Commons Sitting of 1 May 1918

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

PRIVATE BUSINESS.
Local Government (Ireland) Provisional Orders (No. 1) Bill (by Order),
Second Reading deferred till To-morrow.

LIQUOR TRADE.
Copy presented of Reports, etc., of English, Scotch, and Irish Committees on State Purchase and Control of Liquor Trade [by Command]; to lie upon the Table.
REPRESENTATION OF THE PEOPLE ACT (PROPORTIONAL REPRESENTATION).
Copy presented of Scheme prepared by the Royal Commissioners appointed in pursuance of Section 20 (2) of the Representation of the People Act, 1918, under which approximately one hundred Members of the House of Commons shall be elected on the principle of Proportional Representation [by Command]; to lie upon the Table.

SHOPS ACT, 1912.
Copy presented of Order made by the Council of the undermentioned local authority, and confirmed by the Secretary for Scotland:
Burgh of Motherwell
[by Act]; to lie upon the Table.

PHARMACY (IRELAND) ACT, 1875.
Copy presented of Amended Regulations as to acceptance of other Examinations in lieu of the Pharmaceutical Preliminary Examination [by Act]; to lie upon the Table.
MINISTRY OF NATIONAL SERVICE (RESERVE FORCES ACT, 1882).
Copy presented of Regulation made by the Minister of National Service in regard to the Medical Examination of Reservists, dated 23rd April, 1918 [by Act]; to lie upon the Table.
TEMPORARY LAWS.
Paper laid upon the Table by the Clerk of the House: Register of Temporary Laws for the Eighth Session, Thirtieth Parliament, of the United Kingdom of Great Britain and Ireland [pursuant to the Report of the Select Committee on Expiring Laws in Session 1866]; to be printed. [No. 53.]
ORAL ANSWERS TO QUESTIONS
  WAR.

    DELHI WAR CONFERENCE.
    Sir J. D. REESasked the Secretary of State for India whether he can give the House any information regarding the War Conference held at Delhi, and the offers made by Indian princes and ruling chiefs of aid to the British Government?
    The PRESIDENT of the BOARD of EDUCATION (Mr. Herbert Fisher): The Delhi Conference has been held in response to the Prime Minister's Message inviting the Government and the people of India to redouble their efforts in the common cause. The Viceroy's object in convening it was to invite the co-operation of all classes in sinking domestic discussions, in securing their active support of measures for developing the man-power and resources of the country, and in cheerfully bearing the burdens necessary to that end.
    As regards the last part of the question, particulars have not yet reached the Secretary of State.
    Sir J. JARDINE: Could the right hon. Gentleman say whether the response made by the princes and ruling chiefs in India has been as much as was expected by the Secretary of State?
    Mr. FISHER: The Secretary of State has not yet received this information.

    INDIAN ARMY (OFFICERS' PAY).
    Mr. PETO: asked the Secretary of State for India whether all officers of battalions of the British Army serving in India receive Indian rates of pay; whether he can state what is the difference between the pay received by a lieutenant in an Infantry regiment serving in India and serving in France; whether he can say whether such officers of the British service serving in India and drawing pay from the Indian Army funds are eligible for the receipt of the children's allowance granted under a recent Royal Warrant; and, if not, whether it is proposed to extend the benefits of the Royal Warrant to the dependants of officers of the British Army serving in India?
    Mr. FISHER: The reply to the first question is in the affirmative, and to the second that the pay and allowances of a lieutenant of British Infantry amount approximately to £24 15s. per month, and in India to Rs. 300, plus Rs. 30 special allowance (if a New Army or Territorial officer), equivalent to £24 0s. 9d. at the rate of exchange hitherto current, and to £24 15s. at the new exchange rate of 1s. 6d. With regard to the third question, the Royal Warrant which granted children's allowance does not apply to officers drawing Indian pay. But a revision of the Indian rates of pay of subalterns, and the extension of officers in receipt of Indian pay of the grant of children's allowance is being considered by the Government of India.
    Mr. PETO: Will the right hon. Gentleman make representations to hasten a decision in this matter in view of the fact that officers of the lowest rank—lieutenants—are receiving no higher pay while serving in India than while serving in France; and that, therefore, their wives and children are quite as much in need of these allowances as those officers in the British Army?
    Mr. FISHER: I will bear in mind what the hon. Gentleman says.

  FOOD SUPPLIES.

    CADETS' RATIONS (HOLIDAYS).
    Mr. HOLTasked the Secretary to the Admiralty if boys at Osborne and Dartmouth receive during the term or the
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    holidays rations in excess of those allowed to other boys of the same age; and, if so, what is the difference in the rations?
    The PARLIAMENTARY SECRETARY to the ADMIRALTY (Dr. Macnamara): Perhaps my hon. Friend will put this question down again next week. The colleges are in vacation, and I have not been able to obtain the necessary information in time for reply to-day.
    Mr. HOLTasked the Under-Secretary of State for War if young men at Woolwich and Sandhurst receive during the term or the holidays rations in excess of those allowed to other young men of the same age; and, if so, what is the difference in the rations?
    The FINANCIAL SECRETARY to the WAR OFFICE (Mr. Forster): During the term the scale of rations for cadets of Woolwich and Sandhurst is the same as that for soldiers of similar age in graduated battalions. No arrangements for their feeding in the holidays are made by the military authorities.
    Mr. HOLT: Are they on the scale of the Home Defence Army?
    Mr. FORSTER: They are on a special scale suitable for boys under training.
    Sir JOHN JARDINE: Does that apply to those at Training Cadet Schools?
    Mr. FORSTER: I am not quite clear upon that point. Perhaps my hon. Friend will give me notice.
    Sir HENRY CRAIK: Is it not the case that the physical work required of these young men at Woolwich and Sandhurst is very much greater than for others?
    Mr. FORSTER: I think it is a matter of common knowledge and universal acceptance that boys between seventeen and nineteen want a larger proportion of food than more mature adults.

    PRISONERS' RATIONS.
    Major HUNTasked whether any German prisoners are or have been during the last month allowed 1 lb. of butter per week?
    Mr. MACPHERSON: The answer is in the negative.

    CAMP RATIONS.
    Major NEWMANasked the Under-Secretary of State for War (1) what is the general rule with regard to staff-

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    sergeants or other non-commissioned officers who are allowed to live outside camp with their wives and families in respect of rations; have they the same privilege as commissioned officers and are allowed to draw rations from the camp to be consumed at home, or must they choose between drawing their rations and consuming them in camp, or else accept 7s. per week in lieu of rations and buy their rations in the town on the usual scale allowed by food ticket to the ordinary civilian; is the general Regulation on the subject carried out at Grantham Camp; (2)whether non-commissioned officers living out of camp are not given the privilege of drawing their rations and consuming them out of camp, but have instead to accept 7s. per week in lieu of rations and live on the civilian scale allowed by food tickets; whether, as a result, such non-commissioned officers can only obtain 15 ozs. of meat per week as against a soldier's ration of 70 ozs.; is he aware that in consequence it is difficult for a man engaged in physical instruction or who may be sent abroad at short notice to keep fit; and will the War Office issue instructions that the same privileges be accorded to non-commissioned officers as are given to commissioned officers in this matter?
    Mr. FORSTER: A soldier living with his family receives a consolidated money allowance to cover rations, lodgings, etc. When in receipt of this allowance, the soldier is not entitled to draw rations in kind. The question whether any alteration should be made in the existing Regulations or in the rate of the consolidated allowance is being considered.
    Major NEWMAN: Is this rate 7s. per week?
    Mr. FORSTER: No; there is a consolidated allowance, which, speaking from memory, amounts to 20s. or 21s. a week.

    DATES (RETAIL PRICES).
    Mr. ROWNTREEasked the Parliamentary Secretary to the Ministry of Food whether his attention has been drawn to the retail prices at which dates are selling; and whether he has considered the advisability of fixing the selling price?
    Mr. PETOasked the Parliamentary Secretary to the Ministry of Food whether any control price for the sale of
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    dates has been fixed; whether there is any adequate supply in this country to enable dates to be supplied with any approach to uniformity throughout the country; and whether he is aware that the only dates obtainable in most shops cost between 2s. 6d. and 3s. per 1b.?
    The PARLIAMENTARY SECRETARY to the MINISTRY of FOOD (Mr. Clynes): There are two distinct classes of dates sold in this country—Persian dates, of which a considerable quantity has been purchased by the Ministry of Food; and Tunis and Egyptian dates, of which small amounts have arrived on private account. The latter are in the nature of a luxury, generally packed in fancy boxes, and no maximum price has been fixed for them. The maximum retailprice of the Persian dates, which are now being distributed, is fixed by Order at 6d. a lb. The supply available is about one-third of a normal year's supply, and is being distributed with uniformity throughout the United Kingdom through the ordinary trade channels
    Mr. PETO: Can the hon. Gentleman give us any idea when these dates will be likely to be distributed and be obtainable at the ordinary shops?
    Mr. CLYNES: I understand that already at one or two places there are small queues of date-eaters waiting outside the shops.
    Mr. ROWLANDSasked what is the quantity of dates to be sold at 6d. per lb. which have been imported; and are they all being put on the market?
    Mr. CLYNES: The total amount imported is 6,300 tons. Of this quantity 470 tons were distributed to the Admiralty and the Navy and Army Canteen Board, 100 tons arrived in an unsatisfactory condition, which did not allow of their being kept, and were, therefore, sold immediately; 330 tons are being held back as a reserve, and the remainder are being put on the market.
    Mr. ROWLANDS: How soon does the hon. Gentleman expect the dates will be put on the market, as he says there are queues waiting for them?
    Mr. CLYNES: The only reason for holding them back is that we are awaiting additional supplies, and desire to place them on the market at one time.

    HEAVY MANUAL WORKERS.
    Captain CARR-GOMMasked the Parliamentary Secretary to the Ministry of Food whether, in view of the scarcity of cheese and the fact that it is a necessary diet for those engaged on heavy work, the Ministry would arrange for such persons only being entitled to buy cheese?
    Mr. CLYNES: The question of the supply and distribution of cheese is at present under consideration, and I will see that my hon. and gallant Friend's suggestion is borne in mind.
    Captain CARR-GOMMasked the Parliamentary Secretary to the Ministry of Food what precautions the Ministry are taking to see that only those engaged on heavy work are furnished with the special cards for heavy workers?
    Mr. CLYNES: Under the provisional arrangement now in force, supplementary ration cards for heavy workers are issued only on an individual application, stating the nature of the work and verified by a certificate by the employer or other responsible person. The general subject of supplementary rations is under further consideration. I am in consultation with the representatives of organised labour, and hope to make an announcement shortly.
    Mr. LOUGH: Can the hon. Gentleman say how many supplementary rations have been issued up to the present time?
    Mr. CLYNES: No; I only know that many thousands of the forms have been correctly filled up and the applications made, but as to the exact number, I should require notice.

  STEAMSHIP "GLENART CASTLE" (LOSS).
  Major HUNTasked the Secretary to the Admiralty whether he can now give the explanation of Commander Sir Edward Nicholl as to his statement that the German submarine which sank the "Glenart Castle" received information by a spy from Newport, that there were spies in every port in the Bristol Channel, and that he knew because he was examination officer for the Bristol Channel?
  Dr. MACNAMARA: Sir Edward Nicholl was at the time serving under the War Office. He has been asked for an ex-
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  planation by that Department. I understand his explanation has not yet been received, but that steps are being taken by the War Office to hastem the reply.
  Mr. RONALD MCNEILL: How many weeks have passed since this statement was made?
  Dr. MACNAMARA: The statement was made on the 3rd March, and on the 11th March I said that an explanation would be asked for. I shall have the opportunity myself of speaking to Sir Edward Nicholl on Tuesday.

  HIS MAJESTY'S SHIP "VINDICTIVE" (PUBLIC VIEW).
  Colonel WEIGALLasked the Secretary to the Admiralty whether it is proposed to repair His Majesty's ship "Vindictive" or to leave this historic ship in her present condition as an example and inspiration to the public?
  Dr. MACNAMARA: Representations in the sense of the latter part of my hon. and gallant Friend's question have already reached us from a number of quarters The matter is under consideration.

  RUSSIA.
  Mr. LEES-SMITHasked the Secretary of State for Foreign Affairs whether he will say whether the United States and France have now Ambassadors in Russia
  The SECRETARY of STATE for FOREIGN AFFAIRS (Mr. Balfour): The answer is in the affirmative, but they are not accredited to any Russian Government.
  Mr. LEES-SMITH: Will the right hon. Gentleman say why the British Government have not someone there of equal dignity to those two foreign representatives?
  Mr. BALFOUR: I have said these Ambassadors are not accredited. They are not acting as Ambassadors.
  Mr. KINGasked the Chancellor of the Exchequer whether he is aware that Mr. Konstantine Dmitrivitch Nabokoff, who was dismissed from his post in London by the Russian Government, is now employed by the so-called Russian Government Committee, at India House,

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  Kingsway; whether Mr. Nabokoff has at any time during the past six months asked for or received any financial assistance from the British Government, either for himself or for the Russian Government Committee; and whether he will consult the present Russian Government as to whether Mr. Nabokoff should be returned to Russia or conscripted with other Russians into the British Army?
  Mr. BALFOUR: My right hon. Friend has asked me to answer this question. The answer to the first and third parts of the question is in the negative; to the second part in the affirmative.
  Mr. KING: Can we be told how much money has been advanced by the Government to representatives of the Russian Czarist Government—not the present Government?
  Mr. BALFOUR: That is a question of which I shall require notice.

  DIPLOMATIC SERVICE (MR. G. YOUNG).
  Mr. HOLTasked the Secretary of State for Foreign Affairs if he will state by what Government Departments and on what duties Mr. George Young has been employed since he ceased to be a member of the Diplomatic Service?
  Mr. BALFOUR: Mr. Young obtained employment at the Admiralty.

  EMPEROR OF AUSTRIA.
  Mr. HOLTasked the Secretary of State for Foreign Affairs if he will publics has a White Paper so much information as to the letter of the Emperor of Austria to Prince Sixte of Bourbon and of the steps taken in consequence thereof as has been communicated to the French Chamber of Deputies?
  Mr. BALFOUR: The question appears still to be under discussion by the Parliamentary Commissions of the Navy, Army, and Foreign Affairs, who, as far as I am aware, have not yet reported to the French Chamber. No action, therefore, of the nature suggested to the hon. Member Appears possible at present, but I will
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  arrange that the House shall be put in possession of any public declaration made by the French Government on the subject.

  CEYLON.

    APPOINTMENT OF GOVERNOR.
    Mr. KINGasked the Secretary of State for the Colonies whether he is aware that the President of the Ceylon Reform League is Sir P. Arunachalam, a retired Ceylon Civil servant and a member of the Ceylon Executive Council; and whether this representative of Ceylon native opinion will be consulted in any proposal to appoint a new Governor of Ceylon?
    The UNDER-SECRETARY of STATE for the COLONIES (Mr. Hewins): The answer to the first part of the question is in the affirmative, and to the second part in the negative.
    Mr. KINGasked the Secretary of State for the Colonies whether he has received from the Ceylon Reform League any protest against the proposed appointment of Sir Hugh Clifford as Governor of Ceylon; whether he is aware that the late Sir J. Anderson as Governor was regarded with great confidence and was popular with the whole native population, and that Sir Hugh Clifford is regarded as unsympathetic; and whether he will now announce that there is no intention of appointing Sir Hugh Clifford?
    Mr. HEWINS: The hon. Member will now be aware, from public announcements, that His Majesty has approved the appointment of Sir William Manning as Governor of Ceylon in succession to Sir John Anderson.
    Mr. KING: May I ask whether the policy of Sir John Anderson will be continued, at the definite wish of the Government, by the new Governor?
    Mr. HEWINS: That question does not arise out of the answer.
    Mr. KING: I will put it down.

  MATABELE EXPEDITION.

    OFFERS TO NATIVES.
    Mr. KINGasked the Secretary of State for the Colonies (1) whether he has considered the document disclosed before the Judicial Committee of

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    the Privy Council on 25th April, alleged to have been signed by Sir L. S. Jameson on 14th August, 1893; whether he is aware that this document purports to offer free farms of 3,000 morgen each to each member of the Victoria Force for Matabeleland; whether this document was issued at the time with the knowledge or sanction of the Colonial Office; on what date the Colonial Office was first made acquainted with the terms or tenor of these promises; (2) whether he is aware that in a case now being heard by the Judicial Committee of the Privy Council it was disclosed that each member of the Victoria Force which took part in the Matabele Expedition in 1892 was offered fifteen reef and five alluvial claims; whether this offer was made with the knowledge or authority of the British Government; whether it has been at any time subsequently confirmed or admitted; whether it is the practice of the Colonial Office to offer such territorial considerations to persons taking part in expeditions under British command; (3) whether he has seen the report of disclosures made before the Judicial Committee of the Privy Council last week, in which the loot taken in the Matabele Expedition of 1893 was apportioned as to one-half to the British South Africa Company and one-half to the officers and men of the Victoria Force; whether this arrangement, which meant depriving the natives of their means of peaceful livelihood, was made after consultation with the Colonial Office or any officials acting under the Colonial Office; if not, whether at any later date it was communicated to the Colonial Office; if so, what action was taken by the Colonial Office on hearing the terms of the proclamation of Sir L. S. Jameson, who offered these terms to the Chartered Company and its servants?
    Mr. HEWINS: The disclosures referred to in the hon. Member's three questions have long been matters of discussion, and the facts and their bearing on the position of the natives were raised in the House of Commons at the time. They have only attracted attention now in consequence of the proceedings before the Privy Council, and I must decline further discussion of them while the case is still before the tribunal.
    Mr. KING: In view of the possible misuse of these revelations by the enemy in neutral countries, can the Government make some statement on the subject?
    Mr. HEWINS: No; I do not think that would be at all desirable.
    Mr. KING: Why not?

  SOLDIERS (ATTENDANCE AT MEETINGS).
  Mr. LEES-SMITHasked the Undersecretary of State for War whether any further speeches on the War which soldiers are compelled to attend, such as that recently delivered at Blackpool, have been or are intended to be arranged?
  The UNDER-SECRETARY of STATE for WAR (Mr. Macpherson): I regret that my inquiries are not yet complete, but I will write to my hon. Friend as soon as I am in a position to do so.

  PRISONERS OF WAR (REFUSAL TO WORK).
  Major HUNTasked the Undersecretary of State for War what are the disciplinary measures which officers in charge of German prisoners of war are allowed to take if the prisoners refuse to do a fair amount of work?
  Mr. MACPHERSON: Combatant prisoners of war can be dealt with:

  (1) By being placed on a lower scale of pay;

  (2) By stoppage of privileges;

  (3) By punishment awarded by the Commandant or by a Military Court in accordance with the Royal Warrant for maintenance of discipline among prisoners of war.

  Civilian prisoners of war can be taken off the work they are engaged upon and returned to a parent camp at their own expense. Both combatant and civilian prisoners of war, if not at work, are immediately placed on the non-workers' scale of rations.
  Major HUNT: Could the right hon. Gentleman say what these punishments are?
  Mr. MACPHERSON: I have just told my hon. and gallant Friend.

  ARMY DENTAL SURGEONS.
  Mr. PENNEFATHERasked the Under-Secretary of State for War if his

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  attention has been drawn to reports received from a dental surgeon to seven Red Cross hospitals to the effect that many men have been invalided home as a result of bad teeth, and that the recovery of others who are wounded is retarded as a result of septic teeth, also that most of these men had bad teeth when they joined, and were sent out to the front without proper dental treatment; and whether, in view of the necessity of utilising our manpower to the full, the War Office will now take steps to place the dental examination of the teeth of recruits and the dental care of serving soldiers on a more satisfactory basis?
  Mr. MACPHERSON: The War Office has already taken steps to place the dental examination of the teeth of recruits and the dental care of serving soldiers on a satisfactory basis.
  Mr. PENNEFATHERasked how many dental surgeons are now employed as such in the Army; how many dental surgeons previously employed as combatants have received dental commissions; if it is proposed to increase the number of dental surgeons holding commissions; and, if so, by what number?
  Mr. MACPHERSON: The total number of dental surgeons now employed in the Army is 584; 233 dental surgeons who were previously employed as combatants have received dental commissions. It is proposed to increase the number of dental surgeons holding commissions, but the actual number is not fixed.

  MILITARY SERVICE.

    MEDICAL OFFICERS (TEMPORARY).
    Mr. WATTasked the Under-Secretary of State for War whether an official memorandum has recently been sent to temporary medical officers in France whose yearly contracts are about to expire, stating that they will require to renew their agreements unless their release is asked for by some public body or by a medical practitioner requiring their services at home; and. if so, having regard to the terms of the Military Service Act, will he say why this action has been taken?
    Mr. MACPHERSON: I am not aware of any memorandum of the
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    nature suggested by my hon. Friend. A letter from the Ministry of National Service has been sent to all such officers requesting them to continue their services in the Royal Army Medical Corps on the expiration of their contracts. The letter also states that the privilege which has hitherto been accorded of laying before the Central Professional Committees any difficulties which individuals may have in continuing their services, will not be affected.

    VOLUNTEER OFFICERS.
    Sir C. KINLOCH-COOKEasked the Under-Secretary of State for War whether he is now in a position to make any statement with regard to the arrangements made by the Army Council with regard to the status of Volunteer officers who are called up under the new Military Service Act; and will they be transferred as officers in the Army, or will they be placed in some cadet corps for instruction, or will they have to join up as privates?
    Mr. MACPHERSON: Volunteer officers and ex-Volunteer officers between the ages of thirty-five and forty-five will be sent to cadet battalions, in so far as there are vacancies. These vacancies arc, however, very few in number. Generally, therefore, the arrangement will be that they will have the opportunity of joining the Inns of Court or Artists' Officers Training Corps, where there will be special platoons appropriate to their age and class. This applies only to Volunteer officers and ex-Volunteer officers who held their commissions before the passing of the Act.

    ROYAL ARMY MEDICAL CORPS (RAILWAY FARES).
    Sir H. CRAIKasked the Financial Secretary to the War Office whether medical men who are called up to serve as officers in the Royal Army Medical Corps are required to pay their own railway fares from their homes to London; and whether he is prepared to remedy the hardship thus caused to doctors resident in Scotland or at a distance from London?
    Mr. FORSTER: Royal Army Medical Corps officers do not necessarily join for duty in London on first appointment, but proceed from their homes to their stations direct. Free travelling for this journey is not admissible.

    INVALIDED SOLDIERS.
    Major HUNTasked the Minister of National Service whether a soldier invalided out of the Army before the War who had served overseas is specifically excluded from being called up under the Schedule of the new Military Service Act?
    The PARLIAMENTARY SECRETARY to the MINISTRY of NATIONAL SERVICE (Mr. Beck): Any disabled man who has served in the field or at sea in any previous war is excepted from liability to military service by Clause 4 (a) of the First Schedule to the Military Service (No. 2) Act, 1918. If my hon. and gallant Friend has any particular man in mind I will gladly advise him as to his position.

    WORK OF NATIONAL IMPORTANCE.
    Major HUNTasked the Minister of National Service whether a man who had served for nineteen weeks with the Colours and was discharged on 6th October, 1917, as unfit for war service, and is now an insurance clerk, has to find work of national importance; and, if so, within what time from the 6th October, 1917, has he to find this class of work?
    Mr. BECK: Employment as an insurance clerk is not considered to be work of national importance. A disabled man who is not already on work of national importance is bound to use his best endeavours to obtain such work if he wishes to avail himself of the provisions of the Act. Full particulars of the time within which he should obtain such work and the procedure to be followed are set out in National Service Instruction 29 of 1918, which has been published and widely circulated.
    Major HUNT: Cannot the hon. Gentleman give the House some further information? How long is a man given after he has been discharged?
    Mr. BECK: Oh, he is officially given a month, but in practice, in genuine cases, we use the greatest elasticity in extending that period.

    CIVILIAN AND MILITARY DOCTORS.
    Mr. CATHCART WASONasked the Minister of National Service if he is aware that in the past military doctors have not paid the slightest attention to the opinions of civilian doctors, and that, in consequence, many men utterly unfit have been called up for service at a useless cost to the country; and if, under the more
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    serious conditions now prevailing, he will see that the opinions of civilian doctors are reasonably considered?
    Mr. BECK: I presume that the statement refers to the practice of the old Recruiting Boards. Under the present arrangements for the medical examination of recruits, every effort is made not only to obtain evidence of each man's medical history, but to weigh this evidence carefully before deciding on a man's grading.

    MEDICAL GRADING.
    Mr. ANDERSONasked whether medical grade No. 2 now includes the old category B 2 as well as categories B 1 and C 1?
    Mr. BECK: The answer is in the negative. The classification by grades introduced last autumn superseded the former classification by categories. There is no precise parallel between the grades and categories. Men in category B 2 are administratively regarded as in Grade 3 until they are re-examined and graded by a National Service medical board. Thereafter they are liable to the conditions affecting the grade in which they are placed.
    The standard of medical grading by National Service medical boards have not been altered. The only variation is, as I stated in answer to the hon. Member for West Leeds on the 18th April, that a slightly lower standard of vision has been adopted in accordance with the views expressed by a committee of military and civil ophthalmic specialists.
    Mr. EDMUND HARVEY: Would it be possible to give the standard conditions adopted now?
    Mr. BECK: Practically they have been published now, and I believe they are on sale.

    WATER COMPANIES' EMPLOYES.
    Mr. PETOasked whether the Order M.N.S. Form R. 49 cancels the partial exemption granted to employés of water companies over thirty-one years of age in Memorandum R. 165 issued on 5th December last; and whether, in view of the fact that the staffs of skilled men employed by the provincial water companies have been reduced to the minimum necessary for the maintenance of the supply of water in their areas, it is intended to withdraw any more of these men?
    Mr. BECK: The Memorandum referred to in the first part of the question is still in operation, and is not affected by the Decertification Order of 9th April. As regards the latter part, I can only refer my hon. Friend to my reply to his question on the same subject on 25th April.

    ONE-MAN BUSINESSES (SCOTLAND).
    Mr. WATTasked the Secretary for Scotland whether the circular to tribunals regarding one-man businesses has yet been issued in Scotland whereby owners of such businesses will be put on the same footing as they are in England and Wales or whether his Department has still got this matter under consideration?
    The SECRETARY for SCOTLAND (Mr. Munro): The circular to which my hon. and learned Friend refers was issued at the beginning of February. It places the owners of one-man businesses in Scotland upon the same footing as similar men in England and Wales.

  SOLDIERS' LEAVE.
  Mr. WATTasked whether the soldiers who have been three years in Gallipoli, Egypt, and Palestine, as, for example, the l/6th Highland Light Infantry, and who have been moved to France, will be given first leave when circumstances permit, in view of the facts that they have been so long abroad and that they were promised early leave on the evacuation of Gallipoli?
  Mr. MACPHERSON: At the present time all leave from France is in abeyance, but I can assure my hon. Friend that cases such as he mentions in his question will receive the sympathetic consideration of the Field-Marshal Commanding-in-Chief as soon as the circumstances permit.

  ENEMY SHELLS AND EXPLOSIVES.
  Mr. GILBERTasked the Undersecretary of State for War whether he has now completed his inquiries as to whether any of our wounded men in the recent German advance have suffered from any new kind of explosive shell or any new form of gas; and whether he can make any statement on the subject?
  Mr. MACPHERSON: Reports have been obtained from various hospitals in the London district, and there does not appear to be any evidence which would lead the medical authorities to believe that any wounds to our soldiers have been caused by a new kind of explosive, chemical shell, or gas used by the enemy.

  WOOL.
  Mr. WATTasked the Financial Secretary to the War Office whether, if a farmer raises objection to sending his wool to any particular wool broker on account of unsatisfactory dealings with him in the past, the district executive officer of the Wool Purchasing Department will give him the option referred to in answer to a question in this House on 19th December last?
  Mr. FORSTER: As I informed the hon. Member, in answer to the previous question to which he refers, the district executive officer will always consider any reasonable objection raised.

  RAILWAY ACCOMMODATION (GERMAN PRISONERS).
  Mr. SHIRLEY BENNasked the President of the Board of Trade if his attention has been drawn to the fact that at Bournemouth two English women with first-class tickets were turned out of a first-class railway compartment and put into a third-class compartment, in order to permit of German officers under escort occupying the first-class carriage; and whether instructions will be given that in the future no English woman is to be turned out of her seat to make room for any German, and that if there is no empty first-class carriage available German officers will be carried in any compartment regardless of class?
  Mr. MACPHERSON: My right hon. Friend has asked me to answer this question. As regards the first two parts, I would refer my hon. Friend to my reply on Monday last to the hon. and gallant Member for Christchurch. The answer to the last part of the question is in the affirmative.
  Colonel BURNasked the President of the Board of Trade why an English commercial traveller was recently turned out

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  of a first-class smoking compartment at a station on the Midland Railway to make room for a party of German officer prisoners, and whether he is aware that his luggage was thrown out on the platform by one of the station officials?
  The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Wardle): If the hon. and gallant Member will let me know when and where the incident to which he refers took place, I will inquire into the circumstances.
  Colonel BURN: Is it necessary to treat these inhuman Huns in this way, by putting them into a first-class compartment, with the result that our own people have to travel by truck or any other way they can?
  Mr. WARDLE: That is a question of policy which does not arise out of the answer.

  BUDGET PROPOSALS.

    EXCISE DUTY.
    Sir GEORGE YOUNGERasked the Chancellor of the Exchequer whether he is aware that, in addition to the Excise Duty of 50s. per standard barrel of beer, a further surcharge of 25s. per standard barrel has been imposed by the Ministry of Food on munition ale, thus increasing the duty on munition ale to 75s. per standard barrel; what is the amount received from this surcharge on munition ale for the month of April and how has this money been disposed of; and whether Government Departments controlling commodities have the power to surcharge such commodities up to any extent they please without Parliamentary authority or control?
    Mr. CLYNES: The maximum barrelage which a brewer for sale is authorised to brew under the Intoxicating Liquor (Output and Delivery) Order, 1917, may be increased, within prescribed limits, by such further amount, if any, as in his case may be authorised by licence of the Food Controller if he complies with tin conditions subject to which such licence is granted. In view of the fact that licences to brew additional beer for munition workers must necessarily be confined to brewers in munition areas, it was decided that these licences should be granted only to brewers who were willing to pay to the Food Controller for the
    1538
    credit of the Exchequer a fee of 25s. per standard barrel in excess of the duty. The payments for the month of April will slightly exceed £80,000. I may add that all the areas are now covered by brewers who are willing to accept this condition.
    Sir G. YOUNGER: Under what constitutional authority is this surcharge made?
    Mr. CLYNES: I shall require notice of that question. It is quite a new point to me.
    Mr. LOUGH: Has this surcharge been made during any part of the financial year ending 31st March, and if so, how much?
    Mr. CLYNES: That question also I shall require notice of.

    INCOME TAX.
    Mr. ADAMSONasked the Chancellor of the Exchequer whether he is aware that, although it is the general practice to allow clerks to be assessed for the purposes of Income Tax on their average earnings for three years, surveyors of taxes in some places refuse to allow this, especially in cases where a clerk has changed his employment; and whether he will issue Instructions for a uniform procedure of assessing clerks on their average income, as is done in the case of professional men?
    The CHANCELLOR of the EXCHEQUER (Mr. Bonar Law): I am not aware of the eases to which the hon. Member refers, but if he will give me particulars I will look into the matter.

    PROFESSIONAL MEN (INCOMES).
    Mr. PETOasked the Chancellor of the Exchequer whether he will favourably consider the insertion in the Finance Bill of a provision rendering professional incomes, where increased emoluments have been earned during the War, liable to the operation of the Excess Profits Tax?
    Mr. BONAR LAW: This is a matter which has been very carefully considered, but, having regard to the existing reliefs and allowances in the Excess Profits Duty, the extension of that duty to professions would produce but a small yield, while diverting the energies of surveyors of taxes from other and more profitable Revenue work.
    Mr. PETOasked the Chancellor of the Exchequer whether he will favourably consider the insertion in the Finance Bill of a provision exempting the income of members of the legal and other learned professions who have given up their practice in order to undertake military or naval duties from the operation of the rule of the three years' average?
    Mr. BONAR LAW: Provision already exists to meet the cases contemplated by my hon. Friend. In this connection I would invite his attention to Sections 11 and 12 of the Finance Act, 1917.

  REPRESENTATION OF THE PEOPLE ACT, 1918.

    SERVICE PROXIES.
    Sir OWEN PHILIPPSasked the President of the Local Government Board when he expects to be able to issue the necessary Order in Council with reference to the appointment or nomination by sailors and soldiers of proxies under the Representation of the People Act, 1918?
    The PRESIDENT of the LOCAL GOVERNMENT BOARD (Mr. Hayes Fisher): An Order in Council on this subject is in course of preparation, but I am not in a position at the moment to say at what date it may be possible to issue it.

    REGISTRATION FORMS.
    Mr. GILBERTasked the President of the Local Government Board whether he is aware that registration officers in the London area are delivering the new registration forms at houses without making proper inquiry as to the persons residing there and are simply leaving the forms to be filled up by the occupiers and posted to the registration officers; whether he is aware that a large proportion of these forms are not being returned; and whether, with a view of saving labour and time and obtaining efficient registers, he will instruct registration officers to make a proper house-to-house canvass and fill up the forms forthwith by their canvassers on the information obtained?
    Mr. FISHER: The view which I hold, and which I have represented in a circular issued to registration officers, is that a house-to-house inquiry will be necessary in practically every registration area. If,
    1540
    later on, the hon. Member becomes aware of cases in which no such inquiry is proposed to be made, and will furnish me with particulars, I will communicate with the registration officer who is responsible for the preparation of the lists. I hope, however, the hon. Member will recognise the extraordinary difficulties under which registration officers are working at the present time.

  INCREASE OF RENT, ETC. (AMENDMENT), BILL.
  Colonel LESLIE WILSONasked the President of the Local Government Board whether, in view of the influx of aliens due to air raids into residential areas near London, he proposes to introduce a Bill which will protect tenants of houses of a larger annual rental than £26 a year from being dispossessed of their houses by such aliens and others who are willing to pay higher rents?
  Mr. FISHER: I would refer my hon. and gallant Friend to what I said yesterday on the Third Reading of the Increase of Rents, etc. (Amendment), Bill. I am afraid I cannot give any undertaking to introduce legislation of the kind he desires.
  Major NEWMAN: Is the right hon. Gentleman not aware of the great public feeling on the question, and is it not possible to introduce legislation stopping these aliens from moving about from one place to another during the War?
  Mr. FISHER: I am aware of the public feeling, but I am also aware of the fact that there is congestion of business in the House of Commons.

  PETROL SUPPLIES.
  Mr. PETOasked the President of the Board of Trade whether it is proposed, in the interests of economy of petrol, to place any restriction upon the distances that may be travelled in the country by petrol-driven cars belonging to tradesmen and co-operative stores soliciting orders and delivering goods?
  Mr. WARDLE: The President of the Board of Trade has recently appointed a Road Transport Board, one function of which will be to determine what further measures are necessary to ensure the most economic use of road transport vehicles.

  1541
  The Road Transport Board, through its local officers, will investigate the questions referred to by the hon. Gentleman, and will decide what restrictions, if any, shall be placed upon the distances travelled by vehicles used for soliciting orders and delivering goods.

  HOUSE OF COMMONS (PAYMENT OF MEMBERS).
  Sir BERTRAM FALLEasked the Prime Minister if he is aware that£250,000 is being allotted annually to the payment of Members of this House; that the nation is in need of money, and that this sum represents the interest on£5,000,000 at 5 per cent.; and if he will withhold the salary of Members and use the money so saved for the purpose of paying the interest of such £5,000,000 until such time as the country can better afford the luxury of paid legislators?
  Mr. BONAR LAW: I do not see my way to adopt my hon. Friend's suggestion.
  Sir B. FALLE: Is the right hon. Gentleman aware of the very strong feeling in the country that this House should set an example in this matter?
  Mr. BONAR LAW: I dare say there are many people who have that feeling, but I think it would arouse very acute controversy if we were to start that question here.

  DARDANELLES COMMISSION.
  Colonel BURNasked the Prime Minister whether the proceedings of the Dardanelles Commission will be made public?
  Mr. BONAR LAW: I regret that I cannot add anything to the reply which I gave to the hon. Member for Lanarkshire (North-West) on the 16th January last.

  BRITISH SHIPS (CONVEYANCE OF STORES AND TROOPS).
  Sir OWEN PHILIPPS: asked the Parliamentary Secretary to the Shipping Controller whether British ships, when employed for the conveyance of stores or troops for account of the United States, France, or Italy, receive the same rates of remuneration in respect of such employ-
  1542
  ment as are paid by those countries in respect of equivalent services performed by ships on their own register and flying their own flags?
  The PARLIAMENTARY SECRETARY to the MINISTRY of SHIPPING (Sir Leo Chiozza Money): The owners of British requisitioned ships receive British rates of remuneration, irrespective of the service on which the ships are employed. I think the hon. Member will see that that is the only course we could take. The financial arrangements between this country and the Allies on account of shipping services rendered by and to this country are too complicated to be explained within the limits of an answer to a question. Generally, they are on a reciprocal basis.

  EXCHANGE BUILDINGS, GLASGOW.
  Mr. WATTasked the Minister of Labour, with reference to the new Exchange buildings acquired in Glasgow, whether the present tenants have been informed that they must leave at a very early date; if so, at what date; is he aware that some of these tenants are serving with the forces at the front, while others are dependants of soldiers so serving; and is it intended to evict these?
  The PARLIAMENTARY SECRETARY to the MINISTRY of LABOUR (Mr. Bridgeman): The tenancies of the present occupants of the premises expire in the ordinary course at Whitsun term day, and the tenants have received formal notice from the proprietors of the premises to give up the premises on the expiration of their tenancies. The Minister of Labour would be prepared to assent to arrangements being made as far as practicable for allowing them to remain in occupation until the premises are required for the necessary work on alterations. My right hon. Friend is informed that one of the tenants is at present serving with the forces, and that the wife of a soldier is the tenant of another part of the premises. Inquiries are being made whether it would be possible to allow either or both of these tenants to occupy a portion of the premises without seriously interfering with the use of the remainder for the work of the Department.
  Mr. WATT: Will these tenants on their return be allowed to utilise the same premises as they are now utilising?
  Mr. BRIDGE MAN: We shall endeavour to make arrangements as suitable as possible for them, and I cannot say more.

  DEFENCE OF THE REALM ACT REGULATIONS.
  Major DAVIESasked the Home Secretary whether his attention has been called to the fact that E. D. Morel, lately convicted on his own evidence of offences against the Defence of the Realm Regulations, has now joined the Independent Labour Party; whether he is conducting a pro-German propaganda in the country; and whether he proposes to take any steps in the matter?
  The SECRETARY of STATE for the HOME DEPARTMENT (Sir George Cave): I have no information to the effect stated in the first two parts of the question. If this person should again contravene the Defence of the Realm Regulations proceedings would at once be taken against him.
  Mr. OUTHWAITE: Is it not a fact that the only charge that can be made against Mr. Morel was that of accepting the offer made by the niece of the Foreign Secretary to send one of his books, and does he not think that the hon. and gallant Member at this moment might be better employed than in bringing insinuations against a braver man than himself?
  Sir G. CAVE: I made no insinuations of any kind. I cannot accept the hon. Member's statement as to the nature of the offence, and I do not think it is desirable that I should go into it.
  Mr. ANDERSONasked the Home Secretary whether he is aware that the police have entered the business premises of Mr. S. H. Street, printer, Mitcham Lane, Streatham, have dismantled all his printing machines, injuring beyond repair one press worth between £40 and £50; whether he knows that the police produced no warrant for these proceedings, and ultimately departed after locking the door and taking away the key; whether he can state under what Regulation the police are allowed to destroy a man's property on the premises and to lock out the man from his own premises; whether the police held an order from a justice of the peace requiring the premises to be closed; if so, why this order was not produced; and for what purpose and under whose instructions these proceedings were taken?
  Sir G. CAVE: The action referred to in this question was taken by the police under No. 51 of the Defence of the Realm Regulations in connection with the printing of a newspaper called the "Tribunal," and I have no reason to believe that they exceeded their powers. A portion of one machine was accidentally damaged, but I am informed that the damage is very slight. As regards the key, Mr. Street himself handed it to the police officers, saying that he was going away and that he would be obliged if they would lock the place up. When the removal was completed the key was handed back to Mr. Street. There was no necessity for an order from a justice of the peace.

  FORCIBLE FEEDING, WARRINGTON.
  Mr. E. HARVEYasked whether Emanuel Ribeiro, after fourteen months' forcible feeding at Lord Derby's War Hospital, Warrington, is still being forcibly fed at Wormwood Scrubs; whether he has received a letter from Mrs. Ribeiro giving particulars of his emaciated physical condition as a consequence of what he had undergone before his removal to prison; and whether he is now able to recommend the release of Ribeiro, in view of the length of time he has suffered and the uselessness of prolonging this treatment?
  Sir G. CAVE: The answer to the first part of the question is in the affirmative. The man was received into prison on the 23rd March, and on the same date his wife wrote a letter, of which a copy was sent to me, to the effect that he was in a low state of health and in an emaciated condition. I asked for a special medical report upon the case, which was to the effect that the man was in good health but rather too fat owing to want of exercise. A further medical report received to-day shows that his health continues good and that he is losing fat and gaining muscle and is taking his exercise regularly. It appears to me, therefore, that there are no medical grounds for ordering his release.
  Major NEWMAN: Why was this man Ribeiro allowed to stay in this hospital for fourteen months, and who paid for him? Was it Lord Derby, the country, or who?
  Sir G. CAVE: That question must be: addressed to the War Office.

  WOMEN'S ARMY AUXILIARY CORPS.
  Mr. KINGasked the Home Secretary whether his attention has been called to the case of the Rev. R. H. Quick, who was fined £40 at the Congleton Borough Police Court on a charge of having spread false reports regarding the Women's Army Auxiliary Corps, which charge was founded on the fact that in a letter to the Secretary of the Social Purity League he had made inquiries as to the truth or otherwise of certain accusations which he bad heard from a soldier friend; and whether he will reduce the fine due to a well-meaning inquiry as to the behaviour of persons enrolled for employment under the Army Council?
  Sir G. CAVE: My attention has not been called to this case, and no reason has at present been shown for reducing the fine. A well-meaning question, if published, may do great harm.
  Captain ALBERT SMITH: Is the right hon. Gentleman aware that there are too many of these well-meaning inquiries with regard to the women of this country at the present time?
  Sir G. CAVE: I think my hon. and gallant Friend knows that I take that view.
  Mr. KING: Does the right hon. Gentleman not realise that if you crush all inquiries you only create and increase suspicion?

  ENEMY ALIENS.
  Mr. WATTasked whether Germans who have been ordered from East Coast towns because of the chief constables reporting them as dangerous there, may now come to London to live and daily take part in the business of the City with impunity, in the same way as E. A. Meyer, who was ordered out of Westcliff-on-Sea and who immediately sought refuge in London and daily attends an office of German stockbrokers in Throgmorton Street; and will he say why espionage is possible in seaport towns where it is impossible in London?
  Sir G. CAVE: I have nothing to add to the answers which I gave on the 24th April with regard to the case of E. A. Mcyer, a naturalised British subject. It is obvious that restrictions which are desirable in seaport towns do not necessarily apply to London.
  Mr. WATT: Are we to understand that German refugees from seaport towns are coming to London in any number?
  Sir G. CAVE: The hon. Gentleman knows that that is not so. This man is a British subject.

  Elementary School Children (Maintenance Grants).
  Mr. ROWNTREEasked the President of the Board of Education whether local education authorities have now the power to award maintenance Grants to children attending elementary schools beyond the age of fourteen; and, if so, under what conditions?
  Mr. FISHER: A local education authority have, under Section 11 of the Education (Administrative Provisions) Act, 1907, power to aid by scholarships or bursaries the instruction in public elementary schools of scholars from the age of twelve up to the limit of age fixed for the provision of instructions in a public elementary school by Section 22 of the Education Act, 1902.

  Continuation Schools.
  Mr. ROWNTREE: asked the President of the Board of Education whether, under Clause 10 of the Education Bill or otherwise, it will be possible for a local education authority and for persons who set up a continuation school under the control and direction of the local education authority to provide instruction for a greater number of hours than provided in the Education Bill?
  Mr. FISHER: The answer is in the affirmative, but attendance for the additional hours will not be obligatory.

  Church Temporalities (Wales).
  Mr. LLEWELYN WILLIAMSasked the Secretary of State for the Home Department whether the Government actuary, Sir Alfred Watson, as stated in the Third Report of the Commissioners of Church Temporalities in Wales, has made a Report as to the operation of paragraph 2 of the Fourth Schedule of the Welsh Church Act, 1914; whether the Report has been submitted to the Representative Body of the Church in Wales; and whether the Government are prepared, in order that Welsh representatives in this House as

  1547
  well as the representatives of the Church should be made acquainted with its contents, to lay the Report upon the Table?
  Sir G. CAVE: This Report was received and was communicated by the Commissioners to the Representative Body with a view to an agreement being arrived at in accordance with the Act. As, failing agreement, the question will have to be referred to arbitration, I do not think it desirable that the Report should be laid upon the Table at the present moment.

BUSINESS OF THE HOUSE.
Mr. RUNCIMAN: Does the right hon. Gentleman propose to ask the House to sit on Friday?
Mr. BONAR LAW: If, as I hope, the Report of the Financial Resolutions be obtained to-day, it will not be necessary to sit on Friday.
Mr. PRINGLE: Can the right hon. Gentleman say when the Home Rule Bill will be introduced?
Mr. BONAR LAW: No, Sir; I cannot.
Mr. KING: Is there any prospect of the Education Bill being taken up while the Home Rule Bill is being worked out?
Mr. BONAR LAW: I shall state tomorrow the business for next week, and perhaps I shall be able to say something about it then.
Mr. RICHARD LAMBERT: Can the right hon. Gentleman say when the House will rise for Whitsuntide?
Mr. BONAR LAW: No; I am sorry to say I cannot.
Ordered, "That the Proceedings on Consideration of the Reports of the Committee of Ways and Means of the 22nd and 23rd April 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.]

POSTAL RATES.
Captain CARR-GOMM: I wish to ask you, Mr. Speaker, whether it is possible for Members of this House to discuss and express their opinion in any way during
1548
the progress of the Budget Resolutions upon the postal rates, and particularly upon the rates to be imposed upon letters to our troops? As stated in the White-Paper which was issued on the 22nd of April, the Bill introduced by the Postmaster-General yesterday only refers to increased rates on postcards and postal packets. By the Act of 1908 the Postmaster-General has power by Warrant to increase the postal rate of letters, but there is a considerable amount of feeling with regard to the second portion of this proposed increase relating to letters to our troops. I would like to know whether it is possible for us on the Budget Resolutions to express our opinion on this point before it is too late, in view of the fact that the Resolution considered in Committee on the 22nd of April contained these words:
"That it is expedient to amend the law relating to the National Debt, Customs and Inland Revenue (including Excise), and to make further provision in connection with finance."
Could this matter not be discussed under those words?
Mr. BONAR LAW: Perhaps I may be allowed to say at once that there is a technical difficulty as mentioned by my hon. and gallant Friend. I am not sure that there would be an opportunity of discussing it, but it is quite clear that the House ought to have an opportunity of discussing a matter of this kind, and, if it cannot be got in the ordinary way, I shall arrange for an opportunity before the matter is finally settled in one way or another.
Captain CARR-GOMM: In thanking the right hon. Gentleman for that answer, may I ask whether the House is to have an opportunity of expressing its opinion on this proposal by vote?
Mr. BONAR LAW: In saying that I would give the House an opportunity, I meant a full opportunity. I am sure that the House may rely upon that opportunity being given.
Mr. SPEAKER: Is the hon. and gallant Gentleman satisfied with the answer that he has just obtained, or does he want further advice in the matter?
Captain CARR-GOMM: No, Sir; I am very grateful to the Government for treating the matter in that way.

PRIVATE BUSINESS
Pontypool Gas and Water Bill [Lords]
Red Cross and Order of St. John Bill [Lords],
Pontypridd and Rhondda Joint Water Board Bill [Lords],
Railway Passengers Assurance Bill [Lords],
Read the first time; and referred to the Examiners of Petitions for Private Bills.

MESSAGE FROM THE LORDS.
That they have passed a Bill, intituled, "An Act to confer further powers on the Pontypool Gas and Water Company; and for other purposes." [Pontypool Gas and Water Bill [Lords.]
Also, a Bill, intituled, "An Act to enable the British Red Cross Society and the Grand Priory of the Order of the Hospital of Saint John of Jerusalem in England to apply to the public advantage the residue of their property acquired for the purposes of the present War; and for other purposes." [Red Cross and Order of Saint John Bill [Lords.]
Also, a Bill, intituled, "An Act to extend the periods limited by the Pontypridd and Rhondda Water Act, 1913, for the purchase of lands and the construction of works, and to revive powers for purchase of lands." [Pontypridd and Rhondda Joint Water Board Bill [Lords.]
And also, a Bill, intituled, "An Act to consolidate the Acts relating to the Rail-

Year.

Finance Act.

Assumed Income.

Allowances.*

Residue of Income charged to Income Tax.

Rate of Tax.

Amount of Tax payable.

Abatement.

Children.

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

£

s.

d.

£

s.

d.

£

s.

d.

s.

d.

£

s.

d.

1913–14

1913

166

13

4

166

13

4

Nil.

—

Nil.

1914–15

1914 and 1914

166

13

4

166

13

4

Nil.

—

Nil.

(Session 2)

£

£

s.

d.

1915–16

1915 and (No. 2) 1915

500

0

0

100

75

0

0

325

0

0

1

9 3/5

29

5

0

1916–17

1916

500

0

0

100

75

0

0

325

0

0

2

3

36

11

3

1917–18

1917

500

0

0

100

75

0

0

325

0

0

2

3

36

11

3

1918–19

Proposed

1,000

0

0

—

—

1,000

0

0

3

0

150

0

0

1919–20

—

Same as in 1918–19 if circum stances remain
unaltered.

* The total Income for 1918–19 exceeds the limit to which the proposed wife allowance will apply.

Mr. CLOUGH: asked the Chancellor of the Exchequer if he will state the detail and the total amounts that an owner, with a wife and three children, who was also
1550
way Passengers Assurance Company, and to extend the objects and business of the Company, and to make new provisions for the government of the Company and the-management of its affairs; and for other purposes." [Railway Passengers Assurance Bill [Lords.]

ORDERS OF THE DAY.
  WAYS AND MEANS.— [22ND APRIL.]
    BUDGET RESOLUTIONS.
    Resolution reported,
    BUDGET RESOLUTIONS.

      CONTINUATION OF DUTIES (CUSTOMS).
      1. "That the following duties of Customs, imposed by Part I. of the Finance (No. 2) Act, 1915, and continued by Section one of the Finance Act, 1917, until the first day of August, nineteen hundred and eighteen, shall continue to be charged from that date until the first day of August, nineteen hundred and nineteen, that is to say:

      Duty.

      Section of Finance (No. 2)Act. 1915.

      Increased Duty on Tea

      …

      1

      Additional Duties on Dried Fruit

      …

      8

      Additional Duty on Motor Spirit

      …

      10 (1)

      New Import Duties

      …

      12

      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution agreed to.
      Resolution reported,

      CONTINUATION OF DUTIES (EXCISE).
      2. "That the following duties of Excise imposed by Part I. of the Finance (No. 2) Act, 1915, and continued by Section two of the Finance Act, 1917, until the first day of August, nineteen hundred and eighteen, shall continue to be charged until the first day of August, nineteen hundred and nineteen, that is to say:

      Duty.

      Section of Finance (No. 2) Act, 1915.

      Additional Duty on Motor Spirit

      10(2)

      Additional Medicine Duties

      …

      11

      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution agreed to.
      Resolution reported,

      >SUGAR (CUSTOMS).
      3. "That in lieu of the duties of Customs now payable on sugar imported into Great Britain or Ireland there shall, on and after the twenty-third day of April, nineteen hundred and enghteen, be charged the following duties:

      £

      s.

      d.

      Sugar of a polarisation exceeding 98 degrees

      the cwt.

      1

      5

      8

      £

      s.

      d.

      Sugar of a polarisation not exceeding 76 degrees

      the cwt.

      0

      12

      4

      and intermediate dates varying between 25s. 8d. and 12s. 4d. on sugar of a polarisation not exceeding 98 and exceeding 76 degrees.

      Molasses (including all sugar and extracts from sugar which cannot be tested by polariscope):

      if containing 70 per cent. or more of sweetening matter

      the cwt.

      0

      16

      3

      if containing less than 70 per cent. and more than 50 per cent. of sweetening matter

      the cwt.

      0

      11

      8

      if containing not more than 50 per cent. of sweetening matter

      the cwt.

      0

      5

      8 ½

      Glucose:

      Solid

      the cwt.

      0

      16

      3

      Liquid

      the cwt.

      0

      11

      8

      Saccharine (including substances of a like nature or use)

      the oz.

      0

      8

      3

      and so in proportion for any less quantity.
      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. D. MASON: I do not think that we ought to pass this without offering a few observations against this very large increase in the cost of living, particularly of the middle and working classes. Sugar has already been considerably enhanced in price, and I do think that we ought to offer some protest against this further increase in the duty. The Chancellor of the Exchequer seemed to think that the subsidy on the loaf compensated for this material increase in the cost of living, but I think we should follow the lead of the right hon. Gentleman the Member for Barnard Castle (Mr. A. Henderson), who suggested that the working classes would rather that the food taxes were completely abolished and that the Income Tax were developed or that a direct tax upon wages was imposed. It would be out of Order to speak of that matter just now, but one must offer some alternative if we protest against this particular tax. The same argument applies to many of the other taxes, such as the Luxury Tax, which tries to tax the thing rather than the result. I hope that many Members, while not prepared perhaps to divide the House on the Motion, will protest against the tax, which unquestionably falls heavily upon those least able to bear it, and which will certainly lead to a further increase in the

      1561
      cost of living. The right hon. Gentleman made out no case for this serious increase in the duty upon sugar, and I believe that many people will protest against it. It seems to me to be unjust. It is not as if the particular classes which it hits are not already feeling very much the increased cost of living. It falls upon old age pensioners and upon those with fixed incomes, and will materially affect the health and comfort of the community There is no justification for the increase which is now proposed.
      Mr. PRINGLE: I wish to join with my hon. Friend in protesting against the very serious increase in the duty on sugar. The only real justification offered by the Government for this charge was that the classes mainly affected by it were receiving a considerable benefit from the Treasury in the shaps of the subsidy offered upon the price of the loaf. That is a kind of argument which we should not accept in relation to a proposal of this sort. If there is objection, and I have always believed that there is grave objection, to the system of subsidising for the purpose of lowering the price of bread, then it is the duty of the Government, instead of seeking by way of taxation to obtain from those affected the equivalent of that which the Government is granting, to reduce the amount of the subsidy direct. That is the obvious, the practical and the logical course to take. In view of the new situation that has arisen in relation to rationing generally, it was the obvious duty of the Government to reconsider the whole policy in regard to bread, with a view to putting an end to this objectionable system of a subsidy and providing bread to the public on a rationed basis and of a decent quality. The justification to which I have referred is open to this further objection: In order to justify an increase in permanent taxation, the Chancellor of the Exchequer uses a subsidy which is temporary in character. He says, in effect, that because the working classes during the present year, and, possibly, for the remainder of the War, are to be entitled to bread at a price lower than the natural price, therefore he is justified in increasing taxation on a basis which is likely to be permanent after the War. It is from the point of view of the permanent effect of this tax that the House ought to discuss it. As my hon. Friend has pointed out, this tax falls with peculiar severity upon the poorer classes of the community. It is true that
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      the great mass of the working classes at the present time are probably able to bear it, that the working population of this country have been during the last year and the year before enjoying higher wages than at any previous period, and that a larger number of them have been in the enjoyment of such wages. But that must not let us conceal from our minds the fact that there are large numbers of very poor and deserving people who are not in that fortunate position. There are, for example, the pensioners to whom my hon. Friend referred, but there is an even larger class than these; there are the dependants of the soldiers and sailors who are at present serving the country. It is quite true that these separation allowances have been increased, but everybody who regards these separation allowances in relation to the purchasing power of money will agree that the increase in these paration allowances has not by any means kept pace with the increase in the cost of living, that this class is the class which is suffering specially by the War, and that undoubtedly this form of indirect taxation is going to affect them most severely. If you take the class of officers, you find that a special provision is made in respect of the Income Tax for serving officers. The increases of the Income Tax which affect the civilian population do not affect them. But when you take this form of indirect taxation, which affects the wives and children of the serving soldiers of the rank and file, although they are not receiving any substantial increase in their allowances, they nevertheless have to bear this extra burden. If we look at this tax from the point of view of this very large class, the House should hesitate before giving its assent to the increase of this particular tax.
      Before assenting to this tax we should also look at the industrial effects of it. During the War, of course, the question of the sugar which is used as raw material is not a factor of particular importance in relation to the trade of the country. But undoubtedly the Chancellor of the Exchequer is looking at this as a permanent tax. We know that in the past the sugar-using trades have been a very important part of the export trades of this country. They have been very large, very valuable, and very prosperous trades. When the War comes to an end, undoubtedly it will be the object of those engaged in these trades to regain their old position as soon as possible, and it

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      will be the interest of the country that those engaged in these trades should regain that position. When they have to face the new situation after the War, and when they will be endeavouring to restore their broken fortunes, they will find themselves handicapped by the very severe burden which this tax will impose. The probability in that situation is that you will have an outcry, when the War is over, both from the users of sugar and from the consumers who are affected, for a reduction of this tax, and that outcry may be so great in volume and dimensions that the Government then may not be able to resist it. It is the duty of the Chancellor of the Exchequer now to take a long view, and to look at the possible difficulties, either of himself or his probable successor, at that time. It will be a very inconvenient thing for the Chancellor of the Exchequer of that time to have to contemplate the reduction of any form of taxation, but you may have a situation in which the popular forces demanding such a reduction are so great that the Treasury and this House will not be able to resist it. It is of the utmost importance that such a probability should be in the minds of the Government and the House now, when this suggestion of an increase is under discussion.
      It is not as if this were the only means that the Chancellor of the Exchequer has now of raising increased revenue. There are other classes in the community upon whom increased taxation could have been imposed without any of the grave objections which I have mentioned as affecting this proposed increase. Everybody who has taken part in the Budget Debates recognises the courage of the Chancellor -of the Exchequer's proposals, that he has faced the situation fairly and courageously, and that he has endeavoured to place the burden upon the community which is commensurate with the national liabilities. But, while we agree in admiring the way in which he has faced this difficult task, we are entitled to offer some detailed criticism of particular methods. This particular increase might well have been dispensed with on account of the facts I have mentioned, and the Revenue which the right hon. Gentleman would lose by that sacrifice could have been obtained by him by a very slight addition to the increase of the Income Tax which he has imposed. That would have been a preferable method. The increased burden imposed
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      on Income Tax payers would have been comparatively slight, and there would not have been anything like the hardship which is likely to arise to very large classes owing to this increase in the Sugar Duty. I think the considerations which I have mentioned should be present in the minds of the House when discussing the proposals of the Government. It is true that we in this House, as well as the Chancellor of the Exchequer, should endeavour to see that the burden of the War is apportioned as fairly as possible among the different classes of the community, but when an addition to taxation is proposed such as that which we are now discussing, which involves a very heavy burden upon people who have not benefited by the War at all —namely, the particular class of dependants of those who are fighting —when we are discussing a burden which involves that hardship, I think we should ask the Government to reconsider the situation, and reconsider it in the light of this fact, that increases of taxation which would have affected officers have been modified so as to relieve them of any possible hardship, and that the same mitigation should be allowed in the case of those who are fighting in the ranks.
      Mr. LOUGH: I would like to say, with regard to the remarks which have fallen from my two hon. Friends opposite, that I entirely agree with them in the protest they have made against the Sugar Tax, but it occurs to me that a more convenient time to do this would be when the Finance Bill comes up in Committee, and when we have a Clause imposing this new tax, and when the omission of that Clause can be moved. I rise now only, as far as that matter is concerned, to tell my two hon. Friends that why I do not support the action they are taking now is because I think the more convenient course would be to move the rejection of the Clause imposing this tax in Committee on the Bill, and by that time we would have had an opportunity of seeing what the country thinks of it, and we could do it altogether in a more effective and measured way than it is possible to do it this afternoon. I was sorry that my hon. Friend the Member for Coventry (Mr. D. Mason) spoke of not dividing the House. What is the use of raising these points if you do not divide on them? I hope my hon. Friend will pluck up his courage, and that when some of us move the rejection of this Clause when we have

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      the Bill in Committee that he will support us. But leaving the question of sugar, I want to refer to one point in the very ingenious speech we have just listened to. Perhaps the Chancellor of the Exchequer will allow me to ask him this one question. I do not know whether he heard a remark which fell from the hon. Gentleman who has just sat down about the subsidy for bread. That was a very ingenious remark, and I would wish that we could have an answer to it from the Chancellor of the Exchequer, so that we should not have to raise it again. As we have the matter up now, perhaps the Chancellor of the Exchequer would explain to us why he did not adopt the course of taking so much off the bread subsidy instead of maintaining the subsidy at its full amount, and then taking the opportunity of taxing a certain article, especially sugar, which affects exactly the same consumers as bread —putting a heavy tax on them while the subsidy is given in regard to another article. It seems a moat confused method of finance, and a very ingenious problem has been put to the House by my hon. Friend who has just sat down, that the Chancellor of the Exchequer should take an opportunity of explaining why he did not adopt that course. If he does so, I am sure the House will be glad to hear him.
      Mr. BALDWIN (Joint Financial Secretary to the Treasury): I think the discussion which has been raised by my hon. Friends behind me is one to be expected. It has been raised very fairly and very considerately, and it demands an answer. The simplest answer to make at this stage of the proceedings —and I quite agree with my right hon. Friend opposite (Mr. Lough) that perhaps the more convenient time for a detailed discussion of this matter would be during the progress of the Finance Bill rather than on the Report stage of the Resolution —is to say that the reason which has guided the Government in imposing the tax is this: It has been argued that we should distribute the present taxation we have had to raise as fairly as we can through all classes of the community. Hon. Members will have noticed in the Budget that this duty on sugar is practically the only tax which affects people in receipt of incomes lower than £500 a year —that is, additional tax [An HON. MEMBER: "What about tobacco?"] I mean a compulsory tax. You do not pay the Tobacco Tax unless you smoke.
      Mr. PRINGLE: Do not take sugar in your tea!
      Mr. BALDWIN: With regard to sugar, I think that perhaps hon. Members who are opposed to this additional burden are a little apt to lose sight of what is its actual incidence, and at the risk of being a little tedious I must take one or two minutes in pointing out what is the actual incidence. The amount of the tax comes to 2s. 8 ½d. per annum per head on the rationed amount of sugar. Well now, consider first of all what that charge is on a household which is in receipt of an income that renders it liable to Income Tax —an income of over £130 a year. It cannot be pretended that any additional hardship is inflicted there, because for each child who is an inmate of a house of that kind there is the additional burden of 2s. 8 ½d. in the year, and there is a rebate allowed off the Income Tax which amounts to 56s. 3d. There has been this year given also a rebate on the Income Tax for the wife — that is over and above what was given last year —a rebate equivalent to that given for one child —so that in all probability almost in every household within Income Tax-paying limits, which include a very large proportion of the working classes of to-day, there is no additional burden imposed by this tax; indeed, I think I should be probably be nearer the mark if I say there is a decrease in the burden.
      Mr. LOUGH: Will not my hon. Friend admit that the tax presses on the whole consumption of sugar, which is £80 per head?
      Mr. BALDWIN: I think my right hon. Friend rather exaggerates. I admit, of course, that the tax presses throughout the sugar trade, but I am advised that the amount of sugar used in the sugar trade for articles of consumption to-day would increase the amount of what we may call the direct taxation on sugar by about 30 per cent.
      Mr. LOUGH: Surely it presses on the whole consumption!
      4.0 P.M.
      Mr. BALDWIN: Certainly, but the pressure would not be so great as my right hon. Friend says. I am advised that the pressure would increase the tax by about 30 per cent. It would add something like 1s. per head to the year's burden. Then we come to the class, of whom the

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      hon. and learned Member for Lanark (Mr. Pringle) spoke, coming below the Income Tax-paying class. There, I admit, that the very smallest increase is an increase which can be felt; but we have to remember that if you consider a tax of this kind right to put on, it is not possible to make exemptions from it. It is, I am afraid, the fact that to a certain point those at the bottom of the scale do feel, and must feel, every increase in taxation which is put on But when the hon. Member speaks of the soldiers' dependants as if they were a class without anything to look to beyond what they get in the way of allowances, I cannot follow his argument the whole way, because I do not think that is a literal statement of fact. It is this very class —the class below the Income Tax-paying class —of whom, I think, we may fairly use the argument which was urged by the Chancellor of the Exchequer that, at all events, if they are to pay this very small increase in what is to them an almost necessary article they have, on the other side of the balance-sheet, something which is worth more to them, that is, the subsidy on the loaf. To the suggestions made by some hon. Members that we should have reduced the subsidy, the answer is very simple. If we were to reduce the subsidy, we should have advanced against us exactly the same arguments which we have used against us to-day in putting this slight increase on the Sugar Duty as to its effect upon the poorest classes. I hope the sense of the House as a whole will be with me in what I have said, and will agree to pass this Resolution on the Report stage to-day, reserving to itself, quite properly, the right to discuss it subsequently at any length it chooses.
      Mr. ROWNTREE: My hon. Friend is such a persuasive speaker that one hardly likes to criticise what he has said, yet I cannot help thinking that he has hardly given a correct view as to what the tax on sugar really means to the very poor. We are not specially concerned at the moment with the tax so far as it affects the Income Tax payer, because, after all, although he is suffering in many ways he is not suffering in not actually getting a sufficient subsistence. Take the case of an agricultural labourer. Last year we passed a measure giving a statutory minimum wage of 25s. to the agricultural labourer. What does this tax on sugar
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      mean in the case of the agricultural labourer? At the present time a family of five will be able to get 2 ½ lbs. of sugar per week. The total tax on that amount of sugar is 7d. Therefore, if the agricultural labourer pays 7d. per week in tax, that means 30s. per year on a wage of 25s., and really amounts to an Income Tax of 5 ½d. — [An HON. MEMBER: "Weekly? "] —No; but it comes to an equivalent of an Income Tax of 5 ½d., and it is in cases like that where the real hardship comes. Take the million old-age pensioners. The Government very rightly have put up the pension from 5s. to 7s. 6d. What does this tax mean to these old people? If it is hard on the agricultural labourer, with 25s. per week, it is three times as hard on an old-age pensioner, who has only 7s. 6d. per week.
      Sir F. BANBURY: He has not four people to keep.
      Mr. ROWNTREE: I think that is correct, but you cannot put it quite on an average of five, and I think in the case of the old-age pensioner it is a matter of extreme hardship. I would like to know from my right hon. Friend whether he has consulted the Labour portion of the Government in regard to this tax? I notice that the Parliamentary Secretary to the Ministry of Food, in speaking last year on the Sugar Tax, reminded the House of the case of labourers getting only 23s. per week, and he said distinctly that those men could not afford to pay the tax that was then suggested. Then he went on to say:
      "There are a few millions of people in this country whose level of subsistence is still so low and whose wages are so inadequate in view of the cost of commodities, as to make it undesirable that any additional impost should be placed upon them."
      The right hon. Member for one of the Divisions of Glasgow (Mr. Barnes), who is a member of the War Cabinet spoke a year earlier on this question of sugar, and protested strongly against an additional tax on the ground that so much came from the pockets of the poor. If those protests were valid then, they are valid now, and whilst I agree with what has been said, that bold as the Chancellor of the Exchequer's proposals are in regard to the raising of money, I would like to see more money raised, and I believe more money ought to have been raised. It is not that I am objecting to his raising £10,000,000, but it is the

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      method of raising it that I object to. I believe it would have been far better to have put this on the Income Tax, and let the Income Tax payers find it, instead of getting it from families who really cannot afford to pay. I should also like to draw attention once more, because we are apt to forget these facts, to the very interesting summary that was made by the right hon. Member for Glasgow (Mr. Barnes) with regard to the findings of the Commissioners who visited the industrial areas to inquire into the unrest there. In speaking of the main factor of unrest, he said:
      "All the Commissioners put in the forefront as the leading cause of unrest the fact that the cost of living has increased disproportionately to the advance in wages. The Commissioners are unanimous in regarding this as the most important of the causes of industrial unrest. Not only is it the leading cause of unrest in itself, but its existence in the minds of the workers colours many subsidiary causes in regard to which in themselves there might have been no serious complaint."
      We know perfectly well that since then the Government have been trying, mainly through the action of the Food Controller, to reduce the cost of food, and all kinds of artificial devices have been adopted to get the cost down, often at very great expense and with very great difficulty, and now the Government are proposing to increase very largely the cost of this very important item of food, which already, I believe, has increased in price, with the duty that has been put upon it, more than any other, with the exception of fish and eggs. I really feel that this is a very serious proposition which the Government have put before us, and one that requires very serious consideration. It has been said again and again —and we are all agreed about this —that the mere putting up of wages to meet this increased cost of living does not really settle the difficulty, because the cost of living goes up with the rise of wages. I am perfectly certain that the increase now suggested in the Sugar Tax will be used all through the country, and I think probably rightly used, in order to ask for increased wages. I fancy that many people in very good positions will regret this, and would have preferred that this money should have been got out of increased Income Tax and not have been taken from the pockets of the poor and from a class of the community many of whom are not, with prices as they are, really getting all they should get for the necessary sustenance of life. I regret
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      very much that the Chancellor of the Exchequer has suggested this tax, and I am sorry to think that he proposes it at a time when I recognise that he has done so much in other ways. I think that is a very serious blot on his financial proposals.
      Mr. LEIF JONES: The Financial Secretary to the Treasury has again to-day repeated the figures as to the amount of this tax per head of the families in this country. I really do not know why he lays such stress upon the sugar ration. The Estimates of the Treasury are that this tax is to raise £12,000,000. It is not asking the arithmeticians of the Treasury to perform a very difficult sum to see that the average burden upon the individual, if £12,000,000 is distributed, per head of the population amounts to 5s. per head. In any calculation which the hon. Member makes as to the burden which is thrown on a family he cannot put this tax at less than 5s. per head. That is, I think, the burden which will fall upon the people as a result of this tax. My hon. Friend says the tax is small, that it is not a heavy tax, and that It is fair that this part of the population should bear some of the extra taxation. That is one line to take, but the Government does not stick to that line, because after they have said that it is desirable to enforce fresh taxation upon the poorer classes who will mainly feel this burden, they point out that they are giving them back, in one way or another, the equivalent of any fresh taxation that is being put upon them. I think the Government has seriously weakened its case by resting it upon a comparison with the bread subsidy. I do not see what the two things have to do with one another. All through that comparison they make the assumption, which I believe is not justified, that the people of this country are getting the full benefit, in the price of bread, of the large subsidy. I put it to the Government that it would have been quite possible to save out of the bread subsidy, by a readjustment of their arrangement, at least the £12,000,000 which they are raising out of this tax, and they could have done it without raising the price of bread. That is my very strong impression.
      The CHANCELLOR of the EXCHEQUER (Mr. Bonar Law): I should be very glad if my right hon. Friend would toll mo how this could be done.
      Mr. LEIF JONES: It will hardly be in order to do so now. I believe a large part of the subsidy is going in too large profits, which I have no doubt will come back to the Chancellor in the shape of excess profits from the bakers and others; but by the arrangements which they have made they are wasting a large part of the bread subsidy, and they could have got the £12,000,000 which they are raising from sugar by lowering the bread subsidy without at the same time raising the price of bread. If I am right, the position is a very serious one, and even now the Government might reconsider the position before the Budget passes into law.
      Mr. PRICE: I very much regret to have listened to the speech of the Financial Secretary. He did precisely the same as the Chancellor of the Exchequer did when he introduced the Budget in describing the effect this tax was going to have and the burden it would impose on the working classes. Neither speech is true nor in accordance with the facts. These are the words used by the Chancellor of the Exchequer:
      "The ration of sugar is ½ lb. per week; the duty is l ½d. per 1b. Therefore the burden upon each consumer is l ½d. per fortnight." — [OFFICIAL REPORT, 22nd April, 1918, col. 717.]
      I asked him in his second speech whether this applied to the sugar which was sold over the counter. He said Yes." But that does not cover sugar which is consumed by the working classes. The total yield of the tax is £13,200,000, and not the £12,000,000 which has been indicated. Docs the House think for a moment that merchants are going to handle £13,200,000, and put it out in duty, without demanding a profit upon the duty which they have paid? It is a perfect farce. When you buy sugar, as I have bought it myself, you do not consider how much duty is in the sugar. You consider what is the price of it, and whatever the price is you put that into the stuff which you are manufacturing, and it is upon the basis of the total amount of the ingredients in the thing you are manufacturing that you estimate the profit. Therefore it is absolutely unfair for the Chancellor of the Exchequer and the Financial Secretary to deliver speeches calculating first of all that it was going to be equal to 1 ¼d. a lb. per fortnight and now that it is going to be 2s. 8 ½d. a year. That statement is contrary to fact, and I can only regret that two men occupying such high positions should try to throw dust in the eyes of the working classes by
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      declaring that that is the amount they will have to bear. Another consideration is the price of goods which will be increased by this tax. There is an enormous number of articles which contain sugar, and when you get a large increase in duty the burden of the tax will always be greater upon the people who use every article in which sugar is contained than the duty itself warrants. It is no use blaming manufacturers or traders. They have their outlay of money and they must get their profit upon it. I regret beyond measure that we should have had two speeches such as these because they are contrary to fact, and I trust we shall never again have such speeches delivered from the Front Bench.
      A great many people talk about the increase of wages which has gone on in different parts of the country. It is true there has been an increase of wages, largely in munition areas, but there are plenty of districts where there has been little or no increase, and where the income of the people is greatly lessened. Take the whole of the East Coast, which is liable to possible invasion. Yon have a great reduction of population. Edinburgh has benefited little or nothing by contracts being placed there. The University has been drained of its students, and an enormous number of poor people have had their incomes largely reduced in consequence, while house rents have been increased, and to impose a burden like this upon such a people is a perfect scandal. I have had a large number of letters from small confectioners all over the country, and there was a deputation of confectioners before the duty was imposed. They described their condition then. What will be their condition after the duty? A great many of those who have gone into this trade are widows who have been driven to take it up because they have lost the breadwinner of the family, and this imposition on them is perfectly unfair. The list of taxes composed in this Budget begins with Customs and Excise, and so on. A great many have said, "You should have increased Income Tax." I agree with that, but it is remarkable that there are two taxes which have never been increased since the War began: one is the Land Tax and the other is the Land Values Duty. At the same time you are increasing the Sugar Duty, which falls severely on poor people, and I sincerely trust that Labour Members will divide on this, so that we may enter a strong protest against this great increase.
      Mr. WHITEHOUSE: I want to reply to one argument which was addressed to the House by the Financial Secretary. By a series of arithmetical gymnastics, with which I did not wholly agree, he showed that there was no burden whatever upon anyone who paid Income Tax. He devoted the major part of his speech to a consideration of schemes which would relieve the Income Tax payer of burdens even under the present financial proposal. But the whole point of the criticism against this proposal is that it falls with such extreme hardship upon those below the Income Tax level, and whom it has been the deliberate policy of this House to preserve from further taxation. I was very surprised indeed that the hon. Gentleman said, in justification of this increased burden on the extremely poor, that the Government had given them a 9d. loaf, but it is the fact that the Government gave a 9d. loaf to the poor that ought to prevent them imposing this new taxation. The 9d. loaf was given at great expense, because the margin available in the case of the extremely poor was wholly insufficient to meet the increased cost of bread. Therefore, if you give the extremely poor this great concession with regard to the price of bread, you are really rendering that policy a nullity if you add to the price of articles of food almost equally necessary. Therefore I do not think the hon. Gentleman was entitled to say that this taxation was right and fair and just because the 9d. loaf had been given to the poor.
      There is another consideration which has scarcely been noticed in connection with these proposals. When the hon. Gentleman speaks of it as amounting to 2s. 8d. in a year he forgets that a tax upon sugar means an increase in other foods which are also largely used by the poor. The articles of food which are at present rationed are wholly insufficient for anyone, and the official rations have to be supplemented by foods which are not rationed. In the case of the poor, articles of food in which sugar is a most important ingredient have to be bought and consumed, and therefore not only is the price of sugar being raised to the extremely poor, but also the price of non-rationed foods which are essential. It is because I feel that the hon. Gentleman has not given a justification for this tax, and has used arguments in defending it which should really condemn it, that I hope it may yet be rejected.
      Captain SMITH: I hope the Chancellor of the Exchequer will reconsider his determination to keep on this extra tax. Of all the taxes which he imposes this time this has been more talked about as being unjust than any of the others, and while one can heartily congratulate him on the great fairness of his taxation I cannot do it with regard to the Sugar Tax. I shall certainly take advantage of any Motion to eliminate this additional tax whenever it comes before the House, and I am quite sure I am not by myself in this attitude. The Secretary to the Treasury said the object was to spread over the taxation in order to get the required yield. Surely people who have to buy commodities for their families are punished enough without having increased taxation put on necessary foods. If anything is required for the people of this country now, it is that they should be assured of a reasonable amount of food to carry them through this War, wherever the money comes from, and should not be called upon, especially those at the lower end of the scale who cannot afford it, to pay these increased prices. The argument in reference to the cheaper loaf does not appeal to me very much. The loaf is bad enough now, at the price it is, and I submit that the efforts of the Government ought to be directed to its improvement, and, if the subsidy is to be given to keep the price of bread down, there are a variety of other sources than sugar from which the Chancellor of the Exchequer could derive revenue by taxation in order to meet that subsidy. I am quite sure that if the right hon. Gentleman could bring out a scheme of taxing luxuries, as he has done already, but to a greater extent than he has done, I think that he would find that an increase of that source of income would be greatly supported. The increase might be two or three-fold the tax proposed, and I think that revenue obtained in that way would be greatly preferred to the proposed increase of the tax on sugar, which is an exceedingly important article of diet for the great masses of people.
      Sugar enters into a great number of articles which are used in the household, and housewives and members of families are at the present time pinching themselves in order to save sugar against the time of the fruit season, when they propose to make jam superior to anything, in quality, that they can purchase in the shops. That is a very important feature

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      of domestic economy, and ought not to be overlooked. Yet it is at this very time that you propose to impose this increased tax on this article of sugar, and people are rather disheartened, thinking that after all they are being called upon to pay higher prices for jam, sugar and syrups that are of such inestimable value to any household in helping to keep down the consumption of other articles. The bread now supplied has nothing like the intrinsic value of the bread which was supplied in pre-war times, and I think the Chancellor of the Exchequer, rather than increase the Sugar Tax, which he supports by reference to the cheap loaf, should look to other sources of taxation, and, if he does so, I believe that he will cause a great amount of satisfaction throughout the country. So far as I am concerned I shall oppose this tax in every division that takes place.
      Sir WATSON RUTHERFORD: The Committee must not run away with the impression that we are dealing only with the question of sugar. We ought to give the Chancellor of the Exchequer credit for so framing his Budget as to spread taxation over the largest number in the most equitable manner possible. Of all the taxes that are imposed, this on sugar is the one with which I have the least sympathy, because it is a tax on a necessity of life. At the same time it is inevitable that it should be imposed. It is not as big a tax in proportion to the value of the article affected as it was before the War, when the tax on sugar, before the War, was a moderate one, yet big as the tax is now, ad valorem it is not so big as it was in pre-war days. I think that ought to be borne in mind. It ought also to be remembered that in all these taxes the effort on the part of the Chancellor of the Exchequer must be to spread them over the people as equitably as he can. I suppose there is hardly a tax to which a thousand objections could not be taken by almost everybody. In reference to this tax, I could cite twenty or thirty almost fatal objections to it, but we really must not forget that we have to raise an enormous sum of money to meet the cost of the War, and so long as that is done equitably, all we can do is to accept a tax of this kind, whether we like it or not.
      Mr. OUTHWAITE: The Chancellor of the Exchequer and his colleague the Financial Secretary to the Treasury, in
      1576
      supporting the Sugar Tax, are under two misapprehensions. First, they argue that the workers are, at any rate, better able to bear this tax than they were at any former period. But I would point out that wages have not gone up in every instance, nor can it be said that in every case this tax is in no way oppressive. I think that is a misapprehension. There are great sections of the population whose spending capacity to-day is actually less than it was before the War. The bulk of my own Constituents have received only a miserable advance in wages, while there has been a 100 per cent. rise in the cost of living. They are paying 12s. in the £in rates, and they are reduced to the very margin of subsistence, so that every penny of increased cost most certainly affects large numbers. During the Debates which we had in pre-war times in regard to this character of taxation, it was argued that it was oppressive and unjust and, if that was the case then, it must be so now to a very much greater degree amongst a large number of the community. It docs seem to me an absolute farce to have coal boards sitting, and other Committees sitting, to effect artificial restrictions in the use and price of commodities, at the same time that you are increasing artificially the price of a prime necessity of life. Since the War the cost of sugar has gone up from 2d. a lb. to the amount, with taxation, of at least 7d. a lb. —an enormous and oppressive increase.
      There is another fallacy in the mind of the Chancellor of the Exchequer. He talked of spreading these taxes equitably over the masses of the people, and there seems to be the idea that there is a certain amount of justice in bringing in people who are not touched by those taxes which are yielding vast amounts of revenue, and which the Chancellor of the Exchequer, in reply to a question yesterday, evidently regards as direct taxation. The right hon. Gentleman referred to the Excess Profits Tax as a direct tax bringing in some £300,000,000 a year. These excess profits are being made by profiteers out of the pockets of the very people on whom you are going to impose this Sugar Tax. Those profits do not come miraculously from heaven or miraculously from below; they are taken out of the pockets of the people by profiteers, from whom the Government take 80 per cent The Chancellor of the Exchequer looks upon that as direct taxation, but

      1577
      in reality it is indirect taxation, because it falls most heavily upon those people whom the Chancellor of the Exchequer is going to bring in to contribute to the taxation on sugar, on the ground that they are not now sufficiently taxed, and are escaping the burden of the imposts levied under the Budget. That is not the case, and I shall oppose the tax when we go to a Division.
      Mr. ADAMSON: I wish to appeal to the Chancellor of the Exchequer to reconsider the whole question of this tax. The hon. Member for Liverpool (Sir W. Rutherford) suggests that the intention of the Chancellor is to spread the increased taxation as equitably as possible over all people. I think there is no justification for this particular increase of taxation that we are now discussing. In securing this extra money the right hon. Gentleman is obtaining it from those who cannot afford to pay it. I think that taxation ought to be raised from those who are able to pay it, without cutting into their means and scope of living. Small as this increase may be, it really means to a very large section of our people a reduction in their living; it will mean that they will have to go without some necessities of life. I think it is a pity, if an increase of money is required, that it cannot be found from other sources than sugar. There are many other sources that the Chancellor of the Exchequer can find from which to draw the money he requires. Let me suggest one, for instance: The Government has imposed a Super-tax on incomes over a certain amount; why not impose that tax after £1,000 instead of after £2,500 a year? There are other alternatives, if one cared to suggest them; there are many directions from which money could be procured other than this source from which the Chancellor of the Exchequer proposes to draw it. I hope the right hon. Gentleman will seriously consider this matter between now and the discussion of the Finance Bill. I think, whatever my colleagues may do, that they agree with me as to the injustice of this particular tax, and we may be bound to divide against it when we come to the discussion of the Finance Bill. I would, however, appeal to the right hon. Gentleman to give this matter reconsideration, and I am certain that, if he promises to do that, there will be no necessity for a Division taking place at this moment.
      Mr. BONAR LAW: I will not now repeat the arguments which I and my hon. Friend have used. I rise rather to make an appeal to the House as to whether or not they consider that there has been sufficient discussion at this stage, and will allow the matter now to go to a Division. Anyone who has introduced a Budget requiring taxation on the scale that this Budget requires it, is bound to try to make all those who ought to pay taxation bear their share in the cost of the War. [An HON. MEMBER: "Except the landowners!"] I think they are paying a good deal, and I think also it has been generally admitted that I have tried to frame the Budget from that point of view. The House ought to bear this in mind, that we have to carry on this War, and that we have got to get a great deal of money, not merely by taxation, but by borrowing. I am perfectly certain that, from the point of view of those who are in earnest in trying to see that this country is not beaten in this struggle, nothing could be worse than to give the impression that those who have money ought alone to meet the cost, and that those who are not so well off ought not to be made to contribute according to their ability to pay. It has been said that another 1d. on the Income Tax would meet the case. That is perfectly true. But I think that even those who use that argument must feel that there must be some stage at which the burden of the War, from the money point of view, is being borne by all classes according to their means. That is where the trouble comes in. The House must remember that in this Budget an allowance for the wife, in addition to that for children, has been granted in the case of Income Tax payers, while we have made no addition to the Income Tax on incomes up to £500 a year. These facts have been taken into account in dealing with the Budget as a whole, and I should not have felt justified in leaving incomes up to £500 untouched if I had not done something in the way of indirect taxation to balance the account. That is the motive which has influenced us. It is quite natural there should be a discussion, and even a Division, on this Resolution, but I hope that we shall now be allowed to get on with the business of the Committee.
      Mr. FRANCE: I certainly desire to respond to the appeal of the Chancellor of the Exchequer that we should not delay

      1579
      the Division. But there is a point I should like to recall to the right hon. Gentleman's mind. He has told us it is his desire — and I am quite sure his Budget has shown it — in the main to put the taxation on those who can best bear it. But this Sugar Tax presses most heavily on those who can ill afford to pay it. The Sugar Tax does not come under the character of a sumptuary tax; it is a tax on a necessity of life, especially for children, and those who have to provide for children will have to bear this additional burden, not only on the sugar ration itself, but on those articles containing sugar and necessary to supplement the sugar ration, which is hardly sufficient for children of tender years. I would also like to call attention to the fact that it is one of the canons of taxation that the extra amount the public have to pay should, as far as possible, reach the Treasury. But in this particular case, as shown by my hon. Friend the Member for Edinburgh, it is clear that a large part of the extra money paid by the public for articles in which sugar is
      an ingredient can never reach the Treasury. There is not only the profit on the increased turnover, but the inevitable extra price which must be put on articles in which sugar is an ingredient from the very nature of the calculations of prices. A ½d. is the smallest addition that can be made to theprice of many articles, such as jam, biscuits, cocoa or condensed milk, into all of which sugar finds its way, and when the increased duty is something just under a ½d., the extra charge to the consumer must be the full ½d., while if the addition to the duty is represented by ¾d., the public is charged 1d.; therefore a considerable portion of the increase paid by the consumer is never received by the Treasury. The duty, therefore, presses particularly heavily upon those who have to use these articles which constitute an essential part of their food supply.
      Question put, "That this House doth agree with the Committee in the said Resolution."
      The House divided: Ayes, 141; Noes, 56.

      Division No. 32.]

      AYES.

      [4.50 p.m.

      Agg-Gardner, Sir James Tynte

      Falle, Sir Bertram Godfray

      Marriott, John A. R.

      Agnew, Sir George William

      Fell, Sir Arthur

      Mason, James F. (Windsor)

      Amery, Captain L. C. M. S.

      Foster, Philip Staveley

      Middlebrook, Sir William

      Archdale, Lieut. Edward M.

      Gibbs, Colonel George Abraham

      Morison, Hector (Hackney, S.)

      Baker, Maj. Sir Randolf L. (Dorset, N.)

      Gilmour, Lieut.-Col. John

      Morison, Thomas B. (Inverness)

      Baldwin, Stanley

      Goddard, Rt. Hon. Sir Daniel Ford

      Morton, Sir Alpheus Cleophas

      Banbury, Rt. Hon. Sir F. G.

      Goulding, Sir Edward Alfred

      Nicholson, William (Petersfield)

      Barnes, Rt. Hon. George N.

      Greig, Colonel J. W.

      Orde-Powlett, Hon. W. G. A.

      Barrett, Capt. R. W.

      Gretton John

      Parker, Rt. Hon. Sir G. (Gravesend)

      Barran, Sir John N. (Hawick, Burghs)

      Gwynne, R. S. (Sussex, Eastbourne)

      Parker, James (Halifax)

      Barton, sir William

      Hamilton, Rt. Hon. Lord C. J.

      Pennefather, De Fonblanque

      Beach, William F. H.

      Harmood-Banner, Sir J. S.

      Peto, Basil Edward

      Beckett, Hon. Gervase

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

      Philipps, Maf-Gen. Sir Ivor (S'hampton)

      Bellairs, Commander C. W.

      Havelock-Allan, Sir Henry

      Philipps, Captain Sir Owen (Chester)

      Benn, Arthur Shirley (Plymouth)

      Helme, Sir Norval Watson

      Pryce-Jones, Colonel E.

      Boles, Lieut.-Colonel Dennis Fortescue

      Hermon-Hodge, Sir R. T.

      Randles, Sir John S.

      Brace, Rt. Hon. William

      Hewart, Rt. Hon. Sir Gordon

      Rees, G. C. (Carnarvonshire, Arfan)

      Bridgeman, William Clive

      Hinds, John

      Roberts, Sir S. (Sheffield, Ecclesall)

      Brookes, Warwick

      Hodge, Rt. Hon. John

      Robinson, Sidney

      Bull, Sir William James

      Hope, James Fitzalan (Sheffield)

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

      Burn, Colonel C. R.

      Hughes, Spencer Leigh

      Samuel, Rt. Hon. Sir Harry (Norwood)

      Butcher, John George

      Hunter, Major Sir Charles Rodk.

      Sanders, Col. Robert Arthur

      Carew, C R. S.

      Illingworth, Rt. Hon. Albert H.

      Shortt, Edward

      Carnegie, Lieut.-Colonel D. G.

      Jardine, Ernest (Somerset, East)

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

      Cator, John

      Jardine, Sir J. (Roxburgh)

      Smith, Harold (Warrington)

      Coats, Sir Stuart A. (Wimbledon)

      Jones, J. Towyn (Carmarthen, East)

      Spear, Sir John Ward

      Cochrane, Cecil Algernon

      Jones, W. Kennedy (Hornsey)

      Spicer, Rt Hon. Sir Albert

      Collins, Sir W. (Derby)

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

      Staveley-Hill. Lieut.-Col. Henry

      Cooper, Sir Richard Ashmole

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

      Stewart, Gershom

      Cornwall, Sir Edwin A.

      Lindsay, William Arthur

      Stirling, Lieut.-Col. Archibald

      Cowan, Sir W. H.

      Locker-Lampson, G. (Salisbury)

      Stoker, R. B.

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

      Lonsdale, James R.

      Strauss, Arthur (Paddington, North)

      Craik, Rt. Hon. Sir Henry

      Lowe, Sir F. W.

      Strauss, Edward A. (Southwark, West)

      Currie, George W.

      M'Calmont, Brig.-Gen. Robert C. A.

      Sutherland, John E.

      Dalziel, Davison (Brixton)

      MacCaw, William J. MacGeagh

      Sykes, Col. Sir Alan John (Knutsford)

      Davies, David (Montgomery Co.)

      M'Curdy, Charles Albert

      Terrell, George (Wilts, N. W.)

      Davies, M. Vaughan- (Cardiganshire)

      Macmaster, Donald

      Thomas, Sir A. G. (Monmouth, S.)

      Dawes, James Arthur

      McMicking, Major Gilbert

      Tickler, T. G.

      Denman, Hon. Richard Douglas

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

      Turton, Edmund Russborough

      Denniss, E. R. B

      McNeill, Ronald (Kent, St. Augustine's)

      Walker, Colonel William Hall

      Duncan, Sir J. Hastings (Yorks, Otley)

      Maden, Sir John Henry

      Walsh, Stephen (Lancs., Ince)

      Du Pre, Major W. Baring

      Malcolm, Ian

      Walton, Sir Joseph

      Ward, W. Dudley (Southampton)

      Williamson, Sir Archibald

      Wood, Sir John (Stalybridge)

      Wardle, George J.

      Willoughby, Lieut.-Col. Hon. Claud

      Younger, Sir George

      Waring, Major Walter

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

      Yoxall, Sir James H.

      Wason, Rt. Hon. E. (Clackmannan)

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

      Whiteley, Sir H. J. (Droitwich)

      Winfrey, Sir Richard

      TELLERS FOR THE AYES.—Captain F. Guest and Lord Edmund Talbot.

      Williams, Aneurin (Durham, N.W.)

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

      NOES.

      Adamson, William

      Haslam, Lewis

      Smith, Capt. Albert (Lancs., Clitheroe)

      Alden, Percy

      Hogge, James Myles

      Stanton, Charles Butt

      Arnold, Sydney

      John, Edward Thomas

      Taylor, Theodore C. (Radcliffe)

      Baker, Joseph Allen (Finsbury, E.)

      Jones, Rt. Hon. Leif (Notts, Rushcliffe)

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

      Burns, Rt. Hon. John

      Jowett, Frederick William

      Thorne, William (West Ham)

      Carr-Gomm, H. W.

      Kenyon, Barnet

      Tillett, B.

      Chancellor, Henry George

      King, Joseph

      Toulmin, Sir George

      Clough, William

      Lambert, Richard (Wilts, Cricklade)

      Verney, Sir Harry

      Crooks, Rt. Hon. William

      Lough, Rt. Hon. Thomas

      Watt, Henry A.

      Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)

      Macdonald, J. Ramsay (Leicester)

      Whitehouse, John Howard

      Davies, Ellis William (Eifion)

      Marshall, Arthur Harold

      Whyte, Alexander F. (Perth)

      Davies, Timothy (Lincs., Louth)

      Needham, Christopher T.

      Wiles, Rt. Hon. Thomas

      Dougherty, Rt. Hon. Sir J. B.

      Outhwaite, R. L.

      Wilkie, Alexander

      Duncan, C. (Barrow-in-Furness)

      Price, C. E. (Edinburgh, Central)

      Williams, Llewelyn (Carmarthen)

      Essex, Sir Richard Walter

      Pringle, William M. R.

      Wilson, W. T. (Westhoughton)

      Ferens, Rt. Hon. Thomas Robinson

      Rattan, Peter Wilson

      Yeo, Sir Alfred William

      France, Gerald Ashburner

      Richardson, Arthur (Rotherham)

      Galbraith, Samuel

      Rowlands, James

      TELLERS FOR THE NOES.—Mr. David Mason and Mr. Anderson.

      Gilbert, J. D.

      Rowntree, Arnold

      Harvey, T. E. (Leeds, West)

      Smallwood, Edward

      Question put, and agreed to.

      Resolution reported,

      SUGAR (EXCISE).
      4. "That in lieu of the duties of Excise now payable on sugar made in Great Britain or Ireland there shall, on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duties:

      £

      s.

      d.

      Sugar of a polarisation exceeding 98 degrees

      the cwt.

      1

      3

      4

      Sugar of a polarisation not exceeding 76 degrees

      the cwt.

      0

      11

      2

      and intermediate duties varying between 23s. 4d. and 11s. 2d. on sugar of a polarisation not exceeding 98 and exceeding 76 degrees.

      Molasses (including all sugar and extracts from sugar which cannot be tested by the polariscope):

      if containing 70 per cent. or more of sweetening matter

      the cwt.

      0

      13

      6

      if containing less than 70 per cent. and more than 50 per cent. of sweetening matter

      the cwt.

      0

      9

      8

      if containing not more than 50 per cent. of sweetening matter

      the cwt.

      0

      4

      9½

      Glucose:

      Solid

      the cwt.

      0

      16

      3

      Liquid

      the cwt.

      0

      11

      8

      Saccharine (including substances of a like nature or use)

      the oz.

      0

      8

      3

      and so in proportion for any less quantity.
      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution reported,

      SPIRITS (CUSTOMS).
      5. "That in addition to the duties of Customs now payable on spirits imported into Great
      1582
      Britain or Ireland there shall, on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duties, that is to say:—

      £

      s.

      d.

      For every gallon computed at proof of spirits of any description except perfumed spirits

      0

      15

      3

      For every gallon of perfumed spirits

      1

      4

      3

      For every gallon of liqueurs, cordials, mixtures, and other preparations entered in such a manner as to indicate that the strength is not to be tested

      1

      0

      6

      and the duties of Customs on the articles here after mentioned, being articles in which spirit is contained or in the manufacture of which spirit is used, shall be proportionately increased, and shall be as follows:—

      £

      s.

      d.

      Chloral hydrate

      …

      the pound

      0

      3

      6

      Chloroform

      …

      the pound

      0

      8

      8

      Collodion

      …

      the gallon

      3

      10

      0

      Ether, acetic

      …

      the pound

      0

      5

      2

      Ether, butyric

      …

      the gallon

      2

      3

      9

      Ether, sulphuric

      …

      the gallon

      3

      13

      2

      Ethyl, iodide of

      …

      the gallon

      1

      18

      1

      Ethyl bromide

      …

      the pound

      0

      2

      10

      Ethyl chloride

      …

      the gallon

      2

      3

      9

      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. L. JONES: It is not my intention, as the House will readily believe, to oppose these taxes, and I rise only for the purpose of asking two questions in connection with the Chancellor of the Exchequer's proposals this year for extra taxation of liquor. As this is the first of the taxes, the present is, perhaps, the most convenient opportunity for referring

      1583
      to the matter. My right hon. Friend will remember that last year he took off a large proportion of the Licence Duties, and he did that in spite of protests from some quarters that it was unnecessary to afford this relief to the liquor trade. He did not, however, anticipate, as he has himself admitted, that they would make the profits they have made during the past twelve months, and he based his reduction on an anticipated decrease, or, at any rate, no increase, in the profits of the trade. The first question I wish to ask is this: Now that he has realised that the liquor trade, owing to the monopoly and restrictions, have not lost money but, on the contrary, have made money — very large profits indeed — why has not the right hon. Gentleman restored the Licence Duties in this Budget, instead of leaving them at the reduced figure at which they were placed last year? I want to remind the House that before the War the Licence Duties were between £4,000,000 and £5,000,000. In the last year before the War they were £4,300,000. In the following year — or two years later, perhaps— they were £3,400,000. Last year they were £2,400,000, and this year they are estimated at 1,100,000. You have, therefore, the Licence Duties reduced to about 20 per cent. of their former figure. I cannot understand why my right hon. Friend, who based his reduction solely on the ground of a reduction of profits, seeing that the profits have been, and are being made, has not restored the Licence Duties. I desire to point out to him and to the House —
      Mr. SPEAKER: The right hon. Gentleman cannot discuss the Licence Duties under this Resolution. There is nothing in it about Licence Duties. The discussion on these Resolutions must be confined to the subject matter of the particular Resolution before the House.
      Mr. JONES: Very well, Mr. Speaker, I will not pursue that matter. Perhaps I can raise it on the Finance Bill, but I think I have said enough to make clear to my right hon. Friend the point. I do it really in no controversial spirit, but because a certain amount of money is being raised from the trade, and it is the question of the form in which that should be raised that I have risen to discuss rather than anything else. The second point I wish to raise is this: The taxes which the Chancellor of the Ex-
      1584
      chequer is putting on this year are taxes direct upon the liquor, and whereas the tax upon the Licence Duty — I think I am not out of order in saying that — is a tax upon a monopoly which cannot easily be passed on to the consumer, the tax on spirits or beer is one that is immediately passed on to the consumer, and has to be paid by the purchaser of the liquor. Now, it is quite true that that is affected in the present year by the fact that the Ministry of Food, I suppose, is stepping in and fixing the prices at which the liquor is to be sold. The question I want to put to the Chancellor of the Exchequer — and I do not know that the information will be available to-day — is what margin is he leaving, both in the case of spirits and in the case of beer, to the trade between the extra taxation and the prices which are fixed for sale to the public? What is the profit which he anticipates on the average will be made on the gallon of spirits and on the barrel of beer? I do not press the Chancellor of the Exchequer for an answer to that to-day. It may be necessary to consult the Minister of Food —
      Sir G. YOUNGER: They do not know.
      Mr. JONES: That is an assumption I should not like to make, but if my hon. Friend does so no one is so likely to know as he is. Yet the matter is one of exceeding importance. My impression is that a higher tax might have been charged relatively to the prices that have been fixed for the sale of liquor and still a very sufficient profit would have been left to the brewers and distillers, and the Chancellor might have got more money out of it without injuring any body. I shall be very much obliged if the right hon. Gentleman, before the Second Reading of the Finance Bill comes on, will let us know whether that point has been considered, and, if so, what is the margin he thinks it desirable to leave? I would point out that it is a necessary consideration for him to take into account for this reason: He is collecting in excess profits the greater part of what is left to the trade, and that is a very extravagant way of getting in revenue, as he knows well. It is far better for him to put on the maximum tax direct that he thinks it desirable to put on and to leave to the particular trade only that part of the profits which will enable them to make the pre-war standard of profit. The idea of taxation in any trade he is taxing is not that he should get revenue

      1585
      out of excess profits, but that he should so fix his taxes and his prices as to leave to the traders just the pre-war profit and no more That would hit his Excess Profits Tax, but it would be more profitable to the State and more convenient to the traders.
      Mr. BONAR LAW: I am obliged to my right hon. Friend (Mr. L. Jones), first of all, for his readiness to leave to a later stage anything ho has to say on this subject. I may say — and it will doubtless surprise him — that I have listened to his speech this afternoon with pleasure, because I got rather a shock when introducing my Budget he praised my taxes on this commodity. I had a feeling — I hope he will not think I am accusing him of being narrow-minded — that if he was quite pleased I must have gone a little too far. I am glad he is a little more critical to-day. Of course, the point of view he puts as regards price was the chief factor in my mind and that of the Food Controller in coming to a decision as to the duty. The whole thing is in an absolutely artificial condition, and I may say to the House that I had a very strong temptation to get a very much larger revenue out of the trade even than the large amount I am asking for in this Budget — and it would be perfectly easily done. There is a demand, strange as it may seem to my right hon. Friend—
      Mr. JONES: I know it well!
      Mr. BONAR LAW: —for these commodities far in excess of the supply, and it is my opinion that at almost any price we could have sold them. The result would have been, if I had chosen, and the Food Controller was willing, that we might have put another 1d. or 2d. on the glass of beer and have got an almost unlimited revenue. But obviously that would not have been wise, chiefly for there a son that while food itself is scarce if we had done that the mass of the people of this country would have been so dissatisfied if they had not got it that we should have lost more than we obtained. That is what influenced the Government. Precisely the same thing would happen if in addition to giving the industrial population inferior beer — so inferior, I am told by those who are good judges, that it is not beer at all — we had raised the price. You would have had an amount of industrial discontent greater than could have been produced in any other
      1586
      way. As regards both beer and spirits, it is not an easy calculation to decide exactly how much should be taken for the Treasury and what the price should be. It is not easy, for this reason: Conditions are altogether different. If one could say that such-and-such is the cost of the production of the article, and so much is the cost of distribution, one could leave a fair margin of profit. That is precisely what I should like to do, but the conditions are so varied and so difficult to adjust that obviously there might be room for mistakes on our part, and whatever the figure fixed it would either be too favourable to one set of people or unfair to another. That is inevitable, and all I would say is that in conjunction with the Food Controller the whole matter was gone into as carefully as we could do it, and we came to the conclusion that the duty, when taken in connection with the prices fixed to the public, is fair to everyone concerned, and not least to the Treasury, in which I am more particularly interested.
      Resolution reported,

      SPIRITS (EXCISE).
      6. "That in addition to the duty of Excise now payable for every gallon computed at proof of spirits distilled in the United Kingdom there shall, on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duty (that is to say):

      £

      s.

      d.

      For every gallon of spirits computed at proof

      0

      15

      3

      and so in proportion for any less quantity.
      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution reported,

      BEER (CUSTOMS).
      7. "That in addition to the duties of Customs now payable on beer imported into Great Britain or Ireland there shall, on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duties (that is to say):
      In the case of beer called or similar to mum, spruce, or black beer, or Berlin white beer or other preparations, whether fermented or not fermented, of a similar character:

      £

      s.

      d.

      For every thirty-six gallons where the worts thereof are or were before fermentation of a specific gravity—

      Not exceeding one thousand two hundred and fifteen degrees, a duty of

      5

      0

      0

      Exceeding one thousand two hundred and fifteen degrees, a duty of

      6

      17

      2

      £

      s.

      d.

      In the case of every description of beer other than that above specified —

      For every thirty-six gallons where the worts thereof were before fermentation of a specific gravity of one thousand and fifty-five degrees, a duty of

      1

      5

      0

      and so in proportion for any difference in gravity.
      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Colonel GRETTON: The House, I am sure, realises that the increase in the Beer Duty is an extraordinarily high one. The duty on beer is doubled by this Resolution, and I am sure that it will be recognised that it can only be borne by the brewery trades because of the very exceptional and artificial conditions to which the Chancellor of the Exchequer has already drawn the attention of the House. The price of the greater proportion of the beer which is brewed is fixed by Order of the Food Controller, and for that reason the brewery trade and the licensed victuallers are limited as to the amount which they will be able to recover from the public in respect of this enormous duty. Then the gravity of beer is fixed at an average gravity in Great Britain, that is to say England, Scotland, and Wales, at 1.030 degrees, so that the greater quantity of beer which can be produced under present restrictions must be of the low gravity and at prices fixed by the Food Controller. The inequality about these Regulations is that in Ireland the gravity of the beer is fixed at 1.045 degrees, so that the whole of the beer brewed in Ireland is brewed at the gravity which escapes the Food Controller's Regulations, although a great deal of that beer is sent into Great Britain and sold to the public free of these restrictions and prices, so that a considerable proportion of this duty can be recovered by Irish brewers, whereas English brewers have not the same advantage.
      Still, the brewery trade has made up its mind to bear this burden. Brewers generally at all stages of the War and at present have been and are willing to sacrifice their personal and private interests to support the public cause, and they are determined to offer no opposition to this enormous increase in the duty. But at
      1588
      the same time it should be said that as a permanent tax this duty would be unbearable, and it can only be borne now because the public under present conditions are willing to pay an extraordinarily high price for beer and because of the generally artificial conditions under which beer is now being brewed and sold. The licensed victualler will have to pay his share of this enormous impost, because in many cases the brewers are not able to bear these taxes; few of them will be able to do so, and they are therefore obliged to cast a portion of the duty on to the licensed victualler, who will not be able to recover it from the public owing to the restrictions of the prices. But the retail trade also has made up its mind to use its best endeavours to meet the situation and to comply with the desires of the Chancellor of the Exchequer in this direction. At the same time, the retail trade is faced with the same difficulty as the brewers, and they are only able to do this owing to the highly artificial conditions under which the trade is being carried on.
      There is one other matter to which I would like to draw the attention of the House, and that is the inequality with which these burdens rest upon the different portions of the trade. The brewer whose trade is a free trade, and who has not tied houses on which to rely, is at much greater expense in the production and distribution of his beer than is the brewer who has tied houses and who, from the management of these houses, takes a very large proportion of the retail profit. Therefore he has profits brought into his business which are not brewing profits, and in fact many of the brewery companies of that description might be better described as public-house companies than as brewery companies.
      The Chancellor of the Exchequer has tried to meet this situation by undertaking that excess profits will be available to repay the earnings of brewers which may fall below the pre-war standard, but I would remind the House that this is a limited undertaking, that all the brewery companies have not and may not make large excess profits or excess profits at all, and so the excess profits may easily and rapidly become exhausted. Therefore, with regard to this undertaking, it may, and probably will, be found that it is not an inexhaustible or indeed a deep fund from which the lack of earnings may be recouped. I do not wish to labour

      1589
      these questions, but it is right that the attention of the House should be drawn, while considering this enormous increase in that duty, to the conditions under which this great increase can be paid, and that it clearly cannot be a permanent one, because the public, under normal conditions, will not be content to pay so high a price for the very weak beer which the Government now allows to be sold —except for a very small proportion which some brewers may be able to produce. I am not opposing this tax, as the House will realise, but it is an enormous burden which it will take a great effort to bear, and in some cases the brewers will have the greatest possible difficulties and will have to fall back on the undertaking of the Chancellor of the Exchequer that their deficiencies in earnings below the pre-war standard shall be repaid to them out of the excess profits taxation.
      Mr. BONAR LAW: I only rise to say that it is a great relief to me to hear, as I do for the first time, that the brewers as a whole are going to accept this taxation without any opposition. I was not aware that they were going to do so until now, and I am very glad to hear that so large a source of revenue is going through without any opposition.
      Colonel GRETTON: If I may interrupt the right hon. Gentleman, I have no official intimation to that effect, and I am giving the House my own opinion from such information as I have at my disposal.
      Mr. BONAR LAW: I am quite sure my hon. and gallant Friend will understand that I did not mean that he was speaking in that official sense, but it was a relief to me to know that there is not going to be any organised opposition to a tax of this kind. I would like to say one thing more. Everything my hon. and gallant Friend has said about the inequalities as between one brewer and another was impressed upon me very strongly, and I felt the greatest difficulty in coming to a figure which under the circumstances seemed fair. I have had the opportunity of consulting a number of men representative of the trade, and I found in their case, as I have found and as I am sure every other representative of the Government has found in similar circumstances, that when you call in anyone from a trade, patricularly an accountant, and ask his advice he will
      1590
      give it in the interests of the Government and not in the interests of the trade. I admit and I may say so to the House, that there was not one of those gentlemen whom I consulted who did not think I was going to the extreme limit of what was possibly in doubling the duty. They did not tell me it was unfair, but they told me I was going to the extreme limit. I would not, therefore, have been, the least surprised if there was a great deal of opposition from the trade, and it is only right that I should say, on behalf of the Government, that that trade, like every other trade which we have found it necessary to approach in the same way, has treated the Government in a manner which would have been impossible if they had not been conscious of the position under which the nation stands and of the urgent necessity for raising this money.
      Sir FREDERICK BANBURY: I do not wish to oppose the tax, but I would like to ask one or two questions in regard to it. The tax as the Chancellor of the Exchequer has just told us is double that of the old tax, and it means an enormous burden upon the trade. What I want to know is this. First of all, beer is considered to be a food to a certain extent —there are nourishing qualities in beer, though, perhaps, the right hon. Gentleman the Member for the Rushcliffe Division, who has had to leave the House, would not admit it. But I understand there are such nourishing qualities in beer, and it is also evident that the brewers must get some profit. Is it to be assumed that the value of the beer will or can be reduced by the adding of cold water, and if so what is the working man going to say to it? I am appearing at the moment as a champion of the working man, a rôle which is always assumed by the hon. Members below the Gangway. I do know that if a working man likes anything, he likes his beer fairly strong, and it is no secret that some years ago the Government had some difficulties in dealing with the working men on their finding that they could not get a sufficient quantity of beer. It is absolutely necessary for a man who is doing hard manual work, work which causes perspiration for instance, that he should have something to replace what goes from him. I believe that the price is restricted by the Food Controller?
      Mr. BONAR LAW: That is so.
      Sir F. BANBURY: It is quite impossible for me or any other person not connected with the trade or with the Treasury to know whether the difference between the price as restricted by the Food Controller and the cost of making the beer is sufficient to give an adequate profit to the brewer, without the necessity of his diluting the beer and reducing its strength to an undesirable point. I should like to know from my hon. Friend the Financial Secretary to the Treasury whether that has been considered by the Government?
      Mr. BONAR LAW: It has been considered by the Government, and the result is in the Order.
      Sir F. BANBURY: And is there a fair margin of profit left to the brewer? I am not a brewer, but I think the Chancellor of the Exchequer will agree with me that if you put taxation on industry to such an extent that the industries cannot live you do great advantage to the nation as a whole and you prevent that contribution to taxation or to National War Bonds, which is absolutely essential.
      Resolution reported,

      BEER (EXCISE).
      8. "That in addition to the duty of Excise now payable in respect of beer brewed in the United Kingdom there shall, on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duty (that is to say):

      £

      s.

      d.

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

      1

      5

      0

      and so in proportion for any difference in quantity or gravity.
      And it is declared that it is expedient in the-public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution reported,

      MATCHES (CUSTOMS).
      9. "That in addition to the duties of Customs now payable on matches imported into Great Britain or Ireland there shall on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duty (that is to say):

      £

      s.

      d.

      For every ten thousand matches a duty of

      0

      1

      8

      and so in proportion for any less quantity.
      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Sir W. RUTHERFORD: I should like to take this opportunity of asking the Chancellor of the Exchequer whether the amount of matches upon which the tax will be charged has seriously diminished of late, because I find, as a matter of experience, that there arc many households to-day which cannot get, at any price whatever, the matches that are really essential for ordinary comfort in the household, and it does strike me very forcibly that if you reduce the quantity of matches that are sold by half, and you double the duty, you do not, of course, get any more revenue from matches. But if we are now putting an increased duty on any given quantity of matches, as this Resolution proposes, it seems to me it is an important consideration to know upon what volume of matches it is anticipated that this extra duty will be paid. There is a very considerable potential revenue to be got, which otherwise would be entirely lost, unless some steps are taken to see that, at the same time that this tax is being imposed, the quantity will be available for the public which will enable the money to come into the Exchequer, and also meet the convenience and the terrible want of this commodity which is at present a feature of the position.
      Mr. BONAR LAW: I am glad to have the opportunity of explaining to the House that this is not taxation in the ordinary sense at all. As Chancellor of the Exchequer I should not have dreamt of putting an additional tax on matches. The sale of matches is under the control of the Tobacco and Match Controller. What he found was that there was a great scarcity of matches, and that this was partly due to the fact that the price which he had fixed, owing to the rise in the cost of manufacture, was so low that it did not enable the manufacturer to get a reasonable profit. It was necessary, therefore, for that reason alone, to raise the price. The Controller found that by raising the price a ¼d. he would give the trade a larger amount of profit than that to which they were entitled, taking into account everything else. The point was not raised by me, but, as a method of increasing the supply of matches by raising the price to encourage manufacturers to produce. This was all arranged in connection with the manu-

      1593
      facturers, and the meaning of it is that, owing to the necessity of raising the price apart from the Revenue, £600,000 was offered to the Treasury, and the Chancellor of the Exchequer would have been a very foolish man not to accept it. The object is not at all to limit the consumption, and the effect will really be, I hope, to increase the supply of matches by giving manufacturers a price which will make it worth their while to produce them.
      Mr. PRINGLE: I think the explanation is very satisfactory. I do not think anyone minds paying the tax, so long as the Controller will guarantee that the matches will light.
      Resolution reported,

      MATCHES (EXCISE).
      10. "That in addition to the duties of Excise payable on matches made in Great Britain or Ireland there shall on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duty, that is to say:—

      £

      s.

      d.

      For every ten thousand matches a duty of

      0

      1

      8

      and so in proportion for any less quantity.
      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution reported,

      TOBACCO (CUSTOMS).
      11. "That in lieu of the duties of Customs now payable on tobacco imported into Great Britain or Ireland there shall, on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duties (that is to say):

      £

      s.

      d.

      Upon tobacco unmanufactured, viz.:

      Containing 10 lbs. or more of moisture in every 100 lbs. weight thereof—

      Unstripped

      the pound

      0

      8

      2

      Stripped

      the pound

      0

      8

      2½

      Containing less than 10 lbs. of moisture in every 100 lbs. weight thereof—

      Unstripped

      the pound

      0

      9

      0½

      Stripped

      the pound

      0

      9

      1

      Upon tobacco manufactured, viz.:

      Cigars

      the pound

      0

      15

      7

      Cigarettes

      the pound

      0

      12

      7

      Cavendish or Negrohead

      the pound

      0

      11

      10½

      Cavendish or Negrohead manufactured in bond

      the pound

      0

      10

      4½

      Other manufactured tobacco

      the pound

      0

      10

      4½

      Snuff containing more than 13 lbs. of moisture in every 100 lbs. weight thereof

      the pound

      0

      9

      9½

      Snuff not containing more than 13 lbs. of moisture in every 100 lbs. weight thereof

      the pound

      0

      11

      10½

      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution reported,

      TOBACCO (EXCISE).
      12. "That in lieu of the duties of Excise payable on tobacco grown in Great Britain or Ireland there shall on and after the twenty-third day of April, nineteen hundred and eighteen, be charged the following duties (that is to say):

      £

      s.

      d.

      Upon tobacco unmanufactured, viz.:

      Tobacco containing 10 pounds or more of moisture in every 100 pounds weight thereof

      the pound

      0

      8

      9

      Tobacco containing less than 10 pounds of moisture in every 100 pounds weight thereof

      the pound

      0

      8

      10½

      Upon tobacco manufactured, viz.:

      Cavendish or Negrohead manufactured in bond

      the pound

      0

      10

      4½

      and so in proportion for any less quantity.
      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution reported,

      LUXURY DUTY.
      13. "That there shall be charged on all payments made in respect of the purchase or supply of articles sold or supplied in Great Britain or Ireland (excluding articles sold wholesale unless sold by auction), which shall be declared by Resolution of the Committee of Ways and Means of this House to be articles of luxury, and on all payments made in respect of goods sold or supplied, accommodation supplied, or services rendered, at any place in Great Britain or Ireland which shall be declared by Resolution of the Committee of Ways and Means of this House to be a place of luxury, an Excise duty of an amount equal to one-sixth part of the payment."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Sir CHARLES HENRY: Whilst I am not enamoured of this Luxury Tax, and personally I would prefer the Chancellor of the Exchequer making an addition to the Income Tax in order to avoid it, now that he has decided to impose this duty, the Committee which he has set up has solely to deal with the Schedule of the articles on which the duty is to be imposed. I would like some information on this point. As I understand it, the consumer or the ultimate purchaser will have to pay the duty, and there will be no duty paid by the retailer or by the distributor when he purchases from the wholesaler except in the case of sale by auction. If the Chancellor

      1595
      will permit me to say so, I think there he is up against somewhat of a difficulty. I will take an instance which is familiar to a good many Members of this House. Take sales at Christie's, for example. There was a sale there recently in aid of the Red Cross. If I bought an article at that sale, before Christie's would have delivered me that article, I would have had to pay this duty of 2d. in the 1s. But if a dealer bought the article — he is really in this instance a wholesaler — according to this I find he would also have to pay the duty. Therefore, if a dealer buys an article at auction, and I buy it from the dealer, does the Revenue obtain this duty twice?
      Mr. BONAR LAW: In that case, yes.
      Sir C. HENRY: Then I hardly think it is equitable. I really think this will not only create hardship, but will hit auction sales. I think it is a point that will require some consideration. There is another point. As I understand, the Chancellor of the Exchequer has not brought forward this Luxury Tax entirely as a war method of raising taxes, but, so long as we have this great load of debt upon us, as a permanent addition to our fiscal system. I know at the present time it is almost impossible for an individual to get things from abroad. After the War, when the present regulations and restrictions are relaxed, people will be able to go to the Continent and buy things and import them. I will put a concrete case. I go to Paris to buy an article of luxury, say, a table, or my wife goes over and buys an article of dress. She can import that article, and the Exchequer will get no revenue from it. I am not speaking from a Free Trade or Tariff point of view. But if in normal times the Chancellor is imposing this Excise Duty on these articles of luxury, must he not, in order to safeguard his revenue, impose a countervailing import duty? Otherwise there is a great temptation for people, when possible, to do their shopping abroad, and be able to buy at 15 per cent. lower price than in this country.
      Mr. MACMASTER: And pay the cost of the journey?
      Sir C. HENRY: It all depends. It may pay one. Those are some of the difficulties, and, as I understand this Committee will have nothing to do with the imposition that is laid down in the Finance Bill, but will only deal with the Schedule of the articles, I think the House would
      1596
      like to have some information with regard to the points I have put before the Chancellor.
      Sir W. RUTHERFORD: I venture to think there is a very simple answer to the difficulties which the hon. Baronet seems to anticipate. In the first place, with regard to sales by auction, some of us have been of opinion for some years, when members of our family go to auctions, that it would be a very good thing if some brake and some obstacle could be put in the way of their indulging in the practice, and I cannot imagine anything more hopeful or more satisfactory for our taxation in this country than the tax that is now proposed. It seems to me that if Christie's had sold an old master, say, to a member of the firm of Agnew or Duveen, and Mr. Agnew or Mr. Duveen, or some dealer of that description, keeps that picture for two or three years and eventually disposes of it, I cannot see why he should not pay the tax just as a private individual going to buy it. Therefore the objection from that point of view really comes to nothing. As regards the difficulty suggested about going over to Paris, there, I think again, the hon. Baronet has fallen into error. He has overlooked the fact that they have a similar tax in France.
      Sir C. HENRY: How can that benefit the British Treasury?
      Sir W. RUTHERFORD: It does not benefit the British Treasury in any shape or form, but if the hon. Baronet thinks he can buy a similar article in Paris because there is no tax of this kind, he is neglecting the fact that only a few months ago the French Government imposed a similar tax, and I am one of those who are under the impression that the terrible expenses all over the world, including even the United States, are going to be such that this tax will be adopted almost universally, and the idea that the hon. Baronet will be able to go to any place, where anything can be purchased that is really worth purchasing, and escape this tax if it is an article of luxury, is, I think, a wrong one. I think he will find that he will have to pay. I would appeal to the patriotism of the hon. Baronet that if he is going to buy an art production for himself or a dross for his wife such as he has suggested, that he should do it in England — why not? where the tax, at all events, will go to the British Exchequer, instead of going — as he

      1597
      threatened just now — over to France, where he would have to pay exactly the same tax, and the French Government would get the money. I do not think there is really anything in either of the two objections which the hon. Baronet has put before the House.
      Sir F. BANBURY: I do not agree with the hon. Baronet as to the way in which he regards this particular tax. If the Select Committee do their duty properly it seems to me that it is an extremely good tax, because there can be no question about it; but at the present moment a large number of people are spending a consider able amount of money which they ought not to be spending. What we require at the present is thrift. We require it more than anything else. We will not, however, get this merely by advocating it. Mention has been made in some speeches by hon. Members of a certain gentleman. I do not just remember his name—
      An HON. MEMBER: Yapp!
      Sir F. BANBURY:— —going about advocating thrift, and so far as I can remember, at one of his meetings he was asked how it was that he was wearing a starched collar at the time he was advocating that no money should be spent on things of that description. It has no effect, this advocacy. It is the duty of all who can to cease unnecessary spending, and anything to this end put forward in the House of Commons I shall be extremely glad to support. A great deal depends upon the Select Committee. I am extremely glad the Chancellor of the Exchequer did not do me the honour to put me on that Committee.
      Mr. BONAR LAW: I did not make the appointments.
      An HON. MEMBER: It was the Patronage Secretary.
      Sir F. BANBURY: I see; the Patronage Secretary to the Treasury. I suppose that would be the right hon. Gentleman the Member for Dumfries, who probably selected all these gentlemen. I gather from the form in which this Resolution is worded that when the Select Committee have come to their decision it will be submitted to this House, and that we shall have the opportunity of deciding whether or not we approve of the result of their
      1598
      deliberations. A great deal will depend upon the method in which they have chosen the articles which are to be taxed. I am not in any way casting any reflections upon the Committee, for their duty is one of those difficult duties which are imposed from time to time; and it is quite possible that certain arguments may have to be put forward against the recommendations of the Committee or in favour of other recommendations. I presume we shall not be in order in suggesting another tax. All we shall be able to do will be to move to reduce the number of the articles or the duty fixed. I do not quite understand the meaning of the words in the Resolution: "Excluding articles sold wholesale, unless sold by auction." If anyone goes to Christie's to buy a work of art I do not see why he should not pay the 2d. If a dealer — and dealers arc usually very astute gentlemen — he will be perfectly well-advised in paying the 2d. But there is the further proviso, and I do not see how you can distinguish between the man who buys an article for the purposes of resale, and the man who buys an article for the purpose of use.
      Sir C. HENRY: If a person buys an article for resale from a wholesale merchant he has not to pay.
      Sir F. BANBURY: I do not understand the proposal. It is not quite the illustration given to us by the hon. Baronet. He talked about Christie's, but you do not sell pictures wholesale at Christie's. I know very little about art. I could not go to Christie's and spend a large sum of money for pictures, or anything else. You do not, so far as I know, buy pictures wholesale, but simply, so to speak, by retail. I should like to ask what is actually the difference between the sale of an article wholesale by private treaty and the sale of an article wholesale by auction? What are the articles upon which this tax is to be imposed? Is it to be imposed upon article A if A is sold wholesale privately to B? If it is sold wholesale by auction to me, do I then pay the tax? I do not see the object of that. I do not see why there should be a difference or a penalty upon the person who sells the same number of articles by private treaty — why he should be treated better than another person who sells the same number of articles by auction? Probably there is some reason for it, but I cannot see it, and before we part from this item I hope we shall. have an explanation.
      Mr. BONAR LAW: This very short discussion to-day is a good illustration of the difficulty encountered in dealing with taxes of this kind. I think, also, it is an indication that the Government were right in trying to get the moral support of all by giving the matter over to a Select Committee for the preparation of a Schedule, instead of simply presenting a Schedule worked up by Board of Trade officials, to be followed by that kind of criticism with which such is usually accompanied, when Members point out the probable effect of the tax upon this, that, or the other. I think the whole of the House takes the view, on broad grounds, that this is a kind of tax which, if we can, we ought to impose. The Government certainly put forward the proposal to that end, and are assured that the Committee, and the House of Commons, will help us. Anyone who has had, even for a short while, any official connection with the Treasury will know that there is a feeling of apprehension in anything new like the present proposal. Its difficulties stare one in the face. The question arises, "How is it to be worked out?" I was frightened when I began to consider this proposal. I fancy my right hon. Friend opposite, if I am not mistaken, was faced with the same feeling and apprehension in connection with a smaller tax—that is, the Entertainments Tax—but he was convinced that it was a right kind of tax in wartime, and it has brought in £5,000,000 of Revenue, and our present proposal will, we believe, give us a large sum of money. This, too, we believe, is the right kind of tax to impose in wartime.
      Mention has been made of Christie's and cases that may arise here, and how impossible it would be to say that if an article were sold to a private person he should not pay the duty, while if it is sold to a dealer by auction he should pay the duty. The difficulty of working out cases like this is almost insuperable. There is no intention of making that distinction which the words of the Resolution, I admit, seem to imply. Take the case of the auction sales of furs, which are not sold wholesale in the ordinary way. If an article is sold wholesale in the ordinary way it is not to be treated differently from the things sold wholesale by auction. We shall have to make arrangements to meet these various difficult cases. All kinds of difficulties of this kind are in front of us.
      1600
      But when the time comes we shall rely upon the House of Commons to help us to get over these difficulties.
      Sir H. DALZIEL: I should like to put one point to the right hon. Gentleman. It will undoubtedly come up from the Committee as a result of their deliberations. As I understand it, the Resolution excludes articles sold wholesale unless sold by auction. What does that exactly mean? I will give a case about which I would like to know the view of the Chancellor. Suppose a picture is sold at Christie's for £20,000, and it is bought by a wholesale dealer for the purpose of re-sale, would the tax apply in a case of that kind?
      Mr. BONAR LAW: The House of Commons will have the opportunity of considering points like that put by the right hon. Gentleman. My own view, however—and I am not going to say anything which I have deeply considered — is this: If a dealer goes to Christie's and is prepared to buy, in spite of the fact that he knows he will have to pay the tax, I do not see why he should not pay it. It is almost impossible, however, to deal with auction sales of that kind on the basis that the person who is buying for himself will pay, and that the person buying for another one will not. Cases of that kind will have to be very carefully considered, and the House of Commons will have the opportunity of expressing an opinion upon the proposal put forward.
      Sir H. DALZIEL: I am very much obliged to my right hon. Friend for giving us that explanation. I was only anxious to guard against this Resolution being passed, and confusion being caused by our being bound by it as it stands.
      6.0 P.M.
      Sir J. WALTON: I approve of the principle of the Luxury Duty. No one could have voted, as I did the other evening, for imposing an extra tax upon sugar, which is most felt by the poorer people in the country, unless he were at the same time quite prepared to impose much larger burdens on the wealthier portions of the community. One has only to walk through the streets of London to see the shop windows crowded with articles of luxury which are wholly unnecessary in war-time. I think it is a very happy inspiration on the part of the Chancellor of the Exchequer that he should bring in this Luxury Duty. We have had a statement from him to-day

      1601
      showing the reasonable spirit in which he has approached the subject. We have had from him a recognition of the difficulties to be got over. We have also had an assurance from him that questions regarding the articles to be included in the Schedule, those articles which are sold wholesale, and so on, can be fully considered in Committee, and adjusted in an equitable manner. Personally I should be glad to know that imported luxuries were also to be taxed, because if they are not to be equally taxed it produces an inequality and injustice to the manufacturers of similar articles at home. I do not know how the Chancellor of the Exchequer proposes to equalise that in order that the English producers of luxuries will not be placed at an unfair advantage. I support very strongly the putting on of this Luxury Duty, and I hope that the Schedule of articles to be included will be drawn wide enough to cover what really can be dispensed with during the War, and the purchase of which is unnecessary expenditure which ought not to be made in view of our general financial position to-day and what it is likely to be in the near future.
      Mr. J. HENDERSON: I am afraid there will be a good deal of difficulty in regard to the option which is offered. In the auction rooms in Mincing Lane expensive wines are offered for sale and bought in large quantities by the trade, and the wine merchant retailing wine would find that there would be a double tax upon it.
      Mr. BONAR LAW: I have already replied to that point.
      Mr. HENDERSON: In this case you are not selling one picture, but selling hundreds of dozens of bottles of wine.
      Mr. BONAR LAW: That would be in the same position as furs.
      Mr. McKENNA: These articles might be sold to the trade, and there might be competing with the trade private purchasers, and then the same difficulty would arise as in regard to the sale of pictures at Christie's. I think, however, that these questions might be settled better in Committee, and we cannot deal with them now.
      Mr. WATT: I do not rise to oppose the Luxury Tax, and I think the Chancellor of the Exchequer is to be congratulated upon initiating it. I also congratulate the
      1602
      right hon. Gentleman upon the fact that for the first time he is inviting the assistance of a House of Commons Committee, and this is the initiation of a new principle, namely, that a Committee of the House of Commons is to assist the Chancellor of the Exchequer in the formation of his Budget. I do not know whether the right hon. Gentleman is satisfied with the Committee as it is set up, but I am told that it only represents the drapery trade and the Press. The point I want to direct attention to is that large establishments in the drapery trade are now advertising that they will pay this tax for their customers for one or three months. I would like to ask whether the Department are going to take any steps to deal with that action. I have had representations made to me from such establishments in my own Constituency that they regard this as unfair competition, and the right hon. Gentleman will realise that the 17 per cent. they are offering to pay for their customers on these articles of luxury will not come out of the profits of the establishment, but they will be put on some other articles which will probably not be luxuries, and, therefore, you will have the public paying a Luxury Duty on article which are not luxuries. The establishments which are advertising to pay this tax for their customers are, in many instances establishments paying Excess Profits Duty. If they pay Excess Profits Duty to the Government and they now arrange to pay the Luxury Tax it will come off the excess profits that should be paid to the Government. Therefore you will have this extraordinary position that the Government will be paying its own Luxury Tax and instead of getting excess profits the Luxury Tax will be taken off. I hope the right hon. Gentleman will take an early opportunity of dealing with this point so that this inequality will disappear.
      Mr. D. MASON: I think the hon. Member for the College Division of Glasgow (Mr. Watt)said he was an enthusiastic supporter of this tax, and he congratulated the Chancellor of the Exchequer on initiating it. I think the illustration the hon. Member gave must have convinced anyone that it was an eloquent testimony to the unsoundness of this particular part of the Budget. While we all desire a reduction in the purchasing of luxuries, the hon. Member gave an illustration to show that already the drapery establishments are

      1603
      advertising that they are going to pay this tax for their customers, and the result will be that this will actually give a stimulus to the purchase of luxuries. The result of these advertisements will be to stimulate ladies to come to those particular shops to make their purchases quickly in order to escape this tax. The Committee appointed to consider this question has been referred to, but I think one ought to raise one's voice against what may be a waste of time on the Committee, because if you try to interfere with trade in order to get at some particular articles this invariably leads to evasion, and accentuates the difficulties which you are trying to overcome. I only wish to take advantage of my hon. Friend's very excellent example to show the inherent unsoundness of this particular tax. We all desire economy and a reduction of luxuries, but I think the better way would have been to increase the Income Tax or the Super-tax.
      Resolution reported,

      INCOME TAX.
      14. "That—

      (a) Income Tax shall be charged for the year beginning the sixth day of April, nineteen hundred and eighteen, at the rate of six shillings in the pound, and the same additional Income Tax on the income from certain securities shall be charged for that year as was charged for the year beginning the sixth day of April, nineteen hundred and seventeen;

      (b) the like provisions shall have effect with respect to the Income Tax so charged (including the said additional Income Tax) and the annual value of property has had effect with respect to the Income Tax charged for the year beginning the sixth day of April, nineteen hundred and seventeen, and the value of property during that year; and

      (c) it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of The Provisional Collection of Taxes Act, 1913."

      Resolution read a second time.
      Mr. G. TERRELL: I beg to move, at the end of paragraph (b), to insert the words:
      "Provided that such proper deductions for wear and tear, depreciation and obsolescence of all assets, buildings, machinery, and plant employed in trade or business shall be allowed to such amount as appears to the Commissioners of Inland Revenue to be the amount which would be deducted by a prudent owner desirous of maintaining his trade or business in a state of efficiency."
      Mr. SPEAKER: I think it would be far preferable if the hon. Member would move his Amendment in Committee, for he would then get a better opportunity; and one Amendment will not be sufficient at this stage. It may turn out that when we reach the Committee stage what the hon. Member wants to do might be best met by a new Clause rather than by an Amendment. It would be open to the hon. Member on this Resolution to bring forward anything he wishes to say on his Amendment, but he would leave the House much freer to discuss other questions if he would postpone moving his Amendment now.
      Mr. TERRELL: I very much desire, Mr. Speaker, to fall in with the view which you have just expressed, but my Amendment simply deals with a matter of principle. When we come to the Committee stage of the Finance Bill it may be necessary to amend the Bill in several details, and it may be necessary to consider some way back how far other Acts which deal with the Income Tax and which are on the Statute Book have to be modified so as bring them into line with this Amendment. Therefore, Mr. Speaker, with all deference and respect to your suggestion, I should much prefer to have this opportunity of submitting to the House the principle which is involved in my Amendment, in order to ascertain whether the Government will accept it or not, and then it will stand to be incorporated suitably in the Finance Bill when it comes before the House.
      Mr. SPEAKER: Of course, I cannot prevent the hon. Member from moving his Amendment if he persists, but I may point out that the moving of this Amendment will confine the discussion to this particular Amendment, and the Debate will be very much limited.
      Mr. TERRELL: That may be so, as far as my Amendment goes, but I should like to explain to the House that this is to some extent the same Amendment which was moved in Committee on the Finance Bill of last year. It has been modified and made simple in order to meet various criticisms which were made by the Treasury, and what we now ask is the settlement of a question which has been in the minds of all manufacturers for a great number of years. As the law stands at present, it is in the uncontrolled power of the Commissioners of Inland Revenue to fix such a figure for depreciation as in

      1605
      their discretion they consider right. There is nothing whatever to control them or to indicate how they are to exercise that discretion. We ask that they should be guided in the exercise of their discretion by what a prudent owner would consider a just allowance for depreciation. It is easy to ascertain what a prudent owner considers just.
      Mr. J. HENDERSON: On a point of Order. Might I appeal to my hon. Friend? I am supporting him, but one can see, as you, Sir, have said, that this Amendment will prevent discussion of other elements of the Income Tax. There are a great number of Members who are anxious to discuss various questions, and they would be debarred from doing so by this Amendment. I would ask my hon. Friend to withdraw, and at the proper time I shall be prepared to support him.
      Sir R. COOPER: Might I ask whether it is in conformity with the usual procedure on these Resolutions for a general discussion to take place on the Resolution and for Amendments to be moved at a later stage?
      Mr. SPEAKER: That is the reverse of the order. Amendments are taken first. The hon. Member by bringing in this Amendment now, as I have pointed out, limits the discussion, and, as he in his first sentence showed, the proper place to deal with the matter is in Committee, because he said that it was in Committee that he had raised the question last year.
      Sir W. PEARCE: When this Amendment is disposed of, will it not then be possible to have a general discussion?
      Mr. SPEAKER: Certainly!
      Mr. TERRELL: I had arranged to hand this Amendment in when the Budget Resolutions were before the House on the first day, but I was asked not to do it at that stage, because it would limit the general discussion. I, therefore, purposely postponed the Amendment and put it down on the Order Paper in the form in which it appears to-day so as to give hon. Members who wished to discuss the general question a full opportunity of doing so. It is a little unreasonable now, considering that this is not the Amendment of an individual Member but is one which is supported by a very large number of members, if the opportunity is to be denied me of presenting it. I, therefore, much regret that I cannot accede to
      1606
      the request which my hon. Friend has made to me. As the Income Tax law is at present administered, the Treasury or the Commissioners have the fullest and most complete uncontrolled discretion to award any sum which they like for depreciation. That has been the practice for the past forty years, and the result is that they have never allowed sufficient depreciation. They have never allowed depreciation on buildings, on patents, on goodwill, and on other assets which obviously, if the business is to be conducted in a prudent manner, should from year to year be depreciated. It is not the desire of any manufacturers to attempt to evade any just contribution to taxation. We do not quarrel with the rates of the Income Tax, or, for the matter of that, with the rates of the Excess Profits Tax, but we claim that when you tax income the income should be net, and should not be something more than income. The tax at present, to the extent that it is levied on a sum in excess of income, is a tax on capital. That is most unfair, and what we demand is that there should be equality of sacrifice for all payers of Income Tax. It is common knowledge, and it has been ruled over and over again, that these allowances are wholly insufficient. I should like to refer to the Report of the Committee of Lord Balfour of Burleigh, which was issued only a few days ago. There is in that Report a special reference to this question of depreciation, and I should just like to quote to the House the different findings of the Committee, which I think are important. The Committee refers to reports of various Departmental Committees which have reported on this very question, and, first of all, they say:
      "The Textile Trades Committee recommend that in making allowances the Commissioners should take into account the circumstances of each industry and should sanction larger allowances."
      The Shipping and Shipbuilding Industries Committee, in their report on shipbuilding, state:
      "The usual rates now allowed for depreciation vary from 5 to 7½per cent., and in rare cases to 10 per cent. on the decrease in value of machinery and plant, while the experience of the most successful firms show that it is often necessary to put aside a sum up to 100 per cent. in excess of that allowance."
      In other words, successful firms allow double the amount which is allowed by the Income Tax Commissioners. The Iron. and Steel Trades Committee say:
      "Manufacturers were unanimously of opinion that the allowances now made for depreciation

      1607
      are quite inadequate under modern conditions of working, and they urge that the allowances should be heavily increased and should be calculated upon the efficient working life of plant and machinery."
      Then there is the Engineering Trades Committee. It is rather a heavy and important Committee; and it considered this subject at great length:
      "The Engineering Trades Committee also agree that the usual rates of from 5 to 7½per cent. are far too low to be attributed to depreciation in these progressive days. The Engineering Committee consider that up to 10 per cent. for day use and 15 per cent. for day and night use should be allowed, and that a reasonable depreciation on workshop buildings should also be allowed."
      The Committee then goes on to point out:
      "No depreciation, however, is allowed in respect of buildings, except the statutory allowance of one-sixth on the rack rent value to cover maintenance and repairs."
      The Report goes on:
      "The Departmental Committee on Income Tax of 1905 recommended that the law should be amended in order to enable allowances to be made in the case of owner occupiers of trade premises, but their recommendation does not appear to have been carried into effect."
      The final reference to this question is contained in Article 349, in which the Committee specifically recommends as follows:
      "We are of opinion that depreciation should be allowed for income Tax purposes on an adequate scale according to the circumstances of each Case, and we recommend that immediate steps should be taken for this purpose by the Treasury."
      The Government have had this Report for five months, and the outcome of it is that they have within the last few days issued a new White Paper in regard to the matter, but they still stick to the old phrase of forty years ago that "depreciation is to be limited to the amount which the Commissioners in their discretion think just and reasonable." That does not meet the case at all. It is not nearly enough, as can be seen by reference to the Report which I have read. The Government or the Treasury in this White Paper refer to the rates fixed by agreement in certain trades, and they say:
      "These allowances are accepted by the taxpayers and generally adopted."
      The taxpayers were practically forced to accept these rates. It was a matter of Hobson's choice. Certain rates had been allowed by the Commissioners in the exercise of their discretion. Those rates were submitted to certain trades, and possibly some slight concession in some
      1608
      direction or another was made, but they were forced to accept them. I wish to state most definitely that these rates are wholly insufficient, and in no sense meet what all manufacturers and all traders consider a very grave grievance indeed. Of course, depreciation was not a matter of very great concern in the days when the Income Tax was only 1s. in the £l, but now, when you have an Income Tax of 6s., and when on top of that you have an Excess Profits Tax, and for a favoured few a Super-tax, these allowances become a matter of very grave concern, and I trust that my right hon. Friend opposite will see his way to meet the Amendment which is on the Paper in a reasonable spirit. When the subject was before the House, my hon. Friend the Financial Secretary rather scoffed at the term "a prudent owner." He thought that it was a term which would open the door to evasion, a door through which all the Excess Profits, as he put it, might escape. The term "a prudent owner" is easily understandable. It is not difficult to determine in any trade what is or what is not prudent. All that you have to do—the Treasury have the means at their disposal—is to look up the back balance-sheets of the firms and see what the Income Tax Commissioners have allowed, and what on top of that the firms have themselves allowed for depreciation. They can take as a fairly satisfactory guide that what the people who are engaged in the business are allowing is a prudent allowance, and if they met us in that spirit it would be a matter of great satisfaction to the whole of the industrial classes in the country.
      One word on the question of buildings. The Amendment proposes to extend the scope to which depreciation is allowed. Hitherto no allowance has been made upon workshop buildings. I should have thought that this was a matter which interested the Labour party, in view of the miserable, dreary factory buildings one sees all over the country in all the old works. The secret of that is that the Treasury have refused to allow any depreciation whatever upon workshop buildings. If an owner sets up a fund, that fund is taxed, and all that the owner can get is one-sixth of the annual rack rent value of the property for repairs. That, as everyone knows, particularly those who have to deal with some of the older works, is a wholly insufficient allowance. You cannot lay down any hard and fast

      1609
      scale, because it stands to reason that in some trade the buildings will last a great number of years, while in other trades the buildings depreciate very rapidly. It is a matter in which the Commissioners should be guided in each case by what a prudent owner thinks necessary and desirable. I urge the matter upon the House, and beg the Government to give it their consideration. In conclusion, let me say that we look upon this as a very urgent and pressing matter. I have been asked to press this Amendment to-day. I was hoping that, after the discussion we had last year on the subject, some proposal would come from the Government, particularly after the findings of Lord Balfour of Burleigh's Committee. The Government have had that Committee's Report in their hands for five months, and, if they had intended to do anything, they would have done it before now. They must have known that this subject was very much in the minds of manufacturers from one end of the country to the other. I trust that the Chancellor of the Exchequer will see his way to accept this Amendment, or will hold out some hope that a wide and generous scale of depreciation will be framed and brought into operation before we get to the Finance Bill. I hope he will meet us in that way, but I must say that the inaction of the Government up to the present has been a matter of very great disappointment.
      Sir A. WILLIAMSON: I beg to second the Amendment.
      As my hon. Friend who moved it has said, Lord Balfour of Burleigh's Committee has tabled a Report which has been in the hands of the Government for a number of months. Within recent days we have had issued to us, without, so far as I know, any request for it from Members of the House, a White Paper which is headed on the outside:
      "Statement respecting allowances for wear and tear, obsolescence of plant and machinery."
      I do not know whether we are to take this as an answer to the recommendations of Lord Balfour of Burleigh's Committee. If it is the answer, and is all the Treasury have to submit to the House by way of answer to the very solid and serious observations made by that Committee, it is a very unsatisfactory answer. I find fault with the present condition of things, first of all, because of the inadequacy of the present allowances, and also because of their inequality. The hon. Member for
      1610
      Chippenham (Mr. G. Terrell) spoke at some length of the inadequacy. I should think there is no doubt in the mind of any business man in this House that the inadequacy pervades almost all branches of trades. It goes further than trade, because it goes to the property — that is to say, the buildings which are associated with enterprises. Looking at the question of the inequality of these allowances for a moment, if hon. Members have the White Paper before them they will see that, in connection with electric light undertakings, the allowance made by the Treasury is 5 per cent. on the written down value of plant and machinery. In the case of flour-milling machinery an allowance is made of 7½ per cent., and in the case of meters, cookers, and gas fires connected with gas undertakings the allowance is 10 per cent. I do not know how this inequality of treatment can be justified. The fact that an electric plant, which is high-running plant, and which everybody knows wears out quickly, should only have an allowance of 5 per cent., and that not on prime cost, but on the written down value, whereas 10 per cent. is allowed on a gas fire, seems to be unjustifiable. If that is all the answer the Treasury have to give in defence of the inequality, it is a very poor defence indeed.
      With regard to the representatives of the trades who are supposed to have assented to these deductions, the hon. Member for Chippenham very properly said that when the taxpayer appears and argues that a larger allowance by way of depreciation should be made, he is told, ''Oh, so much is all we allow." There is no answer except an appeal, which very few people are willing to undertake. I know of no representatives of industries generally who have met as an association with the Treasury to settle these matters. It may be that in the case of shipowners there has been such a representative meeting. I do not know. At any rate, there are many trades, some of them in this list, which I can assert have not been consulted as trades, although individual traders may have been dealt with individually. I am quite sure that if it were put to these traders, instead of their assenting to the statement that they accept these allowances, the answer made to the Government would be that they were dissatisfied with the allowances and that they were very inadequate. I

      1611
      spoke just now of the differences. The engineering trades tell us, through Lord Balfour of Burleigh's Committee, that they consider the allowances should be 10 per cent. for day-running machinery, and 15 per cent. for day and night-running machinery. Manufacturers of iron and steel also tell us that they find the allowance for depreciation quite inadequate under modern conditions. Everyone knows that modern conditions demand faster running machinery than the conditions in times past. I have been sitting on a Committee connected with electric power. So far as I can see from the evidence put before that Committee, we in this country are on the eve of a very great change in connection with the driving power of our machinery. It is quite likely that in a few years' time a great deal of the machinery of the country will be driven by electric power. That means that the machinery of the country will go faster. There will be a speeding up, and with that speeding up there will be greater wear and tear, and the life of the machinery will be shortened. Therefore, this subject is more and more pressing, and requires the attention of the Government more and more urgently. The fact that the machinery is driven more rapidly brings about a more rapid obsolescence of the machinery.
      One thing which Lord Balfour of Burleigh's Committee had put very strongly before them was the need for scrapping inefficient plant. It was held that one of the reasons why this country was apt to get behindhand in the competition with Germany, and especially with the United States, was that we were content to go on too long with machinery that was not the best. The policy of the Government, as shown in this White Paper, discourages manufacturers from scrapping plant. That is a great disadvantage to the country. The policy of the Government, in my judgment, ought to be such as to make adequate allowance for depreciation and obsolescence, and thereby to encourage manufacturers — so far as the tax-gatherer can encourage manufacturers — to replace old machinery by more efficient machinery. With regard to buildings and other assets, it seems as if the Government had not realised that there were certain buildings which are put up only for the purpose of a trade or industry. For example, in the building of a flour mill,
      1612
      the silos that hold the wheat are put up only for that one purpose. They have very little value for any other purpose. Consequently, the depreciation of the buildings and of the silos is practically the same thing as the depreciation of the plant, but under the present condition of the law no allowance whatever is given for depreciation of the buildings.
      The same thing applies to enterprises. We must not forget that we are taxing enterprises in foreign countries as well as at home. Take the case of oil fields in a foreign country, where a number of galvanised and wooden buildings are run up to house the people engaged in the field and to provide offices, warehouses, stores and so forth. Surely those buildings have no value at all except as machinery for the running of the enterprise? Most of our business people hold that a good deal of depreciation should be allowed on those buildings, just as it is allowed on the rest of the enterprise. The higher the tax, the more urgent this matter becomes. A 6s. Income Tax is very different from a 1s. Income Tax. Therefore, those of us who have from year to year asked the Government to give more attention to this matter can do so with all the more emphasis now, when the tax is so exceedingly heavy. I would warn the Government that unless enterprises which are situated in foreign countries meet with sympathetic treatment there is great danger that those enterprises will be formed into foreign companies, and not into British companies. In the case of milling enterprises, of cement industries and of oil enterprises abroad which I know, it will be quite possible for all three of them to be formed into foreign companies instead of British companies. At the present time they are British companies, but if they are not to be treated with some consideration in the matter of depreciation, more consideration than they have yet had, and if the rate of Income Tax is 6s. in the £, and may possibly some day be more, those enterprises will be bound, in order to face competition which they have to meet locally, to remove their headquarters to foreign countries, which would be a great disadvantage to this country. The policy with regard to oil and wasting securities of that sort is a very disastrous policy, because no allowance is made for the exhaustion of the properties. When the oil is taken from the oil-fields, when the nitrate is taken from the nitrate-fields,

      1613
      when the clay is taken from the deposits where it is got for cement manufacture, no allowance is made for wasting securities, and that is a matter of the most urgent importance, and deserves, and I hope will receive, the sympathetic attention of the Government, particularly having in view, as they ought to have, foreign enterprises, in which the citizens of this country are so largely engaged. It is a very curious fact that a certain depreciation is allowed in connection with an oil well. The well is sunk. It costs so much to sink it. Casing has to be done, which is costly, and by the time it is built it may have cost anything from £8,000 to £15,000. When you have drilled it to a depth of perhaps 3,000 feet or more, you may find no oil at all. Consequently your twelve or sixteen months of labour has gone, much of your casing cannot be withdrawn and is lost, and you are allowed by the Treasury 10 per cent. depreciation. The whole thing is valueless. It is all gone when there is no oil. The proper course in such a case, if the whole thing is written off at a loss, would be to allow it as a whole loss, but that is not what is done. They assume that the well still exists, and they go on allowing depreciation for ten or fifteen years. That is only an instance where the thing is done. But a far more important thing is the wasting assets and the allowance for the extraction of raw material on such enterprises as oil-fields. I hope the Chancellor of the Exchequer, whom I am sure has heard this subject urged before him ad nauseam, will now take that practical step, seeing that Lord Balfour of Burleigh's Committee has given it such very strong backing, and allow some more reasonable allowance for depreciation and also an allowance for wasting securities.
      Mr. BONAR LAW: I have heard of this subject before, as the hon. Baronet has reminded the House. The same Amendment in effect was brought before the House last year, and as my hon. Friend (Mr. Terrell) means to get it ventilated as much as possible and have it introduced at all subsequent stages, I am certain we shall hear it in Committee later on, and I would therefore ask the House to excuse me if I do not go very deeply into it now, and I rather hope the discussion will take place more in detail on the Committee stage. But there are one or two general remarks which I must make now. First of all I have found, as every Chancellor of the Exchequer during the War has found, that taking the
      1614
      country as a whole the readiness with which all classes have borne taxation is very remarkable and very creditable, and a proof of that is that we have borne it to an extent far in excess of any other belligerent country, and in a way entirely different from our chief enemy. But every Chancellor of the Exchequer finds that each particular class of person, while he is personally willing to pay what he thinks fair, is always strongly inclined to think that the burden being placed upon him is inequitable as compared with that which has fallen on other people. I receive ever so many deputations. They are all quite sincere, and they are all satisfied that the particular industry, whatever it is, is paying more than its fair share. We have had an example of that to-day. First of all, we have the Sugar Tax. If anyone had come to the House and looked at those who were sitting here at that time and then come and looked at the House at this moment, it would see an entirely new generation occupying the benches. [HON. MEMBERS: "No!"] Largely, I am sure. The result is that the Chancellor of the Exchequer is faced on every particular tax by a section of the House which thinks it is not quite fair, and would like to see it altered. In these circumstances he has to rely, and can always successfully rely, on the sense of the House as a whole to check any tendency towards individual desire in regard to one particular trade or industry.
      In regard to this I recognise quite as strongly as hon. Members who have spoken that the fact that the tax is so high makes it essentially necessary that it should be fair and just in its incidence, but I really do not think those who are pressing for this Amendment quite realise what the position is. The Treasury has no power to grant this relief. It is done by the Commissioners of Taxes, who are independent of the Treasury. We cannot give them orders. It is quite true that, to a large extent, they take advice from the Treasury, but in particular districts there are people who might, and sometimes do, take a view entirely different from the Treasury, and, if so, we have no redress. We simply have to accept their view. As an example of that, the hon. Baronet (Sir A. Williamson) has talked about unfairness in regard to oil machinery. I am told by an hon. Member of the House that that grievance arose in connection with the business in

      1615
      which he was interested. He made an appeal to the Commissioners of Taxes, and got at once the very thing that the hon. Baronet is asking for. That is an illustration that they have now the right to go to the Commissioners and make sure that fair depreciation is allowed. There is another point which I think is not realised. The hon. Baronet dwelt on the great necessity of getting rid of obsolete machinery and replacing it by new. He said that is the one thing the Government ought to encourage. I pointed out last year — it is rather strange that the arguments should be used again — that the custom now is that if any manufacturer desires to scrap particular machinery the Commissioners of Inland Revenue give him credit for the whole of it.
      Mr. J. HENDERSON: No.
      Mr. BONAR LAW: It is so.
      Mr. HENDERSON: I know a case exactly the reverse.
      Mr. BONAR LAW: It is stated in the White Paper, and my advisers tell me it is invariably so. If it not so there is a right to appeal to the Commissioners of Taxes. The custom is in these cases to give them credit for the full value, less the scrap value, of the old machinery. Nothing could be fairer than that, and that, I am told, is the custom. In what fairer way can you arrive at a fair basis in a case of this kind. The hon. Member (Mr. Terrell) spoke almost with emotion of the fact that forty years ago cases used to be decided by the Commissioners of Taxes in the way they thought fair and just. The Amendment is that it is to be decided by the trade which is interested in the way that trade thinks fair and just. If it is to be decided between two sets of people — the Government on the one hand and the trade on the other—I do not know which I prefer. I think there is an interest in both cases, but I cannot think of any better method than that which exists now: to have a right of appeal to the Commissioners of Taxes, who are independent.
      Mr. TERRELL: I would like to refer the right hon. Gentleman to the Amendment. It is that depreciation is to be allowed to such an amount as appears to the Commissioners to be the amount which would be deducted by a prudent owner.
      7.0 P.M.
      Mr. BONAR LAW: I thought my hon. Friend would understand, but I will explain why I think it amounts to the same thing. If you have to decide between the trade and the Government, I know no fairer way than to leave it to the Commissioners, with the full power which they possess now. That method is in effect what I have stated, and that is proved precisely by my hon. Friend's own illustration. He says "as a prudent owner would think right." What in the world does that mean? How can anyone, judge cases of that kind? My hon. Friend says it is quite simple. Turn up their books and find what the firm has allowed in the past, and that is fair and prudent. He has been in business, and so have I. He knows the difference. He knows that if you have a limited liability company with directors who want to make a good show and give big dividends, their prudence will probably not go beyond what the Commissioners of Taxes would allow. On the other hand, if you have a business owned entirely by a man and his son, they will very likely write off an amount which to anyone in the other category would seem altogether absurd. Here is an illustration which shows where we should be landed. I have been told that the Bank of England, acting as a prudent owner, has written down the value of the ground on which the bank buildings stand to £5. There are many cases of that kind. That is the prudent owner. The real effect of the Amendment, if it were possible to work it upon the lines my hon. Friend suggests, would be that the depreciation would wipe off a large part of the income, and in reality it is giving an instruction which would lead to absolute chaos if there were an attempt to work upon it, and I think would be altogether impracticable from every point of view. If it is raised again I suppose I must argue it, but I hope it will be delayed till Committee. The Government really does not want to be unfair to that or any other trade. We realise quite as strongly as the federation for which my hon. Friend speaks that it is all very well to get taxation in big amounts like £300,000,000 from the Excess Profits Duty. There are some people from whom you can take it, but in the long run if the result of that is to cripple the industry of the country for a long time after the War, the very people who tell us we should not dream of putting a tax on anything that is

      1617
      bought by the poorer classes will be the first to realise that we should be injuring the working class more than any other class. Unless there is some strong case of injustice — I have seen a great many deputations, and I do not think there is — this is not the time when we should alter the system on which Income Tax has been collected, for I do not know how long, against the Treasury, which needs the money. There is another thing I would tell my hon. Friend. Last year a very great effort was made to bring about a change in regard to the Excess Profits Duty. There is a very strong feeling outside the House, and I think it is pretty strong in some quarters inside the House, that the Government, now that it has greater need of money, ought to have taken a larger share of the excess profits. We have not done it for the very reason I have given, that I thought we had gone as far as wisdom entitled us to go. I think so, but many people do not.
      Mr. TERRELL: You know.
      Mr. BONAR LAW: I am very much obliged to my hon. Friend, and I hope he will give me credit for knowing about this subject also. I do impress upon the House that, whether it was wise or unwise, we have left that tax at its present level, and I think those who are interested should take that into account when they are pressing for changes in regard to a matter of this kind. The class which my hon. Friend represents is a class in which I have spent a large part of my life. I know them very well. They are neither better nor worse than other people, but I do think that that class ought, if possible, to set the highest example they can. The Chancellor of the Exchequer is in a much better position when standing firm in regard to indirect taxation which he thinks just when other classes who are suffering as they do are prepared, without making too much fuss, to pay the burden which falls upon them.
      Mt. J. MASON: The right hon. Gentleman, in the latter part of his speech, seems to me to have gone a long way to advocate the necessity of the Amendment which we recommend. He has pointed out that the Excess Profits Duty in itself is a very considerable burden on industry, and might even become a danger to industry. I believe it is that conviction which very largely prevents him from proposing to
      1618
      increase it. My right hon. Friend also said that he saw no reason to alter the basis on which Income Tax had been collected for a great number of years. He seems to forget the fact that when the Income Tax was at 9d. in the £ it was not a very important affair for industry, and there was not the same injustice.
      Mr. BONAR LAW: I did not say that this tax was unjust. The argument I used was a reason against altering the basis of the tax, unless there was some great injustice.
      Mr. MASON: The point is that the incidence of the Income Tax has been greatly increased in its effect upon industry by the amount having been raised from 9d. or 1s. in the £ to 6s. in the £. My right hon. Friend spoke quite accurately of the cheerfulness with which individuals have supported increased taxation. I think everybody will agree that, on the whole, the country has borne its burden in a most meritorious manner; but the burden of Income Tax upon industry must be looked at in a different light from the burden of Income Tax upon individuals. When we are considering the burden upon individuals it is a question of hardship to those individuals only, but when we are considering the burden by industry we have to consider the effect it will have on the safety and the future development of those industries as a whole, and I cannot help thinking that now that industry has to bear Excess Profits Duty and in addition Income Tax amounting to nearly one-third of the balance, that really that which is proposed to be dealt with by this Amendment ought to be seriously considered without loss of time. Last year the Financial Secretary said that this might be dealt with when the whole of the Income Tax law was revised. We are a very long way off having time to revise the Income Tax law. We have been talking of that for years, and there is no likelihood of that being done in the near future. It is for that reason and for the sake of industry and the development of industry in this country that this question ought to be dealt with, although, as the Chancellor of the Exchequer says, we cannot afford to give away any money from the Exchequer. It is very important to the industry of the country in the future that something should be done, because we cannot afford to wait much longer before this is put on a better and a firm basis. Nobody in industry will or

      1619
      does object to paying fair taxation which is due from industry, whether it be in Excess Profits Duty or in Income Tax, but what everybody feels is unsafe is that this tax should be on a false basis and that the tax should not be justly and fairly fixed. I agree with my hon. Friend opposite who dealt very much on the necessity of providing for depreciation and obsolescence. So long as the estimation for depreciation and especially for obsolescence is devised fairly and justly industry can safely look forward to the future. On the other hand, anything like uncertainty, with the rate of taxation as high as it is now, is fraught with danger to industry as a whole.
      Sir C. HENRY: The Mover and Seconder of the Amendment referred to the recommendation of Lord Balfour of Burleigh's Committee. They omitted to give the final recommendation, which was to the effect that the whole matter of the incidence of taxation should be inquired into at the earliest possible date. Although I am in favour of the Amendment in part, I could not vote for it as it stands on the Paper. I do not see why you should give a preference to obsolescence in machinery and not to wastage in connection with mines and other things. The Chancellor of the Exchequer has the recommendations of the Balfour of Burleigh Committee before him, and we know that the Government have already undertaken to set up an inquiry after the War into Income Tax. The recommendations of the Committee go further and urge that the inquiry should be instituted at the earliest possible date. We all recognise the necessity of that inquiry and the necessity of considering the incidence of Income Tax, especially at its present high level. I would ask my right hon. Friend whether he could not find some way of dealing with this matter now, instead of waiting until after the War before setting up the inquiry? It is of the utmost importance, and, though I am fully aware of the heavy tax that is made upon Treasury officials, I can conceive no matter of greater urgency than this. The recommendations urge it as a means of enabling "the State to raise by means of Income Tax at least as much revenue as at present with less individual hardship and less damage to productive industry." Therefore, if the Chancellor of the Exchequer could find means of getting up the inquiry without waiting, it would satisfy the public and especially the
      1620
      industrial classes. I am aware of the difficulty, and I think the whole House is aware of it, but as this is such a great matter of urgency and of vital importance I do think the inquiry should not be longer delayed.
      Mr. J. HENDERSON: The last speaker referred to the promise that has been made year after year of a Committee of Inquiry into the Income Tax. I do not see any reason why that Committee should not be appointed at once. We have a great many Committees, and there are plenty of Members who would be quite willing to go into this very serious question which presses so much upon the people of the country. Take the case of wasting assets which has been a standing case for many years in this House. That has been recognised in other countries. New Zealand recognises it. In the case of a mining property in this country the tax is based upon the full amount of the profits of the company, but in New Zealand it is only on one-half. It is recognised there that a mine has only twenty-five years of life. In South Africa mining property and other property of a wasting nature have allowances made to them, and if the right hon. Gentleman will look at the last Act where they have Excess Profits Duty in South Africa he will find that that is so. I see no earthly reason why a similar thing should not be done here. It is a very great hardship in this country in the case of a mining property which deals with a wasting commodity, which will disappear at the end of a certain number of years, that you levy your tax upon the present basis. As regards depreciation, I have in my profession constantly met with the greatest difficulty. There is a different practice in almost every surveyor's office. The Chancellor of the Exchequer said that when machinery was scrapped the whole value of that machinery was allowed. All I can say is that that does not coincide with my experience. I had a case in Liverpool in regard to some new invention which would enable people to make an article at half the cost. About £17,000 worth of material was scrapped in one year, and not one penny piece was allowed except the 10 per cent. Why there should be no allowance for depreciation of buildings I do not know. Buildings break down or tumble down like anything else, and why we should have to struggle to get 7½, 10, 15 or 20 per cent. I cannot understand. Sometimes you can get 20 per cent. on a motor lorry. Twenty per cent. on a

      1621
      motor lorry is not enough. No motor lorry which is doing heavy work can last five years. A motor car for pleasure may last five or ten years, but a motor lorry will not last so long. Then there is the business about allowing certain repairs, which is really very difficult. My right hon. Friend takes refuge behind the Commissioners, and they take refuge behind the Treasury. Why they should not have some fixed principle upon which to go, so that one could know what allowance you are going to get, I cannot understand. It would save a tremendous lot of trouble and a tremendous lot of appeals to the Commissioners.
      We need some definite lines of allowance. Take the 7½ per cent. which is sometimes allowed on machinery. In the prewar days that was all right. But now, supposing you have a machine, say, a turbine, which cost £1,000 before the War, and you were writing off 7½ per cent., that is of no use now, because, when you replace that turbine, two or three years hence, it will cost you £3,000. The cost of everything has gone up so enormously that the old percentages are absolutely useless. That is an element which ought to be taken into consideration. But my right hon. Friend says it lies with the Commissioners. The Commissioners' fiat is final, and I do not think there is any appeal to the Court on a question of depreciation; it is left to their discretion. I cannot see why the Commissioners should not lay their heads together and classify these things — there is no difficulty in classifying machinery — so as to enable a proper deduction to be made. You have this anomaly that whereas the Income Tax Commissioners are only allowing 7½ per cent., they are allowing 12 per cent. for excess profits, while for munitions which are doing work they are allowing 20 per cent. There is all that difference, and there is no homogeneity whatever about the deduction allowed for depreciation.
      I would urge my right hon. Friend to appoint a Committee at once to deal with the various difficulties which press under the Income Tax, the ramifications of which and the hardships of which are very great. I should like to mention one other point. When his predecessor was Chancellor he promised that the return of Income Tax from trades should be expedited. I admit it has been expedited to a very considerable extent, but the right hon. Gentleman must be aware that the number and variety of the claims
      1622
      under the various gradings is extremely difficult, and the number of people who are mulcted and who never get any advantage under this is enormous. Let me give him a simple example. You get a big trust estate — it may not be very large, but, say, a trust estate of about £50,000. There are ten beneficiaries, each one of whom has only an income of £200. They are all entitled to reclaim. These investments may be in a long schedule of some forty or fifty—
      Sir W. PEARCE: On a point of Order. Is the hon. Member dealing with the question of depreciation which is now before the House?
      Mr. SPEAKER: I think the hon. Member is aware that that is the only point which we can now discuss.
      Mr. HENDERSON: Perhaps I must apologise to the House for a digression, but I would again press the Chancellor of the Exchequer carefully to consider this matter, for there is a great deal of hardship. It cannot be said that the percentages allowed by the Commissioners on the principle they seem to have adopted are sufficient to replace the machinery at present in use, particularly in view of the high pressure of work, and more especially in regard to the enormous increase in the cost of production of these very machines. I am perfectly satisfied that the right hon. Gentleman must come to the conclusion that the allowances are not sufficient, and that they ought to be regulated in a manner which would be satisfactory.
      Sir W. PEARCE: I hope the Government will realise that this discussion has not been raised in the interests of any particular industry. It has been forced on the attention of the House to-night because the whole industrial conditions of the country have so changed that the allowance of 5 per cent. for depreciation on the part of the Revenue authorities has become absolutely insufficient. Unless this question is dealt with the whole industry of the country is likely to get into a parlous condition, and to be quite unable to meet the conditions after the War, when we shall have to face an enormous amount of competition from America and Germany. We cannot afford to wait until the whole of the Income Tax anomalies are put right. This matter requires to be rectified at once. I remember speaking on the point last year. I then ventured to prophesy that any Committee which the right hon. Gentleman

      1623
      might appoint would tell him that it was absolutely necessary to reconsider this one claim of the Income Tax assessors at once. The Balfour of Burleigh Committee has had it before them, and refers to the matter, going on to say that the situation with regardto depreciation and obsolescence should be taken in hand at once. I happened to serve on another Departmental Committee, which considered the position of two large branches of industry. Half the members of that Committee were from various Government offices. The Treasury was not represented there, but the Board of Trade, the Food Controller, the Board of Agriculture, the Ministry of Munitions were; while there were other officials which made up half of this Departmental Committee. Their recommendation went much farther than that of the Balfour of Burleigh Committee. They said, in specific words, that the Government must recognise that the whole conditions had changed. They recommended, not only that the 5 per cent. should be increased to 10 per cent., but that the 10 per cent. should be made retrospective. The Government appointed another Committee, whose Report I have not seen, and which sat about a year ago and dealt with this very point. I am quite certain they must have reported in the same sense. I want the Government to understand to-night that we are not here in the interests of any particular section, but that it is necessary, if the industry of the country is not going to be seriously handicapped, and even possibly half ruined, that this should be taken in hand. These allowances should be recast in a very much more handsome manner, and instead of 5 per cent. being the ordinary official standard, 10 per cent., or thereabouts, is the very least which ought to be allowed.
      Sir NORVAL HELME: It may not be a convenient time for those who are interested in the manufacturing industries of the country to press the Chancellor of the Exchequer to comply with this Amendment, but I think there is a principle involved which it is highly important that the House should present to the Chancellor, and should ask him to take it into careful consideration. Of course, we know, when the working classes are being asked to contribute out of their more limited means to the indirect taxation of the country, that it may not be desirable for the manufacturing industry to press
      1624
      immediately for the reduction which is claimed here. But when you remember that this Amendment is of a character which strikes at a weakness in the administration, I think it is desirable that the Chancellor should have regard to this one item in the list which is now before the House. In the matter of buildings it is well known that no depreciation whatever is allowed. One-sixth is allowed from the rental value to provide for the repairs. In many businesses buildings have been erected which are of no use whatever unless they are continually used for that one particular trade. Hence, it is held by many of us that where such buildings are erected there ought to be a corresponding treatment of such items standing in the capital accounts of the firms, as is the case in regard to depreciation of machinery. The amount of the yearly allowance for the depreciation of machinery is a matter which stands upon another footing, and it has been argued to-night with regard to the changing times through which we are passing. I think that if an inquiry were instituted it would be found that the allowances that have been made have not been equal to the necessities of the case where machinery has been very heavily used, and where the wear and tear has been excessive. I would only ask the Chancellor of the Exchequer, in these few words, to take into account this one aspect to which I have alluded — namely, that no depreciation whatever is allowed upon buildings. That is a thing that I hope may be remedied, and also that all other items may be taken into account.
      Sir J. WALTON: I was glad to see my right hon. Friend the Chancellor of the Exchequer recognise that in these days of heavy war taxation the question of the trading interests of this country having a fair and adequate allowance for depreciation and wear and tear has become of vital importance to our future trade and prosperity. I consider that the Amendment put down by my hon. Friend the Member for Chippenham is not wide enough in its scope. I hope that he will withdraw it, and between now and the Committee stage draft a well-considered and more comprehensive Clause dealing with this question. I hope the Chancellor of the Exchequer will consider, between now and the Committee stage, after that new Clause is put down, whether he cannot either accept it or, at any rate, agree to appoint a Committee to go into the whole

      1625
      question without further delay. The present Amendment, as far as I understand it, does not include depreciation which is essentially necessary through wasting assets, as in the case of coal mines, where large sums of money are spent to win a certain area of coal. When the coal is exhausted the plant is worth a mere bagatelle, even if £500,000 has been spent in establishing the colliery. It is only sound business that there should be allowances in the way of depreciation, so that the capital should be restored for further investment at the expiration of the working of a particular colliery. The same thing applies to iron ore mines, to clay, and to other minerals. Also, there should be included depreciation for the expiry of leaseholds. Much hardship and loss is occasioned in connection with leaseholds. The whole question is a wide one, and is most important, but I do not desire to go into it in detail to-night, because I think it will be much more properly dealt with on the Committee stage of the Finance Bill. Speaking about machinery, we know perfectly well that in these days it is being adapted more on American lines of light construction. It works at a high speed, and naturally has a much shorter life than our old, substantial machinery used to have. That is especially the fact when this machinery is worked a much larger number of hours out of the twenty-four.
      The Chancellor of the Exchequer told us that it had been suggested to him that he should make the Excess Profits Duty higher than 80 per cent., but I would point out to him that, so far as the coal trade is concerned, we have, in addition, another tax of 15 per cent. to pay, making in all 95 per cent. Excess Profits Duty. So that in the case of that trade, at all events, there is not very much room for an increase of the Excess Profits Duty. In conclusion, I would remark, upon this subject, that we have, first, to spare money in order to win this War, no matter what the burdens and sacrifices may be that are put upon us. Secondly, our object must be to safeguard the trade and commerce of this country, so that, after the War, we may be in a position to develop our industries, our shipping, and our trade, in order to ensure a rapid economic recovery, and to enable us to compete against the United States, Germany, Japan, and other countries, whose competition will be greater than ever it was in pre-war
      1626
      years. Therefore, if we are wise, we shall do nothing to deplete our financial resources by taxation or otherwise, in order that we may develop all our resources, if we are to maintain our industrial and commercial prosperity against other nations of the world.
      Sir C. CORY: I should like to impress upon the Chancellor of the Exchequer the importance of this Amendment. The right hon. Gentleman has said it is important that the Government should get all the money they possibly can, in view of this War, and I am sure we all thoroughly appreciate that; but I would put to him this question, whether, by the proposal which we now submit, the Treasury would not in a very short time get more revenue than they will obtain by continuing the present practice as to depreciation? Let them cast their bread upon the waters, and it will be returned to them tenfold before many days. It has already been pointed out that this country will have to meet the competition of Germany, America, and other countries after the War, and it may safely be said that competition will be very keen indeed. The late Mr. Chamberlain on one occasion came to South Wales in connection with his campaign for Colonial Preference, or Tariff Reform, and he pointed to the fact that large quantities of iron and steel were imported by South Wales and Monmouthshire from America and Germany, which, he said, was a great drawback to the interests of this country. I remember that the late Mr. Keene, chairman of Nettlefold's, that large industrial concern, when he returned from America, stated that in South Wales the iron and steel works there were obsolete, and he added that in America they renewed their steel works at the end of about each five years.
      If we had adopted that practice in South Wales, and seen to it that we had good modern works, up to date, and capable of renewal after the lapse of five years, it would have been impossible for Germany or America to dump their iron and steel in South Wales. It was only because our works were old and obsolete that we could not compete with modern installations. Unless, in South Wales, we renew our machinery, instead of continuing with obsolete steel plant, we certainly shall not be able to compete with America, Japan, and other countries. I am not now speaking on behalf of the coal trade, in which I am interested, but

      1627
      on behalf of the trade and industry of the country generally, and unless we take all necessary steps in time, and act upon such principles as those which have been advocated to-day, I fear that we shall fall behind in the competition of the world. I trust that the Chancellor of the Exchequer will take this Amendment into serious and favourable consideration, for I believe it will pay him to do so, and that, by acting on the suggestions which have been offered to him, he would get a much greater revenue in the future

      Division No. 33.]

      AYES.

      [7.38 p.m.

      Agnew, Sir George William

      Foster, Philip Staveley

      Runciman, Sir Walter (Hartlepool)

      Archdale, Lieut. E. M.

      Helme, Sir Norval Watson

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

      Banbury, Rt. Hon. Sir Frederick G.

      Henderson, John M. (Aberdeen, S.)

      Samuel, Samuel (Wandsworth)

      Barlow, Sir John Emmott (Somerset)

      Hinds, John

      Sutherland, John E.

      Bigland, Alfred

      Jardine, Ernest (Somerset, E.)

      Taylor, Theodore C. (Radcliffe)

      Boles, Lieut.-Colonel Dennis Fortescue

      Jones, Rt. Hon. Leif (Notts, Rushcliffe)

      Terrell, George (Wilts, N. W.)

      Bryce, John Annan

      Maden, Sir John Henry

      Tickler, T. G.

      Cator, John

      Marks, Sir George Croydon

      Toulmin, Sir George

      Coats, Sir Stuart A. (Wimbledon)

      Marriott, J. A. R.

      Walker, Colonel William Hall

      Cochrane, Cecil Algernon

      Mason, James F. (Windsor)

      Walton, Sir Joseph

      Cory, Sir Clifford John (St. Ives)

      Middlebrook, Sir William

      Williamson, Sir Archibald

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

      Pennefather, De Fonblanque

      Duncan, Sir J. Hastings (Yorks, Otley)

      Peto, Basil Edward

      TELLERS FOR THE AYES.—Sir W. Pearce and Sir J. Harmood-Banner.

      Du Pre, Major W. Baring

      Richardson, Arthur (Rotherham)

      Essex, Sir Richard Walter

      NOES.

      Adamson, William

      Guest, Capt. Hon. Fred. E. (Dorset, E.)

      Sanders, Col. Robert Arthur

      Agg-Gardner, Sir James Tynte

      Hamilton, Rt. Hon. Lord C. J. (K'ton)

      Shortt, Edward

      Arnold, Sydney

      Harcourt, Robert V. (Montrose)

      Somervell, William Henry

      Baldwin, Stanley

      Havelock-Allan, Sir Henry

      Smith, Albert (Lancs., Clitheroe)

      Barnes, Rt. Hon. George N.

      Henry Sir Charles

      Spear, Sir John Ward

      Barnston, Major Harry

      Hewins, William Albert Samuel

      Stanley, Rt. Hon. Sir A. H. (Asht'n-u-Lyne)

      Barton, Sir William

      Higham, John Sharp

      Stewart, Gershom

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

      Hodge, Rt. Hon. John

      Stoker, R. B.

      Beckett, Hon. Gervase

      Hope, James Fitzalan (Sheffield)

      Strauss, Edward A. (Southwark, West)

      Bellairs, Commander C. W.

      Hudson, Walter

      Thomas, Sir A. G. (Monmouth, S.)

      Benn, Arthur Shirley (Plymouth)

      Jones, J. Towyn (Carmarthen, East)

      Thomas, Rt. Hon. James Henry

      Bird, Alfred

      Jones, W. Kennedy (Hornsey)

      Thorne, William (West Ham)

      Boscawen, Sir Arthur S. T. Griffith-

      Jowett, Frederick William

      Tootill, Robert

      Bowerman, Rt. Hon. C. W.

      Joynson-Hicks, William

      Tryon, Captain George Clement

      Boyton, Sir James

      Kellaway, Frederick George

      Turton, Edmund R.

      Brace, Rt. Hon. William

      King, Joseph

      Walsh, Stephen (Lancs, Ince)

      Bridgeman, William Clive

      Lambert, Richard (Wilts, Cricklade)

      Wardle, George J.

      Carew, Charles R. S. (Tiverton)

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

      Waring, Major Walter

      Cautley, Henry Strother

      Lee, Sir Arthur Hamilton

      Weston, J. W.

      Clough, William

      Levy, Sir Maurice

      White, J. Dundas (Glasgow, Tradeston)

      Clyde, James Avon

      Lindsay, William Arthur

      Whiteley, Sir H. J.

      Coates, Major Sir Edward Feetham

      McCalmont, Brig.-Gen. Robert C. A.

      Wilkie, Alexander

      Compton-Rickett, Rt. Hon. Sir J.

      Macmaster, Donald

      Williams, Aneurin (Durham, N. W.)

      Cornwall, Sir Edwin A.

      Macpherson, James Ian

      Williams, Llewelyn (Carmarthen)

      Craig, Herbert J. (Tynemouth)

      Munro, Rt. Hon. Robert

      Williams, Penry (Middlesbrough)

      Craik, Rt. Hon. Sir Henry

      Parker, James (Halifax)

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

      Currie, George W.

      Pearce, Sir Robert (Staffs, Leek)

      Williams, Thomas J. (Swansea)

      Dalziel, Rt. Hon. Sir J. H. (Kirkcaldy)

      Pease, Rt. Hon Herbert Pike (Darlington)

      Willoughby, Lt.-Col. Hon Claud

      Dawes, James Arthur

      Perkins, Walter Frank

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

      Duncan, C. (Barrow-in-Furness)

      Price, C. E. (Edinburgh, Central)

      Wilson, W. T. (Westhoughton)

      Fell, Sir Arthur

      Pryce-Jones, Colonel E.

      Wing, Thomas Edward

      Ferens, Rt. Hon. Thomas Robinson

      Raffan, Peter Wilson

      Wood, Sir John (Stalybridge)

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

      Randall, Athelstan

      Younger, Sir George

      Gibbs, Colonel George Abraham

      Richardson, Albion (Peckham)

      Gilmour, Lieut.-Col. John

      Roberts, George H. (Norwich)

      TELLERS FOR THE NOES.—Lord

      Goulding, Sir Edward Alfred

      Robinson, Sidney

      Edmund Talbot and Mr. Dudley Ward.

      Greenwood, Sir Hamar (Sunderland)

      Rowlands, James

      Griffith, Rt. Hon. Sir Ellis J.

      Rowntree, Arnold

      than he does at present. By assisting those concerned in our industries to have the means of providing themselves with modern and. up-to-date works, with all the equipment necessary to meet the competition of other countries, he will obtain greater revenue than ho will ever gain if we are to find ourselves compelled to continue with obsolete works.
      Question put, "That those words be there inserted."
      The House divided: Ayes, 40; Noes, 110.
      Resolution reported,

      INCOME TAX (EARNED INCOME).
      15. "That the relief given in respect of earned income shall be modified so as to allow relief only as follows, namely, relief by way of the reduction of the rate of the tax to:—

      2s. 3d. if the total income does not exceed five hundred pounds;

      3s. 0d. if the total income exceeds five hundred pounds and does not exceed one thousand pounds;

      3s. 9d. if the total income exceeds one thousand pounds and does not exceed one thousand five hundred pounds;

      4s. 6d. if the total income exceeds one thousand five hundred pounds and does not exceed two thousand pounds;

      5s. 3d. if the total income exceeds two thousand pounds and does not exceed two thousand five hundred pounds.

      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution reported,

      INCOME TAX (UNEARNED INCOME).
      16. "That the relief given to an individual in respect of unearned income shall be modified so as to be such as will reduce the rate of tax on his unearned income to—

      3s. if the total income does not exceed £500.

      3s. 9d. if the total income exceeds £500 but does not exceed £1,000.

      4s. 6d. if the total income exceeds £1,000 but does not exceed £1,500.

      5s. 3d. if the total income exceeds £1,500 but does not exceed £2,000.

      And it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution reported,

      INCOME TAX (SUPER-TAX).
      17. "That—
      (a) the additional duty of Income Tax (called Super-tax) shall be charged, in respect of incomes which exceed £2,500, as follows:

      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.

      1630

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

      three shillings and sixpence.

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

      four shillings.

      for every pound of the remainder of the excess

      four shillings and sixpence.

      and
      (b) the like provisions shall have effect with respect to the Super-tax as so charged as had effect with respect to the Super-tax charged for the year beginning the sixth day of April, nineteen hundred and seventeen; and
      (c) it is declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Resolution read a second time.
      Sir F. BANBURY: I beg to move, in Sub-section (a), after the word "which" ["in respect of incomes which"], to insert the words "after deducting Income Tax."
      The object of my Amendment is to secure that the Super-tax shall be levied not on a sum which the man does not receive, but on the sum which he does receive. As everyone knows, the Super-tax at present is levied, not on the actual income of a man, but on the amount which he would have received if he had not had to pay Income Tax. When the Income Tax was only Is. or something of that sort in the £1, it really did not very much matter whether the Super-tax was charged on the actual income or on the gross amount, but now that the Income Tax has risen 6s., it makes a serious difference. Supposing a man has an income of £4,000 a year, 6s. Income Tax on that represents £l,200, and his actual income is, therefore, only £2,800; but he is called upon to pay the Super-tax on the £4,000 which he has never received, and which, in fact, he is not able to get. That does seem to me to be a very curious way of levying.
      Mr. BONAR LAW: He only, in fact, has to pay the Super-tax on £1,500.
      Sir F. BANBURY: The right hon. Gentleman is referring, of course, to the deduction, but that really does not meet my argument. It may be argued that it is necessary to get the money, and that if the Income Tax is levied on the actual amount received it would have to be raised in amount. Admitted for the sake of argument that it is necessary to obtain the money in this way, I should much prefer

      1631
      that the tax should be increased, and for this reason, that there has been lately a considerable discussion as to whether or not there should be a levy on capital. I doubt if the vast majority of the people of this country really understand the amount which has to be paid on incomes of over £3,000 or £4,000, and if there were an increase in the tax itself simply in order to raise the same amount of money it would have this advantage that people would know what certain classes of taxpayers are actually paying to the State. We have, I believe, been told by the Chancellor of the Exchequer that a man with an income of £20,000 a year pays 9s. 5d. in the £l, but there are very few people who know that. I think it is only fair that people who are paying these very high taxes and who, as the Chancellor of the Exchequer will admit, have hitherto paid them without murmuring, should have it known that they are mulcted to this extent by the State.
      Sir J. WALTON: And they also have to pay local taxation.
      Sir F. BANBURY: Yes; that also has to be considered. But my Amendment deals with the Super-tax, and with that alone, and I want it to be so arranged that that Super-tax shall not be charged on what a man does not receive. It does not seem to me to be fair to do that, and I, for one, would be ready to pay a larger rate of Income Tax provided that the Super-tax was levied on the amount I actually receive. I am a little doubtful as to the advisability of imposing such a high Income Tax and Super-tax. I do not say that personally I have any objection to pay. I do not believe that the people who do pay it have any great objection, but there are many people who are under the impression that the Super-tax is not a very large sum, and that at the highest it only represents 4s. 6d. in the £ whereas it is something very much greater. I do not want, however, to enlarge upon this point. I will content myself by moving the Amendment.
      Mr. BONAR LAW: I hope and think my right hon. Friend merely desires to draw attention to a question which is a very old subject of discussion rather than to press it now. I quite admit there is a good deal of force in what he has said. It is rather absurd for a man to pay Super-tax on an income which he does not get. But really it is as broad as it is long. We
      1632
      have to get the money, and if we made this suggested change the Super-tax would have to be made proportionately higher. There is also something in what my right hon. Friend has said as to the desirability of people knowing how the higher incomes are taxed. Still, I do not think it is possible to consider making any change at the present moment. No doubt when we go into the whole question of Income Tax it is possible the Super-tax as such may disappear, and it may be a question of graduated taxation right through. Therefore, I do not think we need have this discussion now. I am inclined to think for myself that the man in the street, who does not really follow these things closely, may believe that the rich man pays more than he actually does. He sees that the Income Tax is 6s. and the Super-tax 4s. 6d., and it appears to him, therefore, that the total amount of the tax is 10s. 6d. That is quite a common idea, and although the tax is pretty high we know it is not as bad as that. I shall be glad if my right hon. Friend will not press his Amendment.
      Mr. L. JONES: I do not really think the point is of great importance. It is purely an arithmetical question as to what is the percentage of a man's gross income which is taken by the State in the present form of the tax. I rose mainly for the purpose of drawing attention, not to the imposition of Super-tax on an income which a man does not receive, but on his escape from payment of Super-tax on an income which he has received.
      Mr. SPEAKER: That is not relevant to this Amendment.
      Sir F. BAN BURY: I beg to ask leave to withdraw the Amendment.
      Amendment, by leave, withdrawn.
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. JONES: I think the point I was about to make does arise on the main question. That point is that the dividends paid last year on War Bonds and War Loan Stock—dividends which are paid without deduction for Income Tax and Super-tax—are not included in the statutory income which is taxed, and therefore do not appear in the Super-tax returns. The result is that the dividends of 5 per cent. on War Loan Stock and Bonds escape any payment of Super-tax

      1633
      in the current year, and they will only begin to pay Super-tax in the year 1920. I have no doubt my right hon. Friend took that into account when he was making his Estimate. I should very much like to know what is the loss to the Revenue by that arrangement. I should like to know also, in regard to the form in which Super-tax is levied on statutory income, whether there is any way of getting round it, or how it comes about that all these dividends which have actually been received by investors in War Loan are exempted from Super-tax this year? I cannot see any objection to their paying it. I know, in fact, it has come as a great surprise to some holders of War LoanStock that they have not been called upon to pay it, and some have gone so far as to return these dividends to the Commissioners of Income Tax, and are now asking to have their returns sent back in order that they may strike out the dividends which in a hasty moment they included.
      Mr. J. HENDERSON: Surely they are included in the Super-tax of the previous year?
      Mr. JONES: The Super-tax is payable on the incomes received by the taxpayer last year, and the Super-tax payable for the year 1918–1919 is on the income received in the year 1917–18. Consequently the incomes which have actually been received by the investor in the last year will not pay the Super-tax this year, and the result may be a loss in perpetuity of a considerable sum which might have been collected by the State without any hardship upon the receivers of the income.
      Mr. BONAR LAWindicated dissent.
      Mr. JONES: At any rate it will mean the loss of a good sum, and I do suggest that these men, having received the income, are really in a position to pay the Super-tax upon it.
      Sir C. HENRY: If it is raised they may receive more.
      8.0 P.M.
      Mr. JONES: It is information on this point that I desire to get. Will the right hon. Gentleman tell us what is the total deduction which he has had to make from his Estimate of the return of Super-tax on account of the exemption of War Loan Stock and War Bonds?
      Mr. BONAR LAW: The question is complicated, as my right hon. Friend (Mr. L. Jones) understands. I do not think we
      1634
      have any loss. I think it is a case of postponement, and, as he knows, while he is putting a point of view which is that these people are too well treated they are putting their point of view that they are being wrongly used by being asked to pay 6s. instead of 5s. The explanation is that at the time we were raising the War Loan at the beginning of last year I was asked to make it as attractive as I possibly could, and I am sure everyone will agree with that. I was urged by nearly everyone in the City whom I consulted to give people the right of not having the Income Tax deducted at the source. The object of that is obvious, because every small investor who has a claim, if the tax is deducted at the source, has the trouble of making his claim and getting back the money. If the other course is taken, the Treasury has the trouble of hunting him up and getting the revenue. What I did was to consult with them as to the amount of loss the Revenue would suffer by agreeing to this course. They advised me, after carefully going into it, that there ought not to be a loss in theory, but that there might be a loss in practice by our not getting all the people who should do to pay. Acting on this advice, I came to the conclusion that it was worth while running that risk for the purpose of making the Loan more attractive. That is the explanation, and I hope the House will accept it.
      Resolution reported,

      INCOME TAX (CHARGE OF SCHEDULE B TAX).
      18. "That Income Tax under Schedule B shall be charged for the current year (and for any succeeding year for which Income Tax is charged) in respect of the occupation of lands. tenements, hereditaments,' and heritages chargeable under that Schedule for every twenty shillings of an amount equal to twice the annual value thereof instead of for every twenty shillings of the annual value thereof, and the Acts relating to Income Tax (including any enactments relating to relief from tax) shall have effect accordingly.
      And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Major LANE-FOX: I should like to say one or two things about this "Resolution, but before coming to the main question of the way in which it affects farmers I wish to draw (the right hon. Gentleman's attention to the fact that by the words "occu-

      1635
      pation of lands, tenements, hereditaments," etc., in this Resolution for the first time gardens, woods, plantations, and so on, will be brought under this extra tax. I hope the right hon. Gentleman will consider whether it was really the intention of the Resolution, which is obviously mainly directed to dealing with farmers and the supposed high profits of farmers, to continue as it is at present drafted to deal with gardens and plantations. Of course, where the woods are ripe I admit a considerable profit is being made, but where the woods are unripe there is likely to be great hardship on those who are trying to improve their woods. The main point arising out of this Resolution, of course, is the way in which it affects the farming interest, and I hope very shortly to put one or two considerations in the matter before the House.
      I know that the farmer is not a very popular person at this moment, and that it is very easy to throw stones at him. He is supposed to be a great profiteer, but if that is so I would say that he is not as great a profiteer as those in other classes one can think of. Whether it is so or not, I do not think that is any reason why we should not raise the question of taxation, or give it a fair chance of being considered from both sides. The alternatives given to the farmer — I am not quite clear when he has to choose between the alternatives, but I believe by the 5th June — are whether he shall be taxed under Schedule B on the basis of two years' rent, as representing his year's profit, or whether he shall go under Schedule D. As I say, I believe he has the option on or before 5th June. The Chancellor of the Exchequer will correct me if I am wrong, but if the option is later than that date then the point I am making does not arise. If, on the other hand, he has to take his option as early in the year as June I think unfairness will be done. Later he knows what his profit is going to be, and what his general position is. If these alternatives were really genuine I do not think there would be so much to complain of. Everyone will admit that it would be perfectly fair to tax the farmer like everybody else on the profit he has made under Schedule D. In his Budget speech the right hon. Gentleman told us, what is indeed obvious, that farmers cannot come under Schedule D now. They have not the means. Unfortunately, they do not keep books, and this
      1636
      is not the time, when we want them to double their amount of food production, to force them to the preparation of books to which they are not accustomed. I think it is unfortunate that they have not kept books, but you have to face the facts as they are.
      Of course, the basis of taking the profits of the year as represented by two years' rent is very unfair. Everyone knows the rents of two farms alongside each other may be very different, and that on some estates the rents are very much lower than on others. The whole basis, as the right hon. Gentleman admitted in his Budget speech, is very unfair, a rough and ready one, and one that may do injustice in many cases. What rather alarmed me about his Budget speech was this: If he had encouraged the idea that farmers should come under Schedule D by some easy means, I should have said there was some chance that fairness would be offered to the farming community. But his whole speech seemed to discourage their coming under Schedule D. He pointed to the difficulties of the matter, the depletion of staffs, and the difficulty of checking all these accounts if the farmers went under Schedule D. If the right hon. Gentleman will give an assurance that everything will be done to make it easy for the farmer to be taxed on the profits he has made, then, I think, there is less to be said against this Resolution. If valuations will be accepted which may not be in very good technical form—because, after all, valuers to make proper valuations are not to be found, and if every farmer has to have a proper valuation the men are simply not there to make them— and if the Treasury is going to be content with what on the face of it seems an honest valuation, although technically in every detail it is not in the form which might be expected, I say the position is a fair one. If on the other hand, farmers are to be discouraged, and accounts are not to be accepted unless they are in a technically correct form, then that will be an unfair and unreal alternative. You are not really giving the farmer a choice of being taxed on two years' rent or under Schedule D, but on what may be a very unfair basis. There is no doubt that a great many farmers have done very well during past years, but some have done much better than others, and some have not done so very well. They run risks, and there must be the chance in a certain number of cases where a man may have

      1637
      done—by ill-luck, perhaps—badly, and yet because others have done well he is not to be taxed on the profits he has made but on the wholly imaginery basis of two years' rent, representing a profit he has not made. I do not think that is fair, and I hope the right hon. Gentleman will consider whether something cannot be done to alleviate that system, or at any rate to enable him to declare the actual profit he has made.
      I do not want to keep the House, but this is a moment at which food production is a most important matter, and everything tends to show—I have had a great deal to do with this work lately—that farmers are realising in a great many cases that their methods are antiquated, and they are taking steps to improve them. The policy of a great many farmers I know personally is to use their profits and put them into their farms, increasing their influence, and raising the level of their farms If you are going to give them any sort of grievance, making them think that they are being unfairly taxed, you will stop that process, and I think it will be a disastrous moment at which to do anything that will stop food production this year, or the general developments in the right direction, or that will place anything in the way of farmers putting money into their farms because they have had a good year and have put money into their pockets. I am the last person to say that any farmer would desire to pay less than his fair share. If there are any that do they will not get any sympathy from me, but I think they want to be taxed fairly, and to be given a fair chance of being called on to show what their profits are. I do not think the opportunity afforded is a fair one, and I would suggest to the right hon. Gentleman that he might make it a year and a half, rather than inflict the injustice which may be inflicted under this Resolution. Above all, I do think the House wants to be careful. There is considerable prejudice against the farmer throughout the country. I do not care whether it is right or whether it is wrong, but it does make it necessary for the House to be careful how they inflict a tax which may seem to be representing a popular outcry against a not very popular person. That is what we want to avoid. The tax is not a punitive one or, if it is meant as a punishment, there are a great many people in the country who deserve it more than the farmers, who
      1638
      have made tremendous efforts to meet the demands of the country for increased food production, and who are, I am perfectly certain, doing their utmost in the best way they can to help the country in this time of emergency.
      Mr. CURRIE: So far as I understand the proposals of the Chancellor of the Exchequer, I think the farmer is going to have, and is entitled to have, a fair chance of producing his profit and loss account; and, if he does so, he will be taxed like every other citizen. The hon. and gallant Gentleman who has just spoken referred to the new alternative basis as imaginary. In one respect it is fictitious, but not to a greater degree than the basis adopted in 1914. I do not share his fears as to injustice being inflicted on the farmer, but I wish to support him in what he said in regard to woodlands. He sought to draw a distinction between young and old woodlands, but I am not sure that that is a really true distinction. I would rather say the dividing line should be between pleasure woodlands and commercial woodlands.
      I think, if things are allowed to drift, a considerable measure of injustice may arise, and new woodlands which do not deserve to be heavily taxed, may be taxed twice over. On the other hand, one does not wish to do anything to encourage owners of land to keep in idleness land which might be in use. I do not think that the Government can be, or ought to be, pressed to give an answer upon this tonight, and I therefore do not want to take up any time in arguing it, but I do give notice that the point will be raised on Committee stage. If an answer could be given now, it would be extremely desirable as Members have been bombarded, certainly in Scotland, by everyone interested in woodlands. Another point I wish to ask the Treasury is this, whether this change from the 20s. to the 40s. basis is intended to work any alteration upon the present position of institutions like bowling clubs or golf clubs? There, again, I confess at once that my motive for putting the question just now, instead of on the Committee stage, is to save the trouble of being bombarded by every member of every bowling club in and near Edinburgh. I do not think that an answer can be given now, but I would like the point dealt with as soon as possible.
      Mr. J. HENDERSON: I sympathise very much with my hon. and gallant

      1639
      Friend, who spoke on the question of leniency towards the farmer, and I hope that instructions will be given from the Treasury to the assessors and surveyors in the North and throughout the country that they should give the farmers what assistance they can in shaping their accounts to be submitted under Schedule D, so that they may know where they are. It is quite true that the bulk of them do not keep accounts, and it is not to be wondered at, because they have not been asked for accounts for many years; indeed, I do not believe since 1885. It is quite natural that they have not studied the way of doing it, and therefore, as we are going to cast this upon them, I would back up my hon. and gallant Friend opposite and urge that we should give them all the assistance we can, and afford them as long a time as possible, so that every encouragement should be put in their way. I notice that they are to have the same relief as other people. That makes a very great difference, because a farmer who has a wife and two children pays no Income Tax up to £100 rent— £97 10s. to be exact—and, of course, the relief is applicable in the same way as it goes up. Really, up to £150 or £200 a year there is very little to pay in the case of a man who has a wife and children.
      There is this to be said, that the farmer has a little advantage over a man with similar rent, because he gets his food, which is a very important item, at cost price. Further than that, the trader in similar circumstances has to pay the rent of his house out of his profits, whereas that does not apply in the case of a farmer, and there are a good many other things in which the farmer must consider he is very fairly treated under this Resolution. Still, you are putting before him now something he has never had before, and it is up to the Government to give him every help and time, so that he may not consider he is hardly treated. With regard to woodlands, let me say that in my part of the country in six months there were 200,000 tons of timber taken away. The amount of timber which has been cut down through out England and Scotland is appalling when compared with the replanting, which is very small, and unless some strenuous steps arc taken by the Government to re-afforest much faster than they are doing, thousands and thousands of acres which should be afforested in Scotland will be left If you encourage the planting of trees you must really reconsider the
      1640
      position with regard to these plantations under Income Tax and local rates, because it is impossible and hopeless to expect a man to go on planting if every acre he plants renders him liable to rating and taxation on what really brings him little or no revenue at ail. If you want to encourage him, you must deal with him in a generous way, and therefore I hope that these remarks will not be lost sight of by the Chancellor of the Exchequer.
      Mr. L. JONES: I want to add only a few words to what the last speaker had to say with regard to woodlands. The form of the Resolution as proposed took me rather by surprise. From the Debate on the Budget the other day I gathered that the Government intended to alter the basis of the farmer's assessment to Income Tax, and only the farmer. Nothing was said about anything else which came under Schedule D, and it was a great surprise to me to find that the whole of Schedule D was to be doubled, with the effect of bringing in the woodlands, as referred to by the previous speakers. I venture to think that it is very undesirable to double the assessment on Income Tax on the whole Schedule, and I cannot see any justification for it in the circumstances which we are in at the present time. If anything is clear, it is that it is most desirable to encourage the planting of woodlands, and this assessment of woodlands at double the Schedule D assessments will really have a direct tendency and be an incentive to owners not to afforest their land.
      I know there is a popular impression that very large profits have been made by certain owners of woodlands owing to the high prices to which timber has risen during the War, but I have had occasion to look into the accounts of several woodlands from the time when they were planted, and I am really surprised to find how, even with the present high prices of timber, with practically no competition from outside, and the great demand for timber, there is not at the present moment any advantage to a man to plant his land with timber. It is rather the other way, and it would be a great deal better for the owner if, instead of giving the land up for timber, it had been given up for farming purposes. That is the experience with the high prices. Up to the present time it has been a dead loss to practically everybody in this country to grow timber at all. Therefore, I do think that to bring this in

      1641
      unexpectedly and without warning, in dealing with the farmer's profits, is not quite fair on the part of the Government, and I hope they will reconsider their proposal from the point of view of woodlands.
      I do not wish to say anything particularly about the farmer's position, because I have had my say on that during the Budget Debate. I would only say this, that the perpetual alterations of the assessment of the farmer's profits in relation to rent must have proved, I should think, to anyone who has followed their history that there is no real relation between the farmer's rent and his profits. This assessment to the farmer has stood in the last 120 years at various times at three-quarters of the rent, one-half of the rent, and one-third of the rent, and finally at the whole rent, and now it is to be fixed at twice the rent. No doubt changes have occurred in the farmer's profits during that period and so have changes occurred in the rent, and it is impossible to suppose that these different fluctuations do really represent anything like the facts of the case. The truth is there is no such relation between rents and profits as is proposed in this assessment, and it is high time we should get to a real assessment of a farmer's profits in order that he should be taxed on the profits he has really made and not on some fanciful profits somebody thinks he has made. It is true some farmers have made large profits, but some have not, and I do not know whether you are not going to do a great deal of injustice by this. I cannot tell. My own impression is that a large number of people will be hit by doubling their assessment. I do not know, and I do not think anyone knows. Therefore, I am appealing to the Government—perhaps for one year this does not matter—to get the farmer's assessment on his real profits somehow, and every inducement should be made to get the farmer to come in under Schedule D by some easy arrangement.
      Sir J. SPEAR: I desire to support the appeal of my hon. and gallant Friend to the Chancellor of the Exchequer and the Financial Secretary to place the basis on which farmers are to pay Income Tax on the sum equivalent to rent and a half, rather than on the sum equivalent to two rents, as proposed in the Budget, and I do that in the interest of what I believe to be justice to the farmer and in the interest of the full development of the food supply of the country. I submit that the proposal of the Government to-day is a step that
      1642
      cannot be justified. Prior to the War, the farmer paid Income Tax on a third of his rent. Two years ago that was raised to a sum equivalent to the full rent. To-day it is proposed to double that basis. Now, that is an increase of the basis six times over, and I venture to say there is no other class of property in this country that has to submit to Income Tax increased to that extent. I would point out that while the farmer did get off easily on his contribution to Income Tax prior to the War, on his contribution to local taxation he was more heavily mulcted than any other section of the community, for he was called upon to pay rates on his raw material out of which he manufactures food for the people. That applies to no other manufacturer in the country. I would like, if I may, to allude to a speech made by the present Prime Minister five years ago, and to my moving an Amendment to the Address in reply to the King's Speech, calling attention to the fact that the Government had not promised to deal with the rearrangement of the basis of local taxation, which had been asked for for twenty years. The Primes Minister came down, and, in reply, said that he admitted the burden on agriculture for local rates was intolerable and must be at once relieved. Nothing has been done in that direction yet, and I do say that when the basis on which the farmer pays Income Tax was altered it was only equitable that the basis on which he makes his contribution to the local rates should be dealt with at the same time, so that both responsibilities should be put on a just, an equal, and a fair level with other sections of the community.
      Not only is the- basis on which the farmer pays Income Tax greatly increased, but that carries with it the fact that the poundage on which he has to pay is also greatly increased, and in the case of the larger farmers, who may be occupying land to the extent of perhaps £1,500 a year, that being calculated at £3,000, brings him at once into the position of paying Super-tax to the extent of Cs. 5d. in the £I submit that there is a danger of that driving moneyed men out of the cultivation of the land, and, though we want to see all classes of men engaged in the cultivation of the land, it is very often the bigger man who encourages the production of the best class of cattle, which benefits the whole district, and promotes advance in agriculture, which is of value

      1643
      to the general community. The burden on that man, if the Government adhere to their present proposals, will be intolerable, and will simply drive him out of the business. I claim, too, that it is an unfortunate time for the Government to impose so drastic a change. We all admit there was room for some increase, but just when farmers had revolutionised their system, in response to the appeal of the Government to grow more food, and that often upon uneconomic lines, it is not encouraging the farmers that their contribution to the Income Tax should be doubled, and from the food production point of view I ask the right hon. Gentleman to consider whether he cannot accept the basis of rent and a half rather than two rents.
      I am aware that the farmer has the alternative of being assessed under Schedule D, but the difficulties are enormous. Few farmers hitherto have kept accounts, but even for those who do keep accounts it is very difficult, because the farmer takes from the farm, for the maintenance of his family, eggs, butter, milk, vegetables, and other commodities. If he had to keep an account of all those details, he would have almost to keep a clerk. At any rate he would have to devote time to keeping his daily accounts so as to be in a position to claim to be assessed under Schedule D. He would have to devote time every day, which, with the present scarcity of labour, is intense in agriculture, to keeping his books, when he ought to be tilling his land. From that point of view, I admit, the right hon. Gentleman has promised to meet farmers as fairly as he can with reference to their accounts, and I am grateful to him for his answer to my question yesterday, in which he said that if after a bad harvest the farmer finds towards the end of the year his income will not correspond at all to double his rent, he will allow that farmer to present his accounts to the surveyors, and if they pass them he shall make his January payment, which would be immediately after his financial year, on the basis of his actual profits. That was a concession which was of value, but I submit that, looking all round, the intense increase on this basis will have a deterrent effect on food production which will be very unfortunate just at present.
      We know the expenses of the farmer are greatly increased. We know that the wages paid are greatly increased—and we
      1644
      rejoice in it. We regret the low pay that the agricultural labourer has had to work for of old, resulting from the depression of the "Eighties" and the "Nineties,'" which made it impossible that a fair and just wage should be paid to the agriculture labourer.
      We who champion the cause of the farmer to-day do not do so from any selfish interest in the farmer, but with the desire that this great industry—and, after all, it is the greatest industry!—may be conducted on principles which will yield the largest possible contribution to the common wealth of the country. The proposal of the Government must have a disappointing, and, I think, deterrent effect on this. If I am right—and I think I am right—in saying that the Government proposals will increase the basis on which the farmer will pay Income Tax six times over to what was the case before the War, I think we do make out a case in which we have a right to appeal to the Government to consider whether they cannot put the basis at rental and a half. The Government proposal will have a very serious effect, I consider, on the milk supply. The chief milk supply, of the large towns is from the land adjacent to those towns, and that land very often is rented highly. Doubling the basis of the Income Tax in those cases will make it almost impossible for a dairy to be conducted. I will not say that the business of milk production under present circumstances, in view of those high rents, is quite unremunerative, but with a double basis of Income Tax it will make it almost prohibitive, and the result will be that which we shall all deplore, for it will lead to a considerable falling off in the production of milk.
      I should like to say a word or two in reference to the proposal to double the basis on woodlands. When the Agricultural Rates Act was before the House it was proposed to relieve woodlands the same as agricultural land. This suggestion was opposed on the ground that you must not show that consideration to the grower of timber. Within three years we were having in this House appeals to spend £2,000,000 or £3,000,000 of public money in afforestation. I, therefore, submit that anything that prevents natural development, and the skill of men, in the growth of timber is injurious to the country at large. I submit that a double Income Tax on the very expensive process of growing timber, just at this crisis

      1645
      too, when so much timber has been taken away, is a policy against the best interests of the country. I ask the right hon. Gentleman to yield to the suggestion that the basis should be placed at rental and a half, instead of two rents. Having regard to the burden of local taxation on agriculture, it will be only justice that he should do so. If he cannot see his way to accede to that proposal, then I do say it will be only just, that out of the responsibility of the farmer to pay Income Tax he shall have out of the sum he contributes are bate representing the unjust contribution which he makes to local rates, and which the present Prime Minister has admitted is intolerable. Surely, if to-day you double the farmers' Income Tax, you ought, at the same time he makes payment, allow a rebate on his contribution corresponding to the unfair burden that on all hands is recognised as resting upon him, seeing he contributes to the local rates on the basis of his raw material, which is the case with no other industry in the country.
      In the interests, therefore, of food production, I would appeal to the right hon. Gentleman. I would not for a moment ask—and farmers do not ask—that we should be relieved from a fair contribution to the cost of the War. Farmers have shown their patriotism by doing all they can, and transforming their system, in response to the request of the Government, to meet the requirements of the country in the matter of the food supply. All we say is, having regard to the fact that part of the difficulty of the food supply to-day has been caused by the inability of farmers, through the depression of the "Eighties" and "Nineties," to develop their land, and thereby contribute properly to the food supply of the country—calamitous as it has been—and seeing that Parliament did not help them much in the matter of agriculture, that Parliament will now take that lesson to heart, and not take action that may have the same effect—of injuring the development of that increased food supply which we are all anxious to see.
      Mr. DUNDAS WHITE: On the general question of this Resolution, as regards the taxation of farmers, I submit to the House, and to those who are opposed to the Government proposals, that it is not nearly sufficient that they should show, as can easily be done, that the taxation of the farmer is much higher than it was
      1646
      before the War. What they have to show is that the farmer is being taxed at a rate which is unduly high as compared with other taxpayers—that his taxation is out of proportion to his profits. I submit that they have not as yet succeeded in doing that. Indeed, we all know that profits have been very high. My own impression is that, taking farming as a whole, even if farmers are taxed double under Schedule B, they will in fact be taxed at a rather lower rate than if they were taxed under Schedule D, with books accurately kept. The case has been put by my hon. Friend who has just spoken of a farmer who might farm land whose valuation under Schedule B was £l,500 per year, so that double that valuation would give him a taxable valuation of £3,000 a year, thus making him liable to Super-tax. On that case, which was taken as a case illustrative of hardship, one would like to make two observations. The first is that a farmer farming on that scale in practically every instance will keep books, and if he does not keep books he certainly ought to. Whatever may be said for the small occupier doing without actual accounts, it seems really preposterous to suppose that a man farming on such an enormous scale as to pay £l,500 per year rent should work his farm without books. In the second place, the farmer who carries on. operations on that scale, if he were assessed under Schedule B, can always be assessed under Schedule D if he likes, and would, in fact, generally find that he ought to come within the Super-tax.
      Leaving the general question, I would like to say a few words about this question of woodlands, which to me, as to many hon. Members, seems to be of very great importance, particularly now that this country, which never had too much woodlands for a long time, has, to a great extent, been denuded of its timber. The matter has been raised on several previous occasions, and in Section 38 of the Finance Act of 1916 a special provision was made for woodlands, with a view to facilitating the planting of trees, the general line of that provision being that any person occupying woodlands might, instead of being assessed under Schedule B, elect to be assessed under Schedule D, and, if so assessed, should be entitled to the various allowances under that Schedule. The Chancellor of the Exchequer at that time thought this would do a great deal to help planting,

      1647
      and so, I think, it will. In view of the alternative given under Section 8 of the Act of 1916, as well as under the present proposals, I do not think there is very much hardship in a double tax of Schedule B, as it affects woodlands, because the occupier has the option of coming under Schedule D. There is this important point, that the mere increase of the tax, in so far as it relates to woodlands, will itself act as preventing people from planting woodlands. We desire woodlands to be planted, not so much for profit, but because of the effect that the presence of timber has on the adjoining land.
      I appeal to the Financial Secretary to the Treasury to institute before this Section of the Bill is reached an inquiry into the case of woodlands under the Act of 1916, in order to find out how far the occupiers have availed themselves of this provision, and exactly how the present arrangement as to woodlands works out. I hope he will see his way to do that before this question comes up again. I appeal to him to see whether, even if he applies the present provisions to woodlands, he may not also see his way to allow an extension of the deductions to which occupiers of woodlands are entitled, in order to lessen the amount of the tax they will have to pay, and in order to facilitate the planting of that timber which we so much desire to see increased.
      Mr. BALDWIN: I think this has been a very useful discussion, and I am glad to have this opportunity of saying a few words on these Resolutions in answer to the various points which have been raised. It must be obvious to every hon. Member that, in apportioning an increase of taxation throughout the whole of the community, it is impossible not to place some share of the extra burden on the farmers. It is quite obvious that there has been for some time a feeling among urban Members that the farmers have not been paying a sufficient share of the extra taxation. Unfortunately the only method we have at hand is Schedule B. The Chancellor of the Exchequer explained in his speech on the Budget the difficulties which made it impossible to bring farmers under Schedule D. I hope to see the day before long when everyone engaged in the farming industry will be brought under Schedule D, because, after all, the only fair basis for taxation is the actual basis of profit I hope it will not be considered
      1648
      blasphemous of me if I say that Schedule B seems to me to be an anachronism in these days. I have been carefully studying it, and it seems to me to be a poor kind of engine for the time in which we live. In the first place, you get great variations of rents, so that when you get taxation arbitrarily applied on the rent you are not dealing out even-handed justice between one farmer and another.
      In the second place, I suppose there is no industry where there is a greater variation of profits than in farming. It entirely depends whether a man has free access to the markets, upon what he is growing, and even the weather during the season may affect his profits. All these factors have to be taken into account. It is just as unfair for hon. Members representing urban districts here, when they read of some potato grower in Lincolnshire having made enormous profits in one year, to come to the conclusion that all farmers are making the same profits, as it would be for a Member representing a rural constituency to peruse the Report of the Auditor-General in regard to munitions, and then say that everyone engaged in manufacturing munitions was making profits on a huge scale, although it may be the case in some instances, partly due to their own good fortune, and partly owing to an absence of control during the early days of the War. I wish, as far as my voice may be heard, to protest against any general charges being levelled against the farmers as profiteers. As far as my knowledge goes—and I have teen among them all my life—it is a thoroughly unfair and an unjustifiable charge. I do not think farmers ought to be hold up here or anywhere else as a class who have abused (heir position any more than manufacturers or any other class of the community.
      With regard to the speech of the hon. Member for Barkston Ash (Major Lane-Fox), I think I shall be able to reassure him to a considerable extent on the points which he raised. I gather from what he said that he considers the fairest thing would be to get farmers under Schedule D. T think he is aware that a distinguished North Country Member as long ago as 1842 urged the same course, but Sir Robert Peel took the view that rents had risen, and always did rise in proportion to profits. From that he argued that a tax based on the rental was a fair one. Events during the last quarter of a century, or rather longer, have vitiated

      1649
      that, and I do not think anyone to-day would contend that rents have risen in proportion to profits.
      Mr. L. JONES: Sir Robert Peel reduced the proportion of the rent.
      Mr. BALDWIN: Yes, he reduced it by one-quarter. I agree that the concession made to come under Schedule D from Schedule B is not what might be vulgarly called a "soft" option, because it means that he has to make his declaration within a comparatively limited time, and it means also that in being assessed under Schedule D, he is assessed on a three-years' average. That brings us back to the real difficulty of the whole position—that you have not the accurate accounts on which that basis can be ascertained.
      I was surprised to notice that neither the hon. Member for Tavistock (Sir J. Spear) nor any other hon. Member made any mention of the third alternative, which seems not only the most valuable option to the farmer, but also the one which in this case is going to be of the greatest value; I mean the option under Section 27 of the Finance Act of 1896, which entitles him at the end of any of his trading years to obtain a reduction to the amount of the profits of the actual year just completed. Let me point out how that works, and what is the effect. In explaining how it works, I think I shall be able to show that my hon. Friend the Member for the College Division of Glasgow (Mr. Watt) was labouring under a misapprehension the other day when he spoke of the farmer having to pay up the whole under Schedule B before he could put in any claim. Imagine a man being assessed under Schedule B for the current financial year 1918–1919. He thinks that the assessment is very heavy, but he does not have to pay the tax until 1919; He then does not have to pay it in one lump sum. I am speaking of a man engaged in husbandry. He pays under Schedule B in two halves, one half on the 1st January, 1919, and the other half on the 1st July, 1919. If his farming year end, as many farming years do, on 30th September, 1918, or on 31st December, 1918, he can claim an adjustment for the year which has just expired, which means, if his claim be verified, that he can get back his rebate, if one be due, and be charged for the other half of his tax under Schedule B by reference to the actual profits. Therefore he is not in the position described by the hon. Member for the
      1650
      College Division of Glasgow of having paid out as large a sum as would be represented by Schedule B before he is able to get back as much as would put him on the basis of his actual profits in sufficient time. I think that is a very considerable and a very valuable concession, and if it is made use of, as I have no doubt that it will be in many cases, we shall do all that we can to see that these cases are dealt with promptly. It is our intention, as soon as the Finance Bill of this year becomes law, that the most careful description of these methods of taxation and the best way of meeting them shall be drawn up by the Board of Agriculture and the Board of Inland Revenue and shall be circulated throughout the country for the benefit of all farmers. I will try and see that the circulars are drawn up so that I can understand them myself, and I am quite sure that there will not be a farmer in the Kingdom who will not enjoy reading them on a Sunday evening.
      9.0 P.M.
      I should like to say a word about exemptions under Schedule B. It was impossible for us, in introducing this increase, to have done other than to include Schedule B as a whole. But we recognise that there are various items included in Schedule B which will be hit very hard, and, I think I may say, at first sight apparently unjustly. The only undertaking that I can give to the House to-night, which I do with the consent of the Chancellor of the Exchequer, is that between now and the introduction of the Finance Bill—I do not count its formal stage to-night—we will very carefully examine all instances of property included under Schedule B, apart from property used as husbandry. I can give no promise that we will make exemptions, but we will certainly consider the matter, and, if as the result of that consideration we think that there are some forms of property which should be exempted under this new rate, we will take care that provision is made for it in the Finance Bill.
      There is one thing of which I would like to remind hon. Members who sit, as I do, for agricultural districts.' I cannot see my way to meet my hon. Friend the Member for the Tavistock Division (Sir J. Spear) in reducing the charge that we put on this year from twice to one and a half times the rent. We must retain twice, with the liberty to them of appealing for another form of assessment. I would remind him

      1651
      that, after all, farming is the one business which has been and is completely exempt from the Excess Profits Duty. I do not say that the Excess Profits Duty would have caught a larger number of farmers—we have not the statistics to enable us to say—but it would have caught a good many.
      Sir J. SPEAR: The Excess Profits Duty is not paid on the first £200 above the income prior to the War, and, therefore, most farmers would be exempt.
      Mr. BALDWIN: That is perfectly true under the system of taxation which has existed, but it does not alter the fact that it is an impost from which they are free. The principal reason why they are free is that hitherto they have been taxed in such a way as to make it impossible for any datum line to be provided which would bring them within the Act, but it does not alter the fact that they do enjoy that privilege. That being so, I look to the farming community, when they have studied this question, to face twice the rent manfully, and take up their burdens, as all other sections of the community are doing, remembering that they have this right of appeal to other assessments, and bearing in mind that we have no desire in any way to penalise them; but that we mean to be as helpful as we can be in facilitating their appeals, and in instructing them through the Board of Agriculture how to prepare their accounts and to make those accounts as simple as we can make them, provided that we obtain the result we hope to obtain, which is a fair amount of taxation according to the profit made.
      Resolution reported,

      INCOME TAX (DEDUCTION ON ACCOUNT OF LAND ABROAD NOT TO BE ALLOWED).
      19." That in estimating the amount of annual profits or gains arising or accruing from any profession, trade, employment, or vocation and chargeable to Income Tax under Schedule D no deduction shall be made on account of the annual value of any premises used or occupied for the purpose of that profesion, trade, employment, or vocation if the premises are situated outside the United Kingdom.
      And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. J. HENDERSON: I understand that this is a proposal made to meet the decision in the Boustead case. The Resolution speaks of "the annual value." I suppose there is no attempt to prevent a trader who actually pays rent from obtaining the deduction, and that this provision only applies where the property belongs to the man himself. Is that not so?
      Mr. BALDWIN: I think that is so.
      Mr. HENDERSON: I want it to be made clear, because the word "value" might be made to apply to a case where the property did not belong to the man. Another question I wish to ask is whether the taxation under Schedule D is to date only from the 5th April this year, and that it has no retrospective effect? I understand it only deals with cases coming under Schedule D in the current Income Tax year. If that is so, I have no more to say.
      Resolution reported,

      EXCESS PROFITS DUTY.
      20. "That Excess Profits Duty under Part III. of the Finance (No. 2) Art, 1915, as amended or extended by any subsequent enactment, shall', unless Parliament otherwise determine, be charged for any accounting period ending on or after the first day of August, nineteen hundred and eighteen, and before the first day of August nineteen hundred and nineteen."
      Motion made, and Question proposed,
      "That this House doth agree with the Committee in the said Resolution."
      Sir J. WALTON: I have always supported the Excess Profits Duty, having held from the very outset of the War that no one should be allowed to enrich himself by profits arising out of War conditions. But I must again press the strong feeling that I have as to the unequal incidence of the Excess Profits Tax. That tax ought to be levied on the income of every citizen throughout the country who is in the enjoyment of profits in excess of his prewar profits or income. Notwithstanding the speeches we have heard to-night from my hon. and gallant Friend the Member for the Barkston Ash Division (Major Lane-Fox) and others in regard to the hardships that we are inflicting upon the farming industry of the country, I must say I am still extremely sceptical in regard to that. We are told we are taxing the farmer in Income Tax six times more than we were taxing him before the War. That only shows to me how far short of what

      1653
      was just and equitable was his taxation before the War. All I contend for is fair and equitable treatment all round in the matter of the incidence of taxation. I submit that, as a rule, the agricultural interest in this country have been reaping during the last two years enormous profits and, at the same time, have not been contributing nearly their fair and proper share to the War taxation that has been imposed upon the rest of the country. I recognise that the question of food production is one of vital importance to us at the present time, that we ought not to discourage the farmer by imposing upon him too heavy burdens of taxation, and that we ought to treat him generously But, at the same time, I recognise that to-night, in passing the Super-tax, we have practically let the farmer off, and I do not see why the farmer, along with other tax-payers of the country who have had increased incomes, should not pay Super-tax like other people under the same conditions. We have, however, let him off unless he is taxed under Schedule D. If he is taxed under Schedule D., it is only the very largest farmers in the country who will even then be touched by the Super-tax. If he elects to pay Income Tax on double his rent then, except in a very few cases indeed, he will be absolutely free from the Super-tax that touches everyone else with an income over £2,500 a year. Listening to the hon. Gentleman who has spoken in the interests of agriculture to-night, one would have no idea of the real facts in regard to farmers' profits. You best get the facts when a farmer wishes to make a claim for some compensation. When a farmer came not long ago before the Losses Commission, apparently he had no difficulty in keeping accounts.
      Mr. DEPUTY-SPEAKER (Mr. Whitley): I am afraid that the hon. Baronet has missed his target. We have got two stages beyond the Resolution to which he is speaking. We are now on Resolution No. 20.
      Sir J. WALTON: That is the Excess Profits Duty?
      Mr. DEPUTY-SPEAKER: Yes.
      Sir J. WALTON: I thought I was dealing with the Excess Profits Duty. I was endeavouring to show that the farming interest get off scot free as regards this particular duty, even though they are
      1654
      making largely increased incomes on their pre-war average. All that I am urging is that every section of the community ought to be treated alike, and that the only fair and equitable arrangement of an Excess Profits Duty is that it should apply to everyone in the country enjoying excess profits. The Excess Profits Duty applies practically only to firms and companies. For the life of me I cannot understand why it should not apply equally to individuals as to companies. Why not also apply it to professional men, many of whom are making incomes considerably in excess of those they enjoyed in pre-war days? My protest is simply that we appear to be losing sight of the only true principle of taxation, namely, equal incidence of taxation in these war times. If a man or a firm were making huge profits in the three prewar years, then they pay practically little or nothing in Excess Profits Duty to-day, but if another firm that was experiencing lean times in pre-war years is making enhanced profits to-day, then they pay enormously in Excess Profits Duty. [An HON. MEMBER: "All right!"] It may be all right in the sense that neither in the one case nor the other are they allowed to make immensely more than prewar profits, but still, in considering the question of equal incidence of taxation, it means that the man who is best able to pay—namely, the man who was doing well in pre-war years—may pay little or nothing, and the man least able to pay, the one who has had lean years before the War, pays infinitely more in proportion. Even the Chancellor of the Exchequer does not consider that the Excess Profits Duty is an ideal tax as levied to-day so far as equal incidence of taxation goes, and in this time of financial emergency we cannot expect to carry out as fully as we could in normal times the principle of the equal incidence of taxation. The farming interest, professional men, and others who are in the enjoyment to-day of much more than pre-war incomes ought by hook or by crook to be brought within the meshes of the Excess Profits Duty, and made to pay a fair share of the burdens of taxation which are now being imposed over the whole country.
      Resolution reported,

      EXCESS PROFITS DUTY (TRADING STOCKS).
      21. "That for the purpose of Excess Profits Duty profits arising from the sale of trading stock otherwise that in the ordinary course of trade, at any time after the twenty-second day

      1655
      of April, nineteen hundred and eighteen, shall, be deemed to be profits arising from a trade on business, and where any such sale takes place alter a trade or business has ceased the trade or business shall for the purpose aforesaid be deemed to have been carried on up to and including the date on which the sale takes place, and where any trading stock is disposed of otherwise than by way of sale it shall for the purpose aforesaid be treated as having been sold."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. CURRIE: I think most people will feel that the Chancellor of the Exchequer has acted justly, and not too quickly, in bringing to an end the possibility of these transactions escaping their fair share of Excess Profits Duty. He indicated the other night that there were difficulties in the way of any retrospective action, and so far as I know, while he might have been willing had it been practicable to reach back in somewhat the same way as was done regarding shipping, or in some other way, he does not think that is practicable. But I think a distinction can be drawn between transactions begun some time ago and finished before this date and others which were begun some time ago but have not yet quite reached the final stages. For instance, there is a well-known case in Scotland where a whisky business was bought a few years ago by a body of enterprising business men, and, according to current rumour, I believe well founded, bought up another well-known whisky business for £2,000,000, and on the ground that this was a capital transaction not a single farthing of Excess Profits Duty was paid, an injustice being brought about, very hard to bear, upon the general body of taxpayers, and not merely other Excess Profits Duty taxpayers. My belief is that a good many transactions of that class entered into some time ago were entered into on the understanding that the price representing the consideration of the transaction was to be paid by instalments as the goods were sold to the public, and if that is so it follows that many of these transactions am still in the stage of incompletion. If the Chancellor of the Exchequer could lay his finger upon any transaction in that stage he could fairly, without committing himself to the principle that retrospective legislation was justifiable, still rope these people in for their 80 per cent. of Excess Profits Duty, and if the facts are as I believe they are I think the thing could be done, because a great injustice has been
      1656
      worked to the general body of taxpayers by people who acted in that way, knowing perfectly well that they were practically evading the tax. The general objection to retrospective legislation is that it is unfair to tax a man in that way unless you have given him some warning. But people who have traded in that way had ample warning, because it has been a matter of current criticism for eighteen months that a good deal of public indignation was arising at the spectacle of these transactions being run through and escaping the Chancellor of the Exchequer's sieve. On that ground, also, retrospective taxation, which would otherwise be objectionable, would certainly be morally justifiable, and I do not think in the present case it would be impossible. I should like to hear what the Chancellor of the Exchequer has to say, if he is inclined to say anything at the present stage, as to transactions of that kind.
      Mr. J. HENDERSON: I give the Chancellor of the Exchequer notice that when he brings in his Bill I am going to move to make this retrospective. I know ho has said there is a great deal of objection to retrospective legislation. If he had been in the House the other night he would have found a measure in respect of rent going back to September, notwithstanding that in the interval a great many agreements were made. The Act itself was retrospective. It was not passed until July, 1915, and it related back to 6th August of the previous year, and a man or a company had to account for profits made in a prewar year all except a couple of days of the War. The right hon. Gentleman said the money may have been distributed. So it was there. I agree that retrospective legislation is bad in normal times, but these are not normal times, and this is not a normal Act. It was retrospective from the very beginning. I only want to strengthen the right hon. Gentleman's hands, and I am quite sure the House will support him in making this retrospective. I will tell the House what I know. Some whisky people bought up six wine merchants. They all had large stocks of whisky, wine, liqueur, and all the rest of it, and they bought them all up, goodwill and everything, by that process attempting to get rid of the Excess Profits Duty. The fiction is that at the last moment of purchase what was before an element of profit, namely, all these liquors, during that operation turned into solid capital

      1657
      which could not be taxed. That will not do in war time, and in face of the Excess Profits Duty. I want the right hon. Gentleman to consider it and say whether such a sale could not be treated as an ordinary sale. Suppose any of these wine merchants had an accounting period on 30th June, 1913. They make a profit in July. They make a profit in August, September. October, November, December, and then at the tenth or eleventh month they say, "Now we will avoid the Excess Profits Duty by selling the whole thing as a going concern. "That is not right. They ought to be accountable for all these months of profit. What I would have done would be this, that they should account from the last accounting period, and that for the purpose of profit and loss accounts when that sale took place the stock should be valued and esteemed at the value which they realise from it on the sale to the purchaser. That is perfectly honest and perfectly simple, although there may be some difficulty, because they may have mixed the thing up. I have probably said more on the subject of excess profits than any other Back Bench Member. I have always supported the Excess Profits Duty, although I have criticised it where it was unfair in its incidence. That anyone at this stage, in the fourth year of the War, should escape by such an attempt as that I have described is very wrong. I was in the company of a large whisky merchant the other day, and he said to me, "If I sold my whisky to-day I could make millions; but I am not going to do it, even if they allowed me. I am not going to pay 80 per cent. to the Chancellor of the Exchequer." My advice to the Chancellor is to commandeer these supplies, and then whatever price you get you will get 80 per cent. of it back. These transactions which have taken place for the purpose of avoiding the Excess Profits Duty ought not to be allowed to pass. Considerations which stand in the way of making this legislation retrospective are not valid, because this Act itself is retrospective, and the Chancellor of the Exchequer made the 80 per cent. duty retrospective last year. Although it was only introduced in the summer, it was made retrospective to January.
      Colonel GRETTON: The argument which has been addressed to the House has been based on a very limited subject, namely, the realisation of stock-in-trade and the- transfer of a class of business
      1658
      which at the present time consists entirely of stock accumulated because there is at the moment no reduction. This Resolution is rather obscure, but in so far as I understand it it applies to the sale of businesses of this kind. If it applies to a business which is an earning business and does not consist of stock-in-trade, but consists of potential earnings and not of stock, then the Resolution is of a very wide character. I would remind the House that if they are going to make a transaction of that kind retrospective they will disturb very vast transactions which have taken place within a recent period. It is very well known that there have been amalgamations of shipping businesses. A certain class of steamer known as the tramp steamer, which was not earning very large profits before the War, has during the period of the War become exceedingly valuable, and companies engaged in businesses of that kind have realised their steamships as going concerns and made very high profits. Is it intended to tax transactions of that kind? There are two distinct classes of transactions, the realisation of stock-in-trade which lies there for sale, and the transfer from one control to another of an earning business which does not consist of stock-in-trade but potential powers of earning revenue and dividend. The matter requires to be cleared up, and it was in the hope of getting an explanation that I rose.
      Mr. BONAR LAW: As my hon. Friend has promised to bring this subject forward later I hope he will not mind if I do not deal with it now at any length. I came to the conclusion which I announced in this matter after a good deal of consideration and a good deal of inquiry. If I believed that all, as I believe there are some, cases where transactions took place for the express purpose of avoiding the Excess Profits Duty, I would have had no hesitation whatever in making it retrospective, but I am led to believe that there were a good many transactions of that kind which were really done in the ordinary way of business. That being so, I felt very strongly that I was right in the course I was taking. I have considered it very carefully. My hon. Friend was wrong in saying that this is on the same footing as the 80 per cent. duty last year, which he says was made retrospective. I was very careful not to make it retrospective in any sense. We gave notice in January that we intended to raise the Excess.

      1659
      Profits Duty, and we only made it retrospective to the extent of that indication of what we intended to do. However, this matter will be brought forward at a later stage and can be considered then. I have listened carefully to what my hon. Friend and others have said, and I hope the House will be satisfied to let us have the Resolution now.
      Mr. CURRIE: If the Resolution is passed as it stands, will it be possible on the Committee stage to say anything at all as to imposing a further charge by making this retrospective, or does this finish the matter completely?
      Mr. DEPUTY-SPEAKER: I do not think it would be impossible to say anything, but it would be impossible to do much unless the Committee persuaded the Government to bring in a further Resolution in Ways and Means. It is always open to do that. If the proposal is to impose fresh taxation, neither to-night on the Report stage nor on the Committee stage can that be done. Any proposal for additional taxation must originate in Committee of Ways and Means.
      Mr. BONAR LAW: I think I am right in saying that the House will be in the same position on the Committee stage as it is to-night in connection with the Resolution.
      Mr. CURRIE: Will the right hon. Gentleman say something about incomplete transactions? There are transactions still hanging over for settlement.
      Mr. BONAR LAW: I would rather not say anything about that, because it is rather difficult to say when a transaction is complete. My hon. Friend has had a lot of business experience, and so have I. I have always regarded a transaction as complete when the contract is signed.
      Mr. CURRIE: The settlement is not complete.
      Mr. BONAR LAW: That is a subject on which I would rather not say anything at this stage.
      Mr. HENDERSON: Supposing for months since the date of the last accounting period they had been earning profit in this ordinary daily business, are they to escape from that?
      Mr. BONAR LAW: I would rather leave that point now.
      Resolution reported,

      STAMP DUTY (BILLS OF EXCHANGE).
      22. "That twopence shall be substituted for one penny as the Stamp Duty on all bills of exchange and promissory notes now chargeable with duty at the rate of one penny."
      Motion made, and Question proposed, "That this House doth agree with the Committee in the said Resolution."
      Mr. D. MASON: This proposal to increase the duty upon cheques has created more opposition and more discussion throughout the country than any other proposal of the right hon. Gentleman. Just to mention some of the more important bodies which have already protested against it, I might say that the London Chamber of Commerce passed a Resolution the day before yesterday, and the London Stock Exchange and many other bodies have passed Resolutions asking the right hon. Gentleman to consider the inadvisability of proceeding with this tax. In some of the previous Debates which we have had this afternoon and evening it was suggested that certain interests were represented, but I think the right hon. Gentleman will agree with me that this appeal, which I now make to him, and which I believe many others will probably endorse, is one not representing any particular interest, but is in the general interests of the whole trading community. It is quite true that some bankers may have expressed themselves as being in favour of this tax, as it may not mean any hardship to them, or because it possibly may reduce the number of transactions, and therefore the clerical work involved. This is not a banking problem; it is one which directly affects the whole trading and commercial community. I believe that anything that will tend to retard the use of cheques will be likely to interfere with business. The cheques of to-day are used for very small sums, often, I think, as low as 5s. That in itself, I think, is an advantage. It has been suggested—and, I think, very properly—that if this tax is persisted with it will tend to discourage the use of cheques, and the result will be an increase in the use of paper money. Even the Chancellor of the Exchequer will agree that while an emergency circulation may be necessary in time of war, anything that can be done to prevent us from unduly extending that most undesirable form of circulation ought certainty to receive his support; and anything which is likely to retard that desirable object—namely, the

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      reduction rather than the extension of Government paper money—should surely appeal to him. It has been argued that there is no difference between the circulation of cheques and Treasury currency notes. One authority suggested that, but it was pointed out, I think by the City Editor of the "Times," that there is a very vital distinction. I should rather like to elaborate that. The difference between a Treasury currency note and a cheque is this, that the cheque rapidly returns to the issuer, whereas Treasury notes remain in circulation and accentuate the inflation, which leads to a still further rise in prices, which again stimulates imports, and further embarrasses finance. On the other hand, the more cheques that are used do not circulate in the sense that Treasury notes circulate, because they are rapidly returned to those who issue them, and the currency is contracted rapidly accordingly.
      I cannot see why the right hon. Gentleman, who has been most reasonable, and is always ready to listen to any protest or appeal made to him by hon. Members in this House, should proceed with this tax. He has said that the amount which will be raised— £ 1,000,000—is not a large amount, but that, of course, a million is a million. I quite agree; it is not on the ground of the amount. If this amount which is to be added to the Revenue could be added in a legitimate way, then I, for one, would heartily support any proposal likely to lead to an addition to the Revenue; but at this time a million would be dearly bought if it tended to interfere with and to discourage our trade and commerce, and if it accentuated this inflation, as I believe it would, and which, I think, the Chancellor himself now admits, because, in answer to a question, recently, he said that the Treasury were now watching the extension of Treasury currency notes. When we remember that the figures of the currency notes now amount to something like £235,000,000, whereas the gold reserve held against them is only 28½millions; and when I remind the House that the total in paper money which has been issued by all the belligerents amounts to no less than 44,131 millions, surely any measure such as this, which would be likely still further to accentuate that, would be a most unwise one. As I have already said, the small sum obtained in revenue would not be commensurate with the injury which it might do and the discouragement it might
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      inflict on trading operations and commerce by accentuating inflation. This should surely influence the right hon. Gentleman, before he brings in this Bill, to drop this most undesirable tax. After the facts which I have ventured to submit to him, I think the right hon. Gentleman will consider this matter. When great chambers of commerce, when bodies such as the Stock Exchange, and when many bankers who, if they take the trouble really to consider this question, offer their protest, then these things should surely carry weight with the right hon. Gentleman. He has already said he has consulted with some bankers. I do not suggest that bankers are superior to other people. Probably they are very similar in their characteristics and human nature to other members of the community. I do not wish to reflect on them in any way, but when we know that inflation is an advantage to bankers personally, you cannot wonder that, as a class, they have not worried very much about this problem. While I do not wish to reflect on them, if they thought it was likely to give them less clerical trouble with regard to the cheques and if it would in another manner lead to opportunities of obtaining further profit, then you can understand the banking community, as bankers, have not taken a very active position in opposing this increase.
      But I venture to appeal to the right hon. Gentleman, in the interests of our trade, of our credit, and of the general situation. This tax will unquestionably tend to reduce the amount of circulating medium in the shape of cheques, and cheques are the only things we have now, apart from Treasury notes and Bank of England notes. Bank of England notes, as hon. Members will agree, we seldom see at all now. The real circulating currency to-day is the Treasury currency note. The Treasury currency note, considered as currency, is, of course, the finest you can have in the world. It is too good, really; it is so good that it never returns to the user. The only reason why it might return would be if the public were to distrust the ability of the Treasury to repay the notes, and then there would be a panic. But the very fact that it is so good makes its redundant, and leads to inflation and a rise in prices; whereas, if you could, by some means, restrict your currency, you would tend to reduce prices to some extent and to alleviate the distress and embarrassment that comes from that.

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      Therefore, if you can encourage the use of cheques, which are a natural form of currency, and which, by the mere fact that they are drawn by private individuals and not secured by the revenues of the United Kingdom naturally tend to contract and are not elastic in the sense that they come back to the users, you will be doing something to alleviate the increasing evil of inflation, which is so prevalent to-day. I appeal to the right hon. Gentleman to consider the various resolutions that will probably be presented to him in the course of the next few days or weeks before he brings in his Finance Bill.
      Mr. J. MASON: The hon. Gentleman who has just addressed the House has given the opinion that the use of cheques owing to the increased tax would be largely abandoned in favour of the increased use of Treasury notes. But I think everybody will agree that, so far as cheques for a substantial amount are concerned, 2d. instead of 1d. would have no effect at all. No one drawing a cheque of any size ever considers whether he pays anything or pays nothing. It is only in regard to the small cheques that the 2d. would be considered, but even in relation to them you have to think what the alternatives are to using them. You have the alternative of sending a postal order, but you have to pay for it. You have the alternative of sending a Treasury note in an envelope, but it must be registered, and again that costs 2d.; or you could walk round and pay the Bill yourself, but that would involve the losing of a considerable amount of time which one may assume, in some cases, would be worth at least 2d. Finally, you may abandon paying the bill at all, and take the consequences. I sincerely hope that the Chancellor of the Exchequer will maintain this additional 1d. upon cheques.
      Mr. BONAR LAW: If the House desires to press this, of course there will be an opportunity in connection with the Finance Bill. In the meantime I hope there will not be much of a discussion tonight. I should like to make it plain to the House, and to those interested outside, that I have not seen any reason, so far, to alter the decision which I took when introducing this proposal. I think what my hon. Friend has said, in a way which commends itself to the House, is precisely the consideration which decided me in putting on this tax. I admit I did
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      not think of his fourth alternative. [Laughter] I do not think that the making of the tax 2d, instead of 1d., will seriously diminish the number of cheques. I wish the House to understand that I did not put this tax on without doing my best to find out what the effect would be. Naturally. I could not go round to every hank to inquire, but what I did was to discuss it with one or two of the leading bankers in London, and I asked one of them to inquire of any of his friends what was the general opinion, and I was told by the bankers I consulted that, in their view, the 2d. would be paid just as the Id. now is. with very little notice after the first two or three weeks. I cannot, obviously, give the names of those whom I consulted, but one of them, a well-known banker, who used to be a Member of this House, said that it was a very reasonable tax in the present conditions. If the change should lead to a scarcity of silver, we might be prepared to issue 5s. currency notes earlier than would otherwise be necessary, but I do not want to do that, and if I believed for a moment that the effect would be to reduce the number of cheques, I would not go on with it. It is a kind of tax which it would be quite easy for organised bodies to make it impossible for me to continue. But I am convinced that the view expressed by my hon. Friend is the right one, and that it will have no serious effect in reducing cheques. Only to-day I received a letter from the chairman of one of the big banks. He wrote:
      "In a week or two the 2d. cheque would be in use as if there never had been any other."
      It may be that it will not be a useful tax after the War, and that we shall have to go back to the old custom, but we can deal with that when the time comes. Unless an agitation is started—which it would be quite easy to do—and if the people, who are using cheques now, look upon this as a very small help towards the War—as something they are paying in addition—if they keep that view, it will have no effect whatever on the use of cheques, and I hope the House will try to stimulate that view. I am convinced, so far as I can judge, that the tax will not have the effect that is expected, and that being so, I ask the House to support mo in regard to it on the Finance Bill.
      10.0 P.M.
      Sir F. BANBURY: I am rather inclined to think that the effect of the Cheque Tax will not be altogether such

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      as the hon. Gentleman opposite (Mr. D. Mason) has suggested. I am not of opinion that it "will result in encouraging the use of currency, because, after all, the cheque is a convenient method of remitting money, and in all probability that convenient method will still be continued. There is, however, a very strong feeling in business circles against the imposition of this tax, and only yesterday I received a letter from the Committee of the Stock Exchange, informing me that they had passed a resolution, which has been sent to the Chancellor of the Exchequer requesting him not to proceed with this proposal, on the ground that it would inflict very considerable inconvenience in connection with business transactions, while the revenue to the Exchequer would be extremedy small. I think that that is true. The view I take of the case is that it is a tax on industry. A private individual like myself will not be much affected by it, but where you have a very large number of cheques to draw there is no doubt the tax will be an additional burden upon an already overburdened industry, which has to pay Income Tax and Excess Profits Duty, and is now to have this additional charge imposed upon it. There is another point. I do not say it is a very serious one—which ought to be considered, and that is that a large number of people have already got cheque books. How is it proposed that the additional tax shall be imposed? Is the owner of the cheque book to affix an additional Id. stamp on every cheque he draws?
      Mr. KING: It would be easy enough.
      Mr. BONAR LAW: I may say we quite recognise that difficulty, and we are considering now in what way it will be possible to facilitate the operation. We shall do everything in our power to make it as easy as possible.
      Sir F. BAN BURY: I am glad to hear that from the Chancellor of the Exchequer. These matters are small, but they cause irritation. I hope the right hon. Gentleman will bear in mind the inconvenience that may arise. As far as I have been able to ascertain—and, of course, it is impossible to get the opinion of a big constituency like the City of London on a matter like this in so short a time—I think the Chancellor of the Exchequer will acknowledge that the business men of London have shown them-
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      selves desirous of meeting him in every possible way; they are not in the habit of putting difficulties in his path, even although his proposals may considerably inconvenience them—there is a strong feeling in the City that this tax is inconvenient and troublesome,and will produce very little return to the revenue. I remember when the late Lord St. Aldwyn proposed to do the same thing, he met with very strong criticism, and was obliged to abandon the tax. In times like these a Chancellor of the Exchequer bringing in a Budget nearly always has some little point on which he may possibly yield, and perhaps this is the small and only point upon which my right hon. Friend is going to yield. I am not asking for any pledge, but I think it might be well if he would consider the arguments I have put forward in the interests of those who have hitherto so loyally supported him in his taxation.

  WAYS AND MEANS— [23rd April]
  Resolution reported.
  WAYS AND MEANS— [23rd April]

    AMENDMENT OF LAW.
    "That it is expedient to amend the Law relating to the National Debt, Customs, and Inland Revenue (including Excise), and to make further provision in connection with Finance."
    Bill ordered to be brought in upon the said Resolution by the Chairman of Ways and Means, Mr. Bonar Law, and Mr. Baldwin.
    FINANCE BILL,—to grant certain duties of Customs and Inland Revenue, including Excise, to alter other duties, and to amend the Law relating to Customs and Inland Revenue, including Excise, and the National Debt, and to make further provision in connection with Finance," presented accordingly, and read the first time; to be read a second time upon Monday next, and to be printed. [Bill 24.]

  LAND DRAINAGE [EXPENSES].
  Considered in Committee.
  [Mr. J. W. WILSON 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 the Expenses of the Board of Agriculture and Fisheries under any Act of the present Session to amend the Land Drainage Act, 1861, and to make further provision for the drainage of agricultural land."
  Mr. KING: I do not know who is in charge of this Resolution. I think, however, that someone connected with the Board of Agriculture ought to be here, and I must protest. (Sir R. Winfrey here entered the House.) I am very delighted to see a representative of the Board of Agriculture present. What I want to suggest is that even in a small Bill like the Land Drainage Bill some definite sum ought to be fixed in order that we may know that we are not launching out into a vast expenditure. I presume this Bill would never have been brought in unless the Treasury had been consulted, and had fixed some limit to the amount of money that was to be expended under it. If so, why cannot that sum be stated in the Financial Resolution? I must protest again—I do it for the twentieth or thirtieth time—against Financial Resolutions on quite small matters being brought in with unlimited amounts. How are we to know what expenditure is here involved? It may be £100,000, or it may be £2,000,000 or £3,000,000. I hope we shall have some assurance, at any rate, that the amount is to be limited, that the Estimate has been well considered by the Treasury, and that there is a limit beyond which the expenditure is not to go.
  The PARLIAMENTARY SECRETARY to the BOARD of AGRICULTURE (Sir R. Winfrey): It is not estimated that the expenses under this Bill will be at all large, because under the measure the Board of Agriculture will carry on the drainage scheme, and then we shall recover from the different landowners the expenses which are incurred. There will, however, naturally be a certain amount of expense in promoting these drainage schemes in the country. As to how far we shall be able to get on with these schemes during the War it is impossible to say, but at any rate the expediture is not going to be of any considerable character.
  Mr. KING: Has any limit been given?
  Sir R. WINFREY: I am afraid not.
  Sir F. BAN BURY: The hon. Member (Mr. King) has stated that in his opinion it is a mistake to pass a Resolution of this sort unless a limit is given to the expenditure. That is one of the things I have been endeavouring to do for a number of years, and it is one on which, as a matter of fact, I defeated the Government, of which the hon. Gentleman was a staunch supporter, and in all probability he voted against me on that occasion.
  Mr. KING: I am afraid I did.
  Sir F. BANBURY: I am sorry to hear that, because I am afraid it shows that the hon. Gentleman is not as consistent as he might be.
  Mr. KING: I am reformed now.
  Sir F. BANBURY: Then I suggest that the hon. Gentleman should have followed my example and moved an Amendment limiting the amount which the Board of Agriculture could have spent on this one particular thing. I would point out to him that it is a perfectly easy thing to do. All he has to do is to put on the Paper an Amendment to the Resolution "Providing that such sum shall not exceed" any particular amount, and when that is done reasons ought to be advanced why that is not accepted.
  Mr. KING: I will do it on the next Bill.
  Sir F. BANBURY: The next Bill is not as important as this Bill, because the next Bill involves a very much more limited amount. Seriously, however, I was not here yesterday for reasons over which I have no control, but I should like to have some assurance from the Government a little more definite than the mere statement that the amount will not be large, because in these days a statement that the amount will not be large may mean anything or may mean nothing—
  Mr. J. HOPE (Lord of the Treasury): You have just said that millions are nothing.
  Sir F. BANBURY: As the hon. Gentleman says, millions are nothing. The Parliamentary Secretary may mean that he will not exceed £10,000,000 sterling, or something of that sort, and that is a very large sum of money to vote at the present time. The hon. Gentleman says they are going to recover it from the landlord. That is not very pleasant for the landlord from whom you arc going to recover it.
  Sir R. WINFREY: It will improve the land.
  Sir F. BANBURY: The Board of Agriculture have done a great many things lately which have not improved the land, which have caused a loss, and I am a little doubtful in giving powers to the Board of Agriculture which are not going to improve the land. I think it might probably do considerable damage to the land. We are fortunately now in Committee, and the hon. Gentleman

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  can speak again. I would like, therefore, to have some assurance from him, firstly, that if damage is done to the land some compensation will be given to the landlord, and, secondly, that the amount will be limited to—what shall we say? [HON. MEMBERS: "Ten millions!"] No, something really small, say, £500,000, or something of that sort, which in these days is not very much. I trust the hon. Gentleman will give me some answer which will satisfy me, otherwise I shall be compelled to do what the hon. Gentleman (Mr. King) has not done, and move an Amendment containing the words I have suggested.
  Mr. RAFFAN: The speech of the hon. Baronet (Sir F. Banbury) compels me to put to some extent the contrary view to that he has expressed. I should have been very glad if we had had an estimate, but I can see the difficulty with regard to that. The Minister for Agriculture stated last night that under this Bill it may be possible—and, indeed, he hoped it would be possible—that 1,000,000 acres of land now waterlogged would be made available for food production. As my hon. Friend on the Treasury Bench has stated, one can quite conceive this difficulty of seeing how much work can be done during this year owing to the War, and Die consequent difficulty of giving any detailed estimates. I should, however, like an assurance in regard to this. As I understand the scheme of the Bill is that the actual cost of the drainage work is to be defrayed by those who benefit from it, and is to be covered from a drainage rate imposed on the owners of the land which is improved. I should like to secure if I could an assurance that if no opposition is offered at this stage the expenses incurred will be strictly limited to expenses of administration, and that so far as the actual work of drainage is concerned it is intended that any burdens shall fall on those who benefit because of the improvement in their land. If I could have that assurance, so far as I am concerned, I should for the moment be satisfied, but I think we are entitled to ask what is intended. If the idea were to subsidise schemes of reclamation and drainage then, indeed, if you are to deal with a million acres, this House might be launched into very, very large expenditure indeed. I should like some assurance on that point.
  Sir R. WINFREY: I think I can give the hon. Member the assurance that he requires, that the expenses under this Bill should be limited to the administration; and I think I can assure the right hon. Baronet (Sir F. Banbury) that we hope to improve the land by our scheme
  Sir F. BANBURY: I am satisfied with the first, but not with the second.
  Question put, and agreed to. Resolution to be reported to-morrow.

  HORSE BREEDING [EXPENSES].
  Considered in Committee.
  [Mr. WILSON 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 the expenses of the Board of Agriculture and Fisheries under any Act of the present Session to regulate the use of stallions for stud purposes." —[Sir R. Winfrey.]
  Mr. KING: Profiting by the admirable advice recently given to me by the right hon. Baronet (Sir F. Banbury), I beg to move, at the end of the Resolution, to add the words "provided that the total amount payable shall not exceed £10,000 in any one financial year."
  I do not need to repeat the remarks I made just now, but I must point out that here we have a Resolution for an absolutely unnamed sum, an unlimited amount. This is a small Bill. There are very few horses in the country. You cannot do much in expenditure on breeding now, because nobody can afford to keep horses. If one has not got a horse, one cannot afford to buy a horse. Therefore the scope of this Bill must be limited, and in these days when economy is so necessary I want to know of the sum the Board of Agriculture put on these questions. Have they any idea how much they are going to spend? Have they got from the Treasury permission to spend up to any limited amount? I really think we ought to have an answer to this question, and it is in that spirit and desiring not to hinder but to clarify the views and make more definite the plans of the Board of Agriculture that I beg to move this Amendment.
  Mr. WATT: I desire to say a word in support of this Amendment put by my hon. Friend the Member for Somerset. I

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  think it is right, when the House is passing this Financial Resolution, that a limit should be put upon it, and I think £10,000 is sufficient for this particular object. Then I would like to ask the right hon. Gentleman as to the administration of this fund. He is aware that the Board of Agriculture and Fisheries has no jurisdiction in regard to Scotland, and I would like to know whether Scotland is not to have the benefit of this Bill dealing with stallions, and, if so, how is it to be administered? The office of the right hon. Gentleman cannot administer it in Scotland, and provision ought to be made for the Local Government Board in Scotland] to have some share of it.
  Sir R. WINFREY: There is a provision in this Bill to apply it to Scotland and to Ireland. I may say that £10,000 would be quite sufficient, and I accept the Amendment.
  Mr. WATT: That does not overcome my difficulty. This money is being given to the Board of Agriculture and Fisheries, and they have no jurisdiction in Scotland, and therefore Scotland will have no share of this money if it is passed by the Committee, if it is given to the Board which has jurisdiction only in England. I ask the right hon. Gentleman how Scotland is to get its share. Is it proposed that the Board of Agriculture will hand it over to Scotland and allow them to administer it? If so, what is the figure that is to be handed to Scotland because she ought to get her fair share? And what is the figure to be handed to Ireland? Whether Scot land is to have a fair share or not, it is right that the figure should be limited by this Committee, and, in my view, £10,000 is enough to spend on this scheme in war-time.
  Mr. KING: I would like to say how gratefully I acknowledge the way in which my proposal has been met. My only regret is that I have not put it at £5,000. As I understand I can do that on the Report stage, I will not trouble the hon. Member to capitulate any further this evening. I have always admired the hon. Member, who is one of the best members of the Government, and I do so still more to-night, and express the hope that he and others will be equally prompt and graceful in their capitulations.
  Amendment agreed to.
  Resolution to be reported To-morrow.
  The remaining Orders were read, and postponed.
  Whereupon Mr. SPEAKER, pursuant to the Order of the House of the 13th February, proposed the Question, "That this House do now adjourn."
  Adjourned accordingly at Twenty minutes after Ten o'clock.
  Mr. SPEAKER has, in pursuance of Standing Order No. 1, nominated—

  The Right Hon. John William Wilson,

  The Right Hon. Sir Willoughby Hyett Dickinson,

  The Right Hon. Charles William Bowerman,

  Mr. Thomas Power O'Connor, and

  Mr. John Frederick Peel Rawlinson

  to act during this Session as temporary Chairmen of Committees when requested by the Chairman of Ways and Means.