Commons Sitting of 3 June 1918

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

PRIVATE BUSINESS.
Brixham Gas Bill [Lords],
Read the third time, and passed, with Amendments.
Londonderry Corporation Bill,
Read the third time, and passed.
County of London Electric Supply Bill [Lords],
Nelson Corporation Water Bill [Lords],
Wands worth, Wimbledon, and Epsom District Gas Bill [Lords],
Yorkshire Electric Power Bill [Lords],
Read a second time, and committed.
Motherwell Water (Supplementary Supply) Provisional Order Bill,
Read the third time, and passed.

BOARD OF EDUCATION.
Copies presented of Regulations for Secondary Schools, in England, excluding Wales and Monmouthshire [by Command]; to lie upon the Table.
COLONIAL REPORTS (ANNUAL).
Copy presented of Colonial Report No. 958 (Gilbert and Ellice Islands, Report for 1916–17 [by Command]; to lie upon the Table.
MINISTRY OF MUNITIONS (NATIONAL AND ROYAL AIRCRAFT FACTORIES).
Copy presented of Annual Accounts of the National Factories and of the Royal Aircraft Factory for the year 1916–17, with the Report of the Comptroller and Auditor-General thereon [by Act]; to lie upon the Table, and to be printed. [No. 68.]
ALKALI, Etc., WORKS REGULATION ACT, 1906.
Copy presented of Fifty-fourth Annual Report on Alkali, etc., Works by the Chief Inspector, being for 1917 [by Act]; to lie upon the Table.
MINISTRY OF FOOD.
Copies presented of Order amending the Public Meals Order, 1918, and Rice (Retail Prices) Amendment Order, 1918, made by the Food Controller under the Defence of the Realm Regulations [by Command]; to lie upon the Table.
RAILWAY ACCIDENTS.
Copy presented of Report of the Board of Trade upon the Accidents that have occurred on the Railways of the United Kingdom during the year 1917 [by Command]; to lie upon the Table.

MINISTRY OF RECONSTRUCTION.
Copy presented of Report on Conciliation and Arbitration by the Committee on Relations between Employers and Employed [by Command]; to lie upon the Table.
Copy presented of Report of the Agricultural Policy Sub-committee of the Reconstruction Committee [by Command]; to lie upon the Table.
Copy presented of Summary of Evidence taken before the Agricultural Policy Sub-Committee of the Reconstruction Committee [by Command]; to lie upon the Table.

INTERMEDIATE EDUCATION (IRELAND).
Copy presented of Rule determining the maximum number of superintendents to be appointed [by Act]; to lie upon the Table.
ORAL ANSWERS TO QUESTIONS.
  WAR.

    ENEMY ALIENS.
    l. Brigadier-General CROFTasked the President of the Board of Trade whether

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    letters patent have been granted by the Patent Office to enemy aliens during 1917; and whether any patents since the War have been actually issued to German subjects resident in Germany?
    The PRESIDENT of the BOARD of TRADE (Sir Albert Stanley): The reply to both parts of the question is in the negative. I am sending to the hon. and gallant Gentleman a copy of the procedure followed by the Patent Office in cases of applications for patents on behalf of enemy subjects.

    MUNITIONS.

      WORKERS' TRAVELLING FACILITIES.
      Mr. ROWLANDSasked the President of the Board of Trade whether the Railway Executive Committee have cancelled the facilities which up to now have been given to munition workers who are working away from their homes of week-end railway tickets at special rates; if so, is he aware that it will affect many thousands of munition workers and in many cases prevent them visiting their families; and will he therefore reinstate the special facilities?
      Sir A. STANLEY: The withdrawal of the limited number of cheap week-end tickets formerly issued to employés in controlled establishments was decided upon as a result of the most careful consideration of the whole of the circumstances by my right hon. Friend the Minister of Munitions of War and myself, and I cannot hold out any hope that these special facilities can be restored. I would remind the hon. Gentleman that War Munition Volunteers and certain other classes of munition workers are still granted special travelling facilities on the occasion of a generally observed trade holiday.
      Mr. PRINGLE: Can the right hon. Gentleman say whether the Minister of Munitions will grant these munition workers an increase of wages in view of the increased cost of travelling— another 12½per cent?
      Sir A. STANLEY: That question must be addressed to the Minister of Munitions.
      Mr. ROWLANDS: Is the right hon. Gentleman prepared to take into consideration exceptional cases where men have to go long distances?
      Sir A. STANLEY: All the relevant facts were most carefully considered. We did not come to this decision without carefully considering all aspects of the case. I am afraid that it would be very difficult to make any exception whatever.
      Mr. G. TERRELL: Is it a fact, as suggested by the question, that there are many thousands of persons interested in this matter?
      Mr. PRINGLE: Oh, yes!
      Sir A. STANLEY: It would be true to say that several thousand tickets were issued per week.

    RAILWAY SEASON TICKETS.
    Sir ARTHUR FELLasked the President of the Board of Trade why the price of a third-class season ticket from Yarmouth to Norwich has been raised 71 per cent. or from £2 6s. per. quarter to £3 18s. 9d. per quarter, instead of the 20 per cent. stated in the Order; and why the railway company cannot continue to issue the tickets on the same conditions with the 20 per cent. increase only added?
    Sir A. STANLEY: I understand that the Great Eastern Railway Company have now arranged to issue such season tickets as those referred to at the rates previously charged, subject to the 20 per cent. in crease only.
    Mr. ALBION RICHARDSONasked the President of the Board of Trade whether, in view of the fact that it is not clear that the new Regulations relating to the issue of season tickets given to men who were serving in the Army and Navy prior to the 1st January, 1917, and who have since been, or who are hereafter, discharged there from, the same rights of obtaining season tickets in the districts in which they live as they would have had if they had been season-ticket holders in such districts prior to the 1st January, 1917, he will forthwith issue an Instruction to the railway companies making it clear that it is the intention of the Government that such discharged men shall have such rights?
    Sir A. STANLEY: Yes, Sir; I will in form the Railway Executive Committee that this is the intention.
    Mr. GILBERTasked the President of the Board of Trade whether he can arrange with the Railway Executive Com-

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    mittee that the facilities which have been extended to certain season tickets by allowing their use on two or three competing systems in the same town or district shall be applied to all season tickets in the country where there are competing lines or systems, in order to facilitate travelling while the present shortage of train services exists?
    Sir A. STANLEY:I will bring the hon. Gentleman's suggestion to the notice of the Railway Executive Committee, but I may remind him that arrangements already exist under which, when the necessity arises on account of previous reduction of train services, the availability of season tickets may be extended.
    Mr. ROWLANDS:Could not the principle which has been adopted in some cases be applied all round, in view of the shortage of trains and the enormous delay some men have to suffer through not being able to travel by another route?
    Sir A. STANLEY:If my hon. Friend will bring to my notice any case where it is desirable and where it is not done, I will be glad to consider it.
    Mr. CHANCELLOR:Could it not be made general instead of dealing with particular cases?
    Sir A. STANLEY:I am afraid that it could not be made completely general. There are certain exceptions which must be guarded, but, apart from that, I believe it is general.
    Mr. BOWERMANasked the Prime Minister whether he has received from municipal and other representative bodies resolutions indicating the feeling created by the action of the Railway Executive Committee in increasing the fares payable by season-ticket holders; whether he is aware that hardship has thereby been inflicted upon many thousands of business men, women, and young persons who must of necessity continue to travel to and from their work by train; and whether the representations made to him upon the subject will be considered, with a view to the railway companies reverting to their former scale of charges for season tickets?
    Sir A. STANLEY:The Prime Minister has asked me to reply to this question Resolutions of the nature referred to have been received, but, while I greatly regret any hardship which an increase in the price
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    of season tickets may involve, I fear that, for the reasons that I have already explained to the House, the increase is necessary.
    Mr. BOWERMAN:Will the right hon. Gentleman be prepared to receive a deputation?
    Sir A. STANLEY:I never make it a practice to refuse to see deputations, and I do not think I can refuse to see a deputation on this matter. I have agreed to receive a deputation from Southend tomorrow, but I am afraid the answer I have given to-day must be really final.

    RAILWAY COMPANIES (ACCOUNTS).
    Mr. GILBERTasked the President of the Board of Trade whether he will publish as a White Paper the accounts of the railway companies, showing revenue and expenditure for each year since the Government assumed control, and also the amount of the yearly contribution, if any, of the Government to the respective companies?
    Sir A. STANLEY:Under present arrangements the railways are worked as a single unit, and the receipts attributable to the traffic actually conveyed over any particular company's lines are not ascertained. The total revenue and expenditure of the railway companies is published in the Statistical Abstracts, and the payments made under the agreement with the railway companies are shown in the Appropriation Accounts of the Vote of Credit. These payments are made to the railway companies as a whole, and not to the individual companies.
    Colonel W. THORNE:Is the right hon. Gentleman aware that the public in general think that the increase in railway fares and season tickets is going directly into the pockets of the shareholders of the companies, and will he give the House an assurance that the railway companies are not making these huge profits, as supposed?
    Sir A. STANLEY:Certainly. I am not aware that the public are under any false impression, but I am quite willing to make it perfectly clear that no part of the revenue derived from the increase upon season tickets or upon ordinary tickets will go to the railway company. The whole of it goes to the State.
    Mr. LOUGH:Would my right hon. Friend have any objection to publishing a balance-sheet up to the end of the last financial year or some other convenient date, showing the profit on the working?
    Mr. SPEAKER:The right hon. Gentleman must give notice of that question.

    PRISONERS OF WAR.

      COAL MINING.
      Colonel Sir FREDERICK HALLasked the President of the Board of Trade if, without detriment to the public interest, he can state what were the difficulties the Coal Controller found that precluded German prisoners of war from being employed in.mines; whether he is aware of the shortage of miners in this country owing to their having joined the Colours; and whether, considering the urgency of the matter, the difficulties referred to can be overcome, with a view to the employment of the prisoners in the manner indicated?
      Sir A. STANLEY: The difficulties in the way of the introduction of German prisoners of war to work in coal mines are not such as can be readily overcome, but the Controller of Coal Mines is still considering to what extent they can be employed upon work connected with coal mining.
      Sir F. HALL:If I put the question down in a fortnight's time, will the right hon. Gentleman be able to give me any information?
      Sir A. STANLEY:If I have anything new, I shall be glad to give my hon. Friend the information.
      Mr. OUTHWAITE:Would it not be preferable to secure the exchange of British miners who are prisoners in Germany for German prisoners here?
      Sir A. STANLEY: That is a question which I am not in a position to answer.

      EXCHANGE (HAGUE CONFERENCE).
      Mr. A. RICHARDSONasked the Secretary of State for Foreign Affairs whether he can now state whom the Government propose to appoint as delegates to represent this country at the conference with Germany to arrange for the exchange of prisoners; whether they
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      propose to include Lord Newton and General Belfield in their number; and whether the Government is prepared to afford this House an opportunity of discussing the proposed appointments before they become effective?
      Mr. JAMES HOPE (Lord of the Treasury): As I informed my hon. Friend on Friday, this is really a question for the Leader of the House, and I understand he has a Private Notice question on the subject which he will answer to-day.
      Mr. JOYNSON-HICKS: asked the Prime Minister whether he has any statement to make with regard to the forthcoming conference at The Hague in connection with the exchange of prisoners of war?
      The CHANCELLOR of the EX CHEQUER (Mr. Bonar Law):In view of the importance which the Government attach to this subject, they have appointed the Home Secretary, in addition to Lord Newton and General Belfield, to act as the British delegates.
      Sir F. HALL:Will the question of prisoners in Turkey be taken into consideration?
      Mr. BONAR LAW:Not, of course, in connection with this delegation.
      Mr. JOYNSON-HICKS:When is the conference likely to take place?
      Mr. BONAR LAW:My right hon. Friend and his colleagues propose to go in a day or two.
      Mr. A. RICHARDSON:Will the House have an opportunity of discussing the appointments of Lord Newton and General Belfield before they are confirmed?
      Mr. BONAR LAW:The appointments have already been made, and I should be very much disappointed if the House is not satisfied with them.
      Mr. PR INGLE:Will any attempt be made to negotiate with the Turkish Government for the exchange of prisoners?
      Mr. BONAR LAW:I believe efforts have been made, but I should like notice of the question.
      Mr. JOYNSON-HICKS:Can the right hon. Gentleman assure the House that they will have the very widest discretion to discuss the whole question of prisoners, both in Germany and Holland?
      Mr. BONAR LAW:They will have a very wide discretion.
      Mr. WHITEHOUSE:Will they be protected from Lord Northcliffe's attacks?

      GRONINGEN CAMP, HOLLAND (RATIONS).
      Colonel THORNEasked the First Lord of the Admiralty whether he is aware that there is a scarcity of food at the prisoners of war camp, Groningen, Holland; that some time back the Admiralty stated that there was no need for parcels to be sent to the Navy men interned in Holland, as they could obtain what they wanted through the canteen if money was sent in lieu; that now the conditions have changed; if he can see his way to allow parcels of food to be sent to the prisoners of war again; and, if not, what action he proposes taking in the matter with a view to the Navy men being better supplied with food?
      The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): Representations as to the inadequacy of the rations supplied to the men interned at Groningen have been received. It is understood that the present scale of rations is the same as that authorised in the case of the civilian population of Holland. The Admiralty are, however, in telegraphic communication with the Naval Attaché at The Hague on the subject generally. Any action in the direction of sending food from this country, whether by means of parcels or otherwise, could, however, only be taken with the sanction of the Netherlands Government, who are responsible for the scale of rationing.
      General CROFTasked the hon. Member for Sheffield (Central Division) what are the monthly rations of the interned prisoners at Groningen, Holland; whether they are considered adequate; and, if not, what steps he intends to take to improve their condition?
      Mr. HOPE: The answer is covered by the answer given by my right hon. Friend the Secretary to the Admiralty to No. 26.
      General CROFT: Is the right hon. Gentleman's Department taking steps to try to arrange an exchange of these prisoners in view of the rations, which are notoriously inadequate?
      Mr. HOPE: That is bound up with the larger question of the exchange of prisoners as a whole.
      General CROFT: Are the prisoners in Holland included in these negotiations?
      Mr. HOPE: There is nothing to prevent their case being discussed, and I have no doubt it will be discussed.

      PRISONERS OF WAR DEPARTMENT.
      Mr. JOYNSON-HICKSasked the Prime Minister what exactly are the powers and duties of Lord Newton as head of the Prisoners of War Department; and whether the negotiations with Germany are being conducted by him or by the Foreign Office?
      Mr. BONAR LAW: The Prisoners of War Department, which had previously been a Department of the Foreign Office, was reconstituted under a decision of the Cabinet dated 26th October, 1916, since which date the Foreign Office has ceased to be responsible for the policy pursued in regard to prisoners of war. Under the above decision the Prisoners of War Department works n conjunction with other Departments concerned in questions affecting prisoners of war, and. in case of a difference of opinion involving any questions of policy arising between them, Lord Newton, as Controller of the Prisoners of War Department, was directed to bring the matter before the Cabinet.
      Mr. JOYNSON-HICKS: If there had been delay in ascertaining what was going on between France and Germany, would Lord Newton or the Foreign Office be responsible?
      Mr. BONAR LAW: Clearly the Foreign Office would not be more responsible than the rest of the Government. But, as a matter of fact, Lord Newton could not be responsible, for he had no knowledge.

      BREAD CHARGES.
      Sir C. KINLOCH-COOKEasked the Under-Secretary of State for War whether he is aware that parents are charged £2 15s. a month for bread sent from Copenhagen to their sons who are prisoners of war; and whether, seeing the rations which are allowed to conscientious objectors in this country for doing comparatively little work, he can see his way to supply men who have fought for their country and had the misfortune to-be taken prisoners with bread rations free of charge to their parents?
      The UNDERSECRETARY of STATE for WAR (Mr. Macpherson): The charge made for bread sent from Copenhagen is 10s. per four weeks in the case of officers and 7s. 6d. for other ranks. In neither case does this cover the cost involved. Should relatives not be in a position to meet this charge, the bread is sent free.

    MILITARY SERVICE.

      RUSSIAN SUBJECTS (COMPULSORY RECRUITING).
      Mr. KINGasked the Secretary of State for Foreign Affairs whether he has received through the British diplomatic agent in Moscow a request from the Russian Government not to conscript any more Russian subjects in this country; and, if so, what answer has been returned?
      The MINISTER of BLOCKADE (Lord Robert Cecil): The Russian People's Commissary for Foreign Affairs has forwarded to His Majesty's Government a request that the necessary measures may be taken to stop the compulsory recruiting of Russians in England. We are still considering the nature of the reply to be returned.
      Sir H. NIELDasked the Secretary of State for Foreign Affairs whether the British Government claims the right to impress foreigners into her armies; if so, whether there is a corresponding right for Russia to call up British subjects resident in Russia; does the Soviet Government recognise exemption granted to British subjects resident in Russia; by whom are such exemptions being granted; and are there any and what corresponding exemptions being granted to Russians in this country, and by whom?
      Lord R. CECIL: The hon. Member is aware that, by the terms of the Military Service (Conventions with Allied States) Act, His Majesty's Government have power- to incorporate in the British Army citizens or subjects of an Allied State, with whom His Majesty's Government have made a Convention or agreement for the purpose, if the persons in question do not elect within a certain period to return to their own country for service in its Army. The Military Ser vice Agreement with Russia entitled His Majesty's Government to make use of this power over Russian subjects, and gave the Russian Government a corresponding right to call up British subjects
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      in Russia. I do not think that the question of the Soviet Government recognising or not recognising exemptions from military service issued to British subjects arises, since there is now no Army in Russia from service in which British subjects could be exempted. As regards the last part of the question, I would refer the hon. Member to the reply returned to the hon. Member for North Somerset on 30th April last.
      Sir F. HALL: If these Russians are not going to be put into our Army, would it not be better in the circumstances that they should be deported to their own country?
      Lord R. CECIL: I will consider that.
      Colonel THORNE: Can the Noble Lord state whether there is any Soviet Government? Is he aware that anarchists do not believe in government at all?
      Sir H. NIELDasked the Minister of National Service whether Ukrainians or Poles resident in the United Kingdom are being called up for national service in the British Army; and, in such event, whether, in determining the status of an alien-born subject and his liability for military service, Russian or British law should be applied, and in particular in deciding the question who is a Russian subject within the terms of the Convention with Russia of July, 1917?
      The PARLIAMENTARY SECRETARY to the MINISTRY of NATIONAL SERVICE (Mr. Beck): Natives of the Ukraine or Russian Poland, who are resident in this country, and are of military age, as prescribed by the Anglo-Russian Military Service Convention, are being called up for service in the British Army in the same manner as other Russian subjects in this country. The latter part of the question appears to relate to the construction of an Act of Parliament, and if a case arose where the liability to military ser vice was disputed, I assume it would be a matter for the Courts to decide.
      Sir H. NIELD: asked the Secretary of State for Foreign Affairs whether he is aware that Mr. Abraham Glucksmann, of New York, has been arrested by the London police and fined £20 for failing to report himself under the Russian Convention of 1917, he having received his first papers as an American citizen and having formally renounced his allegiance to Russia, and that his arrest has been

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      effected notwithstanding that he had previously voluntarily offered to serve in the English Army but was refused acceptance; and if he will state what steps he proposes to take to remove the results of this action?
      The UNDER-SECRETARY of STATE for the HOME DEPARTMENT (Mr. Brace): My right hon. Friend has asked me to reply to this question. I am advised that the fact that this man made a Declaration of Intention to become an American citizen, and purports to have renounced allegiance to Russia, does not confer American citizenship on him or affect his Russian nationality. I am not aware that he volunteered for service in the British Army and was refused. The information in my possession shows that after making several endeavours to leave this country for America in 1916 he applied to go to Russia under the Convention in 1917, but failed to take the opportunity of doing so which was afforded him. I see no ground for taking any action in the case.

      DISCHARGED SOLDIERS (RE-ENLISTMENT).
      Mr. HOGGEasked the Minister of National Service whether he has yet pre pared any scheme offering special terms to discharged men who wish to re-enlist; and, if so, can he give the details?
      Mr. BECK: I regret I have nothing to add to the answer given on 28th May. I am in consultation with my right hon. Friend the Under-Secretary of State for War, and it is hoped that an announcement will be made shortly.

      ROYAL ARMY MEDICAL CORPS.
      Mr. SNOWDENasked the Under secretary of State for War if Private N. B. Grimley, No. 57634, G Company, 3rd Yorks, West Hartlepool, who enlisted in the Royal Army Medical Corps from the Home Hospitals Reserve, is now in an Infantry unit; and whether, in view of his statement on 5th February, 1918, that Royal Army Medical Corps men who en listed from the Home Hospitals Reserve were not being transferred to combatant units, this man may be returned to the Royal Army Medical Corps in accordance with his own request?
      Mr. MACPHERSON: Instructions have now been given for Private Grimley to be retransferred to the Royal Army Medical Corps.

      NON-COMBATANT CORPS, SWINDON.
      Mr. SNOWDENasked the Under secretary of State for War if he will have inquiry made into the treatment accorded to the men of No. 4 Southern Company, Non-Combatant Corps, Chiseldon Camp, Swindon, who are subjected to all kinds of persecution at the hands of the officer commanding, who stops their leave, in violation of Headquarters' instructions, and gives the men fourteen days' C.B. for inadvertently omitting to remove numerals from fatigue tunics to walking-out tunics, and who, contrary to the practice of other units at this camp, furnishes no minor offences report to Headquarters?
      Mr. MACPHERSON: If the facts are as stated by my lion. Friend, the men concerned should exercise their rights under Section 43 of the Army Act and: paragraph 439 of the King's Regulations.

      TIME-EXPIRED SOLDIER (CONSCIENTIOUS OBJECTOR).
      Mr. SNOWDENasked the Under secretary of State for War whether he is aware that Private A. Child, No. 7631, 7th Royal West Kent.Regiment, enlisted on 18th March, 1904, for twelve years, to be extended to thirteen years in the event of war, which period expired on 18th March, 1917; whether Child then applied for his discharge and was refused; whether he is aware that Child became a conscientious objector to killing his fellow men in 1908, but felt that his oath of allegiance was binding until he had completed his term of enlistment; whether he is aware that Child refused to obey orders in March, 1917. when his time expired, and was. sentenced to eighteen months' hard labour, one month remitted by district court-martial; whether he is aware that he was afterwards sent back to France, where he has since been court-martialled twice, receiving sentences of twenty-eight days' field punishment and nine months' hard labour, respectively, the latter term having just expired in No. 5 Military Prison, France; whether he is aware that this man is now awaiting trial by court- martial for again refusing to obey orders; and, seeing that all this procedure is contrary to Army Order of 25th May, 1916, which provides for the soldier who has committed an offence against military discipline and states that the offence was the result of a conscientious objection to military service shall be sentenced to imprisonment and not to detention and

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      shall be confined in the nearest civil prison, will he see that Child is sent to this country to serve his sentence, so that he may have an opportunity of appearing before the Central Tribunal to have his case investigated?
      Mr. MACPHERSON: If the facts are as stated by my hon. Friend, I can only say that it has not been our practice to permit the transfer to civil prisons, in the event of their being sentenced to imprisonment by court-martial, of men whose conscientious objection has been evinced under circumstances such as those disclosed in the question.
      Mr. SNOWDEN: Is it not a fact that in the Army Instruction on this point it is distinctly stated that these men would be sent even from France to this country to carry out their sentences?
      Mr. MACPHERSON: This is quite an exceptional case. This man enlisted in 1904 as a soldier for thirteen years' service. His position is entirely different from that of a man who is called up as a conscientious objector under the Act.

      EX-WARRANT OFFICERS.
      General CROFTasked the Under secretary of State for War whether, under the new Military Service Act, ex-warrant officers who come under the new age ex tension will be reinstated in their old rank; and whether any such warrant officers who volunteer before being called up will be given their former rank?
      Mr. MACPHERSON: The answer to both parts of my hon. and gallant Friend's question is in the affirmative, provided such warrant officers are medically fit, and were not discharged from the Army for inefficiency or misconduct.

      CONSCIENTIOUS OBJECTORS.
      Sir C. KINLOCH-COOKEasked the Secretary of State for the Home Department whether he is aware that the conscientious objectors stationed at Knutsford have been transferred to the Princetown Settlement in South Devon; whether he is aware that the village of Princetown is a summer resort for people in the West Country seeking health and change of air and that the inhabitants resent the presence of the many hundreds of conscientious objectors now overrunning this part of Dartmoor; that
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      these men are under no discipline out side working hours; and that practically Princetown and its immediate neighbour hood are now in possession of conscientious objectors; will he say why conscientious objectors were taken away from Knutsford; whether he received any complaints from the local residents about the conscientious objectors while there; and, if so, what was the nature of the complaints?
      Mr. BRACE: The answer to the first three parts of the question is in the affirmative, except that some only of the conscientious objectors at Knutsford have been transferred to Princetown. Strong complaints were received from Knutsford against retaining a work centre for conscientious objectors in a populous centre in which there were two auxiliary hospitals for wounded soldiers, and it was. decided, before the recent disturbances at Knutsford, to move the centre from that place. The men at Princetown work for the greater part of the day and remain under certain disciplinary restrictions out of working hours.
      Sir C. KINLOCH-COOKE: Were there no other causes of complaint than the fact that these two hospitals were in the neighbourhood?
      Mr. BRACE: There were, but those causes of complaint were not the reasons for the removal.
      Sir C. KINLOCH-COOKEasked the Secretary of State for the Home Department whether his attention has been, called to the allegation that on 11th May two conscientious objectors stopped to sneer at a man who had lost his foot in France, that one of the conscientious objectors was a professional pugilist, and: that a soldier passing thrashed one of the conscientious objectors, whereupon the other conscientious objector joined in the fight and struck the soldier with a stick over the head and face; and will he see that men who apparently have no objection to fighting British soldiers are sent to take their proper place in the Army at the front, so that their fighting proclivities may be used against the enemy?
      Mr. BRACE: The Committee saw a reference to this incident in the Press and made immediate inquiries with a view to disciplinary action. It has, however, been found impossible so far to identify any of the parties.
      Sir C. KINLOCH-COOKE: Does the right hon. Gentleman mean to say that he has not sufficient control over the conscientious objectors to enable him to discover who were these two men who were walking along the road?
      Mr. BRACE: If the hon. Member can assist me in discovering them, I shall be very glad.
      Mr. SNOWDEN: Has the right hon. Gentleman been able to find who was the soldier who lost his foot in the War?
      Mr. BRACE: The answer must be taken as being accurate as far as I have been.able to ascertain.
      Sir C. KINLOCH-COOKEasked the Secretary of State for the Home Department if he is aware that permission was given to the Rev. N. B. Walke, of Cornwall, to address the conscientious objectors at Princetown on the condition attached to that permission that Mr. Walke was to obstain from political propaganda; whether he is aware that after the service in the prison Mr. Walke visited the hostel or club kept up by the conscientious objectors in the village, where he met a number of conscientious objectors; that on leaving the hostel a document fell from his pocket bearing the headings Objects of the Brotherhood, Constitution. Conditions of Membership; that one of the objects of the brotherhood cited in the document was to create a common fund to enable men and women to obtain a livelihood and to maintain their families engaged in propaganda and other work; and whether, in view of the fact that this hostel is being used for propaganda work, he will cause it to be immediately closed?
      Mr. BRACE: I am informed that Mr. Walke was given permission to hold religious services in the centre on condition that; he confined himself to religious topics. As to his activities outside the centre, I have no information, but the statements in the question will be considered by the Committee.
      Sir C. KINLOCH-COOKE: Ts this the first time that this has been brought to the notice of the hon. Gentleman?
      Mr. BRACE: I do not think it is.
      Sir C. KINLOCH-COOKEasked the Secretary of State for the Home Department whether he can say if any minister other than Mr, Walke has been given, a
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      similar privilege with regard to addressing the conscientious objectors, and with the same condition attached thereto; whether any complaint has been received by the Home Office of such privilege having been abused; and what action was taken in the matter?
      Mr. BRACE: Other ministers have been given similar permissions subject to the same condition. No complaint of abuse has been received.
      Sir C. KINLOCH-COOKE: Is the right hon. Gentleman certain of the last statement which he has made?

      ALLIED COUNTRIES (CONVENTIONS).
      Sir H. NIELDasked the Secretary of State for the Home Department whether, having regard to the many difficult questions which have arisen and must arise in connection with treaty or convention rights over the subjects of the United Kingdom and other Allied countries in relation to military service in particular and to the differences in status in the different countries—e.g., the doctrine of the United States of America that a man may expatriate himself—he will appoint a Commission or a Select Committee of the House to at once consider the subject arid report?
      Mr. BRACE: I think that such questions as arise of the nature indicated in the question can be dealt with by the existing judicial and administrative machinery, and I do not think that the proposal in the last part of the question could usefully be adopted in present circumstances.

    FOOD SUPPLIES.

      MILK.
      Mr. W. WATSONasked the Parliamentary Secretary to the Ministry of Food whether proposals are being considered for the requisition by the Government of the wholesale milk trade; and, if so, whether the House will have an opportunity of discussing such proposals before their adoption by the Government?
      The PARLIAMENTARY SECRETARY to the MINISTRY of FOOD (Mr. Clynes): As regards the first part of the question, I may refer the hon. Member to the answer given last. Thursday to the hon. Member for East Nottingham. The

      1217
      second part should, I think, be addressed to my right hon. Friend the Leader of the House.
      Sir C. HENRY: Is it the intention of the Government to requisition supplies of condensed milk?
      Mr. CLYNES: I should require notice of that question.

      ALLOTMENT HOLDERS (SECURITY OF TENURE).
      Mr. ALDENasked the President of the Board of Agriculture when he intends to introduce legislation to regularise the position of allotment holders; and whether there is security of tenure apart from such legislation until the autumn of 1920?
      The PRESIDENT of the BOARD of AGRICULTURE (Mr. Prothero): I hope to be able at an early date to introduce legislation which will give additional security of tenure to allotment holders. The answer to the latter part of the question is in the negative.

    CONCRETE VESSELS.
    Mr. P. A. HARRISasked the First Lord of the Admiralty whether he will ascertain if sea-going barges of reinforced concrete, schooner rigged, were in regular use for commercial purposes in Italy ten years ago; whether he is aware that a 150-ton barge, the "Liguria," was launched as far back as 1905 and has now been in regular commercial use for twelve years, and that the Italian Government concrete sea-going barges of 100 tons have now been in regular employment for a number of years; and whether, having regard to the apparent lack of information as to concrete ships constructed in Italy, he will cause particulars to be collected of concrete ships, barges, and pontoons employed in the Mediterranean, the Adriatic, and the Italian rivers and ports, with a view of obtaining information as to the experience in this Allied country and making the same known to naval architects, reinforced concrete contractors, and shipbuilders in England?
    Dr. MACNAMARA: Yes, Sir. It is the fact that sea-going concrete barges of 150 tons capacity were constructed in Italy some ten years ago. I have no information, however, regarding the development of the construction of reinforced concrete craft in Italy, and so far as I am aware only a very small number is in use. We
    1218
    are, of course, glad of information at all times and from all sources. In recent years this industry has been widely developed in Scandinavia, and full reports as to the methods of construction, etc., adopted in that country have been obtained.
    Mr. HARRIS: Will an opportunity be taken of getting any reports?
    Dr. MACNAMARA: Yes:
    Mr. HARRISasked the First Lord of the Admiralty if the large reinforced concrete ships recently launched or on the stocks on the Pacific coast of America have been inspected by any British engineers or shipbuilders; whether any independent reports on their design and construction have been obtained; and if such reports could be circulated for the benefit of the British industries interested so that the lessons learned might be applied in our shipyards without an undue time having to elapse in the experimental construction of smaller tonnage?
    Dr. MACNAMARA: The large concrete ships recently launched in America have been inspected by a British engineer, and his report is in the possession of the Department concerned, which also possesses independent reports on these ships, while further reports are now awaited. When the information obtained—which would of course include a sea-going test—is comprehensive enough for the purpose, a report can be drawn up for the benefit of the British industries interested.
    Mr. HARRIS: Is the right hon. Gentle man aware that photographs of these ships were shown in the House of Commons?
    Dr. MACNAMARA: That may very well be.

    INDIA.

      SIR SUBRAMANIYA AIYER (LETTER TO PRESIDENT WILSON).
      Mr. JOYNSON-HICKSasked the Secretary for India (1) whether his attention has been called to the letter of Sir Subramaniya Aiyer, K.C.I.E., to President Wilson; whether this letter was grossly defamatory of British rule in India; whether this letter evaded the, censorship; whether any action has been taken against the sender under the Defence of India Act; (2) whether Sir Subramaniya Aiyer was among those

      1219
      making representations to him during his recent visit to India; and whether the Government proposes to deal with the assertions in the letter to President Wilson?
      General CROFTasked the Secretary of State for India whether his attention has been called to the letter addressed by Sir Subramaniya Aiyer to President Wilson, in which he states that President Wilson and other leaders have been kept in ignorance of the full measure of misrule and oppression in India, that officials of an alien nation, speaking a foreign tongue, have forced their will upon it, that they grant themselves exorbitant salaries and large allowances, that they refuse education, sap the people of their wealth, impose crushing taxes, and cast thousands of people into prisons for uttering patriotic sentiments, and that the prisons are so filthy that often the in mates die from loathsome diseases; whether he is aware that this gentleman has fallen under the influence of Mrs. Besant; and what action he proposes to take with a view to putting an end to such propaganda?
      The SECRETARY of STATE for INDIA (Mr. Montagu): The disgraceful letter is correctly described in the questions. Its impropriety is all the more inexcusable because of the position of the writer. I was amazed to read of its recent publication. But the assertions in the letter are too wild and baseless to require or receive notice from any responsible authority. No action has as yet been taken as regards the author, but I am in communication with the Viceroy on the subject.
      Sir J. D. REES: Is the right hon. Gentleman aware that this member of a short-lived race is already upwards of seventy-seven years old, and that this is a senile production?

      TRIAL OF NATIVES, SAN FRANCISCO.
      Mr. JOYNSON-HICKSasked the Secretary of State for India whether the Government of India has issued or will issue in India in the vernacular papers, where this be possible, the result of the trial of natives of India at San Francisco for revolutionary propaganda of a pro-German and anti-British nature?
      Mr. MONTAGU: I have inquired from the Government of India what steps they have taken, or propose to take, to make public the result of the trial.

      GOVERNMENT OF INDIA (REPORT).
      Mr. JOYNSON-HICKSasked the Secretary of State for India whether he will undertake to submit his proposals for the amendment of the Indian Government to Parliament in the form of a Bill; and, if not, in what way does he propose to submit them to Parliament?
      Mr. MONTAGU: As I stated in reply to a question by my hon. and gallant Friend the Member for Newcastle-under-Lyme on the 28th May, the proposals that the Viceroy and I are submitting to the Prime Minister are embodied in a Report, and this is now before the War Cabinet. My hon. Friend will realise that the grave preoccupations of the War Cabinet at the present time have made it impossible for them to come to a decision yet as to the course that should be adopted. In accordance with the announcement in Parliament of the 20th August last, ample opportunity will be afforded for the public discussion of proposals resulting from my mission to India, and if His Majesty's Government decide to give effect to the recommendations it will be necessary in due course to introduce a Bill for the purpose.

    SPECIAL CONSTABULARY (COMMISSIONS).
    Sir F. HALLasked the Under-Secretary of State -for War whether he will favourably consider the granting of com missions, on the same lines as to Volunteers, to men who were precluded from joining the Colours, but who have served in the special constabulary, and who, in many cases, through their consistent good work, have been promoted to sergeants, inspectors, and other higher ranks; and whether steps can be taken to enable such men to join Training Corps, so that they may not be handicapped in consequence of their being members of the special constabulary instead of the Volunteer Force?
    Mr. MACPHERSON: I am afraid that the special facilities granted to officers of the Volunteer Force cannot be extended to members of the special constabulary. Such men should make application to join an Officers' Training Corps in the usual way.
    Sir F. HALL: Does not the right hon. Gentleman think it presses rather hardly upon those men who were too old

    1221
    originally to join the Colours and gave their services to the special constabulary; cannot something be done to facilitate their being able to obtain commissions the same as the Volunteers?
    Mr. MACPHERSON: I have every possible sympathy with the special constabulary, but their case is quite different from the officers of Volunteers, who have for nearly four years worked hard in their spare time to become efficient soldiers. The special constables have no such training. We had great difficulty in finding accommodation so as to enable us to send them to Cadet battalions. We could only say we would send a few to Cadet battalions and the officers to Officers' Training Corps.
    Sir F. HALL: If facilities can be granted, will the right hon. Gentleman do anything he can to assist members of the constabulary?
    Mr. MACPHERSON: Most certainly, if there are vacancies, but I. am afraid there are none.

    NAVAL AND MILITARY PENSIONS AND GRANTS.
    Mr. SNOWDENasked the Pensions Minister if he will accelerate the settlement of the pension case of the late Private Comberbach, No. 13377, the Cameronians, which was submitted to him on the 6th December last as a case of grave urgency owing to the condition of the man's widow, who is in a weak state of health with eight dependent children, a further communication being addressed to him on the 27th December last, to which a reply was received to the effect that no time would be lost in arriving at a decision, and another communication from him, dated 21st February last, stating that the matter was being expedited, and a still further communication, dated 28th March, repeating that the case was being expedited, the last communication from the Department, dated 2nd May, stating that inquiries are being made, and the result will be notified as soon as possible?
    The MINISTER of PENSIONS (Mr. Hodge): Private Robert Comberbach, late Scottish Rifles, served for forty-four days in the Army and died suddenly eight days after being discharged as "not likely to become an efficient soldier," application for the discharge having been made by the medical officer, the cause of
    1222
    whose objection was that the man suffered from lumbago and dyspepsia due to deficient teeth, rendering him unfit for service abroad. An inquest was held, but the exact cause of death is not known as there was no post-mortem examination. A verdict of death from natural causes was returned. The case has been carefully considered by the Deputy-Director of Medical Services, who is of opinion that the man did not die of disease attributable to or aggravated by service. In these circumstances the widow is eligible for temporary pension only, and this is to be awarded at once. I regret the delay.

    TRAVELLING BY SEA (WOMEN AND CHILDREN).
    Colonel WEDGWOODasked the First Lord of the Admiralty whether his attention has been drawn to the fact that women wishing to go to America with the intention of getting married are refused passports, while the wives of Canadian officers are urged to return to Canada; and, if so, will he state what reasons guide his office in this policy?
    Dr. MACNAMARA: As in my reply of the I6th May, I am answering this question on behalf of the various Departments concerned. The general policy is that the travelling of women and children by sea is to be restricted to the utmost possible extent and not to be allowed except in cases of the greatest possible urgency in which refusal to grant passports would involve great hardship. It is the fact that the Canadian authorities issued a notice to wives and dependants of Canadian officers and other ranks not in tending permanently to reside in this country to consider the question of return to Canada. That has led to a number of requests for repatriation, and endeavour has been made to meet them. But the case of the woman who desires to go to America or any other part of the world to get married appears to be on a different footing, and is viewed along the lines of the general statement I made at the outset. These requests are only granted, as I have said, in the rare case in which refusal would involve real hardship. In such a case the request is referred to the Inter-Departmental Passport Committee to advise the Secretary of State for Foreign Affairs as to whether or not a passport should be issued.
    Mr. PRINGLE: Is it not a real hardship not to allow them to cross?
    Dr. MACNAMARA: We are anxious that they should not go to sea.
    Mr. HOLT: Is there any objection to these women and children crossing the sea except that of their personal safety?
    Dr. MACNAMARA: Certainly it is personal safety. It is bad enough for a man to be torpedoed. I should think it much worse for a woman and little children.
    Mr. HOLT: Is there any other reason? Dr. MACNAMARA: No other.
    Mr. KING: Will not my right hon. Friend allow women to judge for them selves whether they will run the risk— surely they have the right and liberty to judge for themselves in the matter?
    Mr. PRINGLE: In view of the fact that your franchise now places women and men on an equality, why should not women be on an equality with men in this matter of emigration?
    Sir F. FLANNERY: Is it not a fact that the presence of women on board in time of danger increases the difficulty?
    Dr. MACNAMARA: I endeavoured to say that in reply to my hon. Friend. That is the case. In case of real hardship the matter is referred to the Departmental authority.

    TORPEDOED SHIPS (SALVAGE CLAIMS).
    Mr. SNOWDENasked the Secretary to the Admiralty whether the tug boat men on Admiralty boats who rescue torpedoed ships receive any special remuneration or recognition; whether the men of1 the chartered tugs receive salvage or prize money; and whether the Admiralty will consider the desirability of treating the men in the service of the Navy in the same way as the men employed on chartered tugs?
    Dr. MACNAMARA: When tugs are chartered on conditions not amounting to a demise to the Crown, salvage claims can be made by the owners and crews on their own authority, Admiralty consent not being necessary. When Admiralty-owned tugs and tugs chartered on conditions constituting a demise to the Grown perform salvage services, the Admiralty may make a claim in respect of, or give
    1224
    their consent to, a claim being made by the crews. If the vessel salved were a vessel under Government requisition, salvage would not be allowed if the Government took both war risks and marine risks. If the damage were from marine risks and not covered by the Government, then a salvage claim would be allowed. But where the crew is not allowed to make a claim for salvage and the services are exceptionally meritorious, the practice is to consider the crew for a special grant from Navy Votes.

    REGISTERED LETTER (LOSS AT EDINBURGH).
    Mr. HOGGEasked the Postmaster-General whether he is aware that Mr. J. S. Simpson, a sorting clerk and telegraphist at Edinburgh, was retained on duty for four hours without pay, and was officially warned by the Controller because of the temporary loss of a registered letter; whether he is aware that the temporary loss was due to the inadequate accommodation provided and the pressure under which the Edinburgh staff were compelled to work; whether Mr. Simpson was repeatedly refused permission to leave the office to obtain food: with the result that he was without sustenance from until his release at 5 p.m.; whether the accommodation has since been increased to meet the requirements of the work, as a result of a plan which had been under consideration for a number of years; and whether, seeing that there is no legal justification to warrant the action of the Post Office authorities in compelling a post office servant to remain on duty with out pay, he will give instructions for the payment of the amount due to Mr. Simpson for the excess period of four hours?
    The ASSISTANT POSTMASTER-GENERAL (Mr. Pike Pease): Mr. Simpson remained on duty to assist in tracing a registered letter for whose loss he was responsible, and I can see no ground for making any payment to him. in respect of the time in question. He was not pre vented from obtaining food. The accommodation at the date in question is reported to have been sufficient. The recent alterations in the registered letter office was part of general rearrangement, was planned several years ago, and had no connection with this incident.

    INDUSTRIAL COUNCILS.
    Mr. ALDENasked the Minister of Labour how many industrial councils on the lines of the Whitley Report have yet been formed; and what steps he is taking to encourage the formation of such councils?
    The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Bridgeman): Two joint standing industrial councils have now been formed in the building and pottery industries respectively. The completion of the negotiations in connection with the formation of several other councils may be looked for in the near future. As regards the steps which are being taken to encourage the formation of such councils, I would refer the hon. Member to the reply given to a question on this subject asked by the hon. Member for Crewe on the 23rd April, of which I am sending him a copy.

    AIR RAIDS.

      VATICAN REPRESENTATIONS.
      Sir F. HALLasked the Prime Minister if, in response to an appeal received through the Vatican, the Government have undertaken that there should be no aircraft attack on cities not in the vicinity of the battle front during the day time on 30th May; whether a like appeal was made to the Allied Governments concerned; and, if so, with what result; if he can state whether any similar action has at any time been taken by the Vatican with reference to the bombing of hospitals and the torpedoing of hospital ships by the Germans; and, if so, with what result; and, if not, whether, as the lives of British" soldiers and sailors wounded while fighting in the defence of. freedom may be regarded as of not less value than those of the persons who assemble on Corpus Christi Day to pray for the success of Germany in her attacks on the liberties of the world, the Government will take the opportunity to make representations to the Vatican on the matter?
      Mr. R. McNEILLasked the Prime Minister whether an undertaking was given, or an announcement made, by the British Government that a German town should be immune from attack by British aircraft on the 30th of May; if so, at whose request was such an undertaking
      1226
      given and what reasons were offered for compliance with it; were the military authorities in France consulted on the subject; was any promise of reciprocal immunity from aerial attack by Germany on cities of the Allies obtained in consideration of such an undertaking; if he is aware that a church in Paris was bombarded on that day by the Germans; and will he give an assurance that no such unmerited favour to the enemy will be allowed to interfere with the prosecution of military operations in future?
      Captain CARR-GOMMasked the Prime Minister whether, when assenting to the request of the Vatican that there should be no air attack on Cologne on the feast of Corpus Christi, the attention of the Vatican was drawn to the shelling of Paris on Good Friday whereby casualties were inflicted on the congregation of a church, to the recent aerial bombardment of hospitals at Etaples, and to the air raid on London on Whit-Sunday night?
      Mr. BONAR LAW: The appeal referred to was received by the French and British Governments, and the reply in the terms already announced was sent after consultation and in agreement with the French Government. The staff of the Air Ministry was also consulted. The action of the Germans in shelling Paris in spite of our undertaking will not be forgotten, in the event of any similar appeal being made in the future.
      Sir F. HALL: Can the right hon. Gentle man say whether any undertaking was given by the German Government that the aircraft used for the protection of the back areas should not be used for bombing our hospitals and troops on Corpus Christi Day?
      Mr. BONAR LAW: It was precisely in connection with a question of this kind that we consulted the staff of the Air Ministry. They were of opinion that the use referred to could not be made, if for no other reason than that the notice was too short to enable other dispositions to be made.
      Mr. McNEILL: What reasons were advanced for this favour being shown to the enemy?
      Mr. BONAR LAW: I am afraid it would be rather difficult to give reasons for and against by question and answer. I am

      1227
      sure my hon. Friend will see that there is great deal to be said on both sides in regard to an appeal of this kind.
      Mr. McNEILL: Were the Government influenced by the fact that the Foreign Office is under the influence of the Vatican?
      Mr. BONAR LAW: The Foreign Office had really nothing to do with it. It was a decision taken by the War Cabinet after full consideration of all the relevant facts.
      Sir F. HALL: Will any such consideration be shown to the Germans in future?
      Mr. BONAR LAW: If the hon. Gentle man will look at the last part of my answer, I hope he will be satisfied.
      Captain CARR-GOMM: Will the House and the public have an opportunity of seeing the full correspondence in this matter?
      Mr. BONAR LAW: There was no correspondence except the telegram conveying the request, and the announcement made in the Press as to our reply.
      Captain CARR-GOMM: Has the attention of the Vatican been drawn to the fact that on Whit-Sunday night London was bombed by German aircraft, and to other facts?
      Mr. BONAR LAW: No; they were not. It is quite obvious that the Government would have been fully justified in view of the raids at Whitsuntide in refusing altogether to consider such an application. In addition to that, it seems to me an example of German mentality that such a request should have been put forward after what happened at Whitsuntide. Though I think it was an impudent request it does not follow that it would be unwise to accede to it.
      Colonel THORNE: Do you not think that the Germans think we are a lot of fools?
      Mr. HERBERT SAMUEL: Can the right hon. Gentleman say whether the Germans were asked to take reciprocal action to spare on that day other places behind the British lines, and, if not, why not?
      Mr. BONAR LAW: They were not. I should have thought that such a request was quite unnecessary. If we had made such a request it might have implied that we were making a bargain. We were not; we were doing this because we thought it was right to do it.
      Mr. A. F. WHYTE: Has the Government any information that the Vatican made a request to the German Government in regard to the bombardment of Paris on Good Friday?
      Mr. BONAR LAW: We have no knowledge of any such representation having been made. Perhaps it is right to say that we have called the attention of the Vatican to what took place on Corpus Christi Day in Paris.

      SHELTERS.
      Mr. P. A. HARRISasked the Secretary of State for the Home Department whether any independent technical inquiry has been made as to air-raid damage Caused in January at the printing works of a weekly journal, where many casualties resulted, other than, any inquiry on behalf of the Commissioner of Metropolitan Police; whether there were concrete floors in this building over the basement in which the casualties occurred; if so, whether these floors had been pierced by the bomb that was dropped from enemy aircraft or whether the bomb fell just outside the building and did not pierce any of the concrete floors; whether the criticisms that have been made against the police regarding the selection of these premises as an air-raid shelter were, accordingly, un justified, and likewise the stricture against the utility of concrete floors as affording a reasonable shelter against dud shells, incendiary bombs, and explosive bombs of moderate size used in air-raid attacks; and whether he will state if he knows of any case in the Metropolis where an enemy bomb of any description has so far pierced three or four concrete floors, so that the public may know if a. reasonable amount of shelter may be expected where they are protected by a number of concrete or reinforced concrete floors?
      Mr. BRACE: I understand that inquiry has been made by technical experts appointed by the Committee of Scientific and Industrial Research. The building had concrete floors over the basement, none of which were pierced by the bomb, which entered the building by a pavement light. The occurrence, therefore, affords no reason for doubting the utility of concrete floors as affording reasonable protection against blind shells, incendiary bombs, and explosive bombs of small size. I would remind the hon. Member that the buildings available as air-raid shelters are not classified as bomb-proof, but they are

      1229
      quite suitable for the purpose for which they are primarily intended, namely, to afford shelter against splinters of bombs, shells, etc., for use by persons who happen to be in the open when the raid takes place.

    IRELAND.

      HOME RULE AND CONSCRIPTION.
      Mr ANDERSONasked the Prime Minister (1) whether it is still pro posed to apply Conscription to Ireland; if so, when and under what conditions; (2) if he can now announce the policy of the Government with respect to Irish Home Rule; whether he is aware that the prospects of settlement are being seriously endangered by the prolonged delay and by the policy pursued meantime in other directions; and what further steps it is proposed to take?
      Mr. BONAR LAW: I cannot add any thing to the previous replies on this subject.
      Mr. PRINGLE: Can the right hon. Gentleman say when he will be able to state when Conscription is to be applied to Ireland and when the Home Rule Bill is to be introduced?
      Mr. BONAR LAW: As I have said, I cannot make any statement on the subject.
      Mr. PRINGLE: Are we to understand that no troops are to come from Ireland for the purpose of the present campaign, and that the Military Service Act is a fraud on the older men in this country?
      Mr. BONAR LAW: The hon. Member will make a mistake if he comes to that understanding.
      Mr. KING: Is the right hon. Gentleman not aware that the action and delay of the Government is inducing everybody to think that there will be no Conscription and no Home Rule?
      Mr. SPEAKER: That does not arise out of the question.

      ARRESTS.
      Mr. ANDERSONasked what further action the Government propose to take in regard to the men and women arrested in Ireland on suspicion of treasonable conspiracy; whether it is pro posed that they should have the right of
      1230
      open trial or be enabled in any way to defend themselves against the charges made against them; whether any who may be able to establish their innocence will have an opportunity of doing so before any tribunal; and whether the Government propose to set any limit to the imprisonment without trial of these deportees?
      The ATTORNEY-GENERAL for IRE LAND (Mr. A. Samuels): The persons referred to were arrested and interned by an Order made by the Chief Secretary under Defence of the Realm Regulation 14 b. The Order served upon each person arrested stated that if within seven days from the date of serving the Order he or she submitted any representations against the provisions of the Order to the Chief Secretary such representations would be referred to an advisory committee pre sided over by a judge of the High Court. If the report of the committee satisfies the Chief Secretary in any case that the Order of internment may safely be revoked or varied the Chief Secretary will revoke or vary the Order accordingly.
      Mr. PRINGLE: Do these interned people know that they may have the right of legal assistance in making any representations of the kind mentioned in the answer?
      Mr. SAMUELS: The hon. Member had better put that question down.
      Mr. JOYNSON-HICKS: Have any requests been received?
      Mr. SAMUELS: I cannot answer that.

      INTERNED PERSONS.
      Mr. KINGasked the Home Secretary whether he has now framed the Regulations under which persons interned under the Defence of the Realm Regulation 14, and lately resident in Ireland, will receive letters, visits, and parcels; and whether he is aware that though they and their friends were informed over a fortnight ago that visits from relatives and legal advisers and the privileges of letter writing were to be freely accorded no such privileges have so far been allowed?
      Mr. BRACE: These persons are allowed within certain limits to communicate direct with their friends and to receive letters and parcels from them, and have been informed of the regulations govern-

      1231
      ing such correspondence. Visits from relatives cannot be allowed at present, but any application from a prisoner to see his legal adviser will be considered.
      Mr. KING: Is the right hon. Gentleman aware that though these persons were told a fortnight ago that they might see their relatives— their children, for instance— up to this morning they had not been allowed either to see or to communicate with them by letter, and that there are children awaiting dispositions being made for them who are not allowed to see their parents?
      Mr. BRACE: I am not aware of that.
      Mr. KING: As this matter has been brought to the attention of the Home Secretary and the Under-Secretary repeatedly during the past week, will the right hon. Gentleman take up the matter at once with a view to preventing these persons being treated worse than ordinary criminals?
      Mr. BRACE: I have only to say that visits from relatives cannot be allowed at present.
      Mr. KING: Why are all letters between parents and children prevented, so that there is not one word of communication with these persons allowed at present?
      Mr. BRACE: These persons are allowed, within certain limits, to communicate direct with their friends and receive letters and parcels from them,
      Mr. KING: As my experience is in direct conflict with the statement of the right hon. Gentleman, will he allow me to see him immediately after Questions on this matter?
      Mr. BRACE: I will always be glad to Bee my hon. Friend.

    WAR AIMS (ILLUSTRATIONS).
    Mr. HOLTasked the Chancellor of the Exchequer whether he will place all illustrated posters issued by any propaganda or War Aims Department and paid for out of public money on exhibition in the Tea Boom, or other place accessible to Members of this House, so that they can form an opinion as to the propriety of these posters?
    Mr. BONAR LAW: I do not think the proposal in the question is necessary or desirable.
    Mr. HOLT: Is the right hon. Gentle man aware that some of them are of a most disgraceful character?
    Mr. BONAR LAW: I have not seen them, but I should be reluctant to accept my hon. Friend's description of them until I have seen them.
    Mr. HOLT: If that is so, why should they not be exposed in the Tea Boom, and let us decide for ourselves whether they are disgraceful or not?
    Mr. BONAR LAW: I think the Tea Room would soon get very full.

    HOSPITALS, PORTSMOUTH.
    Sir BERTRAM FALLEasked the Under-Secretary for War if he is aware that all the hospitals, including the Royal Hospital, the Fausell Road Hospital (400 beds), the Union Infirmary, and a number of private houses lent to the Voluntary Aid Detachment, Portsmouth, are being taken over by a United States staff and that the English staff and patients are being sent wherever there is a corner for them; and if he will secure at least the preservation of the Royal Hospital and the Union Infirmary for the English staff and English patients?
    Mr. MACPHERSON: Owing to the present conditions of fighting in France some American and British wounded are-being brought to this country in the same convoys and are being treated in British hospitals. It is the desire of the American authorities that their medical and nursing staffs now available in this country should undertake some portion of the charge in our hospitals of American and British soldiers. With a view to taking advantage of the generous offer of our Ally and freeing British staff for other hospitals two sections of a general hospital at Portsmouth have been examined, and I hope that the necessary arrangements will be made. British soldiers will not be ejected from the hospital, but as vacancies occur the majority of patients admitted will probably be American.
    Sir B. FALLE: Is the right hon. Gentle man not aware that while the Americans are welcome, Portsmouth is a large town which requires large hospital accommodation itself?
    Mr. MACPHERSON: I am well aware of the welcome which Portsmouth has given to American, wounded and American troops, and I am hopeful that the answer I have given will satisfy the town.

    SHIPBUILDING.
    Mr. ALDENasked the Under secretary of State for War whether he can state the number of men already released from the Army for shipbuilding purposes; and whether he proposes to release the necessary men for all the shipyards of the country engaged in the production of merchant shipping?
    Mr. MACPHERSON: Nearly 10,000 men have been released from the Army for this purpose. As my hon. Friend is no doubt aware, the War Cabinet decided that men should be released from the Army for ship building, and I am afraid I cannot answer the last part of the question.

    OFFICERS (HOME SERVICE).
    Sir F. HALLasked the Under secretary of State for War if it has been the practice for some time past to arrange that officers who have been engaged for a considerable time on active service in France and elsewhere should be sent back for a six months' period of home service; if a large number of such officers have recently returned to the front not with-standing that only a short part of their six months' period at home had expired; if he will state the reasons for adopting this course in view of the fact that there are a number of officers passed for general service who have not yet left this country, while those sent back have, in a large number of cases, had two years' active service and upwards; and, if so, whether he will take the necessary steps to ensure that the service of officers at the front shall be more equally distributed?
    Mr. MACPHERSON: Officers in need of rest from active service have been sent from France and elsewhere for a tour of service at home for a period of six months. Owing to the urgent necessity for experienced officers in particular units, the Commander-in-Chief has in some cases asked for the return of certain officers, and, if found fit for service, they have been sent back.

    WAR CHARITIES (LOTTERIES).
    Sir C. HENRYasked the Secretary of State for the Home Department whether he will consider introducing legislation in order that the Commissioner of Police of the Metropolis may not be compelled to take action against promoters of war charities when, for the purpose of collecting money, they have recourse to tombolas, lotteries, or raffles?
    Mr. BRACE: This proposal would raise difficult and controversial questions, and I cannot undertake to introduce legislation on the subject at present.
    Sir C. HENRY: Will the right hon. Gentleman give instructions to the Com missioners of Police by which some modifications will be made in the Order, so that the war charities making use of tombolas and raffles may not be interfered with?
    Mr. BRACE: The difficulty is that once you make an alteration in the law you do not know where it will stop.
    Sir C. HENRY: Are we to understand that raising money for war charities is vetoed entirely?
    Mr. BRACE: I cannot say that.
    Mr. PRINGLE: Cannot it be done by Regulation under the Defence of the Realm Act, just like the suspension of the Habeas Corpus Act?
    Mr. BRACE: It can be done in many ways, but the Government are not pre pared to do it at present.
    Mr. HOUSTON: Cannot those war charity undertakings in which tombolas and lotteries are being organised at present be allowed to be completed? A very big effort is being made in Liverpool at present to raise funds to provide food for our prisoners in Germany.
    Mr. BRACE: I will give consideration to the war charities which have made arrangements already, and see if anything can be done.
    Sir C. HENRY: Does this provision apply to the whole country, and are the police to put it into operation?
    Mr. BRACE: Certainly.

    BANK AMALGAMATIONS.

      GOVERNMENT DECISION.
      Sir A. FELLasked the Chancellor of the Exchequer what action the Government propose to take with regard to the recommendations contained in the Report of the Committee on Bank Amalgamations?
      Mr. BONAR LAW: The Government propose to introduce legislation as soon as possible with a view to carrying out the Committee's recommendations. Mean time, in order to avoid delay, it is proposed to set up at once the Committee of two to advise the Departments concerned on the desirability or otherwise of any schemes for amalgamations that may be proposed, and I am glad to be able to announce that Lord Inchcape has agreed to act on this Committee as the financial representative, and Lord Colwyn as the commercial representative. The Committee will be prepared to consider forth with any schemes of this character that may be submitted to the Government. Applications should be addressed to me at the Treasury.

IRISH MEMBERS' ARREST.
Mr. SPEAKER: I have received from the Chief Secretary for Ireland the following letter, which, with its permission, I propose to read to the House:
Chief Secretary's Office,
Dublin Castle.
1st June, 1918.
Sir,
I have the honour to inform you that the following Members of Parliament were arrested under the authority of Orders issued by me on the 17th May under Regulation 14b of the Defence of the Realm Regulations, and were transferred on the 18th May to Great Britain for internment:

(1)Mr. Edmund de Valera, M.P. for East Clare, on 17th May;

(2)Count George N. Plunkett, M.P., for North Roscommon, on 18th May;

(3)Mr. W. T. Cosgrave, M.P. for Kilkenny City, on 18th May; and

(4 Mr. Joseph McGuinness, M.P. for South Longford, on 18th May.

I desire to say that my Order of the 17th May recited that the above-named Members of Parliament were persons within an area in respect of which the operation of Section one of The Defence of the Realm (Amendment) Act, 1915, is for the time being suspended; and, further, that on the recommendation of a competent military authority, appointed under the Defence of the Realm Regulations, it appeared to me that for securing the public safety and
1236
the defence of the Realm it was expedient that the said Members of Parliament should, in view of the fact that they were persona suspected of acting, having acted, and being about to act in a manner prejudicial to the public safety and the defence of the Realm, be interned, and be subject to all the rules and conditions applicable to persons interned, and should remain interned until further orders.
I have the honour to be
Sir,
Your obedient Servant,
EDWARD SHORTT,
Chief Secretary.
Mr. KING: On the announcement you have just read, Sir, may I call your attention, first of all, to the usual practice in such cases. It is quite clear from Erskine May and the authorities, that it has been usual to acquaint you, as guardian of the liberties of this House, immediately on the arrest of Members of Parliament. If we take the cases of arrest that were made in 1881 under the Crimes Act in Ireland, we shall find that on the very day on which Members of this House were arrested in Ireland, letters were addressed to you, Sir, or to your predecessor, notifying that such arrests had been made. I wish to call to your attention, Sir, the special case on the 4th May, 1881, the day after the pre sent hon. Member for East Mayo was arrested. The hon. Member was arrested on the 3rd May, and on that very day Lord Cooper, the then Lord-Lieutenant of Ireland, wrote Mr. Speaker, and on the 4th May the letter was read in this House.
Mr. R. McNEILL: May I ask, Sir, in what form the hon. Member is bringing this matter forward? Is it a point of order, or a question of privilege, and will it be open to debate by the House?
Mr. SPEAKER: This is a question addressed to me. I believe that is only the preliminary stage.
Mr. KING: I shall be only too pleased, Sir, to satisfy both you and my hon. Friend. The question I have to put is clear, and it is this: whether it is not the duty in such cases to intimate at once, and without delay, that such arrests have been made. May I point out to you, Sir, that the letter stales that these arrests were made on the 17th and 18th May, some on one day and some on the other, and it was not until the 1st June, a fortnight later, that the Chief Secretary, wrote to you an intimation of the fact of the arrest. Of course, we all recognise that the Chief Secretary is new to his office and we wish

1237
to be as patient as possible. But on the question of the rights and privileges of this House and of the usual custom, may I not ask you whether it is not in accordance with precedent that such arrests of Members of Parliament should be communicated to you forthwith and without any delay?
Mr. SPEAKER: The hon. Member is aware that there is no statutory injunction upon magistrates, or persons committing Members of the House, to inform the House of that act. It is entirely a matter of custom and of courtesy, and I think that, as a rule, it is better that the letter

ORDERS OF THE DAY.
  BUSINESS OF THE HOUSE.
  Ordered, "That the Proceedings of the Committee of Ways and Means be not interrupted this night under the Standing Order (Sittings of the House), and may be entered upon at any hour although opposed."—[Mr. Bonar Law.]

  FINANCE BILL.
  Considered in Committee.
  [Mr. WHITLEY in the Chair.]
  Clause 1 (Continuation of Customs Duties Imposed Under 5 6 Geo. 5, c. 89); Clause 2 (Continuation of Temporary Excise Duties Imposed Under 5 b" Geo. 5, c. 89); and Clause 3 (Increased Duties on Spirits), ordered to stand part of the Bill.
  CLAUSE 4..—(Reduction and Allowance of Duty in Respect of Spirits Used in Medical Preparations or for Scientific Purposes.)
  (1)In the case of any mixture, compound or preparation which, on importation, is charged with duty in respect of the spirit contained in it, or used in its preparation or manufacture, the duties specified in Part I. of the First Schedule to this Act shall be reduced by the sum of fifteen shillings and three pence, and the additional duty specified in Part II. of that Schedule shall not be charged, if the mixture, compound, or preparation is one which is recognised by the Commissioners of Customs and Excise as being used for medical purposes.
  (2)If any person proves to the satisfaction of the Commissioners of Customs and Excise that any spirits in respect of which the duties imposed by this Act have been paid have been delivered to him and used solely in the manufacture or preparation of any article recognised by the Commissioners as being used for medical purposes, or have been used for scientific purposes, he shall, subject to such Regulations as the Commissioners of Customs and Excise may prescribe, be entitled to obtain from the Com missioners repayment of the sum of fifteen shillings and threepence in respect of every gallon computed at proof of spirits so used, and shall also, if he proves to the satisfaction of the Commissioners that the spirits so used were spirits to which the restrictions contained in the Immature Spirits (Restriction) Act, 1915, did not apply, be entitled to obtained from the Commissioners repayment of the amount of the additional duty in respect of immature spirits (if any) paid under this Act in respect of the spirits.
  (3)Regulations made under this Section may provide that a person shall not be entitled to claim repayment unless he has kept such books and taken such account of Stock as may be pre-
  1258
  scribed by the Regulations, and may apply to any such person any of the enactments relating to any duty of customs or excise and to persons carrying on any trade subject to the laws of excise, and may contain such other provisions as the Commissions of Customs and Excise may consider necessary for the protection of the revenue.
  (4) If any person contravenes or fails to comply with the Regulations made by the Com missioners under this Section, or if any person for the purpose of obtaining any repayment of duty under this Section or in connection with any application for any such repayment, makes any false statement or false representation, he shall in respect of each offence be liable to an excise penalty of five hundred pounds.
  The CHANCELLOR of the EXCHEQUER (Mr. Bonar Law): I beg to move, in Sub-section (1), after the word "pence" ["three pence, and the additional"], to insert the words "or if the mixture, compound, or preparation is entered in such' a, manner as to indicate that the strength is not to be tested, by the sum of one pound and sixpence."
  Mr. LOUGH: Can the right hon. Gentle man explain the meaning of the Amendment?
  Mr. BONAR LAW: The object of the Amendment is to carry out a promise that my right hon. Friend made in 1906 to make no difference in the schedules with regard to these preparations.
  Amendment agreed to.
  Clause, as amended, ordered to stand part of the Bill.
  CLAUSE 5 (Increased Customs Duties on Beer) ordered to stand part of the Bill.

  FINANCE BILL.

    CLAUSE 6.—(Increased Excise Duly on Beer.)
    In lieu of the duty of Excise payable in respect of beer brewed in the United Kingdom there shall, as from the twenty-third day of April nineteen hundred and eighteen, be charged, levied, and paid—

    For every thirty-six gallons of words of a specific gravity of one thousand and fifty-five degrees, the duty of

    £

    s.

    d.

    2

    10

    0

    and in lieu of the drawback of Excise payable in respect of beer exported from the United Kingdom as merchandise or shipped for use as ship's stores, there shall be allowed and paid in respect of beer on which it is shown that the increased Excise Duty charged by this Act has been paid a drawback calculated according to the original gravity thereof (that is to say):—

    For every thirty-six gallons of beer of an original gravity of one thousand and fifty-five degrees, the drawback of

    £

    s.

    d.

    2

    10

    3

    and so as to both duty and drawback in pro portion for any difference in quantity or gravity.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Sir GEORGE YOUNGER: I want to call my right hon. Friend's attention to a question on Clause 6. When the Government duty was placed on beer it was perfectly well known by the parties concerned that the trade would have to pay it. There have been many restrictions on the brewing of beer in the last three or four years, all very properly made because it was necessary that they should be, and no brewer that I know of ever made any objection. There was a very great reduction made last year, and a much more severe restriction than before. Special barrels for munition areas were allocated, I think, to the brewers who could most surely supply the areas, and you were really supplying to them a part of the trade previously restricted. That was all right, but when it came on to the allocation day the Food Department, on its own initiative, said it would allocate none of those barrels unless brewers paid 25s. per barrel for the privilege of brewing the beer. They did not mind because they were paying excess profits. My point is this; I do not object to a tax from my right hon. Friend. I accept his taxation with the greatest good will in the world, because I know conditions are artificial, and he will deal with us in the fairest way he can. But I do object to being taxed by an official in the Food Control Office. It is grossly unconstitutional, and I believe it is quite illegal, and I hope my right hon. Friend will see when the period expires that some new arrangement shall be made.
    Mr. BONAR LAW: I will give consideration to the point raised by my hon. Friend. It is, I admit, a point of substance. I admit this method is open to some objection.
    Mr. CHANCELLOR: Do I understand the right hon. Gentleman to suggest that he will be able to remit this taxation?
    Mr. BONAR LAW: My hon. Friend did not ask that. He asked if, from this period, the Chancellor of the Exchequer would consider whether it was done by a right method, or if some other should be adopted.
    Sir G. YOUNGER: I did not ask for repayment; I do not press for that.
    Question put, and agreed to.
    Clause 7 (Duties and Drawbacks on Tobacco) ordered to stand part of the Bill.

    CLAUSE 8.—(Increased Customs Duties on Sugar.)
    In lieu of the present Customs duties, drawbacks, and allowance in respect of sugar, molasses, glucose, and saccharin there shall, as from the twenty-third day of April nineteen hundred and eighteen, be charged levied and paid the duties specified in the first column of Part I. of the Third Schedule to this Act, and there shall be paid and allowed the drawbacks and allowance set out in Part II. of that Schedule.
    Mr. D. MASON: I beg to move to leave out this Clause.
    I do so because I think that the proposal to increase the duties on sugar, which touches the very poorest of our population, should not be accepted by this House. We know it is a hardship which would press most hardly on the very poor. It would press upon those who are in receipt of old age pensions and who have suffered by the increased cost of living, and if we are asked to support the increase proposed in Clause 8 in the price of sugar it would be, to my mind, reprehensible. No case has been made out in" favour of it. It was well pointed out by the hon. Member for Lanark (Mr. Pringle) that there is also another class, those in receipt of separation allowances, who are suffering from this ever-increasing cost of living, and are we to add to their burdens by increasing still further the cost of this very necessary article of food? Even from a health point of view it seems to me most unwise to increase this duty. Sugar is a very necessary article. To a very large section of the community it is really a question of health. I understand the Government contemplate establishing, if they have not decided to establish, a Ministry of Health, and here is a measure which will go a long way to undermine the health of the community by increasing the price of this very necessary commodity. I have hero a Petition which, I believe, represents many thousands, if not millions of small shopkeepers who are engaged in the small confectionery trade, and their customers. They, of course, are very much affected by this particular provision of the Finance Bill. This Petition states:
    "We earnestly ask for your assistance on behalf of the many thousands of struggling retail confectioners throughout the country, the majority of whom are women, including a large number of poor widows, spinsters and wives with husbands and sons in the Army. Their means of livelihood are in great peril owing to their inability to obtain sufficient supplies of sweets and chocolates. We believe they are

    1261
    entitled to your help as they are selling a commodity known to possess great food value and sustaining properties, which, to the mass of the public, is not a luxury, but in these days of war strain, a necessity to most classes of civilian workers, as well as to soldiers and sailors, and particularly beneficial to the health of children. We therefore earnestly petition you to urge the Government to release at the earliest possible moment further supplies of sugar needed for the manufacture of sweets and chocolates, whereby public requirements may be met and" the desperate position of shopkeepers may be rightly alleviated."
    4.0 P.M.
    While I, of course, recognise that there is a scarcity in this commodity, and the Government has taken control of it and the price has been more or less fixed, I think to accentuate that and make still harder the 1 position of these small shopkeepers and their customers in regard to an article which I have already stated is a very useful article of food, is the height of unwisdom. When we know there is a scarcity, why accentuate the evil? There is another great industry, aerated waters, lemonade and other articles, which are very useful, consumed by a large section of the community and very wholesome. These also are interfered with by making this necessary ingredient still harder to obtain. I have heard no argument by the Government to justify the increase. They say that in the course of a war we must have taxation spread over the whole community, and the working class must bear its share. I contend that the working class has done more than its share. The finance of the Government adds to the burdens of the working class every day, as the Chancellor knows. He knows of a subject to which I have often referred in this House, and that is his action at the Treasury in increasing his paper issues every week, thereby adding to the cost of all commodities, penalising the working classes, and debasing the currency. So that to say that the working classes are not bearing their share is beside the point. I hope that those who support this tax, upon which we intend to vote, will be able to justify to their constituents the increase of this burden on the poor and those least able to bear it.
    Sir C. HENRY: My hon. Friend ended his remarks by stating that he hoped those who were supporting this would justify it to their constituents. I can say this—and I believe I am expressing the view of a good many constituents throughout the country—that all classes of
    1262
    the community who are weekly wage earners desire to pay their contribution to the War. My hon. Friend mentioned the Petition he had received, whch, he said, was backed up by I do not know how many thousands or millions of people. It is the usual course, when a Member receives a Petition of such wide character, to deposit it on the Table of the House. I should like to see that Petition upon which my hon. Friend lays so much weight. Why did he not take the usual course and lay it upon the Table of the House? I do hope the Chancellor of the Exchequer will not—I am certain he will not—give way one iota in regard to this tax. It is all very well for my hon. Friend the Member for Coventry to propose a reduction in the duty on a commodity like sugar, which we all recognise is a necessity for every householder in the country, to court a certain amount of popularity of that kind. But that does not help to win the War. This money is necessary to carry on the War. Then he uses the argument that this extra tax on sugar is penalising the small confectionery trade. He is doubtless unaware that the Ministry of Food has quite recently issued an Order by which the small shopkeeper has a preference as regards supplies of the articles he sells, and that large storekeepers are deprived of such confectionery as the small shopkeepers may have. Therefore, again I doubt whether there has been much protest against this Sugar Tax from small shopkeepers. I hope if the hon. Gentleman goes to a Division, the support he receives will be negligible.
    Mr. DENNISS:I do not intend to vote against this tax, because I consider it is a war tax, and that it is necessary to get money; but I do rise to record an objection to the tax because of its cumulative effect on certain manufactures and industries. If it is to be regarded purely as a war tax, there is no objection to it, but if in times of peace the tax is to be not only on raw materials, in which sugar plays a principal part, but also on the finished articles, it is a cumulative tax which is very injurious to industry. The brewers the other day in the House recorded their protest against the tax in order that when peace is declared they will be able to call upon the Chancellor of the Exchequer to modify the tax in such a way as not tointerfere with their industry. I rise to record the same protest on behalf of the National Mineral Water

    1263
    Association. The brewers, after all, use an amount of sugar which bears a very small proportion to the value of the finished article—beer—but in the manufacture of mineral waters it forms a very important part indeed. Not only are the mineral water manufacturers taxed upon the sugar, but they are taxed upon the mineral water when it is produced. The proportion that that bears to the cost of the whole article is so great that they feel it is a burden that ought not to be placed upon them except in time of war. In time of war they cheerfully submit in the public interest, but in time of peace I ask the Chancellor of the Exchequer to say he does not intend to continue-this double tax. I know some hon. Members have welcomed it because it hits the teetotaler. If it hit him, I should be very glad, because he pays very little tax indeed. But I am afraid it does not. I have made inquiry, and I find that the teetotaler drinks no soda water, which is a medium for whisky; and with regard to syrups and other drinks, such as lemonade, they are largely drunk by people engaged in industries in the North of England. The teetotaler drinks nothing but tea and cocoa as a rule, and pays little taxation indeed.
    Having made that protest I wish to say one word about the small weetstuff retailer. I quite agree with the hon. Baronet who has just spoken that this is a question rather for the Food Controller than the Chancellor of the Exchequer. The Food Controller has done his best, and is doing his best, for the small retailer, and it is only after a long period has elapsed, and only after very much suffering and hardship has been endured by this very worthy and deserving class of people who have no other means of livelihood. It is not so much the duty on the sugar, because they can put the price on the goods, but the scarcity of sugar which is being dealt with in a very sympathetic spirit by my right hon. Friend the Parliamentary Secretary to the Ministry of Food, and I will take this opportunity of publicly congratulating him and the House on the honour just bestowed upon him for his services to the country in the distribution of food.
    Mr. LOUGH: My hon. Friend who has just sat down once again charmed the Committee with the equivocal course
    1264
    which he takes in connection with some of these burdens. On the one hand he makes an emphatic protest against the tax, but, on the other hand, he will not vote against it, and if the Committee is satisfied with the reason he gave, I think we may very well leave it there. I think the heavy nature of this tax ought to be considered by the Committee before it is passed. There are many burdens imposed in this Bill that might almost be described as ferocious. We have swept through half-a-dozen already—taxes on tobacco, spirits, and beer, raised to a point quite unprecedented, perhaps, in any country, and certainly in this country—but here is sugar, which is a necessary and delightful diet, treated with greater severity than anything else, and I do think the tax needs more justification than it has received in this House. In July, 1914, a month before the War broke out, the wholesale price of the article was 15s. 10½d. To-day the price is 57s. 9d., so there is a far greater rise with regard to sugar, which is undoubtedly one of the necessities of life, than anything else. Every other article seems to secure some sympathy from the Government except sugar. We have the whole provision of milk threatened by the strenuous efforts the Government are making to keep down the price as much as they can. Great efforts were made to keep the price of meat low. Sugar alone appears to receive this bad treatment from the Government. The retail price in July, 1914, was 2d. a lb.; to-day it is 7d., that is, three and a half times as much. In July, 1914, the duty was 1s. l0d. per cwt.; to-day the Chancellor of the Exchequer makes it thirteen times as great, raising it from Is.l0d. to 25s. 8d. per cwt.
    What has sugar done that it should receive such cruel and ruthless treatment from my right hon. Friend? We have not had a good defence of the tax yet. The ratio of increase on this most necessary article of food is 250 per cent., and nothing like it can be shown with regard to any other commodity. I thought it might interest the Committee to know how it has progressed in some of our Dominions, and I take the case of Canada. In Canada the price of sugar per 100 lbs. in July, 1914, was 4 dollars 60 cents.; to-day it is only 8 dollars 80 cents. So that the rise in Canada in the price of sugar, after three and half years of war, has only been 71 per cent. and yet we have

    1265
    250 per cent. here. When we are considering the tremendous burden placed upon sugar we must also remember that the Government have taken the management of it. My right hon. Friend who is chairman of the Royal Commission on Sugar has really become the sugar merchant of the country, and I think the mismanagement of the supply by the Government has tended to put up the price very much, as well as the placing of this heavy duty upon it. This is the first of the great commodities of which the Government took the management.
    I would really ask the right hon. Gentleman to deal with this point if he can—whether there has not been a great deal of substance in the argument put, I think, when we last discussed the matter on the Second Reading of the Bill, by my hon. Friend the Member for Lanark. Here is sugar, which is admitted by everybody to be one of the necessities of life, with this immense burden placed upon it, amounting to £25,000,000 a year, while another article, wheat or bread, a necessity of very little greater importance than sugar, instead of having any burden laid upon it, receives from the Government a great subsidy of about £40,000,000 a year. Why cannot we have a similar policy with regard to sugar? Why take this extraordinarily complicated method with regard to an article which appears to stand on the same platform and be equally necessary to all the people? One they make cheap and the other they make dear, in a way no civilised Government ever attempted before, by placing this heavy tax upon it. I do not suppose this is the occasion for making any long speeches about those matters, but that point is a very grave one; it is a great point of policy. It has not been defended here. The Government goes to one article, wheat or com, and gives a very high price for it; it goes to other articles, and makes production extremely difficult, because of the low prices they fix. In this case they pile on this large tax, which is thirteen times as much as the tax before the War, and in the case of the sister article they give this huge subsidy.
    I do think that this policy, these principles on which the Government is moving, ought to be considered. I think we may fairly ask for some more businesslike proceeding that can be more easily defended. It is all very well for the hon. Member opposite to say that we want
    1266
    money for the War. We do! We are getting a tremendous amount of it under this Budget. In regard to this point of getting the money, this House might very well ask the Chancellor, in one of his first sentences, to state, in connection with the Finance Bill, how much money he wants. I believe he has, under the Finance Bill, already got a great deal more than he wants. He is probably underestimating his gigantic revenue. The same position would appear to apply to the Luxury Tax, where the yield has not been estimated. It may be that its imposition, as things now stand, will be that the Government will be imposing a huge burden before they are done with it. It is not enough to say that money is wanted for the War. I believe the country has gladly contributed the necessary sum, is contributing better than any other country in the world at the present time, and is contributing better in this War than ever before. Therefore these sort of broken sentences that money is wanted for the War ought not to betaken as a justification for a tax which bears this extraordinary feature to which I have ventured to call the attention of the Committee. I do hope that my right hon. Friend will give some attention to-these solid and reasonable arguments.
    Mr. SNOWDEN: The hon. Baronet (Sir C. Henry), in the impassioned oration he delivered a few minutes ago, gave the Government a piece of advice which, in these critical times, ought to be exceedingly valuable. He explained to them an original way of achieving the object they had in view, and that was by increasing the Sugar Tax. The only parallel to the originality of the suggestion put forward by the hon. Baronet is the observation that fell from the Prime Minister some time ago, when he said that the issue of the War now depended upon the potatoes grown during the present year. The statement made by the hon. Member for Coventry that this is not a popular tax amongst the working classes is true. I would ask the hon. Baronet to put this question to a meeting of agricultural labourers. It is not possible, I suggest, to get a meeting of working-class electors, even in the constituency of the hon. Baronet, where a vote would be secured in favour of increasing the tax upon sugar. I know that the working classes resent this tax very much. The Sugar Tax is very unpopular. It is felt to be a very real burden upon the people, who are

    1267
    already taxed out of proportion to their capacity to pay. It is all very well for the hon. Baronet to put forward the observations he does. The tax does not make much difference to him. I would ask the hon. Baronet to consider which would be better, this exceeding increase in the cost of sugar or an increase in the Income Tax? I would suggest another thing—because my suggestion raises this question—let Mm put before a meeting of working men in his constituency the alternative as to whether "they" would sooner pay an increased Sugar Tax or "he" should pay an increase in the tax upon his not insignificant income? We cannot regard this proposed increase of the Sugar Tax without regarding the other proposals for indirect taxation which are made in this Budget. The Chancellor of the Exchequer, apart from the Luxury Tax, of which no estimate has been made, has imposed as much in indirect taxation this year as in direct taxation. The figures are approximately equal. That surely cannot be sustained, because there is no comparison at all between the capacity of the respective classes to pay increased taxation. The right hon. Gentleman who last sat down tells us that the yield of the Sugar Tax in duty will be about £25,000,000 per year. That £25,000,000 works out at about 10s. per head of the population. Taking the average family at five, it means 50s. a year in Sugar Tax alone, or Is. per week upon each of the members of the average working-class family. This is a real burden upon the hundreds and thousands of families in the country today who have an income not too adequate to meet the essential needs of existence. Indeed, the thing that surprises me beyond all other things is how the working people of the country live, with prices as they are. With a strain so heavy and a burden so great, an increase of 2d. or 3d. in the cost of living makes a very perceptible difference indeed. I am not now urging the objection that I urged previously. It was recognised by the Liberal Government, when it came into power in 1906, that the Sugar Tax, which had been imposed by the preceding Government, ought at the earliest possible opportunity to be reduced or abolished. When the War broke out the Government were under a promise to repeal the Sugar Tax. For these reasons I therefore support the Amendment moved by my hon. Friend opposite. I
    1268
    was glad to hear him make the remarks he did. If he presses the thing to a Division, whatever may be the amount of support in that Division, at any rate he may take away this satisfaction, that in persisting in his intention he has expressed the feeling of the overwhelming mass of the working people of this country.
    Mr. BALDWIN (Joint Financial Secretary to the Treasury): I do not propose to detain the Committee at any length on this subject, which was discussed during the earlier stage of the Budget. After all, it is not one in which further arguments can easily be adduced, either for or against. I know sugar is a subject which very often generates a certain amount of warmth in this country, as, for instance, in the case of the right hon. Gentleman the Member for Islington (Mr. T. Lough). After all, we must look at this proposal as we must look at all other proposals in the Budget—strictly from a business point of view, and also from this point of view: We want the Committee to believe that we are attempting to spread the enormous burden which has to be spread on the shoulders of the people as equitably as we can. I am quite aware that no tax in itself can be popular. I agree entirely with the hon. Member for Blackburn (Mr. Snowden) that there is no single tax against which, given the right kind of audience, you could not get a unanimous vote. On the other hand, there is no single tax where, again if you choose your audience, you could not get an enthusiastic support for laying that particular burden on the shoulders of someone else ! After all, it is not my business here to do either of these two things. I must try and justify to the House the course that has been taken by the Chancellor of the Exchequer. In framing our Budget this year we attempted—I still maintain it in spite of criticism—to deal lightly with those who nave small incomes. As was pointed out in the course of the Budget Debate, this increase in the Sugar Duty—I do not think I need remind hon. Members how small is the actual increase!—is the only additional tax this year which falls on men of less income than £500 a year.
    Mr. BONAR LAW: Of necessity!
    Mr. BALDWIN:Yes, which of necessity falls on those who have a less income

    1269
    than £500 a year. Having regard to the increase of taxation in Income Tax, Super-tax, and liquor, it seems to me that a slight burden should be put even on those who are at the lower end of the scale as regards Income Tax. Consider the case against sugar. It is easy to recognise it. Of course it arises from this, that you come down to the men who have below £500 a year, you work down through the men who have a living wage, beyond, down to the poor, and then to the very poor. I quite recognise there is additional hardship, although only a slight additional hardship, in this increased tax on the very poor. It is, however, impossible to devise any method of taxation which is not felt in those quarters. I would ask the Committee to bear in mind that if we had not proposed this tax, we should have left alone, without any additional taxation, at a time when everyone else is paying it, those who receive the smaller incomes.
    It is very easy for the hon. Member for Blackburn to say, "Put what you would have gained; by this on the Income Tax." I think we may already claim to have paid, I think, considerable attention to the Income Tax during this financial year. We feel that there should be something in reserve in that direction, for, if the War should be prolonged, we may have to come to the House another year, and ask for still Member for Islington spoke as though we were in charge of an overflowing were in charge of an overflowing Treasury. My view is that we should get every penny we can. If we can get more money than we have budgeted for, so much the better for the country. the right hon. Gentleman asks, "Why should sugar be penalised in the way it is?" Sugar suffers, as some other articles do, from the one defect from the point of view of sugar, and that is that it is an article of universal consumption. It is an axiom in taxation that if you want to get revenue, you should get hold of some article that everybody uses and tax it. At a time like this sugar is rationed. The amount of it is limited, the tax is an easy one to impose and collect, and the whole amount of the tax goes to the Revenue, with very little trouble or expense for collection. As objection may be taken to this tax in certain quarters of the House, I think that consideration is one which will commend itself to the Committee as being part of this Budget as a
    1270
    whole, and I hope the Committee will support us in carrying this Clause as it stands, just as in the later stages of this Budget we shall ask for the united support of the Committee to defeat many schemes that will be brought forward to whittle down this form of taxation which affect certain classes of the community.
    Mr. PRINGLE: The hon. Gentleman who has just replied has reminded the Committee that this subject has already been under discussion, and that on a former occasion the main contention of the Government was that that was a highly inconvenient time to discuss the subject, and we were given to understand that the full reply of the Government would be made at a later stage. Now, I think, the Committee will agree that the hon. Gentleman who has replied for the Government has hardly come up to expectations. Personally, I should have preferred not to have taken part in this discussion today in view of what is going on elsewhere, but when one opens the morning paper and sees business as usual and birthday honours and baronetcies for profiteers, we feel entitled to protest against taxing the poor man's sugar. We have to consider, first of all, whether this is an equitable tax. It is not disputed that it will be a productive tax. Nobody has suggested that the Revenue will not come to the Exchequer by the increase of the tax upon sugar, but both the Financial Secretary to the Treasury and the Chancellor of the Exchequer in previous speeches have, I think, signally failed to make out a case for the equity of this proposal.
    There are two different lines of arguments put forward in justification of the action of the Government. The first line is that it is only equitable to adopt this form of taxation when new direct taxation is being imposed, because it is urged that those who contribute to the Revenue solely in the form of indirect taxation should also be called upon for contributions. As a general rule there is a great deal to be said for that contention, but there are special circumstances which arise in connection with what may be called the non-tax paying classes. Who are the non-tax paying classes at the present time 2 They are not the more prosperous working classes, because those classes are already within the Income Tax, and the great majority of munition workers receiving the 12½per cent. bonus are now within the ranks of Income Tax payers. Many of them are dependants of soldiers who are

    1271
    at present in the Army fighting in France or some other theatre of war, and they are not receiving any war bonus. If you take the case of a wife and three children, the munificent provision made by the Government amounts to 29s. 6d. per week, and surely it is a heavy Income Tax on this poor woman to have an increased Sugar Tax levied upon her!
    My hon. Friend asserts that there is no popular feeling against this proposal, but in these days popular feeling cannot be ascertained on matters of this kind. If a woman in receipt of a separation allowance sends a letter to the Press it is suppressed. You are making all the editors of newspapers knights now, and they have to make some return to the Government in the way of the suppression of expressions of popular opinion. The consequence is that the Government are not aware of the real feeling of large sections of the people on this question. They recognise that organised workers can always make their position felt in the country. There was an inquiry in regard to industrial unrest last year, conducted by the right hon. Gentleman the Member for the Blackfriars Division (Mr. Barnes), and he told the Government that industrial unrest was due to the increased cost of living, and the Ministry of Munitions distributed another 12½ per cent. all over the country. I think the Committee is entitled to know, if there is discontent as a result of this new tax on sugar, whether this vicious circle is to be still further continued, and whether there is to be a still further large concession to the workers in order to alleviate discontent. There are the people in receipt of separation allowances, and there are also the widows of soldiers who are deceased. They have no means of getting something to compensate them for what is taken from them under this form of taxation, and I think it is a matter of gross unfairness that the Government should by this means seek to take away part, of what these people are rightly entitled to. These are not the only people who will suffer. There are the old age pensioners, who are in an equally unfortunate position. Take also the case of the agricultural labourers, whose wages are now, I suppose, raised to 25s. a week. It was stated by the senior Member for York in a former Debate that this tax amounted to an Income Tax of 5½d. on the agricultural labourer. Surely that is impos-
    1272
    ing a charge altogether out of proportion, if it means an Income Tax of 5½d to what is being imposed upon other classes of the community!
    Then there is the further defence put forward that it is necessary to impose some part of the burden upon non-Income Tax payers, but they are paying in another way. They are paying in the cost of everything they buy owing to the policy adopted by the Government, and they are paying for this reason more than anybody else in the country. Every article of prime necessity has increased in cost on account of the inflation of prices, and to say that the people who are suffering high prices on account of this inflation are not affected by the financial policy of the country is, I think, totally misleading the Committee. Another argument used is that this tax is a set-off against the subsidy paid for the reduced price of the loaf. As the hon. Gentleman was silent about that point, I wonder whether we are to understand that this argument has now been definitely and finally abandoned by the Government! It-is well if that is so, because a more fallacious argument has never been brought forward to justify any tax in this House. First of all we all know that the bread subsidy is a temporary one, and yet the Government are seeking to justify a permanent indirect tax on the basis that it counterbalances a temporary subsidy. I do not think that can be justified, and the Government could have achieved their object by a temporary adjustment in the price of sugar, but they are seeking to use this temporary subsidy for the purpose of imposing a permanent charge upon the indirect taxpayer.
    Does this subsidy justify the imposition of this tax? We know enough now about the administration of this subsidy to be able to assert that it is extremely wasteful in its character, and that by a rearrangement of the subsidy the whole amount to be obtained from this increased tax could be saved by the Government without adding a penny to the price of the loaf. In these circumstances I think the Government should be asked to abandon the tax and to fix on the more economical and equitable administration of the subsidy, so that the money which is sought to be raised by this tax may be made up to the Exchequer. I think that is a wise and rational course. I remember in a former Debate the Leader of the Labour party, whom I congratu-

    1273
    late upon the honour he has just received, indicated that he was going to do terrible things on the Committee stage. He was one of the speakers who held that it would be very inconvenient that we should discuss this matter on the Report stage, and he then stated that he would be prepared to move the rejection of the Clause on behalf of the Labour party. Up to the present, however, he has taken no very conspicuous part in this Debate, neither has the Labour party as a whole, but I am hoping that now he has been reminded of his former attitude he will once more state here what the Labour party is thinking. We have always known what the Labour party thought when it was out of office in the past. In 1916 the Member for the Blackfriars Division, who is now a member of the War Cabinet, protested against a much smaller increase of the Sugar Tax, and now he is telling us about the diabolical ingenuity of the Germans—
    The CHAIRMAN: I have allowed the hon. Member a good deal of latitude, but it is not fair to introduce wholly irrelevant matter to which hon. Members are not entitled to reply. It is very unfair.
    Mr. PRINGLE: I do not wish to enter into a discussion upon the consistency of the action of members of the Labour party, but I think an hon. Member might always be allowed to strengthen his case by referring to the former views of hon. Members of this House. The staple arguments between the two Front Benches have always been what they themselves have said previously, and now an hon. Member is not to be entitled to refer to what a Minister said before he became a Minister. Of course I accept your ruling, Mr. Chairman. Two years ago the right hon. Gentleman the Member for the Blackfriars Division made a speech protesting against a small increase in the Sugar Duty, and I was quoting his opinion to strengthen my case against a larger increase. The same argument also applies to a speech made by the Secretary to the Ministry of Food, who has now become a right hon. Gentleman. I am not going to enter into the question as to the value of the arguments then adduced, but I say that if those gentlemen were entitled to put forward their opinions then, it is surely quite within the competence and the right of other hon. Members who have not come into office to adhere to their former views,
    1274
    and also to put forward what it is surely important for this Committee to remember in regard to the former views of those right hon. Gentlemen. I say that this tax cannot be justified as an equivalent to the subsidy on bread, and it is a tax which is going to affect large classes of the community, many of them most deserving— namely, the dependants of soldiers and sailors who are fighting at the front, and the dependants of deceased soldiers and sailors. Under these circumstances I shall certainly go into the Lobby against this Clause.
    Sir J. D. REES: It seems to me that those who welcomed on the introduction of this Budget the principles upon which it was framed cannot very consistently now object to support the operative Clauses of it. It is all very well when you come to a particular tax to say it is open to objection, but hon. Members in the position I have indicated are not justified in pressing their objection. I only rose to ask the Chancellor of the Exchequer whether it is feasible for him to communicate with the Food Department with a view to the exercise of the most merciful consideration in the administration of this tax for an exceedingly poor class of persons, the small sweetmeat shopkeepers, of whom a large number are to be found in my Constituency.
    The CHAIRMAN: That does not arise here. It is another Department altogether.
    Mr. ADAMSON: I rise to support the Amendment put forward by the hon. Member for Coventry (Mr. D. Mason). It may be within the recollection of the Committee that on the occasion when this matter was last discussed I said a few words in support of a similar Motion. [An Hon. Member: "You said you would put an Amendment down on the Committee stage to reject the Clause."] There is an Amendment down to reject the Clause, and I am about to support it. I support it not because of the extraordinary appeal made to me by the hon. Member for Lanark (Mr. Pringle), but because this is an unjust tax. It is a tax upon that section of the people who are least able to bear it, and I think the Chancellor of the Exchequer would be very well advised if he were to agree to the Amendment and to try and find compensation in other directions where the burden would be less excessive than it is in the case of this particular duty. The hon. Baronet the Member for Wellington

    1275
    (Sir C. Henry) stated that an Amendment of this kind did not help us to win the War. May I reply that a tax of this kind does not help us to win the War, and if we are levying a tax on a section of the people who are unable to bear it we are bound to breed dissatisfaction and discontent, which I think will not help us to win the War. There are many other directions in which the Chancellor of the Exchequer could look for the money that he is securing from this tax—directions that would have less effect on the moral of our people. If you are to go successfully through the present struggle it is very important to keep up the moral of the people. As has been pointed out by the hon. Member for Blackburn (Mr. Snowden), the Income Tax at certain stages could have afforded the money which is involved in this Sugar Tax. I hope that before the discussion ceases we shall have the Chancellor of the Exchequer agreeing to this Amendment. The increase in the cost of living which has taken place since the War began is a very serious matter for a large section of our people. This tax certainly affects very seriously old age pensioners and those who are dependent on separation allowances. But it does not affect them alone, because there are large masses of working people who have had little or no increase in their wages, and yet have had to meet the increased cost of living which is going on outside anything that has been done by the Chancellor of the Exchequer. There is, therefore, all the more reason why we should avoid adding to the burden of that section of our people, and I hope consequently the right hon. Gentleman will see his way to abandon this proposed increase of the Sugar Tax.
    Mr. BONAR LAW: I am obliged to hon. Members for the brevity of their speeches on this subject, and I agree that the conditions in which we are placed to-day make it unsuitable for those ordinary party recriminations which usually take place in the discussions on the Budget. This remark is suggested by an observation which fell from the hon. Member for Coventry (Mr. D. Mason), recalling how during pre-war days at election times it was customary for people to go round the constituencies complaining that certain candidates had voted against the reduction of the Tea or Sugar Taxes. As a matter of fact, any supporter
    1276
    of the Government of that time who voted in favour of those taxes did so because they were necessary for carrying on the government of the country. Surely this taxation is still much more necessary now, and I feel quite confident that the votes of hon. Members will therefore not be influenced by considerations of that kind. This is not a tax which I had any pleasure in imposing, and I would ask the Committee to bear in mind that, in framing these Budget proposals, what we had to consider was whether the burden as a whole is fairly put on all sections of the community that were able to pay. The hon. Member for Blackburn (Mr. Snowden) spoke of the proportion of direct to indirect taxation. I am one of those who think it not only a matter of right, but also a matter of necessity that the big financial burden of a war like this can only be borne by those who have the money available. It is the well-to-do classes that must bear the great proportion of this additional taxation. Perhaps the Committee will be surprised to learn what a complete change there has been in the proportion of direct to indirect taxation since the War broke out. In the last year before the War, 1913–14, the proportion of direct taxation was 57½ per cent. as against 42½ per cent. of indirect taxation. This year direct taxation amounts to between 81 and 82 per cent. of the whole, as compared with between 18 and 19 per cent. of indirect taxation. No one, therefore, can fail to recognise that direct taxation has been asked to pay a very large part of the additional burden due to the War.
    When we come to this particular tax I would ask the Committee to take into consideration the reasons that must have influenced any Chancellor of the Exchequer in imposing the taxation. It is necessary to take the Budget as a whole. For instance, we had to impose additional Income Tax this year. But in doing so I left out altogether those whose incomes were less than £500 a year. But I did not feel I should be justified in doing that unless at the same time I was able to get something out of those classes who were thus exempted. As a matter of fact, the only additional burden in connection with this new taxation falling upon anyone with an income of less than £500 a year is this particular tax on sugar—putting aside, of course, such things as beer and tobacco, which are regarded as luxuries and which some people do not think a necessity at all. I quite recognise that in the taxation

    1277
    of sugar you are imposing a burden which falls on all classes of the community, and which, inasmuch as the consumption of sugar is pretty equally distributed throughout the population, falls therefore more heavily on the class least able to pay it. That is true, but then I ask the Committee to remember that in this same Budget in regard to Income Tax I granted an allowance for the wife, placing her in that respect on the same level as a child. Therefore, so far as any member of the working class who is called upon to pay Income Tax is concerned, he actually, with this additional duty on sugar, pays less than he did before that allowance was decided upon. At the present rate of Income Tax the allowance for the wife represents the sum of £2 16s. 3d. per year. This calculation has been made. Take the case of a family of seven—a husband, wife and five children. The extra duty on the present sugar ration for that family amounts to 18s. 11d. per year. There are, of course, other articles containing sugar which are consumed by the family, such as jam, and in respect of that the consumer is not paying on those articles anything like a full share of the additional burden for sugar. It has been estimated that the duty on these other articles represents not more than one-third of the duty on the sugar ration, making the whole burden in that respect £l 5s. 3d. per annum, as against the allowance for the wife of £2.16s. 3d. It is quite obvious, therefore, that in the case of the working classes, where they are paying Income Tax, they are not Being asked to pay any part of this additional burden.
    5.0 p.m.
    Now we come to the poorest classes, those who do not come within the Income Tax scales. The hon. Member for Lanark (Mr. Pringle) has suggested that it is not fair to bring into account in this connection the subsidy which has been given on bread. I think he is mistaken in that view, although he was quite right when he said that the subsidy on bread was for the period of the War only, while the Sugar Duty might go on after the War. Of course, any financial Bill, whatever may be the intentions of the Chancellor of the Exchequer, can only apply to that year in which the Bill is passed. Therefore it is for this year only, and in estimating the amount which would be raised under a general system of taxation this
    1278
    must be reconsidered in the light of events which arise out of the War and it does not follow that the same rate will be kept on after the War is over. If the principle is sound and if the burden we are now imposing on the people of this country is reasonable you are entitled to take the subsidy on the loaf into account. I ask the Committee to look at what this is. Here again I have had a calculation made If you take the same sized family which I gave before and assume that only the-voluntary ration allowance is used,. though as a matter of fact a good deal more than that is being used—then the saving for a family of seven is £3 5s., whereas the extra Sugar Duty is only £l 5s. 3d. My right hon. Friend and the Member for Lanark said this is a very complicated way of doing this. So it is, but I do not think it follows that it is a bad way. I know there is a good deal to be said on both sides as to the wisdom of this subsidy on bread, but I would point out to the Committee that France, a country less able to do this sort of thing, than ourselves, had arranged for the loaf to be fixed at a lower price before we came to this decision, and when hon. Members say we should just take off the bread subsidy and not put on the Sugar Duty, I do not believe they are representing the views of the poorest classes of the consumers of this country. If they had to choose between the cheaper loaf and the dearer sugar I think on the whole they would rather the dearer sugar than the dearer loaf. The hon. Member for Lanark seemed rather to complain that we do not make long speeches.
    Mr. PRINGLE: No, I did not!
    Mr. BONAR LAW: I thought the hon. Member said so, but I do not know how it is possible to give the same arguments over and over again without being a nuisance to the House of Commons, and that I am sure is not the desire either of Ministers or the House of Commons. Let me just summarise what I have said. You must take this Budget as a whole. For this year at all events if you take the subsidy into account we are putting no additional burden on anyone with an income below £500 a year. In this instance I do feel it would be very wrong to use the same kind of arguments as we are accustomed to use in ordinary

    1279
    times, though I am aware that certain Members do hold and express strong views, but I do ask them to realise that at all events there has been an effort to deal fairly with this whole question of taxation. I hope that we will now be

    Division No. 46.]

    AYES.

    [5.5 p.m.

    Agg-Gardner, sir James Tynte

    Fleming, Sir J. (Aberdeen, S.)

    Palmer, Godfrey Mark

    Archdale, Lieut. E. M.

    Foster, Philip Staveley

    Pearce, Sir Robert (Staffs, Leek)

    Baird, John Lawrence

    Geddes, Sir A. C. (Hants, N.)

    Pearce, Sir William (Limehouse)

    Baldwin, Stanley

    Gibbs, Col. George Abraham

    Pease, Rt. Hon. H. Pike (Darlington)

    Banbury, Rt. Hon. Sir Frederick G.

    Gilmour, Lieut.-Col. John

    Pratt, J. W.

    Barnes, Rt. Hon. George N.

    Greenwood, Sir Hamar (Sunderland)

    Prothero, Rt. Hon. Roland Edmund

    Barnett, Captain R. W.

    Greig, Colonel J. W.

    Pryce-Jones, Col. E.

    Barnston, Major Harry

    Gretton Col. John

    Pulley, C. T.

    Beach, William F. H.

    Hall, Lt.-Col. Sir Fred (Dulwich)

    Rawlinson, John Frederick Peel

    Beauchamp, Sir Edward

    Hambro, Angus Valdemar

    Rees, G. C. (Carnarvonshire, Arfon)

    Beck, Arthur Cecil

    Hamersley, Lt.-Col. Alfred St. George

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

    Beckett, Hon. Gervase

    Hanson, Charles Augustin

    Richardson, Albion (Peckham)

    Bird, Alfred

    Hardy, Rt. Hon. Laurence

    Roberts, Sir J. H. (Denbighs)

    Black, Sir Arthur W.

    Harmsworth, Cecil (Luton, Beds.)

    Roberts, Sir S. (Sheffield, Ecclesall)

    Blake, Sir Francis Douglas

    Harris,.Sir Henry P. (Paddington, S.)

    Robertson, Rt. Hon. J. M.

    Boles, Lieut.-Col. Dennis Fortescue

    Haslam, Lewis

    Royds, Major Edmund

    Booth, Frederick Handel

    Havelock-Allan, Sir Henry

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

    Boscawen, sir Arthur S. T. Griffith

    Henderson, John M. (Aberdeen, W.)

    Samuel, Rt. Hon. Sir Harry (Norwood)

    Boyton, Sir James

    Henry, Sir Charles (Shropshire)

    Scott, A. MacCallum (Glas., Bridgeton)

    Brace, Rt. Hon. William

    Henry, Denis S. (Londonderry, S.)

    Sharman-Crawford, Col. R. G.

    Brassey, H. L. C.

    Hewart, Rt. Hon. Sir Gordon

    Small wood, Edward

    Bridgeman, William Clive

    Hodge, Rt. Hon. John

    Smith, Rt. Hon. Sir F. E. (Liverpool)

    Brookes, Warwick

    Hohler, Gerald Fitzroy

    Spear, Sir John Ward

    B runner, John F. L.

    Holt, Richard Durning

    Spicer, Rt. Hon. Sir Albert

    Bull, Sir William

    Hope, James Fitzalan (Sheffield)

    Stirling, Lieut.-Col. Archibald

    Burgoyne, Captain A. H.

    Hughes, Spencer Leigh

    Strauss, Arthur (Paddington, North)

    Burn, Colonel C. R.

    Hunter, Major Sir Charles Rodk.

    Strauss, Edward E. (Southwark, West)

    Carson, Rt. Hon. Sir Edward H.

    Illingworth, Rt. Hon. Albert H.

    Sykes, Col. Sir Mark (Hull Central)

    Cheyne, Sir W. W.

    Jackson, Lieut.-Col. Hon. F. S. (York)

    Terrell, George (Wilts, N.W.)

    Clyde, James Avon

    Jones, J. Towyn (Carmarthen, E.)

    Walsh, Stephen (Lanes., Ince)

    Clynes, John R.

    Jones, W. Kennedy (Hornsey)

    Walton, Sir Joseph

    Coats, Sir Stuart A. (Wimbledon)

    Kinloch-Cooke, Sir Clement

    Wardle, George J.

    Colvin, Col. Richard Beale

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

    Warner, Sir Thomas Courtenay T.

    Compton-Rickett, Rt. Hon. Sir J.

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

    Watson, John Bertrand (Stockton)

    Cornwall, Sir Edwin A.

    Lewis, Rt. Hon. John Herbert

    Whiteley, Sir H. J.

    Craig, Colonel Sir J. (Down, E.)

    Lonsdale, James R.

    Whittaker, Rt. Hon. Sir Thomas P.

    Craik, Rt. Hon. Sir Henry

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

    Williams, Aneurin (Durham, N.W.)

    Croft, Brigadier-General Henry Page

    M'Callum, Sir John M.

    Williams, Col. Sir R. (Dorset, W.)

    Currie, George w.

    MacCaw, William J. MacGeagh

    Willoughby, Lieut.-Col. Hon. Claud

    Dalrymple, Hon. H. H.

    McKenna, Rt. Hon. Reginald

    Wilson, Capt. A. Stanley (Yorks. E.R.)

    Davies, David (Montgomery Co.)

    Mackinder, Halford J.

    Wilson, Col. Leslie C. (Reading)

    Denniss, E. R. B.

    Macmaster, Donald

    Winfrey, Sir Richard

    Dickinson, Rt. Hon. Sir W. H.

    McMicking, Major Gilbert

    Wood, Hon. E. F. L. (Yorks, Ripon)

    Dougherty, Rt. Hon. Sir J. B.

    Maitland, Sir A. D. Steel-

    Wright, Captain Henry Fitzherbert

    Du Pre, Major W. Baring

    Mason, James F. (Windsor)

    Young, William (Perth, East)

    Essex, Sir Richard Walter

    Mond, Rt. Hon. Sir Alfred

    Younger, Sir George

    Fell, Sir Arthur

    Money, Sir L. G. Chiozza.

    Yoxall, Sir James Henry

    Fisher, Rt. Hon. H. A. L. (Hallam)

    Morgan, George Hay

    Fisher, Rt. Hon. W. Hayes (Fulham)

    Munro, Rt. Hon. Robert

    TELLERS FOR THE AYES.—Lord

    Fitzroy, Hon. Edward A.

    Newman, Sir Robert (Exeter)

    Edmund Talbot and Mr. Dudley

    Flannery, Sir J. Fortescue

    Nicholson, William G. (Petersfield)

    Ward.

    NOES.

    Adamson, William

    Hancock, John George

    Roch, Walter F. (Pembroke)

    Anderson, W. C.

    Hudson, Walter

    Rowlands, James

    Arnold, Sydney

    Jowett, Frederick William

    Snowden, Philip

    Baker, Joseph Allen (Finsbury, E.)

    Lambert, Richard (Wilts, Cricklade)

    Thomas, Rt. Hon. J. H. (Derby)

    Barlow, Sir John Emmott (Somerset)

    Lough, Rt. Hon. Thomas

    Trevelyan Charles Philips

    Bowden, Major G. R. Harland

    Macdonald, J. Ramsay (Leicester)

    Wednwood, Lieut.-Commander Josiah C.

    Bowerman, Rt. Hon. C. W,

    Outhwaite, R. L.

    Whitehouse, John Howard

    Burns, Rt. Hon. John

    Peto, Basil Edward

    Wiles, Rt. Hon. Thomas

    Chancellor, Henry George

    Ponsonby, Arthur A. W. H.

    Forens, Rt. Hon. Thomas Robinson

    Price, C. E. (Edinburgh, Central)

    TELLERS FOR THE NOES.—Mr.

    Galbraith, Samuel

    Pringle. William M. R.

    David Mason and Capt. A. Smith.

    Glanville, Harold James

    Richardson, Thomas (Whitehaven)

    CLAUSE 9.—(Increased Excise Duties on Sugar.)
    (1) In lieu of the present Excise Duty, drawbacks, and allowance in respect of sugar, molasses, glucose, and saccharine there shall as
    allowed to come to a decision on this particular part of the Bill.
    Question put, "That the Clause stand part of the Bill."
    The Committee divided: Ayes, 149; Noes, 31.
    from the twenty-third day of April, nineteen hundred and eighteen, be charged, levied, and paid the duties specified in the second column of Part I. of the Third Schedule to this Act,

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    and there shall be paid and allowed the drawbacks and allowance set out in Part II. of that Schedule.
    (2) The provisions of Part III. of the Schedule to the Finance (No. 2) Act, 1915, shall apply to the Excise Duty under this Section.
    Amendment made: In Sub-section (2), after the word "the" ["the Finance (No. 2) Act"], insert the word "first."— [Mr. Bonar Law.]
    Clause, as amended, ordered to stand part of the Bill.
    Clause 10 (Increased Duties on Matches) ordered to stand part of the Bill.

    CLAUSE 11.—(Duty on Articles and Places of Luxury.)
    (1) As from the appointed date there shall be charged, levied, and paid on all payments made in respect of the purchase or supply of articles of luxury sold or supplied in Great Britain or Ireland, other than a purchase of articles by a person who is a dealer in articles of the same or a like nature buying to sell again, and on all payments made in respect of goods sold or supplied, accommodation supplied, or services rendered, at any place of luxury in Great Britain or Ireland, an Excise Duty (in this Act referred to as "Luxury Duty ") of an amount equal to one-sixth part of the payment:
    Provided that where the total amount paid for any articles of luxury sold or supplied to one person at the same time, or the total amount paid at a place of luxury by one person at the same time, is less than one shilling, Luxury Duty shall not be charged in respect of the payment, and where any such payment exceeds one shilling, Luxury Duty shall not be charged on any fractional part of a shilling.
    (2) Luxury Duty chargeable on payments made in respect of articles of luxury sold or supplied shall be recoverable from the person by whom the articles are sold or supplied, and Luxury Duty chargeable in respect of payments made at a place of luxury shall be recoverable from the proprietor of the place of luxury, or if it is not recoverable from that person or the proprietor, as the case may be, shall be recoverable from the person by whom or on whose behalf the payments are made.
    Where the amount of the duty is less than fifty pounds, Luxury Duty may, without prejudice to any other means of recovery, be recovered by the Commissioners of Customs and Excise summarily as a civil debt.
    (3) In this Part of this Aet—
    The expressions "article of luxury" and "place of luxury" mean respectively any article or place declared from time to time by Resolution of the House of Commons originating in Committee of Ways and Means to be an article of luxury or place of luxury:
    The expression "accommodation" includes lodging, stabling, and accommodation for vehicles of any description, and the expression "services rendered" includes games and sports provided:
    The expression "appointed date" means as respects any article of luxury or place of luxury, such date, not being earlier than two weeks or later than four week 6 after the pass-
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    ing of a Resolution declaring the article or place to be an article or place of luxury, or the passing of this Act, whichever is the later, as may be fixed by the Treasury:
    The expression "proprietor" in relation to a club includes any person responsible for the management of the club.
    Mr. BONAR LAW: I beg to move, in Sub-section (1), to leave out the words "all payments," and to insert instead thereof the words "every payment." This is a purely drafting Amendment.
    Amendment agreed to.
    The CHAIRMAN: The next Amendment, standing in the name of the hon. Member for Cambridge University (Mr. Rawlinson)—to insert the words "hire purchase"—will come later, in the definition Clause.
    Amendment made: In Sub-section (1), leave out the words "all payments" ["all payments made in respect of goods sold or supplied"], and insert instead thereof the words "every payment."—[Mr. Bonar Law.]
    Mr. BONAR LAW: I beg to move, in Sub-section (1), to leave out the words "of an amount equal to one-sixth part of the payment," and to insert instead thereof the words "at the rate shown in the scale set out in the Fourth Schedule to this Act."
    Mr. LOUGH: It is difficult to follow this.
    Mr. BALDWIN:May I explain that the alteration of those words is necessitated by the fact that a scale has been drawn up to keep as closely as possible to the one-sixth which was sanctioned in the Resolution, and a scale was drawn up for the purpose of administering the Act so that as small an amount of stamps as possible might be used for the purpose of collecting this duty. It is also, I understand, a great convenience to the shopkeeper, and will prevent a great deal of rather intricate calculation.
    Sir C. HENRY: My right hon. Friend has surely not altered the flat rate of ⅙th?
    Mr. BALDWIN: It is very near to it.
    Sir M. BARLOW:I have an Amendment to this Clause in its original shape, asking for a reduction in the tax, and I should like an opportunity of saying a few words in regard to it. I am not so sanguine as to assume that the Chancellor of the Exchequer will give us the reduction quite in the form that I suggest, but there ought to be an opportunity offered

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    those—I speak on behalf of important organisations—who desire to make suggestions as to the amount of the tax proposed. I do not know how beat in accordance with the convenience of the House and the rules of Order to bring this matter forward, but the Amendment would be substantially out of order, because directly the one-sixth disappears it really becomes a question of the Schedule. If I could have an opportunity of dealing with the matter on the Schedule—and I take it that would be the proper course—I would let the Amendment as it stands drop, but I do think that an opportunity ought to be given for responsible bodies of traders to put their views before the Chancellor of the Exchequer and the House as to why, in their view, the tax as at present proposed is too high. I speak for a large number of associations, such as the Booksellers' Association and,the Art Dealers' Association, who are not in the least hostile—I do not say that they like the tax, but they are prepared, as loyal, patriotic Englishmen, within reasonable limits to accede to the Chancellor's demands—and their contention is that the burden of the tax, if you put it as high as 16g per cent., will be so great that it will defeat its own purpose.
    Mr. HOLT: On a point of Order. May I ask whether the effect of discussing the rate of the tax now will be that when we come to consider the words which the Chancellor proposes to insert in the Schedule we shall be debarred from any further discussion?
    The DEPUTY-CHAIRMAN (Sir D. Maclean): I take it that the general discussion will take place on this Amendment, and of course we shall dispose of the Amendment of the hon. Member now in possession of the Committee.
    Mr. BONAR LAW: Is that Amendment in order?
    The DEPUTY-CHAIRMAN: I shall not call upon the hon. Member.
    Mr. BONAR LAW: I do not know whether it is the best course, but I was going to suggest that the discussion might take place on the Schedule, when it would be easy to reduce the total. It would be a pity to have the discussion twice.
    Sir M. BARLOW: I am quite in the hands of the Committee, and if you, Sir, agree, I am quite willing to concur.
    The DEPUTY-CHAIRMAN: The discussion which the hon. Member wishes could be raised more correctly on the Schedule.
    Mr. LOUGH: Are we to understand that the hon. Member will raise this point when we come to the Schedule? I would like to ask the right hon. Gentleman's opinion with regard to this matter. We refer by this Amendment to a scale, and that scale appears for the first time in the Amendments now before us. The scale and certain Amendments of the Chancellor of the Exchequer refer to a number of articles which will be sent down to us from the Committee upstairs. We do not. know what they will be. We are really acting in the dark. We are planning taxes and rates of taxes, and we are drawing up this working scale for a number of articles about which we do not know anything. It seems to me a very unsatisfactory way to proceed in a grave matter of this kind. Would it not be better for the Chancellor of the Exchequer not to move these Amendments now, and for us not to go on with this part of the Bill until we have the Report from the Committee upstairs and know exactly the articles that we are proposing to tax? It may be that the rates which we are laying down and that the principles which the Chancellor of the Exchequer has embodied in this and subsequent Amendments may not fit any article. There may be two or three articles of gigantic importance that will come down from the Committee upstairs, and we are really taking a leap in the dark in applying all these principles to the articles before we know what they are. I therefore beg to suggest to my right hon. Friend, who is meeting with no obstruction of any kind to-day, that he might defer this Clause of the Luxury Tax until we get the Report of the Committee, and deal with it altogether in a separate Bill. It would be an objection if my right hon. Friend could say that he would lose time by doing so, and would be interfering with the businesslike procedure of the House—
    The DEPUTY-CHAIRMAN: I think it better to say that it is no use making that appeal to the Chancellor of the Exchequer, because you cannot postpone a Clause which you have already amended in Committee.
    Mr. LOUGH: Surely if the Government—
    The DEPUTY-CHAIRMAN: I could not give my assent to it
    Mr. D. MASON: If you were agreeable, and if it were the sense of the House that we should wait for the Report of the Committee, would it not be possible to defer the further consideration of this Clause?
    Mr. BONAR LAW: I wish to say that in this matter I am entirely in the hands of the Committee. When we discussed this tax with my advisers, of course, it was new, and at the time that the Resolutions were put down there were a lot of considerations which had not been taken into account. They have been taken into account since, and they are now embodied in the Amendment before the Committee. The view of my advisers is that they have now covered the case, and that the general principles we have laid down will cover any Schedule that is introduced. At the same time, I quite realise that it is an unusual course. My object in taking it frankly was to avoid having all the stages of two Finance Bills—the Committee knows exactly what that means—but, in view of the way in which the House of Commons has treated every Finance Bill since the War began, I am perfectly certain, if that is considered to be the better method, that we can rely upon the House of Commons not wasting time and allowing us to get our Bill without delay. I am in the hands of the Committee, and, if there is a general feeling that it would be better to drop these Luxury Taxes out of this Bill altogether and introduce a separate Finance Bill, I am perfectly ready to do it; but, if so, I wish the Committee to understand that it must not be taken as in any way indicating any going back at all on the determination to carry through this proposal. It is simply a question of method. As I say, I leave myself in the hands of the Committee.
    Mr. McKENNA: I think my right hon. Friend has treated the House very fairly, and I am quite sure from my own experience that when he introduces his second Bill the House will treat him equally fairly. I remember that in 1916 I took part of the original proposals out of the Finance Bill and introduced a second Bill. and the House gave me the Bill almost at once. I believe, after the Committee has reported and we know what are the articles of luxury that my right hon. Friend will have a much easier task than he would have now that we should be legislating in the dark.
    Mr. BONAR LAW: I fancy from the cheers which greeted what I said, and from what my right hon. Friend has said, that the Committee feel that is the best method, and in these circumstances I gladly fall in with the suggestion.
    Mr. HOLT: I quite agree with the course that the Chancellor of the Exchequer proposes to take, and I was really going to raise the same point at a subsequent stage, but I hope it is not understood that those who are opposed to this tax by accepting the proposal of the right hon. Gentleman pledge ourselves to give a friendly passage to a Bill to which we object altogether in principle.
    Mr. BONAR LAW: Oh no, I do not at all expect that. All I understand it to mean is that there will be no effort except the most legitimate discussion, and that otherwise we shall be allowed to get the Bill.
    Mr. H. SAMUEL: Do we understand that the first paragraph of Sub-section (3) will not appear in the subsequent Bill when it is introduced after the Committee has reported?
    Mr. BONAR LAW: That, of course, will come out.
    The DEPUTY-CHAIRMAN:I am sorry that I cannot withdraw the Clause from the Committee.
    Mr. HOLT: We can negative it.
    Mr. BONAR LAW: Then you will have to negative the whole Clause.
    Mr. RUNCIMAN: If we negative the Clause will that in any way interfere with the introduction of the same proposal in the form of a separate Bill later in the Session? We ought to have it quite clear, so that the Chancellor of the Exchequer is not embarrassed.
    The DEPUTY-CHAIRMAN: The decision of the Committee will not affect the power to bring in another Bill; it will only affect the Clause in the Bill.
    Amendment, by leave, withdrawn.
    Clause, as amended, negatived.
    Clauses 12 (Supplemental Provisions as to Luxury Duty) and 13 (Provision for Enabling Local Authority and Police Authority to Exercise Powers in Relation to Luxury Duty) negatived.
    Clauses 14 (Limit of Time for Payment of Beer Duty); 15 (Deposit of British Glucose in Warehouse on Drawback); 16, (Amendment of 39 40 Vict., c. 36, with Respect to Excise Drawbacks); and 17, (Drawback and Allowance on Goods Damaged or Destroyed After Shipment), ordered to stand part of the Bill.

    CLAUSE 18.—(Molasses Used as Food for Stock.)
    Sub-section (1) of Section one of the Revenue Act, 1903 (which exempts from duty imported molasses to be used solely as food for stock), shall apply to molasses produced by a refiner in Great Britain or Ireland from sugar upon which no duty has been paid as it applies to molasses imported into Great Britain or Ireland.
    (2)If any person uses, or is in any way concerned in using, any duty-free molasses other wise than as food for stock, he shall be liable to a penalty of fifty pounds, and the molasses and any articles compounded therewith or manufactured there from shall be forfeited.
    In this Section the expression "duty-free molasses" means molasses which have been allowed to be imported or delivered without payment of duty under Sub-section (1) of Section one of the Revenue Act, 1903, as amended by any other enactment, or in respect of which an allowance has been made under Sub-section (2) of that Section.
    Amendment made: At the end of the Clause add the words "as amended by any other enactment."—[Mr. Bonar Law.]
    Clause, as amended, ordered to stand part of the Bill.

PART II.
  INCOME TAX.

    CLAUSE 19.—(Income Tax for 1918–19.)
    (1)Income Tax for the year beginning on the sixth day of April, nineteen hundred and eighteen, shall be charged at the rate of six shillings, and the additional Income Tax under Section twenty-seven of the Finance Act. 1916, on securities which the Treasury are willing to purchase, shall be charged, levied, and paid for that year at the same rate as was charged for the year beginning on the sixth day of April, nineteen hundred and seventeen.
    (2)All such enactments relating to Income Tax, including the said additional Income Tax, as were in force with respect to the duties of Income Tax granted for the year beginning the sixth day of April, nineteen hundred and seven teen, shall have full force and effect with respect to any duties of Income Tax granted by this Act.
    (3)The annual value of any property which has been adopted for the purpose cither of Income Tax under Schedules A and B in the Income Tax Act, 1853, or of the Inhabited House Duty for the year ending on the fifth day of April, nineteen hundred and eighteen, shall be taken as the annual value of that property for the same purpose for the next subsequent year:
    Provided that this Sub-section—

    (a) so far as respects the duty on inhabited houses in Scotland shall be construed with the substitution of the twenty-fourth day of May for the fifth day of April; and

    (b) shall not apply to the Metropolis as denned by the Valuation (Metropolis) Act, 1869.

    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. RAWLINSON:I desire to raise one or two small matters in connection with the Income Tax. One quite realises that it is necessary to raise the amount of the tax, but I particularly desire an assurance from the Chancellor of the Exchequer as to the collection of the tax at the present time. Are we sure that the taxes we put on are really carefully collected? I would put that question, first of all, with regard to the tax on incomes under £200 a year— the smaller incomes upon which the tax is not collected in many cases by the regular means of collection. Can the right hon. Gentleman tell the Committee anything as to the way in which that tax is coming in? I have heard disquieting reports even in England, and I suppose as far as Ireland is concerned it is too much to ask for an assurance to this effect. I would also wish the right hon. Gentleman to tell us something about the collection of the tax on the War Loan dividends. From a business point of view the present arrangement is an extraordinarily bad one. I was interested in an estate which was wound up in 1916, and I found it very difficult to get anybody to take the tax. Eventually I got someone, as a personal favour, to make an assessment, and the money was paid last year. Again, we have had great difficulty about War Loan dividends which came in last December. Not only did the Chancellor of the Exchequer not get the tax last December, but the return has yet to be made for this year, and the tax will not be payable till next January. Even then it will not be collected until a later date. That is a very long delay in getting in a tax, in addition to which there is a considerable loss of Income Tax, because people do not make their returns properly. Difficulties arise at every turn. I have no doubt that before the Chancellor of the Exchequer made the present rules he carefully considered the matter. In one sense it was a choice of evils. I would suggest that, if it is found that the rules work as badly as they do at the present time, the Chancellor of the Exchequer should reconsider them. Another question of great

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    complication in connection with the Income Tax, and which has been raised in the House frequently by various Chancellors of the Exchequer, is the question of the three years' average. It may be defensible in certain times, but it is absolutely indefensible now. The various exceptions which may be granted whittle the tax away practically at every turn. I also desire to have an explanation in regard to Sub-section (3), which says:
    "The annual value of any property which has been adopted for the purpose either of Income Tax under Schedules A and B in the Income Tax Act, 1853, or of Inhabited House Duty, for the year ending on the fifth day of April, nineteen hundred and eighteen, shall be taken as the annual value of that property for the same purpose for the next subsequent year."
    Is not that a new Sub-section, put in for the first time? If so, what is the object of inserting it here? I assure the right hon. Gentleman that I do not in the least oppose the raising of the Income Tax, which appears to be absolutely necessary, and it is not in any spirit of antagonism to the Clause that I ask for an explanation on these three points. Naturally, we do not like the Income Tax being raised, but the whole Budget has been most carefully constructed, and it is only on matters of detail that one desires to offer criticism.
    Colonel STIRLING: May I ask, on a point of Order, whether on Clause 23 we can have a general discussion on the taxation of woodlands, or whether we should raise the point on this Clause?
    The DEPUTY-CHAIRMAN: I see that the Government have an Amendment on the Paper to Clause 23, and on that the point can be raised.
    Mr. BONAR LAW: I should like, if I may, to give a reasoned reply to what has been said by my hon. and learned Friend (Mr. Rawlinson), although I rather think that what we are discussing is not administration but additional taxation, and the points he raised were questions of administration. If, Sir Donald Maclean, you will allow me, I will explain how the matter stands. The Committee will remember that at the time we tried to raise the Loan in January, 1917, we were very anxious—the House as well as the Government—that it should be made a great success. As had been done by all previous Chancellors of the Exchequer, I consulted experts in the City in regard to this matter and was told by everyone of them that it would make the Loan much
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    more attractive if we could take away the deduction of Income Tax at the source. That seemed, on the face of it, obvious. We were very anxious to get subscriptions, as far as possible, not merely from those who were very rich but from all sections. As I said before, it meant that everyone who subscribed to the War Loan, in order to get back the difference by abatement allowance, had to prove that they were not liable to pay the full amount of Income Tax. By the arrangement we made the. custom was reversed, and the claim had to be made on the individual. I consulted my advisers about this, and they thought, as my hon. and learned Friend has said, that there would undoubtedly be some delay in collection, but they did assure me that, in their opinion, in the long run there would be no loss of revenue. Acting on the best advice I could get, I was satisfied that, on the whole, putting one advantage against a disadvantage, it was in the national interest at that time to encourage subscriptions to the Loan by doing away with the principle of deduction at the source. I quite admit, and I am pure every financial expert in the Committee will agree with me, that it was rather a bad precedent, because the success of the Income Tax largely depends upon collection at the source. I admit that, but I still think that in all the circumstances in which we were then placed it was the right thing to do. The result of the Loan justifies the course we took.
    As to the collection of the tax on small Incomes, it is obvious that it must be very difficult, comparatively, to collect the Income Tax in the case of these small incomes. All that I can say—I have made inquiry—is that this collection is getting more and more efficient the longer this tax lasts. My advisers are getting all they can in, and are well satisfied with the result. As an indication of the result of the tax, and that the effort made to get it in has not been unsuccessful, I may say—I am sure my right hon. Friend the Leader of the Labour party (Mr. Adamson) will agree with me that once the House has imposed the tax it is the duty of the Government to collect it—that one of the best proofs that it has been effective is the number of deputations I have received from various bodies. My right hon. Friend has been present at most of them. They have been deputations urging me to increase the limit to which the Income Tax applies. As to Sub-section (3), I have no note upon it, and I do not know whether

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    or not it is new. If there is any difficulty, it can be put right on Report. I will make inquiries about it.

    CLAUSE 20.—(Modification of Belief Given in Respect of Earned Income.)
    (1) The following Sub-section shall be substituted for Sub-section (1) of Section nineteen of the Finance Act, 1907 (which provides for the reduction of the Income Tax payable in respect of earned income), in lieu of that substituted by Section twenty-five of the Finance Act, 1916, namely:
    "(1) Any individual who claims and proves in manner provided by this Section that his total income from all sources does not exceed two thousand five hundred pounds, and that any part of that income is earned income shall be entitled, subject to the provisions of this Section, to such relief from Income Tax as will reduce the amount payable on the earned income to the amount which would be payable if the tax were charged on that income at the rate of—
    "Two shillings and threepence if the total income does not exceed five hundred pounds;
    "Three shillings if the total income exceeds five hundred pounds and does not exceed one thousand pounds;
    "Three shillings and ninepence if the total income exceeds one thousand pounds and does not exceed one thousand five hundred pounds;
    "Four shillings and sixpence if the total income exceeds one thousand five hundred pounds and does not exceed two thousand pounds;
    "Five shillings and threepence if the total income exceeds two thousand pounds and does not exceed two thousand five hundred pounds."
    (2) Paragraph (a) of Sub-section (7) of Section nineteen of the Finance Act, 1907, shall have effect as though there were inserted therein after the words "in any office or employment of profit" the words "or given to the individual in respect of the past services of any deceased person."
    Mr. ADAMSON: I beg to move, in Subsection (1), after the word "of" ["if the tax were charged on that income at the rate of"] to insert the words "One shiling if the total income does not exceed two hundred pounds; one shilling and sixpence if the total income exceeds two hundred pounds and does not exceed two hundred and fifty pounds; one shilling and ninepence if the total income exceeds two hundred and fifty pounds and does not exceed three hundred and fifty pounds."
    My object in moving this Amendment is, as far as possible, to adjust the incidence of taxation upon all sections of our people. When the Income Tax limit was
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    reduced in 1915 from £160 per annum to £130 per annum we were then informed from all sides of the House that the working classes of the country would be very willing indeed to bear their share of the cost of the War. Accordingly, the Income Tax limit was reduced, in order to rope them in. Since then the cost of living has increased enormously, and these people with low incomes, who for the first time were then roped in, are now finding that the strain that has been put upon them is an excessive one. I am perfectly safe in saying that the cost of living has risen by at least 80 per cent. It is no doubt true that there have been certain advances in wages. Certain advances in wages have been secured by most sections of the industrial classes of this country. There are some people who have had no advance, but, generally speaking, advances in wages have been secured. These advances in wages may be said to range from 15 per cent. to 65 per cent. but in no case, as far as I know, has it equalled the increase that has taken place in the cost of living. Consequently, persons with small incomes who, for the first time, have been roped in by the lowering of the Income Tax limit from £150 to £130 are feeling the strain much more severely now than they felt it when the tax was imposed in 1915. I know that to give effect to my suggestion would mean a considerable loss to the Revenue, but there are other directions in which the right hon. Gentleman could recoup himself, even if the principle embodied in the Amendment were carried to a much larger extent than I propose. Taxation should be imposed on that section of people who are best able to bear it. The parties covered by my Amendment are those less able to bear it. They should have some relief and the amount payable by those with larger incomes should be increased as their income increases. I hope that in the interests of fair play to all sections of our people the Chancellor of the Exchequer will be prepared to give serious consideration to the Amendment.
    Mr. D. MASON: It may perhaps appear inconsistent for me to support the Amendment when I have so often argued in favour of developing and extending the Income Tax downwards, and the effect of taxation upon wages. But I have always been careful when arguing in favour of extending the Income Tax right down the scale to couple it with the abolition of

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    food taxes. When I have addressed my own constituency, which is an industrial constituency, they have expressed themselves as preferring that there should be, as promised, a Commission to consider the development and extension of the Income Tax—that would be much more popular among the working classes and those in receipt of small incomes—and that we should abolish all food taxes. But, inasmuch as we have not got that, and we have to deal with things as they are, and, remembering that the largely increased cost of living presses very hard upon those leastable to bear it, the same arguments which I submitted in favour of the abolition of the sugar increase would be equally applicable to this proposal. It is particularly civil servants, old age pensioners, and those in receipt of fixed incomes and separation allowances who feel this terrible impress of the continual increase in the cost of living, and, therefore, they deserve some consideration. I hope the right hon. Gentleman will meet my right hon. Friend by some such reduction as is embodied in the Amendment. It is this class of people, who have very little political organisation, and very few representatives to speak for them, and yet who feel unquestionably this ever-increasing cost of living who ought to have some redress. We have denied them the remedy which might have been accorded if we had not voted for an increase in the Sugar Duty. They felt these increases on tea, sugar and so forth, and therefore as we have not given them any satisfaction on those lines, we ought to support the Amendment.
    Colonel Sir C. SEELY: I have great diffidence in pressing the right hon. Gentleman for any concession on account of Income Tax, because he has made us the concession, for which we have pressed for a long time, of including dependents in the children's allowance. But I should like to ask him whether he will consider this Amendment carefully, not with a view to accepting it exactly in the form in which it stands, but of making some rather larger concession than he does in the present Bill to small incomes. I have never much liked the imposing of Income Tax upon wage-earners, and have always doubted whether it was a very wise arrangement, and whether it was sufficiently productive to make it worth the trouble and difficulty of collecting. I am aware that there has been very great dissatisfaction with it, and considerable
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    difficulty with regard to it. Taxes are never really productive unless they are paid more or less willingly. It may be said that no tax is paid willingly, but I think English taxes on the whole are not resisted. They are not regarded in such a manner as to make any real resistance to their payment, and I feel that, with regard to this lowering of the amount of assessment there has arisen a difficulty with regard to its collection and a feeling against it which is rather new, and which it would be a very good thing if we could remedy. If something like the present suggestion were adopted, and if the graduation were continued so as to give a still lower graduation for a very small increase, it would be more willingly paid, and you might really not lose as much by your action as would appear to be the case on the face of the proposal.
    Persons who have been recently put into the class of Income Tax payers should not be called upon to pay 2s. 3d. in the £l, which, after all, to the old Income Tax payers, would have been considered perfectly horrible, although now we have got accustomed to much larger amounts. Therefore if the right hon. Gentleman would consider, not necessarily adopting the suggestion in its entirety, but some further continuation of this system of graduation, he would not only be making a very great concession, which would be very much appreciated, but would make the whole principle of imposing Income Tax upon wage earners more generally accepted, and if it is to be done and to be continued, and if it is to be a productive tax, he may make up his mind that he will not do it unless he makes them satisfied with it. If he makes them satisfied with it, it may become a permanent source of revenue. If they go on in their present frame of mind with regard to it, it will be purely a temporary measure, and certain money will be collected with a great deal of friction and a considerable amount of loss, because there has been definite loss to the country. There are not many cases, but I have known of people who attended their work rather less in order to keep themselves out of the Income Tax level. There has been a sort of understanding that so many days' work would mean so much money, and therefore if you do only a small amount of days' work you would not be on the list. If the right hon. Gentleman had adopted a suggestion of this kind and made these people a little

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    further concession, and said, "Although we are obliged to put Income Tax upon you, we will graduate it to the best of our ability, and make it relative to the amount that you can afford," he might have put an end to that ill-feeling with regard to it which has, I think, been unfortunate and to a certain extent disadvantageous to the country. May I thank the right hon. Gentleman for what he has done with regard to his abatement of Income Tax?
    6.0 p.m.
    Colonel THORNE: The Chancellor of the Exchequer knows the views of the organised workers quite well, because deputations have waited upon him on one or two occasions with regard to the Income Tax which is now charged upon wage earners. I belong to an economic organisation which for thirty-five years has advocated that no one should be taxed who is receiving less than £300 per annum. I believe no direct taxation should be imposed upon anyone unless he has sufficient to provide wife and children with the necessaries of life. There are a good many wage earners earning perhaps £150 or £200 who have to pay Income Tax. No one will make me believe that a man receiving less than £200 per annum, with the present price of commodities, not only food, but clothing, fruit, and everything you can think of, can provide for a family. This is a very reasonable concession that we are asking. There are a number of workmen who are called upon to pay Income Tax simply because they work overtime and on Sundays. That is a great hardship. They are doing extra work for the benefit of the country, and I do not think they should be called upon to pay this tax. I am not in a position to say, and I do not know whether the Chancellor of the Exhequer is in a position to say, what would be the exact cost to the Treasury assuming this Amendment was agreed to. He indicates that it may amount to a very considerable sum. I recognise, on the other hand, that if concessions are made in this direction it means a loss to the Treasury which some of us will have to make up. If it means a few hundred thousand pounds of cost to the nation, some other way must be found to make up the money, seeing that the Chancellor of the Exchequer has budgeted for a certain amount. I am hoping he will
    1296
    have a surplus. At any rate, there are any number of people in this country who could well afford to pay a great deal more money than they are doing to-day, considering the huge incomes that some people are receiving. A few thousands from some people would not hurt them so much as the burden would hurt the wage earners who are only getting £200 a year. In all these matters of taxation I think the burden should be put on the shoulders of those who are well able to bear it. I am afraid that our pleading will be of no avail, because the Chancellor of the Exchequer has made up his mind that he cannot make any concession because of the diminution of revenue that would occur if this concession was granted. He knows the feeling of the organised workers upon this matter, because the Trade Union Congress on several occasions has passed resolutions which say that so far as the total amount of income is concerned it should either be raised or the tax should be reduced. I would urge the Chancellor of the Exchequer to give us some concession if he cannot give us all we ask for.
    Mr. BALDWIN: I do not know whether my right hon. Friend expects us to substitute this scale for the existing one, but I am afraid that this year it will be impossible for us to make the change he desires. Though I do not propose to speak at length on this matter, I think it is only fair that the Committee should realise that the Government have taken steps to ease the working of the Income Tax year after year, and have done something to make the incidence of it less burdensome than it might have been. My hon. Friend the Member for West Ham (Colonel Thorne) spoke quite naturally when he said it seems very hard that a man with a family should pay Income Tax if he had only from £150 to £200 a year. There will be very general sympathy with that, but there is very often in dealing with this matter much more sympathy than there is accurate knowledge of what the incidence of the Income Tax really is to-day. While the income has been increased this year by a Is., it has been left at the old rate of 2s. 3d. on incomes of less than £500 a year. In addition, there is an allowance now of £25 a year for a wife, and also an allowance for each child under sixteen years of age. There is also an allowance—a subject in which the hon. Baronet (Sir C. Seely) is interested—in

    1297
    respect of dependent relatives. These are real and substantial concessions, and in effect it means that a married man with his wife living does not become subject to Income Tax until his income is more than £145 a year. If a married man has two small children, he goes up to within £5 of £200 a year before he pays Income Tax. Therefore, it is quite true to say, broadly, that any working man with a small family is exempt from Income Tax until his income is over £200 a year. That is not taking into account the possibility of dependent relatives living with him. There is also a small allowance for tools, working clothes, and death benefits. I admit quite frankly that our schedules of Income Tax as yet are not perfect. I do not suppose they ever will be, but I maintain that we are trying to improve them. I must take my stand now and say that as far as this year goes we have done all that we can see our way to do at a time like this, and I cannot hold out any hope of meeting the right hon. Gentleman and his Friends.
    Amendment negatived.
    Clause ordered to stand part of the Bill.

    CLAUSE 21.—(Graduation of Tax on Unearned Income in Case of Incomes not Exceeding £2,000.)
    Section twenty-six of the Finance Act, 1916, shall have effect as if for the rates of tax specified in that Section there were substituted the following rates, namely—
    Three shillings if the total income does not exceed five hundred pounds;
    Three shillings and ninepence if the total income exceeds five hundred pounds and does not exceed one thousand pounds;
    Four shillings and sixpence if the total income exceeds one thousand pounds and does not exceed one thousand five hundred pounds;
    Five shillings and threepence if the total income exceeds one thousand five hundred pounds and does not exceed two thousand pounds.
    Sir R. ADKINS:I beg to move, to leave out the words "Three shillings," and to insert instead thereof the words "Two shillings and sixpence."
    I move this not only for the purpose of asking the Chancellor of the Exchequer to accept the Amendment, but because I want to raise the issue that lies behind the proposal. We are now dealing with unearned income. The rate of tax on unearned income is naturally higher in this Bill than the rate on earned income. It so happens that the new scale in this Bill raises the tax on unearned incomes
    1298
    more steeply than it does on other incomes, and when you are dealing with the lower limit of unearned income, under £500, you are dealing with a certain class of the community that is perhaps of all classes the most helpless financially in view of the increased cost of nearly everything these people have to buy. You are dealing with persons who have small incomes which they are not earning. The bulk of them are persons whose capacity of earning is very little. They are living on the thrift either of their ancestors or of themselves, and they are placed by the conditions of a war like this in a position of peculiar hardship and difficulty. Where income is earned it is possible by various means that the rate of pay may be and ought to be increased to meet the possible increase in the cost of livelihood. But where you are dealing with small unearned incomes, there is no such method by which to relieve the acute pressure caused by the economic conditions of a war like this. You are dealing with a number of people who are particularly helpless and who cannot get back in any other way the additional burden which is put upon them. While I fully admit that yon ought to tax unearned incomes, small as well as great, on a higher rate than earned incomes, to keep up that important distinction, I do think the Government should take some notice of the extreme pressure under which this class of the community now lives, and that so long as they are preserving that distinction, and so long as they are increasing somewhat the burden which this class bears, they might see their way not to make the increase so stiff as they have done. In regard to this class of persons whose income does not exceed £500 a year, perhaps only £250 or £300, 2s. 6d. in, the£ is surely adequate to make them feel their full proportion of financial burden which every member of the community ought in war time to bear. If the right hon. Gentleman will compare the scale he will find that this increase comes most steeply upon this class than upon any other class in the community, and it is because of their special economic helplessness that I make this appeal.
    Mr. BONAR LAW: My hon. and learned Friend has moved this Amendment to draw the attention of the Committee to the matter rather than having any hope that it will be possible to do anything at the present time. As a matter of fact,

    1299
    up to £500 we are leaving the taxation exactly where it was before, and to make the alteration which he proposes at a time like this, when we are imposing £114,000,000 of additional taxation, would be actually to make a reduction in this case. I do not think that he can expect us to do that. I recognise very fully the appeal which he has put forward in favour of people with small incomes which are called unearned. They do represent, as he has truly said, either the thrift of friends who have left it to them or the thrift of husbands who have left the incomes to their widows, or in some cases it is the thrift of the people themselves. At a time like this, when, as we all know, the high cost of living presses in actual result quite as severely, so far as my experience goes, on many people above the £500 scale as it does upon those below that limit, because people cannot really change their habits. I admit when we take all into account there is a strong case for the proposal which he has made, but for the reason I have given, that we are imposing an immense sum of new taxation, we cannot forego it in this case, and so far as this year is concerned, I can hold out no hope of doing so.
    Mr. LOUGH:I suppose my hon. and learned Friend will not be entirely disappointed with the answer he has received. If he is, I can sympathise with him. There is one further point in regard to this matter which I will tack on to this discussion rather than move an Amendment about it. At the very high rate which Income Tax has now reached those whose incomes are over £500 a year are hit very hard. If the Chancellor of the Exchequer will agree to consider the grades scale from £500 to £1,000 he might say that those from £500 a year to £750 should be at a lower rate, and those from £750 to £1,000 at a higher rate. By a little adjustment the matter might be dealt with satisfactorily. By the present rate of Income Tax those in receipt of small incomes, £300, £400, or £450 a year must feel the tax a terrible reduction at a time when the cost of living is so great. If my right hon. Friend will agree to look into this question, if not now, at any rate in the next Bill, and meantime consider between, now and the Report stage whether, on this matter of the £500 step, which might have been reasonable enough formerly, a change
    1300
    is required now, he would confer great benefit on great numbers of the community.
    Sir R. ADKINS: I hope that between now and the Report stage the Chancellor of the Exchequer will consider the steepness of the steps. I ask leave to withdraw my Amendment.
    Amendment, by leave, withdrawn.
    Clause ordered to stand part of the Bill.

    CLAUSE 22.—(Super-tax for 1918-19.)
    (1) In addition to the Income Tax charged at the rate of six shillings under this Act and the additional Income Tax under Section twenty- seven of the Finance Act, 1916, there shall be charged, levied, and paid for the year beginning on the sixth day of April, nineteen hundred and eighteen, in respect of the income of any individual, the total of which from all sources exceeds two thousand five hundred pounds, an additional duty of Income Tax (in this Act referred to as "Super-tax") at the following rates:

    In respect of the first £2,000 of the income

    Nil.

    In respect of the excess over £2,000—

    for every pound of the first £500 of the excess

    one shilling.

    for every pound of the next £500 of the excess

    one shilling and sixpence.

    for every pound of the next £1,000 of the excess

    two shillings.

    for every pound of the next £1,000 of the excess

    two shillings and sixpence.

    for every pound of the next £1,000 of the excess

    three shillings.

    for every pound of the next £2,000 of the excess

    three shillings and sixpence.

    (2) All such enactments relating to Super-tax as were in force with respect to the Super-tax granted for the year beginning the sixth day of April, nineteen hundred and seventeen, shall have full force and effect with respect to the Super-tax granted under this Section.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Mr. RAWLINSON: The words of this Clause are
    "In respect of the income of any individual the total of which from all sources exceed £2,500."
    That, for all practical purposes, has always been dealt with in the sensible way of taking the income which the person literally receives during the. previous year. But as regards such questions as

    1301
    the continuance of War Loan, or anything of that kind, they have to be thrown forward into the next year, and the Exchequer loses a large part of the income for a long time. That also has a bad effect upon people themselves. I would like the right hon. Gentleman to consider whether there is not any way in which he can deal with total incomes from all sources. People would return the literal amount of money which they had received from one 5th of April to the next 5th of April. That would be the business-like way of doing it. If it cannot be done in the case of Income Tax—and I never could discover why it could not be done in that way—at all events it could be done in reference to Super-tax. The present procedure reduces the old idea, which began with a three years' average, to a wholesale absurdity. It is not in any spirit of hostility to the Income Tax or the Super-tax that I make this criticism, but in view of the fact that under the present system there is a tremendous loss to the Exchequer. I have never received any satisfactory answer to the question why both Super-tax and Income Tax should not be taxed in the simple way on the exact amount which has been received during the preceding twelve months. Question put, and agreed to.

    CLAUSE 23.—(Charge of Schedule B Tax.)
    Sections twenty-six and twenty-seven of the Finance Act, 1896 (which relate respectively to the application of the Income Tax Acts and to annual value for the purpose of exemption from or abatement of Income Tax under Schedule B), shall, as respects Income Tax under Schedule B, have effect as if for the references to one-third of the annual value there were substituted references to an amount equal to twice the annual value.
    The following Amendment stood on the Paper in the name of Mr. PETO: After the words "Schedule B" ["Schedule B, have"] insert the words "assessed on land used solely for the purposes of husbandry."
    The DEPUTY-CHAIRMAN: The first Amendment is covered by the next Amendment but one on the Paper.
    Mr. PETO: As far as I can read the Amendment of the Chancellor of the Exchequer it fairly meets the point of my Amendment, and I feel quite satisfied that, if the right hon. Gentleman will give such sufficient explanation as is necessary, it is more likely to meet the general acceptance of the Committee than any grounds which I should put forward.
    1302
    Indeed, it is not necessary for me to argue the case. The Chancellor of the Exchequer has appreciated the point of my Amendment, and I, therefore, do not propose to move it, as his Amendment covers adequately the point.
    Sir J. BOYTON: I beg to move, at the end, to add the words
    "except in the case of land used for charitable purposes only or bond fide for purposes of games or recreation, without any view to the payment of any dividend or profit out of the revenue thereof."
    This Amendment is in the interests of many charitable institutions which have a considerable amount of ground around the institution, and for the preservation of many playing fields and in the interests of many societies for the promotion of schemes of recreation throughout the country. Sections 26 and 27 of the Finance Act of 1896 give the opportunity of being assessed under Schedule D, or under the old fashioned Schedule B, which allowed only one-third of the annual value. Now under the new system all this land, being classed as agricultural land, would be charged, not under Schedule D, but under the new scale of Schedule B, which would be very prohibitive.
    Mr. BONAR LAW: Is not that covered by my Amendment?
    Sir J. BOYTON: So, the right hon. Gentleman gives only the annual value of one year. That would penalise hopelessly the interests for which I plead. I want him to give Schedule D, so that many of these institutions and many of these sports provided by contributions should be kept under Schedule D and have nothing whatever to do with Schedule B. The annual value would be prohibitive. For instance, the Society of Playing Fields has one field at Walthamstow, and the amount paid in Income Tax under Schedule D in each of the two years 1914–15 and 1915–16 was £4 4s.; in 1917–18, notwithstanding the reduction in the assessment—of course, they would naturally appeal against it—it was £44 15s., while if the proposal now before the Committee were carried out for 1918–19 and the tax were paid on double the assessed value of the land, it would amount to £160, which would be practically blotting out these recreation grounds. In many cases the Amendment of the right hon. Gentleman will be welcomed as some lessening of the difficulties,

    1303
    but it does not go far enough. Where these concerns are not carried on for profit, but with a charitable object and by voluntary contributions, I submit that Schedule D should apply. The Playing Fields Association provide balance-sheets from which it will be seen that many of the fields hitherto used for recreation purposes cannot continue to be so used. Large numbers of munition workers and others still require recreation, and much useful work is done by this particular society, which is only one instance of many. I would appeal, therefore, to the right hon. Gentleman to leave the tax under Schedule D and not to have one year's value under Schedule B.
    Mr.. BONAR LAW:It seems to me that the Amendment of my hon. Friend is covered exactly by the Government Amendment—judging by the Amendment alone—because the Amendment which I am going to propose will have this effect: that if anything except actual husbandry was under Schedule B before and paid only one year's annual value, it will continue to do so. On the other hand, in the case of charitable undertakings there is no payment of taxation, so that in effect what I am doing under my Amendment is precisely what my hon. Friend has in view. But, having followed his speech, I think that he had something else in view than was contained in his Amendment, because institutions such as ago If club or a cricket club might be treated as if they were business institutions and put under Schedule D. I think that my hon. Friend should be satisfied that the Amendment about to be proposed will leave the situation as regards the places affected as it was before the alteration in this years' Budget.
    Sir C. HOBHOUSE: The hon. Gentleman referred to the case of a field at Walthamstow being assessed the year before last at four guineas and last year at forty-four guineas. My recollection is that any assessment in respect of a charitable object is free from all tax at all, or ought to be free, and if an assessment has been put on this particular field and similar fields, and demands are made upon whoever is responsible for financing these fields, then I would ask the Chancellor of the Exchequer to direct the authorities of the Inland Revenue not to assess these kinds of recreation grounds which are used for charitable objects, as
    1304
    no demands should be made upon them for Income Tax. It is quite clear that the persons responsible for this particular piece of ground are ignorant of the privilege which they enjoy under the law, and that a demand has been made upon them by the Inland Revenue officials, and they, being ignorant of the law, paid the tax. The Inland Revenue are conniving at an infraction of the law when they demand payment of that which the law says ought not to be paid, and my right hon. Friend should instruct the Inland Revenue that in the case of notorious charitable objects such as public parks they should not make an assessment and demand this tax.
    Mr. BONAR LAW: I do not think the Inland Revenue are in the habit of making the kind of assessment suggested, and there is no desire to apply the Act of Parliament other than in its spirit as well as in its letter. I will have this matter looked into, and if my hon. Friend will bring it up again I will endeavour to deal with it.
    Mr. RAWLINSON: The London Playing Fields Society, of which I am a member, is an institution which cannot very well plead ignorance of the law, and I would remind the right hon. Gentleman that very valuable work is being done by societies of that description. It has never been suggested that such societies work for profits, for their members have to subscribe large amounts every year, and even then, very often, they do not make both ends meet. Not only have they to pay the local rates, but taxation upon them during the last two years has gone up at a very great rate. All the hon. Member who moved this Amendment asks is that the privilege which is given under the Bill should be extended to all societies or associations which are doing work of this kind. Last year, when the farmers were included, the provisions did not include persons who let out land in this manner.
    Mr. BONAR LAW: I have promised to look into the matter in order to see what can be done.
    Mr. RAWLINSON: The right hon. Gentleman is probably aware that there are a large number of football grounds in London, and even in Glasgow, which are making very handsome profits, and ought to be assessed. There is a difference between football grounds and these playing fields and other open spaces which

    1305
    are contemplated by the Amendment. Football grounds, of course, ought to pay upon their profits, but institutions of the kind under discussion very frequently have difficulty in making both ends meet, and it is for them the hon. Member is moving his Amendment to give them relief from the taxation which has been imposed on them in the last two years, and which has proved a very great difficulty indeed to them. I hope, therefore, that the Chancellor of the Exchequer will see whether he cannot help us to a greater extent than he has already promised up to the present moment, for after what he has said I am not very hopeful.
    Amendment negatived.
    Mr. BONAR LAW: I beg to move, at the end of the Clause, to add the words.
    "Provided that where it is proved to the satisfaction of the Income Tax Commissioners concerned that any person occupying any lands and assessed to Income Tax in respect thereof under Schedule B is not occupying those lands for the purposes of husbandry only, or mainly for those purposes, the above provision shall, unless the Board of Agriculture and Fisheries, on a reference to the Board by the Commissioners of Inland Revenue, certify that the use of the lands by that person for purposes other than purposes of husbandry is unreasonable, apply in relation to those lands as if for the reference to an amount equal to twice the annual value there were substituted a reference to an amount equal to the annual value.
    The expression 'Board of Agriculture and Fisheries' means in the application of this Section to Scotland the Board of Agriculture for Scotland, and in the application of this Section to Ireland the Department of Agriculture and Technical Instruction for Ireland."
    Sir F. BANBURY: I do not quite understand why the Board of Agriculture and Fisheries is put in this Amendment. If those words were left out, I think there is no doubt that it would meet the point raised by several Members on the Committee stage of the Resolution. By putting in the Board of Agriculture and Fisheries, practically what the right hon. Gentleman has done is to give to the Board the power to say, "We choose to say that such-and-such a thing has occurred, and in our opinion this land ought to be used in a different manner; therefore, unless you do so-and-so, we shall certify you that it ought to be done, and it will be made a subject of increased taxation." I do not like the idea of putting into the hands of a Government Department the power of saying, "Unless you do such-and-such things we shall see that taxation is imposed upon you."
    1306
    What I think the Chancellor of the Exchequer has in mind is to meet exceptional cases where, for some unknown reason, the land is not properly utilised. I presume that is what the right hon. Gentleman has in his mind, but I would much prefer that he agreed to an Amendment of the Clause rather than to leave it in the power of a Department to make a charge.
    Mr. HOLT: I am very glad indeed the Chancellor of the Exchequer has seen his way to put down an Amendment which in substance meets an Amendment which I have upon the Paper. I agree with the right hon. Baronet (Sir F. Banbury) that it is not satisfactory that a Government Department should have power to say whether a person is to pay double Income Tax because he does not use a particular piece of land in a particular way for a year. I would like the Chancellor of the Exchequer to consider the further point, that if the Board of Agriculture is to certify that land is being improperly used, then the occupier should have power, if the improper use of the land is not due to his action but to some restriction under which he is placed by others, to obtain relief from the taxation. It might be that the conditions of his lease, or other restrictions, are imposed upon him, thus preventing his using the piece of land in the manner required by the authorities. It would really be unfair to the occupier of the land, and I would suggest to the right hon. Gentleman the Chancellor of the Exchequer that the taxation should be imposed upon the person who really prevents the land from being properly used, the owner, or whoever it may be, who has used his powers to prevent the occupier from complying with the demands of the Department.
    Mr. BONAR LAW: In regard to this Amendment, I shall endeavour to meet the general view of the House, but I would point out that our object is to leave things exactly where they were previously, except in regard to land improperly used. There is a feeling, especially at this time, that land ought to be used for agricultural purposes, and the Clause provides for those cases. The taxpayer will have not only to deal with the Board of Agriculture, but the Inland Revenue, and he will have the protection of two Departments before he is called upon to pay. I quite admit that my right hon. Friend is right in his view that a Department ought not to have the

    1307
    power to make a charge, a power properly belonging to the House of Commons. There is no desire or intention on the part of Government Departments to use this power in any way save where it is found to be necessary. I suggest that the Amendment I have proposed should be left as it is. As to the point put by my hon. Friend (Mr. Holt), there is something in the view that the man who has the power to enforce restrictions and who prevents land from being properly utilised should be the person to pay the tax, and not the occupier, who has been prevented from properly using the land. I should be very glad to look into that point, but I hope the Committee will not expect me to give away my Clause altogether.
    Sir F. BANBURY: It is an annual Clause, and therefore it can be revised in another year. I am glad that the Chancellor of the Exchequer thinks I am right, and that I can claim him as a purist in matters of finance.
    Mr. J. HENDERSON: I want to know where protection will be given to the occupier between the Board of Agriculture and Fisheries and the Treasury. The latter will follow the rule, and when the right hon. Gentleman says that the Treasury has no intention of dealing with these matters arbitrarily, I would point out that the Treasury do not regard what is said in the House as to the interpretation of an Act. I think the occupier should have some sort of protection or remedy as between the two Departments.
    Colonel GRETTON:I want to raise one other point in reference to what the Chancellor of the Exchequer said as to the question of land being used purely for the purposes of husbandry. There are cases in which the land is used for large plantations, and is the Clause intended to deal with cases of that kind?
    Mr. BONAR LAW: Those cases are absolutely excluded, and stand as they did before.
    Colonel STIRLING: In raising the point of the incidence of Income Tax upon woodland, I hope that the Committee will not think that I have any desire to raise the personal grievances of a landowner. Landowners do pot complain of the sacrifices which the War has entailed upon them. Taxation is a very small part of the sacrifice, and they have
    1308
    borne without a murmur the burden of taxation which presses with a peculiar weight, as, I think, the Chancellor of the Exchequer would admit, upon the owners of agricultural land. I venture to say a word upon the question of taxation of woodlands, not because it presses upon landowners, but because it presses upon an industry of vital importance to the nation. From the point of view of the average landowner it is only a pebble compared to the mountain of taxation, Imperial and local, which he bears. There may be cases in which it presses hardly upon individuals with large areas of woodlands, but it is fair to remember that these have had the advantages of the recent high prices of timber. Now I ask the Committee to consider these figures. They are taken from a parish in the South of Scotland, and I can assure the Committee that they are not abnormal; in fact, other parishes in the same district can show an even heavier burden of taxation. The extent of woods concerned is 93.6 acres; the valuation roll rental is £14, or about 3s. an acre. This 3s. an acre is not a real rental, it is a valuation based on the value of the land as unimproved grazing, and though no rent is in point of fact paid or received for the land, this 3s. an acre is the basis for local and Imperial taxation. Now the total taxation, Imperial and local, on this imaginary rental of £14, amounted in 1917 to a little over £14, or over 20s. in the £, and this sum was by no means imaginary, but paid in hard cash. Of this £14, £6 5s. was accounted for by Income Tax under Schedules A and B. Super-tax was also paid, though I am aware that cannot be dealt with at present. Perhaps I may be allowed to say that the total of Imperial taxation on this 93 acres of wood was over £10.
    Now forestry is an industry against which the charges ran up at compound interest, for it may be sixty to a hundred years before the wood is cut and sold. Taking the average rotation at seventy years, the Committee will see what a crushing burden these high rates of Income Tax will put upon woods planted within the last ten years. £1 at compound interest at 4 per cent.—a low rate at the present day—will amount to £10 10s. at the end of sixty years. I am well aware that the occupier of woodlands has the option under the Finance Acts of 1915 and 1916 of electing for assessment to Income Tax under Schedule D, but I would put it to

    1309
    the Chancellor of the Exchequer, who will doubtless correct me if I am wrong, that the option has been exercised in comparatively very few cases. It has been very difficult for landowners with their depleted staffs to institute the new and elaborate system of accounts required. That is, I hope, only a temporary reason. But I believe there will remain a strong argument against putting any but newly planted or very young woods under Schedule D. In the case of older woods it is often impossible to ascertain the cost of planting, fencing, maintenance and protection, and taxation. In the extreme case of mature woods, ready to cut now, only three years of maintenance charges —at this time at their lowest—and three years' taxation could be set against the price of a mature wood which may have stood for seventy to one hundred years, and all previous expenditure and compound interest must go by the board; and I think that the same objection will hold good with all but the youngest class of woods. In all other cases the option of Schedule D is of no value. I do not know how this difficulty can be met under the present circumstances. If there were in existence a forest authority with the necessary powers, it might be possible to adjust a scale of deductions on account of formation, maintenance, and other charges applicable to woods of various ages. This would be a slow process, requiring a. great deal of local knowledge and experience, and evidently could not come into general use for a long time to come.
    I hope that the right hon. Gentleman will consider this point. I have raised this question of Income Tax because I believe that the present high rates will act as a deterrent against the planting of new ground for which even a very low grazing rent is being obtained at present, and that there is a danger that areas recently cleared of wood will be let for rough grazing which will, at all events, bring in something towards the cost of taxation, instead | of being replanted and taxed upon a rental which does not exist. This has always been something of an injustice in the case of woods grown for the production of timber. The present high rates if long continued will impose an impossible burden upon forestry, and I hope that the Chancellor of the Exchequer, of whose goodwill towards forestry there can be no doubt, will consider this aspect of the question.
    Amendment agreed to.
    Motion made, and Question proposed, "That the Clause, as amended, stand part of the Bill."
    Mr. G. LAMBERT: May I thank the Chancellor of the Exchequer for the consideration he has displayed in accepting, in putting upon the Paper the Amendment which has just been passed? But I would also draw his attention to one or two other phases of this Clause on the Motion that it stand part, because the Clause must be, and I hope will be, administered fairly and sensibly, otherwise there will undoubtedly be a great grievance among the farmers of the community. I am not here for one moment to suggest that farmers, or any other class, while the Chancellor of the Exchequer is raising this enormous revenue, should be let off their reasonable obligations to the State. But there is at this moment a feeling against the farmers of this country. I do not suppose there is any class more unpopular than fanners, and at the present moment they are accused of being profiteers. It is no fault of theirs that the price of their products has risen, but still the public have to pay, and sees they have to pay, very much more for their food. I want the right hon. Gentleman to give an assurance that this Clause shall be worked reasonably. You cannot afford, at the present time, to play fast and loose with the agricultural industry. I have never known it to be in a more critical condition than it is at the present moment. It suffers from considerable interference. But, though there is this interference, and although labour has been taken away, yet the Reports of the Board of Agriculture have shown that the farmers have responded splendidly to the application of the Government to increase the cultivation of the land. Farmers have, I quite agree, made considerable profits in the early part of the War, but conditions are entirely changed to-day. The cost of production has gone up enormously, wages have risen —and rightly risen—and the agricultural labourer is at last, I am glad to say, coming into something of his own. The other costs of production have risen too; the cost of feeding stuffs, of manure, and of everything which the farmer has to buy. I myself—if I may give this experience to the Committee—wanted a couple of implements during the last few months. I wanted a milk separator, the price of which before the War was £ll 10s., and the price I had to pay for it

    1311
    to-day was £20. I had to purchase a self-binder, which, before the War, was about £27; the cost to-day was £59. That shows that the cost of production in the agricultural industry has increased enormously. There is a great temptation on the part of the farmer, at the present moment, to clear out and to sell his stock. He could get out at great advantage to himself. If you watch the agricultural sales, you will see that horses, cattle, pigs and implements are making what used to be thought to be fabulous prices. No man to-day can go in and take a new farm and stock it at the present prices with any hope of success. If any man with no stock of his own has to go into a farm and has to buy all the horses, cattle, implements, and the hundred and one things which are necessary, at present day prices, I am quite certain he will make no profit on it. Therefore, I want the Chancellor of the Exchequer to realise that farmers, when they are keeping on their farms to-day, are really, in many eases, doing so for a patriotic purpose. I came across a farmer the other day, a milk producer, who said: "Were it not for the War I would not be worried with this."
    7.0 p.m.
    There is one other caveat I wish to make as this Clause goes through, and that is the Chancellor of the Exchequer must be good enough to remember that local charges are still very heavy. There has been no relief or apportionment of local rates. Local rates press very heavily upon the farmer. I take, for instance, the Education Act of 1902, which probably increased the local rates to the farmer from l0d. to Is. in the £, and he did not get any special advantage. Now, we have an Education Bill going through the House. How much is that going to increase the rates on the farmer and the local community? These are burdens which are placed upon the local community without any demand from them, while in reality they are part of what are called, or of what ought to be, national expenditure. Take another thing, the roads, which are getting in a deplorable state. This is through no fault of the local authorities; they cannot get labour and material, but the roads will have to be repaired after the War, and the cost of repairing them will be very considerable indeed. Therefore, I want to enter a caveat that whilst this Clause shall pass through, it must be on condition that
    1312
    local taxation is fairly adapted between all classes of the community. That seems to me to be only just and legitimate, because there has been no class so heavily taxed as the farmer. Before the War, the farmer paid on one-third of the rent; last year, it was put up to the annual rent; to-day it is double the rent. I want the right hon. Gentleman, if he will, to give instructions to the Inland Revenue people that in the collection of this money and in the matter of the production of farmers' accounts.—if they do produce them—that, provided there is no attempt at fraud, they shall not be exacting as regards meticulous accuracy.—[Laughter.]—I say provided there is no attempt at fraud; you must comply with the spirit of the Act. Any hon. Gentleman who really laughs at this matter must remember that a fanner at about £70 or £80 a year to-day is liable to Income Tax, and a farmer of that class, if he is to get on to-day, has to work very hard.—[An HON. MEMBER: "£120 a year."]—No; double the rent. If a man is paying that rental he does not employ much labour, and has to work very hard. When he comes in from a hard day's work in the fields he has not very much time to keep accounts. That is why I ask the Chancellor of the Exchequer, though he has to get his Revenue, not to exact accounts which will require an accountant to keep, providing that the spirit of the law is kept and that there is no evasion. One other class of the community which, I think, has not really received that attention which—I do not know that they deserve—but which the circumstances demand, is that of the occupier of land who is also the owner. Many owners of land farm a portion of their own land, not so much for profit, but to have an interest in the soil. They have not been able to give that personal supervision to their farms which is necessary to make a profit; in fact, someone said the other day that the best manure on the farm is the print of the farmer's foot. I am not sure he is not right. The owner and occupier of agricultural land, provided his income is such as to compel him to pay at the highest rate, is taxed to-day 6s. in the £ on Schedule A, and 12s. in the £ on Schedule B; that is, altogether 18s. in the £. I do not think there is any class of the community taxed like that, and the attention of the Exchequer authorities has not, I think, really been drawn to this quite so pointedly as I have done to-day. Then

    1313
    take the case of the owner or occupier who has to pay tithes, which have enormously increased. I do not know whether any legislation is to be introduced, but they will very largely increase in future. Rates, as I have said, appear likely to rise, and the cost of repairs has gone up from 50 to 100 per cent., if they can get them done at all, and therefore their profits, although assessed at double the rent, will not come to anything like the sum. Therefore, I ask the Chancellor of the Exchequer that in this case, too, provided there are no signs of fraud, the Inland Revenue authorities shall act fairly and intelligibly towards, not only the farmers, but the owner-occupiers as well. Personally, I have always met with the greatest possible courtesy from the Inland Revenue, but this is a new matter to a very large number of small men who have not yet realised that they come under the Income Tax Act, and, therefore, I hope the Chancellor of the Exchequer will give me the assurance now that the taxation to be gathered and garnered under this Clause shall be reasonably administered, so that there shall be no sense of grievance engendered in the agricultural community.
    Major E. WOOD:I think the right hon. Member has done good service to the Committee and the agricultural community in taking this opportunity, before the Committee parts with the Clause, to draw the Chancellor's attention to matters of which he has just spoken. I think that he was quite right to lay emphasis upon the need for elasticity and simplicity in the administration of this Clause. I do not wish to restate any arguments that have been used before in this House, but I would like to say in that connection that I think the form of circular that has been issued, I think, by the Board of Agriculture in conjunction with the Treasury, is one for which farmers, and those concerned with agriculture, ought to express their gratitude to whatever Government Department is responsible for it, and I only suggest to my right hon. Friend that, if he could take such steps as might suggest themselves to him, to make sure that that circular as to the method in which farmers are to claim, when they are to claim, and the remedies for wrong claim, etc., gets into the hands of the people who have actually got to pay. I know in my own district—it may be they do not have time to read the newspapers. or only read them at the week-end—the ordinary work-
    1314
    ing farmer does not see these announcements in the papers, and you have to get, at him in a variety of ways. I would suggest, therefore, to the right hon. Gentleman that he should see, for instance, that this circular is sent, and that the agricultural societies to whom it is sent—small societies—should make it their business to draw the attention of their members to it, otherwise a great many people will not reap the advantages it offers.
    I would like further to support the right hon. Member who introduced this subject in what he said with regard to rates. I have no intention to discuss that matter in detail, because this is not the time and place. I would only say this, that if the case that has been put before the Royal Commissions, and before Chancellors, and in this House times out of number on the subject, were sound before, it is a hundred-fold more sound to-day. The case, by what has been done in this Finance Bill, has become unanswerable, and I do want to urge this as strongly as I can on the Chancellor, that the real grievance is that, while we all go on laying duties upon local authorities that fall upon the rates, we levy rates upon one portion only of the income of the locality, because that is what the present system amounts to. Therefore, we shall find ourselves more and more in this position, that we shall goon passing laws in great number no doubt in the years that are coming; the expense of which will fall to be paid in great measure by the localities, and unless the Chancellor can arrive at some agreed settlement of this matter, he will find himself, and every Minister will find himself, either faced by the necessity of withdrawing some legislative project, which will confer great benefits, in response to the outcry which will arise from the localities when they see what it will cost, or else carry it in the absence of all the local sympathy that will be essential to the success of these schemes, and which, I believe, if the Chancellor could give some assurance that he did really mean to handle this matter generously and quickly, he might be able to secure.
    Mr. J. HENDERSON: I only want to say, in support of my right hon. Friend the Member for South Molton (Mr. Lambert), I do not suppose that anyone will deny, least of all Parliament itself, that in the past farmers have made considerable profit, but I do not believe next year they will make anything like the profit they have made.

    1315
    As a matter of fact, the interference of the Food Controller has to a large extent destroyed the chance of cattle-raising. It was pointed out by a deputation to the Food Controller that, whereas previously the cattle-feeder bought store cattle from Ireland at 45s. a cwt., he could not buy it at less than 60s. a cwt., and all the price he could get was fixed by the Food Controller at 60s. He had to buy at that, feed it for three or four months, and then sell at 60s. At the very time they were fixing this price for mature cattle they were actually selling immature cattle in Ireland to the Army at something like 70s. If you could buy at 45s., and sell after six months' feeding at 70s. or 80s., there was profit; but if you buy at 60s. and sell at 60s., or buy at 67s. and sell at 67s. there is no profit at all. And then the price of feeding-stuff has risen enormously. Wages have risen, and the price of the keep of the men has also largely risen. What will happen will be this: The majority of these men, with rents of £100 or over a year, will try to keep books and come under Schedule D. I again support, and strongly urge, the point made by my right hon. Friend opposite.
    Farmers, whether rightly or wrongly, have become accustomed—and this House is responsible—to do without books. In my Constituency, which is an agricultural one, I do not suppose that three or four years ago there were more than half a dozen farmers who paid any Income Tax at all. Step by step, however, you have proceeded, until at the present time you have brought into the vortex of Schedule D those who have never been brought up to keep these accounts. There is a very great difficulty, particularly in my part of the country, and, in fact, mostly all through Scotland, arising from this. Under the Scottish system, men are hired for six months, and sometimes for twelve months, but mostly for six months. They are paid so much money and given their keep. The question is, What are the farmers going to charge in their accounts for the keep of the men? That is a very difficult question, and that is where the assessor in the North will need to have instructions from my right hon. Friend and the Treasury that they are to agree upon some proper scale, and so enable the man simply to charge on this scale for the keep of his men as part of the expense. That is a very great trouble with which he is faced. There is also this
    1316
    trouble, that sometimes the farmer has a son or daughter who works for the farm. There is an allowance to be made for their keep and for their wages—a set of circumstances which does not arise in the ordinary trader's business, so far as I know. There is another difficulty with regard to taking stock, and it is this: the stock to-day is constantly moving, constantly increasing in value—or, it may be, decreasing. At all events, it is always fluid, and it is very difficult for the farmer at any given time in the year to say what his stock may be. Suppose he takes it at one period one year it may be large; the next year he may have cleared away the whole lot, or, anyhow, a portion of it. This is what differentiates him from the ordinary business man. There is no regularity so far as his stock prices are concerned. There is also, as I said, the difficulty in regard to the keep of the men, or the allowance to be made for them, all of which is avoided in England where the men receive a certain weekly wage. It is not so in Scotland, where the men get a six months' wage and their keep.
    There is thus the difficulty of assessing the farmer, and all that I have said goes to this point, that the assessor ought to submit to these farmers a simple form of keeping their accounts so that they will be able easily to get at the result of their trading. I submit, with my right hon. Friend opposite, that there is no reason to suspect anything in the shape of fraud or misrepresentation, and these assessors and surveyors should give the fanner all the assistance they can, because I believe that even if they give them such assistance the profits this year will not be anything like double the rent. It will be wise for every farmer, whoever he is, to keep some simple form of accounts. When it comes to dealing with the farmer of £400 a year, representing an Income Tax assessment of £800, it will be found that very few farmers are making that profit. The question of breeding is another thing altogether, for breeders get very high prices for their stock. The ordinary farmer, however, will find himself better with a simple form of accounts in coming under Schedule D. Inasmuch as in the past you have accustomed him, rightly or wrongly, to do without accounts, now that you are starting to require accounts you ought to give him every facility, indulgence, and consideration.
    Sir C. HOBHOUSE: The Chancellor of the Exchequer might perhaps deal with

    1317
    the point, which I support, which fell from my right hon. Friend the Member for South Molton in regard to the great increase in tithes. Hon. Members, unless they are directly interested in agriculture, hardly know how great that increase has been. I noticed the Chancellor of the Exchequer unconsciously shake his head, and I thought it meant assent to the suggestion that something should be done either in this Bill, or in the course of this Session, to deal with that great increase. The connection between that increase and this Clause arises in this way: Since the beginning of the War, certainly within the last ten years, and more particularly during the last four years, there has been, no doubt, a great breaking up of estates, and the acquisition of the greater part of those estates by the cultivating tenants. The consequences is that the number of assessments now made by the Inland Revenue upon this land for the purpose of revenue collection must, I imagine, have increased by something like 50 per cent. over the pre-war period. The tithe was formerly paid by the landlord. It now falls upon the owner and occupier who has become the landlord and the cultivator at the same time. He will, in addition to this charge which is going to be put upon him by the Chancellor of the Exchequer—this increased assessment—have to meet the greatly increased charge for tithes which will also reduce the assessment made on his farm, thus reducing the amount of revenue collected by the Exchequer. I think that is, if I may venture to say so, the point of view of the Chancellor of the Exchequer. The increased tax upon the farmers has been put upon them, to my mind, just a year too late. My right hon. Friend was perfectly right when he said the profits of the farmer have greatly fallen in the course of last year. They are going to fall still further.
    Those farmers who keep their accounts, I think, like my right hon. Friend, are a great majority of the farmers of this country. I do not know whether the Chancellor of the Exchequer is aware, but I am sure my right hon. Friend is aware, and I am aware, that most of the farmers of this country now pay their accounts by cheque, and the fact that they have a working balance at the bank upon which they draw by cheque, indicates to my mind—and, I think, probably indicates to most minds—that they keep accounts, and that these cheques are in themselves a
    1318
    check. That is so in my experience. Well, now they will have to bear a greatly increased charge for labour. That has not yet become apparent, but it will do so during this year's assessment, because agricultural wages are increasing largely in every case that I know. Indeed, they have greatly increased, and will cause that addition to the expenses of the farmers which will be charged against the amount of profit which will be assessed under Schedule D. They will take advantage of that for the purpose of escaping the double assessment which is to be put upon them, if they choose to be so assessed instead of on their rent. Therefore, I think a very large part of the expected yield of this tax will escape the net of the Chancellor of the Exchequer. I am afraid he will be disappointed in the result which he expects from this yield. However, I do not want to go into that point. I may be quite wrong, and what I have said may be a more gloomy prospect than the result will show. But perhaps the right hon. Gentleman will tell us— I dare say he did tell us in his Budget statement—what he expects to get from this source. I shall, I confess, be greatly surprised if I am wrong and if the right hon. Gentleman is not disappointed at the end of the year at the revenue he at present expects. He might also tell us, when he answers, whether he proposes to deal with this question of tithe rent charge, which is really becoming a very serious item. I am told that in the county of Essex, for instance, the tithe rent charge amounts to something like 6s. in the £ per acre.
    Sir J. SPEAR: I should like in a very few words to assure the Chancellor of the Exchequer that farmers are very disappointed that he has not been able to yield to the suggestion made on the First Reading of the Bill that he should place the assessment on which farmers pay Income Tax on something less than that which corresponds to two years' rent. The feeling is this: We acknowledge that the right hon. Gentleman has endeavoured to meet, in reference to the losses realised during the year from bad harvests or from any other cause, the farmer who finds that his income will not be what was reasonably expected. Though his financial year ends in September, the right hon. Gentleman has made the concession, which we appreciate, that the fanner can present his accounts and pay his Income Tax in January on the basis of the actual receipts rather

    1319
    than under Schedule D. We appreciate that, but it is extremely difficult for the farmer to keep accounts that will accomplish that purpose. Still, I hope the difficulty will be overcome by the farmers learning to keep accounts as well as they may. The point, however, upon which we feel aggrieved is the increase of the Income Tax to 600 per cent. on what was paid before the War. When the Government takes the farmer's crop the price paid is based on figures calculated as to 60 per cent. on pre-war prices. Again, the price of hay taken by the Government is based on 40 per cent. above pre-war prices. We therefore complain, and think it is unfair, inconsistent, and unjust that the Government should charge the farmer 600 per cent. increase on his Income Tax when the same Government only pays the farmer 40 and 60 per cent. respectively above pre-war prices for the commodities they take from him. Even the military authorities in taking land from the farmer for military purposes base the compensation paid to him on one year's rent. Here, again, the Government are inconsistent, for their transaction with the farmer is on a level altogether lower from that to which they make their demands from the farmer. All this has a deterrent effect upon the farmer's enterprise.
    Farmers are not less patriotic than any other section of the community. Farmers are anxious to contribute their fair share to the cost of the War. Farmers, indeed, have shown their patriotism in a substantial way by sticking to their business during the awful thirty years' depression up to the end of 1917. They have shown their pluck and patriotism, but for which the scarcity of food and the deplorably high prices would have been much more serious than they are. In response to the appeal of the Government they have increased production wonder fully. The Prime Minister has very properly and frequently borne testimony to the magnificent efforts made by the farmers under very difficult circum stances owing to the increased cost and increased scarcity of labour. Yet we are all invited to rejoice because they have been able to make the land yield the equivalent of food for forty weeks in the year. I do not want to exaggerate, but I hear it on all hands said by the farmers — for they feel it— "We have done our very best for the Government. We have parted with our men, we have parted with
    1320
    our sons, we have worked day and night to get our crops in so that the country shall be independent of the foreigner; yet the Government turn upon us and seek our goods at 40 and 60 per cent. only above pre-war prices and then demand that we shall pay it back to them on a basis of 600 per cent." If he were not the British farmer it would have discouraged him altogether. The increased basis of Income Tax never ought to have been made until there had been rearrangement of the basis of local taxation. Five years ago, when I moved an Amendment to the Address in reply to the King's Speech, the present Prime Minister, in reply, admitted that the burden of local rates on agriculture was intolerable and must be remedied. Nothing has been done since— except that they have gradually increased. Therefore I urge the right hon. Gentleman to see if he cannot even now meet the farmer in a spirit of justice. The Government, we say, should hold themselves responsible to have at the earliest moment an equitable and just re arrangement of the basis of local taxation. I join in the appeal that is being made that the Government will endeavour to procure this simple form on which agriculturists can make their return. I wish just to say this word more, that the farmers, although they have made progress and profits out of the latter, have to pay the debts and losses incurred by the terrible depression of thirty years. This House is not really aware of what that means. It means pork sold at 3¾d. a Lb., wheat at 5s. a bag, and I have sold plenty of it at that price; and beef and mutton at 5d. a lb. If it had not been for the pluck of the farmers and the loyalty of the landlords and labourers through that depression the position of the country to-day would be far more alarming than it is. We think the Government are not showing a right spirit in return for the perseverance of agriculturists to impose taxation to this extent because we have had a couple of good years.
    Mr. BONAR LAW: The right hon. Gentleman the Member for South Molton (Mr. Lambert) made what I thought was an interesting speech from the point of view of any Minister in charge of a Bill, and I congratulate myself upon it. I thought the Clause was just going through, but the result of that speech has produced a large number of other speeches equally

    1321
    interesting, and although I do not complain, from the point of view of getting the Bill through, a little more time has been taken. I listened to the speech of my hon. Friend (Sir J. Spear) with great interest, and there is a.great deal of truth in what he said. The same remark also applies to the speech made by the right hon. Gentle man the Member for South Moulton. I believe that there has been a great deal of exageration as to the amount of the profits made toy the farmers. On the other hand, I think it will be admitted that, considering what their profits have been, they have not hitherto borne their full share of the burden of taxation necessitated by the War. I think it is quite true that this tax ought to have been imposed a year ago, and I say that, apart from the necessity under which I as Chancellor of the Exchequer stood of trying to make taxation fall more equally on those classes who have not been paying their full share. If one class does not pay its proper share, other classes have to pay more.
    Apart from imposing taxation on that ground, there was another ground which made it almost a necessity, and it was the feeling that farmers were not doing their duty in this respect. It is perfectly true that as a nation we are bearing all this taxation with very little grumbling, yet I wish to point out that of all the deputations which I have received in regard to the Budget com plaining that they were being treated worse than their neighbours, hardly one of those deputations failed to point to the case of the farmers. The farmers have done splendid work, and the production of food at this time is more important than taxation, and neither the Government nor the House of Commons could have done anything more unwise than to place such a burden on the farmers that would have caused them to feel that they were being badly treated by the Government and the country. But I do not think that is the case, and I feel sure that what we are doing will not have such a bad effect as my hon. Friend thinks. I believe that even yet the farmers can well afford to bear the burden of taxation which we are placing upon them, for we are putting them on precisely the same footing as everybody else. I think they must take into account that they pay no excess profits as the result of the War, although they have made more profits than they did before the War, and, therefore, I do not think they have any cause to complain.
    1322
    My right hon. Friend (Sir C. Hob-house) referred to tithes, but I do not think that question is very much connected with this Bill. What I meant by nodding my head on the occasion he referred to was that I fully realised what he was saying, and I knew the Government were considering whether anything could be done. It is a hard case not merely for the landowner who is cultivating his own land, but it is hard for the landlord who is letting his land; in fact, it is harder on him, because we have made it impossible for him to raise his rent and yet. he has to pay additional taxation. I admit all that was said about the un-equality of local taxation. It is quite true that before the War all parties in this House were pledged to adjust this matter. I cannot hold out any hope at present, but it is one of the first things that ought to be taken in hand when the War comes to an end. There is certainly no feeling on the part of the Government except one of gratitude towards the farming community for the efforts they have made in response to the Government appeal. But we do not think that our taxation is unfair. I should like to say that I believe, so far as I can tell, that nothing which this country has done in connection with the War is so remarkable from, every point of view as the way in which the food production has increased since the War.
    Mr. G. LAMBERT: Does the right hon. Gentleman propose to instruct the Inland Revenue to proceed in a more reasonable spirit with regard to the accounts?
    Mr. BONAR LAW: I think I made that point very plain in previous speeches on the Budget. I approached the Board of Agriculture to get them to act as the farmer's friend in the matter of framing the accounts so as to see that not only was the simplest possible method adopted, but that they should also get the assistance which is necessary in the framing of those accounts, and my right hon. Friend can rely upon it that the Inland Revenue will act as reasonably as possible.
    Mr. PETO: I shall not attempt to add anything to the general Debate, but I do want to put a definite point to the Chancellor of the Exchequer to consider between now and the Report stage. The right hon. Gentleman the Member for South Moulton referred to the occupier owner, and pointed out that in the case

    1323
    of an owner he was taxable at the highest rate of Income Tax. The double Income Tax on the farm rental would be some thing altogether different to what the Chancellor of the Exchequer intends. In the case of a small farm let to a tenant he is taxed on the earned income at the lowest level, but if the owner holds that farm and cultivates it himself he is liable to the full rate of Income Tax, and consequently he will be paying very nearly three times the tax which is supposed to be the equivalent of a tenant occupying the same farm would pay. Perhaps between now and the Report stage the right hon. Gentleman will consider limiting the amount of this double tax in every case to the rate applicable and appropriate to the rental of the farm itself, without regard to the other income of the occupier, whether he is the owner or the occupier. That would make the incidence of the tax a little less onerous in the case of persons with other incomes, and it would make it more what the Chancellor of the Exchequer intends— namely, a tax on the real profits of the farm. I hope the Chancellor of the Exchequer will consider that point. I have had representations made to me in this sense, if this tax is imposed as proposed, "It will force me to let a farm which for years I have cultivated myself, and that ought not to be the intention of the Chancellor of the Exchequer." Therefore I hope he will seriously consider this point. I should have liked to have had an opportunity of congratulating the right hon. Gentleman the Member for South Moulton and of confirming what he has said. I do believe that the whole basis of this demand for a double tax is perfectly simple. The public at large know that prices have risen enormously. They therefore presume that the farmers are getting enormous profits, but the facts are the other way, because the prices of everything the farmers have to buy have risen much more in proportion, quite independently of the control and interference of various Government Departments.

    CLAUSE 24.—(continuance of certain relief from income tax.)
    The provisions of Section twenty-nine, Section thirty (as amended and extended by Section eleven of the Finance Act, 1917), and Section forty-three of the Finance Act, 1916, (which give relief from Income Tax in certain cases for the then current Income Tax year) shall have effect as if herein re-enacted and in terms made
    1324
    applicable to the Income Tax year beginning on the sixth day of April, nineteen hundred and eighteen.
    Provided that the said Section thirty as so amended shall apply to any person who during. the current Income Tax year has served as a member of the Air Force, but a person shall not deemed to have served as a member of the Air Force unless he has served as an airman in Air Force service or as an officer of the Air Force on full pay or at a rate of pay which appears to the Income Tax Commissioners concerned, after consultation with the Air Council, to be equivalent to full pay, and either out of the British Islands or for at least one month continuously in the British Islands.
    Brigadier-General CROFT: I beg to move, at the end of the Clause, to add the words:
    "Provided also that the said Section forty-three shall have effect as if the words ' three-shillings and sixpence' were omitted and the words ' one shilling and sixpence ' were sub stituted there for."
    I think the House is so well informed with regard to what I call this scandal of a double Income Tax that I do not intend to speak for more than one or two minutes on this subject. I would like to inform hon. Members who have not followed the matter very carefully that this. is no longer a question affecting simply Australia and New Zealand, but it also affects those in South Africa and in Canada. The Chancellor of the Exchequer at the beginning of the War again and again pointed out that this matter was going to be adjusted by a conference of representatives from all parts of the Empire, and that conference was to be held immediately after the War. That was all very well for one year, and it was not such a great burden for two years, but as the War has gone on there is hardly a single hon. Member who does not now feel that the prolongation of this agony of confiscatory taxation has been really one we ought not to have permitted for our kinsmen in the Dominions over seas.
    I am going to ask the Chancellor of the Exchequer to once more consider this question, and if I do not make a long speech it is because I want the Chancellor of the Exchequer to get some-dinner. He knows full well the justice of this case. We have his own words on many occasions in which he has told us that he admits this grievance, and I hope he will now make a clean cut on this question. We have put down the same Amendment as last year, because the position has not really altered. As a matter of fact. with regard to Dominion

    1325
    residents who are taxed in the Dominions, the general effect is that they are worse off this year than last year. I want to read a letter which I have received from a large Australian merchant, who writes as follows:
    "I have to-day received an urgent request from my managing director in Australia for my company to put in an application for Australian War Loan, to which I regret I have had to reply in the negative, merely because the English taxation makes this impossible.
    "This company is an Australian company, registered in New South Wales. All its assets are in Australia, the business is carried on in Australia, and all the profits are made there; yet on account of the control being in London, it is treated for the purpose of English Income Tax as if it were an English company, and it therefore pays English tax on its entire profits irrespective of the fact that a large proportion of them never come to this country, and never will. The bearing of this on investments in Australian War Loan is as follows:— The Australian Loan is issued at 4½per cent. free of Australian tax, and is therefore undoubtedly a favourable investment for companies situated in Australia as ours is situated, provided they are not subject to English tax. In our case, when this 4½per cent. was brought into our profit and loss account, we should pay English tax on the income from this Australian Loan, which would stay in Australia, thus making it appear obviously ' unfavourable compared with an English Loan realising 5¼per cent. interest. As a matter of fact, we, an Australian company, have invested large amounts in English War Loan, the interest on which, when transmitted to Australia is not subject to Australian Income Tax, as this part of income has been earned out side Australia. When, however, this Australian company properly desires to invest similarly in Australian War Loan, the English tax authorities make it impossible for it to do so."
    That is the whole point. The House is well aware of the arguments. I hope the right hon. Gentleman will remember that in the case of Australia and New-Zealand, at any rate, they do not collect Income Tax on money which has been earned in this country, yet where people from the Dominions are resident here and have their businesses in the Dominions we here charge the double duty upon them. If an Australian is resident in this country and he is a man of wealth he pays a tax of 10s. 2d. here in addition to one of 6s. 6d. in Australia. and he pays the latter purely and simply in order to provide the Austrialian Armies which are fighting for us in France. The same argument applies in a lesser degree to the other Dominions which I have mentioned. It has been admitted that this tax in unfair, and the Chancellor of the Exchequer has told us that the only possible reason for such a grave, and speaking disinterestedly as I do on this
    1326
    subject, such a wicked injustice continuing, is that this is not the time when he can afford to give up any Revenue which is coming in. It comes to this, that in order to get a certain amount—I do not know the exact figures, but I am told it represents about nine hours' cost of this War—we are placing this huge burden on our kinsmen with the inevitable result—and I know it has occurred in three cases recently—that Dominion citizens have had to go back to Australia because they cannot afford to remain here and pay these higher taxes. I submit that in this case the needs of the Mother Country ought not to be adduced as a reason why we should penalise the very men who are paying twice over for the Armies of the British Empire. Heaven knows, if we do not realise now what the Dominions have done for us, we never shall. Remember the original Expeditionary Force we sent out to France. It consisted of four divisions. But the Dominions before very long provided nearly 1,000,000 men to fight under the British Flag for the Sovereign who is collecting this tax. I hope most sincerely the Chancellor of the Exchequer will realise the desirability of granting this concession, and that at the end of four years we shall cease practically confiscating the incomes of those people whose only crime is that they have come here to this country to live among us, and in many cases, it may be, in order to be nearer their relatives who are fighting on our behalf. I hope the Chancellor of the Exchequer will see his way to make this concession.
    Sir J. D. REES: My hon. and gallant Friend has been commendably brief. I will try to follow his example. Indeed, it is with some compunction that I rise at all to speak on this matter, not because I have not an exceedingly good case, but because of the fact that I have for some twelve years been chosen to make representations on this very question. A great many people from Australia are paying no less than 16s. 9d. in the£ Income Tax. That is a crushing burden, and I know various companies that are leaving this country, taking themselves away bag and baggage, because of that burden. This is a matter for serious consideration by the Chancellor of the Exchequer, especially bearing in mind the admirable service which has been done by the Colonies throughout this War. As regards the Indian side of the question,

    1327
    I confess that the Chancellor of the Exchequer has taken some wind out of my sails by announcing that the extra Is. will not be paid where the combined tax in any part of the Empire is as much as 6s., and then the tax will remain at 3s. 6d. in the £
    It must not be supposed that this is a question which merely affects rich men. No man can long remain rich if he is called upon to pay 16s. 9d. in the £as Income Tax. But the Indian people affected are those who often really have no income out of which to pay this double Income Tax. Take the case of an Indian Civil servant who retires on a pension of £ l, 000. He has paid for £ 500 of that out of the Provident Fund. His income is really reduced when he gets home to £ 750. The only additional income he probably has may be some small investment in a tea garden in India. That man is exceedingly hard hit by this tax, and he is totally unable, I suggest, to pay such a heavy Income Tax. I know that the Chancellor of the Exchequer is acquainted with these cases inside and out. I understand his position is that, as far as he is concerned, he can not remit anything he has got hold of at the present time. Such a position is perfectly intelligible, and one can see that it is hard for the Chancellor of the Exchequer to let any money go at a time like this. I will not trouble the right hon. Gentleman, therefore, by repeating the arguments I have raised on many previous occasions. I will only beg of him, as soon as he possibly can, to remedy this injustice, and in the meantime, perhaps, he will consider whether, from a revenue point of view, he is not losing more than he is gaining by driving capital out of the Empire by the enforcement of this double Income Tax.
    Mr. P. A. HARRIS: I do not think hon. Members who are pressing this matter are serving their cause well by moving an Amendment in this extreme form. The concession which has been made on two consecutive Budgets is a recognition of a sound principle on which the Government have agreed, and, as I understand it, they are prepared after the War to reconsider the whole problem from the Imperial point of view. Practically the whole of my income comes from the Colonies, and I should be both, as one deriving his income from Colonial sources, to feel that I was being placed in an exceptionally privileged
    1328
    position. The concession made this year is a very considerable one, because, although the Income Tax has been raised to 6s., the incomes derived from over sea sources are only to be called upon to pay the same tax as last year. I think that is a very generous proposal, and if it were to ' be suggested that in a time of war, when the needs of the Empire are so great and the necessities of the Exchequer so exceptional, special privileges should be given to Colonials, the result might be to weaken rather than to strengthen the Imperial bond, and it might cause hostility on the part of the working classes and amongst business men who derive their incomes from home sources. I think it is only fair that the Government and the English Treasury should get credit for what, all things considered, is a step in the right direction, and a step taken during the War. It is a generous step made more generous by that fact, and it should be recognised by those affected by it.
    Mr. MACMASTER: I shall also endeavour to imitate the example of brevity which preceding speakers have set, and make my remarks as few as possible. With regard to taxation, I think the general underlying principle is that it should be fair and equal all round, but in the case of this double tax some incomes are made to pay twice over, often for the very same purpose. Take the present War. Australia and other Dominions are contributing of their money to carry on the War just the same as the United Kingdom. But incomes earned in Australia and New Zealand are made liable to Income Tax twice over when they are forwarded to this country, and that I submit is grossly unfair. With regard to the remedy, I am not hopeful that we shall get it at this moment, although I do not take that view for the reason which was advanced by the last speaker, the burden of whose song was that this was a time of emergency and difficulty, and those who received their incomes from abroad ought not to desire to be put in a privileged position by seeking exemption from the tax. Personally I do not take the view that they are asking to be put in a privileged position. Al they ask for is to be put in a position of equality with others. They want equality of position all round. What they contend is that the imposition of this double tax is nothing more or less than legalised robbery. I understand that the Chancellor of the Exchequer has got all the money he really wants this year,

    1329
    or is in the way to get it. It should be remembered that at the last Conference it was placed on record by the Government that this was a very unjust and unfair tax, and that being so, it does seem to me we are entitled to look forward to be relieved of it at the earliest possible moment. No doubt any Government that may be in power in this country when the War ends will take the proper steps to rectify this outrageous injustice. But I want to recall the attention of the Committee to the fact that a good deal of discussion took place at the Conference, and the resolution which was carried unanimously was to the effect that the present imposition of the double duty is unsatisfactory and that, at the conclusion of the War, immediate steps should be taken in order to rectify the injustice. I am pre pared to rely on that.
    8.0p.m.
    Mr. J. MASON: I have no personal experience of the effect of the double Income Tax within the Empire, and if I intervene for a moment it is because I feel that the continuation of a grievance of this kind—and I think it is very properly looked on by a great many people as an unjust arrangement—is a very serious matter, even in time of war. I cannot help feeling that, although the Chancellor of the Exchequer cannot go all the way, this question really ought not to be left very much longer. According to the figures, I am told that in Australia the State Tax and the Common wealth Tax added here amount in the maximum to 8s. 3d., and if you add on the English tax as it remains in this Budget, 3s. 6d., that makes 11s. 9d. without the Super-tax, which, of course, is a very severe burden compared with what we have to pay in this country. The point I want to make is that it seems to me the Australians' position is clearly worsened by the fact that they have a very heavy Excess Profits Tax as well, and the effect of the Excess Profits Tax, added to the Income Tax, is to make the position of these people almost impossible. I am told that the Excess Profits Tax in Australia is 75 per cent., so that out of a given private income in Australia 75per cent. is deducted, and then the other 25 per cent. has deducted from it here 80 per cent. for Excess Profits Tax, and the remainder is subject to this Income Tax. That seems to be a position so intolerable that it ought to be dealt with, and not left until after the War.
    Sir C. KINLOCH-COOKE: I should like to support the Amendment, because I have taken an interest in this manner for many years, and because I think it is time something should be done to improve the position. I will ask the Chancellor of the Exchequer whether he cannot see his way to remit the tax in the case of persons whose money is earned in the Dominions, and whose profits are invested in the Dominions, in cases where no money whatever comes to the country. That is a very small matter. I have been into the case very carefully with those persons who have come over here, and who have asked me if I would make that suggestion to the Chancellor of the Exchequer. I do not think I am asking a very great thing. I also think that it is perfectly true, as many Members have said, that there are people who wish to stay in this country, but who have been obliged to go back to Australia and Canada owing to this question of double Income Tax. Another matter which has been pointed out to me on more than one occasion is that trade itself is leaving the Motherland for the same reason. I think that in these days, when we are called upon to do as much as we can to bring together the Dominions and the Motherland, that it is most unfortunate we should continue double Income Tax, which cannot do anything other than tend to separate the two.
    Mr. BONAR LAW: All my hon. Friends who have spoken on this Amendment have been so brief that I feel the least I can do is to make a very short speech in reply, and I am sure they will not think that the brevity, of my remarks now is any indication that I do not realise the seriousness of this problem. Although my hon. and gallant Friend the Member for Christ-church (General Croft) is right in saying that I thoroughly sympathise with the purpose of this Amendment, it is not the fact that I should be ready to adopt an Amendment of this kind. I quite recognise that one of the greatest needs from a financial point of view, and one of the things at which we should aim most strongly, is that when the time comes for sending money abroad again every inducement should be given to investors in the Empire, so as to strengthen the Empire with the money that goes there rather than that it should go to foreign countries. That is one reason why I have always been in favour of doing something with regard to double Income Tax. There are two considerations, and

    1331
    they are the only two I am going to put before the Committee, which should make one hesitate on an Amendment of this kind. The first is that there is a great deal to be said from the point of view of an Australian who comes to reside in England and who has to pay not only on the money spent here but on the money made in Australia, and which never comes home to him at all. But there is another case where I am not at all sure the claim is equally good. Take any individual, myself or anyone else. An investment is held out to us in some Dominion. In deciding whether we will accept that offer we look in the main, if we are not influenced by patriotic considerations, to two things—the net return to us, and the safety of the investment we are making. As a matter of fact, in spite of the Income Tax in these Dominions, in many cases it is true, I am informed, that the actual return which I would receive, in spite of this double Income Tax, on money invested in the Colonies is higher than the return I would receive from money invested in this country at the present time. You have, therefore, to put that particular aspect of it out of your mind in discussing this question. In other words, you have to look at the big issue, which is strengthening the Empire by investing money in it. In looking at the unfairness of making an Australian who chooses to come to London and reside here pay inall eases full double Income Tax you must put that on one side, and you ought not to treat in the same way the individual who simply has an investment and sends his money to the Colonies. You have to consider, therefore, whether, taking all the facts into account, he gets a fair and reasonable return for his money in spite of the taxation to which he is subjected.
    There is one other consideration, but one which is very important. I quite admit that this double Income Tax system ought not to continue an hour longer than the end of the War. We ought to put an end to it as soon as we possibly can; but I do not accept, and I am quite sure that the Dominion Prime Ministers would not accept, the principle of this Amendment as a right one. That principle is that in doing away with this double Income Tax the whole burden is to fall on the British Exchequer. I do not think that is right. It ought to be a question of
    1332
    adjustment, and the two countries should decide between themselves in what way the giving up of taxation is to be borne. I know, as a matter of fact, that that is the view taken by the Dominion Prime Ministers themselves. They feel it is a question for proper adjustment. It is. quite true, as my hon. and gallant Friend the Member for Christchurch said, that whether money is raised by an Income Tax in Australia or in Great Britain it is equally spent on the War. That is quite true, but we have to consider the burden that is laid on the different parts of the Empire as the result of the War. I would not yield to anyone in my admiration of what the Dominions have done, though what has been done by this country is worthy of admiration too. There is this difference: They are far away and we are the centre, and I feel the part they have taken in the War is such as would never have been anticipated. I recognise that fully, but you have to think of the position after the War. This War is laying on all belligerents a financial burden which is terrible in its intensity. I do not wish to exaggerate it. I never have—indeed, I have always felt that the want of money would never stop the War before we had achieved our object; but do not let us make any mistake. It is going to leave a very heavy burden, however it is adjusted, for many generations as a result of this War. I am, therefore, quite sure my hon. Friends will agree that from that point of view what you have to consider, treating the Empire as a whole, as we all wish to do, is how each partner is best able to bear the burden which falls after the War, and from that point of view I do not think anyone has any doubt that when you consider the immense natural resources of our Dominions they will be able to bear their share at least quite as well as the Mother Country will bear her share.
    There is one) other consideration that I would put to my hon. and gallant Friend who moved this Amendment—and I feel sure he will not press it to a Division as he did last year—and that is that we are putting on additional taxation to the extent of a full year of £ 114,000,000. We are not asking anyone who pays double Income Tax to pay any part of this additional Income Tax. I really think that as Chancellor of the Exchequer I would not be justified in going further than in relieving them of all this additional taxation, and I hope that my hon.

    1333
    Friends who feel strongly on this point will agree that I have done as much as I can.
    General CROFT: With every desire to try to meet my right hon. Friend's view, may I ask if he will give us any under taking that the matter will once more be placed before the Imperial Conference; and will the Chancellor himself undertake to see that there is an opportunity given to the Prime Ministers to reconsider the question, at any rate, so that when the Budget comes round next year the Chancellor will not have to tell us, "In another year's time "?
    Mr. BONAR LAW: I think that is asking a great deal. I will undertake that the Prime Ministers shall be asked to discuss this subject; tout what my hon. and gallant Friend really asks is that I should invite them to deprive me of the argument which I have used from year to year.
    Mr. BRACE: I think we are all grateful to the Chancellor of the Exchequer for not having increased the burden under this Clause this year, but I do not think he was very fortunate in his answer to the arguments which have been adduced, because the main part of them does not affect this question at all. The relative powers of this country, and of the Colonies, to bear taxation after the War does not affect the demand for a modification of this particular tax at this particular moment. I would like very much to ask whether the Treasury is taking particulars now of the amount of Revenue they are likely to lose by driving the concerns which are now conducted in this country, and are liable to double taxation, out of the country. I believe they will find that a great deal will be lost to the country by reason of the fact that concerns hitherto managed in this country, and which deal with Colonial money earned in the Colonies, are largely leaving this country, owing to the burden of this taxation, and getting themselves managed abroad, where they are doing their business? It seems to me we have never been able to find out exactly how much money is being earned by these taxes. I have asked several times, and we have always been told that it was not possible to obtain the figure. I suppose the adjustment is very slow, as it was a new thing on the present scale, and there must have been great difficulties in realising exactly how the incidence of the tax
    1334
    would operate, but by this time, as the tax has been running for two years, I think some knowledge ought to have been obtained, and we ought to be able to know exactly what is being realised by it. I think the hon. and gallant Member for Christchurch said that he thought it would amount to something like nine hours of the War. I should have thought it was less, but the Treasury ought by this time to be able to tell us something about what it is, and it seems to me that they ought to be making inquiries with regard to the amount of money which is likely to be lost by driving out of this country businesses hitherto managed here.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed,. "That the Clause stand part of the Bill."
    Sir R. COOPER: The point that I desire to put is very difficult to frame, because in this Clause there is legislation by reference to two previous Acts. It concerns the problem of double Income Tax in the case of countries other than the Colonies. The Chancellor of the Ex chequer has quite clearly told us that the problem of the double Income Tax in the case of the Colonies is a very serious one, and that it is in the interests of this country and of British industry that we should get rid of it as soon as possible after the War. It is equally true that in the case of countries other than the Colonies the double Income Tax is bearing more and more heavily, and before long we shall have reached a point at which certain businesses must be absolutely crushed out of existence. Of course, if it is necessary to raise taxation in this manner and you can make sure, having crushed a business out of existence, that it is going to remain as a British possession and that the trade will be carried on by some other British firm, there may not probably be much to be said against the alteration, but I want to impress upon my hon. Friend this fact. In the United States at the present time the taxes. analogous to our Income Tax amount to 5s. 2d. in the £. Adding that to the 10s. 2d.—to take the extreme case—paid by people in this country, you have 15s. 4d., and seeing that Congress has notified its intention to add considerably to the taxes in the United States, it must be obvious that people who have interests in the United States, and there are a very large number of them, must reach a point when they will get no profit, when

    1335
    they are bound to suffer very severely, and when their businesses in many cases must come to an end. TheUnited States -desire as far as they possibly can to pay the largest possible share of their war expenditure out of income.
    The DEPUTY-CHAIRMAN: I do not see how what the hon. Member says is relevant to the Clause.
    Sir R. COOPER: I wanted to put an Amendment in which was intended to -raise the question of relief from double Income Tax.
    The DEPUTY-CHAIRMAN: The hon. Member cannot discuss an Amendment which he has not put in.
    Mr. D. MASON: He was speaking on the Clause.
    The DEPUTY-CHAIRMAN: It does not makeany difference; the point is that what the hon. Member is saying is not relevant to the Clause. This Clause deals with the Dominions and not with the United States.
    Sir R. COOPER: I understood that this dealt with the question of the double Income Tax, which at present is confined to the Dominions. The Chancellor of the Exchequer spoke very widely on the sub ject, but if you say that I am out of Order I will give way and bow to your ruling.
    Sir G. YOUNGER: Would it not be proper to raise this question by way of a new Clause?
    The DEPUTY-CHAIRMAN: It cannot be raised on this Clause.

    CLAUSE 25.— [Continuance of Relief under 5 Geo. 5. c. 7 s. 13.)
    (1)Section thirteen of the Finance Act, 1914 (Session 2) (which gives relief in respect of diminution of income due to war), shall apply to Income Tax (including Super-tax) for the current Income Tax year, but with the substitution, as regards postponed Super-tax, of the first day of January, nineteen hundred and twenty, for the first day of January, nineteen hundred and sixteen, as the date on which the postponed Super-tax is to become payable.
    (2)Any payment of Super-tax for any year (hereinafter referred to as the year of charge) which has been postponed under Section thirteen of the Finance Act, 1914 (Session 2), as continued by Section twenty of the Finance Act, 1915, Section twenty-eight of the Finance Act, 1916, and Section twelve of the Finance Act, 1917, or which has been postponed and further postponed under those Sections may be further postponed until the first day of January, nineteen hundred and twenty, if the individual
    1336
    from whom the payment is due proves to the satisfaction of the Special Commissioners that his actual income from all sources for the current Income Tax year is or will be less than two-thirds of the income on which he was liable to be charged to Super-tax for the year of charge.
    Motion made, and Question proposed, "That the Clause stand part of the Bill."
    Sir A. WILLIAMSON: Can the Financial Secretary to the Treasury tell us what is the meaning of the words "actual income"? Do the Government mean a man's statutory income or his real income? The words are indefinite, and it is very desirable before we pass this Clause that we should know exactly what is the meaning of the words "actual income." I per haps ought to have given notice that I in tended to ask this question, and I apologise for not having done so, but I did mention it on the Second Reading of the Bill when the Chancellor of the Exchequer was in his place, and I did not receive any answer.
    Mr. BALDWIN: The income of the actual year is calculated according to Income Tax rules.
    Sir A. WILLIAMSON: That is the statutory income?

    CLAUSE 26.— (Provision with Respect to Deductions for Wear and Tear of Plant, etc.)
    (1) Where the Commissioners of Inland Revenue are satisfied on an application made to them for the purpose that any considerable number of persons engaged in any class of trade or business are dissatisfied with the amount of any deduction for wear and tear, the Com missioners, unless they are of opinion that the application is frivolous or vexatious or relates to matters already decided by a Board of Referees, shall refer the case to the Board of Referees, and that Board shall deal with the case and determine the deduction to be allowed.
    In this Section—
    The expression "deduction for wear and tear" has the same meaning as in Section twenty-six of the Finance Act, 1907; and
    The expression "class of trade or business" means a class of trade or business which may be determined to be such for the purposes of this Section by the Commissioners of Inland Revenue; and
    The expression "Board of Referees" means any Board of Referees appointed for the purpose of Part III. of the Finance (No. 2) Act, 1915, or if there is no such Board, a Board of Referees to be appointed for the purpose of this Section by the Treasury.
    (2) In estimating the profits or gains of any trade, manufacture, adventure, or concern in the nature of trade chargeable under Schedule D, or the profits of any concern chargeable by reference to the rules of that

    1337
    Schedule, there shall be allowed to be deducted as expenses incurred in any year so much of any amount expended in that year in replacing any plant or machinery which has become obsolete as is. equivalent to the cost of the plant or machinery replaced after deducting from that cost the total amount of any allowances which have at any time been made in estimating profits or gains as aforesaid on account of the wear and tear of that plant and machinery and any sum realised by the sale of that machinery or plant.
    (3) Section nine of the Finance Act, 1898 (which relates to the amount of the deduction to be allowed on account of the annual value of premises), shall not apply in the case of any premises being mills, factories, or other similar premises.
    Mr. G. TERRELL: I beg to move to leave out the words "Where the Commissioners of Inland Revenue are satisfied on an application made to them for the purpose that any considerable number of persons," and to insert instead thereof the words "If any person."
    There are a number of Amendments on the Paper in my name, and perhaps it would be convenient if I took them altogether, because they all relate to one subject which on several occasions we have had before the House— namely, the allowances which are made by the Treasury for depreciation of plant and machinery and other assets. It will clear the ground if I state, for the information of the Committee, what has happened in the last eighteen months. An Amendment was moved to the Finance Bill of last year asking that allowance such as a prudent owner would make should be allowed for wear and tear and obsolescence on all assets, buildings, and so on. Immediately after that Amendment was put on the Notice Paper the Treasury issued a White Paper which to some extent met the claim, but of course it did not go half far enough. On 16th July an Amendment was moved, but was not pressed to a Division. A great many arguments were used pressing upon the Government the extreme importance, urgency, and necessity of giving attention to this matter. In December last the Report of Lord Balfour of Burleigh's Committee was published. As many hon. Members are aware, that Report contained the recommendation that greater allowances should be granted for depreciation. Still the Treasury did nothing until 16th April of the present year, when a further White Paper was issued, also undated, by which some additional concessions were granted. Two or three days after the issue of that White Paper the Report of Lord Balfour
    1338
    of Burleigh's Committee was issued, and we then understood why the concessions contained in the White Paper were granted. The Committee will recollect the Motion we made on the 1st May on the Financial Resolution. We again pressed our point and asked that the allowances which a prudent owner would think reasonable should be granted. That was pressed to a Division but, unfortunately,. we were unable to carry our point.
    I am glad to see that the Government are still moving and still realise that this is a subject which cannot be allowed to drop and which will be pressed until the reasonable concessions which manufacturers are demanding are granted. "We are now on the Finance Bill and Clause 26 is, in spirit, a substantial advance in the right direction. In substance, effect and practice, however, it is of no use at all. Under the Clause, before anyone can get the benefit of the right of appeal, he has to be one of a considerable number of persons engaged in any class of trade or business. In other words, he has to get a considerable number of persons together, who are engaged in the same class of trade or business and they have to work in agreement with him. They jointly have-to make representations to the Treasury,. and, if they are successful— the Treasury have it absolutely in their discretion to turn them down if they think that the application is frivolous or vexatious— then, and only then, can they get to a Board of Referees and have their case fairly adjudicated upon. That is not a concession at all, because you can never get there. No individual could ever get to a Board of Referees. He has to be one of a considerable class of persons engaged in a particular trade; in other words, he has to get together practically everybody who is engaged in a particular class of trade, and they have to make a joint representation to the Treasury. Is that possible? Is it practicable? It is simply trifling with the question to concede to a great extent what we are asking for, and then to hedge it round with a condition which makes it utterly impossible for any one ever to obtain it. From that point of view it is necessary to consider what Amendment should be introduced to meet the case. The Amendment which stands in my name is so framed that the Clause will read:
    "If any person engaged in any class of trade or business is dissatisfied with the amount of any deduction for wear and tear, special

    1339
    depreciation or obsolescence, the Commissioners, unless they are of opinion that the application is frivolous or vexatious, shall refer the case to the Board of Referees."
    That is putting the matter on a reason able basis, so that any individual has his right of appeal. It still reserves to the Treasury the power to turn the application down if the case is frivolous or vexatious. I do not think it can be seriously con tended that they are to turn down the whole of a particular trade if they make an application, but under the Clause as framed the Treasury would have the power to do so. It is quite reasonable and only fair to the Treasury— we do not want to do anything that is unreasonable— that, if an individual makes a demand or claim which is obviously frivolous or vexatious, then the Treasury, in the exercise of their discretion, should have the right to turn the application down. This is an attempt, so far as we are concerned, to meet the case fairly and in a straightforward manner. There is one point which we have raised on every occasion on which this subject has been before the House, that is the question of buildings and other wasting assets. Over and over again we have asked that an allowance should be made for depreciation of buildings. It is curious that though these Motions and Amendments have been moved, and the same point has been raised in regard to buildings, it has never once been answered. The Government have always found it convenient to ride off on other issues and ignore the question of buildings. I should have thought that the question of buildings was a subject which would have interested hon. Members who usually sit on the Labour Benches, because it is essentially a question which interests working men. In all the old factories you see dark, dreary, and dismal workshops. To a great extent that is due to the fact that buildings are not written off in the same way as plant and machinery are written off. If you attempt to write them off, and create a fund, that fund is taxed. That is not much encouragement to manufacturers to provide newer, better and modern buildings. There is also the question of patents, the question of mines, and a variety of other forms of what are known as wasting assets, and in all these cases full, reason able rates of depreciation should be allowed. The question is why you should tax anything more than net income, because under the present system without a doubt you are taxing something consider-
    1340
    ably more than net income. We are not seeking to evade any taxation. We know taxes have to be paid, but in the case of right hon. Gentlemen on the Treasury Bench it is net incomes which are taxed, and we ask for equality of sacrifice. We ask that when the Income Tax, as it now is, is 6s. in the £, the pound that you tax is really a pound, and not something considerably less. That, I think, is a reasonable demand, and I trust my hon. Friend will see his way to meet the Amendment. It is not put forward in any spirit of hostility. We consider that we have a just grievance, and that it is a matter which affects all the industries, trades, and manufactures of the country, and we hope he will regard it in that light and meet the claim which we have put forward. It is not only a claim which is made, we will say. by certain manufacturers' organisations, although, of course, they are at the back of the movement, but it has been recommended by one of the most influential and important Committees which the Government has ever appointed. I refer to the Lord Balfour of Burleigh Committee. It recommends these allowances, and the different Departmental Committees which have considered the question of trade after the War, each in their turn, have also recommended that proper allowances should be granted. I trust my hon. Friend recognises that we regard this matter as of very great importance, and I hope he will see his way to meet our claim.
    Sir ROWLAND BARRAN: I think we should treat the Treasury Bench fairly, and admit that in this matter of depreciation traders have been better treated under the last Budget and under this than under Budgets put forward on either side of the House in the old days before the Coalition. I should like, while appreciating what they have done, to ask them to go a little further on the good road they have started upon. This question of the right of the individual, or of trade combinations, to depreciation has had a year's trial, and the experience of traders is that it is practically impossible for any individual trader to get the depreciation that he considers himself justified in asking by means of a combination in his own trade. During the year many large traders have tried, and the result of their failure is that combinations of the largest bodies of traders in the country have taken the matter in hand and are interesting themselves in it in the

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    interest not of the whole body, but of the individual. It is the company, after all, which pays the tax, and not any body of men, and it is only fair that the people who have to pay the tax should have a direct appeal to the referee. One objection to this matter being referred to the members of a trade is that a particular manufacturer may not, in very many cases does not, want to put the whole of the details of his processes and the particulars of the machinery that he has before all his competitors, still less the grounds on which he claims depreciation. Another point is that traders are not by any means always congregated in the same district. Supposing a manufacturer is alone, as is very often the case, in a large industrial district. You often find in one city one or two sole manufacturers of a particular product. There are no people in that trade in the district. They are in another part of the country. There are not the same Income Tax Commissioners. Yet these may be very large businesses. A man in a particular branch of the cotton trade in another part of the country has an equal right to depreciation of machinery as those who are congregated round Liverpool and Manchester. Or take some engineering firm which may be in the Midlands, quite away from the manufacturers in his own trade. He surely has an equal right to go before the referees as the whole group of engineers who may be situated in the district around Sheffield. It is very often the man with a special process, unlike anyone else's, who is most in need of protection, and whose special process needs special consideration in this matter. But, under the Bill as it stands, he is the one man who cannot get it.
    I have spoken of the interests and rights of the manufacturers, but that is not the point of view from which I am really looking at this matter. I am not looking at it, and I do not think the trade is looking at it, purely from the point of view of the manufacturer. It is not in the interests of trade in general, and it is not in the interests of the country that special processes and special machinery, much less the general machinery of the great trades, should be subject to an unfair tax. There are a great many things in Income Tax that are unfair; we are all agreed upon that. When Income Tax law has been over hauled and codified many anomalies and grievances will be altered. We have to deal now with points of injustice in the
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    Income Tax, not merely injustice to individuals, but injustices which are a detriment to trade and are hindering trade. The experience of the largest manufacturers, of those who are most progressive in scrapping old machinery and in putting in new machinery, and of those who initiate the newest processes, is that the Income Tax Commissioners are very difficult to deal with in regard to reasonable depreciation. At the present time it is practically impossible to get to the referees who, we believe, are a more able and more considerate type of men, and whose duty it is to take a wider view, and who, if they do not take a wider view, the House of Commons will have to take care in future that that wider view is taken in these matters. I want the Treasury Bench to look at it from this point of view, and not from the point of view that if they agree to this alternation they are going to lose a small sum of money. The amount of money is not the greatest question. The money will have to be found, but the money ought not to be found by penalising industry in this particular way at the pre sent time, when we need the Government to give every facility that it possibly can to industry. There is nothing that will be more needed after the War than that every manufacturer shall depreciate his machinery and everything that concerns his processes very fully, and that every manufacturer shall be ready, and shall be encouraged by the State, to scrap old machinery and replace it by new, and shall scrap old methods and replace them by new methods. The only thing we are asking the Government to do is to alter this Clause so as to give the manufacturer what is fair and just in the first place, and something that will be an encouragement for the manufacturer to carry on his business in the best form as soon as the War comes to a close.
    Sir A. WILLIAMSON: I suppose I must deal with the question as it relates to the Amendment to line 10.
    The DEPUTY-CHAIRMAN: I do not wish to shut off a general discussion.
    Mr. LOUGH: Do you mean on the whole series of Amendments?
    The DEPUTY-CHAIRMAN: I am not disposed to intervene to prevent a general discussion on the main proposals. I am not relying upon the particular form of Amendment now before the Committee.
    Sir A. WILLIAMSON: Am I right in assuming that in the event of the Amendment on line 10 being carried or reversed that would not affect the Amendment to leave out line 16 to 19 inclusive, which is a very important Amendment and which stands apart.
    The DEPUTY-CHAIRMAN: Certainly. The decision on this Amendment will only dispose of Amendments which are absolutely related to it.
    Sir A. WILLIAMSON:In regard to this particular Amendment I strongly support it, and I fear that it has not been quite appreciated that this Clause is hedging round the concession to such an extent that it will be of little value. First of all, you have to get a considerable number of persons and then when you have got them the class of trade has to be decided by the Commissioners of the Inland Revenue. Therefore, you have two gates to pass before you get to the referee. Then there is also a question about frivolous and vexatious applications. So that you have three gates to get through before you reach the Board of Referee. It has been forgotten that the words, "a considerable number of persons," are going to be very difficult. In trades there are many degrees of depreciation according to the situation of the work. This country is a great trading and venturing community, which ventures its money in enterprises in every part of the world. In some parts of the world you have a climate which is dry: where it never rains. In another part of the world you have a climate where it rains almost continuously, and in another part of the world you have tropical heat, while in another part you have almost arctic cold. In these different places the amount of depreciation varies very greatly. If you have works in the tropics the depreciation is very rapid in certain kinds of machinery and especially in the buildings connected with those works. Again, if you have works situated close to the sea the action of the sea air and the salt upon some of those works is very rapid— it very rapidly corrodes metal. You have all kinds of conditions arising, and if people are engaged in the same class of business you cannot get a fair and equal rate of depreciation for the same class of business situated in these different places.
    Take the oil industry. That would come under the definition "class of trade or business." If the same rate of
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    depreciation was to be applied in the case of an oil well in Mexico as to the case of an oil well in Peru we should be treating the Peruvian oil well very unreasonably and unfairly. The rate in one case might be something like four or five years as the average life, while in the other case it might be ten, fifteen, or twenty years. So that the rate of depreciation on the wells in these two cases would be grossly unfair if it were fixed on the basis of the Mexico figures for the case of the wells in Peru. I only give that as an example. The same argument may be applied to most industries which are scattered all over the world. When we are passing laws in this country it must be remembered that we are not dealing only with manufactures in Lancashire and Yorkshire. We are dealing with industries all over the world, but we are very apt to forget that. I hope that the Government will see their way to allow any person in any class that is dissatisfied to go before the Board of Referees, unless it be a frivolous or vexatious application, which, of course, must beshut out. Such cases, however, are not likely to be very numerous. I think you might have omitted referring to frivolous or vexatious applications, because people are not going to waste time in going before the Board of Referees on a case which they know has no substance. It ought to be in the power of any person, and not merely of a considerable number of persons to go before the Board of Referees. I hope the Treasury are prepared to meet what are the feelings of the Committee in this matter that anyone who has a good case to put forward should Be entitled to come forward and state his case. I hope I have said enough to show the Committee that no one class of case can cover all the cases within that class, because of the different situation of these works, and there is also a variation in the wear and tear even of the same kind of machinery, so that it is very difficult to lay down one rate of depreciation for any particular class of trade. Therefore I have much pleasure in supporting the Amendment.
    Mr. J. HENDERSON: I desire to sup port what has been said with regard to giving the power of appeal to anyone. I have myself in questions of Excess Profits Duties which go before the Commissioners very considerable difficulty in respect of particular trades. In one case in which I had to go before them they would not

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    give their decision until they had summoned everybody known to be engaged in the trade, and asked them whether they would raise any objection to the decision which was to be given. I therefore think that it ought not to be left to the Com missioners to decide, and that the same right which you give to a trade to go before a special or an ordinary Commission ought to be given in each case. With regard to these wasting assets we have had for many years a promise in which it was admitted that great hardships arose, and that these, with other anomalies of Income Tax, were to be submitted to a committee. But though it is four or five— and I am not sure if it is not six— years since that promise was made, we are exactly where we were. If an allowance for depreciation is to be made for Excess Profits Duties there is no earthly reason for not allowing similar depreciation for ordinary Income Tax. As my right hon. Friend has said, business is not conducted in this way. I have to account for a business in Liberia where the white ant is always very busy destroying property, books of account as well as everything else
    9.0 p.m.
    There is another special thing which the Treasury themselves have since the passing of the Act granted by Regulation. I pressed for the Regulation, and got it. That is with regard to expiring patents. If you go before the Income Tax Commissioners and ask them to make an allowance for expiring patents they will laugh at you. But the Commissioners for Excess Profits. Duty have made an allowance in certain cases. After deducting a certain sum for goodwill the balance should be divided over the life of the patent and so much per annum deducted from the profits. Is not that fair for an ordinary business? A man may make a great deal of profit and pay Income Tax on it, and in a few years' time his patent expires and it must go, or only so much of it remains as his good will has created. But there is an instance in which the Commissioners for Excess Profits Duty themselves have admitted that it is right to have a deduction for a wasting asset in the life of a patent which is not applicable to Schedule D as Income Tax. That is an instance of a great many of the same kind. Also there are other allowances. Allowance was made the other day for new premises under the Excess Profits Duties of 57 per cent. running over three years— that is to say, 19 per cent. per annum. The Income
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    Tax Commissioners, under Schedule D, would never think of allowing that. Yet it was only just and fair. There was no attempt to say that it was an unjust claim. They would not have allowed it if there had been. My experience of these referees and of the judgments which they have given points very clearly to this. There is a large number of instances. As my right hon. Friend will remember, the original standard of profit was 6 or 7 per cent. That has gone. He himself has seen the necessity of raising it to 9. But the referees have in a large number of cases run that up to 10, 12, 16, and even 18 per cent. on the pre-war standard— a percentage standard and allowances for additional happenings. That all points to this, that fixed Regulations, which have been put down and acted upon for many years under Schedule D, are themselves altogether obsolescent. They do not apply to modern business, and especially where that modern business is spread not only over this country, but all over the world. Take, for instance, motor lorries. I had a case before the Commissioners in which some of the motor lorries were engaged in this country and some were engaged in South Africa, where the roads are exceedingly bad. They were bound to admit that the life of a motor lorry in this country was at the best six or seven years, whereas in South Africa, with the roads there, it was not four.
    Take the case of buildings. I never could understand why the Income Tax Commissioners have not allowed for depreciation on buildings. My own view, which may be a peculiar one, is that every building becomes unwholesome after it has been up for fifty or sixty years. The whole place, particularly if it is a manufacturing place, becomes so impregnated with microbes that it really becomes in sanitary; and every manufacturing building ought to be overhauled, at all events much more often than it is. If you did that, you would have much better health conditions for the workers in them. There are a great many other things in the way of wasting assets. There are leaseholds. A leasehold may have twenty years to run, and you may have paid a big premium on it. No allowance is made, and at the end of the term you will have nothing to get back for the buildings which you have put up, but probably you will have to make a payment to the land lord for dilapidations. I think the old

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    answer for these anomalies connected with the Income Tax ought not to be repeated to-day. For five or six years we have had promises of a Commission, and even if peace were declared to-morrow I do not suppose that a Commission could be set up for a year, and possibly it could not give a decision until another twelve months after its appointment. In the meantime, this is what is going on, and all sorts of difficulties arise. There is not only obsolescence, there is not only scrapping of machinery, and other matters of that character, but there is this fact, that where you have been making provision for 5 per cent., 6 per cent. or 7 per cent. before the War to replace machinery, it is altogether another question at present in regard to subject of taxation. Five per cent. for a number of years would pro vide you with £ 100, and when the time comes for you to get that £ 100, probably you want £ 100, £ 200, £ 300 or £ 400. These are all reasons why a fair allowance should be made under Schedule D of the Income Tax. I would again point out that we ought to have an allowance for machinery consistent with the life of the machinery, consistent with the price we have to pay for machinery afterwards. Unless all that is fairly considered, there cannot be any justice done under Schedule D.
    I would further point out that there has never been allowed any deduction for the cost of restoring capital. The Courts have decided that the Commissioners are not allowed to consider that, and, there fore, for a number of years we have received no allowance, the Court having held that it was capital. That, I submit, was essentially wrong. If you pay £ 5,000 to get £ 100,000, where is the £ 5,000 to come from? It is an expense. The £ 100,000, or whatever the amount may be, remains a charge upon the capital of the business, and you have got to pay it when the time comes, while the only source from which you can repay yourselves, and put the company in a proper position, is out of profits. I appeal very strongly to my right hon. Friend the Chancellor of the Exchequer that this and other matters should not be left to the views of the Commissioners, but that the man who is concerned should himself be entitled to put his case. Further than that, there ought to be an enlargement of the scope of allowances for machinery and buildings.
    Mr. LOUGH: This is one of the discussions in the House which makes the heart of anybody shrink within him if he is connected with the trade and commerce of this country, and what has been said by the hon. Member (Mr. G. Terrell) is well worthy of attention. I have myself brought before the right hon. Gentleman suggestions for some slight reform, only a small reform, and he held up his hands with holy horror, "The whole thing would go if I did what you ask." I did not use the word "nonsense," nor could I have done so with so great an authority as the right hon. Gentleman the Chancellor of the Exchequer, but my proposal was merely a thing that would have greased the wheels of business, and would have enabled him to get on with his Bill. But nothing could produce the slightest effect upon him. These cases which have been put forward in the course of this discussion illustrate the struggles which go on between the business mind and the official mind. I remember well that the Government was asked for a grant of free alcohol in order to develop the dye industry, but that industry passed away to Germany, because this House had not the sense to allow alcohol free from any duty in order to give the same facilities to our manufacturers as manufacturers in every other civilised land enjoyed. These cases which we are now discussing are of the same kind. Any impartial man listening to this Debate, and looking at the words in the Bill, will be struck by the repeated mention of officials who apparently regard it as their business to stifle industry, and prevent the development of any great manufacture in this country. All that the Amendment asks is that a person who thinks he has a good' case should be in a position to bring it forward and have it examined. Yet this House of Commons has already been engaged for a considerable time in asking that the business man should be able to appeal on his case. Look at the words in the Bill, "Where the Commissioners-are satisfied on an application." How can you satisfy the Commissioners? I have never satisfied them, nor can any body else satisfy them. When they are satisfied "on application made to them for the purpose, that any considerable number of business men." According to these words you are to have a consider able number of business men, or else you cannot make any progress in setting up an industry of any importance in this

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    country. How can you get a considerable number of men? What is the first difficulty 1 Trade jealousy. A man who has any business to promote, any scheme which he wants to develop, does not want to take everybody into his confidence; he does not wish to tell them his business, or everything that is running through his mind. Bather than do that, he says, "If I cannot get this thing through my self, I will drop it."
    The words of this measure bristle with officials who are to be satisfied. The Commissioners have to see a "consider able number of people," whereas the fact is that there is never a considerable number of people taking part in enterprises such as those which are now engaging our attention. It is generally some one genius who is concerned in some of his own ideas which he wishes to develop him self if he can do so. Cases have been brought out here in which the circum stances are not alike. Then there is the motor wagon case, one in South Africa and the other on Tower Hill. These cases are too simple for argument, and one would think that they would not have to be mentioned to the Chancellor of the Exchequer in the House of Commons. In any two factories in this country, standing alongside of one another, or not ten miles from one another, you would find entirely different circumstances, and well worthy of consideration from these officials.
    I will mention one case, and I will tell the Committee what I did in it, because they will recognise just the same spirit about this remark as about the one which I addressed to my right hon. Friend opposite on the Second Reading stage. A friend of mine is making margarine in a small way, producing 100 lbs. a week. He said, "I could double my output, but I cannot arrange with the Income Tax people about the depreciation they give me on the new machinery I am putting in." I could hardly believe the story, and I said to him, "Can you get the machinery?" He replied, "Yes; I can get the machinery. I shall have to pay double or two and a half times as much as I have had to pay, but I could double the output of margarine in a few weeks." Then I took the side of the Income Tax Commissioners, and I said," Depreciation does not matter much. You had better get on with the business and make a good thing out of it, now that it is wanted for the War." He said, "I will not— not I.
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    I do not know when the War will be over, and they ought to meet me on it." I said, "What will they allow you?" He replied, "Something between 7½ per cent. and 15 per cent. "For this difference between 7½ per cent. and 15 per cent. this improvement is being choked and stopped. I wish the Chancellor of the Exchequer would try and work out this case. What would the country lose by this manufacturer getting 'this? I do not know what the country would lose, but I imagine that upon £ 1,000 they would lose £ 75. What would the country gain? There might be a profit of £ 3,000 or £ 4,000, on which Income Tax would be paid in that year on this little venture. It seems to me ridiculous that the development of any industry should be checked by a trivial thing of this kind. My Friend who spoke last commented on the words in the Clause, "unless it is frivolous," and so on. He said that no business man would bring forward anything that was frivolous. But the Amendment contains this very word "frivolous." It is hedged round with safeguards. The whole point we are arguing now is that the wheels of production should not be choked by these official rules. I appeal to my right hon. Friend to consider the circumstances of the moment. Old official rules, made twenty or thirty, or even ten years ago, are of no use and no help to business men who are trying to grapple with the difficulties of present-day war necessities. Prices are different to-day, and everything is different from any previous time of which we have had experience in this country. I do think that the case put forward from many parts of the House, and the example which I have quoted, must carry conviction to my right hon. Friend. What is the use of his sitting. there and listening for an hour and a half to business men on a reasonable point of this nature, instead of jumping up at once and saying, "I will accept it"? What do we meet here for? [An HON. Member: "Talk!"] Talk? Perhaps I ought to sit down myself, and I will not prolong the Debate-; but business men have a. right to express an opinion on a thing like this, which they understand and about which they know. Is my right hon. Friend aware that this matter is brought forward with the consent of that powerful organisaion, the Federation of British Industries? That alone ought to satisfy him. These men are not unreasonable, and if they cannot do

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    anything through their own representatives in their own House of Commons, when the case is so admirably presented as it has been on two occasions, then it is a poor look out for British industry.
    Mr. BALDWIN: After listening to this discussion for the last hour, I feel like a man who has not got a single friend. All the same, I shall try and discuss the subject as temperately and as reasonably as it has been discussed by my hon. Friend who followed the hon. Member for Wiltshire. I think I cannot do better, especially having regard to the interesting and amusing speech of my right hon. Friend opposite a moment ago, than to begin by looking at the Clause which we are discussing and seeing what it is. You, Sir, I think very wisely, if I may say so, have allowed the discussion to cover somewhat wide ground, as so many of these Amendments hang together, and perhaps I may be excused if I follow the example set by other speakers and speak somewhat broadly on the subject, and without special reference to one Amendment only. We discussed this question of depreciation at length last year, and this 26th Clause is the outcome of a good deal of thought and discussion which has taken place arising from what passed then. It is very obvious to what we owe the prominence which this subject has attained in the last year or so. It is one more instance of the way in which the incidence of Income Tax is being increasingly felt wherever it operates, owing to the figure to which that tax has risen. All kinds of difficulties, and perhaps even anomalies which were tolerable under Is. Income Tax, become much more serious under the present Income Tax. We see exactly the same effect which we have seen in the Excess Profits Duty, where the Duty was carried on for a longer period than was at one time contemplated, and the rate has had to be increased through the continuance of the War, and where, in some cases, provision has had to be made to ease the incidence of that duty. There was a great deal of truth in what the hon. Member for Aberdeen said. He said that one year follows another. Nothing is done to settle the matter, and my right hon. Friend (Mr. Lough) with his enthusiasm follows along that line of country. But the fact remains that the War goes on, and while the War goes on, it is most unfortunate— as I am. the first to recognise— that it is a
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    physical impossibility to examine this subject and the very kindred subjects in the Income Tax as they can be examined when the War ends. That is so, for the very simple reason that we cannot get together the personnel that would be required for a committee to perform these investigations, nor secure the attendance of the experts of all kinds who would be wanted to assist them. Men of the calibre who would be required for so complicated, technical, and difficult a subject are al ready engaged in work which it is impossible for them to leave, and which gives them no spare time for other purposes, however important they may be. I have felt the need of this, and so has my right hon. Friend. We have looked into it recently, to see whether even now it might not be possible to set up this Committee, and we have had, with the greatest possible reluctance, to abandon all idea of it for the present.
    But until that Committee can undertake this work, it will be impossible to give full investigation to a subject which goes down to the very root of the incidence of Income Tax, and until that is done it will be impossible for us to do more than meet, as far as we can, the greatest difficulties, and try to ease the burden with out giving away important principles, and without yielding up what may be an enormous amount of revenue.
    To look for a moment at this Clause, for which, except for some very friendly remarks of the hon. Baronet, we have had very little commendation so far, I think the Committee must remember that there has been a good deal of discussion about this right of appeal to referees we are proposing to give. My right hon. Friend the Member for Islington spoke as though there was not already a right of appeal. This right of appeal is a secondary right. There is already a right of appeal of the individual to the Commissioners. I quite agree as to the difficulty. Very often the individual fails to give satisfaction in appealing to the general Commissioners. But here we propose that a secondary right of appeal should lie to the referees. It seems to us— and I still hold the same view, although I listened very carefully to that which was advocated on the other side— that in giving this secondary right of appeal there is no reason for letting the individual as such, when dissatisfied with the first Court, go to the second Court. I think the second Court should be more

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    safeguarded, and the safeguard of the second Court is given by saying that it shall not be open to any individual, which might— and I think very often would— lead to complaints of a frivolous nature— perhaps not so frivolous that they might be at once dismissed as frivolous, but complaints which certainly would not be brought in concert with several members of an industry who felt that they were not being dealt with fairly. It is an extension of the right of appeal. It is not all that my hon. Friends want, perhaps, but it is a move forward in that direction, and I must ask them to-night to be satisfied with that as far as it goes.
    The second Sub-section of this Clause is, I think, a very valuable concession, because we take a practice of giving obsolescence, and we make that statutory. It is generally considered to be a mark of progress when you convert practice into a statutory form. We have done that here, and it is a very real benefit. With regard to the third Sub section, it is perfectly well known to members of this Committee that in pre paring the Income Tax assessment under Schedule D you deduct from that what you have under Schedule A, and you are not to be taxed twice over. Schedule A pays on five-sixths of the annual value of the property. Up to now that five-sixths has been allowed to be claimed against Schedule D, but we allow the extra one-sixth, which makes five-sixths into six-sixths, to be deducted in making the deduction for Schedule D, which one-sixth you can put straight away towards depreciation of your buildings. It has been calculated by my experts— and I do not pretend to make calculations of this nature, because I never was a mathematician— that this one-sixth which has been given in Sub-section (3) will, at com pound interest, write off the value of the premises in thirty years. That is a free gift, and one which, I think, is not of in considerable value. I admit, as I have admitted before, that we do not go all the way— perhaps not half the way— to meet my hon. Friends, but we have gone some of the way, and I can assure the Committee that we have given a great deal of consideration to the subject. We feel that we have gone to the utmost limit that we can go with safety until we have had an opportunity, or our successors in this place may have an opportunity, of
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    examining this subject as it ought to be examined before permanent statutory changes are made in a matter of such vital importance.
    I would like to touch on one of two smaller points referred to by my hon. Friend the Member for West Aberdeen-shire (Mr. J. M. Henderson). He spoke about leaseholds, and said how unfair it was that depreciation was not allowed. I venture to think, although no one has more respect than I have for his wide. experience in all these matters, that here he spoke without having given due consideration to the subject, as I think people are so liable to do in assuming that they are being overtaxed, and that they are being required to pay something which in equity they ought not to pay. It has always seemed to me since I looked into this matter that the question of what tax would have to be borne operates on the purchaser's mind in fixing the price, and that he knows pretty well what liabilities will fall upon him when he makes his offer. The reason people are feeling the pinch to-day is that in many cases they have made their bargains in reference to a state of things which has passed away for a generation, that is, with reference to a period of low taxation.
    Mr. J. HENDERSON: I did not refer to the purchase. What I meant was a house built on a lease, and when the lease expires the whole value goes.
    Mr. BALDWIN: The case is just the same. I was saying that the hard ship caused was where people had calculated prices at a rate of Income Tax which has passed away, but, after all, that is a common hardship we feel in every relation of life owing to increased taxation. It is no greater hardship on a man who has made a bargain in commercial affairs in that way than it is on a man who has been living in a certain way of life, and who finds his expenditure curtailed by increase of taxation rising to to a point which he never possibly anticipated. We shall have to adjust' ourselves to these new conditions, and, I think, industry will have to do so, too. I should like to add that there is one Amendment, that of my right hon. Friend (Sir A. Williamson), which, I think, it will be only fair to accept. It proposes to leave out of Sub section (1) the words "or relates to matters already decided by a Board of Referees." If I am not out of order, I

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    should like to say that we cannot accept Amendments dealing with the question of depreciation.
    Mr. CURRIE:I think when those concerned read to-morrow the closely reasoned statement of the Financial Secretary to the Treasury they will feel that there is not very much to be said for the Amendment with which the hon. Gentle man has just been dealing. One admits that if we were engaged in a general discussion as to what should be done permanently with reference to the question of depreciation, etc., we would agree with much that has been said. But that is not the position with which we are dealing. In his opening remarks my hon. Friend said that he felt that he was a man without Friends. I do not think that is the feeling that most of us in Committee have towards him at present. I think it may be interesting to the House, and it is right it should be known in the country, that the executive of the Associated Chambers of Commerce, who presumably know their own business and their own interests as well as any other people, take the view that the way in which the Chancellor of the Exchequer has dealt with all these questions up to this point of depreciation, and so on, is so fair and reasonable that they feel quite unable to place difficulties in his way in passing this Clause of the Budget; on the contrary, they feel grateful to him for the line of broad justice with which he has met all the contentions which were brought forward some time ago.
    Mr. PETO: Before the Amendment is put I should like to say one word in regard to the question of special depreciation and also as to wasting assets, machinery, etc. The Financial Secretary's whole argument on this point was not as to the merits of the case, but on the fact that we have not got an adequate body of experts that are free to deal with the question. That argument will apply quite equally against Clause 26 as a whole. If, under the third Sub-section of the Clause, the amount of the deduction to be allowed on the account of the annual value of premises can be calculated as to the extra sixth of the annual value of buildings taxed under Schedule A, and to be given back— if that has been worked out and calculated as to exactly the period of redemption of the value of the buildings, I cannot see why rough, substantial justice should not be done now, even though the
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    Income Tax has been raised to 6s. in the£The hon. Member for Aberdeen (Mr. Henderson) raised a point in regard to leaseholds. The answer of the Financial Secretary was that you could not deal with such hings as leaseholds and mines and put them all together. He did not think it necessary to deal with that. He gave us as a reason that it was always present in the mind of the person who purchased leasehold or a mine as to what was the effect of taxation; it was calculated in the price. He destroyed the point of that argument in his next sentence. The argument from the fact that the purchaser calculated perhaps at Is. Income Tax in 1912 in the purchase of a mine or an undertaking was vitiated, as the whole basis of the transaction was changed when the Income Tax had been doubled, and still further when it multiplied by six in the present year. The question of wasting assets is entirely separate from that of leaseholds. There is something in the contention of the hon. Gentleman who has just addressed the House when what he has said is applied not only to leaseholds, but not when it is applied to all wasting assets. I cannot see why a commercial undertaking which is dealing with one particular kind of industry, such as, for instance, mining, and the more rapidly perishing mineral deposits, such as nitrates, should be taxed in such an excessive manner, or so entirely differently to other undertakings that are engaged in commercial industry. It makes a perfectly crushing burden upon these companies. It would be a heavy burden in any case if you assume that their extraction of minerals is necessarily income, and is therefore subject to profit, or Income Tax. It is nothing of the kind. The extraction of minerals, whether you calculate it in making your purchase price of the mineral grounds on the tax of Is. in the £, or any other rate, is a mere substitution of one form of capital for another. It has nothing whatever to do with the annual income derived. I do not for one moment agree with the hon. Member for Leith Burghs, who said that when the business world to-morrow reads the very carefully reasoned apology— for it is more apology than speech!— we have just had from the Treasury Bench, that they will be satisfied that substantial justice has been done. What they will say will be that if we can deal with this question of wear and tear, why cannot we deal with

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    the item of mining Income Tax, or, rather, Profit Tax, upon all commercial undertakings which is now based upon a rate of 6s. in the £ l, and that, therefore, what was an injustice five or six years ago, has now become an intolerable burden, and inequality between one business and another. Therefore, I say that, so far as I am concerned, I am not satisfied with the result of this Debate. I cannot see why the subject, if dealt with at all, cannot be adequately dealt with. If there are experts commissioned to deal with wear and tear, why are they not at liberty, even in this time of war, to deal with what is far more important, the question of wasting assets? The question at issue is at the very root of fairly taxing the different industries upon an equitable and equal basis. The question of obsolescence and wasting assets should be
    Sir A. WILLIAMSON: I beg to move, in Sub-Section (1), to leave out the words
    properly and adequately dealt with. I cannot see anything complicated or difficult in these Amendments which have been, moved by my hon. colleagues. I think i they merely do scanty justice, considering the amount of notice which has been given to the Treasury that this question was one exercising the business community, and particularly the manufacturing Community throughout the country. It is not a question of trying to escape taxation. It is simply the absolute obligation placed upon the Treasury of seeing something is done which is more equitable and fair under present conditions.
    Question put, "That the words pro posed to be left out stand part of the Clause."
    The Committee divided: Ayes, 78; Noes, 67.
    "or relates to matters already decided by a board of referees."
    I understand that the Government propose to accept this Amendment, and I would therefore formally move it.
    Mr. BONAR LAW: Yes.
    Amendment agreed to.
    Sir C. KINLOCH-COOKE: I beg to move, in Sub-section (1), after the words "the Finance Act, 1907," to insert the, words "amended by the addition of the words whether such machinery or plant is working or, owing to causes of temporary operations, is out of work at the time."
    This is really a very small matter, but at the same time it is important and, moreover, it is one which I feel certain the Chancellor of the Exchequer will be only too delighted to accept, as it will right a wrong, and that, I am sure, the right hon. Gentleman is most anxious should be done. I will not trouble the Committee by reading the whole of the words of Section 26, but I will content myself with repeating the lines to which I wish to get this addition made:
    "The expression ' deduction for wear and tear' has the same meaning as in Section 26 of the Finance Act, 1907."
    It is after these words that I desire to get inserted the words I have moved. Section 26 of the Act of 1907 runs:
    " For the purpose of enabling deductions for i wear and tear to be allowed and claims in respect of those deductions shall be included in the annual statement of the profits or gains of the concern.…and the additional Commissioners in assessing those profits and gains shall make such allowances in respect of those claims as they think just and reasonable."
    10.0 p.m.
    But for the purposes of assessing the Com missioners of Inland Revenue draw a distinction between machinery in use and machinery not in use. I think, however, that every member of the Committee will agree that when machinery is not in use it deteriorates very much faster than machinery which is in use, and what I have to ask the Chancellor of the Exchequer to do is to do away with this very unfair distinction and to give power to the Commissioners of Inland Revenue to say that this allowance shall be made whether the machinery is in use or not in use owing to causes of temporary operation. I will give an instance which has come to my notice recently. A friend of mine had a difference of opinion with the surveyor of taxes as to the rate of depreciation on certain plant and machinery. He appealed from the surveyor of taxes to the Commissioners,
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    and they admitted that the plant in certain Colonies was lying idle owing to the War and was in consequence depreciating, but they said that no allowance could be made for such depreciation as the plant was not being used for the purposes for which it was intended, and, accordingly my friend was non-suited. I venture to think that that is not what the Chancellor of the Exchequer in tended. He does not intend that on such matters an unfair distinction like this should be continued, and I appeal to the right hon. Gentleman to put this wrong right to-night, and to give the Commissioners of Inland Revenue power to say that whether the machinery is being used or whether it is lying idle for some temporary purpose this concession shall be given in regard to Income Tax. It is, of course, at the present moment the fact that owing to the War machinery in all parts of the world is out of work, and it is for this reason that I propose this Amendment.
    Colonel GRETTON: I have the same case to bring before the Committee, but I propose to do it in a rather different form, namely, by moving the new Clause which appears on the Paper in my name, and is to the effect that allowance be made for the non-user of machinery and plant. I have also an Amendment on the Paper to insert in the Sub-section which the hon and gallant Member who has just spoken also proposes to amend, the words "as amended by this Act." The points raised by my hon. and gallant Friend and myself are really the same.
    Mr. BONAR LAW: As the hon. and gallant Gentleman who has just spoken has said, the points raised in these two Amendments are really the same, and I feel it would be much more convenient that the matter should be raised on the suggested new Clause. If the hon. and gallant Gentleman the Member for Devonport agrees to that, perhaps he will withdraw his Amendment and allow the matter to be dealt with on the new Clause.
    Sir C. KINLOCH-COOKE: I am quite willing to do that.
    Amendment, by leave, withdrawn.
    Colonel GRETTON: Is it not necessary at this point to put in my Amendment, "as amended by this Act"?
    The CHAIRMAN: I took it that that Amendment had reference to the new Clause. It is not necessary, however, to

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    bring in those words here. I understand that the question will remain open on the new Clause, and it will be dealt with when we reach that point.
    Sir C. KINLOCH-COOKE: In with drawing my Amendment I understood the new Clause would cover the point which I intended to raise.
    Mr. BONAR LAW: Certainly.
    Sir R. BARRAN: I beg to move to leave out the word's
    "The expression ' class of trade or business ' means a class of trade or business which may be determined to be such for the purposes of this Section by the Commissioners of Inland Revenue; and"
    I regret that the Chancellor of the Exchequer has not seen his way to deal with the first part of this Clause, seeing that it makes it so difficult for anyone engaged in business to go to the Referees. I hope the right hon. Gentleman, however, will treat this proposition a little more generously. Surely the way the Board of Referees are hedged about by the first fifteen lines of this Clause is quite sufficient, this provision that it shall be left to the Inland Revenue Commissioners to decide what is a class of trade or business. You may, for instance, get a number of people going to them who are engaged in any class of trade or business, and it is open to the Commissioners to say, "Oh! you have already been dealt with." Take the mining industry. That is a class of trade or business which may have been dealt with. Yet the Commissioners may say, "We have had a reference to depreciation under that, and we are not going to reopen the question again." A consider able number of people say, "But this is a particular kind of mining which has no possible connection whatever with the classes with which you have dealt under the general class of mining, and we wish to be heard on it." The Commissioners say, "We have done with mining, and we will not listen to you." You go into York shire and may be dealing with the woollen trade. You ask for depreciation on some thing which is in the woollen industry and has not been dealt with. A question comes up that deals with worsted, or something that is neither woollen nor worsted, but they say it has been dealt with under the woollen industry, and decline to consider it under a sub-division of that industry. Practically everything in this Clause that is apparently given to the trader is being taken away or made extremely difficult by the manner in which the Treasury are
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    hedging it round. I want to point out that it is not merely imaginary. You had a large number in the "No" lobby com pared with the "Aye" lobby, and it is because the manufacturers in this country during the last year have had the experience of trying to get their cases before the referees, and have either failed to get-there or to get satisfaction.
    You have to-day a very strong feeling from the manufacturing interests in this country that they are not satisfied with the position in which this matter rests. I want to urge the Government to leave out these words. I think if you have in a district what is described here as a consider able number of commercial men representing a large and fair proportion of the trade of the district, and they think it worth their while to ask for a reference of an important case of depreciation to the Board of Referees, it is not in the interests of the commerce of that district that they should be ruled out because the wider category has already been heard, or that the Commissioners should be entitled to say, "You have been heard on this matter, and although you represent a very considerable interest we are going to deal with this thing as a matter that has been judged and are not going to hear it." What is the attitude of the Government? What is the advantage of leaving these words in? Do the Government suppose that in any great manufacturing district a large number of men are coming together to ask for a reference to the Referees without having any sensible case to put before them. If that is so, the Board of Referees can always dismiss it by the earlier words "that the application is frivolous or vexatious." I think it might be left to the people who understand the business, and the Commissioners of Income Tax do not understand, in the first instance, the different kinds of technicalities of the businesses with which they are dealing. They may understand them when the questions have been put before them, but initially the Commissioners of Income Tax do not understand the nice distinction of the different businesses, and why depreciation is justified in one case and not in another. There is no reason why a body of able business men desiring to save time, and without undue interference from the Commissioners of Income Tax, should be refused a hearing. If it is vexatious they can refuse it, and if it is wrong they can reject. it. I do ask the Treasury Bench, in view

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    of the large body of opinion that ex pressed itself in the Lobby a few minutes ago, to leave out these words.
    Mr. BONAR LAW: I must confess to the Committee that I am a little disappointed at the amount of pressure which is still put in regard to this question of depreciation. I should like to point out this fact to the Committee. I listened most carefully to all the discussions in the earlier stages, as I did also last year. I tried to find from those discussions anything which it was possible for the Treasury to do without giving away revenue which at this time it is not possible for us to give. As a result of that consideration I brought in three distinct improvements from the point of view of the manufacturers which are contained in the Bill as it is now brought forward, and it is not too much to say to the Committee that if we have not had additional discussion and additional Amendments in consequence of the Amendment I have made, this is certain, that we have not been saved any of the pressure which is brought on this subject. It is a very -difficult subject. The idea on the part of some Members seems to be that it is a case of officials against the trade of this country. It is nothing of the kind, and I think those who, like my hon. Friend the Member for Liverpool, who is an accountant and has himself had experience of the way in which these matters are dealt with by the Commissioners, will say that their experience is that they are really dealing with these matters fairly, and that certainly was my object in making these concessions. It must be obvious to the Committee that at a time like this, when it is absolutely necessary that the Government should obtain all the revenue that it possibly can to meet the expenses of the War, we cannot go as far in making concessions of this kind as even in some cases, on the merits of the proposition put before us, we should wish to go. It is true, on the other hand, that the higher Income Tax does make any inequality press with undue severity. All I want to say is that I have tried, and my hon. Friend besides me (Mr. Baldwin), who is a business man and understands all these problems from a business man's point of view, has tried with me to give every concession we felt we should be justified in giving in view of the demand for money. I wish the Committee to give us credit for that and to
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    take into account that we are trying to meet them as far as we can. With all due respect to my hon. Friend (Sir E. Barran), that is due rather to the previous discussion than to the Amendment now before him. As regards this particular Amendment the reason the words were put in was that the Board of Revenue have found that one of the difficulties they have had to meet has been people saying, "There is something special in the way I do my business which brings me into a grade by myself." That they wish to avoid, but I agree with my hon. Friend, who has put the case with great moderation and which makes the case that we always try to meet, that the words in the earlier part of the Clause do seem to go far enough. I think that is so, but if my hon. Friend will leave it in this position, I will under take either to make the change on the Report stage or to give him another opportunity of bringing it up again.
    Amendment, by leave, withdrawn.
    Motion made, and Question proposed. "That the Clause, as amended, stand part of the Bill."
    Sir C. HOBHOUSE: I understand that the effect of Sub-section (3) is that in estimating the amount of annual profits or gains in respect of any mill, factory, or similar premises, the sum which is to be deducted on account of the annual value of the premises may be the full amount of the assessment of the premises for the purposes of the Income Tax, but may not exceed that sum.
    Mr. BONAR LAW: My right hon. Friend has correctly explained it, but I should like to point out that before this Clause was introduced at all an allowance for repairs and maintenance was given, and this is something quite above that. It is a new concession.
    Mr. LOUGH: What is the nature of it?
    Mr. BONAR LAW: It was explained most minutely and clearly by my hon. Friend, and I hope that the Committee does not want me to go into it again. The net result is that it will mean paying off the full value in something like thirty years.
    Mr. TERRELL: I am very sorry that the right hon. Gentleman has felt that great pressure has been brought to bear upon him in connection with these Amendments for depreciation, but we have felt very

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    strongly that if it had been pressure brought to bear by Labour the Government would have shown a reasonable spirit, and would at once have gone out of their way to make some concession. As it happens to be brought by employers, the Government say, "Impossible," and they refuse to do anything. The result is that a Division is forced upon them in which they get a very small majority. I am glad, however, that my right hon. Friend is going to reconsider some of these questions upon the Report stage.
    Question put, and agreed to.

    CLAUSE 27.— [No deduction to be allowed on account of annual value of premises abroad.)
    Where any lands, tenements, hereditaments or other premises of whatsoever description used for the purpose of any trade, manufacture, ad venture, concern, profession, employment or vocation, are situated outside the United Kingdom, no deduction or set-off shall, in estimating the amount of annual profits or gains arising or accruing from that trade, manufacture, adventure, concern, profession, employment or vocation, in any manner be allowed on account or in respect of the annual value of those premises.
    Mr. J. HENDERSON: I beg to move, after the word "vocation" ["vocation, are situated"], to insert the words "are the property of the trader or manufacturer and."
    This Amendment is designed to meet the decision of the House of Lords in the Bowstead case that the owners of lands, tenements, hereditaments, or other premises were entitled to charge the annual value of these as against their working expenses. It cannot be contended if a man rents a property in Cape Town or anywhere that he is not going to have the rent which he actually pays allowed off his Income Tax. That was a case where the people did not own the property, and it was held by one Court, that because they did not pay on it under Schedule A that it ought to be allowed. The House of Lords said they were entitled to deduct it.
    Sir J. D. REES: The case has not teen taken to the House of Lords.
    Mr. HENDERSON: I admit I made a mistake. The case has not been taken to the House of Lords, because there is no chance of success. Am I right in supposing that it is only where people are the owners of the property that no allowance is to be made for the value of the premises out there, or is no allowance to be made even
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    if they pay rent?. If the Chancellor of the Exchequer will explain to me what he means, I will withdraw the Amendment.
    Mr. BONAR LAW: My legal advisers inform me that the effect of this Clause would produce precisely the result my hon. Friend desires. It is obviously a point upon which I cannot express an opinion on the wording of a legal document. It is very difficult to deal with it by way of a manuscript Amendment. Perhaps my hon. Friend will be satisfied now with the statement I have made, and if he wishes to raise the point later he can do so on the Report stage.
    Mr. HENDERSON: Will the right hon. Gentleman put the point to his legal advisers? The word "value" might mean rental value. I do not see that it can mean anything else. If a man pays rent, he ought to be allowed to deduct it, and it is only if he is the owner that he should pay.
    Sir C. HENRY: This is a rather important point. Until I heard the Chancellor of the Exchequer's explanation I was under the impression that any firm which carries on a branch business, say, in France or anywhere else, and which has to pay rent for those premises, could not deduct the rent in making up their accounts for Income Tax purposes. That ought to be made perfectly clear, because I feel sure that as the Clause is drafted now the view of the hon. Member for West Aberdeen (Mr. J. Henderson) is the one that is generally held.
    Mr. BONAR LAW: It is a question of words to carry out an intention about which we are all agreed.
    Sir F. BANBURY: What is the intention?
    Mr. BONAR LAW: That he should not pay in the case my hon. Friend (Mr. Henderson) referred to.
    Mr. HENDERSON: When he pays rent?
    Mr. BONAR LAW: If that be so, I will give the Committee the undertaking that we will examine the words carefully, and if any change is necessary in order to make the meaning quite clear, we will bring it up on the Report stage.
    Sir J. D. REES: May I ask you, Mr. Whitley, whether you are going to allow a discussion on the proposal to leave out the Clause now, or should that be raised later?
    The CHAIRMAN: It is always open to an hon. Member to speak on the question, "That the Clause stand part of the Bill," when we have disposed of the Amendments.
    Sir F. BANBURY: I am not at all sure that I agree with the Amendment of the hon. Member for West Aberdeen (Mr. Henderson), but perhaps the best course to pursue would be to raise a discussion on the question that the Clause stand part of the Bill, so as not to have two discussions. I think I could bring it in.
    Sir C. HOBHOUSE: The right hon. Baronet thinks he can bring it in. We all know what a past master he is in the art of introducing into a discussion anything he wishes to introduce, but the real decision would rest with you, Mr. Whitley. May I ask whether it would be possible for the right hon. Baronet to introduce this subject into the discussion on the question, "That the Clause stand part of the Bill"? I should like your ruling on that point, otherwise I should like to say something on the Amendment.
    Sir F. BANBURY: Nothing has been agreed. The Chancellor of the Exchequer has merely given an undertaking that on the Report stage he will do certain things. Therefore there is nothing agreed. There has been nothing before the Committee. When the question is put that the Clause stand part, we can discuss whether or not it should be passed, with Amendments which may be put into it or without.
    The CHAIRMAN: Certainly. I do not see any reason to limit it.
    Amendment, by leave, withdrawn.
    Motion made and Question proposed, "That the Clause stand part of the Bill."
    Sir J. D. REES: This arose out of the Bowstead case, which has not got beyond the Appeal Court. In that ease a firm of merchants having branches in different places in the East, in arriving at the Income Tax chargeable, claimed a set-off against the average profits of the annual value of the premises they occupied abroad. Those profits accrued before 1914, in the Budget of which year income which accrues abroad and is not remitted home becomes subject to Income Tax. Under the judgment in the case between the surveyor of taxes and Messrs Bowstead the Court of first in stance and the Court of Appeal found in
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    favour of Messrs. Bowstead. But I do not pretend to argue that the matter should be left exactly where it now is, because under the judgment the firm would be entitled, in arriving at its profits, to deduct the annual value of their whole estates and buildings. I do not think the Chancellor of the Exchequer could well leave the matter in that position, but at the same time there is this to be considered. This was a flaw in Income Tax law in favour of the subject, but as the Income Tax law contains many anomalies and inequalities against the subject and as it is all awaiting revision it does not seem quite fair, because a gap has been discovered in favour of the taxpayer, to proceed to alter that, leaving all the other inequalities which are against him in full force and effect. For that reason it is hardly fair to enforce this Clause as it finds a place in the Bill at present. I do not know whether the Chancellor of the Exchequer would be disposed to consider if the Clause might stand as regards buildings, leaving out the question of land. Of course, the Clause very frequently becomes enforce able in respect of plantations in India and Ceylon, for instance. Therefore you would hardly expect the annual value of those lands and premises to be deducted, and very difficult questions would arise whether the basis of calculation should be 5 per cent. of the capital at the time they were acquired or what it should be. That would be a very difficult question. I am prepared to base my argument upon this, that though a flaw has been discovered in favour of the taxpayer it is not altogether right and equitable to stop that gap as against the taxpayer, leaving unadjusted all the many inequalities in Income Tax which tell against him.
    Sir C. HOBHOUSE: I understand that the object of this Clause, as contained in the side note, is that hereafter no deduction shall be allowed on account of annual value of premises abroad in estimating the annual profits or gains arising from trade. The Chancellor of the Exchequer has expressed his readiness to consider an Amendment which, while stopping this deduction in the case of freehold premises abroad, would continue it in the case of leasehold premises.
    Mr. BONAR LAW: It leaves it precisely where it was.
    Sir C. HOBHOUSE: The right hon. Gentleman grants the deduction in the

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    case of leasehold, but stops it in the case of freehold property. Surely that is not a wise thing either from the point of view of justice or revenue. Consider what would happen? I get a deduction off leasehold premises, but no deduction off a freehold. What would be my action? I should convert the freehold into a leasehold. I should at once sell the premises abroad, and I might have £ 10,000 in free cash. Then I should pay a rent to some person to whom I had sold the premises and at once proceed to claim deduction in respect to the premises. It is rather an unwise piece of business on the part of the Treasury, and I would seriously ask the Chancellor of the Exchequer whether when he comes to consider the proposed Amendment he will not see both the inequity and stupidity of accepting it, and that he will either allow the Clause to stand as it is or delete the Clause altogether from the Bill. If I recollect aright, the trades which are carried on at a profit abroad have to be brought into account for the purpose of taxation in this country by any person who is a subject of this country or a resident in this country. If that trade is carried on abroad and the profits of it are subject to Income Tax in this country then surely the premises kept abroad for the purposes of that trade ought to get the same reduction as if they were premises here. I should have thought that was equity as well as common sense. Whether the Chancellor of the Exchequer agrees with that or not, I hope he will agree with the other view, and either make the deduction common to both lease hold and freehold premises or get rid of it altogether.
    Sir F. BAN BURY: I object to this Clause. As I understand it, the Clause is put in to meet a decision which was given in one of the Courts of law. It seems to me that very often when we desire to defeat a decision given in a Court of law we make mistakes in this House. What does this Clause actually do? I am not a lawyer and I may be wrong, but if English words have any meaning the Clause as it now stands says that if you have premises, tenements, or hereditaments used for trade or manufacture in England you may deduct the annual value when you are arriving at the method of assessing your property for Income Tax, but if they are held
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    abroad you cannot do so. That seems to me to be absolutely absurd. There can be no reason whatever why if you can deduct the annual value of premises in England that you cannot deduct it when they are abroad. There is more reason why you should deduct it abroad, because the original reason of imposing taxation was that the person who enjoys the benefit and protection of the laws of the land which requires money to carry them out should contribute to the maintenance of law and order in the country. There fore, it seems to me absurd to say that you may not deduct the same sum if you happen to have property abroad that you may deduct if you happen to have property in England.
    My next point is the Amendment of the hon. Member below the Gangway. I very often agree with him, but in this case I think he is absolutely wrong. There is the very astute reason brought forward by my right hon. Friend (Sir C. Hob-house) that an ordinary person, knowing that his property was freehold and that he could not deduct the annual value, would immediately sell to somebody else, pay rent, and then deduct the annual value. Why is their rent to be more sacred than the interest of money arising from an investment? There is no difference that I can see between them. In those circumstances I cannot agree with that particular Amendment. As I understand it, the argument put forward is this, that if you are in England and own a certain manufactory you are allowed to deduct the annual value of that because the Income Tax is charged in other shape upon the annual value. But if you own the property abroad you do not pay Income Tax on the annual value of the property. I do not think that that has anything to do with it, be cause what we have got to consider is the proper and just method of arriving at the profits on which you are to be assessed, but under the Act which was passed by the present Prime Minister, I think in 1914, which said that all incomes that was received from property abroad, whether it was brought to this country or not, had to be declared for the purpose of Income Tax. That argument falls to the ground. Therefore, I see no necessity for the insertion of this Clause un less it is because of the wish to defeat the decision of the Court, which is a growing practice of this House. It may be that

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    this Clause may not have been fully understood by members of the Committee. Probably that is so. I should not have noticed it if it had not been brought specially to my attention, but I think that it is a matter which really requires attention, and I hope either that we shall have some very good reason given for its inclusion or that the Government will allow the Clause to be negatived.
    Sir G. YOUNGER: I do not think that this Clause wants much elucidation. My right hon. Friend has taken the case both for and against it. Obviously the reason for the Clause is this. In Great Britain every person who owns property and returns his Income Tax under Schedule D, has already been assessed for the rental of his buildings under Schedule A. In those circumstances I suppose he deducts Schedule A valuation, because he has paid already, and it would be ridiculous to ask him to pay twice. If you pay rental for premises that you use in connection with your business that is deducted in the profit and loss account, but the Schedule A is paid by the man who receives the rent. In the case of the Colonies obviously there should be no deduction in respect of the value of freehold property. You are entitled to deduct it here because you pay tax on it, but you have no right to deduct it abroad because you do not pay tax on it.
    Sir F. BANBURY: You do pay two Income Taxes.
    Sir G. YOUNGER: No. Therefore the case to my mind is perfectly clear.
    Sir F. BANBURY: The original law, as I understand it— I may be wrong, though I do not think I am— was that if a man had property abroad, and if he brought the proceeds to this country he was not liable to Income Tax; but the present Prime Minister altered that.
    Mr. BONAR LAW: This has nothing to do with that.
    Sir G. YOUNGER: This is only to really put a man abroad in the same position as a man here. When he pays under Schedule A he is entitled to deduct that; where he does not pay under Schedule A he is not entitled to a deduction. There is no reason why he should be.
    Mr. J. HENDERSON: My right hon. Friend opposite has not quite grasped the position. In this country no allowance is deducted in respect of the value of the premises. All that is allowed is part of the Schedule A tax which is paid. You have the rental of the premises under Schedule A. You may have that. But the balance of profits is under Schedule D. Suppose you had a place in Cape Town, and your own premises in London, and you charged the Cape Town premises with a thousand a year; that thousand ought to come to London, and be credited in the books here. But under this provision the Government get nothing from that, neither under Schedule A or Schedule B. That is the point, which my right hon. Friend has confused with the Act of 1914. Under that Act, a London firm carrying on business at the Cape did not pay the tax whether he brought the profits here or not. That was decided under the De Beers case. It would be most unfair, if I had a place in Cape Town, and I charged my business there with £ 500 a year and was allowed a deduction out there, that then, on bringing my accounts here under Schedule D I should be charged on that, and not credit myself with the £ 500. You cannot credit yourself in London unless you have paid under Schedule A. Where a bond fide rent is paid to a third party, that should be allowed in the expense of carrying on the business.
    Mr. PETO: I had a Motion to omit this Clause, and I want to give my reasons for that Motion. I am going back to an Act before that of 1914, namely, the Act of 1842, and I wish to tell the right hon. Gentleman why I think this Clause is wholly misconceived. This comes under the original Act of 1842, under Schedule A, which says that tax shall be collected for all land, tenements, hereditaments, and heritages in Great Britain. The Treasury has never claimed Schedule A on land and premises held all over the world, but under the 1842 Act, on profits under Schedule D, the words are these:
    "Upon the annual profits or gains arising or accruing to any person residing in Great Britain from any kind of property whatever, whether secured in Great Britain or elsewhere.'
    Therefore, the basis of assessment under Schedule D is entirely different from Schedule A, and I cannot see why now, in 1918, we should in effect say that the Chancellor of the Exchequer is entitled to charge Income Tax under Schedule D on

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    the annual value of property that is held at Cape Town or somewhere else which ought to be or only could be assessed under Schedule A.
    Mr. J. M. HENDERSON: Those profits come here.
    Mr. PETO: It is not a question of profits at all. By all means, if the right hon. Gentleman throws his net as wide as he does, tax the actual profit made in any part of the world by a British subject which is brought to this country, but do not say, in taxing that profit, you are going to include the annual value of premises which would have been, or ought to have been, taxed under Schedule A if they were situated in this country, no matter what part of the world those premises were situated in. It is only one step removed from the Chancellor of the Exchequer saying that a British subject has no right to purchase property in any part of the world without paying him Income Tax on the annual value of the property, whether they are profits from industry or trade, or it is merely a house in which he resides. I think in doing this, and in trying, as the right hon. Baronet said, to change, in an Act of Parliament, what is probably a perfectly correct judgment in the High Court, we shall probably be making a great mistake, and I am more than ever convinced that we have departed from the fundamental rule on which the whole of the Income Tax is based. I hope those who have put down the rejection of this Clause will press it to a Division.
    Sir A. WILLIAMSON: I do not agree with all the critics of the Clause, and I am inclined to think the Government is right. There is one illustration, how ever, as to the matter of rent being paid to third parties. I will give a concrete case as to how this operates. I am chair man of a company which owns mills in South America. Until lately we have paid Income Tax on our whole profits, but some clever person discovered that we were entitled to deduct) an, imaginary rent from these profits. Consequently, during this current year we have deducted this rent from our profits, and, there fore, we are paying Income Tax on less than the profits we have made. I do not think that is quite reasonable, although I was in duty bound as chairman of the company to agree that we must take all the legal rights to which our share-
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    holders are entitled under the law as it stands. That is called the Bowstead decision. This Clause is designed to put us back to the position we imagined we were in before this took place. Provided the Clause is cleared up, so as to make it clear that the Government do not intend to treat as an item which is not deductible from the profits rent paid to third parties, I think the Clause is perfectly right, and I support the Government.
    Sir W. BEALE: The hon. Member for Ayr Burghs is quite right, on the showing of the hon. Member for Devizes. If a man carries on business on property which he owns abroad he is, in fact, bringing the annual value of that property over here on account of his profits. If a man were exempt because his income was derived from property abroad, it would be a different thing, but I think the hon. Member for Devizes rather con fused two things. This is a question whether a man should be allowed to deduct a rent which he has brought over to this country as profit owing to his con ducting business abroad. I think it is clear the Clause is right from that point of view.
    Mr. BONAR LAW: The Committee will perhaps understand the difficulty which Ministers have in dealing with a variety of questions of this sort when we see the immense amount of difference in the views of the Committee with regard to a matter which is, I think, as simple as it could possibly be. It has been explained absolutely correctly, I think, by my hon. Friend behind me, and the only argument which has been addressed on this subject that has any point at all, to my mind, is that of the right hon. Baronet the Member for the City of London. His view is that, since the subject has got the better of the Government, it is very wrong of the Government to try to get back on the subject. That might be a very satisfactory thing: for the subject, but it would be very bad for the Chancellor of the Exchequer. All that this does is to bring back what has been the practice from the very beginning. I hope, therefore, the Committee will think we have had sufficient discussion on this subject, and will allow this Clause to go through. Perhaps they will be further influenced in coming to this decision, when I say that, as we have done so well to day with the Bill, I shall not ask them to proceed further to-night.
    Question put, and agreed to.
    Motion made, and Question, "That the Chairman do report Progress and ask leave to sit again," put, and agreed to.
    Committee report Progress;to sit again To-morrow.

    EMIGRATION [EXPENSES.]
    Considered in Committee.
    [MR. WHITLEY in the Chair.]
    Motion made, and Question proposed, "That it is expedient to authorise the payment, out of moneys to be provided by Parliament, of all Expenses of the Central Emigration Authority constituted under any Act of the present Session to provide for the establishment and powers of a Central Emigration Authority, and for other purposes relative thereto."— [Mr. Hewins.]
    Mr. HOLT: I beg to move, at the end, to add the words "not exceeding two thousand pounds in any year."
    Before we pass from this we ought to have some sort of idea of what these expenses are likely to be. So far as I have been able to make out from the Bill this expenditure is absolutely unnecessary. We are going by this Bill to establish an Authority to perform very little work other than that which is being performed by the Board of Trade and by certain local authorities. It is not only certain expenses that have to be paid under the first two Clauses of the Bill, but the Bill provides for the payment of a chairman and a vice-chairman. There is nothing to suggest what sort of salaries they are to get or what kind of individuals they are to be. We have not been told. We are now also told that the Authority is to appoint officers and servants with salaries. So far as I can make out, looking through the Bill at the moment, they are to be paid to do work which at present is being done by the Board of Trade. I find it very difficult to make out whether this work which the persons concerned are to do is or is not the same work which is being done by the Board of Trade, or whether it is different work. We have no idea of what the expense is under this Bill, or how far it is to be in substitution of other expenditure which is now being defrayed under the Board of Trade Votes. I think we should have some satisfactory assurance from the Government that no very large sum of money is
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    going to be expended under this measure. Two thousand pounds will, I think, be quite ample for any reasonable purposes of the Authority. Because the whole of the expenditure that is now incurred by the Board of Trade for the bulk of the work might very well continue, as it appears to me there is no reason to interfere with that work. All the Authority would appear to have to do will be to form a Committee for the purpose of disseminating any in formation which might appear to be useful to intending emigrants. Such work might very well be done for £ 2,000 a year.
    The UNDER-SECRETARY of STATE for the COLONIES (Mr. Hewins): I should like to explain that this Resolution is intended to enable us to get on with the work of the Authority. I can give my right hon. Friend the assurance that, so far as is contemplated by the Bill, this will lead to economy and not to increased expenditure. I explained on the Second Reading the way in which we intend to make use of existing organisations and existing machinery, and I hope that in the circumstances my hon. Friend will not press his Amendment to a Division. We really want to get on with the business. We will welcome any suggestions that the hon. Gentleman will make subsequently. This Resolution is merely to enable the Government to get on with the setting up of the machinery of the Central Authority, and it does not include any huge financial expenditure. I hope my hon. Friend will allow us to get on with the Bill, and not delay it.
    Mr. BOOTH: I think a Resolution of this kind ought to be brought on at an earlier hour, because it is a little difficult for hon. Members to address the Committee—
    It being Eleven of the clock, the Chair man left the Chair to make his Report to the House.
    Committee report Progress; to sit again to-morrow.
    The remaining Orders were read, and postponed.
    Whereupon Mr. Deputy-Speaker (Mr. Whitley), pursuant to the Order of the House of the 13th February, proposed the Question, "That this House do now adjourn."
    Mr. BOOTH: It is pretty evident that the Finance Bill will be completed to morrow. In view of that fact, I wish to ask a question about the important Amendment which comes first on the Education Bill. I am sure the Government would agree with me when I say that it would be very unfortunate if we had any hitch in regard to the important Amendment standing in the name of the hon. Member for Chorley (Sir H. Hibbert), and I would like an assurance that the matter will be disposed of, even if we have to sit a little beyond eleven o'clock.
    Lord EDMUND Talbot (Joint Parliamentary Secretary to the Treasury): The intention is to take the Education Bill on Wednesday, and it is assumed that the Committee stage of the Finance Bill will be finished to-morrow. If it should be finished early, we might take the Small Holdings Bill, and possibly the Trade Boards Bill.
    Question put, and agreed to.
    Adjourned accordingly at Two minutes after Eleven o'clock.