Kingdom, whether they are domiciled there or not. I do not think that is controversial. The second part of the Clause deals with the funds of assurance companies who have got to keep a certain number of their life insurance funds invested in foreign countries. By Section 5 of the Finance Act, 1914, income derived from these securities was exempted from Income Tax when the recipient was resident abroad, but immediately the money came home he became liable. During the War, in response to invitations from the Government, many insurance companies have brought home the income from their securities abroad for the purpose of increasing our funds during the War. This patriotic act has led insurance companies into liability for Income Tax, and the Clause is intended to meet the difficulty.
    Sir H. DALZIEL: Is this Clause intended to apply only to India?
    Mr. MONTAGU: Any foreign country in which Englishmen are resident.
    Sir H. DALZIEL: Does it apply to America.
    Mr. MONTAGU: Yes.
    Sir H. DALZIEL: Is it not intended to deal principally with America? Does it not apply to America more than to India?
    Mr. MONTAGU: No.
    Sir H. DALZIEL: Do I understand that this only applies to Government securities that may be invested in America?
    Mr. McKENNA: My right hon. Friend knows that certain Government securities are now issued free of Income Tax to-foreign holders. It is felt that the same release from liability to pay Income Tax ought to be enjoyed by British subjects resident abroad as would be enjoyed by them but for the fact that the original Acts referred to "domicile." This refers mainly to British subjects resident in India who are really domiciled here and intend to return here. On the securities which they hold Income Tax is chargeable, though they are living abroad and spending all their income abroad and are not in other respects subject to Income Tax.
    Sir H. DALZIEL: Is this limited to Government securities?
    Mr. McKENNA: Yes.
    Clause read a second time, and added to the Bill.

    NEW CLAUSE.—(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."—[Mr. McKenna.] Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. MONTAGU: We are anxious to collect sums which are due to us on account of Excess Profits Duty. Sometimes delay is entailed in determining the liability when it has already become obvious that thousands of pounds are due from the company or firm which is liable to be taxed. The firm wants some means of disposing

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    of these sums before the final adjustment of the tax. The suggestion in this Clause is that they should be allowed to pay in advance, before the liability is finally settled, and be entitled to interest for the sums so paid in advance. The effect is just the same as if the companies or firms concerned took out Treasury Bills, except that the Treasury Bills run for fixed periods and the tax may become payable at the end of a broken period.
    Mr. PETO: I would like one word of explanation from the right hon. Gentleman. I wrote to the Chancellor of the Exchequer on the subject of accepting Exchequer Bonds and the like in payment of Excess Profits Duty, and understood that the Treasury had no power without legislation to accept Government securities in payment of Excess Profits Duty. Surely what we are now enacting is a little complicated. We have first this Clause in reference to Excess Profits Duty, and then there is a second Clause enabling Exchequer Bonds to be deposited in satisfaction of Death Duties. The liability to Excess Profits Duty and the levy under the Munitions Act are not a certain amount. We are told that nothing is certain in this world but death, and certainly if the Clause is good enough for the Death Duties it ought to be right in the case of excess profits and the levy under the Munitions Act, in the form that at any time during the year when these duties accrue Government securities will be accepted. They would have them in liquidation of the debt, if it were so stated here. I cannot quite understand the Chancellor of the Exchequer's answer that the Government cannot accept Government securities for settlement of Income Tax and Excess Profits Duty without legislation. He knew he was going to propose legislation to the House, and why could he not have amalgamated those two Clauses into one, and provide that either in the case of Death Duties or Excess Profits Duty Government securities would be accepted?
    Mr. POLLOCK: I do not believe the last two lines of the Clause are really effective for the purpose of carrying out the intention of the Chancellor of the Exchequer. They are rather cryptic:
    "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."
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    What you really mean is that when you ascertain the amount due you come to consider payment of the interest. I believe that if this matter were left over until Report the Chancellor of the Exchequer might insert some words such as "calculating the value of the amount." As the matter stands, it may be that the deposit is larger than the amount of the debt that is to be paid, and, so far as the sum that has been deposited before the date when the debt was actually due is concerned, you would want to allow interest, or you would give interest on the total deposit. As the words stand I do not think they will effect your real purpose, and I suggest the Chancellor of the Exchequer should take the matter into consideration before Report.
    Mr. McKENNA: I admit that the words are very difficult to follow, but if the hon. and learned Member will read them as I do it would be in this way: "In calculating the amount to be so applied"; then you have to go back two lines to the words, "and sums so deposited shall be applied in payment of any such duty"; and then you go back to the first line of the Clause, "Any person may deposit," etc. In calculating what the person has deposited you do not take the actual amount deposited, but the amount of accrued interest, and that amount becomes payable. If you get a deposit which is greater than the amount to be paid, the balance is returned. If these words are not clear, I do not know any form of words by which it could be put more shortly.
    Mr. POLLOCK: I should have thought that the English language was capable of dealing with this in a proper manner, and that the Chancellor of the Exchequer, with his admirable knowledge of Chinese puzzles, would have been able to find a form of words. If English fails, then I suppose we must accept it, but I should have thought that, with a little greater care, the words might have been made plainer to those who desire to understand them. They are the most perfect Income Tax sort of words because they are quite unintelligible to the ordinary reader. On that ground they fulfil the historic tradition that belongs to all Income Tax Acts.
    Clause added to the Bill.

    NEW CLAUSE.—(Power to Transfer Exchequer Bonds in Satisfaction of Death Duties.)
    (1) Any person from whom any sum is due on account of any Death Duty may pay that sum or any part thereof by means of the transfer in accordance with Regulations made by the Treasury to the Commissioners of Inland Revenue of an equal amount of any Exchequer Bonds forming part of an issue which may be approved by the Treasury for the purpose, and any Exchequer Bonds so transferred shall be accepted by the Commissioners in satisfaction of the amount.
    (2) Any Exchequer Bonds so transferred shall be deemed to mature for payment on the date of the transfer, and the principal and interest of the bond when received by the Commissioners of Inland Revenue shall be brought into account as Death Duty revenue in such manner as the Treasury direct.
    (3) Exchequer Bonds shall for the purposes of this Section be deemed to be of the amount of their nominal value with the addition of any interest accrued due but remaining unpaid.—[Mr. McKenna.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. MONTAGU: a great deal of persuasion has been addressed to my right hon. Friend and myself with a view to doing what is proposed in the Clause, and it is believed that it would increase the sale of Exchequer Bonds, and we have responded to those appeals.
    Mr. J. MASON: I welcome this suggestion, which is a convenient one for wealthy individuals. I would suggest the consideration of the desirability of allowing prepayment of Death Duty at compound interest. That would have the great advantage of relieving the State during a considerable period for the payment of any interest at all. I am sure it would be convenient to individuals to be able to pay a portion of Death Duties during their lives, not always in fixed amounts during any particular year. It would be a very much easier form in which to pay them by than doing it by the ordinary form of insuring life. I made this suggestion some years ago, and I cannot help thinking that there are some
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    advantages now which might appeal to the right hon. Gentleman which did not appeal before.
    Question put, and agreed to. Clause added to the Bill.

    NEW CLAUSE.—(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 accountel 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.—[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 is a proposal for the payment of interest on Exchequer Bonds which are registered without deduction of Income Tax. It is a small relief to be able to give to the investors whose Income Tax would not reach, under ordinary circumstances, 5s. in the £, but, at any rate, if they invest their money in Exchequer Bonds or buy Exchequer Bonds which are registered they will not have any Income Tax deducted at the source. In that case the person will be assessed, and will then only pay the Income Tax which is due upon them. It is proposed in order in some way to get over a grievance.
    Clause added to the Bill.

    NEW CLAUSE.—(Extension of Section 2 of the Government War Obligations Act, 1915.)
    (1) Sub-section (1) of Section two of the Government War Obligations Act, 1915, shall apply, and shall be deemed always to have applied, to the sale of securities to the Treasury and to securities sold to the Treasury in the same manner as it applies to the giving of securities to the Treasury in exchange for Government securities and to securities so given in exchange.
    (2) The authority and indemnity given to persons holding securities under Sub-section (1) of Section two of the Government War Obligations Act, 1915, shall apply, and shall be deemed always to have applied, to directors of a company, and to any person holding securities on behalf of any corporation or body of persons depositing securities or giving them in exchange, or selling securities, in pursuance of that Sub-section as amended by this Act, notwithstanding any want of authority from the company, corporation, or body of persons.
    (3) It is hereby declared that Sub-section (4) of Section two of the Government War Obligations Act, 1915, (which removes certain disqualifications attaching to Members of Parliament in connection with the deposit, exchange, and sale of securities under a Treasury securities deposit scheme), applies to any transactions in connection with any such deposit, exchange, or sale as it applies to the deposit, exchange, or sale.—[Mr.McKenna.]
    Clause brought up, and read the first time.
    Motion made, and Question proposed, "That the Clause be read a second time."
    Mr. MONTAGU: The first part of this Clause makes it quite clear that the indemnity given by previous legislation to trustees who deposit securities with the Treasury under the American securities scheme shall also apply when they sell their securities to the State. The second Sub-section gives authority and indemnity to directors and other people holding securities on behalf of corporations. It was thought that this would not be necessary, because the company or corporation could hold a meeting and decide to hand their securities over to the Government. But that causes great waste of time and delay, and this Clause gives power to directors to act on behalf of the company. The third Sub-section is to make quite clear the position of Members of Parliament. Under a previous Act an indemnity was given to Members of Parliament if they sold their American securities to the Government, but there are certain Members of this House who are brokers, and have persuaded their clients to sell securities to the Government. I think the indemnity was already quite clear, but some anxiety has been expressed, and this is a declaratory Clause
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    to make sure that these Gentlemen acting in the capacity of brokers have not thereby vacated their seats.
    Sir G. YOUNGER: Is there any indemnity in the case of Treasury Bills?
    Mr. MONTAGU: Yes.
    Clause added to the Bill.
    Committee report Progress; to sit again to-morrow (Tuesday).
    The remaining Orders were read, and postponed.

OLD AGE PENSIONS.
Whereupon Mr. SPEAKER, pursuant to the Order of the House of the 22nd February, proposed the Question, "That this House do now adjourn."
Mr. WING: I desire to call attention to the question of the Government dealing with old age pensions. The difficulty with the ordinary man is to be found in the way the Government deal with this matter. If you approach the Local Government Board they say that the matter is partly one for the Treasury; and if you appeal to the Treasury they say that nothing can be done without an Act of Parliament. I can assure the right hon. Gentleman that there is a very great agitation on the matter, especially in the North of England, and the Government will really have no rest unless something is done of a definite nature in the direction of supplementing or increasing the present old ago pensions, or in taking some means whereby the old age pensioners may be enabled to meet the increased cost of living. I do hope that the right hon. Gentleman will, in the few moments at his disposal, give us some reasoned argument, or some reason, why the Government have taken the stand of persistently replying: "I have nothing to add to what has already been stated," whilst if you take what has already been stated you find it: "That the Government are unable at the present time to take any steps whatever. I hope that the Prime Minister will give a day for the discussion of this subject or put down the Old Age Pensions Vote for an early discussion, or do something in order to

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allay the increasing agitation going on throughout the country on behalf of increased old age pensions.
Mr. McKENNA: I shall give my hon. Friend as full an answer as I possibly can in the few moments at my disposal. The difficulty between the two Departments is the following: Any general increase of the rate of old age pensions would be a matter for the Treasury. But I must tell him frankly that I do not think a case is made out for a general increase of the 5s. per week. So far as the Treasury is concerned, I shall not be prepared to recommend to the House any such increase, which would be enormously costly. It would be possible, of course, for old age pensioners to I receive outdoor relief in addition to their old age pension, provided there was an amendment of the existing law, which disqualifies old age pensioners from receiving old age pensions if they j are also in receipt of outdoor relief. An amendment of the law would have to be effected by a Bill introduced either by me or by my right hon. Friend the President of the Local Government Board. But the preliminary to the introduction of a Bill amending the law would be the production of satisfactory evidence that there is a real case for giving outdoor relief to any substantial number of old age pensioners. Upon that point I understand that the Local Government Board are I satisfied that there is no real case. That is the whole of the difference, or confusion,
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as my hon. Friend has described it, between the responsibilities of the two Departments. For my part it is quite impossible for me to say whether or not there is a case for local treatment, after inquiry, of individual old age pensioners. That is knowledge which comes within the province of the Local Government Board, and on which I have no knowledge at all. So far as the general all-round increase of rate is concerned, I hope my hon. Friend would not press any such proposal, which would be extremely controversial, and would throw upon the State a burden at a time when the State is burdened to the utmost of its powers.
Sir H. DALZIEL: My right hon Friend will understand that the grievance my hon. Friend brings forward is that the 5s. now is worth about 2s. 6d. I agree that it is difficult to propose money in this matter at the present time, and I only rise to express my regret that when a year ago we pressed the Government for a Committee to inquire into this question of the rise in the price of food, we met with no sympathy whatever, but an absolute denial from that bench that any grievance existed. If we had had a real Committee appointed a year ago to watch this question, I venture to say the food exploiters would not have made their fortunes, and I believe the 5s. a week would have been worth not 2s. 6d., but its full value.
Adjourned accordingly at Twenty-nine minutes after Eleven o'clock.