HC Deb 02 July 1917 vol 95 cc775-94

The following duties of Customs, imposed by Part I. of the Finance (No. 2) Act, 1915, shall continue to be charged, levied, and paid until the first day of August, nineteen hundred and eighteen, that is to say: —

Duty. Section of Act.
Increased Duty on Tea 1
Additional Duties on Dried Fruit 8
Additional Duty on Motor Spirit. 10(1)
New Import Duties 12


I beg to move to leave out the line, "Increased duty on tea."

The duty on tea with this increase is now 1s. per lb., and if this Amendment were adopted it would abolish the extra 4d. imposed by this Finance Bill. There was a very remarkable answer by the Shipping Controller the other day which disclosed that the freight on tea had been raised from about ½d. per lb. to 4½d., and that this 4d. goes to the Government as a sort of illicit profit on tea. That seems a most astounding thing, and if this Amendment were accepted the duty imposed directly by this House would be 8d. per lb., while the Government would still get the 1s. by means of this extra 4d. per lb. which is now charged and retained by them. My Amendment is moved as a protest against the duty being raised secretly and indirectly to 1s. 3d. or 1s. 4d. without the consent of this House. I hope I shall succeed in getting support for this proposal. This matter of the burden of the high prices of food is becoming the most important question in this country. Everybody is talking about it, and in every paper you open you see it. Anyone who is familiar with the scenes which take place in connection with some of the articles on which the heaviest burden rests in the poor streets of the Metropolis will agree that if this House does not pay attention to this matter this House is running serious risk of public disorder. The Prime Minister stated in Dundee on Saturday last on this subject as to the conduct of the Government: We shall even go to the extent of resorting to the Exchequer in order to see that, at any rate, the price of bread is within the compass of the bulk of the people. The Prime Minister also said in that speech: Food must be brought within reach of the poople. The worst method of enforcing economy is by extravagant prices. It means provoking disconient. I am doing what the Prime Minister told me to do. He said that the Government would "go to the extent of resorting to the Exchequer." I am resorting to the Exchequer. There is the Chancellor of the Exchequer opposite, and I ask him to have regard to this extra burden direct and indirect which has been put on tea. The Prime Minister went on to mention two causes for the high prices of food, but neither of those account for the high cost and heavy burdens placed upon tea. I am very sorry that the findings of the Committee of this House on Food have been entirely ignored or neglected. The Government of the day appointed that Committee, which issued three Reports. One of those went into the question of tea. I found myself on the Report of that Committee, and I ask that due consideration should be given to the findings of that Committee, and that those findings should not be tossed into the waste-paper basket. That Committee gave four reasons for the high price and cost of tea. The first was the enhanced profits of the producer. That, I think, is at the bottom not only of this question of tea, but also of wheat and meat and sugar, and other things this House has to consider, and I think that is the direction in which we must look. Then they put the action of certain brokers. We had the case of a wholesale co-operative society. I do not pay undue attention to that matter. The representative of the Food Controller, himself a great co-operator, did not like to follow up that matter, and I do not want to follow it up, and merely leave it there. The third point was found to be the increase caused by freights paid to the shipping companies. Since that date mentioned the freights have been doubled, and are paid, not to the shipping companies, but to the Government. My right hon. Friend who looks so innocent is getting 3d. or 4d. per lb. by that means. The fourth reason given by the Committee is the excessive taxation of this article imposed by Parliament Everything we do here is naturally experimental, and my right hon. Friend who raised the duty to 1s. may do something to regain the confidence of the House which may be a little shaken in his wisdom if he supports my proposal to-day. The Parliamentary Committee appointed by the Government, and presided over by my right hon. Friend who was lately connected with the Board of Trade, found that, the high taxation imposed by Parliament was one of the causes of the high prices of tea, and so I ask the Committee to remember that fact to-day. This is a Clause which will now have to receive some attention from the House. It is the extraordinary proceedings of the Government in its purchases of tea, and especially the new Government. We kept the Government right with regard to tea for the first two and a half years of the War, and up to December last the price of tea was low to the Army. The Army was supplied at 10½d. per lb. The price of tea was low to the people, who were supplied at 1s. per lb., apart from the duty. The whole tragedy with regard to tea, so far as it is a tragedy, was caused by the Government— and the new Government! That is the next reason why I ask the House to consider this matter. A very interesting Report has been published, a Report on War Contracts. In this Report there is a little paragraph about tea to which I desire to direct the attention of the House. It mentions that the price of tea was, as I said, 10½d. per lb. for the whole year. Then it says A great increase took place. How did that increase take place? Because the Government instead of being content to supply their requirements on the market basis in the first, place, prohibited the importation of, tea, and that created a great scare, and secondly, they transferred the buying. Now the Government have seen the effect of buying tea—a most difficult and delicate thing to judge ! I said to my right hon. Friend more than a year ago, and I say it to everybody, and I say it to this House, that they ought to get the best expert advice from the houses who have been accustomed to distribute tea, who have distributed it most honestly during the whole of their lives. They could ask their assistance instead of trying—and perhaps succeeding—to create a revolution of their own, with the most disastrous effects on the country. The Government have gone on to buy tea at Calcutta. It has been announced that they have bought tea at 8¾d. or 9d. a lb., but I have a telegram here stating that to-day the price at Calcutta is 5d. to 7d. per lb.—2d. per lb. less. I do not want to be too hard upon them, because they have no expert advice. They are dealing with the producers, and the producers are always most anxious to get the highest price they can get. [An HON. MEMBER: "What about the middleman?"] You will hear about him presently. I would strongly recommend hon. Gentlemen to read this report from which I am quoting. It states that the Government are buying tea at 8|d. What are the Government doing in London?

The Government have fixed prices for tea in London, and to-morrow a sham sale opens, approved by the Government, and the lowest price in that sale is 1s. a lb.—possibly 11d. ! Twenty-five per cent, of that tea has to be sold at 1s., 35 per cent, at 1s. 3d., and 25 per cent. at 1s. 6d. It is a sort of Dutch, auction, a public sale with the Government coming in to prevent the tea falling down to a reasonable price. That is another reason why I ask this House to have mercy upon the poor consumer, seeing that the Government is proceeding in such an extraordinary way, and to do something drastic in this matter. According to this report, which I have quoted, the Government are buying all the tea they can get, and a figure of 60,000,000 lbs. is mentioned at 8¾d. at Calcutta. The report States it costs 1d. to bring the tea here—which is 9¾d. All the time the Government have issued an Order—it is almost incredible—to the buyers that they must not give less than 1s. 4d. per lb. in London for tea. There never was such a thing done. It is perfectly incredible. The auctions have been suspended for a fortnight. They are to be resumed to-morrow, and these prices, approved by the Government, have been established here in London. I ask the question: If the Government can buy this tea, even at the high price of 8¾d., which is 2d. too high, in Calcutta, and can bring it here at id.—if they can do that for the soldiers why cannot they do the same for the people of this country? That is all I ask.

Anyone who reads this report, a most amazing report, will see that it is full of the ability of the Government buyers. Then I say let them buy for the people. Let them buy us tea, sugar, wheat, meat a bit cheaper than now. Notoriously tea ought not to exceed a 1s. a lb., and yet the Government have fixed this high price in the London sales, as compared with the low price of which I have spoken in Calcutta! The House will say: "Of course, the thing will settle itself in a moment." No, it will not settle itself in a moment, and for this reason: The Government have got the key of the door; the Government will not approve of them buying for the public. The Government has shut out the China tea. It will not let even the Dutch send in their excellent Java tea, and it will not bring in our own tea. So there is an extraordinary situation. I know the answer will be made that it is the shipping situation. We shall have repeated the same facts that we heard in February. If they are true—and I do not question those who make them—then we are bound to reduce the duty, be- cause it is too bad. In this report, which I am quoting, hon. Members will see that the Government argue that they were going to save 9d. per lb. in the tea purchased for the Army. I should like that 9d. saved for everybody. The people would like to get their tea 9d. or 1s. cheaper, yet the Government calmly ask us to accept without question the present situation. The report states that tea can be bought so cheap there while we are paying such a high price for it here! These are very remarkable facts. My hon. Friend beside me says he does not understand it. It is very difficult to understand. The Government have done this, and in a cowardly way. They have established what is called a Tea Control in London; yet they have not issued an Order. They are bound to issue an Order before they set up a Control. They have done it on the one side, where the Food Controller is. At 1s. 3d. and 1s. 6d. per lb. for tea, while all the time the Government have —


The right hon. Gentleman seems to me to be opening up a discussion on the Food. Controller's estimates. We have to discuss the tax only, and not the action of the Food Controller.


I was afraid there would be trouble about the matter. I apologise, Mr. Whitley, it is not necessary for me to go at any length into the points which I have mentioned, but I submit to you, without arguing the matter—I am sure you will allow me the usual latitude, for I am moving that we should reduce the duty—that I am at liberty to give reasons for my proposal; and the one reason is that the Government are buying tea so much cheaper in Calcutta than they are allowing us to buy it here in London. I think they have made a corrupt bargain in the sense of saying to the producer: "If you give us our Army tea at 8d. we will allow you to charge the people the usual figure." However, I cannot go into that now. It is a very curious story. I do not know why the Government did it. The Government said it was recommended by the tea trade. I can contradict that. We have had large meetings in the tea trade to protest against the whole thing. I will not go into the question of Government contracts and buying, because I am going to ask my right hon. Friend for a day on which to discuss them. 4.0 P.M.

Here I merely give the facts, and I say to the Government, in the interests of the consumer, "Since you are charging us secretly in freight 4d. per lb. on the tea—since the establishment of the Tea Control—take off the 4d. per lb. duty in order to equalise the matter." Another reason, which I have already mentioned but have not elaborated, why I think the Government ought to reduce the duty, is because of the policy they have followed of excluding imports. What good can they get by excluding imports? Why not let the Dutch send in some tea


The Germans are interested in the Dutch tea.


Of course, I do not want anything in which the Germans are interested, but I think we are much more interested in the Java estates than the Germans, and precautions could be taken against German trade. Therefore, I think both China tea and Dutch tea ought to be admitted, if they can be got here. I do not want to mix these rather extraordinary facts with the general question of the Clause. I do say they want some examination by this House. I was over in Ireland about three or four weeks ago, and I was asking a poor woman what she paid for tea. She said she now paid 3s. 8d., instead of 2s. 8d., and she bought a pound every week, so that there is a tax of £2 12s. on a family of four, and there is half or two-thirds as great a tax in every house in England. I have great confidence in appealing to the Committee on this Report of the Board of Trade, which went into food prices, and which attached great importance to the high taxes. I commence this Debate, so far as food is concerned, by asking for the reduction of this tax by only 4d. a lb. Perhaps a little late-r on in the Budget I may be able to bring another subject forward.


As indeed you indicated, Mr. Whitley, if I were able to answer the speech with which my right hon. Friend has just favoured us, I should have to know in detail every operation of every Department of the Government, and I confess that I am not, and never hope to be, in that position. As regards this particular proposal, I should at least have, liked some opportunity of verifying the statement that something like 4d. a pound is made on all the tea imported, without freight. I think it is not possible. I am not, however, going to deal with that, but will give an answer on the general grounds. My right hon. Friend has suggested that my predecessor would get back his reputation for financial wisdom, which I did not know he had lost, if he would support trim to-day in taking off the duty imposed last year. I hardly think my right hon. Friend will look upon that as a method of increasing his financial wisdom. This Amendment moved by my right hon. Friend is a very good indication of the difficulty in which anyone stands who represents the Treasury at a time like this, I am perfectly certain my right hon. Friend disliked very much adding 4d. to the Tea Duty last year, and in the same way, when we come to the few cases in which I have added to this kind of taxation, I can assure the House that the last thing one would wish to do would be to put additional burdens of this kind, if they can be avoided. But wo have got to raise money, and I think it may do good if I give the Committee now some indication of the extent to which the additional revenue we have got has come from direct taxation as compared with the extent to which we have got it from indirect taxation. In 1913–14, the last year before the War, the total amount of indirect taxation was £09,000,000. It has been raised in the Budget which we are now considering to the extent of £102,000,000, which, no doubt, represents a very heavy burden on many classes of the community. But compare that with the extent to which direct taxation has been increased. In 1913–14 the amount was £93,000,000; in the present year it has risen to£466,000,000. Or put it in the way of percentage. The percentage of indirect taxation in 1913–14 was 42, and the percentage of direct taxation was 57. Now it has altered to this extent: the percentage of indirect taxation is 18, and the percentage of direct taxation is 82.


Do you include Excess Profits in the direct taxation?


Yes, certainly, I include the Excess Profits Tax in the direct taxation. I did think it would be useful that the Committee should have these facts before them at the beginning of our discussion. I do not wish in any sense to suggest that the arrangement we have now made is not fit. That is to say, in time of war we must get the revenue from those able to provide it. That must be the criterion. But, admitting that, I think the Committee will feel also that some part of the burden should be borne by all classes, and what we should try is to make that burden as fair as possible in its incidence. As regards this particular duty, my right hon. Friend suggested that it was a great crime on the part of the Government that we had taken in a crisis a price which was not represented by the actual freight paid, that is to say, that the Government got the difference. If you were to take it otherwise it would mean not that the consumer would get the benefit, but that the particular trader who happened to get a particular ship at a low freight would get the profit, and neither the State nor the consumer would get the benefit. Then my right hon. Friend made this curious argument, as I think it. He said that the Prime Minister had stated it was the intention of the Government, if necessary, to come to the Exchequer to keep some of the necessary supplies at a reasonable level, and he said, "Since you are doing that, what justification have you for taking into the Treasury the amount you are taking from the freight in this way?" I should put it this way: I should say that if the Treasury has to make good in one direction, it is only right that it should get what it can as compensation for the amount it has to put out in that way. I would make this appeal to the Committee. Of course, all these questions could give scope for absolutely unendless discussion, but I am sure that, on the whole, the Committee will take the view that it is not going to take off duties which were imposed last year, and though, of course, it is natural and right that such subjects should be raised, I hope no unnecessary time will be taken in the discussion, which I am sure the majority of the Committee will regard as academic.

Sir J. D. REES

The producers loyally accepted the increased duty which the right hon. Gentleman opposite wants to take off. In his speech he rather purported to speak for the producer, the consumer, and anybody but the retailer. I am not quite clear why he took that line, nor have I got up to support his Amendment to-day, because I think the producers, having accepted this increase, it is quite clear it cannot be taken off. There is one thing I cannot understand. I understand the present position to be that a ship calls, let us say, on the Malabar coast. It cannot bring any tea home now. I do not know why, when the Government have exhausted the Priority List. I do not know that the right hon. Gentleman opposite is right in imputing to the Government the raising of freights. To what extent is the Government now in complete control of the shipping so as to be able to control the prices? Is the present enormous rise in freights, which, of course, is a very serious burden in the tea trade, such as the Government can entirely control"! Perhaps, some hon. Gentleman when he rises will make that perfectly clear. If there is this order of priority, bow is it tea cannot be put in the ships, and how is it the Government do not control the freights so as to prevent rises to this tremendous figure? I should rather like to have that cleared up. I have taken every means to find out, but I confess I am in some doubt about it. Then how is it, under existing arrangements, tea grown in Northern India and brought to Calcutta is exported, but tea grown in Southern India has no means of being exported? It makes a very unfair discrimination. That is a point I should like to have cleared up. When my right hon. Friend opposite wants us to get Java and China tea, I do not think anybody in the House should sympathise with him. I wish, on the other hand, we would keep out Java and China tea, and only buy Indian and Ceylon tea at a time like this, and so give that preference to British produce which, I think, almost everybody now thinks it is entitled to get.


When the Chancellor of the Exchequer told us just now that to discuss this Amendment involved his having a knowledge of every operation of every Department of the Government, I thought it was rather an interesting remark, and it will, I hope, show him and other Members of this House what will be expected of Ministers when the Government undertakes the management of the whole of the affairs of the State. If they are going to manage the whole affairs of the State, the Leader of the House will very soon find out that the business of the Treasury Bench is not so pleasant as it used to be, and will be rather exhausting. I understand the object of this tax on tea was to make comparatively poor people in this community contribute some taxation. I understand that was the object of indirect taxation. Of course, if it is also the object of the State to reduce the burden upon poor people by a grant from the Exchequer, which is what the Prime Minister apparently contemplates, then it would appear that the object of this tax is really going to frustrate it, and the subsidising of one article of food indicated by the Prime Minister is negatived by a tax on another. The two cannot be defended at the same time. I want to ask the Chancellor of the Exchequer if he could enlighten the Committee on this point: The Government, for reasons which we need not discuss, be they good, bad, or indifferent, are making a very considerable reduction in the importation of tea. Now it is quite obvious, if that takes place, there must be a very considerable reduction in the yield of the tax. Would the Chancellor of the Exchequer be prepared to tell the Committee what he has estimated will be the total loss to the revenue which is going to be brought about by the restrictions imposed on the importation of tea? I would also commend to the Committee this interesting consideration: What is the use of an import duty as a means of raising revenue when by Governmental decree you have prevented importation of the article? How is it possible to finance any country during a great War, when your source of taxation consists of articles the importation of which has been forbidden by decree1? The facts brought to light with reference to tea seem to indicate the futility of any import duties to finance any country during War time. My right hon. Friend raised another question which I think deserves a certain amount of attention. He alluded to the very high rate of freight being paid upon tea from Colombo. I do not know whether his figures are correct, but at any rate the freights are unreasonable.


The Shipping Controller stated that those figures were approximately accurate.


I believe that is so. On this subject I speak with more freedom, because in one respect I am interested because I have been an unwilling party to fixing those rates. I thought they were unreasonable, I protested against them and I withdrew from the Association because I thought it was so utterly unreasonable. Therefore I think I am entitled to tell the House that the rate of freight from China is only about half of the rate from Colombo, consequently by the prohibition of China tea the public is being deprived of a rate of freight coming in at half the cost for a much better article. I think it is outrageous that people should not only be compelled to take a less quantity of tea, but also an inferior quality. I want to direct the attention of the Committee to what I believe a very serious constitutional point raised by my right hon. Friend. We are asked to sanction a duty on tea of 1s. in the lb., but meanwhile the Government is, in fact, without any vote of this House, by an administrative ukase, proceeding to levy another duty upon tea. What has taken place is this. The Government has requisitioned certain steamers, and they pay them a certain rate of freight. They are directing that a very much higher rate of freight is to be charged in respect of the goods transported by the steamers, and the Government are putting into the pocket of the Exchequer the difference between the rate of freight they are directing should be charged to that which they are paying to the shipowner. No one can deny that that is practically levying a tax, whether it is upon the shipowner or the consumer of tea may be a matter for argument, but for the purposes of this discussion I think we may regard it as a tax upon the consumer of tea.

Now it is perfectly obvious that if the Government pursue this policy of requisitioning steamers in the way they are now doing, they do not want a vote of this House to levy a tax upon the importation of any commodity whatever. By pursuing this policy they are arrogating to themselves without any vote of this House the right to levy an import duty upon any commodity which they please, and it appears to me that that is wholly immoral. It is entirely contrary to any constitutional principle which has ever been accepted by this House. I think this is a point which should be better understood. I imagine that there will be a certain number of people sufficiently public spirited to contest these operations in the Law Courts. I think it is the duty of every public spirited citizen who is in a position to bring an action, to bring this matter into the Courts in order to obtain a decision as to the legality of these proceedings. I think this Committee should insist on the Government coming forward with proper legislation to sanction any steps whatever they propose to take in the way of taking money out of anybody's pocket, I do not care whose it is. Money ought not to be taken out of anybody's pocket without an Act of Parliament. The Government are undoubtedly levying a very substantial additional tax on tea—whether it is 2d., 3d., or 4d. per lb. is a matter of argument, and I do not think it matters how much it is, and I will put it for the sake of argument at about 2d. a lb. When the Government without the authority of Parliament are levying an import duty of 2d. a lb. on tea in this way, I do not think this House ought to sanction a duty of 1s. a lb.


The freight is 245s. per ton, and how does that represent an additional tax of 2d. a lb?


I am speaking of the approximate rate. A ton of tea is approximately 1,000 lbs. net weight, the actual ton is 50 cubic feet, therefore I work it out at 220s. per ton of 50 cubic feet. If the right hon. Gentleman chooses to make the calculation he will find the discrepancy between that and the amount he proposes to pay the shipowner is something in the neighbourhood of 2d. in the lb. Therefore I say that the Government. are levying a tax on the tea of 2d. in the lb. which they have no right whatever to do, and if my right hon. Friend will go into the Division Lobby I will vote with him as a protest against the whole illegality of this form of taxation upon tea.


I think I have raised this question before. I do not want to argue whether the tax is high or low, but it is a well established rule of the Constitution and of this House that no grant of money to the Crown shall be made or can be made without the grant having originated by a vote in Committee of Ways and Means in this House. If by any construction this 2d., or whatever it may be, is added fortuitously in this way, I say it is wholly unconstitutional and ultra vires. Of course we are at war, but I think the Government have no right to increase the taxation by a silent method. This is not the only case in which the Government have proposed a special tax. I know a case of a soldier down at Greenwich employed to discharge two cargoes of sugar, and the Government paid this soldier l½d. per hour and charged the owners of the ship 9d. per hour, and they pocketed the difference. Really, that is not strictly just. The Government have no right to charge a single penny more than what they pay. 'To impose a charge which, in fact, is a grant of money to the Crown, from whatever source, must and ought to originate in a Committee of Ways and Means of this House, and if it does not it is ultra vires.


I hope my hon. Friends who have raised a very important point will not think it necessary to press it further. It is quite clear that the Government are proceeding rightly in not allowing the difference of the two rates of freight to go into private pockets. Whether the Government have authority already existing by law to appropriate this difference to the Exchequer is quite another point, and if they have not got authority that is a question to be settled, as my hon. Friend has said, in the Courts of law. If by the regulations under the Defence of the Realm Act they have this authority, then the argument of my right hon. Friend falls to the ground. In either case I do not think there is any possible ground for voting against this tax.


I think the Government has not been sufficiently explicit in reference to the rise which has taken place in the price of tea, and it ought to be explained more fully to the public. The causes ought to be clearly stated which have contributed to this rise in price. There is a great feeling of irritation among consumers of tea, which I do not think would exist if it were clearly explained how this rise has occurred. The result is that they write to the papers and take things for granted; they say that it is a monstrous thing and that someone is making a huge profit and ought to be punished. A tax of 1s. upon tea always means a little more to the consumer than the amount of the duty. The price charged now is anything from 5d. on the lower grades up to a possible l0d. on the higher grades. It should not be forgotten that the cost of tea cases has trebled what it used to be; in fact, they cannot get the wood to make tea chests, and the price of lead for lining the same is double or treble what it used to be, and this must raise the price of tea. The public do not know these facts, and they say that the grocer is charging exorbitant prices and making enormous profits. I am sure that explanation might be given by the Food Controller of the Treasury to show how it is that this rise in price has taken place.

We have often had the question raised of this duty being reduced for Colonial tea. I do not wish to raise this point now during the War, but I wish to say that I got an answer to a question the other day stating that 30,500,000 lbs. of tea had come in from Java last year, and this must mean that £1,500,000 have gone into the pockets of Dutch and Java companies for this produce. I am told that the Germans are largely interested in the Java States and they have largely financed tea production in Java. Therefore I think the action of the Government in prohibiting the export of tea from Java is perfectly correct. I only hope they will allow the ships to call in at Indian ports as they used to do. We have been told that there is not more than three months' supply in the country to meet the present demand, and that prices must rise again shortly if something is not done. Under these circumstances, although we cannot ask for a reduction of the duty upon tea, I hope the Government will arrange for the accumulation of large stocks coming in at a more moderate rate than is now charged, and explain more clearly to the public the causes of the increased cost.


If the right hon. Gentleman who moved the Amendment insists upon going into the Lobby, I shall certainly vote against him on the broad ground of principle which was raised, and very properly raised, by the Chancellor of the Exchequer. The ground which he took was the proportions which are at present being borne by direct and indirect taxation. If he had gone a little further back he would have made an even stronger case than that which he placed before the Committee. I had the curiosity a short time ago to take out the figures on this point since the accession of Sir Robert Peel to office in 1841, and I will summarise very briefly the result of that inquiry. Broadly speaking, the proportions between those two classes of taxation have been almost precisely reversed in the course of three-quarters of a century. Whereas when Sir Robert Peel came into power in 1841 the percentage paid by indirect taxation was 73 as against 27 per cent, paid by direct taxation, ten years later, in 1851, the proportion of indirect taxation was 67 per cent., and direct taxation, therefore, 33 per cent.; in 1881—I skip over certain decades—the proportion paid by indirect taxation was 60 per cent., and by direct taxation therefore 40 per cent.; in the first year of the present century, if 1901 was the first year, the proportions were almost exactly equal, 50.6 per cent, being the indirect taxation and 49.4 per cent. the direct taxation; ten years later, in 1910–11, 43 per cent, was the indirect taxation and 56 per cent, was the direct taxation. This went on continuously down to last year, when the proportions were, indirect taxation 28 per cent, and direct taxation 72 per cent.

One or two very obvious reflections are suggested by this very remarkable series of figures. In the first place, as I have already said, it will be observed that in the course of three-quarters of a century the proportions between the two classes of taxation have been almost exactly reversed, because whereas in 1841, the year in which Sir Robert Peel came to power, indirect taxes contributed 72 per cent., last year 72 per cent, was contributed by direct taxation. The second point is the unbroken consistency of the transition from the old financial system to the new. If I had given the figures in greater detail, they would have indicated an absolutely uninterrupted tendency. That is worth bearing in mind. The third point which I desire to emphasise is the very gradual nature of the transition. Down to the year 1909 there was no violent jump—it was a very easy gradation—but from that, point onwards the tendency has been very notably accentuated, and the point which the Chancellor of the Exchequer has incidentally raised is one which ought to be very carefully considered by this Committee, namely, whether we can safely go further in this direction.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."


I beg to move to omit the Clause, because the principle contained in it of legislation by reference is unconstitutional and most irregular. If hon. Members will look at the Clause they will find that we are not given the particulars of the different duties, but are simply referred to Part I. of the Finance (No. 2) Act, 1915. I have had some difficulty in getting possession of that Act at the Vote Office, but all the details of these particular taxes are to be found there in Sections 1, 8, 10, and 12, which give the increased duty on tea, the additional duty on dried fruits, the additional duty on motor spirit, and the new import duties. If anyone takes the trouble to study that Finance Act they will find that they are given at considerable length and with some detail. These duties are most important, and they ought to come up again for review. This method of asking us to pass a Finance Bill by reference is most irregular. We know that we have to have legislation by reference in ordinary statutory legislation, but if there is one thing more than another which is the very bedrock of British Finance it is that we have an annual statement, and that we are entitled to have the taxes brought before us every year. We ought to have the produce of these taxes with the additions from year to year. We know, owing to the exigencies of the situation, that we have to put up with token Estimates, but I hope that we have not yet arrived at token taxes. It seems to me that we are entitled to have the details of the taxes we are asked to pass, and I emphatically protest against this method of asking us to pass Part I. of the Bill applying to a very considerable number of taxes without giving us an opportunity of discussing them. We know that the balances in every Department are surrendered to the Treasury every year. We are entitled to know the produce of the taxes, and we ought to have a detailed statement from the Chancellor of the Exchequer when he asks us again to pass them. He ought not to ask us to pass them by reference to an Act already on the Statute Book.


When I spoke before I asked the right hon. Gentleman if he could tell me what was the loss of Tea Duty consequent upon the restrictions on importation?


I had detailed Estimates, of course, at the time of my Budget statement, but I have not got them here, and I should have to send for them. It must be plain to the Committee and my hon. Friend that, knowing there were restrictions in force and more to come, it was impossible to make any Estimate with anything like security, and I do not think it would be of much assistance if I gave the Estimate.

Sir J. D. REES

Does the right hon. Gentleman admit responsibility for the extra freight charge?


I would like my right hon. Friend to give this Motion just a little consideration. This House has really no Finance Act before it at all except as regards the Income Tax and Excess, Profits Tax. It is legislation by reference in a permanent form. When the different taxes were brought up in the old traditional course we had a reasonable talk about them. Our experience this afternoon provides that is not so now. We used to have the taxes on tea, sugar, and all the other articles, but now they are all swept away and darkness overshadows the sea. The country has no opportunity of knowing what it pays by a particular tax or what is done. I asked what was covered by these taxes. They are very voluminous There are the tea, dried fruits, motor spirit, and new import duties. What, for example, is meant by "new import duties"? No one knows. They ought to have been given in a separate Clause with full details. The Chancellor of the Exchequer is not responsible. My right hon. Friend (Mr. McKenna) introduced them, some years ago with a great flourish of trumpets, and we thought that there was going to be a new policy. Does the right hon. Gentleman intend developing that policy, or will he let it die out? The new import duties are not doing very well. In 1915–16 they brought in £600,000. Last year they produced less than £300,000. Trade is. disturbed, a great staff is employed, and we get a dwindling duty. I will say nothing about motor spirit, but the duty on dried fruits has also diminished, and it seems to me a pity that such articles should be taxed at all just now. There is perhaps this excise for the right hon. Gentleman. This Clause follows exactly the Finance Bill of last year. That was a bad example,, and if the right hon. Gentleman, with regard to these duties, which are really very important, although they bear a very small proportion to the whole taxation, would say that he would give us the facts in the old form in future, it would be a very useful reform on the method introduced by my right hon. Friend.


I find myself between two difficulties. I do not like not to answer any point, but on the other hand I do not like to make a speech which may probably result in us not getting on so quickly with the business as we otherwise might do. It is obvious that the point raised by my hon. Friend is a very big issue indeed. I am not going to discuss it, but I should like to say, especially to my hon. Friend opposite (Mr. Holt), that I do not think he quite realises the extent to which that pure doctrine of pure finance would carry him in time of War. It would mean that you could not do what we have done in the case of thousands of articles. You could not requisition articles for the War Office and for the general public except by getting an Act of Parliament.


Could not you requisition and resell, and have a profit on the resale?


My right hon. Friend will excuse me, but you could not do anything to create additional revenue in any shape or form. Just consider this particular instance. It is not so simple as some people seem to think. If it were the case that the whole of any article was brought in on requisition rates it would be a simple thing to say that the charge to the consumer should be a certain amount and nothing more. But expediency comes in in this way. If you are trying to regulate prices all round the duty of the Food Controller is to try and prevent any article of necessity going to an excess price and not to prevent a certain rise in other articles. Therefore the expediency comes in from that point of view. Is it or is it not right to allow this particular article to rise to a certain level in order to have the means of preventing the price of other articles rising. But it is much more difficult than that. Anything that comes into this country comes in in British ships and neutral ships which are used to bring in a much larger proportion than formerly. I think it is quite obvious there must be some latitude in matters of this kind. As regards the point raised by the right hon. Gentleman, I remember the discussion very well on the import duties of specific articles. My right hon. Friend was one of those who thought it better to have full-fledged Tariff Reform, and I remember telling him at that time that no tariff reformer would try to advocate a policy of Tariff Reform by his particular method. I thought so, and the reason for it was that at that time the limit on imports by the restrictions and absence of shipping and other things had not gone to the length it has gone now. The then Chancellor of the Exchequer thought, in those circumstances and I agreed with him, that he should try to prevent the consumption of unnecessary articles by taxation and by restriction, and the conditions are now so altered and had been so affected by the absence of shipping that I would not dream of putting on extra duties. But that is a different thing from taking them off. My expert advisers tell me we can get the taxation without employing additional men. The machinery is now all working, and I can assure my right hon. Friend that in those circumstances it would be carrying prudery to the point of absurdity to take off this source of revenue.


I beg to ask leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.