FINANCE BILL.

HC Deb 12 July 1920 vol 131 cc1999-2122

Considered in Committee.—[Progress 7th July.]

[Mr. WHITLEY in the Chair.]

CLAUSE 40: (Continuance and increase of Rate of Excess Profits Duty).

(1) The Finance (No. 2) Act, 1915 (in this Part of this Act referred to as "the principal Act"), shall, so far as it relates to excess Profits Duty, apply, unless Parliament otherwise determines, to any accounting period ending on or after the fifth day of August, nineteen hundred and twenty, and before the fifth day of August, nineteen hundred and twenty-one, as it applies to accounting periods ended after the fourth day of August, nineteen hundred and fourteen, and before the fifth day of August, nineteen hundred and twenty.

(2) Section thirty-eight of the principal Act shall, as respects excess profits arising in any accounting period commencing on or after the first day of January, nineteen hundred and twenty, have effect as if sixty per cent. of the excess were substituted as the rate of duty for forty per cent. of the excess, or, in the case of an accounting period which commenced before that date but ends after that date, as if sixty per cent, were substituted for forty per cent. as respects so much of the excess as may be apportioned under this Part of this Act to the part commencing on that date.

In calculating any repayment or set-off under Sub-section (3) of Section thirty-eight of the principal Act any amount to be repaid or set off on account of a deficiency or loss arising in any accounting period commencing on or after the first day of January, nineteen hundred and twenty, or, in the case of an accounting period which has commenced before that date but ends after that date, on account of so much of the deficiency or loss as may be apportioned under this Part of this Act to the part commencing on that date, shall be calculated by reference to duty at the rate of sixty per cent.

Any additional duty payable by virtue of this Section in respect of a past accounting period may be assessed and recovered notwithstanding that duty has already been assessed in respect of that period.

Mr. GEORGE TERRELL

May I ask your ruling, Mr. Chairman, as to the interpretation to be placed on Clause 40, which we are now about to consider? This Clause continues the Finance (No. 2) Act of 1920, and Sub-section (2) provides that Section 38 of the Act shall, as respects excess profits, have effect as if 60 per cent. of the excess were sub- stituted as the rate of duty for 40 per cent. of the excess. The Act of 1915, Section 38, provides that the excess is to be 50 per cent., and I should like to know whether in regard to the Amendment to omit Sub-section (2) the effect will be to reduce the duty to 40 per cent. or to 50 per cent.

THE CHAIRMAN

The effect of leaving out Sub-section (2) of Clause 40 would be to leave the rate of Excess Profits Duty as it was last year, namely, 40 per cent., and we should not revert to the original rate of 50 per cent. as it stands in the second Finance Act of 1915.

4.0 P.M.

I think it will be for the convenience of the Committee if I indicate the way in which I propose to deal with the earlier Amendments to this Clause. The first Amendment, standing in the name of the hon. Member for the Exchange Division of Liverpool (Mr. Leslie Scott), to insert at the beginning of Sub-section (1) the words "subject to the modifications contained in this part of this Act," is out of Order because, it is unnecessary. The second Amendment, standing in the name of the hon. Member for Chippenham (Mr. G. Terrell), to leave out Sub-section (1), is equivalent to negativing the Clause, and those Amendments are not permitted. Of course, if the Committee desire to reject the Clause, they can do it when we reach the end of the Clause. There is a series of Amendments on the Paper dealing with minor mitigations of the Excess Profits Duty, and some of them will come properly as Amendments to one or other of the Chancellor's new Clauses which now appear on the Order Paper. For instance, the Amendment, at the end of Sub-section (1), to add Provided that the profits standard shall in every case be the statutory percentage on the average amount of capital employed in the trade or business during the accounting period, as defined by the principal Act; and so much of the principal Act as relates to the calculation of the pre-War standard of profits by reference to the profits of or the capital employed in the business in any pre-War trade year shall cease to have effect"— standing in the name of the hon. and gallant Member for Newcastle (Major Barnes), is a matter for an Amenldment to the second new Clause of the Chancellor of the Exchequer (Amendment as respects pre-War standard in accounting periods ending after 31st December, 1919), dealing with Excess Profits Duty. The same remark applies to the following Amendment, at the end of Sub-section (1), to add —(2) The statutory percentage shall, in the case of a trade or business not carried on or owned by a company or other body corporate, be taken to be eleven per cent. instead, of eight per cent., and accordingly Sub-section (2) of Section twenty-six of the Finance Act, 1917, shall have effect as though eleven per cent, were substituted for eight per cent."— standing in the name of the hon. Member for Rossendale (Mr. Waddington). It should be an Amendment to the Chancellor's new Clause (Reduction of Duty in the case of certain transfers of stocks and marketable securities). I need not go through all these minor Amendments. If they are cognate to the subject-matter of the new Clauses of the Chancellor of the Exchequer, they will probably come as Amendments to those Clauses. If not, they will be the subject of new Clauses by themselves, with this exception, that Amendments of Section 38 of the principal Act come properly within the scope of Clause 40. There are at present two of those Amendments upon the Paper. One stands in the name of the hon. Member for Chippenham (Mr. Terrell), and proposes to substitute £2,000 for £200 as the first amount which escapes the Excess Profits Duty, and the other stands in the name of the hon. Member for South Islington (Mr. Higham), at the end of the Clause, to add (3) In the case of any person who has served during the War as a member of any of the naval or military forces of the Crown, or in the service of a naval or military character in connection with the War, for which payment was made out of money provided by Parliament, or in any work abroad of the British Red Cross Society or the St. John Ambulance Association, or any other body with similar objects, and who has commenced business for the first time after demobilisation or discharge, line six of Section thirty-eight (1) of the principal Act shall read as if the word 'five' was substituted for the word 'two'"— which again proposes to amend Section 38 of the principal Act. I propose taking in the first place the Amendment of the hon. Member for Chippenham to leave out Sub-section (2). The effect of it will be to reduce the Excess Profits Duty from 60 per cent. to 40 per cent., at which it was placed in the Act of last year. On that Amendment, I propose to allow a fairly wide Debate, so that some discussion can be taken as to the general effect of the duty and so that reference may be made also to the question as to how far the proposals of the Chancellor the Exchequer at present appearing on the Paper meet the desires of hon. Members.

Lieut.-Colonel Sir F. HALL

I have the first Amendment down to leave out Subsection (2). May I ask why someone else is to move the Amendment?

The CHAIRMAN

It is always entirely a matter within the discretion of the Chair, where several Members tender the same Amendment, who shall be called upon to propose the Amendment. It is quite a matter of chance how the Amendments get upon the Paper, and I consider that the hon. Member for Chippenham, who has interested himself in this matter, is entitled to move the Amendment.

Sir F. BANBURY

What would be the effect if Sub-section (2) were left out of the Clause? If Sub-section (2) be left out, does it not follow that the principal Act again becomes the governing factor in the Bill? The principal Act imposes a charge of 50 per cent. and not 40 per cent., which, I understand, is the Amendment which the hon. Member (Mr. Terrell) wishes to move. I have taken the trouble to look up the principal Act, and it seems to me that the omission of this Sub-section would be to substitute, not 40 per cent. but 50 per cent. for 60 per cent.

The CHAIRMAN

It was observing the right hon. Baronet's Amendment on the Paper that caused me very carefully to investigate this question. Since the original Act, which imposed 50 per cent., the rate has been varied by every Finance Act, except one, the Act of 1918. In that case there was no Sub-section (2). The right hon. Baronet will notice also that in every one of the preceding Acts there was a Sub-section (2) which varied, as this Sub-section does, the pre-existing rate of the duty. Therefore, I have no doubt that the effect of leaving out Sub-section (2) from the present Clause will throw us back to last year's Act and not to the principal Act of 1915. I think, if the right hon. Baronet went through all the Acts and considered them together, he would see that is the effect.

Sir F. BANBURY

As a matter of fact, I did go through all the Acts, and I came to this conclusion. I noticed that where a variation was going to be imposed this form carried it out, but where there was to be no variation there was no form, and you went back to the Finance Act of 1915. I may be quite wrong, but that is my conclusion after going through the matter very carefully. It is a very doubtful point, and, as it is a very important matter, I think the Committee ought to be quite certain. I do not suggest it, but in case the law officers should hold that I am right and that you arc wrong, I would ask the Government if they could not give a pledge that they would give effect to the intention of my hon. Friend opposite.

The CHAIRMAN

I took the precaution of fortifying my own view by the opinion of the most distinguished authority of the Crown on this subject. I found that he agreed with me, and I shall be very glad to show the right hon. Baronet the considered reply which I received.

Sir F. HALL

I am not questioning your ruling, but I should like to ask, for the general knowledge of the Committee, whether it is not the established custom of the Committee that an Amendment should be moved by the hon. Member who first placed it upon the Order Paper?

The CHAIRMAN

No, that is quite contrary to the practice. It has never been observed in that way.

Mr. TERRELL

I beg to move to leave out Sub-section (2).

The effect of this Amendment would be to reduce the rate of the duty from 60 per cent. to 40 per cent. I say at once that, even if I am successful in obtaining that reduction, it will still be an open question whether I and my hon. Friends who are associated with me in this matter will accept the continuance of the duty at all. I do not propose to deal with cases of individual hardship. Most hon. Members have heard direct from their constituents, and no doubt they will bring those particular cases before the House. I know hon. Members have been bombarded with letters, and many, I am sure, have felt some sense of annoyance. I confess that when I saw the announcement in the "Daily Mail" inviting readers to fill in coupons and send them to their Members I felt some sense of annoyance. I have received a perfect bombardment. I suppose in my case it may be considered a complimentary bombardment. When I looked through the names of the people who sent me these coupons, I found a great many traders from my own constituency, and I must say, though it has given me a good deal of trouble, as it has other hon. Members, that it has shown me, at any rate, that there is a very strong opposition in the trading community to the continuance of this duty. I have no doubt that hon. Members understand the position to-day better than when the Financial Resolution was before the House. It is perfectly clear that this was a war tax pure and simple. I wish to remind the Committee of a speech recently made by Mr. McKenna, who was the author of this duty, and who was Chancellor of the Exchequer at the time of its first passage into law. He said: I frequently pledged myself, not merely to deputations who came to see me on the subject of the tax, but to the House of Commons, and I believe with the concurrence of all my then colleagues, that the tax should not be continued in peace. That is a very definite pledge. It may be urged that was a different Government, that Mr. McKenna has left Parliament, that we have a new Government, and that they are not bound by pledges which he gave. He was, however, followed as Chancellor of the Exchequer by my right hon. Friend the present Leader of the House, and without a shadow of doubt those pledges were renewed. It is important that the House should remember the nature of the pledges which the present Leader of the House gave when he was Chancellor of the Exchequer and was seeking to continue this tax. The first reference which I wish to make is to a speech which he delivered in February, 1917. I need not read the whole of the passage. He said: Even after making allowance for Excess Profits Duty, which must come to an end with the end of the War— That is a declaration that the tax was for the duration of the War. Then, in answer to a question in June, 1917, the right hon. Gentleman replied: It is not intended that the Excess Profits Duty should be a permanent tax after the War. Again, in the Debate on the Finance Bill, in July, 1917, he stated: The Excess Profits Duty is only to continue during the War. As recently as April, 1918, he made this statement: When the Excess Profits Duty comes to an end. This calculation is based on the assumption, which I am sure will prove to be correct, whatever Government or House of Commons is then existing, that the duty will be allowed to go on to the end of the accounting period after peace is declared. That is a very definite statement, and the end of that accounting period after peace is declared will be the 4th of next month. I can only say that those are pretty definite declarations and that they were followed by the declaration of my right hon. Friend, the Chancellor of the Exchequer, who, in introducing the Budget last year, denounced the tax in the most vigorous terms and said it produced unfairness and inequality, encouraged wasteful expenditure, and was a deterrent to enterprise and new development. I think the business world is entitled, having in their mind the declaration previously made, to think that, at any rate, last year would be the last year for the continuance of this tax. I put a question only the other day to my right hon. Friend as to whether these definite pledges had not been given, and the reply I am afraid was an unsatisfactory one, as he said he was not aware that Mr. McKenna gave definite pledges as to the date of the withdrawal of the tax. That does not meet the case. We know perfectly well that the tax could not be withdrawn the moment peace was declared, and that it must terminate at the end of the first accounting period, and that is the claim or request which I now make to the House. How in the face of these pledges the Government can continue it or, in fact, reimpose it by increasing it, is beyond my comprehension of what is right or fair. I venture to think that the quite definite series of pledges on the part of the Government, which I have described to the House, should be regarded as its most sacred obligation and honoured accordingly.

Taxation may be just or it may be unjust. It does not depend on the amount which is levied; the desire has always been to impose just taxation. It is a principle that all backs should bear the burden, and we have extended it so that the broadest backs should bear the greater burden, and that, as between people of equal means, the burden should be equal. There has been substantial justice in that system. The objection today to the tax is not that people who have made profits want to escape, but that they want to be taxed equally. Taxation is unjust when certain classes are selected either for favoured exemption or for special taxation, and I venture to think that this tax is unjust for both those reasons. Many classes who have made war profits—accountants, auctioneers and lawyers—escape entirely. Firms who, through pure accident, have a high datum line escape, and then there are classes who are selected for special taxation, old firms and new firms with a low datum line. It does not stop at that, which is hard enough, because we all know that the incidence of the tax enables firms with a high datum to beat competitors in business with a low datum line. The Chancellor of the Exchequer has asked, "What is your alternative?" The trouble of the present House of Commons is that we have no official Opposition. I venture to think that in the old pre-War days if a Chancellor of the Exchequer had challenged the official Opposition by inviting them to submit an alternative Budget, he would have met with a pretty warm reception. It is not our business to submit alternative Budgets. We have neither the information nor the data to enable us to do so. It is quite impossible for the Opposition, or for private Members to submit anything in the nature of an alternative Budget.

The mischief of this tax is the datum line. It was not a fair tax five years ago, and everything has altered since then. Prices have altered, the value of money has altered, and yet we are still tied to the same old datum line. Practically all the Amendments on the Paper in relation to this tax are directed against the datum line. All are based on its gross inequality. I throw this suggestion out to my right hon. Friend the Chancellor of the Exchequer. If he wants an alternative, why not abolish the datum line? That is a suggestion which I venture to think is worthy of consideration. Of course, I know that any proposal of this sort must involve someone or another in a liability which, under present circumstances, he is exempt from. The men with high datum lines, the big firms engaged on armaments during the War, may probably have a very strong objection to any tinkering with the datum line. It is a subject, however, which requires consideration. My right hon. Friend, in introducing his Budget, referred to a tax on turnover. I have no data which would enable me to advocate a tax on turnover. The proposal has never been properly examined. I think before you attempt to increase or even to extend this tax every other alternative should be carefully examined. I suggest to my right hon. Friend that if, at this eleventh hour, he is willing to take any suggestions which are offered, however humbly, both these proposals, and probably there might be other proposals, should be carefully examined between now and the time when it is necessary for him to make provision for the future. The levy of the tax now is really not necessary for this year, because for the present year's Budget we are levying on the arrears of the Excess Profits Duty from previous years. My right hon. Friend stated that he hoped to get £220,000,000 from the Excess Profits Duty in the present Budget. Of that £220,000,000, £190,000,000, as far as I can make out, is arrears from previous years, so that the amount to be obtained to-day from the re-imposition of this tax is really quite a negligible sum, and might very well be postponed until other proposals have been carefully and thoroughly examined.

Another question which I might ask is, what are you going to get in the form of net revenue out of this tax? I believe my right hon. Friend stated that it would produce in all something like £300,000,000—a very small sum this year, and the bulk of it next year and in future years. In making that statement, I think he is mistaken, and I will tell the House why. If the tax were withdrawn he would certainly get an extra £90,000,000 from Income Tax. He would, I am told, get something like £20,000,000 from extra Super-tax. He would get, I believe, something like £15,000,000 from the proposed Corporation Profits Tax. Then there is a very important item—dissipated profits—as a result of this tax. I am told that that sum would not be far short of £40,000,000 or £50,000,000, which is absolute waste and loss to the Treasury. The net proceeds of this tax, the net amount which my right hon. Friend will receive, is something in the nature of £130,000,000, and not £300,000,000 as has been stated. and that is not receivable this year. Only a small sum will come in this year, the balance being receivable next year and in future years. We have had experience of what this Budget has done for trade and industry. It has produced a perfect slump, and the damage which it has done is, I venture to think, out of all proportion to the amount which the right hon. Gentleman will ultimately get. It does not only stand at that. You are going to get liabilities which you are incurring by continuing this tax. Under Sub-section (3) of Clause 38 of the No. 2 Act of 1915 there is a liability on the part of the Treasury to repay to firms the whole or part of the amount which they have paid in the event of their profits falling below the datum line. That is a very grave liability, a very serious liability. We have received many hundreds of millions for excess profits. There is a liability to repay the whole of that amount. I understand that at present repayment claims are already being met. I suggest that this liability ought to be stated and fully explained to the House before we come to any decision as to the continuance of this tax. May I just emphasise the fact of this great hardship in connection with the liability to repay? The firms who are likely to make the demand first are the firms who have a high pre-War datum line. It is not the firms with a low datum line, but those with a high datum line, who will make a claim upon the Exchequer for repayment under the Clause in the Act of 1915 which I have quoted. Is it not monstrously unfair that the firms with a low datum line should be oppressed for the purpose of making repayment to the firms with a high pre-War datum line? To my mind it is really unthinkable that this House should persevere in a course of oppression of that kind, and I beg that my right hon. Friend, when he comes to reply, will give us a full explanation as to what the real liability is.

It seems to me that the Government have really two great liabilities upon their shoulders as the result of the War from which we have emerged. One is the reconstruction and reinstatement of trade; the other is the repayment of debt. To my mind the reconstruction of trade is of primary importance, as it is only out of good trade that we shall get the money with which to discharge the debt. Instead of attempting to reconstruct trade, you are harassing trade, and if you harass trade you will add enormously to the difficulties of the future. As I have already said, this Budget has phoduced a slump in trade. I am told that orders are being cancelled, and, if that continues, the result must be unemployment in the coming winter months. When that unemployment comes, my right hon. Friend must not say, "Well, this is something which I never expected." He will be blamed for it; the Government will be blamed for it. Unless something is done, either by the complete withdrawal of this tax or by making it less oppressive to firms with a low datum line, there will certainly arise a condition of affairs which will cause us the greatest concern in the winter. We tell the working man that the wellbeing of the country depends upon production. "Greater production" has been our cry, and the cry has also been, "Speed up production." Yet to the brains and the driving power of industry you discourage enterprise. It seems to me that there is a confusion of thought on the part of the Government, which shows that they have never given serious consideration to this matter. I am told that the decision to continue the tax was only arrived at by the Government at the very last moment before presenting their Budget—that it was intended as a sop to that handful of people who are clamouring for a capital levy or for nationalisation. If it had been otherwise, surely my right hon. Friend would have warned those in industry, so that they might make their arrangements. To spring it on industry was a great injustice. I hear that innumerable concerns are now placed in the greatest financial difficulty. They have entered into contracts and obligations for reconstruction, for buying new machinery, on the faith and in the hope that the tax would end. They now go to their banks for credit, and the banks say "No." I am told that they are going to their banks to-day to borrow money to pay the arrears, and to pay those arrears at the rate of 40 per cent. Surely to increase it to 60 per cent. is out of all proportion to the value which the money will be to the nation.

This is not only an internal matter. A great number of British companies are carrying on their business entirely abroad. In reply to a question which I put to my right hon. Friend the other day, I received the answer that those firms who carry on business abroad contribute this year to the Excess Profits Duty £12,000,000 and to Income Tax £23,000,000, so that we get £35,000,000 of revenue from them. It is an easy matter for those firms to escape altogether. There is no difficulty in transferring their registration to other countries, and I am told that they are doing it. If we oppress them, they will do that, without a shadow of doubt. I am told by a friend, who is concerned in a big company which carries on its business entirely abroad and has some foreign shareholders, that those foreign shareholders are clamouring against continuing the British registration. He says that their profits this year will be something over £1,000,000, that in Excess Profits Duty they will have to pay 500,000, in Corporation Profits Tax £29,000,000, and in Income Tax £142,000—that, in fact, two-thirds of their profits will be taken by British taxation. He says that the foreign shareholders, naturally, ask why the registration is not transferred abroad. In no country in the world are people more oppressed by taxation than in this country. If a company like that does transfer its registration to another country, it is a grave loss to us all, and it increases the burden on those who are left here. I think that that is a very good reason why greater care should be taken with regard to the continuance of the tax, much less its increase. The opinion of all the organisations engaged in industry in the country is against it. The Chambers of Commerce denounce it; the trade associations denounce it. Only the other day an example was set us by France. In France they have an Excess Profits Duty, and only last month they repealed it. They said that it discouraged enterprise. We want to encourage enterprise. Surely these are circumstances which have become very apparent since the Budget was introduced, and which should weigh with the Government.

The Government say they want the money. They have embarked on a vast scheme of social reform, but they embarked upon it at a time when it was thought that Germany would pay. We fought the last election on the cry, "Make Germany pay," and I think most hon. Members had it very much in their minds that something would be obtained from Germany. There is no reasonable prospect, however, of our getting anything at once from Germany. Surely it is incumbent on my right hon. Friend to consider the altered situation, to cut the programme according to the material, and not to launch out into such schemes as being in a hurry to pay off debt. To my mind that is most unnecessary. No other nation in the world is thinking of oppressing its industry for the purpose of rushing into a repayment of debt. It is grossly unfair to oppress firms with a low datum line for purposes of housing, for purposes of education, for the purposes of the Ministry of Transport, for subsidies, or for putting soldiers into pre-War uniforms. I venture to urge upon. the Committee that this tax is an unbearable burden, that it will do more harm than good, and that, by oppressing trade and by discouraging development and enterprise, you are making it exceedingly difficult to meet your liabilities in future years. Therefore I consider that it is in the highest national interest that this tax should be resisted, and, as a first step, I beg to move the omission of Sub-section (2), the effect of which, as I have already stated, will be to reduce the duty to 40 per cent.

Sir GEORGE YOUNGER

Had my hon. Friend opposite (Mr. Terrell) proposed the Amendment which stands first in his name on the Paper, namely, to leave out Sub-section (1), I should have been bound to say that I could not support him, because I do not think that, at the present moment, it is possible to .consider the remission of this tax as a whole. It is true that its incidence has been condemned. It has been admitted in many cases it is cruelly unjust, and that it was instituted only as a War expedient, and was not intended to continue in time of peace. Yet, the very onerous expenditure that we have to meet, much of which really admits of no economy, makes it impossible to expect its total remission now or until some fresh substitute is obtained for it. No savings are possible on such charges as interest upon debt, war pensions, and items of that kind, and although, in other directions, economies can, I hope, be made, still the annual expenditure must make a heavy drain on our resources, and some kind of taxation of industry seems inevitable as part of our fiscal system for some time to come. That is a very serious fact, but it is difficult to see how it can be avoided. Such a tax ought to be levied so that it shall be fair all round, and only to an extent which will not throttle industry by removing all incentive to enterprise and development. Further, to secure increased production it is vitally necessary that every element of uncertainty shall be removed. There can be no greater curse to trade development than uncertainty. Unfortunately, the present proposal of the Government with regard to Excess Profits Duty has created this atmosphere, and it has had a very grave influence already on the state of trade.

Mr. T. GRIFFITHS

On a point of Order. Is the hon. Baronet allowed to read his speech?

The CHAIRMAN

Many hon. Members avail themselves of substantial notes. I do not think the hon. Baronet is going beyond the custom.

Sir G. YOUNGER

A right hon. Gentleman the other night seemed to get beyond his intentions, and I thought I had better be perfectly certain I did not get beyond mine. I come, then, to the conclusion that the first thing to deal with is this aspect of the question, and I therefore invite the Chancellor of the Exchequer to deal with it at once so far as the future is concerned. For the moment I leave the present year out of the situation and ask him to say now, if he is willing to do so, that whatever he may do about the present year he will at all events undertake that the maximum rate, if the tax be continued next year and if some substitute is not found, will not exceed 40 per cent. The great advantage of that will be that traders will know precisely what their maximum liabilities will be. They will be able to make their contracts with reasonable confidence and I hope some of the unfortunate results which have already accrued from the proposals of the Budget will in that way be got rid of. Contracts ahead are being cancelled to an alarming extent, new companies, I understand, are not being registered, and some businesses already, I believe, are being closed down. Bargains made in the general belief that after what happened last year there would be no further increase in the duties are a subject of litigation of a serious kind, and I should hope therefore that whatever the right hon. Gentleman may do he will at least go so far as to say that there will be no increase of the 40 per cent. As to the increase to 60 per cent., I am afraid I find myself rather in disagreement with the Government. I am sorry they should have asked for such a large increase. The right hon. Gentleman may say, probably he has some right to say, he went rather far last year in reducing the tax so low as 40 per cent. I do not really think that if it was a mistake it is one of those mistakes which can be retrieved now, because the circumstances to-day are wholly different. I am afraid the Government has gone further than it ought to have done. I say the Government advisedly, because rumour has it that this decision was taken at the last moment, and I see some papers say the right hon. Gentleman was not really responsible for it.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I not only accept, but claim my full share in the decision.

Sir G. YOUNGER

I hope very much it may be possible to modify the tax. No one can say that any actual pledge was given last year, but it was generally understood that it would not be advanced. A very important effect of it is that the firms concerned in many cases have no liquid assets with which to pay it. No doubt the 20 per cent. saved last year has been embarked in their business. It is useless to say, "Go to the banks and ask them to advance money upon it," because they have already advanced up to the limits of prudent banking. The right hon. Gentleman himself admitted quite recently to a deputation that there was really a change in trade since the Budget. We all know it who are engaged in trade; certainly those of us engaged in banking know it. If the state of trade is different from what it was when the Budget proposals were made, should there not be a modification to meet the case? I think it is not unreasonable to ask for that. It may be that 20 per. cent., which appears to be the natural corollary to that admission, is going a little too far, but surely we might halve the difference. If we could persuade the right hon. Gentleman to reduce the present year's tax to 50 per cent., with the promise that while the Government remains in power that it will not charge more than 40 per cent. next year, I am certain the present difficulty would be overcome, the great resentment that is felt about the tax, which is very unjust in certain cases, would disappear, and we should all again be a happy family.

Mr. HOLMES

The country is really in a most extraordinary position in regard to the Excess Profits Duty. Everyone considers it is a bad tax, the Chancellor of the Exchequer admits it himself, and yet the united wisdom of the whole country cannot suggest an alternative to substitute for it. May I put, in possibly a new way, the position with regard to the taxation imposed upon the trade of the country. Trades and businesses of all kinds at the end of the year show so much profit, and we should consider that all these profits form a pool. The Chancellor of the Exchequer estimates that the total profits of all trades and businesses for the current year will amount to £1,100,000,000. As Chancellor of the Exchequer, when he comes to draw up his Budget he surveys that pool and considers the manner in which he shall take such sum out of it as he requires for national purposes. For the current year he is taking just about half of it—about £565,000,000—in making this calculation I have ignored Super-tax—he is taking £300,000,000 in Excess Profits Duty and £35,000,000 in Corporation Profits Tax, and of the balance he takes 6s. in Income Tax, which is £230,000,000. What we have to ask ourselves is, admitting the need of revenue, admitting that he is entitled to take half of the profits made by trade and business throughout the year for national purposes, is the manner in which he is imposing that taxation the best manner from the general national point of view. To begin with, it should be the desire of everyone that the pool of £1,100,000,000 should be increased, that trade and business should expand, and that the danger should not be that taxation would cause that pool to contract. There is a great danger that this 60 per cent. Excess Profits Duty is not merely going to prevent the pool from going up, but will contract it and reduce the yield from the taxation which the right hon. Gentleman or his successor will have in the years to come. Thus the very effect of the 60 per cent. Excess Profits Duty is to decrease the pool. The Chancellor of the Exchequer himself last year gave the three principal reasons against the Duty. The first is that it causes extravagance in business. If it was abolished the very savings in business would amount to 10 per cent., and would increase the pool from £1,100,000,000 to £1,200,000,000. That is a desirable thing in itself, and it gives a larger pool for the Chancellor to tax. Then there is the question of evasion and hiding up. Everyone knows it is going on all over the business world in more or less legitimate ways. Many traders have a doubt as to whether certain expenditure is capital expenditure or current expenditure, and they give themselves the benefit of the doubt and always charge it against profit. That is what you may call almost a legitimate method of evasion. Most of us know that there are other methods by which Excess Profits Duty is being evaded from one end of the country to another. The greater the prize the greater the risk a man will take. If by taking a risk he is going to secure £60 out of every £100 for himself, he takes it, but if he is only going to get 2s. 6d. out of every £1 he probably would not take the risk. If Excess Profits Duty was abolished and another tax which I shall suggest substituted for it, the amount of evasion would be minimised, and consequently the pool would be to that extent increased. But the greatest of all, far greater than the question of extravagance and greater than the question of evasion, is the manner in which the 60 per cent. Excess Profits Duty is stifling enterprise and initiative. We have seen it during the past few weeks. In the belief that the Excess Profits Duty was going to disappear, business men have been making plans for going forward and starting new enterprises. They have given them up. This tax makes it not worth while to risk the capital and spend the time upon it, and therefore the pool of the nation's profits will be reduced this year, next year, and in the years to come if the tax is continued, by reason of the fact that these new businesses will not have been started, and profits will not have been made.

5.0 P.M.

I do not know whether I am taking an exaggerated view, but I believe if the right hon. Gentleman abolished the Excess Profits Duty altogether he would find next year that instead of having a pool of £1,100,000,000 on which to levy taxation when he came to make up his Budget, he would have a pool of nearer £1,400,000,000. What could be done with that pool? Every business man would prefer to have a flat tax of 2s. 6d. in the pound and then pay Income Tax in addition. I believe a flat tax of 2s. 6d. in the pound would be sufficient, because the pool upon which that would be levied would be so much greater, because of the savings which could be made in the administration of businesses, because of the lack of evasion, and because of the profits that would come from new businesses and enterprises that would be started. If the Chancellor of the Exchequer would get rid of the Excess Profits Duty and put in its place a flat tax of 2s. 6d., he would secure the revenue which he is at present getting, and he would encourage traders to go on with their work.

There is another matter which must not be lost sight of. The Chancellor of the Exchequer in the Budget claimed to carry on the Excess Profits Duty because the War was not finished. He said that men who were making profits to-day were equally making them as a result of the War as they did during the War. He seemed to suggest that the conditions were exactly the same now as in 1914–19. There is one very great difference which we must take into account, and that is the supply of labour. During the War, when profits were being made by all businesses, the difficulty of business men was to get labour. There was no difficulty in finding a job for anyone who wanted a job, but to-day we have millions of men who have been demobilised and although industry has to a certain extent absorbed them, we see unemployment in every town to-day.

The danger is that this tax of 60 per cent. is so discouraging the starting of new businesses that by the end of this year we shall see a crisis generally throughout industry, with unemployment in nearly every town. The Chancellor of the Exchequer may say that as Chancellor that is no business of his, because it is his business to raise revenue; but the Chancellor, as a Member of the Cabinet, must take that point of view into account when he is considering the effect of his Budget. One dare not contemplate the psychological effect of a period of unemployment. When for years nearly every family in the country have had enough money to satisfy their needs, and even money to spare, when they have never had such a thing before, and when a man during the years has always been able to get a job if he wanted one, to change that position so that there are many men out of work and many families suffering from starvation will have a psychological effect which the Chancellor of the Exchequer must take into account with regard to his Budget. He said something the other day to the hon. Member for East Edinburgh about what idle hands find to do. That is the danger that may come upon this country towards the end of this year or the beginning of next, with this prospect of unemployment. The hon. Member for Chippenham (Mr. G. Terrell) referred to the extraordinary slump which has taken place in business during the past few months. That slump has taken place undoubtedly as the result of three causes. The first was the setting up of the Wartime Wealth Committee. That Committee made a report, but the Government have come to a decision in which they obviously did not consider the report of the Committee, because if the Committee said anything at all it was to encourage the Government to go on with the wartime wealth tax. If the Government intended not to have a Wartime Wealth Tax whatever the Committee reported they ought never to have set up that Committee. It undoubtedly caused a great deal of harm in trade and business circles.

The second cause of the slump has been the withdrawal by the banks of credit facilities and the calling in of loans. I asked a question concerning this of the Chancellor of the Exchequer the week before last, but the Financial Secretary said that this was a matter which did not lend itself to question and answer. I would, therefore, ask the Chancellor of the Exchequer to what extent he has advised the banks to withdraw credit and to call in loans. To a certain extent he has succeeded in causing speculators to throw goods upon the market and, so far as those goods are concerned, to bring prices down for the time being, but, on the other hand, it has been perfectly clear that many trades have been adversely affected and that the lack of initiative and enterprise at the present time is, in part, caused by this withdrawal of credit. The third reason for the slump has been the continuance of the Excess Profits Duty and the increase of the rate from 40 to 60 per cent.

What the business men of this country want is certainty in regard to the future. The raw materials which the men in our factories are working on to-day were not bought yesterday, but were probably bought six months ago. The business man, when buying goods at the present time which his workpeople will work on in January and February next year, is face to face with this question: "Shall I be able to get the money to pay for them when the time comes?" If he is doubtful about it, he does not buy. He says to himself, "Is it worth my while to increase my business with this tax of 60 per cent.?" If he answers that it is not worth his while, he does not buy. The danger, therefore, is that the volume of trade in the country will fall as a result of the financial position. The Chancellor of the Exchequer says that he will stand or fall by the 60 per cent. Excess Profits Duty. I join with the right hon. Baronet (Sir G. Younger) in asking the Chancellor of the Exchequer to say definitely what are his proposals for the future. Will he be able to take off the Excess Profits Duty on a given date? Will he be able to let the business men know that, as from the 31st December of this year, they can look forward to a reduced amount of taxation, which will encourage them now to lay their plans for starting new businesses and for extending their present businesses?

Mr. CHAMBERLAIN

The Committee will observe that, however wide the measure of support which the Amendment receives, it is supported for different reasons and for different objects by the hon. Gentlemen who have spoken for it or upon it. My hon. Friend who moved the Amendment (Mr. Terrell)—I am glad to think that he is still my hon. Friend, though he feels it necessary for my own good to chastise me freely—in his opening observation and his closing observation, not obscurely intimated that, whatever concession might be made, he was going to vote against the continuance of the tax. So far as he is concerned, he presented himself as an irreconcilable opponent of the tax in any shape, in any form, or at any rate. My hon. Friend who spoke from behind me (Sir G. Younger) and my hon. Friend who has just spoken (Mr. Holmes) adopted a different attitude. I must distinguish between these two sections of thought. No Minister hopes to carry a great measure of this kind or ought to try to carry a great measure like the Finance Bill of this year without listening to arguments and without concessions in detail on minor matters in the course of the discussion. I hope the Committee will consider that in my conduct of the Finance Bill last year, and so far in my conduct of the Finance Bill this year, I have not been quite unreasonable in that respect. I have sought where I could without doing serious injury to the general scheme of Government finance to meet my critics, though not always with results that have been very encouraging to me. It is quite a different matter altogether when my hon. Friend (Mr. Terrell) comes forward and proposes to knock out the keystone of the whole arch. That is not a proposition which any Government could accept.

The Finance Bill is one of the crucial Bills of the year. It is the work of the Government as a whole, and they cannot submit to have it utterly emasculated without the consequences which naturally follow from such a divergence of opinion between themselves and the House. My hon. Friend opposite, and, I think, my hon. Friend behind me were inclined as a result of some public rumours abroad to distinguish between my responsibility and that of my colleagues for this Budget. Both of them suggested that the decision in regard to the Excess Profits Duty was an eleventh-hour-decision, or a decision at the last moment. If any Minister has a greater responsibility than another for the Finance Bill it must be the Chancellor of the Exchequer, and it is quite certain that he cannot have less responsibility than all his colleagues. I ventured to interrupt my hon. Friend and to say not merely that I accepted, but that I accepted my full share of responsibility for this Budget. I listened to the suggestions of my colleagues, and I met or accepted their criticisms as I listen to the suggestions of Members here and meet and accept their criticisms, and no decision was taken without me as a full assenting party, even if I was not myself the originator of it. That must always be the position in regard to the Finance Bill. That is a responsibility which the Chancellor of the Exchequer must take, or he must vacate his office.

May I say a few words as to the reasons why we came to our decision? I realise as fully as any hon. Member that, if I might so describe the position, the Chancellor of the Exchequer is a partner with the industry of this country; that our interests are common, though they diverge and must diverge in detail, though there may be differences between the two sides of the table, so to speak, as to the share which it is right, proper and wise at any given moment for the Exchequer to take out of the earnings of industry; nevertheless our interests are, at the bottom, common interests, and the prosperity and the credit of the country are of as much importance to me as to them, and to them as to me. Consider the difficulties of the Chancellor of the Exchequer and the difficulties of the Government. During the War the common criticism of the finance of my predecessors, an unjustifiable criticism, was that under the conditions of the War they called for insufficient sacrifice from the taxpayer, and did not take enough of the national wealth to meet the charges of the War. During last year, when neither I nor the Government could see our way to repay any debt, and, indeed, when we found it necessary to propose to the House that we should borrow further on revenue account to meet the expenditure of the year, there was general criticism of us for not doing more. I was told again and again, in the course of the Debate and outside, that I ought to have had courage to put on whatever taxation was necessary in order to avoid any fresh borrowing, and, indeed, by many critics I was told that I ought to have gone further and made a beginning with the repayment of debt.

That was the line of attack upon the finance of the Government, as long as we were continuing to borrow, and before it was in our power to make any repayment of debt. I told the House last year that at the beginning of this year I was hopeful that there would be no more borrowing on revenue account, and that the time would come to make a beginning with the repayment of debt. There was no word of criticism on that programme, except that we were very slow to begin, that we showed an insufficient appreciation of its urgency, and that our critics distrusted our earnestness or our willing- ness to make a serious effort to that end. Members in every quarter of this House dwelt upon the evils of inflation, upon the share of responsibility which devolved upon the Government finance for the high prices which prevailed and the rise in prices, and upon the share of responsibility which fell upon it for the continuance of inflation, and called upon us for a remedy for all these things. I asked for a little time and a little patience. This year we thought the time had come to grapple with these things, and at once the cry is, "Why are you in such a hurry? What reason is there to pay off any debt? Why cannot you let it wait? We fought the War for posterity; let posterity pay it." Observe, as long as the Government was not taking the course which it is taking this year, it was criticised because it has not taken it; but the moment it had taken this course, because it thinks the time has come when it should be taken, it is attacked because it has taken it.

Whichever we do, we cannot do right. If there be people who approve our action at either time, they are silent. It is the critics whose voices are heard, sometimes more, sometimes less instructed critics, sometimes people who have genuinely known about these things, sometimes the people who have only filled up newspaper slips, almost a habit acquired by particupation in weekly competitions. The cardinal feature of the Government policy this year was that there should be no more borrowing. That was not all—that we should begin when we were prosperous to make a serious effort to reduce our debt. Was it not worth while? After all, we have come through very difficult times, even since the War, so far with no small measure of success. We had no crisis in this country, no financial crisis such as they have suffered from in Japan, no such difficulties as have faced them in the United States. By caution, combined with firmness and courage, we have passed safely through some difficult times, and I think that with the same qualities we can pass safely through the future.

It is quite true that the position at the moment is not exactly the same as it was at the time when the Budget was introduced. I do not think that it is correct to suggest, as the hon. Member for Derbyshire (Mr. Holmes) suggested, that unemployment has increased. My infor- mation is that it has actually declined; but, in any case, it has not increased. But I admit that there has been a certain change of atmosphere, a certain check placed upon the spirit of uncontrolled expenditure and wild speculation which was prevalent in the early months of this year. The hon. Member for Derbyshire asked me how far I was responsible for the action of the banks in withdrawing credit and calling in loans. My responsibility, in so far as I have any responsibility, arises out of an interview which I sought with leading bankers in order to ascertain whether, in their opinion, they could take such measures as might guard us against the necessity for any further rise in money rates. I knew that the first rise in the Treasury Bill rate, the Bank of England rate, had been distasteful to many bankers and many people outside. I was confronted with certain circumstances in which, having followed the policy indicated by two Committees, one a Finance Committee under the late Lord Cunliffe, the other a Committee with business representatives on it, having taken every step within my power, I was yet being forced into a fresh inflation, not because I was borrowing new money, but because the demands for money were so great that the attraction of Treasury Bills was insufficient as compared with the other opportunities of investment. There was no step that I could take except to raise the rates again.

Before I took that step I sought an interview with bankers to see if they could help. I pointed out to them that it was useless for me to restrict the creation of credit if they only took advantage of my self-denying ordinance in order to create credit on a larger scale themselves. I indicated to them, and, indeed, they knew it, that the position of the banks themselves was one which required their careful consideration and watchfulness, and I told them that I did not think that they could go on increasing the amount of their overdrafts and loans, or that they ought to allow the overdrafts and loans to be used for speculative purposes, and, in particular, for the speculative holding up of stocks for higher prices. I do not believe there is any difference of opinion between us on that. As to how the bankers applied my counsel, to what extent they applied it, or what steps they take on their own account, I have no responsibility, and can accept none. But I am quite sure that it was time that there was that warning, and I am not myself wholly disappointed, because there is a little more consideration and a little more caution in the atmosphere to-day than there was at the beginning of the year. I think that such caution is necessary if we are to steer safely through the rocks ahead, and with the exercise of such' caution, with patience and courage, I believe that we shall safely navigate the ship into smooth waters.

My hon. Friend the mover of the Amendment wants to abolish the whole of the Excess Profits Duty. He say that it is not for me to invite him to find an alternative. I do not seriously expect any hon. Member to find a policy for the Government, though if he has ideals and he is a friendly critic, I think that it is not too much to expect that he should put them into the common stock, but when the representatives of trade and industry who are affected by a particular tax come to the Chancellor of the Exchequer and remonstrate against that tax, I think it is proper that the Chancellor of the Exchequer should state the limits within which he feels that the financial circumstances of the time give him freedom. If for instance, as was the case this year or last year, I could not afford to do anything without a revenue comparable to that raised by the Excess Profits Duty, surely it was not an impertinence, surely it was not to be considered merely as a debating point, to ask these gentlemen who felt themselves affected adversely by the tax which I found in existence, being continued, to suggested to me, if they could, an alternative which would be more acceptable to them. Last year I was taken to task .for having said that their convenience should be a consideration. I think that it ought to be. If they will accept the condition that from these classes of the community, from these sources, a certain revenue is to be drawn, and if they then offer to the Government an alternative method of obtaining it with less discontent to themselves, we should be fools not to consider that proposition—we should very gladly do it.

My hon. Friend is quite mistaken in saying that the Government did not investigate or seriously investigate other alternatives. I think he mentioned two. He said: "Let us abolish the datum line." That was examined by my right hon. Friend the Leader of the House three or more years ago. I examined it last year and I re-examined it this year, and I do not think it will serve our purpose as long as a sum is required comparable to that for which the Excess Profits Duty is now being levied. Then I understood my hon. Friend to suggest a graduated tax on profits.

Mr. TERRELL

No.

Mr. CHAMBERLAIN

Then I do not know what the other suggestion was.

Mr. TERRELL

I suggested that the right hon. Gentleman should consider the deletion of the datum line.

Mr. CHAMBERLAIN

What does that mean? Does it not mean that you must take from the capital in every industry a certain tax-free return and that thereafter you must tax? If you tried that you would be pressed in the interests of business with smaller returns not to take as much from a business which, say, in proportion made 5 per cent. above your datum line as from the business which made 100 per cent., 200 per cent., or 300 per cent. above the datum line. I think it comes to the same thing. At any rate I can say this, that no suggestion has been brought forward which we have not examined carefully. I am as anxious as anyone else to find a substitute for the Excess Profits Duty. I am as conscious as anyone else of the defects which are inherent in the tax. I have never regarded it as being a possible permanent financial engine, as being part of the permanent machinery of Revenue collection. My hon. Friend recited the statements made by Mr. McKenna and by my right hon. Friend (Mr. Bonar Law) as to the temporary character of the tax. I do regard it as temporary. I cannot conceive that it could remain as a permanent tax. But I have not yet seen my way, as long as we want a Revenue comparable with that which we are raising by this tax, and as long as the circumstances remain of such a character as to justify the continuance of this tax, to find a substitute for it which would be even generally acceptable to the House or to the interests concerned. Let me make a confession to the Committee.

Sir F. BANBURY

A concession?

Mr. CHAMBERLAIN

A confession. I agree with my critics that what trade and industry most require is some certainty of outlook, some security as to the future, and I agree that the course we have taken has brought into the minds of the people concerned an element of uncertainty which would not have been present if last year I had reduced the Duty from 80 per cent. to 60 per cent., and if, in the circumstances of this year, I had asked the House to continue the duty at that rate for yet another year. It is the backward step which has so perturbed men's minds. The reasons for it were explained. If we are to touch the Floating Debt we must have additional taxation under present circumstances. Nobody has suggested, except in connection with Excess Profits Duty, that I am making too great a reduction in the Floating Debt. On the contrary, my critics have said what a small thing it is after all. You may ask men to make bricks without straw, but if you give them neither straw nor clay, of what are they to make bricks?

Sir F. BANBURY

Make no bricks at all.

Mr. CHAMBERLAIN

I am called upon to reduce the debt without taxation. It cannot be done, not even by so able a financier and so ingenious a one as my right hon. Friend the Member for the City of London. We wanted more money. Where were we to find it? The hon. Member says lightly "abolish the Excess Profits Duty." Would he like it put on the Income Tax? Foregoing the addition of 20 per cent. only would mean a couple of shillings on the Income Tax. Is that the kind of suggestion which would commend itself to the Committee or to my hon. Friend under the guise of the general assertion that everybody should be called upon to pay his share and that there should be no inequality between the burdens of one man and of another? I do not believe there is any serious dispute or that there was any serious dispute until this agitation grew and inspired my critics. I do not believe there was any suggestion that we were making too great an effort in the reduction of debt now, or that we could have raised the money this year in a fairer manner. I do not want to make this a permanent tax, neither do I contemplate the circumstances of the present day, financial and industrial, as being of a permanent character. There are continuing now conditions which were evolved during the War, which are wholly abnormal, which give abnormal profit, and it is the continuation of those abnormal conditions which justifies us in continuing this abnormal tax.

My hon. Friend the Member for Ayr Burghs (Sir G. Younger) appealed to me to give some indication of the future policy of the Government, and the hon. Gentleman opposite reinforced that appeal. I feel a little difficulty. The Mover of the Amendment challenged the whole policy of the Government. I am quite ready to discuss Amendments in detail when the principle of the measure we are discussing is accepted, but I find it a little difficult to talk about the future or to make concessions in the light of the agitation with which my hon. Friend and others associated with him have felt it right to fight this tax. There is another difficulty. If I make statements as to the future of the tax, it is quite true that the taxpayer is able to make his plans accordingly. If he is a strictly scrupulous man that is all to the good, but if he is not—the hon. Member was dwelling upon the fact that he was not—he takes advantage of any forecast which the Government may make, or which he thinks the Government have made, to cast his plans accordingly, for the purpose, not of making an increased income, but of paying less tax. I was told of a gentleman whose criticism of this year's Budget arose from the fact that he had conducted his last year's business on the assumption that the Excess Profits Tax would come off altogether this year, or at least be reduced, and that the more he threw last year's profits into those of this year the better it would be for him. When that expectation is disappointed the wrath of the individual who has worked for it is visited on the Chancellor of the Exchequer. Still, I feel as much as the hon. Gentleman that the great interest of the country is to have some kind of security. As long as the expenditure of the State continues at the figure at which I estimate that it will continue for some years to come. I do not believe it will be within the possibility of the Government to give up the Excess Profits Tax without finding a substitute for it.

Mr. PALMER

Economy!

Mr. CHAMBERLAIN

We cannot discuss everything at once. I am well aware that if I ever make a speech on any subject and do not repeat that the Government is studying economy, and that I myself am anxious to reduce expenditure where it can be done, I shall be blamed. But if I deal with economy every time I make a speech at all, it would immensely prolong the length of my speeches. Make all the economies you can, cut down as ruthlessly as you can, and as far as public opinion will permit, I still do not believe that you can simply abolish this tax within a measurable time without putting anything in its place. I shall continue, on behalf of the Government, and with the Government, to study alternatives, and the sooner we can find a more satisfactory alternative the better we shall be pleased. This I say at once; that I never contemplated nor did the Government contemplate, that the 60 per cent., for which we asked this year and for which I again press, should continue beyond this year. If we are responsible for the finance of next year, we shall not propose to the House a rate of duty in excess of 40 per cent.

Mr. BILLING

They will carry the profits forward to next year now.

Mr. CHAMBERLAIN

If we have succeeded in the interim in finding a satisfactory alternative, we may not have to make even that proposal. As regards the details of the tax, I have already put down upon the Clause Amendments which do meet the points which were mainly pressed upon me on the discussion of the Resolution. I beg the Committee to remember those points, for they are a little forgotten in the agitation of the last week. Then, speaker after speaker, especially if he was the representative of big interests, said that it was for new capital and for the small man that he was appealing. That is not the plea of the Mover of the Amendment. We have put down Amendments which deal, at considerable sacrifice, both with new capital and with the small man. Whether those are sufficient or not we can argue upon the Clause which imposes the duty. I do not say that my last word is said upon that subject, but I do say that, confronted with a financial situation such as that with which we are confronted, it was the bounden duty of the Government to make a great effort to restore and improve our credit. It was our bounden duty, and it is in the interests of the taxpayer as much as of the Exchequer or the nation at large, to call for a great effort now, when it can be made, instead of leaving the whole burden to fall upon the lean years which sooner or later will come. There is a disposition outside the House to say that everything which is disadvantageous is the work of the Government, and that for most things the Budget is responsibly. Yesterday it was the absence of something at a suitable price, and to-day it is the cancellation of orders and the slackening of trade, but there are a great many other things which have combined to produce those results.

There is nothing in the situation today which with reasonable courage and reasonable prudence and reasonable enterprise on the part of the taxpayer and of the Government cannot be met, and which does not justify the proposal laid before the Committee. I hear talk about the position of our undertakings abroad. Is the national credit of no advantage to them? Is there anything which has more impressed the world, or for which we get more immediate return, than the efforts we have made to right our finances the moment the War stopped? Consider the efforts we have made and the results that we have achieved already in respect to foreign exchanges. I beg the House not in deference to an agitation, which I will not characterise, and not in deference to a sympathy, which I think at this moment is largely misplaced, and not in weariness or impatience at the very outset to throw up the task which we have undertaken, I beg them to continue to the Government that support which will enable the Government to put our finances in a really satisfactory position.

Sir F. BANBURY

I regret that my right hon. Friend the Chancellor of the Exchequer has not seen his way to make some concession this year. I have not advocated the total abolition of this duty this year, but I do say that we are justified in asking the Government to meet us. The Chancellor of the Exchequer said that if anybody desired to criticise him in a friendly way, and had any suggestion to make, he ought to make it. I do not propose to go into the details of the Excess Profits Duty. During the War it was a rough and ready method of assessing taxes upon people who were making money out of the necessities of the country; but the War has stopped, and I think everybody admits that the Excess Profits Duty is a bad tax, and the sooner it can be abolished the better. The only question before us is this: Suppose at the present moment we reduced the tax from 60 per cent. to 40 per cent., what would happen? Would it be necessary to impose fresh taxation, and, if not, how can the loss be met? I suggest that it is not necessary to impose fresh taxation for this purpose. The amount which the Government would lose this year is only £10,000,000. I hope the Chancellor will excuse me if I talk for a few moments about economy. With all due deference, I would suggest that the proper method is not to impose fresh taxation, but to see whether or not you cannot, by reducing expenditure, do without this tax. My right hon. Friend talked about the reduction of the Floating Debt. I do not wish for a moment to say that that should be postponed, and, although the sum set apart may be a little larger than is necessary, I am prepared to pass that by, because I agree that the reduction of the Floating Debt is a very important matter. But I would ask my right hon. Friend whether there are not other means by which, without increasing taxation, he might make this concession to the ratepayers of the country.

There is a general feeling, I think rightly, that now peace has been declared, or shortly is about to be declared, instead of increasing the burden of taxation by putting on new taxes or increasing old ones, steps ought to be taken to lighten taxation and to relieve the enormous burden which is pressing so heavily upon everyone, not merely upon those who pay the Excess Profits Duty, but upon everyone. If that is so, how is it possible to avoid the imposition of fresh taxation? The Chancellor has been good enough to circulate a paper to the House in which he points out the difference between pre-War expenditure and present expenditure. Hon. Members will see from Table 2 that there is a sum of £341,613,000 proposed to be spent this year which was not spent at all in the year 1913. Is it necessary, and this is where I propose to point out how he can make this concession, to continue this enormous expenditure. The first item is War Pensions, £123,000,000. That is necessary. The next item is Out-of-Work Donation. I do not think that is necessary. The next item is training ex-soldiers. That, I think, is necessary. Education, re-settlement, and oversea settlement. That I think is necessary. Housing subsidies, possibly that may be necessary, but I venture to say that railway agreements, bread subsidy, Treasury securities, property losses (Ireland), Foreign Office, Ministry of Munitions, £27,000,000, Ministry of Shipping, £16,000,000, Coal Mines Deficiency, £15,000,000, etc., etc., are totally unnecessary. I have added up the items which I consider to be unnecessary, and I find there is a sum of £150,000,000, which I venture to say, we ought to save. All we ask for is £10,000,000. There is another item to which I think the attention of the Committee might be drawn, and that is, Expenses of Civil Administration, £4,800,000. That is made up of three items, and one of the items is New Departments, Ministry of Transport Department, Department of Overseas Trade, National Savings Committee, Liquor Control Board, Civil Service Arbitration Cabinet Offices—we would be much better without any of them.

I think I have shown in a very short time how very easy it would be to make this concession. What is the best way to insure, first of all, what we want at the present moment? It is economy. There is only one real way, and that is to refuse taxation. If we refuse taxation the Government must economise because they cannot get the money. I have always had a very great admiration for my right hon. Friend the Chancellor, and I am sure he is anxious for economy, but he wants a little assistance. Let us give him a little assistance. I am really acting as his best friend when I suggest that the House must let the Government know that they will not impose these enormous taxes. There is a sum of £1,400,000,000 this year, as against £200,000,000 the year before the War, and which we all thought was an enormous sum. I remember Mr. Gladstone saying that £100,000,000 was too much for the country to spend, and now it is £1,400,000,000. I understand the Chancellor to say that this expenditure must go on for some years.

Mr. CHAMBERLAIN

No, no.

Sir F. BANBURY

I am glad to hear it. I understand it was the Excess Profits Duty he mentioned. I do not want to go into the question of unemployment and all that kind of thing, but I say again, it is impossible for the country to be commercially successful if it has to bear the burden of taxation now imposed. I earnestly trust that the Committee will take my advice and show that they are in earnest by refusing this taxation.

6.0 P.M.

Mr. WADDINGTON

Speaking as a Lancashire Member, may I say we have due regard to the fact that the finances of the country are in such a critical state, that it is impossible to speak of wholly discontinuing the particular tax. I think we ought to express to the right hon. Gentleman the Chancellor our gratitude for the manner in which he has met the case of the small trader. When we are demanding concessions we ought to express some thanks for and appreciation of the concessions which the Chancellor has already voluntarily given. Those concessions affect not a few hundred people, but as I understand more than half the traders liable for this tax will come within the benefit of the concessions, so that it will include 30,000 traders who come within the £4,000 limit. I do not like these statements being made that there is an industrial slump in consequence of the Budget. If you go to Manchester, you will find no statements there that the depression in trade is in consequence of the Budget or the higher rate of Excess Profits Duty. If you impose a higher tax, of course it has its influence, but the financial crisis in Japan and the fall in the value of silver have had far more to do with the decline, which we think is a temporary decline, in the cotton trade than the rise in the Excess Profits Duty. It is disparaging to the best interests of trade when a tax is put down as solely responsible for this temporary slump. The cotton trade is in such a position, with the shortage that has taken place in the hours of labour and the demand throughout the world for cotton goods, that those who are claiming the total abolition of this tax and expecting to be able to prove in six or twelve months that there is unemployment throughout the whole of Lancashire, with the cotton trade at a standstill, are building an argument on something which we in Lancashire consider will in no way be realised. I heard the suggestion of the hon. Member for North- east Derbyshire (Mr. Holmes) of imposing a flat rate tax of 2s. 6d. in the £. I have always understood that where you are having to work and to put in initiative and to take risks in your business, you ought not to be taxed at so high a standard as the income derived from previously accumulated wealth, but, according to the suggestion of the Liberal Member for North-east Derbyshire, he would impose a permanent taxation on the trade of this country of 2s. 6d. in the £ more than he would impose on the accumulated wealth, and that is, surely, contrary to all the canons of Liberal finance and not, I think, acceptable in any quarter of the House.

I should like to suggest that Mr. McKenna's original tax had one great blot, the blot of making the Treasury responsible for the repayment of losses. That is something which we ought to try to get rid of, because when you get a serious depression it will have a most important effect on trade. Whatever Mr. McKenna's position may be as a banker to-day, the manner in which he imposed that obligation on the Treasury was the work neither of a banker nor of an ordinary business man. If you are going to make it compulsory for the State to repay these moneys, you can have, as has been explained already, liabilities growing into hundreds of millions, and they would grow at a time when the Treasury would not be receiving income and would be in a worse position for the repayment of any losses. Is it not possible to get rid of this liability by a sort of compromise and bringing the tax down to 40 per cent.? If after the 1st of January next year the- liability of the Treasury for losses were to cease, then I think there would be some justification for making a bargain between the Treasury and the trader, the trader foregoing his right for the repayment of losses and the Treasury foregoing its increase of Excess Profits Duty this year. I respectfully suggest that to the Financial Secretary to the Treasury.

I think that traders of this country are willing to help in restoring the finances of the country to a better condition, but to impose a tax of 60 per cent. is to go past the point of efficiency. The manufacturer speeds up his machinery till he finds the proper, efficient standard at which it will run, but if he gets past that standard he has to reduce it. The Treasury have got past the efficient rate of Excess Profits Duty. If they would keep it at 40 per cent., if they would let the traders know that it is not in the future to exceed a maximum of 40 per cent., you would have more heart put into business. you would have more security given to development, and you would be doing a great good in positively increasing the trade of this country and the taxable wealth from which you could get your income in different directions. I hope the Chancellor will not be deaf to the appeals which have been made to him, and that he will remember that with a tax of 40 per cent. he is doing something which is not only to the advantage of the trader, but of the country, and if it is possible so to reconstruct his financial arrangements as to reduce the expenditure—because that is what the traders, particularly of Lancashire, are asking for—and to keep this tax at an efficient standard, the traders will feel that they will be able to assist the Government.

Mr. RAE

On the Second Reading of the Finance Bill, we had a promise from the Financial Secretary that he and the Chancellor of the Exchequer would try to find out where the shoe pinched, and that they would try to ease the shoe, and I think we are justified in asking ourselves whether they are trying to redeem their promise. As the hon. Member for Rossendale (Mr. Waddington) has well said, despite all the complaints that have been made in this House, no class has been or is being so badly hit under the Excess Profits Duty as new beginners and those who are running small businesses. They have solid ground for serious complaint. They are not in the same position as men running large businesses, who can band themselves together, to plead their cause before the Chancellor of the Exchequer, on account of the scattered nature of these small businesses and the small amount of capital that so many of them have. I would remind the Chancellor that it is the early years of any business man's life that are the most trying. It is the gathering together of the first few hundred pounds or the first few thousand pounds that seems such a toilsome and never-ending task. But what is the position of these traders to-day? After a hard year's work, putting all they possibly can into their business, when their balance-sheets are returned to them with the amount of taxation that they have to pay marked on them, not only is all the cream taken away from their profits, but a good deal of the milk disappears as well, and nothing more than a beggarly pittance is left for them. Not only so, but they are up against the nightmare of falling prices, and at all events in the wool textile trades of the West Riding, we know something about what a nightmare falling prices are to us to-day and will be to us in the future.

What is the effect of unduly taxing these younger firms? You stultify their efforts, and not only that, but you make it much more difficult for young firms to start, and if young firms are not encouraged, where are you going to get the men who will have the big firms later on? If you destroy the younger firms, you will in the long run destroy the older firms. Strangle the small businesses, and you will certainly in time destroy the larger businesses. To revert to the promise made on the Second Reading, I know that two Clauses have been put down by the Chancellor of the Exchequer, practically embodying several Amendments that have appeared on the Notice Paper for some time. There is to be an alteration under the 1917 Act, where special concessions were made to pre-War incomes of £500 and present incomes of £2,000. These two sums are to be raised to £2,000 in the one case and £4,000 in the other, and this will prove a real concession of very great value to the small business man. Let me put it to the Committee in a practical way. Take a pre-War profit of £400 and a present profit of £1,200. The amount taxable upon that £1,200 is £440, but under the new Clause that £440 will become £40, a very great reduction. Take the case of a pre-War profit of £500 and a present profit of £2,000. Under the present arrangement the taxable amount is £1,300, and that will fall under the new arrangement to £900. Take, again, the other proposal, under which new beginners and those who have been in business also before the War, are to be allowed £500 practically as salary, which is not to be taxed, but is to be reckoned as part of their income, and each partner is to be allowed to have £250 over and above this £500, or practically £750. Take four partners working together, and you have got four times £750, which, I think, is £3,000, un- taxable—a very great improvement upon the present arrangement—and on new capital an allowance of 12 per cent. If the members of this firm have been serving in the War—and many of them have—they deserve much more consideration than those men who have been at home during the War. They will receive 12 per cent. on the whole of their capital, plus this allowance of —750.

I think sometimes, as I listen to these Debates, that the hated publican of ancient days must have been a benevolent old gentleman in comparison with the hardhearted wretch we have for the Chancellor of the Exchequer; and yet, frankly, when one looks at the concessions which the Chancellor is making to the small business men, and to those men who are hardest hit, they are very valuable concessions indeed. I will not say they are generous, but I will say they are just. There is one class which the Chancellor of the Exchequer has forgotten, and I would beg of the Financial Secretary to consider this class. Take the case of a firm that has had a fairly large capital before the War, say, —5,000 up to —25,000, and who, through a bad cycle of years—and they come in all trades—has got such a bad pre-War average, that it cannot be considered a pre-War average at all, and this firm is driven back on a percentage standard. I do suggest to the Financial Secretary that 8 per cent. on a fairly large capital, say, of —10,000 or —20,000, is not a fair business return under present conditions, and I do plead very strongly to the Financial Secretary to raise that 8 per cent. to 12 per cent., so that these firms with this unfair datum line, for which they cannot be held responsible, shall no longer trade under this very grave injustice from which they are suffering at present. I would like to make another suggestion, and that is to reduce the tax from 60 per cent. to 50 per cent., and so get rid of a great of the grumbling that exists. Some of the grumbling is justified, and some is not justified.

Mr. ARTHUR MICHAEL SAMUEL

Many of the hon. Gentlemen who have addressed themselves to the subject now before the Committee have taken up the standpoint of manufacturers or traders, and have shown how this Excess Profits Duty will hurt them. May I go to the other extreme, and endeavour to show the Committee how I think this Excess Profits Duty will defeat its own end, injure the national finances, and fail to do that which the Chancellor of the Exchequer has very prudently endeavoured to set out to do? I take it from what he has said, and from the line taken by the right hon. Baronet the Member for the City of London (Sir F. Banbury), that one of the many objects of this large tax is to reduce Floating Debt. Very good. I wish it could do it; but it will not do it. I challenge the statement of the Chancellor of the Exchequer when he says he can, by means of this Excess Profits Duty, partly or wholly repay a similar amount of the Floating Debt. He makes a point in replying to the Federation of British Industries. I cut this out of the "Times" report: He claimed that the efforts of the Government to grapple with the debt and to deal with inflation of credit had been very beneficial. — The Government, by their intention to grapple with the debt left by the War and the inflation of credit, had steadied matters considerably. I will take those observations as the pivot on which to base my observations. It within the recollection of most Members of this House that there has been a very great outcry about the lack of ability on the part of traders to borrow money of their bankers. I will say here and now that I find no fault with the bankers. I think they have lent up to the extent of their resources, and their prudence is well justified. I do not want to disclose private matters, but I can speak of limited liability companies, of many private firms which have had to borrow from their bankers the amount to pay their Excess Profits Duty. What has been the result? The Chancellor of the Exchequer hopes to get —200,000,000 to —300,000,000 for the reduction of the Floating Debt during the current year. I maintain that of the advances of bankers to traders in the current period, more than —200,000,000 has been advanced to pay Excess Profits Duty, and the consequence is that the Chancellor of the Exchequer, if he will pardon my saying it, by a confusion of thought is mixing up cancellation of National Debt with paying it off. The —230,000,000 he gets from the traders, who borrow it from the banks. He will have shifted the burden of Floating Debt off the shoulders of the State and put it on to the shoulders of the trader, who will transfer it, by credit based upon nothing, to his bank. The right hon. Gentleman will not have paid off Floating Debt by that amount. All he will have done will be to cancel a debt of the State by transferring it from his shoulders to that of the nation.

We have at last realised that there is an immense difference between inflation of currency and inflation of credit. The time has come when the country, and, I think, the Treasury itself, should realise that there is an immense difference between the cancellation of National Debt and the payment of it. If the Chancellor is trying to reduce inflation by getting rid of his Floating Debt, he is doing nothing of the kind. He is merely transferring that inflation from the Government on to the shoulders of the traders through the banks. But this restriction of ability of the trader to borrow more money from his bank, owing to the shortage of bank resources, because the banks have already lent large sums in order to meet the Excess Profits claim, is also having a further effect. It is reducing the ability of the manufacturer and trader to extend their export trade by which to pay off foreign debt—for example, the American debt—in the finest possible way. Creating psychological effects in this country as to our means and willingness to pay off debt in the eyes of the American people is a very expensive proceeding and is not worth its cost to the trade of the nation. The best way to pay off debt is not by psychological effects but by paying it, in the same way as we have paid, or are paying, the Anglo-French American Loan. We are paying that by assets and not by psychological effects. The best way to increase the good esteem of our friends abroad is to increase our exports and actually repay debt with them, and we cannot do that unless we have this credit, which we want to get from the banks. Cancellation of debt by way of Excess Profits Duty, by transferring it from the Chancellor of the Exchequer's shoulders to the traders' shoulders, is just as if a bankrupt were to go to Carey Street and cancel a debt. He can cancel it but it is not payment.

The Chancellor of the Exchequer talks about inflation and deflation in this Report of his views before the Federation of British Industries, and I humbly submit that a good many ill-considered opinions are given about inflation and deflation. What does he want to deflate? Does he want to deflate the currency? If he wishes to do it hurriedly he must at once reduce the volume of currency notes with which wages are paid which of course would reduce employment—the very abnegation of statesmanship. If he wishes to deflate credit, he deprives traders from getting credit to carry on their business. As an hon. Member said earlier in the afternoon, it is a very good thing to restrict the credit of those speculating in raw material, but when it comes to the point that he is deflating credit, and deflating it so that it affects the manufacuring class, I say his theory is thoroughly unsound, and is one which I cannot by any means accept. You cannot, as a matter of fact, deflate by violence and at the same time do no harm to industry and to the national finances. The only harmless way of inflating or deflating is to do it very gradually indeed. The real way to deflate in this country is as if you had a tub of articles and a number of tickets which represented those articles. If there are more tickets than articles that is inflation, and if you destroy the tickets that are in excess of the numbers of articles, you only put up the value of those tickets which are not destroyed. The proper way to restore value to the redundant tickets is to increase the articles in the tub. The right hon. Gentleman is doing the opposite, and by deflating credit is defeating the very object at which he aims. He is preventing us making additional goods to go into the tub so as to provide an article for each ticket.

The Financial Secretary to the Treasury the other day took a much more curious line. He said, "I wish to reduce debt while inflation goes on, because it will be better for the taxpayer." I think there must be lurking in his mind that very old theory of cheap pounds and dear pounds. It was the old theory discussed in this House a hundred years ago almost to a month, when Baring pointed out that it was better to pay off debt when corn was 80s. a quarter, as it was then, because money had been lent to the Government when corn was 80s., rather than wait for 60s. corn. That exactly applied a hundred years ago, but we should realise that the old argument about dear pounds and cheap pounds in relation to our National Debt is not fully applicable now, owing to our domestic production other than agricultural production being not likely to have a material fall in value in the future. The money raised by loan for the purpose of carrying on the War was not to any extent raised by agricultural profits. Agriculture plays a very small part in the profits of this country at the present moment, and the fall which will take place in the values of imported raw materials, which together with labour and coal produce, the trade out of which taxation is effected, will not bear adversely upon this country. If things fall in value it will only be so far as wages fall—and I do not think they will fall—and only so far as coal will fall—and I do not think it will fall very much—only the fall in the raw material in the manufactured article will create that loss and that loss will fall upon persons who are not inhabitants of these islands. I therefore lay down this formula on the depreciation of money and debt repayment. We should realise that the old argument about dear pounds and cheap pounds in relation to our present National Debt is not fully applicable, owing to the fact that our domestic productions, other than agricultural production, are not likely to have a material fall in value in the immediate future. Whatever reductions in values of raw materials may take place, the loss, for the most part, will fall on persons who are not inhabitants of the British Isles. The argument of the borrowed cheap pound versus the re-payable dear pound was applicable in the days when the chief industry of this country was agriculture, but it is only applicable in a minute degree now that the trade of the country mainly depends upon the manufacture of imported raw materials by means of British coal and British labour. I say that any repayment of floating debt cannot be affected by this Excess Profits Duty, and I say the efforts of the Chancellor of the Exchequer are being entirely stultified and cancelled by the fact that the money is not being made out of profit, but is being made by loans from banks. Again I would say a quick repayment of floating debt, even to the extent of £230,000,000 in a year would create a grave disaster in this country. Take the matter to its logical conclusion. Supposing all the Excess Profits Duty were paid to the Chancellor of the Ex- chequer in gold to-morrow morning and he went into the City and tore up an equal amount of Treasury Bills, it would at once create an inflation beyond all conception. We do not know what the floating debt does. We do not know what the payment and repayment of Treasury Bills do. They perform certain unascertained and mystical functions in the economic system of this country very much like the ductless glands in the human body or the spleen. We do not know what these organs do. I myself, though I have studied these economic questions day after day, do not know how gradual deflation or inflation or floating debt do or do not hurt the solvent economic system of this country; but of one thing I am perfectly certain—a quick and hasty deflation or debt repayment, which seems an obsession of the Treasury, must do great harm. The Chancellor of the Exchequer has made a suggestion that we, at any rate, should put forward some alternative scheme. I myself do not go so far as my hon. Friend behind me (Mr. G. Terrell), so I shall not vote for the total abolition of the Excess Profits Duty. I know money must be found, but I hope that the Chancellor of the Exchequer will not say that he is not now open to conviction, and that as matters and conditions have changed, and very materially, since he made his Budget speech, I hope he will not say still that he is going to stand or fall by the Excess Profits Duty at 60 per cent. Let him be like Abraham Lincoln, and admit that it is a right thing to change one's mind if conditions have changed so as to warrant a change of policy; and the conditions have changed.

The right hon. Gentleman asks for an alternative suggestion. I make this proposal to him, that he should reduce the Excess Profits Duty to 40 per cent. on one condition, that industry will not ask back that money overpaid in Excess Profits Duty. I believe it will be something like £22,000,000 this year. In such an event, the right hon. Gentleman would, any rate, be making a concession to industry, while, on the other hand, he would not be giving up the position he took without some quid pro quo for the Treasury. I may add I am not authorised of my colleagues of the Associated Chambers of Commerce to say what I have just said, but I believe my suggestion would be a golden bridge to enable the Chancellor of the Exchequer to say, "Well, I have not given way for nothing." I believe such a concession would soften public opinion. I believe, at any rate, it would make the majority of traders feel more satisfied. I believe, at the same time, it would save the Treasury a large sum and help to expand the export trade, though, undoubtedly, some firms would suffer heavily by surrendering their right of claiming back excess profits. But the greatest good for the greatest number.

I agree with my hon. Friend the Member for Rossendale, for I do not think that trade is going to fall at the rate some people foretell. I believe the silver question and various other circumstances such as those in Japan, which have knocked things about very considerably, will keep things at a lower level for a time. But I believe traders will feel, if they get the proposed concession from the Chancellor, they will be the more capable of increasing the sources of taxation by trade expansion. The Treasury will lose nothing if trade, as I think, remains fair. The traders will gain something, and the benefit to the country will be considerable. The concession would satisfy public opinion. I should like the right hon. Gentleman to see his way to accept the proposal I put forward.

Sir GODFREY COLLINS

Speeches have been made by several hon. Members urging the Government and the Chancellor to reconsider the amount of the Excess Profits Duty. The hon. Gentleman who has just sat down, if I understood him correctly, proposed that the Government should borrow the necessary money for the service of the State.

Mr. A. M. SAMUEL

No. Let me correct that at once. I do not think that for a moment, but I say we should hold our hands and not indulge in hasty repayment by causing traders to borrow in order to enable the State to cancel debt.

Sir G. COLLINS

I understand the hon. Member does not propose that the Government should borrow the required sum of money. Will he therefore propose that further taxation should be imposed because this House this year has decided the amount of our annual expenditure?

It rests with the Committee this afternoon to determine what is to be the character of the taxes which will be imposed upon the citizens. If hon. Members are opposed to this tax they must either fall back on one or two alternatives. Borrowing is discarded by every Member of this House, because Consols are at 47, and 5 per cent. War Loan Stock is at 86. Inflation is also discarded. We have seen the evil effect of inflation during the last six years. We must, therefore, fall back on taxation. The money itself has to come directly from the profits of the taxpayer. No statesman to-day proposes to increase indirect taxation. It would be the height of folly with prices so high, and especially in view of the subsidies. We therefore fall back on direct taxation.

Exception to this tax was taken by two hon. Members who urged that the Income Tax should be increased. To raise the necessary sum the Income Tax would require to be raised to 10s. in the £1. I need only mention that figure to show the folly of any such proposal. We, therefore, fall back on this Excess Profits Duty. But, really, there is only one sound alternative to a continuation of the Excess Profits Duty, and that is a real and lasting reduction in national expenditure. I have often during several years raised my voice in this House on that subject, and I only regret that during the last twelve months I have not had that privilege; but I do not think it will be in order on this occasion to develop that line of argument as a possible alternative to a reduction of the Excess Profits Duty. Parliament has decided the amount of our expenditure; it rests with the Committee to decide how that money shall be raised. I propose this afternoon, with the consent of the Committee, to submit further arguments In favour of a continuation of the Excess Profits Duty. It has been said, and with truth, that Great Britain has made untold financial sacrifices during the War. If we compare our sacrifices with other nations our efforts compare extremely well. It has been said: "Look at France." One hon. Member this afternoon directed our attention there. France to-day is only raising some £30,000,000 by direct taxation. I hope our efforts in the future will not in any way coincide with the efforts of France in raising money to pay for the cost of the War. It has also been said by a former Chancellor of Exchequer (Mr. McKenna)—whose courage in these matters calls for our commendation and support—why should we tax ourselves when we require to raise £120,000,000 for pensions? Why should we tax ourselves to reduce the debt when our War expenditure in the East is amounting to a large figure? Why should we tax ourselves when we require to find large sums of money, £80,000,000, to subsidise bread, railways, and coal?

I would reply to these critics quite simply. We must balance our national revenue and our national expenditure. We must conform to the standard of the individual in private life, of making our yearly income balance our yearly expenditure. The road to ruin is pleasant until the end is reached. This Amendment raises in a very definite way whether this House will follow the difficult, unpopular and unpleasant, but economical path of putting this country in the future on to sound economic lines. It is said: "Why should this tax continue in 1920?" I reply that the conditions which exist to-day are very similar to the conditions that existed in 1916 when the tax was introduced. Throughout the War competition broke down. Owners of commodities and producers were able to make undue profits. The War created monopoly and led to monopoly values. I ask: Is the State to stand idly by while these conditions exist to-day, and allow monopoly values to pass completely into the pockets of private individuals? Monopoly profits are being made to-day. Such profits are a fit and proper subject for taxation. When scarcity disappears, Mr. Whitley, and plenty takes the place of shortage, when competition raises its head again, then the Chancellor of the Exchequer must remove entirely the Excess Profits Duty.

The foregoing arguments I have advanced in favour of the continuance of the tax this year should be discarded if it can be shown, as some hon. Members have endeavoured to show, that our national development will be retarded. I will try to meet some of the arguments of those who have argued that a continuation of this tax will check our national development. I ask the Committee to consider for a moment the position of our staple industries to-day. Is it not true to say, broadly speaking, that throughout the length and breadth of this country in all our staple industries there have been during the War large extensions; plant has been doubled and trebled, and facilities for production vastly increased? I am now referring to the available buildings and plant for the purpose of manufacture, and not to the actual production and manufacture of goods from the existing plant. If it be true that there exists to-day so large an increase in the plant in comparison with the pre-War period, it is not vital in the national interest that there should be a great inflow of new capital in the construction of buildings, and so on. I would ask opponents of this duty to take any great industry to-day, and show the Committee that in the national interest it needs a great inflow of new capital.

Let me cite two great industries and compare their position to-day with their position in 1914. Take the steel industry. Before the War the facilities for production in this country were some 6¾ million tons. To-day facilities exist for an output of 10,000,000 tons. Take shipbuilding. During the War there were constructed 300 slips for building and launching ocean-going steamers, thereby allowing Great Britain to increase her output by some 25 per cent. If it, be true, as I submit to the Committee it is true, that we have to-day these great facilities for the production of goods, the main argument advanced against the continuation of the tax falls to the ground. I naturally admit that the Excess Profits Duty does check and stop the inflow of new capital into every industry. I join issue, however, with hon. Members who argue it is more important to encourage the inflow of capital to-day into these new industries rather than adopt the policy of the Chancellor of the Exchequer and raise the £300,000,000 for which he asks.

A further argument against the tax is the view, freely expressed, that an undue burden is being placed on the taxpayer. The Government must face this fact. The public are not prepared to-day to find money, by taxation, to largely reduce the National Debt; neither should they be asked to do so. It has been said that we may cancel the National Debt in 20 or 30 years, but any such proposal would be the height of folly. Without committing myself to a forecast of the future, I think a Sinking Fund of half per cent. is ample and generous, and it is open to consideration whether, when the present abnormal conditions disappear, we should reduce the debt while being required to find, by taxation, large sums for pensions which will be of a decreasing quantity. It is said that the continuance of the tax is a breach of faith. The hon. Member for Chippenham (Mr. Terrell) dealt with that point in his speech. One Parliament cannot bind another; Parliament is a sovereign body, and may alter to-day a decision of yesterday. Let me submit a further argument. During the War the price of commodities was controlled, and thus profits were restricted. Decontrol has, at the moment, led to increased profits. Is the Government justified in permitting prices to soar, and not secure by taxation for the needs of the State some share of the increased profits? I would also submit a further point. Excess Profits Duty during the War was paid either by the owners or manufacturers, or by the consumers; in both cases they were inhabitants of Great Britain. To-day, however, the position is slightly different: our export trade is steadily rising; over-sea buyers are readily purchasing, at high prices, our manufactured goods; whether from the East, or West, or South, the world is drawing on the manufacturing resources of Great Britain. While the world scarcity exists consumers over seas are paying a share of Excess Profits Duty. A striking indirect result of the continuation of the Excess Profits Duty this year has not yet been mentioned; whether this result was anticipated by the Chancellor of the Exchequer or not I cannot say. During the first few months of the year we witnessed an extraordinary outburst of industrial flotations: company after company was reconstructed, the public were invited to subscribe, conditions were being created which would have rivalled the South Sea Bubble! We do not desire a repetition of that experience. The bubble has been pricked before an acute crisis had arisen; the speculative mania has been held in check, with advantage to the British public.

It is easy to find political justification for the tax; proposals for taxation should not, however, be diluted for political exigencies and popular support, and I do not seek to justify the continuance of the tax for political objects. It is, however, said, it may be with truth, that the present House of Commons is mainly composed of rich men, with more wealth, on the average, than previous Parliaments. Labour points, with scorn and derision, to the Government as a Capitalist Government; on every Labour platform in the country, Capital is pointed out as the enemy. While not denying the evils and abuses of the capitalist system, I invite the Labour party to compare the taxation proposals of all the democratic Parliaments with the record of the British House of Commons during the last six years. Let the comparison be made. I invite and challenge the Labour party! If the comparison be fairly made, there can be but one answer; that the British House of Commons has shouldered the burden. This tax is the price of a long War. Power and responsibility have been given to the present House of Commons to face an unpleasant fact, with its attendant unpopularity! Let me remind the Committee of one of Burke's famous quotations. He said: If we command our wealth we shall be rich and free: If our wealth commands us, we are poor indeed! The first part of that quotation is a true illustration of the financial propositions of the Government, and I submit that, after the Division on this Amendment, it will be an accurate description of the present House of Commons.

Mr. CLOUGH

There can be no doubt that the decision ultimately arrived at upon this question to-night will greatly affect for good or ill for many years to come the trade, commerce, and financial stability of our country. I have listened to the hon. Member who has just spoken, and I am not quite sure whether or not I see his point; but it does not seem reasonable to me that because we have bigger workshops and more plant, therefore we can afford to continue the Excess Profits Duty. My view is, that because of these bigger workshops and plant bought at War prices, business men more and more need to retain in their businesses some of their money which is now going in taxation. We have been reminded that the Chancellor of the Exchequer stated that he would stand or fall by the Excess Profits Duty at 60 per cent. Is it not possible for him to have the misfortune to do both? He may stand by the Excess Profits Duty inside this House, and fall from the confidence and esteem of the bankers, financial experts and best business men throughout the country.

Let me hasten to say that I admire the undoubted integrity, ability and great Parliamentary experience of the Chancellor of the Exchequer, and it is no exaggeration for me to say that for many years the right hon. Gentleman has been one of my particular political idols. I wish to point out to this Committee that our country could not afford to continue to retain in office as Chancellor of the Exchequer anybody, however brilliant his personal qualities, if he once loses the confidence of the investing classes. Confidence is as vital to successful commerce as either capital or labour, and no one can doubt that confidence has been severely shaken since an increase in the Excess Profits Duty was proposed in April last. In the interests of Labour even more than of Capital we ought to see to-day that British industries are not too heavily handicapped in their fight for world's markets. Increased production on a large scale would speedily remedy most of the nation's present difficulties. In my opinion, a more liberal supply of commodities, which are now scarce, would do more good to the country than the repayment of debt.

It has been said this afternoon that there is a danger in our large floating debt, but, at any rate, it does float, and trade and commerce will undoubtedly sink if it is too heavily weighted with taxation. It is no exaggeration to say that there has been a serious slackening in trade since the increase of the Excess Profits Duty was proposed. Sales have been far fewer recently than in any similar period of time since the Armistice, and, whatever other causes there may be, undoubtedly a large proportion of this diminution is due to the proposed increase in the Excess Profits Duty. The familiar letters "E.P.D." may have stood for Excess Profits Duty at the Treasury, but in the country they have meant Extravagance in the administration of business, Profiteering which has resulted in grumbling on all hands, and Deception and Dishonesty which has been proved in many of the courts of the country at the present time. The Excess Profits Duty has encouraged profiteering, and it has had a great deal to do with the increase in the cost of living.

Let us see how this duty has worked out in practice. We must admit that the cost of living has gone up. I will take a business having three partners before the War, and they made three-halfpence per pound on wool or cotton before the War. The cost of living has been doubled for everybody, so that they now need threepence per pound profit to share amongst the three partners to be in any way equally as well off as they were before the War; but to retain this threepence per pound profit for division amongst these three partners they needed a profit of no less than ninepence per pound when Excess Profits Duty was 80 per cent., and they will require about sevenpence per pound profit if the Excess Profits Duty is 60 per cent., and even then they would not be as well off as they were with three-halfpence per pound profit before the War. This explains the big advance which has taken place in prices.

7.0 P.M.

The Excess Profits Duty is a tax which expressly penalises diligence and especially punishes development, and we want a great increase of output in order that paper money wages may become real wages. Another evil of the tax is that it creates vested interests. No one can deny that at least £300,000 is now needed to put up and equip a mill or workshop to compete with a concern which cost only £100,000 before the War. Hitherto the tax has treated with the greatest unfairness young men who have been invalided out of the Army during the War and recently-demobilised service men who have set up in business, and I appeal to the Committee to remove this genuine grievance. Perhaps my Labour friends will agree that there is at least one thing in common between capitalists and trade unionists, and it is that neither will do his best when he feels that he is working under a grievance, and I think this tax is a real genuine grievance. It has been said Clause 1 would show who were Free Traders and who were not. So will the voting on Clause 40 to-day, because I am sure no true Free Trader can possibly vote for the continuance of the Excess Profits Duty, which undoubtedly gives far more protection to old-established firms having a high datum line than any tariff which the most enthusiastic Tariff Reformer has ever proposed in this country. I believe if new and young firms can start in busi- ness without an undue handicap against old-established firms, it will quickly bring down the present cost of living. If the Excess Profits Duty is not to be done away with altogether, then it is at least necessary to reduce it to 40 per cent. Can anyone deny that commerce, since April last, has been threatened with a serious financial and economic crisis? It is surely the duty of this Committee to grant relief to overtaxed industries in some way or other, and to do so before more serious damage is done. Although I shall vote against the Government to-night on this question, it is my earnest wish that "too late" should not be written of this Government, and I venture to suggest it is the urgent duty of Parliament to re-establish confidence in trade now. I believe a reduction to 40 per cent. of the Excess Profits Duty would help a great deal towards this most desirable end.

Mr. ASQUITH

I shall not intervene for more than a very few moments in this Debate between you, Sir, and the large array of hon. Members who are apparently anxious to catch your eye. I do not like, on this matter, however, to give a silent vote, which might very well expose me to misunderstanding and misconstruction. Let me say at once that I cannot vote for the Amendment of the hon. Member for Chippenham (Mr. Terrell). At the same time I am bound, as are all, I think, who listened carefully to what was said by him and to what has been said by others, to admit that there is not a little force in some of the considerations he has brought before the Committee. I was a Member, indeed, I was the head of the Government, by which the Excess Profits Duty was, during the course of the War, originally imposed. It was imposed, as Mr. McKenna, the then Chancellor of the Exchequer, said in language which I think has been cited more than once in the course of this discussion, as a temporary expedient for the purposes of the War, and it was, in my judgment, let me say parenthetically, a perfectly legitimate and most productive instrument. It was imposed temporarily for the purposes of the War, and with a very distinct intimation that its termination might be looked forward to with the advent of peace.

Only last year the right hon. Gentleman the present Chancellor of the Exchequer described, I think accurately, and without exaggeration, the unfairness and inequality in some respects of its incidence and also its injurious consequences on trade. He used language which will be in the recollection of many Members of the Committee from which business men were entitled to infer that it was a doomed tax, nearing its end. That impression was certainly not weakened, and indeed it was, in the opinion of the whole business world, corroborated and emphasised by the appointment of the War Levy Committee in the spring of the present year.

Something has been said by an hon. Member who sits behind me of evasion in connection with this duty. I remember hearing an eminent judge, one of the most eminent, the late Lord Bramwell, say from the Bench, that every man is entitled to evade the law if he can do so successfully. That is perfectly true. The fault, if fault there be, is with the lawgiver who does not make his structure sufficiently wind and water-tight, and not with the citizen who slips through the loophole which has been improvidently and carelessly left unguarded. Therefore, I am not moved to moral or any other form of indignation, by this talk about evasion. No blame, in my judgment attaches to men who framed their business programme, as many admittedly did in this country, on the assumption that the tax would certainly not be increased, and would, in all probability, disappear.

There is another aspect of the case, on which I am glad to be in almost complete agreement with my right hon. Friend the Member for the City of London (Sir F. Banbury), who spoke with his usual vigour and incisiveness. Indeed, if he will allow me to say so, he wears gracefully and effectively the mantle bequeathed to posterity by that doughty Radical economist, Joseph Hume. I may not be able to agree entirely with my right hon. Friend in his summary and somewhat rough and ready classification of our public expenditure under two heads—that which is necessary and that which is unnecessary—though I note in passing, with much gratification, perhaps another wholesome symptom of his political development, as he classes the additional expenditure on national education now, for the first time, as one of our national necessities.

Sir F. BANBURY

I was speaking of the education of soldiers.

Mr. ASQUITH

I am sorry it was so limited, but, at any rate, it is a sign of grace, and I am quite sure that that saving process will lead my right hon. Friend eventually to take a more enlarged view of our national system. While I do not altogether agree with the details of my right hon. Friend's classification, I agree entirely with what he said as to the importance, and not only the importance, but the feasibility, of a large and drastic reduction of expenditure. He said, in his heroic way, that the House of Commons, by way of giving a lesson to the Government, should refuse taxation. I take a rather different view, or perhaps I have a different way of expressing the idea. I say that, while the House and the country should realise that the maintenance and increase of taxation, even in such an objectionable form as is involved in this Excess Profits Duty, are the price which they pay, and will have to pay, for neglect to enforce public economy. You must pay your bills. You must fulfil your obligations to the public creditor. You must—and here I agree with the Chancellor of the Exchequer—make serious, continuous, and ever-growing efforts to reduce the Floating Debt, which is a millstone round the neck of our commercial community. These are things which require money. Money must be raised, and if you will not get money by saving, you have to get it by taxation. That is the moral of this situation, and that is the reason why I cannot vote with the hon. Member for Chippenham against the proposal of the Government to continue, and even to increase, this Duty.

Let me add this. You have to tax and to increase taxation to meet the present scale of expenditure, and your present obligations in regard to the reduction and ultimate cancellation of your Floating Debt. Many and grave as are the objections in detail to the Excess Profits Duty, it has this merit, which, I believe, will commend it to a very large section of our fellow-countrymen outside, that it does tap a still unexhausted reservoir of fortunes and wealth created by the exigencies of the War. To a large extent—although I do not in any way disparage the energy and enterprise of our trading community—that wealth is a result of hazard, accident, and national necessity, and is therefore the fittest of all possible subjects for national taxation. It is on these grounds that I cannot vote for the Amendment of the hon. Member for Chippenham.

Sir W. PEARCE

I do not believe that 60 per cent. at the present time represents the maximum productivity of this tax. A wise Chancellor of the Exchequer will take notice of the circumstances of the immediate times. Most of us know that commercial and industrial circles in this country are very greatly disappointed and discouraged by this 60 per cent. Excess Profits Duty, plus the Corporation Profits Tax. No one expected the duty on excess profits to be raised, and I can assure the Chancellor of the Exchequer that in certain circles in the country there is a great sense, not only of discouragement, but almost of resentment on this matter. It has been put to me from a most important quarter that the Chancellor of the Exchequer in his own interests, and in the interests of the Treasury, would be wise either to accept this Amendment, or at least to reduce the duty to 50 per cent. I am told by responsible people that a concession of that kind would create an atmosphere of good feeling and confidence which at the present moment is absent. There is another reason which I want to press upon the right hon. Gentleman, and that is that this 60 per cent. duty will certainly check the expansion of the industry of the country.

To-day we have an unexampled opportunity. Most of the world is in a parlous condition industrially, and there is an unexampled opportunity for expansion in this country. If this is not allowed, how are we going to carry our enormous National Debt? It is only by greatly extending our business that the commerce and industry of this country can meet the situation. It is all very well to point to large increases in factories and plants in the country. Those factories and plants cannot be worked without capital. Nearly every large concern to-day is feeling the want of capital, and this House is in danger of forgetting that to-day the capital expenses on any given operation are from 200 to 300 per cent. higher than they were before the War. I think the Government ought to hesitate very much before they decide not to meet that in some degree, if only to the extent of making the duty 50 per cent. instead of 60 per cent. One suggestion was made by the hon. Member opposite (Mr. Terrell) that had not occurred to myself, namely, that in the national interest the best way to meet the situation would be to make the duty 40 per cent. and take away the right to recover. I do not know what the nature of the claims on the Treasury for repayment may be, but I should imagine that they are not very heavy, and, if I were Chancellor of the Exchequer, the first thing I should want to do would be to get rid of this obligation to refund Excess Profits Duty when the firms in question were below their standard. I feel certain that that is going to be an awkward factor for the Government to settle, and, if there are not many claims to? day, and if it can be in any way fairly done, I believe the best course in the national interest would be to make the duty 40 per cent. and get rid of the right to recover. The feeling in commerce to-day is one of disappointment and discouragement, and there is a danger that the best efforts will not be put into commercial undertakings; and I feel sure that the Government would do a wise and prudent thing, and would help the Treasury, if they would meet this Amendment in some sense.

Mr. BRIGGS

I feel some diffidence in intervening in this Debate of experts, but I want to say only a few words from the point of view of a plain business man. I agree with the right hon. Baronet the Member for the City of London (Sir F. Banbury) that we should refuse taxation in order to force economy on the Government, but I do not agree that it should be this tax which is refused. What better source of taxation can there be than profits which were a direct consequence of the War? [HON. MEMBERS: "No!"] Some hon. Members say "No," but I am a business man, and connected with manufacturing, and I have practical experience of this tax. In fact, I do not think there is an hon. Member in this Committee who is suffering more keenly from it than I am myself. In spite of that, I say quite frankly that this tax is an absolutely just tax, and I consider that the Chancellor of the Exchequer has to a large extent met its hardships by the Amendments which he has upon the paper. I am going to ask him, in a new Clause which I have myself put down, to meet a hardship.

I want to deal in a business way with some of the arguments which have been put forward. We have heard of the sympathy that is felt for the small man, and I have every sympathy with him. I know what it is to be a small man, and to build up a business. But I would suggest to the small man that he should bear in mind that, before the War, a man starting in business was quite prepared, and fully expected, to devote the best portion of his life to building it up, whereas the small man who started in business during the War, or who starts to-day, is or has been able in five years' time to arrive at a position which it would have taken him 15 years to reach before the War. [HON. MEMBERS: "No, no."] Hon. Members say "No, no," but perhaps they did not start as small men, and do not really know what it is to build up a business. We have also heard about businesses which were on a poor basis before the War. I myself had such a business, but I say that, if we are honest in the matter, we have to acknowledge that many of those businesses which had a poor pre War basis would, had it not been for the War, have gone through the Bankruptcy Court by this time. I could give a list of well known businesses in the City of London, with some of which I am closely acquainted, which have increased their profits, not twice or three times, but ten or fifteen times, merely as a consequence of the War and nothing else.

Then we hear a great deal about the destruction of incentive and the restraining of capital because of this tax. I suggest to hon. Members who are not in business that they need not put very much value upon that. I would ask them, especially in view of the new percentages that are being granted by the Chancellor of the Exchequer, what method of work can give a better result, to capitalist or workman, than trade, even under this Excess Profits Duty? There is no form of livelihood which gives a better return than business, even under this tax. Again we hear a great deal about extravagance. Hon. Members may smile, but I know that what I say is correct from a practical point of view. Extravagance can only take two forms. It may take the form of higher wages; but, as an employer for 30 years of considerable numbers of both men and women, I would venture to say that the most generous employer is not likely to be reckless in the direction of higher wages. Hon. Members are silent, and therefore I take it that they agree with that. The only other form which extravagance is likely to take is in the direction of renewals and replacements, and there, I grant, there are evasions of the tax. If you like—the Chancellor of the Exchequer is here—I am an evader myself. The only person who suffers by that, however, is the Chancellor of the Exchequer, because this expenditure is not really extravagance. Expenditure which is put into renewals and replacements is bound to come back in the future trade of the country. It is only capital expenditure at the cost of the Government, and therefore it is not wasteful extravagance.

I say that we ought to support this tax because it is a war tax, and we made these profits from the War; but I would presume to say to the Chancellor of the Exchequer that we could not bear this tax indefinitely. At the same time, I would go so far as to say that it is not the cause of the temporary depression in trade. There may be a slight holding up of trade, because it is necessary to wait and see what is going to happen, but that is merely a "nine days' wonder." The difficulty from which the trade of this country is suffering to-day is uncertainty with regard to prices, and that, in the main, is due to reckless speculation. I know something of several commodities—cotton, linen, silk, wool—and I say that in the case of those goods we do not know to-day what the price is going to be to-morrow, because of the speculation that goes on.

Mr. CLOUGH

Did we ever know?

Mr. BRIGGS

I know that some of those who were going to support me on my new Clause may now withdraw their support, but I say to them now, let us remember that we business men are making these profits, and let us remember that we are not the only section of the community. There is an equally large section—either professional or middleclass—with fixed incomes, who cannot add to their incomes as we can. I ask my business friends what this large section of the community must think when they read in the Press, as they did last week, the report of the meeting of one of the largest trading concerns in this country, and perhaps in the world—the Shell Company—where the chairman decried the Excess Profits Duty, and said, or rather inferred, "If only this tax did not exist, what profits we should make!" He decried and belittled the tax, and in the same breadth declared a 50 per cent. dividend! What do people in this country who are not in trade think when they read that? I say to hon. Members, and I say to business men, speaking as a business man, let us take care that the people in the country do not think that we grudge parting with this money, which we have only made as a result of the security gained for us by the lives given by our fellow-countrymen overseas.

Mr. SUGDEN

I have listened with very great interest to the speech of my hon. Friend this afternoon, and I congratulate him upon the effort he has made and the point of view he has presented to us; but, while doing that, I must differ from many of his conclusions, and in due time I may be able to say a word or two upon them. First, however, I would like to say something of what the right hon. Gentleman the Chancellor of the Exchequer said at an earlier stage of our Debate this afternoon. He seemed to suggest that there was some idea in the minds of the great industrial community that it might be thought that they were endeavouring in some fashion to obtain an undue advantage over other taxpayers in regard to their duty in connection with the finance of the country. I want to say at once that, if the reduction of this tax from 60 per cent. to 40 per cent. were likely to put a greater burden upon the working people of the country, I for one would not support it. I feel, and other hon. Members feel, that, where profits have been made, quite legitimately, and honourably, but still willy-nilly, whether they would or no—in war days and later—where such profits have been made, I say they should be given in all due fulness to the finances of the country, for the purpose of doing what is necessary in regard to the obligations which are upon us. Neither before the War nor since has a correct diagnosis been made, either by any section of the community or from those Benches, of the method which will be most lucrative to the Chancellor of the Exchequer in its result. I assert, and I challenge the Chancellor of the Exchequer to prove to the contrary that, were he to accept this Amendment—not that the Excess Profits Duty should be eliminated, but that it should be reduced to the 40 per cent. at which it previously stood—I say that, with the plans that have been made by the great trading communities of the country, he would obtain more lucrative results from that tax of 40 per cent. than he will obtain if he keeps it at 60 per cent.

I say that for many reasons. I want to inform the Chancellor of the Exchequer and those with him that the great industrial concerns of the country are not in the hands of just a minor section of capitalists. We have the great limited companies with us to-day, and, speaking for two sections of industry, cotton and wool, I can say that the workers themselves are the greatest holders in this great labour and material-producing machinery of the country, and, further, they themselves will be penalised to a greater extent than those who stand in the ranks of the high capitalists. Again I want to appeal to the help of our Friends on the Labour Benches. The right hon. Gentleman (Mr. Clynes) said he wished 80 per cent. had been suggested rather than 60 per cent., and another hon. Member went further and suggested 100 per cent. I want to refer more particularly to the suggestion of the hon. Gentleman (Mr. Graham), who stated that the Excess Profits Duty was an improper tax and would not produce the required results. If we have to fight the great competition that is facing us in France, Italy, India, and in the Eastern markets, while having to bear this heavy taxation, we shall in due course be still further handing on to those who are to follow us the heavy or a heavier burden of taxation than even that which we carry at present. Something has been said about steel billets. Do hon. Members remember that, as the result of our taxation to-day, billets are coming into this country at £22 per ton, German billets at £20 per ton, and Belgian billets at £19, and the very lowest price at which British billets can be bought is £26? There is a great rubber industry with a capital of £200,000,000 in Java, the Malay States, and the surrounding islands, worked from this City of London, which has been built up in the past 10 years, and the result of the incidence of this tax is that much-needed commodity, instead of contributing its fair share, is being stultified. Something will be said later on behalf of other industries; hence I will proceed to further points.

The right hon. Gentleman has asked for certain methods which will produce the desired results, and I suggest that he should put before the great organised commercial bodies the amount that he requires to raise, let them formulate their methods and give him the money and accept his decision that if in six months the half amount he desires is not raised, then he may inflict upon them whatever he desires. That would be a fair and proper proposal to put to the business community; for then, with their specialised knowledge of their different trades, they would to their very uttermost exert in fair and equitable method the correct equipoise of taxation which would build reserves, increase industry and labour for the worker, and fight the competition of other lands. I make my bow to the Chancellor for his great business capacity. I thank him on behalf of the smaller traders for what he has done in respect to concessions. He has met many sections of the trading community in respect to certain grievances. The employés are the major consideration now; they are the greatest capitalists of the country, not only in respect of their labour, but in regard to their financial holdings in industry (and very properly so, too). Let them, in conjunction with the commercial classes, produce a tax which will be more equitable than this. The right hon. Gentleman was hardly fair to the Mover of the Amendment when he suggested that he desired the total elimination of the tax. Of course, we do, as a business community, desire it, but we feel and know that, if no other proposal is to be forthcoming and acceptable, the commercial community will accept 40 per cent., as the Mover of the Amendment suggests. I repeat, with full knowledge of the gravity of the position, that there has been no financial expert, either in this Government or in previous Governments since the War commenced, who has correctly foretold and diagnosed the proper method of obtaining the finances of the country. Therefore let us go slowly and carefully. Not for a single moment do I support the ca' canny attitude in the ranks of the Labour classes, and not for a moment will I support it in the ranks of the manufacturers. It is a violation of the equity and justice which is due for the great sacrifices of the War. The men who lay 200 bricks per day are setting an improper example to the men in the high ranks of finance to follow, but I am proud to say the shareholders in these great industrial concerns who instruct their directors to use that same ca' canny attitude do not obtain. I therefore plead with the Chancellor of the Exchequer that he will accept the Amendment, and that 40 per cent. shall be tried; and if at the end of six months the tax is not producing what it should, I will support him in any additional scheme to compel the balance to be produced.

Captain COOTE

The forcible remarks of the hon. Member (Mr. Sugden) seem to have contained this suggestion, that the Chancellor of the Exchequer should for the present moment drop his proposal to increase the duty to 60 per cent. and consult the business community as to an alternative tax. Had the business community really been chiefly concerned, as they ought to have been, about the production of an alternative they have really had a very long time to think it over since the tax was first proposed. It is hardly worth while for hon. Members to lay emphasis upon the bad character of the tax. Upon that point they are preaching to the converted, and as the whole Committee is convinced that it is a bad tax surely it is up to the business community to suggest an alternative. If they do not they put themselves into a very false position. There is the primâ facie presumption against them that all that they want is merely to avoid taxation and not to pay their fair share. I do not suggest that that is true, but that is the presumption they lay themselves open to. What are the alternatives to this tax? The one which appeals to me most strongly is that which was suggested by the right hon. Baronet (Sir F. Banbury). The business community has by their action washed out and eradicated the only alternative which will fulfil what to my mind are the two essential requirements of any alternative, namely, that it should be immediately operative and equally productive. The only tax with which those requirements might possibly comply is the capital levy. I do not want to argue in favour or against it, but only to point out that that alternative has been completely eradicated for the time being, and moreover that the War Profits Levy does not fulfil the requirement of being immediately operative because no money was expected to be realised from it for a considerable time after its first inception. Therefore, I think the Committee is reduced to consider the alternative which the business community suggests to be that of a reduction of expenditure. That point was emphasised by the right hon. Gentleman (Mr. Asquith).

I do not know whether hon. Members have taken the trouble to go through the Estimates and see where this reduction of expenditure can be immediately carried out. A number of experiments have been undertaken by the Government —some people might call them Socialistic experiments; they are none the worse for that—to which exception has been taken. I believe what is meant by the reduction of expenditure is the dropping of these experiments forthwith. It is surely better that this present Government, which is not wedded to their continuance, whether they succeed or fail, should undertake those experiments than that some subsequent Government, which is devoted heart and soul to them and will persevere in them, whether they prove a failure or not, should have to undertake them. But that is by the way. Take the Ministry of Labour. Take the Ministry of Shipping. I have made a rough estimate, as best I can, upon the basis of the figures in the Estimates for 1920–21, and, taking five of these experiments, we find that the Government might cut out £14,000,000 of increased expenditure upon education. They might cut out, if they wish, the whole of the cost of the Ministry of Health—£34,500,000. They might cut out the whole cost of the Ministry of Labour—£25,500,000. They might cut out the cost of the Ministry of Transport, which, exclusive of the railway agreements, costs £1,000,000 or rather over. They might cut out, without reckoning Appropriations-in-Aid, the Ministry of Shipping, which costs £16,000,000. That totals up to £90,000,000. How can that sum compare with £300,000,000 which the Chancellor of the Exchequer expects to realise? An hon. Member below the Gangway was bold enough to declare that this was a just tax. I make no such claim; but it is a necessary tax at present, for if it is not necessary, how can hon. Members get up and advocate a policy of reducing debt?

Lieut. - Colonel Sir J. NORTON-GRIFFITHS

We do not want to reduce it. We want to keep it at 40 per cent.

Captain COOTE

I understand the Chairman has ruled that we may have a more general discussion, and I also understood that the Mover of the Amendment distinctly pledged himself to being all out for the total abolition of the tax. I do not pretend that the tax is a just one, but I urge the Committee to consider whether it is not necessary. I feel, however, that those hon. Members who feel strongly on the point have a perfect right to ask the Chancellor of the Exchequer, in conjunction with them, before the next financial year, to think out very carefully some possible alternative for this tax. He has already promised to do so. Much as I dislike the tax, and without decrying the arguments advanced by the right hon. Baronet (Sir F. Banbury) in favour of a drastic reduction of expenditure—no sum is too small to save at present—yet, even if we make large reductions in expenditure, we shall still have a large sum to find, and I do not see any other way at present to find it except by supporting the Chancellor's proposal, and therefore I propose to support him in the Lobby.

Mr. G. ROBERTS

We are confronted with a great fact, and that is that a certain amount of money has to be provided, and we have to determine how best it can be secured, having regard to the general interests of the country. I have no hesitation in saying that I regard Excess Profits Duty as a vicious tax, as one which is inimical to trade in normal circumstances. It was imposed during the War, and it has worked in both directions. It has worked with some advantage, particularly to labour, because it has eased the resistance of the employing classes who have known that the concessions they made to labour have come out of excess profits or during the War out of revised contracts. Now that we have reached normal circumstances, or practically normal circumstances, I regard the tax as being fraught with some danger to trade. We desire constantly to stimulate enterprise, and I am certain that any tax or any condition that suppresses intiative and enterprise is going to recoil, not on one class, but upon the community as a whole. What we need is to secure regular employment, and in order to do that we have to place our industries on a condition which makes for prosperity. While differing at some point or other, the interests of employers and employed are identical to this extent that the prosperity of their respective industries is a vital concern to each section. This tax was imposed during the War, with certain justifications. I have been desirous with other Members of making those who have profited during the War disgorge for the benefit of the nation, but wealth is an illusory thing; it may be beneficent like the rain, but rain absorbs into the earth or it evaporates into the air, and wealth is just as illusive to trade as the effects of the elements in that regard. Therefore, unless we had started at a very early period with our determination to appropriate the increases of wealth made during the War, and as a result of the War, I felt that it was an impracticable proposition. So with regard to the capital levy. I favour it in principle, but there is a great danger, not to the possessing classes, but to the employed section of the community, and my concern is to give employment and regular means of subsistence to the great mass of people, the majority of whom are the working classes.

The great evil of this Excess Profits Tax is not its incidence; it is the fact that the Chancellor of the Exchequer and the Government have created a real sense of insecurity in the community. Last year my right hon. Friend denounced this tax and led the country to expect that he was going to abolish it at a very early date, and business people based their plans on this interpretation of my right hon. Friend's speech in introducing his Budget last year. If it had not been for that sense of insecurity trade could adapt itself to any particular form of tax that you cared to impose upon it. It might work equitably here or there, but insecurity and lack of confidence is the greatest disadvantage that British trade is labouring under at the present time. I have had a number of illustrations brought to my notice of business men who had laid out plans for great developments, who are now retarded in the carrying out of those plans because of the change which my right hon. friend has now made.. We have to choose as between two alternatives: is this insecurity outbalanced by the advantage which may accrue to national credit by the liquidation of a large amount of floating debt? I have come to the conclusion that while much may be said against the Excess Profits Duty it is to the greater advantage of the community that my right hon. Friend should be in a position to liquidate the greatest possible measure of debt at this moment. I agree with those who have said that the War was fought not merely for this generation but for posterity. Whilst I was in the Government I was puzzled as to whether it would not have been better for my right hon. Friend to have suspended the desire to liquidate the debt for a few years, for I felt that the flow of capital into industry and the demands of the world would have placed us in an impregnable position among the nations of the world in trade and commerce. Whatever may be our speculative opinion and whatever side of the House we sit upon, these are facts which we cannot possibly ignore.

In order to secure to our people a full and secure livelihood which we claim to be their inalienable right we have to build up the trade and commerce of the country, and in order to do that we have to make, efficient our method and to adjust the incidence of our taxation on a fair and defensible basis. I have come to the conclusion that it is best for the great mass of our people that my right hon. Friend should be encouraged on this occasion to have a surplus at his disposal for the purpose of clearing off the largest possible amount of debt; but I never get rid of this fact that I have a rooted objection to all forms of indirect taxation. Let us have no illusion about this matter, that the Excess Profits Duty is simply another form of indirect taxation which has to be borne by individuals, and which in its incidence is inequitable as between individual and individual. The old-established firm has a preference against the new and enterprising firm, and it means that these young firms have to pay a higher rate of Income Tax on a given amount of income than is the case among the older establishments. I have often described myself as a single-taxer. I believe the Income Tax, properly graduated, is the only fair form of tax; the only tax that can be properly defended. It is the one tax that will bear equitably upon all classes of the community. It is a tax based upon the ability of the individual to pay, and adjusted according to the means at his disposal. Whatever we do in regard to the Excess Profits Duty, the Tea Tax, or anything else, we are simply tinkering at the problem. We require complete reform of our system of taxation, and if we want to get rid of these grievances, and put taxation on a fair and equitable basis, we have to recognise the fact that direct taxation, a tax on income, is the only form that can be justified. Having regard to all that has occurred to-day, and recognising that in this House we cannot consider these matters purely from the economic stand-point, I support the tax. These questions have their political implication, and if the Chancellor of the Exchequer were to agree with the demand to eliminate this tax he would be immediately subjected to the charge of having yielded to interested persons in the community, and that fact in itself might produce greater disaster than any taxation that he could impose. Therefore, viewing the matter from all points of view, I consider that we are best consulting the interests of the country in supporting the right hon. Gentleman on this occasion.

Mr. WILLIAM GRAHAM

Appeals have been addressed by hon. Members to the Labour Benches for a statement of the faith that we hold in regard to Excess Profits Duty. One hon. Member made an appeal to the Labour Members from the point of view of representative institutions in this country. No doubt there are views in regard to taxation, even on this Excess Profits Duty, which are intended to convey the impression that we have little use for the House of Commons or for any great institution in Great Britain, but I think the hon. Member would be the first to agree that those views are not representative of the Labour movement as a whole, and that many of its best supporters within recent time have done all in their power to obtain for representative institutions the recognition which they deserve. We do not support this tax blindly or without discrimination There is an impression, perhaps in some quarters of this House, and certainly in many quarters in the country, that Labour always subscribes to the taxation of the capitalist class, as it is called, and that we do not pause to investigate either the incidence or the effects of the tax provided we are satisfied that it is hitting people whom we assume possess wealth, power, and property in Great Britain. By way of reply to that, I would point out that in the Labour movement in recent times there has been more detailed investigation of the incidence of taxation in Great Britain than in some of the other political parties, and some of the most representative members of those political parties have paid tribute to the investigation which has been made. That investigation has been applied to the Excess Profits Duty. We have tried to examine this tax, not merely from the point of view of the financial needs of the country, urgent and acute as they are, but also from the point of view of its social, economic, and political effect, and I have no hesitation in saying that representative Labour thought on economics strongly condemns the Excess Profits Duty, and that they are aware of the mischievous results which must ensue from its imposition, but they are with the Chancellor of the Exchequer in contending that on balance we must continue it until at least an alternative is found.

8.0 P.M.

There are only two features of the effects of the tax to which I wish to direct attention. In the first place it is almost universally admitted that the imposition of this tax leads to wasteful and perhaps unnecessary expenditure. On that point no hon. Member can dispute that there probably never was a time in our history when expenditure should be more remunerative and more productive than to-day. On analysis, expenditure divides itself into two classes. On the one hand the class which brings return or brings production, which increases output and an ever-increasing output of the commodities on which we depend, and on the other hand the class which is merely devoted to luxury enterprise, to the supply of articles and commodities which are not strictly necessary, certainly not in times of stress, and which we could dispense with without any sacrifice having regard to the conditions of shortage through which the country is passing. From that point of view, no one can defend Excess Profits Duty. Personally I am quite convinced that this tax has been the means of encouraging a great deal of wasteful expenditure, of increasing prices, in some respects strengthening competition for certain articles, and making the position of the whole of the masses of the people more difficult than if perhaps we had handled our national finances in another way. This is the first defect of which we are profoundly convinced in representative sections of the Labour movement.

There is another defect. Hon. Members on both sides have indicated that there have been distributed by way of evading Excess Profits Duty, considerable sums of money for remuneration which otherwise would probably not be provided, by way of bonus, etc., or a general gift which probably we should not have had but for the existence of this tax. I remember reading quite recently a review of wage systems, and more particularly of the wage systems in operation in Great Britain during the War, and I was very much impressed indeed by the manner in which the wage levels in this country had been consciously and unconsciously affected by the existence of this duty, and by the fact that there had been an artificial and unnatural interference with the ordinary plan of British remuneration. I am the very last to suggest that either our professional classes or working classes are not to be properly remunerated. I have always fought in my own way with many limitations for increased remuneration, because I believed that a better standard of life was necessary, and that with prices increasing as rapidly as they were it was necessary unless social disorder and chaos were to overtake the people.

But if we are going to increase remuneration, if we are going to interfere with wage levels in Great Britain, either directly through the Ministry of Labour or indirectly through the operation of a tax such as this, then do it according to the principles of commonsense and reason, and in a business like way. Do not give concessions to one section of the people, which happens to come within the reach or scope of evasion of this duty, because that immediately penalises another section and leads to demands, which I am quite willing to admit in some cases are well founded, but which are grounded on the artificial interference on which we have unconsciously embarked as a people by the imposition of a duty of this kind. These things are plain. I do want hon. Members opposite to realise that there is a point of view on these matters in the Labour movement, that we have a faith which may be right or wrong, but is at all events worthy of presentation, and which is not incon- sistent with the highest advance in the prosperity of our people.

Looking at one or two of the other aspects of the problem, it has sometimes been said on the Benches behind regarding the evasion of Excess Profits Duty, that it seems to be the rule, and one hon. Gentleman said that the fact that it was widely evaded was a reason why it should be withdrawn. Very few hon. Members will subscribe to that doctrine. There is a form of direct action in escaping taxation which is by no means confined to the labouring classes in this country. It is practised by professional people and others who take certain steps, legitimate steps, to evade duties which they are called upon to perform, or it may be even to subscribe to taxes they are called upon to pay. I do not press that, but I do say this, we should be able to cope with evasion, and if it is true that in Great Britain we are losing quite a considerable sum annually, not merely by the evasion of Excess Profits Duty, but by the evasion of Super-tax and Income Tax to an extent which is estimated by the tax surveyors themselves, the most authoritative body to which we could appeal, at not less than from £5,000,000 to £10,000,000, and which is placed by many others at a much higher figure, then let us deal with evasion.

But I cannot help noticing in passing that it is a very sad commentary on the business community in Great Britain to-day to say that, in the wholesale manner which some speakers seem to allege, they are evading a tax which is imposed under the law of the country by the British House of Commons, and that some of them, I hope a minority, are rejoicing in the fact. I should like to think that morality with all its limitations and the interruption of numerous forces which have impeded its progress is much higher than that. I prefer to take a somewhat more optimistic view of my fellowmen. Further, as a general criticism it was suggested that there was no immediate reason why we should seek at a very early date to reduce the indebtedness of this country. I have heard hon. Members argue not only in this House, but elsewhere, that after all there is no burden in a National Debt, that it is the indebtedness of all the people to a section of the people, probably some of them outside the country, but at all events a considerable section within the country, and that we could easily postpone repayment of the national indebtedness if we are satisfied that we gain more on balance in the trade and commerce of the country by the postponement of repayment, by using, so to speak, the security which we have obtained as a result of that expenditure, and that from that point of view national indebtedness need not worry man, woman or child.

I prefer in these matters to discard the intricate doctrine of economics. I prefer to come down to the ordinary plain facts of human experience, and to suggest that it is impossible in the last resort to draw a distinction between an individual and the State. If it is good business for the individual to get rid of his indebtedness, it will probably be good business for the State as well, and arguing the case as you like, either on economics or on the experience of everyday practice, there is a real burden in national indebtedness, and we cannot do anything but hamper commerce and industry and penalise employment unless we take steps as quickly as possible to reduce this great obligation. I agree with hon. Members that it may be dangerous to wipe out enormous amounts of indebtedness if you are only going to do that by imposing a rate of taxation which would so cripple industry and impose such a financial burden that it would be impossible to carry on. The truth is that in these matters we are always balancing considerations; we are always trying to ascertain to what limit we can go by way of taxation without destruction to enterprise and how far and how rapidly we can bring down that £7,800,000 of national indebtedness of this country at the present time.

I look beyond that, and I cannot help feeling, especially at a time like the present, that this is of immense significance from the point of view of our position in the world, and of the emergence of satisfactory world economic conditions at the earliest possible moment. In pre-War times we were rightly proud of our financial position. We should try as soon as possible to get back to that pride of place, try to set an example to the world, and I feel that we shall do that successfully if we bring down this enormous burden. In the third place, there is another argument, familiar in public de- bate, which I have always felt has been greatly exaggerated in this country. It is suggested that if we continue what amounts to penal taxation we shall drive wealth abroad. I am always corn-polled to ask, and never more so than now, to which country in the world will that wealth proceed? Take any country on the Continent of Europe, now passing through the aftermath of war. Can we name a country in which credit is better than it is in this country, a country where social conditions are more stable, or where there is greater certainty with regard to the economic future? A few days ago the Finance Minister in Germany made a very significant speech. I was impressed by the fact that if we had taken away the heading of Germany from that speech and Budget statement we could probably have imagined, without the slightest difficulty, that that was the speech and the Budget statement being submitted to the British House of Commons. In many respects he had the same ends in view, and there were the same methods and the same difficulties confronting the people. France is in an admittedly trying position. Take Spain, if you like. There labour is veering rapidly towards the left and towards doctrines that are far more advanced than any advocated by any section of people in Great Britain. The Balkans are equally unsettled. Austria is very largely in despair. Much the same state of affairs obtains in the world at large. There is world-wide unsettlement. Personally, I do not attach a great deal of importance to the argument that wealth will proceed abroad. Even if it were true, to a larger extent than I believe to be the case, I am not sure that on economic grounds it would be altogether a bad proposition for Great Britain.

I cannot conclude without making what I hope will be a practical proposal to the Chancellor of the Exchequer. There is no doubt that the Excess Profits Tax has great weaknesses, but have we in Great Britain really exhausted the field of the alternatives? Recently one of the most representative and, I think, authoritative bodies which could have appealed to the Chancellor of the Exchequer made an appeal on the lines of securing an investigation into expenditure, into the taxable capacity of the 44 millions of our people, and into the amount which this country can con- veniently carry from year to year without penalising unduly either industry or commerce or its general economic recovery. Any such investigation would have to direct its mind to three propositions. It would require, first of all, to ascertain much more accurately than has hitherto been done whether anything resembling a capital levy is possible. I have no desire to press that argument upon the House, but I join with many other hon. Members who have argued that some form of capital imposition or levy will be inevitable and certainly will be required in Great Britain. That doctrine has not been advanced mainly by the people who are generally described, like myself, as the irresponsible spokesmen of Labour. It has been advanced by some of the most distinguished economic thinkers in our universities, which are usually not the haunt of very much that is advanced or progressive in these matters. It has been advocated with, great force by these men.

In the second place, have we really explored all the possibilities of a levy on War wealth? We have had the Report of the Select Committee. A more unsatisfactory document, or one less likely to give a lead one way or the other, was probably never presented to Parliament. I go beyond the recommendations of that Select Committee to the proposals of the Inland Revenue authorities and to the scheme which was advocated to a large extent by one of the most expert economists and one of the greatest authorities on taxation in this country, Dr. J. C. Stamp. His conclusion was that the scheme was practicable, and he thought that we had to weigh up in Great Britain the uncertainty which would be occasioned by the imposition of a scheme of that kind with the undeniable advantages on the other side which would accrue to national credit by the reduction of the indebtedness now confronting our people. I am greatly influenced by his opinion. He inclined to the second view. He thought it could be done, and he made that statement to the Select Committee. In the third place we have to explore, pehaps, more than we have ever done, the relations of direct and indirect taxation. Many of us here are not satisfied, if you are to find an alternative to the Excess Profits Tax, that we are by any means at the end of our tether either in regard to Income Tax or Super-tax. It is true that at the present time very large incomes are flowing to recipients year by year by the growth of trusts, combines, and syndicates automatically, without personal initiative or exertion. If these things are so, there are alternatives to the Excess Profits Tax. I would like to see a Commission appointed which would have regard to the whole economic situation, which would take steps to recommend as soon as possible, after due investigation, the elimination of wasteful forms of taxation, and would urge the Chancellor of the Exchequer to embark upon constructive schemes of taxation that may be levied, schemes which could be introduced without danger and with very great profit to the British people.

Lieut.-Colonel Sir F. HALL

We are very glad that the hon. Member who has just spoken and those he represents are not in favour of the Excess Profits Duty. He stated in a previous speech that he was opposed to the duty, but that, nevertheless, he was going to defend it. He has enlightened us as to the reasons why he made that statement. I am glad he is desirous that the Chancellor should set up a Committee to inquire into the question of the resources of this country, in order that the business people, as well as those living on fixed incomes, should not be taxed out of existence. The discussion to-day has gone on wide lines, and I think certain Members wonder what is the meaning of the proposal to leave out this Sub-section. I heard some Members say that they were not satisfied that the Excess Profits Duty should be done away with. I do not believe the time has arrived, unfortunately, this year when we can do away entirely with the Excess Profits Duty. The object of the Amendment is simply to restore the status quo and to reduce the increase from 60 to 40 per cent., as it was in the Budget in 1919–20. Some people might think we were asking the Chancellor for a concession of a couple of hundred millions, but the fact is that the revenue is calculated to be £220,000,000 or, estimated, £300,000,000, and the Chancellor indicated that £190,000,000 of that was duty that had not been paid up to the present time. Therefore, there is £30,000,000 to be collected in the 1920–21 Budget, and to reduce the Duty from 60 to 40 per cent. on that amount means a sum of £10,000,000. I cannot help thinking if the Chancellor had not stated that he intended to stand or fall by this proposition, he would have been inclined to consider with a little more care and sympathy, shall I say, the wide expressions whch have been made here this afternoon.

After the speech of the Chancellor last year, the country generally and the business community expected that there would be some reduction in the duty this year, so that one can imagine the consternation that was caused by the proposed increase. When a Minister makes a statement here, we are supposed to believe that what he tells us is practically the policy of the Government. Nobody could have been more bitter as a Minister of the Crown against this tax than the Chancellor was last year, and considering that the difference between 60 per cent. and 40 per cent. represents £10,000,000, I think the right hon. Gentleman might have seen his way to have accepted the Amendment and to have met the generally expressed view. When you attempt to raise money you have to go to the business community, and if the feelings of that community are to be continually shaken, then appeals to loosen their purse strings will not be received as cordially as in the past. All those interested in small businesses will realise the sympathetic consideration which the Chancellor has given to the appeals made to him. Notwithstanding some remarks made to-day that the alterations were of no importance, I think the great body of small business people will recognise that they are of a very important nature. I should like the Chancellor to consider not only the position of the small business houses, but to realise that the larger houses have had thrust upon them enormous responsibilties since 1914, and the time has really arrived when some consideration should be given to them.

Let us take the position with regard to other industrial countries, such as Germany, France, and Belgium. They are not in a position to continue their manufactures the same as we are in this country, for the reason that France and Belgium have had their industrial quarters very much interefered with by the War. Germany, on the other hand, is suffering so much from the aftermath of the War that she is not able to manufacture the goods for exportation as in the past. Surely this is a time when every consideration should be given to help to increase the manufactures in this country. There are difficulties, we know, with the bankers. I think the bankers are right, because they have to look at the position as it is, and they have got to protect themselves against panics, but the manufactures want all the assistance possible to enable them to increase now, for business hereafter, the export of the manufactured articles of this country. We have been asked to produce more, and I am glad to see that there has been a considerable improvement recently in the Board of Trade returns, but our exports have not amounted to anything like our imports, and we are justified in asking the Government to render all possible assistance so that our manufacturers may be able to compete with other countries and to increase the output of this country. It is said that the question of economy rests with the House of Commons, but I venture to say that that is not so, because as soon as economies are suggested and there arises the question of voting whether or not money shall be given, the Government immediately put on their Whips, and I say that it does not give this House a fair chance of carrying out economies. I have no doubt that when the Division on this question comes on this evening, the Government will put on their Whips, but if they left it to the fair decision of the Committee, I am satisfied in my own mind that the Committee would by a very large majority decide on the deletion of Sub-section (2), for the reason, not that we say that the present time is the time when the whole of the Duty should be abolished, but that the time has arrived when there should be no increase in this Duty.

Last year, I remember, the Chancellor said this was a rough and ready tax, one that had many faults, and that he would have been prepared to bring in another suggestion if there had been time. Surely if there had been in the minds of the Government the knowledge that they were going to increase this duty, I should have thought that between April last year and April this year they would have carefully considered other ways of raising the money; and, after the statement of the Chancellor this afternoon that the tax was not to be of a permanent nature, I hope that between now and next Budget the matter will have been carefully looked into, and that the iniquities of this. Excess Profits Duty, which have been admitted by the Chancellor of the Exchequer, will be done away with, and some other reasonable form of taxation brought in which will not press on the great business community of this country so unfairly. I say at once that I do not think there is any need for a continuance of this tax. We hear a good deal about the necessity of repaying our debt within a given period, but if the benefits we have gained through fighting and winning the War will go, as is said, to our children and to our children's children, I venture to say that it is not fair that this great pressure of taxation should be placed on the existing population, but that those who come after us should bear their fair and equitable proportion. We are not desirous of evading what is reasonable and right for us to pay, but I entirely disagree with the idea that the whole of this debt should be wiped off in 26 years' time. If it were spread over a period of 50 years instead of 26 years, it would put much less pressure on the present population. We have passed through all the troublous times of the past six years, and our soldiers have fought for the women and children of this country and to maintain the prestige of this country, but not on the understanding that the great bulk of the cost of it should be paid for by the existing population.

I am afraid it is difficult for the Government to alter their programme this year, but, perhaps, when the Budget for next year is under consideration they may be able to bring forward a scheme by which the repayment of this debt may be spread over a longer time. If my right hon. Friend and those who are acting with him can be brought to understand and realise that the great bulk of the people of this country do not see eye-to-eye with the Government as to the necessity for the redemption of this debt within such a short period, we shall at all events not have had this discussion in vain. My right hon. Friend, the Member for the City of London (Sir F. Banbury), referred to matters in which he said millions could be saved. I would like to protest against the £27,000,000 that has to be borne by the Ministry of Munitions, an expenditure which might have been necessary during the War, but it is not necessary now. That and many other expenses might easily have been reduced if the Government had shown any inclination towards economy. I do not think this Debate will have been in vain if something is done in this direction. I hope there will not be a general rush to support the Government irrespective of the ideas of hon. Members. I have heard many hon. Members say that they are not in favour of the continuance of this tax on the same ratio, and if they think it should be 40 per cent., I hope they will support this Amendment by their votes in the Lobby.

Captain KNIGHTS

I desire to make an appeal to the right hon. Gentleman, the Member for Bewdley (Mr. Baldwin), who at the present time is the sole occupant of the Treasury Bench. I wish to say that I do not think the Chancellor of the Exchequer has sought the opinion of the business community, and he has relied more upon the ideals of men of undoubted ability as accountants and his Inland Revenue authorities, who probably have never earned a penny in their lives. I do not wish to be disrespectful to those gentlemen, but I have been present at the Treasury on deputations, and I have realised the enormous influence which those gentlemen had upon questions put to the Treasury. They do not represent the trading community, and although the Chancellor of the Exchequer may get a majority in this House in opposition to this Amendment, it will consist of people who are not members of the trading community, and they will be people who represent the professions and who live upon the trading community of this country.

It has been my experience during the past few weeks to receive something like 2,000 letters from all parts of the country upon the subject of this Excess Profits Duty. I think the most telling argument I have had was from the head of a well-known firm of accountants in the City of London who informed me last week that out of a list of over 250 trading concerns who paid Excess Profits Duty last year and this year the total out of that 250 may be counted upon the fingers of one hand, the main reason being that these people, having got up to their pre-War limit, have now shut down. Of course, they have not closed down altogether, but they have ceased endeavouring to increase their business with the present difficulty of obtaining finance, and through being unable to fix prices for future deliveries.

In my own business I have recently been asked to quote a fixed price to our Colonies for the manufacture of machinery, and I take it that it is the duty of everybody to increase the production of goods which are going out of this country to stabilise the exchange. To-day it is impossible for any manufacturer to fix the price which he can submit to anybody Overseas even if they were to cable an acceptance of his offer, because even then it is going to take six or twelve months to manufacture the goods. It is impossible to say what your figure is going to be, and all the while the United States of America, Japan and other countries are competing with us and succeeding in obtaining orders where British goods would have the preference if the prices were equal, but it is impossible to give a fixed quotation to-day, and the Colonies and other countries overseas are doing business with our trade rivals.

Hon. Members have heard the suggestion which has been made by the Chancellor of the Exchequer. I say perfectly frankly that the trading community to-morrow, when they read what was intended as a concession, will not pay the slightest notice to it. On a former occasion in this House I heard the Chancellor of the Exchequer state in as explicit words as anybody could use, that this tax would come off. He then said that his only regret was after he had been Chancellor of the Exchequer for only a few months that he had not had time to bring forward proper proposals to this House, and it was in view of that statement that the House of Commons accepted the continuance of the Excess Profits Duty at 40 per cent. The arguments which the right hon. Gentleman used upon that occasion were the most scathing against the tax of any I have ever heard, and yet in April this year he comes forward, and not only proposes to continue that 40 per cent., but to increase it to 60 per cent. It is that which is the main reason that has caused the trading community of this country to lose absolute faith in Ministers of the Crown who make such statements before the House.

The trading community in the past has placed its trust in the words of Ministers of the Crown, and they have made their arrangements based upon the proposals made by the Chancellor of the Exchequer last year, and their faith has been so rudely shaken that I am confident they will pay no attention to the terms offered this afternoon, which were accompanied by two "ifs". Last year there was no "if" at all in front of the right hon. Gentleman's statement, but to-day he offers a sop to the country by saying that if next year he is responsible for the Budget, and if this Government is in office then, this tax will not exceed 40 per cent. I make an appeal to the Chancellor of the Exchequer to reduce this tax this year to 40 per cent., and I will undertake to say that if he does he will receive more from the Income Tax and the Super Tax through the impetus that will be given to trade throughout the country than he will probably receive from the additional 20 per cent. on the Excess Profits Duty this year.

Major ENTWISTLE

I have listened to the speech of the Chancellor of the Exchequer and all the speeches which succeeded it, and I must confess that I think the two main issues have been burked by the right hon. Gentleman in his statement. First of all, he assumed, without any proof or argument, that the 60 per cent. must be retained or else a substitute must be found in its place. We had no evidence, no argument, and no facts stated to support that assumption, and when we come to examine the figures I think that, so far from it being proved that this additional rate is a necessity, it will be found to be just the contrary. It has been said very often in the course of the Debate to-night that only £10,000,000 comes from this Excess Profits Duty in the present year, but I am prepared to go further than that, and view it from the point of view of the future as well. It is said that the year after this year £65,000,000 will come in from this 20 per cent. increase and two years later, that is the next year but one, a sum of £25,000,000 will come in. That in only the proceeds of this tax, and the times at which these proceeds will be realised. This year, it is admitted, the losing of this 20 per cent. increase is immaterial, because it only affects some £10,000,000. Next year it is a matter of £65,000,000. It is that, after all, which must be the necessity on which the Chancellor of the Exchequer bases his tax.

In the Return he gives of the National Debt and assets, the right hon. Gentleman gives as one of the items the arrears of Excess Profits Duty as on 31st March, 1920, at £310,000,000. That is a significant sum, because, although in the revenue which he estimates for the coming year, part of these arrears will come in, nevertheless that, I think, makes up for the Excess Profits Duty of this year which does not come in this year, but at a later time, so that the proceeds of the Excess Profits Duty for the coming year that will be attributable to this year will be £220,000,000. If left at 40 per cent., but an extra £111,000,000 if it is left at 60 per cent. The whole of these arrears of £310,000,000 is additional money which is to come in. I hope I shall be corrected by the Financial Secretary if that is wrong, but I make the statement that this £310,000,000 arrears of Excess Profits Duty is an addition, and will come in in addition to the sum which is estimated as the proceeds of the Excess Profits Duty this year. So that the right hon. Gentleman has the whole of this sum of £310,000,000 in the future years. I say, therefore, he has not taken into account that sum of £310,000,000, a source which is ample to meet his claims for reduction of the Floating Debt and reduction of the dead-weight debt. In addition to this, in the year following this year for which these Estimates are made out, the presumption to prove the necessity for this 20 per cent. increase is that expenditure will carry on on its present scale.

We have had a White Paper issued, which gives us the Estimates for another normal year. That normal year shows that without any Excess Profits Duty at all the revenue will exceed the expenditure by a sum allowing £148,000,000 for debt reduction and £32,000,000 for a Half Per Cent. Sinking Fund. What I say is that for this year this 20 per cent. increase does not matter; it is only £10,000,000. For next year it will, I think, bring in £65,000,000. Why should not this normal year come into operation the year after this year, that is, next year? What does it come to? What are the main reductions in this normal year from this year's Estimates? We have a reduction of £192,000,000 in the Civil Service Estimates. When we examine the items under the head "Civil Service," we find that the chief items by which this £192,000,000 is obtained is by the elimination of Loans to Dominions are Allies, £36,000,000; railway agreements, transport, etc., £26,000,000; bread subsidy, £45,000,000; Ministry of Munitions, £27,000,000; Ministry of Shipping, £16,000,000; coal deficiency, £15,000,000. Why should not all these disappear before next year? I cannot see any reason why. We are promised that by the end of the year all subsidies will have disappeared. Why, therefore, should not these be eliminated before we come to next year?

We come to the Army and Navy. There is an allowance for a reduction of £95,000,000 from this year's Estimates. There is no reason why that reduction should not take place when budgeting for next year. We say, therefore, that if this normal year is achieved next year—and I say the country should insist that it should be brought about—that no Excess Profits Duty at all is required, and that is without taking into account the £310,000,000 of arrears and interest which have still to come in. So far, therefore, from the Chancellor of the Exchequer showing the necessity of this increase, he has not even proved the necessity for the retention of the 40 per cent. Excess Profits Duty. That is on the first point. I say a case has not been proved for the necessity of the tax.

Let us come to the second important point. This is a question which, although the right hon. Gentleman has had it brought to his notice time after time during the last few weeks, he has not endeavoured to meet. I refer to the point that the 60 per cent. Excess Profits Duty will actually produce less in revenue than if he retains the tax at 40 per cent. I agree that is a matter of opinion, that it can be denied, and that it cannot be absolutely and dogmatically proved. But I have come across several instances which are the result of this increase in the Excess Profits Duty. Instructions have been given by manufacturers to their salesman that they must not take in more than 50 per cent. of the orders for last year. I know one place where production has been definitely limited and work-people discharged. That is hampering industry, and that is not an isolated instance. It is really having the effect of restricting and reducing production. If it has that effect now, it is obvious the evils to which we will be driven very shortly. If production is reduced, and the actual revenue at 60 per cent. will be less than the actual revenue at 40 per cent., and the result of this decreased production will be a smaller revenue, then existing taxes will have to be raised. So you will go on in your vicious circle.

We are up against what Mr. McKenna recently described as our taxable limit. I would say that with an Excess Profits Duty of 60 per cent. you have gone over that margin; over the taxable margin which industry will stand at the present time. It is often said by my hon. Friends on the Labour Benches here, that it is absurd to say that a man will not work if he has only 40 per cent. of profit in excess of a certain amount, and that nobody but a fool would not be content with taking the 40 per cent. The position is not quite so simple as that. Out of that 40 per cent. the manufacturer has to pay another 10s. or more in the £1 in Income Tax and Super-tax. That reduces his 40 per cent. In order, however, to get this excess profit, he has to put up a good deal more capital. That is the crux of the matter. Stocks now in nearly every industry cost three times as much as before the War, and to get this increased profit three times the capital, for more production, has to be provided. Capital, too, is largely needed in order to keep up stocks and purchases of material. But there is always the danger—and this is one of the points which has been made to-day—of a slump in prices. What with the action of the Government, which at one moment says that the Excess Profits Duty is a bad tax and gives every impression that the following year they are going to take it off, and then raises it to 60 per cent.—what, I say, with the vagaries of the Government at the present time, and the difficulties of the international situation, there is a great danger of a slump in prices.

9.0 P.M.

For this small and inadequate return, are people going to provide this extra capital at a grave risk of a slump in prices and the additional work and labour involved? When you look at it from that point of view, it is not 40 per cent. left. Income Tax and Super-tax have to come out, and then there is the huge risk which has to be run of the extra capital and the difficulty of obtaining the capital. The banks are restricting it very much at the instigation of the Chancellor of the Exchequer. There are difficulties of obtaining the capital, and, with the worry and the anxiety, the business man naturally says, "Why should I work for the Government?" I have spoken of cases where manufacturers have actually given instructions for production to be restricted, and there is the case of the man who goes away on Wednesday morning every week for a holiday at the seaside. When asked how it is he takes so much holiday, he says, "Well, on Monday and Tuesday I am working for myself, and on Wednesday and Thursday I should only be working for the Government, and so I go to the seaside." That is a reprehensible thing, no doubt, and I do not say that man is doing the right thing, but you have to take human nature as it is, and, in view of the extra risk which is run for small remuneration, people are adopting the attitude of not working for a spendthrift Government. The result is that production is diminishing.

It is no use the Chancellor of the Exchequer saying he will stand or fall by this tax. If there is any reasonable apprehension that production is going to be restricted, that is an absolutely fatal objection to the tax. It is no use talking about debt redemption or funding the Floating Debt, or anything else, if this tax is really going to restrict production. In addition to that, it will actually produce less revenue, and in the end will help the vicious circle, which will bring about complete bankruptcy and ruin. There is another objection, I think, to this tax. Why should all the burden be put on to the shoulders of the new enterprises, and the old businesses with prewar standards escape so far as this tax is concerned? You talk about taxing prosperity; but I say this is taxing the young man who fought in the War. I agree that the concession which the Chancellor has made to small new businesses palliates that to some extent, but the young man who has fought in the War has not the chance of getting into a business with a fat pre-war standard. His hopes lie in the direction of a new business, or a business with a bad prewar standard which has to make its way, and not necessarily a small business. You have allowed these men to fight for you, and you are also going to make them pay for the War as well. I say it is a fatal objection to the Excess Profits Duty. It is those men who fought in the War, and who are now making efforts to make up for the years they lost, who are being hampered and fettered at every turn by the operation of this tax.

Then I would urge my hon. Friends of the Labour party not to be misled by the meretricious appeal of the Excess Profits Duty. It is said that this is a tax which, at any rate, hits the profiteer. It does not hit the the profiteer. If you had had a War Fortunes Levy, there would have been some chance of hitting the profiteer, although with the delay that occurred in that, you would not have got the profiteer as you ought if the tax had been imposed earlier. This tax is going to decrease production and result in unemployment. I have tried to show that the Chancellor of the Exchequer has not proved the necessity of the tax, but, even if he had, then I appeal to the Members of the Labour party not to give it to him in this form—the very worst form that could be devised for raising taxation. I am not going into all the objections to the tax—the extravagance and the rest of it—but it has fatal objections. It is causing high prices, and it will cause unemployment. One of the alternatives which has been suggested is a flat rate tax above a certain percentage. That is the tax I favour to avoid these difficulties and leave ample room for enterprise, initiative and energy. If the necessity for this tax has been proved, and the Members of the Labour party think it has, then I say, do not vote for a bad tax like this, but vote against this tax, and force the Chancellor of the Exchequer to bring about either a War Fortunes Levy, a Capital Levy, or some other suggested form of tax, and I appeal to them not to be misled by the merely apparent attractiveness of this tax. I also would appeal to the Government, if it be of any use, not to be obstinate merely because they say they stand or fall by this tax. If there is a reasonable doubt as to this increase not producing more than if the tax is left at its present rate, then there should be no hesitation at all in giving way, because of the altered conditions and the proof offered that, so far from producing revenue, it will not produce revenue, and will be a great detriment to the trade of the country.

Mr. WALLACE

I listened very closely to the speech of the Chancellor of the Exchequer this afternoon, and, if my impression was correct, I do not think he banged and bolted the door against a possible concession in this Excess Profits Duty. He told the Committee that he considered himself a partner in the industry of the country. I can only say that, if he is a partner, he has adopted a policy which has caused grave concern and misgiving to the other partner. His announcement that the Excess Profits Duty would be increased by 20 per cent this year fell like a bomb-shell upon the commercial communities of this country. I do not believe that on the part of the average business man in this country there is the slightest wish to evade the payment of one penny of legitimate taxation. I believe the average business man and the average firm wish to bear their fair share of the expense of the War. We have all common ground for knowing that this country passed through great tribulation and had a great deliverance, and that the price must be paid. While that is so, I think the commercial interests of this country have a right to expect from the Chancellor of the Exchequer and from the Government a certain consistency and continuity of financial policy, and we claim that those considerations have been quite absent from the Chancellor of the Exchequer's Budget this year. He must claim his share of the golden eggs, but there is no reason why he should interfere with the productivity of the bird itself. That is really, in effect, what his policy amounts to. We are, after all, a great commercial people. We are still a nation of shopkeepers, and we have a right to expect that there will be some logical sequence in the Government policy, and to say that business firms are entitled to make plans for their future development with a fair amount of certainty regarding future taxation.

I do not know whether it is too late to make an appeal to the Chancellor of the Exchequer. He is not in his place at the moment, but he is most efficiently represented by the right hon. Gentleman the Financial Secretary to the Treasury. I venture to suggest, even at this time of the Debate, that it is not too late for the Chancellor of the Exchequer to reconsider his decision. I am not one of those who believe that the time has come yet when you can possibly abolish altogether the Excess Profits Duty. It must go on for some time to come. The money must be collected from somewhere, and a certain proportion of it must come from the profits that are made in business. With all respect, I do suggest to the Chancellor of the Exchequer, because it is my fixed and definite belief, that the Treasury would find it more remunerative if they relied upon the income from the 40 per cent. or 50 per cent. Excess Profits Duty than from the 60 per cent. I do not think that the Chancellor of the Exchequer fairly met the argument which has been put forward this afternoon with regard to the blighting effect of this extra duty upon business. At first I disbelieved in the accounts of its effect upon business in the City of London and elsewhere; but I have since received proof which is beyond dispute that this tax, with the 20 per cent. added to what it was last year, is having a most definite effect in the way of fettering industry and the development of business. Perhaps I shall best convince the right hon. Gentleman who represents the Treasury if I give him a specific example. One instance that one knows is always better than mere assertion. I know a firm in the City of London who decided early this year to extend their business. They arranged for new plant and machinery, and they expected out of a new venture an annual profit of something life £10,000. As soon as the Budget was introduced, this new plan of development and extension was dropped.

I went personally to see a friend of my own who was connected with the business and I asked him the reason. He told me this: "I was prepared to put down new capital and employ a large number of hands in this particular extension and to do so because the Chancellor of the Exchequer last year at least suggested that the Excess Profits Duty would be abolished this year. But I find it is now 60 per cent., and this is how it is going to affect the new venture. If we make £10,000 the first charge upon the profits will be 5 per cent. Corporation Tax; then 60 per cent. Excess Profits Duty on top of that; and when the income comes to the partners they will have to pay the heavy Income Tax at the rate of 6s. in the pound." This particular firm decided that the game was not worth the risk, and it seems to me in the calculations which he has made the Chancellor of the Exchequer has not taken into cognisance all the risks which follow the placing of new capital in a particular business of this kind. This case impressed me very strongly, and I have heard of other cases since, not only in London, but also in the Provinces. I have no sympathy with the business man or with any other men who squeal because they have to pay heavy taxation. I am concerned as a business man about a policy of the Government which has the bad effects which this undoubtedly has had already. We have been told by the hon. Gentleman who has just spoken that unemployment will be one result in some of our great industries. I am sorry to say that there are already signs of that unemployment. There is not perhaps a great deal of unemployment, but there is certainly short time, and I am afraid the Chancellor of the Exchequer will find himself in a great difficulty. He has forgotten one salient fact in regard to this policy. He is surrounded by most expert advisers. I am not sure that they have much practical experience of business life, and I think he has left out of his calculations in deciding upon this policy the cold, hard facts of human nature. Our country has been built up by individual enterprise and industry, and that should not be forgotten. I am afraid the Chancellor of the Exchequer will find himself up against a very dangerous situation, for the effect of this policy has already been proved to be disastrous in many commercial undertakings. I wish to emphasise this appeal to the Chancellor of the Exchequer and especially on this one ground, if I may repeat myself for a moment, that I am absolutely convinced that this tax, even if reduced to 50 per cent. or limited to 40 per cent. as it was last year, would be more remunerative to the Treasury than it would be if the proposed increase were made.

Mr. REMER

I wish to make some preliminary observations as to the total figure of £300,000,000 which has been referred to several times as being the produce of this tax. There have been three speeches to which I have listened and in all of them reference has been made to the argument that we have to get this money to meet the expenditure of the year, and this figure has been mentioned in the course of the speeches. I refer to the speeches of the right hon. Gentleman the Member for Norwich (Mr. Roberts), the right hon. Gentleman the Member for Paisley (Mr. Asquith), and the hon. Member for Greenock (Sir G. Collins). I think it cannot be repeated too often that the amount which we are going to get in this year according to the Budget speech of the Chancellor of the Exchequer, from the increase of this tax from 40 to 60 per cent. is only £10,000,000. The arguments which have been used by the right hon. Gentleman the Member for Paisley and the hon. Member for Greenwich do not seem to hold good. It is suggested that the increase is not being put on to meet the expenditure which the House has sanctioned this year, but to meet expenditure which may come in succeeding years. Therefore, I think it is quite legitimate to argue that the only way to meet the succeeding amounts in subsequent years is to reduce the expenditure which this House is asked to sanction. That is the real issue. The only alternative to the Excess Profits Tax is to radically reduce our expenditure. I put a question to the Chancellor of the Exchequer to-day which unfortunately was not reached. But the answer is being circulated in the OFFICIAL REPORT, and I propose to read it because it is of paramount importance to this Debate. The question: Whether the committees of inquiry into Government extravagance will have as part of their reference the policy of the Ministry which causes extravagance, particularly the continuance of control by the Ministry of Food in several directions which causes losses to the Government, waste of valuable foodstuffs, and needless jobs for unnecessary officials. I think the answer if of very great importance. The Chancellor of the Exchequer's reply reads: No, Sir. The committees are not committees of inquiry into Government policy, but into the staff and organisations of certain Departments. The terms of reference will be as follows: To examine either by way of test examination or otherwise as they may see fit the staffing and method of work of the Departments and to report what, if any, economies may be effected in them, having regard to the work which the Department is called upon to perform in the execution of the policy decided on by the Government. I cannot see any difference whatever between the Committee which the Chancellor of the Exchequer proposes to set up and the Public Accounts Committee over which my right hon. Friend the Member for the City of London presides.

Sir F. BANBURY

The Select Committee on Estimates.

Mr. REMER

Yes, the Select Committee on National Expenditure. It seems to me that this question is of vital importance to this Debate. The Chancellor of the Exchequer, in the course of his speech this afternoon, used as his main argument for the continuance of this tax the condition of the floating debt, and he turned round to the House by way of challenge and said there was no one who could suggest a way in which that floating debt could be reduced. He even went so far, I think, as to say that it could not be done. During the past few weeks I have been making persistent inquiries of the Ministry of Food, and one of my questions has been as to the reported purchase by that Ministry of a quantity of bacon stored in New York at a cost of £11,000,000. The purchase has neither been denied nor confirmed. I suppose I am correct in assuming that that bacon has been purchased with money obtained by increasing the floating debt. Therefore the floating debt could have been cut down to that extent if the Ministry of Food had left the matter as it should have done, in the hands of private enterprise to deal with. It can be fairly argued that there are large quantities of other commodities which have been purchased under similar circumstances, which ought to have been left to private enterprise, and which if they had been so left would have enabled the floating debt to be reduced by a very considerable sum.

Then we find that the Government are embarking on investments of all kinds. The House is at the present moment considering an investment in the Nauru Island which can only be concluded by increasing the Floating Debt. We have sanctioned investments in the British Celluloids Company, in British Dye Stuffs, Ltd., and in other companies. They may be very good investments, but it can be asked fairly, in view of the danger to the country of these investments, whether we can afford to go on with these enterprises, and whether it is wise policy to continue such investments at the present time. The Chancellor of the Exchequer in his speech this afternoon made a statement to the effect that he regarded himself as a partner with industry. It seems to me that industry cannot be regarded as a partner with the Exchequer; it can only be regarded at the present moment in the form of a tax collector, and when we come to large amounts it means that the firm or company is only earning profit for the purposes of discharging its debt to the Government. That is the only way in which industry can be regarded at the present moment. I think the Chancellor of the Exchequer in putting forward his argument this afternoon indicated that he had been listening far too closely to the greybeards of Lombard Street. It is a very arguable point whether the large amount of duty he is asking commerce to pay this year should not be left over for posterity to deal with. I know it is a common argument that we should look at what our ancestors did during the Napoleonic Wars. They did pay large sums out of current earnings in order to pay for those wars, but it should also be borne in mind that, after the Napoleonic Wars, we had the Hungry Forties, which are sometimes attributed to the fact that the people at that time tried to pay too much in one year. The Chancellor of the Exchequer suggested to us that we should begin whilst we are prosperous to pay the debt. I would remind the Committee that the effort which he has made to begin to repay debt while we are prosperous has resulted in a very considerable slump. I do not propose to argue whether that slump is caused by the Excess Profits Duty or not, but it is a curious thing that that slump started at the time when the Excess Profits Duty was imposed. I have no doubt that it has been caused by the lack of confidence brought about by that tax. In my view the only fair way is to follow the line of argument used by the hon. Member for Clippenham (Mr. Terrell) in his opening speech, and to secure the abolition of the datum line, so as to put everyone on the same basis. It is idle to say, as has been said in this Debate, that everyone is on the same line, and that this tax is fair and just if Messrs. Coats and Messrs. Lever are able to keep £3,000,000 before they start paying the tax at all. It is idle to say, in such a case, that the competitors of those firms are being treated as equitably as they are themselves. I suppose I am not unlike many other hon. Members in having received a large number of letters on this question. I propose to read to the Committee one letter, which I think puts the case of the inequality of this tax in a very striking manner. It says: When war broke out we were all informed that the land was going to be a country for heroes to live in; also everybody who joined up was told that the country was going to look after them, keep the home fires burning, and see that they lost nothing. The Government especially constituted itself the guardian of all the unfortunate mugs who chose to believe them. Let us see how this works out in practice. The two following individuals, whom I will call A and B, are actual acquaintances of mine, and both have one man businesses. A, when War broke out, threw up his business, joined the Forces, and was lucky enough, at the end of the War, to be discharged with a gratuity of, I believe, about £200. However, his business having been non-existent for over five years, he had to start again. He then found that all his business was in the hands of people who had not obeyed the call of glory, and he was forced to start in a fresh line; whereupon the paternal Government informs him that, as his business was not in existence before the War, he will, therefore, have to pay them £60 out of every £100 income, and pay Income Tax on the balance. B, on the other hand, when War broke out, did not join up. When conscription came he managed to get himself exempted, as he was doing work of national importance, which work, incidentally, was resulting in a very handsome profit to him. On the signing of Peace he was still doing exactly the same work as he was before the War. The Government, therefore, say that they will only enforce Excess Profits Duty upon the increase of his profits over the pre-war profits; that is to say, instead of paying Excess Profits Duty upon his whole profits, as the unfortunate A had to do, he pays Excess Profits Duty on about 10 per cent. of his profits. I do not think that anyone, when the different treatment meted out by the Government to those two individuals is compared, can ever say that the tax is fair and equitable.

Lieut.-Colonel WILLEY

Judging from the speeches which have been made in this Debate, one would have little hesitation in assuming that the majority of those who have spoken were strong supporters of the Amendment. One notable exception was the hon. Member for Blackley (Mr. Briggs). I am in complete disagreement with the remarks which he made in support of the tax, but, never the less, he struck a note with which I think every Member of the Committee will agree, that there is no attempt or desire on the part of those who object to this tax, in principle, to avoid paying their share towards the taxation which is now necessary. The allegation has been made that the Exchequer will obtain more by a tax of 40 per cent. than it will by a tax of 60 per cent. If that is so, the margin of difference between the levy at 60 per cent. and at 40 per cent. Must any case be small, and the factor, therefore, which is most deserving of consideration is the human factor. Will the reduction of the tax to 40 per cent. result in a loss to the Exchequer commensurate with the disadvantage which is being experienced at the present moment? It is believed that there will be a loss of incentive to extend business, and the majority of those who have spoken in favour of the Amendment have justified very strongly the appeals which have been made to the Chancellor of the Exchequer to reconsider his attitude with regard to this tax. There are two means by which the situation can be met. One is to reduce the rate of the repayment of debt, and the other is to reduce expenditure. Anyone who is in touch with the realities of business will agree that it is a bad policy to pay off your debt at the expense of your working capital. The Chancellor of the Exchequer, to the admiration of everyone, drew a picture of the effect it was having on the financial world when we were ready to shoulder so ambitious a programme of rapid re payment of debt. If, however, speed of reduction is to be bought at the price of decreased trade, it is too high a price to pay. The right hon. Baronet the Member for the City of London (Sir F. Banbury) gave a striking reason why the increase which might be obtained from a tax of 60 per cent., as against one of 40 per cent., was small compared with the sums that might be saved were expenditure reduced. I am sure that everyone who heard the right hon. Gentleman's remarks must have been impressed with the strength of his short appeal. There is converging upon the Government at the present moment, from many angles, an attack because of their failure to reduce expenditure, which, with ever-increasing momentum, is going, apparently, to develop in the direction of weakening the position much more than their supporters in this House would wish to see. There is no denying the fact that the human element does enter into the problem. It may be no more than a belief, but it is a belief, that a man who is ready to work in extending the commerce of the country, if he feels that he is not going to pay more than 40 per cent., may, if the tax is raised to 50 or 60 per cent., stick his toes out and say, "I won't try."

I should like to take an illustration of what a business man has to consider when he takes a decision. Shall he aim at expanding his business or shall he not take advantage of an extra opportunity which presents itself to him? Take a business involving a turnover of £100,000. It is possible that he might make 10 per cent. profit on it. Most would be thankful to get 5 per cent., but assuming he got 10 per cent., that is £10,000. £6,000 would be required for Excess Profits Duty, and of the remaining £4,000 a half will go in Income Tax and Super-tax. Can anyone argue that there is much encouragement to a man taking extra risks in a business worth £100,000 for the sake of earning £2,000? I honestly believe there are few Members of the House who would take the risk—and risk it is with the fluctuating prices of to-day—in a business of the value of £100,000 with the prospect of obtaining —2,000 from it. So I appeal to the Chancellor of the Exchequer to consider the human element in this, and I ask him if it is not perhaps a little better, measuring one against the other, to give that extra encouragement to business which will result in revenue in future years, rather than insist resolutely on obtaining the relatively small amount which would come into the Exchequer between 40 per cent. and 60 per cent. Hon. Members who are directors of banks must know that demands have already been made upon banks for advances towards payments to the Exchequer, and if this is persisted in, would it not appear that we are putting an additional burden on the banks? We are thereby merely substituting national indebtedness, which can be obtained at a low rate of interest, for individual indebtedness, for which the banks charge high rates, and on which they make high profits. The net result is a little to the advantage of the country, but it has this effect, that it limits the resources of the banks available for loaning to their customers to carry on business. After all, it is turnover which results in profit, and without profit the Exchequer can get no returns.

Sir J. D. REES

A Member for Nottingham would do less than his duty if he did not say he had received from probably every manufacturer in that city a strong protest not only against the rise in this duty but against its very existence, and I cannot but sympathise very much with these feelings. It was with some consternation that I found it was going to be increased from 40 per cent. to 60 per cent., and I heard with some alarm what the Chancellor of the Exchequer said to-day, if I rightly understood it. It seemed to me that there was a note of continuance in what he said which was rather new and certainly disconcerting. He said he held out the hope of 40 per cent. for next year. I had hoped that it would be 40 per cent. this year, and no tax next year. I will not presume to ask the Committee to listen to me while I repeat those obvious objections to the tax which are admitted by everyone, and by no one more readily than by the Chancellor of the Exchequer himself, but there is a particular injustice which falls upon a new industry which is quite crushing. The hon. Member for Hertfordshire is aware of the cruel incidence of a tax of this character upon, for instance, tea, coffee, or cinchona, upon which expenditure has been incurred from year to year, and upon which a return was just beginning at the fatal moment when the tax was imposed. I do not intend to go over ground which I have heard covered, but I would refer to the patent injustice of saying to the Chancellor of the Exchequer, "If you want £10,000,000 you can easily get it by saving". Those who will the end will the means, and as hon. Members on every occasion when any proposal is brought before them, no matter of what character, press for larger and not for less expenditure, I cannot for the life of me see how the House as a collective unit can possibly accuse the right hon. Gentleman or the Government of extravagance. I long to see immense reductions, and I believe they can be effected. But only by spectacular and drastic methods, such as, I dare say, no Government could be expected to take. If I might give an instance, I was at the head of a Department during the War. It had a staff of 520 clerks, and when the War came to an end I thought from the nature of the occupation that my office would come to an end. But I never heard in my life so many good reasons for the continuance of an office. It was pointed out every day that there were reasons why it must exist for a month, two months, three months or much longer. I fixed an early date for its abolition and gave everyone notice regardless of any other considerations.

I believe there is no other way of making any reductions except to insist upon the most drastic action, quite regardless of the results to any individuals or to the pet policy of any party, clique, or collection of cranks whatsoever. To expect that the Chancellor of the Exchequer can make reductions so long as the policy of the extension of Government control in every direction is pressed upon him seems to be perfectly absurd. If the whole of the staff that the whole Government employs were abolished, lock, stock, and barrel, something under £20,000,000 would be saved, whereas if a policy of betterment, regardless of cost, or the attainment of some ideal standard which exists in no part of this planet, is pressed on the Government from all quarters of the House, and most of all from the quarter immediately opposite, there can be no real reduction and the fact should be faced that the nation's expenditure is due entirely to policy and not to extravagance on the part of those who are carrying out a policy which the representatives of the people are pressing on the Government, and insist on their carrying out in the most expensive manner possible. I protest that that is the case, and the records of every Debate which has taken place in this House on a Friday or on any matter of expenditure will bear me out. If these controls were given up, if the standard of education was kept within reasonable bounds, there would be money saved; but until somebody is willing to face some reduction we shall never get it. Nobody dares to mention where reductions can be made, because each particular expenditure is in favour with some particular group, and when anyone suggests reduction you are told that you cannot save on pensions, you cannot save on education, you cannot save on the bread subsidy, and you cannot save on the railway subsidy. In fact, there is no concrete expenditure on which you can save, so we are told. While all this collective expenditure goes on, you are expected to make large reductions, and there is looming in the distance immense expenditure in workmen's compensation and in other directions.

It may be that the £10,000,000 which the Chancellor of the Exchequer is going to get by the proposed increase in the Excess Profits Duty would possibly accrue to him by an increase in the Income Tax and by the general improvement in trade, if he could see his way to do without the tax in this form; but as to that I am not in a position to judge. He knows, I presume, that the £10,000,000 is certain in regard to this tax and that it is problematical to some extent whether he would get it if he did not impose the tax. I would urge upon the right hon. Gentleman that he should not be too insistent upon collecting the uttermost farthing from the present generation, which has already suffered severely, and now groans under cruel and crushing taxation, and that he should remember the cruel position of people who are now crushed with taxes and also the position of industry, staggering under heavy burdens. That should never escape his attention, and I do not think it does escape his attention But money has to be found, and not only does this House invariably press for the uttermost expenditure, but whenever a good bargain comes before it and there is an opportunity of making money, it is immediately suspect and protested against as contravening some high ideal principles, which I do not understand.

There is one point which I desire to bring before the notice of the Committee, that is, that when the Excess Profits Duty was first imposed it was payable in respect of an accounting period which ended on or after August 4th, 1914, and it was then pointed out that if the accounting period of any company ended on the 30th September, it would be called upon to pay Excess Profits Duty in respect of 12 months, during ten of which the tax was not in force. An effort was made then to obtain an assurance from the Chancellor of the Exchequer that justice would be done in respect of this unfair incidence of taxation at some period during its history, the proposal being that an allowance should be made in respect of such portion of the 12 months as had run prior to the date when Excess Profits Duty came into force. The time has come for redeeming the promise that was then made. That it was a very definite promise. I am not prepared to argue, upon such records as I have Consulted, but that equity requires that this allowance should be made now that the War is over I think the Chancellor of the Exchequer will be prepared to agree, and I hope that he will take that matter into consideration at once and see that this tax, which undoubtedly is exceedingly hard, and which is bitterly resented, shall not be allowed to be an extra burden upon those particular industries in respect of its collection for a period during which the tax was not in force, an injustice which can be remedied now that the War is over. I hope, further, that we may see an end of this tax in sight.

Mr. J. W. WILSON

I wish to ask the Government whether, in view of all the circumstances, they cannot give us a little more indication of their intention, which might influence votes in the Division. A great deal has been said, and very little defence has been made, as to the general incidence of this tax, which is admitted to be full of inequalities. The appeal I wish to make is on behalf of the small manufacturer and business people who happen to have had very bad basis years, 1912–13, and also on behalf of new businesses. On the former class it seems to press especially hard to be handicapped seven years afterwards by a basis which, although it has been modified a little from year to year, still acts very severely. From this class, I should imagine, the Treasury get very little compared with what they get from the larger businesses. Though this tax may hamper development in the larger businesses, and may tend to careless and extravagant management, it is bringing in a very substantial amount from them; but with regard to the smaller businesses, with very small basis years, it seems that after seven years there might be some concession made, even beyond those concessions which are on the Order Paper in the name of the Chancellor of the Exchequer. These particular businesses, and the businesses which have started since that period, are grateful for what concession has been made, but they hope for more. Probably the Chancellor of the Exchequer is keeping his powder dry for the final discussion on the new Clauses; but from the point of view of the Division on this particular Amendment, and considering that the discussion has ranged over a very wide area, I would appeal to him whether he could give us something more than the vague hints that were foreshadowed this afternoon as to further concessions which may be made in the interests of those cases where this tax presses the hardest and yields to the Exchequer the least return.

10.0 P.M.

The FINANCIAL SECRETARY to the TREASURY (Mr. Baldwin)

In answer to my right hon. Friend who has just, spoken, it would be more convenient if the Chancellor of the Exchequer were to give expression to what he may be able to say when the Clauses are put before the Committee, and when he is able to see in black and white what further concessions, if any, hon. Members desire. It is impossible at this moment to say more on that point, nor am I desirous in the short time at my disposal to embark on that subject. I wish to confine myself to the immediate purpose of the Amendment. I have listened with attention and with very great interest to nearly all the speeches made during the Debate to-day. I am gratified that, in spite of the considerable amount of support which was given to my hon. Friend's Amendment, the attacks that were made on my right hon. Friend (Mr. Chamberlain) to-day were a great deal less violent than might have been expected from some of the things that have been said about him outside this House. But even here I notice that one hon. Member (Mr. Clough) confessed that he was going to vote against the Government to-night, though he said that the right hon. Gentleman in years past had been one of his idols. But I remember that one of the features of the idol worshipper—and I am very thankful that I have never been a worshipper of idols myself—is that if an idol does not grant his prayer, he considers himself at liberty to break his idol into fragments. Another complaint levelled against my right hon. Friend—and this is one which has appeared in the articles which I have read in the Press for some weeks past—is that he is surrounded by advisers of great intellectual capacity, intellectual theorists, in whom is found none of the milk of human nature. I can hardly arrogate to myself the great title of adviser, but I am fairly clear that I am not an "intellectual theorist," and on the other hand I am brimful of human nature. Perhaps it might be imputed to me as a fault that I have an excess of that commodity instead of too little.

It was suggested before the Committee, that a number of business men would be willing to forego any relief that might have been given to them by the original Act if the Chancellor of the Exchequer would reduce the Excess Profits Duty to 40 per cent. This came from more than one part of the House and perhaps the point should be answered. It must be clear to hon. Members that the Chancellor of the Exchequer cannot enter into a gamble of that nature at this period. The Clause under the original Act has been law from the beginning. The provisions laid down under this Clause have been acted upon. Hon. Members who have offered us this deal have, to my mind, enormously exaggerated the amounts that will be due for repayment from the Exchequer. They may not have realised that, up to and including the Estimates made in this year's Budget, the sum expected to be gathered in the course of twelve months from Excess Profits Duty is a net sum, and that allowance is made for all repayments which, on the best calculations available, may be anticipated. Hon. Members must remember that, before repayment can be claimed, it means, not only that there must be no excess profit, but that the profits must fall below the standard profits. For that to happen there would have to be such a fall in prices of every article in this country as certainly is not in sight to-day, and as I do not believe is possible within any time that is likely to be covered by the provisions of this Act.

I want to come to the Amendment before the House. Considerable latitude has very rightly been allowed us in this discussion, but, after all, the point at issue is a very simple one. It is, Shall the Excess Profits Tax for the financial year be calculated at 60 per cent. or at 40 per cent.? A great many Members of the Committee entered on very interesting disquisitions about the rate at which, in their opinion, the debt of this country should be paid off; but, as far as this particular point is concerned, that is very largely an academic question. To give life to that question, the assumption must be made that taxation is to be paid off for many years to come at the same rate as the Chancellor of the Exchequer calculated for this year and next year. But reference to his speech when he made his financial statement shows quite clearly that he was making a great effort to meet a particular emergency at a particular time, when he believed that the trade of the country could stand it. He specifically repudiated the idea that that rate would be continued for the purpose of debt repayment. The point which he made, and it was perfectly clear and simple, was that while the country was able, as he believed and as I believe, to pay this taxation, such taxation should be demanded, because it was of the greatest importance to the credit of the country as a whole that we should cease to borrow, that we should make our expenditure and our receipts balance, and that we should have enough margin left over this year and inside next year to begin to redeem a portion of the Floating Debt. That policy has been accepted by a large number of Members, and it is to give effect to that policy that, among other taxes, the Chancellor of the Exchequer proposed this year the raising of the Excess Profits Duty by another 20 per cent.

In my belief, the efforts outlined in that Budget speech have been crowned with success, for there is no doubt that at this moment the credit of this country is standing very high. We have the reputation before the world of making at this moment a gigantic effort to put ourselves in the best position possible to make a sound national balance sheet this year and in the immediate future; and we have seen, as has been mentioned to-night, that a welcome and necessary re-action has already taken place in the foreign exchanges. But it has been said, and said with truth, that since my right hon. Friend's speech, there has been a change in the condition of the country, and that change has been used as an argument that he should recede from the position he took up in April, and that he should give back the increase which he then proposed.

I think we must examine for a moment or two what is the cause of that change. I do not propose to do it at any length. My right hon. Friend, after all, dealt with it. What I shall say will be merely dotting the i's and crossing the t's. I may perhaps put it in less classic language, and possibly for that reason may reach a larger audience. There is no doubt that we are passing through a period of financial stringency, but what has the Excess Profits Duty to do with that stringency? I maintain that it has nothing at all to do with it. I am quite aware that many hon. Members believe that it has a great deal to do with it. In my view, what has happened is something that has often happened before, will often happen again, and is quite irrespective of the fact whether there be in existence or not an Excess Profits Duty. Why did the banks restrict their credit? [HON. MEMBERS: "Ask the Chancellor.!"] I thought I should get that reply. It is because they were over-lent. Any hon. Member who has been, or is to-day, a bank director—and I am sorry to say my fate as a bank director is now in the past—knows where the safety line is with regard to loans.

We have been passing through a period—and here I want to address my remarks to the whole Committee, because they touch the Labour party just as much as other hon. Members who are interested—of immense inflation of credit. It has been easy to make money; it has been easy to get increased wages. So easy has it been, and so fast has the rise occurred, both in wages and in profits, that many people believed that happy state of things was going on for ever, and did not realise that unless there came a change nothing could save this country first from a panic, and then from a crash. The brake had to be put on. It is all very well for those who have to perform that very disagreeable duty of interviewing their customers hour by hour and day by day in every town in the kingdom to use the Chancellor of the Exchequer as a shield. They know perfectly well that it was vital to the stability of their own business that they should pull in those credits when they did, and that so far from the Chancellor, as he has been represented, "leading this country down the rapids and over the cataract into the whirlpool," he has seized hold of a rock in midstream, and is holding on to it with hands and feet. I can assure the Committee that there is no better work they can do for the finances of their country at this time than to give all the backing in their power to the Chancellor of the Exchequer, who is fighting one of the hardest battles any man has ever had to fight, and not only that, but is fighting it against every form of abuse and obloquy which is being hurled at him.

If I may go back for a moment, I would say how in this period of inflation, as in all periods of inflation, of credit it is so easy for wages and for profits to go up and up, but when the check comes, and people realise that this golden manna is not going to fall from heaven in perpetuity, one's first feeling is surprise, and one's second feeling is indignation. The people who first felt this credit restriction were the company promoters and the speculators. They were the first people who gave voice, and some of them, indeed, paid for advertisements in the daily Press, that all men might read of the terrible calamities that were coming upon them! Not to be outdone when the example was first put to them, my friends in business followed suit, and we have had a very lively, interesting, and amusing campaign, which has now been going on for some weeks.

I believe this campaign has overshot its mark by its exaggeration. I am not in business now, but I still know enough of business to be sure that in this 20 per cent. increase for this year there is nothing that the industry of the country cannot face. They can do it. I am not surprised that they are fighting against it. It is natural for all sections of the House to fight against any tax that presses hard upon them, but I venture to say there are very few industries to-day which are going to be damaged by the increase proposed for this year. Let me look at my own experience. Of the only dividends I have been accustomed to get with regularity all my life that have failed me this year—they make a good deal of difference in my income—one failure is attributable to the moulders' strike, by the friends of the party opposite, and the other to the Government control of coal. In neither of those cases is the Excess Profits Duty to blame. In all the interest that I have, where the Excess Profits Duty is playing its part, and playing a very fine part too, for the Exchequer, I have not suffered, and I frankly believe that the fears that are expressed in regard to this 20 per cent. have been enormously exaggerated.

I do not wonder, in this condition of temporary financial stringency, that many men, seeing the Excess Profits Duty at their door, put down all their troubles to that, and I do not wonder either, as my right hon. Friend said, that many people in the country, when invited to send letters or cards of protest to their Member, do not hesitate to do so. I am only too pleased, as a man who has no restriction of working hours, and who gets no pay for working overtime, that so many people in the country have ample time in which to sit down to fill up these forms, and write postcards and letters on this subject. I beg Members of this Committee not to be carried away by fear of their constituents in a matter of that kind, but, if they believe that the Government is right, to vote manfully with them in the Lobby. There are hon. Members, I know, who sincerely believe that this is the "last straw" in the matter of taxation. Nothing the Chancellor of the Exchequer or I can say will have any effect upon them. But I think I may appeal to hon. Members who may have been moved to act by the volume of their correspondence, by the reiterations of the Press, and who have come to the conclusion that the only thing that stands between us and the achievement in the immediate future—of the Golden Age—is to wipe out this iniquitious 20 per cent., which is going to carry the whole country to perdition!

There is undoubtedly at the one end of the scale—and we have heard it worked to-night for all it is worth—hardship, and increasing hardship, in the case of the small business. My right hon. Friend has shown himself willing to consider this point, and not only to consider it, but to put up for the examination of the Committee a scheme whereby considerable alleviation may be brought to

this class, which we all consider to be the most deserving class. The Clause which he has put down will come up in due course to be examined on their merits, and he will, of course, consider suggestions that there may be to improve the working of these Clauses, although it is only fair for the Committee to remember that he is making a substantial concession of revenue in the changes he is proposing, and, of course, concessions in the amount of revenue must be limited to some figure that will not materially upset his Budget calculations.

I hope it may be possible for the Committee on this one Amendment to come to a conclusion quickly, because we have a great deal of work yet before us, and I do not think any hon. Member can claim that the Government have attempted in any way either to monopolise the time of the Committee by speaking from the Front Bench, or to control or arrest this discussion. We have heard the views of hon. Members put forward from many points of view, and from all parts of the Committee, and I appeal to the Committee to come now to a decision on this Amendment, and thus enable us to make some progress to-night with the Excess Profits Duty.

Mr. BONAR LAW (Leader of the House)

rose in his place, and claimed to move, "That the Question be now put."

Question put accordingly, "That the words proposed to be left out, down to the word 'sixty ' ["as if sixty per cent."], stand part of the Clause."

The Committee divided: Ayes, 289 Noes, 117.

Division No. 202.]	AYES.	[10 25 p.m.
Adair, Rear-Admiral Thomas B. S.	Benn, Sir A. S. (Plymouth, Drake)	Bull, Rt. Hon. Sir William James.
Addison, Rt. Hon. Dr. C.	Bentinck, Lord Henry Cavendish	Burdon, Colonel Rowland
Adkins, Sir W. Ryland D.	Bethell, Sir John Henry	Burdett-Coutts, William
Agg-Gardner, Sir James Tynte	Blades, Capt. Sir George Rowland	Campion, Lieut.-Colonel W. R.
Ainsworth, Captain Charles	Blair, Reginald	Cape, Thomas
Amery, Lieut.-Col. Leopold C. M. S.	Blake, Sir Francis Douglas	Carew, Charles Robert S.
Armitage, Robert	Boles, Lieut.-Colonel D. F.	Carr, W. Theodore
Astbury, Lieut.-Commander F. W.	Boscawen, Rt. Hon. Sir A. Griffith-	Carter, W. (Nottingham, Mansfield)
Astor, Viscountess	Bowerman, Rt. Hon. Charles W.	Casey, T. W.
Bagley, Captain E. Ashton	Bowles, Colonel H. F.	Cautley, Henry S.
Baird, Sir John Lawrence	Bowyer, Captain G. E. W.	Chamberlain, Rt. Hn. J. A. (Birm.,W.).
Baldwin, Rt. Hon. Stanley	Brace, Rt. Hon. William	Chamberlain, N. (Birm., Ladywood)
Balfour, Sir R. (Glasgow, Partick)	Brassey, Major H. L. C.	Churchill, Rt. Hon. Winston S.
Barnes, Major H. (Newcastle, E.)	Bridgeman, William Clive	Clay, Lieut.-Colonel H. H. Spender
Barnston, Major Harry	Briggs, Harold	Coates, Major Sir Edward F.
Barrand, A. R.	Broad, Thomas Tucker	Cobb, Sir Cyril
Barrie, Rt. Hon. H. T. (Lon'derry, N.)	Bromfield, William	Collins, Col. Sir G. P. (Greenock)
Beauchamp, Sir Edward	Brown, Captain D. C.	Colvin, Brig.-General Richard Beale
Beckett, Hon. Gervase	Brown, James (Ayr and Bute)	Conway, Sir W. Martin
Bell, James (Lancaster, Ormskirk)	Buchanan, Lieut.-Colonel A. L. H.	Coote, Colin Reith (Isle of Ely)
Cope, Major Wm.	Jones, Sir Edgar R. (Merthyr Tydvil)	Roundell, Colonel R. F.
Cory, Sir J. H. (Cardiff. South)	Jones, Sir Evan (Pembroke)	Royce, William Stapleton
Courthope, Major George L.	Jones, Henry Haydn (Merioneth)	Royden, Sir Thomas
Cowan, D. M. (Scottish Universities)	Kellaway, Rt. Hon. Fredk. George	Royds, Lieut.-Colonel Edmund
Craik, Rt. Hon. Sir Henry	Kidd, James	Rutherford, Sir W. W. (Edge Hill)
Curzon, Commander Viscount	King, Commander Henry Douglas	Sanders, Colonel Sir Robert A.
Davies, Sir Joseph (Chester, Crewe)	Knight, Major E. A. (Kidderminster)	Scott, A. M. (Glasgow, Bridgeton)
Davies, Sir William H. (Bristol, S.)	Lane-Fox, G. R.	Scott, Leslie (Liverpool, Exchange)
Davison, J. E. (Smethwick)	Larmor, Sir Joseph	Scott, Sir Samuel (St. Marylebone)
Dawes, Commander	Law, Rt. Hon. A. B. (Glasgow, C.)	Sexton, James
Dennis, J. W. (Birmingham, Deritend)	Lawson, John J.	Shaw, Thomas (Preston)
Denniss, Edmund R. B. (Oldham)	Lewis, Rt. Hon. J. H. (Univ., Wales)	Shaw, William T. (Forfar)
Dewhurst, Lieut.-Commander Harry	Lewis, T. A. (Glam., Pontypridd)	Short, Alfred (Wednesbury)
Du Pre, Colonel William Baring	Locker-Lampson, Com. O. (H'tlngd'n)	Simm, M. T.
Edgar, Clifford B.	Long, Rt. Hon. Walter	Sitch, Charles H.
Edge, Captain William	Lorden, John William	Smith, W. R. (Wellingborough)
Edwards, C. (Monmouth, Bedwellty)	Lort-Williams, J.	Spencer, George A.
Edwards, Major J. (Aberavon)	Loseby, Captain C. E.	Stanier, Captain Sir Beville
Edwards, John H. (Glam., Neath)	Lunn, William	Stanley, Major H.. G.
Elliot, Capt. Walter E. (Lanark)	M'Curdy, Rt. Hon. C. A.	Stanton, Charles B.
Elveden, Viscount	Macdonald, Rt. Hon. John Murray	Starkey, Captain John R.
Eyres-Monsell, Commander B M.	McLaren, Hon. H. D. (Leicester)	Steel, Major S. Strang
Falle, Major Sir Bertram G.	Maclean, Neil (Glasgow, Govan)	Stephenson, Colonel H. K.
Farquharson, Major A. C.	Macleod, J. Mackintosh	Stewart, Gershom
Fell, Sir Arthur	Macmaster, Donald	Strauss, Edward Anthony
Finney, Samuel	M'Micking, Major Gilbert	Surtees, Brigadier-General H. C.
Fisher, Rt. Hon. Herbert A. L.	Macnamara, Rt. Hon. Dr. T. J.	Sutherland, Sir William
FitzRoy, Captain Hon. E. A.	McNeill, Ronald (Kent, Canterbury)	Swan, J. E.
Flannery, Sir James Fortescue	Mallalieu, F. W.	Sykes, Colonel Sir A. J. (Knutsford)
Ford, Patrick Johnston	Malone, Major P. B. (Tottenham, S.)	Taylor, J.
Foreman, Henry	Marks, Sir George Croydon	Thomas, Rt. Hon. James H. (Derby)
Forestier-Walker, L.	Martin, Captain A. E.	Thomas, Brig.-Gen. Sir O. (Anglesey)
Forrest, Walter	Matthews, David	Thomas-Stanford, Charles
Fremantle, Lieut.-Colonel Francis E.	Mildmay, Colonel Rt. Hon. F. B.	Thomson, F. C. (Aberdeen, South)
Gibbs, Colonel George Abraham	Mills, John Edmund	Thomson, T. (Middlesbrough, West)
Gilbert, James Daniel	Molson, Major John Elsdale	Thomson, Sir W. Mitchell-(Maryhill)
Gilmour, Lieut.-Colonel John	Mond, Rt. Hon. Sir Alfred M.	Thorpe, Captain John Henry
Graham, D. M. (Lanark, Hamilton)	Montagu, Rt. Hon. E. S.	Tillett, Benjamin
Graham, R. (Nelson and Colne)	Moreing, Captain Algernon H.	Tootill, Robert
Graham, W. (Edinburgh, Central)	Morgan, Major D. Watts	Townley, Maximilian G.
Grayson, Lieut.-Colonel Sir Henry	Morison, Rt. Hon. Thomas Brash	Tryon, Major George Clement
Green, Albert (Derby)	Morrison, Hugh	Turton, E. R.
Gregory, Holman	Morrison-Bell, Major A. C.	Vickers, Douglas
Greig, Colonel James William	Mosley, Oswald	Walsh, Stephen (Lancaster, Ince)
Griffiths, T. (Monmouth, Pontypool)	Mount, William Arthur	Walters, Sir John Tudor
Grundy, T. W.	Murray, John (Leeds, West)	Walton, J. (York, W. R., Don Valley)
Guest, J. (York, W. R., Hemsworth)	Murray, Major William Dumfries)	Ward-Jackson, Major C. L.
Guest, Major O. (Leic., Loughboro')	Myers, Thomas	Ward, Col. J. (Stoke-upon-Trent)
Hallwood, Augustine	Nall, Major Joseph	Ward, Col. L. (Kingston-upon-Hull)
Hall, F. (York, W. R., Normanton)	Neal, Arthur	Waring, Major Walter
Hanson, Sir Charles Augustin	Newbould, Alfred Ernest	Waterson, A. E.
Harmsworth, C. B. (Bedford, Luton)	Newman, Sir R. H. S. D. L. (Exeter)	Watson, Captain John Bertrand
Harris, Sir Henry Percy	Newton, Major Harry Kottingham	Wheler, Lieut.-Colonel C. H.
Hartshorn, Vernon	O'Grady, Captain James	White, Lieut.-Col. G. D. (Southport)
Haslam, Lewis	Palmer, Major Godfrey Mark	Whitla, Sir William
Hayward, Major Evan	Parker, James	Wignall, James
Henderson, Major V. L. (Tradeston)	Pease, Rt. Hon. Herbert Pike	Wild, Sir Ernest Edward
Hennessy, Major J. R. G.	Peel, Col. Hn. S. (Uxbridge, Mddx.)	Williams, Lt.-Com. C. (Tavistock)
Hewart, Rt. Hon. Sir Gordon	Pinkham, Lieut.-Colonel Charles	Williams, Col. Sir R. (Dorset, W.)
Hirst, G. H.	Pollock, Sir Ernest M.	Williamson, Rt. Hon. Sir Archibald
Hoare, Lieut.-Colonel Sir S. J. G.	Prescott, Major W. H.	Willoughby, Lieut.-Col. Hon. Claud
Holbrook, Sir Arthur Richard	Pretyman, Rt. Hon. Ernest G.	Wilson, Daniel M. (Down, West)
Hope, Sir H. (Stirling & Cl'ckm'nn'n,W.)	Pulley, Charles Thornton	Wilson, Colonel Leslie O. (Reading)
Hope, James F. (Sheffield, Central)	Purchase, H. G.	Wilson, Col. M. (York, Richmond)
Hope, Lt.-Col. Sir J. A. (Midlothian)	Rae, H. Norman	Wilson, W. Tyson (Westhoughton)
Hope, J. D. (Berwick & Haddington)	Raw, Lieutenant-Colonel N.	Wintringham, T.
Hopkins, John W. W.	Rees, Sir J. D. (Nottingham, East)	Wood, Hon. Edward F. L. (Ripon)
Hopkinson, A. (Lancaster, Mossley)	Renwick, George	Wood, Sir H. K. (Woolwich, West)
Horne, Sir R. S. (Glasgow, Hillhead)	Richardson, Sir Albion (Camberwell)	Wood, Major S. Hill- (High Peak)
Hotchkin, Captain Stafford Vere	Richardson, R. (Houghton-le-Spring)	Woolcock, William James U.
Howard, Major S. G.	Roberts, Frederick O. (W. Bromwich)	Worsfold, Dr. T. Cato
Hunter, General Sir A. (Lancaster)	Roberts, Rt. Hon. G. H. (Norwich)	Young, Lieut.-Com. E. H. (Norwich)
Hunter-Weston, Lieut-Gen. Sir A. G.	Roberts, Sir S. (Sheffield, Ecclesall)	Young, W. (Perth & Kinross, Perth)
Irving, Dan	Robertson, John
Jameson, J. Gordon	Robinson, S. (Brecon and Radnor)	TELLERS FOR THE AYES.—
Jephcott, A. R.	Robinson, Sir T. (Lancs., Stretford)	Lord E. Talbot and Mr. Dudley
Jodrell, Neville Paul	Rodger, A. K.	Ward.
Johnson, Sir Stanley	Rose, Frank H.
NOES.
Archer-Shee, Lieut.-Colonel Martin	Bellairs, Commander Carlyon W.	Bird, Sir A. (Wolverhampton, West)
Ashley, Colonel Wilfrid W.	Bennett, Thomas Jewell	Blane, T. A.
Atkey, A. R.	Betterton, Henry B.	Borwick, Major G. O.
Balfour, George (Hampstead)	Bigland, Alfred	Bramsdon, Sir Thomas
Banner, Sir John S. Harmood-	Billing, Noel Pemberton-	Briant, Frank
Barker, Major Robert H.	Birchall, Major J. Dearman	Brittain, Sir Harry
Bruton, Sir James	Hickman, Brig.-General Thomas E.	Perkins, Walter Frank
Buckley, Lieut.-Colonel A.	Higham, Charles Frederick	Perring, William George
Burn, Col. C. R. (Devon, Torquay)	Hinds, John	Pickering, Lieut.-Colonel Emil W.
Campbell, J. D. C.	Hogge, James Myles	Pownall, Lieut.-Colonel Assheton
Carter, R. A. D. (Man., Withington)	Holmes, J. Stanley	Raffan, Peter Wilson
Chadwick, Sir Robert	Hood, Joseph	Ramsden, G. T.
Child, Brigadier-General Sir Hill	Hume-Williams, Sir W. Ellis	Raper, A. Baldwin
Clough, Robert	Inskip, Thomas Walker H.	Remer, J. R.
Coats, Sir Stuart	Jackson, Lieut.-Colonel Hon. F. S.	Remnant, Sir James
Cockerill, Brigadier-General G. K.	James, Lieut.-Colonel Hon. Cuthbert	Rogers, Sir Hallewell
Colfox, Major Wm. Phillips	Jones, William Kennedy (Hornsey)	Samuel, Samuel (W'dsworth, Putney)
Davies, Alfred Thomas (Lincoln)	Kenworthy, Lieut.-Commander J. M.	Smith, Sir Allan M. (Croydon, South)
Davison, Sir W. H. (Kensington, S.)	Law, Alfred J. (Rochdale)	Smithers, Sir Alfred W.
Dockrell, Sir Maurice	Lister, Sir R. Ashton	Sprot, Colonel Sir Alexander
Entwistle, Major C. F.	Lloyd, George Butler	Sugden, W. H.
Fildes, Henry	Locker-Lampson, G. (Wood Green)	Sykes, Sir Charles (Huddersfield)
Foxcrott, Captain Charles Talbot	Lyle-Samuel, Alexander	Talbot, G. A. (Hemel Hempstead)
Frece, Sir Walter de	M'Donald, Dr. Bouverie F. P.	Terrell, George (Wilts, Chippenham)
Galbraith, Samuel	Maddocks, Henry	Terrell, Captain R. (Oxford, Henley)
Gange, E. Stanley	Manville, Edward	Tickler, Thomas George
Ganzoni, Captain Francis John C.	Marriott, John Arthur Ransome	Waddington, R.
Gould, James C.	Meysey-Thompson, Lieut.-Col. E. C.	Warren, Lieut.-Col. Sir Alfred H.
Goulding, Rt. Hon. Sir Edward A.	Mitchell, William Lane	White, Charles F. (Derby, Western)
Grant, James A.	Morden, Colonel H. Grant	Willey, Lieut.-Colonel F. V.
Gray, Major Ernest (Accrington)	Newman, Colonel J. R. P. (Finchley)	Williams, Lt.-Col. Sir R. (Banbury)
Greenwood, William (Stockport)	Nicholl, Commander Sir Edward	Wills, Lieut.-Colonel Sir Gilbert
Gretton, Colonel John	Nicholson, William G. (Petersfield)	Wilson, Capt. A. S. (Holderness)
Gritten, W. G. Howard	Nield, Sir Herbert	Wilson, Lt.-Col. Sir M. (Bethnal Gn.)
Guinness, Lieut.-Col. Hon. W. E.	Norris, Colonel Sir Henry G.	Wood, Major M. M. (Aberdeen, C.)
Hacking, Captain Douglas H.	Norton-Griffiths, Lieut.-Col. Sir John	Young, Sir Frederick W. (Swindon)
Hall, Lieut.-Col. Sir F. (Dulwich)	Palmer, Charles Frederick (Wrekin)
Hambro, Captain Angus Valdemar	Parkinson, Albert L. (Blackpool)	TELLERS FOR THE NOES.—
Herbert, Hon. A. (Somerset, Yeovil)	Pearce, Sir William	Sir F. Banbury and Captain
Herbert, Dennis (Hertford, Watford)	Pennefather, De Fonblanque	Knights.

Question, "That the Question be now put," put, and agreed to.

Sir D. MACLEAN

May I ask the Chancellor of the Exchequer how far he proposes to endeavour to go to-night with the Bill?

Mr. CHAMBERLAIN

As the Committee knows, it was the hope of the Government that we should be able to-night to take the Excess Profits Duty Clauses and the Corporation Profits Tax Clauses, and begin to-morrow with the Clauses relating to the Land Values Duties. I am afraid that it is impossible to carry out that programme in view of the length of time that has been occupied by the discussion which has just taken place; but I would beg the Committee to consent to finish the Excess Profits Duty Clauses to-night, and to begin with the Corporation Profits Tax to-morrow. I am sorry to have to postpone the Land Values Duties Clauses. I must remind the Committee that a great part of the discussion on the details as to the Excess Profits Duty will arise on one or other of the new Clauses standing in my name. We have still those new Clauses to go through, and for those we must allot Wednesday as well as to-morrow, a day more than we intended; but I hope that the Committee will allow us to have the Excess Profits Duty Clauses in the Bill to-night.

Mr. SEXTON

Will the right hon. Gentleman take the new Clauses on Wednesday or postpone them beyond Wednesday?

Mr. CHAMBERLAIN

No, I think we must take them to-morrow.

Sir D. MACLEAN

May I remind the Chancellor of the Exchequer that it was a very clear and definite understanding at which we came, and that the result of it was that he got the whole of the Bill except these postponed Clauses. Every one of the Clauses that we have passed certainly gave us ample opportunity for the full discharge of our public duty in the discussion of them. That was a very large concession which he got from the Opposition, and I am quite sure that we shall not be prepared to take the discussion of the Land Values Duties after dinner to-morrow night. My right hon. Friend must be very optimistic if he expects to get the Corporation Profits Tax before dinner to-morrow. It is a subject of the very greatest interest and on which there is considerable division of opinion. We should feel very much aggrieved if we had to take the Land Values Duties after dinner to-morrow night.

Mr. CHAMBERLAIN

I am anxious to meet the general convenience of the Committee. After all, even the Finance Bill must be got through within a reasonable time, if the programme of the Session is to be kept to at all. If it will suit the convenience of the Committee I shall be prepared—and I understand this can be done—to take the Corporation Profits Tax and the new Clauses to-morrow and to begin the Land Duties on Wednesday. To do that I shall have to move the postponement of the Land Duties Clauses until after the new Clauses have been considered. It must be on the understanding that the new Clauses are finished to-morrow, because, if they are not, we cannot get back to the Land Duties as the first business on Wednesday. We have done our best to meet the convenience of hon. Members, and I hope the Committee will really help us in the general interests of the Measure.

Sir D. MACLEAN

As far as we are concerned, those for whom I can speak—and there are indications I can speak for a good number—we will not on the discussion of the new Clauses in any way delay business. We, indeed, have not done so hitherto throughout the progress of the Bill, and we do not intend to do so. What we have asked is that on this matter of the Land Duties, which is one of very deep interest to us, we should be given full opportunity for debating it and that not late at night. If by the exigencies of Parliamentary business the Land Duties cannot be taken as the first business on Wednesday we cannot help ourselves. Minorities must suffer, and we will bear our sufferings as cheerfully as we can.

Colonel GRETTON

There are private Members in this House who have no desire to delay business, but who are greatly interested in many of these new Clauses. The Chancellor of the Exchequer himself admits that in regard to the Excess Profits Duty he has new Clauses down of very great importance. It is not right to ask hon. Members interested in these new Clauses to neglect their duty by in any way agreeing to the compact made between the two Front Benches. I think a protest should be made on the part of private Members who, without any desire to obstruct the progress of the Bill, claim the right to discuss the new Clauses on their merits.

Mr. BILLING

I desire to ask the Chancellor of the Exchequer whether, having overcome the substantial opposition of the Opposition, and made a bargain with them, he will proceed to put the Closure on the first private Member who desires to continue the discussion to-morrow night? Can we have his assur-that he will not do that?

The CHAIRMAN

This is really all irregular, as there is no Question before the Committee. I have allowed these interrogatories in the interests of business, but we cannot go on any further. With regard to the further Amendments, I must take the decision of the Committee in regard to the 60 per cent., as far as the Committee stage is concerned, and therefore I shall be bound to pass over the Amendment in the name of the hon. and gallant Member for Newcastle (Major Barnes) to leave out the words "sixty per cent. of the excess" and insert other words. The next Amendment, in the name of the hon. Member for Chippenham (Mr. Terrell), to insert the words "for two hundred pounds there were substituted two thousand pounds and," is in the wrong place. If the hon. Member will move it at the end of the Sub-section beginning "And as if," it will be in order.

Mr. TERRELL

In view of the new Clause proposed by the Chancellor of the Exchequer, which will come on to-morrow, and which to some extent meets this case, I do not propose to move that Amendment.

The CHAIRMAN

The next Amendment is that in the name of the right hon. Gentleman the Member for the City of London (Sir F. Banbury), to leave out the last paragraph of Sub-section (2).

Sir F. BANBURY

That is merely consequential, and I do not propose to move it.

The CHAIRMAN

The remaining Amendments on pages 1378 and 1379 come under the ruling which I gave at the beginning of the proceedings to-day.

Mr. HOLMES

On a point of Order. The Amendment standing in my name with reference to the construction of Article 4 of Part II of the Fourth Schedule of the principal Act is with a view to explaining the construction of the principal Act, and does not in any way come within the decision to which the Committee has already come.

The CHAIRMAN

The proposal of the hon. Member here is to amend Article 4 of Part II of the Fourth Schedule of the principal Act, and that, clearly, ought to be the subject of a separate Clause, and ought not to be interjected, as it were, into Clause 40.

Mr. HOLMES

I submit that the fourth Schedule of the Principal Act was an annex to Clause 38 of the principal Act. That established the Excess Profits Duty, and the Schedule provided the rules under which it should be administered, and therefore I beg to submit that any variation of Clause 38 of the principal Act can come in here.

The CHAIRMAN

I think it should be as a new Clause, for the convenience of those who may have to refer to the Act in the future. It should have a side heading, such as "Amendment to Fourth Schedule of Principal Act," or something of that sort. It would be very inconvenient, assuming that it were carried, that it should be brought into the present Clause.

Sir D. MACLEAN

My hon. Friend, who knows a great deal of this subject, attaches very considerable importance to this Clause. May I express the hope that the Clause, without binding yourself absolutely now, is one which you will be inclined to select when you come to the new Clauses?

The CHAIRMAN

I do not know who will be in the Chair. I can only say I have great respect for Amendments from that particular quarter. The remaining proposals down to the end of page 1379 are all questions which should come as Amendments to the Government Clauses or as new Clauses by themselves. When I come to the Amendment in the name of the right hon. Gentleman (Mr. Clynes) [at the end of the Clause to add new Subsection "(3) Paragraph (c) of Section thirty-nine of the principal Act is hereby repealed"], that is a taxing proposal which cannot be done without a preliminary Resolution in Ways and Means. The next Amendment is in order.

Mr. HIGHAM

I beg to move, at the end of the Clause, to add a new Subsection: (3) In the case of any person who has served during the War as a member of any of the naval or military forces of the Crown, or in the service of a naval or military character in connection with the War for which payment was made out of money provided by Parliament, or in any work abroad of the British Red Cross Society or the St. John Ambulance Association, or any other body with similar objects, and who has commenced business for the first time after demobilisation or discharge, line six of section thirty-eight (1) of the principal Act shall read as if the word 'five' was substituted for the word 'two.' In looking through the Bill I fail to find any outstanding concession to the men of the fighting forces, and it occurred to me that possibly the Chancellor of the Exchequer, with the many things he has to deal with, overlooked the fact that men who had fought and were starting in business since the Armistice should have some concession over civilians. The allowance of £200 which was put in force in 1914 applies to both civilians and ex-service men. There are thousands of soldiers and officers who started in business since the Armistice. These men, I feel, should have some extra concession. and I draw the attention of the Chancellor of the Exchequer to this fact in the hope that he and the Committee will approve of the proposal that these ex-soldiers and women who have started in business since the Armistice should have a concession of £500 as opposed to a concession of £200 to the civilian.

Mr. CHAMBERLAIN

This is the kind of Amendment which is apt to invoke a larger measure of sympathy when its object is first explained and yet which cannot be adopted with satisfaction on further reflection. The hon. Member recognises, of course, that the people for whom he pleads will obtain an advantage under the concessions which I promised to make at a previous stage of the Bill and which are represented by the new Clauses I have placed on the Paper. His objection to that is that these advantages are common to all, soldiers and civilians, people who have served and people who have not. That is true, but after all, I do not think we should be wise now to make a new distinction in favour of the demobilised worker for his country. It is not very pleasant to say that some of those who would be included really rendered greater service or forewent greater advantages than some who would not be included. You must deal with businesses and with classes of businesses as such rather than with the particular individual who happens to be carrying them on. The very fact that my concessions have been directed to small businesses, and to new businesses or to new capital brought into businesses result in bringing relief to the class of case which my hon. Friend has brought to the notice of the Committee, and with which all of us have a good deal of sympathy. I hope, having regard to the fact that they will get relief under the general Clause, the hon. Member will not think it necessary to press the Amendment.

Mr. BILLING

It is really amazing, that even before Peace is signed, the Chancellor of the Exchequer should get up and say that he fails to see any distinction between the man who served and the man who did not.

Mr. CHAMBERLAIN

I did not say that.

11.0 P.M.

Mr. BILLING

I am not going to bandy words with the Chancellor of the Exchequer. Whatever he says, let us judge him, as I want to judge him, not by his debating power, but by what his actions amount to. Anyone who has studied the effect of the War on the small businesses of this country will realise that there exists a distinct line of demarcation between the man who gave up his little business and joined up in 1914, and later, and the man who stayed back and took advantage of the boom that came to every little business. I could give the Chancellor of the Exchequer a dozen cases of little garages which took on shell making and made a fortune, while other garages in the same town were closed down because the fellows had joined up in 1914. The right hon. Gentleman sees no distinction between them. So many hon. Members stumped the country in order to get young fellows to give up their businesses, and said, "If you do not come back we will look after the people who are left, and if you do come back you may be assured you will come back to a grateful country." Yet within a year the Chancellor of the Exchequer fails to see the difference between these two classes of men. He dismisses this Amendment as he dismisses other suggestions as that of a private Member with no backing in this House, and therefore no ability to force him to reconsider his decision. I hope other hon. Members will give their experience and add what weight they can to bring the Chancellor of the Exchequer to accept the Amendment, or so frame his new Clauses as to make that distinction, which is a very great distinction, between the men who gave up their businesses and the men who did not. Many of these men are endeavouring to re-establish themselves and to borrow money, even from the banks. If this concession is given to them it would give them material assistance in setting themselves on their feet once more. It is not a question of favouring this particular class, but of paying them back a small portion of what they have actually sacrificed in the interests of the country—to say nothing of the sacrifice of life of the original volunteers, which is nothing! If the Chancellor of the Exchequer desires to fulfil the election pledges of his leader and make this a land more fit for heroes to live in—not that I wish to remind him of the Prime Minister's platitudes, of which we have heard so many—I ask him to take into consideration the Amendment put down in the interests of heroes whom the Prime Minister constantly uses as political powder and shot.

Mr. HOLMES

The Chancellor of the Exchequer is budgetting for £300,000,000 Excess Profits Duty. The Amendment of the hon. Member for South Islington (Mr. Higham) is a question of hundreds. It does not even apply to the cases just referred to by the hon. Member for Hertford (Mr. Billing), because it is an Amendment to assist the men who have commenced business for the first time after demobilisation or discharge. Every trade or business in the country has the right to retain its profit standard or its percentage standard plus £200. The Amendment proposes that a man who commences business for the first time after demobilisation or discharge should be allowed £500 margin instead of £200. It does not refer to the man who has been in business and given it up and gone to the War and come back again, and this is a reason for the distinction, because the man who gave up his business to go into the War, can start business again and can retain his old profit standard for the purpose of Excess Profits Duty in the current year.

Mr. BILLING

Suppose he was not making any?

Mr. HOLMES

He was, because if a man had a business which was not making a profit and then joined the Army, he was not giving up so much as the man who was making a profit, but the man who commences business for the first time gets only the percentage on his capital. All of us desire to assist the man who has fought for five years and has given up five of the best years of his life when he might have established a business, and now that he desires to commence business people want to give him, if possible, a better chance than the man who has not gone. The suggestion is a little preferential treatment for the man who has fought and now commences for the first time.

Mr. CHAMBERLAIN

I do not feel strongly on this matter. What I am really afraid of is that if I accept the hon. Member's Amendment, I should create a new grievance. If the acceptance of the Amendment would satisfy the Committee, I will accept it, but I do not want it to be used as a jumping off ground for asking for something more.

Mr. MARRIOTT

The Chancellor of the Exchequer will admit, I think, that when we were discussing a similar concession in regard to Income Tax recently I did my best to protect him from some of my Friends. Therefore I venture to hope that the House will give him the assurance he desires. I am certain that my hon. Friend opposite has raised an exceedingly important point. I have very interesting and touching cases in my own constituency where young men, having returned from the War, have set up small businesses of this kind. To those men this concession would be of inestimable importance.

Mr. BILLING

May I ask the Chancellor of the Exchequer whether I am to understand that if this Amendment passes it will not affect those men who had businesses before the War and returned to those businesses on demobilisation?

Sir J. NORTON-GRIFFITHS

Central Wandsworth, which I have the honour to represent, is a place where small businesses exist more than in most places. I have had numerous representations made to me that ex-service men should have some advantages given to them. Many of them gave up business to go to fight, and I take it that when they come back and re-establish those businesses, those businesses will be regarded as new businesses? I thank the Chancellor of the Exchequer for the concession he has made to the men who fought for their country.

Mr. RAE

If this Amendment is accepted in the sense indicated by the Chancellor of the Exchequer it will result in a very great grievance indeed. I was a member of a tribunal and knew of case after case of men who were sent to the Front, cases of men who were the proprietors of one-man businesses. Those businesses had to be closed entirely during their absence, and they have reopened them since their return from the Army. To say that such men shall be placed in a worse position than the men who have not hitherto tried to establish a business at all, probably because they were too young, would be a very great hardship indeed. There is absolutely no argument to support the one case that does not support the other.

Mr. DENNIS HERBERT

It occurs to me that the unsatisfactory part of this Amendment is the inclusion of the words "for the first time." We might extend it a little more by inserting instead the words "who has commenced a new business after demobilisation."

Mr. HOLMES

May I suggest that the Chancellor of the Exchequer accept the Amendment now, and consider it before the Report stage?

Mr. CHAMBERLAIN

I will do that but I am not very much encouraged. Exactly that has happened which I feared. I pointed out to the Committee my anticipations, but in deference to the feelings expressed, I said I would accept the Amendment as it stood. The immediate result is an attack from other quarters for making a concession which is said to be unjust to men excluded from it. It is not encouraging, but I will do what the hon. Member (Mr. Holmes) suggests. I will accept the Amendment, and consider the matter again before Report, but I cannot pledge myself to go any further.

Captain COOTE

May I point out that the man who was in business before the War, when he starts again receives substantial assistance from the State, while the man starting a new business does not get similar assistance.

Lieut.-Commander ASTBURY

The Amendment which the Chancellor has accepted on certain conditions has not been accepted by several hon. Members. Great harm may result to those men who have fought and come back and who start small businesses. Discharged men are not starting businesses of magnitude, but only small businesses of tobacconists and paper shops.

Amendment agreed to.

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

Mr. BILLING

There is one point of view which has not been referred to at all, and that is the unfair incidence of this tax on the wealthy and on the poor. It is the shareholder who pays the Excess Profits Duty. Assume that a Member of the Labour Party has an investment of £500 in a limited company, and that a Member of the Government or some wealthy Minister has £50,000 invested in the same company. Under the Excess Profits Duty they will pay proportionately the same amount, but had the money been raised by income tax the small investor would have escaped because he would have received an increased dividend for the absence of the Excess Profits Duty. Why the Labour Members should support the Excess Profits Duty seems to me quite incomprehensible. Possibly every argument that could have been put forward has been put forward to-night, and unfortunately they were not original, because most of us had read them in all the papers in the past two or three months. We expected a concession from the Chancellor of the Exchequer, and we did not get it. When the hon. Member behind the right hon. Gentleman, who is very closely associated with his party, rose and requested a concession, many of us thought this was a means of giving the Chancellor of the Exchequer an opportunity of making a concession, but none was forthcoming. There are many hon. Members who were determined to vote against the Government on this question, until it came to the division lobby. That is the true test. That is the time when the Whips tell them what it will cost them to vote against the Government, and I was surprised, considering we lost in that Lobby the support of what is colloquially known as the Opposition, that we managed to put in considerably over 100 against the Government.

The right hon. Baronet the member for the City of London (Sir F. Banbury) made what was regarded by many as a jovial speech, but it was really not a jovial speech. It was quite one of the most serious and useful contributions we have had to the debate. The Chancellor has denied the parentage of this proposed increase in the duty, and we know that this tax came from the Prime Minister himself and from the right hon. Gentleman who, it is rumoured, is going to take the place of the present Chancellor of the Exchequer. Those are the parents of this proposal, who have forced the Chancellor of the Exchequer into the present position, but why did he not tell us what his alternative suggestions were? Assuming that he was not, in favour, as I submit he was not, of the increase of this tax at these various meetings which were held before the Government came to this decision, he must have put forward in justification for the position he holds some alternative measure to justify him in opposing, as I submit he did oppose, the increase of this tax.

It has been suggested by a Labour Member in an admirable speech that there was no danger of us driving capital out of the country or injuring labour, but hon. Members might remember that capital and labour are nothing unless energy and enterprise are behind them to make them successful. The Chancellor chooses this particular moment to harass business undertakings, as this tax does, and suggests, because of opposition in this House, that we private Members represent big vested interests in the country. The right hon. Gentleman's assistant, on his own admission, is interested in far bigger interests than I myself or many other hon. Members might be. Personally, I am in no way affected. The right hon. Gentleman might make it 100 per cent.

The CHAIRMAN

The hon. Gentleman is repeating his own remarks rather a great number of times.

Mr. BILLING

I will endeavour not to do that again. I may say it is impossible for me not to repeat other hon. Members' remarks.

The CHAIRMAN

That would be equally out of order.

Mr. BILLING

It is not my intention to endeavour to detain the Committee, but I regret that the fight which has been put up has not had a greater sense of reality. To hear in the smoking-rooms in this House the bitterness—

The CHAIRMAN

The hon. Member is breaking another rule in criticising a decision come to by the Committee an hour and a-half ago.

Mr. BILLING

I do not wish to criticise the Committee on the past, but what I do wish to say is that when this Clause was put I was the only Member who rose to speak on it, which rather suggests that every hon. Member has given up the fight. If private Members, the first time we lose a division, are going to be bullied by the Chancellor, or the Opposition or the Government into remaining silent and giving it up in despair, I say the usefulness of private Members is past. It is only, if necessary, by exhausting the Government, by continuing these debates into the early hours of the morning, by showing the Government that we think more of the duties which we are called upon to perform than we do of getting to our beds, and by exhausting every form of argument which our ingenuity can suggest, that we eventually might organise in this House—

The CHAIRMAN

This had better be discussed in the Lobbies. It has nothing to do with this Clause.

Mr. LYLE-SAMUEL

The real issue before this Committee to-day, in the view of the people throughout the entire country, is whether or not there remains in this House sufficient independence for Members to carry a majority in the division against a tax which everyone connected with industry in this country believes to be wrong, and a direct attack upon industrial prosperity. I have not heard a single valid argument in favour of this tax; nor indeed has anyone attempted to justify the existence of the tax. It is not now too late for this Committee to do what the country expects it to do—vote down this increase of Excess Profits Duty. Everyone who is in touch with industrial organisations throughout the country is aware of the grave loss that the revenue will have in this current year from the increase of this Excess Profits Duty. More particularly is that loss impressed upon one by the increasing amount of unemployment. There is no section of this House which should have supported the abolition of this duty more than the Labour party. Unemployment is increasing in every part of the country. In a small industrial town in my constituency this week they are working three days a week. I would ask the Chancellor of the Exchequer if he can tell the House of one single industrial business that has been started since the introduction of his Budget? Not one! Is it true or not to say that scores and scores of businesses that were planned to start have been abandoned? Will the right hon. Gentleman get as much revenue from the 60 per cent. as from the 40 per cent.? Is that his justification or not? To-day I was talking to one of the largest solicitors in Birmingham. He told me that his firm had issued more writs during the last three weeks against people of good commercial reputation than they had issued since the outbreak of the war. This matter is so serious that I for one hope that the Committee will have said to the Chancellor of the Exchequer, "This is a bad tax, one that our industrial life cannot stand, and whatever political consequences we shall do our duty and vote against it." But, no!

Those who do not like this House and do not believe in the Coalition have described this House as one of "hard-faced men who look as if they had done well out of the war." None of us probably are quite aware of how our features may strike the outsider. [HON. MEMBERS: "Agreed."] We are unable to judge whether we look hard-faced or benign. But there is one thing: Whether or not we are hard-faced hon. Members are very weak in their knees as soon as the whips are put on—

The CHAIRMAN

As I explained a little while ago to another hon. Member, that may all be subject for small talk in the Lobbies, but not for the floor of the House. If the hon. Member desires to exhibit his superior morality over his fellow Members his remarks should be made outside, not inside, the House.

Mr. LYLE-SAMUEL

I am sorry, Mr. Whitley, but my remarks were not intended to be of a personal nature. [HON. MEMBERS: "Divide," and "Go on!"] It is all very well for hon. Members to shout when they have made up their minds, and are indifferent to the industrial consequences or afraid of the political consequences of this issue. But the matter is a grave one for the industrial life of the country, and anyone who feels strongly—and, I venture to say, hon. Members so feel—[HON. MEMBERS: "Agreed"]—but to shout one down by ribald and stupid remarks—well—The Chancellor has had alternating periods of exuberant optimism and profound depression. Last summer he told us we were "heading for bankruptcy"; in the autumn that we were "about to see the inauguration of a period of extraordinary industrial prosperity"! Now the Chancellor sees that a check has come. The increase of the Excess Profits Duty

from 40 to 60 per cent. has caused the check to which the right hon. Gentleman referred. Unemployment this winter promises to be on a scale such as few Members of this Committee have ever known, and it will be almost entirely due to this tax. I protest against this increase, in support of which there is not a real majority, although an artificial party majority has been created for it. The prosperity of industrial life in this country is much more important than the political future of any party. The Chancellor of the Exchequer said that "twenty such Budgets as this would see the end of the National Debt," but I have no hesitation in saying that two such Budgets would see the decline and end of the industrial prosperity of this country.

Question put, "That the Clause, as amended, stand part of the Bill."

Commander BELLAIRS (seated and covered)

I wish to ask you, Mr. Chairman, whether a Member who has paired is entitled to call out "No!" when the question is put from the Chair?

The CHAIRMAN

I have no knowledge of affairs outside the precincts of the Committee.

The House divided: Ayes, 202; Noes, 16.

Division No. 203.]	AYES.	[11.30 p.m.
Adair, Rear-Admiral Thomas B. S.	Carter, W. (Nottingham, Mansfield)	Hacking, Captain Douglas H.
Addison, Rt. Hon. Dr. C.	Casey, T. W.	Hailwood, Augustine
Agg-Gardner, Sir James Tynte	Chamberlain, Rt. Hn. J. A. (Birm.,W.)	Hall, F. (York, W. R., Normanton)
Ainsworth, Captain Charles	Coates, Major Sir Edward F.	Hanson, Sir Charles Augustin
Amery, Lieut.-Col. Leopold C. M. S.	Colvin, Brig.-General Richard Beale	Hartshorn, Vernon
Armitage, Robert	Conway, Sir W. Martin	Haslam, Lewis
Astbury, Lieut.-Commander F. W.	Coote, Colin Reith (Isle of Ely)	Hayday, Arthur
Baird, Sir John Lawrence	Cope, Major Wm.	Hayward, Major Evan
Baldwin, Rt. Hon. Stanley	Courthope, Major George L.	Hennessy, Major J. R. G.
Banbury, Rt. Hon. Sir Frederick G.	Cowan, D. M. (Scottish Universities)	Hirst, G. H.
Barnston, Major Harry	Davison, J. E. (Smethwick)	Holbrook, Sir Arthur Richard
Barrand, A. R.	Dawes, James Arthur	Hope, Sir H. (Stirling & Cl'ckm'nn'n,W.)
Barrie, Rt. Hon. H. T. (Lon'derry, N.)	Dennis, J. W. (Birmingham, Deritend)	Hope, James F. (Sheffield, Central)
Bell, James (Lancaster, Ormskirk)	Dewhurst, Lieut.-Commander Harry	Hope, Lt.-Col. Sir J. A. (Midlothian)
Bellairs. Commander Carlyon W.	Edgar, Clifford B.	Hope, J. D. (Berwick & Haddington)
Bigland, Alfred	Edwards, C. (Monmouth, Bedwellty)	Hopkinson, A. (Lancaster, Mossley)
Bird, Sir A. (Wolverhampton, West)	Edwards, Major J. (Aberavon)	Horne, Sir R. S. (Glasgow, Hillhead)
Boles, Lieut.-Colonel D. F.	Elliot, Capt. Walter E. (Lanark)	Hotchkin, Captain Stafford Vere
Borwick, Major G. O.	Eyres-Monsell, Commander B. M.	Howard, Major S. G.
Boscawen, Rt. Hon. Sir A. Griffith-	Farquharson, Major A. C.	Hunter, General Sir A. (Lancaster)
Bowerman, Rt. Hon. Charles W.	Finney, Samuel	Hunter-Weston, Lieut.-Gen. Sir A. G.
Bowles, Colonel H. F.	Ford, Patrick Johnston	Inskip, Thomas Walker H.
Brace, Rt. Hon. William	Forestier-Walker, L.	Jameson, J. Gordon
Brassey, Major H. L. C.	Forrest, Walter	Jephcott, A. R.
Bridgeman, William Clive	Fremantle, Lieut.-Colonel Francis E.	Johnson, Sir Stanley
Briggs, Harold	Gange, E. Stanley	Jones, Sir Edgar R. (Merthyr Tydvil)
Broad, Thomas Tucker	Ganzoni, Captain Francis John C.	Jones, G. W. H. (Stoke Newington)
Bromfield, William	Gibbs, Colonel George Abraham	Jones, Henry Haydn (Merioneth)
Brown, Captain D. C.	Gilbert, James Daniel	Kellaway, Rt. Hon. Fredk. George
Bruton, Sir James	Gilmour, Lieut.-Colonel John	Kidd, James
Buchanan, Lieut.-Colonel A. L. H.	Gould, James C.	King, Commander Henry Douglas
Burn, Col. C. R. (Devon, Torquay)	Graham, R. (Nelson and Colne)	Knight, Major E. A. (Kidderminster)
Butcher, Sir John George	Green, Joseph F. (Leicester, W.)	Lane-Fox, G. R.
Campion, Lieut.-Colonel W. R.	Greig, Colonel James William	Larmor, Sir Joseph
Cape, Thomas	Griffiths, T. (Monmouth, Pontypool)	Law, Rt. Hon. A. B. (Glasgow, C.)
Carew, Charles Robert S.	Grundy, T. W.	Lawson, John J.
Carr, W. Theodore	Guest, J. (York, W. R., Hemsworth)	Lewis, Rt. Hon. J. H. (Univ., Wales)
Lister, Sir R. Ashton	Pulley, Charles Thornton	Thomson, Sir W. Mitchell- (Maryhill)
Lloyd-Greame, Major Sir P.	Purchase, H. G.	Tillett, Benjamin
Locker-Lampson, Com. O. (H'tingd'n)	Rae, H. Norman	Tryon, Major George Clement
Long, Rt. Hon. Walter	Ramsden, G. T.	Turton, E. R.
Lorden, John William	Raper, A. Baldwin	Vickers, Douglas
Lort-Williams, J.	Raw, Lieutenant-Colonel N.	Wallace, J.
Loseby, Captain C. E.	Richardson, R. (Houghton-le-Spring)	Ward, Col. L. (Kingston-upon-Hull)
M'Curdy, Charles Albert	Roberts, Frederick O. (W. Bromwich)	Ward-Jackson, Major C. L.
M'Lean, Nell (Glasgow, Goven)	Roberts, Rt. Hon. G. H. (Norwich)	Waterson, A. E.
McNeill, Ronald (Kent, Canterbury)	Robinson, Sir T (Lancs., Stretford)	Watson, Captain John Bertrand
Mallalieu, F. W.	Rodger, A. K.	Whaler, Lieut.-Colonel C. H.
Marriott, John Arthur Ransome	Rose, Frank H.	White, Lieut.-Col. G. D. (Southport)
Matthews, David	Roundell, Colonel R. F.	Whitla, Sir William
Mond, Rt. Hon. Sir Alfred M.	Royce, William Stapleton	Willey, Lieut.-Colonel F. V.
Montagu, Rt. Hon. E. S.	Samuel, A. M. (Surrey, Farnham)	Williams, Lt.-Com. C. (Tavistock)
Moreing, Captain Algernon H.	Samuel, Samuel (W'dsworth, Putney)	Williams, Col. Sir R. (Dorset, W.)
Morgan, Major D. Watts	Sanders, Colonel Sir Robert A.	Williamson, Rt. Hon. Sir Archibald
Morison, Rt. Hon. Thomas Brash	Scott, A. M. (Glasgow, Bridgeton)	Willoughby, Lieut.-Col. Hon. Claud
Morrison-Bell, Major A. C.	Sexton, James	Wills, Lieut.-Colonel Sir Gilbert
Murray, John (Leeds, West)	Shaw, Thomas (Preston)	Wilson, Daniel M. (Down, West)
Nall, Major Joseph	Shaw, William T. (Forfar)	Wilson, Colonel Leslie O. (Reading)
Neal, Arthur	Sitch, Charles H.	Wilson, W. Tyson (Westhoughton)
Newman, Sir R. H. S. D. L. (Exeter)	Smith, W. R. (Wellingborough)	Wood, Sir H. K. (Woolwich, West)
Nield, Sir Herbert	Spencer, George A.	Wood, Major S. Hill- (High Peak)
Parker, James	Stanler, Captain Sir Beville	Young, Lieut.-Com. E. H. (Norwich)
Parkinson, Albert L. (Blackpool)	Stanley, Major H. G. (Preston)	Young, Sir Frederick W. (Swindon)
Pease, Rt. Hon. Herbert Pike	Stephenson, Colonel H. K.	Younger, Sir George
Peel, Col. Hn. S. (Uxbridge, Mddx.)	Sutherland, Sir William
Perring, William George	Sykes, Sir Charles (Huddersfield)	TELLERS FOR THE AYES.—
Pickering, Lieut.-Colonel Emil W.	Thomas, Brig.-Gen. Sir O. (Anglesey)	Lord Edmund Talbot and Mr.
Pollock, Sir Ernest M.	Thomson, F. C. (Aberdeen, South)	Dudley Ward.
Pretyman, Rt. Hon. Ernest G.	Thomson, T. (Middlesbrough, West)
NOES.
Barker, Major Robert H.	Higham, Charles Frederick	White, Charles F. (Derby, Western)
Entwistle, Major C. F.	Kenworthy, Lieut.-Commander J. M.	Wilson, Lt.-Col. Sir M. (Bethnal Gn.)
Fildes, Henry	Palmer, Charles Frederick (Wrekin)
Grant, James A.	Remer, J. R.	TELLERS FOR THE NOES.—
Greenwood, William (Stockport)	Smith, Sir Allan M. (Croydon, South)	Mr. Pemberton-Billing and Captain
Hall, Lieut.-Col. Sir F. (Dulwich)	Sugden, W. H.	Newton Knights.
Hickman, Brig.-Gen. Thomas E.	Terrell, Captain R. (Oxford, Henley)

Clauses 41 (Increase of Rate of Excess Mineral Rights Duty), 42 (Apportionment of accounting periods and years), and 43 (Interpretation) ordered to stand part of the Bill.

Committee report Progress; to sit again To-morrow.

The remaining Orders were read and postponed.

It being after half-past Eleven of the clock, Mr. DEPUTY - SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at a Quarter before Twelve o'clock.