HC Deb 16 July 1920 vol 131 cc2818-25

Section forty-five of The Finance (No. 2) Act, 1915, shall be read as if the following Sub-section were inserted after the first Subsection thereof:— The Commissioners shall, upon due and reasonable proof being shown that payment of the duty by cash would entail hardship or create financial difficulty, accept, in lieu of cash, mortgage bonds or other form of bonds reasonably secured bearing interest at bank rates. Such bonds to be redeemable at any time within six years of their date or, failing their being redeemed at the end of the sixth year of their date, the Commissioners of Inland Revenue may dispose of same as they may seem fit."—[Mr. Briggs.]

Brought up, and read the First time.


I beg to move, "That the Clause be read a Second time."

3.0 P.M.

This Clause has for its object the helping of people who are making profits, but, owing to the nature of their business and the tying up of their money and the reduced value of stocks, have not the money at hand wherewith to meet the Excess Profits Duty. There are businesses in which the bigger the profits the greater the difficulty in meeting the tax. I will read a short extract from a letter I have received from a leading firm of woollen merchants. They say: It would be difficult to curtail our operations, much of which is with foreign countries. We fully agree the financial position must be met, and are ready to do our share; but owing to poor pre-War years we are one of the sufferers. If Parliament supports the 60 per cent. Excess Profits Duty, could you urge upon the Chancellor the need for granting a legal right for the payment to be spread over a reasonable period. This would help us. It is not just that we should be dependent on the goodwill of a local collector. Some may be lenient, others not. The right to deferred payment should be statutory. The Chancellor knows full well that some firms have now got their backs against the wall. He knows they are not at all likely to avail themselves of the opportunity given upder this Clause except as the very last resort. No firm would be desirous of having the Government more or less in the position of a sleeping partner. I would ask him what the alternative is likely to be. Does he contemplate putting honourable firms, whose honour is just as dear to them as is his honour to any Member of this House, in the County Court when they cannot make payment? Unless he does, I do not see what steps he can take to enforce it. There is one other point which may not have occurred to him. He acknowledges that he has £190,000,000 of arrears. If he could see his way to adopt this Clause, or something similar to it, this £190,000,000 of arrears would automatically become income-producing and would yield at 7½ per cent. about £15,000,000 a year. If he says that would not be so for any reason whatsoever, the only possible alternative is that the firms owing these arrears would, to get rid of the interest, pay up their arrears. So that either way the Treasury has the advantage. It is therefore for the single purpose of safeguarding businesses of this character that I urge upon the right hon. Gentleman to help them to meet their payment of this tax—not to escape it—by some such Clause as this.


I cannot accept this Amendment. It would work very unevenly, and I do not think it is required for the case which my hon. Friend has in mind—the really genuine case where a delay is necessary, and time must be allowed for payment. It is not a matter of indifference to the Treasury as to when the money is paid. We want the money, and we do not want merely an interest-bearing security. Therefore, the onus must be on the taxpayer to show, and we must have very strong proof, that he is in such a position that he must defer an obligation which his neighbour is called upon to discharge at once. My hon. Friend proposes that The Commissioners shall, upon due and reasonable proof being shown that payment of the duty by cash would entail hardship or create financial difficulty"— that is a loose and wide term— accept, in lieu of cash, mortgage bonds or other form of bonds reasonably secured. Again, these are very loose words. It would be easy for the most flourishing concern to satisfy the Commissioners that their bonds were reasonably secured, but there would be greater difficulties in the case of a less prosperous firm to give an assurance that the bonds they might give would be reasonably secured. This covers a point which was dealt with, in a different form, by my right hon. Friend the present Leader of the House a few years ago, when he inquired from the Federation of British Industries whether, if they contemplated any such proposal, they would give anything in the nature of a corporate guarantee of the bonds. They did not respond to that invitation, and I do not think my hon. Friend would be surprised. In these circumstances the securities which in certain conditions the Commissioners of Inland Revenue would have, are not likely to be a very marketable security. There is a section in the principal Act which is relevant to the cases which my hon. Friend has in mind. It deals with the cases for which we ought to provide. In cases of real and proved difficulty, insurmountable difficulty, the Commissioners may allow payment by instalment, instead of requiring the whole sum to be paid at once, and they have exercised that discretion in cases where it was required. That would meet the cases which my hon. Friend has in view, and I hope he will not press a proposal which, like my predecessor, I cannot possibly accept.


I should like to ask the right hon. Gentleman a few questions on the question of payment by instalment. My experience of the taxing authorities is that payment by instalment is only delayed for one or two months at the most. It is not a delay for a considerable period. I thought the right hon. Gentleman would have given some information as to the difficulty which he has in mind. Is it a question of the Floating Debt, the Funding Debt or the National Debt? The whole question of the Floating Debt, which I assume is one of the matters which prevent him from accepting the Amendment—


The Finance Bill is designed to produce revenue required in the year, for all purposes. It is true that the Excess Profits Duty which is levied this year is in the nature of things largely payable next year. The cash is required next year and it cannot be a matter of indifference, quite apart from the date or the form of the expenditure at any given moment, whether the revenue is acquired in a year or five or ten years later.


That is the answer I wanted, because it proves the point that if it is next year for which the right hon. Gentleman requires this revenue the remedy is to cut down the expenditure to a very considerable extent, as he can do. So far as the Floating Debt is at present concerned if he requires the money this year or next year for that purpose I cannot understand why the Financial Secretary should come down to the House and move a Clause which is intended to increase the Floating Debt. I fail to see what ground there is for not accepting the new Clause, which seems to me an entirely reasonable Clause. It provides for payment in bonds for hard cases and for the interest on those bonds. There are cases where people are a very considerable amount in arrears in the payment of their Excess Profits Duty, and I fail to see why those people should not be asked to pay interest on the arrears. If they were asked to pay interest on the arrears we should find that those arrears would be very largely paid up. I hope my hon. Friend w ill press his Clause to a division.


This refers to present debtors, not to prospective debtors.


I am trying to prove that future debtors should be treated in a much more drastic way. I should have thought that from the very gracious way in which my hon. Friend treated my right hon. Friend in the Debate that he would have received much more generous treatment.


I do not think that in a matter like this the Chancellor of the Exchequer ought to be guided by precedent or by any decision of his predecessors. This Amendment relates to a Duty which is a new one and is regarded as temporary and everything should be done to enable people to meet their obligations without imposing upon them further financial difficulties or hardships in connection with their trade. The object of the Clause is not that any person who makes a claim is to have the claim met. It seems to me that all this Amendment is asking is that traders actually either in difficulties or, having prospective difficulties, should be assisted by this accommodation between the revenue authorities and themselves. Our interest in an Amendment of this kind is that unemployment is sometimes caused through financial difficulty or some momentary internal dislocation in the way of a trades difficulty which employers are up against. Therefore from the standpoint not only of trading interests and smooth internal working between those companies and the Treasury as well as from the standpoint of the interest of those whose income comes from continuity of work, the Chancellor might further consider the demand which is made in this Amendment.


I join in the appeal to the Chancellor of the Exchequer to accept this new Clause. I have had some most distressing cases submitted to me of firms who were in the greatest possible difficulty who have been pressed by the Treasury for payment of the duty and are in this position, that unless they can get some relief and the Treasury show a little more consideration, they will have to close down, and a number of people will be thrown out of work. Unless the Treasury are lenient and show consideration they will have a very great responsibility, because they are not acting at all in a sympathetic manner. Vast sums have been spent by firms for the improvement and development of works for War purposes, sums which have been provided out of profits, and now that money is called up by the Treasury in the form of cash. I hope that my hon. Friend will press this to a division because I am oppressed with the unsympathetic attitude, which the Chancellor of the Exchequer shows to these cases of great hardship, and which causes a great deal of hostility to the Government in the country, which is much to be regretted.


I waited to hear what the Chancellor would say in reply to my hon. Friend, and it did not seem to me to justify the positions from the Government point of view. The Chancellor says, to use an American expression, he "needs the money." We all sympathise with him in that attitude, but this Amendment deals with those cases in which all the power possessed either by the Chancellor or the Treasury cannot get the money, except by putting in a receiver and winding up the business. What is his alternative to this proposed Amendment in cases where it can be

proved that the firm is not in a position to tender cash for obligations in respect of Excess Profits? I admit that the Amendment is loosely worded, but it conveys a very clear impression of its sense. If it is not set forth in the Ministerial manner what the object to be attained is I am sure that the Chancellor could reduce the intention of the Clause to very exact language if he accepted the spirit of it. I hope that we shall hear from the Chancellor that he is prepared to give the Amendment further consideration. The Chancellor referred to difficulties in dealing with the merits of the case. In my experience Government officials are sufficiently alive to business matters to be able to hold a very perfect inquest upon balance sheets and businesses from which they desire to extract revenue. I cannot see why a properly-appointed official representative of the Treasury should not be competent to form an opinion with regard to the status of the business from a careful examination of its duly-audited accounts and balance sheets. I press the Chancellor to reconsider the question from the point of view on which he rests his case—that he needs the money—and if he can show commercial men how, by merely threatening or by bringing pressure to bear on their businesses, he can turn into current coin of the Realm he will be rendering a service to the business community and at the same time filling coffers of the Exchequer.

Question put, "That the Clause be read a Second time."

The Committee divided: Ayes, 36; Noes, 70.

Division No. 223.] AYES. [3 25 P.m.
Adair, Rear-Admiral Thomas B. S. Hayday, Arthur Sexton, James
Atkey, A. R. Hopkins, John W. W Sitch, Charles H.
Benn, Capt. Sir I. H., Bart.(Gr'nw'h) Hunter, General Sir A. (Lancaster) Spencer, George A.
Bowerman, Rt. Hon. Charles W. Kenworthy, Lieut.-Commander J. M. Sugden, W. H.
Brace, Rt. Hon. William Lorden, John William Terrell, George (Wilts, Chippenham)
Brown, James (Ayr and Bute) Mills, John Edmund Thorne, G. R. (Wolverhampton, E.)
Carter, W. (Nottingham, Mansfield) Moore, Major-General Sir Newton J. Waterson, A. E.
Clynes, Rt. Hon. J. R. O'Grady, Captain James Wignall, James
Galbraith, Samuel Parkinson, John Allen (Wigan) Wilson, W. Tyson (Westhoughton)
Glanville, Harold James Raffan, Peter Wilson Wood, Major M. M. (Aberdeen, C.)
Graham, W. (Edinburgh, Central) Richardson, Alexander (Gravesend)
Green, Albert (Derby) Robertson, John TELLERS FOR THE AYES.—
Grundy, T. W. Rose, Frank H. Mr. Briggs and Mr. Remer.
Adkins, Sir W. Ryland D. Barnston, Major Harry Blair, Reginald
Agg-Gardner, Sir James Tynte Bellairs, Commander Carlyon W. Borwick, Major G. O.
Amery, Lieut.-Col. Leapold C. M.S. Benn, Sir A. S. (Plymouth, Drake) Boscawen, Rt. Hon. Sir A. Griffith-
Baird, Sir John Lawrence Benn, Captain Wedgwood (Leith) Bowyer, Captain G. E. W.
Baldwin, Rt. Hon. Stanley Betterton, Henry B. Brassey, Major H. L. C.
Barnes, Major H. (Newcastle, E.) Birchall, Major J. Dearman Breese, Major Charles E.
Bridgeman, William Clive Henderson, Major V. L. (Tradeston) Pilditch, Sir Philip
Bruton, Sir James Hennessy, Major J. A. G. Pinkham, Lieut.-Colonel Charles
Buchanan, Lieut.-Colonel A. L. H. Herbert, Hon. A. (Somerset, Yeovil) Pollock, Sir Ernest M.
Bull, Rt. Hon. Sir William James Herbert Dennis (Hertford, Watford) Pownall, Lieut.-Colonel Assheton
Burn, Col. C. R. (Devon, Torquay) Hewart, Rt. Hon. Sir Gordon Purchase, H. G.
Butcher, Sir John George Hinds, John Raeburn, Sir William H.
Campion, Lieut.-Colonel W. R. Hope, James F. (Sheffield, Central) Rees, Sir J. D. (Nottingham, East)
Casey, T. W. Hope, Lt.-Col. Sir J. A. (Midlothian) Samuel, A. M. (Surrey, Farnham)
Chamberlain, Rt. Hn. J. A.(Birm., W.) Horne, Sir R. S. (Glasgow, Hillhead) Samuel, Rt. Hon. Sir H. (Norwood)
Churchill, Rt. Hon. Winston S. Howard, Major S. G. Sanders, Colonel Sir Robert A.
Clay, Lieut.-Colonel H. H. Spender Hurst, Lieut.-Colonel Gerald B. Scott, A. M. (Glasgow, Bridgeton)
Coates, Major Sir Edward F. Jackson, Lieut.-Colonel Hon. F. S. Seddon, J. A.
Coats, Sir Stuart James, Lieut.-Colonel Hon. Cuthbert Shortt, Rt. Hon E. (N'castle-on-T.)
Cobb, Sir Cyril Johnstone, Joseph Smithers, Sir Alfred W.
Cohen, Major J. Brunel Jones, Sir Evan (Pembroke) Sprot, Colonel Sir Alexander
Colvin, Brig.-General Richard Beale Jones, J. T. (Carmarthen, Lianelly) Stanley, Major H. G. (Preston)
Conway, Sir W. Martin Jones, William Kennedy (Hornsey) Steel, Major S. Strang
Cowan, D. M. (Scottish Universities) Kellaway, Rt. Hon. Fredk. George Stewart, Gershom
Craig, Colonel Sir J. (Down, Mid) King, Commander Henry Douglas Sturrock, J. Leng
Craik, Rt. Hon. Sir Henry Law, Rt. Hon. A. B. (Glasgow, C.) Surtees, Brigadier-General H. C.
Curzon, Commander Viscount Lloyd, George Butler Sutherland, Sir William
Davies, Thomas (Cirencester) Locker-Lampson, G. (Wood Green) Talbot, G. A. (Hemel Hempstead)
Davison, Sir W. H. (Kensington, S.) Locker-Lampson, Com. O. (H'tingd'n) Taylor, J. (Dumbarton)
Dawes, James Arthur Lort-Williams, J. Thomson, F. C. (Aberdeen, South)
Dockrell, Sir Maurice Loseby, Captain C. E. Thorpe, Captain John Henry
Duncannon, Viscount Lyle, C. E. Leonard Walters, Sir John Tudor
Edgar, Clifford B. Lyle-Samuel, Alexander Ward, Col. L. (Kingston-upon-Hull)
Edwards, Major J. (Aberavon) M'Curdy, Rt. Hon. C. A. Waring, Major Walter
Edwards, John H. (Glam., Neath) M'Donald, Dr. Bouverie F. P. Warner, Sir T. Courtenay T.
Elliot, Capt. Walter E. (Lanark) Macdonald, Rt. Hon. John Murray Wason, John Cathcart
Elveden, Viscount Mackinder, Sir H. J. (Camlachie) Watson, Captain John Bertrand
Eyres-Monsell, Commander B. M. McLaren, Robert (Lanark, Northern) Whitla, Sir William
Falle, Major Sir Bertram G. M'Lean, Lieut.-Col. Charles W. W. Wild, Sir Ernest Edward
Fell, Sir Arthur Macleod, J. Mackintosh Williams, Aneurin (Durham, Consett)
Fisher, Rt. Hon. Herbert A. L. Macnamara, Rt. Hon. Dr. T. J. Williams, Lt.-Com. C. (Tavistock)
Flannery, Sir James Fortescue M'Neill, Ronald (Kent, Canterbury) Williamson, Rt. Hon. Sir Archibald
Ford, Patrick Johnston Macquisten, F. A. Willoughby, Lieut.-Col. Hon. Claud
Foxcroft, Captain Charles Talbot Magnus, Sir Philip Wills, Lieut.-Colonel Sir Gilbert
Fraser, Major Sir Keith Marks, Sir George Croydon Wilson, Colonel Leslie O. (Reading)
Ganzoni, Captain Francis John C. Molson, Major John Elsdale Wilson, Lt.-Col. Sir M. (Bethnal Gn.)
Gibbs, Colonel George Abraham Moore-Brabazon, Lieut.-Col. J. T. C Winterton, Major Earl
Gilmour, Lieut.-Colonel John Morris, Richard Wood, Sir J. (Stalybridge & Hyde)
Glyn, Major Ralph Morrison, Hugh Woolcock, William James U.
Goff, Sir R. Park Morrison-Bell, Major A. C. Yate, Colonel Charles Edward
Green, Joseph F. (Leicester, W.) Mosley, Oswald Young, Lieut.-Com. E. H. (Norwich)
Greenwood, William (Stockport) Mount, William Arthur Young, Sir Frederick W. (Swindon)
Greig, Colonel James William Murchison, C. K. Young, W. (Perth & Kinross, Perth)
Gretton, Colonel John Nield, Sir Herbert
Guinness, Lieut.-Col. Hon. W. E. Ormsby-Gore, Captain Hon. W. TELLERS FOR THE NOES.—
Hacking, Captain Douglas H. Palmer, Major Godfrey Mark Lord E. Talbot and Mr. Dudley Ward.
Harmsworth, C. B. (Bedford, Luton) Perkins, Walter Frank
Haslam, Lewis Philipps, Sir Owen C. (Chester, City)